Alec Hogg: What to expect from Davos 2015 (webinar and transcript)

The World Economic Forum’s 2015 annual meeting starts in Davos next week. Biznews.com’s editor Alec Hogg will be participating for the 11th successive year. This Google Hangout Webinar gives us a preview of what to expect from the week long power nexus in the Alps. Click here to download the free preview pdf, ‘A verteran’s guide to surviving Davos 2015’ compiled by Alec Hogg, which serves as welcome reading in addition to Hogg’s insightful webinar. 

ALEC HOGG: Well, hello everybody. It’s exactly 1:30 and this is the Davos Deliberations podcast/webcast. Call it what you like. It’s really good to be with you. I’m Alec Hogg and it is my pleasure to share with you what I’m likely to be seeing at the World Economic Forum next week. In fact, we’ll be flying tomorrow evening. It’s come around again so very quickly.

Well, we have a lovely slideshow for you, so let’s kick off with some of the highlights of the World Economic Forum and exactly, what it is.

DD2As you can see there, it’s in an idyllic setting. On the top, right-hand side, that is a picture of Davos. The start of the World Economic Forum was 45 years ago, by the man in the top-left, Klaus Schwab. Klaus is a polymath, one of those people who are fabulously smart at many things and he has a double doctorate. He was the youngest ever professor at Geneva University. He had this idea 45 years ago, that the world was not heading in the direction he would like it to be, because there wasn’t enough engagement. There wasn’t enough interaction. People were not listening to each other. They were not talking. They were doing a lot of talking, but not a whole lot of listening. He decided to bring together (initially) managerial people from Europe. Thereafter, it expanded to bring in other parts of the world and now, the World Economic Annual Forum’s meeting in Davos is an institution. In fact, it has transformed Davos – a little town -, which used to be a place that was… Perhaps, if you like a three-star ski resort, many hotels are around there for more of a middle-class type of visitor from Switzerland. Of course, that’s all changed because of the World Economic Forum but in years gone by, Davos was a place that people with consumption – particularly in the 1800’s (what we know as TB) – would go to, because of the dry air. It is very dry and very cold in winter but apparently, that’s very good for tuberculosis. He selected this place because it is far away from most other points.

It’s also very easy to stop those who don’t want to come in, from arriving. It’s not easy for terrorist attacks and that kind of thing and of course, they have the support of the Swiss government. Every year, the World Economic Forum has something like 5000 Swiss troops who are posted around the Alpine areas.

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The WEF itself is an organisation that brings together knowledge and information, and it has this down to a fine art. Its credo is to improve the state of the world and it does this by many different ways. Every year, they would go out and collect very smart young people from universities around the world to come and work at the World Economic Forum. It’s a kick-start for many careers but they also have a formal program, which is based on Global Agenda Councils. There are 80 of these and they take certain ideas and certain areas, and focus on them. For instance, the Internet would be one of the Global Agenda Councils. Africa would be another. Education would be another. There are 80 of these, where experts from around the world get together once a year physically, in Dubai, and during the rest of the year they will engage with each other via email and social media, etcetera.

By looking at the major questions, they come up with information that is then put together into the agenda that one has at the World Economic Forum in Davos. They have many other councils around the world, as well. The Regional Summits: there’s one in South Africa, which occurs every second year – that’s the South African hosting of the Africa summit. Alternate years, it’s gone to another part of the continent. I’ve been to Africa Economic Summits in Addis Ababa, Mozambique, Maputo, and also more recently, into Tanzania and last year, the event was held in Nigeria. It means that this year, the first week in June, it will come back to South Africa again and once more, to Cape Town. Those Regional Summits are not just held in Africa. They’re held in various parts of the world so the WEF community gets together to discuss these regional issues and then of course, the big one, which is in Davos and that starts next week. It’s always in the final, full week of January, which happens to fall next week in 2015.

Social entrepreneurship is a big part of the program as well and the lady in the middle there is Hilda Schwab whom, like her husband Klaus (the founder of the World Economic Forum) is an academic. She has been driving the Social Entrepreneurship Foundation, which the Schwabs themselves have named and kept going and in fact, put a lot of energy into it. This was created some years ago, when Mohammed Yunus who’s very well known for micro finance initiatives in the sub-continent of India and Bangladesh, came to Davos and got everybody terribly excited about the opportunities that a social entrepreneur like himself can bring, and change the world. Just from my own perspective, I’ve met people there who have helped in Vietnam, to rehabilitate prostitutes. I’ve met a guy from South Africa who is transforming downtown Johannesburg by taking old office buildings and converting them into homes for people who otherwise, would not be able to afford homes.

Social entrepreneurship has become a very big part of the World Economic Forum and the premise there is ‘change things by using business approaches’. It’s also something, which has become a career option now for many young people whom, in the past, just had to go into the corporate environment to make a living. Social entrepreneurs do give you the opportunity to make a difference and make a living as well. The Young Global Leaders program is one where many South Africans have participated. Nicky Newton-King, the Chief Executive of the JSE was a member. Taddy Blecher, a well-known professor of Seda, the downtown university in Johannesburg: he was a member. Also, Alan Knott-Craig, an Internet entrepreneur.

The founder of Tumblr, talking about Internet and many young people have gotten together in these Young Global Leader programs to find each other, to network with each other, and to develop not only their own interrelationships but during the period that they are Young Global Leaders (they are selected while they’re in their mid-30’s. Once they hit 40, they should become full-blown members of the WEF through various organisations) they continue to keep their networks and relationships going. Only a couple of years ago, the WEF brought in what they call Global Shapers and these are people in their early 20’s. The Global Shapers program is different to the other programs in that they have established, in dozens of cities around the world, little hubs where young people get together and talk about what they can do to improve the state of the world, which is all part of the World Economic Forum.

There are 4500 of these Global Shapers around the world of whom, 50 get to go to Davos. I did meet a young lady from China last year – most charming.   I think she was 21 years old. She’d already managed to get her doctorate, so she was one of those whizz-kids who got to university early on, spoke impeccable English, and was charming on top of it. She was one of those selected. There are always a few South Africans, who are selected into the Global Shapers, as well.

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The annual meeting itself, as you would have concluded already, is the highlight of the year for the World Economic Forum. It’s a five-day affair and over the years that I’ve attended… The very first one I went to was in 1993 and that was after Nelson Mandela, Mangosuthu Buthelezi, and FW de Klerk had appeared on a stage together for the very, first time and that was in Davos. Interestingly, on his way there Nelson Mandela was a staunch socialist. On his way back, he realised that what he had been taught from those who supported the ANC while he on Robben Eiland was actually, no longer fit for purpose in the world that he’d come into. The person who taught him this was the Prime Minister of Vietnam. He was browbeaten by many of the western economists, leaders, Presidents, and Prime Ministers but he didn’t really take that to heart, did Madiba

It was only once the Prime Minister of Vietnam took him aside and explained to him why the language he was talking was no longer applicable in the world, that Mandela started listening, because the Prime Minister of Vietnam was himself a Vietcong General who had been a man, greatly admired by Nelson Mandela while he was in jail. That was an interesting story told to me by the former Reserve Bank Governor. Tito Mboweni, who was present at that meeting.   In fact, Tito was also there in 1993 where I asked him to help me to co-host a segment that we did together for the SABC. In only got back into Davos in 2005 and have been going to the meeting ever since. Why I mention this is because by attending every year, you get a good understanding of the trends that are happening there and at the World Economic Forum, you get 2.500 who come together to listen, primarily (because only one person can talk at a time).

They attended 250 different sessions, anything from the airline pilot who landed in the Hudson River to save people’s lives in that way, through to the curator of the British Museum, which is one of the more fascinating discussions that I was privileged to attend, to heads of government – Bill Clinton and Vladimir Putin. I once had the pleasure of spending an hour in the company of Olesun Obasanjo, at the time, the President of Nigeria, that was when Nigeria was just coming out of its difficult period, and asking for Debt Forgiveness, which indeed, it did receive. It is a meeting of the rich and powerful, but all of which is funded by the businesses. The top 1000 companies in the world become members of the World Economic Forum. They pay a very high subscription fee, but in terms of networking they get that back, no doubt, many times over.

The attendees, as you can see from that picture there, the IMF President (or rather, the Managing Director Christine La Garde) in the middle there with the grey hair. I bumped into her one day when she was at… They used to have a breakfast on a Sunday morning after the meeting had ended and Peter Sullivan, the former editor of the Star was with him. He’d known her from before and he got her to come and sit between us, so we had a conversation with her. Then, she was the Finance Minister of France. That’s the kind of thing that happens in Davos. Next to her, David Cameron – the Prime Minister of England. I met him while he was still the leader of the opposition and was thoroughly underwhelmed by a man whom, today, has grown so in stature. Dilma Rousseff, the embattle President of Brazil made her first attempt since last year. She’s in the bottom right-hand corner – embattle, because she’s been dragged into this Petrobras scandal involving millions of Dollars. There was a breaking story on that, and that you can go and read on Biznews today. Mostly though, if you look on the left-hand side, you have plenary sessions where some of the smartest people in the world share their ideas.

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Interestingly enough, none of them are asked or allowed to speak for more than 6 minutes. So, who attends? There’s Tony Blair, a little picture with Bono – both of them very regular attendees. In fact, when you go onto Biznews, there’s a wonderful PDF, which the team have put together. Included in that is what we all the starts of Davos. You can read about 20-odd of the people who are there all the time. Patrice Motsepe, one of the richest men in Africa is a regular attendee. I think this year Patrice will be listening out very carefully, to see what is happening to commodities and resources prices, given that his company (African Rainbow Minerals) is exposed to it. Maria Ramos on the top right, was one of the first co-chairs of Davos from the fairer sex. She did us proud that year. I think that was in 2010. Of course, she is the Chief Executive of Absa and now Barclays Africa.

Of course, Koos Bekker, the former Chief Executive and Chairman-in-waiting at Naspers is a regular attendee. We tend to see a lot of each other there. I use the opportunity to pick his mind/pick his brain to get some insights into the way he sees the media environment and he’s a big draw-card. There’s another gentleman, Ben Magara who no doubt, like Patrice, will be thinking very carefully about what is going to happen or what’s in store for the commodities sector of the market. We do have the opportunity for you (in this webcast) to ask questions. If you look at the right-hand side of your screen, there’s a chat message. If you’d like to ask a question, just go along there and please enter the question. I can pick it up on this side and we’ll then relay that question and answer it to the best of my ability.

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What comes out of it? I think this is really, the big part of the World Economic Forum. Remember, it’s all to do with education. It’s all to do with opening your minds and if you consider the calibre of the individuals who are coming to the WEF every year – and remember, they cut it down to only 2500 people – then most of them to A-type personalities who find it very difficult to listen. Usually, they talk or prefer to talk but at WEF, because the calibre of the participants is so high, this is the one place that A-type personalities realise very quickly, that they can learn a lot more by just taking the cotton wool out of their ears and putting it into their mouths. That injection of information…the insights that are provided by the best in the world in their subject is what helps to alter minds, alter impressions, and in many ways, to do what the forum tries to achieve, which is committed (as it says) to improving the state of the world.

The President and the Cabinet from South Africa attend pretty much every year. Jacob Zuma missed last year and there was another year, or maybe three or four years ago, where many of the Cabinet members did not go to Davos. The reason for that though is that there was a clash with Lekgotla, which was held in South Africa. Generally speaking, they are going to be there. We do understand that Jacob Zuma will be at Davos this year, and participating in one of the CNBC Africa events, that Bronwyn Nielsen will be hosting. She usually gets to talk to quite a few of the Presidents in that plenary session and in her inimitable, feisty manner, tends to get the best out of them. There was a memorable argument between Bronwyn and Jacob Zuma two years ago, and that tends to happen when you get out of the country or the old hierarchical standards seem to be thrown away.

One sees people as people and engagements continue at a different level. That’s one of the huge advantages of this forum. It does set the economic agenda for the year. I’ve been attending (as I said earlier) from 2005 and pretty much every year, I can come out of it and have a good feel/a good sense of what it likely to happen I the economy that year. What are the issues to look out for? For instance, about give years ago we started getting onto the agenda in Davos to begin with. Now, you only have to ride through Sandton to see what the impact of that has been, given the high-rise buildings for the service companies that are serving Africa. Africa has become a very hot topic and a great place to invest. I think it was four years ago, where there was a (this is one of the events) in one of the larger rooms that they have available to people and there was no way I could get in.

I arrived 15 minutes before the event and were so long that even though there was standing room only people were being turned away. That showed them that the Africa Investment story was really, top and centre. Will it continue this year? That will be something I’m sure I’ll be able to report back to you on. The other major trends that have come out of Davos is the climate change, which was identified there long before it came to the popular culture, but you have to know who listen to and again, if you read through the PDF that we have on Biznews, you would see that there was an occasion that I attended there were three of the four economists (this was in 2007) were talking about a world that was going to the boom. They were talking about the Goldilocks economy. Do you remember that? Not too hot and not too cold – just right.

There was a gentleman with an Italian accent from New York called Nouriel Roubini who warned that they were all deluding themselves and that in fact, major changes were just about ready to happen. Well, Roubini’s warnings were proven to be accurate and of course, he’s become a superstar; not just of Davos, but all over the world for swimming against that particular tide. There’s a question that’s come in, which says ‘what is it all about’. Well, it’s all about knowledge sharing. It’s all about an injection of information, an ability to educate. Ongoing learning, we know, is of critical importance and that’s what Davos is all about. It’s the power nexus of the world, but when these people get together and listen to each other, you tend to find that subjects (that in the past were not being addressed) are now all of a sudden addressed and you see things from a different angle.

The other big move has been the subject or organised crime, which has been raised to the forefront at the World Economic Forum. I was involved some years ago, in a session with a man by the name of Moises Naim. Now, if you’ve been following Mark Zuckerberg’s recent discussions, the name will be familiar to you. Moises wrote a book called ‘Illicit’ some years ago, all about organised crime and it’s brilliant, if you read that to understand that organised crime is the same as a big business. You have these nexuses around the world. South Africa’s the one where marijuana and precious stones…that’s the hub here.   Eastern Europe is for sex workers. Not surprisingly, South America is a hub for cocaine and this is all articulated very well by Moises, in his book. Where the Zuckerberg story comes in was at the beginning of the year, Mark Zuckerberg (the founder of Facebook) said that he’s going to make this a year that he reads more, so he’s looking to read two books every month.

The first one he would read is Moises Naim’s latest take, which is a book on power. Isn’t that interesting, that you meet people like his and suddenly, they’re thrust into the limelight. Incidentally, Moises is a Venezuelan and when you listen to what he has to say about Venezuela and some of the other people from that part of the world, you realise the downside to the political programs that have been followed by that country (and one that is under a lot of pressure). If you had money invested in Venezuela today, I guess it would only be because you’d never been to the World Economic Forum or listened to what the Venezuelan exiles have to say, is happening in that country.

Another important question has come in. Why is it important for you, Alec Hogg, to go? Well, it’s important because when one travels you open your mind and you get to learn about the reality of life, which is that we live in a very small country in global terms. In fact, South Africa’s GDP is under half-a-percent of the world’s and put in a different context, we are 1/75th the size of the United States. I believe it’s important to understand what is happening elsewhere because that will impact us here and we can interpret those major events for the way they’re going to affect us here in South Africa. For me, it’s been an absolute privilege to go there for the last 11 years in a row – and 12, overall – because I’ve been getting these injections of knowledge to pass on in the shaping and contexting of all the work that I do – serving our community.

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The theme for 2015 is the New Global Context. This is based on the fact that it’s 25 years now, if you look at the top-right picture there, since the Berlin Wall collapsed. Before the Berlin Wall collapsed, there was an ideological battle between socialism and capitalism. The collapse of the wall showed that socialism was not a system that benefitted mankind or human beings. Now that the victory of capitalism (if you like) has had 25 years and a big jolt through the 2007/2007 Global Financial Crisis, is it time to reassess whether capitalism in the format that took over after the collapse of the Berlin Wall is the right way or not. That’s the theme and the Global Context will be focusing on lessons to be learned and absorbed from these big developments that have occurred.

As you can see, the one picture in the Middle East there’ve been massive changes, geopolitical issues, we have Ukraine that has exploded out of nowhere. These are issues and the tensions, geopolitically, will be first, upfront, and centre this year in Davos.

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Some of the other issues: the erosion of trust in political leaders: we know that South Africa’s President, Jacob Zuma, has not been held in the highest esteem by all citizens of the country. It’s not unusual. This is something that happens all over the world. The tap/trust deficit between business and politics is enormous everywhere in the world and is on the agenda in Davos. The picture there of Johann Rupert, who is very well-known for laying into government at the Annual General Meeting of Remgro towards the end of last year.

Quantitative easing: that’s the picture of the Federal Reserve Bank. Quantitative ease. It’s the injection of cash into the system. That means that as the money is being pulled out, interest rates are going to rise. How is that going to affect the world? How is that going to affect Global Economic Growth? With America currently chugging along at five percent Economic Growth, the potential for the politicians or economic managers there to pull money out of the system now is much higher than it’s been for a long time. How’s that going to affect us, here in the Southern tip of Africa. That technological revolution: one of the big stories from last year’s Davos, was around the Third Machine Age – the way that Artificial Intelligence is changing the world, the way that technology (and that’s a picture down at the bottom, of Elon Musk, the South African who’s revolutionising space travel or at least, trying to).

The technology that has been brought to bear is making human beings redundant in many areas. What happens as a consequence of that? Hackers: the whole, Internet Governance issue is very heavily featured on the agenda and not surprisingly. We saw what happened with Sony recently where northern Koreans allegedly hacked into their back end.

Climate change is still a very important subject. The unemployment of youth, not just in South Africa where this is a problem – it is a global issue and poverty is not something that’s going o go off the agenda here or anywhere, anytime soon.

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So what do we hope to learn? Well, we hope to learn South Africa’s place in the world. We know we’re small. We know we’re like cork on the ocean. We’re not an island. It’s a good reminder when you get out there, that you can see where we do fit in the Table (if you like) of Nations, and that we have to look after our own shop. We can’t do things that are so far out of kilter with the rest of the world that its capital leaves us or indeed, doesn’t come back into this country. We’ll look at the economic agenda for this year and it looks once more, as though the United States will be the driving force. I say ‘once more’ because it’s had an absence of something like 15 years. It’s been China’s job. American locomotive is back there again and bringing back knowledge – new information. Last year, when I returned from Davos, I was able to tell those who came along to the sessions that the right thing to do would be to buy Google shares and to buy Naspers shares.   Why Naspers? Well, even there, Tencent (it’s Chinese associate) was getting very good press and to my way of thinking; if you were getting that kind of spotlight at a place like Davos, then must be a serious business. Although many were saying Naspers had had its run, to me it was only just starting.

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So what comes up next? Well, do go and have a look at the Davos page on biznews.com. We’ve worked hard to give you a good understanding. It’s a lovely read. There’s lots of information there that you can be pick up on. There will be a review of WEF 2015 when I return. That will be in just over a week’s time, so I hope you join us for that podcast as well and we’ll also be having a Google Hangout with some guests from Davos once we get back here.

For the next week, it’s going to be Davos-craziness on biznews.com – everything you possibly want to know from the dogs of Davos to the stars of Davos to – would you believe – the cats of Davos, if we can find any will be featured there. We’re going to be taking photographs. We’re going to be taking videos. We’ll be talking to all kinds of people around there and of course, bringing you the information and the news as it happens.

I hope you enjoy the journey. Thank you for the questions. I’m sorry I didn’t manage to get around to anymore. It’s been a real pleasure to be have been with you for this past half-hour and I look forward to being in your company again when we get back. Do enjoy the journey. It’s going to be quite a ride.   This is Alec Hogg, signing off.

 

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