Martyn Davies is, simply put, a man of the world. Apart from his constant international travel as a managing director of Deloitte responsible for emerging markets in Africa and beyond, Davies’ very upbringing, education, and subsequent career path epitomize today’s global professionals.
His family immigrated to South Africa from the U.K. when he was a young kid. He was a university student when Apartheid fell. It was a time of great excitement, hope, uncertainty and fear. He remembers chaperoning a visiting Chinese academic in March 1994 to observe the election. They drove past the headquarters of the African National Congress in Johannesburg, the Shell House, where moments earlier 19 people were shot and killed in a gun fight between different factions of the ANC.
Davies is no stranger to political upheavals and violence, and has had many direct encounters with world-changing events. For annual family holidays, his parents send the kids to visit a different country each year. When Martyn was 17 in 1989, he and his brother found themselves in Berlin shortly after the Berlin Wall came down.
It left a powerful impression on him, which subsequently motivated him to study law, international relations and economic history at Witwatersrand University, where he completed a Ph.D. at age 25.
Davies became fascinated by Asia after a visit to Singapore in 1990. This was followed by a trip visiting Hong Kong, Shenzhen and Guangzhou, and then Taiwan. It was there that he had another encounter with history. Deng Xiaoping was then making his famous southern tour to restart China’s economic reform. Davies visited the new special economic zone in Shenzhen and was hugely impressed with the stupendous scale and speed of development. The release of the entrepreneurial energy and drive of a country long suppressed by communist ideology was immensely uplifting.
Then there was no turning back. He was captivated by East Asia. When he was offered a scholarship for post-graduate studies overseas, he chose South Korea and arrived in Seoul in 1996, just in time to have his next encounter with history, the 1997 Asian financial crisis. Davies found himself in the midst of a society shaken to its core. Seemingly omnipotent business conglomerates, known as chaebols, suddenly became insolvent. The exchange value of the currency plunged. The finance minister was in jail. Ordinary citizens queued up to surrender their gold jewelry to the government to help shore up the country’s foreign reserves. It was all very bewildering, and an incredible eye-opening experience for Davies.
The 1997 Asian financial crisis notwithstanding, Davies is one of the few who saw very early on that the future of Africa is with Asia. He studied Chinese in Taiwan; and continued to visit the region extensively, building up a formidable network of business and professional contacts. Back in Johannesburg, he launched a highly successful consultancy business, Frontier Advisory, to work with governments and the private sector, which quickly became the go-to place for insights on sub-Sahara Africa’s economic development and business potential, especially in connection with trade and investment ties with Asia. In short order, Davies was named No. 1 analyst in South Africa by the prestigious Financial Mail Annual Award; and was selected by the World Economic Forum as a Young Global Leader. Davies is undoubtedly one of the very few Africans who first connected the rise of Asia with the emergence of radically different prospects for Africa.
Recently, I managed to meet up with Davies for dinner in spite of his frenetic travel schedule. We met at Flames, a restaurant on the outdoor terrace of the fabulous Four Seasons Hotel in Westcliff that looks over a magnificent vista of Johannesburg. Over a dinner of Karu lamb (for me) and ostrich steak (for Davies), we talked about the future of Africa in the context of the rise of Asia.
Davies is deeply concerned that globalization as we knew it in the last several decades is coming to an end. Global investment and trade are slowing in recent years. Multinational companies’ cross-border sales have stalled in many instances. Politics have turned bitterly divisive and acrimonious in the U.S. and Europe. But Davies also sees something darker and more ominous, the return of tribalism. In spite of the spread of democracy and globalization across much of the world in the past half-a-century, tribalism, or in its modern incarnation as identity politics in Western countries, has never completely gone away. Like some dormant virus, it has come alive on the back of discriminatory populism.
The problem, Davies emphasizes, has been decades in the making. It has to do with the fact that globalization has been creating both winners and losers even as it delivers more economic growth and prosperity to the world at the aggregate. Many such losers are in the high-income, developed countries, and their plights have been ignored by their political and business elites. When their anger and resentment became politicized, it paved the way for the rise of the far right in many western countries. Davies astutely observes that mass movements against established elites typically do not come from those stuck at the bottom in abject poverty. Instead, they take roots among the better off who find their conditions in decline relative to others. Thus, while globalization has left behind losers in both high-income, developed countries as well as in poor developing countries, anti-globalization movements are found mostly in Western democracies. In a region like Africa, the situation is very different.
In Africa, Davies sees two distinct phases of globalization in recent decades. The first was the commodity boom in the 2000s that was driven mostly by Chinese demand. It was a giddying time for many African countries, especially for oil producers like Nigeria. At one point, Goldman Sachs was predicting a $200 oil price per barrel and many expected– believing the hype–that Nigeria would shortly become the first $1 trillion economy in Africa. For a while it looked as if all the economic challenges of Africa could be flushed away with a tidal wave of cash from exporting oil and mineral resources. The narrative of Africa rising became popular, and many Africans started to believe it. Then it all came to a shuddering halt in 2014 when the price of oil collapsed.
Since 2014, Davies believes that Africa has entered into a new and more challenging phase in its globalization. Severe deficits in logistics and infrastructure, skills and education, law and order, governance and state capacity, which were seriously problematic before the commodity boom, once again reared their ugly heads. Without the boom, the way that economic development is hobbled by these deficits can no longer be covered up today. If anything, complacency and neglect during the boom years have made the problem worse. Deeper structural reform is required for embedded development in Africa to progress.
It is in this context that Asia is rapidly becoming the new hope of the future for Africa. The fact of the matter is that Africa’s trade and investment linkages with Asia have grown tremendously. Geographically, Davies sees a massive economic sub-region being formed connecting Africa, through the Middle East and the Indian sub-continent, with East Asia. Africa’s Eastern regions can more accurately be described as “near Asia” as the region tilts through commerce toward Asia.
There is no question that China is a key player in bridging these two continents. Media attention has focused on China’s Belt and Road Initiative (BRI) and associated large state-driven investment schemes such as special economic zones and mega transportation projects. BRI is indeed critical as it directly addresses Africa’s deep infrastructure deficits. Without better infrastructure and more efficient logistics, Africa simply will not be able to take off economically. From this perspective, BRI is a potential game changer for many African countries.
But Davies sees an even deeper transformation underway in Africa. In the wake of China’s government-directed investment and large state-owned enterprises are tens of thousands of Chinese entrepreneurs. Nobody knows the exact numbers, Davies believes that there are at least several hundred thousand private Chinese entrepreneurs across sub-Sahara Africa, ranging from retailers to manufacturing to consumer services to commercial farming. They have populated the special economic zones established by African governments in partnership with China and use them as a beach head from which to expand into local markets. In contrast with the large government sponsored projects, businesses run by these private entrepreneurs are more employment-intensive, and are more likely to introduce innovation that is more appropriate for local needs. In manufacturing and farming, they are also more export-oriented, leveraging their connections back in Asia. In similar fashion to Southeast Asia, these Chinese entrepreneurs are having a sizable impact on the economies of sub-Sahara Africa.
Davies is quick to point out that while Chinese entrepreneurs dominate in numbers, Korean and Indian entrepreneurs are also in Africa in force, and are thriving in different economic and market niches. Korean companies exporting and assembly consumer goods from electronics to cars often dominate their market segments in South Africa. Indian entrepreneurs, on the other hand, have the advantage of being able to leverage the vast networks of the Indian diaspora in Central and East Africa, and in South Africa as well, that go back many generations. The trust and connectivity through the Indian diaspora is undoubtedly facilitating economic integration between Africa, the Middle East and the Indian sub-continent. They are the catalysts that are accelerating Africa’s business development locally, while fast-tracking trade and investment connections with Asia. Davies sees a widespread Guajarati and Muslim diaspora as India’s counterweight to China’s state-driven BRI strategy.
However, to fully realize the potential of Africa’s connections with Asia, Davies believes strongly that a deep transformation of how the government is run and how the economy is managed in Africa is required. In this connection, Davies worries about the risk that many African governments are misinterpreting China’s developmental experience. There is a myth of a “China model” being perpetuated among certain African leaders and governments. Supposedly, China’s success has to do with its large state-owned enterprises and the government’s active role in “commanding” the economy. Not surprisingly, such a “China model” has tremendous appeal to many aspiring African statists and autocrats.
As a keen student of the Chinese economy, Davies sees no such “China model.” For him, China exemplifies experimentation and pragmatism in how it manages its economic development. Behind its (hollow) ideological rhetoric, China’s economic development is an unceasing process of trial and error, learning from mistakes, rapid course corrections when things are not working out, and replicating successes wherever possible. Davies contends that the government is powerful in China not in the sense of controlling the economy, but in having the institutional capacity for directing policies to adapt to changing circumstances and for effective implementation. As far as Davies is concerned, this should be the real China model for Africa–an effective and pragmatic state focusing almost obsessively on development success.
In this connection, leadership is of paramount importance in Africa for Davies. Given the more challenging global economic environment, Africa needs more than ever before leaders who are pragmatic when it comes to getting economic development policies right, who are visionaries when it comes to uniting the disparate communities in the society to embrace a common citizenship, and who are true nation-builders when it comes to making public institutions accountable for better governance.
While Davies is generally optimistic about the prospects of Africa, especially in terms of the potential of economic integration with Asia, he is also unflinchingly realistic. Africa needs to continue to globalize in a world where economic risk is rising and countries now need to work extra hard to grow. And that is a very tall order. Given that a prerequisite for success is effective and adaptive leadership, there is no escaping the conclusion that in many parts of Africa there are huge gaps between what is and what should be.
At the personal level, however, Davies is determined that he and his family will continue to globalize. He is married to a South African of Muslim Indian descent, with three lovely young children. Davies’ family is well travelled, multilingual, multiracial, multireligious, and multinational. His children attended Jewish kindergarten, an Anglican primary school, and madrassa classes over weekends. Davies’ own professional career straddles academia and business; and has forged an admirable ability to work seamlessly across Africa, Europe, the US and Asia. This is one African family that will thrive regardless of whether Africa can succeed in its attempts to progressively develop and globalize.