“Show me the money!” These are the words uttered by Rod Tidwell (a character played by Cuba Gooding, Jr.) in the 1996 film “Jerry Maguire”, directed by Cameron Crowe. Jerry Maguire (Tom Cruise) is the once-cocky sports agent who was out of a job and desperate to hold on to clients. Tidwell, the Arizona Cardinals wide receiver, said this after he colourfully expressed his unhappiness with his existing contract to the agent.
This line is relevant in every business transaction as it is a passionate plea for a return on investment. But economic diplomacy, though within the same context, is much greater than this and as such we should tweak this line: “Show me the value!” And this is what the drafters of South Africa’s National Development Plan (NDP) said to the Department of International Relations and Cooperation when they demanded they justified the value the country derived from the humongous budget it spent on its diplomatic missions abroad. This is the question that the national development strategic plan in every country asks of its diplomats.
So last week I tried to help how our diplomats could answer this question. You may remember I indicated in this news portal that I had the privilege of conducting a two-hour virtual presentation to South Africa’s diplomats across the world. Many of the Jambo Africa Online readers felt robbed that I didn’t share the essence of my presentation for them to have the gist of it. Although all my previous Publisher’s Comments speak to economic diplomacy as an outcome of the nation brand management that I always propagate for, let me oblige as my readers’ wishes are my command – otherwise I wouldn’t be in this business of knowledge productión and distribution.
What I presented was a succinct synopsis of what could be seen as a full module on economic diplomacy that could be presented over a few days or even a week. Although I touched on my practical experience as a former South Africa’s Consul-General to Milan and the work I’ve been recently doing through my company, Brandhill Africa™, I have in partnership with the agency, Growth Diagnostics (in collaboration with the North West University Business School), developed an economic diplomacy programme not only for the foreign affairs departments (including their diplomatic missions), but also for the non-state actors as the theory of public diplomacy has clearly indicated international relations, with the advent of globalisation, is no longer the purview of state-to-state engagements, but also non-state actors such as the private sector (who are the delivery drivers of economic growth as the state simply creates an enabling regulatory environment), civil society and even individuals have vested interests in a country’s foreign policy. So every stakeholder claims a pound of flesh from their country’s national interest. So our programme is also customised to local and provincial governments; business community (corporates and chambers); not-for-profit institutions (NPCs and NPOs) and individual entrepreneurs.
In my previous life as a senior diplomat, I’ve hosted municipalities and provinces that landed in Italy without having constructed their expected outcomes for their ourward missions (and we had to urgently put together an itinerary for them to ensure the trip wasn’t a fruitless expenditure); saw them making commitments that they never followed through (yes, they were quick to sign twinning agreements which only gathered the “proverbial dust on their shelves”); and I also heard municipalities and provinces saying to us as a mission so-and-so will be in your host country so we are just telling you as a courtesy because we don’t want your involvement in the visit (yes, not knowing that we knew more about the very same people they were meeting and we could have shared with them valuable intelligence prior to their meetings). Let me hasten to say some ministerial and provincial delegations did very well as they planned their trips with us – such as Gauteng and Mpumalanga premier-led outward missions. Similarly, I’ve seen corporates landing in Italy without doing prior research on how business was conducted in their host countries and our appeal for a diplomatic mission to be every visitor’s first port of call before engaging with their counterparts fell on deaf ears. On a lighter though serious note, given a chance we could tell even a female tourist to Italy that if you accepted an invite for a lunch or dinner date from a potential suitor or friend, be prepared to pay 50% of the bill as it was a local tradition. Most of South African visitors only reached out to us when their visits went terribly wrong.
Our programme’s mantra, “facilitating with confidence”, eloquently captures its outcomes-based approach that ensures our delegates will be armed with sufficient knowledge to navigate the murky world of diplomacy and international business with confidence. Indeed most countries would say today that a top priority of their diplomatic system for their missions abroad is the promotion of their country’s national economic interests. Many embassies spend the bulk of their time on economic work. For example, the David Cameron UK government, within weeks of taking office in mid-2010, summoned all ambassadors to tell them that helping British business was their topmost priority. In 2012, the Dutch Foreign Ministry implemented reforms aiming “to promote Dutch interests, with special focus on economic diplomacy”. I can vouch to the effectiveness of their strategy as in 2011 as part of our orientation as heads-of-missions-designate, my cohort was taken for a month to the Netherlands’ Clingendal Institute of International Relations – an independent think tank and academy on international relations based in The Hague. The trainers were specialists from all over the world.
Economic diplomacy differs from political diplomacy in one key aspect. Almost always, the direct beneficiaries or “end-users” are business enterprises, not governments per se. This means that the government – the foreign affairs ministry and embassies, trade and industry ministry, its economic agencies and promotional bodies – are facilitators, catalysts, and agents.
Globalisation means countries are competing for tourism and foreign direct investments (FDI) and opening foreign market access opportunities for their strategic exports. These are the three core objectives of economic diplomacy.
Foreign policy engagements are no longer only about state-to-state relationships, but increasingly state to non-state actor (business and civil society) relationships – I have to emphasise this. In the context of bilateral relations, it is key for diplomatic missions to facilitate and attract FDI inflows and promote tourists’ visits to their home countries and at the same time facilitate increased foreign trade in goods and services.
Economic diplomacy is key considering South Africa’s worsening share of global FDI. In 2021 Egypt became Africa’s biggest beneficiary of FDI and this afforded it the opportunity to overtake South Africa as the second biggest economy on the continent after Nigeria.
So our programme proposal is key since so many in diplomatic missions and international relations environment – across all the three sectors – lack economic literacy skills as diplomacy was historically almost purely political. We wish to close this gap via extensive and practical training.
Furthermore, we will also provide our clients with support services, like regular global and country intelligence research, which will unlock insight in their daily engagements with various stakeholders – particularly investors, tourists and consumers – that can be leveraged to the benefit of South Africa’s national interests.
Empowering diplomatic missions and other interested stakeholders with economic diplomacy literacy skills will not only boost their confidence but also unlock valuable investment attraction.
Recent anecdotal estimates are that public sector entities from South Africa facilitate approximately 10% only of all FDI into the country. The rest is facilitated by the private sector like legal firms, analysts and consultants. Improving the skillset and tacit knowledge of public servants in this regard could unlock significant additional investments for South Africa.
This programme is also relevant to provincial Offices of the Premiers; provincial Departments of Economic Development and Tourism; provincial Trade and Investment Promotion Agencies (TIPAs) and provincial Economic Cluster Departments.
Lastly, since local government and its entities are centres of Economic Development and at the coalface of service delivery, it is equally important for them to be empowered via economic literacy skills through our programme. Offices of the Mayor; Members of the Mayoral Committees; and City Economic Development Agencies form part of a critical stakeholder matrix.
This is done mindful of DIRCO remaining the primary driver of South Africa’s international relations efforts and coordination centre of public sector engagements as per the constitutional prescripts of the country.
What is economic diplomacy?
Economic diplomacy could be defined as the application of tools of diplomacy to assist with the removal of barriers to trade and investment, and to the resolution of policy conflicts arising from the globalisation of the world economy.
And to assist with the work of delegations at standard setting organisations, i.e., the World Trade Organisation (WTO). Dealing with economic policy issues in the multilateral fora like the United Nations Conference on Trade and Development (UNCTAD) and standard setting organisations like the World Intellectual Property Organisation (WIPO). Moreover, economic diplomats monitor and report on economic policies in foreign countries and provide home government advice on how to best influence these.
In addition, economic diplomacy can also be interpreted as the conduct by government officials in the context of negotiations and other relations between nations – the art and science of conducting such relations, the skills in managing negotiations, people handling and more, to ensure little or no ill-will.
Another perspective of economic diplomacy rests on the management of international relations by negotiations, the method by which such relations are managed by ambassadors and other officials, the skills required for such affairs, the diplomatic body, adroitness in personal relations and tact. Economic diplomacy employs economic resources either as rewards or sanctions, in pursuit of a particular foreign policy objective. Often referred to as “economic statecraft”. An economic diplomat should be professional and monitor and report on economic policies in foreign countries and advise home governments on how to best influence them.
Economic diplomacy deals with articulation of foreign policy in the real world of trade and investment between nations, where high principles and objectives set out in the policy are fleshed out and put into effect.
Useful tools in the field includes:
• Economic and trade and investment analysis (including in the fields of politics, law and social relations).
• Negotiation and coalition building.
• Public and private communication.
In comparison to the counterparts from developed countries, when it comes to the application of economic diplomacy tools, developing country representatives often do not perform at the same level of efficiency. One reason is relative inadequacy of education and training in economic diplomacy. An individual’s capacity to negotiate is one of the crucial determinants of the outcomes of such a process.
Considering this gap and realising the vacuum in terms of the absence of an institutional base in developing countries to offer practical training and education in economic diplomacy and related aspects, we compiled our programme to assist in closing the gap.
Our programme outline
This programme will introduce delegates to the theories and analytical frameworks relating to decision-making and negotiation in international economic relations. Relevant literature on the application of theory to understanding the factors shaping international economic negotiations will be shared and discussed. Coverage of the respective roles of the main actors, institutional settings and processes involved in domestic decision-making and international negotiation, and their interaction with each other, as well as the process of international economic negotiations.
No prior knowledge of economics is required to attend the programme. The programme is practical, focused and designed to deliver impact.
Our programme objectives
The programme’s objectives can be summarised to:
• Meet the imperative of having trained government officials/corporate managers at various departments/organisations who are involved in economic diplomacy.
• Ensure coherence between South Africa’s domestic policy on trade and investment related issues with international commitments.
• Enhance skills by developing/strengthening capacity for taking effective part in trade and investment negotiations and implementation aspects of related international agreements.
By the end of the programme, delegates should be able to:
• Describe how economic diplomacy evolved, and how it plays a key role in international affairs, connecting closely with domestic priorities and development objectives in states.
• Explain the role played by different actors, state and non-states, in the development of “whole of country” policies, and how a proper diplomatic system works with all key stakeholders.
• Apply the learning to the running of an economic section, and to the manner in which commerce chambers of individual enterprises can work with the foreign ministry and with diplomatic missions in the commercial and economic arena.
• Apply the learning to the promotion of exchanges of business delegations, and participation in trade exhibitions.
• Assess current trends in the framework conditions of international trade and other economic exchanges.
Some of the topics covered
The programme content is practical but covers a range of vital areas to familiarise delegates with the complex global environment and will contain content including:
Evolution of economic diplomacy. Diplomacy starts with trade: consulates precede “embassies”; the Levant Company sets up the English embassy in Constantinople, 1583; the subsequent advance of high politics; the age of imperialism and the slow recovery of economic diplomacy. Diplomacy ends with trade: growth of importance of international trade and capital flows; new political need of diplomatic services to respond to business lobbies at home.
Economic diplomacy today. Principal content and stages traversed by countries in practice of economic diplomacy; public diplomacy, image management and economic diplomacy; how economic diplomacy connects with other branches of diplomatic work; working with home actors, learning from them.
Regulatory environment and domestic context. Extent and consequences of “managed trade”; dumping and complaints procedures; trade negotiations; role of chambers of commerce and industry associations; special role of embassies in such domestic outreach; role of think tanks and NGOs; public diplomacy dimension of trade.
Embassy’s economic section. Staff of the economic section, including the importance of locally recruited personnel; position of the section within the embassy and comparisons between diplomatic services; how many ambassadors have had significant experience of economic diplomacy? Does economic diplomacy have the real priority that usual rhetoric suggests?
Trade and investment promotion. Importance of trade, focus on exports, pursuit of new markets and new products; dispute settlement and role of official agencies; value and domestic role of FDI, portfolio, private equity and other forms of investment; broad and targeted promotion; role of specialised agencies; two-way FDI flows.
Craft skills. Business delegations and trade exhibitions: country promotion exhibitions and specialised trade fairs; selection, observation and participation; exhibition techniques and best practices; organisation of business delegations; role of missions in both outbound and homebound groups; planning, preparation and follow-up; delegations accompanying summit and other official visits.
Economic sanctions. Why economic sanctions became popular in the 20th century; variety of purposes they are designed to serve; different kinds of sanctions; role of embassies; how states defend themselves against sanctions, including cultivation of business lobbies (Iraq under Saddam; Iran today); smart sanctions versus stupid sanctions.
WTO and Free Trade Areas (FTAs). Basic features of the multilateral trading system; WTO process and its future; likely outcomes of current, convoluted negotiations; preferential trade agreements (PTAs), including commonalities and differences; are FTAs and PTAs building or stumbling blocks to a multilateral trading system?
Ethics in economic diplomacy. Corruption risks in attracting investment include nepotism, cronyism and rent-seeking. IPAs may favour recommending companies controlled by family members, friends or party members, regardless of their merit or suitability to the investor. Domestic companies may also IPAs to be put at the top of their list for recommendations. If an investment is important enough to significantly alter the socio-economic well-being of a country, investors may use this knowledge to hold a country captive and demand further benefits or market favourability to the detriment of the population. Policy capture by a small group of investors may shut out other investors or local competitors in the future.
Nation brand management. Nation brand index for investment promotion, “the Zebra paradigm”. Interrogation of forty (40) variables ranked in order of relevance/significance to investor decision making. Regular tracking studies on investor perceptions of SA nation brands and news feeds on investment opportunities in the region.
Global intelligence and analysis – training support. Part of the programme are trade, investment and economics research, analysis and insight support. Given that many of the issues facing the world have a global dimension, we are ideally positioned to offer custom research support on the phenomenon of globalisation as it gathers pace and impact. Leading organisations rely on our team for data, analysis and forecasts to keep them informed about global developments, some of which include:
i. Risk Analysis: Identification of actual and potential threats around the world and to assist delegates in understanding the implications for their organisations.
ii. Industry Analysis: Analysis of key themes for key industries in major economies.
The support services are bespoke and designed to provide solutions specific to client’s needs, such as trade, investment, economics, international relations and public policy. All is evidence-based research ideal for policymakers and stakeholders seeking clear and measurable outcomes.
The support will provide independent, thought-provoking content, and provide clients with knowledge, insight, and interaction that support better-informed strategies and decisions. Our team have access to a network led by experts with in-depth understanding of the geographies and markets. Through a distinctive blend of support services, our team delivers a range of global focused analysis on prevailing conditions.
• Country Analysis: Access to regular, detailed country-specific economic and political forecasts, as well as assessments of the business and regulatory environments. Our joint team monitors the world to prepare DIRCO for what is ahead. Country analysis provides forward-looking data and analysis to understand a country’s political, policy and economic outlook. Specific areas of this service include:
i. Global economic outlook and regular insights spanning politics, economics and market-moving topics.
ii. Overviews of countries and forecasts.
iii. Industry analysis on the outlook for major industries in the large markets.
iv. Regulatory intelligence on the policies that will impact the business environment in key economies.
v. Commodity supply, demand and prices outlook for critical goods.
vi. Macroeconomic data as well as historic trends.
Our coverage on global, regional and country-level analysis is led by our joint team and network access of expert research analysts. Our approach is unique; deliberately designed to intersect politics, policy and the economy, our methodology leads to a more nuanced perspective than simple number crunching. Our team is fiercely independent and rightly so. This ensures our clients can trust the analysis and apply the insights it offers with confidence.
This is our offering which could ensure Africa and her countries increase the global FDI share from the paltry 5.2%, with an annual increase of only 1.1% from 2020. We also have to be mindful of the fact while most African countries saw a moderate rise in FDI in 2021, in South Africa around 45% of the total was due to an intrafirm financial transaction. The work is cut out for us. As the cliche goes: we’re open for your business, make that call.
By the way, as I mentioned last week again, my new book will be published by end of this month. I argue in it that the advent of globalisation – characterised by hyper-competition for foreign direct investment and tourism; and access to and dominance in the markets – has catapulted economic diplomacy to the centre of international relations. How can Africa and her countries claim their stake in the global marketplace? This book endeavours – through its autonomous and yet interdependent chapters – to suggest, uncompromisingly without being prescriptive – practical solutions grounded in time-tested and tried global theoretical formulations but contextualised within pan-African epistemologies for relevance and suitability to the continental realities. The book attempts to contribute to the efforts to change the narrative in brand Africa and to help her reclaim her original position as the cradle of civilisation whose essence was best captured by Pliny the Elder who mused: “Ex Africa semper aliquid movi” – “out of Africa there is always something new”. Though the book is a guide, it’s written accessibly and eloquently decorated with bits and pieces of anecdotes interspersing theory and practice of nation brand management.
Enjoy your weekend.
Saul Molobi (FCIM)
Publisher: Jambo Africa Online
Group Chairman and Chief Executive Officer: Brandhill Africa™
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