December 31, 2021

Stop Waiting, the New Normal Is Already Here

"Waiting for the new normal" is what I hear often in my discussions with business leaders. However, as we close out a year as the world deals with the Omicron variant of covid-19, the new normal seems elusive and distant. Or, perhaps, we are living in age of the new normal. As explained by The Economist, "The era of predictable unpredictability is not going away. In 2021 people have been yearning for something like stability. Even those who accepted that they would never get their old lives back hoped for a new normal. Yet as 2022 draws near, it is time to face the world's predictable unpredictability. The pattern for the rest of the 2020s is not the familiar routine of the pre-covid years, but the turmoil and bewilderment of the pandemic era. The new normal is already here."

Air travel, for example, forever changed as a result of the terrorist attacks of September 11th, 2021. "In the years that followed each fresh plot exposed an unforeseen weakness that required a new rule," The Economist notes. "First came locked cockpit doors, more armed air marshals and bans on sharp objects. Later, suspicion fell on bottles of liquid, shoes and laptops. Flying did not return to normal, nor did it establish a new routine. Instead, everything was permanently up for revision."

What is more, "The world is similarly unpredictable today and the pandemic is part of the reason. For almost two years people have lived with shifting regimes of mask-wearing, tests, lockdowns, travel bans, vaccination certificates and other paperwork. As outbreaks of new cases and variants ebb and flow, so these regimes can also be expected to come and go. That is the price of living with a disease that has not yet settled into its endemic state."

"For much of humanity the new year is a time for reflection on the past, The Economist says in another article. "But many minds will also inevitably cast forward. If the fitful past two years of the covid-19 pandemic offer any lesson, it is that the future remains murky and uncertain."

The article, which contains the image below, adds, "Not to be deterred, we have turned to prediction markets to give us a glimpse of 2022. Pooling data from punters on exchanges like Betfair, Metaculus, PredictIt and Smarkets, can offer a theoretically better guide to the future than plunging headlong into the unknown. Will the pandemic claim millions more? Might Russia invade Ukraine? Could America's high inflation persist? And will Tom Brady win an obscene eighth Super Bowl? Another eventful year awaits."

A business' success is often determined by how it can quickly adapt to changing circumstance cause by natural disasters, health crises, or financial market volatility, just to name a few. Defined as an ability to recover from or adjust easily to misfortune or change, resilience is a word that must be in the lexicon of all business leaders. As explained in a post on this forum about an article published by Dr. Linton Wells II, an expert who focuses on links between policy, technology and decision-making, especially in building resilience and cybersecurity, "Resilient companies produce impressive results. They have shown positive earnings and sales growth during recessionary years, improved their corporate image by effective strategic responses to natural disasters, raised dividends for several consecutive decades, and won back market share against low cost and online competitors."

While it is ideal to have more certainty on what may take place in the future, this is simply not possible. Whether it is for our home, business, or community,, the best we can do is prepare for uncertainty. There are events we can prepare for as evident in a video entitled "The World Ahead 2022: five stories to watch out for," but we must also create plans to quickly adapt to those unforeseen events.

Recognizing that the new normal has arrived, we should be asking: How can we ensure future-readiness by preparing for disruptions, be it a pandemic, natural disaster, geopolitical crisis, or a volatile financial market?

What are your predictions for 2022?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 29, 2021

While Mobile Technology Offers Life-Changing Benefits, Research Shows Many Persons With Disabilities Remain Unconnected and Digitally Excluded

According to a fact sheet produced by the World Health Organization (WHO), one billion people, or 15 percent of the global population, live with some form of disability. And the number of people living with disability are dramatically increasing due to demographic trends and increases in chronic health conditions, among other causes. In consideration of this information provided by the WHO, it was with great interest to read a report produced by the GSM Association (GSMA), a UK-based organization that represents the interests of mobile operators worldwide, that says "Mobile devices and services offer life-changing benefits to persons with disabilities, such as enabling access to basic services and independent living. Despite this potential many persons with disabilities remain unconnected and digitally excluded. It is estimated that around 90 percent do not have adequate access to the assistive technologies (AT) they require. Mobile-based ATs, especially smartphones, could be a valuable and cost-effective tool for persons with disabilities."

The report presents key insights into the mobile disability gap. Presenting research from the following seven low- and middle-income countries (LMIC): Algeria, Bangladesh, Guatemala, India, Kenya, Nigeria, and Pakistan, GSMA's research "revealed that persons with disabilities are less likely to own a mobile, especially a smartphone, and are even less likely to use, or be aware of, mobile internet."

In explaining the research's methodology, the GSMA says "The Washington Group Short Set of Questions was used to identify persons with disabilities. Respondents who reported that they had 'a lot of difficulty' or 'cannot do at all' in at least one of the functional domains were considered a person with disabilities revealed that persons with disabilities."

Key findings of the report include:
  1. "Persons with disabilities have lower levels of mobile ownership than non-disabled persons in all countries surveyed. Bangladesh has the widest gap, where persons with disabilities are 55 percent less likely to own a mobile phone than non-disabled persons, and the smallest gap is in Kenya and Pakistan at 11 percent.
  2. "Despite the life-enhancing potential of smartphones as an assistive technology and a gateway to digital inclusion, persons with disabilities are significantly less likely to own a smartphone than non-disabled persons. The disability gap in smartphone ownership is wider than the gap in overall mobile ownership in most of the survey countries.
  3. "There is a significant disability gap in mobile internet use. In each of the survey countries, persons with disabilities are significantly less likely to use mobile internet than non-disabled persons.
  4. "Across all survey countries, fewer persons with disabilities are aware of the mobile internet than non-disabled persons. This is a significant barrier that prevents persons with disabilities from using and benefitting from mobile internet.
  5. "In India and Pakistan, mobile users with disabilities who are aware of mobile internet but do not use it reported that a lack of literacy and skills is the main barrier to usage. Other major barriers include lack of perceived relevance, safety and security and affordability."

The GSMA correctly asserts that "Key stakeholders in the mobile industry have a critical role to play in closing the mobile disability gap and ensuring digital inclusion for all. This includes policymakers, international organizations, non-governmental organizations, organizations for persons with disabilities (OPDs), mobile operators and other ecosystem players, including start-ups and device manufacturers."

What is more, the report offers the following recommendations for stakeholders interested in eliminating the mobile disability gap:
  • "Understand the mobile disability gap and how to reach and serve persons with disabilities better. Accurate and reliable disability-disaggregated data is a crucial tool for stakeholders to understand and address barriers to the digital inclusion of persons with disabilities. However, in most markets, disability-disaggregated data related to the access and use of mobile-enabled products and services is lacking, and has hampered digital inclusion efforts. It is critical that policymakers, the public and private sectors and digital players invest in, and collaborate on, accurate, ethical and effective data collection. This will help to monitor progress and inform the design of inclusive and relevant products, services and innovations for persons with disabilities.
  • "Raise awareness of mobile internet and its benefits for persons with disabilities. Awareness of mobile internet is lower among persons with disabilities than non-disabled persons, limiting their potential usage of mobile internet. To raise awareness of the benefits of mobile internet and smartphones as an assistive technology, stakeholders can develop campaigns targeting persons with disabilities and explore partnerships with OPDs to reach persons with disabilities and showcase how mobile services are relevant to their lives.
  • "Develop inclusive products and services that meet the diverse needs of persons with disabilities. Once persons with disabilities are aware of mobile internet and its benefits, it is important that they have access to relevant products and services that meet their needs. It is important that stakeholders ensure that existing products are accessible, and that new content, products and services are created with persons with disabilities in mind (e.g. user-centered design and inclusive or universal design practices) to improve accessibility and usability.
  • "Build the digital skills of persons with disabilities. Many persons with disabilities are digitally excluded because they do not know how to use mobile and mobile internet in a way that meets their needs. Stakeholders can support the delivery of mobile digital skills programs that train persons with disabilities (and their caregivers/relatives) how to use mobile internet to meet their needs. They can also explore partnerships with OPDs or other relevant organizations to teach persons with disabilities how to access and use accessibility features and mobile-enabled products and services. Stakeholders can use resources such as the GSMA's Mobile Internet Skills Training Toolkit (MISTT) to train people how to access and use mobile internet services, including accessibility features. The toolkit is a visual, easy-to-follow guide that helps trainers demonstrate the functionality and value of the internet on internet-enabled mobile phones.
  • "Ensure products and services are affordable for persons with disabilities. Smartphones, which typically provide the most accessibility features and drive substantially higher mobile internet use, are often unaffordable for persons with disabilities. Mobile operators can design solutions to make internet-enabled handsets more affordable to persons with disabilities, such as innovative financing models and 'data-light' accessible versions of mobile apps and services."

A more detailed set of recommendations for the mobile industry can be found in the GSMA's Principles for Driving the Digital Inclusion of Persons with Disabilities.

Do you agree with the recommendations for eliminating the mobile disability gap? What inclusive products and services are you developing to meet the diverse needs of persons with disabilities?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 27, 2021

Japan: On the Front Line

Image: The Economist
Reflecting on my earliest childhood memories, Japan is a country outside of my home country of the United States that I first learned about. Starting with my grandfather sharing his experience of serving in the U.S. military at Pearl Harbor, Hawai'i on Dec. 7th, 1941 (an experience that does not reflect the east Asian country in a positive light), to my fourth grade teacher, Ms. Murakami, a Japanese-American who shared aspects of the country's unique culture, to summer visits to my grandfather's sister-in-law in Florida where Aunt Etsi taught me to say a few Japanese words and how to use chopsticks, I find the country fascinating.

During my professional career, I appreciate having the privilege of spending a significant amount of time in Japan. These experiences, some of which are discussed on this forum, include helping a Japanese medical device company create a strategic plan to export their product to key international markets, advising an American company to deploy its services in the country, or building relationships with business and government leaders from Kobe, Japan's only city to have a sister city relationship with Seattle. Therefore, it was with great interest to read a special report produced by The Economist about the world's third largest economy.

Accompanying the report, which is comprised of eight articles, an editorial notes that "Two takes are often told about Japan. The first is of a nation in decline, with a shrinking and ageing population, sapped of its vitality. The second is of an alluring, hyper-functional, somewhat eccentric society—a nice place to eat sushi or explore strange subcultures, but of little wider relevance to the outside world. Both tales lead people to dismiss Japan. That is a mistake."

The Economist's report argues that "Japan is not an outlier—it is a harbinger. Many of the challenges it faces already affect other countries, or soon will, including rapid ageing, secular stagnation, the risk of natural disasters, and the peril of being caught between China and America. The fact that some of these problems hit Japan early makes it a useful laboratory for observing their effects and working out how to respond."

The report begins by explaining that "Japan's new imperial era began in spring 2019, when a nondescript man in a dark suit revealed its name: Reiwa. The first character, rei, means 'auspicious' or 'orderly'; wa means 'harmony' or 'peace' (officials chose 'beautiful harmony' as the English rendering). For the first time the name came not from classical Chinese literature, but from Japan's Manyoshu poetry anthology, compiled over a millennium ago: 'In this auspicious (rei) month of early spring, the weather is fine and the wind gentle (wa).'"

With respect to Japan making a "case for a more active and interventionist security policy," The Economist points out that "If rivalry between China and America is the big story in 21st century geopolitics, no other country, except perhaps Taiwan itself, has as much influence as Japan over how it will unfold—nor as much to lose if it goes badly. 'Japan is the front line,' says General Yoshida Yoshihide, chief of the army. This reality is forcing a realization that, although there can be no substitute for America, Japan must supplement it in order to maintain a favorable balance of power."

Moreover, "Japan is strengthening defenses and building ties with others. Tanaka Akihiko, of the National Graduate Institute for Policy Studies (GRIPS) in Tokyo, speaks of a shift from a 'one-pillar' to a 'multi-pillar' architecture. 'We can't rely on America alone,' he says. That does not mean turning away but keeping America close by contributing more. Nor does it mean antagonizing China, upon which the economy depends. 'As the rest of us figure out how to compete with China without catastrophe, Japan has been there for at least a decade and Japan has the best strategy,' says Michael Green, a former official at America's National Security Council."

On the topic of climate change, Japan is prepared for disaster, but unprepared for climate change. "As the threat from natural hazards grows, from climate change-fueled fires to zoonotic pandemics, the world must live with more risk," says The Economist. "The countries that fare best will be the resilient ones. In 'The Resilient Society,' Markus Brunnermeier, an economist from Princeton University, argues that "Resilience can serve as the guiding North Star for designing a post-covid-19 society."

The discussion on climate change importantly adds: "The biggest lesson from Japan is the value of preparation." As Karashima Yukari, who works at the Peace Boat Disaster Relief Volunteer Center, a Tokyo-based nongovernmental organization that assists people in disaster-affected communities and strengthen the capacity of local communities to response to disasters both in Japan and around the world, says, "'It's too late if you start acting after the disaster happens.' That this sounds banal in much of the world makes its absence more striking."

What is more, "Of $137bn provided in global disaster-related development assistance from 2005 to 2017, 96% was spent on emergency response and reconstruction, less than 4% on disaster preparedness. Donors prefer high-profile rescue work; the media cover disasters when they happen, not when they do not. Many governments treat prevention as a cost, not an investment. But natural hazards are not always disasters. 'The hazard becomes a disaster when the coping capacity is too weak,' says Takeya Kimio, an adviser to Japan’s overseas development agency. In 2015 he promoted the 'Build Back Better' concept in the UN Sendai Framework, a global pact on disaster-risk management."

The special report also discusses how Tokyo, the world's biggest city, is also one of the most livable. "[W]ith 37m residents in the metropolitan area and 14m in the city proper," Tokyo "offers lessons to developing cities elsewhere. In 1950, 30% of the world's population was urban; by 2050, 68% will be. Much remaining growth will be in megacities of more than 10m in Asia and Africa. There are 33 such cities now; by 2030 there will be 43. As Tokyo grapples with what to do when cities age and shrink, it can also serve as a case study for other rich cities."

Japan is learning to cope with an ageing population, notes The Economist. "Demographic change has two drivers often lumped together: rising longevity and a falling birth rate. Their convergence demands 'a new map of life' says Akiyama Hiroko, founder of the University of Tokyo's Institute of Gerontology." Furthermore, "Infrastructure created when the population was younger and the demographic pyramid sturdier must be redesigned, from health care to housing to transport. The new reality demands a 'completely different way of thinking,' says Kashiwa Kazuyori, head of Gojome's town-planning department. When he started work in the 1970s, the focus was on growth. Now it is about managing decline."

Part of managing the decline of an ageing workforce is replacing retiring workers with foreign workers. Japan, perhaps unfairly, is often criticized about its reticence of allowing foreign workers to immigrate to the island nation. An article focused on how the ranks of foreign workers are growing fact but from a low base, however, says "One in every 55 workers is foreign, up from one in every 204 in 2009."

As for the economy, The Economist explains how "Japan is the canary in this coal-mine":
In the 1980s its booming economy struck fear in the world. After the bubble burst in the 1990s, public debt ballooned and deflation set in. Many in the West said Japan's debt was unsustainable and the Bank of Japan (BOJ) should do more to boost inflation. In 2013 the BOJ's governor, Kuroda Haruhiko, embarked on dramatic monetary easing. The debt hovered around 230% of GDP. A strange thing ensued: no fiscal crisis struck, nor did inflation come near the 2% target. "The standard textbook on macroeconomics needs an additional few chapters—it doesn't capture the problems Japan faced," says Shirakawa Masaaki, Mr Kuroda's predecessor.

Japan is among many countries that has experienced a decline of worker productivity. As the article on the economy explains, "Boosting productivity could help to offset the impact of the shrinking population." Yoshikawa Hiroshi, president of Rissho University in Tokyo, "reckons that innovation is key to growth, and that ageing creates new problems that entrepreneurs can solve. Generational shifts may help. While many still prefer stable sarariman (salaryman) jobs in big firms, some of today's brightest graduates go into startups." Encouragingly, I have observed a rise of Japanese startups in the past several years that are developing innovative solutions in artificial intelligence, climate tech, data analytics and machine learning, digital healthcare, robotics, and enterprise services.

The report concludes with an assertion that Japan "would be better with younger and more dynamic leaders." The ruling LDP party has won every election "but twice since the party's founding in 1955." The article importantly explains that "Without a threat of losing power, any ruling party becomes unaccountable. Demographic change exacerbates things: some 20% of local politicians are elected without a contest. The result is a government that, in many ways, does not look or think like its people. Less than 10% of new Diet members are women; just three out of 21 cabinet ministers are. Only two are under 50. Dynastic politicians still dominate."

What is more, "Society is changing faster than established powers. Japan is in the midst of a quiet transformation, argues Hosoya Yuichi, a political scientist: 'There is a new wind, but within an old-fashioned structure.' On social issues from gay rights to family law, the LDP is out of step. Many voters feel they cannot change the system, which drives some into business or civil society, not politics."

While attending a conference about Japan's importance in the future of Asia in 2016, I was asked by a fellow attendee about my thoughts on economic engagement in Japan. In light of China's rapidly growing economy at the time, coupled with Japan's secular stagnation of low inflation, low interest rates and low growth, I replied that a business would be foolish to consider entering the Japanese market. I was wrong.

Despite tightening regulations on the private sector, increased censorship of the media and Internet, inconsistent policies on currency repatriation, and issues concerning human rights, China's market may be too big for some businesses to ignore. Japan, however, with its independent judiciary, democratic government, and open economy, presents an opportunity that businesses of all sizes should explore.

Do you agree that Japan is a harbinger, not an outlier? What business or investment opportunities are you seeing in the country?
Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 26, 2021

Recommendations on Making Smart Cities and IoT a Reality in Latin America

In response to the previous post about Latin America's mobile economy including the projected growth of the region's Internet of Things (IoT) market, a reader shared a link to a report entitled Making smart cities and IoT a reality in Latin America: a quick guide for decision-makers. Noting that IoT "brings about an enormous opportunity for Latin America," the report, which was produced by the GSMA, a UK-based organization that represents the interests of mobile operators worldwide, predicts that "IoT solutions will innovate across a great variety of industries, such as energy, healthcare and transportation. They will combine communication networks and existing 'off-line' services increasing productivity, diminishing waste and improving citizens' wellbeing."

In addition, the report, which is available in English and español, explains that "[i]f governments and policymakers in Latin America want to realize the full benefits of the IoT and help close the technology gap between the region and developed countries they should take action, they should:
  • "Resist the temptation to consider IoT services as traditional telecom services. Legacy regulation – that is, regulations established long before the IoT became a reality to deal with traditional voice and data services, will be most often irrelevant, will unnecessarily stifle IoT innovation, slow down take up and ultimately damage consumer and business in the region
  • "Facilitate a cross-regulator, cross- department dialogue and strategy across the various government administrations. For example, utility and telecom regulators should define and work together on how to promote smart meters; Transport and Communication ministries should define together how communication networks will serve roads; Smart city planners from different towns should work together to define best practice and work on common standards."

On designing a comprehensive IoT policy, the GSMA recommends that policymakers "build a 3-step plan consisting of scoping the country's needs and potentials, estimating the positive impact on different economic areas and IoT verticals, and then designing and implementing specific actions to enable such growth." As for governments serving as demand enablers, the report suggests that "where possible, migrate towards utilizing IoT-enabled solution for public services – from utilities to urban mobility and healthcare." Developing public-private partnerships (PPPs) "and seeking/offering various sources of funding can be an important step to secure this goal."

Lastly, with respect to privacy, security, and standardization, the GSMA presents four recommends on how "governments should resist the temptation to create specific rules and national standards for IoT":
  • A general data protection law that applies horizontally to all industries and services – not just IoT – is an important measure to secure trust in the IoT and guarantee consistent levels of protection for users.
  • On what concerns security, it is important that governments support industry-led best practices and standards, which are constantly evolving to overcome threats, making it quicker and more cost-effective to adapt than rigid national standards.
  • Governments should also note the myriad of efforts already being pursued by industry-led standards, and their importance for interoperability of services at the national and international levels – therefore, creating national standards would likely be counterproductive.
  • A flexible and reliable governance structure. At the city level, it is important that mayors create a flexible governance model with an independent leader (such as a Chief Information Officer, CIO). For municipal services, mayors should always prefer scalable and interoperable solutions to avoid vendor lock-in. Finally, mayors should consider adopting open data policies to foster a data-enabled economy that could be easily used by citizens, NGOs and commercial entities. As well as providing one-stop access to a city's information, sharing data would support communication and analysis, more transparent and efficient policymaking, and create value by catalyzing the development of innovative apps and services.

As a topic of regular discussion on this forum, I remain optimistic by the benefits IoT and smart cities will bring to people in industrialize and emerging markets alike. International standards and best practices, however, must be in place to maximize the benefits of such innovation. I hope this report serves as a useful tool for policymakers in Latin America and emerging markets worldwide.
Do you agree with the recommendations on how to make smart cities and IoT a reality in Latin America? What would you add?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 13, 2021

Economic Contribution of Latin America's Mobile Ecosystem Will Grow by More Than $30 Billion by 2025

According to its GSMA Intelligence's latest report on the state of the mobile economy in Latin America, the research arm of the GSM Association (GSMA), a UK-based organization that represents the interests of mobile operators worldwide, says "The mobile industry in Latin America continues to play a crucial role in the response to Covid-19. Mobile networks have enabled social and economic activities to continue. People have relied on the internet to stay connected to friends and family, access educational and health services, and work remotely."

Growth in subscriber penetration and smartphone adoption remains strong, the report notes. GSMA Intelligence estimates Latin America will have 485 million unique mobile subscribers by 2025 (73% of the population), up from nearly 450 million by the end of 2021. "Around half of new subscribers will come from Brazil and Mexico during this period. There will also be strong growth in underpenetrated markets such as Guatemala and Honduras."

The report, which is available in English and español, importantly adds:
Smartphone connections in Latin America will reach 500 million at the end of 2021 – an adoption rate of 74%. The next four years will see almost 100 million additional smartphone connections in the region, taking adoption above 80%. This will spur mobile internet adoption, enabling more people to access digital services for the first time. These achievements will be underpinned by operators' continued investment in network infrastructure. Between 2020 and 2025, mobile operators in Latin America will invest more than $73 billion in their networks, with an increasing share of this 5G-related.
While 4G continues to dominate the Latin American market, accounting for close to 70 percent of total connections at the end of 2025, the report encouragingly asserts that "5G momentum is building, with further commercial 5G services launched in 2021." GSMA Intelligence points out that "While mobile operators wait for access to new spectrum, they are laying the groundwork for the 5G era through investments in accompanying infrastructure, such as fiber, and partnerships to trial and develop new applications."

On the topic of the mobile industry driving economic growth and social development, the report explains that "In 2020, mobile technologies and services generated 7.1% of GDP in Latin America – a contribution that amounted to more than $340 billion of economic value added." Moreover, "The mobile ecosystem also supported more than 1.6 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with more than $29 billion raised through taxes on the sector in 2020. By 2025, the economic contribution of the Latin American mobile ecosystem will grow by more than $30 billion, as countries in the region increasingly benefit from the improvements in productivity and efficiency brought about by the increased take-up of mobile services."

On the transformation of the enterprise sector, GSMA Intelligence says "As a result of mobile operator activity and partnerships, total IoT connections in Latin America will amass at a hastening pace, reaching close to 1.2 billion in 2025. Growth will be relatively faster in the enterprise IoT market, with a notable increase in the adoption of smart buildings solutions (forecast to record a CAGR of 24% between 2020 and 2025)." Furthermore, "IoT applications have the power to make a meaningful contribution to the UN's Sustainable Development Goals (SDGs) by facilitating carbon emissions reductions, while improving safety and supporting economic development."

Lastly, the report discusses decisions policymakers in Latin American can make to help shape the connected society. "The pandemic has emphasized the need for connectivity and the critical role of mobile technology. Now is the time for governments to reassess the business and regulatory environment for mobile services in order to accelerate investment and innovation for a connected society."

Infographic: GSMA Intelligence

What opportunities are you seeing in Latin America's mobile economy?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 8, 2021

Report Details Europe's Rapidly Growing Tech Sector

During my time serving as an advisor to a German tech firm in the late 2000s, I had the opportunity to learn more about Europe's tech sector. While the United States was experiencing a rise of its own tech sector, I was surprised at the lethargic growth of the sector in Europe. As explained by The Economist, "That a continent shattered by two world wars produced far fewer businesses destined for high growth in the second half of the 20th century is perhaps unsurprising. But Europe never recovered its appetite for high-growth business creation. In the past three decades, America has spawned four behemoths—Google, Amazon, Tesla and Facebook, now known as Meta—whose valuations have topped $1trn."

What is more, "Not one of Europe's corporate youths, meanwhile, has risen as high as $100bn. One champion of the 2000s, Skype, was in 2011 bought for $8.5bn by Microsoft. The other, Spotify, is today worth only $48bn. SAP, the closest thing the continent has to a tech giant, was founded three years before Microsoft and is worth less than a fifteenth of it."

Over a decade later from advising the German tech firm, I was pleased to read an article by Ryan Browne, a technology reporter for CNBC in London, proclaiming "Europe's tech sector is on fire." Focusing on a report produced by Atomico, a UK-based venture capital firm, Mr. Browne writes that "Start-ups in the region are on track to haul in a record $121 billion in funding this year ... roughly three times the $41 billion of capital raised in 2020. It's the first time European start-ups have raised more than $100 billion in a single year, and highlights surging interest from investors in the continent's rapidly-growing tech industry."

"'It's been a defining year for European tech,' Tom Wehmeier, Atomico's head of insights, told CNBC. 'I think what we've seen in the numbers is that European tech is creating value faster than ever.'"

Titled the State of European Tech 2021, below are the report's key findings:
  • Record growth drives new milestones. "Europe is firmly positioned as a global tech player in 2021, with a record $100B of capital invested, 98 new unicorns, and the strongest ever startup pipeline, now on par with the US. European tech is creating value at its fastest pace, adding $1 trillion in just 8 months. While geographical differences in maturity level remain, talent mobility and distributed success is powering newer hubs."
  • Talent is betting on tech. "The European tech talent pool is deeper and more experienced than ever, as talent is recycled across the continent. Yet there is still a way to go; talent acquisition tops the list of challenges for founders, alongside fundraising. Many founders – particularly those from underrepresented backgrounds – are finding it as hard as ever to access capital."
  • European entrepreneurs are shaping their own path. "European tech has become a breeding ground for companies across all sectors. From frontier tech to crypto and enterprise SaaS, European founders can build successful companies from Europe. A new generation of entrepreneurs is putting social and climate impact at the core of their mission. The ecosystem is aware of the need to improve diversity and inclusion, but has much left to do to make that happen."
  • Investing in Europe is more attractive and dynamic than ever. "VC has become the leading funding mechanism for entrepreneurs, but to stay competitive, VCs have to keep innovating. As the opportunity set matures, global investors are doubling down: from seed rounds to public markets, there are now more international investors and buyers active in Europe. While investors across the board have more conviction in European tech, pension funds still lag behind on their allocation to tech."
  • Outcomes defy expectations in private and public markets. "Europe continues to produce more tech IPOs than the US, $1B+ IPOs are becoming the norm, and record-breaking exit activity reached an astonishing $275B in deal value. Still, Europe is only in the first innings of its tech journey, with all indicators now pointing towards many trillions in value to be added over the next decade, even in a conservative scenario."
  • From stumbling blocks to building blocks. "European tech is on a strong trajectory, with venture capital delivering consistently benchmark-beating returns. However, funding, talent and policy are all critical components we must continue to fine tune. With more collaboration across private and public sectors, we can supercharge the next decade for tech. And with better accountability from founders and investors, we can deliver more on inclusivity and sustainability."

While the report paints an optimistic scene, "Not all is rosy in European tech," CNBC's Mr. Browne notes. "Despite venture-backed companies raising record levels of funding in Europe, early-stage firms are being squeezed, according to Atomico." Moreover, "Less than 1% of venture capital invested in the first nine months of 2021 went to companies that were founded this year, a figure that has typically ranged from 1-3% in earlier years."

Mr. Browne also points out that "diversity remains a key issue. Only 1.3% of venture capital funding in Europe goes to start-ups with ethnic minority founding teams, Atomico said, citing a survey of more than 5,000 tech professionals in the region." And "the lack of pension fund allocation to start-up investments" is another hurdle "with European pension funds earmarking less than 0.02% of their $3 trillion for venture capital funds."

"Yet change is in the air," the aforementioned article by The Economist explains. "Venture capitalists, who want to sniff out the next Google while it is still being run from the founders' kitchen tables, are homing in on European startups. There are many more to choose from. European entrepreneurs who would once have gone west to start a business are now likely to start up at home rather than in Silicon Valley."

The Economist
 adds that "A new influx of capital is proof of an altered mood. Ten years ago, European firms grabbed less than a tenth of all venture capital (VC) money invested globally, though Europe’s share of global GDP was a little over a quarter." Encouragingly, "This year has seen dealmaking volumes soar in many regions, but particularly in Europe, which now attracts around 18% of global VC funding, says Dealroom, a data provider (see chart 1). That funding is at an all-time high, pumping up values for European startups. The continent now boasts 65 'unicorn cities,' or those which have produced a privately held startup worth more than $1bn. That is more than any other region."

What are your thoughts about the sate of Europe's tech sector? What opportunities or risks are you seeing?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 3, 2021

China to Benefit From Declining US Interest in the MENA Region

Those who follow geopolitical events in the Middle East are speculating how United States' withdrawal from Afghanistan will impact matters in the region. A paper published by The Economist Intelligence Unit (The EIU) focuses on this topic as it "examines which countries in the region could be next to be destabilized by the external competition to result from the US withdrawal. The paper "also outlines which countries could benefit economically from a growing relationship with China" and "aims to help investors in the region understand how geopolitical risk, and international tensions in particular, have shifted with the US’s exit."

Helping "investors to better understand relative risk across the region," below are the paper's key findings:
  • The speed with which the Taliban retook Afghanistan emphasizes the risks for traditional US allies of over-reliance on US security guarantees, while also highlighting opportunities for other Global powers to expand in the region.
  • China's neutrality in the Middle East and North Africa (MENA) and economic power make it the best-positioned external power to benefit from long-term US withdrawal from the region.
  • Traditional US allies—mainly the UAE, Israel, Saudi Arabia and Egypt—will undergo some modest diversification of their relations with other major powers and try to resolve some regional conflicts without the US.
  • However, those same US allies will also compete for influence with two other blocs with different ideological visions for the region—one led by Iran and the other comprising countries backing regional Islamist groups.
  • This will lead to shifting diplomacy between blocs, as well as the emergence of new pockets of instability—with Lebanon currently most at risk.

According to The EIU, "The criticism that the US president, Joe Biden, has come under for the US withdrawal from Afghanistan suggests that further sudden US troop withdrawals from conflict zones are unlikely for now. Remnants of Islamic State in Iraq and Syria will probably mean that some US presence, albeit a reduced one, stays there in the medium term." The paper further asserts that "the US will continue to maintain its security alliances, ensuring it remains the main foreign security presence in the region. However, it is clear that a key part of US foreign policy is to avoid being drawn into lengthy and costly conflicts in the region—preventing Iranian nuclear proliferation perhaps being the only exception. As a result, Turkey, Russia and China have more scope to become regional powerbrokers."

With respect to China benefiting from long-term US withdrawal from the region, the paper explains that "China has little interest in competing with the US for regional security dominance. But there are economic incentives for China to expand its presence—the Middle East provides key trade routes from Asia to Europe and East Africa as part of its Belt and Road Initiative, and is the source of much of China's oil supply."

The EIU importantly adds:
Although US influence remains paramount for Israel, which may limit Chinese opportunities there, most other countries will deepen their economic ties with China. Provided Iran secures US sanctions relief, Chinese infrastructure investment in Iran is likely to rise sharply in return for cut-price oil. At the same, the Gulf economies will build closer relations with China, while still balancing their alliances with the US, as a source of much-desired technology-sharing and external financing. Meanwhile, China's growing influence will also put it in a prime position to secure reconstruction contracts in conflict zones like Libya and Syria. In the longer term, as its economic interests grow, geopolitical neutrality will become more difficult. But in the short to medium term, China's interests in the Middle East will remain largely economic.
Lastly, the paper includes The EIU's MENA Risk Tracker Scores for Political Stability and Security Risk (see images below) where Yemen and Qatar are ranked most and least risky, respectively, for both political stability and security risk.

How do you think the United States' withdrawal from Afghanistan will impact matters in the MENA region? 

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 30, 2021

ITU Report Suggests 'COVID Connectivity Boost' – but World's Poorest Being Left Far Behind

Writing the Forward for a report produced by the International Telecommunication Union (ITU), the United Nations specialized agency for information and communication technologies (ICTs), Doreen Bogdan-Martin, director of the ITU Telecommunication Development Bureau, says "An estimated 4.9 billion people are using the Internet in 2021, according to latest estimates in this 2021 edition of Measuring Digital Development: Facts and figures. That means that roughly 63 percent of the world's population is now online – an increase of 17 percent – with almost 800 million people estimated to have come online since 2019. Internet penetration increased more than 20 percent on average in Africa, in Asia and the Pacific, and in the UN-designated Least Developed Countries (LDCs)."

Moreover, according to Ms. Bogdan-Martin, "It is clear that ICTs and the Internet have been vital in helping maintain continuity in business activity, employment, education, provision of basic citizens' services, entertainment, and socializing. Digital platforms and services have enabled countless innovations that helped mitigate the health, social and economic costs of the tragedy, and build resilience against future crises."

Key findings of the 2021 edition of Facts and Figures, ITU's annual overview of the state of digital connectivity worldwide, include:

The digital gender divide is narrowing globally, but large gaps remain in poorer countries.
  • Globally, an average of 62 percent of men use the Internet compared with 57 percent of women.
  • Although the digital gender divide has been narrowing in all world regions and has been virtually eliminated in the developed world (89 percent of men and 88 percent of women online) wide gaps remain in Least Developed Countries (31 percent of men compared to just 19 percent of women) and in Landlocked Developing Countries (38 percent of men compared to 27 percent of women).
  • The gender divide remains particularly pronounced in Africa (35 percent of men compared to 24 percent of women) and the Arab States (68 percent of men compared to 56 percent of women).
The urban-rural gap, though less severe in developed countries, remains a major challenge for digital connectivity in the rest of the world.
  • Globally, people in urban areas are twice as likely to use the Internet than those in rural areas (76 percent urban compared to 39 percent rural).
  • In developed economies, the urban-rural gap appears negligible in terms of Internet usage (with 89 percent of people in urban areas having used the Internet in the last three months, compared to 85 percent in rural areas), whereas in developing countries, people in urban areas are twice as likely to use the Internet as those in rural areas (72 percent urban compared to 34 percent rural).
  • In the LDCs, urban dwellers are almost four times as likely to use the Internet as people living in rural areas (47 percent urban compared to 13 percent rural).
A generational gap is evident across all world regions.
  • On average, 71 percent of the world's population aged 15-24 is using the Internet, compared with 57 percent of all other age groups.
  • This generational gap is reflected across all regions. It is most pronounced in the LDCs, where 34 percent of young people are connected, compared with only 22 percent of the rest of the population.
  • Greater uptake among young people bodes well for connectivity and development. In the LDCs, for example, half of the population is less than 20 years old, suggesting that local labor markets will become progressively more connected and technology-savvy as the younger generation enters the workforce.
ITU continues monitoring the world's evolving digital divide.
  • ITU figures also point to a glaring gap between digital network availability versus actual connection. While 95 percent of people in the world could theoretically access a 3G or 4G mobile broadband network, billions of them do not connect.
  • Affordability of devices and services remains a major barrier. The widely accepted target for affordable broadband connectivity in developing countries sets the cost of an entry-level mobile broadband package at 2 percent of gross national income (GNI) per capita. Yet in some of the world's poorest nations, getting online can cost a staggering 20 percent or more of per capita GNI.
  • Lack of digital skills and an appreciation of the benefits of an online connection is another bottleneck, compounded by a lack of content in local languages, as well as by interfaces that demand literacy and numeracy skills that many people do not possess.

The digital divide, which is the gulf between those who have ready access to the Internet and those who do not, is a topic often discussed on this forum. And while it is encouraging to see entrepreneurs launch tech startups in low- and middle-income countries, the success of these new enterprises and the benefits their digital platforms and services can bring to consumers is limited if people are unable to access the Internet. As Ms. Bogdan-Martin insightfully notes in the report, "We cannot close the digital divide if we cannot measure it. And we cannot connect the unconnected if we do not know who they are, where they live, and why they remain offline – nor can we measure the success of our policies to bridge the gap.

"Through a set of unique and timely statistics, ITU’s Facts and figures sheds light on the multiple facets and evolving nature of the digital divide and takes stock of the progress towards closing it."

What do you think of the report's findings? What are your recommendations for bridging the digital divide?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 29, 2021

GSMA's 2021 Report on the Mobile Economy Presents Examples of IoT-Enabled Healthcare Solutions

"The Covid-19 pandemic has had a profound impact on the health and livelihoods of individuals and communities around the world," according to GSMA Intelligence. the research arm of the GSMA, a UK-based organization that represents the interests of mobile operators worldwide. Moreover, "In these trying times, connectivity has emerged as a lifeline for society by enabling many social and economic activities to continue amid unprecedented social and travel restrictions, supporting new ways for enterprises to operate safely and facilitating effective response measures from government and other stakeholders."

Titled The Mobile Economy 2021, the report further notes that "Mobile has been particularly instrumental during this period, keeping people connected and underpinning new services in response to the pandemic. Around the world, the exceptional scale and utility of mobile networks and services have":
  • enabled people to work and learn remotely, stay in touch with loved ones, and perform many other everyday activities online
  • supported innovative health solutions, such as remote patient monitoring and contact tracing, to control the spread of the virus
  • provided a platform for people to access digital financial services, given efforts to reduce the reliance on cash
  • facilitated the safe and efficient distribution of social welfare to vulnerable people
  • generated valuable insights on mobility patterns from anonymized and aggregated mobile big data to inform government response measures at various stages of the pandemic.

In addition to highlighting the crucial role mobile technology will play as governments look to reinvigorate their economies and build a better, more inclusive society, the report outlines a series of policy recommendations for shaping the post-pandemic digital economy, from direct stimulus funds and balancing policies for personal data to removing barriers to network deployment.

Other key findings include:
  • By the end of 2025, 5G will account for just over a fifth of total mobile connections, and more than two in five people around the world will live within reach of a 5G network.
  • Although 4G has significant headroom for growth; Globally, 4G is expected to peak at just under 60% by 2023 as 5G begins to gain traction in new markets. In leading 5G markets such as China, South Korea, and the US, 4G has peaked and, in some cases, begun to decline.

With respect to the mobile industry's efforts to tackle climate issues, the report notes that "In April 2021, the mobile sector was credited by the United Nations (UN) for achieving a critical breakthrough towards its mission of combatting climate change. Being the first major sector to achieve the rigorous criteria set by the UN's Race to Zero campaign demonstrates the commitment and leadership of mobile operators in the push to meet the goals of the Paris Agreement." Importantly, "This comes at a time when political and economic leaders are giving renewed impetus to delivering a zero-carbon world. Today, 50% of operators by connections and 65% by revenue have committed to science-based targets (SBTs) on the reduction of carbon emissions."

As indicated in a previous post on this blog, while it will several years to build a global 5G network and associated services, I am optimistic about the potential benefits of 5G including hyperfast connections, improved reliability, high capacity and low latency. Telecoms operations will offer hi-tech solutions to businesses through 5G, businesses can use these technologies to transform their operations and optimize efficiency, and governments can create a robust 5G infrastructure to attract investment, create jobs and drive economic growth. GSMA Intelligence, however, points out the need to "develop compelling 5G use cases that leverage the technology's unique capabilities and to support the realization of Industry 4.0 objectives. Commercializing 5G across the consumer and enterprise segments will require the right blend of partnerships, with a combination of capabilities being key to creating value."

To help build use cases, GSMA Intelligence explains that "operators and equipment vendors have invested in 5G labs dedicated to co-creating solutions with partners to address specific needs. These labs, which often include startups, academia, cloud providers and systems integrators, and large enterprises, demonstrate how mobile operators and other ecosystem players can come together to facilitate 5G-enabled digital transformation for society."

Below are a few examples of 5G labs and focus areas by region:

Asia Pacific
  • China Unicom, China Mobile and China Telecom, along with other members of the 5G Slicing Association, including Huawei, China Sports Media and TD Tech, have established a 5G lab on network slicing for enterprises.
  • NTT Docomo leads a consortium to develop 5G solutions for industry verticals such as manufacturing and construction. Founding members of the 5G Global Enterprise Solution Consortium include AIS, Fujitsu and NEC.
  • Vodafone New Zealand is collaborating with several organizations to explore the development of a variety of 5G use cases, including a 5G drone service for the New Zealand Police and an AI solution for retail stores.
  • Europe Orange has established nine 5G labs across France, Romania and Belgium to support the development of new consumer and enterprise applications.
  • Verizon has opened a 5G lab and production studio in London to support its international business and media customers. The lab allows startups, academics and enterprises to explore use cases for immersive education, AR/VR gaming, autonomous vehicles, smart cities and IoT.
  • STC is collaborating with Saudi Aramco and Huawei to develop 5G use cases for the oil and gas sector and to explore use cases around MEC, 5G slicing and industrial-scale IoT.
  • AT&T is working with universities and vendors to develop 5G applications across a variety of areas, including manufacturing and autonomous car applications.
  • Verizon is pursuing initiatives with the NFL, Emory Healthcare, Responder Corp., and the US Department of Energy. Focus areas include use cases for healthcare, first responders, autonomous mobility, smart cities, education and retail.
  • T-Mobile is a founding partner of the 5G Open Innovation Lab, alongside global tech players, including NASA, Intel and Microsoft, and academic institutions.

Lastly, in explaining how Covid-19 cast a spotlight on IoT applications in healthcare, the report says: "In the wake of the pandemic, healthcare service providers have relied on technologies to enhance service delivery and improve efficiency in the delivery of medical supplies, amid increased demand and social-distancing requirements. IoT underpins many innovative digital health products and solutions for consumers and enterprises, as well as new ways of treating patients remotely. For example, wearable IoT devices, such as smartwatches, are increasingly being used for remote and contactless vital signs monitoring.

The report presents the following examples of IoT-enabled healthcare solutions utilized to support patients during the pandemic:
  • Remote patient monitoring: Healthcare professionals use IoT devices to track heart rate, blood pressure and blood glucose levels of patients remotely, particularly the elderly and other vulnerable patients that have had to shield during the pandemic.
  • Contact tracing: A number of contract tracing systems implemented around the world rely on IoT-based solutions to track the movement of patients and enforce social distancing in public areas.
  • Vaccine cold chain monitoring: IoT platforms have been used to develop cold chain monitoring systems that track the temperature and location of vaccine carriers. For example, the Electronic Vaccine Intelligence Network, developed by the United Nations Development Program (UNDP) and the Indian government, has reduced vaccine stock-outs by 80%.
  • Hospital sanitization: Non-surgical robots connected to IoT systems have been used to clean patient rooms and to disinfect and sterilize surfaces from Covid-19 contamination with a special UV light and chemicals.
  • Automated temperature screening: IoT-enabled thermal imaging systems have been used to identify people with elevated body temperatures before they enter buildings, such as airports, office spaces, schools, shopping centers and hospitals, for further screening.
  • Facilities and PPE stock management: IoT system have been used to provide supply-chain planners and policymakers with actionable information on the availability of hospital beds and personal protective equipment (PPE) for medical staff for the efficient allocation of resources.
  • Healthcare delivery drones: IoT-enabled drones have been utilized to deliver test kits and results, PPE, medicines and other vital medical supplies, especially in developing regions with poor logistics infrastructure. For example, in Ghana, connected-drone company Zipline is supporting the delivery of vaccines to remote parts of the country.

What IoT-enabled solutions are you seeing or developing?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 24, 2021

Is Jihadism a Risk Factor for Investing in Africa?

A startup's board of advisors?
(Image credit:
Investing in Africa has been a regular topic of discussion among my friends and colleagues over the past year. I published a post on this forum about a report that says African tech startups raised $1.4 billion in 2020 with the fintech sector receiving 25 percent or $354 million of the total amount. And I am confident this amount will be significant higher for 2021. While there are many reasons to remain optimistic about the future of Africa's digital economy, particularly in the fintech, agritech enterprise, and health tech sectors, investors should be mindful of the risks that exist which may negatively impact a company's operations and financial performance. One such risk is the growing security instability on the continent.

I often hear people from Africa express their frustration that many people residing outside the continent view their homeland as a place ravaged by war and disease. They say the global media perform a disservice by focusing on the negatives while neglecting to report on advancements made in key areas including economic development, education, and rule of law. I agree with their feelings of frustration as I have witnessed the exponential economic growth since the time I made my first investment in Africa in 1995. However, armed conflicts on the continent exist in many areas. There are concerns that these conflicts will spread to cities that have experienced significant economic growth over the past two decades.

At the time of publishing this post, there are growing insurgencies by jihadists and separatists in the Sahel, the ecoclimatic and biogeographic realm of transition in Africa between the Sahara to the north and the Sudanian savanna to the south (see map on the right). According to an article published by The Economist on Nov. 20th, 2021, "almost 9,000 European and American troops on the front line of what is now the West's biggest offensive against jihadists, in the Sahel. It is not going well. How it will end depends in no small part on whether the West learns the right lessons from its failures in Afghanistan."

During my time working on private sector development initiatives in Afghanistan, my colleagues and I evaluated security risks based on the flow of funds and weapons to jihadists. Entrepreneurs and small business owners living in Afghan provinces that received the largest percentage of imported weapons and funds to support jihadists and violent extremists experienced more risks to their business including corruption, lack of access to essential services such as electricity and water, and restrictions on the hiring of women.

With the United States' withdrawal from Afghanistan this past summer, jihadists around the world "were elated by the fall of Kabul," In another article published on Aug. 28th, 2021, The Economist notes: "Through willpower, patience and cunning, a low-budget band of holy warriors has vanquished America and taken charge of a medium-size country. To Muslims who yearn to expel infidels and overthrow secular states, it was evidence that God approves. The ripple effects could be felt far and wide."

The article adds that "outside Afghanistan, the main ripple effects will be psychological. The Taliban's triumph will fire up jihadists in other countries, and spur recruits to join them. Some who live in rich countries will be inspired to commit acts of terrorism there. It does not take many such attacks to sow a sense of fear or roil domestic politics.

"Even worse will be the effect in poorer, weaker states, where jihadists aspire not merely to kill but to control territory, or at least prevent the government from doing so. In places like Pakistan, Yemen, Syria, Nigeria, Mali, Somalia and Mozambique, they already do. In several other parts of Asia, Africa and the Middle East, they threaten to. Many are asking: if our Afghan brothers can beat a superpower, surely we can beat our own wretched rulers?"

The Economist Intelligence Unit's latest Democracy Index, which provides "a snapshot of the state of democracy worldwide in 165 independent states and two territories," says "[t]he deterioration in the global score in 2020 was driven by a decline in the average regional score everywhere in the world, but by especially large falls in the 'authoritarian regime'-dominated regions of Sub-Saharan Africa and the Middle East and North Africa."

Moreover, The Economist, in its Aug. 28th article, asserts:
Bad government creates an opening for jihadism. When a state is unjust, its citizens may imagine that one run by jihadists might be better. Even if they do not take up arms, they may quietly support those who do. Many rural Afghans decided that Taliban justice, though harsh, was quicker and less corrupt than government courts, and that Taliban checkpoints were less plunderous. This is one reason the Taliban's final march to power met so little resistance. The other was psychological: they won because when America pulled out Afghans did not want to die fighting for a lost cause. Similar principles apply elsewhere. Jihadists in north-eastern Nigeria are hard to beat because locals detest the central government and army officers sell their own men's weapons to the guerrillas and pocket the cash.
In an email message to my colleagues and clients where I shared a link about a webinar the U.S. Department of Commerce is hosting on Nov. 30th, 2021, which will allow participants to hear real-time market conditions and learn about technology and commercial digital transformation opportunities in Ethiopia, Mozambique, Nigeria, and Kenya, I included a message saying that this event should be interesting given the first three of these countries are currently experiencing some form of conflict by jihadists or violent extremists. As for Kenya, the East Africa country is on high alert because of recent suicide bombings in neighboring Uganda.

Barring Ethiopia where the Tigray People's Liberation Front are taking towns on the way to the country's capital, Addis Ababa, most armed conflicts occur in rural areas far from capital cities or economic centers. Given the rise of authoritarian regime-dominated regions in sub-Saharan Africa, coupled with jihadists feeling emboldened by the Taliban's recapturing of Afghanistan, it may be a matter of time until we see armed conflict in cities that are experiencing a vibrant startup ecosystem.

I remain optimistic about business and investment opportunities in Africa, particularly in the continent's digital economy. But those who are launching a new firm or investing in one should perform an assessment of country-level risks including evaluating the safety of the physical environment. In determining the risk of rising jihadism, follow the money.

If you are investing in Africa, which risk factors are you paying attention to?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 22, 2021

2022 Will (Hopefully) Be a Year of Recovery and Renewal for Economies and Businesses Affected by Covid-19

"2021 was supposed to be a year of recovery for economies and businesses that had been affected by the coronavirus (Covid-19) pandemic," according to The Economist Intelligence Unit's annual report that examines the opportunities and challenges ahead for seven sectors of the global economy: automotive; consumer goods and retailing; energy; financial services; healthcare and pharmaceuticals; technology and telecoms; and tourism. "However, it has not been a straightforward rebound. Although coronavirus vaccines allowed many countries to ease lockdowns and begin a recovery, cases remained stubbornly high, albeit with an improved recovery rate. International borders remained either shut or subject to cumbersome testing requirements. One knock-on effect was supply-chain disruptions that hampered companies' ability to meet consumer demand, pushing up prices. Many of these problems will persist into 2022."

Businesses operating in these seven sectors should note that "[g]rowth prospects for all these sectors in 2022 will depend on their respective base levels. Some sectors—notably, telecoms and pharmaceuticals—thrived during the pandemic, but will need to navigate evolving consumer demands, as well as increased competition and regulation going forwards. Some sectors—notably, automotive and tourism—suffered slumps and will struggle to deal with the aftermath. For the remainder, the situation and outlook remain mixed, with companies pushing against headwinds to reach areas of opportunity."

The report presents the following key forecasts:
  • Supply-chain disruption will make it harder for manufacturers and retailers to meet recovering demand, dampening sales forecasts for both consumer goods and automotive.
  • High prices will push up interest rates, which could raise bad debt levels and dampen demand. However, some consumer companies and banks will turn higher prices to their advantage.
  • New technologies - both digital and non-digital - will offer new opportunities, but will also attract more attention from regulators keen to ensure a level playing field. Health apps will be among those affected.
  • Companies will need to prepare for changes in tax regulation, following a global deal to set a minimum corporate tax rate. Although this legislation may be derailed, efforts to collect taxes are increasing.
  • Amid efforts to combat climate change, companies will come under more pressure to cut emissions and meet more standardized reporting requirements. This will affect their investment strategies, particularly in the oil and coal sectors.
In addition, below are the key forecasts as they relate to each of the aforementioned seven sectors of the global economy:

Automotive in 2022: back to near-normal
  • Global sales of new vehicles will rise by 7.5% in 2022, taking them back past 2019 levels. The recovery will be led by Asia and North America.
  • Many vehicle makers will still struggle to meet recovering demand amid continuing supply-chain disruptions.
  • Global sales of new electric vehicles (EVs) will continue to soar, rising by 51%. New emissions rules will force carmakers to make far-reaching decisions about their fossil-fuel models.
Consumer goods in 2022: knots in the supply chain
  • Global retail sales will recover to 2019 levels in volume terms, but coronavirus (Covid-19) cases, inflationary pressures and slow job growth will pose challenges.
  • Online shopping will grow at a slower pace in 2022 as lockdowns lift, but will still account for 17% of global retail sales.
  • Higher supply-chain costs will motivate businesses to wean consumers off discount schemes and focus on higher-margin premium products.
Energy in 2022: transition time
  • Global energy consumption will rise by 2.2% as economies recover from the impact of the pandemic. All types of energy, apart from nuclear power, will benefit.
  • Energy prices will stay firmer than in recent years, as demand recovers and supply bottlenecks continue to disrupt power generation.
  • Many energy companies will need to undertake an urgent review of their strategies in 2022, as governments and investors ramp up pressure to cut emissions.
Finance in 2022: gusty tailwinds
  • Economic recovery and rising interest rates will boost prospects for many financial firms in 2022, provided bad loans remain at manageable levels.
  • Developing markets will take longer to regain their appeal than developed ones. Regulatory uncertainties in China will throw up challenges in the world’s fastest-growing market for financial services.
  • Green finance will move towards center stage, as companies and investors try to live up to pledges made at the COP26 climate summit.
Healthcare in 2022: the aftermath of coronavirus
  • Global healthcare spending growth will slow to 4.1%, despite rising costs, as governments start to assess the economic damage wreaked by the pandemic.
  • Vaccinating the world against Covid-19 (coronavirus) will remain a core priority. However, healthcare systems will also need to start tackling a backlog of non-coronavirus care.
  • Healthcare is not exempt from supply-chain problems, and governments will push ahead with regulation designed to increase resilience and lower costs.
Technology and telecoms in 2022: geopolitical tensions
  • Of 60 major telecoms markets, 16 will launch 5G services in 2022 (see map below), but challenges in spectrum availability and pricing will cause delays.
  • Technology and politics will continue to be interlinked. The semiconductor shortage will persist, making onshoring of chip production a strategic priority for countries.
  • Governments will tighten regulations to boost cyber security, which will be the main short-term risk to digitalization progress, but discrepancies between countries will often dilute the impact.

Tourism in 2022: a shaky recovery
  • International arrivals will recover some ground but fail to return to 2019 levels, with business travel likely to remain depressed.
  • Differing levels of border control and variations in vaccine passports will continue to make international travel difficult in 2022, although domestic tourism will fill some gaps.
  • Compliance with climate-change regulations, as well as higher fuel prices and wages, will increase air-travel costs in 2022. This will eventually lead to airline mergers, airport closures and higher ticket prices.
Lastly, with respect to its macroeconomic forecast, The EIU asserts that "the global economic recovery will continue in 2022, with real GDP expanding by 4.1% at market exchange rates, after rebounding by an estimated 5.4% in 2021. Of the G20 countries, China and Turkey were the only two not to shrink in 2020 and will continue to post firm growth. Eight more, led by the US, have already regained their 2019 GDP levels in real terms, following a strong rebound. The remaining ten, including EU countries and Japan, will regain pre-pandemic levels in 2022, having lost two years of growth."

The report, however, points out that the "recovery could still be derailed if the pandemic flares up again. Persistent supply-chain disruptions could keep commodity prices elevated. This will benefit commodity-dependent countries, but will fuel inflation. That, in turn, will lead to tightening monetary policy, with impacts on stock markets, banks, companies and governments. Geopolitics will remain fraught too: the EIU sees an escalation in US-China tensions as the biggest global risk."

Twelve months ago as my colleagues and prepared to close-out 2020, we anticipated 2021 would be a year of recovery and renewal. While some sectors such as technology and pharmaceuticals have seen a healthy rebound, the automotive and tourism sectors struggled during the past year. And the consumer goods, energy, finance, and healthcare sectors had a mixed year as they seek out new areas of opportunity. In the coming year, we will be watching the global vaccination rate, the rise of any potential variants of covid-19, and how governments respond to new outbreaks. We will also monitor how governments and central banks continue their efforts to stimulate economic growth while curtailing inflationary pressure.

What will you be watching in 2022?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.