Geopolitical Shocks and Climate Change Will Remain Biggest Risks in 2025, Says EIU Report

"Hopes that the world will one day return to normal have been continually dashed since the covid-19 pandemic, and 2025 will be no different," the Economist Intelligence Unit (EIU) says in its Industry outlook 2025 report that explores the challenges, opportunities and trends to watch in the following six industries: energy, financial services, consumer goods and retailing, technology, automotive, and healthcare. The report further says: "Although working and travel patterns are normalizing, the economic and political outlook remains uncertain. EIU forecasts that real GDP will grow by a subdued 2.6% in 2025, similar to 2024 but slower than the average for the ten years before the pandemic." What is more, "The US economy will slow as labor markets tighten, but China's will accelerate slightly, amid stimulus and reviving trade. Those of the EU and Japan will also tick up, but only smaller developing markets such as India will deliver significant growth."

Geopolitical tensions and trade barriers will force more shifts in supply chains, amid subdued business growth. The EIU also presents the following predictions for 2025:

• Inflation is expected to ease, allowing for further monetary easing.
• Prices for agricultural and energy commodities will fall, but those for industrial raw materials will rise.
• Geopolitical risks will persist amid wars in Ukraine and the Middle East, while rising trade barriers between the EU, the US and China will reshape supply chains.
• Climate change will increase geopolitical tensions. National climate pledges will be updated at COP30 in November 2025, but much will depend on US leadership.
• Investment in technology, especially artificial intelligence (AI), will remain strong, but tech companies will face regulatory pressures, investor impatience and scrutiny over energy usage.

According to the EIU, "Falling inflation will allow monetary easing to continue. We expect the Federal Reserve (Fed, the US central bank) to cut interest rates by a further 50 basis points during 2025. We also expect prices for agricultural commodities and industrial raw materials to move in different directions in 2025- 26. Although agricultural prices will continue to trend downwards, prices for industrial raw materials will rise again, particularly for base metals that benefit from the green transition. As for energy commodities, prices will fall on average, but remain at risk from political shocks."

The UK-based company provides the following key global forecasts for each sector covered by its report:

• Energy: Fossil-fuel markets will continue to face geopolitical risks amid conflicts in the Middle East and Ukraine, but investment into renewables will remain strong, particularly in China.
• Financial services: Falling interest rates will weigh on bank profit margins, leading to lower dividend payouts, but the Basel III endgame will be eased or delayed further.
• Consumer goods and retailing: Global retail volumes will expand by 2.2%, helped by disinflation, but regulations around online retailing will tighten further, particularly for high-volume low-price Asian retailers such as Shein and Temu.
• Technology: More countries will start using satellite internet, but use cases will be limited to enterprise clients—military and maritime. Amazon's Kuiper will disrupt the market duopoly of Starlink and EutelSat OneWeb.
• Automotive: After a difficult few years, annual new-vehicle sales will reach a record 97.2m units in 2025. We forecast that sales of new cars will rise by 2%, commercial vehicles by 4% and electric vehicles by 16%.
• Healthcare: Global healthcare spending will outpace inflation, growing by 1.9% in real terms. The World Health Organization will make climate change the focus of its 14th four-year general program, which starts in 2025.

Companies and investors alike should take note that geopolitical shocks and climate change will remain the biggest risks in 2025. The EIU's "baseline forecast assumes that another large-scale war will not break out in Asia or the Middle East. However, the continued threat of geopolitical conflict, in addition to the continuing war in Ukraine, will lead to economic reconfiguration and policy divergence." Moreover, "The EU and the US are already raising barriers against Chinese exports in areas from  automotive and technology to healthcare. Chinese retaliation is likely to intensify in 2025 as rival blocs emerge across the world. These trends," according to the report's authors, "will reshape supply chains over 2025, and could upend our forecast of falling commodity prices and inflation."

Regarding climate change and how efforts to mitigate it will play in these political rifts, the report notes that "At COP30 in November 2025 governments are due to update their national climate pledges (NDCs), but much will depend on US leadership. The debate over environmental, social and governance (ESG) reporting will intensify as regulations enforcing disclosure come into effect in the EU and elsewhere." In addition, "EU climate regulations, due to come into force from 2026, will also have an international impact on trade by forcing multinational companies to monitor their supply chains."

While investment in technology, particularly AI, will be strong as projects gather pace, "technology companies will face pressure from several directions as regulations tighten (particularly in Europe), investors become more impatient for profits and their energy usage comes under more scrutiny." I agree with the EIU that "Companies will need to navigate these new requirements, while also trying to reconfigure their supply chains and seek out areas of growth."

What challenges, opportunities and trends are you watching as we celebrate the beginning of 2025?

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.

Malaysian Electric Utilities Seek U.S. Partners to Help Decarbonize the Country's Energy Sector

As noted in previous posts in this Forum, I am optimistic about the commercial opportunities that U.S. companies that are looking to sell their services and products in Southeast Asia. Among the ten nations that comprise the Association of Southeast Asian Nations (ASEAN), I recommend that American business owners and corporate executives look closely commercial opportunities in ASEAN's six largest economies (data provided by the International Monetary Fund): Indonesia, Thailand, Singapore, Philippines, Vietnam, and Malaysia.

The Malaysia Country Commercial Guide, which is a useful resource produced by the International Trade Administration, an agency within the U.S. Department of Commerce, explains that "Malaysia is an upper middle-income economy with a population of over 34 million. The country's growing affluent middle class increasingly drives consumer and business demand for quality goods and services. U.S. products and brands are favorably viewed and enjoy a strong presence in many sectors, including technology, machinery, electronics, medical equipment, and franchising."

What is more, "U.S. exporters looking to expand their market presence in Malaysia can benefit from the country's developed infrastructure, an English-speaking business and consumer environment, a well-established legal framework, and the ability to repatriate capital and profits. Malaysia is generally considered an easy and cost-competitive market for doing business. The United States is Malaysia's third-largest trading partner, and U.S. exports of goods to Malaysia were valued at over $18 billion in 2022." The U.S. Department of State also points out that "Malaysia is the United States' 17th largest trading partner and the second-largest trading partner among the 10 ASEAN members, after Vietnam."

Considering my optimism about ASEAN's economic opportunities and interest in employing technologies to mitigate the consequences resulting from global warming, I attended the Malaysia Smart Grid Technologies Reverse Trade Mission (RTM) on May 1st, 2024 in Millbrae, Calif. The U.S. Trade and Development Agency (USTDA), which helps companies create U.S. jobs through the export of U.S. goods and services for priority infrastructure projects in emerging economies, sponsored this event. Delegates of the RTM included representatives of agencies within the Malaysian governments and executives from Malaysian energy utilities. Representatives from the USTDA and the U.S. Commercial Service were also in attendance at the event held just outside of San Francisco.

A delegate from the Tenaga Nasional Berhad (TNB) said the Malaysian multinational electricity company is the only electric utility company in Peninsular Malaysia and is the largest publicly listed power company in Southeast Asia. Serving over 10 million customers throughout Peninsular Malaysia (except Sarawak) and the East Malaysian state of Sabah, TNB's core activities are in the generation, transmission and distribution of electricity. The presentation also highlighted how renewables are expected to grow significantly, with Malaysia targeting 70 percent of its 2050 installed capacity. Advancements in storage technologies are making renewables more dispatchable.

While not part of the presentation, TNB's most recent sustainability report explains:

We have been making progress in rolling out the adoption of a Smart Grid as part of our Grid of the Future (GoTF) initiatives. GoTF aims to improve the grid flexibility with two-pronged objectives - to allow for better services to our customers and enable higher growth of Variable Renewable Energy (VRE) and Distributed Energy Resources (DER). TNB has achieved a Smart Grid Index (SGI) score of 71.4% in FY2022, which demonstrates significant improvement of 19.4% from 2019. Moving forward, under our Smart Utility 2025 Masterplan, we target to achieve a score of 85% by 2025. Through the establishment of this ambitious target, we aim to facilitate the integration of clean energy into our electricity grid and enable efficient management and utilization of resources. These endeavors will help drive the pace of our decarbonization efforts and renewable energy initiatives to achieve our net zero aspiration.

 

Source: www.tnb.com.my/sustainability

Attendees then heard a presentation by Sarawak Energy Berhad, which is state owned electric utility company of the State of Sarawak. Sarawak Energy's vision is to achieve sustainable growth and prosperity for Sarawak by meeting the region's need for reliable and renewable energy—providing electricity to 3 million Sarawakians in urban and rural areas. Furthermore, the utility aims to ensure all rural communities including the most remote and inaccessible upriver communities have access to constant electricity supply. Using micro-hydro, which is the small-scale harnessing of energy from falling water such as that from steep mountain rivers, and solar hybrids, Sarawak Energy has a goal to help more than 30,000 rural household achieve full electrification by 2025. Sarawak Energy is also making progress in becoming a regional power house as the utility exports power to the Indonesian province of West Kalimantan.

Source: www.sarawakenergy.com/about-us

According to the aforementioned country commercial guide, "The Malaysian government is seeking ways to grow its national grid to be a smart, automated, digitally-enabled grid. Malaysia is looking for solutions that ensure greater cost efficiency, reliability, and customer satisfaction than can be achieved with centralized grids. Market opportunities for U.S. companies exist for smart meters, grid technologies and systems, and transmission & distribution systems." I appreciate how this business briefing provided an opportunity for U.S. entities to meet with a delegation of decision-makers from Malaysia interested in learning more about U.S. smart grid technologies and best practices for cybersecurity, distribution networks, and storage solutions for the power sector.

What opportunities are you seeing in ASEAN's renewable energy sector?

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.

Infrastructure Opportunities in Latin America Are Deep and Wide

A report published by the Economist Intelligence Unit (the EIU) asserts that "Latin America lags most of its regional peers in terms of infrastructure investment. According to the Global Infrastructure Hub (GI Hub, a G20 initiative), Latin America spent 2.2% of its GDP in 2023 on infrastructure, but actual investment needs are estimated at 3.5% of GDP. The difference of 1.3% of GDP represents nearly US$90bn in unmet infrastructure needs, and that gap will only widen if infrastructure investment does not pick up."

The EIU also notes that the shortfall in infrastructure investment is reflected in its "Operational Risk scores, which place Latin America far behind OECD economies in the infrastructure category." For example, "Poor infrastructure weighs on the business environment and growth: the lack of proper transport links raises supply‑chain costs; unreliable electricity distribution disrupts economic activity; and patchy ICT coverage leaves entire regions and their inhabitants isolated."

The report's other key findings include:

• Latin America's infrastructure remains below par by international standards, limiting competitiveness and economic growth. Many of the region's governments are operating under significant fiscal constraints, which means that they will look to the private sector to take a more prominent role in developing much-needed infrastructure in 2024.
• There are myriad opportunities for private investors in all sectors across the region. Most Latin American countries have adopted the public-private partnership (PPP) model, but policies, regulatory frameworks and risks vary widely from country to country. Uncertainty surrounding the policy direction of some governments—particularly in Argentina and Colombia—is another obstacle to attracting investment.
• Even countries with well-established frameworks and experience with PPPs—such as Colombia, Mexico and Panama—will face setbacks. In particular, a lack of consensus between governments, businesses and local communities will stoke social unrest and delay development.
• National governments do not have a monopoly on PPPs: in Brazil, for example, states and municipalities have used PPPs to accelerate their own projects—a trend that will continue in 2024 and beyond.

The EIU explains how the infrastructure gap is holding Latin America back in keeping up with new technologies. "Because of its sizeable infrastructure gap, the well of investment opportunities in Latin America is deep and wide," the report says. "The region's logistics and utilities infrastructure is in dire need of expansion and modernization, but sectors at the forefront of innovation and technology also deserve attention. The rollout of 5G technology, for example, has been slow in some countries, but progress this year—Argentina finally carried out its long-awaited 5G auction in October and Colombia in December—will generate some opportunities in 2024."

The report importantly adds:

Investment in renewable and sustainable energy sources, like solar and wind, is also growing but remains far below Latin America's potential. The region could become a crucial player in the supply chain to power the global green energy shift, owing to its large reserves of critical minerals, wide use of renewable energy sources and water availability. However, it lacks the necessary infrastructure and funding to produce the batteries and green hydrogen that will fuel the world in the decades to come. Investments in these areas are on the radar of governments in Latin America's major economies, but the biggest infrastructure opportunities—in the near term at least—will be in logistics, including road, rail, energy distribution, and ports in the likes of Argentina, Brazil, Colombia and Mexico.

What are your thoughts about the private sector taking a more prominent role in developing Latin America's much-needed infrastructure in 2024?

​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.

Growth Prospects, Risks and Trends in Six Critical Sectors in 2024

The past few years have been turbulent for most companies as the pandemic, soaring commodity prices, high interest rates and political disruption resulted in profits for many and bankruptcy for some. A report published by the Economist Intelligence Unit (EIU) asks: Will conditions stabilize in 2024?

EIU's report provides growth prospects, risks and trends facing six critical sectors in the coming year, as inflation eases but geopolitical tensions remain high. The report argues that the biggest challenge facing businesses next year will be climate change and looks at how experimentation with artificial intelligence will give way to rapid adoption, changing corporate strategies and the nature of work.

Key findings include:

• Climate change will drive demand in sectors relating to mitigation and adaptation. Insurers, companies and governments will struggle to price in the increasing risks.
• EU and US regulations on environmental, social and governance (ESG) reporting will push companies to scrutinize their operations and supply chains. However, skepticism about ESG will harden in the US ahead of November’s presidential elections.
• Corporate concerns over taxation will increase as the OECD introduces its global minimum tax rate and individual governments try to reduce budget deficits and national debt levels.
• Geopolitical tensions and wars will complicate government and corporate responses to all of the above. Investment in supply chains, particularly for technology and the energy transition, will adapt to minimize political risk.
• Generative artificial intelligence will disrupt a few sectors, but most companies will find ways to use AI to increase productivity.

The report also provides key global forecasts for each sector covered:

• Automotive: The automotive industry will face another subdued year in 2024, weighed down by slow consumer spending, high interest rates and disruption to supply chains due to geopolitical tensions. The only bright spot will be the electric vehicles market, with sales expected to soar by 21% to 14.9 million unit as governments and consumers try to mitigate the worsening effects of climate change. The report notes that established carmakers will have to fight hard to hold off competition from China.
• Consumer goods and retail: A slowdown in inflation will bolster retail volume growth by 6.7% in US dollar terms and 2% in volume terms in 2024. However, reduced savings and high food prices, worsened by the effects of climate change, will act as dampeners. The EIU also points out that high food prices will continue to cause problems in Asia.
• Energy: Global energy consumption will grow by 1.8% in 2024, largely driven by strong demand in Asia. Despite still-high prices and unsolved supply chain disruptions, demand for fossil fuels will reach record levels, but demand for renewable energy will rise by 11%.
• Finance: High interest rates will determine the success or failure of almost every part of the financial services sector in 2024. Though painful for borrowers, banks will enjoy strong net interest margins margins and revenue flows until margins begin to narrow mildly in late 2024. Property firms and funds, however, will suffer.
• Healthcare: Healthcare spending will rise by 2% in real US-dollar terms, following two years of decline, as inflation eases. However, resources will remain constrained as governments try to bring down fiscal deficits and public debt levels.
• Telecoms and technology: Geopolitics will continue to affect technology in 2024. The tech battle between the US and China will persist in areas including artificial intelligence (AI), chips and quantum technologies. AI will continue to develop, particularly generative AI, but will encounter challenges from new regulations in the EU and other major jurisdictions, as well as complications from US-China tensions.

I appreciate how the annual industry outlook provides businesses with foresight of the critical global trends and threats that will affect their sector 2024. Which trends and threats are you watching in the coming year?

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.

Challenges, Opportunities and Trends to Watch in Seven Sectors in 2023

"The continuing pandemic, the war in Ukraine and high inflation have forced many companies to scale back their forecasts" in 2022, the Economist Intelligence Unit (EIU) notes. Will 2023 will be any better?

The 12th edition of the EIU's annual report forecasts growth and key risks in seven business sectors for 2023, as the war in Ukraine pushes up commodity prices and the cost of living. The report argues that the war has disrupted the recovery from the covid-19 pandemic, and businesses now face increased risks as economies slow or tip into recession, particularly in Europe.

The EIU's report also provides key global forecasts for each of the seven industries:

• Global sales of new vehicles will be flat in 2023, but sales of electric vehicles will rise by 25% to 10.7m units.
• In 2023 retail growth volumes will be respectable at 4.9% in US-dollar terms, which will mainly reflect high inflation. In real terms, global sales will slow or fall in most markets.
• Global energy consumption will rise by just 1.3% as the global economy slows. The energy crisis will force some countries to increase their use of coal or rethink plans to phase out nuclear power.
• Weakening economic output and rising interest rates will lead to more difficult conditions for banks, insurers and fund managers. Formerly fast-growing fintech companies will be hit by the capital-market crunch.
• Global healthcare spending will rise by 4.9% year on year in US-dollar terms, which will mask falling investment in real terms, as countries struggle to cope with continued demand.
• The metaverse will not become a mass-market in 2023, but this will not stop heavy investment into this technology. The drive to standardization and the battle with web3 will be at the forefront.
• International tourism arrivals will rise by 30% as China slowly loosens its covid-19 restrictions. This will follow 60% growth in 2022, but will still leave total arrivals below 2019 levels.

The EIU also presents the following key forecasts for each industry:

Automotive outlook 2023: Bright spots amid stalling growth

• 
  The automotive industry will remain vulnerable to global headwinds in 2023 including the energy crisis, slower global demand and continued supply-chain problems.
• Global new-vehicles sales will remain flat in 2023: new-car sales will rise by 0.9% and new commercial vehicle (CV) sales will fall by 1.3%.
• Sales of electric vehicles (EVs) will be the only bright spot, growing by 25%, but governments will restructure their incentive schemes.
• Governments' focus will turn to charging networks, which are inadequate to meet the expanding EV fleet.
• Autonomous vehicles will take a leap forward, as UN regulators lift their speed limit.

Consumer goods and retail outlook 2023: Retailers respond to pricing pressures

• 
  Inflation will push up global retail sales by a robust 5% in US-dollar terms in 2023, but the lower volume of sales and surging costs will weaken retailers' profits.
• The rollout of automation technologies will offer opportunities to limit wage growth, which means that retail employment is unlikely to return to 2019 levels.
• Online sales growth will slow, but the online share of retail will edge up to about 14% of global retail sales.
• Inflation-wary consumers will prefer to shop at discount stores, helping these retailers to increase their market shares.
• The economic slowdown in China, caused in part by its zero-covid strategy, will mean fresh challenges for global luxury brands already affected by the loss of Chinese tourists.

Energy outlook 2023: Surviving the energy crisis

• 
  Global energy consumption will grow by only 1.3% in 2023 amid a slowing economy.
• Despite decarbonization targets, coal consumption will grow marginally to compensate for gaps in gas supplies.
• More extreme weather events will force many countries to fall back on fossil fuels, delaying the energy transition.
• Renewable energy consumption will surge by about 11%, with Asia leading the way, but investment will weaken.
• The energy crisis will prompt some governments to backtrack on efforts to phase out the use of nuclear power.

Finance outlook 2023: A new test for financial stability

• 
  Weakening economic output and rising interest rates will lead to more difficult conditions for banks, insurers and fund managers in 2023 than in the past two years.
• The impact will be particularly acute in North America and Europe, where governments will offer support. The environment will be tough in Asia as well, although policy rates will rise by less.
• Heavily indebted developing countries will find it harder to refinance foreign debt, driving some to default or require rescues to avoid it. However, the International Monetary Fund will continue its lenient treatment of economies requiring its financing programs.
• The current capital-market crunch will hobble a wide variety of loss-making fintech challengers that sought to outflank incumbents in banking, payments and other activities.

Healthcare outlook 2023: The aftermath of the pandemic

• 
  Healthcare spending will fall in 2023 in real terms, given high inflation and slow economic growth, forcing difficult decisions on how to provide care.
• Digitalization of the healthcare system will continue, but the use of health data will come under stricter regulation in the US, Europe and China.
• Patent cliffs for key drugs and measures to control pharmaceutical pricing in the US, India and elsewhere will force some major pharma companies to spur growth through deals.
• Supply-chain disruptions will continue to push up drugmakers' costs, despite investment in more localized pharmaceutical production.

Technology and telecoms outlook 2023: The battle for digital supremacy

• 
  The metaverse will not become mass-market in 2023, but this will not stop heavy investment in the technology. The drive to standardization and the battle with web3 will be at the forefront.
• Artificial intelligence (AI) will continue to develop, after several breakthroughs in 2022, but will encounter challenges from new regulations in key jurisdictions.
• Semiconductors will continue to be a geopolitical tool between the US and China, involving many other countries. Some companies producing the most advanced products and equipment will benefit.
• Asian telecommunications companies will continue to look for consolidation in 2023. Mobile markets with four or more mobile network operators, such as Sri Lanka, Japan and India, are the most likely to secure deals.

Tourism outlook 2023: Turbulence in the travel industry

• 
  Global tourism arrivals will rise by 30% in 2023, following 60% growth in 2022, but they will still not return to pre-pandemic levels.
• The economic downturn, sanctions on Russia and, above all, China’s zero-covid strategy will be among the factors weighing on the industry.
• Hotels, restaurants and airports will struggle to cope with labor shortages, wage demands, and high food and energy prices.
• Even so, international airlines are expected to return to profitability, benefiting from continued pent-up demand.
• The impact of climate change on the industry will become more apparent, with high temperatures, water shortages and floods forcing tourism destinations to take action.

Useful for companies developing their global business strategy for the coming year, the report presents the following macroeconomic key points:

• The war in Ukraine, combined with lockdowns in China, has exacerbated supply-chain disruptions and pushed up global inflation, forcing EIU to downgrade its forecasts for economic growth in 2023.
• Many governments, particularly in Europe, will be forced to scale back investment in public services, including healthcare, in order to protect households and businesses from the effects of higher prices.
• While some businesses (particularly in commodities sectors) will benefit from high prices, many will be hit by weak demand and high input costs, particularly for energy.
• Profitability will be squeezed, while corporate investment will slow amid rising interest rates.
• However, some companies (notably in pharmaceuticals, technology and retailing) will take advantage of lower stock-market valuations, bankruptcies and government incentives to snap up strategic assets and position themselves for an eventual upturn.

"Amid all this gloom," the EIU encouragingly says "there will be areas of opportunity." Taking the EV market as an example, "online retail sales and tourism will continue to deliver strong growth, particularly in Asia and the Middle East," the report notes. "Innovations—from the metaverse to automated vehicles and data analytics (notably in healthcare)—will attract investment, with some companies also seizing on chances offered by volatile financial markets." I concur that "It will not be an easy year, but it could be a transformative one."

Lastly, The Economist produced a video that looks into which stories may be worth watching in the coming year.

What will you be watching in 2023?

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.

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.

While a Slow, Painful Recovery to the Global Economy Is Predicted in 2021, the EIU Says Digitalization Will Present Opportunities for Certain Sectors

While I am always mindful of risks that can impact a company's operations, a pandemic is not often a risk most corporate leaders prepare for. The coronavirus pandemic's grip on the global economy was certainly not in consideration when I published a post about The Economist Intelligence Unit's (The EIU) Industries in 2020 report. One year later, The EIU's report entitled Industries in 2021: A Slow, Painful Recovery, which gives its outlook for six global industries: automotive, consumer goods and retail, energy, financial services, healthcare and pharmaceuticals, and telecommunications, says "[m]uch of what we predicted in last year's report turned out to be wrong. As we all know, the coronavirus (Covid-19) pandemic overturned assumptions about the development of the global economy and destroyed any hope of steady growth for many industries. This year more uncertainties and risks lie ahead as the world stutters into a recovery."

The report explains: "With their finances already weakened by the pandemic and resulting lockdowns, many companies will not be able to take advantage of a recovery that is likely to be fitful. The consumer goods and retail sector in particular is likely to see a wave of bankruptcies and store closures as more business goes online. The financial sector will also have to cope with a sharp rise in non-performing loans that, in some cases, may overwhelm the provisions that banks have put in place. Restructuring will reshape even those industries, such as telecoms, which have emerged from the pandemic relatively unscathed. However, there will be some winners from this process as markets consolidate around surviving companies and opportunities open up for new business models."

What is more, "With many industries lobbying for support, governments whose tax revenues are already depleted will have to focus support and incentives on sectors with the strongest growth prospects, or those that feed into long-term policy goals. These are likely to include protecting jobs, promoting investment (particularly in innovation) and tackling climate change."

Regarding the energy sector, The EIU maintains "policy will focus on increasing the use of renewable energy. Even Poland, previously a staunch defender of its coal sector, will begin a phase-out, while markets in South-East Asia will see particularly strong growth in renewables. In the automotive sector, generous incentives will continue to encourage purchases of electric vehicles, particularly in Europe, although countries such as France will start to trim back funding as the sector develops. China, meanwhile, will shift its focus towards hydrogen fuel cell vehicles, previously an area where Japan led the way."

On the topic of trade spats and international disputes, the report suggests: "As countries and companies try to rebuild, their focus is likely to turn inwards, with domestic markets and operations becoming a priority. However, as pressure to reshore production and secure supply chains increases, this will have implications at an international level, too."

For example, "In the telecoms sector, this has particular implications for Huawei, a Chinese telecoms company that is now being targeted by US export controls. The technology war will also affect other sectors, including automotive and consumer electronics, while in the financial services sector concerns over China's intentions could undermine Hong Kong's role as an international hub. The UK, meanwhile, will face its own international challenges, as Brexit finally takes full effect on January 1st, drastically changing the business environment for financial firms, automakers and many others."

"Digitalization," according to The EIU, "will affect nearly every industry sector. In the consumer goods and retail sector (and even the automotive sector) the growth of online shopping will generate new companies and new jobs, making up for some of the cuts seen in real-world retailing. However, online retailers will not have it all their own way, with cash-strapped governments keen to raise digital taxes that are likely to exacerbate international tensions."

Moreover, "The rise in online shopping and other activity will also fuel the growth of new financial services, starting with digital payments and progressing into digital currencies, including national ones in China and elsewhere. Even healthcare providers, spurred by the pandemic and social distancing measures, are expanding their online services, with new regulations widening access to telehealth—while at the same time reining back its use where it could affect patient care."

The EIU's "key global forecasts for the six industries covered by this report are:

• "Asia will be the first region to rebound to 2019 levels in most industries, given its relatively shallow slump in 2020;
• "Latin America and Africa will see the slowest recovery, held back by low commodity prices and high debt levels;
• "new-car sales will recover to grow by 15% globally, while commercial vehicle sales will rise by 16%, but only China, Ukraine and Turkey will see sales return to their 2019 levels;
• "global retail sales volumes will grow by 3% but still fall 2% short of 2019 levels;
• "energy consumption will rebound partially—by 2.6% worldwide—but demand for oil and coal will remain lower than in 2019 as the use of renewables surges ahead;
• "financial firms will face weak demand for their services amid mounting debt defaults, while their income will be hurt by low interest rates;
• "healthcare expenditure, which dipped in 2020 despite spending on the pandemic, will surpass 2019 levels, rising by 7% worldwide in US dollar terms; and
• "global mobile subscriptions, which also dipped in 2020, will increase by 3%, again surpassing 2019 levels."

The EIU held a webinar, which is available through this link or the video embedded below, features industry analysts who comment on specific aspects of the report. While I recommend watching the session in its entirety, one point worth mentioning is the presentation of how the six industries covered by the report will be impacted by four key trends:

Job loses and bankruptcies will mount

• Automotive
• Consumer goods and retail

Some governments will aim to support a green recovery

• Automotive
• Energy

Trade spats and international disputes will remain disruptive

• Financial services
• Telecoms

Digitalization will offer the biggest opportunities

• Consumer goods and retail
• Financial services
• Healthcare and pharmaceuticals
• Telecoms

"As these decidedly mixed forecasts demonstrate," the report notes "there will be nothing straightforward about the global economic and business recovery in 2021. Even if the coronavirus is brought under control, many companies will face challenges that they will not be able to meet. Nevertheless, there will also be opportunities on offer for companies that are nimble enough to take advantage of rapid changes in the economic, business and political environment."

What are your predictions for 2021?

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.

GSMA Report Explores the Value of Pay-as-You-Go Solar for Mobile Operators in Africa

On a trip to Africa just a few years ago, I was unable to recharge my mobile phone because the power was temporary unavailable in the city that I was visiting. This experience was a reminder that the value of a mobile phone to an individual is diminished if she is unable to keep device charged on a regular basis. Given the ubiquity of mobile phones in developing countries and their important value not just as a communication tool, but their use for utilizing value-added services such as education, business management, and mobile banking.

According to a study produced by the GSMA's Mobile for Development Utilities program, which aims to improve access to basic energy, water and sanitation services in underserved communities using mobile technology and infrastructure, the pay-as-you-go (PAYG) "solar model has spread rapidly across developing countries as a means of delivering energy services. Over one million PAYG devices were sold during the first six months of 2019. The growth of PAYG solar has only been possible with the rapid growth of mobile money and mobile connectivity that allows customers to pay by instalments, and companies to remotely control and monitor the solar home systems (SHS). And in turn, the PAYG solar industry has helped to drive the adoption and use of mobile money, by giving customers a regular and essential use case. Solar energy provides mobile subscribers with a convenient, safe and affordable way to keep their phones charged."

Available in English and Français, the report explains that it is "the first multi-country analysis to quantify the value of that synergy for the mobile industry. This was done by looking at mobile usage data from cohorts of PAYG customers starting six months before, and through the first six months of making SHS payments, and comparing this same analysis to a control group (not using PAYG solar). Five mobile operators from Uganda, Rwanda, Benin, Côte d’Ivoire, and Zambia worked with us to provide aggregated and anonymized mobile money and GSM data in order to measure the commercial value that the PAYG solar industry has for the mobile industry. The key findings from this analysis are as follows:"

PAYG solar customers show significantly increased mobile money usage, beyond just solar payments

"Across markets there is a clear trend showing that PAYG solar customers increase their mobile money usage from 27 percent up to 113 percent," the report says. "Customers made more mobile money transactions not only to pay for the solar home systems, but more transactions overall. This shows that PAYG solar can drive a range of mobile money transactions, and therefore makes a very important use case to develop mobile money ecosystems."

PAYG solar drives adoption of mobile money

"Across markets, 21 to 31 percent of PAYG solar customers were new to mobile money, or reactivated their accounts (after being inactive for 90 days or more)," notes the report. "This demonstrates that PAYG solar companies are laying the foundation of mobile money by introducing, or re-introducing customers to the service through their agents, and providing them with the essential training to keep making their payments for each PAYG solar instalment."

PAYG solar customers yield increased overall revenue for mobile operators

"It is striking that overall revenue did increase at higher rates than the control group in all markets. This shows that PAYG solar customers increase their usage of other mobile services, such as voice, SMS, and data more than other customers. Specifically, in two markets where we had data (Côte d’Ivoire and Uganda), PAYG solar customers significantly increased their usage of mobile data. This finding is particularly important because it shows that in an era where mobile operators are struggling with declining voice revenues, PAYG solar can lead to broader digital inclusion."

PAYG solar demonstrates the case for strengthening and broadening collaboration

The report asserts that "[t]hese findings provide robust evidence for the immense value that PAYG solar has for mobile operators to grow their business - helping them to reach more consumers and deepening their use of mobile services. Nonetheless, there are limitations to this kind of study, and we faced gaps in the data, for example we found it difficult to measure the impact of PAYG solar on reducing customer churn for mobile operators due to the limited timeframe of the study."

In addition to the aforementioned findings, the report presents three key actions for the mobile industry to stimulate PAYG partnerships:

1. "For mobile operators already working with PAYG solar providers, there's a need to look at how deeper collaboration with these partners can further drive these mutual benefits.
2. "For all mobile operators, investing in mobile money as a full business platform is essential to attract innovative service providers, and allow them to quickly and affordably put it to work.
3. "Mobile operators can gain unique business intelligence on their partnerships from their data."

Lastly, I share in the "hope that this analysis provides the groundwork for deeper research on synergies between mobile operators and PAYG solar providers, as well as other PAYG services that are gaining traction in emerging markets, such as prepaid water and cooking gas."

What recommendations do you have for how mobile operators can support sustainable development initiatives?

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.

The Use of Green Sukuk Grows to Support Environmental Projects

"If the world is to avoid catastrophic climate change, trillions of dollars of sustainable investments will need to be made every year between now and 2050," writes Melanie Noronha, senior editor for The Economist Intelligence Unit's (The EIU) thought leadership division in EMEA. "Much will have to come from capital markets where investors have already demonstrated an appetite for 'green bonds' which tie the proceeds to environmental projects. There are hopes that sukuk—a sharia-compliant financial instrument similar to a bond—could also be channeled towards environmental investments."

Supported by the Dubai Islamic Economy Development Center, Ms. Noronha's article, "A new shade of green: Sukuk for sustainability," is the first in a series by The EIU on "Innovation in the Islamic Economy." According to the article, "The first shoots of a similar 'green' instrument in the Islamic finance sector emerged not too long ago. In 2017, renewable energy group Tadau Energy issued the first 'green' sukuk, raising US$59m to finance a solar power plant in Malaysia, the birthplace of conventional sukuk in the 1990s. Indonesia issued sovereign green sukuk worth US$1.25bn in 2018 and US$750m in 2019 to fund environment-related projects."

Moreover, "There is activity in the Arabian Gulf countries as well. In 2019 Majid Al Futtaim, a UAE-based retail company, raised US$600m with the region's first corporate green sukuk. This was followed by a €1bn (US$1.12bn) green sukuk by Saudi-based Islamic Development Bank to finance renewable energy, green transportation and pollution control in its member countries."

Ms. Noronha explains that "[c]ompared to conventional sukuk, the market for green sukuk is tiny. Conventional sukuk issuance totaled US$162bn in 2019, while the total outstanding debt for green sukuk amounts to only US$7.9bn..." She adds that "some view it as a natural solution for low-carbon investment. Islamic finance is based on assumptions of fairness and social responsibility, and—while it has not always been observed—environmental stewardship is intrinsic to sharia principles."

What is more, "Since sharia forbids the receipt of interest, sukuk are backed by assets and investors are paid an agreed share of the profits before being returned the principal at maturity. This structure gives them confidence that their capital is being used for a particular purpose."

As a way to combat the effects of climate change, I am witnessing a rise of business and investment opportunities in Africa, Asia, and the Middle East in the automotive (electric vehicles) and renewable energy (wind, solar, and biogas) sectors. Recognizing an increasing interest among investors to support environmental, social and governance initiatives (ESG), I concur that "[t]he combination of investors seeking sharia-compliant investments and those with ... ESG priorities provides a wide investor base for green sukuk."

What instruments are you seeing used to support sustainable investments?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

2020 Will See a Pick-Up in Global GDP Growth and Global Trade, Despite Continuing Trade Tensions

"After a gloomy year, the world's major industries are looking for an upturn in 2020. However, much will depend on policies in the US," says a report by The Economist Intelligence Unit (The EIU), the research arm of The Economist, in its Industries in 2020 report.

In its Industries in 2019 report, The EIU "highlighted five major risks that could undermine global business during the coming year. Four of those risks came true: the deepening of the US-China trade war, an emerging market downturn, tussles over technology and sanctions on Iran. These all dented economic growth and consumer confidence, dragging down sales across several business sectors during 2019. The fifth risk we mentioned, Brexit, has still not happened, but continues to overshadow business in Europe."

The EIU is "expecting a pick-up in global GDP growth and global trade in 2020, despite continuing trade tensions. However, regional trends will diverge, leading to mixed growth forecasts for the six major business sectors covered in this report: automotive, consumer goods and retailing, energy, financial services, healthcare, and telecoms. While there will be opportunities on offer, there are six factors that will determine the direction of these industries in the coming year:

• "A sporadic recovery. Although the global economy will accelerate, growth will be led by an upturn in non-OECD markets, while OECD markets will remain subdued. However, GDP growth in China will also continue to slow, affecting global demand for many goods and exposing problems with manufacturing overcapacity.
• "A watershed election. The US presidential election in November 2020 will be a turning point for several sectors. The re-election of the Republican president, Donald Trump, would slow the rollout of renewable energy, for example, while a Democrat victory could bring new efforts to reform healthcare, as well as sharp increases in corporate taxes.
• "From trade to regulation. The US-China trade war will broaden to affect markets including the EU and Japan. However, the focus will turn from tariffs to regulation, particularly that of the financial and technology sectors. We expect more US sanctions against Chinese companies, as well as legal skirmishes over intellectual property.
• "Asian alliances. While the US continues to raise trade barriers, Asia is forging ahead with new trade deals. The 16 countries in the proposed Regional Comprehensive Economic Partnership (RCEP) aim to sign an agreement in 2020, creating the world’s biggest free-trade agreement. Meanwhile the 11 countries in the overlapping Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will continue to ratify that deal, while opening negotiations with potential new joiners such as China.
• "Brexit hangover. Even if Brexit happens on January 31st 2020—as currently expected—uncertainty will not disappear. The transition period could be fraught, with short-term disruption to trade flows heightening political wrangling over future trade deals.

What is more, "These factors will affect all six of the industries covered in this report, to varying degrees.

"The automotive sector, which has tumbled in 2019, will benefit somewhat from the recovery in many emerging and developing markets. We see car sales heading into positive territory after dropping in 2019. However, commercial vehicle sales in particular will come under pressure from global trade trends as the US continues to threaten vehicle-producing countries such as Mexico, Germany, Japan, South Korea and China with increased tariffs. Brexit will also bring enormous challenges for Europe's vehicle sector, particularly for UK-based producers.

"Consumer markets will also be badly affected by global trade tensions, particularly in the electronics sector, while the political turmoil in Hong Kong will dent sales of luxury goods. This, combined with retail’s greater reliance on developed markets and the rise of online retailing, will slow global retail sales. We expect retail sales to rise by just 2.2% in volume terms, down from 2.5% in 2019.

"For the energy sector, the pledges made under Paris Climate Change Agreement in 2016 will begin to take effect in 2020, making this the base year against which 2030 targets will be judged. However, with the US on the brink of withdrawing from the agreement, global progress will be slowed. The target of slowing global warming to less than 2 degrees centigrade is looking increasingly unattainable, unless the US election results in an unexpected policy change. The oil sector will also be vulnerable to political shocks, although we expect slow consumption growth to keep prices range-bound.

"The financial services sector will see little uplift from accelerating global growth, because it will be more affected by the slowdown in core OECD markets. The economic weakness of developed markets will keep interest rates low, maintaining the pressure on banking and investment margins. Several major financial hubs, including Hong Kong and London, will also be fragile amid difficult political conditions. However, the expansion of digital banking will hold immense promise for increasing financial inclusion in emerging markets.

"For the healthcare sector, too, the US presidential elections will be a particular watershed. Debates will rage over healthcare reform and drug pricing. With other countries also bearing down on prices but expanding access to healthcare, we expect global health spending to accelerate sharply, while spending on pharmaceuticals slows.

"In the telecoms sector, investment in 5G and fiber fixed-line services is likely to be a top priority in 2020. However, companies will have to invest with little certainty of a return and with regulation still uncertain. Moreover, the US-China trade war will continue to pose a major risk, given the dominance of Chinese companies such as Huawei in the build-out of telecoms infrastructure."

The report adds: "As a result of these trends, our key global forecasts for the six industries covered by this report are:

• new-car sales will recover to grow by 1.7%, but CV sales will edge down by 0.1%;
• retail sale volumes will increase by 2.2%, slower than the 2.5% reported in 2019;
• global energy consumption will rise by 1.8%, with particularly strong growth for renewables, while oil prices will remain range-bound;
• bank balance sheets and lending will expand by 6.5%, with Asia leading the expansion;
• healthcare spending will climb by 6.2% worldwide in US dollar terms, despite growth of just 3.1% for pharmaceuticals; and
• global mobile subscriptions will increase by 3%, fixed lines by nearly 2% and broadband subscriptions by 6%.

"Despite these mixed forecasts, there will be opportunities on offer for companies that are competitive and international enough to take advantage. Even so, they will have to be nimble to adapt to rapid changes in the business and political environment."

Lastly, The Economist produced a video presenting its predictions for the top stories of 2020.

What are your predictions for 2020?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

A Tech-Driven Transformation in Africa is Making People Healthier, Wealthier, and Better Educated

Since my first trip to the African continent in the 1990s, I have appreciated the correlation between advances in technology and the rise of socioeconomic development. From obtaining a drove of information from the world wide web through a desktop computer using a dial-up modem to transferring cash through a service optimized for mobile phones, it is amazing to witness such transformations in the lives of those whom live in developing countries. Therefore, I read with great interest a special report entitled "Technology in Africa" in the Nov. 11, 2017 issue of The Economist.

The report's leading article, "The leapfrog model: What technology can do for Africa," notes that across "sub-Saharan Africa, countries are on the cusp of a tech-driven transformation that is already beginning to make people healthier, wealthier and better educated at a pace that only recently seemed unimaginable."

Providing some historical context of technological advances in Africa, the article explains:

The first taste of these new possibilities came when mobile phones swarmed across the continent a decade ago. Within just a few short years hundreds of millions of people were able to phone and text for the first time, bypassing monopolistic state-owned phone companies that kept customers waiting for landlines indefinitely. And leapfrogging over old technologies and business models with mobile phones quickly made other sorts of leaps possible. Thanks to M-Pesa, a service that lets people send money through their phones, everyone with a phone suddenly also had, in effect, a bank account in their pocket. As mobile money has lowered transaction costs, it has brought down barriers to innovation in all sorts of other areas, allowing lenders quickly to assess credit risks, insurers to sell life and medical cover in small chunks and new energy firms to sell electricity by the day or week.

What is more, "Some of these innovations are emerging from the thriving tech hubs that are popping up across Africa, but most of the technology transforming the continent comes from elsewhere. The $50 smartphones on which apps connect motorcycle taxis and customers in Rwanda are Chinese, for instance. However, these technologies are often being combined in new ways to solve uniquely African problems. If you want to book a truck to move your cow, or get an ambulance to go to hospital, you will probably turn to an African startup."

The article importantly mentions that "much of the money going into African technology comes not from philanthropists but from hard-nosed investors looking for attractive returns. In 2016 African tech firms raised a record $367m. Although paltry by the standards of Silicon Valley, this is helping to stimulate the setting up of firms such as Flutterwave, a Nigerian payments company, and Zipline, which uses drones to deliver blood to clinics in Rwanda."

Not all of the news, however, is so optimistic:

Technology is advancing far more slowly in Africa than it is in the rich world, so the gap has been widening in recent years. "The poverty gap is a technology gap," says Kwabena Frimpong Boateng, Ghana's science and technology minister. It is also a knowledge and education gap. Three-quarters of children in their third year of schooling in Kenya, Uganda and Tanzania are unable to explain the meaning of the sentence "The name of the dog is Puppy" after reading it aloud. If the education system cannot prepare youngsters for jobs in a tech economy, Africa risks falling even further behind.

The do it yourself method of learning, which I have witnessed all so well during my travels to Africa, continues to thrive. The article explains that "given an opportunity to grasp that technology, many in Africa do so with both hands. In a tech hub in Lagos, Nigeria, enthusiastic youngsters tap away on laptop computers, practicing coding skills that many have picked up through online portals such as Udacity or by watching YouTube videos." Furthermore, "Jean-Claude Bastos, who sponsors an annual innovation prize in Africa as well as a tech hub in the slums of Luanda, Angola, recalls how alarmed he was when he first put a 3D printer into the center, only to find that the youngsters there immediately dismantled it. 'They took it apart, then put it back together, then did it again. Now if anything in it breaks they rebuild it on intuition, like it is a motorbike or car,' he says."

Lastly, the report says,

A cluster of new technologies promise to have a huge impact on Africa, not least because they can help solve some of Africa's biggest and longest-standing problems. These include weak state-run education systems, a high burden of disease, broken infrastructure and low productivity on farms and in factories. What made mobile phones so much more important in Africa than in the rich world was that for hundreds of millions of people they were the first and only form of telecommunication available. Equally, if a vaccine is developed for malaria, it will make little difference in the rich world but could save millions of lives in Africa. 'Investments in health R&D for HIV, tuberculosis, malaria and other diseases will be a massive boon for poor countries where the disease burden is highest,' says Bill Gates, whose foundation funds some of this research. 'The same is true for innovations like better seeds that enable poor farmers to increase crop yields.'

The Economist's special report is presented through the following articles:

• "Good night, gloom: Africa might leapfrog straight to cheap renewable electricity and minigrids"
• "The right connections: Beefing up mobile-phone and internet penetration in Africa"
• "Yes, we have no bananas: How technology can cure market failures in Africa"
• "Someone to watch over them: Electronic surveillance may save the rhino"
• "Doing more with less: Technology can make scarce medical resources go further"
• "Robots in the rainforest: Technology may help compensate for Africa's lack of manufacturing"
• "Four legs good, four wheels better: The sharing economy, African style"
• "Light in the tunnel: Technology cannot solve all of Africa's problems, but it can help with many"

How do you think technology will transform the lives of people living in Africa?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

Observations from the Eureka Park Marketplace at CES 2016

I attended CES® from Jan. 5-9, 2016 in Las Vegas, Nev. During my visit to the internationally renowned electronics and technology trade show, I had the opportunity to visit with several startup companies exhibiting in the Eureka Park Marketplace at CES®. Eureka Park is promoted as "the flagship startup destination at CES, providing a unique opportunity to launch a new product, service or idea."

500 companies exhibited at this year's Eureka Park Marketplace, up from 375 in 2015. According to an announcement by the Consumer Technology Association (CTA)™, which owns and produces CES®, over 1,100 startup companies "have exhibited in Eureka Park since its inception in 2012" and "at least 100 of these startups have been funded at $1 million or more. Eureka Park created a leaderboard that provides a ranked list of those companies who received funding.

This year's Eureka Park had a strong representation from outside the United States. Among the 500 startup companies from 29 countries, "more than 50 percent of exhibitors coming from outside the U.S. New countries represented in Eureka Park in 2016 include Austria, Czech Republic, Greece, Netherlands, New Zealand, Russia, Taiwan, Turkey, and UAE. At the show, Eureka Park is segmented by specific verticals such as wearables, smart home, health and sports tech, 3D printing, audio and video and virtual reality."

Among the hundreds of exhibiting companies, I found particular interest in a company called ECHY, which has developed an environmentally-friendly alternative to electric lighting during the daytime by capturing natural light on the outside of buildings and brought inside by fiber optic cables. According to the company's website, "The idea of using fiber optics to transport sunlight to the inside of buildings began in the 1980s. It was, however, at the time, too expensive to be produced on a large scale." The company's founder's solution, in 2010, has enabled the democratization of natural lighting by fiber optics. They launched their idea while studying at the National Polytechnic School in Paris and patented their technology in 2012.

The Champs-sur-Marne, France-based company further explains that "During the first year, the ECHY team were working on Research and Development at their school in Paris, where they created their first prototype and product: Eschysse. ESCHYSSE has been available on the market since 2013, and marks the commercial beginning of ECHY." The company's team currently consists of six individuals together engineers, researchers and sales representatives.

The  company provides the following reasons on why to use its technology:

1. Benefit from the positive impacts natural light has on our health and well-being;
2. Make the most of underexposed areas;
3. Make your building more energy efficient;
4. 100% sustainable and green technology;
5. A modular system that can be adapted to any room; and
6. Constant lighting even it isn't sunny.

ECHY produced a brief video that explains how its panels are fixed on a tracking system, which enables them to absorb sunlight during the day and then transport it, via fiber optics, to the inside of buildings.

I also enjoyed visiting with Well Being Digital (WBD101), which created "the smallest heart measurement earbud design." According to its website, the Hong Kong-based company "aims to enable affordable & accurate underlying technologies for mHealth/wearable devices." Among the three platforms or devices, ActivHearts™, MoGo™, and EarTaps™, the Hong Kong-based company demonstrated, I found interest in ActivHearts™, which is a heart rate measurement technology using photoplethysmography (PPG) that can be applied to earphones and wrist watches.

WBD101's website further explains that "one of the challenges of PPG technology is that the PPG sensors pick up a lot of noise when the user is exercising, as it is very sensitive to motion. WBD101 technology uses multiple source and sensor pairs and advance digital signal processing to remove these motion noise." Moreover, "The latest generation of ActivHearts™ makes use of Bluetooth Smart technology (BLE) that means you can easily have your heart rate information displayed on your smartphone apps."

WBD101 produced a video for CES 2016 highlighting its ActivHearts™ technology.

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.