Mobile Money Services Are Growing Faster Than Predicted, Says GSMA Report

According GSMA's State of the Industry Report on Mobile Money 2023 report, "mobile money is now considered a mainstream financial service in many countries." Funded by the Bill and Melinda Gates Foundation, the UK-based organization says: "During the COVID-19 pandemic, mobile money enabled millions of people in low- and middle-income countries (LMICs) to access digital financial services (DFS) for their daily needs." Available in English and French, the report "looks at the growth of mobile money in a post-pandemic world."

The report notes that adoption and active usage continue to rise. "Registered mobile money accounts grew by 13% year on year, from 1.4 billion in 2021 to 1.6 billion in 2022. This can be attributed, in part, to regulatory changes in Sub-Saharan Africa, particularly in Nigeria and Ethiopia where mobile money adoption rose rapidly."

What is more, digital transactions are increasing as the use of cash slows down. "Transaction values grew by 22% between 2021 and 2022, from $1 trillion to around $1.26 trillion," the report explains. "However, the share of cash-based transactions in the overall transaction mix declined, with cash-in and cash-out transactions dropping nearly two percentage points. This is due to a significant rise in digital transactions, particularly interoperable bank transfers and bill payments."

Encouragingly, global daily transaction values are exceeding predictions. "In 2020, global daily transaction values exceeded $2 billion. The State of the Industry Report on Mobile Money 2021 (covering data from 2020) suggested this could reach $3 billion a day by the end of 2022. This figure has been surpassed, with $3.45 billion transacted daily via mobile money in 2022."

Mobile money remains a key savings channel, according to the GSMA. In 2022, approximately 60% of mobile money providers (MMPs) "offered users a savings account. Half of these providers did not offer a savings product in 2021. The World Bank Global Findex 2021 found that 15% of adults in Sub-Saharan Africa, or 39% of all mobile money account owners in the region, saved using a mobile money account."

Disappointingly, women in LMICs are 28% less likely than men to own a mobile money account. "More women have a mobile money account than ever before and are using it at a similar rate as men on a 30-day basis. However, there is still a gender gap in account ownership that has recently widened in countries such as Nigeria and Pakistan." The report continues to explain that "One of the main barriers to closing the gender gap is mobile phone ownership: increasing mobile phone ownership can improve mobile money adoption rates among women. Other steps to close the mobile money gender gap include increasing women's digital skills and awareness of the benefits of mobile money, and tackling social norms and other barriers that are preventing women from using it."

Another key finding of the report is that regulation has been influenced by challenges such as taxation and fraud. "Regulation has focused on ensuring payment systems remain safe and efficient while also encouraging innovation. However, the mobile money industry is facing several regulatory challenges. Some countries have introduced taxes on mobile money transactions and fees that do not align with their financial inclusion objectives." Moreover, "Fraud also remains an industrywide issue, which many regulators are aiming to overcome through improved consumer awareness and capacity building."

GSMA's report on the state of the mobile money industry draws on the results of the annual GSMA Global Adoption Survey of Mobile Financial Services and data from the GSMA Mobile Money Deployment Tracker. I appreciate how this report provides insights on mobile money performance from the GSMA's engagement with the industry.

What do you think of the report's findings? What is your engagement with the mobile money industry?

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.

Digitally Enabled Climate Finance Can Help LMICs Reduce Emissions and Adapt to the Impacts of Climate Change

Having engaged in the climate finance and technology sectors over the past several years, I agree with the GSMA that "Climate finance has increasingly taken center stage in debates about the future of climate action. For low- and middle-income countries (LMICs) to reduce emissions, significant financial support is needed to transition to low-carbon economies and adapt to the impacts of climate change." The UK-based organization notes in a new report that provides an overview of how mobile and digital technology can be used to facilitate and accelerate climate finance, "While disruptive technologies offer great promise, they require an enabling ecosystem and robust financing to be successful."

The report's Executive Summary importantly points out: "The use of mobile and digital technologies in delivering climate finance to underserved communities shows excellent promise. Emerging solutions moving climate finance forward include frontier technologies, such as the Internet of Things (IoT) and blockchain, as well as the voluntary carbon market (VCM).

The report's other main conclusions include:

Defining climate finance: "The research highlighted that the public and private sectors define climate finance differently. This has an impact on the level, quality and priority of investment in climate change. Understanding the various definitions of climate finance is also key to creating an inclusive ecosystem in which all actors can execute their mandates, including the mobile and digital technology community. The knowledge and technical expertise required for climate finance can be enhanced based on agreed definitions, and will help to develop tailored products, services and capacity building tools."

Building knowledge and technical expertise in digitally enabled climate finance: "Climate finance is a new, complex and contested field. Digitally enabled climate finance has added a layer of complexity because it incorporates technology in both climate action and climate financing. As a result, there is a gap in knowledge and technical expertise, which are key to developing solutions and accelerating climate finance for those most impacted by climate change."

Developing digital infrastructure and ecosystems in LMICs: "The deployment and delivery of climate finance via mobile and digital technologies depends on strong digital infrastructure. However, there are numerous barriers to the development of this infrastructure."

Improving access to quality data: "Digital technology needs to be integrated in climate finance to ensure quality data. However, in LMICs, there are data-related barriers that make it difficult to attract investment and compete for access to climate financing."

Reaching underserved populations: "Underserved groups in LMICs, especially women, are the least likely to access and use mobile technology. This is due to a variety of reasons, including the affordability of handsets and data, a lack of digital skills and social norms. Since these groups tend to be the most vulnerable to the impacts of climate change, solutions need to be tailored specifically to their needs and access to technology."

The development of carbon markets: "[T]he adoption of Article 6 and Article 6.4 of the Paris Agreement, which outline the development of a VCM, has sparked interest in this innovative climate financing mechanism. However, there are persistent implementation challenges, largely due to complex and immature markets."

I appreciate how the report showcases models and best practices for how mobile and digital technologies can ensure vital funds reach the most vulnerable people and communities. In doing so, it demonstrates the opportunities for transformative technologies to help counter the climate crisis. While climate finance is relatively new, research presented in the report "shows that mobile and digital technology are uniquely positioned to provide tools that catalyze and strengthen how it is delivered." The report also "offers a preliminary assessment of digitally enabled climate finance to guide public and private sector actors, including financial institutions and mobile network operators (MNOs). In doing so, it seeks to support the delivery of innovative solutions and partnerships that serve communities most affected by climate change."

The GSMA also produced a webinar that discussed the future of climate action and the role of mobile and digital technology in delivering climate finance in LMICs.

If finance is at the heart of tackling the climate change crisis, then what are your recommendations of how to use mobile and digital technologies to ensure vital funds reach the most vulnerable people and communities?

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.

Report Identifies Six Decarbonizing Technologies That Will Help Asia's Path to a Greener Future

"Asia, home to vast engines of economic growth, is at the center of the climate debate," says a report written by Economist Impact and sponsored by Eastspring Investment, which is a Singapore-based asset management business of Prudential plc. The report adds that "In the past two decades, global carbon emissions from fossil fuel combustion have risen by 45%, primarily driven by Asia, for which this figure stood at 135%. The region's ongoing dependence on coal has driven its per-head carbon emissions to equal that of the global average. Asia's carbon emissions are likely to rise by 16% over the next decade.

"Meanwhile, the effects of climate change are becoming more pronounced in parts of the region. In the past year, unprecedented floods in Pakistan wiped out a significant share of its crops; India recorded its highest-ever temperatures, with meteorologists sounding the alarm for more to come this year; and a severe heatwave in China exacerbated a drought that impacted food production and the power supply."

The report importantly points out that Asia "is facing significant human and economic costs arising from intense greenhouse gas (GHG) emissions. Under pressure to set ambitious net zero targets and reduce emissions, technologies that enhance efficiencies and help industries decarbonize will be crucial pieces of the climate puzzle in Asia."

The findings presented in Asia's path to a greener future: Six technologies with decarbonizing potential are based on an extensive literature review, an interview program, and analysis conducted between October 2022 and March 2023. The report's findings, which are listed below, are intended to act as a springboard for discussions to support the development of technologies that have decarbonizing potential and identify the roadblocks to their progress.

• Technologies that are driving significant gains in Europe or the Americas need to be adapted to the Asian market. For example, the majority of alternative protein products are tailored to suit Western preferences and are prohibitively costly for the more price-sensitive Asian market. Alternative proteins would likely see broader adoption and create more impact if adapted to specific market preferences and price conditions.
• Decarbonization efforts should aim to address emissions and waste across the entire lifecycle of production and use. Most of the hydrogen currently consumed is grey, which is produced from natural gas. The decarbonization potential of hydrogen-powered vehicles will significantly increase with the use of renewable energy to produce hydrogen fuel. Likewise, using food waste for manufacturing textiles moves away from the current highly polluting linear model of production to a circular economy.
• Developing supporting infrastructure can enhance technology development. The growth of technologies such as hydrogen vehicles and battery recycling is currently limited due to insufficient supporting infrastructure. Spurring hydrogen vehicle uptake depends on installing a network of refueling stations and green hydrogen production plants. To diminish end-of-life impacts of batteries, well-designed and managed disposable and collection mechanisms are necessary. Implementing policies that support the development of necessary infrastructure will ensure a conducive environment for the growth and expansion of these technologies.
• Addressing poor consumer sentiment will be key in scaling up technologies. Negative perceptions impede new technology adoption. In the case of alternative proteins, consumers can be deterred by concerns about taste and nutritional value. With hydrogen vehicles, safety is a key issue, while recycled batteries can be perceived as lower quality. Investigations into safety incidents can help curb concerns. In other cases, public awareness and better communication by businesses and governments can go a long way to address common misperceptions.
• Recycling and reuse can present opportunities to overcome supply chain disruptions owing to changing global dynamics. The prices of critical minerals are on the rise because of growth in demand and fluctuations in supply. Recycling products, such as electric vehicle (EV) batteries, could ease the dependence on expensive raw materials, improve affordability and facilitate the transition away from a linear take-make-waste economy.
• Policy support in the form of subsidies and financial incentives can reduce technology costs. At present, many new technologies are expensive, which is hindering their adoption and development. Government support through subsidies, grants and other financial incentives can help reduce production costs and enable economies of scale. Lower production costs could translate into lower purchase prices for end consumers and foster greater adoption.
• Greater public and private investments are needed. While climate technology is attracting investment, more financial support is needed to scale-up the next wave of innovation. Funding is also needed to help install essential infrastructure to support the uptake of climate technologies such as hydrogen production plants and EV charging stations.

The six technologies with decarbonizing potential include are segmented into three verticals: agriculture (alternative proteins and precision farming), transport (EV batteries and hydrogen vehicles), and waste (alternative fabrics and battery recycling). These technologies "show considerable potential for reducing Asia's carbon footprint, as well as improving sustainability and security in the region." However, "each technology has its own set of unique challenges."

I support the report's assertion "Technology is a critical enabler of decarbonization efforts and, as it continues to advance, it brings greater scope to address emissions in hard-to-abate sectors." The report adds that "innovation plays a crucial role in improving energy efficiency and reducing waste, but challenges remain to the broader uptake of each technology. Investment in research, development and deployment of nascent technologies will be essential to achieving our climate goals."

What technologies do you think will have the biggest impact on Asia's path to a greener future?

​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.

China's 5G Enterprise Services to See Greater Commercial Scale in 2023, Says GSMA

"China's economy is on the road to recovery, following the easing of Covid-19 restrictions from late 2022," the GSMA, an organization that presents the interests of mobile operators worldwide, said in its latest report on the state of China's mobile economy. "Mobile connectivity served as a lifeline throughout the pandemic and will play an even more crucial role in enabling the safe return to social interaction and the restart of many economic activities."

The report, which is available in English and Chinese, notes that "authorities across China have outlined plans to integrate digital technologies, underpinned by advanced mobile connectivity, into every aspect of society to sustain China's competitiveness in an evolving global economy. In 2022, mobile technologies and services generated 5.5% of China's GDP – a contribution that amounted to $1.1 trillion of economic value added."

The UK-based organization adds that "5G will underpin future mobile innovation and services, building on current deployments and adoption." What is more, "The number of 5G base stations in China exceeded 2.3 million at the end of 2022, including approximately 887,000 built during the year. China will be the first market with 1 billion 5G connections, reaching the milestone by 2025. The report also says that "By 2030, 5G connections in China will reach 1.6 billion, accounting for nearly a third of the global total. The technology will add $290 billion to the Chinese economy in 2030, with benefits spread across industries."

Additional key highlights from the report include:

• 5G enterprise services to see greater commercial scale in 2023: "Mainland China is the largest 5G market in the world, accounting for more than 60% of global 5G connections at the end of 2022. With strong take-up of 5G among consumers, the focus of operators is now increasingly shifting to 5G for enterprises. This offers opportunities to grow revenues beyond connectivity in adjacent areas such as cloud services – a segment where operators in China have recently made significant progress."
• Dedicated networks on the rise: "Private and dedicated wireless network solutions are back in vogue, as 5G’s enhanced capabilities move deployments beyond low-profile, niche offerings. Manufacturing and mining are two sectors where demand for private and dedicated 5G networks in China looks particularly strong."
• Innovation underpins China's digital ambitions: "China's digital ambitions are driven by a combination of external and internal factors, notably a slowdown in growth of the real economy. The digital ecosystem, including start-ups, will be at the forefront of efforts to realize China's digital ambitions, with innovation and investments driving the creation of new solutions across the focus areas of China's 14th Five-Year Plan (2021–2025) and the Long-Range Objectives Through the Year 2035."
• The mobile industry shifts towards circularity: "Across the telecoms ecosystem, sustainability has extended beyond corporate social responsibility (CSR) to become a core strategic priority. Industry players are increasingly adopting a model of production, service offering and consumption that involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products for as long as possible."
• Fintech presents opportunities for mobile industry players: "China has developed a lead in fintech services over the past decade, driven by investments in an expanding portfolio of products and surging public demand for electronic payment options. As fintech innovators increasingly leverage emerging technologies (such as big data, AI and cloud computing) to enable more complex and customized solutions, operators have an opportunity to play a greater role in fintech."

The report also reveals the following statistics:

• Unique mobile subscribers in China will total 1.33 billion by 2030;
• There were 1.17 billion mobile internet subscribers in China in 2022, equivalent to 79% adoption;
• 5G will overtake 4G in 2024 to become the dominant mobile technology in China;
• China to be among leading 5G markets globally, with 88% adoption by 2030;
• Smartphone connections will total 1.73 billion in China by 2030, accounting for 93% of connections;
• Smartphone data traffic in China to more than double over the period to 2028;
• Licensed cellular IoT connections in China to double to 3.6 billion by 2030;
• Revenue growth is set to moderate in China over the coming years as 5G adoption reaches maturity;
• Operators in China will spend $291 billion on their networks during 2023–2030, with most on 5G;
• The mobile sector added $1.1 trillion of economic value to the Chinese economy in 2022;
• At the end of the decade, mobile's economic contribution will reach $1.3 trillion;
• The mobile ecosystem in China supported 6 million jobs in 2022;
• The fiscal contribution of the mobile ecosystem reached $110 billion in 2022;
• 5G will add almost $290 billion to the economy in China in 2030; and
• Manufacturing and services will benefit the most from 5G in 2030.

Infographic: GSMA

Regarding the sixth generation mobile system standard (6G), the GSMA points out that "The mobile industry is already studying how 6G will shape the future of mobile. For regulators, ministries, operators, vendors and researchers, spectrum policy for 6G is becoming increasingly important." Furthermore, "2023 marks the beginning of a long journey as new studies begin when the WRC-27 cycle kicks off."

The report concludes by explaining how "6G is expected to become the primary mobile technology in the 2030s and will offer an enhanced user experience over previous generations. It promises ultra-fast data rates with lower latency, significant energy efficiency improvements and greater reliability."

What opportunities are you seeing in China's mobile 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.

Modest Global Growth and Challenges Ahead in 2023, Says EIU

According to a report about the global economic outlook for 2023 published by the Economist Intelligence Unit (EIU), the global economy is proving resilient amid severe economic headwinds. However, the UK-based organization, says global gross domestic product (GDP) growth will slow sharply in this year with global inflation remaining stubbornly high. Moreover, the report notes that risks abound for the global economy including fears about global food supplies.

Additional key findings from the report include:

• The EIU expects global economic growth to slow sharply in 2023, reflecting persistent headwinds stemming from the ripple effects of the war in Ukraine, as well as high inflation and rising interest rates.
• The EIU's forecast for global growth stands at 2% (up from 1.9% last month). This upward revision reflects an improvement to our US growth outlook, which the EIU now forecasts at 0.7% for 2023 (up from 0.3% previously).
• The EIU forecasts that the Chinese economy will grow by 5.7% in 2023. The recovery will be consumer-led as the exit from the country's zero-covid policy unleashes pent-up demand for goods and services (including outbound tourism).
• The euro zone has avoided recession in the winter of 2022/23, owing to lower than expected energy demand due to mild temperatures. However, high inflation continues to weigh on spending—the EIU forecasts GDP growth of just 0.7% in the bloc.
• The EIU expects a moderate global recovery in 2024, with real GDP growth of 2.5%. However, growth in OECD economies will remain subdued, at a forecast 1.5%. By contrast, the EIU forecasts growth of 4.1% in non-OECD economies.
• Inflation was a major driver of our forecasts in 2022, and this will continue to be the case in 2023. The EIU expects major central banks to end their tightening cycles by mid-year as inflation slows, but rates will remain high in 2023-24.
• Despite sky-high interest rates, global inflation will subside only gradually, from an estimated 9.3% in 2022 to 6.7% in 2023 and 4.3% in 2024. Prices will remain high in level terms, even after inflation subsides, fueling the risk of social unrest.
• Oil prices will remain high in 2023, owing to continued disruption from the war in Ukraine and rising Chinese demand. The EIU expects oil (dated Brent Blend) to trade above US$80/barrel until 2025.

I appreciate how this report provides businesses with foresight of the critical global trends and threats that will shape interest rates, inflation and economic activity in the year ahead. What do you think about the report's findings?

​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.

Mobile Connectivity Is a Lifeline for Society

In its latest report that provides insights on the state of the mobile economy worldwide, the GSMA says "Mobile connectivity continues to be a lifeline for society, helping the most vulnerable people in areas affected by conflict and natural disasters to stay connected. It is also enabling advanced connectivity capabilities needed by verticals to innovate amid diverse political, social and macroeconomic headwinds."

The UK-based organization representing the interests of mobile operators worldwide adds that "By the end of 2022, over 5.4 billion people globally subscribed to a mobile service, including 4.4 billion people who also used the mobile internet." The report notes that "The mobile internet usage gap has narrowed markedly in the last five years – from 50% in 2017 to 41% in 2022 on average – but still remains significant and demands urgent attention from all stakeholders."

What is more, "In 2022, mobile technologies and services generated 5% of global GDP, a contribution that amounted to $5.2 trillion of economic value added, and supported 28 million jobs across the wider mobile ecosystem. 5G will underpin future mobile innovation and services, building on ongoing deployments and adoption. 5G adoption will reach 17% this year, rising to 54% (equivalent to 5.3 billion connections) by 2030. The technology will add almost $1 trillion to the global economy in 2030, with benefits spread across all industries."

Key trends shaping the mobile ecosystem include:

• 5G consumer monetization comes into focus: "Throughout 2023, some 30 new markets will launch 5G services; importantly, many of these will be developing markets across Africa and Asia, making 5G a truly global trend. As 5G adoption continues to scale, the monetization imperative will grow."
• Private 5G builds momentum: "Private wireless solutions are back in vogue, as 5G's enhanced capabilities allow deployments to move beyond low-profile niche offerings."
• Mobile industry shifts towards circularity: "Across the telecoms ecosystem, sustainability has extended beyond corporate social responsibility to become a core strategic priority. Industry players are increasingly adopting a model of production, service offering and consumption that involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products for as long as possible."
• The metaverse continues to gain traction: "Momentum for the metaverse continues to grow, alongside advancements in enabling technologies like 5G, AI and wearables. The growing interest from key stakeholders and ecosystem players has led to the emergence of important building blocks for the advancement of the metaverse, notably content and applications, standards and devices, which will be at the forefront of activities in 2023."
• Fintech presents opportunities for mobile industry players: "Fintech has transformed the way financial services cater to consumers and businesses alike. Although investor sentiments fell sharply in 2022 after record funding the previous year, the fundamentals of growth – including high demand, digital-centric lifestyles and enabling regulations – remain strong."

The report also highlights the following statistics:

• There were 5.4 billon unique mobile subscribers in 2022, rising to 6.3 billion by 2030;
• Globally, there were 4.4 billion mobile internet users in 2022, equivalent to 55% penetration;
• 5G will overtake 4G in 2029 to become the dominant mobile technology by the end of this decade;
• 5G adoption will be over 85% in the top 5G markets by 2030, led by the six Gulf Cooperation Council states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates), developed Asia Pacific, and North America;
• There will be 9 billion smartphone connections by 2030, equivalent to 92% of total connections;
• Globally, smartphone data traffic will rise more than threefold in the period to 2028, with the biggest users in North America and Northeast Asia;
• The total number of licensed cellular IoT connections will double to 5.3 billion by 2030, with Greater China accounting for two-thirds;
• Revenue growth is expected to remain in positive territory in both developed and developing regions for the period to 2030;
• At the end of the decade, mobile's economic contribution will surpass $6 trillion; and
• The fiscal contribution of the mobile ecosystem reached $530 billion in 2022.

Infographic: GSMA

As for the mobile industry's impact on the 17 UN Sustainable Development Goals (SDGs), the GSMA explains that "There are now 11 SDGs where mobile's contribution is over 50, compared to six SDGs in 2020 and none in 2015." Furthermore, "The mobile industry continues to achieve its highest impact on SDG 9: Industry, Innovation and Infrastructure, driven by the reach of mobile networks and take-up of mobile internet services."

The report encouragingly adds that "The biggest improvements were recorded in the industry's contribution to SDG 1: No Poverty, SDG 2: Zero Hunger and SDG 4: Quality Education. This is due to the increasing proportion of people using mobile for activities such as accessing government services, applying and searching for jobs, and obtaining educational information for themselves or their children." The GSMA also notes that there was "an improvement in the affordability of mobile data and devices. This comes after affordability worsened in 2020 because of the decline in per capita income due to the Covid-19 pandemic."

What aspects of the report did you find of particular interest?

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.

How a Company Can Build Resiliency in Uncertain Times

"Amid compounding challenges across the Americas, it's becoming abundantly clear that an actively engaged board is paramount to success," EY notes in its report that presents priorities a company's board of directors should consider in 2023 to build resiliency. The multinational consultancy adds: "Companies are navigating an unprecedented mix of challenges, from the ongoing pandemic to escalating cybersecurity threats, climate change impacts, evolving regulatory pressures and more."

What is more, "By overseeing strategies to navigate this complex business environment and provide guidance on transformational investments, boards play a crucial role in helping management teams explore different options, challenge assumptions and thrive under uncertain conditions. This resiliency — the ability to anticipate, prepare for, respond and adapt to a changing environment — is necessary in an increasingly complex world."

Based on the survey results and EY's direct engagement with hundreds of key stakeholders (including boards, individual directors, C-suite executives and leading institutional investors), the report has identified the following five board priorities for 2023:

Priority 1: Navigating uniquely challenging economic conditions

• How is the company planning for a range of economic scenarios, including those in which inflation and wage growth stay elevated for longer?
• How often does the board ask leadership: "What if we're wrong? What happens if a low-probability, high-impact scenario emerges? What would we do differently if that is the case?"
• What is the company doing to stress-test its balance sheet and develop a crisis playbook that gives company leaders comfort in their ability to manage even the worst-case scenario?
• How is the company building a resilient and sustainable pricing strategy? How is scenario-planning supporting that strategy?
• How is the company evaluating labor costs and decisions in the context of the company's longer-term talent strategy?

Priority 2: Rethinking capital strategy

• How is the company investing to motivate risk and create opportunity despite multiple headwinds?
• How is the company's investment strategy changing in key areas such as digital and technology, people and skills, innovation and R&D, and sustainability? How are the board committees coordinating their oversight of these matters?
• How is the company considering a variety of transactions (e.g., M&A , divestment, new joint ventures or strategic alliances to achieve its strategic goals? Are those options explored at the board level, or is the board presented only with management's decision?
• What is the company's approach to capital allocation (i.e., is it data-driven, consistent and enterprise-wide)? Does it focus on qualitative and quantitative metrics?
• How is the company's investor engagement program keeping key shareholders informed of the company's long-term value creation strategies and the board's related expertise? Do disclosures describing the board's composition demonstrate that, individually and collectively, the board is fit for purpose?

Priority 3: Enabling innovation and technology transformation

• How is the company's innovation budget and program contributing to the creation of an informed strategic plan leveraging emerging technology?
• How is the board thinking about and redefining competitors or industry boundaries? Who might now be a competitor that wasn't previously?
• How are responses to changing stakeholder demands, expectations and operational disruptions leading management teams to innovate?
• How are investments in innovation tracked and reported to the board? Is the board engaged in innovation discussions as part of the strategy-setting process?
• How is the board building a foundational understanding of evolving technologies such as the metaverse, including learning through experience?

Priority 4: Championing a future-focused talent agenda

• How is the board gaining insight into employee engagement, performance, operating statistics such as retention and turnover, and experience across different segments (seniority level, geography, function or business, etc.)?
• How is the company providing support for career path and progression, including mentoring, learning and development programs, and updating organizational design to open opportunities for advancement? Are upskilling and retention central to the company's talent strategy, including around key are as such as technology and sustainability?
• How is the company ensuring pay equity? How is it also creating a human- centered rewards policy encompassing compensation, wellbeing, flexible benefits, time off and more?
• How is the company enabling productivity and culture alignment in a hybrid working environment?
• Has the company leveraged a third-party assessment to validate that the company's policies and practices foster diversity and inclusion, and how can they be more effective? How is the company's DEI commitment integrated into the ways it serves its customers, communities and the market?

Priority 5: Overseeing cybersecurity and data privacy

• Have appropriate and meaningful cyber metrics been identified and provided to the board on a regular basis and given a monetary value?
  
• What information has management provided to help the board assess which critical business assets and partners, including third parties and suppliers, are most vulnerable to cyber attacks?
• How does management evaluate and categorize identified cyber and data privacy incidents and determine which ones to escalate to the board?
• Has the board participated with management in one of its cyber breach simulations in the last year? How rigorous was the resting?
• Has the company leveraged a third-party assessment to validate that the company's cyber risk management program is meeting its objectives? If so, is the board having direct dialogue with the third party related to the scope of work and findings?

The report also presents the following other priorities on the board agenda:

• What systems and processes are in place to monitor international and domestic legislative and regulatory developments and keep the board informed as appropriate?
• How is the company ensuring visibility across global supply chains and considering alternative suppliers to improve resilience to shortages or price volatility? Is it evaluating supplier relationships for potential geopolitical complications and exploring alternative supplier networks attuned to the new geostrategic environment?
• Does the company view climate initiatives as a means of protecting and creating more value for the business? How is it exploring opportunities to transform its business portfolios while reducing emissions?
• How is company engaging and supporting suppliers to influence emissions reduction through their supply chains? Has the company considered a strategic partnership or joint venture to help achieve its climate agenda?
• How well do management and the board understand how geopolitical developments affect current and future strategy? Is scenario planning being used to systematically explore multiple plausible future and their potential business implications?

I concur with EY's concluding paragraph that "[i]n this new era of permanent uncertainty and volatility, success will be based on resiliency and sustainability, including the ability to sustain shocks, self-disrupt, and contribute to the solution of societal and environmental challenges. To meet the challenges ahead, boards will need to strengthen their effectiveness through continual assessment and improvement."

What are your recommendations for how a company can build resiliency in these uncertain times?

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.

A Toolkit for Startups in the Utilities Sector Seeking to Partner With the Public Sector

"Cities in low-and middle-income countries are home to one billion people lacking access to affordable, reliable, safe, and sustainable utility services," Max Cuvellier, GSMA's Head of Mobile for Development, writes in the Forward of a toolkit that was created for startups in the utilities sector that are seeking to partner with the public sector. He adds: "This urban service gap is being exacerbated by rapid urbanization, climate change and widening inequalities posing complex challenges to city authorities, municipalities, and utility service providers."

In its press release announcing the publication of the toolkit, the GSMA, a UK-based organization that represents the interests of mobile operators worldwide, notes: "Partnerships between start-ups and the public sector have emerged as an innovative and impactful way to address critical gaps in essential urban services – particularly when it comes to reaching low-income urban populations in informal settlements. They have the potential to combine the technology, innovative financing, and agility of start-up ventures with the public sector’s scale, service mandate, and resources."

The GSMA's announcement further says: "Over the last decade, through the GSMA Innovation Fund, we have supported more than 100 start-ups and SMEs working across LMICs. In that time, we have observed how central partnerships are to startups' scaling journeys and wider social impact. We have also seen how partnership formation between stakeholders with different organizational cultures, time horizons, and strategic priorities can pose challenges. Meanwhile, there has been little research and few resources tailored towards start-ups and early-stage private sector innovators pursuing partnerships with the public sector."

This toolkit therefore aims to:

1. Highlight the role of start-up-public sector collaboration in the context of the many challenges facing cities in LMICs;
2. To provide a conceptual framework of how to think through, frame, and define startup-public sector partnerships;
3. To offer practical tips and tools to startups navigating these complex partnerships; and
4. To highlight additional resources that might be relevant to those aiming to catalyze startup public sector collaboration.

The toolkit presents the following conclusions:

• Innovation: Digital solutions have demonstrated their value for improving urban services in LMICs. However, more innovation is needed to develop business models that can be deployed on a wide scale and account for the financial constraints of utilities and municipalities, as well the needs of low-income customers.
• Urbanization and climate change: Though the startup-public sector partnership landscape for improved urban utility services is still nascent, trends such as rapid urbanization, urbanization without structural formation, and climate change will mean that municipalities and public utilities will have to collaborate with startups and private sector innovators to close the urban service divide. While there has been more attention placed on the opportunities related to startup-public sector partnerships for urban utility services, it is also clear that there are many barriers to such partnership models, particularly when it comes to taking such partnership models to scale.
• Pioneers and challenges: Examples in countries that have pioneered these partnerships such as Kenya, India, and Bangladesh highlight that start-up-public sector partnerships can support cities in making urban utility service delivery more affordable, reliable, safe, and sustainable. Despite these successes, it is important for startups to be aware of the challenges and complexities associated with public sector collaboration, and better assess where synergies with the public sector lie and how their service can support the public sector in meeting its objectives.
• Collaboration: This toolkit sought to highlight the role of startup-public sector collaboration in the context of many challenges facing cities in LMICs (Section 1), provide a conceptual framework of how to think through, frame, and define startup-public sector partnerships (Section 2), offer practical tips and tools to start-ups navigating these complex partnerships (Section 3), and highlight additional resources that might be relevant to those aiming to catalyze startup-public sector collaboration (Section 4). Given how nascent many partnerships and the wider start-up public sector ecosystem are, it will be critical to continue to conduct research on the developmental, commercial, and social impact of these innovative partnerships, and use case studies to generate granular insights.
• Drivers for change: Trends will continue to drive startup-public sector partnerships for improved urban utility service provision. These include increasing devolution and public sector programs that encourage and incentivize startup participation in urban service delivery, the increased relevance and maturity of circular economy use cases, increased adoption and availability of frontier technologies and digital payments, as well as increased availability of funders and funding models to support multi-stakeholder partnerships.
• Digital Utilities Partnership Hub: The GSMA Digital Utilities program convenes startups, relevant public sector organizations such as state-owned utilities, and other relevant corporates such as MNOs to catalyze innovative partnerships and collaboration for urban utility service provision. Alongside this toolkit, the GSMA Digital Utilities program is launching the Digital Utilities Partnership Hub. The hub is GSMA's comprehensive source of information on the role of digital solutions and innovative partnerships for improved urban service delivery, highlighting key insights and case studies from our work with public and private sector stakeholders over the last decade.
• Support: The GSMA Digital Utilities program is committed to supporting startups and their public sector partners aiming to form, sustain, and scale partnerships for improved urban utility service delivery. To achieve GSMA's objectives, the program engages in:
• De-risking and catalyzing innovative urban utility services: Providing grants to private sector innovators to test and demonstrate the role of digital urban service solutions;
• Research and insights: Generate rigorous evidence on innovative solutions to essential service provision by gathering insights from Innovation Fund grantees and conducting research with partner organizations with deep expertise in utility service provision; Partnership facilitation and convening of key ecosystem stakeholders: Drive replication and scale through convenings and leveraging our own networks as well as those of key partners who work to enable similar solutions; and
• Technical advice to MNOs, municipalities, and utility service providers: Provide advice on the role of digital innovation for improved utility service provision and insights on how to achieve multi-stakeholder partnerships.
• Enabling Forums: GSMA's market engagement team is looking forward to convening public sector stakeholders and startups for our next digital urban utility forums in Bangladesh and Kenya in Q4, and GSMA's program is looking forward to leveraging their strategic partnerships with key enablers and funders such as Imagine H2O Asia, the International Water Association, GOGLA, the World Bank, the Asian Development Bank, the World Resources Institute and other partners to continue to drive public-private collaboration to close the urban service divide.

Do you see value in this toolkit for startups in the utilities sector? What recommendations do you have for how startups and the public sector can partner?

​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.

ITU Report: Internet More Affordable and Widespread, but World's Poorest Still Shut Off From Online Opportunities

In its latest annual report measuring digital development, the International Telecommunication Union (ITU), the United Nations specialized agency for information and communication technologies (ICTs), says an estimated 5.3 billion people of the earth's 8 billion are using the Internet in 2022, or roughly 66 percent of the world's populations. However, the gender digital divide continues to exist as only 63 percent of women were using the Internet in 2022 compared to 69 percent of men. "This means there are 259 million more men than women using the Internet in 2022," the report notes.

The ITU also finds that youth aged 15-24 years are the driving force of connectivity, with 75 percent of young people worldwide now able to use the Internet.​ The report encouragingly points out: "There are signs that the generational gap is shrinking. In 2020, the difference between the penetration rate among young people (71 percent) and the rest of the population (57 percent) was 14 percentage points."

What is more, "In all regions of the world, people aged between 15 and 24 are more connected than people who are older or younger than that. Universality, defined as more than 95 percent Internet use, has already been reached in this age group in high-income and upper-middle-income economies. The biggest gap in relative terms is observed in low-income economies, where 39 percent of young people use the Internet, compared with only 23 percent for the rest of the population."

With respect to mobile subscriptions, the report says almost three-quarters of the global population aged 10 and over now own a mobile phone. "Internet use is becoming as ubiquitous as mobile phones. Accordingly, the number of mobile-broadband subscriptions is rapidly approaching the level of mobile-cellular subscriptions, which is plateauing."

Despite the ubiquitousness of mobile phone use, "low levels of ICT skills hamper progress to universal and meaningful connectivity," the report importantly notes. "A low level of ICT skills is one of the main barriers to achieving universal and meaningful connectivity."

As for the affordability of ICT services, the report finds that global median price of mobile-broadband services dropped from 1.9 percent to 1.5 percent of average gross national income (GNI) per capita. However, the report explains that "the lack of affordability continues to be a key barrier to Internet access particularly in low-income economies, even though this country group witnessed a nearly two-percentage-point drop in the income-adjusted price of mobile broadband services." Furthermore, "A wide gap remains between high-income economies and the rest of the world. Compared to median prices that are paid in high-income economies, the basket costs nearly 10 times as much in lower-middle-income economies and nearly 30 times as much as in low-income economies, after adjusting for differences in GNI per capita."

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I appreciate how ITU's annual Facts and Figures report offers an independent and rigorously researched snapshot of the state of digital connectivity worldwide. As Doreen Bogdan-Martin, who was elected as ITU's Secretary-General subsequently after the report's publication, wrote: The report "serves as a key element in global efforts to 'connect the world' and bring universal meaningful connectivity to everyone, everywhere. Accurate data are essential: to be sure our policies and projects are having a real impact on bridging the digital divide, we need to constantly track core connectivity indicators, and drill down into the data to reveal both unexpected sticking points, and surprising successes." She adds that "ITU data are relied upon, not just by the broader UN system, but by governments, the global technology sector, development financing institutions, and the many grassroots organizations working to promote digital inclusion within their communities."

What recommendations do you have for increasing digital inclusion and promoting online opportunities?

​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.