Jambo Africa Online’s Senior Editorial Correspondent, FRANCOIS FOUCHE, puts together a collage of news titbits on economic developments impacting on Africa…
Frequent business travel may be a thing of the past
A Bloomberg survey of 45 large businesses in the U.S., Europe and Asia shows that 84% plan to spend less on travel post-pandemic.
Of those, a majority saw budgets dropping by between 20% – 40%.
The ease and efficiency of virtual software, cost savings and lower carbon emissions were the primary reasons cited for the cutbacks.
Look like business travel may not bounce back to 2019 levels any time soon.
Corporates are looking at their bottom-line, their environmental commitments, the demand from employees for more flexible working and thinking: Why do I have to bring that back?
That’s a blow to the airline and hospitality industries – already among the biggest casualties of the pandemic.
Business travellers, who buy premium-class or more-expensive refundable tickets, rang in as much as three-quarters of airlines’ pre-pandemic profits while accounting for only 12% of seats, according to PwC.
The hotels sector, which draws about two-thirds of its revenue from business travellers, could see a dip of as much as 18% by 2022, a Morgan Stanley study shows.
Not everyone agrees though.
“Covid-19 has definitely taught people that some of the mad regular dashes across the Atlantic hither and thither aren’t necessary,” said Warren East, the CEO of Rolls-Royce Holdings, which makes aircraft engines.
“But when you peel back beyond that superficial analysis, you realize people were doing it because they thought it delivered real benefit to them.”
There may also be competitive pressures to keep flying, according to Air France-KLM CEO Ben Smith. “I hear many of our corporate customers saying that the day they lose an account because they weren’t somewhere face-to-face will immediately bring them back to the way operations were before,” he said.
By raising 200 million U.S. dollars in its Series A round, Senegal-based fintech start-up Wave has become the fourth unicorn on the African continent.
It is now valued at 1.7 billion U.S. dollars, becoming the second freshly-minted fintech unicorn out of the continent in the span of only two weeks after Nigeria’s OPay.
As the chart indicates, the rise of mobile payment providers in sub-Saharan Africa is unlikely to stop anytime soon.
According to the 2020 report by the Global System for Mobile Communications Association (GSMA), the sub-Saharan section of the African continent heavily relies on mobile money, with 548 million registered and 159 million active accounts across 157 providers.
North Africa, Europa and Central Asia, on the other hand, only have a combined seven million active mobile money accounts and a transaction value of roughly 15 billion U.S. dollars.
Sub-Saharan Africa easily dwarfs this number: In 2020, Africans exchanged 490 billion U.S. dollars using mobile money providers alone.
Mobile money describes payment services operated via a mobile device instead of credit or debit cards, cheques or cash.
It has become especially prevalent in so-called under- or unbanked areas like a majority of Africa and large parts of Asia, enabling its residents to pay everything from electrical bills to day-to-day shopping with their mobile phone, without the need to connect it to an existing bank account.
The growth expectations of this market have attracted public and private funding by organisations like the Bill & Melinda Gates Foundation and the Mercy Corps, among others.
The U.K. this week delayed a looming wave of new post-Brexit border checks, seeking to give respite to firms already struggling with supply shortages linked to the pandemic and quitting the European Union.
With supermarkets and retailers battling a lorry-driver shortfall, significant employee vacancies and inflated shipping and commodity costs, the prospect of an extra customs burden on EU food imports from Oct 1 threatened further disruption in the build-up to the busy Christmas period.
The new customs checks on food will now start in July 2022. The British government described the move as a pragmatic delay that gives companies more time to prepare. The EU is the source of about 30% of all food consumed in Britain, according to the British Retail Consortium.
But not everyone was pleased: The U.K.’s biggest food and drink lobby group criticized the policy for creating an unfair playing field between British and European firms.
“The asymmetric nature of border controls facing exports and imports distorts the market and places many U.K. producers at a competitive disadvantage with EU producers,” said Ian Wright, chief executive of the Food and Drink Federation. The U.K.’s stance “undermines trust and confidence among businesses,” he said.
Wright has also warned of “permanent” shortages of some food products in Britain in the post-Brexit era, with consumers no longer able to expect that they can get whatever they want in shops.
All the while, Boris Johnson’s government is refusing to deploy temporary visas for EU workers to plug labour gaps — the supply-chain crisis is global, his ministers insist, and inward migration wouldn’t help. Really?!
The world is concerned about climate change. Africa stands to benefit
In the run up to the COP26 international climate talks, which begin Oct. 31 in Glasgow, African countries are positioning themselves to attract so-called green finance.
In a few days, South Africa will receive a delegation from the U.S., U.K., Germany and France to discuss funding the gradual closure of some of the country’s coal-fired power plants.
Our deputy finance minister earlier suggested that $15 billion of national debt be forgiven in exchange for phasing out coal.
AFC Capital this week announced plans to raise $2 billion for climate-resilient infrastructure on the continent.
Gabon passed a law that will allow it to trade carbon credits generated from preserving its forests and a Kenya geothermal-power utility plans to sell credits it accumulated over the past 18 months.
Africa is a rich hunting ground for those looking for climate-related finance opportunities.
Coal-reliant countries like South Africa need money to transition.
At the same time, the Congo Basin, which spans much of central Africa including Gabon, is the world’s second-biggest natural carbon store after the Amazon, providing ample opportunities to generate carbon credits.
With extreme weather events around the world, from hurricanes to wildfires, raising awareness about global warming, now is the time for Africa to tap into green finance.
Our Environment Minister Barbara Creecy wants COP26 to set an annual target of $750 billion to help poor countries transition to clean energy and protect themselves against climate change. It’s almost 8x more than the current goal that’s never been met.