<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="394" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/USFed-820x394.jpg" alt="" class="wp-image-470131" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/USFed-820x394.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/USFed-300x144.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/USFed-160x77.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/USFed-768x369.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/USFed.jpg 970w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



The release of the latest trove of data on the US economy provided plenty of good news: the country’s growth forecast is resilient; the labor market is buoyant, and inflation remains on its downward trajectory. The personal consumption expenditure (PCE) price index—the Federal Reserve’s preferred inflation measure—<a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20240131.pdf">rose</a>&nbsp;2.6% over the 12 months ending in December, well below the 5.4% recorded at end-2022. (Remove volatile food and energy costs, and core PCE prices have been&nbsp;<a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20240131.pdf">running</a>&nbsp;at just 1.9%).



Momentum is thus building in favor of adjusting the central bank’s monetary policy stance to focus more on growth objectives and sustain the post-pandemic economic expansion. As tempting as such a policy move may be, hastily cutting interest rates is not a risk-free proposition even in the best of times. The risks are especially acute today given the state of our highly-geopoliticized, polycrisis world, in which supply-chain disruption has become a permanent feature of the global economy.



Though the US economy&nbsp;<a href="https://www.imf.org/en/Publications/WEO/Issues/2024/01/30/world-economic-outlook-update-january-2024">defied</a>&nbsp;most economists’ expectations for a recession, recording growth of 2.5% in 2023 – the highest among advanced economies – the risk has not abated entirely, with sharp monetary tightening emerging as the major threat to a positive outlook.



Bringing inflation to heel without causing a recession was&nbsp;<a href="https://www.project-syndicate.org/commentary/central-banks-combat-inflation-economic-cost-by-hippolyte-fofack-2022-05?barrier=accesspaylog">always</a>&nbsp;a tall order, managing the tradeoff between price stability and financial stability. The previous year therefore represents a remarkable pendulum swing for the US economy, in stark contrast to the euro area, where the European Central Bank aggressively tightened monetary policy to combat inflation and growth was anemic at just 0.5%, weighed down by Germany which saw its economy&nbsp;<a href="https://www.reuters.com/markets/europe/german-economy-contracted-03-2023-stats-office-2024-01-15/#:~:text=BERLIN%2C%20Jan%2015%20(Reuters),Statistics%20Office%20said%20on%20Monday.">contract</a>&nbsp;by 0.3% in 2023.



Several factors helped keep the US economy on an expansionary track. First, and perhaps the most important, is the&nbsp;<a href="https://home.treasury.gov/news/press-releases/jy1693">scale</a>&nbsp;(more than 25% of GDP) of pandemic relief, infrastructure spending, and investment incentives.



Unlike during previous economic recoveries, US business investment has been particularly strong post-pandemic. Expressed as a percentage of GDP, business fixed investment has&nbsp;<a href="https://home.treasury.gov/news/featured-stories/the-inflation-reduction-act-and-us-business-investment">remained</a>&nbsp;steady, at about the same level as in the pre-Covid years, a better outcome than any post-recession period since 1980.



Second, the ancillary benefits of increased government spending have also been keenly felt at the household and state levels. Preliminary analysis shows that state and local government spending has&nbsp;<a href="https://www.wsj.com/articles/gdp-report-consumer-spending-economy-price-index-425deb40">contributed</a>&nbsp;more than twice as much to GDP over the last two years than over the preceding five years ending in 2021.&nbsp;And with the tight labor market sustaining wage growth, consumption spending has remained strong as well,&nbsp;<a href="https://www.wsj.com/articles/gdp-report-consumer-spending-economy-price-index-425deb40">contributing</a>&nbsp;over 1.9 percentage points to the 3.3% expansion recorded in Q4 2023.



Having evaded a major economic downturn the new consensus among market analysts and some political leaders is an aggressive&nbsp;<a href="https://www.wsj.com/finance/banking/regional-banks-had-another-ugly-quarter-db141a0e">pivot</a>&nbsp;toward rate cuts to provide further relief to businesses and sustain the growth momentum. Senator Sherrod Brown, the Chairman of the Senate Banking Committee, has urged Fed Chair Jerome Powell to dial back rate hikes,&nbsp;<a href="https://www.brown.senate.gov/newsroom/press/release/brown-to-fed-cutting-rates-will-cut-housing-costs">writing</a>&nbsp;“restrictive monetary policy is no longer the right tool for combatting inflation.”



But despite the expected growth deceleration, the US economy is still expanding at a solid pace. Corporate earnings are expected to rise by more than 12% this year, and the latest survey from the University of Michigan shows that consumer confidence in the US economy has&nbsp;<a href="https://www.businessinsider.com/consumer-confidence-economy-stock-market-gas-prices-eggs-vibes-recession-2024-1#:~:text=Since%20November%2C%20the%20University%20of,personal%20finances%20has%20also%20improved.">jumped</a>&nbsp;by 29% since November, the greatest two-month surge since 1991.&nbsp;At the same time, impressive jobs growth in January 2024 has&nbsp;<a href="https://www.bls.gov/news.release/pdf/empsit.pdf">kept</a>&nbsp;the US unemployment rate at a remarkably low level.



More ominous, however, is the threat of supply-chain bottlenecks, one of the main drivers of transitory inflation. These bottlenecks have created so much inflationary havoc over the last few years that they may not be transitory after all. Geopolitical shocks have dramatically&nbsp;<a href="https://www.imf.org/en/Publications/WEO/Issues/2024/01/30/world-economic-outlook-update-january-2024">increased</a>&nbsp;commodity prices, which were the major drivers of inflationary pressures as illustrated by the dynamics of core inflation in recent months.



Already, Houthi attacks in the Red Sea are&nbsp;<a href="https://www.bloomberg.com/news/articles/2024-01-24/red-sea-crisis-how-houthi-attacks-raise-inflation-supply-chain-worries">taking a toll</a>&nbsp;on trade and have dramatically increased the average costs of transporting goods across the globe. As this latest episode illustrates, the world is always just one crisis away from further disruption to international supply chains.



Internal dynamics are also pointing to other sources of inflationary risk. Further price pressure cannot be ruled out in a strong economy&nbsp;<a href="https://www.project-syndicate.org/commentary/supply-side-constraints-mean-excessively-low-fed-real-interest-rates-would-unleash-inflation-by-michael-spence-2024-02?barrier=accesspaylog">contending</a>&nbsp;with myriad structural supply constraints, such as labor shortages and declining productivity. These unknowns compound uncertainty about current inflation dynamics, necessitating a more cautious approach in the management of the growth-inflation tradeoff. Interestingly, investors in interest-rates futures markets were divided on whether the Fed should cut rates at its March meeting, and market-based probability of a March cut has&nbsp;<a href="https://www.wsj.com/economy/central-banking/fed-leaves-rates-steady-and-opens-door-wider-to-cuts-d10a107d">fallen</a>&nbsp;to around 35% since the Fed’s first FOMC meeting of the year last January.



Timing is everything when it comes to monetary policymaking, and the Fed has earned the right to make its next interest rate move at the time of its choosing as it navigates its way toward the neutral policy stance.



Dr Hippolyte Fofack, a Distinguished Fellow at the Global Federation of Competitiveness Councils (GFCC) and research associate at the Harvard University CAS, is a former chief economist and director of research at Afreximbank.

USFed

Rate Cuts? Timing Is Everything for Fed

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/blog-2099x600-md-central-bank-ymgerman-istock-by-getty-images-820x234.jpg" alt="" class="wp-image-469808" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/blog-2099x600-md-central-bank-ymgerman-istock-by-getty-images-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/blog-2099x600-md-central-bank-ymgerman-istock-by-getty-images-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/blog-2099x600-md-central-bank-ymgerman-istock-by-getty-images-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/blog-2099x600-md-central-bank-ymgerman-istock-by-getty-images-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/blog-2099x600-md-central-bank-ymgerman-istock-by-getty-images-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/blog-2099x600-md-central-bank-ymgerman-istock-by-getty-images-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: ymgerman/iStock by Getty Images</figcaption></figure>



Central bankers today face many challenges to their independence. Calls are growing for interest-rate cuts, even if premature, and are likely to intensify as half the world’s population votes this year. Risks of political interference in banks&#8217; decision making and personnel appointments are rising. Governments and central bankers must resist these pressures.



But why does this matter? Just consider what independent central banks have achieved in recent years. Central bankers steered effectively through the pandemic, unleashing aggressive monetary easing that helped prevent a global financial meltdown and speed recovery.



As the focus shifted to restoring price stability, central bankers appropriately tightened monetary policy—albeit on different timelines. Their response helped to keep inflation expectations anchored in most countries even as price increases reached multi-decade highs. Emerging markets were leaders in tightening early and forcefully, enhancing their credibility.



These central bank actions have brought inflation down to much more manageable levels and reduced the risks of a hard landing. While the battle isn’t yet over, their success thus far has largely been because of the independence and credibility that many central banks have built up in recent decades.



The recent success in bringing down inflation contrasts sharply to the economic instability that prevailed during the high inflation period of the 1970s. Back then, central banks didn’t have clear mandates to prioritize price stability, or clear laws protecting their autonomy. As a result, they were often pressured by politicians to lower interest rates when inflation was high.



Everyone was hurt by this high inflation, boom and bust era—especially people living on fixed incomes who saw their real incomes and savings eroded. Success in reducing inflation only came in the mid-1980s when central banks were given political support to aggressively fight inflation.



Measuring impact



Extensive research, including our own, demonstrates the critical importance of central bank independence.



One&nbsp;<a href="https://data.imf.org/api/document/download?key=74044185&amp;utm_medium=email&amp;utm_source=govdelivery">IMF study</a>, looking at dozens of central banks from 2007 to 2021, shows that those with strong independence scores were more successful in keeping people’s inflation expectations in check, which helps keep inflation low. Independence is critical, and has become more predominant among countries at every income level.



Another IMF study&nbsp;<a href="https://www.imf.org/en/Publications/WP/Issues/2022/09/16/Central-Bank-Independence-and-Inflation-in-Latin-America-Through-the-Lens-of-History-523542?utm_medium=email&amp;utm_source=govdelivery">tracking</a>&nbsp;17 Latin American central banks over the past 100 years examines factors including: decision-making independence, clarity of mandate, and whether they could be forced to lend to the government. It also found that greater independence was associated with much better inflation outcomes.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2024/03/21/strengthen-central-bank-independence-to-protect-the-world-economy?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2024/03/9184675/md-blog-cbi-chart-v2-71_original.png" alt="two charts showing 100 years of central bank independence and inflation in Latin America"/></a></figure>



The bottom line is clear: central bank independence matters for price stability—and price stability matters for consistent long-term growth.



But to wield enormous power in democratic societies, trust is key. Central banks must earn that trust every day—through strong governance, transparency, and accountability, and delivering on core responsibilities.



Strong governance helps ensure that monetary policy is predictable and based on achieving mandated long-term goals, rather than short-term political gains. It starts with a clear legislative mandate that sets price stability as the main objective.



Even if employment is put on the same pedestal—as with the US Federal Reserve’s dual mandate—legislators have recognized that price stability aids macroeconomic stability, which ultimately supports employment.



Strong governance and independence mean central bankers should have control of their budgets and personnel, and not be subject to easy dismissal based on their policy views or actions taken within the legal mandate.



In exchange, they must be accountable, and they should be transparent.



They should regularly explain how their actions seek to advance their legislatively mandated goals, both in detailed reports and through testimony before lawmakers. Because central bank decisions profoundly affect everyone, central banks and governments should continue working to raise economic literacy so the people can be part of the policy conversation.



And trust ultimately depends on their success in delivering price stability, and ensuring the financial system remains stable.&nbsp;



Respecting independence



Other branches of government have clear responsibilities in helping central bankers achieve their mandated objectives and navigate hazards ahead. This includes not only laws proclaiming independence, but also following the letter and spirit of such laws.



It also means taking into account how other policy actions impact the job of central bankers.



Enacting prudent fiscal policies that keep debt sustainable helps to reduce the risk of “fiscal dominance”—pressure on the central bank to provide low-cost financing to the government, which ultimately stokes inflation. Fiscal prudence also provides more budget space to support the economy when needed, bolstering economic stability.



Another government responsibility that is often shared with central banks: maintaining a strong and well-regulated financial system.



Financial stability benefits the whole economy and reduces the risk that the central bank becomes reluctant to raise interest rates for fear of causing a financial meltdown. Actions to strengthen financial institutions since the global financial crisis, including in emerging markets, allowed central banks to raise rates sharply without undermining the financial system. This major achievement must be preserved.



When central banks and governments each play their roles, we have seen better control of inflation, better outcomes in growth and employment, and lower financial stability risks.



The IMF is here to help policymakers face these challenges. We strongly support central bank independence, providing tailored technical assistance to members working to improve governance and legal frameworks. We make independence an explicit pillar in some Fund-supported financing programs, agreeing with members on actions to measure and achieve it.



To strengthen this work, we introduced a new way to&nbsp;<a href="https://www.imf.org/en/Publications/WP/Issues/2024/02/23/A-New-Measure-of-Central-Bank-Independence-545270?utm_medium=email&amp;utm_source=govdelivery">measure independence</a>&nbsp;based on which aspects of it matter most, according to our recent survey of central banks.



And to increase accountability, we have developed a&nbsp;<a href="https://www.imf.org/external/datamapper/CBT/?utm_medium=email&amp;utm_source=govdelivery#:~:text=The%20CBT%20is%20an%20international,and%20contribute%20to%20policy%20effectiveness.#:~:text=The%20CBT%20is%20an%20international,and%20contribute%20to%20policy%20effectiveness.#">transparency&nbsp;code</a>&nbsp;that helps central banks assess and improve their practices.



By working together—central bankers and government leaders, legislatures, and the people—we can preserve and strengthen central banks to win the fight against inflation today and foster economic stability and growth for years to come.



This will benefit everyone—the retiree living on a fixed income; the small entrepreneur trying to build her business; and every society that could face unrest when inflation gets out of control.



With such high stakes, we must preserve and strengthen central bank independence.

blog-2099×600-md-central-bank-ymgerman-istock-by-getty-images

Strengthen Central Bank Independence to Protect the World Economy

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="771" height="746" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/image001-3.jpg" alt="" class="wp-image-469794" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/image001-3.jpg 771w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/image001-3-300x290.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/image001-3-93x90.jpg 93w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/image001-3-768x743.jpg 768w" sizes="auto, (max-width: 771px) 100vw, 771px" /><figcaption class="wp-element-caption">Elais Monage, President of the Black Business Council</figcaption></figure>



Reflecting on the Black Industrialists and Exporters Conference hosted by the Department of Trade Industry and Competition (DTIC) this week one is left with mixed feelings that while the aspirations of the program are noble, not enough is being done to push the boundaries and realise the full potential of the Black Industrialists program. One of the fundamental flaws limiting this programs success is the lack of a clear and well-articulated description coupled with a broader vision of what the notion of a black industrialist actually entails.



Lewis Carroll’s age-old adage, that if you don’t know where you are going, any road will take you there, rings true here. There is a growing sense of the term “black industrialist” beginning to take on a “catch-all” phrase to blanket everyone, from those who have built empires from the ground up, hold controlling equity stakes and demonstrate deep operational expertise in their respective businesses, to anyone with a loan or grant from the Industrial Development Corporation (IDC), National Empowerment Fund (NEF) or the DTIC and holding notional equity stakes in companies.



This is not to suggest that that notion of a black industrialist should be used as a gate-keeper with regards to who can and who can’t be referred to by the term. However, there are some obvious risks to the approach that is currently being adopted, hence some perceived limitations of the program. The first, and perhaps a subordinate issue, is that blanketing all and sundry as black industrialists does not give the emerging and upstart entrants something to aspire to, simply because the concept is neither understood nor properly defined. At the same time flippant use of the term dilutes the weight of the notion of a black industrialist for those who have a proven track record and have created and developed multi-generational assets of significant scale.&nbsp;



The second, and more prevalent matter, is that it becomes increasingly elusive to tangibly measure where progress and success of black industrialists is happening. One is led to make this second conclusion based on the assessment of the last 30 years of democracy, 20 years since the implementation of the Broad Based Black Economic Empowerment (BBBEE) legislation and 9 years since the launch of the Black Industrialists Policy, that the country cannot attest to having a black owned commercial bank, telecommunications company or oil major. There are a handful of law firms, consulting houses and auditing firms that are black owned and controlled, however these are far and few apart while the mainstream firms in these respective areas cannot be attributed as being in the hands of black people.&nbsp;&nbsp;



While it is the stated intention of the government to develop a class of black industrialists, who will diversify the historic pattens of ownership of industries making the industries representative of the country’s broader demographic, and to create the fertile ground for these industrialists to build something of generational value, a few areas can be highlighted where the state is missing a fundamental opportunity to purposefully attain this aspiration.



The spectrum auction and licencing round of 2022, with the next phase set for 2024, is one such area where the state missed an opportunity to sow the seeds for the development of the black-owned telecommunications company of formidable statue, however, much of this capacity was taken up, and likely to happen again in the next round, by the established telecommunication companies, entrenching their dominance. The Public Procurement Bill is another such area that could be leveraged by the state, given its R1 trillion annual spend, to run a massive scale industrialisation program targeted at setting up and developing black industrialists. However, not only has the process of legislating the bill taken an inordinate amount of time, prior versions of the bill did not explicitly take this as an opportune moment to drive the black industrialist’s agenda. Common to both of these examples is that these are public instruments, or areas in which the government has considerable influence, but are seemingly unable to match up the stated black industrialists’ aspiration with the very tools in the government’s tool kit.



It is my assessment that the factors contributing to limiting the impact of the governments own stated intension to develop this class of black industrialists is firstly a lack of a clear and well-articulated vision of what the black industrialists program seeks to achieve. And secondly, an ancillary but fundamental factor is what a black industrialist actually is. This is where the government needs to go back to the drawing board, because articulating these aspects will guide which direction policy will go and by extension resources that need to be mobilised to achieve the goal.&nbsp;



As a start, my submission is that the definition of a black industrialist should entail two critical aspects. Firstly, a company that is both majority black owned with effective beneficial value accruing to the owners. Secondly, there must be demonstrable operational involvement by the industrialists in all aspects of the business, and not limited to boardroom positions.



On the part of the government defining its vision for black industrialists, it is important to note that many instruments are in the direct control of the state to achieve the aspiration of developing a black industrialist class of noteworthy scale, however, political will to achieve this is the ultimate overlay if any such program is going to enjoy success.

image001-3

The notion of a black industrialist requires a complete review if the program is going to have the desired transformational impact

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="463" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Dr-Ngwenya_2-002-1-820x463.jpg" alt="" class="wp-image-467655" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Dr-Ngwenya_2-002-1-820x463.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Dr-Ngwenya_2-002-1-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Dr-Ngwenya_2-002-1-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Dr-Ngwenya_2-002-1-768x434.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Dr-Ngwenya_2-002-1-1536x868.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Dr-Ngwenya_2-002-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Dr. Mthandazo Ngwenya</figcaption></figure>



The rise in inflation, energy costs, high unemployment, and skyrocketing food prices in recent years have placed severe pressures on the consumer and created what is commonly called a ‘cost of living crisis.’



An article published by BusinessTech in September last year titled ‘The Cost of Being Middle Class in South Africa’ noted that it takes on average just 5 days for middle-income South Africans to spend about 80% of their monthly income. Meaning they only have about 20% on average of their income to survive on for the remaining 20 days each month.



Of the 80% of their income spent within the first week of receiving their salaries, 73% out of the 80% is estimated to be spent on servicing debts and other fixed cost elements. This means on average the consumer is left with slightly above 20% of their disposable income to purchase food, medicines, petrol, and transport costs along with other daily necessities for survival for the remaining three weeks of the month before the next payday. The middle-class lives pay cheque to pay cheque with limited accumulated savings, limited fixed capital formation, and rising debt service obligations with associated marked increases in consumer debt defaults – hence the coinage of ‘crisis’ in defining the true status of the middle class today.



A pervasive phenomenon that has added to the woes of the middle class impacting their grocery bills and yet being less frequently talked about relates to the economic concepts of Shrinkflation and Skimpflation.



<h1 class="wp-block-heading" id="h-so-what-is-shrinkflation">So, what is Shrinkflation?</h1>



In simple terms, many consumers feel like the quantity of some food products in the shops has decreased, and yet the price of those products has stayed the same or increased. Many consumers are left confused, upset, or simple exacerbated by the situation. Many consumers ask themselves ‘is this real or am I just imagining this reduction in quantity.’ It turns out that many consumers are right about this reduction in the quantity of some of their favourite foods. Shrinkflation is the real process where manufacturers reduce the quantity of their products for example a 500 ml Coke buddy is now reduced to 440ml and yet the price stays the same or increases slightly. This is done by manufacturers to preserve or increase profit margins in the face of rising input costs of production – for example rising energy prices. Instead of passing the increased input cost to the consumer, the manufacturer simply reduces the size of the product and keeps its prices constant or slightly raises them.



The impact of shrinkflation is that the consumer gets less product in their monthly shopping basket for the same level of expenditure. They are left scratching their heads, puzzled as to why the grocery bags are getting lighter and lighter with each visit to the supermarket.



In some product ranges and categories, the poor middle class has been hit by shrinkflation and its equally nefarious cousin Skimpflation!



<h1 class="wp-block-heading" id="h-and-what-is-skimpflation">And what is Skimpflation?</h1>



Skimpflation refers to when manufacturers continue to release the same food products but start making them with cheaper ingredients than before in a bid to cut costs. It may equally apply to services that a hotel offers – less frequent change of bedding, towels, or longer waiting times in restaurants due to a reduction in service staff. In skimpflation, you are getting less value for your money as a result of the reduction in the quality of inputs or services. Most common consumer sentiments range from ‘this ice cream just does not taste the same as it used to or why are my jeans less durable than before as examples.’ In cases of skimpflation, the product may weigh the same, but the manufacturers have reconfigured the composition of the ingredients of the product and reconstituted the product using cheaper alternatives for the more expensive ingredients, for example, adding more raisins and fewer cashews nuts in a mixed nuts bag.



<h1 class="wp-block-heading" id="h-is-this-a-south-african-problem">Is this a South African problem?</h1>



A University of Birmingham Business School blog titled ‘Shrinkffation and skimpffation, a permanent loss in what your money can buy’, published in October 2023, cited research undertaken by Barclays Banks in June 2023 where 70% of the British public had noticed examples of shrinkflation in the products they bought, particularly in goods such as chocolate (46%), crisps (42%), packs of biscuits (37%), and snack bars (32%). The changes in the quantity or quality of products and services have a direct and serve impact on consumer wallets.



So concerned by the impacts of shrinkflation on United States of America consumers, President Joe Biden took to social media in February this year, on the eve of the Super Bowl to lament its impacts and called for an immediate stop of the practice by major USA producers. The USA is heading to an election in November and without a doubt, the rising cost of living is top of mind for many middle class Americans.



Far from being limited to South Africa, the phenomena of shrinkflation and skimpflation have taken on rising significance even in developed markets. Producers face risks of consumers who are cash-strapped buying less of the product or opting for other cheaper alternatives altogether. In an economy faced with a prohibitive cost of living due to rising prices, consumer brand loyalty becomes less guaranteed, and premium brands may risk losing market share should they employ such tactics.



One takeaway for the South African middle class facing a cost-of-living crisis – your perceived reduction in quantity or quality of products and services may very well be real and not imaged! Compare prices, read the ingredient compositions, and make smart choices to conserve your disposable income.

Dr-Ngwenya_2-002-1

The crisis of Shrinkflation and Skimpflation on Middle-Class Disposable Incomes

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="687" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/OLUMIDE-OLATUNJI-1-820x687.jpg" alt="" class="wp-image-465749" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/OLUMIDE-OLATUNJI-1-820x687.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/OLUMIDE-OLATUNJI-1-300x252.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/OLUMIDE-OLATUNJI-1-107x90.jpg 107w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/OLUMIDE-OLATUNJI-1-768x644.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/OLUMIDE-OLATUNJI-1-1536x1288.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/OLUMIDE-OLATUNJI-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Olumide Olatunji, the Managing Director of Access Bank Ghana</figcaption></figure>



The expansion of African countries&#8217; involvement in international trade and global value chains holds the promise of triggering a profound ripple effect, transforming economies, and alleviating poverty across the continent.



But our prosperity isn’t solely reliant on international value chains. In West Africa, our rapid population growth, rising incomes, and a burgeoning middle class makes us a dynamic consumer market. Our region is home to a wealth of natural resources, from fertile agricultural land to abundant mineral deposits and a diverse range of industries, from manufacturing and technology to creative arts and tourism.



Now is the time to harness this potential and unleash the power of intra-African trade. By strengthening our economic ties and exchanging goods and services within our own region, we can create jobs, boost economic growth, and improve the lives of millions of people.



Enhancing intra-African trade presents a multitude of benefits for our region. By reducing our reliance on external markets, we fortify our resilience against global economic upheavals. It fosters the evolution of regional value chains, catalyzing heightened productivity and innovation. This, in turn, fuels economic growth, and bolsters regional integration, nurturing a shared sense of unity and cooperation.



The African Continental Free Trade Agreement (AfCFTA), operational since January 2021, offers a glimpse into the potential transformational impact of a single continental market. The <a href="https://www.brookings.edu/articles/figure-of-the-week-the-african-continental-free-trade-areas-impact-on-income-and-wages/">United Nations Economic Commission for Africa</a> estimates that the AfCFTA could raise intra-Africa trade to as much as $50bn to $70bn by 2040 while the <a href="https://www.worldbank.org/en/topic/trade/publication/free-trade-deal-boosts-africa-economic-development">World Bank</a> predicts that it could increase real income as much as 9% by 2035, lifting 50 million people out of extreme poverty.



This is where Access Bank emerges as a pivotal player having grown from a small presence in Nigeria to becoming Africa’s largest banks by customer numbers. The Bank has been on a journey, to strategically establish presence across Africa, expanding to high-potential markets and leveraging the benefits of the (AfCFTA). In West Africa alone, outside of Nigeria, we have expanded into five other countries and the latest acquisition of Standard Chartered Bank’s shareholding in Cameroon, The Gambia and Sierra Leone will further enhance the bank’s presence in the region.



We are establishing a strong presence in all the major trade centers on the continent, enabling us to make our trade finance expertise available to West African multinational corporations as well as small and medium-sized enterprises (SMEs). As we consolidate our Wholesale business, supporting intra-African trade across the continent, our international subsidiaries will continue to play a critical role in anchoring trade across key global markets.



It would, however, be remiss of me not to highlight that, to fully realize the potential of intra-African trade, we must address the challenges that hinder its growth. These include inadequate infrastructure, such as roads, railways, and ports, which makes transportation of goods costly and inefficient; non-tariff barriers, such as complex customs procedures and regulatory hurdles which discourage trade; and limited access to finance, particularly for SMEs, which while being the backbone of our economies,<a href="https://www.afdb.org/en/documents/smes-demand-trade-finance-africa-case-kenya-and-tanzania-volume-14-issue-6"> face an annual trade finance gap of approximately $81 billion</a>.



Overcoming these challenges requires concerted action at both private and public sectors. While governments must invest in infrastructure development, streamline trade procedures, and harmonise regional regulations to facilitating cross-border trade, and promote regional value chains, the private sector also has a key role to play in driving intra-African trade.



As African businesses continue to expand their reach across the continent, the role of trade finance is expected to grow even more significant. By providing the right funding at fair costs, trade finance empowers businesses to optimize their bottom line, contributing to the sustainable development of Africa&#8217;s burgeoning economies.



The benefits of trade finance extend beyond access to capital. Access Bank&#8217;s trade finance solutions also help businesses manage payment and supply risks, ensuring seamless transactions and protecting against potential disruptions. This reduces the burden on businesses and allows them to focus on their core operations.



As we move forward, it is essential to foster a spirit of regional cooperation and collaboration. We must recognize that our destinies are intertwined, and that our success is linked to the success of our neighbors. By working together, we can create a prosperous and interconnected West Africa, where trade serves as a catalyst for economic growth, social development, and shared prosperity.



Access Bank stands ready to support the region in seizing this opportunity and building a future where West Africa stands tall, not just as a region of immense potential, but as a region that has harnessed its strengths to create a brighter future for all its citizens.

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Unleashing the Power of Intra-African Trade: A Path to Prosperity for West Africa

In sub-Saharan Africa, more women start businesses than anywhere else globally, a testament to their entrepreneurial spirit. However, despite this drive, persistent barriers restrict their economic potential – including financial barriers. As we celebrate International Women’s Day, we want to reiterate that prioritizing investments in women’s financial inclusion is crucial to rectifying these imbalances and to fostering inclusive, equitable economic growth &#8211; ensuring that millions of women can reach their full potential.



Women entrepreneurs and access to finance



Over 74% of women in sub-Saharan Africa are employed in the informal sector, and only 33% hold a formal bank account. While informal employment can offer flexibility and options when finding a formal job is difficult, informal employment can lead to significant vulnerabilities: workers do not benefit from public social protection schemes for health, unemployment, and pensions, heightening their risk of poverty and reducing their resilience to crises like the COVID-19 pandemic. The additional domestic duties also sometimes hinder the pursue of economic opportunities, hence creating a vicious circle.



For Africa’s female entrepreneurs looking to start or expand their business, access to capital, like loans or through credit, is a major hurdle. Only 15% of loans to small and medium-sized businesses in the region go to women-owned ventures. Cultural barriers, such as lack of property or land ownership, often prevent women from meeting loan requirements because they don&#8217;t have the collateral banks believe they need to give them a loan. Ironically, despite demonstrating higher loan repayment rates than men, women-led businesses are often perceived as riskier by financial institutions. This has created a staggering $42 billion finance gap for women entrepreneurs on the continent, demanding immediate action. 



Closing this gap will benefit not just women entrepreneurs, but their families, communities, and our economies. Female-led startups and businesses are key drivers of socio-economic development, creating a foundation of prosperity across the continent. In Mauritania, the West Africa Coastal Areas (WACA) has contributed funding for the establishment of a sardine canning facility for the Mauritanian Women&#8217;s Business Council (CMFA), enhancing their capacity to manufacture high-quality canned products, penetrate global markets, and boost their income. Because money in women’s hands matters: When women control household incomes, their children’s health improves, and malnutrition is reduced by 43%. African governments and policymakers can unlock this potential by implementing gender – focused policies and budgeting, which are fundamental in creating an enabling environment that uplifts women.



Empowering women through digital financial inclusion



Innovative digital financial services and tools are empowering millions of African women to access startup capital, conduct business efficiently, and save and invest their money. In Kenya, the mobile money platform M-Pesa has been phenomenally successful in promoting financial inclusion, particularly benefiting young women with limited education and income. Women can use mobile money as the main financial channel for saving, helping them independently access financial services and transition from subsistence agricultural work into formal and self-owned business opportunities. Mobile money, and other digital financial tools, have emerged as an equalizing force, providing women with a critical link to the formal economy and a gateway to economic security.



In Mauritania, one of the leading banks Banque Populaire de Mauritanie (BPM) pioneered efforts in mobile banking through its mobile banking service called Bankily leading to a surge in mobile banking usage, which will significantly boost female entrepreneurship. Furthermore, the Investment Promotion Agency of Mauritania, along with the Ministry of Economy and Ministry of Digitalization, are collectively pushing to improve the economic landscape to expand access for women entrepreneurs.



However, despite double-digit growth in mobile phone ownership across Africa, only 12% of women possess digital finance knowledge and communications technology skills. Additionally, less than 30% of women have access to the internet. In Nigeria, for instance, socio-economic conditions and cultural norms limit women’s digital opportunities, with 77% of rural Nigerians lacking access to the internet and women potentially being prevented from accessing internet services by male family members. Addressing this digital divide is essential to ensuring all women have the power to save and invest for the future, proactively managing their finances.



Building digital inclusion requires equipping women with the skills and resources necessary to fully participate in the digital economy. Investing in initiatives like the Africa Digital Financial Inclusion Facility (ADFI), which empowers women farmers in Kenya, Nigeria and Zambia through affordable digital microinsurance, will catalyze change by building resilience and maximizing the socio-economic returns from digital technologies. Clearly, financial digitalization provides the backbone for socio-economic transformation and must be a priority on Africa’s development agenda. 



Closing the gender gap in finance is not just an economic imperative; it’s a social one. African women are entrepreneurial trailblazers, and when women achieve their economic potential, whole societies benefit. This International Women’s Day, we urge African governments, organizations, and communities to not only recognize but actively harness women’s economic potential and power. By leveraging the power of digital solutions to support African women entrepreneurs, we initiate a virtuous cycle of empowerment and prosperity that uplifts all. Embracing collective action and continuous investment in gender-inclusive digital platforms, we can amplify women’s economic influence, propelling Africa toward its overarching development objectives.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="800" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Aissata-2024-03-05-at-16.34.32-002-800x800.jpeg" alt="" class="wp-image-464022" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Aissata-2024-03-05-at-16.34.32-002-800x800.jpeg 800w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Aissata-2024-03-05-at-16.34.32-002-300x300.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Aissata-2024-03-05-at-16.34.32-002-90x90.jpeg 90w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Aissata-2024-03-05-at-16.34.32-002-768x768.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/Aissata-2024-03-05-at-16.34.32-002.jpeg 1280w" sizes="auto, (max-width: 800px) 100vw, 800px" /><figcaption class="wp-element-caption">Aïssata Lam is the Director General of the Investment Promotion Agency of Mauritania</figcaption></figure>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="656" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/GA16441180_Rachel_Toku-Appiah_20220318_0001-2-820x656.jpg" alt="" class="wp-image-464023" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/GA16441180_Rachel_Toku-Appiah_20220318_0001-2-820x656.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/GA16441180_Rachel_Toku-Appiah_20220318_0001-2-300x240.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/GA16441180_Rachel_Toku-Appiah_20220318_0001-2-113x90.jpg 113w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/GA16441180_Rachel_Toku-Appiah_20220318_0001-2-768x614.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/GA16441180_Rachel_Toku-Appiah_20220318_0001-2-1536x1229.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/GA16441180_Rachel_Toku-Appiah_20220318_0001-2-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Rachel Toku-Appiah &#8211; Director &#8211; Policy, Advocacy and Communications for Africa, Bill and Melinda Gates Foundation, Johannesburg, South Africa.</figcaption></figure>

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Advancing Women’s Economic Power through Financial Access and Digital Technologies

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Making Bretton Woods Work for Africa

<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="706" height="703" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/Africa-in-the-Global-Village-Burna-Boy.jpg" alt="" class="wp-image-460345" style="width:840px;height:auto" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/Africa-in-the-Global-Village-Burna-Boy.jpg 706w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/Africa-in-the-Global-Village-Burna-Boy-300x300.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/Africa-in-the-Global-Village-Burna-Boy-90x90.jpg 90w" sizes="auto, (max-width: 706px) 100vw, 706px" /></figure>



Hidden in plain sight, Africans are in the thick of the kind of history-making that will define the 21st century.



In 2024, Africa presents a paradox.&nbsp; Its population is growing fast, but its&nbsp;<a href="https://www.ft.com/content/178bdc1c-256b-475b-b7c1-a9f68df9f933?segmentId=3f81fe28-ba5d-8a93-616e-4859191fabd8">economy</a>&nbsp;is growing slow.&nbsp; Conflicts are expanding not contracting.&nbsp; And yet its influence in the world is growing faster than ever.&nbsp; How come?



This is a result of two global trends that will help shape the world in the 21st&nbsp;century.



One is familiar to everyone and much discussed by analysts and the media: the geopolitical shift to a multipolar world.&nbsp; This gives African nations greater agency in the world, if they choose and are able to use it.&nbsp; Many African governments rightly say they want to pick and choose their own international partners, maintain good relations with all corners of the world; and the powers, old and new, great and middling, are beating a path to their door, keen to get their votes in the UN and their support for various international causes, from climate change to ‘civilizational values’, from human rights to national rights.



But it is the second trend that is equally significant and largely happening under the radar: the spread of Africans across the globe in the 21st&nbsp;century, the ever-growing African diaspora that is beginning to make its presence and influence felt in a growing number of places. When we look back in 50 or 100 years people will say: yes, that made a major difference to the world.



It is, of course, scarcely a new trend. &nbsp;From the beginning of humanity, it was the migration of homo sapiens out of Africa that began the human trajectory on which we are still engaged.&nbsp; In ancient and classical times, African influences can be found in Greece, Rome, the Arab world and beyond. The biggest migration was not voluntary but forced, through the trans-Atlantic slave trade, which took millions of Africans by brute force to the Caribbean and Americas, in a wholly subordinate role from which it took them over a hundred years to recover equal rights.



In the 19th&nbsp;and 20th&nbsp;centuries, migration flowed the other way, from Europe to Africa, but not as workers – as colonists, settlers, merchants and administrators.&nbsp; With independence in the second half of the 20th&nbsp;century, that flow reversed.&nbsp; Many Europeans returned home, and a growing number of Africans followed them.&nbsp; The 20th&nbsp;century also saw the most remarkable growth in Africa’s population, from around 140 million in 1900 to over 1.4 billion today (according to&nbsp;<a href="https://www.worldometers.info/world-population/africa-population/">latest estimates</a>), made possible by the transformation of economic and health conditions on the continent.



All such bursts in population growth elsewhere have given rise to outward migration.&nbsp; Since the 19th&nbsp;century, major migrations from Ireland, China, India, Armenia, Lebanon, Palestine, and of Jewish people from many countries have all had significant economic and sometimes political effects, both on the countries of origin and the countries of destination.&nbsp; People are like water: they will go wherever they need to; and if they cannot make a living in one place, they will move to another where they can.



The great African migration that is gathering impetus will have a similarly profound impact.&nbsp;&nbsp; Like previous migrants, Africans bring with them their own particular skills and characteristics.&nbsp; They are enormously enterprising, creative and connected – to each other and to the continent.&nbsp; Most visible to the rest of the world up to now has been African creativity, in music, the arts, film and literature, and achievement in the realm of sport.&nbsp; Africa is already a global force in the world of music, its beats setting a new standard for music elsewhere.&nbsp; This impact feeds back to the countries of origin, not just as remittances, but as economic and cultural influence.&nbsp; The rapidly expanding Nigerian diaspora is especially influential in business and culture, veritably a force to be reckoned with – as Nigeria’s presidential candidates recognised in the run-up to the last election.&nbsp; If Bola Tinubu’s new government can create a country and an economy that people are willing to invest in, Nigeria could begin to realise its potential as one of the world’s new ‘middle powers.’&nbsp; But for now it remains a big ‘if’.



The opportunities for them certainly exist overseas.&nbsp; The Old World is&nbsp;<a href="https://www.oecd.org/economy/ageing-inclusive-growth/">ageing</a>.&nbsp; The demand for labour in Europe, North America and Japan – and soon in China – is growing, a demand that young people from Africa (and Latin America) would be happy to meet.



But the obstacles to them doing so are severe.&nbsp; On top of the residue of racism left by the slave trade and European colonisation, voters in many prosperous countries are becoming less secure and more insular, reflected in the rise of nativist right-wing movements that seek to exclude foreigners and reduce or even stop immigration altogether, despite the shortage of workers.&nbsp; Unlike the European colonists of the 19th&nbsp;century, African migrants cannot force their way in.&nbsp; &nbsp;&nbsp;But they will prove hard to stop if the employment opportunities exist.



What does this mean for Africa?&nbsp; It means that at the level of people, even if not in trade or finance, Africa’s weight and influence in the world is rising.&nbsp; Many of the migrants seek to assimilate.&nbsp; Some – in the US and UK certainly – go into politics and make their voice heard.&nbsp; But most also retain close links with their families and countries of origin.



What is striking is how widespread African communities have become.&nbsp; In Jonny Pitts’ phrase, there is a whole culture of&nbsp;<a href="https://afropean.com/">Afropean</a>&nbsp;communities across Europe and into Russia.&nbsp; Who knew there were 16,000 Africans studying in&nbsp;<a href="https://www.globalcitizen.org/en/content/africans-in-ukraine-does-the-world-still-care/">Ukraine</a>&nbsp;until they fled with the outbreak of war in 2022?&nbsp; As Chimamanda Ngozi Adichie describes, there is a big community in&nbsp;<a href="https://www.theguardian.com/books/2013/apr/15/americanah-chimamanda-ngozi-adichie-review">America</a>.&nbsp; And in&nbsp;<a href="https://blogs.lse.ac.uk/africaatlse/2022/05/23/africans-in-china-see-the-country-as-a-dreamland-accidental-destination-migration%20/">China</a>, an African community of several hundred thousand persists despite the hostility Africans faced during Covid.



Everywhere, these communities will leave an indelible mark on the world and carry a lasting significance at home and overseas.

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Africa in the global village: Notes on some epochal trends

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-1166232739-820x547.jpg" alt="" class="wp-image-459065" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-1166232739-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-1166232739-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-1166232739-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-1166232739-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-1166232739-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-1166232739-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Mthuli Ncube, Zimbabwe&#8217;s finance minister, sits in the audience during a plenary session on day two of the 28th World Economic Forum (WEF) on Africa in Cape Town, South Africa, on Thursday, Sept. 5, 2019. The World Economic Forum on Africa meeting runs from 4-6 September. Photographer: Waldo Swiegers/Bloomberg via Getty Images</figcaption></figure>



Paradoxically, climate change impacts are more pronounced in the low-carbon emitting countries, with events beyond the capacity of communities and countries to adapt. For instance, Africa’s carbon footprint is relatively small compared to other regions. In 2020, Africa’s total greenhouse gas emissions (GHGs) stood around 1.5 billion metric tonnes of carbon dioxide (CO2) equivalent, which represents about 3% of global emissions (<a href="http://www.unfccc.int">www.unfccc.int</a>).



<h2 class="wp-block-heading" id="h-climate-change-mitigation-and-adaptation">Climate Change Mitigation and Adaptation</h2>



Globally, there is consensus that upscaling the climate action agenda requires that the means of the implementation (MoI), namely finance, technology transfer, and capacity building be given utmost priority hence, the amplified calls for Parties to the United Nations Framework Convention on Climate Change (UNFCCC) to accelerate ambition through their Nationally Determined Contributions (NDCs) (<a href="http://www.unfccc.int">www.unfccc.int</a>). 



Following increased scientific evidence pointing to fossil fuels as the major driver of climate change, there were increased calls for a global-phase out thereof at the just ended Twenty-Eighth Conference of Parties to the UNFCCC (COP28) held in Dubai, United Arab Emirates. However, most Global South Parties advocate for a gradual ‘phasing down’ (just transition as opposed to an outright ‘phase out’) through the deployment of renewables to replace traditional fossil fuels. 



Developing country Parties argue that the envisaged transition requires decision makers to be mindful of historical disparities, suffered impacts, and varying responsibilities, and to ensure a fair distribution of the efforts and benefits of this transition.



Inevitably, given the complexity of the climate crisis and energy transition nexus, it is necessary to work towards building a shared vision of renewable energy deployment that builds upon exemplary cases, standardizes processes, improves legislation, and proposes instruments that support and ensure local development. Africa and other developing countries dependent on the exploitation of fossil fuels, should therefore:



<ul class="wp-block-list">
<li>Continue to call for the use of these resources using cleaner technologies and for a ‘gradual phase out’ to allow adequate time to adjust social and economic systems and raise concern on double standards by some developed countries that are reverting to fossil fuels in wake of the persisting crisis in Eastern Europe.</li>



<li>Amplify calls for availing of more funding to Global South countries for renewable energy and energy efficiency, as well as for the development of sustainable technologies and sustainable food systems.</li>
</ul>



Evidence shows that Africa has enormous potential for development of renewable energy sources, particularly solar and wind. The continent is endowed with some of the best solar resources in the world, with parts of North Africa receiving an average of over 2 000 hours of sunshine per year. Africa also has excellent wind resources, particularly along its long coastline. In essence, developing renewable energy sources in Africa could help to reduce the continent’s reliance on fossil fuels and reduce GHG emissions as well as creating new opportunities for economic development, job creation and poverty reduction (<a href="http://www.climatechampions.unfccc.int">www.climatechampions.unfccc.int</a>).



Forests of Africa such as the Congo Basin rainforest, the Guinea-Congo forest, the East African Coastal Forest, the Miombo woodlands and the Sudanian Savanna have a significant role in the global carbon cycle (carbon sinks) hence, have potential to play a major role in carbon trading. Despite this huge potential, the current value of carbon trading in Africa is relatively low, contributing a paltry 2% on the global carbon markets of trading taking place mostly in the voluntary carbon market (VCM). 



The African continent is estimated to have potential to reduce emissions by over 2 billion tonnes of carbon dioxide equivalent (CO2e) per year by 2030. By reducing deforestation and forest degradation as well as upscaling sustainable forest management, Africa could generate carbon credits that could be sold on the carbon market. However, the realisation of this potential hinges on a number of factors, including the development of a formal carbon market, enforcement of regulations and the availability of funding as well as the development of renewable energy and other low-carbon technologies (<a href="http://www.carboncredits.com">www.carboncredits.com</a>; <a href="http://www.climatechampions.unfccc.int">www.climatechampions.unfccc.int</a>).



<h2 class="wp-block-heading" id="h-climate-financing-landscape">Climate Financing Landscape</h2>



Global landscape for climate finance estimated that 2021 climate finance flows amounted to US$850-940 billion, while Global Carbon Credit market was valued at US$760 billion (and is expected to grow by over 21% during the period 2023-2028) (Climate Policy Initiative, 2022). The global green bond market issuance reached US$1.2 trillion in the first half of 2023, up from US$1 trillion in the same period in 2022, signifying growing awareness of the need to address climate change (Climate Bonds Initiative, 2023). By implication, the growth in the climate finance landscape, represents a significant increase in the amount of capital raised for green initiatives, which include renewable energy, energy efficiency, sustainable transport, and sustainable water and wastewater management.



Article 2.1 (c) and Article 9 of the Paris Agreement highlight the need for “finance flows consistent with a pathway toward low GHG emissions and climate-resilient development” (<a href="http://www.unfccc.int">www.unfccc.int</a>). At least US$4.35 trillion is required annually by 2030 to meet global climate objectives (Climate Policy Initiative, 2022). Mobilisation of adequate and predictable financial flows persistently presents a major impediment towards attainment of the Paris Agreement targets across most Global South countries; Zimbabwe included. 



While evidence points to a significant increase in climate finance in recent years, it is still far short of the estimated needs and priorities. In 2019, the total climate finance flows to developing countries were around US$70 billion against an estimated annual requirement of US$100-300 billion. The amount of equity financing for climate change in Africa is much lower than in other regions and the International Finance Corporation (IFC, 2018) estimates that this may reach US$2.5 trillion by 2040. 



In addition, the majority of climate finance flows are in the form of loans, rather than grants, which can reinforce debt burdens for developing countries. There is also lack of transparency and accountability in the way climate finance is allocated and disbursed (Brazier, 2017). On the other hand, the current financial architecture and governance arrangements under the Paris Agreement are yet to support countries in averting, minimizing, and addressing climate related loss and damages which are predicted to become more frequent and intense in the coming decades (<a href="http://www.unfccc.int">www.unfccc.int</a>).



<h2 class="wp-block-heading" id="h-green-financing-for-africa">Green Financing for Africa</h2>



Most, if not all, developing country Parties lack adequate financial resources to accelerate their low-carbon and climate-resilient developmental actions. This is mostly due to their low per capita income, unstable economies, constrained fiscal space, lack of institutional capacity and structural weaknesses (<a href="http://www.thecommonwealth.org">www.thecommonwealth.org</a>) which militate against the desired forward thrust towards a resilient and green growth pathway, thus depriving the potential to harness the powerful synergies between adaptation, growth and development. 



The protracted debates around climate financing at the annual COP Meetings under the auspices of the UNFCCC, the non-fulfilment of pledges made by developed country Parties as well as impediments around access to the available climate finance, all point to the dire need for a paradigm shift in approach by spurring proactiveness among developing countries to combat the effects of climate change. This entails leveraging innovative financing instruments to crowd in private climate financing in Africa (blended finance).



Africa’s private investors ought to recognise that climate financing is not only an environmental issue, but is also a developmental issue that embraces economic and social transformation in the quest for sustainable development. Therefore, climate-allied financial instruments guarantee returns on the investor as well as on the continent. 



Green climate financing has been on an upward spiral in Africa in recent years, with the goal of supporting projects that help reduce emissions, increase resilience to climate change, and improve livelihoods e.g. African Development Bank’s Climate Action Plant and the Green Climate Fund (GCF) financed “Accelerating Renewable Energy Integration and Sustainable Energy (AREISE)” project in Kenya. 



The success of Africa’s Green Transition process is anchored on the combined efforts of the public and private sectors, with a strong collaboration with international development partners towards mobilizing the required climate financial resources ensuring that all investments are environmentally sustainable, whilst delivering the desired economic and social benefits for all. Africa requires at least US$52.7 billion annually to advance climate action, yet current annual spending on adaptation is just around US$11.4 billion (GCA, 2022).



An assortment of innovative mechanisms could help increase sustainable green financing in Africa and typical examples include:



<ul class="wp-block-list">
<li>Use of blended finance, which combines public and private financing to support projects that have both social and environmental benefits (GCA, 2022);</li>



<li>Climate bonds, which can be used to finance projects that reduce GHG emissions or increase resilience to climate change. Functioning bond markets, investment funds (green bond funds) can provide a good example of how to draw in institutional investors and such funds should be replicated and scaled up to incentivize issuers to generate a sufficient supply of green assets to finance green projects (<a href="http://www.investopedia.com">www.investopedia.com</a>);</li>



<li>Equity financing, which can be used to fund green initiatives such as renewable energy projects, sustainable agriculture, and energy efficiency improvements. Despite the perceived risks, equity financing has a number of advantages over other types of financing, including lower borrowing costs, more flexibility in terms of repayment and the ability to attract long-term investors.</li>



<li>Establishment of Green banks, which are financial institutions that exclusively invest in green projects; and</li>



<li>Carbon pricing mechanisms (carbon markets), such as emissions trading systems or carbon taxes, could be used to raise revenue for sustainable development. Recent efforts to develop regional carbon markets, such as the African Carbon Markets Initiative (ACMI), could help to address the current challenges bedevilling carbon trading on the African continent. In addition, Africa’s abundant renewable energy resources could make it a net exporter of carbon credits, providing a steady stream of revenue for sustainable development projects. Zimbabwe has made strides in developing a regulatory framework for carbon trading, administered through the Ministry of Environment, Climate and Wildlife, which is beginning to bear fruits as many stakeholders have expressed interest to participate in the carbon markets.</li>
</ul>



In conclusion, sustainable green financing, being a critical component of green industrialisation, therefore presents an opportunity for developing countries to leap frog to higher levels of development through transitioning to low-carbon and resource-efficient economies. By evolving to low-carbon economies, there will be a growing demand for green technologies and services, thus developing countries stand to benefit from this transition by developing new industries and creating new jobs. Green industrialisation can help reduce poverty and inequality by providing access to clean energy, clean water and other basic services in a way enhancing prospects of shaping a world that is sustainable, inclusive and prosperous for all.

Day Two Of The 28th World Economic Forum on Africa

Climate change and financing Africa

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-184386374-820x461.jpg" alt="" class="wp-image-459062" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-184386374-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-184386374-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-184386374-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-184386374-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-184386374-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-184386374-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



Trade ministers from around the world are convening at the end of February in Abu Dhabi for the 13th Ministerial Conference of the World Trade Organization. The event is a biennial opportunity for the WTO’s 164 members to meet at the highest level to review the functioning of the multilateral trading system and decide on its future.



The Ministerial Conference comes at a moment where the global economy is in a fragile state, with the World Bank projecting a decade of historically low growth ahead of just 2% annually. Trade – which has long been a driver of growth and poverty eradication, having helped 1 billion people lift themselves out of destitution in recent decades – is facing strong headwinds as protectionist forces mount. With leaders in many countries questioning the value of participating in a globalized world economy, the growth of geopolitical-driven protectionism threatens to limit the gains of globalization.



Against this backdrop, it is not an overstatement to say the conference in Abu Dhabi will be a critical moment in determining the future of global trade. As countries re-shore and friend-shore their value chains because of legitimate national security concerns, it is essential for ministers to reshape the current global trade system to prevent these trends from resulting in severe fragmentation, which could cost the global economy as much as <a href="https://www.imf.org/en/Blogs/Articles/2023/01/16/Confronting-fragmentation-where-it-matters-most-trade-debt-and-climate-action">7% of GDP</a>, according to the IMF.



WTO Director-General Ngozi Okonjo-Iweala has been acutely aware of the importance of the moment and has <a href="https://www.wto.org/english/news_e/news23_e/dgno_24aug23_e.htm">appealed</a> for the need to “be ready to roll up our sleeves and work in Abu Dhabi&#8221;.



But what would this work need to look like to make a real difference?



On the agenda will be efforts to advance international trade and reform the WTO itself, such as eliminating subsidies that encourage overfishing, extending the moratorium on duties on cross-border e-commerce, and restoring the system for settling trade disputes.



Yet, as important as these issues are, addressing them individually – with success uncertain, given the need for consensus to forge an agreement – may have at best a marginal impact on global trade. The necessary decision to admit two new members, Timor Leste and Comoros, into the WTO also cannot be considered significant progress if important topics are yet again kicked down the road.



Leaders in Abu Dhabi will need to be ambitious and focus on solving the underlying challenges ailing the trade system. They will need to address two factors that have enabled deglobalization to take hold despite the overall benefits trade has delivered over the past three decades: First, that trade is seen as being misaligned with global priorities; and second, that gains from trade have not been equitably distributed within and between countries.



Strengthening the trade system should first and foremost mean expanding the trade agenda beyond delivering efficiencies. Instead, trade needs to advance climate action and social inclusion through multilateral commitments against a “race to the bottom” on environment, labour and consumer standards. Participating in global value chains can help the diffusion of climate-friendly technologies, such as solar panels or drought-resistant seeds. The broader the benefits delivered by trade, the more firmly it will be aligned with global priorities such as the Sustainable Development Goals. This, in turn, will enable trade to engender more trust of governments and citizens as they see the real value of it. Trade can thus be “fenced off” from geopolitical rivalry rather than disrupted for near-term political wins.



Here, inspiration can be taken from the African Continental Free Trade Area Agreement (ACFTA), which aims to create a single market for goods and services on the continent and facilitate the free movement of people. Its Protocol on Investment is designed to support the continent’s green transition by promoting investment in green sectors, encouraging incentives for low-carbon investments, and developing green investment standards.



Secondly, more inclusive trade mechanisms must be developed. <a>In particular, least-developed countries </a>with structural constraints such as fragile institutions, weak markets and a limited knowledge base, face difficulties taking full advantage of the opportunities offered by globalization. Between 2011 and 2020, exports of goods and services from least-developed countries contracted, and their share in global exports <a href="https://www.wto.org/english/news_e/news21_e/ddgag_16nov21_e.htm">stagnated</a>. What little economic growth has taken place has in most cases failed to trickle down to the poor.



More public-private consultations centred on the Global South are needed to ensure that multilateral trade policies prioritize the sustainable development of countries with the least economic power.



Trade-restrictive measures based on legitimate national security concerns is likely to remain a feature of global trade. To improve transparency, certainty and mutual trust, such measures must be ring-fenced, meaning focused, proportionate and time-bound.



The aspiration of an expanded and rebalanced global trade agenda is not something that can be achieved easily in times when trust is being eroded by rising geopolitical rivalry. But if ministers leave Abu Dhabi with little more than symbolic achievements, an opportunity will have been lost to strengthen a system of economic interdependence that has delivered immense, albeit imperfect, benefits. The alternative – a more fragmented, protectionist global economy – will make everyone worse off and will be a missed opportunity to strengthen collective action on the very environmental, economic and societal issues most countries care about.



Nicolai Ruge is Lead, Geopolitics and Trade, at the World Economic Forum. This piece draws on the Forum’s report <a href="https://www.weforum.org/publications/shaping-cooperation-in-a-fragmenting-world/">Shaping Cooperation in a Fragmenting World</a>.



Danny Quah is Dean and Li Ka Shing Professor in Economics, Lee Kuan Yew School of Public Policy, National University of Singapore

Global Connections China

Shifting the course of Global Trade at 13th Ministerial Conference

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="663" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/EM-photo1-1-820x663.jpg" alt="" class="wp-image-458475" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/EM-photo1-1-820x663.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/EM-photo1-1-300x243.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/EM-photo1-1-111x90.jpg 111w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/EM-photo1-1-768x621.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/EM-photo1-1-1536x1242.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/EM-photo1-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Elna Moolman, Head: SA macroeconomic research at Standard Bank South Africa</figcaption></figure>



The national budget indeed favoured fiscal continuity and consolidation (over any pre-election populist decisions), as anticipated, and in contrast with the consensus forecasts for sustained and significant fiscal deterioration.



Government intends to make a larger, immediate withdrawal from the gold and foreign exchange contingency reserve account (GFECRA) than generally expected. This is essentially the unrealised profits on SA’s gold and foreign exchange reserves, typically from rand depreciation over time. It plans to use R100 billion from the GFECRA in FY24/25, and R25 billion in each of FY25/26 and FY26/27.



This is reducing government’s borrowing requirement and therefore its debt burden. However, it was disappointing that only guiding principles on how the funds will be used were provided in the Budget, with (only) an undertaking that it will eventually be “formalised through legislation”. The guiding principles in the Budget are pragmatic, but we would’ve preferred the GFECRA only being used once its use is legislated, to ensure that future use will remain prudent.



Nevertheless, despite this disappointment (of using GFECRA before its longer-term use has been legislated) and persistent risks (to both the near-term and medium-term spending and revenue forecasts), the fiscal prognosis is at least somewhat better than investors expected. The Budget confirms government’s commitment to fiscal consolidation. Therefore, financial markets are likely to react positively to the Budget. While there might be a strong initial response to better-than-expected fiscal and funding metrics, this may partly unwind as investor concern about the aforementioned factors (upside spending risks and downside revenue risks) persists.

EM photo1 1

Fiscal discipline, R150bn windfall to reduce SA’s debt burden

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/NER_20190729_WFP-Simon_Pierre_Diouf_7227-820x547.jpg" alt="" class="wp-image-457759" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/NER_20190729_WFP-Simon_Pierre_Diouf_7227-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/NER_20190729_WFP-Simon_Pierre_Diouf_7227-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/NER_20190729_WFP-Simon_Pierre_Diouf_7227-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/NER_20190729_WFP-Simon_Pierre_Diouf_7227-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/NER_20190729_WFP-Simon_Pierre_Diouf_7227-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/NER_20190729_WFP-Simon_Pierre_Diouf_7227-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo credit: WFP/Simon Pierre Diouf</figcaption></figure>



Nearly ten years after Africa’s leaders&nbsp;<a href="https://au.int/sites/default/files/documents/31247-doc-malabo_declaration_2014_11_26.pdf" target="_blank" rel="noreferrer noopener">reiterated</a>&nbsp;their “resolve to ending hunger and improving nutrition,” there is still much to be done in the fight against an unprecedented continental&nbsp;<a href="https://www.redcross.org.uk/stories/disasters-and-emergencies/world/africa-hunger-crisis-100-million-struggling-to-eat" target="_blank" rel="noreferrer noopener">food crisis</a>.



The meeting of our leaders in Addis Ababa at the&nbsp;<a href="https://au.int/en/summit/37" target="_blank" rel="noreferrer noopener">African Union Summit</a>&nbsp;this month, therefore, takes place against dire, if not entirely unprecedented, circumstances.



For instance, my own country of Sierra Leone is among the most exposed to the escalating impacts of climate change. These changes in the climate – from unpredictable rainfall to rising temperatures – disrupt agricultural yields and food systems at large.



These challenges arise at a critical time when&nbsp;<a href="https://docs.wfp.org/api/documents/WFP-0000153832/download/?_ga=2.1752049.1771678112.1707288571-434489079.1701945362" target="_blank" rel="noreferrer noopener">over 50 percent of the households</a>&nbsp;in Sierra Leone are grappling with food insecurity, making them highly susceptible to any additional disturbances in food supply chains. Concurrently, the depreciation of our currency has amplified our national debt, constraining the government&#8217;s financial capacity to invest in effective solutions to address these challenges.



Despite the hurdles, and by harnessing Africa’s new membership in the G20, our leaders can turn commitments into action, by removing global structural barriers hindering the fight against hunger and by transforming food systems across the continent.



To begin with, this means delivering on existing plans drawn up by continental leaders to tackle hunger and malnutrition challenges.



Agreements such as the 2014&nbsp;<a href="https://www.resakss.org/sites/default/files/Malabo%20Declaration%20on%20Agriculture_2014_11%2026-.pdf" target="_blank" rel="noreferrer noopener">Malabo Declaration</a>&nbsp;and the Comprehensive African Agricultural Development Programme (CAADP), the&nbsp;<a href="https://www.afdb.org/sites/default/files/2023/09/08/the_african_leaders_nairobi_declaration_on_climate_change-rev-eng.pdf" target="_blank" rel="noreferrer noopener">Nairobi Declaration</a>&nbsp;proposed at the 2023 Africa Climate Summit, and the&nbsp;<a href="https://www.afdb.org/sites/default/files/2023/01/27/dakar_ii_declaration_food_sovereignty_and_resilience_.pdf" target="_blank" rel="noreferrer noopener">Dakar Declaration</a>&nbsp;agreed last year, demonstrate Africa’s strong legacy in building frameworks to address hunger and malnutrition. However, the actual implementation of these plans has frequently fallen short of expectations, highlighting a critical gap between ambitious policy formulation and effective action.



In light of this, African governments must allocate 10 percent of their budgets to agriculture and development to fulfill their commitment made under the CAADP to revive agricultural growth and address mounting food insecurity challenges, particularly amid changing climate conditions.



Africa&#8217;s small-scale farmers, despite being so vulnerable to climate-related risks, hold immense potential in feeding a growing population. Roughly 33 million smallholder farms contribute up to&nbsp;<a href="https://www.ifad.org/thefieldreport/#:~:text=In%20Africa%2C%20there%20are%20an,food%20production%20and%20reduce%20poverty" target="_blank" rel="noreferrer noopener">70 percent</a>&nbsp;of the continent’s food supply yet receive just a fraction of the finance needed to adapt to a changing climate. Hence, funding should ensure that they are not left behind in addressing the escalating issue of hunger on the continent.



And while 10 percent seems a large figure, the ripple effects of such an investment would extend far beyond merely combating hunger and malnutrition. Better nutrition is essential for improving access to and the quality of education, which is the focus of this month’s AU meetings. By addressing hunger, Africa can improve education for our next generation, while providing a viable pathway to lift communities out of poverty.



Secondly, Africa’s leaders must actively seek much-needed global collaboration to address food insecurity while securing relief from mounting debt burdens.



Having&nbsp;<a href="https://www.weforum.org/agenda/2023/09/african-union-g20-world-leaders/" target="_blank" rel="noreferrer noopener">permanently joined</a>&nbsp;the G20, the African Union must capitalize on this year’s meetings to drive concerted global efforts to address hunger, particularly by relieving the continent’s pressing debt burden to redirect funds towards urgent humanitarian needs and to make investments to boost sustainable economic growth.



President Lula of Brazil, who assumed the presidency of the G20 for this year, is a noted ally in the fight against hunger. Recognized for his efforts with the World Food Prize in&nbsp;<a href="https://www.reuters.com/article/idUSJOE75L050/" target="_blank" rel="noreferrer noopener">2011</a>,&nbsp;he has already expressed his commitment to establishing an Alliance against poverty and hunger. This is welcomed &#8211; we urgently need a consolidated global effort &#8211; a ‘plan’ to drive the fight to end hunger for good.



Africa’s hunger levels are also inextricably linked to a deteriorating fiscal landscape. In Sierra Leone, consumer inflation stands at&nbsp;<a href="https://www.imf.org/external/datamapper/PCPIEPCH@WEO/SLE?zoom=SLE&amp;highlight=SLE" target="_blank" rel="noreferrer noopener">more than 20 percent</a>, while government debt is&nbsp;<a href="https://www.imf.org/external/datamapper/GGXWDG_NGDP@WEO/SLE?zoom=SLE&amp;highlight=SLE" target="_blank" rel="noreferrer noopener">more than 80 percent</a>&nbsp;of our country’s GDP, vastly limiting the ability of citizens and the government to navigate the unprecedented food crisis.



African leaders must therefore use the AU Summit to set the tone for the rest of the year, placing the global food crisis at the top of their international agenda. This also includes this year’s COP29 climate talks, given that 17 out&nbsp;<a href="https://www.uneca.org/stories/17-out-of-the-20-countries-most-threatened-by-climate-change-are-in-africa%2C-but-there-are#:~:text=According%20to%20the%20latest%20report,health%2C%20productivity%20and%20food%20security." target="_blank" rel="noreferrer noopener">of the 20</a>&nbsp;countries most threatened by climate change are in Africa and considering the impact of climate change on food systems and nutrition.



Thirdly, in moving to tackle food insecurity across the continent, Africa’s leaders must adopt a holistic, “all of government” approach if we are to make progress by the end of the decade.



Our food systems present a complex web of challenges: in addition to being a source of nutrition and livelihoods, food production is a primary source of environmental destruction, causing up to&nbsp;<a href="https://www.fao.org/newsroom/detail/cop26-agricultural-expansion-drives-almost-90-percent-of-global-deforestation/en" target="_blank" rel="noreferrer noopener">90 percent</a>&nbsp;of deforestation and around a&nbsp;<a href="https://ourworldindata.org/food-ghg-emissions" target="_blank" rel="noreferrer noopener">quarter</a>&nbsp;of greenhouse gas (GHG) emissions globally.



To balance the trade-offs between boosting productivity and preserving the environment, governments must adopt a holistic approach, recognizing the impact of food systems transformation beyond hunger levels alone. In Sierra Leone, the Presidential Council led by H.E President Bio brings together government officials, farmers, researchers, and civil society members, and serves as a pivotal platform for navigating the complex trade-offs in the battle to end hunger.



Africa&#8217;s leaders have laid down a substantial framework over recent decades for addressing hunger and malnutrition on the continent. Now, given that a third of the world’s youth will be African by 2050, they must build on this legacy with bold action to save lives now, build resilience and secure a prosperous and sustainable future for the upcoming generations.

NER_20190729_WFP-Simon_Pierre_Diouf_7227

Commitments don’t grow crops: why Africa needs action to tackle hunger once and for all

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/The-Elders-820x547.jpeg" alt="" class="wp-image-456384" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/The-Elders-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/The-Elders-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/The-Elders-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/The-Elders-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/The-Elders-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/The-Elders.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



Written by: 



<ul class="wp-block-list">
<li>Mary Robinson, former President of Ireland, and Chair of The Elders</li>



<li>Gordon Brown, former Prime Minister of the United Kingdom</li>



<li>Annie Lennox, Singer-songwriter and political activist</li>



<li>Charles Oppenheimer, grandson of J. Robert Oppenheimer</li>



<li>Ban Ki-moon, Former UN Secretary-General and Deputy Chair of The Elders</li>



<li>Sir Richard Branson, Co-founder, Virgin Group</li>



<li>Christoph Heusgen, Chair of the Munich Security Conference</li>
</ul>



Our world is in grave danger. We face a set of threats that put all humanity at risk. Our leaders are not responding with the wisdom and urgency required.    



The impact of these threats is already being seen: a rapidly changing climate, a pandemic that killed millions and cost trillions, wars in which the use of nuclear weapons has been openly raised. &nbsp;



There could be worse to come. Some of these threats jeopardise the very existence of life on earth. We do not yet know how significant the emerging risks associated with Artificial Intelligence will be.&nbsp;&nbsp;



We are at a precipice. &nbsp;



The signatories of this letter call on world leaders to work together to address these existential threats more decisively. We welcome people of all communities, generations, and political views to join us in asking for courageous decision-making &#8211; for the sake of our common future. &nbsp;



The knowledge and resources to address these challenges exist. But too many of our leaders lack the political will or capability to take decisive action. They seek short-term fixes over long-term solutions.  &nbsp;



In a year when half the world’s adult population face elections, we urge all those seeking office to take a bold new approach. We need long-view leadership from decision-makers who understand the urgency of the existential threats we face, and believe in our ability to overcome them. &nbsp;



Long-view leadership means showing the determination to resolve intractable problems not just manage them, the wisdom to make decisions based on scientific evidence and reason, and the humility to listen to all those affected. Long-view leaders must have the moral strength to address both current concerns and long-term risks, often at the expense of vested interests.  &nbsp;



Such values should be common to all political leaders. But they are woefully missing in so many. We need leaders, women and men, who consistently demonstrate the courage to:  &nbsp;



<ol class="wp-block-list">
<li>Think beyond short-term political cycles and deliver solutions for both current and future generations.  &nbsp;</li>



<li>Recognise that enduring answers require compromise and collaboration for the good of the whole world.  &nbsp;</li>



<li>Show compassion for all people, designing sustainable policies which respect that everyone is born free and equal in dignity and rights. &nbsp;</li>



<li>Uphold the international rule of law and accept that durable agreements require transparency and accountability.   &nbsp;</li>



<li>Commit to a vision of hope in humanity’s shared future, not play to its divided past. &nbsp;</li>
</ol>



These principles of long-view leadership can inform urgent changes in policy. Governments can get to work now to agree how to finance the transition to a safe and healthy future powered by clean energy, relaunch arms control talks to reduce the risk of nuclear war, save millions of lives by concluding an equitable pandemic treaty, and start to build the global governance needed to make AI a force for good, not a runaway risk. &nbsp;



As leaders prepare to gather in New York in September for the UN Summit of the Future, it is time to change direction. The biggest risks facing us cannot be tackled by any country acting alone. Yet when nations work together, these challenges can all be addressed, for the good of us all. &nbsp;



Despite the seriousness of these existential threats, hope remains. Our best future can still lie ahead of us. We call on leaders to take the long view, and show the courage to lead us to that better future.

The-Elders

Open letter calling on world leaders to show long-view leadership on existential threats

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="235" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/BLOG-2099x600-MD-AI-BLOG-X-poser-Adobe-Stock-820x235.jpg" alt="" class="wp-image-454379" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/BLOG-2099x600-MD-AI-BLOG-X-poser-Adobe-Stock-820x235.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/BLOG-2099x600-MD-AI-BLOG-X-poser-Adobe-Stock-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/BLOG-2099x600-MD-AI-BLOG-X-poser-Adobe-Stock-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/BLOG-2099x600-MD-AI-BLOG-X-poser-Adobe-Stock-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/BLOG-2099x600-MD-AI-BLOG-X-poser-Adobe-Stock-1536x440.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/BLOG-2099x600-MD-AI-BLOG-X-poser-Adobe-Stock-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">X-poser/Adobe Stock</figcaption></figure>



AI will affect almost 40 percent of jobs around the world, replacing some and complementing others. We need a careful balance of policies to tap its potential



We are on the brink of a technological revolution that could jumpstart productivity, boost global growth and raise incomes around the world. Yet it could also replace jobs and deepen inequality.



The rapid advance of artificial intelligence has captivated the world, causing both excitement and alarm, and raising important questions about its potential impact on the global economy. The net effect is difficult to foresee, as AI will ripple through economies in complex ways. What we can say with some confidence is that we will need to come up with a set of policies to safely leverage the vast potential of AI for the benefit of humanity.



Reshaping the Nature of Work



In&nbsp;<a href="https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2024/01/14/Gen-AI-Artificial-Intelligence-and-the-Future-of-Work-542379?cid=bl-com-SDNEA2024001">a new analysis</a>, IMF staff examine the potential impact of AI on the global labor market. Many studies have predicted the likelihood that jobs will be replaced by AI. Yet we know that in many cases AI is likely to complement human work. The IMF analysis captures both these forces.



The findings are striking: almost 40 percent of global employment is exposed to AI. Historically, automation and information technology have tended to affect routine tasks, but one of the things that sets AI apart is its ability to impact high-skilled jobs. As a result, advanced economies face greater risks from AI—but also more opportunities to leverage its benefits—compared with emerging market and developing economies.



In advanced economies, about 60 percent of jobs may be impacted by AI. Roughly half the exposed jobs may benefit from AI integration, enhancing productivity. For the other half, AI applications may execute key tasks currently performed by humans, which could lower labor demand, leading to lower wages and reduced hiring. In the most extreme cases, some of these jobs may disappear.



In emerging markets and low-income countries, by contrast, AI exposure is expected to be 40 percent and 26 percent, respectively. These findings suggest emerging market and developing economies face fewer immediate disruptions from AI. At the same time, many of these countries don’t have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time the technology could worsen inequality among nations.



<figure class="wp-block-image"><img decoding="async" src="https://www.imf.org/-/media/Images/IMF/Blog/Articles/Blog-Charts/2024/January/AI-MD-Blog-Chart-1.ashx" alt=""/></figure>



AI could also affect income and wealth inequality within countries. We may see polarization within income brackets, with workers who can harness AI seeing an increase in their productivity and wages—and those who cannot falling behind.&nbsp;<a href="https://www.nber.org/papers/w31161">Research</a>&nbsp;shows that AI can help less experienced workers enhance their productivity more quickly. Younger workers may find it easier to exploit opportunities, while older workers could struggle to adapt.



The effect on labor income will largely depend on the extent to which AI will complement high-income workers. If AI significantly complements higher-income workers, it may lead to a disproportionate increase in their labor income. Moreover, gains in productivity from firms that adopt AI will likely boost capital returns, which may also favor high earners. Both of these phenomena could exacerbate inequality.



In most scenarios, AI will likely worsen overall inequality, a troubling trend that policymakers must proactively address to prevent the technology from further stoking social tensions. It is crucial for countries to establish comprehensive social safety nets and offer retraining programs for vulnerable workers. In doing so, we can make the AI transition more inclusive, protecting livelihoods and curbing inequality.



An Inclusive AI-Driven World



AI is being integrated into businesses around the world at remarkable speed, underscoring the need for policymakers to act.



To help countries craft the right policies, the IMF has developed an AI Preparedness Index that measures readiness in areas such as digital infrastructure, human-capital and labor-market policies, innovation and economic integration, and regulation and ethics.



The human-capital and labor-market policies component, for example, evaluates elements such as years of schooling and job-market mobility, as well as the proportion of the population covered by social safety nets. The regulation and ethics component assesses the adaptability to digital business models of a country’s legal framework and the presence of strong governance for effective enforcement.



Using the index, IMF staff assessed the readiness of 125 countries. The findings reveal that wealthier economies, including advanced and some emerging market economies, tend to be better equipped for AI adoption than low-income countries, though there is considerable variation across countries. Singapore, the United States and Denmark posted the highest scores on the index, based on their strong results in all four categories tracked.



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Guided by the insights from the AI Preparedness Index, advanced economies should prioritize AI innovation and integration while developing robust regulatory frameworks. This approach will cultivate a safe and responsible AI environment, helping maintain public trust. For emerging market and developing economies, the priority should be laying a strong foundation through investments in digital infrastructure and a digitally competent workforce.



The AI era is upon us, and it is still within our power to ensure it brings prosperity for all.

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AI Will Transform the Global Economy. Let’s Make Sure It Benefits Humanity.

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="493" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/JuanitaMaree001-s-1-820x493.jpg" alt="" class="wp-image-452139" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/JuanitaMaree001-s-1-820x493.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/JuanitaMaree001-s-1-300x181.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/JuanitaMaree001-s-1-150x90.jpg 150w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/JuanitaMaree001-s-1-768x462.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/JuanitaMaree001-s-1-1536x924.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/JuanitaMaree001-s-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Dr Juanita Maree, CEO of the SA Association of Freight Forwarders</figcaption></figure>



The logistics crisis in South Africa is, without doubt, the ‘perfect storm’, strangling the private sector and trade, negatively impacting the fiscal, causing massive knock-on damage to the nation at large. This is a situation that government now recognises as an ‘Achilles heel’ to the national economy.



Corrective, regenerative focus from collaborative platforms between the public and private sectors to address the situation has started to show progress, but needs to intensify. The road is long and arduous; we are off to a late but reasonable start. The Southern Africa Association of Freight Forwarders (SAAFF) welcomes the opportunity to track and measure progress through its industry leading qualitative Weekly Cargo Movement Report and its commitment to securing sustainable solutions as a dynamic sectoral representative body at the forefront of this critical path.



Significantly, imports and exports in 2023 represented 56.22% of South Africa’s total GDP, down by 8,7% from 2022 – and this in a boom year for mineral resources. The drop obliterated robust trade growth posted in 2022 &#8211; a recovery year after the impacts of the COVID-19 catastrophe. In the context of such losses and taking into consideration the serious knock-on impact this has on business across all sectors, it is clearly time for stretch targets in the reconstruction of the logistics network.



South Africa&#8217;s freight demand is high, at nearly 500 billion tonne-kilometres*. We need a multi-modal approach to satisfy our freight demand. And at the worst of times recently, the inefficiencies in rail cost us R1 billion a day, while the inefficiencies at the ports amount to a loss of R200 million a day. These numbers are staggering – clearly highlighting the magnitude of the current problems and the desperate need to overturn them.



<h2 class="wp-block-heading" id="h-where-are-we-currently">Where are we currently?</h2>



Taking stock of progress since SAAFF’s urgent call to Government on February the 7th&nbsp;last year when the organisation warned of the need for wholesale reform and urgent corrective action to decisively address the crisis in the logistics sector, developments are encouraging and poised to pick up pace in 2024.



The introduction of the National Logistics Crisis Committee (NLCC) came as an important response from Government to Industry and was greeted by a legion of strong, powerful well-vested private-sector partners ready for action&nbsp; &#8211; a major step in the right direction.



The NLCC, constituted by Government works to secure stability across the logistics and supply chain arena. Through this forum, the private sector is able to participate and have regular access to a specialist logistics consultative platform that is anchored by cadence and accountability, committed to enabling world-class logistics networks for South Africa. The NLCC work is already making difference. The recovery plan deployed by Transnet in Pier 2, the country’s biggest container terminal, will remove the backlog effectively end of February 2024 as was anticipated in the original plan.



SAAFF Chief Executive Officer Dr Juanita Maree went on record to highlight the importance of Cabinet’s approval and activation of the Freight Logistics Roadmap, saying it would open the way for the revival of a properly resourced, inter-modal, world class logistics network for South Africa and the region.&nbsp; In the short-term, the approval gives traction to the emergency, restorative programme underway to address the current crisis which is further aided by the R47 billion guarantee facility introduced in support of Transnet’s Recovery Plan, the dynamics start to paint a picture.



<h2 class="wp-block-heading" id="h-where-are-we-going">Where are we going?</h2>



Quality in the execution of the plans is critical. When reforms are well implemented, transparent Apex key performance indicators become evident and measurable between marine, waterside, landside, and evacuation of Terminals, enabling South Africa to conduct sound benchmarking against best practice.&nbsp; Introducing in other words, inter and intra port competition&nbsp; &#8211; the operational platform that is required for an intact logistic network to support trade and trade growth.&nbsp;



Our call is still out for more practical measures to be introduced as sustainable action to protect jobs and attract investment. Well-managed, functional Public-Private-Partnerships (PPP) have proven successful for both developed and emerging economies across the world. Designed to ensure collaborative work within the ‘SA Inc.’ concept to shape our Logistics network across all modalities.&nbsp; PPP platforms should allay fears among labour groups about job losses and instead predict OPPORTUNITY for job creation.



Excellence as a standard is an absolute requirement. Excellence must define SA Inc.’s Logistics network going forward, in the evolution.&nbsp; For this to become a reality it is essential to be clear on what is required to support trade and trade growth.&nbsp; The Transnet Freight Rail and Ports management crisis begs for reinforcement to be urgently and adequately expedited.



<h2 class="wp-block-heading" id="h-risk-and-reward-in-the-short-term-horizon">Risk and Reward in the short-term horizon</h2>



Transnet is a ‘big ship’, it turns slowly, but turning it is! &#8211; guided by the steadfast commitment and solid operational experience of the team under the leadership of current acting CEO Michelle Phillips who, earlier this week again called on government to accelerate private-sector-participation in the dysfunctional state-owned logistics firm [Transnet] saying this action “needs to be put on steroids”.



It is a fundamental truth that logistics is the beating heart of the national economy, the activator of trade, commerce, jobs, skills development, FDI, et-al. In general terms, logistics is the driver of business dynamics, ROI – and has a significant impact on the quality of life in our country.&nbsp;&nbsp;



South Africa has what it takes to fix the problems, improve its logistics base and to turn this moment into an opportunity to uphold its leadership position in the regional and continental context and beyond in the global supply chain where geopolitical and climate driven congestions beg for efficient, alternative routes and trade partners. South Africa has a chance to press reset, to reinvent its position as a founder member of BRICS and at the dawn of the AfCFTA. We need all hands-on-deck!

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Reaching the point of Turnaround

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<figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="541" height="363" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/image012.png" alt="" class="wp-image-452113" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/image012.png 541w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/image012-300x201.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/image012-134x90.png 134w" sizes="auto, (max-width: 541px) 100vw, 541px" /></figure></div>


<a href="#c201b58a-4f05-44a8-a472-3ce45b6e5bcc" id="c201b58a-4f05-44a8-a472-3ce45b6e5bcc-link">1</a>South Africa’s benchmark (ten-year) government bond has seen its yield remain above 11.00% for most of this year so far and averaging 11.03% after 2023’s average of 11.25%, deteriorated from 2022’s 10.48% as fiscal health weakened.



• Indeed, in 2021, the yield on South Africa’s benchmark (ten-year) government bond averaged 9.40%, and in 2019 8.94%, 2013 7.35% as SA’s long-term borrowing costs rose as the state extended its gross loan borrowings (as a % of GDP).



• South Africa’s steadily rising benchmark yield (inverse relation to the price) over the years indicates the falling value of SA bonds, with yields much lower, and hence the ten-year yield much higher than that of most EM bonds.&nbsp;



• Bloomberg’s ten-year local currency bond yield ranker for emerging countries’ debt shows that SA ranks among the bottom of the twenty-eight countries included, with only Russia, Turkey, Pakistan, Lebanon and Nigeria seeing higher yields.



• That is, the local currency bonds for SA have a relatively high overall total country risk (as local currency debt includes country risk as well as sovereign risk) compared to other emerging countries’ benchmark bonds.



• The majority of this Bloomberg ranked groups’ yields are below 10%, specifically over twenty-one of the twenty-eight countries, with Brazil’s benchmark bond yield at 10.71%, and South Africa coming in next at twenty-three.



• The extremely poor faring of SA’s government bonds is indicative of the deterioration in the credit quality, with borrowing set to balloon to 74.7% of GDP this fiscal year from 70.9% in 2022/23. It is projected to climb&nbsp; further to 77.5% of GDP by 2026/27.&nbsp;



• In the second half of the 2000s the debt was closer to 20% of GDP, while the country’s benchmark bond yield was close to 6%. The most recent government statistics show for the first three quarters of 2023/24 that the revenue underrun continues.



• Expenditure is at 74.2% of the revised budget in the MTBPS, ahead of last year’s 70.1% at this time. Revenue is at 71.5% of budget, under the 72.2% of the comparable period, and underscoring the likelihood of the projected ballooning in borrowings.


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The deficit is currently sitting at -R292.2bn for the first three quarters of the year. Gross loan debt as a % of GDP was below 70% prior to 2022/23, and last year saw weak commodity prices and a collapse in growth damage revenues.



• The state continues to overspend this fiscal year compared to the comparative periods of last year, eroding the chance of the country’s gross loan debt coming in substantially below the projected figure, which is undermining bond yields.



• Financial markets react negatively to increased borrowings, particularly when expenditure does not slow to fit the deterioration in revenue, which has been the case for a number of years for SA, causing its yields to jump up, and credit ratings to fall.&nbsp;&nbsp;



• Lebanon, Turkey, Nigeria and Russia have lower credit ratings than SA, higher benchmark bond yields, with Nigeria and Turkey in the single B category, Pakistan CCC and Lebanon lower at RD, with the bottom rung ratings being seen as ‘junk’.



• The IMF highlights in its World Economic Outlook that “(i)n emerging market and developing economies, in which output has on average fallen even further below the prepandemic trend, on average the fiscal stance is estimated to have been neutral.”



• Adding in its WEO (World Economic Outlook) that “(t)he exceptions include Brazil and Russia, where fiscal policy eased in 2023”,&nbsp; with the yield on Brazil’s ten year bond rising from 10.28% in 2023 to 10.75%.



• The IMF adds “(i)n 2024, the fiscal policy stance is expected to tighten in several advanced and emerging market and developing economies to rebuild budgetary room for maneuver and curb the rising path of debt”.



• “Global growth is projected at 3.1 percent in 2024 and 3.2 percent in 2025, with the 2024 forecast 0.2(%) … higher than that in the October …WEO) on … greater-than expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China.”



• “The forecast for 2024–25 is, however, below the historical (2000–19) average of 3.8 percent, with elevated central bank policy rates to fight inflation, a withdrawal of fiscal support amid high debt weighing on economic activity, and low underlying productivity growth.”


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SA Bond note: the deteriorated bond values persist as SA heads into the Budget on 21st February

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/BLOG-2099x600-Peteerv-iStock-by-Getty-Images-iStock-533277159-820x234.jpg" alt="" class="wp-image-449834" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/BLOG-2099x600-Peteerv-iStock-by-Getty-Images-iStock-533277159-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/BLOG-2099x600-Peteerv-iStock-by-Getty-Images-iStock-533277159-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/BLOG-2099x600-Peteerv-iStock-by-Getty-Images-iStock-533277159-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/BLOG-2099x600-Peteerv-iStock-by-Getty-Images-iStock-533277159-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/BLOG-2099x600-Peteerv-iStock-by-Getty-Images-iStock-533277159-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/BLOG-2099x600-Peteerv-iStock-by-Getty-Images-iStock-533277159-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: Peeterv/iStock by Getty Images</figcaption></figure>



Sub-Saharan Africa suffers from persistent security challenges, and Sahel countries such as Burkina Faso, Chad, Niger, Mauritania, and Mali are particularly afflicted by protracted conflicts and humanitarian crises.



While various factors can fuel conflict, our&nbsp;<a href="https://www.elibrary.imf.org/view/journals/001/2024/004/001.2024.issue-004-en.xml?cid=bl-com-WPIEA2024004&amp;utm_medium=email&amp;utm_source=govdelivery">research</a>&nbsp;shows that discontent with state institutions among marginalized groups is a key driver of unrest in the region. Such distrust reflects perceptions that governments fail to address equity issues and inclusive growth—including the fair allocation of natural resources and human capital development.



Institutional failures aggravate feelings of exclusion where some people or groups are systematically denied rights, opportunities, or resources that may be available to other segments of the population. This invites conflict by undermining the principles of fairness and inclusivity vital for sustainable development.



As the <a href="https://www.imf.org/en/Blogs/chart-of-the-week?utm_medium=email&amp;utm_source=govdelivery">Chart of the Week</a> shows, conflict is often concentrated near national borders where there tend to be more limited or insufficient public services, fostering feelings of exclusion. These conflict-prone hotspots pose substantial security and stability risks in both directly affected and neighboring countries.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="601" height="800" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/ssa-fatalties-map-3-4_original-601x800.png" alt="" class="wp-image-449833" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/ssa-fatalties-map-3-4_original-601x800.png 601w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/ssa-fatalties-map-3-4_original-225x300.png 225w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/ssa-fatalties-map-3-4_original-68x90.png 68w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/ssa-fatalties-map-3-4_original.png 736w" sizes="auto, (max-width: 601px) 100vw, 601px" /></figure>



Notable examples of conflicts with potential cross-border spillover effects include the recent civil war in Ethiopia and the long-running conflicts in South Sudan and the Central African Republic, as well as extremism-driven conflicts across the Sahel and northern Mozambique.



Our analysis of conditions across all countries in sub-Saharan Africa from 1990 to 2022 explores the instrumental role of social, political, and economic exclusion in driving conflicts, as expressed by our new exclusion index. Our study is intended to help policymakers navigate the complexities of the region, and in turn improve lives.



It highlights how mitigating violent conflict requires a comprehensive approach to address various forms of exclusion. Fostering relationships between people and a government that ensures justice and equitable public service delivery is crucial in establishing conditions for sustainable peace and social cohesion.



Poverty and underdevelopment alone may not fuel conflict. But those underlying factors are exacerbated by the experience or perception of social and economic exclusion, thus providing a fertile breeding ground for armed groups, necessitating urgent intervention.



Exclusion and distrust of government are not the only causes of conflict, which can also be fueled by climate change and food insecurity, among other factors. Moreover, the dire repercussions of the security crisis, coupled with these challenges, underscore an urgent need for humanitarian assistance and the pressing need to improve the quality and efficiency of security expenditures, as well as combating terrorism financing. However, those efforts may fall short if the problem of exclusion is not addressed at the same time.

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Contributor

Rate Cuts? Timing Is Everything for Fed

Strengthen Central Bank Independence to Protect the World Economy

The notion of a black industrialist requires a complete review if the program is going to have the desired transformational impact

The crisis of Shrinkflation and Skimpflation on Middle-Class Disposable Incomes

Unleashing the Power of Intra-African Trade: A Path to Prosperity for West Africa

Advancing Women’s Economic Power through Financial Access and Digital Technologies

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Fiscal discipline, R150bn windfall to reduce SA’s debt burden

Commitments don’t grow crops: why Africa needs action to tackle hunger once and for all

Open letter calling on world leaders to show long-view leadership on existential threats

AI Will Transform the Global Economy. Let’s Make Sure It Benefits Humanity.

Reaching the point of Turnaround

SA Bond note: the deteriorated bond values persist as SA heads into the Budget on 21st February

How Distrust of Government by Marginalized People Fuels Conflict in Africa

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