<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="492" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/bill-and-melinda-gates-t-820x492.jpg" alt="" class="wp-image-401148" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/bill-and-melinda-gates-t-820x492.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/bill-and-melinda-gates-t-300x180.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/bill-and-melinda-gates-t-768x461.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/bill-and-melinda-gates-t.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Bill and Melinda GatesFrederic Stevens | Getty Images</figcaption></figure>



SEATTLE,&nbsp;WA&nbsp;(January&nbsp;24,&nbsp;2024)&nbsp;–&nbsp;In&nbsp;his&nbsp;<a href="https://www.gatesfoundation.org/ideas/articles/2024-gates-foundation-annual-letter" target="_blank" rel="noreferrer noopener">annual&nbsp;letter&nbsp;published&nbsp;today,</a>&nbsp;Bill&nbsp;&amp;&nbsp;Melinda&nbsp;Gates&nbsp;Foundation CEO&nbsp;<a href="https://www.gatesfoundation.org/about/leadership/mark-suzman" target="_blank" rel="noreferrer noopener">Mark Suzman</a>&nbsp;called for philanthropists to give more and give now to meet the unprecedented challenges nations across the globe face in combatting poverty, eradicating disease, and fighting&nbsp;inequality.



In the years since the COVID-19 pandemic struck, the world has seen a backslide in progress at a time when low-income countries have fewer resources to meet basic human needs. And yet, there is a robust pipeline of <a href="https://www.gatesfoundation.org/ideas/science-innovation-technology" target="_blank" rel="noreferrer noopener">health and technological innovations</a> and proven solutions that could be scaled up or catalyzed with the advent of additional philanthropic dollars.



“Philanthropy&nbsp;can&nbsp;take&nbsp;risks&nbsp;and&nbsp;help&nbsp;fill&nbsp;gaps&nbsp;that&nbsp;would otherwise&nbsp;be&nbsp;overlooked&nbsp;or&nbsp;underfunded,” Suzman&nbsp;writes.&nbsp;“We&nbsp;have&nbsp;the&nbsp;opportunity&nbsp;to&nbsp;realize&nbsp;the&nbsp;full&nbsp;potential&nbsp;of&nbsp;philanthropy&nbsp;at&nbsp;the&nbsp;moment when the world needs it most.&#8221;



According to&nbsp;<a href="https://www.forbes.com/sites/chasewithorn/2023/04/04/forbes-37th-annual-worlds-billionaires-list-facts-and-figures-2023/?sh=5b6583577d76" target="_blank" rel="noreferrer noopener">Forbes,</a>&nbsp;the net worth of the world’s 2,640 billionaires is at least $12.2 trillion. Suzman points out that with just $1 billion in additional giving—a tiny fraction of that amount—philanthropists could fund a set of&nbsp;<a href="https://www.gatesfoundation.org/goalkeepers/report/2023-report/" target="_blank" rel="noreferrer noopener">high-impact, low-cost interventions</a>&nbsp;that could save the lives of 2 million additional mothers and babies by 2030. With $4 billion, they could help half a billion smallholder farmers&nbsp;<a href="https://www.cgiar.org/invest/" target="_blank" rel="noreferrer noopener">become</a>&nbsp;<a href="https://www.cgiar.org/invest/" target="_blank" rel="noreferrer noopener">more climate resilient</a>&nbsp;and reduce greenhouse gas emissions from agriculture by 1 gigaton a year by 2030.&nbsp;With&nbsp;a&nbsp;little&nbsp;more&nbsp;than&nbsp;$7&nbsp;billion,&nbsp;they&nbsp;could&nbsp;<a href="https://www.gavi.org/gavi-investment-opportunity-2021-2025" target="_blank" rel="noreferrer noopener">get&nbsp;vaccines&nbsp;to&nbsp;300&nbsp;million&nbsp;people,</a>&nbsp;preventing&nbsp;at&nbsp;least 7 million deaths.



This&nbsp;immense&nbsp;potential&nbsp;to&nbsp;respond&nbsp;to&nbsp;compounding&nbsp;global&nbsp;crises&nbsp;and&nbsp;accelerate&nbsp;progress&nbsp;is&nbsp;why&nbsp;the



Gates Foundation is stepping up its funding support. Earlier this month, the Gates Foundation’s board of trustees <a href="https://www.gatesfoundation.org/ideas/media-center/press-releases/2024/01/annual-budget-funding-future-health" target="_blank" rel="noreferrer noopener">approved a 2024 budget of $8.6 billion</a>—the largest ever—which the foundation will use to fund innovative ways to save and improve lives. In 2022, the foundation announced its intent to <a href="https://www.gatesfoundation.org/ideas/media-center/press-releases/2022/07/gates-foundation-announce-annual-payout-increase-us-9-billion-global-crises-response" target="_blank" rel="noreferrer noopener">increase its</a> <a href="https://www.gatesfoundation.org/ideas/media-center/press-releases/2022/07/gates-foundation-announce-annual-payout-increase-us-9-billion-global-crises-response" target="_blank" rel="noreferrer noopener">annual payout to $9 billion by 2026,</a> and it is committed to spending down its endowment within 20 years of its founders’ deaths to focus on solving urgent problems now and helping set up sustainable systems for the future.



Suzman’s letter also highlights the growth and evolution of philanthropy globally, citing organizations such as&nbsp;the African Philanthropy Forum that is helping African donors&nbsp;work together&nbsp;to drive inclusive, sustainable&nbsp;development&nbsp;across&nbsp;the&nbsp;continent&nbsp;and&nbsp;foundations&nbsp;based&nbsp;in&nbsp;countries&nbsp;like&nbsp;India,&nbsp;China,&nbsp;and Singapore are taking on more local and global problems. “The philanthropic ecosystem looks different



than&nbsp;it&nbsp;did&nbsp;when&nbsp;I&nbsp;started&nbsp;doing&nbsp;this&nbsp;work&nbsp;over&nbsp;15&nbsp;years&nbsp;ago,&nbsp;and&nbsp;that’s&nbsp;a good&nbsp;thing,”&nbsp;he&nbsp;writes.&nbsp;“Donors around the world are bringing bold vision and lived experience to complex challenges.”



Small donations made by millions&nbsp;of&nbsp;people worldwide are also having an enormous&nbsp;impact. Suzman underscores&nbsp;that&nbsp;nearly&nbsp;half&nbsp;the&nbsp;world’s&nbsp;countries&nbsp;participate&nbsp;in&nbsp;Giving&nbsp;Tuesday,&nbsp;a&nbsp;movement&nbsp;that&nbsp;has facilitated more than $13 billion in donations since 2012.



As&nbsp;Suzman&nbsp;writes,&nbsp;“Today’s&nbsp;world&nbsp;has&nbsp;no&nbsp;shortage&nbsp;of&nbsp;complex&nbsp;problems&nbsp;to&nbsp;be&nbsp;tackled&nbsp;or&nbsp;innovators&nbsp;ready to take them on. But without generous investment and persistent support, great ideas remain&nbsp;just that: ideas.&nbsp;If&nbsp;more&nbsp;people&nbsp;step&nbsp;up&nbsp;their&nbsp;commitments&nbsp;and&nbsp;focus&nbsp;their&nbsp;resources&nbsp;on&nbsp;the&nbsp;areas&nbsp;of&nbsp;greatest&nbsp;need, those ideas can translate to impact.”

bill-and-melinda-gates-t

Gates Foundation CEO Urges More Philanthropy for Proven Life-Saving Solutions

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/responsive_big_webp_tBFYBMOKhTfHbJy9Pt6J1GKDAtyqFL7gT0yZEmtaGrc-820x461.webp" alt="" class="wp-image-448107" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/responsive_big_webp_tBFYBMOKhTfHbJy9Pt6J1GKDAtyqFL7gT0yZEmtaGrc-820x461.webp 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/responsive_big_webp_tBFYBMOKhTfHbJy9Pt6J1GKDAtyqFL7gT0yZEmtaGrc-300x169.webp 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/responsive_big_webp_tBFYBMOKhTfHbJy9Pt6J1GKDAtyqFL7gT0yZEmtaGrc-160x90.webp 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/responsive_big_webp_tBFYBMOKhTfHbJy9Pt6J1GKDAtyqFL7gT0yZEmtaGrc-768x432.webp 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/responsive_big_webp_tBFYBMOKhTfHbJy9Pt6J1GKDAtyqFL7gT0yZEmtaGrc-1536x864.webp 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/responsive_big_webp_tBFYBMOKhTfHbJy9Pt6J1GKDAtyqFL7gT0yZEmtaGrc.webp 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Image: World Economic Forum</figcaption></figure>



The 54th Annual Meeting of the World Economic Forum convened in Davos, Switzerland, against a tense geo-political backdrop.



Conflicts in multiple regions continue to threaten global peace and stability while political fragmentation is increasingly taking a toll on other issue areas ranging from the climate crisis to the development of advanced technologies. In Davos, top public and private sector voices as well as leading civil society experts met to&nbsp;discuss how to effectively deal with security crises, such as the current situation in the Middle East, while at the same time mitigating the structural forces of fragmentation.



The meeting was also attended by over 60 heads of states and government and nearly 300 ministers and other political leaders, several of which delivered public addresses.



Here&#8217;s some of what they had to say.



<h3 class="wp-block-heading" id="h-li-qiang-premier-of-the-people-s-republic-of-china">Li Qiang, Premier of the People&#8217;s Republic of China</h3>



Li Qiang, Premier of the People&#8217;s Republic of China, delivered the first special address of the Annual Meeting 2024.



Li called for the rebuilding of trust between countries and touted China&#8217;s economy, stressing its integral position in the global economy. &#8220;The Chinese economy is making steady progress, and will continue to provide a strong impetus for the world economy,&#8221; Li&nbsp;<a href="https://x.com/wef/status/1747208713859891611?s=20">stated</a>.



<h3 class="wp-block-heading">Ursula von der Leyen, President of the European Commission</h3>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1929142845-820x547.jpg" alt="" class="wp-image-448101" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1929142845-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1929142845-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1929142845-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1929142845-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1929142845-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1929142845-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Ursula von der Leyen, president of the European Commission, delivers a special address on the opening day of the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 16, 2024. The annual Davos gathering of political leaders, top executives and celebrities runs from January 15 to 19. Photographer: Stefan Wermuth/Bloomberg via Getty Images</figcaption></figure>



Ursula von der Leyen, President of the European Commission, urged countries around the world to collaborate and rebuild trust amidst an array of global challenges ranging from the climate crisis to polarization within societies.



Von der Leyen also discussed efforts to advance Europe&#8217;s energy independence. &#8220;Europe has made real progress in improving the resilience of its energy systems,&#8221; after Russia&#8217;s invasion of Ukraine, she said. For von der Leyen&#8217;s full remarks, see&nbsp;<a href="https://www.weforum.org/agenda/2024/01/ursula-von-der-leyen-full-speech-davos/">here</a>.



<h3 class="wp-block-heading">Volodymyr Zelenskyy, President of Ukraine</h3>



Ukrainian President Volodymyr Zelenskyy decried the ongoing Russian aggression against Ukraine and called on countries around the world to support Ukraine&#8217;s war efforts. &#8221; &#8220;We need you in Ukraine to build, to reconstruct and to restore our lives,&#8221; he said.



Zelenskyy also praised the Ukrainian military&#8217;s extraordinary war efforts and called for international support to ensure a just and final peace.



<h3 class="wp-block-heading">Sheikh Mohammed bin Abdulrahman Al-Thani, Prime Minister and Minister of Foreign Affairs of Qatar</h3>



Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al-Thani spoke with World Economic Forum President Børge Brende on 16 January.



Sheikh Mohammed discussed the current conflict in the Middle East and the precarious state of shipping security in the Red Sea. &#8220;Protecting the freedom of navigation is a global issue,&#8221; he said.



<h4 class="wp-block-heading">Pham Minh Chinh, Prime Minister of Viet Nam</h4>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1853395643-820x547.jpg" alt="" class="wp-image-448102" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1853395643-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1853395643-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1853395643-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1853395643-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1853395643-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1853395643-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">TOKYO, JAPAN &#8211; DECEMBER 17: Vietnam&#8217;s Prime Minister Pham Minh Chinh attends a session of the ASEAN-Japan Commemorative Summit Meeting at the Hotel Okura Tokyo in Tokyo on December 17, 2023. (Photo by Kazuhiro NOGI / POOL / AFP/Anadolu via Getty Images)</figcaption></figure>



Pham Minh Chinh, Prime Minister of Viet Nam, sat down for a conversation with Thomas Friedman, a foreign affairs columnist at&nbsp;The New York Times. Among several topics, Chinh shared Viet Nam&#8217;s plans for development, including a 2045 goal to become a developed nation with high income.



&#8220;For the industries to grow,&#8221; Chinh said, &#8220;we need to develop a modern and industrialized nation. And we need to attach importance to all industries.&#8221;



<h4 class="wp-block-heading">Jake Sullivan, National Security Advisor of the United States</h4>



US National Security Advisor Jake Sullivan delivered a special address outlining the United States&#8217; position on the most pressing global issues ranging from shipping disruptions in the Red Sea to US competition with China. The world, he said, is in an era of &#8220;strategic competition in an age of interdependence.&#8221;



Sullivan noted that &#8220;major powers are vastly more interdependent than at any time during the Cold War,&#8221; adding that powerful countries are &#8220;also in stiff competition about the type of world we want to build. This age is one of disruptive change.&#8221;



<h4 class="wp-block-heading">Bisher Hani Al Khasawneh, Prime Minister of Jordan</h4>



Bisher Hani Al Khasawneh, Prime Minister of the Hashemite Kingdom of Jordan, spoke in coversation with Daniel Kurtz-Phelan, the editor-in-chief of&nbsp;Foreign Affairs. Al Khasawneh spoke about the ongoing conflict in the Middle East and the potential for an escalation of violence and displacement of people.



&#8220;The longer [this conflict] lasts, the more prospects we have that endanger regional peace, security and stability,&#8221; he said.



<h4 class="wp-block-heading">Antony Blinken, Secretary of State of the United States</h4>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1931382137-820x547.jpg" alt="" class="wp-image-448088" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1931382137-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1931382137-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1931382137-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1931382137-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1931382137-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1931382137-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Antony Blinken, US secretary of state, during a conversation session on day two of the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, Jan. 17, 2024. The annual Davos gathering of political leaders, top executives and celebrities runs from January 15 to 19. Photographer: Hollie Adams/Bloomberg via Getty Images</figcaption></figure>



US Secretary of State Anthony Blinken sat down with Thomas Friedman of&nbsp;The New York Times&nbsp;for wide-ranging conversation on today&#8217;s most challenging foreign policy issues. The topics of discussion included the war in Ukraine, the escalation of conflict in the Middle East and shipping disruptions in the Red Sea, to name a few.



&#8220;I can&#8217;t think of a time when there&#8217;s been both a greater multiplicity and greater complexity of the challenges that we&#8217;re dealing with,&#8221; Blinken said.



<h4 class="wp-block-heading">António Guterres, Secretary-General of the United Nations</h4>



In a special address, António Guterres, Secretary-General of the United Nations, called on countries to put aside differences and come together to deal with shared challenges. In particular, Guterres called for action to combat the climate crisis and advance the clean energy transition.



Guterres added that while rebuilding trust will not happen overnight, it is &#8220;both essential, and possible.&#8221; For the full remarks, see&nbsp;<a href="https://www.weforum.org/agenda/2024/01/davos-2024-special-address-by-antonio-guterres-secretary-general-of-the-united-nations/">here</a>.



<h4 class="wp-block-heading">Hossein Amir-Abdollahian, Minister of Foreign Affairs of Iran</h4>



Hossein Amir-Abdollahian, Minister of Foreign Affairs of the Islamic Republic of Iran, sat down with CNN host Fareed Zakaria to discuss the geopolitics of the Middle East and Iran&#8217;s position on an array of global issues.



<h4 class="wp-block-heading">Mohammad Mustafa, Chairman of the Palestine Investment Fund</h4>



Mohammad Mustafa, Chairman of the Palestine Investment Fund, spoke with World Economic Forum President Børge Brende about the conflict in Israel and Gaza. Mustafa demanded more humanitarian aid be allowed into the territory and called for a political solution to the conflict.



<h4 class="wp-block-heading">Javier Milei, President of Argentina</h4>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1932549482-820x547.jpg" alt="" class="wp-image-448103" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1932549482-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1932549482-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1932549482-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1932549482-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1932549482-1536x1025.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1932549482-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Javier Milei, Argentina&#8217;s president, during a special address on day two of the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, Jan. 17, 2024. The annual Davos gathering of political leaders, top executives and celebrities runs from January 15 to 19. Photographer: Hollie Adams/Bloomberg via Getty Images</figcaption></figure>



Javier Milei, President of Argentina, shared his views on the state of the global economy and the mechanisms for economic growth. Milei also discussed political and economic philosophy as well as his vision for economic stability in Argentina. For Milei&#8217;s full remarks, see&nbsp;<a href="https://www.weforum.org/agenda/2024/01/special-address-by-javier-milei-president-of-argentina/">here</a>.



<h4 class="wp-block-heading">Pedro Sánchez, Prime Minister of Spain</h4>



Spanish Prime Minister Pedro Sánchez touched on themes including repercussions of a failure to achieve the Sustainable Development Goals by 2030, and the importance of maintaining a rules-based international order.



Sánchez also spoke about the ongoing global conflicts and the need to carefully govern the use of AI. After his prepared remarks, he sat down for a discussion with Børge Brende about topics including EU expansion (including, potentially, Ukraine). “Our common approach with regard to the conflict in Ukraine,” he said, “is the most important strength that we as Europe have.” For Sánchez&#8217;s full remarks, see&nbsp;<a href="https://www.weforum.org/agenda/2024/01/davos-2024-special-address-by-pedro-sanchez-prime-minister-of-spain/">here</a>.



<h4 class="wp-block-heading">Emmanuel Macron, President of France</h4>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="562" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1933121158-820x562.jpg" alt="" class="wp-image-448104" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1933121158-820x562.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1933121158-300x205.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1933121158-131x90.jpg 131w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1933121158-768x526.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1933121158-1536x1052.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/GettyImages-1933121158-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">17 January 2024, Switzerland, Davos: Emmanuel Macron, President of France, speaks at an event of the World Economic Forum (WEF). Photo: Hannes P. Albert/dpa (Photo by Hannes P Albert/picture alliance via Getty Images)</figcaption></figure>



French President Emmanuel Macron discussed economic growth in France and advances in European integration. Moreover, Macron detailed the technological prowess of France and discussed efforts to foster innovation around advanced technologies like AI.



Macron also outlined France&#8217;s position on the ongoing conflicts in Ukraine and in the Middle East.



<h4 class="wp-block-heading">Isaac Herzog, President of Israel</h4>



Israeli President Isaac Herzog spoke with World Economic Forum President Børge Brende about the ongoing conflict in Gaza and tensions in the region. Herzog decried Hamas&#8217; terrorist attacks on 7 October 2023 and demanded the release of Israeli hostages currently being held by Hamas. Moreover, he called on the international community to support Israel in the conflict.



<h4 class="wp-block-heading">Mohammed Shyaa Al Sudani, Prime Minister of Iraq</h4>



Iraqi Prime Minister Shyaa Al Sudani spoke with John Harris, the Founding Editor of Politico, about the political and security situation in Iraq as well as the country&#8217;s transition away from an oil-based economy. He also reflected on how Iraq must delicately balance its relationships with other regional and global powers.



Moreover, Al Sudani spoke about the ongoing conflict in Israel and Gaza, and the rising tensions across the Middle East.



<h4 class="wp-block-heading">Kyriakos Mitsotakis, Prime Minister of Greece</h4>



Greek Prime Minister Kyriakos Mitsotakis spoke with Ravi Agrawal, Editor-in-Chief of&nbsp;Foreign Policy, about today&#8217;s most pressing foreign policy issues ranging from the conflict in the Middle East to the potential for NATO enlargement.



Kyriakos also reflected on Greek and European economic stability as well as the issue of migration across Mediterranean countries.

responsive_big_webp_tBFYBMOKhTfHbJy9Pt6J1GKDAtyqFL7gT0yZEmtaGrc

Over 60 heads of state attended Davos 2024. Here’s what they had to say

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="716" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/Klaus_Schwab_ID-1-2-820x716.jpg" alt="" class="wp-image-447096" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/Klaus_Schwab_ID-1-2-820x716.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/Klaus_Schwab_ID-1-2-300x262.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/Klaus_Schwab_ID-1-2-103x90.jpg 103w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/Klaus_Schwab_ID-1-2-768x671.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/Klaus_Schwab_ID-1-2.jpg 1183w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Klaus Schwab, Founder and Executive Chairman, World Economic Forum</figcaption></figure>



Increasing division, heightened hostility, and a surge in conflicts are defining the current global landscape. The perpetual need for crisis management is depleting the crucial human energy that could otherwise be channelled into shaping a more optimistic future.



Despite facing serious crises in the past, the current wave of pessimism is unprecedented. And unlike the past, the power and presence of global media and communications technology today means that every challenge and setback is amplified, further magnifying the sense of doom and gloom.



After an era that lifted a billion people out of poverty and improved living standards everywhere, the anxiety about losing control over what lies ahead is pushing people towards embracing extreme ideologies and the leaders who champion them.



Rebuilding trust in our future is paramount. The question is where to start, given today’s complex circumstances.



Similar to a medical diagnosis, we must first identify and address the root causes of our malaise. We’re at a pivotal moment in history, yet we still cling to outdated solutions. Complicating matters is the fact that we&#8217;re grappling with many issues simultaneously, all of which are deeply interconnected and mutually reinforcing. There&#8217;s no quick fix or one-size-fits-all remedy. It&#8217;s about addressing all the symptoms in a holistic manner.



First, we no longer have a narrative for how to reinvigorate our economies, which today are burdened by unsustainable levels of debt and inflation, eroding the purchasing power of individuals. Traditional monetary and fiscal policies have run out of steam, and supply side policies are further exacerbating the debt burden. What’s crucially needed now is a new approach – one which leverages the transition to a green, digital, and inclusive economy as a great opportunity for job creation, increased purchasing power and ultimately sustained economic growth.



Second, climate change is a clear threat to current and especially future generations. We must respond to this challenge by increasing energy affordability, security, and sustainability, all the while reducing geoeconomic and geopolitical dependencies. With technological progress, cheaper renewable energy is readily available and can substantially contribute to a more equitable world, with far-reaching impacts on the environment, life quality, and longevity.



Third, we are living in an era of exponential technological development, particularly with the advent of artificial intelligence. These technologies can be enormously disruptive forces if not well governed, but they can also serve as catalysts for a renaissance of humanity, unlocking new dimensions of human creativity and fostering unprecedented collaboration and understanding.



These holistic narratives require global, national, and local cooperation – especially in a world that&#8217;s becoming more competitive and multipolar, marked by growing societal divides and pervasive uncertainty.



Open, transparent conversations can restore mutual trust between individuals and nations who, out of fear for their own future, prioritize their own interests. The resulting dynamics diminish hope in a brighter future. To steer away from crisis-driven dynamics and foster cooperation, trust and a shared vision for a brighter future, we must create a positive narrative that unlocks the opportunities presented by this historic turning point.

Klaus_Schwab_ID-1-2

Rebuilding Trust in the Future

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/QOM6DFY4YFKBTJHWK36SCHU26U-820x547.jpg" alt="" class="wp-image-424241" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/QOM6DFY4YFKBTJHWK36SCHU26U-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/QOM6DFY4YFKBTJHWK36SCHU26U-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/QOM6DFY4YFKBTJHWK36SCHU26U-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/QOM6DFY4YFKBTJHWK36SCHU26U-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/QOM6DFY4YFKBTJHWK36SCHU26U-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/QOM6DFY4YFKBTJHWK36SCHU26U-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: The International Monetary Fund (IMF) logo in Washington, United States, September 4, 2018. REUTERS/Yuri Gripas/File Photo</figcaption></figure>



Washington, DC – December 5, 2023:&nbsp;On November 20, 2023, the Executive Board of the International Monetary Fund (IMF) discussed the staff report: “Review of the Fund’s Strategy on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT).” The staff report takes stock of the implementation of the Fund’s AML/CFT program adopted by the Executive Board in 2018, identifies lessons learned, and seeks the Executive Board’s endorsement of the proposals for the way forward. The report provides an overview of the current approach by staff towards money laundering (ML) and terrorism financing (TF) risks and context, followed by an in-depth analysis of staff’s work under key Fund workstreams—surveillance, financial sector assessment programs (FSAPs), Fund-supported programs, AML/CFT assessments, and capacity development (CD). It also describes how AML/CFT issues have been integrated into other Fund policies and how staff has contributed to the global AML/CFT agenda through close coordination with other stakeholders to leverage synergies and avoid duplication of work. Based on these findings, the paper proposes the way forward for the Fund’s AML/CFT strategy by deepening further the integration of financial integrity issues in the Fund’s core functions through enhanced focus on AML/CFT issues that have macroeconomic impact and sets out issues for discussion.



Since the 2018 review of the Fund’s AML/CFT strategy, the coverage of financial integrity issues has increased across all workstreams. Staff enhanced its understanding of ML/TF risks and of the macroeconomic impact of financial crimes, based on a wide range of quantitative and qualitative data, which has guided the Fund’s engagements with member countries. This review highlights an increased coverage of AML/CFT issues in surveillance and related conditionality in Fund-supported programs. Staff has provided input on AML/CFT in every FSAP, making full use of the flexibility in scope and depth afforded, and contributed to the broader discussion of the stability and soundness of members’ financial sectors, while avoiding duplication with AML/CFT assessments against the international standards set by the Financial Action Task Force (FATF). The increase in regional, multi country, and thematic CD projects has resulted in assistance to a broader range of countries and enhanced flexibility for targeted and more effective and impactful engagements. Staff’s active participation in AML/CFT assessments by the FATF Global Network has effectively contributed to its assessment efforts. The current policy to conduct one to two assessments per year has allowed staff to deliver one assessment per year given the length of these exercises, while also increasing staff’s participation in the review of the quality and consistency of draft assessment reports prepared by other assessor bodies which are essential for the IMF’s work and to help ensure a more evenhanded approach in conducting assessments, and in training assessors and assisting countries preparing for assessments. In addition, staff has participated in an assessment led by a FATF-style regional body, pursuant to the policy endorsed by the Board in 2020.



<h2 class="wp-block-heading" id="h-executive-board-assessment">Executive Board Assessment </h2>



Executive Directors welcomed the opportunity to review the Fund’s AML/CFT Strategy. They stressed that addressing ML, TF, and proliferation financing risks is integral to the Fund’s mandate to support the integrity and stability of the international financial system and member countries’ economies. They welcomed the staff’s stocktaking of the progress that has been made and the lessons learned. They agreed with the overall direction to continue to enhance staff’s understanding of the nature and severity of financial integrity risks, with a greater focus on assessing and mitigating negative macroeconomic impacts, which will help staff further prioritize the depth and scope of its engagements. They emphasized that staff should continue to rely on the multipronged approach and synergies across the Fund’s various workstreams to support individual member countries’ efforts in enhancing the effectiveness of their AML/CFT frameworks.



Directors supported the proposed approach on surveillance, where staff will put greater focus on the linkages between financial integrity issues and fiscal, financial sector, and structural priorities. They agreed that staff should continue to cover financial integrity issues under the current principles of engagement and deepen its coverage in an evenhanded manner, commensurate with the risks faced by members, on a mandatory basis when these issues are macro-critical and on a voluntary basis when requested by the member country. With regard to FSAPs, Directors concurred that the current policy of mandatory coverage of AML/CFT issues with flexibility in scope and depth remains appropriate and supported staff’s proposal to put greater emphasis on the nexus between financial integrity and financial stability. Directors also agreed with the proposed approach on Fund supported programs, where staff will continue to use its own judgment and expertise in designing financial integrity and AML/CFT conditionality in line with program objectives and subject to the principles of criticality, parsimony, and avoiding cross conditionality. Directors also noted the importance of better understanding political economy constraints. A number of Directors emphasized the need for flexibility and technical support for members with capacity weaknesses. In this context, a few Directors considered that it is preferable to address AML/CFT issues through tailored CD support.



Directors welcomed the CD activities delivered by staff to member countries and agreed that, in line with the Fund’s CD strategy, staff should continue to provide comprehensive CD support with greater flexibility to respond to the evolving demand from the membership and deepen support for other Fund workstreams. They noted that a better understanding of ML/TF risks will allow staff to continue to further develop the CD program in line with evolving risks such as those related to digital money, laundering of the proceeds of corruption, tax evasion, and environmental crimes. Directors reiterated the need to continue to coordinate with other technical assistance providers to maximize efforts and avoid duplication of efforts.



Directors concurred that staff should continue to integrate financial integrity issues in other Fund policies. They also welcomed staff’s proposal to deepen its engagement with a broader range of external stakeholders, including through enhanced collaboration with other international and regional organizations and civil society, and leverage global and regional partnerships to maximize the impact of the Fund’s AML/CFT work program while focusing on its comparative advantage.



Directors highlighted the importance of the Fund’s continued engagement in AML/CFT assessments with a focus on quality and consistency. They generally supported or were open to staff’s proposal to increase gradually its assessment-related work, to be able to deliver two Fund-led assessments and participate in one FSRB-led assessment per year from FY 2028 onward, without prejudice to other core workstreams and subject to the reallocation of resources to enable this increase. Some Directors, nonetheless, considered the current pace of assessments to be broadly adequate. Directors looked forward to considering staff’s proposal to increase its assessment work in the context of the medium term budget process.



Directors noted that the next review of the AML/CFT Strategy would be expected to be completed within the next five years.

FILE PHOTO: The IMF logo is seen outside the headquarters building in Washington

IMF Executive Board Discusses the Fund’s Strategy on Anti-Money Laundering and Combating the Financing of Terrorism

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/12/1691767759484-820x547.jpg" alt="" class="wp-image-432762" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/12/1691767759484-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/1691767759484-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/1691767759484-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/1691767759484-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/1691767759484-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/1691767759484.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



<a href="https://www.mdpi.com/1911-8074/14/11/561" target="_blank" rel="noreferrer noopener">Less than a third</a>&nbsp;of sub-Saharan Africa’s population is financially literate – in contrast to OECD countries where over half the population is. This lack of financial literacy has implications that are as significant as they are concerning. As researchers Ashenafi Fanta and Kingstone Mutsonziwa&nbsp;<a href="https://www.mdpi.com/1911-8074/14/11/561" target="_blank" rel="noreferrer noopener">explain</a>, financially literate people make better and more informed investment decisions, save for retirement and rainy days, and are more resilient to economic shocks – while those without adequate financial literacy:



<ol class="wp-block-list">
<li>Tend to be more heavily indebted and rack up greater financial expenses&nbsp;&nbsp;</li>



<li>Are more easily exploited by unscrupulous financial actors</li>



<li>Are more prone to making costly investment mistakes</li>



<li>Have a higher risk of falling behind on debt payments</li>
</ol>



Increased financial literacy creates a host of positive outcomes – not just for individuals and their families, but for a country’s broader economy and society too. Research suggests that the benefits of financial literacy include reductions in debt and&nbsp;<a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9735152/#CR14" target="_blank" rel="noreferrer noopener">poverty</a>,&nbsp;<a href="https://www.degruyter.com/document/doi/10.1515/econ-2022-0019/html?lang=en" target="_blank" rel="noreferrer noopener">stronger economic growth</a>&nbsp;and&nbsp;<a href="https://www.allianz.com/en/economic_research/financialliteracy/allianz-financial-and-risk-literacy.html#:~:text=Financial%20literacy%20is%20therefore%20a,entrepreneurship%20insurance%20%E2%80%93%20and%20even%20homeownership." target="_blank" rel="noreferrer noopener">greater mobility</a>. Indeed, as&nbsp;<a href="https://www.allianz.com/en/economic_research/financialliteracy/allianz-financial-and-risk-literacy.html#:~:text=Financial%20literacy%20is%20therefore%20a,entrepreneurship%20insurance%20%E2%80%93%20and%20even%20homeownership." target="_blank" rel="noreferrer noopener">research from Allianz</a>&nbsp;explains, financial literacy acts as “a catalyst for economic mobility” and better living conditions through enabling marginalized and vulnerable people “to make better financial decisions and promote long-term planning,” unlocking&nbsp; “opportunities such as access to credit, entrepreneurship insurance – and even homeownership” so that cycle of poverty can be broken.



<h2 class="wp-block-heading" id="h-africa-s-fintech-revolution-requires-a-revolution-in-financial-literacy">Africa’s fintech revolution requires a revolution in financial literacy</h2>



In recent years, Africa has seen a rapid proliferation of fintech (financial technology), particularly via mobile devices. This should come as no surprise given that, by the middle of the decade,&nbsp;<a href="https://www.kbc.co.ke/devops/strong-mobile-growth-predicted-for-sub-saharan-africa/" target="_blank" rel="noreferrer noopener">nearly half a billion Africans</a>&nbsp;will have access to mobile internet. Electronic payments (a market&nbsp;<a href="https://www.mckinsey.com/industries/financial-services/our-insights/the-future-of-payments-in-africa" target="_blank" rel="noreferrer noopener">projected</a>&nbsp;to have revenues of $40 billion by 2025) are now widespread, and there are now over&nbsp;<a href="https://qz.com/africa/2161960/gsma-70-percent-of-the-worlds-1-trillion-mobile-money-market-is-in-africa#:~:text=In%20the%20review%20period%2C%20registered,just%20over%20a%20year%20before." target="_blank" rel="noreferrer noopener">184 million</a>&nbsp;mobile money wallets being actively used across Africa.



The increasing ubiquity of fintech offers plenty of advantages – increasing the accessibility, affordability and convenience of financial services on a continent which has long been underbanked. But while greater access to financial data and more numerous savings and investment options are to be welcomed, they are not a substitute for financial literacy. In fact, the fintech revolution underway makes the need for financial literacy education in Africa all the more necessary – and urgent. With a dizzying variety of financial products more easily available than ever before, indebtedness and risky investing is likely to increase if not proactively addressed.



There are a number of approaches through which African nations should scale up financial literacy education for their citizens – at all ages.



<ol class="wp-block-list">
<li>Schools: Young people need to be taught the basics of financial literacy from the get go. That is why schools like the Complexo Escolar Privado Internacional (CEPI) – an award-winning school in Luanda, Angola, operated by ABO Capital – prioritizes the study of STEM and empowers its students to participate in global education competitions, including the recent GENIUS Olympiad in New York and the 2022 Copernicus Mathematics Olympiad. But while some programs already exist at the school level (typically implemented by the private sector and nonprofits), OECD <a href="https://read.oecd-ilibrary.org/finance-and-investment/the-status-of-financial-education-in-africa_5k94cqqx90wl-en#page43" target="_blank" rel="noreferrer noopener">research</a> suggests that these efforts tend to be siloed, lacking coherence and country-wide coordination. Governments must therefore take the lead in establishing standardized literacy programs, collaborating with – and more effectively monitoring – the other stakeholders (including nonprofits and businesses) who are already active in the financial literacy space. Governments must set measurable targets for improvement, using financial literacy metrics determined by international organizations like the World Bank so that progress can be assessed and benchmarked against other countries.</li>
</ol>



<ol class="wp-block-list" start="2">
<li>Financial Institutions: Financial institutions should prioritize improvements in financial literacy for their customers – either as one of their strategic goals or as an integral component of their corporate social responsibility. African financial institutions that have incorporated financial literacy programs have seen successful results. For example, <a href="https://www.povertyactionlab.org/evaluation/evaluating-effectiveness-financial-literacy-program-south-africa" target="_blank" rel="noreferrer noopener">research</a> shows that a financial literacy program offered by <a href="https://www.povertyactionlab.org/evaluation/evaluating-effectiveness-financial-literacy-program-south-africa" target="_blank" rel="noreferrer noopener">Old Mutual</a> (a major South African financial services firm) resulted in improvements in “financial behavior related to savings, borrowings, and money management”.</li>
</ol>



<ol class="wp-block-list" start="3">
<li>Mobile Money Operators: Roughly <a href="https://www.linkedin.com/pulse/bridging-financial-gap-axalios-impact-africas-unbanked-population#:~:text=The%20African%20continent%20is%20home,infrastructure%2C%20and%20low%20financial%20literacy." target="_blank" rel="noreferrer noopener">350 million Africans</a> do not have access to traditional financial institutions, with many of them using mobile money operators to manage their finances instead. Mobile money operators must therefore use their platforms to promote financial literacy courses that complement their existing products and services. In addition, mobile money operators should also introduce goal-oriented programs that incentivise saving. For example, <a href="https://squaddigital.com/m-shwari" target="_blank" rel="noreferrer noopener">the M-Shwari 52 Week Challenge</a> in Kenya led to more than 270,000 Kenyans increasing their savings, with a total of 4.5 billion Kenyan Shillings saved.</li>
</ol>



Through rolling out financial education rapidly and at scale, we will be empowering Africa’s consumers with the know-how they need to wisely and profitably invest, borrow and save. Not only will this lead to greater individual wellbeing and prosperity: we will also be priming the continent’s economy for a new era of vibrant growth and lasting resilience.

1691767759484

Why it’s time to ramp up financial literacy education across Africa

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="794" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/12/Elias-Monage-820x794.jpg" alt="" class="wp-image-432584" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/12/Elias-Monage-820x794.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/Elias-Monage-300x290.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/Elias-Monage-93x90.jpg 93w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/Elias-Monage-768x744.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/Elias-Monage-1536x1487.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/12/Elias-Monage-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Elias Monage, President of SEIFSA</figcaption></figure>



The steel industry is the backbone of any economy, it forms the foundation of any modern economy and is essential to every single sector. Without a healthy and vibrant local steel industry, South Africa will simply not be able to integrate and develop itself or the rest of the continent. The steel sector – and South Africa – urgently needs clarity on policies, consensus on action plans and realised deliverables on the ground in order to instil confidence in the viability of the country to boost competitiveness and attract both local and foreign direct investment.



The recent announcement by ArcelorMittal South Africa on the potential closure of its operations in Newcastle and Vereeniging, as well as ArcelorMittal Rail and Structural presents a major set-back to the base of the industrial sector and industrialisation more broadly. This development also raises the sharp question whether the grand aspirations of the Steel Master Plan (SMP) to reindustrialise the steel industry are beginning to disintegrate under our watch. The unfortunate reality is that the lofty goals set by the SMP to charter a roadmap to reenergise the sector, expand production and demand across the steel and fabrication value chain are becoming increasingly illusive. There is a growing sense on the part of industry that the SMP has collapsed.



The SMP was pitched as the platform through which all the stakeholders, namely; government, business and labour, who have a direct and vested interest in seeing this industry prosper, would come together and work collaboratively to meet this end. The plan was sold as a deviation from the old and unproductive approach where government directs the path which industry should take and one where different stakeholders lobby the government toward their respective ends in an unstructured way. It was meant to be a unifying platform, where meaningful and active collaboration took place to arrest the rapid decline currently being experienced by the industry through short-term interventions and to grow the industry through longer dated interventions. Importantly, it was also meant to open avenues of communication and collaboration between all stakeholders.



The metals and engineering industries, and particularly the constituency I represent through the Steel and Engineering Industries Federation of Southern Africa (SEIFSA), fully committed itself to the SMP when it was launched in 2021. SEIFSA was a signatory to the founding document and nominated a number of captains of industry to lead various workstream. The SEIFSA team has invested considerable resources to the work of the SMP unlike some of the nay-sayers that wrote-off SMP at the outset.



Over the last year, SEIFSA has made numerous formal requests for a meeting with the Minister of Trade Industry and Competition on the scrap metal export ban and other much wider and arguably more important and strategic industrial policy concerns. Disappointingly, the meetings have not materialised and our requests have fallen on deaf ears.



We understand and acknowledge that Ministers leading key departments and portfolios are extremely busy, but what we cannot accept is the lack of decisive leadership from the DTIC, resulting in numerous decisions being strung out and not forthcoming. That said, it is ironic that some decisions, like the ban on scrap metal exports – with all its adverse implications – received priority preference and relatively fast decision turn-around times. A further concern to business is the delays in appointing permanent staff to critical decision-making roles. A significant number of DTIC staff, in key decision-making roles, hold them in an acting capacity and this in part contributes to the delays on decision-making.



Public consultation processes on regulations which are often undertaken when it is seemingly clear that a decision has already been taken. This suspicion on the part of business is supported by the unwillingness of the ministry to engage industry on a more in-depth basis on some of the more rational proposals submitted by industry, as in the case of the scrap metal export ban. Moreover, relating to the same scrap metal export ban there has been a very concerning shift in the goal post where the motivation to extend the export ban is now leaning to input cost support for the scrap-based mills and the country’s decarbonisation efforts, whereas the original reasons used to force the decision through were of a security nature and protection of infrastructure. Introducing industrial policy by stealth and misleading economic signals as in this case, renders the SMP as a platform to rubber-stamp and legitimise decisions, including those that do not enjoy support and alignment by a significant block of employers.



Overarching all of this is the fact that the SMP was meant to deliver a comprehensive industrial policy framework, where a total industry perspective would be taken and complementarities across the value chain enhanced. Sadly, what we are witnessing is the opposite, wherein policy is implemented in a fragmented manner, with a short-term view and with pockets of industry being pit against one another. The scrap metal export ban is one such divisive and market distorting development.



The industry is quickly losing faith in the SMP process and it is obvious but worth mentioning that the withdrawal of this constituency from the SMP would virtually render the plan moot.



Industry simply cannot continue to invest the amount of time, effort and resources as it has done thus far for altruistic reasons, particularly when the experienced reality is one of a continued deterioration of the business and operating environment, company closures and job losses.

Elias-Monage

The collapse of the Steel Master Plan and disintegration of industry

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/GettyImages-1246262502-820x547.jpg" alt="" class="wp-image-422462" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/01/GettyImages-1246262502-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/GettyImages-1246262502-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/GettyImages-1246262502-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/GettyImages-1246262502-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/GettyImages-1246262502-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/01/GettyImages-1246262502-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">DAVOS, SWITZERLAND &#8211; JANUARY 15: The WEF annual meeting to be held from January 16 to 20 in Davos, Switzerland on January 15, 2023. Under the theme of &#8220;Cooperation in a Fragmented World,&#8221; top figures shaping global politics and the business world will attend this weekâs 53rd annual meeting of the World Economic Forum (WEF), in Davos-Klosters, Switzerland. The meeting, which starts Monday, will bring together more than 2,700 leaders from 130 countries including 50 heads of state or government, as multiple crises deepen divisions and fragment the geopolitical landscape. (Photo by Dursun Aydemir/Anadolu Agency via Getty Images)</figcaption></figure>



Dubai, United Arab Emirates, 1 December 2023 –&nbsp;The World Economic Forum, with support from the Government of the United Arab Emirates, along with more than 20 corporate and research partners in the food sector, launched today the First Movers Coalition for Food. The initiative uses the combined procurement power for sustainably produced farming products to speed up the adoption of sustainable farming, innovations and transitional funding.



Food systems account for more than 30% of global emissions and are critical in achieving the Paris Agreement and limiting global warming to below 1.5C. Aggregating demand for sustainably produced and low-emission agricultural commodities, therefore, can accelerate the transition to net-zero, nature-positive transitions in food systems.



“Through the First Movers Coalition for Food, leading global companies will send demand signals to catalyse the acceleration and adoption of environmentally friendly farming methods and green innovations. This collective public-private partnership will help de-risk upfront investments into more sustainable food production systems,” said Børge Brende, President of the World Economic Forum.



The First Movers Coalition for Food comprises corporate champions from multinational and regional companies with significant purchasing power, value chain partners, farmer organizations and research partners alongside governments to improve existing food systems.



The new initiative aims to accelerate sustainable farming and production methods and technologies by leveraging collective demand for low-carbon agricultural commodities. It will do so through the power of aggregated demand, aiming for a combined procurement value for low-carbon commodities of $10-$20 billion from coalition members. Corporate partners currently participating in the coalition account for a combined revenue of $2.1 trillion, with operations globally.



Founding members of the First Mover Coalition for Food are leading companies that recognize the need for more sustainable practices and innovation in food production systems. Starting mid-December 2023, the World Economic Forum and participating companies and governments will work jointly to identify the demand commitments and pathways to support and mobilize the ecosystem to enable such transformation. The coalition is expected to publish its initial results of the collaborative work in the summer of 2024.



“The way we produce and eat food causes 30% of the world’s greenhouse gas emissions, uses over 70% of the world’s freshwater, and is responsible for 80% of deforestation and habitat loss in tropical areas,” said Mariam Almheiri, Minister of Climate Change and Environment of the United Arab Emirates. “If we don’t quickly find new, sustainable ways to produce and consume food, these problems will worsen in only a couple of decades. Showing clear demand for improvements in sustainable agriculture production methods is crucial for reaching our global climate goals, and we need to act now.”



Ahmed Galal Ismail, Chief Executive of Majid Al Futtaim, added: “We recognize how our role in reducing emissions across our value chains has an impact on the long-term sustainable health of people and the planet. As an increasing number of customers make the everyday choice to shop sustainably, we as a retailer have the responsibility to deliver more responsibly sourced and produced products. By joining the First Movers Coalition for Food initiative, we aim to amplify the demand for low-emission products and partner with those promoting nature-positive practices, fostering resilient agricultural systems with improved biodiversity and reduced water usage.”



Manny Maceda, Chief Executive Officer and Chairman of the Board of Bain &amp; Company said the coalition will transform how companies procure agricultural commodities, enabling a shift toward eco-friendly production. “This will decrease the risks associated with required investments in low-emissions agri-food production, make it easier to expand to net-zero and nature-positive technologies, and help farmers adopt greener practices such as regenerative agriculture.” About the First Movers Coalition The First Movers Coalition for Food&nbsp;builds on the success of the&nbsp;First Movers Coalition&nbsp;for Industry, launched at COP26 in Glasgow by US President Joe Biden and the World Economic Forum in 2021.



The First Movers Coalition&nbsp;for Industry aggregates purchasing demand&nbsp;to create early markets for innovative clean technologies across eight hard-to-abate industry sectors: aviation, shipping, trucking, steel, aluminium, concrete and cement, and&nbsp;chemicals.&nbsp;



To date, the coalition has garnered the support of&nbsp;more than&nbsp;13&nbsp;government&nbsp;partners and&nbsp;90 companies&nbsp;with&nbsp;purchasing commitments of more than&nbsp;$15 billion. This is&nbsp;the most significant demand signal for clean technologies for industrial sectors that the world has ever seen.



First Movers Coalition for Food members Initial partners working jointly on shaping and accelerating significant demand signals and green procurement commitments include Bayer AG, Cargill, Danone, Louis Dreyfus Company, Majid Al Futtaim Holding Llc, Nestlé, NR Instant Produce PCL, Olam Agri, PepsiCo Inc., Sekem Group, UPL Ltd, Tyson Foods Inc., JBS S.A., and Yara International ASA. More companies will be announced in the coming months. Expert organizations supporting the process include Bain &amp; Company, Ginko Bioworks, Grow Asia, IDH, Indigo Ag, International Rice Research Institute, Temasek Life Sciences Laboratory, Tropical Forest Alliance, and University of Tokyo. The initiative is endorsed by the Government of the United Arab Emirates.

World Economic Forum

WEF First Movers Coalition for Food to Create up to $20 Billion Value Chain for Sustainable Farming

South Africa’s loadshedding crisis continues to underline the importance of a stable electricity supply to keep the economy moving. At least for now, the controversial term “baseload” in this country indicates electricity generation from coal and, to a lesser extent, some nuclear. Peak demand has always been met by our pumped-storage schemes that store and release water to generate electricity, as well as open-cycle gas turbines that run on diesel. Increasingly, renewable energy options are adding to capacity and displacing some of the coal-generated supply from ageing power stations, but commercial, industrial and manufacturing enterprises cannot function to capacity without a stable supply of reliable, baseload electricity.



“The point is that South Africa, and indeed the world, needs a mix of energy sources,” says Gcobisa Melamane, clean coal research specialist at the South African National Energy Development Institute (SANEDI). “None of the sources and technologies we currently have can meet the needs of economies and societies on their own.”



South Africa’s Integrated Resource Plan, drawn up by the Department of Mineral Resources and Energy (DMRE) in 2019 and currently under review, recognises this fact by placing coal status quo at more than 80% of the energy mix. While that percentage is targeted to decrease by almost half (42%) by 2030, coal is expected to remain the dominant energy source for the foreseeable future. In addition, the coal mining and energy generation industries employ thousands of people, adding a socioeconomic impact to the process of transitioning from one type of energy sources to another.



South Africa is not alone in its reliance on coal. Over the past year, several of the European countries that had previously sworn off coal had to fire up their coal power stations again to deal with the energy shortages that resulted from geopolitical circumstances in the northern hemisphere.



Melamane adds, however, that it’s not business as usual in the coal space. Significant time, effort and resources are being dedicated to developing technologies that will limit the environmental impact of coal-fired electricity generation. “SANEDI is one of the organisations in the country researching technologies that can make the use of fossil fuels cleaner so that we can keep using it in a more responsible manner in South Africa. We still have abundant coal resources and it remains a cheaper source of energy. We need to use it while we have it, which makes cleaner technologies a necessary and worthwhile investment.”



Against this backdrop, SANEDI launched its Cleaner Fossil Fuels &amp; Related Technologies programme in 2021 to develop a roadmap for the country to improve the environmental footprint of its energy mix.



In terms of fossil fuels, the first phase of the project identified all the technologies that currently exist. In phase two, 18 focal technologies were selected for further study and to understand where and how they are being used globally. In Japan, China and the US, an array of cleaner coal technologies are already in demonstration and even commercial use. The third phase, which kicked off at the end of September this year, is investigating which of the focal technologies are easily adoptable from a grid perspective, taking into account cost of implementation, regulatory compliance and the skills required. The roadmap study is planned to be completed by the end of March 2024 and, once the relevant stakeholders have approved it, South Africa’s roadmap to cleaner fossil fuels will be published.



“Our country is responsible for 2% of global greenhouse gas emissions but that means nothing to people here whose health is impacted by poor air quality,” says Melamane. “Improving human health and living conditions is one of the main drivers of the research we do.”



The focal technologies in SANEDI’s cleaner fossil fuels roadmap include high-efficiency low-emissions (HELE) carbon capture and sequestration, underground coal gasification to produce syngas for power generation with lower levels of greenhouse gases, and equipment to reduce nitrogen and sulphur dioxides and particulate matter in flue-gas emissions. Most of these have been proven capable of reducing harmful emissions by up to 300kgCO2/MWh in international studies. “SANEDI champions collaboration with local and international research organisations to ensure we learn from each other and don’t waste limited resources on redoing work that has already completed elsewhere,” says Melamane.



For as long as South Africa needs coal to help meet its energy demands, the work to limit its impact on the environment has to continue. We simply cannot afford to satisfy our need for electricity at the expense of the health of humans and the environment.

Gcobisa Melamane, Clean Coal Research Specialist SANEDI

Coal still has a place in our energy mix

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="650" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1645166870-820x650.jpg" alt="" class="wp-image-430880" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1645166870-820x650.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1645166870-300x238.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1645166870-114x90.jpg 114w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1645166870-768x609.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1645166870.jpg 1358w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">NAIROBI, KENYA &#8211; SEPTEMBER 4: Josefa Leonel Correia Sacko, Commissioner Agriculture, Rural Development, Blue Economy and Sustainable Environment at the African Union Commission speaks during the 1st Africa climate summit at the Kenyatta International Convention Center in Nairobi, Kenya on September 4, 2023. (Photo by Andrew Kasuku/Anadolu Agency via Getty Images)</figcaption></figure>



For millions of people across Africa, livestock are their lifeblood. Animals such as camels, cows, and donkeys, along with goats, sheep, and chickens represent food, livelihoods, draught power, fertiliser, fibre and a convertible source of income, especially if crops fail. Pastoralists rely on livestock to survive in areas where crops cannot grow, and Africa relies on pastoralists to produce half of its meat and milk, a daily glass of which helps children develop both physically and cognitively.



Livestock provide valuable agricultural resilience to climate extremes. The ability to move animals to find feed, water and shade means livestock de-risks crop farming while providing a safety net for failed harvests. Livestock also help diversify rural incomes and are particularly important for women’s empowerment. Meanwhile, managed grazing and manure can help restore degraded land and support biodiversity. Livestock also boost the climate resilience of communities, making them less vulnerable in face of shocks, and better able to rebuild in the aftermath of disasters.



Because of this, livestock keeping in Africa should be seen as a credible climate solution – a solution with legs. Helping animals and herders to adapt to climate stresses and shocks can prevent critical food and economic losses and meet rising demand, while also supporting animal welfare and protecting the most vulnerable in the face of rising temperatures and unpredictable rains.



However, increasingly frequent and prolonged climate extremes are making it harder for livestock-keepers to adapt in time to sustain a growing population. More than 13 million livestock have died during the ongoing and unprecedented drought across the Horn of Africa. Thousands of animals have been killed during flooding in Niger, and new conditions are impacting the spread of livestock disease. It can take up to five years for farmers to recover from these losses if at all, according to UN reports.



We call on Parties at COP28 to urgently make the case for more climate finance to support adaptation for sustainable livestock systems in Africa. We urge high-income countries to meet their commitment to provide $100 billion per year in climate finance for developing countries. And we urge African countries to make the adaptation of livestock systems a core part of their climate strategies. As of last year, the continent received only 11 per cent of its total climate finance needs at just $30 billion, and less than one per cent of climate finance reached the livestock sector.



Adapting Africa’s livestock sector to a changing climate must be a priority at COP28 for the sustainable development of a continent that has contributed under three per cent of historic global greenhouse gas emissions. This includes developing more reliable forages and feed, more resilient breeds of indigenous livestock, more resilient animal health systems and support services, such as digital information tools, finance and index-based livestock insurance. Livestock should be included in national disaster risk reduction plans so that they are protected as important assets in the face of climate-related disasters.



Improving small-scale livestock resilience goes hand in hand with reducing emissions. Expanding simple, improved practices on smallholder farms and preventing livestock losses can reduce greenhouse emissions by up to 30 per cent, while boosting productivity, animal welfare, food security and incomes.



Climate adaptation within Africa’s livestock sector presents a unique opportunity to sustainably feed and support a quarter of the world’s population by 2050. In short, for Africa to feed itself, we need to invest in livestock. It is not only an economic issue but a form of climate justice. For many of Africa’s 800 million herders and smallholder farmers, a future without livestock is a future without life.

1st Africa Climate Summit kicks off in Kenya

Open Letter to World Leaders and Parties to the Paris Agreement ahead of COP28

Geneva, Switzerland, 28 November 2023&nbsp;– Transitioning to a more sustainable and carbon-neutral future, $13.5 trillion in investments will be needed by 2050, particularly in the production, energy and transport sectors, according to a new World Economic Forum report.



The&nbsp;Net-Zero Industry Tracker 2023, published in collaboration with Accenture, takes stock of progress towards net-zero emissions for eight industries – steel, cement, aluminum, ammonia, excluding other chemicals, oil and gas, aviation, shipping and trucking – which depend on fossil fuels for 90% of their energy demand and pose some of the most technological and capital-intensive decarbonization challenges.



The report, published the same week as the United Nations called at COP28 for “dramatic climate action” to close an “emissions canyon”, outlines pathways to accelerate the decarbonization of emission-intensive production, energy and transport industries.&nbsp;While the pathway to net zero in these sectors will differ based on unique sectoral and regional factors, investments in clean power, clean hydrogen and infrastructure for carbon capture, utilization and storage (CCUS) will be needed to accelerate industrial decarbonization across most sectors.



“Decarbonizing these industrial and transport sectors, which emit 40% of global greenhouse gas emissions today, is essential to achieving net zero, especially as demand for industrial products and transport services will continue to be strong,” said Roberto Bocca, Head of Centre for Energy and Materials, World Economic Forum. “Significant infrastructure investments are required, complemented by policies and stronger incentives so industries can switch to low-emission technologies while ensuring access to affordable and reliable resources critical for economic growth.”



According to the report, the $13.5 trillion in investments is derived from average clean power generation costs of solar, off-shore and on-shore wind, nuclear and geothermal, electrolyzer costs for clean hydrogen and carbon transport, as well as storage costs.



The Net-Zero Industry Tracker proposes a comprehensive framework of emissions drivers and enablers to measure progress and identify gaps, scorecards for each industry, and opportunities for cross-sector collaboration. Building on the 2022 edition, the updated report includes transportation sectors and applies the framework to identify strategies for net-zero industrial transformation.



The report’s findings underscore the urgency for creating a robust enabling environment, including low-emissions technologies, infrastructure, demand for green products, policies and investments. In addition to increasing capital expenditures to decarbonize existing industrial and transport asset bases, further investment is needed to build a clean-energy infrastructure.



Share of global GHG emissions for heavy industrial and transport sectors



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="956" height="856" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/WEF_Image_Graph.jpg" alt="W" class="wp-image-430686" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/WEF_Image_Graph.jpg 956w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/WEF_Image_Graph-300x269.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/WEF_Image_Graph-820x734.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/WEF_Image_Graph-101x90.jpg 101w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/WEF_Image_Graph-768x688.jpg 768w" sizes="auto, (max-width: 956px) 100vw, 956px" /></figure>



The majority of the technologies needed to deliver net-zero emissions are expected to reach commercial maturity after 2030, highlighting the need for collaborative approaches to research, develop and scale them. This includes substituting legacy technologies with low-emission alternatives, increasing efficiency of processes and machinery, electrification and driving circularity.



“It is imperative that action is taken soon to both decarbonize and improve energy efficiency; otherwise, unabated fossil-fuel demand in the key industry sectors, which have grown 8% on average the past three years, will increase very significantly by 2050,” said Bocca. “But industrial leaders can&nbsp; respond through new collaborative ways of working and innovating, for example within&nbsp;<a href="https://weforum.us3.list-manage.com/track/click?u=6308fe51b420dc9ff3834abc8&amp;id=5e48b8e30b&amp;e=d66be97e93">industrial clusters</a>&nbsp;and by fostering best practices, sharing infrastructure in important areas like clean hydrogen and CCUS and building &nbsp;demand for lower-emissions products.”



According to the report, carbon pricing, tax subsidies, public procurement and development of strong business cases can support in mobilizing necessary investments. However, raising capital for high-risk projects with unproven technologies could be challenging in the current macroeconomic environment. Institutional investors and multilateral banks, therefore, can play an important role by providing access to low-cost capital linked to emissions targets; equally vital is adapting financial models to the needs of various industries and regions.



“Collaboration between the public and private sectors is critical to a successful energy transition, and technology can be a key enabler in both managing affordable and reliable access to clean energy and addressing the incremental cost of decarbonization,” said Muqsit Ashraf, who leads&nbsp;<a href="https://weforum.us3.list-manage.com/track/click?u=6308fe51b420dc9ff3834abc8&amp;id=095135a5bd&amp;e=d66be97e93">Accenture Strategy</a>. “Widespread scaling and adoption of clean power, carbon capture and storage, and energy efficiency technologies across sectors are vital for progress. Additionally, business model innovations can also help stimulate demand and accelerate industrial decarbonization — achieving&nbsp;<a href="https://weforum.us3.list-manage.com/track/click?u=6308fe51b420dc9ff3834abc8&amp;id=08ae963912&amp;e=d66be97e93">net-zero objectives</a>&nbsp;and a resilient energy transition.”



The report acknowledges that recent policy developments can push the industrial net-zero transformation in the right direction. While some advanced economies are enacting large-scale policy measures, emerging economies – which will account for a larger share of future demand for industrial products and transport services – will need help accessing low-emission technologies and solutions.



The report also calls for industrial sectors to focus on the following five areas, and details specific actions for each of the sectors as part of its individual scorecard:



<ul class="wp-block-list">
<li>Technology&nbsp;– Prioritize clean power technology across most sectors, commercially scale CCUS in cement, and improve technology to reduce costs for clean hydrogen development.</li>



<li>Infrastructure&nbsp;– Promote shared infrastructure, such as industrial hubs and clusters.</li>



<li>Demand&nbsp;– Create a standardized framework for low-emissions products, a simple emissions-intensity calculator and an auditable carbon-footprint assessment process, improving consumer transparency.</li>



<li>Policy&nbsp;– Align on emissions reduction requirements globally, with policies customized to suit individual country needs and enhance market transparency to increase emission intensity visibility.</li>



<li>Capital&nbsp;– Improve transparency for low-emissions and low-carbon alternatives, strengthen demand signals and reduce capital expenditures through shared infrastructure development.</li>
</ul>



“The Net-Zero Tracker 2023 explores in detail how low-carbon solutions and infrastructure will contribute to increasing the pace of decarbonization in hard-to-abate industries,” said Stephanie Jamison, Accenture’s global Resources industry practice lead and global sustainability services lead. “This depth is essential to help companies create sustainable value and impact as they strive to achieve net-zero carbon emissions.”

power-station-pollution-energy-electricity

Net-Zero Industry Tracker: $13.5 Trillion Investment Needed to Fast-Track Decarbonization of Key Hard-to-Abate Industry Sectors 

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="525" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/07/XQ3CLFTD3JI4XIFC4ZMYKDHA5E-820x525.jpg" alt="" class="wp-image-426248" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/07/XQ3CLFTD3JI4XIFC4ZMYKDHA5E-820x525.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/XQ3CLFTD3JI4XIFC4ZMYKDHA5E-300x192.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/XQ3CLFTD3JI4XIFC4ZMYKDHA5E-141x90.jpg 141w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/XQ3CLFTD3JI4XIFC4ZMYKDHA5E-768x491.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/XQ3CLFTD3JI4XIFC4ZMYKDHA5E-1536x983.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/07/XQ3CLFTD3JI4XIFC4ZMYKDHA5E-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A wind turbine produces renewable energy outside Caledon, South Africa, May 20, 2020. Picture taken May 20, 2020. REUTERS/Mike Hutchings//File Photo</figcaption></figure>



Despite contributing a mere 4% of global greenhouse gas (GHG) emissions, Africa disproportionately bears the brunt of climate change’s devasting impacts. In fact, Just Transition Africa emphasises that Africa is especially vulnerable owing to its debt burden, high levels of poverty and absence of food, water and energy security.



With Africa’s key role in the net zero transition, the just transition’s tenets of environmental, social and climate justice ought to be firmly embedded within international and national policy mechanisms for net zero. However, even coming to a consensus on what exactly the just transition means for the continent has proven to be a roadblock for African leaders and the international community.



In September 2023, the inaugural African Climate Summit saw the conspicuous absence of leaders from South Africa, Nigeria and Uganda over how the low-carbon transition ought to proceed. Where some in the international community have argued that a low-carbon transition has no room for fossil fuels, some African leaders believe that the immediate energy and economic needs of the African people need to be met first.



At the heart of these tensions seems to lie a disagreement over what is considered ‘just’, and how that justice ought to be delivered. How then do we move Africa’s urgently needed just transition forward?



An opportunity and not a burden



Currently, the World Economic Forum estimates that between 2022 and 2030, Africa alone will need US$2.8 trillion to fulfil its nationally determined contributions under the Paris Agreement. However, global climate finance flows were only at US$ 1.3 trillion for 2021/2022, illustrating a significant investment gap across climate mitigation and adaptation.



This investment gap has been one of the largest roadblocks in Africa’s just transition. On the one hand, Africa faces calls from the international community to rapidly decarbonise and phase out fossil fuels completely. On the other hand, Africa requires significant pools of affordable energy to meet economic and social needs but often find that renewable energy is more expensive and less secure than traditional fossil fuels.



African nations are often not averse to a low-carbon transition. However, without the right financial incentives and technical assistance, premature commitments to phase out fossil fuels only leave African leaders frustrated at their inability to exploit at-hand resources while having no financially viable alternative.



Moving forward requires the ‘just transition’ to be framed as an opportunity – not an undue burden. Commitments to the transition need to be backed with the necessary international green financing, knowledge sharing and institutional capacity building. Ultimately, an approach that restricts rather than incentivises will only exacerbate existing political tensions and draw the global community further away from its ‘just’ goal.



There is no just transition without a just economic system



The just transition not only pays attention to net zero but also demands the establishment of a globally just economic system. As Kenyan President William Ruto notes, the global financial system is “outdated, dysfunctional and unjust” and Africa has suffered as a result.



Fossil fuels extracted from Africa are largely planned for export, resulting in the removal of resource and the repatriation of profits to foreign lands, leaving little behind to support Africa’s economic development. Similarly, voluntary carbon markets that have been promoted as sources of green income have been subjected to profit repatriation. International brokers and verification bodies operating outside of Africa but within Africa’s carbon markets can charge up to 70% of the value of an offset credit, severely reducing the revenue that reaches local communities. Moreover, credits verified by the same standards generate US$7–9/credit in Africa, while credits generated in the EU and Japan are fetching more than $100/credit.



Enhanced national, regional and international governance measures need to be in place to ensure that Africa’s resources are valued fairly and that profits remain with the African people. International institutions such as the World Trade Organisation must advocate for trade that firmly incorporates just principles. If any value is truly to be derived from the low-carbon transition for Africa, the global value chain must be addressed.



Justice must not be an afterthought



Africa’s just transition and its dignified and prosperous future will not be achieved without significant change. The just transition must be led by a firm commitment to rethink, remedy and repatriate. Justice must sit firmly at the heart of all climate action.

FILE PHOTO: Wind turbines produce renewable energy outside Caledon

Moving Africa’s ‘just transition’ forward

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="692" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/03/GettyImages-1160291643-820x692.jpeg" alt="" class="wp-image-398637" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/03/GettyImages-1160291643-820x692.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/03/GettyImages-1160291643-300x253.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/03/GettyImages-1160291643-768x649.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/03/GettyImages-1160291643-1536x1297.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/03/GettyImages-1160291643-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">SANDTON, SOUTH AFRICA MARCH 07: Standard Bank Group CEO Sim Tshabalala during the banks annual results presentation at Morningside on March 07, 2019. Tshabalala said, economic growth in the country will remain suppressed until some of the reforms undertaken by the government start boosting confidence. (Photo by Freddy Mavunda/Sowetan/Gallo Images via Getty Images)</figcaption></figure>



Johannesburg November 2024 – Last week was difficult. Standard Bank was once again publicly accused of currency manipulation, of being opposed to the South African government, and – in some quarters – even of treason.&nbsp;&nbsp;



Standard Bank has not manipulated the value of the Rand. Standard Bank has not engaged in any anti-competitive or criminal conduct. Standard Bank is committed to always behaving with complete integrity.&nbsp;&nbsp;



However, in a strange and painful way, last week was also a very good one for those of us who care about South Africa’s rule of law, democracy, and economic performance. Here’s why.&nbsp;&nbsp;



Under our rule of law, the relevant legal and administrative processes are not thrown off course by dramatic statements and viral social media messages. The Competition Appeal Court continues to hear evidence on the alleged Rand fixing case, with one of the judges asking, in relation to Standard Bank ‘What is the point of pursuing this?  And, surely there&#8217;s massive injustice to a bank to be hauled in front of the Tribunal on a cartel case, where in fact there&#8217;s plausible evidence – more than plausible, incontrovertible evidence, that they&#8217;re not part of the deal?’&nbsp;&nbsp;



The Reserve Bank, too, continues to exercise its mandate. Relatively soon after these allegations were first made, in 2015, the Reserve Bank found ‘no evidence of malpractice or serious misconduct in the South African foreign exchange market… [and that] the foreign exchange market in South Africa is competitive.’ This month, the SARB released a technical paper showing that convergence in Rand markets is ‘in the main, a rational response to public information, indicating central bank credibility.’ and the lack of collusion in being able to manipulate the Rand. These kinds of legal and technical processes don’t make the headlines. But, in the end, they are what counts. In South Africa, rationality will prevail.&nbsp;&nbsp;



The week demonstrated the health of our democracy in general – and of our free media and social media in particular. Voices alleging illegal and unpatriotic behavior by the banks were robustly challenged. Nobody was silenced. Nobody will be silenced. As befits our democracy, vigorous debate continues. As an additional benefit, curious South Africans were given a very comprehensive crash course in how foreign exchange markets work. It wasn’t pretty, but we all emerge with our rights reconfirmed, and better informed about these complex markets.&nbsp;&nbsp;&nbsp;



This controversy also gives Standard Bank another very welcome chance to explain to our fellow South Africans how we think and what we do.&nbsp;&nbsp;



The first thing to emphasise is that Standard Bank never hides behind legal tactics or claims of confidentiality, unless any particular matter is before the courts and is sub judice. When we discovered in 2015 that some employees of our subsidiary in Tanzania had committed crimes, we immediately self-reported this and accepted the fines and sanctions. When we discovered that some employees had opened accounts unethically (but not illegally) in South Africa in 2020, we were transparent while the matter was being investigated and informed all the affected parties. Our track record shows that if we had done anything illegal in the foreign exchange market, we would have admitted and reported it immediately.&nbsp;&nbsp;



We’re not playing for time or looking for a deal. When we say that we are innocent of currency manipulation, we mean it.&nbsp; We will not settle.&nbsp; Where we find that our people have engaged in wrongful conduct, we will act swiftly and will work with the relevant authorities.&nbsp;&nbsp; Where we find no evidence of wrongdoing, we will protect and defend our people &#8211; our most valuable assets.&nbsp;&nbsp;



Next, we put a lot of time and resources into promoting more investment and faster growth in South Africa. Standard Bank’s long term performance depends on the success of the economy and on the economic wellbeing of our clients.&nbsp;



As several cabinet ministers will be able to confirm, last month alone, we were among the main sponsors and main speakers at two major conferences – SA Tomorrow and the AGOA Forum &#8211; devoted to encouraging investment in South Africa.&nbsp; We do this by emphasising South Africa’s fundamental stability, strong rule of law, economic resilience, competitiveness, and improving prospects &#8211; thanks in large part to structural reforms that the government is implementing.&nbsp;&nbsp;



We’re patriots who would never undermine this country. But we won’t sit back idly either or toe the line. As South Africa – and Africa’s – largest private sector financial institution, we believe we have a right and a duty to comment on economic and financial sector policy. When we see errors, or opportunities to do better, in these areas we call them out. For instance, we will continue to argue vigorously for the reforms needed to improve South Africa’s competitive advantages, to reduce the cost of capital, and so to accelerate growth and job creation.&nbsp; Right now, for instance, faster reforms to the transport sector, far wider use of public-private partnerships across the public sector, and more effective law enforcement are top of our list. Since banks depend on trust and on contracts, a strong rule of law is absolutely vital to us.&nbsp;



But we will never comment outside our mandate. And we will never make a statement for, or against, any political party or individual politician. We exist to serve the economic development of South Africa and to help South Africans flourish. All South Africans. We don’t take sides. We stand on the side of sound universal principles that seek to advance the cause of ordinary people, the Constitution and the rule of law. &nbsp;



We do everything in our power to support our clients through good times and bad. We are always looking for ways to increase the financial and economic inclusion of our fellow South Africans and Africans. Everything we do emerges from this perspective, and all our activities aim to create sustainable growth and inclusive value.&nbsp;&nbsp;



For example, over the first half of this year, we kept R1.8 trillion in deposits safe for our clients, and we paid R45 billion in interest on those deposits to the individuals, corporates and governments who entrusted their savings to us. We managed R1.4 trillion in assets – which is mostly money that people are saving for their pensions or that they are relying on in retirement. Over the first half of the year, we also paid out more than R11 billion to clients in annuities and for death and disability claims.&nbsp;&nbsp;



At the end of the first half of 2023, we held a stock of R1.4 trillion in loans. Our aim is that each loan brings people closer to realising their aspirations. For instance, we lent R22 billion to small and medium enterprises across Africa to grow their businesses, and we registered R1.4 billion of affordable housing loans in South Africa, bringing the number of clients we have provided loans to for affordable homes to more than 98 000.&nbsp;&nbsp;



Last year, we spent R12.5 billion with black-owned suppliers, and paid R6.5 billion in tax to the South African government. Through our membership of the Banking Association and Business Unity South Africa, we are strong supporters of the government-business collaborations on energy, logistics and&nbsp;&nbsp; tackling crime and corruption. Many of our colleagues lend their skills and time to improve the performance of SOEs and other important public entities.&nbsp;



Finally, as I write this during a weekend of stage 6 loadshedding, I’m pleased to say that Standard Bank has so far funded nearly 4000 MWh of new electricity generation in South Africa – that’s equivalent to four stages of loadshedding once it all comes online.&nbsp; Far from undermining South Africa we are, literally, helping to keep the lights on.&nbsp;&nbsp;



No matter what anybody says or thinks about us, that’s not going to change. As proud and committed South Africans, we will always uphold our Constitutional obligation to ensure that our country ‘improves the quality of life of all citizens.’ We will continue to seek out opportunities to work with all stakeholders to fulfil this obligation.

Standard Bank CEO Sim Tshabala presents annual results

Banking on the rule of law – Sim Tshabalala  

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/Michael-Muhangi-HiRes-image-820x547.jpg" alt="" class="wp-image-429000" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/Michael-Muhangi-HiRes-image-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/Michael-Muhangi-HiRes-image-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/Michael-Muhangi-HiRes-image-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/Michael-Muhangi-HiRes-image-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/Michael-Muhangi-HiRes-image-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/Michael-Muhangi-HiRes-image.jpg 2000w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Michael Muhangi, Head of Trans-Regional Clients, Africa Regions for Business and Commercial Banking at Standard Bank Group</figcaption></figure>



The Africa of 2023 is a continent that is embracing new opportunities. As it moves to exploit commonalities existing between neighbours, the advantages of intra-Africa trade are taking cooperation between countries to new levels. Trade agreements are gathering momentum, and traditional trade barriers are crumbling.



With the gradual elimination of political, economic, and regulatory barriers has come a need for financial institutions to adopt a strong trans-regional focus. For South Africa, which has always been a dominant market and trading power, encompassing both local corporations and family-owned businesses that have the potential to expand into Africa, the challenge is to ensure that it is ready to accept the inevitable competition that is looming on the horizon, says Michael Muhangi, Head of Trans-Regional Clients, Africa Regions for Business and Commercial Banking at Standard Bank Group.&nbsp;&nbsp;



“Already, we are seeing a change across the continent. Levels of economic activity are increasing as intra-Africa trade gathers momentum. The potential future challenge for market share means that South African financial institutions, including Standard Bank, should be looking at how they take advantage of the changes sweeping across the continent.



“Competitive strategies and tactics are essential if the growing opportunities emerging from increasing trade and initiatives such as the African Continental Free Trade Area (AfCFTA) agreement are to benefit South African companies looking for opportunities on the continent.



“What is required is a focus on available opportunities and a strong commitment from South African institutions to identify and evaluate projects or market niches that their clients could explore.”



In this consulting and supportive role, significant contributions can be made to help accomplish a smooth transition and alter the status of clients from being substantial players in local markets to businesses with a growing, sustainable African footprint, says Muhangi.



He adds that South African institutions should use their insights into their clients’ businesses, stirring in ingredients such as their broad areas of expertise, their experience, and their presence in various African markets, as well as their ability to create bespoke solutions, in order to create a recipe for clients’ growth in Africa.



Companies generally require support as they expand into new markets and become trans-regional clients. This support can be provided in the form of trade information and market intelligence, assistance with the identification of opportunities in key sectors, guidance on regulatory and legal requirements, and introductions to potential local partners within existing bank client bases.



“Stronger integration within the political and economic unions of West Africa (ECOWAS), East Africa (EAC) and Southern Africa (SADC) is easing the process of expanding into those markets, and the AfCFTA with its continental reach is further accelerating the unification of those trading blocs,” says Muhangi.



“There is no doubt that a wide, exciting road into Africa is opening. Many companies making the journey will originate from South Africa, which has the distinct advantage of having large, mature, and advanced market sectors and experienced local corporate leaders looking for new ventures and opportunities.”



Driving South African companies’ interest in markets to the north are local realities that make up the challenging economic environment facing their enterprises. These realities include loadshedding, crowded and competitive market sectors, and reduced consumer disposable income. All these factors make the search for alternative markets a viable option.



“Ultimately, trans-regional clients want to do business through a full-service continental bank that connects the dots across regions and helps fulfil their business needs. They want a full suite of services delivered with uniform levels of expertise and quality.”



Meeting these client expectations as a continental bank is not fully possible unless the supporting relationship, service and risk models are optimised, and all stakeholders work together to achieve a common cause. A keen and deliberate focus on these fundamental requirements is essential if we are to become the ‘go-to’ business bank on the continent, says Muhangi.



For Standard Bank, being a truly continental bank positioned to service a growing trans-regional client base means being the dominant business bank in all the markets within which it operates.&nbsp;&nbsp;



“The Standard Bank Group is actively developing African strategies and preparing for a continental future. Our view is that Africa will increasingly become a desirable investment destination. Besides its diverse markets and vast labour pool, its attractions include countries showing steady GDP growth and opportunities for a wide range of businesses across a multitude of sectors.



“Africa is beckoning trans-regional businesses. Standard Bank will be there, helping them succeed,” says Muhangi.

Michael-Muhangi-HiRes-image

Africa’s continental integration offers opportunities for cross-border expansion

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1760555842-820x547.jpg" alt="" class="wp-image-428829" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1760555842-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1760555842-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1760555842-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1760555842-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1760555842-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-1760555842-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Attendees arrive for the African Growth and Opportunity Act (AGOA) forum in Johannesburg, South Africa, on Friday, Nov. 3, 2023. The US aims to ensure that its preferential trade pact with Africa is replaced without interruption when it expires in two-year&#8217;s time, while bringing it up to date. Photographer: Leon Sadiki/Bloomberg via Getty Images</figcaption></figure>



Africa is often characterised as a continent poised for economic growth and development. Often, prosperity and development in Africa can be linked back to exports and the benefits that they generate.



This brings to the forefront the African Growth and Opportunity Act (AGOA) and its role in opening American markets to 35 African countries, as well as the African Continental Free Trade Area (AfCFTA), which aims to increase socio-economic development, reduce poverty, and make Africa more competitive in the global economy through the elimination of tariffs on most goods and the promotion of intra-African trade.



The roots of AGOA and AfCFTA explain it all. AGOA, enacted by the United States in 2000, gives African countries duty-free and quota-free access to the American market for a wide range of products ranging from agricultural goods to manufactured items. Its aims are to promote economic development in Africa through trade, enhance US–African economic relations, and diversify the African export base. However, access is not unconditional and remains subject to ongoing assessment and compliance hurdles put up by the Act’s eligibility criteria.



The AfCFTA trade agreement, launched by the African Union, aims to create a single African market for goods and services by eliminating tariffs and non-tariff barriers to trade. To date, 47 countries&nbsp;have ratified their instruments of the AfCFTA agreement, and 46 have ratified and deposited their instruments of ratification. Seven countries have yet to ratify and only one country has yet to sign. &nbsp;



Progress in creating the world&#8217;s largest free trade area is, therefore, well underway towards achieving its objective of creating the world’s largest trading bloc by stimulating intra-African economic growth.



The synergy between these two initiatives is seen in the fact that AGOA offers significant opportunities for African countries to diversify their export markets whilst, AfCFTA enables African nations to reduce their dependence on traditional trade partners. To get the best of both worlds, African businesses should, therefore be simultaneously exploring both agreements and maximising their export opportunities.



AGOA offers incentives to encourage Africans to develop outward-looking sectors while AfCFTA, through its larger African market, will enable businesses to hone and specialise their activities by aligning themselves with the competitive advantages that the two treaties offer. Moreover, both programmes foster export-oriented industries.



As they gear up and prepare to embark on global export adventures, African industries can effectively use the increased opportunities offered by AfCFTA to build supply chains, increase capacity, and grow production volumes as they prepare to move into global markets.



Crucial to success, and a topic of everyday business conversation, is that regardless of whether we target only continental markets or also American markets, opportunities need infrastructure. Africa is moving strongly to put transport, logistics and communications networks in place. There can be no greater incentive for this growth than booming export opportunities and associated benefits for participating countries.



With trade comes regulation. It is in this field that massive benefits lie. If AGOA and AfCFTA work together to promote regulatory harmonisation across Africa by aligning regulations and standards, unsurpassed opportunities could be opened for African businesses. Compliance costs would be reduced, competitiveness would increase, and African products would be more attractive to international buyers.



Besides infrastructure development, Africa requires significant investment. Foreign direct investment (FDI) plays a pivotal role in fostering economic growth and generating employment opportunities. The synergy and collaboration between AGOA and AfCFTA have the potential to stimulate FDI, thereby promoting technology transfer, and job creation across the continent.



Investment in one country could spur the opening of multiple continental markets, plus access to preferential markets to the consumer base in the US.



Naturally, these economic benefits will not come without challenges, which include addressing non-tariff barriers, ensuring compliance with rules of origin, and overcoming infrastructure deficits.



In implementing their AGOA benefits, African countries cannot rely solely on capacity-building support but must help themselves. Furthermore, being AGOA-eligible does not guarantee that they will fully exploit AGOA benefits and achieve their AfCFTA goals.



The potential impact of global economic conditions and changing US trade policies on AGOA should also be considered<s>. </s>Barring these constraints, all of which are resolvable, AGOA and AfCFTA offers two powerful, complementary instruments for promoting African exports and economic growth and propelling African nations towards becoming global trading powerhouses.

The African Growth and Opportunity Act Forum

Exploring synergies between AGOA and AfCFTA: the case for African exports

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="437" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/cnbc-africa-1500-800-820x437.jpg" alt="" class="wp-image-428197" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/cnbc-africa-1500-800-820x437.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/cnbc-africa-1500-800-300x160.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/cnbc-africa-1500-800-160x85.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/cnbc-africa-1500-800-768x410.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/cnbc-africa-1500-800.jpg 1500w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



Television business news&nbsp;channel CNBC Africa is introducing a new newsreader on Friday – and it’s an artificial intelligence-powered avatar.



The avatar, a blend of AI and human likeness, is modelled on Chanel Retief, who works for Africa Business News (ABN), the parent of CNBC Africa.



The channel said the new AI is designed to augment human productivity, not replace it.



The AI newsreader will work in tandem with CNBC Africa’s team of journalists, analysts and anchors to create “a mix of human expertise and technological efficiency”.



The world’s first AI anchor debuted in November 2018 at an internet conference in China.



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="SA industry panel formed to advance digital transformation" width="500" height="281" src="https://www.youtube.com/embed/m_1FoKhFNjQ?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div></figure>



Modelled on China’s state-run Xinhua News Agency’s Zhang Zhao, the new anchor learns from live videos and is able to work 24 hours a day, reporting via social media and on the Xinhua website.



Watch CNBC’s AI anchor in the video above — the AI newsreader is on from the one-minute, 2o-second mark.&nbsp; –&nbsp;© 2023 NewsCentral Media

cnbc-africa-1500-800

CNBC Africa gets a new anchor – and it’s an AI avatar

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/blog-2099x600-gfsr-ch-2-interest-rates-mongkolchon-adobe-stock-820x234.jpg" alt="" class="wp-image-428105" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/blog-2099x600-gfsr-ch-2-interest-rates-mongkolchon-adobe-stock-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/blog-2099x600-gfsr-ch-2-interest-rates-mongkolchon-adobe-stock-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/blog-2099x600-gfsr-ch-2-interest-rates-mongkolchon-adobe-stock-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/blog-2099x600-gfsr-ch-2-interest-rates-mongkolchon-adobe-stock-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/blog-2099x600-gfsr-ch-2-interest-rates-mongkolchon-adobe-stock-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/blog-2099x600-gfsr-ch-2-interest-rates-mongkolchon-adobe-stock-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: Mongkolchon/Adobe Stock</figcaption></figure>



The world’s central banks have unleashed the steepest series of interest-rate increases in decades during their two-year drive to tame inflation—and they may not be done yet. Policymakers have raised rates by about 400 basis points on average in advanced economies since late 2021, and around 650 basis points in emerging market economies.



Most economies are absorbing this aggressive policy tightening, showing resilience&nbsp; over the past year, but core inflation remains elevated in several of them, especially the United States and parts of Europe. Major central banks therefore may need to keep interest rates higher for longer.



In this environment, risks to the world economy remain skewed to the downside, as we detail in in our&nbsp;<a href="https://www.imf.org/en/Publications/GFSR/Issues/2023/10/10/global-financial-stability-report-october-2023?cid=pr-com-AM2023-GFSREA2023002&amp;utm_medium=email&amp;utm_source=govdelivery">Global Financial Stability Report</a>. Though this latest assessment of vulnerabilities is similar to what we noted in April, the acute stress we saw in some banking systems has since subsided. However, we now see indications of trouble elsewhere.



One such warning sign is the diminished ability of individual and business borrowers to service their debt, also known as credit risk. Making debt more expensive is an intended consequence of tightening monetary policy to contain inflation. The risk, however, is that borrowers might already be in precarious positions financially, and the higher interest rates could amplify these fragilities, leading to a surge of defaults.



<h2 class="wp-block-heading" id="h-eroding-buffers">Eroding buffers</h2>



In the corporate world, many businesses suffered closures during the pandemic, and others emerged with healthy cash buffers thanks in part to fiscal support in many countries. Firms were also able to protect their profit margins even though inflation had picked up. In a higher-for-longer world, however, many firms are drawing down cash buffers as earnings moderate and as debt servicing costs rise.



Indeed, the GFSR shows increasing shares of small and mid-sized firms in both advanced and emerging market economies with barely enough cash to pay their interest expenses. And defaults are on the rise in the leveraged loan market, where financially weaker firms borrow. These troubles are likely going to worsen in the coming year as more than $5.5 trillion of corporate debt comes due.


<div class="wp-block-image">
<figure class="aligncenter"><a href="https://www.imf.org/en/Blogs/Articles/2023/10/10/higher-for-longer-interest-rate-environment-is-squeezing-more-borrowers?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2023/10/8343161/5018241/gfsr-chapter-1-chart-1_crop.jpg" alt="chart showing looming debt in maturing bonds and loans by year for various economies"/></a></figure></div>


Households too have been drawing down their buffers. Excess savings in advanced economies have steadily declined from peak levels early last year that were equal to 4 percent to 8 percent of gross domestic product. There are also signs of rising delinquencies in credit cards and auto loans.



Headwinds also confront real estate. Home mortgages, typically the largest category of household borrowing, now carry much higher interest rates than just a year ago, eroding savings and weighing on housing markets. Countries with predominantly floating rate mortgages have generally experienced larger home price declines as higher interest rates translate more quickly into mortgage payment difficulties. Commercial real estate faces similar strains as higher interest rates have resulted in funding sources drying up, transactions slowing, and defaults rising.



Higher interest rates also are challenging governments. Frontier and low-income countries are having a harder time borrowing in hard currencies like the euro, yen, US dollar and UK pound as foreign investors demand greater returns. This year, hard currency bond issuances have occurred at much higher coupon—or interest—rates. But sovereign debt concerns do not only apply to low-income countries, as the recent surge in longer-term interest rates in advanced economies has demonstrated.&nbsp;


<div class="wp-block-image">
<figure class="aligncenter"><a href="https://www.imf.org/en/Blogs/Articles/2023/10/10/higher-for-longer-interest-rate-environment-is-squeezing-more-borrowers?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2023/10/8343148/5018242/gfsr-chapter-1-chart-2_crop.jpg" alt="chart showing levels of bond issuance in emerging market economies from 2010-2023"/></a></figure></div>


By contrast, major emerging economies largely do not face this predicament given better economic fundamentals and financial health, although the flow of foreign portfolio investment into these countries has also slowed. Material amounts of foreign investment have left China in recent months as mounting troubles in its property sector have dented investor confidence.



<h2 class="wp-block-heading" id="h-spillover-effects">Spillover effects</h2>



Most investors appear to have shrugged off mounting evidence that borrowers are having repayment troubles. Along with generally healthy stock and bond markets, financial conditions have eased as investors appear to expect a global soft landing, in which higher central bank interest rates contain inflation without causing a recession.



This optimism creates two problems: relatively easy financial conditions could continue to&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2023/07/27/inflation-remains-risk-confronting-financial-markets?utm_medium=email&amp;utm_source=govdelivery">fuel inflation</a>, and rates can tighten sharply if adverse shocks occur—such as an escalation of the war in Ukraine or an intensification of stress in the Chinese property market.



A sharp tightening of financial conditions would strain weaker banks already facing higher credit risks. Surveys from several countries already point to a slowdown in bank lending, with rising borrower risk cited as a key reason. Many banks will lose significant amounts of equity capital in a scenario where high inflation and high interest rates prevail and the global economy tips into recession, as we explore in a forthcoming GFSR chapter. Investors and depositors will scrutinize the prospects of banks if their stock-market capitalization falls below the value of balance sheet, causing funding problems for the weak bank. Outside of banking system, fragilities are also present for nonbank financial intermediaries, such as hedge funds and pension funds, that lend in private markets.



Reassuringly, policymakers can prevent bad outcomes. Central banks must remain determined in bringing inflation back to target—sustained economic growth and financial stability is not possible without price stability. If financial stability is threatened, policymakers should promptly use liquidity support facilities and other tools to mitigate acute stress and restore market confidence. Finally, given the importance of healthy banks to the global economy, there is a need to further enhance financial sector regulation and supervision.

blog-2099×600-gfsr-ch-2-interest-rates-mongkolchon-adobe-stock

Higher-for-Longer Interest Rate Environment is Squeezing More Borrowers

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/09/blog-2099x600-gender-imf-photos-52054762405-364cf455bd-6k-820x234.jpg" alt="" class="wp-image-427750" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/09/blog-2099x600-gender-imf-photos-52054762405-364cf455bd-6k-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/blog-2099x600-gender-imf-photos-52054762405-364cf455bd-6k-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/blog-2099x600-gender-imf-photos-52054762405-364cf455bd-6k-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/blog-2099x600-gender-imf-photos-52054762405-364cf455bd-6k-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/blog-2099x600-gender-imf-photos-52054762405-364cf455bd-6k-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/blog-2099x600-gender-imf-photos-52054762405-364cf455bd-6k-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



Narrowing the gap between the share of men and women who work is one of the very important reforms policymakers can make to revive economies amid the weakest medium-term growth outlook in more than three decades.



With global growth predicted to languish at just&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2023/04/19/world-economic-outlook-shows-economies-facing-high-uncertainty?utm_medium=email&amp;utm_source=govdelivery">3 percent</a>&nbsp;over the next five years and with traditional growth engines sputtering, many economies are missing out by not tapping women’s potential. Only&nbsp;<a href="https://data.worldbank.org/indicator/SL.TLF.CACT.FE.ZS?utm_medium=email&amp;utm_source=govdelivery">47 percent</a>&nbsp;of women are active in today’s labor markets, compared with 72 percent of men. The average global gap has fallen by only 1 percentage point annually over the past three decades and remains unacceptably wide.



To blame are unfair laws, unequal access to services, discriminatory attitudes and other barriers that prevent women from realizing their full economic potential. The result is a shocking waste of talent, leading to losses in potential growth.



We estimate that emerging and developing economies could boost gross domestic product by about 8 percent over the next few years by raising the rate of female labor force participation by 5.9 percentage points—the average amount by which the top 5 percent of countries reduced the participation gap during 2014-19. 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, that’s more than the economic “scarring,” or output losses, inflicted on countries by the pandemic.


<div class="wp-block-image">
<figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="539" height="539" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/09/gender-blog-chart-v2_crop.jpg" alt="" class="wp-image-427749" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/09/gender-blog-chart-v2_crop.jpg 539w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/gender-blog-chart-v2_crop-300x300.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/gender-blog-chart-v2_crop-90x90.jpg 90w" sizes="auto, (max-width: 539px) 100vw, 539px" /></figure></div>


Policymakers can of course lift growth in many ways, from governance reforms to strengthen institutions, to financial reforms to unlock capital for investment, as discussed in a&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2023/09/25/how-reform-can-aid-growth-and-green-transition-in-developing-economies?utm_medium=email&amp;utm_source=govdelivery">recent IMF blog</a>. Complementing these reforms with measures to narrow gender gaps would greatly amplify these returns.



Unfortunately, present policies do not come close to closing gender gaps. Many researchers say it’s inevitable that women’s labor force participation will eventually reach that of men, even if it takes centuries. But gender gaps are unlikely to ever close if present policy trends persist, as we show in a new&nbsp;<a href="https://www.imf.org/en/Publications/WP/Issues/2023/09/13/When-Will-Global-Gender-Gaps-Close-537981?utm_medium=email&amp;utm_source=govdelivery">research paper</a>.



Our analysis of three decades of data shows that countries have made progress increasing women’s participation, but economies of all income levels experienced several setbacks—a result of shocks, crises and policy reversals. The pandemic, for example, eroded progress closing gender gaps, especially for&nbsp;<a href="https://www.imf.org/en/Publications/WP/Issues/2021/03/03/COVID-19-She-Cession-The-Employment-Penalty-of-Taking-Care-of-Young-Children-50117?utm_medium=email&amp;utm_source=govdelivery">women with young children</a>. Setbacks like this cause scarring that slows and often reverses progress toward gender equality.



As a result, gender gaps in labor force participation will narrow but never close if countries continue on their present policy path. Gaps would remain large for most countries, exceeding 16 percentage points in one out of ten countries.



Countries must step up efforts to break down barriers to women’s participation in the labor market—such as limited access to education, health, assets, finance, land, legal rights, and care services. They should systematically take account of how macroeconomic, structural, and financial policy packages impact women. The IMF’s&nbsp;<a href="https://www.imf.org/en/Publications/Policy-Papers/Issues/2022/07/28/IMF-Strategy-Toward-Mainstreaming-Gender-521344?utm_medium=email&amp;utm_source=govdelivery">gender strategy</a>&nbsp;aims to assist member countries in these efforts.

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