The world is on the cusp of a new epoch due to massive geopolitical and multi-lateral structural changes, and African countries could benefit from these changes such as by leap-frogging technologies of the past and being part of opportunities such as in energy, Standard Bank chief economist, Goolam Ballim, said yesterday.
Speaking at Standard Bank’s Africa Unlocked conference in Cape Town, he said over the past 30 years, and notwithstanding smaller conflicts, the world had a been relatively stable and predictable place, but this was changing due to a number of structural socio-economic, political and other shifts taking place simultaneously, he said.
For instance, post the Covid-pandemic, global supply chain strategies had changed from being globally interlocking for maximum efficiency to one that instead promoted resilience of the supply chain, resulting in increased costs to trade.
The benefits of the internet and online systems had virtually peaked and were being replaced by AI and other fast-developing technologies.
The world was in the midst of one of the biggest energy sector resets. The benefits of globalisation was no longer being perceived with as much enthusiasm as previously by business. There was a shift politically towards “illiberalism” in political sentiment.
There has also been the rise of “big man” politics globally, which includes leaders such as Putin in Russia, Trump in the US, and former Brazil president Jair Bolsonaro, and this has also been associated with an increased emphasis on nationalism. These changes would almost certainly involve a level of risk premium in financial markets, Ballim said.
He said in some African countries economic growth was accelerating and consistent, such as in some East African countries such as Kenya and Ethiopia, while growth was tepid in particularly in the large economies on the continent such as South African and Nigeria.
Standard Bank Group is the largest bank by assets on the continent, operating in 20 African countries, with headline earnings of around R42.9 billion and total assets worth R3.1 trillion.
Lungisa Fuzile, Standard Bank SA CEO, said one opportunity on the continent was the development of renewable energy systems. He said the World Bank estimated that 76% of Africa’s energy requirements would be powered by renewable energy by 2040 and these were most likely to be hydro-electric, solar, and wind systems.
The continent also held significant quantities of mineral resources such as cobalt, manganese and lithium that will be required by the global energy reset, and partnerships were needed to help African countries realise the benefits of the exploitation of these minerals on their economies, said Fuzile.
Ballim said African countries would also benefit from its anticipated increase in the size of its workforce in coming years, given it has the fast-growing and biggest proportion of youth in the world.
As example, he cited the sharp increase in the size of the global workforce with the opening of global markets over the past 30 years, with the introduction of the workforces of China, India, and Brazil to world markets. Of concern in this context was the fact that not as many children had returned to school post the Covid pandemic, as had been attending school prior to the pandemic.
Ballim said another big potential boost to growth on the continent was economic diplomacy, which had, for instance, been very successful in buttressing the local economies of China and India, but he said it was important that policies for this to focus on young industries that could be globally competitive.
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