As Climate change could cause 29% spike in cereal prices: leaked UN report, because Food supply chains will get disrupted globally, the study warns. Report to be officially released in August informs Nitin Sethi, of New Delhi in this article of Business Standard.
As far as the MENA region is concerned, food has always been in short supply, but does this mean it would get worse.
The report will be put before all member countries of the UN Framework Convention and once it gets their stamp of approval by consensus it will be made public on August 8. Photo: Representative Image
“The rate and geographic extent of global land and freshwater resources over recent decades is unprecedented in human history,” a report authored by UN’s panel of scientists from across the world on climate change is set to inform. Business Standard reviewed a leaked copy of the draft report sent to the governments of 197 countries. The report warns that as the global temperatures rise, the stress on land resources and its productivity is set to rise.
The report by the UN Inter-governmental panel on climate change, is called, “IPCC Special Report on Climate Change, Desertification, Land Degradation, Sustainable Land Management, Food Security, and Greenhouse gas fluxes in terrestrial ecosystems.”
The report will be put before all member countries of the UN Framework Convention and once it gets their stamp of approval by consensus it will be made public on August 8.
The authors of the report, gleaning through state-of-art science research have concluded that, “Observed climate change is already affecting the four pillars of food security – availability, access, utilization, and stability – through increased temperatures, changing precipitation patterns, and greater frequency of some extreme events.”
Continuing climate change is expected to further “create additional stresses on land systems exacerbating risks related to desertification, land degradation and food security,” the report says.
In a significant finding for countries such as India, the authors say, at global warming of 2° Celsius, the population of drylands exposed and vulnerable to water stress, increased drought intensity and habitat degradation could be as high as 522 million. Scientists conclude that at current levels of greenhouse gas emission reductions committed by the countries under Paris Agreement there is a good likelihood for the planet to breach the 2° Celsius temperature rise barrier.
“In drylands, desertification and climate change are projected to cause further reduction in crop and livestock productivity, modify the composition of plant species and reduce biological diversity,” research endorsed by the scientific panel shows.
Half of the vulnerable population due to the climate-change induced aridity would be in South Asia. The degradation of land due to climate change is already leading to consequent shaving off of the global economy, the scientific panel notes. “There are increasingly negative effects on GDP from impacts on land-based values and ecosystem service as temperature increases,” the report says. But, it notes that, at the regional level, the impacts would vary. “Compound extreme events, such as a heat wave within a drought or drought followed by extreme rainfall, will decrease gross primary productivity of lands, the authors warn
The impact on agriculture in higher latitudes is recorded to be different than in lower ones, such as one covering India. “Increasing temperature are affecting agricultural productivity in higher latitudes, raising yields of some crops such as maize, cotton, wheat, sugar beets, while in lower-latitude regions yields of crops such as maize, wheat and barley are declining.
Modelling results, that the scientific panel reviewed, show that cereal prices could rise by up to 29 per cent in 2050 due to climate change, which would impact consumers globally through higher food prices, though the impact would vary by regions. The stability of food supply is expected to decrease as the magnitude and frequency of extreme events caused by climate change increases, disrupting food chains globally.
The increase in global temperatures and consequent climate change is already affecting the productivity of livestock, which is one a main-stay of Indian rural economy. The authors conclude, “Observed impacts in pastoral systems include pasture declines, lower animal growth rates and productivity, damaged reproductive functions, increased pests and diseases, and loss of biodiversity.”
At the same time coastal economies are already suffering an impact as well. “Coastal erosion is affecting new regions as a result of interacting human drivers and climate change such as sea-level rise and impacts of changing cyclone paths,” though the scientists hold a low level confidence in the scientific research that concludes the impact of climate change on cyclone paths.
Saudi Gazette posted an article dated July 9, 2019, on MENA start-up ecosystem on the rise, explaining that it is all “positive news for the continually growing ecosystem with strong growth through a record number of transactions.”
DUBAI — Total funding across the Middle East and North Africa (MENA)-based start-ups was up 66% from H1 2018, MAGNiTT, the region’s most powerful startup platform, said in its H1 2019 MENA Venture Investment Report, which provides an in-depth analysis of start-up funding and venture capital across the Middle East and North Africa.
The report highlights positive news for the continually growing ecosystem with strong growth through a record number of transactions.
Philip Bahoshy, MAGNiTT’s founder, said “the MENA region is hitting its inflection point. The acceleration of funding we saw in the latter half of 2018 has continued into 2019.”
Bahoshy noted that “there are many signs of an ever maturing ecosystem. As start-ups grow, we have seen more start-ups raising larger tickets, more exits and a continued interest from International investors in the region, especially from Asia.”
He also pointed to “UBER’s acquisition of CAREEM is another example of a large international player acquiring a local company after Amazon’s acquisition of Souq. This will further act as a catalyst to spur on the regions entrepreneurial environment.”
The report noted that H1 2019 saw 238 investments in MENA-based start-ups, amounting to $471 million of total funding. This is an excellent indicator, a 66% increase in investment dollars compared to H1 2018, in which $283 million was invested.
The number of deals remained healthy at a record high, up 28% compared to H1 2018, showing continued appetite in start-ups from the region at all stages of investment.
Noor Sweid, General Partner of Global Ventures, said “the growth in the start-up and tech ecosystem in the region is phenomenal, and yet, we are just at the beginning of a trajectory that will see technology-driven companies grow significantly and incredibly quickly over the coming years. These numbers illustrate the momentum and successes that the underlying companies and founders are achieving, and the growth in the investment ecosystem and opportunities alongside them.”
The UAE remains the most active startup ecosystem with 26% of all deals and 66% of total funding. Saudi Arabia was one of the fastest growing ecosystems, up 2% from H1 2018 recording 26 investments in H1 2019.
The UAE has maintained its dominance with 26% of all transactions made in to UAE-headquartered start-ups in H1 2019, while it also accounted for 66% of total funding.
Khalfan Belhoul, CEO of the Dubai Future Foundation, explains this by highlighting that “With the vision of our leaders, and a strong strategy in place, the UAE has cemented its position as an ideal destination for startups, founders, creative thinkers, and innovators. We have leveraged that vision, through creating dynamic co-working spaces, agile legislation that supports innovation and attractive visa policies for entrepreneurs and business professionals, and we continue our efforts toward positioning Dubai as a global testbed for cutting-edge technologies.”
However, the landscape continues to evolve. Tunisia was the fastest growing ecosystem in H1 2019 – receiving the 5th highest number of deals at 8% of all deals, up 4% from H1 2018. While Saudi Arabia recorded 2% increase in number of deals, up to 11% of all transactions across the MENA region.
FinTech retained its top spot in H1 2019 and accounted for 17% of all deals. Notable investments include the $8 million in Yallacompare, $6 million in Souqalmal and $4 million in Beehive.
E-commerce still remains prevalent accounting for 12% of all deals, followed Delivery & Transport, which was the third most popular industry in terms total deals in H1 2019, accounting for 8%.
The report furthered said 130 institutions invested in MENA-based start-ups in H1 2019, of which 30% were from outside the region.
500 Startups remained the most active venture capital firm, especially at early stage investments, while Flat6Labs was the most active accelerator program.
Moreover, H1 2019 saw the influx trend of foreign investors continue. The entrance of China’s MSA Capital and Germany’s food conglomerate Henkel, among others, highlighted continued international interest in MENA start-ups. In fact, 30% of all entities that invested in MENA-based start-ups were international investors.
Walid Faza, Partner and Chief Operating Officer of MSA Capital, said: “Chinese models are shaping the consumption habits of emerging market tech consumers and MSA’s deep knowledge in both ecosystems positions us to add a lot of value to companies based in MENA.”
EMPG leads the start-up ecosystem with a $100 million fundraise, followed by Yellow Door Energy and Swvl
EMPG receives the highest amount of funding by a single start-up, raising $100 million in February 2019. Yellow Door Energy ($65M) and Swvl ($42 million) complete the top 3.
In total, the top 10 deals in H1 2019 account for 62% of the total investment amount in H1 2019, down 9% from H1 2019. In terms of exits, H1 2019 has seen 15 start-up exits take place across MENA, an increase of 5 compared to H1 2018.
The largest of these was Careem’’ landmark exit to Uber. Magnus Olsson, Co-Founder, Chief Experience Officer noted “Our $3.1 billion deal with Uber was a hugely significant moment, not just for Careem, but also for the Greater Middle East. It was the largest tech deal this part of the world has ever seen and puts our region’s emerging technology ecosystem on the map of both regional and foreign investors.” On the impact the deal will have across the ecosystem, Olsson noted that “Careem views its colleagues as owners of the business and so we introduced an equity scheme that will now see them financially benefit from the transaction. We hope that the deal will act as a catalyst for the next generation of tech startups in our region.”
The World Economic Forum article dated 28 May 2019, could well be applied to most of the countries of the MENA region. Apart from the oil exporting ones, all the others’ informal economy appears to the naked eye as undergoing the same phenomenon but perhaps at a lesser density. In effect, very much like in the neighbouring sub-Saharan regions, the MENA’s informal markets seem to be pushing towards a new kind of business structure. A new kind of company is revolutionising Africa’s gig economy?Aubrey Hruby, Senior advisor to Fortune 500 companies replies.
For more than 30 years, governments and international development organizations have followed the same recipe for formalising the world’s informal economy; enacting new legislation and regulations or abolishing those that get in the way of the process.
By 2035, Africa will contribute more people to the workforce each year than the rest of the world combined. By 2050, the continent will be home to 1.25 billion people of working age. In order to absorb these new entrants, Africa needs to create more than 18 million new jobs each year. Given the urgent need to provide jobs and livelihoods to Africans, it is time to examine the conventional wisdom that informal markets must transition into formal markets. Development finance institutions (DFIs) and private investors in African markets can play a critical role in both advancing Africa’s gig economy and changing the narrative that growth in informal markets is incompatible with sustainable development.
Across African markets, companies are pioneering business models that bridge the formal and informal sectors; in these models, each company is a formal entity but can mobilise large numbers of informal actors in their supply chains or service delivery. While this has been done in dairies in Kenya and at coffee and cocoa outgrowers across the continent and in other sectors for nearly a century, the penetration of mobile phones has enabled a new breed of African companies to monetise their ability to organize and inject trust into fragmented informal markets. However, unlike Uber or Airbnb, which disrupted largely formal sectors, many of Africa’s new ‘gig economy’ firms are writing the rules for whole new industries in local markets.
Perhaps the most high-profile example is Safaricom’s M-PESA. Since its launch in 2007, M-PESA, a mobile payments system developed by Kenya’s largest telecoms operator, has enabled millions of informal sector workers to move money at a lower cost, which has provided a significant boost to the Kenyan and Tanzanian economies. Another, more recent example, is Nigeria’s Cars45, operated by Frontier Car Group. Nigeria’s $12 billion used car industry is largely informal and characterised by distrust, a lack of standardisation and the absence of a structured dealer network. Cars45 facilitates the buying and selling of used cars by pricing and rating their condition transparently and conducting online auctions. Many sectors throughout the continent remain highly informal and would benefit from these types of bridges into formality. These ‘bridge companies’ are going to define the future of employment in African countries.
DFIs are ideally placed to invest in bridge companies in African markets, given their long presence and in-depth engagement with local financing environments. The International Finance Corporation (IFC) and the UK’s CDC Group already invest in technology-enabled start-ups, and others, including OPIC, are adapting their strategies to be able to do so. Many of the continent’s most promising technology-enabled bridge companies are starting to raise funding large enough to attract the attention of DFIs. Frontier Car Group recently raised $89 million, Kenya’s Twiga Foods raised $10 million, and Nigeria’s Kobo365 has raised $6 million. Overcoming a dearth of funding remains one of the highest barriers for African entrepreneurs, and the development impact of investing in those that improve employment is enormous.
The gig economy comes with limitations. Lack of legal rights, limited career progression, stagnant pay and a lack of benefits are just some of the issues that will need to be addressed in an ‘Uberised’ world. These challenges, plus the day-to-day economic uncertainty, make the informal sector far worse in many ways than the formal. Bridge companies – because they are registered, and have a public brand and centralised management – can be pressured into addressing issues around workers’ wellbeing. Studies into the financial behaviours and needs of low-income families by BFA, a consulting firm specialising in financial inclusion policies, found that workers often aspired to ‘gig economy’ jobs but hated casual labour (such as waiting on a corner to be hired for the day) because of the lack of reliability and predictability.
The future of work is changing and the mass job creators of today will not be able to meet the needs of tomorrow’s workforce in the same way. Bridge companies are pioneering new ways of injecting efficiency and higher productivity into traditional informal markets. Investing in this trend is critical to solving Africa’s pressing job creation need.
A new tide of people power is rising in Africa. On April 2, a nonviolent resistance movement in Algeria succeeded in pressuring Abdelaziz Bouteflika to resign after 20 years as president. Nine days later, protesters in Sudan were celebrating the ouster of Omar al-Bashir, Sudan’s president of 30 years, after a three-month-long uprising against his regime.
The nonviolent overthrows of Bouteflika and Bashir are not aberrations. They reflect a surprising trend across the continent: despite common perceptions of Africa as wracked by violence and conflict, since 2000, most rebellions there have been unarmed and peaceful. Over the past decade, mass uprisings in Africa have accounted for one in three of the nonviolent campaigns aiming to topple dictatorships around the world. Africa has seen 25 new, nonviolent mass movements—almost twice as many as Asia, the next most active region with 16.
The AU said it noted “with deep regret” that the military had not stepped aside and handed power to civilians within a 15-day period set by the AU last month.
The bloc also reiterated “its conviction that a military-led transition in Sudan will be totally unacceptable and contrary to the will and legitimate aspirations, to democratic institutions and processes, as well as respect for human rights and freedoms of the Sudanese people”.
The military assumed power in Sudan after toppling the country’s long-time ruler Omar al-Bashir following months of anti-government protests.
It promised to hold elections within two years but protesters have rejected that and remained on the streets of the capital, Khartoum, demanding immediate civilian rule.
The council, led by General Abdul Fattah al-Burhan, has been negotiating with protest leaders on the formation of a new transitional government. But the two sides are divided over the role of the military, which is dominated by al-Bashir appointees.
As per the World Bank in its latest announcement, “Growth has picked up across the region and is projected to strengthen over the next few years. And almost all MENA countries have moved to reduce or eliminate energy subsidies, identify new sources of non-oil revenues, and expand social safety nets to shield the poor from adverse effects of change.”
Meanwhile the World Economic Forum informs that the MENA region hosts the world’s elite today and tomorrow by the Dead Sea shore, to try and debate some of the region’s current issues. Jordan has already held the WEF’S gathering in the recent past; refer to MENA-Forum.
ByMirek Dusek, Deputy Head of the Centre for Geopolitical and Regional Affairs, Member of the Executive Committee, World Economic Forum
For thousands of years, the Dead Sea has attracted visitors from far and wide, drawn by legends of its power to heal and rejuvenate. On 6-7 April, 1,000 key leaders from government, business and civil society will gather on its shores for the World Economic Forum on the Middle East and North Africa (MENA). Over two days they will confront the issues facing more than 400 million people.
A region of two opposing systems
The Arab world is a region of two contrasting systems. One system features a dynamic private sector, digitally native youth and open economies. The other has a bloated public sector and closed, controlled economies.
Most people in the Middle East and North Africa (MENA) interact with both systems, facing a mixed reality. Wealth sits side-by-side with poverty; an exciting entrepreneurial culture struggles with leaden bureaucracy; and an insatiable appetite for the new is balanced with a reverence for tradition.
How these two systems interact – and whether the dynamic, forward-looking system can thrive while respecting the traditions of the Arab world – is among the most important issues the region is facing today.
Five key questions
The following five areas will determine whether the Arab world can successfully move towards the system of innovation and competitiveness.
1. Can the Arab world develop a new, sustainable economic and social framework?
The social contract in much of the Arab world has relied on state-provided employment. This is unsustainable. Nearly half the population is under 25, and a quarter of those are unemployed. Add the biggest gender gap in the world, and it’s clear a new framework is needed.
2. Can a mechanism for conflict resolution be developed?
Ongoing humanitarian disasters in Syria, Yemen and Iraq require immediate attention, as do the longer-term projects of rebuilding fully functioning states. The region has been home to long-standing tensions, and unless these are mitigated, a thriving, competitive region will be hard to realise.
3. Can an ecosystem of entrepreneurship and innovation be developed?
The stories of individual success in the region are too often ones of thriving despite the economic framework. An ecosystem that nurtures innovation and encourages firms to flourish and grow is needed.
4. Are countries prepared for the Fourth Industrial Revolution?
Changes in the way we work are happening more quickly than most societies are prepared for. There is a short window for establishing the right regulatory environment, and reskilling people to make sure they – and the larger economies – can capture the opportunities of technology.
5. Will addressing corruption and transparency be a priority?
Governance reform is a “must do” issue in the region and disillusionment caused by perceptions of corruption is particularly strong among young Arabs.
Global questions, Arab answers
While other regions have grappled with similar questions, the Arab world needs Arab solutions, that capitalize on the unique strengths of the area while accounting for its important sensibilities. There are good examples of this starting to happen.
The UAE is playing a leading role in integrating the region into the global economy. The new Emirates Centre for the Fourth Industrial Revolution, run by the Dubai Future Foundation in partnership with the World Economic Forum, is working to shape governance and capacity issues in the MENA, and it could shape data protocols across the world as a whole. Europe is enforcing strict data protections and regulations, while the United States is taking a more liberal approach. The Arab solution being developed may not just be a better fit for the region, but for elsewhere as well.
Saudi Arabia already has an influential voice as part of the G20, and it’s a voice that can grow. In 2020, it will host the Riyadh Summit, presenting an opportunity for greater impact on the regional and global agenda. A forward-looking programme that strengthens the MENA economies and the global economy as a whole will be an important step toward long-term success for the area.
Actions not words
There is a dire need for a new collaborative platform that brings governments together with businesses and other stakeholders in private-public cooperation. This is the aim of the World Economic Forum’s summit in Jordan. By convening members of the public and private sectors, and bringing new voices into the arena, such as the 100 Arab Start-ups, we hope to facilitate forward-leaning dialogue that understands and respects the values and culture of the region.
Traditional bricks and mortar retail is under attack globally. Retailers have struggled to compete with the growing popularity of large-scale competitors such as Amazon and Alibaba. The industry is also in the grip of a revolution powered by digital technology, as people shop online rather than in stores. Millennials comprise the largest internet audience, and will have more buying power than any generation before. But they still want to touch, feel and explore products. Shopping is becoming more of an experiential activity, during which stores compete for consumers’ “share of wallet”.
Middle Eastern retailers and consumer goods companies are even more vulnerable, as the pressure from e-commerce and changes in consumer buying behaviour are compounded by rising costs associated with economic reforms, such as workforce localization, taxes, and increasing fuel and electricity prices. As prices rise, consumer buying power and confidence is becoming subdued.
In fact, our latest survey, conducted in September 2018, reveals that consumers in the Middle East are spending even more cautiously than they have in previous years. They are also more anxious: 80% of survey respondents in Saudi Arabia and 72% in the United Arab Emirates are worried about losing their jobs. In both countries, more than 40% of respondents said they’re cutting down on spending and paying closer attention to prices.
Consequently, traditional retailers have limited levers to operate in response. They have a large fixed base of assets, which they need to rethink as shoppers favour the convenience of purchasing online rather than visiting stores. It is absolutely critical that retailers think about how to operate at maximum efficiency, with a hard focus on cash and working capital, in order to survive to the next stage. They are in a paradoxical moment where their revenues and returns are declining, yet they must invest in technology. It is not always easy to justify this spend with investors. And in thinking beyond the present to the different value propositions and approaches needed to recapture the customer, they must re-skill their employees and recruit new talent.
Customers are now more interested in experiences than products. In considering how to stay with them throughout their buying journey and not just at the end of it, retailers need to make many changes in the way they reach their customer, how they interact with them, what they learn about them, and how they ultimately sell them a product, service or experience. Convenience is also becoming important to consumers as they move their retail activity online. In fact, 50-60% of consumers state that saving time is one of the main reasons why they shop online.
Digital technologies and changing shopping habits are a clear threat to traditional retail business models. But there are positive ways to respond to these trends. To embrace these opportunities, real-estate developers must get closer to consumers and figure out how to meet their evolving wants and needs.
The good news is that by leveraging their assets – physical proximity to consumers, logistics, brand, in-store experience – traditional players still have the right to win. The Middle East has a young population with aspiring lifestyle choices, and with the various macroeconomic transformations taking place, buying power will recover and grow. But retailers must be willing to undertake rapid, radical and lasting transformation when it comes to efficiency, and the ways they embrace technology and offer products.
A transformation can be designed around the following five fundamentals or key success factors.
First of all, the full leadership team – not just the Board and CEO – has to be behind the change required to turn the business around.
Second, this motivation needs to move beyond the boardroom fast and engage the front line, going deep and wide across the organization.
In the Middle East, those two elements are typically in place. It’s the following three that need more focus.
The right structures need to be put in place to ensure that any response is effectively executed and delivered – for example how the business is organized, how governance is implemented, and how objectives and deliverables are executed.
Culture is also important. This is not about how to respond from a technical point of view, but the changes necessary in the mindsets and behaviours of everyone in the organization to make the transformation a success.
The last element is identifying, developing and elevating the best people in your organization, because they are the resource who will take you from point A to point B.
There is no doubt that physical retail is here to stay, and will keep its place alongside the online marketplace. Even e-commerce giants are entering into physical retail, as digital natives invest offline – see Amazon acquiring Wholefoods, and Alibaba’s Hema concept. These new stores have decoupled the notions of “shopping” and ‘“buying”, showing the face of retail is changing. Traditional retailers’ main challenge is to accelerate the pace of transformation, while ensuring they address, in a holistic way, the growth side, cost side, cash side and re-skilling of employees, in order to deliver results.