Africa, ESG and tech: three themes for 2023
So here we are 2023. I am sure each of you reading this has a number of opportunities and challenges that are front of mind as the year begins. I cannot begin to try and encapsulate everything that could present in 2023, perhaps we should just accept that it’s a fool's errand trying to predict anything right now. For me, there are three themes that seem to keep coming up as huge opportunities or potential icebergs for our ship SS2023 as we sail into the new year: Africa; the status of ESG; and the role that technology continues to play today.
1. Africa rising
The Africa rising story has ebbed and flowed for years. I’d argue that the potential for growth and opportunity in countries across the continent is stronger than ever, but not only for the usual reasons. It's not that we have been insulated from the headwinds buffering the rest of the world. We experience the same fallout from geopolitics, global economic turbulence and the climate crisis as everybody else. But, unlike the rest of the world, challenge, chaos and uncertainty are not new to us. This is our status quo, and we've learned to live with it, and, indeed, to succeed despite it. Power outages; water shortages; lengthy, unpredictable supply chains; rising and fluctuating prices – we carry on regardless and make a plan to get things done anyway.
It's a strange sort of optimistic pessimism. We don't expect anything to change for the better unless we do it ourselves, so we have become self-reliant, innovative and creative. I’m not celebrating or glorifying this, but acknowledging that we have the experience, resilience and attitude to navigate whatever comes our way. Which ironically, makes us well-placed for innovation, growth and opportunity in today’s world.
In addition, the Africa Continental Free Trade Area (AfCFTA), the world’s largest free trade area, really gears up this year. The continent has five out of ten of the fastest-growing countries in the world, according to the IMF. It also has a large population of 1.7 billion people with business and consumer spending power. Specifically, addressing the energy crisis presents interesting opportunities in several African countries.
So, if you're feeling despondent about the poor investment returns forecast for Western Europe and North America this year and beyond, perhaps look to investments in Africa to diversify your portfolio and generate returns that could surprise and outperform the rest of the world.
2. ESG (Environmental, Social and Governance)
This was set to be the year that a multitude of environmental, social and governance regulations and legislations came into effect around the world that would finally start clarifying what is required from companies in terms of ESG reporting. To be sure, we would still have had a long way to go – ESG is a large, complex and sometimes contradictory beast. But it was a big step in the right direction to effective and meaningful reporting by organisations to better inform investors, customers and employees, and also to drive change and improved sustainability.
The reality, though, is that given the global polycrisis we’re experiencing, ESG is likely to be a can that is kicked down the road for the time being. Countries faced with the choice between providing affordable heating and power to their citizens and businesses or their climate goals, are likely (as Germany already has) to soften their stance on the environment and return to fossil fuels in the short term. Likewise, companies battling to survive a tough and volatile economy might struggle to motivate the redeployment or hiring of new assets to tackle the complex task that is ESG.
Of course, this is a shame and illustrates the complexities and payoffs of ESG targets. Do governments allow their citizens to freeze while holding on to their climate goals zealously? And do companies lay off people or even go under because they have redeployed resources they couldn't afford to bolster their ESG efforts?
This is definitely not a call to throw the baby out with the bath water. Companies should at the bare minimum keep ESG on their agendas and do what they can to lay the foundations for the future. Further, companies could look to ESG as an interesting way to differentiate themselves during the downturn, meeting investor and customer expectations around ESG ahead of the competition.
Technology remains a key ingredient to surviving and growing as a business, despite tough, chaotic times. This is one area you don't want to cut back on when nervously considering the likelihood of a recession this year. This goes beyond what technology can do for you at face value today and speaks to the existential future of your organisation.
Yes, cloud computing, for instance, enables communication, collaboration, analytics, efficiency and productivity. But it also sets you up to navigate a changing and unpredictable future by giving you the affordable flexibility and agility to turn on a dime when you need to.
This could be defensive: say your main product or service becomes defunct in a matter of months, thanks to competitor innovation or the market just simply moving on. Or this could be offensive: you spot a need in the market that you're ideally suited to meet, and you can do so quickly. Consider the way the shift in how we pay is speeding up: from cash, to cards, to contactless, and then to paying with your phone, first with QR codes and now with a tap. Cash and physical debit or credit cards are rapidly becoming things of a bygone era, today we just need to be sure our phone is in our pocket when we leave home and we can pay our way through the day. It feels like this happened in the blink of an eye, illustrating just how fast disruption happens and that now is not the time to shelve innovation.
This is the game-changing stuff needed today to ensure your organisation is in the top 10% of businesses that historically have exited economic slumps stronger than ever.
One thing we can be sure of is that it’s no longer business as usual and it seems unlikely that it ever will be again. But that doesn’t mean it’s game over, so hoist the sails, chart your objectives and sail into an uncertain future with more than a little optimism…
As published in AccountingWeb - January 2023