Megatrends – long-term processes of transformation with broad scope and dramatic impact – may often seem too far removed for business leaders focused on local, medium-term activities. However, no business wanting to thrive in a rapidly changing world can afford NOT to think strategically, or to not look ‘beyond the horizon’ to understand the longer-term implications and impacts of today’s prevailing trends. A robust foresight capability is essential for business to understand the nature of change and to best position itself as it seeks to grow into the future. This is particularly true of the South African – and specifically the Western Cape – economies with their significant exposure to such global and African trends.
Globalisation – the worldwide movement to economic, financial and communications integration – has a significant, and every-growing, impact on business. For the Cape economy, globalisation has a number of positive spin-offs, although some of them are still to be fully realised. Expanding broadband connectivity renders the vagaries of location redundant. What were distant global markets have been ‘localised’ through massively expanded IT capabilities. Running a global business empire from Cape Town, regardless of how physically distant key markets are, is a reality for many organisations. Given the Cape’s attractiveness as a place to live, there is significant long-term economic upside from this one aspect of globalisation.
Globalisation also means that the people most in demand are increasingly mobile, and can choose anywhere in the world to live. One of Cape Town’s unique features is that it has been a magnet for innovators for some time. It is often described as inspiring, which has meant that innovative people are, in fact, inspired to come here to live, and to work (such as the Arup engineer who has made Cape Town home based on this being the World Design capital 2014! We must capitalise on this strength, and encourage the growth of innovative industries. Design, architecture, film, technology and research, renewable industries and education are all sectors with existing strengths in the Cape. We should be creating a business environment that fosters the establishment of these kinds of entities, both large and small, and which attracts global talent to the region.
Urbanisation is another undeniable global megatrend. 70% of the world’s population will be living in cities by 2050. In Africa, that figure is likely to be around 50%. The growth of urban megacities presents both challenges and opportunities for Cape Town and the rest of the continent. We have the opportunity to capitalise on the influx of talented people to our cities, but must recognise that long-term infrastructure investment for transport, health and education, for example, must be prioritised.
The economic rise of Africa is also a constant in any megatrend discussion. Consider some statistics: the IMF estimates that by 2015, seven African countries will rank in the top ten fastest-growing economies in the world. By 2030, the IMF believes, Africa will have a larger middle class than India. Concurrently, consumer spending in Africa is expected to grow from $860 billion in 2008 to $1.4 trillion in 2020 – meaning that within five years, approximately 200 million Africans will enter the market for consumer goods. They will need transport, business and financial services, electricity and water, food, clothing, and certainly luxury goods. Any business that is not already actively operating in Africa should, at the very least, be planning to do so – or risk losing out on one of the biggest global economic opportunities of the next thirty years.
Climate change is already globally evident, and its effects are being felt in developed and developing countries alike. Expert opinion is that Africa is likely to feel the impact of climate change doubly. Not only do many studies point to the continent being heavily affected by climate change, but there is also evidence to suggest that Africa may be one of the regions least likely to absorb its impact. Climate change presents local business with opportunities, however. For example, the Cape has a robust agricultural sector. By leveraging technological innovation and research, markets for delivering on Africa’s growing food-and water-security needs can be opened up. Exporting agri-technology expertise to intensify farming operations across Africa represents a significant local opportunity, as does the effective application of global lessons in water efficiency.
The development of a ‘green’ economy is already underway. Vodacom, for example, recently replaced their roof tiles of their office in Century City with the largest solar installation on one roof in Africa. The array is predicted to generate 744 MWh per annum, which translates to a savings of 744 tons of CO² per year. Most telling, however, is the fact that the roof will be paid off in 5.5 years, based on the current Eskom rebate structure. With rising energy costs, and a proposed carbon tax in 2015, businesses will have to react in similarly innovative ways to meet the on-going challenge of climate change.
There is universal agreement that the global megatrend that is having the greatest impact, and which is arguably the least understood, is technological change. Experts point to the effect of technology on almost every aspect of daily life. Retailing, banking, upstream exploration, farming – all are being transformed by technology, underlining the inter-related nature of many of the trends themselves.
Education will either be the key to our collective futures or the albatross around our necks. Remote teaching opens possibilities for education institutions to broaden their reach far beyond traditional catchment areas. With four universities, Cape Town has an unprecedented opportunity to become the premier educational hub in Africa. Every technological opportunity to capitalise on this possibility should be explored, and the infrastructure to make it possible must be encouraged. For example, Stellenbosch University’s schools telematics program, where under-served schools receive lessons via satellite, should ideally be considered and rolled out as widely as possible, thereby directly addressing South Africa’s skills deficit.
It could be argued that technology binds the other global megatrends together. It facilitates globalisation, makes urban living more attractive, and allows talented people to work in ways that were previously impossible. The provision of goods and services across Africa is increasingly dependent on technology, and technological innovation is also indispensable in the quest for cost-effective solutions to the challenges of climate change. For Cape Town to thrive, it clearly needs to address key current issues, such as housing, transport, job creation, healthcare, skills development and education. For its long term economic and social sustainability, however, it is essential that a watchful eye is kept on global megatrends, and that their implications, and the opportunities they present, are fully exploited.