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In April 2020, Business Financial Services Ltd's Joint Managing director David Mainwaring started to monitor the way that the world was changing. David has lived, had businesses in and or worked in about 120 countries in the course of a long and varied business career. It is clear that the way we will live and do business in the future will change dramatically as a result of Coronavirus.
David, and his co-directors, decided to focus their research on the many opportunities that these changes have created with a view forming a company to capitalise those opportunities.
In broad terms these are David’s initial conclusions. He uses the word initial, because some major companies may survive the pandemic but they also could lose much of their status, their power and importance. David’s first conclusions related to the following countries.
The USA has been the dominant power for over 100 years during which time it has benefited from their processing of a high proportion of international financial transactions. Since 2008 it has been printing an increasing amount of money and it is expected that the amount is likely to increase substantially. It is quite possible that the world could lose confidence in the US Dollar which could be catastrophic to the world’s economy and the US economy in particular.
The USA has lost about 40% of its small businesses due to the coronavirus. These companies are unlikely to be restarted. It is likely that over 1,00,000 will become unemployed and could be unemployed for many years.
Due to the recent US election, it will take some time before we know how President Biden’s decisions will affect the economy.
Whether or not the country is able to overcome these and other pressing problems will determine whether the USA will maintain its leading role in the world. The outlook does not look good at the time of writing.
China has been growing its industrial and global strength over the last 30 years. It has disregarded human rights, it has dominated weaker countries with which it trades, it has sent many pupils to leading world universities and many of its citizens have held senior positions in some of the leading world companies. Information has been stolen by them and it has been used by China to develop their industries. Each of the above factors have helped them develop their industries and enabled China to be the second most powerful country in the world.
As a result of the world's shifting perception of China, many companies, and countries, have started to modify their procurement policies and are moving their procurement, and manufacturing elsewhere. This trend may continue but China will fight back. The future is far from certain. But there are additional considerations.
During 2020 and continuing into 2021, China has suffered from very serious flooding in the Yangtze River delta area. If the Three Gorges Dam collapses, which looks very possible, the resulting floods could kill 400 million people in the lower flood plains. China would lose most of its fertile productive agricultural land, and it's much of its manufacturing base.
Politically and militarily, China has recently become very aggressive with its neighbours and this could trigger a global conflict.
Within the next 6 - 12 months the direction of these changes will become clearer.
The UK has left the EU, and several European countries are challenging the EU over many internal issues and it is likely that more countries will leave the Union. If this happens the EU may collapse AS A POLITICAL AND ECONOMIC ENTITY within 5 years. The former EU countries will then be free to join other trading blocs. We are looking at a period of readjustment and fluidity in the world economy.
The UK has commenced negotiations to join the CPTPP trading bloc (together with the other 63 countries with which they trade agreements). This could further weaken China’s power.
Let us now concentrate on the opportunities and countries which David has identified and which are likely to prosper.
The new and younger leaderships in Africa are working to rid their countries of the scourge of corruption which has enriched the few and sabotaged the development that would benefit the many.
1. In the half century since Africa threw off the shackles of colonialism development has not fulfilled expectations and Africa still has poor road and rail infrastructure. Corruption and lack of transparency has bedevilled efforts to enable the countries of the continent to bring the benefits of their enormous mineral and agricultural wealth to their populations.
2. The African Continental Free Trade Area (AfCFTA) began on New Year's Day 2021. According to the World Economic Forum it aims to bring continent-wide free trade to 1.3 billion people in a $3.4 trillion economic bloc. Challenges including poor road and rail links, political unrest, and excessive border bureaucracy will not disappear overnight. Full implementation of the deal is expected to take years. The AfCFTA aims to bring together 1.3 billion people in a $3.4 trillion economic bloc that will be the largest free trade area since the establishment of the World Trade Organization. Supporters say it will boost trade among African neighbours while allowing the continent to develop its own value chains. The World Bank estimates it could lift tens of millions out of poverty by 2035. “There is a new Africa emerging with a sense of urgency and purpose, it also has an aspiration to become self-reliant,” Ghana’s President Nana Akufo-Addo said during an online launch ceremony.
3. Africa has a population of about 1.30 billion people with an average age of less than 20 years. About 80% of its population make their living from agriculture, but they only have one tractor per 4000 people, whereas in the UK on average there are 2 tractors per agricultural employee. Agricultural development needs to go hand in hand with industrial development so that improving agriculture does not create landless and jobless millions flooding into the cities and leading lives of abject urban poverty.
4. A substantial amount of land in Africa is available but it is not cultivated. Much water flows through Africa but little irrigation has been introduced. Due to the size of the continent and the varying heights above sea level almost any crop in the world can be grown in Africa. But there is little infrastructure and there are no supporting industries, processing facilities, supply chains, temperature control facilities, etc.
5. Many people are now moving from the country to the towns and cities. Over the past 20 years this has transformed many cities into thriving business hubs. Economic growth, in the ten fastest growing countries of Africa, has been at 7% or above during the last 10 years.
6. This presents huge opportunities but there are risks. Businesses intending to do business in Africa face challenges of theft, corruption, lack of infrastructure etc. Knowledgeable and experienced local partners with political connections are vital for success.
7. Business Financial Services Ltd is your ideal partner for developing business in Africa. The company is based in London, it works with African governments and businesses which will help them to be successful in Africa. It will also help African exporters to enter new export markets from around the world.
8. We bring together three vital components which will help Africans to develop their country and their economies.
a. Infrastructure and supply chain building projects need strong political support at the highest level of government. Business Financial Services are developing those connections to assist their clients.
b. Reliable and experienced construction and delivery partners ensure that the project is well built, completed, and delivered on time.
c. The third element is finance and financial services. Our finance partners have the knowledge and track record to source funding and secure the necessary financial security and guarantees to make sure that projects can go ahead.
Below, we are highlighting some of these opportunities which will be available to our clients on the Business Financial Services’ website. We offer the following services to our clients to promote their goods or services to potential buyers.
1. We maintain close communications with senior people in many African countries and will introduce our clients to them when opportunities in those countries arise and actively promote our clients’ products to governments or other outlets.
2. We help companies to raise capital or loans to enable them to develop their import or export businesses.
3. We arrange insurance facilities for the above companies.
4. We introduce clients to a wide range of professional companies which provide specialist services such as veterinary services, irrigation services, architectural services, financial services, etc.
5. We provide space on our website to promote our client’s goods or services whether they are importers or exporters.
6. We work with, not only companies, but industrial sectors and supply chains as well. For example, within agriculture, we are able to bring together the farm, the abattoir, the food processing, the temperature-controlled supply chain to the retailer, the hotel, the hospital or any other outlet within their country or for their export markets. We will constantly expand our connections and the range of services that we will offer to clients.
We will also monitor and work in The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and other blocks which the EU may join in the future.
Now that the UK has left the EU, India has become much more important to the UK. Trade between the two countries will develop rapidly. This, together with other Brexit exit developments will be the subject of future articles.