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Income protection payouts and Universal Credit

November 14, 2018

SAMI Consulting were pleased to see the latest news from the Building Resilient Households Group, co-chaired by SAMI Consulting’s Richard Walsh and Alan Woods, about their latest clarification on a range of policy types and related wording. In an article for the IPTF‘s November 2018 newsletter, Richard Walsh explains the news as follows.

In my last bulletin I covered the clarification the Building Resilient Households Group received from DWP on the interactions between means-tested State benefits and IP. A particular focus of our work has been on mortgage protection post the abolition of State support for mortgage interest payments. In summary, any income received from IP which is specifically intended and used to cover mortgage payments will be totally disregarded when entitlement to means-tested benefits is assessed. I know that many insurers are considering how to ensure that new policy wordings will be designed to ensure that customers can benefit from this clarification. And from an adviser perspective my view is that it would be worth documenting this at sales point.

On 1 November we launched, through the CII, (see article here and press release here) our latest clarification which covers term life, terminal, illness and CI policies. The key change is that Universal Credit (UC) legislation makes it clear that if a person uses their capital to pay off or reduce a debt, including a mortgage, they will not be treated as depriving themselves of that capital.   Once the capital has been used to pay off a debt, it will no longer be taken into account in the assessment of entitlement for UC.

Advisers should check, at the point of claim, if their client is in an area where UC has gone live. And whether the client is in receipt of a legacy benefit. Only claimants of UC, State Pension Credit and Housing Benefit for people over the qualifying age for State Pension Credit can benefit from the DWP clarification. You can check if your client is in a UC area by reading the ‘Where you Live’ section here: https://www.understandinguniversalcredit.gov.uk/new-to-universal-credit/is-it-for-me/

This is very important at claims stage because for legacy benefits the ‘deprivation of capital rules’ mean that if a customer uses capital to pay back a debt before the agreed date, they may be treated as still having the capital. This may occur  when, for example, they pay off their mortgage and the agreement says it is not due to be paid back for another 15 years or when they make payments to a flexible current account mortgage which reduce the outstanding balance on the mortgage. However the roll out of UC for new claimants is nearly complete and this complication will not arise post February next year for new claimants.

This does beg the question – what happens if it takes some time between receipt of a capital payment and actually using it to pay off a debt? Unfortunately the legislation does not allow for such a “breathing space”. In my view this does make a case for advisers who are selling term life etc policies for mortgages to consider some extra cover to tide customers over this period. The capital limits are the same for UC and legacy working age benefits and are based on the total capital of both partners combined. Up to £6,000 the capital is disregarded. Above that claimants are treated as having tariff income of £1 a week for each complete £250 of capital over £6,000 up to and including £16,000 – the cut off point.

Not covered in either release is Family Income Benefit but we have received clarification on that too. In essence FIB is treated as unearned income in the same way as IP. It is NOT treated as capital. The only exception would be if the customer were to commute it to a single capital lump sum, in which case it would effectively be the same as a term life or CI policy. I am aware of some policies which pay out an initial capital lump sum followed by a regular income. In which case it could be argued that the initial payment should be treated as capital and the payments that follow would be income. But there is no case law on this.

To summarise the complete picture for advisers:

  • IP remains an excellent option for mortgage cover and it pays out in circumstances that other policies do not. The key thing is to ensure that it is clear that the payment is indeed for a mortgage
  • Term life, TI and CI are also good for mortgage cover and especially so after the roll out of UC is completed for new claimants. However additional cover should be considered to ensure that a customer doesn’t have to eat into the amount they have available to pay off the debt for the period that they will not be entitled to means tested benefit
  • FIB does what it says on the tin. It provides an income for the period of the policy. Many people will also be entitled to non-means-tested bereavement benefits in addition to their FIB or term life policy

Written by Richard Walsh, SAMI Fellow and co-chair of BRHG, and originally published in the November 2018 IPTF newsletter.

The views expressed are those of the author(s) and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter here and/or browse our website

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Megatrends and how to survive them – Social structures

November 7, 2018

“Megatrends and How to Survive Them” is the title of our book published on 1st November this year, by Cambridge Scholars Publishing.

This is one of a series of blogs based on the work we have done for the book.

We chose Social Structures as a megatrend as we believe the changes in society are deep and long-lasting – a new paradigm will emerge:

  • Until relatively recently family structures were typically wide and extended, with a number of children and few surviving grandparents and perhaps aunts and uncles. Now, globally, as marriage becomes less the norm, as women have fewer children, as people live longer, family units may well consist of one child, one parent, grandparents, and several great grandparents.
  • As migration and urbanisation become the norm, new social structures replace those that have been in place for centuries – family members may be geographically remote, employment and work may be more transient, as may neighbours and community.

In addition to the trends of reduction in the number of children per woman, and the decrease in marriage, the increase in longevity is starting to cause stresses in society. This could cause shifts in attitudes to work in later life and the definition of social contribution to society.

Some implications of the new family structures are:

  • Single parent families will need more flexible working arrangements such as job shares and allowance for absence due to lack of backup.
  • More work for those “of pensionable age”.
  • As is found in China, one child families can result in people who find it difficult to be part of a group.
  • Flexible working arrangements, and adapting to new family structures, may cause re-assignment of work and work locations.
  • More allowance will need to be made for absence and presenteeism (present physically, but not mentally) due to illnesses both physical and mental.

The effect of these and other changes is reflected in the GINI index. The GINI index for a society is 100 if one person has all the wealth and the rest none, and it is 0 if everyone has equal wealth, so it is a measure of the gap between the rich and the poor.

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What this shows is that since 1820, which was roughly the start of the industrial revolution, inequality between countries has shot up. This is because the industrialised countries got rich and other countries didn’t.  This gap has started to reduce as more countries industrialise.

Historically within many countries there was high inequality. Industrialisation reduced this, with the post World War II period being one of relative equality in most countries. But inequality within countries is increasing again. All the trends that we can see suggest that the directions of travel of both these graphs will continue: inequality between countries is reducing, and within countries increasing.

Inequality within countries – both real and perceived – is likely to continue and lead to civic unrest and increasing regional conflicts. This sense of inequality is fed by a number of factors:

  • Increasing technological change (A.I., robots, etc.) alongside continued globalisation,
  • Decline in labour market protection,
  • Tax policies that benefit the wealthy.

Popular attention is likely to focus on unfair practices such as tax evasion and corruption.

Since health and social problems are worse in more unequal countries, the self-interest of organisations in improving low pay and working conditions would seem obvious. Not only would this benefit those less well-off but also those with more wealth.

Some questions you might like to consider, looking forward:

  • Thinking about the new social structures, how might your strategy and business model need to change in order to continue to be successful?
  • Who do you think you will be selling to, and what are networks and social structures?
  • How might your product/service offering need to change?

We live in interesting times!

Written by Patricia Lustig, SAMI Associate and MD, LASA Insight, and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

The views expressed are those of the authors and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at newreader@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

New Technology trends emerging in 2018

October 31, 2018

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Following last week’s post which updated the trends discussed in our blog at the beginning of 2018, here are another five trends that have emerged during the year and are showing immense growth in potential.

New entries

  1. 3D variety

3D printing has been around for decades, albeit mostly on the manufacturing fringes and for prototypes. In the last decade, it has assumed prominence but remained generally confined to plastics. Material options are widening however, as cost and time are mutually reduced. Such developments could optimize traditional material properties. With it, our very ways of mass-producing products could be about to change profoundly. For example, researchers from the Lawrence Livermore National Laboratory have developed a 3D printing method for creating stainless-steel parts twice as strong as traditionally made ones.In addition, the world’s first bio-inspired 3D printed cement paste has been produced, which refills when cracked and thus promises to make infrastructure more resilient to natural disasters and ageing.

  1. The walls have eyes: facial recognition.

Facial recognition technology is finally ready for its post-phone future. Questions remains as to whether as a society we are ready for its implications even as businesses roll out its use. Delta Air Lines is launching what it calls the first “biometric terminal” in the US, using facial recognition at check-in, security and boarding. Doha’s Hamad Airport wants to use the technology – seen in Dubai’s virtual tunnel-shaped aquarium- to eliminate the need for passports within 5 years. Since 70.4 percent of passengers want tech to help speed things up at the airport, and with 77 percent of airports and 71 percent of airlines considering biometrics options, we would expect airports to become the first widespread case use for the technology. Its wider use in society will almost certainly be more contested, however.

  1. Cognitive commerce

Artificial intelligence is hardly a new phenomenon – it could have featured as a top technology for every one of at least the last twenty years – but as capabilities increase, so do its implications. Some 47 percent of smartphone shoppers would like a service that automatically restocks everyday items, 63 percent of whom think most people will have a personal shopping advisor within three years. Meanwhile nearly one in three consumers globally say they plan on buying an AI device or personal assistant, but this is close to 50 percent in East Asian countries. It is only a matter of time – perhaps less than a year – before these personal devices mesh with in some with either Google’s predictive tech or Amazon’s recommendation engines. When it does, we will be on the frontlines, perhaps prosaically at first, of automated cognitive consumption.

  1. Mini me digital twin

Cognitive commerce may require a digital go-between along the lines of a digital avatar or virtual assistant, to represent us, prompt us or point us towards recommendations.Gartner sees mainstream adoption as early as 2020, along with speech recognition. We would therefore expect prototypes chiefly representing ordinary consumers, as opposed to brands, to appear in the interim. Some 48 percent like the idea of a digital alter ego; in-fact 46 percent say it would help improve the quality of their life. With digital identity also set to become a key industry and technology in its own right, the idea of our own personal digital twin – a trusted (by ourselves and those we interact with) verified, online presence could quickly become a key staple of digital life.

  1. The IoE

With 4,756 IoT connections now being made every minute, perhaps it is no longer enough for every company to be a tech company or even a digital company. The Internet of Everything is set to boom thanks to ‘…sticker-like electronics or sensors,’ that can be attached to the outer surface of any given object. This could add an Internet connection to almost any product, even without manufacturing changes. Thanks to synergies with other technologies, such as blockchain, around one-third of potential deployments are applicable across multiple industries. This brings a new disruptive wrinkle to the technologyand could move it out of the hype and experimentation phase into a new way of doing things.

Written by David Smith, Chief Executive, Global Futures and Foresight.

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at newreader@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

What’s Hot in Technology: 2018 October update

October 24, 2018

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Following our predictions for hot technologies in 2018, we provide a snapshot on the state of those predictions, an update of key developments in these areas and a rough assessment of our predictions. Those that have come true in some way are marked ‘realised’ while those that have yet to emerge are marked ‘not yet in view’. Those that will appear through evolution rather than a single point event are marked ‘ongoing’, while our picks that have been bolstered in some way by subsequent developments are marked as ‘emerging’.

 

  1. Hashgraph

Blockchain will undoubtedly create waves in 2018 and beyond, from the Bitcoin express through to practical uses in smart contracts and across countless industries. This is not to suggest that this new technology will not in time be supplanted itself by competitors offering improved features. Hashgraph, for example, claims to work at 50,000 the speed of blockchain, whilst proving mathematically fairer and using less energy. 2018 will see an explosion in rival technologies underpinning new cryptocurrency and ledger systems.

Where are we now: We posited that 2018 would see the emergence of rival ledger systems to blockchain, with hashgraph first and foremost amongst them. In August 2018, Hedera Hashgraphraised $100 million via a future token sale from institutional investors for its new commerce network based on its “hashgraph consensus” technology. The company suggests its ledger technology can function much faster, more securely, and at a larger scale than current blockchain technologies.

Status: Emerging

  1. Shoppable social

The lines between retail, social network and entertainment will blur to an even greater extent in 2018 than we have seen thus far. Amazon has already launched a shoppable social network called Spark whilst Buy+, a Chinese virtual reality shopping experience backed by Alibaba, engaged over 8 million users within a week of launching.’ Social video, and other virtual interfaces, could represent the future of retail since 2019 is expected to see video comprising 85 percent of net traffic and 50 percent of commerce arriving via mobile.

Where are we now: Our entry suggested that ‘…social video, and other virtual interfaces, could represent the future of retail.’ In March 2018, it was announced that Instagram was to expand its shopping features, allowing merchants to add shopping tags to their social media posts. This year it has also been reported that ‘…social shopping is being adopted by social media and customers alike, but only 26% of retailers have a formal plan in place for the digital transformation.’

Status: Realised

  1. Data becomes toxic

Data competency has already ordained winners and losers and in 2018, it will continue to do so, albeit from new perspectives. Data volume will overwhelm all but the most prepared since average human knowledge is doubling every 13 months – meaning, within a couple of years, the total information volume may double every 11 hours. Allied to volume is a common vulnerability in many data models. Many lack explicit consumer consent – especially via apps, and few have equivalent to ‘key facts’ in financial services. As consumers realise the value inherent in their data, the unspoken legal risk in data models will upend all but the most prepared. What data we hold and how we use it will be the life and death of our companies.

Where are we now: We suggested that ‘…the unspoken legal risk in data models will upend all but the most prepared. What data we hold and how we use it will be the life and death of our companies.’ GDPR in the European Union recognises this and has impacted on permissiveness in the use of personal data. While this dynamic still holds, we have already seen data issues impacting companies in 2018. Chief among them is Facebook, which lost $35 billion in market value following reports that Cambridge Analytica had unauthorized access to 50 million Facebook user accounts.

Status: Realised / Ongoing

  1. Employees+

Perhaps with an eye towards automation or else simply improving their marketplace standing, 70 percent of employees say they would consider mind and body-boosting treatments if it improved their job prospects. Although futuristic sounding, smart drugs such as modafinil are already reportedly widespread in academia, industry and beyond. HR policies may need revisiting to place guidelines for brainhacking and other routes employees will be seeking to gain an edge.

Where are we now: Plenty of articles have focussed on the augmentation of human work with A.I, but little new evidence further supports our reported assertion that ‘…70 percent of employees say they would consider mind and body-boosting treatments if it improved their job prospects.

Status: Not yet in view

  1. Self-inflating structures

With housing shortages contributing to acute market misalignments in some advanced economies, and the need for ‘insta-infrastructure,’ following catastrophes around the world, a new built form paradigm is required. Furthermore, companies will increasingly value flexible solutions to their office space issues. 3D printing already provides a platform for addressing these issues. In 2018, more tech-based solutions will appear to compliment it, such as MIT’s self-inflating structures project that works as a ‘…functional tool for things such as distributed assembly processes, transportation of goods, emergency response and architecture.’ Flexibility in the built form could radically redraw the economy; in 2018, we expect proto examples of this change of direction to hit the headlines.

Where are we now: Possible developments in 4D printing promise an era of programmable buildings, perhaps including ‘self-inflation’ or self-building. Furthermore, in May 2018, a team of Polish designers won a competition with its design for an inflatable skyscraper designed for use in emergency zones. ‘The building is called “Skyshelter.zip” and it’s envisioned as a structure that can provide shelter for refugees from natural disasters such as hurricanes, tornadoes, and earthquakes. Skyshelter.zip is a tower that can be as tall as 328 feet high, so it could provide room for up to 1,000 people on multiple floors. It could also serve as a first-aid dispensary, or even be configured as a vertical farm to produce badly needed food in a disaster area.

Status: Emerging

  1. Interaction 4.0

The way we will buy, build and use technology is changing rapidly, which means the teams and ecosystems that build it and run it will need to change too. Designers should be especially cognizant of this. In 2016 mobile net use overtook computer net use, whilst by 2020, ‘…50 percent of all searches could be voice searches, and around 30 percent will involve no screen whatsoever.’ VR, holograms, AR and haptics will all feature; 2018 will see the omnichannel become a lot more crowded.

Where are we now: Interaction 4.0 is well underway, perhaps to the point of this being too mainstream to be an individually identifiable trend. Accenture (Feb 2018) reported that 80 percent of executives believe it will be important to leverageextended reality solutions to close the gap of physical distance when engaging with employees and customers.

Status: Realised 

  1. New consumer industries (from colliding technologies/industries)

Consumers ‘…demand experiences, not just products, and have become active participants at every stage of the value chain’. In many cases this erodes industry boundaries and creates new markets at the intersections of collision, such as wellcare where health, wellness and beauty collide. There is no one single technology that is driving this Hot trend; rather the realisation that B2B2C markets are reconfiguring into delivering desired consumer outcomes. How to organise for this – in terms of aligning organisation structure to technology provision – will be key.

Where are we now: Given the blurring nature of many new industries, it often requires a little distance before we can say ‘this is new,’ as opposed to company xyz is doing something different(ly). What we currently perceive as new revenue streams, or mashups may in time become their own distinct industry, or more likely, ecosystem.

Status: Ongoing

  1. Photonics

As an intermediate step on the path to quantum computing, photonic computing could provide the ‘…same accuracy as the best conventional chips while slashing the energy consumption by orders of magnitude and offering 100 times the speed. By 2020, larger systems capable of achieving multiple Exaflops are forecast to arrive.That would enable even handheld devices to have AI capabilities built into them without outsourcing the heavy lifting to large servers, something that would otherwise be next to impossible.’ All data could therefore be processed in near real-time, at the edge of networks such as the IoT. IT strategies, consumer behaviour and the architecture within which to operate would all shift as a result, some in unpredictable ways.

Where are we now: Despite a host of research milestones, and some setbacksin 2018, the promise and premise of photonics remains one for the near future. One researcher in 2018 suggests that ‘…if you look at photonic integrated circuits today, the complexity is comparable to the complexity the microelectronics industrywas integrating into their circuits in the mid-1970s.’

Status: Ongoing but tipping point not yet realised.

  1. Personalised analytics

With McKinsey estimating around a third of the current CEO remit is already outsourceable, and examples of mass automation of management roles already appearing with hedgefunds and beyond, 2018 will see a clamour from professionals seeking to future-proof their roles. Ironically, AI may provide an answer. ‘Personalized analytics (will) become mirrors and lenses for refocusing professional effectiveness, says MIT research fellow, Michael Schrage MIT research fellow. ‘Michael envisions selvesware serving the role of a perpetually present leadership coach providing real-time advice on executive behaviour.’

Where are we now: In many ways we are already surrounded by personalised analytics, but even within the narrower work based confines in which we identified it, examples are emerging. In October 2018, it was reported that Chinese giant Baidu is reportedly testing neural networks that can match job seekers to jobs. Further evolution of the system could morph into one where people can self-analyse skills, have remedial courses or books recommended to them or have ideas vetted by AI.

Status: Ongoing

  • Machines have their own bank accounts

There can be little doubt that widespread automation brings about a raft of societal and ethical questions. Hitherto fringe ideas will gain currency as the automated economy takes hold. The rights of robots to the fruits of their own production may become one such issue in the near future. The Commonwealth Bank of Australia is reportedly looking into the implications of a future in which ‘…machines have their own bank accounts and pay for replacement parts and engineers to service them,’ whilst the European Union has already called for ‘the consideration of a Civil Law Rule of Robots’. Intellectual property rights could flow from this, suggesting machines could become their own economic agents in the near future to a degree currently considered unthinkable.

Where are we now: As far as our prediction went, this was perhaps the most outlandish, despite citing sources of some banks already considering the implications of this. To our knowledge, no machine has yet started accumulating personal wealth. However, in the U.S, ‘…legal scholar Shawn Bayer has shown that anyone can confer legal personhood on a computer system, by putting it in control of a limited liability corporation in the U.S. If that manoeuvre is upheld in courts, artificial intelligence systems would be able to own property, sue, hire lawyers and enjoy freedom of speech and other protections under the law.’ Perhaps the bank account is not too far away after all?

Status: Not yet in view.

The next blog will look at new emerging trends seen during the year so come back soon.

Written by David Smith, Chief Executive, Global Futures and Foresight.

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at newreader@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

 

Megatrends and how to survive them – Migration and Urbanisation

October 17, 2018

Megatrends and How to Survive Them is the title of our book that is due to be published on November 1st, by Cambridge Scholars Publishing.

This is one of a series of blogs based on the work we have done for the book. In it, the third Megatrend we explore is Migration and Urbanisation.  We chose this because we now have more people living in urban areas than live in rural areas for the first time in history.

People migrate either because they are fleeing bad situations (the minority of migrants) or because they are aware there is a better life somewhere else and they choose to move to find it.  About one percent of the world’s population is “an asylum seeker, internally displaced or a refugee”. However, as more people become middle class (see our blog on the first Megatrend, Population), they have the ability to make a choice about where they live.  Most of you reading this are probably migrants: if you no longer live near where you were born, you, too, are a migrant.  More than one in ten of us is a migrant, many from rural to urban areas within a country, or to another country.

In the 1950s the world population was around 2 billion and more than two thirds of people lived in rural areas.  Today it is more than three times that and more people (roughly 4 billion of 7.6 billion) live in urban areas than rural.

Migration for blog

As the figure shows, the trends are for Asia and Africa to become as urbanised as Europe and North America.  Urbanisation is expected to continue while rural populations shrink. Many of the fastest growing urban areas are relatively small cities in Africa and Asia.

As jobs migrate to cities, their economies are also moving from being mainly manufacturing based to delivering services.  Migration to cities leads to opportunity: the growing diversity can feed creativity and innovation; it can also help countries with falling population levels care for the young, the ill and the elderly.

Today’s growing cities face many challenges.  Not just the obvious ones such as developing infrastructure to support the growth, but considering health, education, waste management, logistics of food supply and environmental change.  Often little or no long-term planning is done: what planning is done is frequently for today and not considering what will be needed in the future.  Many cities were designed for the times of our grandparents, not for today.  To meet the future, cities will need to become Smart Cities: urban areas that use electronic data collection sensors to supply information to help them manage their resources and infrastructure more effectively and efficiently.  This could improve the quality of life for their residents across buildings, mobility, infrastructure, public space, social and community programmes and civic governance.

Living in urban areas can have problems.  With high accommodation costs, migrants and those with no employment or low wages congregate in poorer areas – which, in many cities means informal settlements, slums, shanty towns and run-down areas.  These areas are usually not part of the urban planning if it exists, so they grow in a haphazard way lacking infrastructure, transport, safety, water and public services.  High youth unemployment (where young males outnumber young females in informal settlements) is correlated to rising levels of crime and violence.  When many people live together in small spaces, mental and physical health can be affected.

And of course, two-thirds of the cities in the world today are on coasts, vulnerable to flooding and sea level rise.

Some relevant articles:

https://www.raconteur.net/technology/the-city-in-2030 with some views of how a smart city will look.

http://www.theafricareport.com/North-Africa/africas-15-richest-cities-in-2030.html which these are likely to be.

And for handling risks that can arise: https://www.ted.com/talks/robert_muggah_how_to_protect_fast_growing_cities_from_failing.

Some questions you might consider:

  • How does urbanisation affect your market, products and services? How might you need to adapt them?
  • How could urbanisation affect the people you work with? Will it make the skills you need easier to find?
  • Where will you locate your business and where will the people you work with live and work?
  • What opportunities might there be for developing new forms of social frameworks and support in both urban and rural areas?

We live in interesting times!

Written by Patricia Lustig, SAMI Associate and MD, LASA Insight, and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

The views expressed are those of the authors and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at newreader@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

Will the 21st Century Be African? Part 2 – Social Changes

October 10, 2018

In the first blog of this series, I set out a quick overview of the factors that might make Africa the most important continent by the end of this century. In this blog I look at the social and demographic change that will underpin the transformation of Africa as a key player in global politics and trade.

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By the end of the 21st Century, Africa’s population is projected to be over 4.1 billion (as I write it is 1.2 billion).  It will be the most populous continent on earth.  By 2050, the African population will be 2.4 billion, and, more strikingly, one third of the world’s youth population will be African, according to a report prepared for the EU Institute for Security Studies (ISS).  This growth will be greatest in West, Central and East Africa.

Today 60% of Africa’s population is rural.  This century’s massive population growth will see the rise of African megacities.  According to projections by Canada’s Global Cities Institute, by the end of the century, 13 of the world’s 20 biggest megacities will be African.  The three biggest cities in the world will be – in reverse order – Dar es Salaam (70 million), Kinshasa (83 million) and biggest of all, Lagos (88 million).

To put those populations into perspective, the largest city today is Tokyo (37.5 million).  100 years ago it was London (4.7 million).

Africa will see a century-long surge in its human potential.  The growing population will mean a massive growth in GDP and in Africa’s international importance.  It is reasonable to assume that global youth culture will have an increasingly African flavour, and an African team will finally lift the World Football Cup – which will itself mark Africa’s “arrival” at the global top table.

But whether Africa’s baby boom will prove to be an undiluted boon, a mixed blessing, or a curse will depend on a number of key variables.  Some are – at least at this point in the century – outside the direct control of Africa and its governments.

  • Technological developments will present the challenges and opportunities – the trajectory to modernity, education and skills for Africa’s young and burgeoning population.
  • Climate change will define the challenges to be overcome in terms of food production and access to water to support the population.
  • Global economic developments will mark out the terms of trade as Africa seeks to provide growth and opportunities for its people, and secure access to investment to underpin a path to self-sustaining development.
  • The world’s current major economic powers will all seek to trade with Africa, but the state of relations between those powers will affect the terms of trade – whether there is an attempted reversion to the Cold War, where the power blocs backed African “strong men” in order to seek exclusive influence, or whether there is a more peaceable globalised economic system.

We will look at each of these in the rest of this series.  But in order to make the rising population into as great an opportunity as possible, African nations themselves will need to address a number of issues including:

  • Health and health care: immunisation and vaccination, utilising technology to empower people to manage their own health and easily and quickly to access health advice and diagnostics
  • Nutrition: growing the food and providing access to clean water to support a well-nourished and healthy population
  • Education: allowing the booming young population access to the knowledge and skills they will need to become players in the world that the 4thIndustrial Revolution is bringing into being; and in particular, educating women to allow them to achieve their full economic potential, and control the sizes of their families in the future
  • Governance: tackling corruption and providing the effective governance that the African megacities will need in order to prosper and be habitable, and effective education and health care.

The risks Africa faces are obvious, but none the less real and significant for that.

  • The “baby boom” in Africa – assuming it is followed by a reduction in birth rates, as has happened elsewhere in the world as women become better educated – will lead to the problem of an aging population towards the end of the century
  • Poverty & unemployment will be massive, if the African economies fail to develop in a way that allows them to utilise the huge increase in human capital at their disposal
  • African megacities may experience slum conditions unprecedented, even in the world’s current developing megacities (or in Dickensian London) leading to squalor and the risk of pandemic diseases. It is likely that they will do so at some time, given the rate at which they will grow.  A major test of African governance will be how City and national governments match up to the task of developing an infrastructure to support megacities, their populations and economies and alleviate the slum problems
  • The drift into megacities from a predominantly rural population may destroy important social and familial structures, leading to an inability to provide the social care and multigenerational care necessary in a rapidly changing society
  • Africa could be vulnerable to conflicts – whether tribal, cultural or religious, especially if there is widespread unemployment, meaning large numbers of young men with no means of making a living
  • There may be a “brain drain” both within Africa and beyond, as the brightest and best of Africa’s young people seek to make a better life for themselves and their families. If the other risks listed above come into play, the brain drain effect will be even greater.

Watch This Space

In the next blog in this series I will look at technology, and the risks and challenges it presents for Africa as it grows.

Written by David Lye, SAMI Fellow and Director and Jonathan Blanchard Smith, SAMI Fellow and Director

The views expressed are those of the author and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at newreader@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

Megatrends and how to survive them – Shifting Values

October 4, 2018

“Megatrends and How to Survive Them” is the title of our book that is due to be published on November 1st, by Cambridge Scholars Publishing.

This is one of a series of blogs based on the work we have done for the book. We chose Shifting Values as a megatrend for a number of reasons:

  • Until relatively recently much of the global population was concerned with surviving wars, famine and plague. Wars are still present in some areas of the globe, but affect fewer people than in previous generations. Famine is still a problem in localised areas but more people are obese than are malnourished. And though there are ongoing concerns over pandemics, international responses have improved to head these off (cf response to most recent Ebola outbreak).
  • Until recently much of the global population was poor. Again, the situation varies across the globe and within countries, but the figure shows how different the world is now from even 40 years ago.

Megatrends 4.1

  • With this increase in wealth has come increased education. Literacy rates among women still lag behind that of men in some parts of the world, but overall, we can say that by 2025 there are expected to be more graduates than the total population in 1945, 2.5 billion. The second figure is from “Beyond Crisis: Achieving Renewal in a Turbulent World”:

Megatrends 4.2

“For the first time, the number of people in the middle class surpasses those living in poverty,” says World Bank President Jim Yong Kim. Putting these factors together, more people than ever before now have choices.They also now have a basis for making decisions about what is important to them.

Once basic needs are met, Maslow’s hierarchy suggests that people are motivated to look for ways of belonging, for esteem and self-actualisation. The emergence of a global middle class means that more people in all regions seek ways of realising these. This sometimes results in migration or may lead to new attitudes to their work/life balance or their role in society. It is this change in attitudes to work/life balance and role in society that we capture in the book under the heading of Shifting Values.

Generational differences are making themselves visible globally. Some differences between generations in different geographies are the result of history in that region, other differences result from the ubiquitous reach of ICT via TV, smart phones and the internet. There are already many similarities among globally. This is likely to be because there are more similarities between people who are middle class (regardless of which country they live in), than there are differences.

The key generational discontinuity seems to be that Millennials – born between 1980 and 2000 – think more globally and are more techno-savvy than previous generations. They worry about government policies and social inequality, lack of opportunity, and are willing to move countries and regions to better themselves. The number one reason Millennials leave organisations is due to lack of personal career opportunity within their parameters of work/life balance and job satisfaction. Millennials are exhibiting a shift from consumerism to shared experience: tourism, leisure and sport. There is also an increasing acceptance, in many regions, of aspects of sexual diversity e.g. trans, non-binary, and gender-fluidity.

Statistically, Millennials account for a quarter of the world’s population. They will make up three quarters of the global workforce by 2025. Generation X and Millennials outnumber traditionalists, those born before 1945, but they do not vote as consistently. This is sometimes because they have less of a sense of belonging, or less respect for the results of the democratic process.

The other shift in values, visible across generations is a wider interest in spiritual aspects – of self or others – sometimes expressed as religion, sometimes as mindfulness or wellbeing. Religion has, of course, been a source of divisiveness over the millennia, whereas mindfulness is inwardly focused.  While in the global north, the influence of religion is in decline, this is not so in much of the global south.

Some questions you might like to consider, looking towards 2032:

  • Thinking about shifting values in your country, how might your strategy and business model need to change in order to continue to be successful?
  • Who do you think you will be selling to, and what are their values?
  • How might your product/service offering need to change?

We live in interesting times!

Written by Patricia Lustig, SAMI Associate and MD, LASA Insight, and Gill Ringland, SAMI Emeritus Fellow and Director, Ethical Reading.

The views expressed are those of the authors and not necessarily of SAMI Consulting.

SAMI Consulting was founded in 1989 by Shell and St Andrews University. They have undertaken scenario planning projects for a wide range of UK and international organisations. Their core skill is providing the link between futures research and strategy.

If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at newreader@samiconsulting.co.uk and/or browse our website at http://www.samiconsulting.co.uk

 

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