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Will the 21st Century Be African? Part 3 – Uses of Technology

December 12, 2018

 

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This is the third in a series of blogs on the factors that might make Africa the most important continent by the end of this century. In this blog we look at the ways in which technology could help Africa to match its population growth with economic and social progress.

By the end of the 21st Century, Africa’s population is projected to be over 4.1 billion (today 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.

The Fourth Industrial Revolution is a global phenomenon involving the rapid evolution and (importantly) the interaction between new technologies including: big data, artificial intelligence (AI), computing, connectivity, robotics, genetics, biotech, nanotech, and sustainable energy generation and storage.

In this blog, rather than simply rehash what has been written many times before about the huge potential of these technologies, we identify how some of them might work in a specifically African context, help to address some specifically African problems, and help to bring about an African transformation in this century.

Smart megacities

In the previous blog we described how the population surge would mean that Africa was projected to have 13 of the world’s biggest 20 megacities by the end of the century, including the three biggest: Lagos, Kinshasa and Dar-es-Salaam.  It is likely that those cities will grow in a chaotic, sprawling and largely unplanned way, as was the case with many of the megacities of the 20th century.  Technology will be critical in determining how well these cities can function, and their effectiveness in fostering African economic growth and competitiveness.  Key challenges will be:

  • Reliable energy supplies – probably based on renewable, locally generated and stored power
  • Reliable connectivity – a 5G infrastructure will be critical to Africa’s success
  • Reliable transportation and distribution networks – using clean vehicles, a sharing infrastructure and extensive use of drones to mitigate the inevitable road congestion
  • Access to education and health care – using mobile technology and AI to make these services more accessible and more economical
  • Improving public health and hygiene – using advances in biotech to help with the task of purifying water and genetech to combat insects and other pests that spread disease
  • A thriving business environment – based on property law, with verifiable and enforceable rights
  • Resilience – the capacity to guard against, and mitigate natural and other shocks

Below are some specific examples, but before looking at these, it is important to recognise that Africa’s success or failure: whether Africa emerges as a global leader over the century, or remains subject to the greater economic power of others, will depend crucially on the extent to which it is able to harness the technologies of the 4th Industrial Revolution both to tackle existing economic, social and environmental challenges, and to build strength, resilience and self-sufficiency for the future.

Energy

But turning to the positives, in Rwanda only a just over a third of households has access to mains electricity.  Although Rwanda has useful natural resources – it derives 56% of its electricity from hydro – it would have major physical and geographical problems in building a traditional national grid, given the mountainous and often sparsely populated nature of the country.  Instead, Rwanda aims to deliver off-grid electricity to a further 22% of households using thermal, methane, peat and solar energy.  And as the price of generation and storage falls, it will progress further.  Energy without a grid will be more resilient, easier to repair and maintain, and better suited to Rwanda’s geography.  It will also be cleaner and more sustainable.

Health

Just as Rwanda has the potential to “jump the shark” by building an electricity infrastructure that does not depend on a national grid, so the opportunity exists to take health care and education to people without the need for an expensive physical health infrastructure.  80% of sight loss is avoidable.  Andrew Bastawrous, CEO and co-founder of Peek Vision, has established in Kenya, where he lives, a system that allows state of the art eye screening to be available to a poor and widely dispersed rural population via smartphones, carried by health care workers on bicycles and recharged by the use of solar rucksacks. Test results can be sent to central collection and analysis points and results communicated back to people and their families.  This could apply equally well in Africa’s teeming megacities of the future.  In addition, the ability to pinpoint those who need help, and link to local leaders is a vital tool with potentially wider adaptation for both health and education.

 

Genetics & Biotech

Turning to the application of genetics, throughout Africa, sleeping sickness, which is spread by the tsetse fly, has in the last century killed hundreds of thousands of people, and 70 million people are at risk of the illness.  The genome of the tsetse fly was successfully mapped by a coalition of Western Universities in 2014, and now scientists are using that genetic information to reduce or eliminate the spread of the disease. The aim is to eliminate sleeping sickness as a problem in parts of Africa as early as 2020, and transfer knowledge and establish research programmes in Africa itself to allow Africa to lead the fight.  In the same way, companies are now bringing to market new biological treatments to purify water more effectively and more cheaply than ever before.

Blockchain

In a later blog we will look at the economic drivers of change in Africa.  In the context of this one, it is important to recognise the potential value of blockchain technology in helping to establish effective and enforceable property rights, and facilitating online access to finance and commercial activities – such as retail and peer-to-peer lending.  The big Corporations are already starting to investigate the opportunities.  The Blockchain Africa Conference is now an annual event.  But African actors as well as international corporations are entering the lists.  As Africa moves into the future in technology, blockchain represents a decentralized and largely incorruptible ‘truth engine’, and has the potential both to facilitate easier payments, promote SME business, and mitigate a number of identity management and transactional problems that have bedevilled Africa.

Risks

These examples all provide grounds for optimism that Africa can overcome the challenges, and seize the opportunities of the continent’s rapid growth in this century.  But, inevitably, there are risks inherent in technology that could move things onto an altogether less happy trajectory:

  • Technology may exclude and/or exploit those who need it the most – the poor, women and girls, people migrating to the megacities in search of a future
  • Technology opens up greater opportunities for crime, in particular cyber fraud and theft – hence the importance of blockchain as a defence against this
  • It may also become more an instrument of war and insurgency – intensifying internecine conflict, and exploited by powerful elites to bolster their dominance
  • Genetic and biotech experiments may go wrong – for example attempts to use genetics to “modify” the malarial anopheles mosquito might backfire, and lead to more dangerous and resilient strains of the insect
  • Megacities could become choked by unplanned developments and traffic, and choked by toxic air and water, as well as sinks of crime and human exploitation.The putative cities of 70- and 80-million are an unprecedented experiment in human society

And of course, the effects of global warming, and other environmental catastrophes, such as regional water and food shortages, could throw Africa’s development off course, and towards the negatives listed above.  In our next blog we will look at the environmental drivers of change, and the massive challenges Africa will wrestle with, 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

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What’s Eating Europe?

December 5, 2018

This blog summarises the big issues that dominated #ESPAS18, the Conference of the European Strategy & Policy Analysis System, held in Brussels on 28/29 November.

The Rise of Populism

The rise of populist parties and politics within Europe and beyond is worrying the EU and its institutions.  Within Europe, the Governments of several Central European member states, Italy, and the rise of populist opposition in other states – not to mention the vote for Brexit in the UK and the gilets jaunes demonstrations in France – marks a challenging departure from the centrist liberal democratic values that underpin the EU.  The 2019 European Parliament Elections will be interesting. What if the populists win (unlikely but not impossible) or hold a large chunk of seats in the new Parliament (entirely possible)?

Beyond Europe’s borders, the election of President Trump, as well as other populists in Turkey, Brazil, the Philippines and elsewhere strengthens the feeling that existing multilateral institutions are under threat.

ESPAS heard evidence from Daniel Drezner, Prof of International Politics, Fletcher School of Law & Diplomacy, that populism in the US may be nearing its limits, and that it may be spawning a counter-reaction.  This was a welcome message to many at the Conference.  On the other hand, other speakers warned that things would get much more challenging.

Will Populism produce its own antibodies, or will the 4thIR fuel the continuing move away from multilateralism and the liberal consensus?

The 4thIndustrial Revolution and the Rise of the Global Corporations

Frans Timmermans, First Vice-President of the European Commission observed that the 4thIndustrial Revolution means different things to different blocs:

  • For China it’s about extending state control
  • For the US it’s about the growth and exercise of big US corporate power in the world
  • For Europe it’s about morality and democracy: if democracy can’t control the 4thIR, people will look elsewhere for answers

It seems likely that whatever meaning we place on it, the 4thIndustrial Revolution will usher in more disruptive change to people’s employment and standard of living, and the prospects of young people, who already suffer high rates of employment across the EU.  Those affected adversely will be more receptive to populist politics. The tide of populism may continue to rise.

The message of ESPAS was clear: we need to embrace the 4thIndustrial Revolution: change is inevitable.  But Europe’s desire to control and regulate it may be impossible in practice.  We heard that last year 40% of capital investment in AI went to China, 38% to the USA, and the remaining 22% was spread around the rest of the world including Europe.  If the US and/or China lead the 4thIndustrial Revolution, then it will be likely to have American and/or Chinese characteristics.

Will Europe be able to shape the 4thIR, or will it be swept along in its wake?

The Economic Outlook

There was some encouragement about the relative economic recovery in the state of the European economies, but speakers warned that much of the damage of the years since the crash had not yet been undone, and that there remain pockets of relative poverty, as well as high unemployment, and skewed patterns of debt across the Eurozone.

Looking to the future, Europe lags behind the US and China in investment in infrastructure and Research & Development (for example, the figures above on AI investment) and any rise in unemployment as a result of the 4thIndustrial Revolution will reduce the revenue from employment-linked taxes, which are currently 48% of revenue across the EU.  Where will Europe rank among the economic heavyweight contenders?

Will Europe rank among the economic heavyweight contenders or will it become an economic middleweight?

Europe in the World

Speakers from Asia and the Middle East observed that Europe had declining influence in the world. From being one of the main influences on developing nations and their politics and economics, Europe was now lagging far behind other powers.

Against this background, the competitive advantage enjoyed by the USA and China in AI and other cutting edge technologies suggests that Europe may be on a trajectory of declining influence.  This comes at a time of global threat, with the rise of non-state groups destabilising countries and regions, and the spread of frozen conflict, as well as the resurgence of Russia, and regional powers tempted to follow undemocratic models of governance. One speaker warned that Europe was ignoring the threat posed by Russia.  Others said that Europe has “gone to sleep” since 1989.

Europe is not alone in being concerned about this.  Liberals beyond Europe want to see Europe be more assertive in promoting its values.  And, from a US point of view, Bruce Stokes, Director, Global Economic Attitudes, the Pew Centre took an Atlanticist view, warning that the US and Europe were declining in influence, and therefore had very little time to seek to influence the upkeep (or reform) of multilateral rules-based global governance.

More encouragingly, we heard from E Gyima-Boadi, Director of Afrobarometer, that support for democracy in Africa is strong, about 70% (not following the downward trend in the west).  Also there is support (75%) for term limits for office holders, and a growing willingness to protest, especially among the rising numbers of middle class and young people.

Economics aside, what can and should Europe do to promote western liberal and democratic values?  What are the prospects of success?

The Demographics of the Global Village

Based on UN Demographic Projections, the West (Europe and North America) will comprise only 8% of the world’s population by the end of this century.  What price European values when the World is much more Asian and African, and the economic centre of power has shifted back to Asia (where it lay for centuries before the 1stIndustrial Revolution).

What Is to Be Done?

The mood at the Conference was mixed.  There was a sense among some of “declinism” – the sense that Europe has fallen behind the leaders, and will fall further back as the century progresses.  Others believed that European values were of a superior character, and could still win through. Clearly the EU wishes to do what it can to promote a multilateral, rules-based system of world governance based on liberal, democratic values and with proper transparency and accountability in place.  But does Europe have the economic heft and political will to rise to the challenge?

ps. Don’t mention the Brexit

Had there been British Brexiteers at the Conference, they might have been surprised and even perhaps disappointed at the lack of discussion of Brexit.  It featured in the various discussions of the rise of populism, and there was some regret at the UK’s imminent departure.  Ramon Valcarel Siso MEP, a Vice-President of the European Parliament, described Brexit as one of the saddest events in the history of the EU.  But the prevailing mood was that Brexit is a done deal, sad though it may be, and that Europe needs to focus its entire attention on these future challenges.

Written by David Lye, 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 – Economic Activity

November 28, 2018

Megatrends and How to Survive Them is the title of our book published by Cambridge Scholars Publishing and available on Amazon.

This is one of a series of blogs based on the work we have done for the book. We chose Economic Activity as a topic for discussion because the structure of much economic thinking is being challenged by the megatrends.

The economic megatrends are that economic growth will continue and the average GDPs of countries and regions will tend to converge. Growing returns to capital at the expense of labour means that multi-nationals will increasingly impact local economies, and that there will be growing inequality within countries.

The impact on economic thinking comes from (at least) three directions.

First, economist and social scientist Kenneth Boulding made the point that “The classical economic taxonomy of the factors of production into land, labour and capital is too heterogeneous to be useful; know-how, energy and materials are a much more useful taxonomy in understanding productive processes.”

Over the past decades, each of these has seen a substitution: of non-human for human sources of energy, automated control systems for humans as a source of process control, and the embodiment of knowledge and know-how in process plant, and equipment for knowledge and know-how embodied in production labour.

There has been a persistent trend to use mechanical energy from non-human sources in place of mechanical energy from human and animal sources. This substitution is approaching completion.

Second, almost every production process requires process control. Increasingly automated control systems are displacing humans as a source of process control, for example driverless vehicles. This substitution will continue to play out over the next few decades.

Over the next decade, almost every production process is informed by knowledge and know-how. Originally, the humans who did the work and provided process control, also provided the knowledge and know-how needed for production. Increasingly, the knowledge and know-how are embodied in the plant and equipment. The generation of knowledge and know-how is highly specialised and is easily replicated. This is the domain of the Connected World megatrend.

Together these substitutions, as they work out, have profound implications for human societies. As humans play a smaller and smaller role in production, payments for labour will not be adequate to be the main means for accessing the goods and services that can be produced. And, most of the value created in production will accrue to the owners of the process. They are then able to buy more, that, in turn, generates even more income. The result is that we are witnessing increasing concentrations of wealth globally. While the expansion of the middle classes in Asia is a dominant force for change in our timescale, the underlying structural factors mean that inequality of wealth and the nature and role of work represents an ongoing challenge for society and economic policy.

Megatrends 7Third, in Doughnut Economics, Kate Raworth reminds us that economic growth was not at first, intended to signify wellbeing. Simon Kuznets, who standardised the measurement of growth, warned: “The welfare of a nation can scarcely be inferred from a measure of national income.” While economics in the 20th century took as its dominant model “rational economic man”, she argues that the aim of economic activity should be economies that “make us thrive…”

The central image in mainstream economics is the circular flow diagram. It depicts a closed flow of income cycling between households, businesses, banks, government and trade, operating in a social and ecological vacuum. Energy, materials, the natural world, human society, power, and the wealth we hold in common … all are missing from the current economic model. Unpaid work is ignored, though no economy could function without it. Like “rational economic man”, this representation of economic activity bears little relationship to reality.

Raworth embeds the economy in the Earth’s systems and in society, including the flow of materials and energy. She also includes people as more than just workers, consumers and owners of capital. The resulting doughnut model consists of two rings. The inner ring of the doughnut represents a sufficiency of the resources we need to lead a good life: food, clean water, housing, sanitation, energy, education, healthcare, good government. Anyone living in the hole in the middle of the doughnut is in a state of deprivation. A billion people live in the hole in the middle (Level 1 on Hans Rosling’s categorisation in his book Factfulness).

The nature of the outer boundary is more fluid. We have breached the outer boundary in several places by using up resources faster than they can be replenished by the ecosystem. There is evidence to suggest that prosperous societies become more environmentally aware and better at protecting it, and that technology is finding ways to avoid the zero-sum game, e.g. renewable energy, biotech, and nanotech as an aid to recycling etc. As the population continues to increase and push up against resource limits, the world may need this type of integrative framework within which to set conventional growth measures and to add new economic measures.

For instance, some models start to build in the factor that many people now have choices and may not be driven by economic/financial factors in making decisions. This is a major challenge to many existing economic models. As people become wealthier, they may choose to spend their time in different ways, on no cost experiences, rather than driving for more wealth or accumulating more goods.

So, for leaders, the questions to ask themselves and their organisations could be:

  • How does growing inequality of wealth affect your organisation, supply chain and customers?
  • Do you assume that rational economic man is the dominant model? Have you tested this with people in your organisation and outside?

We are very grateful to Dr Robert Hoffman and Willem Londeman for their significant inputs to this blog.

We live in exciting 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 Scientist Live 2018 – a review

November 21, 2018

The “New Scientist Live Festival of Ideas and Discovery” took place at ExCel London from 20th-23rd September, the third in a series of annual events started in 2016. I attended on the Saturday.

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The show was once again divided into five zones: engineering, technology, humans, earth and cosmos, but better laid out than for the first show two years ago.  The stage areas had been given more space allowing more people to attend the speakers’ lectures. While the major exhibitors included big players such as BAE Systems, the European Space Agency and Shell as you would expect, it seemed to me that there had also been an increase in the number of stands aimed at families and trying to attract children to science.

Thus, “Mad Science” set out to inspire primary school aged children on a scale that made a difference. Currently, 30,000 children take part in a Mad Science After School Club. The “Little School of Science,” running holiday camps and science clubs, was a place to learn, experiment, explore and play for 3-13year olds. With a wider appeal, “Maths in the Real World” was a combination of seven different mathematical organisations joining forces to promote the importance and use of maths in everyday life.

Elsewhere, a light bulb moment occurred while I was talking to a representative of the Association for Nutrition. The UK Foresight Report on Reducing Obesity from 2007 is perhaps one of the most well-known and well-regarded reports that the unit has produced, but I hadn’t realised that anyone can call themselves a nutritionist, and today “expert advice” on social media drowns out the professional voice encouraging a healthy diet. The British Dietetic Association faced a similar uphill struggle. Pause for thought. At least they were there, as was Wateraid with some simple straightforward material on how to get clean water and decent sanitation to those who don’t have them through appropriate low-cost, long-term solutions.

Finally, with regard to the problem that affects us all directly – climate change, Copernicus1, Europe’s flagship Earth Observation Programme, gave a most impressive demonstration of its databases that deliver freely accessible information on environmental issues. The climate change service provides quality assured information about the past, present and future climate worldwide, and can be searched with great specificity.

This gives a flavour of what was a much bigger exhibition. But to the speakers of the day. I settled down to hear four who were working at the frontiers of their fields.

Mathematical physicist Ivette Fuentes’ presentation was entitled, “How to build a quantum teleporter.” I must admit that I struggled to follow all the quantum mechanics(!), but the nub of what I understood her to say was this. At very small scale an electron can be in two places at once. It also has something called a spin property, explained as being either up or down. However, in this quantum entanglement, it is in a maximally correlated state or non-separable: in other words the “state” of the electron in one place must be the same as its state in the other. Thus if you can encode information in the electron particle in one place, it must appear in the other. If this all sounds rather weird, perhaps the more understandable and better known point is that at the very small (and very large) scale quantum mechanics applies, but classical physics does not work. The current problem is to work out how to link the two together. However, Ms. Fuentes stressed that the era of quantum mechanics was coming, and that the UK was in the forefront of initiatives on quantum technologies.

Astrophysicist Chamkaur Ghag addressed a parallel problem: “The Hunt for Dark Matter”. 85% of the universe was missing. Yet “Dark Matter” had existed since the beginning of time, and was the mysterious glue holding galaxies together. Addressing the key question of whether it mattered, he pointed out that in the absence of understanding it, how could we know what is going to happen next. How would it affect what we thought had happened in the past. To gain this understanding, we needed to go beyond standard model physics. He posited the question: “Where is the doorway?” Complex experiments had yielded no answers yet.

However, the talk of the day came from Daniel Davis on the latest developments in immunology. The basic principle of vaccination is the idea that an infection is dealt with more efficiently if the immune system has encountered the same virus or bacteria previously. By using harmless versions, vaccines work by provoking the immune system to build up defences against them. (Upon this basis I was vaccinated as a child against diphtheria, polio and tuberculosis etc.) Yet this is only adaptive immunity. It wasn’t until 1989 that Charles Janeway of Yale University postulated that the immune system must contain receptors that that interlock specifically with germs or infected cells. In other words there is a part of the system that may be called innate immunity. Since then:

“… the world of immunity has opened up to reveal … not a simple circuit involving a few types of immune cells, but a multi-layered, dynamic lattice of interlocking sub-systems, one of the most complex and important frontiers of scientific enquiry that we know of.”2

Professor Davis pronounced that this enhanced understanding of how the immune system worked had brought us to the cusp of a new world, and a revolution in how we deal with health matters.

The day ended with a keynote lecture from Carlo Rovelli on the nature of time. The context he outlined at the start of his talk – that time is not the timeline we think it is, that time is different in different places because of mass and so forth – will be familiar to readers here. I won’t attempt to denote the abstruse ideas he developed in his lecture (his new book3covers this subject) except to say that after listening to him for an hour it was easy to understand how he has become such a famous populariser given the calm charisma he brings to his delivery.

What must be mentioned was how the session ended. When the chair announced that there would be ten minutes for questions, my heart sank. (In my experience this usually means that some eccentric will drone on unstoppably about their particular high horse for nine of them without asking anything.) On this occasion, however, five pertinent questions were put and answered directly and compactly. The last of them, to do with free will, elicited the following approximate quote from Spinoza off the top of Professor Rovelli’s head: “Free will is a fact which happens in our brain: we can’t predict things about the world, or our internal state.”

Those of us who apply ourselves in trying to make sense of our possible futures spend a good deal of time looking out into the various aspects of our social, cultural, economic, political and physical environment and beyond. My day at New Scientist Live was a reminder to give due weight to the world underneath and alongside the tiniest atom of matter and the world inside the bodies within which we are confined. What we don’t know about what we don’t know may be more than we think.

REFERENCES

  1. The Copernicus ECMWF (European Centre for Medium-Range Weather Forecasts) websites demonstrated at the exhibition were:
    1. atmosphere.copernicus.eu
    2. climate.copernicus.eu
  2. DAVIS, Daniel M, “The Beautiful Cure”, The Bodley Head, 2018.
  3. ROVELLI, Carlo, “The Order of Time”, Allen Lane, 2018.

Written by Tony Diggle, SAMI Associate.

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

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

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

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