Welcome to Mind Matters week of 21 February 2022

Geopolitcal news 

Ukraine: what’s really behind Putin’s deployment of ‘peacekeeping’ troops? Experts explain

If you take this [recognition of the independence of the two breakaway republics of Donetsk and Luhansk] at face value – that Putin is only interested in protecting the rights of the two pro-Russian republics – then accepting recognition would spare Ukraine a major military confrontation with Russia. It would also mean that Kyiv would avoid the domestic political difficulties and socio-economic costs that an implementation of the deeply unpopular 2015 Minsk agreement would mean for the Ukrainian president Volodymyr Zelenskyi and his government.

If you see things through this lens you may not find anything wrong with Russia deploying "peace keeping troops " to the two republics. Read the article to gain more insight. Is it ideologically or economically motivated? Does the ideology serve the economic incentive? Why is the West so fast to react with sanctions?  4 min read, also available below. 

Ukraine: world financial markets have not broken sweat since the Russian escalation – why?

The economic consequences of armed conflicts have received widespread attention at least as far back as when John Meynard Keynes wrote about them in 1919 in relation to the first world war. Yet as the world braces for a possible war in Ukraine, we still know relatively little about the interplay between conflicts and financial markets.

Will this read make you feel less anxious about the potential conflict in the Ukraine upsetting global markets? 3 min read also available below. 

U.S. Stocks Extend Slide Over Ukraine Concerns

All three major U.S. indexes declined on Wednesday, a day after the S&P 500 entered a correction

U.S. stocks fell Wednesday, deepening their losses after concerns over the Ukraine crisis helped push the S&P 500 into correction territory.

The threat of war in Ukraine has added to uncertainty in global markets. The U.S. stock benchmark dropped 79.26 points, or 1.8%, to 4225.50, a day after closing down more than 10% from its Jan. 3 record following Russia’s deployment of soldiers in Ukraine’s Donbas region. The S&P 500 is now down 12% from its record.

On Wednesday, Ukraine declared a state of emergency and began to mobilize reservists, calling on its citizens to immediately leave Russia.

Wow, that's a very different picture to the one painted in the article above. The Wall Street Journal does have a particular angle being American, but read the article and watch the short video on what the Nord Straem 2's role is in the Ukraine crisis. 4 min 30 secs

AU-EU summit: what stands in the way of a deeper relationship

The triennial high-level summits between the European Union (EU) and the African Union (AU) are often criticised as being photo opportunities without substance. Nevertheless, even photo opportunities are important. They show that European leaders are willing to receive their African counterparts on par with full honours.

This is important given the increasing competition with other summits, such as China-Africa and Russia-Africa. It is also important given the colonial legacy of a number of EU countries and a host of African countries.

The meeting was last week, but we didn't get chance to showcase it. The West will look to SA for comment given the friction that lies between the US and China and the West and Russia. The article is available below. 3min 30 sec read 

'Inflation surge to cause a major shift at three levels'

Element Investment Managers believe the surge in inflation, which is causing interest rates to rise worldwide, will see two different investment styles outperform.

Investors could shift from growth investing to value, and from passive investing to active strategies. They could also prefer small-cap to large-cap stocks.

A two minute read. 

Some definitions to aid understanding:

A stock is an investment that represents a share, or partial ownership, of a company. Stocks are one of the best ways to build wealth. 

https://www.nerdwallet.com › Investing

Small-cap stocks? a share or group of shares in a company that has a low total value of shares: ... We like to buy small stocks before they are discovered by other investors.

https://dictionary.cambridge.org › dictionary › small-stock

Local news - Budget and commentaries

Economists welcome the Budget's fiscal discipline, but long-term concerns remain

On asset allocation, local economists expect the bond market to respond favourably, but there is division among them about the impact on equities.

Local economists have broadly welcomed Finance Minister Enoch Godongwana’s inaugural Budget Speech due to its focus on fiscal discipline. However, they warned that the South African government’s finances remain on shaky ground, especially over the long term. 

Economists interviewed by Citywire South Africa also supported Godongwana’s planned use of R182bn in extra, unplanned tax revenue.

Stanlib chief economist Kevin Lings, Momentum Investments economist Sanisha Packirisamy AND Alexander Forbes executive chief economist Isaah Mhlanga give their views. 6 min read

Budget Speech Competition for students celebrates 50 years

Founded in 1972, the Budget Speech Competition, as it is more widely known, has become a highly anticipated annual event that coincides with the delivery of the national Budget Speech in parliament. Designed as a platform to empower and create exposure for the country’s brightest young minds, the competition has created opportunities for thousands of aspiring young thinkers to understand the fiscal policy process as well as contribute their creative ideas towards solving some of our country’s most pressing socio-economic challenges.

Note that Isaah Mhlanga, featured above as one of the commentators, won this competition in 2008!  2min 30 sec read

Godongwana delivers a little bit of this, a little bit of that, but no fireworks

If the president emphasised the importance of economic growth in his Sona speech, then National Treasury re-articulated the importance of executing on the many structural reforms introduced over the last year.

More detail in this article which is useful if you don't read the Summary above or listen to the speech itself which is embedded in this article. 4 min read. 

Insurance and industry related news

Sweden’s first transgender CEO: Diversity is an investment opportunity

Caroline Farberger’s gender surgery made her aware of the business world’s lack of diversity. Now joining Wellstreet, she wants to funnel more venture capital to non-normative startups.

The experience of being part of a marginalised group led Farberger to adapt her leadership style to each colleague’s unique situation and needs.

Her advice to all middle aged white men can be headed by us all, but let's get those middle aged white men changing as they still hold the power! 

‘E-du-cate your-self,’ she says, emphasising each syllable, then smiles, and continues: ‘about subconscious prejudices. Because as humans, we all have prejudices. The least we can do is to educate ourselves to become conscious of them. It’s only when we have conscious prejudices that we can work with them and compensate for them.’

3min 30 sec read

Rise in Non-Covid-19 Deaths Hits Life Insurers

Companies believe lack of medical treatment during pandemic has contributed to deaths from other causes

U.S. life insurers, as expected, made a large number of Covid-19 death-benefit payouts last year. More surprisingly, many saw a jump in other death claims, too.

Industry executives and actuaries believe many of these other fatalities are tied to delays in medical care as a result of lockdowns in 2020, and then, later, people’s fears of seeking out treatment and trouble lining up appointments.

Some insurers see continued high levels of these deaths for some time, even if Covid-19 deaths decline this year.

What do you think will have to happen to the life tables and models that life insurers use currently to price annuity products etc? A 3 min 30 sec read but also a short video on new studies which offer clues about who may be more susceptible to long Covid, a term for lingering Covid-19 symptoms. WSJ breaks down the science of long Covid and the state of treatment.

WATCH | Doccie takes you inside SA’s race to roll out the Covid-19 vaccine

An insightful new documentary, produced by Discovery, lets you look behind the scenes at the highlights of the drive to vaccinate the nation

In January 2022, Discovery celebrated a significant milestone: one-million Covid-19 vaccine doses administered through its nine vaccination sites.

Set up as surge capacity sites in the early stages of the government-led Covid-19 vaccination programme, these sites have administered vaccinations to all South Africans, whether covered by private health insurance or not.

The documentary is 21 minutes long and a testament to what can be done when the private and public sector collaborate. 

Short-term policyholder concerns, then and now

The 2020/21 Insurance Barometer shows that the challenging economy, political unrest, the pandemic’s impact on businesses, cybercrime and climate change are among the top risks highlighted by the consumers, intermediaries and corporates polled.

Read this article to get a gist of the flow of the elements that have contributed to changes in policies since 2019 and what is expected in 2022. 3 min 30 sec read

Leon Campher to step down as CEO of Asisa

The Association of Savings and Investments South Africa (Asisa) has announced that founding CEO Leon Campher (pictured) will be retiring later this year.

The board has announced Busisa Jiya as his replacement.

2 min 30 sec read.

Fintech, digitization and AI 

Local fintech Lipa Payments locks in R10m funding

South African fintech start-up Lipa Payments has secured a R10 million investment, which it says it will use to drive digital payments across Africa’s informal sectors.

Lipa secured the investment from Empowerment Capital’s Imvelo Ventures, which is backed by Capitec Bank.

“A key part of our digital strategy is to partner with fintech companies to accelerate the delivery of our offer and to create unique opportunities through partnerships,” says Francois Dempers, manager of innovation at digital strategy, Capitec Bank.

2min 30 second read. 

Homechoice invests in SA buy-now-pay-later start-up

Weaver Fintech, a new division of omni-channel retailer Homechoice International (HiL), has made its first acquisition, buying an 85% stake in Cape Town-based buy-now-pay-later (BNPL) start-up PayJustNow.

The BNPL sector is undergoing exponential growth, locally and abroad. It currently only makes up 2% of the global market, but consumers were expected to make nearly $100 billion in retail purchases using BNPL in 2021, up from $24 billion in 2020 and $20 billion in 2019, notes the company.

It's all happening in this space it would seem! 2min read

Discovery Bank attracts R9.5bn retail deposits

Discovery Bank attracted over R9.5 billion retail deposits from over 400 000 clients, reaching a new turning point in the six months ended December 2021.

The digital bank, headed by Hylton Kallner as CEO, says its service offering, which caters for the full spectrum of the retail market, has been driving high levels of client engagement, adding it is on track for break-even by 2024.

More on how digital banks are finding their place in the market. 2 min read

Naspers invests R15m in earned wage access platform Floatpays

Naspers, through its R1.4 billion early-stage tech investment vehicle Naspers Foundry, announced a R15 million ($1 million) investment in Floatpays, an on-demand earned wage access platform that helps customers build financial wellness.

Floatpays provides customers with real-time access to a portion of their earned but not yet paid income at any time during the month, giving them an alternative to using credit to cover unplanned expenses.

This is Naspers Foundry’s third fintech investment and its ninth transaction since its launch in 2019.

Fintech gaining a further hold on consumer behaviour. Think about it, innovation and not simply growth is the key to sustainability. 3 min read

What’s new in banking API programs

Banks are taking a more sophisticated approach to their use of APIs to maximize the value they derive from these digital workhorses.

This article from McKinsey gives a broad overview of the adoption of the exponential use of application programming interfaces in banking. They don't cite South African banks, but I would say they are well ahead of European and American counterparts. 5 min read

Five actions to get right when building a healthcare data ecosystem

As providers step up to build much-needed healthcare data ecosystems, they can bolster their chances for success by laying a solid foundation.

Growth in digital healthcare will accelerate the need for patient-centered data ecosystems. The healthcare sector still relies on extremely decoupled, decentralized data repositories due to the high bar of healthcare regulations such as HIPAA, technical complexity, and business concerns about data ownership and sharing. Any company that orchestrates an ecosystem will need to address not only technical considerations but also business issues, including agreements to share intellectual property, data contracts, service-level agreements, and more. Here we provide five actions to lay a solid foundation.

A great article if you're interested in Health care, but also in data in general and how important it is to maintain integrity and collaborate. 5 min read 

Three experts offer an inside look at the state of AI

The results from McKinsey’s most recent survey on the state of AI are in. Conducted during a year of pandemic, it covered some 1,800 respondents from across a range of industries around the globe.

According to our findings, the adoption of AI continues to build; a full embrace of best practices is critical to high performance; and risk management remains complicated and challenging. It’s the 4th year we’ve run the survey, and the first time MLOps (short for machine-learning operations, the term refers to best practices for the commercial use of AI) and cloud technologies emerged as critical differentiators.

This article and the report shows how AI is becoming more and more entrenched in our every day lives and all businesses. 3 min 30 sec read. The report is a very good read too, all graph detail changing according to category selection. Brilliantly visual and enlightening. Report is a 10 - 15 min read.  

About you

Why the pursuit of happiness can be bad for you – and what you should pursue instead

Happiness is one of the most important goals in life. During the pandemic, it trended as the most searched word on Google. But here’s why the pursuit of happiness can be bad for you.

It can make us more self-centred. The active pursuit of happiness can exacerbate individualistic tendencies to seek out pleasures at the expense of others (breaking up a friendship because it is not fun), society (driving fast may make you happy, but it endangers people’s lives) or the environment (keeping the air-conditioning on overnight). Ironically, that self-centredness, apart from not serving others well, also makes people who pursue happiness more lonely. Focused on making ourselves happy, we forget the basic principle of happiness, which is to look outside ourselves for true happiness.

A three minute read to get you to think about what makes you happy or why you're not happy! 

It’s Time We Reclaim Our Focus

In his new book, Johann Hari investigates how our brains have been broken by technology — and what we can do to fight back.

This is an interview in The New York Times so you may need a subscription, but try the link first it as you are allowed a few free reads! In essence we are doing ourselves a disservice being chained to our phones and other devices. Our focus is redirected through marketing to a maze of possibilities not many materialising in a better quality of life. 

PW#825: What is bike shedding? And why you need to stop doing it

 it turns out bike shedding is actually a reference to the shed in which bicycles can be stored. And, more importantly, the phrase is a metaphor that works like this: 

Imagine a group of people pulled together to discuss implementation of a new nuclear facility. The problems are so big and complex that instead of discussing the risks of nuclear energy, or the costs of the plant, or how to dispose of spent resources, the committee instead focuses on the trivial problem of where to position and what colour to paint the bicycle shed for employees. 

Also known as Parkinson’s law of triviality, bike shedding describes our tendency to devote a disproportionate amount of our time on trivial matters while steering clear of more important ones. 

I just love Daphne Gray- Grant because although she is a writing coach she could just as easily be a life coach!  Do read this article to stop yourself from bike shedding! 4 min read

"Simple is nearly always better. But if it's going to be complicated, then make sure the problem is worth the complexity. A great deal of time is wasted creating complex solutions to relatively unimportant problems." James Clear