Welcome to Mind Matters, week of 5 September 2022

International and local economic news 

China has waived the debt of some African countries. But it’s not about refinancing

In mid-August, China’s Ministry of Foreign Affairs surprised the world with a series of announcements. Wang Yi, Beijing’s most senior diplomat, promised extensive debt relief for some of the world’s poorest countries. The announcement was made at the ministerial meeting of the Forum for China Africa Cooperation.

In addition to increasing food assistance to the continent, Wang committed to no longer demanding repayment of concessional loans that in the recent past had reached maturity, but which 17 African states had failed to pay off.

This appears to be great relief, but on closer inspection it may not be as a grand a gesture as it is made out to be. Understand how government debt and loans keep  (mostly) African states in perpetual poverty. Article is below in PDF. 5 min read 

Prospect of peak inflation improves outlook for fixed interest assets

After a prolonged streak of negative inflation surprises, driven by a series of unforeseen supply-side shocks, the moderation in Citi’s Inflation Surprise Index suggests that inflation has finally peaked. The index, which shows when inflation surprises to the upside or downside, has been firmly in positive territory since early this year, but recent data reveals that while inflation is still higher than expected, the extent of surprises are no longer as significant as they were previously.

This update is brought to you by Prescient Investment Management. Interesting illustrations help a reader to engage with the content.  4 min read

New UK Prime Minister Promises to ‘Unshackle’ City of London

Truss wants a more vigorous pruning of financial rules inherited from the European Union which she says “hold the City, and its contribution to the entire country, back.”

Since being largely cut off from the EU following Britain’s departure from the bloc, the City faces competition from Amsterdam and Paris, as well as longstanding rivals like New York and Singapore.

The article provides insight but also indicates that there is nothing novel about the new PM's  intentions! Note the emphasis on regulation. 3 min 30 sec read

South Africa’s GDP contracts 0.7% in Q2, taking output back to pre-pandemic levels

“After two consecutive quarters of … growth, real gross domestic product decreased by 0.7% in the second quarter of 2022,” Stats SA said in a statement.  

If the economy contracts again this quarter, which ends on 30 September, it would mean that South Africa has fallen into a recession. That is too early to call as most of the economic data for July and August are not in yet, and the stuff that has come out so far hints at a tentative recovery. 

3 min read

News of women making advances 

LexisNexis SA CEO named leading woman in African tech

LexisNexis South Africa is thrilled to announce that its CEO, Videsha Proothveerajh, has been recognised as the leading woman in technology on the continent.

Proothveerajh scooped the prestigious Woman in Tech award at this year’s Africa Tech Week Awards ceremony on Wednesday, 31 August. The innovative legal tech giant also clinched runner-up spot in the Tech Company of the Year category.

Congratulations Videsha! It is so  important for women to be recognised in this area. 2 min 20 sec read

61% of SA women boost income by going freelance

As a leading global talent-on-demand platform, Outsized marked Women’s Month by running a survey of female independent consultants in South Africa, to gauge their experience of working as on-demand talent.

We found that our survey respondents were enjoying more opportunities, development and growth, and getting the flexibility they wanted. Those who had not felt they were not getting what they wanted in corporate environments said the move out had left them feeling both empowered and valued.

Illuminating and encouraging article. 4 min read

Insurance news

Global Reinsurers’ Capital Levels Drop by 11% During H1, Hit by Declines in Markets

Global reinsurers’ capital levels dropped by 11% in the first half of 2022 to $647 billion, hurt by market declines, though higher interest rates helped their liability positions, broker Gallagher Re said on Tuesday.

Reinsurers, who insure the insurers, have suffered from recent drops in stock and bond markets, Gallagher Re said in a report.

Let's watch this space as there is going to be some more news after their (reinsurers) annual conference in Monte Carlo which is taking place next week for the first time since 2019. 

Bidvest Life’s claim volumes jump 44% in 2021

Bidvest Life recorded the highest number of claims in its 27-year history last year, with claim volumes increasing by 44% compared to 2020.

The spike was largely driven by an increase in Covid-19 infections and complications, said the company’s acting chief product and pricing actuary, Nic Smit. However, growth in the company’s book was also resulting in more claims.

Read this article so that you are open to the full set of statistics - it's not always what you think it's going to be. 4 min read

South African Premiums to Rise as Insurers Face Growing Flood, Fire Risks: Sanlam

South Africans could soon be paying as much as 5% more on their premiums as insurers face growing risks both globally and locally.

The country is now considered “very risky” due to mounting flood and fire dangers, as well as risks to people and infrastructure following last year’s deadly riots, according to Paul Hanratty, chief executive officer at Sanlam Ltd.

2 min read

Vastly different financial results from Discovery’s insurance arms

Discovery’s long-term and short-term insurance arms delivered contrasting performances in the group’s 2022 financial year, with Discovery Life’s normalised operating profit surging by 200% and Discovery Insure’s tanking 165%, driven mainly by the KwaZulu-Natal floods and motor-part inflation.

Discovery Insurer’s slump comes a week after Santam, South Africa’s biggest short-term insurer, announced that its half-year net operating profit slumped 51%, from R1.2 billion to R429 million. Santam also cited the KZN floods and higher inflation, as well as market volatility, for the weaker results.

Informative article. 4 min  read

Court dismisses OUTsurance bid to pull Hippo ‘parody’ advert

OUTsurance spokesperson Natasha Kawulesar said the insurer believes the advert is an infringement of its brand properties, is misleading, and places the industry in a poor light.

Do you think that the Court's judgement was appropriate? If yes, why and if not also give reason/s why you say so. 3 min read

Hollard plugs the widening gap of under-insurance in the market

Hollard is transforming life insurance by offering simplified, hassle-free life insurance packages to the broader mass market and to first-time policyholders. As part of this ambitious attempt to expand long term insurance cover to the broader market, Hollard will supplement the product range with an education drive, aimed at informing consumers of the importance of life insurance cover.

See what's new out there in this article and why there's a market for the product. 4 min read

Fintech and digitisation 

Fintech in Africa: The end of the beginning

One industry leader we spoke with said that rather than a “fintech disruption,” the continent is experiencing a “fintech eruption,” and local and international investors are taking notice. 

Despite a slow down in funding in line with global trends, we expect significant growth and value creation to lie ahead for the fintech industry in Africa. Cash is still used in around 90 percent of transactions in Africa, which means that fintech revenues have huge potential to grow. If the sector overall can reach similar levels of penetration to those seen in Kenya, a country with one of the highest levels of fintech penetration in the world, we estimate that African fintech revenues could reach eight times their current value by 2025. 

As the fastest-growing start-up industry in Africa, the success of fintech companies is being fueled by several trends, including increasing smartphone ownership, declining internet costs, and expanded network coverage, as well as a young, fast-growing, and rapidly urbanizing population.

This is a well researched report by McKinsey and is downloadable from their site. The exhibits are very informative and the comparisons more than interesting.  30 min read for the whole report.  

KPMG predicts boom in African fintech investments

For Africa, the anticipated fintech investments are expected to coincide with the massive growth of the sector, as it has been tipped to play a catalytic role in boosting financial inclusion on the continent.

A brief 3 min read. 

Digital-only Discovery Bank reports R990m loss

Digital bank Discovery Bank’s operating loss for the financial year was R990 million, 10% lower than the previous financial year.

This emerged today when Discovery announced its financial results for the year ended 30 June.

What will be factored into Discovery's decision to keep the Bank? R990 million is a lot of money plus the loss from 2020! 2 min read

‘Huge appetite’ for digital-only banks as another player launches

With the high number of unbanked South African customers, the country’s newest low-cost branchless bank − Be Mobile Africa − should tap into the infinite opportunities presented by consumers’ huge appetite for digital-only banking.

This is according to research firms Africa Analysis and IDC, which believe the intensifying competition in SA’s digital-only banking space is healthy for the financial services sector, and is also good for financial inclusion in a country where cash is still king.

The high number of unbanked locals leaves roughly R12 billion in cash believed to be floating around outside of the formal banking system.

Wow, that's a market for you, but what are the risks? 5 min read

Payments Association reconfigures for digital inclusion

The South African Reserve Bank’s (SARB’s) decision to restructure the Payments Association of South Africa (PASA) into the new co-designed Payments Industry Body will stimulate innovation and promote collaboration and financial inclusion in SA’s financial sector.

PASA is the payment system management body recognised by the SARB, in terms of the National Payment System Act of 1998.

In June 2021, the SARB announced plans to reform PASA into the new Payments Industry Body, in efforts to add an inclusive community of payment system stakeholders from other emerging industries, such as e-commerce and fintech players, as committee representatives.

This article has been included to illustrate how deep digital inclusion is becoming within the economy. 4 min 30 sec read

All things cyber related 

Web-Connected Devices May Have to Meet New EU Cybersecurity Rules

Providers of internet-connected technology – from Apple iPhone software to baby monitors – will have to meet new cybersecurity requirements in the European Union or face fines and possibly have the product taken off the market, according to a draft proposal seen by Bloomberg.

New rules from the European Commission called the Cyber Resilience Act, set to become public next week, are aimed at improving the security of devices in the face of surging online attacks across the globe. Damages from software and hardware cybercrime amounted to roughly $6 trillion last year alone.

The regulations would surely make insuring in this market more attractive - what do you think?  2min 

Cyber MGA Coalition Launches in UK Insurance Market

Coalition, the San Francisco-based cyber managing general agent, began trading in the UK, effective Sept. 1, and has opened a London office.

Coalition helps small and midsize organizations manage cyber risk by combining cyber-security tools, monitoring, access to around-the-clock digital forensics, incident response, and broad insurance coverage.

What is meant by democratising cyber security?   2 min read

Beyond Zeros and Ones: When Cyber Attacks Become Physical

When people think of cyber attacks, they might think of things like phishing, ransomware or data theft. But increasingly, something called cyber-physical attacks are making their way into the conversation – particularly in the critical infrastructure industry – and experts on this episode of The Insuring Cyber Podcast say they are likely to continue growing.

Where there are cracks the light comes in. Some have suggested the internet of things is the spoiler. What do you think? 4 min read

Investments, infrastructure and regulation interplay

Southern African countries can do better at infrastructure: what the choices might look like

Countries in southern Africa are under a crushing burden brought about by a confluence of factors. These include the unprecedented growth in the number of young people, the remarkable speed of urbanisation and the rise of informal settlements in urban centres.

The physical infrastructure needed to meet these challenges requires exceptional solutions. But these call for alternative approaches. These include deep collaboration between member states and the private sector. And the development of a robust relationship between economic and social infrastructure, on the one hand, and the underlying policy framework that drives decisions on the other.

A well written article. 5 min read available below in PDF. 

As SA moves to prevent global greylisting, alarm bells ring over broad definition of terrorist activities

Much of the Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Bill updated existing legislation by including cybercrime, and computers, but also by bringing it in line with updated international conventions and standards.

With regulations it all comes down to the wording and what you add or take away from existing legislation. This article underscores the importance of regulation but also the potential pitfalls. 4 min read

The Construction Mafia debacle – holding South Africa hostage

Groups colloquially known as the construction mafia are operating under the banner of “radical economic transformation”. They present themselves under the guise of “local business forums” and invade construction sites across the country, demanding money or a stake in development projects. In 2018, these groups and various emulators started to invade construction sites nationally, demanding as much as 30% of the contract value of the job. 

This article shows that it is not simple to invest in construction. It also shows how corrupt our society is. The unemployed are more likely to join such groups because they offer work even though the basis is ethically questionable. When people are starving ethics are not considered. 3 min read 

SA’s regulatory noose stifles start-up investment

South African exchange control regulations are among the factors that affect inflows of foreign investment capital into the local start-up ecosystem.

This came to light during a panel discussion at the Sentech-sponsored Africa Tech Week 2022 conference, held in Cape Town last week.

Commenting on her experience as a foreign investor, Sarah Dusek, investor and founder of investment fund Enygma Ventures, said exchange control is one of the most frustrating things about investing in Africa.

Very interesting article; current regulation is frustrating for investors and limits growth. 5 min read 

Walmart buying Massmart – why now?

Given the billions it has already invested, it is not in its interest to walk away from the table.

As many have heard, Massmart’s parent company, Walmart, has made an offer to purchase the remaining 47% stake it does not already own. Walmart initially bought a 51% stake in Massmart in 2011 which was seen as an attempt to grab a share in the fast-growing African market. 

This article shows, using the scenario provided by a real situation, how New Age's Human -Factor tool can inform investment decisions. The tool avoids the risk of human biases in stock picking. 3min 30 sec read

Medipos threatens to cut SAPO medical aid over R700m debt

The South African Post Office (SAPO), which is technically bankrupt, owes the Medipos medical aid scheme R700m for workers’ contributions, and is likely to be discontinued within the next 30 days – leaving 12 000 members and their families, some 22 000 people, without health cover.

It is very sad for the employees and their families. The post office the world over has existed for centuries and SAPO was a pillar of SA infrastructure. 3min 30 sec read

Health care and related topics

How you sleep could be ‘strongest predictor’ of when you will die – US study

Increased sleep fragmentation, when people briefly wake up several times at night without remembering it, is the “strongest predictor of mortality,” according to a review by scientists of 12 000 studies.

The research, published recently in the journal Digital Medicine, assessed thousands of studies investigating characteristics of individuals during their sleep, including chin and leg movement, breathing and heartbeat.

This article gives you an overview of the paper, however the abstract to the paper is at the bottom of the article and that you will find interesting because it talks about the methodology to arrive at the model. The paper is also free to access if you have the time to read it. The article is a 3 min read.

Mental health app aims to reach the masses

Local app Panda is looking to democratise access to mental health assistance, as South Africa observes World Suicide Prevention Day.

The day takes place internationally each year on 10 September and endeavours to increase awareness of suicidality, as well as to fight the stigma associated with suicide.

According to an opinion piece by Angela Vorster, clinical psychologist at the school for clinical medicine at the University of the Free State: “There are actually so many ways and places to receive healthcare and support; however, the most significant barrier to making use of these resources is sustained by the stigma associated with suicide and mental illness.

This app is so meaningful, I sincerely hope that being digital will make more people feel safe to use it rather than being seen going to the therapist. 3 min read

Health dept readies online system for medical recruits

According to the DOH, the system will officially open for applications on Tuesday, 13 September and close at midnight on 25 September.

The online system was developed to help manage the internship and community service programme (ICSP), so that the application and allocation of posts is fair and equitable.

This article is placed here to show how digitisation is becoming more pervasive as it becomes more effective - especially when a national database can provide a full picture. 2 min read

Health Squared gets leave to apply for voluntary liquidation

After its initial application for voluntary liquidation was opposed by the Council for Medical Schemes (CMS) registrar, who wanted to place the scheme under curatorship and then wind it up, the Johannesburg High Court has granted Health Squared Medical Scheme leave to apply for voluntary liquidation on 27 September, but has yet to decide on the industry regulator’s urgent application to place it under curatorship.

Health Squared was formed by the amalgamation of Spectramed and Resolution Health in 2019, and has never met the statutory minimum solvency requirement.

If you represented a Medical Aid - what would your response have been? See the article for what Discovery, Bonitas and Insight Actuaries have to say before you answer the question. 4 min read

Climate change 

Just a small rise in Earth’s temperature could cause irreversible ecosystem and weather changes

Scientists call for forecasting teams to join forces, improve estimates of “tipping points”

From melting ice sheets to stressed coral reefs, global warming is changing our world in unmistakable ways. But identifying “tipping points,” thresholds past which such transformations become irreversible or self-sustaining, has been more difficult—and controversial. Some researchers argue that emphasizing looming but uncertain points of no return could feed public apathy, rather than energize efforts to curb climate change.

This article is a call for more collaboration from scientists across the globe as well as an urgency to produce more models.  3 min read

Op-ed: Just Transition to a Low Carbon Economy in Africa

One of the most topical issues occupying the minds of leaders in governments, policy makers, corporates and scenario planners alike in recent times must undoubtedly be the adverse effects of global warming. Apart from a few climate change denialists, there is general consensus in the scientist community that worldwide adverse and erratic climate conditions experienced in recent years are largely attributable to global warming.

This is a well written article which amongst other lines of thought argues for collaboration across Africa to save Africa. 7 min read

About YOU

Psychiatrist Elisabeth Kübler-Ross on finding yourself:

"Learn to get in touch with silence within yourself and know that everything in this life has a purpose. There are no mistakes, no coincidences; all events are blessings given to us to learn from. There is no need to go to India or anywhere else to find peace. You will find that deep place of silence right in your room, your garden or even your bathtub."

Source: Yoga Journal

 A MUST READ!

COVID-19: A catalyst to cancel burnout culture?

Like the rest of us, Arianna Huffington needs her sleep. But in today’s fast-changing, success-driven, and distracted culture, it’s easy to discount the importance of sleep and other basic human needs, much less maintain a sense of wonder and purpose. As work pressure and family demands continue to rise, is it any wonder that burnout and stress have reached epidemic levels?

Arianna Huffington is the founder and CEO of Thrive, the founder of The Huffington Post, and the author of 15 books, including Thrive and The Sleep Revolution. In this interview Arianna speaks to Erica Coe,  a partner in McKinsey’s Atlanta office and a co-leader of the McKinsey Health Institute.

How to improve your writing productivity by doing less

Do you want to improve your writing productivity? Your best step is to plan on doing LESS….

I am intensely motivated to be productive.

But I draw a very clear line against the tactics currently being used by some employers. Amazon’s notorious habit of clocking its warehouse workers by every second, never mind every minute, for example, is starting to spread to other industries, according to a recent piece in the New York Times. (I’ve unlocked it for you.)  

Don't be perturbed by the fact that you may not write a lot - it could be any subject or task at hand - simply apply the principles. 4 min read