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Look to China for the main beneficiary of America’s likely retreat from Africa

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Anti-terrorism and transactional relationships are likely be the main features of US President Donald Trump’s Africa policy. But if Trump’s proposed cuts to the state department hold, the US will be less and less of a presence on the continent, according to Prof Gregory F Treverton, who directed the US National Intelligence Council in the Obama Administration.

Treverton, who is currently Professor of Practice at the University of Southern California, is a world authority on security and intelligence. I put a number of questions to Treverton who visited South Africa recently to deliver the keynote address at a South African Council on International Relations conference on South Africa’s relations with Africa.

Why is Donald Trump’s foreign policy so incomprehensible?

I wish I knew! It’s a continual struggle between, on the one hand, the true believers, the American firsters who are anti-trade and anti-engagement in what they see as an unfriendly world, and on the other more traditional conservative Republicans.

The pattern has been that the more traditional conservative Republicans, like the Secretaries of State and Defence, tug policy in a more familiar direction, only to have the president blow the process up with a tweet condemning the Paris climate agreement or labelling Germany an unfair trader. The intensity of the struggle is reflected in the continuing haemorrhage of leaks, all from the very top of the administration.

Didn’t the post-Second World War liberal international order need a shake up?

Yes, and perhaps in that sense we’ll end up thanking Trump, if, and this is a big if, we get through the next years without a major crisis or too much broken crockery. Some of Trump’s complaints, like (America’s Western) allies bearing too little of the burden, have been true for a long time. And the reaction by Americans to the sense that they pay too much for the “public goods” of international economics and security has been going on for a long time.

Polls routinely show that Americans think the country spends on foreign aid 20 or 30 times what it actually does. So, too, the questioning of what we all too easily call the “liberal international order” has been growing over time.

You suggested that Russia under Vladimir Putin, is a declining power. Doesn’t the evidence point in the other direction?

It surely is a declining power, though Putin has played a weak hand extraordinarily well. It is in demographic decline, and far from modernising the Russian economy, Putin has only deepened its dependence on hydrocarbons. My fear is that as the country declines, it will be all the more tempted to turn to what tools it retains – cyber attacks and nuclear sabre-rattling.

How do you think Trump’s Africa policy will turn out?

In testifying before Congress, Secretary of State Rex Tillerson probably was as clear as the administration could be given its disarray. Africa was in the “turning to other countries” category, and he began with the fight against terrorism. He did, though, mention the economic opportunities in Africa, mostly in the sense of business that might be done. I suspect those will continue to be the emphasis.

So does this mean that anti-terrorism and transactional relationships will be the main features of Trump’s Africa policy?

I think they will continue to be the main drivers, for better or worse, though not the only drivers. The country will have to respond to major humanitarian crises whether the administration wants to or not. And some of the legacy programmes of the last two administrations, like the African Growth and Opportunity Act, or the President’s Emergency Plan for AIDS Relief  have had bipartisan support, so we’ll see how they fare in the congressional budget process.

And, if this is so, what are the long-term implications of this for US relations with the continent?

If Trump’s proposed cuts to the State Department and USAID hold, the US will be less and less of a presence on the continent. The main beneficiary, diplomatically, will be China, followed by the Europeans and perhaps even Russia, though it doesn’t have much to contribute except arms sales.

If there is any silver lining, perhaps it will be that Africans, and particularly South Africans, will realise they have to take more initiative on their own.

When it comes to the US itself, you raised the possibility that it might break up? Were you speaking in abstract terms, or is this a real possibility?

I meant it mostly as a metaphor and as a touchstone for thinking about the future. I don’t think it’s likely, but it does have to be considered.

What is certain is that the next few years will be a kind if a guerrilla war, one mostly fought in the courts, between the US federal government and the “blue” (read Democratic Party-controlled) states, led by California, over climate change, immigration and other issues.

What does the Trump presidency mean for these ideas?

So far it seems bound to increase the divide in America. Trump has talked and acted entirely to please his base. He has played on fear, fanning it by portraying the country in dire straits surrounded by a hostile world. So far that base – especially older and often poorer white Americans – seems to have been satisfied by word, words they see as validating them.

But we’ve known from the beginning that Trump can’t deliver on his promises: those “good” low-skilled jobs in manufacturing or mining (as he has portrayed them) aren’t coming back. So we’ll see, but I expect that realisation to only deepen the anger and disaffection. – Written by Peter Vale

The co-hosts of the conference Treverton addressed were the Johannesburg Institute for Advanced Study (JIAS) and the Wits School of Public Management.

Originally published by The Conversation

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Economy

Here’s Why Gold Has Topped $2,000 For The First Time

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Gold reached a record high of more than $2,000 an ounce on Tuesday, as investors, spooked by a weakening dollar, volatility triggered by coronavirus and ever rising U.S. cases, continue to look for a safe haven to move their money into.

KEY FACTS

  • Gold hit a high of $2,041.33 an ounce on Wednesday, after exceeding $2,000 for the first time on Tuesday.
  • The precious metal has gained more than 34% this year, making it one of 2020’s best-performing assets, Reuters reports.
  • Gold isn’t the only precious metal to have gained significantly, with the price of silver jumping to its highest level since 2013, and rising 50% overall this year.
  • The dollar weakened to two-year lows last week as lawmakers in Washington work to agree another stimulus deal.

KEY BACKGROUND

Governments and central banks across the world are unleashing stimulus packages worth some $20 trillion into the global economy, according to the Bank of America, in a bid to boost output after the pandemic continues to halt major industries and force people to stay home. U.S. lawmakers are currently working to secure a further package of economic relief, and investors are concerned that stimulus packages will trigger inflation and devalue other assets. Meanwhile, escalating tensions between the world’s two largest economies, the U.S. and China, is likely to keep pushing gold upwards.

WHAT TO WATCH FOR

Gold’s impressive rally could well continue, analysts predict, as the pandemic shows little sign of slowing down, allowing battered industries to reopen and letting global economies recover. More than 18 million people have been infected so far, while the death toll topped 700,000 this week.

By Isabel Togoh, Forbes Staff

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Op-Ed: The eCommerce Lifeboat For South Africa’s Retail Industry

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Covid-19 led eCommerce revolution

The Covid-19 crisis has redefined the retail playing field.  This has seen retailers scrambling to accommodate changed consumer behaviour as shopping surges online.  

The pandemic has exposed the precariousness of a solely bricks and mortar model.  According to a recent report by McKinsey, consumers expect a relative shift to online shopping in most categories in the short term,  driven primarily by a sharp decrease in in-store shopping. In the longer term, 40 percent of consumers plan to increase online shopping once the crisis is over.

Fear of infection drives move to online

“Previous epidemics have foreshadowed this online trend,”  says Derek Cikes, Commercial Director at buy now pay later fintech, Payflex.  

“The SARS epidemic in 2003 expedited China’s path in launching digital payments and eCommerce in the country, creating a permanent shift in consumer behaviour.  Similarly, the Coronavirus has caused a marked change in South Africa’s consumer behaviour and habits, with social distancing, hygiene measures and self-quarantine now integral parts of our everyday realities,” says Cikes.

With the crisis expected to remain for the foreseeable future, these behaviours are anticipated to become further entrenched and remain even as the crisis eventually ebbs.

Shopping:  an altered reality

Shopping is no longer a leisurely, sensory-filled experience.  Instead, retailers have replaced sampling of beauty items or delightful food temptations with an antibacterial touch averse world of hand sanitizers and plexiglass barriers.  

This interaction or rather fear of interaction is driving new shopping behaviour, with consumers opting for the safety and convenience of eCommerce. And retailers are hastening to adapt to what they view as lasting changes in the way that people choose to shop as millions of consumers choose online as their preferred medium of shopping.

Epidemics’ impact on retail

According to a Global Shopping Index published by Salesforce, the number of unique digital shoppers rose 40% year-over-year for Q1 2020. 

In a South African context, 29% of online consumers say they are doing far more shopping online than before the coronavirus outbreak while 65% say they are visiting physical stores less, according to a Nielsen study of 10 markets in Africa and the Middle East, including South Africa. 

“The pandemic has fast-tracked trends that were already budding in the eCommerce space including digital and alternative payments. The 40% increase in shoppers and 25% increase in eCommerce merchant sign-ups to our platforms highlights this monumental shift towards digital as an increasingly preferred avenue of shopping and transacting,”  says Cikes.

Cikes says the increased availability of click-and-collect models, digital payment models like buy now pay later platforms and other alternative payment options,  as well as faster delivery models, are anticipated to further fuel this online revolution. 

Global players wake up to eCommerce opportunity

Major tech and retailer stores are waking up to the huge potential of eCommerce as millions of consumers choose online space for their shopping. Facebook is making a major push into e-commerce with the launch of Shops, a way for businesses to set up free storefronts on Facebook and Instagram. 

While Zara-owner Inditex recently announced plans to close up to 1,200 smaller-sized stores, and to invest 3 billion dollars in digital commerce. 

“Retailers and tech companies are recognising the significance, need and value to move online in order to accommodate consumer behaviour and sentiment for safer, seamless shopping alternatives.  It will be interesting to see the kind of personalised, targeted spin they can put on it based on their collected user data around interests and geolocation,” says Cikes.

How SA retailers can harness this opportunity

The consumer mindset has changed in terms of their relationship to eCommerce.  Online has become an accepted, go-to shopping alternative with the digital environment providing consumers with convenience, safety and access to a wide range of shopping options.

And while hygiene and safety concerns have provided the initial impetus in driving consumers online, shoppers have now experienced this environment as a feasible option with its accompanying convenience and benefits. This is entrenching the shift to online shopping, extending its impact to long after the pandemic has passed.

“We’re reaching a tipping point for eCommerce.  Standalone bricks and mortar are no longer sufficient as consumers demand more rapid digitisation solutions.  The fact that more people than ever are relying on the internet to shop for their everyday needs makes it imperative to have an online shopping model in order to remain competitive and viable.

The eCommerce revolution is here.  Those that will survive will be retailers who have a multichannel approach to sales that provides customers with an option for a seamless shopping experience from the comfort of their own homes.  This is no longer a luxury. It’s critical,” concludes Cikes. 

– Paul Behrmann, Founder & CEO of Payflex

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Why It Must All Ad Up

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With Covid-19 emphasizing the human element in advertising, brands should re-evaluate their strategies and reframe their messaging to stay relevant. Saying nothing is wrong too, add experts.

“How do we respond to the biggest global conversation taking place?” asks Robert Grace, Founding Partner: Head Of Strategy, at M&C Saatchi Abel, an integrated advertising agency with branches across Africa. “How are you actually going to match what you’re talking about with action?”

This is where advertising’s role becomes interesting, far from simply acting like a loudspeaker to products, or putting out mushy messages to engender brand loyalty.

How has marketing had to help brands pivot their messaging at this time?

The global pandemic is influencing every aspect of life. “I’ve never heard the word ‘unprecedented’ used so much. We’ve used so much hyperbolic language in this time,” says Grace.

From changing work cultures, to countries in lockdown facing economic crises, Covid-19 is impacting everyone in tangible ways. For agencies and by extension, brands, to pretend it’s not happening or go on with business as normal, reads as tone-deaf at best and disingenuous and ruthless at worst.

With that in mind, some brands have opted for silence, fearful of saying the wrong thing at the wrong time. “Saying the wrong thing is unforgivable – the consumer is smarter than they’ve ever been. You could have been in the right place but one wrong move could send you backwards,” explains Khuthala Gala-Holten, Managing Director at Joe Public in Johannesburg.

The risk of saying the wrong thing is paired with the risk of saying nothing at all. “Many brands have paused spending now, which is not the best thing to do, because people expect brands to play a role. 88% of consumers want brands to talk to them now,” says Shaun Frazao, Head of Digital at Wavemaker. The data backs this up – according to email service provider Everlytic, their March 2020 open rate was really high: 55.3 million unique opens.

Others that are still “talking” are dramatically pivoting on their marketing messages and communications.

“Whatever you say has to be authentic and not seen as a marketing opportunity,” explains Grace.

“There are some brands that should be going into quarantine over this period – don’t use this ‘opportunity’ to sell, rather use the time to refine your strategy. So that when you go back into the market, you demonstrate that you’ve understood what consumers will be wanting from your brand.”

Gala-Holten adds: “Strategy first – what are the guardrails? Sometimes clients have several agencies. So you really need to empower them with guardrails. This is now the ‘new normal’ – we will never be the same. From the creative perspective, in a way, it’s very exciting.”

Across sub-Saharan Africa, we’re seeing six key themes in communications and advertising, explains Frazao (see sidebar). “Consumer centricity needs to be first. Brands that are communicating now are looking long-term, to build trust, and not short-term at the sales they could make.”

Every agency interviewed for this article has seen a combination of two trends: contracts shrinking as businesses struggle to make money, and a shift to digital marketing. “The way business has been done will change in the advertising world. We have been moving gradually to a very focused marketing landscape, and this will be the tipping point to push them into that realm at a faster pace,” says Darren Leishman, CEO of Spitfire Inbound.

For digital agencies or agencies with digital service offerings, this shift has been less painful, but agencies with offerings like TV ads (that require crew and a studio to shoot in) and eventing (where large groups of people meet) are the hardest hit.

“People are spending more time online and media figures are reflecting higher views than normal for online ads. Clients are cutting spend in offline channels in favor of online ones. However, most brands remain very cautious with marketing spend in general at this time,” says Brian Carter, Executive Creative Director at Digitas Liquorice.

Clint Paterson, CEO at sport and entertainment agency Levergy, adds: “New behaviors and lifestyles will take root, but it’s critically important to remember, people’s passions won’t die. The role of the brand or event owner becomes one of adaption here, how can relationships be reinterpreted, reinvented and reimagined to generate the kind of connection with audiences appropriate to this new normality?”

Grace puts it another way: “Any cracks you had before Covid-19 will turn into gaping holes.”

Diana Springer, Partner: Head of Strategy for strategic consultancy Black & White, adds marketing as a whole has become increasingly performance-based and goal-orientated. But in unforeseen times, “brands have to reframe what they’re measuring,” says Springer. “Otherwise, they can lose relevance. You have to change how you define success to shift your strategy. This pandemic is really making us consider the fundamentals.”


‘6 Marketing Themes FOR This Time’

Shaun Frazao, Head of Digital at Wavemaker, advises six key pandemic-driven themes in marketing for Africa:

  • Supporting the frontline workers
  • Repurposing production (instead of making products, brands are making products to help their consumer, such as South African Breweries donating alcohol to make hand-sanitizer)
  • Helping the vulnerable
  • Health messages (posters on social distancing, Pick n Pay’s message to avoid panic buying, and SA Tourism advising people to travel later)
  • Making staying at home easier (brands are trying to be empathetic by making staying at home easier, like Vumatel increasing internet speed for free)
  • Distributing positivity (Nandos’ latest ad is all about remaining positive, and Nike did something similar).

– Samantha Steele

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