Tracking the future: Top trends that will shape South Africa and the world

By Daniel Silke

Respected analyst Daniel Silke provides a glimpse into global trends that will influence South African business and politics in the coming decade, such as the decline of the USA, the rise of emerging markets and the changing workplace. This book is for every South African person and business preparing for the changing world.

• Language: English
• Publisher: Tafelberg
• Release date: Aug 15, 2011
• ISBN: 9780624053378

Book preview

Introduction

Fasten Your Seat Belt …

Why are you reading this book? Probably because the word ‘future’ is in the title and that intrigues you. You hope it will tell you what is going to happen in an increasingly complex world. Like all humanity, you are fascinated about your future career, wealth, personal and business relationships and operating environment well beyond the here and now.

Like someone visiting Madame Rosa in her caravan and gazing into her crystal ball, you want plausible predictions. You want to know what is coming so you can plan ahead, for good times and bad. And you’re right. Understanding the broad context in which coming changes will take place will equip you to handle the future; if nothing else, you will be warned about the challenges, transformations and opportunities to come.

This isn’t a book about scenarios that may or may not happen. Instead, you will encounter a number of macro trends that might look familiar. Maybe you are already experiencing them in your business or personal life. Together these trends will shake your world. They will create a future where competition for scarce resources in a more populous and technologically connected world will turn existing modes of business, communication and politics on their heads.

After reading all the chapters, you might feel trends important to you haven’t been mentioned. That is fine. Trends in this book might be identified as applying on a big-picture scale, but they remain my subjective choice. Trends omitted here but identified by you are no doubt important in your life. No list of trends, yours or mine, is mutually exclusive.

The macro trends set to test humanity are already shaping the contours of the global operating environment. For individuals, companies and countries, understanding and preparing for them is going to be critical for survival. Their scale is so all-encompassing that no one will be spared. Being aware and acting now will not only improve the lives of people across the planet, it will also propel nations forward and make them leading players of the future.

Take the most rapid population growth ever in human existence between now and 2050. A more crowded planet will need to feed the two billion people that will be added in our lifetime. Food prices might spike but opportunities to leverage agri-business skills are immense and crucial to the world’s future. By 2025 mankind will need double the resources currently consumed in order to survive. Access to limited resources will be a hot topic across the globe.

For the first time in the history of the world, the continent of Africa looks to be on the brink of being a wealth creator for its people rather than a squanderer only benefiting elites. A new class of consumer with the ability to spend on a host of goods and services opens up vast and hitherto untapped opportunities for the expansion of foreign retailers and infrastructure providers. With one of the world’s fastest growing young populations, the continent will have a potential workforce well into the future.

Together with a move towards democratic accountability, Africa is likely to be the development story to 2050. But its commodity wealth offers both opportunity and risk. It will be courted and cajoled into providing Asia and the West with its riches. In a second scramble for Africa the continent needs to beware of the pre-eminent role it is set to play. Critically, its elites will have to be more responsive than ever to share the wealth with their people.

Take the years following the world’s devastating credit crunch and recession of 2007–2010. Old economic models have been discredited and as the world battles to find new more equitable and safer economic sets of rules, volatility and ambiguity across many markets can lead to irrational behaviour. The leadership role of the West has taken a knock, out-performed by eastern- and southern-hemisphere emerging markets. Led by China and India, these emerging nations rather than a sole super-power will become centres of economic growth and geopolitical decision-making for the rest of our lives.

If you think the city you live in is increasingly clogged – swelled by shanties and favelas – you ain’t seen nothing yet! There is currently an explosion of urbanism resulting in the fastest rate of rural to urban migration ever witnessed by humanity. At least 70 percent of the world’s population will be urban by 2050, changing the ways communities, businesses, economies and the environment affect their inhabitants. Most importantly, we will return to a world of powerful city-states, more nimble and progressive than the countries in which they find themselves.

Take heed of the changes coming in the workforce, the dawn of a new era where jobs are much more flexible. Working conditions will be diffused to anywhere at any time and contracts will be shorter and project based. This will require a new approach to managing the workplace where a multigenerational office staff representing a diverse range of values, interests and motivations will compete.

Don’t say you weren’t warned. Prepare to live longer, perhaps for 125 years instead of the 70 or 80 you planned for. This will affect savings and investment, and redraft ways in which we encourage productivity, eventually re-engaging older workers who will need to work longer to achieve financial security as pensions are cut or downsized.

Take the rising Asian consumer and the shift in business profits away from retail in the United States or United Kingdom to China, Korea, India, to name a few. Look at the way bookstores are selling fewer books and more electronic gadgets and what this means for predicting the next profit driver.

Understand the trend towards an enquiring consumer more critical than before. Consumers, just like the citizenry in every country, will interrogate their service providers. They will seek authenticity and trust, and their access to communications will empower them. New aggressive populaces less likely to tolerate tyranny and autocracy will use social media and electronic formats to gather information, organise and protest. Just as consumers become more assertive, so populations become inspired.

For South African readers always concerned about the future of their country, these macro trends will have a significant impact on the current political and economic debate, leaving policies and political parties reeling. To make the most of its potential, the country will need to address key trends that are simply passing it by. Fortunately, a host of coming trends will boost South Africa’s ability to grow and be a global player, turning its politics on its head in the process.

To get the most from this book you will need to use the facts and analysis to position yourself, your family and your business for the decades to 2050. Taking a medium- or slightly longer-term view is no longer a luxury you can’t afford.

Remember, these trends will place a competitive impetus on all of us. Those who react with foresight will rise above those who don’t. Failing to understand and react in a proactive fashion will let others in the back door. Whether it is preparing your child or business for the information age of the future, the potential of foresight and the pitfalls of inaction are the same.

If nothing else, what you are about to read will sensitise you. It will take you out of your narrow work confines or suburban coffee shop. But you will need to ask key questions as you read. How can I adapt and take advantage of the pressure of population growth and the demands that brings? What choices do I have when it comes to opening up to new markets and cultures with new technologies? Will I be able to compete with a competitor who understands that exposure to Asia will be the profit generator of the future? How do I get ahead of the pack and move into the African business environment? What happens to my family’s future if I live longer than even my wildest expectations? And, for those with children: What must my child know about the world to equip him or her to survive and be successful?

These trends were deliberately chosen because they aren’t going to go away. For the rest of our lifetime, they will be part of us all. Enjoy the ride but make sure you fasten your seat belt!

Chapter 1

People and the Planet

This is a unique period for the world. The era of the fastest-ever population growth is with us and will peak in 2050 before tapering off. The strain on the planet of more than 9 billion people by 2050 will be immense. Demographic changes will pit generations against each other and alter the power balance between the developed and developing world. The challenges and opportunities of environmental trends and food and water security will shape humanity in the decades to come.

By 2050 the planet’s population will have hurtled to a record 9.1 billion. Put more starkly, the global population has risen by almost four billion people since 1950 and will grow by another two billion in the next 40 years. To make this dramatic population rise more meaningful, let us note that at the start of this chapter the global population stood at 6 889 797 914. You can flip to page 32 (but do come back and read it all) to see how many people have been born while the author has been writing.

Some time by the beginning of 2012 or sooner, the seven billionth living person will be born. While it took an initial 250 000 years for the planet to play host to a billion inhabitants (circa 1800), each successive billion has taken substantially shorter periods. More than a century passed to reach two billion in 1927. The billion after that took only a third of the time (1927–1960) and the next billion half as long. The most recent additional billion took just 12 years, and the one before that, 13 years.

Fertility rates will slow

There is, however, an important surprise ahead. This era of unprecedented acceleration is over, or it will be pretty soon. It is just as important to understand this as to acknowledge the overall rise in the population thus far. In the 1950s and 1960s, the Baby Boom resulted in high birth rates in richer countries and even higher rates in poorer nations. These are now falling. Momentum is shifting and numbers being added to the total population are dropping. The current population rise, as dramatic as it is, will be the last to happen in such a short period.

Fertility rates (children per woman in a lifetime), the underlying impetus for growth, are now falling and families are getting smaller. This change has been breathtaking in some developing countries noted for their historically high birth rates. In Iran, for example, fertility fell from seven to below two in 2006; in Bangladesh – a long-time culprit of mass population expansion – from six to three between 1980 and 2000[1]. Significantly, these changes are occurring not just in the West or Japan, but in large developing nations normally associated with very high birth rates. The West can no longer assert that it is the poor who will continue to procreate without thought about the responsibilities larger families bring. Even in Africa longer-term trends show a real decline.

A new milestone will shortly occur and it will change the way we live, think and interact with one another. Half of mankind will soon be living in countries or regions where fertility rates are at 2.1 or below. This is an accepted replacement rate where a country has just enough children to keep the population stable (births balancing deaths). With the global population sprinting to over nine billion, humanity is ironically confronting a future of depopulation and sub-fertility for the first time. These phenomena will become core concepts in everyday speak and in political action in the future.

In the latter part of this century, slower or even negative population growth will fortunately allow the world more time to deal with the demographic and environmental problems overpopulation trends have caused to date.

Urbanisation, education, advancements in medical science and a rising middle class will be the core drivers for such a numbers decrease. A decline in mortality will therefore be pretty positive for the planet. So, while we have always feared overpopulation – which may well reach a peak by 2050 – the opposite will become the focus of attention. It is going to be increasingly difficult to find young people after the middle of the century.

However, while long-term projections forecast a more manageable planet – at least in terms of population growth – this is probably beyond the lifetime of most people reading this book. For the rest of our current lifetimes (the next 40 years) the planet will add almost 30 percent of its current humanity to its grand total. Most of the additional 2.3 billion people will swell the population of developing countries, which is projected to rise from 5.6 billion in 2009 to 7.9 billion in 2050. The rise in humanity will be distributed among the population aged 15–59 (1.2 billion) and 60 or over (1.1 billion) because the number of children under the age of 15 in developing countries will decrease[2].

In contrast to the large population increases in China, India and other developing nations to 2050, the population of the more developed regions of the world is expected to change minimally, passing almost unnoticed from 1.23 billion to 1.28 billion. In fact, developed world populations would decline to 1.15 billion were it not for the projected net migration from poorer to richer countries, which is projected to average 2.4 million people annually from 2009 to 2050[3].

Larger workforce in developing countries

The uniqueness of this era is further enhanced by the fact that in both developed and less developed regions the number of people in the main working ages of 25 to 59 is at an all-time high – 605 million in developed regions and 2.5 billion in less developed regions. Yet whereas in developed countries that number is expected to peak over the next decade and stagnate thereafter, in the developing world it will continue rising, increasing by almost half a billion over the next decade and reaching a total of 3.6 billion in 2050[4].

These population trends justify the urgency of supporting employment creation in developing countries. Only such domestic economic growth can offset growing internal frustrations that often lead young, unemployed men to resort to crime and terrorism.

The sheer numbers of potential workers in the developing world will shift business even further away from the developed world. While globalisation resulted in offshoring for price, the future motivation for offshoring will be necessity and practicality. There are simply going to be fewer workers in the West and many more in the developing world. This is good news for the developing world because a rising proportion of younger people entering the workforce (with skills) should drive productivity and economic growth closer to home and, if they are lucky, discourage emigration to the West.

Fewer workers in the West also means ageing populations. Between 1950 and 2000, the percentage of the world’s population older than 60 years rose marginally from 8 percent to 10 percent. By 2050 this percentage will almost double to 21 percent. Age will be the key demographic trend in many countries, particularly in Western Europe and Japan, where the share of population aged 60-plus will be more than 40 percent by mid-century. In South Korea, the entire working age population will barely exceed the 60-and-older population. The world is currently witnessing the fastest growth ever of those aged 60 and above[5].

If you think this is only a developed world trend, think again. Today only 11 percent of the Chinese population is older than 60, but by 2040 it will rise to 28 percent[6], largely due to the generational effects of the one-child policy. In 2050, 30 percent of Chinese will be over 60 – up from 12 percent currently.

These demographic changes may create new imperatives for changing China’s model of economic growth. The country will have to look for alternatives to the heavily labour-intensive pattern of the past and integrate ageing workers into less physical jobs. Ageing countries that become leaders at this will have an outstanding advantage. One aspect China will have to address – and it will have an economic effect – will be to create a comprehensive social safety net before it is too late. The sheer size of its younger population will mean it hits skills shortages later than the United States or the United Kingdom, but its reported preponderance of males over females may cause a gender imbalance sooner.

Human life expectancy was 37 years in 1800. New 21st-century technologies have the potential to overcome problems that humanity has struggled with for eons. Biotechnology and nanotechnology have the potential to overcome disease and vastly extend human health and longevity.

Radical life extension could be the medium- to long-term demographic trend of our time. The use of nanobots embedded in human bloodstreams, together with advances in artificial intelligence, is making futurists the world over talk about humans potentially becoming immortal by 2050[7] as cancers and other diseases are wiped out. It is more feasible, though, that the average life will be 125 years by 2050 rather than the 70 or 80 we might currently enjoy.

Managing benefits in an ageing world

These trends will have profound business and social implications. Already Western economies are feeling this demographic challenge. In the aftermath of the global recession of 2007–2010, their stagnant ageing populations are now confronted by public sector budget cuts. The recession could not have come at a worse time for older workers. Increasing health and pension claims come, demographically speaking, when the number of older people is growing and at a time when austerity measures on both sides of the Atlantic are kicking in.

With the world entering its current peak era of ageing humans, social benefits are in retreat. Add to this rather gloomy picture the shrinking pool of workers in the West and Japan and a critical global juncture is being reached – and perhaps overlooked – now and towards 2050.

With budgets cut, services across all government departments are likely to be severely curtailed or even eliminated. The key debating point in future will be a domestic issue rather than foreign policy. The Left/Right divide that often characterises our public discourse as human beings will mutate into a spending debate about societal priorities.

One of the key domestic issues in the developed world will be to establish whether it is a priority for a country to care for its elderly or look to stimulate the younger generations to become more productive and innovative. While global politics will still focus on ‘sexy’ strategic issues, such as who wields power in a multi-polar world or whether democracy will prevail in a future China, the politics of pensions and health care will become more mainstream. The next 20 years will bring greater fiscal and public debt pressures as aged and related healthcare services remain under fiscal stress.

Expect new political parties to emerge to represent older voters and their interests. Retired peoples’ political movements aren’t new, but they will become more vocal, activist in methodology and popular, just as the Green movement accomplished for much of the last decade. The politics of ageing will envelop the globe. It will have an impact on economic growth, investments and savings, consumption habits, the workplace and, of course, on pensions. Beyond the economic, social change in the ways families are composed, living arrangements, housing and again the troublesome issue of health care will dominate this new demographic-induced debate.

A maturity–youth divide will join the north–south or digital divides as a measure of potential conflict. Societies will need to make stark choices or work at compromises. The worst of all possible worlds will occur when both safety nets for the elderly and increased tuition fees for the young are introduced simultaneously, as in the United Kingdom in 2010. Societies will need simultaneously to advance the prospects for younger people and keep the elderly onboard – pretty tough unless economic growth can resume. A clash of generations may now be seen as an addition to Samuel’s Huntington’s seminal predictions of a clash of civilisations[8].

Undermining either generational group right now can be the stuff of political instability in the short term and dire social problems later on. If families are to be encouraged to have children in the depopulated Western world, high university tuition fees are a disincentive. Similarly, if the