South Asian region is excessively wide-open to climate change effects; comprising higher temperatures, sea-level rise, inconsistent rainfall, amplified occurrence and harshness of extreme weather incidents, increased overflow and glacial melting. It is anticipated as the nastiest impacted regions by climate change and global warming because of geophysical environment in addition to the socio economic and demographic backwardness of population. There are millions of people bearing the burden of these catastrophes due to reliance upon climate sensitive segments such as forestry, fishing and agriculture for their daily needs. Biodiversity, human health, food security, energy, water, agricultural output as well as coastal arrangements are going to imperil causing increased migrations ultimately escalating pressures over main towns (Hans, 2020).
With the help of mainstreaming climatic resistance in to community development policies and taking along confirmed worthy development practices in to resilience approach conveyance as well as through integrated aptitude towards it can easily help to accomplish uneven methods to advancement and combating negative outcomes of climate change. It is an urgent necessity for domestic, regional and global level to mitigate and take adaptive measures for facing the harsh veracity of climatic change. South Asian states “as one bloc” should make constructive negotiations via international organizations. To achieve this, further regional considerations, cooperation and mutual work is required.
This article attempts to assess the over-all condition of South Asian climatic change and role of national and international organizations in this regard. It also suggests the adaptation based actions and other recommendations to bring improvement. For this, it has been divided into three sections with the explanation below;
Section-I Climate Change in South Asia; Particular Records and Evidences
It is expected that South Asian region will experience 2-6 degree of Celsius increase in the temperature by the ending 21st century era (Rabindranath, 2002). Heating up of roughly 0.21 Degree-Celsius every ten years is anticipated for coming twenty years (Jayant, 2007).
Past and future climatic aspects and alterations in temperature are shown here. (Figure 01 and Figure 02)
(Figure-01) Current/Past Köppen Climate Classification map for South Asia (1980-2016)
(Figure-02) Predicted Köppen Climate Classification map for South Asia (2071-2100)
According to the experts, South Asia is already suffering the wrath of climate change. There are influences on economic enactments of the South Asian states mainly and the livelihoods of thousands of folks of this area are affected and even in the near future this situation will be worst. South Asian region is projected as the most awful affected global regions because of climate change, and this is due to various reasons: like geo-climatic surroundings, excessive dependence on agriculture, socio-economic and demographic credentials etc. (Nazrul Islam, 2014).
Yohe et al., (2008) reflects that biodiversity, coastal ecosystem, food, human health, water resources, land deprivation etc. are deliberated as extremely vulnerable for this region on basis of climatic-change. Cyclones, famine, overflows, storms etc. are in the lives of millions of South Asians. On the other hand, the severity and intensity of these incidents in the recent times are increasing badly which is very worrisome. Scientists discourse that because of inclusive climate-change, incidences like these, will increase in coming era and take along a lot of despair for lots of folks. In this region, forthcoming years in several parts mainly in Maldives, islands or coastal areas of India and Sri Lanka, Southern coastal localities of Bangladesh are totally unreliable. Evidences illustrate that rise of 1 meter in the sea-level may cause an economic cost of 1259 million dollars in India only and this is almost equal to 0.37% of the total GNP (Jayashree, 2007). Total GDP loss since 2010 to future projection till 2100 has been shown here (Figure-03). Besides this economic loss, another worst consequence will be the incursion of ‘environmental refugees’ (term proposed by Lester Brown in 1976) in the overburdened hubs of South Asia, that is going to jeopardize the environmental, commercial, as well as societal balance in this region.
(Figure-03) Total Economic cost (GDP Loss) of Climate Change, South Asia
South Asian region is susceptible to various climate change hazards which are linked with its geography, population, economic infrastructure etc. These are;
Glacial Melting: The peaks of Himalayas are sustenance for almost one and half billions of population, living in flood-plains of several rivers flowing from it. Around 10 percent rivers of Himalaya emanate by water-melting of snow peaks, and is very indispensable for endurance during dry spells (ADB, 2009). But due to growing temperatures, the Himalayas’ ice mass is waning more speedily than universal average, and it will badly impact the Basins. Water scarcity during summer-months, that denotes approximately 61% of the yearly current, can impact this zone at the crucial time while people want water for the purpose of cultivation or hydro-power in addition to others. The change in snow melting and snow covering patterns will be affecting river flow in coming term (ADB, 2009). As per the studies of International Centre for Integrated Mountain Development, at hand are possibly twenty unsafe glacial water bodies in Nepal as well as twenty-five in Bhutan, which pretense hazard of upsurge overflows towards remote populations (Ives et al., 2010).
Land Erosion: Increase in floods, storms, surges, rainfall, rise in the sea-level besides anthropological activities are reasons of deteriorating destruction in South Asian zone. Over-grazed rangelands, coastal lands and stripped highlands got pretentious specifically. 26.5 percent of coast-line is disposed to corrosion in India, by around 450 hectares of mass land lost on yearly basis. Coastline of Sri Lanka is also matter to substantial erosion in specific areas, whereas the mountain state is susceptible to the recurrent landslides. Mountain communities in India, Bhutan and Nepal, are facing landslides regularly (Hans, 2020). Economies, habitats, agriculture and narrowing livelihood prospects, especially of the country side underprivileged are getting damaged. In South Asia, shoreline besides foothill territory erosion is going to worsen in years ahead because of extreme weather events occurrence due to climatic change.
Rising Sea-Level: Stretched plus comprehensively settled coastlines of the region are extremely in danger of sea-level increase. Only in state of Bangladesh the level of sea is anticipated to upsurge 46 cm by the year 2050, affecting 10 to 15 percent of land mass and assessed 35 million people (GOB, 2007). It has been also projected that sea-level will grow by 15-39 cm by 2050 in India, placing major cities including Kolkata, Kochi as well as Mumbai at menace. A great fraction of Coastal line of Sri Lanka stays under 1-meter overhead of the sea level, which can get sunken due to high waves, alongside its transportation substructure. Average altitude of Maldives’ landmasses is 1.50 meters above the level of sea, therefore survival is in threat which could be triggered by large scale migrations, having ripple impacts across the borders. Rise in the sea level gives path to saline water incursion, which possess risk for supply of drinking water, agriculture and aquatic lives. Above hundred million hectares got affected in Bangladesh, and whole of Maldives got wedged via salt-water meddling because of rising of sea-levels. It also came under forecast that Thatta and Badin-two historical cities in Sindh, Pakistan will get swallowed by the sea till 2050 because the sea is encroaching eighty acres of land per day. Sea-level rise has been shown covering 21st century over here. (Figure-04)
(Figure-04) Anticipated sea level changes by the end of 21st Century for Three Emission Scenarios based on Geophysical Fluid Dynamics Laboratory Model Results
Floods: Major zones of India, Bangladesh, Sri Lanka and Nepal are inclined to recurring floods because of low elevation, heavy monsoon rains and blocked natural drainage. Melting of glaciers and rising of seas levels with maximum chance of storm surges and flooding caused by climatic change can put state of Bangladesh at specific risk, because of three large river systems’ convergence, side by side assembling the rainwater of an area twelve times larger than the country. In Bangladesh for nine months, floods could last. Abrupt monsoon rains trapped South Asian region improvised to deal with the floods, which affected almost thirty million people of India, Bangladesh and Nepal in 2007. Approximately 1.1 million homes and 11 million people got damaged and displaced during 2010 floods in Pakistan (Hans, 2020). Recent flood in 2022 has also caused a huge loss to Pakistani nation.
Cyclones: Cyclone Amphan, a strongest storm is one of the recent examples which slammed into India and Bangladesh in May, 2020. It ended up with 3 million evacuees and damaged around 2 million homes there. People of India, Bangladesh and Sri Lanka were displaced at large scale. Such stormy weathers are recurrent shift triggers. Back in year 2009, 2.3 million Indians and nearly 1 million of Bangladeshi people were displaced by Cyclone Aila (Kugelman, 2020).
Section-II National, Regional and Global level Climate Actions in South Asian
National Level Efforts: Laws and policies are made for mitigation and adaptation against climate change by governments across South Asia. In 2005, after Indian Ocean Tsunami had affected millions of people, Maldives had developed a plan to relocate their population towards higher grounds and now they plan to build new islands altogether. But issues like corruption, not enough funds and poor infrastructure are great hurdles in the enforcement of these policies. Currently national initiatives range from basic to proper proactive measures like plantation, constructing concrete houses at coastal areas etc. In India, action plan promotes energy efficiency, renewable energy, water management and sustainable agriculture. For reducing migration risks elevated from climate issues, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) guarantees to provide hundred days of paid-employment yearly to the wages manual worker. 10 billion US Dollars are given to 60 cities for developing infrastructure by Jawaharlal Nehru National Urban Renewal Mission, so that they can accommodate migrants from other parts. Moreover, the program Afat Vimo gives insurance for losses such as of earthquakes, cyclones, landslides or floods etc. In the meantime, there is a climate change policy in Pakistan for addressing migration due to climate severity, national food security policy for making agriculture productive and resilient to weather variations. Bangladesh is also initiating its plans under National Strategies on the Management of Disasters and Climate-Induced problems. Sustainable productions of fruits, forests as well as fish resources are being developed. The state is forerunner of this region due to putting efforts for integrating climate-change issue in to interagency structure of its government. Policies are made for establishing climatic change organization, governmental advisory body and planning commissions in every ministry.
States of this region emphasized sustainable farming progression and put efforts for reducing water-resources’ vulnerability besides aquatic threats for addressing adaptation community based approaches are integrated with institutional systemic mitigation and adaptation (MOE, 2011a, 2011b; MOEF, 2012a, 2012b; GOIRP, 2003; RGOB, n.d.; ROM, 2001; GON, 2011a; 2011b). Bangladesh set its objective to ensure food security from 2010 to 2015. Bhutan tried to promote adaptation in hydro power and agriculture sector by creating awareness and developing reliable capacity for facing climatic threats in future. India has enhanced infrastructure growth to ensure lesser impacts of weather disasters. Objective of Maldives’ government till 2020 was to assist adaptation in coastal settlement, tourism, health, water resources, food, agriculture, coral reef, fisheries as well as infrastructure development sectors. Nepal’s Action plan deals with food security related issues. Pakistan is aiming to guarantee foodstuff, water also energy-security for minimizing natural disasters’ impacts till 2030. Whereas Sri Lanka’s resilience to climate change programs focused on water resources, fisheries and agriculture segments during 2011-2016.
But despite of these policies and plans, actual implementation cannot be seen. Indian climate change action plan faced criticism due to lack of strategies for executing it. Institutions have failed to achieve their set agendas at a large scale. In Pakistan, situation is same as well. As their policy which aimed for an implementation frame work, actually did not implemented adaptation plans. Although capital has passed climate related laws but have not focused on enforcement. Provincial officials lacking technical or financial capacity faced challenges too. In addition to this negligence, Bangladesh even of it pioneer status, does not possess a national climate change policy and is facing many threats due to inefficient frame work.
Regional Level Efforts: For combating environmental degradation concerns, regional cooperation got initiated during 1987 in 3rd South Asian Association for Regional Cooperation (SAARC) Conference. It was recognized there that natural disasters of this region are strongly linked with climatic change. For this purpose, “Regional Study on the Causes and Consequences of Natural Disasters and the Protection and Preservation of Environment-1991” as well as an additional reading over “Greenhouse Effect and its Impact on the Region-1992” was initiated. It recommended measures of sharing experiences, information and awareness regarding climate change, transferring technological skills etc. For revising those studies, in 1997 SAARC-Plan of Action for Environment got implemented. This made sure the formation of Regional-Centers of Excellence, like SAARC Meteorology Research Centre (SMRC) made in Dhaka-1995, SAARC Coastal Zone Management Centre (SCZMC) prepared in Male-2004, SAARC Disaster Management Centre (SDMC) built in New Delhi-2007 in addition to SAARC Forestry Center present in Bhutan lately. Centers provide reliable support to institutions for bringing the issues of climatic change or calamity risk-super vision in this region. SAARC also executed South Asia Disaster Knowledge Network from 2009 to 2012, financed by World Bank’s Global Facility for Disaster Reduction and Recovery. It shared information and awareness regarding risk minimization in region (Krampe & Swain, 2018).
As per SAARC, it is chief obligation of national governments to implement the Action Plan. Under regional cooperation, this Plan demands for effective mechanism which will cooperatively work with existing institutions according to the given guidelines and directions. Different Workshops like Science and Technology Solicitations in calamity menace Reduction Workshop-January, 2008-New Delhi as well as marine and coastal Risks in Goa-May 2008 highlighted the need of exchanging information and researches about climatic change adaptation among all the states in South Asia.
Climate Action Network-South Asia is also a civil society organization comprising more than 200 associations. It works to promote sustainable development and protects environment, by linking research, policies and work based on action for addressing adverse impacts of climatic disturbance. CANSA remain at forefront to represent Southern views at International Climate-negotiations.
Global Level Efforts: Various environmental conventions, agreements, treaties, legislations and protocols like the UN Conference on Human Environment-1972, Our Common Future-1987, the Earth Summit-1992, the Kyoto Protocol-1992, Johannesburg Summit-2002, Bali Conference-2007, Poznan Conference-2008, Hyogo Framework for Action-2005 to 2015, Paris Agreement-2015, Asia-Pacific climate change adaption information platform-2019 were joint efforts to combat environmental hazards and minimize impacts of climate change globally.
International Union for Conservation of Nature-1948, United Nations Environment Program-1972, Intergovernmental Panel on Climate Change-1988, Global Environment Facility-1991, Earth System Governance Project-2009, World Nature Organization-2010 are some of the international-level organizations working for protecting ecology and environment world-wide. These all are based on framework of resilience based policies, early warning systems, disaster threat lessening tools’ usage, techno-legal regime for development practices, susceptibility and hazard calculations, land-use preparation, and augmenting official and lawful volumes to be adopted by nations and communities to combat environmental degradation security challenge. Integration of information about disaster risk management and enforcement of that information for bridging the gap of dealing with risks during environmental alterations is stressed by such international-level actions. The United Nations Framework Convention on Climate Change (UNFCC), under Kyoto Protocol aims that developed countries will stabilize discharge of greenhouse-gases in addition they would be provided by solutions and tools for such maintenance via promoting Clean Development Mechanisms in the developing countries. Another major contribution of the Convention was Bali Action plan for enhancing adaptation in risk management domains.
Natural tragedies with the menacing influences over subsist and their means of support are increasing, which basically shifted the paradigm towards disaster-management of South Asian regions. This shift is to all-inclusive management of disasters reduction covering its entire phases from only one post disaster reprieve and reintegration. Disaster Risk Reduction (DRR) is the main focus comprising preparedness, prevention and mitigation measures. These programs are related to hydro-meteorological disasters like flood protection, alternative livelihood initiatives, droughts proofing, saline embankment or bio shields etc. are same like programs of climate change adaptation. Therefore, integration between both of these programs is necessary. It will augment developments by increasing relevancy with the contemporary challenges.
Even after such efforts, human population is facing severe security challenge of environmental degradation which is leading towards survival hardships. On the contrary of all action plans, there is no legal framework for climate induced displacement and even there is no consent based definition of environmental refugee. However, International Organization for Migration has made a framework product on dealing with migrations due to climate change after research has been done in Bangladesh, Sri Lanka and Nepal. Red Cross and World Bank have also offered scientific and technical assistance for catastrophe risk-management agendas in states here. Region’s Water-Initiative by World Bank gives analytical and technological help for forecasting floods in Ganges Basin. Climate adaptation and resilience for South Asia is another venture which provides funding for development. Bilateral donors, UK’s National Weather service and aid-agency also contributes in developing early-warning structures for climatic susceptible populations of the region.
Section-III Solutions based on mitigating and adaptive methods to combat climatic change impacts
National, regional and international efforts are encouraging but these are not sufficient. There is much more the local and global community should do for helping reducing exposure of region to climate vulnerabilities.
Here are some suggestions by which the severity of climate change impacts can be minimized:
1.Carbon emissions should be reduced and environmental friendly, sustainable technologies with less carbon-emission should be used. Due to emission of greenhouse gases via thermal plants, renewable energy sources are required to be used. All governments should make re-forestation their priority and ensure sustainable use of forests, natural resources and specially water.
2.More livelihood opportunities should be promoted in the non-agrarian domains. As it’s the major income source of a lot of South Asians and though a vulnerable segment. Therefore, farmers and other workers are susceptible to weather alterations. International organizations can donate for vocational trainings and skill enhancement programs for making millions of population able to work in other sectors like electronics, retails, telecommunications etc.
3.Provincial authorities should be empowered to tackle climate related disasters. In this region provincial governments lack requisite resources and expertise to combat impacts so they should be trained and funds should be provided to them. Decentralization is not enough when there is no implementation of policies at local or ground level. Analysts identified it very critical for the case of Pakistan, Nepal and Bangladesh (Parry et al., 2013, p. 33; Regmi & Bhandari, 2013; TAF, 2012). Sponsor trainings and awareness programs as well as check and balance by federal officials can solve this issue.
4.United States should assimilate climate change adaptation and mitigation assistance in to administration’s main Asia Policy and Indo-Pacific strategies. US officials consider South Asian region as fragment of Indo Pacific region therefore, aims for making strong ties with this region under the policy. Although cooperation based areas are less in number mainly based on counter-terrorism or maritime joint venture. US should allow its American Development Bank for investing in sectors like sustainable agriculture or disaster resilient structure for minimizing climate-change effects.
5.There is lack in financing and funding and this is a major reason for working on adaptation based measures against climate threats. Policies regarding it are hindering the situation as Pakistan can be taken as an example which primarily focused on external financing and not promoting internal one to deal such threats (GOP, 2012). There were bilateral donors helping like in 2009 almost eighteen donors assisted Nepal in climate change adaptation and same happened in Bangladesh, but implementing the plans into firm actions had been often seen here (CCNN, 2011; Alam et al., 2011). For overcoming these kinds of hurdles, internal as well as external parties should donate for the cause to protect whole region from adverse impacts of climatic severity.
6.Regional cooperation is a great need of this time to jointly combat the threats of climatic change. The region is rife with many tensions and strains among Pakistan and India, Afghanistan and Pakistan as well as India and other smaller neighboring states. Intra-regional trade is also less as compared to other regions and non-existence of commercial collaboration further deprives it from solidification and mutual path towards prosperity. In addition to this, the main regional body SAARC is somehow paralyzed in taking actions because of Pakistan-India stress full diplomatic relations. Diplomats from neutral states and other external actors should therefore initiate Track-II diplomacy and arrange multi-lateral forums for helping to build consent based joint plan, by which climate change threats can be addressed. Programs like Dhaka Declaration on Climate Change and SAARC Food Security Reserve should be implemented which had languished for years. These can promote regional cooperation and capacity building as well as can reserve food grains for communities exposed to climate threats during disasters.
7.Furthermore, governments, NGOs and other civil organizations of the region should play their role by disseminating mass awareness regarding climatic change, making people encourage to go for diverse means of livelihoods and different patterns of consumption with the help of media, education or social movements, make them motivated for applying adaptation and mitigation based strategies to combat climatic change impacts.
South Asian climate related security-risks demand for governments to step up and international communities to support the cause and save the region. Now is the time to better understand future climate anticipations’ implication for ongoing expositions. Though the efforts of integrating stakeholders and diverse structures of institutes in climatic change scenario are being made and many international level treaties, agreements or mega projects are planned but outcome is despondent. There is a lot more to be done. Responsibility lies on major powers-global policemen to compensate developing states by initiating development grants, projects implementations and infrastructure betterment.
COVID-19 crisis is a lesson and window of opportunity for all to re-form national and international politics according to the liberal stand point of cooperation. In climate change context, optimistic attitude is very much needed as radical change is always possible. Re-alignment of traditionalists with re-invention of liberal sustainable development plan as well as constructing innovative ideas, discourses and identities will definitely enable International relations for research in coming many decades of national and international level politics.
This research article confirms that paradigm shift is compulsory for confronting non-traditional security threats like climate change. Focusing environment as a referent object is way too necessary now for ensuring over all security and stability of this region as well as whole world. Globalized world and trans-national boundaries ask for more cooperative relations not only to promote trade or production but to fight mutually against every threat. Therefore, beside states, international community has to play its part for combating the contrary influences of climate variation. Individual level awareness and efforts are significant as well. In the beginning, it is only one step which takes all to mutual destiny, so making aware a lay man, who is more vulnerable to climatic hazards means a lot to the over-all contribution of adaptation and mitigation on climate-change in this region of South Asia.
Inquiry on General Babangida’s Involvement in Conventional Banking despite Introduction of Islamic Finance in Nigeria
I hope this letter finds you well. I am writing to express my curiosity and seek clarification on a matter that has caught my attention, specifically pertaining to General Babangida’s involvement in the conventional banking industry despite his role in introducing Islamic finance during the financial reforms of his military government in Nigeria. Vide your special article commemorating his 81st Birthday published in your esteemed news website: https://focus.afrief.org/trending/a-salutary-tribute-to-general-ibrahim-badamasi-babangida-architect-of-islamic-finance-in-nigeria/
It is indeed noteworthy that General Ibrahim Babangida played a pivotal role in shaping the economic landscape of Nigeria by introducing Islamic finance principles. It is fascinating to witness the implementation of Islamic finance in Nigeria, as it promotes principles that align with religious and ethical values. General Babangida’s efforts to introduce this form of finance were undoubtedly commendable, reflecting his commitment to establishing an alternative financial system that adheres to Islamic principles.
However, recent observations suggest his active participation in the conventional banking sector in Nigeria. Certainly, it is intriguing to see General Babangida’s continued involvement in the conventional banking industry, which operates under different principles. While some may argue that his involvement in both sectors is simply a matter of personal choice, it raises questions about the compatibility of his actions with the ideals and principles of Islamic finance. While the former is interest driven, the latter prohibits interest related transactions completely.
I wonder if General Babangida has ever publicly addressed this matter or explained his reasoning behind being active in both sectors. It would be enlightening to hear his perspective on how he reconciles his involvement in conventional banking with his efforts towards promoting Islamic finance. This has raised questions in my mind and perhaps in the minds of others as well.
I am keen to understand the rationale behind General Babangida’s dual engagement in both Islamic finance and conventional banking. Does this reflect a strategic approach to diversify Nigeria’s financial sector, or are there specific reasons behind his involvement in conventional banking despite advocating for Islamic finance principles?
Additionally, it would be interesting to explore the potential impact of his dual involvement on the perception and growth of Islamic finance in Nigeria. Does his presence in the conventional banking industry hinder the progress of Islamic finance, or does it have the potential to bridge the gap between the two sectors?
I believe that delving into these questions could provide valuable insights and generate constructive discussions within the Islamic finance community in Nigeria. By shedding light on General Babangida’s dual involvement and the potential implications, we can further enhance our understanding of the challenges and opportunities faced by the Islamic economy in our country.
Thank you for considering my questions, and I look forward to reading more about this topic in your esteemed Focus on Islamic Economy.
Abba Musa Mamman Lagos
10 Megatrends Shaping the World in 2024
The report, “Navigating Megatrends Shaping Our Future in 2024”, was launched during the first day of the World Governments Summit (WGS) 2024, being held under the theme “Shaping Future Governments” from 12th-14th February in Dubai. The report examines the indicators that shape these megatrends, supported by evidence from today as well as future expectations. These trends inform decision-makers and foresight experts about various sectors and the potential opportunities in each.
Khalfan Belhoul, CEO of Dubai Future Foundation, said, “This report has been launched in line with DFF’s efforts to identify and communicate those trends with the most potential to shape opportunities and strengthen local and international partnerships to overcome current and future challenges.”
“The challenges that face us on our journey to the future require that we are agile enough to be able to adapt to rapid change. It is vital we pay attention to the signals we detect – only then can we be prepared to overcome challenges and seize opportunities. The World Governments Summit provides a platform for discussing these challenges and exploring the opportunities.”
New types of materials will create a shift in the industry, with solutions based on artificial intelligence (AI) such as biopolymers, biorefineries, and chemical recycling paving the way. These solutions will facilitate the development of new biological and novel materials that could rival plastics.
Boundless Multidimensional Data
Enabled by developments such as 5G and 6G in addition to advanced connectivity, the availability of raw data will vastly increase. The Internet of Things (IoT) will continue being deployed in healthcare, agriculture, and smart cities, especially in the Middle East.
The cybersecurity sector will boom amid a sharp rise in smart home devices and wearable tech. According to a report by Allianz, the annual cost of ransomware is projected to reach around $265 billion by 2031. Meanwhile, the debate on the future of decentralised finance will continue.
Advances in tech and the growing demand for energy will drive the pursuit of alternative sources of energy. Novel materials and machine intelligence will enhance current sources of energy, including their distribution around the world – and in space.
Approaches to conservation will be more interdisciplinary and future-focused, taking into account both societal and environmental factors. Driven by resource scarcity, climate change, and shifts in social values, environmental impact management will become increasingly holistic.
Borderless World – Fluid Economies
The world is witnessing a rise in unmediated transactions in finance, health, education, trade, services, and even space, which are blurring boundaries and creating more cross-border communities. Advances in communications, computing, and advanced machine intelligence will accelerate the creation of a borderless world that will change the way we work, live, and connect.
The spread of 5G and 6G networks will enhance the applications of autonomous technologies and IoT. As quantum technologies become scalable and reliable, immersive experiences will become even more realistic.
Living with Autonomous Robots and Automation
Robotics and automation will increasingly be deployed across industries beyond automotive, manufacturing and supply chain logistics. This will provide opportunities for efficiency and innovation, although there will also be ethical challenges to address.
New workplace norms will emerge, with people needing to adapt to non-traditional skill sets in areas such as digital literacy, communications, culture and sustainability.
Advanced Health and Nutrition
Accelerated progress in advanced machine intelligence, nano- and biotechnology, additive manufacturing, and IoT will transform health and nutrition, improving health and wellbeing for people of all ages. Technology will reduce, if not eradicate, some communicable and non-communicable diseases and enhance the sustainable use of and access to water and food.
Africa’s New Online Foreign Exchange System will Enable Cross-border Payments in Local Currencies – what you need to know
The high cost of making cross border payments on the African continent has driven governments on the continent to seek options of settling trade and other transactions in local currencies. This has given birth to the Pan-African Payment and Settlement System which was formally launched in Accra, Ghana, in January 2022. Development economist Christopher Adam, who has studied the exchange rate policies of African countries, answers some key questions.
Why are African countries exposed in the international currency market?
Three main reasons. First, African economies are small and as such are highly dependent on trade with the rest of the world. Their exports are dominated by primary commodities including oil and gas, minerals and cash crop agriculture. On the import side, they purchase a whole range of goods – from essential commodities not produced at home such as food, drugs and medicines, to capital goods and energy. A large proportion of these are sourced from China and other major economies of the global north. But because African countries are small relative to their trading partners they rarely have the power to determine the prices of imports and exports. They are “price takers” in world markets. And with world prices being set in the major reserve currencies of the world (the US dollar, euro, yen and renminbi), African countries are exposed to movements in these world prices. Second, “intra-African” trade is still a relatively small proportion of the total trade of African countries.
What’s required for the system to get off the ground?
The basic idea of the system is to be able to settle trade between African countries without having to use the US dollar. There are two major challenges with that. First, intra-African trade accounts for less than 15% of Africa’s exports at present (although supporters of the African Continental Free Trade Area expect this to grow significantly over the coming decades). The African payment system therefore does not eliminate the role of the dollar (or other foreign currencies) in trade settlement entirely.
The second issue is that trade is not balanced between African countries. For example, Kenya exports goods of higher total value to Ethiopia than it imports from Ethiopia. If Ethiopia paid in its own currency, Kenya would end up with Ethiopian currency that it didn’t need. Some form of settlement currency that is acceptable to all is required – most likely the US dollar.
What are the challenges and potential risks?
Since trade rarely occurs instantaneously, some institution in the trade financing chain carries the exchange rate risk. Because of the gap between placing an order for imports and receiving them to sell in the local economy, there is a risk that the value of local currency will change relative to the currency in which the import is denominated.
In the “old” system, this risk is borne by the trader because everything is priced in dollars. The local currency value of the income from exports or the local currency cost of imports will change with movements between the local currency and the dollar, but the banks and those counterparts pricing in the dollar are protected.
Under the new system the same allocation of risk will remain in “external trade”. This currency risk is also present for intra-African trade.
An important question for the new African payment system is: who bears the exchange risk if one African currency depreciates relative to another? Should the importer carry the risk, or the exporter? Can and should the African payment system bear this risk of exchange rate movements itself? Where both currencies are volatile, traders might still prefer the relative stability of settlement through the US dollar.
The success of this system also depends on scale. The more trade settlement is routed through it, the easier it will be to settle in local currencies. Large currency imbalances will be less common. But until the system achieves this scale, the African payment system will need a strong balance sheet so that traders and participants can have confidence that settlement will be swift and risk free. It is unclear at the moment how this is to be achieved.
What is the best case scenario?
If the system can address the trade imbalance problem, provide clarity on risk management and reach scale, it could be very successful. But this is all going to be driven by underlying economic performance. Improved settlement will help but what is really driving this is the structure of trade. The more the economies of Africa can develop intra-African trade and the less dependent they are on extra-African trade, the less will be dollar dependence in trade. This growth in trade depends to some degree on trade settlement and trade financing but much more on production, consumption, trade policy and fiscal policy.
Professor of Development Economics, University of Oxford
Inquiry on General Babangida’s Involvement in Conventional Banking despite Introduction of Islamic Finance in Nigeria
Dr. Gazali Muhammad Appointed Technical Advisor to President Bola Ahmed Tinubu of Nigeria on Development Finance
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