Momodou Camara (Acca)
Fintech companies are bringing disruption to all segments of finance, from payments to wealth management. A number of cities are poised to unlock business opportunities as a result of this transformation. Fintech is proving to be one of the most fruitful sectors for venture returns. According to Juniper Research, fintech companies will generate $638bn in revenue in 2024, a 143 percent growth on estimated revenues for 2019. As Brexit uncertainty clouds the prospects of one of the world’s financial capitals, London, there is a growing interest in the fintech hubs emerging elsewhere. Around the globe, cities are opening their doors to foreign investment and creating incentives for start-up creation, all in the hope of tapping into this burgeoning market. According to a survey by Startup Genome, these are among the top emerging fintech hubs to watch right now:
Bengaluru (previously Bangalore) is anticipated to become one of the next big tech hubs. One of Asia’s fastest growing start-up ecosystems, the city is home to 438 fintech start-ups and has been dubbed the ‘Silicon Valley of India’. One such start-up is Bengaluru-based Zerodha, an online broker that has transformed stock trading in India. While fintech is in its early stages in India, the opportunities are rapidly growing. The country recently overtook China as Asia’s top fundraising hub for fintech. These opportunities are especially exciting in areas such as payments, which constitute the largest share of fintech start-ups in India. As a testament to the country’s potential, Mastercard is planning to invest $1bn in India over the next five years and has opened offices in Gurgaon and Bengaluru.
The currency markets
*** These are indicative figures as per the 2nd. January, 2020.
The commodity markets in the Greater Banjul Areas
*** Market prices are as of 02nd January, 2020
Top five (5) economic risk factors
Whether it’s unemployment or cyber-security, every country has weaknesses in its economy, which if exploited, could drive it into recession. No matter how resilient a country’s economy may be, there will always be risk factors that threaten to derail growth and could even plunge it into recession. Some of these risks, such as decline in national industry, have existed for centuries, whereas others, like cyber-attacks, are much newer phenomena. Some are easier to prepare for, through policy, infrastructure or technology, while others could strike with little warning, leaving severe and long-lasting marks. As every country’s economy is different, some will be hit harder than others by various risks depending on the state of their industries and institutions. The best way of ascertaining which are the most significant threats, as well as how a country is preparing itself, is by conversing with decision makers across government, business and civil society. By being aware of the possible risk factors, and preparing as best they can, countries give themselves the greatest chance of bouncing back when a threat does come to fruition.
3 – Energy price shock
For countries such as Saudi Arabia, Qatar, Oman and Bahrain, whose economies are heavily reliant upon oil and natural gas revenues, a dramatic decline in energy prices poses a significant threat. The WEF estimates that 15 countries, including unlikely contenders such as Australia, are most likely to face an economic crisis as a result of an energy price shock, as was seen globally in 2015. In January 2016, the price of crude oil fell below $30 a barrel, compounded by a global oversupply and a shift away from fossil fuels. Countries such as Kuwait saw GDP contractions of up to three percent that year as a result, and some only emerged from recession in 2018.
The crisis emphasised the need for economic diversification, particularly in OPEC countries, but progress has been slow so far, which explains why an energy price shock remains a major risk. Not only would national industry be affected if prices were to drop or lift suddenly, but suppliers may be forced to reflect changes in the prices that customers pay for energy. This would drive down purchasing power, increase poverty and may cause a country to fall into recession.
4 – Failure of national governance
A vital part of a government’s role is to ensure that the existing law of the land is upheld, and introduce measures to improve living conditions for every single citizen. However, if this responsibility is not met, either as a result of corruption or ineffective policies, it poses a significant risk to the economy and to society. The WEF estimates that a failure of national governance poses the greatest threat of economic breakdown to 11 countries, including Panama, Greece, Ecuador and Brazil. Several of these nations, particularly Brazil and Ecuador, have significant issues with corruption to contend with, and current governments must work to unpick money laundering, bribery, fraud and various other issues that are deeply embedded in those societies. Previous governments in countries such as Greece have also overspent massively on a national level, creating a devil-may-care culture with regards to the budget, which now poses a serious threat to the economy. It’s not just the responsibility of politicians to tackle government issues, though – businesses, civil society and the general public all have a role to play. Companies operating in countries with poor governance face higher costs, so it is in their interests to comply with national regulations and campaign for others that would protect their businesses. Similarly, consumers are more likely to be defrauded or scammed as a result of improper governance, while the legal system will groan under the weight of a pile of fraud cases in countries where regulation and compliance is inadequate.
5 – Fiscal crises
Fiscal crises tend to be the greatest economic risk factor in countries for which economic growth is erratic and could be derailed by any number of national or global fiscal events. This is certainly the case in the 11 countries named by WEF as the most likely to face economic breakdown as a result of a financial crisis, which include Turkey, Azerbaijan, Argentina and Russia. The 2008 crash is a key example, as it derailed the economic progress of developing countries, plunging many into deep recessions. Turkey in particular saw consistent GDP growth of above five percent in the early 2000s, until the impact of the financial crisis saw its economy contract by 4.7 percent in 2009. Fiscal crises are highly unpredictable and it can be challenging for governments to know how to plan for them; however, reducing the national deficit, building a budget surplus, and encouraging business growth, productivity and employment is a good place to start. By preparing at a national level, governments can avoid excessive national and personal borrowing and debt when a crisis does hit, which has long-reaching economic effects and can derail recovery.
Great entrepreneurial quotes of the week
1. If all the economists were laid end to end, they’d never reach a conclusion.
By–George Bernard Shaw
2. How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.
By–Robert G. Allen
3. I made my money the old-fashioned way. I was very nice to a wealthy relative right before he died.
4. Innovation distinguishes between a leader and a follower.
5. The real measure of your wealth is how much you’d be worth if you lost all your money.
6. Money is a terrible master but an excellent servant.
7. Try to save something while your salary is small; it’s impossible to save after you begin to earn more.
8. Wealth is the ability to fully experience life.
By–Henry David Thoreau
9. The individual investor should act consistently as an investor and not as a speculator.
10. I’m a great believer in luck, and I find the harder I work the more I have of it.