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Attracting international investment to accelerate Africa’s industrialization

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Foreign Direct Investment (FDI) is essential for Africa’s industrialization: it brings improved know-how, modern technology, and access to international markets; however, it needs to be targeted and complemented by tailored strategies and policies to lead to inclusive and sustainable industrial development (ISID). This was a key conclusion of LI Yong, the Director General of the United Nations Industrial Development Organization (UNIDO), during today’s high-level session of the 2018 World Investment Forum jointly organized by the African Union (AU), the United Nations Conference on Trade and Development (UNCTAD) and UNIDO. Director General Li also urged stakeholders to take advantage of opportunities and platforms presented throughout the UN’s 2030 agenda, the AU’s Agenda 2063, the AFCFTA and the Third Industrial Development Decade for Africa (IDDA III).

“To mobilize investment, you need to understand what investors want,” said Clare Akamanzi, Chief Executive Officer of the Rwanda Development Board. “Investors want speed and stability, in an economy that is predictable and stable, both in terms of legal framework and economic growth. Sustainability and long-term value are of great importance for them to bet on your economy.” “Growth needs both local and foreign companies; therefore follow the example of attractive countries and appeal to national and international investors,” added Director for Sustainable Economic Development at the Netherlands’ Ministry of Foreign Affairs Hans Docter. “You also need more concrete incentives, such as business parks and entrepreneurship programmes to spur growth and create more cooperation opportunities.”

The potential of the recently-established African Continental Free Trade Area (AfCFTA) was also explored during the Forum; UNCTAD Secretary-General Mukhisa Kituyi noted: “Industrialization requires strategic partnerships that must combine political leadership and a framework and strategies to mobilize competencies.” “AfCFTA is the biggest opportunity for Africa, but for it to become, Africa must industrialize,” said Ghana’s Minister of Trade and Industry Alan John Kwadwo Kyerematen. Amelia Kyambadde, Uganda’s Minister of Trade, Industry and Co-Operatives, and Kayula Siame, Permanent Secretary of Zambia’s Ministry of Commerce, Trade and Industry, both expressed their support for the free trade area.

The event brought together global thought leaders and decision makers to discuss new approaches towards mobilizing investment for Africa’s manufacturing and industry-related sectors. Indeed, investment in Africa’s manufacturing sector needs to rapidly increase to meet the aspirations of structural economic transformation and industrialization. However, declining global FDI and its focus on the extractive sectors in Africa are long-term concerns, and the participants discussed opportunities to reverse present investment trends, including the role of the international community in supporting the continent’s ambitions.

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New Initiative to Build An Equitable, Interoperable and Safe Metaverse

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The World Economic Forum announced today a new initiative, Defining and Building the Metaverse. The initiative brings together key stakeholders to build an economically viable, interoperable, safe and inclusive metaverse. Research suggests that the metaverse is expected to grow into an $800 billion market by 2024.

At this early stage, the metaverse can develop in many ways, depending on research, innovation, investment and policy. The new initiative convenes more than 60 leading technology and other sector companies alongside experts, academics and civil society to accelerate the development of governance and policy frameworks for the metaverse and strengthen economic and social value creation opportunities.

The initiative will focus on two key areas. The first area of focus is the governance of the metaverse, how the technologies and environments of the metaverse can be developed in safe, secure, interoperable and inclusive ways. The second will focus on value creation and identify the incentives and risks that businesses, individuals and society will encounter as the metaverse comes to life. The initiative will also outline how value chains may be disrupted, industries may be transformed, new assets could be created and rights protected.

“The Defining and Building the Metaverse initiative provides the industry with an essential toolkit for ethically and responsibly building the metaverse. This will help ensure that we can fully harness this vital medium for social and economic interconnectivity in an inclusive, ethical and transformative manner,” said Jeremy Jurgens, Managing Director, World Economic Forum.

Stakeholder views

“The metaverse is at an early stage in its development. Done well, the metaverse could be a positive force for inclusion and equity, bridging some of the divides that exist in today’s physical and digital spaces. That’s why the Defining and Building the Metaverse initiative will be so valuable. It mustn’t be shaped by tech companies on their own. It needs to be developed openly with a spirit of cooperation between the private sector, lawmakers, civil society, academia and the people who will use these technologies. This effort must be undertaken in the best interests of people and society, not technology companies,” said Nick Clegg, President of Global Affairs, Meta Platforms, Inc.

“The metaverse is the next inevitable step in the evolution of the internet but will require comprehensive collaboration between all ecosystem stakeholders to make it an open, safe and secure environment. As such, this Forum initiative is a robust start to addressing the key technology and policy fundamentals to enable the metaverse to fulfil its boundless potential,” said Cher Wang, Founder and Chairwoman, HTC Corporation.

“While the metaverse is in its nascent stage, we believe it has the potential to deliver enhanced connections for everyone. As an industry it is incumbent upon all of us to ensure this new paradigm is developed in a way that is accessible for everyone, puts the needs of people first, enhances human connection and is developed securely with trust built in by design. It is for this reason that we are proud to participate in this cross-industry collaborative body that will define the standards for the metaverse,” said Brad Smith, President and Vice-Chair, Microsoft Corporation.

As part of Sony Group, our goal is to get closer to people, and Sony Interactive Entertainment approaches the Metaverse with the mission to further imagine the ‘best place to play.’ We envision a virtual world that will captivate our fans, excite global creators, and bridge these two vast communities in bold new ways. Now, with an anticipated growing community of users engaging within the Metaverse, governance is a critical and shared responsibility of all its participants. An accessible, safe, and inclusive Metaverse will require new ways of thinking and democratization as well as strong commitments from all involved,” said Stephanie Burns, SVP, General Counsel, Sony Interactive Entertainment.

“At Magic Leap, we are excited about how technologies like augmented reality will transform the way we live and work, especially in growing fields like healthcare, manufacturing and the public sector. To realize the potential of these technologies, a thoughtful framework for regulation that protects users and facilitates future innovation is required, supported by all stakeholders, including businesses, consumers, government, NGOs and academia,” said Peggy Johnson, CEO of Magic Leap, Inc.

“As a company that has inspired and developed generations of kids through physical play, we are uniquely positioned to help develop kids in the digital worlds of tomorrow. As the metaverse evolves, it is reshaping how people meet, play, work, learn and interact in a virtual world. To us, the priority is to help create a world in which we can give kids all the benefits of the metaverse – one with immersive experiences, creativity and self-expression at its core – in a way that is also safe, protects their rights and promotes their well-being,” said Julia Goldin, Chief Product and Marketing Officer, The LEGO Group.

“The rapid advancement and adoption of the metaverse will create unforeseen complexities in terms of governance, ethics, social and industrial effects. Thus, the need for collective intelligence to anticipate, analyse, design, experiment on and constantly revise governance measures and frameworks will be crucial. It will be an honour for us from CJ Group to make contributions along with dedicated and leading colleagues from around the world to the World Economic Forum’s metaverse initiative,” said Dr. Cha Inhyok, Chief Executive Officer, CJ Olive Networks & Group Chief Digital Officer, CJ Corporation.

“In these early stages of development of the metaverse, it is important to define the operating principles, standards and ways of working as we go forward. Frameworks that account for openness, interoperability and safety are fundamental to long-term sustainability and success of these shared ecosystems and communities. We look forward to contributing to the World Economic Forum’s committees for this new initiative,” said Nuala O’Connor, Senior Vice-President & Chief Counsel, Digital Citizenship, Walmart Inc.

“Animoca Brands is pleased to be a part of the inaugural metaverse initiative launched by the World Economic Forum and we look forward to a dialogue with our industry colleagues as we navigate the potential of true digital ownership in the open metaverse,” said Yat Siu, Co-founder and Chairman, Animoca Brands.

Taking active steps to form a strong foundation for metaverse development is one of the key tasks humanity has to fulfil this decade. We are proud to be part of the World Economic Forum’s metaverse group and give our insights and suggestions regarding these topics, particularly that of interoperability. We are keen to further develop decentralized ways to allow users the ability to move freely between virtual reality worlds and keep their digital identities and belongings truly theirs,” said Artur Sychov, Founder and CEO of Somnium Space.

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Growing Intra-Africa Trade through Digital Transformation of Customs and Borders

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The digital transformation of customs and borders in Africa could improve efficiencies in processes, such as administration at customs and borders, and yield trade gains on the continent of $20 billion a year. A new report by the World Economic Forum, Growing Intra-Africa Trade through Digital Transformation of customs and borders, launched today at the Annual Meeting 2022 in Davos, provides a pragmatic perspective on the non-tariff barriers in border and customs services that can be exponentially improved through digital transformation to increase intra-Africa trade.

The report, written in collaboration with Deloitte, is launched at the convening of the Forum Friends of the Africa Continental Free Trade Area (AfCFTA), a multistakeholder group that supports implementation of the goals set out by AfCFTA through public-private collaborations. The group comprises Paul Kagame, President of Rwanda,; Wamkele Mene, Secretary-General, of the African Continental Free Trade Area Secretariat; Patrice Motsepe, Founder and Executive Chairman, African Rainbow Minerals; and Jim Ovia, Chairman, Zenith Bank among others.

The AfCFTA implementation, which started in January 2021, has the potential to increase intra-African trade from its current 18% of total trade to 50% by 2030. It also has the potential to lift 30 million people out of extreme poverty. However, achieving its full potential depends on putting in place significant policy reforms and trade facilitation measures.

Kavitha Prag, Africa Lead, Enterprise Technology and Performance at Deloitte Africa, said: “The African Free Trade Area agreement can be a great catalyst for Africa’s growth and development, but its full realization hinges on the introduction of efficiencies, including the improvement of customs processes. Digital transformation of border posts and customs is thus a crucial and necessary step in the implementation of the protocol, especially for many of Africa’s landlocked countries.”

Various countries and the regional economic communities are making efforts to build better trade networks enabled by world-class logistics networks that can withstand recent supply chain shocks such as the COVID-19 pandemic and geopolitical tensions.

The report highlights insights from the Logistic Performance Index as well as key insights from case studies demonstrating the quantifiable value of digital reforms in countries such as Ghana, Kenya and Uganda. The paper is a call to action for more integrated digital reforms that can drive higher impact through public-private partnerships that sets the course for Africa’s post-pandemic recovery and growth.

“Even after tariffs are lowered, and simplified procedures put in place, the full benefits of the AfCFTA will not be realized unless non-tariff barriers to trade are also addressed,” said Chido Munyati, Head of Africa at the World Economic Forum. “Policy-makers can make a difference by implementing digital solutions.”

The report calls on the following policy support to enable digital transformation:

– Legislative support and acceptance that embraces new practices such as e-signatures or the use of drones to monitor cargo

– Buy-in from the various agencies that enable these operations to embrace digital reforms and embed them in their processes

– Take action based on demand-driven interventions that lead to higher adoption of rates by all organizations and position intra-Africa trade as more cost- and time-competitive

– Develop skills of services agents that can maximize the potential of the digital solutions

– Better co-ordination among AfCFTA members to establish Single Customs Territories

The World Bank notes that while African exports of goods and services have seen their fastest growth in the past decade, the volumes remain low at just three per cent of global trade. The bank says boosting intra-regional trade requires improvement of physical integration, such as cross-border energy, transport and connectivity infrastructure, strengthening cooperation by harmonizing customs rules and procedures, and facilitating business integration through regional electronic settlement systems, an electronic cargo-tracking system, and easing restrictions on services trade.

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Digital Tech Can Reduce Emissions by up to 20% in High-Emitting Industries

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Digital technologies can reduce greenhouse gas emissions by up to 20% by 2050 in the three highest-emitting sectors: energy, mobility and materials. As businesses and governments respond to global calls for action to tackle climate change, significant efforts must be put in place to achieve net zero.

These new estimates are the result of a collaboration between the World Economic Forum and Accenture. However, a large gap remains between commitments and action. Estimates of current commitments indicate a projected emissions reduction of merely 7.5% when a 55% reduction is needed. Closing this gap will require high-emitting sectors to rethink efficiency, circularity and sustainability.

Digital solutions that can cut global emissions

Energy, materials and mobility constitute the highest emission sectors, contributing 43%, 26% and 24% respectively of total emissions in 2020. These industries can use four digital technologies to decarbonize their operations and value chains: foundational technologies such as big data analytics; decision-making technologies such as artificial intelligence/machine learning and digital twins; enabling technologies such as cloud, 5G, blockchain and augmented reality; and sensing and control technologies such as internet of things, drones and automation.

According to the estimates, digital solutions can reduce emissions by up to 8% in the energy sector by enhancing carbon-intensive processes, improving energy efficiency in buildings, and deploying and managing renewable energy.

In the materials sector, digital solutions can improve mining and upstream production and enhance efficiency and circularity of materials, reducing up to 7% of GHG emissions by 2050. The mobility sector can reduce emissions by up to 5% by supporting the transition from fossil fuel combustion to green molecules, improving supply chain efficiencies and optimizing travel routes.

“Digital technologies and business models are readily available levers for companies to accelerate their climate and energy transitions. Technology can bring transparency, efficiency and circularity to business processes and value chains. Shared learning and action by industry leaders and climate coalitions will be key to realizing the benefits of technology at scale while keeping its carbon footprint low,” said Manju George, Head of Platform Strategy, Digital Economy, World Economic Forum.

Lighthouse examples show what’s possible

The Forum is curating an inventory of lighthouse examples, companies that are leading the way in implementing digital technologies to reduce their carbon footprint and deliver economic growth to inspire more adoption and collaboration.

“The combination of digital and sustainability is already creating significant value across industries but many companies are still seeking the practical, strategic and impactful actions they must take now to realize the full impact of their ambitions and commitments,” said Kathleen O’Reilly, Global Lead, Accenture Strategy.“While every digital transformation will look different, the use of real-time data to enable sustainable decision-making, new-skilling opportunities for workforces to scale digital, and collaboration both within the organization and across the value chain will be core to the success of all.”

In each sector, digital technologies must be deployed together with new climate technologies and business models to deliver net zero. In addition, efforts to reduce emissions from the digital technologies themselves must continue, keeping their net impact on the planet overwhelmingly positive.

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