In the first part of this blog article, we discussed the main sources of anxiety and nervousness during this pivotal year 2020. Since the longer-term factors driving geopolitical instability are the paradigm changes around Climate Change and Digitalization, Europe asks itself what its role in shaping these could be.
Climate Change
Europe is a densely populated continent, with around half of its population living less than 50 km from the coast. The population density is more than three times that of the USA. Many people are not aware that the European coastline is 185'000 km long, more than eight times that of the USA and almost five times that of Russia. The ratio of coast to territory surface is 2.2 for the USA versus 23.3 for Europe. A pillar of economic stability in Europe has been the absence of dramatic weather phenomena and a moderate climate. That also ensured the absence of numerous kinds of infectious diseases. Climate change-induced rising ocean levels, freak weather events, and encroaching insect-borne diseases would hit Europe relatively harder than many other parts of the world.
The fossil fuel economy has not been a winning game for Europe. The EU has a net import ratio of 95% of its oil consumption, 83% of its gas consumption, and even coal is net 43% imported. Stepping away from that and betting on renewables and clean fusion to curb climate change and achieve energy security is an obvious path to take. Not surprisingly, the EU raised its CO2 reduction target for 2030 from 40% to 55% and strives to be climate-neutral by 2050. A natural alliance partner in this struggle could be Africa. The continent will be hit by the impacts of Climate Change in slightly other ways than Europe, but even more severely. The main reason is Africa's high dependency on climate-related activities and its relatively low capacity to adapt.
Additionally, erratic variability in precipitation directly hampers the livelihood of hundreds of millions through droughts, sinking water tables, and floodings. On the other hand, Africa has almost limitless solar, wind, and geothermal energy capacities; even hydropower can still be expanded. The idea of lowering the dependency on hydrocarbon imports is even more compelling for Africa than Europe since the bill for it is crippling governments' fiscal abilities in most of the 54 African countries. At the same time, only a handful are net exporters of energy. In the early part of the century, the Desertec Industrial Initiative proposed generating a surplus of renewable energy in Africa and exporting that to Europe. That would also benefit most of today's hydrocarbon producing countries in Africa. Europe's and Africa's agendas until 2050 should be aligned and coordinated to achieve climate-related targets and economic progress at the same time. All technology for that is existing, proven, and economically most viable.
Digitalization
Africa lost out on the first three Industrial Revolutions. There were structural reasons for that. Industrialization needed know-how that was not being shared with Africa. Electrification demanded enormous capital resources, which were not available. Robotization is - at least partially - driven by a lack of labor availability. Africa had the opposite.
With Digitalization, the situation is different. Digitalization democratizes know-how, needs little capital, and benefits from population numbers. The African population is young (median age <20), large (>1.3 billion), and tech-savvy. The number of mobile phone users has outpaced that of Europe and the USA combined. Africa is leapfrogging in wireless applications, mobile payment systems, and the use of crypto technology.
Why is this important for Europe? Well, Europe needs to find its place in the 4th Industrial Revolution. China uses its giant population and politically sanctioned lack of privacy protection to foster 4IR related innovations, which need giant sets of training records, especially in AI-supported biometrical recognition and autonomous vehicles. The sheer number of commercial transactions allows fintech systems to scale faster than in any other region of the world. On the other hand, the USA use their headstart in social media development, eCommerce, and media content creation to dominate that part of business scope. And the USA and China are highly homogenous markets. Going nationwide means massive economy of scale. All three of the above-mentioned propositions are not entirely compatible with European thinking. Europe holds data privacy high, frowns at social media and its adverse effects, and does not support the pump & dump philosophy of US-style debt-financed overconsumption. Europe sees itself as a frontrunner for commensurate consumption, sustainable business, and cyclical economy. Digitalization can perfectly support those intentions when the focus is cast onto B2B and industrial applications for 4IR technologies. That would foster the competitiveness and sustainability of European based manufacturing and drive an overall optimization philosophy. Neither "Big Brother" nor hyper-consumption is the game to play for Europe. Still, with its rather aged and stagnating population, Europe is on the backfoot. Unless Europe combines forces with Africa and its young, tech-savvy, and highly creative people. Africa will step by step be a sizable market for goods, a surplus producer of resources, and especially a source of creative content in areas of fashion, music, design, movies, and art. While Africa and Europe are both fragmented and based on a flurry of cultures, beliefs, languages, and traditions, the two continents complement each other. Here is the old, overcrowded, industrial, and wealthy Europe. There is the young, vast, digital-thirsty African continent urgently needing investment. Today we fear migration from Africa, triggered by war and climate change. Tomorrow, the sheer space, available labor force, and market dynamics of Africa will lure millions of Europeans to this beautiful continent to explore, invest, or retire.
Summary
In both areas of mitigating Climate Change and leveraging Digitalization, Europe and Africa should cooperate. There is more compatibility than meets the eye. Together the two continents would be almost 2 billion people, owning every resource imaginable, sharing the same timezones, languages, and interests while complementing each other in areas such as capital availability, space, resource ownership, demographics, and agility. Together they could leapfrog to an entirely climate neutral, creative, and digitally-enabled manufacturing powerhouse that holds up individualism, freedom, democracy, and multilateralism in a world that is at a pivotal point of losing all that.