South Africa rules out 2020 Olympic bid
South Africa has today sensationally ruled out bidding for the 2020 Olympic Games in favour of improving “basic service delivery” in the country.
In a spectacular U-turn, chief government spokesman Jimmy Manyi told the media that “the decision taken by cabinet is final”.
Johannesburg, Port Elizabeth and in particular Durban were all said to be interested in bidding to become the first African host city of the Olympics, boosted by the success of South Africa’s hosting of the FIFA World Cup.
Only in March, South Africa's Sam Ramsamy, a member of the International Olympic Committee’s (IOC) ruling Executive Board, stated: "We presented the bids by the three cities to the [South African] government and we are awaiting the decision on which one of the trio will succeed. The outcome is expected next month and Africa is definitely in the race for 2020."
However, the cabinet turned down a request by the South African Sports Federation to host the bid and instead will concentrate on rolling out services and amenities in deprived communities.
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The lack of water and electricity in some communities has led to angry protests over the last few years, as a debilitating unemployment rate has also taken its toll.
"Job creation is going to be a serious issue," said Manyi. "That is where the focus is going to be. So if any money is going to be spent, it's going to be on basic service delivery."
"Cabinet has not taken this decision lightly. It has considered the whole view of the euphoria of the World Cup and the gains that we still have to consolidate on the World Cup," said Manyi.
"But more importantly, cabinet has felt... that it's better to rather focus the energies of the rest of the country on the basic service delivery - 'Laser approach' is the new terminology now in terms of what is going to be happening."
Manyi admitted that the amount of cash needed to host the global sporting event was factor in the decision.
"The financial implications indeed were considered but the key issue here in cabinet is on a laser focus. Cabinet does not want anything that can be interpreted to be a distraction of what this government must achieve."
Billionaire Kumar Birla Champions Regional Supply Chains
As the head of the Aditya Birla Group, a US$46bn firm that operates in 36 countries, Kumar Mangalam Birla is no stranger to splashy strategic moves. Yet his recent announcement that he no longer wants to acquire globally distributed supply chains stood out. While many companies have struggled to cope with shipping backlogs, his firm has chosen to pivot and focus on regional networks. Said Birla: ‘We wouldn’t look at a company or a business where you source in one corner of the world and sell in another’.
He cited protectionism, the pandemic, and the limited movement of products and people around the world as ABG’s primary causes of lost profits. And they aren’t alone. Over the past year, 900 of the U.S. and Europe’s biggest IT, defence, and financial services firms have lost an average of US$184mn apiece.
An Era of Global Disruption
Over the past few decades, low shipping rates and rapid delivery times have lulled multinational firms into a false sense of security. In the early 2000s, companies chose to take on significant global supply chain risks in exchange for increased profits. First, it made sense to manufacture higher-value goods, such as electronics, in low-cost regions throughout Southeast Asia, India, and Africa. Second, first-tier suppliers started to outsource the manufacturing of specific components to second-, third-, and even fourth-tiers—leaving supply chains with extremely limited visibility.
So when COVID-19 disruptions struck certain regions, companies were caught unprepared. Usually, these events come few and far between. But over the past ten years, we’ve seen a number of ‘black swan’ events that have thrown the supply chain industry into chaos. Here’s a quick history of the most significant events in recent years, thanks to the MIT Sloan Management Review:
- 2010. China creates export quotas for rare earth elements.
- 2011. The Tōhoku Earthquake hits East Japan; flooding sweeps throughout Thailand.
- 2016-present. Trade wars between the U.S. and China hurt suppliers.
- 2020-present. COVID-19 pandemic shuts down international shipping ports.
Now, Kumar Birla is one of many who want to re-evaluate how we run our supply chains. Though his company has acquired 40+ companies in the last quarter decade, Birla intends to build up local hubs rather than expand operations.
Why Pursue Regionalisation?
Combine Chinese economic dominance, global supply chain vulnerabilities, and major government policy shifts around the world, and you have a storm brewing on the horizon for big multinational firms. As Brookings noted, ‘the biggest risk for trading opportunities in the developing world is growing protectionism in more advanced economies, often dressed up as national security protection’.
Altogether, from the U.S. to the European Union, governments are trying to protect their domestic supply chains, secure adequate stockpiles of materials, and build world-class local networks. Consider Biden’s recent executive order, which seeks to bring semiconductor manufacturing back to home soil, or Japan’s bid to open more memory chip fabrication factories near Tokyo. The Aditya Birla Group intends to react in kind. Said Birla: ‘We’re looking at regionalism as a very big theme’.
Will Others Follow Suit?
In the post-pandemic economy, global businesses must decide whether to expand or contract. On one hand, the Alibaba Group’s Cainiao Smart Logistics Network recently launched a direct flight between Hong Kong, China, and Lagos, Nigeria. On the other, the Japanese government is desperate to make its chip manufacturing domestic. Indeed, as two supply chain strategies diverge in a post-pandemic world, the one businesses take may make all the difference.
Yet Birla is confident that regionalisation is the right call. According to his words at the Qatar Economic Forum, even necessary cross-border transactions should be smaller in scope. And as the Bloomberg Billionaires Index now lists his net wealth at US$10.4bn, up 52% from 2020, he may have the cash to test his theories out. ‘Regional hubs, regional presence, regional employment, catering to regional demand’, he stated. ‘We’re a global company rooted in local economics’.