Washington challenged for World Bank Presidency
By Matthew Staff
Africa has voiced their support for Nigerian Finance Minister, Ngozi Okonjo-Iweala to be elected as President of the World Bank; disrupting a post held by the US senate since World War 2.
Unless America finds an esteemed candidate very soon, it looks as though they will be beaten to the top job by either Okonjo-Iweala or Colombia’s Jose Antonio Ocampo, replacing their current President Robert Zoellick.
Since 1945, the position has been dominated by the US senate, but following John Kerry’s reluctance to run for the job, the door has been left open for another developed nation to take the reins.
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From the 187 member nations, a World Bank board of 25 is formed; of which three are compiled from Africa. The finance ministers from Angola, Nigeria and South Africa are set to make the announcement of Okonjo-Iweala’s inclusion on Friday at a press conference in Petoria.
His candidacy has received extensive positive backing from the world’s ministers in general, and despite China, Brazil, Russia and India all having aspirations for their own members, their unity in dethroning America is resounding.
“We continue to believe that the president should be chosen based on merit, and it is very positive to have an open competition process,” declared Carlos Cozendey, the Secretary of Foreign Affairs at Brazil’s finance ministry.
His view is shared by many in a collaborative hope that developing countries can unite to produce a more democratic decision in future elections.
Former World Bank official, Domenico Lombardi has stated that this year’s election will be the first “truly contested decision”, and it is likely that Okonjo-Iweala and Ocampo will battle it out for the vacancy.
Any last ditch attempts by China look destined to be too little, too late, while the USA are focusing on a curve ball of their own.
To show their forward thinking transitional mindset, they are trying to convince ambassador, Susan Rice to become the first female president.
This seems to be their last hope to convince electorates that America are still the right country to lead the World’s finances, but the likelihood is that Nigeria, and indeed Africa as a whole, will be celebrating upon hearing the results.
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’.