Horizons newsletter – Week 35 // 2017
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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The next wave of African democratization
Since the 1990s, Africa has made much progress in democratization. This was spearheaded by a generation of reformers like Nelson Mandela, Meles Zenawi and Paul Kagame. Currently however, progress is stalling. Recently, Paul Kagame won a third term as president of Rwanda with 99% of the vote, a result that raises questions about the fairness of the elections. Kenya’s elections were won by Uhuru Kenyatta, but the result was challenged by Raila Odina. Fear remains that violence will break out again just as in 2007. Where could better governance in the future come from? First of all from female leaders. After years of civil war, Ellen Johnson Sirleaf of Liberia and the many Rwandese female parliamentarians played a crucial role in stabilizing their countries. Improvement can also come from technologies like Firechat, Soundcloud, anti-corruption apps and biometric voting systems that improve transparency. These two drivers could add new impulse to a process of democratization that is currently stalling. Elections later this year in Liberia, Angola and the Democratic Republic of Congo will confirm if Africa will move to the next phase.
Grocery stores strike back
Until recently grocery shopping has been largely untouched by ecommerce, mostly because of the logistic challenges involved in delivering perishables to the home fast, fresh, and at an affordable price. However, it seems a tipping point is approaching. The first sign was the announced acquisition of the Whole Foods grocery chain by Amazon last June, but more recently, a slew of announcements by leading retailers indicates a shift. To compete with Amazon Prime on affordable same-day deliveries, Aldi has begun to collaborate with Instacart, Target acquired same-day delivery firm Grand Junction, and Chinese food delivery firm Ele.me acquired its Baidu competitor. Because these independent delivery companies can provide last-mile delivery for several grocery chains nationwide, they can aggregate demand and reach the scale and profitability that few companies can achieve on their own. Instacart, for instance, works with over 150 grocery chains, including Publix, Ahold-Delhaize and Walmart. Therefore, while most attention is focused on how traditional grocery chains are fighting back against Amazon, the less conspicuous independent logistics companies enabling this strike are the major beneficiaries.
Generations have different consumption patterns because their budgets, financial obligations, physical abilities, and so on, vary. But there is also an underlying factor that differentiates youngsters’ consumption spending from older generations. Using data from the World Value Survey’s latest wave (2010-2014), we find that younger generations in high-income countries adhere more to post-material values: values that stress self-development and general quality of life, instead of economic and physical security (material values). That might explain why Millennials– generally defined as those born between 1980 and 2000 – prefer to spend their money on experiences, such as live entertainment and yoga, instead of buying television sets and other consumption goods. In addition, younger generations are less interested in brands and are more open to sharing instead of owning goods (cars for example). Instead of consuming more goods and flaunting their wealth ostentatiously, younger generations prefer the experiences and consumption goods that have intrinsic value and make their life more meaningful.