MORGENIE PILLAY: Is our AfCFTA strategy future — and weather — ready?

In today’s service-centric world economy, could SA’s strategic imperative for its automotive industry — to increase vehicle and automotive component exports under the African Continental Free Trade Agreement (AfCFTA) — be stale?

Is it clinging to the comfort of familiarity but disconnected from significant realities? Is growing SA vehicle production to 1% of global output risk smart, considering that original equipment manufacturers (OEMs) are vulnerable to climate-related risks?  

Insights from the Harvard Business Review’s report on a mapping study by Resilinc and the University of Maryland, analysing the supply chains of 100 OEMs in the high tech, auto and consumer goods industries, used climate data to identify at-risk supply chain sites.  

While it focused on risks at Chinese, US and Taiwanese sites, it revealed that supply and revenue were at risk if the supplier site was disrupted by a climate-related event. Therein lies lesson one. Could this be a significant vulnerability running through SA’s master plans?     

The study found that only 11% of the at-risk sites had available backup manufacturing sites or business continuity plans. It makes no sense to believe such risk brings opportunity. After all, we are not insulated and our OEMs may have weaker protection.

This illustrates not just the business case for pre-emptive mitigation, but also the trade value of weather services and products. It also indicates that enjoying a commercial lead in such services will be increasingly sought out to secure advantages within supply chains and in global trade.   

Lesson two is to not underestimate commercial demand for climate knowledge, especially how weather services and products will affect overall business development on the continent. Big-ticket investments on the continent will be high-risk and prone to failure without adequate insurance. This makes past, present and future weather and climate information both tradable and relevant for economic growth and a healthy AfCFTA.  

Cornell University’s Global Labour Institute and Schroders’ report on how climate loss and damage will hit the Asian apparel hub at a cost of $65bn triggers a valuable stress test for the AfCFTA.

Recalling the big promises made for sectors such as apparel, vehicles, agriculture and financial services, it is elementary that for the AfCFTA to succeed it must be surrounded by a comprehensive set of sentient derisking measures. Even better if those measures can also drive innovation and business growth for services like weather and data.

Lesson three is that professional meteorological services, meteorological big data services and customisable meteorological services all have considerable value for trade continuity under the AfCFTA and for achieving and sustaining job-rich growth.   

The AfCFTA’s  Protocol on Trade in Services has extensive provisions, which if properly triggered can make meteorological services investable and tradable on and from the continent to the world.    

But given SA’s sunk costs in favourites like automobiles, is this really a tradable service of worth? Decide for yourself if it is “geared for growth”: 

• There is growing public and private sector demand for commercial-use weather services in all markets. End-use is growing at a compound annual growth rate of 9.4% (2023-32). Demand for more customised services will rise in aviation and shipping, logistics and supply chain management, financial services and insurance, agriculture, health, water management and distribution, built environment and commercial real-estate, tourism, health and satellite-enabled services.  
• Global and continental production of renewable energy will further fuel this demand as renewable energy is weather-dependent, with weather variability affecting energy stability, energy generation including critical minerals mining. These services in the renewable energy value chain will be a critical input for managing energy output, renewable energy generation and shortfalls, including renewable batteries adoption and use.  Meteorology datasets from varied sources offer big value to R&D and are integral for creating competitive advantages in design of energy systems and effective storage.
• Africa has a $1.8-trillion insurance protection gap. This is only going to grow, partly because of the “lack of a plan” to drive collection, movement and commercial use of weather data by leveraging emerging tech like artificial intelligence (AI) and blockchain to innovate for customised insurance services and products for climate risk on the continent.  
• Customised weather products and services are functional (operational and strategic) for derisking investment and trade under the AfCFTA, including empowering better access to climate finance. Considering that 43% of global assets are not protected adequately, including 60% of global food supplies, we cannot ignore what this means for the AfCFTA assets we are banking on to boost trade.   
• The nascent meteorological services market on the continent points to supply gaps. Demand will be driven by disaster prevention, financial risk, evolving standards on sustainability, competitive intelligence and R&D needs. This demand will also multiply demand for meteorology-climatology education services, professional skills and innovative franchises. 
• Easier access to affordable and customisable weather/climate services advances inclusion. A Frontiers in Climate Study by Friedman and others demonstrates the big value of customised weather and climate services driving inclusion and addressing gender and geographic differences for weather and climate information that is relevant for livelihoods. 
• The National Meteorology Institute of SA was in the news recently for boosting meteorology co-operation with China. Chinese development benevolence? Unlikely. China has correctly calculated meteorology’s economic worth for gaining overall and long-term economic advantages in the global economy. Securing access to meteorology infrastructure and metadata secures advantages in weather-adjusting economic data increasingly expedient for deepening trade growth.  

• Dr Pillay is an international trade-in-services specialist.