Italy - Strong and Resilient Recovery is Possible - Horasis Global Meeting 2021

On June 8th, 2021, the Horasis community gathered for the annual Global Meeting to navigate latest developments and discuss the post-COVID future. Under the theme “Fostering Shared Humanity”, over 1000 speakers and delegates debated how to be entrepreneurial and at the same time proactive in advancing sustainable development in the interest of the global public good.

What are the seedpods of shared solutions to solve the existential challenges facing business, governments and humanity at large? How to nurture the deep transformations our world needs? And how to ignite discourses on openness, fair globalization and equality?

I was delighted to curate and moderate an incredible panel and to discuss with leading professionals from the government and the private sector how a strong and resilient recovery in post-pandemic Italy is possible and is happening.

A little background first: Italy is the eurozone’s third-largest economy, and was the first European country to be hit by the pandemic in early 2020.

A recent New York Times article titled “How Mario Draghi Is making Italy a power player in Europe”, detailing how the Prime Minister is leveraging his European relationships and his solid reputation to make Italy a stronger force on the continent.

When in late March the EU was stumbling through a Covid-19 vaccine rollout coupled with shortages and logistical challenges, Draghi took matters into his own hands by seizing a shipment of vaccines destined for Australia – and showing that a new, aggressive and strong force had arrived in the European bloc. The Australia experiment, as officials in Europe call it, was a turning point, for Europe and for Italy. With Chancellor Merkel of Germany leaving office in September and President Macron of France facing very tough elections next year, Draghi seems to be poised to fill a leadership vacuum in Europe, showing that Italy is now punching above its weight.

On April 28th, the Italian parliament approved the ‘Italian National Reform and Resilience Plan”, which foresees reforms and investments to be implemented in the span of the next five years. With a total value of €235 billion, the Italian Recovery Plan represents the largest Recovery and Resilience Plan, as well as the one on which all eyes will be on.

In a short interview during the same month, Mario Draghi confirmed that Italy's 160% debt ratio, second highest in the euro zone but far from Japan’s debt at 200%, is not worrying because low interest rates, central bank support and the COVID-19 pandemic have changed the way markets view debt sustainability.

“Today’s eyes – he stated - see things completely differently, the pandemic has made it legitimate to create more debt, it has prompted the ECB’s strategy and driven the behaviour of those who make the rules in Brussels, however we must make a distinction between “good debt and bad debt”, what matters is that countries use debt for productive investment in order to create growth”.

Although since 1992 the Italian governments have had budget surpluses year after year, over the last 20 years, Italy has experienced a period of economic stagnation.

Most economists agree in identifying the cause of such stagnation in the decline of productivity, which in turn is largely driven by a series of structural deficiencies afflicting both the private and public sector.

To support the country’s recovery, in line with the EU guidelines, the investments and reforms foreseen by the Italian Recovery Plan are articulated into six major missions:

1. Digitalization, innovation, competitiveness and culture

2. Green revolution and ecological transition;

3. Infrastructure for sustainable mobility;

4. Education and research;

5. Cohesion and inclusion;

6. Health.

About 40 per cent of the Recovery Plan will be spent on green projects, and 27 per cent will be dedicated to the digitalisation of the Italian economy. The plan is heavy on investments to modernize, boost innovation and digitize Italy’s economy and bureaucracy and encourage environmentally sustainable development.

Bank of Italy indications of last week show production regaining strong momentum, fresh investments, and an accelerating economy, with a 4% GDP growth shown so far in 2021, up to 4.5% according to the OECD. Due to the pandemic, Italian companies and families have saved over 140 billion euros, or 9% of GDP. Something similar has also happened elsewhere in Europe.

On June 1st, during a public event, prime Minister Draghi said “Italy is alive, strong, and has a great desire to restart. The months of the pandemic were very tough but we are now facing a phase of recovery and trust, on which to build a fairer and more modern country. And to release the energies that have stood still in recent years.”

So, will a recovery gradually take shape and become as impetuous as data indicators seem to show? Can technology promote a new model beyond GDP to measure a modern country’s wealth and sustainability while guaranteeing sustainable development? Join our discussion and find out more, full session in the video below.

M.

(info@smartbizhub.com)

Made in Italy, a 100-billion dollar Restart

How can the economy be re-launched in a post-COVID world?

(Original article by Manuela Andaloro published in Italian on Corriere dell’ Italianita’.)

There’s no way around it, this is a time of great hardship, complex mechanisms, and unknown variables. 2020 will probably go down to history as the Annus Horribilis of the past 70 years, given the terrible cost in terms of human lives and public health, and due to the incredibly strong impact on the entire economic system, both national and global.

Still, despite the severity of this shock, Italy’s economy grew by 16.1% in the third quarter from the previous three months, a much stronger rebound than expected following a coronavirus lockdown, outperforming the UK, Spain, Germany and France. The rise in Italian industrial output also points to strong economic rebound.

Lombardy is the 1st regional economy in Italy, its GDP is nearly equivalent to Switzerland’s.

The preconditions – as we have seen in the recent Rapporto Export (export report) issued in September 2020 – for a restart of the Italian nation seem to exist. A strong relaunch is possible by means of Italy’s driving force: Made in Italy. Fashion, Furniture, Design, Food, Manufacturing, Engineering, Tourism: these are all sectors in which “italianness” is an established synonym of quality, reliability, and creativity.

It includes businesses deeply-rooted in certain areas, with a fabric of supply chains and districts in all Italian regions, with a significant push towards international markets. The strength of the “Made in Italy” calling boosts export, increases the competitiveness of the entire Country System, and leverages on both the growing digitization and a now unavoidable global trend: sustainability. A strong attention towards “green” sectors, viewed as an opportunity for the environment and the planet to have their revenge, but also an occasion for investment, growth, and employment for the entire production network. In this scenario, the Country’s priorities intertwine with those of the Green New Deal for Europe, and are targeted towards reaching the goals set by 2050.

In this context, it was very interesting for me to take part – from October 6 to 8 – in one of the few digital happenings that has set a clear and precise end: to understand how to restart the Italian system, and how to do things better than before. “Made in Italy: The Restart” was a three-day program of digital events organized by two leading financial publications such as Il Sole 24 Ore and Financial Times, for the relaunch and recovery of the world of Made in Italy excellence: a series of structured events, and an occasion for debate on the related growth strategies. A stellar lineup of Government representatives, CEOs, and over 40 top managers and entrepreneurs representing Italian excellence were brought together through streaming and simultaneous translation.

Participants included five Italian Ministers, two Undersecretaries, five representatives of Confindustria (Italian industry business organization) – with President Bonomi leading the group, the Governor of Banca d’Italia (central bank of Italy) Ignazio Visco, and over 40 top managers and entrepreneurs embodying Italian excellence. It was a moment of reflection, but also an organized relaunch and amplification of a clear message: Made in Italy is strong, and recognized worldwide as a symbol of quality, safety, and reliability.

Dominated (40%) by the luxury good sector, where Italy stands in 3rd place at the global level, the industry is completed by food, fashion, furniture, and personal care products. Made in Italy goods have also increased in value in the automotive, oil & gas, pharmaceutical, and engineering fields, which goes to show the versatility and eclectic nature of Italian companies.

il Sole 24 Ore, The Banker, interview to Ignazio Visco, Bank of Italy

Innovation is the keyword pushing great Italian businesses, not only in terms of product design, but also in business choices that have consolidated the presence of Italian products on the most competitive international markets (US, Japan, Germany).

In spite of the current COVID crisis, the Made in Italy market strongly affects the development of Italian and international economies, and now enjoys and crucial role on the global stage and in terms of proliferation of new business opportunities in the import and export of all that which is manufactured in Italy, known abroad as a cradle of pristine craftsmanship.

The value of the Made in Italy label has grown by 14% from 2018 to 2019, reaching 96.9 billion dollars (source: BrandZ Top30 Most Valuable Italian Brands 2019). Stronger than the aura of economic and political uncertainty, Italian brands have continued to grow in double digits, year after year, thanks to a solid worldwide presence. Over the past 40 years, “Made in Italy” has become more and more a brand, a label, and an intangible value that increases the competitive advantage of goods. The global demand for Italian products is continuously and constantly on the rise in traditionally responsive markets, but has also and especially grown in emerging economies that look at our country as an example of excellence.

Moreover, the great Italian brands are a driving force for small and medium enterprises that – although not enjoying the same notoriousness – benefit in terms of perceived quality and innovation.

The Italian economy has adequately avoided recession in the past few years, and one of the main reasons is its growth in export, with Made in Italy acting as the driveshaft to achieve comparable and sometimes greater results than those recorded by the German market.

But what is behind the fame of Made in Italy? The positive image of Italian companies dates back to half a millennium ago, in the Renaissance. An occasionally turbulent time, it nonetheless sanctioned the quality of Italian technology and aesthetics, along with a knack for business based upon manual skill and craftsmanship.

Ministry of Foreign Affairs Luigi di Maio

Two fundamental take-aways may thus be extrapolated from the topics dealt with by many of the speakers present at the Il Sole 24 Ore- Financial Times 3-day event. The first was summarized by Ministry of Foreign Affairs Luigi di Maio, who spoke of how innovation and digital technology are extremely strong levers for a post-COVID success: “We cannot waste the opportunity that this crisis grants us: innovation and digitization will be the levers of success in the post-pandemic phase, both in Italy and worldwide”. The second take-away is environmental sustainability, a central topic that must capitalize on the great awareness gained in terms of the need for a sustainable approach towards the future of our Planet and of coming generations.

With our excellence, strength, and togetherness as our re-starting block, we shall go far, once again.

Manuela Andaloro

(info@smartbizhub.com)

Sources: FT, Reuters

Original article published in Italian on Corriere dell’ Italianita’.

COVID-19 LENS: LONGEVITY ECONOMY AND GRETA GENERATION. FINTECHS MUST THINK BIG.

Built for growth, the global economic machine has been brought to a screeching halt. Thanks to intervention on an unprecedented scale, a full-scale meltdown has been averted – for now.

On January 30th, 2020, 43 representatives from 32 UK FinTechs, 25 Swiss banks and financial institutions, 7 VCs, 19 Swiss FinTech players, and many others gathered in Zurich: over 180 experts met to talk innovation, sustainability, and investments.

We didn’t know then that our world was about to change for a while to come – perhaps forever – and that soon we’d have put our discussions about innovation and sustainability to practice.

5th UK FinTech Mission to Switzerland event, 30.1.20, British Embassy Bern, DIT, Zurich Insurance

Key discussions of the day focused on social shifts driven by the longevity economy, age diversity, and ethics reshaping the financial world. Our aging society has been affecting consumer trends, opening new opportunities for businesses and workforce, while increasingly, 40-year-old millennials have been leading the charge of socially-responsible and sustainable investing, both ultimately driving the greater good.

COVID-19 has changed the ball game in today’s global economy, society, and impact investment strategies, calling into serious question our ability to reach the Sustainable Development Goals (SDGs) by 2030 – if that was ever possible.

With the current crisis in full development, many hope that a “mindset shift” will occur once a “new normal” is achieved. Both optimists and pessimists seem to agree that western balance sheets will at best go back to 2008 levels. In terms of debt-to-GDP, we’re talking of 10 percent or more, plus unemployment at 15-20 percent coupled with the strong possibility of populist-enforced cuts in foreign aid and the very likely scenario of social unrest across the first world.

The financial meltdown (currently deemed to be worse than that of 1987 or indeed, as some say, similar to the Great Depression of the 1930s) will also very likely reduce traditional foundation funding. 

It is interesting, and very difficult, to think now of the topics we discussed on stage only a few months back, and to do so, wearing a Covid-19 lens. Most of the challenges we discussed – whether concerning the aging population among consumers and investors as well as in the workplace, or the attitude of millennials towards social good – have only worsened. Possibly, two key aspects will emerge and might be the staple to overcome the ever-greater challenges ahead: digitization and sustainability, sparking new discussions around a new way to work and to engage in less-social contexts, and around the increasing need for impact and sustainable investing.

“As the Chair of the International Accounting Standards Board recently noted, the current approach ‘will not prioritize planet over profit.’ What is important for both sides of the for-profit and not-for-profit divide is not what people are saying – but what they are already doing to be socially impactful. What are we paying for?  And what is the incremental impact of each government or corporate dollar to each SDG? In other words, we need a metrics process whereby everyone is seriously involved and stakeholder actions are competitive, comparative and, predictive.

If not, we will continue to witness a decline in both the effective statistics measuring the SDGs as well as the effectiveness of programs designed to serve them, with an expansion of the funding gap. The danger is that, by 2030, the international community will have spent $6 trillion with little to show, particularly to teenage Swedish activist Greta Thunberg’s generation.”

Governments are pumping out capital to try to save economies and bridge financing gaps around the world, but it is apparent that government funding alone is likely to be insufficient to solve this immediate crisis. Nor can it be relied on as the only solution for the longer-term investments required to build stable, resilient systems that can manage a planet headed toward a population of 10 billion people within the next few decades. 

We know that climate change will disproportionately affect those at the base of the economic pyramid; as we are experiencing with coronavirus-related deaths and job losses, the same is true for this pandemic. The crisis has highlighted the case for purpose-driven, inclusive finance across both the environmental and social sectors, which is at the core of impact investing.

An encouraging takeaway from the crisis is that the push for private capital to act more decisively as a force for good in society and to shoulder a portion of the investment burden does not have to come necessarily with attractive returns.

 Visionary leadership needed.

As the COVID-19 pandemic continues to create uncertainty, many FinTechs are under stress on a number of fronts. Access to funding – especially for some early-stage ventures, as many investors focused on established FinTechs with clear business models –, recent interest rate cuts and the economic slowdown have radically changed many industry assumptions.

Yet, as the broader economy shifts from response to recovery, COVID-19 may create new opportunities for some FinTechs. For example, as social distancing has taken hold worldwide, there has been very strong growth in the use of digital financial services and e-commerce, as well as an increased interest in doing the “social good”.

Keeping an eye on future opportunities, FinTech companies may be forced to reexamine their missions and business models after COVID-19. A key question is how to leverage both existing and newly-developed assets to seize new opportunities in the future. It could be an opportune time to think big and act boldly. First and foremost, it is apparent that social distancing is accelerating customers’ use of online – especially, mobile – channels to view and manage their finances. Because many FinTechs are purpose-built for the mobile channel, they often excel in offering presentation, on-boarding, underwriting, and data visualization services, as well as in providing the right context for transactions. These capabilities will likely become even more relevant and important as a greater number of financial transactions are conducted through digital channels.

FinTechs can play an important role, perhaps through strategic partnerships across a broad ecosystem of players – including financial institutions, retailers, and the government sector – in distributing benefits to more vulnerable sectors of the population. Indeed, many FinTechs made it their mission to democratize financial services by providing basic financial services in a fair and transparent way. 

COVID-19 and the Longevity Economy

Despite the outbreak, the global population continues to age, and we expect global life expectancies to creep higher over the long term. Although we may see some changes in consumption patterns post-COVID-19, the key drivers of the longevity economy will likely remain intact.

The “Longevity Economy” is redrawing economic lines (AARP research), changing the face of the workforce, advancing technology and innovation, and busting perceptions of what it means to age. Bank of America Merrill Lynch projected in 2019 that the global spending power of those aged 60-plus would reach $15 trillion annually by the end of 2020.

Increasing longevity had, until February 2020, spurred unprecedented economic growth and new opportunities for personal fulfilment. Markets have been evolving to meet their needs and aspirations, offering new opportunities.

Aging adults are not only consumers – they are our only increasing natural resource, a talent pool that can power businesses and enhance the communities of the future.

Over the next few decades, baby boomers and Gen X will pass a significant amount of wealth (calculated at $30T prior to the COVID crisis) on the millennial generation. With very high spending power, millennials have started to reshape the investing and FinTech spaces to better align with their ethical values.

FinTechs for social good

“Life is what happens when you are busy making other plans.”  As we struggle to bring into focus the long-term impacts of a post-COVID-19 world, Lennon’s quote is a poignant reminder of the uncertainties that lie ahead for sustainable and responsible investors. 

We are now approaching an inflection point in the crisis, where savvy investors are fundamentally reassessing economic, environmental, social and, governance factors to adjust to the new normal.

The time has passed for small commitments, hyperboles, and delays in embracing sustainable investing. Now is the time for leadership, investment, and action.  Companies and investment managers that remain on the sidelines will sacrifice their opportunity to shape their own, and the planet’s, future.

Within 36 months, there will no longer be a discernable distinction between sustainable and traditional investing, predicts the Responsible Investor.

We can only take note and act fast.

Manuela Andaloro

(info@smartbizhub.com)

Sources: Global Geneva, the Guardian, Deloitte, Gig Economy Data, Responsible Investor.

Republished also on Corriere dell’Italianita’

UK FinTech Mission to Switzerland 2020