Year: 2026

The resale and circular economy boom

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Second-hand shopping has come a long way. What was once the preserve of charity shops and car boot sales has evolved into one of the fastest-growing sectors in global retail. Today’s resale market is a vibrant, tech-driven space powered by savvy shoppers who care about both value and sustainability. It is the circular economy in action, where products are designed, used and reused to give them a longer life.

From fashion to electronics, buying pre-owned has become a mainstream habit that is changing the way people, and brands, think about ownership and waste. For marketplaces and investors, this shift opens up huge opportunities, but it also brings new challenges as they navigate a fast-moving and increasingly sophisticated resale landscape.

A recent report, Second-Hand, First Choice: The Psychology of Recommerce by Retail Economics and MPB, values the global recommerce market (excluding cars) at around $220bn – and it is expected to grow by almost 80 percent by 2028 across the US, UK, France and Germany.

Rising living costs have made value a key concern for shoppers, but this boom isn’t just about saving money. It reflects a deeper cultural and generational shift. Younger consumers, especially Millennials and Gen Z, are turning away from fast fashion and throwaway tech in favour of items that reflect personality and ethics. Buying second-hand has become a lifestyle statement, a way to shop with purpose and express individuality.

Resale also delivers real environmental impact. Every pre-owned purchase helps extend the life of an existing product, reducing the need for new manufacturing and cutting carbon emissions. For consumers who want to live more consciously, resale offers a simple, rewarding way to support a more responsible and less wasteful economy.

The professionalisation of resale
Today’s marketplaces are polished and tech-enabled, combining convenience with trust. Depop, for example, has redefined fashion resale by blending social media-style discovery with commerce, while Vestiaire Collective has built a reputation for authenticated luxury fashion. Vinted, ThredUp and eBay have all expanded certified pre-owned programmes, further embedding resale into the mainstream retail ecosystem.

At the heart of this transformation is technology, but it is the way it is used that really makes the difference. AI now helps shoppers find exactly what they are looking for, suggesting items, setting fair prices and curating personalised experiences. Smarter logistics make buying and selling seamless, with integrated systems that handle shipping, returns and reverse supply chains efficiently. Many platforms also use expert authentication teams or even blockchain-based certificates to verify the provenance of high-value items. Together, these innovations have removed much of the friction and doubt that once surrounded second-hand shopping, giving the resale market the same polish and professionalism as traditional retail.

For investors, the rise of the resale and circular economy is a clear market opportunity with long-term value potential. The appeal lies in the combination of growth and strong ESG credentials. Venture capital and private equity firms are increasingly backing businesses that extend product lifespans through refurbishment and repair models that generate healthy returns while supporting sustainability goals. The investment logic is straightforward: as resources become scarcer and regulation around waste and emissions tightens, circular business models are positioned to outperform. The sector’s resilience during economic downturns, driven by consumer demand for value, adds another layer of stability, making resale and refurbishment a rare mix of defensive and growth investment.

Funds are now focusing on scalable, technology-led platforms that make circularity efficient across industries such as fashion, electronics and furniture. For investors, supporting these companies is a way to futureproof portfolios against changing consumer expectations and regulatory pressure. The circular economy is proving that profitability and responsibility can go hand in hand, and that is an equation the finance world is increasingly keen to back.

Retailers rethink ownership
For established retailers, the resale revolution is proving both a challenge and an opportunity. Traditional linear business models – sell, discard, repeat – are increasingly at odds with consumer expectations and ESG commitments. In response, many brands are integrating resale and repair directly into their operations.

Patagonia’s Worn Wear programme, IKEA’s buy-back initiatives and Gucci and Burberry’s certified pre-owned collections all signal a shift towards more circular retail practices. These initiatives extend product life and tap into new revenue streams. By facilitating resale within their own ecosystems, brands can control quality and capture residual value that once leaked into third-party marketplaces. This approach also allows retailers to demonstrate tangible progress against sustainability goals, something investors and consumers increasingly demand.

For all its growth, the resale sector’s success ultimately hinges on trust. The risk of counterfeit goods and misrepresentation remains a persistent challenge, particularly in luxury and electronics categories. The platforms that will endure are those investing heavily in authentication and verification.

AI algorithms capable of spotting anomalies in photos, blockchain-based provenance records, and specialist teams that inspect and certify goods before listing are fast becoming industry standards. These measures not only protect consumers but also preserve the reputations of brands entering the pre-owned space. Insurance integration complements this framework by offering financial protection against misrepresentation or faults.

Consumers want confidence that their purchases, whether refurbished electronics, luxury handbags, or vintage furniture, are protected. Insurers are responding with products tailored to these needs, covering risks such as counterfeiting, misrepresentation, or faults.

Companies like Bolttech, Cover Genius and Embri are working with marketplaces and retailers to offer embedded insurance, making coverage easy to access at the point of sale. Platforms like Oyster integrate protection plans directly into online checkouts, ensuring that buyers receive reassurance without extra hassle. By providing this safety net, insurers help legitimise the resale sector, encouraging customers to buy higher-value items with confidence. For marketplaces, offering embedded insurance has become a key way to build trust and stand out, providing peace of mind for their users.

In the UK, Back Market covers refurbished mobile devices against damage. Its General Manager, Katy Medlock, explains: “While the refurbished tech movement is growing in the UK, many people still consider pre-loved gadgets a risk. Our insurance is part of an ongoing commitment and we hope this will give more customers peace of mind that their refurbished device is covered and the confidence to swap something ‘new’ for something that’s ‘like new’.”

The sustainability equation
The environmental benefits of resale are undeniable. Extending the life of products reduces the need for new manufacturing, conserving raw materials and cutting carbon emissions. The impact is particularly profound in industries with heavy resource footprints: fashion, which accounts for around 10 percent of global emissions, and electronics, where production involves significant energy use and mineral extraction. Buying a refurbished smartphone or laptop, for instance, avoids the carbon cost of producing a new one, an advantage that resonates with climate-conscious consumers.

For all its growth, the resale sector’s success ultimately hinges on trust

Yet sustainability in resale is not automatic. The rise of ‘fast resale,’ quick turnover of second-hand goods driven by trends and social media, can encourage overconsumption rather than replace new purchases. In such cases, environmental benefits may be diluted. True sustainability depends on quality refurbishment and systems that prioritise reuse over replacement. The most responsible players are taking this seriously, investing in transparent supply chains and low-carbon logistics. Their challenge now is to ensure that the circular economy remains genuinely circular, rather than just a new form of fast consumption with greener branding.

As resale becomes a major global industry, regulatory scrutiny is inevitable. Variations in warranty rules and return policies across markets can create confusion and limit cross-border trade. A move towards greater standardisation would benefit both consumers and platforms, simplifying compliance and fostering trust. Another challenge lies in logistics. Managing returns and restocking adds cost and complexity. Efficient reverse supply chains, capable of collecting and redistributing products at scale, are critical to maintaining profitability. The winners in this space will be those who master operational efficiency as well as consumer engagement.

From trend to norm
The trajectory of the resale market points to continued acceleration. Consumer awareness and technological sophistication are converging to make second-hand desirable. For marketplaces, the opportunity lies in scaling responsibly: combining convenience with credibility and profit with purpose. For retailers, the challenge is to embed circularity as a structural component of their business models.

Those who succeed will redefine the meaning of ownership, turning products from disposable commodities into long-term assets with multiple lives. The future of consumption will not be defined by constant replacement but by continuous renewal. The rise of the resale market shows that extending the life of products is economically advantageous.

With $197bn in clothing resale sales last year and projections of $350bn by 2028, along with multi-billion-dollar valuations for refurbished tech platforms, the numbers speak for themselves. Beyond the figures lies something more profound: a reimagining of the consumer economy that prizes longevity over disposability and purpose alongside profit. Companies that recognise and adapt to this transformation will define the next wave of retail.

Copper and cocoa: the new geography of power

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As climate change and the green transition gather momentum in 2025, unlikely commodities such as copper and cocoa are now reshaping global economic stability the way oil once did. Copper prices have surged more than 20 percent so far this year, driven by supply crunches, green infrastructure and data centre demand. Similarly, cocoa has seen extreme price volatility, due to African climate shocks, hitting record highs in early 2025, before plummeting almost 50 percent.
Together, they highlight a broader geopolitical shift away from fossil fuels towards essential commodities and natural resources. With copper driving the energy transition and cocoa shaping food supply chains and ethical trade, they have become the dual bellwethers of a changing world order.

They also represent how resource power and strategic assets are increasingly concentrated in the Global South, in West Africa’s cocoa heartlands and Latin America’s copper belt. In many ways, copper and cocoa are now the ‘new oil’ – strategic, scarce and representative of both innovation and global inequality.

Underpinning the climate transition
Copper is essential to electrification, being used in electric vehicles, solar panels, wind turbines, hydropower plants, grid upgrades and more. Demand for copper from data centres, where it is used in cooling systems, internal connectivity and power systems, has increased exponentially, supported by the surge in artificial intelligence.

According to the International Energy Agency (IEA), copper demand could hit 31.3 million tonnes by 2030, a considerable increase from 2021’s approximately 24.9 million tonnes. “China’s massive grid expansion and urban development have been the single largest recent driver of copper demand. Continued Chinese industrial stimulus and infrastructure spending are therefore key factors underpinning copper prices,” António Alvarenga, Professor of Strategy and Entrepreneurship at Nova School of Business and Economics, explained. He added: “However, copper mine output has grown only about one to two percent annually, despite rising demand, and new projects take around 15–17 years to develop.”

Copper production is highly concentrated in Zambia and Democratic Republic of Congo, along with Latin America’s copper belt, including Chile and Peru. “This concentration of resources is quietly reshaping global alliances, as countries compete to secure long-term access, much like the oil geopolitics of the 20th century,” Sunil Kansal, head of Consulting and Valuation Services at Shasat Consulting, said.

Copper and cocoa mark a shift to the commodities of the future, scarce and economically resilient

As such, any mine accidents in these key countries can have a profound impact on copper production and drive prices up. Chile’s El Teniente mine had a deadly accident back in July this year, which led to a major production halt and drop in output. This was also seen at the Komoa-Kakula copper mine in DRC in April due to a flooding event and roof collapse. Older mines and chronic underinvestment have boosted copper prices and caused supply chain bottlenecks too lately.

“Many of the world’s major copper mines are aging, and the average copper content (ore grade) is declining, meaning that more rock must be processed to extract the same amount of copper,” Franck Bekaert, senior emerging markets analyst at Gimme Credit, highlighted. “Additionally, permit delays and ecological constraints are hindering the launch of new projects, which is driving up costs. To meet the growing demand for copper, significant investments will be required,” Bekaert added.

Political instability in major producing countries, such as worker strikes and environmental protests, as well as governance issues such as rising corruption have also contributed to supply woes. At present, copper inventories are at record lows, according to Benchmark Intelligence, even as green infrastructure demand from the US and EU soars.

As the world races to electrify, copper’s scarcity is fast becoming a structural risk to global growth, much like oil shocks once were.

How climate shocks impact cocoa
“When the Ivory Coast and Ghana sneeze, global chocolate catches a cold. Cocoa just had its ‘oil moment’: a near 500,000-ton global deficit in 2023–24 pushed inventories to multi-decade lows and sent futures above $10,000/ton at the peak in January 2025,” Francisco Martin-Rayo, co-founder and CEO at Helios AI, said. One of the biggest reasons for this was the El Niño weather pattern in the 2023–24 season. This caused volatile weather patterns, such as unusually heavy rain, followed by hotter and drier weather across key cocoa-producing countries such as Ghana and the Ivory Coast. Cocoa is very sensitive to weather changes as it grows only in limited areas of warm, humid equatorial conditions, with 70 percent of the crop coming from West Africa (see Fig 1). These temperature extremes caused decreased cocoa yields and a rise in crop diseases such as swollen shoot virus and brown rot. The diseases also meant that the remaining yield was of lower quality, further escalating prices. Aging West African cocoa trees are another factor contributing to higher prices. These can severely dampen yield capacity because of decreased soil fertility. Older trees can also be more vulnerable to diseases and pests and become weaker with time.

Farmers then need to invest large amounts in replanting and farm rehabilitation. However, consistently low farmer incomes make such investments difficult to maintain, creating a vicious cycle of aging trees, low productivity and low incomes.

“Cocoa demand has grown steadily. Western holiday consumption and an expanding middle class in Asia/Africa support baseline demand. However, extremely high prices can dampen consumption: in 2025 European and Asian cocoa grindings fell as manufacturers faced higher costs,” Alvarenga said. The factors affecting cocoa go beyond just determining chocolate and related product prices – they represent a systemic crisis in agricultural supply chains today, defined by climate volatility, worsening soil degradation and widespread farmer poverty. With much of the crop still tied to smallholder farmers, cocoa is a social commodity, intimately linked to human issues such as food insecurity, forced migration and income loss and inequality, sitting at the heart of debates about ethical sourcing and fair trade. Even as prices pull back slightly now, the structural issues driving cocoa price volatility remain.

Strategic assets
Much like oil in past decades, both copper and cocoa supply has been highly concentrated in a few regions. This has significantly shaped new geopolitical alignments and trade tensions. One of the biggest ways this has materialised is through consumers now actively seeking to diversify suppliers, to reduce supply chain and security risks. Copper, as a strategic metal and asset, is now crucial to countries’ decarbonisation plans. As AI and other cutting-edge technologies gather pace and require more electricity, copper’s status as the ‘new oil’ is likely to keep growing. As such, major copper consumers including the US and EU are now trying to find more suppliers to spread supply risks.

“The US launched a section 232 national security investigation into copper and China has pivoted away from Chile by sourcing more from DRC, Russia and Zambia. These moves have created new alignments – such as China deepening ties with African producers, Western nations seeking alternative mines or stockpiles,” Alvarenga highlighted. This geopolitical strategising and positioning mimics past resource wars over oil, creating new alliances between industrial powers and resource-rich countries. “As with oil, these relationships can lead to trade frictions, resource nationalism, and competition for influence. For investors, this concentration magnifies geopolitical risk but also signals long-term strategic value,” Edward Nikulin, weather model expert at Mind Money, said.

For cocoa, Ghana and Ivory Coast’s governments wield considerable supply influence through export regulations and price-setting, acting as a kind of producer bloc, similar to OPEC. “We are seeing the emergence of coordinated action by Ghana and the Ivory Coast to demand fairer terms, echoing the resource diplomacy once seen in oil markets,” Kansal said. This is through the ‘Living Income Differential,’ which raises export prices to ensure that more cocoa income reaches farmers directly to improve living standards and reduce child labour, poverty and deforestation.

“The joint $400/ton ‘Living Income Differential’ set a de-facto floor under farmgate economics, while EU deforestation rules (EUDR) are forcing farm-level traceability (GPS coordinates, plot IDs) and reshaping trade flows toward compliant suppliers,” Martin-Rayo explained. “Expect more local processing in Abidjan and San-Pédro and more origin diversification to Ecuador/Brazil a classic resource-security realignment.”

Cocoa farming is increasingly using more tech such as satellite imagery, robotic pollination, ground sensors and drones. These monitor pests, growth rates and soil moisture in large plantations in real time, helping yields to become more stable, which can boost cocoa’s economic and strategic importance. Similarly, more major copper companies are focusing on responsible copper production practices, addressing sustainability and labour concerns that are key to attracting the next generation of investors. “Over the past five years, copper and copper miners have significantly outpaced the S&P 500 and broad commodity indices. Dedicated copper ETFs and mining stocks have been popular. Upside for investors comes from expected supply deficits: pent-up demand from EVs/renewables could lift prices if new mine output lags,” Alvarenga said.

However, he emphasised that policy intervention risks like stockpiling and tariffs remain, which could suddenly decrease copper flows. Although cocoa is more volatile and speculative than copper, Martin-Rayo calls its oil-like status a regime shift. “Think of cocoa as smaller than oil, but newly ‘systemic’ for food manufacturers and retailers.”

The road ahead
2025 highlights the start of a ‘post-oil’ resource era – one where sustainable and ethical commodities hold power. The ‘new oil’ may be mined, grown or digitally verifiable, instead of liquid. Both copper and cocoa mark a shift to the commodities of the future, scarce and economically resilient in an increasingly fragmented world, with investors demanding balance between transparency, accountability and growth.

Fashion industry’s supply chains fight a tariff storm

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Recent geopolitical developments have underscored the fragility of global supply chains, reminding businesses in constantly evolving sectors such as consumer goods and fashion that the strength of supplier relationships is one of the few persistent sources of resilience. Maintaining such relationships through responsible purchasing (based on environmental and social considerations, not just cost and quality) is not only ethical, but strategically necessary. The fashion industry is one of many that is feeling the weight of tariffs – disruptions that come at a time when it is struggling to make progress toward previously stated climate and sustainability goals. According to a 2025 benchmarking survey by the US Fashion Industry Association, 100 percent of 25 leading apparel brands and retailers identified the current administration’s protectionist stance and volatile trade relationships as a top challenge, and more than half flagged policy uncertainty, especially retaliatory tariffs, as their primary concern.

Rather than responding with short-term cost-cutting, though, major consumer-goods companies are making strategic investments to build resilience. For example, retailers such as Walmart and Target have front-loaded inventory to absorb tariff shocks ahead of the holiday season; and Apple chartered cargo flights to transport 1.5 million iPhones from India, an option made possible by increasing production with a key supplier. These are not just logistical moves; they are evidence of why trust-based, responsive supply-chain relationships matter. Responsible purchasing practices are the glue that holds supply chains together in uncertain times. Gartner reports that nearly half of large enterprises have renegotiated supplier contracts or shifted sourcing strategies to manage risks associated with the tariffs. Tools like supply-chain finance are increasingly being used not just for liquidity, but as buffers against volatility. Such trends reflect a growing consensus: resilient, transparent, and values-aligned supply chains are key to avoiding major disruptions and maintaining competitiveness.

Catwalk conundrum
Unfortunately, the fashion sector is a laggard in this regard, scoring just 66 out of 100 in Cascale’s Better Buying 2025 Garment Industry Scorecard, with year-on-year declines in key areas of responsible purchasing, including cost negotiation, payment terms, and product development (see Fig 1).

This is concerning, given that upstream effects can spread when tariffs or other external shocks hit. Production costs often need to be renegotiated, and without strong supplier relationships, shifts in production can increase delays, labour risks, and reputational exposure. The trend is also concerning for its climate implications. The fashion industry, with its complex global supply chains, is particularly vulnerable to such ripple effects. The US tariffs that went into effect on August 7th directly affect sourcing hubs with an outsize influence on the industry’s carbon footprint. Cascale finds that just 1,800 factories in nine countries account for over 80 percent of measured carbon emissions from the apparel, textile, and footwear industries (see Fig 2). Of these, six countries – China, Bangladesh, Vietnam, India, Turkey and Pakistan – have been directly affected by the new tariffs.

Responsible purchasing practices are the glue that holds supply chains together

Shifting sourcing away from these hubs might avoid short-term tariff costs. But it could also disrupt ongoing efforts to reduce emissions from these major sources. We saw this in 2018, when tariffs against China drove a production surge in Vietnam. Since it typically takes an average of 14 months for brands to add new suppliers, such rapid shifts cause a ripple effect: labour violations, longer lead times, and quality issues. Without coordinated planning, they risk undermining climate goals and working conditions alike.

Global appetite for sustainability
Though fashion is a $3trn industry, it is expected to have only a minimal formal presence at this year’s United Nations Climate Change Conference (COP30). As in previous years, travel budgets are being cut, and many teams are being downsized, as the industry slims down in the face of market volatility. Unlike climate-focused gatherings like Climate Week NYC or London Climate Action Week, COP30 will focus more on adaptation finance, carbon pricing, and nature-based strategies than on redrawing trade or sourcing lines.

Nonetheless, those in the industry should pay close attention to get a sense of the global appetite for sustainable finance and investment. Brazil is using its COP30 presidency to promote major initiatives such as the $125bn Tropical Forests Forever Facility, a blended-finance tool designed to help close the $1.3trn annual climate-finance gap by 2035. More-over, the discussions about carbon pricing could have a greater impact on international trade and value chains than any industry-specific trade reform.

In short, COP30 will not offer any direct relief on tariffs, but it could shape the long-term rules of the game, linking sustainability targets, sourcing practices, and competitiveness factors through policy levers that lie beyond the fashion industry’s immediate control.

Fair purchasing practices
As trade-related costs persist, industry leaders must shift their mindset. Their businesses’ resilience will not come from diplomacy or a presidential handshake, but from trust-based relationships, fair purchasing practices, and innovations to drive sustainability. Brands and retailers should view tariffs not only as cost burdens but as stress tests for their supplier partnerships. Companies that default to price-driven strategies risk eroding their ability to deliver quality, speed, and innovation to today’s conscientious consumer.

As trade-related costs persist, industry leaders must shift their mindset

By contrast, companies that lean into transparency and collaboration – sharing forecasts to ensure continuity, smoothing demand through level loading, and offering fairer payment terms – are more likely to avoid spikes in labour violations and preserve the market signals needed to sustain decarbonisation investments.

At a time when tariffs and climate-related shifts can alter sourcing strategies overnight, resilient partnerships are more than operational tools. They are strategic differentiators, signalling accountability, stability, and ethical leadership to a growing list of stakeholders who are thinking about the long term.

The evolving role of the CFO

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Once guardians of budgets and balance sheets, CFOs are now architects of strategy and transformation. The Super CFO, a global CFO survey, finds that ‘super CFOs’ are emerging to combat challenges. Finance leaders have moved from reporting performance to designing it. Enter the Chief Value Officer (CVO), reflecting finance’s role in total value creation. Value is no longer defined by profit but by the Integrated Reporting Framework’s six capitals.

The CFO role has transformed over the last two decades, moving beyond traditional accounting and control functions. Historically, CFOs focused on financial stewardship, including financial reporting and recording transactions. A reactive role has transformed into a strategic partner to the CEO, acting as a ‘co-pilot,’ identifying future opportunities. This double act is critical in managing modern economic unpredictability: the CEO focuses on market opportunities while the CFO steers the organisation through financial stress-testing and scenario planning.

The CFO role is strategic leadership that delivers long-term value to stakeholders. Businesses face more demands from boards, investors and regulators. “Over the past 10 years, the role of CFO has changed from one of financial management and compliance to a strategic leadership tasked with driving change,” says Dan Benson, managing director at executive search firm Morgan Philips Group. This strategic leadership shift has expanded the CFO’s mandate to include greater internal collaboration and external focus.

Deana Murfitt, COO and Executive Coach at Breakfast People, concurs: “The modern CFO is market-facing, having moved away from the confines of the traditional finance function. CFOs are now true business leaders: analysing market trends, pitching to Venture Capital (VC) and representing the corporate voice.”
An unforgiving business landscape fuels this transformation: supply shocks, inflation spikes, and investor scrutiny. CFOs have swapped the back office of spreadsheets for the unpredictability of boardroom strategy. While changes happened before Covid-19, the pandemic accelerated the CFO role. CFOs became catalysts for change across their businesses. AI, data analytics, technology and non-financial metrics have shaped this.

Modern finance leaders are architects of value creation, not just guardians of cost

Benson notes that CFOs are now at the centre of growth initiatives. “Amid a changing and challenging business landscape, CFOs are increasingly focused on driving growth, leading on M&A and raising capital or by driving organisational change to ensure businesses evolve at the pace required to compete,” he says. One CFO who has witnessed the changing role is Rafał Zborowski, founder and managing partner of advisory firm, Braincapital.pl.

He explains, “My career started with a strong focus on financial control and performance management in large organisations like Polkomtel (a mobile operator in Poland), where the priority was cost optimisation and operational efficiency.” Zborowski has seen this first-hand. “Over time, the CFO role has shifted dramatically, and so has mine. At Empik’s Learning Systems Group, I was not only responsible for finance but also for all other supportive functions like IT, HR and legal, which allowed me to lead major transformation programmes, including ERP implementation and process automation,” he says.

Risk, resilience and ESG
The Super CFO study by Egon Zehnder finds 82 percent of finance leaders report a broadening of responsibilities, including direct ownership of ESG alongside M&A and corporate strategy. These figures highlight the shift from operational control to value creation. Earlier generations of CFOs managed performance; today’s CFOs engineer it.

As CFOs extend their reach, their risk remit has expanded too. They now oversee operational, financial, reputational, and environmental risks. “CFOs today are value protectors and value creators, shaping the future by aligning capital, risk management, and strategic ambition,” says Zborowski.

This responsibility intensified post-pandemic, when CFOs led the response to unprecedented volatility. In an article for FM Magazine, Zborowski described re-engineering the business model of a global education group within days of lockdowns. These lessons have become standard practice. From liquidity stress-testing to scenario planning for geopolitical shocks, CFOs now anticipate disruption rather than reacting to it. ESG has expanded the scope: over half of respondents integrate environmental and social risk into financial decision-making.

The digital imperative
Finance blurs as automation and analytics reshape decision-making. AI automates reporting, aids forecasting and improves risk analytics. “Today, the CFO is no longer reporting the numbers but using digital tools and insights to guide innovation and long-term value creation using all available tools, including AI,” explains Zborowski. Protiviti’s Global Finance Trends 2025 study finds 72 percent of finance teams now use AI, more than double the rate a year earlier.

Once reserved for CTOs, CFOs are taking ownership of digital transformation projects. The finance function provides the discipline, governance, and data rigour to make digital investment deliver measurable results. Benson observes that this shift is also changing how company value is perceived. “The digital revolution of the past 10 years is a significant driver in this change, with investment in tech-related businesses dramatically up. For a CFO, this means the value of a company is linked with their tech stack and capability, meaning many strategic CFOs are the drivers of digital transformation within an organisation.

“The CFO’s role is not only to secure financing and monitor performance, but to challenge existing business processes and create the atmosphere for transformation,” Zborowski adds. AI’s impact goes beyond automation. CFOs use models including hyper-accurate forecasting, autonomous compliance using NLP to track global regulations and real-time risk analytics, auditing transactions for anomalies. Once optional for finance leaders, digital literacy is a core component of financial literacy. Successful CFOs will be those who can harness AI and digital transformation for insight.

From CFO to CEO
60 percent of CFOs aspire to be CEOs and 35 percent already co-lead with the CEO, per the Egon Zehnder report. Today’s CFO acts as a de facto deputy CEO, balancing capital allocation with leadership. Benson explains, “While in the past the CFO may have been an ‘ultimate destination’ role, it is increasingly viewed as a stepping stone to CEO and, latterly, NED opportunities.”

The CFO challenge is integrating systemic risks into financial models:
• Cyber risk: No longer an IT problem; a financial liability. CFOs must stress-test the balance sheet against the cost of breaches, including regulatory fines, legal liabilities and brand damage.
• Geopolitical and supply chain risk: CFOs map financial assets and supply costs against political instability.
• ESG integration and carbon pricing: CFOs guide investment toward green technology by implementing an internal carbon price on capital expenditure. Measuring new costs relies on technology.

The CFO position gives a 360-degree view of the business. Zborowski’s accumulated experience, which includes comprehensive knowledge of financial control, IT systems, HR, and legal, enabled the ultimate pivot to CEO. “Later, as CEO of a private equity-backed company, I applied these skills to redesign the business model and drive growth,” the CFO-turned-CEO explains.

Yet not every CFO aspires to be CEO. Due to the demands of their jobs, 64 percent of European CFOs and 50 percent of North American CFOs are considering early retirement, according to Egon Zehnder. The larger the company, the higher the likelihood that a CFO considers early retirement.

To make that leap, technical excellence alone is no longer enough. While 60 percent of CFOs aspire to the top post, 46 percent cite networking and visibility as the biggest barriers, followed by knowledge gaps. Current and future CFOs must develop skills through learning and organisational exposure.

BDO/ACCA advises on skills needed for the pipeline: the next generation must develop experience beyond the core finance function, including involvement in strategic change programmes like IT delivery or M&A integration. This prepares them for a C-suite partnership. Ultimately, organisations must support this development. Boards are seeking diversity of thought.

Benson believes that boards now prioritise agility, resilience, and communication. “Beyond strategy definition and driving change, CFOs must demonstrate workplace agility and lead through challenging times with resilience, flexibility and clarity.” The skillset is no longer confined to financial analysis; it is about executive leadership. Firstly change management: to lead large-scale digital transformation projects, managing stakeholder impact. Secondly, communication: the skill to be a ‘financial storyteller,’ translating data into clear narratives for stakeholders, including investors, regulators and media. Thirdly, digital fluency: not only using technology, but understanding AI and cloud computing.

The road ahead
Few titles will face greater pressure or opportunity than the CFO. Technological progress, regulatory scrutiny, and a volatile global economy demand sharper insights. “The CFO role will continue to broaden as we face a world of greater uncertainty and faster change,” says Zborowski. “Challenges such as ESG integration, cybersecurity and geopolitical volatility will increasingly define their agendas. Advances in AI and digital transformation present an enormous opportunity to enhance decision-making and reinvent business models.” That balance between caution and innovation will determine which finance leaders succeed. As AI and automation take on transactional tasks, the CFO’s comparative advantage will lie in human judgement; connecting data with vision and performance with purpose.

Zborowski concludes with a clear view of the opportunity ahead: “Having worked as both CFO and CEO, the opportunity lies in stepping fully into the role of transformation leader. Those CFOs who can combine strategic vision and execute complex change will be the ones who drive sustainable long-term growth and position their companies to thrive.”

The finance function has come a long way from counting the numbers. The CFO of the future will not just measure value; they will define it.

A TikTok deal China will love

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After four extensions of the statutory deadline to ban TikTok or force its Chinese owners to divest, US President Donald Trump has now signed an executive order transferring the app to US ownership. The announcement follows years of diplomatic sparring, bureaucratic manoeuvring, repeated efforts by federal and state governments to curtail the platform and even a ruling from the US Supreme Court. Has the fate of America’s most viral social media app finally been decided?
Those expecting closure will be disappointed. This latest ‘framework consensus’ still leaves China with significant leverage over TikTok. What looks like a victory for the US may well be Chinese President Xi Jinping’s biggest strategic triumph yet.

On the surface, the agreement does look like a grand bargain for America. Oracle and a consortium of US investors would control 80 percent of a newly created American entity that would run TikTok’s operations in the US. All US user data would remain on Oracle’s servers in Texas, and the new company would license TikTok’s prized recommendation algorithms and retrain them on American data. Six of the entity’s seven board seats will be held by Americans. In other words, Americans’ data and TikTok’s servers and algorithms would all appear to be firmly under US control. And the deal even carries financial rewards for the Trump administration, in the form of a multibillion-dollar payment from investors (effectively a fee for brokering the settlement with the Chinese).

Look more closely, however, and the picture is less reassuring. After all, global investors already own roughly 60 percent of Byte-Dance, TikTok’s parent company, while the company’s founders own another 20 percent and its employees the remaining 20 percent. Thus, the deal merely raises US ownership of the American operation to 80 percent, leaving ByteDance with just under 20 percent – but still the single largest shareholder. More tellingly, the intellectual property behind TikTok’s algorithms remains firmly in Byte-Dance’s hands. Far from acquiring the recommendation engine outright, Oracle and other US investors are only receiving a licensed copy.

This deal merely replaces one form of dependence with another

Algorithms are not static assets. Unlike a car or a house, they cannot be transferred once and for all. They are dynamic, data-driven systems that demand constant retraining, fine-tuning, and significant engineering support to remain effective. Oracle may be able to inspect the code, copy it in full, and retrain the licensed version on US data. But the new American TikTok will still depend on China for periodic updates. This raises difficult questions: will Oracle even receive those updates; and, if so, can it meaningfully monitor and audit them?

To be sure, what makes an algorithm powerful is not only its architecture but also the data on which it is trained. Yet because the US version will rely solely on American user data, Oracle will lack access to the vast global dataset that makes ByteDance’s cutting-edge models so powerful.

Diplomatic tool
China, meanwhile, will hold the legal levers to restrict or impose conditions on any transfer of ByteDance’s technology. Since 2020, China has classified personalised recommendation algorithms as sensitive technology under its export-control regime. That means every export of updates or improvements to TikTok’s algorithm is subject to Chinese government approval. The Chinese authorities therefore can make TikTok a diplomatic tool. Should tensions rise over Taiwan, tariffs, Ukraine, or restrictions on Nvidia chip exports, China could delay or withhold licensing approvals, using TikTok as yet another bargaining chip. In this way, the platform has been transformed into a powerful instrument of Chinese statecraft.

Faced with a licensing arrangement that is governed less by legal terms than by shifting geopolitical winds, US investors in the new TikTok should brace themselves for heightened uncertainty. Rather than shifting TikTok from Chinese to American control, this deal merely replaces one form of dependence with another.

Yes, ByteDance will no longer oversee daily content recommendations; Oracle will, easing the US government’s most immediate security concerns. But China will retain residual control over TikTok’s algorithms. It has the freedom to set the scope of the licence, determine the frequency of updates, and decide whether the US version can keep pace with the global one. Far from diminishing China’s influence, the deal risks entrenching it.

With this agreement, the fear of Chinese access to Americans’ data or direct manipulation of algorithms may fade. But it will be replaced by a subtler and more enduring risk: technological dependence on China, which holds a chokehold over TikTok’s powerful recommendation engine. The Trump administration has simply traded one vulnerability for another. That said, a less competitive US version of TikTok might not be bad for America. Some may even see it as a blessing in disguise. A less competitive TikTok would be a less addictive TikTok. That would ultimately benefit American teenagers – whether or not they realise it.

Africa’s digital boom faces a growing cyber threat

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At the turn of the millennium, Africa was a metaphorical desert in terms of internet access and broadband connectivity. A quarter of a century later, the continent has recorded tangible successes in opening up the digital space. Granted, only 38 percent of Africans are connected to the internet compared to a global average of 68 percent. However, it is indisputable that the continent is home to a burgeoning digital ecosystem that is anchoring economic development and job creation for its young population, 70 percent of whom are under the age of 30. The push towards financial inclusion exemplifies the transformative impacts of digitalisation.

Today, Africa is the bastion of mobile money, with 1.1 billion registered accounts in sub-Saharan Africa. This is more than half of the 2.1 billion global accounts. More fundamentally, the continent accounts for 74 percent of all mobile money transactions globally, with over 81 billion transactions handling a staggering $1.1trn in value in 2024.

The question is no longer whether cybercriminals will strike – but how often

Unfortunately for Africa, the unprecedented digital transformation is coming under serious threat from cybercriminals. The continent has become a fertile ground for attacks, which come in all forms from phishing, malware, ransomware, identity theft, hacking, business email compromise, social media fraud, to large-scale breaches and even digital sextortion. Once a technology problem, cyberattacks have morphed into real threats not just for businesses, but the stability of the socio-economic order.

“Cybersecurity is not merely a technical issue; it has become a fundamental pillar of stability, peace, and sustainable development in Africa,” said Jalel Chelba, Afripol acting Executive Director. He added that the menace is a major threat to the digital sovereignty of states, the resilience of institutions, citizen trust and the proper functioning of economies.

Topmost concern
From government agencies, financial institutions, telecoms and betting companies, to critical infrastructures and all spheres of life, the question is no longer whether cybercriminals will strike, and when. Rather, it is a matter of how often. A survey by audit firm PwC in East Africa confirms this fact. In the region, 74 percent of businesses reckon cyber risks are the topmost concern. Macroeconomic volatility and geopolitical risks rank way below, at 51 percent and 12 percent respectively.

In recent years, companies like Eneo in Cameroon, South Africa Airways, Kenya Urban Roads Authority, Telecom Namibia, Morocco’s National Social Security Fund and even Bank of Uganda (BoU) have fallen victim to attacks. BoU offers a glimpse of just how determined hackers are. In November last year, a breach of IT systems by a group calling itself ‘Waste’ saw the bank lose $16.8m from its coffers.

Across the continent, the rising challenge of cybercrime is bringing about massive losses, with scammers siphoning away in excess of a whopping $4bn annually. The amount is equivalent to 10 percent of GDP. Kenya, Nigeria, South Africa, Egypt, Morocco, Uganda, Ghana and even war-ravaged and poverty-stricken South Sudan are among the countries bearing the brunt of the problem, which is compounded by low digital literacy rates. Research shows that only 50 percent of African countries include computer skills in their school curriculum, compared to a global average of 85 percent.

Tragically, experts reckon that although the challenge of cyberattacks in Africa borders on a crisis that risks wiping out gains in digitalisation, measures to tackle the problem do not inspire confidence. The continent is largely deploying fragmented policies and interventions to fight cybercrime. More worrying is that Africa continues to depend on the global community not only for direction and support, but also for funding operations designed to cripple cybercriminal networks.
“The complexity and fluidity of cyberattacks means that Africa requires urgent and coordinated actions to deal with the problem,” says Ewan Sutherland, Visiting Adjunct Professor at LINK Centre, University of the Witwatersrand (Wits) in South Africa. He adds that the continent cannot fully exploit the benefits of deepening connectivity and digitalisation without watertight mechanisms and systems to deal with cybercrimes.

Interpol, in its 2025 Africa Cyberthreat Assessment Report, paints a picture of Africa as a ‘landscape in flux’ as far as cybercrime is concerned. The report contends that a growing share of reported crimes in the continent are cyber-related. The problem is entrenched in western and eastern Africa, where cybercrime accounts for more than 30 percent of all reported crimes.

Interpol is taking leadership in helping Africa deal with the problem. In August, a mission dubbed Operation Serengeti 2.0 managed to dismantle cybercrime and fraud networks across 18 countries. The operation led to the recovery of $100m, the dismantling of 11,400 malicious infrastructures and the arrest of 1,210 cybercriminals who had targeted nearly 88,000 victims. A similar operation last year in 19 countries led to the arrest of over 1,000 suspects and the dismantling of 134,000 infrastructures linked to $193m in financial crimes that had targeted 35,000 victims. Notably, Interpol’s operations continue to be foreign funded, specifically by the UK and Germany governments as well as the Council of Europe.

Realisation that a booming digital revolution is fast becoming a source of increased vulnerability and economic loss is forcing Africa into action, albeit with each country carving its own path on how to deal with the problem. This emanates from the fact that continental ambitions under the African Union Convention on Cybersecurity and Personal Data Protection, popularly known as the Malabo Convention, have not amounted to any concrete actions. Despite being adopted in 2014 and coming into effect in 2023, the convention is seen as archaic in a fast-changing environment characterised by new technologies like artificial intelligence, cloud computing, internet of things and blockchain, among others. Using AI, for instance, criminals are building more sophisticated tools like WormGPT, FraudGPT, and DarkBERT that facilitate targeted, effective and harder-to-detect attacks.

Besides, the fact that only 15 countries have ratified the convention undermines any efforts towards regional or cross-border cooperation in combating cyberattacks, whose masterminds transcend borders. Chinese nationals, in particular, remain as key architects in instigating attacks in the continent. In the Interpol-led operation for instance, authorities in Angola dismantled 25 cryptocurrency mining centres where 60 Chinese nationals were found to be illegally validating blockchain transactions to generate cryptocurrency.

“African countries are enacting the necessary laws and building homegrown capacity to deal with cybercrimes,” states Mugambi Laibuta, a Kenyan-based privacy and data protection specialist. He adds the fact that 46 countries have data protection laws that mandate reporting of attacks within 72 hours shows the continent is waking up to the seriousness of the problem.

Huge losses
Kenya is a case in point. Data by the Communications Authority shows the country recorded 2.5 billion cyberthreat incidents in the first quarter of 2025, representing a 201.7 percent increase from the previous quarter. GDP losses in the country due to cyberattacks is estimated at 3.6 percent.

Being a pioneer in the mobile money space, digital lending and fintech innovations, the country has become a playing field for hackers and scammers. Recently, the Central Bank of Kenya established a cybersecurity operations centre as part of measures to fight the menace. The centre is equipped to provide critical services such as cyber threat intelligence, incident response, digital forensics and investigations.

“Governments in Africa must realise that cybercrime has the potential to cripple the digital revolution success story,” observes Ali Hussein, a Kenya-based digital transformation consultant. He adds that for this reason, the continent needs sustainable approaches to digital security.

One critical approach that is bearing fruit, albeit on a small scale, is collaboration with international partners. The fact that Interpol in collaboration with Afripol and partners like Cybercrime Atlas, Fortinet and Kaspersky can execute operations to dismantle cybercrime ecosystems gives the continent a solid foundation on which to build on. Experts contend that by plugging in more public and private sector institutions, Africa might not eradicate cybercrime, but has the potential to stem the tide.

“Africa must realise that depending on the international community is a stopgap intervention. In the long term, governments must take the lead in disrupting cybercrime networks,” notes Sutherland.

On this, a growing number of governments are demonstrating some steps in the right direction, particularly in the area of enacting laws and regulations and crafting national cybersecurity strategies that clearly outline the guiding principles for dealing with the menace. These cut across technology transfer, capacity building and information sharing, among others.

Increasing budgets
Critically, Africa understands that it cannot win the war on cybercrime through fancy strategies and policies on paper. For that reason, governments and private companies are increasing cybersecurity budgets to invest in robust systems, which are not cheap. Global consulting firm Kearney gives context in terms of funding. To address investment gaps and secure a sustained commitment to cybersecurity, countries must spend a staggering $22bn between 2022 and 2026. In Kenya, banks are already budgeting as much as $4.6m annually towards cybersecurity.

Any organisation not embedding cybersecurity in its strategy is walking blind

“Any organisation that is not embedding cybersecurity in its strategy is walking blind,” observes Laibuta. He adds the fact that a majority of companies are directing resources in hiring qualified personnel and talent training is an indication that most take the risks of cybersecurity seriously.

For Africa, the reality is that digital evolution is intricately entangled with cyberattacks, which continue to be a moving target. While separating the two is bound to be elusive, the trick in sustaining the digital economy boom lies in building an insurmountable gap and a rock-hard wall when it comes to vulnerabilities.

Markets are the driver of energy transition

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Despite strong global momentum to accelerate decarbonisation, fossil fuels still have a strong hold of the energy use across most sectors. The IEA reports that industrial energy consumption is still dominated by fossil fuels, in particular coal; and transportation relies on oil products for nearly 91 percent of its energy. As of the first half of 2025 however, the global energy supply shows a more positive picture as renewable energy overtook coal as the leading source of energy for the first time in history. But that was no miracle; that is market logic in action. The environmental commodity markets have played the role of scaffolding by providing the framework and support on which the energy transition can be built.

To explain the concept of environmental commodity with a simple analogy: If a homeowner wants to lower his or her carbon footprint, they might install some solar panels. But presuming they live in a block of flats, they might ask a friend to put solar panels on their roof instead. The flat owner helps the friend to finance that and in return can claim that they have neutralised the carbon output of their flat. What those homeowners are doing is creating a marketplace for decarbonisation opportunities, which is exactly what is happening at a macro-level between energy producers, corporates and major industry. It allows people who want to make moves to decarbonise, but who might be constrained. It allows them to invest in the move to decarbonise elsewhere. Similarly, it also enables people who have the opportunity, but not the finance, to get their projects off the ground.

The levers of transition
Emissions Trading Systems (ETS) that put a price on emissions were first launched in 2005. In addition, renewable energy certificates (GOs, IRECs, RECs) that link clean energy generation with consumer demand and fuel mandates (LCFS, REDIII) that reward low-carbon alternatives have gained their importance as tools to put a price on emissions and address environmental impact. These markets exist not to virtue-signal but to account for the cost of emissions and make decarbonisation bankable. Just as in other markets, traders, like us at STX Group, come in to facilitate pricing structures and climate solutions that simplify sales and manage risk for both the buyer and the producer. This market mechanism brings more investment to the market and is therefore an essential part of the commodities markets.

Carbon is finally being priced appropriately — and investment is following

The energy transition is ultimately executed through three levers: efficiency, switching towards renewable fuels and feedstocks, and carbon capture. But these levers only move at scale when markets make them investable; for example, when carbon emissions have been properly priced. The good news is, carbon is being appropriately priced and, as a result, environmental commodity markets have been growing rapidly over the last 20 years. New regulations are also taking effect, especially in Europe, across multiple industries. In shipping, FuelEU Maritime is reshaping fuel demand. In aviation, ReFuelEU mandates are driving uptake of sustainable fuels. RED III is pushing EU member states to increase renewables in power and heat. CBAM is levelling the playing field between domestic and foreign producers in the EU. All these regulations put more pressure on European refineries to ramp up their production of clean energy products. These regulations and increased renewable energy also translate into growing demand for certificates, and that demand makes the transition investable. The future growth of the ‘sustainable economy’ is driven largely by the widening net of regulatory compliance but also has become a lifeline for energy companies operating on markets rapidly shifting towards renewables.

While the pace of change to decarbonise the global economy is arguably still slow, we cannot ignore the emissions that have been capped and addressed because of market schemes like the ETS and a large variety of environmental commodities. To give a sense of the scale, the global EAC market has grown to over 2,400 TWh annually since its formalisation in the early 2000s, representing a size equal to more than 60 percent of the total electricity demand of the European Union. It now covers approximately 40 percent of the EU’s total GHG emissions and generates €38bn in revenues in 2024.

By my latest count, more than 70 countries now operate carbon pricing systems. Clean fuel mandates and schemes are spreading across North America and Asia. In Europe, numerous clean energy policies and regulations are making carbon a balance-sheet cost for major heavy industries including aviation, shipping and manufacturing. There are plenty more schemes similar to the existing regulation that we expect to see make a big impact in the coming years, such as sustainable aviation fuel certificates (SAFc), white certificates to drive energy efficiency and biofuel mandates. One thing is clear: emissions now carry a price, and that price is rising.

I strongly believe that market mechanisms are the most efficient way to align political ambition, corporate obligation and consumer demand to decarbonise, at an affordable cost. Without them, the transition risks becoming slower, costlier and more divisive.

The replication crisis

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The replication crisis in science refers to the experimental finding that many or most experimental findings don’t hold up when scientists try to repeat them. Unlike those other scientific results, it seems that this one has legs – the issue started to become very visible in areas such as medicine, psychology and biology in the mid-2000s, but other fields including economics are not immune.

Since verification is a key step in the scientific method, this calls the whole scientific project into question. Blame for it is often put down to the ‘publish or perish’ ethos, where academics are under pressure to come up with novel findings that will make interesting papers, but another factor is a (rather unscientific) respect for authority. As Jay Bhattacharya, Director of the US National Institutes of Health, told the New York Times, “You have, in field after field after field, a kind of set of dogmatic ideas held by the people who are at the top of the field. And if you don’t share those ideas, you have no chance of advancing within those fields.”

In other words, the problem is not just that experiments do not replicate. It is that theories endorsed by leaders in the field replicate without end.

Respect my authority
An early example of the phenomenon occurred in 1923 when an eminent scientist called Theophilus Painter published a paper that announced that, according to his microscopic observations, human cells contained 24 pairs of human chromosomes. Other scientists repeated his observations and came up with the same number.

However, in the 1950s new methods were developed in which cells were placed onto microscope slides, giving a better view, and it soon became obvious that there were in fact only 23 pairs. Still, Painter’s influence was such that many scientists preferred to stay with his count. Indeed, textbooks from the time showed photographs of chromosomes, in which there were clearly 23, and yet the caption said there were 24. A variation on this occurs when new results are simply ignored because they don’t agree with current theories.

New results are simply ignored because they don’t agree with current theories

A cornerstone of modern economics is the random walk hypothesis, which states that price changes in the stock market are due to random fluctuations. In their 1999 book A Non-Random Walk Down Wall Street, Andrew Lo and Craig MacKinlay recounted that “when we first presented our rejection of the random walk hypothesis at an academic conference in 1986, our discussant – a distinguished economist and senior member of the profession – asserted with great confidence that we had made a programming error, for if our results were correct, this would imply tremendous profit opportunities in the stock market. Being too timid (and too junior) at the time, we responded weakly that our programming was quite solid thank you, and the ensuing debate quickly degenerated thereafter. Fortunately, others were able to replicate our findings exactly.” The random walk hypothesis was thus falsified and never spoken of again (not).

Don’t blame the butterfly
I had first-hand experience of something similar while doing my doctorate on model error in weather forecasting. The general view at the time (around 2000) was that forecast error was primarily due to chaos, aka the ‘butterfly effect,’ rather than the model itself. It followed that by making multiple model runs starting from slightly altered initial conditions, it should still be possible to make probabilistic forecasts: a technique known as ensemble forecasting. My thesis though showed there was a simple test: if forecast errors grew exponentially in time (line curves up), they were probably due to chaos, but if they grew with the square-root of time (line curves down), then they were due to the model. During a talk at a main European weather centre, when I showed a plot of forecast errors growing almost perfectly with the square-root of time, I was interrupted by the institution’s research head who said confidently that the plot must be wrong, since error growth has positive curvature, not negative.

After the talk, we agreed that someone should replicate my results. When that was done, they were identical to the ones I had shown – however, it made absolutely no difference. The consensus remained that the errors were primarily due to chaos, so the expensive ensemble forecasting systems were not at risk (though not everyone was convinced, including New Scientist magazine which ran with the cover article ‘Don’t blame the butterfly’).

Replicate this
Of course, you might think that replication should be less of a problem in finance, if only because of the amounts of money that are often at stake. You can’t just make up a wacky theory about the stock market with made-up data and hope that no one will notice. Or say that a line curves up when it obviously curves down. However, in another sense it may be that the opposite is true.

Biology has progressed remarkably since the textbooks of the 1950s. Not only can biologists correctly count chromosomes, they can also engineer what goes on inside them. Economics and finance in contrast seem stuck (the random walk hypothesis dates back to 1900, and people are still arguing about it). Instead of replicating tired ideas, maybe it is time to look at data in a new way. But that is a topic for another column.

China’s Latin American power play

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When Peru opened a new $3.6bn mega-port in late 2024, it was the latest of the giant projects that China has built and funded in Latin America under its global, trillion-dollar Belt and Road programme. And it was typical of many other B&R projects.

First, China gets much more out of it than Peru because the port, named Chancay, slashes shipping time between Latin America and Asia by two whole weeks. This means Chinese state-owned container vessels are shifting electric vehicles and many other manufactured goods into the region much faster than before and shifting raw materials back home to feed China’s enormous factories.

Second, the financial arrangements cost Peru a lot more than they do China. For a relatively small investment of about $1.6bn of the total $3.6bn, state-owned port giant Cosco has booked a 60 percent stake.

Third, courtesy of the Peru government, which rewrote the rules of foreign ownership, Cosco gets exclusive use of the deep-water port for up to 60 years. Overall, the deal is so beneficial for China in the long term that President Xi, who formally opened the port, promised in early 2025 at least another $9bn in credit for B&R-type projects in Latin America. “We ride the tide of progress together to pursue win-win cooperation,” he told Latin American dignitaries in Beijing. Although the Chinese economy has weakened in the last two years, there is still money on the table for the right B&R projects. Typically, the funds come from what a UN report described as “a complex web of policy banks, commercial banks, state-owned enterprises, sovereign funds and public–private partnerships.”

New infrastructure
Until recent years, B&R-funded projects were mainly to build conventional infrastructure such as new roads, railways, airports, dams and ports. For instance, the Chancay port is one of at least a dozen wholly or partly owned or run by China. Now though, China’s state-owned and controlled giants are moving in new directions. Currently, according to recent studies, PowerChina has invested in no fewer than 11 Latin American countries including, once again, in Peru, where it acquired two electricity suppliers for some $3bn in a deal that gave China virtual control over the nation’s electricity distribution. In other energy coups, Chinese companies are running Latin America’s largest solar plant in Jujuy, Argentina and a wind farm in Coquimbo, Chile.

While China has been assiduously cultivating Latin America, the US has neglected it lately

Huawei is one high-tech Chinese company that has established a strong foothold in new infrastructure such as artificial intelligence, smart cities and 5G technology. By 2020, in Curitiba, Brazil, Huawei was running over half of internet connections. Although not officially under the B&R umbrella, Brazil has quietly become Beijing’s biggest trading partner in the region. “Even though Brazil is not formally part of the Belt and Road, we are in many ways very much aligned with its spirit,” Tulio Cariello, director of content and research at the Brazil-China Business Council, told Dialogue Earth, a non-profit environmental media outlet. “We have been receiving investments in infrastructure for quite some time now – especially in the energy sector – but also in ports, storage, logistics and more.”

In a region hungry for foreign investment, Brazil is one of 20 other countries to sign deals with China, the most recent being Colombia. Of these nations Brazil, Argentina, Peru, Chile, Ecuador and, most controversially, Venezuela have gone in the deep end – to the regret of numerous activist organisations that argue Beijing has too much control over their countries’ future.

For instance, China is also heavily invested in Peru’s mines, hydropower, transmission and copper projects. On top of existing projects, Brazil is discussing with Beijing a trans-continental rail link that would run from the Amazon (where China already has significant interests) to the Pacific, thus bypassing the Panama Canal.

Argentina, which was only too pleased to grab an $18bn currency swap lifeline from Chinese banks to tide it over a debt crisis, is also home to B&R-financed hydropower dams and space-tracking facilities, the latter of great concern to the US. Billions of Venezuela’s debt to China is paid in oil exports, much to the detriment of the domestic economy.

The main attraction for China remains Latin America’s critical minerals, notably the ‘lithium triangle’ that links Chile, Argentina and Bolivia. This has aroused fierce domestic criticism over the wholesale export of raw and rare materials that could be exploited much more profitably at home.

Deals with dictators
In the first years of B&R in Latin America, it was Chinese officials who opened the door, preferring to work with dictatorships – or at least authoritarian governments – rather than with democratic, market-led nations. Talking to Dialogue Earth, Colombia-based expert on China, Parsifal D’Sola, puts it diplomatically by saying that Beijing has tended “to favour state-to-state relations, which facilitates the entry of projects and financing in countries where decision-making is concentrated in a small group and the market plays a secondary role.”

Others put it more bluntly. China’s role in such countries is that of “an incubator of populism,” argues Evan Ellis, professor of Latin American Studies at the US Army War College Strategic Studies Institute. “It’s not that China’s trying to produce anti-democratic regimes, but that anti-democratic regimes find a willing partner in the Chinese.” Until President Xi’s promise of $9bn or more of extra credit for Latin America, China had held the purse strings tighter in the last two or three years, at least for big-ticket projects, as Beijing waits for the original investments to pay off. And they are paying off handsomely.

In 2024, total trade between China and Latin America and the Caribbean (the LAC region) hit $518bn, according to official Chinese figures. China imports agricultural produce to feed its 1.4 billion people, and metals and minerals to supply its high-tech industries such as BYD, the world’s largest manufacturer of electric vehicles that, incidentally, has taken over a former Ford-owned plant in the Bahia region of Brazil.

In short, Latin America sells to China vast quantities of low-value products such as soy, copper, lithium, iron ore and oil while buying high-value machinery, electronics, electric vehicles, turbines and other cleverly mass-produced technologies. Economists would say that Latin America is on the wrong end of the supply chain. Yet China is widely applauded for its consistent, long-term implementation of an economic strategy while Latin America’s nearest neighbour and natural economic partner – the US – sat on its hands. For instance, in the last few years few American companies even bothered to bid for the many infrastructure projects that B&R was able to snap up under Uncle Sam’s nose.

Peru’s Chancay Port provides a good example. It is an investment that capital-rich America could have made to its enormous benefit. Yet Peru, a nation of 38 million, has a substantially bigger trade with China than it does with the US – and it can only get bigger.

While China has been assiduously cultivating Latin America, the US has neglected it lately, even though the US is still the region’s biggest trading partner. Former President Joe Biden visited South America just twice while Donald Trump made just one visit to the region in his first term. Trump has gone out of his way to put the region offside rather than cultivate it, for instance by imposing punitive tariffs on Brazil and by threatening to seize the Panama Canal.

Although it is far too late, senior US military are increasingly concerned about Beijing’s leverage in Latin America. General Laura Richardson of the US Southern Command has warned that “China is on the 20-yard line, to our home land,” citing Chancay Port’s potential to be used for military vessels spying on American naval and commercial ships.

Strategic think tanks like the Atlantic Council has warned: “If a conflict were to break out in, for example, Taiwan or the South China Sea, this global network of 38 Cosco-operated ports could pose a serious logistical challenge for foreign militaries looking to move ships or supplies to the Indo-Pacific.”

Some B&R projects go wrong. New research shows that up to a third globally aren’t completed or run into trouble – a dam in Ecuador is mired in dispute over structural defects, and recipient nations all too often end up with unsustainable debt burdens against which China extracts payment in kind; for instance, Venezuela’s oil exports. Complaints about severe ecological damage at Chancay were quickly shut down.

Yet only one nation has signed itself out of B&R. Although he told Trump that “our canal’s sovereignty is not negotiable,” Panama’s president Jose Raul Mulino kicked China out of planned projects there. Others are nervous of Beijing involvement and, like Mexico, prefer to remain outside the fence.

In the meantime, China’s trading boom looks unstoppable. In 2021 trade with Latin America was worth over $450bn. Three years later it was worth $518bn for an increase of over 40 times since the turn of the century. And there are plenty of experts who predict $700bn within another decade.

Money without borders

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Anti-migrant movements in different developed countries like the US, UK and parts of Europe are taking a new shift. Many individuals who oppose globalisation argue that migration policies have created unfair labour conditions, widened global inequalities and contributed to political instability in underdeveloped countries. Yet the other side of the story is equally strong. Migration has indeed enabled millions of households to survive, build resilience and even prosper.

Remittances, the money migrants send back to their home countries, are now considered one of the most important sources of external financing for developing economies. In fact, in many countries, remittances have surpassed foreign direct investment (FDI). As per the World Bank’s Global Remittance Report, there remains a large data gap between officially recorded flows and actual remittances, as migrants often rely on both formal and informal transfer systems.

The World Development Report 2023 notes that around 184 million people migrated globally in 2023 due to economic, domestic and political reasons. At least 77 countries now rely on remittances for more than three percent of their GDP, and in about 30 countries, remittances account for over 10 percent of GDP. For low- and middle-income countries (LMICs), remittance inflows exceeded $650bn in 2023, a figure higher than FDI for many economies. By 2026, the global remittance market is predicted to exceed $800bn, underscoring its critical role in economic development. Migration patterns, fintech innovation and geopolitics are shaping this huge market, making it more dynamic than ever before.

Remittance drivers
From consumer brands to tech giants like Procter & Gamble, Apple, Amazon, Alibaba, Google and Microsoft, outsourcing and hiring across borders is now part of business models. Developed economies with high GDP are also confronting structural challenges like aging populations, low birth rates and persistent labour shortages. Countries like Japan, Germany, Italy and the UK increasingly rely on foreign workers to sustain their industries. At the same time, poor infrastructure and low wages in home countries continue to push individuals to migrate in search of better opportunities.

While anti-migrant campaigns and rising nationalism seek to limit immigration, the global demand for labour shows no sign of slowing down in 2026. This continued demand sustains the flow of migrant workers and, with it, the flow of remittances. Another dimension is climate change, which is becoming a central driver of migration. By 2050, millions of people are projected to be displaced due to extreme weather conditions, global warming and disruptions to agriculture. By 2026, these factors are already accelerating migration patterns.

The World Meteorological Organisation highlights that there is a 48 percent chance that global temperatures will exceed 1.4°C above pre-industrial levels in the next five years. Regions like Southwest America and Southern Europe are expected to be drier, while parts of Africa, Brazil and Australia will face heavier rainfall and flooding.

These weather disruptions are reshaping mobility. Skilled workers in Alaska or Canada, facing harsh winters, may seek opportunities elsewhere. Likewise, extreme heat in Brazil is likely to push workers toward countries offering both better pay and more favourable climates. Regardless of the economic necessity, political instability, or climate disruption, migrants consistently send funds back home. These cross-border cash flows not only secure the livelihoods of families but also stimulate local economies. The use of remittances is also evolving. Traditionally, funds were directed toward household consumption such as food, rent or education. Migrants are leveraging their earnings for investment opportunities in their home countries, financing small businesses, purchasing property or supporting community projects.

This shift means remittances are no longer simply tools of survival but also drivers of entrepreneurship and economic diversification. Both sending and receiving countries benefit from this where migrants strengthen their financial security abroad while simultaneously stimulating economic growth back home.

A fintech makeover
Before the technological boom, sending and receiving money across borders was costly, slow and often inaccessible. According to the World Bank’s 2020 data, the global average cost of sending $200 was between six and seven percent, far higher than the UN Sustainable Development Goal (SDG) target of three percent. In Africa, costs often exceeded 10 percent, making remittances especially burdensome for low-income migrants. The fintech revolution has transformed this landscape. Instant money transfers are now possible thanks to digital platforms that complete transactions in seconds rather than days. Migrants no longer need to stand in long queues at remittance centres; with the tap of a mobile app, they can send funds home almost instantly. This convenience has redefined the experience of sending and receiving money across borders. Equally transformative has been the rise of mobile money services. Platforms such as M-Pesa in Kenya, Easypaisa in Pakistan, and bKash in Bangladesh have given millions of people access to financial services for the first time. By allowing recipients to receive funds directly on their mobile phones, these systems eliminate the need for bank accounts, which remain inaccessible for many in rural or underserved areas.

The dominance of mobile money is set to expand further. By 2026, analysts predict that mobile money applications will become the primary channel for remittances in many developing countries. In regions where traditional banking infrastructure is limited, these digital platforms are emerging as the backbone of financial inclusion, ensuring that remittances reach families quickly, securely and at a fraction of the previous cost.

Cryptocurrencies and stablecoins have added a new dimension to remittances. Stablecoins, backed by assets like the US dollar, offer a less volatile way to transfer funds. While cryptocurrencies remain riskier, they are increasingly popular in regions with weak financial systems. At the same time, central banks are experimenting with Central Bank Digital Currencies (CBDCs).

Although still in their early stages, CBDCs could become a secure and low-cost remittance channel within a few years. Security is another frontier where fintech has made advances. Digital wallets now incorporate biometrics, facial recognition and multi-factor authentication, reducing the risk of fraud. Moreover, by moving migrants into the formal financial system, these innovations allow governments to collect data, improve transparency and even broaden their tax base. The result? By 2026, digital transformation will have made remittances not only cheaper and faster but also more integrated into everyday financial life.

The geopolitical cut
Remittance channels are deeply influenced by geopolitics. Changing alliances, sanctions and rivalries will shape how money moves across borders in 2026. Countries under heavy sanctions often experience reduced remittance flows, as migrants resort to informal networks such as hawala or unregulated crypto transfers. These alternatives undermine transparency and weaken oversight. At the same time, shifts in global financial power are producing new dynamics. For example, Russia and China are working to develop regional payment systems to reduce dependence on western platforms, potentially redrawing the global remittance map. Governments are also seeking to better track remittances and encourage the use of formal systems. India, for instance, has introduced diaspora bonds, enabling its large migrant population to invest directly in infrastructure projects. Other countries are introducing policies to incentivise banking channels over illegal transfers. By 2026, the emphasis will be on making remittances not just transparent and secure, but also strategically aligned with national development goals.

Is the $800bn milestone enough to understand the future of remittances? The answer is more complex. In countries such as India, Bangladesh, the Philippines, and across Latin America and throughout Sub-Saharan Africa, remittance inflows are expanding at double-digit rates. These regions rely heavily on migrant earnings, and the steady increase highlights the resilience of remittances even in times of global uncertainty.

The digital remittance market has already surpassed $800bn as of 2024, and projections suggest it will continue to grow rapidly. With a compound annual growth rate of around 8.5 percent forecast from 2026 to 2033, the sector could reach as much as $1.5trn by 2033. This scale not only reflects rising migration but also the speed at which digital platforms are transforming the industry. Yet challenges persist. Economies with weak digital infrastructure risk falling behind in this transformation. In several parts of Sub-Saharan Africa, limited internet connectivity, inadequate regulation and gaps in financial literacy hinder the widespread adoption of digital channels. Without targeted investment and policy support, these countries may not fully capture the benefits of the digital remittance boom. While digital channels are quickly dominating, traditional money transfer operators remain relevant in certain regions. Countries like Nigeria and some parts of Latin America continue to rely on conventional platforms due to low digital penetration. Yet, experts estimate that within a few years, more than 50 percent of global remittances will be digitalised. Remittances carry both opportunities and risks. On the opportunity side, they improve household welfare, finance education, and stimulate entrepreneurship. Governments can channel these funds into development initiatives such as infrastructure, healthcare and small and medium enterprise (SME) support.

The rapid rise of fintech offers another opportunity: digital channels bring millions of previously unbanked people into the financial system. By 2026, fintech platforms could provide consistent economic growth and the financial security that developing economies urgently require. Yet risks remain. Heavy dependence on remittances can make economies vulnerable to downturns in host countries. If a host economy faces recession or imposes restrictive policies, remittance flows could decline sharply. Furthermore, strict regulations or heavy taxation may drive migrants back toward informal transfer systems, undermining transparency. Geopolitical conflicts and sanctions also remain a constant threat to the smooth flow of funds. The future of remittances is promising, but it is not without pitfalls. The key lies in making them affordable, transparent and resilient.

The road to 2026
Remittances are far more than financial transfers. They are lifelines for families, catalysts for fintech innovation, and drivers of economic growth in both host and home countries. By 2026, the global remittance market will not just be a story of money moving across borders but of resilience, opportunity, and transformation. Predictions from global analysts suggest steady growth well into the next decade. Yet, the key question remains: can governments, financial institutions and fintechs keep remittances affordable, transparent and impactful? If they can, remittances will evolve from survival tools into engines of prosperity; a bridge not just between countries, but between present needs and future opportunities. n

Is computing power ABS on the horizon to fund AI?

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JP Morgan suggests that $5trn will be spent on the build-out of data centres worldwide from 2026 to 2030, while McKinsey expects that the total investment could reach $7trn during the same period. In aggregate, these forecasts imply a base-case annual capital expenditure of $1trn. Headline figures vary across financial institutions and consulting firms. Their guesstimates, however, all point in the same direction.

To put the scale of this annual capex into perspective, Bank of America estimates that it costs $50bn to build one gigawatt (GW) of data centre capacity. At that rate, $1trn of annual investment would fund approximately 20 GW of new capacity, three times New York’s installed electricity capacity of roughly 6.7 GW.

Silicon Valley, meanwhile, seems to move fast to meet this goal. 2025 has just witnessed a web of circular financing deals in which hyperscalers and fast-growing AI unicorns increasingly investing in each other, blurring the line between customers, suppliers, and investors. OpenAI, Oracle, and SoftBank has committed $500bn for their Stargate project over the next four years while CoreWeave signed a $14bn deal with Meta to supply computing power, to name just two examples. According to Goldman Sachs, the consensus capex estimates for AI hyperscalers alone might reach $394m by the end of 2025.

The million-dollar question is how such investment will ultimately be financed. For hyperscalers such as Meta, this size of commitment in AI investment is consistent with the scale of their balance sheets. The route to funding such investment is less clear, however, for standalone AI developers. OpenAI generated approximately $20bn of annual recurring revenue (ARR) in 2025, yet the AI poster child has committed to invest $1.4trn over the next eight years, according to Sam Altman.

To answer this question, it is useful to examine how AI investment has been funded to date. Hyperscalers funded early AI investment with their own cash flows. In 2025 alone, Meta, Microsoft, Amazon, and Alphabet collectively sit on around $500bn free cash flows. Then the debt capital market was tapped as this once-in-a-lifetime technological breakthrough in the 21st century started to appear promising. Constrained by balance-sheet leverage ratios, they started to shift debt off balance sheet recently.

A case in point is Meta’s Hyperion Data Center in Louisiana. In October 2025, Meta announced a joint venture with Blue Owl Capital to develop this project through a special-purpose vehicle (SPV) called Beignet Investor. According to the Financial Times, this SPV has raised $30bn in total, comprising $27bn of loans from private credit funds and $3bn of equity from Blue Owl.

Looking ahead, Morgan Stanley addressed the funding question in a report published in July 2025. The bank estimates that capex in data centres by 2028 could reach approximately $3trn, half of which could be covered by hyperscalers’ own cash flows. A further $200bn could be funded by corporate debt issuance. Specifically, it points out that another $150bn could be funded via data centre asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS).

Data centres have already been financed off balance sheet
Data centres are not new to the securitisation market, but their use of structured finance remains limited. The first-ever data centre ABS in the world was issued in February 2018 by Vantage Data Centers, a data centre operator in key US markets. Rated A- by Standard & Poor’s, the securitisation notes raised $1.125bn, allowing Vantage to expand in existing and new markets. Three years later, Blackstone issued the first-ever CMBS in 2021, raising $3.2bn to finance the its $10bn acquisition of data centre operator QTS Realty Trust in June 2021.

For computing power ABS and potentially more exotic financing vehicles to emerge at scale, clearer evidence of AI monetisation might be required

In Europe it is still at its early stage as there are only two ABS deals so far. In June 2024, Vantage raised £600m in securitised term notes regarding two data centres located in Wales, UK, making the first-ever data centre ABS in Europe. One year later, it issued another €640m in securitised term notes in June 2025 for four data centres located in Frankfurt and Berlin, Germany, the first-ever data centre ABS in continental Europe.

According to the New York Times, 27 data centre ABS deals have been issued raising $13.3bn in 2025, increased 55 percent year-over-year.

Why computing power is structurally securitisable
At present, data centre securitisation deals are all issued by data centre operators, with long-term contractual cash flows from tenant lease payments, from either co-location customers or hyperscalers. Proceeds are typically used to refinance existing debt and expand data-centre capacity.

Against this backdrop, the web of circular financing in 2025 has brought some of the neocloud providers to the fore, offering AI developers access to computing power on a rental basis. The GPU-as-a-Service (GPUaaS) model shifts AI infrastructure spending from upfront capex to flexible operating costs for AI training and inference.

Leading players have recently secured a number of long-term contracts with hyperscalers. Nebius, an Armsterdam-based neocloud company, for example, has signed an agreement with Microsoft to provide GPU services with the total contract value up to $19.4bn through 2031 and a $3bn agreement with Meta over five years. These long-dated contractual obligations would create predictable and stable cash flows, allowing computing power to be securitised in the same way data centre operators issue data centre ABS & CMBS to expand capacity in the competitive GPU-as-a-Service market.

While no high-profile securitisation transactions have yet emerged, the Financial Times reported that some technology bankers have seen ABS deals on AI debt in recent months. Details of these deals remain limited.

Where the securitisation thesis breaks down, for now
That said, the picture has become more mixed in recent months, with early signs of strain emerging across the AI landscape. Often as a canary in the coal mine, equity capital markets have begun to reassess the sustainability of AI-driven investment. Oracle shares have plummeted 43 percent as of December 23, 2025 from their highest level earlier in September when Oracle inked a $300bn computing power deal with OpenAI. In this deal, OpenAI will purchase computing power capacity worth $300bn from Oracle over five years, per the Wall Street Journal. The shift has also been reflected in the derivative markets. Oracle’s five-year credit default swap (CDS) skyrocketed from around 37 basis points in July to 151.3 basis points in November 2025, the highest level since 2009, per Bloomberg.

The web of circular financing in 2025 has brought some of the neocloud providers to the fore

The scale of the market sentiment reflects widespread concern about the feasibility of Oracle’s recent expansion. In its latest 10-Q earnings report, Oracle disclosed $248bn of additional lease commitments, largely tied to the build-out of AI infrastructure.

The main concern around Oracle is twofold, per Bloomberg. First, there is a mismatch between the duration of Oracle’s lease commitments and its contracted revenues. While lease obligations are expected to spread across 15 to 19 years, most of its contracts are due in the next five years, exposing a company at the epicentre of AI infrastructure build-out to renewal risk and potential excess capacity if demand softens. Second, it might under-depreciate its GPUs and need to upgrade their servers in the middle of a lease. It currently depreciate IT equipment over six years as most of its peers do. However, there is no answer as to how long GPUs can last for as ChatGPT was only introduced three years ago on November 30, 2022.

Similar pressure has been evident elsewhere. CoreWeave and Nebius shares have slid 55 percent and 30 percent from their respective peaks as of the end of 2025.

Despite these sharp equity corrections, the broad picture for AI infrastructure funding is still resilient. In an interview with CNBC in December 2025, Sung Cho, co-head of public tech investing and US fundamental equity at Goldman Sachs, however, reinforced confidence in the sustainability of AI funding. He claimed that, viewed in aggregate, 90 percent of the capital expenditure to date in AI is funded by hyperscalers’ operating cash flows with only 10 percent financed by corporate debt, the majority of which is issued by Meta, whose credit ratings are higher than those of the US government.

For computing power ABS and potentially more exotic financing vehicles to emerge at scale, clearer evidence of AI monetisation might be required. In the near term, a viable B2B2C model, where AI adoptions translates directly into productivity boost and margin expansion for end customers, could serve as the first dawn. Once such economics are established, computing power ABS deals might become mainstream, diversifying the spectrum of financing options available to the AI industry.

Has the moral core of capitalism been lost in translation?

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When did capitalism become a dirty word? Despite what we are led to believe, it is not a political construct; it has absolutely nothing to do with politics. Adam Smith, the so-called ‘Father of Capitalist Thinking’ believed that free markets were not engines of extraction, but instruments of moral order, arguing that “humans were self-serving by nature but that as long as every individual were to seek the fulfilment of his or her own self-interest, the material needs of the whole society would be met.” In fact, he never even coined the term capitalism.

However, Smith’s simple explanation of markets has since been hijacked as we see business capital flow towards ‘engineering’ balance sheets rather than building factories, towards stock price rather than workers, and extraction instead of invention. This is more than a market distortion, it is an identity crisis, and with capitalism stripped of its moral core it risks becoming an economy of scraping value from value, rather than creating it.

Enterprise as moral progress
Smith didn’t see commerce as a cold machine, and believed, rightly or wrongly, that self-interest and sympathy could align to generate productivity and shared prosperity. In his ‘Theory of Moral Sentiments and Essays on Philosophical Subjects’ (1759), he argued that when individuals pursue their own gain within a moral framework, their labours often produce benefits beyond themselves, because we have in-built instincts that make us care about others’ well-being.

Buybacks only provide short-term stability. They mask any underlying issues

And this concept forms the basis of his ‘Invisible Hand Theory’ in his seminal work The Wealth of Nations about the unseen market forces that drive a free economy through self-interest and voluntary trades. The industrial revolutions that followed seemed to vindicate this ethos, and early capitalism wasn’t just about factories or markets, it was about harnessing innovation, trade, and employment to lift living standards and entire societies. Prosperity meant producing more, such as steel, textiles and railways, and the ‘real economy’ was capitalism’s moral anchor: enterprise equalled progress.

And for over 200 years, capitalism worked, on the whole, as Smith intended, with capital flowing into factories, infrastructure, and innovation, to create real wealth and shared prosperity. However, new financial tools, the rise of shareholder primacy, and a wave of financial deregulation in the 1980s redefined corporate priorities. Driven by financial investors who criticised managers for not focusing on shareholder interests during the economic challenges of the 1970s, this ‘shareholder value revolution’ shifted focus from building productive businesses and long-term growth to maximising short-term returns for shareholders, often at the expense of investment in workers, research, and tangible assets.

A pivotal moment in this transformation occurred in 1982 with the US Securities and Exchange Commission’s adoption of Rule 10b-18, which provided companies with a ‘safe harbour’ allowing them to buy back their own stock without risking accusations of market manipulation, provided they follow clear limits on timing, amount and price. Meanwhile the Depository Institutions Deregulation and Monetary Control Act of 1980 phased out interest rate ceilings on deposits and broadened the range of activities banks could engage in. In the UK, deregulation occurred through a series of legislative acts and market-driven changes, most notably the Big Bang in 1986, which freed London’s stock market by allowing foreign ownership of brokers, removing fixed commissions and automating price quotes.

Along with advancements in information technology, these developments facilitated the rise of financial markets and the prioritisation of shareholder value over traditional industrial growth, to fundamentally alter the landscape of capitalism.

The hollowing of enterprise
The use of stock buybacks has transformed from being a niche financial tool in the 1980s to a core mechanism for companies to return capital to shareholders. And while this can signal confidence in a company’s future, this diversion of funds from research and development (R&D), employee wages and business expansion has raised concerns about buybacks being used to boost earnings per share (EPS) and inflate stock prices. Unfortunately, this trend has been reinforced by executive pay, which often links CEO pay to short-term stock results. For example, in 2018, S&P 500 firms allocated a staggering 81 percent of extra cash from tax cuts to buybacks and dividends, but only 4.6 percent was spent on R&D.

In the technology sector, Apple announced a $110bn repurchase plan in 2024, while maintaining significant cash reserves, which raises questions about the allocation of resources between shareholder returns and investments in innovation. Similarly, Delta Air Lines repurchased $5bn of its stock in 2018, money, some would say, that would have been better spent on improving infrastructure or employee benefits. Even energy firms, despite record profits, have prioritised buybacks over investment in sustainable energy initiatives or projects that address environmental concerns. All of which illustrate the broader trend of financial engineering over investments to drive long-term growth and societal benefits.

Weakening markets and eroding society
For capitalism in the 21st century, this surge in stock buybacks has introduced a paradox. While companies may appear more profitable in the short term, the long-term health of both markets and society is increasingly at risk.

Wage growth has stagnated, which has only helped to widen the wealth gap

On the surface, by reducing share supply, potentially boosting EPS and making companies more attractive to investors, buybacks can stabilise stock prices. The 2021 US Chamber of Commerce report by Craig Lewis and Joshua White, ‘Corporate Liquidity Provision and Share Repurchase Programmes,’ which studied a large sample of more than 10,000 US companies over 17 years found six key benefits associated with buybacks: greater liquidity, reduced volatility, economic benefit for retail investors, proactive repurchase activity to stabilise stock price, responding to uncertainty by strengthening buyback activities, and using stock buyback as a strategic liquidity supplier.

But buybacks only provide short-term stability. They mask any underlying issues. With buybacks, companies risk diminishing their long-term competitiveness, as they divert capital investment away from R&D, infrastructure and workforce investment. This can lead to a decline in productivity and increased vulnerability during economic downturns, as firms may lack the necessary investments to adapt and innovate.

The societal impact is equally concerning. Prioritising shareholder returns over capital investment means that for many workers wage growth has stagnated, which has only helped to widen the wealth gap. And with companies allocating more funds to buybacks rather than paying income tax, according to a report by Americans for Tax Fairness, it raises questions as to their true commitment to societal welfare. As profits flow towards mostly shareholders and executives, workers are left behind, eroding trust in companies and challenging capitalism’s fairness and moral legitimacy.

Rethinking capitalism in 2025
As we move into the second quarter of the 21st century, capitalism, or rather what it has morphed into, is in desperate need of a makeover. But with the whole world seemingly in a financial mess, how can we realign economic incentives with long-term societal well-being?

In terms of policy reforms, one suggestion is to restrict excessive stock buybacks either through increasing the tax on repurchases or treating buybacks similarly to dividends and taxing accordingly. One other crucial measure to implement is realigning executive pay from short-term results to long-term performance.

However, policy tweaks alone won’t restore faith in capitalism. There is a growing push to rethink how companies invest, grow, and define success through a combination of stakeholder capitalism and patient capital. Valuing workers, customers, and communities, instead of shareholder returns, and investing money for the long term rather than a quick win, will, invariably, give businesses room to innovate and grow. Additionally, by implementing green industrial policies, governments can steer investment into clean energy, new technologies, and infrastructure to speed the shift towards a low-carbon economy.

Rediscovering capitalism’s moral core
Was Adam Smith right? Is self-interest only justifiable when it serves society? If recent social commentary is anything to go by, economic systems without this alignment risk inefficiency and moral erosion. And, like Mr Darcy’s good opinion, trust in the system, once lost, is hard to get back, while markets based purely on extraction instead of creation are unstable.

Capitalism with a moral core provides more than ethical reassurance; it encourages people to act responsibly and predictably, creating stability in how businesses and markets operate. And companies that embed social purpose into strategy often foster loyalty, spark innovation, and encourage responsible risk-taking, with studies showing that those committed to ESG often outperform others, proving that profit and purpose can coexist.

Building businesses and creating wealth is not, as social media would have you believe, inherently evil. But without an ethical anchor, rewarding short-term gain at the expense of collective welfare is what has given capitalism its bad name.

With that moral anchor, people can see economic success as serving society, and it is a win-win all round; companies become stronger and more resilient, communities trust those companies to reinvest, workers feel valued, and investors gain confidence that profits are sustainable in the long term.

Women take the lead in wealth

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Over the next two decades, the largest intergenerational wealth transfer in history will take place. Baby Boomers and the Silent Generation are expected to pass down roughly $124trn by 2048, a tidal wave of capital that will reshape families, philanthropy and the financial services industry. The numbers alone are enough to grab headlines. But behind the dollars lies a deeper story about who will inherit this wealth and what they will do with it. For the first time in history, women are positioned not as ‘plus ones’ in financial planning, but as primary inheritors and decision-makers.

Statistically, women live longer than men, meaning they are more likely to control assets for longer stretches of time. That reality shifts the centre of financial gravity. “With women holding more wealth for longer periods of time, their decisions have the potential to shape our economy more than ever before,” says Megan Wiley, CFP of Badgley Phelps Wealth Managers. This historic handoff is more than just a matter of economics. It is a social and cultural inflection point that is already reshaping the way families talk about money, how advisors work with clients, and how women see themselves as stewards of wealth.

Generational divide in wealth’s purpose
A recent Harris Poll report, The Great Wealth Transfer, sheds light on the attitudes shaping this moment. According to the findings of this American market research and analytics firm, older Americans – those 55 and up – see wealth primarily as a source of security (42 percent) and lifestyle or enjoyment (35 percent). By contrast, younger heirs emphasise legacy-building (22 percent) and personal fulfillment (18 percent), alongside far greater interest in ESG and impact investing.

This generational divide signals a profound change in how capital will be deployed. Millennials and Gen Z are less content with simply holding and growing wealth; they want their money to work in service of values and social change.

Families that talk about wealth transfer create heirs who thrive, not heirs who guess

Confidence, however, tells a different story. Sixty-four percent of older Americans say they trust their heirs to manage wealth responsibly, while 83 percent of heirs say they feel confident themselves. But beneath the surface optimism lies unease. Younger inheritors cite concerns about taxes, legal complexities and the possibility of mismanaging assets. They also carry an emotional load: guilt, grief and anxiety that older generations often underestimate. These cross-currents will have a direct impact on financial firms. Nearly half of heirs – 43 percent – say they plan to switch providers after receiving their inheritance, citing mismatched values and a lack of personal connection. For wealth managers, the message is clear: retaining the next generation of clients will require more than investment performance. It will demand trust, transparency and alignment with values.

One of the biggest hurdles women face in this transition isn’t financial – it is cultural. For decades, daughters were often excluded from wealth conversations. Many grew up hearing, ‘Dad handles the finances,’ a phrase that subtly reinforced the belief that money was not their domain.

“All too often, heirs are looped in at the 11th hour, when the will has been written or after someone’s death,” says Michelle Taylor, a financial advisor at GFG Solutions. “The fear of making a wrong move with family money can paralyse them into inaction.”

Nancy Butler, a financial planner with 40 years of experience, has seen how silence perpetuates unpreparedness. “If your great-grandparents didn’t teach sound financial habits to your grandparents, and your grandparents didn’t pass them down, then your parents may not have been equipped to teach you,” she explains. “Without this chain of knowledge, each generation finds itself repeating the same mistakes.” By contrast, families that talk openly about money tend to raise more confident heirs. “Families that talk about wealth transfer create heirs who thrive, not heirs who guess,” says Allison Alexander of Savant Wealth Management.

Financial literacy isn’t enough
Today’s young women may be more financially literate than any generation before them, but that doesn’t mean they are prepared to inherit. “You can have all the content in the world, but unless you understand it and implement it, the confidence gap will still be present,” says Taylor. Srbuhi Avetisian, Research and Analytics Lead at Owner.One, argues that the real gap is inheritance literacy. “Only seven percent of heirs in our global survey knew they typically have a three-to-six-month window to act before assets freeze,” she explains. “That window determines whether heirs – often daughters – retain access to their families’ lifestyle or lose it.”

Joyce Jiao, CEO of Herekind, a digital estate administration platform, points to another overlooked challenge: the administrative burden. “Financial literacy teaches you how to manage money, but it doesn’t teach you how to navigate the nightmare of probate, bank negotiations, funeral costs and dependent care – all while grieving,” she says. “Most often, the eldest daughter is the executor. Even highly educated women can feel overwhelmed and unprepared.” Money is never just money, especially when it arrives through loss. Inheritances often come tethered to grief, guilt, or a sense of unworthiness. “An inheritance can carry grief as well as opportunity,” says Alexander. Without support, those emotions can drive poor financial choices.

For many women, the emotional undercurrents run deep. “Impostor syndrome is huge. Survivor’s guilt is common. And wealth, for many women, still feels dangerous – like it comes with a cost and can be taken away,” says transformational wealth coach Halle Eavelyn.

Jiao sees the same dynamic in her work with executors: “They are the emotional bridge – grieving, paying estate costs out-of-pocket, and making financial decisions that affect the entire family – all before they can even access their inheritance.”

Advisors are slowly adapting
The advisory industry is beginning to take note. Where once women were treated as secondary clients, they are increasingly recognised as the lead decision-makers. “Women are happy to know the desired result will be achieved and give that more weight than the return they will achieve in a particular strategy,” says Taylor. Wiley sees a similar trend: “Clients want to see a holistic plan before making portfolio changes, allowing them to align investments with broader goals such as charitable giving.” That shift toward holistic, life-centric planning is critical. Advisors who focus only on products and return risk alienating a generation that values impact, caregiving and legacy alongside financial growth.

As women inherit unprecedented amounts of wealth, they are also rewriting its purpose

Technology is also reshaping the landscape. Interactive dashboards, inheritance simulations, and women-focused peer networks are creating safe spaces to learn and practise decision-making before the windfall arrives. “Institutions that run inheritance simulations – showing heirs what the first 90 days after a death look like – will build more confidence than any investment seminar,” says Avetisian. As women inherit unprecedented amounts of wealth, they are also rewriting its purpose. Unlike earlier generations, they are far more likely to view money not as an end in itself but as a means to community impact, sustainability, and family legacy. “When women control the purse strings, priorities change,” says Eavelyn. “Leadership gets more nuanced. Entrepreneurship gets more inclusive. Philanthropy shows up more. This isn’t just a transfer of wealth – it’s a paradigm change.”

Kristin Hull, Founder and CIO of Nia Impact Capital, an Oakland-based impact investing firm that builds public equity portfolios with a focus on companies advancing sustainability, social justice, and gender diversity in leadership, argues that the $124trn wealth transfer is positioning women as key decision-makers who want transparency, purpose and investments aligned with their values.

She notes that while younger women are digitally fluent and eager for tools and peer networks, gaps remain in inheritance literacy and emotional readiness. Her most urgent call: to make gender-lens investing (GLI) the default, embedding equity and impact metrics into portfolio construction, estate planning and wealth transfer frameworks.

This shift is not confined to the US. In Asia, women are on track to control nearly a third of investable assets by 2030, while in Africa and the Middle East, rising female entrepreneurship is accelerating wealth ownership. Yet cultural and legal barriers remain: in some regions, inheritance laws still favour male heirs, and in others, daughters face resistance in assuming financial leadership. For global financial institutions, the implication is clear – this transfer is both an opportunity and a stress test, demanding new frameworks that respect regional differences while empowering women as primary decision-makers.

The overlooked opportunity
Across the experts, one theme recurs: timing. Too often, women are brought into wealth planning too late – after a death, when grief and confusion collide with financial responsibility. “The most overlooked opportunity is recognising that women need not just a wealth plan but a wealth identity,” says Eavelyn. “Until a woman sees herself as someone who is worthy of holding, growing and enjoying her money, she stays stuck in fear and silence.”

Practical steps can shift this trajectory. Inviting heirs to annual family meetings, creating mentorship spaces, offering just-in-time educational tools, and reframing conversations around values instead of just numbers all help prepare women for stewardship. These early interventions turn inheritance from a disruptive windfall into a natural extension of life planning.

The $124trn wealth transfer is more than a reallocation of assets – it is a cultural and economic turning point. Women, poised to inherit and manage more wealth than ever, face both challenges and opportunities. For financial institutions, the path forward is clear: survival in this new era requires transparency, education, and treating women as the lead decision-makers they are. Whether this transfer becomes a burden or a breakthrough will depend on how well families, advisors, and institutions rise to the moment.

Can Armenia’s tech boom free it from Russia’s grip?

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Samvel Khachikyan’s career path may seem unusual, but in many ways, it is quite typical for Armenia – a small Caucasian country of fewer than three million people. His personal journey mirrors the challenges and achievements his homeland has experienced in recent years.

At 17, through hard work and determination, Khachikyan earned a place at the United World College on nearly a full scholarship. But just six months into his studies, he was forced to pause his education to complete mandatory military service. In 2020, he joined the army and served in Nagorno-Karabakh – known as Artsakh by Armenians, a mountainous region at the southern end of the Karabakh range within Azerbaijan.

That same year, after decades of sporadic clashes, Azerbaijan launched a large-scale military operation that became known as the Second Karabakh War. In just 44 days, it broke through Armenian defences and regained seven surrounding districts along with about a third of Nagorno-Karabakh itself. At least 6,500 lost their lives in the conflict.

Having witnessed one of the hardest chapters in his country’s recent history, Khachikyan completed his service with a renewed sense of purpose. “I was a guy with little experience, no knowledge, nothing in my background – just a big desire to do something and a strong hunger to learn,” he says.

Today, Khachikyan is the Director of Programs at SmartGate, a venture capital firm based in both California and Armenia that focuses on tech investments. The company connects Armenian founders with Silicon Valley and Los Angeles, helping them build networks with leading US companies and investors.

Between Russia and the West
When Khachikyan was serving in the military, he recalls vividly that he never once encountered a Russian soldier – yet Russian forces have long maintained a strong presence in Armenia. The Russian 102nd Military Base in Gyumri, under the command of Moscow’s Southern Military District, stands as a visible symbol of the Kremlin’s enduring influence. For decades, Armenia has been regarded as Russia’s closest ally in the South Caucasus.

Armenia appears to be turning its back on its long-time political and economic partner

Natalie Sabanadze, a Senior Research Fellow with the Russia and Eurasia Programme at Chatham House, says the relationship was “historically determined – shaped by security and geopolitical priorities.”

She explains, “You choose an ally to balance threats and reduce risks. Historically, the greatest threat to Armenia in the region came from Turkey. Later, as a result of the Karabakh conflict, Azerbaijan also became a threat. To minimise the risks, Armenia chose to maintain its alliance with Russia after the collapse of the Soviet Union.”

As a result, two geopolitical axes emerged in the Caucasus: one reinforcing Russia’s dominance – Russia, Armenia and Iran – and the other, comprising Turkey, Georgia and Azerbaijan, aligning more closely with the West. Now, however, Armenia appears to be turning its back on its long-time political and economic partner.

In a historic moment, the Armenian president stood at the White House alongside his Azerbaijani counterpart to sign a peace deal brokered by US President Donald Trump. The move signals a bold realignment – and leaves Prime Minister Nikol Pashinyan with a daunting challenge: convincing Western partners that Armenia is ready for closer cooperation.

“Compared to previous years, Pashinyan is actively trying to shift from a balancing policy to one focused on moving out of Russia’s sphere of influence,” says Natia Seskuria, an Associate Fellow at the Royal United Services Institute (RUSI). “It is not easy to make Armenia a compelling case for investment – especially given the ongoing geopolitical turbulence.”

Armenia’s bet on technology
Technology has emerged as Armenia’s niche – a route to greater political and economic independence. The country’s quiet digital transformation is now drawing the attention of global players. Among the most ambitious projects is an AI data centre by US tech giant Nvidia, slated to open in 2026 – a development few could have imagined just a decade ago.

According to Minister of High-Tech Industry Mkhitar Hayrapetyan, the initiative will be the region’s largest technological undertaking: a $500m investment, the deployment of thousands of Nvidia Blackwell GPUs, and the construction of infrastructure with more than 100 megawatts of capacity.

The country aims to strengthen its technology sector and position itself as a regional hub. But this is not purely a technological ambition – it is also a strategic one. Technological progress could play a crucial role in helping Armenia grow into a more independent and influential state on the global political and economic stage.

Seskuria believes the strategy is logical, given Armenia’s lack of natural resources and limited geostrategic importance. “The niche it is trying to occupy can make Armenia attractive not only to European but also to Asian countries,” she says. “This has an economic dimension first and foremost, but also a political one, since the two are interconnected.”

Armenia’s goals are considered largely realistic, given other successful examples in the wider region. Soon after gaining independence from the Soviet Union in 1991, Estonia decided that building a digital economy and investing heavily in technological innovation would be the best path forward for a small nation with few natural resources. Substantial investments in computer networking and digital infrastructure followed – and today, this former Soviet republic stands as one of the most technologically advanced countries in the world. Perhaps it is a path Armenia is determined to follow.

Inside Armenia’s push for innovation
Khachikyan believes that the driving force behind Armenia’s recent technological pivot is its people. “People started building tech start-ups without any support from inside the country,” he says. “They understood that this could become something important – something that could position Armenia as a regional hub.” According to him, both the Armenian government and the public are now paying unprecedented attention to the country’s tech ecosystem – largely because Armenia has the intellectual capacity to compete globally.

Technological progress could play a crucial role in helping Armenia grow

There are already companies proving that Armenians have the ability to achieve ambitious goals in technology. ServiceTitan – an Armenian-founded, cloud-based tradesperson software company – became the first Armenian tech firm to list its shares on the Nasdaq stock exchange when it went public last December and was valued at over $10bn. The company was founded in 2012 in California, by Armenian entrepreneurs Ara Mahdessian and Vahe Kuzoyan. Over the past 12 years, it has grown into a leading developer of software to help HVAC businesses solve the challenges they face.

Khachikyan’s SmartGate VC is another example of an Armenian tech company that has found success abroad. The firm has been investing in artificial intelligence, brain–computer interfaces, cybersecurity and other emerging technologies. Khachikyan notes that their work began long before the current AI boom. “We were investing back in 2018, when AI wasn’t a hype,” he says. “We are not just investing in start-ups that use ChatGPT – we are investing in the fundamentals of AI.”

SmartGate also supports early-stage founders through community initiatives. “We are organising lots of events and programmes for start-ups,” Khachikyan explains. “One of those initiatives is the Armenia Start-up Academy, which we launched in 2018 with one simple goal – to help Armenian founders understand what a start-up really is and give them the resources to build one.”

Collaboration and mutual support have long been essential drivers across Armenia’s different sectors. According to official data, around seven million Armenians live in more than 100 countries worldwide. The diaspora – diverse, far-reaching and active across 24 time zones – plays a vital role in connecting Armenia with the rest of the world and amplifying its influence. “Armenia has always maintained strong connections with both the West and the East, largely thanks to its diaspora. The diaspora factor is very significant, as Armenia has a highly influential global community that closely follows developments in the country,” says Sabanadze.

Armenia’s path forward
As Armenia aims to become a hub for innovation and investment, being a neighbour of Russia presents significant challenges – especially given Moscow’s long-standing role as a close ally in economic, political and military matters. The central question now is whether Russia will step aside and allow Armenia to successfully attract Western investments and establish itself as a technology hub in the region. The answer is far from straightforward, particularly in light of the Kremlin’s aggressive actions in both recent and more distant history. While many believe that Russia lacks the capacity to block Armenia’s Western path, Seskuria holds a different view.

“Militarily, Russia’s resources are quite limited due to the enormous expenditures in Ukraine,” she says. “However, if we look at other hybrid warfare methods in the region – not just in Armenia – Russia has become more active since the war in Ukraine began.”

Seskuria warns that Armenia’s upcoming elections warrant close attention. “Elections are a politically vulnerable moment,” she explains. “Russia often sees them as an opportunity to intervene and influence the outcome using its resources.”

Despite these risks, Khachikyan remains optimistic. He believes that growing international interest and investment signal a bright future for Armenia’s technology sector. Nvidia’s forthcoming project, along with other major initiatives, will provide local researchers and engineers with access to advanced technologies and greater computing power. Yet, he emphasises that one factor will determine whether Armenia’s ambitions can truly take root: peace. “If people feel safer – free from wars and conflicts – growth will be stronger,” Khachikyan says. “Because the most fundamental requirement for developing any economy, or any field, is security.”