The Future Lies with Cities

Interview highlights with Francesco Vanni d'Archirafi, global head of Citi Transaction Services

General News

A world where big cities are more important than countries and compete among each other, especially to attract investment, is how the future will be, says Francesco Vanni d'Archirafi, global head of Citi Transaction Services (CTS).

Since 2009, the Italian executive has led the bank's business responsible for international transactions and global investments from medium- and large-sized companies, both private and public. CTS has a daily trade volume of about US$3 trillion, with US$12.8 trillion in assets under custody.

In an interview with Folha in Brazil, the third most important market for Citi just behind the US and United Kingdom, Vanni d'Archirafi explains how global investment has inverted its flows in the last decade, and says Brazil is seen as a country of opportunities despite the poor growth of the economy. Read the highlights of his interview below.

Trends

There are three "megatrends" we are investing in. The first one is globalization. The second one is about going from manual to digital processes, and the third is the migration from rural to big urban areas. Today, 50 percent of the global population live in cities and we believe that in the next 25 years, this figure will be somewhere around 70 percent or 75 percent. These trends will be mainly in major urban centers in the world, and this will be where 85 percent of growth and wealth will originate. So, our focus in the future will increasingly be in the 150 largest cities in the world, including the big cities in Brazil.

Big Cities

Competition in the future will be more among big urban centers than among big countries. There will be a world of cities, not countries. Who will attract the next big investment? Who will build the new airport first, who has the best metro, the best hospitals, the best schools? This is not among countries, but between one urban center and another. So competition exists within a country, but also at a global level. Public administrators who understand this will have a lot to do in order to bring investment and wealth to their communities.

Investment Flow

Traditionally, investment went from the Northern Hemisphere to the Southern Hemisphere. What has changed is that the Southern Hemisphere is now creating great wealth, in Asia and Latin America. So companies, financial institutions, and countries started to look at the world as a place with investment opportunities. We started to see an increased flow from South to South - for instance, from Asia and China to Africa or Latin America, and from Brazil to Asia and Africa. And even from South to North, instead of what happened before. And now you have increasing investments in the United States, because if there is a revolution of the energy industry [with the US becoming the next big exporter], it will be cheaper to have a manufacturing plant close to energy sources. And Brazil, which is one of new investors, is taking advantage of that.

Brazilian Companies

I have seen Brazilian companies in Europe, in the USA, in other Latin American countries, Asia, and Africa. These are both purchasers for their own supply chains, but also markets where Brazil can sell its products. This is the case of Embraer, for example.

Poor GDP

Large growth is always better. But everyone we talk to, among our clients, is executing their investment plans. All of them see this huge opportunity of infrastructure, and believe that Brazil has made a great progress, and there's room to have a high return on investment. Retail, consumption, and service industries are quite well, with full employment...