Business24 Newspaper 7th December, 2020 by Business24 Online

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MONDAY DECEMBER 7, 2020

NO. B24 / 136 | NEWS FOR BUSINESS LEADERS

MONDAY DECEMBER 7, 2020

Who will ride Ghana’s economic horse to post-Covid victory?

President Akufo-Addo & Former President John Mahama

By Nii Annerquaye Abbey annerquaye@gmail.com

s Ghanaians head to the polls today to choose a President, whoever emerges victorious will have to hit the ground running, with little room for a honeymoon, owing to the devastation caused

to the economy by the COVID-19 pandemic. In the past three years, economic growth has hovered above six percent, making the country one of the high flyers in the sub-region. Other key macroeconomic indicators were trending in the direction that the government had wanted, with

Gov’t says power sector interventions have saved US$5bn See page 3 ECONOMIC INDICATORS EXCHANGE RATE (INT. RATE)

inflation in single digit at the start of 2020. But the onset of the pandemic put the economy at a low ebb—the projected growth of 1.9 percent would be the lowest in more than 30 years—with the budget deficit, occasioned by unplanned expenditure and huge revenue shortfalls, expected to reach 11.4

BRENT CRUDE $/BARREL

POLICY RATE

14.5%

NATURAL GAS $/MILLION BTUS

GHANA REFERENCE RATE

15.12%

GOLD $/TROY OUNCE

OVERALL FISCAL DEFICIT

11.4% OF GDP

PROJECTED GDP GROWTH RATE AVERAGE PETROL & DIESEL PRICE:

0.9% GHC 5.13

Cont’d on page 2

Ghana, Ivory Coast to leverage cocoa production capacity to enforce new pricing mechanism Cont’d on page 3

INTERNATIONAL MARKET USD$1 =GHC 5.7027

percent of GDP, which would be one of the largest in the country’s history. The winner of today’s exercise, who will be sworn in on January 7, 2021, will have to first navigate the rising deficit and ballooning public debt to execute a raft of campaign promises.

CORN $/BUSHEL COCOA $/METRIC TON COFFEE $/POUND:

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Editorial / News

MONDAY DECEMBER 7, 2020

Editorial

Make Ghana the winner!

or the eighth time under the fourth republic, Ghanaians will be voting to chose their President and their respective members of parliament. As a key fundamental principle of democracy, the importance of free and fair elections cannot be overstated. Indeed, there is little surprise that most countries that have slipped into disputes or civil wars have at the heart of these disagreements disputed elections. Since the promulgation of the fourth republican constitution 28 years ago, Ghana has excelled marvelously anytime it went to the polls. And quite remarkably, it appears every time the success trumps the previous elections. It must be stated, however, that

these successes do not come on a silver platter. They were achieved as a result of deliberate efforts from multiple stakeholders with an undertaken to ensure that whatever responsibility required of them is discharged creditably without fail. Taking the success we have witnessed continuously for granted is akin to urging these multiple stakeholders, ranging from the citizens, the Electoral Commission and the political actors, to also rest easy on their responsibilities. Ghana has already spent a good number of its young years experimenting with all manner of governance systems and clearly, none has been more useful than democracy. While it may its own pitfalls, a functional democracy

is the country’s surest bet to delivering development to its people. It is little wonder that over the past three decades, the country has made great strides to lifting its people out of poverty. As we go to the polls today, this paper would like to call on every stakeholder to reflect on the role they play in the attainment of credible elections. This paper is very confident that, like the past eight elections since 1992, everyone who matters in the success of the elections will live up to the responsibilities required of them. As the torchbearer of democracy in sub-Sahara Africa, the country’s credentials will once again be enhanced no matter who emerges victorious.

Who will ride Ghana’s economic horse to post-Covid victory? Continued from cover The incumbent, President Nana Akufo-Addo, who came to power four years ago on the back of ambitious promises to transform the economy, create jobs and deliver his flagship free Senior High School (SHS) policy, faced severe budget constraints throughout his term, owing to revenue underperformance. Although the President succeeded in implementing some of his promises, the small revenue envelope proved difficult to square with the ambitious spending pledges. Given the damage caused by the pandemic, should President Akufo-Addo win his reelection bid, he would have to work assiduously to grow the economy to generate sustainable jobs to ameliorate the plight of Ghanaians caught on the wrong side of the pandemic storm. His main opponent, former President John Dramani Mahama, has persistently preached a message of continuity— expressing his desire to continue the implementation of the

incumbent’s key policies and programmes. These programmes do not come cheap, however, with the Free SHS and the Nation Builders Corps (NABCo), which gave jobs to 100,000 graduates, costing the taxpayer more than GH¢3bn annually. Mr. Mahama’s party, the National Democratic Congress (NDC), also has its own policies to implement. Promises to make primary healthcare free, spend US$10bn on infrastructure, and introduce a nationwide apprenticeship programme, among others, would have to be pursued amidst a delicate attempt to restore the economy to a sound footing. The more than 17 million

voters will also be selecting parliamentary candidates who will be crucial in helping the executive President pursue his planned policies. The Electoral Commission Chair, Jean Adukwei Mensa, yesterday told newsmen the Commission is working to deliver the results of the polls within the shortest possible time, backtracking on an earlier pledge to announce a winner in 24 hours. Whether President Akufo-Addo secures a second term or the comeback bid of John Mahama is successful, the workload that awaits them is enormous—and as far as the electorate is concerned, they cannot fail.

News

MONDAY DECEMBER 7, 2020

Gov’t says power sector interventions have saved US$5bn By Benson AFFUL affulbenson@gmail.com

he Ministry of Finance says government has saved the energy sector over US$5bn by relocating the Karpowership power plants and securing agreements with CENIT Power Limited and Cenpower Generation Company Limited under its ongoing renegotiation of power purchase agreements (PPAs). The ministry said it has also paid in excess of US$1bn to independent power producers (IPPs) this year alone. This is in addition to the GH₵2.7bn paid by Electricity Company of Ghana (ECG) to the IPPs. “Government has underscored its commitment to undertaking the Energy Sector Recovery Programme (ESRP) in good faith and in partnership with its stakeholders. Government has continued to progress the ESRP and expects to make

further announcements soon. Government welcomes the collaboration and commitment shown by IPPs so far and calls for their support in bringing the negotiations to a swift close,” the ministry said in a statement. The country’s energy sector is faced with a number of

challenges. According to the Finance Ministry, many of these issues were inherited by the current government from the previous administration. It said while attempting to provide emergency power to address a spate of persistent

load-shedding which crippled businesses and adversely affected growth of the economy, the erstwhile Mahama administration signed contracts with IPPs in an uncoordinated and noncompetitive manner. The Ministry said Ghana pays over US$500m a year in excess capacity payments, that is, payment for power that it simply does not use or need. Despite the challenges, it said government has prioritised making payments to the IPPs to reduce the debts. “In our second term, this administration will continue to manage the situation by negotiating more balanced contracts, reducing the debt, instituting careful forward planning and proper data-driven analysis, as well as transparent, competitive, corruption-free energy procurement processes to build a resilient, sustainable energy sector for the good people of Ghana,” it added.

Ghana, Ivory Coast to leverage cocoa production capacity to enforce be used is to hedge and not to cocoa consumption would fall for new pricing mechanism By Joshua Worlasi Amlanu macjosh1922@gmail.com

hana and Ivory Coast, which produce two-thirds of the world’s cocoa, will leverage their production capacities to ensure the industry adheres to the living income differential (LID) pricing mechanism, the advisor to both countries on the LID, Joseph K. Forson, has disclosed. The two countries cancelled all cocoa sustainability schemes run by U.S.-based Hershey, accusing the chocolate maker of trying to evade the payment of the US$400 LID per tonne of cocoa to farmers, aimed at combating farmer poverty. “What we are targeting to do is to leverage whatever strength we have to get them to adhere to the pricing mechanism that we think will help our farmers,” Mr. Forson said in an interview with Business24. “Eventually, if we need to disrupt the value chain a bit, we would disrupt [it]. This is purely commercial,” the advisor emphasised.

The two countries accused Hershey of sourcing unusually large volumes of physical cocoa on the ICE futures exchange in order to avoid the premium. In view of this, third-party companies are also being barred from running sustainability schemes in the West African nations on behalf of Hershey. The schemes certify cocoa as sustainably sourced— meaning its production is free of environmental and human rights abuses, such as using child labour or being grown in a protected forest. “They used a very technical strategy to avoid paying the LID. This isn’t illegal because the futures market structure allows for it; however, it is immoral and unethical,” Mr. Forson noted. He added: “There has been a clear agreement that the right things need to be done to support cocoa farmers and the LID is what we all agree on. “Using technical strategies is equal to abusing the futures market—because our understanding of the way the futures market is supposed to

play games like taking physical delivery just to avoid paying the LID. “We are dealing with the action taken by Hershey and our reaction is a signal to the rest of the market; thus any industry processor or brand that would try any technical maneuvers, we will bring them out.” The first year of the LID has been very successful, he said. “Between the two countries, about US$1.5bn was generated from the LID, and all of the amount realised has been passed on to the farmers. This specifically led to the 28 percent increase in Ghana’s cocoa producer price and 26 percent increase in that of Ivory coast,” Mr. Forson disclosed. An estimated 80 to 85 percent of the 2020/2021 cocoa crop was sold under the LID pricing mechanism. The advisor also revealed that the two countries have already started selling the 2021/2022 crop using the LID pricing mechanism. Global cocoa prices Cocoa prices on Wednesday fell to two-week lows on global demand concerns after Fitch Solutions said that global 2020

the first time since 2016 as Covid lockdowns this year undercut cocoa demand. Reports by barchart.com indicate that robust supplies from the Ivory Coast, the world’s largest cocoa producer, are bearish for cocoa. Ivory Coast government data last week showed that cocoa bean deliveries at the ports from November 23–29 were up 18.5 percent year-on-year (y/y) at 93,560 metric tonnes (MT) and cumulative cocoa bean deliveries during October 1 to November 29 were up 12.1 percent y/y at 786,035 MT. However, smaller cocoa supplies from Ghana, the world’s second-largest producer, have been estimated as a positive factor for cocoa prices. Data showed that cocoa purchases from Ghana during October 1 to November 5 totalled 146,886 MT, down 10 percent y/y. Another positive factor for cocoa prices was the announcement by the International Cocoa Organisation (ICCO) last week that it had cut its global 2019/20 cocoa surplus estimate to 19,000 MT from a prior estimate of 42,000 MT.

MONDAY DECEMBER 7, 2020

News

MONDAY DECEMBER 7, 2020

African Union approves January 1 for commencement of trading under AfCFTA

frican leaders have approved that trading should start on 1 January next year as scheduled on the African Continental Free Trade Area (AfCFTA) agreement and requested African financial institutions to provide technical and financial support for its implementation. “We call on women, youth, businesses, trade unions, civil society, cross border traders, the academia, the African Diaspora and other stakeholders to join us as governments in this historic endeavour of creating the Africa we want in line with the African Union Agenda 2063,” the leaders said in a declaration at the end of their 13th extraordinary summit of the member-states held virtually today. The leaders re-affirmed their resolve to deepen continental integration through the AfCFTA and commended the contribution of the African Ministers of Trade for the preparations toward the launch of trading on 1 January 2021. Speaking while opening the meeting, the African Union Chairperson and South Africa’s President Mr. Cyril Ramaphosa said the commencement of trading would be one of the “most

significant milestones” in the continental integration project and the clearest affirmation yet that Africa is determined to take charge of its own destiny. Mr. Ramaphosa described the AfCFTA as the great edifice that holds Africa’s collective dreams and aspirations for an integrated and prosperous continent. “The AfCFTA will boost intra-African trade, it will promote industrialization and competitiveness and contribute to job creation, and it will unleash regional value chains that will facilitate Africa’s meaningful integration into the global economy,” he said. According to him, the AfCFTA should be used to advance the empowerment of Africa’s women, which is one of the most important objectives of continental body’s Agenda 2063 as improving women’s access to trade opportunities not only facilitates economic freedom for women, but also expands the productive capacity of countries. He called on the AU to consider a Protocol on Women in Trade to facilitate greater trade opportunities for women, and to focus on removing non-tariff barriers to trade. President Ramaphosa also

expressed gratitude to the United Nations Economic Commission for Africa (ECA) for providing technical support to the continental initiative. In his own speech, the Secretary-General of the AfCFTA Wamkele Mene pledged to work with the ECA and the UN development Programme to prepare the AU Protocol on Women in Trade, saying that for AfCFTA to be inclusive and to ensure shared growth across the continent, women , young Africans and SMEs have to be at the heart of its implementation. Such a protocol will build upon the AfCFTA Framework Agreement that recognizes

gender equality as an explicit objective. Mr. Mene also joined some of the leaders to acknowledge the technical assistance provided member states by the ECA in the development of their National AfCFTA strategies. The Director of ECA’s Regional Integration and Trade Division, Mr. Stephen Karingi, welcomed the outcomes of the summit saying, “The inclusion of health and education among the priority services sectors for liberalization under the AfCFTA in the light of the impact of the covid-19 pandemic have received a boost from the AfCFTA Champion, President Issoufou of Niger.”

StanChart launches a ‘Women in Technology’ incubator programme

tandard Chartered Bank Ghana Limited last week announced the implementation of a Women in Tech Incubator (WIT) Programme in collaboration with the Ghana Climate Innovation Centre; an Ashesi University business incubator. Championed by Standard Chartered, the Women in Tech Incubator Programme, is specifically designed for womenled or women-owned businesses that are applying technological innovation to their operations, or women owned tech start-ups. For the duration of the programme, Standard Chartered Bank, through Ghana Climate Innovation Centre (GCIC) will offer a series of interventions to selected businesses including opportunities to pitch for and secure financial grants for scaling up their business and access to dedicated enterprise and portfolio managers. Additionally, these selected businesses will be given access to GCIC’s highly acclaimed High Values Mini MBA

and the Women Entrepreneurs Transformation Programme. Commenting on the initiative, Mrs. Mansa Nettey, Chief Executive, Standard Chartered Bank Ghana Limited said, “Empowering businesses founded or led by females is crucial to accelerating progress towards achieving our nation’s Sustainable Development Goals. The Women in Tech Incubator will provide an opportunity for women-owned or led businesses to thrive in a post COVID-19 digital world by tapping into the opportunities offered by technology adaptation.” “Collaborating with Ashesi University’s GCIC is key due to their understanding of the Ghanaian entrepreneurial ecosystem, expertise and

commitment to excellence is distinctively complimentary to Standard Chartered Bank’s values and brand promise Here for good. We look forward to all that will be accomplished through this initiative, including redefining entrepreneurship” Mrs. Nettey added. Ms. Olga Arara-Kimani, Regional Head Corporate Affairs and Brand & Marketing, Standard Chartered Africa & Middle East said about launching Women In Technology in Ghana: “We have found that female techpreneurs face significant obstacles and structural inequalities in preventing them to scale their businesses, including financing and mentorship. With a thriving start-up scene, internet

penetration at almost 50% and the country having the highest rate of women-owned businesses globally, we believe that the Women in Tech Programme will plug the gap for female techpreneurs looking to grow their business at scale and foster a stronger and more dynamic startup ecosystem in Ghana.” Launched in 2014 in New York, Standard Chartered Bank’s WiT is now a global programme. In 2017 the first WIT incubator was launched in the Africa and Middle East region, with Kenya being the first market and have subsequently rolled it out in other key markets including Nigeria, UAE, Pakistan, Bahrain and Zambia with Ghana being the 7th market. In three years, the Bank has provided over US$500,000 to various programme cohorts in these markets along with financial backing, Standard Chartered also provides training, mentoring and access to a wider network of other companies for these entrepreneurs.

MONDAY DECEMBER 7, 2020

News

MONDAY DECEMBER 7, 2020

Eni presents the 19th edition of the World Oil, Gas and Renewables Review

ni has released the 19th edition of the World Oil, Gas and Renewables Review, the annual statistics report on oil, natural gas and renewable sources. The World Oil, Gas and Renewables Review aims to be a useful tool for a deeper understanding of the fundamentals of the energy sector. It observes the emerging decarbonisation trends with the goal of helping to identify the necessary actions to tackle the climate challenge. In 2019, global oil demand recorded a lower growth rate compared to the last 10 years (+ 0.8% vs + 1.4%), global gas demand expanded driven by Asia-Pacific (+ 4.3%) and North America (+ 2.7%) and, in the renewables sector, solar continued to hold the lead in the growth of installed capacity, with an annual increase of 20%. The Review is split in two volumes: • the World Oil Review, devoted to oil reserves, supply, demand, trade and prices with a special focus dedicated to crude oil quality and to the refining

industry; • the World Gas and Renewables Review, focused on natural gas and renewables sources (solar, wind and biofuels). Key points of the World Oil Review Global oil demand continued to grow in 2019 but at lower pace compared to the last 10 years (+0.8% vs +1.4%). In 2019 Brent average price (64 $/b) was roughly 7 $/b lower than in 2018. Rising geopolitical

tensions and concerns about USChina trade had little impact on oil supply/demand balance and on Brent prices. “Zero growth” of world oil production in 2019, as OPEC+ group cuts counterbalanced US growth. US production rose by 11%, further eroding OPEC’s market share. Crude quality reported a strong discontinuity in 2019 with a great reduction of medium & sour crudes, which contributed to a lighter average produced barrel. The quality balance showed a reduced supply in the medium

heavy crudes (OPEC’s cuts, Iran and Venezuela) and a further appreciation of the relative price differentials. Asia Pacific leads the global refining capacity growth accounting for almost 90% of the 1.5 Mb/d increase versus 2018. Key points of the World Gas and Renewables Review In 2019 global gas demand has continued to grow for the 10th year in a row, driven by Asia Pacific (+4.3%) and North America (+2.7%). China confirmed itself as the first world importer. Global gas production continued the positive trend with a +3.1% in 2019, despite the decline in Europe (-6.5%), mainly thanks to new LNG plants start-up in US and Australia. During 2019, US became the 2nd world gas exporter after Russia overtaking Qatar. Big step forward for LNG that now accounts for 38% of total traded gas, gaining 4% share in one single year (34% in 2018). Solar energy continued to dominate renewable capacity expansion with a yearly increase of 20%, doubling the 10.5% growth recorded by wind. Asia confirmed its leadership in solar capacity expansion (about 60% of the total in 2019 and China maintained its leadership in solar and wind capacity.

Oilfield Service Purchases Set to Lose US$340 billion until 2028

he oilfield service (OFS) market is projected to lose a cumulative $340 billion in purchases value over the next eight years, a Rystad Energy analysis shows, as peak oil demand will arrive earlier and at a lower level than previously thought, leading to reduced E&P investments. The Covid-19 pandemic’s effect and the accelerating energy transition last month impelled Rystad Energy to revise its peak oil demand forecast. We now see it coming in 2028, two years earlier than previously expected, at 102 million barrels per day, down from earlier projections of 106 million barrels per day. OFS purchases are expected to drop to US$473 billion this year from $625 billion in 2019 and remain flat in 2021 before starting a slow recovery. Based on our updated peak oil demand forecast we now see OFS purchases returning to pre-pandemic levels only after 2024 in nominal terms, reaching US$642 billion in 2025. In real terms, excluding the

impact of price inflation, annual purchases are not expected to revisit pre-pandemic levels this decade. The US$340 billion of lost purchases value is spread across the coming eight years and is calculated as the cumulative difference between the current and the previous outlook for peak oil demand, which corresponds to a 6% drop. We now expect investments to increase by 13% in 2022 (versus 17% previously) and 16% in 2023 (18% previously). Most of this

downward revision is driven by shale investments, which previously were expected to grow by 45% in 2022 and now are pegged at about 30% growth. Shale operators have been hit hard of late, and they also harbor ambitions to generate better cash flow by reducing their investment ratio. Growth in the offshore segment is revised down from 12% in 2022 to only 9%. “With a lower need and willingness among E&P companies to invest in oil and gas, capital expenditure across

offshore, shale and conventional onshore resources will probably struggle to get back to 2019 levels,” says Audun Martinsen, Head of Energy Service Research at Rystad Energy. In nominal terms, offshore investment levels are projected to return to 2019 levels in 2023, with conventional onshore following suit in 2025 and shale in 2028. In real terms, however, investments in upstream oil and gas may never make it back to 2019 levels, Martinsen adds.

MONDAY DECEMBER 7, 2020

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MONDAY DECEMBER 7, 2020

Building your business network: 9 recommended LinkedIn strategies

ince its launch in 2003 LinkedIn has grown enormously and has gone on to become the veritable ‘Who’s Who’ site for many industries. The latest figures available from May, 2020, show that LinkedIn had amassed a membership of over 720 million registered users across 150 different countries. What connects all of these LinkedIn users is business. That’s what makes LinkedIn the ultimate social media networking tool for professionals. It doesn’t matter whether you’re looking to expand your reach, find content, explore opportunities, recruit new talent or build and manage a powerful network, LinkedIn is where it’s at. The simple fact is if you’re serious about business networking, then you really need to have a LinkedIn presence. Using LinkedIn to build and manage a more powerful network. The list of tools available to LinkedIn’s network users is growing exponentially. However, whilst this might be a boon for businesses, it can also cause problems. The tools will only ever be useful if they are used carefully and appropriately. It’s important to remember that not every tool will be suitable for your business: it’s also important to remember that some network users will not always choose to participate with, or be amenable to, every tool in LinkedIn’s armoury. So whatever tools you decide to use to further your business network should be used

cautiously. How can you identify which tools are appropriate for your business network, and which could harm your reputation? Well, if you choose to follow some of the unspoken, but accepted LinkedIn rules you won’t go far wrong. LinkedIn networking: 9 recommended strategies. Do: • Keep your profile professional. Think of it as a brochure, and your first point of contact with potential networking connections. Use appropriate images, and make sure your information is correct and always kept up to date. • Only join the groups that are relevant and appropriate: you don’t have to join every group that your connections recommend. Some will be relevant to your industry: others won’t. Periodically check through the list of groups you subscribe to, and leave those that no longer produce results. • Maintain an active presence: when members of your network post interesting articles, don’t be afraid to comment on these. Playing an active part in discussions will only help make your profile more recognisable. • Only seek endorsements which are a testament to your skills and expertise: having unnecessary endorsements won’t bring any long-term benefits. In fact they may be counterproductive and detract from any relevant testimonials which endorse your key skills. • Don’t be afraid to post

video content to re-enforce your key skills: images speak louder than words, and their effects can be longer lasting. If you have access to video clips that will help existing members or potential members of your network understand what skills you can offer, then share these with your network. • Use your profile as productively as possible: make sure you add any glowing references you might have received that sing the praises of your work. Post these references in your profile, and remember to include project or publication URLs. • Consider the wording on your profile carefully: if you want to connect with other users and build your network, then it always pays to carefully construct personal messages. Don’t simply rely on the standard ‘Join my Network’ message. Write personal invitations. These can help to kick-start relationships, and will demonstrate that you were prepared to put in the time and effort to cultivate new connections. • Reach out to new connections: Find meaningful connections and look for the common ground between you and other potential connections based on their profiles. Invite them to join your network and make them aware of how a new burgeoning relationship can bring reciprocal value. • Write meaningful recommendations for other connections: any endorsement of a colleague’s skills should be authentic and meaningful. You

don’t write recommendations simply to receive a mutual endorsement. You recommend then because you genuinely respect and want to recommend their services to others in your network. It might ultimately lead to them endorsing you at some point, but that is incidental. Authored by: Business for Breakfast (BforB)

Business for Breakfast (BforB) is internationally recognised for creating successful networking meetings, events and training for referral marketing. Our global offices are in Australia, Germany, Czech Republic, Spain, Slovakia, Ghana and headquartered in UK. We create an environment where you can build quality relationships within your group, backed up by an ongoing member support programme. BforB is committed to helping small to medium scale businesses expand. In our professional network, members meet regularly in business networks to develop relationships, support each other and to share and record referral business. We are here to help you get new business from quality business introductions and referrals made through our meetings. Kindly join our next meeting using this link: https://rb.gy/qrf4pl

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8 Accelerator Programs 5 Incubator Programs 4 Training Programs 3 Educaaonal Programs

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in total invested in $1.5m businesses

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MONDAY DECEMBER 7, 2020

Maradona: Why the football icon’s inheritance could be messy

portfolio of properties, lucrative image rights, and an amphibious tank from Belarus. These were just some of the reported trappings of Diego Maradona’s fortune. The Argentine football icon died at 60 last week, leaving behind a complicated financial legacy that echoes his at times troubled personal life. Since Maradona’s death there has been rampant speculation about his wealth and the heirs entitled to a share of it. Maradona had a big family, fathering at least eight children over decades of romantic entanglements with six different women. His inheritance is expected to be divided equally among those children. But with no reports of a will, Argentine legal experts and journalists say the inheritance will be far from straightforward. They expect a protracted court battle fraught with family disputes, DNA tests and opportunistic claims of paternity as lawyers scramble to calculate the true value of Maradona’s estate. “I predict that the inheritance process will be a mess,” Elias Kier Joffe, a lawyer based in Argentina’s capital Buenos Aires, told the BBC. “I suspect it will take some time to sort out.” So, who are Maradona’s children? Paternity revelations were a common theme of Maradona’s colourful life. One of his daughters once joked the former attacking midfielder could almost make up a football team’s full starting 11 with his ever-growing brood. For years Maradona denied having any children besides Gianinna, 31, and Dalma, 33, both daughters he had with exwife Claudia Villafañe, whom he divorced in 2003 after nearly 20 years of marriage. Eventually, the World Cup winner acknowledged six more children. Maradona recognised Diego Junior, 34, and Jana, 24, as his flesh and blood in the mid-2010s after court battles with their mothers, with whom he had had affairs. There was no such paternity dispute over the 2013 birth of his second son, seven-year-old Diego Fernando. Then a surprise development came in 2019, when Maradona’s lawyer said he had agreed to accept the paternity of three children born in Cuba, where he

The second metric is Maradona’s net worth which, put simply, is the sum total of what a person owns (their assets) minus what they owe (their liabilities). Maradona had an estimated net worth of $500,000 at the time of his death, according to Celebrity Net Worth, a website that reports on the wealth of famous people. The website says its networth estimates are based on “financial analysis, market research, and inside sources”. Some of the assets Maradona is widely reported to have owned include:

spent several years from 2000 undergoing treatment for a cocaine habit. That brings us up to date. Now, there are still at least two more - Argentines Santiago Lara, 19 and Magalí Gil, 23 - who believe Maradona is their father. Both say they are taking legal action to establish this, which they will need to do to claim a portion of Maradona’s inheritance. Indeed, Mr Lara’s lawyer has already asked a court to exhume the footballer’s body to collect a sample for a DNA test. Still, even if Mr Lara and Ms Gil did establish a paternal link, it is not clear how much they would receive in inheritance. What’s the estimated value of Maradona’s wealth? There is no comprehensive account of Maradona’s wealth, but in some speculative reports, media outlets have used two metrics. The first estimates the total value of all Maradona’s assets, from his sports cars to his jewellery. An inheritance worth between $75m (£55m) and $100m is one estimate that has been widely cited by Argentine media. This was referenced, without attribution to a source, in an article written by Julio Chiappetta, an Argentine sports journalist who was close to Maradona.

• At least five properties in Argentina but, as Mr Joffe said, “no Beverly Hills mansion” • A Rolls Royce Ghost worth about $360,000 and a BMW i8 worth about $175,000 • A Hunter Overcomer amphibious vehicle gifted to him during a trip to Belarus • A diamond ring worth $360,000 • A contract that allows Konami to use Maradona’s likeness in its Pro Evolution Soccer video game Celebrity Net Worth says Maradona earned “tens of millions of dollars from salaries and endorsements” during his career as a player and a manager. A large portion of this wealth came from his contract with Italian football club Napoli where, according to a 1990 report by the New York Times, he drew $3m in salary, plus another $8m to $10m in endorsements. Italy both made and broke Maradona, giving with one hand and trying to take away with the other. In 2005, the Italian government said Maradona owed 37.2m euros (£32m; $48.6m) in unpaid taxes dating back to his Napoli days. To this day, the vast majority of the debt remains unpaid. Maradona refused to pay it and, had he lived longer, may have continued to do so. Nevertheless, the tax bill was still a major liability. This was factored into the estimate by Celebrity Net

Worth, hence the seemingly low $500,000 figure. One friend, Argentine journalist Luis Ventura, said Maradona’s well-documented spending habits hadn’t done his bank balance any favours either. Appearing on the Fantino a la tarde TV programme, Ventura was asked whether Maradona had “died poor”. “Definitely poor,” Ventura said. “He liked to spend, and when someone asked him for money, he gave it.” How will his inheritance be shared? Throughout his life Maradona had some very public disputes with ex-partners and his children, with all sides airing their grievances on social media or Argentine TV. Maradona’s health and wealth were often the twin sources of contention. In November 2019, for example, Maradona alluded to his inheritance after his daughter Gianinna expressed concerns about his health on social media. “I tell you all that I’m not going to leave anything behind, I’m going to donate it,” Maradona said in a video posted to YouTube. Under Argentine law, however, a person can only give away a third of their assets in a will, with the rest passed on to their children or spouse. Since Maradona does not appear to have left a will, and had no spouse at the time of death, his children should, in theory, receive an equal share of the entire estate. “The culture of Argentina is not to draft a will. Most people don’t,” Mr Joffe said. The BBC did contact Maradona’s lawyer, Matías Morla, to ask about the will and other inheritance issues, but at the time of publication, there had been no reply. Without a will, things get a bit technical. Maradona’s apparent heirs recognised or not - can file a claim for a share of his inheritance in court nine days after his death on 25 November. Argentine media reports suggest Jana, Maradona’s third daughter, was the first to do so on Thursday. A judge will then decide “who takes what” before issuing what’s known as the declaration of heirs, Sebastian Limeres, a lawyer who specialises in inheritance, told the BBC. This could take months. In the meantime, “we can’t predict if the heirs are going to get along well”, Mr Limeres said. After all, you can’t choose your family. That, some might say, is decided by the hand of God.

MONDAY DECEMBER 7, 2020

Feature

MONDAY DECEMBER 7, 2020

Keynote Speech Delivered by Dr. Akinwumi A. Adesina, President of the African Development Bank Group, at the Virtual 2020 International Forum on African Leadership, December 4, 2020

our Excellency Dr. Lazarus Chakwera, President of the Republic of Malawi, Honorable Ministers, Eminent Guests, distinguished ladies and gentlemen. I would like to thank Dr. Ken Giami, the Publisher and CEO of the African Leadership Magazine, organizers of the International Forum on African Leadership, for inviting me to speak to you at this event today. The theme of the event, “Rethinking Global Partnerships and Africa’s Economic Resurgence,” is very apt for the times we are in today. We live in unprecedented and challenging times with the COVID pandemic. Globally, over 60 million people have been infected and over 1.4 million have died. In Africa, total infections are at over 2 million, with over 45,000 deaths. The negative impacts on economies have been massive. The African Development Bank estimates that Africa’s GDP will decline by $173-236 billion by the end of the year. Africa’s economic growth rate is expected to decline by 3.4%. The world has become more fragile as we all face common existential risks. All are affected, developed and developing countries. There’s no coronavirus

for developed countries and coronavirus for developing countries. Our greatest test and task is to build effective partnerships and reinforce leadership to navigate through the pandemic, save as many lives and possible, reverse the trend, and put the world and its economies back on more resilient recovery pathways. Leadership and partnerships for a world in need. The African Development Bank showed leadership and responsiveness in supporting countries to address the pandemic. The Bank launched a $10 billion crisis response facility to support countries’ immediate needs for liquidity. The Bank also launched a $3 billion fight COVID-19 social bond on the global capital markets, the largest US dollar denominated social bond ever in world history, now listed on the London Stock Exchange, Luxembourg Stock Exchange and Nasdaq. The speed and quality of the economic recovery process from the pandemic will depend on our shared sense of collective responsibility and the financial capacity of developing countries to address immediate shocks, stabilize their economies, and invest in growing back.

Yet, the disparity in the financial capacity to tackle the pandemic is very stark. While developed countries have spent over $10 trillion as fiscal stimulus for their economies, with spending by Western Europe being 30 times what was spent on the Marshall Plan, developing countries have minuscule fiscal space. These are stark inequalities which will affect the speed at which different economies recover from the effects of the pandemic. While social distancing is needed to prevent spread of the virus, fiscal distancing must be avoided. But there are also other divides. The digital divide has worsened. Countries with poor energy access, electrification rates and limited broadband access could not stay open to transition businesses to the virtual new normal. The pandemic has further laid bare the divide in the labor market. Those with skills are able to keep their jobs, while low skilled workers, especially those employed in the informal sector lost jobs, worsened by the lockdowns. It’s estimated that up to 30 million jobs will be lost in Africa by the end of the year. There’s a big divide in

healthcare capacities. Prior to the pandemic, Africa had on average only 9 beds per 10,000 people, 2 equipped labs for COVID19 tests, 20 physicians per 10,000 people. Developed countries have 10 times the number of physicians and nurses and spend 60 times per capita on health. I am confident that these, and other challenges arising from the pandemic can be overcome. But we must re-think many things and do things much differently than before. We must not put new wine in old wine skins. As Africa builds back, priority should be put on the quality of growth, not just the quantum of growth. Growth must be more equitable, and focus on sectors that are better able to create jobs. Building back African economies with resilience requires addressing its high debt levels. Total outstanding debt on the continent is over $700 billion. While bilateral concessional debt finance has declined from 52% to 27% between 2000 and 2019, commercial debt owed to private creditors increased from 17% to 40% in the same period. Private commercial debtors held some $44 billion in Eurobond debt for 10 African countries at the end of September 2020.

CONTINUED ON PAGE 15

MONDAY DECEMBER 7, 2020

CONTINUED FROM PAGE 13 Global partnership efforts are being made by the G20 to support debt relief for developing countries through the Debt Service Suspension Initiative. To date 22 African countries have benefitted from the initiative, which has deferred debt payments for $5.2 billion. However, this only represents 4% of Africa’s total bilateral debt. Much larger financial support is needed, and the private sector creditors need to be part of the solution. The lesson for Africa is clear: Africa simply cannot accelerate its development by relying only on debt, especially expensive bilateral and commercial debt. Africa must grow by mobilizing domestic resources, especially by unlocking its over $1 trillion in pension funds, sovereign wealth funds and insurance funds. These should be better harnessed to help close the annual infrastructure financing gap estimated at $64108 billion. Africa will build back faster by also harnessing and better managing the revenue streams from its abundant natural resources, including minerals, metals, biodiversity, blue economy, forest resources, agriculture and oil and gas, in order to boost domestic savings. Going forward, more transparent governance over natural resources must form a key component of financing Africa’s growth. Africa must build back by focusing sharply on food and nutritional security. For many, the risk of hunger is higher than coronavirus. Without food, medicines or vaccines don’t work. There is vaccination against coronavirus, but there is no vaccination against hunger. The African Development Bank led the way in providing over $384 million for countries to address immediate food and nutrition issues, including providing access to improved seeds, farm inputs, strategic food reserves and opening up of regional trade corridors to facilitate trade in food. We must build back by focusing on the private sector, especially the small and medium sized enterprises who are the lifelines of the economy and largest employers of labor. We must build back by focusing on the youth, many of whom had no jobs prior to

the pandemic. That’s why the African Development Bank will support the launch of the Youth Entrepreneurship investment Banks to create a viable financial ecosystem to unleash the entrepreneurship and businesses of young people. We must build back by ensuring that women are strongly supported, as majority of them have lost incomes, due to their greater dependence on informal markets and sectors such as tourism, hospitality and trade, all of which have been devastated by the lockdowns. That’s why the Bank will further accelerate its efforts to mobilize $5 billion for women through its Affirmative Finance Action for Women. We must build back by paying greater attention to climate change and resilience. The African Development Bank will redouble its efforts on the Desert to Power Initiative to provide electricity for 280 million people in the Sahel through solar power systems. Building forward, the Bank will boost Africa’s capacity to adapt to climate change. That’s why the Bank expects to devote 40% of its total financing to climate finance by 2021. The Bank is already scaling up support to African countries to insure themselves against climate shocks through the Bank’s Africa Disaster Risk Insurance Financing Initiative. I was pleased to join forces with former UN Secretary General Ban Ki-Moon to establish the Global Center for Adaptation in Africa, hosted by the African Development Bank, to help leverage additional global resources to support Africa’s climate adaptation. We must build back by ensuring that there’s universal health care for all. We must expand social protection programs for the poor and ensure universal health insurance, especially for millions of the poor who rely on self-

provisioning for health care. We must build back by building quality health care infrastructure for Africa. We must build Africa’s manufacturing capacity for pharmaceuticals, medicines and vaccine production. The concentration of manufacturing capacity and global value chains outside of Africa poses a great risk to the continent. That’s why the African Development Bank plans to move into investing in quality health infrastructure to provide better access to quality health care. The Bank will also support the development of Africa’s pharmaceutical industry to manufacture medicines and vaccines in Africa. The African Development Bank is supporting the development of the Africa Continental Free Trade Area to create competitive industrial manufacturing capacity and wider trade and investment opportunities for the continent. The Bank provided $4.5 million to help create the secretariat for the free trade area. To further support the free trade area, the African Development Bank is supporting the Africa Exchange Linkage Project, to integrate stock exchanges across Africa. This will create a capital market with capitalization in excess of $1 trillion, representing 90% of Africa’s total equity market. This will increase liquidity and enable seamless trading platforms across the continent. We must re-think infrastructure and for a “Digital Africa”. As economies recover, the world will become more digital. People, businesses, financial institutions and governments have to rapidly adjust to this “new normal”. The role of technology, especially digital technology, artificial intelligence, robotics and Internet of Things, will further revolutionize financial inclusion, delivering services, climate information, insurance, and health delivery, especially

new models of telemedicine for better access and affordable care. Therefore, Africa must further accelerate the development of digital infrastructure. Going forward, we must rethink global health systems and partnerships. In an interconnected world, with so much fluidity, securing health requires that we rethink and reconfigure institutions. We should now be strengthening the regional and national health institutions. For nations and the regions must lead efforts, now, and in the future. That’s why the African Development Bank provided $27 million to the Africa Center for Disease Control to take the leadership in tackling the pandemic. The pandemic is a shock to the world. Yet, working together we will overcome challenges arising from it. We will arise, we will reset and we will rebuild. For that, leadership is critical, at all levels. Leadership that will inspire not aspire. Leadership that will strengthen, not weaken and diminish. Leadership that will build cooperation, not reinforce isolation. Leadership that will look for common and collective interest, not build walls of nationalism and exclusivity. We must hold hands together, and rebuild together. We are only as strong as the partnerships we build together, for after all, all lives are created equal. This is the time for audacious global leadership. Leadership that is able to navigate complexities and restore hope and confidence, to grow back, safer, better, healthier and with greater resilience. Leadership that brings out the best in all of us. Let’s work together to make the world a better place for all. Thank you all very much.

MONDAY DECEMBER 7, 2020

Feature

MONDAY DECEMBER 7, 2020

Africa is greatly challenged by Covid-19 pandemic

lthough the world has been forced to its knees as a result of the COVID-19 pandemic, countries in Africa are facing a severe decline in future investments, high debt obligations and massive backlog of economic infrastructure. Prof Meshach Aziakpono, a professor of Development Finance at the University of Stellenbosch Business School (USB) says although all countries around the world are affected, the African countries pre-COVID-19 had challenges of such nature, that their recovery is not going to be easy. “The level of disruption brought about by the covid-19 globally is overarching and since Africa is not operating in isolation, how the pandemic affects the globe has a significant impact especially if you consider the problems the continent faced pre-COVID-19.” “Before COVID-19, Africa was at the lowest level of income compared to other regions of the world. According to the World Bank (2019), only 1 African country from 80 countries around the world was identified as high income, and 23 out of 31 countries, in the lowincome quadrant. Unemployment is between 33-55% affecting the youth which constitutes 70% of the population. Hunger, poverty, massive infrastructure backlogs, high-levels of debt and corruption, all stifles the growth of the continent.” Prof Aziakpono says in South Africa, according to the OECD, 57% youth were unemployed in 2019. “The high level of income inequality and the growing proportion of those who have little, increases social challenges.” “Most countries around the world are facing a recession and the impact on Africa can not be stressed enough. Developed countries were able to through economic stimulus packages support their citizens with relief funds, grants, healthcare infrastructure and means stimulating the economy, thereby cushioning the impact on businesses and mitigating the adverse effect of the pandemic.” “Although similar initiatives were adopted at different levels and degrees in developing countries, the number of people that could benefit were

significantly limited.” The informal sector, which makes up a vast majority of small businesses in Africa were significantly affected due to the fact that their businesses are not correctly documented making it impossible not only to identify them but for these businesses to access the relief that was offered.” He says that the impact on Africa has already seen a decline in tourism, foreign direct investment, development assistance, a decrease in tax revenue, loss in revenue from natural resources, decline in exports and an increase in public expenditure. “Government debt is at an alltime high. The Daily Maverick estimates a R285 billion loss in revenue for South Africa with

government loan response jumping to R95 billion.” “In a response to offer relief, the ratio of Government borrowing to GDP increased significantly yet it will soon be impossible to borrow at a reduced cost. With the private sector constraint, the only option is for Governments to boost the economy, yet their capacity is limited.” Prof Aziakpono says it is evident that the capacity to generate domestic resources is limited and COVID-19 has worsened the situation. “GDP per capital was already very low and if the recession turns into an economic crisis, the reduction will be even greater, spiralling the countries into further poverty. Developed countries are weathering their own storms,

resulting in significantly lowering foreign investment and the flow of funds available for developing countries.” With these real challenges Africa faces, a vicious circle is created, leading to the critical question of how does one recover an already failing economy? Prof Aziakpono says one of the solutions is for Africa to look beyond individual country specific needs and solve the issues as a continent. “Africa has a unique opportunity to mobilise and tap the huge trade potential within the continent. The Africa Free Trade Agreement needs to be implemented to unleash growth, instead of depending on import from other countries. Also, Africa governments need to approach lenders collectively for debt cancellation and in its absence, at least a delay in repayments and possible cancellation of interest payment.” “Africa is in a unique position to embrace technology which can support and grow business- tobusiness transactions, boosting potential funding for SMMEs.” He says proper mechanisms need to be put in place to fight corruption and to create policies that would protect an investors rights to enhance their confidence in investing in Africa. “No investor does so without the guarantee of improving their bottom-line and making profits. We are sending investors away and Governments and its citizens need to recognise the crucial role they play in attracting and retaining investors.” As a final point, Prof Aziakpono says Africa needs to increase the culture of savings, even amongst the poor. “Current policies cater for the rich but what if we made saving attractive to the poor? If we can implement a scheme whereby the poor are incentivised to save, this will have a significant impact on spendable income, foster a culture of saving and uplift the poor whilst the continent mobilises resources for growth and prosperity.” CONTACT DETAILS Dr Marietjie van der Merwe USB Representative Marie@ globalnatives.com +230 606 2341 / +230 5 701 1362

MONDAY DECEMBER 7, 2020

Feature

MONDAY DECEMBER 7, 2020

Designing vaccines for people, not profits

By Mariana Mazzucato, Henry Lishi Li, Els Torreele

ecent announcements of demonstrated efficacy in COVID-19 vaccine trials have brought hope that a return to normality is in sight. The preliminary data for Pfizer/ BioNTech and Moderna’s novel mRNA vaccines are highly encouraging, suggesting that their approval for emergency use is forthcoming. And more recent news of effectiveness (albeit at a slightly lower rate) in a vaccine from AstraZeneca and the University of Oxford has fueled optimism that even more breakthroughs are on their way. In theory, the arrival of a safe and effective vaccine would represent the beginning of the end of the COVID-19 pandemic. In reality, we are not even at the end of the beginning of delivering what is needed: a “people’s vaccine” that is equitably distributed and made freely available to all who need it. To be sure, the work to create vaccines in a matter of months deserves praise. Humanity has made a monumental technological leap forward. But the springboard was decades of massive public investment in research and development. Most of the leading vaccine candidates prime the immune system’s defenses against the viral “spike protein,” an approach made possible through years of research at the US National Institutes of Health. More immediately, BioNTech has received $445 million from the German government, and Moderna has received $1 million from the Coalition for Epidemic Preparedness Innovations and more than $1 billion from the US Biomedical Advanced Research and Development Authority and the US Defense Advanced Research Projects Agency. The

AstraZeneca-Oxford vaccine has received more than £1 billion ($1.3 billion) of public funding. But for technological advances to translate into Health for All, innovations that are created collectively should be governed in the public interest, not for private profit. This is especially true when it comes to developing, manufacturing, and distributing a vaccine in the context of a pandemic. No country acting alone can resolve this crisis. That is why we need vaccines that are universally and freely available. And yet, the current innovation system prioritizes the interests of highincome countries over those of everyone else, and profits over public health. The first step toward a people’s vaccine is to ensure full transparency of the clinicaltrial results, which would enable independent and timely assessments of safety and efficacy. The publication of scanty, preliminary data through corporate press releases is meant for financial markets, not the public-health community. This practice sets a bad precedent. While pharmaceutical share prices surge, health professionals and the public are left secondguessing the reported results. As more details about the flaws in clinical trial design and implementation for the AstraZeneca-Oxford vaccine emerge, so do the calls for open science and immediate sharing of protocols and results. In addition, critical questions about the leading vaccine candidates remain unanswered. Responding to political and economic pressure in high-income countries, pharmaceutical companies are rushing their vaccine candidates across the finish line. Accordingly, they have designed their phasethree clinical trials to deliver the quickest possible positive read-out, rather than addressing

more relevant questions such as whether the vaccine prevents infection or just protects against the disease. It also is unclear how long the protection will last; whether a given vaccine works equally well in young and old people, or in people with co-morbidities; and how the top candidates compare to one another (critical for designing effective vaccination strategies). Moreover, national interests – especially those of developed countries – remain the dominant factor in vaccine rollout. While the international purchase and distribution platform COVAX represents a momentous step forward, its impact is being offset by massive bilateral advancepurchase agreements by rich countries that can afford to bet on multiple vaccines. For example, high-income countries have already bought close to 80% of the Pfizer/BioNTech and Moderna vaccine doses that will be available within the first year. All told, rich countries have laid claim to 3.8 billion doses from different vaccine makers, compared to 3.2 billion (which includes around 700 million doses for COVAX) for the rest of the world combined. In other words, high-income countries have pre-ordered enough doses to cover their populations several times over, leaving the rest of the world with potentially too few to cover even their most at-risk communities. At the same time, because the vaccine race is focused primarily on Western markets, some candidates are scarcely viable outside of a developedcountry context. The Pfizer/ BioNTech vaccine must be kept at -70ºC, which is colder than an Antarctic winter. Distributing this vaccine will create costly and complex logistical challenges, especially for low- and middleincome countries. Although other candidates – such as the AstraZeneca-Oxford vaccine – are

stable at higher temperatures, it is notable that such glaring features of market discrimination are built into the first product to reach the approval stage. Beyond national interest lurks the problem of even narrower private interests, which stem from an over-financialized biopharmaceutical innovation model. The business model for future vaccine development is already being sized up now that the pandemic has revealed the potential windfall for investors. But while they benefit from skyrocketing stock prices, soaring capital gains, and dumping a company’s shares the same day it announces promising preliminary results in a clinical trial, delivering a people’s vaccine has become an afterthought. The COVID-19 crisis is a perfect test of whether a more publichealth-oriented approach to innovation and production will prevail in the years ahead. While Pfizer is sticking with the model of maximizing shareholder value, AstraZeneca has at least pledged not to profit from its vaccine “during the pandemic.” Yet, despite all the public investment that underwrote these innovations, the process will remain opaque, leaving one to wonder if AstraZeneca is actually ready to prioritize public health over profit and offer its vaccine at cost. While the recent vaccine news has brought hope, it also has exposed the pharmaceutical industry’s broken business model, casting doubt on the prospects of delivering a people’s vaccine and achieving Health for All. Business as usual may allow us to scrape by in this crisis. But there is a better way to do things. Before the next pandemic arrives, we must recognize vaccines as global health commons, and start to reorient the innovation system toward symbiotic publicprivate partnerships governed in the public interest.

MONDAY DECEMBER 7, 2020

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MONDAY DECEMBER 7, 2020

Pension scheme will attract the youth to cocoa farming -- Afriyie Akoto

r Owusu Afriyie Akoto, Minister of Food and Agriculture, has expressed optimism about more youth nurturing interest in cocoa farming following the launch of the Cocoa Farmers Pension Scheme. He described the introduction of the Scheme as a laudable idea as it would secure the financial future of the Ghanaian cocoa farmer. Established in pursuant to Section 26 of the Ghana Cocoa Board (COCOBOD) Law (PNDC Law 81), the initiative was described as one of the most decisive pro-poor agro intervention programmes by the NPP Administration. Dr Afriyie Akoto, who was speaking at the launch of the Scheme in Kumasi, said the Law mandated the Board to establish a contributory insurance for cocoa farmers to enable them enjoy a decent pension. At the initial stages, some 1.5 million farmers are expected to be rolled onto the Scheme, which amongst others, have the

objective of making life better for ageing farmers. The COCOBOD would make supplementary contributions on behalf of the farmers as they contributed voluntarily towards their own retirement. The Scheme is to be managed by the National Pensions Regulatory Authority (NPRA), and forms part of efforts by the government acting through the Ministry of Food and Agriculture (MoFA), to sustain interest and revamp the cocoa sector.

“The overall objective is to build more hope in the businesses of the farmer and also give a meaningful future to both the old and the young in society,” he noted. The Minster indicated that since the inception of the government’s agricultural intervention programmes in 2017, more people, especially the youth, had participated and was hopeful the new Scheme was going to be a big push for the youth as well. He emphasized on some of

the improvements seen in the cocoa sector recently, including; the Cocoa Farm Rehabilitation, National Pruning Exercise and Hand Pollination programmes. According to the Minister, the government was poised to increase cocoa production substantially, adding that in the past years, cocoa farmers had complained about their dwindling financial backing as they aged. He commended the government for such a laudable idea of instituting the Scheme to financially support cocoa farmers in their old age. Hayford Attah Krufi, Chief Executive Officer of the NPRA, said the Scheme was timely and much appropriate and its importance to the socio-economic welfare of the cocoa farmer could not be over-emphasized, he added. “Every current worker or employee, both in the informal and the formal sector today, is a potential retiree tomorrow. “Therefore, the economic security in one’s old-age is an integral part of every individual’s wellbeing,” he observed. GNA

Our AfCFTA goals will fail without private sector inclusion -- Minister

obert Ahomka-Lindsay, Deputy Minister of Trade and Industry, says private sector participation is key to the country’s quest to benefit from the Africa Continental Free Trade Area (AfCFTA) agreement. He said the government recognised the role of local entrepreneurs and was committed to supporting businesses succeed under the AfCFTA. The Minister, who was addressing a regional stakeholders

conference in Ho on the trade agreement, said the continental free trade area held prospects for the business community. “Entrepreneurs must all be commended. It is not easy to set up and sustain a business throughout the years. It is a journey that needs the strength of character and focus. Our AfCETA journey would fail if the private sector does not take advantage. Many agencies are there to support you, so please be

aware and don’t be afraid to walk in and ask for support,” he said. Mr Ahomka-Lindsay said the government had supported key financial institutions to provide the needed support. He said through the GRATIS Foundation, the government established technical solution centres across the country so small and medium enterprises (SMEs) could access the right equipment. He said the One District One Factory (1D1F) initiative was to enable the private sector to make the most of the nation’s industrial prospects. The Minister said to strengthen the local economy, there was the need for the export of valueadded products, and appealed to the private sector to consider the 17 exportable products identified and supported by the government. He said a National Export Development Strategy was developed to help transform the export economy and called for creativity to stay ahead of the free trade competition. “We must explore ways to increase creativity around product processing and

packaging. Ghana is the eighth highest exporter on the Continent and a focus of the competition,” Mr Ahomka Lindsay stated. Mr Kofi Addo, Head of the 1D1F, said the government prioritised the establishment of industrial parks in all regions to support the development of the strategic anchor industries identified, including industrial metals, oil and gas, automobile assembly, and industrial chemicals, among others. He said the government, in its passion to see the private sector blossom, gave supportive tax cuts and exemptions to cushion progress. Mr Sandy Osei-Agyeman, Board Chairman of the Ghana Export Promotion Authority (GEPA), advised businesses to consider the “multiplier effect” module, which he said was the secret to the success of the Jewish business community. The multiplier effect stipulates that businesses sourced all raw materials from within to keep the wealth in the immediate community. GNA

MONDAY DECEMBER 7, 2020

Feature

MONDAY DECEMBER 7, 2020

Time is Ripe for Innovation in the World of Sovereign Debt Restructuring By Peter Breuer and Charles Cohen

hen corporations have too much debt and need to restructure it, creditors often end up exchanging bonds or loans for stocks. They trade the guaranteed payout of a fixed-income investment for an equity position whose return depends on the company’s future results. In other words, investors accept to share risk. Could a similar mechanism be applied when a sovereign nation has to restructure its debt, tying payouts to its future economic performance? New IMF staff research looks at possible innovative sovereign debt instruments that could do both: help creditors and debtors reach agreement on how to restructure debt by sharing some upside potential, and make a country’s debt portfolio more resilient to future shocks. The pandemic might be the force that catalyzes long overdue innovation in sovereign debt instruments that could facilitate restructurings and even help avoid them in the future. COVID-19’s huge economic shock finds about half of lowincome countries and several emerging markets already in or at high risk of a debt crisis. And sovereign debt levels are expected to rise, by about 17 percent of GDP in advanced economies; 12 percent in emerging markets; and 8 percent in low-income countries, compared to pre-pandemic expectations. The COVID-19 crisis has also ushered in a period of great macroeconomic uncertainty. In this situation, the prospects for a sovereign’s ongoing ability to service its debt are more uncertain than at any other juncture, potentially making creditors less willing to accept a permanently diminished claim. Prolonged negotiations, lack of market access and high uncertainty during a restructuring can deprive nations of desperately needed funds for an extended period, reducing priority spending and investments required to grow the economy and allow the country to service its debts. In trying to avoid this downward spiral, some

governments may be tempted to accept unfavorable restructuring terms that end up triggering the same problems again in a short space of time. Contingency plan The pandemic might be the force that catalyzes long overdue innovation in the sovereign debt market. This could facilitate less protracted and simpler restructurings, and help avoid them in the future. Debt instruments that adjust payouts to creditors according to (or “contingent on”) the sovereign’s future health— measured by GDP, exports, or commodity prices—could help break this negative cycle. In an economic slowdown, these “state-contingent debt instruments” would maintain debt relief that a country obtained in a restructuring. In an upswing, they would automatically provide additional compensation to creditors as the country’s ability to pay improves. This commitment may allow the country to reach agreement on a larger cut of its debt burden upfront and make it more sustainable going forward, particularly as it regains quicker market access. Further designing a symmetric instrument offering larger relief in a downside scenario could permit agreement to be reached around a more favorable baseline, providing value recovery for investors and downside protection to the country.

Implementation challenges Despite the appeal of statecontingent debt instruments in these uncertain times, longstanding implementation difficulties remain and their design needs to incorporate lessons from experience. Creditors have historically discounted these instruments given their untested nature, idiosyncratic risk profiles, and resultant lack of trading liquidity. Such concerns can be addressed by tying state variables, such as GDP growth or commodity prices, closely to the debtors’ repayment capacity and ensuring that the measurement of state variables is shielded from data manipulation. Wider usage and standardization of terms would allow investors to understand state-contingent contracts better, provide better price formation and foster trading in the secondary market. To address borrowers’ concerns, the payout formula should be transparent and provide countercyclical relief, while also capping excessive payouts. Hurricane insurance Restructurings can also enhance a country’s debt portfolio resilience by including insurance-like clauses that provide relief when shocks— such as hurricanes or other natural disasters—strike. Lenders have been willing to provide hurricane insurance to some

Caribbean countries in the form of interest forbearance and maturity extension. Such clauses enhance a country’s repayment capacity at the time of crisis, benefitting both sides. A restructuring offers a unique chance to exchange the entire debt stock for new securities with these mechanisms, keeping all creditors on equal footing. An even more ambitious goal would be the development of instruments that could prompt automatic debt standstills in a global crisis (like the current pandemic), helping developing countries cope with an unexpectedly large shock. However, defining an appropriate triggering event remains difficult. One possibility is to link future private sector debt standstills to official sector standstills, as this would serve as an appropriately strong indication of the severity of the crisis. State-contingent debt instruments can be useful in certain situations. But they are no panacea for the inherent challenges of a sovereign debt restructuring. Other comprehensive reforms are needed, as detailed in other recent research on strengthening debt architecture. Optimizing their design in light of past experience may allow contingent instruments to play an important role in facilitating speedier and less costly debt restructurings, while making countries more resilient against future shocks. Now is the time to tackle this challenge.

MONDAY DECEMBER 7, 2020