Business24 Newspaper 18th January, 2021 by Business24 Online

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MONDAY JANUARY 18, 2021

NO. B24 / 147 | NEWS FOR BUSINESS LEADERS

Commodity exchange considers trading cocoa

MONDAY JANUARY 18, 2021

Relief for importers as GSA backtracks on fee increment By Patrick Paintsil p_paintsil@hotmail.com

he Ghana Standards Authority (GSA) has rescinded its decision to start the implementation of its revised registration fees for freight forwarders and general importers—originally scheduled for the start of this month— to allow for more stakeholder consultations and buy-in. “No changes to the charges; the [old] charges have been maintained,” Director-General of the Authority Prof. Alex Dodoo told a gathering of importers in Accra. Cont’d on page 3

Gov’t targets GH¢22.35bn of domestic debt securities in Q1 By Joshua Worlasi Amlanu By Joshua Worlasi Amlanu macjosh1922@gmail.com

s part of the mediumterm plan for the trade of commodities in Ghana, the Ghana Commodity Exchange (GCX) is considering listing on its trading floor the light cocoa bean, which is mostly consumed by domestic

processors. Currently, the exchange does not trade cash crop contracts, but plans to introduce a number of them in the coming years. “In the medium-term period, we’re looking at bringing commodities such as the cash crops onto the trading floor of the exchange. We’re

ECONOMIC INDICATORS EXCHANGE RATE (INT. RATE)

looking at also the possibility of trading the domestic cocoa here in Ghana—that is, the cocoa traded and used by processors here in Ghana,” Robert Dowuona Owoo, Chief Operating Officer of the GCX, said in an interview with Business24.

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

overnment will borrow a total of GH¢22.35bn from the domestic debt market in the first quarter of 2021, according to the public debt issuance calendar issued by the Finance Ministry on Friday.

Cont’d on page 2 INTERNATIONAL MARKET

USD$1 =GHC 5.7027

macjosh1922@gmail.com

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

Cont’d on page 3 Follow us online:

$41.26 2.622 1,922.57 329.50 $2,339.27 $109.65

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Editorial / News

MONDAY JANUARY 18, 2021

Editorial

Police enforcement of COVID protocols not enough

he past two weeks have been dreadful. Ghana’s Covid-19 infections are getting worse by the minute with the official death statistics painting a grim picture. The number of active cases has risen from a little over 900 to 1,924 in just a fortnight. Our COVID-19 treatment centres have gone from having zero patients to now being full because of the upsurge in infections. The blatant disregard for Covid-19 protocols is at the heart of this second wave of infections that we are witnessing. Indeed, it looks like we remain on course to pay the ultimate price for the non-adherence over the past one month as already our hospitals are at their wit’s end trying to contain patients in need of critical care.

President Nana Akufo-Addo in his 22nd address to the state on Sunday said he has directed the Inspector General of Police (IGP) to get his men to enforce the mandatory wearing of nose masks in public spaces. It is particularly sad that even the grim statistics coming from the Ghana Health Service (GHS) was not enough deterrent for those disregarding the protocols. Even as the enforcement is carried out in public places and public transport etc, we must know that we remain the absolute last line of defense. Without our cooperation and determination to adhere to these protocols especially in our homes, places of work among others, the police’s enforcement would yield little response.

A second lockdown will do our economy more harm than good but as the President said, if we continue to disobey the protocols it will become the only option. It is this paper’s considered view that the reopening of the schools especially for pre-basic pupils be delayed some few weeks given that the situation has become much volatile with the increased infections and the new covid-19 variant being detected. But be that as it may, parents and teachers must be responsible for ensuring that they all observe the protocols and teach their children and students to do same. Together we overcome the virus.

Commodity exchange considers trading cocoa Continued from cover

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He noted that the plan is currently at the discussion stage, which will involve all stakeholders, such as the cocoa marketing company, in deciding the standards and protocols to be adopted for the trading of the commodity. According to Cocobod, the industry regulator, about a third of Ghana’s annual cocoa beans output is processed domestically,

with a target to boost this share to 50 percent. Domestic processors will be able to buy their beans from the exchange when the crop is listed, said Mr. Owoo. “The good thing is that it’s going to help determine the price on the international market,” he added. Industry watchers say the introduction of cocoa would be a boost to the fast-expanding exchange, given the huge impact

of cocoa on the Ghanaian economy. “Listing of cocoa will expand the market volume of the exchange,” said vice president of the Ghana Commodity Brokers Association, Jeffery Ntorinkansah. He added that the introduction of cocoa and other cash crops will attract investment to the GCX, especially as the government— which is presently the sole shareholder—intends to divest its interest in the exchange. “When cocoa is listed, the international interested parties will see premium in investing. Fortunately, government’s willingness to offload its shares in the exchange will make it even more attractive for international investors,” the commodity expert said. Mr. Owoo, of the GCX, said the exchange is also in the preparation and approval process to allow trading of cashew contracts.

News

MONDAY JANUARY 18, 2021

Relief for importers as GSA backtracks on fee increment Continued from cover This was the outcome of a stakeholder meeting convened by the Ghana Shippers’ Authority in Accra to dialogue on the revised rates. The Standards Authority, in December last year, announced that it would start the implementation of its new fees and charges effective January 1 this year. The increases ranged from GH¢1,000 to GH¢5,000 annually for importers of goods such as gaming items, industrial machinery and cement, to GH¢20,000 for shopping malls, who are considered big importers. Approval for the new fees and charges was given by Parliament in August 2019 for implementation in the year 2020 for a select group of items, but implementation was delayed due to the impact of the coronavirus pandemic on businesses. Despite the year-long delay, President of the Ghana Union of Traders Association (GUTA) Dr. Joseph Obeng—and other

Prof. Alex Dodoo, Director-General of the GSA

associations including the Freight Forwarders Association of Ghana (FFAG) and Association of Ghana Industries (AGI)—argued that they will need more time for their businesses to recover from the shocks of the pandemic. He mentioned the negative impact of COVID-19 on businesses

and the coming into effect of the African Continental Free Trade Area (AfCFTA) as key reasons for their position. Freight forwarders had earlier indicated strongly that the proposed increment would be borne by consumers as it could lead to a spike in import prices.

The coronavirus pandemic has had a disruptive impact on global supply chains and international trade, with the total volume of cargo—both containerised and general—handled by the country’s two seaports in the first quarter of 2020 decreasing by a whopping 44.9 percent year-on-year.

Gov’t targets GH¢22.35bn of domestic debt securities in Q1 Continued from cover About GH¢19.73bn of the amount is earmarked to roll over maturities, whereas the

remaining GH¢2.61bn is fresh issuance to meet government’s financing requirements. Domestic portfolio investors will be able to invest up to GH¢13.51bn

Ken Ofori-Atta, Finance Minister from 2017-2020, has been asked by the president to oversee the Finance Ministry until a new cabinet is confirmed.

in short-term government debt securities, which are not open to foreign investors. This comprises debt securities with tenors of 91 days, 182 days and 364 days to be issued during the period, all of which are reserved for domestic investors. The remaining securities of GH¢8.84bn, comprising debt securities with tenors from two years up to 20 years, will be made available to non-resident investors as well, who have tended to dominate subscriptions of such medium- to long-term issuances. Government is expected to update the issuance calendar on a monthly rolling basis, to reflect a full quarter financing programme. This is due to prevailing extraordinary circumstances brought about by the coronavirus

outbreak. Total amounts of GH¢10.4bn, GH¢1.7bn and GH¢1.41bn will be issued via auction for the 91day, 182-day, and 364-day bills, respectively. For securities with higher tenors, government will issue them through the book-building method. Amounts of GH¢4.13bn and GH¢1.7bn will be issued for the 2-year notes and 3-year bonds, along with a targeted amount of GH¢1.4bn in 5-year bonds. Totals of GH¢800m and GH¢ 700m are targeted for the 6-year and 7-year bonds respectively. For the 20-year bond, GH¢111.4m is expected to be issued as a shelf offering, which will be re-opened based on investors’ request and dependent on market conditions.

MONDAY JANUARY 18, 2021

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News

MONDAY JANUARY 18, 2021

Speaker Bagbin urges agencies to resubmit bills outstanding from previous parliament By Eugene Davis

he Speaker of Parliament, Alban Sumana Kingsford Bagbin, has urged sponsoring government agencies and institutions to resubmit bills that were outstanding in the 7th Parliament, chief among them the International Business Agreements and Budget Bills. Presenting his maiden speech on the resumption of sitting by the 8th parliament on Friday, Mr. Bagbin said draft legislation such as the Affirmative Action Bill, Spousal Rights Bill, and the new Standing Orders of the House, which have been pending since 2002, call for urgent action. “I call on the responsible sponsoring government agencies or institutions to resubmit these bills to the House early for consideration,” he said. “In particular, I call on Parliament to expeditiously deal with the review of the Standing Orders of the House.” The Affirmative Action Bill

Speaker Bagbin wants outstanding bills in the previous parliament to be considered again in the new parliament.

seeks equal representation and participation of both women and men in governance, public positions of power and all decision-making spaces of the country. It also requires all sectors to reserve a percentage of their employment for women. Political parties are also

encouraged to adopt voluntary party quotas to promote women’s participation in party politics. The bill mandates all public institutions to adopt gender policies, including recruitment policies, aimed at achieving a balanced structuring of those institutions in terms of gender.

The Spousal Rights Bill requires spouses to have equal access to property jointly acquired during marriage and for matrimonial property to be equitably distributed between the spouses upon termination of the marriage.

Prez directs IGP to enforce mandatory wearing of nose masks By Eugene Davis

resident Nana Akufo-Addo has directed the Inspector General of Police to ensure that there is strict compliance with the mandatory wearing of nose masks in public spaces as the government bids to get tough on the rising cases of the Covid-19.. His assertion following a recent spike in the novel coronavirus cases nationwide. Thirteen

regions out of 16 in the country have active cases with the count jumping from a little over 900 to 1,924 in under two weeks. Presenting his 22nd update on measures taken to tackle the virus on Sunday, the President said: “I have instructed the InspectorGeneral of Police to direct officers, men, and women of the Police Service to ensure the rigorous enforcement of the law on mask wearing at all public places and in

public transport.” He also added that the police are to ensure the closure of all night clubs, pubs, beaches that may be operating in defiance of the law. According to him, persons in market places are expected to conduct their activities in accordance with the hygiene and safety protocols. Tied to this, regulatory agencies will undertake random checks to

ensure conformity with Covid-19 protocols. “Should any facility or institution fail to comply with these directives, its activities will be immediately prohibited and appropriate sanctions applied,” the president stated. Lockdown The President cautioned that he does not intend to trigger the partial lockdown rule and urged persons to play their part by staying safe and adhering to the safety protocols. However, if the active cases continue to rise, he may be forced to impose restrictions on movement just as it was done last year. The President in his address said a considerable number of contact tracers are being mobilized to follow up on contacts of all who test positive and that all laboratories, public and private are expected to supply in real time data on persons tested on the common platform established by the Ghana Health Service. Treatment and isolation centres, he said, are being reactivated across the country in anticipation of any further increase in infections.

MONDAY JANUARY 18, 2021

World

MONDAY JANUARY 18, 2021

Violent youth protests hit Tunisia amid economic turmoil

olice used tear gas to disperse violent protests led by disgruntled youths in several Tunisian cities overnight, including in the capital of Tunis and in the seaside city of Sousse. Tunisians in general are angry that the North African country is on the verge of bankruptcy

and has dire public services. And many feel disappointed that on the 10-year anniversary of the revolution that ousted autocratic President Zine El Abidine Ben Ali there is little to show in terms of improvement. Police swooped in as shops and banks were looted and

vandalized, arresting “dozens” of youths, according to state news agency TAP. Protesters blocked roads by burning tires and threw stones and other objects at police and businesses, according to the Interior Ministry, which said the situation was now “calm” across the country on Sunday. Videos circulating on social media showed dramatic chases down alleys between groups of

young people and the police who used tear gas to disperse them. Tunisia on Thursday commemorated the 10th anniversary since the flight into exile of the iron-fisted Ben Ali, who was pushed from power in a popular revolt that foreshadowed the regional pro-democracy uprisings, strife and civil war in North Africa and the Mideast that came to be known as the Arab Spring. A budding democracy in Tunisia grew out of the aftermath. And yet, despite gains, a pall of disenchantment hangs over the North African country, which has been stressed by extremist attacks, political infighting, a troubled economy and promises unfulfilled, including development of the interior. Despite guaranteed rights and numerous democratic elections, protests flourish, especially in the central and southern regions where the jobless rate among youth reaches 30% and the poverty level is above 20%. According to the Tunisian Forum of Economic and Social Rights, more than 1,000 demonstrations took place in November alone. Months of sit-ins have paralyzed oil and phosphate production for months, putting holes of billions of dollars in the country’s budget.

U.S. retail sales fell in December for 3rd straight month

mericans cut back on spending in December for the third-straight month as a surge in virus cases kept people away from stores during the critical holiday shopping season. The U.S. Commerce Department said Friday that retail sales fell a seasonally adjusted 0.7% in December from the month before, a decline Wall Street analysts weren’t expecting. Sales also fell in October and November, even as retailers tried to get people shopping for Christmas gifts early by offering deals before Halloween. Friday’s report covers only about a third of overall consumer spending. Services such as haircuts and hotel stays, which have been badly hurt by the pandemic, are not included. The unexpected decline underscores the economy’s troubles as the pandemic has worsened this winter. Employers shed jobs last month for the first time since April. And layoffs appear to be continuing, as the

number of people seeking jobless benefits jumped last week to the highest level since August. That’s left many Americans with less to spend. But the recent $600 stimulus checks sent to most Americans is expected to boost the economy in the coming months. And as vaccines are more widely distributed, economists expect the economy to rebound at a healthy pace in the second half of this year. So far, retailers have reported mixed results for the holiday season. Big box retailer Target, which sells groceries, fashions and cleaning supplies under one roof, said sales rose during the holidays as virus-wary people seek onestop shopping. Meanwhile, chains typically found at malls, such as Nordstrom, Victoria’s Secret, and Urban Outfitters, reported a sales drop. The Commerce Department said sales even fell online, down nearly 6% after rising 19% for the year. That may be due to Amazon,

which held its annual Prime Day sales event in October this year for the first time, which likely pushed people to shop earlier in the season and spend less in December, analysts at Wells Fargo Securities said. Walmart, Target and Best Buy followed Amazon’s lead, offering competing discounts to coincide with Prime Day. At restaurants and bars, sales fell 4.5% in December as states restricted in-person dining, ending the year down 21%. It wasn’t all bad news: Sales at home improvement stores continued to rise, up 0.9% last month after growing 17% for the year, as people spruced up their

houses as they quarantined. But the biggest increase was at gas stations, likely due to a rise in gas prices and holiday-related road trips, which pushed sales up 6.6% after falling 12% for the year. The National Retail Federation, which represents Walmart, Macy’s and other big retailers, painted a rosier picture of the numbers. The nation’s largest retail trade group said that when car, restaurant and gas sales are taken out, and when nonseasonably adjusted numbers are compared from a year ago instead of month to month, sales in November and December actually rose 8.3% from the year before.

MONDAY JANUARY 18, 2021

Aviation

MONDAY JANUARY 18, 2021

Airline industry needs up to another $80bn to survive pandemic

he world’s airlines need another $70-$80bn of government support to get through the crisis caused by the coronavirus pandemic. That’s according to the head of the International Air Transport Association (IATA), which is the trade association for the world’s airlines. Director-General Alexandre de Juniac told the BBC that sum was “on top of the $170bn already granted”. Extra funds would “bridge the gap” between now and June, he said. June is when he expects the first significant easing of travel restrictions, as the impact of vaccines begins to be felt. Government travel restrictions and a huge fall in passenger confidence meant global demand for flights fell about 60% last year, according to IATA figures. That means 2020 saw about 1.8 billion passengers fly, instead of the 4.5 billion in 2019. In an industry where profit margins were already thin it means airlines are estimated to have already lost $118bn, with worse set to come. More bankruptcies Not all airlines have been able to withstand those losses. Mr de Juniac said about 3540 airlines have disappeared already. Many of them are smaller regional carriers, including UKbased Flybe which disappeared early in the pandemic. Others bigger companies, such as Thai Airways and South African Airways, have only survived thanks to large government bailouts and support programmes. Mr de Juniac adds that in 2021

it is “likely to happen that we see additional bankruptcies”, which is why more government support is needed. He points out that greater choice benefits passengers, competition normally means lower fares . On top of that, before the pandemic, more than 65 million jobs depended on aviation. For those airlines that are still flying, coronavirus vaccines are seen as essential for a recovery in international air travel. IATA is developing a new app that it hopes will make it easier for passengers to fly, by managing proof of Covid testing and vaccines in a way that satisfies governments and airlines around the world. It hopes to launch the app as soon as the end of March In the meantime, countries persist with having different requirements for testing and quarantines. ‘Horrific’ coordination The chief executive of Qatar Airways, Akbar Al-Baker, is hopeful this new technology can help increase passenger numbers. He told the BBC: “I think that this will be the new norm that everybody will have to produce a vaccination certificate to board an aeroplane - and not

only to board an aeroplane, a lot of countries would require that you be vaccinated before you come to the countries.” It’s a view echoed by the founder and chief executive of Air Asia, Tony Fernandes, who told the BBC: “I think countries are going to say, unless you’re vaccinated they’re not going to let you in without quarantine.” Both chief executives are frustrated by different governments having different requirements for travellers to enter their countries. Mr Fernandes says “the United Nations, with the travel industry, should have come up with some standard protocols” earlier in the pandemic, but that politics had got in the way. “Governments are petrified of their people, and they’re taking a very, very, very conservative view”, he says, adding: “They all want to be in control. It’s like nothing I’ve ever heard. The coordination on Covid is horrific. “I just think that everyone’s... scared and just reacting in a very jingoistic and nationalistic way. In my history of the aviation business, I’ve never seen something so poorly coordinated.” Cost cutting Both airline bosses are hopeful that international coordination

Akbar al-Baker is hopeful the industry will come up with common standards for Covid passenger safety.

is possible, Mr al-Baker says “I think it will be a joint ICAO, IATA and WHO project, to introduce a safety pass for people whose vaccination certificate will be recognised internationally.” He says questions remain over “how fast it will be” rolled out and if the troika can then “impose it on all countries to accept” their proposal. Both airlines want that to happen, because like their rivals they have seen huge drops in passenger numbers since the pandemic began and had to delay the delivery of new aircraft. Air Asia has lost hundreds of millions of dollars and cut more than 80% of its flights. It’s also seen its Japanese arm file for bankruptcy, helping reverse the expansion the low cast carrier saw in 2019 when it carried 83.5 million passengers. Qatar Airways, which focuses on ferrying passengers through its Middle Eastern hub, has cut about 20% of its staff and received a nearly $2bn bailout from Qatari government. It also struggled with the impact of several neighbours blocking its planes from their airspace. Mr al-Baker has welcomed this month’s ending of the blockade, saying it “will reduce the inconvenience of a passenger” because it will shorten flight times. It will, he said, “also contribute positively to the bottom line of the airline because now we have less operational cost”. When it comes to the problems of the pandemic IATA’s Mr de Juniac says continued cost cutting will also be crucial for all airlines “to be sure that they are able to cope with this very difficult time in which they don’t have their usual revenues”.

MONDAY JANUARY 18, 2021

Companies

MONDAY JANUARY 18, 2021

Samsung introduces latest flagship devices

amsung has introduced Galaxy S21 and Galaxy S21+, the latest flagship devices that empower you to express yourself. Made for the way we live now, Galaxy S21 is loaded with state-of-the-art innovations so you can make the most of every moment. The new flagship series debuts a head-turning, iconic design, an epic pro-grade camera for users of any skill level and the most advanced processor ever in a Galaxy device. And each device offers the connectivity, power and performance that only Samsung can deliver. “We are living in a mobilefirst world, and with so many of us working remotely and spending more time at home, we wanted to deliver a smartphone experience that meets the rigorous multimedia demands of our continuously changing routines,” said Dudu Mokholo, Chief Marketing Officer at Samsung Central Africa. “We also recognise the importance of choice, especially now, and that’s why the Galaxy S21 series

gives you the freedom to choose the best device for your style and needs.” With a bold new style, Galaxy S21 is built for expression. Galaxy S21 was designed for those who want a light design and compact 6.2-inch display. Galaxy S21+ sports an expanded 6.7-inch display and a larger battery, perfect for marathon gamers and binge-watchers. The Galaxy S21 series introduces an all-new, iconic Contour Cut Camera housing

that seamlessly blends into the device’s metal frame for a sleek, yet striking, aesthetic. S21 and S21+ will be available in a range of eye-catching colours, including a new signature colour: Phantom Violet. And each device is coated with a luxurious haze finish on the back for a sophisticated look and feel. Galaxy S21 touts an intelligent, edge-to-edge Dynamic AMOLED 2X Infinity-O display with adaptive 120Hz refresh rate for smoother scrolling and viewing.

It automatically adjusts the frame rate based on the content whether you’re swiping through your social feeds or watching shows. The display is also easy on the eyes. To help reduce eye fatigue, the new Eye Comfort Shield automatically adjusts the blue light based on the time of day, content you’re viewing, and your bedtime. For over a decade, the Galaxy S series has delivered groundbreaking, flagship mobile experiences for people who rely on their smartphone for expression, connection and entertainment. The new Galaxy S21 series builds on this legacy to offer the premium flagship experience and make every day epic. Galaxy S21 will be available in a variety of models, so you can find the perfect complement for your personal style and needs. For users who demand a flagship mobile experience, with prograde camera innovations and top-of-the-line performance, at various price points, Galaxy S21 and Galaxy S21+ deliver in every category — and then some.

CBG donates medical beds to LEKMA Hospital

s part of its regional CSR activities, Consolidated Bank Ghana (CBG) has donated medical beds to the Ledzorkuku Krowor Municipal Assembly (LEKMA) Hospital in Accra. Presenting the items to the hospital, General Manager, Branches and Digital Channels, Edward Antwi, said the donation is relevant to the bank’s strategy to stand with its customers and the community at large. “Hospitals serve the community, and as part of our corporate social responsibility and our tagline to stand with our customers, we deem it important to contribute towards selected hospitals. We believe this donation will go a long way to help the people in these communities”. “Again, this is one of the many initiatives aimed at helping the country’s fight against COVID-19. We are committed to supporting the COVID-19 fight through a number of interventions and we will continue to invest in needy communities nation-wide”, he assured. Receiving the items on behalf of the hospital, Dr. Akua Agyemang Asante, Acting Medical

Superintendent of LEKMA Hospital expressed gratitude to CBG for their support. “We convey our deepest appreciation to Consolidated Bank Ghana for thinking of us. We are most grateful to them. This really came at an opportune time when we needed more

beds for the sick. We believe that this is the beginning of a deep relationship between us”. The donation is aimed at supporting selected medical institutions and providing critical equipment necessary for the delivery of effective health care. Consolidated Bank Ghana

since the outbreak of COVID-19 in Ghana, has supported medical institutions including the Noguchi Memorial Institute for Medical Research, the Covid-19 National Trust Fund, the Ministry of Health and the University of Ghana Medical Centre.

MONDAY JANUARY 18, 2021

Feature

MONDAY JANUARY 18, 2021

Is your business ready for 2021?

any business leaders have realized that now is the time to seize the opportunity to develop a business plan for 2021. Covid-19 has not only exposed the strengths and weaknesses of many companies, but it has also opened new avenues for conducting business. 2021 could mean a blank slate for employers, as people can position themselves for future success. 1. Start processes early Beginning the process early not only enables managers and employees to start thinking about the long term sooner, but it also helps to shift the focus from short-term survival to a much more positive, strategic approach for the future. It has never been more apparent how critical business plans are to an organization’s operations until recently. The more time your company has to prepare, the better positioned it will be in compared to competitors. 2. Embrace reality Based on unprecedented times and the uncertain economy, it is difficult to predict what the future holds, so organizations should embrace reality and develop a plan based on existing conditions. Business leaders should conduct a thorough analysis of the company to help devise a long-term plan for 2021. 3. Set conservative projections Currently, many economic forecasts indicate a modest growth

rate in 2021. That said, businesses should set optimistic projections. With many current unknowns, businesses should be prepared with a more conservative, plan. Being cautious when setting business objectives is wise, while also including stretch goals to motivate and encourage employees. For example, companies that identified new opportunities because of changing business operations should be able to capitalize and expand upon those areas, leading to increased productivity and profitability. 4. Incorporate adaptability Every crisis provides leaders with a chance to examine how it was handled and what to incorporate in the future. Agile leadership has been the key to survival and recovery for many organizations during the pandemic. Companies that could quickly pivot their operations experienced a lesser impact than others. Therefore, it is imperative for companies to factor adaptability into their 2021 plans. Flexible goals, processes and strategies can help stabilize a business if the economic crisis worsens before it improves. 5. Take care of your people An element of every business plan should be a people strategy. Now more than ever, employers should priorities taking care of their people — from physical and mental health to quality of life and work-life balance. In addition, maintaining a

strong corporate culture is always paramount, but it is especially crucial with many employees working in a remote environment. When companies take care of their people, it leads to more loyal employees and discretionary efforts.

employers and employees should feel a renewed sense of positivity. Authored by: BforB | Networking Clubs

6. Plan for unusual scenarios While most business plans include typical financially related “what if ” scenarios, leaders should consider expanding it to include unusual ones. Based on the world events of late, scenario planning that addresses specific situations that may arise in the next 12 to 18 months might include: widespread resurgence of COVID-19; additional tools and equipment for remote workers; employees affected by childcare issues and school closures; decrease in product demand; the point at which a reduction in force is necessary; and numerous employees contracting the coronavirus. A long-term strategy that includes various scenarios will help businesses better navigate the hurdles if or when they occur. The pandemic has afforded many companies with a great ability to rise to the occasion, examine their operations and learn many lessons along the way. Organizations that seize the opportunity now to get a head start on their 2021 business plan based on their experiences will be better positioned for success and have time to make any tweaks necessary in such a dynamic environment. As companies reset for 2021 with guarded optimism,

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MONDAY JANUARY 18, 2021

Feature

MONDAY JANUARY 18, 2021

Has coronavirus made us more ethical consumers?

Ashley Tryner’s firm saw a big rise in orders last year

imberley Bird says the coronavirus pandemic has turned her into a more ethical, more environmentallyconscious consumer. And she is far from alone. “This year has really kicked my awareness into overdrive,” says the 32-year-old, from Yeovil, in the South West of England. “I look at products I’m using, and find more environmentallyfriendly alternatives,” she says. “And I reuse whatever I can. Anything I don’t need, I donate or give away.” With Covid-19 and the resulting lockdowns increasing work and financial insecurities for many of us, you might think that we have had to quietly drop our ethical and environmental concerns when shopping. However, numerous reports and studies have in fact shown that the opposite is true, and that coronavirus has focused our minds on helping to create a better, healthier world. Take a 2020 global survey by management consultancy firm Accenture. It said that consumers “have dramatically evolved”, and that 60% were reporting making more environmentally friendly, sustainable, or ethical purchases since the start of the pandemic. Accenture added that nine out of 10 of that percentage said were likely to continue doing so. Meanwhile, a study by research group Kantar said that since Covid-19 sustainability was more of a concern for consumers than before the outbreak. And 65% of global respondents told a survey by pollsters Ipsos Mori “that it is important that climate change is prioritised in the economic recovery after coronavirus”.

Are we seeing an ethical and environmental consumer revolution that is here to stay? “It’s clear that consumption is looking very different than it did [before Covid],” says Oliver Wright, global lead of consumer goods and services at Accenture. “This is a black swan event [surprise occurrence that has a major, lasting impact]. It is making people think more about balancing what they buy, and how they spend their time, with global issues of sustainability.” Ashley Tryner has seen firsthand just how much consumer behaviour changed in 2020. She is the founder of New York-based Farmbox Direct, which since 2014 has posted boxes of organic fruit and vegetables to homes across the continental US. She says that last year the firm saw its sales soar by more than 30 times 2019’s levels. “Overnight, the company had to shift operating elements to handle growth that would typically come over a few years, and with several million in marketing spend,” says Ms Tryner. Although some people question the merits of organic farming, the number of people buying organic in general is increasing. Overall, the US organic products market was forecast to have seen sales rise by 9.5% last year to $252bn (£186bn). In the UK, the data for the Soil Association showed that sales were due to increase by exactly the same percentage, to £2.6bn, a 10-year high. “The coronavirus has brought our food and farming systems sharply into focus, exposing the fragility of our food production

systems, and inflexible supply chains,” says Clare McDermott, the Soil Association’s business development director. Reports on both sides of the Atlantic have also shown that since Covid more people are now choosing to shop locally, and from small businesses, which can reduce the environmental impact of food and other product deliveries, by cutting the length of supply chains. Norrina Meechan is one such person. And although the 50-year-old from Lennoxtown, near Glasgow, had a very specific reason for starting to shop more locally last year, she says she is going to keep it up after the pandemic. At the start of the UK’s first lockdown, she was recovering from a caesarean section, and so couldn’t drive to the shops. She found the solution on her local Facebook Marketplace pages. “I get fresh fruit and veg delivered by a local supplier, and use a nearby butcher,” she says. “I’ve also bought some ready to cook meals from a local hotel when they had to adapt. “I know how much of a difference it makes to the business owners, their families and staff. And there is great variety.” Reports have also shown that sales of vegan food soared during last year’s lockdowns. In the US, trade group Plant Based Food Association said that during last year’s first lockdowns sales of vegan products rose by 90%. Meanwhile, UK food website The Vegan Kind, said its sales tripled last year. The increased ethical concern now applied to the food industry

appears to be mirrored in the clothing sector. UK children’s clothing firm Frugi makes its clothes solely from organic cotton and recycled plastic, and says it saw sales rise 60% last year, led by online orders. “Covid has heightened people’s awareness of environmental issues,” says chair Julia Reynolds, who previously in her career created the Florence and Fred fashion brand for Tesco. “During the lockdowns, people spend more time with their families, more time outdoors, more time enjoying the simple things in life. Not having the air traffic or road noise, hearing the birds sing - it is poignant. I think the experience has escalated the sustainability movement.” But is this increased ethical and environmental consumerism really here to stay? Karine Trinquetel from Kantar’s sustainable transformation unit, believes so. “During past recessions, we have seen a decline in people placing sustainability as a priority,” she says. “This time around the story looks different. “People’s views on sustainability have become reinforced, even accelerated. We are at a tipping point. All around the world, people are expressing an appetite for change.” Back in Yeovil, Ms Bird agrees. “Small changes can add up to much bigger ones,” she says. “Before you know it you’re thinking about everything you do. If everyone made one small change that would be millions of changes.” BBC

MONDAY JANUARY 18, 2021

Feature

MONDAY JANUARY 18, 2021

China’s debt grip on Africa

By Paola Subacchi

he pandemic is confronting highly indebted poor countries with a fateful dilemma. As Ethiopian Prime Minister Abiy Ahmed, a Nobel Peace Prize laureate, lamented last April, leaders have been forced to choose whether to “continue to pay toward debt or redirect resources to save lives and livelihoods.” And when they choose the latter, it is often China – Africa’s biggest bilateral lender – to which they have to answer. According to Ahmed, a moratorium on debt payments was essential to enable Ethiopia to respond to COVID-19. Such a moratorium would save Ethiopia – one of the world’s poorest countries – $1.7 billion between April 2020 and the end of the year, and $3.5 billion if extended to the end of 2022. An effective COVID-19 response, he noted, would cost $3 billion. A debt moratorium did save Angola, at least for now. Along with Chad, the Republic of the Congo, Mauritania, and Sudan, Angola was under severe financial pressure, owing to the collapse in commodity prices triggered by the COVID-19 crisis. But, in September, Angola secured an agreement with three of its major creditors – including the China Development Bank (the CDB, to which Angola owes $14.5 billion) and the Export-Import Bank of China (EximBank, owed $5 billion) – to receive $6.2 billion in debt relief over the next three years. Similarly, in October, Zambia missed a $42.5 million interest payment on a dollar-denominated bond, and was on the brink

of defaulting on its $12 billion foreign debt – the equivalent of approximately half of its GDP. But the same Chinese creditors eased the pressure: the CDB deferred interest and principal repayments for six months, until April 2021, and EximBank suspended all payments on its $110 million portfolio of sovereign loans. The EximBank deal was agreed within the framework of the G20’s Debt Service Suspension Initiative (DSSI), under which 73 of the world’s poorest countries can request temporary respite from bilateral debt repayments. So far, 46 countries – including Angola and Zambia among the 31 in Africa – have made DSSI requests. Some 70% of the affected payments – worth about $8 billion – are owed to China, which holds 62% of Africa’s official bilateral debt. This should not be a surprise: since the 2008 global financial crisis, China has steadily ramped up its direct lending to developing countries. For the 50 most indebted recipients of such lending, the average stock of debt owed to China has increased from less than 1% of GDP in 2005 to more than 15% in 2017. This carries serious risks. For starters, Chinese lenders tend to set more onerous borrowing conditions – higher interest rates, shorter maturities – than multilateral development banks. In April 2020, Tanzanian President John Magufuli reportedly threatened to cancel a $10 billion project launched by his predecessor, because the Chinese funding came with conditions that “only a drunkard” would accept. Moreover, most of China’s

bilateral lending is carried out by so-called policy banks and state-owned commercial banks, which may be controlled by the Chinese state, but operate as legally independent entities, not as sovereign lenders. So, unlike the members of the Paris Club of major sovereign creditors, they often require collateral for development loans. About 60% of their total lending to developing countries is subject to collateral. When a country applies for debt relief, its Chinese creditors can claim the rights to assets held in escrow. Furthermore, because of their murky status – neither official nor private – Chinese banks tend to renegotiate sovereign loans bilaterally and in secret. That was true of Zambia’s agreement with the CDB, which China considers to be a commercial creditor. Refusing to heed calls from the World Bank and the G20 for the CDB to participate in the DSSI as an official bilateral lender, China insisted that the suspension of debt-service payments took place “on a voluntary basis and according to market principles.” To be sure, China does not bear sole responsibility for this situation. It was the failure of other lenders to provide adequate funding – especially infrastructure investment – that drove so many low-income countries into Chinese creditors’ arms. African countries often cannot afford to build the infrastructure they desperately need to support their growing populations. Moreover, they lack access to international capital markets and banks. And sovereign lenders have not picked up the slack: in 2017, the Paris Club accounted for only 5% of public and publicly

guaranteed debt in Sub-Saharan Africa. Chinese lenders, on the other hand, have been willing to extend loans to poor African countries without demanding much in terms of governance reforms and anti-corruption measures. The result has been projects that are bound by draconian lending conditions, expensive to operate, and unlikely ever to produce decent returns. Debt moratoria during the COVID-19 crisis may offer poor countries temporary respite, freeing up funds for the pandemic response. But they will not solve these countries’ debt problems. On the contrary, the end of the moratoria could trigger a wave of synchronized defaults, requiring the International Monetary Fund and other multilateral institutions to intervene. To address these debt risks sustainably requires a new international framework. US President-elect Joe Biden should lead the way in creating one that can manage the fallout from Chinese predatory lending. After all, holding China accountable for its unfair trade practices is one of the few areas where there is broad bipartisan agreement in the United States, and China’s actions in finance are even less transparent – and potentially more destructive. About the author Paola Subacchi, Professor of International Economics at the University of London’s Queen Mary Global Policy Institute, is the author, most recently, of The Cost of Free Money (Yale University Press, 2020).

MONDAY JANUARY 18, 2021