Business24 Newspaper 7th October, 2020 by Business24 Online

THEBUSINESS24ONLINE.COM

WEDNESDAY OCTOBER 7, 2020

NO. B24 / 110 | NEWS FOR BUSINESS LEADERS

WEDNESDAY OCTOBER 7, 2020

BoG targets lenders outside banking sector in credit reference reforms T

Assibey-Yeboah: Agyapa Royalties suspension will boost investor confidence By Eugene Davis ugendavis@gmail.com

he suspension of the Agyapa Royalties transaction, pending a corruption risk assessment by the Office of the Special Prosecutor, will be a confidence booster for the country’s prospects on the international capital market, chairman of Parliament’s Finance Committee, Dr. Mark Assibey-Yeboah, has said. Cont’d on page 3

Debt cancellation holds major risks— 1st Deputy Gov. By Joshua Worlasi Amlanu macjosh1922@gmail.com

A Dr. Ernest Addison, Governor, Bank of Ghana

By Joshua Worlasi Amlanu macjosh1922@gmail.com

he Bank of Ghana says it is working to bring on board lenders outside

the banking sector in an effort to expand the existing credit referencing database. The central bank, in its 2019 Credit Referencing Activity report, stated that this process will enable these lenders to

ECONOMIC INDICATORS *EXCHANGE RATE (INT. RATE)

share their credit information with the banking sector through the credit referencing system. Cont’d on page 2 INTERNATIONAL MARKET

USD$1 =GHC 5.7027* 14.5%*

NATURAL GAS $/MILLION BTUS

GHANA REFERENCE RATE

15.12%

GOLD $/TROY OUNCE

OVERALL FISCAL DEFICIT

11.4% OF GDP

AVERAGE PETROL & DIESEL PRICE:

0.9% GHC 5.13*

$41.26 2.622 1,922.57

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

Cont’d on page 3 Follow us online:

BRENT CRUDE $/BARREL

*POLICY RATE

PROJECTED GDP GROWTH RATE

lthough debt cancellation can provide enormous relief to enable countries deal with their current debt challenges, there are major risks involved, which include the signal it sends to the market about creditworthiness, Dr. Maxwell Opoku-Afari, First Deputy Governor of the Bank of Ghana, has told an international conference on financing lowincome countries.

329.50 $2,339.27 $109.65

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NEWS/EDITORIAL Editorial / News

MONDAY SEPTEMBER 2020 WEDNESDAY OCTOBER 14 7, 2020

EDITORIAL Editorial

Pay before boarding order needs a rethink

Use Agyapa’s suspension to engage stakeholders

Wash your hands 2

Cover your cough 3

The new directive for all passengers topast pay their ver the twofor months COVID-19 test online before their so, the Agyapa arrival or at Kotoka International royalties Airportminerals has been meet deal with resentment by airlines and has dominated major news passengers.

bulletins with experts divided At a time when passengers are over the usefulness of the still coming to terms with the transaction to the US$150 � GHC 900�country. mandatory payment for COVID-19 While proponents test of upon the arrival at KIA, the new directive deal have argued that the has generated more debate. move to offload a portion Passengers travelling to Ghana of the Tuesday, country’s mineral will from September 15 royalties on to the be required makeLondon online payments for the mandatory Stock Exchange to raise about C OV I D -1 9 te s t at Ko to k a US$500m is aAirport smart prior one for International to the cash-strapped Financea boarding of their flight, d i r e c t i the v e opponents b y F r o nthink tier Ministry, HealthCare� the company otherwise. contracted to carry out the Opponents have raised so antigen test at KIA--to all airlines on Friday has revealed. many issues about the deal B y t h e from n e w corruption directive, ranging “Passengers are required to show to lack of due diligence, proof of payment to airlines as a cronyism among others – arguing that the deal ought to be suspended at the very least to allow for broader

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wishes that to remain anonymous, thing was obvious was told Business24 that “The cost is the fact that there was a need already too high and now this for consensus of agoing sort if newa policy is also to the be country i m p l e mwas e n t etod make . T h ethe r e most are hundreds Ghanaian traders out of this of unique transaction. who travel to buy goods to retail therefore, a piece of in It thewas, country. welcome news that the deal “Most of them don� t carry any was put on hold tocards allow electronic payment to for be able to pay online. should investigations to beThey conducted havethe theOffice flexibility to pay cash by of the Special when they arrive.” Prosecutor. The Consumer Protection According Agency � CPA� to has the alsoSpecial raised Prosecutor, it about will the be critical questions relatively high cost of risk the conducting a corruption assessment on the transaction after which it will give the goahead or otherwise.

“Look around Africa and you office must seize the moment see that what is paid in Ghana for to perform a thorough the test is the highest. Why investigation should that be� ”whose outcome

leaves noraised roomquestions for doubt. He also about Also, even as this why the Noguchi Memorial Institute for Medical of investigation goesResearch on, this the University of Ghana, was not paper will like to call on the made to handle the testing for a Finance Ministry which is reasonable fee but– rather a contract giventhis totransaction, a foreign spearheading company do as what Noguchi to try as to much possible to could adequately handle. use this moment to engage Business24 would like to urge relevant stakeholders to athe flexible approach that allows obtain their passengers to buy-in. either pay online or cash on arrival. It is better to get the Agyapa deal right, even if it delays, than to rush it and see our fingers get burnt.

COVID-19: Banks deferred GH¢3bn in loan repayments CONTINUED FROM COVER

Wear a mask

condition for boarding of flights country� s COVID-19 testing to KIA.” regime. stakeholder consultation. It is refreshing to see T h e n e w d i re c t ive , h a s The CPA� s Chief taking Executive There are other opponents our institutions up however, been described by Officer, Kofi Kapito, said in as who feltasthere was something the as mantle to scrutinise airlines detrimental to the much the government want to fishy about theto deal that curb government’s transactions renewed efforts stimulate imported cases of the demand for air travel, given that respiratory disease, it must needs to be investigated and if which have come under anot lot cash payments remains the burden the passenger but charge wrongdoing is found out, the of flak. While the autonomy of predominant mode of payment what is enough to cover their perpetrators brought to book. cost the and OSP not is without for most Ghanaian travelers. to profit question, from the passenger. As saga operator raged on, who one this paper believes that the An the airline

BoG targets lenders outside banking sector in credit reference reforms

that the desired outcomes are outbreak had transformed their team structures to the new way of achieved and the economy operations, the bank chiefs working in order to maximise brought back on track.” responded that the immediate efficiencies of digital banking, Mr. Awuah� s remarks were response was to enforce remote and ensure less-paper operations reinforced by majority of the top working while realigning workers� and requirements for social distancing. In the long run, these bank executives who responded roles. measures may result in possible While the majority, 69 percent, to the survey. The respondents layoffs for some whose the jobs of respondents indicated that unavailability of credit That notwithstanding, Continued from coverof Ghana to of advised the Bank become automated,” the itreport remote working become of the will persons beinga Bank of Ghana added that has increase stakeholder consultation information said. permanent option going forward, in order to propose more searched, poor data quality or strengthened its surveillance Ghana’s credit referencing there was general consensus that on the findings inconsistencies in identification of Commenting financial institutions andof beneficial policies. system was established following the new norm will ultimately lead the survey, which was on the among other factors. credit bureaus to ensure that they of said,thewillCredit help information, theThis, passage theme “The which new normal� toCommenting the sheddingon of the workers whose institutions challenges violate banks� the estimate the timelines and extent response to COVID-19”, PwC� s Reporting Act 2007 (Act 726). It jobs have become automated. credit referencing system, credit referencing regulations are to which the policies of the of the “ M o s t b a n k s i n t e n d t o Country Senior Partner, Vish was part of reforms introduced bank said the absence sanctioned. regulator will remain available. the permanently incorporate remote Ashiagbor, cautioned that for to S ostrengthen m e r e s p othe n d ecredit n t s market s i m p l y of a unique in theto workers The report also praised the that survive the digital working as an identifier option available to enablethat lenders reliable thought thereobtain was the need credit market has become a role the credit referencing system staff based on their roles. 12.5� of p ro g re s s i o n , t hey h ave to information to evaluate for detailed guidelines from the the major contributory to isupgrade playingtheir in loan skills recoveries, to remain banks confirmed thatfactor they have creditworthiness borrowers. government andofBank of Ghana the relatively poor quality particularly relating to the relevant. already begun and will continue to the central bank, onAccording the implement ation of of information theandcredit to realign the jobinroles work customers of defunct financial the use of the continues to measures putsystem in place to curb the referencing database. institutions. impact of the pandemic. see modest gains. Last year,view, a total number of In their clear guidance 2,820,946 enquiries was missing, and were thoughmade this on databases ofacredit c othe uld be sh r e d bureaus, during stakeholder an consultation, they representing increase of seven could not fully embed the percent from the 2018 figure. new policies in operational strategy The report explained that 61 without a detailed documented percent of all the enquiries were directive.as hits, as these searches regarded ADVERTISE WITH US produced some information on Post-pandemic banking TEL: +233 024 212 2742 the persons being searched upon. The remaining 39 percent When asked the audit firm www.thebusiness24online.net searches did bynot produce about how the pandemic� s The three credit reference bureaus in Ghana any information as a result

WEDNESDAY OCTOBER 7, 2020

Assibey-Yeboah: Agyapa Royalties suspension will boost investor confidence Continued from cover In an October 1 letter to the Special Prosecutor (SP), Charles Adu Boahen, a deputy finance minister, said the government had put the planned Initial Public Offer (IPO) of Agyapa on hold and would await the SP’s green light before proceeding. This followed the SP’s decision to conduct a corruption risk assessment on the controversial transaction, through which the government is seeking to monetise the country’s gold royalties to raise equity funds on the London and Ghana Stock Exchanges. According to Dr. AssibeyYeboah, the grounds for halting the process are logical. “You should hasten slowly given that the OSP has written to the Finance Ministry. Let’s pull the brakes so that the OSP concludes the corruption risk

Dr. Mark Assibey-Yeboah

assessment; then we can move forward,” he said. “In any event, that can be a

confident booster to investors, Ghanaians and to everyone connected to the transaction;

so I think it is a step in the right direction,” he told Business24 in an interview at Parliament House on Tuesday. Dr. Assibey-Yeboah added that he would be surprised if the OSP found something wrong with the deal, given the thorough work done on it. Government wants to take advantage of gold’s strong price performance this year to raise at least US$500m from the IPO. Both the opposition National Democratic Congress and civil society groups have raised questions about the transaction, including the basis for valuing the gold royalties assigned to Agyapa and the company’s registration in Jersey, an offshore British tax haven. In response, the government has said the company would comply with international corporate governance standards, including the strict rules of the London Stock Exchange, where Agyapa would be primarily listed.

Debt cancellation holds major risks—1st Deputy Governor Continued from cover To help developing countries deal with the economic crisis caused by the Covid-19 pandemic, the G20 launched the Debt

Service Suspension Initiative (DSSI), which freezes low-income countries’ external debt service payments to official bilateral creditors until the end of 2020. However, not all eligible

First Deputy Governor of the Bank of Ghana, Dr. Maxwell Opoku-Afari

countries have taken advantage of the initiative, for reasons such as fear of losing access to private capital markets, which have become a major source of funding for the more mature developing economies. Speaking this week on a Debt Sustainability Panel at the Centre for Global Development (CGD) Conference on Financing LowIncome Countries, the First Deputy Governor said, already, the announcement of the DSSI has contributed to the significant reductions in the sovereign bond spreads of most emerging market economies, including even those that did not participate in the programme. He said the potential loss of market access in the medium to long term, the signal sent about a country’s creditworthiness, and the possibility of increased external funding costs are among the risks associated with signing

up for any debt relief initiative. Ghana, whose public debt stock rose to GH¢263.1bn at the end of July, equivalent to 68.3 percent of Gross Domestic Product (GDP), has not yet requested debt relief from its official creditors. Forty-two percent of Ghana’s external debt stock is in the form of sovereign bonds, while onefifth of the domestic debt stock is held by non-residents. According to Dr. Opoku-Afari, due to the relatively complex structure of the Ghanaian debt stock, “debt management should include regular access to domestic markets, with keen attention to non-resident investors, regular access to the international capital market, maintaining a stable exchange rate and inflation, sustaining real sector growth at a rate enough to pay down existing debt, and minimising the interest cost on the various components of the public debt stock.”

WEDNESDAY OCTOBER 7, 2020

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News

WEDNESDAY OCTOBER 7, 2020

BoG commits US$525m to FX forward market By Joshua Worlasi Amlanu macjosh1922@gmail.com

he Bank of Ghana (BoG) has since the turn of the year committed at least US$525m to its forex forward auctions introduced last year as part of reforms to bring stability to the local currency. Bids submitted during the year amounted to US$1.32bn, out of which the central bank accepted US$525m—which represents about 73 percent of the total targeted amount for the year. The bids submitted were for the 7-day, 15-day, 30-day, and 45-day tenors as well as the 60-day and 75-day tenors. In total, 1,623 bids were submitted, but the BoG accepted only 692 out of the total. The demand for forex was highest in the month of May, as a

total of 228 bids were submitted. In May, the BoG announced that it had secured a US$1bn repurchase agreement (REPO) facility with

the U.S. Federal Reserve under the Fed’s Repo Facility for Foreign and International Monetary Authorities (FIMA Repo Facility).

The facility, the BoG said, is expected to be available for at least six months and provides an important foreign exchange buffer to boost dollar liquidity amid the COVID-19 pandemic. The initiative by the bank has been described as prudent by many market analysts, since it preempts any possible shocks that may come from a sharp demand for the US dollar in the short term, especially at a time when forex inflows from the major sources have seen a decline. The activities of the central bank on the forex market have contributed significantly to the stability of the cedi this year, despite the coronavirus pandemic. Data available from the Bank of Ghana show that the local currency depreciated by 2.9 percent in the year to the end of September.

Over 420 school kids benefit from MTN Ghana Foundation’s classroom block at New Mangoase

TN Ghana Foundation has inaugurated a three-unit classroom block for New Mangoase Roman Catholic Basic School in the Eastern region. The project which comes at a cost of GH¢394,379.27 will benefit over 420 pupils from new Mangoase and its surrounding communities. The facility includes a headteacher’s office, a staff common room and classroom furniture. In addition, Huawei, a technology partner of MTN Ghana donated 12 desktop computers with corresponding desk to help with the teaching and learning of ICT. The provision of this facility for the school will help eliminate the issue of trekking longer hours to other communities to access education. It will significantly reduce overcrowding as well as help eliminate absenteeism amongst school children. Speaking on the project, the Corporate Services Executive of MTN Ghana, Mr. Samuel Koranteng, said that the MTN Ghana Foundation agreed to support the school because it recognises the important role education plays in the

development of individuals and society. “The provision of this school block shows that we take the issues of education seriously. The MTN Ghana Foundation believes that education gives every individual an opportunity to escape poverty and have a fair chance of building a brighter future.” He said: “Even though school is not in session due to COVID 19, the MTN Ghana Foundation is still excited because the pupils will return to school in a secured and conducive learning environment”. A few weeks ago, the MTN Ghana Foundation was highly commended for providing a six-unit classroom block and staff bungalow for children in Nhyiaeso in Asante Akim. For over twelve years now, the MTN Ghana Foundation has consistently invested in various initiatives aimed at improving the wellbeing of Ghanaians. So far, the organization has spent over USD 15,207,874.19 in 150 projects across the country. Out of this 85 are educational projects. These projects are estimated to have impacted over 4 million people.

A teacher interacting with students during the commissioning of newly constructed 3 unit classroom block for Mangoase RC Basic School

Prime Minister of the Republic of Cameroon, Chief Dr. Joseph Dion Ngute (left) together with Togbe Afede XIV

Togbe Afede XIV explores opportunities in Cameroon

ogbe Afede XIV, President of the National House of Chiefs, who was recently crowned Entrepreneur of the Decade the Ghana Entrepreneurs and Corporate Executive Awards, has taken his passion for the development of Ghana and Africa to the territories of the Republic of Cameroon. Togbe, who is the Founder of SAS Finance Group and Africa World Airlines, and Co-founder of Sunon Asogli Power Ghana Ltd, led a team from Sunon Asogli Power to explore opportunities in the power sector of Cameroon. The team also explored the prospects for Accra-YaoundeAccra flights, via Douala, by African World Airlines. During the visit, the team met with the Minister of Water Resources and Energy, the

Director of Electricity at the Ministry, and top executives of Electricity Sector Regulatory Agency. The team was also privileged to meet withthe Prime Minister of the Republic of Cameroon, Chief Dr. Joseph Dion Ngute. The Prime Minister, on behalf of the President and the people of Cameroon, warmly welcomed Togbe and his team, and expressed the hope that Sunon Asogli Power and Africa World Airlines would invest in Cameroon. The Prime Minister, who is also a traditional leader, expressed excitement about Togbe’s plans to promote collaboration among African traditional leaders. He stressed the importance of Africa to Africa collaboration in moving the continent forward.

WEDNESDAY OCTOBER 7, 2020

Mining

WEDNESDAY OCTOBER 7, 2020

Newmont to release third quarter 2020 financial results on October 29

ewmont Gold have announced it will report third quarter 2020 operations and financial results before the market opens on Thursday, October 29, 2020. The company is also expected to hold a conference call at 12 p.m. Eastern Time the same day. The earnings call will also be carried on the company’s website. Newmont is the world’s leading gold company and a producer of copper, silver, zinc and lead. The Company’s world-class portfolio of assets, prospects and talent

is anchored in favorable mining jurisdictions in North America, South America, Australia and Africa. Newmont is the only gold producer listed in the S&P 500 Index and is widely recognized for its principled environmental, social and governance practices. The company is an industry leader in value creation, supported by robust safety standards, superior execution and technical expertise. Newmont was founded in 1921 and has been publicly traded since 1925.

Source: newmont

Minimum US$95m compensation Zambia’s mining sector need not be overshadowed by economic diversity claim lodged against Tanzania agenda

E I

ndiana Resources has provided an update on the dispute with the Government of Tanzania over the illegal expropriation of the Ntaka Hill Nickel Project and other breaches of the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United Republic of Tanzania for the Promotion and Protection of Investments. As the majority shareholder in Ntaka Nickel Holdings (NNHL) and Nachingwea UK (NUK) (both incorporated in the United Kingdom) Indiana is the manager of the Joint Venture for the Project and is leading activities with regards to this matter. The Company is pleased to advise that NUK, NNHL and its subsidiary Nachingwea Nickel (NNL) have now lodged a Request for Arbitration (RfA) with the International Centre for Settlement of Investment Disputes (ICSID), part of the World Bank, in accordance with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). The RfA contains a background to the dispute, a summary of the Claimant’s claims and an initial estimate of compensation for loss of the Project and damages sustained by the Investors resulting from the actions of the Government of Tanzania, which is currently in excess of US$95 million. Documents relating to the RfA

have now been sent by ICSID to H. E. The Hon John Magufuli President of the United Republic of Tanzania, The Hon Doto M. Biteko, Minister for Minerals and Prof Adelardus Kilangi, Attorney General of Tanzania notifying them of the arbitration proceedings. ICSID should soon proceed to formally register the case. The ICSID Convention has been ratified by 154 States, including Tanzania. An award issued by an ICSID tribunal is enforceable in any one of those 154 member States as if it were a judgment of one of their own courts. Partly because of this, States have overwhelmingly and historically complied voluntarily with the payment terms of such awards. The Company has engaged LALIVE, an international law firm, to act on its behalf. LALIVE has offices in Geneva, Zurich, and London, and specialises in international arbitration. The firm has extensive experience in international investment arbitration concerning mining and other natural resources and is representing investors and States as counsel worldwide. Indiana’s Executive Chairman Bronwyn Barnes says: “We have worked diligently over the past six months to prepare to lodge our request for arbitration with ICSID and place an estimate on the value of the claim for compensation for the expropriation of the Project.

conomic diversification should not prevent Zambia from exploiting its mineral wealth, says Stanbic Bank Zambia. The country’s largest bank has warned that while pushing for economic diversification is important, there is need to ensure the country’s mineral wealth and the mining sector were not neglected. Zambia boasts 10% of the world’s copper reserves, is the second largest copper producer in Africa and the eighth globally, remains one of the world’s largest cobalt producers, and has the world’s largest emerald mine. The mining industry is an important pillar of the economy contributing about 12% and 75% of GDP and exports, respectively. Government has in recent years prioritised economic diversification to move away from over-dependence on the extractive industry in line with Vision 2030 and the Seventh National Development Plan. Speaking during a webinar, Stanbic Bank Zambia client coverage, mining and metals Manager Namakuka Sichone noted that mining’s significance to the local economy need not be overshadowed by the country’s diversification agenda. “In as much as we should strive to reduce our over-dependence on the extractive industry on account of its high volatility in the context of fluctuating mineral prices, there is need for Government and other stakeholders to increase their investment in the sector if the country is to enjoy maximum benefit from its vast mineral wealth and reach its development targets.” “As Zambia’s biggest bank by assets, we have a responsibility to help drive the economy

forward through strategic financial support in key growth sectors. While we understand and unequivocally support the country’s diversification agenda, we realise that mining remains an essential pillar to the economy,” she said. In the last decade, Stanbic Bank has invested over US$3billion in the extractive industry with the aim of stimulating growth in all areas, including mining investment, supply chain and community development. Zambia Chamber of Mines president Goodwell Mateyo said that for Zambia to realise its development goals, there was urgent need to translate the country’s mineral resources into wealth to compliment investment in other growth sectors. Mateyo noted that the world was on the verge of a fourth industrial revolution that would spark fresh interest in Zambia’s mineral resources. He however, warned that the country could miss out if investments in the extractive industry were delayed. “Due to the industry’s long-term nature, we need to start implementing measures to prop it up as soon as possible if we are to benefit from the fourth industrial revolution which is just on the horizon. Mining investments have a long maturity period; taking years, sometimes decades before an investor can see a return.” “We have the mineral reserves, what is needed is adequate investment to turn those reserves into tangible wealth. But to stimulate investment, we need to have a conducive economic environment – which has unfortunately been hit hard by the current pandemic,” Mateyo noted.

WEDNESDAY OCTOBER 7, 2020

Feature

WEDNESDAY OCTOBER 7, 2020

Leveraging Africa’s informal economy for young people By Alice Saisha

y 2050, Africa will be home to 25% of the world’s workforce. And yet there is no guarantee that those workers – especially the growing share of young people among them – will be employed, let alone in decent jobs. Of Africa’s nearly 420 million young people (aged 15-35), onethird are currently unemployed, and another third are vulnerably employed. Only one in six young Africans is in wage employment. With few options and even less hope, young people may resort to activities like prostitution to make ends meet, or to distractions like illicit drugs. Africa’s largest generation is now at risk of being lost – a failure that would have far-reaching consequences. If Africa’s human capital is left idle, its innovative capacity will be depleted, and its growth potential squandered. Demand for government benefits will rise, placing intensifying pressure on public budgets, and popular frustration will grow, potentially fueling social unrest and political instability. Africa does not lack resources, but they are often poorly managed and inequitably distributed. The informal economy’s predominance is, in a sense, a testament to these failures. After all, it is governance failures like rampant corruption and inadequate investment incentives that have limited the number of available opportunities, especially for young people who lack highlevel connections. This leaves workers with little choice but to take their efforts, capabilities, and entrepreneurial spirits to the informal sector, finding ways to generate income with little or no startup capital. According to the International Labor Organization, the informal economy amounts to a whopping 41% of Sub-Saharan Africa’s GDP, with that share reaching 60% in some countries (Nigeria, Tanzania, and Zimbabwe). Moreover, it accounts for about three-quarters of non-agricultural employment, and 72% of total employment in Sub-Saharan Africa. In the informal economy, workers create their own opportunities. But they lack any semblance of job security or labor protections, let alone benefits. Those who run their own businesses struggle to expand

their operations, not least because they lack access to capital. And, of course, informal firms and workers pay no taxes. To create quality job opportunities for Africa’s growing youth population, the continent’s governments should both nurture the informal sector and encourage informal businesses to formalize their operations. To this end, they could employ many of the same tactics that have proved effective in encouraging the development of small and medium-size enterprises in countries like Mozambique and Zambia. For starters, governments could create incentives for informal-sector businesses to invest in expansion, create jobs, and, ultimately, formalize their operations. One way to do this is by promoting employmentlinked health-insurance schemes. Another is by fostering financial inclusion. If informal traders can open bank accounts and secure loans, they will be far better equipped – and more motivated – to expand and formalize their operations. Improved access to seed and venture-capital financing would also help. So would preferential procurement – an approach that Zambia’s Citizens Economic Empowerment Commission is already using to increase the economic participation of marginalized groups, including women, the young, and people with disabilities.

Tax reform is also essential. If informal traders expect taxes to impose an excessively heavy burden, they are unlikely to formalize their operations. Thus, tax reporting should be simplified, online-payment options should be introduced, and tax rates should not be too high. In addition, African governments, together with nongovernmental organizations, could foster human-capital development by offering training and supporting mentorship programs for informal-sector workers. At the same time, they should tap young people’s own networking skills, including their social-media savvy. Despite the high barriers they face, young Africans are already influential social actors and activists, and engines of economic progress, not least because of their ability to leverage modern connectivity. To make the most of this power, governments should engage young people in the process of formalizing the informal economy, ensuring that they have the platforms and tools they need to build effective support networks, which enable mentorship, knowledge exchanges, and the showcasing of skills. Young people could devise ways to make the most of new technologies. They could formulate electronic manuals, participate in remote trainings and mentorship sessions, and

create apps that support business development. And they could propose policies that would ensure that the economy meets their needs. For any of this to work, governments must be ready to listen. To that end, nationaland regional-level forums for discussion could play an important role. While formalizing a larger share of economic activity is the goal, African leaders must recognize that the informal economy will not go away any time soon. And it does not have to: a wellsupported and dynamic informal sector can be a powerful driver of inclusive growth. Support must therefore not be contingent on formalization. In the early nineteenth century, US First Lady Rachel Jackson said, “Our youth are not failing the system; the system is failing our youth.” She could have been talking about Africa in 2020. It is time to change the system, with young people at the forefront of progress. Indeed, as Jackson put it, “the very youth who are being treated the worst are the young people who are going to lead us out of this nightmare.” About author Alice Saisha, an African Century Fellow, is a monitoring and evaluation officer at the Campaign for Female Education (CAMFED) Zambia.

WEDNESDAY OCTOBER 7, 2020

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Africa Business

WEDNESDAY OCTOBER 7, 2020

African Development Bank wins global award for COVID-19 bond issue

he African Development Bank was selected in a poll of bond market players as the best issuer in 2020 of a COVID-19 bond for its US$3billion dollar-denominated Fight COVID-19 social bond issued on March 27, 2020. The winners of the GobalCapital Bond Awards 2020 were announced on 30 September at a ceremony held virtually for the first time in 12 years. GlobalCapital is a leading source of information on global capital markets with coverage of all market segments. “We are grateful for the market’s recognition of the Bank’s effort in responding quickly to the needs of the continent with its Fight COVID-19 Social Bond which is an important instrument in alleviating the impact of the COVID-19 pandemic on African economies and lives. Thanks to the very strong support received by investors, we were able to provide an efficient response at a very challenging time while also catering to the needs of socially responsible investors looking for impactful investments,” said Ms. Bajabulile Swazi Tshabalala, the Bank’s Senior Vice President and Chief

Adesina Akinwumi, AfDB President

Finance Officer. The Fight COVID-19 bond, floated on the Luxembourg Stock Exchange and significantly oversubscribed, was the world’s largest social bond at time of issuance. The Bank has since listed the bond on both the London Stock Exchange and Nasdaq. Bond proceeds, with a three-year maturity, will go to alleviate the impact of the pandemic on livelihoods and Africa’s economies. “The primary debt capital markets’ response to the coronavirus crisis has been resilient and robust. Institutions all over the world from governments and multilateral development banks, to domestic lenders, to companies have raised vital financing to see them through this extraordinary period,” GlobalCapital noted in its winners’ announcement release.

The bond issue is part of a suite of interventions the Bank has rolled out to strengthen African countries’ responses to the health and economic impacts of the COVID-19 pandemic. This includes a COVID-19 Response Facility of up to $10 billion to provide flexible and emergency assistance to the Bank’s members to shore up their national budget, economies and livelihoods of their citizens. “The African Development Bank is proud of the success of its landmark “Fight COVID-19 Social Bond”, launched to help alleviate the impact of the pandemic on people’s lives and livelihood. This transaction, the largest social bond at the time of issuance, reflects investors’ confidence in the Bank’s Social Bond framework, and its capacity to deliver. We were among the pioneers

Middle East and Africa Energy Week conference draws worldclass lineup to advance energy transformation agenda

iemens Energy and partners are holding a major Middle East and Africa-focused virtual conference, entitled ‘Shaping the Energy of Tomorrow’, from October 19 – 21, 2020, to drive forward the sustainability and decarbonization agenda at a defining moment in the energy industry. With the long-term impacts of Covid-19 and a fundamental shift in energy markets still being realized, now is the moment for the energy industry to collaborate to realize a future that is sustainable, efficient, affordable and accessible, in line with the ideals laid out by UN Sustainable Goal 7. The MEA Energy Week conference is being held in partnership with the Association of German Chambers of Industry and Commerce (DIHK); the ArabGerman Chamber of Commerce and Industry (Ghorfa); the Global Manufacturing and Industrialization Summit

(GMIS); and Masdar, a global leader in renewable energy and sustainable urban development, and a wholly-owned subsidiary of the Abu Dhabi government’s Mubadala Investment Company. The world-class speaker lineup currently features numerous regional ministers, CEOs, energy and finance industry leaders and Siemens Energy experts for the eight panel sessions. To date, ministers from Benin, Iraq, Jordan, Morocco, Nigeria and the UAE will participate in the conference. Senior executives from Abu Dhabi Transmission and Despatch Company, ADNOC, Crescent Petroleum, DEWA, Euler Hermes, Masdar, Mubadala and Saudi Aramco have also confirmed their participation. The panelists will address the numerous challenges and opportunities that the energy industry faces amid the twin goals of improving access to energy and meeting growing demand on the one hand, while also doing so in an

environmentally and financially sustainable manner. Topics such as financing sustainable energy projects, integrating renewables into grids, incorporating digitalization and automaton, decarbonizing hydrocarbon intensive industries, and utilizing green hydrogen, will be at the forefront of panel discussions. The launch of this important and timely event comes shortly after the listing of Siemens Energy on the Frankfurt Stock Exchange on September 28, following a spin-off from Siemens AG. An estimated one-sixth of the world’s power generation is already based on technologies from Siemens Energy. With this important legacy comes significant responsibility; to help shape the direction of the future of energy sector, with a focus on sustainability, innovation, and decarbonization, for the benefit of society. “Around 850 million people on our planet still lack access to

in the Social Bond market, and would like to thank all our partners, including the arrangers and investors, for their continued trust and support and share this award and success with them,” said Hassatou N’Sele, Treasurer of the Bank. The Bank is a recognized pioneer in the social bond sphere. In March 2020, it received the Environmental Finance’s 2020 bond of the year award—SSA category— for a successful one billion Norwegian krone (NOK) social bond issued in 2019. It was the first social bond ever launched in the Norwegian market, and the Bank’s first transaction in Norwegian Krone. In 2018, the Bank was recognized as “Second most impressive social or sustainability bond issuer” at the Global Capital Socially Responsible Investments Awards. Since 2017, the Bank has launched nearly $5 billion worth of such instruments denominated in US dollars, euros and Norwegian krone. The Bank is rated AAA by all the major rating agencies. In late 2019, the Board of Governors of the Bank Group approved a 125% increase in the General Capital of the Bank, raising its capital from $93 billion to $208 billion, the largest increase in the institution’s history. reliable electricity, this must be improved. As an independent company, Siemens Energy has the entrepreneurial flexibility to help shape the global transformation of the energy markets in a sustainable and economically successful manner,” said Dietmar Siersdorfer, Siemens Energy Middle East Managing Director. “But this change can only be achieved with global awareness, willingness to adapt and strong partnerships. That is what makes this event so important. The impressive list of participants highlights the desire to collaborate on finding solutions to the challenges.” “The ‘Shaping the Energy of Tomorrow’ virtual conference is a remarkable initiative that aims to create an excellent platform to discuss the essential economic challenges of today and tomorrow. The event brings together energy industry leaders and policymakers at a time of potentially drastic change for the energy industry.” said Dr. Volker Treier, Chief Executive of Foreign Trade and Member of the Executive Board, DIHK.

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Companies

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Vodafone celebrates and reward customers during Customer Care Week

n line with its commitment to continually reward and engage its customers, Vodafone Ghana is once again celebrating Customer Experience Week with a host of exciting activities and initiatives. Commencing the week-long celebration, Vodafone offered its customers free and unrestricted calls to Vodafone numbers all day on Sunday. Throughout the week, Vodafone will engage and reward its customer base including enterprise customers with exciting prizes such as Vodafone Cash, gift baskets, mifis with data, airtime and Vodafone souvenirs. Vodafone is also giving away unique gift packs to customers during an ‘unspecified hour’ within its shops. The items in the gift packs include hand sanitisers and nose masks. Vodafone’s Enterprise Customers will also get to use the Telco’s Bulk SMS platform and Caller Ring Back Tune for promotional campaigns throughout the month. Commenting on Vodafone’s Care Week celebration, Angela Mensah-Poku, the Director of Digital Transformation and

Commercial Operations said: “At Vodafone, we continually strive to deliver an outstanding customer experience by putting the customer first. This has been embedded in our day-to-day business to ensure great customer experience remains at the heart of what we do. Customers want the best of services at all times because it is a promise we make to them when they sign up with us. Our brand promise is a proposition to stand beside the customer at all times as they make the leap into the unknown digital future. Throughout the week, we step up our superior passion for customers and project our undisputed leadership in customer experience. The customer deserves more – and we understand that language, I dare say, more than any other company in Ghana’s fast paced telecommunications sector.” As part of the organisation’s loyalty programme, Vodafone will also reward customers whose birthdays are in October with free on-net calls to friends, families and loved ones. Customers also get to enjoy free on-net calls for a number of days on their 2nd, 5th and 10th anniversary on the network.

Angela Mensah-Poku, the Director of Digital Transformation and Commercial Operations

UBA America to part-finance US$1.3bn cocoa syndicated loan for 2020/21

nited Bank for Africa, America (UBA America) has partnered other banks to arrange US$1.3bn syndicated loan to purchase cocoa beans by the Ghana Cocoa Board (COCOBOD) in the 2020/2021 crop season. The loan for which the agreement was signed last week Tuesday through a virtual ceremony, will be used to purchase an estimated 900,000 metric tonnes of cocoa beans from farmers through the Licensed Buying Companies (LBCs) for the 2020/2021 cocoa season. Managing Director/CEO of UBA Ghana, Mr. Olalekan Balogun, in his brief comments on the loan agreement, praised the management of COCOBOD for working efficiently to secure the future of farmers with hence the introduction of various schemes to support the farmer. He said, UBA will continue to offer its support to the cocoa sector

to ensure the total development. A statement from COCOBOD indicated that UBA America, as one of the participants in the syndication, partnered other financial institutions such as the ABN Amro Bank, Cooperative Rabobank UA, DZ Bank AG Deutsche, Industrial

and Commercial Bank of China Limited, and the Commerzbank Aktiengesellschaft. The Minister of Food and Agriculture, Dr. Owusu-Afriyie Akoto, thanked the financial institutions for the interest, stressing the loan facility would help the country to achieve its

production targets. Since inception in 2005, UBA Ghana has established its presence in Ghana as a full financial service institution providing retail, corporate and investment banking services. The bank offers a wide range of unique banking solutions and products to its customers. The Bank pioneered the entry of a new generation of foreign banks into Ghana in January 2005. UBA Ghana’s presence in the banking industry in Ghana over the last decade has revolutionised banking in the industry, where competitive innovation in responding to the needs of the customers has become the driving force of the industry. UBA’s world class customer driven innovations have earned it the confidence of the Ghanaian public; as it continues to provide banking services to a wide variety of customers.

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Markets

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Feature

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The stock-market disconnect

By Kenneth Rogoff

hy are stock-market valuations soaring when the real economy remains so fragile? One factor has become increasingly clear: The crisis has disproportionately affected small businesses and low-income service workers. They are essential for the real economy, but not so much for equity markets. True, there are other explanations for today’s lofty valuations, but each has its limitations. For example, because stock markets are forward-looking, current stock prices may reflect optimism about the imminent arrival of effective COVID-19 vaccines and radically improved testing and treatment options, which would allow for a more limited and nuanced approach to lockdowns. This outlook may be justified, or it may be that markets are underestimating the likelihood of a severe second wave this winter, and overestimating the efficacy and impact of the first-generation vaccines. A second, and perhaps more convincing, explanation for today’s stock market performance is that central banks have pushed interest rates down to near zero. With markets convinced that there is little chance that rates will rise in the foreseeable future, prices of long-lived assets such as houses, art, gold, and even Bitcoin have all been driven upward. And because tech firms’ revenue streams are tilted far into the future, they have benefited disproportionately from low interest rates. But, again, it is not clear that markets are correct in anticipating a never-ending continuation of low interest rates. After all, the

long-term adverse supply effects, particularly from deglobalization, may linger long after global demand has recovered. A third explanation is that in addition to providing ultralow interest rates, central banks have directly backed private bond markets – representing an unprecedented intervention in the case of the US Federal Reserve. These private bond purchases should not be thought of as monetary policy in a conventional sense. Rather, they resemble a quasi-fiscal policy, with the central bank acting as an agent for the Treasury in an emergency situation. As such, this particular intervention is likely to be temporary, even though central banks have not yet succeeded in telegraphing that fact to markets. Despite sharply elevated macroeconomic volatility and a rising supply of corporate debt, interest-rate spreads over government debt have actually narrowed in many markets, and the number of major corporate bankruptcies to date remains remarkably low considering the magnitude of the recession. At some point, markets will be disabused of the notion that taxpayers will cover everything indefinitely. Central banks are ultimately constrained in the amount of risk they are allowed to assume, and the belief that they still have an appetite for taking on more could be challenged if a severe second wave arrives this winter. While these three explanations offer some insights into why stock prices are rising at a time when the real economy is heading south, they tend to miss a big piece of the puzzle: the economic pain inflicted by COVID-19 is not

being borne by publicly traded companies. It is falling on small businesses and individual service proprietors – from dry cleaners to restaurants to entertainment providers – that are not listed on the stock market (which leans more toward manufacturing). These smaller players simply do not have the capital needed to survive a shock of this duration and magnitude. And government programs that have helped keep them afloat for a while are beginning to lapse, raising the risk of a snowball effect in the event of a second wave. Some small-business failures will be seen as part and parcel of the broader economic restructuring that the pandemic has triggered. But plenty of otherwise viable businesses also will fail, leaving large publicly traded companies with an even stronger market position than they already had. In fact, that is yet another reason for the market euphoria. (True, some large businesses have filed for bankruptcy protection, but most – not least brick-and-mortar retailers – were already in trouble before the pandemic). Further underscoring the unequal impact of the pandemic, government tax revenues have not fallen by nearly as much as one might expect, given the magnitude of the recession and record post-war unemployment levels (or, in Europe’s case, the massive outlays to pay furloughed workers). The reason, of course, is that the job losses have been concentrated among low-income individuals who pay less in taxes. But today’s elevated stock markets face risks that are not only economic, including but not limited to the significant possibility of an unprecedented political crisis following the US presidential

election this November. After the 2008 financial crisis, there was a widespread backlash over policies that seemed to favor Wall Street over Main Street. This time, Wall Street will again be vilified, but populist wrath also will be directed toward Silicon Valley. One likely outcome, especially if the ongoing process of deglobalization makes it more difficult for corporations to shift their operations to low-tax countries, will be a reversal of the trend decline in corporate tax rates. That will not be good for stock prices, and it would be a mistake to think the populist response would stop there. Until lofty stock-market valuations are underpinned by a broad-based recovery in both health and economic outcomes, investors should not get too comfortable with their outsize pandemic profits. What goes up can also come down. About the author Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in Financial Economics, was the chief economist of the International Monetary Fund from 2001 to 2003. He is co-author of This Time is Different: Eight Centuries of Financial Folly and author of The Curse of Cash.

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The woman who wants everyone to get a pension

he BBC’s weekly The Boss series profiles different business leaders from around the world. This week we speak to Romi Savova, founder and chief executive of pension firm PensionBee. After working in the financial industry for six years, Romi Savova says that she thought that transferring all her pensions to one provider would be easy. At the time, in 2014, she was leaving her job at the London office of US investment bank giant Morgan Stanley to join a tech company. But she very quickly realised her assumption about moving her pension was wrong. “I called financial advisors [for help], who didn’t call me back for three years,” she says. “Because I wasn’t an attractive customer. “I had a meaningful pension, but it wasn’t worth hundreds of thousands of pounds, like some of their clients.” When she did find a new pension provider, she says the process of switching was difficult, “with 20 pages of information to check through”, and all sorts of fees thrown at her. “I thought - if I work in finance all my working life, what must it be like for people who don’t?” With that in mind, Romi realised that she had an idea for a new business - an online and appbased pension firm that allowed people to quickly and simply consolidate all their pension pots in one place. “I started talking to everyone

I know, to see what story they had about pensions,” says Romi, 35. “Everyone had one or more pensions that they knew very little about, wished they had online access to, and wanted to know they were getting good value.” So taking a leap of faith, in 2014 she began work on creating PensionBee with her friend Jonathan Lister Parsons. He ran a small tech business, and they had met at a start-up networking event in London. Securing £1m in funding from investors, both quit their jobs in 2015, and they launched the business a year later. Romi took the chief executive role, while Jonathan remains the chief technology officer. Today more than £1bn is invested in pensions via PensionBee, and it has 100,000 active users. It makes its money by charging an annual fee. Looking back, Romi says that the first few years of the business could be “challenging”. “When you start a business from scratch there are long, sleepless nights, and adrenalinefuelled days where you need to be doing anything, and everything, and there’s no-one else to help you.” The London-based business quickly grew though, helped by growing awareness in the UK of the importance of pensions. This came as the UK government increased the age at which people get the state pension, and at the same time introduced auto-

enrolment, whereby firms have to set up pensions for their staff. To help fuel its growth, PensionBee has now received more than £28m in total funding from investment firms. It offers its customers pension funds managed by industry heavyweights such as BlackRock, HSBC and Legal & General. Rivals offering a similar service to PensionBee include Moneybox, Smart Pensions and Penfold. Romi, who was born in Bulgaria, and then raised in South Africa, says that everyone should “put as much away as they can afford” towards their pension. Laura Blows, editor of Pensions Age magazine, says that PensionBee has shaken up the sector. “It is a young company within an old industry, being a leading example of how the sector can modernise the way it serves its clients, through the use of technology, and the focus on ease of user experience.” Romi says that unlike many companies and sectors of the economy, PensionBee has grown strongly during the continuing coronavirus pandemic. The number of new customers joining in the three months from March was said to be 37% higher than in the previous quarter. “Everyone was doing some level of reorganisation, whether that was for their house or admin,” says Romi, who went to university in the US. The company now has 102

employees, and while it may sound corny, Romi insists that “one of our unique values is love”. So how does the company show love? “I really wanted to create a place where people can be themselves, whatever their gender, ethnicity or sexual orientation, “ she says. “In big companies you have to hide who you are. [And] we have equal parental leave for mums and dads, with six months fully paid leave.” The company is also due to introduce a new fund that does not include any investment in fossil fuel firms. Romi says this is in response to the requests of some customers. Looking ahead, she says that the focus of the business will remain the UK. “We always keep overseas in review, but in reality there are so many people in the UK who we haven’t reached and need helping.” But being so engulfed in the world of pensions, does Romi - a mum of two young children - ever think about her own eventual retirement? “I can’t see myself not working,” she says. “I’ve definitely tried holidaying, and I can make it through a week, but at that point I really miss things. “I don’t know yet what my retirement will look like. I don’t think it works the same for everyone. I look at my parents, and my dad is in his late 60s, and he is still working.” BBC

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