Business24 Newspaper - August 26, 2020 by Business24 Online

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WED. AUGUST 24, 2020

Agyapa Royalties deal amounts to ‘elite capture’ – CSOs charge TOR needs capital injection to avoid collapse, warns COPEC Government needs to raise capital to support the Tema Oil Refinery (TOR), which is in dire straits, otherwise it will bite the dust, the Executive Secretary of the Chamber of Petroleum Consumers (COPEC), Duncan Amoah, has said. >> PAGE 3

BY EUGENE DAVIS Dr. Steve Manteaw wants full disclosure on persons behind the Agyapa Royalties deal

BY NII ANNERQUAYE ABBEY

ifteen civil society organisations (CSOs) have called on President Nana Addo Dankwa Akufo-Addo to suspend the Agyapa Royalties agreement–which seeks to leverage the country’s interest in selected mining concessions for development – describing it as ‘elite capture’. “Ours is a struggle against elite capture of resources that commonly belong to all Ghanaians and we call on every one of us, regardless of our political persuasion, to join hands in safeguarding the national interest,” the group said at a press conference in Accra on Tuesday. Agyapa Royalties Limited, a Special Purpose

Vehicle (SPV) created by the Minerals Income Investment Fund (MIIF), will offer some of the shares held by the fund to investors in order to raise about US$500m when it lists on the Ghana and London stock exchanges before the end of the year. The group, however, told journalists that the agreement is being pushed through by some faceless persons Convenor for the group, Dr. Steve Manteaw said government must come clean on who the managers and directors of the company (Agyapa Royalties Limited) are and further raised questions about the processes to select such people; which they fear could be politically exposed persons.

ADB to support outgrower farmers under IDIF >> PAGE 3

>> MORE ON PAGE 2

Watchdog: Chineseowned trawler relicensed despite unpaid US$1m fine

ECONOMIC INDICATORS

First National Bank Ghana secures US$85m funding from DEG

US $ 1 = 5.6797

*POLICY RATE

14.5%*

GHANA REFERENCE RATE

15.12%

OVERALL FISCAL DEFICIT

11.4 % OF GDP

PROJECTED GDP GROWTH RATE AVERAGE PETROL & DIESEL PRICE:

NATURAL GAS $/MILLION BTUS GOLD $/TROY OUNCE CORN $/BUSHEL

>> MORE ON PAGE 5

0.9% GHc 5.13*

INTERNATIONAL MARKET BRENT CRUDE $/BARREL

BY BENSON AFFUL >> MORE ON PAGE 3

*EXCHANGE RATE (INT. RATE)

43.22 1.79 1,842.40 329.50

COCOA $/METRIC TON

1,562.00

COFFEE $/POUND:

$109.65

COPPER USD/T OZ.

220.15

SILVER $/TROY OUNCE:

17.07

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NEWS/EDITORIAL

WED. AUGUST 26, 2020

EDITORIAL

Agyapa deal is a good initiative, but full disclosure necessary 1

Wash your hands 2

Cover your cough

Government’s initiative to maximize the country’s mineral royalties through the establishment of Agyapa Royalties Limited by the Minerals Income and Investment Fund (MIIF) is laudable, but concerns remain over the deal that ought to be addressed. The desire by government to issue the gold royalties-backed IPO this year to raise US$500m, is due to the historical performance of the precious mineral on the global market. Gold is now trading at about US$ 2,000 per ounce and is seen as a safe haven for many investors. The upfront capital to be raised from listing of Agyapa Royalties Limited on the London Stock Exchange and Ghana Stock Exchange, as well as regular dividends thereafter will be invested in developing the country’s gold resources, building of gold refineries and world-class gold certification institution. However, fifteen civil society

organisations (CSOs) have called on President Nana Addo Dankwa Akufo-Addo to suspend the Agyapa Royalties agreement until full disclosure on the beneficial owners and directors are made known. Describing the deal as ‘elite capture’ the group wants to ensure that the interest of the state is well protected. “Ours is a struggle against elite capture of resources that commonly belong to all Ghanaians and we call on every one of us, regardless of our political persuasion, to join hands in safeguarding the national interest,” the group said at a press conference in Accra on Tuesday. Convenor for the group, Dr. Steve Manteaw said government must come clean on who the managers and directors of the company (Agyapa Royalties Limited) are and further raised questions about the processes to select such

people; which they fear could be politically exposed persons. The group-- Alliance of CSOs Working on Extractives, Anti-Corruption and Good Governance—added that: “We are deeply worried that if government proceeded to the market amidst the public outcry and threats of future policy reversal from the major opposition party, Ghana may suffer the undesirable consequence of a rather high premium, as investors may be sensitive to the political risks associated with such investment,” Dr. Manteaw added. While the deal is novel and laudable, Business24 calls for full disclosure of all directors and other pertinent information related to the deal to ensure the cooperation of all.

Agyapa Royalties deal amounts to ‘elite capture’ – CSOs charge CONTINUED FROM COVER

Wear a mask Brought to you by

LIMITED Copyright @ 2019 Business24 Limited. All Rights Reserved. Editorial Team Dominic Andoh: Editor Eugene Kwabena Davis (Head of Parliamentary Business & Commodities) Benson Afful (Head of Energy & Education) Patrick Paintsil (Head of Maritime & Banking) Nii Annerquaye Abbey (Online Editor) Marketing Alexander Lartey Agyemang (Business Development Manager) Ruth Fosua Tetteh (Dept. Business Development Manager) Gifty Mensah (Marketing Manager) Irene Mottey (Sales Manager) Edna Eyram Swatson (Special Projects Manager ) Events Evelyn Kanyoke (Snr. Events Consultant) Finance/Administration Joseph Ackon Bissue (Accountant)

The group, which calls itself Alliance of CSOs Working on Extractives, Anti-Corruption and Good Governance, called on the president to suspend the implementation of the MIIF agreement until all documents relating to the establishment of Agyapa Royalties and its beneficial owners have been disclosed. The country, Dr. Manteaw warned, could rather be punished by investors should it not rectify the raging controversies surrounding the agreement. “We are deeply worried that if government proceeded to the market amidst the public outcry and threats of future policy reversal from the major opposition party, Ghana may suffer the undesirable consequence of a rather high premium, as investors may be sensitive to the political risks associated with such investment,” Dr. Manteaw stated. Way forward The CSOs called on the President to establish a multi-stakeholder

process to review all options available to optimize the mineral royalties in order to secure a riskfree revenue to the state. “We are always happy to engage as always, to learn, debate and challenge government ways to optimize the mineral royalties if government is willing to activate those democratic channels. “Gold royalty is the most certain revenues to the state. Even though commodities prices tend to be cyclical, gold has oscillated 20 percent which makes it a more stable than oil,” Dr. Manteaw stated justifying why the deal has to be revised. Agyapa Agreement The Deputy Finance Minister Charles Adu Boahen earlier this week told the Business24 that the upfront capital to be raised from listing of Agyapa Royalties Limited on the London Stock Exchange and Ghana Stock Exchange, as well as regular dividends thereafter will be invested in developing the country’s gold resources, building of gold refineries and world-class gold certification institution. “The funds raised during the

listing and future profits will be reinvested in mining and the building of gold refineries and certification companies that will refine and certify gold produced locally and for other countries in the sub-region. We have been mining for centuries and we don’t have many gold refineries and gold certification companies,” Mr. Adu Boahen said is response to the specific infrastructure projects that funds raised in the IPO and thereafter would be expended on. Government, under the Minerals Income Investment Fund Act has created a Special Purpose Vehicle (SPV), Agyapa Royalties Limited, to maximise the mineral royalties received by government from mining companies. In 2019, Ghana’s income from mineral royalties stood at about US$200m, according to Finance Ministry figures. At a time that the precious mineral is trading at a high of about US$2,000 per ounce, experts have argued that though gold is not a currency, it rivals the dollar as an international reserve asset and has thus benefited from the desire for diversification given the fall in real interest rates.

WED. AUGUST 26, 2020

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TOR needs capital injection to avoid collapse, warns COPEC BY EUGENE DAVIS

Ghana’s only refinery has for long been loss-making and riddled with debt, with energy experts calling for equity injection or privatisation to make it efficient and profitable. For years the refinery has not published any financial statements. However, according to its 2019 variance report, TOR made a net loss of GH¢186.4m in the first four months of 2019. This was against a budgeted loss of GH¢71.7m. “TOR’s revenue targets are not being achieved due to lack of working capital to procure crude oil for processing on a continuous basis. However, fixed costs continue to be incurred,” the report said. Duncan Amoah said government should step in with investment to make the company financially viable and able to clear its debt backlog and purchase crude oil supplies.

“Our checks indicate that the plant itself had to be shut down. We are pleading with authorities that the right investments are made, because till date it remains the only refinery Ghana has. One would have expected that after becoming an oil producing country our refinery would have been of importance to us. Sadly the fortunes of TOR keep dwindling,” he told Business24 in an interview. According to him, the company even struggles to pay salaries, and he urged government to within the short term commit investments to improve its fortunes. Some of the causes of the woes of TOR, Mr. Amoah explained, are poor management practices in the past, lack of right investment and retooling, such that equipment which were fixed in the 1970s are still in use today. Once TOR is up and working, it will ensure fuel security, he added. He also opposed the idea that TOR should be used as a tank farm, insisting that “we do not

think it will make any economic sense to turn a US$1bn facility into a tank hub. We can use the tanks and still let the refinery work so as to contribute to Ghana’s GDP.” In 2012, TOR secured some US$900m in financing from BNP Paribas and Standard Chartered to help it clear its debt backlog and purchase crude oil supplies. It was the second multi-million dollar bailout since 2010 for the 45,000 barrel-per-day plant, which has run only intermittently for years due to trouble securing

credit to line up a steady supply of crude shipments. In spite of the government injecting an additional GH¢3.49bn and shareholders’ funds amounting to GH¢678.9m as at the end of the first four months of 2019, the refinery’s liquidity position has not been good. TOR’s total debt, as at April 30, 2019, was GH¢1.5bn, after the government-backed ESLA Plc had paid a total amount of GH¢1.14bn in legacy debts.

Watchdog: Chinese-owned trawler re-licensed despite unpaid US$1m fine BY BENSON AFFUL A Chinese-owned fishing trawler has been re-licensed to fish in Ghana, despite being caught for illegal fishing twice and failing to pay a US$1m fine, watchdog Environmental Justice Foundation (EJF) has alleged. In June 2019, the Lu Rong Yuan Yu 956, which is operated by the Chinese company Rongcheng Ocean Fishery Co. Ltd., was apprehended in Ghanaian waters with illegal nets and undersized small pelagic fish – the staple catch of artisanal fishers – on board. The full fine of US$1m was issued, but the vessel owners failed to pay, the EJF said, adding that in May 2020 the vessel was caught again for almost identical offences. “Despite this clear track record of illegality, the vessel has now been licensed to fish while it awaits a further hearing,” said EJF in a statement. The watchdog said the use of illegal nets is often associated with the damaging practice of “saiko”, as trawlers use them to illegally target the main catch of artisanal fishers – small pelagic fish, also known as the “people’s fish”. “Once caught, they transfer the

catch at sea to specially adapted boats and sell this stolen fish back to local communities at a profit,” EJF said. “This represents a worrying threat to livelihoods in coastal communities. At a time when local fishers should be recording bumper catches, they report returning to the sea with empty nets as fish

populations collapse,” it added. The EJF said re-licensing of the vessel may also be inconsistent with legal requirements. It explained: “The 2002 Fisheries Act states that the Fisheries Commission should not recommend the renewal of a fishing licence where there is a failure to satisfy a judgment or determination for

illegal fishing. It seems that the fines issued to the vessel in 2019 are determinations that have not been satisfied.” Steve Trent, Executive Director of EJF, said “it is crucial that all cases of illegal fishing in Ghana are treated rigorously so that perpetrators are prevented from committing these crimes again.”

WED. AUGUST 26, 2020

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ADB to support outgrower farmers under IDIF The Managing Director of the Agricultural Development Bank (ADB), Dr John Kofi Mensah, says the indeginous bank will support Outgrower Farmers supplying raw materials to Factories under the government’s One District One Factory (1D1F) initiative. According to Dr. Mensah, industries established under the One District One Factory in need of agricultural support can be rest assured of the preparedness of the Bank to provide the needed financial support so they operate at optimum level. At the commissioning of the Ekumfi Fruits and Juices limited and Casa De Ropa Limited in the Central Region by President Nana Addo Dankwa Akufo Addo , Dr. Kofi Mensah said the bank will soon disburse about GH¢50million to support outgrower farm companies operating within the catchment areas of the two factories. “These factories need constant supply of raw materials to remain in business and as our contribution

to the IDIF we are giving out loans to especially outgrower farmers attached to the IDIF factories so they can supply these factories with the needed raw materials”, he said. According to Dr. Kofi Mensah many companies established in the past have not performed to their full capacity or even survived due to the lack of raw materials, hence the decision by the bank to support the outgrower farmers to ensure the availability of raw materials to sustain the factories and create more jobs. “Our association with such key government projects, especially those related to agribusiness, is a manifestation of the new direction of the Board to ensure the bank focuses on its mandate of agribusiness financing,” he said. He commended President Nana Addo Dankwa Akufo-Addo for his foresight and vision of the IDIF initiative and assured him of ADB’s support towards all initiatives aimed at making the country food sufficient.

First National Bank Ghana secures US$85m funding from DEG DEG has given a total of US$85 million long-term loan facility to First National Bank Ghana. This is part of its support for financial institutions to widen the access to credit for SMEs and businesses within the real estate value chain in developing countries who may have been impacted by the COVID-19 pandemic. FNBG offers the full spectrum of banking services to retail and commercial clients. Having acquired and merged with the erstwhile GHL Bank, leading provider of private real estate finance in Ghana, this funding is timely to expanding the bank’s asset portfolio. Petra Kotte, Head of division Financial Institutions and German Business at DEG explained that this funding is a clear signal of DEG’s confidence in Ghana’s economic development. “With our commitment in Ghana, we are strengthening the real estate sector for private households. We also support SMEs, which are important employers and the driving force behind the private sector, especially in the current situation.”, he said. Dominic Adu, CEO of First National Bank expressed his appreciation for the funding by DEG and explained that this will enable First National Bank Ghana to scale up its provision of financial supports and further

enhance the commercialization of infrastructure across the country. “Indeed, the world at large is still dealing with the impact of the pandemic, but we have seen a tremendous rise in SMEs as well as the housing and infrastructure industry over the past few years in Ghana. We cannot downplay the

importance of scaling up the available financial support that will help minimize the impact of the pandemic on these businesses. That is why we will capitalize on funding from institutions like the DEG to engineer the expansion of real estate developments and sustainability of business operations in Ghana”, Dominic emphasized.

FNBG was founded in 2015 with a strong digital banking focus and has been developing successfully ever since. With over 500 employees in Ghana and an extended branch network across Greater Accra, Ashanti and Western Region, the bank is expected to run a profitable operation with its sustainable business model in the coming years.

WED. AUGUST 26, 2020

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The EU is fueling hunger in Africa

BY MUHAMMED MAGASSY

frica is becoming a new COVID-19 epicenter. In the recent weeks, South Africa reported a 60% increase in natural deaths, suggesting a higher COVID death toll than reported. And the World Health Organization recently warned that cases are proliferating across Sub-Saharan Africa, including my country, The Gambia. Unless the European Union urgently rethinks its protectionist trade policies – beginning with the Common Agricultural Policy – a sharp uptick in food insecurity will turn the COVID-19 crisis into a catastrophe. The CAP subsidizes European farmers to the tune of €42 billion ($50 billion) annually, thereby giving them an unfair advantage in foreign markets, such as Africa. As a report released by the NGO network Coordination SUD last year showed, such subsidies, together with the abolition of market-regulation mechanisms (such as milk quotas), have strengthened EU producers’ ability to export agricultural products at low prices to markets in the Global South. Such policies distort markets, destabilize developing-country economies, and destroy livelihoods. For example, the CAP has devastated agricultural production in West Africa, particularly for wheat and milk powder. And the problem extends far beyond Africa: local industry and agriculture in Caribbean and Pacific countries have been

undermined as well. The EU’s protectionist policies mean that developing-country farmers, who have access to significantly less support, cannot compete with European imports. In fact, though 60% of SubSaharan Africans are smallholder farmers, a staggering 80% of local food needs are met by imports. EU subsidies to its own farmers, along with what the UN Food and Agriculture Organization describes as “unfair trade agreements,” have enabled EU farmers to undersell African farmers dramatically. This protectionist stifling of local producers partly explains why, even before the pandemic, half of Africa’s population faced food insecurity. Last month, there was a glimmer of hope that the EU was finally rethinking the CAP, at least within Europe. One proposal that was put forward focused on helping small farmers in Europe by expanding communitysupported agricultural (CSA) schemes, which directly connect farmers to consumers. Proposed reforms also reflected criticisms of industrial animal farming and trade in livestock over long distances – practices that facilitate the emergence and spread of viral infections similar to COVID-19. But this approach once again remains inherently detrimental to African producers, who would continue to be subject to EU protectionism in the guise of “free trade.” It is precisely in regions like West Africa, where a large number of smallholder farmers are currently being crowded out

of the market by protectionist policies, that CSA schemes would be particularly valuable. What is needed from the EU is a fairer, more holistic approach that accounts for the effects of its policies on African farmers. In the meantime, European policymakers have shelved the proposals until at least the end of 2022, owing to the pandemic. Making matters worse, to increase its own crisis stockpiles, the EU is preparing to limit food exports. This could directly constrain Africa’s food supply without supporting African farmers, compounding disruptions to global food-supply chains, while placing additional pressure on smallholder farmers. The CAP is not the only EU policy that is devastating developing-country agriculture. Its 2019 ban on palm-oil imports, ostensibly implemented to prevent deforestation, is similarly misguided. A blanket ban on palm oil – a common food product also used in biofuels – may simply shift demand to less efficient, more land-intensive agricultural products, such as sunflower and rapeseed oil, resulting in even higher rates of deforestation and greater environmental strain. (Some policy experts believe that this is the point: despite the guise of environmentalism, the ban is fundamentally a protectionist effort aimed at boosting the EU’s own oilseed industries.) Whatever the motivation, there is no doubt that the ban devastates the livelihoods of smallholder

farmers, who comprise 50% of palm-oil producers. Add to that the decline in overall demand caused by the COVID-19 crisis, and smallholder farmers in Malaysia – one of the world’s largest palm-oil producers – are facing a veritable “survival crisis,” despite the tremendous progress the country has made in ensuring sustainable production. Again, there is some evidence that the EU is rethinking its approach. But the needed changes are far from guaranteed. As the COVID-19 crisis escalates in Africa, the economic, social, and, eventually, political fallout will be significant. The harmful effects of poorly conceived policies and practices will intensify and multiply. And, in lieu of strong action, millions of people will go hungry. If the EU really wants to help Africa, during the pandemic and beyond, it must urgently reform its trade policies to ensure a level playing field and enhance food security. We are all in this crisis together. We in West Africa hope that we will not be left alone in addressing it.

Muhammed Magassy, Executive Director of the Magassy Foundation for Relevant Easy Adult Literacy, is a member of The Gambia’s National Assembly and the Economic Community of West African States’ parliament. Copyright: Project Syndicate, 2020. www.project-syndicate.org

WED. AUGUST 26, 2020

Feature

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COVID-19: Population and Development Matters for Africa

he COVID-19 pandemic is ravaging the whole world causing millions of human morbidities and thousands of mortalities. Although the pandemic is primarily a health issue, it has social, political, economic, environmental and other dimensions. The toll of COVID-19 cases is still at low levels but increasing gradually across Africa with thousands of confirmed cases and hundreds of deaths daily. The Virus affects all age groups, although it impacts more on the Older Persons and people with underlying medical conditions particularly, as documented in the developed world. The statistics on the Sex Ratio disparity in experiences and patterns are still in the process of being documented. Full-blown consequences of the pandemic manifested when affected countries and regions applied the Lockdown measures to contain and curtail the spread – increase index cases and deaths. These consequences differed across regions. For Low and Middle-income countries (LMICs), the pandemic has already had devastating and overwhelming effects including- Poverty (reduced household incomes due to limited mobility and the lockdowns) widened inequality; Food Insecurity; hunger; loss of income of small business holders in the informal sector; in-access to basic health care (essentially for RH/FP care & services); etc. In a similar manner, the pandemic has disrupted education processes of children and young people. In Africa, although more men have tested positive to the corona virus, the pandemic has indirectly impacted more on women, young people and children who are usually marginalized in accessing education, health care, capital and descent jobs /employment. It is well documented that lack of access to sexual and reproductive health services, including family planning is especially devastating for marginalized populations who are already dealing with economic, social, cultural and logistical barriers (the availability/stock outs of commodities experienced by FP clients and absence of health workers at the health facilities) to care. Before the inception of the COVID-19, most African countries faced challenges of high maternal and childhood morbidity and mortality, high teenage/adolescents’ pregnancies and child births; unacceptable child marriages; low modern contraceptive prevalence rates (mCPR), high unmet need for family planning and high total fertility rates (TFR). These poor indicators impact on the socio economic development and the

potential for the continent to harness the demographic dividend. Coupled with the above, are poor nutritional status and humanitarian emergencies. In the frantic effort to address the challenges arising from the pandemic in Africa, issues of Reproductive Health particularly Family Planning suffer complete neglect which would reverse gains made on Population Management with implications, both in the short and long term regarding Africa’s quest to Harness the Demographic Dividend, achieving particularly SDGs 1, 2, 3, 4,5 & 10; meeting the Commitments made at the ICPD@25 during the Nairobi Summit; eventual Sustainable Development and milestones towards Agenda 2063. Some of the experienced challenges arise from the inadequate supplies, equipment and staff being diverted to cater for the unprecedented pandemic as essential frontline workers; supply chain disruptions; women avoiding preventive care or choosing to deliver outside of facilities; and clinic closures. Drawinginferencefromaveryrecent analytical illustration comment by Guttmacher on “……The Potential Impact of COVID-19 Pandemic on Sexual and Reproductive Health in 132 Low-and-MiddleIncome Countries…..” arising from disruptions of RH/FP serviceschains of activities and in-access due to restrictions of movement and fear of contacting the Virus, etc. The illustration shows that;10% decline in use of short-and long-acting reversible contraceptives could result in 48,558,000 additional women with Unmet need for modern contraceptive; 15,401,000 additional unintended pregnancies (from past evidences, most of those women/unintended pregnancies will occur in Africa). Again, a 10% decline in service coverage of essential pregnancyrelated and newborn care could lead to 1,745,000 additional women experiencing major obstetric complications; 28,000 additional maternal deaths; 2,591,000 additional newborns experiencing major complications; and 168,000 additional newborn deaths (Africa remains at the receiving end). These evidence-based illustrations at a time when huge efforts were being deployed to transform and improve women and girls’ lives, there is a danger that COVID-19 will destabilize a number of African countries, with serious consequences that will divert the path towards cultivating/harnessing the demographic dividend. The outcomes, if unchecked, will have enormous negative impact on Africa’s effort to moderate its population growth, improve the

standards of living and quality of life of all its citizens as COVID-19 continues to unfold in the immediate and in the long-term. There are looming devastations due to inequalities in service provision across all development sectors. For example, schools as part of the lockdown measures to contain the spread of the virus, adopted the use of information and communications technology (ICT) to deliver online programmes, lessons and lectures at a distance to their enrolled students. But there are obvious challenges since only some schools especially in the urban centres have ICT infrastructure. Such challenging times provide an opportunity for the ministries of education to quickly prioritize, improve and maximize their ICT operations to ensure all children can access education irrespective of their economic status and area of residence. The closing down of all schools due to the COVID-19 crisis coupled with an ongoing restrictions on movement also exacerbated the limited access to sexual reproductive health information and services for young people. In fact, it has invoked fear among leaders, parents and other stakeholders that some girls may not return back to school due to unintended pregnancies after the long stay at home. This jeopardizes efforts countries had made in ensuring that all children keep in schools to avoid early marriages/ teenage pregnancies and gain skills to contribute towards harnessing the demographic dividend. Most urban population in Africa rely on the informal sector for their economic and daily living. The livelihood activities and opportunities are transient and change day-by-day creating challenges for individual actors, households, communities and economic planners in having upto-date information on survival opportunities. Even before the COVID-19 pandemic, a significant proportion of the urban population working in the informal sector were facing particular constraints including limited access to capital, limited support and recognition by the authorities, and limited access to workspaces and other facilities. The activities are fragmented and performed in multiple locations, thus requiring easy mobility. Most of these largely depend on their daily sales to make ends meet, due to the low-profit margins that characterize the sector. There is great reliance on cash not only for access to food, but also water, sanitation, garbage disposal, lighting, fuel, health needs etc. Since the outbreak of the COVID-19, most governments have taken several initiatives including movement restrictions, curfews,

lockdowns, and providing social distancing guidelines to combat its spread. Moreover, the success of these government anti-COVID-19 efforts will largely depend on actions taken by individuals in their different spheres of life, including economic ventures. Clearly, the national and international anti COVID-19 guidelines on social distancing have impacted on both formal and informal sources of livelihoods, and yet policy makers have focused narrowly on distributing food as basic essential items for the vulnerable populations in the context of the movement restrictions and the lockdown period. This creates uncertainties on how the urban dwellers are economically surviving. By and large, informal economy workers operate in poor occupational, safety and health conditions, with inadequate access to water and sanitation, and minimal mechanisms to manage risks. Even before the pandemic, access to healthcare was mostly out of reach due to affordability issues. Amidst the pandemic, earning an income has become much more difficult as buyers have disappeared, and are avoiding public spaces. As they often simply cannot implement social distancing and access the personal protective equipment (PPE), they are particularly more exposed and vulnerable to the pandemic. African leaders must act now In the light of the above, if immediate consciousness is not aroused, Africa may experience outcomes of poor maternal, new born, child and adolescent health and in the long-term population explosion with several sectorial consequences and inability to harness the potential demographic dividend. COVID-19 has introduced setbacks for Africa and emerging from this state, will require collective regional concerted effort and firm commitments by African Leaders to put the Continent back on track. Policymakers in Africa and their partners can mitigate this catastrophe if they take swift, decisive action.

(Source:The Regional Collaborative Platform of National Population Councils/Commissions of Kenya, Ghana, Nigeria, Uganda and Zambia)

WED. AUGUST 26, 2020

Feature

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America’s Coming Double Dip BY STEPHEN S. ROACH

he double dip is not a dance. It is the timehonored tendency of the US economy to relapse into recession after a temporary recovery. Over the years, it has happened far more often than not. Notwithstanding frothy financial markets, which currently are discounting the nirvana of an uninterrupted V-shaped recovery, there is a compelling case for another double dip in the aftermath of America’s devastating COVID-19 shock. The daunting history of the US business cycle warns against complacency. Double dips – defined simply as a decline in quarterly real GDP following a temporary rebound – have occurred in eight of the 11 recessions since the end of World War II. The only exceptions were the recessions of 1953-54, the brief contraction of 1980, and the mild downturn of 1990-91. All the others contained double dips, and two featured triple dips – two false starts followed by relapses. The double-dip does not, of course, come out of thin air. It reflects the combination of lingering vulnerability in the underlying economy and aftershocks from the initial recessionary blow. As a general rule, the more severe the downturn, the greater the damage, the longer the healing, and the higher the likelihood of a double dip. That was the case in the sharp recessions of 1957-58, 1973-75, and 1981-82, as well as in the major contraction that accompanied the 2008-09 global financial crisis. The current recession is a classic set-up for a double dip. Lingering vulnerability is hardly a question in the aftermath of the 32.9% annualized plunge in the second quarter of 2020 – by far the sharpest quarterly decline on record. Damaged as never before by the unprecedented lockdown to combat the initial outbreak of COVID-19, the economy has barely begun to heal. A sharp rebound in the current quarter is simple arithmetic –and virtually guaranteed by the partial reopening of shuttered businesses. But will it stick, or will there be a relapse? Financial markets aren’t the least bit worried about a relapse, owing largely to unprecedented monetary easing, which has evoked the time-honored maxim: “don’t fight the Fed.” Added comfort comes from equally unprecedented fiscal relief aimed at mitigating the pandemicrelated shock to businesses and

households. This could be wishful thinking. The basic problem is the virus, not the need for Fed-induced liquidity injections or the temporary support of a fiscal package. Monetary and fiscal measures can temper financial markets’ distress, but they can do little, if anything, to resolve the underlying health security issues weighing on the real economy. With the US remaining in the grips of the pandemic, the case for sustainable recovery looks tenuous. While rebounds in production and employment underscore significant progress on the supply side of the economy, these gains are far from complete. Through July, nonfarm employment has recouped only 42% of what was lost in February and March, and the unemployment rate, at 10.2%, is still nearly triple the pre-COVID level of 3.5%. Similarly, industrial production in July remained 8% below its February high. Healing has been even more tentative on the demand side. That is especially the case for key components of discretionary consumption – notably, retail shopping, as well as spending on restaurants, travel, and leisure. Full participation in these activities – all of which entail face-to-face human contact – implies health risks that most of the population is unwilling to take, especially given elevated infections, the lack of robust therapeutics, and the absence of a vaccine. To put the pandemic’s impact in perspective, consider that transportation, recreation,

restaurants, and accommodations – the most COVID-sensitive segments of consumer demand – accounted for 21% of total household expenditures on services in the first quarter of 2020, before the pandemic hit full force. Combined spending on these categories plunged at an 86% annual rate in real (inflationadjusted) terms in the second quarter. The monthly data through June underscore the lingering headwinds from these important segments of discretionary consumption. While combined consumer spending on durables and nondurables bounced back to 4.6% above pre-pandemic levels (in real terms), household spending on total services – by far, the largest component of total consumption – has recouped only 43% of its lockdown-induced losses. On balance, this points to what can be called an asynchronous normalization – a partial recovery that is drawing greater support from the supply side than from the demand side. The US is hardly unique in this respect. Similar outcomes are evident in other economies – even China, whose state-directed system is much more effective at command and control of the supply side than it is in influencing the behavioral norms shaping pandemicsensitive household consumption on the demand side. But the asynchronous normalization of the US economy is very different in one key respect: America’s abysmal failure at containing the virus not only

underscores the lingering fears of infection, but also raises the distinct possibility of a new wave of COVID-19 itself. While there has been a reduction in the incidence of new cases over the past month, the daily infection count of nearly 48,000 in the week ending August 20 is more than double the pace recorded in May and June. Together with a death rate that has averaged a little more than 1,000 per day since late July – and projected to remain at that level for the rest of the year – this elevated pace of infection takes on even greater importance as a predictor of what lies ahead. Consumer fears – and their impact on pandemic-sensitive services – are unlikely to subside in such a climate and could well intensify if a new wave hits. Therein lies the case for a double dip. Partial and asynchronous normalization in the aftermath of the worst economic shock on record signals lingering vulnerability in the US economy. And failure to contain the virus underscores the distinct possibility of aftershocks. This is precisely the combination that has led to previous double dips. Yet frothy financial markets are wedded to the narrative of a classic V-shaped recovery. The rhymes of history suggest a very different outcome.

Stephen S. Roach is a faculty member at Yale University and the author of Unbalanced: The Codependency of America and China. Copyright: Project Syndicate, 2020. www.project-syndicate.org

WED. AUGUST 26, 2020

News

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NIA targets one million in Greater Accra mop-up

The National Identification Authority (NIA) says it is targeting some one million persons in its Ghana card registration mopup ongoing in the Greater Accra region. Mr. Francis Palmdeti, Assistant Commissioner of Immigration (ACI), Head of Corporate Affairs of the Authority said the target of 80 per cent coverage would be achieved with the issuance of one million cards in the mop-up

targeted at persons aged 15 years and above who were unable to register for the first round of the mass registration. He said the NIA had created 881 centres across the Greater Accra Region, including Accra East and West, where the first round of mass registration was done. Mr Palmdeti said the mop-up, which started on 24th August, would last for two weeks. He said the mop-up took off

slowly but hopeful patronage would pick up, saying, similar exercises went successfully in some regions, including Ashanti, Volta and Oti. Mr George Attoh, the Supervising Registration Officer (SRO) at the Children and Orphanage Centre in Labone said on the second day of the mop-up, only ten people were registered between 0700 to 0930 hours. He said the centre did not record

any technical challenges apart from the low turnout. Ms Bernita Osaah, the SRO at Christ the King School Registration Centre said between 0700 and 1000 hours, the centre had registered eight persons, with all adhering to COVID-19 safety protocols. The situation was not different at the Labone Senior High Registration Centre.

COVID-19: African Development Bank Annual Meetings go virtual For the first time in the history of the African Development Bank, its Annual Meetings will be held virtually to comply with the COVID-19 pandemic-related socialdistancing guidelines. The Governors’ Dialogue and the election of a president will be top of the agenda of the upcoming Meetings scheduled for 26-27 August 2020. A statement from the Bank said this year marked the 55th meeting of the Bank’s Board of Governors and the 46th Annual Meeting of the African Development Fund, the Bank’s concessional arm, and has the added significance of being an election year for the Bank’s president. The incumbent, Dr. Akinwumi Adesina, is running as the sole candidate for a new five-year term. Since the COVID-19 pandemic hit the continent’s shores in early March, over one million confirmed cases of the virus have been recorded in Africa. The pandemic has hit the region’s economies hard in the wake of falling commodity prices and containment measures by governments that have led to country lockdowns. For several months, the Bank has been extending support to regional member countries in cushioning their economies, health systems, and citizens’ livelihoods from parallel health and economic

impacts from COVID-19. In April 2020, The Bank established a Covid-19 Response Facility of up to $10 billion to extend flexible support to African sovereign and non-sovereign operations. As of August 20, $2.29 billion in CRF funding had been approved for ADB member countries, A further $1.186 billion has been disbursed to ADF member countries, with approvals ongoing. In March, the Bank also raised a record $3 billion with a COVID-19 social bond floated on the London Stock Exchange. The institution reached some major milestones during the trying

times of lockdown with both Fitch and Standard & Poor credit rating agencies reaffirming the Bank’s AAA rating with a stable outlook. During the meetings, Governors are expected to receive updates on a range of Bank developments since the previous Annual Meetings held in Malabo, Equatorial Guinea in June 2019. This will include the Bank’s seventh General Capital increase, which the Board of Governors approved in Abidjan, Cote D’Ivoire on October 31, 2019, and which increased the Bank’s capital base by a historic $115 billion to $208 billion. In December 2019, African Development Fund Donors

pledged $7.6 billion, the fifteenth such replenishment, to help Africa’s poorest countries. The Governors will vote on August 27 to elect the eighth president of the Bank. Dr. Adesina, the first Nigerian to hold the post, was elected for a five-year term on May 28, 2015, by the Bank’s Board of Governors during that year’s Annual Meetings held in Abidjan, Côte d’Ivoire. Bank Governors are typically the finance and economy ministers or Central Bank Governors of the 54 African regional member countries and 27 non-regional member countries. GNA

WED. AUGUST 26, 2020

Mining

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Gov’t is moving too slowly to save the economy –Goldfields CEO BY NICK HOLLAND Goldfields CEO, Nick Holland says the South African government is moving too slowly on key decisions for business at a time when it needs to be more flexible to save the economy Adding his voice to a growing chorus of business leaders urging the ANC-led government to move quickly and decisively on investorfriendly actions to save the economy after a battering of nearly five months during the hard lockdown, Holland said in an interview with Business Day that his main concern was the lack of urgency to make the

necessary changes. Gold Fields, reported its interim results on Thursday 20 August. It showed a more than doubling of its

Mining major backs Fair Cobalt Alliance launched in the DRC As the demand for the minerals in battery production, including cobalt, is set to increase to power the transition to a greener economy, the Fair Cobalt Alliance (FCA) was launched in the Democratic Republic of Congo in response to poor economic, social and working conditions for many mining communities in the cobalt supply chain. The FCA was set up by social enterprise Fairphone, with partners Signify, the world leader in lighting; Huayou Cobalt, a leading supplier of the metal and The Impact Facility, an organisation designed to convene supply chains to empower ASM communities and enable diversification of mining economies. The founding members are joined by one of the world’s largest global diversified natural resource companies, Glencore; the Responsible Cobalt Initiative (RCI), a programme established by Chinese cobalt refining and mining companies active in the Democratic Republic of Congo (DRC) to tackle risks facing workers at artisanal mines in the cobalt supply chain; German mobility provider, Sono Motors and Lifesaver, which delivers hire and return portable power banks for events and venues. Knowledge and development organisations, amongst them Miller Center for Entrepreneurship, and Congolese civil society, including the Centre Arrupe pour la Recherche et la Formation (CARF) are also actively supporting and participating in the initiative. Meanwhile, the Dutch Ministry of Foreign Affairs and Ministry for Foreign Trade and Development Cooperation, implemented by The Netherlands Enterprise Agency, contributes to the alliance through a multi-year grant. The FCA is set up to work with the DRC government and civil society partners to tackle problems in the cobalt supply chain linked to artisanal and small scale mining (ASM), such as poor working

conditions and child labour, and build a source of responsible cobalt from the ASM sector. The members of the FCA will be working closely with both national and provincial DRC government and with civil society and implementing partners towards three objectives: Drive the supply of fairer cobalt by supporting the professionalisation of ASM mining management and safer and environmentally more responsible sites. Work towards child-labour free Kolwezi mines by supporting ASM operators in establishing credible control and monitoring mechanisms to keep children out of the mines and support the enrolment of children into school, allowing children and youth access to education and vocational training. Increase household incomes by investing in community programmes, designed to create sustainable livelihoods other than mining, focused on the promotion of agriculture, entrepreneurship and financial literacy support projects. Cobalt is a key mineral in battery production and the longer-term transition to a low-carbon economy. This initiative connects cobalt from the ASM operations in Lualaba Province, in the DRC, to the global electronics and automotive supply chains. Full implementation will take five years and will start in mines located in Kasulu and Kamilombe in the DRC, with the ambition to scale to more mines.

first-half earnings to $323-million and the group declared an interim dividend of R1.60 per share — the same amount it paid out for all of 2019. This is largely because of prices. Gold’s spot price has been on a tear as the global economic meltdown triggered by the pandemic boosts its appeal as a safe haven — though it must be said that wider equity markets have also recovered dramatically, which may slow the flight to bullion. Holland to step down Mr. Holland who is due to step down in 2021, having reached the gold miner’s retirement age, told

journalists that the rest of his time with the company would be spent nurturing the nine mines in the group that were set to deliver up to 2.5-million ounces a year for a decade and keep cash flows as high as possible. “I’m a shareholder in Gold Fields, and a reasonable percentage of my net worth is in this company,” he said. Holland will turn 63 in September 2021, and according to company policy he must retire. He had no plans after Gold Fields, he said.

Kinross Gold releases 2019 sustainability report

Kinross Gold Corporation delivered strong Environmental, Social and Governance (ESG) performance, including $3.2 bn of economic benefits to host countries through taxes, wages, procurement and community support in 2019, its sustainability report revealed. According to its 2019 Sustainability Report (the “Report”), detailing the company’s progress over the past two years in delivering on its commitment to responsible mining. The Report provides a transparent account of Kinross’ sustainability performance, including ESG activities, and an in-depth review of the company’s relationships with host communities, workforce and host governments. “Kinross’ commitment to safety and sustainability is

deeply rooted in our values and culture,” said J. Paul Rollinson, President and CEO. “Our safety performance remains among the best in the industry and on par with, or better than that of companies in nonindustrial sectors. We continue to prioritize health and safety and environmental stewardship, as well as providing sustainable benefits to the communities where we operate, with over $3.2 billion spent in our host countries in 2019 through taxes, wages, procurement and community support.” Kinross’ 2019 Sustainability Report, available at https://www. kinross.com/kinross-gold-2019sustainability-report, is structured in line with the Company’s Safety and Sustainability policy and First Priorities: do no harm to people, the environment and communities; make a positive contribution for all stakeholders, and; act ethically and transparently.

WED. AUGUST 26, 2020

Maritime

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CMA CGM to take delivery of world’s largest LNG-powered vessels French shipping group CMA CGM is to take delivery of its first ultra large LNG-powered containership following completion of the vessels’ gas trials. The CMA CGM Jacques Saade returned to the Shanghai JiangnanChangxing Shipyard, a part of China’s Hudong-Zhongua, on Monday, its AIS data shows. To remind, Jiagnan launched the 23,000 TEU LNG-powered containership in August 2019 and the vessel completed sea trials end March. Offshore Energy understands that CMA CGM is expected to take delivery of the ship during September, more likely in the first half of the month, after it will depart to Europe. The vessel will serve the EuropeAsia route. It will bunker LNG from the MOL-owned and Totalchartered Gas Agility that arrived

off Rotterdam during the weekend. CSSC’s Hudong and its unit Jiangnan are building in total nine LNG-powered sister vessels for the French firm. All of the ships will be 400 meters long and 61 meters wide, making them them the world’s largest LNG-powered vessels. They will feature WinGD’s dual-

fuel engines and GTT’s 18,600cbm fuel tank, both largest ever built. CMA CGM previously said it expects to take delivery of all of these LNG-powered giants by the first half of 2021. They will all join CMA CGM Jacques Saade on the Europe-Asia route.

The shipping group aims to have in total 20 LNG-powered vessels in its fleet by 2022 as it looks to comply with the new IMO standards and slash emissions. This includes five Eastern Pacific Shipping’s 15,000 TEU containerships and six smaller vessels of 1,400 TEU.

Africa: Mauritius oil spill highlights importance of maritime laws - UN Trade Body The devastating oil spill off the east coast of Mauritius has highlighted the need for global adoption of international legislation that govern the seas and protect small island states and their vulnerable marine ecosystems against ship pollution, UN trade body UNCTAD has stated. The grounding last month of the MV Wakashio, in an environmentally sensitive and biodiverse area, has endangered marine life, food security, and health in Mauritius, as well as its $1.6 billion tourism industry, already hard hit by the COVID-19 pandemic. “There’s a need for universal participation in the existing international legal framework, where all nations are party to agreements, so when incidents like this occur, vulnerable countries are protected”, said Shamika N. Sirimanne, UNCTAD’s technology and logistics director. Historic oil spill UNCTAD said the spill is considered the worst in the history of Mauritius, an island nation in the Indian Ocean, known for its spectacular beaches. The MV Wakashio--a Japaneseowned bulk carrier flying under the Panamanian flag -was travelling from China to Brazil when it grounded on a coral reef on 25 July, close to a marine park and two internationally protected wetland sites. The cause is still unknown. The ship was not carrying cargo and reportedly had an estimated 3,894 tons of fuel oil, 207 tons of diesel, and 90 tons of lubricant oil on board. By 11 August, up to 2,000 tons of fuel had reportedly leaked from the ship, which split in two several

days later. Most of the fuel onboard had been recovered by this time, according to the vessel’s owner. ‘An existential and developmental threat’ In an article published this week, UNCTAD outlined how the unfolding environmental crisis in Mauritius shows the importance of having an effective international legal regime for when such disasters occur. This framework is especially critical for small island developing states (SIDS) which face “an existential and developmental threat” from oil spills in their waters. UNCTAD is the UN agency that supports developing countries in gaining fair access to the globalized economy. Like Mauritius, SIDS are often close to global shipping lanes. These nations also rely on the marine

environment - and its biodiversity for tourism, fishing and aquaculture. Different ships, different legislation Although several international conventions govern the seas and how they are used, some are not ratified by all countries and while others have yet to enter into force. Furthermore, different ships are subject to different international legal conventions, which UNCTAD said presents a challenge in the Mauritius case. As the MV Wakashio spill falls under the International Convention on Civil Liability for Bunker Oil Pollution Damage, compensation for economic losses and environmental damage would be less than if the vessel had been an oil tanker. While the Bunker Convention would provide for maximum compensation of around $65.17

million, the payout would be four times higher, or $286 million, under the applicable International Oil Pollution Compensation Funds regime. Given the potentially high costs and wide-ranging environmental and economic implications of ship-source pollution incidents, UNCTAD again underlined the need for all countries to adopt the latest international legal instruments for the global good. “Sustainable Development Goal 14 calls on us to protect life below water and this means minimizing pollution at every possible turn, including putting all necessary precautions in place to manage environmental disasters like oil spills when they do happen”, Ms. Sirimanne said. www.allafrica.com

WED. AUGUST 26, 2020

Africa Business

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South Africa’s Nedbank CFO to join Vodacom South Africa’s Nedbank Group Chief Financial Officer Raisibe Morathi has resigned from the lender to take up a similar role at Vodacom Group, the companies said in separate statements on Tuesday. Morathi has been the group CFO at Nedbank since 2009, where she was responsible for leading a team of over 900 people involved in finance, operations and strategy. She will join Vodacom from Nov. 1. “Given Vodacom Group’s leadership position as a mobile money provider in Africa and our accelerated growth ambitions beyond traditional telco services, Raisibe’s extensive financial services experience makes her an excellent addition to the Vodacom Group Board and Executive

Committee,” Vodacom Group Chief Executive Shameel Joosub said. Vodacom and other mobile operators in Africa are looking to offer lending and other financial services to the vast majority of Africans who do not have bank accounts, a move likely to threaten traditional and digital banks. They are also seeking to expand their mobile payment apps into online market places to leverage their network and customer base. Morathi, who will leave Nedbank on Sept.30, succeeds Till Streichert following his departure in June. In a separate statement, Nedbank said it has appointed Mike Davis as CFO designate with immediate effect and as the group’s CFO from Oct. 1. (af.reuters.com)

CBN tells banks to takeover collection of electricity bills The Central Bank of Nigeria (CBN) has asked banks to take responsibility for collecting electricity bill payments. In a circular dated August 21, Bello Hassan, CBN’s director of banking supervision, said taking over from electricity distribution companies will improve payment discipline in the industry. “The payment or settlement of all NESI related goods or services shall be made through the Nigerian banking system,” the circular read. “Consequently, all collections for the payments of NESI regulated goods and services provided by a DisCo shall be paid into a designated account such that collections arising from services rendered by the DisCo shall be paid into an account in the sole name of the DisCo; collections arising from services rendered by a third party/parties on behalf of the DisCo shall be paid into an account in the joint name of the DisCo and the third-party vendor(s) “All energy and non-energy collections of DisCos, whether cash or cashless, shall only be performed by deposit money banks (DMBs). No entity shall be permitted to collect revenues for DisCos except if that entity is so authorized by a DMB in line with the relevant CBN guidelines for agent banking and agent banking relationships. “Therefore, the DMB shall be permitted to authorize its agents to collect energy and nonenergy payments on its behalf for any DisCo; the actions or inactions of the agent shall be the

responsibility of the authorizing DMB. Any DMB found to be maintaining any account(s) for any entity collecting payments on behalf of any DisCo without appropriate authorization shall have regulatory actions imposed on it.” The apex bank also directed that banks providing bank guarantees to Nigeria Bulk Electricity Trading

(NBET) Plc and the Transmission Company of Nigeria (TCN) on behalf of DisCos, would take full responsibility for the collections and the remittances of the DisCos to both NBET and TCN. “For the avoidance of doubt, no DMB is permitted to open or continue to maintain a collection account for a DisCo without the express no-objection of the DMB

that guaranteed its exposure to NBET or TCN,” it said. According to the latest quarterly report of the Nigerian Electricity Regulatory Commission (NERC), the collection efficiency by the DisCos is low and has continued to adversely impact the financial liquidity of the industry. Source: The Cable

WED. AUGUST 26, 2020

Weekly investment Update

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WED. AUGUST 26, 2020

Weekly investment Update

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WED. AUGUST 26, 2020