Business24 Newspaper (April 13, 2020) by Business24 Online

EDITION B24 | 29

Trawlers collapsing fisheries, campaign group warns MORE ON PAGE 3

MONDAY APRIL 13, 2020

THEBUSINESS24ONLINE.NET

COVID-19 drives Chamber of Mines sub-Saharan Africa supports COVID-19 fight toward first recession with GHC 11.5 million in 25 years MORE ON PAGE 5

MORE ON PAGE 3

POST-COVID-19:

Cheaper power could jumpstart economy, says expert MORE ON PAGE 2

The addition of about 22.5 percent levies and charges to the end-user tariff has made electricity an expensive commodity in Ghana ECONOMIC INDICATORS

WHAT YOU CAN LEARN FROM THE ICT INDUSTRY MORE ON PAGE 06

AFRICA’S COVID-19 BUDGET CRUNCH MORE ON PAGE 10

INTERNATIONAL MARKET

*EXCHANGE RATE (INT. RATE)

USD$1 =GH¢5.6896*

EXCHANGE RATE (BANK RATE)

USD$1 =GH¢5900.*

BRENT CRUDE $/BARREL NATURAL GAS $/MILLION BTUS

*POLICY RATE

14.5%*

GOLD $/TROY OUNCE

GHANA REFERENCE RATE

15.12%

CORN $/BUSHEL

OVERALL FISCAL DEFICIT

7.8%*

COCOA $/METRIC TON

PROJECTED GDP GROWTH RATE PRIMARY BALANCE. AVERAGE PETROL & DIESEL PRICE:

32.50 1.77 1,739.50 329.50 2,311

2.6

COFFEE $/POUND:

+5.70 ($108.30)

1.4% OF GDP

COPPER USD/T OZ.

220.15

GHc 5.13*

SILVER $/TROY OUNCE:

15.92

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MONDAY APRIL 13, 2020

NEWS/EDITORIAL

Editorial: Act now to save our fish stock 1

For years, the media has reported about the illegal fishing in the country’s territorial waters that has led to a sharp decline in the sardinella population. However, action taken by the relevant authorities have been half-hearted. Business24 backs the call by the Environmental Justice Foundation for firm and decisive actions to be taken to save our fish stock.

The illegal fishing is extremely worrying since these young fishes are crucial to population recovery and sardinella are already on the brink of collapse, having declined by 80 percent over the past 20 years. At the heart of this is Saiko. This is a destructive form of illegal fishing, whereby foreign trawlers target the main catch of Ghanaian canoe fishers, transfer it at sea to specially adapted boats, and sell

this stolen fish back to local communities at a profit. EJF in its recent study examined 18 blocks of Saiko fish landed at Elmina: sardinella were present in two-thirds of the blocks and 99 percent of them were juveniles below minimum legal landing size. It also examined the by-catch landed by trawlers and found a very similar picture, that is, 99 percent of the sardinella were below legal size.

“We have the approved net to be 60mm in measurement. But some of them don’t use those nets—they use mesh, which is less than the 60mm. If they use those nets, the fingerlings [juvenile fish] will not be able to go out. So, by the end of the day, they will bring [catch] everything,” EJF said in its report. This grim data should move us to act quickly to save our fish stock.

Wash your hands 2

Cheaper power could jumpstart economy, says expert BY BENSON AFFUL

Cover your cough 3

If you are sick, wear 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 Chief Executive Officer of the Chamber of Independent Power Producers, Distribution Companies and Bulk Consumers (CIPDIB), Elikplim Kwabla Apetorgbor, has suggested to government that one of the strategies to revitalise the economy post-coronavirus is to give cheaper power to industry for growth and job creation. His call comes in the wake of the one-week extension of the lockdown imposed by the government in Greater Accra, Greater Kumasi, and Awutu Senya East district to help contain the spread of COVID-19. The lockdown, which began on March 30 and will now last till April 20, has restricted movement of people and led to the shutdown of businesses in the country’s economic nerve centres. Predictions are that economic growth will take a significant battering as a result of the restrictions. “When the country is out of the clutches of COVID-19 and begins efforts at revitalising the economy, we must do so on the premise that industry requires cheaper power for growth and job creation, all of which translate into tax earnings for the country,” Mr. Apetorgbor told Business24. He said after COVID-19, the country will require very strategic interventions and workable solutions to quickly bring the economy to a sound footing.

“It must not be business as usual. We cannot tax ourselves out of the downturn. We must rather engineer deliberate growth at a faster pace to quickly bring relief to our people. The actions we take will inform the volume of foreign direct investments we are able to attract. Our policies, especially in the energy sector, will determine how quickly we recover from this shock.” To improve industry’s competitiveness, he called for reductions in electricity tariffs by removing some of the levies that currently make the cost of energy in Ghana a huge burden for businesses. According to him, the

addition of about 22.5 percent levies and charges to the end-user tariff contributes significantly to the expensive electricity consumers complain about. He called for the removal of the maximum demand charge and power factor surcharges from the tariff applicable to industries and bulk consumers. Taxes which he described as “inessentials”, such as the GETFund and NHIL levies, VAT, public lighting levy and national electrification levy, should also be removed, he said. The complete removal of these taxes and a reduction in gas price will position Ghana as one of the benchmarks for competitive energy pricing

in the sub-region and bring visible economic relief to the country, he added. “This will translate into a drastic reduction in the cost of production, prices of goods and services, and eventually trigger the utilisation of any idle capacity.” Meanwhile, President Nana Akufo-Addo, as part of measures to bring relief to Ghanaians during the lockdown, said last Thursday the government will fully cover the bills of low-income consumers of electricity for April, May and June. Consumers who fall outside of this category will see 50 percent of their electricity bills absorbed by the government for the same period.

NEWS

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MONDAY APRIL 13, 2020

Trawlers collapsing fisheries, campaign group warns BY BENSON AFFUL

Ghana’s sardinella fishery, which provides food and livelihoods for coastal communities, is under severe threat from illegal targeting by industrial trawlers, the Environmental Justice Foundation has said. The EJF said samples of “Saiko” sardinella it obtained in its recent survey were 99 percent juveniles. This, it said, is extremely worrying since these young fishes are crucial to population recovery and sardinella are already on the brink of collapse, having declined by 80 percent over the past 20 years. Saiko is a destructive form of illegal fishing, whereby foreign trawlers target the main catch of Ghanaian canoe fishers, transfer it at sea to specially adapted boats, and sell this stolen fish back to local communities at a profit. EJF in its recent study examined 18 blocks of Saiko fish landed at Elmina: sardinella were present in two-thirds of the blocks and

Ghana’s sardinella population has declined by 80 percent over the past 20 years due to illegal fishing

99 percent of them were juveniles below minimum legal landing size. It also examined the bycatch landed by trawlers and found a very similar picture, that is, 99 percent of the sardinella were below legal size. Trawling with illegal nets, with a mesh size smaller than the legal minimum, is a major problem in Ghana. “We have the approved net to be 60mm in measurement. But some of them don’t use those nets—they use mesh,

which is less than the 60mm. If they use those nets, the fingerlings [juvenile fish] will not be able to go out. So, by the end of the day, they will bring [catch] everything,” EJF said in its report. An urgent crackdown on Saiko is needed, it said, stating that although Saiko transhipments, under-size mesh nets, and landing juveniles are all illegal practices, as clearly laid out in Ghanaian law, they are often allowed to continue unchecked.

“When sanctions are given out, they are inconsistent and weak. For instance, the statutory minimum fine for use of illegal nets and landing juveniles under Ghana’s 2014 Fisheries Amendment Act is US$1 million, yet there are numerous cases of vessels refusing to pay or paying lower sums and then being re-licensed to continue fishing,” it said. This year the government committed to banning all domestic and international vessels found to be engaging

in Saiko from operating in Ghanaian waters. It must keep this vital pledge, EJF said, as well as immediately investigate all suspected cases of Saiko fishing and prosecute cases transparently through the court process. It called for thorough inspections of the landings of industrial trawlers to ensure they are only targeting species of the type and size dictated by their licence, and that the landed fish are above the minimum legal size. Executive Director of EJF Steve Trent said: “In a time when the world is facing coronavirus, stable livelihoods and food security are even more crucial than before. Ghana’s fisheries are in crisis, with the country now forced to import half its fish and canoe fisherfolk coming home from sea empty-handed. The state is losing millions of dollars every year in revenue. The government has the ability to stop this illegal and highly damaging activity now, and it must act to do so without delay.”

Chamber of Mines supports COVID-19 fight with GHC 11.5 million The Ghana Chamber of Mines, led by its President, Eric Asubonteng, has made a donation of GH¢ 11.5 million to the Ministry of Health and allied institutions as part of the mining industry’s voluntary contribution to the fight against the Coronavirus (COVID-19) pandemic. Producing member companies of the Chamber that contributed to the donation are: Adamus Resources Ltd, AngloGold Ashanti Iduapriem Mine, AngloGold Ashanti Obuasi Mine, Asanko Gold Ghana Ltd, Chirano Gold Mines, Golden Star Resources, Gold Fields Ghana, Newmont Ghana and Perseus Mining Gh. Ltd. Speaking at the ceremony, Mr. Asubonteng stated: “The World Health Organisation (WHO) has recommended that increased testing, done quickly and effectively, is a key step in isolating and containing the infection. It is our fervent expectation that this donation will ease the pressure on government and free up much-needed resources for other essential aspects of the national strategy for

Covid-19. “You may have heard about the measures individual member companies of the Chamber have put in place to protect our employees, contractors and host community from the infection. These include extensive internal COVID-19 protocols on our operations, as well as donations at the local level to health facilities, local government institutions and community groups.” “As a good Ghanaian corporate citizen, even as we seek the promotion of our respective business interests, we at the Ghana Chamber of Mines recognise the need to also identify ourselves with progressive national efforts to protect the people and institutions in our host communities and the nation at large.” the Chamber President added. Mr. Asubonteng stressed the need for Ghanaians to heed the advice of the Ghana Health Service and the medical staff as “we put our shoulders to the wheel to safeguard our dear country from the effects of this pan-

demic.” He further urged individuals and businesses to collaborate with government to ensure that the nation returned to normalcy as soon as possible in order to protect the value chain of both the formal and informal sectors of Ghana’s economy. “The mining industry thrives on discipline as well as upholding the health and safety of our employees and host communities; hence we pledge our unflinching support to the government and its experts as we work collaboratively to stop the onslaught of COVID-19,” he added. The donation will go into the procurement of essential medical equipment. This consists of GH¢ 3.3 million for twenty (20) Ventilators and accessories to the Ministry of Health for distribution to hospitals across the country; GH¢ 5 million to the key testing centres across the country to support the testing of 25,000 Covid-19 cases. This is broken down into the following: GH¢2 million to the Noguchi Medical Research Institute to sup-

port the testing of 10,000 Covid-19 cases, GH¢ 2 Million to the Kumasi Centre for Collaborative Research in Tropical Medicine (KCCR) to support testing of 10,000 Covid-19 cases, and GH¢ 1 million to the National Public Health Reference Laboratory of the Korle-bu Teaching Hospital to support testing of 5,000 Covid-19 cases. The remaining amount of GH¢3.2 Million has been used to procure 7,000 complete sets of PPEs to frontline

health workers and to support other Covid-19 logistical requirements made up of hand gloves (7,000 boxes), coverall (7,000 pieces), goggles (7,000 pieces), face shield (7,000 pieces), Surgical Face Mask (7,000 pieces), N-95 Respirators (7,000 pieces) and thermometer (1,000 pieces). An Affiliate member of the Chamber, Rikair Company Ltd, also donated three oxygen concentrators to the Ministry of Health.

| MONDAY APRIL 13, 2020

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NEWS

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MONDAY APRIL 13, 2020

COVID-19 drives sub-Saharan Africa toward first recession in 25 years Growth in Sub-Saharan Africa has been significantly impacted by the ongoing coronavirus outbreak and is forecast to fall sharply from 2.4% in 2019 to -2.1 to -5.1% in 2020, the first recession in the region over the past 25 years, according to the latest Africa’s Pulse, the World Bank’s twiceyearly economic update for the region. “The COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard,” said Hafez Ghanem, World Bank Vice President for Africa. “We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term - including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with COVID 19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises, and food security.” The Pulse authors recommend that African policymakers focus on saving lives and protecting livelihoods by focusing on strengthening health systems and taking quick actions to minimize disruptions in food supply chains. They also recommend implementing social protection programs, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector. The analysis shows that COVID-19 will cost the region between $37 billion and $79 billion in output losses for 2020 due to a combination of effects. They include trade and value chain disruption, which impacts commodity exporters and countries with strong value chain participation; reduced foreign financing flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and through direct impacts on health systems, and disruptions caused by containment measures and the public response. While most countries in the region have been affected to different degrees by the pandemic, real gross domestic product growth is projected to fall sharply particularly in the region’s three largest economies - Nigeria, Angola, and South Africa- as a result of persistently weak growth and investment. In general, oil exporting-countries

Hafez Ghanem, World Bank Vice President for Africa says immediate and long-term impact of the coronavirus pandemic requires adequate funding to save livelihoods. will also be hard-hit; while growth is also expected to weaken substantially in the two fastest growing areasthe West African Economic and Monetary Union and the East African Community-due to weak external demand, disruptions to supply chains and domestic production. The region’s tourism sector is expected to contract sharply due to severe disruption to travel. The COVID-19 crisis also has the potential to spark a food security crisis in Africa, with agricultural production potentially contracting between 2.6% in an optimistic scenario and up to 7% if there are trade blockages. Food imports would decline substantially (as much as 25% or as little as 13%) due to a combination of higher transaction costs and reduced domestic demand. Several African countries have reacted quickly and decisively to curb the potential influx and spread of the coronavirus, very much in line

with international guidelines. However, the report points out several factors that pose challenges to the containment and mitigation measures, in particular the large and densely populated urban informal settlements, poor access to safe water and sanitation facilities, and fragile health systems. Ultimately, the magnitude of the impact will depend on the public’s reaction within respective countries, the spread of the disease, and the policy response. And these factors together could lead to reduced labor market participation, capital underutilization, lower human capital accumulation, and long-term productivity effects. “In addition to containment measures, we have seen that in responding to COVID-19, countries are opting for a combination of emergency fiscal and monetary policy actions with many central banks in the region taking important actions like cutting interest rates and providing

extraordinary liquidity assistance,” said Albert Zeufack, Chief Economist for Africa at the World Bank. “However, it is important to ensure that fiscal policy builds in space for social protection interventions, especially targeting workers in the informal sector, and sows the seed for future resilience of our economies.” The authors emphasize the need for a customized policy response to reflect the structure of African economies (especially the large informal sector) and the peculiar constraints policymakers currently face, particularly the deteriorating fiscal positions and heightened public debt vulnerabilities, and the overall low operational capacity to respond. “The immediate measures are important but there is no doubt there will be need for some sort of debt relief from bilateral creditors to

secure the resources urgently needed to fight COVID-19 and to help manage or maintain macroeconomic stability in the region,” said Cesar Calderon, Lead Economist and Lead author of the report. Due to the COVID-19 pandemic, economic circumstances within countries and regions are fluid and change on a day-by-day basis. The macroeconomic analysis in the report is based on data available by the first quarter of March 2020. The World Bank Group is taking broad, fast action to help developing countries strengthen their pandemic response, increase disease surveillance, improve public health interventions, and help the private sector continue to operate and sustain jobs. It is deploying up to $160 billion in financial support over the next 15 months to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery.

F E AT U R E

| MONDAY APRIL 13, 2020

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WORKING IN REMOTE TEAMS:

What you can learn from the ICT industry BY: DIANA VAN DER STELT

This is the third article in a series about lessons from the ICT sector that can help you to face the challenges of the current lockdown. In a Ghanaian workplace, it is common to have a lot of discipline and controls in place to ensure that employees are productive and are not being distracted. However, how is that going to work if people are supposed to work from home due to the Covid-19 crisis? The software industry has learned how to deliver remotely 20 years ago, a typical software project would start with a large requirement document that describes what is to be built. A software company would be contracted. Then, a team of developers would start building what was in the documents. They would all write small pieces of code and share these in files on a pen drive to be merged later on. Months later, there would be a test version ready for the customer. Often, these projects were not successful. Customers were not happy with the result. Misunderstanding or new ideas during the production time of the software are some of the reasons. Frequently, budgets would double or triple during the execution. That is why in 2001 a group of ICT professionals came up with the “Agile Manifesto” pledging for fast deliveries by teams of developers and very short feedback cycles. Nowadays, numerous cloud tools allow developers to work in the same environment simultaneously. In addition, “Agile” has completely changed the practice of software development. It has equally made it a lot easier to work remotely and keep projects small. Let’s look at the main ingredients that can help your team while you are not working in the office. An Agile way of working At the CoreNet Global Conference in Brussels in September 2009, a definition of the agile way of working was launched: Agile working is about bringing people, processes, connectivity and technology, time and place together to find the most appropriate and effective way of working to carry out a

particular task. It is working within guidelines (of the task) but without boundaries (of how you achieve it). This requires a very different work culture that needs time to practice, and in particular needs a different mind-set of the management of an organization. The principles formulated in the Agile Agenda are: •

View work as an activity not a place,

•

Focus on performance not presence,

•

Create trust-based relationships not hierarchies,

•

Embrace innovation rather than bureaucracy, and

•

Value people more than property.

•

Paul Allsopp, The Agile Organization, 2001.

The scope of this article does not allow to extensively discuss all paradigms related to Agile but will concentrate on some practical tools from the SCRUM framework, that can help you to work with your team remotely. Working in short cycles or sprints Rather than planning projects with a long-time horizon, agile projects are organized in short iterations or sprints of one to three weeks. Every sprint has a clear time zone and a well-

defined result, as the various tasks needed to achieve these results are assigned to the various team members. Each cycle starts with a planning meeting to specify these ‘ingredients’, and ends with a retrospective: a short evaluation meeting to discuss possible improvements in the team. Work agile means continuous improvement in small steps, where the team learns from every sprint to do better in the next sprint. Daily standups Every day at a fixed time (for example: 8:30 am) everyone gathers on a video conferencing call to touch base. During daily standups, the team discusses what everyone had done the previous day, and what problems have been encountered. Then the targets for the coming days are shared. Everyone should have the chance to speak out and tell what they need from others to do their work properly. Joint electronic environment

work

In a joint cloud archive, team members can share documents with various levels of authorization (readonly, editing), and when web applications are being used to support business processes, staff can login anytime anywhere to do their work. In fact, when working with cloud-based

documents and software, there is no reasons to work from the office. Online monitoring tools There are many online monitoring tools to collaborate on projects, such as SLACK, JIRA or ASANA. A particular one to mention for agile teams is TRELLO (there is a free version available that does the job well). With an account for everyone on www.trello.com you can create a planning board and assign tasks to team members on an electronic dashboard with sticky notes. Team members will move their sticker from “to do” to “doing” to “done” while everybody can see their progress, making it completely transparent what everyone is working on.

Weekly demos As the Agile way of working is not so much about being at the office but more about getting things done and produce a certain result, it can be a good practice to do ‘organized online demo-sessions’ where team members will show their work to the rest of the team, or customers. At the office, an employee would be requested to do a power point presentation. Fortunately, video conferencing software also provides for a “screen sharing ” option. Employees should be ready to present their work on a weekly basis, focusing on the result, rather than the number of hours spent on a certain task.

Use sticky notes to create a Trello board at a central place in your home and use it for your daily family routine during this period. Also, Include tasks for every person including children.

Figure 1: A sample Trello board

Author: Diana van der Stelt, Sales Director at Trinity Software Center, Kumasi and director at Maxim Nyansa IT Solutions Foundation, Tantra Hills, Accra, a training center for ICT professionals. Member, Institute of ICT Professionals, Ghana. For comments, contact dianavanderstelt@trinitysoftwarecenter.com, www.trinitysoftwarecenter.com

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MONDAY APRIL 13, 2020

| MONDAY APRIL 13, 2020

R E A L E S TAT E C O R N E R

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Subtitle: Real estate FAQ - I BY JORGE.OSORIO Dear reader, I would like to share some valuable insight based on interactions with Ghanaians just like you to advise your first or next real estate purchase, categorised according to the most commonly-asked questions regarding real estate investment in Accra. I hope that it will give you the needed perspective and guide you to make the right choices. Q: How can I afford real estate in Accra? I even struggle to pay my rent! The cost of real estate in Accra may seem prohibitively high, but there are a number of options to finance your purchase. The first one that usually comes to mind is selffinancing from one’s own resources. However, there is also the option of mortgage financing through a bank and even joint ownership with trusted family, friends and/or business partners. A mortgage will allow you to spread the cost of your investment over at least fifteen years at a defined interest rate. You may have to make some sacrifices to factor monthly mortgage payments into your current expenditure, but you can offset these by leasing the property to earn income. In the case of joint ownership, it is important to seek legal counsel and document all agreements to avoid future conflict. This way, you not only pool resources for your investment but also preserve the relationships involved. It is important to note that reputable real estate companies offer different arrangements to suit one’s payment ability, so do not hesitate to start a conversation around this subject in order to clarify all the applicable terms and conditions. Q: I want to invest in real estate to supplement my income through rent proceeds. Where is the most ideal location and how much can I expect to earn? There are both established and upcoming prime locations in Accra, so your real estate purchase must be determined by your personal research, investment goals and risk appetite. Your personal research matters because you must be well-informed about any investment before making financial commitments. In

addition to professional advice from trusted real estate companies, consider infrastructural and other developments in the location you are considering. Is it close to major access routes or projects of national interest? Is it the ‘next frontier’ for real estate development because it is surrounded by neighbourhoods that have almost reached saturation? Have several real estate companies set their sights on the area? A close observation will give you answers to these questions and more. Next, realistically consider what your minimum return on investment will be based on property values and average rental income within that area. If they match your investment goals, then you are one step closer to identifying the ideal location. Finally, your risk appetite is a factor when investing in an area that is still considered a ‘new site’, one whose full potential is yet to be realised and may not be very rewarding in the short term. How much are you willing to risk in case your optimistic forecast does not materialise? Q: What are my options for managing my real estate investment? I do not have a

lot of time to spare. Gone are the days when you were solely responsible for managing your real estate property. You can choose to offload this entirely to a professional facility and property management team who will see to it that your property is taken care of in line with your expectations. Although this comes at an additional cost, it is necessary to measure how much time and energy such a service will save you from making frequent trips to your property and engaging various artisans for repairs and maintenance. Remember, your real estate property will only appreciate in value if it is managed well. Also, this may save you money in the long-term since a fraction of whatever income you generate from the property will be channelled towards its upkeep. It is better to do this on a regular schedule than to allow your building to deteriorate, because it will always cost you more to restore. Furthermore, a property management company can also be assigned the responsibility of securing tenants for your building to increase its chances of occupancy.

Q: Is real estate insurance necessary? After all, I have more than enough bills to pay! Think about insurance this way: if you have already made a substantial investment in buying real estate property, is it in your best interest to leave things to chance when it comes to protecting it? Insuring your real estate property will not only secure your investment, but it will also give you peace of mind in case of any unfortunate incident. You can plan ahead to avoid being unduly inconvenienced by insurance premium payments. You can also set aside a portion of your rental income in a dedicated savings account or fixed-term investment to cater for this cost. As long as you prioritise insurance for your property, you can find a way to cover the extra expense. I hope you know a little bit more now to guide your real estate purchase, because the fact of the matter is this: real estate is a tangible asset that is worth investing in. Psssttt...let me tell you an open secret: do you know that Devtraco properties not only offer great value but also give buyers a

hassle-free ownership experience? Our properties are located in Accra’s prime neighbourhoods and guarantee an average annual return of up to 12% with a potential capital appreciation of 5%. We provide allied property management services and sell insured buildings in a seamless process that can take less than twenty-four hours to conclude. I believe such an offer is definitely worth considering!

Jorge Osorio

As always, I look forward to continuing our conversation so send your questions, observations, concerns (and even disagreements) to jorge. osorio@DevtracoGroup.com.

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F E AT U R E

| MONDAY APRIL 13, 2020

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Africa’s COVID-19 Budget Crunch they are needed. Maintaining an efficient flow of information to track expenditure and quickly determine further needs is crucial. Alongside short-term emergency efforts in the fight against COVID-19, countries should reinforce their medium- and long-term pandemic preparedness. The ongoing challenges of many developed countries, including individual US states, to source the necessary medical equipment and supplies in time to respond to the pandemic should serve as a warning to African governments. In order to increase bargaining power and avoid unnecessary competition, governments should consider a pan-African procurement strategy for essential supplies. They should also begin efforts to expand the fiscal space for pandemic preparedness by capitalizing on the public awareness the COVID-19 crisis has created. Although imposing new taxes before economies recover will be difficult, there is evidence that voluntary taxation could enable governments to tap resources for activities such as disaster relief. The key is to guarantee that the proceeds from such schemes will go to a ringfenced public health emergency fund. But governments’ decisions on the financing of health facilities and services for future emergencies will be equally important. Africa’s health systems are unprepared for the current crisis. That must be addressed now – and never be allowed to happen again.

BY BINIAM BEDASSO AND NEIL COLE As COVID-19 crisscrosses Africa, and policymakers are implementing emergency responses, World Health Organization Director-General Tedros Adhanom Ghebreyesus has issued a clarion call to African governments: “In other countries,” he said in March, “we have seen how the virus actually accelerates after a certain tipping point, so the best advice for Africa is to prepare for the worst and prepare today.” But even viable efforts to mitigate the effort will press many African countries’ already-strained budgets to the breaking point – or beyond. As it is, Sub-Saharan African countries allocate an average of only 7% of their general government budget to health, compared to 15% for OECD countries. The cumulative effect of low spending has left many of these countries with precarious health systems that struggle to provide ordinary services, let alone respond to a pandemic. Under-investment is the main reason Africa’s health systems are weak. But lack of fiscal space for emergencies like the pandemic – due to unsustainable levels of debt and shrinking savings – makes matters worse. And governments are also reluctant to make hard decisions that may require reallocating budgets and reversing wage increases for public-sector employees. Some governments have been pro-active. South Africa, which has one of the continent’s highest infection rates, has reversed earlier wage agreements with labor unions in order to mobilize emergency funds for COVID-19. Other measures adopted by President Cyril Ramaphosa’s administration, which was quicker off the mark than most Western governments, include expansionary monetary policy and tapping surplus funds held by public financial institutions. The private sector also has donated to the government’s Solidarity Fund. Liberia’s experience in the fight against the Ebola outbreak in 2014 provides crucial lessons for policymakers about how to tackle a major public health crisis with limited financial resources and organizational capabilities. According to a detailed WHO assessment of Liberia’s preparedness to tackle Ebola, the John F. Kennedy Medical Center, the country’s only large referral hospital, was heavily damaged during the country’s 14-year civil war. No hospital had an isolation ward, few

medical staff had been trained in the basic principles of infection prevention and control, and facilities had little or no personal protective equipment. So how did Liberia tackle the Ebola health and public finance crisis? After declaring Ebola a national emergency in August 2014 and instituting many of the measures – border controls, curfews, and community quarantining – now seen worldwide in response to the COVID-19 pandemic, Liberia’s government undertook several fiscal measures. The authorities boosted health expenditures by 111%, to about 60% of the total budget, which increased by 24%. Alongside this reorganization and increase in public spending, Liberia’s main economic sectors – especially mining, agriculture, agroforestry, and services – contracted by around 8%.

“In order to increase bargaining power and avoid unnecessary competition, governments should consider a pan-African procurement strategy for essential supplies. They should also begin efforts to expand the fiscal space for pandemic preparedness by capitalizing on the public awareness the COVID-19 crisis has created.”

The Liberian Ministry of Finance and Development Planning took several additional measures. It suspended all capital investment projects, except those directly linked to the Ebola emergency. It also reduced the recurrent operational costs of government ministries and agencies, and directed public officials not involved in addressing the Ebola emergency to stay home. And it established an Ebola trust

fund to pool public resources and grants from donors, corporate partners, and members of the public, similar to the fund that the South African government has established in response to COVID-19. Moreover, finance ministry staff moved into the building of the health ministry. This improved coordination and communication during the crisis, and enabled the authorities to monitor expenditure better, and respond more agilely to the changing situation. In keeping with Liberia’s “allhands-on-deck” approach, governments will need to improve coordination across all agencies and levels of administration, especially in decentralized political systems where the implementation of health services is the responsibility of provincial, state, or local authorities. This will ensure that emergency funds are allocated where and when

Biniam Bedasso

Neil Cole

Biniam Bedasso is a researcher and public-finance specialist at the Collaborative Africa Budget Reform Initiative (CABRI). Neil Cole is Executive Secretary of the Collaborative Africa Budget Reform Initiative (CABRI). Copyright: Project Syndicate, 2020. www.project-syndicate.org

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The Human-Capital costs of the crisis

BY BARRY EICHENGREEN US President Donald Trump tells us that once COVID-19 is contained and it is safe to go back to work, the economy will be “great again.” Is he right? There is at least one reason to think he is. After all, unlike a hurricane or earthquake, the pandemic has caused no damage to the physical capital stock. It follows, Trump and his advisers argue, that we can pick up where we left off. The economy took a time-out, but now output will rebound swiftly to pre-crisis levels and growth will proceed as before. We are even told that the economy will be stronger than ever. People who put off buying a car because it was unsafe to visit the dealership will do so now. Firms that have put expansion plans on hold will double down on investment. Baseball teams unable to play in the spring will schedule doubleheaders in the fall. Unfortunately, reality will not oblige Trump’s rosy scenario. Households newly aware that they lack the financial reserves to deal with unforeseen circumstances will increase their precautionary saving

and continue to put off buying that new car. Firms won’t invest in expanding capacity until they are confident that the virus won’t return. With the developing world entering and exiting the crisis later than the United States, exports will be weak. The good news is that public spending can replace the private spending that is lost. With interest rates at rock-bottom levels, the US still has fiscal space, despite its staggeringly large deficit. It’s important to recognize that fiscal stimulus will be needed for an extended period, given that higher precautionary saving and weak investment will persist. The temptation to turn off the fiscal tap too early, as the US (and Europe) did in 2010, must be resisted. But the supply-side damage from the crisis is not so easily repaired. Inevitably, supply chains will have to be restructured in ways that make production costlier. Even if they have to pay more, firms will produce closer to home, whether because of their heightened recognition of the risks of relying on far-flung operations, or in response to political arguments for achieving national selfsufficiency in the provision of essential goods. For firms,

enhanced security and certainty will mean higher costs and lower productivity, which will translate into higher prices for consumers. But this is a small problem compared to the impact on labor. Workers experiencing unemployment in a downturn can be permanently scarred. They are less able to form durable attachments with employers and more likely to experience additional episodes of joblessness. Their wages tend to be lower, not just in the immediate aftermath of the event, but for decades, even over their entire working lifetimes. Lower wages are a sign that these workers’ productivity has been impaired. In other words, while there has been no destruction of physical capital in the pandemic, the risk of damage to human capital is significant. At a time when unemployment in the US is on course to reach 25% and higher, this is a serious concern. Historical evidence of the negative effects of unemployment on human capital is extensive. My Berkeley colleague Jesse Rothstein has documented their prevalence following the Great Recession. My teacher Nick Crafts, now at the University of Warwick,

analyzed their ubiquity during the Great Depression. In part, these effects reflect the frictions that arise when a worker’s attachment to a firm is broken. Firm-specific skills have no value when the firm that uses them goes out of business. Even when a worker’s skill set is more widely applicable, finding a suitable match with another employer may take time. This suggests that the US is more at risk of squandering human capital than European countries, where governments are pursuing ambitious policies to preserve employeremployee relationships. Unemployment and hardship can also lead to demoralization, depression, and other psychological traumas, lowering affected individuals’ productivity and attractiveness to employers. We saw this in the 1930s, not just in declining rates of labor force participation but also in rising rates of suicide and falling rates of marriage. Here, too, one worries especially about the US, given its relatively limited safety net, its opioid crisis, and its “deaths of despair.” Many of these negative consequences are most prevalent when unemployment is recurrent or extended. If this

downturn turns out to be as short as it is sharp, one can hope that the loss of human capital, the resulting damage to the economy’s productive capacity, and the pain and suffering that come with them will be limited. The length of the downturn will depend above all on our success at containing the coronavirus and mitigating its effects. And that success will hinge, in turn, on our cohesiveness as a society and on the quality of our leadership. For Americans, that is not a very hopeful note to end on.

Barry Eichengreen is Professor of Economics at the University of California, Berkeley. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era. Copyright: Project Syndicate, 2020. www.project-syndicate.org

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The COVID-19 default time bomb BY PIERRE-OLIVIER GOURINCHAS AND CHANG-TAI HSIEH

Without a comprehensive debt moratorium, the COVID-19 pandemic will lead to a wave of uncontrolled sovereign defaults, especially among emerging and developing economies. Should that happen, global efforts to contain the public-health crisis will fail, and the current economic collapse may well turn into a permanent decline. Rich and poor countries alike are facing an unprecedented economic crisis as businesses close and workers lose their income. A downturn of this magnitude can cause tremendous long-term damage, as critical economic linkages vanish. Scores of firms will close permanently unless urgent action is taken. To this end, the United States Congress recently passed a $2 trillion rescue package, while the Danish and Canadian governments, for example, are subsidizing 75% of the payroll of their countries’ small and medium-size enterprises (SMEs). China, meanwhile, has expanded credit and eliminated payroll taxes, and just announced a rescue package worth almost $1 trillion. But COVID-19 poses even greater problems for emerging economies such as India and Mexico. There, the economic costs of social distancing are even higher than in the US and Europe, and vulnerable SMEs, with low cash reserves, account for a much larger share of the economy. Such countries also have far more precarious health-care systems. The funds required to support vulnerable workers and businesses, as well as to treat COVID-19 patients, could be as much as 10% of their GDP. Where will that money come from? Some advanced economies, such as the US, can borrow much more at little extra cost. But some of that funding comes from foreign investors seeking financial safety, and some from US private investors liquidating their foreign holdings. In other words, the financing that America and other advanced economies need comes in part from countries like Mexico. What’s more, unlike during the 2008 global financial crisis, every emerging and developing economy now needs to borrow at exactly the same time. So, even if Mexico were able to issue bonds, it would be competing with many oth-

er countries in the same situation. It is an unfortunate fact, but countries have no one else to borrow from but other countries. Left to their own devices, financial markets will pick winners and losers. The winners will be those countries with enough capacity to issue safe bonds. They will be able to borrow huge amounts at rock-bottom interest rates. The losers will be the world’s Mexicos. In fact, such countries will be doubly damned: not only will they be unable to raise funds to deal with the crisis, but capital will also move away, as it has already started to, precisely because of borrowing by the US, China, and European countries. It is little wonder, then, that more than 90 countries have already approached the International Monetary Fund for financial assistance. A cascade of disorderly sovereign defaults now, when developing-country governments need to spend huge sums to keep their citizens healthy and their economies on life support, would have enormous human and economic costs, and sharply diminish our chances of containing the pandemic. After all, to contain the virus anywhere requires containing it everywhere. To avoid a catastrophic outcome, the world urgently needs strong collective action. The IMF estimates that emerg-

ing economies’ funding needs total $2.5 trillion, but this figure seems low. In any case, the resources of the World Bank and IMF are currently far too limited. Efforts to boost the Fund’s firepower – currently only $1 trillion – must be aggressively pursued. In the meantime, the IMF should act to head off the coming wave of sovereign defaults by coordinating a broad debt moratorium. The moratorium would suspend all sovereign-debt repayments to private and public creditors by emerging and developing economies that requested such a freeze, and would remain in place until the health crisis passed. Our estimates suggest that a one-year debt moratorium could free upwards of $1 trillion, or 3.3% of low- and middle-income countries’ combined income – vastly more than the estimated $14 billion that would be freed by the proposed moratorium on debt repayments to public creditors by poorer countries only. That would go a long way toward helping countries like Mexico and India tackle the current crisis. Although some might object that a debt moratorium will stop most private lending to these countries, such capital flows have already stopped or reversed. And although a moratorium could lock such coun-

tries out of international capital markets for a long time, the stigma on this occasion should be much less, because the moratorium would be imposed as a result of a worldwide pandemic rather than fiscal profligacy. The IMF’s imprimatur should also help. Private creditors will be more likely to agree to a moratorium once they understand that the alternative is a slew of uncontrolled defaults, which will not help their bottom line. A debt moratorium preserves the option of avoiding a formal debt restructuring if economic conditions improve after the pandemic. A substantial share of this sovereign debt is now issued under local law, which can be modified. Debt issued under foreign law and without collective-action clauses is more problematic. In that case, sovereign-immunity laws in the US and the United Kingdom could temporarily be changed to permit judges to end lawsuits from holdouts against countries that the IMF certifies as unable to service their current debt owing to the pandemic. Such a solution would be in the social and economic interest of rich countries, too. During Latin America’s debt crisis in the 1980s, it took almost ten years for creditors to enter into earnest discussions under the so-called Brady Plan. This time must be different. We need to coordinate a

broad debt moratorium immediately to avoid another lost decade (or two) for the Mexicos of this world.

Pierre-Olivier Gourinchas

Chang-Tai Hsieh

Pierre-Olivier Gourinchas is Professor of Economics at the University of California, Berkeley and a visiting professor at Princeton University. Chang-Tai Hsieh is Professor of Economics at the University of Chicago Booth School of Business. Copyright: Project Syndicate, 2020. www.project-syndicate.org

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Time has not dimmed the memory of our loved ones

BY DR. AISA KIRABO KACYIRA, HIGH COMMISSIONER OF RWANDA TO GHANA On the 7th of April of each year, we take time to commemorate, remember and honor the loss of our loved ones; over one million innocent lives that perished during the 1994 genocide against the Tutsi in Rwanda in 100 days. As our President remarked in his statement to the nation this last Tuesday, ‘It is that time of the year when it is very difficult to express what is in our hearts and minds.’ Time has not dimmed the memory of our loved ones, it has instead given us resolve to strive more and live out the values they cherished and aspired to achieve. To this end, I would like to pay special tribute to the survivors of genocide who have given so much more to support the rebirth of a new Rwanda; choosing to forgive even under such unimaginable pain and trauma, in order to allow us all to embrace unity, reconciliation, peace and prosperity! As Our President said, on one of such events of commemoration ‘The Genocide survivors truly are our heroes!’

I would also like to pay special tribute and honor to the Rwanda Patriotic Army (the then Military wing of Rwanda Patriotic Front) which under the Command of President Paul Kagame, singlehandedly stopped the genocide as the international community looked on. To these young men and women who sacrificed their lives, to undertake an almost insurmountable task and against all odds, stopped the genocide and liberated our country; some paying the ultimate price, we shall forever honor you and be grateful! I would also like to take this opportunity to thank the Government and people of Ghana, and other partners and friends of Rwanda here in Ghana who have stood with us during this period. Being a new Resident High Commission, and given the tough times of this COVID crisis, this means a lot to us and we really appreciate it. We had earlier planned to have a more interactive event that would have allowed us to engage more through interactive discussions, walk to remember and sharing of testimonies but with the existing COVID-19 Pandemic, and the necessary measures needed to prevent its spread, we haven’t been able to.

Nevertheless, we hope to organize some interactive events once life normalizes after COVID-19. I would also like to thank the Rwandan Diaspora community and its leadership for their good collaboration and support. The main purpose of this commemoration is to remember and honor the innocent lives lost and to take time to reflect and critically analyse our history, draw lessons from it and forge a better future to ensure genocide Never happens again. Painful as it is, it is an absolute necessity not only for the reasons I just mentioned but also for the fact that we must continue to fight the lurking evil of genocide denial and revisionism, which from the very beginning is part of the genocide ideology cycle, and whose aim is to contort history, destroy the truth, and negate the evil perpetrated by the genocidaires! To this we say, Rwanda has changed for good - it shall Never happen again! We also call upon the international community to heed to the Security Council resolution 2150(2014) of 16 April 2014 (on prevention and fight against Genocide and other serious crimes under international law),

some of the main extracts of which are the following: • Underscores the importance of taking into account lessons learned from the 1994 Genocide against the Tutsi in Rwanda (...)”; • “Condemns without reservation any denial of this Genocide, and urges Member States to develop educational programs that will inculcate future generations with the lessons of the Genocide in order to help prevent future Genocides” • Welcomes efforts by Member States to investigate and prosecute those accused of this Genocide. Dear Friends, Partners and fellow Rwandans, genocide is not only a violation of Human rights, but a threat to international peace and justice. ‘Never again’ is a call to all humanity. I am honored and humbled to note that Rwanda has risen out of those ashes and heeded to that call way beyond its borders - to the global arena where its uniformed men and women today contribute a significant portion of the UN Peace keeping force. At home, from this dark and tragic history, Rwandans have made tough but lasting choices to embrace unity instead of divisionism, inclusive governance instead

of ‘winner takes it all’, teamwork, transparency and accountability- where everyone’s voice matters, and thinking-big ‘stretching our imagination to always aim for the best. All these milestones have been achieved inclusively under the inspirational and visionary leadership of our President H.E Paul Kagame. Our theme for commemoration this year is RememberReuniteRenew; As part of our commemoration, We do light a candle, as a symbol of hope, of a brighter future. The truth is, over the years, this light and hope is increasingly becoming a reality in the lives of ordinary Rwandans! The transformation is real! We also see a brighter future for our young ones, and through these reflective periods, we engage them and encourage them to take on the button of leadership always remembering where we have come, choosing to learn from and not be defined by our past, and above all upholding the unity and dignity of all Rwandans! As we continue to remember, We will strive to uphold it, With God’s help. I thank you.

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