Business24 ePaper (April 15, 2020) by Business24 Online

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WEDNESDAY APRIL 15, 2020

Energy sector debt set for sharp escalation

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No direct COVID-19 cash transfers at this stage

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INTERNATIONAL MARKET

*EXCHANGE RATE (INT. RATE)

AVERAGE PETROL & DIESEL PRICE:

31.17 1.68 1,778.20 329.50 2,288

2.6

COFFEE $/POUND:

+5.70 ($108.30)

1.4% OF GDP

COPPER USD/T OZ.

220.15

GHc 5.13*

SILVER $/TROY OUNCE:

16.39

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NEWS/EDITORIAL

Editorial: Right call, Prof Gatsi 1

Wash your hands

Business24 associates itself with the call by Prof John Gatsi for funds generated from the Work Bank, IMF, the Stabilization Fund and the COVID-19 Trust Fund to be applied judiciously to avoid delay in resuming normal economic activities postCOVID-19. His call follows the approval of a US$1billion loan by the IMF Executive Board for Ghana. The facility, which has a zero interest rate with grace period covering about 5.5years for 10-year maturity loan.

Prudent application of all the funds, Prof Gatsi notes, is required with greater transparency and accountability. The bright use of the funds will also help avoid delay in resuming normal economic activities. “We must avoid food crisis in post- coronavirus era,” he said in an article published by Business24. This loan, he notes, has displayed some important fiscal management issues that make the prudent utilization of the RCF by GoG imperative. Overall, the fiscal deficit deteriorated from -7% of GDP in 2018 to -7.5% in 2019 and is project-

ed to further decline to -9.5% in 2020 based on government data submitted to the IMF inclusive of financial and energy sector costs. The primary balance which is a critical domestic anchor for debt sustainability also deteriorated from -1.1 in 2018 to -1.8 in 2019 and expected to close the year 2020 with -4.1. The debt to GDP ratio has also deteriorated by 4.2% (59% to 63.2% from 2018 to 2019) and projected to worsen to about 69% in 2020, excluding ESLA bonds. “There will be about 6.5% reduction in GDP per capita for Ghanaians between 2019 and 2020. This

compromises the share of Ghanaians in the national cake. While the expectation for recession is a possibility for fragile economies in Sub-Saharan Africa, if the Coronavirus pandemic is contained early enough, Ghana may not slip into a recession but will experience sharp reduction in economic growth from 6.1% in 2019 to 1.5% in 2020.” This stark reality ought to move duty bearers to act in the best interest of the country.

Critical lifeline as IMF approves emergency loan Cover your cough 3

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to Ghana’s facility. The IMF, which is forecasting that Ghana’s economy would grow by as low as 1.5 percent this year, believes the emergency credit—which comes at a zero interest rate, with a five-and-a-halfyear grace period and 10year maturity—will help address the urgent fiscal and balance of payments needs the country faces. As of Monday, April 13, Ghana’s coronavirus infections stood at 566, which is a growth of 28,200 percent since the first two cases were reported on March 12. Call for bailout

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)

According to Finance Minister Ken Ofori-Atta in a speech presented to Parliament last month, the collapse in global crude oil prices and decline in economic activity caused by COVID-19 could see Ghana lose more than GH¢9.5 billion in fiscal revenues. Mr. Ofori-Atta was hopeful that the IMF’s emergency funding, in addition to other measures, would fill the yawning fiscal deficit—estimated to be 9.5 percent of GDP—created as a result of the economic turmoil brought about by the pandemic. While the Minister had told Parliament government was seeking about US$540 million from the Fund, the amount approved by the IMF’s Executive Board is nearly double what was programmed.

Relief from IMF The Fund in a release stated that its decision to vote the huge resources to the country was also to inspire confidence in the world’s second-largest cocoa producer while asking other development partners to come to Ghana’s aid. The Deputy Managing Director and Chair of the IMF’s Executive Board, Tao Zhang, described the response as “timely, targeted and proactive”, which will go a long way in increasing health and social spending to support affected households and firms. “The uncertain dynamics of the pandemic creates significant risks to the macroeconomic outlook. Ghana continues to be classified at high risk of debt distress. The authorities remain committed to policies consistent with strong growth, rapid poverty reduction, and macroeconomic stability over the medium-term,” he said. “Additional support from other development partners will be required and critical to close the remaining external financing gap and ease budget constraints.” Ghana last year concluded a four-year IMF Extended Credit Facility (ECF) programme, under which it drew more than US$910 million from the Washington-based lender to support its balance of payments issues. Unlike the ECF, the current facility is being provided without any consequential programmebased conditionality or reviews.

IMF’s Managing Director Kristalina Georgieva is hoping the Fund’s timely intervention will ease the burden the pandemic has placed on the economies of poor countries

IMF’s COVID-19 emergency funding The IMF last month revealed it was making available about US$50 billion through its rapid-disbursing emergency financing facilities for lowincome and emerging market countries in light of the COVID-19 outbreak. “We know that the disease is spreading quickly. With over one-third of our membership affected directly, this is no longer a regional issue—it is a global problem calling for a global response,” Managing Director Kristalina Georgieva said at a joint press conference with World Bank Group President David Malpass. “Under any scenario, global growth in 2020 will drop below last year’s level,” said Georgieva. In January, the IMF had projected global growth to improve to 3.3 percent this year from 2.9 percent last year. Then, in February, it revised down 2020 global growth to 3.2 percent, before subsequently saying the world economy will undergo a deep recession.

The IMF chief said she is “particularly concerned about our low-income and more vulnerable members— these countries may see financing needs rise rapidly as the economic and human cost of the virus escalates.” For low-income countries, the IMF has rapid-disbursing emergency financing of up to US$10 billion (50 percent of quota of eligible members) that can be accessed without a full-fledged IMF programme, according to Georgieva. “THE UNCERTAIN DYNAMICS OF THE PANDEMIC CREATES SIGNIFICANT RISKS TO THE MACROECONOMIC OUTLOOK. GHANA CONTINUES TO BE CLASSIFIED AT HIGH RISK OF DEBT DISTRESS. THE AUTHORITIES REMAIN COMMITTED TO POLICIES CONSISTENT WITH STRONG GROWTH, RAPID POVERTY REDUCTION, AND MACROECONOMIC STABILITY OVER THE MEDIUM-TERM,”

NEWS

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WEDNESDAY APRIL 15, 2020

Energy sector debt set for sharp escalation BY DOMINICK ANDOH

The country’s power sector debt is on the cusp of a surge following government’s decision to absorb the bills of all lifeline consumers (50kw and below) and half of the cost of power consumed by other households and industries (above 50kw) as part of measures to cushion the populace from the impact of the coronavirus pandemic. As at end-March, outstanding debts due to independent power producers and gas suppliers stood at about US$1.5 billion (GH¢8.4 billion), with the total sector debt said to be in excess of US$2 billion. With the Africa Centre for Energy Policy (ACEP) estimating the total subsidy that will result from the latest policy intervention at about GH¢3 billion, the implication, absent reimbursement of the sector for the subsidy, would be a sharp escalation of the scale of liabilities. The inability of ESLA Plc., the special purpose vehicle created to address the

Benjamin Boakye, Executive Director of ACEP, estimates that GH¢2.1 billion could be saved with proper targeting of the recent subsidy announced by President Nana Akufo-Addo to ease the pain of the COVID-19 pandemic on citizens.

sector’s precarious financial situation, to fix the problem comprehensively has prompted the government to rely on other sources to address the growing debt. Finance Minister Ken OforiAtta in February indicated that government has set aside US$1 billion of the successfully raised $3 billion Eurobond to address the challenges in the energy

sector. However, the recent electricity freebies, energy experts have warned, would erode the gains made following the US$1billion commitment. Benjamin Boakye, ACEP’s Executive Director, warned that the power sector is reeling from debt, with no end in sight for debt accumulation.

“The current outstanding debt to Independent Power Producers (IPPs) stands in excess of US$1 billion. Last week, government had to intervene to pay for unpaid gas utilised for power generation to the tune of US$100 million to avert a calamitous action by the OCTP partners to draw down World Bank guarantees for the projects. This picture is gloomy enough, without exhausting all the challenges in the power sector, for careful consideration of actions that further worsen the financial sustainability of the sector.” Subsidy must be properly targeted ACEP argues that though the COVID-19 pandemic has impacted many businesses and livelihoods, which requires direct support from the government, proper targeting is necessary to provide the right support and reduce wastage arising from supporting people who may not need the support. Mr. Boakye said government should ensure that at least everybody has the option to

enjoy electricity for the most essential purposes, with any consumption above the lifeline limit paid for by the consumer. “The burden on government for this approach will be GH¢92 million a month, significantly lower than the GH¢1 billion under the proposed policy. This generates a saving of GH₵2.1 billion which can be used for other interventions to mitigate the impact of COVID-19.” He further called on government to quickly map out large households in poorer communities who do not benefit from the lifeline tariff because they are too many on a single meter, to ensure proper targeting of the most vulnerable in society for the intervention. “The current implementation of the lifeline policy is known to be ineffective at targeting the poor in society. This means that further efforts are required to ensure that the poor can be supported in this era.”

No direct COVID-19 cash transfers at this stage BY EUGENE DAVIS

Government will not be transferring direct cash to households under the GH¢1.2 billion Coronavirus Alleviation Programme recently approved by Parliament, Business24 can confirm. Speaking in an interview with the paper, the Chairman of Parliament’s Finance Committee, Dr. Mark AssibeyYeboah, indicated that part of the resources voted will rather be used to provide food items and hot meals to vulnerable households. The Finance Minister is expected to furnish Parliament later with the details of the expenditure in a supplementary appropriation request, since the initial approval was given under emergency procedures, he said. “What we did was to determine whether a need has arisen and, if so, then we authorise expenditure. This is not a normal approval because the Constitution envisages that in such an emergency, you don’t need to go through all the motions and come to the full House. That is why the Minister will come back, having spent [the

funds], to brief the House on all the details.” He therefore described calls, principally by Minority MPs, for details of the expenditure and the beneficiaries as “premature”. The Minority had also warned against politicisation of the assistance to be provided to households. The main objective of the Coronavirus Alleviation Programme is to protect households and livelihoods;

support micro-, small- and medium-sized businesses; minimise job losses; and provide additional funding for promotion of industries to expand industrial output for domestic consumption and exports. Of the GH¢1.2 billion approved, GH¢323 million has been set aside to provide relief to health workers. This will pay for the waiver of their personal income taxes for three months, an allowance

equivalent to 50 percent of basic salary for four months, and transportation of health personnel to and from work. Provision has also been made for GH¢600 million to provide soft loans to small businesses to help them through the crisis. According to Dr. AssibeyYeboah, an extra US$50 million is expected to crystallise between now and the end of the year into the Contingency Fund, which,

if it becomes available and is requested by the Finance Minister, would be considered for approval by his Committee. Ghana’s coronavirus case count as at Monday stood at 566 with eight deaths, with parts of the country placed on lockdown since March 30 to limit the spread of the disease. The first two cases were reported on March 12.

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WEDNESDAY APRIL 15, 2020

Majority Caucus contributes GH¢100,000 to COVID-19 Fund BY EUGENE DAVIS

The Majority Caucus in Parliament has redeemed a pledge to contribute GH¢100,000 to the COVID-19 Trust Fund. The Majority Leader, Osei Kyei-Mensah-Bonsu said the cost of fighting the Coronavirus pandemic cannot be borne by the state alone. He said: “Individuals, institutions and groups would have to make contributions to support the government’s effort. The period the country is going through is a difficult one, especially for those who have been affected by the coronavirus through no fault of theirs.” “Many people are contributing their part and sending their donations to the Presidency. We hear of various groups and individuals going to communities and areas to

make donations of various items including sanitizers, face masks and others,” he stated The Majority leader cautioned that the hit the economy has taken since the coronavirus was first recorded in Ghana will take about two years to address. He expressed worry that should the pandemic continue for the next three to five months, the situation could be serious than what is being experienced presently. Parliament last week passed the COVID-19 National Trust Fund Bill, 2020 under a certificate of urgency. The Trust will receive donations for disbursement. The Bill, which the President has assented to, gives legal backing to the establishment of the Trust Fund to complement the efforts of government in the fight against the coronavirus pandemic.

First National Bank Ghana introduces #RealHelp to cushion customers First National Bank Ghana Limited has introduced a raft of relief packages to help cushion both individual and corporate customers against the economic impact of the COVID-19 pandemic. “Long before the first case of COVID-19 was detected in Ghana, many analysts had predicted that the pandemic would adversely impact Ghanaian businesses and therefore, individual incomes and the overall national economy,” says Richard Hudson, CEO of First National Bank Ghana. “We appreciate that in these tough times, we need to stand together with our customers by offering them the #RealHelp they need to make it through these tough economic times.” Under the #RealHelp initiative, First National Bank Ghana Limited is offering at least a 2% interest rate cut on loans to all existing customers from 01 April 2020 for the tenor of all Ghana-cedi denominated loan facilities. Mr. Hudson explained that all cedi denominated loans at First National Bank Ghana Limited are linked to the Ghana Reference Rate (GRR) which is published monthly on

the first Wednesday of every month. Loans to customers are quoted at the GRR plus a margin. With the recently announced drop in the MPC rate, the GRR dropped by 1.20% and the bank then slashed its margin by a further 1% across all cedi related loans, bringing the total reduction to 2.20%. Customers have also been given an option to apply for repayment holidays, where a temporary moratorium will be placed on the loan repayments for up to six months. This is expected to give customers some leeway to reorganise their finances which may be negatively affected by the economic fallout from the COVID-19 pandemic. Customers can apply for the repayment holiday on the First National Bank app or by using the quick code *877# on its cell phone banking platform. “The entire process has been digitized so there’s absolutely no paperwork and that also means response times will be faster,” Mr. Hudson says. “We believe these interventions will assist customers who have demonstrated sound banking behaviour, such as consistently honouring their

repayments to the bank before the onset of the COVID-19 pandemic,” he added. Head, Marketing and Corporate Affairs at First National Bank Ghana, Delali Dzidzienyo added that: “With these initiatives, we want to consolidate our position as the most helpful bank in Ghana. We are offering our customers a real helping hand in a very difficult time as many businesses will not perform as well as they had hoped this year; and many individuals will not earn the monthly incomes that they normally expect. The #RealHelp we are offering is not a one-size-fits-all solution but is tailored to each customer’s unique situation which ensures that we give them the necessary help they that need in this particular circumstance.”

WE APPRECIATE THAT IN THESE TOUGH TIMES, WE NEED TO STAND TOGETHER WITH OUR CUSTOMERS BY OFFERING THEM THE #REALHELP Richard Hudson says First National Bank Ghana’s relief packages are designed to help its customers heavily impacted by the COVID-19 to reorganize their finances.

Richard Hudson, CEO of First National Bank Ghana.

F E AT U R E

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US$1billion IMF Coronavirus loan disbursement to Ghana: The true picture of the economy PROF. JOHN GATSI

The announcement by the IMF Executive Board that US$1billion loan, under the Rapid Credit Facility (RCF), has been approved for Ghana is good news. However, this does not take away the fiscal, growth, debt management and international reserve realities for Ghana. The IMF as an international financial institution has provided for countries to access RCF in emergency situations, normally occasioned by developments that are beyond the strategic anticipation of countries. This could be in the form of natural disasters, health pandemic, among others, which compromises stable balance of payment and fiscal developments for economies. As classified by the IMF, the loan comes under RCF, which is why about a month after the application by the Government of Ghana (GoG), the loan disbursement has been rapidly approved so that the loan will start hitting the account of GoG in tranches timeously. This rapid disbursement does not happen because of extraordinary efforts by countries accessing the facility but the exigencies of the times. It further means even though the RCF is not a programbased facility, progress report on the utilization of the earlier disbursement should be seen to address Coronavirus related issues, balance of payments and fiscal management issues. As discussed in an earlier article, the main feature of the RCF is its “zero interest rate with grace period covering about 5.5years for 10-year maturity loan. This defines the concessionary nature of the RCF as against most of the recent market-based loans (commercial loans) with greater burdens of repayment”. It was also stated in the earlier article on the RCF that this loan does not attract program-based reviews and evaluation by the IMF, but Ghana must prove how the facility addresses underlying balance of payment issues, financial support to vulnerable families, stimulus packages to micro and small scale businesses in a manner that deals with poverty reduction and immediate health care needs at the time. This loan has displayed some important fiscal management issues that make the prudent utilization of the RCF by GoG comparable to the canonical demands of the Ten Biblical Commandments. Overall, the fiscal deficit

Prof John Gatsi wants funds generated from the Work Bank, IMF, the Stabilization Fund and the COVID-19 Trust Fund applied judiciously to avoid delay in resuming normal economic activities post-COVID-19.

deteriorated from -7% of GDP in 2018 to -7.5% in 2019 and is projected to further decline to -9.5% in 2020 based on government data submitted to the IMF inclusive of financial and energy sector costs. The primary balance which is a critical domestic anchor for debt sustainability also deteriorated from -1.1 in 2018 to -1.8 in 2019 and expected to close the year 2020 with -4.1. The debt to GDP ratio has also deteriorated by 4.2% (59% to 63.2% from 2018 to 2019) and projected to worsen to about 69% in 2020, excluding ESLA bonds. There will be about 6.5% reduction in GDP per capita for Ghanaians between 2019 and 2020. This compromises the share of Ghanaians in the national cake. While the expectation for recession is a possibility for fragile economies in Sub-Saharan Africa, if the Coronavirus pandemic is contained early enough, Ghana may not slip into a recession but will experience sharp reduction in economic

growth from 6.1% in 2019 to 1.5% in 2020. This is why judicious application of all the funds being generated from the WorkdBank, IMF, the Stabilization Fund and the COVID-19 Trust Fund is required with greater transparency and accountability. We must apply the funds to avoid delay in resuming normal economic activities. We must avoid food crisis in post- coronavirus era. In 2020, oil GDP is cut to about -2.1% with ever dwindling donor support expected to be about $514Million in 2020 against $826Million in 2019. GoG must deal with this crisis to hold the confidence of foreign investors to apply the break of investment withdrawals or dis-investing. The IMF indicated balance of payments as one of the areas that the $1Billion disbursement will address. The gross international reserve which is a protection for domestic currency performance and confidence of foreign investors is not in

good shape. On average, between 2018 and 2020 the gross international reserve covers about 2.9 months of imports in which 2.7 months of imports is expected in 2020. This means between 2018 to the first quarter of 2020 there is no record of the reserve performing better than what is presented to IMF. The net international reserve, which in practice is the critical measure, averages 2.2months of imports from 2018 to 2020 with expectation of 2.1 months of imports in 2020. While Parliament did a good job by providing fast track approval to government to borrow from the IMF, the reality is that there are recorded deterioration in the key fundamentals before the Coronavirus. Government should make good use of the flow of funds. This is important as the chances that government may bundle more areas that will create further problems is

high. The criteria for individuals and businesses to benefit from the Coronavirus Alleviation Program should be made more transparent and well targeted. A matrix of primary balance, lower revenue prospect, critically low expected growth rate, heightened expenditures and deteriorating debt to GDP ratio as well as the weak international reserve position makes 2020 and 2021 very difficult years for the Ghanaian economy. In the midst of the Ebola crisis, energy sector crisis and collapsed of crude oil prices spanning from 2013 to 2016 with the right decisions and investments of available funds, Ghana’s economy did emerge stronger. Though, one is not compelled to compare the Ebola period with Coronavirus pandemic, the two periods remain times of massive shocks that require similar determination and commitment to rewrite new financial and fiscal notes about the Ghanaian economy. Prof. John Gatsi is the Dean of the University of Cape Coast Business School

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TOURISM

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WEDNESDAY APRIL 15, 2020

Can domestic and intra-Africa tourism be the answer to the effect of COVID-19 pandemic? BY PHILIP GEBU

Since the Coronavirus Pandemic, I have been following discussions on radio and television regarding the effect of the pandemic on the tourism industry both domestically and internationally. Many have called for domestic tourism whiles others have called for intra-Africa tourism as the solution to the impact of covid-19 on the industry especially in Ghana. It astonishes me that this call is now seriously being considered when all this while we should have taken domestic tourism more seriously and put measures in place to ensuring its success. A survey of senior executives in the travel and tourism industry conducted by Oxford Economics on behalf of the WTTC provided additional insight. Nearly 86% of the respondents found that development of their local tourism industry had led to an increase in local job creation through increased foreign direct investments. I wrote an article (Tourism Club, the answer to domestic tourism in Ghana) some time back providing a blue print of what we needed to do as a country in the promotion of domestic tourism and that includes the establishment of tourism clubs in schools, churches, companies, communities etc. The more domestic tours are undertaken in Ghana, the more economic activities are generated, and the more local businesses make money, the more local people are employed, the more jobs are created, the more local Ghanaian owned business are stronger and new businesses are set up and the more taxes government receives and the more funds are available to government to undertake and improve infrastructure developments among others across the country. The survey again revealed that more than 80% of senior executives in the industry confirmed that local businesses outside of tourism have benefited indirectly from tourism development. Industries that benefit indirectly include agriculture, businesses services, construction, and real estate. It therefore means that, the effect of the

coronavirus on the tourism industry will extend to other industries. I have taken that campaign i.e. (establishing tourism clubs) to the first and second cycles schools by seeking to establish tourism clubs but up until now, I have not received the required support I need from the Ghana Education Service to ensure its success. I must emphasis that the Ghana Tourism Authority has given us all the support we need and are eager to see domestic tourism thrive in this country. Some radio stations have also taken it upon themselves to ensure that they also promote domestic tourism by organizing tours around the country. Well done. One big challenge tour operators face in their bid to promote domestic and intra-Africa tourism is that, most Ghanaians who may be interested to partake in domestic tourism fall within the middle or upper class and research show that about 80% or more within this category will prefer driving to their preferred destinations by themselves and go on to make their own accommodation arrangements. The tour operators profits will come by making these booking transportation and accommodation on behalf of their clients when organizing tours. Therefore, if these two components are being handled directly by their clients, how do they make money and even talk of profit? Profits they make go a long way to ensure they remain in business. For the lower class, it becomes even more difficult to partake in domestic tourism because they may see tourism as a luxury they cannot afford when their basic needs are not being met. Studies shown that most people use their disposable and discretionary income for tourism activities which the poor lack. According to the World Bank, as at 2016 Ghana’s poverty rate stood at 56.9 %. Organisation of excursions and tours for schools is a viable option, however one challenge here is that, the schools will want to organise the excursions themselves because they want to make profit at the expense of tour operators. To add insult to injury, they overload the buses carrying

these kids flouting road safety measures and putting the lives of these school children at risk. I have highlighted this menace in my previous articles and suggested the right procedures to be followed using the develop countries as point of reference yet it is still ongoing.

for Eastern Africa. He says “the limited movement of Africans within the African continent has meant that very few, say, East Africans have been to Central or West Africa and vice versa, and hence there is no way of knowing what opportunities are being wasted due to this lack of interaction.”

Considering the aforementioned points, it becomes difficult for tour operators to lead in the promotion of domestic tourism and just as hotels are closing down, some may also follow soon. Another big challenge tour operator face is the high cost of accommodation making Ghana a very expensive destination to promote. When it comes to festivals, those who attend these festivals make their own arrangements leaving out tour operators. It is the hotels and other forms of accommodation who then benefit. Unfortunately for them, these festivals happen only once a year. How they do leverage during the other times of the year remains a mystery.

Another challenge is the borders imposed on us by the Europeans during the colonial days which has allowed trans movement to be difficult even though on paper there are protocols to ease movements, yet on the grounds, there are different stories. This is also corroborated by Elishilia D. Kaaya, CEO of Arusha International Conference Centre.

When it comes to intraAfrica tourism, there are also many challenges identified. Some of them include the fact that a large number of the African population also live in poverty and poverty is a stumbling bock to travelling. Money is identified as a facilitator in tourism meaning without money it becomes difficult to travel, pay for accommodation and entrance fees at tourist attractions, eat in supposedly expensive restaurants, and purchasing of souvenirs. Another big challenge is the fact that those who can afford to travel around will prefer travelling to destinations like Dubai for their holidays. Such destinations seem more appealing compared to African destinations. Could it be because it’s difficult traveling around the continent at affordable prices? In some cases, to reach some destinations on the continent, travellers would have to connect in Europe before arriving at their final destinations. This was corroborated by Dr Geoffrey Manyara who works as an Economic Affairs Officer at the United Nations Economic Commission for Africa Sub-Regional Office

“The first thing we should do in Africa as a continent is to get rid of the colonial borders. Because Africa is one. We don’t need these borders that are created to control us. Many of the recent developments in Africa are a precursor of having a continent acting in Unison. Infrastructure is key. We need to connect all of Africa by reliable roads. Then we need reliable connections with Airlines, and good air communication among African countries. There is a lot of negativity in the media today about Africa. It is our responsibility to clear the air and ensure Africa is seen for its fantastic beauty and resources. It is a fact that the AU has established goals to be met by 2063 on the basis of a 10year implementation targets. First and foremost, the 10year implementation plan, 2014-2023 seeks to double the tourism sector’s contribution to the continent’s GDP by 2023 from base year 2013, translating into about $338 billion. Additionally, it seeks to double intra-Africa tourism by 2023, that is, travel by African citizens around the African continent for tourism purposes. They recognize that some of the current challenges such as high cost of air transport; poor connectivity; and the unfavorable visa regime need to be addressed in achieving their goal. According to the African Development Bank’s 2017 Visa Openness Report, Africans on average were required to apply for visas before travel to 55 per cent of

other African states, unlike, their European counterparts. The European Union has the free movement of people among its fundamental freedoms and within the Schengen Area, which comprises 26 states, internal borders are a thing of the past. This has resulted in the free movement of goods and services, and, importantly, tourists. It is not by accident, therefore, that Europe now receives almost 50 per cent of global international tourist arrivals. Any person who wants too experience the real challenge in Africa should just travel from Ghana to la Cote d’Ivoire to Nigeria. The COVID-19 pandemic will worsen things. Already most countries have closed their borders in a bid to curb down the spread. Lockdowns are being implemented across the continent. I don’t see domestic tourism being the solution nor intraAfrican tourism anytime soon. The reality is that, the situations on the ground were not smooth and post COVID-19 I believe movement of people will be stricter especially at borders. Expert say we should expect at least a 12month recovery period, but I foresee a much longer period. This current situation should at least ensure things don’t remain same post COVID-19 if we hope to see light at the end of the tunnel.

Philip Gebu is a Tourism Lecturer. He is the C.E.O of FoReal Destinations Ltd, a Tourism Destinations Management and Marketing Company based in Ghana and with partners in many other countries. Please contact Philip with your comments and suggestions. Write to forealdestinations@gmail.com / info@forealdestinations.com. Visit our website at www.forealdestinations.com or call or WhatsApp +233(0)244295901/0264295901.Visit our social media sites Facebook, Twitter and Instagram: FoReal Destinations

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Suspend emerging and developing economies’ debt payments BY CARMEN M. REINHART AND KENNETH ROGOFF As the COVID-19 virus spreads globally, economic paralysis and unemployment follow in its wake. But the economic fallout of the pandemic in most emerging and developing economies is likely to be far worse than anything we have seen in China, Europe, or the United States. This is no time to expect them to meet their debt payments, either to private or official creditors. With inadequate health-care systems, limited capacity to deliver fiscal or monetary stimulus, and underdeveloped (or nonexistent) social-safety nets, the emerging and developing world is on the cusp not only of a humanitarian crisis, but also of the most serious financial crisis since at least the 1930s. Capital has been stampeding out of most of these economies over the past few weeks, and a wave of new sovereign defaults appears inevitable. We have been consistently arguing the urgent need for a temporary moratorium on all debt repayment by any but the most creditworthy developing or emerging sovereign debtors. The case for a moratorium for distressed sovereign borrowers has many similarities to that for households, small businesses, and municipalities. Underscoring the urgency is the reality that the quarantine experience is starkly different in the developing world. In the vast slums of São Paulo, Mumbai, or Manila, quarantining can mean living in one small room with ten people, with little food or water and scant or no compensation for lost wages. If history is any guide, the supply disruptions that accompany the pandemic may soon be followed by food shortages. More than 90 countries have already sought emergency funding from the International Monetary Fund’s Rapid Financing Instrument (RFI) and World Bank resources. And in much of the developing world, the worst of the pandemic is not expected until later this year. When that happens, the direct humanitarian and economic impact will come on top of the pandemic’s effects on global trade and commodity prices, which are already battering many emerging economies. The World Trade Organization expects global trade to decline by 13-32% in 2020. Oil-producing countries (and many more primary commodity producers) have been

suffering the consequences of the price war between Saudi Arabia and Russia, sparking downgrades in sovereign credit ratings. Leaders of the world’s largest economies must recognize that a return to “normal” in our globalized world is not possible so long as the pandemic continues its grim march. It is myopic for creditors, official and private, to expect debt repayments from countries where those resources would have to be diverted from the fight against COVID-19. Deepening and prolonging the global depression is a very risky proposition. At a low point in the mid-1980s, emerging and developing economies accounted for about 18% of global GDP (in US dollars); in 2020, that share is 41% (and 60% if adjusted for purchasing power). We recommend an immediate temporary moratorium on external debt repayments for all but “AAA”-rated sovereigns. By “external,” we mean

debts issued under the jurisdiction of foreign courts, typically in New York or London. Debts issued under domestic law would be dealt with by countries themselves. For this kind of debt relief to be effective, it must be encompassing, including debts owed to the multilateral lenders, such as the International Monetary Fund and the World Bank, sovereign creditors (Paris Club members and China), and private investors. Ultimately, the debt of many countries will need to be restructured; there will be no alternative to a negotiated partial default. But courts and multilateral lenders are no better able to handle debt default en masse than hospitals can handle operating at ten times capacity. A temporary moratorium may provide the necessary bridge. In the bestcase scenario, it might even prevent some defaults. The World Bank and the IMF have vast experience with countries in debt distress, and in recent years have increas-

ingly recognized that partial default is often the only realistic option, a point we stressed in much of our earlier work on external debt. It is a great tragedy that, following the 2008 global financial crisis, the eurozone failed to find a way to restructure Southern Europe’s debts beyond the Greek case – a course of action we strongly advocated at the time. Trying to enforce regular debt payments in highly irregular times can only lead to deeper and more protracted recessions than need to happen. Of course, a debt moratorium will require the US, which wields effective veto power at the IMF, to get on board. But so, too, must China. In the past two decades, more and more developing countries turned to China for loans (which are typically collateralized and carry market interest rates). Although China is now a major creditor in about 40 countries and an important one in scores more, it has so far refused to join the Paris Club (which coordinates

rescheduling of sovereign debts) and insists on pursuing its own bilateral closed-door approach. What can be done? The IMF and the World Bank have the capacity and expertise to coordinate a debt moratorium if the US and other major players conclude that a such a move is in their national interest. Private creditors will have relatively little choice but to cooperate in the short run. Many emerging and developing economies will soon stop paying their debts, anyway. The world needs to get in front of the problem.

Carmen M. Reinhart is Professor of the International Financial System at Harvard University’s Kennedy School of Government. Kenneth Rogoff, a former chief economist of the IMF, is Professor of Economics and Public Policy at Harvard University. Copyright: Project Syndicate, 2020. www.project-syndicate.org

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How the G20 should lead, again

BY: HONG NAM-KI Following a virtual summit on March 26, the G20 is now working to devise an action plan for addressing both the COVID-19 pandemic and the resulting economic crisis. While the task today is more difficult than it was after the 2008 global financial crisis, we know from past disasters that solidarity is the only solution. The COVID-19 pandemic has cast a pall over the global economy, making it impossible to anticipate even the near future. Restrictions on cross-border movements, along with national lockdowns, are rapidly reducing global production and consumption, and disrupting value chains. Growing uncertainties are creating a vicious circle, as the contraction in the real economy spills over into the financial sector, in turn reducing credit to nonfinancial firms. There are good reasons to worry that the economic shocks caused by COVID-19 could be greater and longer lasting than those caused by the 2008 global financial crisis, perhaps even the Great Depression of the 1930s. At this critical juncture, the world is turning, once more, to the G20 for leadership. Established in the wake of the 1997 Asian financial crisis – which it went on to resolve – the G20 began as a gathering of member-state

finance ministers and central bankers. It then evolved into a forum for heads of state and government during the 2008 crisis, and has since played a crucial role in the world economy by facilitating international cooperation and providing invaluable guidance in times of crisis. Faced with the unprecedented COVID-19 shock, the G20, which comprises countries accounting for some 90% of global output, needs to get busy again. Since mid-March, when South Korean President Moon Jae-in called for an emergency virtual G20 summit, which was held on March 26, governments have been rapidly marshaling a response to the crisis. During that meeting, G20 leaders committed to pursuing close coordination in four major policy areas: health, economy, trade, and international cooperation. They also vowed to take the initiative to work together as global firefighters. Now, all governments and international organizations, led by the G20’s ministerlevel consultative bodies, are working together to prepare a concrete action plan to meet national leaders’ stated commitments. To address both the pandemic and the economic fallout from it, the G20 must do three things. First, it needs to keep demonstrating a strong commitment to

policy coordination. Each and every G20 member state needs to devise nationallevel policy measures aimed at achieving the same global targets, while remaining in close contact with one another to ensure that their efforts are aligned and complementary. Solidarity, not isolation and new barriers, is the only way out of the crisis. To retain the trust of citizens and companies alike, the G20 must signal its willingness to take further action beyond current market expectations, if necessary. Second, the G20 needs to validate its commitment with a concrete, practical action plan and policies that follow through on it. Here, it is important to remember the lessons of 2008, when G20 governments agreed to ambitious economic stimulus measures, regulatory reforms, and a standstill on protectionism. These pledges led the world out of the deepest phase of the crisis. The COVID-19 pandemic confronts us with an even tougher task, because we must resolve a health crisis and an economic collapse simultaneously. To succeed, economic rescue policies and quarantine measures will need to be closely coordinated and fully incorporated into the G20’s action plan. Third, the strategy for confronting the immediate twin crisis must include

an exit strategy and a longer-term vision for the global economy. Keeping containment measures in place for an extended period of time will hurt many industries and undermine economies’ resilience. Given the difficulties of predicting a viable timeline for restoring economic activity, the G20 should start instituting strategic recovery measures now, so that they are in place when they are needed. It should also take this opportunity to formulate a framework for accommodating the pandemic-driven proliferation of “untact” transactions – a new term, currently trending in South Korea, to describe non-faceto-face encounters. While it was leading the charge for the initial emergency summit, South Korea’s government also prepared an issue paper with a comprehensive set of plans for coordination in quarantine measures, macroeconomic policies, global financial stability, and the movement of people and goods. The task now is to ensure that the global response is preemptive, prompt, and precise. South Korea’s effectiveness in combating the coronavirus has earned praise from around the world. It owes its success to a combination of transparent quarantine and treatment measures and a comprehensive

$120 billion fiscal stimulus package. Our government has since distributed its COVID-19-response manual to G20 members, other governments, and relevant international organizations. South Korea will continue to do its part, working closely with the G20 to organize an effective global response to the crisis. We must remember the adage that, “Difficulties mastered are opportunities won.” And for its part, the G20 must once again act as the world’s control tower. With the group’s continued leadership in this crisis and beyond, we can guide the global economy into a new phase of strong, sustainable, balanced, and inclusive growth.

Hong Nam-Ki is South Korea’s Deputy Prime Minister and Minister of Economy and Finance. Copyright: Project Syndicate, 2020. www.project-syndicate.org

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CalBank Celebrates World Recycling Day CalBank is committed to supporting the achievement of the Sustainable Development Goals (SDGs) and has adopted a few of the goals including SDG 7 which focuses on affordable and clean energy. This agenda requires the Bank to operate sustainable banking principles that enjoins CalBank to be sensitive to environmental and social standards in its business. In pursuit of these, the Bank strives to interweave these tenets in the daily activities of its stakeholders. As the world celebrates World Recycling Day, the Bank showcases efforts taken in making CalBank’s world a better place. CalBank’s “Greenovation” Project In September 2019, CalBank introduced the “Greenovation” Challenge where all the Bank’s staff in departments and branches nationwide were tasked with conceptualizing innovative and “Green” oriented projects that would benefit the Bank and the communities it operates in. Following six-weeks of exciting team-work and intense staff collaboration, 51 departments and branches submitted various projects for vetting and selection. Eleven projects were adjudged as top projects and CalBank’s Credit Department was selected as the ultimate winner. The winning project replaced all single-use plastic cups and bottles used within the Bank’s premises with reusable bottles and biodegradable cups. This cultural change has reduced the amount of plastic waste generated and disposed of within the Banks’ environment. Plastic waste generated by CalBank before the change was approximately 234,000 single-use plastic cups and 50,700 plastic bottles annually. EDGE The Bank was recently awarded with an International Finance Corporation (IFC) EDGE Certification after subjecting the new head-office building’s green credentials to an international, green-building assessment, verification and certification process. EDGE which is an acronym of Excellence in Design for Greater Efficiencies is an IFC innovation. The EDGE application helps to determine the most cost-effective options for designing green within a local climate context. EDGE is part of a holistic strategy to steer construction in rapidly urbanizing economies onto a more low-carbon path with a standard of 20 percent less energy use, 20 percent less water use, and 20 percent less embodied energy in materials. CalBank’s Green Head Office Building The Bank’s recently commissioned 15,200 m2 Head Office facility is the epitome of green sustainability which is now central to the Bank’s strategy. The eco-friendly, 12-storey tower features several green elements in its design. The building is powered by a 500-KW solar plant. Rainwater is harvested and re-used whilst well-water is used sustainably. LED lights and motions sensors are deployed throughout the building which is clad with a special heat-deflecting glass façade, all to reduce total energy requirements Green Financing at CalBank CalBank has allocated funds totaling USD 32.5 million for financing green projects. Qualifying projects must either be classified as Renewable Energy (RE) or Energy Efficiency (EE) projects. The facility is targeted at households, SMEs and corporate clients. Projects financed must lead to a reduction in average energy consumption, a reduction in greenhouse gases or must lead to use of renewable energy within industries, SMEs, agribusinesses, commercial services and households in Ghana. To ensure that the projects financed yield the desired “green” impact, the facility guarantees: competitive pricing compared to other products of the bank; access to funds dedicated towards green financing; and access to advisory services on green projects.

CalBank Greenovation Team

Forward Together

CalBank Credit Department

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Now is the time to show true African Solidarity: Reflections on COVID-19 BY PIERRE-OLIVIER GOURINCHAS AND CHANG-TAI HSIEH

These are unprecedented times. The pandemic of such magnitude and global scale has affected each member of this generation with countries around the world hoisting their resources to downscale the massive repercussions brought about by COVID-19. As Africa starts closing its borders and locking down communities to mitigate the risks, the Food and Agriculture Organization of the United Nations (FAO) is calling for all countries to take urgent measures to lessen the impact on food systems and all dimensions of food security and nutrition. FAO’s 2019 Africa Regional Overview of Food Security showed that there are 256 million Africans, or 20 percent of the population, who are undernourished. Of these, 239 million are in sub-Saharan Africa. According to the FAO Global Information and Early Warning System, 34 out of the 44 countries currently in need of food external assistance for food, are in Africa. These stark figures show that we were already vulnerable pre-COVID-19. Unless we take timely measures, we risk a looming food crisis. Measures do not include panic and therefore, panicking is not a method of mitigating the risks. There is enough food around for every African; we cannot replicate the mistakes during the 2007-08 food crisis, and turn this health crisis into an entirely avoidable food crisis. Another hard lesson for us to learn from was the Ebola Virus Disease outbreak in 2014-16. Quarantines and panic led to a spike in hunger and malnutrition. The suffering worsened as restrictions on movement led to labor shortages at harvest time even as other farmers were unable to bring their produce to market. The food systems and food supply chains are interlocked, and disruption in one place can have rippling effects. It is therefore paramount that prevention and risk reduction strategies should be in place. As we know, agriculture is the source of livelihoods for hundreds of millions of Africans. We need to have prompt measures to ensure that food supply chains remain functioning to mitigate the risk of large shocks that would have a considerable impact on everybody, especially on the poor and the most vulnerable.

Abebe Haile-Gabriel, Assistant Director-General and Regional Representative for Africa Food and Agriculture Organization of the United Nations (FAO)

Vulnerable groups include small-scale farmers, pastoralists, and fishers who are unable to work their land, care for the livestock, or fish. They will also have difficulty accessing markets to sell their products and/or buy with higher prices and limited purchasing power. Informal laborers on the other hand, face job and income losses in harvesting and processing. COVID-19 spares no one. By now, we have millions of children missing school, and most importantly, many unable to partake of school meals they have come to rely upon. Countries need to meet the immediate food needs of their vulnerable populations, boost their social protection programmes, keep global food trade going, ensure the domestic supply chain gears moving, and support smallholder farmers’ ability to increase food production. Another worry in the Africa region points to the existing humanitarian crises. Con-

flict-driven crises continued to be the primary cause of the high levels of severe food insecurity, while drought, floods and other shocks have also aggravated food insecurity conditions locally. In the Horn of Africa, several countries are facing the worst desert locust crisis in over 25 years. This is an unprecedented threat to food security and livelihoods, which could lead to further suffering, displacement and potential conflict. More than 20 million people are already facing severe acute food insecurity, and the locust invasion and the pandemic will drive this figure even higher. It is therefore critical that donor countries ensure continued delivery of humanitarian assistance where food insecurity is already high. This disease does not recognize borders. Movement of food and trade must remain unabated across borders in compliance with existing food safety standards.

Food supply chain disruption, including hampering the movement of agricultural and food industry workers and extending border delays for food containers, result in the spoilage of perishables and food waste loss. We must prevent the repeat of these scenarios; it is at times like this that more, not less, global and regional cooperation becomes vital. Now is the time to show solidarity, act responsibly and adhere to our shared goal of enhancing food security, food safety and nutrition and improving the general welfare of the population in Africa. We must ensure that our response to COVID-19 does not create unwarranted shortages of essential items and exacerbate hunger and malnutrition. Amidst this crisis, our FAO teams are working with countries to anticipate and mitigate the impact of the pandemic on food security and livelihoods. We continue to support the efforts to the alleviation of COVID-19’s effects on food

trade and markets. This is the time where our individual efforts must come together as regional aspirations. We have a common goal – keeping Africa food secure and healthy.

“NOW IS THE TIME TO SHOW SOLIDARITY, ACT RESPONSIBLY AND ADHERE TO OUR SHARED GOAL OF ENHANCING FOOD SECURITY, FOOD SAFETY AND NUTRITION AND IMPROVING THE GENERAL WELFARE OF THE POPULATION IN AFRICA”

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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Viral Authoritarianism BY PATRICK GASPARD God and the people are the source of all power … I have taken it, and damn it, I will keep it forever,” declared Haiti’s François “Papa Doc” Duvalier in 1963. And so he did, remaining president until his death in 1971, whereupon he was succeeded by his son, JeanClaude (“Baby Doc”), who extended the dictatorship another 15 years. This may seem like ancient history. But not to me. My family is Haitian, and though we immigrated to the United States during my childhood, we always seemed to remain within reach of the Duvaliers’ ruthless regime. I have never lost sight of the brutal lessons Haitians learned under the Duvaliers, including how they regularly used natural disasters and national crises to tighten their stranglehold on power. We must heed that lesson today. COVID-19 is a threat not just to public health, but also to human rights. Throughout history, crises like the current one have served as a convenient pretext for authoritarian regimes to normalize their tyrannical impulses. My parents witnessed this firsthand in Haiti. We are all seeing it again now. The new threat started in China, where an already authoritarian government’s initial effort to cover up the epidemic allowed it to spread globally. But China is hardly alone. In India, Prime Minister Narendra Modi’s government instituted a 21-day lockdown with only four hours’ notice, providing no time for millions of the world’s poorest people to stockpile food and water. Worse, Indian lawenforcement authorities have since been using the lockdown to increase their targeted discrimination against the country’s Muslims. Meanwhile, in Kenya and Nigeria, police and military forces have pummeled anyone who does not seem to be complying quickly enough with social-distancing protocols. In Israel, the authorities have joined around two dozen other governments in stretching privacy protections to the breaking point, by using cellphone data to track citizens’ movements. And in Hungary, Prime Minister Viktor Orbán, who has been

consolidating power for years, has pushed through a law that effectively codifies his status as an absolute dictator. The response to these violations from the world’s democracies has barely risen to the level of a whisper. But lest Americans think themselves immune from such power grabs, they should consider that, in late March, the US Department of Justice asked Congress for the power to detain American citizens (not just undocumented immigrants) indefinitely without trial. Governments that adopt such measures justify them as necessary to combat the pandemic. But history shows us that illiberal leaders rarely, if ever, allow their emergency powers to expire. To be sure, every government has a duty to respond forcefully to the unfolding publichealth calamity, and doing so might require temporary but significant restrictions on citizens’ actions. But many of the policies adopted by authoritarian leaders in recent weeks are not just anti-democratic; they are also counterproductive in fighting the pandemic. For example, far from preventing the spread of disease, suppressing press freedoms makes it far more difficult to raise awareness about how the public

should respond. Likewise, detaining civilians without trial undermines trust in government precisely when it is needed most. And canceling elections removes any incentive political leaders have to place the public’s interests first. As we take the fight to COVID-19, we also must do everything we can to protect the health of our democracies. More to the point, we must recognize that, in many ways, defending public health and defending democracy are two fronts in the same battle. Fortunately, civil-society organizations and individuals are not powerless in the face of pandemic crackdowns. After more than three decades on the front lines in defense of democracy, we at the Open Society Foundations have learned some relevant lessons. For starters, we must use every tool available to protect civil liberties. While the pandemic calls for social distancing, it does not justify police brutality and abuse of government power. The instant that political leaders start restricting free speech and the right to protest, or spurn checks on their power, the risk of a slide into authoritarianism becomes real. Governments that start to test these limits must be held accountable immediately.

The second lesson is that we must resist scapegoating. In responding to the pandemic, too many governments have sought to label COVID-19 a “Chinese” virus, setting the stage for surveillance and stigmatization of people of Chinese descent. As a Haitian-American, I witnessed such persecution firsthand during the HIV/ AIDS crisis in the 1980s, when the US Centers for Disease Control and Prevention announced that AIDS was being transmitted by “homosexuals, heroin users, hemophiliacs, and Haitians.” As a result of that unscientific, biased messaging, the US started detaining Haitian asylum seekers in a horrific Guantánamo Bay prison camp, which actually undermined efforts to prevent the spread of HIV. Finally, we must address the underlying economic and social disparities that pandemics tend to exacerbate. To see how the coronavirus has laid bare America’s profound inequities, look no further than Rikers Island, New York City’s main jail, which now has the highest infection rate on the planet. More broadly, the crisis is demonstrating once again that far too many American families lack access to health care, paid sick leave, worker protections,

personal savings, and other basic needs. Even as we fend off new attacks on democracy and civil rights, we must use this moment to recognize all the ways our societies were stripping the rights of citizens, refugees, migrants, and asylum seekers before the pandemic hit. Yes, concerns about the state of democracy is not most people’s main concern nowadays. But if safeguarding democracy is not on your own personal “to-do” list, it is safe to assume that it isn’t on anyone else’s, either. Sadly, too many of those in power will never take it upon themselves to protect our rights. We must do that for ourselves. Democracy is more than just a system of governance; it is a lens through which to view the world and one’s place in it. If we break that lens during an emergency, we may never see ourselves the same way again.

Patrick Gaspard, a former United States ambassador to South Africa, is President of the Open Society Foundations. Copyright: Project Syndicate, 2020. www.project-syndicate. org

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