Business24 Newspaper (April 24-2020) by Business24 Online

EDITION B24 | 34

FRIDAY APRIL 24, 2020

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Goldman Sachs predicts flat economy, EIU a contraction Gov’t should trim spending to navigate crisis, ranking member on finance says MORE ON PAGE 3

Finance Minister Ken Ofori-Atta has a lot to do to mitigate the impact of the virus and return the economy to a strong footing

BY NII ANNERQUAYE ABBEY

Goldman Sachs, the international investment bank, and the Economist Intelligence Unit (EIU) have delivered grim forecasts of what will become of Ghana’s economic growth as a result of the devastating COVID-19 pandemic. The two institutions, in separate

0% -1% Goldman Sachs

EIU

assessments of the impact of the pandemic on the country’s immediate economic outlook, said GDP will at best record zero growth—below government’s hope of achieving a modest growth of 1.5 percent. With the pandemic hitting hard at government’s revenues, creating a MORE ON PAGE 2

UNIPASS not working— Freight Forwarders …despite government’s assurances

Procurement expert on Covid-19: Build robust industry, enforce local buying MORE ON PAGE 3

ECONOMIC INDICATORS *EXCHANGE RATE (INT. RATE) EXCHANGE RATE (BANK RATE)

USD$1 =GH¢5.6896* USD$1 =GH¢5.52.*

*POLICY RATE

14.5%*

GHANA REFERENCE RATE

15.12%

OVERALL FISCAL DEFICIT

6.6

PROJECTED GDP GROWTH RATE

1.5%

PRIMARY BALANCE.

-1.1% OF GDP

AVERAGE PETROL & DIESEL PRICE:

MORE ON PAGE 6

GHc 5.13*

INTERNATIONAL MARKET BRENT CRUDE $/BARREL

28.08

NATURAL GAS $/MILLION BTUS

1.75

GOLD $/TROY OUNCE

1,698.80

CORN $/BUSHEL

329.50

COCOA $/METRIC TON

2,368

COFFEE $/POUND:

+5.70 ($108.30)

COPPER USD/T OZ.

220.15

SILVER $/TROY OUNCE:

16.39

| THEBUSINESS24ONLINE.NET

FRIDAY APRIL 24, 2020

NEWS/EDITORIAL

Wash your hands 2

Cover your cough 3

Editorial: COVID-19: Boosting local industrial capacity is imperative China, the giant of the global supply chain business, has closed its borders and most import-laden economies like ours are set on edge. We have not bordered to assess the impact of the disruption to the global supply chain to the importing public and its extended effect on government’s revenue fortunes. Its time to take that into consideration. As we speak, big importers including the Ghana Union of Trade Associations (GUTA) and the Food and Beverages

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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)

At least it has been able to look within to identify and empower businesses to produce some basic yet critical safety items that are needed to fight the spread of the virus such as face masks, sanitisers, gloves, scrubs etc. Coincidentally, in the absence of imported ones, the public are patronising these items. This is a good sign that with government leading the local buying agenda, we could be able to build a self sufficient economy. The pandemic offers us the opportunity to right some wrongs of the economy if we

can sustainably transition from imports to exports based nation. This is the time to embark on an aggressive import substitution drive by building local industrial capacity. In doing so, the public should be dragged along. They must be encouraged to buy and consume locally produced goods, with government leading the agenda, as has been seen with the face mask situation

Goldman Sachs predicts flat economy, EIU a contraction wider-than-expected deficit, the EIU in its latest country report said the economy is heading for a contraction this year, with a forecast real GDP decline of 1 percent.

If you are sick, wear mask

Association of Ghana (FABAG) have expressed the discomfort they find themselves in at this particular point in time. For a country that imports almost everything it consumes, the bulk of which comes from China, the loss to the pandemic could be wide and far-reaching. In all of these, one thing stands tall and its the fact that the cost associated to the business will be passed on to the end consumer as prices of goods will go up. Government’s response to the viral pandemic, especially on the supply side has been fantastic.

The UK-based business advisory firm stated that the release of about US$1.4bn from the World Bank and the International Monetary Fund to battle the effects of the coronavirus crisis will not prevent the economy from slipping into recession. “The pandemic will have a significant impact on Ghana’s economic outlook for 2020, necessitating a total rewrite of the 2020 budget. Some of the effects are already showing; financial conditions have tightened and the currency has weakened (with the cedi depreciating by some 7 percent since March, to about GH¢5.81:US$1 currently).” Government’s response to the pandemic was to announce further spending in specific areas with the hope of jumpstarting the economy postCOVID-19. The Coronavirus Alleviation Programme (CAP), among other interventions, will require additional spending of

THE PANDEMIC WILL HAVE A SIGNIFICANT IMPACT ON GHANA’S ECONOMIC OUTLOOK FOR 2020, NECESSITATING A TOTAL REWRITE OF THE 2020 BUDGET. SOME OF THE EFFECTS ARE ALREADY SHOWING; FINANCIAL CONDITIONS HAVE TIGHTENED AND THE CURRENCY HAS WEAKENED (WITH THE CEDI DEPRECIATING BY SOME 7 PERCENT SINCE MARCH, TO ABOUT GH¢5.81:US$1 CURRENTLY).

GH¢1.6bn. According to the EIU, the unplanned expenditure coupled with a revenue shortfall of about GH¢8.7 bn will see government’s fiscal deficit widen to 7.8 percent of GDP in 2020, up sharply from an estimated 5.1 percent of GDP last year. Zero growth The economic research department of Goldman Sachs, in a forecast prepared for investors, said Ghana’s economy will record zero percent growth. The gloom forecast follows

the Ghana Statistical Service’s release of GDP data on Wednesday, which showed that the economy recorded a 6.5 percent growth rate in 2019. While hailing the 2019 GDP growth as a positive performance, Goldman Sachs’ researchers said the pandemic will have adverse effects on the economy. “Today’s positive surprise [Ghana’s 2019 6.5 percent GDP growth] is overshadowed by the looming growth impact stemming from the triple shock of COVID-19, which

has dampened external demand, forced restrictions on domestic activity, and negatively impacted Ghana’s terms-of-trade, on balance. We expect growth to fall to 0 percent in 2020,” the note to investors read. 2019 GDP growth The economy’s 6.5 percent growth rate last year was below the 7 percent projection the Finance Ministry had previously announced. The below-expectations performance was caused by a decrease in the growth rate of non-oil GDP, which was down from 6.5 percent in 2018 to 5.8 percent in 2019. The slowdown in the non-oil GDP growth rate was partly attributed to a 10.4 percent growth rate in mining and quarrying activities (excluding oil and gas) in 2019, compared with 48.6 percent recorded in 2018. Also, contractions in the forestry and logging, water and sewerage, and construction sub-sectors also contributed to the slowdown in non-oil GDP growth. The growth rate recorded last year however shows a marginal improvement on the 6.3 percent recorded in 2018.

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Gov’t should trim spending to navigate crisis, ranking member on finance says BY EUGENE DAVIS

The Minority Spokesperson on Finance, Cassiel Ato Forson, has urged government to focus on rationalising expenditure by cutting down on projects that are not of priority to the state, as this will help ensure fiscal prudence after the coronavirus pandemic. According to him, government will use over 100 percent of revenue to service debt and pay wages because of the crisis, adding that government should have cut expenditure by now. He cautioned that if care is not taken, the country would end the year with debt-toGDP at 70 percent using the rebased GDP and close to 83 percent using non-rebased GDP. This would certainly trigger a credit rating downgrade, he said. Already, credit rating agency Fitch is predicting that the country’s debt-toGDP ratio would rise to about 77 percent by the close of

Ato Forson, Ranking Member of Parliament’s Finance Committee, advocates a reprogramming of government expenditure to navigate the crisis.

the year due to the massive revenue shortfall caused by the COVID-19 pandemic. For Mr. Forson, who used to be a Deputy Finance Minister under the previous NDC government, “in times of emergency, the first thing that comes to mind is to look at your budget lines and to reprioritise. You

look at things that you have no choice but to do such as paying wages and salaries, and you look at goods and services and capital expenditure, as well as other discretionary expenditures— those ones you can cut them.” This is particularly important, he added,

because revenues automatically start dwindling during an emergency, with exogenous factors like the fall in crude oil prices affecting the Annual Budget Funding Amount (ABFA), for which reason government should reprogramme expenditure. Meanwhile, the government already outlined plans at

the end of March to reduce some expenditures in response to the coronavirus economic shock, which the International Monetary Fund estimates will cause a revenue loss of GH₵8.7bn this year, equivalent to 2.2 percent of GDP. The plans, announced by Finance Minister Ken OforiAtta, identified reductions in goods and services and capital expenditures by GH₵1.2bn, as well as savings of a similar amount by deferring interest payments on some government debt. But Mr. Forson cited planned spending of close to GH₵1bn to compile a new voters’ register as something that should be reconsidered. The Member of Parliament for Ajumako-Enyan-Esiam also maintained that the size of government can be reduced by 50 percent given that the economy is under strain, stressing that such a measure will help to prune down expenditure.

Procurement expert on Covid-19: Build robust industry, enforce local buying Should the wearing of face masks become the norm, producers of such items are going to get huge demand and that will be a new avenue for job and wealth creation. That is the kind of support we should be giving to the manufacturing sector even after the pandemic,” he said.

BY EUGENE DAVIS

The impact of disruptions to global supply chains will be dire on an import-led Ghanaian economy and government must see that as a learning curve to build local production capacity along with improved local buying, Collins Sarpong Agyemang, President of the Ghana Institute of Procurement and Supply (GIPS), has said. In an exclusive interview with Business24 detailing the severity of disruptions to the supply side owing to the pandemic, he indicated that government, which is the biggest spender, must be seen as the exemplary force in procuring what is produced locally by home-

grown industries. “Because of the Covid-19 [pandemic], we have been able to look within to start the production of certain basic essential items, such as face masks, sanitisers, and other personal protective equipment, locally.

According to the procurement expert, time is ripe for the government to aggressively perk up the patronage and consumption of locally-produced goods to strengthen the capacity of home-made industries who require such support to improve on their competitiveness. “We have to support local industry and aspire to become self-sufficient so that our economy could still be on its feet should something

similar rear its head. We have the capacity to produce the various items being used by frontline workers in the fight against the pandemic, such as the gloves, syringes, ventilators and all, but usually they won’t be patronised because people prefer [the] same items that are imported from either China or UK,” Mr. Agyemang noted.

produce to feed themselves for even up to a year amid the pandemic. Should they continue like this, what then happens to import-led economies, including us [Ghana] that import about 85 percent of what is consumed locally? It is obvious that the time to prioritise local production and consumption is now,” he said to buttress his argument.

To him, the worstaffected economies by the coronavirus crisis are those that were highly dependent on supplies from China, and he wondered how they would cope as long as the Asian country kept its borders closed.

He added: “The economy is all about demand and supply, and to aid its revival amid the pandemic, procurement and supply chain professionals with the requisite know-how must be recognised, brought to the decision table, and given the right support that will help to bring their expertise to bear.”

“Have you wondered why China is delaying in opening its borders? It’s because they have the capacity to

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FRIDAY APRIL 24, 2020

Avoid measures that disrupt supply chain, impact the most vulnerable—UN agencies The World Health Organization (WHO) and World Trade Organization (WTO) have called on Governments to avoid measures that can disrupt supply chains and negatively impact the poorest and most vulnerable. They said these measures should be avoided notably in developing and least developed countries that are typically reliant on imports of medicines and medical equipment. A joint statement released by the two organisations called on its Members to continue to share information about their measures with WHO and WTO, in line with the established transparency mechanisms, which are now especially valuable in supporting a coordinated response. COVID-19 has rapidly progressed to become a global pandemic, causing unprecedented, far-reaching impact on the health, social and economic well-being

of communities around the world. It said to ensure that health technologies, including diagnostics, medicines, vaccines and other medical supplies vital to treating patients infected by COVID-19, reach those in need quickly, “we emphasize the importance of streamlining conformity checks based on regulatory cooperation and international standards.” “While we are heartened by the remarkable research efforts and the rapid mobilization of public and private resources to develop COVID-19 health technologies, we call upon governments to implement policy measures that can further facilitate their research and development, and to promote their rapid dissemination within countries and across borders so as to ensure equitable access to those technologies,” it added. The statement said such initiatives include targeted

investment, ensuring open access to clinical test results, the sharing of relevant intellectual property rights, increasing manufacturing capacity, open and transparent procurement regimes, the elimination of tariffs on relevant health technologies, and trade facilitation measures to reduce costs and delays. Global action, solidarity and international cooperation are more necessary than ever to address this health situation. The two Organisations said they were committed to responding effectively to the situation, working together with other international organizations and our respective memberships. The statement said global, coordinated action was required to deal with the extraordinary challenges the pandemic poses to people’s health as well as their livelihoods. It said protecting lives was its top priority, and these

efforts can be impeded by unnecessary disruptions to global trade and supply chains. It said governments’ trade policy decisions significantly influence both getting medical equipment and supplies to where they were urgently needed and catalyzing the supply of critical inputs for the production of medicines and health technologies to fight the pandemic. “Keeping trade in health technologies as open and predictable as possible is therefore of vital interest. This will help countries to respond to this crisis, to recover from it and to build the health systems that will foster greater resilience in the future,” it said. It said they were working together to support efforts to ensure the normal crossborder flow of vital medical supplies and other goods and services, promoting them where possible, and to resolve unnecessary

disruptions to global supply chains, in furtherance of the International Health Regulations (2005) and WTO rules. The purpose of the International Health Regulations is to prevent, protect against, control and provide a public health response to the international spread of disease in ways that are commensurate with public health risks, with a view to minimizing interference with international traffic and trade. WTO rules provide governments with the flexibilities they may need to address essential medical supply shortages and/or public health challenges. The statement said any measure taken to promote public health that restricts trade should be “targeted, proportionate, transparent and temporary”, consistent with recent calls from world leaders

Togbe Afede XIV supports meningitis, COVID-19 fight BY BENSON AFFUL

The President of the National House of Chiefs, who is also the Paramount Chief of Asogli State, Togbe Afede XIV, has donated a cash amount of GH¢ 50,000 to the Upper West Regional Hospital to support the fight against Cerebrospinal meningitis (CSM). Kuoro Richard Babini Kanton IV, President of the Upper West Regional House of Chiefs, presenting the items on behalf of Togbe Afede XIV, said recent media reports about the outbreak of CSM in the region is a concern to traditional rulers in the country. He said just as the nation is busily battling COVID-19 pandemic with all the requisite energy and resources, same must be done in the fight against CSM. Of the donated amount, GH¢ 30,000 is to be used as seed money for the establishment of a fund to support local research

towards the development of a vaccine for the treatment of CSM. He added that GHC 20,000 will go into the procurement of emergency medical supplies to support the delivery of quality and timely services to patients receiving treatment for suspected CSM cases. The Regional Director of Health Services Dr. Afreh Osei Kuffuor, who received the cash donation on behalf of the Regional Minister in a short ceremony at the Upper West Regional Hospital, thanked the President of the National House of Chiefs for the support in the fight against CSM. He noted that several calls has been sent out for philanthropies to come to the aid of the region to combat the menace. Dr. Afreh said he was happy the President of the National House of Chiefs came to the rescue of the Regional Hospital and assured that the money would be used for the intended purpose.

In a related development, Togbe Afede XIV, who is also the Board Chairman of Chamber of Independent Power Producers, Distribution and Bulk Consumers, has also donated US$200,000 to the National COVID-19 Trust Fund.

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need to act now to stop this health crisis transforming into a food crisis and the fallout from COVID-19 may push rural families even deeper into poverty, hunger and desperation, which is a real threat to global prosperity and stability.” He said with immediate action, “we can provide rural people with the tools to adapt and ensure a quicker recovery, averting an even bigger humanitarian crisis.” With their movements restricted to contain further spread of the virus, many small-scale farmers are unable to access markets to sell produce or to buy inputs, such as seeds or fertilizer. Closures of major transport routes and export bans are also likely to affect food systems adversely and as entire production chains are disrupted and unemployment rises, the most vulnerable include daily labourers, small businesses and informal workers, who are very often women and young people. The return of workers from cities affected by lockdowns will put further strain on rural households, which will

also stop receiving much needed remittances. About 80 per cent of the world’s poorest and most food insecure people live in rural areas, even before the outbreak, more than 820 million people were going hungry every day. A recent United Nations University study warned that in a worst-case scenario, the economic impact of the pandemic could push a further half-billion people into poverty. “This pandemic is threatening the gains we have made in reducing poverty over the past years. To avoid serious disruption to rural economies, it is essential to ensure agriculture, food chains, markets and trade continue to function,” Houngbo said. “A majority of the world’s most impoverished people are already suffering the consequences of climate change and conflict. An economic downturn in rural areas could compound these effects, generating more hunger and increasing instability, especially in fragile states.” The Rural Poor Stimulus

Facility will focus on the following activities: Provide inputs for production of crops, livestock and fisheries to small-scale producers so that they can weather the immediate effects of the economic crisis. The Facility would also facilitate access to markets to support small-scale farmers to sell their products in conditions where restricted movement is interrupting the functioning of markets, including providing logistics and storage support. It would provide targeted funds for rural financial services to ensure sufficient liquidity was available and to ease immediate loan repayment requirements to maintain services, markets and jobs for poor rural people. The Fund urged the use of digital services to share key information on production, weather, finance and markets. IFAD has significant experience in working in fragile situations improving the resilience of rural populations. For example, in Sierra Leone during the Ebola outbreak, IFAD-

supported banks were the sole providers of banking and financial services in affected areas. They provided timely assistance during the outbreak and supported the renewal of the rural economy after the crisis passed. Even before the COVID-19 pandemic, IFAD was already stepping up its programmes and calling on member states to increase investments in rural development to achieve Sustainable Development Goal 2, ending hunger. “A timely response to the pandemic is an opportunity to rebuild the world’s food systems along more sustainable and inclusive lines and build the resilience of rural populations to crisis, whether related to health, climate or conflict,” said Houngbo. IFAD has received requests from governments in more than 65 countries to help respond to the impact of the pandemic. It has already adapted its projects and diverted funds to support this.

UNIPASS not working—Freight Forwarders Stakeholders in the port industry say despite assurances given by the Senior Minister, Yaw OsafoMaafo that the Integrated Customs Management Systems (ICUMS) otherwise known as UNIPASS is functional, the ICUMS has fundamental challenges and ought to be suspended in the interim. Ghana’s ports are very crucial in the generation of much-need revenue for government and the current commotion that has resulted with the deployment of the ICUMS at Takoradi Port threatens to derail gains made. President of the Ghana Institute of Freight Forwarders (GIFF), Edward Akrong, speaking on Wednesday, April 23 said: “Our members cannot use the UNIPASS/ICUMS system because the system is problematic. Some importers have still not been able to clear their goods since April 9, 2020. We are losing a lot of revenue as a result of the failing system”.

Given the problems with the UNIPASS/ICUMS system, most clearing agents, he said, have gone back to use the GCNet/West Blue system. Currently, “about 80 percent of the clearance is being done through the GCNET and West Blue systems now.”

Mr. Akrong, on Wednesday, April 22 further bemoaned the situation where goods for export are seized at the borders because the exporter did no use the failing UNIPASS/ICUMS system. He cited an incident that happened recently at

the Paga border, where a customs officer prevented some goods from leaving the country because the exporter used the GCNet/ West Blue system. Mr. Akrong said the chaotic situation that UNIPASS/ ICUMS system has created at the port does not auger well

for clearing agents and the country as a whole. He, therefore, called on President Nana Addo Dankwa Akufo-Addo to intervene in the situation by halting the failing UNIPASS/ ICUMS system to save the nation and importers from losing revenue.

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FRIDAY APRIL 24, 2020

NEWS

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New IFAD fund launched to help prevent rural food crisis in wake of COVID-19 With the COVID-19 pandemic and economic slowdown threatening the lives and livelihoods of the world’s most vulnerable people, the International Fund for Agricultural Development (IFAD) has committed US$40 million to support farmers and rural communities to continue growing and selling food. The Fund also launched an urgent appeal for additional funds to support farmers. IFAD’s new multi-donor fund, the COVID-19 Rural Poor Stimulus Facility, will mitigate the effects of the pandemic on food production, market access and rural employment. As part of the broader UN socio-economic response framework, the Facility will ensure that farmers in the most vulnerable countries have timely access to inputs, information, markets and liquidity. On top of its own contribution, IFAD aims to raise at least $200million more from Member States, foundations and the private sector. Mr Gilbert F. Houngbo, President of IFAD said “We need to act now to stop this health crisis transforming into a food crisis and the fallout from COVID-19 may push rural families even deeper into poverty, hunger and desperation, which is a real threat to global prosperity and stability.” He said with immediate action, “we can provide rural people with the tools to adapt and ensure a quicker recovery, averting an even bigger humanitarian crisis.” With their movements restricted to contain further spread of the virus, many small-scale farmers are unable to access markets to sell produce or to buy inputs, such as seeds or fertilizer. Closures of major transport routes and export bans are also likely to affect food systems adversely and as entire production chains are disrupted and unemployment rises, the most vulnerable include daily labourers, small businesses and informal workers, who are very often women and young people. The return of workers from cities affected by lockdowns will put further strain on rural households, which will also stop receiving much needed remittances. About 80 per cent of the world’s poorest and most food insecure people live in rural areas, even before the

outbreak, more than 820 million people were going hungry every day. A recent United Nations University study warned that in a worst-case scenario, the economic impact of the pandemic could push a further half-billion people into poverty. “This pandemic is threatening the gains we have made in reducing poverty over the past years. To avoid serious disruption to rural economies, it is essential to ensure agriculture, food chains, markets and trade continue to function,” Houngbo said. “A majority of the world’s most impoverished people are already suffering the consequences of climate change and conflict. An economic downturn in rural areas could compound these effects, generating more hunger and increasing instability, especially in fragile states.” The Rural Poor Stimulus Facility will focus on the following activities: Provide inputs for production of crops, livestock and fisheries to small-scale producers so that they can weather the immediate effects of the economic crisis. The Facility would also facilitate access to markets to support small-scale farmers to sell their products in conditions where restricted movement is interrupting the functioning of markets, including providing logistics and storage support. It would provide targeted funds for rural financial services to ensure sufficient liquidity was available and to ease immediate loan repayment requirements to maintain services, markets and jobs for poor rural people. The Fund urged the use of digital services to share key information on production, weather, finance and markets. IFAD has significant

experience in working in fragile situations improving the resilience of rural populations. For example, in Sierra Leone during the Ebola outbreak, IFADsupported banks were the sole providers of banking and financial services in affected areas. They provided timely assistance during the outbreak and supported the renewal of the rural economy after the crisis passed. Even before the COVID-19 pandemic, IFAD was already stepping up its programmes and calling on member states to increase investments in rural development to achieve Sustainable Development Goal 2, ending hunger. “A timely response to the pandemic is an opportunity to rebuild the world’s food systems along more sustainable and inclusive lines and build the resilience of rural populations to crisis, whether related to health, climate or conflict,” said Houngbo. IFAD has received requests from governments in more than 65 countries to help respond to the impact of the pandemic. It has already adapted its projects and diverted funds to support this. With the COVID-19 pandemic and economic slowdown threatening the lives and livelihoods of the world’s most vulnerable people, the International Fund for Agricultural Development (IFAD) has committed US$40 million to support farmers and rural communities to continue growing and selling food. The Fund also launched an urgent appeal for additional funds to support farmers. IFAD’s new multi-donor fund, the COVID-19 Rural Poor Stimulus Facility, will mitigate the effects of the pandemic on food production, market access and rural employment. As part of the broader UN

socio-economic response framework, the Facility will ensure that farmers in the most vulnerable countries have timely access to inputs, information, markets and liquidity. On top of its own contribution, IFAD aims to raise at least $200million more from Member States, foundations and the private sector. Mr Gilbert F. Houngbo, President of IFAD said “We need to act now to stop this health crisis transforming into a food crisis and the fallout from COVID-19 may push rural families even deeper into poverty, hunger and desperation, which is a real threat to global prosperity and stability.” He said with immediate action, “we can provide rural people with the tools to adapt and ensure a quicker recovery, averting an even bigger humanitarian crisis.” With their movements restricted to contain further spread of the virus, many small-scale farmers are unable to access markets to sell produce or to buy inputs, such as seeds or fertilizer. Closures of major transport routes and export bans are also likely to affect food systems adversely and as entire production chains are disrupted and unemployment rises, the most vulnerable include daily labourers, small businesses and informal workers, who are very often women and young people. The return of workers from cities affected by lockdowns will put further strain on rural households, which will also stop receiving much needed remittances. About 80 per cent of the world’s poorest and most food insecure people live in rural areas, even before the outbreak, more than 820 million people were going hungry every day. A recent United Nations University study warned that in a worst-case scenario, the economic impact of the pandemic could push a further half-billion people into poverty. “This pandemic is threatening the gains we have made in reducing poverty over the past years. To avoid serious disruption to rural economies, it is essential to ensure agriculture, food chains, markets and trade continue to function,” Houngbo said. “A majority of the world’s most impoverished people are already suffering the

consequences of climate change and conflict. An economic downturn in rural areas could compound these effects, generating more hunger and increasing instability, especially in fragile states.” The Rural Poor Stimulus Facility will focus on the following activities: Provide inputs for production of crops, livestock and fisheries to small-scale producers so that they can weather the immediate effects of the economic crisis. The Facility would also facilitate access to markets to support small-scale farmers to sell their products in conditions where restricted movement is interrupting the functioning of markets, including providing logistics and storage support. It would provide targeted funds for rural financial services to ensure sufficient liquidity was available and to ease immediate loan repayment requirements to maintain services, markets and jobs for poor rural people. The Fund urged the use of digital services to share key information on production, weather, finance and markets. IFAD has significant experience in working in fragile situations improving the resilience of rural populations. For example, in Sierra Leone during the Ebola outbreak, IFADsupported banks were the sole providers of banking and financial services in affected areas. They provided timely assistance during the outbreak and supported the renewal of the rural economy after the crisis passed. Even before the COVID-19 pandemic, IFAD was already stepping up its programmes and calling on member states to increase investments in rural development to achieve Sustainable Development Goal 2, ending hunger. “A timely response to the pandemic is an opportunity to rebuild the world’s food systems along more sustainable and inclusive lines and build the resilience of rural populations to crisis, whether related to health, climate or conflict,” said Houngbo. IFAD has received requests from governments in more than 65 countries to help respond to the impact of the pandemic. It has already adapted its projects and diverted funds to support this.

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F E AT U R E

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Time for smallholder farmers to join climate change fight

BY QUAINOO REUBEN I am aware that the National Climate Change Policy has been prepared with the active involvement and assistance of a wide range of stakeholders who have contributed immensely in ensuring the finalisation of the National Climate Change Policy. The stakeholders included the staff and management of Ministry of Environment, Science, Technology and Innovation (MESTI) and the Environmental Protection Agency in particular, as well as other related public sector ministries, departments and agencies, civil society organizations and non-governmental organizations, the National House of Chiefs, the private sector and industry, research and academic institutions, the media and press, development partners and international and inter-governmental organizations in Ghana, the Parliament of Ghana and in particular the Parliamentary Select Committees on Environment, Science and Technology and on Lands and Forestry and the National Climate Change Committee (NCCC), under whose mandate the Policy was drafted. Ghana has demonstrated

impressive economic development over the past decades, attaining the status of a middle-income country. However, future growth is still threatened by its high vulnerability to climate change as reflected in increasing temperatures across the various ecological zones where rainfall patterns are also becoming less predictable and thus exacerbate poverty amongst the poorest people, particularly women and children. Two days ago, I had a conversation with some farmers across the country, those in the northern regions tells me they anxiously waiting for the rains to start. We are in the middle of April and normally we should be having rains across the country especially Kumasi and Accra but that’s not the case. What has change? Will farmers be disappointed by the rains this year? smallholder farmers remember that climate change is a global challenge that requires a concerted effort by all nations and by all individuals. Africa is more vulnerable than any other region to the world’s changing weather patterns. Smallholder farmers please take note of the following; firstly, African society is very

closely coupled with the climate system; hundreds of millions of people depend on rainfall to grow their food. Secondly, the African climate system is controlled by an extremely complex mix of large-scale weather systems, many from distant parts of the planet and, in comparison with almost all other inhabited regions, is vastly understudied. It is therefore capable of all sorts of surprises. Thirdly , the degree of expected climate change is large. The two most extensive land-based end-ofcentury projected decreases in rainfall anywhere on the planet occur over Africa; one over North Africa and the other over southern Africa. Finally, the capacity for adaptation to climate change is low; poverty equates to reduced choice at the individual level. As countries particularly those on the African continent implement series of interventions to mitigate the adverse social and economic impact of the COVID19 pandemic, farmers, farmworkers and everyone else in the food supply chain should take climate change serious because it is real and Ghana is vulnerable. Suggestions to Government

for smallholder farmers in Ghana I therefore suggest government takes into consideration the following as we all help fight this global pandemic: The first point is the need to promote capacity-building for farmers and fisherfolk and build awareness on climate change issues. Also, government must show strong will in building capacity for communitylevel weather data collection, analysis and dissemination for agricultural planning. There is equally the need to document and promote appropriate indigenous knowledge and best practices. We will also have to develop climate-resilient cropping and livestock systems as well as crop varieties and livestock breeds tolerant to flooding, drought and salinity as well as promote diversified land use practices, including agroforestry, dry-land farming, urban/backyard vegetable production, to reduce risk and increase the capacity of farmers to cope with droughts and floods. Lastly, improve productivity through improved farming technologies and practices, such as the integration of trees into farming

systems, integrated nutrient management under various crops, green/organic farming, etc. Conclusion What happens to women, matters to Ghana’s economy. Women produce 70% of the nation’s subsistence crops, account for 52% of our labour force and contribute 46% of our total GDP. They tend to be responsible for household water supplies and energy for cooking, and for food security and are highly dependent on local natural resources for their livelihoods all of which makes them disproportionately vulnerable to climate change. It is a matter of social justice that we succeed. Africa will be hardest hit by climate change, but has contributed the least to causing that change. I am pleading with all farmers to adhere to all precautionary measures and stay safe, this is the time our beloved mother Ghana needs us most.

Quainoo Reuben is an Agriculturist, Project Management Professional and a Journalist with cross-platform experience working with Radio, Newspaper and Online platforms and received 2019 Outstanding Journalist in Agriculture Reporting by Ghana Chamber of Agribusiness.

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Of Fashion and Protection: The use of face masks in the corona circus BY KWESI AMPONSAHTAWIAH

Personal protective equipment a nomenclature largely used in industries has now become a household name as the world joins hands to fight the global p a n d e m i c - C OV I D - 1 9. Although the magnitude of the problem requires global effort, it is needless to say that personal and individual efforts are most required in the protection against the virus. The praise of PPE particularly face mask has been sang in various circles giving it some premium and raising its value in recent times. However, the same cannot be said of the circus characterizing its use with dire consequence for the fight against the pandemic. Is it not surprising that in Ghana, the spread of the virus is largely among people who can afford and are using the PPE? Perhaps, it is time to examine the appropriateness of the mask and its appropriate use among Ghanaians. Mask alone can give a false feeling of protection and can be a source of infection if not used correctly (WHO 2020). According to Myles Munroe “where the purpose of a thing is not known abuse is inevitable”. The abuse/ misuse or inappropriate use of the face mask during this period could jeopardise efforts aimed at controlling the spread of the pandemic as the masks could serve as receptors and conduits for the spread of the virus. . Personal protective equipment (PPE) are significant part of the resources put at the disposal of individuals (mostly employees) to protect and prevent injuries, diseases and illnesses emanating from a working or living environment. Ideally, the best approach is to maintain a safe working/living environment and eliminate any potential hazards. PPE should only be relied upon as a last line of defense in environments and under circumstances where it is practically impossible to control the hazards at source. The current pandemic reflects such conditions for the use of PPE particularly the face mask as scientists continue to stage a war for a

source solution to the virus. The use of PPE generally implies working or living in a potentially hazardous environment. The global environment has become potentially hazardous putting all at risk and requiring the use of PPE by all. However, the use of PPE is meaningless unless it is intricately linked to the following: 1. Appropriate choice of equipment 2. Proper use of equipment 3. Proper maintenance/ storage of equipment 4. Adequate training for the user Therefore, it is of prime importance to ensure that the equipment chosen is both reliable and effective, it is being properly used and maintained, and the user has undergone adequate training. The aim of this article is to raise awareness on the proper use of face masks during this period of COVID-19. The innovations that have characterized the production of face masks in the wake of COVID-19 deserve commendation albeit with some caution. Are the producers of these masks following standards in the production of the PPE or merelt putting together pieces of materials with strings attached? Are the producers using appropriate materials and methods in producing the PPE? Are the activities of the producers regulated? Who certifies, the PPE before they are sent out for use? Or it is a case of emergency situations require emergency response? It is important to ensure some minimum standards if the PPE is to serve its purpose

of injury and disease prevention and not another addition to fashion. Mask alone can give a false sense of protection and can be a source of infection if not used correctly(WHO, 2020). Indeed, the inappropriateness of the materials used in the production of the masks is largely affecting its proper usage as many patrons find it discomforting and have to let it off occasionally to catch some breath and also to engage in “proper” conversation. At the market places, most of the masks worn are torn, with others discolored and soggy with holes in them. The masks are seen as transferrable materials with individuals passing them over to close relations after use. The cost of the masks makes it difficult for many to dispose of it after use, and yet are not properly stored for re-use. Masks cannot protect against the new corona virus when used alone. When worn, they should be combined with hand hygiene and other preventive measure (WHO, 2020). Hand care protocols are not observed before and after the use of the masks. The masks are used by all without recourse to underlying medical conditions which may be compounded by its use. The mask may appear a very simple protective equipment for use. However, the lack of training on its appropriate use and guidelines on its use amd maintenance may defeat its purpose only to render it another costume for the circus. The World Health Organisations (WHO) together with other wellmeaning agencies have provided some guidelines for the appropriate use of

appropriate masks in this period of COVID-19. Key Points on the Proper Use of PPE Proper selection First, understand the nature and degree of the potential hazards, and then select appropriate PPE that meets the relevant standards. Furthermore, the PPE (in this case mask) must properly fit the physique of the user before they can be effective. PPE must meet the demands of the environment and should be as comfortable and easy to use as possible. Correct use Understand and abide by the correct usage methods of the PPE. • Before putting on a mask, clean hands with alcohol-based hand rub or soap and water. • Examine the mask for tears or holes • Cover mouth and nose with mask and make sure there are no gaps between your face and the mask. • Avoid touching the mask while using it; if you do, clean your hands with alcoholbased hand rub or soap and water. • Replace the mask with a new one as soon as it is damp and do not reuse single-use masks. • To remove the mask: remove it from behind (do not touch the front of mask); discard immediately in a closed bin; clean hands with alcohol-based hand rub or soap and water. (WHO, 2020) Correct maintenance / storage The PPE should be properly maintained and stored if reusable. This could be done

as follows: • Inspect the mask to be sure it can be reused. Has it been compromised? Is it wet? Visibly soiled? If it is, keep in a sealed bag and dispose it off safely, then perform hand hygiene. If the mask is OK to reuse, prepare it for storage. (Next step.). • Fold the mask in half (lengthwise or widthwise), so the outside surfaces are touching each other. Place it carefully into your clean storage area/bag. Seal the bag, if you’re using a paper one; if using a plastic baggie, leave it open. Conclusion The fashion craze that has characterized the production and use of face masks though welcome as it encourages the use of face masks as a preventive measure to the spread of the virus. However, the inappropriate use of the masks only presents false hopes likely to render the innovations futile as it may rather compound the problem than than help prevent the spread. Thus, it is recommended that though in crisis period, there is the need for the appropriate state agencies particularly, the Ghana Standards Authority to ensure some minimum standards in the production of the face masks. Also, the government through the relevant agencies should step up education on the appropriate use of appropriate PPEs during this period of COVID-19. The corona circus must that has characterized the use of the face mask muxt give way to the appropriate use of same.

Kwesi Amponsah-Tawiah, PhD Associate Professor of Organisational Development Head, Department of Organisation &Human Resource Management University of Ghana Business School P.O.Box LG 78 Legon-Accra Kamponsah-tawiah@ug.edu.gh +233(0)546238672

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The trade cure for the global economy BY VICTOR K. FUNG As world leaders work to revitalize multilateralism to confront the COVID-19 crisis, they must also reshape it in a way that recognizes and reflects the many dimensions of global interdependency. This means, first and foremost, ensuring an open and sustainable global trading system. The COVID-19 pandemic has sent the world into perilous, uncharted territory from which no country will emerge unscathed. Over half of the global population is under some form of lockdown. All economies, rich and poor, are falling into recession and can limit the fallout only by working together. China – the pandemic’s first epicenter – offers insight into the need to work together. The monthslong lockdown of Hubei province, together with strict movement restrictions across the country, caused a nearly 40% drop in yearon-year industrial profits in January and February. Factories began to reopen in March, but have faced order cancellations, postponements, and payment delays, as overseas buyers struggle to cope with the pandemic’s effects. So, even as public health is recovering, the speed of China’s economic recovery will depend at least partly on the rest of the world. Given how deeply interconnected the global economy is, this will be true for every country: even as the pandemic is controlled at home, disruptions elsewhere in the world – and, potentially, additional waves of outbreaks – will impede recovery. Global supply chains tell a similar story. Even before the pandemic, supply chains were absorbing the impact of two years of trade disputes between China and the United States. Now, they are dealing with a combination of production stoppages, transportation disruptions, and plummeting global demand. The World Trade Organization estimates that global trade may fall by as much as 32% this year. Meanwhile, unemployment is skyrocketing in many economies: in the last four weeks, a record 22 million unemployment claims have been filed in the US alone. It is high time we recognized how irrevocably connected

and interdependent the world has become. No country can win on its own, despite what some may think. As the world confronts a severe recession and humanitarian catastrophe, nationalist political posturing is the last thing anyone needs. The only way to minimize the pandemic’s fallout is with solidarity: to protect their own people, national governments must collaborate to develop solutions that benefit all people. The first step is to remove protectionist tariffs and other trade barriers, thereby ensuring that critical goods – especially medical supplies and equipment, and food and other essentials – are delivered wherever they are needed. Nobody is safe until everybody is safe. Solidarity also means protecting jobs, incomes, and livelihoods everywhere. Among other things, this demands practical measures to keep small and medium-size enterprises afloat – a point that the International Chamber of Commerce (ICC) recently underscored. SMEs account for a significant share of jobs

in most major economies, and provide many of the goods and services we use daily. To ensure that a general slowdown does not cause lasting structural damage, these firms must be protected. But the imperative extends beyond propping up existing firms long enough to return to business as usual. As we chart a pathway out of the COVID-19 crisis, we should aim to create a better future, shaped not by competition, with countries weaponizing the trade and other ties that underpin shared prosperity, but by mutually beneficial cooperation. As we work to revitalize multilateralism, we must also reshape it in a way that recognizes and reflects the many dimensions of global interdependency. This means, first and foremost, ensuring open and sustainable global trade, which is a proven means of enabling all countries – large and small, rich and poor – to achieve economic growth and alleviate poverty. Trade also underpins global peace and stability, by giving everyone a stake in the same world system.

Establishing such a system requires more than removing the tariffs, administrative impediments, and “behind the border” measures that encumber the movement of basic consumer products, industrial goods, and especially technology. Countries must recognize that either we all win – with people everywhere gaining access to the tools they need to improve their quality of life, develop industries, and innovate – or we are all worse off. That means drastically improving access to trade finance, especially in the emerging economies, where there is a funding gap of over US$1trn. Insufficient trade and investment finance hits SMEs especially hard, hampering their ability to expand or innovate in good times, and to survive in bad times. That is why the ICC has called on banks to boost bridge funding to companies to mitigate the worst effects of the COVID-19 crisis, and allow companies to continue to trade through a financial shortfall. But much more needs to be done. While boosting trade finance during the

2008 global financial crisis helped to catalyze the global recovery, progress has since stalled. To ensure a sustained recovery from this crisis, and the development of a more resilient and inclusive global economy in the longer term, trade finance must occupy a permanent place on the global agenda. Reviving multilateralism and ensuring open trade are entirely achievable objectives. They require no new laws or additional resources, only commitment and solidarity. The payoff – equitable and sustainable development – would be massive. Humanitarian aid has long proved critical in times of crisis. Now, in the midst of a crisis gripping the entire world, all of us must recognize the importance of “humanitarian trade.”

Victor K. Fung is Chairman of the Fung Group and a former chair of the International Chamber of Commerce (2008-2010). Copyright: Project Syndicate, 2020. www.project-syndicate. org.

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Patents vs. the Pandemic

BY JOSEPH E. STIGLITZ, ARJUN JAYADEV, AND ACHAL PRABHALA Imagine a world in which a global network of medical professionals monitored for emerging strains of a contagious virus, periodically updated an established formula for vaccinating against it, and then made that information available to companies and countries around the world. Moreover, imagine if this work were done without any intellectual-property (IP) considerations, and without pharmaceutical monopolies exploiting a desperate public to maximize their profits. This may sound like a utopian fantasy, but it is actually a description of how the flu vaccine has been produced for the past 50 years. Through the World Health Organization’s Global Influenza Surveillance and Response System, experts from around the world convene twice a year to analyze and discuss the latest data on emerging flu strains, and to decide which strains should be included in each year’s vaccine. As a network of laboratories spanning 110 countries, funded almost entirely by governments (and partly by foundations), GISRS epitomizes what Amy Kapczynski of Yale Law School calls “open science.” Because GISRS is focused solely on protecting human lives, rather than turning a profit, it is uniquely capable of gathering, interpreting, and distributing actionable knowledge for the development of vaccines. While this approach may

have been taken for granted in the past, its advantages are quickly becoming clear. In responding to the pandemic, the global scientific community has shown a remarkable willingness to share knowledge of potential treatments, coordinate clinical trials, develop new models transparently, and publish findings immediately. In this new climate of cooperation, it is easy to forget that commercial pharmaceutical companies have for decades been privatizing and locking up the knowledge commons by extending control over life-saving drugs through unwarranted, frivolous, or secondary patents, and by lobbying against the approval and production of generics. With the arrival of COVID-19, it is now painfully obvious that such monopolization comes at the cost of human lives. Monopoly control over the technology used in testing for the virus has hampered the rapid rollout of more testing kits, just as 3M’s 441 patents mentioning “respirator” or “N95” have made it more difficult for new producers to manufacture medical-grade face masks at scale. Worse, multiple patents are in force in most of the world for three of the most promising treatments for COVID-19 – remdesivir, favipiravir, and lopinavir/ritonavir. Already, these patents are preventing competition and threatening both the affordability and the supply of new drugs. We now have a choice between two futures. In the

first scenario, we continue as usual, relying on the big pharmaceutical companies, hoping that some potential treatment for COVID-19 will make it through clinical trials, and that other technologies for detection, testing, and protection will emerge. In this future, patents will give monopoly suppliers control over most of these innovations. The suppliers will set the price high, forcing downstream rationing of care. In the absence of strong public intervention, lives will be lost, particularly in developing countries. The same problem will also apply to any potential COVID-19 vaccine. Unlike Jonas Salk’s polio vaccine, which was made freely available immediately, most vaccines that come to market today are patented. For example, PCV13, the current multistrain pneumonia vaccine administered to babies, costs hundreds of dollars because it is the monopoly property of Pfizer. And although Gavi, the Vaccine Alliance subsidizes some of the costs of the vaccine in developing countries, many people still cannot afford it. In India, more than 100,000 preventable infant deaths from pneumonia are recorded every year, while the vaccine brings in roughly $5 billion in revenue for Pfizer annually. In the second possible future, we would acknowledge that the current system – in which private monopolies profit from knowledge that is largely produced by public institutions – is not fit for purpose. As public-health

advocates and scholars have long argued, monopolies kill, by denying access to life-saving medicines that otherwise would have been available under an alternative system – like the one facilitating the yearly production of the flu vaccine. There is already some movement in favor of alternative approaches. For example, Costa Rica’s government recently called on the WHO to establish a voluntary pool of IP rights for COVID-19 treatments, which would allow multiple manufacturers to supply new drugs and diagnostics at more affordable prices. Patent pooling is not a new idea. Through the Medicines Patent Pool, the United Nations and the WHO have for years sought to increase access to treatments for HIV/AIDS, hepatitis C, and tuberculosis, and have now expanded that program to cover COVID-19. Patent pools, prize funds, and other similar ideas are part of a broader agenda to reform how life-saving drugs are developed and made available. The goal is to replace a monopoly-driven system with one based on cooperation and shared knowledge. To be sure, some will argue that the COVID-19 crisis is sui generis, or that the threat of compulsory licenses offers sufficient means for pressuring drug companies to behave well. But, beyond front-line researchers who are not motivated solely by shortterm profits, it is not clear that the big pharmaceutical companies understand

their responsibilities. After all, Gilead, the maker of remdesivir, initially reacted to the current crisis by applying for “orphan drug” status, which would have granted it a stronger monopoly position and multimillion-dollar tax breaks. (Following a public outcry, the company withdrew its application.) For too long, we have bought into the myth that today’s IP regime is necessary. The proven success of GISRS and other applications of “open science” shows that it is not. With the COVID-19 death toll rising, we should question the wisdom and morality of a system that silently condemns millions of human beings to suffering and death every year. It’s time for a new approach. Academics and policymakers have already come forward with many promising proposals for generating socially useful – rather than merely profitable – pharmaceutical innovation. There has never been a better time to start putting these ideas into practice.

Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, is the author, most recently, of People, Power, and Profits: Progressive Capitalism for an Age of Discontent. Arjun Jayadev is Professor of Economics at Azim Premji University and Senior Economist at the Institute for New Economic Thinking. Achal Prabhala is a fellow at the Shuttleworth Foundation and coordinator of the accessibsa project, which campaigns for access to medicines in India, Brazil, and South Africa. Copyright: Project Syndicate, 2020. www.project-syndicate.org

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In the midst of a global pandemic, opportunities abound for a revival: A Finance and Investment perspective. BY EBENEZER AMANKWAH-MINKAH, MONETARY AND FINANCIAL ECONOMIST

now a two-week “lockdown” of all but the most essential services by the government, the effects are only going to be exacerbated.

From a small market in Wuhan, China, the novel Corona virus, now named Covid-19 began an inexorable march around the world and is now truly a global health crisis. Half a century of globalization has brought us closer, for good or for worse. Integrated financial markets, closely knit supply chains and easily accessible air travel mean that in this age, a crisis of this nature can scarcely be contained in any one country. Even as countries have scrambled to close their borders and insulate their citizens, the fact is that no country can truly cut itself off from the rest of world without inflicting fatal damage on its economy and the very citizens it seeks to protect.

On the fiscal side, the decline in economic activity due to the precautionary measures as much as the actual infection rate will have significant impact. Government revenue in particular will be significantly affected. You can’t tax what is not produced after all. With oil prices also tumbling, our recently discovered cash cow will also not be as fruitful till at least 2021. Some analysts even believe low oil prices could persist for longer. In that event, we would have to find another way to plug the resultant gaps in our revenue. There is also likely to be a reduction in private and public investments and savings as more resources are applied to the much more urgent imperative of simply staying alive. Ironically, while depriving us of revenue, Covid-19 would require us to scale up our health services and infrastructure to cope, which would in turn require us to spend more money. We would need to hire more doctors and nurses and pay them more to account for increased risk. We would need to implement preventive measures and spend more on research to understand and deal with the virus. And were a vaccine to be found, we would need money to procure them for our citizens. Already, at the direction of the President, the Minister of Finance is looking to find one hundred million dollars that we hadn’t planned to spend when he presented his budget a few short months ago.

While the crisis is first and foremost a health crisis, there are obvious economic and financial costs. As the disease first took hold in China, financial markets noticed and panicked as if on cue. China is after all, the world’s production shop and when adjusted for purchasing power parity. Even if the disease had not spread beyond its borders, the effects of China being in the throes of it would still have been profound. With 721,902 infections 33,965 deaths around the world as at 14th March 2020. Covid-19 has had a telling effect on health systems and economies. While the economic impact in particular might take some time to decipher, there are some measures we can take now. Companies on stock exchanges around the world have lost much of their value, productivity has slowed and the forecast for growth has been adjusted downwards. Here in Ghana, our bourse is not nearly as sophisticated or integrated enough to show the dramatic effects that we have seen in other markets. And yet, the effects are unmistakable. Even before the first case was recorded, we saw a marked slowdown in economic activity, owing in no small part to reduced imports from China. After over a hundred confirmed cases, border closures and

For investors, this will be a moment of extreme caution. Naturally risk-averse, the uncertainty of this period will manifest in reduced foreign investment, which frontier economies such as ours have come to rely on. This will impact growth as well as job creation and sustenance. Disruptions in business will also likely lead to higher default rates, which in turn would lead lenders to become more restrained in extending credit. This and the greater sensitivity to changes in market conditions will combine to reduce liquidity in the system.

The greatest risk, of course, should our infection rate get out of control, would be increased mortality which would have devastating effect on human as well as economic levels. We could have a reduction in the labour force from either ill health or worse and extended losses in productivity. For an economy such as ours, vast numbers unable to participate as they seek care would have a tremendously negative effect on both the micro and macro levels. And we would also have to contend with a fall in household income which would disproportionately affect the less well-off who have no investments or financial security. The resultant increase in inequality would have social consequences that we would then have to deal with for many years. If you are in the market for a silver lining, however, you may find the reduced pressure on the Cedi due to reduced imports a little satisfying. The beneficiary here should be our local producers who should grasp the nettle, step into the void and prove themselves capable. We have seen some of this in the production of sanitizers, hand washing soap, disinfectants and pharmaceuticals. The president was right to meet the pharmaceutical industry leaders to plan and coordinate a response. It would be appropriate to extend this call to all other relevant sectors and provide high level support for them to rise to the national challenge. Conversely, there is likely to be negative demand in especially nonessential goods and services. While intervention from the government would be helpful, a lot would depend on the deftness and innovation from the firms. Smart re-allocation of resources and even of operational focus would help some weather the coming storms. In the short term, there are some things that Ghana and countries such as ours can do. We have to immediately scale up our expenditure on public health systems. We need to immediately increase the number of health personnel we have

and the facilities where they can operate. This is necessary not just for this pandemic but also critical for the long term interests of our people. Covid-19 is the wakeup call that we should not have needed but we must not let the lessons from it go unheeded. The money won’t be easy to find but we must treat this as a matter of life or death because it literally is. Our local entrepreneurs will also need help. They will need some breathers from some of their tax obligations to enable them survive. With reduced productivity and demand, insisting on these obligations could be the death knell for especially small and medium sized companies in these fragile times. Workers could also do with some reductions in their income taxes as we seek to encourage spending and demand in order to keep the economy going through the pandemic and beyond. With some gentle encouraging from government, financial institutions could also offer creditors moratoriums on loan repayments. This will help companies through the bad times so they can live to fight when this is over. Encouragingly, some local institutions are already considering this and at least one has made a firm announcement. We need more to step and hold the hands of their clients through this. Supporting them means that they will still be around when we have gotten through this and able to discharge their obligations fully, rather than spluttering to a stop and out of reach halfway through. In the long term, however, the whole global economy will need a rethink. The vulnerabilities exposed by this pandemic should

force all of us into an uncomfortable but necessary reckoning. Fast and furious globalization has brought many benefits to people all over the world, some more than others, admittedly. But perhaps it is not built to withstand a viral epidemic that lays waste to much of the systems that we rely on. We certainly do not need to shut down this system that has worked, on the whole, so well to replace it with less tested alternatives. But we do need to rethink how it works and scale up its resilience to unforeseen threats such as this. But while Davos man and woman contemplate the big picture, there are things that we can do at the local level. First and foremost, we have to boost local production. Out of this, the beginnings of vibrant local industrial sector must be seen. In particular, we need to industrialize our agriculture sector to ensure food sufficiency. This will drastically reduce our import bill and with it, the perpetual pressure on our long suffering cedi. And just as importantly, as many of us are finding out as we stock up for the two-week lockdown, when you have to close your doors, you need to have your own food. This crisis need not break us. But it must change us. We must summon and apply the can do spirit of the Ghanaian to surmount this as we have done with other national challenges in the past. We need to innovate. We need to stand together. We need to become truly self-reliant. And we need to use this moment when we are all focused on a single challenge to unite and reorient our national course to one that works for all Ghanaians of every stripe and colour. And we can.

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TOURISM

20 FRIDAY APRIL 24, 2020

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What hospitality businesses can do to prepare for COVID-19 recovery BY PHILIP GEBU

The economic effect of COVID-19 to the world economy may not be known until the Pandemic has fully be contained. However, experts like Sarathy, a professor of international business and strategy says “My gut feel is the impact on the economy is unlikely to last more than two financial reporting quarters, so we’re talking about six months, with the bulk of negative effects in the April to June quarter and the July to September quarters,” says “By then I think the impact should be dying out and business should start being able to pick up its travel.” He goes on to say that one reason people are not flying is partly fear of contagion, so lower fares may not overcome that fear. I perfectly agree with him. This is the uncertainty of this virus and until the airlines are back into full operation, the tourism industry will not pick up and the hoteliers and other tourism related businesses will be out of business. Businesses within the tourism industry are interconnected. The industry is driven by demand and supply. Thus if a tourist living in the UK decides to come to Ghana for a short holiday, he will begin by firstly shopping for the cheapest available flight then move to accommodation and other ancillary services he may need whiles in Ghana. If he or she does not get a suitable flight that meets the budget then coming to Ghana may not happen and the hotelier will not receive his cash because no business did happen. I tried to simplify this scenario for us to understand the gravity of the current situation in which we find ourselves. For now, my focus is on those offering accommodation services in Ghana. Currently, many airlines are grounded and many have laid of their staff. With the closure of some international airports, the lockdown of some countries and the ban on social gatherings, patronage of hospitality facilities, particularly hotels are in a limbo. The ILO has already reminded us that, based on different scenarios

for the impact of COVID-19 on global GDP growth, the estimates indicate a rise in global unemployment of between 5.3 million (“low” scenario) and 24.7 million (“high” scenario) from a base level of 188 million in 2019. By comparison, the 2008-9 global financial crisis increased global unemployment by 22 million. Underemployment is also expected to increase on a large scale, as the economic consequences of the virus outbreak translate into reductions in working hours and wages. Domestically, the ban on social gathering which prior to the ban generated some incomes for hotels has also been stampeded. Data available to the B&FT from 16 hotels in three regions have shown that a total sum of almost GH¢63.1million – equivalent to US$11.8 million (Bank of Ghana, March 19, 2020 midrate of 5.3480) – has been lost due to cancellation of room bookings and conferences scheduled for the months of March and April. Of the 16 hotels, one is based in Eastern Region, one in Bono Region and 14 in the Greater Accra Region. The hotel in Eastern Region has lost some GH¢1.7 million while the hotel in Bono Region lost about GH¢2.16 million after cancellations of room bookings and conferences over the two-month period. The 14 hotels, including some five-, four-, and threestar hotels based in Greater Accra lost about GH¢59.2 million as a result to the cancellations. Many of these cancellations happened after the president’s directive against mass gatherings and the announcement of travel advisory by the information minister, all in the bid to contain and prevent spread of the coronavirus in the country. We are told that Kempinski which has about 400 workers are letting 340 go home. They are closing about four floors and other hotels are laying off up to %90 of their employees. The Ghana Hotel Association has called for a bail out. Their proposal includes the following; A clear Bailout and Rescue plan (financial and practical) laid out by government for both staff and business owners

Transparency on timelines for Bailout and Rescue Plans so businesses can prepare logistically and rationally for the turbulent times ahead Utility tariffs – reduce by at least 65 percent till December 31, 2020 •

Water tariff – should be reduced by 65 percent till December 31, 2020

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Suspend the Tourism Levy of 1 percent, and use current reserves to aid in Hotel Bailouts.

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VAT – reduce the Output Rate for hotels to match the 3 percent Input Rate paid by all suppliers

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Property Rates – Reduce by 50 percent

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EPA/GHAMRO/ARSOG – Suspend these charges until further notice

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Stop banks from charging the principal & interest on loans over a period of at least six months

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SSNIT to support by paying a portion of employee’s contribution as salary over a six-month period

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Unpaid Leave for Staff members during layoffs for a minimum of threemonths per year asap – or

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Union annual salary increment requests should be suspended during said trying times

The bail out is indeed necessary, however there is indeed a need to also consider unemployment benefits. The irony of this situation is that, last year, the hospitality facilities really made a big hit out of the “Year of Return”. One question being asked is how the profits or gains were used. However, some may argue that, no one anticipated this scenario and ever believed this pandemic could be so devastating on the tourism industry. The reality is that, whatever bail out government may provide will not change the challenges they are experiencing even though it might support them in some way, however considering the longevity of the effect of the Pandemic, they need to consider the following measures suggested by Pierre Verbeke, Director Hospitality Advisory Services

at EHL Advisory Services; 1. Consider all the support possibilities that the government and other official bodies have at your disposal? In some countries, you may get a lump sum to cover a part of the costs. In others, there are measures in place for continued payment of employees, up to a degree, so that you do not immediately need to severe the relationship with your staff. 2. Talk to your bank and ask them what they can and will do? In some countries the banks are themselves supported by the government, the national bank or by supranational instances, so that they can renegotiate loan terms with small businesses. In other cases, banks have already pledged that they will not charge for debt renegotiations or for creating new mortgages and new loans. Whatever the country’s infrastructure, it will be a necessity for the interested party to start the discussion and go to the bank with a plan that includes recovery scenarios showing what has been done to limit the damage and what will be done once business returns.

In some countries today, breweries have decided that the cafés and restaurants they own should not pay rent for 1, 2 or 3 months. This is certainly something worth pursuing with your landlord. Whereas in the past a landlord may have thought of the rent in an unemotional way, knowing he could easily find new tenants, this situation is different. It affects every player in the market and, coming out of this crisis, there may not be so many candidates for rent. 4. Talk to your team, regularly updating them on what it is you are doing and how they could help. After all, their livelihood is also at stake and they suddenly face as much uncertainty as you do. They may have solutions or thoughts that could help the business. It would also be beneficial to see how, in respect of local labour laws, the worktime can be rearranged if and when business picks up again, as we all anticipate that a slow recovery will probably be the most realistic scenario.

3. Talk with suppliers and look at how you can reschedule some payments or how you can re-arrange your supply when things will pick-up again? One rather underused system is ‘vendor consignment’. I have used it in the past when managing cash-strapped properties. This allowed me to only pay the supplier once the goods have been actually sold and allowed for a different cash management, keeping more cash in the property. Although not widely known in the hospitality industry, now may be the time to start this discussion with your suppliers. I see it as a winwin situation that benefits both parties: one forking out less cash, the other being ensured of continued business. Some invoices may be worth paying in instalments, instead of in one lump sum. Insurances can be paid per month, same as with certain taxes.

By Philip Gebu

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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Spain is leading the way on perpetual bonds

BY ADAIR TURNER The European Council is holding a virtual summit on April 23 to consider how the European Union should cope with the economic fallout of the COVID-19 pandemic. Spain’s submission is by far the most thoroughly considered and innovative proposal that will be presented. It should be the first item on the meeting agenda. The main innovation that Spain will introduce is the EU’s issuance of perpetual bonds. The idea is not new. Britain first issued consolidated bonds, or Consols, in 1752, and later used them to finance the Napoleonic and Crimean Wars, the Slavery Abolition Act, the Irish Distress Loan, and World War I. The United States Congress authorized issuing Consols in 1870 to consolidate the debts accumulated in the Civil War. But perpetual bonds have never before been considered by the EU. Now Spain is proposing them as an extraordinary measure to deal with an extraordinary situation. They would be extremely effective. We are currently under attack by a largely unknown novel coronavirus, and perpetual bonds would

provide us with the financial resources we need to win that battle. We are also engaged in another battle that threatens to destroy our civilization: climate change. I propose that perpetual bonds be used to finance that battle as well. As their name implies, the principal on perpetual bonds never has to be repaid, although in different circumstances it may be appropriate to redeem them. In 2015, for example, the United Kingdom redeemed the British Consols and war bonds in full. A €1 trillion ($1.1 trillion) issue carrying a coupon of 0.5% would cost €5 billion a year to service. This would give €5 billion a two-hundredfold leverage. Even the authors of Spain’s “non-paper” may not have realized the implications; they devote a large part of their proposal on how the perpetual bonds can be serviced. But that is not a problem. EU governments could easily underwrite €5 billion to service a €1 trillion issue of perpetual bonds, either unanimously or by a coalition of the willing. There is no need to find new sources of revenue. Selling €1 trillion worth of perpetual bonds with a yield of 0.5% is not a

problem, either. The longest bond currently outstanding (Austrian 100-year bonds) yields just under 0.5%. Of course, it may take the markets some time to familiarize themselves with the idea of perpetual bonds. But the issue of perpetual bonds does not need to be sold in one go; it can be sold in tranches, and longterm investors such as life insurance companies will snatch them up. As the tranches are completed, they would sell at a premium over the Austrian bonds. There is a debate about the size of the perpetual bond issue. EU Commission President Ursula von der Leyen is seeking €1 trillion, but the Spanish non-paper proposes up to €1.5 trillion. This offers an opportunity to include the second threat to our civilization, climate change. This threat was foremost in the public’s mind, and the primary concern of the European Commission, until the novel coronavirus overshadowed everything else. But we should not forget climate change. The primary objective of issuing €1.5 trillion worth of perpetual bonds must be to combat the pandemic, but if it is brought under control, there may be some money left over to fight

climate change; if not, a separate bond issue could be considered. It should be emphasized, however, that both the pandemic and climate change are exceptional occurrences that call for exceptional policies; perpetual bonds should not be used under normal circumstances. I have two other observations. One relates to the following passage in the Spanish non-paper: “The Fund could be anchored within the umbrella of the Multiannual Financial Framework below the own resources ceiling but above the expenditure ceiling.”

seems to indicate that the first interpretation is correct. Nevertheless, greater clarity would be highly desirable. My other observation relates to Italy, where public opinion is moving toward leaving the euro and the EU. What remains of Europe without Italy? That question underscores the importance of using perpetual bonds – and should induce the European Council to move even faster than it is currently contemplating.

It is not clear whether this means that the MFF should be subordinated to the objectives of the perpetual bond issue, or the perpetual bond issue should be subordinated to the MFF. Given the difficulties of agreeing on the MFF, if the latter interpretation is correct, the perpetual bonds may be issued too late or never. The non-paper states that the “transfer of funds should be frontloaded,” beginning on January 1, 2021, “and be executed during the coming 2 to 3 years in order to jump-start the economies of affected countries.” This

George Soros, Founder and Chair of the Open Society Foundations, is the author, most recently, of In Defense of Open Society (Public Affairs, 2019). Copyright: Project Syndicate, 2020. www.project-syndicate.org.

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