Business24 Newspaper (April 6, 2020) by Business24 Online

EDITION B24 | 27

MONDAY APRIL 6, 2020

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Minority questions UNIPASS deal

Time to think about unemployment benefits in Ghana …Ofori-Atta

…says there is “no value for money” MORE ON PAGE 2

MORE ON PAGE 2

ECONOMIC INDICATORS

GRA DEPLOYS NEW SINGLE WINDOW SYSTEM AT TAKORADI PORT MORE ON PAGE 03

PARLIAMENT APPROVES GH¢6.3BN SUPPLEMENTARY ESTIMATE MORE ON PAGE 05

INTERNATIONAL MARKET

*EXCHANGE RATE (INT. RATE)

USD$1 =GH¢5.6896*

EXCHANGE RATE (BANK RATE)

USD$1 =GH¢5900.*

*POLICY RATE

14%*

GHANA REFERENCE RATE

(YET TO BE SET)

OVERALL FISCAL DEFICIT

7.8%*

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

BRENT CRUDE $/BARREL NATURAL GAS $/MILLION BTUS GOLD $/TROY OUNCE CORN $/BUSHEL COCOA $/METRIC TON

31.87 1.64 1,649 329.50 2,260

2.6

COFFEE $/POUND:

+5.70 ($108.30)

1.4% OF GDP

COPPER USD/T OZ.

220.15

GHc 5.13*

SILVER $/TROY OUNCE:

14.53

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MONDAY APRIL 6, 2020

News/Editorial 1

Wash your hands 2

Editorial: Online study for WASSCE, BECE students innovative The creation of an online study platform for final-year Senior and Junior High School students to access all the core subjects and selected electives by the Education Ministry is commendable. Following the emergence of cases of COVID-19 in Ghana in early March, President Nana AutoCAD directed the closure of all schools and universities and suspended

If you are sick, wear mask Brought to you by

The Minority in Parliament has questioned government’s decision to push through the UNIPASS deal, despite the clear breaches of the Public Procurement Act and the lack of value for money brought to its attention by various think-tanks and civil society organisations. In a press conference addressed by Yusif Sulemana, Deputy Ranking Member on the Trade, Industry and Tourism Committee of the House, the Minority said the sole-sourced contract signed between the Trade and Industry Ministry and Ghana Link/Customs UNIPASS International Agency (CUPIA) of South Korea did not follow due process and is therefore “illegal” and “void”. “None of the six conditions under which sole-sourcing is allowed was occasioned in 2017 to trigger Sections 40 and 41 of Act 663 [the Procurement Act],” Mr. Sulemana said, adding that “a contract that is illegally

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)

labs and simulations. Students will also get access to an online test after every lesson. State Broadcaster, GBC, is expected to play a key role in this endeavour. The Ghana Education Service has collaborated with the Ghana Broadcasting Corporation to launch the Ghana Learning TV channel. The channel, which is a 24-hour free-to-air channel for distance learning, will provide lessons in

Mathematics, English Language, Social Studies, and Science for all SHS students. This is a clear reminder that the public ought to pay their TV Licence fee for the state broadcaster to continue rendering such public service. Business24 commends the Education Ministry, GBC and all partners for this initiative.

Minority questions UNIPASS deal BY EUGENE DAVIS

Cover your cough

public events to help contain the spread of the virus. The West African Examinations Council (WAEC) also suspended the West African Senior School Certificate Examination (WASSCE) and the Basic Education Certificate Examination (BECE) in a move to comply with the President’s directive. However, with this innovation, students can access video lessons and lesson notes as well as visual

procured is void and so they [Ghana Link/CUPIA] enter into this contract at their own risk.” He further queried the propriety of handing over the country’s National Single Window System to Ghana Link and its South Korean partner at the expense of the existing vendors, Ghana Community Network Services Limited (GCNet) and West Blue Consulting. “As we speak, until they were brought on board in 2017— after which they suspended operations for eight good months—the existing National Single Window System [operated by GCNet & West Blue] had been running; so it is not as if there is something urgent for which we have to bring them on board. Even if we needed a new system, why are you using sole-sourcing?” He said there is no justification for government to seek to replace competent, internationally-recognised, indigenous home-grown companies and systems with foreign systems, particularly in this era of self-sufficiency and Ghana Beyond Aid. High UNIPASS contract fees The Minority further ques-

tioned why government will “replace a cheaper system that is delivering its mandate with a more expensive one that is unproven to be superior?” “The combined fees paid to GCNET and West Blue for their services is 0.54 percent of FOB (Free On Board value). With this Ghana Link/UNIPASS deal, government of Ghana has decided, for whatever reason, to pay 0.75 percent of FOB. This was after granting Ghana Link duty- and tax-free importation of their inputs (which GCNET and West Blue do not enjoy). “Our question to President Akufo-Addo is, what specific addition is Ghana Link/UNIPASS bringing on to warrant the extra 0.21 percent of FOB? Why is government providing Ghana Link with inordinately higher fees for a service that is being provided at a lower cost? Ghanaians want to know why they will be paying more for this unproven system.” Contract termination Another issue raised by the Minority is the conditions under which the UNIPASS contract can be terminated. “Our government has committed that if it had to unilat-

erally abrogate or it materially breaches the contract with Ghana Link/UNIPASS, Ghana will pay graduated fees of US$93 million to US$12 million in the first to the tenth year to the company. “The strange and worrying issue about these clauses is that Ghana is committing to pay US$93 million for terminating a contract whose total value over the 10 years is US$40 million. “What would have been logical would be to pay Ghana Link/UNIPASS the remaining value of their contract in the event of a unilateral termination of the contract by Ghana. If it is the contention of government that this is not the logical thing to do, then on what basis are they in a letter signed by Senior Minister Hon. Yaw Osafo-Maafo proposing to pay GCNET the value of the unspent term of their contract?” Meanwhile, the government, which insists on the superiority of the new system, is proceeding with its roll-out, as directives have been issued effective April 1 for its deployment at the Takoradi port.

Cedi staggers in run against dollar CONTINUED FROM PAGE 1

policy response to the COVID-19 crisis last week, warned that ongoing capital flight could dissipate the country’s reserves. “COVID-19 has also sparked off capital flight as a result of related bearish emerging market sentiments and given the high proportion (about 25%) of local bonds held by non-resident investors. We are seeing an increase in demand for dollars which could impact negatively on foreign reserves…In these apocalyptic times, we must do all we can to conserve

and preserve our foreign exchange reserves,” he stated. The crashing of crude oil prices by 50 percent from US$65.9 per barrel in December 2019 could deny the country valuable foreign exchange earnings of close to US$1 billion this year. As at end-February, the country had gross international reserves of US$10 billion, one of the highest levels in history and enough to provide 4.8 months of import cover. A source at the central bank told Business24 the bank is closely monitoring the situation. Asked whether there are plans to sell more

dollars to meet the increased demand, he responded that no such plan is currently in place. The bank’s own response to COVID-19 was to cut its policy rate by 150 basis points on March 18 to 14.5 percent – the lowest since June 2012. Since the cut, the currency has lost more than 2 percent of its value against the dollar. The central bank said it acted to stimulate lending to the real sector, given the anticipated negative effects on the economy of COVID-19motivated restrictions imposed by the government.

NEWS

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Time to think about unemployment benefits in Ghana—Ofori-Atta BY EUGENE DAVIS

Finance Minister Ken Ofori-Atta has suggested that one of the ways to deal with testing times such as the aftermath of the coronavirus pandemic lockdown is to consider unemployment benefits for citizens. Presenting a statement to Parliament on Saturday, after lawmakers had agreed to lower the cap on the Ghana Stabilisation Fund (GSF) from the current US$300m to US$100m, he said: “We still don’t have unemployment benefits in this country, and now is the time to also begin to look at what we have to do with unemployment benefits. It is going to lead to a whole recalibration of a lot of issues that go to the heart of protecting citizens in this time.” Publicly-funded unemployment benefits, which are common in rich, industrialised countries, are rare and hardly affordable by lower-income countries, which have much lower revenue-to-GDP ratios. The lack of such welfare payments contributes to why poorer countries have narrower social safety nets to help their people get through an economic crisis, such as the present one caused by the coronavirus pandemic. The bulk of Ghanaian workers are informal entrepreneurs, almost 24 percent of

whom earn below GH₵1,700 a year. For these people, their income is earned on a daily basis, such that a day without

WASSCE, BECE students to study online BY BENSON AFFUL

The Ministry of Education has created an online study platform for final-year Senior and Junior High School students to access all the core subjects and selected electives. To access the platform, students are requested to visit icampusgh.com and enter their BECE index number as their username. For SHS 3 students, they are requested to add 17 to the index number and then enter Ghana@12345 as their default password to log in. In a statement issued to Business24, the ministry said some of the benefits of the platform are that students can access video lessons and lesson notes as well as visual labs and simulations. Students will also get access to an online test after every lesson, the statement added. Additionally, the Ghana

Education Service has collaborated with the Ghana Broadcasting Corporation to launch the Ghana Learning TV channel. The channel, which is a 24hour free-to-air channel for distance learning, will provide lessons in Mathematics, English Language, Social Studies, and Science for all SHS students. Following the emergence of cases of COVID-19 in Ghana in early March, President Nana Akufo-Addo directed the closure of all schools and universities and suspended public events to help contain the spread of the virus. The West African Examinations Council (WAEC) also suspended the West African Senior School Certificate Examination (WASSCE) and the Basic Education Certificate Examination (BECE) in a move to comply with the President’s directive.

work could mean hunger in their households. “A lockdown does not enable them to get income to support

their family. We are going to have to rethink some of the laws that we have to make sure we save our people. I will

beg your indulgence for deep thought and consideration of some of these rules to make sure that we will have a future for our people,” Mr. Ofori-Atta said. While estimating that COVID-19 could cost the economy between 5 and 10 percent of GDP, he announced that the Ministry of Finance is putting together a new programme, the COVID-Care and Revitalisation of Enterprises Programme, to support SMEs and other industries. Parliament approves lower cap on GSF Meanwhile, the proposal to lower the cap on the GSF, the country’s rainy-day oil fund, from the current US$300m to US$100m has been given legislative backing. This will enable an amount of more than US$200 million to be transferred immediately into the Contingency Fund for use to finance the Coronavirus Alleviation Programme (CAP) and other policies to fight the pandemic. The CAP will set aside GH₵1 billion to help businesses and households mitigate the fallout of COVID-19. In addition, the government has extended the date for companies to pay their first-quarter taxes and has struck an arrangement with banks to increase funding and provide loan-payment relief to enterprises.

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MONDAY APRIL 6, 2020

GRA deploys new single window system at Takoradi Port BY PATRICK PAINTSIL

The Commissioner-General of the Ghana Revenue Authority (GRA), Ammishaddai Owusu-Amoah, has ordered the deployment of the Integrated Customs Management System (ICUMS), also known as the UNIPASS system, at the Takoradi Port effective April 1. Per the order, the new system will replace the existing customs management system being operated by the Ghana Community Network (GCNet) and West Blue Consulting Limited in the processing of all cargo-related documents and subsequent imposition of applicable import duties and taxes payable to the state. The Commissioner-General’s Order (CGO), a copy of which is available to Business24, is asking shipping lines to use the new system for manifest submission to start the process for valuation and billings to the shipper.

The directive, dated March 31, 2020 and signed by the head of the state tax collector, read: “All shipping lines/ agents are to submit manifest in ICUMS for vessels arriving at the Takoradi Port. All Customs Classification and Valuation Report (CCVR) acquired for bill of entry creation targeting manifests and bill of laden for vessels arriving later than 1st April, 2020 shall be re-processed in ICUMS.” For the suspense regimes, the directive instructs that for smooth transition, customs officers, working with declarants, Free Zones and bonded warehouse operators, must take inventory of outstanding stocks in the GCNet and West Blue systems for onward migration onto the new system. All subsequent ex-warehousing processes and duty-free transactions shall take place in the ICUMS, it added. The decision of the GRA to replace the existing customs

Parliament approves GH¢6.3bn Supplementary Estimate Ministry of Finance has gotten legal backing from the legislature to the withdraw sums of money from the Consolidated Fund and other Funds to meet government’s expenditure for the financial year ending on the 31 Day of December, 2019. Parliament on Friday, approved GH¢6.3billion as Supplementary Estimates for the purposes of providing additional financing to carry out government operations for the 2019 financial year. According to the Finance Committee report on the Supplementary Appropriation Bill, 2020 the approval shall be deemed to have come into effect on July 29, 2019. The object of the Bill is to provide for the withdrawal of sums of money from the Consolidated Fund and other funds supplementary appropriation to meet Government’s expenditure for the financial year ending on the 31 Day of December, 2019. The specific purposes for which the sums are appropriated have been specified in the schedules to the Bill, all of them geared towards providing additional funding for efficiently carrying out the services of the 2019 Financial Year. After the approval of the 2019 Budget by Parliament, there arose significant domestic and global developments which posed fiscal risks

to the economy. Those developments mainly related to the upward adjustment of interest payments resulting from the effect of a higher rate than the programmed exchange rate and higher net domestic borrowing in the first half of the year as well as an upward adjustment in Goods and Services in the second half of the year to meet critical security expenses and other expenses. Additionally, the crystallization of contingent liabilities of the energy sector in respect of take-or-pay contract obligations with Independent Power Producers (IPPs) increased the requirements for external amortization above the amount provided for in the Budget for the year 2019. These developments led to supplementary estimates being approved to support government operations for the year. As to how the funds approved by the House as Supplementary Estimates for 2019 had been utilized, the Committee was informed that out of the total sum approved, GH¢5,144,602,698.01 was used to make payments to Independent Power Producers (PPIs) and Related Parties. The rest of the fund were applied towards interest payments as well as an upward adjustment in Goods and Services expenditure for the 2019 financial year.

management systems with the ICUMS has been a subject of prolonged debate. Critics of the new system, previously known as UNIPASS, have cited the presumed disruptions that the new system will bring to the shipping community, especially at a time that the ports’ stakeholders were getting used to the current system run by West Blue Consulting and GCNet, coupled with the impressive gains of the paperless port reforms. Policy think-tank IMANI Af-

rica has already petitioned the ministries of trade and industry and finance as well as the presidency, warning against replacing the existing reliable customs and ports technologies with an expensive and untested ports valuation system. But according to the Customs Division of the GRA, the new system is “the best end-to-end customs management system available.” “We want to assure all stakeholders that we sink

or swim together, and therefore, in the national interest, whatever we have to do to ensure that we get the best qualitative, real value for money in any service provision, we will do it,” Commissioner of Customs Col. Kwadwo Damoah said at a media workshop on the new system. ICUMS encompasses five subordinate systems, namely: single window system, clearance management system, cargo management system, information management system, and an administrative system, officials of the GRA said at the same workshop. “The new system is expected to reduce clearance cost and time in line with the World Customs Organisation’s Trade Facilitation Agreement. It also has an integrated risk management system that profiles the data of companies and travellers so as to monitor behaviour and risk patterns,” they argued.

Ghana Baptist Convention donates to National COVID-19 Fund BY PATRICK PAINTSIL

The Ghana Baptist Convention (GBC) has made a donation of GHC 100,000 to the COVID-19 National Trust Fund in support of government’s effort to fight the coronavirus pandemic. The donation, which was from a member-church of the GBC, the Triumphant Baptist Church (TBC) of Kwadaso, Kumasi, in the Ashanti Region. The gesture was the first step of a special GBC COVID-19 Fund, which has been instituted by the Convention to receive donations from it member churches and individual members to support the national cause. Presenting the cheque, a seven-member delegation led by Reverend Enoch Nii Narh Thompson, Vice President Ministries and Rev. Washington Komla Darke, Vice President Administration of the GBC, acknowledged governments efforts aimed at containing the pandemic and assured that the Convention will continue to support government’s efforts to rid Ghana of the dreaded disease. Receiving the donation, Mrs. Akosua Frema Osei Opare, the Chief of Staff at the Office of the President, thanked the Convention and it member-church, TBC for their generosity and kindness. She entreated the Convention to encourage its members to endeavour to

Reverend Enoch Nii Narh Thompson, Vice President Ministries at the GBC presenting the cheque to Mrs Akosua Frema Opare-Osei, the Chief of Staff, looking on is Rev. Washington Komla Darke, Vice President Administration at the GBC.

observe all the appropriate protocols to curb the spread of the virus. Mrs. Osei Opare also admonished that any suspected infected persons should not fear any form of stigma but avail themselves quickly for testing and early treatment. Rev. Washington Komla Darke, entreated all member-churches and individual members of the GBC to make donations into the Convention’s COVID-19 Fund. He also stressed the need for all to observe the necessary protocols in keeping the virus at bay and emphasised the need for members to adhere strictly to the current partial locdown directives “Deliberately stay at home to deliberately stop the virus,” he implored.

Deacon Anthony Adu-Nketiah, Chairman of the Body of Deacons of TBC, on his part commended government’s efforts to contain the epidemic. He affirmed the call on all local congregations, assemblies or churches of all denominations to create local COVID-19 accounts to serve the broader purpose of the GBC in helping the fight against the pandemic. “As Christians, we should let our light shine by championing this course in the country in times like this,” he added. Other members of the delegation were Rev Kwaku Frimpong, Associate Pastor; Pastor Dennis Agyemang, Deputy Associate Pastor; Deacon James Amoateng Antwi; the Church Secretary and Deacon Benjamin Adjei, the Chairman of Finance Committee; all of the Triumphant Baptist Church.

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Restrictions taking a heavy toll on economies of Nations-WHO Dr. Tedros Adhanom Ghebreyesus, the Director-General of the World Health Organisation (WHO), has said the restrictions many countries have put in place to contain the COVID-19 pandemic are having a heavy toll on economies. Dr. Ghebreyesus in his opening remarks at the media briefing on COVID-19 on Friday, April 3, 2020 said: “We are in a shared struggle to protect both lives and livelihoods.” He said, in the short term, countries could ease the burden on their populations through social welfare programmes to ensure people have food and other life essentials. The Director-General said for some countries, debt relief was essential to enable them to take care of their people and avoid economic collapse. “This is an area of cooperation between WHO, the IMF and the World Bank,” he added. He said but ultimately, the best way for countries to end restrictions and ease their economic effects was to attack the virus, with the aggressive and comprehensive package of measures that “we have spoken about many times before: find, test, isolate and treat every case, and trace every contact.”

He said if countries rush to lift restrictions too quickly, the virus could resurge and the economic impact could be even more severe and prolonged. The Director-General said financing the health response was therefore an essential investment not just in saving lives, but in the longer-term social and economic recovery. He, therefore, called on all countries to ensure core public health measures are fully funded, including case-finding, testing, contact tracing, collecting data, and communication and information campaigns. He also urged countries and partners to strengthen the foundations of health systems, indicating that health workers must be paid their salaries, and health facilities need a reliable supply of funding to purchase essential medical supplies. “We call on all countries to remove financial barriers to care,” he added. He said several countries were suspending user fees and providing free testing and care for COVID-19, regardless of a person’s insurance, citizenship, or residence status and these measures are encouraged. Dr. Ghebreyesus said sus-

pending user fees should be supported with measures to compensate providers for the loss of revenues. He said Governments should also consider using cash transfers to the most vulnerable households to overcome barriers to access. “This may be particularly important for refugees, internally displaced persons, migrants and the homeless,” the Director-General said. Meanwhile, the pandemic was also having an effect on the fight against other diseases, like polio. He said reduce the risk of increasing transmission of COVID-19, the polio oversight board has made the hard decision to suspend house-tohouse vaccination campaigns, knowing that this may lead to an increase in polio cases. The Director-General said to reduce this risk, the WHO would support countries to maintain essential immunization for all vaccine preventable diseases. “WHO has published guidance for countries on how to maintain essential health services even while responding to this crisis,” he said. The Global Polio Eradication Initiative is working to ensure that once it is safe to do so, countries can be supported to

rapidly restart polio vaccination campaigns. He said while all energy may be focused on COVID-19 now, “our commitment to eradicating polio is unshakeable.” On the other hand, he said sadly, there were reports from some countries of an increase in domestic violence since the COVID-19 outbreak began. He said as people were asked to stay at home, the risk of intimate partner violence was likely to increase and women in abusive relationships were more likely to be exposed to violence, as were their children, as family members spend more time in close contact, and families cope with additional stress and potential economic or job losses. He, therefore, called on countries to include services for addressing domestic violence as an essential service that must continue during the COVID-19 response. He urged people experiencing or at risk of domestic violence to apeak to supportive family and friends, seek support from a hotline, or seek out local services for survivors. He called on them to make a plan to protect themselves and their children any way they could, adding that this could include having a neigh-

bour, friend, relative, or shelter identified to go to should they need to leave the house immediately. The Director-General said two months ago, WHO issued its Strategic Preparedness and Response Plan, with an initial ask of US$675 million to support the response. He announced that almost US$690 million has now been pledged or received and of this amount, US$300 million has been given to support WHO’s work, and the rest has been given on a bilateral basis, or to other organizations involved in the response. He commended the State of Kuwait, which became one of the largest donors, with a total of US$60 million. WHO’s Solidarity Response Fund has now raised more than US$127 million from more than 219,000 individuals and organizations. Dr Ghebreyesus said “we still have a long way to go in this fight. WHO is working every day with all countries and partners to save lives, and to mitigate the social and economic impact of the pandemic. More than 1 million confirmed cases of COVID-19 have now been reported to WHO, including more than 50,000 deaths..

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FEATURE

MONDAY APRIL 6, 2020

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The Future of Work Capsules:

Investing in people’s capabilities, institutions, decent and sustainable work BY BAPTISTA SARAH GEBU (MRS.) The International Labour Organisation (ILO) has called on governments to commit to a set of measures to address the challenges caused by unprecedented transformational change in the world of work Indeed, social protection from birth to old age and an entitlement to lifelong learning are among ten recommendations made in a landmark report by the ILO’s Global Commission on the Future of Work. The ILO in the report, called on governments to commit to a set of measures in order to address the challenges caused by unprecedented transformational change in the world of work. Co-chaired by South African President Cyril Ramaphosa and Swedish Prime Minister, Stefan Löfven, the Commission outlines a vision for a human-centred agenda that is based on investing in people’s capabilities, institutions of work and in decent and sustainable work. Among the ten recommendations continuing from previous articles are: • A universal labour guarantee that protects fundamental workers’ rights, an adequate living wage, limits on hours of work and safe and healthy workplaces. • Guaranteed social protection from birth to old age that supports people’s needs over the life cycle. • A universal entitlement to lifelong learning that enables people to skill, reskill and upskill. • Managing technological change to boost decent work, including an international governance system for digital labour platforms. • Greater investments in the care, green and rural economies. • A transformative and measurable agenda for gender equality. • Reshaping business incentives to encourage long-term investments. The first point is that universal labour guarantees protection of fundamental workers’ rights, an adequate living wage, limits on hours of work and safe and healthy workplaces was discussed in our pervious article. It also calls to mind the need to drive advocacy together towards having safe and healthy workplaces. I was at one of Ghana’s local shopping malls within the Greater Accra Region of Ghana before the announcement of a coronavirus hit the world and is causing the world to observe what I

termed “Silence Hour”. To my surprise, the employees of the mall had no eating place. Per our labour laws, employees are expected, depending on an employee’s contract type, to take a 30 minutes to onehour break period whiles at work. This provision places an obligation on employers to provide decent eating places for employees at work. This Covid-19 pandemic is causing the world of work to adapt at a pace never seen. In Ghana, the concept of working from home all of a sudden attracted widespread support from individuals, businesses and government. We need to be mindful of roles, rights & responsibilities of parties to a contract. The worker has rights and responsibilities. As a worker, it is your responsibility to: follow all lawful employer safety and health rules and regulations, and wear or use required protective equipment while working. The worker/employee has to report all hazardous conditions to the employer, report any job-related injury or illness to the employer, and seek treatment promptly. Let us discuss roles, rights & responsibilities. When it comes to health and safety, everyone in the workplace has distinct responsibilities. Whether you’re an owner, employer, supervisor, prime contractor, or a worker, you have a role to play in keeping the workplace safe.

As a worker, you have rights to a safe and healthy workplace, which includes the right to refuse unsafe work. Responsibilities for workplace health and safety Everyone has a role to play in workplace safety. As an owner, you are ultimately responsible for health and safety. In many cases, the owner is also in the role of employer. If you’re both the owner of the workplace and the employer, you must meet your responsibilities for both roles. Your responsibilities as an owner is to maintain the premises in a way that ensures the health and safety of people working either in offices or on site. Disclose to employers or prime contractors the full details of any potential hazards in or around the workplace so they can be eliminated or controlled. Comply with occupational health and safety requirements and orders. Whether a business is large or small, the law requires that it be a safe and healthy place to work. If you are an employer, it is your responsibility to ensure a healthy and safe workplace. Your responsibilities as an employer include establishing a valid occupational health and safety program. Train your employees to do their work safely and provide proper supervision. Provide supervisors with the necessary support and training to carry out health and safety responsibilities. Ensure ade-

quate first aid equipment, supplies, and trained attendants on site to handle injuries. Regularly inspect your workplace to make sure everything is working properly. Fix problems reported by workers. This helps to keep a functional workplace. Its interesting how most offices neglect simple issues like fixing a faulty switch unattended to for ages until a harm is caused before these issues are attended to. It appears it’s typical of us as Ghanaians to not maintain a decent functional office and by extension home or church by observation. I wish to use this opportunity to encourage all to try to learn to maintain a functional home, office and church. When we detect a faulty cable or switch let’s endeavor to fix it quickly and not wait for injuries and or accidents to occur before we act. Same applies to our government, we appeal for a functional economy. Furthermore, the employer’s responsibility includes transporting injured workers to the nearest location for medical treatment should accidents occur whiles at work. This demands the operation of the law on workman compensation insurance. In mounting our compliance advocacy, we will employ all businesses not to wait to acquire these workman compensation documents just for project bidding purposes only but implement the workman

compensation policy in its entirety. NOTE: In researching about how work would be for us all in the future, I am gathering people’s view and ideas about work for the African continent to enable us foster solution-oriented conversations across sectors and regions that will enable us build a better world of work for all based on empirical research. You too can join that conversation with the hashtag #theFutureofWorkCapsules #FoWC

Baptista Sarah Gebu (Mrs.)

Baptista is a human resource professional with a broad generalist background. Building a team of efficient & effective workforce is her business. Affecting lives is her calling! She is an HR Generalist, strategic planner, innovative, professional connector and a motivator. You can reach her via e-mail on bap.tista@outlook.com You can follow this conversation on Linked-In: Baptista Sarah Gebu and on twitter @SarahTista. Call or WhatsApp: +233(0)262213313. Follow the hashtag #theFutureofWorkCapsules #FoWC

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E N E R GY

MONDAY APRIL 6, 2020

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The OPEC meeting could send oil Prices Crashing Below US$10 The current optimism of analysts and the media that an end to the ongoing OPEC+ oil price spat is near is entirely unjustified. The ongoing oil market volatility, the battle between leading producers for market share, the logistical impossibility of enforcing U.S. production cuts, and the continued demand destruction caused by COVID-19 are not issues that can be solved by an OPEC meeting. Immediately after Trump’s latest OPEC twitter offensive, Saudi Arabia and Russia came out with critical statements about the impact and influence of the US president on the matter. While Putin and Mohammed bin Salman are reluctant to bash Trump, the real power when it comes to the oil market does not lie with the U.S. President. The tweet by Trump claiming that MBS and Putin would agree to a 10+ million bpd production cut shows not only his overestimation of his own power over the two countries, but also shows a lack of knowledge about the underlying market fundamentals and the current demand destruction worldwide. As former US president George W. Bush stated during his election campaign, which did not end well as we know, “it’s the economy stupid” that matters in the end.

Trump’s tweets and general approach to this matter suggests he and his administration are out of touch with reality. Even if a Saudi-Russian combination would cut 10 million bpd, the oil price reaction would be minimal and very short-lived. At present, leading oil market experts such as Vitol, Trafigura and Goldman Sachs are warning of a total demand destruction of 20 million bpd or more. When looking at the cuts in global refinery runs, we have already hit levels of -17 million bpd or more. Downstream companies are cutting back on all production as demand from industry and consumers worldwide collapses. Lockdowns in more than half the world are having a major impact, hurting demand for oil, gas and other kinds of energy. Cutting 10+ million bpd of production is not a real solution and it could even cause markets to react negatively. When production cuts fail to send oil prices up, the fear in the market could hit historical highs, causing oil prices to fall to levels below $10 per barrel in the coming weeks. The upcoming “OPEC+ and Friends” meeting is going to be a very tricky one. There is the very real possibility of the meeting failing as the targets that have been set are totally unclear. Saudi Arabia, probably supported by Abu Dhabi, called an emergency meeting, not only of OPEC+ members

but of all oil-producing nations. That means that, at least according to Western media, the US is invited and will likely attend. In inviting the U.S., it seems that Saudi Arabia has called Trump’s bluff because by attending the meeting Washington will be implicitly stating that a possible production cut agreement would include the US. When looking at the US upstream oil and gas sector there is one thing you can state without any analysis….Washington and US oil and gas operators are not on the same page. Suggestions of Washington being able to control or even force US oil to cut production, even via legislation, are ludicrous and would end in a mammoth legal battle. Even if only Texas representatives attend, oil companies will be unlikely to comply, it is simply not in the US oil and gas DNA to work together on an international level. Free market economics is a cornerstone of U.S. society and business. The second major threat at the Monday meeting is that Saudi Arabia not appear to be at all convinced that it needs to change its current tactics. Its targeted goals of regaining market share, forcing Russia to come to the table and bringing non-OPEC producers such as U.S. shale to their knees are working well. Several Saudi

officials have stated that they are willing to discuss a new agreement but only under the conditions that potential production cuts will be on the shoulders of all, not only Saudi Arabia, Russia, and UAE. In this light - Trump’s demand for a more than 10 million bpd cut from Russia and Saudi Arabia is unrealistic, to say the least. Russia’s position has, until now, remained unclear. While Putin is still acting as though he has nothing to worry about, Russian oligarchs and the Russian leader are happy to debate any options that are on the table. For Russia, the current position taken by Trump is being seen as an opportunity to get some gifts from the U.S. very soon. Russia might consider cooperation with the U.S. if Washington agrees to bring an end to Russian sanctions. But that is not as important to Moscow as a strong relationship with Riyadh and OPEC going forward. Future opportunities with Saudi Arabia are more attractive to Putin than a positive relationship with a President that may not be re-elected this year. While all eyes will be on Washington, Riyadh, and Moscow in the coming day, there is a fourth group that is going to be vital at Monday’s meeting. In order to reach a 10 million bpd cut, OPEC will have to convince all other oil-producing countries to contribute. At present, convincing such

a large list of independent nations to join these efforts seems unrealistic. Countries such as Libya, Iran, Iraq, Brazil, and Canada, are unlikely to agree at present to cut production. This is yet another reason that the OPEC meeting will likely fail on Monday. The real fear for markets at the moment should be sentiment and expectation. After Trump’s tweet cited a 10-15 million barrel per day cut, oil prices have soared and anything less than that will be seen as a failure. After what is looking set to be a fairly quiet weekend for energy markets, a Monday failure with plenty of media attention is likely to drive markets into a frenzy. This fear, combined with continued demand destruction could serve as a serious problem for oil markets next week. With this in mind, the rational short-term approach of OPEC+ should be, especially for Riyadh and Moscow, to not move at all. Don’t increase production, stand on the quay and watch the US shale and non-OPEC VLCCs fill oil storage to the brim. If OPEC+ cuts without the assistance of other nations it will lose future leverage and markets may crash anyway. By doing nothing, Saudi Arabia and Russia can maintain the illusion that a production cut from OPEC+ would save markets. (oilprice. com)

Uganda: Shell Gas introduces free home delivery solution Vivo Energy Uganda has announced the introduction of a free home delivery solution for Shell Gas. This is in a bid to bring services closer and offer greater convenience, safe transportation and doorstep delivery of Shell Gas to customers. The move follows restrictions put in place by the Uganda government to stem the spread of the COVID-19 pandemic. Deliveries are currently available to customers across greater Kampala and Entebbe region, with plans to rollout to reach even more areas. The free deliveries will be made daily from 8am to 4pm, seven days a week, by Shell agents using motorbikes and delivery trucks with effect from 1 April 2020. Orders can be made through either a toll free line: 0800 980 098, MTN ‒ 0771 355 418, or Airtel – 0759 043 511. These lines will be operational to serve customers from 8am to 8pm. “In a bid to bring services

closer and offer greater convenience and safe transportation of Shell Gas, we have accelerated the planned introduction of a home delivery service. We are aware that people are now at home and may experience difficulty in accessing essential services, especially as cooking needs are even greater with all members of the family at home,” said Moses Kebba, the Vivo Energy Marketing Manager. The free home delivery solution applies to both existing Shell Gas customers who require refills as well as first time purchase customers. “Our delivery service applies to both existing customers as well as those who are interested in purchasing cylinders and accessories. We are offering free installation and doorstep delivery. Our team will be on hand to help you get started by setting up the equipment and offering easy and quick usage tutorials,” Kebba added. In line with the Standard Operating Procedures stipulat-

ed by the Ministry of Health, Shell Gas deliveries have in place the necessary sanitary requirements to keep the delivery agents and consumers safe in the wake of the COVID-19 outbreak. “The team is equipped with sanitizers, gloves and face masks and have been trained to practice social distancing

during the process because the health and safety of our customers and staff is our absolute priority. In addition to the safety equipment, we have also put in place mobile payment methods and are encouraging customers to use them to eliminate handling of cash and limit contact,” Kebba said.

Payments can be made via mobile money or bank transfer. Cash will also be accepted. The company has also put in place an operational call centre team available daily to take delivery orders from customers which are then passed on to the various delivery teams stationed around the city. “The process is fast and smooth and we can assure you of quick and efficient same day delivery. I encourage customers to take advantage of the toll free line such that they do not have to incur any additional call charges in these difficult times,” Kebba concluded. Shell Gas is available and will be delivered in three sizes 6kg, 12kg and 45kg with refills going for UGX 57,000, UGX 110,000 and UGX 320,000 respectively. New purchases are priced at UGX 189,000 for the 6kg cylinder, UGX 291,000 for the 12kg metallic cylinder, UGX 622,000 for the 45kg cylinder and 341,000shs for the composite cylinder. (Vivo Energy)

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Ghana: US$20m tax waiver approved for Tamale Airport phase II project Parliament has approved a tax waiver of US$21million for the purchase of materials and equipment for the construction of the second phase of the Tamale International Airport. German-based KfW IPEX-Bank GmH, is expected to finance the phase II of the Tamale Airport project. On July 24, 2018, Parliament approved the commercial contract agreement for the design and execution of the works between the Government and QG Construction Limited, a United Kingdom (UK)-based construction firm with local presence in the sum of US$70 million for the phase two. The commercial agreement for the construction of the multi-purpose Terminal Building of approximately 5,000m2, as part of the Tamale Airport Phase II project in

the Northern Region of Ghana was signed last year and captured as part of the 2019 budget. However, the contract agreement specified that the contract price excludes taxes, duties and fees. This, therefore, meant government had to waive the taxes in order for the smooth implementation of the project. The US$20.95 million waiver request is made up of US$1. 2million on local purchases and $19,723,551 on imports of materials, equipment and vehicles to be procured for the Tamale Airport project. Besides the terminal that will accommodate passengers, there are plans to construct a cargo village and training facilities for airline technicians as well flying officers.

Kotoka Airport closure When Will Aviation Return To extended for 2 weeks Pre-Coronavirus Levels?

The Kotoka International Airport has been closed to all international passenger flights for an additional next two weeks, as government steps up efforts to stem the tide of imported COVID-19 cases. Soaring imported cases of the disease and recorded domestic infections forced the hand of Ghana’s government to close all air, land and sea borders effective midnight on Sunday, March 22 for an initial two-week period. This follows similar measures taken by countries in the West African sub-region to contain the rapid spread of the coronavirus. Togo, Benin, Nigeria, Cameroon, Ivory Coast, Burkina Faso, The Gambia, and Senegal, have all closed their land, sea and air borders to

help contain the spread of the disease. The initial two-week period, which was due to end on April 5, has now been extended by an Executive Instrument (EI 66) effective midnight April 5. “Mr President believes that these tough decisions are necessary to protect the lives of Ghanaians despite the inconvenience it causes to many.” “We continue to thank essential service providers who are at the frontlines of this covid-19 response program. We also thank the people of Ghana for their cooperation thus far. #ThisTooShallPass,” Information Minister, Kojo Oppong Nkrumah confirmed in a social media post.

The quick answer to this question is, unfortunately, not for a very long time. The recovery in demand will be long and slow. However, it will happen. The second golden age of air travel has just been and gone, and it will be a significant period of time before we see the aviation sector back at its peak. Aviation is undoubtedly one of the industries hit hardest by the outbreak of COVID-19. More than 40 major airlines have now grounded their entire fleets and many other airlines have suspended over 90% of their flights. International flights have been hit hardest, due to the widespread border and entry restrictions around the world. The overriding issue with this is that most airlines make the vast majority of their profits from international flights, with many domestic routes being loss-making if less than 75% of seats are sold. Therefore, airlines around the world have currently temporarily laid off or furloughed staff along with grounded fleets to reduce costs. However, with revenue and ticket sales being a fraction of what would be expected in a normal market, there are still other costs to consider such as maintenance, technology costs and even marketing. Airlines need to capitalise on any revenue they can get for when the aviation sector begins to reopen, and with serious concerns that

much of the lucrative summer season revenue may be lost, many airlines may struggle to survive for several years to come. Without a doubt, many airlines around the world need, and will very likely receive government support, ranging from loans to bailouts and even part-nationalisation. We have already seen the Italian flag-carrier Alitalia re-nationalised, and in countries such as France and Germany which have a clear, incumbent national airline, we can expect to see extensive government support. Some analysts are predicting and even hoping that aviation and travel will bounce back stronger than ever once travel restrictions ease. The major concern is that the economy has been so badly impacted that demand simply will not be at the level is previously was, for the foreseeable future. In addition to low demand, the uncertainty as to when international movement will be allowed again will continue to weigh on the sector, even with temporary government support.

The last golden age of air travel was between the 1970s-1980s. The likes of Pan Am and TWA glorified farflung destinations at a time when Boeing made the iconic 747 Jumbo Jet. This was a glorious time for air travel and the last 15 years has been somewhat of a second golden age of air travel. Low-cost airlines have opened up a plethora of new destinations to a market looking to travel with a lower budget, and on the other end of the spectrum, airlines have introduced opulence on aircraft such as the mammoth a380 double-decker aircraft. Private first-class suites with fully closing doors, on-board bars and showers are just a few of the extravagant facilities now offered. Although that won’t go away overnight, with an almost guaranteed period of suppressed demand due to what will be a weak consumer market through economic recovery, we can, at the very least, expect to see consolidation. Consolidation of not only some airlines, but also of routes and customer options.

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How COVID-19 is transforming manufacturing

By: Dalia Marin

As the COVID-19 pandemic escalates, the advanced economies seem to be geared up for a manufacturing renaissance. But while this may reduce risks for large firms, it probably will not benefit very many advanced-economy workers, let alone the developing countries from which production is being shifted. As the COVID-19 pandemic escalates, the risks inherent in global supply chains are more apparent than ever. Rather than await a return to business as usual, with manufacturing activities concentrated in countries where labor is cheap and plentiful, advanced-economy companies are shifting their focus to the lowest-wage workers of all: robots. Firms began relocating production to low-wage countries in the early 1990s, aided by the fall of the Iron Curtain, China’s global integration and eventual accession to the World Trade Organization, and the rise of containerization. The period between 1990 and the 2008 global financial crisis has been called an era of hyper-globalization in which global value chains accounted for about 60% of global trade. The 2008 global financial and economic crisis marked

the beginning of the end of this era of hyper-globalization. In 2011, global value chains stopped expanding. They have not grown again since. This reversal was driven by uncertainty. From 2008 to 2011, the World Uncertainty Index – constructed by Hites Ahir, Nicholas Bloom, and Davide Furceri – increased by 200%. To compare, during the 2002-03 outbreak of severe acute respiratory syndrome (SARS), the WUI rose by 70%. After the United Kingdom voted in 2016 to leave the European Union, it surged by 250%. When uncertainty rises, global value chains suffer. Based on past data, one can predict that a 300% increase in uncertainty – as the COVID-19 pandemic seems likely to produce – would reduce global supply-chain activity by 35.4%. Firms no longer consider the cost savings of offshoring to be worth the risk. At a time when adopting robots is cheaper than ever, the incentive to reshore production is even stronger. The arithmetic is simple. A company in, say, the United States would have to pay an American worker a lot more than, say, a Vietnamese or Bangladeshi one. But a US-based robot would not demand wages at all, let alone benefits like health insurance or sick leave.

Investment in robots is not new. Advanced-economy firms have been pursuing it since the mid-1990s, led by the automotive industry, which can account for 50-60% of a country’s robot stock. In Germany – a global leader in robot adoption – robots per 10,000 workers in manufacturing stood at 322 in 2017. Only South Korea (710 robots per 10,000 workers) and Singapore (658 per 10,000) have a higher ratio. The US has 200 robots per 10,000 workers. In fact, when the 2008 crisis struck, some countries, such as Germany, already had enough robots to minimize the importance of labor costs in production. Many others, aided by the sharp post-2008 decline in interest rates relative to wages, boosted robot adoption and reshored a larger share of production. The same is likely to happen today. Based on monetary policy so far, a 30% drop in interest rates can be expected, as central banks try to offset the damage of the COVID-19 pandemic. Past data indicate that this could bring a 75.7% acceleration in robot adoption. (It will not bring an unbridled boom in robot adoption, because rising uncertainty also deters investment.) This trend will be concentrated in the sectors that are

most exposed to global value chains. In Germany, that means autos and transport equipment, electronics, and textiles – industries that import around 12% of their inputs from low-wage countries. (Overall, the German economy imports 6.5% of the inputs it uses.) Globally, the industries where the most reshoring activity is taking place are chemicals, metal products, and electrical products and electronics. The chemical industry stands out as the top reshorer in France, Germany, Italy, and the US. This trend poses a major threat to many developing countries’ growth models, which depend on low-cost manufacturing and exports of intermediate inputs. In Central and Eastern Europe, some countries have responded to this challenge by investing in robots themselves. The Czech Republic, Slovakia, and Slovenia (which have large foreign-owned auto sectors) now have more robots per 10,000 workers than the US or France. And the strategy seems to be working: they remain an attractive offshoring destination for rich countries. Low-cost manufacturing hubs in Asia may have a harder time, especially in the wake of the pandemic. China, which secured its economic rise by

establishing itself at the center of many global value chains, will face particularly serious challenges, despite its plans to shift to higher-value-added activities and boost domestic consumption. Between rising protectionism (especially in the US under President Donald Trump) and the COVID-19 pandemic, the advanced economies seem to be geared up for a manufacturing renaissance. But while this may reduce risks for large firms, it probably will not benefit very many advanced-economy workers, let alone the developing countries from which production is being shifted. For that, governments will need to implement policies suited to this new economic order.

Dalia Marin is Chair of International Economics at the University of Munich and a research fellow at the Centre for Economic Policy Research.

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Is this China’s global leadership moment?

BY KEYU JIN When he welcomed US President Donald Trump to Beijing’s Forbidden City in 2017, Chinese President Xi Jinping pointed to the character “peace” in the names of all three halls of the great complex, emphasizing the Confucian maxim “Peace is prized above all.” The world needs to adhere to that idea now more than ever, but its two leading powers are at loggerheads at the worst possible time. Anti-Chinese sentiment permeates American society, and a popular saying in China these days is that if you are not angry at America, you are not patriotic. Sino-American tensions have become so severe that it can seem as if only an attack on Earth by extra-terrestrials could ease them. Seen from this perspective, perhaps we ought to regard the COVID-19 pandemic as the attack we need. Rather than continuing to engage in a blame game and finger-pointing, which accomplish nothing, China and the United States should be collaborating to find a vaccine or a cure. The COVID-19 crisis offers both countries a possible path from recrimination to reconciliation. In particular, the pandemic gives China a rare opportunity to address its strategic dilemmas as a rising power, above all its struggle to win the trust of the US

and other leading powers. Through actions rather than words, China’s leaders can rebuild the country’s international image on the basis of a moral imperative rather than geopolitical interests. The world suddenly finds itself mired in a health crisis, an economic crisis, and a liquidity crisis. As a result, many economies are facing the prospect of a downturn on the scale of the Great Depression of the 1930s, rather than the Great Recession of 2009. One central lesson from the Great Depression is that rich-country governments sparked global protectionism with measures such as the US Smoot-Hawley Tariff Act and Britain’s Abnormal Importations Act, which contributed to the sharp slowdown in trade and capital movements. In fact, such “every country for itself” policies are invariably the ultimate culprit behind any global economic crisis. Every major global crisis of the last 20 years has been an opportunity for China to strengthen its diplomatic relationships. US Presidents George W. Bush and Barack Obama both labeled China as America’s chief rival and competitor. But in each case, China managed to turn the situation around – first by collaborating on anti-terrorism programs following the September 11, 2001, attacks on the US, and then by helping to stimulate global demand and calm financial markets in the wake of the 2008

global financial crisis. Similarly, during the eurozone debt crisis, China strengthened its ties with Europe by purchasing Greek, Portuguese, and Spanish bonds. It also boosted imports from Europe and increased investments there. By helping to lead the global response to the COVID-19 crisis, China can turn its defensive, reactive stance toward the US into a more open, proactive one. Fortunately, China’s leaders understand both the challenge and the opportunity before them. For starters, the US has limited capacity to produce the swabs, ventilators, face masks, and protective gear that its hospitals need. China should therefore offer to send supplies and equipment, and share its data and clinical experiences regarding COVID-19. In addition, China should guarantee the continued operation of its medical supply chains and resist any temptation to cut off exports of essential inputs such as pharmaceuticals and vitamins to the US, as some Chinese have suggested. Second, China can be an anchor for global demand and a source of critical supplies, because Chinese businesses are now springing back to life as the country prepares to exit its lockdown. By stabilizing global supply chains and helping to maintain the flow of goods wherever it can, China can quietly refute the “decoupling” narrative that has

begun to take hold. Such efforts are particularly important at a time when COVID-19 threatens the consummation of the recent China-US “phase one” trade deal. Although China pledged as part of the agreement to buy $12.8 billion worth of US services in 2020, tourism was meant to account for much of that. Moreover, demand for certain goods will not be met from China, while some other goods will not be produced in America, leading to shortages. The pandemic thus gives both countries a convenient excuse to hold off on further tariff hikes and give each other some breathing space. Third, China should provide financial assistance to developing countries, which typically are left in the lurch during global economic downturns. The International Monetary Fund lacks the resources to be a major lender or liquidity provider, while the world’s leading central banks offer swap facilities mostly to one another. It was the People’s Bank of China that provided rescue packages and took on credit risk to help Portugal, Argentina, and Egypt during their respective financial crises. Finally, as China’s leaders seize this opportunity to revive relations with the US, private actors in both countries also are working together. US and Chinese medical companies are cooperating to produce and distribute COVID-19

test kits. And Harvard University scientists will collaborate with Chinese researchers – including Zhong Nanshan, the renowned epidemiologist who first identified the SARS virus – in a five-year, $115 million coronavirus research program funded by a Chinese real-estate company. If there is one lesson that China should share with the world, it is that speed, transparency, accuracy, and scientific reliability are of the utmost importance when communicating about the COVID-19 crisis. A pandemic is no time to tout the superiority of any country’s governance system or approach, let alone compete for global dominance. China should quietly win trust by helping the US and other countries, not out of strategic interest, but on moral grounds.

Norvan Acquah–Hayford

Keyu Jin, Professor of Economics at the London School of Economics, is a World Economic Forum Young Global Leader. Project Syndicate, 2020.. www.project-syndicate.org

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Capitalism’s triple crisis

BY MARIANA MAZZUCATO LONDON – Capitalism is facing at least three major crises. A pandemic-induced health crisis has rapidly ignited an economic crisis with yet unknown consequences for financial stability, and all of this is playing out against the backdrop of a climate crisis that cannot be addressed by “business as usual.” Until just two months ago, the news media were full of frightening images of overwhelmed firefighters, not overwhelmed health-care providers. This triple crisis has revealed several problems with how we do capitalism, all of which must be solved at the same time that we address the immediate health emergency. Otherwise, we will simply be solving problems in one place while creating new ones elsewhere. That is what happened with the 2008 financial crisis. Policymakers flooded the world with liquidity without directing it toward good investment opportunities. As a result, the money ended up back in a financial sector that was (and remains) unfit for purpose. The COVID-19 crisis is exposing still more flaws in our economic structures, not least the increasing precarity of work, owing to the rise of the gig economy and a decades-long deterioration of workers’ bargaining power. Telecommuting simply is not an option for most workers, and although governments are extending

some assistance to workers with regular contracts, the self-employed may find themselves left high and dry. Worse, governments are now extending loans to businesses at a time when private debt is already historically high. In the United States, total household debt just before the current crisis was $14.15 trillion, which is $1.5 trillion higher than it was in 2008 (in nominal terms). And lest we forget, it was high private debt that caused the global financial crisis. Unfortunately, over the past decade, many countries have pursued austerity, as if public debt were the problem. The result has been to erode the very public-sector institutions that we need to overcome crises like the coronavirus pandemic. Since 2015, the United Kingdom has cut public-health budgets by £1 billion ($1.2 billion), increasing the burden on doctors in training (many of whom have left the National Health Service altogether), and reducing the long-term investments needed to ensure that patients are treated in safe, up-to-date, fully staffed facilities. And in the US – which has never had a properly funded public-health system – the Trump administration has been persistently trying to cut funding and capacity for the Centers for Disease Control and Prevention, among other critical institutions. On top of these self-inflicted wounds, an overly “financialized” business sector has been siphoning value out of the economy by rewarding shareholders through stock-buyback schemes, rather than shoring up long-run growth by

investing in research and development, wages, and worker training. As a result, households have been depleted of financial cushions, making it harder to afford basic goods like housing and education. The bad news is that the COVID-19 crisis is exacerbating all these problems. The good news is that we can use the current state of emergency to start building a more inclusive and sustainable economy. The point is not to delay or block government support, but to structure it properly. We must avoid the mistakes of the post-2008 era, when bailouts allowed corporations to reap even higher profits once the crisis was over, but failed to lay the foundation for a robust and inclusive recovery. This time, rescue measures absolutely must come with conditions attached. Now that the state is back to playing a leading role, it must be cast as the hero rather than as a naive patsy. That means delivering immediate solutions, but designing them in such a way as to serve the public interest over the long term. For example, conditionalities can be put in place for government support to businesses. Firms receiving bailouts should be asked to retain workers, and ensure that once the crisis is over they will invest in worker training and improved working conditions. Better still, as in Denmark, government should be supporting businesses to continue paying wages even when workers are not working – simultaneously helping households to retain their incomes, preventing the virus from spreading, and making it easier for businesses to resume production once

the crisis is over. Moreover, bailouts should be designed to steer larger companies to reward value creation instead of value extraction, preventing share buybacks and encouraging investment in sustainable growth and a reduced carbon footprint. Having declared last year that it will embrace a stakeholder value model, this is the Business Roundtable’s chance to back its words with action. If corporate America is still dragging its feet now, we should call its bluff. When it comes to households, governments should look beyond loans to the possibility of debt relief, especially given current high levels of private debt. At a minimum, creditor payments should be frozen until the immediate economic crisis is resolved, and direct cash injections used for those households that are in direst need. And the US should offer government guarantees to pay 80-100% of distressed companies’ wage bills, as the UK and many European Union and Asian countries have done. It is also time to rethink public-private partnerships. Too often, these arrangements are less symbiotic than parasitic. The effort to develop a COVID-19 vaccine could become yet another one-way relationship in which corporations reap massive profits by selling back to the public a product that was born of taxpayer-funded research. Indeed, despite US taxpayers’ significant public investment in vaccine development, the US Secretary of Health and Human Services, Alex Azar, recently conceded that newly developed COVID-19 treat-

ments or vaccines might not be affordable to all Americans. We desperately need entrepreneurial states that will invest more in innovation – from artificial intelligence to public health to renewables. But as this crisis reminds us, we also need states that know how to negotiate, so that the benefits of public investment return to the public. A killer virus has exposed major weaknesses within Western capitalist economies. Now that governments are on a war footing, we have an opportunity to fix the system. If we don’t, we will stand no chance against the third major crisis – an increasingly uninhabitable planet – and all the smaller crises that will come with it in the years and decades ahead.

“UNFORTUNATELY, OVER THE PAST DECADE, MANY COUNTRIES HAVE PURSUED AUSTERITY, AS IF PUBLIC DEBT WERE THE PROBLEM. THE RESULT HAS BEEN TO ERODE THE VERY PUBLIC-SECTOR INSTITUTIONS THAT WE NEED TO OVERCOME CRISES LIKE THE CORONAVIRUS PANDEMIC”

Mariana Mazzucato is Professor of the Economics of Innovation and Public Value and Director of the UCL Institute for Innovation & Public Purpose (IIPP). She is the author of The Value of Everything: Making and Taking in the Global Economy. Copyright: Project Syndicate, 2020. www. project-syndicate.org.

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