Business24 Newspaper 5th February, 2021 by Business24 Online

FRIDAY FEBRUARY 5, 2021

BUSINESS24.COM.GH

FRIDAY FEBRUARY 5, 2021

NO. B24 / 155 | NEWS FOR BUSINESS LEADERS

GPHA seeks to handle 20% of containerised cargo from Q2

Bond market investors keenly await treasury issuance By Joshua Worlasi Amlanu macjosh1922@gmail.com

ond market investors have signalled keen interest in the upcoming issuances of government debt, as some are holding back funds from the secondary market ahead of the February issuance, a senior analyst with Databank Research, Cont’d on page 3

Gov’t stepping up support for cocoa processing—Veep By Eugene Davis ugendavis@gmail.com

Michael Luguje is the Director-General of the GPHA

By Patrick Paintsil p_paintsil@hotmail.com

he Ghana Ports and Harbours Authority (GPHA) is hoping to reach an agreement by the end of the first quarter with private concessionaire Meridian Port Services (MPS) to handle 20 percent of

ECONOMIC INDICATORS EXCHANGE RATE (INT. RATE)

POLICY RATE

14.5% 14.77%

OVERALL FISCAL DEFICIT

11.4% OF GDP

AVERAGE PETROL & DIESEL PRICE:

able to have the agreement.” The concessionaire agreement that birthed the construction of the MPS Terminal 3 at the Tema Port gave the private operator [MPS] the monopoly to handle all containerised cargo at its new terminal.

4.2% GHC 5.13

he Vice President, Dr. Mahamudu Bawamia, says government has stepped up efforts to support local entrepreneurs and businesses that have interest and expertise in cocoa value addition. Speaking at the launch of the National Chocolate Week in Accra, Cont’d on page 3

Cont’d on page 2 INTERNATIONAL MARKET

US$1 = GHC 5.7606

GHANA REFERENCE RATE PROJECTED GDP GROWTH RATE

Joseph Boahen Aidoo

containerised cargo at the Tema Port. Speaking at a staff durbar in Tema, the director-general of the port authority, Michael Luguje, said: “Our hope is that we initiate the discussions by a letter, expecting MPS to be forthcoming with us getting the agreement. Then by the close of March we should be

BRENT CRUDE $/BARREL NATURAL GAS $/MILLION BTUS GOLD $/TROY OUNCE

CORN $/BUSHEL

$543.75

COCOA $/METRIC TON

$123.55

COFFEE $/POUND:

facebook.com/business24gh twitter.com/business24gh linkedin.com/pg/business24gh instagram.com/business24gh

Did you know 65% of the world’s products and services are exchanged following a referral or recommendation? Want to know more? Send us an email at info@bforbgh.com Call Us 0594 016 432 | www.bforb.com

@bforbghana

Editorial / News

FRIDAY FEBRUARY 5, 2021

Editorial

GPHA, MPS deal must happen

he Meridian Port Services (MPS), a private port operator, was given a monopoly over the management of all containerised cargo at the new MPS Terminal – a situation the Ghana Ports and Harbours Authority (GPHA) was not too much enthused about. According to the GPHA, MPS’ monopoly which came about as a result of the concessionaire agreement that led to the construction of the new terminal threatens the operations and workforce of the nation’s port operator. GPHA has since been persuading MPS to consider allowing the nation’s port operator to handle at least 20 percent of containerised cargo

at its new terminal as a way of keeping GPHA in business. At a crunch meeting in Dubai in November 2019, MPS was said to have agreed to the demand of GPHA, but the latter is yet to access and handle that percentage of containerised cargo. The Director-General of GPHA, Michael Luguje, knowing the delicate nature of the call on MPS told a staff gathering recently that they are hoping MPS will cede fully to their demands by the second quarter. According to him, while pursuing the agreement to allow GPHA handle 20 percent of containerised cargo, the authority was able to handle between 10 to 12 percent of cargo

in the latter end of last year. Like Mr. Luguje said, this paper is not in doubt regarding the social benefits of the hybrid system of operations that the GPHA is currently operating, as opposed to the sole landlord port authority system of operations. The advantages of the hybrid system, its impact on the liquidity system and the GPHA’s ability to provide the social requirement of government, which is to create jobs goes to justify the need to review the MPS Terminal 3 contract. Government may have had valid reasons regarding the appropriateness of the MPS deal, but time has certainly shown that a rethink is plausible and must be explored.

GPHA seeks to handle 20% of containerised cargo from Q2 Continued from cover

Your subscription -- along with the support of businesses that advertise in Business24 -- makes an investment in journalism that is essential to keep the business community in Ghana well-informed. We value your support and loyalty. Contact Email: hello@thebusiness24online.net Newsroom: 030 296 5315 news@thebusiness24online. net Advertising / Sales: +233 24 212 2742

To sustain the operations and workforce of the nation’s port operator, however, the authority has been pushing MPS to cede 20 percent of containerised cargo to it, a demand that has been backed by other stakeholders including the Maritime and Dockworkers Union (MDU). At a crunch meeting in Dubai in November 2019, MPS agreed to the demand of GPHA, but the latter is yet to access and handle that percentage of containerised cargo. Mr. Luguje admitted that their demand from the private concessionaire was one that required patience and prudence due to the unique dynamics of the concession agreement. According to him, while pursuing the agreement to allow GPHA handle 20 percent of containerised cargo, the authority was able to handle between 10 to 12 percent of cargo in the latter end of last year. “We have travelled a long journey. We had to engage

shipping lines to insist that we have to start to implement that 20 percent while we wait for a signed agreement. It wasn’t an easy one. But thanks to management and staff, we worked together to ensure that at least we managed 10-12 percent of that volume up to close of year 2020,” he said. The GPHA boss recounted the unified efforts of the staff, union and management in persistently making their case to government to review the MPS Terminal 3

contract. Michael Luguje also explained the social benefits of the hybrid system of operations that the GPHA is currently operating, as opposed to the sole landlord port authority system of operations. “We have been able to showcase the advantages of the hybrid system, its impact on the liquidity system and our ability to provide the social requirement of government, which is to create jobs.”

FRIDAY FEBRUARY 5, 2021

Bond market investors keenly await treasury issuance Continued from cover Courage Kingsley Martey, has said. Currently, there is a slowdown in trading on the fixed income market, largely for the longerdated tenors. “While issues of debt remain a lingering concern, it is difficult to rule out market expectations of the treasury’s next issuance for February as a reason for the slowdown in trading on the fixed income market. We noticed that the slowdown in trading on the fixed income market is largely along the longer-dated tenors, with most of the interest now shifting to the front of the yield curve,” Mr. Martey said in an interview with Business24. He observed that yields on government securities have gone up slightly this week following

the publication of latest economic and debt data by the Bank of Ghana. “I believe a combination of the MPC data on government’s debt situation together with some investors holding back funds ahead of the February issuance are key explanations for this week’s market performance,” he said. At the end of November 2020, domestic public debt was GH¢147.3bn, representing 38.2 percent of GDP, out of the GH¢286.9bn total public debt. He projected that government would want to build a buffer for liability management in the event that market conditions tightened unexpectedly amidst the second wave of the Covid-19 pandemic. This month, GH¢6.67bn of debt is expected to be issued, including a 7-year bond of GH¢700m.

“Ideally, they [government] would want to build a buffer for liability management in the event that market conditions tightened unexpectedly. And because of this, we could see excess uptake during bond issuances,” Mr.

Martey said. “However, the T-bill auctions have shown a commitment by government to stay to the planned auction targets despite the stronger demand they received during the auctions,” he added.

Gov’t stepping up support for cocoa processing—Veep Continued from cover a celebration marked under the auspices of Ghana Cocoa Board (Cocobod), Ghana Tourism Authority and Ghana Investment Promotion Centre, he said Ghana

has an ambitious target of raising local consumption of cocoa and cocoa products, and increasing processing of cocoa. “There are various efforts to ease the setting up of cocoa processing companies, to ease the

operations of cocoa processing companies and to stimulate the consumption of cocoa,” he said. “We have moved from 25 percent to about 40 percent of our beans being produced locally, and the target is to hit 50 percent in the shortest possible time,” he added. He further disclosed that

government is working with financial institutions to ensure that the processing companies “get their required volume of beans to deliver the value-added product that they require.” He challenged Cocobod to increase cocoa consumption per capita in a bid to promote cocoa and boost the economy. Ghana’s cocoa consumption per capita, which used to be 0.5kg, has inched up to 0.53kg. On his part, the CEO of Cocobod, Joseph Boahen Aidoo, said plans are underway to incentivise local processors to produce “innovative chocolates”. “The board is poised to strengthen its local incentive packages to encourage local processors and artisanal chocolate makers. The incentives will ensure that the processors are able to access more beans and produce innovative chocolates.” He said the country is aiming to boost per capita cocoa consumption to around 6 or 8kg, as is the case in some European countries.

FRIDAY FEBRUARY 5, 2021

News

FRIDAY FEBRUARY 5, 2021

Be opportunity-driven in pandemic era, entrepreneurs told By Eugene Davis ugendavis@gmail.com

ntrepreneurs seeking to succeed in these challenging times have been urged to be opportunity-driven in order to attain their goals. Entrepreneurs and start-up businesses are a driving force in the economic development of any country, in terms of job creation, innovation and export potential. According to the International Trade Centre, small businesses form 92 percent of registered businesses in Ghana and 70 percent of Gross Domestic Product (GDP). The current economic climate has been tough on many businesses and business owners, but entrepreneurs and small business owners continue to fight on, with the focus on not only surviving but thriving during these times of adversity. In view of this, the Executive Director of Daasco Group of

Companies, Dr. Dasmon Alex Akpabli, has recommended to entrepreneurs to evaluate each opportunity in the market to determine whether it has economic value. “It has to be potentially lucrative for exploitation and must have a demand pull before you can pursue it,” he said on a virtual programme held under the auspices of the Department of Marketing and Entrepreneurship of the University of Ghana Business School (UGBS). Speaking on the topic “Succeeding against Odds: Entrepreneurial Tips for a Challenging Pandemic Era”, he said entrepreneurs need to be innovative. “Surrounding yourself with strong, positive minds will help you to look towards finding solutions and focusing on what you can do, rather than what you cannot.” Dr. Akpabli said developing a network and having good

connections is one of the ways of discovering entrepreneurial opportunities. “Use this time to perfect your networking skills. Connect with new people or engage with your current connections. With most

people isolating, keeping in contact with others is essential for your mental health as well as beneficial for business.” The programme formed part of UGBS’ Distinguished Marketing Practitioner Seminar series.

IT Consortium collaborates with Axis Pension to launch RemitPlus

T Consortium, Ghana’s number one ranked FinTech in the Ghana Club 100, has launched RemitPlus -- a product designed to allow Ghanaians have access to value added financial services such as pensions contributions whenever they receive international remittances. Other value offerings that come with RemitPlus include an embedded life cover of GHS 5,000 for contributors and access to loan facilities from partner financial institutions using pension contributions as collateral. Speaking at the launch, the Managing Director of IT Consortium, Mr. Romeo Bugyei was excited about the potential RemitPlus offers to financially excluded citizens, particularly women. “Data available to us shows that 70% of the formal working force in Ghana are not active pension contributors, while data from our other products show that 70% of people acquiring informal pensions are men, meaning that our women are being left behind. We believe in the product and the value it gives to our citizens. It has the potential to lift more women out of poverty through

the avenue to set money aside for pensions, and, that is something that really excites us,” he said. He noted that IT Consortium has been in the space of valueadded services for a long time and the company is working to ensure that pensions will not be the only added service. “We are speaking with our banking partners to offer direct investments, hospital payments, school fees payment among others using this same platform,” he revealed. IT Consortium developed RemitPlus through a grant known as the Remittance Grant Facility Fund; awarded by the Swiss

State Secretariat for Economic Affairs (SECO) together with the Ministry of Finance. They worked in partnership with SendWave, Axis Pensions Trust and Access Bank PLC, with KPMG as fund managers. Access Bank PLC representative, Mr. Stephen Abban, was convinced that this partnership with IT Consortium is a major step towards giving financially excluded people access to financial services. He pledged the bank’s strong commitment to ensuring the success of RemitPlus. On his part, Mr Afriyie Oware,

Group CEO of Axis Pensions Trust Ltd, expressed excitement about collaborations between Financial Institutions and FinTechs and the opportunities they offer to lower costs and design innovative products that are more financially inclusive. With Ghana being the second largest receiver of remittance in sub-Saharan Africa, Zakaria Umar who spoke on behalf of the fund manager, KMPG indicated that sending remittances without hindrances is important for providing better quality food, health care and business support particularly for rural folk. IT Consortium is one of Africa’s leading financial services technology solutions providers and was the first Ghanaian FinTech to obtain the ISO/ IEC 27001:2013 certification in addition to its Payment Card Industry Data Security Standards (PCI-DSS) certification. More recently, it acquired the highest license within the Payment Services Provider (PSP) category, following the passage of the Payment Systems and Services Act, 2019 (Act 987). IT Consortium is committed to the development of innovative services that make financial services accessible to financially excluded people.

FRIDAY FEBRUARY 5, 2021

News

FRIDAY FEBRUARY 5, 2021

President re-appointed ECOWAS Chairman

he Authority of Heads of State and Government of the Economic Community of West African States (ECOWAS) has re-appointed President Nana Addo Dankwa Akufo-Addo chairman of the Bloc. The Authority, at its extraordinary session held on Tuesday, February 2, 2021, unamimously agreed that President Akufo-Addo steers the affairs of the body for another one-year term, to oversee the implementation of the institutional reforms aimed at improving the corporate governance of the sub-regional body. President Akufo-Addo was first elected Chairman of the 15-member economic bloc in September 2020 by the 57th Ordinary Session of the Authority to direct its activities for a year. A communique issued at the end of the meeting said the Heads of State and Government praised President Akufo-Addo “for his leadership in steering the affairs of the Community”, and called on him to, with the support of the Ministerial Ad hoc Committee on institutional reforms, lead a reflection on the issues, and

submit a report to Authority’s next ordinary session to be held June 2021. The Authority’s Tuesday’s Extraordinary Session, chaired by President Akufo-Addo, was in preparation for the 34th ordinary Session of the Assembly of the African Union on the election of the new management team of the African Union Commission. According to the Communique, the Heads of State and Government Session took note of the memorandum on the selection of the Chairperson of the African Union for the 20222023 period and the proposed mechanism for the nomination of

countries in coming years. The Authorty paid heed also to the Report of the ECOWAS Council of Ministers on the harmonisation of Member States’ applications for positions in international organisations, and gave attention to the Memorandum on the implementation of the ECOWAS institutional reform. Fourteen ECOWAS heads of State took part in the Session, including Roch Marc Christian Kabore of Burkina Faso, Jorge Carlos de Almeida Fonseca of the Republic of Cape Verde, Cote d’Ivoire’s Alassane Ouattara, Ghana’s Nana Addo Dankwa Akufo-Addo, Prof. Alpha Conde

of Guinea, Umaro Sissoco Embalo of Guinea Bissau, and George Manneh Weah of Liberia. The rest are Macky Sall of Senegal, Julius Maada Bio of Sierra Leone, Togo’s Faure Essozimna Gnassingbe, Yemi Osinbajo, VicePresident of Nigeria, Brigi Rafini, Prime Minister of the Republic of Niger, Moctar Ouane, Prime Minister of Transition of the Republic of Mali, and Aurélien Agbenonci, Minister of Foreign Affairs of the Republic of Benin. The session was also attended by Jean-Claude Kassi Brou, President of ECOWAS Commission. GNA

COCOBOD to appear before Parliament on cocoa payment

he Ghana Cocoa Board (COCOBOD) is to appear before Parliament over non-payment to cocoa farmers through their respective Licensed Buying Companies (LBC) for the period of the 2020/21 crop season. First Deputy Speaker Joseph Osei-Owusu gave the directive in a reaction, after a statement by Mr Kofi Adams, MP for Buem, and contributions on the statement by Members, on the plight of cocoa farmers in cocoa growing areas in Ghana, for not receiving payments. The Speaker further directed the Leadership of the House to programme officials of the board to meet The Committee of The Whole of Parliament to discuss the issues. Mr Adams statement was titled: “The Plight of Cocoa Farmers in the Buem Constituency Despite $1.3 billion loan facility to the Ghana Cocoa Board.” According to Mr Adams, reports from his constituency and other constituencies in the cocoa growing regions has it that, cocoa farmers have not

been paid by LBCs for their cocoa purchased in the last two months even though they are in the third month of the main cocoa season. “The Ghana Cocoa Board secured a $ 1.3 billion-dollar facility to purchase cocoa beans for 2020/21 crop season. This facility was to assist Cocoa board make upfront payment for cocoa beans that it purchases from cocoa farmers,” Mr Adams said. He added: “Most of the cocoa

farmers in Ghana depend mainly on the proceeds of cocoa sale to fend for themselves and their families and most importantly to prepare new farmlands for the next farming season. “The proceeds of these sales pay their bills ranging from school fees through domestic utilities to medical bills.” The Buem MP urged the House to intervene to get the Ghana Cocoa Board to release funds

to LBCs to enable them pay the farmers for the cocoa beans purchased, during the period under review. “It was Parliament which approved the syndicated facility for the purpose of purchasing cocoa for the (2020/21) crop,” Mr Adams argued. Mr Adams later at a news conference, supported by Kwabena Mintah Akandoh, MP for Juaboso, threw more light on the matter, arguing that the nonpayment to the cocoa farmer worsened their economic plight during the period. Deputy Majority Leader and MP for Efutu Alexander Kwamina Afenyo-Markin, at a news conference, just after that of Mr Adams, countered the calls by the Buem MP and refuted the claims made by the Buem MP. Mr Afenyo-Markin challenged Mr Adams to name the LBCs that had not paid the cocoa farmers, as he (Mr Afenyo-Markin) said the COCOBOD had settled all LBCs that raised certificates for payment. GNA

FRIDAY FEBRUARY 5, 2021

News

FRIDAY FEBRUARY 5, 2021

MPS Terminal 3 gets three ISO certifications

eridian Port Services Limited has received three ISO certifications namely; Quality Management System (ISO 9001:2015), Environmental Management System (ISO 14001:2015) and Occupational Health and Safety Management System (ISO 45001:2018). This follows the successful audit of the company’s management systems by Bureau Veritas Certification Holding SAS – UK Branch, which found the facility to have met the required standards on the environment, systems and occupational health and safety. The scope of the ISO certification incorporated cargo handling, storage and supporting 6ransport activities including implementation of pedestrian free yard concept and green terminal concept. Chief Executive Officer of MPS, Mohamed Samara, commenting on the certifications, indicated that quality was important to their business because they value their customers. “MPS has a high regard for health, safety, environment and deploying the highest standards in safeguarding men and

machines. We indeed recognise the need to deliver our services in a safe, timely, efficient and competitive manner,” he said. Having successfully completed the implantation and upgrading the Tema Port facility to match up the globally recognised industry standards, the MPS management deemed it necessary to boost the achieved efficiency by going for the International Organization for Standardization (ISO) certifications. “Obtaining the ISO accreditation in the first year of operations at the new MPS Terminal 3 is a remarkable achievement by the MPS team,” said the CEO. “From the onset, management embarked on building a mutually profitable relationship with the port stakeholders, ensuring long-term success, through the understanding of their needs and expectations. The MPS management team demonstrate an impressive level of commitment to continuous improvement and the company has already established an Integrated Management System which provides a framework for measuring and improving their performance,” the company said

in a statement. On July 2019, MPS received multiple certifications of Excellence in Design for Greater Efficiencies (EDGE) as per the standards of the International Finance Corporation (IFC) after its administrative and the workshop buildings had passed all requirements. That recognition made MPS’s workshop maintenance building the first light industrial building to be EDGE certified in Africa. MPS is a joint venture between the Ghana Ports and Harbours Authority and Meridian Port Holdings Limited, with Bolloré Transport & Logistics and APM

Terminals as the two main shareholders. MPS Terminal 3 of Tema Port is the leading Container Terminal/Port in West Africa by virtue of its commitment to continuous improvement in the quality of service provided to stakeholders. This is enabled by the shareholders commitment to investments in infrastructure, superstructure, technology and human-development that are of long -term value to the business. It is a sophisticated port facility well-heeled with technology and some of the world’s most advanced equipment, systems and digital processes.

Young entrepreneurs advised to stop misappropriating business capital By Julius K. Satsi

oung entrepreneurs have been advised resist the temptation of using funds generated from their businesses for their personal gain. Speaking at a programme dubbed: Emerging Young Entrepreneurs Network Dialogue (EYEN), Justice Mensah, a business consultant said entrepreneurs must see their businesses as a separate entity from themselves. According to him, it would be a better option for entrepreneurs to pay themselves a commission or salary and use that rather than directly using their business capital. Mr. William Quaye, the Chief Executive Officer of Bill’s Consult Limited, noted that the world is moving from customer service to customer care, which calls for the need to care for what the customer desires at all times. He said for an entrepreneur to succeed, there is the need to understand the behaviour of customers in order to satisfy their

Participants at the Emerging Young Entrepreneurs Network Dialogue (EYEN)

demands because the absence of the customer meant the end of the business. Mr. Quaye said young business owners must learn to classify

customers to ensure better service delivery, adding that customer classification helps to know which group to spend more resources on.

He said it is not easy to keep customers but it is worth it because attaining new customers is usually more expensive than the maintaining the existing ones. Mr. Elvis Sackey, Business and Management Consultant also speaking at the event noted that for a business to succeed, there is the need for effective planning and the adoption best organisational strategies. Mr. Sackey explained that many start-ups are unable to endure the hard time like during the lockdown era due to poor planning but said there is the need for young and emerging entrepreneurs to develop strategic plans that could spur their businesses on even beyond the owner’s existence. He said every entrepreneur ought to take into consideration the three levels of strategies; corporate, business and functional levels of strategies, noting that what most young business owners need is direction derived from passion for what they want to do.

FRIDAY FEBRUARY 5, 2021

Feature

FRIDAY FEBRUARY 5, 2021

COVID’s long shadow: social repercussions of pandemics

By Philip Barrett, Sophia Chen, and Nan Li

n 1832, the great cholera pandemic hit Paris. In just a few months, the disease killed 20,000 of the city’s 650,000 population. Most fatalities occurred in the heart of the city, where many poor workers lived in squalid conditions, drawn to Paris by the Industrial Revolution. The spread of the disease heightened class tensions, as the rich blamed the poor for spreading the disease and the poor thought they were being poisoned. Animosity and anger were soon directed at the unpopular King. The funeral of General Lamarque—pandemic victim and defender of popular causes—spurred large antigovernment demonstration on the barricaded streets: scenes immortalized in Victor Hugo’s novel Les Misérables. Historians have argued that the epidemic’s interaction with preexisting tensions was a principal cause of what came to be known as the Paris Uprising of 1832, which may in turn explain subsequent government repression and public revolt in the French capital in the 19th century. If history is a predictor, unrest may reemerge as the pandemic eases.

From the Plague of Justinian and the Black Death to the 1918 Influenza Epidemic, history is replete with examples of disease outbreaks casting long shadows of social repercussions: shaping politics, subverting the social order, and some ultimately causing social unrest. Why? One possible reason is that an epidemic can reveal or aggravate pre-existing fault lines in society, such as inadequate social safety nets, lack of trust in institutions, or a perception of government indifference, incompetence, or corruption. Historically, outbreaks of contagious diseases have also led to ethnic or religious backlashes or worsened tensions among economic classes. Despite ample examples, quantitative evidence on the link between epidemics and social unrest is scant and limited to specific episodes. Recent IMF staff research fills this gap by offering global evidence of this link in recent decades. A key challenge for research on social unrest is identifying when events of unrest have occurred. Although sources of information on unrest are available, many are at low frequency or have inconsistent coverage. To address these shortcomings, a recent IMF staff paper uses an index based on press coverage of social unrest to create a Reported Social Unrest

Index. This provides a consistent, monthly measure of social unrest for 130 countries from 1985 to the present. Spikes in the index line up very closely with narrative descriptions of unrest in a variety of case studies, suggesting that the index captures real events rather than shifts in media sentiment or attention. Using this index, the IMF staff study finds that countries with more frequent and severe epidemics also experienced greater unrest on average. During and immediately after a pandemic, the social scarring in the form of unrest may not show up quickly. Indeed, humanitarian crises likely impede the communication and transportation needed to organize major protests. Moreover, public opinion might favor cohesion and solidarity in times of duress. In some cases, incumbent regimes may also take advantage of an emergency to consolidate power and suppress dissent. The COVID-19 experience is consistent with this historical pattern, so far. In fact, the number of major unrest events worldwide has fallen to its lowest

level in almost five years. Notable exceptions include the United States and Lebanon, but even in these cases, the largest protests are related to issues that could potentially be exacerbated, but not directly caused by COVID-19. But looking beyond the immediate aftermath, the risk of social unrest spikes in the longer term. Using information on the types of unrest, the IMF staff study focuses on the form that unrest typically takes after an epidemic. This analysis shows that, over time, the risk of riots and antigovernment demonstrations rises. Furthermore, the study finds evidence of heightened risk of a major government crisis— an event that threatens to bring down the government and that typically occurs in the two years following a severe epidemic. If history is a predictor, unrest may reemerge as the pandemic eases. The threats may be bigger where the crisis exposes or exacerbates pre-existing problems such as a lack of trust in institutions, poor governance, poverty, or inequality. This article first appeared in IMF Research Perspectives.

FRIDAY FEBRUARY 5, 2021

Feature

FRIDAY FEBRUARY 5, 2021

Telecommuting under lockdown

emote work also referred to as telecommuting (work from anywhere or teleworking) has been with us since the 1970s. Over the past, two to three decades’ efforts have been made to institutionalize and further formalize the future of work. In 1995 a phrase was coined to put in perspective what it means to telecommute, “work is something you do, not something you travel to”. Telecommuting is defined explicitly as the working arrangements made for employees, where they do not have to necessarily commute by any means to a central point in delivering assigned duties or roles. The central point could be a warehouse, office building, and to some categories of employees, the field. In this article, we shall consider “Remote Work” from the locus of IT and further narrow it down to Application Developers and in parallel to Tech firms. With the inception of telecommuting in western countries, some organizations including governments adopted teleworking to benefit themselves and their employees. Telecommuting was first recognized in satellite technologies where satellite offices were linked to remote mainframes through dumb terminals. Dumb terminal is described by TECHOPEDIA.COM as a very simple monitor with very little processing power and features. The network bridge between mainframes and dumb terminals was established using telephone

lines. After a decade, given the significant breakthroughs in personal computers with respect to their processing power and increasing stability in performance, usage of personal computers was indeed harnessing a parallel and exponential household usage. Moving computers to the home became the order and this forged whole new possibilities, where offices can be migrated to homes or anywhere. Personal computers could connect to organizational mainframes from anywhere, this further broadened and pinpointed areas where office work or activities may be conducted. Over the years past, organizations specifically tech firms, have struggled to completely give in to telecommuting until 2019 during the surge of the COVID-19 pandemic. This pandemic really forced significant Tech firms to allow most of their employees to telecommute. Going remote, even Tech firms required a great deal of investment into organizational IT infrastructure and out-sourcing other services such as tools needed for communication. The basic tools for effective and efficient remote engagements maybe but not limited to virtual calling, emailing, and conferencing tools. These tools are very essential and without them, no meaningful remote engagement can be achieved. The internet has had its fair share undergoing rapid stages of metamorphosis. At the very core in driving communication

is the internet. It is fascinating how western countries have embraced the internet and made it accessible to their citizens as to rights and not a privilege for few, thereby paving way for seamless telecommuting. In March 2020, when the COVID-19 lockdown was imposed in Ghana, the Telecommunication companies (Telcos) rose to the occasion by reinforcing their systems and providing the necessary tools for their employees to telecommute. During this period, the leading Telcos reported significant improvements in voice, data, and mobile money transactions. Indeed, customers also confirmed the seamless 4G mobile data services. Most employees have been very efficient and delivering effectively to meet customer demands. Telecommuting under lockdown has raised questions regarding the future of work after and beyond the pandemic. On January 24, 2012, Reuters Poll reported that “one in five workers around the globe, particularly employees in the Middle East, Latin America and Asia, telecommute frequently and nearly 10 percent work from home every day”. It is very important to reiterate the classic case of overwhelming work output by most telecommuting employees. Organizations that have allowed most of their employees to telecommute can and will attest to the benefits it brings to their firms. Some of the numerous benefits include a reduction in office space, utility bills (water, electricity, sanitary, etc.), and for tech start-ups

engaging developers, there is no need for quantum investment for office space set-up. Rather, resources could be channelled into remunerations and ventures that will aid in smooth project delivery. Employees telecommuting have also reported a remarkable balance in work and personal life. Teleworkers do not have to necessarily commute to and fro, thereby reducing the commuting time for traversing through traffic jams. In conclusion, some organizations will choose telecommuting to benefit employees whilst others will consider it solely for the benefit of the organization. Indeed, for effective telecommuting, the business must consider two key factors. The first being structures for communication and marrying the impact on the personal life of employees and the potential benefits to the business. Communication tools are common and once setup is done; employees may use any of the channels to drive organizational goals. Secondly, although some employees require constant monitoring, it is not appropriate for organizations to lump together all employees into this category. In considering the benefits, organizations with complex structures should explore the potentials of telecommuting. Author: Patrick Wunake (Member, Institute of ICT Professionals, Ghana) For comments, contact: pmarks1914@gmail.com or Mobile: +233 272068039

FRIDAY FEBRUARY 5, 2021

Feature

FRIDAY FEBRUARY 5, 2021

What’s different about the GameStop bubble?

By Jeffrey Frankel

n the last week of January, the price of stock in GameStop – an ailing brick-and-mortar video-game retailer – soared 323% for the week and 1,700% for the month. Nothing happened within the company to drive the increase; its fundamentals remain unchanged. It was a speculative bubble – but with a twist. With any bubble, investors who get in and out at the right moment make a lot of money, while those who get in too late or stay too long suffer large losses. Participating in a speculative bubble is thus like playing roulette in a casino, with the financial-services companies (like Charles Schwab) and retailinvestment platforms (like Robinhood) acting as the “house.” But the GameStop bubble is unusual, because it challenges both of the most common interpretations of financial markets. The first interpretation is that financial markets efficiently allocate capital to enterprises that have strong economic fundamentals and away from those that do not. The second is that big Wall Street traders speculate in ways that destabilize markets, making unseemly profits at the expense of the little guy. The investors who purchased all those GameStop shares – often young, mostly amateur traders coordinating on message boards such as Reddit’s WallStreetBets – seem to subscribe to the latter interpretation. In their view, by conspiring to drive up struggling companies’ stock prices, the little guy was beating Wall Street at its own game. And, indeed, the hedge funds that had been shortselling GameStop have swallowed massive losses. But this David-versus-Goliath narrative has serious flaws. In fact, there are no clear-cut heroes or villains in the GameStop story. For starters, both sides used the same tool: options trading. The

hedge funds bought put options (“selling short”), betting the stock would fall. The small traders then bought call options (“going long”), betting it would rise. They did the same with other struggling companies, such as the movie-theater chain AMC Entertainment and the mobiledevice manufacturer BlackBerry. Short-sellers tend to generate more hostility than those who go long, but there is nothing inherently nefarious in their approach. On the contrary, they often fulfill a useful economic function. By betting against what they view as an overvalued stock, hedge funds drive the price closer to what a company’s fundamentals warrant. This practice can help to slow down the growth of price bubbles, whose implosion can be devastating – as the 2008 global financial crisis showed. Short-sellers also brought attention to dubious sales schemes in the nutritionalsupplements industry in 2015 and dishonest accounting practices at the German company Wirecard last year. The small GameStop investors are not villains, either. True, no one claims to believe that GameStop is actually worth $325 per share. Their motive for continuing to buy appears to be either to ride the speculative wave – much as casino habitués gamble for fun – or to inflict pain on the hedge funds as a sort of populist political message. They are within their rights to do both. To be sure, had a few big hedge funds colluded in the way the Reddit traders did, they could well have faced prosecution for illegal market manipulation. But this doesn’t apply to the GameStop investors, who were small, numerous, and open about what they were trying to do. Moreover, at a time of extreme wealth inequality, the GameStop investors are far more sympathetic

figures, with everyone from US Representative Alexandria Ocasio-Cortez of New York (on the left) to US Senator Ted Cruz of Texas (on the right) taking their side. Despite incurring huge losses, the hedge funds remain wealthy. But some traders will suffer mightily. The novices who jumped on the GameStop bandwagon after the price had already begun rising and are keeping their shares to the bitter end – an approach known as “holding on with diamond hands” – will probably end up losing most of the money they invested. Many of these investors probably would not have invested without the urging of the social-media campaign and in some cases can ill afford the losses. Complicating the story further, on January 29, Robinhood imposed restrictions on trading in 50 companies, including those on which the Redditors were betting – a move that caused GameStop and other stocks to nosedive and attracted the ire of Ocasio-Cortez and Cruz. (It has since narrowed the restrictions to just eight Reddit favorites.) One duty of financial regulation is to protect people who may not know what they are getting into from losing everything. So, the Securities and Exchange Commission released a statement announcing an investigation into the “regulated entities” – not the roulette players, but the house – to ensure that they “uphold their obligations to protect investors and to identify and pursue potential wrongdoing.” This is not the first time Robinhood has come under SEC scrutiny. In December, the company was fined $65 million for misleading customers about how it makes its money. (Robinhood led customers to believe they were getting the best price for their orders, but actually gave orders to firms that

generated higher revenues for the company.) During the GameStop episode, Robinhood’s problem was that it had been operating with too thin a margin. When faced with both regulatory constraints (in the form of capital requirements) and demands from its market-clearing house that it put up more deposits to back its trading, it faced the prospect of being unable to pay off customers who had won their bets. Robinhood has been able to raise more capital, and will survive, albeit possibly in a diminished form. But a capable regulator like Gary Gensler, if he is confirmed as the SEC’s new chair, might decide to tighten the regulations that led Robinhood to restrict trading – say, by raising capital requirements. Robinhood’s customers have already concluded that the platform – supposedly created to democratize finance – stands exposed as a component of the financial establishment. But evidently they still believe in Reddit’s WallStreetBets. They are reminiscent of victims of past Ponzi schemes, who sometimes blame their losses not on the con artist behind the scheme, but on the authorities who shut it down. About the author

Jeffrey Frankel, Professor of Capital Formation and Growth at Harvard University, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He is a research associate at the US National Bureau of Economic Research.

FRIDAY FEBRUARY 5, 2021

CALL FOR APPLICATIONS - AFIDBA ACCELERATOR PROGRAM! The AFIDBA program is a free 6 – month program, fully funded by the Agence Française de Développement (AFD) aimed at scaling up digital and inclusive Businesses in Ghana, Senegal, Morocco, and Burkina Faso. The program is open to Businesses, who involve the BoP population (that is, people who make less than $8 a day) within their value chain and are ready to scale up! Apply now to join the next cohort of entrepreneurs and stand the chance to get funded with an amount of €15,000 (50% grant, 50% interest-free loan). Apply using this link: www.innohub.com.gh/programs/afidba Application deadline: Feb. 5, 2021

Markets

FRIDAY FEBRUARY 5, 2021

CONTINUED ON PAGE 18

18 CONTINUED FROM PAGE 17

FRIDAY FEBRUARY 5, 2021