Business24 Newspaper - Sept. 4, 2020 by Business24 Online

THEBUSINESS24ONLINE.COM

NO. B24 / 95

NEWS FOR BUSINESS LEADERS

FRIDAY SEPTEMBER 4, 2020

Glimmer of hope for forex bureau operators as passengers jet in By Sani Abdul-Rahman

Forex Bureau operators are heaving a sigh of relief after commercial passenger flights touched the tarmac of the Kotoka International Airport (KIA) for the first time since March, when Ghana closed her borders as part of measures to curb the spread of Covid-19. The arrival of both evacuees and foreign nationals on Tuesday has evoked cautious optimism amongst forex traders expecting a rebound from a near-collapse experience caused by the pandemic. The forex business in Ghana, which hinges on patronage from importers, expatriate businesses, the traveling public, and inbound tourists, suffered its worst forex turnover in decades as draconian restrictions on human movement were introduced to battle the virus.

Dr. Maxwell Opoku-Afari said the central bank gave no loans to the government in 2016-2019.

BoG developing proposal to amend its law By Eugene Davis ugendavis@gmail.com

he central bank has begun an internal review of the Bank of Ghana Amendment Act 2016 (Act 918), which is likely to result in a proposal for further amendments to facilitate the implementation of the law, the first deputy governor of the bank, Dr. Maxwell Opoku-Afari, has said.

He was speaking during an appearance before Parliament’s Public Accounts Committee on Wednesday to answer questions on the AuditorGeneral’s report for the 2017 financial year. The report had accused the Bank of Ghana of breaching the ceiling on central bank lending to government, which Act 918 limits to not more than

Ghana’s automotive industry: a burgeoning market for investment

More See Page 2

5 percent of the previous year’s total fiscal revenue at any time. However, Dr. Opoku-Afari said the report’s finding was the result of the AuditorGeneral interpreting the ceiling as being applicable to the total stock of outstanding government debt to the central bank, which in 2017 exceeded 5 percent of the previous

Police, Shippers’ Authority commit to removing trade barriers

More See Page 2

The Ghana Police Service and the Ghana Shippers’ Authority (GSA) have renewed their commitment to work together to remove trade barriers along Ghana’s transit corridor. The two state agencies made the pledge when the Chief Executive Officer (CEO) of the GSA, Ms. Benonita

Build strong mechanisms to sustain tourism livelihoods in crisis situations

>>> More See Page 13

>>> More See Page 15

More See Page 2 INTERNATIONAL MARKET

ECONOMIC INDICATORS *EXCHANGE RATE (INT. RATE)

USD$1 =GHC 5.6734*

BRENT CRUDE $/BARREL

*POLICY RATE

14.5%*

NATURAL GAS $/MILLION BTUS

GHANA REFERENCE RATE

15.12%

GOLD $/TROY OUNCE

OVERALL FISCAL DEFICIT

11.4 % OF GDP

PROJECTED GDP GROWTH RATE AVERAGE PETROL & DIESEL PRICE:

0.9% GHc 5.13*

CORN $/BUSHEL

43.22 1.79 1,842.40 329.50

COCOA $/METRIC TON

1,562.00

COFFEE $/POUND:

$109.65

Follow us online: facebook.com/business24gh twitter.com/business24gh linkedin.com/pg/business24gh instagram.com/business24gh

NEWS/EDITORIAL

FRIDAY SEPTEMBER 4 2020

EDITORIAL

Wash your hands 2

Cover your cough

Cooperation between agencies will facilitate trade The strong desire of state agencies to work together to facilitate trade along the country’s transit corridors, will serve to boost trade. The bottlenecks in trade are often cited as a major hindrance by many businesses. Very often information submitted to one state agency is not made available to another and requires the importer or exporter to submit an information multiple times to multiple state institutions for assessment or clearance. The Ghana Police Service and the Ghana Shippers’ Authority (GSA) have, therefore, renewed their commitment to work together to remove trade barriers along Ghana’s transit corridor. The two state agencies made

the pledge when the Chief Executive Officer (CEO) of the GSA, Ms. Benonita Bismarck paid a courtesy call on the Inspector General of Police (IGP), James Oppong-Boanuh on Tuesday. She informed the IGP about the establishment of an e-platform by the GSA in collaboration with the Borderless Alliance to provide real-time solutions to non-tariff barriers to trade along Ghana’s transit corridor. Ms. Bismarck said with the ongoing expansion works in the Tema Port, it is expected that trade will increase between Ghana and the landlocked countries of Burkina Faso, Mali and Niger. She, however, said the GSA has identified 75 police barriers between Tema and Paga during

its quarterly road trips and monitoring exercises along the corridor. The barriers have become a conduit for some officers of the service to extort monies from transit shippers, especially truck drivers for supposed road traffic infractions. For his part, Mr. OppongBoanuh assured the GSA of the Police Administration’s support in removing non-tariff barriers along the corridor. We applaud the appointment of Liaison Officers to work with Regional Commanders to collaborate with the GSA to address the issue.

BoG developing proposal to amend its law CONTINUED FROM COVER

Wear a mask Brought to you by

Visit thebusiess24online.com/ contacts to see a full list of Biz24 leaders and newsroom contacts. Your newspaper subscription - along with the support of businesses who advertise in the BUSINESS24 and on theBUSINESS24online.com - make an investment in the Journalism that is essential to keep business community in Ghana well-informed. We value your support and loyalty, and we are committed to serving you Conatct us

Email: hello@thebusiness24online.net Newsroom: 030 296 5315 news@thebusiness24online.net Advertising Sales: +233 030 296 5297

year’s total fiscal revenue. On the other hand, in the central bank’s interpretation, the ceiling applies to actual central bank lending since the promulgation of the act, which was zero in 2016-2019. “The stock of central bank financing as at the time before the act came into effect far exceeded 5 percent [of the previous year’s total revenue], so the understanding and interpretation was that the stock was ringfenced, and going forward the central bank would then not finance the budget beyond 5 percent,” the first deputy governor said. “The central bank has also entered into an MoU with the Ministry of Finance, and we have actually limited [the financing] to zero percent. So right from 2016 when the act came into effect till now, central bank financing to the budget has been zero percent until recently when we triggered section 30 and went into the asset purchase programme,” he added. Asked by a member of the committee whether the different legal interpretations necessitated an

amendment of the law, the deputy governor stated: “We have had two to three years of implementing the act, and we have actually commissioned a team to document some of the implementation issues that have come up—[especially] those that are of material effect that will constitute the need to engage the Ministry of Finance to look at bringing a proposal to amend certain aspects of the act.” He also told the committee that

the central bank will begin talks with the Ministry of Finance to find ways to reduce the government’s outstanding stock of debt to the central bank. Although the law permits the central bank to use part of its annual profits to offset these debts, this could not be done in the last three years because the bank made losses in 2017 and 2018, and was unable to utilise its 2019 profit to reduce the debt.

N E WS PA PA E R

ADVERTISE WITH US

TEL: +233 024 212 2742

www.thebusiness24online.net

News

FRIDAY SEPTEMBER 4 2020

Glimmer of hope for forex bureau operators as passengers jet in By Sani Abdul-Rahman

“It’s foreigners and importers that largely buy and sell foreign currencies from us and since the restrictions on movement were implemented, we’ve not had people walking in to transact business with us. Business was not good before the pandemic but worsened during the period and we are yet to recover from the shock. We considered closing the business,” Daniel Addy Selby, Manager of Rahama Forex Bureau in Accra told Business24. As passengers from across the world begin to fly in and the yuletide approaches, the forex traders anticipate increase in demand and supply of foreign currencies by visiting tourists and importers stocking up to meet the usual increase in demand during the period. “With the airport reopened, we expect the foreign nationals coming in for tourism and business to start transacting with us so that we can recover. Also, the Christmas is around the corner so we are hoping that demand for the currencies will rise,” Mr. Selby said. But as the pandemic lingers and

the country’s borders remained partially closed, some analysts forecast activity on the forex bureau market to remain low till next year when hopefully, restrictions around the world would be largely relaxed. “The reopening of Ghana’s airport will not make much impact in terms of the demand and supply of foreign currencies across the forex bureau market. The borders of some trading partners remain closed; health professionals have warned against leisure travels and economic activity is yet to return to pre-covid era. Therefore, they may have to wait a bit longer for activity on their

market to improve,” economist and currency analyst with Databank Research, Courage Martey told Business24. Weak regulatory regime has resulted in scanty data about the forex bureau industry, with details such as forex turnover unavailable, making it impossible to analyse market trends. The Bank of Ghana has recently enforced some reforms in the industry but activity on the market remain largely undocumented. Plight worsened by ‘black market’ The central bank’s directive to

forex bureau operators to demand identification cards before engaging in forex trading, drives one-time clients to the black market to transact business. “The BoG directed us to request ID cards before buying or selling any currency. Then just in front of our shops are black market guys trading without asking for ID cards. Why will the customer waste time to give ID card when he or she can get sorted without all the bureaucracies,” a forex bureau operator who wants to remain anonymous told Business24. Currency analyst Courage Martey attributed their ordeal to the regulatory failure on the side of the central bank, urging it to extend its regulations to the parallel market to curtail the disruptions caused by such players. He added that: “the black market dealers cause a lot of disruptions on the market, setting exchange rates on their terms thereby undoing all the gains achieved through stringent supervision. The Bank of Ghana must do well to regulate their activity or clamp on their operations.”

Police, Shippers’ Authority commit to removing trade barriers Bismarck paid a courtesy call on the Inspector General of Police (IGP), James Oppong-Boanuh on Tuesday. She informed the IGP about the establishment of an e-platform by the GSA in collaboration with the Borderless Alliance to provide realtime solutions to non-tariff barriers to trade along Ghana’s transit corridor. Ms. Bismarck said with the ongoing expansion works in the Tema Port, it is expected that trade will increase between Ghana and the landlocked countries of Burkina Faso, Mali and Niger. She, however, said the GSA has identified 75 police barriers between Tema and Paga during its quarterly road trips and monitoring exercises along the corridor. The barriers have become a conduit for some officers of the service to extort monies from transit shippers, especially truck drivers for supposed road traffic infractions. The development, she said, has led to the increasing cost of doing business along the corridor with its associated delays which sometimes

cause damage to perishable goods. She appealed to the IGP to assist the GSA in resolving the challenge. For his part, Mr. OppongBoanuh assured the GSA of the Police Administration’s support in removing non-tariff barriers along the corridor. He intimated the

appointment of Liaison Officers to work with Regional Commanders to collaborate with the GSA to address the issue. He appealed to shippers and truck drivers to report officers who extort monies from them to be sanctioned.

Explaining why there is an increased number of police barriers along the corridor, the IGP said the proliferation of weapons and pockets of violence registered in the sub-region coupled with fighting crime internally have given cause to the service to put in extra measures to keep the country safe.

FRIDAY SEPTEMBER 4 2020

News

FRIDAY SEPTEMBER 4 2020

ZEEPAY Mobile Money opens flagship branch in Kasoa ZEEPAY, a fast-growing FINTECH and a Challenger Electronic Money issuer (Mobile Money Company), has announced the opening of its flagship branch in Kasoa. Kasoa is currently one of the fastest growing cities in Accra and West Africa. The area due to the high number of returnees living in it, and the high rate of remittance receivers is presently considered as a remittance epi center. Thus, justifying Zeepay’s decision to set up its first branch in the Kasoa locality. Zeepay Mobile Money is the fastest growing Remittance to Mobile Money wallet provider in Ghana. Initially started out as a FINTECH 6years ago. Until it was recently licensed by Bank of Ghana to operate as a Mobile Money. Mr, Andrew Takyi-Appiah, Managing Director of Zeepay said: “Over the last 2years we have seen over 200,000 remittance transactions go into the Kasoa municipality and it environs annually. This decision is one of the major influencing factors that drove us to set up in the area. At Zeepay Mobile Money our strategy remains the same as our founding principleswhich is to help reduce the cost of remittance both on the send and

receive side. We believe we have achieved this today by making it possible to pay international money transfer directly into Zeepay Mobile Money.” Dede Quarshie, Chief Commercial Officer ZEEPAY, speaking about the service said, “With the introduction of our Zeepay Mobile Money service, we are able to reduce cost of remittance at the last mile by 20percent. We are delighted that our receivers and subscribers can

benefit from the savings especially in this period of pandemic. Our services include Airtime for all networks in both Ghana and abroad, ability to fund your Zeepay Mobile Money using your VISA Card, or from all Networks and regular Cash In and Out at Agents points including Banking Halls and ATMs. We look forward to opening up additional Concept Stores nationwide over the next 6months.” Felicity L. Jaforktuk, Zeepay’s

Mobile Money Product Manager said: “Our Zeepay Mobile Money is designed such that we leverage existing distribution in the market, which gives us access to over 150,000 Agent network nationwide. Our services are also interoperable and available for use by all. You don’t need a SIM card, rather all you need is an active phone number and dial *270# for Register and use the service. Our service is truly ubiquitous and since opening our doors in July, we currently have about 101,000 subscribers and processed over GHS500million in volumes already. We anticipate to close the year with about 500,000 subscribers and thanks to all for believing in the freedom we bring to market. Zeepay is the fastest growing FINTECH into Mobile Financial Services across Africa with Operations in Ghana and United Kingdom and terminating to 20 countries across Africa and with termination agreements in over 90 jurisdictions globally. It specialize in remittance termination into mobile wallets and completely network and partner agnostic. We are wholly owned Ghanaian company and regulated in the UK by Financial Conduct Authority and in Ghana by Bank of Ghana.

Emirates to resume flights to Accra and Abidjan from September 6 Announced it will resume flights to Accra, Ghana and Abidjan, Ivory Coast from September 6. The addition of these two destinations takes the total number of points served by Emirates in Africa to 11. This will also take the airline’s passenger network to 81 destinations in September, offering customers around the world even more connections to Dubai, and via Dubai, as the airline safely and gradually resumes passenger operations to meet passenger demand. Flights from Dubai to Accra and Abidjan will be linked services, operating three times a week. The flights will be operated with the Emirates Boeing 777-300ER and can be booked on emirates.com or via travel agents. Customers can stop over or travel to Dubai as the city has reopened for international business and leisure visitors. Ensuring the safety of travellers, visitors, and the community, COVID-19 PCR tests are mandatory for all inbound and transit passengers arriving to Dubai (and the UAE), including UAE citizens, residents and tourists, irrespective of the country they are coming from.

Destination Dubai: From sunsoaked beaches and heritage activities to world class hospitality and leisure facilities, Dubai is one of the most popular global destinations. In 2019, the city welcomed 16.7 million visitors and hosted over hundreds of global meetings and exhibitions, as well as sports and entertainment events. Dubai was one of the world’s first cities to obtain Safe Travels stamp from the World Travel and Tourism Council (WTTC) – which endorses Dubai’s comprehensive and effective measures to ensure guest health and safety. Flexibility and assurance: Emirates’ booking policies offer customers flexibility and confidence to plan their travel. Customers who purchase an Emirates ticket by 30 September 2020 for travel on or before 30 November 2020,  can enjoy generous rebooking terms and options, if they have to change their travel plans due to unexpected flight or travel restrictions relating to COVID-19, or when they book a Flex or Flex plus fare. More information here. Free, global cover for COVID-19 related costs: Customers can now travel with confidence, as Emirates

has committed to cover COVID-19 related medical expenses, free of cost, should they be diagnosed with COVID-19 during their travel while they are away from home. This cover is immediately effective for customers flying on Emirates until 31 October 2020 (first flight to be completed on or before 31 October 2020), and is valid for 31 days from the moment they fly the first sector of their journey. This means Emirates customers can continue to benefit from the added assurance of this cover, even if they travel onwards to another city after arriving at their Emirates destination. For more details: www. emirates.com/COVID19assistance. Health and safety: Emirates has implemented a comprehensive

set of measures at every step of the customer journey to ensure the safety of its customers and employees on the ground and in the air, including the distribution of complimentary hygiene kits containing masks, gloves, hand sanitiser and antibacterial wipes to all customers. For more information on these measures and the services available on each flight, visit: www. emirates.com/yoursafety. Tourist entry requirements: For more information on entry requirements for international visitors to Dubai visit: www. emirates.com/flytoDubai. Dubai residents can check the latest travel requirements at: www.emirates. com/returntoDubai.

FRIDAY SEPTEMBER 4 2020

ICT

FRIDAY SEPTEMBER 4 2020

Why do emails go to Spam folder? BY KAUNDA, IBN AHMED

This is a question I addressed extensively in my new book titled: “Digital First: The step by step employment guide for Digital Citizens.” Anything that the email providers determine as spam will get moved into your spam folder. You can see your spam folder on the left side of your Gmail or Yahoo screen, with a number listing how many messages are in the spam folder. Outlook.com calls that folder Junk. Below are some of the reasons why email providers classify email as spam 1)Your email does not have a Physical Address or a P.O.BOX in it. Email filters are able to scan for physical address or a post office box in your email content. So make sure you have it there. You can add it to your Email signature so you don’t have to write it always. 2)People receiving your emails are marking it as Spam. The email filters take into consideration what others are saying about you. This is something I will call “Crow Verification”. When many people mark your email as spam, the email filters will automatically see you as such. How do you get around this? Try getting permission before sending emails to the person. Also, make sure the content is really relevant to the person. Once the content is tailored to the person’s interest, the person will not mark it as spam. That aside, in the USA for example, you can get into trouble if you send email without permission. There is an act to that effect. You can read more about it here: https:// www.ftc.gov/tips-advice/businesscenter/guidance/can-spam-actcompliance-guide-business. 3)Low Engagement Email is considered a two way communication. You can’t be sending emails to people and no one is replying. That is red flag. This mostly happens in Email marketing where we send bulk emails. How do you go around this? Find a way to get the recipient to take action (reply). Alternatively, you can create about 50 or 100 emails and add that to your bulk emails. Anytime you send emails out, send some to yourself, and reply yourself. That will create engagement enough to fool the filters (algorithms). Emailing yourself in order to trick the providers is something I will not recommend. 4)Your domain is blacklisted Before registering OnlinePresident.org, I used domains such are thedigitalcompanion.com,

remote.com.gh, webextremist. com, etc. I’ve abandoned them all. Only God knows what I did with those domains. Imagine if I used info@webextremist.com to send 1000s of spam emails. Anyone owning that domain now will suffer from my bad behavior. How do you go around this? Create an engagement around your email. Send emails to your friends and ask (plead) with them to reply. Better still, check the status of your domain (whether blacklisted or not) before buying it. You can check that here: http://www.blacklistalert.org/ 5)There is no “Source” in your Subject. The email should have been enough to indicate where the content is coming from, but unfortunately filters expect to see something like “Kaunda from Datatype Technology .........” in the email Subject. 6)In proper fraction The ratio of your text to image should be proper. You should not have small text and large image. At most, Image should cover 40% of your email, and 60% of text. Anything else is a characteristic of spam email.

Offer, Absolutely free, Amazing, Rush to register, Apply now, wow, hurry, cancel anytime, etc. Any word that can make someone rush to take an action is a red flag. You can get a long list of words and phrases that raise red flag from here https://www.automational.com/ spam-trigger-words-to-avoid/ 9)Misleading Title/Subject For example, if your email subject claims to come “From Online President” or “From Donald J Trump” you can have problem

From the above diagram, it is clear that my email content has one broken link and there is a sign that I can also improve the content of the email.

7)Sending Attachment in bulk email. We normally do this a lot. We send company profile in our bulk emailing. Sometime back I used to send proposals that way too. It is a horrible practice. In email marketing, do not add attachment. You can later send the attachment to individuals who show business prospect. 8)Using amazing words and phrases. Words and phrases like Freeeeee

with filters. Do not pretend to be someone else. 10)Too much links or too much coloring Do not add too much links or colors in your email. One or two is OK. 11)Grammar “glammar, glammer” The email filters associate wrong spelling to scammers. So make sure you construct your English well. If yours is as horrible as mine, then install the application called Grammarly. It has a chrome

extension that helps to form the right tenses and spelling. The free version is enough to do your job. 12)No “Unsubscribe” option in your email This is for those who send bulk email. Do not think you are smart by denying the recipient the option to opt-out. It will go against your future campaign. Conclusion A simple way to make sure your email satisfies all the above

conditions is to first send your email to a Mail Tester and check the score. Note: This is purely for those who are into Email Marketing. I sent a test email to an email tester, pretending to be Donald Trump. Below is the analysis. To test your email, visit https:// www.mail-tester.com/ and follow the steps there

Author: KAUNDA, Ibn Ahmed (CEO, Datatype Technology) For comments, contact Kaunda, OnlinePresident via email kaunda@ outlook.com; Mobile +233 234 80 90 10; Website: OnlinePresident.org

FRIDAY SEPTEMBER 4 2020

Feature

FRIDAY SEPTEMBER 4 2020

How tourism can lead COVID-19 recovery and why Africa is well-placed to benefit

BY ZURAB POLOLIKASHVILI, SECRETARY-GENERAL, WORLD TOURISM ORGANIZATION

round the world, countries are steadily shifting from responding to the COVID-19 pandemic to the recovery phase. And for many, tourism will play a key role here, not least due to its importance in job creation, supporting livelihoods and driving inclusive development. But tourism itself has been hit hard by this unprecedented crisis. During the first five months of the year alone, the world welcomed 300 million fewer international tourists than in 2019, UNWTO data shows. This translates into around US$320 billion in lost revenues, triple the amount lost in 2009 during the global economic crisis. Looking at Africa, there has been a decrease of 47% in international tourists. This sudden and unexpected fall places many millions of jobs and people’s livelihood at risk. Moreover, as the United Nations Secretary-General Antonio Guterres made clear in his landmark Policy Brief on “COVID-19 and Transforming Tourism”, it also places the progress we have been making towards using tourism as a driver of the Sustainable Development Goals, including those relating to gender equality and the conservation of our cultural and natural heritage, in jeopardy.

So, how can we get tourism moving again? Above all, it is a matter of trust and confidence. People will only travel again if they feel safe. Moreover, they not only need to be confident that they won’t bring the virus home with them, many also feel a responsibility to not spread it themselves. In this regard, Africa has certain notable advantages over other global regions. For most international tourists, Africa is a prime destination for nature tourism – to see wildlife or to experience unspoiled landscapes and habitats. This lends itself to social distancing, making it relatively easy for every part of the tourism value chain to introduce strict hygiene protocols. Furthermore, Africa, as the World Health Organization (WHO) statistics show, has been the least affected of all global regions. Due to a combination of factors, infections across the continent have been considerably lower than those recorded elsewhere in the world, and new cases continue to slow. All this presents an opportunity for African countries to market themselves as safe destinations, as governments across the continent are increasingly realizing. Indeed, when we asked our African Member States how they would like to see UNWTO adapt our 2030 Agenda for Africa (a plan of action for growing tourism over the next decade) to better reflect the changed circumstances caused by the pandemic, many singled out promoting ‘Brand Africa’ as

a key priority. On the back of this feedback, we have launched a special Branding Africa Challenge to identify the best marketing ideas and strategies that will allow prospective tourists to see a different, more positive side to the continent. This practical assistance in marketing and promotion is being rolled out alongside other areas of support that UNWTO is offering all our Member States, including helping to train and up-skill tourism workers so that they can adapt to the new reality. At the same time, we’re working closely with Members to promote innovation and entrepreneurship, recognizing that overcoming unprecedented challenges often requires new ideas and new voices. However, even as countries lift travel restrictions and confidence returns, international tourism will not return overnight. That is why UNWTO is also working with Member States to help them realize the potential of both domestic and regional tourism. With more than 1 billion citizens, the youngest population of any continent, and a growing middle class, there is a significant market for this kind of travel. Capitalizing on this will not only help support those jobs who are dependent on a strong tourism sector, it will also protect tourism businesses, 80% of which are small enterprises. Furthermore, across Africa, the revenues generated by tourism are a key source of funding for conservation projects as well

as a source of livelihoods for rural communities and particularly for women and youth. Growing domestic tourism while at the same time preparing for the return of international tourism will, therefore, allow the many social and economic benefits the sector provides to return. Just as individuals have a role to play in getting tourism moving again – by travelling domestically and by being a responsible tourist – so too do governments have a responsibility to support a sector upon which millions of people depend. There is a pressing need for financial assistance and fiscal policies that support tourism businesses, especially small enterprises. Governments also need to work together to reopen borders in a coordinated manner. This is no time to go it alone. And, looking ahead, the Open Skies Policies being implemented by the African Union should be embraced fully, another example of where strong and determined leadership will make a real difference. In conclusion, the ability of the tourism sector to bounce back has been proven time and again over the years. The sector has also shown an ability to adapt and respond to challenges. Learning from the lessons of the past while also embracing innovation and new ideas will be pivotal as we restart tourism across Africa, and so reestablish the sector as the ultimate driver of growth and opportunity for all.

FRIDAY SEPTEMBER 4 2020

Feature

FRIDAY SEPTEMBER 4 2020

Africa’s gathering debt storm BY COBUS VAN STADEN

he COVID-19 crisis is pushing Africa to the financial brink. African governments are under pressure to continue servicing their external loans, leaving them with few resources to confront a historic pandemic and its economic fallout. Without external support – specifically, a comprehensive repayment freeze – some African economies will buckle under their debt burden. The resulting domino effect could imperil the entire continent’s development and harm richer countries, too. The international community’s response so far has been mixed. The most notable step so far – the G20’s Debt Service Suspension Initiative (DSSI) for the world’s poorest countries – covers only official bilateral debt. But 61% of African DSSI countries’ debtservice payments this year will go to private creditors, bondholders, and multilateral lenders like the World Bank. And, despite the G20’s assurances, some countries joining the DSSI were subsequently downgraded by global ratings agencies. The World Bank has played an unhelpful role here. Although its president, David Malpass, recently called for expanded debt relief and even raised the possibility of a writeoff, he has also resisted calls for the Bank itself (a major lender to Africa) to freeze debt repayments. Instead, the US-dominated institution seems more interested in scoring political points by urging the China Development Bank to join the G20 initiative, even though doing so would really affect only one African country. Geopolitics are also derailing the promising option of a new allocation of the International Monetary Fund’s Special Drawing Rights (its global reserve asset) in order to unlock extra liquidity. This initiative faces resistance from US President Donald Trump’s administration, which worries that some of the funds would flow to countries like Iran. A major problem for Africa is that it now has significant privatesector debt. In May, a group of 25 of the continent’s largest private creditors was created, in consultation with the United Nations Economic Commission for Africa (UNECA). The organization’s executive secretary, Vera Songwe, has been pushing for Africa’s debt to be bundled into an instrument resembling a collateralized debt obligation, backed by an AAA-rated multilateral finance institution or a central bank. This would save

countries time by quickly giving them a two-year repayment freeze in order to deal with the pandemic, without preventing them from tapping credit markets in the future to fund economic recovery. But the private creditors quickly rejected such blanket approaches, insisting that African countries’ debt needs to be dealt with on a case-by-case basis. This risks wasting so much time that many countries could slide into default while they’re waiting, which would be especially galling in view of the large profits these creditors have made by chasing Africa’s sky-high yields. Although none of these proposals is a magic bullet, Africa’s debt problem is not intractable. The continent’s debt-service payments in 2020 amount to $44 billion. That is a lot of money, but it’s small change compared to the trillions of dollars that rich-country governments are pumping into their own economies. Pious laments about how the “poorest countries will suffer the most” accompany the infighting among Africa’s creditors. This response assumes that while Africa’s distress is regrettable, it’s also far away, and the continent will quietly suffer in its corner. Today, such thinking is woefully naive. Until early this year, many African economies had been growing robustly. Now, without external help to weather the COVID-19 storm, these countries could face economic collapse. This will directly affect the rich world in

ways for which it is not prepared. For China, the current debt crisis represents its biggest political setback to date in Africa. The continent’s economic value to China may have declined somewhat, but its political value as a dependable bloc of votes in multilateral institutions is increasing. If Democratic challenger Joe Biden wins November’s US presidential election, China will face concerted pressure in those organizations. And although China has joined the G20’s DSSI in principle, its application remains piecemeal and opaque. The political costs are mounting. China currently faces a chorus of debt-related disapproval in Nigeria, both on social media and in the country’s House of Representatives. Nigerian politicians are calling for an audit of every Chinese loan to the country – an unprecedented move in China-Africa relations. If the economic and debt crisis worsens, this hostility will spread across the continent. During previous hard times, African opposition parties campaigned against the Chinese presence in their countries. Increased economic chaos may lead not only to an erosion of highlevel African support for China in forums like the UN, but also to populist targeting of Chinese firms and citizens. America’s engagement in Africa has a strong military and anti-terrorist component. US policymakers should thus be

concerned that the Islamic State (ISIS) has recently taken control of a port in Mozambique. Africa has a population of 1.2 billion, with an average age of 19. A continent of teenagers with no economic prospects will not be difficult to radicalize. Europe is already dealing with the scandal of Greek authorities abandoning African migrants, leaving them to die on the high seas. If African economies collapse, Europe will face an unprecedented migration crisis that dwarfs that of 2015, which almost triggered rightwing populist takeovers in several EU countries. The cost of helping Africa to ride out this debt storm is minuscule, while the costs of not doing so are unimaginably huge. Many European Union member states have joined the DSSI, and they might support its extension when the G20 and the Paris Club of sovereign creditors reconvene later this year. But avoiding nightmare scenarios will require innovation. All of Africa’s financial partners, including multilateral institutions, private creditors, and rich-country governments, must get together with UNECA and other African stakeholders to work out a broad solution, and fast.

Cobus van Staden is a senior foreign policy researcher at the South African Institute of International Affairs. Copyright: Project Syndicate, 2020. www. project-syndicate.org

FRIDAY SEPTEMBER 4 2020

Feature

FRIDAY SEPTEMBER 4 2020

Ghana’s automotive industry: a burgeoning market for investment ‘’This is the first, and there will be many more to come’’.

hese were the words of the President Nana Addo Danquah Akuffo Addo when the German car maker Volkswagen officially unveiled its first ever range of locally assembled cars. The VW story was birthed in 2018 when the German Chancellor Angela Merkel visited Ghana to strengthen diplomatic and development ties. This saw the German car Manufacturer VW, become the first company to sign a Memorandum Of Understanding (MOU) with the Ghanaian government for the assembling of vehicles in the country. The car manufacturer subsequently registered its local company VW Ghana; a 100 percent subsidiary of VW South Africa to manufacture six of its models, the Tiguan, Teramont, Amarok, Passat, Polo and Caddy. The official unveiling of the six models on August 3rd,2020 was the pinnacle of the success story for the first phase of VW’s car manufacturing project valued at 10.5 million dollars. In coming- months, the company is expected to roll out a second phase worth US$22 million dollars to produce an average of 1000020000 cars annually according to data by the Ministry of Trade and Industry (MOTI). But the story of VW as stated by the president, will be one of several car manufactures expected to commence assembling of cars in Ghana under the governments automotive industry hub; where Vehicle Assemble and Automotive Components manufacturing has been identified as a strategic industry to be supported as part of the nation’s Ten-Point-Plan for industrial development. According to the Trade Minister Alan Kyeremanten, imported vehicles was among the top three import commodity items in the country. It represented 12.5 percent of the nation’s total import bill for 2018 which was estimated to be around US$12 billion - clearly depicting a very high demand and market for vehicles in the country. As a result, government plans to halve the high vehicle import by inducing the local production of vehicles through the Automotive Policy and developing car financing schemes to facilitate the purchase of new cars.

In the months ensuing, government is upbeat about more automobile manufacturers launching their operations. “Renault, Suzuki, Nissan and Toyota are some of the brands that have expressed interest to come in and start production. There’s also SinoTruck from China who’s already assembling here for the market, while discussions are ongoing with Honda to also begin production’’ said Yofi Grant CEO of the GIPC when questioned on what to expect after the VW official launch in a recent engagement with the media. He carried on to explain that the primary objective of the automotive industry hub concept was to create jobs, induce industrial growth and spur economic development in the country, contrary to agitations from second hand car dealers. The framework of the automotive industry hub is now set in the recently developed automotive development policy by the Ministry of Trade and Industry. Here the initial scope of the policy is to provide the necessary framework to establish assembly andmanufacturing capacity in Ghana. The initial coverage of vehicles to be assembled under the

policy includes new passenger cars, SUV’s and light commercial vehicles such as pick-ups, minibuses and cargo vans. Additional Policy interventions are being introduced in the course of the implementation for assembling medium and heavy-duty vehicles and buses. The policy further provides a number of fiscal incentives under the nation’s Tax Act such as; Corporate tax holiday of 5 years for Enhanced Semi Knock Down (SKD) registered assemblers and 10 years tax holiday for Completely Knocked Down (CKD) registered assemblers. Again, the policy provides for a waiver of the import duties and related charges on any plant, machinery, equipment or parts of the plant, machinery or equipment imported for SKD and CKD Auto Assembly. The recent passage of the Customs Amendment Bill which placed restrictions on the importation of over-age and salvaged cars also bodes well for the establishment of this automotive industrial hub by dealing with the problem of grey markets. Notwithstanding the fact that used cars make up the chunk of

the Ghanaian car market, recent trends have also shown a gradual increase in demand for luxury and new vehicles in Africa due to a burgeoning middle class. This therefore augurs well for Ghana’s developing automotive industry which will not only serve local demand but the larger West African market, a region with more than 380 million people. This ready market together with a conducive environment backed by policies places Ghana as the most visible location for a full blown automotive industry with endless opportunity for investment across the automotive value chain, which includes vehicle sales, aftersales, vehicle assembly and production. With time, the domestic production and assembly of vehicles will have substantial multiplier benefits for the country by reducing the overall price of cars, thereby increasing purchases as well as boosting employment opportunities, technology transfers, industrialization and export revenues for sustained economic growth. Source: GIPC

FRIDAY SEPTEMBER 4 2020

Feature

FRIDAY SEPTEMBER 4 2020

Build strong mechanisms to sustain tourism livelihoods in crisis situations BY SAMUEL OBENG APPAH

t is refreshing and exciting seeing global travel and tourism restart in the midst of the Coronavirus crisis. This gives credence to the sector’s resilience attribute. But for the people who have lost their jobs temporarily or permanently as a result of the pandemic, tourism hasn’t done much to support their livelihoods. COVID-19 has exposed the vulnerabilities of the sector in the wake of an unexpected situation. A UNWTO COVID-19 Impact Assessment on Travel and Tourism published in May clearly put the situation in perspective: In an unprecedented blow to the tourism sector, the COVID-19 pandemic has cut international tourist arrivals in the first quarter of 2020 to a fraction of what they were a year ago. Available data points to a doubledigit decrease of 22% in Q1 2020, with arrivals in March down by 57%. This translates into a loss of 67 million international arrivals and about USD 80 billion in receipts. Prospects for the year have been downgraded several times since the outbreak in view of the high level of uncertainty. Current scenarios point to declines of 58% to 78% in international tourist arrivals for the year, depending on the speed of the containment and the duration of travel restrictions and shutdown of borders, although the outlook remains highly uncertain. The scenarios reflect three possible patterns of monthly change in arrivals from April to December 2020 supposing that travel restrictions start to be lifted and national borders opened in early July (Scenario 1: -58%), in early September (Scenario 2: -70%) or in early December (Scenario 3: -78%). These scenarios would put 100 to 120 million direct tourism jobs at risk. This is by far the worst result in the historical series of international tourism since 1950 and would put an abrupt end to a 10-year period of sustained growth since the 2009 financial crisis. The situation is even much more dire for countries whose economies are heavily dependent on tourism. Tourism’s contribution to the global economy has always been much touted as one that gives hope for countries that are seeking to diversify their economy.

The industry is currently responsible for one in every ten jobs globally and injects billions of dollars into local economies. However, tourism is arguably the most sensitive economic sector to shocks. In the advent of the Coronavirus pandemic, thousands or perhaps millions of jobs have been lost. Those who were lucky enough to hold on to their jobs have had their salaries and wages slashed to the barest minimum. What’s even shocking is that in the first three months of the pandemic, a lot of entities within tourism and its periphery sectors could not even guarantee full payment of workers’ salaries. And that is why for tourism dependent businesses and workers, it’s crucial that strong systems are put in place to ensure continuity of employment or at least mitigate the impact on them whenever crisis hit. Tourism should not and must not be an ephemeral Fairweather Friend that is only available in good times. Tourism has to be good in both the bad and good times for those who depend on it. It’s just not right for people to expect job losses or wage cuts simply because there is a pandemic or any other crisis for that matter. It is therefore important that governments and businesses begin

to plan well into the future to ensure sustainability of livelihoods of people who are employed by the sector whenever an unexpected event befalls. Of course, desperate times call for desperate measures; but for tourism workers these measures should not saddle them with economic burdens or erode the confidence they have in the sector. The current Coronavirus pandemic has unravelled job security weaknesses within Africa’s tourism sector which imposes a greater responsibility on stakeholders to properly plan ahead henceforth. Countries on the continent have had relative success in containing the spread of the virus, yet, the consequences on its travel and tourism have been staggeringly alarming; one that has not just led to permanent job losses but also douced the hopes of many others. The current crisis has taught all stakeholders in tourism that they can’t get too comfortable assuming that the sector can be depended on all the time for those it employs. This calls for bold and innovative ways to make tourism work for all in times of trouble. The use of ICT tools is quite critical in this regard. Destinations particularly must invest in Virtual

and Augmented Reality (VR and AR) tools that is able bring tour experiences to people in situations like Covid-19 when they can’t really move around. So long as these people pay for such experiences, the destinations can at least have money to pay their staff. In addition to that, businesses within the sector must establish remunerative schemes that take cognizance of eventualities so that workers are not unnecessarily overwhelmed when they happen. The bottom line is that Africa’s tourism must be set on a path that provides strong anchorage for those who depend on it in turbulent times of uncertainties and crises. That journey must begin now.

The writer is the content Editor at Voyagesafriq

FRIDAY SEPTEMBER 4 2020

Feature

FRIDAY SEPTEMBER 4 2020

News

FRIDAY SEPTEMBER 4 2020