Business24 Newspaper (June 15, 2020) by Business24 Online

EDITION B24 | 62

MONDAY JUNE 15, 2020

THEBUSINESS24ONLINE.NET

Q1 GDP out on Wednesday

West African states seek common airspace surveillance BY DOMINICK ANDOH

MORE ON PG 29

*EXCHANGE RATE (INT. RATE)

USD$1 =GHC 5.6230*

*POLICY RATE

14.5%*

GHANA REFERENCE RATE

15.12%

OVERALL FISCAL DEFICIT

6.6 % OF GDP

PROJECTED GDP GROWTH RATE PRIMARY BALANCE.

1.5% -1.1% OF GDP

AVERAGE PETROL & DIESEL PRICE:

GHc 5.13*

INTERNATIONAL MARKET BRENT CRUDE $/BARREL

42.30

NATURAL GAS $/MILLION BTUS

1.78

GOLD $/TROY OUNCE

1,685.06

CORN $/BUSHEL

329.50

COCOA $/METRIC TON

2,384.00

COFFEE $/POUND:

+5.70 ($108.30)

COPPER USD/T OZ.

220.15

SILVER $/TROY OUNCE:

17.07

NEWS/EDITORIAL

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MONDAY JUNE 15, 2020

EDITORIAL

Wash your hands 2

Cover your cough 3

War against “saiko” requires tougher sanctions A new study on saiko fishing has for the first time put a value on the cost of the destructive fishing practice, which is being driven largely by Chinese trawlers and is devastating Ghana’s overexploited fisheries. An investigation by the Londonbased Environmental Justice Foundation (EJF) has confirmed earlier estimates that in 2017 saiko fishing – the practice of transshipping fish at sea from industrial trawlers to specially adapted canoes – took around 100,000 metric tonnes of fishes.

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LIMITED Copyright @ 2019 Business24 Limited. All Rights Reserved. Editorial Team Dominic Andoh: Editor Eugene Kwabena Davis (Head of Parliamentary Business & Commodities) Benson Afful (Head of Energy & Education) Patrick Paintsil (Head of Maritime & Banking) Nii Annerquaye Abbey (Online Editor) Marketing Alexander Lartey Agyemang (Business Development Manager) Ruth Fosua Tetteh (Dept. Business Development Manager) Gifty Mensah (Marketing Manager) Irene Mottey (Sales Manager) Edna Eyram Swatson (Special Projects Manager ) Events Evelyn Kanyoke (Snr. Events Consultant) Finance/Administration Joseph Ackon Bissue (Accountant)

There are laws to deter this practice on our territorial waters but the illegality persists because of the lack of enforcement these laws. The Business24 is calling on the regulators of the fisheries industry to crack the whip on operators who are blatantly engaging in saiko on our waters to secure the livelihoods of thousands of the country’s coastal dwellers.

Q1 GDP out on Wednesday (…CONTINUED FROM COVER )

Wear a mask

The country’s fisheries sector and related activities along its value chain are under threat of imminent collapse as a result of this destructive practice, where foreign trawlers target the staple catch of canoe fishers and sell it back to local communities at a profit. The Minister for Fisheries and Aquaculture Development Elizabeth Naa Afoley Quaye has called for complete eradication of the practice but it an illegality than requires strict and tougher punitive measures.

that separates improvement in local business conditions from deterioration. The virus is expected to, among others, knock off nearly US$1.8bn from Ghana’s export earnings, reflecting the slowdown in economic activity, disruptions to trade, and the steep decline in global oil prices. Downward growth With the pandemic hitting hard at government revenues, creating a widerthan-expected deficit, the UK-based business advisory firm Economist Intelligence Unit (EIU) has said the economy is heading for a contraction this year, with a forecast real GDP decline of 1 percent. “The pandemic will have a significant impact on Ghana’s economic outlook for 2020, necessitating a total rewrite of the 2020 budget. Some of the effects are already showing; financial conditions have tightened and the currency has weakened (with the cedi depreciating by some 7 percent since March, to about GH¢5.81:US$1 currently),” the EIU said in its April country report. Goldman Sachs, an international investment bank, also predicted that economic growth will be flat this year, in contrast with government hopes of achieving at least 1.5 percent growth. Below expectations The pandemic shock comes after the country’s economic growth for last year fell below expectation. The 6.5 percent growth rate recorded was below the 7.1

percent target the Finance Ministry had previously announced. The below-expectations performance was caused by a decrease in the growth rate of nonoil GDP, which went down from 6.5 percent in 2018 to 5.8 percent in 2019.

The slowdown in the non-oil GDP growth rate was attributed to a 10.4 percent growth rate in mining and quarrying activities (excluding oil and gas) in 2019 compared to the 48.6 percent recorded in 2018.

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MONDAY JUNE 15, 2020

West African states seek common airspace surveillance BY DOMINICK ANDOH West African states are seeking to establish common communication and surveillance systems to better coordinate and improve the overall safety of the airspace within the region. Simon Allotey, Director-General of the Ghana Civil Aviation Authority (GCAA), told Buisness24 exclusively that a number of agreements have been signed and implementation is being planned. “We are now looking at implementation of the common systems for communications and surveillance data sharing. We are also talking to the ASECNA member states—made up of Francophone countries in West Africa except Guinea,” he said. “We are also in talks with the Nigeria Airspace Management Agency (NAMA) and the Roberts FIR—made up of Liberia, Sierra Leone and Guinea—over implementing some common communication and surveillance systems, whereby we could share surveillance data so that the aircraft we are seeing in Accra will also be seen in Togo, and they know when an aircraft will be in

Simon Allotey, Director General of GCAA

their airspace.” Provision of communication and surveillance for aircraft flying in the sub-region is currently handled by some individual countries, while other countries have formed a bloc to share communication and surveillance data. The Accra Flight Information Region (Accra FIR), for instance, is split into two—Accra East and Accra West. Accra East’s control centre is in Lomé, while Accra West’s control centre is in Accra. Accra, however,

handles issuance of notifications (NOTAMS) to their Togo and Benin counterparts. Nigeria also operates its own Flight Information Regions (FIRs). Liberia, Sierra Leone, Guinea use the Roberts FIR, while ASECNA member states— Francophone countries in West Africa—use a common FIR. Civil aviation authorities in these countries, with the support of their governments, are seeking to implement common communication and surveillance systems to better

enhance coordination, data sharing and planning, and draw them closer to a future common upper airspace control centre, just as exists in Europe. European Union member countries share a common upper airspace control centre called Euro Control. A common communication and surveillance system will greatly help in reducing accidents and incidents within the sub-region and assure passengers of enhanced safety when they fly. This makes for more effective planning. “This is more of coordination and cooperation such as implementing joint systems. One system can provide control over a wide area. So, instead of Ghana acquiring its own satellite system and Nigeria, Abidjan, and Roberts FIR also acquiring their own system, states could come together and implement one system which would be shared and used by all of them. Technology now abounds to have one system providing control over a larger area. In the early days we had a groundbased system, so everything was localised, but now with satellitebased equipment, you can sit in Accra and see what is happening in Niamey,” Mr. Allotey noted.

Chinese vessel fined US$1m commits same offence BY BENSON AFFUL The Lu Rong Yuan Yu 956, a Chinese fishing vessel, has been arrested again for the same illegal fishing crimes it was apprehended for a year ago, the Environmental Justice Foundation (EJF) has said. The Marine Police apprehended the vessel again on May 30, and again the charges brought against it were fishing with nets with a mesh size below the legal limit and catching under-sized fish. The vessel, which is operated by the Chinese company Rongcheng Ocean Fishery Co. Ltd., is expected to be detained until June 16, when the case is due to come before court. Narrating the chain of events, EJF said that in October 2019, the owners were issued with a fine of US$1m by an out-of-court settlement committee, and an additional GH¢124,000 for the fish on board the vessel. However, the owners refused to pay the fine and the case returned to court. Despite this, the vessel’s licence was renewed and the trawler put to sea again, fishing

The vessel was fined US$1m last year for engaging in illegal fishing

in the waters of both Ghana and neighbouring Cote d’Ivoire. This blatant disregard for the law, it said, is enabled by a lack of deterrent sanctions and the decision taken by government officials in the full knowledge of these crimes to re-license the vessel before the fine was paid. It said if government does not crack down on these practices it would endanger the livelihoods and food

security of millions of Ghanaians. It said under international law, Ghana has a responsibility to establish and implement a system of deterrent sanctions that deprives offenders of the benefits flowing from their illegal fishing activities. The fact that the vessel was authorised by the Ghanaian authorities to fish in Cote d’Ivoire, despite its failure to pay a fine for serious illegal fishing offences,

shows that Ghana’s decisions on these cases have international importance, it added. EJF’s Executive Director Steve Trent said it is vital to ensure that the vessel pays the full fines in both cases, and that the outcomes of this and other cases are published on the Ministry of Fisheries’ website. “Perpetrators cannot simply choose not to pay a fine and go back to exactly the same criminal actions as before. That is not how justice works. To safeguard Ghana’s food security, livelihoods and stability, the government must act to tackle this issue across the whole fleet.” Around 90 percent of Ghana’s industrial fishing fleet is linked to Chinese ownership. As Ghana’s fisheries laws prohibit foreigners from engaging in joint ventures in the industrial trawl sector, Chinese organisations operate through Ghanaian “front” companies, using opaque corporate structures to import their vessels, register and obtain a licence.

MONDAY JUNE 15, 2020

News

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Sahara Energy COO reviews impact of IMO 2020, affirms group’s commitment to cleaner fuels As economies begin to recover and trade restrictions ease following the COVID-19 pandemic, an increase in demand for Very Low Sulphur Fuel Oil (VLSFO) should see prices strengthen Andrew Laven, Chief Operating Officer, Sahara Energy Resources DMCC, Dubai has said. In an article for leading trade publication Energy Voice, Laven explored key industry developments in the six months since the introduction of the IMO:2020 policy. Looking ahead, he reaffirmed Sahara Group’s commitment to cleaner fuels, welcoming industry-wide efforts to reduce maritime sulphur emissions and commending the energy sector’s transition to VLSFO without incurring anticipated delays. Sahara Group continues to demonstrate leadership in the energy sector globally, providing full backing for progressive policymaking in support of wider sustainability initiatives. Previewing Sahara Group’s plans for the United Arab Emirates and other markets, Laven reiterated the energy conglomerate’s preparedness for transitions to cleaner fuels. “For the foreseeable future this will be the marine fuel of choice and we want to play our part in ensuring availability and supporting the supply chain that is necessary to keep trade moving.” In the article, Laven also looks ahead to the economic recovery following the COVID-19 pandemic and the preparedness of the

shipping business to meet demand: “As the global lockdown eases and economies awake, the shipping business will inevitably see increased demand. International shipping is responsible for around 90% of world trade. This will drive demand for VLSFO and prices should strengthen. The build-up of stocks in advance of 2020 meant shortages did not occur and the reduction in demand through COVID-19 meant the supply chain hasn’t been fully tested.” Addressing fears that the energy sector would not adjust smoothly or productively to the IMO 2020 policy, Laven said: “While the talk was negative, the industry proved very capable of rebalancing and the shift to VLSFO started during the third quarter of 2019. The spike in HSFO was driven by restricted availability as storage shifted to VLSFO. The price of VLSFO rose, at times to higher than the next alternative, MGO. As the supply chain became more robust and stocks of VLSFO built up, the differential to HSFO dropped. On occasions, HSFO actually became more difficult to purchase than VLSFO.” Laven also looked at the relative stability of the market around HSFO (High-sulphur Fuel Oil) in the last six months, noting that: “The most dramatic change was that the demand for HSFO collapsed, but so did the supply. As a result, the prices for HSFO have remained remarkably stable,

despite the changes. In March, oil prices fell, owing to the impact of COVID-19 and oversupply, having an impact on fuel prices. Despite this, HSFO prices remained stronger than VLSFO.” Recognising the unexpected role that the coronavirus pandemic has played, Laven placed the state of the energy sector in a new context, pointing out that: “It has been a long six months since January 2020.

There is no question now that the impact of the pandemic is likely to have a bigger effect on the marine business than even the most cynical projections around IMO 2020 would consider. The oil industry had quickly moved past the switch to a lower sulphur fuel, but COVID-19 has driven a level of economic disruption that will be much longer lasting.”

Sun Exchange raises US$ 4m to enable more African solar projects South Africa-based peer-to-peer solar leasing platform Sun Exchange earlier this week said it has closed a USD-4-million (EUR 3.5m) Series A funding round that will enable it to continue the solar project expansion across Sub-Saharan Africa driven by its members. Through Sun Exchange, members from around the world can own solar energy-producing cells and lease them to power businesses and organisations in emerging markets. Projects funded by the platform’s members power schools, clinics, farms, cell towers, water plants, businesses and other organisations. Sun Exchange said that Africa Renewable Power Fund (ARPF), a private equity fund for renewable energy projects across Sub-Saharan Africa, has provided USD 3 million in the funding round. Its anchor investing entity is London-based

ARCH Emerging Markets Partners Ltd. The platform will use the funds to expand its solar finance solution offering, strengthen its marketing activities to significantly expand its membership base and enhance its software to add capabilities and features to its online platform. Established in 2014, the platform raised USD 1.6 million in seed financing in 2017, with investors including US-based Network Society Ventures, South Africa’s Kalon Venture Partners and technology accelerators BoostVC, Techstars and Powerhouse. Sun Exchange currently has over 17,000 members from 162 countries. It has helped to provide solar power for 31 schools, businesses and organisations in South Africa. (renewablesnow.com)

MONDAY JUNE 15, 2020

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Banking

Simply doing Banking better – A Checklist

“At its core, banking is not simply about profit, but about personal relationship”. — Felix George Rohatyn, retired Investment Banker with Lazard

EBENEZER ASUMANG (CGIA

anking has evolved a lot in the past few years and stakeholders are alarmed at the rate of competition within the industry. Many changes have occurred in the industry world-wide and the Ghanaian terrain has had its first share of the ripple effects. When Capitec Bank opened its doors in 2001 as South Africa’s first new retail bank in 20 years, it was unable to raise a R100 000 loan from financial institutions to buy a pool motor vehicle for its northern areas of operation. However, due to simple but prudent ways of banking, it raised about R3 billion in surplus funds and invested with the very same institutions that saw Capitec as a non-starter within a shorter time. In having surplus funds, Capitec did not only show what poor judges the big institutions were, but also showed those banks the way they did business. Most importantly, Capitec was able to take the presumed high-risk, lower end of the income market and made it a success. So much so that people in the middle- and upperincome levels, fed up with the poor service and high costs of the Big Four, joined the Capitec wagon. Personal relationship was crucial in achieving that. The banking industry in Ghana has metamorphosed in many ways and still undergoing diagnosis in other areas of operation. Regulatory compliance, Increase in Capital requirement, Robust Technology

application, Diversified Talents, etc. have played a major role in changing the phase of the industry in Ghana. The industry however, requires very prudent but simple ways of making service delivery better. If you want to make banking easy, you have to look at the complete relationship. When viewed in aggregate, how much are you asking people to do? E.g. get a debit card, a credit card, enroll in online banking, mobile banking, sign up for e-statements, etc.? How much time do all that take? How many different employees, forms and touchpoints are involved? A nonexhaustive checklist is required to simply do banking better. • Processes – How hard is it to get a loan, open an account, or enroll in online banking? How many steps does it take? Are there unnecessary policies or complex procedures interfering with efficiency? How long does it take? Where are consumers frustrated by bureaucratic obstacles? What hoops do you make people jump through? • Locations – Are your branches easy to find or are they in awkward locations, buried far from beaten paths? How accessible are your ATMs? Is it easy to get in and out of your parking lots? Once inside, do people intuitively know where to go and what to do? • Online – How hard is it for consumers to find what they are looking for on your website? How far do they have to dig? How many clicks

•

does it take? Is your site map counterintuitive? Is the interface confusing? Do you overwhelm visitors with links? Can people open accounts and apply for loans online? Can people ask you questions live online? Service Delivery – What could people do online that they can presently only do by making a trip to a branch? How many times is someone handed off before they get the information they need? If someone talks to three different people, will they get three different answers? What’s your automated phone system like? Products – Do you make it easy for consumers to compare products? Are your products easy to apply for and use? How much paperwork is involved? Can people easily access current account information via various channels? Choices – Do you offer too many? Are the differences clear? How do you make it easier for people to make the right decisions? Transparency – Are you upfront about how your products are structured? Are you honest, candid and straightforward? Are you clear about what the costs will be to each consumer? How complex are your disclosures? Do you bury conditions, or cloak them in confusing legalese? Image & Identity – What does your brand identity say about you? Does your logo, slogan,

colours, etc., convey and reflect a “simple” way of doing business? Do you have multipage brochures? Do you send new customers away with a folder full of printed materials? The industry`s competition is becoming keener, and all players in it must work tirelessly to stay in competition. Banks in Ghana definitely want to achieve success but that can happen only with deliberate efforts by the institutions to make that possible. A great collaboration involving all stakeholders (especially the regulator, shareholders, board, management, employees) will make that happen. “If banks cannot truly be customer intimate, they are doomed to be just dumb commodities, acting behind the scenes, like utilities” …..JP Nicols

Ebenezer ASUMANG (CGIA) worked in mainstream Banking & NBFIs. He is a Google Certified Digital Marketer, an Author and a Chartered member of the CGIA Institute, USA. www.ebenezerasumang.com /info@ ebenezerasumang.com/0242339145 LinkedIn – Ebenezer Asumang Facebook – Ebenezer Asare Asumang Twitter - @kwabenasumang Instagram – Ebenezer Asumang

MONDAY JUNE 15, 2020

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Feature

Cybersecurity insights for management decision making

Figure 1: Threats blocked by antivirus software for ‘Organization A’ between Nov ‘19 and May ‘20

KWADWO AKOMEA-AGYIN

nsights are everything. In cybersecurity, insights lead to better strategies as businesses keep their online activity safe and secured both for themselves and their consumers; a key part of their business continuity plan (BCP). This article hopes to provide “quickwin” insights for Chief Information Officers (CIOs) and decision makers in investing in cybersecurity programs for their organizations. A simple analysis of an antivirus program report (See Figure 1: Threats blocked by antivirus software for ‘Organization A’ between Nov ‘19 and May ‘20) revealed so many insights that could lead to actionable strategies to safeguard organizations going forward. This antivirus analysis was done on threats that were successfully blocked by an antivirus system over the course of six (6) months for an organization in Ghana. The study was conducted on 17 workstations (based on available data with false positives taken care of ) between December 2019 and May 2020. The insights revealed the following: February and March 2020 recorded 31% more threats blocked than in the whole of 2019. This gives a subtle indication of the rise in threats due to the coronavirus pandemic [WHO reports fivefold increase in cyber attacks, urges vigilance. (2020, April 23). www. who.int] Users were either looking for coronavirus-related information within this period or downloading all kinds of applications onto their computers, taking advantage of the free internet at the office, before the work-from-home policies were implemented. 1.By April 2020 however, the number of blocked threats had reduced to just 38 (76% drop), rising steadily to 55 blocks by the time of

collecting the data (29th May 2020). This could be attributed to the fact that employees’ online activities had reduced during the lockdown (no “free office internet” means reduced online activity), but started rising again when work resumed gradually in May 2020. 2. Other insights included: a.346 malware detections in downloaded applications, representing 56.5% of all threats in the period. b.72 trojan detections majorly from visiting unsafe websites, representing 11.8% of all threats in the period. c.194 worm detections, representing 30.9% of all threats in the period. These were majorly from files dropped by other malware or files downloaded unknowingly by users when they visited malicious websites. d.5 virus detections, representing 0.8% of all threats in the period. 3.The threats that were blocked ranged from threats with a low information exposure/damage potential to very high information exposure/damage potential. Management insights and the need for visibility Managers with insights as simple as the above can decide on signing up to an Information Security Management System (ISMS) platform [ISO/IEC 27001 Information security management. (2020, April 3). www.iso.org] to address employee online behavior, data and technology use. For instance, sensitizing employees on their cyber activity to ensure total awareness when in the cyberspace and regulating Universal Serial Bus (USB) device use within the organization. Apart from employees, new attack surfaces are being introduced with the adoption of artificial intelligence and automation technologies, coupled with highspeed connectivity technologies

like 5G which can enable quick data exfiltration when attacked. Ever so importantly, real-time visibility into the cyberactivity on your network will provide actionable insights for immediate and further action, with the potential to minimize damage. Real-time visibility is enabled by implementing a Security Operations Center (SOC) or signing up with a Managed Security Services Provider (MSSP). However, before investing in visibility, it is best practice to perform a vulnerability and risk assessment of your IT environment to know what threats are already present, drawing a plan and budget to handle those, before signing up for an MSSP service for continued visibility. A very good assessment will provide a number of recommendations that may include: 1.Adopting and implementing policies (the ‘why’), standards (the ‘what’), procedures (the ‘how’) and guidelines, with emphasis on the specific industry’s cyber security standards/directives available for adoption (International Organization for Standardization -ISO, National Institute of Standards and Technology-NIST, International Electrotechnical CommissionIEC, Bank of Ghana Cyber and Information Security Directive, etc.) 2.Implementing real-time visibility through building a SOC or signing up with an MSSP service provider. 3.Improving Network security through network segmentation [What Is Network Segmentation? (2020, March 30). www.cisco.com]. 4.Ensuring secured system configurations & IT practices. Rapid 7’s “under the hoodie” project [Under the Hoodie 2019: Security Lessons Learned from 180 Pen Tests. (2019). www.rapid7.com] revealed the top 4 vulnerabilities from external assessments, as weak transport layer security (21.6%), system misconfigurations or other (17.5%), weak password policy

(11.3%), and outdated software (11.3%). While it is most ideal to invest in all the recommendations from a thorough assessment, it is practically unattainable in one go, largely due to budget constraints. This article recommends that signing up for an MSSP service for visibility is a quick win investment. I recommend opting for a company which has international experience as well as experts with a wide exposure to different kinds of attacks that have happened in the past. The MSSP should have enough threat intelligence feeds and should be well-versed in the current and future threat landscape. Signing up for an MSSP service will remove the burden of upgrade which is transferred to the MSSP provider. Further to that, MSSPs also provide incident response in the event of an attack to ensure minimal damage and provide (in most cases) forensic analysis, to help the organization learn and prepare for future attacks. Coupled with automation capabilities, perhaps the most important benefit of signing up to an MSSP is the expertise (experienced responders, analysts and threat intelligence experts) you receive. Conclusion Whiles there is no guarantee of a fully protected IT infrastructure/ network environment free from compromise, gaining visibility is a step in the right direction in your journey to ensuring that you have the right insights for decision-making and quick incident responses.

Kwadwo Akomea-Agyin; | Digital Solutions Expert & Business Analyst | email: kojo.e@live.com | Skype: Kwadwo_2010 | LinkedIn: Kwadwo Akomea-Agyin, PMP, MRes.

MONDAY JUNE 15, 2020

Aviation

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Rolls-Royce delivers 8,000th engine from Dahlewitz, Germany Rolls-Royce has delivered the 8,000th engine made at its site in Dahlewitz, Germany. The engine, a BR725, will be shipped to Gulfstream Aerospace Corporation in Savannah, Georgia, USA, to power its current flagship business jet, the G650ER. The Dahlewitz site, located south of Berlin, started production in June 1995 and today employs approximately 3,000 people. As the Rolls-Royce Centre of Excellence for business aviation engines, the site has an important role in the compnay’s global manufacturing and development footprint. Alongside production of the BR725, a range of business jet engines including the BR710 and Pearl 15 engines, as well as the Trent XWB for the Airbus A350, are assembled at the facility. The Dahlewitz site is also home to development and testing facilities

for Rolls-Royce’s new power gearbox for the UltraFan® demonstrator programme. The 8,000th engine is a member of the reliable and proven BR700 family that powers some of the fastest, longest-range and largest business jets on the market. More than 4,700 BR700 engines have been built to date and the fleet has recorded more than 27 million cumulative operating hours. Dr. Dirk Geisinger, Director Business Aviation, Rolls-Royce and Chairman of Rolls-Royce Deutschland, said: “We are very proud of this achievement, which comes as the result of 25 years of hard, dedicated work from our Dahlewitz team. And I’m especially proud of our employees who are committed, even in these unprecedented times, to delivering world-class products and to supporting our global customer base.”

Ghana to evacuate citizens in UK on Wednesday

Turkish Airlines to resume flights to China, US June 19

Ghana’s Ministry of Foreign Affairs and Regional Integration is to evacuate all Ghanaians in the United Kingdom (UK) who desire to return home. Citizens who seek to return, however, must be willing and able to cover the cost of travel and 14-day mandatory quarantine in a hotel in Accra upon their return. A notice published on the website of the Ghana High Commission, UK said: “In preparation for the intended evacuation and to ensure a smooth exercise, interested applicants are to note the following: • Cost of airline ticket: the negotiated rate of fare with KLM from London Should be paid directly to the airline which will contact only passengers who fulfill all the requirements as set out in points (e) and (f ); • Passengers who are already in possession of KLM or Airfrance return tickets will be allowed to use those tickets for the flight. Such passengers should furnish KLM with a copy of the return ticket; • Passengers are to carry the appropriate PPE ie. Face masks before boarding the flight; • There will be temperature checks before boarding; • All passengers are also to note that they will cover the cost of the mandatory 14-day quarantine with a possible extension to 21 days depending on individual cases. The cost of quarantine as indicated below PER NIGHT MUST be paid directly to a selected hotel before

Turkish Airlines will resume some international flights this month to China, South Korea and the United States among other destinations, the airline said on Friday, a day after it began restarting such services. On Twitter, Chief Executive Bilal Eksi said flights to Chicago and Washington DC would resume on June 19, and those to

•

• • •

passengers are allowed to travel. Cost of airline ticket: the negotiated rate of fare with KLM from London SHOULD be paid directly to the airline which will contact ONLY passengers who fulfil all the requirements as set out in points (e) and (f ); Passengers who are already in possession of KLM or Airfrance return tickets will be allowed to use those tickets for the flight. Such passengers should furnish KLM with a copy of the return ticket; Passengers are to carry the appropriate PPE ie. Face masks before boarding the flight; There will be temperature checks before boarding; All passengers are also to note that they will cover the cost of the mandatory 14-day quarantine with a possible extension to 21 days depending on individual cases. The cost of quarantine as indicated below PER NIGHT MUST be paid directly to a selected hotel before passengers are allowed to travel.”

Los Angeles would restart on June 24, with three each week. In a notice on its website, the airline said it would start a weekly flight to Shanghai from June 19, with two weekly flights each to Hong Kong and Seoul from June 24. On Thursday, it had resumed flights to Britain, Germany and the Netherlands. (Source: Turkish Airlines)

MONDAY JUNE 15, 2020

Feature

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(The BoG MPC and Deficit Financing)

Parliament’s review must separate 2020 Budget and COVID-19 gaps BY SETH E. TERKPER [FORMER MINISTER FOR FINANCE]

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1. Introduction The final article in the “BOG MPC AND DEFICIT FINANCING” series calls on Parliament to reexamine the revised 2020 Budget and COVID-19 fiscal gaps that it approved to mitigate the effects of the pandemic. The areas to examine include (a) the use of “offsets” to show a lower fiscal gap for the approval; (b) besides a lower GDP, extra costs that increase the budget deficit materially from Ghc18.89 billion to Ghc 25.1 billion; and (c) since the extra COVID-19 costs is funded, highlight the reasons for using the virus spread as excuse for Bank of Ghana (BOG) to finance over 50 percent of the disclosed 2020 budget deficit. It is not transparent to use COVID-19 to resurrect the proposed BOG deficit-financing which existed since 1970s but was abolished. The IMF and other multilateral/ bilateral loans and drawdown from the Stabilization Fund now cover COVID costs. As we noted in past articles, since GOG uses about 98 percent of tax revenues on interest payment and compensation only, it was creating financing problems, even without COVID-19. This article uses the IMF’s Article IV (December 2019) and Rapid Credit Facility (RCF)/COVID (April 2020) Reports to show the original 2020 Budget gap (above fiscal deficit) and the gap relating to COVID19. Table 1 is from the RCF/COVID-19 Report. Table 1 corrections and use in ensuing sections will show that the reasons for the financing pressure is partly due to GOG’s continued use of fiscal “offsets”. • Arithmetic errors: addition errors of 6.1% plus (-0.2) % percent [Art. IV] and 5.3% plus a further 4.1% [RCF-COVID] in the totals (Lines 1 and 2). • Fiscal “offsets”: the figures 6.1% and 5.3% in the bullet point above are equal to the interest payment items for the Article IV and RCF columns respectively (Line 1.1). The second point is that GOG has met the projected COVID-19 costs in Table 1 and, therefore, it is not credible to use the virus as the entire excuse for BOG’s deficit-financing. • Weak reasons for deficit financing: MPC’s reasons of tight domestic market condition and significantly high interest rate are insufficient but more transparent than MOF. • Self-inflicted higher deficit: GOG’s use of narrow base to exclude exceptional costs from so-called “headline” deficits

diverges from financing and public debt on broad basis. Offsets” show “impressive” outcomes: as with “interest payments” in this article, GOG uses implicit offsets and neutralized fiscal items (arrears and exceptional costs) to equate budget deficits to fiscal balances (both cash and commitment basis).

Since the correction of these anomalies are not related to the policy actions on COVID-19, the House must engage in a full debate on proper fiscal rules for recording and reporting budget, financing, and debt outcomes—in considering the MOF request for deficit-financing. Table 1: IMF RCF (COVID-19) Fiscal Gap Computation

Table 1: IMF RCF (COVID-19) Fiscal Gap Computation

Table 2: Budget financing needs

2.Fiscal pressures started with understating budget deficits Tables 2 to 6 correct and separate the IMF’s pre-Corona and postCorona financing needs and possible sources of funding. From the Article IV in 2019, it repeats Table 1’s bases to (a) use “routine” grants or loans to pay for the 2020 Budget deficit and (b) “exceptional” financing for COVID-19. The main conclusions from Table 2 are as follows— •

•

Borrowing for Budget items: GOG borrow for (a) the normal fiscal deficit; (b) debt service (i.e., interest and amortization); and (c) exceptional expenditures such as energy costs and bailout cost (from ESLA). Borrowing usually excludes debt service: however, as Table 2 shows, the rise in deficit from Ghc18.9 billion to Ghc25.5 billion (Art. IV) and Ghc36.6 billion (RCF) excludes the entire debt service and reverses ESLA “self-financing” for energy and road arrears. Inadequate domestic revenue: The Budget can only meet (a) salaries and allowances); (b) goods and services; (c) transfers (e.g., DACF, etc.); and (iv) capital expenditure. Errors (“offsets”) exacerbate the gap: As noted, the errors or “offsets” (equal to interest payments in both Art. IV and RCF) increase the burden of financing.

To reiterate, the country is borrowing to repay public debt (principal and interest) and increase in 2020 fiscal deficit from 6.4 to 9.5 percent of GDP—a reflection of GRA’s inability to raise sufficient revenues to support an expanded GOG expenditure program.

Table 3: Correction of “financing needs” gap

Table 4: Financing of 2020 Budget Items

Table 5: Exceptional financing of COVID-19 estimates

(…CONTINUED ON PAGE 17)

MONDAY JUNE 15, 2020

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How people power strengthens the rule of law

BY DOUG COLTART

n a cold winter’s night in July 2016, thousands of people gathered inside and outside Rotten Row Magistrates’ Court in Harare to await the verdict in the Zimbabwean government’s case against Pastor Evan Mawarire, the leader of the #ThisFlag movement and a staunch opponent of then-President Robert Mugabe. When the magistrate eventually threw out the treason charges brought against Mawarire for peacefully rallying people against corruption, a street party broke out. It was an unexpected victory for the rule of law – won, at least in part, through collective nonviolent action by ordinary people. In its most basic form, the rule of law simply means that no one is above the law. Everyone is treated fairly and justly, and the government does not exercise its power arbitrarily. These principles lie at the heart of the ongoing protests against systemic racism and police brutality in the United States following the death of George Floyd. The rule of law is very different from rule by law, which characterizes many authoritarian states and, increasingly, some democracies as well. Many argue, not unreasonably, that building robust institutions is essential to strengthening the rule of law. But what do you do when the institutions which are meant to uphold the rule of law are so hollowed out that they have become the primary tools for its subversion? The conventional focus on “building institutions” can leave ordinary people feeling disempowered, waiting patiently for the all-important institutions to reform, while they remain on the receiving end of oppression meted out by those very institutions. It can also lead to unhelpful interventions by well-meaning external actors,

which inadvertently strengthen the authoritarian capabilities of captured institutions, rather than the rule of law. To strengthen the rule of law, we first need to focus on strengthening people, not institutions. This involves the difficult, dangerous, and often unglamorous work of grassroots community organizing that empowers citizens to act through informal channels outside of established institutions. Such action includes non-violent protests – marches, boycotts, strikes, and pickets – as well as community initiatives that directly improve people’s lives, such as worker advice centers and community gardens. Such efforts are especially necessary in authoritarian states where institutions are fundamentally broken. But even in established democracies, the recent failure of supposedly strong institutions to prevent the rule of law from being undermined has shown that there is no substitute for an active and organized citizenry. Such engagement cannot be legislated or decreed, or copied and pasted from another jurisdiction. People must build it collectively from the ground up. Building people power starts with opening citizens’ minds to a different type of society and a new way of doing things. In apartheid South Africa, for example, the study groups and adult literacy classes in townships during the 1970s helped to lay the groundwork for the mass movement that emerged in the 1980s under the banner of the United Democratic Front. The UDF would go on to play a leading role in the struggle against apartheid, culminating in 1990 with Nelson Mandela’s release from prison and the unbanning of the African National Congress. Next, like-minded people need to organize themselves, connect with one another in the real world

(not just on social media), and become actively involved in issues directly affecting their lives. These issues might at first be local rather than national, and involve less risky actions. Over time, however, people build mutual trust and gain confidence in both themselves and their collective power as a group. Coalitions form, and actions become larger in scope and perhaps more confrontational. Before you know it, a social movement emerges that is bigger than any of the individuals or organizations involved and can unlock people’s power to bring about change. People power can strengthen the rule of law in at least three ways. For starters, it can counteract and even neutralize the top-down pressure placed on courts and police by the authorities – typically, the executive. This can help to ensure that even hollowed-out or compromised institutions discharge their duties in accordance with the rule of law – as in the case involving Mawarire. Second, a people-power movement can create alternative spaces that prefigure a society in which the rule of law is respected. The movement must operate internally in a just and fair way, and apply the same standards to all its members regardless of rank. And any civil disobedience must have a strategic purpose and be highly disciplined, so that participants understand that such action does not constitute a rejection of the rule of law, but rather a means of establishing it. Third, people power has repeatedly proved to be an effective tool in defeating even the most brutal dictatorships and achieving a transition to a more democratic system of governance. Far-reaching reforms that strengthen the rule of law can then be implemented in ways that would not have been possible under a corrupted system. In November 2019, for example, Sudan’s new transitional authority

– established after months of nonviolent protests against President Omar al-Bashir’s dictatorship and then against the military regime that ousted him – repealed an oppressive public-order law that had governed how women could behave and dress in public. Although Sudan’s transition is by no means complete, this represented a huge triumph for the rule of law. It would not have been achieved without people power. Authoritarian leaders understand and fear people power. Soon after Mawarire’s hearing, the Zimbabwean regime erected a fence around Rotten Row Magistrates’ Court to prevent similar public gatherings there in the future. But just as authoritarian regimes adapt and learn from their past mistakes, those of us fighting for a society based on the rule of law also must adjust, innovate, and improvise, and accumulate enough power to dismantle the oppressive systems that shackle us. Only through the struggle of ordinary people can we eventually shift our focus to building strong institutions that protect everyone equally.

The author is writing in his personal capacity, and the views expressed here are his own. Doug Coltart is a lawyer at Mtetwa & Nyambirai Legal Practitioners in Zimbabwe. Copyright: Project Syndicate, 2020. www.project-syndicate.org

MONDAY JUNE 15, 2020

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(…CONTINUED FROM PAGE 13)

3.Crisis not deterring MOF’s use of fiscal “offsets” to impress Table 3 shows the [writer’s] adjustments or corrections of “offsets” in calculating the 2020 Budget and COVID-19 financing gaps. The precedent is clear: similar abuse of fiscal rules to reduce the budget deficit from 10.3 percent to 6.3 percent of GDP (old basis) in the same fiscal year (2016). Hence, article concludes beyond a mere fiscal error to use of “offsets” to equate neutralize “interest payments” in the Article IV and RCF columns in the Tables. The article continues with the corrected fiscal gaps of 22% (Art. IV) and 27.5 (RCD/ COVID). 4. The difficult domestic [market] financing situation GOG is relying heavily on a “developing” domestic market to finance the 2020 and COVID-19 fiscal gaps. Table 4 shows that correcting the fiscal gap puts more pressure on Government to look for alternative or unorthodox sources of financing. The article adds some 2020 Budget items for comparison. The IMF reports combine Table 4 and Table 5 but, while they overlap, separates the “routine” 2020 Budget and “exceptional” COVID-19 financing needs. The following are some critical observations on financing the routine budget balance (Table 4). •

•

Inclusion of “off-budget” or “exceptional” items: the IMF shows the narrow basis (i.e., so-called “headline” deficit) separately but adds all exceptional costs (i.e., bank bailout costs and energy sector arrears) to the overall deficit or balance. Heavy reliance on domestic market: GOG expects to raise about 65.84 percent (Art. IV) or 60.22 percent (after IMF RCF etc.,) from a relatively weak domestic market—which COVID state got worse for its primary and secondary dealer banks.

From August 2015, as part of the “smart-borrowing” initiative, GOG launched specific measures to deepen the domestic capital market: notably, the book-building “bid” approach for medium and long-term GOG instruments and establishing the Ghana Fixed Income Market (GFIM). These structures are not yet strong to support such high GOG debt market and any spillovers from COVID-19. Table 5 shows (a) estimates for exceptional COVID-19 expenses and revenue shortfalls; and (b) external and domestic source of financing. Table 6 shows the Memorandum Table that corrects “offsets” and omissions from the IMF extract in the substantive Tables above. 5.Other signals of tightening domestic financial market

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As BOG’s MPC statement noted, the issue is a tightening domestic capital that can now only cater for GOG’s new issuances and rollovers at “significantly high interest rates”. •

•

Exceptional domestic financing: after the IMF, World Bank and other COVID-19 support, GOG must raise extra 1.7 percent of GDP from the same domestic markets, which takes the overall financing to about 70 percent. Financing rollovers: the financing discussed above does not include sourcing funds from the same domestic market to rollover maturing GOG bills and bonds. Exit of non-resident investors: exit of non-resident investors with 50 to 60 percent share of medium-term bonds (not allowed in the short-term treasury and notes markets). Increasing use of “tap-ins”: recent large “uncovered” auctions and “build-building” bids result in “tap-ins” (private deals) to refinance existing or take new issues offers.

The government got to its peaks with the use of oil revenues and debt to finance high consumption expenditures. The uses for the 2020 Sovereign Bond include routine current expenses such as the Free Senior High School and expensive initiatives—items that cannot be sustained on borrowing and debt that is expected to hit 70 percent at end-2020. Neither is tapping BOG Balance Sheet sustainable, given the deferral of its debt service commitments. 6. Conclusion GOG’s own 2020 Budget summarizes the domestic financial market situation from 2019 (Q1 to Q3) clearly as follows (p34 par.138 and 139): “The higher-thanprogrammed financing (especially from domestic sources) stems mainly from the frontloading of financing requirements to meet Government expenditures and other debt service obligations, including the settlement of uncovered Government auctions, following substantial revenue shortfalls. “As a result, total Domestic Financing, including drawdown of Government deposits at the Central Bank, domestic market operations, and other sources of domestic financing constituted about 59.6 percent of total financing, amounting to Ghc9.3 billion (2.7% of GDP) against the target of Ghc3.7 billion (1.1% of GDP)” These are based on the narrow deficit basis—excluding exceptional costs—since earlier it states : “Mr. Speaker, following Governments fiscal operations, the overall fiscal balances on cash basis resulted in a deficit of Gc15.7 billion, equivalent to 4.5 percent of GDP) against the target of Ghc14.2 billion (or 4.1 percent of GDP”. Table 7 from the MOF Website

Table 6: Correction of errors and offsets

Table 7: Budget and Fiscal Outturn for 2019

(updated January 2020), continues to show the wide difference between GOG data and IMF reports. First, the outturn to end-2019 is impressive but hardly credible and, second, even the addition of exceptional costs by GOG diverges widely from the IMF Article IV and RCF/COVID disclosures. The financing difficulties that is now drawing BOG unorthodox fiscal practices and rules are partly self-inflicted. They derive from the brazen use of unorthodox accounting and fiscal rules such as “offsets”, flattening fiscal balances to equal budget deficits, and excluding “exceptional costs” to impress. These are contrary to

passing a comprehensive Public Financial Management Act (PFMA) in 2015 and its “derivative” 2018 Budget Responsibility Act (BRA). Despite overlaps, Parliament should separate the correction of budget deficit anomalies from measures to minimize the impact of COVID-19 pandemic. Examples of fiscal overlap include the fall in domestic taxes from COVID-19 actions (e.g., lock down, shutdowns, border closures etc.,) and OPEC (Russia versus Saudi) crude oil price fall. After all, the fiscal data to end-2019 and 2020 were available before the declaration of the COVID pandemic in March 2020.

SETH EMMANUEL TERKPER IS A CHARTERED ACCOUNTANT AND FORMER MINISTER FOR FINANCE AND ECONOMIC PLANNING OF GHANA.

MONDAY JUNE 15, 2020

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The Global Economic Reset—Promoting a more inclusive recovery BY KRISTALINA GEORGIEVA

The COVID-19 crisis is inflicting the most pain on those who are already most vulnerable. This calamity could lead to a significant rise in income inequality. And it could jeopardize development gains, from educational attainment to poverty reduction. New estimates suggest that up to 100 million people worldwide could be pushed into extreme poverty, erasing all gains made in poverty reduction in the past three years. That is why policymakers must do everything in their power to promote a more inclusive recovery, one that benefits all segments of society. Our new research, prepared jointly with the World Bank for the G20, focuses on how to increase people’s access to opportunities, no matter who they are and where they are from. More equitable access to opportunities is associated with stronger and more sustainable growth and higher income gains for the poor. But unlocking the full potential of all individuals is not an easy task. The reality is that low-income households face higher health risks from the virus. They bear the brunt of record-high unemployment and are less likely to benefit from distance learning. Children’s nutrition may also be harmed by the disruption to school-provided meals. According to UN estimates, more than half a billion children worldwide have lost their access to education as a result of coronavirus lockdowns. Many won’t return to the classrooms after the pandemic, with girls more likely than boys to drop out. These inequalities are truly shocking, but not unexpected. We know from experience and recent IMF analysis that major epidemics often exacerbate pre-existing income inequality. A policy response like no other The good news is that governments around the world have deployed extraordinary policy measures to save lives and protect livelihoods. These include extra efforts to protect the poor, with many countries stepping up food aid and targeted cash transfers. Globally, fiscal actions so far amount to about $10 trillion. But given the severity of the crisis, significant further efforts are essential. This includes taking the measures needed to avoid a scarring of the economy, including from job losses and higher inequality. It is clear that increasing access to opportunities is now more critical than ever if we are to avoid persistent increases in inequality.

With this in mind, I would like to highlight three priorities: 1. Use fiscal stimulus wisely Substantial fiscal stimulus will have to be deployed during the recovery phase to boost growth and employment. We know from the global financial crisis that countries that experienced larger output losses relative to the pre-crisis trend tended to have higher increases in inequality. Yet securing a return to growth is not enough. Let’s remember the post-financial crisis reforms and investments that made banking systems more resilient. We will need a similar surge in reforms and investments during the recovery phase to significantly improve the economic prospects of the most vulnerable. So, we will need a fiscal stimulus that delivers for people. This means scaling up public investment in health care to protect the most vulnerable and minimize the risks from future epidemics. It also means strengthening social safety nets; expanding access to quality education, clean water, and sanitation; and investing in climate-smart infrastructure. Some countries could also expand access to high-quality childcare, which can boost female labor force participation and long-term growth. These efforts are critical to achieve the Sustainable Development Goals. But how can we significantly scale up spending when so many countries are now facing rising public debt? Public debt in emerging markets has risen to levels not seen in 50 years. The IMF and the World Bank have championed debt service suspension as a fast-acting measure for countries that lack the financial resources to adequately respond to the crisis. The G20 has responded by agreeing to suspend repayment of official bilateral credit for the poorest countries, from May 1 through the end of 2020. Over the medium term, there will be room to improve the efficiency of spending and mobilize higher public revenue. There will also be room for tax reform: for example, some advanced and emerging economies could raise their top personal income tax rates without slowing growth. Countries could ensure that the corporate tax system captures an appropriate part of the unusual gains received by the “winners” of the crisis, including perhaps from digital activities. And there should be a concerted effort to combat illicit flows and close tax loopholes, both domestically and internationally. 2. Empower the next generation through education The virus-related disruption to education has left millions of children at risk of “learning poverty,”

which means being unable to read and comprehend a simple text by age 10. Driven by poor access to quality schooling, learning poverty is already too high, especially in emerging. We are also concerned about the long-term effects of the crisis on income and education gaps. In our research, we looked at the link between education and inequality. A 10-point increase in a country’s Gini coefficient (with such increases observed in some economies around the time of the global financial crisis) is associated with significantly lower educational attainment of about half a year. This could reduce lifetime earnings and cause income and opportunity gaps to become persistent across generations. In other words, safeguarding our future means safeguarding our children. That is why we need more investment in education—not just spending more on schools and distance-learning capacity, but also improving the quality of education and the access to life-long learning and re-skilling. These efforts can pay large dividends in terms of growth, productivity, and living standards. Simulations, based on a model reflecting an economy like Brazil, show that reducing the educational attainment gap by a quarter, relative to the OECD average, could boost economic output by more than 14 percent. 3. Harness the power of financial technology COVID-19 has triggered a mass migration from analog to digital. But not everyone has seen the benefits; and the growing digital divide is set to become one of the legacies of the crisis. What can policymakers do? A key priority must be to broaden the access of low-income households and small businesses to financial products, which will allow households to smooth consumption in the face of shocks and businesses to undertake productive investments. This “inclusion revolution” is now gaining momentum as governments are providing emergency cash transfers in record amounts. For example, in Pakistan and Peru, new

support programs cover one-third of the population. Reaching the most vulnerable can be challenging in developing economies, where nearly 70 percent of employment is informal. But this is where fintech opportunities abound. Think of the fact that about two-thirds of all unbanked adults (1.1 billion people) have a mobile phone, and one-quarter have access to the internet. Moving routine cash payments by governments into accounts could reduce the number of unbanked adults by 100 million globally, and even bigger opportunities exist in the private sector. Of course, governments also need to manage fintech risks. Reforms are needed to promote competition, enhance consumer protection, and fight money laundering. Finding the right balance will be critical for lower inequality and growth. Our research shows that greater access to finance and technology is associated with higher intergenerational income mobility. And we have estimated that there is a 2- to 3-percentage-point GDP growth difference over the long term between financially inclusive countries and their less inclusive peers. In all these areas, the IMF is working with the World Bank and many other partners to support countries in this time of crisis. We are deeply committed to helping vulnerable groups through our hands-on technical assistance, policy advice, and lending programs. And we have increased our focus on social spending issues, including safety nets, health and education. As they move forward, all governments will need to gear up for a more inclusive recovery. This means taking the right measures, especially on fiscal stimulus, education, and fintech. And it means sharing ideas, learning from others, and fostering a greater sense of solidarity. If there is one lesson from this crisis, it’s that our society is only as strong as its weakest member. This should be our compass to a more resilient post-pandemic world. (blogs.imf.org)

MONDAY JUNE 15, 2020

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Will COVID-19 widen the gender justice gap? BY SANDIE OKORO, PAUL PRETTITORE

lobally, women have only three-quarters of the legal rights afforded to men, with the worst inequalities relating to family relationships, employment, control of economic assets, and violence. Ensuring that the current pandemic does not deepen these disparities is therefore crucial. Worldwide, an estimated 1.5 billion people face legal problems they cannot resolve, while 4.5 billion – particularly women, the poor, and other vulnerable people – are excluded from the protections and opportunities that the law provides. True, the news is not all bad. United Nations Sustainable Development Goal 16 aims to “provide access to justice for all,” while multidimensional poverty measures increasingly consider justice-related indicators. Moreover, enhanced data collection methods and more readily available global and national statistics have improved the measurement of justice gaps and filled critical data voids. But COVID-19 is creating further obstacles to equal access to justice, especially for women. Pandemic responses are likely to be heavily gendered, meaning that migrant, disabled, and indigenous women are doubly disadvantaged. Ensuring that the current crisis does not widen existing gender-based legal disparities is therefore crucial. Those disparities were already pronounced before the pandemic, with many women facing an uphill battle to gain access to justice. Despite numerous legal reforms, women globally have only threequarters of the legal rights afforded to men, with the worst inequalities relating to family relationships, employment, control of economic assets, and violence. Women do not necessarily experience more legal problems than men. But they tend to face specific problems with issues like alimony and child support, sexual violence, lack of legal identity, and access to social safety nets. Taken together, the socioeconomic impact of such problems is enormous. Furthermore, women frequently lack the financial resources and social networks to navigate justice systems. Social norms, which often are more restrictive than laws, may prevent them from taking legal action. And even when they do act, gender-biased public officials may undermine them. And women who must already balance family care with formal or informal jobs may lack the time to go to court. Courts are not the only avenue for seeking justice, but they are an important one, and COVID-19

has exposed their weaknesses. Courts have traditionally been slow to adopt technology, rely too much on in-person appearances, and have struggled to make their services accessible to people lacking lawyers or other legal assistance. Understanding their specialized language is difficult without a law degree, while the sort of clientcentered approaches common in other public services remain rare. In response to the pandemic, courts are changing their practices in ways that may improve access, including by embracing technology to share information and conduct transactions such as submitting petitions and requesting protection orders. Remote hearings using phones and video have become a new normal, while some court services can be provided via email and text message. But while the new embrace of technology should be welcomed, vulnerable people, including women, are at risk of being left behind. Courts have also adopted a triage approach during the crisis, for example by postponing nonemergency cases and extending existing judicial orders. Women have benefited from blanket extensions of protection orders and childcustody decisions. More generally, judicial triage points to how cases can be resolved most efficiently in the longer term. The OECD and the United Kingdom have already launched initiatives to monitor new court service methods and capture the gains. Such data are increasingly seen as necessary to underpin judicial reforms.

And significant, lasting reforms may well be needed, given the additional threats posed by the pandemic and its economic fallout. For starters, worsening financial, family, and health problems will likely lead to an upsurge in violence against women. Germany, Spain, the UK, the United States, and Canada are already reporting rising levels of domestic violence and requests for emergency shelter. But lockdowns and other crisis measures may have cut off the usual routes for addressing violence. Likewise, recession and unemployment are liable to reduce men’s ability to pay alimony and child support, requiring courts to enforce or amend earlier decisions. And women may find it difficult to access social-protection payments and other crisis-related benefits if they lack legal forms of identification, are excluded from public-information initiatives, or lack the financial resources to seek legal help. Women’s financial constraints will become increasingly salient, because the pandemic is also likely to exacerbate existing economic gender gaps, further limiting women’s access to justice. For example, those whose husbands die of COVID-19 may lose access to sources of wealth such as land and savings. Without special legal protections to prevent economic gaps from widening, loss of assets will make it harder for women to navigate justice systems or afford assistance. In many countries, the poor rely disproportionately on legal aid services, which have been shown to have positive social and

economic effects on women and their households. But the sharp economic downturn is likely to threaten this resource as well. Finally, the crisis may trigger a backlash on social norms, undermining women’s ability to challenge unfair laws and practices. It could also lead to weaker enforcement of reforms of family and employment law that have benefited women. There are two ways to mitigate these risks. First, the pandemic must not be permitted to widen the gender justice gap. This will require assessing whether judicial responses to the pandemic may have planned or unintended negative consequences for women. And we need to view gender in the context of other overlapping dimensions of disadvantage such as poverty, ethnicity, disability, language, and location. Second, the crisis gives us an opportunity to add to our growing knowledge of what works in improving women’s access to justice. This calls for monitoring and evaluating new initiatives and collecting data. Above all, measures that help to close the gender justice gap should be made permanent and scaled as appropriate, rather than being regarded as temporary and reversible.

SANDIE OKORO is Senior Vice President and General Counsel for the World Bank Group and Vice President for Compliance at the World Bank. PAUL PRETTITORE is a senior specialist at the World Bank.

MONDAY JUNE 15, 2020

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Modi’s Fiscal Follies

BY JAYATI GHOSH Students in introductory macroeconomics courses typically used to learn about the paradox of thrift. This theory, popularized by John Maynard Keynes, states that if households decide to save more and consume less during a slowdown or recession (because of uncertainty about future income), then the resulting reduction in aggregate demand will aggravate the economic decline. Given this counterproductive behavior by both households and private firms, the correct policy response in a slump is to increase government spending. Unfortunately, Indian Prime Minister Narendra Modi’s government is doing the opposite during the current pandemicinduced downturn – with potentially disastrous consequences. Modi’s fiscal rigidity is symptomatic of a broader long-term trend. In the mid-twentieth century, the Keynesian idea of boosting public spending to counteract a slump was mainstream and widely implemented. But, beginning in the 1980s, fiscal hawks started taking over both the economics discipline and most countries’ commanding heights of economic policymaking. From that point on, “fiscal discipline” became the order of the day, and was enshrined in national laws and international treaties that sought to limit government deficits to some predefined proportion of national income, such as the European Union’s 3%-of-GDP ceiling. And the fashion in the developed world eventually became the norm for developing countries, too. That was inevitable. The International Monetary Fund and

representatives of global finance were relentless in pushing their obsession with fiscal consolidation and then austerity (absolute reductions in government spending), to the point that it became dogma for developingcountry governments. The new orthodoxy reached its apotheosis in the extraordinary concept of “expansionary austerity,” whereby large reductions in government spending came to be associated with faster economic growth, because of their supposed positive impact on investor confidence. This notion was extensively refuted both theoretically and empirically for advanced economies. But it continued to dominate macroeconomic policy, until the economic disruption caused by COVID-19 led OECD governments to toss zombie orthodoxy to the wind and borrow heavily from central banks to arrest the decline. Such a reaction is unsurprising: the sheer stupidity of pursuing fiscal austerity during a pandemicinduced recession should be obvious. But even today, it is not apparent to some governments, particularly in the developing world. In some cases, a country’s kneejerk austerity reflex stems from its external-debt burden and other pressures on public finances that limit spending. But fiscal restrictions are often self-imposed, reflecting policymakers’ fear of how financial markets and global investors will react to the larger deficits that are assumed to result from increased public spending. This denial of the paradox of thrift betrays a basic lack of understanding of macroeconomic processes. And Modi’s government is exhibit A, providing, providing an almost textbook example of how the paradox applies to

public expenditure in a context of insufficient aggregate demand. Even before the pandemic struck, the Indian economy had been slowing significantly for several years under Modi’s leadership. Falling employment and decelerating household consumption were clear evidence of weak aggregate demand. This inevitably affected tax revenues in the fiscal year ending in March 2020. Indirect tax receipts were significantly below budget estimates, while a big corporatetax cut midway through the year reduced revenue from direct taxes, even as private investment declined. Modi’s government responded to the persistent revenue shortfall during the year by cutting essential public expenditure. Significant real expenditure cuts in health, education, and other social services and welfare resulted in the government spending Rs 878 billion ($11.6 billion) less than the original budget. Not surprisingly, this effort to contain the fiscal deficit failed. The negative multiplier effects of lower government spending added to the recessionary tendencies in the economy, further reducing indirect tax receipts and widening the budget gap further. Moreover, GDP was also lower than anticipated because of the expenditure cuts. The net result was a full-year fiscal deficit of at least 4.6% of GDP, well above the government’s target of 3.4%. India’s experience is further evidence – if any were needed – that attempting fiscal consolidation in a downturn by reducing public expenditure is likely to backfire and produce the opposite result, because the spending cuts intensify the recession. In India’s case, the rating agencies and investors

whom the government was trying to placate have become even more critical. Sadly, and despite scoring this own goal, Modi’s government is now repeating its mistake in the midst of the pandemic. It is stubbornly refusing to provide much-needed fiscal stimulus, relying instead on inflated claims that are unsupported by actual spending. Worse, Modi’s administration is passing all responsibility for dealing with the pandemic and its consequences to India’s state (provincial) governments, but providing them with no additional resources to do this. And it has already declared that it will make wide-ranging expenditure cuts to compensate for the small amounts it has allocated to tackle the pandemic, so its fiscal-policy stance over the course of the year is likely to remain counterproductive. Such an unnecessary and avoidable approach is a recipe for multiple health and economic disasters. Governments such as Modi’s remain “slaves to some defunct economist,” to borrow Keynes’s phrase, clinging to macroeconomic policies that will intensify economic ruin as surely as they always have.

Jayati Ghosh is Professor of Economics at Jawaharlal Nehru University in New Delhi, Executive Secretary of International Development Economics Associates, and a member of the Independent Commission for the Reform of International Corporate Taxation. Copyright: Project Syndicate, 2020. www. project-syndicate.org.

MONDAY JUNE 15, 2020

Africa Economy

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Nigeria’s WTO candidate looks to bridge the US-China schism

gozi Okonjo-Iweala says Washington and Beijing have a mutual interest in repairing the broken global trading system. Nigeria’s nominee to become global trade chief is casting herself as the peacemaker who can push the U.S. and China to find common ground and resurrect the moribund World Trade Organization. Ngozi Okonjo-Iweala, a former No. 2 at the World Bank who is now heading a vaccine alliance in poor nations, has established herself as an early frontrunner in the race to become next director general of the WTO — a position that should ideally be filled by September. Her game-changing entry into the contest comes in contrast to the slow start of EU trade chief Phil Hogan. The Irishman had an unexpectedly bumpy opening to his WTO campaign after the U.S. and several European countries this week said that they would consider backing a candidate from a developing country. In an interview with POLITICO, Okonjo-Iweala, who also sits on the board of Twitter, said she would be the listener-in-chief and “objective arbiter” who could convince Beijing and Washington that it was in their mutual interest to get the WTO running again. The WTO is currently paralyzed. Washington accuses of the Geneva-based body of being too soft on China and is calling for root-and-branch reform. In the meantime, it has blocked the appointment of judges to the WTO’s Appellate Body, the top global court for trade disputes, effectively bringing the WTO system to a halt. “The U.S. and China are the two largest economies in the world. I know that they both believe in trade ... Both China and the U.S. have an interest in seeing the WTO go on. But they want people to listen, they want someone who can listen carefully to what their issues are, what is it they want to see improved in the WTO,” Okonjo-Iweala said. In remarks that will play well in Washington, she accepted that sweeping reform was needed and also hinted that she was willing to engage with the all-important debate over China’s status as a “developing country” at the WTO. China’s insistence that it is entitled to the plum trading benefits afforded to a “developing country” is a red rag to U.S. President Donald Trump, and Okonjo-Iweala acknowledged there was a gulf to address between what richer and poorer developing nations were getting out of the globalized trading system. “The developed country members feel they have borne the burden of liberalization and maybe the advanced developing countries

should bear more. The least developed countries feel they could benefit more from the system,” she said. More broadly, she argued that the WTO had failed to keep up with the times. “The WTO needs to be brought up to the 21st century. Some of the rules are outdated and they don’t reflect the significant developments in the global economy. Issues such as the digital economy, competition policy, investment, climate change and environment, they all need to be addressed.” She stressed that her experience from two stints as Nigeria’s finance minister had given her the political skills to broker big trade-offs in Geneva. She also argued her background as a development economist convinced her of the value of trade — as opposed to aid — as a way of lifting countries out of poverty. She is by no means guaranteed a smooth path to Geneva, however. Her most immediate challenge is that Africa is not fully united behind her. Egypt insists that its technocrat candidate Hamid Mamdouh should be considered the official nominee for the African Union. The appointment of a WTO chief comes down to a giant haggle for consensus in Geneva, so it’s a considerable advantage to have a united regional camp behind a candidate from the outset. While sidestepping the opposition from Egypt, Okonjo-Iweala suggested that Nigeria’s goals ultimately aligned with Africa’s more widely. “With respect to the AU, what the AU wants is what my country wants ... Nigeria is trying to put its best foot forward and I believe that the AU wants the best candidate that can do the best to

bring the job to Africa.” Another of her challenges has been resistance from some European countries that fear an African WTO boss would be keen to take on the EU, the world’s biggest trade bloc, over its lavish agricultural subsidies. When asked about this, however, she did not confront the farm payments directly but said that her goal was to represent all members, including the EU. She stressed that “African countries obviously want to strengthen themselves so they can develop and they want to develop through trade, and through production more than through aid” but highlighted regional trade agreements rather than any push to slash European farm subsidies. “So what is it that we can look at within the WTO and the world trading system that can strengthen and benefit African countries? They’ve just negotiated the African Continental Free Trade Agreement, which is a milestone.” Indeed, there are increasing signs that the Harvard-educated economist is already taken very seriously as a candidate in the EU and the U.S. Despite European Trade Commissioner Hogan saying that he is exploring his own candidacy, several leading EU countries have said that they are keeping their options open. At a meeting of EU trade ministers this week, Hogan sought to rally European countries behind him, publicly announcing that he was “exploring” a bid. In a statement opening the meeting, Hogan argued team Europe should put forward its own “EU candidate.” But the ministers from both France and the

Netherlands were decidedly lukewarm, saying Europe should keep open the option of backing a non-EU candidate. “We don’t necessarily want to search outside the EU, but we shouldn’t close that door yet either,” said Dutch Trade Minister Sigrid Kaag. A diplomat from another Western European country went even further and said: “We specifically said that we should be open to African candidates given the EU’s renewed attention for Africa and the fact that they never held the post.” A senior French official also described Okonjo-Iweala as a “good candidate.” In a final setback after the ministerial meeting, Hogan had told reporters that he had discussed his potential candidacy with U.S. Trade Representative Robert Lighthizer. “I can confirm that we had a conversation about this some time ago,” Hogan said. “Ambassador Lighthizer is very much of the view that a developed country should assume the responsibility of the director general of the WTO,” Hogan added. But, a few hours later, his American counterpart contradicted him — in a way that kept the door very much open for an African to run. “Ambassador Lighthizer does not support any candidate at this time, nor does he feel that a candidate must necessarily be from a developed country,” said Lighthizer’s spokesman Jeff Emerson. When asked whether she had discussions with the U.S. trade camp herself, Okonjo-Iweala said: “I will begin to reach out and hopefully reach out to the necessary people, I haven’t done that yet.” www.politico.com

MONDAY JUNE 15, 2020

Automobile

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Honda hackers may have used tools favored by countries A computer virus hit the Japanese automaker Honda this week, disrupting its internal computer networks, forcing it to shut factories across the globe and leaving employees cut off from email or internal servers. While Honda has declined to name the attackers or the tools they used, cybersecurity analysts said that the attack appears to have been carried out by software designed to attack the control systems for a wide variety of industrial facilities like factories and power plants. Such cyberweapons previously were only known to have been used by state agents. In the hands of criminals, the tools could be used not just to steal data or disrupt business operations but to bring factories to a grinding halt or switch off power grids. Previous assaults on Japanese corporations have been aimed at disrupting communications, or stealing or holding data hostage, according to Masahiro Shimomura, head of the Japan Network Security Association. “This is a real advancement,” he said. “The ability to infect process controls, in other words, the production line,that means it’s quite advanced.” In a statement, Honda said it canceled production at most North American plants Monday, resumed production at some Tuesday and had all back running by Thursday. The virus also halted work at Honda factories in Brazil, India and Turkey. The company said it had so far found no evidence of a loss of personally identifiable information. Emails sent by Honda to American auto dealers said that the virus had affected the American Honda Finance Corp., which was unable to “answer calls, fund contracts, provide payoff quotes or service customer accounts.” A system that automatically orders parts for

dealers was also suspended, and dealers were unable to submit new warranty claims, the emails said. On Friday, Misako Saka, a spokeswoman for Honda, said the company had “almost entirely recovered.” Production at the company’s factories “was temporarily paused to ensure safety,” she said, adding that the company reopened the last factory, located in Ohio, on Thursday morning. The attack was identified Monday morning in Japan, when employees could not open their email or files, she said, adding that the virus had “penetrated an internal sever and then spread.” The company ordered employees not to turn on corporate computers and temporarily shut factories to

assess the extent of the damage. The cybersecurity firm Malwarebytes and other analysts said that the tool used in the attack was most likely a relatively new variety of ransomware meant to disrupt industrial systems, in addition to the standard practice of encrypting files. The most famous example of a virus that targets industrial controls is Stuxnet, which was jointly developed by Israel and the United States and used to destroy over 1,000 centrifuges used in Iran’s uranium enrichment program. The attack on Honda, Malwarebytes wrote in a recent blog post, was probably carried out using a variation on a group of programs called Snake — also known as Ekans, or snake spelled backward — which

was identified in December. The company based its assessment on information posted to an online repository. Attempts to run the code in the company’s lab showed that it was specifically aimed at Honda’s internal networks, Malwarebytes wrote. Although Honda has declined to specify how the virus entered its networks, speculation has centered around a possible breach related to remote working policies put in place after the beginning of the coronavirus pandemic. A system that gives employees remote access to internal networks may have opened an opportunity for hackers to introduce the virus, Malwarebytes wrote. (auto. economictimes.indiatimes.com)

Tata Motors Purchases 50% share of Jayem Automotives in JTSV Joint Venture Tata Motors has announced that it has signed an agreement to purchase the 50 per cent shareholding of Jayem Automotives in JT Special Vehicles Pvt. Ltd. ( JTSV). Further to this announcement, JTSV will become a wholly owned subsidiary of Tata Motors, following the completion of the procedural requirements. This does mean that cars under the JTP brand will no longer be sold in India. JTSV was formed in 2017 as a 50:50 joint venture between Tata Motors Ltd. and Jayem Automotives to develop high performance versions of the company’s passenger cars under the ‘JTP’ brand. The company then launched the Tiago JTP and the Tigor JTP in 2018. Both the Tiago and Tigor JTP have

been updated to make it look a bit sportier and the performance too has been enhanced in both cars. The passenger car industry in India witnessed a challenging FY1920, exacerbated with mandatory change in regulations and the current COVID-19 pandemic, which has impacted the demand in this niche category of vehicles. In light of this ongoing scenario, both Tata Motors and Jayem Automotives found it prudent to discontinue this venture. Tata Motors will continue to provide all requisite support and service to customers and users of Tiago JTP and Tigor JTP cars at its select dealerships, to ensure that the customers can avail of all the benefits.

MONDAY JUNE 15, 2020

Risk & Insurance

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COVID-19 scare, the good news for insurers

SAMUEL KOFI OHENE

ver the past six months, the world has seen a global health event that surpasses any other like it in the past 100 years. Global economies and industries ranging from finance, aviation, oil & gas, agribusiness, hospitality and tourism have slowed to a crawl if not perhaps, a halt. The technology, pharmaceutical and health industries may be undoubtedly, the center of activity in these times. The world has looked to the insurance industry for remedies and a possible bail out, but the Insurance firms have sung one song “Our finite balance sheets are not hedged to absorb shocks of this global nature which seems to have no end in sight”. Insurers have been met with unpopular criticism as they pointed clients to policy terms, conditions and exceptions especially on Business Interruption Policies. Pensions and Life insurance were not left of the hook as Actuaries world-wide scrambled to model the possible impacts of the pandemic on the policy holder mortalities and investment yield curves factored in the pricing and reserving models. Even though these times will not be termed as business as usual, there are some positive aspects to the pandemic for Insurers worldwide outlined below. 1.Technological Innovation; Insurers have been long described as old fashioned conservative risk managers who desire to stick to their complicated policy wordings. As insurers begin to see the need to allocate more resources into

Technological innovation due to physical mobility restrictions posed by the pandemic, it will aid them harness the endless possibilities Technology can offer. Hosting policy data in the cloud rather than hard copies, remotely assisting clients without having to visit the premises, Issuing of policies online, assessing claims and paying via e-payment platforms all present positive impacts covid19 will have on our insurance industry which has long been tagged as old fashioned. 2.Exploring none-traditional distribution methods. It is typical to associate insurance with its numerous agents and brokers. Traditional insurance is mostly sold through an agent tied to a firm, or an insurance broker who acts on behalf of the client to advise on the type and firm to purchase the best fit policy for the client. The traditional sales methods have not been bad at all until covid19 knocked on our doors and we all had to restrict movement. Selling by the traditional means will not work very well in these circumstances. This road block has increased the fervency of insurance firms to explore none traditional means of sales such as telephone sales, online sales and partnerships with none insurance firms offering services with insurance cover as a component of their services. 3.Increased perception of the importance of insurance. It appears there is no better way to appreciate Insurance than when one encounters the reality of unexpected expenses due to a sudden health emergency or revenue loss due to a loss of life of a breadwinner. The global response in turning to insurance for a bail out

resulted in an increased perception of how important buying an insurance policy, especially health and life insurance, relay is. For most covered lives, their concern was double checking if their policies guaranteed them some protection from any of the diverse impacts of the pandemic. Others were willing to purchase life cover due to the perception that premiums may soon go up. This ripple effect that placed a spotlight on insurance in this period can be harnessed as a good opportunity to increase insurance sales and promotions to enhance the loyalty of clients. As mentioned above, this global event is one of such that statistically occurs once in several years hence there’s a need to make the best of any good opportunities the situation may present the industry with whilst it lasts. The heightened scare of unplanned health expenses and loss of life will be a best time to offer people financial security and peace of mind through insurance as long as they can afford it. 4.Reduction in claim experience of Motor Insurance. Globally, General Insurers have reported lower motor insurance and workmen’s compensation plans in the first quarter of 2020 due to the restrictions on mobility and working on site. If vehicles and pedestrians stay home and move less, the less exposed insured vehicles will be to collision risks. This will especially be positive news for General Insurance firms with motor policies forming the majority of their claims portfolio. A motor only General Insurance firm or motor dominant General Insurance firm will expect to make some savings on their motor claim liabilities due to the

impact of the pandemic on vehicle mobility and transportation. Even though a speculated reason for the reduction is ascribed to incurred but not yet reported claims, this seems less likely and such cases may be negligible in the first half of the year due to the generally slowed down mobility. In conclusion, Insurance offers a cushion for the economy in times of uncertain events leading to adverse financial impact. Undoubtedly, Insurance Industry has had its’s fair share of losses. The impact of decreasing investment yields, lower sales, premium income and a spike in some claim portfolios may lead to asset-liability mismatch in a number of firms in the medium to long term if recovery does not occur soon. Despite the gloom and scare, risk is opportunity, and if one looks closely enough, the potentials of the good sides outlined above can be taken advantage of as a means to recovery and strengthened insurance industry.

Samuel Kofi Ohene is a professional risk analyst with specialties focused on actuarial and statistical techniques in financial and operations risk management. For comments, contact him via email, sohene15@ gmail.com

MONDAY JUNE 15, 2020

Feature

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Top Beverage Companies Awarded at 4th Ghana Beverage Awards The maiden virtual edition of the Ghana Beverage Awards has been successfully organised in adherence to the stipulated COVID-19 protocols and to ensure the safety of all its stakeholders. Club Beer emerged the winner of the prestigious Product of the Year award which is the ultimate award. Other winners on the night include, Voltic Natural Mineral Water, Jameson Irish Whiskey, Alomo Bitters, Blue Skies, Rush energy drink, Vitamilk chocolate and Kpoo Keke Liqueur. The maiden virtual edition of the awards which was streamed live online and on e.TV Ghana, GTV and GTV Sports Plus was held under the theme “Inspiring Excellence in Ghana’s Beverage Industry” with the aim of promoting both local and foreign beverages as well as the participation of small-scale beverage enterprises in Ghana. In delivering the welcome remarks, Chief Executive Officer of Global Media Alliance Group (GMA), Mr. Ernest Boateng explained the rationale behind the virtual awards; “Following the outbreak of the COVID-19 pandemic both in Ghana and globally, as a nation we have been advised by the President of our Republic to adhere to all the social distancing protocols and

other directives which will help us to control the spread of COVID-19. We have therefore gone ahead to organize the virtual awards and stream live both on TV and online. As an organization, this is our way of proceeding to celebrate excellence in the beverage industry while adhering to all the recommended directives without endangering lives,” he explained. In a lead up to this year’s awards, a beverage Industry Tour was organized for the GBA board to visit nominated companies to familiarize with their work and practices. This initiative is one of the new activities

which was introduced in the buildup to the 2019 Awards Night. This year, GBA introduced two new categories; Local Beverage Advertisement of the Year and International Liqueur of the Year. The addition of the new categories is to acknowledge feedback from stakeholders, particularly consumers who have been instrumental in the nominations phase. The Local Beverage Advertisement of the Year Award went to the Kasapreko at 20 while the International Liqueur of the year was won by Baileys Irish Cream.

The Ghana Beverage Awards is organized by Global Media Alliance. Supporting partners are the Food Research Institute (FRI) under CSIR, Ghana Tourism Authority (GTA), Consumer Protection Agency and the Food and Beverage Association of Ghana (FABAG). Other partners for this year’s awards include Perception Management International, Telande, Sunseekers Tours, Archbert Media, GTV, GTV Plus, Kencity Media Group, Citi FM, Daily Graphic, The Chronicle, Business24, Ghanaweb, The Publisher, GTV and GTV Sports Plus.

MONDAY JUNE 15, 2020