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MONDAY JUNE 29, 2020

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IES analysts back cut to oil price assumption in mid-year budget review First quarter cargo traffic rose by 12.6% BY PATRICK PAINTSIL

BY BENSON AFFUL

Despite the recent increases in oil prices on the international market, policy think tank Institute of Energy Security (IES) has predicted that the oil market is not likely to see a V-shaped price recovery any time soon. Since falling to record lows in March and April, Brent crude oil prices have experienced some gains following the easing of coronavirus-induced restrictions around the world. Prices stayed near US$40 per barrel at the end of last week. However, analysts at IES told Business24 in an interview that it is difficult to tell whether the trend would continue in the months ahead.

“Any forecast of oil demand and price getting to the pre-COVID-19 levels before end-year could be distorted by some prevailing market happenings, posing as risks which cast shadows over the immediate recovery of the oil industry. These include a possible second wave of infections, increasing stock levels, delayed full economic recovery, return of shale production, political tension between the US and China, and the coming of the summer,” the analysts said. “Also, there are still hundreds of millions barrels of crude and petroleum products being held in storage tanks around the world, making it difficult for OPEC+ production cuts to have any meaningful impact on prices.” According to the energy sector analysts,

MORE ON PG 11

BRENT CRUDE $/BARREL

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 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 29, 2020

EDITORIAL

Wash your hands 2

Cover your cough 3

Free SHS laudable but concerns remain over long-term funding The revelation by the Vice President, Dr. Mahamudu Bawumia, that government has so far spent GH¢2bn on its flagship Free Senior High School (SHS) since September 2017 has raised questions over the longterm sustainability of the programme. Implementation of the Free SHS programme has made it possible for hundreds of children from deprived areas to attain a high school education. It has made nonsense the decadesold challenge of children with good grades whose parents could not afford to pay for admission and other fees at prominent high schools, having to end their education at the Junior High School Level. Indeed, the first year of implementation of the policy saw the government earmark about

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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)

and not ending up in the pockets of a few, the funding mechanism ought to be assessed to ensure it is sustainable in the long-term. Currently, the COVID-19 pandemic has put enormous pressure on the revenue envelope. With very little fiscal space, questions over funding sustainability arises. Business24 supports government’s Free SHS programme but associate with calls by various education stakeholder groups for a secured and sustainable funding mechanism to ensure the policy outlive governments and benefits millions of deprived children in the future.

IES analysts back cut to oil price assumption in mid-year budget review (…CONTINUED FROM COVER )

Wear a mask

GH¢400m to take care of over 300,000 students who were placed in Senior High Schools (SHS) across the country. With the full roll-out of the policy completed, total enrolment in SHS currently stands at 1.2m students, the highest ever in the country’s history. It is estimated that government spends about GH¢2,312 on each SHS student per year. In his 2020 budget presentation to Parliament, Finance Minister Ken Ofori-Atta disclosed that the policy has saved parents a total amount of GH¢1.8bn. Though the programme is laudable and is designed to ensure the country’s oil revenues are being equitably distributed to the people

compounding the situation is the vast amount of natural gas held in storage due to the milder winter, adding that as summer draws closer, natural gas storages are likely to get fuller due to fall in demand and the introduction of new supplies. Again, the IES said there are currently over 2.2m barrels of U.S. production shut-in, waiting to be re-opened when oil price draws closer to US$45 per barrel. “One must also not lose sight of the fact that the extent to which the current crisis has destroyed the global economy is much greater than the 2008/2009 crisis. As a result, a full recovery may be delayed for a while,” the IES added. On the back of these factors, the Institute said the government must be measured in its crude oil price assumption going into the second half of the year 2020. In March, the government said it was now working with an oil price assumption of US$40 per barrel, significantly below its original 2020 budget projection of US$62.6 per barrel. This would lead to a revenue shortfall of around US$1bn this year, Finance Minister Ken Ofori-Atta said. Industry watchers including Fitch Solutions and Bloomberg see oil averaging US$40 per barrel this year, with chances of further increases in 2021. Mr. Ofori Atta is expected to present the mid-year budget review and supplementary estimates for the

financial year in July. In April this year, Parliament granted a request by the Minister to withdraw an amount of GH¢1.2bn, equivalent to US$219m, from the oil stabilisation fund to finance the Coronavirus Alleviation Programme (CAP). The Finance Minister is expected

to use the budget review to explain how the government intends to replenish the stabilisation fund. Data from the Ghana Statistical Service earlier this month revealed that the country’s economy grew 4.9 percent year-on-year in the first quarter of 2020 compared with 6.7 percent in the same period last year.

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News

First quarter cargo traffic rose by 12.6% BY PATRICK PAINTSIL

The total volume of laden containers handled by the two seaports— Tema and Takoradi— rose by 12.6 percent year-on-year in the first quarter of 2020, despite the Covid-induced restrictions and disruptions to trade and supply chains, according to the Bank of Ghana’s (BoG) Real Sector Developments Report for the period. Container traffic for the first quarter registered 166,685 TwentyFoot Equivalent Units (TEUs) compared with 148,022 TEUs for the corresponding period of last year. In March alone, when Covid-19 broke out in Ghana, total container traffic was 58,816 TEUs, 18.1 percent higher than the February throughput of 49,800 TEUs and 7.6 percent more on a year-on-year basis. The data suggest that the virus pandemic scarcely affected the fortunes of the maritime sector during the first quarter. Though the BoG data did not give the equivalent traffic in terms of tonnage, it is likely that also went up over the first quarter of 2019, when

3.5m metric tonnes of containers were handled by the two seaports. This is because the higher container volume in the first quarter of 2020 would generally correspond to improved traffic in terms of tonnage. The impressive first quarter results of the maritime sector can partly be attributed to the government’s decision to allow port activities to go ahead despite the restrictions imposed on the country as part of efforts to fight the coronavirus pandemic.

The BoG data defied the projections of some industry analysts that the disruptions to global supply chains would have dire implications on the country’s shipping business. The Ghana Chamber of Shipping, for instance, had predicted a 15 percent fall from the 3.5m metric tonnes recorded in the first quarter of 2019. “We are yet to get the final figures for the quarter, but we estimate that, looking at the disruptions to the supply chain, we are likely to

lose about 15 percent of our previous tonnage for same period 2019,” CEO of the chamber Dr. Kofi Mbiah told Business24 in an exclusive interview in March. If the same rate of growth in container traffic seen in the first quarter of 2020 is maintained for the rest of the year, then it is predictable that total traffic for this operational year will be higher than that of 2019, in spite of the raging virus pandemic. This could shore up overall economic activity, which, in the wake of the pandemic, has been forecast to experience an unprecedented slump in 2020. Generally, cargo traffic to the country’s seaports has seen continuous growth over the last decade, with throughput rising from 15.1m metric tonnes in 2014 to 21.5m metric tonnes as at 2017. There was an 8 percent increase over the 2017 figure to 23.8m metric tonnes in 2018, before it slipped to 20.8m metric tonnes in 2019. At the end of 2019, industry players were upbeat about a promising business year in 2020, banking on the prospects of the ultra-modern and sophisticated MPS Terminal 3 that was opened last year.

Free SHS has cost the state GH¢2bn so far BY BENSON AFFUL

The government has spent GH¢2bn so far on its flagship Free Senior High School (SHS) policy, the Vice President, Dr. Mahamudu Bawumia, has revealed. Speaking at the National Council meeting of the governing New Patriotic Party over the weekend in Accra, the Vice President said the GH¢2bn spent on the Free SHS policy is part of more than GH¢20bn the government has spent on key polices since it assumed office in 2017. President Akufo-Addo, during the Free SHS policy launch in September 2017, said his government would invest revenues from oil into one of the most ambitious social programmes in the country’s history. According to him, Free SHS is ensuring that the country’s oil revenues are being equitably distributed to the people and not ending up in the pockets of a few. The first year of implementation of the policy saw the government earmark about GH¢400m to take

care of over 300,000 students who were placed in Senior High Schools (SHS) across the country. With the full roll-out of the policy completed, total enrolment in SHS currently stands at 1.2m students, the highest ever in the country’s history. It is estimated that government spends about GH¢2,312 on each SHS student per year. In his 2020 budget presentation to Parliament, Finance Minister Ken Ofori-Atta disclosed that the policy has saved parents a total amount of GH¢1.8bn. Policy to swell demand for tertiary admissions

Education watchers have said demand for tertiary school admissions is expected to be massive this year, as the country awaits the maiden graduation of over 360,000 Free SHS students who will be applying for entry into the various tertiary institutions. The reality is that this single batch of Free SHS beneficiaries are more in number than the entire student population of the 138 tertiary institutions in the country at the moment. The 138 tertiary institutions, including colleges of education and nursing training, have an entire

student population of 320,746 covering all batches, and they have the capacity to admit about 100,000 students yearly as a result of limited infrastructure. This means that in 2020 these institutions will not even be able to admit half of the 360,000 students who are expected to apply for admission into the various tertiary institutions. Of course, government has said its aim is to ensure that secondary school education becomes the least education any Ghanaian would have—so a counter-argument would be that it is not all the 360,000 SHS graduates that would be expected to have tertiary education. But analysts have argued that secondary school education is not enough to produce the requisite human resources for the accelerated industrialisation government seeks. Government, according to analysts, must therefore embark on rigorous infrastructural expansion in the various tertiary institutions to enable them admit the historic number that will be searching for higher education in the near future.

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News

Yofi Grant appointed external independent member of the Board of OACPS’ Endowment Trust Fund The Chief Executive Officer (CEO) of the Ghana Investment Promotion Centre, (GIPC), Reginald Yofi Grant, has been appointed as an External Independent Member, for a 2-year mandate, on the Board of Directors of the Organisation of African, Caribbean and Pacific States, OACPS’ Endowment and Trust Fund (ETF), to represent the West Africa Region. The OACPS’ Endowment and Trust Fund (ETF) was formally launched at the 9th Summit of the Heads of State and Government of the OACPS, in Nairobi, Kenya, in December 2019, to assist the OACPS to become financially independent by diversifying its funding sources beyond the assessed contributions of Member States. A statement issued by Ghana’s Embassy in Brussels noted that “the appointment was confirmed at the 929th meeting of the Committee of Ambassadors (COA) of the Organisation of African, Caribbean and Pacific States (OACPS) recently held in Brussels Meanwhile, Ghana has pledged an amount of One Hundred Thousand Euros (100,000) as her contribution to the fund in response to an appeal launched by the OACPS.

Yofi Grant is a Ghanaian investment banker with over 30 years of extensive work experience in banking and finance. He has served in various capacities in corporate finance and advisory, corporate banking and marketing. He has broad knowledge and great exposure in the African financial markets and has cultivated strong relationships with international private equity funds, portfolio and investment managers and brokerage funds. The Organisation of African, Caribbean and Pacific States, OACPS The Organisation of African, Caribbean and Pacific States (OACPS), formerly the ACP Group is one of the most enduring institutions in the landscape of international economic diplomacy. “Today, it is the largest trans-national and tri-continental organisation of developing countries on the international scene. Its seventy-nine (79) member countries from Africa, the Caribbean and the Pacific are bound together by a shared sense of history and a common vision of the future, with all of them, save for Cuba, signatories to the Cotonou Partnership Agreement (CPA), also

known as the “ACP-EC Partnership Agreement” which connects them to the European Union ,” the statement said. There are forty-eight (48) countries from Sub-Saharan Africa, sixteen (16) from the Caribbean and fifteen (15) from the Pacific. Ghana has been an active member of the OACPS since its formation in 1975, with the coming into force of the Georgetown Agreement, signed in Georgetown, The Cooperative Republic of Guyana. Furthermore, the longstanding development

cooperation between Ghana and the European Union (EU) has been framed around successive Partnership Agreements (PA) signed by the OACPS and the EU, the first being the Lome Convention of 1975. The ETF is also one of the key elements of the Future Perspectives of the OACPS, which is geared towards re-inventing and repositioning the OACPS as a ‘fit for purpose’ Organisation and an influential global player on the international scene post-2020, capable of securing the interests of its Member States.

Ghanaian technology executive elected onto ICC Executive Board The International Chamber of Commerce (ICC), has for the first time in its 100 years of existence, elected a black female as a member of its Executive Board. The new member, Valentina Mintah, a Ghanaian technology executive, recognised internationally for her expertise in trade facilitation and process automation, joins the ICC Executive Board, responsible for developing and implementing ICC’s strategy, policy and programme of action, and for overseeing the financial affairs of the world business organization. Ms. Mintah is the founder and former Chief Executive of West Blue Consulting, an award-winning ICT organization. She was a Senior Solutions Specialist at Crown Agents in the UK, having previously worked at IBM. She is also a founding member of the African Performance Institute, an organisation that promotes the advancement of e-commerce and e-government in Africa. ICC is the world’s largest business organisation representing 45 million companies and 1 billion employees from all sectors and company sizes in over 130 countries. The seven-member Executive

Board was announced at the 2020 meeting of the ICC World Council and Ms. Mintah would be on the board with some of the world’s most renowned giants including Sheikh Khalifa bin Jassim bin Mohammad Al-Thani from Qatar, Sebastian Escarrer from Spain, Dario Gallina from Italy, Shinta Kamdani from Indonesia, Takeshi Niinami from Japan and Jane Sun from China. The 2020 meeting of the ICC World Council also announced that it has elected MasterCard Chief Executive, Ajay Banga, as ICC Chairman and confirmed Maria Fernanda Garza, Chief Executive of Orestia as ICC First Vice-Chair. Valentina Mintah, speaking after the announcement said: “It is a great

privilege to have been elected to the Executive Board of the International Chamber of Commerce, and the organisation’s most diverse board to date. Alongside colleagues from ICC and its national committees, including ICC-Ghana, I look forward to drawing on my experience of working with West African and other emerging economies to support the promotion of international trade, responsible business conduct, and a global approach to regulation.” Congratulatory messages have started pouring in from across the world for Ms. Mintah. ICC Secretary General John W.H. Denton AO said: “ICC is delighted to welcome Valentina Mintah to its global Executive Board. Throughout her career, Valentina has championed international trade facilitation both in her home region of West Africa and in several transitional economies across the world. With her additional role as Vice-Chair of ICC Ghana, she is uniquely placed to support the strengthening of commercial and trade ties between several key, high growth global markets.” ICC Ghana Secretary General Emmanuel Doni-Kwame said: “ICC Ghana has one of its own on the

Executive Board, this is not only well deserved by a qualified professional but an honour to a blessed nation and a continent whose time has come. Valentina’s experience in Africa is an asset to the new Board as we strive to make business work for everyone, everyday and everywhere. Ms. Mintah established West Blue Consulting in 2012 and led the company to successfully develop and deliver a national single window platform for Nigeria, significantly optimizing and improving trade facilitation in the country, and leading to savings of USD 25 million per month for the Government of Nigeria. In 2014, West Blue Consulting further harnessed its customs modernization expertise to develop and implement a national single window platform for Ghana. Within two years of its implementation in 2015 at ports across the country, the platform had saved the Government of Ghana USD 500 million. This resulted in Ghana rising through the ranks of the World Bank’s ‘Ease of Doing Business’ index, becoming a vibrant hub for continental free trade.

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MONDAY JUNE 29, 2020

Controller to deploy software to monitor all gov’t accounts BY EUGENE DAVIS The Controller and Accountant General (CAG), Kwasi Kwaning Bosompem, has revealed that his office is working on a software, the B-tracking system, which when fully functional will track every single government account. Appearing before the Public Accounts Committee (PAC) sitting in Accra last week, Mr. Bosompem said the system will strengthen the operation of the Treasury Single Account (TSA), which was set up in 2016 to pool all government resources into one account for better monitoring. “TSA is working. The main aim of TSA is to have total oversight of accounts that you operate. It does not mean we cannot operate a commercial account, but the government wants all its accounts to be operated at the Bank of Ghana,” he told members of the committee.

Kwasi Kwaning Bosompem says a software will be introduced to track all government accounts.

Mantrac Ghana Donates $10,000 to National COVID-19 Trust Fund

BY KWASI ANKU Mantrac Ghana Limited, as part of efforts to support the fight against COVID-19, has donated an amount of GHC 58,500.00 being the equivalent of US$10,000 to the National COVID-19 Trust Fund. The cash donation is part of Mantrac Ghana’s total commitment of US$40,000 to help the fight against COVID-19 in the country. Mr. Kingsley Amoako-Mensah, Head of Human Resources Department at Mantrac Ghana, said the company was committed to contributing to the growth and development of the country. He said management firmly stands with the government in the fight against the pandemic, adding

that through the donation, many lives would be touched and saved. Mr. Amoako-Mensah said “Mantrac Ghana will donate Personal Protective Equipment valued at US$30,000 to some health facilities in communities where they operate” in the coming months. He advised Ghanaians to adhere to the mandatory wearing of face mask, observe all recommendations on social distancing, wash hands regularly with soap under running water and use alcohol based sanitizers frequently. Archbishop Justice Ofei Akrofi, a Representative of the Board of Trustees for the Fund, who received the cheque called on other corporate bodies to emulate the kind gesture of Mantrac Ghana.

“The areas where Bank of Ghana is not accessible, we still rely on the commercial banks to work for us. We are implementing a system, B-tracking system, that will track every account and that will give us details,” he added. The system to be introduced will reveal the total cash available to government by the click of a button, helping the government to improve monitoring of its revenue. Among some of the benefits of running a TSA are that it improves appropriation control, improves operational control during budget execution, enables efficient cash management, and reduces bank fees and transaction costs. Other benefits are that it facilitates efficient payment mechanisms, improves bank reconciliation and quality of fiscal data, as well as lowers liquidity reserve needs. Section 46 of the Public Financial Management Act established the TSA as a unified structure of government bank accounts that enables the

consolidation of government cash resources, and into which all government cash, including moneys received by covered entities, shall be deposited and from which all expenditure of government and covered entities shall be made. The covered entities include the executive, legislature and judiciary; constitutional bodies; ministries, departments, agencies and local government authorities; the public service; autonomous agencies; and statutory bodies. The system can be implemented under a decentralised framework or a centralised framework, but a mixture of the two is acceptable. The operationalisation of the system in Ghana was in line with the requirements of the International Monetary Fund in the recentlyended Extended Credit Facility agreement. It is expected that the TSA will be well integrated into the Ghana Integrated Financial Management Information System.

Mr Price to exit Nigeria in third country departure in a year

In a blow to efforts at job retention in Africa’s largest economy, South Africa’s Mr Price Group Ltd. plans to close its Nigerian business in favor of a stronger focus on its home market, Bloomberg reports. The specialist in mid-range clothing, sports goods and homeware has already shuttered four of its five Nigerian stores and expects to close the last one in the coming months, Chief Executive Officer Mark Blair said in a presentation. Nigeria is the third country that Durban-based Mr Price has recently exited, after Australia and Poland last year. South African companies have long struggled to operate in Nigeria, encountering supplychain disruptions and challenges in getting funds out of the country. Woolworths Holdings Ltd., the South African seller of designer clothing and organic food, quit the West African nation in 2013, while grocer Shoprite Holdings Ltd. said

last year it may close some stores in the country. “We are really going to focus on South Africa in a more concentrated way,” Chief Financial Officer Mark Stirton said in the same presentation. Mr Price expects “a lot of distress among retail peers” in South Africa, which is gradually emerging from a lockdown that has devastated the economy. Retailers not selling food or medical supplies were closed for five weeks through April, and were only allowed to fully open at the start of this month. Mr Price didn’t declare a final dividend and has frozen headoffice salaries to conserve cash. Last month it blazed a trail by announcing plans to sell shares to pursue growth opportunities, a move later replicated by rivals The Foschini Group Ltd. and Pepkor Holdings Ltd. (Source: businessday. ng).

MONDAY JUNE 29, 2020

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ICT

COVID-19 Disruption: The need to move ICT centres from the community to the home BY SAMUEL HANSON HAGAN

astandpresentgovernments have channeled some resources into establishing community and school Information and Communication Technology (ICT) centres. These ICT centres have been established purposely to enhance the learning of ICT in schools and communities. A typical ICT centre would have a set of computers and accessories with no access to the internet or an Intranet. ICT teachers are expected to use these computers to teach school children some basic computer hardware and applications. Just a few of these ICT centers are connected to the internet through either private initiatives, VSAT or through the government’s fiber backbone initiative. The ministry of Communication of Ghana’s vision for community information centers (CIC) is to create rural access centres and use the medium of ICT to promote community-based ICT applications that will promote operational efficiencies delivered through effective and timely availability of information. According to a 2004 government project strategy chanced up by yours truly, government through the ministry of Communication had plans to build community information centers in all districts in Ghana to serve as centres of learning and assist in bridging the digital divide between rural and urban communities. This document, also known as Ghana’s ICT for Accelerated Development Policy “also proposes the deployment and spread of ICTs in the Community as a way to improve the economic base and further accelerate growth and development towards transforming Ghana into an information society”. The initial setups where a collaborative effort by the Government of Ghana and the Government of India. These centres were expected to be connected to Satellite from the remote location as the near-end and to the Ghana-India Kofi Annan Centre of Excellence in ICT as the far-end to facilitate system management and finally establish a link to the government portal at the Information Services Department of the Ministry of Information to facilitate government to citizen (G2C) interaction. These ideas surrounding the establishment of CIC where laudable until Covid-19 arrived to disrupt the system. On the 30th day of March 2020, a lockdown was announced in two regions in Ghana to curb the spread of Covid-19. Prior to that, all schools were closed, and new restrictions and social distancing rules were introduced. The Ministry of Education and the Ghana Education Service tried different

ways of engaging students while at home. Mediums such as Television and Radio were used to engage students. Additionally, Mobile Network Operators (MNOs) in Ghana also zero rated some educational Uniform Resource Locator (URLs) for students to access. All these interventions were to get students to learn what they would have been learning if they were at school. All these interventions by the Ministry were not good enough. They never provided the interaction that the students needed. What was missing were the interactions between the students and the teachers. That is where the most important element comes in: the provision or availability of Laptops or tablets. If as a country, we had a policy of providing all students with a very robust locally assembled laptop or tablet which can have access to internet services, our nightmare would have been solved by now. We could as a country have gone fully online from day one for all students during the lockdown. It would be very easy for MNOs to provide free access to internet services for education purposes to all students who uses the free laptops or tablets. The mac addresses of these devices could be easily allowed on all networks to access internet for only educational purpose, that is, an interactive application where a student could interact with his peers and teacher in a classroom setting. Ghana would not be the first country to provide free laptops to students. Countries such as Peru, Uruguay and Rwanda have adopted the one child one laptop agenda in full. Other countries such as Norway, Brazil, Bangladesh, South Korea and Spain are also implementing it partially. The United States does not provide free laptops from the

federal government, but some districts such as the Los Angeles Unified district and Miami Dade (Florida) are providing free devices to students in their districts. It is also worth mentioning that some school districts are increasingly promoting ‘bring your own technology’ (or ‘BYOT’) initiatives to increase the access to laptops and tablets within schools. If we are serious about turning the fortunes of this great nation, we should take some bold steps in making ICT and access to ICT devices for learning a priority. Free Secondary school without the access to ICT tools would produce half-baked graduates. These Graduates would not be competitive in the job market globally. Students in other countries are developing mobile applications, computer applications, robots, and other computer aided applications while our students are busy studying ICT on the chalk board. The provision of free laptops and tablets to students would open the floodgate for innovation and creativity in the development of software and applications by students. The pros outweigh the cons in providing free laptops to every Ghanaian child of school going age. The free laptops must be designed and assembled locally in Ghana with local production offices in all Regional or district capitals. This first step would be an avenue for job creation for the youth. The citing of the assembling plants in the regions or even districts can support with the maintenance of these devices for either free or for a small charge. With every child having access to laptops and free internet services for education purposes, we can eliminate the double track system, and increase enrollment drastically. We would not need to build more

classrooms to accommodate students. All that would be needed is to enroll a cohort on an online system, get them connected from a specific time for an in-class experience. Occasionally, the online students could be asked to visit the schools for a “residency” type of experience. Through curiosity and access to online materials, students with access to the free laptops (hitherto would not have had one) can learn new skills from free materials online and build their capacity without being in the four corners of a school building. Access can be controlled on these devices so that students cannot access X rated sites and other adult rated sites. A central management system to manage updates and security settings can be setup to control these devices. Unauthorized applications can be detected and deleted remotely. We have managed to implement free SHS, we can manage to provide free laptops and devices for all students of school going age thereby improving the economic base and to further accelerate growth and development towards transforming Ghana into an information society.

Samuel Hanson Hagan; | Telecommunication Consultant | Member, Institute of ICT Professionals Ghana. For comments, contact email: shhagan@gmail.com | WhatsApp: +233507393640

MONDAY JUNE 29, 2020

Feature

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Managing cash flow during a period of crisis

BY DELOITTE

As a typical “black swan” event, COVID-19 took the world by complete surprise. This newly identified coronavirus was first seen in Wuhan, the capital of Hubei province in central China in December 2019. As at the middle of March 2020, the virus has infected over 160,000 people, and led to more than 6,000 deaths. More than 150 countries are now reporting positive cases of COVID-19 as the virus spreads globally, impacting communities, ecosystems, and supply chains far beyond China. Ghana first reported two COVID-19 cases on 12 March 2020. Since then, over 20 more cases have been confirmed in Ghana. The President, as part of measures to tackle the situation, announced the release of US$ 100 million to help fight the virus. Other measures introduced by the Government include, a suspension of all public gatherings for the next four weeks, closure of all schools until further notice, and a ban on the entry of non-Ghanaian citizens into the country. These restrictions are likely to have adverse impact on businesses in Ghana especially the hospitality, air travel and tourism sectors. In addition, there is likely to be a sharp decline in demand for Ghanaian goods in Europe and Asia leading to a significant drop in sales and cash for businesses that produce for export. The focus of most businesses now is on protecting employees, understanding the risks to their business, and managing the supply chain disruptions caused by the efforts to contain the spread of COVID-19. The full impact of this epidemic on businesses and supply chains is still unknown, with the most optimistic forecasts predicting that normalcy in China may return

by April,1 with a full global recovery lagging depending on how other geographies are ultimately affected by the virus. However, one thing is certain: this event will have global economic and financial ramifications that will be felt throughout global supply chains, from raw materials to finished products. This article will suggest ways organisations can mitigate damages to their business during this volatile event. Businesses in sectors such as tourism, hospitality, entertainment and air transportation have been particularly hard-hit in the short term. Businesses in consumer goods and retail may also be at higher-than-normal financial risk, especially those with a high exposure to China, and those in seasonal businesses where demand may be lost (as opposed to shifted), such as such perishable consumer goods and seasonal apparel. Even commodity-oriented industries, such as metals and mining or oil and gas, are exposed as global demand shifts and pricing fluctuates. Responding to the immediate challenge 1. Ensure you have a robust framework for managing supply chain risk. Supply chain management is a complex challenge, and finance-related problems only add to the risk. Do you know if any of your customers are in trouble and might be unable to pay for the goods and services you deliver? If you manufacture a product and want to sell it to someone outside your borders, you typically require a letter of credit from a prime bank that proves the buyer can pay. This letter of credit not only provides a source of ultimate payment, it can also be used to secure inventory financing while the goods are in transit—so it’s

important to make sure these letters of credit are still reliable. Ensuring you understand the financial risks of your key trading partners, customers, and suppliers is a critical consideration in times like these. 2. Ensure your own financing remains viable. In these circumstances, don’t assume the financing options you previously had available to you will continue to be available. Undertake scenario planning to better understand how much cash you’ll need and for how long. Use this opportunity to actively engage with your financing partners to ensure your available lines of credit remain available, and to explore new or additional options should you require them. 3. Focus on the cash-to-cash conversion cycle. Under normal business conditions, companies primarily focus on the profit and losses–growing the top line while managing the bottom line. Routine back-office activities such as paying bills and turning receivables into cash are often taken for granted. In the current abnormal business conditions, smart companies are shifting their focus from the income statement to the balance sheet. Of the three elements of working capital–payables, receivables, and inventory, executives have a tendency to focus on inventory. But, in order to minimize working capital requirements during challenging times, it’s important to apply a coordinated approach that addresses all three areas. 4. Think like a CFO, across the organization. As managers step up to the challenges of disruption and inventory shortages, they generally spend their days thinking about operations and don’t pay much

attention to finance and treasury issues. More often than not, inventory levels and other critical business parameters are driven by customer service requirements and operational capabilities, not financial constraints. But what if the situation was reversed? What if working capital was the company’s primary constraint on inventory, and managers were given the challenge of making it work? How would that affect your supply chain and inventory practices? 5. Revisit your variable costs. Reducing your variable costs is often a quicker way to immediately reduce your cash outflows than focusing on your fixed costs. Of course, there are the typical variable cost-reduction levers, such as imposing travel bans and non-essential meeting restrictions (which might already be in place as a way to manage employee safety), imposing hiring freezes, and placing restrictions on discretionary spend like entertainment and training. When labour is a significant cost line in your business, consider avenues that might help reduce spend to avoid getting to a situation where layoffs are required. For example, look for opportunities to reduce contract labour and redistribute work to your permanent workforce. And, if necessary, consider offering voluntary, or even involuntary, leave without pay to preserve cash. 6. Revisit capital investment plans. With cash flow forecasts in mind, consider what’s really necessary for the near term. What capital investments can be postponed until the situation improves? What capital investments should be reconsidered? What capital investments are required to position (…CONTINUED ON PAGE 13 )

MONDAY JUNE 29, 2020

Feature / News

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for the rebound and for creating competitive advantage? 7. Focus on inventory management Companies are at risk of experiencing supply chain disruptions due to shortages in raw material and component parts. Inventory safety stock parameters will most likely need to be updated to reflect the increased demand and supply-side volatility, which will have the effect of increasing overall inventory levels, assuming that’s possible. At the same time, businesses will be thinking about securing additional inventory, or strategic stock, as a further buffer against the potential impact of a prolonged or much broader supply chain disruption. Also at the same time, from a cash flow perspective, companies may be considering actions to reduce finished goods inventories, especially in perishable products, where waste is an important consideration and markets remain difficult to access. Balancing the demands for more buffer inventory and managing cash flow may not be as easy as it sounds. Companies that still use simplistic approaches to inventory management might be able to do a quick assessment and find some immediate opportunities to drive down inventory. However, many companies are likely to find that significant

inventory cuts have an adverse effect on customer service and production. Sustainable savings will most likely require fundamental improvements in end-to-end supply chain inventory visibility, demand planning, inventory and safety stock policies, production planning and scheduling, lead-time compression, network-wide available-to-promise, and SKU (stock keeping unit) rationalization. 8. Extend payables, intelligently One way to preserve working capital is to take longer to pay your suppliers. Some companies may unilaterally decide to delay their payments and force the extension on their suppliers, especially when stuck with inventory they can’t deliver into impacted margins. Of course, such an approach is likely to damage your supply relationships. Even worse, it might deprive supply chain partners of the cash they need to maintain their operations, which could lead to late deliveries and quality problems, never mind the added strain to supply relationships. We recommend working with suppliers to establish an agreement that both of you can live with. There might even be situations where you need to accelerate payables for a critical supplier that is on the brink of failure in order to preserve the integrity of your supply chain and prevent a critical disruption. 9. Manage and expedite receivables

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Companies tend to get lax about receivables when the economy is booming, interest rates are relatively low, and cash flow is not a concern. But, as supply chains are affected and managing cash flow becomes more important, it’s worth taking a hard look at how your receivables are being managed. In the point above, we mention the strategy of delaying payments to your suppliers; don’t be surprised if your customers are thinking about doing the same thing to you. That’s why it’s important to improve the rigour of your collection processes. Focus on customer-specific payment performance and identify companies that may be changing their payment practices. Also, get the basics right, such as timely and accurate invoicing. Any errors in your billing process can lead to costly delays in receiving payment. 10. Consider alternate supply chain financing options Depending on what your cash flow scenario planning reveals, you may also need to consider tactics to generate faster cash flow from your receivables. Aggressive techniques such as factoring your receivables, although relatively expensive, may be your best option to improve cash flow quickly. You may also consider working with your customers to offer dynamic discounting solutions for those that are able to pay more quickly (e.g., discount terms can be defined in advance, and the customer calculates the appropriate discount

based on a defined payment schedule). With this technique, you are essentially paying customers to provide you with short-term financing. But the cost may be substantial: a conventional “2% net 10” early payment discount translates into a 36% APR. However, if government loans or bank credits are not available, this might be one of your only options. There are also a number of other supply chain financing possibilities that can be implemented in the short to medium term, such as collaborating with your key trading partners to optimize cash flow across the extended supply chain. THE WAY FORWARD

“Given the importance of cash flow in times like this, companies should immediately develop a treasury plan for cash management as part of their overall business risk and continuity plans. In doing so, it is essential to take a full ecosystem and end-to-end supply chain perspective, as the approaches you take to manage cash will have implications for not only your business but also for your customers.” Contact: Charles Larbi-Odam, Country Managing Executive, Deloitte Ghana. Email: clarbi-odam@deloitte. com.gh +233 307 086 330

First National Bank appoints first Ghanaian CEO First National Bank Ghana has announced the appointment of Dominic Adu as its first Ghanaian Chief Executive Officer, effective Wednesday July 01, 2020. Dominic takes over from Richard Hudson who has served in this position since the inception of the bank five years ago. Mr. Adu was the Chief Executive Officer of the erstwhile GHL Bank, which was recently acquired by First National Bank Ghana. “On behalf of the Board of Directors, we are excited to welcome Dominic to lead the First National Bank Ghana team. He has a wealth of experience in domestic and international finance, private equity, entrepreneurship and leadership which will add great value to our team,” the chairman of the board of directors of First National Bank Ghana, Mr. Joseph Tetteh says. “Notably, this appointment marks another milestone in the history of First National Bank Ghana to have a Ghanaian citizen as CEO. We are confident that his leadership capabilities, coupled with his astute financial and economic management expertise, will enable the bank to further expand its product offering to all Ghanaians while contributing significantly to the growth of the business.

His experience will help unlock further value in our banking services and expand our existing offering to help the average Ghanaian fulfill their financial aspirations,” he added. Dominic Adu co-founded Ghana Home Loans, Ghana’s foremost mortgage finance institution in 2006. In June 2017 he led Ghana Home Loans through a transition to become a universal bank after obtaining a banking license under the name GHL Bank Plc. Mr. Adu is a Chartered Accountant (ACA, England & Wales) with an MSc. Economics degree from the University of London. He also holds a bachelor’s degree in Economics from the University of Manchester. Johan Maree, CEO of FNB Rest of Africa, is optimistic that as CEO, Dominic Adu will lead First National Bank Ghana to market leadership. “It is with much joy that I congratulate Dominic Adu on his appointment as CEO,” Mr. Maree said. He is a respected leader within the industry, and I look forward to him leveraging his wealth of experience and steering the business to greater profitability in these challenging times. I would also like to thank CEO Richard Hudson for his service, contribution and role in building the business over the years”.

Richard Hudson, the outgoing CEO, will remain in the business and has been appointed as Executive Director of First National Bank Ghana. He will assume responsibility for some roles in the transitional phase while the two businesses fully integrate. “I wish Dominic every success in the months and years ahead as he takes the business to greater heights. He can be assured of my unconditional support in ensuring the success of the bank particularly

in the post COVID-19 environment,” said Mr. Hudson. Accepting his new appointment Mr. Adu stated: “I have inherited two strong combined brands built by Richard and the founders of GHL supported by a committed team of leaders and staff who are passionate and devoted to delivering innovative financial solutions. I look forward to contributing towards establishing a solid financial institution and the overall growth of the banking industry in Ghana.”

MONDAY JUNE 29, 2020

Feature

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The triple crisis shaking the world

BY JOSCHKA FISCHER

ore than just a publichealth disaster, the COVID-19 pandemic is a history-defining event with far-reaching implications for the global distribution of wealth and power. With economies in freefall and geopolitical tensions rising, there can be no return to normal: the past is passed, and only the future counts now. The COVID-19 pandemic is entering its second phase as countries gradually reopen their economies and loosen or even revoke strict social-distancing measures. Yet, barring the arrival of an effective, universally available therapy or vaccine, the transition back to “normal” will be more aspirational than real. Worse, it risks triggering a second wave of infections at the local and regional level, and possibly on a much larger scale. True, political decision-makers, health-care providers, scientists, and the general public have learned a great deal from the experience of the first wave. Though a second wave of infections seems highly probable, it will play out differently than the first wave. Rather than a full-scale lockdown that brings economic and social life to a standstill, the response will rely mainly on strict but targeted rules for social distancing, face masks, telecommuting, video conferencing, and so forth. But, depending on the next wave’s intensity, local or regional lockdowns may still be deemed necessary in the most extreme cases.

Much like the first wave of the pandemic, the next phase will involve a trio of simultaneous crises. To the risk of new infections getting out of control and spreading globally once again must be added the ongoing economic and social fallout and an escalating geopolitical bust-up. The global economy is already in a deep recession that will not be quickly or easily overcome. And this, along with the pandemic, will factor into the intensifying SinoAmerican rivalry, particularly in the months leading up to the United States’ presidential election in November. As if this combination of health, socioeconomic, and geopolitical upheavals were not destabilizing enough, one also cannot ignore the Trump factor. If US President Donald Trump were to win a second four-year term, the current global chaos would escalate dramatically, whereas a victory for his Democratic opponent, Joe Biden, would at least bring greater stability. The stakes in the US presidential election could scarcely be higher. Given the world’s mounting crises, it is no exaggeration to say that humanity is approaching an historic crossroads. The full extent of the economic recession probably will not become apparent until this fall and winter, when it will most likely come as another shock, because the world is no longer accustomed to such dramatic contractions. Both psychologically and in real terms, we are accustomed to continuous growth.Will richer countries in the West and Asia be able to deal with a deep, widespread, prolonged recession or even depression? Even

if trillions of dollars in stimulus spending proves sufficient to offset a full collapse, the question will be what comes next. In the worst scenario (which is not impossible), Trump is re-elected, the second wave of the pandemic is global, economies continue to crash, and the new cold war in East Asia turns hot. But even if one does not assume the worst, the triple crisis will usher in a new era, requiring that national political and economic systems and multilateral institutions be rebuilt. Even in the best-case scenario, there can be no return to the status quo ante. The past has passed; only the future counts now. We should harbor no illusions about what might and should come next. The crises triggered by the pandemic are so deep and far-reaching that they inevitably will lead to a radical redistribution of power and wealth at the global level. The societies that have prepared for this outcome by mustering the necessary energy, know-how, and investments will be among the winners; those that fail to see what is coming will find themselves among the losers. After all, long before the pandemic, the world was already undergoing a transition to the digital age, with farreaching implications for the value of traditional technologies, legacy industries, and the distribution of global power and wealth. Moreover, an even greater global crisis is already fully visible on the horizon. The consequences of runaway climate change will be far graver than anything we have ever seen, and there will be no chance of a vaccine to solve that problem. The COVID-19 pandemic thus

marks a real turning point. For centuries, we have relied on a system of political economy comprising sovereign egoistical nation-states, industries (both under capitalism and socialism) that run on fossil fuels, and the consumption of finite natural resources. This system is quickly reaching its limits, making fundamental change unavoidable. The task now is to learn as much as we can from the first wave of the triple crisis. For Europe, which seemed to have fallen far behind economically and geopolitically, this moment represents an unexpected opportunity to address its obvious shortcomings. Europe has the political values (democracy, rule of law, and social equality), technical know-how, and investment power to act decisively in the interest of its own principles and goals, as well as those of humanity more generally. The only question is what Europeans are waiting for.

Joschka Fischer was German Foreign Minister and Vice Chancellor from 1998-2005, a term marked by Germany’s strong support for NATO’s intervention in Kosovo in 1999, followed by its opposition to the war in Iraq. Fischer entered electoral politics after participating in the antiestablishment protests of the 1960s and 1970s, and played a key role in founding Germany’s Green Party, which he led for almost two decades. © Project Syndicate 1995–2020

MONDAY JUNE 29, 2020

Risk & Insurance

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Six possible reasons your insurance claim delayed or didn’t get paid Part I

BY SAMUEL KOFI OHENE

It is popular to hear many say Insurance is shrouded in a lot of mystery with confusing legal terms in their policy contracts. In the financial services sector, insurance may be the arm said to be full of riddles. In the Ghanaian industry, sales staff and especially front office workers, have had to endure a lot of name calling such as “thieves” and “con men” by exasperated clients who feel cheated for one reason or the other. Most of these tensions are experienced at the point of claim processing. That very crucial moment when the firm is expected to stand up to its end of the bargain. Even though there may be an iota of truth in the myriad of accusations leveled against insurance firms, are the insurance companies always to blame when claims are not paid or delayed? The reasons outlined below are just few of several possible reasons that may delay your insurance claim or may not get it paid at all to your disappointment. This will be a part one to a two part article on insurance claim payment. The second part will speak on the other three reasons and what one can do at the point of purchasing insurance (or whilst on cover) to fast track your claim payment when due. 1. Policy Exceptions Policy exceptions are one of the most popular reasons an insurance firm will repudiate or turn your claim request down. Even though this particular reason hurts the most if an insured is pious with premium payments and “assumes” the event is covered when in actual fact, it isn’t. Repudiations due to exceptions can arise if the insured is not privy to what actually the policy covers, and what it does not. “Mis-selling” can be a major reason insureds will assume they are paying for something which does not meet their expectations

or needed cover. The direct cause of a damage or loss of life or injury is another determining factor in ascertaining whether the damage or loss is insured against or not. A number of vehicle owners assume vehicle maintenance is covered by insurance, whereas insurance does not cover wear and tear. In fact, if the proximate or direct cause of an accident is traced to an issue of wear and tear, your claim may be repudiated or turned down per investigations carried out by the firm. If you have a life policy that pays out a sum of money to dependents when one passes on due to critical illnesses such as cancer, heart or liver disease, if one unfortunately is deceased through a motor accident, the policy in particular may not pay out if it does not include a cover due to accidental events. Fortunately, a great number of various types of life policies include a cover for accidental death in order to make the product more marketable. It is very important to ask all the necessary questions about scope of cover before and even when the policy is in force. 2. Nondisclosure of vital information. Not disclosing material or important information to an insurer can cost you at the point of claiming on your insurance. The story is said of a man who stated on the insurance proposal form he has a house with a garage whilst insuring his vehicle. Unfortunately his vehicle got stolen and at the point of claiming, the insurers got to know he didn’t have a garage and parks his car outside. The story is easy to figure out, his claim was turned down. Insurers base their risk ratings and pricing on information presented to them by the client. Insurers typically have a questionnaire proposal form with every information they deem vital in rating the risk they are about to bear. Information not stated, and deemed vital, can influence an insurer’s

decision on what premium to charge and on what terms to accept the risk or not. Failing to disclose underlying health conditions, health history, or a life style that may affect the risk pertaining to a life policy are all deemed material and can influence the premium charged. As a rule of thumb, if you are not asked on the proposal form or by the insurer, volunteer as much information you deem vital to the policy or the cover, this will ensure the insurer has little grounds to turn down a claim for nondisclosure. Some insureds also make a case against claims turned down based on information not asked by the insurer and this can be a grey area. 3. Fraud Insurance is not an investment to the policyholder, neither is it a profit or interest generating venture. Unfortunately, a number of insureds device means and ways to receive funds from insurance firms fraudulently. Because insurers guard societal interest in ensuring monies pooled together through premiums are paid out in genuine claims, they have over the years improved in their ability to detect fraudulent claims. Fraudulent claims come in various shapes and forms. From deliberately causing personal damage to property, to covering none existent property or lives, to falsifying claim documents. The conclusion of a fraudulent claim is rest assured, it will be turned down as soon as the red flags are lifted. Possible legal action on the insured may follow if the insurance firm chooses to pursue the fraud. Stories are told of arsonists setting fire to shops filled with empty boxes to create an impression of lost goods due to fire outbreak. Some have purchased insurance for already deceased people and falsified death certificates. The list of popular insurance fraud may be endless, but the result is the same, either you do not get paid when found out, end up

with law enforcement, or swindle the firm and get paid the claim for other insureds to pay for the cost later through higher premiums. The last possibility is the least likely due to the sophisticated fraud detection measures insurance firms are investing in in recent times. In next week’s edition, we will speak about three other claim delay or denial possibilities that are not technical insurance reasons nor related to the policy but more of human nature or externally driven. Do share your stories and real life situations if you have encountered any of the issues raised above as an insurer or an insured via my email provided below. Real life situations are often the best examples to educate others.

Samuel Kofi Ohene is a professional risk analyst in the Insurance Industry, both General and Life Insurance. His specialties currently focus on actuarial and statistical techniques in financial and operations risk management. He has a background in insurance underwriting and claims management as well. For comments, contact him via email, sohene15@gmail.com

MONDAY JUNE 29, 2020

Aviation

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Ethiopian welcomes back business and leisure customers with emphasis on wellness During the pandemic, Ethiopian Airlines, Africa’s largest airline, was the go-to airline for essential travel, repatriation flights and airlift of medical and personal protective equipment (PPE). With the easing of travel restrictions across the globe, Ethiopian is welcoming back business and leisure travellers with programs aimed at safeguarding their health and safety. The program reinforces Ethiopian pledge to protect the health and safety of its customers and staff. It includes the steps the airline is taking to maintain customer and staff wellbeing through-out the service chain beginning from the first interaction with customers during ticketing/reservation and up to arrival at destination. Tewolde Gebremariam, Group CEO of Ethiopian, noted that “Ethiopian is proud to be there when the world needed it most--repatriating citizens, re-uniting families, facilitating essential travel and transporting much needed medical and personal protective equipment (PPE) for health professionals and the general public under very difficult and challenging circumstances. “We are proud to be an integral part of the fight against COVID-19. Now we want to play a leading role in the new-normal. To a very large extent, it’s about getting back the confidence of business and leisure travelers. “With the protective measures we are taking in line with CDC, IATA, ICAO and WHO guidelines, customers and staff can rest assured

that their safety and health are well looked after when flying with us.” Customers are, however, advised to check travel restrictions of destination countries prior to arriving at the airport for a flight. Facemasks will be mandatory for travel. Except children under the age 2, all customers must keep their masks on throughout their journey. All ET customer-facing staff will wear Personal Protective Equipment (PPEs). This includes ticket offices, airport and lounge staff, as well as cabin crew. On-board service is redesigned to minimize contact while maintaining our African flavoured Ethiopian hospitality. Items, such as magazines, menus and other reading materials that were traditionally shared will no longer be available. Before Departure According to the airline, customers holding tickets purchased before August 31, 2020 and valid for travel until September 30, 2020 can rest assured that their tickets will be valid until 31 December 2021. Customers who have exchanged their tickets for vouchers can utilize the vouchers within one year. It is essential that customers satisfy destination entry requirements such as health certificates and fill health declaration forms if required. Up-to-date destination entry requirements can be found on: https://www.ethiopianairlines. com/aa/travel-updates Customers feeling unwell are strongly encouraged not to travel and travel only when feeling well. The airline has indicated that unwell

customers will not be allowed to enter the airport and will be denied boarding a flight. All Ethiopian aircraft are thoroughly cleaned and disinfected prior to departing from the hub, and at turnaround stations. At the airport, enhanced health screenings, including temperature checks, are expected be conducted. To ensure adequate social distancing, markings are placed through-out the Addis Ababa Bole International Airport terminal building and hand sanitisers will be available for use. Passengers must check in their cabin baggage. They’re allowed to bring on board only essential items such as laptops, handbags, briefcases, and baby items. All checked-in bags will be sanitised before being loaded onto the aircraft. To reduce contact between customers, boarding will be done in an orderly manner by seat-rows starting from the back of the aircraft

towards the front. Onboard: In business class complimentary hygiene kits that include masks, antibacterial wipes, and hand sanitizer will be provided. In economy masks, hand sanitizers and antibacterial wipes will be available on demand. “Comfort items” such as pillows, blankets, headphones, and toys are hygienically sealed. On-board lavatories will also be sanitized frequently during flight. Menu’s, Magazines and newspapers will, however, not be available onboard. Crew are trained to handle flight operations in a COVID-19 travel world. As countries continue to open their borders and relax travel restrictions, Ethiopian is ready to increase frequencies to accommodate the demand by focusing on the wellbeing of customers and staff. Ethiopian is happy to welcome back business and leisure travellers.

Emirates Skycargo continues to connect Ghana to global markets Emirates SkyCargo has grown its operations in Africa to include Accra, and Ghanaian businesses can now benefit from weekly cargo flights from Accra to Dubai starting June 25, 2020. The airline has established this short term schedule which utilizes the belly hold capacity on its wide body Boeing 777-300 ER passenger aircraft. Cathrine Wesley, Emirates’ Country Manager, Ghana said: “As an extremely agile and customerfocused business, we are very committed in supporting the Ghanaian economy and helping local businesses maintain continuity by keeping their supplies running across essential industries.” Emirates SkyCargo started its operations in Ghana in 2004. Emirates SkyCargo has helped

import a variety of goods including mobile phones, garments, leather, beverages and personal effects. It has also facilitated the export of local produce including fresh and cut fruits. . Emirates SkyCargo is now operating scheduled cargo flights to over 80 global destinations every week. The carrier has steadily increased the number of destinations in its cargo network starting with just over 50 cities from late April to more than 80 across six continents by the end of May 2020. Some of the recent destinations reintroduced to Emirates SkyCargo’s network include Aguadilla, Auckland, Barcelona, Brisbane, Christchurch, Colombo, Conakry, Dakar, Dhaka, Dublin, Hanoi, Kabul, Kuala Lumpur, Lagos, Mexico City, New York, Perth, Quito, Sao Paulo, Tehran and Washington D.C.

Operating a mix of scheduled and chartered flights and extending its geographical reach by using road feeder services provided by trucking partners across the world, Emirates SkyCargo has been acting

as a global connector for essential commodities including PPE, pharmaceuticals, food and other perishables, e-commerce goods as well as machinery and other equipment.

MONDAY JUNE 29, 2020

Feature

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What today’s bailouts can do for tomorrow’s economies

BY SAADIA ZAHIDI

ast year, the World Economic Forum’s annual Global Competitiveness Report assessed 141 governments’ future-readiness and found that most rated poorly on this and other crucial long-term indicators. Yet now that the pandemic-induced lockdown is wreaking havoc on the global economy and exposing the inadequacies of many institutions, an era of bigger – and perhaps bolder – government has arrived. Already, an estimated $9 trillion has been pumped into the global economy to support households, stem job losses, and keep businesses afloat. Now that some countries are beginning to emerge from lockdowns, their leaders have a unique opportunity to reshape the economy to provide better, greener, and more equitable outcomes for all. The crisis offers an opportunity for what the World Economic Forum has deemed the “Great Reset,” starting not at some point in the distant future but right now. Building on the lessons learned during the 2008 financial crisis and its aftermath, many governments are attaching a range of meaningful conditions to bailouts and other rescue measures. The short-term assistance being provided today can and should be leveraged to encourage more responsible business practices, save jobs, address inequality and climate change, and build long-term resilience against future shocks.

For example, owing to concerns about rising inequality and pressures on public budgets, France, Denmark, and Poland have denied government support to companies with headquarters in tax havens outside of Europe. And the United Kingdom has banned dividend payments and restricted bonuses in companies accessing its loan scheme. Governments are also attempting to safeguard jobs by providing incentives for companies to maintain employment levels. US companies accessing Coronavirus Aid, Relief, and Economic Security Act funds must maintain at least 90% of their pre-pandemic employment levels until September 30. Japan has applied similar conditions in extending its employee-retention assistance to both small and medium-size enterprises and large corporations. And Russia has introduced wage subsidies for companies that retain at least 90% of their workforce. Meanwhile, Italy is implementing a temporary blanket ban on dismissals, not limited to companies accessing government funds. While it remains to be seen whether these temporary restrictions will be effective at maintaining employment after they are lifted, they are providing a cushion – and a “fighting chance” – to workers in the midst of this unprecedented crisis and ahead of a future recovery. Even in deeply distressed sectors, rescue measures are being designed to emphasize social and environmental responsibility and encourage more long-term thinking. For example, now that the airline

industry is facing a demand shock as a result of global travel restrictions, its pre-crisis business practices have come under scrutiny. Over the past decade, the largest airlines in the United States spent 96% of their free cash flow on share buybacks, nearly double the rate of other S&P 500 companies. Now, cash-strapped airlines wishing to access governments funds must not only cease stock buybacks and dividend payments until the end of 2021; they must also agree not to use involuntary furloughs or reduce pay rates until September 30. Likewise, the French government has attached “green strings” to its €7 billion ($7.9 billion) bailout of Air France-KLM, requiring the airline to commit to halving its carbon dioxide emissions (per passenger and per kilometer), relative to their 2005 level, by 2030. These instances of embedding long-term thinking into shortterm measures are clearly steps in the right direction. But, given the sheer scale of fiscal support being provided and rising concerns about inequality, climate change, unemployment, and public debt, the next wave of recovery measures should go even further. Here, the European Commission’s Next Generation EU crisis fund should be taken as a model for others to follow. With €750 billion ($845 billion) in grants and loans, it promises to usher in a fair and inclusive recovery by accelerating the transition to a green digital economy. Its basic conditions would help European countries shift away from declining heavy industries while supporting vulnerable workers. But whether all

EU member states will get on board remains to be seen. The pandemic has thrust governments into a more proactive role than anyone would have imagined just a few months ago. As we move beyond the immediate health crisis, policymakers must seize the opportunity to implement bold, forward-looking reforms. That includes redesigning social contracts, providing adequate safety nets, cultivating the skills and jobs that the future economy will need, and improving the distribution of risk and return between the public, the state, and the private sector. But while governments must assume a leadership role, shaping the recovery and charting a new course for growth will require greater collaboration between businesses, public and government institutions, and workers. For the Great Reset to succeed, all stakeholders must have a hand in it. By now, it should be obvious that we cannot go back to a system that benefited the few at the expense of the many. Forced to manage shortterm pressures and confront longterm uncertainties at the same time, leaders find themselves at a historic crossroads. Governments’ new clout gives them the means to start building fairer, more sustainable, and more resilient economies.

Saadia Zahidi is Managing Director and Head of the Center for the New Economy and Society at the World Economic Forum. © Project Syndicate 1995–2020

MONDAY JUNE 29, 2020

Feature

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Definite similarities between starting and running a business, and raising a child!

BY MRS. MEL FISHER

y son recently turned 18. We had a lovely celebration with family and friends, and he’s turning into a thoroughly nice young man, which is very rewarding. Indeed, as I thought about this, and looked back at the 18 years that have passed since he was born, it gave me some food for thought: the similarities between raising a child and building a business. To begin with, your baby is born, and you find yourself working nonstop morning, noon and night to provide for your new arrival. Sound familiar! In the early days, there are times when life stinks, literally with a baby, metaphorically when you deal with the frustrations of establishing a start-up business. You discover a patience you never previously realised you had, and whatever the challenges, you know you have to remain positive at all times: so when the baby cries all night, you deal with it, but then seek advice and solutions. Indeed, there is a similarity with networking – one you would expect from me! As a mother to a young child you join ‘mother and

baby’ groups to meet like-minded people, learn from each other’s experiences, and seek to offer help where relevant. Just as we do when we go business networking for the first time: meet, learn, educate, move forward with confidence. Hopefully! Going forward we grow our connections, and as we do so, we grow with confidence – being a mother is no different. How many more similarities can I think of: for instance, it is always difficult to switch off, it keeps you awake at nights, no two days are alike, growing pains cause trials and tribulations, running before you can walk can prove painful…and so on. But of course, there are plenty of highs: birthdays, for instance, and maybe the immense pride at any awards or achievements; not forgetting the anticipation of what can potentially be achieved by your child or your business in the future. As your child grows older, you can – like your business – start to take a small step back: sure, you remain hands on, but you can finally take some time off and confidently delegate someone to take responsibility in your absence. And by the teenage years, you’ve become more of a consultant and

advisor: giving your charges the opportunity to make their own decisions, but being there to help them do it if requested, and being on hand to step in, in the event of a crisis. As both a parent and a business owner, you need to communicate well, be patient, and learn from your mistakes. You need to nurture and support, but without being too hands on. And on good days and bad, you are always a proud parent and business owner. The ultimate aspiration is to make both your child, and your business, self-sustaining; ultimately if all goes well, there are far more good days than bad, and when you look back, you wouldn’t swap the experience for anything! My son is 18 now. My role going forward is to make sure I give him the best advice, and help him make the right decisions for his future. Eventually he’ll go his own way, but I will always be there for him. Just as any business owner would be for the ‘baby’ they launched from scratch, and toiled for years to make successful. Yes, there is definitely a similarity between raising a child and running a business!

The author is the Group MD, Business for Breakfast. Business for Breakfast (BforB) is internationally recognised for creating successful networking meetings, events and training for referral marketing. We create an environment where you can build quality relationships within your group, backed up by an ongoing member support programme. BforB is committed to helping small to medium scale businesses expand. In our professional network, members meet regularly in business networks to develop relationships, support each other and to share and record referral business. We are here to help you get new business from quality business introductions and referrals made through our meetings. Contact us: 059 4 016 432 |info@bforbgh.com| Facebook & LinkedIn: @bforbghana||www.bforb.com.

MONDAY JUNE 29, 2020

Africa Economy

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Nestlé decision to cease Fairtrade cocoa sourcing sparks major concern from Ivory Coast farmers Fairtrade cocoa producers in Ivory Coast have expressed key concerns over a Nestlé UK and Ireland decision to switch from buying cocoa and sugar on Fairtrade terms, as the multinational company moves to a new deal with Rainforest Alliance. Neill Barston reports. In an open letter to the Swissheadquartered business, the Ivorian Fairtrade Network (RICE), said the decision represented a ‘devastating blow’ to its group of 16,000 smallscale farmers who had operated as part of the present agreement, which formed a supply chain for KitKat and other major products over the past decade. However, Nestlé stated it intends to continue supporting farming communities, and had factored mitigation plans into its decision – which it says was necessary as part of its drive to ensure 100% sustainably sourced cocoa by 2025. Responding to the company’s latest decision, the Ivorian network highlighted a study from Fairtrade International that showed 58% of cocoa producers in Côte d’Ivoire live below the poverty line. They claimed the research demonstrated that collective efforts to support farmers are now needed more than ever. In addition, it noted that the present Fairtrade agreement with Nestlé has enabled access to education and healthcare for children, electricity, as well as wider improved living standards for remote communities. The letter read: “Fairtrade is essential for us because it allows us to participate in the development of our communities independently. A non-Fairtrade trade relationship means regression and continued poverty. Indeed,

only Fairtrade provides a minimum price and a fixed premium, nonnegotiable, which is paid 100% to producers, to decide for ourselves how this premium is used for the improvement of our living conditions and the development of our communities. “Nestlé is one of the leading buyers of Fairtrade certified cocoa through its KitKat brand and we are grateful for all this decade of partnership where we have contributed to its success. Right now, we are experiencing one of the greatest health and economic tragedies of our lives. Besides the new global pandemic of COVID 19, producers remain deeply affected by long-term poverty, lack of services, low and unpredictable incomes and climate change. We have seen how the Fairtrade minimum price, premium and safety net have benefited producers during this health crisis. These revenues have enabled us to act quickly against Covid-19 to protect our health, support our communities and deal with a food disaster in some cases.” Explaining its decision, Nestlé said that it already had a longstanding partnership with Rainforest Alliance, and that it will continue to work together to build farmer resiliency, tackle key social and environmental issues such as child labour, and empower farmers with the knowledge and skills to negotiate for themselves in the global marketplace. Simon Billington, Global Technical Manager for Nestlé Confectionery, stated that the move was critical to its sustainable cocoa programme, and as has been reported previously by Confectionery Production, an issue that remains at the core of

leading manufacturers production goals. “Our expanded partnership with the Rainforest Alliance underlines our commitment to sustainable cocoa sourcing throughout our global supply chain. We are aware that the move will have an impact on some farmers, and we are working hard to mitigate this. Nestlé will be maintaining the same level of cocoa spend for the 2020-21 season. We will be investing in a series of initiatives to support farmers and our cocoa growing communities over the next two years, including £1 million to develop an industry-first living income pilot and a further £500,000 on community projects. “We want to continue working with our Fairtrade farmers and we will pay for them to get to the level required by the UTZ standard, which since 2018 has been part of the Rainforest Alliance certification programme. If farmers are not able to do this in time for the next crop, we will also provide them with financial support for the coming year. “Our successful partnership with Fairtrade is ending as we harmonise our certification for sustainable sourcing internationally. Over the last 10 years, Fairtrade and KitKat, together with millions of KitKat lovers in the UK, have supported cocoa farmers in the Cote d’Ivoire. We are grateful to the Fairtrade organisation and proud of the work that KitKat has supported with them. “The Rainforest Alliance has significant experience working with cocoa farmers in understanding and implementing robust sustainability criteria that drives positive change,

and we look forward to deepening our collaboration in the coming years.” Alex Morgan, Chief Markets Officer, Rainforest Alliance said that the organisation was delighted that Nestlé is strengthening its position in the cocoa sector and unifying its responsible cocoa sourcing commitment across all of its portfolios, noting that the move came as the Alliance has just released a new seal and due to publish the new, improved Sustainable Agriculture Standard this month. “Our certification programmes continue to connect companies, consumers, farmers and businesses committed to protecting the health of ecosystems, workers, and communities by using social and market forces to protect nature and improve the lives of food producers.” As the business noted, it has invested CHF220 million (£180 million) into the Nestlé Cocoa Plan, which currently delivers 200,000 tonnes of certified sustainable cocoa annually. Through this scheme, the company has provided millions of more disease-resistant trees to cocoa communities, worked to reduce child labour through strengthening education provision and infrastructure, and has trained 114,000 farmers on sustainable farming best practice since 2018. In addition, Nestlé UK and Ireland has sourced 100% certified, sustainable cocoa for its entire chocolate and biscuit portfolio since 2015, and this latest step will ensure consistency and security across the business’s global supply chain. (confectioneryproduction.com)

Zimbabwe suspends stock exchange, mobile payments over ‘economic sabotage’ Zimbabwe on Friday suspended trade on the stock exchange and mobile phone-based payments to address what President Emmerson Mnangagwa’s government called “criminality and economic sabotage”. The decision to suspend mobile payments will hit the economy hard as more than 80% of all transactions are conducted on phones due to a shortage of banknotes, according to central bank data. In a statement on Friday, government spokesman Nick Mangwana said the move, which takes immediate effect, was part of efforts to arrest the slide of the Zimbabwe dollar, which has sharply devalued since its reintroduction last year after a decade of dollarisation. “Government is in possession of impeccable intelligence which constitutes a prima facie case whereby the phone-based mobile

money systems of Zimbabwe are conspiring, with the help of the Zimbabwe Stock Exchange, either deliberately or inadvertently, in illicit activities that are sabotaging the economy,” the statement said. The suspension of all mobile payments and the stock market was meant to allow “intrusive investigations”. The government says mobile payment platforms were major drivers of a roaring foreign currency trade outside formal banking channels, with multiple listed stocks such as Old Mutual providing proxy exchange rates implied by their prices on foreign bourses such as the London Stock Exchange. On Tuesday, Zimbabwe’s central bank began weekly foreign currency auctions in a bid to draw scarce foreign currency into the formal market. (Source: Reuters)

MONDAY JUNE 29, 2020

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Financial conditions have eased, but insolvencies loom large BY TOBIAS ADRIAN AND FABIO NATALUCCI

Amid the human tragedy and economic recession caused by the COVID-19 pandemic, the recent surge in risk appetite in financial markets has caught analysts’ attention. After sharp declines in February and March, equity markets have rallied back, in some cases to close to their January levels, while credit spreads have narrowed significantly, even for riskier investments. This has created an apparent disconnect between financial markets and economic prospects. Investors seem to be betting that lasting strong support from central banks will sustain a quick recovery even as economic data point to a deeperthan-expected downturn, as shown in the June 2020 World Economic Outlook Update. Tug of war In the newest Global Financial Stability Update, we analyze the tug of war between the real economy and financial markets and the risks involved. With huge uncertainties about economic outlook and investors highly sensitive to COVID-19 developments, pre-existing financial vulnerabilities are being exposed by the pandemic. Debt levels are rising, and potential credit losses resulting from insolvencies could test bank resilience in some countries. Some emerging market and frontier economies are facing refinancing risks, and lower-rated countries have started to regain access to markets only slowly Major central banks around the world have contributed to the substantial easing of financial conditions via interest rate cuts and a balance sheet expansion of over $6 trillion, including asset purchases, FX swap lines, and credit & liquidity facilities. These swift and unprecedented actions by central banks have restored confidence and boosted investor risk taking, including in emerging markets, where asset purchases have been deployed for the first time. Risky asset prices have rebounded since the precipitous fall early in the year, while benchmark interest rates have fallen. With the easing of global financial conditions, risk appetite has retuned also to emerging markets. Aggregate portfolio outflows have stabilized, and some countries have experienced some modest inflows again. In credit markets, spreads of investmentgrade companies in advanced economies are currently quite contained, contrary to the sharp widening seen during previous large economic shocks. Spreads have also narrowed significantly in emerging countries, albeit less so in frontier markets. On net, financial stability risks in the short

term are little changed since the last Global Financial Stability Report, as prompt and bold actions by policymakers have helped cushion the impact of the pandemic on the global economic outlook. A disconnect has emerged The disconnect between financial markets and the real economy can be illustrated by the recent decoupling between the soaring U.S. equity markets and plunging consumer confidence (two indicators that have historically trended together), raising questions about the rally’s sustainability if not for the boost provided by central banks. This divergence raises the specter of another correction in risk asset prices should investors’ attitude change, posing a threat to the recovery. So-called bear equity market rallies have occurred in the past during periods of significant economic pressures, only to unwind swiftly. What triggers? A number of developments could trigger a decline in risk assets’ prices. The recession could be deeper and longer than currently anticipated by investors. There could be a second wave of infections, with ensuing containment measures. Geopolitical tensions or broadening social unrest in response to rising global inequality could lead to a reversal in investor sentiment. Finally, expectations about the extent of central banks’ support could turn out to be too optimistic, leading investors to reassess their appetite and pricing of risk. Such a repricing, especially if amplified by financial vulnerabilities, could result in a sharp tightening in financial conditions, thus constraining the flow of credit to the economy. Financial stress could worsen an already unprecedented economic recession, making a recovery even more challenging. Pre-existing vulnerabilities Pre-existing financial vulnerabilities are being laid bare by the pandemic. First, in advanced and emerging market economies alike, corporate and household debt burdens could become unmanageable in a severe economic contraction. Aggregate corporate debt has been rising over several years, and it now stands at historically high levels relative to GDP. Household debt has also increased in many economies, some of which now face an extremely sharp economic slowdown. The deterioration in economic fundamentals has already led to a corporate ratings downgrade, and there is a risk of a broader impact on the solvency of companies and households. Second, the realization of credit events will test the resilience of the banking sector as they assess how governments’ support for households and companies

translates into borrowers repaying their loans. Some banks have started to prepare for this process, and expectation of further pressure on their profitability is reflected in the declining prices of their stocks. Third, nonbank financial companies could also be affected. These entities now play a greater role in the financial system than before. But since their appetite for continuing to provide credit during a deep downturn is untested, they could end up being an amplifier of stress. For example, a sharp correction in asset prices could lead to large outflows in investment funds (as seen early in the year), possibly triggering fire sales of assets. Fourth, while conditions have eased in general, risks remain for some emerging and frontier markets that face more urgent refinancing needs. Their debts’ rollover will be more costly should financial conditions suddenly tighten. Some of these countries also have low levels of reserves, making it harder to manage portfolio outflows. Credit-rating downgrades could worsen this dynamic. Mind the trade-offs Countries need to strike the

right balance between competing priorities in their response to the pandemic, being mindful of the trade-offs and implications of continuing to support the economy while preserving financial stability. The unprecedented use of unconventional tools has undoubtedly cushioned the pandemic’s blow to the global economy and lessened the immediate danger to the global financial system—the intended objective of policy actions. However, policymakers need to be attentive to possible unintended consequences, such as a continued buildup of financial vulnerabilities in an environment of easy financial conditions. The expectation of continued support from central banks could turn already stretched asset valuations into vulnerabilities— particularly in a context of financial systems and corporate sectors that are depleting their buffers during the pandemic. Once the recovery is underway, policymakers should urgently address vulnerabilities that could sow the seeds of future problems and put growth at risk down the road. (Source: blogs.imf.org)

MONDAY JUNE 29, 2020

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Kuapa Kokoo outlines ambitious 3-yr action plan to conform to global standards BY EUGENE DAVIS

Kuapa Kokoo, one of Ghana’s foremost farmer-based cooperative organisation, has outlined a three-year ambitious action plan aimed at forest restoration and conforming to the Cocoa & Forests Initiative’s (CFI) sustainable forest management practices. The action plan is expected to span from 2020–2022. It entails mapping of its members’ farms to guarantee that their supplies are traceable from the source of production to the first point of sale; contribute to intensification of production by supplying improved cocoa seedlings and timber trees for planting; deepening the adoption of planting of trees to reduce carbon emission and protect cocoa farms. Other components also include: the promotion of sustainable livelihoods and income diversification for cocoa farmers, crop diversification, agricultural inter-cropping, off- farm activities, and other income generating activities designed to boost and diversify household income. According to the Managing Director of Kuapa Kokoo Limited, Mr. Samuel Adimado, the action plan “is a key component of our forest restoration, sustainable productivity development, and social inclusion goals for our farmers. We are aiming to ensure that all our members’ farms are located outside protected forests and that cocoa agroforestry practices is practiced by our members. We want to demonstrate leadership in environmental protection and sustainability, safety, and social responsibility which is our core values. “Our vision for the CFI is to ensure that our production, and distribution activities does not negatively impact on biodiversity, forest and protected lands in general. We also want to ensure that our products and the production processes of our members will conform to globally acceptable standards as the preferred choice cocoa farmer organization and ensure full traceability of our products and services”. He called on industry players to support the CFI, noting that “the time to act and live our words on environmental and sustainable production is now”. Also included in the action plan is the support of community-based natural resource management (CBNRM) programmes for forest restoration/protection in cocoa communities through the Community Resource Management Area (CREMA) and Hotspot Intervention Area (HIA) concepts in Kuapa Kokoo’s operational areas.

The core objective of the CFI is to prevent deforestation and ensure forest protection and restoration, sustainable production and farmers’ livelihoods, community engagement and social inclusion, thus no further conversion of any forest land for cocoa production. The action plan also aligns with Ghana’s National Implementation Plan as a way of supporting and contributing to what the nation has decided to do to halt deforestation and promote sustainable production of the cash crop. Kuapa Kokoo with over 100,000 members, has since 2019 signed unto the CFI as the only farmer based cooperative organisation that shares the objectives and vision of CFI. Background The governments of Cote d’Ivoire and Ghana and the world’s leading cocoa and chocolate companies signed a landmark agreements in November 2017 to end deforestation

and promote forest restoration and protection in the cocoa supply chain. This new public-private partnership was called Cocoa & Forests Initiative. It was put together by the World Cocoa Foundation (WCF), IDH – the Sustainable Trade Initiative, and the Prince of Wales’s International Sustainability Unit (ISU). The Frameworks for Action for Cote d’Ivoire and Ghana define core commitments, verifiable actions, and time bound targets required for a deforestation-free and forest positive supply chain. The Governments of Cote d’Ivoire and Ghana play a critical leadership role in establishing the national strategy, enabling policy environment, and governance structure for CFI implementation. They ensure that CFI is linked to similar initiatives with other relevant national strategies and plans. They provide key operational guidance, and baseline economic, environmental, and social data, to

help companies identify and plan the most effective and efficient private investment activities for CFI. So far, thirty-three companies, accounting for about 85% of global cocoa usage, have now joined CFI. Each company has agreed to prepare a detailed individual action plan that spells out the specific actions it will take in 2018-2022 to deliver the commitments set out in the Frameworks. Each company will decide for itself how to best support the achievement of the Frameworks objectives, based on their role in the supply chain, and their cocoa sustainability goals. Almost all companies have now completed initial action plans. The Frameworks are structured around three critical themes namely: Forest protection and restoration; Sustainable production and farmers’ livelihood; and Community engagement and social inclusion.

MONDAY JUNE 29, 2020