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Vaccines for all or vaccine apartheid?
MTN Ghana to reward customers with exciting packages as part of 25th anniversary See page 7
See page 15
BUSINESS24.COM.GH
NO. B24 / 208 | NEWS FOR BUSINESS LEADERS
MONDAY MONDAY MAY JUNE 3, 2021 14, 2021
Goldman Sachs sees further policy rate cut in 2021 By Nii Annerquaye Abbey
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he economics research department of Goldman Sachs, the global investment bank, is predicting that the Bank of Ghana (BoG) will cut the policy rate by a further 200 basis points (bp) by the close of the year. Earlier this month, the Monetary Policy Committee (MPC) of the central bank announced a surprise rate cut—reducing the policy rate by 100 basis points to 13.5
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Government to develop 10 iconic tourism attractions
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Dr. Ernest Addison, BoG Governor
Ghana must wean itself off fossil fuels, expert warns
A coal-fired power plant
By Business24 Reporters onsolidated Bank Ghana (CBG) is the country’s fifth-largest bank by assets, according to Business24’s review of banking sector performance for the 2020 financial year.
abbeykwei@gmail.com
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CBG is 5th largest bank by assets
By Benson Afful affulbenson@gmail.com
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uclear scientist Dr. Isaac Newton Acquah has cautioned the country to wean itself off fossil fuels as quickly as possible to meet the objectives of the Sustainable Development Goal (SDG) 13, which is to combat climate change and its impact, especially on quality of life and productivity. He said currently, there are five primary energy sources, namely, coal, oil, natural gas, renewables, and nuclear power. The first three, Cont’d on page 2
he government is determined to develop two iconic tourism attractions in each of the five regions of the north to stimulate growth in the area. Dr Ibrahim Awal, Minister for Tourism, Arts and Culture, who announced this in a speech read on his behalf, said the move was to address the human and social development challenges and create visibility to attract domestic and international tourists and visitors to the area. Cont’d on page 5
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Editorial / News
MONDAY JUNE 14, 2021
Editorial
Transporters need right push to thrive in AfCFTA
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he implementation of the single continental market for trade has been met with applause from players in almost all sectors of the economy. The reason is obvious. In this arrangement, there are limitless opportunities for business growth and expansion, jobs and wealth. The latest group of workers to throw their weight behind the continental project are those in the transport and logistics sector, specifically truckers and haulers who cart cargo through the nation’s transit corridors. Coming from the heels of a pandemic that seriously harmed their businesses, transporters say the AfCFTA will be their
trump card to speedy recovery. To them, an open market means more cargo to move across borders, especially from one landlocked country to another, something that is not permissible currently despite numerous existing trade protocols. But the fortunes of these critical businesses in the shipping industry in their dealings continent-wide will come from prudent policies and interventions from both government and direct stakeholders. This is because Ghanaian transporters been faced with serious challenges from their counterparts in landlocked countries for quite a long time.
They have now asked government to use the Ecowas protocols as a case study to identify similar issues that may arise and tackle it head on. This is a noble call to action because the role of government in trade facilitation is very vital to the success or otherwise of those that engage in the business itself. We urge that trade stakeholders will heed this call to action and help return the cargo transport and logistics sector back to sustainable path. This paper believes that for AfCFTA to succeed, it needs a wider stakeholder buy in and as such it is refreshing to see important players identifying opportunities they can leverage.
Goldman Sachs sees further policy rate cut in 2021 Continued from cover
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percent—after it judged that the risk of inflation jumping out of the bank’s target band of 6–10 percent was minimal. Goldman Sachs Economics Research said the cut was against its “unanimous consensus expectations” that the rate would be maintained. “The MPC struck a positive tone for growth going forward, as both real activity indicators and progress in the vaccination campaign point to a strong rebound in the economy in
2021,” said the investment bank in a report to clients. “We interpreted the cut as the BoG taking a view that fiscal and external risks have decreased in recent months, most likely supported by the Eurobond issuance in March and by foreign inflows into local-currency debt,” it added. Following the unexpected action by the central bank, and the announcement of a decline in inflation to 7.5 percent for the month of May, Goldman Sachs has forecast that the conditions are right for the central bank to
further reduce the policy rate, which influences banks’ lending rates. “Given the increased confidence on the fiscal side and the stability of the cedi— supported by capital inflows and gains in the terms of trade—we believe that lower inflation in the coming months will prompt the Bank of Ghana to deliver a further 200bp cut by year-end. Indeed, we think that the biggest constraints on easing policy for the bank were the fiscal and external risks. With lower pressure from the fiscal side, a stable currency, and falling inflation, we believe that the [bank] will continue to cut rates somewhat further. We now forecast a 100bp cut in its next meeting in July and another 100bp cut in Q4, to a terminal rate of 11.5 percent, when we expect inflation to be in line with the target,” the investment bank said. The easing of policy by the BoG has further brightened the outlook for 2021 economic growth, which is expected to be within 4–6 percent, according to both official and private forecasts.
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Ghana must wean itself off fossil fuels, expert warns Continued from cover that is, coal, oil and natural gas, are the fossil fuels used in transport industries, for domestic purposes, as well as for electricity generation. “Let’s note and accept that the five practical renewable sources are biomass, hydro power, wind power, solar power,
and geothermal. Out of these renewable options, only biomass can be used to provide heat, and it is the main source of energy for cooking in developing countries. Renewables and nuclear power are mainly used to generate electricity, and they are expected to produce colossal amount of electricity to cover all the energy needs in all the economic
sectors,” he said. He said it is interesting to note that 77.9 percent of global electricity comes from fossil fuels and nuclear power, while 22.1 percent comes from renewables, with hydropower alone accounting for 16.4 percent. Wind and solar power, the fastest growing technologies, together account for only 3.6 percent of electricity produced in the world. The other renewables, including biomass and
CBG is 5th largest bank by assets Continued from cover The bank, which was created by the state in 2018 through a consolidation of seven problem banks within the industry, held GH¢9.96bn of assets on its books in 2020, which represented an increase of 43.5 percent from GH¢6.94bn in 2019. This put the bank in control of 6.7 percent of total industry assets. Based on their 2020 financial results, Ecobank, GCB, Stanbic, and Absa are the country’s top four banks by assets, holding GH¢15.88bn, GH¢15.32bn, GH¢12.74bn, and GH¢12.55bn respectively on their books as at December last year. While most of CBG’s assets are in the form of investment securities—mostly government bonds—the bank has been growing its lending rapidly since 2019, with loans and advances rising from GH¢3.55m in 2018 to GH¢227.88m in 2019 and GH¢861.74m in 2020. In late May, the bank set out its stall as the champion of smalland medium-scale enterprises (SMEs) with the announcement of GH¢120m of funding for the
sector this year, collateral-free lending, and reduced transaction cost of credit for these clients. Under the Digitise SMEs agenda, the bank said it aims to sign on more than 50 percent of its MSME clients to its digital platforms, which it believes will help them
improve their operations and become more efficient. Supporting SMEs to grow will help Ghana reap the benefits of the continental single market project (the African Continental Free Trade Area) which kicked off this year, the bank added.
geothermal, generate 2.2 percent of the electricity, he added. According to Dr. Acquah, since hydropower is almost fully exploited in Ghana and West Africa as well as in many advanced countries, its share is not expected to grow very much henceforth. Many experts have been advocating an increase in renewable electricity generation in the country, which they argue is the future of electricity generation. Others also advocate for nuclear power, which they say is the cheapest and safest. However, Dr. Acquah, who is a former Safeguard Inspector at the International Atomic Energy Agency (IAEA), said the proponents of wind and solar power boast about their qualities, but unknowingly or willfully fail to mention their limitations, and tend to mislead policymakers and the general public. He said wind and solar power have the lowest capacity factors out of all the above-mentioned energy sources for power generation, saying that explains why after decades of rapid growth of wind and solar power, they jointly generate only 3.6 percent of global electricity.
In 2020 CBG grew its revenue by 10.6 percent to GH¢629.59m, with total expenses increasing by 18.7 percent to GH¢552.87m. This yielded a profit before tax of GH¢76.72m and profit after tax of GH¢46.32m. In 2019 the bank declared a profit before tax of GH¢103.72m and a profit after tax of GH¢69.05m.
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News
MONDAY JUNE 14, 2021
Feasibility studies to cultivate rubber in Kumasi underway
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he Kumasi Metropolitan Assembly (KMA) is working with soil scientists at the Forestry Commission (FC) on the feasibility of cultivating rubber in the metropolis. In pursuance of this idea, the soil scientists had already taken samples of varied soil types from different areas within Ghana’s second-largest city and experimenting with them. “The Assembly is looking forward to assisting smallholder farmers to plant rubber to generate income for their livelihood if we should achieve our objectives,” Mr Osei AssibeyAntwi, the Metropolitan Chief Executive (MCE), said. The MCE, in an interview with the Ghana News Agency (GNA) in Kumasi, on the sidelines of the official take-off of the Green Ghana Project, said rubber had varied economic benefits and attracted high demand on the international market. “Cash crop production is widely considered vital for improved incomes, especially in developing countries,” he observed.
The MCE said the venture, when implemented, would add up to the sustainable growth of the local economy, saying raw materials from the rubber plantation could be utilized for industrial purposes. The rubber tree, originally from the Amazon Forest, was introduced to Ghana in the late 1800s in the Aburi Botanic Gardens in the Eastern Region. Soil scientists say the average temperature required for rubber plantation is 25-34 Degree Celsius, and the soil for rubber cultivation has to be deep and well-drained. Acidic soil, which is lateritic loam or clayey loam, is best suited for these trees, according to research. Mr Assibey-Antwi highlighted the essence of the Green Ghana Project and rallied the citizenry to show a keen interest in the noble initiative as it was meant to recover Ghana’s lost forest cover. “The devastating effect of the changing climatic conditions is catching up with us as a people,” he told the GNA and advised landlords and property owners
to make it a policy of planting at least a tree at their backyards. “We need as many trees as possible to absorb the carbon in the atmosphere to overcome the dangers relating to climate change,” he noted. The MCE said more than 33, 000 varied tree seedlings, ranging from mahogany, coconut to royal palm, were being planted under the Project. Mr Assibey-Antwi, who had since assumption of office won many laurels for some novelty environmental initiatives such as the ‘Keep Kumasi Clean Green’ Project, hinted that more than 500, 000 tree seedlings were distributed to the residents for planting over the last four years. “The demand for the seedlings keeps growing, therefore, the KMA is liaising with the Forestry
Commission to nurse more tree species for distribution to the people,” he said. The official take-off of the Green Ghana Project was symbolically held at the State Experimental Basic School in Kumasi, a European Union (EU)-designated Forest Zone, where 120 trees were planted. Mr Benito Owusu-Bio, Deputy Minister-designate for Lands and Natural Resources, who was the Special Guest of Honour, planted a symbolic tree to commence the Project. In a brief message, he assured of the Government’s resolve to improving Ghana’s ecosystem, adding that five million tree seedlings were expected to be planted under the Project. GNA
Government to develop 10 iconic tourism attractions Continued from cover He was speaking at a two-day conference in Tamale organised by the Northern Development Authority (NDA) to validate the Northern Ghana Tourism Development Strategy. Key stakeholders in the tourism sector, including Ghana Tourism Authority, Ghana Cultural Forum, Ghana Museums and Monuments Board, and Creative Arts Agency, among others, attended the conference to validate the strategy to pave way for its launch and implementation. The draft Northern Ghana Tourism Development Strategy was facilitated by the then Savannah Accelerated Development Authority (SADA) between 2016 and 2017 under the auspices of the Ministry of Tourism, Arts and Culture. SADA identified a core working group of seasoned experts in the field of Tourism and Cultural Development, based on their rich experiences, combined ideas to produce the draft of the Strategy document. The objective of the strategy is to leverage the rich tourism and cultural resources in the
northern enclave of the country to competitively position the area as a preferred tourist destination in the country and the West African sub-region. The strategy is northern Ghana focused and outlines specific actions and targets aimed at developing a vibrant tourism industry to create jobs, reduce poverty and increase per capita income in the area. The northern enclave of the country, comprising the Northern, North East, Savannah, Upper East and Upper West Regions, abounds in diverse rich tourism attractions such as nature, antiquity, and culture, which need to be harnessed and packaged for enhanced marketing and promotion, hence the Northern Ghana Tourism
Development Strategy. Dr Awal said the uniqueness of the northern enclave, “home to diverse cultures, art forms, vast and suitable landscape as well as a reservoir of warm and hospitable people, are necessary ingredients in the tourism menu that need to be explored not only for tourism development but any other industrial developments” to create sustainable jobs. He commended the NDA and said its efforts to give the sector “a solid Tourism Strategy to govern and revolutionise sustainable tourism practice in the northern part of Ghana feeds into the overall gamut of my ambition to make Tourism, Arts and Culture industry the number one contributor to Gross Domestic Product while creating more
than one million new jobs and employment.” Mr Boniface Gambila, Acting Chief Executive Officer of NDA, said the development of tourism, culture and the arts sectors of the north was at core of the NDA’S mandate to accelerate the overall socio-economic development of the area, as well as complement government’s aggressive campaign to promote indigenous goods. Mr Gambila said, “It is no doubt northern Ghana comparatively possesses a plethora of scenic natural tourist attractions, a melting pot of richly diverse cultures, ingenious arts and warmth, which when well packaged and marketed, will attract the much-desired foreign exchange earnings for the Zone.” Some of the participants called for efforts to sensitise, especially the youth to develop an interest in patronising tourist attractions in the country to boost their growth and development. Others also called for investments in arts and culture to sustain the tourism industry. GNA
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Companies
MONDAY JUNE 14, 2021
MTN Ghana to reward customers with exciting packages as part of 25th anniversary
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TN Ghana has announced exciting packages to delight and reward its customers as it marks 25 years of operations in Ghana. The rewards will be executed in different ways and on different phases. Firstly, all customers get to enjoy Free 25mins talk time on their first on-net call (MTN to MTN calls) each day from 2nd to 30th of June, 2021. This promo is referred to as Good Day Ghana Promo. The second promo is dubbed the “Early Birds Rewards’, where the top Two Thousand Five Hundred customers (2500) who have been on the network since the company begun its operations in 1996 will enjoy unlimited calls on the network throughout the month of June 2021. This will be capped at 3 hours each day. Also, all 2,500 customers have been rewarded with 2.5GB of data since 2nd June 2021. This will be valid until 30th June 2021. Additionally, the top 250 customers from the 2500 list will each be rewarded with high-end devices and exclusive souvenirs in recognition of their
Noel Kojo Ganson
loyalty and tenure. Commenting on the customer rewards for the 25th anniversary celebrations, the Chief Marketing Officer for MTN Ghana, Noel Kojo Ganson noted that the rewards is part of MTN Ghana’s way of appreciating customers for their loyalty over the past 25 years. “Also recognizing the value of tenure, we have a special promotion for our top 2500 who have been with the brand through its changing phases from Spacefon to MTN. We are using this anniversary celebration to
express our sincerest gratitude to them for believing in us and staying with the network all these years. Customers are not required to subscribe to any short code to enjoy the offers, they can just make their calls and MTN will take care of the cost”. Mr. Noel Kojo Ganson hinted that following the June promotions there will be a Mega promotion where MTN will give away 25 cars to deserving customers in a 3-month long promotion. He explained that details will be shared with customers before it
goes live. As the 25th anniversary promotions run, MTN customers are advised to be wary of the activities of fraudsters who employ various tactics to defraud customers. MTN Ghana will only reach out to customers from its official line 0244300000. More importantly, none of the reward packages require subscriptions for participation. MTN promotions are not sent via a link or a promo code for customers to click or send funds to before redeeming a prize. Customers are advised to call the Toll Free number 100 or interact with customer service agents on its social media handles as follows: Twitter @ MTNGhana/@AskMTNGhana; Facebook: MTNGhana WhatsApp:0554300000 and 0555300000. Customers also have the choice of using MyMTN App or Email via customercare. GH@mtn.com. MTN’s call center with toll free number 100 will continue to operate 24hours and the team will be available to confirm what promotions are running.
Sahara Group urges WTO to promote equitable trade, access to energy
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ola Adesina, Executive Director, Sahara Group has said the World Trade Organisation (WTO) needs to galvanise the interest and support of various stakeholders to promote equitable global trade relations and energy access in Africa where almost 600 million live without electricity. Adesina who spoke on ‘Redirecting the World Trade Organisation’ at the virtual 2021 Horasis Global Meeting said deploying multilateral engagements would help circumvent the status quo that has made global trade relations “somewhat lopsided.” Horasis is one of the foremost annual meetings of the world’s leading decision makers from business, government and civil society. “The WTO must ensure that multilateralism guides its decision making. The countries of the world are not all on same pedestal, there should be consideration for the poor countries. The WTO should create a system where countries come together to create
a united front to handle the issues the world is facing,” he said. Adesina explained that multilateral strategies would create “elastic solutions” that can be adapted with respect to the unique challenges and opportunities across global trade blocs. He argued that while sustainability should be the ultimate driver of development, concessions need to be in place to effectively manage the current challenges of less developed continents. He stated: “Africa still suffers from the twin challenge of access versus affordability of electricity. We all need each other to solve the global challenges we face as individual countries and the world. A strong commitment is needed to maintain open and free trade; to keep open borders and to help the poorest countries, particularly least developed countries, survive the economic shock created by the Covid-19 pandemic.” Speaking on access to power in Africa, Adesina said the WTO
should explore collaborating with the various stakeholders to accelerate the pace of technology needed to make alternative power cheaper and more accessible to the consumers. Africa is home to 17% of the world’s population, but accounts for just 4% of global power supply investment. On a per capita basis, power supply investment in Africa ranks among the lowest in the world and lack of energy costs the continent over $110billion annually. “The Environmental Impact Analysis of conventional power sources should be the focal point of conversations with
African Presidents as well as key political and business leaders to ensure their support and agree a collective and sustainable solution template,” Adesina said. The Horasis session noted that with protectionism gaining steam globally, the WTO would need to reinforce its influence on stabilizing global trade negotiations. Experts expect that the WTO, under the leadership of Dr. Ngozi Okonjo-Iweala will spearhead effective reforms that would make the organization play a strategic role in promoting equity and transparency in the quest for global sustainable development.
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Feature
MONDAY JUNE 14, 2021
Your network marketing business membership code is your goldmine
By Kennedy Amoako
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n order to continuously succeed in your Longrich business, there are specific keys that guarantee your consistent success and growth in the business. Others may begin, but quit alongside, this means they might have lost the keys to opening the door to continuous success in the business. This article will lay down those keys and techniques you need to adapt, to be able to consistently grow in your network marketing business and we will use Longrich, the world leading network marketing platform as a case study. Your membership code: The moment you register with the Longrich business, you are given a membership code, also known as your partnership loyalty code. This code is your key to ownership and guarantees your partnership with the business. Without your code, you are not a recognized partner of the business. There are numerous benefits you stand to receive from having access to this membership code. 1. First of all, you are able to buy products from stockists/ franchisees or any of Longrich’s offices worldwide at company price/unit price (Cost Price). This
means you save up to 20% + from purchasing the same units of products from a retail shop. For example, a consumer without a membership code will buy a Longrich toothpaste from a retail shop at 40ghs to 50ghs but someone with a membership number will buy the same product at 28ghs. 2. You are entitled to enjoy Product Promotions among other promotions which are organized by the company on a regular basis. For example, this week (14th June, 2021 to 20th June, 2021), Longrich International Ghana is running a triple PV promo for it’s consumers with membership codes. So you purchase three units of selected products and get one extra for free. This promotion is not available for consumers without membership codes. 3. You again enjoy Product Points (PVs). These are numerical values attached with every product you purchase from the company, and with your code, you have the PVs recorded against your loyalty account which when accumulated over a period, qualifies you for incentives and many rewards given by the company. Again, this privilege is not available to consumers without membership code. 4. With your membership
codes you earn from Bulk Purchases using multiple accounts. When you register initially, you have the right to reregister yourself multiple times or your family members and earn for purchasing products with the codes of those accounts under your main code. This helps you to earn in multiples later on when you recommend and bring others on board to partner. 5. After joining the business and receiving your membership loyalty company account code, you have the right to refer others to purchase products directly from the company or it’s stockist branches instead of buying from a retail shop just as you did. Once you refer the business and the testimonies from using the products to friends, family and business partners, you get paid from the company. To achieve this, always remember to use your code as the sponsor and placement (as a referral code) for the purchases being made by the new person for the first time. This will link their account to yours then you receive payment on any purchases they made as well as purchases made by their referals. 6. When you consistently recommend and bring more consumers and business partners on board to join and encourage your referees to do same, you in turn build a team of Business
Builders & Consumers and this also qualifies you for incentives awarded periodically by the company (ie. Cars, Trips, House funds, Scholarships, etc.) What you do after registration; after you have your membership code, you may ask yourself, “now what?”. There are 3 simple steps to add to your knowledge about how to use your code; 1. The first and most important is to use the products you have purchased. 2. The second step is to share (ie. products as gift or sell, share testimonies) and invite more people to come on board 3. The last but not least is to focus on the business and be consistent with it. There is a biblical saying which reads; ‘for the lack of knowledge my people will perish”. Ignorance is the beginning of failure, but knowledge is enlightenment for success. Follow vividly these few key steps in growing your Longrich business; grab unto your membership code as you do your passport and boarding pass to travel, visit your back office regularly as you do your bank account at the end of the month, use the products, share your testimonies and build with consistency, and you would definitely achieve the longdreamt success. Longrich, Better Life, Better Future.
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Energy
MONDAY JUNE 14, 2021
Investors managing US$41 trillion in assets urge governments for ambitious climate policy ahead of COP
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7 investors managing more than US$41 trillion in assets have released a new joint statement to all world governments urging a global race-to-the-top on climate policy and warning that laggards will miss out on trillions of dollars in investment if they aim too low and move too slow. This represents the largest collective assets under management to sign on to a global investor statement to governments on climate change since the first statement in 2009. The Investor Agenda, launched in 2018 by seven founding partners: AIGCC, CDP, Ceres, Investor Group on Climate Change, IIGCC, PRI and UNEP-FI, provides a common leadership agenda on the climate crisis for investors that is unifying, comprehensive, and focused on accelerating investor action for a net-zero emissions economy. Head of UNEP-FI and Investor Agenda Steering Committee member, Eric Usher, said: “We applaud this renewed momentum from investors and look forward to continuing to support governments across the world as they take meaningful action. Policymaker and regulator signaling helps reinforce the needed market-led, climatefocused capital mobilisation, which is so critical to avoiding the climate crisis.” The initial signatories to the 2021 Global Investor Statement have been released ahead of the
G7 Summit to encourage further investor advocacy for ambitious climate policy action ahead of the 26th United Nations Climate Conference of the Parties (COP26) in November. The statement will remain open for further institutional investors to sign until COP26 and will be periodically updated with new signatories at key moments throughout 2021. Signatories to date include some of the world’s largest institutional investors and asset managers. State Street Global Advisors Global Chief Investment Officer, Lori Heinel, said: “We are committed to engaging with companies not just on the goal of reaching net-zero, but on how they will get there. The push to net-zero is both urgent and necessary, and equally important is understanding the transition pathways companies will choose to achieve the commitment and deliver value for investors over the long term.” The investor signatories call on all governments to undertake five priority actions before COP26 in November: • Strengthen their Nationally Determined Contributions (NDCs) for 2030 in line with limiting warming to 1.5°C; • Commit to a domestic mid-century, net-zero emissions target and outline a pathway with ambitious interim targets including clear decarbonization roadmaps for each carbon-
intensive sector; • Implement domestic policies to deliver these targets, incentivise private investments in zero-emissions solutions and ensure ambitious pre2030 action; including: “the removal of fossil fuel subsidies by set deadlines, the phase out of thermal coal-based electricity generation by set deadlines in line with credible 1.5°C temperature pathways, the avoidance of new carbon-intensive infrastructure (e.g. no new coal power plants) and the development of just transition plans for affected workers and communities.” • Ensure COVID-19 economic recovery plans support the transition to netzero emissions and enhance resilience; and • Commit to implementing mandatory climate risk disclosure requirements aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Many nations already have or have vowed to improve their climate policies, including 2030 emissions reduction targets, through updated NDCs ahead of COP26. However, significant climate policy and finance gaps remain in almost all nations, and the world is currently not on a trajectory to meet the objectives of the Paris Agreement, underscoring the need for further ambition. Signing the Global Investor
Statement to Governments on the Climate Crisis is an action item in the policy advocacy focus area of The Investor Agenda. Launched in 2018 by seven founding partners –– Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment and UNEP Finance Initiative –– The Investor Agenda provides a common leadership agenda on the climate crisis for investors that is unifying, comprehensive, and focused on accelerating investor action for a net-zero emissions economy. The founding partners of The Investor Agenda are calling on all institutional investors that support increased government ambition on the climate crisis to sign on to the statement via the Investor Agenda website, and are also encouraging investors worldwide to commit to developing comprehensive investor climate action plans (ICAPs) and to aligning their investments with the goal of net-zero emissions by 2050 or sooner, with credible interim targets, among other actions. (To be continued) Writer: Donald Marshall Company: Mframadan Energy Management & Research Institute (M.E.M.R.I). Contact: 00233-24-4550854 Email: donaldamus@yahoo.com Original Source: Climate Action
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International
MONDAY JUNE 14, 2021
South African lost decade a ‘deep, deep, deep tragedy’
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former South African finance minister has slammed Jacob Zuma, president between 2009 and 2018, for leaving the country weaker after working to undermine the power of the country’s finance department. Trevor Manuel held the position for 13 years after his appointment in 1996, overseeing a period when his country’s economy was growing at its fastest pace in more than two decades.
Speaking on an International Monetary Fund podcast, he said the Jacob Zuma government lost the sense of purpose and togetherness that drove the early post-Apartheid administration. “One of the issues that was fundamentally important was that cabinet has to act as a collective,” he said. “It was an interpretation we gave to our constitution that the budget is the strongest statement of collective cabinet
responsibility.” Manuel said technical committees were set up by the SA Treasury for other departments to come and explain what they needed money for, and a minister’s committee on the budget that included cabinet members gathered to discuss public spending as a whole. “That doesn’t exist any more, and that for me is the deep, deep, deep tragedy,” he told the IMF. “Because the kind of decade
[under] Jacob Zuma isn’t just ‘lost’ as though you stayed static, you in fact retrogressed in a number of areas.” Manuel said Zuma tried to “take the Treasury apart” because he thought it was too powerful and too cautious on public spending. But a weaker Treasury, Manuel said, has left South Africa weaker when trying to raise resources and inefficient when allocating them. South Africa’s economy grew on average by 3.6% a year from 1996 and 2008 under Manuel’s stewardship, but in the decade that followed it averaged just 1.5%, according to World Bank figures. In his first 10 years, he also brought the budget deficit down from 5% of GDP to close to zero. “The fact that we were compelled to live within our means, that I think was a big strength,” he said. Corruption and high public sector wages took “resources off the table” under Zuma, Manuel added, and debt relief will be needed to allow the government to adequately fund important public spending, particularly on the social safety net. Credit: Publicfinancefocus.org
Japan to keep fiscal target for now despite ongoing Covid-19 struggle
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he Japanese government still officially aims to reach a budget surplus by 2025 despite the impact of Covid-19 on its public finances. A policy document presented to the Council on Economic Policy this week, aimed at setting the fiscal blueprint for the coming financial year, outlined the government’s priorities. It set out the need for Japan to support its economic recovery as well as move towards carbon neutrality, keep up with digital technology and meet the challenge of the country’s declining birth rate, all while shoring up public finances. “We will do our utmost to overcome deflation and revitalise the economy, ensure the sustainability of social security, and pave the way for fiscal consolidation by the time all Baby Boomers are 75 years of age or older, in order to eliminate the anxieties of future generations,” it said. “Therefore, we will adhere to the fiscal consolidation target set
forth in the 2018 policy (aiming for a budget surplus for the national and local governments in 2025, and at the same time aiming for a stable reduction in the debt-toGDP ratio).” In 2018, the government expected to run a deficit equivalent to 1.4% of GDP in 202122, but amid Covid-19 the current forecast is 7.2%. “The ratio of [the deficit] to GDP has recently deviated significantly from its improving trajectory due to the decrease in
tax revenue amid the pandemic and the increase in expenditures such as related supplementary budgets,” the document said. The paper, which still needs to be approved by the cabinet, said the target, of balancing the budget by 2025-26, will be assessed again within this fiscal year once the impact of Covid-19 has been measured more fully. Japan is currently undergoing its fourth wave of cases. Next year’s budget will include a greater focus on digitalisation,
the environment and supporting parents, according to the document. Increased digitalisation, especially in the workplace, will allow people to move out of large cities and rebalance the economy away from Tokyo in particular, the document said, and support rural areas. Environmental policies will support the government’s push for carbon neutrality by 2050, and investment in childcare will support parents in work.
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Feature
MONDAY JUNE 14, 2021
Vaccines for all or vaccine apartheid?
By Gordon Brown
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he G7 summit starting on Friday will mark the first time that world leaders have met in person for almost two years. It is Joe Biden’s first such meeting as US president and Angela Merkel’s last as German Chancellor. The gathering will also be the first test of what UK Prime Minister Boris Johnson’s oft-quoted “Global Britain” slogan actually means. When thinking of past G7 summits, most people will remember little more than well-choreographed leaders’ photo opportunities. But on rare occasions, a G7 can bring meaningful policy breakthroughs. So it was in 2009 when, in consultation with African leaders, the Italianhosted G8 broke new ground on international development. In introducing this session, I remember recounting fellow leaders of the story of a Rwanda schoolboy caught up in the genocide of the 1990s and now immortalized in the Kigali Genocide Memorial museum, where, in a section devoted to children, one can find his photograph and a plaque that reads: David, age 11 Ambition: to be a doctor Favorite sport: football
Favorite hobby: making people laugh Death: by mutilation Last words: the UN are coming to save us In his idealism and innocence, David believed the international community would save him and his mother. We didn’t. David’s story was repeated by US President Barack Obama and Italian Prime Minister Silvio Berlusconi. We agreed that the international community had done too little to help people in mortal danger, and our communiqué announced our intention to do much more. Once again, a life-and-death issue, and the costs of inaction, should be at the forefront of the G7’s agenda. Our failure so far to build on the development of safe and effective COVID-19 vaccines with a plan to immunize the whole world is unacceptable. Already, 3.8 million people around the world have died from COVID-19. Some 80,000 more are dying every week. And it is not an exaggeration to state that the G7’s members will decide who is vaccinated and safe and who remains unvaccinated and at risk. In the last few days, the United States has offered to supply 500 million doses of the PfizerBioNTech vaccine to developing countries, and may offer more.
The United Kingdom is expected to offer 100 million doses. Others will respond, too. But the numbers being discussed fall short of the 11 billion doses needed. We need a continuous flow over the next few months and beyond to meet Johnson’s pledge to vaccinate the whole world by the end of 2022. Achieving this requires guaranteed funding and pooled purchasing that in turn leads to new manufacturing capacity and a secure pipeline of vaccine supply on every continent. And we need a decision to finance all of this now if we are to avoid the familiar vicious circle whereby the world fails to underwrite the costs and we fall short of the vaccination supplies we need. The omens for the world’s poorest countries are not yet encouraging. The vast majority of the 2.5 billion COVID-19 vaccine doses produced so far have gone to the richest countries. SubSaharan Africa has received less than 2%. As a result, only 2% of the region’s population has had a first vaccine shot, and only 0.2% are fully immunized. The Anglican archbishop of Cape Town, Thabo Makgoba, calls this “vaccine apartheid.” And today, with African rates of COVID-19 infection rising by an estimated 25% per week, the world’s poorest countries face two problems that
perhaps only the G7 can resolve. First, they cannot contain the spread of the disease if they have to wait in a queue this summer and autumn for leftover Western doses, most of which won’t arrive until next year. Second, they cannot reach Western levels of immunization or protect themselves with testing and protective equipment without more financial support: $16 billion more is needed this year, and upward of $30 billion in 2022. A proposal from the leaders of Norway and South Africa illustrates how the world can raise the needed cash. Their formula takes into account each country’s income and wealth, and the differential benefits they would receive from the reopening of the world economy. Based on their ability to pay, the G7, along with South Korea and Australia, would underwrite 67% of the costs. The US would pay 27%, Europe 22%, the UK 5%, and Japan 6%, with Canada, South Korea, and Australia chipping in 2% each. Other G20 countries, including China, Russia, and the oil states, would cover the rest. But there is, in the words of Martin Luther King, Jr., “such a thing as being too late.” The world needs a decision by the G7 this week, or lives will continue to be lost. The world cannot afford vaccine apartheid.
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Feature
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Will infrastructure unlock the investment potential of Africa?
By Gordon Brown
T
he link between FDI and a solid infrastructure Africa has been known for its lack of basic infrastructure development. But the critical question is: To what extent does infrastructure development impact growth in foreign direct investment in Africa? It is hypothesised that adequate infrastructure improves the efficiency of a country and lowers the cost of doing business, thus attracting the flow of investment funds. This paper investigated the relationship between infrastructure development and foreign direct investment in Africa spanning 30 countries between 2003 and 2016. The period under review includes the global economic crisis. The countries represented all the regions of the continent – Southern, Western, Eastern and North Africa. Utilising the Africa Infrastructure Development Index (AIDI), which ranks countries based on their infrastructure development, the study is one of the first to measure the link between foreign direct investment (FDI) and the development of water supply and sanitation, information and telecommunications technology (ICT), energy and transport as published annually by the AIKP and the African Development Bank. Why does Africa rely on FDI? A well-established domestic financial and capital market sector is crucial for sustained economic growth in any country. However, in developing countries, no such markets exist which presents critical challenges to growth and
stability. And even if they do exist, there are not enough local investors with the capacity to take advantage of the economic opportunities available. This forces these countries to rely on a flow of capital from developed markets by means of remittances, donor funds, foreign direct investments, equity funds, bond funds, investment portfolios and/ or other forms. For the purposes of this paper, FDI is regarded as the investment made to acquire a lasting interest in enterprises operating outside the investor’s home economy. FDI comes in various forms – including opening a subsidiary or an associate company in another country, acquiring a controlling equity interest in an existing foreign company, or facilitating a merger or joint venture with a foreign company. FDI can also include the provision of project finance or facilitating the transfer of technology and managerial skills from the source country. The need for FDI is driven by factors such as political and economic institutions of governance, level of infrastructure, openness to trade, economic freedom, labour markets, import and export opportunities, skills levels, macro-economic stability, proximity to important markets, market size, and the availability of natural resources. However, high inflation, political instability and conflict do deter FDI. Between 2010 and 2016, on average, the FDI inflow into the sample of 30 African countries equated to 4% of GDP annually with the highest FDI recorded at 45.8% and the lowest at 0%. GDP grew by an average of 4.9% which is higher than the world average has been for several years. The average GDP per capita was
US$2,211.876, with the lowest at US$173.9164 and the highest at US$10,716.22. During this time, FDI was not entirely dominated by investments in mining and extractive industries but rather by investments in technology, media and telecommunication, retail and consumer products and financial services. Private investment opportunities have also emerged in infrastructural sectors such as education, healthcare and security which were previously highly dominated by the public sector. This diversification has provided a division of economies in some markets, where the haves use private services and the have-nots use the mostly inadequate and inefficient public infrastructure that is beset by delays and interruptions in service provisions. Some countries, though, have managed to improve public infrastructure to a level where it directly competes with private infrastructure. However, the consistency of FDI and the monitoring of trends are problematic. For example, a country’s level of FDI may be positively affected by a large investment into a wellestablished entity, which results in the FDI for that year being a deviation from the average. Large single transactions unlikely to be repeated will show a significant decline in the following year. FDI is also impacted by global investment trends. The United Nations Conference on Trade and Development reported that FDI fell by 13% in 2016 as global economic growth remained weak and world trade volumes posted poor gains.
with one another for many centuries as economies need to export goods and services to generate revenue with which to finance imported goods and services that cannot be produced domestically. To leverage comparative advantages in other countries, some companies move their production plants across borders or invest in countries where they can make a profit. Developing countries, on the other hand, need FDI to augment domestic economic growth and to bridge the financial gap. Unlike other investment types, FDI invests in physical capital and is therefore partially irreversible as much of the costs associated are irretrievable should the firm decide to disinvest. It assists the recipient country to import technology and thereby catch up with economically developed countries, boosting the country’s infrastructure stock through the facilitation of newer, faster and more productive technology. Inhibiting factors to international investment include unreliable energy provision, the high cost of transport and nonfunctional utilities – although these can be promoting factors if they function efficiently. A new trend has therefore emerged where governments seek investment in private infrastructure projects from multilateral institutions to reduce the perceived risks of some projects or to encourage FDI investors pursuing a project in the area to invest in the lack of infrastructure to support their operations. The impact of infrastructure on FDI
The benefits of FDI Countries have been trading
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19 CONTINUED FROM PAGE 17 Infrastructure refers to the basic physical and organisational structures and facilities integral to the social, political and economic life of any nation. It includes assets such as buildings, roads, power supplies and ICT, and enables not only the well-being of the society that benefits from it but is increasingly becoming an important base on which to build economic development. Economic infrastructure refers to the physical infrastructure such as transport, energy, communications, water and sanitation, while social infrastructure refers to health, education, commercial and security or defence. Africa is faced with a significant infrastructure deficit. Infrastructure is mainly concentrated in urban areas or near big cities. Even then, outdated and inadequate urban plans fail to take into account the social, political, economic and environmental contexts of urban development in Africa. At present, Africa’s ability to attract FDI is hampered by the following in particular: • Energy: Sub-Saharan Africa consistently ranks low in terms of energy production compared to other developing regions. The entire continent produces less than 100 gigawatts of power. Of the 674 million people worldwide without access to electricity, 90% are in sub-Saharan Africa.
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Energy has a positive and statistically significant effect on FDI inflows. However, Africa’s unreliable power and water supply and the high cost of transport make it difficult for international investors to manufacture and produce efficiently on this continent. • Transport: Transport infrastructure is found to be less developed than other types of infrastructure with some countries indicating close to zero transport infrastructure development. It is further interpreted that an increase in air transport (passenger and freight), more kilometres of tarmacked road as a percentage of the total road network, more kilometres of railway lines, and adequate port infrastructure are key determinants in attracting FDI into a country. • ICT: One of the categories of infrastructure that has greatly improved over the last 10 years is information and telecommunications with $25 billion invested by private investors and operators between 1995 and 2005. Mobile telephone services in particular leapfrogged other infrastructure sectors. Hence, in some regions, the number of people with access to adequate water and sanitation is less than one in three, yet more than 90% have
access to mobile telephony services. The higher the ICT development, the more efficient the economy, contributing to productivity and economic growth indirectly by attracting more FDI. However, most of the developing countries lack ICT infrastructure, which is enormously costly for locals and first needs to be built up to get to the level where it can help to attract FDI. • Water supply and sanitation: This has an important role in attracting FDI. The United Nation’s Sustainable Development Goals state that the lack of access to improved water supply and sanitation services imposes high costs on society, especially the poor. Yet despite the importance of water for development, 82% of governments have indicated that financing was not enough to reach national targets for drinking water. The African region is known as a net recipient of FDI capital flows. Investments lead to possible imports of associated machinery and equipment, as well as the export of the projects’ outputs as operations begin, and as profits and invested capital are repatriated as the project matures. FDI flows have an impact on a country’s balance of payments since most FDI investments are accompanied by imports and exports into and out
of the country. This study found that few countries had consistently high FDI inflows over the reporting period. In countries where FDI exceeded 10% of GDP, this was due to investment in oilfields by the major oil companies and China’s investment in rail, road and port infrastructure. Countries with higher levels of GDP per capita attract higher levels of FDI, particularly as they can attract better skills and benefit from production factors, better education and adherence to the rule of law. What does the future hold for FDI in Africa? African governments should continue to focus on the development of their economies to ensure that their economies grow faster than their populations. The implementation of the Sustainable Development Goals should be the focus of every country on the African continent. The large number of African countries in the lowincome category is one of the factors making it difficult to attract meaningful FDI, even as infrastructure development improves. This article is based on the MPhil in Development Finance research assignment of Linda Velenkosini Buthelezi. He is a graduate of the University of Stellenbosch Business School. His supervisor was Dr Ashenafi Fanta, senior lecturer in Development Finance and programme head of USB’s PhD in Development Finance.
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Markets
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