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FBNBANK@25; The walk of the African elephant is majestic
Food and beverage association protests compulsory local insurance policy See page 5
See page 9
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NO. B24 / 214 | NEWS FOR BUSINESS LEADERS
Power exports hit record level By Benson Afful
affulbenson@gmail.com
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hana’s electricity exports hit a record level last year, official data have showed. The Energy Commission, which regulates the sector, reported that annual electricity exports climbed by approximately 26 percent to 1,801 GWh (gigagwatt hours) in Cont’d on page 2
MONDAY MONDAYJUNE MAY 28, 3, 2021 2021
W. Bank Country Director lauds BoG’s domestic gold purchase programme
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he World Bank has lauded the Bank of Ghana’s domestic gold purchase programme, which among others seeks to help shore up the country’s foreign reserves. Cont’d on page 3
Manufacturing hub ambition will be realised, gov’t assures By Benson Afful affulbenson@gmail.com
Aerial view of the Akosombo hydro dam
UKGCC boss advocates guarantee scheme for hospitality industry By Eugene Davis ugendavis@gmail.com
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he Executive Director of the UKGhana Chamber of Commerce (UKGCC), Adjoba Kyiamah, has asked government to step in and offer extra support to the tourism and hospitality industry to help in their fast and robust recovery from
Adjoba Kyiamah is the Executive Director of UKGCC.
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he Ministry of Trade and Industry says government is on course in making the country the manufacturing hub of the continent, as it has so far identified more than 200 exporters who are receiving support to export to potential markets. Mr. Anthony NyameBaafi, a technical advisor to the ministry, speaking Cont’d on page 5
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Editorial / News
MONDAY JUNE 28, 2021
Editorial
Let’s tackle cocoa-related child labour head on
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lobal Civil Society, a group of civil society organisation working on human rights in the cocoa sector across the world has made some interesting revelations about child labour concerns in the local cocoa industry. The group cited a recent survey University of Chicago which showed that close to 1.5 million children are engaged in hazardous or age-inappropriate work on cocoa farms in Ghana and Cote d’Ivoire. The vast majority of these child labourers, they said, are exposed to the worst forms of child labour, such as carrying heavy loads, working with dangerous tools, and increasing exposure to harmful agrochemicals.
The continual use of children in the cocoa production process has seen widespread condemnation from several fronts, which some countries threatening to boycott cocoa made from the sweat of children. Interestingly, perpetrators of these practices use the lack of regulation as an excuse not to shoulder their own responsibility. It is a fact that child labour is still a reality on West African cocoa farms, and there is strong evidence that forced labour continues in the sector as well. It said the impact of these systems must be communicated publicly and transparently in a way that enables meaningful participation and access to remedy for workers and their
representatives. The group urges effective partnerships between producer and consumer countries are needed to work on the necessary enabling environment. These must be developed in a much more inclusive manner than previous attempts, bringing in civil society organisations, independent trade unions, local communities, and farmer representatives, they said. The time has come for collective efforts to tackle the issues with child abuse in the cocoa sector head-on. For an economy that is highly dependent on the commodity, this issue demands utmost attention from stakeholders in the agricultural space.
Power exports hit record level Continued from cover
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2020, from the previous record of 1,430 GWh in 2019. The tremendous growth in exports has been driven by increased supply to Burkina Faso, said the commission in its annual National Energy Statistics report. Ghana also sells power to Togo and Benin.
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Matthew Opoku Prempeh, Energy Minister
The rapidly rising exports is being fuelled also by overcapacity in the sector, with the government looking for ways to dispose of excess electricity generation that is estimated to cost US$500m annually. Last year, installed generation capacity was 5,134 MW against system peak demand of 3,090 MW.
While power exports have risen for four straight years, imports have also steadily declined in the same period, touching a sixyear low of 58 GWh in 2020. This resulted in net electricity exports of 1,743 GWh last year—the highest on record and almost 34 percent above the 2019 net export figure of 1,303 GWh. Meanwhile, demand for electricity in the country continues to increase, recording a growth rate of 10.2 percent last year despite the pandemic. According to the regulator’s 2021 Energy Outlook for Ghana report, the total energy including losses consumed in the country last year was 19,717 GWh as against 17,887 GWh in 2019. For 2021, the commission is projecting a generation capacity of 5,328.1 MW, with a dependable capacity of 4,879 MW. The bulk (68.5 percent) of the dependable capacity will come from thermal sources, it said. System peak demand, on the other hand, is projected at 3,304 MW. Hydropower and thermal plants are projected to generate 32.9 percent and 66.4 percent of total electricity supply in 2021, with the remaining 0.7 percent expected to be met by other renewables, including solar PV and biogas.
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UKGCC boss advocates guarantee scheme for hospitality industry Continued from cover the pandemic. Government last year launched the GH¢1bn Coronavirus Alleviation Programme (CAP) business support scheme to support small and medium-scale enterprises (SMEs) impacted by the pandemic. However, analysts have called for more support to cushion businesses. The tourism and hospitality industry, the hardest-hit by the pandemic and which comprises mostly SMEs, requires immediate improvement in liquidity to aid its recovery, Ms. Kyiamah said. “We recommend the introduction of governmentbacked guarantees for the tourism and hospitality sector, similar to the Ghana Incentive-Based RiskSharing System for Agricultural Lending (GIRSAL). This system provides an effective system whereby government provides the necessary undertaking for commercial banks and financial institutions to offer farmers and agriculture-related businesses access to financing. The risks associated with the financing are shared among the parties involved,” she told Business 24 in an interview. Ghana’s tourism, until the advent of the pandemic, was projected to grow significantly following the huge success of
Awal Mohammed, Tourism Minister
the “Year of Return” initiative. The 2019 Tourism Report by the Ghana Tourism Authority indicated that the country earned US$3.3bn in tourism receipts that year. To rebuild the industry for the future, a sustainable recovery through financial support is required, Ms. Kyiamah said. She added that the chamber
will continue to advocate policy reforms and interventions that will “help our members rebound quickly and contribute to the growth of the economy.” The UKGCC recently released the 2020 Business Climate Survey, in which it entreated government to improve both access to and cost of capital to enable businesses recover faster from the COVID-19
shock. The survey also called for a greater digitisation effort to help reduce corruption and increase transparency, and for dialogue between the government and the private sector to understand the needs of businesses regarding their capacity to expand and trade under the African Continental Free Trade Area (AfCFTA).
W. Bank Country Director lauds BoG’s domestic gold purchase programme Continued from cover According to the central bank, the move will enable it buy gold from selected local aggregators and mining firms and pay in the local currency at the prevailing market price. The bank said it hopes this novelty will double its gold holdings in the next five years from 8.7 tonnes to 17.4 tonnes, thereby growing its foreign exchange reserves to foster confidence, enhance currency stability, and create a more attractive environment for foreign direct investments and economic growth. Speaking on the development, Pierre Laporte, Country Director for the World Bank, said “gold is one of the safest means of saving,
and it is not unusual for countries to have gold reserves as part of their reserves. So I think it is a good initiative, and if you look at the evolution of prices of gold throughout the last 10 years, even from 2008 to now, I think it is a wise move.” The Bank of Ghana said the programme will also enable it leverage its gold holdings to raise cheaper sources of financing to provide short-term foreign exchange liquidity, adding that it has engaged domestic mining firms in collaboration with the Ghana Chamber of Mines to buy refined gold from their refineries. It further said the programme has the potential to improve the small-scale gold mining sector by ensuring the operators receive a fair purchasing price for their
Pierre Laporte, World Bank Country Director
gold and are incentivised to formalise and move away from
damaging environmental social practices.
and
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News
MONDAY JUNE 28, 2021
Manufacturing hub ambition will be realised, gov’t assures Continued from cover on behalf of the Minister, Alan John Kwadwo Kyeremanten, said the government in 2017 realised there was the need to increase exports, especially of value-added products. “So from 2017, the ministry started to implement this industrial transformation agenda, and the first one was the 1 District 1 Factory (1D1F), which basically is to add value to the raw materials,” he said at the FBN Bank@25 National Trade Forum in Accra. He explained that under the Industrial Transformation Agenda, the government has a strategic plan to develop the automobile, pharmaceutical, petrochemical, industrial starch, bauxite, and iron and steel industries, which will enhance the country’s exports. “We believe that can enhance production for both local
consumption and export. Now you know, for example, that VW from Germany has come to do some manufacturing and will be exporting to neighbouring countries,” Mr. Nyame-Baafi said.
He added that as part of the strategy to boost manufacturing and export, the ministry launched the National Export Development Strategy last year, with the country now in full gear to enhance its
exports to the United States market under the African Growth and Opportunity Act (AGOA), to the European Union (EU) market under the Economic Partnership Agreement (EPA), and to the continental market under the African Continental Free Trade Area (AFCTA) agreement. “So, we can say with confidence that from this year onwards our export is going to be enhanced and we will increase our export revenue from what we gained in 2019.” Mr. Nyame-Baafi said the government is aware of the challenges facing exporters and is doing a lot to resolve them, including by providing training to help exporters meet the quality standards of the European Union and other key external markets. Citing an example, he added that “for smoked fish exports, the Ghana Standards Authority trained some fishmongers, and now they are able to meet the international standard.”
Food and beverage association protests compulsory local insurance policy By Henry G. Martinson
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he Food and Beverage Association of Ghana (FABAG) is up in arms against government over the Ghana Insurance Act’s requirement for all imported goods to be insured by local insurance agents. According to FABAG, the act
seeks to help local insurance companies generate revenue at the expense of importers. Section 222 of the Ghana Insurance Act 2021 (Act 1061) states that “a person who imports goods other than personal effects into the country shall insure the goods with an insurer licensed under the Act.” Subsection 2 also prohibits offshore marine cargo and hulk
insurance, with the exception of reinsurance contracts approved by the regulator. But speaking to Business24 after a meeting with the Ghana Shippers Authority, Sam Aggrey, Executive Secretary of FABAG, said insuring imported goods with local companies should be optional rather than mandatory. “When the goods reach, for instance, Tema, because you have
insured the goods from the foreign origin, it is only appropriate that it ends there, unless you want to insure the goods through a local insurance agent to its final destination or warehouse. But what the government is saying is that, even if you are importing from, say, United Kingdom, the local insurance company must insure the goods from its foreign origin to the local port.” He added: “Even if the local insurance company has a foreign agent from the importing country and I want to insure my goods to Ghana, it should still be optional, not compulsory. Again, if the goods come to Tema without being insured from its foreign origin but reach Ghana successfully, the law says I should still insure with a local agent, is it fair?” FABAG is also calling for a review of the clause in the act which prescribes a custodial sentence for persons or entities who fail to comply with the policy. This, the association contends, is inimical and counterproductive to government’s agenda of making Ghana a business-friendly hub in the West African sub-region.
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News
MONDAY JUNE 28, 2021
Former Ethiopia PM arrives in Ghana
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ormer Ethiopia Prime Minister and Board Chair of the Alliance for a Green Revolution in Africa (AGRA) , Hailemariam Dessalegn, arrived in Ghana on Sunday on the third leg of a pan-African mission to urge leaders to prioritize investment in agriculture for food security and strengthened economies. His visit is coming ahead of the UN Food Systems Summit in September, where the world’s leaders will evaluate progress towards the achievement of the
Sustainable Development Goals (SDGs), including SDG 2 the
The AGRA delegation includes the organistion’s President, Dr Agnes Kalibata. They will meet with the president of Ghana Nana Akufo-Addo on Monday 28 June. The AGRA delegation will also meet with development partners and conduct field visits. As well as lauding the progress that Ghana has made to advance the country’s inclusive agriculture transformation, they will brief President Nana Akufo-Addo on preparations for the AGRF 2021 eradication of hunger from the Summit to be held in Nairobi, continent. Kenya in September.
Ghana striving for an industrialised economy driven by nuclear, renewable energy
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he Minister of Energy, Dr Matthew Opoku Prempeh, has said the Government is working towards boosting Ghana’s industrialisation with clean and reliable energy systems, such as nuclear and renewables. He said there was a growing consensus that nuclear energy had an important role in decarbonising electricity generation for accelerated industrial development. “While renewable energy sources are expected to continue to grow significantly, nuclear power, an important part of today’s clear energy, is also the largest source of lower carbon electricity generation in advanced economies, providing approximately 40 per cent of all low carbon generations,” he said. He referred to an International Energy Agency report on clean energy system asserting that without nuclear investment, achieving a sustainable energy system would be much harder with implications to emissions, cost and energy security. Dr Opoku Prempeh stated this, in a speech read on his behalf, at a Stakeholders Forum on Ghana’s Nuclear Power Programme in Accra. Under the theme: “Nuclear Energy Innovations: The Future Technologies for Clean Energy and how to drive deep decarbonisation of Ghana’s power sector”, the forum was organised by the Association of Ghana Industries (AGI), in collaboration with Nuclear Power Ghana (NPG). Dr Opoku Prempeh noted that turning to clean energy systems for electricity generation would also decarbonise other areas, such as transportation, and other environmental pollution activities. “Within Ghana’s power generation side, issues on
consistent demand growth, high tariff for industries, affordability, reliability, and resilience criteria have brought to the fore the issue of an alternative base-load power,” he stated. Considering the facts available on the country’s energy needs, capacity, cost and other related issues, nuclear energy, he said, could provide that alternative clean base-load power. “A new nuclear power station does not only generate reliable low carbon electricity, but also provides wider social economic benefits both during its development, construction and the subsequent 60 years that the plant would be in operation.” He recalled that in 2007, former President John Agyekum Kufuor set up a committee, chaired by Professor Daniel Adzei-Bekoe, to explore the possibility of Ghana using nuclear energy as an alternative based-load source of power. This was around the time that Ghana was faced with supply power challenges. To sustain the natural progression of the country’s technological energy advancement, he noted, subsequent governments had supported this effort to improve the country’s energy security to provide leadership and resources to facilitate the nuclear power programme. This has given birth to the NPG to become the owner/operator of Ghana’s first nuclear power plant. He said the NPG Board, under the chairmanship of Mr Fred Oware, was focused on providing relevant resources to build a strong safety culture and resilience management systems that adhered to standards in the planning and development of nuclear infrastructure and related activities across the country.
In addition to electricity generation, nuclear energy, the Minister said, could provide solutions to an even wider range of applications - those innovative nuclear technologies such as small modular reactors would complement existing large reactors to enable deep decarbonization as part of the clean energy transition. “Nuclear technologies are equally improving people’s lives in many other ways and are supporting sustainable developments,” he said. “Medical, industry and agriculture applications of nuclear technology are in use all over the world, including Ghana. Mr Seth Twum-Akwaboah, Chief Executive Officer, AGI, said research had shown that Ghana had one of the highest energy tariffs in Africa, which was affecting the competitiveness of local industries He, therefore, urged industry players to be open-minded about Ghana’s Nuclear Power Programme as part of the energy mix, which experts say would drive down the cost of energy significantly. He said having affordable, reliable and sustainable source of power for industry would make Ghanaian businesses competitive and maximise the benefits under the African Continental Free Trade Area.
Mr Twum-Akwaboah said industry players had always desired a system, which would enable them to be competitive, relying on clean, affordable, reliable and accessible power, without compromising the sustenance of power generating companies. Resource Persons from the Ministry of Energy, NPG, Nuclear Power Institute, Volta River Authority, GridCo, Bui Power Authority, among others, made presentations on the roles their respective bodies were playing in achieving a national energy mix in the national interest. They noted that Ghana’s first president, Osagyefo Dr Kwame Nkrumah launched Ghana’s Atomic Energy Project in 1964, with plans for utilising nuclear power to drive Ghana’s industrialisation in the future. They gave the assurance that developing a nuclear programme was a systematic and highly regulated process, which guaranteed the safety and security of all users of power plants. They answered the questions from participants, which were on the time lines set for the implementation of the project, its affordability and the business opportunities it would provide. GNA
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Feature
MONDAY JUNE 28, 2021
FBNBANK@25; The walk of the African elephant is majestic
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n 11 September 2017, the Bank of Ghana issued a new minimum capital directive as part of its banking sector reforms. The new directive required that universal banks operating in Ghana increase their stated capital to GHS400 million by the end of 2018. We all know what happened afterwards, particularly the fact that nine banks lost their licences to operate. But as the saying goes, there is a silver lining in every cloud. For FBNBank Ghana this was an opportunity to re-strategise, to press the reset button after more than three years of operations following the 100 per cent acquisition of the erstwhile International Commercial Bank Ghana Limited (ICB) in 2013 by First Bank of Nigeria (FBN). FBNBank Ghana in those years had set up shop initially with Mrs. Subu Giwa-Amu as the first Managing Director who passed the baton to Seyi Oyefeso in 2014 and the Joseph Yieleh Chireh as Chairman of the board of directors. For them it was a great opportunity to offer FirstBank’s rich brand of banking in the Ghana market and to build on the performance of ICB. Let us get FirstBank’s pedigree right; this is a bank which has been in existence since 1894 and is as such the oldest bank in Africa’s most populous nation with some 30 million customers in Nigeria alone. Their wealth of experience garnered over the years is rich with a befitting appetite for breaking new ground and introducing innovation. That they have an enduring brand, which then was 120 years old, is a testament of their resilience. FirstBank has literally seen it all. Their foray into sub-Saharan Africa, one may say belated, was a deliberate undertaking to widen the girth of the majestic African elephant, that they symbolically
are and the plains that it roams. This move into Ghana as FBNBank, was however not as smooth sailing as expected. Before any attempt at performance improvement, there were issues of cultural transformation, embedding the values of the new brand and literally getting the Bank’s people on the same page as its leadership for the new journey and also setting the business agenda and strategy right. This transformation and a myriad of attendant developments hampered the momentum and slowed the pace, unfortunately. The fact is on 28th June 1996, when George Koshy, Managing Director of ICB received the licence for the Bank to commence business, it was for ICB to operate as a development bank. Between 1996 and 2013, however, when ICB operated in Ghana, it transformed into a universal bank with a strategy of serving the needs of small and medium sized entities through a network of 17 branches and 2 agencies till the sale of its West African franchise to FirstBank of Nigeria. For anyone to come up with US$72.5 million for reinvestment, there would have to be a good reason. This certainly was the situation in the case of the leadership of FirstBank of Nigeria when it came to that crossroads for deciding whether their Ghana subsidiary was worth reinvesting into or perhaps, abandoning ship. For FBNBank therefore, the Bank of Ghana’s banking sector reforms and the new minimum capital directive in particular marked a watershed in their operations and focus in the market. The reinjection of capital also brought about a boost of energy and commitment to tackle the challenges and thereby ride the storms. The announcement on 6 December 2018 that FBNBank
had received a US$72.5 million capital injection was met with renewed hope by all the Bank’s stakeholders. However, one particular group in the Bank’s relationship-sphere, its people, the employees, were the most relieved. There was the tacit realisation that the injection meant a new lease of life and therefore things had to be done differently. To any observer, this was one group of people even so, the demographics were interesting. Most were Millennials and they were led by a combination of Baby-boomers and Generation Xers. Throw in the fact that there were those who were on board the train from the days of ICB and then those who joined in the new days of FBNBank. In the mix, was a host of growing expectations from every possible group one could think of which had not been met including issues which were better dealt with as soon as possible if the Bank had to put its best foot forward. The challenge was how all these groupings were to be woven into a fine corporate mesh in order to guarantee progress. In addition to the people issue, there was the restructuring of the Bank’s offerings and business focus. The timing and direction of the decisions made on these by the bank’s leadership, to ensure that they take full advantage of the silver lining in what was perceived by others in the banking industry in Ghana as dark clouds, was the crucible moment for the FBNBank brand. It was not surprising to industry watchers, when FBNBank started rolling out a variety of products and undertaking some activities to put its name and agenda more forcefully out there. Just around the same time Gbenga Odeyemi had served his term as Managing Director in Ghana and was due for a move to Sierra Leone
to manage the parent bank’s interests there. He was replaced in May 2019 by Victor Yaw Asante who became the Bank’s first Ghanaian Managing Director and Chief Executive Officer. According to Victor Yaw Asante, “there could not have been a more opportune time for me to assume the reins of leadership and help implement the growth agenda of FBNBank than at the time when the industry was evolving.” Victor had been carefully chosen with the renewed focus of the Bank in mind. In the words of Dr. Adesola Adeduntan, Managing Director of FirstBank, “Victor’s demonstration of excellent technical skills, knowledge, experience and his leadership capabilities contributed in no small measure to his appointment.” He was convinced that Victor Asante was very well placed to provide strategic leadership that the bank needed to continue on its trajectory of becoming the clear leader and Ghana’s bank of first choice. With the full support of FirstBank, FBNBank led by Victor with his able team embarked on a change agenda with the people being his first priority. Mr. Asante revealed just a few weeks ago to Joy FM’s Lexis Bill that, “the first thing you do is to carry people along. In everything you do, it’s about people, you have to envision, you have to connect, you have to embrace, you have to empathise and you have to understand what makes people tick. You have to understand what the issues of people are.” He explained further that he was able to connect with his people at FBNBank over a six-month period of internal roadshows and other engagements in addition to being very open with them. With a reinforced focus, recapitalisation and an engaged
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Energy
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600m Africans have no electricity, ECA report
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bout 600million people in Africa do not have access to electricity, a report by the Economic Commission for Africa (ECA) has revealed. The report titled “Energy Prices in Africa: transition Towards Clean Energy for Africa also said 900million people on the continent have no access to clean cooking fuel. Meanwhile, it said electricity access rate in 24 countries are below 50percent. “There’s no way Africa can build forward better if we do not make adequate investments in energy and ensure affordable access for all,” said ECA Executive Secretary, Vera Songwe. The UN Under-SecretaryGeneral urged countries to ensure that there’s cost reflective pricing in the energy sector. The report cites Liberia, Malawi, Central African Republic, Burundi, and South Sudan as having stagnated or reversed in electricity access. Countries like Nigeria, DRC and Ethiopia reportedly have the biggest electricity access deficits. “Access to cheap and clean energy is an essential component of Africa’s transformation and industrialization,” said Oliver Chinganya, Director of the African
Centre for Statistics (ACS), who moderated the session. The ACS Director said, “in the context of AfCFTA deployment and implementation, supplying economies with affordable fuel is integral to supporting actions for faster achievement of the Sustainable Development Goals and Africa’s Agenda 2063.” The report deplores the fact that Africa relies mainly on fossil fuels and biomes instead of diversifying its primary energy supply, given its plethora of resources (renewable and nonrenewable). “Households use 86% of
biofuel and waste energy for cooking, while the transport sector consumes 78% of oil. Natural gas is mainly used in industrial sector.” In his presentation, Anthony Monganeli Mehlwana, an ECA Economic Affairs Officer, highlighted the “urgent need to invest in electricity infrastructure, diversify electricity supply and embrace modern renewables.” In terms of prices, Mr Mehlwana said “Levelized Cost of Energy (LCOE) or fossil power plants is more expensive” than wind and solar. “Onshore wind costs $59 per
MW while utility solar PV costs $79 per MW. Meanwhile, the cost of coal is $109 per MW and natural gas stands at $74 per MW.” He pointed out that “high energy production costs, transmission and distribution losses (18-25%) means that utilities need to be constantly bailed out and subsidies implemented for users.” At this rate, and according to the SDG 7 tracking report, Africa will not meet the SDG 7 targets due to limited supply and access to electricity. About $40 billion worth of investments per year is needed to meet the continents energy needs. The report recommends that countries must provide an enabling environment for crowding-in private sector investments in electricity sector; apply cost reflective tariffs while paying attention to efficient generation of electricity to lower the costs; and provide incentives and mechanisms to increase the share of renewable energy in the power systems. The study also highlights the need for countries to introduce natural gas as a transitionary fuel to replace coal and facilitate full deployment of renewables.
Kosmos Energy appoints Roy A. Franklin to Board of Directors
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osmos Energy has appointed Mr. Roy A. Franklinhas to its Board of Directors. Mr. Franklin is a senior executive with more than 45 years in the energy industry and extensive board experience in multiple companies both in the public and private sector. Mr. Franklin currently serves as Chairman of the international energy services group, John Wood Group PLC (“Wood”), and is also a member of the Advisory Board of Kerogen Capital LLC. In Mr. Franklin’s current role at Wood, he has overseen the company’s strategic positioning for the energy transition, broadening the company’s core activities from oilfield services to sustainable energy infrastructure, delivering solutions for a net-zero future. Wood is recognized as a sector leader in ESG matters with an AA rating from MSCI (Kosmos is also AA rated by MSCI) and Mr. Franklin’s experience in this area will be invaluable to Kosmos as it continues to navigate the energy transition. He was previously the
Chairman of Premier Oil plc, a UK-based independent oil and gas exploration company, from 2017 until its acquisition in 2021, the Chairman of privately-held Energean Israel Ltd from 2017 to 2021, and the Deputy Chairman of Equinor A/S from 2015 until 2019. In addition to those listed above, he has served on the boards of a number of other
international companies in nonexecutive roles, including Statoil A/S from 2007 until 2013, Santos Ltd from 2006 until 2017, Keller Group plc from 2007 until 2016, and Amec Foster Wheeler Plc from 2016 until 2017 when it was acquired by Wood. Mr. Franklin began his career at BP where he spent 18 years in roles of increasing responsibility. He then joined Clyde Petroleum
plc as Group Managing Director, and served as CEO of Paladin Resources plc from 1997 until its acquisition by Talisman Energy in 2005. In 2004 he was awarded the Order of the British Empire, and in 2006 the Petroleum Group Medal of the Geological Society of London, both in recognition of his services to the UK oil and gas industry.
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International
MONDAY JUNE 28, 2021
German pandemic borrowing to rise to €470bn
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ermany’s cabinet has approved €100bn of borrowing to pay for the government’s Covid-19 response in the country’s draft budget. The move, from the traditionally fiscally conservative country, will
take all pandemic-era borrowing to a total of €470bn. Germany’s debt-to-GDP ratio in 2021 is projected to reach 74.5%, lower than the 82.3% peak in 2010 in the wake of the global financial crash.
“After weathering the crisis comparatively well, we now want to emerge from the crisis in good shape,” said finance minister Olaf Scholz. “That’s why we are continuing to pursue resolute, decisive fiscal
policy measures in our 2022 budget.” The 2022 draft budget contains €443bn of spending, which is far less than the €547.7bn planned for this year but more than the €419.8bn planned in an earlier version of the draft. It includes €51.8bn in investment spending, which the finance ministry pointed out is higher than pre-crisis levels (e.g. €38.1bn in 2019). “Our investments are targeted in particular towards social cohesion, strong communities and a strong, climate-friendly economy that is fit for the future,” said Scholz. The budget also sets aside €10bn for unforeseen costs related to the pandemic. Germany has been able to borrow such large sums of money because the government and the European Commission suspended their fiscal rules to support the economy. The finance ministry said it plans to resume regular deficit and borrowing limits from 2023, when net borrowing could fall as low as €5.4bn.
US agrees $1trn infrastructure deal A bipartisan group of US politicians have reached an agreement on an infrastructure bill initially valued at $953bn, including the creation of a new Infrastructure Financing Authority. President Joe Biden confirmed the agreement on the package yesterday, which has been slimmed down on the reported $3trn planned in March. The plan includes $579bn in new spending, with $312bn pledged for transport over the next five-years, and a further $266bn in water, energy and broadband infrastructure. Biden tweeted: “This bipartisan agreement represents the largest investment in public transit in American history. The largest investment in rail since the creation of Amtrak. “It will deliver high speed internet to every American home and replace 100% of our nation’s lead pipes.” The bill will run for initial fiveyears, and if extended to the end of a second presidential term, the value will increase to around $1.2trn. The group of 10 senators,
consiting of five Democrats and five Republicans, met yesterday to thrash out the deal, with the major sticking point being on how the planned spending would be funded, with the GOP keen to avoid further debt burdens. Following the agreement, the bill will seek approval from Senate and the House of Representatives, before being signed off by Biden. The White House confirmed that the framework will be financed through a combination of closing the tax gap, redirecting unspent emergency relief funds and sales from the US petroleum reserve. Biden’s plan includes the creation of the Infrastructure Financing Authority, which will leverage billions of dollars into clean transportation and clean energy, a White House briefing said. The plan will also include national network of electric vehicle chargers along highways and in rural and disadvantaged communities, and the move from fossil-fuel dependent transport networks. Democrats hope to approve the rest of the president’s economic
plans using their slim majority in Congress, separate from the bipartisan infrastructure bill negotiated with Republicans. However, Nancy Pelosi, speaker at the House of Representatives, said in a press conference: “There is not going to be a bipartisan bill without a reconciliation bill.” She added that the House would not vote on the infrastructure bill until the Senate had dealt with both packages.
If approved by Congress, the plan would follow Biden’s $1.9tn stimulus bill, which was approved in March as an emergency measure to boost the nations economic recovery from Covid-19. Earlier this month, the US Federal Reserve outlined plans to sell off more than $14bn of corporate assets purchased last year, to help keep companies solvent through the Covid-19 pandemic.
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Feature
MONDAY JUNE 28, 2021
Is the Fed getting burned again?
By John B. Taylor
F
ifty years ago, on June 22, 1971, US Federal Reserve Chair Arthur Burns wrote a memorandum to President Richard Nixon that will long live in infamy. Inflation was picking up, and Burns wanted the White House to understand that the price surge was not due to monetary policy or to any action that the Fed had taken under his leadership. The issue, rather, was that “the structure of the economy [had] changed profoundly.” Accordingly, Burns was writing to recommend “a strong wage and price policy”: “I have already outlined to you a possible path for such a policy – emphatic and pointed jawboning, followed by a wage and price review board (preferably through the instrumentality of the Cabinet Committee on Economic Policy); and in the event of insufficient success (which is now more probable than it would have been a year or two ago), followed – perhaps no later than next January – by a six-month wage and price freeze.” Perhaps owing to Burns’s reputation as a renowned scholar (he was Milton Friedman’s teacher) and his long experience as a policymaker, the memo convinced Nixon to proceed with a wage and price freeze, and to follow that up with a policy of wage and price controls and guidelines for the entire economy. For a time after the freeze was implemented, the controls and guidelines seemed to be working. They were even politically popular for a brief period. Inflation inched down,
and the freeze was followed by more compulsory controls requiring firms to get permission from a commission to change wages and prices. But the intrusive nature of the system began to wear on people and the economy because every price increase had to be approved by a federal government bureaucracy. Moreover, it soon became obvious that the government controls and interventions were making matters worse. Ignoring its responsibility to keep inflation low, the Fed had started letting the money supply increase faster, with the annual growth rate of M2 (a measure of cash, deposits, and highly liquid assets) averaging 10% in the 1970s, up from 7% in the 1960s. This compounded the impact of the decade’s oil shocks on the price level, and the inflation rate shot into double digits – rising above 12% three times (first in 1974 and then again in 1979 and 1980) – while the unemployment rate rose from 5.9% in June 1971 to 9% in 1975. As we know now, the US economy’s performance in the 1970s was very poor owing at least partly to that era’s monetary policies. This was when the word “stagflation” was coined to describe a strange mix of rising inflation and stagnant economic growth. As James A. Dorn of the Cato Institute recently recounted, Nixon’s “price controls went on to distort market prices” and are rightly remembered as a cautionary tale. “We should not forget that the loss of economic freedom is a high price to pay for
a false promise to end inflation by suppressing market forces” (emphasis mine). The COVID-19 crisis has laid bare systemic inequities that will have to be addressed if we are ever going to build more sustainable, resilient, and inclusive societies. In Back to Health: Making Up for Lost Time, leading experts examined the immediate legacy of the pandemic and explored solutions for bringing all communities and societies back to health. As it happens, Choose Economic Freedomis the title of a book that I published last year with George P. Shultz, who passed away in February at the age of 100. Schultz had gained decades of wisdom and experience as both a diplomat and economic policymaker, serving as the Nixon administration’s budget director when Burns wrote his audacious memo. In an appendix to our book, we included the full text of that document, because it had only recently been discovered in the Hoover Institution archives. It should now be recognized as required reading for anyone seeking to understand the recent history of US economic policymaking. The Burns memo is a perfect example of how bad ideas lead to bad policies, which in turn lead to bad economic outcomes. Despite Burns’s extraordinary reputation, his memo conveyed a set of terrible policy recommendations. By blaming everything on putative structural defects supposedly afflicting the entire economy, the memo’s worst effect was to shun the Fed’s responsibility for
controlling inflation, even though it was clearly responsible for the rising price level. By the same token, good ideas lead to good policy and good economic performance. As Schultz and I showed, this was certainly the case in the 1980s. The Fed reasserted itself as part of a broader economic reform, and the economy duly boomed. The message from this historical experience – and many other examples in the United States and elsewhere – should be abundantly clear. And while history never repeats itself, it often rhymes, so consider where we are midway through 2021: inflation is picking up, and the Fed is once again claiming that it is not responsible for that development. Instead, Fed officials argue that today’s surge in prices merely reflects the bounce back from the low inflation of the last year. Worse, the Fed’s policy is even more interventionist now than it was in Burns’s day. Its balance sheet has exploded from massive purchases of Treasury bonds and mortgage-backed securities, and the growth rate of M2 has risen sharply over the past year. The federal funds interest rate is now lower than virtually any tested monetary policy rule or strategy suggests it should be, including those listed on page 48 of the Fed’s own February 2021 Monetary Policy Report. It is not too late to learn from past mistakes and turn monetary policy into the handmaiden of a sustained recovery from the pandemic. But time is running out.
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CONTINUED FROM PAGE 9 team, all achieved on the back of the call for injection of more capital, FBNBank has gradually been building momentum for greater traction on its chosen path. Today, the staff of the Bank feel more connected and will admit that they are much more engaged in going-ons than previously. The Small and Medium Enterprises (SMEs) agenda is much more articulated and pronounced these days. So is FBNBank’s voice on key developments from a thought-leadership position. Channels of customer interaction have increased with the roll-out of agency banking and some more branches. The Bank’s digitalisation agenda is on track with some exciting propositions for customers and corporate clients. In recent times the Bank has introduced a Contact Centre, enhanced their Premium Banking proposition and improved on its brand awareness and recognition. To be more direct, FBNBank and its brand are much more alive than ever before. Crucially, the Bank has also received both PCI DSS and ISO 27001-2013 certifications. According to Mohammed Ozamah, FBNBank Ghana’s Executive Director and Chief Risk Officer, “by securing the PCI DSS and ISO 27001-2013 certifications, we have taken the crucial step of providing information security and adhering to international security standards and regulatory requirements in an era of increasing sophisticated cyberattacks. These certifications provide the assurance to our customers that we have them at the heart of what we do.” On the whole, there is a greater effort and desire, collectively, among all stakeholders to move the Bank to the next level. Exactly what Victor Asante set out to achieve when he stated on the occasion of his appointment that, “my utmost priority is to endear
the brand to our stakeholders in the Ghanaian market and use all available means to make the brand a mark of excellence by meeting the needs of our valued customers, to the extent that FBNBank becomes the preferred bank.” The 2021 edition of the Brand Health Check – Banking Report indicates that FBNBank is enjoying a very good Net Promoter Score with word-of-mouth working very well in its favour. In other areas of the brand assessment there is marked improvement also. On the ground, customers speak of a revival of their banking brand with increased effort at awareness creation and differentiation. Hear Evelyn Bekpo, a commercial banking client of the Bank, “I have more than one banking relationship so I am able to tell which of my banks is paying more attention to my needs. For some time now, I have developed a better relationship with FBNBank and it is all because they have been much attentive and may be aggressive, yes, in a positive way.” SMEs in particular
have received more attention over the last 30 or so months with various forms of support for importers, exporters and manufacturers even through the height of the COVID-19 breakout. This year, 2021, FBNBank is celebrating its 25th anniversary in Ghana and for most of its actors the look-back and how the ship was placed on an even keel is equally as important as the look-forward into the future. According to Semiu Lamidi, Executive Director and Chief Financial Officer of FBNBank Ghana, “the strategic decisions in those crucial moments and their timing have opened up new opportunities for FBNBank, putting us in a stronger position to offer more competition for the future. Our people are passionate about our brand, our products are more customer-focused and our processes have been fashioned with the customer at the heart of the design. Our name is out there and the customers know that our game entails putting them first.” With a more focused agenda and
a collective sense of purpose FBNBank, having embarked on a new journey is looking to use its silver jubilee anniversary as yet another watershed in its operations in Ghana and they are aiming really high. “We are 25 this year and our actions leading up to this milestone have been seminal to where we find ourselves now. As a strong and dynamic brand, we are in a strong position and are primed for progress along our chosen path. Like the African elephant, we are taking one majestic step at a time on a walk to success. We are walking the talk of our brand promise which enjoins us to always deliver the ultimate gold standard of value and excellence to our stakeholders in a very calculated way” says Victor Yaw Asante. Banks all over the world, like other corporate entities, have their ups and downs, high and lows with hairpin bends they have to navigate carefully otherwise they risk disaster. How they put their array of strategy-led decisions and actions together is crucial for their existence. For FBNBank they have, in a phoenixlike way, found a way out of what turned into a crisis for some to regain their gait and it is the walk of the African elephant. FBNBank Ghana is a member of the First Bank of Nigeria Limited Group which is renowned for its great customer service and general stakeholder engagement garnered over its 127 years of operation. FBNBank Ghana has 20 branches and two agencies across the country with over 400 staff. FBNBank offers universal banking services to individuals and businesses in Ghana.
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