Business24 Newspaper 3rd May, 2021 by Business24 Online

MONDAY MAY 3, 2021

BUSINESS24.COM.GH

NO. B24 / 190 | NEWS FOR BUSINESS LEADERS

MONDAY MONDAY MAYMAY 3, 2021 3, 2021

Gov’t to sell GH¢4.1bn of fresh local debt in Q2 Gov’t to develop strategy on ‘future of work’ – Prez By Eugene Davis ugendavis@gmail.com

resident Nana Addo Dankwa Akufo-Addo has revealed that government is taking steps to address the future of work in a post-pandemic era, emphasizing on the constant need to upgrade existing skillset. Cont’d on page 3

SEC pays GH¢768m to claimants

T for the rest of the quarter to June. In all, government is planning to raise GH¢21.43bn from investors, with nearly 81 percent of the amount to be used to roll over maturities.

he Securities and Exchange Commission (SEC) has paid a total of GH¢768.26million to 6,916 claimants affected in the collapse of a number of fund management companies. This represents 83 percent of the total number of claimants who signed up following the clean-up exercise. Rev. Daniel Ogbarmey Tetteh, Director-General of SEC, said 6,349 individuals were paid GH¢ 409.29million,

Cont’d on page 2

Cont’d on page 3

Ken Ofori-Atta

By Joshua Worlasi Amlanu macjosh1922@gmail.com

overnment has released the muchawaited domestic borrowing calendar for the second quarter of 2021, with about GH¢4.13bn of fresh

securities to be issued to meet government’s financing requirements during the period. The calendar, whose delayed publication caused uncertainty among investors, will provide clarity on the government’s financing plans

ECONOMIC INDICATORS EXCHANGE RATE (INT. RATE)

POLICY RATE

INTERNATIONAL MARKET US$1 = GHC 5.7606 14.5%

GHANA REFERENCE RATE

14.77%

OVERALL FISCAL DEFICIT

11.4% OF GDP

PROJECTED GDP GROWTH RATE AVERAGE PETROL & DIESEL PRICE:

4.2% GHC 5.13

BRENT CRUDE $/BARREL NATURAL GAS $/MILLION BTUS GOLD $/TROY OUNCE

CORN $/BUSHEL

$543.75

COCOA $/METRIC TON

$123.55

COFFEE $/POUND:

facebook.com/business24gh twitter.com/business24gh linkedin.com/pg/business24gh instagram.com/business24gh

Editorial / News

MONDAY MAY 3, 2021

Editorial

Power outages counterproductive

ver the past few months, Ghanaians have experienced irregular power supply. While some of the outages are scheduled, others are mostly unannounced catching consumers unawares mostly are rather odd times. These power cuts bear semblance to what transpired during the peak of the load shedding era some five years ago prompting fears whether the country is indeed back to the dark days. Authorities have resisted assertions that the country has run into a power crisis that requires the proverbial timetable that will advertise a formal load shedding programme. The authorities have sought refuge in the excuse that these intermittent and frequent power cuts occur as a result of ongoing

construction works on certain key power projects in the capital. It has also become the norm for authorities to attribute some of these unannounced power cuts to maintenance works or sudden failure of key power installations. The excuses anytime the power goes out have become one too many. There is no denying that the country’s power sector is under considerable amount of pressure. The power transmission side has not seen any significant investment bar the investment being made by the Millennium Development Authority (MiDA) under its Compact II initiative. There is also the distribution challenge one of the reasons for which the ill-fated Power Distribution Services (PDS) was engaged. Since their exit, not

much has been done to deal with the problem. Of course, there is the almighty cost of power produced by the independent power producers. Government is locked in these agreements and almost cash strapped in making good its commitments leading to debt accumulation for power produced. This paper believes that all these challenges have persisted for a while and government cannot play innocent if not much was done in the past to prevent them from coming to a head. The last thing that this economy needs after the debilitating effects caused by the pandemic is power cuts – be it announced or unannounced. For many SMEs that survived the pandemic, this would provide the final nail!

Gov’t to sell GH¢4.1bn of fresh local debt in Q2 Continued from cover

Your subscription -- along with the support of businesses that advertise in Business24 -- makes an investment in journalism that is essential to keep the business community in Ghana well-informed. We value your support and loyalty. Contact Email: hello@thebusiness24online.net Newsroom: 030 296 5315 Advertising / Sales: +233 24 212 2742

Based on the calendar, domestic portfolio investors will be able to invest up to GH¢18.43bn in short-term government debt securities, comprising tenors of 91 days, 182 days and 364 days, to be sold during the period. This category is reserved strictly for

domestic investors. The remaining securities of about GH¢3bn, comprising five- and seven-year bonds to be issued in May and June respectively, will be accessible to both resident and non-resident investors, who mostly dominate subscriptions of such medium- to long-term securities.

The five-year bond will target an amount of GH¢2bn, while the seven-year bond will target GH¢1bn. The short-term securities will be issued through auctions, while the medium-term ones will be issued via the book-building method.

MONDAY MAY 3, 2021

Gov’t to develop strategy on ‘future of work’ – Prez Continued from cover According to him, the required skills needed to survive in this ravaged world are different from what people are used to and unless there is a significant upgrade, progress would be stalled. The President who was speaking at this year’s National May Day celebration at the forecourt of the Trades Union Congress (TUC) in Accra said: “The Minister for Employment and Labour Relations is working to address a major concern of the future of work. I look forward to a frank and vigorous discussion on the subject to make sure we are ready for the many changes that we need to embrace to develop our economy in these changed times”. The President also announced that negotiations within the National Tripartite Committee working to establish the minimum wage for 2021 has begun in earnest. This year’s celebration was on the theme: “Economic Recovery in an Era of Covid-19; The Role of

Ghana TUC-Ghana General Secretary Dr. Anthony Yaw Baah

Social Partners.” He used the occasion to laud the resilience of workers during the peak of the coronavirus pandemic. He said the government was working to ensure that no worker was worse off as it took measures to sustain the growth and fiscal stability that the country

witnessed in the three years before the pandemic struck. President Akufo-Addo urged organised labour to work with the government and embrace the many changes that would be adopted in the effort to rebuild and develop the economy post COVID-19. The President also revealed

that Ghana will take delivery of 350,000 doses of the AstraZeneca vaccine from the COVAX facility on Tuesday, May 4, 2021. This, according to the President, forms part of moves to vaccinate Ghana’s entire adult population by the end of the year.

for the provision of GHc5.5 billion in the 2021 Budget Statement, which was recently approved by Parliament to complete the Asset Management Industry Cleanup Exercise. The Director-General said the provision further demonstrated government’s profound commitment to strengthening the securities market in realising its potential as an essential driver for economic growth and development. He appealed to all affected clients to patiently follow through with all relevant processes to redeem their claims and to rely

only on information provided by the SEC and the Official Liquidator. The courts had granted 37 liquidation orders to the Official Liquidator (The RegistrarGeneral) as at the March 31, 2021, out of the 47 FMCs with claims from investors after the revocation. Virtual Creditor and Class meetings were held by the Official Liquidator for clients of 34 of these companies. The remaining 10 Companies have their liquidation petitions currently pending before the High Court for hearing.

SEC pays GH¢768m to claimants Continued from cover while 562 corporates and institutions received GH¢ 358.68million. Rev Ogbarmey was speaking at a media briefing to update the media and clients of defunct Fund Management Companies (FMC) on the bailout implementation programme. He said for the partial bailout, a total of 64,685 out of 89,233 claimants had signed up for the programme by executing the assignment and subscription agreement as at March 31, 2021, representing 72 per cent. The Director-General, said the actual payments made under the partial bailout programme as at March 31, 2021 stood at GH¢ 995million to 52,264 claimants, representing 81 per cent of total claimants and 83 per cent of the total corresponding partial bailout value. “The number of clients who have been fully settled under this programme is around a total of 42,945 claimants as at March 31, 2021,” he added. So far, 51,143 Individuals were paid an amount of GH¢959.57million, while 1,121 Corporates and Institutions

were paid an amount of GH¢34.93million. He said there were less than a quarter of the liquidation petitions outstanding and commended the Official Liquidator and the Courts. Rev Ogbarmey said the next update would be provided at the end of the second quarter. “For the claimants with validated claims in excess of the GH¢ 50,000 threshold, please be assured that the full bailout package will be triggered when the liquidation orders are granted,” he said. He urged the investors to avoid the use of middlemen or facilitators to secure payout of the bailout. Rev. Ogbarmey, assured all affected clients that the government had made provision to cover all validated claims with the recent additional allocation in the 2021 National Budget Statement to support the clean-up exercise in the asset management industry. “There is no need for any affected client to panic because of the protracted court liquidation process,” he added. Rev Ogbarmey expressed appreciation to the government

MONDAY MAY 3, 2021

Market News

MONDAY MAY 3, 2021

Stock market capitalisation jumps by GH¢3.64bn in April By Joshua Worlasi Amlanu macjosh1922@gmail.com

he value of the Ghana Stock Exchange grew by GH¢3.64bn in April to GH¢60.8bn, as the market’s bull run since the last quarter of 2020 continues. At the end of trading in April, the GSE Composite Index achieved a year-to-date return of 31.93 percent compared with 13.99 percent at the end of March. The financial stocks index also posted a 5.29 percent year-todate return, improving from 3.54 percent in March. Over the same four months of last year, the GSE Composite Index suffered a loss of 3.74 percent, while the financial stocks

index went down by 5.61 percent. About 28.77m shares were traded in April, slightly lower than trades made in the same period of 2020. The stock price of MTN Ghana saw the highest rise in the month, increasing by 34 percent to GH¢1.14. MTN has been one of the major winners in the COVID era, as digital payments, online meetings and e-commerce have become the new norm, boosting the company’s revenues. GCB Bank led the gainers among financial stocks, followed by Cal Bank, Standard Chartered Bank and Societe Generale. Ecobank Ghana recorded a price decline, while five other stocks remained unchanged. Market analysts attributed the general price gains in financial

stocks to the good performance of listed financial institutions despite the pandemic. With yields on government securities declining, the market is expecting a continuous uptrend in the key indices as investors seek higher returns. Key among such investors are pension fund managers, some of whom have

over-invested in government securities and will try to rebalance their portfolios in favour of the equity market. Market experts project that the equities market is set for continued growth given the government’s policy to permanently exempt taxes on capital gains on listed securities.

Fan Milk posts 15% revenue growth is also due to growth in Q1 [an]“Theincrease in export business

an Milk Plc, the ice cream and dairy products maker, began the year on a positive note, delivering a year-on-year revenue growth of 15 percent in the first quarter, according to unaudited financial statements published on April 30. Revenue grew to GH¢121.75m in January to March compared with GH¢105.84 in the corresponding period of 2019. The growth, according to the company, is in line with its objective “to recover the decline in outdoor channel [that is, exports] and accelerate growth in indoor channel [that is, local sales]”.

to Franco[phone] countries. For the first time in several months, the outdoor channel grew by 3 percent in the month of March,” it said. “The company continues to drive cost efficiency in operation, recording [a] 10 percent increase in sales and distribution expenses, lower than revenue growth,” it added. There was a significant increase in administrative expenses, by 64 percent to GH¢7.92m, largely emanating from forex losses. Nevertheless, the company posted a net profit after tax of GH¢5.5m, almost the same as in the first quarter of 2019.

Guinness Ghana revenue grows 24% growth of 66 percent above the y-o-y in Jan-Mar

uinness Ghana Breweries, the leading total beverage business in Ghana, has posted a 24 percent year-on-year increase in net sales in January to March, which represents the third quarter of the company’s July to June financial year. According to the company’s unaudited financial statements for the period, the growth in revenue was largely driven by volume growth and a positive price/mix. During the period, the cost of producing beverages increased but was slower than sales revenue growth. This resulted in gross profit

same quarter last year. “We offset inflation and commodity price increases through increased local sourcing and production,” the company said. Selling, general and administrative expenses in the third quarter increased by 9 percent, driven by increased spending on promotions such as the “Yen Nyin Mbom” Retailer Loyalty Programme. This resulted in an operating profit of GH¢104.86m for the first nine months of the financial year. Net profit after tax stood at GH¢55.8m for the period, representing a year-on-year increase of 171 percent.

MONDAY MAY 3, 2021

Energy

MONDAY MAY 3, 2021

Race to Zero strengthens and clarifies minimum net zero criteria for members

he UN-backed Race to Zero has bolstered the minimum criteria that non-state actors must meet to be accredited by the climate campaign amid growing criticism from some campaigners that corporate net zero pledges are not ambitous enough to ensure global temperature rises are limited to 1.5C. Following recent criticism of net zero targets, the UN-backed campaign tightens its standards and notes that ‘the concept of net zero is complex and the science and best practices are developing fast’ The new rules, will come into force on 1 June, include a stronger emphasis on the need for businesses, investors, cities, regions, and universities to implement clear interim targets that trigger immediate decarbonisation efforts. The campaign has also tightened the language it uses when defining residual emissions, sources, and credits in its criteria document in an attempt to provide more specificity about what types of carbon sink projects can legitimately be included in net zero strategies. The new rules come as net zero commitments across the private sector face growing push back from some campaigners and scientists who claim the long-term targets provide a cover for firms to continue polluting in the short term and that commitments are overly reliant on dubious assumptions about the viability and scalability of negative emissions projects. A widely shared article last week by the University of Exeter’s

James Dyke, the University of East Anglia’s Robert Watson, and the University of Lund’s Wolfgang Knorr condemned the “fantasy of net zero” and concluded that “current net zero policies will not keep warming to within 1.5C because they were never intended to”. The article shared by Greta Thunberg, who hailed it as “one of the most important and informative texts I have ever read on the climate- and ecological crises”. The update to the Race to Zero’s criteria is the result of a three-month review facilitated by University of Oxford. In a statement, the campaign emphasised the criteria update was part of an “ongoing process” with the climate action community, noting “the concept of net zero is complex and the science and best practices are developing fast”. Dr Thomas Hale, chair of the Expert Peer Review group and associate professor in global public policy at Blavatnik School of Government, said the criteria had been designed to promote learning and ‘upward convergence’ among members. “The criteria help catalyse actors to come up to the frontier of best practices, to identify common challenges and questions, and to help advance that frontier going forward,” he said. “It’s important to continue developing what needs to happen to accelerate our transition towards a decarbonised economy, whilst also championing these robust efforts already underway.” Key changes to the criteria include a stronger emphasis for actors to explicitly outline how

they will contribute towards or beyond their fair share of halving emissions by 2030 and requirements for them to include all scopes of emissions in targets. Moreover, the term ‘offsetting’ has been removed from the Race to Zero’s criteria document altogether and replaced with ‘sinks and credits’, with the description of the types of abatement measures accepted by the campaign lengthened to provide more details on what types of projects qualify. On top of meeting the previous criteria for offsets to meet robust standards for additionality, performance and accounting, all members must now ensure that sinks and credits do not undermine social justice or harm biodiversity, and that abatement efforts encourage immediate contributions to the preservation and restoration of natural sinks that are “not necessarily linked to neutralisation claims”. In addition, members will be required, for the first time, to “clearly state what sinks or credits are used to make what, if any, neutralization claims, clarifying how sinks and credits are used both on the path to net zero, and after net zero is obtained”. The new rules also demand that members commit to working with other actors on delivering the net zero transition through engagement, information sharing, access to finance, and capacity building. A spokesperson from the campaign confirmed to BusinessGreen that existing signatories to the campaign that do not reform their targets so they meet the new criteria would have

their membership rescinded. In addition to the wider update, the campaign today also published criteria for oil and gas companies joining the campaign for the first time. To join the Race to Zero, fossil fuel firms will be required to have a target approved by the Science-Based Targets Initiative based on the oil and gas methodology which is currently under development. “Net zero has become the guiding star for climate ambition, with net zero commitments growing exponentially from companies, cities, regions, investors and universities across the world,” said Gonzalo Munoz, Chilean High Level climate champion for COP25. “Our mission with Race to Zero is to maintain the integrity of these efforts, and firmly establish the minimum floor for climate ambition with rigorous criteria and a transparent process. Ensuring the credibility of climate action is crucial if we are to deliver a zero carbon world in time.” The Race to Zero campaign, which launched by the UN last summer to galvanise the private sector behind climate action ahead of the vital COP26 climate conference this autumn, brings together more than 2,100 businesses, 120 investors, 20 regions and 500 universities. Writer: Donald Marshall Company: Mframadan Energy Management & Research Institute (M.E.M.R.I). Contact: 00233-24-4550854 Email: donaldamus@yahoo.com Original Source: Businessgreen

MONDAY MAY 3, 2021

Mining

MONDAY MAY 3, 2021

Gold Fields’ plans bolstered by positive gold market

ual-listed major Gold Fields’ subsidiary Gold Fields Ghana (GFG) is always seeking opportunities to expand its portfolio within the West Africa region, explains Gold Fields executive VP and West Africa head Alfred Baku. “Gold has performed very well on the global market since 2020. Further, while mildly fluctuating, the current gold price of about $1,700/oz is viable, provided operating costs are managed well.” Baku notes that GFG began a reinvestment project at the Damang mine in 2017, investing roughly $1.4-billion in capital and operational expenditure over an eight-year period. The project, which is progressing ahead of schedule and beyond the production plan, reported positive cash flow in 2019. “It is important to note that the reinvestment project started after the approval of the development agreement with the Ghanaian government. With only an estimated mining reserve of 1.7-million ounces of gold in 2016, the decision to reinvest in Damang was a strategic one.” Baku notes that, in 2019, GFG also started a new Damang drilling programme. The broader exploration programme has the potential to extend Damang’s life-of-mine (LoM) by a further four years, with

According to the 2020 financial results, GFG’s regional all-in costs increased by 2% to $1,060/oz from $1,039/oz in 2019. “We are aware that we have set an ambitious objective and we will continue to work hard to achieve it.” Cost Reduction Strategies Alfred Baku

the current estimated reserves expected to be depleted by 2025. Meanwhile, the Tarkwa mine’s aggressive exploration agenda aims to identify new resources and upgrade existing ones. In 2019, Tarkwa added 1.2-million ounces to the mine’s resource portfolio – with an additional 200 000 oz in 2020 post-depletion – enabling the mine to extend its LoM by another 15 years. The Asanko Gold Mine, a joint venture ( JV) operation with Galiano Gold, is also focusing on exploration across its tenement package. In 2020, a budget of $10-million was allocated to exploration, half of which was funded by GFG. Baku says that GFG’s strategic intent is to produce one-million ounces of gold a year in the region. “Another strategic objective is to reduce all-in costs to below $1,000/oz to remain profitable and sustain operations even if the gold price declines to those levels,” comments Baku.

The primary challenges affecting the performance and viability of GFG’s operations are deeper pits, declining grades, longer haulage distances, high waste strip ratios and high operating costs. “Tarkwa and Damang are mature open-pit mines. As we mine deeper, we mine more waste and increase haulage distances, which drives up costs.” GFG is mitigating these challenges through the adoption of technology to boost production efficiency, improve safety and promote growth. “For instance, to optimise our operational efficiency, we are piloting autonomous drilling at Tarkwa and have installed a highprecision GPS hole navigation system on drill rigs at Damang. We have also started implementing a Cleaner Safer Vehicle initiative, converting diesel engines to run on liquefied natural gas.” Gold Fields has also installed collision avoidance and fatigue management systems on haul trucks to prevent fatalities,

serious injuries and equipment damage. Addressing ASM Baku notes that illegal and artisanal and small-scale mining (ASM) are more prevalent in the West African region. He explains that GFG manages these activities through an ASM strategy, which includes patrolling active mining areas, consulting with affected stakeholders, negotiating evictions and, as necessary, prosecution of offenders by law enforcement agencies. GFG recently revised its ASM strategy to include a more proactive engagement with community stakeholder groups and support the creation of nonmining jobs. 2021 Outlook “We have set realistic production and cost targets for the year. We are optimistic that our mines, as well as the Asanko JV, will not experience any material interruptions, based on our experience in 2020. Overall the outlook for 2021 is positive, if the gold price trades close to the $1,600/oz range,” Baku concludes. Source: miningweekly.com

Golden Star publishes 2020 Corporate Responsibility report

olden Star Resources, which operates the Wassa gold mine in Ghana, has published its 2020 Corporate Responsibility Report. According to a statement from the company, the report has been prepared in accordance with the Global Reporting Initiative Standards (Core option), the United Nations Global Compact reporting requirements, and the Sustainability Accounting Standards Board’s (“SASB”) Metals and Mining Sustainability Accounting Standard. “In what was a transformative year for the company, Golden Star implemented, in 2020, a number of major initiatives and has made significant advancements in respect of the overall sustainability performance,” said the statement. The report, the statement added, documents communication on Progress to the UN Global Compact and discusses the programmes that support the

Sustainable Development Goals and the company’s progress towards alignment with the World Gold Council’s (WGC) Responsible Gold Mining Principles (RGMPs). It also reveals work conducted on the Investor Mining and Safety Tailings Initiative and the WGC Conflict Free Gold Standard. The statement said the key highlights of the report include Wassa being recognised as the safest mine in Ghana and receiving the best performer in occupational health and safety at the Ghana Mining Industry Awards. In addition, Golden Star continued its leading practice performance in malaria prevention, with 2020 recording the lowest case rates and days lost to malaria on company record. The CEO of Golden Star, Andrew Wray, said, “In dealing with the challenges of an unprecedented global pandemic, we were able to demonstrate the benefits of our focus on operating responsibly and sustainably through our

Source:gsr.com

pandemic management controls as well as our local procurement initiatives – we were able to protect our workforce and local communities, ensure stability of our operations and maintain supply chains despite land borders being closed. Not only were we able to continue operations on a reasonably uninterrupted basis, we were able to deliver significantly higher tax revenues to the Government of Ghana,

which helped it to deal with the financial pressures of the pandemic. We have always understood that value generation is inherently linked with sustainability. In 2020, we clearly enunciated the understanding that people, culture and leadership, sustainability, operational excellence, financial excellence and growth are equal drivers of success and must be pursued collectively in order to achieve our goals. We know that good reporting is of limited value if it is not substantiated by good responsible performance. Throughout the organisation, our teams have delivered a remarkable performance during 2020. The improvements in water recycling, new initiatives on diversity and inclusion, and the continued strengthening of our governance systems, all demonstrate our ongoing commitment to sustainability.”

MONDAY MAY 3, 2021

Energy

MONDAY MAY 3, 2021

Eni to shed retail-renewable energy stake

talian energy group Eni (ENI. MI) is planning to spin off a minority stake in its new retail and renewable business next year, it said on Friday, after announcing first quarter profits that missed expectations. Several European energy companies, including Spain’s Repsol (REP.MC), aim to divest parts of their renewables business to raise money to reduce debt and pay for the shift away from oil and gas. Eni said it planned to list or sell a minority stake in the business that includes renewable energy and retail energy sales next year, confirming a Reuters report from March. Analysts at Jefferies said the business, which has 10 million customers and plans to grow green power generation to over 5 gigawatts (GW) by 2025, could be worth 9 billion euros ($10.89 billion) including debt.

“That’s less scope for upwards estimate revisions that peers will benefit from coming out of earnings,” said Bernstein. At 1422 GMT Eni shares were down 2.4% while the European oil&gas index (.SXEP) was down 0.4%. Looking up

Eni expects the new unit to almost double its core earnings, or EBITDA, by 2024 to 1 billion euros. “The combination of these two entities clearly could move the vehicle to the range of a doubledigit multiple (to EBITDA),” CFO Francesco Gattei said on a call with analysts. In the first quarter, Eni’s

adjusted net profit jumped almost five times to 270 million euros ($327 million) as firmer oil prices offset lower production. The result was below an analyst consensus of about 440 million euros, in part due to a weaker performance in gas and refining margins. Cash flow from operations fell 12% to 1.6 billion euros.

Pandemic lockdowns throttled fuel demand last year prompting energy groups like Eni to rein in investments and returns. But Europe’s energy companies this year have posted increased earnings boosted by higher oil prices as demand starts to pick up. read more “We have been able to improve our outlook for the coming months, forecasting free cash flow generation in 2021 of more than 3 billion euros,” Chief Executive Claudio Descalzi said.

Total enters a 640-mw offshore wind project under construction in Taiwan

T Tullow launches an offering of US$1.8bn Senior Secured Notes

ullow Oil plc has announced that it has commenced an offering of senior secured notes due 2026 and has received US$600 million of commitments in respect of a super senior revolving facilities agreement maturing in December 2024. This comprised of a US$500 million revolving credit facility and a US$100 million letter of credit facility (the Revolving Credit Facility and together with the offering of the Notes, the Transactions). The notes and the revolving credit facility will be senior secured obligations of the Company and will be guaranteed by certain of the Company’s subsidiaries. Use of Proceeds The company intends to enter into the transactions and use the proceeds from the offering of Notes, together with cash on

hand, to extend the maturity profile of its indebtedness. These transactions are expected to be net leverage neutral by firstly, repaying all amounts outstanding under, and cancelling all commitments made available pursuant to, the Company’s existing Reserves Based Lending Facility, Secondly, redeeming in full the company’s US$650 million aggregate principal amount of 6¼% Senior Notes due 2022 at a redemption price of 100% of their principal amount plus accrued and unpaid interest and additional amounts, if any, to the date of redemption, Thirdly, at their maturity, repaying in full and cancelling the Company’s $300 million aggregate principal amount of 65/8% convertible bonds due 12 July 2021, and Lastly, paying fees and expenses incurred in connection with the Transactions.

otal has signed an agreement with wpd to acquire a 23% interest in Yunlin Holding GmbH, the owner of Yunlin offshore wind farm located off the coast of Taiwan, around 200 kilometers southwest of Taipei. The project, currently under construction, represents production capacity of 640 megawatts (MW) and benefits from a 20-year guaranteed-price power purchase agreement (PPA) with the state-owned company Taipower of USD 250/MWh for the first 10 years and USD 125/ MWh for the following 10 years. For this acquisition of a 23% interest, Total will pay to wpd a consideration based on its share of past costs. Located around 10 kilometers offshore at water depths ranging from 7 to 35 meters, the wind farm will comprise 80 wind turbines with a unit capacity of 8 MW. Construction is scheduled to be completed in 2022. Once on stream, the project will produce 2.4 terawatt hours (TWh) of renewable electricity per year, enough to serve the power needs of 605,000 households. Procurement of the main components has been finalized and marine works are under way. The project reached a major milestone with the installation of the first wind turbine on April 23. Identified by Taiwan’s

authorities as a key area in the development of renewable energies, offshore wind power will be a significant contributor to the objective of generating 20% of its electricity from renewables by 2025 while fostering the emergence of a local wind power industry. Taiwan is one of the priority regions selected by Total for its development in offshore wind power in Asia. “This agreement provides Total with an opportunity to gain a foothold in one of Asia’s main offshore wind markets and strengthens the Group’s position in this fast-growing segment, in line with its strategy of profitable development in renewables worldwide,” said Stéphane Michel, President Gas, Renewables & Power at Total. “Taiwan has been a pioneer in developing offshore wind power in Asia, and we are proud to contribute to the transformation of its energy mix. We are delighted to enter into this first partnership with wpd, one of the leading independent developers of offshore wind power.”

MONDAY MAY 3, 2021

Feature

MONDAY MAY 3, 2021

Will the Fourth Industrial Revolution lead to large-scale unemployment?

By Bertus Buys & Prof Martin Butler

hen the impact of modern technologies like artificial intelligence, machine learning and robotics are discussed in a business or social context the conversation inevitably turns to the impact on employment. There are justifiable concerns that technology will lead to widespread unemployment or, at the very least, a workforce not ready for the types of opportunities provided. When technology changes the structure of economic activities some employment opportunities will be lost. This raises the question: Will this only be those jobs that are repetitive and rather simplistic, or will it have a zero net effect on formal employment? If anything, the Fourth Industrial Revolution’s significant impact on policy and strategy is intensifying the level of conversation that, up to now, has mostly been based on anecdotal evidence or historical reference. However, there are always lessons to learn from the past. In addition, we need explorative technological forecasting based on extrapolations from the past to make sense of the future. Therefore, this study looked at the impact of technological innovation on employment over the long term to obtain a better picture of what the future might hold. The technological unemployment debate has split the academic world into technology pessimists and technology optimists. The pessimistic view is that innovation destroys jobs; it creates

structural changes in the economy that drive unemployment in the unskilled labour market, while increasing employment in the skilled market. The optimistic view is that innovation creates a myriad of possibilities in the form of new employment, and also positively influences multiple support industries and sectors that already exist, with a net positive effect. Technological innovation and unemployment The media and management literature warn about the perils of technological unemployment. To move beyond the sensationseeking statistics, it is necessary to obtain a better understanding of the types of jobs gained and lost as a result of technological innovation. Four aspects are important when looking at the effect of technological innovation on employment. Firstly, any study about economic impact could be done at product/process level, firm level and industry level. It is of course also possible to extrapolate industry level to country or larger geographical levels. Secondly, we need to take cognisance of the multiple dimensions of innovation. Thirdly, we need a long-term lens to look at high-level correlations between technological developments and economic cycles. Finally, the types of unemployment need to be analysed to try and isolate technology induced unemployment from other large employment trends that could influence the data. The literature indicates four main types of unemployment: • Structural unemployment:

This is defined as the disparity between the jobs available in the market and the skills of the workforce. • Frictional unemployment: This is defined as the short-term unemployment experienced while people are looking for jobs. • Cyclical unemployment: This is defined as loss of work due to economic downturns. • Seasonal unemployment: This refers to unemployment as a result of seasonal productive activities – like those typically found in the agricultural industry. According to early 20th century Austrian political economist Joseph Schumpeter, all types of unemployment could be ascribed to the creative destruction process. He explained that unemployment is mainly frictional; unemployment as a result of technology adoption was temporary and of a cyclical nature. In contrast, the Italian economist Pasinetti believed that structural changes in the economic system generated a technology-induced loss of employment. A global analysis of the 2008 recession indicated that job polarisation – referring to a structural change from low-skilled or unskilled labour to skilled labour – was typically concentrated during recessions which coincided with technological changes. One of the mostly widely used theories to investigate the interdependency between technological transformation and economic activity is the Kondratieff waves introduced by Russian economist Nikolai Kondratieff in his 1925 book The major economic cycles. The type of unemployment depends on where the economic system finds

itself on the economic supercycle, also called the K-wave pattern or Kondratieff long wave. During the initiation of the upswing (recovery phase), the type of unemployment should be deemed structural as there was a mismatch between the skills required and the proficiency of the labour force. When the economic system entered the prosperity phase, unemployment was reduced, leaving predominantly frictional and voluntary unemployment. As the prosperity phase progressed, the type of unemployment became technological owing to the development of process improvement innovations. At the peak of the wave, the technological innovations reached their full maturity and, in conjunction with the start of the development of new inventions, initiated the recession. In the recession phase and throughout the depression phase, the main type of unemployment is cyclical. Technologically induced loss of employment usually arose in the later stages of recessions. Fears of such losses stemmed from the labour-saving goal of most technological innovations and were typically sparked in periods characterised by radical technological innovation. Empirical studies have been conducted to determine the effects of technological innovation on unemployment. Unfortunately, most studies were undertaken at individual firm level and do not take into consideration the creation of new industries and markets brought about by radical technological innovation.

CONTINUED ON PAGE 19

MONDAY MAY 3, 2021

Feature

MONDAY MAY 3, 2021

Share the intellectual property on covid-19

By Jeffrey D. Sachs

he governments of South Africa, India, and dozens of other developing countries are calling for the rights on intellectual property (IP), including vaccine patents, to be waived to accelerate the worldwide production of supplies to fight COVID-19. They are absolutely correct. IP for fighting COVID-19 should be waived, and indeed actively shared among scientists, companies, and nations. The pharmaceutical industry and the governments of several vaccine-producing countries, including the United States and the United Kingdom, as well as the European Commission, have been resisting the IP waiver, while 150 public leaders and experts have sent an open letter to US President Joe Biden in support of it. There is no longer any question about who is right. Given the surge of COVID-19 in several regions, most recently in India, the continuing emergence of new and deadly variants of the virus, and the inability of the current vaccine producers to keep pace with global needs, an IP waiver or its equivalent has become a practical urgent need as well as a moral imperative. As a general principle, IP should not stand in the way of scaling up production to fight COVID-19 or any other public health emergency. We need more countries to be producing vaccines, test kits, and other needed commodities. IP-related delays could mean millions more COVID-19 deaths and more viral mutations that sweep across the entire world population, possibly infecting people who have already been vaccinated. And yet we face a situation in which the world’s urgent needs are pitted against the narrow

corporate interests of a few US and European pharmaceutical companies. The companies are even trying to turn their opposition to an IP waiver into a geopolitical issue, arguing that China and Russia must be prevented from gaining the knowhow to produce mRNA vaccines. This argument is immoral, indeed potentially homicidal. If opposition to IP waivers slows the production of effective vaccines in China and Russia, it would directly endanger Americans, Europeans, and everyone else. Even in the best of circumstances, IP involves a balancing act of costs and benefits. Patents give an incentive for innovation, but at the expense of granting 20 years of monopoly power to the patent holder. The benefits of innovation must therefore be weighed against the cost of monopoly power that limits supply. In a deadly pandemic, the choice is clear: we should waive the patent rights in order to increase the supplies of life-saving commodities in order to end the pandemic. The relevant international law, known as the TRIPS (TradeRelated Aspects of Intellectual Property Rights) Agreement, already recognizes the right and occasional need of governments to override IP in the case of public health emergencies by invoking a compulsory license. A compulsory license gives local companies the right to use patent-protected IP. The right to compulsory licensing of IP to protect public health was already agreed in 2001 as part of TRIPS in the case of production for domestic use. In 2005, it was extended to cover production for exports to countries that lack their own production capacity. It is likely that Brazil, China, India, Russia, and South Africa

could develop the capacity for increasing the global supply of COVID-19 vaccines. Yet these countries are reluctant to invoke compulsory licenses for fear of retaliation by the US Government or other governments where patent-holders are based. The proposed general waiver of IP would overcome the fear of each country in invoking a compulsory license, and would solve other heavy bureaucratic obstacles in using compulsory licenses. A waiver would also be helpful for non-vaccine technologies (solvents and reagents, vaccine vials, test kits, and so forth). An IP waiver could be carefully designed and targeted. Patent-holders should still be compensated at a reasonable rate for the successful use of their IP. The waiver should be limited to COVID-19, and not extended automatically to other uses. And it should be temporary, say for five years. The pharmaceutical industry argues that an IP waiver would deprive the industry of its rightful profits, and of financial incentives for future drug development. Such claims are greatly exaggerated, and reflect greed over reason. The IP held by Moderna, BioNTech-Pfizer, and others is not mainly the result of those companies’ innovations, but rather of academic research funded by the US Government, especially the National Institutes of Health (NIH). The private companies are claiming the exclusive right to IP that was produced largely with public funding and academic science. Some of the key scientific breakthroughs of mRNA vaccines were achieved by two researchers working under NIH grants at the University of Pennsylvania in the 1990s and early 2000s, and their pioneering work relied on a

network of academic researchers funded by the NIH. The University of Pennsylvania still owns key patents that have been sub-licensed to BioNTech and Moderna. Since the emergence of COVID-19, the US government provided at least $955 million to Moderna to fund accelerated work, including the clinical trials, and also entered into an advanced market commitment with BioNTechPfizer. All in all, the recent US Government support for the rapid development of the COVID-19 vaccines has totaled more than $10 billion. The companies brought in private investors to build up manufacturing capacity and the late-stage research and development and clinical trials needed to bring the vaccines to fruition. This is indeed an important role, and private investors put substantial sums at risk to carry it out. But they have done so with the US Government as an indispensable partner. The private investors will surely earn huge returns, so they should restrain their greed (or have it restrained for them) by recognizing the need to share the IP globally at this stage. Moderna is currently capitalized at some $73.4 billion, compared with the roughly $1.1 billion in equity raised by the company’s initial public offering in 2018. The benefits of mRNA and other IP should be made available globally without further delay, and the knowhow should be shared as rapidly and widely as possible. We have the capabilities to scale worldwide immunization, in order to save lives, prevent the emergence of new variants, and end the pandemic. IP must serve the global good, rather than humanity serving the interests of a few private companies.

MONDAY MAY 3, 2021

Feature

MONDAY MAY 3, 2021

Boss or a team player? Business for Breakfast (BforB) is internationally recognised for creating successful networking meetings, events and training for referral marketing. Our global offices are in Australia, Germany, Czech Republic, Spain, Slovakia, Ghana and headquartered in UK.

t BforB International, our groups collaborate successfully together as proactive teams. But which leadership qualities can generate the most success? Our members are generally chosen to participate based on tangible skills or the knowledge base they bring to the table. Everyone is given equal opportunity to contribute and deliver the success of the meeting. They are encouraged to be innovative, bring new ideas and potential to the group and look for new ways to spawn referral opportunities. The diversity of the business sectors, background size and location has become the strength and wealth of every local referral meeting. So, what do our leaders look like? What makes them successful?

In truth there isn’t just one profile that leads to overall success. One franchise partner was certainly interested in the opportunity. He had the idea that being ‘the boss’ for the group suited his expectations and the overall team goals. However, this approach has on a couple of occasions led to his stance being challenged and rejected by the wider team. But fast forward a few years on and he has successfully built a strong and sustainable BforB franchise. On another occasion a franchise applicant recognized quickly the opportunity to partner with other organizations and strategically position himself as a key facilitator; dedicated to supporting and developing a team and helping his members achieve significant success. In the years to come this partner went

on to win team awards, achieve incredible growth and deliver personal financial results. Everybody who comes to BforB International brings with them an individual approach and personality that we can help hone to achieve success. Over the years we have understood what made both personalities achieve their goals; access to a well – established system and our wealth of expertise in developing people, regardless of their motivations, background or sector experience. Authored by: BforB Networking Clubs

Ghana

We create an environment where you can build quality relationships within your group, backed up by an ongoing member support programme. BforB is committed to helping small to medium scale businesses expand. In our professional network, members meet regularly in business networks to develop relationships, support each other and to share and record referral business. We are here to help you get new business from quality business introductions and referrals made through our meetings. Contact us: | mel@bforb.com | LinkedIn: @bforbuk | www.bforb. co.uk Contact us for more information on the programmes offered by the University of Stellenbosch Business School (USB): Dr Marietjie van der Merwe USB Representative marie@globalnatives.com +230 606 2341 / +230 5 701 1362 Click on the link for more details on the programmes: https://www.usb.ac.za/academicprogrammes/

CalBank supports 2021 population and housing census

alBank PLC has donated GH¢10,000 to the Ghana Statistical Service (GSS) to support the printing of the Field Officer’s Manual (FOM) for the 2021 Population and Housing Census. The FOM will be the reference document to be used for training the Field Officers to be deployed for the census exercise. The 321-paged manual is the outcome of months-long collaborative efforts by key stakeholders, including management and staff of GSS, and faculty members from universities across the country. The contents of the manual are meant to equip Field Officers with all the needed information to ensure there is complete coverage and quality data during the census exercise. A delegation from GSS comprising Mr. Emmanuel

Mrs. Abena Osei-Akoto, Head of Recruitment and Training for the 2021 PHC accepting the cheque from Mr. Peter Hall, Events and Sponsorship Officer, CalBank. Looking on is Mr. Kofi Sabi, Head of Marketing, CalBank.

George Ossei, Head of the Census Secretariat, Mrs. Abena OseiAkoto, Head of Recruitment and Training; and Mr. Francis Nyarkoh-Larbi, Head of Publicity, Education and Advocacy, accepted the cheque on behalf of management. Ghana Statistical Service will be training 75,000 prospective Field

Officers from 31st May to 9th June in preparation for data collection which starts 13th June with the listing of structures. With the Census Night set on 27th June, the enumeration period will be from 28th June to 11th July. The implementation of the 2021 PHC is a massive and complex national activity that requires

mobilizing and leveraging resources from stakeholders and strategic partners for successful conduct of the census. In a brief statement, Mr. Kofi Sabi, Head of Marketing, CalBank said, the data from the Census will help the Bank as it serves as the basis for its operations.

MONDAY MAY 3, 2021

Will the Fourth Industrial Revolution lead to large-scale unemployment? • Process innovation does NOT lead to job losses as generally believed. In fact, the data shows it small positive effect size on job creation. • Unemployment is also the result of the failure to upskill people for new types of employment opportunities. Will the robots take over your job? Not likely. But you will need to acquire new skills to stay in demand in a digital world.

CONTINUED FROM PAGE 13 Both pessimists and optimists agree that short-term unemployment follows in the wake of technological innovation. However, the debate about the long-term impact of technological innovation on employment continues. Taking a closer look at technological innovation Technological innovations have an impact on society, the economy and unemployment. The innovation continuum ranges from radical to incremental. Radical technological innovation typically creates new industries and markets while incremental technological innovation improves what already exists and is usually labour-saving in nature. Radical or revolutionary technological innovation has a far more significant impact on economic activity, and therefore employment, than its incremental counterpart. We also need to distinguish between product innovation and process innovation. Process innovation improves the efficiency of the production process, or processes supporting the production process. Product innovation improves existing products or creates new products for the market. In general, process innovation is deemed a driver of unemployment because it can replace human workers in the course of optimisation practices. Product innovation, on the other hand, leads to employment growth owing to a growth in the market, at the firm level. Most studies on technological unemployment have used a microeconomic framework to determine its impact on firm level. The firm-level research and development expenditure, which serves as a proxy for technological innovation, can easily be related to a firm’s employment trends. However, a firmlevel analysis limits the ability to determine the net effect of radical technological innovation on, for example, another firm in another industry, since it affects multiple levels of the economy. Seeing the bigger picture Part of the reason why the impact of technological innovation on employment is still unclear is the fragmentation of the studies that have been undertaken. These studies cover different geographies, levels of

investigation (firm, industry, sector, or country) and time frames. Very few studies are performed on a macroeconomic level, partly because it is challenging to find a suitable proxy for technological innovation and to control for codeterministic macroeconomic factors. This is where a systematic literature review, as an academic research method, is well suited because it can integrate the results from a large number of empirical studies. This study used a longitudinal dataset – 213 data sets from 24 primary studies – to analyse the effect of technological innovation on employment. The analysis is thus done on a larger dataset gathered by multiple researchers, across various firms and industries, and in different sections of the K-wave. While the meta-analysis did not render significant results at a macro level, analyses at firm, process, and product levels delivered significant effect sizes with interesting results. What did the study find? Technological innovation creates employment at firm level. This study supports a positive correlation between technological innovation and employment, but only at firm level. It provides robust scientific evidence to counter some of the negative narratives about technological unemployment. The data required to explore the question on a macro level, and over a significantly longer period, is unfortunately still lacking. It was also found that product innovation has a generally higher positive impact on employment than process innovation. Both product and process technology innovation lead to increased employment at firm level. Despite process innovation having a small effect size, this counters the prevailing belief that

technological innovation destroys jobs. Interestingly, the negative impact of process innovation prevalent in the current discourse is not supported by the data. Arguments that this could be unique to the Fourth Industrial Revolution due to automation do not hold true. Previous large-scale technological innovations have also led to process automation, just using different technological innovations. At a firm level, product-based technological innovation enables not only additional employment capabilities but also strategic market benefits. Having the ability to keep up, or even outpace competitors, allows for better overall performance. It is imperative to manage the transition of the workforce. It is important to invest in the training and education of employees in order for the firm to leverage new product development without having to employ external people. It is recommended that policymakers in countries where unemployment is a concern should consider developing supportive initiatives that could help firms to expand or establish long-term product and process innovation abilities. This includes initiatives to facilitate the transition of the workforce – from an educational and skills development perspective – to coincide with shifts in technology. The combination of these two initiatives would require the collective effort of policymakers, major industry players, and academia. Overall, the key take-outs from this study are: • Technology does not destroy jobs; it shifts employment opportunities. • T e c h n o l o g i c a l development leads to various types of innovation during macroeconomic cycles.

• This article is based on the MBA research assignment of Bertus Buys, with Prof Martin Butler as his research supervisor. The title of the research assignment is The robot ate my job: A longitudinal literature review of the impact of technology on employment in the last 200 years. • Prof Butler lectures in Digital Enterprise Management and Technology Futures at USB. He is also head of Teaching and Learning at USB. PULL QUOTES There are justifiable concerns that technology will lead to widespread unemployment or, at the very least, a workforce not ready for the types of opportunities provided. The type of unemployment depends on where the economic system finds itself on the economic supercycle, also called the K-wave pattern or Kondratieff long wave. Both pessimists and optimists agree that short-term unemployment follows in the wake of technological innovation. However, the debate about the long-term impact of technological innovation on employment continues. Radical or revolutionary technological innovation has a far more significant impact on economic activity, and therefore employment, than its incremental counterpart. In general, process innovation is deemed a driver of unemployment because it can replace human workers in the course of optimisation practices. Product innovation, on the other hand, leads to employment growth owing to a growth in the market, at the firm level. Technological innovation creates employment at firm level. It is important to invest in the training and education of employees in order for the firm to leverage new product development without having to employ external people.

MONDAY MAY 3, 2021