Business24 Newspaper - July 29, 2020

EDITION B24 | 78

THEBUSINESS24ONLINE.NET

WEDNESDAY JULY 29, 2020

Shippers to bear the brunt of GPHA-MPS ‘trade-off’ Bond interest deferment proposal still being considered— BoG Gov. The Governor of the Bank of Ghana, Dr. Ernest Addison, has stated that the bank is still in talks with the Ministry of Finance regarding the deferment of interest payment of about GH¢1.2bn on some nonmarketable domestic government bonds.

BY NII ANNERQUAYE ABBEY

S

hippers, and by extension, consumers of imported goods will be at the receiving end of a “trade-off” between the state ports operator Ghana Ports and Harbours Authority (GPHA) and Meridian Port Services (MPS), the private operator of the Tema Port Terminal 3, the Business24 has picked up.

In order for the state ports operator to secure 20 percent of containerised vessel jobs—after initially ceding 100 percent of the business to MPS—the GPHA has to approve the request of the latter to adjust its tariffs to make up for any revenue loss.

The GPHA will need that percentage of the business to cushion its operations and to save thousands of workers from losing their source of livelihood.

MPS however argues that shedding that percentage of vessel jobs without the corresponding increase in tariffs could see it losing revenue, which it considers to be “unfair” and “unacceptable”.

Already, the Deed of Amendment (DoA) of the

MPS’s concessionaire agreement with GPHA gives MPS the exclusive right to increase tariffs as and when some technical or market factors put their US$1.5bn port investment in jeopardy.

However, in December last year, the GPHA failed to comply with the adjusted tariffs that were set by MPS as agreed in the DoA. An initial request to increase shore-handling tariffs by between 80-200 percent on some service fee items was beaten down to 40 percent by the Transport Ministry amid protests from the port community.

The new tariffs are therefore an attempt to recoup the lost revenue from that action and to make up for parting with some container loads to GPHA—but the bone of contention has been the decision of MPS to target its new charges at the marine side, which is the shipping lines.

Also, though the DOA states that both the landside and the marine side should be increased, it appears that the burden has been put on only marine side which has seen full tariff increase in December, something the shipping lines see to be discriminatory.

Doubling tax-to-GDP ratio in 3 years is ambitious—Abeku Gyan-Quansah MORE ON PG 2

BY PATRICK PAINTSIL

>>PAGE 3

The Finance Ministry’s bid to nearly double the amount of taxes collected over the next three years has been described as ambitious by Abeku Gyan-Quansah, a Tax Partner at PwC Ghana, the accounting and audit firm.

BY NII ANNERQUAYE ABBEY

>> PAGE 3

ECONOMIC INDICATORS *EXCHANGE RATE (INT. RATE)

USD$1 =GHC 5.6734*

*POLICY RATE

14.5%*

GHANA REFERENCE RATE

15.12%

OVERALL FISCAL DEFICIT

11.4 % OF GDP

PROJECTED GDP GROWTH RATE AVERAGE PETROL & DIESEL PRICE:

Reclamation of galamsey sites to begin in 2021

Gcb Rolls Out Instant Visa, MasterCard, Union Pay

First National Bank to host maiden real estate developers’ forum

>> PAGE 2

>> PAGE 27

>> PAGE 27

0.9% GHc 5.13*

INTERNATIONAL MARKET BRENT CRUDE $/BARREL NATURAL GAS $/MILLION BTUS GOLD $/TROY OUNCE CORN $/BUSHEL

43.22 1.79 1,842.40 329.50

COCOA $/METRIC TON

1,562.00

COFFEE $/POUND:

$109.65

COPPER USD/T OZ.

220.15

SILVER $/TROY OUNCE:

editor@thebsuiness24online.net

17.07

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NEWS/EDITORIAL

WEDNESDAY JULY 29 , 2020

EDITORIAL

Wrong time to increase port charges 1

Wash your hands 2

The Ghana Ports and Harbours Authority is seeking support from the Ghana Shippers Authority to approve new tariffs on the marine side of the shipping business.

It appears that is the surest means of getting the Meridian Port Services, the private concessionaire to part with 20 percent of the container job to the state ports operator.

Ill-timed as the move will be, the bone of contention hovers around the fact that the proposed tariffs will be applicable to only tge marine side of the shipping business, which means it

will be borne by shipping lines who do business with our ports.

The GPHA admits that its plea to the MPS board to get them to suspend the new tariffs till next year was not successful.

However, the shipping lines who have had to absorb these added costs say they are not in the best of positions to do so this time around.

Per their assertion, the cost of bearing these new tariffs will be passed on to the shipper and, by extension, consumers of imported goods.

Business24 sees this be to a tough action on the already burdened shipper and the Ghanaian economy as a whole.

Obviously, the coronavirus pandemic has impacted on every sphere of the shipping business and therefore the decision of MPS to single out one stakeholder to pay for their revenue shortfalls is unwelcome.

We urge extensive discussions among all the relevant regulatory bodies to help find an amicable solutions to the situation

Shippers to bear the brunt of GPHA-MPS ‘trade-off’ (…CONTINUED FROM COVER )

Cover your cough 3

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

The GPHA, in a letter to the Ghana Shippers’ Authority (GSA) to seek institutional support for the tariff increase, admitted that its rejection of the full implementation of MPS’s shore tariff in December 2019 made the latter suffer some revenue gaps.

“We tried to argue for any adjustment to be considered from 2021 but could not defend that stand, especially when we are negotiating to share 20 percent of the container volumes, which we know was not provided for in the DoA,” part of the letter to GSA read.

The proposed new tariffs to be borne by the shipping lines are US$10 per TEU for port dues, US$15 for stevedorage, US$5 for craneage and US$5 for an empty TEU and they are to be implemented effective September 1,2020.

This means that per the new charges, every shipping line will be surcharged an additional $20 on every 20-foot container

per TEU. According to the letter, the new charges “will compensate for the loss MPS is incurring on the shorehandling tariffs”.

In a virtual meeting with the state ports operator last month, the shipping lines rejected and protested the proposed new tariffs, demanding further justifications.

“When this increase comes, it is going to be passed on to the market; the shipping lines are definitely not going to absorb it,” an aggrieved shipping line representative told Business24.

Every business has suffered during this covid period and the shipping industry itself is struggling with companies posting huge loses, so this can obviously not be absorbed as they have done in the past,” the representative further indicated.

The other side of the argument, which the paper picked up, was the

basis on which the GPHA was also going to increase its charges because once the new tariffs are introduced

by MPS, it will automatically be applied at all the terminals.

Introduction of localised charges According to the source, the new tariffs were ill-timed considering the impact of the virus crisis on the shipping business. But should they take effect, he said, then it would be time for shipping lines to introduce destination handling charges (DTHC) or increase the liner charges.

“If the industry doesn’t bear with us, then we are going to have certain vessels stop calling at our port due to the high cost of doing business and that will create some sort of mafia monopoly in the system to further drive up cost to the shipper,” the source emphasised.

Reclamation of galamsey sites to begin in 2021

BY EUGENE DAVIS

Government intends to begin reclamation and restoration of illegal mining sites next year, when the Ghana Artisanal and Small-Scale Mining Formalisation Project (GASMFP) reaches full implementation, a Deputy Minister of Lands and Natural Resources, Benito Owusu-Bio, has said.

According to him, presently the Ministry and GASMFP are conducting baseline studies on land reclamation in selected mining communities in the country, notably Prestea-Huni-Valley in the Western region and Kyebi in the Eastern region.

“The findings and recommendations of the feasibility studies will guide how the respective sites can be reclaimed and restored, and also advise the Ministry on how to replicate appropriate reclamation and restoration at degraded lands in other areas throughout the country,” the Minister stated.

The GASMFP is a joint government of Ghana and World Bank project with the objective of creating enabling conditions for orderly, safe, sustainable and environmentally-sound development of artisanal and small-scale mining in the country.

The project is a collaboration with the Multi-Sectoral Mining Integrated Project (MMIP), which has a broader perspective of ensuring systematic and sustainable development of artisanal and smallscale mining in the country, spanning economic, social, environmental, and health benefits.

Appearing before Parliament on Tuesday to answer a question on reclamation of lands affected by illegal mining activities in the country, Mr. Owusu-Bio indicated that the purpose of the study was to ascertain the extent of land degradation and water pollution caused by illegal small-scale mining activities in Ghana, to form the

scientific basis for the approach to be adopted for reclamation.

“Lessons learnt from these sites would also inform the nature of reclamation to be undertaken at other locations as well,” he said.

Under the feasibility studies, both soil and water samples are being collected and taken to the laboratory for the appropriate analysis.

The investigations being carried out include soil characteristics analysis, water quality tests of polluted water bodies, and water sediment analysis.

The soil characteristics analysis will evaluate the potential impact of soil chemical properties on possible land uses and assess the concentration of heavy metals therein. Water quality tests will also inform the possible uses water at the respective locations can be put to and what remediation needs to be undertaken to make it suitable for intended uses.

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Bond interest deferment proposal still being considered—BoG Gov.

BY NII ANNERQUAYE ABBEY

The interest deferment proposal, which was announced by the Finance Minister on March 30, seeks to delay the payment of GH¢1.2bn in interest to holders of some non-tradeable bonds to 2022 and beyond – allowing government some fiscal space to mitigate the impact of the COVID-19 pandemic.

Though the Minister did not provide details of the bonds, generally these bonds include those that may have been issued to institutions that the government was indebted to – these holders can only retrieve the bonds when they fall due rather than trade them on the secondary market.

However, the interest deferment proposal was not captured in the 2020 Mid-Year Budget and Supplementary Estimates, leading to questions being raised about the outcome of the discussions with bond holders.

Speaking at the press briefing following the Monetary Policy Committee’s 95th meeting on Monday, Dr. Addison stated that deferring the interest payment on the selected bonds was an option until the central bank decided to make available some GH¢10bn to the government.

“This was one of the ways the Finance Minister wanted to deal with the financing difficulties that he was having. Remember this was announced before we purchased the COVID-19 bond. So now that we are buying the bond from them, I am not sure whether he needs to defer that interest payment. But we are still discussing with the Ministry of Finance,” he added.

Despite the Finance Minister revising the projected budget deficit for 2020 to 11.4 percent of GDP, it is expected that without a decisive solution to the pandemic, financing conditions are still going to remain difficult, which could explain why the government is still

keeping all options open.

Rate stay The Monetary Policy Committee, after a marathon of meetings, voted to maintain the policy rate at 14.5 percent for the second time running.

Dr. Addison explained that the decision was taken despite inflation moving beyond the medium-term target of not more than 10 percent.

“The Bank of Ghana’s latest forecast shows that inflation is currently above its upper limit, driven mostly by food prices.

Adjusting for the unusual noise in the food inflation, the indications are that underlying inflationary pressures are stable.

The bank projects a return of inflation to the medium-term target band by the second quarter of 2021, conditional on corrective fiscal measures being introduced in the near-term,” he noted.

The committee, the Governor

said, was of the view that given the extraordinary circumstances, the widened budget deficit and residual financing gap would require some monetary restraint to preserve the anchors of macroeconomic stability.

Dr. Addison noted that the huge financing gap brought about by the expanded deficit could exert pressure on public debt, with longterm implications for the economy.

He said while government’s stimulus package for various sectors of the economy, including micro, small and medium-sized enterprises, is in the right direction to boost economic activity, going forward, the 2021 budget should be focused on instituting measures to return to the fiscal consolidation path—with the view to building resilience and strengthening the pillars of the economy for a return to macroeconomic stability.

Doubling tax-to-GDP ratio in 3 years is ambitious— Abeku Gyan-Quansah

BY NII ANNERQUAYE ABBEY

Minister of Finance Ken OforiAtta, presenting the 2020 Mid-Year Budget Review and Supplementary Estimates last week, said as part of the COVID-19 Alleviation and Revitalisation of Enterprises Support (CARES) programme, government intends to drive up its tax revenue to 20 percent of GDP by 2023.

In 2019 Ghana’s tax revenue as a percentage of GDP stood at 12.2 percent – which was lower than the 17 percent average for subSaharan African countries.

Mr. Abeku-Quansah, in an interview with Business24, stated that historically, the country has not seen any major increase in the tax-to-GDP ratio – the reason why any astronomical rise will be a huge task.

“We projected our tax-to-GDP ratio based on the 2020 budget to be about 12.5 percent. Right now,

based on the revised budget, we are going to do barely 11 percent of GDP. From 11 percent to 20 percent, we are basically looking at doubling it. The question is, are we really ready for the doubling?” he said.

He noted that the country has not seen remarkable growth in its taxto-GDP ratio over the years due to a number of challenges which still remain unresolved.

One of the impediments Mr. Gyan-Quansah cited was the low tax compliance culture.

“For example, from 2016, the law required that even if you are an employee and all your income is from employment, you should file an income tax return at the end of the year. You can do a survey to find out how many are really aware; of those that are aware, how many are concerned and have indeed filed their income tax returns,” he asked.

The tax expert explained that some of the reasons accounting

for the stagnation in tax revenue could be that potential tax payers remain unconvinced about how their taxes are utilised.

He noted that there is also a general sense of low tax education among the public, and in some instances, there are bottlenecks when one decides to voluntarily make payments.

Mr. Gyan-Quansah suggested that for government to raise tax revenue to the levels its desires, it must actively deal with these impediments in a holistic manner.

Revenue measures The Finance Minister, in the 2020 Budget presented last year, made proposals to improve domestic revenue mobilisation, ensure efficiency in revenue collection, support individuals, and prevent revenue leakage.

Presenting the mid-year budget, the Finance Minister noted that the Ghana Revenue Authority has made progress regarding some of the measures.

The tax collection agency, Mr. Ofori-Atta said, has commenced the imposition of the withholding tax on sale of precious minerals by small-scale miners, which has been sitting in the statute books since 2016.

Also, a Tax Audit and Quality Assurance Department has been established to ensure quality audits and revenue assurance, in addition to an end-to-end Electronic Metering Management System (EMMS) and Monitoring Centre to validate and assure the quantity of petroleum products transported from the various depots and bunkering sites.

Another measure he mentioned is the recent deployment of a new customs administration system—the Integrated Customs Management System (ICUMS)— to ensure a more efficient management and collection of customs duties and taxes.

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FBN Bank scaling up agent banking FBN Bank Ghana, as part of its banking strategy to bring financial services closer to customers, has continued to leverage new and evolving technologies to facilitate access to everyday financial services.

The First Bank of Nigeria Limited subsidiary in Ghana is demonstrating passion and commitment to broadening the opportunities and access to financial services for the unbanked and underbanked segment of our society with access to convenient and affordable financial products and services. The Bank is now scaling up its agent-banking project to complement its digital banking channels to increase access for financial services to customers.

The Managing Director of FBN Bank Ghana, Victor Yaw Asante, said that its network of agents will present a convenient and comfortable alternative for customers that require simple and easy to use digital channels.

He noted that the bank’s agent banking project will go along with continuous innovation and a roll out of new and improved electronic ways of carrying out transactions within their communities. In a world of COVID – 19, these enhancements will promote physical distancing and the reduction of physical interactions of people, thereby guarding against the spread of the coronavirus.

Mr. Asante was concerned about the number of Ghanaians who do not have access to financial products and services, which hinders the financial inclusion process in the country.

According to World Bank’s Global Findex Database, Ghanaian adults with a registered financial account improved from 41% in 2014 to 58% in 2017. Also, in 2017, 54% of women had an account with a formal financial institution, compared to 58% for the general population and 62% of men, implying that there are still many Ghanaian adults who

do not have accounts due to lack of access and other reasons.

He believes FBN Bank’s agent banking will help increase access to financial services and improve the financial inclusion.

The FBN Bank Managing Director recounted that agent banking helps individuals as well as families and opens up communities for economic growth. He also noted that it provides them with the ability to manage their resources and save money enabling them make the right financial decisions in an

affordable, simple and secure way.

FBN Bank Agents are dotted in the Accra-Tema Metropolis to provide opportunities to individuals and businesses. This enables customers to access appropriate, affordable, and timely financial products and services like account opening, cash deposits, cash withdrawals and funds transfer, through the agents’ point of sale devices, the bank’s mobile app and the quick banking *894#.

Ashesi design lab launches future learning virtual hackathon 2 of 3 Ashesi Design Lab, the design thinking and innovation hub of the Ashesi University, has announced the start of Future Learning Virtual Hackathon 2 of 3, the second of three Hackathons to be organised by the Design Lab. The Future Learning Virtual Hackathon 2 of 3 is an opportunity for designers, students, edtech start-ups, schools, and education innovators to identify challenges within the educational environment with the advent of COVID-19 and its restrictions.

The participants would also design and create prototype solutions to enhance the student ‘campus life’ from the comfort of their homes. The opportunity also offers a new way for the participants to network and learn design-thinking skills.

Background & rationale Students leave home to take up a new life on campus with a variety of experiences that influence their personal growth and academic achievements. To that end, universities often endeavour to provide the optimal ‘campus life’ experience for students through a variety of services and programs.

The advent of the COVID-19 pandemic affected life in all

circles, especially that of students and academic institutions by leading to the temporary closure of academic institutions.

However, for several months now in Ghana and the world over, the educational system has been disrupted with the closure of school campuses due to the pandemic.

Most universities moved their classes online providing a varying level of engagement with their students in the online format.

For many students, being home is complicated. The life at home and that on campus are different.

At home, there is little privacy and many distractions and chores.

They (the students) miss their friends and the student schedule they manage themselves. With September drawing nearer, they dread the reopening of school

online, and not on campus. They wonder how they are going to be able to have a ‘campus life’ but from home.

Participation and registration are opened to all from different disciplines to form teams of 3 to a maximum of 5 people with at least one member being resident in Ghana. The Future Learning Hack 2 of 3 is a virtual hackathon.

All communication, presentations and ceremonies will be conducted online for the duration of the event.

As a competition, there are several benefits for the first 3 winning teams. These include networking opportunities, mentorship and advisory support, a cash prize, and prizes from sponsors.

The Future Learning Virtual Hackathon 2 of 3 is proudly

sponsored by Ashesi DSC, Feenix, Ameyaw Debrah, Ashesi Leo Club, Veggies and Grills Restaurant, Doughman foods, Business24 e-Newspaper, Ghana Web and Africa Digital Festival.

Registration and applications for the Future Learning Virtual Hackathon 2 of 3 will be open from Monday, 27 July 2020 to the 7th of August, 2020. To apply, visit https://bit.ly/dlabhack2 The Ashesi Design Lab is the design thinking and problemsolving hub of Ashesi University.

Future Learning Virtual Hackathon is a series of three hackathons organized by the Design Lab to tackle the ripple effects of COVID-19 on educational institutions and the learning experience in general.

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Should an SME stress over corporate governance?

BY DR. VERA FIADOR

T

he idea of corporate governance has become a very topical issue, both globally and locally. On the global front, scandals like WorldCom, Enron and others have shaken the way governance of corporates is viewed. In the case of Ghana, the Bank of Ghana (BoG), in 2019, revoked the licenses of a number of Microfinance Institutions (MFIs).

BoG, among many other issues, cited weak corporate governance or the lack of corporate governance as contributing to the failures. It is, however, standard knowledge that, for the average Ghanaian SME owner or manager, corporate governance is considered as a feature of big businesses or specialized sectors like the financial services – banks, insurance etc. To put it differently, the average SME owner considers corporate governance as being for only sophisticated businesses.

Nothing could be farther from the truth. But before one can get into any argument whatsoever, whether for or against the motion that the practice of corporate governance is essential for all businesses – be it big or small, family-owned etc., it is important to first understand the concept of corporate governance.

In the general literature, corporate governance is broadly defined as “the system of controls that helps corporations and other organizations effectively manage, administer and direct economic resources”. Going by this definition, it can immediately be deduced that the relevance of corporate governance touches on more than corporations, other forms of organizations are equally referred to, no segregations. A second point worth noting from this definition is that corporate governance focuses on systems of control that help to effectively manage and administer economic resources. Economic resources here refer to inputs that are used to create things or help to provide services. These economic resources can be human (labour) or non-human (land, machinery and equipment, financial resources, technology etc.,).

The implication of corporate governance within the space of economic resource utilization therefore presupposes that irrespective of the nature of operation etc., once an entity is set up with a mandate that utilizes economic resources (whether

human and/or non-human) to achieve its goals, corporate governance becomes an important ingredient in the quest for success.

Important to the quest for success because corporate governance allows the entity to be effective – that is, able to achieve the goals for which the entity was set up.

Does size of organization matter, one may ask? The implication of organization size in the area of corporate governance for an SME matters more with regards to how elaborate the system may be and not necessarily concerning whether or not there should be a system of corporate governance.

So whilst the corporate governance framework at play may vary for public versus private businesses, for-profits versus nonprofits or family-owned versus non-family businesses, the need for corporate governance remains unquestioned.

The relevance of corporate governance notwithstanding, many Ghanaian SMEs have relegated it to the background, usually with dire consequences unknown to them. On the other hand, however, an SME that implements a good corporate governance system usually enjoys better and cheaper access to capital because the control aspect of corporate governance gives an assurance to funders/ investors that funds will be

put to the best use. In essence, corporate governance engenders trust in investors or funders that their resources will be effectively managed and administered.

In fact, corporate governance mechanisms act as a credible signal about firms’ quality. SMEs with good governance systems also benefit in terms of healthier financial performance and growth because of the effective economic resource management that comes with good corporate governance.

The SME in turn begins to enjoy a better reputation, which also serves to attract a talented and great caliber workforce, ultimately benefitting via financial performance and growth and the cycle continues. In essence, having a good corporate governance setup sets into motion a series of benefits that keep on reinforcing one another and ultimately propelling the organization to greater heights such as going international and the possibility of intergenerational transfer of business to mimic the likes of Ford, General Electric , Suzuki, all of which started as small and or family-owned businesses. In particular, strong governance practices enhance the process of information, and therefore, well-governed companies tend to have less risky management, higher future potential and higher returns for clients.

So as a small business owner or manager, the next time you are tempted to relegate corporate governance to the background or picture it as a feature for only sophisticated businesses, take note that you may unintentionally be relegating effective management and administration, goal achievement, better and easy access to funding and great financial rewards to the background. You may also be giving up on the possibility of creating a multi-national or intergenerational business.

So before you throw SME governance out the door, you may want to stop, think and act now by having a review done on your SME governance framework so as to align it for business success.

DR. VERA FIADOR IS A SENIOR LECTURER IN THE DEPARTMENT OF FINANCE, UNIVERSITY OF GHANA. SHE CAN BE REACHED VIA: VSOLI@UG.EDU.GH

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Risk & Insurance

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COVID-19 is threatening the ability of insurtech to combat business interruption

BY JARED SHELLY

C

oronavirus crept through the world methodically.

First came warnings of international cases.

Soon social media feeds were filled with images of desolate Chinese cities and videos of Italians singing in unison from their balconies. In what seemed like a sudden flash, the virus was on American shores — closing down schools, shuttering restaurants and leaving far too many casualties. The economic damage was swift and heavy. The stock market crashed, unemployment claims skyrocketed, and industries like construction, retail and hospitality were decimated.

Everyone seemed to have the same question: Would insurance companies cover business interruption resulting from the pandemic? The short answer: no.

Business interruption is typically part of property insurance and doesn’t kick in unless there’s actual damage to property. Attorneys will undoubtedly get creative as they fight for coverage. One recently claimed that contaminated surfaces inside a New Orleans restaurant counted as property damage.

Perhaps courts will agree. Perhaps business interruption becomes part of a government stimulus package.

The answers remain to be seen.

What is immediately clear?

Business interruption (BI) coverage has quickly become top-of-mind for companies of all types.

“BI has always been the red-headed stepchild of insuring your business,” said Matthew Struck, partner and co-founder of Treadstone Risk Management.

“Everyone is always concerned about traditional risks. What happens if my building burns down?

What happens if someone sues me?

Only if you were a risk management purist were you thinking of Black Swan events” like coronavirus.

Insurtech has prepped for this very moment Traditionally, business interruption hasn’t been tough to underwrite or assess. If a business were shut down for the entire month of August due to a natural catastrophe, a simple analysis of financials could determine probable revenue loss during that time. But business isn’t that simple anymore. Supply chains have gotten complicated. Technology is quickly evolving. Industries are changing.

It’s made business interruption underwriting and claims adjusting much more difficult. Even before

the coronavirus crisis took hold, companies specializing in Insurtech — technological innovation meant to create savings and efficiencies in the insurance industry — have been making business interruption underwriting and claims adjusting easier and more accurate.

That’s due to the rise of Big Data and technology like artificial intelligence, machine learning, and natural language processing.

Insurtech companies have created models to predict business interruption losses; analyze mountains of data; and output metrics in easy-to-understand charts and digital dashboards.

“Companies are creating more sophisticated modeling techniques for specific losses in order to understand what a business interruption event might look like from a financial standpoint,” said Chris Cheatham, CEO of RiskGenius.

RiskGenuis uses artificial intelligence to quickly and accurately review insurance policies to streamline work for brokers and underwriters. In the business interruption space, RiskGenius can analyze which policies will cover it and what that coverage may look like. “It’s surprising, but a lot of carriers don’t have that kind of analysis done on their portfolios,” said Cheatham.

“We call it emerging risk analysis, where you can look at all the insurance policies in a portfolio, find out which ones fall into which buckets and then triage around those.”

Another company born out of Insurtech is Bold Penguin, a commercial insurance exchange that uses artificial intelligence and natural language processing to match small businesses with insurance companies. “Our process makes it 300% faster. It gets done without calling around and guesswork,” said Amber Wuollet, director of marketing at Bold Penguin. “We don’t pass along any risk that doesn’t meet an insurance company’s underwriting criteria.”

Wuollet said coronavirus fears “quadrupled” inquiries for business interruption coverage on Bold Penguin since February 9. “We have had many owners and risk managers calling in specifically mentioning business interruption coverage,” said Wuollet. With so many slight differences in language from policy to policy, Bold Penguin helps small businesses easily find the coverages or bundles of coverage that fit their businesses and unique needs.

Data-Driven Underwriting Corvus Insurance uses machine learning and AI to make cyber

As business interruption risks become increasingly complicated during COVID-19, will Insurtech be able to step up and find ways to cover losses?

coverage around business interruption more accurate. Corvus analyzes a company’s web hosting, ISP providers, email providers and software to learn about its cyber security posture. “There is tons of information about individuals online. That same idea applies to companies,” said Brian Alva, vice president of cyber underwriting at Corvus. “We’re able to look at all their public-facing infrastructure to see what security they have — then we map that to see which providers have above average or below average histories of client breaches.

We can scan the dark web to see if employee credentials are for sale.

These things can show evidence of a past breach or prevent a future breach.” An advantage of using tech like Corvus is not having to rely on error-prone questionnaires filled out by clients who unknowingly submit incorrect or out-of-date information. “We can get more upto-date information automatically without relying on clients to answer applications. That gives us a lot more insight into what we’re doing on the underwriting side,” Alva said. The cyber risks that Corvus and others are working to stop have broadened in recent years.

“From an underwriting standpoint, calculating a business interruption claim from the actual costs incurred is still difficult but we can look at things that make someone more or less likely to suffer a claim and tailor underwriting that way,” said Alva.

Future of BI and Insurtech With the economy suffering in the wake of the coronavirus, expect Insurtech innovation to suffer in the short-term. Startup funding is expected to dry up and companies could struggle to keep internal innovation teams afloat.

Still, business interruption is so top-of-mind that innovation from Insurtech is all but inevitable.

“Another wave is coming. Call it wave two of Insurtech,” said Cheatham. “That’s going to be great, because you’re going to see a lot of ideas that are more tangible and salient start to take hold.” What will “wave two” look like? Expect more specialization and modeling for specific business interruption events. Data will continue to be accessible and abundant helping to further refine what constitutes business interruption and the damages associated with it. And expect the data to be disseminated in ways that are easy to understand, like cellphone apps or interactive dashboards. “All these new data points available to people will be extremely helpful in modeling out scenarios for business interruption that we just never thought of before,” said Cheatham. “I think you’re going to see a lot of specialization around that.” With the coronavirus proving that business interruption coverage is hardly a given, many could look to insurtech to make sure the data and risks are disseminated accurately, so businesses are better prepared next time around. “As that demand grows, you’ll see new forms of companies — particularly Insurtech companies — coming to market to help meet those needs,” said Alva. “This pandemic has brought business interruption to the forefront. As an industry we’re going to view the demand there to see what solutions we can come up with.”

Jared Shelly is a journalist based in Philadelphia. He can be reached at riskletters@theinstitutes.org. Copyright; riskandinsurance.com

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Trade pact could boost africa’s income by $450 billion, study finds

T

he African Continental Free Trade Area (AfCFTA) represents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion, a new World Bank report has found. If implemented fully, the trade pact could boost regional income by 7% or US$450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035.

The report suggests that achieving these gains will be particularly important given the economic damage caused by the COVID-19 (coronavirus) pandemic, which is expected to cause up to $79 billion in output losses in Africa in 2020.

The pandemic has already caused major disruptions to trade across the continent, including in critical goods such as medical supplies and food.

Most of AfCFTA’s income gains are likely to come from measures that cut red tape and simplify customs procedures. Tariff liberalization accompanied by a reduction in non-tariff barriers—such as quotas and rules of origin—would boost income by 2.4 percent, or about $153 billion. The remainder—$292 billion—would come from tradefacilitation measures that reduce red tape, lower compliance costs for businesses engaged in trade,

and make it easier for African businesses to integrate into global supply chains.

Successful implementation of AfCFTA would help cushion the negative effects of COVID-19 on economic growth by supporting regional trade and value chains through the reduction of trade costs. In the longer term, AfCFTA would provide a path for integration and growth-enhancing reforms for African countries.

By replacing the patchwork of regional agreements, streamlining border procedures, and prioritizing trade reforms, AfCFTA could help African countries increase their resiliency in the face of future economic shocks.

“The African Continental Free Trade Area has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans,” said Albert Zeufack, the World Bank’s Chief Economist for Africa. “The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive. But successful implementation will be key, including careful monitoring of impacts on all workers –women and men, skilled and unskilled— across all countries and sectors, ensuring the agreement’s full

benefit.”

According to the report, the agreement would reshape markets and economies across the region, leading to the creation of new industries and the expansion of key sectors. Overall economic gains would vary, with the largest gains going to countries that currently have high trade costs. Côte d’Ivoire and Zimbabwe—where trade costs are among the region’s highest— would see the biggest gains, with each increasing income by 14 percent. AfCFTA would also significantly boost African trade, particularly intraregional trade in manufacturing. Intra-continental exports would increase by 81 percent while the increase to nonAfrican countries would be 19 percent.

Implementation of the agreement would also spur larger wage gains for women (an increase of 10.5 percent by 2035) than for men (9.9 percent). It would also boost wages for skilled and unskilled workers alike—10.3 percent for unskilled workers, and 9.8 percent for skilled workers.

This report is designed to help countries implement policies that can maximize the agreement’s potential gains while minimizing risks. Creating a continent-wide market will require a determined effort to reduce all trade costs.

This will require legislation to enable goods, capital, and information to flow freely and at easily across borders. Countries that do so will be able to attract foreign investment and increase competition that can increase productivity and innovation by domestic firms. Governments will also need to prepare their workforces to take advantage of new opportunities with new policies designed to reduce the costs of job-switching.

World Bank Group COVID-19 Response The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. We are supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs. We will be deploying up to $160 billion in financial support over 15 months to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery.

This includes $50 billion of new IDA resources through grants and highly concessional loans.

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Mining

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AngloGold Ashanti announces increases in earnings Anglogold Ashanti has posted healthy earnings from gold sales and other production activities, with the company indicating to shareholders that they have reasonable certainty that headline earnings for the period are expected to be between $392 million and $416 million, with headline earnings per share(“HEPS”) of between US 94 cents and US 99 cents.

Headline earnings and HEPS for the comparative period in 2019 were $120 million and US 29 cents, respectively.

The total basic earnings from continuing and discontinued operations (“basic earnings”) for the period are expected to be between $410 million and $432 million, resulting in total basic earnings per share from continuing and discontinued operations (“EPS”) of between US97 cents and US102 cents.

The basic earnings and EPS for the comparative period were $114 million and US 27 cents, respectively.

The expected overall increases in headline earnings and basic earnings for the Period compared to the comparative period were primarily due to the following reasons; the gold price received increased by more than 25%; weaker local currencies mitigated increases in cost of sales; higher foreign exchange gains of $19 million; income from joint ventures, mainly Kibali, increased by $41 million (post-tax) or US 10 cents per share; and care & maintenance costs of $21 million (post-tax) or US 5 cents per share incurred at Obuasi in the prior year were not repeated in the current period.

The increases in earnings were partly offset by higher taxes, withholding taxes and royalties paid in most jurisdictions and deferred taxes raised in Brazil on foreign exchange movements relating to non-monetary assets; negative movements on realised and unrealised oil and gold derivatives of $18 million (posttax) of US 4 cents per share.

Shares in Gold Fields up by 111% Goldfields shares have recorded the highest price hit from this week, with the year-to-date, Limited shares moving to 111.06%, while the 5-day performance has seen it change 17.95%, the company has announced.

Over the past 30 days, the shares of Gold Fields Limited have changed 56.17%. Short interest in the company has seen 7.14 Million shares shorted with days to cover at 0.9.

Wall Street analysts have a consensus price target for the stock at $10.65, which means that the shares’ value could jump -23.1% from current levels. The projected low price target is $5.49 while the price target rests at a high of $15.5.

In that case, then, we find that the current price level is +11.91% off the targeted high while a plunge would see the stock lose -60.36% from current levels.

If we evaluate the company’s growth over the last 5-year and for the next 5-year period, we find that annual earnings growth was +49.7% over the past 5 years. Earnings growth for 2020 is a modest +146.1% .

Gold Fields Limited is expected to release its next earnings report in July, and investors are excited at the prospect of better dividends despite the company’s debt issue.

The forward dividend is 0.1 at a share yield of 0.81%. The company’s dividend yield has gone up over the past 12 months, with a 5 Year Average Dividend Yield of 1.32%.

Insiders own 0% of the company shares, while shares held by institutions stand at 52.37% with a share float percentage of 52.37%.

Investors are also buoyed by the number of investors in a company, with Gold Fields Limited having a total of 274 institutions that hold shares in the company. The top two institutional holders are Van Eck Associates Corporation with over 85.77 Million shares worth more than $407.38 Million. As of March 30, 2020, Van Eck Associates Corporation held 9.71% of shares outstanding.

The other major institutional holder is Dimensional Fund Advisors LP, with the holding of over 35.84 Million shares as of March 30, 2020.

The firm’s total holdings are worth over $170.26 Million and represent 4.06% of shares outstanding.

Also the top two Mutual Funds that are holding company’s shares are VanEck Vectors ETF Tr-Gold Miners ETF and VanEck Vectors ETF Tr-Junior Gold Miners ETF. As of May 30, 2020, the former fund manager holds about 5.11% shares in the company for having 45164345 shares of worth $348.67 Million while later fund manager owns 30.35 Million shares of worth $234.33 Million as of May 30, 2020, which makes it owner of about 3.44% of company’s outstanding stock. (Source: goldfields)

Another reason for the increase is the discounting of the Argentine export duties receivable resulted in a decrease in earnings of $11 million (post-tax) or US 3 cents per share; and a Brazilian power utility legal settlement received in April 2019 of $11 million (post-tax) or US 3cents per share not repeated in the current period.

In addition to the above, earnings

were favourably impacted in the current Period by $17 million (posttax) relating to the noncash impairment reversal on the South African producing assets and related liabilities classified as held for sale as a result of the agreement to sell these assets to Harmony Gold. (Source:anglogold ashanti )

Golden Star sells BogosoPrestea to Future Gold Golden Star Resources has announced it will sell its 90% stake in the Bogoso-Prestea gold mine in southwestern Ghana to Future Global Resources for $55 million and contingent payments of up to another $40 million.

The mine is about 40 km from Golden Star’s Wassa gold mine and the sale will allow the company to accelerate the growth and development of Wassa’s resource base and increase exploration on its wider Wassa-HBB project area.

Under the deal, Future Global Resource will pay $5 million in cash and assume about $25 million of negative working capital. It must also pay Golden Star an additional $10 million in cash on July 31, 2021 and another $15 million in cash on July 31, 2023.

The contingent payments of up to $40 million are based on the development of the Bogoso refractory project, which Golden Star suspended in 2016, and spot gold prices. Bogoso currently has measured and indicated resources of 1.76 million ounces of gold contained within 19.8 million tonnes grading 2.76 grams gold per tonne.

Raj Ray of BMO Capital Markets described the transaction as “a significant catalyst” because “it removes the continuing cash bleed in the Prestea underground operation and allows management to focus on the expansion of the potentially

top-tier Wassa asset.”

Prestea became an undergroundfocused operation in the second half of 2018, and its open-pit operations are now drawing to a close.

The Boboso open-pit operation could be restarted after its refractory processing plant is refurbished.

Golden Star expects to produce 195,000 to 210,000 ounces of gold this year at a cash operating cost of between US$790 and US$850 per ounce.

The Bogoso-Prestea gold mine is Future Global Resources’ first production asset. The company was set up by shareholders this year to build a “globally diversified mining company” with an initial focus on Africa. Its largest shareholder is Blue International Holdings, a U.K.based private investment holding company.

Blue International’s largest investor is Joule Africa Ltd., a developer, owner and operator of sustainable power projects in subSaharan Africa.

News of the sales agreement sent Golden Star’s shares up 15¢ in midday trading. Over the last year the company’s shares have traded in a range of C$2.56 and C$5.81. The company has about 110 million common shares outstanding for a market cap of about C$540 million.

(Source: mining.com)

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UK cannot question HK security law

BY HUO ZHENGXIN

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he Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region was passed unanimously at the 20th session of the Standing Committee of the 13th National People’s Congress, China’s top legislature, on June 30. This prompted some Western countries to allege the promulgation of the national security law in the SAR “lies in direct conflict with its international obligations under the principles of the legallybinding, UN-registered SinoBritish Joint Declaration”.

But the allegation doesn’t hold water on five counts. The issue should be analyzed in terms of the Vienna Convention on the Law of Treaties, which was concluded in 1969 and came into force in 1980, and the United Kingdom and China both are state parties to it. The VCLT is reflective of customary international law, which governs the treaty relations between and among non-state parties. This is important because China did not accede to the VCLT until Sept 3, 1997. In other words, China was not a state party to the VCLT when the Sino-British Joint Declaration was concluded in 1984.

Joint Declaration should be interpreted in good faith According to Article 2 of the VCLT, “treaty means an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation”. As such, the Sino-British Joint Declaration meets the definition of “treaty”, its formal title notwithstanding.

First, the Sino-British Joint Declaration was concluded between China and the UK, both sovereign states, and the text of the instrument itself indicates it is an agreement between China and the UK. The Joint Declaration consists of eight paragraphs and three annexes, with each part having the same status. In particular, Paragraph 8 avers that “this Joint Declaration and its Annexes shall be equally binding”. Also, the Joint Declaration is “governed by international law”, as it stipulates the sovereign and administrative arrangement of Hong Kong during the transitional period. Hence, it is safe to conclude that the Sino-British Joint Declaration is a bilateral treaty between China

and the UK. The Chinese government has acknowledged the legal status of the Joint Declaration as a legally binding treaty. And the instrument, including the SinoBritish Joint Declaration per se and three annexes, was registered as a treaty at the United Nations by the Chinese and British governments on June 12, 1985.

Since the Joint Declaration is a bilateral treaty, the rights and duties of the parties to it should be examined according to the provisions of the VCLT, especially those relating to treaty interpretation. Article 31 of the VCLT says a treaty must be interpreted in good faith and in the light of its object and purpose, and Article 26 enshrines the principle of pacta sunt servanda (agreements are binding and should be implemented in good faith).

The purpose of the Joint Declaration is reflected in its preamble: to reach a “proper negotiated settlement of the question of Hong Kong, which is left over from the past”. The UK acquired Hong Kong Island in 1842 and the Kowloon Peninsula in 1860, and leased the New Territories in 1898 for 99 years by unequal treaties with the Qing Dynasty (1644-1911) when China was weak. Therefore, the overarching purpose of the Joint Declaration is to ensure a smooth transfer of sovereignty of Hong Kong, Kowloon and the New Territories from the UK to

China in 1997, and correct the historical injustice; and this is vital to understanding the rights and duties of the parties to the treaty.

Key provisions of treaty need indepth study Paragraph 1 of the Joint Declaration is a unilateral statement of the Chinese government, which says China would resume the exercise of its sovereignty over the Hong Kong area (including Hong Kong Island, Kowloon and the New Territories, hereinafter referred to as Hong Kong) from July 1, 1997, which incorporates the principal right of the Chinese government under the instrument. And Paragraph 2 is a unilateral statement of the British Government, which says the UK would hand over Hong Kong to China on July 1, 1997, which, correspondingly, reflects the principal duty of the British government hereunder. The two paragraphs are complementary, and together constitute the key provisions of the instrument.

Paragraph 3 is a unilateral statement of the Chinese government, which sets forth the basic policies of China regarding Hong Kong in 12 subparagraphs.

The policies set out in this paragraph are elaborated in Annex I. Paragraphs 4 to 6 and Annexes II and III stipulate arrangements during the transitional period.

And Paragraphs 7 and 8 are about the Joint Declaration’s implementation and entry into force.

However, Paragraph 3 is unique in

terms of its content and nature. It is different from Paragraphs 1 and 2 because it is “self-governing” and its performance is not dependent on any other paragraph. To be more specific, though Paragraphs 1, 2 and 3 are unilateral statements of one party, Paragraphs 1 and 2 are dependent on each other, as they each cannot be fulfilled without the simultaneous performance of the other. But Paragraph 3 is distinct, as the Chinese government can fulfill it unilaterally and independently without the British government playing any role at all.

Also, Paragraph 3 is different from Paragraphs 4 to 8, since the latter reflect the common agreements of both parties, rather than being unilateral statements by one party alone. So the following conclusions can be drawn: • After the smooth transfer of sovereignty of Hong Kong, Kowloon and the New Territories from the UK to China on July 1, 1997, Paragraphs 1 and 2 had been fulfilled; • After the NPC promulgated the Basic Law of the SAR, which incorporates the basic policies of China regarding Hong Kong, China had fulfilled its duties under Paragraph 3 and Annex I; • By maintaining the economic prosperity and social stability of Hong Kong during the CONTINUED ON PAGE 25

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transitional period, both parties fulfilled their duties under Paragraph 4; • After the Sino-British Joint Liaison Group, set up to ensure smooth transition post-handover, was disbanded in 2000, both parties had completed their duties in line with Paragraph 5 and Annex II; • After the Land Commission, established immediately after the Joint Declaration came into force, was dissolved on June 30, 1997, the conditions of Paragraph 6 and Annex III had been fulfilled; • And after the Sino-British Joint Declaration was signed by the Chinese premier and British prime minister on behalf of their respective governments, came into force with the exchange of instruments of ratification on May 27, 1985, and registered by the Chinese and British governments at the UN on June 12, 1985, the two sides had fulfilled their duties pertaining to Paragraphs 7 and 8.

• UK, other states not entitled to supervise HK affairs Since the Joint Declaration is a bilateral treaty between China and the UK, after all its requirements were fulfilled, the UK has no sovereignty, jurisdiction or “right of supervision” over Hong Kong.

This is not to deny the UK’s entitlement to require China to respect the Joint Declaration. As the parties to the instrument, both China and Britain have the right to ask each other to honor it.

But Britain’s right to ask China to respect the Joint Declaration is not absolute; instead, it is subject to the limitation of international law.

To begin with, when requiring China to respect the Joint Declaration, the UK should also abide by pacta sunt servanda. In other words, the UK should exercise such right based on good faith, not on arbitrary interpretation of the Joint Declaration. So the UK’s allegation that China’s decision to promulgate the national security law in the SAR conflicts with China’s international obligations under the Joint Declaration is baseless.

In fact, given that the “one country, two systems” principle is enshrined in the Basic Law of the SAR and the Chinese central government has reiterated that it respects the principle, and it will not be changed or undermined by the national security legislation, anybody with just basic knowledge of international law would conclude that the allegations are

not based on facts.

Also, the UK should not violate the principle of non-interference in another country’s internal affairs when it requires China to respect the Joint Declaration. The principle of non-interference in another country’s internal affairs is part of international law, and enshrined in the UN Charter (Article 2.4). The International Court of Justice was unambiguous when it ruled on the Nicaragua case that” (T) he principle of non-intervention involves the right of every sovereign State to conduct its affairs without outside interference; though examples of trespass against this principle are not infrequent, the Court considers that it is part and parcel of customary international law... (and) international law requires political integrity... to be respected”. (ICJ Reports 1986, p.106, para. 202) One state cannot interfere in another state’s internal affairs It went on to say that “the principle forbids all States or groups of States to intervene directly or indirectly in the internal or external affairs of other States” and that “a prohibited intervention must accordingly be one bearing on matters in which each State is permitted, by the principle of State sovereignty, to decide freely. One of these is the choice of a political, economic, social and cultural system, and the formulation of foreign policy.”

Therefore, under no circumstances should the UK impose its unilateral interpretation of the Sino-British Joint Declaration on China, and vice versa. On issues that fall within the domestic affairs of China, the UK has no right to interfere, directly or indirectly.

And since national security in essence is part of a sovereign country’s domestic affairs, the UK has no right to meddle in China’s decision to promulgate the national security law in Hong Kong.

Apart from the UK, some other Western countries, the United States in particular, have also been interfering in Hong Kong affairs. In 1992, the US passed the Hong Kong Policy Act, which was amended by the so-called Hong Kong Human Rights and Democracy Act of 2019. Under the framework of these acts, the US State Department is required to submit an annual report on recent developments in Hong Kong to the Congress, allegedly to “support the high degree of autonomy and fundamental rights and freedoms of the people of Hong Kong, as enumerated by the Joint Declaration”.

The situation in Hong Kong has also been an important part of the annual reports of the US Congressional Executive Commission on China and the

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US-China Economic and Security Review Commission. The maxim pacta tertiis nec nocent nec prosunt (a treaty binds the parties and only the parties, it does not create obligations for a third state) is the fundamental principle of a treaty. Yet the US has been monitoring the implementation of the Joint Declaration despite not being a party to the treaty and therefore having no right to supervise the implementation of the Joint Declaration.

As the prohibition of intervention “is a corollary of every state’s right to sovereignty, territorial integrity and political independence”, according to L.F.L. Oppenheim who is considered the “father of international law” by many, the US is not allowed by international law to interfere in Hong Kong affairs.

Consequently, the US is not entitled to interfere in China’s decision to promulgate the national security law in Hong Kong on the grounds of the Joint Declaration or any other international treaties.

China’s Constitution is the legal basis for HK Basic Law Some Western countries argue that the Basic Law of the SAR is a product of the Joint Declaration.

However, such argument is baseless, because the Constitution of the People’s Republic of China is the legal basis for the Basic Law of the SAR. First of all, China’s Constitution makes it clear that it is the legal basis for the establishment of special administrative regions and the formulation of the Basic Law of the SAR. The current Constitution of China was enacted by the NPC in 1982, two years before the conclusion of the Sino-British Joint Declaration.

The preamble to the 1982 Constitution states “it is the fundamental law of the state and has supreme legal authority”.

Especially, Article 31 of the Constitution states: “ (T) he state may establish special administrative regions when necessary. The systems to be instituted in special administrative regions shall be prescribed by law enacted by the National People’s Congress in the light of specific conditions”. As such, China’s Constitution is the legal basis for the establishment of special administrative regions and the formulation of the Basic Law of the Hong Kong SAR as well as the Macao SAR. Second, the Joint Declaration itself proclaims that China’s Constitution is the legal basis for the Basic Law of Hong Kong. As mentioned before, Paragraph 3 of the Joint Declaration is a unilateral statement of the Chinese government which sets forth the basic policies of China regarding Hong Kong.

The central government has elaborated those basic policies in

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Annex I thus:” (T) he Constitution of the People’s Republic of China stipulates in Article 31 that ‘the state may establish special administrative regions when necessary. The systems to be instituted in special administrative regions shall be prescribed by laws enacted by the National People’s Congress in light of the specific conditions.’...

The National People’s Congress of the People’s Republic of China shall enact and promulgate a Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China in accordance with the Constitution of the People’s Republic of China …” This establishes without any doubt that China’s Constitution, not the Sino-British Joint Declaration, is the legal basis of the Basic Law of Hong Kong.

And third, the Basic Law of Hong Kong affirms that China’s Constitution is its legal basis, as the last paragraph of its preamble states: “ (I) n accordance with the Constitution of the People’s Republic of China, the National People’s Congress hereby enacts the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China, prescribing the systems to be practiced in the Hong Kong Special Administrative Region, in order to ensure the implementation of the basic policies of the People’s Republic of China regarding Hong Kong”. Therefore, the promulgation of the Basic Law of Hong Kong by the NPC reflects China’s performance of its duties under the Joint Declaration. But the Joint Declaration, an international treaty, is not, and cannot be, the legal basis or source of the Basic Law of Hong Kong. China’s Constitution, as the fundamental law of the State and having supreme legal authority, is the legal basis for the establishment of special administrative regions and the Basic Law of the Hong Kong.

Conclusion After systematically examining the Sino-British Joint Declaration in terms of international law, one can safely conclude that the Joint Declaration is not relevant to national security legislation in Hong Kong. As long as the law is enacted and promulgated pursuant to China’s Constitution and the Basic Law of Hong Kong, its legitimacy cannot be challenged. And foreign countries, including the UK and the US, have no right to question China’s decision to promulgate the national security law in Hong Kong on grounds of the Joint Declaration or any other international treaty.

THE AUTHOR IS A PROFESSOR OF LAW AT CHINA UNIVERSITY OF POLITICAL SCIENCE AND LAW.

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Feature

WEDNESDAY JULY 29, 2020

Corruption and COVID-19

BY VITOR GASPAR, MARTIN MÜHLEISEN, AND RHODA WEEKS-BROWN

C

orruption, the abuse of public office for private gain, is about more than wasted money: it erodes the social contract and corrodes the government’s ability to help grow the economy in a way that benefits all citizens. Corruption was a problem before the crisis, but the COVID-19 pandemic has heightened the importance of stronger governance for three reasons.

First, governments around the world are playing a bigger role in the economy to combat the pandemic and provide economic lifelines to people and firms. This expanded role is crucial but it also increases opportunities for corruption. To help ensure the money and measures are helping the people who need it most, governments need timely and transparent reporting, ex-post audits and accountability procedures, and close cooperation with civil society and the private sector.

Second, as public finances worsen, countries need to prevent tax evasion and the waste and loss of funds caused by corruption in public spending.

Third, crises test people’s trust in government and institutions, and ethical behavior becomes more salient when medical services are in such high demand.

Evidence of corruption could undermine a country’s ability to respond effectively to the crisis, deepening the economic impact, and threatening a loss of political and social cohesion.

During this crisis the IMF hasn’t taken its eye off the ball of our governance and anticorruption work. Our message to all governments has been

clear: spend whatever you need but keep the receipts, because we don’t want accountability to be lost in the process.

In our lending work, we have provided quick disbursements to meet urgent needs. At the same time, enhanced governance measures to track COVID-19 related spending have been part of the emergency financing for countries to fight the pandemic.

Borrowing countries have committed to (i) undertake and publish independent expost audits of crisis-related spending and (ii) publish crisis-related procurement contracts on the government’s website, including identifying the companies awarded the contract and their beneficial owners. The IMF also ensured that emergency resources are subject to the IMF’s Safeguards Assessment policy.

Long-term reform beyond the crisis Governance safeguards for emergency assistance related to COVID-19 are part of a more comprehensive effort by the IMF to improve its member countries good governance and efforts to tackle corruption.

The IMF has significantly increased its focus on governance and corruption over the last few years. We adopted in 2018 an enhanced framework designed to make our work with countries more candid, evenhanded, and effective. This laid the foundation for our COVID-19 policy and lending response, where stronger governance matters even more.

We recently assessed our progress in recent years and published the findings in a staff analysis. Here are the key highlights: • We speak more candidly and in-depth about governance issues with countries.

Text mining analysis shows that we increased coverage of governance

and corruption issues in our annual assessments of countries’ economic health and in our lending programs.

Governancerelated references more than doubled in staff reports in the 18 months after the IMF approved the framework, compared with 2017. In 2019, the IMF discussed governance with countries four times more than the average over the prior ten years.

Just recently—for instance— our surveillance work has focused on central bank governance and operations in Liberia, financial sector oversight in Moldova, and the anti-corruption framework in Mexico.

Fund staff are proposing more concrete governance and anti-corruption recommendations.

• IMF-supported lending programs include specific conditionality related to governance and anticorruption reforms, with governance improvements now being a core objective of many programs.

• We have stepped up technical assistance and training to help countries strengthen governance and anti-corruption efforts.

We aim to help countries improve governance in areas such as tax administration, expenditure oversight, fiscal transparency, financial sector oversight, anti-corruption institutions, and asset declarations for senior officials. This includes governance diagnostic missions to a dozen countries, comprising detailed analysis of governance weaknesses based on legal frameworks and proposing prioritized solutions.

• Moreover, so far, ten

advanced economies— Austria, Canada, the Czech Republic, France, Germany, Italy, Japan, Switzerland, the United Kingdom, and the United States— have participated in the voluntary assessment of their national frameworks to limit opportunities for transnational corruption.

The purpose of the assessments, conducted by the IMF, is to determine the degree to which a country does two things: (1) criminalizes and prosecutes bribery of foreign public officials and (2) prevents foreign officials from concealing corrupt proceeds in its own financial system or domestic economy. The IMF strongly encourages member countries to volunteer for such coverage in its annual economic health checks.

Curbing corruption requires government ownership of reforms, international cooperation, and a joint effort with civil society and the private sector. It also involves political will and the assiduous implementation of reforms over months and years.

This crisis will sharpen our focus on governance in the years ahead because of the pandemic’s devastating effects and costs for people and economies.

Countries can’t afford to lose precious resources at the best of times, and even less so during and after the pandemic. If ever there was a time for anticorruption reforms, it is now.

(Source: IMF.org)

“GOVERNMENTS ARE PLAYING A BIGGER ROLE IN THE ECONOMY AND THIS INCREASES OPPORTUNITIES FOR CORRUPTION.”

WEDNESDAY JULY 29, 2020

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GCB Rolls Out Instant Visa, MasterCard, Union Pay GCB Bank has begun the instant issuance of both proprietary cards and international cards across all its branches nationwide.

Now GCB customers can apply and receive VISA Cards, Mastercards and GCB ReadyCash cards across all GCB Branches instantly. The Bank will also begin the instant issuing of Union Pay International (UPI), formerly China Union Pay early next month.

This follows the successful migration of the Bank’s system and integration of ATMs last week.

The instant issuance of GCB cards is a major move under the Bank’s transformation and digitization programme.

The Managing Director of the Bank, Mr Anselm Ray Sowah, in a remark, said “investment is being made to transform the Bank into a worldclass one to delight customers.”

He said “the banking landscape is changing. A new wave of technology is revolutionising the way customers engage with their finances. From social to mobile capabilities, GCB

is having to redirect the way we do business to deliver a better customer experience and remain competitive.”

He said with networked branches of 185 across the country and digitization GCB is becoming the bank of choice.

Commenting on the successful rollout of the instant issue project, Head of Operations, Mr. Charles C. C. C. Crabbe, stated that this strategic move is aimed at providing convenience for customers to help drive digital banking especially in this Covid-19 era where digital banking has become even more critical.

These cards can be used on the over 300 GCB ATMs nationwide, other bank’s ATMs, Point of Sale (POS) devices at merchant points and for other international transactions.\ Customers of the Bank who requested Visa and MasterCards last Monday expressed delight at the instantaneous issuing of those cards.

First National Bank to host maiden real estate developers’ forum First National Bank Ghana is set to host its first ever Developers Forum in Ghana on Thursday 6th August 2020. It will be a gathering with real estate developers, construction experts and landowners to discuss the bank’s enhanced home loan portfolio, following its recent merger with GHL Bank.

The event is one of the positive experiences that have been carried into the merged entity from the erstwhile GHL Bank, which used to organize the Developers Forum biannually as part of efforts to grow its relationships with real estate developers while gathering ideas to help meet the nation’s increasing housing demands.

“Real Estate Developers are valuable stakeholders in our business,” says Kojo Addo-Kufuor, Executive Head of Home Loans at First National Bank.

“By staying in contact with them, we are able to work together to help address the country’s housing deficit which is estimated around 2million.

This Developers Forum offers us a fine opportunity to introduce the leadership of our enhanced Home Loans team, share the refined processes and discuss support areas to scale up the provision of homes to as many Ghanaians as possible.”

At the upcoming Developers Forum, the team from First National Bank will be sharing value propositions for retail and commercial banking, investments and forex trade as well as the home

loan offering and processes, all of which are relevant to developers and service providers within the ecosystem.

Delali Dzidzienyo, Head of Marketing and corporate affairs at First National Bank says: “Now more than ever, we need to find innovative ways of sharing trends to enhance and facilitate the supply of properties to meet the increasing demand.

The Covid-19 pandemic has been hard-hitting, but we need to highlight the potential opportunities for local developers to identify alternative practical solutions for the housing deficit in Ghana. This session will be a forum to discuss ways we can collaborate better, grow our businesses together and welcome our partners to the First National Bank family.”

The free-to-participate virtual

event will be accessible to only real estate developers, land retailers, contractors and home builders, manufacturers and retailers of building materials as well as suppliers of ancillary home supplies. Interested participants will need to register via any of the First National Bank social media pages for a confirmation of slot.

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MONDAY JULY 20, 2020 WEDNESDAY JULY 29 , 2020

Fossil fuel industry in survival mode: IES analysis

A

s things stand now, fossils are in survival mode, as the momentum on consumption seems waning. The coronavirus crisis accompanied by the global economic downturn appears to have accelerated things to the point where it is prohibitively expensive to consume fossil fuels.

Fossil fuels including oil, natural gas, and coal may continue to be in demand for decades to come because they are incredibly versatile and are absorbed into a massive range of products ranging from groceries to rocket fuel.

However, the momentum gained by renewable energy sources and clean energy technologies (RETs) in recent times is likely to displace fossil fuels. This bring to the fore the theory of “Peak oil”, a conversation that has taken place for decades.

In the traditional sense, peak oil would have been described as the theorized point in time when the maximum rate of extraction of petroleum is reached, after which it enters into terminal decline; on the basis that crude oil is nonreplenishing energy resource.

However, peak oil can be posited within the context of demand.

On the demand side, peak oil may be brought on when it can be established that the cost of extracting the resource go beyond the price consumers are prepared to pay. Second, when alternative sources become cheaper and more available, as we are seeing in upsurge in renewable energy sources like solar and wind.

Third, when the demand for the resource falls for varied reasons,

including the present coronavirus pandemic.

The current global pandemic and the rise in renewable energy investment seem to be pushing peak oil forward. The tables are of course turning in favour of renewables with the push for greener resources to dominate the future energy architecture.

Recent energy sector data seem to present a new twist to the longstanding battle between fossil fuels and renewable fuels, in terms of consumption, costs, and investments.

Since the beginning of the year, consumption of oil have seen a drop while there is an upsurge in the consumption of renewables. The Energy Information Administration (EIA) indicates that Americans achieved a key milestone in 2019 in its energy consumption, with recent forecasts pointing to renewables eclipsing coal as an electricity source in 2020.

There is also clarity in terms of the economics. New reports are indicating that wind and solar were by far the cheapest source of new power generation.

For instance, a report from the International Renewable Energy Agency (IRENA) indicate that more than 50 percent of the renewable capacity added in 2019 achieved lower electricity costs than new coal. Storage batteries and other flexible sources of power generation like hydrogen needed to manage the intermittent nature of renewables are increasingly becoming cheaper too. By virtue of their lower rates, the global generation mix is expected to be

dominated by wind and solar.

Also on a global scale, the International Energy Agency (IEA) could report that investors and capital are moving toward energy sectors that offer wider social benefits that create wellbeing and wealth in the true meaning of the word. The findings suggest that renewables share in the energy market over the past decade offered higher total returns relative to fossil fuels, with lower annualized volatility. It is therefore not strange that the Guardian found global offshore wind investment more than quadrupling in the first half of 2020 despite Covid-19 slump.

It reported that investors gave the greenlight to 28 new offshore windfarms worth a total of US$35 billion this year, four times more than in the first half of 2019 and well above the total for last year as a whole.

While Governments around the globe are initiating unprecedented economic support packages to create relief for the impact of the coronavirus, they are also pledging to align their emergency measures with Green energy recovery.

Unlike post 2008 global financial crisis, which a full green economy failed to emerge for lack of investment in the sector then, the current crisis, have already seen major investments in renewable energy. The support for a green economy is now massive because of renewables becoming cheaper, compared to fossil fuels thus presenting stronger case for economies to invest in a lowcarbon, green economy.

While the party goes on for renewables, the oil and gas

sector in particular is recording outstanding losses. The IEA expects investment in the upstream sector to drop from US$483 billion last year to US$347 billion in 2020; a drop of almost one-third as the industry adjusts to the sudden drop in demand.

Similarly, investment in coal production is anticipated to fall 25 percent this year. Also major oil companies including ExxonMobil, Aramco and Total have reported enormous cutbacks in upstream investment, averaging more than 25 percent compared to last year.

In such low oil price environment, investors can only expect low or no returns from a resource that is associated with high risk and high carbon emission.

According to experts, the pandemic is likely to have lasting effects on the oil industry and may push peak oil forward. In the estimation of Moody’s, oil demand may not return to 2019 levels until at least 2025, and possibly will never return to pre-Covid-19 levels.

The Institute for Energy Security (IES) is a not-for-profit organization which focus on the nexus between energy demand and energy supply. It sets the platform for research and publication, debates, discussions, conferences, consultancy, policy advocacy, training as a conduit to reinforce the global energy systems. The think-tank explore these and other related avenues to provide insight into the role of technology, policy, economics, politics, and regulations in the performance and security of energy supply.