Business24 Newspaper - Sept. 2, 2020 by Business24 Online

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NEWS FOR BUSINESS LEADERS

WEDNESDAY SEPTEMBER 2, 2020

200 passengers complete COVID-19 tests on day 1 By Dominick Andoh kofi.pra@gmail.com

About 200 passengers on three separate flights have successfully undergone COVID-19 tests at the Upper Arrival section of Kotoka International Airport (KIA). This comes just days after President Nana Addo Dankwa Akufo-Addo

announced the opening of Ghana’s air borders effective September 1. Senior officials of the Ministry of Health, Ministry of Aviation, and Ghana Health Service were at the airport to witness the facilitation process. Also present were board members of Ghana Airports Company Limited (GACL),

See Page 7

IMF calls for broad fiscal reforms post-COVID-19

US$150 COVID-19 test stokes more debate The travelling public and airline operators have expressed reservations about the cost of the country’s COVID-19 test on arrival at the Kotoka International Airport. Operators say the cost is one of the highest in the sub-region and on the continent. A COVID-19 test upon arrival in Republic of Togo costs US$70 and in Ivory Coast US$80. See Page 7

By Nii Annerquaye Abbey abbeykwei@gmail.com

he Resident Representative of the International Monetary Fund (IMF), Albert Touna Mama, has called on government to pursue a wide range of fiscal reforms to deal with the stress placed on the economy by the COVID-19 pandemic. In an exclusive interview with Business24, Mr. Touna Mama, in justifying the need for the reforms, said Ghana, like most countries, has seen a sharp accumulation of public debt in a bid to battle a crisis unprecedented in modern economic history. With Ghana on course to record its first double-digit fiscal deficit since 2014, the IMF country chief argued that government should, as much as possible, prioritise its spending in battling the impact of the virus. “The most vulnerable groups in the economy should come first, also because supporting

First Atlantic targets global market with vigorous digital drive See Page 5

Freighters petition gov’t over ICUMSrelated extra charges

See Page 2 See Page 5 INTERNATIONAL MARKET

ECONOMIC INDICATORS *EXCHANGE RATE (INT. RATE)

USD$1 =GHC 5.6734*

BRENT CRUDE $/BARREL

*POLICY RATE

14.5%*

NATURAL GAS $/MILLION BTUS

GHANA REFERENCE RATE

15.12%

GOLD $/TROY OUNCE

OVERALL FISCAL DEFICIT

11.4 % OF GDP

PROJECTED GDP GROWTH RATE AVERAGE PETROL & DIESEL PRICE:

0.9% GHc 5.13*

CORN $/BUSHEL

43.22 1.79 1,842.40 329.50

COCOA $/METRIC TON

1,562.00

COFFEE $/POUND:

$109.65

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NEWS/EDITORIAL

WED. SEPTEMBER 2 2020

EDITORIAL

Cost of COVID-19 test at airport needs a second look

Wash your hands 2

Cover your cough 3

he announcement by authorities that inbound passengers will have to pay US$150 for a COVID-19test, has generatedsomuch debate among the travelling public. Many argue that the cost is relatively expensive, if compared with the cost of PCR tests conducted in neighbouring countries. Indeed, after more than five months of air space closure, many people have no desire to travel for leisure. Many corporate organisations have also restricted staff travel and only allow very essential travels. Given this and the impact of COVID-19 on airlines, many travellers were keenly expecting the test to be as affordable as exist in other neighbouring country A COVID-19 test upon arrival in Republic of Togo costs US$70 and

in Ivory Coast US$80. Rwanda’s COVID-19 test costs US$60, which includes US$50 for the test and a medical service fee of US$10. Egypt has also just announced a US$30 cost for PCR analysis for arriving passengers. “The cost of the test will make travelling expensive, especially at a time when COVID-19 has eroded travel confidence and airlines are doing all they can to stimulate demand again,” one airline operator told Bsuiness24. Though the cost has been justified as being cost-reflective and cheaper than what passengers would have spent if a 14-day quarantine regime was in place, we believe that there should be a tiny window for closed door discussions on a

downward review of the cost. Airlines are re-starting their operations this week and any help they can get to hit pre- COVID levels will be very much appreciated. Business24 checks have revealed that most international airlines are resuming operations this week. TAP Portugal is restarting operations today; KLM, Air France, Emirates, MEA and Ethiopian are all restarting operations this week. Ethiopian will operate a service between Accra and Addis Ababa on September 3, and Emirates is expected to resume on September 6.

IMF calls for broad fiscal reforms post-COVID-19 Wear a mask Brought to you by

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CONTINUED FROM COVER

everybody could be very expensive and not without risks. In addition, and especially in the coming years, some level of burden sharing should be targeted, especially among the groups that have not suffered as much a loss of income during the crisis,” he said. The fund chief’s suggestion comes after government’s initial announcement of free electricity and water for Ghanaians for a three-month period in the wake of the virus – an initiative which has been extended for all consumers in the case of water and for lifeline consumers in the case of electricity. Mr. Touna Mama also believes that rationalising expenditure must go hand-in-hand with other reforms, especially in the postpandemic period. “We think that all these efforts should be supported by a strong impetus to advance fiscal reforms that have stalled in the past, particularly expanding the tax base and improving the efficiency

of public spending, including by means-testing wherever feasible. “Elements for this strategy include reviewing property taxes, streamlining tax exemptions, improving tax administration, digitalising the economy, etc. Some of these reforms [were] also highlighted by the mid-year budget review,” Mr. Touna Mama stated. Curtailing the deficit At the beginning of August, Parliament, in response to a request by Finance Minister Ken Ofori-Atta, suspended the fiscal rules contained in the Fiscal Responsibility Act, which stipulates that the fiscal deficit should not exceed 5 percent of GDP in any year. Per the projections of the Minister, the deficit should come within the stipulated five percent ceiling by 2024. But the Fund is urging government to be cautious with its projections as the pandemic remains largely unpredictable. “The Ministry of Finance has published the broad lines of a medium-term fiscal path. But considering the extreme

uncertainty, it may be too early to formulate any solid and reliable medium-term fiscal trajectory,” he said. “We should recognise that the situation remains fluid and the uncertainty surrounding the evolution of the crisis complicates any assessment of the mediumterm outlook and policymaking. For example, economists still don’t have a good understanding of whether the economic problems created by the COVID-19 pandemic will be self-reversing or mostly permanent. Looking ahead, the challenge will be to strike a balance between economic recovery and restoring healthy fiscal metrics. “ As the situation stabilises, the government will need to come up with well-articulated plans for a return to some sort of fiscal normality. The next big milestone for this, hopefully on the background of a more stable environment, will be the next budget in [the] first quarter of 2021 and to correct course if warranted,” Mr. Touna Mama added.

News

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GNPC says working to retrieve debts owed by gov’t, SOEs By Eugene Davis ugendavis@gmail.com

The Ghana National Petroleum Corporation (GNPC) says plans are underway to reconcile its books with respect to gas payments in order to retrieve outstanding debts owed the company by government and other state-owned enterprises. According to the AuditorGeneral’s report for 2017, government of Ghana and some state-owned enterprises owed the corporation GH₵778m as at 31st December, 2015. Currently, there is no evidence of a repayment plan. Debts owed GNPC include GH₵102m by government of Ghana, GH₵261m by the Ministry of Finance, GH₵198m by Tema Oil Refinery, and GH₵216m by the Ghana National Gas Company. Appearing before the Public Accounts Committee (PAC) hearing on Tuesday at Parliament House in Accra, the Deputy CEO of GNPC, Joseph Dadzie, indicated that the debts owed the company have affected its cash flow, which has hampered operational activities. He said the corporation has written to its debtors and is working

Joseph Dadzie is confident the outstanding debts can be retrieved to shore up GNPC’s cash flow.

with the Ministry of Finance to determine how the payments would be made. Mr. Dadzie also admitted in an interview with Business24 that the Ministry of Finance had made some payments to GNPC, but maintained that “there has to be a broader

reconciliation of the payments and also amounts that are owed by other parastatals to GNPC.” On whether there could be a possibility of writing off some of the debts, he explained that the corporation does not have the authority to write off debts.

Chairman of PAC James Klutse Avedzi urged GNPC to expedite action to retrieve monies owed it to ensure efficiency and profitability in its operations. A 2019 report by the Public Interest and Accountability Committee (PIAC), the oil revenue management watchdog, revealed that GNPC supplied US$334.6m worth of raw gas to the Ghana National Gas Company (GNGC), but no payment was received for the supplies. “This is largely on account of VRA’s [Volta River Authority] inability to pay GNGC for the lean gas supplied. Added to the outstanding balance of US$333.5m, this brings the total indebtedness in respect of lean gas supplies to US$668.1m,” the report said. The report added that despite the indebtedness, GNPC continues to provide guarantees for a range of state-owned enterprises (SOEs), amounting to US$645.5m in 2019. “This is about double compared with the previous years’ and also outweighs the corporation’s total equity financing expenditure of US$164.79m for the period,” it said.

PEF wants regulatory agencies to retain 60% of user fees By Eugene Davis ugendavis@gmail.com

The Private Enterprise Federation (PEF) wants regulatory agencies to be allowed to retain a significant portion of their user fee revenues to enable them serve businesses better. Most regulatory agencies share their user fee revenues, also known as internally-generated funds (IGFs), with the central government based on approved sharing formulae, which vary depending on the agency. Since 2017, the central government, through the passage of a law to regulate revenue earmarking, has sought to increase its share of user fee revenues in a bid to improve budgetary flexibility. According to the CEO of PEF, Nana Osei Bonsu, “PEF recommends that 60 percent of user fees paid by business applicants are retained by the respective agencies for their operations to [help] administer timely processing of applications.” Mr. Bonsu said this at the unveiling of the Ghana business

regulatory reform portal, which is an initiative of the Ministry of Trade and Industry to provide information to the private sector on businessrelated laws and regulations through a single, reliable source. The portal is also a forum where policymakers can consult businesses and individuals affected by regulations in an efficient, transparent and timely way. Its use will help Ministries, Departments and Agencies (MDAs), Metropolitan, Municipal and District Assemblies (MMDAs), as well as regulatory bodies gather information and evidence to assist in formulating policies and regulations. The PEF CEO advised that regulatory agencies should adopt an e-application feedback system linked to a bank payment system to reduce human interface in their work and to limit corruption. He also called for adequate consultations to be held with the private sector on structuring and revision of regulatory agency fees. The new portal is a component of the Ministry of Trade and Industry’s

Nana Osei Bonsu has been leading private sector engagement with government on business environment reforms.

Business Regulatory Reform (BRR) programme, among whose aims is to establish a permanent mechanism for structured publicprivate dialogue, which will involve regular policy consultations between government and the

private sector. The programme is establishing regulatory reform units (RRUs) in 12 selected MDAs, for now, as an institutional mechanism for conducting regulatory reforms.

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News

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First Atlantic targets global market with vigorous digital drive By Patrick Paintsil parryusher@gmail.com

First Atlantic Bank (FAB) has announced plans to leverage its investments in technology and digital banking to explore the global market as it marks two-anda-half decades of seamless banking operations in the country. “The board, management and staff of the bank renew our collective pledge to further strengthen the position of First Atlantic Bank within Ghana and beyond; we aim to transform into a global bank out of Ghana,” Board Chairman Amarquaye Armar said. “The plan is to become the premier digital banking institution in Ghana, meaning we are going to move aggressively on digital banking platforms such as mobile money, online banking and then go global from there,” he added. Mr. Armar was speaking to journalists at a tape-cutting ceremony to officially inaugurate new extensions to the bank’s head office building, including an executive office, corporate services office, operations centre, and a gym. The bank’s global quest, according to him, will be largely driven by offering seamless and tailored customer experiences to its clients through innovation and technology. “As a bank, customer service

is what differentiates us from our competitors, because we pay attention to the needs of clients and customers. Although we are a small bank, that’s our focus and

that’s why we are looking at digital banking, which is more inclusive and convenient.” He also indicated that the bank’s pan-African shareholding appeal

places it in a good position to play an active role in trade financing across the region, including the single continent-wide trade market. “The African Continental Free Trade Area (AfCFTA) makes it a lot easier to trade across borders, even though we already do a lot of trade transactions. With online and digital banking, you can go across borders and into West Africa. Beyond that, we also have pan-African institutional investors across the sub-region that provide a regional outlook for the bank.” Touching on the 25th anniversary of the bank, he thanked the board members, management and customers whose tireless efforts and loyalty have guided the enviable growth of the bank over its two and a half decades of operations. “We appreciate your collective contribution that has assured the growth and resilience of this dynamic bank. Our customers remain indispensable to the existence of this institution, and we dedicate ourselves to innovate delivery of exceptional services to meet your unique and everchanging banking needs.” As part of its celebrations, and as a corporate social responsibility gesture, First Atlantic Bank has already constructed and handed over a fully-fitted Mother and Child Care Unit at Talensi in the Upper East Region and a six-classroom unit with a two-office block at the Cape Coast School for the Deaf.

Freighters petition gov’t over ICUMS-related extra charges The Ghana Institute of Freight Forwarders (GIFF) has raised concerns that its members and the trading community are being charged extra fees due to avoidable delays in the clearance of goods at the ports, following the deployment of the Integrated Customs Management System (ICUMS). GIFF has, therefore, written to government, through the office of the Senior Minister, Mr. Yaw OsafoMaafo, asking for an intervention and suggested that the acceptable grace period for clearing imports should either be extended taking into consideration the ICUMSrelated delays, or importers and the trading community should be given some reliefs. They argue that government must waive some delays-related fees and charges at the ports. GIFF, in a letter signed by its National President, Mr. Edward Akron, and addressed to government, mentioned charges including: state warehouse rent charges, GPHA terminal rent charges, demurrage to the shipping lines, terminal rent charges, ground

handlers storage charges at the airport, truck demurrage at land frontiers and other charges. The letter addressed to Senior Minister, Yaw-Osafo Maafo noted that: “The above fees are chargeable only after one has breached an allowable grace period, our appeal is therefore on the fact that the new normal of ICUMS and the drag it has introduced that makes it the rule

now for clearance to go way beyond allowable grace periods.” The letter further noted: “To this end, we the members of the Ghana Institute of Freight Forwarders, having had extensive engagement with the importing and trading community have resolved to appeal first to your good self to cause to be suspended State Warehouse Rent Charges, cause to be suspended

Interest Charges, empanel a committee under the remits of the Ghana Shippers Authority to review downward all the other fees or review upwards the allowable grace periods taking into consideration all other interests.” The GIFF President, in his letter, appealed to the office of the Senior Minister to consider the concerns and suggestions raised as “extremely important and representative of the views of the solution seekers on the ground”. GIFF said it had suffered the sad situation in silence since ICUMS took over and that it made that unbearable sacrifice because it did not want to “raise the temperature unnecessarily to allow space for this new system to thrive” “We have in every turn after the deployment [of ICUMS], been faced with myriads of hiccups and challenges, nonetheless, we have made expertise available through formalized and informal arrangements and discussions; all in the effort at seeking solutions for the good of the industry and Mother Ghana”, the letter further noted.

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200 passengers complete COVID-19 tests on day 1 led by its chairperson, Ms. Oboshie Sai Cofie, and other management staff. The antigen test being conducted on arriving passengers at the Kotoka International Airport is integral to the government’s decision to reopen the country’s air borders for international flights. Though Ghana’s COVID-19 cases have remained within manageable limits, authorities are careful not to allow importation of more cases that may spark a second wave, as has been experienced in other parts of the world. Ghana’s case count currently stands at about 44,300, with over 43,000 recoveries and 1,421 active cases. By the country’s policy, all international arrivals, including those from the ECOWAS region, will be required to meet specific health protocols before admission into Ghana An arriving passenger must not have symptoms suggestive of COVID-19, with body temperature not exceeding 38 degrees Celsius. The passenger is also required to possess a negative PCR test result, done at most 72 hours before departure, from a certified lab in the country of departure. Upon arrival, passengers who were unable to pay online will join a queue to pay US$150 for the COVID-19 test at the payment centre at the Upper Arrival section of Terminal 3, and then proceed to the sampling cubicle for their samples

to be taken before descending to the main arrival hall. At the arrival hall, passengers will be screened at one of the Port Health stations and results of their

COVID-19 tests made known to them. Arriving passengers who test negative will then proceed to immigration and onto baggage

claim for their luggage and then exit the terminal. Positive cases will receive further clinical assessment and treatment.

US$150 COVID-19 test stokes more debate Rwanda’s COVID-19 test costs US$60, which includes US$50 for the test and a medical service fee of US$10. Egypt has also just announced a US$30 cost for PCR analysis for arriving passengers. “The cost of the test will make travelling expensive, especially at a time when COVID-19 has eroded travel confidence and airlines are doing all they can to stimulate demand again,” one airline operator told Bsuiness24. Aviation Minister Joseph Kofi Adda has however justified the cost, saying it is cost-reflective and cheaper than what passengers would have spent if a 14-day quarantine regime was in place. Dr. Kofi Bonney, lead virologist at the Noguchi Memorial Institute of Medical Research of the University of Ghana, however, called into question the need to conduct an antigen test on passengers who present a negative PCR test upon arrival. “Scientifically, with the PCR test,

within 72 hours, it’s enough. I don’t know why we have to do an antigen test, which is less sensitive, upon arrival. If we look at the tests that have been done over the years, we have a varying sensitivity percentage between 34 percent to around 80 percent,” he said in a

press interview. Airlines restart operations Business24 checks have revealed that most international airlines are resuming operations this week. TAP Portugal is restarting operations today; KLM, Air France,

Emirates, MEA and Ethiopian are all restarting operations this week. Ethiopian will operate a service between Accra and Addis Ababa on September 3, and Emirates is expected to resume on September 6.

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Ghana’s agribusiness industry to benefit from Macfrut’s Virtual Trade Fair Macfrut, the organiser of the world’s largest fruit and vegetable fair, has launched the Macfrut Digital fair scheduled to take place in Cesena, Italy between 8th to 10th September. The fair, which is the first and only digital trade fair for the fresh produce industry is being held in partnership with ICE, the Italian Trade Agency, and seeks to showcase fresh fruits and vegetable produce from across the globe. The fair has over 530 exhibition spaces, 40% of which will be hosted by foreign companies, and has so far registered 600 buyers from all over the world with over 4,000 visitors registered. A number of players in the fruit and vegetable sector within the agribusiness industry in Ghana will be taking part in Macfrut Digital thanks to the support provided by ICE and the United Nations Organization for Industrial Development (UNIDO). Benefits to accrue to participants include an opportunity to showcase their produce to the world and have direct connection to hundreds of buyers from around the world.

Renzo Piraccini, President of Macfrut, explains: ‘We have embarked on a new adventure and we can safely say that the fruit and vegetable sector has responded extremely well. We believe that we are pioneering a project that has huge potential, which was unimaginable until a few months ago. The fact that the health emergency is ongoing, resulting in a level of uncertainty at international level, demonstrates that we made the right decision, which has

changed the way we approach the sector.’ Exhibitors, including those from Ghana, will have a privileged channel where they will be able to “communicate” with the over 600 buyers that have already registered on the platform and organize B2B meetings. Macfrut Digital will offer two levels of interaction: one for visitors, who will be able to visit the virtual stands, communicate with each other, ask for information and make contact to schedule

business meetings, and the other for exhibitors, who will be able to schedule B2B meetings with buyers through a programmed agenda. Dr. Alessandro Gerbino, the Head of ITA for Ghana, Nigeria and Cote d’Ivoire, has implored vegetable and fruit producers to take advantage of Macfrut Digital to expand and grow their businesses. According to him “every misfortune presents an opportunity and we believe the decision of Macfrut to go virtual this year offers an excellent chance for the thousands of vegetable and fruit producers in Africa to take part to showcase their produce to the world.” The event can be accessed from any Internet device (PC or smartphone), while B2B meetings will be accessible online but only from PC, via a dedicated link provided by organizers of the event. Registration for the event is free. Interested participants can access the registration portal from this link: www.macfrut.com/en/c/135/ macfrut_registration .

Value of Dubai Chamber members’ exports to Africa up 20% in June 2020 of 48%, followed by North Africa Figure 1: Declared value of COOs for Africa-bound shipments (AED billion)

Dubai Chamber of Commerce and Industry recorded a 20% month-on-month (m-o-m) increase in the value of member companies’ exports to Africa in June 2020, which reached AED 2.94 billion ($800 million). The value of exports and reexports to Africa, tracked by Certificates of Origin (COOs) issued to Dubai Chamber member companies, signalled a rebound in trade activity with Africa to average levels seen during the JanuaryMarch 2020 period. A rebound in trade activity Of the AED 883 million ($240 million) worth of members’ exports and re-exports targeting Sub-Saharan Africa in June, AED 508.3 million ($138.3 million) went to East Africa, AED 249.5 million ($67.9 million) to West Africa, AED 92 million ($25 million) to Central Africa, and AED 33.3 million ($9 million) to Southern Africa. Despite the wide disparity in value among the sub-regions, West Africa, along with Central Africa, were the main drivers of the rebound seen in June. Member exports to North Africa accounted for two-thirds of the export value to Africa for June, or AED 2.05 billion ($558 million), followed by SubSaharan Africa AED 883 million ($240 million).

Source: Dubai Chamber Figure 2: Declared value of COOs for West Africa-bound shipments (AED million)

Source: Dubai Chamber

On a regional level, the value of members’ exports to Central Africa saw the biggest m-o-m increase

(25%), West Africa (12%) and SubSaharan Africa (8.6%). Best-performing markets Nigeria was identified as one of the best-performing markets in the Sub-Saharan Africa during recent months. Members’ exports to Nigeria in June amounted to AED 112 million. Plastics such as ethylene-alpha-olefin copolymers, polyethylene in primary forms, along with plates and sheets accounted for 23% of exports to this market. Machinery contributed another 15% of exports, and came mainly in the form of drills, hydraulic engines, and appliances. Angola, Dubai’s largest exports partner in the Central Africa subregion, accounted for AED 33 million worth of members’ exports in June. The nature of commodities exported to the country is broad, and includes foodstuff items, such as cereal flour, palm oil, and dairy products, which are in high demand within this market. Strong momentum observed in West and Central Africa sub-regions is likely to continue throughout the second half of 2020, as African cities continue easing movement restrictions and business activity continues returning to pre-Covid-19 levels.

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The Fed’s dangerous new strategy BY WILLEM H. BUITER

n August 27, the US Federal Reserve issued a press release summarizing updates to its longerrun goals and monetary-policy strategy, and Fed Chair Jerome Powell discussed the revisions at greater length in a speech later the same day. The two documents are a collection of type I and type II errors. If the Fed were to pursue the new strategy determinedly, it could inflict real economic damage on the United States and the world. Let’s begin with a minor error of omission. In his speech, Powell referred to the Fed’s congressionally mandated goals of maximum employment and price stability – omitting, as is the norm, its third congressionally mandated objective of moderate long-term interest rates. The obvious tool for managing long-term rates is yieldcurve control, but the policy-setting Federal Open Market Committee (FOMC) does not mention this instrument even in the context of pursuing maximum employment and stable prices. But the real trouble starts with the FOMC’s reinterpretation of “maximum employment.” The press release states that the committee’s policy decision will be informed by its “assessments of the shortfalls of employment from its maximum level.” The FOMC’s original strategy statement, adopted in 2012, referred to “deviations from its maximum level.” This new asymmetric interpretation is extremely worrying. It suggests either that maximum employment is achieved only when every working-age person has a full-time job plus any desired overtime, or that the Phillips curve – which posits an inverse relationship between inflation and unemployment – is dead when it is, at most, stunned. Now, it seems, the Fed will not tighten monetary policy even when the actual level of employment exceeds that at which inflationary pressures in the labor market manifest themselves – which is bound to be well below the FOMC’s maximum employment level. The Fed’s mandated targets should have clear normative content and be susceptible to policy. But, regarding price stability, the FOMC has switched to a flexible form of average inflation targeting – itself a non-transparent form of price-level targeting. According to the press release, the Fed now “seeks to achieve inflation that averages 2% over time.” Therefore, “following periods when inflation has been running persistently

below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time.” This means that past inflation will influence the Fed’s current and future monetary policy. But past inflation is a bygone issue and should be irrelevant for formulating policy – unlike current and expected inflation, which have normative content and can be influenced by policy. Of course, when inflation expectations are influenced by past inflation, then the past will influence current and future monetary policy. But there are, and always will be, other drivers of inflation expectations. Average inflation targeting is just bad economics. Instead, flexible inflation targeting is by far the best way to formulate the objectives and modus operandi of monetary policy. Under such a regime, a central bank raises (lowers) policy rates when anticipated future inflation is above (below) target and when employment is above (below) the best estimate of maximum employment. This is defined as the equilibrium level of employment when both actual and expected inflation are equal to the target rate of inflation – in other words, the natural level of employment. Then there are the Fed’s major errors of omission. For starters, the FOMC does not mention enhancing its monetary-policy

arsenal by removing the effective lower bound (ELB) on policy rates. Today’s persistent low-interest-rate environment supposedly implies that policy rates are more likely to be constrained by their ELB than in the past. But this is because policymakers in the US and around the world have been unwilling to remove it. Abolishing cash would be the easiest way to eliminate the ELB (and would have the further benefit of taxing criminal activity), but there are other ways to achieve the same goal. Such a step would enable the Fed not only to cut policy rates when it otherwise would have been thwarted by the ELB, but also to lower the inflation target to the level consistent with a zero “true” inflation rate – likely below 2%. The FOMC’s second major error of omission is the absence of any discussion of the Fed’s failure, since the outbreak of the COVID-19 pandemic, to enlarge and change the composition of its balance sheet to the fullest possible extent to support economic activity. As of the week of January 6, 2020, the Fed had consolidated assets of $4.15 trillion, or 19.3% of US GDP in 2019. By the week of August 17, its balance sheet had grown to $7.01 trillion, or 32.7% of 2019 GDP. But this growth – equivalent to 13.4% of last year’s GDP in just seven months – seems less impressive when compared to the evolution of the European Central Bank’s

balance sheet over the same period. Between January 3 and August 14, the consolidated Eurosystem’s total assets increased from nearly €4.7 trillion ($5.6 trillion), or 39.2% of the eurozone’s 2019 GDP, to €6.4 trillion, or 53.7% of 2019 GDP. The Eurosystem’s balance sheet thus grew faster than the Fed’s – by the equivalent of 14.5% of last year’s GDP – during the same period. The Fed should convince the US Treasury Department to provide more equity and to guarantee more of the Fed’s risky assets on what should be a significantly larger balance sheet. As the issuer of the only viable global reserve currency, the Fed has an unequaled ability to enlarge its balance sheet and increase its risk, even without additional Treasury support. But it simply has not done enough during the pandemic. The recent changes to the US monetary policy framework are illadvised and potentially harmful. They also fail to address a number of other crucial problems. The Fed should scrap this new approach, and instead make full and effective use of the policy instruments it has – or could have – at its disposal.

Willem H. Buiter, a former chief economist at Citigroup, is a visiting professor at Columbia University. Copyright: Project Syndicate, 2020. www.project-syndicate.org

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What next for great cities? BY HAROLD JAMES

In the era of COVID-19, megacities that lack competent management are bound to share the same fate as the great cities of the past. But competent management means addressing not just the virus but also deeper sources of malaise such as poverty and unaffordable housing.

as COVID-19 killed the megacity? The pandemic certainly is reshaping globalization, turning the hubs of the pre-2020 global economy into epicenters of contagion and leaving their future hanging in the balance. But the crisis also has simply highlighted megacities’ existing vulnerabilities and accelerated processes that were already underway. By the start of this century, cities like London, New York, and Hong Kong had become central nodes in the global flow of money, people, and ideas. They were not just financial centers but also cultural metropoles, hives of creativity that depended on the bankers’ wealth and patronage. Entrepreneurs and innovators flocked in, hoping to remake themselves and the world. But megacities also need a wide range of other workers with different skill sets. Hence, immigrants flocked to them, too, pursuing fortune or merely new opportunities for their children. Many dreamed of joining the creative elite. In due course, thriving global cities became melting pots. This inevitably created new tensions with the hinterland. People in suburbs or rural areas came to see urban life as unattainable or undesirable. The popular mobilization behind Brexit was driven partly by these constituencies’ resentment toward an increasingly multicultural, wealthy London, whose success, they suspected, was coming at their expense. Even upper-middle-class professionals complained that they could not afford life in London. Likewise, US President Donald Trump’s supporters in the south, southwest, and Midwest define themselves in contrast to places like San Francisco and New York City. “Make America Great Again” means toppling the coastal elites. And, of course, the clash of cultures between Hong Kong and mainland China since 1997 has been glaringly obvious, owing to the “one country, two systems” arrangement. In each case, exorbitant property prices in the megacities have poisoned the social well. High-

quality housing is attainable only for the global elite, leaving all other residents in overcrowded conditions or outside the city core. Workers with ephemeral or seasonal jobs often have no real housing to speak of, and a growing epidemic of homelessness began well before the pandemic. Many people must rely on inadequate and unreliable public transportation to commute long distances. University and high-school students lack proper accommodation. With COVID-19 came the fear of infection and a mass exodus of the wealthy. The local economies in upper-income neighborhoods collapsed. The pandemic brought a new kind of social polarization as service workers in health care, public transportation, and retail were forced to expose themselves to the risk of infection or sacrifice their earnings. By contrast, knowledge workers simply started telecommuting and ordering in, lacking nothing but opportunities for physical mingling. The new divide between remote and front-line workers highlighted the sharp class distinctions that many had long preferred to ignore. More recently, the virus has fueled a search for alternatives to the high-cost megacities of the pre-pandemic era. For knowledge workers, technology makes remote employment attractive and easy, eliminating unpleasant commutes and the expenses of city life. Why not work and live wherever one wants? Of course, revulsion to dangerous, overcrowded cities is nothing new. The most catastrophic pandemic on record, the bubonic

plague in mid-fourteenth century Eurasia, prompted a similar flight. To read Boccaccio’s accounts of self-indulgent young Florentine aristocrats fleeing for the hills of Fiesole is to link past and present. In the event, the plague triggered a long-term shift and intensified the class conflict in Florence, as ordinary workers turned against the urban elite. But the most striking historical parallel for the decline of megacities today is Venice. Well before the current crisis, Italian and European politicians frequently invoked the sinking lagoon city as an allegory for the absence of reform. As immortalized by Thomas Mann’s novella Death in Venice, the city has long represented a universal predicament. After reaching the height of its fortunes in the late sixteenth century, it suffered a long decline, owing to shifting trade routes, new competition from poorer but more dynamic cities, and proximity to disease. And yet, Venice could also be a model for the post-COVID megacity. As modern economic historians remind us, the city’s story is not just one of industrial and commercial collapse in the seventeenth century. Rather, production of the most iconic Venetian goods shifted to the hinterland – to smaller towns such as Treviso and Vicenza – leading the Venetian Republic to build a new political relationship with the surrounding territories. Today, pre-existing political conflicts have hampered the overall response to the pandemic. By their very nature, global cities were particularly vulnerable to the virus, and when it struck, their leaders and

national authorities began blaming one another. London Mayor Sadiq Khan has regularly attacked British Prime Minister Boris Johnson’s shambling lockdown strategy. New York City’s mayor is in a threeway struggle with the governor of New York and Trump, who himself has used US cities’ crisis to deflect attention from his own mismanagement. In Hong Kong’s case, the virus created cover for China to assert its authority over the territory with a sweeping new security law. A revival of real democracy is often thought to be the best solution to the problems associated with technocratic globalization. But if democracy is to have any appeal, democratic governments will have to be more effective in addressing not just the virus but also deeper sources of malaise such as poverty and unaffordable housing. Without competent management, megacities are bound to share the same fate as the great cities of the past. London and New York could sink in their own way. But, this time, there would be no renaissance in the hinterland.

Harold James is Professor of History and International Affairs at Princeton University and a senior fellow at the Center for International Governance Innovation. A specialist on German economic history and on globalization, he is a co-author of The Euro and The Battle of Ideas, and the author of The Creation and Destruction of Value: The Globalization Cycle, Krupp: A History of the Legendary German Firm, and Making the European Monetary Union.

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The COVID Middle-Income Trap BY MASOOD AHMED

COVID-19 has had a devastating impact on middle-income countries, especially in Latin America. By helping these countries to overcome the pandemic and its economic fallout, the international community will be acting in its own interests, too.

he coronavirus pandemic has had a devastating impact on middle-income countries (MICs). With the exception of the United States, the ten countries with the highest number of COVID-19 cases to date are all MICs. And the same is true for new daily cases and COVID-19 deaths per million population. The economic projections for MICs are equally dismal. Household incomes will fall across the board in 2020, including for most of the 100 million additional people globally who will fall into extreme poverty in a downside scenario. Latin America’s experience is illustrative: the region accounts for just 8.4% of the global population, but 30% of total COVID-19 fatalities to date. The International Monetary Fund estimates that GDP in Latin America and the Caribbean will contract by 9.4% this year, while the World Bank expects a ten-percentage-point increase in poverty in the region. These setbacks come at a time when waves of social unrest are spreading across MICs. With a few exceptions such as Peru or Ghana, the main drivers of discontent – especially in Latin America – have been lackluster growth, lack of upward mobility, and demands for greater political representation and participation. Even in betterperforming economies, like Chile, many feel that their expectations and aspirations have not been met, and that those at the top of the income distribution have captured most of the gains. To make matters worse, before the COVID-19 crisis, the end of the long commodity supercycle that had boosted MICs’ exports was threatening to reverse rising living standards. Young people feared they would end up where their parents had started a generation ago. When the pandemic erupted, MIC governments responded with lockdowns and economic stimulus. But the effectiveness of these measures has been limited by high urban population densities, sizeable informal economies that make human contact hard to avoid, and financial constraints that are much more binding than in the rich world. In Colombia, for example,

GDP will shrink this year by approximately 7%, the largest decline on record. The pandemicinduced loss of jobs and income has already increased the share of the population living below the poverty line from 27% at the end of 2019 to an estimated 38% in May, despite the government’s provision of emergency cash transfers. Moreover, inequality has widened, with the income of the poorest fifth of the population falling by more than 50%, compared to a 33% reduction for the top quintile. The story is similar in other Latin American countries, suggesting that the economic reversal feared by those protesting in the streets last December is already happening. Social unrest, which had been hibernating, will likely return with a vengeance. MIC governments cannot afford a “whatever it takes” response, and are instead doing whatever they can. But whatever they can do will not be enough, and the international community would be short-sighted to ignore their plight, for at least three reasons. First, MICs account for 75% of the world’s population, which means there can be no effective global health security infrastructure without their engagement and support. It is therefore essential that these countries have access to an effective COVID-19 vaccine as soon as it becomes available. But as things stand, it seems that a vaccine or vaccines will go first to the advanced economies that are investing in their development. Furthermore, the World Health Organization, which is leading the COVID-19 Vaccine Global Access (COVAX) initiative together

with the Coalition for Epidemic Preparedness Innovations and Gavi, the Vaccine Alliance, is – understandably – mainly focusing on the poorest countries. There is currently no guarantee that COVAX will be able to provide the vaccine volumes that MICs need. The “missing middle” is unable to invest heavily in laboratories and clinical trials, lacks adequate disease and mortality surveillance, and receives little global aid. MICs’ rates of vaccination against other infectious diseases – already lower than herd immunity requires – have plummeted during the crisis, which will lead to global outbreaks if not addressed. Second, global economic growth depends on the performance of emerging markets, which account for 60% of the world economy. The recovery from the 2008 global financial crisis was driven by China and, through their impact on commodity prices and trade volumes, by MICs. That is unlikely to happen this time, so MICs will need to rely on other sources of growth to emerge from the pandemic-driven recession. Unfortunately, MIC governments lack the resources to increase public investment and de-risk private investment, so access to international finance is indispensable. So far, MICs have had adequate access to global capital markets, but this could change without notice. Deteriorating fiscal and economic conditions have already triggered a cascade of credit-rating downgrades that could worsen. If markets close or become too expensive, MICs will need to rely on official lenders such as regional development banks.

But these institutions have limited capacity to lend to MICs, and will require capital replenishments. O t h e r financing proposals include an issuance of IMF Special Drawing Rights (the Fund’s reserve asset) or the establishment of a specialpurpose vehicle to channel the liquidity being generated by advanced economies’ central banks toward emerging markets. Concessional finance via regional institutions is also needed to meet vaccination shortfalls, finance public goods like global health security, and shore up safety nets for the poorest populations. Finally, the world is trying to move onto a greener growth path. The bulk of infrastructure investment over the next three decades will be in MICs, and the choices they make will determine whether the world achieves zero net greenhouse-gas emissions by 2050. A protracted crisis in MICs – where emissions are increasing faster than in the developed world – will at best delay such efforts, and could have more damaging consequences. By helping these countries to overcome the pandemic and its economic fallout, the international community will be acting in its own interests, too.

Masood Ahmed, a former senior official at the International Monetary Fund and the World Bank, is President of the Center for Global Development. Mauricio Cárdenas, a former finance minister of Colombia, is Senior Fellow at Columbia University’s Center on Global Energy Policy.

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CSOs Platform on SDGs release report on COVID-19 responses The Coalition of Civil Society Organisations (CSOs) Platform on Sustainable Development Goals (SDGs) has released its report on a research they undertook to gauge government’s response on the impact of COVID-19 and its support to citizens. The report dubbed, “Dissemination and Dialogue Session on the Impact of Government’s Response to COVID-19 on Citizens,” is to support communities, NGOs and other citizens to develop and implement initiatives at the local and national level especially supporting the vulnerable groups in order to assess their socio-economic status and how to keep them cushioned. It sought an outcome of increasing transparency, responsiveness and accountability of government and its relevant agencies to citizens around the development and implementation of COVID-9 response plans including the utilisation of resources from April to August, 2020. The report was funded by SEND Ghana Mr Kwadwo Owusu, National Coordinator for the CSOs Platform on SDGs, who led the virtual release

and discussions on the report on Wednesday said, some 123 respondents, 70 per cent of them males, participated in the study. He said an exploratory research approach was adopted to collect data to understand the impact of COVID-19, disclosing that notwithstanding the small sample size, their expected outcomes were attained. He said similar exercise undertaken by Statistical Service and the World Bank with about 4,000 respondents had returned same conclusions. Key report findings say patronage of health facilities for treatment for all other disease have since decreased, personal protective equipment (PPEs) supplied to health facilities were deemed not enough and inadequate. Others were majority of Ghanaians have benefited from subsidy from water and electricity, patronage of local business have decreased and agricultural sectors have not been directly provided for now. It recommended that government needed to provide subsidies on farm inputs such as fertilizers and seeds for the farming season as farmers businesses were

affected greatly by the pandemic. It identified that many more businesses were yet to apply for support from the Coronavirus Alleviation Programme despite the fact that they have been affected by the pandemic. It suggested a collaboration between the National Board for Small Scale Industries (NBSSI) and Metropolitan, Municipal and Districts (MMDAs) to decentralise application processes to the zonal or area council levels, so more small-scale business owners, who were tech savvy could apply and have access to loans. To promote transparency, it said NBSSI should inform applicants of the range of funds they could apply for and provide reasons for unsuccessful applications. In as much as the support was financial, the NBSSI could consider support in a form of equipment or inputs and provide coaching to businesses on internet marketing. It urged government to work assiduously on the social protection systems of the country, fast-track to complete the household registry, which would help to identify the poor for such interventions so that they could benefit the most.

On government’s subvention on utility, it showed that 75 per cent benefited from the government of Ghana subsidy measures on electricity with 62.6 per cent benefiting from the water policy. On Education, 38.3 per cent and 30.8 per cent indicated using home tutoring and private school learning platforms respectively for their children with on effectiveness, 15.4 per cent found the e-learning platform effective and 47.3 per cent found it to be somewhat effective. It observed that Local Government was lost in the equation for the fight for COVID-19 responses, urging the Ministry to up its game and be visible. It noted there was no intervention from the government to the agricultural sector, with farmers badly battered under the pandemic, most losing their livelihoods. Dr Emmanuel Ayifah, Deputy Country Director, SEND Ghana, noticed there was huge ICT knowledge gap for public and rural schools, which were the most afflicted and recommended for increase in internet penetration, to make cost of data cheaper and telecos investing in infrastructure to increase reach.

“Follow developmental projects with keen interest” – NCCE Mr. Francis Cobbah, New Juaben South Municipal Director of the National Commission for Civic Education (NCCE), has urged community members in the Nyamekrom District to follow developmental projects with keen interest. He said whenever community members followed developmental projects and policies with keen interest, they owned the projects and actively involve themselves in the development process and ensure that the pressing needs in the area were met. He said this at a social auditing forum organised by the NCCE, under its flagship Anti-corruption, Rule of Law and Accountability Programme (ARAP), aimed at promoting community ownership of developmental projects and policies. Mr Cobbah observed that the trend where community members paid less attention to the progress of developmental projects, made transparency and accountability difficult to achieve and urged citizens to get involved to be able to demand accountability from duty bearers. He reminded the community of the coronavirus disease and said that although government had eased restrictions, people were

still getting infected and therefore they should continue to adhere to the safety protocols to prevent its spread. In line with the measures to promote community ownership of developmental projects and policies, the NCCE together with the community members formed an eight-member Social Audit Committee to implement and monitor ongoing projects in the

community. The Committee members are Nana Oburgya Asante, Bosomuruhene of the New Juaben Traditional Council, Mr Bismark Ohene, Unit Committee Chair, Mr Enoch Boahene, teacher, Madam Comfort Osafo, trader, and Madam Faustina Offeibea, a retired nurse. Mr Kingsley Twenefour, Mr Odame and Madam Esther Duah Oyinka were also elected by the

community and tasked to ensure the pressing needs which were the construction of the road, police station and market were realised. Mr Enoch Boahene, who was selected as the head of the Committee, thanked the NCCE and community members for the opportunity, and pledged to work with the Committee to ensure that all community projects were completed. GNA

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GIZ launches mobile insurance awareness campaign German development agency, GIZ in partnership with the National Insurance Commission (NIC) on Monday 31st August 2020 launched a mobile insurance awareness campaign dubbed #SakeOfMorrow. The campaign is to tackle the knowledge gap, increase insurance awareness and literacy to enable underserved consumers to access simple and affordable mobiledelivered insurance and health services. Speaking on the rationale behind the campaign, Technical Advisor of GIZ, Gabriel K. Kwame, indicated that the very essence of doing insurance is to safeguard and cushion people against any unforeseen circumstances. He noted that the Mobile Delivered Insurance Awareness Campaign, #SakeOfMorrow, is a campaign that seeks to draw attention to the need to take steps to secure tomorrow. “There is a major awareness gap in the insurance industry. In our part

of the world, several lives are lost through untimely hospitalization and minor accidents. We believe driving awareness for the convenient and reliable Mobile Insurance will enable Ghanaians to take advantage of its several benefits”, Mr. Kwame added. Mobile Delivered Insurance has become very important as it offers an affordable and more convenient way of doing insurance that can be trusted to secure peoples future using their mobile phone. To sign know more about mobile insurance, you can visit any Mobile Insurance near you or call the NIC hotline 0302960696. There are also regular updates on social media @ MODI on Facebook, Instagram, Twitter and Youtube. #SakeOfMorrow is a GIZ campaign endorsed by the NIC and in partnership with all relevant stakeholders in the mobile insurance sector.

Vodafone dedicates September to SMEs’ Growth Vodafone Ghana has reinforced its commitment to helping Small & Medium Scale Enterprises (SMEs) become more resilient and continue to experience growth during this pandemic by dedicating the month of September to SMEs.

technologies, we continue to enable SMEs progress and thrive during this pandemic. SMEs are the bedrock of every nation and deserve the best of innovative solutions to grow and connect better with their customers. We believe that empowering them will improve their productivity and agility, which will ultimately contribute to Ghana’s economic development. This is why I am particularly excited about the many initiatives we have put in place this month to develop, transform and create digital SMEs.”

The Telco, as part of this year’s celebration, has outlined a host of initiatives purposely aimed at helping SMEs transition from surviving to thriving businesses during this pandemic. These include free digital advertising opportunities, free website presence for six months, free use of Vodafone’s Bulk SMS platform for promotional campaigns, twelve months free insurance cover as well as other unique products. Additionally, Vodafone has once again partnered with the Makola Foundation to train market traders and business owners on digital skills. This forms part of its drive to accelerate SMEs’ adoption of digital solution. The virtual capacity-building programme will also educate participants on how digital solutions such as Vodafone’s Red Trader, Mobility Solutions, and Vodafone Cash enhance productivity. Together with MicroEnsure and the United Nations Capital Development Fund, we will also provide FREE insurance cover for over 200 SMEs. Commenting on the initiative, Tawa Bolarin, Director of Enterprise Business Unit (EBU) at Vodafone Ghana, said technology

Vodafone since the pandemic has developed unique products including ‘Your Business Online’ to boost SMEs’ growth. The leading enterprise communications provider also introduced the Vodafone Business Runway platform, a new webinar series aimed at empowering SMEs with the requisite skills, insights and opportunities that will enable them manage and build thriving businesses.

is transforming the global economy and our pre-occupation as the enterprise unit of Vodafone Ghana, is to help businesses succeed in this digital world. “With our expertise in connectivity and emerging

The Telco’s leadership in the SME space reaches its peak every year in September. Throughout the month, Vodafone engages SMEs across the country through various initiatives, to empower, celebrate and reward them. This campaign is part of its commitment to transforming SMEs in the country and maximizing their digital potential.

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Central Oil Mills Ltd Board of Technical Advisors inaugurated Central Oil Mills, an oil palm processing factory located at Jukwa Mfuom in the Central Region has formally inaugurated its Board of Technical Advisors to assist the company achieve its set goals as it gears up for expansion with support from the Ghana EXIM Bank under the Presidentâ&#x20AC;&#x2122;s IDIF initiative. They are Prof. Ernest Ekow Abano, Food Scientist, University of Cape Coast Agric Engineering Dept, Ing Ebenezer Odei Addo, Mechanical Engineer and Quality Assurance Expert, Mr. Richard Ekow Annobil, HR and Agric & Oil Palm Specialist. Speaking at the ceremony, the Chief Executive Officer of Central Oil Mills, Mr. Aaron Sagoe said the 1D1F support has helped immensely with their expansion program; such as building of a new ultra modern factory sited at Jukwa Ansamaso purposely for fresh palm fruit processing and bottling, acquisition of new machinery to increase production capacity and value addition, onsite laboratories, tractors, trucks and storage tanks. He also stated that, apart from providing job opportunities and source of livelihood for the inhabitants, they have acquired more farms in other adjoining districts and will be able to process fruits from all the farms and Out grower scheme it has initiated

thereby minimising post harvest losses in the region significantly. He thanked the advisors for their readiness and willingness to impart their skills and rich experiences to support the vision of the company. Prof. Ernest Ekow Abano, responding on behalf of the advisors, used the occasion to advise the general public to be wary of consumption of red oil with extra red colour as they have been adulterated with Sundan IV

(popularly known as suudee), an unwholesome chemical which is harmful to the human body when consumed. He said his department has been working closely with Central Oil Mills since it started operation and they are happy to continue even as the company ventures into other value addition activities. He also said the government should consider investing more into oil palm production by way

of setting up Research Boards and Schools to generate value addition for the oil palm industry. In attendance were Mr George Ekow Mensshan of PKF, Chartered Accountants, Nana Adwoa KwegyirAggrey, Integrated Marketing Communications Consultant and Michael Monnie Esq, Company Solicitor. For further information please contact: 0244562245

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