Business24 ePaper (February 17, 2020)

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MONDAY FEBRUARY 17, 2020

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Gov’t courts private finance for roads Eugene K. Davis

The Ministry of Roads and Highways is seeking private involvement in the construction, operation, and maintenance of major roads in the country.

The country has long been reliant on a slender national budget to develop road infrastructure, with less than 30% of roads said to be paved. Experts have suggested leveraging private capital via well-structured public-private-partnership (PPP) arrangements to build roads.

The PPP financing approach has been widely adopted by many developed and developing countries to expand their road and other infrastructure.

The Turkish government, for instance, picked JPMorgan last week as an adviser for the sale of a stake in a US$7.3 billion, 426 km-long motorway.

The Chairman of Parliament’s Roads and Transport Committee, Samuel Ayeh-Paye, told Business24 in an exclusive interview that government has taken extensive steps to woo the private sector to invest in the roads sector.

“That proposal has been made and, indeed, the current government has also adopted the proposal, and we are working on it. A committee has been set up – that is Public-Private Part-

nership (PPP) in road construction -- and they are seriously working to develop modalities that the country can use so that it will not infringe on anybody’s rights. Also, people who travel on the roads [will] pay, and if you do not have money, provision is made for such people to

have an alternative route.

“So when these bottlenecks are removed, then we can start inviting the private sector. But the last time I checked, the Ministry of Roads and Highways was far advanced in courting the private sector to come in.

We can build first-class roads,

such as the Tema Motorway, and toll it. People who cannot pay the toll can use alternative roads, such as the beach road,” he said.

He added that: “In America, there are alternatives; UK, the same thing. There are roads that have been tolled. If you don’t have money to use the tolled roads, there are alternative roads. The only difference is that the alternative road is not as good as the tolled road; the alternative road contains a lot of traffic, so if you want to move fast, you use the highway or express road and pay for it. Until that is done, it will be difficult for government [alone] to fund the construction of all major roads in the country.”

Year of roads Government has declared 2020 as the year of roads and allocated GH¢2.3 billion to the Ministry of Roads and Highways in the 2020 budget, a 76% jump over the GH¢1.3 billion allocated in 2019.

The government, towards the end of 2019, secured GH¢2.2 billion to defray part of the arrears owed road contractors, estimated to be about 12 billion. It has since 2017 paid over GH¢5 billion of outstanding arrears to road contractors.

GSA wants value for money in oil and gas sector

By Eugene K. Davis

The Ghana Standards Authority (GSA) is pushing for the development of National Hydrocarbon Measurement Standards for the custody, transfer and allocation of the metering system aimed at ensuring value for money in the oil and gas sector.

According to the Director-General of the authority, Prof. Alex Dodoo, his outfit has the competence to take over that responsibility from oil companies in determining measurements of transferred liquid and gaseous hydrocarbon products for financial transactions.

“What the Committee [on Trade, Industry and Tourism] is saying is that Ghana has oil; currently, we don’t have an independent way of checking whether what is being paid for us is okay. The GSA has the scientific competence, but we also believe that we need to talk to the Ghana Revenue Authority as well as the Petroleum Commission to be sure that when the fuel comes up the proper levies are collected, the state makes its money, and MORE ON PAGE 2

Shippers to pay more for freight…as price of low-sulphur fuel soars

By Patrick Paintsil

The shipping industry is complying favourably with the new sulphur cap directive of the International Maritime Organisation (IMO)--which is good for the environment—but at a cost to the shipper and, by extension, the local economy, a Business24 analysis of data has revealed.

Sales of low-sulphur fuels, including Low Sulphur Fuel Oil (LSFO) and Low Sulphur Marine Gasoil (LS-MGO), rose by 51% month-on-month in December to 3,127 thousand tonnes, compared to the 1,271 thousand tonnes of High Sulphur Fuel Oil (HSFO) sold in the same month.

Danish shipping major Maersk, for instance, has already decided to increase its bunker surcharge; the tariff

The sulphur cap directive, which came into effect in January, instructs vessels to reduce the sulphur content in their fuel from 3.5% to 0.5% as part of efforts to promote green shipping. However, the high rate of compliance across the globe has led to a sharp increase in the price of low-sulphur fuel, a situation that has forced shipping lines to increase their bunker surcharges.

INTERNATIONAL MARKET

FEATURE

FEATURE

MAKING TECHNOLOGY WORK FOR WORKERS

CHINA’S DIGITAL REVOLUTION BRENT CRUDE $/BARREL: +0.04 ($56.38) IN BANK LENDING NATURAL GAS $/MILLION BTUS: -0.04 ($1.81)

As technological innovation transforms our economies, workers all over the world are doing whatever it takes.. PAGE 5

China has long recognized the importance of increasing small and medium-size enterprises’ access to finance PAGE 17

AS OF 14/2/2020

GOLD $/TROY OUNCE: -0.99 ($1,575.01) SILVER $/TROY OUNCE: +0.04 ($17.66) CORN $/BUSHEL: +2.00 ($384.00) COCOA $/METRIC TON: +27.00 ($2,895.00) COFFEE ¢/POUND: +3.95 ($106.70) SUGAR ¢/POUND: -0.28 ($14.78)

increases will be implemented across all trades and will range between US$50-200 per box.

“In particular, VLSFO price in Asia (Singapore) for a period exceeded US$700/tonne, a more than 20% increase compared to the previous bunker prices used for the Bunker Adjustment Factor (BAF) and Environmental Fuel Fee (EFF) calculation,” the company said MORE ON PAGE 2

GHANA STOCK EXCHANGE PERFORMANCE* GSE COMPOSITE INDEX (DAILY CHANGE %) : +0.44%((GH¢ 2215.92) MARKET CAPITALISATION: GH¢56.75BN MTN GHANA: +1.49% (GH¢0.68) ENTERPRISE GROUP LTD: +1.25% (GH¢1.62) STANDARD CHARTERED BANK: +0.16% (GH¢19.04) ECOBANK GHANA: -1.14% (GH¢7.80)

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GSA wants value for money in oil and gas sector continued from page 1 GSA will get a small bit.

“Ghanaians will [then] see that when we say we have removed 100m litres, it is 100m litres and not 200m or 150m litres, because at the end of the day it is business and any businessman should be able to know what they are selling,” Prof. Dodoo said.

Ghana does not have National Hydrocarbon Measurement Standards, which can help facilitate a transparent auditable process in the transfer of liquid and gaseous hydrocarbon products for financial transactions.

It is in this light that Parliament has urged the Ministry of Trade and Industry as well as the Ghana Standards Authority (GSA) to speed up the process of developing the National Hydrocarbon Measurement Standards to ensure value for money in the oil and gas industry, in collaboration with relevant sector agencies.

Parliament’s Committee on Trade, Industry and Tourism noted that the measurement of crude oil, natural gas and other hydrocarbons produced is at the heart of government’s fiscal oil and gas industry transactions.

Prof. Dodoo explained that the country cannot rely on the buyer to determine what has been purchased, and it is time local institutions were empowered to do it.

“We work with a network of collaborators, and in the end we have to establish Ghanaian standards. Ghana’s oil is very clean, you don’t need to do a lot of removal of sulphur. You price oil based on the volume but also the quality, and once you know the volume, the price you call holds supreme,” he told Business24 at Parliament House, following the adoption of the report on the challenges of imported sub-standard electrical cables, gadgets and accessories.

Editorial: Privatisation of roads, innovative Moves by government to privatise the construction, maintenance and operation of some major roads in the country is very innovative.

For a country that lacks good first class roads in all 275 constituencies, this is a sure way to ensure improved ground transport in the country.

This proposition will leverage private capital and minimise the total dependence on central government funds for the construction of roads in the country.

When this is well-structured, the likes of Tema Motorway—which was built over 50 years ago and have not seen any major reconstruction or resurfacing of its entire length- Accra- Cape Coast- Takoradi highway, Takoradi-Kumasi highway, Kumasi- Tamale highway, and Wa-Bolga highway, could all benefit from private capital.

This approach has been used by many countries to develop their road infrastructure.

Our main concern is respecting the sanctity of valid contracts.

There have been many instances in the past where contracts awarded by a previous government is either suspended for years for reassessment or probe, while others are cancelled and judgement debts incurred, by the government in power.

It is in this light that we call on Parliament to ensure that the PPP modalities for the road sector being worked on, will be water tight and protect both the state and the private investor.

For a country that lacks good first class roads in all 275 constituencies, this is a sure way to ensure improved ground transport in the country.

Shippers to pay more for freight…as price of lowsulphur fuel soars in a statement to justify the new charge.

German shipping liner Hapag-Lloyd revealed plans to introduce an IMO 2020 Transition Charge (ITC) for shortterm contracts as of December 1, 2019.

The move comes in an effort by the company to mitigate fuel price volatility and transitional operational expenses.

Given that these two liners and several others call at the country’s ports, it is likely the new charges they are implementing will reflect in their freight calculations and be billed to Ghanaian shippers.

As shipping lines balance their books, shippers—importers and exporters—as well as the ultimate consumers of imported products on the Ghanaian market are expected to bear the harsh implication of these new developments because the new cost will be passed down.

According to worldmaritimenews, Europe’s largest bun-

ker port, Port of Rotterdam, has equally seen a major rise in the sale of the new Very Low Sulphur Fuel bunker oil (VLSFO).

The port authority said that half of all November bunker sales were for VLSFO, citing data from its new TimeToBunker App. The data showed a major rise in VLSFO sales

last September, which stood at 1,700 tonnes, to 32,000 tonnes and 95,000 tonnes in October and November respectively.

With fuel costs taking up more than 50% of total operating expenses for vessels, the cost associated with this new regulation is seen as an increase too steep for carriers and cargo owners to absorb and stay

operational.

Business24 predicts that as an import-led country, the domestic shipping community and the economy as a whole will not be spared the cost implications of this new directive—much as it is a necessity to protect the lives of flora and fauna and the climate.

Gov’t extends ban on Rosewood export indefinitely The Minister of Lands and Natural Resources, Mr. Kwaku Asomah-Cheremeh, has directed that the ban on Rosewood harvesting, transportation, processing and export announced last year remain in force indefinitely.

He asked the Forestry Directorate of the Ministry to liaise with the Forestry Commission to develop modalities for enhancement of monitoring mechanisms within the various hotspot Rosewood districts to eradicate its illegal harvesting.

He charged the various metropolitan, municipal and district assembles to collaborate with other relevant state agencies to ensure that Rosewood is not transported through any routes from the districts The decision comes after government carefully scru-

tinised and studied the report and recommendations of a seven-member committee established in August last year, to investigate alleged corruption in rosewood trade.

The Government, through the Ministry of Lands and Natural Resources, in August 2019, set up a seven-member Committee, chaired by Mr Benito Owusu-Bio, a Deputy Minister of

Land and Natural Resources, to investigate alleged corruption and illegal trade of rosewood despite the ban placed on it in March last year.

The move follows the publication of an investigative report by the Environmental Intelligence Agency (EIA) in July2019, alleging corruption by top government officials in export of the Rosewood to China.

Addressing a news conference in Accra, Mr. Asomah-Cheremeh said in the interim, all stockpile of Rosewood lying in the various sawmills and hotspot across the country should be evacuated to a central location for auctioning for value-added processing.

He said attention should be placed on freight forwarding companies that falsified documentation to cover wood export, especially illegal Rosewood to Vietnam, saying those

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Dominic Andoh: E ditor Eugene Kwabena Davis: Head of Parliamentary Business & Commodities Benson Afful : Head of Energy & Education Patrick Paintsil : Head of Maritime & Banking Eliezer Mensah: Head of Production Marketing: Alexander Lartey Agyemang: Business Development Manager Ruth Fosua Tetteh: Deputy Business Development Manager

companies should be named and shamed. In the long term, the sector Minister tasked the Forestry Commission to conduct a comprehensive inventory of Rosewood resources to establish its sustainable exploitation levels and promote plantation development.

“A recent publication shows that China has banned illegal timber import from Ghana.

This policy initiative is, indeed, good for Ghana’s Rosewood export trade and our efforts towards the issuance of FLEGT licence under the Voluntary Partnership Agreement,” Mr. Asomah-Charemeh said.

The minister urged interested parties including the local and international media to focus attention on countries like China and Vietnam that import illegal timber from Ghana.

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 Ampomah Akoto: Director of Operations

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News

Shipper Authority to help Blue Skies, others tackle shipment concerns GSA’s shipper visitation and outreach programme to reach out to shippers in their areas of operation to listen to their concerns on shipments and business in general.

The outreach programme, over the years, has served as an avenue for the GSA to address shipment-related challenges of shippers across the country.

Some of the concerns raised by the shippers during the visit include compliance challenges and delays in release of cargo, insufficient number of officers from some regulatory agencies, non-working of shipping lines on weekends and holidays among others.

The Ghana Shippers’ Authority (GSA) has assured shippers operating in the Eastern Region of its commitment to addressing their shipment challenges at the ports.

The companies, which are mostly exporters, include Blue Skies, Okyere Farms, Chocho Industries, Bomarts and Dhillon Farms.

The assurance was given by the Tema Branch Manager of the GSA, Mrs. Monica Josiah, when she led a team to visit the companies. She appealed to the shippers not to hesitate to report their shipment challenges to the GSA for resolution.

Mrs. Josiah reiterated the importance of exports to the development of Ghana as part of President Nana Addo Dankwa Akufo-Addo’s agenda of “Ghana Beyond Aid” and pledged the GSA’s commitment to collaborate with other agencies to promote exports.

The visits form part of the

MiDA to utilize remaining US$331.2 m for energy efficiency projects The Millennium Development Authority (MiDA), the entity mandated to implement the Ghana Power Compact, has re-affirmed its commitment to judiciously utilise the remaining $331.2 million funds for the implementation of infrastructure and business-related projects to enhance energy efficiency.

The funds comprised $308.2 million from the Millennium Challenge Account and $23 million Counterpart Funds from the Government of Ghana to enhance Electricity Company of Ghana’s (ECG) operational efficiency, cut commercial and technical losses and improve ECG’s finances and power distribution efforts in the country.

The ECG Private Sector Participation (PSP) Activity is one of the key project activities that constituted the ECG Financial and Operational Turnaround (EFOT) Project, under the $498.2 million Ghana Power Compact II programme.

Mr. Martin Eson-Benjamin, the Chief Executive Officer (CEO) of MiDA, at a media soiree in Accra, said the funds available would also support investment at the Energy Commission and the Ghana Standard Authority in capacity upgrading in the form of labeling standards, energy auditing and equipment testing.

Additionally, MiDA will fix 14,000 streetlights across the country and continue with the re-trofitting of public buildings at the Korle-Bu Teaching Hospital, the University of Ghana and at the Ministries towards ensuring efficient power consumption and lower electricity bills.

“We shall apply the funds to projects that will improve access to power in eight selected markets in Accra and two in Tamale.

“Counting from today, the Power Compact has one year,

six months and 12 days to end, we have prioritised the completion of two Bulk Station Points (BPS) at Pokuase and Kasoa, ensure efficient and sustainable delivery of power to ECG’s consumers in the micro, small, medium and large industries and institutions, as well as markets, economic enclaves and domestic consumers,” the CEO of MiDA stated.

Mr. Eson-Benjamin elicited media support to convey its

activities, progress, challenges and success stories to the public, to promote understanding and cooperation. For his part, Mr William Amuna, the Technical Controller at MiDA, said they would build two primary sub-stations-one at the University of Ghana Medical Hospital and Nuguchi Medical Research Centre to ensure reliable supply of electricity and another one at Kanda to supply power to the 37 Military Hospital.

The ECG Private Sector Participation (PSP) Activity is one of the key project activities that constituted the ECG Financial and Operational Turnaround (EFOT) Project, under the $498.2 million Ghana Power Compact II programme.

He added that MiDA would support the training of students in energy auditing at the University of Renewable Energy, Sunyani, Kwame Nkrumah University of Science Technology (KNUST) and Accra Technical University. MiDA, he said, would support the ECG’s Metering Management System to ensure proper coordination of metre data to curb illegal power connections and improve revenue collection drive. GNA

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Feature

Making technology work for workers

By Shamina Singh

For workers, coping with the rapid technology-driven transformation of labor markets, without sacrificing dignity, autonomy, or ambition, will require a combination of economic mobility and financial security that can be delivered through a new kind of social safety net – one that puts benefits squarely in the hands of the individual.

As technological innovation transforms our economies, workers all over the world are doing whatever it takes – whether crossing borders, changing jobs, or starting businesses – for a chance to thrive. Yet, social safety nets have been much slower to change, meaning that workers in transition are often highly vulnerable. What will it take to safeguard workers in the labor market of the future?

In the not-too-distant past, most workers were employed in the same industry – often at the same company – for most of their careers. But today, nearly 40% of employed people in the European Union are in atypical employment (not working under a full-time, open-ended contract) or self-employed.

The average working-age American today will hold 11 jobs over their lifetime, with many working multiple jobs at once. Globally, the McKinsey Global Institute estimates that

by 2030, up to 375 million workers (14% of the workforce) will need to switch occupational categories in order to meet the needs of a shifting labor market. Moreover, all workers will need to adapt – acquiring new knowledge and skills – as their jobs evolve alongside increasingly capable machines.

If automation will shape the future of work, life-long learning will determine the future of workers, especially as workers’ lives become longer.

Coping with these changes, without sacrificing dignity, autonomy, or ambition, will require a combination of economic mobility and financial security that can be delivered through a new kind of social safety net – one that puts benefits squarely in the hands of the individual. Workers should not have to choose between facing a period of severe vulnerability as they shift occupations and clinging to the same job until it becomes obsolete, just so they do not lose their benefits.

Just as technology is disrupting their work lives, it can ensure that they are protected by enabling the delivery of benefits that accrue over a person’s working life, regardless of the type of work they do or where in the world they do it.

Some governments are already responding to this imperative. In 2015, France established individual training accounts for all private-sector workers, accessible from when

they first join the labor market to when they retire. Every employee receives 24 hours of training per year of full-time work until they reach a threshold of 120 hours, at which point they receive 12 hours per year of training.

More recently, Singapore created “individual learning accounts” for each citizen over age 24. Account balances can be spent on skills training from approved providers. Similar models have been proposed in Canada, China, and Egypt.

In the United States, legislators in a handful of states and cities are drafting bills to test and fund portable benefits.

But, the responsibility for developing universal portable benefits cannot fall only on governments. The private sector must also help to ensure that all workers – from the migrant to the miner to the marketing professional – have access to the tools and services they need to achieve financial security today and remain agile and productive throughout their lives.

Fortunately, progress is being made here, too, with some startups offering the kind of people-centered tech that will underpin the social safety nets of the future. For example, Trezeo developed a bank account that, using artificial intelligence, provides interest-free loans and ensures consistent pay for independent workers, even during slow periods.

Shamina Singh

France’s Bob Emploi uses AI and government data to provide job seekers with personalized assessments of their prospects.

To encourage continued progress, Mastercard has joined with the Royal Society for the encouragement of Arts, Manufactures and Commerce Future Work Centre to create the Economic Security Impact Accelerator. The partnership – which aims to facilitate the development and deployment of innovative initiatives that directly promote good work and civic inclusion, while ensuring secure and reliable household incomes – shows how private-sector actors can come together and discover new ways of working by leveraging their technology and knowhow.

We have seen firsthand the impact of such joint projects.

Jaza Duka – a partnership among Mastercard, Unilever, and Kenya Commercial Bank – is a digital platform that, since

its introduction in 2017, has been helping to ensure that small merchants have access to the working capital they need to compete and grow.

But, developing such a program in one market is only the first step. A common framework must also be created so that such programs can be scaled up and implemented in different contexts. For example, delivering benefit “points,” rather than money denominated in a particular currency, would allow schemes to operate across borders at a time when workers increasingly need to do the same. And standardized educational credentials would retain their value as they moved with those who have earned them.

As the nature of work changes, so must the nature of benefit systems. To deliver opportunities and security to everyone, everywhere at a time of widespread technological disruption, governments and private-sector actors must work together to advance innovative solutions that meet the urgent and evolving needs of workers. The best way to do this is by taking advantage of the very technologies that are causing the upheaval.

Shamina Singh is President of the Center for Inclusive Growth, Mastercard’s philanthropic hub, and Executive Vice President of Sustainability at Mastercard

Trump’s Travel Ban Benefits Only China

By Cobus van Staden

Overwhelmed by the coronavirus panic, US President Donald Trump’s impeachment folderol, and the chaotic Iowa Democratic caucuses, few took notice of the Trump administration’s announcement that it will expand its controversial 2017 travel ban to six more countries, including four in Africa. It is a politically expedient move that will do nothing to make Americans safer – and will help a country that the Trump’s own White House describes as a “strategic competitor.”

Trump’s original policy, unveiled in 2017, barred travelers from Iran, Libya, North Korea, Somalia, Syria, Venezuela, and Yemen from entering the United States. The expanded version prohibits anyone from Eritrea, Kyrgyzstan, Myanmar, and Nigeria from applying to live and work in the US, and blocks Sudanese and Tanzanians from participating in the Diversity Visa Program, the annual green card lottery created to boost immigration from underrepresented countries.

The Trump administration claimed that the 2017 ban was needed to protect Americans from Islamist terrorism. Its justification for the ban’s expansion is “information-sharing deficiencies and national security risk factors,” such as lapses in tracking suspected terrorists.

But, just as Trump’s border

wall is unlikely to stop inflows of undocumented migrants from Central and South America, the travel ban never had much potential to make Americans safer. None of the 14 most significant terrorist attacks or attempted attacks on US territory in the last quarter-century would have been prevented by it.

The expanded travel ban is about politics, not security.

An election looms, and Trump wants to boost his approval ratings. The expanded travel ban – with its blatantly racist undertones – is red meat for Trump’s Republican base.

Trump’s disdain for African countries is well documented.

In 2018, he reportedly referred to them – as well as Haiti and El Salvador – as “shithole countries,” suggesting that the US should instead attract more immigrants from countries like Norway. The previous year, he commented that, once Nigerians get to the US, they will never “go back to their huts” in Africa.

Since then, the Trump administration has worked actively to restrict immigration from Nigeria. In 2018, the US denied 57% of Nigerian applications for short-term visas – among the highest denial rates for any country. The revamped travel ban cements this pattern as the long-term default, making it almost impossible for Nigerians to emigrate to or work in the US. The targeting of Nigeria is baffling. Statistically, Nigerians

are model immigrants: 59% of Nigerian immigrants to the US have bachelor degrees or higher (compared to 31% of the total US population); Nigerians contributed more than $500 million to the US education system last year; and Nigerian businesses invested $75 million in the US in 2018.

Moreover, the Nigerian diaspora in the US has led to strengthened diplomatic ties between the two countries.

Nigeria is also among America’s key African partners in the fight against terrorism. And as Africa’s most populous country and largest economy, Nigeria has a crucial role to play in the Trump administration’s “Prosper Africa” initiative, which aims to unlock business opportunities on the continent.

By preventing Nigerians from securing work and residency visas, the Trump administration will undermine Nigeria’s prosperity. The country’s tech sector will be hit particularly hard. It was supposed to be a powerful engine of Nigerian growth and development: last year, venture capital investment in the Africa tech sector exceeded $1 billion for the first time, with Nigeria receiving the lion’s share. But continued progress depends on exchanges with the US, which Trump’s new rules will significantly impede.

Prosper Africa was never only about economics. As then-National Security Adviser John Bolton noted in 2018, the ini-

tiative is also supposed to help counter China’s rapidly expanding influence on the continent. Nowhere is that influence more apparent than in Nigeria.

Last year, two Nigerian fintech startups, OPay and PalmPay, together received $210 million in Chinese venture capital. China is also a major buyer of Nigerian oil, and a major supplier of communications satellites, 5G networks, and armed drones.

China is now financing a $3.9 billion railway project between Abuja and the Nigerian coast, a $7 billion rail link between Lagos and Kano, and several road projects, including a trans-Sahara highway connecting Nigeria with five other countries.

The effects of China’s soft-power offensive extend beyond economics. For example, Nigeria’s government is currently considering draft legislation that, following the Chinese model, would restrict free speech on social media.

If the US wants to counter Chinese influence in Africa, greater engagement with Nigeria seems like a no-brainer. But that would mean taking Nigeria’s development ambitions seriously and engaging with actual Nigerian businesspeople, graduate students, and civic leaders. The US may claim that it wants to focus on “trade not aid” in Africa, but the expanded travel ban makes this kind of long-term strategy considerably harder to execute.

Instead, the ban is perpetuating a racist stereotype of Africa

Cobus van Staden

as a burdensome charity case.

For Africans, the travel ban is America’s, not Trump’s. It is America that is rejecting them.

China has no such problem with African promise, talent, and money. And it is more than happy to swoop in to capitalize on what the US has abandoned.

But that won’t help Africans who hoped to work – or join their families – in the US. The Trump administration has systematically – and perhaps permanently – shattered Africans’ perceptions of the US as a land of freedom, justice, and opportunity. As Africans increasingly turn to China for trade and financing, they will not simply redirect their hopes there. They will remember America’s rejection for the rest of their lives.

Cobus van Staden is a senior foreign policy researcher at the South African Institute of International Affairs. © Project Syndicate

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BUSINESS24 | MONDAY FEBRUARY 17, 2020

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MARKETS USDCAD

**price @ time of analysis: 1.33084 STRUCTURE • ABC Zigzag corrective wave PREVIOUS/FORECAST • USDCAD successfully completed its bullish impulsive swing to around 1.3320 price region

** Current price @ time of analysis: 1.32552 •

Expecting sell off to around 1.30445 price region as price corrects its bullish swing in an abc zigzag corrective wave

EURUSD

STRUCTURE • Bullish shark pattern, abc Corrective wave PREVIOUS/FORECAST • The Euro continued to trade lower, breaking 3 month low at around 1.08757 price region to form a bullish harmonic shark with PRZ around 1.08299 price region •

Expecting price to buy in a smaller degree abc zigzag corrective manner to about 1.09917 price region as it begins its abc correction on a higher degree

**current price @ time of analysis: 1.08387

GBPUSD STRUCTURE • WXY double correction PREVIOUS/FORECAST • GBPUSD as discussed last week, fell to around 1.28241 price region •

Expecting bull rally in a 3 wave pattern to around 1.32779 price region to complete wave X of WXY double correction. This will see price fall to around 1.28241 thereafter.

**current price @ time of analysis: 1.30455

ADVICE TO BE PROFITABLE IN TRADING Why do people fail in the forex market?

You would be demotivated when you hear the fact that the failure rate in the forex market is more than 95%.

Yes. Most of the people who try their hand in the forex market, get out of it even before completing one full year. It doesn’t mean that it is really tough to make it in the forex market. And also, there is no need to crack thousands of hard puzzles to open the door of treasures.

If you go through the analysis by experts, it reveals that there is a pattern in the way people approach, and do execute in the forex market. And get the same results!

At the instance you realize it, you would also be the one who accepts the realities. Eventually, you will move ahead and do the needful to be in the earning club.

“Not Following The Market” You’ve learned forex trading.

Well. Beware! It’s not like driving your new car, and it doesn’t have steadfast results. With the top gear and the right acceleration, there is no guarantee to get the right speed.

While trading, you should listen to the market and adapt yourself

to it instead of being stubborn with your ideas. That’s the right way to surf the tides in the forex sea.

“Not Having The Passion” Forex market is not available in common places to fall in love at first sight.

But to be successful and prosper as a trader, one has to develop a real interest in it during learning and executing the knowledge. Otherwise studying the market and analyzing the factors to place your trades would become a tough job. Then quitting in midway is a SURE thing to happen.

“Not Seeing The Reality” In the forex market, success means no 100% win. It’s a combination of ‘WINS’ and ‘LOSSES’, and keeping your losses at a minimum is the key. All successful traders still incur losses, and (it’s part of the game).

Without realizing it many “newbie traders” set unrealistic expectations and burn their energy down. Be informed, and you should not let a streak of failures to let you down and you should devise your strategies to face the failures.

“Overtrading” Aiming unrealistic high profits, trading addiction, and trading beyond the investment potential led the traders to indulge in overtrading.

When you form your trading strategy, you have to take your capital into consideration. Relying on leverage, with the aim of making a big profit, is not advisable as it would eventually lead to the closure of your trading account.

Trade addiction is doing forex trade just for the sake of trading without realizing the need for it. This overtrading, which is incompatible with the capital you have also causes failure.

“Not Having A Proper Forex Plan” Doing forex trade, without a plan is like gambling and incurring a loss is an event to occur, sooner or later. Then, you should trade with the proper risk-reward ratio, which helps you to approach each trade with the right portion of your capital as an acceptable loss.

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Market Watch;

By Agyei Samuel Ofosu

BUSINESS24 | MONDAY FEBRUARY 17, 2020

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Feature

Landing a blow against climate change

By Ibrahim Thiaw

For the last decade, bioenergy has been confined to the sidelines of climate-policy debates, owing to the environmental problems associated with its production. But recent innovations have made this option for supplying sustainable, renewable energy not just viable, but necessary.

In the face of climate change, providing reliable supplies of renewable energy to all who need it has become one of the biggest development challenges of our time. Meeting the international community’s commitment to keep global warming below 1.5-2°C, relative to preindustrial levels, will require expanded use of bioenergy, carbon storage and capture, land-based mitigation strategies like reforestation, and other measures.

The problem is that these potential solutions tend to be discussed only at the margins of international policy circles, if at all. And yet experts estimate that the global carbon budget – the amount of additional carbon dioxide we can still emit without triggering potentially catastrophic climate change – will run out in a mere ten years. That means there is an urgent need to ramp up bioenergy and land-based mitigation options. We already have the science to do so, and the longer we delay, the greater the

possibility that these methods will no longer be viable.

Renewable energy is the best option for averting the most destructive effects of climate change. For six of the last seven years, the global growth of renewable-energy capacity has outpaced that of non-renewables. But while solar and wind are blazing new trails, they still are not meeting global demand.

A decade ago, bioenergy was seen as the most likely candidate to close or at least reduce the supply gap. But its development has stalled for two major reasons. First, efforts to promote it had negative unintended consequences. The incentives used to scale it up led to the rapid conversion of invaluable virgin land. Tropical forests and other vital ecosystems were transformed into biofuel production zones, creating new threats of food insecurity, water scarcity, biodiversity loss, land degradation, and desertification.

In its Special Report on Climate Change and Land last August, the Intergovernmental Panel on Climate Change showed that scale and context are the two most important factors to consider when assessing the costs and benefits of biofuel production. Large monocultural biofuel farms simply are not viable. But biofuel farms that are appropriately placed and fully integrated with other activities in the landscape can be

sustained ecologically.

Equally important is the context in which biofuels are being produced – meaning the type of land being used, the variety of biofuel crops being grown, and the climate-management regimes that are in place. The costs associated with biofuel production are significantly reduced when it occurs on previously degraded land, or on land that has been freed up through improved agriculture or livestock management.

Under the 1.5°C warming scenario, an estimated 700 million hectares of land will be needed for bioenergy feedstocks.

There are multiple ways to achieve this level of bioenergy production sustainably. For example, policies to reduce food waste could free up to 140 million additional hectares. And some portion of the two billion hectares of land that have been degraded in past decades could be restored.

The second reason that bioenergy stalled is that it, too, emits carbon. This challenge persists, because the process of carbon capture remains contentious. We simply do not know what long-term effects might follow from capturing carbon and compressing it into hard rock for storage underground. But academic researchers and the private sector are working on innovations to make the technology viable.

Compressed carbon, for example, could be used as a build-

Ibrahim Thiaw

ing material, which would be a game changer if scaled up to industrial-level use. Moreover, whereas traditional bioenergy feedstocks such as acacia, sugarcane, sweet sorghum, managed forests, and animal waste pose sustainability challenges, researchers at the University of Oxford are now experimenting with the more water-efficient succulent plants. Again, succulents could be a game changer, particularly for dryland populations who have a lot of arid degraded land suitable for cultivation. Many of these communities desperately need energy, but would struggle to maintain solar and wind facilities, owing to the constant threat posed by dust and sandstorms.

In Garalo commune, Mali, for example, small-scale farmers are using 600 hectares previously allocated to water-guzzling cotton crops to supply jatropha oil to a hybrid power plant. And in Sweden, the total share of biomass used as fuel – most of it sourced from managed forests – reached 47% in 2017, according to Statistics

Sweden. Successful models such as these can show us the way forward.

Ultimately, a reliable supply of energy is just as important as an adequate supply of productive land. That will be especially true in the coming decades, when the global population is expected to exceed 9.7 billion people. And yet, if global warming is allowed to reach 3°C, the ensuing climatic effects would make almost all land-based mitigation options useless.

That means we must act now to prevent the loss of vital land resources. We need stronger governance mechanisms to keep food, energy, and environmental needs in balance.

Failing to unleash the full potential of the land-based mitigation options that are currently at our disposal would be an unforgiveable failure, imposing severe consequences on people who have contributed the least to climate change.

Bioenergy and land-based mitigation are not silver bullets.

But they will buy us some time.

As such, they must be part of the broader response to climate change. The next decade may be our last chance to get the land working for everyone

Ibrahim Thiaw is UN Under-Secretary-General and Executive Secretary of the United Nations Convention to Combat Desertification.

Security implications of the situation in Burkina Faso on Ghana

By Osei Bonsu Dickson, Esq., Edem Kojo Spio

The security situation in Burkina Faso is fragile. The West African nation has been under both constant internal and external unrest since 2014.

These unrests have a rippling effect on Burkina Faso’s neighbors and as such, pose security implications on them. This paper will focus on the situation in Burkina Faso and its security implications on Ghana. [1] BACKGROUND Burkina Faso is located in West Africa. It is bordered by Mali, Niger, Ghana, Togo, Benin and Cote d’Ivoire. Burkina Faso, Mail and Niger form the Sahel Region. The region is famously known as a victim of continuous attacks from both terrorist and militant groups on its civilians and army positions since 2014. It has become plagued by a rapidly deteriorating security situation. The geographic focus of terrorist attacks has moved from Mali to Burkina Faso and is increasingly threatening West African coastal states. [1] There are increasing concerns from multiple international bodies on the humanitarian conditions within the Sahel Region. Attacks within the region have increased by fivefold since 2016. In Burkina Faso,

the death toll increased at an alarming rate from 80 in 2016 to 1800 in 2019. Over half a million people have fled from the violence in Burkina Faso since 2014.

There have been over 200 attacks in Burkina Faso since January 2016. According to the International Crisis Group, the increase is somewhat due to the continuing decline in security after the famous revolution which overthrew the longtime President Blaise Compaoré in 2014, after 27 years in power. It is known that Compaoré’s regime had made deals with several militant and armed groups to stop them from conducting attacks in the country. Many speculate that the end of Compaoré’s reign ended all truces with these groups. [1] [2] [3] IMPLICATIONS Spread of terrorism and organized crime In 2019 alone 25,000 Burkinabes sought refuge in neighboring countries, with Ghana being one of them. Ghana is known to be a neighborly country and as such, opens its doors to individuals who are victims of unrest in their respective countries.

It is known and applauded as the humanitarian thing to do as we live in a global village and should be our brother’s keeper.

However, such a kind gesture can be detrimental to the host.

Terrorism is the reason why the Burkinabes are fleeing from their country. A reduction in the population of Burkina Faso and an increase in its devastating and deteriorating situation will not stop the terrorist groups from continuing to attack and kill the Burkinabes.

The impact of the terrorist groups is widespread and as such, they will infiltrate regions which are unaffected. Ghana’s border is at a risk of infiltration by terrorist groups as it lacks solid systems which can thoroughly check, differentiate and verify all objects and persons that pass through its borders.

The terrorists can easily pose as refugees, giving the notion that they are harmless and vulnerable. They can capitalize on this to build their population gradually and strike when the country least expects.

Increase in access to and availability of arms In every country that experiences any form of conflict, especially due to terrorism, there is a resulting increase in the availability of arms. The greater the access to arms, the easier it is to propagate violence. With any successful infiltration of the nation by terrorist groups, arms will be highly sought after and available to potential vigilante groups as well as the terrorist groups.

Strain on the country’s healthcare services Any terrorist attacks in the

country will come with some form of blood shed which will result in multiple injuries and/ or casualties. Injured individuals, be it nationals or internationals, will require medical care. An increase in these attacks can cause an imbalance in the availability of medical care as there may be fewer well-equipped healthcare centers which can cater for the victims.

RECOMMENDATIONS Improved border security system With the right international assistance, primarily Ghana’s allies, the European Union and the United Nations, Ghana can develop a comprehensive border security plan. On 6th February 2020, the European Union launched a 5million euro project to strengthen border security in Ghana. It is a 4-year project themed “Strengthening Border Security in Ghana. The aim of the project is to improve border management and security by decreasing human trafficking, irregular migration, the smuggling of goods and other cross-border crimes.

Improved military, healthcare and food aid Ghana can contribute to the international aid that Burkina Faso. In order to reduce the migration of refugees into the country, we can assist Burkina Faso with military aid, food and

healthcare. In doing so, Ghana can contribute to improving the situation of the victims of unrest without having to place its borders or itself at direct risk. Approaching the problem in its environment poses less risk to Ghana compared to handling it in the country.

Works Cited [1] Aljazeera, “UN envoy: ‘Devastating surge’ of attacks in Sahel and West Africa,” Aljazeera, 9 January 2020. [Online]. Available: https://www.aljazeera.com/ news/2020/01/envoy-devastating-surge-attacks-sahel-west-africa-200109011431355.html.

[Accessed 8 February 2020].

[2] U. H. C. f. Refugees, “UNHCR stepping up response to escalating violence and displacement in the Sahel region,” ReliefWeb, 4 February 2020. [Online]. Available: https://reliefweb.int/report/burkina-faso/unhcr-stepping-responseescalating-violence-and-displacement-sahel-region. [Accessed 8 February 2020].

[3] J. Blake, “ARGUEMENT: Terrorism Threatens a Former Oasis of Stability in West Africa,” Foreign Policy , 1 February 2019. [Online].

Available: https://foreignpolicy. com/2019/02/01/terrorism-threatens-a-former-oasis-of-stabilityin-west-africa-burkina-faso-malicompaore/. [Accessed 10 February 2020].

CSDS AFRICA

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BANKING

AfDB refutes World Bank President’s comments on Africa’s debt profile In several news reports, World Bank President David Malpass was recently quoted as saying some Multilateral Development Banks, including the African Development Bank, have a tendency to lend too quickly and in the process, add to the continent’s debt problems.

According to AfDB, the statement made Mr. Malpass is inaccurate and not fact-based.

Below is the full statement: The World Bank, with a more substantial balance sheet, has significantly larger operations in Africa than the African Development Bank. The World Bank’s operations approved for Africa in the 2018 fiscal year amounted to US$20.2 billion, compared to US$10.1 billion by the African Development Bank.

With regard to Nigeria and South Africa, the World Bank’s outstanding loans for the 2018 fiscal year to both countries stood at US$8.3 billion and US$2.4 billion, respectively.

In contrast, the outstanding amounts for the African Development Bank Group to Nigeria and South Africa were US $2.1 billion and US$2.0 billion, respectively, for the same fiscal year.

With reference to the countries described as “heavily indebted,” our Bank recognizes and closely monitors the upward debt trend. However, there is no systemic risk of debt

Dr. Akinwumi A. Adesina

distress. According to the 2020 African Economic Outlook, at the end of June 2019, total public debt in Nigeria amounted to $83.9 billion, 14.6% higher than the year before. That debt represented 20.1% of GDP, up from 17.5% in 2018.

Of the total public debt, domestic public debt amounted to $56.7 billion while external public debt was $27.2 billion (representing 32.4% of total public debt). South Africa’s national government debt was estimated at 55.6% of GDP in 2019, up from 52.7% in 2018.

South Africa raises most of its funding domestically, with external public debt accounting for only 6.3% of the country’s GDP. Development Banks continue to play critical roles in

development efforts and in the aspirations of developing countries, most especially in Africa.

Given substantial financing needs on the African continent, the development assistance of the African Development Bank, the World Bank and other development partners remain vitally important, with increasing calls for such institutions to do even more.

The lending, policy, and advisory services of these development institutions in their respective regions are often coordinated and provide substantially better value-for-money to developing nations, compared to other sources of financing.

As a result of the African Development Bank’s AAA-rated status, we source funding on

highly competitive terms and pass on favorable terms to our regional member countries.

Combined with other measures to ensure funds are used for intended purposes, it helps regional member countries finance debt and development in the most responsible and sustainable way.

With regard to the need for better lending coordination and the maintenance of high standards of transparency, the African Development Bank coordinates lending activities, especially its public sector policy-based loans, closely with sister International Financial Institutions (notably the World Bank and the IMF).

This includes reliance on the IMF and World Bank’s Debt Sustainability Analyses (DSA)

to determine the composition of our financial assistance to low-income countries; and joint institutional approaches for addressing debt vulnerabilities in the African Development Fund (ADF) and International Development Association (IDA) countries.

In addition, country economists of the African Development Bank fully participate in regional and country-level IMF Article 4 missions. Contrary to suggestions, these are just a few concrete examples of historic and ongoing coordination between sister Multilateral Development Banks, IFIs, and development partners.

The African Development Bank is committed to the development of the African continent. It has a vested interest in closely monitoring debt drivers and trends in African countries as it supports them in their efforts to improve the lives of the people of Africa.

We are of the view that the World Bank could have explored other available platforms to discuss debt concerns among Multilateral Development Banks. The general statement by the President of the World Bank Group insinuating that the African Development Bank contributes to Africa’s debt problem and that it has lower standards of lending is simply put: misleading and inaccurate.

West African CFA franc reform: what’s changing in 2020 Before the Eco can replace the CFA franc, as announced in Abidjan on 21 December 2019, a number of technical, legal and political hurdles must be cleared. The date of the new currency’s introduction is impossible to predict at this time.

To date, only the monetary agreement has been finalised.

It will replace the 1973 agreement between the eight Union Economique et Monétaire Ouest Africaine (UEMOA) member states and France.

The new agreement was signed on 22 December 2019 by all ministers of finance of the nine governments concerned, but no information is known about its content because the African ministers did not release it to the public.

Prior to the upcoming Economic Community of West African States (ECOWAS) meeting, set to be held in June 2020, there are several steps left in the transition process: The monetary agreement, which provides for the Eco to be pegged to the euro with a fixed exchange rate and an unlimited, unconditional guarantee by France, must be ratified by the France’s parliament and UEMOA member states in accordance with their own legal rules.

The guarantee agreement, to replace the operations account agreement with the French Treasury, will specify the terms under which the guarantee may be triggered, whether in the form of an overdraft or a line of credit. It will consist of an interest rate that could change based on the duration of the

BCEAO will need to be taken into account.

Tricky transition period

overdraft or line of credit. The agreement will be signed by the governor of the Banque Centrale des États de l’Afrique de l’Ouest (BCEAO) and France’s minister of finance. The withdrawal of BCEAO reserves from the French Treasury will occur

after these two agreements have been finalised. The reserves will be invested by UEMOA member states, at their discretion, with central banks or the Bank for International Settlements, likely in the spring of 2020.

Representing 50% of member states’ total reserves, they are primarily made up of listed government bonds. Given that they yield less than the 0.75% rate currently paid by the French Treasury, the resulting budgetary imbalance for the

The removal of French representatives from the BCEAO’s supervisory bodies should, in theory, occur after the institution’s statutes and the texts governing UEMOA have been updated. However, given that these formalities could postpone the Eco’s introduction until the end of 2020 and that France would like to get rid of the political burden of the CFA franc as quickly as possible, Paris will remove its representatives as soon as UEMOA member states request it to do so.

Banknote printing and coin minting for the Eco is not expected to take place before the divergent positions of UEMOA and ECOWAS are clarified regarding the fixed or flexible exchange rate of the future common currency as well as its peg to the euro and the French guarantee, which Côte d’Ivoire backs but Nigeria rejects.

Nevertheless, a power struggle over the highly symbolic nature of the currency’s name change has been the focus of attention.

The transition from the CFA franc to the Eco is shaping up to be tricky. If markets get anxious about the new currency’s risk of instability, the Eco’s exchange rate could become highly volatile. Monetary turmoil resulting from such market fears would inevitably impact economic growth across West Africa. theafricareport

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Special Report

The Biometric Threat

By Jayati Ghosh

Around the world, governments are succumbing to the allure of biometric identification systems. To some extent, this may be inevitable, given the burden of demands and expectations placed on modern states. But no one should underestimate the risks these technologies pose.

Biometric identification systems use individuals’ unique intrinsic physical characteristics – fingerprints or handprints, facial patterns, voices, irises, vein maps, or even brain waves – to verify their identity.

Governments have applied the technology to verify passports and visas, identify and track security threats, and, more recently, to ensure that public benefits are correctly distributed.

Private companies, too, have embraced biometric identification systems. Smartphones use fingerprints and facial recognition to determine when to “unlock.” Rather than entering different passwords for different services – including financial services – users simply place their finger on a button on their phone or gaze into its camera lens.

It is certainly convenient.

And, at first glance, it might seem more secure: someone might be able to find out your password, but how could they replicate your essential biological features?

But, as with so many other convenient technologies, we tend to underestimate the risks associated with biometric identification systems. India has learned about them the hard way, as it has expanded its scheme to issue residents a “unique identification number,” or Aadhaar, linked to their biometrics.

Originally, the Aadhaar program’s primary goal was to manage government benefits and eliminate “ghost beneficiaries” of public subsidies.

But it has now been expanded to many spheres: everything from opening a bank account to enrolling children in school to gaining admission to a hospital now requires an Aadhaar.

More than 90% of India’s population has enrolled in the program.

But serious vulnerabilities have emerged. Biometric verification may seem like the ultimate tech solution, but human error creates significant risks, especially when data-collection procedures are not adequately established or implemented. In India, the government wanted to enroll a lot of people quickly in the Aadhaar program, so data collection was outsourced to small service providers with mobile machines.

If a fingerprint or iris scan is even slightly tilted or otherwise wrongly positioned, it may not match future verification scans. Moreover, bodies can change over time – for example, daily manual labor may alter fingerprints – creating discrepancies with the recorded data. And that does not even cover the most basic of mis-

takes, like misspelling names or addresses.

Correcting such errors can be a complicated, drawn-out process. That is a serious problem when one’s ability to collect benefits or carry out financial transactions depends on it.

India has had multiple cases of lost entitlements – whether food rations or wages for public-works programs – as a result of biometric mismatches.

If honest mistakes can do that much harm, imagine the damage that can be caused by outright fraud. Police in Gujarat, India, recently found more than 1,100 casts of beneficiary fingerprints made on a silicone-like material, which were used for illicit withdrawals of food rations from the public distribution system. Because we leave fingerprints on everything we touch, we are all vulnerable to such replication.

And manual replication is just the tip of the iceberg. Researchers have created synthetic “MasterPrints” that enabled them to achieve a frighteningly high number of “imposter matches.”

Further risks arise during the transmission and storage of biometric data. Once collected, biometric data are usually moved to a central database for storage. They have to be encrypted while in transit, but the encryptions can be – and

have been – hacked. Nor are they necessarily safe once they arrive in local, foreign, or cloud servers.

In India, one of the web systems used to record government employees’ work attendance was left without a password, allowing anyone access to the names, job titles, and partial phone numbers of 166,000 workers. Three official Gujarat-based websites were found to be disclosing beneficiaries’ Aadhaar numbers. And the Ministry of Rural Development accidentally exposed nearly 16 million Aadhaar numbers.

Moreover, an anonymous French security researcher accused two government websites of leaking thousands of IDs, including Aadhaar cards.

That leak has now reportedly been plugged. But, given how many public and private agencies have access to the Aadhaar database, such episodes underscore how risky a supposedly secure system can be.

Of course, such vulnerabilities exist with all personal data. But exposure of someone’s biometric information is far more dangerous than exposure of, say, a password or credit card number, because it cannot be undone. We cannot, after all, simply get new irises.

The risk is compounded by efforts to use collected biomet-

Jayati Ghosh

In India, one of the web systems used to record government employees’ work attendance was left without a password, allowing anyone access to the names, job titles, and partial phone numbers of 166,000 workers.

ric data for monitoring and surveillance, as is occurring in China and elsewhere. In this sense, the large-scale collection and storage of people’s biometric data pose an unprecedented threat to privacy. And few countries have anything close to adequate laws to protect their residents.

In India, revelations of the Aadhaar program’s weaknesses have largely been met with official denials, rather than serious efforts to protect users. Worse, other developing countries, such as Brazil, now risk replicating these mistakes, as they rush to adopt biometric technology. And, given the large-scale data breaches that have occurred in the developed world, these countries’ citizens are not safe, either.

Biometric identification systems are permeating every facet of our lives. Unless and until citizens and policymakers recognize and address the complex security risks they entail, no one should feel safe.

Jayati Ghosh is Professor of Economics at Jawaharlal Nehru University in New Delhi, Executive Secretary of International Development Economics Associates, and a member of the Independent Commission for the Reform of International Corporate Taxation.

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Aviation

Ethiopian Airlines answers the Coronavirus questions Ethiopian Airlines’ controversial decision to continue operations to its Chinese destinations has been criticised by some other African airlines. Today the Addis-based carrier responded to explain why it has made this decision.

1. Why did Ethiopian decide to continue flying to China while several airlines stopped their services? Travel ban is not internationally recommended precautionary measure to curb the spread of Coronavirus.

WHO has advised that there is no need to impose travel ban to/from China due to the outbreak. African Union’s Centre for Disease Control and Prevention has also advised that airlines should not stop flying to China.

Accordingly, we have continued our flights to our Chinese destinations.

2. How many destinations does Ethiopian service in China?

Ethiopian flies to five Chinese cities, namely, Beijing, Chengdu, Guangzhou, Shanghai and Hong Kong.

Note that we don’t fly to Wuhan city which is the epicentre of the Coronavirus outbreak.

3. What is the total number of weekly flights you operate to these cities?

We operate a total of 35 weekly flights to China for the most part of the year.

But we have made capacity adjustment due to the seasonal decline in demand which happens every year during Chinese New Year

What is your policy on continuing your flight to china?

We are following recommendations from WHO and CDC as well as Ministry of Health like any other international carrier.

So far, WHO has recommended that travel bans should not be imposed because of the outbreak.

4.

What is Ethiopian doing to protect its flight crew, employees and passengers from potential infection?

We are following all WHO recommended precautions and collaborating actively with the Ministry of Health, Public Health Institute and all stakeholders.

We provide our crew with all the equipment they need to protect themselves and passengers from possible infection.

5. Does suspending flights to/ from China guarantee prevention of the virus from entering Africa?

Even if Ethiopian stops flying to China, it doesn’t mean that our country will be free from the virus unless we make the right prevention.

Some airlines have several daily flights to/from China to their hubs and from there they connect passengers daily to Addis Ababa and other destinations.

Chinese airlines are still flying to all parts of the world including Europe and the Middle East.

They transfer Chinese and passengers of other nationalities from China to other airlines including ET who then transport the passengers to

Addis Ababa and other African destinations.

Cases have also been reported in countries whose carriers have suspended flights to/from China.

6. Isn’t it true that direct flights to China increase the risk of transmitting the Coronavirus?

No, that’s not true. Passengers can fly direct to Addis from China or may travel to another country and connect to flights to Addis. Either way, there could be a risk of the virus coming into the country and other African destinations unless proper prevention is put in place.

All the necessary preventative measures are taken at the origin (China) as well as Bole airport and other destinations in Africa.

7. What measure are taken at Bole International Airport to prevent the virus from entering Africa?

We are working diligently to prevent the disease from importation and medics from the Ministry of Health are in charge

Aviation finance sector looking vulnerable High aircraft values and low lease-rate factors which do not reflect the commercial and operating risks facing airlines leave the aviation finance industry in a vulnerable state in 2020, said Scope Ratings.

Scope expects little change to lease-rate factors in the first half of the year. The slowdown in the global economy will rub off on the aviation industry.

More airline defaults and further consolidation are likely in 2020, though stability in oil prices will help the industry keep costs under control.

“The industry is in a vulnerable state because aircraft values are rising at the same time as lease-rate factors are falling,” says Helene Spro, director in Scope’s project finance team and co-author of the Aviation Finance Outlook 2020, published today. “This trend has played out since the global financial crisis, particularly for narrowbody aircraft such as the Airbus A320 and Boeing 737,” said Spro.

Lease-rate factors are at an all-time low thanks to the expansionary policies of central banks that are keeping interest rates below their natural level. Lease-rate factors are calculated as a percentage of the purchase price and should account for the depreciation of the aircraft, return to investors, administrative costs, natural swap rates and credit spreads.

“Lessors and arrangers must take increasingly optimistic

views on the residual value of aircraft for returns to be viable at current lease rates,” says Spro.

Depreciation is the biggest component of the total lease revenue. “Investors justify lower lease-rate factors by assuming the asset will depreciate more slowly. This dramatically increases credit risk,” adds Christian Vogel, associate director in Scope’s project team and co-author of today’s outlook. Investors will experience a loss in case of default if the aircraft is not appropriately depreciated over the term of the transaction.

“We do not believe that current lease-rate factors in many narrowbody-aircraft transactions are sustainable. This is a hidden risk that will materialise should market conditions worsen,” Vogel adds.

Boeing’s struggle to return the B737MAX to the skies remains the focus of uncertainty surrounding airframe manufacturers in 2020, posing three risks for investors: The credit quality of airlines with the B737MAX in their fleet might deteriorate if it incurs direct costs related to the grounding of the aircraft which also has a broader impact on its operations. Boeing has paid compensation to several airlines. If costs are properly compensated, the impact on credit risk will decrease. However, compensation is unlikely to account for many indirect costs,

such as passengers refusing to fly the B737MAX in the future.

For debt investors invested in B737MAX transactions, the risk today relates to amortising the principal in a way which is out of line with the aircraft’s depreciation, though Scope sees the credit risk of future B737MAX deliveries in line with expectations before the grounding of the planes.

The third credit risk relates to possible over-capacity assuming regulators approve a return of the aircraft to service: another 370 aircraft would suddenly be back in the air based on the number of the jets Boeing says it has delivered so far to 47 airlines. The most likely outcome is that airlines will retire older models when the B737MAX is back in service, reducing some extra capacity though possibly not in all market segments.

African aerospace

Boeing’s struggle to return the B737MAX to the skies remains the focus of uncertainty surrounding airframe manufacturers in 2020, posing three risks for investors

of carrying out the screening of passengers at the airport.

Screening is also conducted 24/7 at Bole for both transiting and for passengers who destined Addis as well as the origin in the respective Chinese airports.

8. How effective are the preventive measures at the airport?

The screening is being carried out at the Addis Ababa Bole International Airport per the guidelines of WHO and other regional and international public health institutes.

The quarantine facility is well equipped with the required professionals and equipment.

9. Is Ethiopian Airlines ready to take the responsibility in case Coronavirus infection is reported in Ethiopia?

Ethiopian is taking all the precautionary measures to prevent the virus from entering the country as well as the continent.

However, as we can see in other countries, some of the confirmed cases of Coronavirus are not because the coun-

tries’ airlines fly to china; some of the confirmed cases are in countries which don’t have an airline.

This indicates that stopping flights to China will not make us immune from the virus.

Equally, it shows that no single airline can be held accountable.

10. How do viruses affect Airlines?

Easily communicable diseases such as Coronavirus can trigger fear in the travelling public.

Travelers opt to stay at home during an outbreak to protect themselves from the viruses and this reduces the number of passengers’ airlines carry.

Nonetheless, Ethiopian, together with Ministry of Health is doing its level best to prevent the virus from entering the country.

11. What is Ethiopian planning to do going forward regarding the threat of the Coronavirus?

Ethiopian will continue to work closely with all the stakeholders including Ministry of Health, Public Health Institute, and WHO to prevent the virus from entering the country.

We will remain extra vigilant and continuously monitor developments so as to adopt appropriate measures.

Medical professionals at Bole International Airport are providing information to travellers to reduce the risk of Coronavirus infection. We will keep following any travel advices recommended by the WHO. African aerospace

Boeing gets LOI for 30 new 7478 aircraft a deal that could be worth over US$10 billion.

Boeing - still reeling from the fallout of two 737 Max tragedies of 2019 could stand a bit of positive news.

On February 7, 2020, Boeing received a Letter of Intent from Avatar Airlines for the purchase of 30 new 7478 passenger version aircraft.

Although Boeing is fulfilling a number of sales of its 7478F freighter, it had no new orders in 2019 for its passenger version.

Avatar promises this order could save the legendary “Queen of the Skies” from extinction which otherwise appears to be inevitable.

On November 19th, Avatar filed for a 121 certificate with the FAA and the Department of Transportation for a Certificate of Public Convenience and Necessity for the authority to operate low-fare scheduled service to large major city pairs throughout the U.S. and Hawaii. Avatar will begin with 14 747-400s transitioning to the 747-8 which it considers to be the ideal aircraft to replace the 400s. Management believes the -8 will provide an increase in both passenger and freight capacity while operating at significantly lower costs adding to its net profits.

Instead of adorning the aircraft with first class lounges,

piano bars and a decadent seating arrangement reminiscent of the 70’s, Avatar plans to bring the 747 experience to the masses. With 539 economy seats on the lower deck and 42 business seats on the upper deck the company will harness the comfort, power, size and safety of the 747, enhancing the overall passenger experience that today’s “lowcost” carriers simply lack.

Avatar’s economy fares are expected to be 50% less than other carriers.

On February 19th, the Company will begin marketing twenty million shares of Series A Preferred stock under SEC Reg D 506c. If you’re an accredited investor, a licensed broker/dealer or a financial advisor and want to learn more about the company and it’s plans be sure to watch its 5 minute summary.

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Energy

Kosmos Energy increases reserves for 7th consecutive Year Kosmos Energy has announced that total 1P reserves at year end 2019 were approximately 169 million barrels of oil equivalent (MMBoe) and 2P reserves were approximately 552 MMBoe. In addition, following the recent signing of the Sale and Purchase Agreement (SPA) for the Phase 1 LNG offtake of the Greater Tortue Ahmeyim project, Kosmos intends to book additional net 1P reserves of approximately 100 MMBoe. Adjusting for these additional volumes increases total 1P reserves to approximately 268 MMBoe. “The quality of our diverse portfolio was demonstrated again in 2019 as Kosmos organically replaced approximately 106 percent of production on a 1P basis, marking the seventh consecutive year of greater than 100 percent of production replacement,” said Andrew G. Inglis, Chairman and Chief Executive Officer of Kosmos Energy.

“In addition, we reached another milestone in the Greater

Tortue Ahmeyim development with the signing of the Phase 1 SPA with BP Gas Marketing, enabling Kosmos to book our 1P reserves for the project. With a 1P reserve base of 268 MMBoe, split approximately 60% oil, 40% gas, we have a 1P reserve to production ratio of approximately 11 years, supporting growth with an increasing contribution of gas.”

The increase in 1P reserves (excluding the impact of the Greater Tortue Ahmeyim Phase 1 LNG SPA) is primarily driven by performance in Ghana, where additional drilling

has increased oil in place estimates. Jubilee recent production performance has been impacted by facilities issues and gas handling constraints, and the reservoir performance remains strong.

The increase in 2P reserves was primarily driven by performance at Jubilee and an increase at Greater Tortue Ahmeyim following the GTA-1 appraisal well drilled in 2019.

2P reserves in Equatorial Guinea and the Gulf of Mexico were held relatively flat, with revisions replacing most of 2019 production. The company’s

(MMBoe)

1P Reserves

2P Reserves

Year-End 2018 Reserves

167

513

- Production

-24

-24

+Revisions

25

63

Year-End 2019 Reserves

169

552

+ Greater Tortue Ahmeyim Phase 1 1

100

n/a

Adjusted Current Reserves

268

552

Reserve Replacement Ratio 2

518%

265%

reported reserves are prepared

by Ryder Scott Company, L.P., an independent third-party reserve engineering firm.

Proved reserves have been calculated using SEC guidelines at a weighted average price of $63.15/bbl Brent. Proved plus probable reserves have been calculated using PRMS guidelines using a nominal Brent oil price of $60/bbl in 2020 increasing thereafter.

1) Tortue Phase 1 SPA was signed on February 11, 2020

and proved reserves from Tortue have been included in a certified reserve report by Ryder Scott Company L.P.. Probable reserves for Phase 1 of Tortue were booked in 2018 as a result of the approval of the Phase 1 plan of development.

2) Reserve replacement ratio (RRR) is the amount of oil and gas added to the company’s reserves divided by the amount extracted for production in 2019.

Aker Energy commissions Fugro Ghana for geotechnical and geophysical survey Aker Energy has awarded the contract for geotechnical and geophysical survey services to Fugro Ghana Ltd (“Fugro”) for the Pecan field.

“For Aker Energy, this contract is an important next step as we prepare for the ramp up of the Pecan project,” says Olav Henriksen, Senior Vice President for Projects in Aker Energy.

“We are both eager and excited to get started and Fugro’s services are world class, making them a natural choice to partner with.”

The contract involves surveying services from two state-ofthe-art vessels for a 10-week period, starting in March, as well as laboratory testing post operations. The geotechnical vessel, Fugro Scout, is specifically designed for geotechnical operations in water depths up to 3,000 metres for both drilling and seabed sampling and in situ testing.

The aim of the surveys is to obtain critical information about seabed and sub-seabed conditions to facilitate the planning and emplacement of the Pecan subsea field and floating production storage and offloading (FPSO) ship.

“This project will build on the extensive experience that our vessels and staff have gained in Ghana and the wider West Africa region, and we look forward to using this knowledge to execute a safe and successful campaign,” said Jaco Stemmet, Fugro’s Director for Africa.

As part of the contract, an emphasis has been placed on local content and capacity building in Ghana through Fugro’s Ghana office. The shore base for the two ships will be Takoradi in the Western Region.

From Fugro, at least one surveyor trainee and one expe-

rienced surveyor will be Ghanaian and there will be local sourcing of various materials in Ghana. In addition, a series of educational and capacity building activities will be rolled out through partnerships with Ghanaian educational institutions and the Petroleum Commission of Ghana.

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Commodities

Root, tuber marketing programme trains 1,294 processors Under the Ministry of Food and Agriculture’s Root and Tuber Improvement and Marketing Programme (RTIMP), 1,294 processors have been trained in Quality Management systems till date, data from the Ministry reveals.

According to available data on MoFA’s website, in terms of technology transfer, 1,294 processors have been trained in Quality Management systems (including packaging and labelling). This has enhanced quality of their product.

Roots and tubers are extremely important crops in rural Ghana. The goal of this IFAD project is to enhance food security and improve the income of resource-poor farmers by facilitating access to new but proven technologies to boost production of root and tuber crops Improvement on quality and volumes has allowed access to external markets. For example, gari from Asueyi is being exported to Niger, Burkina Faso, Nigeria, USA and UK by Nigeria business men. Also, Jenefal Farms exports gari to the Gambia.

RTIMP has multiplied and distributed improved disease and pest –free planting material of

Minister for Food and Agriculture – Dr. Owusu Afriyie Akoto

root and tuber crops to farmers in all 10 regions in Ghana.

With 287ha of primary fields and 1,066 ha of secondary fields established, a total of 133,720 (80,897males and 52,823 females) tertiary farmers out of a target of 174,400 farmers have been supplied with improved planting mate-

EU launches anti-dumping investigation on China aluminium products The European Commission has opened an investigation into whether China is dumping aluminium extrusions, products widely used in transport, construction and electronics, in the European Union, it said on Friday.

A notice in the EU’s Official Journal said it was acting on a complaint filed last month by industry group European Aluminium representing seven producers.

“The evidence provided by the complainant shows that the volume and the prices of the imported product under investigation have had, among other consequences, a negative impact,” the Commission said.

European Aluminium welcomed the move, calling for an urgent launch of anti-dumping duties.

“In the past year, production lines and entire plants closed, with significant job losses as a result. We ask the EU to be proactive rather than wait until it is too late,” Gerd Götz, director general of European Aluminium, said in a statement.

Aluminium extrusions from China are already subject to anti-dumping duties in the United States, Canada, Australia and Vietnam, the statement added.

Aluminium extrusions are used for engine blocks and chassis in autos, to house coaxial cables for electronics and as building facades in construction.

Members of European Aluminium include Norsk Hydro, Rio Tinto and Alcoa.

They are battling a weak market impacted by a lack of demand, including from the auto sector.

rials of recommended varieties of cassava, yam, cocoyam and sweet potato.

Generally, the enthusiasm of beneficiaries to access healthy planting material has been high. Farmers are enthusiastic about the improved planting material supply and it was agreed at midterm to upscale and out scale planting material multiplication and distribution.

RTIMP has instituted the Farmer Field Fora (FFF) as a platform for innovation and sharing of knowledge and experience by farmers, researchers and extension workers. The farmers involved in the FFF are learning to improve the productivity of their farms.

In all, 149 FFFs have been established and 206 FFF facilitators trained. A total of 5,359 farmers (3,215 males and 2,144 females) including 130 from MoFA have been trained and are participating in the Farmer Field Fora (FFF) to improve their capacity to innovate and to enhance adoption of improved technologies.

Due to the effectiveness of the FFF as a platform for technology exchange, it was agreed at midterm to scale it up from the Programme target of 200 to 500.

China sells 1.32 mln tonnes of corn to feed providers

China has sold 1.32 million tonnes of corn to feed processing firms in southern provinces to ensure their raw material supply, the state planner said on Friday A total of 23 feed providers in the coronavirus epicentre Hubei province engaged in the auction during Feb.7-11, according to the National Development and Reform Commission (NDRC) The sales, which exempted firms from transaction fees, will facilitate southern feed producers raw material supplies and ensure their production resumes, the NDRC said Some poultry farmers in Hubei province had to destroy young birds due to a lack of feed caused by transport restrictions amid the coronavirus outbreak.

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Feature

Depreciation of the cedi is man-made

By Edmund Akoto Bamfo

Lately, the most popular phrase in mainstream and social media has been ‘the depreciation of the Ghana Cedi’.

This is because it is worrying to have a country’s currency tumble down considering the negative effect it has on the socio-economic development of the nation.

From July 1965 when the first President Dr. Kwame Nkrumah introduced the first Cedi to 1967 when The National Liberation Council introduced the second Cedi, and in 2007 when President J. A. Kuffuor introduced the third Cedi and up till now 2019, the cedi has continually depreciated against the US dollar. .

As at August 1994, ¢1000 or GH¢0.10 (10 Ghana pesewas) was equivalent to US$1.00.

Today, in May 2019, ¢52,000 or GH¢5.20 is equivalent to US$1.00. This shows that the Ghana Cedi (GH¢) has depreciated drastically within the past 24 years.

Past and present governments have done their best to contain the situation but, in all situations the result has always been the same. When the economic fundamentals are good, the Cedi falls, and when they are weak, the Cedi continues to fall unabated. I think there are more factors apart from economic fundamentals which are undercurrent and effecting Cedi’s strength but it seem our economic managers have not noticed.

In his presentation, I will try to highlight some tools which could certainly do the trick if our economic managers would apply them in their quest to halt the depreciation of the Cedi. .

Before I proceed, let us remind ourselves about the basic economic principle that determines the price of every commodity. The price of every commodity is basically determined by interaction of the forces of demand and supply.

If demand is more than supply, the price will rise and vice versa. Let us agree, and it is true, that in Ghana, the supply of the dollar is less because we do not export more to earn more foreign exchange. It is also true that in this country, the demand for the dollar is more than the supply because we import almost everything; hence the price of the dollar continues to rise.

If our economic managers are able to manage, to reduce and restrict the use of the dollar in our daily economic activities, it could lead to less demand for it and hence its price would automatically fall. It is only then that the depreciation of the Cedi will stop.

The factors I am going to discuss below could in all sincerity reduce the demand for the dollar and together with sound economic fundamentals could halt the depreciation of the cedi.

Standardisation If we want our Cedi to be strong, we must have well established specifications or

standards for every item in the country. Standardization is the process of establishing standards for all products so that only superior quality and long lasting products are in the market, leading to customer satisfaction and safety.

One of the major reasons why Ghanaians demand the US dollar is for the importation of goods. Everything imported into the country must conform to standards to be set by the Ghana Standards Authority (GSA). If quality items are imported, they will last long and the frequency to import the same items will reduce. On the other hand, if inferior items are imported, as it is the case in Ghana, then all the time, we will demand more dollars to import the same item into the country and then the price of the dollar will rise while the cedi depreciates.

The Ministry of Trade and Industry and GSA could be resourced to take up this challenge and establish standards for every item in the country.

They must impartially see to it that importers and manufacturers comply with the established standards and every item imported conforms to the established standards, and all imported goods can only be cleared at the ports if the importer has Certificate of Conformity covering the goods issued by GSA. Re-exporting Re-export means export of foreign goods which has already been imported into the country from a foreign country. This is a double killer and a very big reason why there is continuous depreciation of the cedi.

This is because the importer changes cedis into dollars to import goods into the country and then re-export such goods to another country without even paying customs duty and taxes on such goods.

It means that the importer uses Ghana’s foreign exchange to finance the import bill of the country where he re-exports the goods to. The increase in demand for such re-exported goods in the country of destination means the Ghanaian exporter will change more cedis into dollars in Ghana to import again and again only to re-export hence more demand for the dollar to finance such imports.

The more dollars demanded for such business activities increases the dollar price and causes the cedi to depreciate.

Let us imagine there is an Iron and Steel importer in Ghana who re-exports millions of dollars’ worth of goods, where does he get dollars to finance his imports? His trading activities put undue pressure on the cedi to fall for no positive economic benefit to the nation.

You may understand me if you check the petroleum sector where petroleum products imported into the country are prohibited from being re-exported to other countries. We should prohibit re-export of every item imported into the country with foreign currency from being re-exported if we want our cedi to be strong and stop depreciating.

as reference for government businesses and activities between banks. For the general public, our legal tender is the cedi. It must be forbidden for any transactions whether donation or payment to be quoted in dollars. If people don’t use and transact business in dollars, its prominence will become very insignificant over time.

The role of importers and travellers

Edmund Akoto Bamfo

Re-export is not bad all the time to a nation. If a country’s currency is hard or convertible like US Dollar, UK Pound, European Euro or the Francophone CFA which is hard-pegged to the Euro, then re-export is good. However, if countries like Ghana whose currency is not hard engage in re-export, their currency will depreciate due to cross conversion of the currencies.

If one goes to London to shop made in China goods at Oxford Street and makes payment in British Pound, the British importer doing re-export will not have any challenge paying his Chinese supplier.

He goes to his bank and transfers Pounds Sterling to settle his import bills. On the other hand, if one comes to Accra to shop made in China goods, the Ghanaian importer doing the re-export will have big challenge of changing the cedis to dollars before he could transfer to pay his Chinese supplier. If we allow $100million worth of goods to be re-exported, it means we have sent $100million changed in Ghana out of the country. The more we re-export, the more the cedi depreciates. Only made in Ghana goods must be exported and any goods going out of the country must be covered by Certificate of Origin issued by Ghana Chamber of Commerce.

Import substitution Ghanaians have a penchant for imported goods and so almost everything in the market is imported. Therefore, there is a very high demand for dollar to finance importation of goods. The advent of shopping malls has worsened the situation. These shopping malls import even agro products which abound locally. The government must introduce import prohibition policy on selected goods.

Products which we have factories producing them in Ghana or can be produced with the least support must be prohibited from being imported into the country. The resultant effect will be less demand for the dollar and subsequent fall in its price. Comparable products which can be used as substitute to one another can be consid-

ered. Candles and lanterns are both used to illuminate their surroundings in the night. Candles burn fast and they do not last long whiles lanterns last for years.

To import candles means, burning dollars off, so to limit the demand for dollars to import candles, the government must ban importation of candles. Without candles, lanterns can do the same job and even better. Economic managers must encourage entrepreneurs to manufacture candles locally.

Another example among many others is mosquito net and mosquito coils. They are both used to repel mosquitoes in the night. $100 million worth of imported mosquito coil burn off in a short time, while $100 million worth of mosquito nets last for a very long time.

To reduce demand for dollars, importation of mosquito coils must be banned, especially when we have factories producing mosquito coils in Ghana.

Foreign currency account Any activity that puts excessive pressure on the demand for the dollar must be avoided. I don’t know why in Ghana anybody can walk into any bank and demand to open dollar account. The banks don’t even find out how and where the prospective dollar account holder will get dollars to operate the account. I must say, with little exception all such account holders change cedis into dollars at forex bureau and black markets to operate such bank accounts because such account holders in Ghana don’t earn remuneration in dollars.

With full cedi bank account products; deposit accounts, fixed deposit accounts, current accounts, etc in our banks, changing cedi into dollars to operate dollar account may be superfluous and such activities increase the demand for the dollar thereby increasing its price.

Dollar bank accounts must be reserved for Ghanaians working abroad, those receiving remuneration in dollars, and exporters.

Transaction of business in dollars The dollar must be used only

Importers are the main contributors to the depreciation of the cedi but unfortunately they are the same people who mostly complain about the free fall of the cedi. I don’t blame anyone because Ghana imports almost all the items she needs.

The situation where any amount can be hand-carried across the land borders and the airport must be discouraged.

There must be ceiling on the amount of cash anyone can travel with outside the country. Instruments like travelers’ cheque and credit cards must be encouraged.

Importers must be made to make payments to their supplier through the banks. When all transactions are done through the banks, speculation which starts at the forex bureau and black market will be minimized. Bank transaction certificate issued by banks for the payment of goods imported must be a requisite document for clearing goods from the port. This will reduce activity of money speculators in the market hence may curtail the free fall of the cedi.

Made in Ghana products Industrialization is the way forward. The more we produce most of the things we need, the less demand there will be for the dollar to import. The One District One Factory (1D1F) program is in the right direction.

But to achieve maximum impact on the economy, all 1D1F projects must be nursed and nurtured to grow to become mega companies and their produce should be protected from undue and unfair competition.

Nigeria has prohibited the importation of more than 40 items and this is helping her to move forward her industrialization policy. Ghana can do the same and create more jobs her citizens, and improve her balance of payment position.

The importation of fruit juice and mosquito coils, for example, could be banned. About 99% of the composition of mosquito coil is sawdust and cassava starch. One may ask why we use our hard earned foreign currency to import sawdust especially when we have mosquito coil factories in Ghana.

If the people of Ghana change the status quo, which are: over reliance on imported foreign goods, importation of inferior goods, payment for imported goods outside the banking system and re-exportation, the tumbling down in shocking fashion of the Ghana Cedi could stop.

The writer of this article is an industrialist and chairman of Beatex Enterprises Limited. He can be reached on: abamfo@gmail.com

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Automobile

Renault posts 2019 loss, sets lower profit goal in crunch year Renault reported its first loss in a decade and cut its 2020 margin target, as it attempts to draw a line under the Carlos Ghosn affair and reboot its Nissan alliance.

Renault posted an annual loss of 141 million euros ($153 million), compared with a profit of 3.3 billion euros ($3.6 billion) in 2018, the automaker said in a news release on Friday. Operating income dropped 30 percent to 2.11 billion euros ($2.3 billion).

“It has been a tough year for Groupe Renault and the alliance,” acting CEO Clotilde Delbos told a conference call, adding that the broader autos downturn had hit the company “right when we were facing internal difficulties.”

Nissan’s contribution to Renault’s income plunged to 242 million euros ($262 million) last year from 1.51 billion euros ($1.6 billion) the year before.

Renault has a 43 percent stake in Nissan, which earlier this week posted its first quarterly loss in nearly a decade and cut its profit forecast.

Renault was penalized by charges linked to some of its Chinese joint ventures. The company also booked a 753 million-euro charge ($816 million) related to the discontinuation of the recognition of deferred tax assets on tax

losses in France. Sales to partners were down 3.4 percentage points due to lower vehicle production for Nissan and Daimler, as well as the decline in demand for diesel engines in Europe. A sharp drop in CKD business in China and the end of CKD production in Iran also hit earnings.

Renault’s group sales fell 3.3 percent to 55.53 billion euros ($60.2 billion) in 2019.

For 2020, the automaker sees annual revenues in line with last year, leaving aside currency swings, and a group operating margin of between 3 percent and 4 percent, down from

4.8 percent in 2019.

Renault forecasts positive automotive operating free cash flow before restructuring expenses. Expected volatility in Europe in light of new emissions rules and the potential impacts of the coronavirus cloud the outlook, the company said.

Renault’s 2019 dividend will fall by more than two-thirds to 1.10 euros a share, it said.

Renault forecast that the global auto market would fall in 2020, with sales in Europe and Russia down around 3 percent.

Renault has stumbled in several countries, including Ar-

gentina, and said it needed to fix its operations in China, where it has a partnership with Dongfeng on passenger cars vehicles and with Brilliance China Automotive Holdings on light commercial vehicles.

The automaker has a factory with Dongfeng in Wuhan, the epicenter of the coronavirus epidemic, which has been in lockdown to contain the spread of the virus. It has also suspended operations for at least four days at its South Korean subsidiary in Busan due to supply chain hiccups.

Renault is trying to move past internal turmoil with a man-

agement shake-up, but it is also grappling like some peers, including Nissan, with tumbling auto demand in some key markets such as China.

Last month, Renault named former Volkswagen Group executive Luca de Meo as CEO, starting in July. He and Chairman Jean-Dominique Senard will be charged with turning the page on a troubled era and shoring up Renault’s alliance with Nissan. Sorting out their differences is crucial as automakers face the costly and uncertain transition to electric vehicles.

On Friday, Renault executives repeated assurances that the Nissan alliance was on track.

Delbos acknowledged that investors were still skeptical, but said that the automakers would provide meatier joint goals by May. The company aims to lower structural costs by 2 billion euros in the next three years will provide details on the cuts in May, Delbos said. Renault doesn’t have the “luxury” to wait until de Meo arrives in July, she said.

Delbos stepped into the CEO role on an interim basis after Thierry Bollore, a long-standing Ghosn ally, was ousted in October. She will remain finance chief after de Meo becomes CEO. Autonews.com

Hyundai’s big bet on China faces coronavirus test Hyundai Motor has increasingly relied on China to supply auto parts to its manufacturing hub at home in recent years.

As the coronavirus spreads, its strategy could be backfiring.

One of its main suppliers, Kyungshin, which has rapidly boosted capacity in China over the past two decades to capitalize on the country’s lower labor costs and proximity to South Korea, has seen its operations hit hard by the epidemic.

Hundreds of workers failed to turn up for work last week at two of its four plants, in Jiangsu and Qingdao, following a Chinese New Year holiday that was extended due to the outbreak, according to a source familiar with the matter. In Jiangsu, only about 300 of the 600 employees who were due to return showed up, the source said.

Now Kyungshin, which supplies almost half of the wiring harnesses for Hyundai’s auto electrical systems in the carmaker’s South Korean manufacturing hub, is scrambling to make up for production shortfalls.

It has increased output at its factories in the United States, India, Cambodia and South Korea, according to three people with knowledge of the measures, who told Reuters the company was running its Korean plants around the clock.

As it falls behind schedule, the company plans to use planes as well as ships to speed up the transport of its parts to South Korea, added the sources who declined to be named due to the sensitivity of the matter.

Kyungshin said it was doing all it could to normalize parts sup-

ply. Hyundai told Reuters it was reviewing various measures to minimize the disruption to its operations and “ensure a stable and optimal production system.”

The carmaker’s South Korean hub accounts for about 40 percent of its global production, with vehicles exported to the United States, Europe and Middle East as well as other countries.

The return to work by millions of people in China, where the coronavirus has killed more than 1,100 and infected over 44,000, has been marked by public fears over safety and mistrust of authorities.

Kyungshin’s travails in part re-

flect those of several global automakers, including Volkswagen, Ford, Fiat Chrysler and Daimler, and their suppliers who have seen operations disrupted by the coronavirus outbreak, highlighting their China exposure.

However, Hyundai and South Korean automakers have been hardest hit in their home market. Kyungshin, founded by a friend of Hyundai’s former chairman 45 years ago, and a host of the carmaker’s other South Korean suppliers have rapidly increased capacity in China over the past two decades. They have been able to swiftly supply not only Hyundai’s Chinese factories, but

increasingly its assembly lines back home.

“South Korean automakers are heavy on just-in-time delivery due to close geographic proximity to China. Other automakers have to carry more safety stock,” said Paul Stepanek, president at Complete Manufacturing and Distribution, which advises companies on sourcing supplies in Asia.

“Therefore, when there is a crunch on supply chains, the South Korean automakers feel it faster.”

‘No choice but China’ In an illustration of South Korea’s increase in outsourcing, the country’s exports of auto

parts to China have slumped by two-thirds over the past five years to $2.18 billion last year, while imports of parts made in China have risen by almost a fifth to $1.56 billion, according to South Korean trade data.

About 170 South Korean first and second-tier parts suppliers run a total of around 300 factories in China, according to South Korean auto industry association data.

South Korea sources more than 80 percent of wiring harnesses from China, according to the government, as the parts require labor-intensive assembly and lower labor costs are crucial.

“Suppliers have no choice but to go to China because of cost pressure,” said one of the sources of the supply disruption.

Another of the sources, a senior industry figure, told Reuters the latest disruption caused by the coronavirus outbreak had underscored how exposed Hyundai’s South Korean operations were to problems in China.

“This is an opportunity to address that,” the source told Reuters.

Analysts said that, while the disruption would put pressure on Hyundai to rethink its China strategy, diversifying supplies would take time, money and diplomacy.

“Hyundai had close relationships with local suppliers. It was not easy to go beyond the relationships,” said Jo Hyungje, an adviser to Hyundai and its union, referring to how many suppliers like Kyungshin have grown up with the automaker. Autonews.com

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Feature

America’s isolationist default

By Prof. Barry Eichengreen

Donald Trump’s “America First” policies are widely regarded as an abdication of global leadership, sounding the death knell of the post-World War II multilateral order that the United States shaped and sustained. There is much truth to this view. At the same time, this troubling turn represents a reversion to long-standing US values. Acknowledging that the second half of the twentieth century was an anomaly, rather than the norm, raises troubling questions about the nature of US leadership and about the fate of multilateralism after Trump.

As a resource-rich continental economy separated from Europe and Asia by vast Atlantic and Pacific Oceans, the US has always been tempted by isolationism. Thomas Jefferson famously spoke of no entangling alliances. The Monroe Doctrine, dating from 1823, was not just an assertion of US dominance in the Western Hemisphere, but also an effort to keep America out of European wars. In the twentieth century, the US entered World Wars I and II years late, long after the stakes were clear, and only af-

ter being directly provoked by German U-boat attacks and the Japanese raid on Pearl Harbor.

Moreover, the US long sought to advance its interests abroad unilaterally rather than through multilateral engagement. The Monroe Doctrine is a case in point. America’s refusal following World War I to join the League of Nations is another.

Equally important, domestic business has long held inordinate sway over US economic and foreign policies. This historical pattern reflects the fact that the US was the first country of continental scope to industrialize. Its immense internal market supported the efforts of US entrepreneurs to pioneer the large multidivisional corporation in the second half of the nineteenth century.

This was the age of the robber barons, who held sway over not just the US economy but also its politics. For example, the “Big Four” California railway tycoons (Leland Stanford, Collis Huntington, Mark Hopkins, and Charles Crocker) controlled not just freight rates but also the state legislature.

Viewed from this perspective, the Trump administration’s willingness to cater to domestic corporations’ every regulatory whim is firmly in step with

By Prof. Barry Eichengreen

US history. Americans’ deep, abiding, and historically rooted distrust of government also reinforces isolationism. The view that government only creates problems is not just a product of Fox News. America’s founders were profoundly suspicious of overweening government, from which they suffered under British colonialism.

Following independence from Britain, the fact and then the legacy of slavery created deep-seated opposition to federal interference with local social arrangements and states’ rights. Rallies of gun-rights advocates at state capitols and the occupation of federal land

by Western ranchers are peculiarly American aberrations, but they are also modern-day manifestations of the long-held

view that government can’t be trusted and that the best government is one that governs least. Trump and his policies stand squarely in this tradition.

The existential threat of WWII was enough to shock the US out of its isolationist, anti-government tendencies, at least temporarily. Possessing the single strongest economy, along with politicians, including presidents, with personal experience of war, the postwar US was able to provide the leadership needed to construct an open, multilateral order.

But it was naive to think that this was “the end of history” – that the US would continue to exercise this kind of international leadership indefinitely. In the event, growing economic insecurity, together with the rise of identity politics (reflecting the inability of the once-dominant white majority to adjust to the reality of greater socioeconomic diversity), was enough to cause the American body politic to revert to its unilateral, isolationist mindset.

The next US president – whoever she or he may be – is unlikely to be as committed to free trade, alliance building, and multilateral institutions and rules as the presidents of the second half of the twentieth century. But it is still possi-

ble to imagine multilateralism without the US. Climate change illustrates the point: Trump’s withdrawal from the 2015 Paris climate agreement has not weakened the commitment of other countries to its targets, nor should it.

Another example is how the European Union, China and 15 other countries reacted to Trump’s efforts to paralyze the World Trade Organization by leaving its appellate body inquorate with too few judges. In response, they set up their own ad hoc, shadow appellate body to maintain WTO standards and procedures.

As this last case demonstrates, the successor to US global leadership must be collective global leadership, with the two largest economies, the EU and China, at its fore. Unlike the US, the EU is making every effort to work with China. Given the inevitable geopolitical tensions, cooperation won’t be easy. But, as America once understood, it is the only way.

Barry Eichengreen is Professor of Economics at the University of California, Berkeley. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era. © Project Syndicate 1995–2020

China’s digital revolution in bank lending

By Huang Yiping

China has long recognized the importance of increasing small and medium-size enterprises’ access to finance; now, online banks have found the solution the country needs. This could be a boon not only for growth and innovation, but also for broader financial inclusion – in China and beyond.

China’s economy is growing at is lowest rate in over 30 years, but if the country’s nearly 40 million small and medium-size enterprises (SMEs) could overcome a lack of access to funding, they could become a powerful engine of economic dynamism. Can digital innovators close the SME financing gap?

China’s government has certainly tried. Since 2005, policymakers have been working to expand access to financial services for SMEs, as well as for low-income households.

Measures have included the establishment of more than 8,000 micro-credit companies, higher annual SME loan requirements for banks, and a mandatory reduction in the average interest rate on loans to SMEs, by one percentage point per year in 2018 and 2019.

Yet, despite these efforts, only 20% of Chinese SMEs ever borrow from banks.One reason for this is that SMEs, while plentiful, are not always easy to find, given their small size and geographical diffusion. A more important reason is that many banks are unable to employ market-based risk pricing effectively for SMEs.

With the average Chinese SME surviving for fewer than five years, one cannot claim that lending to them is not risky.

But mandatory lower borrowing costs for SMEs mean that banks cannot use interest rates to offset the higher risks, and the government hasn’t offered compensatory subsidies.

While larger banks have probably adjusted by using cross-subsidization, smaller banks do not have that option.

For them, lending to SMEs means risking the health of their balance sheets. In addition, bank employees are required to take lifelong responsibility for any non-performing loans. So rather than risk extending non-performing loans (NPLs), many banks simply lie about meeting the regulatory requirement.

But even if regulators were not demanding artificially low interest rates for SMEs, banks would struggle to implement effective risk pricing. Traditional credit-scoring models emphasize a borrower’s financial history and fixed assets (collateral), as well as any implicit government guarantee.

SMEs typically don’t have any of these things.

The challenge ahead is thus twofold. In order to encourage banks to lend more, the Chinese authorities must allow more flexible lending rates, rather than imposing excessively low interest-rate requirements that leave banks’ balance sheets vulnerable. At the same time, banks need to find effective ways of conducting risk assessments for SMEs. One innovative approach focuses on “offline soft infor-

mation” – that is, the entrepreneurs’ social behavior and relationships. Smaller commercial banks – such as Tailong, Taizhou, and Mintai banks in the Zhejiang Province – are already using this approach to guide their SME lending.

But the real revolution in SME risk assessment is happening online. A technology platform records data about users’ digital footprints; cloud computing enables relevant information-sharing; and machine learning boosts speed, efficiency, and accuracy.

According to research from the Institute of Digital Finance of Peking University and the Bank of International Settlements, such tech-based credit-scoring models are better at predicting default risk for SME loans than traditional banks’ models, for at least three reasons. First, the new models include behavioral variables and network indicators, which are more stable than balance-sheet information. Second, they use some real-time transaction data – including on cash flows and the business environment – instead of far less up-to-date finance indicators. And, third, machine-learning methods can better capture non-linear interactive relations among individual variables than banks’ traditional linear models.

The “long tail” nature of digital technology provides an additional advantage. Once the platform is established, the marginal cost of serving additional customers is almost zero.

Already, China’s two main mobile-payment providers – Alibaba’s Alipay and Tencent’s WeChat Pay – each has around

one billion customers.

And, of course, digital technology works fast. The online banks that are pioneering this approach – WeBank, MYBank, and XWbank – process loan applications almost instantly.

MYBank’s SME loan business developed the “310” model: it takes less than three minutes to fill out the online application form; once approved, the money is in the borrower’s Alipay account within one second; and there is zero human intervention in the entire process.

By taking advantage of digital innovations, WeBank, MYBank, and XWbank currently each grant around ten million SME or personal loans annually, despite having only 1,0002,000 employees each. And their NPL ratios hover around just 1%.

To be sure, there are challenges to overcome – beginning with data inequality. But this remains a more severe constraint for traditional banks, which focus only on past financial records, than online banks, which use more varied data. WeBank uses more social-media data; MYBank depends heavily on e-commerce records; and XWBank, an open banking system, takes informa-

tion from other tech platforms.

Thus, someone with no credit history may still be able to access funding based on, say, a social-media record.

As for customers who lack a digital footprint altogether, online banks have been developing strategies for enabling customers to build one. For example, an online bank would extend a very small loan to a borrower without any data record online. As the borrower gradually repays the loans and communicates with the bank, he or she also establishes a digital footprint.

China has long recognized the importance of increasing SMEs’ access to finance. Now, online banks are providing the solution the country needs.

This could be a boon not only for economic growth and innovation, but also for broader financial inclusion – in China and beyond.

Huang Yiping, a former member of the Monetary Policy Committee of the People’s Bank of China, is Professor of Economics and Finance at the National School of Development and Director of the Institute of Digital Finance, Peking University, and a member of the International Monetary Fund’s External Advisory Group on Surveillance.

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Feature

The challenging arithmetic of climate action

By Michael Spence

All strategies to mitigate climate change have distributive implications that cannot be overlooked. If left unaddressed, such implications will fuel persistent headwinds to progress on the climate change and sustainability agenda.

ILAN – Climate change was at the forefront of last month’s World Economic Forum meeting in Davos, Switzerland.

Younger participants, in particular, underscored the challenge ahead, with the teenage activist Greta Thunberg delivering a powerful speech on the subject. But they were not in the minority: for the first time ever, climate-related issues dominated the top five positions in the WEF’s Global Risks Perception Survey.

The newfound sense of urgency on climate change comes at a time when the corporate community is increasingly pledging to shift toward a multi-stakeholder model of governance – a transition that would create space for more climate-conscious ways of doing business. But the challenge of creating a sustainable global economy remains monumental.

Each year, the world emits over 36 billion metric tons – or 36 gigatons (Gt) – of carbon dioxide. That is roughly 2.5 times what climate scientists consider a “safe” level of emissions: to keep average global temperatures from rising more than 1.5° Celsius above pre-industrial levels – the threshold beyond which climate change’s

impacts would intensify significantly – we should be emitting just 14 Gt annually over the next two decades. That translates to two metric tons per person each year – far less than the current rate, especially in the developed world.

Progress is being made. Australia, Canada, and the United States have all reduced their per capita emissions since the early 2000’s. But they started at levels in the high teens in metric tons per person, and in the US, the rate still stands at around 15-16 metric tons. Europe, which was in the ten-metric-ton range a decade ago, has done better, with many countries nearing five metric tons per capita – a major achievement, but still more than double the target level.

Moreover, even as the advanced economies have reduced their emissions, total global emissions have continued to rise – by about 6-7 Gt in the past 15 years. This highlights another crucial dimension of the challenge: as emerging and developing economies – which represent some 85% of the world’s population – grow, their per capita emissions increase.

If the global economy grows at 3% or more over the next few years – as the IMF predicts, at least for the near term – getting annual CO2 emissions down to 2.5 metric tons per person within the next 20 years would require carbon intensity to decline by 7.8% per year. With zero growth, a 4.8% annual decline would be needed.

Although that goal seems unachievable, it is useful on an aspirational level. Because the

payoff function is continuous, notwithstanding tipping points and semi-irreversible changes in dynamics, progress toward the goal will be highly beneficial, even if we don’t quite achieve it.

The world’s CO2 output is the product of two ratios: energy intensity (the amount of primary energy consumed per unit of GDP) and the carbon intensity of the energy mix (the amount of CO2 per unit of energy consumed). That means that reducing the global economy’s energy intensity depends on two levers: improving energy efficiency and expanding the use of clean energy. There are reasons to believe that substantial gains can be made on both fronts.

For starters, the costs of clean renewable energy have declined dramatically. A decade ago, the dirtiest source of electric power – coal – was also the cheapest. Renewables are now comparable in cost, and by many estimates, cheaper – even without accounting for the environmental and health effects. Developing countries thus no longer need to choose between cost-effectiveness and environmental wellbeing when investing in the enormous new energy infrastructure that their growing economies demand.

Ensuring that developing countries – which, facing rapid urbanization, must invest substantially in such infrastructure – adhere to high efficiency standards will require broad access to the relevant technologies and best practices, as well as to the right incentives and financing. International financial institutions have a crucial role to

play in creating incentives that attract private capital.

Similarly, important gains can be made in transportation, which currently accounts for about 15% of global energy-related CO2 emissions. (In the US, that figure stands at a whopping 29% – slightly higher than electricity.) Advances in electric vehicles – together with well-designed, energy-efficient public-transportation systems – can go a long way toward reducing the transport sector’s total emissions.

Many economists argue that weaving the full marginal costs of CO2 emissions into the fabric of our economies is essential to accelerate progress, as it would level the playing field for green technologies, strategies, and products. That usually involves putting a price on carbon, either by taxing it or by establishing a system of tradable carbon credits.

But there are serious implementation challenges. As the late environmental economist Martin Weitzman showed, because we know more about the quantity targets that need to be met than about the marginal costs of achieving them, we should focus on the former.

By this logic, our best bet may be a global carbon-trading system in which “carbon credits” decline over time, until they reach an agreed long-term target. This would yield a uniform global carbon price that would move as the targets were tightened, leading to effective and efficient international mitigation.

But implementing such a system would require allocating credits or licenses to countries.

Probably the fairest way to do that would be on the basis of per capita emissions, which would imply potentially large transfers of income from countries with high per capita emissions to their lower-emitting counterparts, or from richer to poorer countries. This, however, may well prove to be an insurmountable barrier, especially at a time when even many rich countries are experiencing rising inequality in income, wealth, opportunity, and economic security.

This is just one example of a broader point. All strategies to mitigate climate change have distributive implications that cannot be overlooked. If left unaddressed, such implications will fuel persistent headwinds to progress on the climate change and sustainability agenda.

The bottom line is that while there is energy, broad engagement, an increased sense of urgency, and several promising trends, the combined effects are not yet powerful enough to counter global economic growth or to produce (or even forecast) a downward trend in CO2 emissions. The latter needs to happen fairly soon

Michael Spence, a Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business and Senior Fellow at the Hoover Institution. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence: The Future of Economic Growth in a Multispeed World.

Turkey sign MoU towards diplomatic enriching archives Ghana’s Foreign Affairs and Regional Integration Ministry has signed a Memorandum of Understanding (MoU) with its Turkish counterpart for cooperation in the field of information technologies and diplomatic archives.

The Foreign Affairs Ministers: Madam Shirley Ayorkor Botchwey sealed the deal on behalf of Ghana, while Mr Mevlut Cavusoglu, signed on behalf of his country.

The signing ceremony took place, on Saturday, in Istanbul , Turkey, where Madam Ayorkor Botchwey is leading a high-powered Ghanaian delegation, comprising the Chief Executive Officer of the Ghana Export Promotions Authority, Madam Afua Asabea Asare, Chief Executive Officer of the Ghana Investment Promotion Centre (GIPC), Mr Yofi Grant , Mr Edwin Provencal , Chief Executive Officer of the Bulk Oil Storage and Transportation (BOST) and other high level officials from both the public and the private sector.

The MoU was to enable both nations to provide a framework for enhanced cooperation in accordance with their mandate and authority, an official statement, issued in Accra, and copied to the Ghana News Agency said.

The Ministries, which are the

implementing institutions shall operate within the respective laws and regulations, exchange information on achievements in the field of diplomatic archival activity, best practices and experiences on diplomatic archival documents.

They shall also provide assistance, exchange technical sup-

port and cooperate in other relevant areas for their mutual interest. “Within the framework of their respective laws and regulations, both parties desire to exchange information on best practices and applications in the framework of strategies and projects of Information Technologies, share

experiences on Information Technologies and cooperate on other relevant issues, which may be feasible and beneficial to both Parties, “ the statement said.

“In accordance with the provisions contained in the Memorandum of Understanding, the countries will develop concrete

proposals on joint publications and archival exhibitions and other activities set to be held”.

Regarding Information Privacy, the statement said, any information (document, software and data) and hardware obtained in the context of the joint activities to be carried out under the MoU “shall not be shared with third parties without the written consent of the other Party”.

The MoU may be amended by mutual consent of the Parties through exchange of notes via diplomatic channels, the statement explained.

“Any amendment(s) made pursuant to the above-mentioned Article shall enter into force in accordance with Article VII of this Agreement “Any disputes that may arise from interpretation or implementation of the Memorandum of Understanding is to be resolved through negotiations and consultations between the Parties through diplomatic channels.

“The Memorandum of Understanding is to enhance and strengthen the cooperation and will not constitute or be interpreted as an international agreement between the Parties and no provision contained herein shall be interpreted or implemented as creating rights or commitments for the parties hereto”. GNA