Business24 Newspaper (March 23, 2020) by Business24 Online

EDITION B24 | 21

MONDAY MARCH 23, 2020

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Kotoka Airport closed to traffic

Pineapple processor gets US$0.6m tax waiver under 1D1F

…regulator, airports operator to be ‘supported’

BY EUGENE DAVIS

Parliament has approved a tax exemption of US$609,478.73 for pineapple and fruit company Peterfield and Rey Limited under the government’s One District One Factory (1D1F) programme. The 1D1F is the government’s flagship industrialisation initiative launched in 2017 with the goal of MORE ON PAGE 2

COVID-19 FALLOUT

WASSCE suspended

PRESIDENT AKUFO-ADDO

BY DOMINICK ANDOH

The Kotoka International Airport has been closed to all international passenger flights for the next two weeks, as government steps up efforts to stem the tide of imported COVID-19 cases. Soaring imported cases of the disease and recorded domestic infections have

forced the hand of Ghana’s government to close all air, land and sea borders effective midnight on Sunday, March 22. This follows similar measures taken by countries in the West African subregion to contain the rapid spread of the coronavirus. Togo, Benin, Nigeria, Cameroon, Ivory Coast, Burkina Faso,

…gov’t to meet ECOWAS over new date

The Gambia, and Senegal have all closed their land, sea and air borders to help contain the spread of the disease. President Nana Addo Dankwa Akufo-Addo, in a national address on Saturday, March 21, announced the ban and expressed optimism it will help minimise imported cases of COVID-19.

BY BENSON AFFUL

MORE ON PAGE 2

ECONOMIC INDICATORS

PREVENTING THE RESURRECTION OF BANKS’ FAILURE MORE ON PAGE 10

FEDERATION TO CHAMPION ECONOMIC WELL-BEING OF FARMERS LAUNCHED MORE ON PAGE 17

INTERNATIONAL MARKET

*EXCHANGE RATE (INT. RATE)

USD$1 =GH¢5.6896*

EXCHANGE RATE (BANK RATE)

USD$1 =GH¢5900.*

*POLICY RATE GHANA REFERENCE RATE *INFLATION RATE PRODUCER PRICE INFLATION:

14.5%* (YET TO BE SET) 7.8%* 11.8%

BRENT CRUDE $/BARREL NATURAL GAS $/MILLION BTUS GOLD $/TROY OUNCE CORN $/BUSHEL COCOA $/METRIC TON COFFEE $/POUND:

91 DAY TREASURY BILL INTEREST RATE

14.7586%

SUGAR $/POUND

AVERAGE PETROL & DIESEL PRICE:

GHc 5.13*

SILVER $/TROY OUNCE:

-2.50 ($26.23) -0.10 ($1.63) -39.50 ($1,486.30) -8.75 ($335.25) -34.00 ($2,284.00) +5.70 ($108.30) -0.22 ($10.67) -0.50 ($12.00)

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MONDAY MARCH 23, 2020

News/Editorial Pineapple processor gets US$0.6m tax waiver under 1D1F continued from page 1 establishing at least one mediumto large-scale factory in every district. About GH¢1.7 billion has so far been disbursed to 172 companies by the government and its private sector financial partners, which include a number of commercial banks. Petersfield and Rey processes pineapple and other fruits, and also produces sachet and bottled water. The company, which is located at Ataabadza in the KomendaEdina Municipal Assembly, has 600 acres of land, of which 150 acres have been cultivated with pineapples and ginger. It intends to expand and diversify its operations by investing in a new project, which involves the processing of pineapples and ginger into juices as well as sachet and bottled water using inputs sourced from mainly local farmers. It applied for a tax waiver under the 1D1F programme to enable it procure materials and equipment to undertake the project. The project also aims to cultivate 200 acres of pineapples, watermelons and passion fruits for the factory in order to contribute to ensuring all-yearround supply of raw materials, and to help local farmers to supply fruits to the factory. Other targets are to export about 10 percent of the factory’s produce in the medium term, contribute to address and reduce post-harvest losses in the Central Region by 2 percent in five years’ time, and create direct and indirect employment.

LIMITED Copyright @ 2019 Business24 Limited. All Rights Reserved. Editorial Team Dominic Andoh: Editor Eugene Kwabena Davis (Head of Parliamentary Business & Commodities) Benson Afful (Head of Energy & Education) Patrick Paintsil (Head of Maritime & Banking) Marketing Alexander Lartey Agyemang (Business Development Manager) Ruth Fosua Tetteh (Dept. Business Development Manager) Gifty Mensah (Marketing Manager) Irene Mottey (Sales Manager) Edna Eyram Swatson (Special Projects Manager ) Events Evelyn Kanyoke (Snr. Events Consultant) Finance/Administration Joseph Ackon Bissue (Accountant)

Editorial: Time to listen, obey and live The rapid spread of the coronavirus (COVID-19) across the globe requires that citizens, religious bodies, and businesses follow directions given by their respective governments and health care professionals so we can contain this disease. The sudden increase in the number of reported cases in Italy, Netherlands, Germany, France, UK and US should serve to warn other coun-

tries. Indeed, citizens and businesses went about their daily routine even when the first case of COVID-19 pandemic was reported in those countries, ignoring warnings by the WHO and their home governments. Today, there is huge pressure on public health care systems in these countries. Large spaces have had to be converted into a temporary health care facility to cater for the growing number of

infections. COVID-19 cases in Ghana are on the rise, despite massive public education about the disease and the initial advice by government that Ghanaians living abroad should seriously consider not traveling to Ghana to minimize any potential spread of the disease. This advice was not heeded and led to our first two imported cases. Others still travelled from countries with significant reported cases of the disease back home.

The confirmed cases in Ghana then shot up to six, then nine, 16 and now 21. Business24 will like to entreat everybody that this is a global health threat that threatens our very existence as a people and the existence of businesses. It is imperative that we listen to what authorities have to say, obey what we are told and live to see tomorrow. Stay home, stay safe, everything else can wait.

Kotoka Airport closed to traffic continued from page 1 “Firstly, all our borders, that is by land, sea and air, will be closed to human traffic for the next two weeks, beginning midnight on Sunday. Anybody who comes into the country before midnight on Sunday will be mandatorily quarantined and tested for the virus. This closure will not apply to goods, supplies and cargo,” he said. Checks by Business24 also reveal that domestic flights will continue to be operated at the airport. Regulator, airports operator to be ‘supported’ Ghana Civil Aviation Authority (GCAA), the industry regulator, and Ghana Airports Company Limited (GACL), the state-owned operator of airport infrastructure,

may be supported to meet part of their overhead costs, following a steep decline in their revenues due to the impact of the pandemic. Aviation Minister Joseph Kofi Adda, in response to a question posed by Business24 about financial support to these agencies, said his ministry will encourage and entertain proposals on how to support the two institutions meet their recurrent expenditure. “If this [flight bans due to

the coronavirus outbreak] continues, our revenue levels will go down, our businesses will dwindle and the airports will be dry places in terms of passengers not coming through. The drastic impact on their bottom line is that they will not get revenue. If passengers are not coming, the GCAA and GACL will not get money, and they will not be able to expand their infrastructure and meet their operational expenses.

“The boards of some of these agencies are meeting, and they will be the ones to brainstorm on this and come up with strategies on how government can meet them half-way, if need be, to deal with this matter. We will also be thinking about how best to maintain the situation and make sure that the aviation sector doesn’t go down any further. We will encourage and entertain their ideas after their board meetings on the strategies that they will be proposing to us.” Yaw Kwakwa, Managing Director of GACL, confirmed that the company is still assessing the impact of the situation on its finances and its ability to meet its recurrent expenditure. “We are assessing the situation and we will make presentations to government through the Aviation Ministry when we are done,” he said.

WASSCE suspended continued from page 1

batch of students under the government’s free Senior High School policy, had been scheduled to begin on March 30 and end on June 1. “The negative impact of the novel and deadly COVID-19 pandemic and the subsequent protocols put in place by governments of member countries to prevent the spread of the disease have serious implications for the conduct of WASSCE for school candidates, 2020, as agreed by the national offices,” a statement by the WAEC copied to Business24 said.

Signed by the Head of Public Affairs, Agnes Teye-Cudjoe, the statement said a new timetable for the conduct of the examination will be designed and made available to all stakeholders when the health situation improves. The statement did not include candidates who will be writing the Basic Education Certificate Examination (BECE), which is slated for June 15. Meanwhile, a reliable source at the Ghana Education Service (GES) disclosed to Business24 that government will meet other countries within the sub-region to deliberate on next steps. “WASSCE is an ECOWAS exam, so Ghana alone cannot postpone the date, it has to be a collective agreement.

So government will meet with other member-states to finalise the date,” the source said. President Akufo-Addo last week Monday directed the closure of all schools and universities and suspended public events to help contain the spread of coronavirus, as a string of African nations imposed tighter restrictions to stem the spread of the global pandemic. However, final-year JHS and SHS students were exempted from the directive and asked to remain in school and adhere to prescribed social distancing protocols while they prepare for their examinations. Since the President gave the directive, teacher unions, such as the Ghana National

Association of Teachers, National Association of Graduate Teachers, and Coalition of Concerned Teachers, have appealed for extension of the four-week shutdown of basic and secondcycle schools to cover finalyear students in those schools. The unions claimed that the students would rather be exposed to the virus when allowed to remain in school, since there are day students among them who attend classes from home. It is estimated that about 397,500 students will write this year’s BECE, while 490,882 students have been registered for the WASSCE.

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More questions for Ghana Link continued from page 1 Documents available to the Business24 have revealed that African Link Inspection Company Limited (ALIC), a subsidiary of Ghana Link-the company mandated by government to take over the country’s National Single Window operations-- has had its contract with the Sierra Leonean government terminated for failure to fully develop and implement an end-to-end customs system, the same system the parent company seeks to roll out in Ghana. Copies of an audit conducted by Sierra Leone’s Ministry of Finance and available to Business24 show that the company was cited for financial malpractices, tax invasion and as responsible for loss of revenue that was to accrue to the state due to its inability to roll out an endto-end system after securing the contract in April 2012. The Sierra Leone government subsequently froze the accounts of the company in that country. In a letter dated January 30, 2020 from the Office of Sierra Leone’s Chief Minister, State House to the Minister of Trade and Industry of that country said: “I have been directed

to inform you to terminate the agreement between the Government of Sierra Leone and African Link Inspections Company with immediate effect.” The rational for the directive, the letter said was that “As part of the inspection agreement, ALIC was to develop the single window concept. This Trade net messaging software allows end users, declarants, Minsters, Departments and Agencies (MDAs) to exchange data to and from the system. This aspect of the agreement was not complied with or implemented.” It further stated that: “ALIC is 100 percent owned by Ghana Link. ALIC Financial

Statement shows a loan of $4million from its parent company, Ghana Link. This is, however, at variance with the amount shown in the balance sheet of Le 6 billion as at 31st December 2017. “ALIC’s US dollar loan from Ghana Link carries an interest rate of 30 percent. When converted into Leones, the interest rate translates to 45 percent which is extremely higher than the commercial rate. There is nowhere in the Global Financial Markets that a parent company lends to the subsidiary company US denominated loan at a rate of 30 percent. The high interest charge is suspiciously premeditated to evade tax

payment as interest payment is deducted before dividend payment,” the letter stated. It further noted that: “There is no evidence that the company has paid corporate tax to government. A recent audit conducted by the National Revenue Authority reveals that the company tax liability is about Le 45 billion. The NRA also discovered a lot of anomalies in their books. ALIC has repaid loan and interest amounting to Le 19 billion to Ghana Link”. Lastly it said “ALIC has not been fully complying with of section 4.3 of the agreement in respect of training programmes dealings with local and

overseas training courses in the areas of computerised Risk Management System, Transaction Price data and other areas of inspection. The Sierra Leone has subsequently abrogated its contract with Ghana Link’s subsidiary African Link Inspection Company. Concerns over Ghana Link/ UNIPASS Coalition of Civil Society Organizations (CSOs) in Ghana, together with other port stakeholders, last week called on President Nana Addo Dankwa Akufo-Addo to as a matter of urgency terminate the 10-year sole sourced Ghana Link/UNIPASS contract. According to the group, the controversial deal is a total rip off and could lead to revenue losses, administrative corruption and depletion of government holdings in the port systems. This they said was because Ghana Link and its overseas partner CUPIA Korea have not demonstrated and piloted any new system to takeover over single window operations at the country’s ports. They added that the 10year sole sourced contract is problematic, urging government to take a second look at it.

Patronise bus terminals to fight Coronavirus outbreak- Transport Min. BY EUGENE DAVIS Minister for Transport, Kweku Ofori Asiamah, has urged commuters to patronise bus terminals in order to curb the spread of the Coronavirus disease. He argued that the designated bus terminals are better equipped with the needed sanitary items in the wake of the COVID-19 pandemic. Mr. Asiamah made this assertion when the Ministry presented sanitary items worth GH¢100,000 to a number of transport unions on Friday in Accra. The items include veronica buckets (200), plastic bowls (200), hand sanitizer (800), detol (400), liquid soap (400), and disposable tissues (400) among others. The move is to boost efforts at mitigating the spread of the COVID-19 pandemic. “We are here to present some items to transport operators following the outbreak of COVID-19 and the way we should go about it. Following the announcement by the President that we need to

take some precaution to protect ourselves, we met the transport sectors and in consultation with our health experts decided to support them with these items.

“We also presented to them 300 recorded messages on pen drives on the transport operators. They have agreed to stop playing music on their buses and play the

THE MOVE IS TO BOOST EFFORTS AT MITIGATING THE SPREAD OF THE COVID-19 PANDEMIC.

announcement to drum home the message to the general public” he said. Beneficiary institutions comprise GPRTU who received 80 veronica bucket, 80 plastic bowls, 300 hand sanitizer, 150 detol, 160 liquid soap,160 tissue and 100 pen drive. The Ghana Road Transport Coordinating Council (GRTCC) received 60 units of veronica buckets, 60 plastic bowls, 200 hand sanitizers, 100 detols, 120 liquid soaps, 120 tissues and 50 pen drives. Metro Mass Transit received 40 veronica buckets, 40 plastic bowls, 110 hand sanitizers, 55 detols, 80 liquid soaps, 80 tissues and 50 pen drives. The ISTC also received 10 veronica buckets, 10 plastic bowls, 50 hand sanitizers, 25 detols, 20 liquid soaps, 20 tissues and 20 pen drives. VIP bus transport were also presented with 10 veronica bucket,10 plastic bowls,50 hand sanitisers,25 detol,20 liquid soap,20 tissue and 20 pendrive.

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“Compliance Police” – Demystifying the concept or perception of fault finding BY OBU NARTEH AMOAH (Continued from Page 18 of Edition B24|20) The following are eight-point approach to building effective compliance stakeholder engagement to rebrand compliance function if it’s seen as: • Include Compliance Objectives in Performance Goals and Appraisal Compliance embedding is a shared responsibility and is better owned when all staff are compliance officers in their various functions and roles. Turning staff to a compliance person is best achieved when compliance goals are included in annual performance goals of all/some(risk-based) and they’re appraised on them. It must be noted that the compliance team is only a conduit through which guidance and advisory flow to staff as they go about the day job. • Set Periodic meetings with Stakeholders/functions At the heart of any compliance program is communication. Professionals will need to have a good communication skill that allows them to train and explain all compliance issues in a precision and clarity to their stakeholders. This communication includes having regular scheduled meet-

ings with various functions to understand issues and activities happening and using such opportunities to tease out policy and process risk and proactively supporting the team to get it right at first time. This eliminates beaches and project compliance as a business partner than a “Police” waiting to arrest wrong doers. • Continuous Risk-based Training and Communication of Policies The first step of embedding stakeholder engagement is the continuous delivering of trainings to staff to aid understanding of all relevant laws and policies. These trainings are supported by regular communication to staff through emails, intranets and other forums (e.g. Integrity Moments) that refreshes staff compliance knowledge in a simplified and practical way. The use of innovative ways like fun games, animations stories for compliance embedding activities all helps in leaving a lasting embedded compliance concept. In the delivery of this communications, the compliance professional must appear approachable and be willing to listen. Trainings and communications must not be generic but be tailored to address specific functional issues and pit holes with best practices to be compliant.

• Practice Open Door Policy/ Advisory The doors of the compliance function or professionals must be OPENED to all. Open Door Policy means having time and a listing hear to hear concerns from staff and help address them. Staff should feel comfortable in entering compliance office to have a chat with the boss or send an IM or email on critical concerns they need a quick advice or even complaints. This practice encourages real time identification of compliance risk and self-reporting of possible breaches. It fosters both functional and personal relationship and engagements. • Be Solution Oriented and not Fault Finding All compliance professionals must be solution oriented to aid the commercial goals of the firm but preserving the asset and reputation at same time. This involves the proactive identification of compliance risk, developing effective mitigations, monitoring and reporting on the effectiveness and developing corrective actions where a breach has occurred to ensure a non-repeat. • Use innovative approach/ fun games and event to bond and embed compliance One of the most lasting way of embedding policies, standards and ways of working has

to do with annual compliance fun game events meant to training, refresh and encourage knowledge sharing on compliance in a competitive manner. Games like Pilolo (Hide & Seek), hop, skip and jump etc. are played as staff answer compliance scenario questions. Groups discuss questions and align before answering. Both the game and answers are marks awarded. Such games also create good relationships between staff and the compliance functions which is essential in implementing compliance programs. • Having a human face to breach management – ensuring fairness and objectivity during investigations and interviews, treating all persons with dignity and respect, assuring persons undergoing breach process of and confidentiality of Personal information. It must be noted that, mostly culprits in alleged breaches become apprehensive. It’s the time that compliance officer needs to calm such persons down and reassure them of seeking means to prevent future occurrence. Being human during breach process is extremely important. • Reward good and ethical behaviors Compliance function must

ensure that exemplary, ethical and compliant staff are awarded or given recognition to encourage others. The practice where communications of sanctions are given to non-compliant staff must be overshadowed with good deeds of staff. The recognition should be periodic, based on evidential facts and could take the form of paid holiday, dinner with MD, a citation on official intranet and a factor in performance appraisals etc. This will encourage and increase good behaviors and ensuring every staff get it right at first time. Conclusion The compliance function must manage its engagement activities in a manner that projects it as a critical business partner that add value to all functions and the firm a whole through proactive management of compliance risk. Effective engagement can be achieved as using the eight point above to achieve a “positive policing” but not a function that is into fault finding like an MTTD officer who hides behind the traffic light lurking for an offensive driver. The heartbeat of any compliance program is effective stakeholder engagement and being trusted.

Wamkele Mene sworn in as Secretary General of the AfCFTA Mr. Wamkele Mene, has been sworn-in as the Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat to be based in Accra, Ghana. This represents an important milestone in the history of the African Union Commission. One of the mandate of the Secretary General is to ensure that implementation instruments required are in place by July 1 for the start of the AfCFTA’s trading. At the 33rd Ordinary Session of their Assembly, AU Heads of State and Government decided among others that “the swearing in and installation of the incoming AfCFTA Secretary General be held in Accra, Ghana on 31st March, 2020” and directed “the African Union Commission to prepare for the installation ceremony in close liaison with the Government of the Republic of Ghana as host.” The first Secretary General of AfCFTA will provide leadership and technical support to AfCFTA Secretariat and overall management of the day-to-day functioning of the Secretariat to ensure it

achieves its desired mandate. In particular, he will be responsible for the management of the AfCFTA Secretariat, implementation of the AfCFTA Agreement and strategic collaboration; diplomatic, representation and

stakeholders’ engagement; information management and dissemination and resources mobilisation for the implementation of the AfCFTA. Speaking shortly after the swearing-in, Mr. Mene said:

“The Republic of Ghana has been at the forefront of integration in Africa. It is therefore natural that as we take this significant step towards the integration of the market in Africa, Ghana should be at vanguard of our

efforts. I therefore thank the government and the people of Ghana, for the warm welcome that we are about to receive in our new home.” He added that: “The AfCFTA is therefore, a critical response to Africa’s developmental challenges. It has the potential to enable Africa to significantly boost intra-Africa trade, improve economies of scale and to establish an integrated market. It has the potential to be a catalyst for industrial development, placing Africa on a path to exporting valueadded products, improving Africa’s competitiveness both in its own markets and globally. It also sends a strong signal to the international investor community that Africa is open for business, based on a single rule-book for trade and investment.” Mr. Wamkele Mene , was the Chief Negotiator for South Africa on the African Continental Free Trade Agreement (AfCFTA),and Chief Director, Africa Multilateral Relations, Department of Trade and Industry(DTI), the Republic of South Africa to discuss AfCFTA.

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Florida A&M University receives 16 Ghanaian exchange students BY: EKOW ESSABRAMENSAH, TALLAHASSEE, FL, UNITED STATES

Seven students from the Regentropfen College of Applied Sciences (ReCAS) in Kansoe, Namoo, in the Bongo District of Upper East have arrived at Florida A & M University (FAMU), USA for a 16-month training in computer science as part of an exchange program. The initiative, which has been described as an ambitious agenda for deepening bilateral relations between the two universities, is to enable the students acquaint themselves with current trends in computer and information science in the promotion of global health care systems in Ghana. The program, an initiative of US-based non-governmental organisation, Institute of Global Health (IGH), is designed to build the capacity of the students in the use of various computer-based applications in health care delivery in Ghana. Upon the group’s arrival, a Ghanaian Faculty Advisor of the Student Associations of Global Health at FAMU, Dr. Yussif Mijirah Dokurugu, explained that the exchange program will create an opportunity for the students to explore and learn new health care methods and practices. Dr. Dokurugu, who is also the President/CEO of ReCAS Global- USA, said: “I entreat all students on the exchange program to endeavor to acquire new skills while in the United States and that it will be an opportunity to help impact the health system in Ghana with the new trends in health practices and also to make a change in the lives of people and the entire society.” Dr. Dokurugu - who is also an Assistant Professor of Epidemiology and Biostatistics, advised that: “It is always good to travel and acquire new training, and apply again when the need arises.” Explaining about the initiative, he confirmed that it is an ambitious agenda being explored by the two Universities: “One that the college is tackling through an academic and cultural exchanges to broaden the horizons of the next generation of students”. He added: “Overseas study adventures provide students with distinct benefits, as they develop responsibility, initiative and accountability. I want them [the students] to learn as much as possible so

they can contribute positively to the Ghanaian economy, especially in the use of information science within the health care delivery of every single person they may come across in their future practices back at home.” Professor Idongesit MkpongRuffin, Chair, Associate Professor at the Department of Computer and Information Sciences, FAMU, said the program has been designed to give the students firsthand experience in modern computer applications focusing on solving global health challenges. It will also provide them with a springboard to be change agents when they return to Ghana.

“The program will position participating students to be fully equipped for employment in governmental and non-governmental agencies where a knowledge of international systems is pertinent to jobs, even in the USA,” she remarked. She indicated that the students, during their stay, will explore various areas of collaboration, including partnerships with other celebrated computer programmers and health experts in the United States of America. Mr. Haruna Mohammed, a beneficiary of the exchange programme, who spoke on behalf of his colleagues expressed profound gratitude

to the authorities of the two schools for the initiative. “At the end of the program, we want to use technology in the Ghanaian health care sector through mobile application. At least, we should have one centralised database for all the hospitals in the country. “At the end of the program, we hope to be able to use knowledge in computer science and information technology acquired to solve social problems within the Ghanaian society as well as within the West African sub-Region.” President of ReCAS, Rev. Dr. Moses Asaah Awinongya SVD, said the collaboration

with FAMU is to enable the students bring different ways of looking at things and solving problems back home. It will help a young institution like ReCAS grow fast while making the necessary changes. He encourages many more candidates to apply to ReCAS and enjoy this and many other opportunities available in the Institution.

“The program will position participating students to be fully equipped for employment in governmental and nongovernmental where a knowledge of international systems is pertinent to jobs agencies

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COVID-19 Epidemic: Together we win BY H.E. SHI TING WANG, CHINESE AMBASSADOR TO GHANA

China’s prevention and control efforts have made important progress at this stage. In the nation of 1.4 billion people, the daily new confirmed cases keep dropping and most of them are imported from overseas. Hubei province reported zero new confirmed or suspected cases on March 18th. More than 87% of the 80,000 confirmed cases have recovered and been discharged. Enterprises in different regions are back to work in a well-organized way. . It starts with us Meanwhile, the epidemic broke out in many places across the world and keeps spreading. Some countries are suffering gravely from it. On March 12th, Ghana confirmed its first two cases of the COVID-19 and then came the news of new confirmed cases. The situation of the victims affects everyone of us. I sincerely wish Ghana win the battle against the epidemic as soon as possible and everyone in this beautiful country well. Six years ago, I worked in the African Bureau of Foreign Ministry. One day, my superior let me make ready to go to Liberia and help the local to fight against with Ebola. My family and friends were all worried about my safety, but I did not hesitate at all. I firmly believed that there was no boarder for epidemics and helping African friends was to help ourselves. After months of hard work, we finally won the battle with Ebola in West Africa. Since then, my understanding to the community with shared future for mankind was more profound. This year, the COVID-19 epidemic again links together the destiny of mankind tightly. What touches us is that the international community, including Ghana, helped China on our battle against the epidemic. H.E. President Nana Addo Dankwa Akufo-Addo wrote solidarity message to H.E. President Xi Jinping at the first moment followed by assistance and support from Ghana to China in different ways. The Ghanaian government cooperated with Chinese government to ensure zero infection of the Ghanaian nationals in China including the students. This is truly a remarkable achievement. Dr. Kwame Nkrumah, the

H.E. Shi Ting Wang

founding President of the Republic of Ghana, once said that “Our independence is meaningless unless it is linked up with the total liberation of Africa”. In my view, the same applies to current battle with the COVID-19, because we have been a community with shared future in the age of globalization. The Chinese people are known with a tradition of returning the favor. We will never forget the friends who helped us at a crucial time. While combating COVID-19 at home, China is ready to contribute to the Ghana’s response. I’d like to share China’s experiences with my Ghanaian friends. Quick response with a nationwide mobilization. Time is life. If we want to win a complete victory against the epidemic, we must make quick response with no exception. Under President Xi Jinping’s deploying and commanding, the whole nation fights an allout people’s war with the epidemic. We mobilized the whole nation quickly and took the most comprehensive and rigorous prevention and control measures after the outbreak, such as immediately setting

up inter-agency task force, activating first-level public health emergency response in 31 provinces, autonomous regions and municipalities, mobilizing the entire nation including communities and rural areas to join the prevention and control, popularizing infection prevention knowledge to the public, releasing information about the epidemic timely, locking down Wuhan city, and built the Huo Shenshan Hospital with 1,000 beds and the Lei Shenshan Hospital with 1,600 beds in just about 10 days. As the WHO Director-General Dr. Tedros noted, China is setting a new standard for outbreak response. Prevention and control based on law and science. The more strenuous the situation is, the more important it is to carry out the work in a law-based, scientific and orderly manner. We uphold social stability by cracking down on assaults on healthcare workers, illegal price hikes of medical supplies and goods key to people’s livelihoods, the making and selling of fake products and the creation and spread of rumors. Meanwhile, we further regu-

lated donations to ensure that all donated funds and goods will be used for preventing the spread of the contagion in time. In addition, we attach great importance to science and technology in prevention and control. We speed up the research of test kit and vaccine, combine the traditional Chinese medicine and Western medicine for treatment and select some effective medicines and treatments. Besides, the experts are well organized to answer questions for the public in time, which also provides strong sci-tech support for winning the battle against COVID-19. Coordinating and concentrating resources on major undertakings. “One tree cannot make a forest.” The epidemic prevention and control is not only a health issue but comprehensive work which requires all-round support like a total war. Since the outbreak,no matter the medical workers and supplies, nor the protective equipment and life necessities, we provide supports whatever Hubei and Wuhan need, such as dispatching more than 42,000 medical workers to

aid the epidemic fight in Hubei Province, guaranteeing the “Vegetable Basket” and “Rice Bag” of Wuhan people by reallocating the resources nationwide, producing medical supplies like masks and protective suits in a 24-Hour uninterrupted way, providing door-to-door service to the quarantined residents, the poverty and the seniors. Wherever there’s an outbreak, there are party members, there are the centralized and unified leadership of the Communist Party of China (CPC) which could concentrate resources to accomplish large,hard and urgent undertakings. This is the unique advantage of China’s system, which once again demonstrates the superiority of the socialism with Chinese characteristics. Acting as a responsible major power in a transparent and open way. Since the outbreak, President Xi Jinping has paid high attention to the international cooperation on the epidemic prevention and control, and made a series of important instructions on strengthening the communication and coordination with other countries and also the cooperation with WHO. The Chinese government first released information about the epidemic in a timely, open, transparent and responsible manner, responded to concerns of all sides actively. Second, we shared the genetic sequence of the COVID-19, 7 guidelines on COVID-19 diagnosis and treatment and 7 guidelines on prevention and control, contributing China’s wisdom and proposals to securing an early global victory over the virus. Third, while fighting hard against the epidemic at home, China offered as much help as we can to countries in need, like medicines supplies, medical specialists and scientific research support. With the good faith and actual deeds, China won wide supports from international community and gathering strength globally for the battle against the epidemic. The epidemic is transient, but the friendship is always around. This year marks the 60th Anniversary of diplomatic relations between China and Ghana, this year is shaping up to be extraordinary. I believe that, tested by the epidemic, the ties between our two peoples will be even stronger, our journey to common development and prosperity will be more determined, and the course for building an even stronger China-Ghana and China-Africa community with a shared future will be injected greater momentum! enabling the full potential of women in a balanced working environment.

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BANKING

MONDAY MARCH 23, 2020

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Preventing the resurrection of banks’ failure BY SEMIU LAMIDI, CHIEF FINANCIAL OFFICER, FBNBANK GHANA LIMITED Not long ago, there was good news from the Governor of Bank of Ghana “we have successively cleaned up the financial sector.” This followed two years of the revocation of licenses of banks, microfinance companies, savings and loans and finance houses. The clean-up exercise that started in August 2017 culminated in a decreased number of Commercial Banks to twenty-three (23) from thirty-six (36). The Savings and Loans institutions shrunk from forty-one (41) to twenty-five (25) while the Microcredit and Microfinance institutions got reduced from five hundred and fifty-four (554) to one hundred and sixty-eight (168). The Finance Houses, Leasing and Remittance Companies went down to seventeen (17) from twenty-six (26). Almost simultaneously, there was a sad news from minister of finance that “the government had injected an average of GH¢18.6bn in the form of bailout to prevent systemic crisis in the banking sector (MOFEB 2019).” The bailout cost approximately 5% of GDP. It was bad news because this humongous amount could have been deployed to improve the country’s road infrastructure, the health care system, education or the one district one factory project among others to improve the Ghanaian economy. The above lends credence to the axiom that shock waves in the failure of financial services affects the entire country. The functions in the financial system are so closely interconnected that any problem in the banking sector will have multiplier effects on other services. This contagion effect possibly led to the revocation of licenses of fifty-three (53) fund management companies on 8th November 2019 by the Security and Exchange Commission of Ghana on account of illiquidity, failure to perform their functions efficiently, honestly and fairly. According to the banking sector report issued by Bank of Ghana in November 2019, “the positive dividends from the clean-up and recapitalisation reforms have remained broadly sustained reflecting in a sound, solvent, profitable and resilient banking sector.” Indeed, the financial metrics improved significantly in October 2019 when compared with that of the pre-recapitalization/reform exercise in 2017. The Non-Performing Loan ratio has reduced from 22.7% to 17%, total industry assets increased to GH¢121bn from GH¢93bn, total capital jumped to GH¢17.3bn from GHS12.3bn, cost of funds improved to 5.3% from 8.1% while Return on Equity leaped

SEMIU LAMIDI to 20.7% from 16.7%. The task ahead is how to sustain this achievement. Aptly put, how do we prevent the industry from witnessing another crisis in future. This discussion will be split into two: the responsibilities of regulatory authority and that of the operators in the financial services sector. The manner and style by which these entities carry out their fiduciary duties will significantly affect the tendency of resurrection of the bank’s failure in future. And the burden of responsibility lies more heavily on the regulators than the operators. The regulatory authority has issued many prudential regulations including Corporate Governance Directive, Fit and Proper Person Directive, Borrowers and Lenders Act, Capital Requirement Directive, Interbank Forex Market Guidelines and others to prevent banks’ failure in future. Beyond this, the regulator needs to ensure strict adherence by the banks to these guidelines. Monitoring and evaluation of compliance are now sine qua non because what is not inspected is not expected and the more time we spend on prevention, the less the need for crisis resolution. This also becomes imperative in the current dispensation where the surviving banks have huge regulatory capital at their disposal. Thomas F. Heelman et al, in their article dubbed “Liberalization, Moral Hazard in Banking, and Prudential Regulation: Are Capital Requirements Enough” posited that when there is huge regulatory capital, the bank executives

have high tendency to gamble in asset allocations. Some of the reasons associated with the insolvency of the banks that had their licenses revoked were insider dealing, false reporting and obtaining banking licenses on the basis of capital with questionable sources (suspicious and non-existent capital) and poor corporate governance. It is very critical and essential that those behind these practices either the erstwhile banks’ owners, the operators or the regulators are prosecuted and sanctioned by the regulators to serve as deterrent to others. It is only when this is done that, we can have public confidence and trust in the industry. Both the public and industry players are eagerly awaiting the result of on-going attempts to hold the people involved accountable. According to reports on the banking crisis in Ghana (various IMF country reports and Bank of Ghana annual reports), one of the prominent factors responsible for the crisis is high non-performing loans most of which were granted to connected and related parties. Banks with high non-performing loans on their books will not generate enough income to operate their business and this further erodes their capital base. These high non-performing loans in the industry were attributable to high lending rates due to sourcing of funds at high costs, high inflation during the period and government’s inability to pay its contractors and other service providers. The second factor is weak regulation where regulators were not attentive to the fran-

chise value of the Banks. Bank of Ghana therefore needs to work assiduously in reducing the interest rates in the industry which will ultimately reduce cost of funds thereby engendering an efficient financial system. The financial environment is constantly changing arising from the evolution of information technology disruption, increased interest rate and exchange rate volatility and new financial products. Faced with these inevitable changes, banks have had to develop new markets and services to maintain their market shares and to meet the growing needs of customers. Bank have partnered with telecom companies to roll out innovative products that are multidimensional and transnational in nature. This changing landscape presents new supervisory challenges to the regulators. The supervisory body needs to invest heavily in skill and capacity development in order to be able to effectively supervise the operators in the industry. The establishment of Ghana Deposit Protection Corporation (GDPC) by the Government is another initiative that can guarantee financial stability as well as curtail the potential effects of bank failures on state resources. The existence of this arrangement connotes prevention of depositors from making panic withdrawals from their banks, thereby avoiding financial instability and the upshot of several real economic effects. In order to achieve its core mandate, which is to protect small depositors from losses as a result of the collapse of financial institutions, govern-

ment needs to strengthen the institution with appropriate resources and power to execute its programme. The premium to be paid by the banks should be well protected and invested such that it would be available when and if the need for it arises. There should be firm handshake and collaboration between the GDPC and Bank of Ghana especially in areas of supervision or examination of the operations of banks. The next is the enforcement of the provision of Credit Reporting Act No 726 of 2007 which makes it mandatory for registered financial institutions to submit data on borrowing customers on monthly basis to all approved Credit Reference Bureaus. The import of this provision is to make credit information especially impaired facilities about customers available effortlessly to financial institutions to aid in credit assessment of potential loan customers. Had this been strictly adhered to, a situation where one customer had huge exposures to about ten banks in 2016 could have been avoided because it posed a serious threat to the industry. On the part of the operators, the position of the Basel Committee on Banking supervision is unambiguous “the major cause of serious banking problems continues to be directly related to lax credit standards for borrowers, or counter parties, poor portfolio risk management, or a lack of attention to changes or future changes in economic or other circumstances that can lead to deterioration in the credit standing of the bank’s counterparties.” All banks must ensure that their risk management framework is enhanced to best international standards that will not only guarantee repayment of the loan but also facilitate recovery of the collateral in case of default. Interestingly, the task to prevent future undesirable occurrences in the banking system and the inherent contagion effect across the entire financial system has been placed on the shoulder of the seven-member Financial Stability Advisory Council. The main responsibility of the council is to “coordinate and share information to ensure speedy recognition of problems and early resolution before they become systemic problems.” What we need is chemotherapy but not life-threatening surgery. An appropriate adage in this instance is “an ounce of prevention is worth a pound of cure.” The more time spent on prevention, the less the need for crisis resolution. And the time to act is now! This article was culled from FNB Bank’s official website

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MONDAY MARCH 23, 2020

AV I AT I O N

Lufthansa releases workers with medical training to help COVID-19 fight German airline group, Lufthansa, has released employees with medical vocational training to volunteer for service in medical facilities, as part of measure to help the European country contain the rapid spread of the coronavirus (COVID-19). The spread of the coronavirus has placed the entire world in an unprecedented state of emergency. At present, no one can foresee what further consequences will ensue. “What is certain, however, is that additional medical personnel will be needed. As a large German company, Lufthansa is living up to its social responsibility even in this exceptional situation. Employees who have completed medical training can now be released quickly and unbureaucratically on a voluntary basis for specific work in a medical facility. Further details are currently being worked out,” the airline group said It noted that as a good corporate citizen, the airline will do its best to support the effort of its home government in these critical times. “The Group also takes its responsibility seriously on another level: in order to bring as many people as possible back home quickly, the Lufthansa Group airlines also operate numerous special flights all over the world. “In close consultation with the governments of their home markets and on behalf of tourism companies and cruise lines, Lufthansa Group airlines are currently of-

fering around 140 special flights. More than 20,000 passengers are thus flying home with Lufthansa, Eurowings, Swiss, Austrian Airlines, Brussels Airlines and Edelweiss. Further special flights will follow in the next few days. “In addition, the Lufthansa Group is making every effort to ensure that the flow of cargo in Germany and Europe does not come to a standstill. Lufthansa Cargo continues to fly its regular program, except for cancellations to mainland China, and keeps the entire freighter fleet in the air,” the airline group said in a statement.

RwandAir cancels its commercial passenger flights

Following instructions from the Rwandan Ministry of Health regarding the global fight against Covid-19 coronavirus, RwandAir has temporarily suspended its commercial passenger flights. The measures will apply for a period of 30 days, beginning at 23:59 on Friday March 20, 2020, and affect all scheduled RwandAir flights departing from and arriving in Rwanda. A RwandAir spokeswoman said: “We are extremely sorry for the disruption and uncertainty this announcement will cause for lightly. We are confident the temporary susour customers. However, we are sure they pension of our operations will help to reappreciate why this decision is unavoidable duce the spread of the coronavirus.” at this time and that it has not been taken

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COMPANY COVID -19 MANAGEMENT STATEMENT The world is in uncharted territory with the coronavirus outbreak – W.H.O We have been accosted by news about the new Coronavirus since December 2019 with reports of new cases emerging in countries all over the Globe every single day. On 11th March 2020, the World Health Organization, WHO, declared the outbreak as a Global Pandemic and Ghana confirmed its first 2 cases on 12th March 2020. With the evolving global spread, many operations have been affected if not halted. In order to protect the staff and the Passengers, PassionAir has adopted basic precautionary measures to be actioned by their employees to minimize the risk during operations; 1. Wash hands frequently and thoroughly with soap and water for at least 20 seconds; 2. Where soap and water is not available, use alcohol-based hand rub accordingly; 3. Maintain Social distancing by avoiding unnecessary contact: use other means of greetings i.e. waving, elbowing etc.; 4. Avoid touching your mouth, face and eyes ; 5. If you feel you have the symptoms please seek medical advice! To further reinforce personal prevention measures in light of the just confirmed COVID-19 cases in Ghana, the following are measures the company has put in-place to create awareness and reduce risk during operations: Passenger Handling Our dedicated team of Passenger handling agents are available to provide assistance and information required where available to ensure Passengers are at ease and comfortable to fly. The personnel have been equipped with information available pertaining to the COVID-19 outbreak that will enable them identify symptoms and address them discreetly to avoid any panic. While assisting Passengers, personal protective wear such as gloves and masks where necessary will be donned and alcohol-based hand rubs used for hygiene purposes. Passengers will also be provided with the alcohol-based hand rubs before boarding the flight. Aircraft and Cabin Environment PassionAir aircraft are maintained per the established program aimed at providing a clean and inviting cabin environment. The Dash-8 Series 400 aircraft Environmental Control System (ECS) supplies fresh conditioned air from its two packs to the Cabin and Cockpit. Part of the air from the cabin is recirculated after filtration using HEPA (High Efficiency Particulate Air) filter. The aircraft are also designed with an air circulation system, that mixes in fresh air from

outside the plane to ensure a continuous flow of fresh air. The total replacement time of air on ground and at cruise altitude (25,000ft) are 2.0 minutes and 2.06 minutes respectively. In addition to tidying each aircraft between flights, we are expanding the use of disinfectants throughout the aircraft, and it will be used in the cabin, on elements in the flight deck, and in the lavatory. Alcohol-based hand rubs have also been availed for use in-flight. Protective equipment such as gloves and masks have been provided to staff for protection while conducting this critical but essential task for the benefit of the operations. Further and deep disinfection of Aircraft interior will be conducted periodically (fortnight) to ensure any residual microorganisms are eliminated. In-Flight We have equipped all of our aircraft with additional stocks of gloves, sanitizers, and surgical masks. While the use of masks has been recommended for protection, they have minimal benefit to prevent wearers from contracting the virus, however, they help contain potential spread of infection from someone who may already be sick. Should one develop symptoms i.e. cough, cold, fever, breathlessness etc…during the flight, the cabin crew may provide the mask as a precautionary measure and reseat the passenger should the need arise. Staff & Customer Awareness Knowledge is power! With the rate at which the outbreak is evolving, it is important that one gets the latest information. There have been many myths than facts pertaining to the virus. While we cannot confirm nor ignore information obtained from various sources, we urge Personnel and Passengers to ascertain the source of information before sharing to avoid creating fear and panic! We are closely following updates from Ghana Health Service as well as internationally, the World Health Organization (WHO) and Center for Disease Control (CDC), for guidelines on how to best handle the crisis. This updates as well as day to day tips are shared via emails and on the PassionAir website. Links to the various advisory bodies have been provided for ease of access. International Travel Following the directives from government of Ghana, the company has imposed restrictions on non-essential travel for staff outside the country. Measures include pre-screening of crew coming into Ghana from their travel history as well as a mandatory 14 days quarantine and medical clearance before resuming duty.

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MONDAY MARCH 23, 2020

E N E R GY

MONDAY MARCH 23, 2020

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Total continues its growth in renewable energy in France with a substantial investment in wind power Total, through Total Quadran - its 100 percent renewable developer and producer in France, acquires 100% of Global Wind Power (GWP) France, a company with a 1000-megawatt (MW) portfolio of onshore wind projects, including 250 MW scheduled to come on stream by 2025. “Following Vents d’Oc’ acquisition in 2019, this new investment demonstrates Total’s commitment to expand in all types of renewable energy while contributing to France’s energy transition goals. It strengthens Total Quadran’s footprint adding to its existing portfolio of nearly 1000 MW of installed and operated capacity, including over 500 MW of onshore wind and confirms its ambition to be one of the main players on France’s renewables market,” said Philippe Sauquet, President Gas, Renewables and

Power at Total said in a statement. GWP’s teams will join Total Quadran, adding to the Group’s existing expertise in order to speed up the wind power development in France.

Total and Low-Carbon Electricity As part of its ambition to become the responsible energy major, Total is building a portfolio of low-carbon electricity operations, with the objec-

tive of seeing them account for 15 to 20% of its sales mix by 2040. Today, Total’s gross low-carbon power generation capacity is close to 7 gigawatts, of which more than 3 gigawatts from renewable energy

sources. With over 5 GW of solar projects announced since the beginning of 2020, the Group is well on track to reach its objective of 25 GW of installed power generation capacity from renewable sources by 2025. Total Quadran, a pioneer of renewable energies with a strong footprint in France and its overseas territories, develops, builds and operates renewable electricity generation resources (wind, photovoltaic, hydro and biogas). Total Quadran operates over 300 renewable energy plants in France totaling over 900 MW, which generate 1 765 GWh of renewable electricity per year. This is the equivalent of the annual consumption of nearly 1 million people and annual savings of nearly 590,000 tons of CO2 emissions.

Kosmos Energy Provides Operational Update

Dr. Joyce Aryee Inspires Vivo Energy Women

Kosmos Energy has provided an operational update in response to the current market volatility, after the company published it full year 2019 results last month The company said in a statement that it is taking the following actions to maintain balance sheet strength and preserve flexibility: 1. Reduce Capital Expenditures: At the 4Q19 results, we guided to a 2020 capital budget for our base production business of $325-$375 million. We have identified over $100 million of discretionary expenditure largely related to exploration activities in the Gulf of Mexico and our basin-opening exploration portfolio. We are now targeting to reduce our 2020 capital budget for the base business by around 30% to under $250 million whilst keeping 2020 production flat, in line with previous guidance and with minimal expected impact on 2021 production. The company also has significant flexibility in its 2021 capital program should current market conditions persist. In Mauritania & Senegal, we are working with the Operator to defer 2020 Tortue Phase 1 capital spending with the goal of extending the carry of our capital obligations through the end of this year. In addition, our priority remains to sell down our interests to support a self-funded growing gas business. Tortue Phases 2 and 3 are expected to take final investment decision (FID) in mid-2022 and mid-2023 respectively with minimal capital required ahead of FID with the objective to project finance both thereafter. 2. Reduce Both Operational Expenditures (Opex) and General and Administrative Costs (G&A) We plan to implement cost reductions with over $60 million of savings

Renowned Management Consultant and Executive Director of the Salt and Light Ministries, Rev. Dr. Joyce Aryee has urged women to work collectively to change misperceptions. According to Dr. Aryee, women can be perceived to be comfortable in lower ranks of the corporate world. This, she said, limits women’s progression to leadership roles, hiding their rich creativity and innovative abilities especially when many women have accepted this perception themselves. She was speaking at Vivo Energy Ghana’s International Women’s Day event to celebrate and empower its female workforce to aspire to greater heights. Speaking on the theme for the year, #EachforEqual, Dr. Aryee urged women to embrace collective individualism – developing themselves for the benefit of the whole. “Women are intelligent, focused, resilient and compassionate, qualities they can leverage to make a significant difference. In consciously empowering women, men must also be empowered in order to align with the current trends in recognition of equal rights and opportunities for all”, she said. The Managing Director of Vivo Energy Ghana, Mr. Ben Hassan Ouattara who spoke on ‘Women in Leader-

expected in Opex and G&A in 2020. Whilst a significant portion of our Opex is fixed, we are targeting a reduction of $1/boe without impacting asset integrity or near-term production. Through a reduction in company headcount, no planned cash bonuses for employees in 2020 and other cost reductions we plan to significantly reduce cash G&A in 2020. 3. Suspend the Dividend Our priority is to ensure the strength of the balance sheet in the current market price volatility. The Board has therefore decided to suspend the dividend after the announced 4Q’19 payment until market conditions improve. This will provide savings of approximately $75 million annually.

ship’, recognised that there is no gender bias in leadership. Leadership effectiveness is based on the individual and not on sex. However, women may instinctively care more about their team’s well-being and have a stronger desire to connect with them on a personal level, thereby making women more transformational leaders than transactional leaders. He therefore urged them to take advantage of their natural abilities to aim at top leadership roles. A senior family physician of the Korle-Bu Polyclinic, Dr. Priscilla Vandyck-Sey, advised women to be more conscious of the pressures associated with the corporate world and undertake regular medical check-ups to ensure they are fit to deliver on their collective individualism agenda. International Women’s Day is celebrated annually on 8th March to showcase commitment to women’s equality, launch new initiatives and action, celebrate women’s achievements, raise awareness, highlight gender parity gains and more. The day is celebrated and supported globally by industry, governments, educational institutions, community groups, professional associations, women’s networks, charities, non-profit bodies and the media.

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MONDAY MARCH 23, 2020

F E AT U R E

MONDAY MARCH 23, 2020

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The false crisis comparison BY STEPHEN S. ROACH

In an effort to get a handle on the economic and financial consequences of the COVID-19 pandemic, the first instinct is to search for precedents and remedies in earlier crises. Many have pointed to the 2008 global financial crisis (GFC) as the most relevant example, especially in the aftermath of the extraordinary monetary-policy actions announced by the US Federal Reserve on March 15. That would be an unfortunate mistake. What worked 11 years ago won’t work today. The COVID-19 pandemic is the mirror image of the GFC. The policy response needs to be crafted accordingly. The GFC was, first and foremost, a financial shock that took a severe toll on the real economy. COVID-19, by contrast, is a public-health crisis. Draconian containment efforts – lockdowns, transportation bans, and restrictions on public assembly – are producing a shock to the real economy, with devastating consequences for businesses, their workers, and the financial sector. During the GFC, unprecedented actions by the Fed were both appropriate and decisive in addressing the primary source of the shock: a devastating blow to the financial system. In the COVID-19 crisis, the Fed cannot play the same role, because it is addressing a secondary shock: the financial repercussions of the primary shock to the real economy. Instead, the Fed’s response must be seen as necessary, but not sufficient, to address the COVID-19 crisis. It is a delicate role, to say the least. The Fed’s policymaking at moments of crisis must always be managed judiciously. As the crisis intensified, it was certainly in a tough place.

However, its rare Sunday announcement of emergency actions on March 15, just two days before a regularly scheduled policy meeting, conveyed a sense of urgency that undoubtedly heightened investors’ fears and stoked rumors of an imminent liquidity crisis. We will never know if the Fed would have been wiser to wait a couple of days. Yet this episode underscores an uncomfortable truth: We have become far too dependent on monetary fixes for all that ails the world. In the days that followed the Fed’s Sunday surprise, the added carnage in financial markets sent a strong message: The “big bazooka” of central banks that worked effectively in putting a floor beneath plummeting markets in late 2008 and early 2009 is not only the wrong weapon to address a public-health crisis; unfortunately, it also lacks live ammunition. This, of course, was the big risk all along. After having failed to normalize policy rates in the aftermath of the GFC, central banks had limited options to address the inevitable next shock. Time and again, we find out that the next shock is never the same as the last. Yet we always seem to fixate on a redesign of policies, regulations, and economic structures that is conditioned by the last crisis – leaving us woefully unprepared for the one to come. Crises can be arrested only

by attacking their source. In the midst of the COVID-19 pandemic, the focus must be on virus containment. That will require creative and expeditious actions, focusing first and foremost on public-health infrastructure and the science of COVID-19 containment and mitigation. Some have used the wartime analogy to emphasize the magnitude and scope of the policy response now required. While this is appropriate, it assumes a degree of political consensus that is sorely lacking in today’s polarized environment. Sadly, the combination of domestic polarization, national protectionism, and global fragmentation is especially problematic in bringing us all together to fight a global problem. As always, when this crisis passes, there will be great introspection on how we got into this mess. This will undoubtedly include a reassessment of globalization, which once seemed like an economic panacea for poor and rich countries alike. Courtesy of a sharp expansion of world trade, along with a concomitant explosion of global value chains, relatively poor developing economies could benefit as producers by reducing poverty and boosting living standards, while the developed world would benefit as consumers by being able to purchase cheaper goods (and increasingly services). The “win-win” of globalization

practically sold itself. But globalization has also led an interdependent world to an unfortunate fixation on the sheer speed of economic growth: the faster the growth, the bigger the “wins” for both producers and consumers. Unfortunately, this overlooked the quality of growth – not just sorely needed investment in disease mitigation and public-health infrastructure,

Stephen S. Roach

CRISES CAN BE ARRESTED ONLY BY ATTACKING THEIR SOURCE. IN THE MIDST OF THE COVID-19 PANDEMIC, THE FOCUS MUST BE ON VIRUS CONTAINMENT.

which the COVID-19 crisis has made glaringly apparent, but also investment in environmental protection despite the equally patent evidence of climate change. The GFC playbook was designed for a world facing threats to the quantity of economic growth. It cannot be the answer for a world facing a shock stemming from deficiencies in the quality of that growth. Monetary and fiscal policies can temper shortterm distress in financial markets and hard-hit businesses and communities. But they don’t address the urgent priority of disease containment and mitigation. There is broad consensus that the best way to restart the global growth engine is by flattening the COVID-19 infection curve, both in individual countries and worldwide. That, not the monetary and fiscal policy template of the last crisis, must be the laser-like focus of policymakers during this crisis. History attests to the resilience of the modern world economy in the aftermath of negative shocks. That offers grounds for hope of a self-generating rebound. But it can be realized only after COVID-19 is contained. Stephen S. Roach, a faculty member at Yale University and former Chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China. Copyright: Project Syndicate, 2020. www.project-syndicate.org

NEWS

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MONDAY MARCH 23, 2020

Federation to champion economic well-being of farmers launched BY KWASI ANKU The Ghana Federation of Forest and Farm Producers (GhaFFaP), a national federation of Forest and Farm Producer Organisations (FFPOs), has been launched in Accra to provide internal economic, social, cultural and other appropriate and relevant welfare services to members. The Membership of the Federation is drawn from three ecological zones of Ghana –the Savannah, Transition and Forest ecological zones - for promoting the interest of forest and farm producers in Ghana. The evolution of GhaFFaP has been influenced by the desire of members to maximize their strength in numbers towards building strong and profitable forest and farmbased businesses, contribute to shaping national policies for sustainable development and promote climate resilience landscapes across the forest, transition and savannah ecological zones in Ghana. The objectives of the federation include: to serve as a platform for advocating condu-

Mr. George Oduro, Deputy Minister of Agriculture

cive forest and farm policies and laws in Ghana, to coordinate the establishment of partnerships with government, private sector and civil society organizations for the benefit of forest and farm producers and promote participation in national development. It is to improve entrepreneurial and business capacities of members and provide business incubation services to forest and farm producers in Ghana and to promote sustainable environmental management and climate resilient practices and landscape restoration. It is also to ensure gender

inclusive practices in all programmes and activities of member organizations and to serve as a platform for resource mobilization for member organizations. On GhaFFaP comparative advantage, the Federation is built on five key pillars that members agree will enable the realization of building inclusive communities, climate resilience and poverty alleviation in Ghana. GhaFFaP serves as a major entry point in delivering at scale national development programmes targeting smallholder farmers as key players and end beneficiaries.

The group provides strength in numbers, strengthened internal governance, strong seat at the table, strength in businesses and strength in climate resilience landscapes building and forest land restoration collectively. Key in the business plans is the aggregation of products, market access and superior quality standards, access to finance, generating internal financing through “village Savings and Loans” Scheme, value addition and partnership with government flagship programmes. GhaFFaP aims to use it strength in numbers to partner with government and other stakeholders to ensure members implement climate resilience plans and undertake forest landscape restoration including the integration of trees on their lands, use of farmer managed natural regeneration approaches and agro-ecology farming best practices. Mr George Oduro, Deputy Minister of Agriculture, who launched the Federation commended the leadership of GhaFFaP and Food and Agri-

culture Organisation (FAO) for teaming up to help Ghana protect its forests as it empowers local farmers economically. He said government continues to prioritise and promote initiatives that were aimed at addressing the effects of climate change and building more resilient landscapes in communities. He said government working with key stakeholders and partners has identified seven priority areas to undertake various climate interventions including food, agriculture, energy, forestry, waste, infrastructure and disaster risk reduction. He said the Ministry was delighted to learn that GhaFFaP would be prioritising the active participation of women and youth through the GhaFFaP Women’s Champions Wing. He reiterated government’s continued support for initiatives such as GhaFFaP as ‘we recognise grassroots mobilisation as a key factor to sustainable and more inclusive.’ development interventions.

MONDAY MARCH 23, 2020

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MONDAY MARCH 23, 2020

What the G20 must do

BY PAOLA SUBACCHI

Saudi Arabia, this year’s chair of the Group of Twenty (G20), will convene a virtual summit next week to discuss a global response to the COVID-19 crisis. The emergency meeting could not come too soon. Because global health is a collective public good, any threat to it requires a multilateral response. The health emergency also threatens to trigger a global recession and financial crisis. As we learned in 2008, global economic crises must also be met with a multilateral strategy. Timid, uncoordinated, or unilateral actions by individual countries will be ineffective, at best, and could lead to a downward spiral of “beggar-thy-neighbor” policies. The G20 is the obvious candidate to play the role of global coordinator. Accounting for around 90% of global GDP, it comprises the world’s largest advanced and emerging economies. And as a forum without a permanent secretariat, it is agile enough to bring the international community together quickly, as it did in November 2008, at the height of the financial crisis. On that occasion, G20 leaders gathered in Washington, DC, to organize a coordinated response, and then met again in April 2009 in London,

where they took steps to stabilize the global economy and restore confidence. It worked: a public display of collective leadership and shared responsibility averted a deeper economic collapse. In today’s emergency, the stakes are even higher, because millions of lives are in peril. Were COVID-19 to end up having a mortality rate of 1%, the final death toll would be similar to that of World War II. Worse, that is the “benign” scenario. As of March 3, the World Health Organization put the current mortality rate at 3.4%, based on reported cases. In advanced economies, health-care systems facing an upsurge in COVID-19 cases are at risk of collapsing. In many developing countries, the medical infrastructure for dealing with infectious diseases is limited. Making matters worse, growing pressure on supply chains will make it more difficult to acquire basic goods, including medical equipment. This is not a time for timid or symbolic action. The G20 urgently needs to adopt a plan for addressing the medical emergency, backstopping the global economy, and restoring confidence. What follows are suggestions – far from an exhaustive list – of the steps policymakers should take. First, G20 leaders should embrace the principle of “virtual-

ity” fully, by canceling the rest of the group’s in-person meetings scheduled for this year. By moving online and avoiding unnecessary gatherings such as the Business 20 and other engagement groups, the G20 can set an example for all of those countries and communities that have yet to recognize the urgency of containment through “social distancing.” Second, the G20 should establish a fund to support the WHO’s efforts to monitor and report on the emergency, and to coordinate the supply of basic equipment like testing kits and face masks. As in 2009, it is important to show the world that competent, skilled professionals are in the driver’s seat. Third, the G20 should give the WHO a formal seat at the table, as it has already done with the International Monetary Fund, the World Bank, and the OECD. Global health has always been a secondary topic for the G20, which has tended to focus only on issues such as access to care and food and water safety. But as the current crisis shows, the systemic impact of pandemics and the influence of public health on economic conditions more broadly should be primary issues of concern. Fourth, G20 member states must be prepared to help low-income countries that lack the infrastructure, medical provisions, expertise, and personnel to contain the con-

tagion. Coordinated action among governments, regional development banks, the United Nations Development Programme, and other entities is critical in this regard. Fifth, the G20 should adopt an emergency package to prevent a full-scale collapse of the global economy. There is an urgent need for fiscal stimulus, measures to keep global supply chains operating, commitments to eschew protectionist measures and unilateral currency devaluation, and arrangements to ensure ample liquidity in the global monetary and financial system. As in 2008 and its aftermath, the current crisis demands a comprehensive, “whatever it takes” approach, and it is needed now. Monetary policy in the absence of coordinated fiscal policies will have only a limited impact, and fiscal policies designed with only domestic considerations in mind will be far less powerful than they otherwise could have been, owing to the spillover effects of import spending. Research shows that the national-level impact of a coordinated G20-wide fiscal-stimulus package could be up to twice as large as that of domestic stimulus measures pursued in isolation. Moreover, unilateral measures could spook bond markets and thereby increase debt-servicing costs for countries such as Italy, which is in the grip of a full-blown medi-

cal emergency. Above all, the G20 must be bold. The world has heard enough hollow declarations and tolerated enough puerile diplomatic quarrels. Judging from the figures coming out of China’s Hubei province (the first epicenter of the pandemic) and northern Italy, the global outbreak will worsen significantly before it improves. And, because the contagion is on an exponential growth path, that worsening could be even more horrifying than what we have seen so far. Only international coordination can prevent a worst-case scenario. People and businesses around the world are deeply concerned – if not outright panicked – and need reassurance. World leaders need to put aside petty nationalism and lead. Otherwise, an emergency that already feels like a war could yet become one.

Paola Subacchi, Professor of International Economics at the University of London’s Queen Mary Global Policy Institute, is the author, most recently, of The Cost of Free Money. Copyright: Project Syndicate, 2020. www.project-syndicate.org

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Averting economic disaster is the easy part Based on China’s experience with COVID-19, the fiscal cost of comprehensive compensation for lost income could reach 10% of annual GDP, and as much as 25% of GDP in the US and Europe if the epidemic turns out to be worse there, which now looks likely. These may seem like mind-boggling sums, but they can be financed in several ways. BY ANATOLE KALETSKY Contrary to my initial expectations, the spread of the COVID-19 coronavirus around the world is not following the relatively benign trajectories experienced in China outside of Wuhan and Hubei province, and in South Korea, Singapore, and the rest of Asia. Instead, across Europe – and very likely in the United States, too – the spread of the virus increasingly resembles the path it took in Hubei. This threatens both medical and economic disaster. But while it may be too late for policymakers to avert a public-health crisis, it is still possible to implement the fiscal and monetary measures needed to prevent an economic catastrophe. To do this, they will need to go much further than the monetary steps announced by the US Federal Reserve and the Trump administration’s proposals for untargeted tax cuts and cash handouts thus far. Initially, I expected that the number of cases in European Union countries would converge toward the 10-100 patients per million seen in Asia outside Hubei, and that the US might follow a roughly similar pattern. The fact is, however, that Italy, France, Spain, and other EU countries are not experiencing the slowdown in the rate of change of acceleration (the second derivative of velocity, or the “jolt” in mathematical parlance), seen in Wuhan and the rest of China by this stage in the epidemic. One possible explanation is that Italy’s lockdown measures are much less rigorous than those in Asia, and that health-care systems are less prepared. For example, patients are not removed from their families as quickly, and so infect others. If so, then the acceleration in the US and the United Kingdom will be even more rapid than in continental Europe, because of the piecemeal, and plain misguided, policy responses from US President Donald Trump and UK Prime Minister Boris Johnson. It is thus entirely possible that the asymptotic outcome for countries in Europe and America will be more like Wuhan’s 1,000 cases per million. Or, in what a few weeks ago would have seemed a nightmare fantasy but is now a reasonable worst-case scenario, Europe and the US could end up with far more infections per capita than Wuhan. Italy, with confirmed infections

nearing 32,000 in a population of around 60 million, already is approaching Wuhan’s ratio – and the Italian epidemic still appears to be accelerating rapidly at a stage when Wuhan’s was already slowing down. Meanwhile, the British government publicly contemplated, and then backtracked from, a policy that would allow the virus to infect 60% of the population in the hope of establishing “herd immunity.” This would be a rate of infection 600 times the level in Wuhan. The only good news in this dreadful situation is that, unlike the medical effects of the virus, the economic impact is easy to predict and overcome. There is one possible policy response that could prevent the epidemic, even in the relatively virulent form experienced in Hubei, from fueling an economic catastrophe worse than the 2008 financial crisis. Governments in every major economy must guarantee unlimited compensation for lost revenues and wages to all businesses and workers affected by quarantines and lockdowns – if not the full 100%, then maybe 80-90%. Ideally this compensation would come through outright grants and fiscal transfers, but another option for larger businesses might be long-term zero-interest loans or loan guarantees. Luckily, this response is now feasible because of the way the 2008

crisis transformed the world economy and financial markets, offering governments unlimited financing with zero interest rates, low inflation, and tolerance for previously unthinkable monetary and fiscal experimentation. To be clear, in the current situation, monetary policy won’t do anything to stimulate economic activity. Nor do policymakers want it to: more economic activity now would only aggravate the public-health crisis. But zero rates and huge liquidity injections are still necessary to prevent financial systems from collapsing. Fiscal measures designed to support recovery should wait until the virus is under control. What governments can and should do now is reassure their citizens and businesses that they can stay at home and not worry about lost incomes, because the government will make up for the losses once the crisis is over. Based on China’s experience, the fiscal cost of comprehensive compensation for lost income could easily come to 10% of annual GDP. And if the epidemic turned out to be worse than in China, which now looks likely, the fiscal cost could be as high as 25% of GDP. These may seem like mind-boggling numbers, but they can be financed in one or more of three ways. First, every G20 country, with the possible exception of Italy,

could easily increase its government debt-to-GDP ratio by 25 percentage points without raising any serious questions about solvency. And debt-service costs would hardly rise at all if central banks committed to keeping short rates at zero for at least two years, and investors were forced by regulation and financial repression to match liabilities with long maturities. There is a fundamental difference between a one-off fiscal transfer, however large, and fiscal stimulus through tax cuts or spending commitments that permanently increase annual deficits. A oneoff transfer of 25% of GDP does less damage to long-term fiscal solvency than a tax cut of 1% or 2% of GDP or long-term spending commitments that change the fiscal structure for decades ahead. Second, central banks could increase their quantitative easing programs to absorb the entire additional debt issuance. In short, the monetary base in every G7 economy could simply expand by 25% of GDP. Lastly, compensation for businesses and workers could come directly from central banks through targeted drops of “helicopter” money. Agreement among governments and central banks around the world on a single method would boost the credibility of the response. In practice, however, some combination of these three policies

could be employed. But should it? There are two objections to full government compensation: It could ultimately prove inflationary, and it would represent an unprecedented intervention by governments to bail out and subsidize businesses. These are weak objections. Today, everyone wants higher inflation. While this might eventually – maybe by the second half of the decade – turn out to be a mistake, there will be plenty of time to switch to anti-inflationary policies between now and then. Full compensation is far from unprecedented. Farmers are regularly compensated for agricultural disasters, such as mad cow disease, or even for plunging agricultural prices and trade wars. Regions and households suffering from floods, earthquakes, or wildfires are normally compensated through disaster relief or subsidized insurance. And, since 2008, banks, insurance companies, and financial markets have received effective fiscal transfers in many countries amounting to far more than 25% of GDP. The difference in this case is that the disaster affects everyone, which, in principle, makes the case for compensation stronger. The only reason why governments around the world are still thinking in terms of loans and credit guarantees, instead of direct fiscal compensation, is that no special-interest lobby such as farmers or bankers is demanding targeted relief.

Anatole Kaletsky

Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics. A former columnist at the Times of London, the International New York Times and the Financial Times, he is the author of Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis, which anticipated many of the post-crisis transformations of the global economy. His 1985 book, Costs of Default, became an influential primer for Latin American and Asian governments negotiating debt defaults and restructurings with banks and the IMF.

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The COVID-19 Cash Out While Chinese authorities have been destroying banknotes that have potentially come into contact with the coronavirus, Western countries remain woefully behind not just in their response to the pandemic, but also in adopting digital payments. One silver lining to the COVID-19 crisis is that this may soon change.

BY JUERGEN BRAUNSTEIN , MARION LABOURE, SACHIN SILVA

Because hand-to-hand exchange of physical currency could transmit the coronavirus, countries around the world are being forced to reconsider the use of cash. In fact, COVID-19 might turn out to be the catalyst that finally brings digital payments fully into the mainstream. Not surprisingly, the digital-payments industry is already focusing on the opportunities created by the crisis. China’s government, for its part, has begun to disinfect and even destroy banknotes to mitigate the spread of the virus, at least in the short run. For example, Hong Kong’s South China Morning Post reports thata local branch of the People’s Bank of China in Guangdong province has been destroying money that may have circulated through highrisk settings such as hospitals and food markets. For fear of importing contaminated currency from Asia, the US Federal Reserve has initiated quarantine measures for physical dollars from the region. Such actions are probably justified, considering that currency in circulation can

indeed serve as a vehicle for transmitting pathogens – much like a mosquito. Studies have found that the human influenza virus, for example, can remain alive and infectious on banknotes for 17 days. Accordingly, it would not be unreasonable to assume that physical currency has played a role in spreading COVID-19 as well. In any case, many countries will be weighing the option of disinfecting, destroying, and reprinting currency. Whatever they decide, one outcome already seems certain: the coronavirus will accelerate an ongoing shift among younger populations toward digital payments, particularly in Asia, and specifically in China. This trend is already strong. As of the end of 2018, around 73% of Internet users in China used online payments services (up from 18% in 2008). Young populations tend to be more open to adopting new technologies, and China and Southeast Asian countries have significantly younger populations than Europe and the United States. Moreover, the Chinese government actively promotes its online banking infrastructure, whereas Western countries rarely use a top-down approach to governance, and have lagged behind Asian economies in

adopting digital payments. There are internal and structural reasons for Western countries’ slower adoption rates. For example, Europe doesn’t have any large technology or financial companies involved in the digital-payments sector. As such, European consumers and businesses must rely on services offered by large US companies – Apple Pay, Google Pay, PayPal, and so forth. But, owing to concerns about ceding critical sectors of the digital economy to US tech giants, the European Union has been taking a slower, more careful approach, favoring those changes that are least disruptive to the European financial-transaction infrastructure. Cultural habits have also slowed the pace of change in the West. Americans and Western Europeans, in particular, are much more dependent on cash than are households in Asia. According to a recent survey by Deutsche Bank, one-third of respondents in developed economies consider cash to be their favorite payment method, and more than half believe that cash will always be around. Changing such culturally ingrained habits without risking public blowback takes time. Still, the global spread of COVID-19 might be moving

the world toward a turning point in how it handles payments. It is too early to predict what changes might be coming, but they are likely to emerge as solutions to specific challenges within different national contexts, payment infrastructures, and demographic groups. Digital versions of cash currency, such as Sweden’s recently announced e-krona, are promising examples of what could be in store. Beyond COVID-19 and the increasing acceptance of noncash payments in stores, there are other reasons why people might want to switch to digital payments. The Deutsche Bank survey, for example, found that convenience plays an important role in a person’s choice to go digital. Digital wallets are free and easily available. Going digital could also help track spending and manage budgets. In terms of security, going cashless reduces the chances of being physically robbed. To be sure, the current crisis has not yet led many countries other than China to disinfect, destroy, and reprint their currencies. But COVID-19 could turn out to be a once-in-a-century pandemic, as Bill Gates recently warned in a commentary for the New England Journal of Medicine. A oncein-a-century pathogen would

demand once-in-a-century solutions. An obvious place to start is to accelerate the inevitable shift toward digital payments.

Juergen Braunstein

Juergen Braunstein is a fellow at Harvard University’s Belfer Center for Science and International Affairs; Marion Laboure is a macro strategist at Deutsche Bank; Sachin Silva is a doctoral candidate and fellow at Harvard University.

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