CFI.co Spring 2021

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Adam Driver

First Thoughts

In 1776, moral philosopher Adam Smith, known as the father of economics (which turned out to be a somewhat unruly child) published The Wealth of Nations.

His book didn’t exactly eclipse the US Declaration of Independence – the other blockbuster of that year –but it can perhaps claim greater worldwide impact, and it has certainly been more influential. Smith, the enemy of mercantilism, championed free trade and open markets, believing that unfettered selfinterest, rather than the strict hand of government, would bring stronger economic outcomes.

Mercantilism means maximising exports and protecting against imports through subsidies and high tariffs (and, in the “good old days”, it called for the salting away of much gold and silver). It would seem an odd position to take, given that others are likely to respond in kind – and when they do, things can get nasty. It can be a harbinger of trade wars, and worse.

In 1930, the Smoot-Hawley Act increased 900 import tariffs by an average of almost 50 percent. It set out to relieve the effects of the US Dust Bowl but resulted in a far worse depression, and provided another spark for World War II (as if there were not enough already).

Yet protectionism persists. Britain did not embrace free trade until the 1880s, by which time it was fully confident of its industrial muscle. And, during the past 60 years, pro-business Asian states have created economic miracles on the back of protectionist policies.

But at last year’s UN General Assembly, Chinese president Xi Jinping called for unflagging pursuit of “an open world economy”. He declared: “We should safeguard the multilateral trading system with the

World Trade Organisation as the cornerstone, take a clear stand against unilateralism and protectionism, and keep the global industrial chain and supply chain stable and smooth.”

The US has had the world’s largest trade deficit for the past 45 years. Half-way through Donald Trump’s presidency, he said: “Trade wars are good and easy to win.” Stock markets went into shock, domestic farm bankruptcies soared, other countries retaliated – and many excluded America from new trade agreements. An organisation called Tariffs Hurt The Homeland was formed on the back of claims that the policy was costing Americans $810 – each second. Of course, China was not well-pleased either: former senior trade official Wei Jianguo said: “The essence of the trade war is that the US wants to destroy China.”

Free trade can result in economic miracles, including the one witnessed in Chile in the 1980s. The Chicago Boys, economists who had studied under Milton Friedman, were responsible for a dramatic reorientation. It brought significant material benefits – and led the way to a free society.

Economic globalisation has its critics, and rightly so. It can be blamed for a rise in inequality, and it cannot protect us from financial crises. But if we don’t like the sort of globalisation we have, we should change it. There may be calls for post-pandemic protectionism, but history flags the dangers of taking that road. We need more, rather than less, economic integration and interdependence as we plan for recovery. But that plan must focus on transformative development, and the achievement of the UN’s 17 Sustainable Development Goals by the year 2030.

This will be change enough.

Correspondence

“ “ “

Last year ended on a promising note thanks to DeepMind’s solution to the “proteinfolding problem” (First Thoughts, Winter). This development is likely to accelerate our understanding of diseases, including the one that defined 2020 and continues to haunt us. It is a comfort that Demis Hassabis and his team at DeepMind can bring their formidable intellects to real world problems. This company is at the vanguard of AI research after a string of significant year-by-year achievements, and it clearly has the best of intentions. However, I would like to urge the AI world to be cautious when assuming that art produced in this way can convincingly imitate the work of the great artists. Hassabis includes a slide in his presentations that shows how deep neural networks can produce pastiches of Van Gogh’s work. Big deal: that’s easily done and not very satisfying. DeepMind is not delving into the mind of a creative genius when producing a sketch of the bicycle outside your Aunt Mabel’s Weymouth cottage in the style of The Starry Night. Something is wrong here.

SALLY JONES (Oxford, UK)

I applaud the positive views expressed by Lord Waverley in your Winter issue regarding Britain’s future role in support of international trade relations. It is true that the country can now act as a bridge between developed and developing markets. It is indeed important that we “do trade differently” now. Trade must contribute responsibly to a more inclusive, sustainable and greener economy. To ensure this, we must push hard to achieve the UN’s Sustainable Development Goals by 2030. As a member of the G7, Britain is well placed to influence the international scene for the better, and I hope this is never forgotten. We worked hard in 2020 to conclude satisfactory trade arrangements with our friends in the EU and elsewhere. We should not take our eyes off the ball now.

GEFFREY WALKER (Ludlow, UK)

I thoroughly enjoyed the Winter issue of your magazine. As an observer –from afar – of the US election and its oftenunsavoury aftermath, it was a pleasure to study your predications for change during the Biden presidency. I have framed the cover, which correctly refers to the new president as uniterin-chief, and it now has pride-of-place in my study. This is not my president, but I welcome the opportunity to join with so many of my US friends in celebrating Biden’s success.

AMI BOATENG (Accra, Ghana)

London: Royal Albert Hall

“Your recent article, Prepare for the Impacts of Climate Change (Winter 2020) is the sort of responsibility-dodging, hand-washing disclaimer that is driving us all to distraction, and possibly destruction. Without even considering Covid, social protection, personal identification and digital payment systems, climate change can be fought on far more logical and effective grounds. It is not inevitable, it is a conscious choice – one taken by the world’s corporations, governments, billionaire entrepreneurs, and ministers, to cut costs. Follow the money: it’s the only enduring refrain. You want solutions? Make it a mandatory obligation for those (individual or corporate) seeking planning permission for a new building, be it home, office or luxury hotel. Every project embarked upon in suitable climates (perhaps not The Netherlands, I admit) should have solar panels included in the spec. Without that single, vital commitment, no development should go ahead. Grey-water systems, composting toilets, circular economies, concerted effort on the part of local and national authorities: all these things can be introduced to good effect. Changing the things we are able to, would cut greenhouse emissions, take a load off the national grid, and improve the West’s generally disgusting, chemically driven sewerage systems. The problem is not one of finding solutions; it’s about applying the solutions which are already to-hand – but dismissed for cost reasons. For filthy lucre, put another way. CFI.co and organs like it, that make it seem as if euros and dollars and pounds sterling were the lifeblood of the planet, are partly to blame for the cost-conscious, greedy mindset that pervades modern society. Pursue some issues that really matter, please.

HILDA VAN VUUREN (Amsterdam, NL)

“In response to your article Steeled by Brexit,EuropeanUnionStandsUptoRuleBreakers, I hardly think that in the average British household the end of the transition period will have barely registered. But Brexit turned Kent into a Danteesque tailback of lorries filled with rotting goods and increasingly desperate, and hungry, drivers. The county formerly known as the Garden of England has also managed to come up with a novel strain of Covid-19. As things stand, it could be our major export of 2021.

BEATRICE FAULKS (Gravesend, UK)

“

I read with great interest your article on UniCredit’s social impact banking policies. Having had some recent dealings with the company in this ambit, I can confirm the admirable steps it has taken to improve inclusivity and diversity – not just in-house, but also in its investment policies and outreach initiatives. It is reassuring in these times of increasing disparity of income to find programmes such as these from enlightened organisations which understand that their businesses will ultimately benefit from including more people in the active economy. Congratulations to Ms Penna and her team on the positive impact they are undoubtedly making.

MASSIMO VISCIDO (Brescia, Italy)

Editorial Team

Sarah Worthington

George Kingsley

Jackie Chapman

Tony Lennox

Kate Stanton

Brendan Filipovski

John Marinus

Ellen Langford

Helen Lynn Stone

Naomi Snelling

Columnists

Otaviano Canuto

Evan Harvey

Tor Svensson

Lord Waverley

Distribution Manager

William Adam

Subscriptions

Maggie Arts

Commercial Director

John Mann

Director, Operations

Marten Mark

Publisher

Anthony Michael

COVER STORIES

World Bank COVID-19 Response (14 – 15)

IBM

Thought Leadership (22 – 25)

IFC

Blending Public and Private Finance (24 – 25)

Cover Story

WTO Director-General Ngozi Okonjo-Iweala (32 – 35)

UNCDF

Inclusive Digital Economies (38 – 39)

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Deloitte

Alternative Investment Fund Market (72 – 73)

Asian Development Bank

Restoring the World’s Oceans (180 – 181)

Axel van Trotsenburg World Bank

Otaviano Canuto

Nouriel Roubini

Michael Spence Nicholas Stern

Joseph E Stiglitz Kruskaia Sierra-Escalante IFC

Paul Horrocks OECD

Tony Lennox

Anna Bjerde Ahmed Dermish Tor Svensson

UNCDF IBM

Lord Waverley

Paolo Sironi

Lindsey McMurray Pollen Street Capital

SegurCaixa Adeslas

ORBIAN Whitecroft Capital Ventum Dynamics

Korosh Farazad Farazad Investments

Scottish Friendly

BBVA Asset Management Deloitte Gorgi Krlev

Adrian Fuchs Heidelberg University SPORTFIVE

The Access Bank UK Carey AVL

Helmut List Stifel Europe ICICI Bank UK

Narodowy Bank Polski

QNB

Mohamed El Dib Kellogg Insight

Investment House Yousef Abdullah Al Subeai

Bernard Haykel

Abbas Basrai KPMG ICBC Middle East

Linklease TANQIA APICORP

Ahmed Attiga

Santiago Free Zone Corporation Naomi Snelling Maximo Lima

David Ariaz Hemisfério Sul Investimentos (HSI)

Mohamed A El-Erian Otaviano Canuto

Shahnaz Radjy Dr Maria Teresa Ferretti Ingrid van Wees

Said Rustamov Asian Development Bank

> World Bank on COVID-19: The Road Back Must Be Green, Resilient, and Inclusive

By Axel van Trotsenburg World Bank Managing Director of Operations

COVID-19 has imposed a deeper, more widespread shock than the global community has faced in many decades. The pandemic is causing illness and death, disrupting livelihoods, and potentially pushing an estimated 150 million more people into extreme poverty by the end of 2021. And while the rapid development of vaccines offers all of us some hope, the pandemic continues to dominate our lives.

For developing countries, COVID is also compounding the risks posed by climate change, along with other long-term challenges. In many places, fragility and conflict were eroding development gains long before the pandemic. Far too many countries were also coping with unsustainable debt levels. And every country was facing challenges to create more jobs in a global economy marked by accelerating technological change.

Taken together, these factors mean that most developing economies were highly vulnerable when COVID struck. And they are now the ones suffering the greatest damage from its impacts. Given the pressing nature of these challenges— notably climate change—countries don’t have the luxury of putting off action on other crises and risks until the pandemic subsides.

This means that the financing needs in low- and middle-income countries are at a historic high. While industrialised countries have spent up to 15–20% of their GDPs on stimulus packages, emerging markets have spent around 6% and the poorest countries have spent less than 2%. To help developing countries at the scale they need will require substantial new resources, from the World Bank Group and other multilaterals, from the donor community, and from the private sector. Sustained, robust financial support for the poorest countries is critical to boosting their capacity to beat the pandemic, build more resilient economies, and restore momentum on the 2030 agenda.

The World Bank Group is committed to helping close this financing gap. Our COVID crisis response over the past year has been fast and decisive in bringing massive support to developing countries, particularly the poorest and most vulnerable. Across the World Bank, IFC, and MIGA, we have stepped up to this challenge since the onset of the pandemic. World Bank programs, normally in the range of

"In addition to increasing the provision of large concessional resources to the poorest countries, as IDA is doing, debt relief has been a key part of the support package."

$42 billion per year, grew last calendar year to $71 billion to meet intensified client demand. About 60 percent of our operations are currently COVID-related.

We are also starting a year early on the negotiations for the next replenishment of the International Development Association (IDA), our fund for the poorest. IDA has been a steadfast and increasingly important source of support for the poorest countries through various crises, and it has stepped up even more during the pandemic. This is especially evident in our support for health, education, and social protection.

In addition to increasing the provision of large concessional resources to the poorest countries, as IDA is doing, debt relief has been a key part of the support package. The G20 Debt Service Suspension Initiative (DSSI) has helped free up resources for governments, which they have been able to direct to priority areas for combatting the pandemic. But there are still challenges, particularly with private creditors, who have not been participating actively in this important initiative. And while the DSSI has provided essential short-term relief, many of the poorer countries also face longer-term concerns on debt sustainability. The G20 Common Framework, about to begin, should help address these problems on a case-by-case basis.

While debt relief and concessional resources from multilateral organisations and donors are critically important, more needs to be done. Tackling this global crisis effectively can happen only with more international solidarity and more international action. With the pandemic affecting every country simultaneously, there’s a risk that wealthier countries will focus mainly on their own recovery. While this is perhaps understandable, as every government is accountable to its own people, it runs the risk of leaving poorer countries behind. This ultimately jeopardises the wellbeing of all.

The COVID vaccines illustrate this risk very clearly. We are working closely with many other organisations to get the vaccines to the people of developing countries. The World Bank is providing up to $12 billion to governments and the IFC a further $4 billion to manufacturers of vaccines and related equipment in developing countries. Efforts include using COVAX, a mechanism that the international community has set up to ensure global, equitable access to vaccines for major infectious diseases. But at this early stage, the industrialised countries have bought up most of the supply of the COVID vaccines, leaving developing countries with insufficient coverage. Therefore, it is very important to ensure fast and equitable distribution of vaccines worldwide.

But beyond these immediate concerns, the pandemic has wider impacts that could affect developing countries for the long term. Continued, sustained financing will be critical to ensure a lasting recovery but rebuilding better will also mean embracing key shifts that are transforming the global economy. COVID-19 has already spurred changes in how people work and live, and in how economies are organised. The crisis is underscoring the value of robust health, education, and social protection systems. It is making clearer than ever that digital access and innovation can support every sector of the economy. And it highlights the need for effective government and community leadership.

This is why we need to start focusing our support, both financial and technical, on the green, resilient, and inclusive transformations that will help economies withstand a range of potential shocks in the future. While the emergency phase is far from over, we must partner with countries now, not just to anticipate health risks, but also to help them brace against climate change, natural disasters, conflict, and economic disruption.

The World Bank Group believes that countries can chart a new, sustainable route to higher living standards by pursuing their climate and environmental goals. Their recovery from the pandemic is a chance to accelerate this progress and rebuild better. Hence, we are preparing to support developing countries on a much larger scale as they invest in green infrastructure, develop environmentally sustainable technologies, and phase out harmful fuel subsidies. The goals of long-term growth and job creation are inextricable from countries’ efforts to reduce carbon emissions and to mitigate and adapt to climate change.

As they plan for the road ahead, developing countries will also need policies and reforms that expand economic participation, that leverage technology for more robust and inclusive delivery of key services, and that make it easier for the public and private sectors to work together toward development goals.

By focusing on key climate investments, countries can not only unlock short-term gains in growth but also deliver long-term benefits: lower carbon emissions, greater resilience to climate

change, and more good jobs in emerging, greener sectors.

The international community stands at a critical moment, with COVID-19 and climate change imposing dual crises of global proportions. Both require a massive global response, and they must be tackled simultaneously. Meeting investment objectives will call for significant financial resources at a time when countries are facing fiscal constraints and debt overhang, and there is a need to augment all sources of finance – including from the private sector, domestic resources, and development financing – and use it effectively.

Developing countries have been the most vulnerable in this pandemic, just as they are to climate impacts. And they face the steepest path back. The World Bank Group is working hard to help them secure the financial resources and sustained international support needed. We are all in this together, and I remain optimistic that we will see real improvement in many countries during 2021. i

ABOUT THE AUTHOR

Axel van Trotsenburg is the World Bank Managing Director of Operations.

In this role, which he assumed on October 1, 2019, van Trotsenburg oversees the Bank’s operational program and ensures that the Bank’s delivery model continues to meet the needs of client countries. He also builds support and mobilises financial resources across the international community for efforts to assist low and middle-income countries.

Van Trotsenburg brings deep experience in regional operations and finance, drawing on his experience as currently the longest serving Vice President at the Bank, with two tenures in the Finance Complex and two in Operations. A Dutch and Austrian national, he was Acting World Bank CEO from September 2 – 30, 2019 and served as World Bank Vice President for Latin America and the Caribbean from February 2019. In this latter position, he led relations with 31 countries in the region and oversaw a portfolio of ongoing projects, technical assistance and grants worth more than US$30 billion.

From 2016 to January 2019, van Trotsenburg served as World Bank Vice President of Development Finance (DFi). Here, he oversaw strategic mobilisation of resources, and was responsible for the replenishment and stewardship of the International Development Association (IDA), the largest source of concessional financing for the world's poorest countries. He has led the policy negotiations and process for two IDA replenishments, which together mobilised a record $125 billion—$50 billion in 2010 for IDA16 and $75 billion in 2016 for IDA18. Under his leadership, for the first time, IDA leveraged its equity by blending donor contributions with internal resources and funds raised through debt markets.

In his DFi role, van Trotsenburg also oversaw the International Bank for Reconstruction and Development (IBRD) corporate finances. He co-led the World Bank Group's efforts to obtain a capital increase which resulted in shareholders endorsing a transformative package in April 2018, including an increase of the IBRD capital by $60 billion. He also cochaired the replenishment negotiations for the Global Environment Facility (GEF) that were successfully concluded in April 2018 and was responsible of a multi-billion-dollar trust fund portfolio.

Prior to joining the World Bank, van Trotsenburg worked at the OECD in Paris. He holds a master’s and a doctorate degree in economics and a master’s degree in international affairs. He is married and has two children.

WORLD BANK: COVID-19 RESPONSE

The World Bank, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries respond to the health, social and economic impacts of COVID-19. This includes $12 billion to help low- and middle-income countries purchase and distribute COVID-19 vaccines, tests, and treatments, and strengthen vaccination systems. The financing builds on the broader World Bank Group COVID-19 response, which is helping more than 100 countries strengthen health systems, support the poorest households, and create supportive conditions to maintain livelihoods and jobs for those hit hardest.

Managing Director of Operations: Axel van Trotsenburg

Nouriel Roubini:

The COVID Bubble

The US economy’s K-shaped recovery is underway. Those with stable fulltime jobs, benefits, and a financial cushion are faring well as stock markets climb to new highs. Those who are unemployed or partially employed in low-valueadded blue-collar and service jobs – the new “precariat” – are saddled with debt, have little financial wealth, and face diminishing economic prospects.

These trends indicate a growing disconnect between Wall Street and Main Street. The new stock-market highs mean nothing to most people. The bottom 50% of the wealth distribution holds just 0.7% of total equity-market assets, whereas the top 10% commands 87.2%, and the top 1% holds 51.8%. The 50 richest people have as much wealth as the 165 million people at the bottom.

Rising inequality has followed the ascent of Big Tech. As many as three retail jobs are lost for every job that Amazon creates, and similar dynamics hold true in other sectors dominated by tech giants. But today’s social and economic stresses are not new. For decades, strapped workers have not been able to keep up with the Joneses, owing to the stagnation of real (inflationadjusted) median income alongside rising costs of living and spending expectations.

For decades, the “solution” to this problem was to “democratise” finance so that poor and struggling households could borrow more to buy homes they couldn’t afford, and then use those homes as ATM machines. This expansion of consumer credit –mortgages and other debt – resulted in a bubble that ended with the 2008 financial crisis, when millions lost their jobs, homes, and savings.

Now, the same millennials who were shafted over a decade ago are being duped again. Workers who rely on gig, part-time, or freelance “employment” are being offered a new rope with which to hang themselves in the name of “financial democratisation.” Millions have opened accounts on Robinhood and other investment apps, where they can leverage their scant savings and incomes several times over to speculate on worthless stocks.

The recent GameStop narrative, featuring a united front of heroic small day traders fighting evil short-selling hedge funds, masks the ugly reality that a cohort of hopeless, jobless, skill-less, debt-burdened individuals is being exploited once again. Many have been convinced that financial success lies not in good jobs, hard work, and patient saving and investment, but in get-rich-quick-schemes and wagers on inherently worthless assets like cryptocurrencies (or “shitcoins,” as I prefer to call them).

Make no mistake: The populist meme in which an army of millennial Davids takes down a Wall Street Goliath is merely serving another scheme to fleece clueless amateur investors. As in 2008, the inevitable result will be another asset bubble. The difference is that this time, recklessly populist members of Congress have taken to inveighing against financial intermediaries for not permitting the vulnerable to leverage themselves even more.

Making matters worse, markets are starting to worry about the massive experiment in budgetdeficit monetisation being carried out by the US Federal Reserve and Department of the Treasury through quantitative easing (a form of Modern Monetary Theory or “helicopter money”). A growing chorus of critics warns that this approach could overheat the economy, forcing the Fed to hike interest rates sooner than expected. Nominal and real bond yields are already rising, and this has shaken risky assets like equities. Owing to these concerns about a Fed-led taper tantrum, a recovery that was supposed to be good for markets is now giving way to a market correction.

Meanwhile, congressional Democrats are moving ahead with a $1.9 trillion rescue package that will include additional direct support to households. But with millions already in arrears on rent and utilities payments or in moratoria on their mortgages, credit cards, and other loans, a significant share of these disbursements will go toward debt repayment and saving, with only around one-third of the stimulus likely to be translated into actual spending.

This implies that the package’s effects on growth, inflation, and bond yields will be smaller than expected. And because the additional

savings will end up being funneled back into purchases of government bonds, what was meant to be a bailout for strapped households will in effect become a bailout for banks and other lenders.

To be sure, inflation may eventually still emerge if the effects of monetised fiscal deficits combine with negative supply shocks to produce stagflation. The risk of such shocks has risen as a result of the new Sino-American cold war, which threatens to trigger a process of deglobalisation and economic balkanisation as countries pursue renewed protectionism and the re-shoring of investments and manufacturing operations. But this is a story for the medium term, not for 2021.

When it comes to this year, growth may yet fall short of expectations. New strains of the coronavirus continue to emerge, raising concerns that existing vaccines may no longer be sufficient to end the pandemic. Repeated stopgo cycles undermine confidence, and political pressure to reopen the economy before the virus is contained will continue to build. Many smalland medium-size enterprises are still at risk of going bust, and far too many people are facing the prospects of long-term unemployment. The list of pathologies afflicting the economy is long and includes rising inequality, deleveraging by debt-burdened firms and workers, and political and geopolitical risks.

Asset markets remain frothy – if not outright bubbly – because they are being fed by superaccommodative monetary policies. But today’s price/earnings ratios are as high they were in the bubbles preceding the busts of 1929 and 2000. Between ever-rising leverage and the potential for bubbles in special-purpose acquisition companies, tech stocks, and cryptocurrencies, today’s market mania offers plenty of cause for concern.

Under these conditions, the Fed is probably worried that markets will instantly crash if it takes away the punch bowl. And with the increase in public and private debt preventing the eventual monetary normalisation, the likelihood of stagflation in the medium term – and a hard landing for asset markets and economies – continues to increase. i

ABOUT THE AUTHOR

Nouriel Roubini, Professor of Economics at New York University's Stern School of Business and Chairman of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com, and he is the host of NourielToday.com.

Otaviano Canuto: Central Banks and Inequality

While the economic recovery around the world remains uneven, fragile, and unbalanced across sectors, financial markets are generally doing very well, thanks! In the United States, only half of the unemployment caused by the pandemic last year has been reversed, while stock markets continued to boom. Of course, this largely reflected the extraordinary support given by monetary authorities since March last year.

As in the period after the 2007-08 global financial crisis, voices have been raised talking about monetary policy and central banks as drivers of income and wealth inequality. The unconventional policies of “quantitative easing” protect the holders of financial assets and value their properties, while workers cross a rough patch on the real side of the economy. As we have already discussed here, financial markets have disconnected from hardships in the street of commons, with the help of the policies of monetary authorities.

Does it make sense to assign an impact of concentration of income and wealth to central bankers' policies? It's complicated...

The argument about central banks’ unconventional monetary policies worsening inequality typically begins with the remark that monetary easing acts in part by raising asset prices, like stock prices. As the rich own more assets than the poor and middle class, “quantitative easing (QE)” policies would increase already high disparities of wealth in countries where they have been applied.

However, first consider that volatility and below-potential macroeconomic performance particularly affect the bottom of the income and wealth pyramids. Adequate fulfillment of the stabilising function attributed to central banks is good for those who have less capacity to defend themselves against unemployment and inflation.

To those who always ask me about rescuing or supporting financial institutions in crisis situations, I always ask back about what the alternative scenario would be. The design of such support can always minimise the rewards in terms of wealth of owners, but the truth is that macroeconomic scenarios in cases where the financial system collapses cannot be out of sight, as economic recovery gets harder under such circumstances.

Mary Daily, president of the Federal Reserve Bank of San Francisco, recently observed how the long expansion of the United States economy after the global financial crisis could only

happen because of the stabilisation measures that followed, with interest rates decided on the basis of a return of inflation to the 2% per year target. Unemployment rates fell to levels close to historical lows. The country's average GDP growth rate in the period fell short of previous decades, but this was not due to monetary policy. She notes:

“This created real opportunities for a large number of sidelined Americans, many of whom were thought to be permanently out of the labor force or lacking the right skills to work in an evolving job market. (…) By early 2019, employers were hiring African American and Hispanicworkersatratesequaltoorhigherthan those of white workers. (…) This reduced longstandingunemploymentgaps,narrowingthemto historic lows.”

In addition, according to a recent Federal Reserve Bank bulletin, the prolonged macroeconomic expansion particularly valued the assets held by those at the bottom of the wealth pyramid (Bhutta et al, 2020). Figure 1 shows how the U.S. median family net worth kept climbing from 2013 to 2019, while the mean family net worth exhibited a lower performance. Median measures divide the population in two halves and are lower than means because of the degrees of wealth concentration at the top. A rising median relative to the mean therefore means that the net worth of families at the lower part of the pyramid grew more.

There are those economists who do not recognise the need for macroeconomic stabilisation through proactive central banks and argue that loose monetary policies favor the top of the pyramid. This would be the case if expansionist policies favored profits more than wages, in addition to the extraordinary gains of the financial intermediaries used to implement the policies (Weiss, 2019). Empirical evidence, however, points to the predominance of distributional effects on income from expansionary monetary policies (Colbion et al, 2014). Across business cycles, monetary policy effects do not tend to make much of a net effect on overall inequality (Bernanke, 2015).

If, on the one hand, it does not seem appropriate to say that stabilisation policies by central banks increase inequality, on the other it is increasingly recognised how inequality in income and wealth affects the effectiveness of their policies. As Luiz Awazu Pereira da Silva, Deputy General Manager of the Bank for International Settlements recently noted (BIS, 2021):

“…inequality reduces the effectiveness of monetarypolicytransmission.(…).Highincome concentration can indeed affect the transmission of monetary policy through the different effects easy monetary conditions have across heterogeneoushouseholds.Wealthierhouseholds have a much lower propensity to consume; hence their consumption may be less reactive to monetary stimulus. In turn, poorer households may not benefit from easier credit conditions because they lack collateral or adequate credit scores and are hence unable to borrow.”

The heterogeneity of monetary policy effects on heterogeneous household conditions is illustrated in Figure 2, taken from a speech by Philip R. Lane, member of the Executive Board of the ECB. It displays how the overall effect on consumer spending through various transmission channels of a 100-basis point cut in eurozone interest rates varies according to household wealth. As Lane (2019) explains:

“First, the standard, intertemporal substitution channel is present only for financially-

Figure 1: Change in median and mean family net worth, 2013–19 surveys. Source: Bhutta et al (2020).

Figure 2: Effects of a 100-basis point cut in interest rates on consumption in the euro area, depending on household wealth. Notes:Thefigureshowsadecompositionoftheeffectsofa100-basispointcut ininterestratesonconsumption.Thetotalconsistsoffourparts.Thestandardintertemporalsubstitutioneffect(IES),thecash-floweffect,theincomeeffect,andthehousingwealtheffect.Thesizeofthese effectsvariesdependingonhouseholds’wealth.EuroareainthischartreferstoFrance,Germany,Italy,andSpain.Source:Lane(2019).

unconstrainedhouseholdswhichareabletosave. Itmakesuponlyaboutathirdofthetotalimpact onaggregateconsumption.Second,thecash-flow channel is particularly strong for homeowners with limited financial assets, who tend to have large mortgages, often with adjustable rates. Third,spendingissubstantiallystimulatedviathe income channel. This channel is heavily skewed towards lower-income households, who also tend tobenefitdisproportionatelyfromastrongerlabor market. Fourth, the strongest asset price effect occurs through the increases in house prices. This effect turns out to be quite large for highly leveraged homeowners, since their consumption ismoresensitivetohouseprices.”

Consumption spending of the lower-income cohort and the cohort of homeowners with only limited financial assets rises more intensively as a result of a 100-basis point cut in interest rates, moving up by almost 1.0 percent and 1.6 percent respectively, while consumption of the financially unconstrained group increases only by 0.4 percent. The bottom-line is that the effects of monetary policy decisions depend on the profile of income and wealth distributions.

The rise in income and wealth inequality in recent history in many countries has fundamental,

structural reasons, such as technological changes and the impacts of globalisation, in addition to the absence of effective social protection networks and national traits regarding race bias, ethnicity, gender, and social classes in access to education, jobs and sources of income. Tax and public spending policies can do a lot about it. Financial regulators can also help through actions and regulations that democratise access and availability of financial resources at low cost, minimising market concentration.

In principle, it would be up to monetary policy to avoid unemployment and inflation, as in inflation targeting regimes adopted by independent central banks. It should be noted, on the other hand, that recent developments in central bank policies, going beyond controlling shortterm interest rates and avoiding the illiquidity of longer-term assets, tend to blur the borders between monetary and fiscal policies, due to the selectivity over what assets to favor.

In this context, there are even proposals for coordination between fiscal and monetary policies to define fiscal programs to be supported via monetisation by the central bank (Bartsch et alii, 2019). There is also the proposal by Christine Lagarde, president of the European

Central Bank, to grant special treatment to “green bonds” in their asset acquisition programs, making “quantitative easing (QE, in English)” a “quantitative greening”. Like the climate agenda, fiscal programs dealing with inequality may well end up falling into the central bank arena! i

First appeared at the Policy Center for the New South. References and links available online.

ABOUT THE AUTHOR

Otaviano Canuto, based in Washington, D.C, is a senior fellow at the Policy Center for the New South, a nonresident senior fellow at Brookings Institution, a visiting public policy fellow at ILAS-Columbia, and principal of the Center for Macroeconomics and Development. He is a former vice-president and a former executive director at the World Bank, a former executive director at the International Monetary Fund and a former vicepresident at the Inter-American Development Bank. He is also a former deputy minister for international affairs at Brazil’s Ministry of Finance and a former professor of economics at University of São Paulo and University of Campinas, Brazil. Otaviano has been a regular columnist for CFI.co for the past eight years.

Follow him on Twitter: @ocanuto

Michael Spence:

The Shape of Global Recovery

OVID-19 vaccination programs are gaining momentum as production capacity ramps up, and as disorganised and tentative distribution and administration procedures are replaced by more robust systems. A task of this size will surely encounter additional bumps along the road. But it is now reasonable to expect that vaccines will have been made available to most

people in North America by this summer, and to most Europeans by early fall.

As of March 15, Israel has administered more than 100 doses per 100 people, compared to 38 in the United Kingdom, 36 in Chile, 32 in the United States, and 11 in the European Union – and those numbers are rising fast. The rates are relatively lower in Asia and the Pacific, but

these countries already largely contained the virus without mass vaccination programs, and their economies have since experienced a rapid recovery.

Meanwhile, lower-income countries on several continents are falling behind, pointing to the need for a more ambitious international effort to provide them with vaccines. As many have noted

"The sectors that were partly or completely shut down will revive."

recently, in our interconnected world, no one is safe until everyone is safe.

Assuming that vaccination continues to pick up globally, the most likely scenario for the economy is a rapid recovery in the second half of this year and into 2022. We should see a partial but sharp reversal of the K-shaped growth patterns that have emerged in pandemic-hit economies.

Specifically, growth in highflying digital and digitally enabled sectors will subside, but not dramatically, because the forced adoption of their services will be tempered by the resumption of in-person activities. At the same time, the sectors that were partly or completely shut down will revive. Major service sectors like retail, hospitality, entertainment, sports, and travel will reopen for an eager public. Industries such as cruise lines will probably institute their own version of a vaccination certificate, with sales rebounding once customers are confident about safety.

All told, this return to previously closed consumption patterns, turbocharged by pentup demand, will produce a burst of growth in depressed sectors, leading to improved economic performance overall. Unemployment will almost certainly fall, even if permanent changes in living and work patterns reduce employment in some areas. (For example, hybrid work models that lock in pandemic-era remote workplaces may reduce demand for restaurants in city centers.)

To be sure, while massive government programs have buffered the economic shock of the pandemic, hard-hit sectors have nonetheless faced significant losses. Between these transitory reductions on the supply side and the predictable surge in demand, a temporary bout of inflation is possible and perhaps likely. But that is no cause for great concern.

Financial markets are already anticipating these trends. After struggling before the pandemic and being hammered in the early stages of the contraction, many value stocks are staging a comeback. Growth stocks in the digital sector, meanwhile, have experienced a small correction. But this, too, should be temporary. While value stocks will continue to hover above their previous doldrums, digital growth stocks will benefit from the powerful long-term trend toward incremental value creation via intangible assets.

One matter of considerable importance is international travel. Businesses can function on digital platforms for a while, but eventually inperson contact will become essential. Moreover, many economies are heavily dependent on travel and especially tourism, which accounts for 1011% of GDP in Spain and Italy and as much as 18% of GDP in Greece (and probably more if one counts multipliers).

Compared to many other sectors, travel faces additional headwinds, because it is non-local.

The rapid recovery pattern that local service industries can expect once the virus is under control does not strictly apply to travel, especially at the international level. To allow for more travel between countries, both – origin and destination – will need to have made progress in vaccinating their populations and containing the virus. Those who are vaccinated and willing to travel will have to be acceptable to the destination country, perhaps by presenting some kind of certification or vaccine passport.

Complicating matters further, international travel is subject to multi-jurisdictional and somewhat uncoordinated regulation. This, together with imperfect cross-border knowledge about external conditions, will make adjusting to new realities on the ground more difficult.

The current trajectory of vaccination indicates that the global rollout will take considerably longer than the programs in advanced economies. The hope is that once these first movers are done, their leaders will turn their attention to bolstering international cooperation and accelerating vaccine production and deployment in developing countries and some emerging markets.

By that point, the advanced economies will be experiencing a brisk recovery, like China and the other Asian economies that contained the virus early on. The return of high-employment service sectors will fuel a broad-based comeback, producing market shifts in relative value across sectors. Schools will resume full in-person learning, armed with complementary digital tools that may enhance the curriculum and provide resilience for the next shock.

In the second half of 2021 and into 2022, the K-shaped dynamic of the pandemic economy will give way to a multi-speed recovery, with the traditional high-contact sectors taking the lead. The two lingering areas of uncertainty for health and economic outcomes are the pace of the vaccine rollout in the developing world and international cooperation to accelerate the restoration of cross-border travel. But with forward-looking leadership, both issues should be fully manageable. i

ABOUT THE AUTHORS

Michael Spence, a Nobel laureate in economics, is Professor of Economics Emeritus and a former dean of the Graduate School of Business at Stanford University. He is Senior Fellow at the Hoover Institution, serves on the Academic Committee at Luohan Academy, and co-chairs the Advisory Board of the Asia Global Institute. He was chairman of the independent Commission on Growth and Development, an international body that from 2006-10 analysed opportunities for global economic growth, and is the author of The Next Convergence: The Future of Economic Growth in a Multispeed World.

IBM Thought Leadership Transparency

Makes the Invisible Hand Visible Again, And Inclusive

by Paolo Sironi

Paolo is the global research leader in Banking and Financial Markets at IBM, Institute of Business Value. IBV is the thought leadership centre of IBM.

Financial markets and economic systems are still exposed to periodic collapses, notwithstanding unprecedented institutional search for stability at all costs. Unorthodox central bank intervention and increasing regulatory action do not seem sufficient to save the macro-framework without a change in perspective. Kristalina Georgieva, chairperson of the IMF, reminded in a late 2019 CNN interview that “uncertaintyisthe new normal”. In 2020, the ECON Committee of the European Parliament identified that one of the top three challenges that central banks will be confronted with in the coming years is our lack of understanding of what a new “economic normal” looks like. As they observed in the turnkey paper “Challenges ahead for the ECB: navigating in the dark?”, some characterise this lack of knowledge of the new steady state, and therefore the lack of understanding of what the new equilibrium will be, as fundamental uncertainty. How can central banks decide on their policy response if they do not know where they are heading? It is in the nature of fundamental uncertainty that it is not measurable.

The Global Financial Crisis already revealed the weaknesses of the equilibrium assumptions, and that something was fundamentally broken in the main mechanisms that regulate or attempt to self-regulate financial services. During a public hearing in front of US Congress (after the default of Lehman Brothers) former FED Chairman Alan Greenspan declared that “I made a mistake in presumingthattheself-interestoforganisations, specifically banks, is such that they were best capable of protecting shareholders and equity in the firms ... I discovered a flaw in the model that I perceived is the critical functioning structure that defines how the world works”. Greenspan’s radical candour might exonerate him from responsibility, but accountability cannot be reduced forever by normatively removing the theoretical problem. Instead, a positive theory is required, as identified in the theory and principles of Financial Market Transparency (FMT) published in 2019.

The rude awakening of 2008 forced the financial services industry to face a two-fold reaction, both inconclusive.

On the one hand, behavioural finance gained new academic thrust in the search for a response to the behavioural problem of intermediaries and investors, qualified as irrational. Notwithstanding the relevant insights, the approach has dealt only partially with the central issue that is essentially biological, having focused on the idea that apparent investor’s irrationality could be resumed to a rational state once cognitive biases had been exposed. From a neurological perspective, it would be like attempting to halve human brain in order to suppress its supposedly “emotional” side. Simple, right? Instead, FMT explains why humans tend to underestimate long tail probabilities as a reaction to uncertaintybased survival needs. Uncertainty is typically considered exogenous to investment decision-

Author: Paolo Sironi

making: forgetting the Black Swan facilitates a more “reassuring” risk-taking appraisal. Same happens to most mathematical models, which are largely based on the assumption that available data is sufficient to calibrate the algorithms. Therefore, the FMT provides needed reasoning to keep financial models and algorithms open, instead of closing the reference framework towards another collapse, as the GFC demonstrated.

On the other hand, regulators had to confront with industry failure of self-regulating capacity. Signs of stress had already emerged in the ’90s, with a repetition of crises increasingly more systemic until the epilogue of the sub-prime mortgage bubble. The strengthening of regulatory safeguards generated an intense debate because of skyrocketing costs of compliance. Instead, the deep anchoring in the causality of the crisis to reference theory might not have been fully discussed and understood. The FMT makes that step, recognizing that we are indeed operating

in an environment of fundamental uncertainty, which is the norm in finance. FMT is a positive and practical theory that investigates the evolution of bank business models facing digital disruption on regulated platform economies. It allows to make uncertainty endogenous to investment decision making, thus generate economic antifragility at micro and macro level.

How does it to that? FMT uses an Occams razor to identify scientifically new biological microfoundations for economic action, and discloses the gap between homo sapiens and homo economicus. It provides a new starting point and a more reasonable understanding of financial markets functioning based on elements that make homo sapiens conscious. In doing so, it opens economic theory to redefine the meaning of money, investing, value, and performance by recognising the endogeneity of fundamental uncertainty on which they lay. Our relationship with money is largely emotional because homo sapiens biology faces fundamental uncertainty

in all decision-making processes, over the irreversible time. Consequently, emotion cannot be excluded - also on digital - in a false claim of homo economicus’ rationality that can be true only ex-post.

A theoretical change paired by regulatory action is a needed step to de-anchor industry mindset from efficiently inefficient outputfocused economies, thus allow for sustainable digital transformation towards outcomeoriented economies, which only win on digital. The FMT institutionalist approach is required to avoid the pitfalls of mainstream financial theory and anchor the current process of digital transformation of business models to investors’ biology, from which that of markets can be derived (responding to the adaptive market hypothesis of Professor Andrew Lo of the MIT Sloan School of Management). Therefore, FMT allows to understand how to remunerate shareholders by generating sustainable value for clients in a transparent regime. It is regulatory transparency – as in the European MiFID II – that is fostering deeper and holistic understanding of the biological micro-foundations of financial markets, letting a “more reasonable” and positive theory emerge that guides business model transformation on a disrupted social, economic, and digital landscape.

To generate value for clients and survive, the banking industry already had to face a bifurcation of strategies which led either towards a fast race-to-zero-price competition, or to the complex search for transparencydriven competitive advantages. On one side, some institutions entrenched in a last-ditch defence of prevailing relationship models, still centred on the assumption of rational agents’ behaviour, fully efficient information, and instantaneous price dynamics that are supposed independent. Instead, the latter are often

influenced by herding and self-referential (i.e., opaque) generation of information. Therefore, the advent of full regulatory transparency (e.g., the reduction of opacity in the European MiFID II) and the impact of digital technology applied on distribution channels of products and their marketing to clients - still designed to conform with mainstream reference theory - has only accelerated the compression of business margins. This led to the search for an efficient scaling on low-cost volumes only (e.g., passive investing). On a larger scale, this trend can produce more endogenous instability because intermediaries become more concentrated in increasing complexity. On the other side, opening financial markets to a business vision that leverages on content (i.e., transparent information and communication) allows clients - real drivers of business value - to reclaim centre stage of any relationships based on trusted and “conscious banking” engagement. In fact, regulatory transparency reveals the fundamental uncertainty of the system stability, behind any attempts of arbitrage. Only dynamic management of financial relationships on a decision-making space mediated by time (irreversible element of human behaviour) allows making sense of investment goals and purpose. This is the target of new financial services platforms, cantered on the financial planning of clients’ lifestyles (e.g., Goal Based Investing). Only making platform participants aware of the generated value makes them also willing to pay for access, transforming the economic relationships of international banking asked to operate on platform economies.

The FMT understanding of how regulatory transparency can turn investment relationships into a competitive advantage, based on real value-generation for participants, re-sets the economic foundations of financial services on more sustainable revenue streams. These can

be finally centred on human goals and purpose, improving ecosystem antifragility and benefitting the whole economy, revising the perspective on what the contribution of exponential technologies should be, such as fintech innovation and artificial intelligence, to unlock added value. Embracing transparency and forging a new theory of value for financial services can truly help to create positive economic impact that is aligned with the UN Development Goals.

Democracy is a platform, society is a platform, economies are platforms, and financial services are platforms. On platform economies, transparency is the core governance principle that generates trust. In a world facing growing uncertainty (deep environmental issues, strong digital shifts and concerning geopolitical tensions) transparency only can help humanity to unlock inclusive economic value, and turn change into progress. Ultimately, transparency is the new invisible hand made visible again. i

ABOUT THE AUTHOR

Paolo is the Global Research Leader in Banking and Financial Markets at IBM, Institute for Business Value. He is senior advisor for selected global accounts, assisting service teams in C-level conversations to leverage IBM portfolio of exponential technologies. He is one of the most respected Fintech voices worldwide and co-hosts the European edition of Breaking Banks podcast. Paolo founded the German startup Capitects, then acquired by IBM, and directed the quantitative risk management department of Banca Intesa Sanpaolo. He is celebrated book author on digital transformation, quantitative finance and economics.

Paolo’s website: thePSironi.com

FMT link to Amazon: amazon.com/FinancialMarket-Transparency-Theory-Principles/ dp/6202086777/ref=asap_bc?ie=UTF8

Nicholas Stern, Joseph E Stiglitz:

Getting the Social Cost of Carbon Right

US President Joe Biden deserves congratulations for committing the United States to rejoin global efforts to combat climate change. But America and the world must respond to the challenge efficiently. Here, Biden’s January 20 executive order establishing an Interagency Working Group on the Social Cost of Greenhouse Gases is an especially important step.

The group’s task is to devise a better estimate for the dollar cost to society (and the planet) of

each ton of carbon dioxide or other greenhouse gases emitted into the atmosphere. The number, referred to as the social cost of carbon (SCC), gives policymakers and government agencies a basis for evaluating the benefits of public projects and regulations designed to curb CO2 emissions – or of any project or regulation that might indirectly affect emissions.

If the working group settles on a low number, many emission-curbing projects and regulations won’t go ahead, because their price tags will

exceed the estimated climate benefits. So, it is vital to get the number right – and by right, we mean higher than it has been in the past.

Broadly speaking, there are two ways to figure out this cost. One method, employed by President Barack Obama’s administration, is to attempt to estimate directly the future damage from emitting an extra unit of carbon.

Unfortunately, implementing this technique well is extraordinarily difficult. The way the Obama

administration did it was deeply flawed, which led to an estimated SCC that was too low, at $50 per ton by 2030 (in 2007 dollars). Even before Donald Trump became president, therefore, the world – and the US in particular – was on track to do too little about climate change.

The problem was the Obama administration’s use of integrated assessment models, which, as the name suggests, integrate economics and environmental sciences to calculate the course of the economy and climate over the

next century or more. Integrating economics and the environment makes eminent sense, but the devil is in the details. These models have shown themselves to be unreliable, generating widely varying ranges of estimates that are highly sensitive to particular assumptions.

For example, a prominent result from one popular version of these models is that we should accept global warming of 3.5 degrees Celsius relative to pre-industrial levels. This is far higher than the 1.5-2°C limit that the international community adopted in the 2015 Paris agreement. In fact, the Intergovernmental Panel on Climate Change has emphasized that the risks associated with global warming of 2°C are much greater than at 1.5°C, so the risks at 3.5°C obviously are far greater.

The 3.5°C temperature increase results from the assumptions made in the model, including the dangerous failure to take seriously the extreme risks that unmanaged climate change poses to our environment, lives, and economy. Moreover, integrated assessment models don’t adequately recognize the potential role of innovation and increasing returns to scale in climate action.

Another problem with the Obama methodology is that it disadvantaged future generations. Much of the benefit of curbing emissions now lies in avoiding the risk of dangerous climate change decades in the future. That means we have to ask how much we care about our children and grandchildren. If the answer is “not a lot,” then we need not do too much. But if we do care about them, that has to be reflected appropriately in our calculations.

Formally, the Obama-era methodology addressed this issue by making assumptions about discounting, showing how much less a dollar will be worth next year (and the year after) compared to today. The Obama administration used an annual discount rate of 3%, implying that to save $1 in 50 years, we would be willing to spend only 22 cents today; to save $1 in 100 years, we would be willing to spend less than five cents.

There is no ethical justification for giving so little weight to future generations’ welfare. But there is not even an economic rationale once we take risk into account.

After all, we pay insurance premiums today to avoid losses tomorrow – in other words, to mitigate risk. We typically pay, say, $1.20 to get back $1 next year on average, because the insurance company delivers the money when we need it – like after a car accident or a house fire. With spending that lowers future risks, the appropriate discount rate is low or can be negative, as in this example, when the potential effects could involve immense destruction.

Spending money today on climate action is like buying an insurance policy, because it reduces the risk of future climate disasters. So, risk translates into a lower discount rate and a higher carbon price.

Now that the Biden administration has committed itself to the international goal of limiting global warming to 1.5-2°C, it should embrace a second, more reliable way to calculate the SCC. It is simply the price at which we will be able to reduce emissions enough to prevent the world from heating up dangerously

This is the price that will encourage the lowcarbon investments and innovations we need, and help to make our cities less congested and polluted. Many other complementary policies will be necessary, including government investments and regulations. As the international carbon-pricing commission that we co-chaired emphasized in its 2017 report, the more successful these policies are in curbing CO2 emissions, the lower the carbon price could be in the future. But the likely SCC would be closer to $100 per ton by 2030 than the $50 per ton estimated by the Obama administration (with a 3% discount rate). An SCC at the upper end of the $50-100 range we suggested in 2017 is entirely appropriate, given that the Paris agreement’s targets have rightly become more ambitious – a 1.5°C limit on warming and netzero emissions by 2050.

These may seem like technical matters best left to the experts. But too many experts have not sufficiently accounted for the scale of climate risks, the well-being of future generations, and the opportunities for climate action given the right incentives.

The Biden administration must put a high enough price on carbon pollution to encourage the scale and urgency of action needed to meet the commitments it has made to Americans and the rest of the world. The future of our planet depends on it. i

ABOUT THE AUTHORS

Nicholas Stern, a former chief economist of the World Bank (2000-03) and co-chair of the international High-Level Commission on Carbon Prices, is Professor of Economics and Government and Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.

Joseph E Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, is a former chief economist of the World Bank (1997-2000) and chair of the US President’s Council of Economic Advisers, was lead author of the 1995 IPCC Climate Assessment, and cochaired the international High-Level Commission on Carbon Prices.

IFC’s Blended Finance Department: Blending Public and Private Finance to Invest in Challenging Markets

By Kruskaia Sierra-Escalante Acting Director/Senior Manager in IFC’s

What can be done to encourage more private investment in developing countries, especially the poorest and most fragile? This question lies at the heart of the development challenge today.

overnments and development institutions alike recognise that the private sector is essential for ending extreme poverty. But getting investors to enter those markets has never been easy, despite continued progress in improving countries’ overall investment environments. The COVID-19 crisis has only increased the real and perceived risks of doing business in developing countries. But it is more important than ever to sustain and grow a vibrant private sector that preserves and creates jobs and delivers essential goods and services.

One approach has emerged that could help make a difference: the blending of concessional funds from development partners with commercial investment funds from private sources. Blended concessional finance is proving to be effective at encouraging private investment in challenging markets, helping create and sustain markets, introduce new technologies, and accelerate economic development.

Blended concessional finance can help buffer contextual risks that would otherwise make it impossible or unaffordable to invest, even when the underlying business proposition is sound. Or to target funding at projects with positive spillovers, for instance first movers in a market that is costly to develop but makes it easier for future investors. Or to nudge investors into overcoming misperceptions or outdated behaviors that have held back, for instance, financing for women entrepreneurs.

IFC has deployed and refined this tool for nearly two decades, with a total of $1.6 billion in concessional funds used to support 266 highimpact projects during 2010-20, mostly in the poorest countries. Growth has been substantial, with commitments reaching nearly $500 million in fiscal year 2020. The results have been promising—donor funds have leveraged $6.1 billion in IFC financing and more than $7.1 billion in investment from private sources.

Blended concessional finance has been successfully deployed across sectors and regions. For example, through IFC’s Small Loan

Gurantee Program, IFC and the IDA Private Sector Window (PSW) are investing in a Togobased mortgage refinancing company to increase access to housing finance and strengthen local capital markets. In Afghanistan, IFC and the IDA PSW are supporting a power-generation project that will help the country meet its vast energy needs. In Malawi, the Global Agriculture and Food Security Program (GAFSP) Private Sector Window and IFC are helping farmers tap into the global demand for macadamia nuts. In Pakistan, the Women Enterpreneurs Finance Initiative (We-Fi) is supporting IFC’s investment in Sarmayacar, a fund that provides early stage funding and training to start-ups in Pakistan –with a focus on high-impact women-led startups. In Uzbekistan, the Canada-IFC Blended Climate Finance Program is helping bring an additional 100 megawatts of solar power to the grid.

With many lower-income markets remaining below investment grade, blended concessional finance is one of the tools that is helping address the 2030 Sustainable Development Goals— particularly those related to employment, growth, and poverty reduction. Blended finance is also

being used to provide rapid liquidity support and helping preserve jobs for firms struggling because of the COVID-19 crisis. Several such programs were launched by development finance institutions in response to the pandemic, especially in the most high-risk markets.

However, the effective use of blended concessional finance requires knowledge and experience that is relatively new to governments and development practitioners, in part because of the complexity of combining public and commercial funds. When wrongly targeted, it can be wasteful at best and distort or destroy markets at worst.

A clear diagnostic and rationale is critical to ensure that the only activities supported are those that deliver significant developmental benefits and would not occur without the use of blended concessional finance. Furthermore, these investments must show a well-mapped path to sustainable commercial financing without subsidies. Good governance is also paramount: there must be transparency regarding the use of public funds, processes that address potential

Blended Finance Department

Articulating the Rationale for Blended Concessional Finance. Source: IFC

conflicts of interest, and the separation of operational decisions and decision-makers from those on blended concessional finance.

Together with other Development Finance Institutions (DFIs), IFC has been at the forefront of developing and upholding high standards for blended concessional finance. In 2017 an IFCled working group developed a set of Enhanced Principles for Using Concessional Finance in Private Sector Investment Operations.

Recognising that transparency is essential, IFC informs development partners, its Board and the public about the key parameters of concessional transactions. Public documents disclose the proposed use of blended concessional finance on a transaction-by-transaction basis, the

instruments to be employed, the estimated amount of financing, the rationale for deploying concessional finance, the expected development impact, and the estimated subsidy as a percentage of total project costs (for projects mandated after October 1, 2019). A revamped IFC project website provides easy access to this information for all IFC blended finance transactions. The website shares this information for all IFC blended concessional finance transactions (please see below to learn how to access these projects).

To avoid a race to the bottom, where concessional resources are being used not to de-risk highly developmental projects that wouldn’t otherwise happen, but solely to benefit the investor, we need to continue to strive for improved

governance, coordination, transparency, and the use of minimum concessionality.

IFC recently released a report as a practitioner’s guide that summarizes its experience in blended concessional finance. It highlights best practices for articulating the rationale for using blended concessional finance; examines approaches for robust transparency, access, and governance; explains how to extend the reach of private sector projects into lower-income countries; and discusses recent financing innovations such as returnable capital contributions. The report, Using Blended Concessional Finance to Invest in Challenging Markets—Economic Considerations, Transparency, Governance, and Lessons of Experience, covers these topics indepth and provides a practical primer about the key elements of this tool. i

ABOUT IFC’S BLENDED FINANCE UNIT

IFC’s Blended Finance Unit blends funds from donor partners alongside IFC’s own in order to catalyze investments that would not otherwise happen because of market barriers. These funds can be used to undertake high-risk, high-reward projects that have strong potential to improve lives and reduce poverty. From fiscal year 2010 to 2020, IFC has deployed $1.6 billion of concessional donor funds to support 266 highimpact projects in over 50 countries, leveraging $5.8 billion in IFC financing and more than $6.8 billion from third parties.

ABOUT THE AUTHOR

Kruskaia Sierra-Escalante is an Acting Director/ Senior Manager in IFC’s Blended Finance Department and in charge of managing a pool of contributor funds of over $5 billion focused on accelerating IFC’s engagement in the most developmentally impactful areas: IDA and FCS countries, climate, infrastructure, gender, SME and agriculture. Since 2013, Kruskaia has managed IFC’s blended finance facilities for climate with more than $1 billion in bilateral and multilateral donor-contributions for climatesmart co-investments in IFC projects. During this period, IFC’s blended climate finance portfolio doubled in volume and helped IFC enter riskier markets. She also manages the IDA Private Sector Window, created in 2017 to support private sector development, growth, and job creation in some of the world’s least developed countries. Prior to her current position, she headed the Blended Finance unit, a governance unit performing credit review, quality assurance and knowledgesharing functions and served as IFC’s Global Lead Counsel for Climate and Blended Finance at IFC.

Kruskaia holds a master’s degree in Public Affairs, with a concentration in Economics and Public Policy, from Princeton University’s Woodrow Wilson School, and a J.D. from the New York University School of Law. Before joining IFC in 2003, Kruskaia was at Chadbourne & Parke, LLP, working primarily in project finance in the power sector.

Author: Kruskaia Sierra-Escalante

> OECD: Blended Finance Institutional Role in Responding to COVD-19

By Paul Horrocks Head of Private Finance for Sustainable Development Unit at

COVID-19 has had a dramatic impact on developing countries and undone years of progress on sustainable development, pushing back into poverty large sections of the population. World Bank analysis projects growth in SubSaharan Africa to decline to -3.3% in 2020, giving the region the first recession in 25 years. In this respect, COVID-19 is and will have a negative influence on economies in many developing countries and further widen inequality, pushing back as many as 150 Million into extreme poverty by 20211.

As developing countries are already facing considerable fiscal pressures and in some instances debt burdens, mobilising the private sector in support of the SDGs will become increasingly important. Blended Finance is recognised as one of the tools available to development actors that can be used to bring the much needed private sector support to address the SDG financing gap. The OECD Development Assistance Committee (DAC) defines blended finance as the strategic use of development finance (concessional and non-concessional) for the mobilisation of additional (commercial) finance towards sustainable development in developingcountries.

Filling the financing gap and directing the private sector to key sectors that can stimulate economic recovery, or attracting commercial finance that would not have otherwise invested in development are the key roles of blended finance. Blended finance should not be seen as a substitute of Official Development Assistance (ODA). ODA will always be primordial, particular in social sectors and least developed countries (LDCs). Currently ODA is likely to remain flat, yet the SDG gap due to COVID-19 will grow even bigger.

Directing and de-risking projects and markets is also an important objective of blended finance, particularly in sectors such as climate. Development actors, due to the concessional and non-concessional nature of blended finance, are willing to take risks and expose themselves to greater financial, political, foreign exchange and technological risks. However, whenever blended finance is being used, the fundamental goal is to work alongside the private sector partner in a program or transaction.

Blended finance has gained considerable traction since the launch of the Addis Abba Action Agenda and the SDGs. That is not to say that the instruments that underpin blended finance have not been used before; e.g. guarantees are a stable instrument of development actors. The difference now is that blended finance has become more mainstream and role of the private sector more evident. On the demand side, the development gaps are significant, while on the supply side substantial amounts of capital are invested in low or negative returning assets, yet could be funding projects and portfolios that contribute to the SDGs.

For blended finance to be effective the institutional architecture of the development landscape needs to be fully mobilised, otherwise the necessary scale will be out of reach. The OECD DAC blended finance definition has a wide approach, which financially means concessional and non-concessional funds mobilising the private sector. The goal being to ensure that institutions act as mobilisers of the private sector while not only using blended concessional finance but also in certain instances non-concessional finance but always the institutional capacity. Institutions bring not only finance to a transaction but credibility and

assurances, through the undertaking of due diligence and development skills. The private sector when going in to high-risk transactions focus on the precedent and DFIs and MDBs have a lot of the necessary experience. This approach is captured in the OECD DAC Blended Finance Principles, which were agreed by the High Level Meeting of the DAC in 2017. The Principles have subsequently been referenced by several G7 and G20 Presidencies thereby forming a part of the international development architecture2

At the Blended Finance and Impact week, the release of the OECD DAC Blended Finance Guidance provided further insights on how to mobilise the private sector using all the institutional capacity possible, particularly MDBs and DFIs. Progress has been achieved, with Blended Finance increasing private sector mobilisation by 28% to USD 48.4 Billion in 2018. More still needs to be done and all the capacities of the development system should be mobilised. As highlighted in the Blended Finance Guidance, mobilisation is not only financial: the DFIs’ institutional role is critical given their understanding of the market, involvement in projects and due diligence capabilities. This institutional capacity is a key catalytic factor in mobilising private actors.

As new actors enter the blended finance space, the OECD DAC Blended Finance Guidance provides a tool for donor governments, development cooperation agencies, philanthropies and other

stakeholders to design and implement effective and transparent blended finance programmes. The expectation is that as new DFIs are established or donors deepen their capabilities to work with the private sector, the Guidance will be the essential roadmap. Each of the five Principles and sub principles and their respective detailed guidance notes provide insights and knowledge that has been co-created over several years with development actors – from both developed and partner countries –, CSOs, the private sector and donors, amongst others.

Policy work on mobilising the private sector has been considerable and the mobilisation figures are starting to bear proof of this collective effort. However, blended finance is yet to show its full potential in terms of development impact. Work still remains to be done on assessing the outcomes of the institutions, instruments, and activities.

SDGs. The Standards were developed as part of a community of practice that counts over 300 members from government’s agencies, DFIs, private asset managers and CSOs. Following approval by the DAC, the Standards will be made freely available for subscription, with Detailed Guidance as a support to implementation.

A lot of work still needs to be done but the policy pieces are coming together thereby allowing development actors and the private sector to respond to the SGD challenges according to the direction given but COVID-19 means we now need to redouble our efforts. i

1https://www.worldbank.org/en/news/press-release/2020/10/07/ covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021

2Specifically, under the Canadian Presidency, the G7 committed to “work to implement the OECD-DAC Blended Finance Principles including promoting greater transparency and accountability of blended finance operations”. Under the Japanese G20 Presidency, the G20 Osaka Declaration by Leaders recognised that blended finance “can play an important role in upscaling our collective efforts”. Under the G7 French Presidency in 2019, the G7 further highlighted their support “to mobilise additional resources for development and help increase the impact of existing resources” and “the implementation of the OECD DAC Blended Finance Principles for Unlocking Commercial Finance for the SDGs” (2019).

ABOUT THE AUTHOR

Paul Horrocks is Head of the Private Finance for Sustainable Development Unit at the OECD Development Co-operation Directorate. Paul is working on a number of initiatives aiming at encouraging greater private sector investment into developing countries, in particular on policies and approaches that governments can adopt in order to ensure that activities are aligned and impact achieved.

Prior to this, Paul was a Senior Executive in Fiscal Group of the Australian Federal Treasury, working on the domestic infrastructure market but also providing policy advise during Australia’s G20 presidency on international policy challenges. Paul has over a decade of Senior leadership at the European Institutions in Brussels, having worked on initiatives such as the deepening of European capital markets in response to the 2008 financial crisis.

Development actors have a strong desire to show how they achieve development impact through blended finance. The OECD/UNDP Impact Standards for Financing Sustainable Development (IS-FSD), developed by the Community of Practice on Private Finance for Sustainable Development (CoP-PFSD), have this goal. Developed as a best practice guide and self-assessment tool, the Standards are designed to support all providers of development finance in the deployment of resources in a way that maximises the positive contribution towards the

Paul has degrees from the University of Wales, and Masters from the University of Liverpool as well as an Executive MBA from Vlerick Business School in Belgium.Paul has degrees from the University of Wales, and Masters from the University of Liverpool as well as an Executive MBA from Vlerick Business School in Belgium.

Author: Paul Horrocks

WTO DIRECTOR-GENERAL NGOZI OKONJO-IWEALA:

MEETING, AND EXCEEDING, HIGH EXPECTATIONS

By Wim Romeijn

Political astuteness and the ability to come up with fresh solutions to tired problems have propelled Ngozi OkonjoIweala to ever greater heights, shattering countless glass ceilings in the process.

konjo-Iweala gets results where others waver, give up, or fail. In the early 2000s, during her first stint as finance minister of Nigeria, she successfully concluded a renegotiation of the country’s massive debt with the Paris Club of major creditor countries, wiping $30bn off the books – including $18bn in outright debt cancellation.

In 2006, at the end of her term, she had added $60bn to the reserves, deposited $38bn in the excess crude fund, and stuck another $5bn in Nigeria’s sovereign wealth fund – even as oil prices hit rock bottom.

As the new director-general of the World Trade Organisation (WTO), Okonjo-Iweala enjoys a well-earned reputation for toughness and

perseverance. However, her appointment – the product of a rather complex electoral process involving considerable geopolitical powerplay and multiple voting rounds – did not go smoothly.

ELECTION

Though she received the backing of the European Union just ahead of the final vote, the US threw a spanner in the works by expressing a preference for South Korean Trade Minister Yoo Myung-hee. Only after Myung-hee withdrew her candidacy did the US agree to support the Nigerian nominee –who was then unanimously chosen by the WTO’s 164 member states.

Earlier, the Trump Administration had argued that Okonjo-Iweala lacked professional experience. However, her resumé features a quarter-century at the World Bank, where she started out as a

development economist and worked her way up to managing-director, the second-highest post in the organisation.

From there, Okonjo-Iweala ruled over the bank’s $81bn operational budget for Africa, Europe, and South and Central Asia. She also chaired the International Development Association (IDA, part of the World Bank Group) replenishment drive, which in the early 2010s raised almost $50bn in grants and soft credit for the least developed countries.

In an article published in The Financial Times, only days after being installed as WTO directorgeneral, Okonjo-Iweala admitted that the pandemic had added to the organisation’s woes, or as she described it, “acute challenges”. She noted that a strong rebound was imminent. The

IMF forecasts that global trade volumes are set to increase by eight percent this year and an additional six percent in 2022.

In her first policy statement, Okonjo-Iweala surprised many by vowing to assume a more forceful role in the equitable distribution of vaccines and the removal of export restrictions and other barriers that derail medical goods supply chains. She also said that a “third way” must be explored for intellectual property to encourage research and innovation while promoting licensing agreements that help scale-up global production.

On her first day in office, Okonjo-Iweala called for a wholesale transfer of covid-19 vaccine technology.

CREDIBILITY

The new WTO director-general hopes to make her mark and return a level of credibility to the organisation by getting its members to agree on meaningful reform. A first test is the upcoming meeting of trade ministers on ocean sustainability. The WTO proposes to eliminate all fisheries subsidies, and so reduce the number of fishing vessels to match the oceans’ dwindling stocks. Okonjo-Iweala is keen on a robust fisheries deal – already 20 years in the making –which may add to the WTO’s standing.

“The world is leaving the WTO behind,” she said. “It cannot be business as usual. Leaders are impatient for change and we have to move from debating to delivering results.” Okonjo-

Iweala needed all of five minutes to signal the arrival of a new dawn at the organisation’s Geneva headquarters, and signalled a complete break with her predecessor’s cautious and softspoken approach. Christine Lagarde, president of the European Central Bank, said she expected the new WTO chief to “rock the place”. OkonjoIweala is unlikely to disappoint.

The first woman, and the first African, to hold the post, the Nigerian economist enjoys a reputation for getting things done and for untying gordian knots without much fanfare. After unceremoniously shaking up the guardians of power in Nigeria, she was nicknamed Okonjo the Troublemaker – something of a badge of honour. During her second stint as finance minister (2011-2015), she stepped on so many toes that her mother was briefly kidnapped as a warning of what might happen should she insist on rootingout corruption.

In Nigeria, she set up the Youth Enterprise With Innovation programme to support small businesses and create jobs. She also led the initiative to re-base the country’s gross domestic product, which resulted in Nigeria becoming Africa’s largest economy.

More recently, Ngozi Okonjo-Iweala has travelled the world as a special envoy for the African Union to rally international support for the continent’s efforts in containing and dealing with coronavirus. Earlier this year, she co-chaired the High Level Independent Panel on financing the

global commons for pandemic preparedness and response set up by the G20 during its recent meeting of finance and central bank deputies.

WOOING THE US

Considered a power broker in global finance but a trade outsider, Okonjo-Iweala is uniquely poised and qualified to tackle some of the tough issues facing the WTO, such as forging an agreement on the $26tn global online marketplace.

The prospect of a comprehensive e-commerce deal offers a way for the WTO to re-engage the US, whose big tech companies face mounting legal hurdles as governments try to collect taxes on trade and operations spread over multiple jurisdictions. It is a Herculean task. OkonjoIweala is, however, optimistic that she can bring all parties to the negotiating table and lay the groundwork for a basic deal.

Okonjo-Iweala admits that she is guided by the wisdom her father, a Nigerian king, lived by: “Never allow anyone to intimidate or blackmail you.” That advice, and perseverance, have helped her survive and prosper in Nigerian politics, and work her way up the World Bank hierarchy.

She has now the most challenging job of all: to find common ground between the richest and poorest countries and serve the interests of all without getting lost in conflict. If anyone can rescue the WTO from irrelevance, it is Ngozi Okonjo-Iweala. Great things are expected of her, and she has a reputation for delivering. i

Director-General: Ngozi Okonjo-Iweala

WTO Director-General Means Business –

and Trouble for Anyone in Her Way

ou can’t stop trouble from coming, but you don’t have to give it a chair to sit on.” That’s an African proverb, and an appropriate maxim for Ngozi Okonjo-Iweala. The 66-year-old Nigerian-born economist, now in the hot seat at the Geneva-based World Trade Organisation (WTO), is no stranger to trouble.

When malaria struck her village in 1960, the sixyear-old Ngozi carried her ill sister three miles to the nearest doctor. There was a crowd of people

at the surgery doors, so she clambered through a rear window to make sure her sibling got the treatment she needed. This is a story typical of a character shaped by a childhood in post-colonial Nigeria: a new country, wracked by poverty, disease, and civil war.

Sixty years on, and that little girl is among the most powerful women in the world. She took the helm of the WTO in March 2021, as the Covid-19 pandemic was devastating world trade.

By Tony Lennox

Her job, once again, is to stop people from dying.

Colleagues and critics alike tend to use words like “formidable”, “bold”, even “scary” when describing Okonjo-Iweala. As Finance Minister in the first decades of the 21st Century, she tackled Nigeria’s economic problems and rampant corruption and earned the nickname “Trouble Woman”. In an interview with The Guardian in 2005, she said: “It means, ‘I give you hell’. I’m a fighter. If you get in my way you get kicked.”

She will need that tenacity to lead the WTO at such a critical time. She is clear about her immediate priority: ensuring the world emerges from the Covid-19 nightmare a better, fairer place.

“No-one is safe until everyone is safe,” she said. “Vaccine nationalism will not pay, because the variants are coming. If other countries are not immunised, it will just be a blowback. It’s unconscionable that people will be dying elsewhere, waiting in a queue, when we have

the technology.” Okonjo-Iweala has experience with vaccine delivery as the former chair of Gavi, the alliance which delivers affordable vaccines against diphtheria, measles, pneumonia, polio and malaria.

Okonjo-Iweala was unanimously elected by the WTO’s 164 member states for a four-year term of office, with a budget of $220m and a staff of 650. She has a reputation as a hard negotiator, and previously spent 25 years at the World Bank, where she rose to number two in the organisation.

Okonjo-Iweala and her siblings were raised by their grandmother while her parents, both professionals, studied in Europe. The family was affected not only by epidemics, but also by food shortages and civil war. She arrived in the US in 1973 to study at Harvard, graduating with a degree in economics. She went on to complete a Phd at the Massachusetts Institute of Technology.

Among her early tasks at the WTO will be the brief to repair the damage done by the spat between China and the US during the Trump presidency, a dispute involving protectionist policies and import quotas which did much to disrupt global trade. Healing the Washington-Beijing rift will be a major task.

Okonjo-Iweala has welcomed the new BidenHarris administration, but is aware that the president will come under pressure from Congress to maintain, at least in part, the US’s tough stance on China. Congress is keen for the WTO to investigate alleged trade abuses by Beijing. And Okonjo-Iweala has previously expressed sympathy for a level playing field on international commerce.

She became a US citizen in 2019 and now holds dual nationality. Some commentators have fretted that her American credentials could affect China’s attitude towards her. But although Okonjo-Iweala has promised to look at American concerns, she is determined to prove she is her own woman. China’s WTO delegation actually saluted her unanimous selection as a vote of trust, but did say that China expected her to work to preserve global multilateral trading systems.

But Okonjo-Iweala has experienced tricky situations before. In Nigeria, she was the driving force behind a successful battle to shake off the country’s debt-ridden reputation. Her aim was to defeat corruption and introduce reforms to improve government transparency, while stabilising the economy. She was instrumental in restoring Nigeria’s international reputation, pushing through reforms and fighting corruption, despite sometimes terrifying opposition from organised crime figures. In her book Reforming the Unreformable: Lessons from Nigeria, Okonjo-Iweala describes how she and her family

came under immense pressure from criminals determined to stop her anti-corruption crusade. She and her husband received death threats. “My security detail was increased to four fulltime Secret Service agents and two extra mobile police to guard my house,” she wrote.

It was during this fraught period that the Nigerian press began to refer to her as “Walhala”, Pidgin English for trouble-maker. “I loved this nickname,” she wrote. “If I was regarded a trouble because of my desire to clean up public finances and work for a better life for Nigerians, then so be it. A trouble-maker I would be.”

Okonjo-Iweala is a campaigner for women in the developing world. In a recent Ted Talk she spoke of her desire to lift women out of their traditional roles – citing the statistic that fewer than 20 percent of African women hold a bank account.

In her WTO job application, she said the organisation should be “responsive to the challenge of facilitating the greater participation of women in international trade, particularly in developing countries, where greater efforts should be made to include women-owned enterprises in the formal sector".

When she was appointed to the WTO, some members of the international media focused on the fact that Ngozi Okonjo-Iweala was a grandmother – an observation, said campaigners, unlikely to have been made had the appointee been male.

She regularly features in lists of the world’s top 100 most powerful and influential women, and is on the advisory boards of dozens of organisations. She has 10 honorary degrees and is the author of several books. She co–wrote Women And Leadership: Conversations With Some of the World’s Most Powerful Women with former Australian prime minister Julia Gillard. The book deals with the sexism that still affects the perception of women as leaders.

Okonjo-Iweala is keen to use the WTO platform to push ahead African agenda. She has said she is determined to change the image of “children with flies on their faces”. “African growth is a trend, not a fluke,” she insists. Africa is a place of hope and opportunity; a continent of entrepreneurs, not one of death, poverty and disease. Instead of waiting for aid, Africa has had to take responsibility by managing its economies better. “We are no longer the ‘lost continent’,” she said.

Anyone doubting Ngozi Okonjo-Iweala’s qualifications for the mammoth tasks facing her should listen to her son, Uzodinma. “She knows how she wants things done,” he says, “and if you don’t do it her way, you’re in trouble.” i

Geneva, Switzerland: The World Trade Organization

> World Bank: Pandemic Recovery is an Opportunity to Step Up Climate Change Action in Europe and Central Asia

By Anna Bjerde

2021 needs to be the year that climate change urgency truly entered the collective consciousness and lasting action followed.

In the same way the effects of climate damage are often described as irreversible, so too is the movement calling for change.

Findings from the largest-ever survey of public opinion on climate change, carried out by UNDP in 2020, found that nearly two-thirds of people around the globe recognised climate change as a global emergency that must take priority. This message has been amplified by a pandemic that has demonstrated, in the most tragic of circumstances, that our old exploits and behaviors can change. That emissions can fall and that we are all accountable, today, for the planet we inhabit.

Across the world, governments and corporations have committed to net-zero emissions or climate neutrality targets toward 2050 and this momentum needs to continue as we move closer to COP26 in Glasgow at the end of the year. Because, despite the lessons of the pandemic that we can change and despite the commitments that have been made, emissions bounced back to pre-pandemic levels by the end of 2020.

Around the world the primary focus is on COVID-19. Beyond the millions of lives so sadly lost, people have also felt the economic pain brought to bear with this enforced transition. Businesses closed, jobs cut, and livelihoods jeopardised. Now policymakers are looking at how to bring the global economy back to life –with sustainability at its heart.

A great example of this economic rethink can be found in Europe. The EU’s ambitious Green Deal sets out a bold vision for climate action, recognising the crucial link between decarbonisation, climate resilience, natural capital, and social inclusion. Rather than scaling back the Green Deal in the face of the COVID-19 pandemic, the EU doubled down –raising its climate ambitions and putting the strategy center stage of its $2+ trillion recovery program.

Flooding in Serbia: In 2014 a low-pressure cyclone affected a large area of Southeastern and Central Europe, causing floods and landslides. Over 1.6 million people were affected in Serbia and Bosnia after a week of flooding. The World Bank’s Floods Emergency Recovery project supported Serbia after the devastating floods of 2014.

Amid the pandemic, the World Bank Group has remained the largest multilateral funder of climate investments in developing countries, having committed $83 billion over the last five years. Across the world, translating bold climate objectives into policies and investments will require close attention to individual country circumstances and strong cooperation between national governments and international institutions. To stave off the worst impacts of climate change, policymakers should consider three key priorities:

First, ramp up financial support for middleand low-income countries in areas such as clean energy technologies, access to electricity, sustainable forestry as well as resilience and mitigation measures to tame natural disasters caused by climate change. This involves richer nations supporting sustainable growth in poorer countries to help raise living standards and protect the environment. In our role, the World Bank Group has committed to an ambitious target: 35% of our financing over the next five years will go to support countries taking ambitious climate action. This will also be critical in supporting our country partners, including in Europe and Central Asia, to meet their national climate commitments made under the Paris Agreement in 2015.

Renewables in Poland: The World Bank is supporting Poland to transition out of coal in a just and fair way. As a result, the share of renewable energy sources in the country’s generation mix will significantly grow above the current levels of around 20 percent.

Second, policymakers must view climate change through a multi-pronged lens. Too often in the past, climate or ‘green’ investments have been unfairly profiled: good for the environment, but costly and uncompetitive. The economic potential and savings of climate action are not always highlighted effectively. For instance, access to reliable electricity can extend business hours for entrepreneurs in developing countries. It enables children to study at night and improve their prospects. Similarly, clean cooking and heating materials have undeniable benefits for extending life expectancy and reducing costs of health care. It spares those in the home – often women –from spending each day collecting biomass, such as foraged wood or manure, to burn on rudimentary stoves. This is time that could spent on gaining an education or starting a business.

We know by now that these climate ‘externalities’ all come with a cost to the economy. Failing to address them has negative implications for poverty reduction, fiscal performance, public health and ultimately economic growth. Institutions like the World Bank offer technical assistance and policy advice on how to maximise these benefits through investments.

Third, protecting the vulnerable from climate shocks and supporting the people and places that will be impacted by the transition to a low carbon economy. Just as we have with the COVID-19 pandemic, governments, businesses and international institutions must be ready to mobilise people and resources to protect the most at-risk groups in our societies. This means always being prepared for unexpected events by building programs based on the fundamental principle of resilience. The World Bank is supporting the European Commission with its €18 billion Just Transition Fund to help member states, particularly in Central, Eastern and Southern Europe, meet the EU’s climate neutrality goal by 2050. A big part of such a transition is phasing out coal use. The Bank is helping policymakers draw on lessons learned from projects in Greece, Bulgaria, the Western Balkans and Ukraine, as well as longstanding experience from the Russian Federation, Poland and Romania. Just Transition provides a comprehensive approach to energy policy changes and transitions and is of high relevance beyond Europe and Central Asia.

The reality is that climate change is a complex set of challenges – environmental, social, political and economic. There is no-one-size-fits-all solution and that is why it is so difficult to address quickly and impossible to tackle in isolation. This is where every country, large or small, has an opportunity to exercise global leadership in one way or another. Global and international financial institutions have an important role to play as conveners in bringing countries around the table to address a common threat.

Author: Anna Bjerde

Let’s look back at 2021 as the year when COVID-19 no longer stole lives and livelihoods and the recovery went into full swing while at the same time contributing to the collective net zero emission target. i

ABOUT THE AUTHOR

Anna Bjerde became World Bank Vice President for Europe and Central Asia on May 1st, 2020. In this position, Anna leads the World Bank’s strategic, analytical, operational and knowledge work in the region.

Prior to this, Anna was Director of Strategy and Operations for the Middle East and North Africa region at the World Bank. Before that, she oversaw the Bank’s strategies, lending and analytical work for sustainable development, covering all six of the Bank’s regions. She also held a deputy Vice President role in the Europe and Central Asia region in 2014-15.

Anna has over 25 years of experience working in development in Africa, the Middle East, Europe and Central Asia, Latin America and the Caribbean, East Asia, and South Asia. Anna is a recognized leader in economic development, with a specific interest in inclusive growth and sustainable development.

Anna is an experienced leader and manager, with experience overseeing large and decentralized workforces and country offices, as well as forging strong bilateral and multilateral partnerships. Anna has a Master’s in Business and Economics from the University of Stockholm.

WORLD BANK’S EUROPE AND CENTRAL ASIA REGION

The World Bank supports 23 countries across the Europe and Central Asia region in promoting growth, reducing poverty, and boosting shared prosperity. We help our clients build more responsible institutions, increase private investment, improve service delivery, upgrade infrastructure, protect the environment, support human development, and empower marginalized groups.

Formoreinformation,pleasevisit: worldbank.org/eca

Aral Sea, Central Asia: The Aral Sea, once the world’s fourth largest body of inland water, shrunk dramatically after the two rivers that fed its waters were diverted in the 1960s to irrigate cotton and rice fields, causing one of the worst environmental disasters of our times. Through a project called the Climate Adaptation and Mitigation Program for the Aral Sea Basin, the World Bank has been supporting both Tajikistan and Uzbekistan in their climate mitigation and adaptation efforts in the former Aral Sea.

Inclusive Markets Are Not Born: How UNCDF is Supporting Inclusive Digital Economies by Advancing the Right Policies and Regulations

By Ahmed Dermish Lead Specialist, Policy and Regulation for Inclusive Digital Ecosystems, UN Capital Development Fund

If you were asked to describe in one word how digital has transformed finance, you wouldn’t be able to do it. Consider a few points.

irst, when it comes to the key players in the financial ecosystem, the pond has a lot more fish. In the age of digital finance, capital relies on digital rails provided by mobile network operators. For that matter, in emerging markets across Africa and Asia, telecom companies like Airtel, Vodafone, MTN, and Orange are not only digital service providers. They are effectively financial service providers. And in this new financial ecosystem, the bank is not the central actor for most customers. The mobile network operator is. They serve as the link between banks, financial service providers, super platforms, and the mobile devices that are now the most important tool to access finance. And MNOs are not only facilitating the flow of commerce, but the flow of personal and financial data that can unlock finance from lender to recipients. Then, of course, there are the super platforms where commerce, capital, search, social media and financial inclusion are intersecting at global scale and unprecedented speed: Google, Facebook, and Alipay just to name a few. And if that wasn’t crazy enough, these actors are often in competition with each other.

If the complexity around access to capital has increased, so has the complexity around the challenges of regulating finance. A central driver of this complexity is the conflict between securing data privacy and validating digital identity. On the privacy side, there are questions relating to service channels, including who and under what conditions can cash agent distribution networks be leveraged; on the payment side, who can be an issuer and under what conditions; and on the store of value, where are funds held and what is the legal treatment? On the digital ID side, how can consumer protection be assured and mechanisms for redress be leveraged when such protection has been violated? Then, of course, there are the critically important efforts of supporting anti-money laundering/combating the finance (AML/CFT) policies and tools.

So, when you aggregate all of these challenges, they all meet at a fundamental question for advancing sustainable development: How can we ensure that financial regulation enables effective flow of finance while also promoting the financial health of the widest swath of people? Answering this question is most critical in the

"For more than 25 years, well before the rise of the digital economy and before anyone was considering a 4th Industrial Revolution, the UNCDF worked with national governments in more than 40 countries to improve the use of financial services."

world’s least developed countries (LDCs) where the financial needs are greatest and the flows of formal finance are scarcest.

The answer lies in an irrefutable reality. That innovative and inclusive markets do not just happen. They need policies and regulations to create the environment to function effectively, especially in the financial services sector. Said simply, inclusive policies lead to inclusive markets. So, how can regulators design and enact those regulations and policies?

For more than 25 years, well before the rise of the digital economy and before anyone was considering a 4th Industrial Revolution, the United Nations Capital Development Fund (UNCDF) worked with national governments in more than 40 countries to improve the use of financial services. Since 2010, our focus gravitated towards digital financial services,

If there is one aspect of our experience that remains relevant in this new age of finance, it is that smart policymaking can help technology contribute to inclusive markets. But getting the right policies and regulations in place are probably more important than at any other time. If legal reforms fail to capture the potential of new business models and technologies, then the prospect of 'being left behind' is all too real, and

the impacts will be all too severe, particularly for the worlds most marginalised communities. This is particularly the case given how the gap in access to digital financial services falls hardest on women and rural communities. Yet, despite the urgency, governments are not always sure where to start with policy or regulatory reforms and how to apply available information and resources.

In response, UNCDF has launched a Policy Accelerator, precisely to provide direct support to policymakers and regulators to bridge the gap between knowledge and implementation. The interdisciplinary team of specialists collaborate with regulators and policymakers to design a practical policymaking process that leverages global research, relevant publications, and peer network engagement. In addition to ongoing support for policymakers and regulators across Africa, Asia and the Pacific, we work closely with partners who share our goals to create enabling regulatory environments.

UNCDF’s method entails:

1. Identifying the policy opportunities, whether it is economic development, financial inclusion or policy harmonisation

2. Assessing the current market and regulatory landscape, while looking to learn from peer markets and align with global standards

3. Working with policymakers and regulators to identify the most suitable options available to them

4. Creating a framework for dialogue and consultation with stakeholders (like service providers and civil society).

Once the government decides on the best policy/ regulatory option for the moment, UNCDF works with them to develop impact metrics and create a training program for the regulators and supervisors.

Leveraging this method in 2020, UNCDF has trained more than 75 regulators and provided focused technical assistance to 15 countries. Eight policies have been introduced or improved, despite the upheaval of a global pandemic. This success is recognised by financial support for the programme from the European Union, the Government of France, and the Bill and Melinda Gates Foundation.

Perhaps our best achievement is the launch and operation of the “Africa Policy Accelerator,” with support from the Bill and Melinda Gates Foundation. The “Africa Policy Accelerator” is UNCDF’s bespoke platform to provide targeted technical assistance and capacity building for policymakers and regulators in14 African markets with potential to ‘leapfrog’ to digital finance and benefit women’s financial inclusion and regional harmonisation. UNCDF is augmenting its work on the ground by contributing knowledge and policy guidance through the G7 Partnership for Women’s Digital Financial Inclusion in Africa as part of France’s 2019 G7 Presidency. With our participation in this high-level forum, we are looking to support policymakers and regulators to conduct country-level research on barriers to women’s economic empowerment to address critical policy and regulatory gaps, focusing heavily on francophone markets in West and Central Africa.

Looking ahead, UNCDF will leverage its approach, experience and expertise in financial inclusion towards the creation of the UNCDF Policy Toolkit. The Policy Toolkit will be a freely available collection of practical resources –including downloadable templates, worksheets, and sample materials -- that will enable regulators and policymakers to nimbly respond to the complex changes in markets and with inclusive policies and regulations.

Rather than proposing a new model for policymaking and regulatory development, we designed our Policy Toolkit in a sequence that parallels a logical approach to policy and regulatory design, while being adaptable so that users can apply it to ocal contexts. The resources within the Policy Toolkit focus on a stage, topic, or task related to the policymaking process, such as:

• Identifying policy opportunities for DFS,

• Assessing the current market, and

• Improving regulatory reporting processes.

For example, instead of brainstorming your own list of stakeholder interview questions, we’ve drafted 50+ questions organised by theme and sector that you can use as a jumping off point. Or if you are looking for opportunities to improve regional harmonisation of digital financial services, we outline a sample process with supporting materials to help you work through it systematically.

We anticipate the Policy Toolkit will be fully live, and available to policymakers and regulators, by Q2 2021.

Digital finance will not become simpler with time. More actors will enter the pond and new technologies will alter the landscape. And one of, if not the most critical factor, in preventing this complexity from becoming a barrier to inclusive growth is delivering the right policies

and regulations. UNCDF is ready to do its part to help policymakers and regulators deliver those policies and regulations. Innovative and inclusive markets are not born. They are made. We will work to keep making them now and into the future. i

ABOUT UNCDF

The UN Capital Development Fund makes public and private finance work for the world’s 46 least developed countries (LDCs).

UNCDF offers “last mile” finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development.

UNCDF’s financing models work through three channels: (1) inclusive digital economies, which connects individuals, households, and small businesses with financial eco-systems that catalyse participation in the local economy, and provide tools to climb out of poverty and manage financial lives; (2) local development finance, which capacitates localities through fiscal decentralisation, innovative municipal finance, and structured project finance to drive local economic expansion and sustainable development; and (3) investment finance, which provides catalytic financial structuring, de-risking, and capital deployment to drive SDG impact and domestic resource mobilisation.

Author: Ahmed Dermish

Lord Waverley on WTO: Inclusive and Sustainable Trade Reforms are Vital for Shared Benefits

ThepreviousUSadministration,thepoliticisationoftrade and a looming economic crisis due to the pandemic and Brexitarecreatinganenvironmentofprotectionism.This mustnotbeallowedtohappen,arguesLordWaverley.

The need has never been greater to deliver inclusive and sustainable trade reforms, and the opportunity to deliver could be now.

The incoming World Trade Organisation directorgeneral, the upcoming G7 meeting in the UK, and the identification of impediments to reform could make this a reality. This would build on the work of G20 finance ministers at the World Bank and the IMF.

The major contributing factor to reform was the failure to implement the WTO Doha round. Reduction in government spending on subsidies in agribusiness were held hostage in the US and the EU to the detriment of developing economies.

That was regrettable. Major benefits could come from freeing-up economies. A broad zero-tariff regime would create wealth in impoverished nations and bring employment and new participants to the supply-chain cycle from the developing world. Making trade reform happen should become our mantra.

There is simmering hope that change might be afoot. The UK must stand ready to lead on the front foot. It is easy to call for WTO reform, but for some governments the rhetoric masks the unsavoury reality that trading systems are stuck in the 1990s. Digital trade and services are systems that fail to live up to modern interconnectivity and speed. Processes are hopelessly antiquated in sectors such as agriculture, with farmers unable to compete with the heavy subsidies in G7 economies.

Trade is ultimately give-and-take. Everyone at the table needs to contribute to a deal that works to the benefit of all. Ngozi Okonjo-Iweala, the first African to head the WTO, has a reputation that suggests that she could deliver. We stand ready in support. Africa, interestingly, is where we could improve the multilateral system for intra-regional trade. It is a region where futureproof rules and standards could easily be incorporated.

The opportunity to build-in modern digital trade infrastructure is enormous, but requires support and investment from the global community. Root problems remain on modernising the digital rulebook, with India and South Africa creating a stumbling blocking effect. Understanding the role of these two G20 economies is as vital as understanding those of the EU, China and the US.

The UK’s call for a more balanced and honest debate on trade reform is welcome if we are to lead by example and move the dial on the world stage. What we never debate is what we are prepared to give up to make this possible.

This is key if we are to make meaningful progress. We must bridge the dialogue gap and find more sustainable and inclusive solutions for all nations, and do so regularly, to keep abreast of changes. New opportunities will drive innovation and solutions to the challenges we face.

The Commonwealth also has an important role to play as a diverse, cross-regional network. It’s a microcosm of WTO membership, and a perfect proving ground for global policy-making and co-operation. If agreement can be found in the Commonwealth, the chances are it will work in the wider trade community.

Capacity building is an important part of the reform challenge. Strengthening the connectivity between Geneva and national capitals is also at the heart of the problem. Too often there is a disconnect, which means we lose the ability to move forward because the flow of dialogue is not happening as it should. In the case of developing countries, teams are often over-stretched and under-resourced, putting them at a significant disadvantage. Input from national capitals and business communities in home countries is vital to enable trade negotiators in Geneva to move forward with confidence when being challenged to make commitments.

Not only has the UK not delivered on Doha, it has now drastically cut the aid budget, a lifeline to help developing countries build trade capability.

"The UK’s call for a more balanced and honest debate on trade reform is welcome if we are to lead by example and move the dial on the world stage. What we never debate is what we are prepared to give up to make this possible."

A decision that looks hasty in the context of G7 – where the UK is arguing for serious change –has undermined its position by removing a key bargaining chip on foreign aid assistance.

Development assistance is vital if any proposal is to succeed, and must be delivered to achieve the opening-up all economies. The government is right to call for WTO reform, but we should stop pointing fingers and have a more honest conversation with ourselves about what we are prepared to give up. Only then will we really make trade work for everyone. i

ABOUT THE AUTHOR

Lord (JD) Waverley

IndependentMember House of Lords

Twitter: @LordWaverley

LinkedIn: linkedin.com/in/ jdwaverley

Retail to the Rescue, but...

‘Zombie’ Stores Still Face a Battle

to Service Debt

etail has undergone some major transformations triggered by the pandemic.

With unemployment and disease surging in the US it is a paradox that the stock market is on a high. Another paradox is that

private consumption is strong, with 2021 likely to be one of the better years in two decades. The reasons people shop remain essentially the same, but the mix and the tools differ.

Covid-19 prompted quarantines around the world and forced businesses to change the way

the operate. In the US, private consumption counts for two-thirds of the total economy, with retail sales of about €5tn.

Retail matters. It is a major employer with a 19 percent share of labour income. One in four Americans works in retail, the largest private sector employer.

By Tor Svensson Chairman CFI.co

"Before coronavirus swept about 15 percent from retail sales last January, only 11 percent of retail sales happened online."

According to The Wall Street Journal, retail sales (excluding gas, auto and food services) rose 6.4 percent in the first 10 months of 2020. The paradox of the surging stock market is explained by the flow of private savings in a period with unattractive interest rates. There has also been a massive transfer of wealth to the richest sector through Congress’ Covid rescue packages. “Helicopter money” through unemployment support has given the US economy support as it is being spent instantly, with quick multiplication effects.

Private consumption remains strong. The shoppers on the top of the wealth and income pyramid are doing fine. Staying home in your tracksuit with no transport cost or restaurant bills saves a lot of money.

What is changing is where and how consumers shop, and what they buy.

Despite the new safety protocols, punters keep shopping. Our love for physical stores is very much alive. Brands still matter, as do value and affordability.

Still, overleveraged retailers has gone bust. During the first nine months of 2020, 27 retailers declared bankruptcy: JC Penney, Neiman Marcus, and J Crew disappeared from shopping malls. Zombie retailers such as Macys are saddled with debt they cannot service.

Shopping malls are disappearing, from 1,800 a few years ago to around 400 now. The consumers prefer outdoors shopping or individualised locations over large generic spaces. The drive is on to make stores safer, more efficient, and more productive (with, for instance, cashierless checkout).

The split is no longer just between bricks-andmortar stores and online purchasing: people are buying online and picking up in-store. “Dark stores” are being used as retail distribution to fulfil ecommerce orders. Such omnichannel strategies requires sophisticated integration for a seamless customer experience.

Department stores are reporting sharp sales declines, as are auto dealerships and restaurants. But essential businesses (e.g. Costco) are reporting homebound consumers are spending more on food, home goods and fitness products. With increased home time, alcohol sales are surging, and flat-screen TV monitors are moving well.

Before coronavirus swept about 15 percent from retail sales last January, only 11 percent of retail sales happened online. eMarketer predicts e-commerce to grow to 19 percent of total retail sales by 2024. In 2020, the sector grew 32 percent to a value of some €800bn. Much of the acceleration came as more consumers avoid stores for essential items such as groceries. Discretionary spending in consumer electronics

and home furnishings reflects a new, pandemicdriven lifestyle. The growth in e-commerce offset the slight decline in brick-and-mortar retail.

While the e-commerce pie is expanding, so is the share of the top 10 “etailers”. Amazon’s sales grew 39 percent to $310bn, way ahead of number two, Walmart with a six percent share (and an annual powerful growth rate of 65 percent). eBay is third, Apple fourth.

Technology drives the new retail experience. AI and data stimulate the interest via personalisation. Data analysis and consumer insight boost sales in real time.

Etailers are innovating message- and voice-based shopping, video chats and augmented reality. In the future of e-commerce, argues IBM’s Ian Fletcher: “You will, in augmented reality, communicate with a chatbot speaking to your digital twin, a replicant avatar which may know you better than yourself. In such contactless society, the danger is the loss of social skills.”

Live-streaming is big in China and used to advertise, sell and train staff. When Walmart invests heavily in TikTok it demonstrates the confluence of retail and the virtual world.

Sales conversion is boosted with making online buying personalised and easier, including buynow, pay-later consumer finance payment solutions and faster check-out via single-click. New channels such as social and mobile e-commerce have been added.

On the infrastructure and logistics side, developments include using robotics for the fulfilment process and to help automate in-store operations such as scanning shelves and moving products.

Retail winners in the future will be the adopters of new technology, omnichannel delivery and consumer insight. But old-school virtues such as value, affordability, great products and customer focus will not lose their potency. i

ABOUT THE AUTHOR

Tor Svensson is the Founder-Chairman of Capital Finance International (CFI.co), which supports the UN SDGs. Tor is senior adviser to a UN recognised NGO.

Spring 2021 Special

It’s Tough at the Top, and Tougher Still for Women to Climb the Executive Ladder

Women make great leaders. The science backs this up; there are countless examples of pioneering women in history. But the reality is that women — who make up half of the population and control an estimated $43tn of global consumer spending — are still woefully underrepresented at the upper echelons of power.

“It frustrates me that all these years on we’re still having to prove the so-called ‘business case’ for employing more women at a high level. It seems common sense to me,” says Dame Helena Morrissey, founder of the 30% Club and one of the Heroes featured on these pages. “The ‘Woman Count 2020’ research found that senior management teams with at least a third of women have a net profit margin of 15.2 percent, while those with none make just 1.5. This performance gap is costing the UK economy a potential £47bn pre-tax profit.

“The sad thing is this isn’t new; there are reports dating back a decade all saying the same thing and yet it hasn’t galvanised the action you’d expect.”

The World Economic Forum cites a 2020 report that found women make up only five percent of chief executives globally. The sixth edition of McKinsey’s Women in the Workplace study shows incremental progress over the past five years in closing the gender gap, but warns that pandemic pressures could cause one in four women in corporate America to downshift careers or quit altogether.

“This could potentially wipe out the progress we've made over the last six years,” said McKinsey partner Jess Huang, a co-leader of the Women in the Workplace research.

Companies are at a crossroads and must choose their next steps carefully if they hope to prevent skilled talent from abandoning the workforce. Working women have been pushed to the breaking point during this pandemic. They were the first to be furloughed, and those who still have a job are most likely making cents in the dollar compared to their male counterparts. Women usually shoulder an oversized share of domestic duties in dualcareer households, and now the pandemic has blurred the lines between work and home even further.

And for women of colour, the situation is worse. They experience the greatest underrepresentation, and the widest pay gap. They are also three times more likely to have suffered the death of a loved one in recent months, as Covid has disproportionately affected communities of colour.

Harvard Business Review conducted a study that found women were rated as better leaders by those who worked with them. It completed a follow-up study during the first phase of the pandemic to explore how women and men fare during a crisis. The research showed that women were rated more positively on 13 of the 19 competencies that comprise overall leadership effectiveness, with the highest outperformance in initiative, learning agility, relationship-building, collaboration and communication.

The following pages showcase some exemplary female leaders in action. From tech experts to SDG advocates, they all have one thing in common: they’ve made it to the top of their fields — and are making room for more women to join them. i

ANNA RADULOVSKI FOUNDER

& CEO WomenTech NETWORK

‘Mompreneur’ Shares Struggles and Wins: is This the Next Unicorn in the Making…?

Anna Radulovski doesn’t just want to make money — she wants to make impacts.

Born and raised in the Ukraine, Radulovski now calls California home. In a podcast interview focused on empowerment and leadership, Radulovski spoke of her struggles — and triumphs — as a young graduate entering the international work force.

After moving to Bulgaria and receiving her first pittance of a pay cheque, she set her mind to never again accept “these coins, these peanuts” in exchange her time and talents. Now, she’s pushing the character limits to include all her titles on her LinkedIn profile.

Radulovski is the founder and CEO of WomenTech, the global network responsible for connecting 100,000 women, minorities and their allies via an annual science and engineering conference. The usual fanfare of the global event was moved online for 2020 and featured an interactive platform with keynote speakers, panel discussions, technical workshops and a tech job fair with face-to-face networking sessions spread over three days.

“During these hard times, many people are being laid off, losing their jobs; often women are the first ones to be asked to leave for unpaid vacation, and we’d like to help. Our focus is global since gender diversity and diversity in tech is not a regional issue,” Radulovski said in preparation for last year’s event, the main theme of which was “Being Human in Times of Disruption, Technology, and Innovation”.

The 2021 conference (scheduled for June 7-11) will build upon last year’s virtual success and include live ceremonies and breakout rooms as well as country and chapter leader sessions.

“In times of social isolation, crisis, and uncertainty it is more important than ever to feel supported by your family or your community. While many of our members are affected by the crisis whether financially or mentally, we see it as important as ever to give our helping hand to get inspired, connect, and find a mentor or career opportunities.”

Radulovski promotes the benefits of network membership from the WomenTech headquarters in Silicon Valley. The conference has already reached over a million people.

WomenTech Network has a symbiotic relationship with Coding Girls, Tech Family Ventures, Founder Institute and Tallocate — all of which count Radulovski among their co-founders and current leadership. Each organisation seeks

to correct the gender imbalance in the tech industry. Coding Girls focuses on empowerment, education and engagement, while the others range from diversity-focused venture capital and female-founder fellowships to a bias-free, AIpowered hiring platform.

Like many female founders, Radulovski has experienced the tight-rope balancing act that comes with being a “mompreneur”. She warns women to choose a partner who will support — rather than stifle — their professional ambitions.

“Some countries and cultures are more openminded while others are still narrow-minded, believing that women’s place is in the kitchen, looking after children or doing ‘feminine’ jobs,” Radulovski told Youth Time magazine. “On the other hand, we see a few role models in tech, who are excellent engineers, product developers, team leads, VPs, CEOs of tech companies, founders of start-ups.”

Radulovski is one such role model, lighting the way for future generations. For her tireless efforts, she was aptly named as the “Trailblazer” winner of the 2020 Diversity In Tech Awards.

There are many hurdles to deal with in a corporate culture that is still widely dominated by men, Radulovski says. “This leads to all kinds of specific challenges, including (but not limited to) limited funding, ‘men’s club’ workplace cultures, a lack of access to growth and resources.”

But, Radulovski says, women shouldn’t be discouraged — even if the numbers paint a dismal picture. She referenced a top-200 startup list published by GeekWire last year, which only featured 16 women-led companies. Those figures might sound bleak, but according to Radulovski, they show incremental progress.

“A woman starting a tech business in a coworking space will, in addition to benefiting from the social atmosphere, feel like part of something that’s big, and growing. These are not wide-open spaces where individuals freelancers are huddled quietly at desks; they’re pleasantly busy, buzzy workplaces where, as corny as it may sound, there’s a sense of success in the air.”

Sounds like the perfect incubator for the next unicorn.

> DR CHITWAN MALHOTRA

DIRECTOR UN SDG HEALTH PARTNERSHIP

Healthcare Hands Meet Across the Waters in Push for Rebuild

The global pandemic has exposed the flaws and inequalities of the world’s healthcare systems. But doctor Chitwan Malhotra, the executive director of the UNSDG Health Partnership in Geneva, believes it also represents an opportunity to build back better.

“I believe nothing is unachievable when we all work together,” the SDG expert says.

Malhotra took up her position two years ago and has served as in an advisory capacity across the gamut of the UN’s Sustainable Development Goals. She has collaborated on a range of initiatives, including global health delivery, urban and rural sanitation, clean drinking water, gender equality, women’s health, non-communicable diseases (NCDs) and mental health in conflict regions.

“I am from the conflict region of Kashmir and have witnessed the first-hand tragic effects of what limited access to health has on the forcibly (internally or externally) displaced population,” she told APN News. “I have made Universal Health Coverage, health for all, my top priority. If we are to remain true to the principles of the SDGs, and leave no-one behind, we must do a better job of getting health services to refugees and migrants.”

Malhotra grew up in the Kashmir Valley, a disputed territory between India, Pakistan and China. Now she works to strengthen health diplomacy, foster collaborative partnerships and engage with international thought-leaders and decision-makers.

As a regular keynote speaker at SDG conferences, Malhotra has crossed paths with some of the world’s most lauded business leaders. She has held discussions on technology, innovations and health with Bill Gates, Satya Nadella (Microsoft CEO) and Mukesh Ambani (Reliance Industries chairman and managing director).

During the 74th UN General Assembly in New York in 2019, Malhotra was involved in the conceptualisation of the Zimbabwe Presidential Fund. The fund focuses on using IT to build digitally enabled smart primary clinics. The fund is also dedicated to improving access to essential medicines for the most vulnerable population. It aims to strengthen primary healthcare and empower communities to better manage the growing burden of NCDs.

“In the age of global competitiveness resources, these are opportunities that we cannot afford to miss in Zimbabwe. The proactive efforts by the government have motivated us on this visit, and we are prepared to invest and partner with Zimbabwe with interest in the health sector,” Malhotra told The Herald.

She pointed to Zimbabwe’s success in tackling the HIV and AIDs epidemic — despite being one of the countries hit hardest. “It has managed to reduce the prevalence of the disease considerably, and is on track in achieving its vision of reducing infections by 2030.”

Malhotra was proud to work with health ministries from various countries to facilitate the urgent procurement and delivery of medical supplies to protect frontline workers and support health systems during the Covid-19 pandemic. She was instrumental in the landmark deal through IHD Marketplace to supply N95 masks to the US from India, opening a new chapter in bilateral ties between the two countries.

“At the IHD Marketplace, we stand by the US and other countries in their efforts to respond to demands on the health system resulting from this emergency,” said Malhotra, who also serves as chairperson of the IHD Group.

Malhotra has received recognition for her continued efforts to further sustainable development around the world. She was awarded the environment award for her contributions to sanitation and clean drinking water initiatives in rural regions of Africa and India. She was honoured by Samira Bawumia, a politician and the Second Lady of Ghana, for her contributions towards good health and wellbeing (SDG#3). She was named by Economic Times as the Global Healthcare Leader of 2020.

Her work is now focused on international health co-operation, and she leads several health committees and programmes in close collaboration with international partners. In addition to serving as head of the UNSDG Health Partnership in Geneva, Malhotra will oversee the development of the India-Africa health cooperation process. She will also initiate and nurture health cooperation within ASEAN (Association of Southeast Asian Nations) and BRICS (Brazil, Russia, India, China and South Africa) countries.

Bill Gates and Dr Chitwan Malhotra

JULES MILLER FOUNDER AND CEO OF THE NUE CO.

Keeping it Simple: a Nue Way of Doing Business

Problems beget solutions, and that’s how it worked for Jules Miller, founder of dietary supplements firm The Nue Co.

At the age of 25 in 2015, Miller, then Londonbased, suffered from irritable bowel syndrome (IBS). She was ill, tired and stressed, and it got so bad that she had internal bleeding. She started researching alternative remedies.

She began taking dietary supplements to no avail, and noticed that most of the pills she was experimenting with contained filling and bulking agents. This is where her contacts came in.

“My grandfather was a pharmacist,” Miller told Coveteur. “He dedicated his whole life to supplements and was actually part of the research team at Cambridge University in the development of B12. There are very few people in the world that know how supplements are made or the details behind supplements as much as my grandfather.”

She was fascinated that he himself refused to take them. She began working with him to understand dietary supplement formulation — and found that many of the ingredients of OTC nostrums contained potentially aggravating ingredients.

In 2017, she started her own — all-natural — supplements company, Nue. It now has annual revenues of nearly £8m, with sales in 2020 rising six-fold on the previous year. Miller credits the pandemic with part of that success, as people became more occupied with underlying health conditions.

Miller was born in London, but her family moved to Colombia when she was a baby. Spanish became her first language, though she returned to the UK with her parents at the age of seven. She studied philosophy at Birmingham University before beginning a career in advertising. She at one time worked as head of business development for vegetarian food company Detox Kitchen.

She reached out to Natalie Massenet, founder of fashion retailer Net-a-Porter, and Harvey Spevak, head of US fitness firm Equinox, both of whom helped her in her quest to tackle IBS.

Nue's launch product was Debloat, a treatment for the syndrome. Vitamins and skin treatments followed, all successful.

“We blend innovative science and nature to drive real results within 30 days. In a category that usually struggles with retention and works on a ‘one capsule for all’ model, we create supplements that target different need states, resulting in a repeat purchase rate close to 80

percent. Our products drive real results that you can feel.”

Clients can order products on an individual basis or sign up for a subscription plan to personalise service and unlock discounts. The company uses a web-based consultation to elicit information from new clients and suggest a relevant subscription plan. All Nue products are cruelty-free and most are vegan. Ingredients are responsibly sourced, and 95 percent of packaging materials are infinitely recyclable.

The company was initially based in Cambridge before moving to New York — a good idea, as the US is the largest market in the booming sector. According to Miller, 80 percent of Americans and half of Britons take a daily multivitamins. The global dietary supplement market had an estimated value of over $136bn in 2020 — and is projected to reach $205bn by 2026.

“Growth is about two things: retention (which we feel like we have nailed) and getting in front

of as many eyeballs as possible,” Miller told Welltodo

“The latter is only achieved through bold, creative and innovative strategies which become increasingly important as the sector becomes more and more competitive.”

CEO Miller and her husband Charlie Gower are the majority shareholders of Nue. Although 2020 brought its fair share of challenges, Miller counts many successes as well. The couple bought a new home, and the company launched nine new products and opened its second global office in London. Nue has also pledged to donate one percent of all 2021 online revenue towards the funding of global water projects.

“In 2021, I’m looking forward to growing the business even further,” she reported in the Evening Standard. “We have some exciting launches coming up as well as opening our distribution up to the UAE, Canada and Australia in the first half of the year.”

> DAME HELENA MORRISSEY >

LEAD NON-EXECUTIVE DIRECTOR AT THE FOREIGN & COMMONWEALTH OFFICE

Women Rising to the Top and Helping Business to Flourish

Dame Helena Morrissey understands how isolating and intimidating it can be for women in the maledominated financial sector.

She’s a seasoned expert with over three decades of experience in the financial services sector. During her 15-year tenure as CEO of Newton Investment Management, she helped to more than double the firm’s AUM.

But it took time for Morrissey to gather the courage to make her voice heard in those homogenous spaces.

She launched the 30% Club campaign in the UK in 2010, pushing the top brass at FTSE 100 companies to recognise the benefits of diverse leadership. As the name suggests, the global campaign encourages the people in power to reach 30 percent female representation on all boards and C-suites — worldwide.

“Helena Morrissey understood that while women’s networks are very important, they were not actually moving women up,” said Brenda Trenowden, the former Global Chair of The 30% Club. “The only people who could do that were the people in power, and Helena’s idea was to start with the board: it’s at the top of the organisation, it’s visible, and it gets measured.”

By 2015, when Morrissey passed the reins to Trenowden, the campaign had achieved measurable progress, pushing female representation on FTSE 100 boards from a previous baseline of 12.5 to 26 percent. It also saw the end of all-male FTSE 100 boards drop from 21 to zero. New targets call for the inclusion of at least one person of colour to all FTSE 350 boards and executive committees by 2023 — still with gender balance, so that half of those positions go to women.

Trenowden’s successor, Ann Cairns, celebrates the campaign’s continued commitment to its global mission and the progress made thus far, but warned there was still much to do. “The glass ceiling is still pervasive and women of colour face some of the greatest hurdles of all,” she said. “It’s a time of change, a time of acceleration, where we can build a much better world for everyone.”

Morrisey echoed that sentiment, stating that if she had it to do it all over again, she wouldn’t limit the focus to women, but attempt to broaden diversity in all dimensions.

Morrissey does just that. Her cross-company initiative seeks to increase inclusivity within the investment and savings industry.

“We don’t want to ‘fix the women’ and then ‘sort out’ ethnicity and socioeconomic diversity. The Diversity Project very overtly is trying to broaden diversity in every dimension,” she said.

Despite reams of research showing that diverse companies perform better, Morrisey is disappointed that few business teams rarely reflect the wider population, leaving an untapped pool of talent, perspectives and backgrounds.

“The science backs up the fact that female powers of empathy and collaboration are beneficial,” she said, citing a 2020 study that found senior management teams comprised of one-third female leaders achieve a net profit margin of 15 percent — while those with none could expect less than two percent.

“It is very obvious to me, both as a parent and a businesswoman, why companies with greater numbers of female executives bring in ten times greater profits,” she said.

“All the evidence suggests we continue to make painfully slow progress towards encouraging more women into fund management and to build their careers in our industry. At the same time, a sense of fatigue has set in around the topic of gender diversity. Yet the arguments for having more women run money, manage people, lead client relationships and contribute to our industry’s culture and future are stronger than ever.”

Morrisey recently joined the House of Lords and was appointed to the board of the wealth management company, St James’s Place. She was confirmed as the lead non-executive director of the Foreign, Commonwealth & Development Office in September 2020.

She is a shrewd business leader — and mother to nine children. She met her husband, Richard Morrisey, when they were both studying at Cambridge.

“Richard volunteered to stay at home after our fourth child and that’s a big part of how I cope.”

JAMIE SMITH CEO OF THE GLOBAL BLOCKCHAIN BUSINESS COUNCIL

Chain Reaction: Champion of Tech that Keeps Crypto Functioning was Once in the Doubters’ Camp Herself

Jamie Smith has great enthusiasm for blockchain, the secure distributed database technology that underlies cryptocurrency major players such as Bitcoin, Litecoin and Ethereum.

The former White House deputy press secretary has held senior communications positions in organisations such as the BitFury Group, the Linux Foundation and, more recently, WestExec Advisors. BitFury Group, a blockchain transaction processor, said on appointing Smith as global chief of communications that it looked forward “to telling the BitFury blockchain story to the world”.

At the 2018 World Economic Forum in Davos, Smith played a major role in promoting blockchain. She leads global initiatives designed to fundamentally change the way the global community does business, transfers value, and opens up new doors to prosperity. But Smith herself once had a poor understanding of blockchain.

After leaving the White House, and on maternity leave from a job in communications, she was approached by a former colleague who pitched the blockchain opportunity to her.

“I think I said something along the lines of, ‘Are you crazy? That’s criminal money, I don't want anything to do with this’,” she told the BBC.

Smith's initial concept of blockchain was that it was synonymous with Bitcoin, and in those early days Bitcoin was, for many, synonymous

with crime. Further investigation brought home to her the true potential of the technology as an enabler of secure financial transactions – not just between major financial institutions, but between individuals.

“The original internet was created to move information, and it did. The information we send to each other, has to be actually stored somewhere, so it's stored in databases,” she said. At that time, security wasn’t the primary objective, and data began to accumulate in massive, silo-style databases.

“The problem is hackers are getting really good at getting into those silos, and once they are in, it’s party time.” If hackers gained access to one system, they had access to all. With blockchain, silos are broken up into a decentralised system. The technology results in a decentralised, immutable public record. The data (block) is stored in an indelible, append-only public database (chain).

“Instead of breaking into a house, now you have to break into a town or city full of houses,” she explained. And those hackers would have to break into every block in the entire chain — at exactly the same time.

Smith compares the evolution of blockchain to the evolution of the internet. Early adopters moved fast, as they tend to, and the general public has begun to understand the technology better — and to recognise its potential outside of the world of cryptocurrencies.

“Blockchain technology has the potential to make the world a more efficient, frictionless place. The amount of people around the world living in either broken systems or entirely corrupt systems is staggering. If done right, blockchain could positively reform entire systems.”

The technology has already been incorporated across applications and industries: music streaming services and licensing agreements, global supply chains, transactive energy platforms, health data management, product traceability, environmental footprint tracking, charity accountability, real estate record-keeping, pharmaceutical security, fraud-proof ticketing, smart contracts, secure document exchanges and peer-to-peer payments. And other markets are ripe for disruption.

Smith has two decades of communications experience and her previous posts include policy aide to Congresswoman Nita M Lowey and communications director for former Secretary of State Madeleine Albright. She was traveling press director for Hillary Clinton.

As a member of the World Economic Forum’s Global Future Council, she has helped to shape the narrative around blockchain technology and create a roadmap for its use.

“There is so much opportunity to enhance global expansion, make businesses more profitable and ensure that every individual around the world can profit as well,” she says. “There is a huge trickleup and -down impact. If we get it right.”

Photo:BorisBaldinger

MACKENZIE SCOTT NOVELIST

AND PHILANTHROPIST

Giving Wealth Away

Mackenzie Scott, the third-richest woman in the world, last year started giving her wealth away.

“There are lots of resources each of us can pull from our safes to share with others,” she said. “I have a disproportionate amount of money to share. But I won’t wait. And I will keep at it until the safe is empty.”

According to Forbes, the net worth of MacKenzie Scott (formerly MacKenzie Bezos) in January 2021 sits around $56bn. That figure bounces around in conjunction with Scott’s recent recordbreaking run of philanthropy. By the end of 2020, she had given away nearly $6bn.

Her fortune stems from her stake in Amazon, the e-commerce juggernaut that she helped her former husband to establish. As part of the divorce settlement, Scott was granted four percent of shares in the world’s fourth-largest company in terms of market cap ($1.6tn).

In May 2019, within a month of the divorce, Scott had signed her name to the Giving Pledge, the campaign started by Bill Gates and Warren Buffet to persuade the world’s wealthiest to donate the majority of their fortunes. Bezos — the richest man in the world with a net worth of over $187bn — is conspicuously absent from this roster. More than 200 people from 24 countries have signed, and a handful of the world’s billionaires have already donated up to a fifth of their wealth.

Fast-forward to the following summer, as nations worldwide were brought to their knees by the Covid crisis. “Like many, I watched the first half of 2020 with a mixture of heartbreak and horror,” she wrote on Medium in August. “Life will never stop finding fresh ways to expose inequities in our systems, or waking us up to the fact that a civilisation this imbalanced is not only unjust, but also unstable.”

Scott pulled together a team to help translate her altruistic intentions into support for those worst-hit by the crisis. They took a data-driven approach to identifying organisations with strong leadership teams and results, with special attention to those operating in communities facing high projected food insecurity, high measures of racial inequity, high local poverty rates, and low access to philanthropic capital.

The team started with a list of 6,490 organisations, compiled from suggestions from hundreds of field experts, funders, non-profit leaders and volunteers with decades of experience. That list was pared back to 384 US organisations working to fulfil basic needs or “addressing long-term systemic inequities that have been deepened

by the crisis”: debt relief, employment training, credit and financial services for under-resourced communities, education for historically marginalised and under-served people, civil rights advocacy groups, and legal defence funds that take on institutional discrimination.

“We do this research and deeper diligence not only to identify organisations with high potential for impact,” Scott said, “but also to pave the way for unsolicited and unexpected gifts given with full trust, and no strings attached. Because our research is data-driven and rigorous, our giving process can be human and soft.”

Her generosity came with little fanfare and complete trust in the organisations to put the money to good use. Scott, who rarely speaks to the media, didn’t disclose the individual donations — but they were estimated to vary between $3m and $40m.

Some criticise Scott for the lack of transparency, but the real rub comes from the source of her fortune: Amazon and its cut-throat, guerrillawarfare tactics.

“That money, as she very well knows, was made through tax avoidance, by wage theft, by union busting, by driving workers into the ground at every turn,” author Anand Giridharadas told Marker. “She now has this classic modern dilemma: she is a serious person who wants to give the money back in ways that actually advance justice.”

Giridharadas highlighted the exclusion of labour rights groups from Scott’s list of beneficiaries. “The most important thing she could do is make sure she’s pushing for the kind of structural, systemic changes that would make it impossible for a fortune like hers to arise ever again.”

Photo: Elena Seibert

Free Trade in Retreat in Europe Due to Environmental and Labour Standards

The EU free trade baton, carried by the UK until Brexit, has been relayed to the Stockholm Six of like-minded liberal countries pushing back against French and Italian pressure for Europe to get tougher on trade defence, and relax on subsidies.

Germany was invited to join the informal group but has demonstrated a slightly worrying lack of excitement as it gravitates away from its liberal instincts towards the more interventionist approach preferred by France, Italy, and several others.

The strengthening of the Paris-Berlin axis in the wake of the economic slump, and the willingness of Chancellor Angela Merkel to leverage her country’s financial might to help troubled member states weather the Corona pandemic has shifted the EU’s trade priorities. Previously unfashionable ideas and concepts have gained currency: industrial policy is back, as are protectionism and state support for corporates deemed of strategic importance. In France, economists are no longer reluctant to call for a “Buy European Act”, and point to the US, where domestic suppliers have long enjoyed a significant edge thanks to discriminatory legislation such as the Buy American Act of 1933 which, though watered down since, remains in force.

PAYING THE PRICE

In a note distributed earlier this year, the Conceil d’Analyse Économique (Council of Economic Analysis) argued that environmental concerns justify raising duties on, for example, EU car imports. However, the note admits that tariffs will probably not encourage the reshoring of automotive production. The council’s economists also warn that consumers may end up paying a hefty price for their insistence on stricter carbon emission and labour standards. According to the council, the best opportunity comes from a post-corona reappraisal of supply line cost and resilience, leading carmakers to lessen their dependence on distant suppliers.

Currently working on a trade policy review, the European Commission adopted the concept of open strategic autonomy to channel and contain the pressure exercised by governments responding to changing domestic attitudes and heightened concerns about climate change, national security, social inequality, and — of course — post-Covid recovery. However, the commission has so far failed to delineate the novel concept which is, essentially, a rhetorical vehicle.

The policy review, the first since 2015, is a cautious attempt to move away from blind adherence to free trade. Pundits have been quick to point out that the principle, as such, has never truly existed. Even the Comprehensive and Economic Trade Agreement (CETA) between the EU and Canada — almost universally hailed as a touchstone — runs for 2,255 pages. The hastily negotiated EU-UK trade deal — curiously enough the first in history to introduce obstacles instead of removing them — needed 1,246 pages to cover its meagre objectives.

Free trade as a shifting ideal is no longer progressing towards liberalisation. Systemic

"Even

Stockholm Six initiator Sweden

is not so sure that free trade is the endall, cure-all it was once held to be."

disparities are, in part, driving that trend. China’s state-sponsored capitalism — a rather unique form of dirigisme — has managed to muddy the waters and reignited the call for a return of industrial policy where states or, in the case of the EU, a supranational entity set out clear objectives and provide the legal and fiscal framework to ensure their implementation. The creation of European champions to nibble at the hegemony of US big tech is a priority for a growing number of European leaders who should, perhaps, know better than to expect miracles — or groundbreaking innovations — from corporates feeding at the state’s trough.

MINOR CHAMPIONS

Europe’s few homegrown minor champions — Booking.com, Skype, Spotify, and SAP — did not grow out of policy initiatives. Some of the more promising and successful ones were quickly snapped up by US companies. Skype, created in Estonia, was acquired by Microsoft in 2011 for $8.5bn. Booking.com, originally Dutch, went to Priceline for $133m in 2005 and is now worth an estimated $75bn. Only Germany´s SAP and Sweden’s Spotify have managed to reach the trailing end of the major tech league under their own power. Wirecard, the great hope of the European fintech sector, went bust when its creative book-keeping practices were uncovered by The Financial Times

After the UK left the EU, Sweden seems to have taken the lead in protecting the autonomy of consumers in the face of slowly rising protectionism. The Stockholm Six are, however, not the fierce and buccaneering freed traders they appear to be. Germany is but a pro forma member of the group while the Netherlands, duly invited to partake, appears to be having second thoughts as well.

Last year, the Dutch and French trade ministries jointly published a “non-paper” — EU jargon for a thought exercise — calling for tougher enforcement of environmental and labour standards. It also proposes the introduction of a Carbon Border Adjustment Mechanism — a rather clumsy euphemism for an added tariff burden and one unlikely to fool anyone. The mechanism would hit hardest those countries that fail to contain their carbon footprint.

The note bluntly suggested the deployment of trade policy as an instrument to provide additional leverage to the imposition of strict standards. Usually at loggerheads over trade,

Paris and The Hague have staged a remarkable rapprochement after Dutch Prime Minister Mark Rutte came under heavy criticism at home for his eagerness to secure parliamentary approval of the EU-Canada trade deal, which only narrowly passed the Lower House and may yet be blocked by the Senate.

The EU-Mercosur trade deal that the commission successfully negotiated in 2019 is also facing opposition. Environmental groups are particularly incensed at the alarming increase in Brazil’s rate of deforestation and the country’s alleged mistreatment of its native inhabitants.

Even Stockholm Six initiator Sweden is not so sure that free trade is the end-all, cure-all it was once held to be. Here too, growing environmental concerns and distorted competition from low wage and low regulation countries have spurred a national debate on the merits and demerits of open borders. The ambitious climate goals of the EU and its individual member states seem to clash with frictionless trade.

So far, the European Commission has not managed to incorporate its lofty standards in any major trade deal. Its trade policy review still dwells at the wishful thinking stage. There are many practicalities to consider before the 2016 Paris Agreement on Climate Change can be elevated to a set of legally binding obligations in any future trade deal. Though 190 of the 197 parties to the deal have ratified the agreement, its incorporation as an added dimension to free trade deals runs into trouble over the extraterritorial imposition of EU law. Not all signatories of the Paris Agreement display the same level of dedication to its full implementation.

Although the reasoning on free trade has changed from economic benefits to environmental concerns, the current debate is not that new: Free traders and protectionists have always clashed, albeit with a certain civility. Both the tone and intensity of the debate on trade have changed. The pandemic and its economic fallout have reopened public discussion on questions that, until about a year ago, appeared settled.

The fact is that free trade is in retreat; reshoring has become a buzz word, and industrial policy is experiencing a second coming of sorts — no longer the preserve of nostalgic economists dwelling on the fringe, but a possible centrepiece in the post-corona rebuilding of shattered and indebted economies. i

> Lindsey McMurray, Co-founder of

Pollen Street Capital: How Capitalising on Change Can Drive Benefits for Financial Services Industry

Lindsey McMurray co-founded Pollen Street Capital in 2013 to back entrepreneurial businesses positioned to benefit from structural changes in the financial services industry.

The firm identifies and champions businesses that are on the cusp of transformation, with agile operations that deliver solutions to customers underserved by mainstream providers.

“The financial services sector touches every aspect of our lives, something that has never been more apparent than in the past 12 months,” she says. “We consider our work through this lens; by accelerating change in financial services, we can have a huge positive impact on the overall economy.”

Lindsey McMurray has been a private equity and credit investor for more than 25 years, with a focus on the financial and business services sector. She chairs the Pollen Street Capital private equity and credit investment committees and serves as non-executive director of several portfolio companies, including Shawbrook, a

UK challenger bank, consumer lender Oplo and Freedom Finance, a service provider to lenders.

“Across our private equity and credit business, we are dedicated to helping businesses reach a wider audience and reflect their potential,” McMurray says. “Through our credit strategy we can provide support to SMEs and community development and have a positive impact on regional growth.

“In our private equity work, we want to accelerate the progress of the sector by drawing on the capabilities of the entire portfolio. In doing so, we drive revenue at an accelerated pace, and create a community of trust, partnership and value-add.”

One of the ways it does this is through the Pollen Street Capital Hub. “Through our Hub initiatives, we can address portfolio-wide issues and develop solutions for common opportunities such as

digital marketing, data and technology, as well as advancing the ESG agenda.”

Before founding Pollen Street Capital, Lindsey McMurray led the principal finance business for the Royal Bank of Scotland (RBS). From 2007, she led the launch of the Special Opportunities Fund within RBS, raising some £1bn from external institutional investors.

When not working to drive positive impact in financial services, Lindsey Mcmurray is a keen runner and completed the Marathon Des Sables in 2007 and 2011. She supports a number of charities, with a particular focus on mentoring children in state schools, supporting climate action initiatives through producing documentary films, as well as supporting the speech and language charity, Auditory Verbal UK, that provided early years therapy to her daughter Grace. i

leading

Managing Partner: Lindsey McMurray

Pollen Street Capital: Beyond ESG, and Accelerating Progress by Adding ‘Caring’ to the Priority List

ollen Street Capital believes that its investments and business support have positive impacts for the financial services industry — and society as a whole.

It is through this lens that Pollen Street assesses opportunities to invest wisely and to help build better businesses, rather than just applying ESG checklists.

“We were recently bold enough to embed Caring as a core value in our business,” said managing director Lindsey McMurray. “Caring is going the extra mile for your portfolio companies, your investors and ultimately for the wider community. For us it is the driving force of our work.”

A PRACTICAL APPROACH TO ESG INVESTING ESG is not so much a movement in the industry as something that has well and truly arrived. For

Pollen Street, it’s a core part of the investment process, from identifying ESG risks preacquisition to working with portfolio companies' post-acquisition to embed the ESG framework. This drives value creation and allows the monitoring of performance against key criteria.

“As we see increased focus on ESG in our industry,” says McMurray, “it becomes clear that responsible investment processes and

"With the climate lens there is a groundswell, people understand the climate emergency but are unsure of what they can do."

procedures are an essential part of working practices.”

Alison Collins, director of Pollen Street Capital’s Hub and ESG Committee chair, said the firm’s portfolio companies were at different stages of maturity. “Some have well developed ESG policies, others have no formal policies in place. Some are in the early stages of implementing ESG programmes. We have an opportunity to support them and share learnings from more mature businesses, so portfolio companies do not have to start at square one.

“We are regularly blown away by the enthusiasm for ESG topics when we meet teams from new additions to the portfolio. The first gap to span is not in demonstrating the importance of ESG as this is invariably already a focus, but in helping the businesses align behind their ‘impact areas.’ Every business is positioned to tackle a specific set of issues.”

When onboarding a new business, Pollen Street works to map out its Impact Areas, aligning ESG strategy to:

• the sub-sector the business operates in

• the customer base

• the strategy

• the skills and expertise of the team.

“It is important to remember the role that the employee base can have in shaping the ESG direction,” said Collins. “Having employees at all levels championing the ESG agenda supports the values of the business and results in everyone having buy-in to drive projects forward.”

Pollen Street’s ESG committee is made up of senior sponsors and passionate team members who join the discussion and have a positive impact in setting responsible investment strategy.

Last year the firm launched its flagship ESG programme, Ten Years’ Time, with the goal of making a difference in the world by connecting its expertise with causes and initiatives that reflect its values. Pollen Street works with Blue Ventures, Future First and Big Issue Invest, sharing and using its core asset management skills.

The firm notes the importance of measuring progress and communicating successes. Pollen Street published its inaugural ESG report last year. “As well as tracking progress, reporting is a fantastic opportunity for firms to share their purpose and bring to life some tangible examples of where their work is having an impact,” says McMurray.

INVESTING WITH IMPACT

As well as embedding ESG diligence and monitoring, Pollen Street Capital aims to have a positive impact through its private equity and credit strategies, accelerating progress in financial services and beyond.

“We believe that a focus on responsible investing can lower risk and enhance financial returns for our funds and underlying investments, while also generating a net benefit for society,” McMurray said.

One of the areas where a specialist such as Pollen Street can make a difference is in supporting regional growth. With lending businesses Shawbrook and Capitalflow, Pollen Street provides support to SMEs and community development.

Lindsey McMurray said a number of businesses in its PE portfolio were lending regionally. “Capitalflow addresses rural businesses which otherwise would have limited funding options. In 2019, about 68 percent of Capitalflow’s SME customers were based outside of capital cities.”

Another of Pollen Street’s portfolio companies, Aryza, offers technology solutions that help financially vulnerable people and improve financial inclusion. During 2019, over a million consumers moved closer to financial rehabilitation and Aryza’s new digital products, My Money Options and DebtSense, are helping businesses to support their customers to resolve their debts more easily.

“With an overarching view to have a positive impact, we can make sure that lending reaches people who are underserved by traditional providers because they don’t fit the bullseye of very narrow lending practices,” said McMurray.

Pollen Street’s credit facilities have supported several green energy initiatives, improving the energy efficiency of property stock in the UK. Through focused product financing and installation solutions, the firm has helped:

• Over 11,000 households to install a new boiler which increases energy efficiency and reduces energy bills

• Over 9,000 households switch to renewable energy

• Over 5,000 households in the provision of insulation

“With the climate lens there is a groundswell, people understand the climate emergency but are unsure of what they can do,” McMurray points out. “What we’re doing is lending to real people, giving them the tools to make a real positive impact.

“When we started investing in financial services, we could see people who perhaps kept this industry at a distance. We saw it as an integral component to enable and drive positive change across much of the economy. It is that wide-reaching influence that means that — as a financial services specialist — Pollen Street Capital can have a positive impact on society through the work that we are passionate about.” i

> SegurCaixa Adeslas: The Year that Put Healthcare in Focus

It’s certain that 2020 will go down in history as the year of Covid. The pandemic has affected almost all the world’s population, and put healthcare in prime position of every country’s agenda.

Healthcare has been the main tool to battle and contain the spread of the virus, and that universal effort has hinged on the dynamic efforts and collaboration of the private sector.

Insurers made a noteworthy contribution to the battle. In Spain, SegurCaixa Adeslas was determined to protect its customers - despite the fact that the health policy explicitly excluded coverage in the event of a pandemic-. The company rapidly adopted measures to protect its employees, customers and service providers. It implemented new processes and procedures to maintain the service in challenging conditions.

Digitalisation, one of SegurCaixa Adeslas’s strategic pillars, has been strengthened to adapt to the unfolding scenario. For two years, the company has been offering the Adeslas Salud y Bienestar health and wellbeing digital platform, and that has been reinforced to bolster remote assistance. SegurCaixa Adeslas has remote guidance services and functions, including electronic prescriptions, which have minimised unnecessary trips during lockdown. That same objective galvanised the extension of healthcare provided by telephone or video-conferencing to the entire healthcare system.

In addition to the insured persons infected by covid who had to be hospitalised, a service was established by SegurCaixa Adeslas to remotely monitor insured those quarantined at home who displayed mild symptoms that could be linked to Covid-19. A team of professionals contacts them by telephone to provide support, therapeutic guidance and protection advice for the patients, and people living with them.

The speed of SegurCaixa Adeslas’s response is due to a corporate culture that places customers at the centre of any strategy, aiming to aid them in their day-to-day lives, giving them with an active role in their own healthcare and providing them with relevant information at every turn.

These commitments are at the root of innovative insurance solutions such as MyBox Health and MyBox Health Seniors, whose approach opens novel channels to ensure solid, lasting relationships. The launch of another service, MyBox Business, has been crucial for the banking insurance channel. It has been an especially

Distribution in premiums by line of business (2020)

In millions of euros

Adeslas reinforces its leadership in Health Insurance

Source: ICEA

difficult time for business, and SegurCaixa Adeslas has become a leader in Shop insurance.

Each year, the firm strengthens its leadership position in the healthcare insurance sector and solidifies its position as a benchmark in the whole non-life Insurance sector. Last year, it earned €

It has a 30.4 percent share of the healthcare market – more than its two most immediate rivals put

A BRIEF HISTORY OF TIME GETS A NEW CHAPTER

“I have wondered about time all my life.” - Professor Stephen Hawking

Professor Hawking did more than wonder about time. He spent most of his life probing into the beginnings of our universe, and discovered the very origins of time itself. And then, this theoretical physicist, whose legacy stands alongside those of Galileo, Newton and Einstein, made his discoveries accessible to everyone. The fact that he did all of this whilst battling debilitating motor neurone disease was all the more remarkable, showing Hawking’s courage, insatiable curiosity, and ambition. The Hawking limited series watches are a fitting tribute to this titan of science, and Bremont is proud to present them alongside Professor Hawking’s family.

> ORBIAN: Supply Chain Finance?

This Firm has Made It a Speciality

ORBIAN is the longest-standing provider of supply chain finance (SCF) solutions.

The firm is decidedly “buyer-centric” with its traditional SCF product and its Express SCF (xSCF) and Virtual Card (e-Card) offerings.

For more than 20 years, ORBIAN has been financing global corporates to help them achieve their working capital objectives. The firm supports suppliers everywhere with a collaborative, flexible solution for working capital management that meets the demands of the global supply chain.

ORBIAN launched, in 2010, the first bankagnostic multi-bank SCF programme in Europe; in 2014, ORBIAN was first to provide SCF to Mainland China.

The company’s universal funding structure, combined with its SCF technology platform, allows it to offer comprehensive solutions and services to global corporate clients. Its programmes have virtually unlimited funding capacity, while mitigating funding and operational risks inherent in other SCF offerings. The streamlined onboarding process ensures best-in-class customer experience.

THOUGHT LEADERSHIP

ORBIAN has maintained its industry-leading position with themes that take the industry forward, such as its recent work on sustainable supply chain finance. It has become a key player in the financial sector’s ESG field.

SCF provides suppliers with access to liquidity and funding that enables the autonomy to manage businesses on favourable capital terms. A sustainable SCF programme allows suppliers to meet the investment requirements required to create sustainable initiatives across their operations.

SCF can be engineered to provide incentives for suppliers driving positive change, and feedback for those who under-perform.

This year will undoubtedly see a great deal of attention paid to the development of sustainable SCF, not only with regard to climate change, but also across key aspects of personal and community well-being.

Last November, ORBIAN launched a major data-collection initiative to create a profile of its transactions and those of its suppliers with regard to the broad ESG agenda. These data will be fed into the firm’s collaboration with a major

European academic research initiative focusing on supply chain finance.

In the driving seat is Thomas Dunn, chairman of ORBIAN, with 30 years’ experience in financial services: banking, insurance and private equity.

Prior to joining Orbian, he worked at JP Morgan in London, Melbourne, Sydney and Tokyo. His 16 years’ experience was focused on debt capital markets, corporate finance and credit markets. He was ultimately responsible for each of these businesses for JP Morgan in Asia Pacific.

Tom Dunn is also the chair of Raglan Capital Ltd, a Bermuda-based private equity firm. i

Chairman: Thomas Dunn

Whitecroft Capital: Banks, Buffers, and One Strategy’s Vital Role

in Bolstering Battered Economies

ank risk sharing – what is it? When asked to write a few words about Whitecroft Capital and our investment strategy, I suddenly realised what a challenge it may be to explain this succinctly. For more than 15 years, we have been living in this small world consisting of specialist investors and large financial institutions, working

on multibillion transactions and allocating capital to the world economy. Sounds exciting, right? For many not so much; perhaps even a boring topic. When asked what I do for a living, a specific caricature always comes to mind where the wife is saying to her husband: “Dear,itisgettinglate and the guests aren’t going home. Could you please start talking about credit derivatives?”

By Michael Sandigursky Founder, Whitecroft Capital

However, I hope you will not “leave” like the guests while I introduce you to our strategy; you are very welcome to stay.

We founded Whitecroft Capital in 2016 with a clear objective - to focus on one narrow, unique, but successful risk sharing strategy. We planned to further popularise it among institutional

investors such as pension funds, insurance companies and foundations looking to diversify from mainstream strategies.

Risk sharing can be traced back to the implementation of the Basel capital accord. In 1988, following lengthy deliberations among the world’s central banks, a new regulatory pact

was born. It set the globally uniform, minimum regulatory capital requirements for all banks.

What is regulatory capital? Major commercial and universal banks provide commercial loans, working capital lines and trade finance advances as a standard part of their service relationship with the customer. This comprises the core business of the bank, and what customers have come to expect. Each credit exposure that the bank acquires through lending must be supported by regulatory capital. This is to create a buffer to absorb credit losses should a client be unable to pay back the loan.

The underlying idea is simple, but the amount of such regulatory capital is far from trivial. After the taxpayer-funded bailouts of the banking system in the 2008 global financial crisis, supervisors were tasked with making the financial system more resilient. They came up with a new framework, known as Basel III. It required all banks to hold significantly increased amounts of regulatory capital to support the whole range of their exposures. Capital has become a scarce resource which could limit further lending growth. Banks are now motivated to find ways to manage their capital more

efficiently. Risk-sharing transactions provide an important solution.

It is a partnership in which banks share the credit risk of their loan portfolios and, consequently, free-up some capital. This is released through risk sharing, then recycled into the lending business providing room for further growth. Monetary and political authorities, particularly those in Europe and the US, have long realised the increasingly crucial role of risk sharing for banks. Banks now have the means to actively manage their balance sheet capital requirements and increase their lending activities, in particular to the SME sector. This endorsement of risk sharing by the authorities is encouraging its use as a strategic tool.

What does risk sharing provide to investors? They can use it as a route to begin directly investing in a specific business of the bank and participate in its growth and performance. The best part being that the investors don’t need to build the same complex and expensive infrastructure as the banks. All loan portfolios used in risk sharing are performing, good quality with an average rating equivalent of BBB/BB, and comprised of hundreds of private loans on

Diversification

from other capital market investments

Floating rate return profile attractive in rising rates environment

Supporting technicals with capital on forefront of the agenda for most banks

Access to credit assets not otherwise available in public markets

Specialist niche market with potential to extract alpha

Attractive risk-adjusted returns from unique asset class

Stable and consistent cash flows

"Whitecroft has been striving to ensure more investors are able to allocate to risk sharing."

the banks’ balance sheets. The banks then offer these credit exposures for regulatory reasons –to improve their capital position – rather than for risk management purposes. These loans are not easy to come by, as they are not available to institutional investors outside of the risk-sharing structures.

In recent years, direct lending strategies have become popular as a way to intermediate banks and lend directly to companies. The goal of the risk sharing strategy is quite the opposite: to provide capital to banks so that they can grow their market share and leverage their existing lending platform. Risk sharing investors do not compete with direct lenders; they largely complement one another by providing finance to the full spectrum of borrowers.

The risk-sharing market has been around for over 20 years. The issuance has been growing steadily since 2008. We estimate the market size to be around $30-35bn of issuance, supporting up to $500bn of lending. Most global banks in Europe and North America are now active in the sector.

Banks are a vital part of the solution to revive world economies, battered by the pandemic and ensuing lockdowns. Capital buffers have been dented by the conservative provisions made at the start of 2020. Capital is key to credit flow,

and there is a significant impetus on increased issuance as a means for banks to manage these pressures. And 2020 turned out to be one of the most active on record.

The investor base in the risk sharing sector has been steadily growing, mostly due to increased awareness and steady performance even in times of stress. Whitecroft has been striving to ensure more investors are able to allocate to risk sharing. Our investment team, with product expertise in the sector, has over 70 years of industry experience and more than eight years of investments in the asset class. The team has executed more than 50 transactions in this space over the past decade.

Access to risk-sharing partnerships is still limited because the transactions are structurally complex, large in size, and typically, privately offered to only a handful of buyers. Specialist managers such as Whitecroft can access exclusive opportunities with the global banks. Our relationships with these institutions, which have strengthened over the years, encourage banks to turn to us when they are looking to undertake such transactions.

Our flagship product, WHITECROFT Core Bank Risk Sharing fund, is a combination of 18 core businesses of 10 leading international banks

with strong underwriting and credit controls. The overall portfolio is very granular, referencing 13,500+ borrower groups, with maximum average borrower concentration of only 0.15 percent. It is well balanced and diversified, with exposure to obligors in 77 countries and 37 industry sectors.

While some private strategies are being flooded with capital eroding value, risk sharing is not. It remains a hidden gem, offering steady and consistent returns of L+ 8-10 percent. Risk sharing has outperformed leveraged loans and high yield bond indices before and during the pandemic. Especially stark is the extent of outperformance of the strategy against the bank equity index. It all goes to show the relative value of risk sharing for specific portfolios compared to generic investment into bank stocks.

No doubt last year was very difficult for everyone. Fortunately, the vaccination programmes seem to be effective in containing the pandemic. We expect a sharp economic rebound, cementing the solid performance of risk sharing through this crisis. With strong regulatory support, banks will increasingly set up such programmes providing even further diversification to investors looking for stable and uncorrelated strategies. We are confident that risk sharing will continue to have a positive and successful future, and look forward to the busy year ahead. i

Access Alpha Returns Stable

Ventum Dynamics: Clean, Renewable Energy to Anyone, Anywhere

WHAT IS YOUR ROLE AT VENTUM AND HOW HAS LIFE PREPARED YOU FOR THAT?

My role as the CEO in Ventum is to drive our contribution forward to the necessary renewable energy transition. The clean energy sector has always intrigued me. I very much enjoy being part of a project that will change how we make use of wind for domestic and international energy production. This is something I just had to be part of. My experience from working on large realty projects have made clear just how increasingly essential the energy classifications have become to both tenants and owners.

WHAT ARE VENTUM’S PURPOSE AND STRATEGIC INTENT?

Our purpose is to be a game changer in the energy market by addressing the international need for substituting the sources of energy for both domestic and industrial power.

HOW DOES THE WORLD BENEFIT FROM VENTUM?

We produce a safe, efficient and placement friendly cleantech solution for reducing traditional energy consumption: an innovative vertical axis wind turbine. As our Verosphere does not require to be pointed towards the wind, the need for wind sensors and orientation mechanics is eliminated.

WHERE DO YOU SEE VENTUM IN 3-5 YEARS’ TIME?

Ventum aims to be a global player in the green energy market and serve as a supplement to solar systems globally.

WHAT IS YOUR INTERNATIONAL STRATEGY?

We are already looking into licencing out production in the US, Asia and Africa.

WHICH UN SDG GOAL(S) DOES VENTUM ADDRESS?

Plenty of them. First and foremost, SDG #7 for affordable and clean energy. Our recent product models are going to be made with recycled sea waste plastic – aligned with SDG #14. We have a strong desire to help and being able to deliver a power solution in remote areas. This is something

the whole team is extremely focused on getting into place, as per our slogan: “Clean, renewable energy to anyone, anywhere”.

HOW HAS THE COVID PANDEMIC INFLUENCED YOUR LIFE AND BUSINESS? HOW DO YOU MITIGATE THE IMPACT?

At the time when the pandemic broke out in Europe, we were in the process of making the final changes to our CADS towards wind simulations. Our set launch date was creeping closer, as we had a slot to launch at the World Expo 2020 in Dubai. Luckily, the whole event got postponed and we were given enough time to continue our development and improve our product even further. We are a small development team, so our cohort didn’t move much out of our own bubble. Knock on wood, we have all been healthy so far. i

CEO: Wolfgang Krohn

> Korosh Farazad:

Unconventional, Experienced, and Continue in Growing the Brand

The acting CEO of Farazad Investments, Korosh Farazad, assures market integrity with an unconventional approach to capital structured financing.

He established the subsidiary arm, Farazad Advisory Ltd in the UK in 2015, expanding the brand and providing professional and structured guidance on mixed-use real estate investment opportunities with deep focus in hospitality, consultancy, in-depth market analysis, and feasibility reports.

Farazad Investments (FI) specialises in accessing capital for projects via sophisticated, highly structured debt and equity solutions. It is headquartered in the Hong Kong and domiciled in UK. FI’s portfolio of international investors has helped to establish it as one of the most recognised and proven boutique investment

houses, with global access to capital and industry focused expertise.

It operates across five continents, with a presence in Britain, Europe, the Middle East, Asia Pacific, Australia and US, with an expanding portfolio and new global funding ventures. FI’s standing in the lending market has strengthened with access to the competitive blue-chip Private Equity Funds and Private Family Offices.

FI's survival during challenging times hinged on Korosh Farazad and his experienced team’s ability to diversify and establish a secure platform, adapting the mechanics of conventional financing to a volatile market. FI has assisted in advising and structuring projects worth more than $3.7bn.

Korosh Farazad’s unique approach has been crucial to the firm’s success and paved the way

for international recognition from regulatory bodies and PE Funds in US, Europe and Asia. A transparent approach to financing and creative thinking led to the introduction of an awardwinning, in-house financing formula.

The acting CEO’s unrivalled knowledge of international banking, finance and investments catapulted the business through the late 1990s, facilitating medium- to large-scale structured financing for major projects.

Farazad also is a Vice Chairman (Non-Executive) for a Swiss Fund with AUM $4.6 Billion and the Co-Founding Member of a hospitality Fund focused in acquiring cashflow positive hotels with distressed asset owners due to the pandemic in prime European cities and Central London. He has significant growth plans to create a hotel portfolio of AUM $1 Billion by 2022. i

Acting CEO: Korosh Farazad

Farazad Investments: Boutique Investment Bank Believes in a Tried and Tested Formula with Innovation on the Side

Farazad Group consists of four subsidiaries: Farazad Investments, Farazad Advisory, Farazad Ventures and Farazad Facility Services.

Established in 1996, Farazad Investments (FI) is a boutique investment bank with global access to capital and industry expertise. FI is registered in Hong Kong with an experienced team based in London, Seoul, Dubai, New York, and Melbourne.

It provides financial products to the private and corporate sectors in developed and developing countries, and tier-1 emerging markets. The FI investment banking team offers a full range of services, identifying and structuring innovative solutions for corporate clients, real estate projects and family offices.

The group takes pride in providing differentiated and creative advisory and capital markets solutions. It focuses on most industries, with special interest in real estate, energy, retail, and infrastructure.

The examples above provide a snapshot of the scope and scale of structured FI projects worldwide.

• Assisted and structured a senior construction loan of $21m for a 41,295 gross-square-foot residential rental development project in East Harlem, New York. The 14-storey property will have 29,390 square feet of net rentable residential area, with some 2,000 rentable square feet of retail space at the base of the building.

• Capital structuring on the equity investment to lease the five-star, 31-key hotel located in Copenhagen, close to Kongens Nytorv, Strøget, the city’s famous canals and metro station. The six-storey hotel has been renovated and decorated, while maintaining its historical charm.

• Capital structuring and advising on the potential acquisition of trophy hotel assets in Europe, valued from €600m and €1bn.

• Sell-side advisory for a leading fashion retail company based in Lugano and Milan, with a valuation of €1bn.

For any one real estate asset acquisition, FI can raise up to 80-90 percent of the capital stack through debt, equity and other forms of financial

vehicles to minimise in diluting the clients cash flow for one specific project. FI manages an active international advisory platform which has executed over $2.65bn of equity, debt and investment sale/acquisition advisory business worldwide. The experienced team at FI provides the same services to companies across industry sectors. The executive team has executed significant investments in sales / debt / equity capitalisations in FI’s focus industries. The company complies with strict international antimoney-laundering regulations.

Services include, but are not limited to:

• Structured Debt & Equity Solutions

• Corporate Advisory & Consultancy

• Market/Sector Expertise Services

• Asset Management under Trinity Hospitality Group

Farazad Investments’ niche business model is built by seeking out exceptional entrepreneurs and creating long-term joint venture partnerships. The formula has been tried and tested. It maximises the skill sets of both parties, enabling them to deliver optimal value to investors and the newly created JV entity. i

Being the Friend that Everyone Needs in Times of Trouble: It’s Down to Planning and Purpose

Scottish Friendly began 2020 with a clear strategy in place. No one in the UK knew how quickly the pandemic would sweep the country, or how profound the impact would be.

e had to respond and we had to do so at pace to ensure we continued to serve the needs of our customers and protect the health of our colleagues,” said chief executive Jim Galbraith. “Within two weeks, the majority of our colleagues were working securely from home, with only those undertaking important tasks that were impossible to do from home remaining in the office.”

Scottish Friendly’s IT department did “a remarkable job” in ensuring that every member of staff the correct equipment to effectively and safely work from home, added Galbraith. “We continue to invest in our technology to improve remote working, with all colleagues now using Virtual Desktop Interface via the Cloud.”

With the increased risks associated with the pandemic, the firm increased its investment in cybersecurity and developed and strengthened the risk-management framework, helping to further bolster its capabilities and resilience.

“While our colleagues adapted to a new way of working, Scottish Friendly created an entirely new HR function,” says Galbraith, “supporting wellbeing with the development of initiatives – including HR drop-in sessions and online fitness classes – that developed new ways of communicating, professionally and socially.”

In addition, a voluntary Scottish Friendly working group developed a set of company values to use as guidelines through the new challenges. “I am proud to say that rather than standing still, Scottish Friendly has continued to grow, recruiting in key areas to help support us through the impact of Covid-19, in particular our customer service and contact centre functions.”

Adapting to the effects of the lockdown required a considerable investment in people and processes, all of which took time. There was no doubt that service levels had suffered at the start of lockdown, Galbraith admits, with escalating demands from customers and the need to adapt to new ways of working. “But after further investment and process efficiencies, we were able to bring service levels back up.”

Chief Executive: Jim Galbraith

Scottish Friendly is determined to continually improve the products and services it offers. “We pride ourselves on differentiating through innovation, efficient customer services and responsible capital management,” Galbraith says. “This is no different whether we are working from home or in the office.

“In spite of the current challenges we face across the UK, we remain well placed to come out of the pandemic stronger than we entered it, enabling us to continue to achieve our vision to provide long-term sustainable growth for our members.”

ORGANIC GROWTH

Responding to the demands of Covid-19 and changes to the way many customers wanted to interact with Scottish Friendly, its targeted marketing activity sought out alternative distribution channels, delivered to homes. “In addition, we adapted our key messages, focusing on certainty and peace of mind through these unpredictable times.”

Targeting more individuals via a mobile app has resulted in a fifth of Scottish Friendly branded sales coming through the channel. “It continues our journey of becoming an app-first financial service provider,” says Galbraith.

Paper-based marketing activity was reduced throughout the course of 2020, helping to reduce the firm’s carbon footprint. Scottish Friendly also increased marketing activity across social media through Facebook adverts and developed a successful radio campaign in the second half of the year.

“The latter is important,” Galbraith points out, “as it offers another scalable way for us to develop our business reach. We expect to develop this alongside our app-based activity over the course of 2021.”

PROCESSING OUTSOURCING

Scottish Friendly continues to work with a range of corporate partnerships, contributing to overall results. While some partners suffered due to the nature of lockdown limiting faceto-face interaction with customers, Scottish Friendly continued to restructure relationships and provide support through this difficult period.

Term-assurance partners performed strongly, as more individuals and families looked to protect themselves.

“Our strategy to diversify through a range of corporate partners continues to prove successful,” Galbraith says, “smoothing out the extreme market conditions we have experienced throughout 2020. We’re confident our investment in products, technology and customer service will continue to add value for our existing partners while we seek to attract new ones.”

MERGERS AND CONSOLIDATION

The focus in 2020 was to further embed Canada Life’s book of life and pensions business, purchased by Scottish Friendly in November 2019. “This was the largest acquisition in our history, significantly increasing assets under management, member numbers and the transfer of new products.”

Scottish Friendly has a long and proven track record of acquiring and administering large books of insurance businesses. “We’ll continue to look for appropriate mergers and acquisition opportunities in the future,” the CEO promises.

FUTURE OUTLOOK

The pandemic has gone on longer than anyone could have foreseen, and is likely to be a dominant factor for the immediate future. “Scottish Friendly will continue to serve our members despite these uncertainties,” Galbraith says.

“We continue to take strength from our mutual status. We have experienced many economic cycles and have always taken the long-term view, enabling us to protect value during short-term turbulence while planning measures to enhance our asset base.

“Our 2020 financial results demonstrate our agility, flexibility, and our commitment and resilience through these difficult times. We recognise the challenges that lie ahead and our key focus remains on the health and wellbeing of our colleagues, of whom I am immensely proud.

“I extend my thanks to each and every one, who together are working hard for the benefit of our members. While the immediate future remains uncertain, we remain confident in our ability to meet its challenges.” i

BBVA Asset Management: Going Global in the Battle to Bring Sustainability to the Wider World of Investment

Spanish bank BBVA is working on a global strategy which will affect all of its investment solutions.

BBVA Asset Management embeds sustainability in the process. It has launched a sustainability plan that applies to all of its mutual and pension funds, based on the four pillars of Engagement, Exclusion, Integration and Impact.

Environmental, social and corporate governance (ESG) criteria, as well as sustainability parameters, are taken into account to analyse the potential of investments – as well as the risks involved. BBVA also considers the impact these investments may have.

"The development of these new capabilities and knowledge will allow us to offer new products with a focus on sustainability,” explains Lara Marín, global head of product at BBVA Asset Management, “or that seek to impact certain sustainable metrics. We are convinced this will be of great interest to our clients in coming years."

BBVA Asset Management’s plan is aligned with the new European regulatory requirements on sustainable investment.

This focus is nothing new to the organisation. BBVA has offered solidarity funds since 1999, and markets a range of sustainable solutions: three mutual funds and a pension fund. In 2008, GPP, the BBVA Group's pension fund manager signed-up to the United Nations Principles for Responsible Investment (UNPRI).

The new sustainability plan is aligned with one of BBVA’s strategic priorities: "Accompanying customers in the transition to a sustainable future."

Back to those four pillars that drive the bank’s decisions:

ENGAGEMENT

"When we talk about engagement, we basically refer to the ways we interact with the companies in which we are invested, with international organisations and regulators, with other investors and with other stakeholders,” explains Alberto Gómez-Reino, head of sustainable investments at BBVA Asset Management. In practice, he says,

"The target for 2021 is to design our own voting policy, aligned with our values and the international best-practice."

commitment is expressed in two ways: voting at shareholders' meetings, and engagement.

“We have been voting for years at the shareholders' meetings of the European companies in which we invest, but in 2020 it extended this vote to North American companies, using information from external advisors.

“The target for 2021 is to design our own voting policy, aligned with our values and the international best-practice. Engagement consists of proactive actions to influence and involve investment companies and mutual funds to adopt sustainability practices.

"In all of them, directly or indirectly, we express as a manager the most important aspects of our beliefs in this area. For 2021, our main target is to sign UNPRIs, as GPP did.”

EXCLUSION

BBVA Group believes that the integration of sustainability in its investment process should not be based on exclusivity. However, in line with best-practice and regulations in some jurisdictions, the exclusion of certain entities has been necessary. Those policies are based on criteria common to the entire BBVA Group.

Black-listed investments include controversial armanent deals, and companies facing severe controversy or not in compliance with the principles of UN Global Compact.

INTEGRATION

The model for integrating ESG factors into the investment process focuses on the development

of an internal rating model for the assets in the portfolio. Integration means using extrafinancial information in the decision-making process. "The most common way to do this is through a rating,” says Lara Marín, “which is nothing more than a synthesis of information on a narrow scale. This is useful to measure, make transparent and report on our portfolios in sustainability terms.”

To build the rating, BBVA relies on external data sources. Analysis has shown a positive and growing correlation between a high sustainability score (or low controversy) and better market returns. The rating has a very narrow scale: A, B and C, with A being the best and C the worst, reserved for those assets or companies which should be avoided in portfolios, or for which engagement strategies should be established. This rating will be available for funds, equities, corporate bonds and governments, and will apply to a significant percentage of the manager's investment universe.

In addition, the selection team of Quality Funds, BBVA's mutual fund selector, has developed its own methodology for assigning an ESG rating to all third-party funds, based on an evaluation of the integration of sustainability in their investment processes.

IMPACT STRATEGY

The UN Global Compact defines impact investing as "the placement of capital in social enterprises and other structures with the intention of creating social and environmental benefits beyond financial return”.

Examples include encouraging green investment through targeted bonds, impact mutual funds, investments in companies aligned with the UN Sustainable Development Goals or indirect impact mutual funds. This is the case for the mutual fund BBVA Futuro Sostenible ISR, FI, which distributes part of its management fee in social and environmental developments. In 2020, this fund distributed more than €1m among 28 solidarity projects. The goal for coming years is to develop a catalogue for implementing impact strategies at various levels, from ideas to specific assets or products.

"In recent years, we have been able to see that the consideration of sustainable criteria in investment management has a positive effect on the profitability of portfolios."

"In recent years, we have been able to see that the consideration of sustainable criteria in investment management has a positive effect on the profitability of portfolios,” says Alberto Gómez-Reino. “It has also made it possible to reduce portfolio risk and – I believe this is the most important point – it allows us to make more informed and complete decisions.”

BBVA Asset Management is convinced that incorporating sustainability into its business, in addition to reflecting its commitment to society in both the short and long term, also means an improvement in the quality of the investment solutions. "With this plan, we align ourselves with the practices of our most relevant international competitors,” says Lara Marín, “and with the

requirements of regulators and the new demands of our clients.”

ABOUT BBVA ASSET MANAGEMENT

The firm is committed to offering clients solutions capable of meeting their goals. It has a global offer of investment solutions in continuous development thanks to constant innovation. This has enabled BBVA to pioneer suitable products for each “market moment” and each type of client.

Mutual funds are managed by an investment team that follows a solid process with global risk-control and local management centres in Argentina, Colombia, Mexico, Peru, Turkey and Spain. It is a benchmark in Spain for pension

funds in the individual and employment segments, meeting the needs of savers. BBVA is also committed to sharing information on retirement via Mi Jubilación (www. jubilaciondefuturo.es), a financial education initiative.

Its products provide a global solution for institutional mandates, Sicav, in Luxembourg, managed portfolios and services for institutional clients.

BBVA Asset Management was a founding member of Spainsif (Spanish Forum for Socially Responsible Investment) and includes socially responsible mutual funds in its range of investment solutions. i

CEO BBVA AM Europe: Luis Megías

Head of Sustainable Investments: Alberto Gómez-Reino

Head of Global Products: Lara Marín

Sustainable Investments: Inma Ansoleaga

Sustainable Investments: Valle Fernández

Sustainable Investments: Javier Apiñaniz

> Deloitte:

Changes on the Horizon for Europe’s Alternative Investment Fund Market

By Lou Kiesch and Xavier Zaegel

The European Commission’s ongoing efforts to establish the Capital Market Union have reached the alternative investment manager’s market in Europe.

It has launched a legislative review cycle of the Alternative Investment Fund Managers Directive (AIFMD), giving the industry the first chance to weigh-in on the proposed changes and the future functioning of the alternative investment fund market.

In June 2020, the European Commission issued its review report on the AIFMD’s application and scope to the European Parliament and Council. Overall, the report concluded that AIFMD was successful in establishing an internal market for alternative investment funds, providing a high level of investor protection, and enabling EUwide risk monitoring by the authorities. It also identified several topics for review to strengthen and adjust the framework.

To receive industry feedback, a market-wide consultation was issued with questions across 11 topics. This consultation closed on January 29, and the industry has shared its perspectives on the market within the European framework. The conclusions attest to a generally wellfunctioning market, and discourages changes by the European Commission for the AIFMD’s Level 1 provisions, suggesting a focus legislative texts for Levels 2 and 3.

Several topics emerged, where industry participants differed on the best approach for the commission. These points diverge further between member states, driven by the respective local flavour of the industry.

INVESTOR ACCESS TO ALTERNATIVE INVESTMENT FUNDS

Should the AIFMD provide broader investor access to alternative investment funds? In the current market, alternative investment funds are available only to professional investors, as defined under the Market in Financial Instruments Directive (MiFID). While some national laws allow broader access (“wellinformed investors” under Luxembourg laws), these national variations are not harmonised, and many clients are left out of the alternative market’s rise in assets and returns.

With private equity, real estate and infrastructure delivering highly sought-after returns in a low interest rate environment, European investors are

"The fact that depositary banks can only provide their services in the country where they are domiciled runs counter to the idea of the Capital Market Union."

looking for easier ways to access these products, and all retail investors are not equal. Some ultra-high-net-worth individuals still qualify as retail investors, despite having the resources and experience to understand and manage the risks. At the same time, the 2018 revamp of the MiFID framework left the criteria of client categorisation largely unchanged, showing that European regulators have no appetite to increase the population of professional investors in the market.

One key focus is whether the AIFMD review will tackle this access obstacle, or whether the industry will be left to wait for a broader change under the MiFID framework.

AMENDMENT OR EXTENSION?

In 2013, the AIFMD introduced a sub-threshold manager regime, where managers of alternative funds below a certain threshold of AUM did not need to apply for a licence, but merely register with authorities. While theoretically useful for new market entrants, the applied assets under management size (€500 million/€100 million when leveraged) is very quickly exceeded in practice. It has done little to increase the entry of new players. Applying for a full license is often expensive, requiring substance and expertise; this can deter even large third-country players from entering the European market.

The consultation sparked a debate to either (i) extend the existing sub-threshold regime to allow for larger asset bandwidths considered “below threshold”, or (ii) introduce a “light” license for players of up to €2bn, to reignite market growth and attract more players. Whichever direction is taken, a study should be conducted to assess the relevance of the sub-threshold regime in today’s climate and the average size of players in the European alternative investment market.

OUTSOURCING AND DELEGATION

Over the years, Luxembourg has developed a strong notion of substance requirements for management companies that delegate certain of their functions. It ensures that any manager retains at least one crucial function of portfolio management and risk management and can effectively service the retained function.

This call for substance is not harmonised across the European Union, but is nationally-driven. And while other member states are slowly following this trend, there are expectations that the AIFMD review will balance the substance rules and introduce a minimum level that is acceptable Europe-wide. The recent political environment surrounding Brexit has brought it to the forefront of the discussion.

EUROPEAN DEPOSITARY PASSPORT

The fact that depositary banks can only provide their services in the country where they are domiciled runs counter to the idea of the Capital Market Union. It even runs counter to the European single market and its principles of freedom of establishment and freedom to provide services. Numerous European authorities have highlighted situations where a limited number of depositary banks in certain countries had led to quasi-monopolies, something a European-wide passport could address. The AIFMD review is a chance to rectify this.

The market has rather mixed feelings about this passport. On the one hand, large groups and top European depositaries see a chance to streamline and consolidate their operations. On the other, it introduces a new bar for market entrants, who will compete locally and against the entire European market of depositary banks. At least one of the large depositary groups has spoken out against such a passport due to its practical implications.

Another argument against these passports is the possible strain on consumer protection of the alternative investment market. By increasing the distance between investors and depositary banks, whose strong control function contributes to investor protection standards within the European Union, these standards may fall and present cross-border hurdles, at the cost of investors.

The call for such a passport pre-dates the AIFMD and was first voiced in the context of the UCITS regime. While the European Securities and Markets Authority (ESMA) has considered such a passport under both regimes, it has not issued an outright recommendation to introduce one. Instead, it has asked the European Commission to assess the passport’s risks and benefits.

Ultimately, the extent of the final changes remains to be seen in the regulatory text’s first draft, which is expected at the end of Q2 or in early Q3. Nor is it known how far the European Commission will honour the industry’s wish for changes through Level 2 and 3 regulatory texts, rather than a fundamental reworking of Level 1.

It is prudent for the industry as a whole to follow the current discussions and to review the consultation feedback to gain an insight into the market opinions, and the directions proposed. While the European Commission is of course not bound by the findings, they have not ignored feedback in the past.

The industry has only recently concluded its efforts regarding MiFID II, which indirectly affected alternative fund managers as product providers, and its efforts around Packaged Retail and Insurance Based Investment Products (PRIIPs). The European Commission has now announced the industry’s next major change. MiFID II and PRIIPs have shown that these changes should not be viewed as a compliance burden, but also as an opportunity to reposition, strengthen and explore new sectors and activities.

If carefully anticipated, all the topics presented here could represent key opportunities for market players, further strengthening the dynamic alternative investment fund market in Europe. i

ABOUT THE AUTHORS

Lou Kiesch joined Deloitte Luxembourg in November 2001 as Director in the Investment Management Services department, where he currently heads up the Compliance and Regulatory Practice.

Since 1 June 2005, he is a partner within Deloitte Luxembourg’s Investment Management Services.

Lou has a work experience of almost 30 years within the financial industry gained in Luxembourg, London, Frankfurt and Paris.

Prior to joining Deloitte, Lou was with Allianz Asset Management and Fidelity Investments where he was in charge of the Continental European Compliance Department.

Lou is co-founder of the Luxembourg Compliance Officer’s Association (ALCO) where he occupied the role of Vice President until April 2003. Lou was a member of different ALFI working groups and chaired ALFI’s committee for International Distribution. He was furthermore Vice-President of the ALFI Regulatory Board and served the Alfi Board for 10 years. He was responsible for the Distribution Committee at Alfi and represented Deloitte at the EFAMA Distribution Committee.

Xavier Zaegel is leading Deloitte’s Consulting Investment Management & Private Equity / Real Estate Sub-Service Line in Luxembourg.

Before joining Deloitte, he worked for another audit firm where he focused on the audit of banks and vehicle with derivative instruments or guaranteed funds. He was also seconded to a Capital Markets department in London for 1 year.

Xavier is member of ABBL, ALFI, EFAMA and Invest Europe working groups. He is certified Financial Risk Manager from GARP (the Global Association of Risk Professionals).

ABOUT DELOITTE LUXEMBOURG

With more than 120 partners and 2,300 employees, Deloitte Luxembourg is one of the Grand Duchy's largest, strongest and oldest professional services firms. For 70 years, our talented teams have been serving clients in various industries delivering high added-value offerings to national and international clients in audit and assurance, consulting, financial advisory, risk advisory, tax, and related services. Deloitte Luxembourg is part of the global Deloitte network that is represented in more than 150 countries and territories and serves four out of five Fortune Global 500® companies. Learn how Deloitte’speoplemakeanimpactthatmattersat www.deloitte.com.

Building Industry Leaders

Portobello Capital is a mid-market private equity firm that seeks out dynamic partners. With a focus on Southern Europe, and the funding and knowhow to maximise value creation, its aim is to achieve superior, risk-adjusted returns for its investors. It builds successful industry leaders to benefit all stakeholders, adhering to consistent and responsible guidelines. Portobello keeps corporate, social and environmental responsibility at the core of its business. Good governance is a constant driver in the firm’s day to-day operations, and in its relationship with employees, investors, partners and suppliers. The ultimate beneficiary is wider society.

Portobello Capital was founded in Madrid in 2010, and its portfolio has grown to include assets under management of €1.4bn. There are 17 companies in its portfolio, and 34 engaged professionals to guide and support the international institutional investors who account for 85 percent of its fund commitments. Portobello Capital has raised five funds since its inception – two of them during the pandemic. The most recent, the Portobello Structured Partnerships Fund I, is currently in fundraising, with a target of €250m.

Government Should End Secretive Trade Negotiations, Say UK Parliamentarians

The government should overhaul its secretive approach to post-Brexit trade negotiations, according to a new report.

The All-Party Parliamentary Group for Trade & Export Promotion, which is backed by the International Chamber of Commerce (ICC), suggests negotiations should be open to public scrutiny to build trust in future trade deals.

The recommendations in the Review of UK Trade Governance report include:

• Expanding membership of the Board of Trade, Strategic Advisory Group and Trade Advisory Groups to include representatives from business, trade union, consumer, environmental, civil society, and academic groups

• Reducing the imposition of NDAs on experts, which restrict consultation when developing advice

• A statutory obligation to publish all documents related to international trade, with easy digital access

• Parliament should be involved in all stages of trade negotiation, from the statutory right to debate draft mandates ahead of bilateral talks to ratifying deals in a timely manner

• A law change obliging the government to publish all economic, environmental, and social impacts of a proposed agreement, including a clear statement on its net benefit to the country.

ICC UK secretary-general Chris Southworth said building trust in the trade system was vital to avoid a backlash over decisions on trade deals in areas such as the erosion of standards for workers, the environment, food, and health and safety. “The current system is too secretive,” he said, “with an over-zealous reliance on NDAs over pragmatism and common sense.

“There is a real risk that trade deals will be rushed through without any proper scrutiny. If agreements aren’t battle-tested, they could prove to be to the disadvantage of the UK as a whole. The Houses of Parliament must be involved at

every stage of trade negotiations, and a wider range of experts given the freedom to offer proper advice.”

Lord Waverley, co-chair of the APPG on Trade and Export Promotion said the report reflected the consideration of evidence of written submission and oral discussions. “We now present an evidence-based set of recommendations that we encourage government to reflect upon as we define the new chapter in our trading history,” he said.

“The APPG for Trade & Export Promotion was founded on the principle of fostering greater dialogue between parliament, business, unions, consumers, academia, NGOs and civil society on all matters relating to trade.”

The first evidence session had delivered on this aspiration, bringing “the voice of prospects and prosperity to the heart of the national debate”.

The report was based on expert testimony from figures across business, consumer organisations, academia and civil society.

The APPG gathered evidence from organisations including Which?, the CBI, the TUC, the Scotch Whiskey Association, and GreenerUK.

Founded in September last year, the APPG for Trade & Export Promotion brings together parliamentarians from all parties, supported by other sectors. “We are working to promote an inclusive, sustainable approach to global trade involving all aspects of the trade agenda,” he said. i

TheAPPGonTradeandExportPromotionwillbe holdingfurtherevidencesessionsthisyear.More information is available at: www.appgtrade.uk/events

"We now present an evidence-based set of recommendations that we encourage government to reflect upon as we define the new chapter in our trading history."

Narodowy Bank Polski under the leadership of Professor Adam Glapiński has been presented with “The Best Central Bank Governance Europe 2021” award by CFI.co.

The outbreak of the global pandemic in 2020 caused unprecedented challenges for

economic policy. Rapid and appropriate action was key to limiting the costs to households and firms in the aftermath of the pandemic shock.

Narodowy Bank Polski met these challenges by correctly diagnosing the situation and the risks involved. Despite the lack of data, NBP took swift, firm and wide-ranging measures

aimed at easing the financial conditions in the economy. The actions taken by NBP have significantly contributed to improving the prospects for the Polish economy: we can expect a robust recovery as early as this year, and the business and economic performance in 2021 should be significantly better than that achieved in 2020.

> Narodowy Bank Polski: European Leader

"The policy response of Narodowy Bank Polski has been swift and large and effective in limiting the economic scarring effects of the pandemic. Adequate liquidity provision remains critical in the short-term (…)."

THE ADOPTED STRATEGY WORKED

NBP was the first bank in Central-Eastern Europe which signalled a cut in interest rates. It also immediately took additional steps to ensure the uninterrupted operation of the banking sector and reduce the cost of servicing and obtaining financing for all sectors of the economy. Measures taken by NBP included

a three-time reduction in interest rates to 0.1 percent, the launch of the purchase of Treasury bonds and bonds guaranteed by the Treasury on the secondary market, reduction of the required reserve ratio from 3.5 percent to 0.5 percent and offering a bill discount credit ensuring the possibility of refinancing loans for enterprises. NBP's reaction was consistent

with the conditions of increased uncertainty: the launched asset purchase programme was designed in such a way as to provide the central bank with considerable flexibility and the ability to react to changing conditions. For this purpose, NBP did not announce ex ante the scale and duration of the purchases and made its course dependent on the market conditions. When it proved necessary, NBP did not hesitate to intervene in the foreign exchange market in order to strengthen the impact of a looser monetary policy on the economy.

NBP has also taken appropriate initiatives in the field of macroprudential and regulatory activities, thanks to which, for example, the systemic risk buffer was lifted. This facilitated the release of significant capital buffers and allowed banks to absorb losses resulting from the crisis.

NBP

ALWAYS ON STANDBY

Maintaining buffers in the decision-making space and ensuring the health of the entire financial system are essential elements of a strategy to prepare for the unexpected. The comprehensive response of the economic policy of the government in Poland, comprising the “anti-crisis shields” and supported by the active approach of Narodowy Bank Polski, was also possible thanks to the strong credit rating of the state.

It is worth noting that the Polish central bank was able to provide support through an accommodative monetary policy and macroprudential easing thanks to the credibility it has built up over the years and the long-term efforts to support a sound financial system and strong regulatory and supervisory structures.

THE ACHIEVED RESULTS ARE A CONSEQUENCE OF TEAMWORK AND WISE MANAGEMENT

NBP’s response to the pandemic crisis was not only quick and decisive, but most importantly, effective. It contributed to a significant reduction in interest rates on loans, generating significant savings for indebted households and enterprises, thus supporting their financial situation in this difficult period. The actions of the central bank also ensured a stable situation in the Treasury bond market, thus enabling the implementation of anti-crisis measures by the government without an excessive increase in the costs of these measures for the taxpayer.

NBP made a very significant contribution to mitigating the economic effects of the pandemic. It was possible to avoid a significant deterioration in the financial situation of the enterprise sector. The unemployment rate in Poland is currently the lowest in the whole of the European Union. Real GDP fell by 2.7 percent in 2020 against an average decline of 6.2 percent in the European Union.

The actions taken under the leadership of Professor Adam Glapiński allowed the Polish economy to be protected against a deep recession and high unemployment.

The bank’s activities were appreciated by the world’s largest financial institutions, such as the World Bank, the International Monetary Fund and the European Bank for Reconstruction and Development, and Professor Adam Glapiński was awarded the special prize of Personality of the Financial Market, awarded by the editors of the

Polish business daily paper, Gazeta Giełdy i Inwestorów “Parkiet”.

In April 2021, appreciating the merits of Professor Glapiński, the President of the Republic of Poland Andrzej Duda stated that the head of the central bank should continue his mission for the next term of office.

The award granted by CFI.co (Capital Finance International) confirms the correctness of the decisions taken by NBP in the difficult times of the COVID-19 pandemic.

Thanking on behalf of all employees of Narodowy Bank Polski for the award granted by CFI.co, Professor Adam Glapiński said: Narodowy Bank Polski reacted swiftly and decisively to the pandemic-related risks, mitigating the negative economic effects on both society and the economy. This happened, amongst others, because we constantly prepare for different scenarios, not only those arising directly from economic events. We analyse the experiences of other central banks and draw conclusions from them. We are able to react flexibly and very quickly, i.e. in advance, also when our assessments are not yet confirmed by data that are always delayed. i

Professor Adam Glapiński

> Helmut List, Chairman and CEO of AVL: Combining Art and Science in the Quest for True Sustainable Mobility

Apassion for research and development in mobility trends means a cuttingedge company cannot look only at today and tomorrow.

“We have to look beyond and use all our imagination, our energy, our creativity to strive for the ultimate potential,” says AVL chairman and CEO Helmut List. “We owe it to the planet.”

Helmut List was born in Graz, Austria, and completed his mechanical engineering studies in 1967 at the Technical University of Graz. Since 1979, he has held the positions of chairman and CEO of the company that was founded by his father in 1948.

List’s vision and commitment have powered the rapid growth of AVL. Under his leadership it has become a global player in propulsion technology innovation and the wider automotive industry. AVL is the world’s largest independent company for development, simulation and testing concepts, solutions and methodologies in emerging mobility trends.

One of Helmut List’s top priorities is the targeted application of research. This is reflected in the high R&D share in all AVL’s business segments, and in the large number of collaborations with university institutes, locally and globally.

List is also chairman of the R&D, honorary consul of the Republic of Korea, and active in several research associations. During his career he has been an active member of the automotive community as chair and board member in associations, councils and committees, including the European Industrial Research Management Association (EIRMA), International Research and Development Action Committee (IRDAC), the European Automotive Research Partners Association (EARPA) and the Sustainable Surface Transport Advisory Group (SSTAG).

The pioneering spirit is central to the company’s success, and Helmut List embodies that drive in AVL’s cultural journey. With his focus on bringing future technologies to fruition, he understands that expertise alone is not enough. Courage is also required. “Only the courageous look beyond the horizon and make discoveries that lead to outstanding innovations”.

His creativity is not limited to mobility; List is an avid promoter of arts, culture and creative thinking, and sees the synergy of art and science. In his role as an industry thought-leader, he encourages artists and scientists to engage in diverse projects to bridge the gap between the disciplines, which in turn expand the limits of technology.

As the CEO of an internationally competitive company, he sees it as his duty to contribute to solving social, cultural and environmental challenges — especially regarding environmental protection, sustainability and restricting greenhouse emissions.

Helmut List is dedicated to fighting climate change by applying a multi-energy strategy. With innovative battery and fuel cell concepts, ranging from hybrid to pure electric, e-mobility is a fundamental pillar of AVL’s strategic journey. The chief executive has proven adept at predicting future trends, and has built up broad competencies in the areas such as ADAS/ AD and digitalization to accelerate smart and connected mobility.

“Science and technology is in our DNA,” he says, “and we will continue to be open to all innovation and to step forward with confidence to shape the trends of sustainable and climate-neutral mobility.”

This is achieved through AVL's worldwide network that understands market dynamics, legislation, science and driving experience. “As a company, we are committed to effectively reducing CO2 for a greener and cleaner future.” i

Chairman and CEO: Helmut List

Embracing Change and Driving Future Mobility Trends

he work we do isn’t just about the challenges of today and tomorrow,” says AVL chairman and CEO Helmut List. “Together with our customers, we look beyond to drive technologies that shape mobility trends for the future.”

Not surprising, then, that List values AVL’s ability to adapt to change.

With more than 11,000 employees and headquarters in Graz, Austria, AVL is the world’s largest company for development, simulation and testing in the automotive industry, and in other sectors. Drawing on its pioneering spirit, it provides concepts, solutions and methodologies to shape future mobility trends.

The company is a major contributor to e-mobility, and applies a multi-energy strategy for all

applications, from hybrid to purely electric including fuel cell technologies. AVL provides innovative and affordable systems to reduce CO2 — as well as time to market. “Our portfolio covers system development, test and validation solutions, simulation tools and expert know-how in these technologies,” says List.

“We have built comprehensive competencies in the fields of ADAS (advanced driver assistance

“AVL constantly evolves its ecosystem of high end methodologies and innovative technologies in the area of vehicle development and testing which provides real world solutions to support customers’ future mobility ambitions.”

systems) and AD (autonomous driving), and digitalization to accelerate the vision of smart and connected mobility. We offer a complete portfolio, from system design, testing, calibration and validation services, tailored software and controls development, to tools and methods for scenario-based development and testing.”

“AVL constantly evolves its ecosystem of high end methodologies and innovative technologies in the area of vehicle development and testing which provides real world solutions to support customers’ future mobility ambitions.”

AVL has digitalized the vehicle development process with state-of-the-art and scalable IT, software and technology platforms. It creates customer solutions in Big Data, AI, simulation and embedded systems.

As mobility systems become more complex and interact with one another, it is critical to take a holistic approach to vehicle development. “We touch every step, from ideation phase to serial production, covering future vehicle architectures and platform solutions, new powertrains and energy carriers,” List explains.

Services include solutions for future vehicle architectures and platforms, powertrains, electronics, chassis and integration of thermal, ADAS, and vehicle systems. “We perform functional development, vehicle system development, assisted/automated driving and connectivity development.

“With a unique and detailed understanding that ranges from single components all the way to the complete vehicle, we are able to balance and optimize the overall goals at all levels of the architecture.”

AVL is proud to have more than 1,500 patents in force — more than 300 of them granted in 2020 worldwide. “Our passion is innovation. This is reflected in our dedication to research, our high R&D investment in all business segments, collaborations with universities and constant exchange within national associations and industry partners.”

Working with an international network of experts in 26 countries and with 45 tech and engineering centers worldwide, AVL creates technologies by driving mobility trends that will help to battle climate change.

List puts it in a nutshell: “We are AVL. We are adaptable to change.” i

Robin Mann: Taking the Path Less Travelled, Relishing Challenge and Change

“I’m looking for people who can think for themselvesandbringuniqueviewpoints,”hesays, “andtheycancomefromanybackground.”

Robin Mann loves his career because it involves constant change.

There is no room for stasis in the life of a Cambridge man whose great inspiration is King Lear — and no sign of a typical banker’s profile, either. “My studies taught me to think for myself,” he says. “I’m much more interested in hearing someone’s ideas than rehashing their professional qualifications, which are often overvalued in traditional investment banking.”

Unpredictability is a life spice for Mann, who has been in his role since 2014. “Our business life is full of variety as so many different situations are encountered,” he says. Mann certainly isn’t getting bored. Stifel has seen spectacular growth, and he aims to maintain that momentum.

As an up and coming player, he knows that industry giants have certain advantages. Their brand scalability is one, but size can be a disadvantage, he believes: the bulge brackets may lack flexibility.

He has previously worked as head of securities, first at Collins Stewart and then Canaccord Genuity. He also spent four years as a consumer analyst with HSBC Securities

The entrepreneurial attitude at Collins Stewart, quite different from that at HSBC, appealed to Mann, with some reservations: it was sink or swim. “You were left to yourself and there was no support. I learned much at Collins Stewart.” But his management style at Stifel is a supportive one: “The world has moved on ”

The growth at Stifel excites Mann and is increasing year-by-year. Revenues shot up by 20 percent during 2020 and he was impressed that people and systems at Stifel proved to be adaptable and resilient in the face of the pandemic fallout.

Stifel’s investment in people was significant last year and will be again in 2021. “We really had no clue what was coming our way in March, and I had no idea how effectively businesses

would adapt. But there are limits. It’s not easy to develop meaningful new relationships over Zoom.”

As far as mid-term prospects are concerned, he expects to see more growth by identifying areas of the market that are less understood. “I’m not looking for vanilla changes,” he says. “In fact, competing only for vanilla business head-to-head with every other investment banker on the planet doesn’t strike me as an effective long-term strategy.”

One new development in investment banking concerns legal services. With a backload of cases to be considered, litigation finance, especially for corporates, is now front and centre. Stifel is well placed to respond to such needs.

Growth is the Mann mantra: “It’s really difficult to get excited every day when you’re going through a turbulent time and the business is not growing. Our general intention is to grow and grow. And you grow in this industry by hiring more and more capable people.

“The reality is that this is a people business. This year we have added excellent people across several promising areas. One of the things that the firm has been good at is bringing in quality people that constantly raise the bar.”

Mann points out that Stifel has been active in the capital markets over the past four or five years and ranks highly. He is pleased that his company contributed, alongside the giants, to the muchneeded UK Listing Review.

As for opportunities post-Brexit, he is bullish about the country’s prospects of continuing as a leading global financial centre. “The world has changed, and London will not have the same preeminent position as it once did, but we still have important advantages — including our position within the time zones, the legal frameworks in place, and our great location.

“I would expect the UK to again become a more attractive venue for entrepreneurs and companies to realise their ambitions.”

Mann believes that a successful corporate leader — regardless of industry — should be down-to-earth. “They must have a big presence and be available to respond whenever the need arises,” he says. “Everyone must know that you will be there when the going gets tough, and that you are not the sort of person who hides behind a desk. Leaders must

appreciate what needs to be done when the going gets rough.

“Anyone can lead a company when all is going well. Leadership is challenged when things are unsure and there are difficulties to be faced.”

As far as leadership skills in his own industry are concerned, Mann has some simple advice:

“Never give up. And understand that you are likely to contend with considerable rejection and failure over the course of your career.”

Lessons learnt by Mann include the realisation that problems aren’t always what they seem. “With hindsight, it’s clear that many things that seemed important at the time really were not.”

He says he is often appalled by the lack of diversity in the industry. “I’m looking for people who can think for themselves and bring unique viewpoints,” he says, “and they can come from any background.”

Robin Mann craves that variety — and he’s looking for more growth. i

> Access by Name, Access by Nature:

The Access Bank UK Ltd, a wholly-owned subsidiary of Access Bank Plc, a Nigerian Stock Exchange-listed company, provides trade finance, commercial and private banking, and asset management products and services for customers dealing in OECD (The Organisation for Economic Cooperation and Development) markets.

It also supports companies wishing to invest in and trade in Sub-Saharan Africa, MENA, and Asia. The Access Bank UK is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. The Access Bank UK Ltd Dubai Branch is situated in the iconic Gate Building of Dubai International Financial Centre

(DIFC). It is regulated by the Dubai Financial Services Authority (DFSA).

Like its parent company, it is committed to developing a sustainable business model. “This is reflected in our moderate appetite for risk, our passion for customer service and our commitment to build long-term

relationships,” says CEO and managing director Jamie Simmonds. “We play a key role in our Group’s vision to be the world’s most respected African bank. As such, we refuse to chase unsustainable yields as a route to growth. Instead, we focus on building our business through the strength of our customer relationships.”

In 2018 the bank became a direct member of the three key UK payment clearing systems: Bacs (Bankers’ Automated Clearing Services), C&CCC (Cheque and Credit Clearing Company’s Image Clearing System) and Faster Payments.

“This is a great landmark for us,” says Simmonds, “enabling us to build a sustainable platform with

direct entry into the UK payment clearing system and enhancing customer service. We anticipate and respond quickly to market needs – with the right technology, products and services.”

The Access Bank UK provides a number of services to support business in Sub-Saharan Africa, and across the world. It was awarded Confirming Bank status by the International Finance Corporation as part of its global trade finance programme, strengthening capabilities.

“We were the first Nigerian Bank in the UK to be appointed as correspondent bank to the Central Bank of Nigeria to undertake infrastructure work on behalf of the Nigerian government,” says Simmonds. “We also issue Letters of Credit on behalf of the Nigerian government and Nigerian National Petroleum Corporation (NNPC).”

The commercial banking team offers relationshipbased support for corporate and individual customers, with a range of products and services, market-leading systems and top-flight service.

“Our global private bank has been built around our passion for delivering excellent service,” Simmonds notes. “We deliver innovative investment solutions to our clients, who value trust, integrity and accountability as well as investment performance.

“We take a proactive approach to product and service delivery, and offer unique investment solutions tailored to our customers’ needs by the experienced private banking team.”

The Dubai branch also assists customers in the MENA region with trade and investment needs in Nigeria and Sub-Saharan Africa. The DIFC Branch is committed to building a long-lasting regional relationship, in line with the approach that has proven so effective for The Access Bank UK. “The combination of the Dubai branch and our presence in the UK and Nigeria delivers a wealth of expertise to benefit our customers.”

Building long-term relationships takes time, and the bank works closely with customers to understand their goals and create strategies to meet their needs. “We provide constant support and development opportunities for our employees, which reflects in their dedication and professionalism,” says Simmonds. “The bank is led by a team of accomplished individuals determined to deliver superior financial solutions for business and individuals.

“Our staff are highly experienced, and many have spent time working in the Sub-Saharan, West African and international marketplaces. We are firmly committed to the diversity of our workforce. We encourage a sense of individual ownership, while also fostering team spirit.

“Our endeavour is to help employees realise their potential through the provision of continuous learning opportunities and the tools and training to support professional growth.”

Simmonds sees people as fundamental to the bank’s continued development. “They provide the skills that deliver our focus on service and customer relationships. During the past year, we selectively recruited additional members to the team and invested in professional development.

“We were the first Nigerian bank to achieve Investors in People accreditation. We have now advanced our status to Platinum. We believe that our consistently low staff turnover reflects the advances we have made in training and development. The bank is currently working in partnership with the Chartered Institute of Personnel & Development (CIPD) programmes.”

In its recent report and Statutory Accounts for 2019, the bank demonstrated another year of significant all-round growth, achieving and exceeding targets for all the main growth strategies. The report, entitled Expanding our Horizons – Africa’s Gateway to the World, highlights strong operational performance by the main strategic business units – and continued growth and expansion in Sub-Saharan Africa and MENA regions.

The bank’s Operating income increased by 20 percent year-on-year to $85.2m, with all four

strategic business units performing well. Pre-tax profits overall grew by 30 percent to $57.2m.

The trade finance operation continues to be the bank’s largest strategic business unit (SBU), and

is confirming bank for Access Bank Plc and the Group. Income grew by 28 percent year-on-year to $40.4m, of which $12.4m was accounted for by correspondent banking.

Commercial banking income was higher than anticipated, at $30.6m – representing five percent year-on-year growth – while assets under management income rose by 15 percent to $2.6m.

Dubai, the newest SBU, was also a significant performer, with income reaching $7.5m, an uplift of 168 percent year-on-year. “This success is founded on our strong relationship model and testament to the trust a growing number of important Middle Eastern clients have shown in us as the gateway to Nigeria and the rest of Africa,” the CEO says.

Simmonds said the recently published results meant the bank had a mandate to develop the Group’s international interests, as it progresses towards global status. “Our clearly defined role is a logical outcome of the successful merger with Diamond Bank,” he says, “and we welcome the opportunity it gives us.”

Herbert Wigwe, chairman and non-executive director, said the bank’s 2019 successes were achieved without any significant contribution from Diamond Bank customers, “which we expect will feed through during 2020 and beyond”. i

Dubai: DIFC Gate Building

CEO and Managing Director: Jamie Simmonds

SPORTFIVE Plays the Game to Win –On Behalf of Its Loyal Customers

Global sports business agency SPORTFIVE delivers customer-centric solutions based on trust, transparency, industry experience, global relations, digital data intelligence and innovation.

SPORTFIVE strategically connects brands, rights-holders, media platforms and fans to create lasting partnerships. With the goal of creating and growing longterm value, the agency leads the sports business into the future with innovative digital solutions. It aims to be “the most progressive and respected partner in sports”.

SPORTFIVE operates with a global mindset and network of over 1,000 local experts based in 15 countries. It is active in football, golf, e-sports, motorsport, handball, tennis, American football, basketball, ice hockey, and multisport events.

It provides comprehensive services for brands, rights-holders, media platforms and athletes. Heineken, SAP, BMW and Longines are among the brands that benefit from the agency’s consulting, partnership acquisition and activation services.

Rights-holders such as the UEFA, DFB, Borussia Dortmund, Riot Games, Atletico Madrid and the LA Lakers rely on the agency’s expertise for marketing partnerships, consulting, partnership sales, hospitality, media sales, international marketing, digital and analytics projects as well as stadium services.

Some 350 top athletes – among them Phil Mickelson, Jadon Sancho, Christian McCaffrey and Toni Kroos – trust SPORTFIVE for talent representation, digital audience development, partnership sales, merchandising and event management.

Media platforms such as ESPN, Twitch and ARD work with the agency on consulting matters, rights and content acquisition, broadcast production, and partnership and ad sales.

The go-ahead agency possesses the biggest network of C-level contacts on brand-side worldwide, and commands the largest salesforce in global sports marketing. It can act as a single partner for any stakeholder along the whole value chain of B2B commercialisation.

SPORTFIVE is a pioneer in automated sales platforms, virtual ads, fan data, e-sports, digital products and services, influencer management and stadium experience.

Sports business expert Stefan Felsing chief executive officer and leads a four-person executive committee that operates out of Hamburg, Germany.

EXCITING CAREER DOMINATED BY PASSION FOR SPORT AND BUSINESS

During his time at SPORTFIVE, Stefan Felsing showed his expertise in the field.

Felsing studied law in Hamburg and Lausanne, graduating in 1997. He led the sale of the global media rights for the UEFA EURO 2008 and created a dedicated team of experts based in Nyon (Switzerland) to build lasting value for the project.

In 2008, Felsing left the SPORTFIVE Group and founded UFA Sports with former leading SPORTFIVE managers Robert Müller von Vultejus, Nikolaus von Doetinchem and Karsten Mahlmann.

At the same time, he was the pro-bono vicepresident of the German Tennis Federation, supporting its legal affairs and marketing. In 2015, UFA Sports was acquired by the Lagardère Sports Group and rebranded U! Sports.

Since that time, the company has been part of the global network of Lagardère Sports and Entertainment, and Felsing was appointed executive vice-president of global media of LSE.

Stefan Felsing left the company at his own request in 2018 to start his own company specialising in sports business consulting. After successfully advising HIG Capital on the acquisition of LSE, Stefan returned to the agency and was appointed CEO. In 2020 the agency was rebranded to SPORTFIVE. i

CEO: Stefan Felsing

> Carey: Universal Importance of Governance is Recognised in the Channel Islands

One recent trend across the finance industry is the significant increase in companies implementing environmental, social and governance principles.

In today’s global context, companies and funds interact with investors, regulators, suppliers and clients around the world. Regardless of jurisdiction, the essence of corporate governance matters. Regulations and governance practices may vary by region, but regardless of nuances, stakeholders are increasingly fluent with the core expectations and demands of good governance.

Carey, a regulated administration and governance firm based in Guernsey, Channel Islands, is often appointed for its expertise in this area. The company demonstrates the application of best-practice with its international client base, and has noticed an increasing demand for governance support in company structures. Many are choosing Guernsey – and specifically Carey –to meet their ESG compliance criteria.

Institutional and retail investors are seeking out fund structures – be it Guernsey private equity investment vehicles, sustainability accredited funds, or stock exchange listed investment companies – and each has its own idea of what good governance looks like. Understanding how integral its role is in all aspects of the corporate and fund life-cycles requires a collaborative approach between client and administrator. Targets are defined and practical steps put in place to ensure that governance framework matches intention.

For funds meeting ESG criteria, crucial questions can help to achieve the best results. How will the board oversee investments and understand the impact? What reporting are investors expecting, in the ever-changing business landscape? How can boards demonstrate that they comply with good governance practices?

The Carey team’s breadth of industry experience across geographic territories guides clients to the forefront of governance. The firm’s own

values, culture and leadership are vital, offering productive challenge in the context of close working partnerships.

Carey offers bespoke services to a range of corporate structures for philanthropic or charitable investing, vehicles for properties, or for funds of all asset classes. Clients come to Carey for this expertise: family groups hoping to formalise management arrangements for private investment schemes, UK private equity fund managers looking for an administrator and US managers wanting to set up funds in Guernsey to IPO on the LSE. There are also established Asian managers wanting to partner with an administrator for their next Guernsey funds.

The experience and working methods of the Carey team guide clients around the pitfalls of fund and corporate administration and governance. The firm tailors solutions to suit all scenarios, asking the hard questions and challenging perceptions to achieve optimum results. i

Senior Management Team at Carey (L-R):

Rebecca Booth Client Director, Corporate & Fund Services

Sara Bourne Deputy Managing Director

Mark Vidamour Head of Corporate & Fund Services

Chris Le Page Head of Client Delivery, Corporate & Fund Services

Now I See: ICICI Bank Builds Bridges Linking India and UK

ICICI Bank is one of the leading Indian multinational banking and financial services institutions, with a presence in 15 countries, a wide range of products and financial services, and consolidated total assets of over INR13.77tn (£134bn).

CICI has been in the UK since 2003, and over the years it has emerged as a full-service commercial bank serving retail, SME and corporate customers from seven UK branches and one in Germany. In addition to physical presence, it has digital channels for mobile and internet banking.

It is one of the few banks in the UK to provide digital account-opening — it can be done in minutes — and only with ICICI can an individual open and activate a UK account from India. Thanks to digital enhancements, it also provides instant remittances to India at competitive rates.

Some of the key products:

• Personal banking: current, savings and deposit accounts are designed for all UK banking needs, with app-based account-

opening for Indian and British passport holders in either country.

• Remittances: with an instant moneytransfer service, clients can enjoy end-to-end solutions with speed, convenience and cost effectiveness— with a Rate Block facility and a 20p preferential rate for the first 180 days.

• NRI Banking with in ICICI Bank India: a doorstep account-opening facility for Indian citizens based in the UK, as well as home Loans and property management services in India.

• Private banking investment products (Indian Corporate Bonds and India dedicated funds) and services provided on an “execution-only” basis, limited to transmission or execution of investment instructions.

• Business banking: a bouquet of services such as business, current and savings accounts,

foreign exchange conversion and hedging, local and international payments, and trade finance — LC discounting, bill collection, SBLC, working capital finance, and bank guarantees.

• Commercial real estate finance: property Loans secured against income-producing commercial real estate assets, including multilet offices; retail units (some with residential above); light industrial units; residential investment portfolios, blocks of apartments, HMOs, student accommodation and hotels.

The upward trajectory through the bank’s impactful presence is surely being felt making it the preferred partner for banking services amongst the Indian Diaspora. i

Formoreinformation,pleasevisit: www.icicibank.co.uk

Scotland:

The High Road to England or a Brave Step to Independence?

hen the Emperor Hadrian ordered the building of a wall to divide the troublesome, blue-painted northern tribes from the more subdued southerners in the second century AD, he literally set in stone the concept of two distinct peoples in Britain.

Some say that Scotland’s identity has always been defined by its relationship to England.

Indeed, there’s even a phrase for it – the Scottish Cringe, a sense of cultural inferiority which has, over the centuries, fostered resentment.

The bitterness which has simmered since the Act of Union in 1707 is about to boil again – thanks to Brexit. A majority of Scots (62 percent) voted to remain in the EU in the 2016 referendum. The fact that the UK left the bloc regardless of Scottish wishes has thrown fuel on the fires of nationalism.

By Tony Lennox

There have been 20 opinion polls since Brexit, each showing that support for independence is now the majority attitude north of the border. If support for the Scottish Nationalist Party (SNP) continues to grow, demands for a new referendum on independence could be on the cards.

Even if a vote takes place, and independence becomes inevitable, there would still be a long

and tortuous path to tread – more difficult, say some commentators, than the UK’s labyrinthine Brexit negotiations. But the question is now being asked: Could Scotland survive, and even prosper, as an independent state?

Those who yearn for independence point to countries of similar size – Ireland, Denmark, Norway, Finland – as examples of countries which perform well as sovereign states. Surely,

they say, Scotland, with its wealth of resources, could perform equally well?

Scotland’s population of 5.4m is similar to that of a number of EU member states: Scotland would be 19th of 27 in terms of size. Scotland has oil and gas reserves – although their value has diminished since the boom years of the 1980s and ’90s. But even as the world turns its back on fossil fuels, Scotland finds itself blessed with an abundance of renewable energy opportunities.

Scotland gets a quarter of Europe’s offshore winds and tides. More wave and tidal power devices are being tested in Scottish waters than anywhere else in the world. The renewables sector already generates more than a third of the country’s energy needs.

Scotland suffered from the decline in manufacturing industry in the later decades of the 20th century, as traditional industries such as coal mining and ship-building were wiped out. Replacing lost jobs by developing the tech industry – “Silicon Glen” – seemed initially promising. But the sector was hit by a global collapse in the early 2000s, and jobs were lost as international firms withdrew.

But the idea is experiencing a revival. Greater diversity in the tech sector has paid dividends –Amazon recently set up a software development centre in Edinburgh, its first such development outside the US. Scotland also runs 18 percent of the UK’s space industry: Glasgow-based firms build more satellites than any other city in Europe. Plans for the UK’s first space centre, to be based in Scotland, are well-advanced.

Excluding oil and gas, the top five Scottish exports are mineral fuels (worth £10.2bn), machinery and transport (£7.2bn), beverages and tobacco (£4.3bn), chemicals (£2.5bn), and manufactured goods (£2bn).

But the country’s major export destination is the rest of the UK – a market which could be threatened by independence. Recent figures show Scotland exports £32.4bn to the UK nations, £17.6bn to the rest of the world, and £14.9bn to Europe. Trade is certain to be a major area of debate in any move towards independence.

In February 2021, a team of economists at the London School of Economics warned that Scotland’s economy could shrink by as much as £11bn a year as a result of the double whammy of Brexit and independence. The effects, said the report, would be lessened only slightly by Scotland re-joining the EU, but that alone wouldn’t make up for the potential loss of trade with the rest of the UK.

One of the report’s authors, Hanwei Huang, said: “This analysis shows that, at least from a trade

perspective, independence would leave Scotland considerably poorer than staying in the United Kingdom.”

The report was greeted with scorn by Nationalists, who made the point that it covered only trading costs and didn’t include factors such as inward investment, cuts to public spending, tax changes, or immigration.

In response to the LSE report, Fiona Hyslop, the Scottish government’s economy secretary, pointed to the fact that EU membership had helped transform the Irish economy – and that the EU market was seven times larger than the UK’s.

“Independent Ireland has dramatically reduced its trade dependence on the UK, diversifying into Europe, and in the process its national income per capita has overtaken the UK’s,” she said. Scotland would be “very well-placed” to grow its economy in the same way, she said.

There is optimism among Nationalists that Scotland could hold its own, even without an open market with the rest of the UK. There are many trade opportunities to be exploited, putting Scotland on the world stage, they believe.

It is the world’s third-largest producer of salmon, for instance. Scotland lands 60 percent of the UK’s fish and supplies more than 25 percent of its beef. It is estimated that 40 bottles of Scotch whisky are exported every second.

Tourism annually contributes £10.5bn to Scotland’s economy. Until the pandemic, almost 16 million visitors came every year. The sector employs more than 218,000 people – eight percent of the total.

The Office for National Statistics reported in 2014 that the Scots were the best educated people in Europe, with 45 percent of those aged 25 to 64 having some kind of tertiary education. Independence campaigners believe this fact means the country would be well-placed to exploit new opportunities. However, the Programme for International Student Assessment reported in 2019 that young Scots were beginning to lag in maths and science.

Membership of the EU is seen by many as the key to future prosperity. And here, problems may lie. On the positive side, Brexit has changed the game as far as the EU is concerned.

At the time of the 2014 independence referendum, José Manuel Barosso, then president of the EU Commission, said it would be “extremely difficult, if not impossible” for Scotland to secure membership due to the EU’s reluctance to encourage secessionist movements.

But Herman van Rompuy, a former president of the European Council, believes the EU

Edinburgh: Victoria Street

would now engage with Scotland on the subject independence. While the process would be complicated, an application would be “seriously considered”. The EU’s attitude has changed since Brexit. The UK is now a “third country” –there is no reason to oppose Scottish secession.

Van Rompuy was president of the European Policy Centre (EPC) think-tank which produced a report on Scottish independence in 2019. It concluded that while the EU should be positive towards Scotland, the country could not expect special treatment. An independent Scotland would have to accept all the obligations of membership, including an agreement to use the euro.

Another fly in the ointment was pointed out by Karel Lannoo, the head of the Centre for European Policy Studies. In a TV interview in December last year, he suggested that any referendum on an independent Scotland would be subject to a vote by all UK citizens.

Fabian Zuleeg, an economist and one of the authors of the EPC paper, also serves as an advisor to the Scottish government. He noted that Brexit had changed the case for Scotland’s future in Europe, and that it would now be inconceivable for the EU to reject an approach.

“EU countries recognise that Scotland has been taken out of the EU against its will, and

there could well be a legitimate case to reenter,” he said. It was vital, however, that any referendum was legally constituted. Pursuit of alternative routes to independence would create a dangerous legal precedent in the eyes of EU member states, especially those which have issues with secessionist movements, he said.

He also made the point that Scotland’s motives for wanting to join the EU would have to be studied. “The last thing the EU would want at this stage is a new ‘awkward’ partner,” he said. “The key is a strong and visible commitment to EU values and the rule of law, in step with the overall direction of European integration. If willing to commit to these values and accession conditions, it is highly likely that an independent Scotland would become a member of the European Union.”

There are other issues regarding EU membership. A sizeable portion of voters in Scotland also voted for Brexit. And even among the ranks of the SNP, a large number see no sense in swapping Westminster for Brussels, and would prefer to see a Scotland independent of both.

Equally, the Covid-19 pandemic has battered Scotland’s economic prospects – and it would have to show a rapid and robust recovery to satisfy the EU.

Kirsty Hughes, director of the think-tank Scottish Centre on European Relations, says: “Independence, if it happened in the coming years, will take place in a transformed postCorona Europe and world. The EU is facing big challenges in continuing to tackle Covid-19 and its wide fall-out – on borders, the single market, on global geopolitics, on the Eurozone and, more broadly, on solidarity and strategy within the EU27. Where the EU will be in one or two years’ time is an open question.”

After an application to the EU, the commission would have to assess whether Scotland met the “Copenhagen criteria” on democracy, a functioning market economy, and an ability to take on the EU’s laws. Hughes predicts that the effects of the pandemic will have increased debt-to-deficit ratios all round –meaning that the bloc may be tougher on those wanting to join. Even if all the hurdles were successfully cleared, Scotland’s accession process would take at least four or five years after independence, which itself is likely to take at least three years.

The most pressing question facing an independent Scotland is that of currency. Many believe this issue derailed the Yes vote in the 2014 referendum. The canny Scot may be a stereotype, but there’s little doubt that economic fears swung the vote against independence.

The new nation would have a number of currency choices: to use sterling under a currency union agreement with the rest of the UK, to use sterling unilaterally, set up its own currency, or adopt the euro.

Hughes said: “The Scottish debate has always been tentative on joining the euro, and more focused on the domestic question of using the pound or creating a Scottish currency. And in terms of the deficit and debt criteria, it would seem an independent Scotland would not anyway be eligible to join the euro straight away.”

A 2020 YouGov poll revealed that only 18 percent of Scots favoured adopting the euro, with 43 percent favouring sterling.

Oliver Harvey, a strategist at Deutsche Bank, believes there are two obvious advantages to retaining sterling – it’s a trusted and stable currency, and creating a new Scottish currency could be problematic. It would be worth less than sterling, and there was a risk of deposit flight from Scotland to England, he believes.

Westminster has told the Scottish government that any sort of currency union is off the table, but the SNP believes Scotland could keep the currency, regardless of Westminster’s wishes. The matter may be taken out of the

hands of politicians, though. Several major Scottish banks have already said they’d move headquarters south of the border in the event of no-currency arrangement.

“If they did that,” says Mr Harvey, “they’d continue to receive liquidity from the Bank of England, and they’d continue to benefit from the implicit fiscal guarantees. The banks themselves have decided it’s not worth the risk.

“Scotland could issue a new currency in parallel, with existing stock of sterling assets. That’s pretty risky, because you might find that lots of people in Scotland might not have much confidence in this new currency, and may not be willing to use it.

“I think a more likely outcome is to have some kind of currency union or ‘sterlingisation’. If the banks move south, it takes it out of Scotland’s and Westminster’s hands… Sterling continues to circulate in Scotland, but the Scottish government doesn’t have much control over monetary policy. Is it costly to have a currency union without a political union? Yes, it’s very costly. The bottom line of this debate is that there are really no good options for Scotland.”

A poll in The Scotsman newspaper, in the days leading up to the last referendum, revealed that half of those canvassed would vote for

independence – if it made them better off. The romantic draw of a free Scotland ultimately fell on the sword of economic realism.

But as a post-Brexit independence momentum builds, it falls to Prime Minister Boris Johnson to try to hold the precarious 300-year-old Union together. The Conservative Party hasn’t been a significant force in Scotland since the 1950s. Despite this, Tory governments have regularly ruled Scotland from Westminster since then – adding to the Scottish sense of English disrespect and neglect.

Johnson appeared on the BBC in 2017 to praise his 18th Century namesake, the great English man of letters Samuel Johnson. “If I could claim kin with the great man, I certainly would,” quoth Boris.

Legendary lexicographer Samuel Johnson is better known north of the border for his acerbic observations of Scotland and the Scottish, including his often-quoted remark: “The noblest prospect which a Scotchman (sic) ever sees is the high road that leads him to England”.

Boris Johnson had no reason to disguise his admiration for a man who once described Scotland as “a worse England” – but now he may see that discretion is a wiser path to tread. i

Loch Awe: the ruins of Kilchurn castle

> Building Bridges: Joining Impact Investing and Social Entrepreneurship

By Gorgi Krlev and Adrian Fuchs

Finance is stepping up to a growing impetus from stakeholders to transform society for the better. Yet, there is a continuous disconnect between social entrepreneurs as vanguards of social value creation and the providers of financial services. A unique partnership between UniCredit and the EU Interreg project Finance 4 Social Change seeks to address this gap. The collaboration shows how we can build bridges, which are essential for spurring profound collaboration across fields of activity and sectors. Only if we harness the synergies that arise from these, are we going to make significant progress on the sustainable development goals.

Finance can be a tool for positive social change. With the ESG investment market flourishing and impact investing gaining traction, more and more people tend to agree with this statement. However, there remains a significant financing gap between those acting as vanguards of social value creation and those that could finance it—namely social entrepreneurs and global banking and financial service providers. Virtually no social enterprise survey has been performed to date, which does not conclude that social entrepreneurs are struggling to find adequate financing.

One factor causing difficulties is that social entrepreneurs are passionate problem solvers that care foremost about creating value for their often-vulnerable target groups. They act as system entrepreneurs or institutional entrepreneurs, roles that require activities, which are not easily condensed into a straight-forward business model. Social enterprises tend to take longer than their commercial counterparts to break-even, and some never do, continuing to depend on a mix of funding from investments, loans, grants and even donations. So, the often proclaimed statement by policy makers and financial providers that all their financial services are in principle available to social entrepreneurs, may often fall short of materialising in actual deals with social entrepreneurs.

A number of banks have recognised that social entrepreneurs and impact organisations are a special, and often small customer group—but given our huge societal challenges—one with exceptional potential. In order to harness this potential and help drive sustainable development through financial inclusion, UniCredit set up their Social Impact Banking unit in 2017, which is an important part of the bank’s commitment

"The growing importance of the social component in ESG is increasingly evident and relevant."

to building a fairer and more inclusive society in all its 13 core markets. Roberta Marracino, UniCredit’s Head of ESG and Impact Banking, explained: “The growing importance of the social component in ESG is increasingly evident and relevant. Our aim is to combine philanthropy and social impact finance to increase financial access and foster inclusion and development in all our territories and our Social Impact Banking programme is a very important part of this effort.” Starting in Italy, UniCredit’s impact banking offer that includes impact finance, microcredit and financial education, has been extended to ten further countries of the Group. Both, the value imperative and the geographic focus made UniCredit a natural ally of “Finance 4 Social Change”, an Interreg project focussing on building capacity in impact investing and social entrepreneurship across the European Danube region.

The project brings together thinkers and doers active in academia, social enterprise networks, impact deal brokering, or public administration focussing on entrepreneurship and small business incubation. Two of the project’s core activities were the development of a Massive Open Online Course called #AirMOOC and

a corresponding pitch competition for social ventures called #AirCompetition. Both, as the acronym suggests, focus on “Accelerating Investment Readiness” on the side of investors as well as that of investees. The MOOC has more than 500 registered users and 6000 views on its YouTube Channel, which should prove to push skills in the field, for instance on how to measure and communicate social impact. The course was recently awarded by the U.S. Association for Small Business and Entrepreneurship (USABSE) in recognition of its potential impacts on stakeholders, such as entrepreneurs, investors or policy makers.

UniCredit sponsored the pitch competition, which attracted applications from more than 240 social ventures across 14 countries. As of 2020 the bank had already dispatched €225,1 million of funding to more than 4380 initiatives and microenterprises. The lion share of those related to the sustainable development goals of good health and well-being as well as that of decent work and economic development. Supporting the pitch competition was another important occasion to offer tangible and meaningful support to the different communities where UniCredit operates, in particular to entrepreneurs in as of yet underrepresented areas of financing. In addition to the sponsorship, UniCredit experts also took part in the panels contributing their skills and know-how to the competition’s participants.

The winners of the four separate regional pitch events, held at the end of 2020, show the incredible variety and richness of what social entrepreneurs do to create value for society, from preserving culture to fostering the dialogue between generations. Vollpension from Austria for example, on first sight, appears to be yet another stylish coffee house start-up in Vienna.

However, at closer inspection it is remarkable on a number of levels. Instead of hiring professional confectioners, the organisation gives older persons the opportunity to share not only their secret recipes but also their memories of yore with the younger generation in vivid discussions. This does not only address the problem of intergenerational disconnect, but may prevent retired people from slipping into old-age poverty and loneliness. One Night Gallery based in Romania’s capital Bucharest builds its value proposition on a unique mix of preserving cultural heritage, featuring local contemporary artists who harness the power of digital technology and performance, and repurposing run-down urban locations through art.

The third awardee, from Croatia, called STEMI is an education tech company that seeks to transform classrooms into innovation labs, where students in middle and high schools acquire critical 21st-century skills such as competencies in 3D modelling, mobile app development, or embedded programming. Finally, Caritas, an initiative located in the Serbian city of Sabac, located west of the country’s metropolis Belgrade, seeks to achieve social protection for disadvantaged groups of the population, by promoting a blend of agricultural production and local tourism based on the principles of sustainable development.

The winners of the competition will not only benefit directly from the prize money they were awarded. The goal of the partnership between Finance 4 Social Change and UniCredit is that the competition will contribute to building up field capacity more widely. It helps the bank, and also other actors engaged shaping the local market environments, in getting to know the field of social innovators and entrepreneurs better, which in the long-run, may lead to further durable financial relationships between social ventures and finance providers. “Our continued strong commitment to social issues means we have a growing ambition to help drive change by offering concrete support to entrepreneurs and initiatives with a significant positive social impact. The network built thanks to this partnership is another important step in this direction,” added Marracino.

Nevertheless, the collaboration between Finance 4 Social Change and UniCredit is still the exception rather than the rule, as the world of finance tends to still remain at some distance to social entrepreneurs, especially such that tackle social inequalities, seek to preserve and enhance culture or introduce entrepreneurial methods into formal education. This needs to change fundamentally to establish a new level playing field for social innovation that can make an important contribution to sustainability. For this, we need to bring otherwise distant actors together and unleash profound collaboration across fields of activity and sectors. We hope this collaboration illustrates how bridges can be built, which genuinely fortify the role of finance as a source for positive social change. i

"A number of banks have recognised that social entrepreneurs and impact organisations are a special, and often small customer group—but given our huge societal challenges—one with exceptional potential."

Author: Gorgi Krlev

ABOUT THE AUTHORS

Gorgi Krlev obtained his PhD at Oxford University (Kellogg College) and works as a senior researcher at the Centre for Social Investment (CSI) of the University of Heidelberg. He leaddeveloped #AirMOOC, which was awarded by the U.S. Association for Small Business and Entrepreneurship (USASBE) for potential impact on stakeholders, such as investors, entrepreneurs and policy makers. He can be found on Twitter @gorgikrlev.

Adrian Fuchs is a Senior Transaction Manager at FASE. He holds a doctorate from University of Hamburg with a focus on asset management. He helped set up the first impact investment fund for foundations at BonVenture and structure impact investments at Bertelsmann Foundation.

ABOUT

THE INSTITUTIONS

The Centre for Social Investment is a research

Author:

Adrian Fuchs

centre at the Max-Weber-Institute for Sociology in the Faculty of Economics and Social Sciences of Heidelberg University. It is an interdisciplinary centre for research, education and training.

FASE – The Financing Agency for Social Entrepreneurship aims to create a thriving ecosystem for social innovation by boosting impact finance across Europe. The organisation connects outstanding social entrepreneurs with investors that are driven by the idea of creating sustainable, positive impact.

The Social Impact Banking unit at UniCredit was established in Italy in 2017. It has since been expanded to 10 other Group countries (Austria, Bosnia & Herzegovina, Bulgaria, Croatia, Germany, Czech Republic, Slovakia, Romania, Serbia, Hungary) with the aim to make a positive contribution to UniCredit’s local communities through impact finance, microcredit and financial education.

ANNOUNCING AWARDS 2021

SPRING HIGHLIGHTS

Once again CFI.co brings you reports of individuals and organisations that our readers and the judging panel consider worthy of special recognition. We hope you find our short profiles interesting and informative.

All the winners announced below were nominated by CFI.co audiences and

then shortlisted for further consideration by the panel. Our research team gathered additional information to help reach a final decision. In many cases, senior members of nominee management teams provided the judges with a personal view of what sets their companies and institutions apart from the competition.

As world economies converge we are coming across many inspirational individuals and organisations from developing as well as developed markets - and everyone can learn something from them. If you have been particularly impressed by an individual or organisation’s performance please visit our award pages at www.cfi.co and nominate.

IBM: BEST INVESTOR RELATIONS UNITED STATES 2020

IBM was aware of the importance of shareholder engagement long before it became an accepted business convention. While many listed companies confine their encounters with investors to the proxy season, for IBM it’s a yearround activity. The company, founded in 1911, is now a multinational tech business with headquarters in New York and operations in 170 countries. And at the core of its business is a commitment to keep investors informed of its ambitions, and dealing with their questions in an open and transparent manner. In 2017

the company embarked on a rigorous offseason campaign of engagement with its shareholders, ensuring the company’s direction was evident. In 2020 it began this process just two weeks after the proxy meeting. IBM’s investor relations team believes that by doing so, it improved communications significantly, identifying issues of most concern to investors. The team has been able, for instance, to recognise a growing interest in environmental and social issues. IBM is steering away from computers and operation system software into

SCOTTISH FRIENDLY: BEST MUTUAL INSURER UK 2021

As a mutual, Scottish Friendly is a mission-driven company, never complacent. The Glasgowbased business has almost 160 years of experience and over 200 employees. Scottish Friendly consists of three main subsidiaries — assurance, asset management and insurance — and is authorised and regulated by the Financial Conduct Authority. It has some 700,000 members and manages assets of over £5bn. It recorded its second-highest sales figures during the pandemic, thanks to business continuity plans and rehearsed disaster-prep exercises.

The company focused on survival tactics and reacted swiftly to protect the wellbeing of its colleagues and existing customers over driving sales performance.. Remote working was enabled within days of lockdown, setting everyone up on the cloud and ensuring that home offices provided ergonomic working conditions. It launched new products with some partners and restructured relationships with others. It introduced a new ethical investment fund and introduced new functionality to further enhance its mobile app. Over the past

SEGURCAIXA ADESLAS: BEST INSURER SPAIN 2021

SegurCaixa Adeslas is a leading health insurer in Spain, where strict Covid measures have included a three-month national lockdown, border closures and other types of restrictions that have affected the daily activity of people and businesses. Despite the difficult year, SegurCaixa Adeslas has achieved superior growth +2,9 percent (vs +1,1% non-life insurance market) and new competencies. It has developed a robust digital platform known as Adeslas Salud y Bienestar and introduced tools so policyholders can manage their personal health programmes in a secure and convenient way. The digital health initiative has proven successful, and patients have expressed their confidence in the online support system. SegurCaixa Adeslas measures its success with a mix of customer satisfaction and

business ambition — a mindset that has helped it to outperform average market growth and claim 30,4 percent of health insurance market share in 2020 (+6,2% vs 2019). There are 1,250 medical centres and 43,000 medical professionals in the SegurCaixa Adeslas network that, despite the fact that health policies do not explicitly cover pandemics, they have cared for more than 22,000 insured infected by Covid since the beginning of the pandemic. The company offers a wide range of non-life insurance products, with healthcare as its primary Line of Business and specialised offers for individuals, businesses and senior people, as well as home, motor, personal accident and funeral insurance. SegurCaixa Adeslas recognised that many people have been hard-hit in recent months

higher growth areas - hybrid cloud and AI – and believes it has laid the foundations for a new era of technology and business. Since 2012 it has invested $120bn into a transformation strategy and has acquired businesses which reflect this direction. At the same time, the company has returned $97bn to shareholders. But it’s for the company’s far-sighted awareness of the importance of investor relations that the judging panel is pleased to present IBM with the 2020 award: Best Investor Relations United States.

year, it has made a conscious choice to support strategies rather than sales figures — for the good of the company, its team and its members. It increased the budget for charity donations whist others detracted and led campaigns that resulted in support for the Trussell Trust Glasgow Foodbank and the Mental Health Foundation. The CFI.co judging panel is impressed to see a company come out the pandemic stronger than it entered. The judges present Scottish Friendly, a repeat programme winner, with the 2021 Best Mutual Insurer (UK) award.

and for this reason it reinforced the development of its MyBox product line, sold exclusively through the bancassurance channel, which offers 3 years without premium increases. This step forward also has other dimensions, such as the inclusion of service quality commitments and accompanying the client throughout the life cycle of the policy for a more satisfactory insurance experience. SegurCaixa Adeslas contributed €2.7m to the sector-sponsored solidarity fund to protect Spanish healthcare workers, and launched its own €160m liquidity fund for the medical staff and hospital providers in its network. The CFI.co judging panel presents SegurCaixa Adeslas, a repeat programme winner, with the 2021 award for Best Insurer (Spain).

AQUIS EXCHANGE: BEST PAN-EUROPEAN EQUITIES TRADING EXCHANGE 2021

European investors and businesses will doubtless have heard of Aquis Exchange. It was the first European trading venue to introduce a subscription pricing model, and is the sixthlargest exchange in Europe for intra-day trading operations. But even institutional investors may have yet to learn of its latest tech advances. The company’s dedicated division, Aquis Technologies, develops and markets cloudpowered solutions, including high-capacity

CAREY:

matching engines and trade surveillance systems. Aquis Exchange is authorised and regulated by the financial authorities of the UK and France to operate as a multilateral trading facility in 15 European markets. It has changed the investment rules to prevent aggressive, non-client proprietary trading. It operates lit order books and clients are charged according to a subscription plan based on messaging traffic, rather than securities value. These pioneering tactics result in cost-effective

trading and high-touch liquidity. Independent analysis has determined that the firm offers low toxicity and signalling risk. The company’s newly acquired primary listing business, Aquis Stock Exchange, allows growth companies to raise capital and both retail and institutional investors to trade shares. The CFI.co judging panel presents Aquis Exchange, a tech-driven disruptor, with the 2021 award for Best Pan-European Equities Trading Exchange.

Carey is a locally owned company of legal professionals in Guernsey, in the Channel Islands. It has been in operation for more than 45 years, putting into practice the values to which many others pay only lip service. The firm has created a collaborative work culture and united individuals with a shared passion for good governance and transparent reporting. Carey deploys a 60-person team to support 180 client groups in 50 countries with a comprehensive range of corporate, fund, and private wealth services. Carey takes the time to

understand the “why” behind clients’ motives before formulating an action plan. It can assist with a range of services: administration of fund structures, stock exchange listings, property portfolios, philanthropic structures, succession planning and more. Carey creatively partners with clients on sustainability issues, using good governance to apply best practices, track environmental and social impacts, and support informed decision-making at board level. It offers answers to crucial questions that often go unasked and works with blue-chip corporations,

fund managers, family offices and foundations to avoid potential pitfalls, strengthen accountability and ensure compliance. Carey donates time as a corporate service provider to the region’s sustainable finance strategy group that forms part of Guernsey’s membership of the UN’s Financial Centres for Sustainability and supports regulated sustainability fund accreditation. The firm challenges expectations and goes above and beyond for its clients. The CFI.co judging panel declares Carey winner of the 2021 award for Best Corporate Services Team (UK).

Geneva-based Asteria Investment Managers takes its name from a variety of starfish known for its ability to regenerate its limbs. The metaphor neatly describes the company’s aspirations towards the regenerative economy. People and planet is the phrase used by Asteria to sum up the company’s approach to ethical investing. Asteria is one of a new generation of independent asset management companies dedicated to impact investing, accelerating the transition to a sustainable socio-economic system, putting the human being and the planet’s ecosystems at its heart. Impact investing combines the

generation of financial returns with support for companies demonstrating a measurable social or environmental benefit – and is the principal objective at Asteria. The company was founded in 2019 but its investment professionals have more than 20 years’ experience. Asteria has at its core a commitment to environmental, social and governance (ESG) goals, used by investors to evaluate corporate behaviour. It uses ESGs to guide its strategy, using capital as an agent of change, encouraging a move towards sustainable and fair economies. It places longterm positive performance at the same level of

importance as impact generation. The company, which manages both private and listed asset classes, devotes time and resource to largescale, sophisticated research to guide its pursuit of investment solutions which lead to positive environmental impact. The company embraces its responsibility, not only in guiding investment strategies, but also ensuring it generates a small environmental footprint, while guaranteeing a job and lifestyle balance for its employees. The judging panel is pleased to present Asteria Investment Managers with the 2021 award for Best ESG Impact Investment Strategy Europe.

> ASTERIA INVESTMENT MANAGERS: BEST ESG IMPACT INVESTMENT STRATEGY EUROPE 2021

BBVA ASSET MANAGEMENT: MOST RESPONSIBLE INVESTMENT MANAGEMENT TEAM SPAIN 2021

BBVA Asset Management (AM) has set out to integrate sustainability commitments throughout every aspect of the organisation. BBVA asset managers prioritise sustainability as key for longterm impacts, and have begun to integrate ESG criteria throughout the investment process. The firm urges industry stragglers to get on-board or risk getting left behind as new EU regulations change the investment landscape. BBVA AM has seen a surge of demand for ESG-focused products from clients and investors, and it expects this to become a core part of its business model. It conducts an ESG analysis to measure carbon emissions and environmental practices of each company in its portfolio. Social impacts and governance practices are also considered. BBVA AM serves as the investment management arm of

BBVA Group in Spain, where the group is headquartered, as well as Portugal, Luxembourg, Turkey, Mexico, Peru, Colombia and Argentina. The firm builds on more than 40 years of experience in asset management and has more than 700 employees, including 150 internationally certified investment experts. With €110bn in AUM, BBVA AM offers three flagship vehicles for responsible investing: a sustainable development equity fund, sustainable fixed-income fund, and a sustainable balanced fund. BBVA AM has distributed nearly €1.2m between 28 charities as part of its sustainable balanced fund, BBVA Futuro Sostenible, and plans to share another €1m between 23 projects this year. The CFI.co judging panel presents BBVA Asset Management with the 2021 award for Most Responsible Investment Management Team (Spain).

Asset Management

BEDROCK GROUP: BEST INVESTMENT PORTFOLIO MANAGER UNITED KINGDOM 2020

Founded in 2004, Bedrock is a global investment and advisory group with headquarters in Geneva and fully regulated offices in London and Monaco. It aims to simplify clients’ lives, serving as the single point of contact for all their banking and investment needs. Bedrock tailors solutions for high-networth families, investment professionals, endowments, foundations and institutions. It offers objective, actionable advisory and customises privileged investment solutions according to individual client needs. It has achieved economies of scale that ensure competitive fees on institutional banking costs and share classes. The firm deploys a global team of 80 specialists and its strategic foresight protected clients’ capital throughout the early volatility of the Covid

crisis. Its early picks in tech and biotech have been some of the portfolio’s strongest performers in the past year. Bedrock credits its impressive portfolio performance to a dedicated team, strong diversification and proactive asset management. The firm promises outstanding service and personal commitment. Clients have direct access to the firm’s founding partners in addition to the investment team. They pull together to achieve clients’ financial objectives, and work to preserve and propagate wealth for future generations. Bedrock publishes a biweekly newsletter with the most relevant, market-affecting events and well-researched facts. The CFI.co judging panel presents Bedrock Group with the 2020 award for Best Investment Portfolio Manager (UK).

CESSATECH A/S: BEST MEDICAL TREATMENT IPO NORDICS 2020

Cessatech credits the substantial oversubscription of its recent IPO to a highcalibre team with strong skills and a collaborative work ethic. The Danish pharmaceuticals company invites investors to reimagine healthcare in the context of evidence-based treatment specially designed for children. Cessatech starts with drugs that have already proven effective in adults, but have yet to be adapted to address children’s unmet medical needs. It fast-tracks clinical trials — without compromising on strict standards of quality and safety — to develop innovative solutions with a reduced risk profile and a shorter time to market. The company’s leadership team brings a diverse range of experiences to the table, from drug development and paediatric analgesic research to product launches and capital raising. The pipeline product (CT001)

is an analgesic non-invasive nasal spray for children experiencing acute pain, including that caused by medical procedures. Cessatech based the development of the drug on a decade’s worth of clinical experience. The treatment has shown promising preliminary results in a collaborative fiveyear retrospective study and was proven safe and effective through a clinical Phase II trial at Copenhagen University Hospital (Rigshospitalet), which is where Cessatech began as an offshoot project. Cessatech will begin late-stage development of the drug this year. Other products in the pipeline include a solution for MRI sedation and a local anaesthetic gel. The CFI.co judging panel is pleased to announce Cessatech as the winner of the 2020 award for Best Medical Treatment IPO (Nordics).

FRASERS GROUP: BEST LOW MARGIN RETAILER UK 2020

In the low margin business environment you have to think fast and react faster to survive. But to prosper, you have to think ahead. The bloodbath on Britain’s high street over the last two decades has been terrifying – and it has changed the way consumers connect with retailers. Many longstanding famous names have disappeared in the face of fierce online competition and soaring rents and business rates. The Frasers Group believes the higher the risk, the greater the reward in the low margin arena. The company emerged

in 2019 following the acquisition of House of Fraser by Mike Ashley’s Sports Direct empire. The group, once known solely for sporting goods, has diversified, now comprising some of the most iconic brands in retailing, including Flannels, Jack Wills, Game, Evans Cycles and Slazenger. The company has never been afraid to push the boundaries of traditional retailing, constantly tracking trends and reacting rapidly. At the end of 2020 Frasers Group reported a 17.6 percent jump in profits, claiming its “elevation without

WiseEnergy: BEST SOLAR ASSET MANAGER UK 2021

Founded in 2008, WiseEnergy manages and optimises solar assets for its parent company, NextEnergy Capital Group, and external clients worldwide. WiseEnergy guides clients along every step of the investment process, from construction to long-term operational asset management. It has more than 1,500 solar assets under management, representing a €4bn value and a power capacity of 2.3 gigawatts. WiseEnergy has made ESG a strategic priority (building on its biodiversity experience in the UK), and has a welcoming work culture with a 120-person team of professionals from diverse backgrounds

providing global insights and local connections. The team is well versed in remote working technologies, and the company has introduced additional layers to ensure that every member feels connected to the whole — despite Covidcaused isolation. For example, WiseEnergy focuses on mental health and support for employees, and hosts monthly virtual update and strategy sessions to maintain connectivity and reaffirm its vision for the year ahead. All employees are passionate about a ruthless focus on performance, a strong commitment to ESG, and personal initiative for innovation and continuous improvement. Superior

QNB ALAHLI: BEST SME BANK AND BEST RETAIL BANK EGYPT 2021

Over the past four decades, QNB ALAHLI has solidified a leading market position as a specialised financial partner for retail and business clients —and the second-largest private bank in Egypt. It has attracted more than 1.2 million clients, offering a digital banking platform paired with high standards of governance, transparency and disclosure. Clients can have secure, on-demand account access, or personal assistance from one of the 6,686 QNB Alahi representatives. The network includes 231 branches, 611 ATMs and

more than 54,000 point-of-sale (POS) devices. It also runs a 24/7 call centre to ensure customer concerns are swiftly resolved. QNB ALAHLI offers retail and business banking solutions, including savings and current accounts, loans and credit lines, payroll services and specialised SME packages. It supports micro-enterprises with preferential financing solutions designed for pharmacies, manufacturers, contractors and POS merchants. QNB ALAHLI sees SMEs as crucial to economic growth, and launched a “fast injection”

limits” strategy was bearing fruit, despite the pandemic. Investing in bricks-and-mortar stores, as well as online, is evidence of the company’s promise to not only keep up with trends but to “reimagine retail”, changing the way the industry operates. Frasers Group has pledged to further invest, not only in its properties, but also its digital business, to elevate its retail proposition across all channels. The CFI.co judges name Frasers Group as the winner of the 2020 award: Best Low Margin Retailer UK.

returns are achieved by maximising assetgenerated revenue, reducing asset operational expenditure and executing risk mitigation for our clients. In this way, WiseEnergy maximises upside and also avoids losses for example by ensuring a proactive “spare part” procurement strategy . WiseEnergy is working to expedite the transition to clean energy — and is convinced that its market-leading investor returns will continue to provide momentum to the movement. The CFI.co judging panel salutes a small organisation with an outsized global impact, presenting WiseEnergy with the 2021 award for Best Solar Asset Manager (UK).

lending programme to provide them with working capital and medium-term facilities with reduced processing time. QNB ALAHLI is proud to report good results for 2020 including a seven percent growth in retail. SME business grew by almost a quarter (confirming the bank’s position as market leader). The CFI.co judging panel has once again found cause for recognition, and presents QNB ALAHLI, a repeat programme winner, with the 2021 awards for Best SME Bank and Best Retail Bank (Egypt).

POLLEN STREET CAPITAL: BEST RESPONSIBLE ALTERNATIVE INVESTMENT TEAM UK 2021

Pollen Street Capital operates according to an ESG-driven ethos. The UKbased alternative investment firm is guided by ethical values and commitment. It backs transformational businesses with private equity and credit solutions. Pollen Street encourages responsible portfolio development and cares for its employees, stakeholders and community. It has 75 people working in its London and New York offices, and the team takes a holistic approach to investing. It executes bold strategies to reinforce the model and increase engagement.

The team talks with investors and takes the time to fully understand their ESG priorities. Most seek multi-layered, long-term impacts, and the firm applies lateral thinking to boost its capabilities. Pollen Street Capital has an overarching

>

SIS GROUP OF

SCHOOLS: BEST

ESG focus that touches on every aspect of its operations. It strives for a transition to a carbon-neutral future through impactled corporate responsibility, with special attention to diversity, crime reduction and governance. The scope continues to expand to allow increased support for environmental issues. The team prioritises efficiency for lasting impacts. Pollen Street Capital conducted a year-long audit to create its leading Philanthropy programme — Ten Years’ Time — to forge partnerships that connect the firm’s expertise with projects beyond its portfolio.

The CFI.co judging panel recognises a firm punching above its weight for ESG impacts. The judges present Pollen Street Capital with the 2021 award for Best Responsible Alternative Investment Team (UK).

INTERNATIONAL EDUCATIONAL INSTITUTION SOUTH EAST ASIA 2021

With an unpredictable world, how does a good school prepare students for their future? Why is quality education becoming increasingly unaffordable in many developing countries?

The SIS Group of Schools and its Singaporean Founder Jaspal Sidhu have a joint purpose to establish quality schools at affordable tuition fees. Using 3 well-established and globally recognised curricula (Singapore, Cambridge and the International Baccalaureate), SIS has established a strong presence in South East Asia, with a comprehensive network in Indonesia and regional representation in India, Myanmar and South Korea. Today SIS is establishing more footprints in these geographies in a strategic partnership with the International Finance Corporation (World Bank).

The SIS Group of Schools welcomes students into a holistic, nurturing and safe environment where year-round inter-disciplinary projects test knowledge and understanding of

multiple subjects. SIS leadership and teachers collaborate actively throughout the Group, guiding their students’ educational development and overall well-being. The unique collaboration eco-system has allowed the Group to make great strides to cut annual costs for students to boost educational inclusion and spur regional socioeconomic development. This saw the Group being awarded the 2019 Financial Times-IFC (World Bank) Global Transformational Award for education.

Besides high academic achievements, the SIS Group of Schools also focuses on 21st century skills like Perseverance, Analytical Thinking, Collaboration and Entrepreneurism. SIS students have moved on to top universities in the region and other parts of the globe.

The CFI.co judging panel congratulates the SIS Group of Schools on winning the 2021 award for Best International Educational Institution (South East Asia).

ROXGOLD INC: BEST MINING CSR STRATEGY WEST AFRICA 2021

Gold is one of the most sought-after minerals on Earth. It once underpinned national monetary systems and has ever-increasing uses in the modern world, from smartphone componentry to space travel. Roxgold strives to meet this growing global demand in the most responsible manner possible. The company is based in Canada, with mining assets in Burkina Faso and Côte d'Ivoire. The Yaramoko Mine Complex in Burkina Faso boasts high-grade annual gold production, and the Séguéla Gold Project in Côte d'Ivoire shows high potential. Roxgold acquired Séguéla in April 2019 for $20m. Following a favourable environmental impact assessment, a mining permit was granted in December last year. Early construction work has begun, building infrastructure for a project that will create over 500 jobs for locals in the Séguéla area. Roxgold

has been busy over the past year, developing the new mine while keeping production on-pace. With pandemic safeguards put swiftly in place, Roxgold was able to protect its people while also exceeding production expectations for 2020. The company reserved an entire hotel for expatriate workers and stockpiled consumables for staff. It made provisions for local contractors to reside on-site during month-long shifts and facilitated the reskilling and upskilling of local workers. Roxgold donations helped to fund educational campaigns and support health professionals in local communities. The CFI.co judging panel recognises a company with the noble aim of creating sustainable value for all stakeholders. The judges present Roxgold, a repeat programme winner, with the 2021 award for Best Mining CSR Strategy (West Africa).

CREDIT SUISSE: BEST WEALTH MANAGEMENT SERVICES EUROPE 2021

In uncertain times it’s a natural instinct to want to protect your wealth – for the benefit of your family. Credit Suisse has put this concern at the heart of their wealth management services, especially during the global pandemic. Indeed, the company believes the family is a social microcosm which could provide a global blueprint to long-term success. The personal touch has always been a cornerstone of the company’s wealth management services. The 165 year old Swiss bank, which is active in financial centres across the globe, prides itself on

the way it deals with individuals, large and small, looking for tailored solutions. The Bank employs more than 3,500 relationship managers whose job is to maintain a client-centric approach, giving wealth management help and advice. Prospective clients are given the opportunity to customise their investment decisions, or leave the judgement to a highly experienced team. The bank promises continuous monitoring of an individual’s portfolio, while avoiding risk. Despite global uncertainties, Credit Suisse delivered a strong underlying performance in its wealth

management-related businesses in 2020. In its full year report, the company pledged to remain fully focussed on delivering quality wealth management products and services –and supporting clients through the pandemic and the resulting economic challenges. Thomas Gottstein, chief executive, says the company is determined to further accelerate growth in wealth management in 2021. For these reasons, in 2021 - and for the second year running - the CFI.co judges are pleased to award Credit Suisse: Best Wealth Management Services Europe.

RÉGION ÎLE-DE-FRANCE: BEST SUSTAINABILITY BOND ISSUER FRANCE 2021

Région Île-de-France is a pioneer of sustainability, issuing green bonds worth €4bn between 2012 and 2020. It was the first European regional authority to cover capital expenditure through green financing. The region accounts for nearly a third of French GDP, and last year launched an €800m Eurobond to finance Covid recovery — the largest and the longest-maturity transaction in its history. It was also the first dual-tranche bond offered by Région Île-de-France, achieving a record high for investor participation and a

record low for overall financing costs. Over the past eight years, international investor numbers have doubled, accounting for 52 percent of the base. The authority seeks to improve quality of life with strategic investment and the shrewd management of its main sectors: transport, economic and environmental development, research, secondary education, professional training, employment, social inclusion, housing and culture. Last year, over half of budgeted capital expenditures contributed to the

region’s ecological ambitions. This year, the top priorities are to improve responses to the pandemic, implement at least half of regional climate-change commitments, and pursue an investment plan to create 30,000 new high school places. Work continues on digitalisation and energy efficiency for schools, and the region continues to fight rising poverty among young people. The CFI.co judging panel presents Région Île-de-France with the 2021 award for Best Sustainability Bond Issuer (France).

TOLOMEO CAPITAL: BEST TECHNOLOGY INVESTMENT TEAM SWITZERLAND 2021

Zurich-headquartered Tolomeo Capital was established in 2011 as a spin-off from the quant and risk management unit of one of Switzerland’s largest institutional family offices. The firm is licensed and regulated by the Swiss Financial Market Supervisory Authority to operate as an asset manager of collective investment schemes. Tolomeo Capital has assembled a team of professionals with strong analytical backgrounds and complementary skills in investment and risk management, financial mathematics and software engineering. The team translates innovations into tradable

quantitative models, focusing on quantitative, tech-driven strategies with an emphasis on risk-adjusted returns. A sustainability risk policy excludes investment in controversial industries and companies that score poorly in the MSCI ESG Rating methodology. ESG performance is an integral part of the Tolomeo process, with transparent reporting practices. The firm benefits from a proprietary tech infrastructure that gives control over every detail of the investment process. It aims to create an independent return stream and deliver uncorrelated, long-term alpha

via systematic, short-term and price-based trading strategies for liquid, publicly traded equity securities and derivatives. Tolomeo Capital prioritises R&D and collaborative partnerships. It has entered into close cooperation with the Baloise group — one of the country’s largest insurance companies and a Tolomeo Capital shareholder — to develop products and services for systematic, rulebased investing. The CFI.co judging panel presents Tolomeo Capital with the 2021 award for Best Technology Investment Team (Switzerland).

PORTOBELLO CAPITAL: BEST MID-MARKET INVESTMENT PARTNER IBERIA 2020

Independent private equity firm Portobello Capital has distinguished itself as a proactive partner of the mid-market investment sphere. The Madrid-based firm was founded in 2010, and its portfolio has grown to include more than 60 investment vehicles and €1.4bn in AUM. Portobello Capital partners with dynamic companies, providing the funding and know-how to maximise value creation. It looks for entrepreneurs who aren’t afraid to challenge convention, and favours bold thoughts and actions. Portobello Capital has successfully raised five funds since its inception — two of them during the pandemic. It has 17 companies in its portfolio and 30 professionals on-staff. Portobello Capital follows a rigorous selection process and invests considerable resources in the recruitment and retention

of high-calibre team members. The result is low staff turnover and high employee engagement. Portobello Capital builds trust with stakeholders — employee or client — by always acting with fairness, respect and integrity. It takes the time to understand its clients’ needs, then takes decisive steps to help them. The firm serves a few select family offices, but its main investors are international institutions. Portobello Capital understands how the Spanish market works and leverages the right platforms to facilitate responsible growth. The firm anticipates a growth spurt of its own as it looks to enlarge the size and geographic scope of its portfolio in the near future. The CFI.co judging panel names Portobello Capital winner of the 2020 award for Best Mid-Market Investment Partner (Iberia).

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FARAZAD INVESTMENTS (FI): BEST PRIVATE EQUITY REAL ESTATE GROUP GLOBAL 2020

Internationally acclaimed entrepreneur Korosh Farazad launched his namesake organisation in 1996, and Farazad Investments (FI) is now a global operation with a presence on five continents and a portfolio of 354 projects with a funding value of $3.7bn. FI specialises in real estate equity solutions, from investment and acquisition to construction and development. It is headquartered in London and has operations in Europe, the Middle East, Asia Pacific, Australia and the US. Farazad leads the business with a top-notch team of professionals boasting over 250 years of cumulative industry expertise. The FI team approaches each project from a client-centric perspective and a value-creation mandate. Clients praise the company’s creative solutions and transparent interactions. FI is an

internationally recognised brand with an organic growth strategy fuelled by solid business referrals. Decades of successful value extraction and ethical operations have built a foundation of trust that keeps the group’s project pipeline humming. FI has cultivated excellent relationships with institutional lenders and industry experts. The team takes pride in the sophisticated, highly structured debt and equity solutions it crafts for each client. FI has registered before on the radar of the CFI.co judging panel for its exceptional track record. The company has been extra selective during Covid times — but is feeling bullish about the upcoming year: 2021 opened with a busy pipeline of projects. The judges announce Farazad Investments as winner of the 2020 global award for Best Private Equity Real Estate Group.

WHITECROFT CAPITAL MANAGEMENT: BEST RISK SHARING INVESTMENT STRATEGY UK 2021

Whitecroft Capital Management operates in a niche market as an asset manager focused on bank capital opportunities. It was founded in London in 2016 and has a presence in Copenhagen. Whitecroft leverages its expertise to execute large, complex transactions for institutional investors. It cultivates committed, long-term relationships with banks to gain access to opportunities and custom-craft solutions rather than pushing off-the-shelf products. Whitecroft has executed transactions with several banks, with their core business spread between trade finance, SMEs and large corporate lending. The scope has expanded to include green and renewable financing. The firm’s raison d’être is to afford institutional investors an efficient access to a diversified set of private risk sharing transactions. Whitecroft manages 18 portfolios, featuring thousands of companies and representing 77 countries across all geographical

regions and 37 industry sectors. It employs active portfolio management and macro-hedging strategies to protect performance against market volatility. It specialises in risk — sharing investments and boasts strong originating and structuring capabilities. Risksharing investments are geared to create stable, attractive yields from exposure to diversified credit portfolios held on the balance sheets of major financial institutions. Whitecroft finds itself — at a moment when banks need access to capital more than ever — well positioned to deliver reliable, risk-adjusted returns across economic cycles. In recognition of the firm’s dedication to risk sharing and its contribution to the popularisation of the asset class among institutional investors over the last decade, the CFl.co judging panel presents Whitecroft Capital Management with the 2021 award for Best Risk Sharing Investment Strategy (UK).

ALASKA PERMANENT FUND: BEST SWF INVESTMENT TEAM THE AMERICAS 2021

Alaska Permanent Fund (APF) began 45 years ago with an initial contribution of $734,000. Through expert management and a disciplined investment approach, that has grown to a $75bn portfolio. APF ranks as the largest sovereign wealth fund in the US. It was launched to ensure that nonrenewable resources would be converted into a sustainable source of intergenerational support for Alaskans. State law mandates that a quarter of any oil and gas royalties be deposited into the fund. Currently, the annual withdrawal

from the earnings that it generates account for 70 percent of the government’s unrestricted general budget. This draw from the earnings provides for government services, including the dividend program for eligible Alaskan residents. The Alaska Permanent Fund Corporation (APFC) is responsible for the fund’s investment and asset management — and it delivers a standout performance. APFC is strengthened by a diverse leadership team and staff that aim to protect principal capital and outperform market

benchmarks. It forges partnerships with premier external managers to amplify internal investment capacities and broaden the fund’s investment reach. APFC CEO Angela Rodell ushered in an era of transformation for the fund, growing it by more than 25 percent. Under the APFC’s stewardship, the fund has proven to be a key revenue generator, with wise investments ensuring that trend for the future. The CFI.co judging panel presents Alaska Permanent Fund with the 2021 award for Best SWF Investment Team (Americas).

CHARAH SOLUTIONS: BEST SUSTAINABLE ENVIRONMENTAL MANAGEMENT SOLUTIONS USA 2020

Charah Solutions’ management and employees are committed to environmental responsibility as the company provides mission-critical environmental services and byproduct sales to the U.S. power generation industry. Charah Solutions assists utilities to sustainably manage and recycle ash byproducts generated from the combustion of coal in the production of electricity. The Company also designs and implements solutions for ash pond management and closure, landfill construction, fly ash sales, and structural fill projects. Charah Solutions is the partner of choice for solving customers’ most complex environmental challenges, and as an industry leader in quality, safety, and compliance, the company is committed to reducing greenhouse gas emissions for a cleaner energy future. Charah Solutions sustainability efforts conserve virgin resources and water, reduce greenhouse gases, and decrease landfill disposal, all while providing essential recycled products that contribute to the growth of the economy. The company’s recovery of coal ash

provides environmental recycling, which is beneficially used in the production of concrete and cement to satisfy the growing infrastructure demands that utilize millions of tons of coal ash every year, thus preserving natural resources while dramatically reducing the need for landfill space. In addition, the beneficial recycling of ash in concrete production replaces Portland cement, a significant contributor to CO2 emissions, thus significantly decreasing CO2 and other greenhouse gases that would otherwise be emitted into the atmosphere. The company also invests in propriety technology for the benefit of the environment such as its MP618® beneficiation technology which improves fly ash quality so that significantly more tons can be recycled for use in concrete and cement production further reducing the overall carbon footprint and use of natural resources. Its use of ash in environmentally-sound structural fill projects returns the land to the community for recreational or commercial and allows for thousands of acres of land to be reclaimed.

Charah Solutions also beneficially uses gypsum byproduct from the power plants which is recycled and used in the production of drywall and agricultural fertilizer, further reducing landfill space as well as water and energy consumption and preserving natural resources. Finally, Charah Solutions is an industry leader in providing Environmental Risk Transfer (ERT) services to the power generation industry which includes the shutdown, decommissioning and demolishing existing coal-fired power plants, remediation of onsite ash ponds and landfills, beneficial recycling of the ash, recycling of steel and other metals through the demolition of the plant and restoration of the land upon project completion for public or commercial use. The CFI.co judging panel was impressed with the ways in which the company is fully committed to supporting its customers while enhancing the environment through its commitment to sustainability. The judges declare Charah Solutions 2020 winner of the award of the Best Sustainable Environmental Management Solutions (USA).

Forests are the lungs of planet Earth, and reducing emissions from deforestation and natural degradation is a primary target of the United Nations. Agrocortex provides forestry management solutions that can offset global carbon emissions, regulate regional rainfall and reduce flooding risks. They protect biodiversity while providing landowners with income options that safeguard the environment. Agrocortex estimates its REDD project — the UN-backed Reducing Emissions from Deforestation and Forest Degradation — has saved around

5,300 hectares of Amazonian rainforest from logging between 2014 and 2019. It is one of the few forest projects in the world that aligns sustainability with the concept of the “triple bottom line”. Agrocortex manages a socially just, environmentally responsible and economically profitable operation. The project area covers some 190,000 hectares in the south-western region of the Amazon. The company divides that into 30 management units of 5,860 hectares, and limits extraction operation to just three percent of the forest each year. The remaining

97 percent is designated a conservation zone. Agrocortex has earned the support of international shareholders, who appreciate its solid corporate structure, exemplary governance, and long-term environmental and community commitments. Agrocortex hopes to serve as inspiration for other companies and landowners fighting climate change and contributing to socio-economic inclusion. The CFI.co judging panel was impressed, and announces Agrocortex as winner of the 2020 Best REDD Expert (Latin America) award.

ROYAL

BANK OF CANADA: BEST

RBC is the largest bank in Canada and offers diversified financial services in the country and around the world. Its private banking division, RBC Wealth Management, took its current form in 2007 when services in the US and Canada were combined. Today, it is the fifth largest private bank globally with around $670bn of assets under management. It has offices in Canada, the United States, Britain, and Asia. RBC has around 1,750 investment advisors in Canada and 1,900 financial advisors in the US. Its high-quality advisors provide personalised financial advice that includes asset management, tax planning, estate planning, trust management, insurance solutions and philanthropy. It also provides a full suite of banking services. For ultra-high net worth individuals, RBC has a dedicated

PRIVATE BANKING

SERVICES CANADA 2021

Enterprise Strategic Client Group to provide solutions across jurisdictions and generations. Over the past four years, it has modernised its software and systems for advisors and customers. These are now considered best in class. The bank also continues to innovate its investment offerings. For example, its customers can now invest in private equity, private credit, hedge funds, and other alternative investments after RBC entered a partnership with iCapital Network. It has also been investing in investment talent in 2020 with strong recruitment from rival banks. This includes a $1.2bn all-female JPMorgan Team. The CFI.co judging panel is impressed with the ambition and innovation of Royal Bank of Canada and offers congratulations on its 2021 award Best Private Banking Services (Canada).

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RUBICON: BEST SaaS SMART CITY SOLUTIONS US 2021

Rubicon is a software company that works with governmental, corporate and non-profit clients to develop solutions designed to end waste by helping its partners find economic value in their waste streams and confidently execute on their sustainability goals. Rubicon began as the passion project of its CEO, Nate Morris, who founded the company in 2008 to address the world’s growing waste problems. Morris started out with a $10,000 line of credit and turned it into a billion-dollar business. The B-Corpcertified company has almost five million service locations across 20 countries on five continents. Rubicon offers waste and recycling services, fleet management and smart city enablement. It partners with clients worldwide to facilitate the transition to a zero-waste future, using big data

and analytics to increase efficiencies, cut costs and implement preparedness plans. Rubicon has developed software-as-a-service (SaaS) packages for municipal clients, enabling governments to put taxpayer dollars to good use and protect environmental resources. By helping municipal departments to digitalise operations, it saves trees while compiling a valuable data cache. Techempowered cities can make data-driven decisions to end waste in all its forms: time, money, energy, human capital and resources. It allows the delivery of systemic, sustainable, positive change, and keeps taxpayer savings front and centre. Nothing removes roadblocks faster than a measurable return on investment. The CFI.co judging panel is pleased to present Rubicon with the 2021 award for Best SaaS Smart City Solutions (US).

DOMINI: BEST IMPACT INVESTMENT ADVISORY UNITED STATES 2021

Domini is heartened by the rising momentum of the impact investment sphere. The US-based mutual fund firm with $2.6 billion assets under management was an early adopter of socially responsible investing and launched its first product in 1991. The niche firm operates on the belief that every each and every dollar spent has an effect, positive or negative. Impact investing starts with individuals who believe, communities that share, and mutual funds that care. The power of small is the greatness of all, Domini believes. The company strives to “grow the pie” and welcomes others to the industry with knowledge-sharing and collaboration. Domini aims to harness the power of finance to build a better world, with universal human dignity and ecological sustainability as the

primary goals. It believes impact investment standards provide the roadmap. Domini follows a threepillar investment approach, applying standards across the process, engaging with investee companies, and investing in communities. It understands that financial systems are only as strong as their foundations, and works to create meaningful progress and concrete community impacts through its portfolio. The firm leverages almost 30 years of research data to make the case for ESG-focused investments for positive impact and returns. The CFI.co judging panel appreciates a company working at grass roots level to build a collective future of resiliency and prosperity, and names Domini winner of the 2021 award for Best Impact Investment Advisory (US).

BP is one of the largest energy, oil and gas companies in the world with revenues of $183.5bn in 2020. BP was founded in 1908 with the discovery of oil in Persia. Like any company with long-term success, BP has made many transitions. In August 2020, it announced plans to transition from an “International Oil Company to [an] Integrated Energy Company”. BP plans to be net zero by 2050. This includes halving the carbon intensity of its products by that year. To do this it plans to reduce oil and

gas production by 40 percent by 2030 and to increase net renewable energy generation from 2.5GW in 2019 to 50GW by 2030. BP is also investing in carbon capture and offsets. These goals are ambitious and show a company committed to helping in the global fight against climate change. While the extent of its environmental ambitions is new, BP has already established an admirable track record. Since 2016, it has reduced its GHG emissions by 3.9Mte, surpassing its 2025 target. It has also

CRC CREDIT BUREAU LTD: BEST CREDIT BUREAU NIGERIA 2021

The pandemic has brought unparalleled destruction of lives and livelihoods. Nigeria has been hit hard, with high economic impacts and little lending. CRC Credit Bureau helps lenders make informed decisions with a nationwide repository of consumer and corporate credit information that covers more than 95 percent of the domestic credit industry. CRC has weathered Covid with steely resolve, achieving returns on par with expectations and is anticipating continued improvement. The bureau is grateful for lessons learned in 2020 and for the impetus

to propel its digital transformation. It now serves clients more through digital channels than face-to-face, which has created greater market access. CRC wants people to stay on top of their credit history — and offers one free credit report per year. Some products are on a subscription basis, including a credit overview notification plan to monitor changes and ensure accuracy. It has developed a range of membership products to assist creditgranting clients with monitoring of their credit portfolios in the phase of the challenges posed

CONVERGENCE PARTNERS: BEST TMT IMPACT

Convergence Partners is an impact investor with a record for identifying, developing and adding value to investment opportunities in Africa’s Technology Media and Telecom (TMT) sector. The private equity fund manager spreads its portfolio across 18 countries. It has invested in major projects in every major region of subSaharan Africa and the company is always looking for opportunities to expand operations and further its contribution to the entire continent’s socio-economic development. Convergence Partners is headquartered in Johannesburg with offices in Mauritius and Nigeria. It spurs financial and social growth

built over 7,500 EV charging stations across the UK. BP has also shown its commitment to local communities. In August, it became a UK Living Wage employer. In 2019, it contributed $84m to communities and NGOs around the world. It has also made a commitment to support the “decade of delivery” for the UN’s Sustainable Development Goals. The CFI.co judging panel applauds BP and presents it with the 2021 award Best ESG Oil & Gas Operator Global.

by covid-19 and the screening of prospective customers, investors and employees. CRC Credit Bureau operates in association with Dun & Bradstreet, a data, insights and analytics company with a 180-year legacy. CRC has become more data-focused with the ability to add value in multiple economic segments and drive markets with better products and stronger analytics. The CFI.co judging panel is pleased to present CRC Credit Bureau, a repeat winner, with the 2021 award for Best Credit Bureau (Nigeria).

STRATEGY AFRICA

with strategic investments in ICT infrastructure and digital innovation. Convergence Partners was founded in 2006 by a tight-knit team of founders who had worked together before and remain active in the business, together with a stable, experienced team that has been built over the years since. The firm values diversity and its talented team is a balance of races, genders and countries of origin. Convergence launched its third private equity fund late last year; it aims to raise $250m by close and has attracted the attention of a number of DFIs. Convergence’s first two funds, the second of which is nearing full deployment,

have invested in 29 companies and exited half of those deals. Convergence Partners is chipping away at the SDG challenges facing the Continent with an investment portfolio that strengthens continental connectivity as well as educational and financial inclusivity. The firm has recently taken the step of launching Sira, its self-developed bespoke impact measurement toolkit, that tracks impact achievements across its portfolios against SDG objectives. The CFI.co judging panel declares Convergence Partners winner of the 2021 award for best TMT Impact Investing Strategy (Africa).

HENKEL: OUTSTANDING CONTRIBUTION TO SUSTAINABLE DEVELOPMENT 2020

Henkel is a leading international chemical and consumer goods company headquartered in Düsseldorf. Its top brands include Schwarzkopf, Loctite and Persil. At over 140 years old, Henkel is no stranger to sustainability. Over several decades, it has shown deep commitment through its expanding sustainability leadership. Its current activities cover six key areas: social progress, performance, safety and health, energy and climate, materials and waste, and water and wastewater. Underpinning these activities are a set of ambitious goals set in 2010. These include the reduction of its carbon footprint from production by 65 percent by 2025, 100 percent renewable energy use by 2030, 100 percent recycled or reusable packaging by 2025 and 50 percent less fossil fuel plastics by 2025.

Henkel has already increased its overall efficiency by 56 percent, is using 31 percent less CO2 per product and 40 percent less waste per product. It is also a leader for sustainability within its value chain. Henkel is a founding member of the global Alliance to End Plastic Waste. It supports social and waste reduction projects in Haiti, Indonesia, the Philippines and Egypt alongside social enterprise Plastic Bank. As part of its Sustainability Ambassador Programme, over 50,000 Henkel employees have brought the message to over 170,000 schoolchildren in 53 countries since 2012. The CFI.co judging panel applauds Henkel’s long track record and is proud to confirm the 2020 award for Outstanding Contribution to Sustainable Development.

COMPANY LTD: BEST SUSTAINABLE INNOVATION STRATEGY THAILAND 2021

Over nearly four decades, Bangchak Corporation Public Company Limited (BCP) has been contributing to Thai socio-economic development through five core divisions: petroleum refinery and trading, marketing, bio-based products, green power and natural resource business development. BCP aims to lead the vanguard of Asia’s transition to a greener future. It has applied strict corporate governance criteria across operations to build a sustainable business model and an inclusive workplace. It has also created long-term value for stakeholders. BCP was the first company in Thailand to receive ISO 50001:2018 certification, and the first oil refinery to be certified by the Water Footprint programme. In 2019, BCP cut water consumption by 31 percent. It offsets thousands of tons of CO2, continuously

improves energy and waste efficiencies, and plans to become carbon-neutral by 2030. It has enhanced fossil fuel production and developed bio-based alternatives to meet growing national energy demands. BCP also generates and distributes clean energy from solar, wind, water and geothermal power projects in Thailand, Japan, the Philippines, Indonesia and Laos. Plastic waste is tackled with circular economy solutions at its 1,200 service stations. The group is powered by a team 1,250-strong and a corporate “3S” strategy that priorities security, stability and sustainability. The CFI.co judging panel recognises a company striving to overcome environmental challenges. Bangchak Corporation Public Company Ltd wins the 2021 award for Best Sustainable Innovation Strategy (Thailand).

HOTFOREX: BEST MARKET RESEARCH AND EDUCATION GLOBAL 2021

HotForex puts clients’ interests at the centre of everything it does. Its title is the unified brand name of the HF Markets Group, which operates in the UK, Cyprus, Dubai, Mauritius, South Africa and the Seychelles. HotForex is recognised as a global leader in online trading, specialising in foreign exchange and contracts for differences (CFDs) on stocks, commodities, metals and indices. HotForex maintains its market-leading position by delivering superior customer service, reliable products, and useful resources. It has developed two trading platforms and a host of complementary products. HotForex weathered the Covid storm by retaining its commitment to clients, striving for results and constantly seeking improvement. HotForex has 200 employees on its global team, including

analysts and researchers that contribute to its ongoing educational outreach. The team conducts daily technical and fundamental analyses of the markets, and shares the findings through multiple channels, in several languages. HotForex posts live Q&A sessions on its social media channels and hosts free weekly webinars covering topics for advanced and novice traders. Digital denizens can brush up their trading skills with video tutorials on the HotForex website or its YouTube channel, which has 26,000 subscribers and counting. The company has just released the GlobalTrendsReport for 2021 for its clients. The CFI.co judges recognise a repeat programme winner, and present HotForex with the 2021 global award for Best Market Research and Education.

MAN GROUP: BEST INVESTMENT MANAGEMENT SERVICES UK 2020

Man Group is an investment management firm with a 230-year trading history and over $113bn in funds under management. Group is headquartered in London and has a global network with 15 international offices. It leverages more than 25 years of experience of global investment management to deliver risk-adjusted returns Institutional investors have contributed 84 percent of the funds under the group’s management. Man Group is comprised of five specialised investment management engines.

Investment House celebrates its 20 this year, and is proud to be recognised as one of the fastest-growing investment banks in the Middle East. Investment House was acquired by a consortium of Qatari businessmen in late 2018, and that injection of capital and new blood has helped the firm to outpace the competition. It provides clients with a suite of effective services and a mindset that seeks to maximise value and minimise risk. Investment House is an innovative partner

ORBIAN is the longest tenured Supply Chain Finance (SCF) provider. They have been providing SCF solutions for over 20 years and financing over $230 billion in trade flows to-date for leading Fortune 500 & Global 500 companies. ORBIAN is 100% dedicated to Buyer-centric SCF solutions including their Traditional Supply Chain Finance product and, more recently, Express SCF (xSCF) and Virtual Card (e-Card) offerings. A pioneer in its industry at many levels, ORBIAN launched, in 2010, the first bank-agnostic multi-bank SCF Program ever implemented in Europe and in 2014, ORBIAN was first company to provide SCF to Mainland China. Orbian universal funding structure,

combined with their SCF technology platform, allows them to offer comprehensive SCF solutions and services to large corporate clients globally and programs with virtually unlimited funding capacity, while mitigating the funding and operational risks inherent in all other SCF offerings. Their streamlined and award-winning onboarding process ensures best-in-class customer experience. Orbian’s financial, legal and technology experts work closely with clients to ensure swift and seamless SCF implementation, using an approach that covers business process, strategy design and IT integration and build a substructure to manage supplier engagement, documentation and onboarding. ORBIAN has

as crucial to the on-going success of the business and has partnered with the University of Oxford to advance research into quantitative finance, machine learning and data analytics. The Oxford-Man Institute has been a part of the university’s engineering science department for over a decade, giving the group a direct link to cutting-edge research and inspiring a crosspollination of ideas between academia and investing. The CFI.co judging panel declares Man Group as the winner of the 2020 award for Best Investment Management Services (UK).

over the past year — and a healthy pipeline of new ones for 2021. It has developed a range of logistics solutions, mainly focusing on transport, and launched 10 new funds over the past 12 months. The CFI.co judging panel is heartened to see a company responding to pandemic challenges with intelligence, agility and flair. The judges declare Investment House as winner of the 2020 dual awards for Best Investment Banking Solutions (Middle East) and Best Asset Management (Qatar).

maintained its industry-leading position through the years by annually investing about 15% of revenue into the continuous improvement of technology, team skills and customer experience and by being a recognised thought leader in themes that bring the industry forward. A recent example is ORBIAN’s work around sustainable Supply Chain Finance in order to become a key player in the ESG agenda in the financial sector. Headquartered in Carlsbad, CA with offices in London (UK) and Munich (Germany), Orbian provides global customer support for our clients in a variety of languages. The CFI.co judges recognise Orbian with the 2021 global award for Most Innovative Trade Finance Solutions.

ICICI BANK UK: BEST INTERNATIONAL DIGITAL BANKING UK 2021

ICICI Bank UK was established to enable the global Indian community to conduct cross-border business with ease. Founded in 2003, ICICI Bank UK PLC is a 100% subsidiary of ICICI Bank Limited (India) and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. ICICI depositors are protected by the Financial Services Compensation Scheme, which would pay out if the bank were ever unable to fulfil its financial obligations.

ICICI Bank UK benefits from a strong technical team, which has developed a digital platform that provides clients with secure access to their money while abroad, with seamless functionality of debit card and a user-friendly digital interface. The bank leverages its local base to facilitate credit history checks and documentation completion.

ICICI Bank UK offers a full range of commercial and business banking services, including savings and current accounts, SME financing and real estate investment portfolios. The closed-user group creates cross-border financial solutions: instant client on-boarding and remittance to ICICI Bank accounts in India, faster payments, and attractive interest rates. It also offers competitive rates on foreign exchange and multi-currency transactions. Business accounts are available in Sterling, US dollars and euros.

The CFI.co judges are impressed with ICICI Bank UK’s credentials, technical advancement and the fact that they offer Instant Current Account opening through mobile app, even if customer is in India at the time of account opening. Hence, declare ICICI Bank UK PLC winner of the 2021 award for Best International Digital Banking (UK).

SPORTFIVE: BEST VALUE CREATION SPORTS MARKETING AGENCY GLOBAL 2020

SPORTFIVE connects sports brands, rights-holders, media platforms and fans with a global network of business relationships. Its decades of experience and innovative spirit generate long-term value, establish pioneering partnerships, and create exciting experiences. SPORTFIVE is based in Hamburg, with hundreds of contractual relationships and representation for individual athletes from around the world. The agency has a presence in Pacific Asia, Europe and the US, where it has eight offices. It specialises in digital marketing campaigns and endorsement agreements. The dedicated team works the global sales network, and the agency has earned a reputation as a transparent, reliable service provider. SPORTFIVE takes a customer-centric approach and creates bespoke solutions for each project. It partners with brands to provide experiential

marketing, entertainment advisory, hospitality and travel services. It helps rights-holders handle distribution strategies, internationalisation services, athlete management, arena operations, digital fan experiences and media, sponsorship and hospitality sales. Media platforms come to SPORTFIVE for advisory services, production assistance, content distribution and partnership, and airtime sales. The SPORTFIVE team leverages 25 years’ international industry expertise to provide a comprehensive offering with consulting and activation elements. SPORTFIVE, previously known as Lagardère Sports and Entertainment, has undergone a rebranding process since it was acquired by HIG Capital in April last year. The CFI.co judging panel declares SPORTFIVE the 2020 winner of the global award for Best Value Creation Sports Marketing Agency.

SHANTI HOSPITALITY GROUP: BEST HOSPITALITY INVESTMENT PORTFOLIO GLOBAL 2021

Shanti Hospitality Group offers a range of investment services, including due diligence, contract negotiations, operational consultation and expansion support. It also provides assetmanagement, from financial monitoring and market repositioning to benchmark analysis and budget reviews. It tackles projects from conception and design development through to renovations and expenditure recommendations. The group has been energised by the resurgence of global markets and is keen to capitalise on new opportunities for strategic partnerships. Shanti Hospitality has a global portfolio of 2,000 rooms across 24 hotels. It operates two fine-dining restaurants and an innovative digital platform connecting street vendors with property owners to create vibrant outdoor eating experiences. Shanti Hospitality maintains a competitive edge by adapting

to customer needs with an active, openminded approach to investment. It focuses on delivering an exceptional experience for clients across a wide portfolio of brands, and welcomes collaboration with partners pursuing innovative ideas. Its business model is streamlined into three verticals: asset management of the thirdparty-operated hotels it owns and operational management of its own and third-party-owned hotels. Shanti Hospitality Group is on a journey of continuous improvement, incorporating best-in-class practices that keep pace with market advances. It aims to enhance guests’ wellbeing with high-touch amenities and impeccable accommodation. It has also hinted at plans for future expansion on its offering. The CFI.co judging panel congratulates Shanti Hospitality Group, winner of the 2021 global award for Best Hospitality Investment Portfolio.

THE ACCESS BANK UK LTD: BEST AFRICA TRADE FINANCE BANK 2021

The Access Bank UK has kept trade finance flowing throughout the pandemic, protecting its staff and ensuring operational continuity. It delivered its promise to prevent furloughs and even brought in new team members.

The Access Bank UK increased its income by 19 percent while maintaining trade finance volume (£3.8bn) and a bank balance sheet (£2.5bn). In 2020, it expanded its business in Ghana, supported multinationals in Angola and

extended its operations in Mozambique. The Access Bank UK is well positioned to capitalise on opportunities in OECD markets, with headquarters in London and offices in Dubai and Lagos. It is authorised by the Prudential Regulation Authority (PRA) and regulated by the UK Financial Conduct Authority (FCA) and the PRA. The Bank is a subsidiary of the Nigerian Access Bank Group, which serves 36 million customers. The Access Bank UK

Graphite has many uses, from the “lead” in your pencil to dry lubricants, high temperature refractories, flame retardants, composites and lithium-ion batteries (LiBs). Tirupati Graphite aims to set the global benchmark for flake graphite and graphene production. The public company has operations in Madagascar and India and was incorporated in London in 2017. Tirupati Graphite employs green technologies to lower its carbon footprint and is committed to increasing sustainability throughout the supply chain. It has achieved outstanding results using its proprietary

zero-hydrofluoric acid, zero-waste purification technology in manufacturing trials. Spherical graphite (SPG) is the anode material used in LiBs, and Tirupati Graphite has completed tests for establishing LiB-grade SPG manufacturing plants with a German equipment specialist. Plant development was fast-tracked to beat the original completion target of July 2022, and the firm is already in talks with manufacturers of electric vehicles (EVs), batteries and anodes. The company points to growing EV adoption and stresses on the importance of aligning production

serves as the Groups OECD confirming hub and is a confirming bank in the Global Trade Finance Programme of the International Finance Corporation. It mitigates import and export risks, offers letters of credit, provides payment guarantees and manages foreign trade exposure. The CFl.co judging panel presents The Access Bank UK, a repeat programme winner, with the 2021 award for Best Africa Trade Finance Bank.

capacity with sustainability in value creation and markets. Tirupati has a network of green-tech facilities for graphite processing and graphene manufacturing being fully integrated in its space. It has achieved impressive growth over a short time, ranking in the top five flake graphite companies worldwide. China, the world’s foremost commercial producer, should prepare for some healthy – and green – competition. The CFI.co judging panel presents Tirupati Graphite with the 2021 global award for Best Sustainable Value Creation Strategy.

Kaleido Privatbank AG is moving from a transactional banking towards boutique services for Central European and German-speaking regions. The bank is rebuilding itself, and the transformation — which would normally take around two years — will be condensed into a supercharged six-month timeline. Kaleido Privatbank AG is headquartered in the heart of the financial hub in Zurich, where over a quarter of global private and institutional assets are managed. The bank will relocate to more spacious offices to accommodate teams of

investment managers, financial intermediaries, compliance specialists and technology experts. It’s also bringing in a new team to spearhead the development of its German markets. As a part of the transformation process the bank also changed its name. Kaleido Privatbank remains true to traditional Swiss banking principles of exceptional customer care, strong governance, and discretion. Kaleido Privatbank understands the needs of highnet-worth individuals, wealthy families and entrepreneurs, and applies more than 25 years

of expertise to customise solutions for them. It aims to become a global reference point for its affluent clientele, and has set new standards for transparency and discretion. Kaleido Privatbank does not consider itself bound by quarterly results, but rather dedicated to its customers and its own integrity. It offers clients access to exclusive communities of likeminded souls and a network of global experts. The CFI.co judging panel presents Kaleido Privatbank AG with the 2021 award for Best Boutique Private Bank (Switzerland).

KALEIDO PRIVATBANK (FORMERLY AP ANLAGE & PRIVATBANK): BEST BOUTIQUE PRIVATE BANK SWITZERLAND 2021

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INVESTMENTS CORPORATION (APICORP): BEST MULTILATERAL DEVELOPMENT BANK EMEA 2021

APICORP’s is a leading multilateral development bank based in Saudi Arabia. Its mission is to develop energy-related industries in the Arab world. It was created by an agreement between the ten member states of the Organisation of Arab Exporting Countries (OAPEC) in 1974. Originally focused on oil and gas, it has expanded its vision over the years to include outstanding renewable energy projects. It has $8.1bn in assets and has a credit rating of AA from Fitch and Aa2 from Moody’s. It is the only financial institution in MENA to have two “AA” ratings. Despite the pandemic and pressures on the oil price, APICROP increased net income by 3 percent to $115m in 2020. This was an impressive result and in contrast to the decreases experienced by most

other MDBs. Its headline project in 2020 was the launch of a $500m countercyclical support package for the energy sector in member countries. This included a 20 percent equity stake in the Jordan Wind Project Company, the first utility-scale wind farm in MENA. The CFI.co judges also note the increasing funding commitment by members (authorised capital now up to $20bn) and APICORP’s increasing sophistication in the debt market. It issued its first benchmark bond in June for $750m, attracting orders of $1.1bn. The bond had the lowest spread in the region compared to peer organisations since the pandemic. The CFI.co judges are delighted to present APICORP the 2021 award Best Multilateral Development Bank (EMEA).

AVL: BEST MOBILITY TECH & ENGINEERING INNOVATOR GLOBAL 2020

The mobility sector is overdue for transformation, with environmental, social and technical challenges adding urgency and impetus. Austria-based AVL describes change as the lifeblood of the automotive industry — and the core of its own purpose. The familyrun business, launched in 1948, has seven decades of experience in mobility innovation. It has grown into a global technology leader with deep cross-industry knowledge of powertrain systems. AVL’s strong leadership and research teams push beyond current boundaries to uncover new potential. The company contributes to the fight against climate change by developing next-generation solutions and services that are clean, affordable, connected and intelligent. It aims to reduce complexity and add value for customers

by adhering to strict quality and innovation standards. As an adaptable company with a global presence and a dedicated workforce, AVL exercises its influence to set the mobility trends of the future. The revolution, with AVL at the vanguard, will address evolving consumer demands and environmental concerns. It favours sustainable design and development to reduce the carbon footprint of powertrain systems across all lifecycle stages, ensuring affordability for the consumer. Electrification, autonomous vehicles, partnership with other engineering companies and data intelligence are high-growth areas that have attracted the attention of AVL. The CFI.co judging panel presents AVL with the 2020 global award for Best Mobility Tech & Engineering Innovator.

ATKINS: BEST SUSTAINABLE ENGINEERING & DESIGN PARTNER GLOBAL 2021

Atkins is a global engineering, design and project management consultancy whose corporate culture and business model deliver positive impacts. The UK-based firm partners with infrastructure clients around the world to help drive sustainability and digital transformation. Atkins sees climate change as the challenge of the century — and innovation, disruption and collaboration as the keys to solving it. Equality, diversity and inclusion are its core tenets of employment, and Atkins strives to attract under-represented demographics through outreach campaigns. It recruits top talent, treats its people with respect, and gives them room to grow. The workforce is united behind a common ideal: to build a better tomorrow by working together today. The company partners with customers

to help enhance infrastructure operations, strengthen community connections and curb carbon emissions. Atkins is part of SNC-Lavalin Group, founded in 1911 and now leading the “net-zero engineering” movement. Atkins leverages the reach and expertise of the group to serve clients in energy, transportation, city planning, environment, defence and security sectors. It is a signatory to the UN Global Compact with an SDG-aligned business model. Atkins has identified goals for the business and its stakeholders over the next three years: affordable, clean energy, climate action, and sustainable cities and communities.

The CFI.co judging panel declares Atkins winner of the 2021 global award for Best Sustainable Engineering & Design Partner.

TANQIA: BEST SUSTAINABLE GROWTH STRATEGY MIDDLE EAST 2021

Tanqia serves a vital need in the UAE, where underground aquifers show falling outputs and rising salinity. At the current pace of water use — without factoring in population or industry growth — the UAE is likely to become one of 10 most water-scarce regions in the world, and could deplete its reserves within the next 50 years. Tanqia amplifies the region’s supply and protects the precious resource through wastewater treatment solutions. The company broke ground on its state-of-the-art wastewater

collection and treatment system (WWCTS) in 2005, and the system has been operational since 2009. The treatment site, located north of Fujairah City, spans 160,000 square metres. It’s in full swing of an expansion project that will push daily treatment capacity from 16,000 cubic metres to 46,000. The pioneering firm is upgrading its effluent distribution network to provide tertiary-treated effluent water that is suitable for unrestricted irrigation and special industrial usage. Upon completion, the network

will provide billions of litres of optimally treated effluent to substitute the use of desalinated and underground water for non-potable use, helping to relieve strained reserves. The plant, which is the first privately held WWCTS in the Middle East, has garnered international recognition for its efficient operations and sustainable impacts. The CFI.co judging panel recognises this innovation by repeat programme winner Tanqia, and presents it with the 2021 award for Best Sustainable Growth Strategy (Middle East).

CORPORACIÓN ZONA FRANCA SANTIAGO: BEST ESG INDUSTRIAL FREE ZONE LATAM & CARIBBEAN 2021

Santiago Free Zone Corporation (CZFS) has earned a reputation for innovation and socioeconomic development across Latin America and the Caribbean. CZFS has been a catalyst for growth over the past 47 years, generating jobs and upskilling employees. It operates the Victor Espaillat Mera Industrial Park (PIVEM), a corporate campus complete with a high-capacity wastewater treatment plant, rooftop solar panels and fibre-optic telecommunications. The complex is on a massive plot which features an urban

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park with forested trails and recreational areas. These green spaces contribute to the wellbeing of the workforce and community. CZFS protects this natural resource with the proactive reforestation of thousands of square kilometres each year. CZFS has adopted a comprehensive CSR structure that centres on the environment, education, entrepreneurship and health. Technical training and educational programmes ensure a pipeline of skilled labour. Preventative health services and outpatient care are available onsite, and a range of other

specialities will be added this year. La Aurora Co-operative is the financial and social support axis of PIVEM's workforce, facilitating savings and investment products. Other support includes a fire substation for PIVEM companies and the surrounding community, CEGESTA talent management, and CAPEX business promotion and professional development. The CFI.co judging panel recognises a repeat programme winner — Corporación Zona Franca Santiago — with the 2021 award for Best ESG Industrial Free Zone (LatAm & Caribbean).

The home page of the National Commercial Bank Jamaica’s website shows a young man smiling happily as he reaches for a smart phone. “Bank on the go, 24/7, with the mobile app,” says the caption – an illustration of how the bank is moving rapidly towards a digital future. NCB has a reputation for being ahead of the curve in banking innovation – it issued the first Jamaican credit card in 1981, for instance. Since its inception as the Colonial Bank of London in 1837, it has grown to become a dominant force in the

island’s financial sector, and recognised as one of the safest banks in the Caribbean. Even so, the decision to undertake an ambitious core banking digital upgrade in 2019 was seen as a major challenge. There were inevitable glitches as NCB began the process of overhauling and modernising its systems, but it overcame problems quickly and openly – and the upgrade came just in time. When Covid-19 hit the island the bank was able to extend digitisation with relative ease. By September 2020 in-bank transactions had been

reduced by 70 percent as more customers moved online. One of the principal aims of the Jamaican government’s National Identity Scheme, which is scheduled to be rolled out later in 2021, is the prevention of fraud and identity theft, and NCB believes that, thanks to the digital modernisation, it is well-positioned to help even more Jamaican businesses and individuals to make the move to digital. The judging panel is pleased to present NCB the 2020 award for Best Digital Banking Services Caribbean.

MOODY'S DE MÉXICO SA DE CV: BEST RISK ANALYSIS LATAM 2021

Moody’s coverage in Mexico includes around 50 corporates and financial institutions, plus over 100 funds, asset managers, subsovereigns, and finance projects. It rated 74 percent ($16,280bn) of Mexico’s crossborder debt and published more than 2,600 Latin America reports in 2020. One of the company’s core strengths is the seniority and skill of its analysts. In Mexico, Moody’s has a 25-person team with a century of combined experience; the group has over 1,000 analysts around the world. Moody’s has expanded its research scope to accommodate growing demand for sustainability reporting. It weighs ESG, climate and credit implications to mitigate risk and measure impact. It identifies material factors affecting performance and applies deep domain expertise to standardise ESG implementation. Moody’s

uses transparent methodologies to derive insight from extra-financial information and to quantify the impact of ESG measures on the economy, company and security-level credit, cash flows and asset valuations. As part of an ongoing digital transformation, it has launched two microsites: one to explain the rating process to prospective issuers, and a Covid-19 microsite with some 1,700 research publications. It releases podcasts through a proprietary hub and mainstream media channels. With trusted and timely reporting, Moody’s helps organisations to build resilience by communicating sustainability credentials. The CFI.co judging panel was impressed by a company with a specialised regional focus and expansive global reach, and announces Moody's de México as winner of the 2021 award for Best Risk Analysis (LATAM).

HEMISFÉRIO SUL INVESTIMENTOS (HSI): BEST REAL ESTATE PRIVATE EQUITY INVESTOR BRAZIL 2021

Hemisfério Sul Investimentos (HSI): Best Real Estate Private Equity Investor Brazil 2021

Good enough is not enough. These words greet any new employee arriving at Hemisfério Sul Investimentos’ São Paulo headquarters. HSI is Latin America’s largest private equity real estate management business and has a well-defined business strategy constructed under this adage. And though the work is exacting, the majority of senior employees have been with HSI for most of its existence.

The company believes that proactivity is the key to achieving quality investment returns. The leadership consists of a core of experienced professionals with a combined 298 years of knowledge and experience in the sector. The management team prides itself on rising to new challenges and always seeking to improve.

The team puts great weight on its core values: integrity, agility, diligence, and restless

curiosity while aiming to resolve challenges with speed and simplicity. Invariably, this involves innovative solutions, and the strategy is working. HSI has raised $5bn in commitments and has returned $2.6bn to investors since its inception. According to CEO Maximo Lima, the team strives to “go the extra mile” in order to create value and exceed the expectations of both investors and partners.

HSI attracts long-term investors to Brazil from across the globe, including the USA, Germany, Switzerland, Singapore, and the UAE. HSI aims to provide top tier returns, achieved through the coordinated action of the entire organisation. By developing optimal strategies for investors, HSI’s experienced management team unlocks growth while mitigating risk.

The CFI.co judging panel is pleased to present Hemisfério Sul Investimentos with the 2021 award for Best Real Estate Private Equity Investor Brazil.

INTER SEGUROS: BEST FAMILY INSURANCE SOLUTIONS BRAZIL 2021

Banco Inter is well known in Brazil as the first 100 percent digital bank. It has broken down the barriers to banking for Brazilian families with its Super App for mobile phones. Now through its insurance company, Inter Seguros, it is bringing the same innovative approach to personal and family insurance. In March 2020, Inter Seguros launched its new platform “Plataforma de Proteção” within the Banco Inter Super App. The platform uses extensive data and proprietary algorithms to personalise insurance offerings to Banco Inter customers. It also brings Banco Inter’s trademark simplicity and transparency. Customers can buy insurance with just a few clicks and completely online. Inter Seguros has also worked hard to streamline the typical processes that can

make insurance cumbersome. The platform currently has 16 products, including pet and mobile phone insurance among more traditional products like home and auto insurance. The CFI.co judges are impressed by the innovation in both delivery and products, and the success the new platform has achieved in its first year. The platform has already reached over 400 thousand active users and in 2020 sold over 265 thousand insurance products. It is now the largest insurance platform in Brazil. Through its success it is bringing greater certainty to countless Brazilian families and at a time where certainty is at a low ebb. CFI.co judges are thus pleased to present Inter Seguros the 2021 award Best Family Insurance Solutions (Brazil).

SKYBRIDGE: BEST GLOBAL HEDGE FUND ADVISORY SOLUTIONS US 2021

US-based SkyBridge is an alternative investments firm founded by Anthony Scaramucci in 2005. The core team has been with the company since its inception, providing clients with multi-asset class advisory, hedge fund solutions and opportunistic investment vehicles. The firm follows an investment philosophy for alpha generation that combines portfolio management, manager selection and institutionalised risk management. The product line-up includes a registered and private fund of hedge funds, customised separate accounts and hedge fund advisory services, a

Bitcoin fund and pre-IPO investments. It manages an Opportunity Zone REIT, which targets assets in economically distressed communities where preferential tax treatment is available. SkyBridge manages several SPVs (special purpose vehicles) that invest in late-stage private technology companies. It also unites finance industry thought-leaders in the annual SALT (SkyBridge Alternatives) Conference. Despite the economic ravages of the pandemic, over the past 12 months SkyBridge is up 37 percent for investors. It has achieved this through dynamic and agile

BARENTS RE: BEST SPECIALTY REINSURER 2021

In a world of uncertainty, people want predictability – not an easy task, as no-one possesses a crystal ball, says Gerardo García chairman of Barents Re, a specialist global reinsurance group. Founded in 1996, the company excels in responding to the challenges of climate change, political tensions, and shifting business trends. The company’s mantra is: “Do it well – and do it properly.” Barents Re has moved at speed to adapt to recent disruptions, aiming to provide certainty for clients in a rapidly changing environment for insurance. Staff constantly

track global movements, adjusting operations to suit the changes. The shift away from globalisation, for instance, has led the company to invest in local “cells” in more than 70 countries around the world - in Europe, Latin America, the Middle East, Africa and Asia. It recognises that each market is different, and there can be no blanket approach. According to García, insurers face challenges everywhere, which is why each Barents Re local cell must always strive to be a centre of excellence. The company offers an array of niche and

portfolio management. SkyBridge runs risk analytics through an integrated system covering the full investment range. It provides research, due diligence and insights for advisory clients, giving them all the tools necessary for informed decision-making. SkyBridge manages $3bn in advisory assets and $4bn in discretionary. It has also received a $100m SMA / Fund of one mandate and a $10bn risk advisory mandate. The CFI.co judging panel presents SkyBridge with the 2021 award for Best Global Hedge Fund Advisory Solutions (US).

speciality reinsurance products in fields which include bonds, energy, finance, constructions and engineering, property and marine cargo. Its experienced underwriting teams have a breadth of knowledge, enabling them to create innovative solutions for clients across a range of subjects. The judges recognise the company’s ability to move at pace, focussing on discipline and execution, and maintaining long-term client relationships, which is why they are pleased to present Barents Re with the 2021 award for Best Specialty Reinsurer.

Canada Goose was founded over 60 years in Toronto. Dani Reiss, the founder’s grandson, later joined the company and became President and CEO. He ignited the company’s growth and pledged to remain Made-in-Canada. Born in the North, the brand made parkas to conquer the extreme temperatures. They have a decades-long tradition of committing to sustainability, one of the most fundamental sustainable choices Canada Goose has made is producing the most premium and functionfirst product on the market underpinned with a lifetime warranty.

The brand recently announced their HUMANATURE philosophy, a purposebased platform that unites their sustainability

and values-based initiatives. Through HUMANATURE Canada Goose’s purpose is clear, they are committed to keeping the planet cold and the people on it warm. Building on their promise to keep the planet cold, Canada Goose unveiled their first Sustainable Impact Strategy in April last year on Earth Day. Key initiatives include using only reclaimed fur in their supply chain from 2022, committing to net zero direct and indirect (Scope 1 and 2) greenhouse gas emissions by 2025 and increasing use of renewable energy. Another main goal is committing to have 90 per cent of Canada Goose fabrics as bluesign® approved for responsible and sustainable practices by 2025. This January, the brand unveiled its most

sustainable parka yet, The Standard Expedition Parka, with recycled and undyed fabrics for the lining and 100 percent responsibly sourced down and reclaimed fur.

Canada Goose keeps people warm by prioritizing philanthropic endeavours. The Resource Centre Program launched in 2009 is one example, where excess materials from production lines are redirected to fulfil needs of the Inuit communities in the remote North. To date more than 2 million meters of fabric has been donated. For a luxury performance brand that provides warm fuzzies in all ways, the CFI. co judging panel recognises Canada Goose with the 2021 global award for Best ESGResponsible Clothing Manufacturer.

PwC MIDDLE EAST: BEST BUSINESS & TAX SERVICES PROVIDER MIDDLE EAST 2021

PwC’s response to Covid-19 illustrates why it is such a trusted provider of tax and business services worldwide. In the Middle East, the company’s goal is to help local companies globalise and global companies localise. The region’s businesses were already familiar with the challenges of geopolitical tensions, demographic shifts, the impact of technology and the need to diversify economies. Then came the pandemic – and with it a need to adapt rapidly. The crisis prompted Middle Eastern states to implement emergency tax measures to protect their economies, including new transfer pricing legislation, significantly increasing the complexity of tax compliance. PwC, with experienced teams on the ground, have steered businesses and private clients through a complex maze of new obligations, while also offering advice to governments on strategies. PwC set

up innovative and dedicated advice and information web pages and held regular webinars to explain the diverse issues. The PwC teams were also able to exploit their global network of specialists to give tailored guidance to clients. A key to PwC’s operations on the ground is developing local talent and expertise, essential to improve levels of trust with local companies. PwC believes the pandemic is an opportunity for Middle Eastern business to focus on broader economic, political and societal issues. The company, which carries out regular research, is working with clients on sustainability goals, suggesting a range of solutions to deal with the challenges. The judging panel recognises PwC for exceptional services in difficult times and is pleased to confirm the 2021 award: Best Business & Tax Services Provider Middle East.

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OMANTEL: BEST DIGITAL TRANSFORMATION LEADERSHIP GCC 2021

Visitors to Oman will hear plenty about as well as experience smart solutions, the Internet of Things and Artificial Intelligence. The sultanate is among a host of Gulf States in the vanguard of the Fourth Industrial Revolution. And at Omantel, the Muscatbased telecommunications giant, they are keenly aware that digital transformation is vital to provide the impetus for success. Founded in 1970, Omantel has grown to become a leading provider of integrated telecommunications in the Gulf Cooperation Council (GCC) region, committed to helping the digital society flourish. In 2021 the company is helping businesses take the next leap – with the introduction of a 5G mobile network to customers in Oman. This follows the 2019 roll-out of a 5G fixed wireless access alternative to fibre broadband. The service offers the most powerful

5G wireless broadband connection with speeds of up to 1Gb. Omantel believes the improved systems will allow businesses to find new ways of working. The company’s stated aim is to promote digital inclusion, responsibility and innovation. It says its focus is on delivering quality service. At the launch of the new service Talal Said Al Mamari, CEO of Omantel said: “We’re pleased to be the first to launch 5G for mobile, which will open new horizons for the mobile sector and will heavily contribute towards supporting growth and digital transformation across different sectors.” Omantel’s rapid moves to extend digital technology to businesses in the Gulf region has been recognised by the judging panel, which is pleased to present the company with the 2021 award for Best Digital Transformation Leadership GCC.

AL FOZAN HOLDING: BEST DIVERSIFIED HOLDINGS GOVERNANCE GCC 2021

“Success is ultimately defined by the measure one helps and benefits one’s fellow man. We aim to achieve this every day.” The statement illustrates Al Fozan Holding’s core values. The family business has grown since its foundation in 1959 to be one of Saudi Arabia’s most celebrated organisations. The Al Fozan family name has long been recognised and respected, not only throughout Saudi Arabia, but across the region and further afield too. It has gathered a large and diverse investment portfolio, encompassing industries including manufacturing, real estate, and retail. But it is more than just a conglomeration of assorted enterprises. It has an active social foundation which manages a large portfolio of non-profit organisations, CSR initiatives and other social investments. The company mantra is to “build a brighter future for everyone around us”. Today Al Fozan Holding is poised to grow beyond its

regional base, with ambitions to become a prominent player in the global arena, but the company’s standards will remain the same. Al Fozan Holding is selective in its portfolio choices, insisting upon ethical rules of service and governance which cover sustainability, hiring and conflict resolution policies and strong board structures. It places a high value on individual skill and experience in its leadership teams, allowing a large degree of independence. In the words of the group chairman, Abdullah bin Abdullatif Al-Fozan: “We have a clear vision and strategy. Authority is properly delegated, and our process procedures and performance management systems are thorough.” The judging panel recognises the skill with which Al Fozan Holding has grown through diverse acquisition in the past 60 years and is pleased to present the company with the 2021 award, Best Diversified Holdings Governance GCC.

APPLIED SCIENCE PRIVATE UNIVERSITY: MOST INNOVATIVE COMMUNITY IMPACT RESEARCH UNIVERSITY MIDDLE EAST 2021

Amman’s Applied Science Private University (ASU) was established in 1991 at the behest of Jordanian expatriates. Limited availability in public systems had forced expats to send school-age children abroad to study — with high costs for the parents and culture shock for the students. Now the university’s curricula and research facilities attract academics from the world over, with nine faculties, 33 bachelor and 8 masters degrees on offer. Thousands of students are enrolled at ASU, with hundreds of faculty members to help them to realise their academic ambitions. The university

has always prioritised scientific research, which has given it a competitive edge in recruitment. In a recent independent study into research volume, three ASU professors ranked in the world’s top two percent. ASU established the ICE innovation and entrepreneurship centre, a creative space where students and alumni can turn concepts into opportunities. The centre also serves as an incubator, with technical manufacturing capability and hands-on experience provided through partnerships with local and international businesses. The surrounding community benefits

VERDANT CAPITAL: BEST FINTECH CAPITAL RAISING TEAM AFRICA 2021

from the alignment of study programmes with local needs. ASU nursing students gain practical experience and provide vital services at the university’s partner hospital. Engineering students collaborate on climate-change solutions at ASU’s Renewable Energy Centre, which features a commercial-scale solar power system and weather station. The CFI.co judging panel presents Applied Science Private University, a repeat programme winner, with the 2021 award for Most Innovative Community Impact Research University (Middle East).

Founded in 2013, Verdant Capital is a leading corporate finance advisor and fintech specialist in Africa. Using its extensive investment experience and contacts, it is playing an increasingly important role in the pan-African fintech space. Its track record is garnering international attention and has caught the eyes of the CFI.co judging panel. In 2020, it closed three fintech deals with a total value of $40m. These three involved a subscription car company in South

Africa, an innovative lease--financing company in East Africa, and a fintech SME-lender to SMEs in South Africa. It is expecting an even stronger 2021 with perhaps double the number of deals. As it continues to build its pipeline, Verdant Capital is also expanding its global reach. It currently has five offices across the continent. The team also has strong investment banking experience and contacts in North America, Europe, and the Middle East. Verdant Capital is

MAKING SCIENCE GROUP: BEST DIGITAL GROWTH STRATEGY SPAIN 2021

the partner firm for its region for leading global M&A partnership, IMAP. The CFI.co judges are also impressed with the breadth of its services. Verdant goes beyond private debt and equity raising. It also has extensive experience in M&A and debt restructuring advisory services. This includes debt renegotiations, distressed refinancing and distressed M&A. CFI.co judges are pleased to present Verdant Capital the 2021 award Best FinTech Capital Raising Team (Africa).

The term “digital native” describes a generation instinctively comfortable with technology. Many businesses, however, are still run by “digital immigrants” for whom the tech world can be a confusing place. That’s where the Madrid-based Making Science Group comes in. It’s a young company in every sense, having been founded only five years ago as a technology and digital marketing consultancy specialising in e-commerce and digital transformation. It is driven by dynamic digital natives with a wide knowledge of big data, user experience software development

and data-driven creativity. Staff members are encouraged to “learn something new every day” as they strive to offer clients tailor-made brand and advertising strategies. The company prides itself on its expertise in web analytics and user behaviour. It offers a complete digital package, from website design to lead generation. At its core the company has a commitment to innovation, and is a staunch supporter of Environmental, Social and Governance (ESG) aims, having pledged to a zero carbon future. It devotes time and resource to staff development, and has

created its own charitable foundation, funded by profits. When rare snow storms disrupted Spain in January 2021, it organised the distribution of coats and blankets to stricken citizens. As part of its international expansion, Making Science acquired Nara Media in 2021, a London-based digital marketing agency specialising in mobile app marketing and measurement. It also operates in Mexico, Portugal, Italy and France. The judging panel is pleased to present Making Science Group with the 2021 award for Best Digital Growth Strategy Spain.

NATIONAL BANK OF POLAND: BEST CENTRAL BANK GOVERNANCE EUROPE 2021

The panel of jurors and editors of CFI. co (Capital Finance International), a prestigious international journal reporting on business, economics and finance, presented the Best Central Bank Governance Europe 2021 award to NBP under the leadership of Prof. Adam Glapiński.

The global pandemic has caused unprecedented challenges in Poland and Central Europe — but Narodowy Bank Polski (NBP) was well prepared. Under the model leadership of Professor Adam Glapiński – President of Narodowy Bank Polski – NBP reacted swiftly, strongly and with conviction to the upcoming shock.

It was the President of NBP that first signalled the need to lower interest rates, promptly slashing the main policy rate to 0.1 percent. NBP also launched the largest asset purchase programme among the emerging market economies, which was a huge step for combating the economic consequences of the pandemic. NBP purchases government securities and government-guaranteed debt

securities on the secondary market and offers bill discount credit to support lending to the private sector.

NBP is supported by a team of experts who safeguard the value of the zloty, the Polish currency. A modern arsenal of tools is in place to monitor data and identify risks. The proactive decisions taken by the NBP Management Board have helped Poland to achieve the lowest unemployment rate in the European Union, one of the lowest economic contraction rates in the European Union, and a record high in capital accounts. NBP acts with full independence. With market confidence, it strives to advance the economic wellbeing of the country and Poles and supports government policy. In 2020, NBP generated a profit of $2.5bn — 95 percent of which goes to fund the state budget. The bank also deserves credit for storing significant reserves of gold, which is purchased with a great feel for the market. NBP has the strength and readiness to withstand market pressures, and the flexibility to respond

to dynamically changing market conditions. The Polish central bank is able to respond swiftly since it is prepared for different scenarios, having at its disposal a broad and modern arsenal of tools to support Poles.

In a nutshell, NBP under the leadership of Professor A. Glapiński responded to the pandemic in a swift manner securing the Polish economy from the worst scenario of deep recession and high unemployment. Narodowy Bank Polski, and thereby Poland, is at the forefront of the fight with the economic consequences of the pandemic. Positive opinions on the bank’s communication, actions as well as its governance by Professor Glapi€ski have been expressed by the world’s leading financial institutions such as the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development, and last but not least, the President of the Republic of Poland Andrzej Duda, who said that Prof. Glapiński should continue his mission as NBP President for the next term of office.

EUROPE 2021

Stifel Europe seeks out fast-growing UK and EU companies and connects them to funding from around the world. It stands out in the investment and funding fray with an inclusive culture, a flat organisational structure and an experienced team. The firm has headquarters in London and Frankfurt, with offices in France, Switzerland, Italy and Spain. It offers a range of capital solutions that go beyond equity and debt. A 550-person team develops small and mid-market investment opportunities

in the technology, health, fintech and real estate sectors. Stifel liaises and partners with business leaders, institutional investors and market regulators across Europe, giving clients access to opportunities and advancing the scope of its renowned research capabilities. The team works closely with clients to understand each company’s needs and tailor solutions for their specific needs. Stifel Europe’s combination of industry verticals and sector expertise allows for optimal funding

flexibility. The organisation contributed to a review of the UK's share-listing regime, led by former EU commissioner Lord Jonathan Hill and released in March. The team was proud to see its advisory contributions considered along with those of industry giants such as HSBC and Citibank. Stifel Europe may be modestly sized, but it’s at the top of its game. The CFI. co judging panel presents Stifel Europe with the 2021 European award for Best Mid-Market Investment Banking Team.

South Africa Teetering on the Edge of Political and Economic Precipice

Keep South Africa Safe: the slogan is stamped on President Cyril Ramaphosa’s favourite facemask, and could refer to more than just the pandemic.

South African President Cyril Ramaphosa

The country is embroiled in an epic struggle to save the rule of law from falling prey to the caprices of political factions apparently more interested in lining their pockets.

The struggle has economic and financial implications. After he took office in 2018 with a promise to wipe out corruption and patronage, Ramaphosa sparked a brief renaissance of sorts. Overseas investors returned, business picked up, and consumers regained a modicum of confidence which has since proved remarkably resilient. However, the South African president has also gained the reputation for painting vast and attractive vistas that fail to materialise, or get bogged down in arcane political disputes.

Ramaphosa’s intention to ease regulation, cut red tape and improve the business climate has largely stalled. A cautious man, who prefers consensus over confrontation, the South African president has repeatedly run up against some ruthless adversaries – often not susceptible to reason or the powers of persuasion – within the governing African National Congress (ANC).

The former ANC chief negotiator at the constitutional talks in the 1990s, and reportedly Nelson Mandela’s preferred successor, Cyril Ramaphosa is failing to display the conciliatory skills that earlier helped to shape the nation. With only two years left as ANC president, time is running out. In fact, crunch time seems to have arrived.

CAPTURED STATE

The State Capture Commission investigating allegations of widespread corruption and abuse of power under former president Jacob Zuma is entering its final weeks. The commission has certainly captured the attention of a nation disgusted by reports of the systematic looting of the country. If there is one uniting factor, it must be public anger at thieving politicians and their collaborators. Videos showing shady businessmen and officials counting stacks of banknotes have been broadcast countless times, sparking revulsion each time.

Some 250 people have been ordered to testify before the State Capture Commission. Former president Zuma showed up only once – in 2019 – to deny any wrongdoing and to walk from the proceedings accusing “lawless judges” of abdicating their constitutional post for political expediency. About 40 witnesses, including a former cabinet member, gave sworn statements directly implicating Zuma in unlawful dealings, auctioning off executive authority to, among others, members of the Gupta family, who allegedly became the de facto rulers of South Africa during Zuma’s nine-year tenure.

Ordered to testify and respond to the accusations, Zuma refused – twice. The commission has now asked the Constitutional Court to arrest him for defying the summons in what is widely considered a litmus test of

"Mboweni has stated that he will not raise taxes on high income earners to stem to outflow of professionals and entrepreneurs."

the rule of law. Zuma remains barricaded in his sprawling Nkandla estate where some 250 members of the Military Veterans Association, in full battle dress, prevent the arrest of their patron. Edward Zuma, the former president’s son, said authorities would have to kill him should they come for his father.

POLITICISED JUDGES

Zuma junior explained that his father was unwilling to co-operate with the State Capture Commission because the judges have been “politicised”. The ensuing stalemate has left the government, and the judiciary, alarmed. Deputy Chief Justice Raymond Zondo, who presides over the commission, said that if Jacob Zuma’s contempt of court were left unaddressed, there would be “lawlessness and chaos”. According to Nicole Fritz, of the legal NGO Freedom Under Law, South Africa’s constitutional project is under siege: “If action isn’t taken against Zuma, you cannot ask the average South African to respect the law and adhere to it,” she said.

The nation is following these events in the hope of discovering where the real power lies. Ramaphosa has managed to rally his supporters to reiterate his party’s unwavering support for the commission and its investigation. The party’s top six leaders have appealed to Zuma to rethink his attitude and co-operate with the judges. In late February, during a meeting of the ANC national executive committee called the celebrate the party’s 109th anniversary, Ramaphosa said again that the ANC had been weakened by corruption. “The constitution and the rule of law are sacrosanct components of our democracy,” he said, “and all people in the country must respect these principles.”

The ANC leadership realises that Zuma’s arrest could split the party, causing it to lose power. Brinkmanship is, however, not one of Ramaphosa’s strong suits. His entire career was forged by consensus-building and avoiding conflict. That seems to have run its course. In a sign that the ANC fears an electoral backlash, the party has promised to vet its candidates for local and national polls. Candidates for public office who have even minor blemishes are to be excluded from the running.

That will prove a rather tough job, as there are few people of any prominence in the ANC who are blameless. Even Ramaphosa’s name has popped up in relation to alleged improprieties. Initially praised for his handling of the Corona Pandemic, he landed in hot water after it transpired that numerous PPE contracts had

been allocated to his friends, some of whom apparently became overnight billionaires.

ECONOMY REELING BUT RESILIENT

While the stalemate continues, South Africa’s economy is reeling under the impact of the pandemic. Finance Minister Tito Mboweni faces the near impossible task of reining-in spending while preserving whatever economic impetus is left. The fiscal strain is taking a heavy toll. National debt is expected to equal the country’s GDP by 2026. In the absence of meaningful economic growth, and with declining tax revenues, the deficit will this year rise to 11 percent of GDP.

The Treasury Department’s own forecast had been darker still (-15 percent), with better-thanexpected tax collections providing a windfall which the government now hopes to use for the acquisition of tens of millions of covid-19 vaccines. Minister Mboweni is expected to raise additional revenue by increasing excise duties on the sale of alcohol and tobacco, leaving corporate and income tax schedules unchanged.

Mboweni has stated that he will not raise taxes on high income earners to stem to outflow of professionals and entrepreneurs. The finance minister is also acutely aware that a failure to demonstrate resolve may yet provoke a sovereign debt crisis.

South Africa has, in fact, weathered the pandemic better than expected. Though GDP retracted by about seven percent last year, consumer spending has proved resilient. A timely boom in mining and agriculture has spared the country from the worst. Ultra-low interest rates have helped as well. Employment levels have remained fairly stable, with most of the jobs lost at the beginning of the pandemic reappearing late last year.

The metaphorical ball lies in President Ramaphosa’s court. Should he fail to make his predecessor comply with the constitutional court’s arrest order, South Africa may yet face a meltdown of its political order and its economy. That is unlikely to withstand a breakdown in the rule of law, with the attendant risk of spooking investors and creditors.

The president must win the current game of chicken being played, lest he lose the last vestiges of credibility – and the power to steer his country through the remainder of the pandemic.

Much depends on proving that Zuma is not a law unto himself. i

QNB ALAHLI:

Rising to the Top of Egypt’s Banking World – by Paying Attention to Quality Service

QNB ALAHLI, established in 1978, is the second-largest private bank in Egypt, and one of the country’s leading financial institutions.

The full-service bank is organised around diversified business lines serving corporates, SMEs, individuals, professionals and financial institutions.

QNB ALAHLI has established several subsidiaries in specialised fields, positioning itself at the head of Egypt’s financial and banking sector. The subsidiaries include QNB ALAHLI Leasing (founded in 1997), QNB ALAHLI Life Insurance Company (established 2003), and QNB ALAHLI Factoring Company (2012).

The bank provides services for 1,240,000 clients, served by 6,700 banking professionals and dynamic teams supported by a multinational platform. A network of 231 branches covers all the Egyptian governorates, with 611 ATMs and 54,000 point-of-sale machines.

Customer service operates around the clock, seven days a week. The attention and importance dedicated to corporate social responsibility, along with the bank’s understanding of the interconnected relationships between societal development and organisational success, is evidenced by its participation in charity projects.

QNB ALAHLI has maintained its status as a major player in the Egyptian market, and has achieved remarkable growth in loans and deposits portfolios, as well as market share. It has increased returns and maintains sound asset quality and cost ratios.

On the corporate side, QNB ALAHLI provides dedicated products for corporate banking, financial advisory, project, structured and trade financing, cash management, and foreign exchange. The competitive QNB ALAHLI offering has led to the creation of strong bonds with corporate customers of all sizes, including subsidiaries of multinationals, mid-caps, and SMEs.

When it comes to small- and medium-sized businesses, QNB ALAHLI applies a model supported via dedicated business lines. It offers specialised programmes such as consulting and

financing. It was the first of the largest banks to achieve its Central Bank of Egypt targets. The SME loan portfolio was to be at least 20 percent of total loans; it recorded 23 percent – a year ahead of deadline.

QNB ALAHLI has capitalised on its leading position by developing and industrialising a world-class retail banking services. It adapted a

market segmentation approach to structure its products to meet the requirements of each sector – with a personalised approach and a variety of payment solutions.

QNB ALAHLI is keen to support the world economy by consistently expanding financial services coverage and promoting financial inclusion. i

Chairman & Managing Director: Mohamed El Dib

KPMG Lower Gulf: Shifting Customer Behavior, Economic Headwinds, Intensifying Competition, Regulatory Pressure and Technological Disruption – What Should Banks Focus On?

By Abbas Basrai Partner, Head of Financial Services, KPMG Lower Gulf

It has been a tumultuous last 12 months for banks. Reeling from the aftershock of the pandemic, despite Central Bank actions to support the economy, banks continue to persevere in an environment characterised by low interest rates and deal with issues relating to counterparties’ credit worthiness and provisioning. Organic growth has been minimal, although there has been some progress in the GCC through mergers and acquisitions. The challenge for banks in 2021 will be to effectively extract value from data to help them focus on their most profitable segments.

With pressure on revenue expected to continue, the only way banks are likely to maintain profit margins is by strictly managing costs. Underlying this is the need to bolster back-end functions, which tend to be driven by people and paper, rather than merely focusing on what is visible to the customer. The mandate for a strong IT infrastructure is more relevant than ever, as lockdowns have rendered effective remote-working technology invaluable.

In a precarious market, banks are being forced to consider alternative models utilising cutting-edge technology, including Banking as a Platform (BaaP), which allows third-party FinTech developers to build products and services on behalf of bank customers. There is now a broad range of FinTech applications for loans, payments, investing, wealth management and other services.

Banks can overhaul their operating models by considering a combination of partnerships and alliances, technology incubators, FinTech acquisition, investments and transformation of their internal capabilities. They will need to rethink the customer experience by leveraging a “design thinking” approach to identify the customer journeys that prompt digital offerings from the platform. Banks should increasingly train their employees to guide customers toward platform-based services. The process, risk and control framework should be realigned, and the control environment will likely need to be extended to third parties.

"Technology is not, however, a universal panacea; wider implications around legacy infrastructures and data repositories remain."

Today’s customer is generally seeking a selfservice, seamless, automated and omni-channel experience – with minimal waiting time. To enable this, banks across the Middle East are digitalising complex processes and end-to-end customer journeys across the front, middle and back offices. It remains to be seen whether banks are truly delivering on the promises they make to their customers, but the outlook is promising. The GCC has a strong regulatory foundation for the launch and operations of digital-only banks.

Technology is not, however, a universal panacea; wider implications around legacy infrastructures and data repositories remain. This has led several banks to consider alternative services that are able to support customer demands for consistent execution and provide for consolidated data storage and near real-time reporting – at lower operating costs. Managed services companies can help banks outsource certain functions. Banks can thereby optimise their footprint, business continuity planning (BCP) strategy, and total cost of operations.

It seems unlikely that banks can continue to maintain their competitive edge without

effectively leveraging digital transformation to match their customers' evolving expectations and behavior. They can optimise their customers’ digital seamless journey through outlining a framework that aims to provide a coherent digitalisation journey based on the current tech maturity, positioning of the bank, providing nextbest-action recommendations, and proposed processes elimination.

Additionally, cloud computing has presented consumers with stronger security and privacy tools, and improved measures for detecting, responding to and preventing security breaches, thus easing the burden for IT functions. By migrating to the cloud, financial services firms can leverage solutions that are inherently better suited to manage six key operational risks: cyber security, digital sovereignty, the remote workforce and customers, third party, technology, and facility.

Automation and AI are instrumental not only in driving operational efficiencies but can also play a role in boosting employee satisfaction. The people aspect of technology cannot be disregarded: it can help staff focus on the more fulfilling parts of their job, freeing them from monotonous, tedious tasks that can be done by a machine. Over the coming years, banks are projected to increase their reliance on robotic process automation (RPA) technologies to conduct human resources (HR) functions, like onboarding and talent acquisition. This should be combined with a focus on upskilling and reskilling employees through investment in learning and development initiatives.

Keeping up with technological innovation is only part of the puzzle: robust regulatory compliance and governance is also critical. In several Middle Eastern countries, over the last two years alone, local authorities have issued or revised many regulations to enhance financial stability. New ones pertaining to banks in the UAE, for example, include corporate governance and risk management regulations. The federal government recently published an updated Banking Law, Anti-Money Laundering (AML) Law, and Companies Law. To succeed in an environment characterised by continual change, banks must adopt compliance frameworks that are mature and flexible.

Regional regulators have also issued regulations related to internal controls over financial reporting (ICOFR). Globally, ICOFR was introduced by the Sarbanes–Oxley Act of 2002 (SOX). The board

and senior management of banks are responsible for implementing an adequate internal control framework that identifies, measures, monitors, and controls all risks. Unlike their US and UK counterparts, however, local banking regulators do not generally mandate periodic reviews on the effectiveness of ICOFR systems.

An integral part of robust corporate governance is the statutory audit. The relationship between auditors and audit committees (ACs) plays a critical role in good governance. The discussion of the audit should not be considered as merely an ‘agenda item’ for the AC at quarter and year ends, but as an opportunity for the external auditor to provide independent insight on matters discussed in the AC meeting. We would also encourage more frequent bilateral (regulator and auditor) and trilateral meetings (including the bank)

to create a better understanding of the audit approach taken.

Regulators, standards setters, audit committees and investors—indeed, the full spectrum of stakeholders—expect a culture of transparency and strong governance. They are seeking enhanced clarity and consistency of metrics being reported, faithful, complete disclosures, and greater assurance around the governance and culture framework of an organisation. Banks are witnessing a time replete with dissonances: great technological advancement tempered by the potentially catastrophic implications of the pandemic. Customer retention will be key, and retention strategies can be supported with digital transformation drives. It is imperative that financial institutions deliver on the promises they make to customers, ensure their experience is seamless, and fortify their control environment against the threats that abound. i

Author: Abbas Basrai

Kellogg Insight: Five Ways to Improve Diversity Training, According to Research

By Susie Allen Based on the research of Evelyn R Carter, Ivuoma Ngozi Onyeador, and Neil A Lewis

All too often, these programmes are ineffective and short-lived. But they don’t have to be…

Diversity trainings, whether implemented out of a desire to improve corporate practices or in response to a public relations crisis, have become a mainstay of American organisational life. By one estimate, they are an $8 bn-a-year industry.

Is that money actually creating meaningful change? In recent years, some social scientists have argued that it isn’t. And studies show little conclusive evidence that diversity trainings shift attitudes and behaviors in a lasting way.

But in a new paper, Ivuoma Onyeador, an assistant professor of management and organisations at the Kellogg School, argues that we shouldn’t give up so quickly. She and her coauthors — Evelyn R Carter of Paradigm Strategy Inc and Neil A Lewis Jr of Cornell University — reviewed the existing research on diversity trainings and used that data to make evidence-based recommendations on how to improve them.

“Diversity trainings aren’t going anywhere. I think that they will continue to be part of the toolkit that organisations use to manage their climate,” Onyeador says. She and her coauthors “wanted to offer some guidance about how those trainings can be as effective as possible, so that people who are implementing them have a realistic sense of what they can do”.

Here, Onyeador offers five recommendations for building a better diversity training program.

BE REALISTIC ABOUT WHAT TRAINING CAN CHANGE— AND WHAT IT CAN’T

Too often, organisations roll-out diversity training with aims such as “improve our culture and our company” or “shift our culture” — aspirations so lofty they can’t possibly be addressed through training alone.

Truly changing an organisation’s culture to make it more diverse and inclusive takes years, not hours, and it requires tools beyond training sessions. “There needs to be a multipronged approach to improving diversity and inclusion,” Onyeador says.

Training, she and her co-authors found, is more likely to be successful when it’s paired with other

"Diversity trainings aren’t going anywhere. I think that they will continue to be part of the toolkit that organisations use to manage their climate."

offerings, such as systems that hold workers and leaders accountable for reducing bias, a well-functioning bias-response process, and networking opportunities for employees from underrepresented groups.

And it’s important to understand that there are worthwhile goals that trainings can’t achieve.

For example, “if the goal is to increase diversity at the managerial level, there may need to be a different intervention,” Onyeador says. She points to a 2006 study of 700 organisations that found that trainings failed to increase the ranks of black and Latino managers — and sometimes even caused managerial diversity to decline. A combination of mentorship programs and diversity oversight structures, by contrast, increased managerial diversity by 40 percent.

SET BETTER GOALS, AND GIVE EMPLOYEES THE TOOLS TO REACH THEM

So what is a realistic goal for a diversity training programme?

Onyeador, Carter, and Lewis found that most effective diversity training programmes help participants identify and reduce bias. “That’s what we argue is the proper outcome of a training,” Onyeador says.

It’s important that participants walk away with not just an awareness of bias, but also with specific tools to help them behave differently in the future. “Some people do want to change their behavior, but they don’t know how,” Onyeador says. It’s best, she and her co-authors propose, for facilitators to leave participants with two to three concrete strategies.

However, even the relatively modest aim of helping employees acknowledge and reduce bias may require larger investments of time and effort than many organisations are used to. Unlearning patterns learned over the course of a lifetime is a gradual process. For that reason, Onyeador suggests a series of workshops instead of a oneoff training session.

Looking back on her own experiences as an undergraduate, “there was some diversity content at the beginning of the year, and then we never addressed any of it again”.

“A different approach might have been to have a series of all-campus conversations throughout the year. Obviously, it’s hard to co-ordinate, but it sends a signal that this is really important.”

Follow-up and reinforcement is essential. One study the authors reviewed found that accountability structures, such as affirmativeaction plans, diversity taskforces, and departments devoted to diversity, produced significantly better outcomes than trainings alone. Another study suggested that, without reinforcement, bias can return to its pre-training levels in just 24 hours.

GET COMFORTABLE WITH DISCOMFORT

Often, companies are wary of diversity trainings because they’re afraid of making employees uncomfortable. It’s an understandable instinct: people from both racial majority and minority groups feel anxious when they talk about race and prefer to avoid the topic. Discussions of racism can also bring about defensive reactions among members of racial majority groups.

These kinds of anxieties have led many organisations to embrace trainings centered around the idea of implicit bias — the idea that unconscious attitudes and stereotypes shape our behaviour. “One of the reasons people use the implicit-bias framing is that it makes participants, white participants in particular, less defensive,” Onyeador explains.

“It’s really important that the training not assume that everyone in the audience is a potential perpetrator of prejudice, but acknowledge that some people are targets.”

"Organisations should also understand that how employees felt about a training isn’t always a good indicator of how much they learned."

The approach has merits and downsides. “Some of my work shows that when we frame discrimination in terms of implicit bias, people are less willing to hold discriminators accountable for their behaviour,” Onyeador says. “That’s an unexpected consequence, and not a good one.”

Instead of trying to avoid defensiveness and frustration, it’s important for facilitators to plan for them. That means not ignoring negative reactions, but actually calling attention to them. “Facilitators can help participants investigate, in a compassionate manner, why they’re having that defensive response,” Onyeador says.

Facilitators can also face resistance from minority-group participants who may resent content geared only toward the majority group — so it’s essential to make sure the curriculum speaks to all participants. “It’s really important that the training not assume that everyone in the audience is a potential perpetrator of prejudice, but acknowledge that some people are targets,” Onyeador says.

Taking time to acknowledge what it’s like to be on the receiving end of prejudice — and calling attention to resources for reporting mistreatment — may actually benefit majority group members, she points out: hearing what it’s like to be a victim “can increase empathy, and help with perspective-taking”.

MEASURE EFFICACY, NOT JUST PREFERENCE

“All too often, training is conducted but not evaluated,” Onyeador says. “Not just evaluations of how people felt about the training, but assessing longitudinally what were you hoping that the training would change and do.”

Failure to measure can doom well-intentioned efforts. Without evidence for the value of training, leaders may not be persuaded to continue paying for it. That’s why setting the right goals at the outset is so important: if you know what you wanted employees to do differently, you can figure out whether or not they actually did it.

For example, Onyeador and her coauthors highlight The Ohio State College of Medicine’s efforts to increase the diversity of their incoming class. After a training aimed at helping admissions counsellors identify how bias might be influencing their admittance decisions, the diversity of the next class rose by 26

percent. What’s more, admissions counsellors reported being more alert to bias when reading applications.

Organisations should also understand that how employees felt about a training isn’t always a good indicator of how much they learned. In general, employees prefer voluntary training to mandatory training — but studies show participants in voluntary programmes learn less than employees in mandatory ones.

In other words, participants can learn whether or not they enjoy the process.

COMMIT TO ONGOING WORK

It’s true that there are a lot of bad diversity training programmes out there, Onyeador says.

“I’ve seen some cringeworthy ones,” she says — trainings that seemed poorly planned, led by facilitators who seem unprepared to answer questions, or who were not supported by leadership.

But the existence of so many ineffective programmes doesn’t mean we should give up on the idea of training altogether. In fact, it’s an invitation to commit more deeply to diversity efforts. The best training programmes Onyeador and her co-authors observed were bolstered by “lots of investment on the front end, and inclusion in a broader diversity strategy”, she says.

As the authors write, “it is not reasonable to expect a transformation to come from training alone. However, a well-designed training programme can be a catalyst that produces ripple effects within an organisation, a community, and beyond.” i

ThisarticlefirstappearedinKelloggInsight.

FEATURED FACULTY

Ivuoma Ngozi Onyeador, assistant professor of Management and Organisations.

ABOUT THE AUTHOR

Susie Allen is a freelance writer based in Chicago.

Middle East Hard-Hit but Striking Back: Dubai

Finds Correct Balance

Last year, Dubai registered a sharp decline in its population. Almost eight of every 100 inhabitants left the country as the pandemic and a drop in oil prices unsettled nerves and the economy.

Key sectors such as real estate, tourism and retail suffered. Property developers are facing trying times, and have tapped their liquidity to stay afloat. Analysts expect no major failures as most Dubai-based real estate companies still enjoy access to funding, and have been proactively managing their cashflow and slashing overheads. But recovery is expected to take time, with only marginal improvements anticipated this year.

Expo 2020, the 35th World Expo now scheduled to go ahead between October 1 this year and March 31, 2022, will offer some much-needed solace to the hammered tourism and hospitality industries. The normalisation of diplomatic ties with Israel and Qatar also bodes well. The biggest boost by far is expected from the United Arab Emirates’ successful vaccination drive, which has already delivered jabs to 56 percent of the population. This has driven the infection rate –the dreaded R-number – down to 0.88.

Real estate professionals are reporting the arrival of the first opportunistic investors drawn by attractive discounts. According to Hussain Sajwani of Damac Properties, the slowdown of the property market started in 2018. “That soft landing became a hard one because of the corona pandemic. Prices of resale units have retreated by about 10 percent on average and are now lower than those of new developments. Now is a great time to buy.”

Though Sajwani does not foresee a further weakening of the market, he does admit that a return to the boom times of the early-2010s is not likely any time soon. “The soft market is here to stay for another year or two with very few new projects being launched,” he said. “However, Dubai will undoubtedly emerge from the pandemic stronger than before. The housing market will eventually tighten at which point new projects get underway and prices resume their rise.”

TENTATIVE RECOVERY

Mo’asher, the country’s official real estate price index, in January recorded some 3,300 sales with a transaction volume of $1.83bn – a jump of 15.5 percent in numbers and 37.7 percent in value over January 2020. The index, a joint effort of Property Finder and the Dubai Land Department, detected an upward trend in the resale market, which now represents 72 percent of all transactions. Mo’asher also detected a promising rebound of the overall property market in the fourth quarter of 2020, providing a silver lining to an otherwise disappointing year.

"While most developed nations tightened restrictions as winter set in, Dubai took a calculated risk by reopening the economy early, betting that its vaccination programme would deliver early results – as it did."

Last year, Dubai’s GDP contracted by 10.8 percent (UAE -6.6 percent). In its most recent country report, S&P Global Ratings predicted that the economy would return to the 2019 levels (in dollar terms) in 2023, with most sectors feeling the pressure of the pandemic fallout. The ratings agency did, however, admit that its outlook may prove pessimistic in light of the UAE’s vaccination campaign. That could provide a significant boost to business and tourism.

While most developed nations tightened restrictions as winter set in, Dubai took a calculated risk by reopening the economy early, betting that its vaccination programme would deliver early results – as it did. Business trackers recorded a fairly robust uptick in activity from December onwards, with non-oil employment levels rising and GDP expected to inch up 1.3 percent in 2021.

Early on, the Dubai government came in for considerable criticism over its decision to ease the lockdown. Cases quadrupled to almost 4,000 a day by the end of January. Daily infections have since dropped to about 3,000, with the country managing to sustain a fatality rate of 0.3 percent. Dubai also sustains the world’s highest daily testing rate at 1.5 percent of the population.

According to Amer Sharif of the Covid-19 Command and Control Centre, the balance between the safety and wellbeing of the population and economic sustainability has been right for a city state and global logistics hub. Dubai relies on cross-border traffic for more than half of its economy. Authorities have been cautious with decreeing travel bans and have only restricted direct passenger flights from the UK and South Africa due to novel virus strains.

REFORMS

Dubai quickly positioned itself as the prime hub for vaccine distribution in the Middle East and beyond. The UAE has unveiled plans to locally

manufacture China’s Sinopharm vaccine later this year, while also trying to secure a head start as the world’s first “vaccination tourism” destination, catering to those unwilling to wait for a jab and able to flash plastic.

National flag carrier Emirates also found a novel way to raise cash by giving its passengers the option to pay extra to block adjacent seats on its flights. Though first introduced by Air New Zealand, the Dubai-based carrier has upped the ante by allowing economy class travellers to buy up to three adjoining seats for prices ranging from $55 to $165.

In another surprise move, the UAE has launched a programme to offer Emirati citizenship to select foreign professionals. Ranked as one of the best in the world for mobility, UAE passports will be offered to investors, scientists, doctors, artists, intellectuals, and others with special talents whose bright minds contribute to the development and prosperity of the country.

UAE royals and officials may nominate deserving candidates, with the cabinet having the final say. Almost nine of every 10 UAE inhabitants are foreign nationals. The initiative is unique in the wider Gulf Region, where paths to citizenship are few and narrow.

The initiative follows a string of progressive reforms that include full ownership for foreigners of businesses outside free zones, legalisation of cohabitation and the sale of alcohol without a licence. According to a government spokesperson, the easing of restrictions seeks to encourage expatriates to invest money – and their future – in the country.

This would end the prevailing attitude amongst foreign nationals to make as much money as possible, and then leave for home. In time, the reforms are expected to add billions to the local economy, and forge a more inclusive society. i

"Dubai quickly positioned itself as the prime hub for vaccine distribution in the Middle East and beyond."

Something remarkable happens when just the right elements come together - ideas with technology, data with inspiration, investors with solutions. That’s what we do every day.

Let’s invest in greater possibilities together.

invesco.com/together

Investment House: Team Efforts Bring Qatari Company to the Fore, with Rewards, Awards, and Exciting Plans for the Future

atar-based Investment House recently celebrated its 20th anniversary – with a flurry of awards.

The criteria for recognition included financial stability, profitability, continuous growth, assets quality, compliance with regulations and Shariah rules – in addition to a significant increase in customer base.

Investment house was acquired in late 2018 by a group of Qatari businessmen with a shared vision. The injection of capital and fresh blood went hand-in-hand with the introduction of modern business strategies, allied to opportunities in the Qatari wealth management market.

It also helped Investment House to overcome market competition. The company provides its

clients with investment opportunities that seek to maximise value and minimise risk.

Investment House chairman and managing director, Mohammed Bin Ahmed Al Suwaidi, said the awards came as the company was contributing to the economic renaissance of the Qatari economy. These efforts were supported by the country’s emir, His Highness Sheikh Tamim bin Hamad al-Thani.

“We will continue to apply the tactics and strategies which have proved a success since the acquisition of the company in late 2018,” he said.

Yousef Abdullah Al Subeai, CEO, said Investment House demonstrated an efficient team effort, and the value of the company’s investment approach in the fields of asset management and investment banking. “The awards make us proud,” he said. “We’re grateful to our customers, and appreciate their trust in us.” He was happy with the validation of the company's investment solutions “that have succeeded in meeting the individual requirements for lots of customers”.

Investment House is a provider of comprehensive services related to investment and wealth management, including IPO, M&A, and private equity services, as well as real estate investments and financial advisory. Also in the frame are asset management services such as founding and managing funds and investment portfolios, and trading in international markets.

managers. They recommend suitable investment products that meet clients’ needs in terms of targeted return, investment period – while considering individual risk tolerance.

The solutions and services provided by Investment House are designed to guide customers towards profitability over the long term. The team has extensive experience in the investment field, as shown by a successful track record. The team distinguished itself with a range of products and investment solutions offered to the Qatari market since its acquisition in 2018. These have attracted individual and institutional clients and increased AUM by more than 600 percent in the past two years.

Investment house has developed a range of solutions related to logistics services on maritime transport, where it has acquired 10 vessels. The company has also made strategic alliances to provide investment opportunities in the European real estate sector, particularly in France and Germany.

The awards – including two from the CFI.co judging panel – put extra responsibility on the company “to enhance, develop and innovate the business”.

Investment House provides financial planning for individual and corporate clients through its qualified team of advisors and financial planning

In addition, Investment House is braced for the future; it has promising local and international investment solutions planned for the year ahead. i

Suwaidi pointed out that public recognition was an indicator that the company was on-track to meet its goal of serving its customers, the nation, and society.

Chairman & Managing Director : Mohammed Bin Ahmed Al Suwaidi

Kellogg Insight: Five Ways Established Companies Can Overcome Internal Hurdles to Innovation

By Susan Margolin Based on insights from Jeffrey Eschbach

Narrow the scope of your brainstorming sessions. And find the right champion for your project.

Rapid innovation can be tougher to achieve at established companies than at start-ups. After all, when the drive to iterate, fail, and keep honing new products and services has to coexist with long-standing operations, there is bound to be some friction.

But intrapreneur teams are critical to keeping up with the ever-increasing pace of disruption — particularly in an environment made even more unstable by the global pandemic.

“In the past, if you got the lead and you controlled the market, you could do so for a long time. Now, we’re seeing that disruption-cycle shorten,” says Jeffrey Eschbach, an adjunct professor of Innovation and Entrepreneurship at Kellogg.

So, in an effort to ride that trend and continue innovating, established companies are often tempted to think and act like start-ups. But, according to Eschbach, this strategy can lead to unexpected issues in the corporate environment. In order to get the most out of their innovation efforts, they will need to adapt their approach.

Eschbach, a seasoned intrapreneur and entrepreneur, outlines five ways that intrapreneurs can overcome some of the most common internal hurdles—and take advantage of unique opportunities too.

RESPECT EXISTING CUSTOMER RELATIONSHIPS

Customer research is essential to product development. This means innovation teams need to be able to work closely with customers to gather feedback throughout the design process. However, there are a number of internal stakeholders who need to be considered too. In an established company, customer contact is typically the role of the sales team, and they often have existing customer relationships that must be respected. When drawing customers into the research process, then, there’s a risk of stepping on the sales team’s toes.

“You as an innovation team could send the wrong message to customers,” Eschbach says. “For example, I’ve seen teams solicit feedback on a prototype and leave customers thinking that their suggestions are what the company plans to do, rather than that they were just collecting data.”

"Find a senior leader who’s willing to say, ‘I need this in my road map, or I need this in my product line.’"

Before your customers mistakenly assume that the cool storyboards and prototypes they discussed with the innovation team will soon materialise, it is critical that communication between teams, and with external stakeholders, is frequent and clear. Without this clarity, sales and account-management teams may be put in the awkward position of having to walk-back promises to customers.

Eschbach recommends that companies establish a clear communication system that integrates the sales team into the customer-research process. This can be as simple as alerting the account manager before engaging a particular client or asking them for a “friendly” contact who’s willing to share feedback without building up unrealistic expectations. If a sales team is especially cautious about the appearance of overselling the company, the innovation team can even work with agreed-upon consultants to approach clients and ask questions.

This integration will lead to fewer mix-ups, which may make sales teams more willing to collaborate with their innovation colleagues in the future. Putting sales managers into conversation with customers as part of the research process also increases their investment.

Don’t Fight Other Stakeholders, Include Them

Other internal teams, including engineers and designers, provide opportunities to unlock new improvements. These groups are often left out of customer-research efforts — or are only brought into the process after problems emerge. Including them from the start can avoid later disconnects and motivate the teams.

“Innovation teams and product managers may come back from meeting with a client and say, ‘Hey engineers, trust me, we’ve got to do this with the prototype,’” Eschbach says. “And the engineers think, ‘Did the client really say that? I don’t quite think that’s really true.’”

Including tech teams in customer-facing conversations, or scheduling joint field trips

to observe how customers use products and prototypes in the wild, can be eye-opening for everyone.

“After seeing the problem firsthand, their ability to create something on target, along with their motivation, increases tremendously. They think, ‘yeah, we’re actually solving a real problem. This isn’t just one laundry-list item that the product managers are coming up with. The customer really is telling us that this is a pain point.’”

Getting a glimpse of the end users’ environment and hearing what they actually want to accomplish helps engineering teams gain a much sharper focus on what to design. Team members who join field research often go from doubters to advocates within their own teams, helping to get buy-in on initiatives from their colleagues.

USE THE RESOURCES AT YOUR DISPOSAL

Yes, established companies may face more friction—but they also start the innovation process with some distinct advantages. After all, over time, they have amassed product lines, internal platforms, data sets, and a customer base. Eschbach recommends that innovation teams put these hard-earned resources to use in the innovation process.

“You’re still bringing all the same methodologies, all the same techniques for gathering information,” Eschbach says, “But you have stuff the start-ups don’t have. If you have a great, responsive customer base, go talk to them—with, of course, the blessing of your sales team.

“Find a senior leader who’s willing to say, ‘I need this in my road map, or I need this in my product line.’ You want to get people on board with a high-level mandate to innovate. They’ll give you a little bit of cover.”

One example comes from the airline industry, where an innovation team was tasked with researching whether customers would pay for extra leg room. The team identified the checkin kiosk as a resource where customers provide information on their buying preferences. Adding a screen that inquired about their willingness to upgrade to a roomier seat saved the money of refitting jetliners for a perk customers may be willing to do without, or may not be willing to pay for.

“By doing this very simple, lightweight test, they obtained feedback from the exact point where customers would be making the purchase,” Eschbach says. “A normal start-up would not be able to test something like that because they wouldn’t have the kiosks.”

DON’T BE TEMPTED BY BLUE-SKY THINKING Intrapreneurs often kick off ideation phases with brainstorming sessions where “anything goes” and there are “no wrong answers.” Such sessions hold strong appeal. What better way to welcome input and gain buy-in across various departments?

But open-ended brainstorming sessions tend to create little of value, Eschbach says. Rather than spurring actionable ideas, discussions tend to range from off-the-mark to obscure, leaving participants frustrated.

“You’ve got to have the guard rails in place which actually open things up in a productive way,” Eschbach advises.

The solution, he says, is to focus conversations on specific areas where customers have concerns.

“You might ask the team to aggregate what’s really going wrong and hurting customers in the field,” Eschbach says. “Then you ask them to narrow down on how to help with that issue. It might sound counterintuitive, but the narrower the pain point, the easier it is to expound, talk about, and explore it.”

Eschbach has participated in a wide range of brainstorming sessions in his career. But one session during his time at Motorola stands out for being particularly effective. His innovation team was looking for ways to design communications tools for firefighters when they are on the scene of incidents.

Before the brainstorm started, the team interviewed firefighters to get a better understanding of the conditions they encounter when battling a blaze: they are under stress, they are often wearing gloves, their vision may be impaired by smoke, and they may not know the location of their colleagues.

Then, rather than starting from scratch with an “anything goes” discussion, the innovation team built their brainstorm around those parameters.

“We came up with solutions on the tech side to help them be more context aware,” he says. “We realised we could use temperature sensors to identify which firefighters are nearest the danger, and then prioritise their audio and video feeds back to the commander.”

Having guardrails in place prevented the team from wasting too much time on ideas that would have been unworkable. “We initially thought we could roll out a text option for them, but in a fire scene with smoke, what they really need is

speech automation so that they can hear what’s going on instead of trying to read while they’re fighting a fire,” Eschbach says. “So many innovations emerged because we restricted the scope, not because we left it wide open.”

FIND A CHAMPION IN SENIOR LEADERSHIP

With complex, established organisations facing so many competing priorities, having a senior leader who can provide vision and champion intrapreneurship endeavors will be crucial to sustaining their impact.

“Find a senior leader who’s willing to say, ‘I need this in my road map, or I need this in my product line,’” Eschbach says. “You want to get people on board with a high-level mandate to innovate. They’ll give you a little bit of cover.”

A C-suite champion can help intrapreneurs clear the lane if salespeople resist having innovation members speak with customers. They can also help clarify the importance of company-wide engagement in innovation efforts.

“Engagement is the real win,” Eschbach says. “Getting it depends on having the right person who is really committed to it. It’s not just about making sure a particular project gets support but making sure that you as an innovation team are. When the folks above you get what you’re doing and why, that can go a long way.”

Innovation teams may need to be, well, innovative about finding their C-suite champions. One idea Eschbach recommends is building “pitch days” into regular quarterly meetings. These events help normalise intrapreneurship activity and get high-level buy-in on projects.

“You can now bring the directors, the VPs, and others who may have budget authority into a space to hear the different pitches. When they latch onto one, now you’ve got your cover. You’ve got your champion who says, ‘I saw 20 pitches. I love that one, let’s go and make it happen’.”

“By formalising this process, when the inevitable internal red tape and naysayers emerge, you’ll have a visible mandate to point to. And if push comes to shove, there’s now someone in your corner with the motivation and authority to help keep your efforts moving forward.” i

ThisarticlefirstappearedinKelloggInsight.

FEATURED FACULTY

Jeffrey Eschbach is the Adjunct Professor of Innovation & Entrepreneurship.

ABOUT THE WRITER

Susan Margolin is a freelance writer based in Boston.

>

ICBC Middle East: Resilience in Times of Crisis

Founded in 1984, ICBC has grown into the largest commercial bank with an extensive global network through 426 institutions covering 49 overseas countries and regions, as well as over 18,000 omnipresent outlets inside China. Since the start of ICBC’s journey to serve the MENA region in 2008, the Institution strives to be a grand bridge connecting the Middle East, North Africa and China. As a long-term strategic partner, the Institution works extensively with leading corporates and governments of the MENA region to support development in key areas such as infrastructure, power and water, oil and gas.

At the moment, ICBC maintains 5 branches in the GCC region, namely ICBC Dubai (DIFC) Branch, Doha (QFC) Branch, Abu Dhabi Branch, Kuwait Branch and Riyadh Branch, which are collectively known as ICBC Middle East Institution.

The COVID-19 pandemic has a farreaching influence over the world by infecting millions and dragging economic activity to a near-standstill. Resilience is of greater importance ever to corporations today under the shadow of the pandemic. ICBC Middle East Institution took coordinated efforts and actions to support the real economy, to provide continuous financial services, and to uphold the spirit of persistence and endurance as a responsible global bank in the fight of COVID-19.

ICBC Middle East Institution consistently supports local pandemic prevention policies and contributes to local COVID-19 containment work. The Institution successively held several sessions of COVID-19 Prevention webinars

to provide knowledge and experience to local institutions and corporates by inviting Chinese frontline experts as speakers. More than 200 representatives attended the webinars. To support the local frontliners with their ongoing efforts, the Institution donated varieties of medical equipments to charities and Red Crescent societies.

In support of the real economy, the Institution collaborates with sovereign institutions and leading corporates to align with local longterm strategic goals, to name infrastructure construction, economic diversification and green development as a few. The Institution has always been a keen contributor for major local projects and prioritises its support to the development of sustainable energy and green economy.

To help its clients to go through this difficult period of pandemic, the Institution is committed to continuously support corporates with various financial services. On top of that, the Institution provides fee waivers of certain services and a well-equipped online banking platform with strong IT infrastructure for clients to ensure their smooth operation. To promote the local economic and social recovery, the Institution also provides targeted financial services to struggling corporates in infrastructure, trade and other sectors. It actively participants in the Chunrong Action launched by ICBC group to bolster business of its customers and stabilise the global industry chain.

The Institution is an active player in the regional bond market, acting as the lead manager or

Beijing: Head Office

"Facing so many world-shaking, paradigm-shifting economic and social disruptions in a single year, ICBC Middle East has shown great resilience in dealing with crisis and maintaining its steady growth."

bookrunner. The Instituion underwrote several major bond issuances. The ever-growing participation in the financial market exhibits its commitment to the region and continuous strengthening of its relationship within the GCC region. Furthermore, ICBC Middle East assists many local institutions to better understand the opportunities in the Chinese Financial Markets. Since 2019, the Institution organised a series of forums on “China’s Capital Market Opportunities” in GCC countries to help local institutional investors to seek new investment opportunities in China Bond Market.

ICBC Middle East insists on creating value for its costumers with excellent services and continuous innovation. The Institution formulated a series of online events to help Middle East corporates to expand their business in China. In 2020, the Institution hosted the 3rd China International Import Expo Middle East online roadshow with "non-contact" cloud methods. Over 80 key

organisations from the GCC countries participated in the event. Their innovative and tailored products and services provided a momentum to the development of bilateral trade and business cooperation between China and the GCC. This forms a crucial part of the Insititution’s postpandemic revitalisation plan to seek a win-win growth led by cooperation and innovation.

Emphasised by the Chairman of ICBC Middle East Regional Committee, Zhang Junguo, “we shall remind ourselves that every single step of the bank’s development is attributed to the trust and support from our clients, partners and employees. In this unprecedented time, what we need is to forge ahead together to build a promising new era in joint hands.”

Putting the wellbeing of employees as a priority, the Institution came up with various strategies to safeguard the health and safety of its employees and their families, setting up a special

leading COVID-19 response team on pandemic containment, updating its bank-wide prevention measures in accordance with the latest pandemic situation in the region. The Institution cares for not only the physical health but also mental health of its people under work-from-home arrangement. By organising more than 20 sessions of Virtual Reunion events and online lectures, the Institution aimed to convey positive spirits and promote cross-cultural communication among employees of more than 10 nationalities.

The past year of 2020 was a year like no other. Facing so many world-shaking, paradigm-shifting economic and social disruptions in a single year, ICBC Middle East has shown great resilience in dealing with crisis and maintaining its steady growth. Looking forward, the Institution will continue to support high-quality economic development, serve the real economy, and make new contributions to the sustainable development. i

Bernard Haykel: Biden’s US-Saudi Recalibration

S President Joe Biden’s administration has refused to impose sanctions directly on Saudi Arabia’s Crown Prince Mohammed bin Salman, despite the recently released CIA assessment that he “approved an operation […] to capture or kill” Saudi journalist Jamal Khashoggi in Istanbul in 2018. By not punishing MBS, as the Kingdom’s de facto ruler is widely known, Biden

has disappointed many. But he correctly put one of America’s most important foreign relationships first.

US Secretary of State Antony Blinken summed up the administration’s stance well, saying that, while America wants to “recalibrate” US-Saudi ties, the bilateral relationship “is bigger than any one person.” Blinken’s statement, which could

apply equally to the murdered Khashoggi as to MBS, underscores an important fact. Biden, like every other US president since Dwight Eisenhower in the 1950s, realises that Saudi Arabia is vital to maintaining American strategic interests in both the Middle East and the rest of the world, and has chosen not to risk rupturing the relationship by antagonising the Kingdom’s next monarch.

"The bilateral relationship 'is bigger than any one person.'"

"Biden’s presence has already had a restraining effect on the Saudi leadership, which has signaled a change in policy on a number of fronts."

Many Democrats are disturbed by the gap between Biden’s rhetoric toward Saudi Arabia during the election campaign, during which he declared that he would “make them in fact the pariah that they are,” and the reality of compromise in managing America’s foreignpolicy interests. Biden’s critics wanted to see MBS punished, if not removed from the Saudi line of royal succession, and regard the decision not to sanction the crown prince as a betrayal of the values-based foreign policy that the president promised to pursue.

But the reason for Biden’s stance is in plain view – and it is not potential US weapons sales to the Kingdom, the rationale that motivated US policy under former President Donald Trump, with his crude transactional outlook. Rather, the US-Saudi relationship is built on many mutual strategic interests that do not depend on who is in power in Riyadh or Washington.

For example, the two countries have a shared interest in the stability of global energy and financial markets, as well as the supremacy of the US dollar as the world’s reserve currency. All Saudi oil is traded in dollars, an arrangement that neither side has an interest in changing.

America and Saudi Arabia also agree on the need to stabilise the Middle East, fight global jihadist groups, contain Iran, and end the war in Yemen and rebuild the country – and for Arab states to normalise relations with Israel. Even controlling the COVID-19 pandemic requires Saudi Arabia’s assistance, given that the annual pilgrimage (hajj) to Mecca, which will likely resume this year, has historically been the mother of all global super-spreader events.

For all these reasons, the bilateral relationship must remain solid, and the Kingdom must remain stable. Targeting MBS for punishment would amount to unprecedented US interference in the Al Saud line of succession and risk upending the country.

Trump dealt with the Saudis in a highly personalised way, mostly through his son-in-law, Jared Kushner, who maintained a close direct connection with MBS. This approach encouraged risky behavior by both sides, such as MBS’s 2017 decision to boycott Qatar or Trump’s readiness

to allow Iran to bomb Saudi oil shipping and installations with impunity through the summer and fall of 2019.

More important, Trump’s tactics also undermined the institutional ties that have long been central to the US-Saudi relationship, such as those between the two countries’ foreign ministries, intelligence services, militaries, finance and energy ministries, and central banks. Biden’s “recalibration” is mostly about re-establishing these institutional connections while reducing the emphasis on high-level personal exchanges.

Biden’s presence has already had a restraining effect on the Saudi leadership, which has signaled a change in policy on a number of fronts. In doing so, it has tacitly admitted the failure of its strategy vis-à-vis both Yemen and Qatar, as well as to excessive repression of dissent at home.

For example, the Saudis have attempted – so far without success – to resolve the conflict with Yemen’s Iran-backed Houthi rebels, and have ended the boycott of Qatar. Domestically, the Saudi authorities have released a few political dissidents and reformers, most notably Loujain al-Hathloul, a courageous female activist.

The United States can build on these positive developments by discreetly encouraging more change – such as an end to the war in Yemen, given the Kingdom’s influence over the conflict’s various parties. Other Saudi actions might include direct talks with Iran and the release of more political prisoners.

In his loud and bombastic manner, Trump often publicly humiliated the Saudi leadership, benefiting neither America nor the Kingdom. Biden’s softer approach, based on mutual interests, will prove more salutary and enduring, and may help a young soon-to-be monarch find his footing. i

ABOUT THE AUTHORS

Bernard Haykel, Professor of Near Eastern Studies and Director of the Institute for the Transregional Study of the Contemporary Middle East, North Africa, and Central Asia at Princeton University, is co-editor (with Thomas Hegghammer and Stéphane Lacroix) of Saudi Arabia in Transition.

> Linklease:

Bridging the Funding Gap with Innovation – and a Good Eye for Unnoticed Opportunities

The estimated financing gap in the Middle East for equipment finance is over $40bn. For Linklease, the answer is leasing.

Leasing ensures clients can access the equipment they need to develop their businesses, while keeping cash and credit facilities free for other purposes.

Linklease was established in 2015 to provide SMEs across the Middle East with an alternative to traditional sources of finance. The firm has established a sustainable market that has helped it to grow – and has benefitted all involved.

This company is led by CEO Steve ThomasWilliams, who has 30 years of international experience with major financial institutions. He has taken Linklease to the forefront of the leasing sector.

Prior to founding Linklease, he was the group CEO of Gulf Finance, a leading SME financing organisation. His success in repositioning the business to deliver strong growth results and rapid GCC expansion was recognised with industry awards.

Before joining Gulf Finance, between 2004 and 2008, Steve Thomas-Williams was based in Dubai with Lloyds Bank. As chief operating officer, he was also a regional board member and head of commercial and retail banking. During these four years, he grew the business from a single branch to a highly profitable, multibranch operation across the Middle East.

Linklease has operations in Saudi Arabia, Mauritius, Africa and India. Leading the development of its international businesses is Managing Director Czes Brodalka. Czes is an experienced professional with 20 years’ experience in financial services and business development.

After Czes completed his studies in Johannesburg, he joined Avis Fleet Services (GE Fleet Services), a joint-venture company with Wesbank Corporate specialising in the financing of large government and corporate fleets. He held various senior management positions during his 10-year tenure. Czes then joined HSBC Middle East, where he specialised in corporate equipment finance as a senior manager, developing and implementing operating and finance lease programmes.

CEO: Steve Thomas-Williams

He later joined Gulf Finance Corporation as Head of Commercial Finance with a clear focus on revenue growth and client acquisition via the introduction and development of new business streams and finance structures.

Babar Malik is the UAE Portfolio Director, brought in to oversee the business in its core market and to develop new channels for the business to engage with its clients. He brings more than two decades of leasing expertise

to the company. Having served with ORIX Corporation Japan’s ventures in Pakistan, Sultanate of Oman and the UAE in positions of increasing responsibility, Babar has developed strong ties with local corporates and a network of key relationships. His focus throughout his career has been to grow the balance sheet with a clear focus on sales, marketing and business development.

Helen Molyneux is the Head of Operations, running the back-office from Linklease’s newly expanded location in Dubai Silicon Oasis, recently announced by Dubai as one of five key areas for development by the government as part of its 2040 plan.

LEASING AS AN INTERMEDIARY

Linklease has highly skilled asset managers that inspect the equipment quarterly, using RFID, GPS and GPRS technology to track and trace equipment.

But as the company name suggests, Linklease derives its ultimate value from the role it plays in linking those wishing to use equipment (the lessee) with those that want to gain the benefits of owning the equipment (the lessor). It crafts those leases together with great skill to ensure that equipment is monitored throughout its life-cycle,

that the client has a good risk profile, and that the structure of the leases is attractive to investors.

BOND PROGRAMME

Linklease is funded by a $500m bond programme issued out of the UK and listed via the Frankfurt Bond Exchange.

Creating an investment vehicle that is an attractive fixed-income product, secured by tangible assets in the Middle East, is a real first. It is true foreign direct investment into the Middle East from global investors moving away from equities to products with a more predictable return.

The bond programme is overseen by Hesham Dahman, who before joining Linklease was with MINT Partners (a division of BGC), as part of the capital markets team, working on debt and equity raises. Prior to this he was at State Street Global Advisors for seven years. For four of those years, he was head of client service for the $30bn AuM EMEA cash business – covering institutional clients across registered money market funds and short-duration fixed income strategies.

Distribution is Glenn Scott-Ellis’s speciality; he has 10 years’ experience raising capital globally through the distribution of listed bonds. He also

has experience raising for a variety of projects including overseas property developers, mining, oil and gas, and energy.

THE FUTURE

Linklease is working with UK Export Finance & other European Export Credit Agencies to set-up leasing programmes in Africa. This is to support the export of UK manufactured equipment into the continent, which will then be made available on leasing schemes. That is an option that was previously not available, and was impacting sales.

This makes the equipment affordable and accessible to the end client, it creates jobs and stimulates the UK economy in a post-Brexit environment and blazes yet another trail for Linklease as a market leader.

Partnering with distributors of well-known brands helps manage the obvious country risks and gives Linklease strong assets with good residual value and a great source of repeat business.

Linklease has a strong future in building leasing solutions in developing markets, bringing professional standards, asset quality and credit control together to help bridge the funding gap for SMEs. i

Dubai: Downtowon

> TANQIA: Blueprint for Sustainable Treatment is Blazing Trails in Water-Strapped Region

TANQIA – the first privately held wastewater collection and treatment Utility in the UAE, and across the wider Middle East Region – is a company that doesn’t lack vision.

Executive chairman of the board Ibrahim Elwan says the firm is enhancing its already state-of-theart Wastewater Collection and Treatment System (WWCTS) in Fujairah by driving down costs, promoting sustainability and accommodating future demand.

Across the Gulf Region, water supply depends on desalinated seawater and underground aquifers. Groundwater sources are shrinking, and increasing in salinity due to over-pumping and sea water ingress. The UAE’s water supply is predominately reliant on desalination and recharging underground sources using surplus desalinated water.

The UAE government has called for compliant recycled wastewater to be maximised as a substitute for desalination and underground extraction. This reduces investments in desalination and replenishes dwindling resources.

Enter TANQIA, a regulated utility developed by infrastructure development company Elwan Group. It has the exclusive mandate to design, finance, construct, own, operate, maintain and expand the WWCTS to meet forecast demand for the duration of the concession period.

Financing of the Greenfield WWCTS was made possible by the Royal Bank of Scotland, guaranteed by Hermes, the Guarantee Institution of the Government of Germany, and a loan from Abu Dhabi Fund for Development (ADFD). The Royal Bank of Scotland loan was paid off in 2017.

Greenfield was the first central wastewater system that the government of Fujairah made possible. It started in 2005 and was operational by early 2009.

The facility spans 16 hectares south of Qidfaa and is the Middle East’s first privately held wastewater collection and treatment utility. It produces high quality treated effluent thanks to its technologydriven approach to wastewater management. TANQIA has earned renown for protecting the Emirate’s environment and is globally recognised for its efficiency.

The forecast demand for wastewater services in the Concession Area forms the basis for

investment strategy to cope with unexpected population growth rate of some eight percent. Water consumption increased in tandem, at an average annual rate of nine percent.

Clean water at the lowest costs is the goal. Tariffs can then gradually increase to help cover the cost of operation and maintenance. “The utility is actually an environmental firm whose emphasis is to extract valuable resources for ‘economic recycling’ while achieving the smallest feasible environmental footprint,” says Elwan.

TANQIA’s strategy has been to avoid assuming additional debt. New investment in increasing installed treatment capacity of the WWTP was deferred, and TANQIA put in place a replacement programme for the existing plant to ensure that it could cope increased influent. The utility could then focus on boosting services in the concession area to raise revenue generation.

The targets were achieved, and the WWCN has grown to cover 526 square km. Service coverage ratio had grown by 2020 to 87 percent. The remaining 13 percent will be used to create the new commercial city centre. Wastewater generated by this segment of the population continues to be evacuated by Fujairah municipality and delivered to the WWTP for treatment.

The support of the Government of Fujairah, the Municipality of Fujairah and the Government of Abu Dhabi were crucial to the extension, says Elwan.

As part of Expansion I project, four treatment trains will be added to the Installed Treatment Capacity of WWTP. The firefighting and fire alarm system of existing WWTP and Expansion I of the plant will be upgraded to comply with new civil defence guidelines. Expansion I will also entail civil works and interior fitting of the administration building, the installation of new pipeline and treatment for irrigation in compliance with WHO standard.

The contract for civil works was awarded to UAE firm Skyline Contracting Company, while the contract for electro-mechanical works related to the design, supply and erection was awarded to German company Bioworks.

ITC will be technically audited and its Bill of Quantities (BOQ) prepared by Emscher, one of the largest water utilities in Germany. The contract to Emscher has been awarded and the pricing of the rehabilitation works should be

available before financial close. In its entirety, Expansion I will increase ITC of WWTP from the 16,000 m3/day in place today to 46,000m3/day when completed.

Under the Concession Agreement, TANQIA’s Greenfield WWTS comprised a wastewater treatment plant processing 16,000 m3/day and composed of two trains (8,000 m3/day each), 179 km of wastewater collection network (WWCN), and 30 pumping stations. Combined, this system was designed to provide services to 4,725 properties.

However, since 2008 (when Phase II of the Greenfield system was completed), TANQIA continued to expand its WWCN by 11 percent. The number of properties connected has increased from 4,725 to 8,252. This represents 19,530 accounts connected to the WWCN, while the population served by TANQIA’s wastewater services increased from around 37,187 up to 116,000.

Peak wastewater generation reached 27,000 m3/day despite the fact that Installed treatment capacity has remained since 2009 at 16,000 m3/day – and the deficit in installed treatment capacity will persist until Expansion I is completed.

Analysis of the data on water consumption within the concession area shows that the peak volume of wastewater generation increased at an average annual rate of 9.7 percent for 2002–2020, and in December 2020 stood at about 27,000 m3/ day.

“This unprecedented growth in water consumption and generation of wastewater requires urgent new investment to increase the installed treatment capacity of the WWTP,” says Elwan. This is coupled with systematic and gradual adjustment in tariffs to encourage conservation and the introduction of water-saving devices to reduce consumption and offset the increase in rates.”

TANQIA-SIYANA – a company fully-owned by the developer, Elwan Group – operates the WWCTS, and has managed to successfully maintain the increase in inflow to 27,000m3/day through its intensive maintenance and replacement programme.

An internal and external network connection will be created to provide wastewater services to Stages I and II of Sheikh Mohamed bin Zaid City (MBZ City), adding another 46.5 km to TANQIA’s 440 km network. The construction of the pipeline and MBZ pump station were completed in 2018.

TANQIA has made progress with the Federal Electricity and Water Authority (FEWA) on developing its effluent distribution network to provide 1.3 billion gallons of high-quality, treated effluent once completed. “TANQIA is making a significant environmental contribution,

generating high-quality effluent for substitution of desalinated and underground water in nonpotable usage,” says Elwan. The plant produces tertiary treated effluent suitable for restricted irrigation and industrial use.

FEWA’s Effluent Balance Tank will also include a distribution network to deliver water to MBZ City and the farms in the northern area of the emirate. TANQIA insisted on having a polishing plant using state-of-the-art technologies to make the effluent suitable for unrestricted irrigation. This decision was made following the recommendations and standards of the WHO, and supportive data on the experience of California.

TANQIA is exploring energy-efficient and green energy projects that boost sustainability and provide energy- and cost-saving opportunities. It is undertaking a 6.6 MWp solar energy project. Stage 1, a rooftop solar panel system, is expected to cover more than 37 percent of the energy requirements of the WWTP’s buildings.

Stage 2 is a solar power plant that is expected to cover 40 percent of the energy requirements of WWTP in its entirety, and allow for the generation of revenues by exchanging cheap power by trading the remaining 60 percent to other industries.

Both stages are at the design and procurement stage, with contracts awarded for Stage 1 expected by Q2 2021, and work on Stage 2 due to begin by Q4 2021. Once completed, the new additions are expected to deliver gains – not only by reducing operational cost, but from a sustainability standpoint too.

“TANQIA’s Green Energy Project will reduce the carbon footprint by about 6,415 tons of CO2 per year,” Elwan says. “This is equivalent to the average emissions generated by 1,362 passenger vehicles driven for a full year.”

TANQIA’s dedication to the environment will continue with the installation of the PV solar power plant that is expected to reach a generating capacity of 10 MW, as electricity demand escalates in tandem with wastewater generation. “TANQIA will continue its aggressive commitment to ensuring clean environment in all of its operations,” promises Elwan.

The firm shares its expertise and plays a key role in developing technologies for the advancement of wastewater treatment plant design around the world. It is assessing options to integrate welldeveloped processes known as “constructed wetlands” and “reed-technology” into its technology portfolio. This not only reduces energy consumption, it also contributes to providing habitat for wildlife. Products considered as waste before will be fully converted into valuable resources, exemplifying true circular economy.

“In this region, we are facing shortages in fertile land but missing out opportunities making our

beautiful country more self-sustainable, by disposing resources which can make it fertile at the same time,” notes Elwan. TANQIA converts the by-product sludge into valuable soil with the reedbed technology. Current projections show that up to 65,000m2 of land are required until 2037, without any addition of chemicals and without any input of energy, other than sunlight. Valuable soil will be produced during a natural process within a period of about seven to ten years.

It can then be made available for landscaping or farming. Given the minimal degree of automation and mechanical equipment required, this can be implemented at least-cost and with minimum CAPEX-requirement.

In 2018, TANQIA SIYANA FZC was certified with the internationally recognised occupational health and safety management system standard OHSAS 18001:2007, alongside the environmental management system standard ISO 14001:2015 and the quality management system standard ISO 9001:2015 for its services on water and wastewater projects and systems.

TANQIA had identified measures at aiming reducing its environmental and carbon footprint well before ratification of the Paris Agreement. Currently, 13 measures have been identified aiming at the reduction of carbon dioxide emissions, some prior to the agreement. Others were implemented after its ratification and are

already contributing to carbon dioxide emission reductions.

Overall, by the end of 2020, a total of 47,296 tons of CO2 were saved, contributing to the UAE’s effort of meeting the Paris Accord’s targets.

However, measures identified to have the most important impact on TANQIA’s climate protection efforts are part of Expansion I after its completion. TANQIA has extended its reach to explore and pursue projects beyond the UAE’s borders. Pursuing such projects is testament to the award-winning firm’s unerring emphasis on quality, efficiency and sustainability at every step, with protection of the environment a top priority.

In projects across the Middle East and the Mediterranean countries of the EU, TANQIA insists that no treated effluent would be discharged below the tertiary stage, and that it would also be polished. The polishing process targets mainly viruses, bacteria and parasites, but also involves the removal of remaining suspended solids, biological oxygen demand (BOD) and other traces of pollutants that may be left after secondary effluent treatment.

TANQIA’s principled approach provides multiple opportunities for reuse of the polished tertiary treated effluent for economic purposes, although the major impediment in the countries of the Gulf Region to achieving this goal is the pricing of wastewater services.

“This will take time, of course, and the involvement of wastewater utilities in identifying downstream potential economic uses for polished tertiary treated effluent.”

TANQIA has been working on a solution that entails containerised polishing of tertiary treated effluent. The results, said Elwan, are encouraging. “TANQIA is now moving to the final stage of the technology by using solar energy as a source of power for the polishing process,” he says. “TANQIA is looking at introducing containers with solar panels, with a view to reducing the cost of polishing wastewater and the cost of desalination. This will require at least another two years of data collection, examining the quality of the output and the energy use per gallon of water to determine the commercial potential of the process.”

TANQIA is working closely on this solution with Water4All – a water treatment unit supplier from the Netherlands – as it strives to commercialise small-scale units for small suppliers and individual consumers. Such a decentralised, selfsustainable solution clearly presents enormous opportunities for driving down the cost of wastewater treatment. It is just the latest in a long line of innovations that positions TANQIA at the forefront of its sector, and serves to further validate this progressive firm’s award-winning, technology-driven approach to wastewater management. i

Ahmed Attiga: The Enviable CV and Impressive Performance of APICORP Chief

Ahmed Attiga is CEO of a multilateral financial institution established in 1974 by the 10 Arab oil-producing countries.

The goal of the Arab Petroleum Investments Corporation was to finance and support energy and petroleum industries in the region, and in emerging markets.

Attiga was unanimously selected for his first term as chief executive by APICORP’s member states in September 2017. The post comes with responsibility: APICORP is the only Arab financial institution enjoying two AA credit ratings from Fitch and Moody’s in the MENA region.

Attiga has proven more than up to the task. He has a distinguished career spanning more than 25 years in investment management, development finance, private equity, research and teaching.

Before Joining APICORP, he was the regional director at the International Finance Corporation, the private sector arm of the World Bank Group. He was responsible for investment and advisory services activities in the Middle East, overseeing an investment portfolio of over $2.7bn and an advisory programme of some $200m.

Attiga also served as a senior advisor on the Board of Executive Directors of the World Bank Group in Washington, DC.

Prior to his service at the World Bank Group, Attiga managed a private equity fund for the State of Wisconsin in the US. He also advised Saudi Arabia’s Public Investment Fund (PIF) on privatisation and restructuring strategies.

In his early career, Attiga held teaching and research positions at the University of WisconsinMadison and at the Kuwait Institute for Scientific Research (KISR).

Doctor Attiga is currently a board member at the Industrialisation & Energy Services Company (TAQA) in Saudi Arabia, and at the Alkhorayef Petroleum Company in Kuwait. He is also a trustee of the Oxford Institute for Energy Studies at the University of Oxford, and a member of the International Studies Dean’s

Advisory Board at the University of WisconsinMadison.

In 2013, he was appointed by His Majesty King Abdullah II of Jordan to serve on the Royal International Commission to evaluate Jordan’s Privatisation Programme. From 2016-2020, he served as a board member of Emirates Development Bank in the UAE.

Attiga has also served on boards, task forces and committees at national, regional and international level. The Libyan national was selected in 2019

and 2020 to be among the Power 50 CEOs in oil and gas in the MENA region by OilandGas.com.

He has also received Princeton University Leadership award (2003) and KISR’s National Academic Achievement award (1988).

Attiga received three graduate degrees: Ph.D. in Finance; MBA, and M.S in International Economies, all from the University of Wisconsin-Madison. He earned his Bachelor in Economics, Summa Cum laude, from Kuwait University. i

CEO: Dr Ahmed Attiga

> The Arab Petroleum Investments Corporation (APICORP): At the Heart of the Arab Oil-Producing World

The Arab Petroleum

Investments

Corporation (APICORP) is a multilateral development financial institution whose shareholders are the 10 Arab oil exporting countries.

APICORP is energy-focused, with a mandate to support the sustainable development of the industry in member countries.

The institution’s initial goal, to be a trusted financial partner for the Arab energy sector, would seem to be successful; its balance sheet for 2020 grew by 7.5 percent to reach $7.89bn.

But APICORP has more than goals; it also has a mission: to develop the sector through creative, value-adding solutions, provided on a commercial basis to facilitate value maximisation.

Its offering includes equity investment, debt financing, financial advisory and energy research services. APICORP’s 2020-2024 strategy is its roadmap to the future, with an aim to bolster its position via a sustainable and innovation-driven approach.

The strategy has five strategic priorities:

• To thrive as a multilateral development financial institution in the transitioning energy world

• To lead the financing of energy players

• To diversify and deepen its client base

• To shape the energy landscape in the Arab world

• To build agile and efficient external and internal ecosystems.

Designed with an in-built capacity to evolve, the strategy will be constantly reviewed to ensure that the organisation remains in lockstep with market needs, and maximise its potential to be a catalyst for impact and sustainability in the region’s relevant sectors.

APICORP’s lines of business include:

Corporate Banking

An innovative array of funded and unfunded, conventional and Islamic, financing solutions to support the energy industry in the MENA region and beyond. It serves as a catalyst for trade growth across the region with international partners.

Investments

APICORP’s own capital is invested to acquire direct equity stakes along with its strategic partners in greenfield and brownfield projects,

"The robust financial and risk metrics enabled APICORP to retain its Aa2 rating, with a stable outlook from Moody’s."

with strong management teams and solid growth potential in diversified energy sub-sectors across multiple geographies.

Strategy, Energy Economics, and Sustainability

It provides analysis, insights and advisory services on the regional and global energy sectors to internal and external stakeholders, as well as guidance to strategic partners. This positions APICORP as a world-class thought-leader on energy investment, finance and sustainability. It leads APICORP’s corporate strategy design and implementation.

Portfolio Management

This oversees APICORP’s portfolio, cutting across investments and corporate banking with a dynamic, hands-on approach in managing loans and investment portfolios post-disbursement, while driving exit strategies and optimising portfolio performance.

Treasury

&

Capital Markets

APICORP’s liquidity is proactively managed, with a diversified fixed-income portfolio and a robust funding profile in order to ensure the corporation’s growth, resilience, and sustainability.

APICORP's diverse financing and equity portfolio spans sectors and geographies to provide it with flexibility and advantage to maximise value for member countries while serving the broader energy spectrum.

APICORP’s track record illustrates its ability to identify and access opportunities. With a strategic network of partners and relationships, APICORP has the insight and risk mitigation expertise to safely and successfully pursue energy development in the MENA region.

While APICORP's member countries and the wider MENA region remain the primary focus, the corporation is expanding geographically to support the development of regional energy. It is growing operations into key markets in Europe,

Asia and North America and creating value for its regional partners by supporting their own international expansion plans. Investing in global firms offers strong potential for technological transfer back to the region.

APICORP has shareholders in Saudi Arabia, Kuwait, UAE, Libya, Iraq, Qatar, Algeria, Bahrain, Egypt and Syria.

FINANCIAL RESULTS

The corporation posted a three percent year-onyear (y-o-y) rise in net income, despite the fallout from the pandemic – from $112m in 2019 to $115m in 2020.

The key drivers include six percent y-o-y growth in APICORP’s corporate banking portfolio, to reach $3.9bn, as well as 13 percent y-o-y growth in the treasury and capital markets portfolio: $46m in capital gains, a 488 percent increase.

The balance sheet increased from $7.34bn to $7.89bn in 2020, a 7.5 percent y-o-y uptick, higher than the five percent CAGR recorded over the previous five years. Key financial and risk metrics also continued steady improvement, and the corporation recorded its highest-ever liquidity ratio of 349 percent, and increased its capital adequacy ratio to 31 percent (+one percent y-o-y), as well as reducing its leverage level from 2.5x in June 2020 to 2.23x in December 2020.

The robust financial and risk metrics enabled APICORP to retain its Aa2 rating, with a stable outlook from Moody’s. The corporation earned its inaugural AA rating, with a stable outlook, from Fitch. APICORP is the only regional financial institution in MENA to hold two AA ratings.

The year also witnessed a landmark: the corporation increased its authorised capital from $2.4bn to $20bn, subscribed capital from $2bn to $10bn, paid-up capital from $1bn to $1.5bn, and callable capital from $1bn to $8.5bn.

BUSINESS LINE HIGHLIGHTS

Corporate Banking

APICORP increased its corporate banking assets by six percent y-o-y in 2020 to reach $3.9bn, booking $1.6bn in drawdowns over the year. Six of the 11 project finance commitments in

2020 were in green energy or within the category of sustainable utility projects, and all were part of the $500m counter-cyclical package the corporation launched in April to help the MENA energy sector mitigate the impact of the pandemic and oil price volatility. The gross NPL ratio, meanwhile, remained low, at just 0.59 percent.

Investments

Although the 2020 crisis affected the revenues of some investee companies, it also opened opportunities for APICORP to pursue quality investments in high-potential, well-run companies and like-minded investors seeking to maximise long-term value-creation and impact. The corporation made its first equity stake in a wind energy company, while progressing on a number of exits from current investments to

optimise the balance sheet as well as capitalise on the positive long-term growth prospects of its equity portfolio.

Treasury & Capital Markets

By following a more proactive approach to managing the assets and liabilities of APICORP, Treasury and Capital Markets was able to optimise the risk-adjusted returns the liquid portfolio (including $ 46m in capital gains), and bolster its strong funding profile.

On the funding front, APICORP increased its medium-term financing by 26 percent y-o-y while decreasing short-term financing by 12 percent as a safeguard against prolonged market volatility. The year saw the corporation raising its profile as a debt issuer in the sovereign, supranational and agency (SSA) space through

the $750m benchmark bond issuance in June, which achieved the lowest-ever yield and spread in the corporation’s history, and attracted highquality SSA investors from across the globe. More than 50 percent of the order book came from central banks and official institutions. The success of the transaction was further cemented with the $250m tap in October that brought the total issuance to $1bn.

Financials for the year ended December 31, 2020:

• Net income increased to $115m

• Balance sheet grew by 7.5 percent to $7.89bn

• Corporate Banking and Treasury & Capital Markets portfolios up six percent and 13 percent, respectively

• Improvement in key financial and risk metrics, including highest-ever liquidity ratio (349 percent) and capital adequacy (31 percent). i

Siraj Power rooftop solar project

Mohammed bin Rashid Solar Park

Dammam independent sewage treatment plant

Kom Ombo Solar Park

APICORP Head Office

Tafila Wind Farm

Latin America

Investors Wary as Brazil’s Bolsonaro Keeps Spending

To reach to the top of the military chain of command it is advisable to follow orders from above without too many questions.

This helps explain why presidents in Latin America prefer to entrust the running of state-owned enterprises to retired generals – they are not likely to overthink their ukases and can be expected to do as they are told.

Brazilian president Jair Bolsonaro recently ousted Petrobras CEO Roberto Castello Branco over his refusal to scrap petrol and diesel price increases. Incensed at Castello Branco’s insubordination, Bolsonaro refused to renew the executive’s contract and announced his replacement: retired general Joaquim Silva e Luna, who is to be transferred from the Itaipu Binacional hydroelectricity generator. Immediately after his appointment, the 71-year-old hinted that he would suspend the policy of setting domestic fuel prices in line with international levels.

The last time Petrobras was forced to keep the price of fuel artificially low, the company bled about $40bn over a four-year period, which saw its debt balloon to $126bn. During the 13-year rule of the Workers’ Party (2003-20016), Brazil’s largest company initially managed to keep its nominal independence, increasing production and gaining worldwide recognition as a pioneer of deep-water oil recovery.

CRAWLING OUT OF A HOLE

After surviving the rather disastrous last four years of Workers’ Party rule, Petrobras managed to extract itself from corruption and political meddling rumours to rebuild its much-tarnished reputation. Under Castello Branco, the company slowly regained the trust of its investors and partners by returning to profitability. In 2019, Petrobras recorded a $10bn profit on $76bn in revenue. Four years earlier, the company lost $8.5bn on a $97bn turnover. Castello Branco also managed to reduce the corporate debt load to $63bn.

Investors were shocked at the CEO’s dismissal, and dumped Petrobras stock, which tumbled just over 20 percent in a single day. Some 73 percent of Petrobras shares are publicly traded, though the Brazilian government holds 50.5 percent of voting rights. Fitch Ratings warned of a possible cashflow crunch should fuel prices be capped.

Analysts point to the significant investments required to tap into Brazil’s lucrative pre-salt basins that produce an exceptionally light crude. Market watchers are also concerned that the proposed sale of Petrobras’ secondary assets such as pipelines and refineries could suffer delays if the company spooks interested buyers with a lack of predictability.

The shake-up at Petrobras has wider implications. Investors and market watchers fear that the hardright president may be offloading his free market credentials – always a bit iffy and more wishful thinking than accomplishments – for political expediency. In January, Bolsonaro let it slip that the country is effectively broke: “There is nothing I can do,” he admitted, before contemplating a new stimulus package.

"A sign of trouble ahead can be gleaned from the steep yield curve of domestic debt, with the 10-year bond currently yielding 7.4 percent while the central bank’s benchmark interest rate stands at two percent."

Last year, the pandemic shaved about five percent off Brazil’s GDP, considerably less than most neighbouring countries. The Bolsonaro administration has spent an estimated eight percent of GDP on support and stimulus packages. Public debt rose to well over 90 percent of the national output – the highest of any major developing economy other than China. However, the International Monetary Fund (IMF) does expect the economy to bounce back with 2021 growth forecast of 3.6 percent. The expected arrival of a minor commodities boom may offer additional solace.

SPEND FEST

The end of monthly cash handouts – $9bn in monthly “corona vouchers” of $110 each reaching about a third of the population – and other stimulus benefits may hit the informal economy hardest, with private demand unlikely to pick up the slack. Seen in this light, the IMF growth prediction seems a bit optimistic.

Bolsonaro must now find a way around the 2016 spending cap imposed by congress, which limits the size of the federal budget to the level of the previous year, corrected for inflation. Investors fear that any attempt at removing this ceiling via a constitutional amendment may well spark a major crisis should investors lose confidence in the government’s ability to meet its, mostly domestic, debt obligations.

Further complicating the picture, next year’s polls may tempt Bolsonaro to throw caution to the wind and spend his way to a second term. The administration’s stalled fiscal reform agenda has investors wary. Meaningful reform, promised by successive governments for the past 30-odd years, has yet to materialise. The administrative reforms promised last year by Finance Minister Paulo Guedes, and slated to shave $57bn off the budget over a decade, have not been implemented.

Looking at Brazil, foreign investors see a complex and unfriendly business environment

that includes high taxation and a considerable infrastructure deficit, resulting in high energy and logistic costs.

Meanwhile Guedes, a disciple of Milton Friedman with impeccable free-market credentials, has been relegated to the political background. He intermittently disappeared from public view since last December, when he clashed with Central Bank president Roberto Campos Neto, who had demanded the government president a credible plan to stabilise public finances. Campos Neto objected to the spending on corona relief. Brazil has spent more than most emerging market economies.

A sign of trouble ahead can be gleaned from the steep yield curve of domestic debt, with the 10year bond currently yielding 7.4 percent while the central bank’s benchmark interest rate stands at two percent. To invalidate the yield curve, the government is issuing short-term paper. Average maturities on domestic federal debt are down to just 3.57 years. Over the second quarter, a volume of debt equal to six percent of GDP must be rolled over, offering the market a chance to display its sentiment.

WHERE TO NEXT?

In line with other emerging markets struggling to keep their economy growing at a clip that promises deliverance from underdevelopment and poverty, the roadblock to riches in Brazil is – as ever – politics. Far from a free market champion, the Bolsonaro Administration is as populist as most of its predecessors, if not more so. The recent Petrobras episode illustrates that he prefers political expediency if given a choice. Investors are rightly concerned that Bolsonaro’s choices may yet end up in tears. Optics deceive: Guedes – the darling of investors – knows what is best, but has apparently been deprived of his autonomy.

The president – a former military man – now calls the shots. i

Employers Need to ‘Catch Up’ With Looming Covid Mental Health Crisis

When it comes to workplace wellbeing, there has been a polarised response to the pandemic. A third of UK employees say support has improved, but others say many organisations are falling short.

Mental ill health costs employers £2.4bn each year, and despite warnings of a looming crisis many have failed to increase support for workers. Of employees canvassed in a recent study by Mental Health First Aid (MHFA), 41 percent said they had less frequent wellbeing check-ins, or none at all, during the pandemic. Slightly more – 43 percent – said their workplace mental health and wellbeing support was unchanged or worse.

MHFA says employers need to increase support, with regular wellbeing checks and activities to stay connected, while ensuring managers have the requisite training and resources.

The research reveals stark differences in the experiences of men and women, and the impact of Covid-19 on their workplace mindset. While 68 percent of women said their workplace confidence had decreased owing to the pandemic, only 31 percent of men felt the same. And 64 percent of women reported an increase in feelings of loneliness or feelings of isolation during this period; the figure was 36 percent for men.

There is a silver lining to the work-from-home model, though. As people juggle work and home life, there have been more insights into colleagues’ lives. Positively, 38 percent of employees say they find easier to bring their “whole self” to work, and be more open with colleagues. That’s double the number of those who found it difficult to do so: 19 percent.

The research coincided with My Whole Self Day in March which was part of the MHFA campaign for workplace culture-change. Backed by business directors and mental health leaders from the Samaritans, Nestle, Bupa UK, UBS and LinkedIn, the Chartered Management Institute and the Federation of Small Businesses, it calls on organisations to empower employees.

The differences in the support people receive for mental health and wellbeing is worrying, says MHFA England CEO Simon Blake. “Covid-19 has

increased the need for employers to support the mental health and wellbeing of their staff,” he said. “The pandemic has laid bare pre-existing inequalities – gender, race and economic – and it has exacerbated them. This needs serious attention as we start to rebuild.

“It is encouraging to see some employers doing brilliant work, but this research reveals disparities in how organisations are approaching mental health and wellbeing support. Workplaces are key to creating a society where everyone’s mental health matters, so some employers must play catch-up.

“It is positive to see many people report they feel they can bring more of their ‘whole self’ to work … Employers must build cultures where people have the trust, flexibility, safety and freedom.”

Blake said regular wellbeing check-ins with colleagues were vital “We’re urging all employers to adopt this simple practice,” he added.

Ann Francke, chief executive of the Chartered Management Institute (CMI), said now was the time. “The pandemic showed that the need for empathetic leadership is on the rise – 72 percent of managers told us that wellbeing would be their top priority for 2021.”

There was an opportunity that should not be missed, she added. “We’re at a crucial point for our country and we want to build back better, so let’s use this once-in-a-generation opportunity to change our workplaces to achieve that.

“Flexible working, improved communication and more consultation are things that build trust and productivity, and we should carry those forward.”

Karl Simons, chief health, safety and security officer at Thames Water, said not only physical or psychological issues affected workers. “It’s the environment in which they are placed,” he said. “At Thames Water, we have created a culture of care in which our people feel empowered to speak up any time they require support, so we can be there at that time of need. i

> Santiago Free Zone Corporation – CZFS: Loosens the Bonds, Creating Growth for the North Region & the Country

Santiago Free Trade Zone Corporation (CZFS in Spanish) is a leading national socio-economic development consortium which prides itself on delivering excellence and innovation.

Founded on April 21, 1974, it is the administrative body of the Corporate Campus, the Victor Espaillat Mera Industrial Park (PIVEM in Spanish) and, for more than four decades, promoter of important projects that generate employment, stimulating the growth of the city of Santiago, the northern region and the country as a whole.

Over the past few years, the Corporate Campus has incorporated support institutions that bolster the comprehensive services offered to the large community of investors that establish themselves in the park. It promotes efficient operational management and growth through talent management, recruitment and selection through CEGESTA; professional training projects supported through Capex; medical attention with high quality standards in MĒDICA; financial support provided by Cooperativa La Aurora; and a Fire Station at the service of both the PIVEM companies and the different communities that surround the park.

Changes promoted through the corporation's different Five-Year Master Plans have designed the profile of an active and involved institution, with strong participation in projects for development and welfare, which are rooted in the park's people.

Sustainability, excellence and integrity are the main values that rule its actions, in line with competitiveness, the promotion of socioeconomic development, profitability, environmental protection, professional training and productivity of the various sectors.

CZFS main operating principles:

• Respect, protection and advocacy of human rights

• Sustainability

• Excellence

• Integrity

• Fostering the generation of high-quality jobs.

PIVEM

Based on almost five decades of experience in industrial development, the Victor Espaillat Mera Industrial Park, where more than 80 Free

"The corporation also granted the companies financial relief to alleviate burdens, preserve jobs, and redirect efforts to remain in operation, helping to continue boosting the national economy."

Trade Zone companies operate, is a competitive facility renowned for its constant innovation. It is orientated towards productivity, competitiveness and the collective well-being of the companies, employees and the surrounding communities.

PIVEM covers nearly two million square meters. The infrastructure features tailor-made designs, led by CZFS's planning and development and engineering departments.

The expansion of the ark continued in 2020 with the construction of three new eco-industrial buildings, which added 240,000 square feet to the production for export area. These buildings are now occupied by the Swedish Match (Tobacco Manufacturing) and Boombah (Textile Manufacturing), with a joint investment and an important economic share.

As part of the park's value offer, it features a high-capacity wastewater treatment plant, an electric power sub-station, rooftop solar panels, as well as state-of-the-art telecommunications infrastructure and fiber optics throughout the entire perimeter, which are part of PIVEM's services.

In response to the COVID-19 crisis and in order to strategically respond to the situation, the CZFS Emergency Committee was created. Measures were adopted and shared to safeguard the health of all the employees of the productive community, as well as to provide support and follow-up for the safe reintegration of work and the sustained restart of the companies.

The corporation also granted the companies financial relief to alleviate burdens, preserve jobs, and redirect efforts to remain in operation,

helping to continue boosting the national economy.

Subsequently, the CZFS COVID-19 Compliance Committee was created to ensure compliance with the protocol established by CZFS, as well as with guidelines and measures established by the Ministry of Health and the WHO.

CAPEX

The Innovation and Professional Development Centre is a specialised training venue for entrepreneurship and professional development through training, knowledge transfer and networking. It is an innovative concept to foster talent, professional skills and competitiveness. Capex designs and develops important entrepreneurship and innovation projects for Santiago, the northern region and the country.

The academy, installed within PIVEM, deployed an innovative educational programme using technology in 2020, connecting diverse audiences in an attractive offer for companies, professionals and the entrepreneurial community.

Capex's virtual value proposition received an admirable scale of engagement from those who were already familiar with the institution and others who joined its various digital classrooms. In 2020 alone, over 14,200 people connected and participated in its training activities.

LA AURORA CO-OPERATIVE

This is the financial and social support wing of PIVEM's workforce. Despite 2020's uncertainties, CoopLaAurora's members confirmed their confidence in the co-operative by increasing their savings and investments.

In addition, the CoopLaAurora mobile app was launched in 2020, with online information on the products available, and assets grew above the average for the financial sector.

CoopLaAurora promotes economic solidarity. It facilitates the acquisition of financial services and products to improve members’ standard of living, as well as education for the management of personal finances.

CEGESTA

CEGESTA is specialised in talent management with experience in industrial sites. It is focused on providing the tools and solutions to facilitate a successful recruitment process.

Before the pandemic, CEGESTA had more than 400 open positions, distributed among 25 companies from PIVEM and from companies located outside the park.

After the reopening, the centre was able to reposition itself, meeting recruitment requirements for the two largest companies in the Park, Swedish Match and Swisher Dominicana, among 13 other companies in the PIVEM and 14 in the local market.

MĒDICA

MĒDICA provides quality preventive health and outpatient care to the PIVEM's labour force and families living in the western Santiago Municipal District, and surrounding areas.

The centre was able to position itself as a real option for the comprehensive management of the health of companies and patients in general, as well as people affected by Covid-19 in 2020.

Regarding Coronavirus, MĒDICA has remained current, performing tests and screening in accordance with appropriate protocols, and providing adequate follow-up to each patient. Currently the services of IgG / IgM Rapid Tests and AG Antigens are offered, with results in no more than three hours; and PCR, with results in 48 to 72 hours.

New specialties, imaging and outpatient services will be added in 2021, such as: Internal Medicine, Cardiology, Diabetology, Nutrition, Orthopaedics, Gastroenterology and Nephrology. In addition, a hemodialysis treatment and CAT scan area will be added to complete the services with state-of-the-art equipment that allows for a proper and high-precision diagnosis.

FREE TRADE ZONE FIREFIGHTERS DIVISION

The board of directors is responsible for ensuring that the emergency unit is kept at the forefront of the field, in order to ensure the physical integrity of the park's infrastructure and the surrounding communities. The in-house fire station makes a significant contribution to mitigating risks to factories, employees and the community, with high-level equipment and qualified personnel who are 100 percent service-orientated.

Projects promoted under each pillar of the corporation's broad Corporate Social Responsibility (CSR) programme enable a large number of people, from the ark's employees to their families and residents of nearby communities, to benefit from opportunities that strengthen their wellbeing and provide Santiago and the Northern Region with increasingly competitive human capital. The CSR plan is built around four main pillars: Education, Environment, Health and Entrepreneurship. i

Dominican Republic: Santo Domingo

> Hemisfério Sul Investimentos (HSI)

No Compromise: Nothing but the Best Will Do for Pioneers of Brazil’s Real Estate Sector

Hemisfério Sul Investimentos (HSI) nails its colours to the mast on its website with the motto: “Good enough is not enough.”

That attitude extends all the way to the top, and its leading management figures accept nothing but 100 percent effort and engagement.

HSI CEO and CIO Maximo Lima has 25 years of experience in real estate private equity, M&A, structured credit, and management.

He studied at the University of Chicago, graduating with a BA in Economics. Lima has been at the helm of HSI since its inception, and is responsible for the company’s strategic planning and real estate investment strategy.

His network of contacts and deep sector experience have created an impressive career path and a proven track record. He has co-ordinated more than 100 transactions, including the creation of a logistics platform, CLB, and its subsequent sale to GLP. At the

time, it was the largest Brazilian real estate transaction ever.

Maximo Lima began his career in hedge funds in 1997, then joined investment bank Wassertein Perella & Co. He participated in the management buyout of the emerging markets division in 1999.

He returned to Brazil in 2000, and was given responsibility for structuring the first securitisation operations for Rio Bravo, at the time a new player in Brazilian finance. In 2003, Lima founded the real estate division of GP Investimentos with two partners – the group that became Prosperitas in 2005, and HSI in 2012.

David Ariaz is CFO and COO at HSI. He brought with him 29 years of experience in corporate management, real estate finance, structuring, and execution.

His education was at UC Berkeley, where – like CEO Lima – he completed a BA in Economics. He also holds an MBA from The Wharton School of the University of Pennsylvania.

Ariaz joined HSI in 2012, and is responsible for corporate planning, with a focus on finance, fund management, and portfolio companies. He participates on boards of directors and coordinates compliance and risk-management for the funds and management company, ultimately signing off on each transaction.

Ariaz manages relationships with leading banks and co-ordinates all financing transactions. In the credit area, he oversees structuring and helps to customise investment opportunities to suit the borrower’s profile.

Prior to joining HSI, he structured and originated real estate finance transactions worth more than $356m, and was responsible for developing the largest logistics platform in Brazil at the time. He contributed to the professionalisation of the Brazilian real estate financing market.

Prior to joining HIS, David Ariaz was a partner and CFO at Bracor Investimentos Imobiliários, and director of structured finance and asset management at Brazilian Capital. i

CEO & CIO: Maximo Lima

CFO & COO: David Ariaz

> Hemisfério Sul Investimentos - Private Equity Trailblazer: Ahead of the Curve and Still Gunning for Gold

Alternative asset fund manager Hemisfério Sul Investimentos began operations in São Paulo some 15 years ago, when real estate private equity began to mature as an institutional asset class in Brazil.

HSI was one of the first asset managers to attract foreign institutional capital to Brazil via private equity funds. The company launched its first real estate private equity fund in 2006, anchored by pension funds, endowments, foundations and sovereign wealth funds from the US, Europe, Asia and the Middle East. Many of these continued to back HSI over subsequent fund vintages.

“Managing our investors’ capital means excelling, thinking outside the box, and building innovative and profitable solutions,” says Director of Finance and Fund Operations Rafael Mazzini.

HSI has evolved from dealing exclusively in real estate private equity to also explore opportunities in private debt, and also manages publicly listed REIT-style funds focused on domestic investors. HSI has raised $5.1bn in capital and distributed $2.6bn in investor returns. “We go the extra mile,” adds Founder and CEO Maximo Lima. “Our goal is to perfect our operations, create value, and exceed the expectations of our investors and partners.”

HSI is driven by a management team with 300 years’ combined experience. The company invests in nearly all real estate asset classes and formats, with a proven ability to innovate and some creative flair.

When the company recognised the preconditions in Brazil for the development of a self-storage business — which had proven a profitable institutional asset class in the US and Europe — it was quick to act. From 2014 through 2016, Brazil was battling an economic crisis; that didn’t deter HSI from launching its storage company and leading the market within a couple of years.

It first sought to understand the business dynamics of the industry in the US and Europe. What generates demand for storage? What are the relevant cultural considerations? HSI anticipated the market trend and launched a wildly successful venture, which it has since exited and sold. “HSI’s real estate team has an eye for the best investment opportunities and the diligence to effectively manage risks. We extract more from our investment positions,” says Director of Investments (Real Estate) Bruno Greve.

The company has an impressive history in Brazil’s logistics and industrial sector. At one point, it accumulated a portfolio with about 40 assets and became the largest owner-operator in the country. The assets were all leased to multinationals, and at the time HSI exited it closed the largest real estate transaction in Brazilian history, selling to Global Logistics Properties (GLP). The transaction gave GLP a foothold in the country; it has continued to grow the portfolio.

“We have a track record of identifying opportunities and of successfully executing

investment theses,” says Leonardo Ferreira, Director of Investments (Special Opportunities). “We use our capital responsibly to generate value.”

HSI manages one of the largest unlisted shopping centre portfolios in Brazil, comprised of 13 malls. Diogo Bustani, Director of Investor Relations, explains how the shopping centre market in Brazil differs from the US or Europe.

Most space in the centres is leased not to stores, but to services, entertainment businesses and restaurants. “We have community colleges and various public services that draw significant traffic, and the crowds spill over into the shops. It's more of a lifestyle experience. And that's in large part what has protected Brazilian malls from the growth of e-commerce,” says Bustani.

HSI took steps to protect visitors and vendors during the Covid crisis. Public health precautions were implemented, and digital sales channels were launched to support vendors. The firm also offered selective, temporary rent relief to retailers.

“All of these initiatives have proven quite successful, because when the pandemic hit, we were proactive with our tenants. And when our shopping centres opened again after the first wave, we saw how quickly they recovered in terms of sales and maintaining client relationships.”

These initiatives resonate with HSI’s corporate ethos – “good enough is not enough” – and a

HSI: Team

corporate identity that defines its core values: integrity, restless curiosity, agility and diligence, ownership and teamwork, results and rewards.

“Integrity is a fundamental pillar of our approach to doing business,” says Bustani. “Restless curiosity is how we relate to the world around us, seeking to understand our context and to decide what path to pursue. With agility and diligence, we secure attractive opportunities and manage risks, working in teams while extracting the best from one another. This is how we deliver results and reward those who help achieve them.”

Woven through these core values are ongoing and increasing commitments for environmental, social and governance considerations. What began as a small operation has evolved into

a company with world-class standards for transparency, digitalisation, and efficiency. Due diligence forms a part of all decision-making processes, and investments in governance structures are paying off in terms of reduced risk and more streamlined operations.

HSI weighs the environmental impacts of each deal and finds opportunities to add value to the investment. It opts for eco-efficient tech in greenfield developments or renovations to conserve water and lower power consumption — investments that deliver results for environment, investors and occupants. Eco-efficient buildings can demand higher rental payments due to savings in operating costs, meaning that the value from the environmental investment can be captured within a single cycle or development project.

HSI has acquired 2.4 million square metres of real estate assets and developed 1.7 million square metres in greenfield projects. All but one HSI office developments boast a LEED certification, including one of the first Neighbourhood certifications in Latin America.

The company has been diversifying its talent base by addressing gender balance in the candidate pool. It partners with local organisations to promote recruitment and professional development.

HSI is proud of the progress it has made, but Bustani is quick to admit there’s more work to be done. “We're not afraid of that. We're excited,” he said. “But as far as our market here in Brazil is concerned, we're pretty confident that we're on the cutting edge.” i

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Faria Lima Plaza

Giving Immunology a Shot in the Arm: STEM at the Root

Science, technology, engineering and mathematics (STEM) star Marta Ponce talks to Naomi Snelling about immunology, vaccines, and why women need to smashtheimpostersyndrome.

Spanish scientist Marta Ponce is in hot demand to give talks and seminars on her specialist topic of immunology –especially in her native Barcelona.

Ponce is a super-spreader of science knowledge –via zoom rather than in person, for obvious reasons.

“I did one presentation teaching kids how to do experiments,” she said. “Another talk was about vaccines – how they are developed, how they work.

“What I love about science is how much you can help the world. And I love that it’s evidencebased – it’s objective and tangible, and there is no place for subjectivity.”

Ponce is a quality-control scientist at the vaccine manufacturing and innovation centre in Oxford (VMIC). The not-for-profit was founded by three academic institutions and is supported by three industrial partners. It places a huge emphasis on knowledge-sharing and collaboration with the academic sector and SMEs – fertile breeding ground for new vaccine technologies.

So where did the passion for science come from?

“Ever since I was a kid, I’ve wanted to know how things work and discover things,” she explained.

“I asked for a microscope as a present. I wanted to find things out and reveal things that aren’t yet known.

“I come from a non-medical family, but they have always said I have to do whatever makes me happy – even though they knew it would mean I would have to leave the country because there are so few scientific research opportunities (in Spain)” she says.

It was a certain Mrs Pilar, Marta’s high school biology teacher, who gave her a hunger to pursue biology.

“Her classes were so interesting. You can tell when a teacher puts energy and passion into their work. Despite having studied many years ago, she kept her knowledge up-to-date.”

A year in Glasgow helped Marta to improve her English while gaining her degree. And with research opportunities virtually non-existent in Barcelona, she then studied for her Masters in

Medical advanced immunology at the General Hospital of Vienna.

“My main research was for a preventative vaccine for asthma in kids. I chose to specialise in immunology because it has a role in absolutely every disease – either it doesn't work well enough and you get immune-deficiency diseases, or it works too (well) and you have allergies and responses. The immune system is absolutely key in every disease.

“People often say, ‘You’re very clever,’ but they forget it’s about how hard you study too. You have to sacrifice your time. I’ve worked on evenings,

weekends and holidays without being paid. You have to have passion.”

Ever heard of the Scissors Phenomenon? At the beginning of a STEM career, there are a lot of women. At the other end are fewer. With men, say the statistics, the opposite is true. And the higher you go, the fewer women there are, especially on advisory boards.

“The system is not balanced,” says Ponce. “Maternity leave reduces your chances. No one is hiring you when you are pregnant, or after having a baby.”

SPOTLIGHT ON MARTA PONCE

Favorite city? Barcelona

Favourite drink? Wine

Last book you read? The 5am Club, by Robin Sharma

Favourite books? The Alchemist, by Paulo Coelho, and The Monk Who Sold His Ferrari, by Robin Sharma.

What exhilarates you? Getting things done, discovering things.

What do I do? I make sure everything in the vaccine manufacturing process has been done properly and it is safe.

How do you take care of your immune system? You have to take care of your body mind and soul. I try to eat well - but with some chocolate and wine as well. I don’t take any supplements. If you eat strawberries peppers and oranges you get the same and you pay less.

So, what is her advice for other young women trying to get into STEM careers?

“We have a saying in Spanish, Todo lo que vale la pena, cuesta conseguir: Hard work pays off. A career in science is exhilarating and challenging and you have to be very determined, fight for your dreams. Sometimes it will be tough, but keep going.

“The other thing we have to be aware of is imposter syndrome. This phenomenon is common in women, especially young women. But we work as hard as anyone else.”

When it comes to dreams, Marta has many of her own. “Ultimately, I would like to lead a good big team in research in science,” she says. “In vaccines, for example.” i

Author: Naomi Snelling

North America

Rebuilding the US Economy: Investor Confidence in Speedy Recovery Soars

FOMO is firmly in charge of the US stock market: the Fear of Missing Out has nearly all classes of investors — from retail to institutional — pouring vast volumes of cash into stocks. Excitement reaches new heights during the current earnings season, with S&P 500 companies reporting an average of 1.3 percent year-on-year revenue growth in the fourth quarter — wrongfooting analysts. In January, most Wall Street forecasters had cautioned against too much optimism and predicted a 1.4 percent drop in revenues for the closing quarter of 2020. Profits jumped 3.4 percent across the S&P 500 blue chips.

Corporate America seems to have turned the page, on track for a stronger-thananticipated post-pandemic rebound.

On “The Street”, the expectation is that earnings per share for S&P 500 companies may rise by as much as 23.3 percent this year after slumping 12 percent in 2020. Pentup consumer demand and the attendant increase in discretionary spending are pinpointed as major drivers of the recovery. The proposed $1.9tn stimulus package currently under consideration by Congress will only add to the looming boom.

For investors, it remains a rather heady mix. They have been buying into the stock market since the quick turnaround of early last year when the initial pandemic-induced scare was quickly replaced by an apparently unfounded, yet solid, belief in the resilience of the US economy. Short-sellers were proved magnificently wrong and paid a hefty price. Last year, stocks soared even as earnings fell. Now they soar yet more as earnings recover. By some markers, US stocks are no longer a bargain, with investors fearful of losing out on a sustained rally. That has been reinforced by the unexpected buoyancy of corporate America as evidenced by the fourth quarter results.

MAIN STREET

The stock market is not necessarily a reflection of the mood on Main Street. In February, the number of new business registrations had decreased by 30.5 percent compared to last year. The employment rate also shows a disconcerting disconnect from how Wall Street looks at the US economy. Low-wage employment — jobs paying $27,000 or less per year — is down 21 percent compared to pre-pandemic times, although the pool of high-wage jobs (>$60k) has grown by 2.9 percent. The number of nationwide job postings has so far failed to recover and is still down 16.3 percent. At the beginning of 2021, the real unemployment rate (U-6) stood at 11.1 percent. The labour participation rate, as calculated by the US Bureau of Labour Statistics, stands at a rather dismal 61.4 percent — fairly high when set against Europe and Asia.

Worryingly, the fall in the rate of unemployment seems to have stalled, although some 22 million jobs lost at the beginning of the pandemic did return. Federal Reserve chair Jerome H Powell expects the January unemployment rate to come in at around 10 percent, instead of the official (U-3) rate of 6.3 percent due to earlier miscalculations and workers permanently leaving the labour force.

Numbers coming out of the non-partisan Congressional Budget Office (CBO) also give

"For investors, it remains a rather heady mix. They have been buying into the stock market since the quick turnaround of early last year when the initial pandemic-induced scare was quickly replaced by an apparently unfounded, yet solid, belief in the resilience of the US economy."

food for thought to the bears. The surge in federal borrowing — $4tn with another $1.9tn in the making — is set to push the national debt to over 100 percent of the US gross domestic product for the first time since 1946. Deficit hawks warn that the current level of spending, unprecedented in peacetime, may well spark a sudden surge of inflation which would not only be difficult to contain without strangling growth, but would also drive up the cost of future borrowing. The CBO predicts that by 2031, the national debt will peak at 107 percent of GDP — if the 2017 tax cuts are allowed to expire.

LOSING FAITH

Former CBO director Douglas Holtz-Eakin fears that global financial markets may lose their faith in the ability of the country to make the numbers add up. So far, inflation has been the least of concerns for the Federal Reserve and the Biden Administration. Powell assured markets that the Fed would tolerate moderate price increases and not instantly hike the interest rate in response. In early February, he noted that inflation had been lower and more stable over the past 30 years. As if on cue, President Joe Biden added that the biggest risk to the US economy is “not going too big but going too small”.

Joseph E Stiglitz, a Nobel Prize-winning economist at Columbia University, noted that a significant gap remains between the country’s actual and potential economic outputs, meaning that stimulus money will only help bridge this mismatch and not provoke inflation. Only when the actual output (supply) is overtaken by the potential (demand) — as happens in an overheated economy — are shortages likely to occur, resulting in a rise of retail and wholesale prices.

Though Stiglitz may have a point, it is not universally shared. Larry Summers, a former economic adviser of the Obama Administration, warned that another big stimulus package would

risk a bout of inflation. Summers argued in a Washington Post column that the successive macroeconomic stimulus packages were out of tune with the scale of the Covid-inspired recession, “with consequences for the value of the dollar and financial stability”. The White House rebuttal came quickly. Senior Economist Jared Bernstein dismissed the concern and explained that the administration was engaged in risk management: “In our view, the risks of doing too little are far greater than the risks of doing too much.”

GREAT RESOLVE

Once the impeachment trial of his predecessor had been dealt with, Biden showed great resolve in pushing his own stimulus bill and appealing to the G7 nations to continue on the path of fiscal and monetary largesse to avoid lasting damage to the global economy. The president promised that the US economy would come “roaring back” in the second half of 2021, once Congress has approved the latest stimulus package.

Biden said his administration would subject the economy to a jolt to accelerate the rebound. Owners of SMEs now worry that the proposed doubling of the federally-mandated minimum wage to $15 an hour — part of the stimulus bill — could push them over the edge. An estimated 32 million American workers earn less than $15. The current federal minimum wage has remained stuck at $7.25 since 2009.

The new US administration has doubled down on the economy. Foreign policy issues have been relegated to the back burner. On international trade, the Biden White House is quietly letting the US slip back into the mainstream, ending its blockade of the World Trade Organisation, making cautious noises about a rapprochement with the European Union, and striking a more conciliatory tone overall without promising any major initiatives. All attention is duly focussed on the public healthcare emergency and the economic recovery.

By choosing pragmatism over political fanfare, and by prioritising the rebuilding of US economy, the Biden Administration aims to reinsert the country into the concert of nations, rebuilding its tarnished reputation and repairing burnt bridges before taking the lead. The president seems to realise that he must deploy the power of the understatement — or silence — for the US to be accepted and engaged as a constructive interlocutor and partner.

Following that, the remarkable resilience of the US economy will speak for itself. i

"By choosing pragmatism over political fanfare, and by prioritising the rebuilding of US economy, the Biden Administration aims to reinsert the country into the concert of nations, rebuilding its tarnished reputation and repairing burnt bridges before taking the lead."

Biden’s Fiscal Package: When Does Enough Become Too Much?

By Otaviano Canuto ThisarticlefirstappearedatPolicyCentrefortheNewSouth.

The monetary policy report recently submitted by the Board of Governors of the Federal Reserve System to the US Congress showed that the Fed’s members have improved economic growth expectations for 2021 and 2022, and expect lower unemployment rates.

Only two of the 18 participants projected personal consumption expenditures (PCE) inflation to exceed the two percent that serves as the longerrun objective for the monetary policy regime. So, is there any justification for fears that the $1.9tn fiscal package sent to Congress by the Biden government could bring too much stimulus to the country's recovering economy? Could the package cause inflation spikes and a reversal of loose monetary policy, with an increase in interest rates causing shocks to indebted non-financial companies?

There are even those who suggest the recent rise in longer-term interest rates on Treasury debt securities already reflects such an expectation. Yields on 10-year bonds recently reached 1.3 percent, from slightly above 0.9 percent at the beginning of the year. Analysts have pointed to yields implicit in 10-year protected-againstinflation government securities as embedding inflation expectations at around 2.2 percent, the highest since 2014.

When added to packages introduced since the beginning of the pandemic, amounts equivalent to 13 percent of GDP will be reached. That is something that has not happened since World War II. It is striking that the concern about excess has been expressed by renowned economists including Lawrence Summers and Olivier Blanchard. They have said the task of recovery should not rest entirely on monetary policy.

Even before considering the Biden package, the US Congressional Budget Office had predicted the country's GDP will exceed the pre-pandemic level this summer. If the Trump administration's second package was enough, the impact of the Biden package on demand (nine percent of GDP) would be more than enough. Morgan Stanley Research has forecast a 6.5 percent GDP growth rate for 2021, and a trajectory above even the pre-COVID-19 path.

The fiscal package has components that need to be differentiated. On one hand, it would provide resources that could be considered as part of the extraordinary public expenditure related to the pandemic. It does not correspond to a macroeconomic recovery policy, even though it will have an impact on aggregate demand.

This includes money being spent to speed-up the vaccination campaign, including spending by subnational entities and the reinforcement of unemployment insurance. On the other hand, items pointed out as excessive and poorly focused include another round of cheques sent directly to households.

Paul Krugman, for his part, has expressed less concern about the potential excess aggregate demand that would bring about. Cheques would not be focused on the lower levels of the income pyramid, judging by their diversion to precautionary savings by households last year. Former US Treasury Secretary Larry Summers said that even if this were the case, the corresponding fiscal space should have been reserved for some future package that is expected to come for investments in infrastructure and green recovery.

Two aspects must be taken into account. First, according to Treasury Secretary Janet Yellen, it would be better to run the risk of excess rather than that of insufficiency. In addition, the Federal Reserve's new monetary policy regime puts the two percent inflation target as an average, not a ceiling forcing monetary policy to act to prevent it in advance.

After a long period of inflation below two percent, even in years with low unemployment and interest rates on the floor, monetary authorities can afford to wait, with above-average inflation, until they are compelled to pull the brake.

The report presented to Congress Feb. 19 explicitly says this. i

Coffee: Quick Jump-start to the Day – or Something We Should Learn to Appreciate?

By Naomi Snelling

From thimble-sized European cups to Americanstyle mochas, lattes and lactose-frees, coffee is more than just a drink – it’s a verb, a noun, a movement, a journey, and a destination.

The bliss of a perfectly created coffee is something we’ve appreciated throughout lockdown, one of our few unrestricted joys. Limited movement has also spawned a flush of DIY baristas as we try to recreate coffee heaven at home.

But where does our love of the bean come from? And do you know your macchiato from your Americano, your cortado from your cappuccino?

In Europe, the drink is at the heart of society. Nowhere is this more true than in Italy, arguably the epicentre of coffee culture. Italy’s gift to the world includes the moka, a stove-top appliance that no household in the country would be without.

Each region of Italy has its own regional style. In the north, you could try your caffè aniseflavoured; in southern Sicily, the spicy exotic Arabian influence creeps in: caffè d’un parrinu is Arabic-inspired, with cloves, cinnamon and cocoa.

Our fascination with the beverage has percolated into all parts of the globe, with aficionados comparing notes on aroma, fruitiness and acidity, with the fervour of wine connoisseurs.

It's not just about taste and culture, though; coffee’s widespread appeal as a socially acceptable stimulant is part of its charm. The world’s favourite cortisol booster and pick-meup raises heart rate, blood pressure, energy levels and mood. The subtle oomph of a coffee “high” varies, and depends on habituation and tolerance. There’s also the question of variety: freeze-dried granules tend not to pack as hefty a punch.

When it comes to the question of how long it takes for the “buzz” to be felt, conventional wisdom says it takes 15 to 45 minutes for caffeine levels to peak. But despite its reputation as a wake-up beverage, sleep experts encourage people to reach for water first thing in the morning.

PRENDIAMO UN CAFFE? A DRINKERS’ GUIDE

Espresso: Small and strong, the archetypal Italian coffee and base unit of nearly every other form. Italians often drink it al banco: at the bar.

Espresso con panna: with a splash of cream. It sounds Italian but it is more likely to originate from Turkey, Germany or Austria.

Cappuccino: An espresso topped with equal parts warm milk and foam; the word means "little cap". It is apparently a reference to the Capuchin monks, whose hooded cowls and shaved heads bear a passing resemblance to the ring of white foam.

Caffe latte: Espresso with steamed milk and a foam layer, and one of the most popular forms. (Don’t shorten it to latte in Italy, or you’ll be handed a glass of milk.)

Macchiato: served by a bare-chested Italian. Er, no: it’s an espresso with one dollop of cream (or milk).

Cortado: Espresso and warm milk in equal parts; this stems from the word cortar, which means “to cut” in Spanish.

The rationale is that the body’s own cortisol is already pumping away, waking you up naturally. “Reserve your caffeine intake for one hour after you wake,” says sleep expert Dave Gibson. “After the cortisol peak, it gives you the ideal mid-morning boost.”

The good news is that while too much caffeine gets your heart pumping and your nerves twitching, three cups per day could reduce the risk of heart failure, according to research based on three long-running studies. i

Mohamed A El-Erian:

The US Recovery’s Promising Moment

resident Joe Biden’s announcement that the US will have enough COVID-19 vaccines for every American by the end of May has contributed to a rising tide of optimism about the country’s economic prospects this year. This, and other good reasons to be hopeful about the economy, opens a valuable window for the administration

to address the complex policy challenges it is facing in 2021 and beyond.

On the positive side, Biden’s vaccine announcement came on the heels of economic data that beat the consensus expectations of economists and market analysts. The latest figures show that personal income grew

by 10% between December and January, that manufacturing expanded by nearly ten percentage points year on year, and that 379,000 jobs were created in February (well above the consensus expectation of some 200,000). In keeping with with these trends, the Federal Reserve Bank of Atlanta’s muchwatched (and notably volatile) GDPNow model

"On the positive side, Biden’s vaccine announcement came on the heels of economic data that beat the consensus expectations of economists and market analysts."

now estimates annualised first-quarter GDP growth to have reached around 10%.

This notable economic pickup is being driven by the release of pent-up demand – both in the US and internationally – and by the fiscal stimulus package that Congress approved at the end of last year. Moreover, these public- and private-sector effects are both likely to intensify as vaccines continue to be administered more quickly, and as the Biden administration progresses with its two-stage rescue and recovery effort.

But three main challenges will need to be addressed quickly. First, progress toward increased vaccine availability is necessary but insufficient. To end the public-health crisis, stepped-up vaccine production will need to be accompanied by a high rate of vaccine acceptance, vigilant efforts to prevent a resurgence of infections, and ongoing resilience in the face of new variants of the virus.

Second, with competing signals from different labor-market data, the pickup in economic activity has yet to be accompanied by a sustained, strong rebound in employment. Moreover, the labor-force participation rate needs to recover more strongly.

The third challenge is highlighted by the debate among economists about whether the Biden administration’s proposed $1.9 trillion American Rescue Plan will lead to economic overheating. The fear is that the additional stimulus will trigger a spike in inflation and market interest rates, which could derail a sustained recovery and heighten the risk of financial-market accidents. Indeed, in recent weeks, there have already been two nearaccidents that, fortunately, were countered by endogenous market flows.

In thinking about these challenges, one also must look beyond 2021. To develop into the type of recovery the US (and global) economy needs and is able to deliver, the current economic bounce will need to prove durable, inclusive, and sustainable. Policymakers will not only have to avoid some significant pitfalls this year; they will also have to do more to counter the pandemic’s lingering aftereffects, particularly those that could undermine households’ balance sheets and hamper productivity and growth both at home and globally.

Judging by the current course of the recovery, major headwinds could emanate from several sources. These include the likely widening of the economic, financial, and health divergence between advanced and developing economies; the deepening disconnect between Main Street (economic

and social conditions) and Wall Street (financial asset prices); sovereign- and corporate-debt challenges (particularly in the developing world); and the social, political, institutional, and economic fallout from the recent spikes in inequality of income, wealth, and opportunity.

Good policy design and implementation can do a lot to minimise these risks. But sustaining the recovery will require an ongoing policy push. After the $1.9 trillion bill passes, the US will need to move expeditiously to enact the Biden administration’s second proposed fiscal package, which is aimed squarely at boosting longer-term productivity and inclusive growth.

Moreover, US policymakers need to look closely at the functioning of the labor market, both directly and in cooperation with the private sector. And they will have to embrace the delicate task of rebalancing the macroeconomic mix so that there is less reliance on unconventional monetary policies (particularly open-ended large-scale asset purchases and highly repressed policy rates), and more emphasis on structural reforms and macro-prudential measures.

After the annus horribilis of 2020, there is justifiable optimism about the US economy. A compelling vision of a much brighter future is coming into sharper focus. It can and should help policymakers to press ahead with preemptive action to mitigate the considerable risks on the horizon.

It would be a tragedy if world leaders were to repeat the mistakes of the post-2008 period, when it won the war against a depression but then failed to secure the peace through high, durable, inclusive, and sustainable growth. The US plays a critical role in this regard. By seizing the moment, policymakers can spare the US – and therefore the rest of the global economy – that unnecessary risk. i

ABOUT THE AUTHOR

Mohamed A El-Erian, Chief Economic Adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-Chief Investment Officer, was Chairman of US President Barack Obama’s Global Development Council. He is President Elect of Queens’ College (Cambridge University), senior adviser at Gramercy, and Part-time Practice Professor at the Wharton School at the University of Pennsylvania. He previously served as CEO of the Harvard Management Company and Deputy Director at the International Monetary Fund. He was named one of Foreign Policy’s Top 100 Global Thinkers four years running. He is the author, most recently, of The Only GameinTown:CentralBanks,Instability,and AvoidingtheNextCollapse.

Asia Pacific

Past and Present, Hegemony and History: China Plays ‘Victim Card’

It is barely a secret that the ruling caste of present-day China seeks to return the country to its former magnificence, lost during the Century of Humiliation (1839-1949) when Japan and Western powers unceremoniously carved up the Middle Kingdom.

Such a broad policy objective is eminently sensible and justified – perhaps even righteous – especially when seen from Beijing. Given its resurgence over the past 50-odd years, China’s heft needs to be accommodated. That need not necessarily involve a clash with the regional and global powers that filled the country’s geopolitical space during its absence from the world stage.

Since 2012, when President Xi Jinping secured power, Chinese foreign policy has focused on reestablishing the regional hegemony of the distant past which saw the neighbourhood pay tribute –real or symbolic – to the great benign power at its core. So far, Jinping has given scant attention to the Westphalian principles that govern the relations between sovereign states. Chinese strategists have some catching up to do and consider that pronounced differences in size and might must be properly reflected in diplomatic traffic and discourse – leading to a stable Pax Sinica

Outsiders may reasonably conclude that China currently behaves like a regional bully, imposing its will on smaller neighbours and using its financial muscle to effectively buy client states in Asia, Europe, Africa, South America, and Oceania.

Beijing’s self-image is that of a peaceful and benign power which naturally attracts and gathers satellites gravitating into its orbit. Attracted by wealth and genius, these lesser states submit to China’s brilliance out of self-interest – and the expectation of rich rewards. That, in any case, is the idealised narrative rescued, edited, and reimposed by Jinping. Reality intrudes every so often because, contrary to imperial times, contemporary China possesses only hard power. The country lacks the moral leadership of yore, when its stability and scientific prowess were the envy of the world.

DISCONNECTED NARRATIVE

Though present-day leaders may drone on about Chinese characteristics, the nation has deployed its impressive economic progress to mimic and expand on western (consumer) values. Jinping´s narrative suffers a disconnect from a tangible reality that not even the vast propaganda apparatus of the state can mask.

The influence of the imperial past on China’s current foreign policy goals and initiatives is a ruse to frame its perceived exceptionalism – a grand storyboard that conveniently covers distinctly 21st Century ambitions and attitudes. The creation of a global financial and resources exchange system that keeps the economy humming, and the forging of interlocking trade and security mechanisms that secure the country’s regional hegemony, are expressions of the hard power that allows China to claim a role in world affairs.

China is, of course, not alone in abusing history to explain and frame the present. However, the country is quite willing to periodically rewrite its

"Beijing’s entrenched view of the world, and its place in it, leads to heightened tensions as China seeks to reclaim prominence while battling historical foes with the hard power it now possesses."

own history to suit the official discourse. In the 1960s, the official view held that the imperial past – as depicted in the stage spectacular The East Is Red – was a time of misery, suffering, and feudalism. That era needed to be expunged to unlock a glorious future of industrialisation and unbound happiness for the masses. Around the turn of the millennium, this storyboard was scrapped. Since then, China’s past is supposed to have been gloriously prosperous, peaceful, and even cosmopolitan, as so impressively choreographed in the opening ceremony of the 2008 Beijing Olympics.

The imperial splendour of dynastic China was, of course, attacked and dismantled by envious foreign powers. By linking that history of victimisation to the present day, President Jinping has managed to cast the US in the role formerly attributed to colonial powers – those eager to contain China and deny the country its rightful place. In that sense, the narrative constructed by Beijing appears seamless and offers a lesson for the future: Beware of envious outsiders.

Mao Zedong was rather fond of predicting the capitalists’ imminent demise, likening the States to a dying person. The great man ridiculed reactionaries – and their “running dogs” –desperately trying to hold back the wheel of history. Much like Winston Churchill, Mao’s exceptionally rich array of utterings, writings, and comments offer a suitable quotation for every occasion. Now brought back out of the mists of history and once again fashionable, Mao’s view of western powers has gained new currency in the Jinping Administration.

MAO’S PREDICTION

After China emerged comparatively unscathed from the 2008/9 global banking crisis and managed to return to growth quickly in the wake of the first coronavirus outbreak, the country’s leaders have begun wondering openly if Mao may have been right. The West, it would seem, has lost its magic touch and US-style capitalism is struggling as inherent contradictions take their toll, with every crisis pushing the system deeper into debt. The Marxist view of history – linear, simplistic, and still much in vogue – offers a neat frame on which events and trends may be gauged and interpreted.

The Chinese leadership has concluded that the inevitable decline of Western power, as embodied by the might of the US and foretold by Mao, is taking place. Under Donald Trump, it intensified. This analysis now forms the core of China’s foreign policy and determines its objectives

and approach. In this light, the Washington-led efforts to comprehensively suppress the rise of China make perfect sense. It has been the Way of the West since time immemorial and, as such, represents the convulsions of a losing proposition.

A recent editorial in the state-controlled Global Times illustrated this perception: “China must accept the reality that America’s attitude to the country has fundamentally changed.” Former top trade official Wei Jianguo put it yet more bluntly: “The essence of the trade war is that the US wants to destroy China.” Senior diplomat Fu Ying, now chair of the Centre for International Security and Strategy at Tsinghua University, says: “It is a fight that the world’s waning superpower cannot afford to lose.”

Beijing’s entrenched view of the world, and its place in it, leads to heightened tensions as China seeks to reclaim prominence while battling historical foes with the hard power it now possesses. The expectation is that the US will double-down on containment and suppression. In response, Chinese leadership is doubling-down on policies to encourage domestic consumption, reorienting growth away from the increasingly unstable and uncertain world. In practical terms, China is, however, not so much de-globalising as it is “de-Americanising”.

The self-sufficiency drive, always present in the background but never a priority, has been reinvigorated to decrease the leverage of the US. Last year, Jinping earmarked an additional $1.4 tn for investment in high-tech infrastructure.

WISHFUL THINKING

The Achilles heel of Jinping’s approach is a rather pronounced form of wishful thinking whereby the actual power of the US and its western allies is underestimated. The US possesses much more than military hardware and cash. The US and Europe derive their strength from soft power: technological innovation, financial wizardry, cultural pre-eminence, and an unequalled moral standing and authority as expressed in universal values. China, on the other hand, has no soft power to speak of. Its economic advances may be admired, but the country’s almost dystopian society has few fans. The culture may have deep roots in history, but does not travel well.

Rather than confront President Jinping’s assertive China with hard power, western nations would be well advised to deploy less harmful guns by reminding all and sundry – including the Chinese – that repression at home and bullying abroad are counter-productive. China must be reminded that the Westphalian principles which underpin civil discourse between sovereign nations can accommodate Beijing’s newfound heft and further its long-term interests without the need for a clash of civilisations.

It is, undoubtedly, a difficult message to deliver and will take a generation or longer to be fully absorbed by Chinese leadership. History does not necessarily repeat itself – and seldom does. i

With classic Scandinavian timepieces and timeless men’s accessories, Georg Jensen prides itself on having designs that every gentleman will truly appreciate.

Belvoir’s Rental Index...

Middle-Income Countries Should Not Be Rushed to ‘Graduate’ Status

By Otaviano Canuto

Many donor countries seem eager to see middle-income countries (MICs) graduate to non-client status in multilateral development institutions before achieving their full development potential.

Such institutions can significantly contribute to the sustainable development of MICs, while seizing many benefits from this relationship.

Multilateral development banks operate in two main ways: regular lending and concessional finance. Regular lending uses interest rates close to market levels and relies on the banks’ wealth of knowledge to create attractive projects for MICs. Concessional finance, on the other hand, is attractive for low-income countries for that knowledge and because it offers low interest rates or grants.

In recent years, major donors and multilateral development banks have steadily increased their focus on low-income countries. By doing so, they would achieve higher impact. However, a necessary increase in efforts aimed at low-income countries should not mean neglecting relatively well-off countries which still have a way to go before achieving full development.

The trade-off is false, for two reasons. Firstly, MICs borrow at close to market rates, which means that the financial cost of maintaining these countries in the client list of multilateral development banks is low. MICs mostly benefit from the knowledge they can access.

Secondly, knowledge that MICs access and use in no way drains the knowledge for use by low-income countries (LICs). Fixed costs for development knowledge are high, and a good share of that knowledge is non-rivalrous. MICs, because of their higher economic sophistication, allow for a better training ground for innovative approaches. Maintaining programmes in MICs can thus be beneficial for LICs, through what has been called the Hummingbird Effect.

One could argue — and many have — that independent of these arguments, MICs are already on a path to development. The resources which multilateral development banks devote to MICs are insubstantial compared to other sources. And multilateral development banks do not have infinite capacity for programme generation.

If multilateral development banks are not really decisive for MICs, then why should they not concentrate on where they will make a greater

impact? Unfortunately, the progress that MICs have made so far is by no means guaranteed to be sustained. Considering that the share of the world’s population — and of the world’s poor — that live in MICs is high, we cannot afford to leave them in a possible middle-income trap. The measures which can be taken to help MICs are in the interest of all countries, poor and rich.

1. A major challenge for MICs is the accumulation of human capital. Recognising the importance of this does not automatically translate into higher levels. Years of schooling are not the same thing as better learning, even if there is a link between the two. Multilateral development banks can help MICs design effective policies to increase the level of learning-adjusted school years (a metric that combines quantity and quality of schooling) for a relatively low cost.

2. A business-friendly environment is essential to moving from middle- to high-income levels. The benefits of specialisation and scale, as well as innovation, depend on a healthy environment where starting, operating or closing a business are not cumbersome endeavours. Multilateral development banks have an essential role here. They can help MICs by increasing the scope of evaluations like the Doing Business Report, to better and transparently reflect the business environment of the countries they examine.

3. MICs are the “low-hanging fruit” of climate change mitigation. While their emissions are higher than those of the LICs, their carbonefficiency is still low. This means that they are the cheapest environment where technologies can be used to reduce greenhouse gas emissions while expanding economic activity. Cutting emissions in MICs is in the world’s interest, and multilateral development banks can still expand such projects in MICs.

A rush to graduate and cease multilateral development bank activities in upper-middle income countries would come at a higher cost than is assumed. The development trajectory of these countries is far from a guaranteed, linear path. The emergence and persistence of the middle-income trap has demonstrated this.

Multilateral development banks, however, can do a lot to help ensure that these countries “graduate with honours” and even go on to become some of the main financiers of development — in the interest of all countries. i

A COVID-19 Silver Lining: Precision Medicine for Brain & Mental Health

By Shahnaz Radjy and Dr Maria Teresa Ferretti

Did you know that nearly 17% of the Swiss population suffer from one or more mental disorders? And that more than 150’000 persons are currently living with dementia in Switzerland, with 30’000 more individuals who develop it every year? That’s a new sufferer every 18 minutes, and about two-thirds of the people affected by dementia are women.

ith COVID-19 still looming despite the distribution of vaccines, what has become clear is that this pandemic is not just about physical health. It has put brain and mental health in the spotlight, too.

That’s where the Women’s Brain Project comes in, and the reason why the 2020 International Forum on Women’s Brain and Mental Health (WBP Forum) was deemed a significant milestone on the path of sex and gender-oriented precision medicine as well as another step toward the realisation of the first Institute of Sex and Gender Precision Medicine in Switzerland.

THE IMPACT ON COVID-19 ON BRAIN AND MENTAL HEALTH

The WBP Forum highlighted sex and gender differences in healthcare, and the importance of brain and mental health as the world struggles with lockdowns and quarantines.

“While our brains are wired to connect and belong, the need to be disconnected and often in isolation due to the pandemic is taking a significant toll in terms of sustained stress, which causes inflammation, a diminished immune response, and a greater susceptibility to other diseases,” stated Professor Eliot Sorel, Chair, Access to Care Committee, American Psychiatric Association, during his keynote address. “This may lead to an exacerbation of pre-existing mental disorders and new incidences of depression and anxiety, above all in the female population as they play a major caregiving role,” he added.

COMBINING

PERSPECTIVES FOR GREATER INSIGHTS

More than 200 people around the world registered for the WBP Forum held virtually on Sept. 1920 last year, gathering scientists, academics, patients, caregivers, and policymakers, including Signe Ratso, European Commission Deputy Director General for Research and Innovation, and Dr. Kaveeta Vasisht, Associate Commissioner for Women’s Health at the U.S. Food and Drug Administration (FDA).

Over the course of the two days, speakers discussed young suicide, maternal mental health, and sex and gender differences in dementia and Alzheimer's Disease, in addition to calls to action for better migraine policies, lifestyle interventions, and new technologies for brain and mental health.

The red thread was “Sex and gender differences in brain and mental health across the lifespan: A gateway to precision medicine”.

THE ROLE OF TECHNOLOGY

Almost if not every panel included references to developing technologies and their potential positive impact on brain and mental health across the board. From apps that caregivers of young people who attempted or died from suicide to opportunities to detect post-partum depression or dementia more efficiently, it was clear that the way forward is to build on artificial intelligence (AI)-powered solutions.

Since 2016, WBP has been leading efforts to study the influence of sex and gender differences in mental and brain diseases with novel technology developments to foster diversity in precision medicine. Artificial intelligence (AI) is a great source of insights for scientific research and precision medicine, but it relies on large dataset bias, mainly European, and based on white men.

One of WBP’s objectives is to break the biases in precision medicine and to promote differentiated data to make clinical trials, drugs development, and health outcomes not discriminatory.

As summarised by Dr Engelberger, Health Councillor of the City of Basel, during his opening remarks at the WBP Forum, “I am sure that gender-specific medicine will become ever more important in the future. If women receive more targeted and efficient medical treatment, fewer resources will be wasted and costs will be reduced. This is important to all of us.”

The sustainability angle is not one often discussed in healthcare, but was the cornerstone of WBP’s

co-founder and CEO, Dr Antonella Santuccione Chadha winning this year’s World Sustainability Award a week prior to the WBP Forum.

LOOKING TO THE FUTURE: A THREE-PRONGED APPROACH

Raising awareness about the aforementioned issues is key, but so is having a solutions-oriented approach. That’s why WBP is spearheading a number of initiatives to translate the insights of their Forum into action.

First, WBP launched the Swiss edition of the global "Be Brain Powerful®" campaign, with the support of various partners and sponsors. Available in English, German, Italian, and French, the campaign is built around the seven pillars of brain health. Individuals can sign up to a 30-Day Brain Health Challenge by email, and while the primary focus is on women’s brain health, a majority of the challenges are relevant to both men and women.

Second, the WBP Hackathon took place in January and February 2021 with participants from all over the world. The goal of the hackathon was to advance the understanding of sex and gender differences and leverage them for improved solutions, through teamwork and innovation. The topics included gender bias in ADHD, maternal mental health and organ-on-achip technology.

Last but not least, by hosting a regulatory roundtable, WBP is working with policy-focused organisations to better understand and catalyse ways in which sex and gender differences can be integrated in to research guidelines and requirements including an emphasis on sex and gender disaggregated data as well as clinical trials and more.

As the world struggles to identify what the “new normal” is, organisations like the Women’s Brain Project are also reshaping reality with the goal of leveraging precision medicine to offer a more effective, equitable, affordable healthcare to all. i

ABOUT THE AUTHORS

Shahnaz Radjy is a member of the Women’s Brain Project Executive Committee and holds an MBA in Healthcare Management from the EHESP as well as a Bachelor of Arts in Biology from the University of Pennsylvania. She worked for ten years in chronic disease prevention and workplace health both at the World Economic Forum in Geneva, Switzerland, and the Vitality Institute in New York, USA. Shahnaz is now based in rural Portugal where she runs the Casa Beatrix ecotourism project while working as a freelance science communication consultant and writer. You can follow her on Twitter under @sradjy.

Maria Teresa is a neuroimmunologist with over a decade of international experience in the field of Alzheimer’s disease. She is the co-founder and Chief Scientific Officer of the Women’s Brain Project.

After a master in Pharmaceutical Chemistry in 2005 (University of Cagliari, Italy), she obtained a PhD in Pharmacology and Therapeutics at McGill University (Montreal, Canada) in 2011. That same year, she started as postdoctoral fellow in the Nitsch’s lab (University of Zurich, Switzerland), where in 2014 she became a group leader. In her research, Maria Teresa aims to identify novel biomarkers for improved individual level prediction of cognitive decline and Alzheimer’s.

Author: Shahnaz Radjy

Author: Maria Teresa Ferretti

Said Rustamov, Ambassador of the Republic of Uzbekistan to the UK: Uzbekistan’s Dynamism Presents New Opportunities for Post-Brexit Britain

Though 5,000 km apart, the UK, an economic leader in the world, and my emerging but fast-developing nation are quietly forming a partnership no-one could have imagined three decades ago, when Uzbekistan broke away from the crumbling Soviet Union. I doubt anyone could have imagined it even five years ago.

The politics and international perspectives of both nations have profoundly changed. Post-Brexit Britain is eager for new friends and alliances. Under the reformist leadership of President Shavkat Mirziyoyev, Uzbekistan, too, is reaching out, resolving old arguments and finding common cause with its Central Asian neighbours and assuming a more active role in global affairs.

In my embassy, we see the results of the British changes on an almost daily basis. A few months ago, we were arranging a cultural webinar about the 15th Century Uzbek poet Alisher Navoi – our Shakespeare. One of my colleagues had the ambitious idea of trying to enlist some British politicians to recite passages from Navoi’s works in translation. Astonishingly, a dozen MPs and peers volunteered, and demonstrated genuine enthusiasm for their roles as interpreters of an ancient and, for them, exotic literary art form. A resulting video became a viral hit back home in Tashkent.

The UK-Uzbekistan relationship is developing in several ways. British historians and archaeologists are exploring our ancient role as a crossroads for trade between East and West, while financial and legal experts are contributing to plans to create a similar role for the future.

Following his election in December 2016, President Shavkat Mirziyoyev set in motion a series of reforms. Make the private sector the driving force for the national economy, instead of the state; encourage competition; democratise and encourage development of civil society; open borders and reduce or eliminate visa requirements; liberalise the currency, and bring in fundamental education reforms.

We were to welcome foreign investment and bring economic regulation up to international standards.

Mandatory labour in our cotton fields, which had drawn international criticism, was banned.

The president’s foreign policy objectives involved similarly dramatic changes. He set about improving relations with Uzbekistan’s neighbours and travelled the world to meet face-to-face with global leaders. His goal was to persuade them of the sincerity, and permanence, of his reforms. If there had been any doubts about the

priority given to human rights issues, President Mirziyoyev sought and secured election to the UN’s 47-member Human Rights Council.

All these seemingly disparate changes have a common theme: Uzbekistan is reviving its centuries-old role as an international crossroads. The country is championing the reinstatement of close trade and transport links, people-to-people connections between Central and South Asia.

"All these seemingly disparate changes have a common theme: Uzbekistan is reviving its centuries-old role as an international crossroads."

Uzbekistan Ambassador to the UK: Said Rustamov

"London is providing assistance to the implementation of economic reforms in Uzbekistan through the Effective Governance for Economic Development in Central Asia (EGED) programme, in partnership with the World Bank."

Mirziyoyev’s focus on regional unity has changed the calculus across the region, and in Afghanistan. He has put enormous effort into bringing peace to Afghanistan – a bridge between two regions. He appointed one of our most senior diplomats as his Special Representative on Afghanistan. Our officials have been helping to bring the Afghan factions to the negotiating table in Doha, and to nudge all parties towards peace. Meanwhile, we have reached a regional consensus on a major transportation and trade corridor through Afghanistan.

And what of the UK’s role in achieving the aims of Uzbekistan’s new development strategy?

From my London vantagepoint, I can say with some pride that it has been significant. One of the president’s key advisors on economic and governance reforms, Sir Suma Chakrabarti, is British, and a former EBRD president. TheCityUK, an organisation representing the UK’s expertise in international finance, is finalising the concept for the creation of a Tashkent International Financial Center (TIFC).

Among the considerations is the adoption of English Common Law, potentially with wider application in domestic dispute resolution.

Most importantly, British education would be valuable for developing human capital and the capacity building much needed for delivering the reforms. We have already achieved some success in this. Throughout the country, special Presidential Schools are being opened, based on British education standards. Several higher education projects are under way, opening joint universities, launching double degrees and research programmes. We are receiving UK technical and advisory support for membership in the World Trade Organisation, a key step towards our embrace of world standards.

London is providing assistance to the implementation of economic reforms in Uzbekistan through the Effective Governance for Economic Development in Central Asia (EGED) programme, in partnership with the World Bank. We are interested in getting access to the

UK’s Generalised System of Preferences (GSP) Enhanced Framework – an equivalent to the GSP+ agreement recently signed with the EU.

It’s not all plain sailing, of course. The UK government allocated £1.25bn in export credits for trade finance, particularly in the energy sector. A few weeks ago, the UK’s Trade Secretary Liz Truss wrote the UK Export Finance agency, setting energy renewables as a key priority. This is a key priority for Uzbekistan too, as we drive to keep to our Paris Agreement commitments on climate change.

Unfortunately, there has been little take-up on the UK side, with much of the work on Uzbekistan’s solar and wind power projects being undertaken by Middle Eastern, EU and American players. We would like to see more British participation in this.

Once the pandemic has been brought under control, and physical meetings and travel are once again possible, I am confident we will. i

President of Uzbekistan: Shavkat Mirziyoyev

Asian Development Bank: Towards a Blue Deal to Restore the World’s Oceans

By

Investments in recovering and maintaining a functioning marine ecosystem can form the foundation of a sustainable “blue economy.”

Marine ecosystems are threatened by extinction. Over the past 50 years, the world has lost nearly half of its coral reefs and mangrove forests, while marine populations have halved and global fish stocks depleted by a third.

If trends continue, it is estimated that there will be no stocks left for commercial fishing by 2048 in the Asia and Pacific region alone. By 2052, oceans might contain more plastic than fish by weight and 90% of coral reefs may be lost.

The case for protecting oceans is stronger than ever. Oceans contribute to every aspect of life on earth, including regulating climate change. Oceans act as a giant carbon sink, absorbing about a third of the carbon dioxide (CO2) generated by human activities since the industrial revolution. However, while helping mitigate climate change, with greater carbon absorption the oceans are also facing a 30% rise in seawater acidity since the industrial revolution – an acidification rate estimated to be 10 times faster than at any other period during the preceding 55 million years. This is already having an impact on marine biodiversity, and with an estimated 1 billion people dependent on seafood and a global fishing market worth an annual $100 billion, ocean health decline is having an impact on the global economy.

Investments in recovering and maintaining a functioning marine ecosystem are essential to support ocean health and the foundation of a sustainable “blue economy.”

HOLISTIC STRATEGIES

The declining health of the world’s oceans is an issue that does not just affect a single industry, sector, or country; it is a threat to the entire planet. The solutions, therefore, must be broad and systematic as well.

Strategies must cut across multiple sectors and countries in a holistic, “source to sea” approach. This includes reducing marine pollution at the source—including agricultural pollution, wastewater, plastic and other solid waste, and discarded fishing gear—while simultaneously protecting and restoring coastal and marine ecosystems and connected rivers. It also includes

sustainable extraction of marine resources including fish and minerals. Governments, nongovernment organisations, businesses, and other stakeholders all need to do their part.

Port and coastal infrastructure is overdue for modernisation. There is an urgent need for ocean-friendly infrastructure including integrated solid waste management, ecologically-sensitive port facilities, and municipal and industrial wastewater and effluent treatment. Also crucial are sustainable agribusinesses that reduce runoff of fertilisers, agrochemicals, waste, and soil erosion, as well as a sustainable aquaculture sector.

With the total asset value of the ocean estimated at $24 trillion and the global ocean economy estimated at $3 trillion per year, there is no shortage of investment opportunities, yet investments themselves have fallen short. In the last 10 years, only $13 billion has been invested in sustainable projects via philanthropy and official development assistance, and even less by the corporate sector. Currently less then 1% of the total value of ocean economy is invested in sustainable projects. At the UN Ocean

Conference in 2017, only about $25.5 billion was committed, about one sixth of what is required for achieving the Sustainable Development Goal 14, Life Below Water, by 2030.

We have a good chance to obtain the investments needed if we successfully rise to three challenges. First, we need to agree on a standardised approach to valuing natural assets. Second, we must assist governments to effectively govern ocean resources, and last we need to inspire and attract private sector initiative and capital to invest in a blue future.

ACCOUNTING FOR NATURAL RESOURCES

The goods and services the ocean provides tend to be significantly undervalued. For example, in the Asia and Pacific region, the benefits of coastal ecosystems such as coral reefs, coastal wetlands and mangrove forests that act as “natural buffers” to storms are rarely quantified and accounted for in coastal protection. This means hazard mitigation and budgetary decisions are being made without fully recognising their value. If damaged during a storm or natural disaster, these assets need to be restored so they can protect us from the next calamity.

Ingrid van Wees. Photos: ADB

Accounting for natural assets on public sector balance sheets will enhance transparency, value improvements to blue assets, and reinforce the need to protect these invaluable resources for future generations.

BUILDING ECOSYSTEM FOR INVESTMENTS

Underlining a commitment to protect our oceans is the need to strengthen the enabling environment for blue economy investments. At the national level, this can be done by creating a central body to develop frameworks to incentivise ocean-positive businesses through supportive taxes and subsidies, and discourage and disallow ocean-impacting businesses through fiscal and regulatory reforms.

Encouraging progress has been made. To date, 57 countries have introduced ocean-related laws, policies or regulations. The conducive blue economy ecosystem that will emerge from these efforts can help channel private and public investments, as well as official development assistance, towards the sustainable development and protection of our oceans.

We need to formulate transfer mechanisms to fund support for essential ocean investments that lack revenue streams. These could take the shape of allocating income from fishing licenses, redirection of harmful subsidies, tourist charges or plastic taxes.

A WAVE OF PRIVATE SECTOR FINANCE

Large-scale investments are required to support ocean projects; while sovereign investments remain essential, the private sector is required to fill the gap. Attracting private investors, however, can be challenging for ocean projects.

The private sector needs a return on investment and this is usually done through user charges. Given that many ocean investments revolve around a shared common resource, it is sometimes difficult to define discrete users to pay. Moreover, when user charges can be applied, their level is constrained by affordability considerations, such as in municipal wastewater projects. This results in a volatile or at least uncertain revenue model, compromising bankability and constraining the flows of private capital.

The less bankable projects need special assistance. Blended finance can play a catalytic role in lowering risk and enhancing profitability to attract private sector participation and capital for these initiatives. Other ways to create bankable project structures includes risk allocation to the most appropriate party, either public or private, or use of subordinated instruments.

“Blue funds” also have huge potential to help overcome these challenges. Arranged by governments or development finance institutions, they could provide much-needed credit enhancement to projects in the form of blue credits. These credits are similar to carbon credits as they provide revenue support based on

the value of the avoided costs from doing a high impact project. Such funds could also support issuance by underlying project sponsors of more creditworthy blue bonds to raise competitive long-term capital from the markets.

Multilateral development banks such as the Asian Development Bank (ADB) can help by developing blue project selection criteria and policy frameworks, creating financial instruments and products, mobilising concessional finance, and preparing bankable project pipelines.

GREEN VERSUS BLUE FINANCE

Green financing has already beaten a path for blue financing to follow. Green instruments aim to pool projects together to diversify risks and enable wider access to financing by tapping the capital markets through green equities and bonds. By enhancing the bankability of a project, these instruments can encourage the expansion of investments in renewable energy, reforestation, watershed management, air quality, and clean transport.

ADB has issued $9.6 billion of Green Bonds since 2010. With additional support, blue investments can be similarly successful. Given the urgency and scale of the problem, blue investments need to gain traction rapidly.

The time has come to expand the scope beyond terrestrial habitats and include investments in our blue planet. This should be echoed by financial regulators and credit rating agencies.

Globally, work is under way to define the blue universe and sustainability criteria. A detailed approach is required, since blue financing lacks the simplicity of a single metric such as carbon equivalency or a “net zero emissions” target.

One step in this direction is ADB’s Ocean Health Program, which is building a pipeline of

bankable projects in marine/ coastal ecosystem protection and pollution reduction. Through innovative finance and partnerships, ADB hopes to catalyse further investments to deliver on the healthy oceans needed for a lasting recovery from the current turmoil. i

ABOUT THE AUTHOR

Ingrid van Wees is the Vice-President for Finance and Risk Management of ADB. She assumed the position in December 2016. She is responsible for the overall management of the operations of the Office of Risk Management, the Controller’s Department, and the Treasury Department.

ABOUT ADB

The Asian Development Bank, founded in 1966 and headquartered in Manila, Philippines, assists its members and partners by providing loans, technical assistance, grants, and equity investments to promote social and economic development. Under its long-term Strategy 2030, ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. ADB is composed of 68 members, 49 of which are from Asia and the Pacific.

Author: Ingrid van Wees

Jim O’Neill:

The Bitcoin Lottery

I was recently approached about setting up my own “special purpose acquisition company” (SPAC), which would allow me to secure financial commitments from investors on the expectation that I will eventually acquire some promising business that would prefer to avoid an initial public offering. In picturing myself in this new role, I mused that I could be doubly fashionable by also jumping into the burgeoning field of cryptocurrencies. There have been plenty of headlines about striking it big, quickly, so why not get in on the action?

Being a wisened participant in financial markets, I declined the invitation. The rising popularity of SPACs and cryptocurrencies seems to reflect not their own strengths but rather the excesses of the current moment, with its raging bull market in equities, ultra-low interest rates, and policy-driven rallies after a year of COVID-19 lockdowns.

To be sure, in some cases, pursuing the SPAC route to a healthy return probably makes a lot of sense. But the fact that so many of these entities are being created should raise concerns about looming risks in the surrounding markets.

As for the cryptocurrency phenomenon, I have tried to remain open-minded, but the economist in me struggles to make sense of it. I certainly understand the conventional complaints about the major fiat currencies. Throughout my career as a foreign-exchange analyst, I often found that it was much easier to dislike a given currency than it was to find one with obvious appeal.

I can still remember my thinking during the runup to the introduction of the euro. Aggregating individual European economies under a shared currency would eliminate a key source of monetary-policy restraint – the much-feared German Bundesbank – and would introduce a new set of risks to the global currency market. This worry led me (briefly) to bet on gold. But by the time the euro was introduced in 1999, I had persuaded myself of its attractions and changed my view (which turned out to be a mistake for the first couple of years, but not in the long term).

Similarly, I have lost count of all the papers I have written and read on the supposed unsustainability of the US balance of payments and the impending decline of the dollar. True, these warnings (and similar portents about Japan’s long-running experiment in monetarypolicy largesse) have yet to be borne out.

"As for the cryptocurrency phenomenon, I have tried to remain open-minded, but the economist in me struggles to make sense of it."

But, given all this inductive evidence, I can see why there is so much excitement behind Bitcoin, the modern version of gold, and its many competitors. Particularly in developing and “emerging” economies, where one often cannot trust the central bank or invest in foreign currencies, the opportunity to stow one’s savings in a digital currency is obviously an inviting one.

By the same token, there has long been a case to be made for creating a new world currency –or upgrading the International Monetary Fund’s reserve asset, special drawing rights – to mitigate some of the excesses associated with the dollar, euro, yen, pound, or any other national currency. For its part, China has already introduced a central bank digital currency, in the hopes of laying the foundation for a new, more stable global monetary system.

But these innovations are fundamentally different from a cryptocurrency like Bitcoin. The standard economic textbook view is that for a currency to be credible, it must serve as a means of exchange, a store of value, and a unit of account. It is hard to see how a cryptocurrency could meet all three of these conditions all of the time. True, some cryptocurrencies have demonstrated an ability to perform some of these functions some of the time. But the price of Bitcoin, the canonical cryptocurrency, is so volatile that it is almost impossible to imagine it becoming a reliable store of value or means of exchange.

Moreover, underlying these three functions is the rather important role of monetary policy. Currency management is a key macroeconomic policymaking tool. Why should we surrender this function to some anonymous or amorphous force such as a decentralised ledger, especially one that caps the overall supply of currency, thus guaranteeing perpetual volatility?

At any rate, it will be interesting to see what happens to cryptocurrencies when central banks finally start raising interest rates after years of maintaining ultra-loose monetary policies. We have already seen that the price of Bitcoin tends to fall sharply during “risk-off” episodes, when markets suddenly move into safe assets. In this respect, it exhibits the same behavior as many “growth stocks” and other highly speculative bets.

In the interest of transparency, I did consider buying some Bitcoin a few years ago, when its price had collapsed from $18,000 to below $8,000 in the space of around two months. Friends of mine predicted that it would climb above $50,000 within two years – and so it has.

Ultimately, I decided against it, because I had already taken a lot of risk investing in early-stage companies that at least served some obvious purpose. But even if I had bet on Bitcoin, I would have understood that it was just a speculative punt, not a bet on the future of the monetary system.

Speculative bets do of course sometimes pay off, and I congratulate those who loaded up on Bitcoin early on. But I would offer them the same advice I would offer to a lottery winner: Don’t let your windfall go to your head.. i

ABOUT THE AUTHOR

Jim O’Neill, a former chairman of Goldman Sachs Asset Management and a former UK Treasury Minister, is Chair of Chatham House.

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