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IBM was one of the first to incorporate the remote working trend in the early 2000s — years before the pandemic struck. At one stage, almost half of the tech firm’s 280,000 staff were working remotely. Then, in 2017, management changed tack; workers were called back to the office. Covid revived the need for flexible conditions just a few years later. Krishna seems now to have accepted the change as long-term (although there is talk of “wage
For practicality and by default — thanks to its embrace from workers weary of the daily commute and waterfountain gossip — the flicker of freedom offered by remote working became a grassroots flame. Workers, as well as those who tread the corridors of power in the world’s biggest corporations, began recognising the positives, the problems, the possibilities — and the potential economies. With the cost-of-living and inflation spiralling, who needs the overheads of an office block? Factor in saved fuel and public transport costs for the minions, and the centre of the working day shifts towards the
Flexibility seems to be the core factor in this debate — and by definition, flexibility means that something bends in more than one direction. If there is middle ground to be discovered, it will be welcome — and probably wobbly.
are finding that without mandates, many workers will shun a return to the office. The online global marketplace for buying and trading securities, the New York-based Nasdaq, tech giant IBM, Airbnb, 3M, Spotify, Lyft: all have opted for hybrid or remote working models.
Working from home was supposed to be a stop-gap measure to enable professional continuity during pandemic isolation. It quickly became more than that: a defining feature of the often-sought, seldom identified, ever-elusive New Normal.
IBM CEO Arvind Krishna has said about 20 percent of the company’s US-based workers are back in the office for three days or more each week — but he is resigned to the fact that the proportion may never climb above 60 percent.
So, what are the downsides? Isolation, for one; we humans are a social species; those nattering sessions around the staff kitchen or water cooler may be more important than is generally realised. Loneliness can be a trigger for underlying mental issues: depression, anxiety, feeling overwhelmed by life. That willingness to take calls or flick emails during downtime can devolve into burnout if workers lose the ability to differentiate between cheerful, voluntary compliance and whip-cracking by a cynical and bullying boss.
But the ball isn’t always in the employers’ court; UK employees with 26 weeks’ service have a statutory right to request flexible-working arrangements. That includes working remotely or from home, and employers are obliged by law to consider such requests. Power to the people? Perhaps. But flexible working can benefit business owners as much as it does their staff.
People learn more on-the-job than they ever did at university or through their apprenticeship — and not always through training programmes. We tend to learn from one another, sometimes without even registering it. Staff development and skills upgrades can be osmotic, the result of observing more experienced colleagues and absorbing wisdom in the process.
ThoughtsFirst First8 Thoughts
Then there are tech issues — data leaks, information security, dabbling with internet programmes or functions that would be better overseen by trained IT staff — and quibbles on both sides about the relative costs of commuting, who should pay phone and utility bills, whether salaries need to be adjusted (in either direction).
Corporationssuburbs.
The “great resignation” has been a symbol of lingering, or growing, discontent. People began quitting desirable jobs from bitterness, or simple boredom, and moving to new pastures. The PwC Global Workforce Hopes and Fears survey canvassed some 52,000 people, and found that the trend is still very much alive in 2022: one-in-five respondents is considering a move over the next year. Those planning to stick around feel justified in asking the boss for a higher salary: 35 percent said they would be applying for a raise.
The growing acceptance of new working models has not been lost on new hires, millennials especially, who are seeing a lack of flexibility as a potential dealbreaker. Mutual trust and respect can build more quickly, and more deeply, than might be the case with over-theshoulder monitoring, evaluation, and reporting. Wellbeing, motivation, productivity, and staff retention are statistically likely to rise.
And there is even flexibility within that flexibility: while workers may be quick to press for their right to work from home, they are also more likely to be less pedantic about keeping strict working hours. Psychology comes into it: A quick email or a phone call out-of-hours is likely to be
unintrusive, even acceptable, in a balanced and relaxed remote routine.
Worker-hireadjustment”).app
Salary is the primary driver for those looking around for new opportunities: 75 percent of respondents to the PwC survey said it was a factor. Fulfilment was crucial for 69 percent of potential job-jumpers, while 66 percent say they want to “truly be themselves” at work. A hybrid work environment is held up as a hopeful compromise by many, but not all employers agree (remember Yelp boss Jeremy Stoppelman’s description of it as “hell”). But for the 45 percent of survey respondents for whom hybrid is not an option, job satisfaction was ranked markedly lower.
TaskRabbit has closed its offices — San Francisco HQ included — and Elon Musk’s first winning ticket, the online payment system PayPal, has also departed San Fran. At least physically. Yelp chief executive Jeremy Stoppelman recently announced that the business directory’s 4,400-person staff will go fully remote. Stoppelman has famously described hybrid work as “hell”, and “the worst of both worlds”. The firm’s offices in New York City, Chicago, and Washington DC will close. The San Francisco HQ and a base in Phoenix remain open as day-rental office spaces.
ThoughtsFirst 9
TheWashingtonPost reports an average of three mass shootings each week in America this year. That’s 200 attacks involving the deaths of four or more people in fewer than six months (at the time of writing). Tallying the casualties is a task too grim to consider, but there are other important, mind-boggling statistics here. While your magazine is not concerned with “hard news” and focuses on business and trade, I think you may still have a role to play. Is it not time for an international push, from publications and news outlets of every stripe, to make the US government (and the NRA) see sense? Simply by regularly publicising the damning and tragic statistics, might it not possible to push — from outside the US — for some sort of change? I read that there are about 15 million assault rifles in circulation in the US — a country that already has more firearms than people. An archaic amendment aimed at providing a capable national militia is so outdated that its continued use as a justification for arming a civilian population is an insult to those who die literally every day in gunrelated violence.
We have been assured that this is a short-term problem fuelled by post-Covid excess demand, combined with deficits on the supply side as the production of goods slowly restarts.
>“““
IRMA REDFERN (Reading, Berks)
I hope I´m wrong.
Correspondence10
I read with interest Joseph E Stiglitz’s article on inflation and how to respond to it. He says that his biggest concern is central banks overreacting and raising interest rates.
Your international readers should not think that we Brits, celebrating the Platinum Jubilee of Queen Elizabeth II, were recalling or glorifying the exploits of a lost empire built on the backs of slaves. We take no pride in this chapter of our history, and should, as a nation, be quick to apologise forNorit. were we celebrating the institution of the royal family — a motley and much flawed bunch, most of whom are, thank goodness, being relegated to the side-lines. But it’s by no means sure that, when the sad day comes, a new monarch and a slimmed-down working royal family will win the hearts, minds, and electoral acceptance of the British people.These celebrations were in honour of just one special woman who has hardly put a foot wrong during 70 years of devoted service. To put it mildly, this is going to be a very hard act to follow.
However, with fresh lockdowns in Shanghai, the ongoing war in Ukraine and the West sanctioning vital goods, I can´t help but feel that Mr Stiglitz is being a tad optimistic.
IRMA REDFERN (Reading, Berks)
11 Summer 2022 Issue
ELIZABETH SANDS (Bournemouth, UK)
VIKRAM DIKSHIT Mumbai, India )
Your magazine’s regular coverage of sustainability advances has given me a dose of hope that’s desperately needed at the moment.
The consequences of world leaders’ decisions are felt most sharply by the most vulnerable populations, often unemployed and impoverished. Our leaders need to step up and work together. Covid, climate change and conflict are daily reshaping our world.
““TheJubileefestival
I’m writing in praise of Christine Lagarde, the first woman to serve as finance minister of a G7 country, managing director of the International Monetary Fund and president of the European Central Bank. She is certainly shattering glass ceilings… or as she sees it, being suspended from a glassLagardecliff. was presented with impossible circumstances, from a global pandemic to regional conflicts and rising inflation, yet she seems to be up to the task. I was thrilled to read about her plans to push the green agenda and gender equality initiatives. It’s about time we shook up the C-suite across the finance world.
NAMEWITHHELD (Illinois, US)
“
I hope the world’s governments will invest in more renewables. It would strengthen national energy resiliency and reduce greenhouse gas emissions — and go some way to protect people from the whims of autocratic strongmen like Putin.
It´s all about lifestyle.
With regard to SDG 12 (sustainable consumption and production patterns): Even if the bulk of the world’s people were to adhere to this particular goal, the increase in population will offset any possible gains. You can't deny people's aspirations, and here in Mumbai we are avid consumers of electronic goods and western style food, normally found in air-conditioned shopping malls.
of pomp, ceremony, coronation chicken and marmalade sandwiches was testament to the British people’s gratitude to, and affection for, their wonderful Queen.
CASSANDRA JONES (Radnor, Wales)
People should get involved at grassroots level. Volunteer, vote, raise your voice for what matters! Communities can install rooftop solar systems and plant urban vegetable gardens, which could take some of the pressure off the power grid and supply chains. Crises seem to be occurring with increasing frequency, and a bit of preventative action could help to insulate us from potential food shortages and spiking energy prices.
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Story Omaha Oracle (24 –HowAccenture27)DoYou Define the Metaverse? (106 –Asian107)Development Bank ‘Engine of Sustainable Development’ (140 –GrowthUNCDF141)Capital Plan (14 – 15) SoaringIMF Inflation (20 –TheOECD21)SDG Mountain (128 – 129) CommercialCBRE Real Estate (72 – 73) > ©Editorialon18-19,22-23,30-31,126-127,142ProjectSyndicate2022 DISCUSSION PAPER
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12 CFI.co | Capital Finance International Chairman Lord JD Waverley Editorial Team Sarah NaomiHelenEllenJohnBrendanKateTonyGeorgeWorthingtonKingsleyLennoxStantonFilipovskiMarinusLangfordLynnStoneSnelling
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COVER
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General Mediterranean Holding Accenture
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Philippine Economic Zone Authority (PEZA) Fred Harrison Women’s Brain Project Altoida Asian Development Bank Ville Skinnari Woochong Um
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Bashar Kilani – 117
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142 Final Thought
Otaviano Canuto Nouriel Roubini IMF
Rewarding Global Excellence
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Joseph E Stiglitz 2022 Special: Future of Food
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David Casas Alarcón –
Preeti Sinha Maimuhan Mohd Sharif Thierry Deau
Bayo Olugbemi
AmInvest
14 CFI.co | Capital Finance International
“This agreement is a further step towards our global ambition to meet the critical need for urban infrastructure that is sustainable, affordable and prepared for long term climate change while contributing to the resilience of cities,” said Meridiam founder and CEO Thierry
UNCDF and Meridiam signed an agreement to collaborate on the International Municipal Investment Fund (IMIF). The investment vehicle — the non-OECD sleeve of The Urban Resilience Fund — has a focus on developing countries, and was launched by Meridiam and the Rockefeller Foundation. It will help to develop, finance, build and operate sustainable and economically sound infrastructure projects that have a critical role to play in adapting and mitigating urban climate change.
PreetiDeau.
The CIF is designed to support investment in small and intermediary cities, and develop and deploy innovative financial models. It will play a crucial role in advancing sustainable finance at the local/subnational level, where most sustainable development services are delivered.
UNCDF and UN-Habitat aim to raise $40m over the next four years to support the required programming, operations, and technical support. The goal is to assist 250 cities with sustainable finance support by 2025.
THE INTERNATIONAL MUNICIPAL INVESTMENT FUND (IMIF)
UNCDF Executive Secretary Preeti Sinha and UN-Habitat Executive Director Maimuhan Mohd Sharif
Technical Assistance Facility will provide support to assist with cities and local government projects. Furthermore, IMIF TAF will support policy and regulatory reform. IMIF TAF focuses largely on providing direct support to municipalities in developing countries.
TheInternationalMunicipalInvestmentFundandalliedinitiativeswillsupport entitieswiththepotentialtomakearealdifferenceinfrontiermarkets.
The IMIF leverages concessional and commercial capital to increase the financing capacity available for urban infrastructure. It provides cities with support for the development and delivery of urban resilience infrastructure.
As an independent Benefit Corporation under French law, Meridiam will act as investment manager for the fund. It has the objective of identifying, developing, and investing in resilient and sustainable infrastructure projects by investing in equity and quasi-equity securities.
by UNCDF, UCLG and its technical partner, the global Fund for Cities Development (FMDV). The coalition’s goal is to lead in the advocacy, creation, and support of a global financial ecosystem for cities and local governments. The fund hopes to accelerate Agenda 2030 by increasing investment in SDG-orientated projects at the local level.
Accompanying the IMIF is an “Expression of Interest” for The International Municipal Investment Fund, Technical Assistance Facility (IMIF TAF), which is managed by TheUNCDF.IMIF
UN-Habitat executive director Maimunah Mohd Sharif added: “Through this offering,
>
Sinha, Executive Secretary of UNCDF, said the IMIF would provide access to impact capital for cities and local governments “at scale for the frontier markets of today and the growth markets of tomorrow”.
“The partnership between UN-Habitat and UNCDF will look to leverage each organisation’s distinct strengths to support sustainable finance at the local level,” said Sinha.
THE CITIES INVESTMENT FACILITY
GrowthUNCDF: Capital Plan to Assist the World’s Least-Developed Nations
The UN’s Human Settlements Programme (UNHabitat) and the UNCDF have announced the launch of the Cities Investment Facility (CIF) as part of the partnership.
After completing the Technical Assistance phase, projects that the IMIF TAF will support may be eligible for acceptance by IMIF for investment.
UNCDF — the UN’s flagship catalytic finance entity for the world’s 46 least developed countries — will provide projects with earlystage pipeline development. With its coalition partner, United Cities and Local Governments (UCLG) — a global network of some 1,000 cities in 140 countries — UNCDF will provide access to a network of local experts working with Themunicipalities.fundwill be leveraged as a tool of the Malaga Coalition, which was launched in 2019
If the private sector is continually asked to increase its appetite for promising projects in often overlooked or riskier markets, then the actors outside of the private sector need to increase its appetite for risk and innovation. Even without the agility of the private sector, the openness to new instruments, new capabilities, and a greater willingness to play a role as a de-risking partner for the private sector, make it possible.
(SDGs) will be coupled with UNCDF’s expertise in local transformative finance as the UN hub for subnational finance.
The IMIF and the Cities Investment Facility embrace the risk and innovation needed to unlock private finance to ensure that capital serves humanity — and not the other way around. i
Theimpact.”partnership
There is a frequent call for the private sector to become an active and robust agent for sustainable development. The question is perhaps not why we should do this, but how can we do it. What financing models can catalyse private capital towards SDG-positive projects with commercial potential?
Reps of UNCDF and Meridiam, including Preeti Sinha and to her right, Thierry Deau, Meridiam Chairman and CEO
cities in emerging and developing economies will be supported to build effective, own-source revenues and public financial management systems to prepare high-impact projects that can be financed, and reach local and international investors to deliver the SDGs’
CFI.co | Capital Finance International 15
between UN-Habitat and UNCDF will look to leverage each organization’s distinct strengths in order to support sustainable finance at the local level. UN-Habitat’s experience of promoting and consolidating collaboration with local governments to implement the Sustainable Development Goals
CALL TO ACTION
These two funds are intended to address that question.
The first quarter also showed a decline, in the order of 1.6 percent, after supercharged GDP growth of 6.9 percent in the last quarter of A2021.common
prefer to look at a set of indicators broader than the two quarterly GDPs of the technical recession. As suggested by the resilience of private consumption in the second quarter, the labour market remained tight. This tightening was cited by Fed president Jeremy Powell, who denied that the economy was in recession after the Fed decided to raise its basic interest rate by 75 basis points to the range of 2.25-2.5 percent.
ColumnistCFI.co 16 CFI.co | Capital Finance International >
A
Figure 1: U.S. GDP components. Source:Richter,W.(2022).GDPSunkbyPlungeinPrivateInvestment,DropinGovernmentSpending.
ConsumerSpendingRoseDespiteRagingInflation,WolfStreet,July28.Twootherrecentindicatorsreinforcethepointaboutthetightlaboursituation,whileindicatingreasonsfortheFedtofurthertightenitsmonetarypolicy.TheEmploymentCostIndex(ICE)report,whichtrackswagesandbenefitspaidbyUSemployers,showedthattotalpayforcivilianworkersduringthesecondquarterincreasedby1.3percent,upbyabout5.1percentin12months.Thecorepriceindexofbasicpersonalconsumptionexpenditures(PCE),whichleavesoutvolatileitemslikefoodandenergyandservesastheFed'smainbenchmark,rose0.6percentinJune,up4.8percentyear-on-year.After
In June, 372,000 new jobs were added, and the unemployment rate stabilised at a historically low 3.6 percent. For every unemployed person, there were two vacancies, making this one of the tightest job markets in recent history (Figure 3). Labour force participation, although increased compared to the period of the pandemic, remains low.
convention is to label it a “technical recession” when there are at least two consecutive quarters of GDP decline. But that is premature, even when recognising clear signs of an economic slowdown at the margin.
Otaviano Canuto: Is the US Economy in Recession?
Preliminary GDP results for the second quarter released by the US Bureau of Economic Analysis showed a drop of 0.9 percent in annualised terms.
Preliminary GDP figures are frequently revised. GDP and GDI (gross domestic income) figures should be equivalent, as GDP measures the sum of final expenditures in an economy, while GDI adds all incomes (wages, profits, and interest payments). In practice, imperfections in statistical collections and differences in data sources allow differences between them, even if adjusted sometime later.
Markets have come to assign a high probability that the Fed will reverse its tightening direction, given signs of an economic slowdown. “Bad news for the economy is good news for the markets,” became a motto.
reduction in private investment and public spending in the federal, state, and municipal spheres dragged it down. Private consumption increased at an annual rate of 1 percent in the quarter, discounting inflation (Figure 1).
the recent Fed meeting, equity markets went up — despite the interest rate hike. The month of July ended up positive, after a first half of the year in which US stocks suffered a decline not seen in half a century (Figure 4).
On one hand, Powell fuelled this belief when he said in the interview that the basic interest
At the moment, the difference between them has no historical precedent. The GDI, in the first quarter, came with a positive number, while the GDP fell (Figure 2). According to a study by Jeremy Nalewaik, former economist at the Fed, estimates of GDI in general point to where GDP is Economistsrevised.
Figure 2: Measures of economic growth, seasonally adjusted at an annual rate. Quarterly – Q1 2010 to Q1 2022. Source:Irwin,N.and Brown,C.(2022).1bigthing:Theeconomy'sdiverginggauges,AxiosMacro,July27.
With the improvement in financial conditions and signs of downward rigidity in core inflation, the Fed should be forced to tighten more, given that its priority is to lower inflation — even at the cost of a recession. It seems premature to bet on such a pivot.
Summer 2022 Issue ColumnistCFI.co 17CFI.co | Capital Finance International
FirstappearedatPolicyCentrefortheNewSouth.
to the target, which would require interest rates to remain above the neutral level for some time.
Figure 4: US Stocks in July posted their best month since 2020. Source:Duguid,K.andRovnik,N.(2022).USstocksspringhigherto closeoutbestmonthsince2020,FinancialTimes,July29.
The burning question is: will the Fed raise its rate by 0.50 percent or 0.75 percent? i
"The tug-of-war between the Fed and the markets will remain fierce, with two points unclear: if the economy does fall into a recession, how deep will it be? How rigid will the downward inflation rate be, measured by its core?"
A chart presented by Robert Armstrong in a Financial Times article illustrates the mismatch between Fed and market projections of the federal funds rate (Figure 5). It compares what the Fed members projected last June with expectations derived from the futures market. The market looks much more dovish than members of the Federal Open Market Committee.
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 vice-president 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 ten years.
constitutes the Fed's average inflation target, in addition to still needing 0.5 to one percent more to get there. Powell says that the level of economic activity will have to go through a period below its potential for inflation to evolve
The tug-of-war between the Fed and the markets will remain fierce, with two points unclear: if the economy does fall into a recession, how deep will it be? How rigid will the downward inflation rate be, measured by its core?
rate was entering its neutral range: one that, in a broader time horizon, does not take away or add demand stimulus to economic activity. On the other hand, such a neutral rate assumes that inflation converges to the two percent that
Follow him on Twitter: @ocanuto
Figure 3: Current US labour market much tighter than in the past three recessions. Source:Lichfield,C.andBusch,S.(2022).“When doesaneconomyenterrecession?”,AtlanticCentre,July28.
Figure 5: Fed funds rate projections. The market is on team transitory. Source: Armstrong, R. (2022). You see a dove, I see a hawk, FinancialTimes,July28.
Stagflationary Debt Crisis Looms
debate has raged for the past year, but now it is largely settled: “Team Persistent” won, and “Team Transitory” – which previously included most central banks and fiscal authorities – must admit to having been mistaken.
T
18 CFI.co | Capital Finance International
he global financial and economic outlook for the year ahead has soured rapidly in recent months, with policymakers, investors, and households now asking how much they should revise their expectations, and for how long. That depends on the answers to six questions.
>
A
First, will the rise in inflation in most advanced economies be temporary or more persistent? This
Nouriel Roubini:
The second question is whether the increase in inflation was driven more by excessive aggregate demand (loose monetary, credit, and fiscal policies) or by stagflationary negative aggregate
supply shocks (including the initial COVID-19 lockdowns, supply-chain bottlenecks, a reduced US labor supply, the impact of Russia’s war in Ukraine on commodity prices, and China’s “zero-COVID” policy). While both demand and supply factors were in the mix, it is now widely recognised that supply factors have played an increasingly decisive role. This matters because supply-driven inflation is stagflationary and thus raises the risk of a hard landing (increased
The fourth question is whether a hard landing would weaken central banks’ hawkish resolve on inflation. If they stop their policy tightening once a hard landing becomes likely, we can expect a persistent rise in inflation and either economic overheating (above-target inflation and above potential growth) or stagflation (above-target inflation and a recession), depending on whether demand shocks or supply shocks are dominant.
stagflationary shocks, a central bank must tighten its policy stance even as the economy heads toward a recession. The situation today is thus fundamentally different from the global financial crisis or the early months of the pandemic, when central banks could ease monetary policy aggressively in response to falling aggregate demand and deflationary pressure. The space for fiscal expansion will also be more limited this time. Most of the fiscal ammunition has been used, and public debts are becoming unsustainable.
ABOUT THE AUTHOR
Moreover, because today’s higher inflation is a global phenomenon, most central banks are tightening at the same time, thereby increasing the probability of a synchronised global recession. This tightening is already having an effect: bubbles are deflating everywhere – including in public and private equity, real estate, housing, meme stocks, crypto, SPACs (special-purpose acquisition companies), bonds, and credit instruments. Real and financial wealth is falling, and debts and debt-servicing ratios are rising.
Whencrisis.confronting
Summer 2022 Issue CFI.co | Capital Finance International 19
There is ample reason to believe that the next recession will be marked by a severe stagflationary debt crisis. As a share of global GDP, private and public debt levels are much higher today than in the past, having risen from 200% in 1999 to 350% today (with a particularly sharp increase since the start of the pandemic). Under these conditions, rapid normalisation of monetary policy and rising interest rates will drive highly leveraged zombie households, companies, financial institutions, and governments into bankruptcy and default.
higher debt levels, implying that we are heading for a combination of 1970s-style stagflation and 2008-style debt crises – that is, a stagflationary debt
unemployment and potentially a recession) when monetary policy is tightened.
That brings us to the final question: Will equity markets rebound from the current bear market (a decline of at least 20% from the last peak), or will they plunge even lower? Most likely, they will plunge lower. After all, in typical plain-vanilla recessions, US and global equities tend to fall by about 35%. But, because the next recession will be both stagflationary and accompanied by a financial crisis, the crash in equity markets could be closer to 50%.
Most market analysts seem to think that central banks will remain hawkish, but I am not so sure. I have argued that they will eventually wimp out and accept higher inflation – followed by stagflation – once a hard landing becomes imminent, because they will be worried about the damage of a recession and a debt trap, owing to an excessive build-up of private and public liabilities after years of low interest rates.
Regardless of whether the recession is mild or severe, history suggests that the equity market has much more room to fall before it bottoms out. In the current context, any rebound – like the one in the last two weeks – should be regarded as a dead-cat bounce, rather than the usual buythe-dip opportunity. Though the current global situation confronts us with many questions, there is no real riddle to solve. Things will get much worse before they get better. i
recognising that a recession is possible, and that a soft landing will be “very challenging.”
Moreover, a model used by the Federal Reserve Bank of New York shows a high probability of a hard landing, and the Bank of England has expressed similar views. Several prominent Wall Street institutions have now decided that a recession is their baseline scenario (the most likely outcome if all other variables are held constant). In both the United States and Europe, forward-looking indicators of economic activity and business and consumer confidence are heading sharply south.
Nouriel Roubini, Professor Emeritus of Economics at New York University’s Stern School of Business, is Chief Economist at Atlas Capital Team, CEO of Roubini Macro Associates, CoFounder of TheBoomBust.com, and author of the forthcoming MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them (Little, Brown and Company, October 2022). He is a former senior economist for international affairs in the White House’s Council of Economic Advisers during the Clinton Administration and 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.
Now that a hard landing is becoming a baseline for more analysts, a new (fifth) question is emerging: Will the coming recession be mild and short-lived, or will it be more severe and characterised by deep financial distress? Most of those who have come late and grudgingly to the hard-landing baseline still contend that any recession will be shallow and brief. They argue that today’s financial imbalances are not as severe as those in the run-up to the 2008 global financial crisis, and that the risk of a recession with a severe debt and financial crisis is therefore low. But this view is dangerously naive.
That leads directly to the third question: Will monetary-policy tightening by the US Federal Reserve and other major central banks bring a hard or soft landing? Until recently, most central banks and most of Wall Street occupied “Team Soft Landing.” But the consensus has rapidly shifted, with even Fed Chair Jerome Powell
The next crisis will not be like its predecessors. In the 1970s, we had stagflation but no massive debt crises, because debt levels were low. After 2008, we had a debt crisis followed by low inflation or deflation, because the credit crunch had generated a negative demand shock. Today, we face supply shocks in a context of much
SoaringIMF: Inflation Puts Central Banks on a Difficult Journey
The Federal Reserve, Bank of Canada, and Bank of England have already raised interest rates markedly and have signaled they expect to continue with more sizable hikes this year. The European Central Bank recently lifted rates for the first time in more than a decade.
By Tobias Adrian, Christopher Erceg & Fabio Natalucci
This seems to be a reasonable baseline for several •reasons:Themonetary and fiscal tightening in train should cool demand both for energy and nonenergy goods, especially in interest-sensitive categories like consumer durables. This should cause goods prices to rise at a slower pace or even fall, and may also push energy prices lower in the absence of additional disruptions in commodity •markets.Supply-side pressures should ease as the pandemic relaxes its grip and lockdowns and production disruptions become less frequent.
Even so, inflation risks appear strongly tilted to the upside. There is a substantial risk that high inflation becomes entrenched, and inflation expectations de-anchor.
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Central bank actions and communications about the likely path of policy have led to a significant rise in real (that is, inflation-adjusted) interest rates on government debt since the start of the
Now,eased.with inflation climbing to multi-decade highs and price pressures broadening to housing and other services, central banks recognise the need to move more urgently to avoid an unmooring of inflation expectations and damaging their credibility. Policymakers should heed the lessons of the past and be resolute to avoid potentially more painful and disruptive adjustments later.
Whileyear.
To illustrate, market-based measures of inflation expectations point to a return of inflation to around 2 percent within the next two or three years for both the United States and Germany. Central bank forecasts, such as the Fed’s latest quarterly projections, point to a similar moderation in the rate of price increases, as do surveys of economists and investors.
Upsideriskstotheinflationoutlookremainlarge,andmoreaggressivetighteningmaybeneedediftheserisksmaterialise.
HIGHER REAL RATES TO HELP PUSH DOWN INFLATION
short-term real rates are still negative, the real rate forward curve in the United States—that is, the path of one-year-ahead real interest rates one to 10 years out implied by market prices— has risen across the curve to a range between 0.5 and 1 percent.
SUBSTANTIAL RISK INFLATION RUNS HIGH However, the magnitude of the inflation surge has been a surprise to central banks and markets, and there remains substantial uncertainty about the outlook for inflation. It is possible that inflation comes down more quickly than central banks envision, especially if supply chain disruptions ease and global policy tightening results in fast declines in energy and goods prices.
The real rate forward curve in the euro area, proxied by German bunds, has also shifted up, though remains deeply negative. That’s consistent
• Slower economic growth should eventually push down service-sector inflation and restrain wage growth.
entral banks in major economies expected as recently as a few months ago that they could tighten monetary policy very gradually. Inflation seemed to be driven by an unusual mix of supply shocks associated with the pandemic and later Russia’s invasion of Ukraine, and it was expected to decline rapidly once these pressures
This path is roughly consistent with a “neutral” real policy stance that allows output to expand around its potential rate. The Fed’s Summary of Economic Projections in mid-June suggested a real neutral rate of around 0.5 percent, and policymakers saw a 1.7 percent output expansion both this year and next, which is very close to estimates of potential.
with real rates converging only gradually to
real interest rates on government bonds have spurred an even larger rise in borrowing costs for consumers and businesses, and contributed to sharp declines in equity prices globally. The modal view of both central banks and markets seems to be that this tightening of financial conditions will be enough to push inflation down to target levels relatively quickly.
Theneutral.higher
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Source: IMF staff calculations.
The costs of bringing down inflation may prove to be markedly higher if upside risks materialise and high inflation becomes entrenched. In that event, central banks will have to be more resolute and tighten more aggressively to cool the economy, and unemployment will likely have to rise significantly.
Source
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Consumers and businesses have also become increasingly concerned about upside inflation risks in recent months. For the United States and Germany, household surveys show that people expect high inflation over the next year, and put considerable odds on the possibility that it runs well above target over the next five years.
Inflation rates in services — for everything from housing rents to personal services — appear to be picking up from already elevated levels, and they are unlikely to come down quickly. These pressures may be reinforced by rapid nominal wage growth. In countries with strong labor markets, nominal wages could start rising rapidly, faster than what firms reasonably could absorb, with the associated increase in unit labor costs passed into prices. Such “second round effects” would translate into more persistent inflation and rising inflation expectations. Finally, a further intensification of geopolitical tensions that ignites a renewed surge in energy prices or compounds existing disruptions could also generate a longer period of high inflation.
Amid signs of already poor liquidity, faster policy rate tightening may result in a further sharp decline in risk asset prices—affecting equities, credit, and emerging market assets. The tightening in financial conditions may well be disorderly, testing the resilience of the financial system and putting especially large strains on emerging markets. Public support for tight monetary policy, now strong with inflation running at multi-decade highs, may be undermined by mounting economic and employment costs.
blogs.imf.org/2022/08/01/soaring-inflation-puts-central-banks-on-a-difficult-journey
Higher real rates to tame inflation: Markets and central banks view tightening of policy as sufficient to quickly push inflation back down to target levels. (percent, forward implied path of one-year rates as of July 25). Source:BloombergFinanceLP;IMFYieldCurveManager. Note: Curves represent the priced-in path of forward breakeven inflation rates and forward one-year real rates derived from inflationprotectedsovereignbonds.Spotratesrepresentthecurrentone-yearrates. Household expectations: Most households in the United States and Germany expect high inflation over the next year. (latest, share of respondents, percent). Source:UniversityofMichigan,Bundesbankconsumersurveys.Note:Shareofrespondentsisbasedonkernel densitiesfitonmicro-data,withmethodologydescribedinGelosandothers(forthcoming).
While the market-based evidence on “average” inflation expectations discussed above may seem reassuring, markets appear to put significant odds on the possibility that inflation may run well above central bank targets over the next few years. Specifically, markets signal a high probability of inflation rates of over 3 percent persisting in coming years in the United States, euro area and the United Kingdom.
Even so, restoring price stability is of paramount importance, and is a necessary condition for sustained economic growth. A key lesson of the high inflation in the 1960s and 1970s was that moving too slowly to restrain it entails a much more costly subsequent tightening to re-anchor inflation expectations and restore policy credibility. It will be important for central banks to keep this experience firmly in their sights as they navigate the difficult road ahead.
Summer 2022 Issue CFI.co | Capital Finance International 21
MORE FORCEFUL TIGHTENING MAY BE NEEDED
Mounting expectations: Markets see a sizable risk that inflation will run high in coming years (latest, percent, over five years).
Mohamed A El-Erian:
t has been five months since Europe and the United States imposed tough economic and financial sanctions on Russia, a G20 country that was the world’s eleventhlargest economy on the eve of its invasion of Ukraine. While the sanctions have been gradually strengthened in the intervening months, debate rages about their effectiveness, the war’s broader
implications for markets and the global economy, and what the West’s next steps should be.
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The Problem with the Current Russia Sanctions Regime
while other forecasters expect a larger fall, together with longer-lasting damage to growth potential. Imports and exports have been severely disrupted, and inflows of foreign investment have essentially stopped. Shortages are multiplying, pushing inflation higher. At this point, the country no longer has a properly functioning foreign-exchange market.
On the first question, although the sanctions have been less effective than Europe and the US had hoped, they also are proving more onerous than the Kremlin claims. Russia’s central bank expects GDP to contract by 8-10% this year,
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The sanctions would have bitten much harder had the West not opted for a carve-out of Russia’s energy sector, and had many more countries joined the US and Europe in the effort. Because that didn’t happen, Russia has not felt nearly as much pressure as it would have. Moreover, it has been able to continue trading through various side and back doors that will likely become increasingly important as long as the sanctions regime, as currently designed, continues.
In any case, maintaining the current sanctions regime is not problem-free, owing to the twin objectives of pressuring Russia and limiting the economic disruption to Europe. Moreover, as European Commission President Ursula von der Leyen recently said, it feels as if Russia is “blackmailing” Europe by threatening to disrupt gas supplies at any moment. No wonder the Commission is urging member countries to cut consumption by 15%.
Butsanctions.itisimpossible to replace something with nothing, which means that no significant loss of dollar or US financial primacy will occur in the immediate future. Rather, the sanctions will lend further momentum to the gradual process of global economic fragmentation, which was also fueled a few years ago by the tariffs imposed by the Trump administration. More countries now have even more of a reason to pursue greater
Muddling through risks bringing about the worst of all possible worlds. It is insufficient to dissuade Russia from continuing its illegal war; it is fueling deeper fragmentation of the international monetary system; and it is not even protecting Europe from a winter gas disruption. i
question concerns global spillovers from the war and the sanctions regime. Most observers agree that Russia’s invasion has increased not just energy insecurity but also food insecurity, highlighting the fallout from the war’s disruption to Ukrainian agricultural exports. But there is still much debate about the West’s use of the economic nuclear sanctions option: the curbs placed on Russia’s central bank and on Russia’s use of the international payments system.
financial resilience and inherently inefficient forms of self-insurance.
Mohamed A El-Erian, President of Queens’ College, University of Cambridge, is Professor at the Wharton School, University of Pennsylvania, and the author of The Only Game in Town: CentralBanks,Instability,andAvoidingtheNextCollapse,RandomHouse,2016.
Doing so would undoubtedly have a severe shortterm economic impact on European economies and the rest of the world, amplifying the “little fires everywhere” syndrome that I warned about in May. It is therefore critical that governments use their available fiscal space to provide targeted support to vulnerable segments of the population, as well as to fragile countries; and multilateral agencies must support developing countries through aid and a more operational debt relief framework. If done properly, this option would yield better outcomes in the medium and long term than the current strategy.
In a time of war, such oversight might seem like a nicety. But some worry that the sanctions could significantly reduce the dollar’s role as the world’s reserve currency and the US financial system’s role as the primary global intermediary for other countries’ savings and investments. After all, a growing number of countries undoubtedly now feel more vulnerable to the reach of US
"Russia’s central bank expects GDP to contract by 8-10% this year, while other forecasters expect a larger fall, together with longer-lasting damage to growth potential."
These curbs are far more intrusive than the usual mix of restrictions on sanctioned government and private sector trade and on individuals’ financial dealings. Yet, because they are not subject to any internationally agreed standards, guidelines, or checks and balances, they fall outside the purview of relevant global-governance bodies such as the Bank for International Settlements, the International Monetary Fund, and the World Trade Organization.
Under the current sanctions regime, the West risks falling between two horses. While easing sanctions could help alleviate concerns about Europe’s economic outlook, this option is a nonstarter, given the atrocities that Russian forces are committing in Ukraine. But if the West is serious about pressuring Russia through truly crippling economic and financial sanctions, it needs to bite the bullet and eliminate the carveouts for energy.
Summer 2022 Issue CFI.co | Capital Finance International 23
Theforecasts.second
ABOUT THE AUTHOR
That brings us to the third debate. With no end in sight for the war, what should the West do next? Fearing the implications for energy prices and the supply of gas to Europe, many in the West are tempted to call for a moratorium on any new sanctions – or even for additional carveouts. Others, however, favor additional measures to hold Russia accountable for its indiscriminate attacks on Ukrainian civilians.
Nonetheless, it is only a matter of time before the Russian economy experiences a harder hit. Inventories of imported goods – including many critical technological and industrial inputs – are dwindling fast, and many sectors are becoming less resilient. The cumulative damage to Russia’s economy over time will be significant and long-lasting – a fact that has not yet been fully captured by consensus medium-term
By some calculations, that modest investment in a no-fee index fund — something not yet available in 1942 — would have grown to over $600,000 by 2020. As Buffett himself pointed out in one of his letters to investors, the same
University of Nebraska is conspicuously absent.
ublic speaking is one essential skill that can see anyone succeed in life. Master it, and your future earnings could easily balloon by 50 percent or more.
By Wim Romeijn
CFI.co | Capital Finance International StoryCover 24 WarrenBuffetteatslikeasix-year-oldandinvestslikeasage;WimRomeijnreportsonthefinancialwizard’slife,times…andquirks.
OMAHA ORACLE ON PUBLIC SPEAKING, FAST FOOD AND FUTURE OF AN EMPIRE
That key is the oft-underappreciated power of compound interest, one of the book’s recurring themes. At the tender age of 11, Warren Buffett put his savings — a grand total of $114.75 — in the stock market, acquiring three preferred shares in Cities Services, a now-defunct natural gas company.
This advice, often ignored, was given by selfmade billionaire investor Warren Buffett in 2009 during a townhall meeting with students at Columbia University in New York. True to style, Buffett offered those present $100,000 cash for a 10 percent cut of their future earnings; $150,000 for those willing to invest in a course to hone their communication skills. It is not known if there were any takers.
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sum invested in gold would have grown to just $4,200 — or less than one percent — from an unmanaged bet on US business. “The magical metal was no match for American mettle,” as he wittily put it.
Acknowledging that government debt is a poor metric of a nation’s progress, Buffett points to the Federal Reserve’s estimate of US household wealth: a staggering $108tn. That sum is described as “retained earnings”, a crucial concept in his investment strategy and one that helps to explain the tailwind. The well of resources gives US entrepreneurs access to capital for continuous innovation, expansion, and disruption.
It was another book that set the young Buffett on his way to success: One Thousand Ways to make $1000, a 1936 tome sourced from his father’s office, inspired him to experiment, peddling assorted wares door-to-door in the neighbourhood (and squirreling away a tidy sum in the process). The book, long out-of-print, has become a sought-after classic for the legions of investors hanging on Buffett’s every word.
Buffett has been consistently bullish on the American economy, as evidenced by his recent $51.1bn splurge on US stocks, including Citigroup, Occidental Petroleum, and Paramount Global. He regularly mentions “the American Tailwind” as the main propellant of his enduring success. That tailwind represents the dynamics — minus the politics — of the US economy and the society that drives it.
WARREN BUFFETT:
Public speaking did not come easily to Buffett himself. The Oracle of Omaha has confessed to “great trepidation” when addressing gatherings during his college years. Taking a Dale Carnegie course changed that for the better. In fact, Buffett’s diploma from the author of How to Win Friends and Influence People is the only plaque displayed at the Omaha office from which he rules the Berkshire Hathaway empire. The degree in Business Administration he secured from the
Rather than ascribing his success to business acumen or esoteric investment strategies, Buffett recognises that he and long-time friend and partner Charlie Munger — vice-chair of Berkshire Hathaway — have merely benefitted from that tailwind. The celebrated investor is famously uninterested in politics.
Sage advice: Don’t bet against the resilience of the US economy. Ignore the chatter and trust in business to consistently turn a profit. The system, as Buffett sees it, always finds a way to either solve or work around problems. The optimist is, as a rule, rewarded with solid returns.
Buffettpoint.”
1949 book The Intelligent Investor has provided Buffett with a lifelong guide. It introduces a sharp distinction between investing and speculation. The author concludes that the intelligent investor is one who does not participate in the market’s follies, but merely profits from them.
The current market, apparently rudderless but drifting south, is akin to the “voting machine” Buffett warned of when paraphrasing the British inventor of value-investing, Benjamin Graham. In the short run, Graham found, the market is a voting machine; in the long run, it is a weighing
Most important of all: Buffett will not invest in companies whose business case he finds hard to grasp. That down-to-earth philosophy helped steer Berkshire Hathaway away from the dot-com bubble of the early 2000s. Proud and sensible Luddites such as Buffett and Munger eschew novelty for novelty’s sake. Berkshire Hathaway seeks to establish a company’s intrinsic value by projecting future earnings and discounting them to present-day levels. Ignoring short-term market moves should allow investors to focus on longterm returns. Exceptions occur when the stock of a company with solid fundamentals suffers a notable drop in its share price — which signals an opportunity to snap-up a few more shares at a Shorndiscount.ofall adornments, value investing equals the search for publicly held companies whose stock is undervalued for no apparent reason. Buffett takes this a step further by adhering to the efficient market hypothesis (EMH) which holds that markets always know best and trade stocks at their fair value. Of course, EMH makes it hard, if not impossible, to identify and buy stock that is undervalued, given that the hypothesis eliminates such irregularities.
Graham’smachine.
is widely credited with introducing the notion of value-investing to the public, backing companies with solid earnings and long-term growth potential. He appreciates companies that pay out a decent dividend to shareholders, and those that can admit and disclose their mistakes.
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In his 2019 letter to Berkshire Hathaway shareholders, he reminded readers that since 1942, the US has had seven Republican and seven Democrat administrations. “While they served, the country contended at various times with a long period of viral inflation,” he wrote, “a 21 percent prime rate, several controversial and costly wars, the resignation of a president, a pervasive collapse in home values, a paralysing financial panic, and a host of other problems. All engendered scary headlines; all are now history.”
Speaking at the annual meeting of Berkshire Hathaway in April this year, Buffet likened the current state of US financial markets to a casino. Millions of new traders entered the system, often spurred into opening brokerage accounts by covid lockdown boredom. The pace of trading has increased, and ready access to options markets has enticed many to place leveraged bets on the rise or fall of iconic companies such as Apple or Tesla — often based on minute fluctuations.
And so it is that Berkshire Hathaway, the fourth-largest company in the world, maintains an exceptionally long investment horizon. The analysts’ usual fixation on quarterly earnings is pointless. Explaining his early 2018 acquisition of an additional 75 million shares in Apple, Buffet dismissed concerns about the company’s disappointing sales. “Nobody buys a farm based on whether they think it’s going to rain next year,” he pointed out. “They buy it because they think it’s a good investment over 10 or 20 years. The idea that you’re going to spend loads
Taking a cue from the master’s master, Buffett and Munger used the market follies to place their own mega-bets — such as acquiring a 14 percent stake in Occidental Petroleum in just two weeks.
of time trying to guess how many iPhones X, or whatever it may be, are going to be sold in a given, three-month period, totally misses the
This is the point at which Berkshire Hathaway applies common sense in determining which company is well-run and has upside potential. There is no magic involved. It boils down to a difference in approach: the conscious choice not to seek capital gain, but to build a stake in quality companies capable of generating earnings.
Assets must deliver value, to his way of thinking, and that is expressed in dollars. “We could, conceivably, introduce Berkshire coins, but in the end, it’s dollars that count. Moreover, the is no reason in the world why the US government is going to let our coins replace theirs.”
“Ifanything.yousaid,
The Berkshire Hathaway board argued that it maintains a “notoriously small” central office — staffed by just 26 people — which manages the company’s interests in an “unusually decentralised” way.
Both men expressed distain for day traders and brokers using blue chip stocks as poker chips.
Terra, Celsius, Three Arrows Capital and, more recently, Coinbase are among the crypto players that have been caught short. Cuban believes the downturn may have a purifying effect, ridding the crypto universe of bad apples.
with business students, Buffett summarised his philosophy thus: “You can’t buy health and you can’t buy love. I’m not interested in cars, and my goal is not to make people envious.”
Crypto and fintech, Thiel says, constitute a movement — and it’s a political question as to whether it will succeed, or whether its opponents will manage to stop it. He singled out Warren Buffet as “enemy number one”, also naming and shaming JP Morgan Chase CEO Jamie Dimon and BlackRock chief executive Larry Fink.
Thiel claimed that the campaign against innovation in finance prevented Bitcoin from rivalling gold as a hedge against inflation — and predicted that the value of crypto could soon match that of all public equities at $115tn.
Berkshire Hathaway’s noninsurance investments. He arrived at the company via CalEnergy, which he transformed from a bit player in the California upstream oil and natural gas business into global force with offshore gas assets in Australia, Poland, and the UK. In 2000, after CalEnergy was absorbed into the Berkshire Hathaway constellation, Abel was put in charge of the company’s energy unit where he got the opportunity to further hone his dealmaking skills.
As future CEO, Abel may yet face more shareholder pressure. Buffett plans to donate most of his wealth to charity. His class-A stock with preferential voting rights (representing 32 percent of the vote) has so far limited activist investors to voicing their opinion (on, say, environmental standards and climate change) before being ignored. Upon his death, Buffett’s holdings will be converted to class-B — and will probably be traded by new shareholders potentially less willing to be silenced by senior management.
The recent crash in its value underscores the sage advice of the Omaha duo. The present crypto bear market prompted billionaire Bitcoin investor Mark Cuban to tip his hat to Buffett: “He
“Now, if you told me you own all of the Bitcoin in the world and you offered it to me for $25bn, I wouldn’t take it — because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything. The apartments are going to produce rent and the farms are going to produce food.”
Abel’s division soon became known for its prowess in quick takeovers. In 2005, it acquired PacifiCorp in a $5.1bn deal, followed by the $10.4bn purchase of the Nevada power company NV Energy and the $8bn buyout of Dominion Energy’s pipeline business last year. A few more sceptical Berkshire Hathaway shareholders point to the failed 2017 $18bn bid for Oncor Energy as proof that Abel is less savvy than Buffett.
Berkshire Hathaway has so far been reluctant to disclose and detail its efforts to address climate change and promote diversity and inclusion across its 360,000-strong workforce. Last year, it successfully urged shareholders to vote down two proposals that would have forced it to
prepare annual reports on climate-related risks and disclose its hiring policies.
Munger accused crypto in general, and Bitcoin in particular, of undermining the US Federal Reserve System. “Also, it makes us look foolish in comparison to the communist leader in China who was smart enough to ban Bitcoin.”
for a one percent interest in all the farmland in the United States, pay our group $25bn, I’ll write you a cheque this afternoon. For $25bn, I now own one percent of the farmland. If you offer me one percent of all the apartment houses in the country and you want another $25bn, I’ll write you a cheque, it’s very simple.
For his breakfast, the billionaire usually turns to McDonald’s on his five-minute commute to work. He once studied the actuarial tables of his insurance companies and found that the lowest death rate is among six-year-olds, “so I decided to eat like a six-year-old. It’s the safest course to take.” His old friend Bill Gates recalled in 2017 how Buffett once paid for their fast-food lunch with Duringcoupons.aQ&A
Just before the “Woodstock for Investors” got under way in Omaha, libertarian tech investor Peter Thiel raged against the reigning “finance gerontocracy”. The angel investor in Facebook and co-founder of PayPal and Palantir Technologies launched an attack on the forces that he thinks deliberately seek to supress Bitcoin to preserve their own power.
StoryCover 26 CFI.co | Capital Finance International
A big question mark hovering over the $500bn business empire Buffet (92) and Munger (98) have built concerns the inevitable. Plans are afoot to split the top job at Berkshire Hathaway into three separate functions in the post BuffettMunger era: a CEO to steer capital allocation, an investment manager to handle the company’s stock portfolio, and a chair for the board.
Speaking to CNBC in early 2020, Buffett confirmed that should “something happen” to him, vice-chair Greg Abel would take over. Munger is sure that Abel would “keep the culture” of the company. The course of succession, reportedly decided in 2012, has been kept secret — one of the few issues that captivates and annoys Abelshareholders.oversees
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“People attach magic to lots of things,” Buffett has said, “and one of them is Bitcoin.” But the Omaha Oracle admits that he is clueless as to the future value of Bitcoin. “Whether it goes up or down over the next five years, I do not know. But I’m pretty sure that it doesn’t produce
was right. It’s only when the tide goes out that you discover who has been swimming naked.”
Although shareholders do sometimes grumble at the excessive earnings top execs like Abel — his pay package topped $19m last year — Buffett himself maintains a famously frugal lifestyle. He draws an annual salary of $380,000, and until last year lived in the house he bought in 1958 for just $31,500.
erkshire Hathaway was born in 1839 as the Valley Falls Company in the eponymous Rhode Island town.
Warren Buffett believes the power of dividends is the investor’s secret weapon. Berkshire Hathaway holds large positions in Fortune 500 companies such as Apple, American Express, and Coca-Cola — which have a solid track record of paying regular and steady dividends. CocaCola has increased its annual dividend for 55 consecutive years.
B
years, Buffett said that buying the failing textile business was his biggest investment mistake; it cost him an estimated $200bn in denied compound returns over the following 45 years. The last Berkshire Hathaway textile mill was shuttered in 1985.
Now one of the world’s biggest holding companies, the enduring success of that “mistake” may be ascribed to its vast interests in the insurance industry which generates a considerable float — money paid in premiums but yet to be employed to cover claims. This cash reserve is on-hand to be invested — and amounted in 2021 to a staggering $147bn.
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Warren Buffet’s Biggest Mistake — and the ‘Bathroom Break’ Moment
Loom for just $835m after its stock lost 97 percent of its value. Further purchases rid Fruit of the Loom of its main competitors and allowed a return to profit. Moving manufacturing plants to Honduras and other low-wage jurisdictions boosted the bottom line.
Although Berkshire Hathaway takes in dividends, the company doesn’t pay any to its shareholders, preferring to reinvest the proceeds. Only once, in 1967, did it pay a 10-cent dividend per share. To this day, Buffett maintains he must have been in the bathroom when the pay-out was authorised. i
The float allows Berkshire Hathaway to move quickly and decisively when an opportunity arises. In 2002, it enabled the purchase of struggling clothing manufacturer Fruit of the
His lowball tender caused Buffett great indignation and prompted him to turn the tables on his nemesis. Instead of selling, he acquired
In 1962, a young Warren Buffett bought his first Berkshire Hathaway stock — after noticing that it wobbled each time the company closed a textile mill. He gradually expanded his stake in the company, but frequently clashed with its chief executive, Seabury Stanton, who offered to buy back Buffett’s stock.
additional stock — and eventually had Stanton Infired.later
In 1955, after a string of mergers, Berkshire Fine Spinning Associates joined up with the Hathaway Manufacturing Company to form an industrial behemoth of 15 plants employing 12,000 workers and bringing in $120m in annual revenue.
• Mass adoption of inter-operable technology Forsolutions.the UK, the centrepiece of this year’s legislative programme is the introduction of an Electronic Trade Documents Bill. It will be the start of a journey to revolutionise the trading environment electronically when issuing negotiable instruments and documents of title.
exists, information is not yet free-flowing. Different formats inhibit solutions from being driven at scale. Technology, rules, and standards connect the fragmented systems between governments, shippers, financiers, insurers, traders, and ports. Blockchain has made trade based on electronic documents feasible — but the goal is to enable the tech market to thrive.
Technology was not available for the creation of electronic paper equivalents. It was not permitted under English law, which requires these instruments to be tangible. An electronic document must be the functional equivalent of a physical document for bills of exchange, promissory notes, warehouse receipts, bills of lading, ships’ delivery orders, mates’ receipts, marine insurance policies and cargo insurance
Trading across borders is a notoriously complex process, highly dependent on paper documents — despite decades-long efforts to digitalise.
Lord Waverley on Digital Transactions: Well Worth the Paper They Aren’t Written On
versions of these negotiable instruments can be issued and handled at a fraction of the cost of the paper equivalent, making them available for SMEs seeking discounting with financial institutions. Exports could be boosted, as receivables converted to debt instruments can be sold.
This will include the legal recognition of electronic versions of commercial trade documents, such as bills of lading, bills of exchange, and warehouse receipts. They will have the same legal effect as their paper equivalents and create legal certainty for the transacting parties.
The digitalisation of customs and trade authorisation will not deliver economic gains unless it is combined with legal reform. What is needed is an approach that delivers both, by addressing three barriers to digital cross-border •trade.Enable national laws recognising commercial trade documents in digital form
Failure to do this will result in higher trade costs for business, fragmented platforms, and systems that do not connect to one other. Basic trade information cannot flow across the system in overly bureaucratic and inefficient processes.
cross-border transaction involves multiple actors and, on average, the exchange of 27 documents. All of this makes trade expensive, slow, and unnecessarily complex.
The British government intends to be the world leader in innovation and regulatory reform by implementing common digital standards and driving technology solutions at scale. As companies around the world struggle with high trade costs and large volumes of documentation, an Electronic Trade Documents Bill presents an important step towards standardisation, digitalisation, and Whilesimplification.thetechnology
• Address the lack of common digital standards to connect systems
ColumnistCFI.co 28 CFI.co | Capital Finance International >
Electroniccertificates.
This will permit affordable transport, logistics management and finance, and promote international trade. Digitalisation would also reduce the illicit trading of goods, lowering the cost for finance and discounting, transport documents, and certificate and customs clearance.
A
Documents of title, such as bills of lading, are pivotal instruments in transport and logistics. Title and negotiable instruments are core documents in trade and finance which have, until now, been tied to physical documents and manual handling. Delayed or lost bills of lading cause demurrage for the carrier, resulting in charges and loss of income.
IndependentMemberHouseofLordsTwitter: @LordWaverley linkedin.com/in/LinkedIn: jdwaverley
ABOUT THE AUTHOR
Summer 2022 Issue ColumnistCFI.co 29
is in a position to determine its own path in a world disrupted by digitalisation and recovering from a pandemic. It has a clear agenda for maximising technology innovation to achieve high-level digital trade. Once in place, the bill will steer digital trade policy and practice towards the UK’s border goals as part of a strategic Paperlessinitiative.tradewould
Theefficient.UK
Lord (JD) Waverley
allow regulation to act as a stimulus for trade growth — and changing laws will cost governments little and deliver considerable economic gains. i
"The UK is in a position to determine its own path in a world disrupted by digitalisation and recovering from a pandemic. It has a clear agenda for innovationtechnologymaximising to achieve high-level digital trade."
Several legal reforms in different regions were inspired by the MLETR principles — but the proposals for Electronic Trade Documents would harmonise and future-proof English legislation for international trade standards and legislation.
Championing neutral trade legislation technology is the United Nations Commission on International Trade Law (UNCITRAL), which anticipated the need for guidance on the distribution of trade documents and published a Model Law for Electronic Transferable Records (MLETR) in 2017.
Thirty percent of global trade is based on English law, so the passing of the Electronic Trade Documents Bill — as a model for other commonlaw jurisdictions — should enable technology neutrality. Machine-readable documents enable more efficient sanctions and make anti-money laundering and sanctions processes more
How the US Could Lose the New Cold War
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Forstake.two
decades after the fall of the Iron Curtain, the US was clearly number one. But then came disastrously misguided wars in the Middle East, the 2008 financial crash, rising inequality, the opioid epidemic, and other crises that seemed to cast doubt on
global hegemony, not values, that is really at
the superiority of America’s economic model. Moreover, between Donald Trump’s election, the attempted coup at the US Capitol, numerous mass shootings, a Republican Party bent on voter suppression, and the rise of conspiracy cults like QAnon, there is more than enough evidence to suggest that some aspects of American political and social life have become deeply pathological.
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he United States appears to have entered a new cold war with both China and Russia. And US leaders’ portrayal of the confrontation as one between democracy and authoritarianism fails the smell test, especially at a time when the same leaders are actively courting a systematic human-rights abuser like Saudi Arabia. Such hypocrisy suggests that it is at least partly
Joseph E Stiglitz:
In seeking the world’s favor, the US will have to make up a lot of lost ground. Its long history of exploiting other countries does not help, and nor does its deeply embedded racism – a force that Trump expertly and cynically channels. Most recently, US policymakers contributed to global “vaccine apartheid,” whereby rich countries got all the shots they needed while people in poorer countries were left to their fates. Meanwhile, America’s new cold war opponents have made their vaccines readily available to others at or below cost, while also helping countries develop their own vaccineproduction facilities.
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), chair of the US President’s Council of Economic Advisers, and co-chair of the High-Level Commission on Carbon Prices. He is a member of the Independent Commission for the Reform of International Corporate Taxation and was lead author of the 1995 IPCC Climate Assessment.
The credibility gap is even wider when it comes to climate change, which disproportionately affects those in the Global South who have the least ability to cope. While major emerging markets have become the leading sources of greenhouse-gas emissions today, US cumulative emissions are still the largest by far. Developed countries continue to add to them, and, worse, have not even delivered on their meager promises to help poor countries manage the effects of the climate crisis that the rich world caused. Instead, US banks contribute
the West must once again make our economic, social, and political systems the envy of the world. In the US, that starts with reducing gun violence, improving environmental regulations, combating inequality and racism, and protecting women’s reproductive rights. Until we have proven ourselves worthy to lead, we cannot expect others to march to our drum. i
to looming debt crises in many countries, often revealing a depraved indifference to the suffering that results.
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Europe and America excel at lecturing others on what is morally right and economically sensible. But the message that usually comes through – as the persistence of US and European agricultural subsidies makes clear – is “do what I say, not what I do.” Especially after the Trump years, America no longer holds any claim to the moral high ground, nor does it have the credibility to dispense advice. Neoliberalism and trickle-down economics were never widely embraced in the Global South, and now they are going out of fashion everywhere.
While China has not done anything to declare itself as a strategic threat to America, the writing is on the wall. In Washington, there is a bipartisan consensus that China could pose a strategic threat, and that the least the US should do to mitigate the risk is to stop helping the Chinese economy grow. According to this view, preemptive action is warranted, even if it means violating the World Trade Organization rules that the US itself did so much to write and promote.
Equallythemselves.important,
ABOUT THE AUTHOR
Of course, America does not want to be dethroned. But it is simply inevitable that China will outstrip the US economically, regardless of what official indicator one uses. Not only is its population four times larger than America’s; its economy also has been growing three times faster for many years (indeed, it already surpassed the US in purchasing-power-parity terms back in 2015).
might know how to make the world’s best bombers and missile systems, but they will not help us here. Instead, we must offer concrete help to developing and emergingmarket countries, starting with a waiver on all COVID-related intellectual property so that they can produce vaccines and treatments for
At the same time, China has excelled not at delivering lectures but at furnishing poor countries with hard infrastructure. Yes, these countries are often left deeply in debt; but, given Western banks’ own behavior as creditors in the developing world, the US and others are hardly in a position to point the finger.
But a country at “war” needs a strategy, and the US cannot win a new great-power contest by itself; it needs friends. Its natural allies are Europe and the other developed democracies around the world. But Trump did everything he could to alienate those countries, and the Republicans – still wholly beholden to him – have provided ample reason to question whether the US is a reliable partner. Moreover, the US also must win the hearts and minds of billions of people in the world’s developing countries and emerging markets – not just to have numbers on its side, but also to secure access to critical resources.
This front in the new cold war opened well before Russia invaded Ukraine. And senior US officials have since warned that the war must not divert attention from the real long-term threat: China. Given that Russia’s economy is around the same size as Spain’s, its “no limits” partnership with China hardly seems to matter economically (though its willingness to engage in disruptive activities around the world could prove useful to its larger southern neighbor).
I could go on, but the point should be clear: If the US is going to embark on a new cold war, it had better understand what it will take to win. Cold wars ultimately are won with the soft power of attraction and persuasion. To come out on top, we must convince the rest of the world to buy not just our products, but also the social, political, and economic system we’re Theselling.US
Future of EntrepreneursFood:Bite Down on Growing Spectre of Hunger
he news can be pretty bleak these days — armed conflict, Covid, and a climate crisis that’s reshaping reality. The World Food Programme says these factors, combined with rising costs, mean that every day, 811 million people are going hungry.
for a taste of what’s to come from some of today’s most inspiring food experts and entrepreneurs… i
Yogi Sadhguru has spent the past four decades leading a global movement to mobilise volunteers and policymakers in support of soil health. He warns of declining levels of micronutrients in our food — up to 90 percent over the past century — and advocates agricultural practices that keep cycling organic matter in the growing medium.
Investorsneeds.
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Andy Zynga, CEO of EIT Food, says primary production is ripe for major innovation, where smart and regenerative agricultural methods are trending topics. He envisions a near-future where consumers can customise high-tech home systems according to their nutritional
are getting onboard, too. Foodtech investments reached a new record in 2021 — $12.8bn — and according to Crunchbase, nearly half of that went to companies creating protein alternatives. Remilk raised $120m for dairy-free milk, New Age Meats snagged $25m for laboratory-grown sausages, and Motif secured $226m to enhance the taste, texture, functionality, and nutritional value of plantbased protein alternatives.
Established players such as Impossible Foods and Beyond Meat benefit from a strong cash position and partnerships. Impossible Foods raised $500m at a valuation of $9.5bn in November — but isn’t in a rush to go public. Beyond Meat, a partner of McDonald’s and Yum Brands, went public in 2019 at a $1.5bn
It's a monumental challenge that requires collaboration between innovators and investors, industries and governments. And a host of heroes is stepping forward to lead the way.
“The world needs to reduce its use of cropprotection chemicals and stop destroying valuable soil,” says Oddbjørn Bergem, CEO of Soil Steam International. The Norwegian company has developed steaming technology as an alternative to pesticides. The treatment,
That number has more than doubled over the past three years — with millions not just hungry, but “teetering on the edge of famine”. Meanwhile, about a third of the food produced globally ends up lost or wasted.
Summer 2022 Special
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Other minds are turning towards indoor growing spaces. Rise Gardens, which recently raised $9m in an oversubscribed series-A funding round, makes IoT-powered hydroponic systems for growing veggies, herbs, and microgreens at home. The vertical gardens sold out three times in 2020, as consumers sought to untether themselves from pandemic-hit supply chains.
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which lasts up to five years, has shown to increase crop yield up to 70 percent and double the storage range.
AgroStar connects five million farmers across India through a multilingual platform featuring educational agronomy content, a social network, and a digital storefront. It has voiceenabled search functions for users with limited literacy and more than 1,000 nationwide stores where the unbanked can pay in cash. The company raised $70m in series-D funding in December 2021.
From fine dining to frontline disaster relief, celebrity chef and philanthropist Jose Andres has fingers in many pies. He has announced the launch of a foodcentred production house — and launched some of his signature dishes into space.
As for where Andres is going, that depends on who needs him most at any given moment. He has over a million Twitter followers tracking his good deeds worldwide. Wherever disaster hits and people are hungry, Andres and his World Central Kitchen (WCK) army can be found, bringing in much-needed supplies, infrastructure and expertise.
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Andres blames the climate crisis for the extreme weather and natural disasters plaguing the planet. Last November, coinciding with the COP26 Climate Summit, WCK announced a $1bn climate disaster fund would be raised and spent over the next 10 years. It was initially seeded with $50m for immediate disaster relief and investment in long-term solutions. Part of the seed money comes from the $100m Courage and Civility Award, a prize invented by Amazon founder Jeff Bezos, hours after returning from his brief foray into space.
The crew spent 15 days on the orbiting research lab — where the Spanish dishes proved a big hit. “We believe we all are part of the same planet. For me, the astronauts eating this all together, makes me so proud,” Andres said. “Sending people up beyond the stars can help us to solve some of the problems that we see on earth.”
Food on the Fiery Frontlines of a Disaster-Prone Planet
And that comes with risk; a Russian missile narrowly missed one of WCK’s partner restaurants, Yaposhka. Four WCK employees were injured, but the team has not given up, just relocated, to continue their humanitarian efforts.
JOSE ANDRES CHEF
The organisation can mobilise in a matter of moments. Andres and his team are on the ground in Ukraine (as of late April), supporting local forces and shining a light on their struggles through Twitter updates. WCK has distributed hundreds of thousands of hot meals and food kits to bomb shelters, hospitals, and churches.
With this latest endeavour, the chef hopes to share his passion with a wider audience. “It’s
been my dream to launch Jose Andres Media for many years — to tell stories about who we are through the food we eat. Our food content will be as creative, fun, inspiring and authentic as our restaurants,” he shared. “Food is so much more than just a plate of ingredients. It tells us where we have come from, and where we’re going.”
ThinkFoodGroup (TFG), the company uniting Andres’ restaurant empire, collaborated with space exploration company Axiom to send some of Spain’s most celebrated specialties on the first fully private SpaceX crew mission to the International Space Station.
While a $1bn target might sound ambitious, according to Andres it’s a drop in the bucket. In 2020, WCK spent more than $250m providing meals for disaster-hit communities worldwide.
There are over 1,000 people working at TFG, either at the group headquarters in Washington DC or one of the 28 restaurants across the US, the Bahamas, and Dubai. Andres is credited with introducing the Spanish trend of tapas, or small-plate servings, to American palettes. He’s authored several books on the subject and starred in numerous TV cooking programmes.
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The WCK team is often first to the frontline, with staff and volunteers working together to fight hunger. Andres founded the non-profit in 2010, after witnessing at first-hand the devastation caused by the Haitian earthquake. WCK provides relief during humanitarian, climate, and community crises, while improving the resilience of food systems at grassroots and global levels. Since its launch, WCK has served more than 70 million meals to people impacted by natural disasters and other crises. The organisation provides educational and networking opportunities, promotes clean cooking practices, and awards grants to farms, fisheries and small food businesses.
ReFEDemissions.has
Gunders is the ideal ReFED leader. She was credited by Consumer Reports as “the woman who helped start the waste-free movement”. She has written a book on the subject, appeared on talk shows, and testified in Congress.
Dana Gunders, executive director at ReFED, sees the human, economic and environmental consequences of food waste in the US — and proposes a roadmap to break the cycle.
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joined forces with Closed Loop Partners to launch a $100m Circular Food Solutions Funding Platform consisting of three cross-cutting verticals:
an $80M investment fund, ReFED’s $10m Catalytic Grant Fund and a $10m innovation
“Enoughprogramme.water for 50 million homes in this country goes to growing food that never gets
Grant money could help to create community composting systems to avoid food from decomposing in landfills and forming pockets of methane gas. According to a report from the Intergovernmental Panel on Climate Change, methane is 80 times more effective than CO2 at trapping heat in the short term.
DANA GUNDERS EXECUTIVE DIRECTOR AT ReFED
“We commit a huge amount of resources to growing food,” she says, citing water and land usage as well as traditional farming methods that contaminate and leach nutrients from the soil. “So, when we throw it out, all of that is for
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is focusing on three pillars: data, engagement, and catalysing capital. The ReFED Insights Engine serves as an online data repository and list of over 1,000 solution providers. It helps people to understand the problem and calculate the impacts of wasted food, quantifying consequences in terms of climate change, resource depletion, and food ReFEDinsecurity.outlines
“We have 38 million people in the US who are considered ‘food insecure’, meaning at some point during the year, they may not know where their next meal will come from. Dual problems exist side-by-side,” she says. Households contribute 37 percent of the nation’s food waste. “It’s really a challenge of design and effectiveness and efficiency throughout our food
toss out tons of fresh, viable produce due to the aesthetic guidelines of commercial markets, where a slightly irregular shape is seen as unsatisfactory. Manufacturers set date recommendations at their own discretion, and these warnings can scare retailers and consumers into throwing out good food. “For most foods, those dates are not telling you to throw the food out. Expiration dates are not regulated, but most are really meant to indicate freshness, rather than food safety.”
45 million tons each year — a 5:1 return of $73bn in annual net financial benefit. ReFED is launching a catalytic grant fund to provide $10m in funding over a five-year period to accelerate and scale high-impact solutions. It plans to distribute grants to worthy organisations, seeking projects that divert food from landfills, conserve natural resources and reduce greenhouse gas
Gunders and the ReFED team work with industry innovators and policy makers to curb wasteful habits, and divert food surplus to the hungry.
Don’t Let Food Waste Get to the Landfill, Pleads Expert
Farmersnaught.”
The organisation prioritises capital as a critical lever in the fight, estimating that $14bn in annual funding will be needed to halve waste by 2030. That total includes $3bn in catalytic capital — patient, purpose-led, and risk-tolerant ReFEDfunding.figures
eaten,” says Gunders. “Then there’s the greenhouse gas effects of growing, transporting, cooling, cooking, and letting that food go to a landfill and rot equivalent to 58 million cars’ worth annually. To say nothing of land, fertilizer, and pesticide use. To add to that, food is the number-one product going into landfills.”
$14bn in annual investments over the next 10 years can cut food waste by
ReFEDsystem.”
solutions for achieving specific goals. It encourages participation at the federal and state levels, and maintains up-to-date research on legislative food waste policies.
In 2020, its Fat Tire brew became the first certified carbon-neutral beer in the US, and
“As a medium-sized company, New Belgium can only have a medium-sized impact. We need more of the big guys to step up, too.”
Brewing Up a Storm to Combat Climate Change
JordanHoldings.saw the positive side of the takeover: a welldeserved recompense for the people who helped to build the brand. “More than 300 employees are receiving over $100,000 of retirement money,” she said, “with some receiving significantly greater amounts.” The total amount paid to current and former employees is nearly $190m.
New Belgium marketed the limited-edition brew, Torched Earth, as “pretty gnarly”; the CEO likened the taste to “eating a Band-Aid”. It’s hoped that the eccentric beverage will serve as a wake-up call for consumers and industry partners.
New Belgium has pledged to make all its beers carbon-neutral by 2030. The company shares its sustainability journey with other breweries.
consumers care about how you operate your company, and the beers you make,” he said. “It’s about how we continue to drive positive social and environmental change.”
That was 30 years ago, and there have been some changes. Co-founders Kim Jordan and Jeff Lebesch have long since stepped down. Steve Fechheimer became New Belgium’s chief executive in 2017.
Fechheimer spearheads the mission to use business as a force for good. New Belgium has consistently reduced its carbon footprint. It invests in renewable energy, funds research into climate-resilient crops, and has donated nearly $17m to non-profits dedicated to conservation and climate solutions.
New Belgium lost a little of its grassroots cachet in 2019, when the employee-owned company was acquired by Lion Little World Beverages — the craft division of Australian brewer Lion — which is in turn owned by Japanese conglomerate Kirin
Before the acquisition, New Belgium was ranked the fourth-largest craft brewery in the US by the Brewers Association. The American trade group stripped New Belgium of its “craft” designation after it joined the Lion family — but that hasn’t hurt the company’s bottom line. Corporate backing has afforded Fechheimer the time and financial flexibility to focus on the long
New Belgium’s craft beers were inspired by a bike ride, first brewed in a basement, and showcased at the Colorado Brewer’s Festival — where they were so popular, they sold out.
STEVE FECHHEIMER NEW BELGIUM CEO
The company recently tasked its brew master with creating “a post-apocalyptic ale” to underscore the urgency of the climate crisis. Rising temperatures and extreme weather are threatening crucial ingredients — clean water, barley, and hops — so the recipe was “themed” with smoke-tainted water (in anticipation of ever-increasing forest fires), drought-resistant buckwheat, and dandelions.
New Belgium, with a 700-strong workforce, has consistently ranked among America’s
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“Craftgame.beer
“If you don’t have a climate plan, you don’t have a business plan,” Fechheimer insists. “Aggressive action to help solve the climate crisis is not only an urgent environmental and social imperative — it’s also a no-brainer for companies seeking to create long-term shareholder value, compete with rivals like China, and create good-paying jobs here at home.
top employers. Free beer is just one of the perks; employees also enjoy insurance cover, paid time-off, an onsite clinic, and wellness programmes. It also offers anniversary gifts, including an all-expenses-paid trip to Belgium at year five and a full month of paid sabbatical at year 10.
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“This isn’t an immaterial number,” Fechheimer points out. “This is co-workers talking about being able to fund college education, or being able to buy a home.”
Hawken had developed a new brewing technique using a progressive enrichment process in a closed system — nothing added and nothing taken away — to achieve an unparalleled level of concentration.
“There’s nothing like this on the market,” Gordon says. “It’s this simple, steadfast focus on doing one thing better than anyone — versus trying to do it all — that’s helped us navigate unprecedented times of pandemic, supply chain crises, and more.”
Jot’s Ultra Coffee is made from organic beans. The concentrate is 20 times stronger than a regular cup — in Just One Tablespoon. It made an apt acronym for the company title: J-O-T.
Gordon and Hawken started out alone, but the team has grown more than tenfold. The company works with farms and co-operatives in prime growing regions, half of which are owned or controlled by women.
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The product can be distributed at ambient temperatures with no loss of quality or freshness. No need for refrigerated containers, or shipping extra water weight. “It just was this real ‘aha!’ moment for the two of us,” says Gordon.
Coffee: it’s been around since the 15 millions of cups are consumed every day. That daily ritual was complicated by the pandemic, when cafes closed and people had to become their own baristas.
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Jot, as a founding member of the Gender Equity Index (GEI), is working on that. The index
quick to try them. The first sold out within three weeks, and lately they’re gone within a day.
Gordon tried it, and was blown away. “You have something in a liquid format, but due to the concentration of this product, we don’t actually have to do anything to it,” Gordon explains. “We don’t have to heat-treat it or pasteurise it in order for it to be shelf-stable.”
“There is not one coffee bean that is not touched by a woman,” says Kimberly Easson, founder and CEO of the Partnership for Gender Equity. She calls women the hidden workforce of the industry, responsible for 40 to 80 percent of coffee labour around the world — yet undervalued and often Moreunpaid.than $500m per year is being spent in coffee-producing countries to improve agricultural practices, to help with carbon mitigation, and other programmes on the ground. But, according to Easson, most of those benefits never reach female workers.
ANDREW GORDON JOT CO-FOUNDER AND CEO
A New Spin on an Ancient Brew — Just One Tablespoon Keeps Java Jiving, and Fair
Start-up Jot splashed onto the scene in 2019, backed by early-stage VC support. “You plan for a lot of scenarios when launching a new business,” observed Jot co-founder and CEO Andrew Gordon, “(but) pandemic isn’t typically one of them.”
Gordon and chief product officer Palo Hawken had both previously launched and led packaged goods companies, Gordon with Square Organics and Hawken with beverage company REBBL.
Jot maximises production without compromising on quality, achieving 30 percent more yield per bean, and turns spent grounds into compost. The resulting concentrate comes in an apothecarystyle Italian glass bottle. Consumers can make a one-time purchase or sign up for Jot’s subscription service. A 200ml bottle sells for less than $20 (on subscription) and makes up to 14 cups.
The start-up was launched by founders Daniel Kurzrock and Jordan Schwartz in 2013. It all began as a form of “recreational entrepreneurship”: the co-founders were keen home-brewers, and realised that every six-pack created kicked out a pound of spent grain. They initially tossed it, then tried using it to bake
Kurzrock spearheaded the project to create an official definition for “upcycled foods”, which set the stage for the development of a third-party certifiable standard.
Last year, the company processed some 400,000 pounds of spent grain that would have otherwise been wasted. Kurzrock expects to eclipse that figure this year — and wants to upcycle 10 million pounds by 2025.
“Atbread.first, our goal was to make enough money to brew beer for free,” says Kurzrock. “We soon realised the possibilities were much bigger.”
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“Together, we look at opportunities to incorporate new ingredients and techniques that make authentic impact into existing supply chains. Our lab helps create products … quickly from concept to market, with flexible services tailored to the needs and capabilities of our partners. For some, we offer full-cycle support; others simply purchase our ingredients.” The production process is energy efficient, and the technology is suitable for other food-production waste streams, such as plant-based beverages.
“Wewheat.upcycle at scale by actively collaborating with leading food brands through our upcycled food lab,” Kurzrock told Sustainable Brands “These Powered by ReGrained projects span products in every aisle of the grocery store.
ReGrained is a certified Public Benefit Corporation and a member of One Percent for the Planet, a global organisation dedicated to preventing greenwashing and increasing accountability. It’s also one of the founding members of the Upcycled Food Association, a non-profit trade association of mission-aligned companies dedicated to building the market.
Here’s to Your Health! ‘Beer Boys’ Become Value-Adding Magnates
The pair fleshed out a business plan in an entrepreneurship course during their last semester. Baking bread was labour intensive, so they pivoted to making nutritional bars, which could be made in large batches and would last for
“Our mission is to better align the food we eat with the planet and people,” Kurzrock says. “The food system is broken for many reasons, one of which is that we waste too much edible food.” Analyses put that at 30 to 40 percent globally, and these metrics generally exclude or underestimate by-products.
“We vastly undervalue the virgin resources required to produce food. So, when we waste food, we’re also wasting the resources it took to grow, harvest, process and distribute food.” To fix that flawed system, he sees adding value to natural resources as a good place to start.
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DANIEL KURZROCK REGRAINED CEO AND CO-FOUNDER UPCYCLED FOOD ASSOCIATION CO-FOUNDER
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ReGrained elevates a by-product to hero status with its star ingredient: SuperGrain+. The “+” hints at added benefits, including prebiotics that stimulate the growth of healthy bacteria in the gut. The versatile protein is comparable to almond flour, and has more fibre than whole
The approach is one of value-added processing, similar to pickling, canning, or making preserves.
“Wemonths.developed the upcycling technology through a collaborative research partnership with the USDA (Department of Agriculture),” Kurzrock explained in a NewHope interview. “Together we patented it, and ReGrained commercialised it.”
Spent grain from the brewing process was traditionally used as stock feed, but Californiabased food-tech firm ReGrained is turning it into a valuable resource.
“Our crops are harvested from breweries (and other manufacturers) instead from of the field. That’s why we call it upcycling. Our technology stabilises soaked grains to keep them food-safe. Our output is a dry, stable material that can be stored at room temperature.”
Beer is — perhaps surprisingly — only the fifth mostconsumed beverage in the world, with an annual global production of about 1.82 billion hectolitres.
“We’re making dairy products that are identical to cow-milk products, with the same taste, texture, stretchiness, meltiness, with no cholesterol and no lactose,” Wolff told The Times of Israel “We’ve basically ported the whole mechanism of producing milk into a single-cell microbe. We don’t need the ‘rest of the cow’ — and we surely don’t need to spend resources in the process of creating a 900-kilogram animal.”
Remilk is headquartered in Tel Aviv, where glasswalled labs and corporate offices underscore the company’s commitment to transparency. The start-up won’t share its secret formula, but likens the process to a high-precision and techenhanced form of cheesemaking.
delivers delicious, nutritious products without harm to people, planet or animals.”
Remilk co-founder and CTO, biochemist Ori Cohavi, believe they have cracked the code for a new generation of dairy. Remilk has developed a microbe-based production method that’s outperforming traditional practices — and using a fraction of the land and water.
The Remilk team isolated the gene responsible for the production of milk protein in cows and inserted it into the yeast used by brewers and bakers. “The gene acts like a manual, instructing the yeast how to produce our protein in a highly efficient way.
AVIV WOLFF REMILK CEO AND CO-FOUNDER
Wolff differentiates Remilk from the host of plant-based milk alternatives encroaching on the traditional market — which he says are “nearly 97 percent water”.
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Fermentation produces protein powder that can be mixed with water, oil and sugar to create a range of products. Unlike plant-based alternatives, Remilk is “chemically identical” to bovine dairy products. It has the same functional properties and can be used for cooking. Double-blind tastings have shown Remilk to be indistinguishable from old-fashioned dairy.
“We then place the yeast in fermenters where it multiplies rapidly and produces real milk proteins, identical to those that cows produce, which are the key building blocks of the traditional dairy we know and love.”
“The world needs sustainable foods for so many reasons, but if we want people to eat sustainable food, it needs to taste damn good — and that’s what we’re doing at Remilk.”
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The company has production facilities in Europe and the US — and brand partnerships in the pipeline. Expansion is in full swing, fuelled by a $120m Series-B funding in January. The round was led by Hanaco, a venture capitalist fund manager based in New York and Tel Aviv. It was the single largest investment in a cow-free dairy company to date, and the value of the start-up has since surged.
Moo-ve Over, Bessie, There’s a New Dairy on the Scene…
According to Remilk’s founder and CEO, Aviv Wolff, the dairy industry has seen little innovation over the past 10,000 years. Half of all habitable land is used for agricultural production, and over three quarters of that is used for raising and feeding livestock. “It’s known to be highly inefficient in terms of greenhouse gas emissions and resource usage,” he Wolffobserves.andhis
Remilk, founded in 2019, will break ground on a manufacturing plant in Denmark before the end of the year. It will be the largest facility of its kind, roughly the size of nine football pitches and with an annual production capacity equal to 50,000 cows. The site will enable Remilk to scale commercialisation, bringing animal-free dairy to the masses without price-gouging.
“This funding propels us on our journey to transform the dairy category into one that
“We want to be more affordable, because essentially what we’re trying to do is to eliminate the economic incentive from using cows in our food system,” Wolff says. “Ending animals’ historic role as providers of food for humankind is one of the most powerful measures we can take to reduce our impact on our planet.”
Israeli food-tech start-up Remilk is challenging a global industry valued at around $900bn.
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Since oil was first discovered 210 kilometres off the coast of Aberdeen, Scotland, in 1969, over 45 billion barrels have been extracted from the North Sea.
By Brendan Filipovski
FromEurope Nets to Net-Zero: North Sea Industries are a-Changing
the world here, with around 80 percent of global installed capacity — and 97 percent of that is from the North Sea. The UK accounts for 44 percent and Germany 34 percent; Denmark is responsible for seven percent, Belgium 6.4, and the Netherlands six.
The UK government is supporting decarbonisation efforts with the 2021 North Sea deal, including funding to retrain oil workers. The EU has introduced legislation requiring oil and gas companies to measure and control methane
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The latest technological buzz surrounds the potential to produce green hydrogen. It uses renewable power to separate hydrogen from water via electrolysis. Green hydrogen is an attractive fuel source in terms of GHG. The only by-product is water; there are no emissions in its creation. It can be produced and used even when wind is low.
This has been backed by regulatory reform and market redesign. That includes the recent revision to the Trans-European Networks for Energy, which focuses on linking EU member countries’ infrastructure and integrating the marketing of renewable energy.
The EU and UK are pushing for oil and gas industries to set GHG targets to meet net-zero by 2050. And extraction emissions are significant: and estimated 3.5 percent of Britain’s total Theemissions.industries can reduce, and possibly eliminate, that by taking four steps. They can electrify platforms, decommission unviable platforms, minimise flaring and fugitive emissions, and store those that escape.
EuropeUkraine.leads
artificial facilities. Gas-fired power stations would be built close by.
There are also plans to use the North Sea for carbon storage. Oil and gas fields have stored these resources in their natural form for millions of years. Now, those fields can be used to sequester captured carbon beneath the seabed. CO2 is compressed, piped offshore, then pumped into the depleted reservoirs. Studies suggest that 99 percent of the CO2 will remain in place for 1,000 years.
The world’s first large-scale carbon storage project was developed in 1996 off the Norwegian coast. Since then, the EU has invested in several pilot projects; now, a large-scale facility is close to a decision on final investment. The PORTHOS project is a CO2 transport hub being developed in the port of Rotterdam. From there, CO2 will be piped to depleted fields 20km offshore — where there is the potential to store 37 million tonnes. If approved, the facility will begin operation by 2025, saving the equivalent of greenhouse gas emissions from 37 million cars.
The UK government intends to increase installed capacity to 40MW by 2030. This target is aided by its 2021 North Sea deal with the oil and gas industry. Advances in technology help. In 2018, a 3MW battery was installed at the 30MW Hywind Scotland floating offshore platform. The battery stores wind-generated power and releases it into the national grid. Also under development are 20GW turbines, much larger than the current six- to eight-GW models.
The EU is striving for a 55 percent reduction in greenhouse gas (GHG) emissions by 2030, and net-zero emissions by 2050, under its €1.8tn European Green Deal. The UK is aiming for a 68 percent reduction by 2030, and net-zero by 2050. Wind power is a big part of the push, with the North Sea a focal point. And wind power generation has increased with the conflict in
The UK government has issued six licences for to store 20 to 30 million tonnes per annum by 2030 — and 50 million by 2035.
EU installed capacity is 16 gigawatts (GW). The union aims to increase this to 300GW by 2050, and the lion’s share is likely to come from North Sea countries. Germany, Belgium, the Netherlands and Denmark have committed to at least 150MW of new capacity by 2050. But unlike previous developments, these four countries will develop offshore platforms together — a North Sea Wind Power hub, the first “truly European” power stations.
ocal fisherman became oil workers and neighbouring countries turned to oil production. Now another transformation is taking place — and this time the colour code is green.
The traditional North Sea oil and gas industries, meanwhile, continue to operate. Remaining reserves have an estimated capacity to last 10 to 40 years. While some argue for a rapid transition to renewable energy, many agree that oil — and particularly gas — will still be needed for the transition years.
Aemissions.generation
of fishermen joined the oil industry — and their grandchildren are now joining an energy revolution. The North Sea industry is a story of our times. We are moving from the petroleum era into one of renewables — and in Europe, North Sea operations lead the way. i
Green hydrogen cannot compete on cost with batteries for electric vehicles, but it may provide a solution for commercial trucks and shipping that require a greater range. Costs will continue to fall as electrolysers are built at scale.
L
But — like natural gas — transport is tricky. Hydrogen is the lightest of the elements, and moving it around requires it to be compressed or liquified. For the North Sea, the plan is to compress it and to send it ashore via repurposed, or new, gas pipelines. It can be blended with natural gas in small quantities, and it can be stored in natural caverns or
n troubled times such as these — overshadowed by war in Ukraine, supply chain problems, and inflation concerns — the bank’s individual asset management promises customised investment solutions. Professional risk management is paired with sustainable returns.
defensive stocks, has performed strongly over the past 18 months. Its Mandatum 25, 50, 70 mixed funds were each in the top quartile in their peer group.
With the new Kathrein Private Markets Platform, clients receive digital access to private equity funds of renowned global providers — even in small volumes. The selection and compilation of funds is based on a strict selection process by the Kathrein Private Equity team.
At Kathrein, the commitment to sustainability is intensive. The careful selection of securities is carried out in co-operation with partner ISS ESG. Not only are investments sustainable, but out of conviction, Kathrein “lives” ESG in-
times, actively managed funds pay off. This is the advantage provided by the portfolio management team, which boasts decades of experience: guaranteeing customised investments on behalf of clients.
Comparisons with the benchmark show the worth of this strategy. The Kathrein Global Enterprise equity fund, which focuses on
I
Inregion.turbulent
Another innovation is the Kathrein Sustainable Global Megatrends equity fund. Based on sustainability criteria, investments are made in selected megatrends such as digitalisation, health, and urbanisation. The fund focuses on pioneers of the respective industries: investing today in the trends of tomorrow.
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Summer 2022 Issue CFI.co | Capital Finance International 43
For Kathrein Privatbank, 2021 was all about innovation. In addition to adopting a new brand identity, it worked intensively on expanding its product range.
of a company forest in Togo underlines this commitment. Almost 4,000 trees have been planted as a contribution to climate protection and job-creation in the
Thehouse.project
Kathrein clients benefit from innovation, the highest investment quality, and professional risk management — in even the most challenging of environments. i
For further information and risk warnings on the investment funds mentioned, please visit kathrein.at and click on "investment solutions".
In times like these, a gold account also makes sense. The Kathrein gold account is managed like a securities account, where physical gold is stored. The advantage is that customers can pick it up at any time. Kathrein Privatbank also offers a wide range of certificates from worldwide recognised issuers. These are diverse, and offer income opportunities in any market situation.
Kathrein InvestingPrivatbank:Today in the Trends of Tomorrow — with Panache
From left: Wilhelm Celeda Chairman of the Board Harald P Holzer Member of the Board Stefan Neubauer Member of the Board
trade finance capabilities. It was also the first Nigerian Bank in the UK to be appointed as correspondent bank to the Central Bank of Nigeria, licensed to undertake infrastructure work on behalf of the Nigerian government and issue letters-of-credit on behalf of the Nigerian government and Nigerian National Petroleum Corporation (NNPC).
The commercial banking team offers relationshipbased service for corporate and individual customers. It offers products and services at competitive rates, with market-leading systems and high quality service.
Like its parent, The Access Bank UK Ltd is committed to developing a sustainable business model — with a moderate appetite for risk, a passion for customer service, and a commitment to building long-term relationships with its customers. It plays a key role in the Access Group’s vision to be “the world’s most-respected African bank”.
44 CFI.co | Capital Finance International
T
The Access Bank UK Ltd provides services to support business activities in Sub-Saharan Africa, and across the world. It was awarded Confirming Bank status by the International Finance Corporation as part of the Global Trade Finance Programme, strengthening its
CEO and Managing Director: Jamie Simmonds
In 2018, The Access Bank UK Ltd became a direct member of the three key British payment clearing systems: Bacs (Bankers’ Automated Clearing Services), C&CCC (Cheque and Credit Clearing Company’s Image Clearing System) and Faster Payments. CEO and managing director Jamie Simmonds said it was “a great landmark for us”, enabling the The Access Bank Ltd UK team to build a sustainable platform with direct entry into the payment clearing system.
AmoderateappetiteforriskandapassionforservingitscustomersisstandingTheAccessBankUKLtdingoodstead.
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The institution refuses to chase unsustainable yields as a route to growth. The focus is on building the business through the strength of its customer relationships.
The global private bank delivers innovative investment solutions to clients, who value trust, integrity, and accountability as well as investment performance. The Access Bank UK Ltd takes a proactive approach with products and services tailored to customers’ needs.
The Access Bank UK Ltd is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. The Dubai branch, in the iconic Gate Building of Dubai International Financial Centre (DIFC), is regulated by the Dubai Financial Services Authority (DFSA).
The Access Bank UK Limited: A Bank whose Guiding Principles Focus on Customer Service and Innovative Solutions
“This will enable us to enhance our level of customer service,” he said. “We have a clear commitment here, and we anticipate and quickly respond to market needs with the right technology, products, and services. Joining the UK payment clearing system is a clear example of meeting the needs of our customers.”
he Access Bank UK Ltd is a wholly owned subsidiary of Access Bank Plc, a Nigerian Stock Exchange-listed company.
It provides trade finance, commercial and private banking and asset management products and services for customers in their dealings with Organisation for Economic Co-operation and Development (OECD) markets. It also supports companies wishing to invest and trade in SubSaharan Africa, MENA, and Asian markets.
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 staffturnover rate reflects in part the advances we have made in training and development. The bank is working in partnership with the Chartered Institute of Personnel & Development (CIPD)
The bank has passed the $100m milestone for the second successive year to achieve $111.1m for 2021, a 10 percent increase. The trade finance operation continues to be the bank’s largest SBU and is confirming bank for Access Bank Plc and the Group. Trade finance maintained an upward trajectory, with income up nine percent year-on-year to $55.8m and correspondent banking income growing to $27.8m, up 12 percent year-on-year.
Statutory Accounts for 2021, the bank demonstrated another year of all-round growth, achieving and exceeding targets for all main growth strategies. Entitled Charting a Course for the Future, the report highlights a strong operational performance by the main strategic business units — and continued growth in Sub-Saharan Africa and the MENA region.
a challenging external environment and difficult trading conditions failed to dent another strong performance. “The performance reinforces the effectiveness of our proven income-driven strategy,” he said, “in which we deepened relationships with key customers and retained relationships that we have had for a decade or longer.”
Commercial banking income has reached $37.6m while asset management income rose by 52 percent to $5m. Retail products continue to attract interest, with £152.2m flowing into its one-, two- and three-year bonds during the year. The Access Bank UK Ltd also announced the launch of a new Visa debit card for personal and business Simmondsbanking.said
The Access Bank UK Dubai Branch offers products and services to assist customers in the MENA region with trade and investment needs in Nigeria and Sub-Saharan Africa. It is committed to building an enduring relationship in the region, in line with the approach that has proven so effective for the The Access Bank UK Ltd. The Dubai branch, coupled with a presence in the UK and Nigeria, allows the bank to deliver a wealth of expertise.
Jamie Simmonds said that throughout his experience in financial services, his guiding principles have been to deliver excellent customer service and provide innovative solutions. “I have been involved in the turnaround of several existing businesses by going back to these basic principles and rebuilding from the ground up.
The Access Bank UK Ltd: offices in the heart of the City of London
This is a bank that takes the time to build longterm relationships. It understands customer goals and creates suitable strategies to meet them. Behind all this is a dedicated and professional staff, constantly supported with development opportunities. The bank remains committed to the diversity of its workforce.
Summer 2022 Issue CFI.co | Capital Finance International 45
Dubai: DIFC Gate Building
Herbert Wigwe, chairman and non-executive director, added: “In achieving another strong set of results in 2021, the bank has emerged fitter through the continued growth and retention of its customers and an increase in staff.”
Many have spent time working in the SubSaharan, West African, and international marketplaces. A sense of individual ownership is encouraged — as is a strong team spirit. The aim is to help employees realise their potential through continuous learning opportunities, with the tools and training to support professional
“When I established the The Access Bank UK Ltd in January 2008, it was at a turbulent time in banking — but we set the risk appetite, the processes and procedures, and developed products that our customers wanted.” i
Inprogrammes.”theReportand
Thegrowth.Access Bank UK Ltd is led by an accomplished team determined to deliver superior financial solutions. As Jamie Simmonds puts it: “Our people are fundamental to our bank’s continued development. They provide the skills that deliver our focus on service and customer relationships. Reflecting this, during the year we selectively recruited additional members to the team and invested more in professional development. We
The UK government says the result is “burdensome bureaucracy and paperwork” on
46 CFI.co | Capital Finance International
Northern Ireland Shilly-Shally Has Experts Fearful of New Trade War
In terms of trade, the UK government’s primary concern is the difficulty of moving goods between Great Britain and Northern Ireland. The protocol requires that customs controls are applied at ports in Northern Ireland, to avoid the need for checks or infrastructure on the land border with the Republic. This compromise was reached to respect peace-keeping measures set out in the 1998 Good Friday Agreement, while minimising the risk that goods could enter the European Single Market without controls.
U
EU officials say the immediate impact of the UK’s decision has been an undermining of trust and credibility. Šefčovič noted that Brussels negotiated in good faith, acknowledging practical difficulties in implementing the Northern Ireland protocol and offering flexibility in certain areas without the need for changes to the agreement itself. Proposed measures included cutting customs paperwork, reducing sanitary controls, and simplifying certification processes for vehicles carrying goods.
international law as well. Let's call a spade a spade: this is illegal.”
nrest has escalated since the UK government tabled legislative reforms in mid-June. If approved by Parliament, the proposals would allow Westminster to unilaterally disregard parts of the Northern Ireland protocol that was agreed in 2019. This has prompted a backlash from Brussels, with officials losing faith in the trust and credibility of the British government. The resulting uncertainty has quickly spread to the business community.
In a statement issued after the proposed legislation was published, he said the bill “means we are now teetering on the brink of a trade war with the EU” and warned of “further economic pain and falls in investment”.
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The UK’s disentanglement from the European Union has been a source of instability in international trade, and is now giving rise to a more serious concern: the possibility of a trade war.
Officials hope that easing the burden for businesses moving goods across the Irish Sea could offset some of the impact Brexit has had on the UK’s trade flows. A report by the Centre for European Reform (CER), a Brussels-based think tank, estimates that post-Brexit goods trade was down 13.6 percent. By comparing the country’s economic performance to a model economy based on a basket of comparable nations, CER suggests Brexit resulted in a 5.2 percent hit to Britain’s GDP last year.
businesses — including those that do not trade with the EU.
Northern Ireland: Belfast
There is a strong economic incentive for Westminster to ensure smooth trade. Ireland is the UK’s sixth-largest trading partner, with UK companies exporting goods worth £21.8bn to the country in 2021. Imports from Ireland totalled £13.9bn over the same period. Of those totals, just 14.7 percent of UK exports originated in Northern Ireland, while 20.4 percent of imports were to Northern Ireland.
For the EU, the UK’s proposed changes to trade arrangements is unpalatable. In a statement delivered two days after the UK government published its draft legislation, European Commission vice-president Maroš Šefčovič characterised the move as a unilateral breach of international law.
The UK proposal, as outlined in a paper published alongside the draft legislation, would result in the introduction of “green” and “red” lanes for goods. The green lane would be open to approved members of a trusted trader scheme, overseen by UK authorities, and would allow goods due to remain in Northern Ireland to be moved without controls. The red lane would apply to goods exported into the European Single Market, and would provide for EU customs and regulatory checks.
By John Basquill
“There is no legal, nor political, justification whatsoever for unilaterally changing an international agreement,” he said. “Opening the door to unilaterally changing an international agreement is a breach of
“We are hugely concerned that the introduction of the government’s Northern Ireland Bill risks significant harm to businesses in London and right across the whole of the UK,” said Richard Burge, chief executive of the London Chamber of Commerce and Industry.
The problem with this arrangement is that all goods moved from Great Britain to Northern Ireland are treated as if they are being imported into the EU, unless the importing company can prove they will remain in Northern Ireland. Regulatory controls apply to some goods, such as agri-food products, regardless of the destination market. Traders are required to make detailed customs declarations for what is essentially intraUK trade.
The European Commission has been specific in some of its offers. Proposals set out in October 2021 would allow British sausages — generally prohibited for import into the EU — to enter Northern Ireland with certification. Products of animal origin, such as cheese or chicken, would have physical checks reduced by 80 percent, while trucks transporting a range of different food
Punitive trade-related actions against the UK would be a drastic option. Officials are reportedly
reluctant to escalate the conflict, citing the need for a united European front against Russian aggression. The UK and EU have been aligned in imposing sanctions following Vladimir Putin’s invasion of Ukraine. There is little appetite to punish EU businesses reliant on access to the UK market at a time when the continent faces soaring energy and food prices.
To abandon that stance could risk ceding the high ground. i
CFI.co | Capital Finance International 47
products would be permitted to provide a single document for all goods on board.
The confrontational tone has accelerated talk of a potential trade war. The UK’s Institute of Export and International Trade has launched a survey to ascertain the potential impact that would have on its members. It cites possible actions as the imposition of tariffs on goods exported to, or imported from, any European Union member state, as well as increased certification standards.
By initiating a trade war via tariffs, restrictions or tougher certification standards, the EU would in effect be breaking the Withdrawal Agreement signed in January 2020. Throughout its negotiations with the UK, the EC has emphasised the primacy of the rule of law, specifically the importance of internationally agreed texts. Even in his shot across the bows after details of the UK’s draft legislation emerged, Šefčovič emphasised the need for a negotiated solution.
Alarmingly for businesses, the EU has retaliated with legal action. Infringement proceedings initially brought in March 2021 but shelved six months later are now being revived. Two new charges are being brought against the UK: failing to carry out legally mandated checks on goods arriving in Northern Ireland, and failing to provide trade statistics deemed essential to the workings of the Single Market.
Author: John Basquill
A
POSITIVE EXTERNALITIES — Positive environmental and/or social externality associated with issuance.
AIM promotes transparency, measurement and reporting of impact, which includes ongoing monitoring of the use of proceeds and reporting, ensuring that investors have full awareness of how their capital is being invested. This culminates in detailed annual Impact Reports for all funds and portfolios.
RESPONSIBLE ISSUER — Issuers must have integrity and high ESG standards, as well as a clear commitment to a sustainable model.
ffirmative Investment Management (AIM) is a dedicated impact fixedincome specialist.
AIM also produces quarterly reports, which include example profiles on held issuers and Calculationissuance. methodologies are disclosed in the appendix of reports, and AIM has worked on the Carbon Yield Methodology in 2016, partnering
with ISS-ESG and Lion’s Head Global with funding from the Rockefeller Foundation.
Verification encompasses sustainability and credit assessments, and is a crucial first step in defining the investable universe. AIM’s verification process, termed SPECTRUM, combines positive selection for impact, and environmental, social and governance risk assessment across a range of criteria at issuer and issuance levels. The result is an approved SPECTRUM universe of labelled and unlabelled green, social, and sustainability bonds. Every bond has a measurable environmental and/or social impact.
48 CFI.co | Capital Finance International >
TRANSPARENT — Clear and transparent investment policies and processes on reporting and disclosure.
MEASURABLE IMPACT — All securities must offer mainstream market yields and provide reporting on the material and measurable environmental and social impacts.
AIM applies a three-step investment process: verification, portfolio management, and measurement and reporting.
The portfolio management team solely manages portfolios for risk-adjusted returns against mainstream benchmarks.
AIM continues to innovate to deliver insights and meaningful reporting. This year, it will report project-level net-zero alignment for the first time, alongside emissions analysis. The sustainability team engages with issuers and has been conducting a thematic engagement on issuers' net zero commitments across sectors. The outcome of this analysis will be featured in AIM's impact reporting.
AIM’s European funds are Article 9 under the EU Sustainable Finance Disclosure Regulation (SFDR), the highest possible sustainability categorisation. Although not required until 2023, AIM is incorporating some SFDR metrics into this year's Impact Report, reporting on the adverse impacts of portfolios alongside the positive and social impact achieved. i
CREDIT — Issuers must be financially creditworthy.
Based primarily in London, with colleagues in Australia and Japan, AIM manages over $1.2bn in assets for clients around the world.
AIM’s business is aligned to how the company itself invests. Its corporate sustainability structure is supported by four key pillars: people, climate, clients, and community. This reaffirms commitments such as the alignment of the business, portfolios and operations with the Paris Targets to limit global warming to 1.5°C — including net-zero GHG emissions by 2050. AIM’s annual corporate sustainability report clearly articulates the firm’s goals and progress.
ETHICS and ISSUER CONDUCT — Issuers must have appropriate governance, policy, and operational conduct.
In 2020, AIM’s global portfolios funded more than 2,551 projects in 165 countries (that’s 75 percent of nations). Some 189,219 tonnes of GHG emissions were prevented from escaping into the atmosphere each year, a saving of 64 percent.
Affirmative Investment Management: a Thriving Firm and a Winning Strategy
The vision is to mobilise capital to address the major challenges facing the world. The company focuses on managing portfolios that generate mainstream returns alongside environmental and social impact.
The SPECTRUM Process
USE OF PROCEEDS — Ability to determine use of proceeds in the issuer framework to assure AIM criteria are met.
By collecting impact data in-house and engaging with issuers, AIM consistently achieves coverage rates of over 90 percent for all portfolios. Over 2021 AIM carried out 170 engagements with issuers. In line with its philosophy, AIM is transparent on methodology, seeking standardisation of impact reporting.
The final step in the AIM investment process is the evidencing of financial returns and impact. A vital component of the firm’s philosophy is transparency for investors. Clients can annually monitor the impact of their investments via reports that detail portfolio-weighted use of proceeds allocation across sectors and geographies. There is also an independent assessment of greenhouse gas (GHG) footprints (Scope 1, 2 and 3), savings, and alignment with the UN’s Sustainable Development Goals (SDGs).
SUSTAINABLE — Aligned with SDGs and the Paris Agreement on Climate Change.
Global manager AIM sets its sights on tackling the world’s problems by mobilising mainstream capital for impact.
DANIEL KRICHEFF – PARTNER, SUSTAINABILITY
fixed income for 11 years. She started her career with Citi’s social finance group, specialising in private debt in frontier market financial Sheinstitutions.hasexperience
Partner, Sustainability: Tess Evans-Rong
Partner, Sustainability: Katie House
LISA WONG – PARTNER, SUSTAINABILITY Lisa Wong has been at the forefront of sustainable
She also supported the development of the European Commission’s Sustainable Finance Taxonomy. At AIM, Katie leverages her expertise in the creation of the investable universe and AIM’s award-winning impact reports.
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She launched the first public list of green bonds at CBI, and worked with the UNFCCC to add green bonds to its NAZCA Climate Action platform. Prior to that, Tess spent three years at BlackRock, where she was an associate in Corporate Governance and Responsible Investment.
United Nations. He began his career working as a communications strategist and speechwriter at the UN, holds a PhD in Anthropology and was most recently a visiting research fellow at University College London.
The sustainability team is responsible for the verification of the SPECTRUM Bond universe, and evidence of those impacts. It is led by four senior members, all experts in their fields: Tess EvansRong, Katie House, Daniel Kricheff, and Lisa Wong.
Daniel Kricheff has extensive experience internationally as an academic and within the
A
Katieyears.
As well as bond research and analysis, Tess drives the development of AIM’s internal impact database, which is leveraged for verification analysis and data collection. It is crucial for providing clients with transparent information.
Tess Evans-Rong has more than 10 years’ experience in responsible investment and ESG analysis. She joined AIM in 2016, after managing the market and data-analysis team at the Climate Bonds Initiative (CBI).
Partner, Sustainability: Lisa Wong
Summer 2022 Issue CFI.co | Capital Finance International 49
KATIE HOUSE – PARTNER, SUSTAINABILITY
across global, private and public sustainable-debt markets in frontier, emerging and advanced economies.
Lisa joined AIM in 2015 and was instrumental in setting-up the verification and impact reporting processes. At AIM, she has designed awardwinning impact management and reporting capabilities, and co-developed market-leading climate impact-assessment tools on transition and physical risk.
TESS EVANS-RONG – PARTNER, SUSTAINABILITY
Take AIM, then Act: Leaders Taking their Firm to the Top
Partner, Sustainability: Daniel Kricheff
Daniel has worked on economic development and conducted research in developing and emerging markets, including establishing a sustainable forestry investment initiative in Central Africa and developing quantitative impact assessment tools.
He joined AIM in 2020, and leads AIM's work on transition finance, a scalable, data- and researchdriven approach to financing the transition to a low carbon economy, including identifying opportunities to drive GHG emissions reductions in hard to abate and major emitting sectors.
Lisa previously worked at Nikko Asset Management, where she was part of the team that launched one of the world’s first dedicated green bond funds. i
ffirmative Investment Management (AIM) is exclusive: it manages only fixed income portfolios that generate mainstream returns as well as environmental and social impact.
joined AIM in 2019 after time as a senior research analyst at Climate Bonds Initiative, focusing on the Climate Bonds Standard: a certification scheme and rule set defining green bond financing eligibility for projects and assets across sectors.
Katie House has deep expertise in the use of proceeds bonds, having specialised in green, social, and sustainability fixed income for seven
Katie also drives AIM’s SFDR-related reporting and sits on various industry working groups as part of AIM’s collaboration with sustainability peers.
CEO: Josef Beneš
T
Martin Pecka has worked in investments for 30 years and specialises in pharmacy and biotechnology. He manages 13 funds, including the Generali Fund of Oil and Energetics and the Generali Fund of Pharmacy and Biotechnology.
Patrik Hudec Daniel Kuka
čka
“The development of modern technologies, economic and demographic developments, globalisation and the shift towards sustainability represent driving forces with considerable impact on the global economy.
"We consider our company the central and Eastern Europe trendsetter — and we constantly provide our clients with new opportunities."
CEO Josef Beneš
Patrik Hudec has over 18 years of expertise in investments. At Generali Investments CEE, it is him who is responsible for the whole portfolio management department of investment funds. He also manages several funds - the Generali Gold Fund and the Generali Emerging Europe Fund among others.
FUND PORTFOLIO MANAGERS
Daniel Kukačka has been with Generali Investments for 20 years and in the sector for more than 25. He is an expert on bonds and investments in global companies. He is responsible for the management of the Generali Fund of Global Brands and the Generali Corporate Bonds Fund.
He studied at the Prague University of Economics and Business and the Columbia University of New BenešYork.has represented the Czech Republic in beach volleyball and is the vice-chair of the Czech volleyball federation. He is also the vicepresident of The Committee of Good Will — Olga Havel Foundation.
Marco MarinucciMartin Pecka Toghrul Mammadov
Marco Marinucci focuses on sustainability and the ESG aspects of investments. He manages several funds, including the Generali Fund of the Living Planet and the Generali Fund of Sustainable Growth.
> The Generali A-Team Takes Decisions with Care Based on a Century of Experience
“We create specific funds narrowly focused on such areas to complement standard dynamic investments portfolios.” i
Toghrul Mammadov reinforced the team of portfolio managers in 2021 with specialisation in corporate shares.
As well as his leadership role at Generali Investments, Beneš acts as chief investments officer for Generali CEE Holding, overseeing the group’s investments in 12 countries. He has held his chief executive’s position since 2014, and prior to his time at Generali he headed two other major Czech investment companies.
FUND PORTFOLIO MANAGEMENT
50 CFI.co | Capital Finance International
“We are the region’s leaders in the value of assets under management,” he says. “We currently have assets of over €16bn in the Czech Republic, and similar amounts in other countries. We consider our company the central and Eastern Europe trendsetter — and we constantly provide our clients with new opportunities.”
“After all these years, I consider some of the funds I manage, especially the Generali Corporate Bonds Fund, as my children,” he says. “I try to make them the best they can be and hope that they will benefit the most people possible.”
Five portfolio managers, with 105 years of collective experience, oversee the funds of Generali Investments CEE.
“Apart from the flagship funds, Generali Investments CEE also offers thematic and sector funds that respond to current developments in society and the financial markets,” says Beneš.
he chief executive of Generali Investments CEE, Josef Beneš, has held positions in the World Bank and London’s Standard Bank, and has investment experience in the Czech Republic, the US, China and the UK.
flights
Air Austral operates
Paris.
flights
Summer 2022 Issue CFI.co | Capital Finance International PARIS Perth Bangkok Chennai Fort Dauphin Tulear Diego Anjouan TANZANIA Dar es Salaam Moron i Nosy BeTamatave EUROPE FRANCE MADAGASCAR SEY CHE L LE S MAYOTTE ROD RIGUES AUSTRALIA THAILAND Joh annesburg Majung a Saint-DenisSaintPierre MOZAMBIQUEPemba (1) Antananarivo ASIA INDIA REUNION ISLAND MAURITIUS SOUTH AFRICA COMOROS Air Austral The French Airline in the Indian Ocean (1) waiting for programming Air Austral subsidiary In codeshare with Operated in partnership with air-austral.com (1) (1)
With Air Austral, go discover the Indian Ocean daily from its Reunion Island’s hub to It offers also to South Africa, Mayotte, Mauritius, Seychelles, the Comoros, Madagascar, India, Thailand … so many dreams destinations.
“We understand their local diversity and preferences,” says chief portfolio manager Michal Toufar, “but also their complexities and shortcomings. We believe that this knowledge is key to successful asset management.”
With its expert team and proximity to customers and clients, Generali has
Generali Investments has been shaping the culture of the European investments as one of the founders of the Czech capital market association. With headquarters in Prague, the company is as close as possible to the financial markets of Central and Eastern Europe.
Generali Investments CEE: Leading by Example, with Proximity to Clients and a Firm Sustainability Focus
maintained its status as the biggest CEE investments company despite the challenges of the pandemic and Russia’s invasion of SinceUkraine.1991,
The growth of Generali Investments’ AUM has also been aided by the company’s partnership with Moneta Money Bank. The co-operation began in 2016 and rapidly grew with AUM currently amounting to almost €404 million; Generali Investments’s total AUM is impressive
enerali Investments CEE, the leading investment company in Central and Eastern Europe, draws on its experience to provide funds which are a perfect fit the region.
G >
52 CFI.co | Capital Finance International
The company stays on top of latest trends but keeps its focus and emphasis on sustainability and the ability to respond to any situation.
While the investments sector has been shaken by the pandemic and Russia’s invasion of Ukraine, Generali has continued to grow. It has always reacted promptly and aptly to the state of financial markets, broadening its portfolio with new tailor-made funds.
“Both social and environmental sustainability are of the utmost importance in all our activities,” concludes Beneš. “That’s why we offer not only the possibility of sustainable investments, but contribute in this way ourselves.
Generali Investments also offer specialised ESGorientated funds, the Generali Sustainable Growth Fund and Generali Fund of the Living Planet. They focus on companies combining financial growth with social and environmental responsibility and good governance.
“The fund met with enormous interest from our clients — during the two-month accumulation period, they invested more than €44.5m, making it one of the most successful tranches ever.”
“As the region’s leader in investments, we hope that others will follow our example.” i
STABILITY AND INNOVATION
Generali Investments CEE is active in charity and CSR. It has provided financial assistance to elderly citizens during the Covid-19 pandemic. “In addition to supporting organisations helping disadvantaged groups of fellow citizens, we are also involved in the global activities of the Generali Group, which connect non-profit organisations with the private sector through the Human Safety Net movement,” says Generali Investments chief executive Josef Beneš.
Summer 2022 Issue CFI.co | Capital Finance International 53
The Living Planet fund invests in companies in the fields of alternative energy sources, waste recycling, organic farming and water treatment. These sectors are all necessary to mitigate the climate change, and present exciting investment Theopportunities.basisfor
Generali Investments CEE promotes climate action and sustainable investing. All the company’s flagship funds squarely support ESG principles. They comply with Article 8 of regulation on the sustainability-related disclosure for the financial services sector (SFDR) of the European Parliament and the European Council.
the successes Generali Investments lies in its analytics team: seven financial experts with more than a century of collective expertise. Their areas of specialisation include macroeconomics, credit assessment, and stocks. The
team covers all financial events of the CEE region. And as a part of the Generali Group, it can befit from the analytical findings of other members of the Generali analytical network — the work of 40
€16bn. The company also benefits from the support of the internal distribution network of Generali Česká pojišťovna, which regularly registers a particular interest in tranche products.
Generali Investments CEE: Fund AUM (mil. EUR). Source: Generali Investments CEE 0 500 1,000 1,500 2,000 2,500 117.7% growth
EMPHASIS ON SUSTAINABILITY
“This year, we have established a new secured fund in response to current conditions,” says Toufar. “The Generali Hedged Equity Income Fund offers the opportunity to invest in stable European companies with high dividend yields — while simultaneously providing a 100 percent hedge of the invested amount, as well as currency hedging.
analytical team has been recognised for its prowess in predicting inflation and the GDP of the Czech Republic, and for the most precise prediction of exchange rates of central European currencies (Consensus Economics Forecast Accuracy Award, Thomson Reuters Analyst Awards).
In harmony with this focus on sustainability, Generali Investments gives priority to projects focused on the environment. For several years, it has been a partner to the series of amateur Run Forests race events, at which the company promotes the benefits of recycling.
SOCIAL RESPONSIBILITY
Theexperts.Prague
Italian asset management specialist ARCA Fondi SGR has become a leading light in the sector
54 CFI.co | Capital Finance International ARCA Fondi SGR: Another Year, Another Profit Record: There’s No Stopping This Italian Asset Manager RCAFondiSGRhaswonrecognition—andfinancialrewards—withgo-aheadstrategies,transparency,andafocusonclientneeds.
responsible governance, and operational excellence. The financial statement for 2021 — the best in the company’s history — showed consolidation of a growing trend. The bottom line was a record net profit of €78.6m — an increase of 39 percent over 2020’s €56.7m — with a distribution of dividends to shareholders for a total of €15m.
thanks to collaborative innovation, a focus on quality, and consistent attention to customer Sinceneeds.its launch in 1983, the firm has developed a range of value-added savings and investments solutions. It has built on strong expertise,
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and information flow through a seamless multi-channel infrastructure to provide clients and distributors with a real-time view of the market, its drivers, and any impact these factors may have on investments. Portals offer a comprehensive view of investment portfolios and details on investment composition, risk contribution and performance attribution are appropriately provided.
ARCA Fondi has developed a digital ecosystem made up of a website, an app, customer- and distributor portals, chatbots and social media channels. Together, these innovations allow continuous interaction with customers and Data,stakeholders.news,
Thanks to an innovative and high-quality product range in 2021, company assets under management have increased by more than €4bn to reach €37bn by the end of December. ARCA Fondi SGR is the investment partner of choice for more than 825,000 clients throughout the country.
In recent years, ARCA Fondi SGR has become one of the main points of reference in the Italian financial market for ESG funds. To add value for its customers, it meets the needs of a new generation of investors who are increasingly concerned about the environmental impact of their choices.
"The financial statement for 2021 — the best in the company’s history — showed consolidation of a growing trend."
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SUBSCRIBER-CENTRIC APPROACH
With 39 years of experience, ARCA Fondi SGR gained a prominent position in the market and is widely recognised as a reliable investment partner. At the heart of this recognition is a customercentric approach, aimed at understanding and addressing needs. Also crucial to the ongoing success is the company’s co-operation with a network of distributors — 100 banks with more than 8000 branches — that share ARCA’s values and sense of business ethics.
DIGITAL TRANSFORMATION
ARCA Fondi shaped the Italian investment management market with a dynamic approach to management aimed at adding value, mitigating risk, and seizing opportunities both at fund and product range levels. ARCA manages portfolios with high levels of transparency and diversification across securities, markets, issuers, currencies, and sectors. It’s an approach that has enabled the delivery of consistent performance across the product range.
FOCUS ON ESG
The range of sustainable investments (Art 8 and Art 9 SFDR) includes four equity funds, three balanced funds and one flexible fund. All respect the highest ESG standards, thanks to a rigorous best-in-class approach to investment limitation
was also a partner at Bain & Company Italy. He previously held the position of European senior strategist for fixed-income derivatives at Paribas, and was executive director of fixed-income research at Goldman Sachs International.
In 2022, it was elected — for the second consecutive year — as the Best SME Equity Fund in Italy. It had previously won CFI.co awards for Best Emerging Markets Debt Manager in Europe — repeatedly, from 2015 to 2018 — and then again in the past three years (2020, 2021 and 2022).
ARCA Fondi, Loeser held the post of director at Finlabo SIM and Banknord SIM; he
Ugo Loeser has been chief executive and general manager of ARCA Fondi SGR since 2011; he is also a member of Assogestioni’s board of Beforedirectors.joining
Some of the Art 9 funds — the Oxygen Plus Funds — adopt an impact investment approach, including in their portfolios only companies that are committed to reducing their CO2 emissions in-line with Paris Agreement goals.
A LOOK INTO THE FUTURE
In 2022, the company will continue to focus on technological innovation, digital evolution and process optimisation. Sustainability, real economy, and pension funds will be at the core of the ARCA strategic evolution for product development.
CEO & General Manager: Ugo Loeser
Thanks to its consistent approach and dedication, ARCA Fondi SGR has achieved significant recognition and praise over the past 11 years. The company has a track record of success in the CFI.co awards programme.
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— and to a set of eligibility criteria that must be met by any investment manager hoping to be compliant to ARCA’s ESG Policy.
RECOGNITION
MAN AT THE TOP
Loeser holds a degree in Economics and Social Sciences from Bocconi University, Milan. i
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hasn’t always been at the forefront of fashion; it was founded in 1913 by Mario Prada, and the brand began life as a luxury leather goods firm in Milan’s Galleria Vittorio Emanuele II, Italy’s oldest shopping gallery. It sold bags, trunks, and other travel accessories, and in 1919, Prada became one of the official suppliers to the Italian royal household.
F
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Consumer interest in ethically sourced products continues to grow. Web searches for “organic”, “second-hand” and “vegan” increased by 17 percent in 2021. Prada has continued working on its promises to make every aspect of its business more sustainable; such as building eco-friendly “garden factories” in Italy. The buildings have won awards for their commitment to restoring and preserving nature, and all of Prada’s Italian facilities operate with renewable energy.
There are still two years left on the €50m, fiveyear sustainability term-loan with the Crédit Agricole Group, and Prada must meet its three sustainability goals in order for interest rates to
a far cry from the company’s 2006 Hollywood image. In the classic movie, audiences catch their first glimpse of Meryl Streep’s character carrying a grey Prada purse before they see her face. They know straight away that she is the eponymous “devil”.
The Devil Wears Prada is a movie classic that captivated audiences with its depiction of a glamorous but cut-throat world. A clueless “plain Jane” journalist, Andrea Sachs (Hathaway) faces off with #girlboss icon Miranda Priestly (Streep). Demanding, sharp-tongued (and allegedly inspired by real-life Vogue editor Anna Wintour), Priestly subjects Sachs to verbal abuse and submerges her with round-the-clock errands — but the reward for her hard work is a high-fashion makeover, and yes, those thigh-high Chanel
Itdecrease.seems
Its popularity exploded in the 1970s after Mario’s granddaughter Miuccia joined the family business, designing a set of backpacks and tote bags. She studied political science and delivered communist manifestos “wearing Saint Laurent and emeralds” before taking over in 1978.
The Devil’s in the Detail for Prada, Which Never Goes Out of Fashion
Prada debuted on the runway in 1988 and has since created some of the most iconic outfits of the past 30 years. The official Prada ethos is “be drivers of change”, and the brand still aims for the unconventional, the innovative, and the Prada’spioneering.newest focus is sustainability. In 2019, chairman and executive director Carlo Mazzi told Vogue that “sustainability cannot be simply a marketing tool” after becoming the first highfashion company to sign a green loan — credit given on the understanding that it is to be used for environmentally friendly purposes. The same year, Prada signed the G7 “fashion pact”. The first-of-its-kind initiative aims to
By Kitty Wenham
For men, bold shoulders and turtlenecks dominated the runway. Titled Body of Work and inspired by utilitarian work uniforms, Prada said in a post-show statement that it wanted to create clothes that make people feel important. “The collection celebrates the idea of working — in all different spheres and meanings. It is a practical, everyday thing. But here, you are formally important. You are not casual.”
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Prada’s FW22 collection debuted on the runway at Milan Fashion Week this February, with models including Kendall Jenner and Kaia Gerber. The collection featured combinations of grey linen and crushed black satin, sheer mesh skirts, and jackets decorated with faux fur or feathers.
"Under the direction of Miuccia, Prada has even delved into the world of NFTs and the metaverse."
Sustainability is the new watchword for a brand that’s staked its place in our imaginationsanddesires.
reduce greenhouse gases to zero by 2050 — and eliminate single-use plastics and achieve 100 percent renewable energy by 2030.
Pradaboots.
Models were adorned with pearls worn askew and leather trench coats; strong silhouettes triumphed over daintiness. The modern Prada customer means business, but it’s a far cry from the pencil skirts and tailored pantsuits worn by Streep.
But in 2022, Prada’s image is less exclusive, more inclusive. In 2019, Forbes reported that “93 percent of global consumers expect more of the brands they use to support local, social and environmental issues” and the Italian fashion house has been adept at keeping up with changing demands.
or those who grew up in the noughties, the mention of Prada may call to mind Anne Hathaway and Meryl Streep, New York magazine offices, and iconic makeover scenes.
Miuccia is still notoriously picky about who she works with, however, telling Vogue that whenever requests land on her desk “they always seem to be about selling more — about cliches, banality, and not about ideas.”
With Prada’s SS23 menswear collection recently presented at Milan’s fashion week, and the invitations to its shows delivered on a functional paper coat, Prada continues to innovate and Don’tinspire.expect to see florals for spring any time soon. i
Author: Kitty Wenham
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Under the direction of Miuccia, Prada has even delved into the world of NFTs and the metaverse. Although the Italian fashion house has historically eschewed collaborations, it has slowly become more amenable to the idea. Perhaps its constantly evolving outlook is driven by Miuccia's rebellious nature.
In 2019, Prada announced a long-term collaboration with sportswear brand Adidas. In 2020, iconic menswear designer Raf Simons joined Prada as co-creative director, and in May 2022, the firm released a collaboration with artist Cassius Hirst.
ince his appointment, ACCENTRO has delivered excellent figures, quarter after quarter. Here, he analyses the market situation and assesses the future of the housing industry.
The construction industry’s response to current challenges has included some very effective measures. Affordable and energy-efficient housing are no longer mutually exclusive. That, too, is good news.
WHAT’S THE SITUATION IN GERMANY — AND SPECIFICALLY IN BERLIN? We’ve had to contend with difficult conditions, but the market has remained relatively stable.
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ACCENTRO chief executive Lars Schriewer took up his position in March 2020 — and with 20 years of experience in the real estate and capital markets, he has implemented winning strategies for the Berlin-based company.
ARE YOU CONFIDENT THAT WILL HAPPEN?
Lars Schriewer, ACCENTRO CEO: Winning Ways in a Dynamic Market — Despite Some Fearful Challenges
SO YOU BECAME A LANDLORD…?
AND THE IMPACTS OF THE WAR IN UKRAINE … Catastrophic. Russia’s invasion of Ukraine has taught us how fragile our lives are. Until February 24, hardly anyone believed that war could break out in the heart of Europe. We are all feeling the effects. Many energy suppliers have announced massive increases for supplies to private households. The long-term challenge is to transform the entire industry. The whole building sector needs to become more sustainable and resource-efficient.
CFI.co: REAL ESTATE MARKETS ARE UNDER PRESSURE, INFLATION RATES ARE RISING, AND SO ARE THE COST OF ENERGY AND BUILDING MATERIALS. IS THE BUBBLE ABOUT TO BURST?
Berlin’s real estate market is dynamic, and the city’s attraction means that housing demand is high. Our Housing Cost Report showed that buying property is still worthwhile compared to renting, despite the price jumps in the capital. This confirms that our product is important and relevant. The political framework is a little complicated at times. The city, however, has an interest in investment — and the courts intervene when things go too far. This balance works quite well. Berlin remains a very attractive location for investors.
Lars Schriewer: I don’t see that, although the underlying conditions have changed significantly in recent months. There is still huge demand for affordable housing, especially in cities. Despite the difficult underlying conditions, I’m optimistic.
WHEN YOU TOOK OVER ACCENTRO AS THE COVID-19 PANDEMIC WAS TAKING HOLD — YET YOU MANAGED TO PRESENT THE BEST RESULTS IN THE COMPANY’S HISTORY. HOW DID YOU MANAGE THAT?
The situation in March 2020 was extraordinary. The economy, and social life, were in lockdown. It quickly became clear to me, and the company, that this situation also created opportunities.
Exactly. Over the past two years, we have managed to build up a large residential portfolio. With rents as a secure source of income, we have created additional stability. Together with a strong performance in our core business, residential privatisation — where we were able to increase sales volumes to a record high — we have significantly increased all key performance indicators. That is despite the massive impact on our business from a challenging market and a difficult political Despiteenvironment.darkclouds on the economic horizon, I believe that real estate — and our product — will remain attractive to private investors. i
CEO: Lars Schriewer
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Independently of Covid-19, we had the goal of diversifying our business. The pandemic accelerated this development.
YOU HAVE BEEN CEO OF ACCENTRO FOR MORE THAN TWO YEARS. HOW IS THE BUSINESS PERFORMING? Stable and positive. We’ve delivered record results in recent quarters, and there are many reasons that this trend will continue. It’s particularly pleasing that we’ve been able to sell a large number of apartments to tenants. By building up our own portfolio, we’ve created a permanent and secure source of income. I’m confident that we’ll confirm a record result in 2022.
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The pageant gave post-Brexit Britain a chance to showcase all things British — including, obviously, the Queen herself.
Impeccably choreographed marches and parades, gasp-inducing aerial displays by the Red Arrows, the warm fuzzies over the video of
It seems fitting that her seven decades wearing the crown coincide with a new opportunity for Britain to step into that role of trade and tech powerhouse. i
sentiment ripples around the world, Britain’s post-Brexit economic future seems to be taking an Basedupturn.on
Not blowing one’s own trumpet is in the British blood; as English writer Wyndham Lewis put it: “The English certainly and fiercely pride themselves in never praising themselves.” But the Queen’s enduring sense of duty stirred gratitude and appreciation.
a hole in the tax-payer pocket, the jubilations were financed by corporate partners, commercial businesses, royal warrant holders and philanthropists. Household brands and international giants jostled to get a slice of the action. The 16 platinum partners making the final cut to have bit parts in HRH’s 70-year reign came from retail, fashion, hospitality, travel, media and business — and champagne.
the Queen and Paddington Bear… it’s been quite Farsomething.frommaking
Bunting & Brexit: Why Brand Britain is Coming Out on Top
By Naomi Snelling
Testament times, a jubilee was celebrated every 50 years with the release of slaves, forgiveness of debt, and the repatriation of property. It must have been a much-anticipated year. The origins will not be lost on Queen Elizabeth, whose faith has helped her to weather any cracks and fault
Monarchy celebrations and a revival of global trading fortunes as the UKshrugsoffBrexitandflexesitsmuscles.
Withlines.unfailing dignity and stoicism, the Queen has been a force for unity, continuing her duties despite her husband’s recent passing.
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hasn’t been such a corking celebration since flag-waving VE Day; the sad irony is that the jubilee took place against the backdrop of war in Europe.
ThereAngel.
recent research, the London-based Centre for Economics and Business Research (CEBR) forecast that post-Brexit Britain would emerge a leader in digital, creative, and tech
Insectors.Old
Queen Elizabeth II recently became the first British Monarch to celebrate a Platinum Jubilee, after 70 years of service. There were 200,000 local events, street parties were scheduled — many of them for the two bank holidays announced in honour of the event — and millions of people around the world joined in the revelry.
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We bring you: Burberry, Moët & Chandon, M&S and St James’s House. Pageant partners were Air Partner, Boodles, Bloomberg, Cadbury, Cadogan, Endava, Fortnum & Mason, McDonald’s, Meta, Sotheby’s, Waitrose & John Lewis and Whispering
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All this has served to revive the monarchy and ignite passion for all things British. As that
t’s universally acknowledged that nobody does pageantry as well as the British, something they are quietly smug about.
CCENTRO Real Estate AG was founded in 1999 as Estavis AG. Today, the listed residential privatisation and investment specialist is headquartered in Berlin and, with 20 years of experience in the sector, is the market leader in Germany.
ACCENTRO’s investments take advantage of the polycentric structure of the country’s housing markets, with many medium-sized and smaller
2009, ACCENTRO has sold more than 18,000 units worth a total of €2bn. Its portfolio comprises around 4,900 units, ranging from affordable and socially subsidised to upscale residential complexes.
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ACCENTRO to the Top
In 2021, the company posted sales of €192.7m — a 53.9 percent increase over the previous year. Earnings before interest and taxes (EBIT) improved by 30.3 per cent to a total of €45.2m. With consolidated earnings of €13.1 million, earnings per share amounted to €0.37. The equity ratio was stable at 28.0 percent. With an NAV of around €13 at a current price of around €4, the company’s shares appear undervalued.
ACCENTRO Real Estate AG: Two Decades of Expertise Have Taken
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economic centres. The company also focuses on eastern cities such as Potsdam, Halle, and Leipzig, along with the Rhine-Ruhr metropolitan
In the 2021 financial year, ACCENTRO generated just under 90 percent of its revenue from the sale of real estate. The notarised sales volume increased by 107 percent year-on-year to €246.5m, with 761 units sold.
THREE PILLARS OF SUCCESS
Incosts.co-operation
INDIVIDUAL PRIVATISATIONS
ACCENTRO plans to expand its portfolio of residential properties. Rental portfolio growth under Schriewer gave a boost to the company in the pandemic. About nine percent of revenue was generated from apartment rentals.
In keeping with the group’s base in Berlin, ACCENTRO’s sales department maintains an international focus. A third of the apartments sold were brokered to foreign buyers.
SECOND REVENUE DRIVER
The company has privatisations with a total volume of around €360m lined-up for this year. As one component of its asset management services, ACCENTRO handles the rapid and cost-efficient division of real estate portfolios, and their marketing. The company’s strength lies primarily in its deep knowledge of the market. This includes local expertise, the features of each property, and the political and social environment. All of these factors are necessary to ensure socially acceptable and tenant-friendly operations.
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STRATEGIC PARTNERSHIP
ACCENTRO’s core business is the sale of apartments. In addition to tenant-orientated sales to owner-occupiers and private investors, larger real estate portfolios are made available to institutional investors.
Since Lars Schriewer was appointed chief executive in March 2020, ACCENTRO has pushed ahead with the development of its
with the German Economic Institute (IW), ACCENTRO regularly publishes studies on the state of the national housing market, such as the Housing Cost and Home Ownership reports. The former compares the costs of owner-occupiers and tenants in all German districts and cities, while the latter sheds light on transaction activity in the real estate market. This provides an important database and decision-making tool for investment.
The properties are evaluated with AI support, providing customers with a real-time impression of their investments. Further developments, such as the brokerage of real estate financing and detailed location analyses are also planned. i
CEO: Lars Schriewer
With varying investment horizons, the company acquires apartments in varying condition, refurbishes them where required, and lets them. The company is focusing on energy-efficiency; due to the tight tenant markets in mediumsized cities, this strategy allows ACCENTRO to generate a secure cash flow. The rental business represents downside protection.
Rental income increased by 64.4 percent yearon-year in the 2021. The portfolio is concentrated on metropolitan areas in the state of North Rhine-Westphalia and in eastern German states, comprising around 3,600 units. ACCENTRO primarily holds portfolio properties in B and C locations, with the aim of leveraging the potential for increased value in years to come.
The company aims to strengthen this service via a partnership with ImmoScout24, Europe’s largest real estate portal. ACCENTRO will provide developers and brokers with an acceptance and sales guarantee, creating a secure exit scenario and allowing for reliable calculations in times of rising construction
DIGITAL INNOVATION
CEO Schriewer is a firm believer in innovative, data-driven services, such as the publicly accessible PropRate platform developed with Samsung subsidiary Cheil. Customers can view all properties from the largest real estate search engines in Germany.
Another strategic goal of Schriewer’s executive board is to strengthen third-party marketing. The company has entered into an exclusive partnership with real estate portal ImmoScout24. This aims to increase sales in the construction sector. While ImmoScout24 is responsible for online marketing, ACCENTRO handles the exclusive marketing of the residential portfolios. It also guarantees the acceptance of the apartments — if necessary into its own portfolio. The concept is aimed at property developers and new-construction projects.
residential portfolio to tap into a stable source of income with a buy-and-hold strategy. Another mainstay is the marketing and sale of apartments for portfolio holders, investors, and project developers.
As a mutual, it is owned by, and run for, the benefit of members — and profits are reinvested. Scottish Friendly firmly believes in the democratisation of savings and investment, and is committed to creating user-friendly, accessible Duringproducts.the pandemic, the priority was on serving and supporting members, colleagues, and the community. “Our staff showed great resilience under difficult circumstances that have lasted longer than any of us could have imagined,” said a Thespokesperson.purpose-led organisation offers products and services that do not discriminate by age, income, or financial experience. The strategy is “to diversify and grow” — which has three core •elements.Organic growth via a branded product range and distribution channels
CEO: Stephen McGee
DEVELOPMENTS
An ongoing relationship with the Action for Children charity has raised £23,500 to support vulnerable children, young adults and their families across Scotland.
The strength and flexibility of the mutual’s governance processes helped it to respond to regulatory changes and best-practice developments. It is a member of the Association of Financial Mutuals and supports its governance standards. There is a commitment
REGULATORY ENVIRONMENT
Last year came many enhancements to policies, processes and systems to ensure compliance with requirements of the Prudential Regulation Authority (PRA) and the Financial Conduct Authority
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Scottish Friendly has won increasing coverage in national, trade and online media outlets, as well as targeted social media exposure. This was achieved by a tailored programme of press activity, including corporate news, consumer thought-leadership research, and regular commentary on industry topics.
Scottish Friendly aims to responsibly invest customers’ funds, and stewardship is consistent with sustainability aspirations. In 2021, the mutual developed its own ESG framework with a focus on sound corporate governance, responsible investing, and improvement of the
Particular(FCA).areas
of focus include operational resilience, climate change, and the fair treatment and protection of vulnerable customers.
• Acquisition and consolidation.
With input from some of the UK’s most popular authors and illustrators, the content has been viewed 150,000 times via social media and an on-demand library hub.
CORPORATE GOVERNANCE
communities in which it operates. It has made a commitment to net-zero by 2030 for direct and indirect greenhouse gas emissions, and across the entire business and supply chain by 2050.
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cottish Friendly’s is one of the UK’s largest mutual life offices, with a history reaching back 160 years — and it has never been driven by the needs of shareholders.
The strategy continues to deliver for Scottish Friendly customers, and there is a commitment to a diverse and innovative product range.
Mutual ScottishBenefits:Friendly Puts Its Money Where Its Heart Is
• New partnerships, and new products launched with existing partners
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The focus has brought in record sales of £46.9m APE (it was £42m for 2020). Assets under management increased to £5.4bn, with solvency capital at a strong 174 percent, well above regulatory requirements. Member numbers increased from 745,000 to 776,000.
to driving continued improvement in all key processes.
ENVIRONMENT, SOCIAL & GOVERNANCE
Of the total, protection sales were £25m (2020: £24.1m) and savings and investments — which include the Scottish Friendly brand, whole of life and savings partners — amounted to £21.9m (2020: £17.9m). Included within savings and investments, Scottish Friendly own brand sales increased in 2021 to £18.4m (2020: £15.7m)
Lookingaftermembers,notshareholders,makesforahealthyworkplace.
The Scottish Friendly Children’s Book Tour delivers a programme of virtual activities, livestreaming entertaining educational content into classrooms and living rooms across Britain.
There has been a strategic investment relationship with JP Morgan Asset Management and abrdn plc. These relationships provide market insights,
Scottish Friendly Headquarters
Scottish Friendly Staff
Scotland: Isle of Skye
All success stories are the result of co-operation and concerted effort. In a recent colleague engagement survey, 86 percent of respondents said they were “proud” to work for Scottish Friendly — and nine in 10 were happy working with their team. To maintain the focus on wellbeing, the HR function has launched a colleague-recognition scheme.
support the delivery of investment returns, and provide additional flexibility in volatile investment markets.
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There has been investment in new tech to strengthen the mutual’s risk-management framework with automation, new technology and continual cost-management. Through innovation, efficient customer services and responsible capital management, Scottish Friendly is well placed to achieve its objective: to provide longterm, sustainable growth for its members. i
It hasn’t always been that way.
But the shirt didn’t have any fashion cred until Coco Chanel spotted one. The legendary French designer incorporated the stripes in her 1917 come-back collection. Her designs, which aimed to elevate leisure wear and break away from the heavily corseted fashion of the time, forever changed casual womenswear.
The brands that Pugh represents are found all around the UK coast — but he singles out the Mumbles and Pembrokeshire as up-and-coming areas. The most unspoiled, too. i
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We Do Love to be Beside the Seaside, and Fashion is So Much Better For That
“Travaux En Corps is famous for its Borsalino hats, which are made from texturized paper. And Les Mauricettes create effortlessly elegant, comfy beach sandals and shoes inspired by the south of France. Even their packaging has a nautical feel — they often come with their own hessian bag.”
Perhaps one of the most well-known seaside fashion essentials is the Breton striped top. Typically a cotton top with blue or navy stripes, it hails from Britany in northern France, where it was naval uniform. In 1858, the shirt boasted 21 stripes, one for each of Napoleon’s victories. (The stripes also made it easier to spot seamen who had fallen overboard.)
As well as health benefits — although not in the way the Victorians prescribed — Britain’s coast has provided sartorial and design inspiration through the ages.
Bloomers, seaside pyjamas, natty outfits for strolling, boating and bathing — there was an influx of new fashions. Some were significantly more relaxed and daring than the conservative styles of the day.
Feared, revered, plundered for its booty, Britain’s appreciation for its beaches as places of leisure came only in the wake of the industrial revolution. Before that, there was no concept of going to the Doctorsbeach.
Jerome Pugh, UK sales agent for a range of French and Italian manufacturers, distributes brands typically sold in the boutiques and stores of UK seaside towns. His brand portfolio includes Mousqueton, Travaux En Corps and iconic beach shoe brand Les Mauricettes.
increasingly advocated “taking the waters”, and the seaside became more popular throughout the 18th Century. The expansion of railways gave rise to holidays and daytrips to the coast — “glamorous” destinations — and a whole new wardrobe was born.
s an island nation, Britain has channelled the coastal couture vibe via brands such as Fat Face, Seasalt, Celtic & Co, Finisterre and White Stuff — which pay more than a passing nod to the coastline.
“ThisBarbour.high-end influence filters down and informs a more laid-back version for the high street or the seaside boutique market.” Of his top three brands, he describes Mousqueton as “a vibrant and colourful label”.
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UK: Durdle Door at the beach on the Jurassic Coast of Dorset
“Coastal fashion always had its unique identity,” he says, “with so much of the inspiration coming from workwear and industrial clothing. It has been adapted over the years by great designers such as Coco Chanel, Jean Paul Gaultier and more recently
Some of these early ensembles live on in the soft, Empire-inspired Indian pyjamas reinvented as palazzo pants or floaty hareem trousers.
By Naomi Snelling
This was, after all, the period of the real Peaky Blinders, one of a number of notorious street gangs from Birmingham. Victorian Britain’s industrial cities all spawned similar mobs.
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The first incident of football-related thuggery came in 1885, when two founder-member teams of the Football League, Preston North End and Birmingham-based Aston Villa, met for a friendly game. Preston beat Villa 5-0; Villa’s supporters attacked their rival fans — and both sets of players and officials.
Despite extensive research, social scientists across the continent have failed to agree on a cause or explanation for the ugly phenomenon. European researchers have suggested a link between football hooliganism and a general rise in juvenile crime and delinquency in many countries, plus the emergence of deviant subcultures.
plays a part, with far-right extremists, especially in former Soviet bloc countries, using matches as recruiting events. Much of the trouble in and around Spain’s football grounds is said to have its roots in the Civil War, or separatist tensions in Catalonia.
More organised violence, on a different scale to the English football gangs, is now evident in the European game. Italian clubs have their “ultras” — well-organised, and in some cases, almost paramilitary groups of fans, some of whom have used firearms in pre-arranged clashes with rivals.
And while some continue to point the finger of blame at the English, studies have shown that football violence has many different causes. While hooliganism in England has been largely connected to tribal club loyalties, in Europe, racial and ethnic tensions are often at the heart of such Politicshostilities.also
Theignored.link between football and violence is longestablished in the British Isles — one of the reasons why many Europeans blame the UK for “exporting” hooliganism.
By Tony Lennox
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competition, winning six consecutive finals from 1977 to 1982, but violent behaviour — allegedly unknown in the European game — caused shock, fear and outrage.
he small Warwickshire town of Atherstone, which sits on Watling Street, the old Roman road marking the division of Anglo-Saxon England and the Danelaw, is the scene of an annual ritual which dates back more than 800 years.
The Atherstone Ball Game resembles the original mediaeval event: it involves a large and unspecified number of young men pursuing a ball up and down the main street in a frantic melee that lasts for an indefinite period every Shrove Tuesday. The only official rule is that “no-one is allowed kill anyone”.
By 1985, England’s pariah status was cemented by tragic scenes at a game in Brussels at the Heysel Stadium between Italian champions Juventus and Liverpool. Inside the stadium, and before the kickoff, English fans charged their rivals, provoking a stampede — and 39 mainly Italian fans were crushed to death when a wall collapsed. A further 600 were injured. UEFA, football’s governing body in Europe, described it as “the darkest day in the history of European football”.
Almost every town and village in England had a similar tradition until the 1830s when Parliament, alarmed by annual mayhem — the official rule was frequently broken, back in the day — introduced laws to restrict such events. In Atherstone, and one or two other locations, these laws have been
By the early 1980s, Europeans were becoming exasperated by the behaviour of English fans, who regularly rampaged through the continent’s cities. English clubs were dominant in European
Aston Villa were again in the spotlight when they competed in, and won, the European Cup in 1982. In the semi-final against Dutch champions Anderlecht, an English fan ran on to the pitch. Anderlecht officials demanded Villa’s disqualification, claiming the pitch incursion affected the outcome of the game, but the English club escaped with a fine.
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The Ugly History of the Beautiful Game
During its European exile, the process of “gentrifying” the English game began. Stadium facilities were modified, seating replaced terracing, and tougher action was taken to root out racism and deter the hooligan element. But meanwhile, European clubs were witnessing an explosion of antisocial behaviour.
The disaster prompted UEFA to act — by banning all English clubs from European competition until 1990. But the actions of UEFA missed the mark; by the time English football authorities were finally shamed into taking action, hooliganism had taken root across Europe.
Football hooliganism, aka ‘the English Disease’, is blame?endemicaroundtheworld.So,isasinglecountrytoTonyLennoxgrabsapieinthestands…
CFI.co | Capital Finance International 69
The notion that all Europe’s football woes directly stem from the English “bovver boys” in the 1970s and ‘80s is disputed by many experts. The Social Issues Research Centre (SIRC), an independent, Oxfordbased non-profit which researches socio-cultural trends is one organisation that believes it to be a myth.
In France, regular hostilities between supporters of Paris Saint-Germain (PSG) and Olympique de Marseille encapsulate the divisions between the north and south of the country. In Russia, some club gangs organise squad “training weekends” involving improved fitness… and battle strategies.
In an SIRC academic study, Steve Frosdick and Peter Marsh suggest there are three general fallacies related to football hooliganism: that the problem is new, that it is a uniquely related to football, and that it’s a purely English phenomenon.
When crowd trouble began to emerge as a serious challenge on the European mainland in the 1970s, it was suggested that fans were simply imitating their British counterparts. Claims by some sociologists that hooliganism was unknown on the continent until that point are, however, contradicted by the evidence.
Yugoslavia was a hotbed of fan violence. In the mid-1950s a wave of football brawls, known as zusism, broke out around the country across ethic and religious lines. Fans armed themselves with hammers, mallets, iron bars and knives. In Turkey, rival spectators confronted one another with knives and pistols; in one incident, 42 spectators died, mostly from stab wounds. The army had to be called in.
Psychologistcontinent.
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matches, as well as at rugby league and union games in England and France.
The Teddy Boys of the 1950s led to the rise of Mods and Rockers in the 1960s, eventually producing the skinheads and bovver boys of the 1970s: gangs which were almost exclusively linked to football clubs.
Throughout the first half of the 20th Century there are numerous reports of sport-based street fighting in continental towns and cities. In 1920, furious fans at a game in Villaggio, Italy, killed the referee. There are other documented incidents — in almost every country where football is played.
Even during the inter-war years, crowd disorder and street fighting were recorded in Hungary, France, Germany and Sweden. Indeed, some British football clubs, fearful of the potential for violence, refused to play friendly matches on the
Football was designed with clear rules, and imbued with Victorian values of fair play and gentlemanly conduct. It was essentially the pastime of the aristocracy, who formed
There are areas of agreement, however. The role of the media, especially the tabloids, is frequently identified as an aggravating factor. Sensationalism has been blamed for stoking tensions between rival fans ahead of a game.
And it isn’t confined to club matches. Sections of the British media have been criticised for likening almost every international match with Germany to the resumption of World War II hostilities.
Nor is violence restricted to football. The first recorded incidence of sport-related fighting involved chariot races in ancient Rome. There have been incidents of crowd trouble at baseball, basketball, ice hockey and American football
The US has a history of spectator violence. At the Winter Olympics in Salt Lake City in 2002, police fired teargas to disperse fans after the finals of the bobsleigh competition. Minor sports are not exempt, either. Serbian fans clashed with Croatian rivals after a water polo European Final in Belgrade in 2003. There have even been incidents, worldwide, at cricket matches.
quaintly-named clubs like the Old Etonians and Corinthians. The first recorded football club in France was founded in Paris in the 1860s — by “English gentlemen”. Their robust style of play was said to have amazed French onlookers.
Despite constant study, there is a general lack of consensus or reliable data on footballrelated violence, making a general assessment almost impossible. Universal explanations can’t accommodate all the cross-cultural variations. Some commentators have likened the sometimes-venomous disputes between teams of sociological experts to hooliganism itself.
While violent incidents still occur from time to time in the English game, there is no comparison to either the dark days of the 1980s. Facilities for English fans are now among the best in the world. Effective campaigns have all but eliminated racist and homophobic behaviour in English grounds, something which cannot be said for some European countries, notably those in parts of eastern Europe.
There have been other positive developments. Some argue that the hooligans themselves are changing. There was a time when negative media coverage was seen as a badge of honour; this appears to be fading. The Scottish “Tartan Army” and the Danish “Roligans” distance themselves from the old hooligan ethic, presenting a very different style of engagement — boisterous, frequently alcoholfuelled, but non-violent, generally amiable, and respectful of host countries.
How did the modern game become so intrinsically linked with violence? When football was first established in England, those behind its development made strenuous efforts to distance the game from the age-old tradition of communal Associationviolence.
Nothing illustrated the changing status of the English football hooligan more than events at the Euro 2016 tournament, held in France. Wellorganised Russian thugs routed their slightly pudgy, lager-swilling English counterparts in running battles on the streets. England’s hooligans were no longer at the “top” of the league.
There is little doubt, however, that despite all the efforts to control violence, there is, and probably always will be, an appetite for fighting among some young men. And football, with its tribal passions, continues to provide a focus.
Historians believe a major turning-point came when English football turned professional, mainly in the North and the Midlands. It developed into a working-class sport, in terms of its participants and its followers.
Crowd trouble in the modern game subsequently became a relatively common phenomena in Britain’s towns and cities, but it was in the mid-1960s — paradoxically, at the moment of English football’s greatest triumph, the hometurf World Cup victory in 1966 — that a new breed of hooligan emerged. Sociologists have failed to agree on a single cause, but most point to changing social attitudes and the emergence of new subcultures among the young.
Peter Marsh, the author of Rules of Disorder, a study of gang violence, believes much of the aggressive behaviour witnessed among English football supporters is ritualistic in nature — and largely symbolic. It is true to say that serious injury, even during the height of hooliganism in the 1960s, ‘70s and ‘80s, has been comparatively rare. Fans of rival teams chant, posture, and pose… but seldom cause serious injury.
Elizabethan pamphleteer Philip Stubbs understood this, and he could have been watching the Atherstone Ball Game when he described football as “a bloody and murdering practice”. And in 1829, an unnamed French observer of a rough village game wrote: “If this is what the English call football, what do they call fighting?” i
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By David Casas Alarcón Property Management Accounting Lead at CBRE’s European Center of Excellence
72 CFI.co | Capital Finance International >
Figure 1: May 2022 Yield spreads. Oxford Economics
he direct and most obvious financial effect is on commodity prices and inflation, while other impacts will be determined by the longevity of the crisis, sanctions, and retaliation. The commercial real estate market has started to adjust to a new regime of higher interest rates to sustain the investment level, with price adjustments and different strategies towards the cross-border investment and foreign exchange.
Inflation is a hot topic in real estate, and for good reason. Most metrics show multi-decade highs, as a sudden economic resumption paired with pandemic-related supply disruptions have ignited a surge in the costs of labour, materials, and energy.
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push in decarbonisation. There is a move to the de-globalisation of supply chains and shifting production closer to the customer, adding fuel
The invasion of Ukraine has agitated global price pressures, a phenomenon that is not likely to resolve itself soon. Supply chains remain bottlenecked and the geopolitical outlook is uncertain, as became clear during the recent NATO summit in Madrid. This upheaval develops while the global markets are still recovering from the Covid shock.
HowCBRE: Commercial Real Estate is Reacting to Sustain Investment
Source:
Figure 2: FX 5yr Forward Vs. spot rates (USD, EUR, GBP, JPY, AUD) Vs. local currencies. Source: Chatam Financial
New regulations in Europe and a shift to global standards concerning how companies declare and report on ESG credentials are leading a
The invasion of Ukraine and the resulting sanctions have brought about economic and political uncertainties.
In APAC, the situation is more fragmented. No changes in Tokyo, where there is no need — yields sit at a significant buffer to 10-year bond rates. Singapore rates are also relatively flat, but again it is a market with a positive insitu spread. The major Australian markets are seeing prices adjust, even after some yield compression in Q1, as activity picked up post-
PRIME ASSETS
Cross-border activity is a major part of investment activity (35 percent per year, on average). So high volatility in currency movements is a cause for short-term concern, and this volatility could continue for another 12 to 18 months.
Despite the short-term macro-economic volatility in markets, real estate is showing maturity in its ability to react to new pricing norms to sustain investment activity. For the sector to remain attractive, pricing and growth fundamentals must remain competitive, even though real estate is becoming increasingly tied to broader infrastructure, energy and debt strategies.
Looking ahead, the market will see more pricing adjustments, particularly in Europe, as the market moves up through the ESG gears. New compliance standards and regulations, particularly with regard to decarbonisation, is impacting investment strategies, asset and market picks. Evidence points to the average CAPEX spend required to reduce energy needs/ emissions is around 25 percent of capital value. This would be an average considering various levels of asset quality. CAPEX requirements would be much lower when it comes to retrofitting or upgrading higher quality prime/core assets. These should get first-mover advantage in terms of achieving higher rental levels.
Themarkets.North
When looking at the difference between five-year forward rates and current spot rates, currencies appear set to depreciate or appreciate relative to each other in-line with interest rates movements.
For lower quality assets, it points to a further need for yields/cap rates to adjust where the rental growth capacity of an asset/market cannot match this cost. Some investors are factoring-in lower returns to shift the needle on the compatibility of assets to meet a broad range of ESG standards.
The global real estate market has been quick to react, with many locations seeing an adjustment in pricing to higher interest rates. Current “live” pricing adjustments (as of May 2022) shows yields have shifted to sustain a risk-free spread to anticipated government bond rates as of yearend 2023.
PRICE ADJUSTMENTS
In Asia, the more insular domestic markets of South Korea and Hong Kong are yet to see any adjustment in pricing. From a global capital perspective, they will need to be made if they are to attract more cross-border activity.
The harder the retrofit, the bigger the pricing impact. Future investment appetite will adjust to this new ESG paradigm, with a growing bank of opportunistic and value-add players entering the market on the lookout for stranded assets. i
Author: David Casas Alarcón
CROSS-BORDER CAPITAL
In Europe, markets are replicating the US adjustment trend — but not as quickly. The UK market is generally holding firm, profiting from a larger yield spread cushion to other continental European locations. That said, there is some evidence around a 0.25 percent correction in yields. This is typically higher across mainland Europe where yields are adjusting by 0.25-0.5 percent across sectors and locations.
CFI.co | Capital Finance International 73
The risk-free spread has oscillated around 1.5 to 3.5 percent, and the greater part of locations sits above and around this threshold. This should position the market to settle quickly, allowing capital to continue to flow across
American region has been the quickest to react, with office yields trending up across major markets by around 0.5 percent. The ever-growing multifamily sector has also seen cap rates move out by around 0.25 percent. Rental growth across the US since the end of 2021 has elevated the current yield.
lockdown. Retail is holding firm — again due to previous price adjustments. There is the expectation of some compression later in the year as investors look for yield in sub-regional shopping centres with strong demographics and development potential.
The Japanese Yen looks cheap, as does the Euro, while the USD, AUD and CAD all look set to increase their buying power. Sterling is somewhere in between. Hedging can compensate for this, but volatile FX rates could see cross-border activity slow until rates settle down. On the flip side, investors seeking to use a currency or hedging advantage could move into the market quickly while others take a backseat.
to the inflationary pressure. This has quickly shifted the needle on short-term interest rates and longer-term government bond rates.
AWARDSANNOUNCING 2022
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.Allthe 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.
SUMMER HIGHLIGHTS
74 CFI.co | Capital Finance International
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.
privatisations of British Airways, British Gas and British Steel in the 1980s and 90s, and is regularly called upon by the UK government to provide vital services. In 2021 Slaughter & May was appointed to the Cabinet Office panel responsible for strategically important projects, providing legal advice aimed at benefiting not only the public sector in terms of procurement policy, but also increasing savings for taxpayer. The company demonstrates its focus on lateral thought by publishing regular blogs which examine the issues of the day,
businesses which display quality growth and offer higher profitability. JP Morgan insight teams report many examples of this trend. More companies, for instance, are tying executive compensation to ESG initiatives. JP Morgan monitoring teams also note that shareholders are increasingly forcing climate change issues up the agenda, demanding that environmental issues are tackled. Adding to the company’s impressive CFI.co awards tally, the judging panel in 2022 is pleased to present JP Morgan with the award, Best Wealth Planning Services United States.
increase in AUM over the years — and proven itself a reliable partner in moments of crisis. The company experienced high outflows in the early days of the Covid pandemic, but the business made a speedy recovery and soon reported higher inflows than pre-pandemic levels. Generali Investments CEE has garnered public praise for its social responsibility and sizable donation to a seniors’ support fund, ensuring those most vulnerable to the virus weren’t left isolated without food, medicines or health assistance. It also backed a charity challenge benefitting
pulmonary departments of regional hospitals. Participants strengthened their lungs through sporting activities and pledged donations — the company then matched the amount collected. Regional conflict has complicated the investment landscape in 2022. But Generali Investments CEE has launched new products and achieved twice the expected results, contributing to its confidence about future growth and international expansion. Generali Investments CEE claims the 2022 award for Best Asset Management Services (Czech Republic).
There’s no broad-brush approach to wealth management, which is why JP Morgan experts pay attention to one-on-one relationships, creating bespoke strategies with each customer’s requirements in mind. The New York-based multinational investment bank prides itself on its ability to tailor specific wealth planning schemes, drawn up using the expertise of staff, and the company’s long experience in the field, serving some of the country’s wealthiest individuals and families. The company’s wealth planning experts take a 360 degree view of each client’s finances, understanding that their
JP MORGAN: BEST WEALTH PLANNING SERVICES UNITED STATES 2022
SLAUGHTER & MAY: BEST CORPORATE & COMMERCIAL LEGAL TEAM UNITED KINGDOM 2022
GENERALI INVESTMENTS CEE: BEST ASSET MANAGEMENT SERVICES CZECH REPUBLIC 2022
needs are likely to evolve. JP Morgan specialists are skilled in helping customers navigate major events, no matter how quickly they arise. One area - sustainable investing, involving Environmental, Social and Governance (ESG) criteria - is currently soaring in popularity. Some sceptics suggest that investors risk sacrificing returns by investing sustainably. JP Morgan disagrees - the company believes sustainable investing has the power to both drive long term growth, and have a positive environmental impact. The company’s experts judge that sustainable investing helps identify
Generali Investments CEE is the biggest asset management company in the Czech Republic, with €16bn in AUM and over 120,000 clients. The company has been contributing to the development of the market over the past three decades and forms part of a global insurance group with a 190-year history. Generali Investments CEE pulls from group resources and local expertise to deliver in terms of client service and fund management. It works for some of the largest institutional clients and biggest portfolios. Generali Investments CEE has managed a steady
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Summer 2022 Issue CFI.co | Capital Finance International 75
> Landor Associates Via Tortona 37 Milan I-20144 Tel.Ital +39 02 764517.1 Il presente documento è un esecutivo La stampa laser fornisce un'indicazione del posizionamento dei colori, ma in nessun caso si deve fare riferimento per la veri ca dei colori di stampa. caratteri tipogra ci non vengono forniti insieme al presente documento in base all'ar L. 22-4 del codice della proprietà intellettuale Sul CD-Rom allegato troverete anche una versione del documento in outline M10095 Recommended colours Colori raccomandati TeNoxt Appr al signature - Firma per approvazione Dat Data 04.03.15Company Client General Artwork Esecuti 02_GI_LINES_CMYK_POS.ai Countr - P ITALIA So ware Adobe Illustrator CS5Implementation - Esecutivista CDL GeneraliGenerali - Investments - Lines - CMYK - positivo
delivering insights into complex areas of the law. A recent 2022 blog on corporate tax, for instance, examined the question of how businesses approach Environmental, Social and Governance (ESG) factors, specifically the thorny topic of how companies square the desire to implement solutions on sustainability grounds at the expense, potentially, of profit. In 2022 the CFI.co judging panel has no hesitation in presenting the company with the award, Best Corporate & Commercial Legal Team United Kingdom.
Great minds think differently – a phrase which neatly describes the ethos at Slaughter & May, one of the UK’s most forward-thinking legal firms, regarded by many as among the most prestigious in the world. Based in the heart of the City of London, the company employs some of the planet’s brightest legal minds, with a depth of expertise and experience, offering firstclass legal service across a range of subjects. The company, founded in 1889, has an impressive corporate and commercial track record – it was heavily involved in the iconic
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Fondi SGR has pioneered many firsts in the Italian market, always with the aim to add value, seize opportunities and mitigate risks. Arca Fondi SGR has built filter tools into its website, allowing visitors to sort the multitude of available investment products according to their interests and needs. Prospective subscribers can see at a glance information on share values, ratings and term periods — or which funds offer the best tax benefits or ESG performance. Arca Fondi SGR is trusted by 820,000 subscribers and 190,000 pension fund members. It manages
COPERNICUS WEALTH MANAGEMENT: BEST WEALTH MANAGEMENT TEAM SWITZERLAND 2022
bring difficult challenges, but feels confident in the team’s capacity to secure its position and protect its clients by recognising and capitalising on changes across the financial industry and beyond. Copernicus Wealth Management operates under the auspices of the Swiss Financial Market Supervisory Authority and is licensed to administer funds in Luxembourg and Ireland. The CFI.co judging panel presents Copernicus Wealth Management — a repeat programme winner — with the 2022 Best Wealth Management Team (Switzerland) award.
Affirmative Investment Management (AIM), launched in 2014, invests to deliver mainstream financial return and environmental and social impact. AIM is a dedicated impact fixed income specialist.Theverification review is considered a critical first step in AIM’s investment process. All impact bond issuers and issues are reviewed through a sustainability lens to form the investable universe. From this point the portfolio team then builds portfolio with suitable risk and return objectives, with the final step in the process focussed on impact measurement and reporting. AIM has developed a data-driven evidence-based impact measurement and reporting process that has garnered media attention and industry awards. AIM has established its own database which captures and compiles granular data on the issuers’ impact as
1Figures for AIM’s flagship fund, the LO Funds – Global ClimateBond,asreportedinthefund’s2021ImpactReport.
behalf of clients globally. The AIM annual impact reports cover over 90% of the portfolio, provide reporting at the individual project level and their portfolios support 15 of the 17 SDGs. AIM’s investments are focused on climate, gender equality, financial inclusion and resiliency among vulnerable groups. In 2020 AIM invested in over 2,551 projects in 165 countries (equating to ¾ of the globe) and avoided 189,219 tonnes of GHG emissions per year, equating to 64% GHG emissions savings, in its global portfolios.
AIM’s flagship fund invested in impact bond issues that granted 240 SME loans, immunised 9,240 children and supported 400 students.1
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AFFIRMATIVE INVESTMENT MANAGEMENT (AIM): BEST SOCIAL IMPACT INVESTMENT MANAGER UK 2022
Affirmative Investment Management wins the 2022 award for Best Social Impact Investment Manager (UK).
ARCA FONDI SGR: BEST EMERGING MARKETS DEBT MANAGER EUROPE
well as the invested projects, which deliver social and environmental impact through mitigation or adaptation.The CFI.co judging panel was impressed with the proprietary framework developed by AIM for the ESG and impact analysis and verification and initial and ongoing engagement of investments. As markets continue to broaden and become more liquid, AIM says that the verification process will also prove increasinglyAIMimportant.challenges the way people think about investing, pushing them to consider the social and environmental impacts created on equal par with the economic profits generated. It seeks to promote the impact bond market and amplify positive outcomes through collaborative partnerships with industry leaders. AIM manages over US$1.05bn in AUM (as of May 2022) on
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management, risk management, legal support and regulatory compliance. The company is driven by a team with experience managing complex portfolios and creating long-term value for all stakeholders. The team talks of the Copernican revolution, which puts the client at the centre of the business. It takes a holistic and entrepreneurial approach to develop solutions that support the real economy. The company has done remarkably well in the relatively short period since its launch. Copernicus CEO Marco Boldrin expects the upcoming year to
Copernicus Wealth Management was established six years ago in Ticino, the southern-most canton and largest Italian-speaking region in Switzerland. The group headquarters are located in Lugano, the third-largest financial centre in Switzerland. The group aims to position itself within the country’s top three financial hubs. It opened an office last year in the heart of Zurich’s central business district and expects to add another branch within a few years in Geneva. Copernicus personalises solutions for private and corporate clients in the areas of asset and wealth
Arca Fondi SGR is one of Italy’s leading asset management companies. The firm has developed a range of value-added savings and investment solutions since its launch 1983. Arca Fondi SGR adheres to the highest standards of professionalism, good governance and operational excellence. The independent company has an extensive distribution network of 100 placement agencies and more than 8,000 branches. All Arca collaborators, whether internal or external, are united under a set of ethical principles of business conduct. Arca
portfolios with high levels of transparency and diversification across securities, markets, issuers, currencies and product sectors. The CFI.co judging panel has followed the firm’s progress over the past seven years, first commenting on its high client retention rates, long-term relationships, multi-manager solutions and consistent portfolio performance. The panel is pleased to find Arca Fondi SGR continuing to build on the momentum — and reaffirms its bragging rights with the 2022 award for Best Emerging Markets Debt Manager (Europe).
ACCENTRO REAL ESTATE AG: BEST RESIDENTIAL REAL ESTATE STRATEGY GERMANY 2022
in Germany, but ACCENTRO found creative ways to overcome.
Summer 2022 Issue CFI.co | Capital Finance International 77
centre of the business. The firm operates among the top five percent of national SMEs. The team analyses each client’s financial situation to define their goals and risk profile. They suggest the best investment strategy according to risk profiles and market conditions, then prepare all necessary trade information for transmission upon clients’ approval. They monitor portfolios and propose preventive or corrective measures whenever necessary. Each client has a dedicated financial advisor, and institutional clients can request a team member to accompany investment committee meetings. The CFI.co judging panel was impressed by Baluarte’s progress over the past year — and its development plans for the next twelve months. Baluarte, a repeat programme winner, claims the 2022 award for the Best Investment Management Team in Portugal.
Arca Fondi SGR is an Italian asset manager with over €36bn in AUM and upwards of 820,000 subscribers. The independent company launched its first funds in 1984 — and that portfolio of assets now exceeds €4bn in value. Arca Fondi SGR closed 2021 with a record net profit of €78.6m, up 39 percent yearover-year. It pushes for continuous innovation in product development to help clients start saving smarter. It launched the Arca Economia Reale funds in 2015, giving investors access to SME equity opportunities in Italy’s manufacturing and service industries. It targets small- and mid-cap companies with industrial ingenuity and diversifies across sectors to ensure the most balanced exposure. These smaller enterprises tend to be less affected by global market trends, but Arca
ACCENTRO currently has around 5.000 units in the portfolio, which is centered around strategic cities and metropolitan areas. It has solidified a market-leading position in Germany as a responsible investor and preferred property manager. ACCENTRO works with private investors and owner-occupiers to make tenantoriented sales of apartments. The company has found tenant proximity to improve asset management.
Covid caused tough challenges in the real estate market adding to the challenges of political regulation in the privatisation of residential real estate
ACCENTRO provides institutional investors with real estate portfolios that deliver stable long-term returns. It also helps with the development management services and management of real estate portfolios and the marketing of properties. Over its subsidiary Proprate ACCENTRO is also running a matching market for private users. The digital Service was developed together with Samsung-subsidiary Cheil and scans the biggest real estate platforms for offers and gives you the opportunity to rate those using a digital tool.
Fondi SGR has managed to preserve the value of the SME equity portfolio throughout the most turbulent market phases. It credits strong sector diversification and a hands-on management approach. Arca Fondi SGR believes these funds — and the companies they represent — will go far in supporting Italy's recovery and resilience plan. The Italian economy has shown good GDP growth entering 2022, with increasing confidence from businesses and consumers, and Arca expects the recovery and resilience reforms will amplify these trends. Arca Fondi SGR is a long-running titleholder in the CFI.co awards programme, first registering on the judging panel’s radar in 2015. In 2022, Arca was selected for the second consecutive year as the Best SME Equity Fund (Italy) award winner.
On one hand, the Executive Board around CEO Lars Schriewer diversified the business model and, in addition to the heavily regulated privatisation of residential property, established a businessline for real estate management-services for third parties and developed its own property portfolio for rental. This ensured a secure cash flow throughout regulatory changes and the DuringCovid-pandemic.CovidBrokers began using smart phones to showcase properties safely, and ACCENTRO introduced a purchase guarantee scheme in cooperation with ImmoScout24, europe’s largest property portal, for property developers to smooth complications caused by rising interest rates and construction costs. ACCENTRO publishes an annual report highlighting home ownership data across all major German cities. The report underscores the scope of the company’s daily work and serves as a decisionmaking aid for customers. ACCENTRO is the only real estate privatisation company in Germany to be listed on the Frankfurt Stock Exchange. The CFI.co judging panel announces ACCENTRO Real Estate AG and the ACCENTRO Real Estate AG CEO Lars Schriewer as the 2022 award winner for Best Residential Real Estate Strategy (Germany).
Multi-family office Baluarte provides independent investment advisory to private, corporate and institutional clients across Portugal, Italy and Spain. The firm is led by managing partner Pedro Silveira Assis, a seasoned veteran of the investment industry since 1993. Baluarte partner Miguel Cordovil combines years of experience in banking, business development and risk management to help private clients preserve their wealth. Rita González, the Baluarte partner who oversees investment strategy, has worked in capital markets for two decades. Over the past year, she has solidified her reputation as a thought leader of investment management. She has been featured in Iberian publications, where she shared analysis and insight on evolving market situations. Baluarte partners collaborate to ensure client needs remain at the front and
BALUARTE: BEST INVESTMENT MANAGEMENT TEAM PORTUGAL 2022
ACCENTRO Real Estate AG is a specialist of property privatisation and residential real estate in Germany. Over the past 20 years, ACCENTRO has sold around 18.000 properties – several thousands of which in Berlin where the company is headquartered.
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ARCA FONDI SGR: BEST SME EQUITY FUND ITALY 2022
enhanced returns. It offers investors access to off-market deals in the €20-100m range via fully regulated, transparent and bankable investment vehicles. It optimises tax structures and maintains compliance across all relevant jurisdictions. BlueRock investors receive quarterly reporting on their investments, and returns are distributed on a quarterly or biannual basis. BlueRock continues to scale up operations. It has recruited two new team members to assist with the boom in business: a portfolio manager and an investment manager. BlueRock recently closed on a portfolio of
22 properties in Berlin. The group elevates property management to modern standards, including in-depth analyses and reporting on ESG performance. Residential properties make up 78 percent of the BlueRock portfolio and account for nearly half of AUM. Meanwhile, its office properties represent only 15 percent of the portfolio yet 44 percent of AUM. Retail and healthcare properties round out the portfolio. The CFI.co judging panel presents BlueRock Group — a repeat programme winner — with the 2022 award for Best Boutique Real Estate Investment Solutions (DACH).
support small businesses through the COVID-19 crisis. The fund provides microloans, grants, and favourable financial terms to small businesses that were severely hit by the pandemic and who traditionally struggle for funding. In February, the fund announced $20m in funding to help diverse-led small businesses in Los Angeles to acquire property and equipment. Given its deep commitment to its customers, the CFI.co judging panel is proud to award Wells Fargo with the 2022 award for Best Small Business Banking Services (United States).
Wells Fargo provides small businesses with access to the largest branch network in the US with over 4,900 branches and 12,000 ATMs. They can be found in 37 states including Washington DC. Across this network, small businesses have access to dedicated bankers who develop a deep understanding of their businesses. The bankers can support and tailor products and services to the needs of each small business. This includes a range of checking account options, business credit cards, domestic and international payment services, payroll services,
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Since its 2013 launch, CORDET has focused with laser precision on Northern Europe’s alternative credit market. CORDET tailors private debt and direct lending solutions for mid-market companies with a stable record of cash flow. It makes select-few investments per year, taking the time to thoroughly vet prospects and establish longstanding relationships with all stakeholders. CORDET targets companies with annual revenue under €250m and EBITDA between €2m and €15m. It only invests in sectors where it has demonstrated all-weather experience across credit cycles. CORDET’s lending activity fills a gap in the
market — and offers attractive risk-adjusted core income-focused returns for institutional investors. CORDET has assembled a team of finance, risk and investment specialists to collaborate with investors and company executives to nurture mutual growth. People-centric policies drive internal development and external engagement. CORDET operates according to Nordic standards and has been cited as a best-in-class employer with indiscriminatory benefits, including generous parental leave. CORDET aligns decision-making with the Principles for Responsible Investment, Task Force on Climate-Related Financial
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Since its launch in 2011, BlueRock Group has executed more than €1.5bn in transaction volume. The Zurich-headquartered real-estate investment boutique has established a strategic network with offices in Berlin, Gibraltar, Manchester and Luxembourg. BlueRock’s strong European presence allows the group to deploy a cherry-picking strategy and capitalise on opportunities with decisive speed and without compromising on due diligence. BlueRock investors benefit from the group’s value-based investment philosophy, which is underpinned by transparency, adaptability and
> BLUEROCK GROUP: BEST BOUTIQUE REAL ESTATE INVESTMENT SOLUTIONS DACH 2022
CORDET: BEST ALTERNATIVE CREDIT INVESTOR UK 2022
Disclosures and Paris Agreement — and receives top ESG marks from external ratings agencies. It celebrates the sustainability progress made by portfolio companies, like automotive supplier FLABEG transitioning to renewable energies or Trust Payment seeking B-Corp certification and pushing for equality with a 42-percent-female workforce. The CFI.co jury points to CORDET’s reliable past performance, particularly throughout the pandemic, combined with a growing pipeline of partners as justification for claiming the Best Alternative Credit Investor (UK) award — for the third consecutive year in 2022.
and merchant services. Wells Fargo’s merchant services allow businesses to take payments inperson, online, and on the go. Wells Fargo also provides businesses with a range of flexible funding options including lines of credit, SBA loans, and commercial real estate financing. Businesses can manage and monitor all their services using their online account and mobile banking applications. Wells Fargo’s strong commitment to small businesses is also demonstrated by their $420m “Open for Business Fund” which was set up in 2020 to
WELLS FARGO BEST SMALL BUSINESS BANKING SERVICES UNITED STATES 2022
CSOB is the leading private bank in the Czech Republic and as member of the KBC Group its presence and expertise extend beyond Europe to the Asian and American markets. It began working with clients with a net worth over CZK 10m in 2002 and in 2015 it opened its Wealth Office for clients with a net worth over CZK 100m. It has 15 specialised Private Banking branches throughout the country. Further, every Private Banking officer has years of experience and services a set number of clients so that every client gets the personal attention they deserve. Personalisation is key. Every client’s portfolio is individually designed with help from CBOS’s unique Global Portfolio Management software. During the pandemic not only did CSOB
CSOB PRIVATE BANKING: BEST PRIVATE BANKING SERVICES CZECH REPUBLIC 2022
CANPACK has been an EcoVadis gold medallist for two consecutive years, ranking among the top two percent of socially responsible companies. It was just shy of winning the platinum medal, but feels confident — looking at a track record of consistent and continuous improvement — that it will level-up next year. CANPACK aligns operations in accordance with the Science-Based Targets initiative and the Paris Agreement. It measures environmental impacts and takes the necessary steps to curb emissions. CANPACK has already managed to reduce greenhouse gas emissions by 13.5 percent across its supply chain. CANPACK’s global plant network, spread across 19 countries, runs entirely off renewable energy. Geopolitical factors made this feat more difficult in some countries, but CANPACK persevered until each plant qualified as a sustainability champion. It’s
Wealth Management Sales Managers (with 25 years of industry experience) and Private Investment Advisors. TEB is also a pioneer in creating the TEB Private Angel Investment Platform and the TEB Private Investor Society. Both platforms help clients to invest in promising Turkish startups and in developing the local entrepreneurship ecosystem. TEB has also developed its Digital Museum service to help educate and inspire clients interested in collecting art. TEB has also developed TEB Affluent Banking to provide its clients with exclusive products and services that go beyond banking to discounts and privileges at restaurants, shops, and travel services. The CFI.co judging panel is pleased to award TEB Private Banking with the 2022 award for Best Private Banking Services (Turkey).
the only one of the big packaging specialists to have reached this level of renewable-powered production. CANPACK conducts quarterly meetings with plants to incorporate resource usage — electricity, thermal, water, waste, recycling — into 2025 and 2030 targets. The group commits to realistic goals, careful never to over-promise and under-deliver. It works to bring suppliers on board with the sustainability agenda and collaborates with industry partners to amplify impacts. It created a zero-carbon can through a B2B partnership with Budweiser. CANPACK companies develop country-specific ESG initiatives, like promoting recycling in Brazil and sponsoring a green film festival in Poland. The CFI.co judging panel presents CANPACK Group — a repeat programme winner — with the 2022 award for Best Sustainable Packaging Solutions (CEE).
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Established in Izmit in 1927, Türk Ekonomi Bankası (TEB) is one of Turkey’s oldest and proudest banks. In 1989, it began providing exclusive services to high-net worth individuals becoming the first Turkish bank to offer private banking services. Today it remains a pioneer in the segment with the development of new services and investment products including in alternative investments. Its 11 Private Banking Centres and four in-branch facilities provides access throughout the country while its strategic partnership with BNP Paribas provides clients with a global investment reach and a physical presence in 19 countries. Its wealth management services are available to clients who hold TRY 15m or more with TEB Private Banking. Tailored investment products and insurance are provided by
> CANPACK GROUP: BEST SUSTAINABLE PACKAGING SOLUTIONS CEE 2022
adjust client’s portfolios to benefit from the rally in equity, but it also adjusted how it interacted with clients: pushing new digital tools to the fore. Now as restrictions are relaxed, CBOS will deploy a hybrid model tailored to the personal preference of each client. CFI.co is impressed by CBOS’s move into private equity and venture capital but is even more impressed to see the development of its ESG commitments including the education of investors as to the importance of sustainable investing. CSOB is developing a full suite of investment products and is poised for even more growth. The CFI.co judging panel is proud to award CSOB Private Banking with the 2022 award for Best Private Banking Services (Czech Republic).
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TEB PRIVATE BANKING: BEST PRIVATE BANKING SERVICES TURKEY 2022
BANK COLUMBIA 2022>
HEWLETT PACKARD ENTERPRISE: BEST GOVERNANCE TEAM UNITED STATES 2022
accountability. It stays ahead of the curve by hiring economic consultants to predict trends and restructuring development plans in accordance. It works with the Saudi ministry of social affairs to establish ESG benchmarks. It’s making strides towards gender empowerment, with succession plans to fast-track qualified female candidates to the executive suite. The CFI.co judging panel unanimously selects Al Fozan Holding Company, a repeat programme winner, as the 2022 winner in the award category for Best Diversified Holdings Governance (GCC).
Hewlett Packard Enterprise (HPE) was among the first global IT companies to sever ties with Russia following its invasion of Ukraine - no surprise for a company built on solid ethical principles. HPE, one of the world’s largest IT companies, insists that employees, partners and suppliers engage in ethical practices, and it responds quickly to violations. HPE will not tolerate corruption, and carries out regular “ethics roadshows” to business leaders worldwide and uses Transparency International’s Corruption Perceptions Index to identify countries at risk of corrupt activity. HPE,
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BTG PACTUAL: BEST
client-centric approach. In Colombia, it has a strong specialisation in asset management for corporate clients and has over $5bn in assets under management. It also specialises in private banking, financing for infrastructure projects, and capital markets including IPOs and M&As. The CFI.co judging panels notes that the bank has continued to bolster its local reach and now has offices in Barranquilla in addition to Bogota and Medellin. It is also to be commended for its commitment to innovation. Its BoostLAB
formed in 2015 as a result of the splitting of the Hewlett-Packard group, constantly monitors its performance against ESG goals. The Texasbased company is driving digital transformation towards a carbon neutral future for itself and its customers, helping protect human rights, and supporting communities through global catastrophes like the Covid-19 pandemic. HPE helps businesses to achieve environmental goals through the use of more efficient hardware. It also offers to collect “retired” technology, to be repurposed by HPE Technology Renewal Centres.
investment through strong governance support and collaboration in the sustainable development of the sector. Investees in the Al Fozan portfolio, a diverse combination of mature enterprises and emergent start-ups, are united by a common set of rules and governance structures. Al Fozan owns 30 companies, and a central committee provides governance checklists regarding sustainability, hiring and conflict resolution, among other policies and procedures. Al Fozan guides the growth of portfolio companies through participation in board meetings, succession planning and corporate
BTG Pactual is a local and regional leader in M&A, debt, and equity operations. It thrives with a culture of meritocratic partnership and entrepreneurship. It also prides itself on its
Al Fozan strives to create synergies between clients and sector experts, increasing return on
AL FOZAN HOLDING COMPANY: BEST DIVERSIFIED HOLDINGS GOVERNANCE GCC 2022 INVESTMENT
BTG Pactual is the largest investment bank in South America and has experienced four years of record growth in its investment banking business. It has been working in Colombia since 2012 when it purchased Bolsa y Renta, a proud local company with over 50 years of experience in the Colombian market.
In terms of its human rights goals, the company is top of the KnowTheChain’s (KTC) Information and Communication Technology benchmark. KTC, an international organisation dedicated to the eradication of forced labour, helps businesses adapt their global supply chains. HPE is also at the forefront of change in terms of diversity and inclusion, setting goals which have made it a world leader. For the second year running, the judging panel is pleased to present HPE with the 2022 award, Best Governance Team United States.
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The company is engaged in four key sectors — manufacturing, retail, real estate and trading — with a mix of investments in other vital areas.
startup hub has been recognised as one of the best financial innovation centres in the world. It provides mentorship, networking, and potential financing to successful startups. In November, it also began operations in Colombia under its new banking license, echoing a similar push in other regional markets. This will allow BTG Pactual Colombia to provide the full suite of banking services for its clients. The CFI.co judging panel is delighted to award BTG Pactual with the 2022 award for Best Investment Bank (Colombia).
Al Fozan Holding Company is a third-generation family-owned conglomerate serving communities across Saudi Arabia and the Gulf Cooperation Council (GCC) region for more than 60 years. It aims to build a brighter future for every person that its operations impact by creating value through intelligence, experience and creativity.
platforms as crucial to overcoming the traditional geopolitical limitations on trade, commerce and communication. CentralNic sells one set of online presence tools (domain names, hosting and email) to online retailers and direct customers, and another set of online marketing tools for acquiring customers. CentralNic takes pride in a blemish-free record of uninterrupted service continuity. With offices in 12 countries, it operates multiple backup facilities around the world, with smooth and immediate transitions, to ensure clients can keep using email and websites — even if some disaster took out CentralNic’s UK headquarters. Over the past 12 years, CEO Ben Crawford has taken CentralNic from 12 to 650 employees and $2m to $410m in revenue. The CFI.co judging panel announces CentralNic Group as the 2022 global award winner for Best Domain Registry Platform.
Domain registry platforms, as master databases of all the web, play a key role in Internet infrastructure. CentralNic Group launched its first commercial registry platform in the 90s, back when it was more the province of universities and governments. Its platform now supports over a dozen national country codes and dominates in new top-level domain names. CentralNic’s market share of new top-level domain names rivals that of all its 38 competitors combined. Continuous improvements and future-proofing keep the platform relevant and adaptable. CentralNic works with governments and businesses worldwide, presenting registry platforms as toolsets for developing national digital economies. CentralNic wants everyone to make their mark on the Internet — register a domain name, launch a webpage, publish information, open an e-commerce store. It views registry
Over the past four decades, General Mediterranean Holding (GMH) has built a diversified business with a presence in 22 countries. GMH is headquartered in Luxembourg with a representative office in London. The group has 130 companies in its portfolio and 11,000 people among staff — and strives to show each one that they’re a valued member of the family. GMH engages in various sectors and activities: banking and finance, real estate, construction, hotel and leisure, industrial, trading, pharmaceuticals, telecommunications, information technology and aviation. The group now has more than $3bn in consolidated assets. GMH first ventured into the hospitality business with the inauguration of Le Royal Hotels & Resorts. Located in the heart of Luxembourg’s financial centre,
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it’s now ranked among the world’s top 50 hotels. Some of the group’s other flagship developments include residential holiday apartments in the French Côte d’Azur, a luxurious hotel in the Spanish capital and a private resort overlooking the Dead Sea. It has several properties around the Sinai Peninsula, a land bridge between Africa and Asia with the Mediterranean Sea to the north and the Red Sea to the south. GMH is also involved with a groundbreaking 62-acre regeneration project on the Southside of Chicago, which will become the city’s 78th neighbourhood — and generate upwards of $7bn in economic activity. The CFI.co judging panel presents General Mediterranean Holding with the 2022 award for Best Hospitality & Leisure Portfolio in Europe, the Middle East and Africa.
GENERAL MEDITERRANEAN HOLDING: BEST HOSPITALITY & LEISURE PORTFOLIO EMEA 2022
Over the past three decades, Capital Bank Group has evolved into one of the most trusted financial partners in Jordan and the region. The group has strengthened its national network of branches and fuelled regional expansion through a series of successful acquisitions, majority shareholder stakes and subsidiaries. The group acquired two banks in less than one year— Bank Audi in Jordan and Iraq in 2021 and Société Générale de Banque Jordanie in 2022 — and became the majority shareholder of the National Bank of Iraq in 2005. Capital Bank has also launched wholly owned subsidiaries in Iraq, Dubai and Saudi Arabia. Early this year, the group introduced a new digital bank, Blink, that meshes seamlessly with the always-on mindset of modern Jordanian society. Blink operates through an
intuitive, secure platform and offers a credit card with lower limits (from 200 to 1000 Jordanian dinars) and longer repayment terms (60 days versus the typical month). The digital bank is expected to further financial inclusion, with a focus on helping individuals, homebased business owners, women and university students to achieve financial independence. Capital Bank has taken decisive steps to foster positive growth, sustainable development and resilience. The bank has over $9bn in assets, while the total equity of its shareholders is $845m. It reported a record 100 percent increase in after-tax net profit increase from 2020 to 2021. The CFI.co judging panel is pleased to announce Capital Bank of Jordan as the 2022 dual-award winner for Most Innovative Digital Bank & Best Bank of Jordan.
CAPITAL BANK OF JORDAN: MOST INNOVATIVE DIGITAL BANK & BEST BANK JORDAN 2022
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CENTRALNIC GROUP: BEST DOMAIN REGISTRY PLATFORM GLOBAL 2022
Account No. I /We wish to open the following account(s) with I&M Bank (Rwanda) PLC as per the following Advised by bank staff
I&M Bank (Rwanda) Plc is the oldest operational bank in the country, incorporated in 1963 and listed on the stock exchange in 2017. The bank spurs socio-economic growth at the national level by developing a range of financial products for individuals, businesses, institutions and corporations. I&M Bank (Rwanda) has developed a digital platform that is delivering results in terms of financial inclusion and poverty reduction across the country and the Diaspora. Automated loan applications bring a new level of convenience and
efficiency. It has introduced a new loan programme promising zero interest if repaid within two weeks. It also collaborated with KfW Development Bank to distribute Investing for Employment grants — and helped 141 MSMEs sustain 2,026 jobs throughout the Covid pandemic. The bank is polishing its payments system to capture more of the point-of-sale market and has become a regional pioneer of cardless transactions. I&M Bank (Rwanda) benefits from a solid reputation and strong capital position, including a liquidity
Old Mutual Investment Group believes in investing for a future that matters. The pandemic has proven that economic, environmental and social systems are interconnected. Old Mutual Investment Group aims to deliver sustainable long-term risk-adjusted returns for clients while also creating positive impacts on communities and ecosystems. It integrates material ESG issues across the investment process, using quantitative and qualitative analysis from internal and external sources to conduct a proprietary assessment. The company has five dedicated
FIRST REGISTRARS & INVESTOR SERVICES: BEST REGISTRAR SERVICES NIGERIA 2022
> I&M BANK (RWANDA) PLC: BEST BANK RWANDA 2022
OLD MUTUAL INVESTMENT GROUP: BEST ESG RESPONSIBLE INVESTOR AFRICA 2022
coverage ratio at 504 percent. Targeted marketing and proactive engagement have helped the bank to increase the customer base, 19 percent in retail banking and 11 percent in corporate compared to the previous year — and 70 percent year-onyear growth in MSMEs. Loans are up across all segments, while improvement in assets quality brought net impairment losses down 69 percent. The CFI.co judging panel presents I&M Bank (Rwanda) Plc — a repeat programme winner — with the 2022 Best Bank (Rwanda) award.
use of e-voting devices — far more accurate than a show of raised hands. It keeps investors informed on share transactions with real-time SMS alerts. Core data management services ensure information stays up to date, dividends are paid promptly and regulatory reports are filed correctly. It can also assist with private placements, bank mandates, M&As, probate and rights issues. The CFI.co judging panel announces First Registrars & Investor Services as the 2022 winner in the award category for Best Registrar Services (Nigeria).
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cleaner alternatives to power the country, and the infrastructure is already prepared to switch from fossil fuels to renewables. The company forms part of Old Mutual Limited, a group with a 177-year history in South Africa. Its growing reputation as an ESG champion has attracted new talent: young professionals with a passion for positive change and the drive to make a difference. The CFI.co judging panel congratulates Old Mutual Investment Group — a repeat programme winner — on claiming the 2022 award for Best ESG Responsible Investor (Africa).
responsible investment professionals and two ESG research analysts collaborating on 161 actively managed portfolios. Old Mutual Investment Group is committed to helping clients build wealth while also building for a better future. Old Mutual Investment Group has spearheaded the development of ESGfocused investment products in South Africa. It offers a selection of investment products designed to deliver green economy outcomes. South Africa is a carbon-intensive country, still heavily dependent on coal. Old Mutual Investment Group has begun to explore
First Registrars & Investor Services has been entrusted to look after the shareholder needs of more than 70 conglomerates, investment managers and SMEs across Nigeria. The company provided share register administration services for over 30 years as part of First Bank of Nigeria before becoming incorporated as an independent company in 1999. The bank divested in 2012 and First Registrars adopted its new identity in 2015. First Registrars & Investor Services registered on the CFI.co radar around this time, due in part to the pioneering leadership of chief
executive Bayo Olugbemi. The company has remained at the forefront of registrar innovation and introduced a range of value-adding digital capabilities. Shareholders and client companies can manage and monitor accounts with 24/7 online access. Electronic dividend warrants can be credited directly into shareholders’ bank account. It supports financial inclusion by distributing dividends via prepaid cards for shareholders without a bank account. It promotes active shareholder participation at annual general meetings and pioneered the
INDIVIDUAL ACCOUNT OPENING FORM
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Title First Name FIRST APPLICANT
“No requotes” is one of XM’s fundamental promises, along with zero fees or commissions on deposits or withdrawals (excluding bank wire transfers under $200). XM invests to maintain a modern tech infrastructure capable of blazing-
XM: MOST RELIABLE BROKER & MOST TRANSPARENT BROKER GLOBAL 2022
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fast trade executions and speedy withdrawal processing. It has implemented automated safeguards to monitor transactions and prevent client account balances from dipping into the negative balance, ensuring they never sustain losses larger than their original investments. XM maintains some of the healthiest capital requirement ratios in the industry. It protects clients’ funds by keeping them in segregated accounts with tier-one EU financial institutions.
XM first registered on the CFI.co radar in 2017, with the judging panel praising the level playing field created by the platform’s trading conditions, ethics compliance and educational outreach. The company has won bragging rights in the awards programme ever since — this time for Most Reliable Broker and Most Transparent Broker (Global 2022).
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A recent rebranding — changing from ThirdWay Africa to ThirdWay Partners —underscores the expanded focus. It’s launching a new location in the capital of Kenya this year, adding to a network with offices in Mozambique, the UK and Spain. ThirdWay was founded by entrepreneurs and investors with deep industry experience and a shared desire to make a difference. The team continues to grow along with the business, with new advisory associates recently recruited to support the increasingly international client base. The CFI.co judging panel has followed the firm’s trajectory for several years and continues to be impressed with its track record of fostering sustainable development cooperation among capital markets, companies, governments and communities. ThirdWay Partners wins the 2022 award for Best ESG Merchant Banking Team (Africa).
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Few online brokers can match the experience and liquidity coverage afforded by digital disruptor XM. The CySEC-regulated and UK-registered broker has opened up trading for more than five million clients from over 190 countries. Traders can choose between 1,000-plus trading instruments and 16 trading platforms. They can sharpen trading skills with unlimited access to XM’s video tutorials as well as daily forex webinars, market research, trading signals, market outlook and technical analysis. XM takes pride in a blemish-free record of never once giving clients requotes in the company’s 13-year history.
ThirdWay Partners strives to deliver shared benefits and sustainable growth to businesses, communities and ecosystems worldwide. It aims to challenge the status quo, moving beyond sustainability as a check-box exercise to an integrated framework for responsible business practices and positive impacts for all stakeholders. ThirdWay Partners aligns advisory and asset management services according to the SDGs and Principles for Responsible Investment. The firm monitors investments and measures impacts of its activities to ensure ESG targets are meet — and exceeded. ThirdWay Partners continues to build on the substantial foothold it has established across the African continent while simultaneously shifting towards more global opportunities. It has advised on more than $500m in transactions across 25 countries and four continents.
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credit appetite in key African markets over the past couple of years. The Bank, has namely, successfully deepened its relationships with Central Banks in subSaharan Africa (SSA) to provide currency swap solutions for their liquidity management needs. The Bank has also on-boarded several banks in Southern, Central and West Africa. In June 2022, Fitch, one of the world’s largest ratings agencies, has assigned Bank One a longterm rating (IDR) of BB- with a Stable Outlook. The new rating places Bank One in the top 15 most highly rated commercial banks in SSA. The CFI.co judging panel presents Bank One — a repeat programme winner — with the 2022 award for Best International Banking Services (Indian Ocean). BANK ONE LIMITED: BEST INTERNATIONAL BANKING SERVICES INDIAN OCEAN 2022
THIRDWAY PARTNERS: BEST ESG MERCHANT BANKING TEAM AFRICA 2022
Mauritian-based Bank One is uniquely positioned as a strong and reliable banking partner “from Africa, for Africa”. Bank One was formed as a joint venture between CIEL Finance, the finance arm of Mauritian conglomerate CIEL Group and Kenya-based I&M Group PLC. The combined footprint of its shareholders in SSA provides Bank One with a physical presence in sub-Saharan Africa, which no other local bank currently has. It serves more than 50,000 domestic and international customers, developing customised services in the areas of international banking, corporate banking, private banking, treasury operations, and personal financial services. In line with its strategy to extend its footprint in Africa, Bank One has increased its coverage and
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company with the necessary assets to face whatever challenges may arise. He passes the reins to incoming CEO Joseph Bréma, who has served as Air Austral’s deputy general manager of economic and financial affairs for three decades. Air Austral is reaping the rewards of a digital transformation journey that began two years ago, from streamlined internal processes to an enhanced customer experience. The CFI.co judging panel recognises Air Austral — a repeat programme winner — with the 2022 award for Best Airline Financial Management Team (Indian Ocean). MANAGEMENT TEAM INDIAN OCEAN 2022
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won numerous awards for banking excellence since inception. ING prides itself on its client focus approach, and will tailor solutions to an individual business’s needs. This includes provision of a single point of contact at the bank to advise on a range of products, and organise industry specialists to provide further guidance when required. ING Philippines is also leading the way in all-digital banking, providing a retail banking platform app which includes features such as facial recognition, digital cheque deposits, and instant money transfers.
Air Austral has implemented a Covid recovery plan that’s fuelled by the momentum of strategic partnerships and conscientious fiscal management. The company has established itself as an aeronautical jewel of the Indian Ocean with operations that contribute significantly to the economic and political sustainability of the island. The airline, which is headquartered in the French overseas department and region of Reunion Island, offers direct flights to mainland France (European connection via code share agreement with Air France), Asia and the Indian Ocean. It adds another 100
to implement sustainability projects that have been delivering considerable gains in energy savings and environmental impacts. Industrial IoT technologies are helping the company to transition analogue and manual methods to a fully digitised system with extended analysis capabilities, including real-time monitoring and reporting. Containers Printers cites the strength of its staff as a key factor to its success. It hires people with proven potential and gives them the training, support and space to achieve significant professional growth. It promotes from
CONTAINERS PRINTERS: BEST SUSTAINABLE PACKAGING TECHNOLOGY & MOST INNOVATIVE PACKAGING TEAM SOUTHEAST ASIA 2022
ING BANK: BEST WHOLESALE BANKING SERVICES PHILIPPINES 2022
Founded in 1981, Containers Printers has evolved from a Singaporean producer of square tins into a diversified packaging partner of nutrition, food and medical brands in over 30 countries. The company keeps pace with changing market winds to maintain a competitive edge. Containers Printers has weathered the past few challenging years by focusing on sustainability and scaling up digital capacities. The company established data-driven processes to track energy usage and monitor performance. It collaborated with the National Environment Agency and energy service partners
> AIR AUSTRAL: BEST AIRLINE FINANCIAL
ING Philippines is signed up to the parent company’s extensive environmental strategy, and was heavily involved in the development of the country’s Burgos Wind Project – a major initiative in the Philippines’ renewable energy drive. ING is an acknowledged expert in the field of renewable energy project financing, and used its sector expertise to help successfully develop the ambitious scheme. In 2022, for the second consecutive year, the CFI.co judging panel is pleased to present ING with the award, Best Wholesale Banking Services Philippines.
within whenever possible and has established an in-house training programme to help employees develop the technical, leadership and project management skills required for upper-level roles. Continuous investments to build the team and tech infrastructure have led to increased revenue and corporate credibility. For the sixth consecutive year, Containers Printers has found favour with the CFI.co judging panel and claimed 2022 awards for Best Sustainable Packaging Technology and Most Innovative Packaging Team in Southeast Asia.
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ING Bank in the Philippines has an enviable record in the provision of wholesale banking services. The Amsterdam-based organisation, which opened its first branch in Manila in 1990, was the first foreign-owned bank to be awarded a universal banking licence in the Philippines, and has a proven track record, especially in wholesale banking services. It offers a range of products to both foreign and domestic businesses, including currency financing, corporate lending, mergers and acquisitions, and trade finance transactions. The ING Philippine franchise has
destinations through codeshare partnerships and aviation alliances. The airline commenced operations in 1990, with the island's regional council as a shareholder. Air Austral’s longstanding CEO Marie-Joseph Malé, who has driven the company’s financial management strategy over the past decade, left the airline in June 2022. Mr. Malé spearheaded the airline’s financial recovery in 2012, regaining balance within a year. In 2017, he implemented a profitable differentiating strategy to address the rise in undercutting offers from budget airlines. The departing CEO leaves the
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JANASHAKTHI LIFE: BEST INSURANCE SERVICES SRI LANKA 2022
can also to explore other South African destinations on a single ticket. As a partner of the Les Iles Vanille association, Air Austral promotes the development of tourism in the Indian Ocean with special offers encouraging ticketholders from Paris to organise combined visits across a wide choice of destinations. Air Austral benefits from a dedicated workforce of 800 employees, all working to strengthen the group’s competitiveness, resiliency and sustainable growth. All signs point towards positive progress in the company’s Covid recovery plan. Air Austral has resumed 95 percent of its pre-pandemic activity and anticipates a full schedule for the summer. The CFI.co judging panel presents repeat programme winner Air Austral with the 2022 award for Best Airline Strategic Partnership (Africa and the Indian Ocean). AUSTRAL: BEST AIRLINE STRATEGIC PARTNERSHIP AFRICA & THE INDIAN OCEAN 2022
Janashakthi Life is reaping the benefits of a growth strategy implemented in 2020 by incoming CEO Ravi Liyanage, a former senior manager at the company. Liyanage set out to remodel the organisation with a customer-centric focus — and ignited an impressive turnaround for the Sri Lankan insurer. Janashakthi is among the top 10 fastest growing brands in Sri Lanka. Its Regular First Year Premium (New business) was up by 115 percent within twelve months of the turnaround. Janashakthi also jumped 33 points in the corporate ranking from 2020 to 2021 in the Most Respected Entities of Sri Lanka, conducted by leading business ranking magazine LMD (Lanka Monthly Digest). It’s a historic achievement that an organisation has moved 33 ranking points within a year. The company’s sales force, nicknamed the Janashakthi Lion Force for their strength and heart, increased more than threefold in channel distribution structure within a year of the turnaround. Continuous training and
Optimism is brewing across the pandemicstricken tourism industry, as the travellers take to the skies again. Air Austral and its partners are happy to see passengers taking advantage of relaxed travel restrictions after what the UN World Tourism Organisation has deemed “the worst year in tourism history”. Air Austral is an airline headquartered in the French overseas department and region of Reunion Island. It offers direct flights to mainland France with connections in Europe via a code share agreement with Air France. Codeshare partnerships and aviation alliances open additional destinations across Asia, Africa and the Indian Ocean. Travellers can fly to Tanzania through the group’s subsidiary network in Mayotte. Air Austral operates direct flights to Johannesburg from Reunion. Through a partnership, the passengers
professional development ensured that the team operated at a high global level thereby reaching a status of international repute and producing 108 sales personnel to join the prestigious Million Dollar Round Table (MDRT), USA. Janashakthi met the challenges of the pandemic head-on and was the first to develop an insurance product for Covid-19 coverage. The CFI.co judging panel believes that Janashakthi Life will come to be regarded as a leader — for the innovation, quality and success of innovative, and timely developed product portfolio — among the top insurers of the world. Some other highlights from its transformation include enhanced customer onboarding, initiating KYC diligence via video chat, a fully digital self-service app and a global health passport reflecting the need to be international in nature to best serve consumers’ health insurance requirements. The jury presents Janashakthi Life with the 2022 award for Best Insurance Services (Sri Lanka).
IBM: BEST SHAREHOLDER ENGAGEMENT UNITED STATES 2022
IBM was an early adopter of the principle of shareholder engagement. As early as 2005, long before the term was in general use, the world’s longest-established tech company had developed sophisticated and ground-breaking proxy season engagement strategies. In the following years the company turned its attention to developing its off-season engagement approach. Teams regularly meet with investors across the whole year, and feedback from these meetings is carefully scrutinised to ensure response is upto-the-minute. IBM teams constantly monitor investor trends, seeking out developments across a range of topics. An illustration of the company’s determination to stay at the cutting edge is its focus on the transformational importance of 21st century technologies – hybrid cloud and AI. IBM has updated its client engagement
model to ensure opportunities in these areas are understood by clients and staff alike. The company, which employs 350,000 people across 170 countries, places significant emphasis on the continual training of staff to ensure all are up-to-date with latest developments. The company’s aim is to embed a client-centric culture, using its range of hardware, software and consulting experience to find solutions to business challenges. In its 111 years in business IBM has come a long way from the production of time clocks and punch card machines, but its focus on reinvention has remained constant. The company has picked up five separate CFI. co awards since 2019, including in this category in 2021. The judges have no hesitation in presenting the company with the 2022 award, Best Shareholder Engagement United States.
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Adoption >
Central banks around the world have succumbed; Brendan FilipovskistudiestheelectroniccurrencyphenomenoninAfrica…
Africa Shakin’ All Over: Fever in Nigeria has Authorities for Next Big Push in
CBDC
By Brendan Filipovski
The Central Bank of Nigeria effectively banned crypto currency trading in February 2021, concerned over price volatility. The year before, Nigeria had the third-highest Bitcoin trading volume in the world: $400m.
"The Central Bank of Nigeria effectively banned crypto currency trading in February 2021, concerned over price volatility. The year before, Nigeria had the third-highest Bitcoin trading volume in the world: $400m."
The eNaira uses a centralised and permissioned blockchain ledger, called a Hyperledger Fabric. While it does not have the flexibility of a decentralised and permissionless blockchain like those of Bitcoin or Ethereum, its greater supervision and regulation arguably provides greater security. It also provides several benefits over current legacy payments systems.
Every day, Nigerians queue at offices and pay large fees to receive remittances from family members abroad. The eNaira is not currently a convertible currency, but the central bank has promised that it will be interoperable with other CBDCs in the future — allowing seamless crossborder transfer. The feasibility of this concept was recently demonstrated by Project Dunbar, a cross-border CBDC project between the central banks of Australia, Malaysia, Singapore, and South Africa.
A
Unlike a private company or private banks, a central bank has the incentive to create an open and interoperable system. Nigeria’s has provided an API for the eNaira and is encouraging its integration into payment systems and hoping to develop new interfaces and services.
At first glance, the eNaira doesn’t look that different, but behind the wheel is the Central Bank of Nigeria rather than some fintech start-up. It has greater control over its supply, compared to existing electronic money. A digital currency is also much cheaper to issue than physical currency, resulting in greater seigniorage.
"The benefits of a CBDC are clear, and so is the pressure from cryptocurrencies. Twelve African central banks have CBDC research projects under way, and Mauritius has one under development."
A wholesale digital currency could be a logical next step. i
eNaira can move directly to and from wallets without intermediaries or delay. This improves efficiency: compare a stimulus payment sent directly to an electronic wallet to the printing and posting of a physical cheque. Cost and time savings are enormous.
Other African central banks are watching developments. The benefits of a CBDC are clear, and so is the pressure from cryptocurrencies. Twelve African central banks have CBDC research projects under way, and Mauritius has one under development. There have also been some false starts, with Senegal and Tunisia cancelling projects, and Egypt not getting beyond an initial study in 2018.
round 105 countries, including 19 in the G20, are exploring a central bank digital currency (CBDC) — but so far only 10 have been launched.
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More than 764,000 eNaira Speed wallets have been downloaded. It sounds impressive, but that figure represents around 0.37 percent of Nigeria’s population — and the number of active users is much lower. In contrast, around 19 percent of China’s population downloaded a CBDC wallet.
Transactions are made directly between counterparties, and remain within the blockchain ledger. If you were to design a currency or payment system from scratch, you’d be likely to use blockchain rather than the layers of settlement, clearing, and intermediary relationships in legacy Blockchainsystems.
A digital wallet for citizens is a boon for financial inclusion. Up to 36 percent of Nigerians are unbanked, and 66 percent don’t live close to a bank branch or ATM. The central bank is targeting 500,000 agents for the loading and unloading of wallets in rural areas.
The Central Bank of Nigeria needs to do more to increase the uptake if benefits are to be realised. History tells us that with momentum and network effects, adoption can increase exponentially. Perhaps a small incentive would help; the Salvadoran government provided citizens $30 when they downloaded a Bitcoin wallet.
lends itself to greater openness and interoperability than current forms of electronic money — and it is more (cryptographically) secure. This, along with the central bank’s open stance, should foster interoperability and integration of the eNaira across Nigeria’s banks and payment systems.
Nigerian President Muhammadu Buhari launched the eNaira in October 2021, a digital version of the naira issued by the Central Bank of Nigeria and pegged to that fiat currency at 1:1. It was developed by a Barbados company that created a CBDC for the Eastern Caribbean Currency Union.
One area of interest is that of remittances, which represent some four percent of Nigerian GDP.
So, what’s so special about the eNaira, and CBDCs in general? People have been using electronic money for decades, and Nigeria has several private payment systems, mobile money operators, and a phone banking system (USSD).
The currency can be used for retail payments with the eNaira Speed Wallet, downloaded onto a smartphone, via a direct bank transfer, cash payment through a bank or agent, or transfer from another eNaira wallet. Merchants can set up wallets to accept the CNDC for payment.
Unlike current electronic money and cryptocurrencies, the eNaira is a direct liability of the Central Bank of Nigeria — which means there is zero credit risk in transactions; it’s like exchanging physical cash. Nor does the eNaira have the volatility of a crypto, granting greater overall financial stability for the country’s financial system.
Having a central bank in charge also provides a trove of data for governments and policy makers. Central banks could see how different groups save (or spend) their welfare payments. The process would help to widen the tax base by bringing informal cash payments into plain sight.
Nigeria is showing the rest of Africa the way forward with its eNaira, which is doing pretty much what the M-Pesa — Kenya’s mobile phone-based money transfer service, payments and micro-financing service — did in the 2000s.
There exists the potential for an official, panAfrican digital currency. The Pan African Payment and Settlement System was launched in January this year, and it promises to revolutionise crossborder African payments through the integration of national RTGS systems and pre-funding.
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By Tony Lennox
people and landscape. There were moments of levity, however, most often involving food and drink: Johnson was a legendary gourmand. At the home of one local aristocrat, the lady of the house politely asked him if he’d like a little wine. “No, madam,” he boomed. “I should like a lot of wine, or no wine at all”.
hese two works from the Georgian era, usually published in one volume for modern readers, are classics of biography and travel writing.
Samuel Johnson and James Boswell journeyed together, each keeping a journal — and while Johnson described Scotland, Boswell described Johnson. The result is a fascinating description of the time, and of the characters of the companions.
• AJourneytotheWesternIslandsofScotland,by Dr Samuel Johnson by James Boswell
Many have pondered the great man’s unlikely attachment to Boswell, a pushy, pox-ridden, philandering young Scot. We should be grateful for it, though, because Boswell’s veneration of Johnson gives us a graphic insight into one of England’s greatest minds.
Despite the gruelling nature of the journey, and Johnson’s poor physical shape, the doctor rarely complained — though his “constitutional melancholy” led him frequently disparage the
Johnson appears to have enjoyed the journey in spite of himself, though he continued to mock Scotland and the Scots once back in his familiar haunts. As Boswell puts it: “Dr Johnson ventured to Scotland, and returned from it in great good humour, with his prejudice much lessened, and with very grateful feelings of the hospitality with which he was treated.” i
Samuel Johnson by Joshua Reynolds
Boswell notes: “Hehadagreat dealofthatqualitycalledhumour,whichgivesanoilinessandaglosstoeveryotherquality.”
• TheJournalofaTourtotheHebrides,
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Johnson was a giant in the Age of Enlightenment: a lexicographer (compiler of dictionaries), a writer, and a moralist with a bon mot for every occasion. With immense wit and intelligence, he depicted 18th Century London at the height of the capital’s intellectual blooming.
Boswell, whom history paints as an obsequious flatterer, was clearly devoted to this man more than 30 years his senior. He writes: “(Johnson) was stern in his taste; hard to please, and easily offended, impetuous and irritable in his temper, but of a most humane and benevolent heart.”
He was determined to prove to Johnson that his low opinion of Boswell’s homeland was misguided. Somehow, in 1773, he persuaded the corpulent 63-year-old to leave the comfort of London’s coffee shops and taverns and accompany him on a strenuous 83-day journey by coach and horseback through the wild, lawless Highlands.
Johnson, being “a true-born Englishman”, held a prejudice based on a belief that all other nations were barbaric. He was once asked (by a Scot) what he thought of Scotland. Johnson replied: “That it is a very vile country, sir.” The Scot, affronted, insisted that God had made Scotland. “Certainly, he did,” Johnson replied, “but he made it for Scotchmen (sic).”
Book Reviews
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Despite his oft-quoted opinion that patriotism was “the last refuge of the scoundrel”, Johnson was famously contemptuous of anything that wasn’t English — most notably, Scotland, which he derided as “a lesser England”. Boswell, an Edinburgh lawyer, engineered an introduction to Johnson at the height of the latter’s fame. The Scot was mesmerised by Johnson, and rarely left his side thereafter, unless it was to consort with prostitutes. He suffered from almost constant bouts of venereal disease.
James Boswell by Joshua Reynolds
The Journey North that Linked a Great Man and a Wastrel
Boswell notes: “He had a great deal of that quality called humour, which gives an oiliness and a gloss to every other quality.”
Johnson is celebrated as the creator of the first English-language dictionary — an accomplishment which made him a household name in Hanoverian Britain. He was friend and collaborator to the greats of his era, including the economist Adam Smith, artist Sir Joshua Reynolds, actor-manager David Garrick, philosopher Edmund Burke, playwright Richard Brinsley Sheridan, and writers Oliver Goldsmith and Edward Gibbon.
banker, a doyen of the investment management world and a capital market guru of unparalleled repute, Olugbemi is the immediate past-president of the Chartered Institute of Bankers of Nigeria (CIBN), where he took the institute on the path of great achievements during his impactful two-year tenure. In the annals and chronicles of the banking and capital market industry with regard to innovative business and financial masterplans and development strategies, Bayo Williams Olugbemi is a force to be reckoned with.
ALimited.career
With 40 years of banking experience with reputable organisations, the CEO is an acknowledged expert in all aspects of Investment Banking and Capital Market industry operations. To many, Bayo Olugbemi is the godfather of the Nigerian Share Registration Industry, one who has mentored many heads of teams of other registrars. In academia, Olugbemi has fearlessly advanced through the ranks.
Bayo Williams Olugbemi is an alumnus of many prestigious Nigerian and international institutions such as the Harvard Business School (AMP 179), Wharton Business School, US, Stanford Business School, US, Institute of Management Development, Switzerland, INSEAD, Singapore and France, Euro Money Capital Market Training, UK, and the Lagos Business School (CEP 11) — among others.
Olugbemi is a dedicated family man, happily married with five children. To his clan of relatives, and his corporate, spiritual and community children, he is a father, mentor and provider. i
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He holds a BSc in Accounting from the University of Lagos and a Master’s degree in Corporate Governance and Ethics (MSc) from Leeds Beckett University (formerly Leeds Metropolitan University), UK. He also holds a Master’s in Business administration (MBA) with specialisation in International Business Management from the Lagos State University, Ojo.
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A fellow of the Chartered Institute of Bankers of Nigeria, Dr Olugbemi is also a fellow of the Chartered Institute of Taxation of Nigeria (FCTI), the Institute of Capital Market Registrars, the National Institute of Marketing of Nigeria, Institute of Directors (Nigeria), Certified Pension Institute of Nigeria, Nigerian Institute of Training & Development (NITAD) and Association of Enterprise Risk Management Professionals (AERMP). He is also an Associate Member of The Chartered Institute of Stockbrokers, Institute of Company Secretaries & Administrators of Nigeria (ICSAN), Nigeria Institute of Management (Chartered), Association of National Accountants of Nigerian (ANAN), and Global Association of Risk Professionals (GARP).
hat Nigeria is blessed with immense wealth is never in doubt: men and women of remarkable business integrity and brilliance, of outstanding grit, dedication, enviable character, values and These,principles.believes
Olugbemi has authored three books, as well as many unpublished but recognised works. His presidential valedictory lecture paper, delivered at the baton-exchange ceremony of the Chartered Institute of Bankers of Nigeria, was titled Entrepreneurship Innovation and Disruption in the Nigerian Banking Industry; What Next?
Armed with professional and business certifications as well as academic recognitions, Olugbemi grew in the lowest ebbs of societal “have-nots” in remote Olugbemi Village in Oluyole LGA of Ibadan, Oyo State of Nigeria, to become a world class banker, capital market registrar, stockbroker and financial market consultant who is globally recognised.
in Business Administration (D.BA) by Ladoke Akintola University of Technology (LAUTECH) Ogbomosho, Oyo State and Doctor of Science (D.Sc) by Adeleke University Ede, Osun State, Nigeria. In pursuit of learning more, in line with his life goals and aspirations, Olugbemi has enrolled for an academic PhD programme in advanced studies in Entrepreneurship Management at the Joseph Ayo Babalola University, Ikeji-Arakeji, Osun State of Nigeria.
That Nigeria is blessed with immense wealth is never in doubt: men and women of remarkable business integrity and brilliance, of outstanding grit, dedication, enviable character, values and principles.
His quest for knowledge is insatiable. Another colourful feather was added to his cap with the conferment of an Honorary Doctorate Degree (Honoris Causa) in Entrepreneurship by the Joseph Ayo Babalola University (JABU) in 2021. This was followed in quick succession in 2022 by 2 other Honorary Doctorate Degrees – Doctor
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First Registrars CEO and MD Bayo Williams Olugbemi, are symbols of a great country. Among this army of prodigies is a financial industry captain of sterling qualities: Dr Bayo Williams Olugbemi, Managing Director and CEO of First Registrars and Investor Services
In the paper, Dr Olugbemi highlighted the roles of entrepreneurship, innovations, and disruption as critical and essential elements for efficiency in the banking sector.
Bayoteams.Williams
Bayo Olugbemi: A Prodigy of Great Repute, Creating a Lasting Legacy
His achievements at the Chartered Institute of Bankers of Nigeria crowns the list of achievements. Upon his assumption, he outlined a five strategic agenda code named A-TEAM which encapsulates his management and leadership style as a world-class manager of
CEO & MD: Bayo Williams Olugbemi
Business, around the world, is no longer “as usual”. With some of the recent challenges, it has become a question of survival of the fittest.
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With CLE, members can apply for loans and monitor savings; it renders paperwork almost obsolete. Co-op administrators can approve or decline loans on-the-go. It has MarketHub functionalities that bring the marketplace to the cooperatives. They can buy discounted goods and services from reliable sources on MarketHub. Other diversification areas include the introduction of company secretariat services, probate administration services, and proxy solicitation services.
and Investor Services offers a range of services in share and bondholders’ data management, and investor-related services such as proxy solicitation, probate management, and company secretariat services. The company is registered as a capital market operator (CMO) with the Securities and Exchange Commission
First Registrars understands the diverse needs of stakeholders, from the customers to the clients, suppliers to vendors — and most importantly its
First Registrars promotes active shareholder participation at AGMs with the e-voting initiative, electronic voting devices far more accurate than the traditional show of raised hands. The voting system was recently upgraded to include a USSD voting option (*5075#) via mobile that allows those shareholders not physically present to participate. It also keeps investors informed of transactions on their share accounts with its introduction of real-time SMS alerts and other solutions.
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The company was a pioneering member of the Electronic Dividend Mandate Management System (EDMMS) for the direct crediting of payments into shareholders/bond-holders bank accounts. It supports financial inclusion through its introduction of the FirstDividend Plus Prepaid Card for unbanked shareholders — the first and only dividend prepaid card within the registrars industry in Nigeria. It has helped to reduce the volume of unclaimed dividends.
In recent years, First Registrars has diversified. It created a strategic business unit with a cooperative administration and management solution. It has distinct features to take cooperative societies to the next digital level. Branded as CLE, it is designed to ease the accounting, administration, and management.
Since the divestment of First Bank of Nigeria from the company, First Registrars has continued to evolve in Nigeria’s capital market. Once a unit within the First Bank Group, it started up as a major cost centre. Eventually it became a foremost subsidiary of the bank under its pioneering managing director and CEO, Dr Bayo Olugbemi, FCIB.
ules of the game are changing, too, and terms of engagement are increasingly dynamic. Government bodies are becoming more receptive to change — as private organisations redefine their business models to catch up with new business Sometrends. may simply respond and adapt; more dynamic organisations will drive these changes to bring about transformation. First Registrars and investor Services Ltd has chosen the latter path.
First Registrars & Investor Services Limited: Thriving in a Challenging World
Beyond Covid-19 are economic and political developments that have impacted trades, policies and workplace operation.
Firstclientele.Registrars
First(SEC).Registrars
Olugbemi turned around the bank’s fortunes and a cost centre was transformed into a key income generating entity through value creation to its
INNOVATIVE SOLUTIONS
R
First Registrars has remained at the forefront of registrar innovation, and introduced a range of value-adding digital capabilities. Shareholders and client companies can access and manage
their share accounts and register of members 24/7 with the First Registrars Online Access.
STAKEHOLDER VALUES
DIVERSIFICATION DRIVE
is committed to the safekeeping of investors’ records. As at the year 2021, it had close to 2 million shareholder/bondholder records that cut across various industries, and 75 equity and bond accounts.
It has created an entirely new internal structure in preparation for the future it envisages for the business. “This structure positions us to face and thrive,” says Olugbemi. “Not just amidst the current challenges that we face — it also prepares us for the challenges that may come up in the future. The internal restructuring brings with it an investment in our people, who will eventually drive our business forward.
THE FUTURE Abraham Lincoln once said: “The best way to predict the future is to create it.” This is a major driver of the firm’s passion, the things it believes in, the values it is committed to. First Registrars
Summer 2022 Issue CFI.co | Capital Finance International 93
“internal customers”: staff and management. Their interests are served to ensure a happy community. The company anticipates their needs and provides solutions tailored to meet, and exceed, them.
“We believe that what is ahead of us as an organisation is far greater and better than what is gone. We are building a brand that will be able to stand the test of time, the First Registrars Brand.”
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has continued its investments in technological infrastructure. One of the key lessons from the pandemic has been a recognition of the power of technology in a digital world. The pandemic provided a learning curve for the company, which is able to identify what works, what does not, and to gather insight as to what will work in the future. The major takeaway is that First Registrars is creating a shift in its business model in the midst of current realities.
with the help of tailored goal-setting worksheets, presentations, and video clips that expose youths to the benefits of planning and make performance-based evaluations which help prepare them for the future and to be self-reliant.
The long-term focus is to work collaboratively with other stakeholders in the industry to create an ecosystem that will make transactions in the capital market seamless for all participants, from the process of on-boarding through the entire lifecycle to the exit of participants. “This we cannot do alone,” says the CEO, “but by collaborative efforts.”
First Registrars’ social responsibility philosophy has been leveraged to ensure its impact is felt — and positively — within and beyond its immediate operating space. It runs impactful programmes and initiatives, and has maintained a well-defined CSR strategy that has a measurable impact on the lives of many people. The company supports programmes across the country that improve child healthcare, education, the arts, sports, community development, and environmental sustainability.
is creating its own future by redefining the share registration business in Nigeria.
"First Registrars and Investor Services offers a range of services in share and bondholders’ data management, and investor-related services such as proxy solicitation, probate management, and company secretariat services."
CORPORATE SOCIAL RESPONSIBILITY
This consistent approach ensures that the First Registrars brand remains strong and recognisable. Its identity is that of a “go-to” place for all equity holders looking for a premier service experience.
Increasing value for investors and stakeholders is an iron rule for First Registrars. It collaborates with key stakeholders in the capital market to redefine on-boarding processes for investors and increase participation to develop bespoke solutions.
“We have over the years maintained our support and partnership with the Youth Rescue and Care Initiative (YORCI), an NGO, to reduce poverty levels and promote responsible behaviour amongst young people,” says CEO and MD Bayo Williams Olugbemi, “by helping them discover, nurture, and ignite their individual potential through exercises, life/leadership skills training, academic endeavours, and mentoring Resultsprogrammes.”aremeasured
“The people are the executors of the long-term strategic plan. We attract and retain the best talents in the industry while on-boarding when Firstnecessary.”Registrars
The first computer “worm”, created by Bob Thomas in 1971, was pretty benign. It bounced between computers, infecting screens with the playful message: “I’m the creeper: catch me if you can.” The first Denial-of-Service (DoS) attack was launched by Robert Morris a decade later. To raise awareness of cybersecurity risks, he created a worm that slowed down the internet — with expensive results; estimates of the damage caused rise to $10m.
figure falls shy of the mark. Most organisations prefer not to publicise attacks for fear of negative press or lawsuits.
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Cybersecuritymodel.consultant
Modern Modem Mobsters are Costing the World a Fortune
Therespectively.WEFGlobal
Over the years, attacks have gone from a trickle to a flood. Hackers have upped the ante. Paid ransoms quadrupled from 2019 to 2020, reaching a record $350m. Some believe that
Colonial Pipeline, which supplies nearly half of consumer and airline fuel for the east coast of the US, suffered one of 2021’s biggest ransomware attacks. A hacker group known as DarkSide Hackers exploited an exposed employee password for a VPN (virtual private network) account. Colonial shut down the pipeline to prevent the infection from spreading, notified the appropriate government agencies, and brought in a specialist to investigate. The hackers got away with a $5m crypto payment before providing Colonial with the decryption
Risks Report 2022 explains how dependency on digital systems has altered society: “Over the last 18 months, industries have undergone rapid digitalisation, workers have shifted to remote working where possible, and platforms and devices facilitating this change have proliferated.
FBI encourages organisations not to pay to avoid copycat attacks, and prevent the ransom being used for illicit activities. There’s no guarantee that the hackers will deliver on their promise, either. Of the 5,600 mid-sized organisations surveyed by cybersecurity specialist Sophos, 66 percent were hit by ransomware in the last year. Nearly half paid the ransom — but only four percent got everything back.
The earliest recorded ransomware attack happened soon after. Joseph Popp created malware (malicious software) known as the AIDS Trojan. He mailed out more than 20,000 floppy disks claiming to contain information on AIDS research. But when researchers inserted the disks, the malware locked their files and demanded a $189 ransom be sent to a Panama PO Box. The attack was poorly designed and relatively easily reversed, but nonetheless, years of research was lost.
Echoing the software-as-a-service (SaaS) model popularised by Adobe and Microsoft, hackers have begun to offer ransomware-as-a-service (RaaS). In 2020, two-thirds of ransomware attacks analysed by cybersecurity firm Group-IB used a RaaS
Thekey.
The internet has come a long way since the good old days of dial-up. What started as the shared domain of government agencies and universities has morphed into an all-encompassing phenomenon.
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The World Economic Forum (WEF) warns that growing digital dependency has intensified cyberthreats — more so since the start of the pandemic. It reports a surge in malware and ransomware attacks, up 358 and 435 percent,
Information is power, and so much data is a potential trove to be plundered by anyone with a little tech savvy. Moral considerations don’t come into it.
Jake Williams says that the rise in attacks comes with an increase in focus. Hackers develop ransomware programmes and set up online shops with customer service for the cybercriminals and their victims. It’s a smooth user experience, with plug-and-play RaaS options available in a one-click purchase and a help desk walking victims through the steps to convert money into cryptocurrency. Williams quipped: “I wish my internet service provider had customer service like these guys do.”
By Heather Leah Smith
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ven in the least developed countries, 27 percent of the population has some access to the internet; in developed countries access is almost universal, and 90 percent of people are active internet users.
“At the same time, cybersecurity threats are outpacing societies’ ability to effectively prevent or respond to them. Lower barriers to entry for cyberthreat actors, more aggressive attack methods, a dearth of cybersecurity professionals and patchwork governance mechanisms are all aggravating the risk.”
The Ransomware Task Force (RTF), powered by the Institute for Security and Technology, links the rise of cryptocurrencies with the explosion of ransomware. Crypto is the hackers’ preferred payment. Because of lax legislation, crypto markets have developed with little regard for due diligence or KYC (know-your-customer) standards. Practices like “chain-hopping” and “mixing services” help criminals to obfuscate funds despite the safeguards of the blockchain. The RTF advocates for greater transparency, collaboration and regulatory consistency in crypto.
Data continues to compound, necessitating new metrics: terabytes, petabytes, exabytes, zettabytes and yottabytes. The global web of connectivity touches on every aspect of modern life — and generates 2.5 quintillion bytes of data each day. (To put that in perspective, there are eight bits, the lowest unit of memory storage, in a byte. Most people measure their consumption in gigabytes: 1,000 megabytes, or a billion bytes. A quintillion equals a million trillions.)
authentication and antivirus filters help to protect networks from external threats.
“There are only two types of companies,” according to Robert Mueller, the former director of the FBI and special counsel on Russian interference in the US election process. “Those that have been hacked and those that will be hacked.”
According to the RTF, ransomware poses significate risks to national security. It threatens critical infrastructure and endangers public health. It can take cities by siege, shutting down municipal services and diverting vital public resources. The City of Atlanta paid a $50,000 Bitcoin ransom in 2018 — but estimated the
The healthcare industry has been under increasing threat from cybercriminals, second only to the SMEs. Hackers exploited vulnerabilities in the pandemic, hitting 560 hospitals, medical centres and healthcare facilities in the US in 2020. The University of Vermont Medical Centre (UVM) was forced to furlough employees and delay medical treatments in October 2020. The UVM president projected the cost of a full system recovery at Jamil$64m.Farshchi,
the chief information security officer of Equifax, stresses the importance of preparedness: “If organisations go through the steps and they practise with their board and executives, then when bad things happen … you’re able to lean in and solve them in a very rapid fashion.”
An IBM study has found that SMEs are the target of 62 percent of all cyberattacks, around 4,000 each day. The cost of a data breach hit a record high in 2021, with surveyed companies spending an average of $4.24m per incident. That’s a hefty expense for any big business, and for smaller players it can be the kiss of death. A study by the National Cyber Security Alliance found that 60 percent of SMEs go out of business within six months of a data breach. Despite those alarming figures, many SMEs have patchy — or even nonexistent — IT protection plans.
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Comprehensive cybersecurity guidance could help employees to close any chinks in the company armour and present a unified, highalert front. Companies could offer training to staff members with the interest and aptitude to levelup skills. This would allow companies to build a cybersecurity team from the ground up, with internal promotion programmes to develop skilled tech workers — currently in short supply.
total cost to exceed $2.6m. The City of Baltimore refused to pay the ransom in a 2019 attack, but it took weeks — and more than $18m — to restore the systems.
There are some basic protocols for all companies. All systems should be backed up at regular intervals on a virtual (cloud) and/or physical (USB drive) database. Software and hardware should be checked for updates; patches are released as new vulnerabilities are uncovered. Passwords should be unique to each user and site, not recycled across multiple pages and providers. Multifactor
The RTF laid out a framework to deter ransomware attacks and disrupt their “business models” to cut their profit margins — which is at 98 percent, according to some estimates. The RTF ai ms to help organisations prepare for, and respond to, ransomware attacks.
“Higher data-breach costs are yet another added expense for businesses in the wake of rapid technology shifts during the pandemic,” said Chris McCurdy, the vice-president and general manager of IBM Security. “While (those costs) reached a record high over the past year, the report also showed positive signs about the impact of modern security tactics, such as AI, automation and the adoption of a zero-trust approach — which may pay-off in reducing the cost of these incidents further down the line.”
According to a 2022 report by Grand View Research, global cybersecurity services will be worth $192.7bn by 2028 — and $500.7bn by 2030. It’s time to find a competent partner to help implement, practise, and maintain a good defence strategy. i
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Oman’s economic prospects are looking up. After blows from Covid-19 and cyclone Shaheen, GDP is expected to grow 5.6 percent this year.
Middle SultanEastof Oman Keeps Firm Hand on the Economic Tiller
Oman: Landscape of Mutrah Corniche in Muscat
By Brendan Filipovski
Oman is increasing its production — by 8.7 percent this year and a predicted 18.6 percent by 2025 — as OPEC+ starts to remove cutbacks put in place at the height of the pandemic. But beneath the rising oil tide, there have been genuine fiscal and structural reforms.
In 2020, Bin Tariq created the Omani Investment Authority (OIA), a sovereign wealth fund to manage public finances, strengthen reserves, and allow investment in economic diversification. The OAI plans to invest $7.54bn across 10 sectors this year, including projects in tourism, logistics, communications, services, and fisheries; $3.6bn will be used to expand oil and gas projects.
The economy is rebounding, with GDP growth expected to average 3.2 percent over the next six years, up from an average of 0.6 percent for the previous five. Increasing oil prices have been key — and with the conflict in Ukraine, they have hit their highest levels since 2008.
Inpopulation.2020,
However, he also had to deal with the shock of the pandemic. Oman’s Covid cases hit highs in July 2020, April and June 2021, and February 2022. Deaths peaked in July and August 2021 — some 4,600 people, or 0.09 percent of the
Other Gulf states, including Saudi Arabia and Jordan, are also keen to develop the industry. At this stage, they have a lead over Oman in renewable energy. Oman, however, has a water Sultanadvantage.Haitham
His cousin, Haitham bin Tariq, succeeded the childless Qaboos bin Said in January 2020. He, too, has shown a commitment to reforms. He was instrumental in developing Vision 2040
real GDP fell by 2.8 percent. Hospitality, construction, retail, and wholesale industries were hardest hit. Unemployment increased from 1.8 percent in 2019 to 3.1 percent. Youth unemployment increased from 8.3 percent to 15.4 percent.
To shore-up public finances, he ordered Oman’s bloated public departments to cut expenditure by 10 percent. With these and other measures, public expenditure was cut by $4.7bn.
While Oman does not have the reserves of Saudi Arabi or the UAE, it is the largest oil exporter outside of OPEC: around of 60 percent of all exports.
With some of these measures affecting youth unemployment, there were protests in May last year. Haitham bin Tariq responded with short-term measures to help: new jobs in the army and an increase in Omani-national quotas for public departments and enterprises. He introduced unemployment insurance in 2020 and the hope is that 2040 Vision, his five-year plan, and a recovering economy will deliver jobs.
He introduced excises on carbonated drinks, alcohol, energy drinks, pork and tobacco; he laid the groundwork for a five percent VAT, introduced in April last year. Similar taxes already existed in other Gulf states. Qaboos bin Said reduced fuel subsidies and public spending, and introduced employer-provided health insurance. He made reforms in 2019 to improve conditions for FDI, in line with the 2040 Vision. There were privatisations before his death.
In August 2014, Oman’s oil price averaged $108 per barrel; by March 2016, it had fallen to $27. Oil rents as a percentage of GDP fell from 36.1 percent in 2014 to 18.3 in 2016. Public finances came under increasing pressure, and Oman’s fiscal balance fell into deficit from 2014. Gross public debt reached 71.4 percent in 2020. This spooked credit rating agencies, which valued Oman at below investment grade.
Oman appears to be in good hands. i
S
&P upgraded Oman’s sovereign bond rating in April. Increased oil production and higher price have helped. Reforms started by Sultan Qaboos bin Said and continuing under his successor, Sultan Haitham bin Tariq, are starting to pay dividends.
"Since 2016, the fiscal deficit has been decreasing and the sultanate is expected to return to surplus; Q1 2022 saw a record $930m budget surplus. Gross public debt is expected to fall to 44 percent this year."
In April, it was announced that the OIA would create two main investment pillars: the National Development Portfolio (NDP) and the Future Generations Fund. The NDP will be used to promote the economic development and diversification of Oman.
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Since 2016, the fiscal deficit has been decreasing and the sultanate is expected to return to surplus; Q1 2022 saw a record $930m budget surplus. Gross public debt is expected to fall to 44 percent this year.
and has continued economic diversification efforts with the introduction of the tenth fiveyear plan for 2021-25.
Bin Tariq’s initial response was to increase fuel subsidies. He issued an order to postpone utility bills, and supported businesses to help them retain staff. The government worked with the WHO on its national vaccination programme in December 2020.
Another project signals the intention to look beyond oil and gas. Oman and Belgium signed an MOU in 2021 for co-operation on green hydrogen. In June, the creation of a new national energy company, Hydrogen Development Oman, was announced. Green hydrogen is separated from water via electrolysis powered by renewable energy. The hydrogen, stored in fuel cells, can power vehicles and ships and replace coking coal in the steel industry.
bin Tariq is clearly following in the footsteps of his cousin to deliver an era of growth and stability. Sultan Qaboos bin Said presided over nearly 50 years of economic growth, stability, and regional influence. To the end, he remained committed to economic reform. His successor has shown his commitment to that legacy — and with increases in the oil price and production, he will probably have scope for an even more ambitious reform agenda.
Bin Tariq is close to introducing an income tax for the wealthy — a first for the Gulf. Sources say foreign nationals will have to pay five to nine percent on locally generated income above $100,000. Omanis are likely to pay five percent on income over $1,000,000.
Qaboos bin Said modernised the country after becoming sultan in 1972. He opened the economy and (with foreign investment) expanded the oil industry. Faced with the challenge of restoring public finances, he launched the Vision 2040 roadmap in 2017 and a national plan for increasing economic diversity, called Tanfeedh. Tourism and shipping were highlighted as areas of growth.
However, farming was not an agent of steady and unequivocal progress. Ethnological and archaeological research warrants the conclusion that hunter-gatherers enjoyed longer lives and more robust health than their settled fellow man. Due to chronic malnutrition (caused by frequent crop failures) and the advent of new diseases, the average height of pioneering farmers dropped 13cm to 165cm for men and 155cm for women. Shockingly, average height only returned to its pre-Neolithic Revolution level in the midtwentieth century. The paleo diet turned out to be not so bad after all.
In Guns, Germs, and Steel: The Fates of Human Societies transdisciplinary historian Jared Diamond concludes that Europeans and East Asians leveraged their comparatively advantageous environment to become early adopters of agricultural sedentary lifestyles which, over time, brought the food surpluses that allowed some people to specialise in pursuits other than mere sustenance.
However, the first ‘proper’ civilisation was formed eight millennia ago when Sumerians agglomerated in villages throughout the Fertile Crescent and eventually invented the plough and figured out how to brew beer, completing the Neolithic Revolution and, incidentally, setting the stage for much human suffering and bondage.
The late David Graeber, co-author of The Dawn of Everything, was without doubt one of the most original social thinkers of our time. He wrote several books such as the bestseller Debt: The First 5,000 Years and is credited with inspiring the Occupy Movement on both sides of the Atlantic – and coined its slogan ‘We Are the 99%’.
His death on 2 September 2020, at the age of 59 during a vacation in Venice, may hint at echoes from Thomas Mann’s 1912 novel but also deprived the world of a magnificent genius – a truly beautiful mind – with an uncanny knack for punching big holes in established thought bubbles, invariably deflating them to nearGraeberirrelevance.made many of his fellow academics uncomfortable. Yale University, where he held an associate professorship in Anthropology from 1998 to 2005, is suspected to have blocked his path to full tenure over political concerns. Graeber, an unapologetic anarchist, moved to the University of London Goldsmiths College instead before finding an academic home at the London School of Economics.
Tell Abu Hureyra, an archaeological site in Syria’s Upper Euphrates Valley, provides the earliest solid evidence of agriculture in the world. The first evidence of bread-making, dating from
P
The opposing argument holds that a stable and progressive civilisation needs structured order and organisation to grow and prosper – and, indeed, offer protection to its members: that being the state’s very raison d’être and why it was entrusted with monopoly powers. However, in practice that crucial state function – the suspension of the law of the jungle – is often a mere afterthought. Proof of the assertion that the state serves to protect against anarchy is said to be grounded in history. It is widely deemed
"The nation state, the highest form of political organisation, has been awarded an absolute monopoly over life and death and, as such, cannot escape its predestined fate."
A Non-Linear Anarchist Reading of World History
By Wim Romeijn
THE CURSE OF THE LAND
Review
reading of history postulates that humankind only embarked on a sustained and rapid trajectory of development after it shed the nomadic meanderings of prehistoric man and settled down to work the land and form communities. This first occurred in the Levant about 23,000 years ago. Here, Neolithic farmers domesticated and cultivated founder crops including barley, lentils, peas, flax, and emmer and einkorn wheat.
Over the next ten or so millennia, agriculture arose independently in at least nine geographies from Mesoamerica to China, India, and Ethiopia.
This division of labour inevitably led to technological innovation – free time being a terrible thing to waste even amongst the ancients – such as the steel swords and firearms that enabled these societies to expand their reach by conquering neighbouring lands, thus forming embryonic empires.
The struggles of mankind in its relentless chase of progress and the inescapable coveting of the neighbour’s riches may, however, have been in vain insofar that states as an expression of politics (derived from the Greek politikos, literally “affairs of the city”) have likely hindered the pursuit more than helped.
UPENDING THE NARRATIVE
Such is the rather remarkable premise of The DawnofEverything:ANewHistoryofHumanity,a700-pagedoorstopper,andpage-turner,thatseekstoupendtheorthodoxnarrativeofsocialevolutionasespousedandpropagatedbyDiamondandtherecentlyfashionableYuvalNoahHarari–and99.9%oftheirfellowbroad-strokehistorians.
GENIUS INTERRUPTED
about 12,500 BCE, was found at Shubayqa, a site in north-eastern Jordan.
Theindisputable.conventional
Farming bound its practitioners to the land, resulting in the appearance of the first semisedentary societies such as the Natufian Culture that stretched northwards from the edge of the Negev Desert to present-day Lebanon, Jordan, and Syria.
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Book - TheDawnofEverything:ANewHistoryofHumanity
It’s an ideology that inspires fear and loathing in equal measure. Anarchism or the conviction that the state – and its pantheon of agents including potentates, scribblers, soldiers, and priests – is a parasite of society and inherently oppressive and evil – and wholly unnecessary as well.
ower corrupts and absolute power corrupts absolutely. Perhaps Mao was right on at least one count: political power ultimately grows out of the gun barrel (or in times past, was delivered by the edge of a sword). The nation state, the highest form of political organisation, has been awarded an absolute monopoly over life and death and, as such, cannot escape its predestined fate. By design and conception, the state is corrupt. Thus spoke the anarchist.
Hisdeceit.participation
Ingovernment.otherplaces,
Messrsrules.
NOBLE SAVAGE
Much later still, French structuralist anthropologist and reluctant explorer Claude Lévi-Strauss lamented the “loss of innocence” in the New World after its involution in the European chrysalis. His 1955 travelogue Tristes Tropiques blends astute ethnological observation with philosophical musings and tentatively concludes that “deeper poverty and spiritual emptiness” are to be found on the streets and in the houses of “our”modern cities.
Graeber’s premise is straightforward: progress is non-linear and other paths of social evolution, much less trodden, may well lead to similar if not better outcomes. In a nutshell: the state and its agents are quite superfluous to human requirements.
Graeber and Wengrow point to a wealth of archaeological discoveries made over the past few decades – thus far mostly confined to scientific journals – to show that many of the earliest known cities were structured along egalitarian lines. Neolithic urbanites apparently lived for centuries without the need to elevate some to lofty positions of power and privilege. The remarkable absence of palaces, temples, or other grandiose buildings – and of evidence of a ruling caste or stratum – strongly suggests self-
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Before dismissing Graeber as woolly-minded or worse, consider that his thoughts and considerations are, essentially, part of the philosophical framework first sketched and delineated by Jean-Jacques Rousseau in his 1754 tract on the origin of social inequality.
the first voyages to the New World. The seamen were astonished to have encountered an idyllic, almost paradisiacal, egalitarian society without princes, cardinals, or warlords and where work seemed optional because nature provided for human needs in abundance. Although he never used the phrase in his own discourse, Rousseau did paint a vivid picture of the Noble Savage: “Once upon a time we were hunter-gatherers, living in a state of childlike innocence, as equals.”
in the landmark Valladolid Debate (1550-51), the first one in Europe to discuss the rights and treatment of indigenous people by colonisers, led to a further weakening of the “encomienda” system – which rewarded colonists and conquerors with the labour of subjected non-Christian people – and its replacement by somewhat less brutal “reducciones” that ushered natives – often forcefully – into towns where missionaries would dispense lessons in Christian morality whilst exploiting their labour.
Graeber departs from well-established tradition with his assertion – backed up by a vast reservoir of proof – that “nobles savages” built large cities and engaged in complex collaborative pursuits; all without the need for rulers – or indeed rigid
As a concept, the noble savage may first have been used by the Roman politician and historian Tacitus whose Germania (De origine et situ Germanorum) rather lyrically describes the lands and customs of Germanic tribes in the “uncivilised” wilderness beyond the empire’s Lessborders.historically distant sits Spanish priest (later bishop of Chiapas) Bartolomé de las Casas (1484-1566) who thundered at the inhumane treatment of the indigenous peoples of the Americas in his Short Account of the Destruction of the Indies. Bishop De las Casas praised the “simple manners” of native Americans and observed that they were incapable of lying or
EXIT RULERS
This happy condition, Rousseau noted, came to an end after the agricultural revolution and the rise of cities. Paradoxically, urban living sparked literature, science, and philosophy but also patriarchy, bureaucracy, taxation, armies, and the exclusion or execution of non-conformists.
palaces and temples were only built much later. The first large cities – with tens of thousands of inhabitants – emerged in Mesoamerica which enjoyed neither the technical nor the logistical advantages of Eurasia. Here,
The French-Swiss philosopher exhaustively studied the journals of mariners returning from
Scott challenged the standard narrative in his own Against the Grain: A Deep History of the Earliest States, published in 2018, which ruffled feathers by looking at the formation and emergence of states through the eyes of sceptical peasants. He likewise concludes that the causal sequence of history’s standard version is demonstrably wrong.
by archaeologists show that the oval-shaped cities or sites of Ukraine flourished between 4100 and 3300 BCE and produced sizeable surpluses. That offered ample opportunity for some of the cities’ more enterprising residents to lord over their neighbours. Yet, there is no proof of that.
VILLAGE SIMPLETONS
Thesedeveloped.cities
CIVIC PRIDE
SCHOLARSHIP DISRUPTED
The urge to write off societies without kings, priests, or generals as “simple” has been prevalent throughout history. Indeed, the noble savage himself is but an inoffensive simpleton and weakling. He may be depicted as quite happy but is often also considered rather ignorant and singularly unable to create great works of art, defy gravity with grand buildings, or invent ingenious machines that lighten man’s burden. Of course, the noble savage carrying no burden had no need for such machines to begin with.
"The narrative of most broad-stroke historians rests on the presumption of linear progress. In this reading, the first 300,000 or so years of human history were rather uneventful. Hunter-gatherers lived in small groups until – at last! –agriculture and sedentary societies gradually appeared to give rise to states organised along hierarchical lines and based on the exploitations of labour."
there were no wheeled conveyances, nor ships, or animal-traction. Moreover, metallurgy was poorly
THE INDIGENOUS CRITIQUE
and Wengrow reject the notion that early humans were nothing more than automatons prodded and guided by material pressures. Instead, they argue that “primitive man” experimented with a “carnival of political forms” and possessed plenty of agency. The idea that history resembles a conveyor belt that takes humankind from the Serengeti wilderness straight into the office cubicle is overdue for reassessment.
There is plenty of evidence that suggests early Ukrainian city dwellers enjoyed social freedoms maintained through local and neighbourhood decision-making processes that dispensed the need for top-down administration. After about eight centuries, the Neolithic cities of Ukraine and Moldova were abandoned for reasons still unknown. Their legacy is nonetheless important for these cities show that an egalitarian society is possible on an urban scale.
The critique, formulated by natives of the New World and recorded by French explorers, posited that for all their technological advances and prowess, the great powers of Europe had failed to promote the freedom, wellbeing, and happiness of their people. As such, the critique questioned the purpose and usefulness of the state as a political construct.
A few learned historians, most perturbed by the potential undermining of their narrative, call Maidanetske and sister sites such as nearby Talianki and Nebelivka “overgrown villages” before quickly moving on to Uruk, the ancient mega-city of Sumer (present-day Iraq) which was at least properly ruled by sovereigns during the Early Dynastic Period, such as the legendary King
of the prehistoric era. They also imported salt, flint, and copper from afar.
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Perhaps the most interesting and striking part of The Dawn of Everything is delivered in an early chapter on The Indigenous Critique which, the authors argue, is likely to have helped spark the European Enlightenment.
MeticulousGilgamesh.analysis
The findings in Ukraine and Moldova coincide with similar ones in Mesoamerica (Teotihuacan) and in China’s Shandong Province where large urban settlements were present well over a thousand years before the rise of the earliest known royal dynasty.
References available online.
The narrative of most broad-stroke historians rests on the presumption of linear progress. In this reading, the first 300,000 or so years of human history were rather uneventful. Huntergatherers lived in small groups until – at last! – agriculture and sedentary societies gradually appeared to give rise to states organised along hierarchical lines and based on the exploitations of Messrslabour.Graeber
Instead, the citizens built assembly buildings and kept communal gardens that produced pears, cherries, apples, apricots, acorns, and hazelnuts – served on painted ceramics that are considered among the finest aesthetic creations
The steppes north of the Black Sea – now a battlefield – are home to many archaeological digs that disrupt established scholarship. Ignoring recent findings and research, many concerned academics prefer to speak euphemistically of “mega-sites” rather than mega-cities.
Yale University political scientist James C Scott said that Graeber and Wengrow have probably delivered a “fatal blow” to the traditional reading of early history but also warned that academia does not usually embrace dissidents – or kindly accept the conclusions of their research.
But how are we to know what really happened in the far reaches of history? Can archaeology truly decipher the intricacies of prehistoric political life? Writing in The Nation, historian Daniel Immerwahr called David Graeber a “wildly creative thinker better known for being interesting than being right.” However, a feeble attempt by Immerwahr to discredit one of the book’s claims fell flat after he read the source wrong.
should not have been. Conventional wisdom holds that advances in agriculture, producing surplus wealth, set off a chain of discoveries that allowed larger groups of people to live and work in one place. In other words: technology enabled, but invariably predated, the formation of larger cities. However, that was decidedly not the case in tech-poor Mesoamerica or along the eastern fringes of Europe.
How such large populations centres may have been held together without kings, bureaucrats, and soldiers mystified historians until 2014 when new conclusive research showed that the Cucuteni-Trypillian settlement unearthed forty years earlier near Maidanetske, a farming village about 240km south of Kyiv in Ukraine, was much larger than initially suspected, holding a population of up to 46,000 people around 3700 BCE – making it by far the largest city of that era.
Excavations have repeatedly shown that early self-governing cities were much more than an agglomeration of self-centred individuals and did, in fact, cultivate a sense of civic pride and unity. Most early cities appear carefully laid out in harmonious patterns and with clearly identifiable districts, reflecting a high degree of urban planning – a distinctly collaborative effort.
In a sense, the flash-in-the-pan Occupy Movement asked the exact same question –and it is a serious one that demands pondering. According to David Wengrow, the present moment invites reflection: “Our prevailing system is putting us and the planet on a course of real catastrophe. We find ourselves paralysed with our horizons closed off by false perspectives of human possibilities based on a mythological conception of history”. i
Over the next 40 or so years, the GMH Group has transformed into a multi-billion-dollar assetbased multinational corporation with a paid-up capital equivalent to $510m. It has followed a strict philosophy of ploughing back profits into the group.
General Mediterranean Holding: More Titles and Honours Than Your Average Captain of Industry
percent of Banque Continentale Du Luxembourg. The group owned banks, and civil engineering company Soludec SA. It was involved in meat production, aviation, the manufacture of generic medicines (200+ licences).
The GMH group now has presence in 22 countries, with some 11,000 personnel. Sir Nadhmi’s philanthropic raison’ d’être is to counter the sometimes-negative way Arabs are portrayed in the West, and to bridge the gap between British Arabs and their host community. He presides over the not-for-profit Anglo Arab Organisation, incorporated in England and Wales.
HeUniversity.rosethrough the ranks to become director of the ministry’s planning and development, then, in January 1979, struck out to start his own business — in Luxembourg. The new entity went under the name of General Mediterranean Holding (now Société de Gestion de Patrimoine Familial). Initial capital was just $2m. With a
F >
The GMH Group has had significant investments in banks; it was the largest independent shareholder in Banque Paribas, where each acquired 50
flair and acumen for business, Auchi soon saw opportunity — and realised that it was time to operate internationally.
ounder and chairman of General Mediterranean Holding (GMH), Sir Nadhmi Auchi, began his career with the Iraqi Ministry of Oil after graduating from Baghdad’s Mustansiriyah
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Donations by Sir Nadhmi Auchi and companies controlled by him include the Children’s Heart Foundation, the International College of Surgeons, the Pakistan Earthquake Relief Commission, educational trust Zindagi, the Graham Layton Trust, Kingston Cancer Hospital, the British Red Cross, Medical Aid for Palestine, and ambulances and medical equipment for
The group objective is the diversification and consolidation of its activities via investments and organic growth. Much of GMH’s business is in the hospitality sector — it owns or manages 24 hotels some of which are under Le Royal Hotels brand. It also operates in the leisure, manufacturing, real estate, international trade, pharmaceutical, healthcare, industrial, publication, media and power generation
Sirsectors.Nadhmi
received a framed print of Westminster signed by 130 politicians, including then-Prime Minister Tony Blair, William Hague, and Charles Kennedy. He was the first Arab to receive honorary Freedom of the City of London.
was vice-chair of the John F Kennedy School of Government at Harvard University from 1996 to 2000.
He was made a member of the order of Knight Commander in a ceremony in St John’s, Antigua and Barbuda, in recognition of his contribution to charitable, humanitarian and inter-religious Theendeavours.RoyalOrder
Auchi was given his personal Coat of Arms by Queen Elizabeth II. On General Mediterranean Holding’s 20th anniversary, he
of Francis l, the highest award of the Knight’s Grand Cross, was delivered to Sir Nadhmi Auchi at a ceremony in London. His other honours include Officer of the Order of the Tunisian Republic, the Grand Cordon of the Order of Independence of the Hashemite Kingdom of Jordan, the Sacred Military Constantinian Order of St George, the Pontifical Order of Pope Saint Sylvester, the First Grade of the Lebanese Order of Merit, and a Commander of the National Order of the PhilanthropicCedar.
Le Royal Beirut
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support includes donations to the Royal Society of Medicine, the Auchi
Dialysis Centre, Hammersmith Hospital London, ambulances, medical equipment and clothing for disaster relief, and the Nadhmi Auchi fellowship programme at the American University in Cairo.
SirLebanon.Nadhmi
Sir Nadhmi Auchi
He is not alone in his achievements when it comes to the GMH fold; the boards and principal subsidiaries consist of prominent and accomplished individuals from the world of finance and commerce; all are leaders in their respective fields. i
There is mass adoption of the metaverse in the gaming community, while others are experiencing it in different ways. For some, the metaverse is a new place to make money. The definition of the “creator economy” is expanding to encompass types of future employment: “creators” will make assets; “performers” will create real-time content; “bridgers” will connect the physical and digital worlds. “Participants” will learn, explore, and enhance; “builders” will design and organise experiences; the community will help to attract and engage.
the role of the metaverse in Web3? We can see the hype and promise, but can we see active user numbers in reality? And prolonged use — not just to check it out, but to stay in it?
Is it all hype? Well, the technology has been there for years. We’ve all experienced VR and
>
Whatdecade.is
By Bashar Kilani Managing Director, Accenture
The metaverse is an evolution of the internet that enables us to move beyond browsing to inhabiting, participating in a shared experience that spans the spectrum of our real world to the fully virtual. The internet as we know it evolved in phases; from Internet of Data, with search
Significant cultural shifts tend to start in a place — such as Renaissance Florence, Vienna in the 1900s, and the Swinging Sixties in London. The location for the next one, in my view, is the metaverse.
As the next internet evolution, the metaverse will be a continuum of rapidly emerging capabilities, use-cases, technologies, and experiences. As it evolves, we must ensure that it is developed with responsibility at the core. From the ownership of data to inclusion and diversity, sustainability, security, and personal safety.
I
The metaverse will transform how businesses interact with customers, how work is done, what products and services companies offer, how they are made and distributed, and how organisations operate. Welcome to the Metaverse Continuum — a spectrum of digitally enhanced worlds, realities and business models poised to revolutionise life and enterprise in the next
t will affect how people experience art, music, movies, and brands that are part of the phenomenon. We can’t predict exactly what shape it will take, but we know it’s coming. We see the metaverse as a continuum that spans the spectrum of digitally enhanced worlds, realities and models. It applies across all aspects of business, across the entire enterprise, from reality to virtual, 2D to 3D, from cloud and AI to extended reality, blockchain, digital twins, edge technologies, and beyond.
engines, to the Internet of People, with social media, to today’s Internet of Things, with sensors and mobile devices that allow us to hail a ride, request delivery or create digital twins…
HowAccenture:Do You Define the Metaverse?
There’s bridge-building work to be done. How do digital assets with different designs transfer across platforms? There’s a need for standards and uniformity. We can expect a period of questioning, learning, and experimenting. Any brand or content creator wanting to operate in the metaverse must be ready for trial and error, with a focus on the enduser’s experience.
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Web3 refers to emerging initiatives that are leveraging technologies such as blockchain and tokens to build a more distributed data layer combined with VR and XR capabilities. We’re now talking about the Internet of Places and the Internet of Ownership interoperability.
Author: Bashar Kilani
The metaverse is less about a fantasy world of unicorns and dragons, and more about an opportunity to escape from physical limits to spend time in a virtual space that’s an extension of real life. In the metaverse, people make themselves part of something in real time.
Organisations will find themselves on the front lines of establishing trust and defining the human experience in these new places. Considerations and concerns around privacy, bias, fairness, and human impact are becoming more acute as the line between physical and digital lives blurs. Leaders in this space will shoulder the mantle of building a responsible metaverse, and the actions and choices they make will set the standards for all that follow.
seen a new set of products digitally created and distributed — fashion, digital clothing and accessories, digital arts and collectables, music and entertainment assets. Creators and artists are minting digital items of value, such as videos, music, event tickets and NFTs. An NFT is a binding agreement between creator and customer — it’s an asset with the potential to increase in value. This creates scarcity and builds desirability into digital items.
XR in games and virtual platforms such as Second Life. Blockchain technology has been around for some time, and we’ve seen massive fluctuation in the valuation of digital assets and the fast adaption of Non-Fungible Tokens (NFTs). Tokenisation has enabled customers to collect, experience and co-create digital goods and services that enhance gaming and social interactions. As in the physical world, companies should expect holistic regulation: who can operate in what capacity, and how. Dubai was the first to adopt law to regulate digital assets in March 2022.
Some businesses have adopted future-forward mindsets, creating the building blocks that will become the Metaverse Continuum. A new generation of technology leaders was forged in the Covid-19 crisis.
At Accenture, during the pandemic, we had to come up with an innovative approach to onboard and train new joiners. Our One Accenture Park is a shared virtual space that enables immersive experiences, interactive showcases and hands-on demonstrations for new joiners.
twins for Accenture offices around the world. The Metaverse is clearly shaping how we work.
Customer experience and engagement will be key to attracting people into the metaverse. Brand owners will establish their own spaces, or look to Big Tech to create “metaverse-as-aservice” platforms. These spaces will probably evolve into more neutral spaces, where subtle and sophisticated interactions can take place in ways that are fluid and free-form.
So, what’s new? The metaverse gained traction during the pandemic — an event that made life exponentially more digital. What we cannot know is how it will evolve. It will require a truly competitive vision; what will these future worlds look like, and what will an enterprise need to succeed? Technology points us in the right direction, but the rest is up to us. The internet is being reimagined as metaverse, and Web3 efforts transform the underpinning and operation of the virtual world.
Teams experienced metaphorical interactive experiences, such as “climbing” a leadership mountain or visiting the skills fountain to “collect” skills coins. The One Accenture Park experience was extended to include client meetings, internal meetings and townhalls — in addition to experiences applicable to the workforce of the future across a set of digital
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The value of new virtual worlds would be capped if not for parallel changes to anchor them in the physical one. The metaverse provides a programmable world that tracks how technology is threaded through physical environments in increasingly sophisticated ways. It projects how the convergence of 5G, ambient computing, augmented reality, smart materials and more are paving the way for businesses. As technology becomes part of the fabric of our world, it allows us to treat our environment more like technology — unlocking an unprecedented fidelity of control, automation, and personalisation.
Wefree.have
What are the business applications and industry verticals, other than gaming? What are the advantages and the future possibilities?
It’s hard to talk about what’s next without talking about ethics. The harm caused by the current internet experience is plain to see; organisations should do better in the next iteration, with more transparency. It will be critical to learn from previous mistakes. Unintended tech consequences are impacting humanity, and openness about that impact must be part of building trust in the metaverse — particularly around behaviour, sustainability, and accessibility. As brands seek to capitalise on the opportunities, we encourage open debate around the ethics relating to who people are, and what they do.
Through creativity, technology, and industry experience, we work with clients to prioritise opportunities and strategies for business Wetransformation.design,build
and operate metaverse capabilities including world-building and engagement, content management, marketplace development, digital twins, trust and safety — plus ecosystem and community development. i
digital product developers, creatives and techies will play a central role in virtual world-building and content placement, as everything is 3D-based. Development methods used in gaming will become mainstream as more 3D experiences come online: play-testing, for example, where gamers give feedback before a game is launched to the wider public. Connected workers enable the field force to tap into expertise and banks of knowledge to capture and log data — instantly, and hands-
Designers,networks.
Our Accenture Metaverse business group brings hundreds of skilled professionals and market leading capabilities into one group dedicated to designing, executing and accelerating metaverse journeys through various engagement models.
ABOUT THE AUTHOR
Bashar Kilani is Managing Director at Accenture based in Dubai and a member of the Growth Markets leadership team focusing on Digital Economy market making trends that accelerate growth, transform operations, and enable organisations to build their digital core.
We help clients ascend the complex learning curve at our Metaverse Continuum Studios on immersive experiences to explore functional and industry usecases, and design a responsible approach.
Dubai provides another example for improving and developing government services. Government entities will transition to become proactive digital services, contributing to optimum quality in digital service provision and developing a secure digital environment for data protection, information systems, and communication
Latin America El Salvador’s Great Bitcoin Experiment has the World Watching with Interest > OneofthesmallestLatinAmericancountrieslastyearadoptedBitcoinas legaltender.Asthecryptouniversewaxesandwanes,howwillElSalvadorfare?
By Brendan Filipovski
Without Bukele’s personal interest, Bitcoin’s jump to legal tender status would have been unlikely. The real epicentre of all this is a town of 3,000 people an hour’s drive south of the capital: El Zonte, aka “Bitcoin Beach”.
From September 2021 through to May this year, the El Salvador government has bought more than 2,300 Bitcoins. Back in September, 2,000 bitcoins equated to $96m; at the end of May, it was more like $63m.
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A Bitcoin economy would also hamper macroeconomic flexibility. The dollar allows El Salvador to rely on the US government to implement expansionary economic policies during economic downturns. But there is no way to increase the global Bitcoin supply.
The project began to flourish, drawing international attention — including that of Jack Mallers, CEO of C2C Bitcoin payment app Strike. Mallers visited El Zonte for three months, and received a call from Bukele asking for help in making Bitcoin legal tender.
"Citizens can keep Bitcoin in private digital wallets or use a custodial device such as the government’s Chivo wallet. Wallets that use the Lightning Network, a secondary layer on top of the Bitcoin blockchain, allow for near-instant transfers of the cryptocurrency at the cost of 0.04 cents."
Bukele has his reasons for embracing Bitcoin. It has given a first-mover advantage and reduces El Salvador’s reliance on the dollar (its own currency, the colón, was replaced with the greenback in 2001). That helped to tame inflation, but increased unwanted American Bitcoininfluence.has
Californian surfer Mike Peterson moved to El Zonte in 2005. He became involved in charity work and local development projects, and in 2019 received an anonymous Bitcoin donation worth $100,000 — for use by the town's residents. He accepted the crypto, and the accompanying mandate to get it “into people's hands”. Peterson made donations to local families and was able to convince some stores to accept Bitcoin payments.
The IMF has advised El Salvador to drop its adoption of Bitcoin. It provided $389m in Covid assistance to El Salvador in 2020, and more assistance is likely to be needed this year and next. Public debt has increased from 67 percent of GDP in 2015 to 82.6 percent in 2022. The IMF is concerned about the crypto’s volatility — and the impact it could have on El Salvador’s public finances and financial system, and on personal wealth. There are also concerns over El Salvador becoming a magnet for money laundering and other criminal activities.
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n September 7, 2021, El Salvador became the first country to accept Bitcoin as legal tender.
Ditching the dollar and embracing a “pure” Bitcoin economy would not see off the volatility problem. The US currency would still be needed to interface with the international financial system. Remittances from El Salvadorians abroad would still be at the mercy of the dollar price of Bitcoin.
"In April, the Central African Republic joined El Salvador in adopting Bitcoin as legal tender. There are similar projects under way in South Africa, Costa Rica and Honduras. But more countries are focusing their energies on Central Bank Digital Currencies (CBDCs)."
In April, the Central African Republic joined El Salvador in adopting Bitcoin as legal tender. There are similar projects under way in South Africa, Costa Rica and Honduras. But more countries are focusing their energies on Central Bank Digital Currencies (CBDCs). Ten have been launched, with another 15 at the pilot stage. Fans believe that CBDCs offer the benefits of cryptocurrency with less volatility. Critics see just another form of fiat currency that will fall short of the potential of Bitcoin and other decentralised
the potential to increase financial inclusion in a country where 70 percent of the population is unbanked. According to the government, some 60 percent of citizens use the Chivo wallet. Then there is the provision of international remittances without the high fees — up to 50 percent of transfer value — or the need to attend a physical office. Remittances represent 20 percent of GDP, but adoption of these advantages remains low.
future of El Salvador and Bitcoin will be keenly watched: it’s an experiment that addresses some of the key economic and social questions of our time. i
Citizens can keep Bitcoin in private digital wallets or use a custodial device such as the government’s Chivo wallet. Wallets that use the Lightning Network, a secondary layer on top of the Bitcoin blockchain, allow for near-instant transfers of the cryptocurrency at the cost of 0.04 cents. Chivo wallet-holders can exchange Bitcoin for dollars at 200 dedicated ATMs. Merchants can do the same conversion via the Development Bank of El Salvador.
Three agencies have downgraded El Salvador’s sovereign rating to junk status. Bitcoin may not the main catalyst for this, although it has complicated things. But El Salvador continues to be a beacon for countries looking to experiment. In May, it hosted central bankers from 44 countries as part of the Alliance for Financial Inclusion. Many of them ventured onto the sands of Bitcoin Beach to set up a Chivo wallet and buy a cocktail using satoshis.
Thecryptos.linked
Businesses are obliged to accept Bitcoin payments, but the US dollar remains the sole unit of account. Salvadoran President Nayib Bukele had hinted at such a move in 2017 when he was mayor of the capital, San Salvador.
Critics and human rights organisations point to the administration’s heavy-handed powergrabbing tactics, but Bukele’s domestic approval rating is over 85 percent. He was elected mayor of Nuevo Cuscatlán in 2012, then mayor of San Salvador in 2015. While running Nuevo Cuscatlán, he gave a free monthly food basket to citizens over the age of 55. He became the country’s president in 2019, after starting the populist Nuevas Ideas (New Ideas) party. Once in power, he managed to reduce the national homicide rate from 52 per 100,000 people in 2018 to 17.6 in 2021.
The voices of critics have grown louder as the price of Bitcoin has plunged. While prophecies of an economic meltdown could be dismissed as hyperbole, warnings from key global institutions cannot be so lightly dismissed.
O
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Over the past 40 years, globalisation has led to measurable improvements in the lives of millions. As Douglas Irwin says in his blog, globalisation deserves some credit for enabling once desperately poor countries to grow, and reduce poverty.
They are also factors that have led the International Monetary Fund to predict a slowing of global growth — from an estimated 6.1 percent in 2021 to 3.6 percent in 2022. But in the face of such widespread crises, it’s important to not lose sight of the fact that globalisation has for many decades been a force for good. It has increased trade, investment and jobs, and these things have in turn elevated living standards, reduced poverty and created opportunities not afforded to previous generations.
In his blog post, academic Douglas Irwin points out that globalisation has enabled most countries to grow richer over the past 40 years — along with a decline in global inequality. The proportion of the world’s population living in extreme poverty fell from 42 percent in 1981 to just 8.6 per cent in 2018. This fact is reinforced when considering world GDP, which grew from some $50tn in 2000 to about $75tn in 2016 — primarily as a result of economic interdependence and increased global trade.
More recently, the World Bank’s International Finance Corporation (IFC) and the European
Research has shown that investment mediated by BVI led to the creation of 2.2 million jobs globally, with an estimated annual contribution of over $15bn to government coffers worldwide (Capital Economics 2017). Developing countries in Asia, Africa and Latin America have been key beneficiaries of this efficient flow of capital and investment. None demonstrates this better
BVI Finance is the voice of the British Virgin Islands’ financial services ofindustry.HerechiefexecutiveEliseDonovangivesCFI.coreadersaglimpseaglobalised,co-operativefuture…
than China, the poster child for globalisation — and the country that has helped take some 700 million people out of poverty on the way to becoming the world’s largest economy when rated in purchasing power parity (World Bank and IMF).
BVI has been a key strategic partner in this journey. According to UNCTAD World Investment Reports, it was the second-largest investor in China from 2006 to 2012, providing $7.72bn of inward foreign direct investment (FDI) to China in 2012. In terms of China’s outward FDI, in 2012 BVI was the fifth-largest recipient. Mainland Chinese and Hong Kong companies accounted for more than 40 percent of the $1.5tn in assets mediated through BVI, underscoring the offshore investment centre’s growing status as a hub for overseas investment.
ne of the topics under discussion at this year’s World Economic Forum meeting in Davos Switzerland was: Is there a future for globalisation? The pandemic, the war in Ukraine, rising energy and food prices, supply chain disruptions, global warming: these challenges threaten to destabilise decades of steady advances.
BVI OneFinance:Country’s Role in the Ongoing Globalisation Story
Bank for Reconstruction and Development (EBRD) have been involved in programmes which have used BVI vehicles to help facilitate projects in developing nations. In recent years, the IFC has invested $100m in a project in Tanzania. The sponsor had a registered office in BVI. Another project in Azerbaijan saw the EBRD lending $100m to five companies, one of which was a BVI-registered entity.
i >
International finance centres such as BVI have an important role to play in the story. They provide robust, trusted platforms that enable businesses to efficiently trade, transact, and invest across borders. Investments mediated by companies domiciled in BVI provide the underlying finance for investment in the infrastructure — roads, hospitals, and broadband — essential for growth.
CEO: Elise Donovan
BVI will play its part in the next chapter of the story — by continuing to provide the most efficient platform for facilitating investment and trade, and in supporting economic growth.
L
Know the Risks and ‘See’ the Future with the Integrity and Transparency of Moody’s Local
atin American domestic credit ratings and research agency Moody’s Local serves the needs of financial markets in Argentina, Bolivia, Brazil, Mexico, Panama, Peru and Uruguay.
Moody’s Local (ML) provides ratings and locallanguage research using country-specific methodologies. It’s a platform of Moody’s Corporation (MCO), with processes independent from those of global credit rating agency Moody’s Investors Service.
Local has seen tremendous growth in Latin America, with more than 990 issuers covered — sectors include structured finance, local government, financial institutions, insurance companies, and corporate entities — and over 300 published pieces of research. Ninety employees have been brought in across the region.
A Moody’s Local rating is an opinion on the relative credit quality of debt obligations, or of an issuer’s ability to honour those obligations, for
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“Moody’s Local strives to offer the highest level of integrity, transparency and consistency,” said Martin Fernandez-Romero, ML managing director and regional head of Latin America. Market participants rely on ML for local opinions — and particularly value the experience of its analysts, “which leads to informed credit decisionMoody’smaking”.
They are not buy-or-sell recommendations, nor do they guarantee that a particular issuer or instrument will not default.
Martin Fernandez-Romero
>
use in a domestic market. The long- and shortterm rating scales are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities.
Credit risk is the possibility that an entity may not meet its contractual financial obligations as
In 2019, MCO deepened its commitment to Latin America’s financial markets by introducing Moody’s Local in Peru, Panama and Bolivia. In September 2020, it extended its services to Argentina and Uruguay, and in June 2021 it launched in Brazil. The arrival of Moody’s Local Mexico was announced this May, completing the roll-out of the domestic ratings platform in major Latin American markets.
Moody’s Local is present in Argentina, Bolivia, Brazil, Panama, Peru, Mexico and Uruguay, where local ratings, products, and research are offered. The Moody’s name and brand is internationally famous — and the agency’sLatinAmericanplatformbringslocalknowledgetothefore."Moody’sLocalstrivestoofferthehighestlevelofintegrity,transparencyandconsistencywhichleadstoinformedcreditdecision-making."
Summer 2022 Issue CFI.co | Capital Finance International 113
they come due. Moody’s Local’s rating system addresses that eventuality by assessing the issuer’s ability to obtain sufficient funds to service the obligation, and its willingness to MLpay.
The scale runs from a high of AAA to a low of C or D, depending on the jurisdiction. The rating modifier “.n” designates the country where the Moody’s Local rating has been assigned: AAA. ar (Argentina), AAA.bo (Bolivia), AAA.br (Brazil), AAA.mx (Mexico), AAA.pa (Panama), AAA.pe (Peru), and AAA.uy (Uruguay). i
Managing Director-Regional Head Latin America: Martin Fernández Romero
1Source:Moody'sLocaldata,asof15th July2022.Includingfunds.
relative credit risk of a debt obligation and the ability to honour it. The company reasserts that a rating is not a statement as to which obligors or obligations will default.
"Moody’s Local has seen tremendous growth in Latin America, with more than 990 issuers covered — sectors include structured finance, local government, financial institutions, insurance companies, and corporate entities."
ratings represent a rank-ordering of creditworthiness within the domestic market of a specific country, and are not comparable among countries. Ratings are forward-looking: the ordering is designed to be maintained over the medium term. An ML rating is an opinion on the
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The venture capital funding it has provided has given life to projects that create wealth for owners — and provide secure jobs for international AAY’semployees.senior management team has almost a century of combined professional experience in commercial project finance and venture capital funding. The company recently added an insurance team, focusing on risk-management, and it continues to grow thanks to its reputation, and a belief that confidentiality and nondisclosure are essential for business.
AAY Investments Panama-basedGroup:Company Earns a Happy Niche in the VC World
with clients. The 45-person AAY staff play a vital role in this, of course. Managers assess how actions throughout the decision-making process affect client and employees. This conscientiousness has resulted in low staff turnover — and high employee and customer AAYretention.hasdeveloped business relationships with national and international brokers, attorneys, banks, financial institutions, insurance companies, and project owners throughout the world.
The group is made up of Templeton Equity, Swiss Credit & Guaranty, Swiss Credit Underwriters, Swiss Credit Equities and six AAY-affiliated partner companies.
P >
The group’s success stems from the longterm relationships it has always established
anama-based Venture Capital Funding firm AAY Investments Group started life in 1986 — and has been able to adapt to the buffeting of changing times and challenging economic trends.
Group has worked with national and international brokers, attorneys, banks, financial institutions, and insurance companies.
The senior management team has some 95 years of combined professional experience in commercial project finance and venture capital
AAY Investments Group now has an insurance team of individuals who are highly skilled in risk management. This allows the group to provide commercial insurance products through reinsurance and guarantees. It can also accept business from the wholesale insurance broker
FUNDING CAPACITY
Thefunding.dynamic members have backgrounds in invaluable fields such as law and investment banking, and all have deep knowledge of the workings of financial institutions.
AAYcountries.Investments
The company provides venture capital around the world, in various currencies. It has given life to projects that have gone on to create wealth for their owners and secure jobs for workers in many
AAY Investments Group is able to offer low interest rates — and, if necessary, a grace period for repayment until a project has adequate cash flow. This has been achieved via a 100 percent project funding programme: 60 percent private lending, 40 percent private equity.
AAY is seeking professional contacts around the world to place client business. Brokers, consultant or other entities working in commercial finance and/or insurance are urged to get in touch. i
AAY Investments Group: Headquarters
As a global project investment group with a private fund and its own private investor capital, AAY has the resources it needs to be a world player. The minimum lending requirement is $5m, with the capability to fund upwards of $50m by using syndicated partners.
thrived while many financial institutions have failed, and it has an enviable track record.
"AAY Investments Group now has an insurance team of individuals who are highly skilled in risk management."
This firm has had venture capital in focus since the mid-80s, and shows a flair for seizing opportunity—andavoidingrisk.AAYInvestmentsGrouphas been in the international project-funding business since Over1986.that time, its adaptability and ability to evolve has brought continued success. It has
Mark Manson, senior managing partner, MBA, 25 years managing fund capital and investment strategies.
BROKER PARTICIPATION
has never been stronger. It has established long-term partnerships, and provides underwriting for commercial funding and related reinsurance projects to non-affiliated financial and insurance entities.
NO SUBSTITUTE FOR EXPERIENCE — AND IT HELPS THAT THE AAY TEAM MEMBERS HAVE A RANGE OF SKILLS
Summer 2022 Issue CFI.co | Capital Finance International 115
THE SamTEAMDavis, senior project director, BA in International Business Finance, 15 years in financial and banking services.
AAY’scommunity.reputation
Simon Greene, head of legal, LLM, with 18 years’ international experience in corporate governance and legal and regulatory matters.
A LOCAL LENS
The researchers wanted to control as much as possible for other factors that could affect employment trends. Employment in a particular industry, such as hospitality or construction, could wax and wane for many reasons besides the Federal Reserve policy.
suggest that when the Federal Reserve enacts policies to boost the economy, it may need to sustain these measures for a longer period. Otherwise, the labour market may not become tight enough for these three groups to benefit. If the agency abandons growth policies too soon, people in those groups might not yet have had a chance to land jobs.
LONG-LASTING BENEFITS
And people with less education — which often correlates with less wealth — might be more vulnerable to setbacks. If a worker’s car breaks down and they don’t have enough money to repair it, they might not be able to get to their job and end up being fired. Or companies may be quicker to lay off less-educated workers in tough economic times. A restaurant might cut its wait-staff during a recession and rehire later. A firm that has invested a lot of training in highly educated employees might hang onto those workers because it would be more costly to retrain a new hire later.
I
> WhentheFedmovestocooltheeconomy,itcandisproportionatelyhurtfemale,black,andless-educatedworkersinslacklabourmarkets,theKelloggInstitutehasfound…
For each urban area, they calculated the tightness of the local labour market, defined as the percentage of employed people aged 25 to 54. The higher the figure, the tighter the labour market, and the more companies had to compete to hire workers. In contrast, if the figure was low, that area had a “slack” labour market and companies had little trouble filling vacant spots.
The researchers found a consistent pattern across all three demographic groups. In general, lowering interest rates had a bigger benefit for those workers in tight labour markets than those in slack ones.
So, the researchers made very specific comparisons. They analysed how employment growth for one demographic group in a particular industry in one urban area compared with employment for the same group in the same industry at the same point in time — but in another area where the local labour market was tighter or slacker.
Kellogg Insight: When Interest Rates Climb, Some Will Be Left Behind
ThisstoryfirstappearedinKelloggInsight
"Female and black job applicants might have been passed over due to sexism and racism."
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“The tightness of the labour market is very important,” Matsa says. “That’s when stimulating more hiring is going to help these Thegroups.”results
Femaletime.and
that the agency wanted employment gains to occur across the population, and that they would consider different indicators — such as the unemployment rates of minority, female, and less-educated workers — when deciding whether to continue economy-boosting Butmeasures.toachieve more inclusive outcomes, policymakers need to better understand how specific demographic groups are affected by Fed policies. “The incidence of economic shocks, and economic policy in this case, isn’t borne by all types of workers the same,” says David Matsa, a professor of finance at Kellogg. Policies intended to reduce unemployment could benefit certain groups more than others.
The Federal Reserve has various financial levers at its disposal to maximise employment and keep prices steady. If unemployment is high, it can lower a benchmark interest rate called the federal-funds rate and buy government securities to increase banks’ cash supply. Those measures, in turn, make it easier for companies to borrow money, expand their operations, and hire workers, making it easier for households to borrow and spend. Conversely, if economic growth is driving inflation up, the agency might reverse tactics and push interest rates higher.
They might compare employment growth for women in the manufacturing industry from 2015 Q1 to Q2 in the Minneapolis area versus the Cincinnati area. Those analyses allowed the team to tease-out how monetary policy affected that group differently depending on labour-market conditions.
Matsa and his collaborators, Nittai Bergman, at Tel Aviv University, and Michael Weber, at the University of Chicago, wanted to know how the Fed’s monetary policies affected groups that have lower average levels of employment. This includes women, black people, and workers without a high-school diploma — groups where a lower percentage of people tend to be employed at any given
To find out how these groups responded to the Fed’s policy measures under different labour-market conditions, Matsa and his colleagues gathered employment data from the Census Bureau’s Quarterly Workforce Indicators programme for 1990 to 2019. The records covered 895 urban areas across the US. The researchers also tracked how the federal-funds rate fluctuated over time.
In a recent study, Matsa and his colleagues focused on three groups: workers who are black, female, or do not have a high-school diploma. They found that when the Fed lowered a key interest rate to encourage economic growth, those groups saw more job growth in areas with “tight” labour markets — where a relatively high fraction of people already had jobs and companies were struggling to hire workers. They did not find this pattern among white, male, or more-educated workers.
That doesn’t mean that the Fed shouldn’t raise interest rates when inflation is high, as it did in March, Matsa says. But “if in other situations they overreact and raise rates prematurely, the burden of that in terms of employment might fall more on some populations than others”, he says.
When the federal-funds rate dropped by one standard deviation, employment growth for black workers was 0.91 percentage points higher in the tightest labour markets than in the slackest ones. Similar trends emerged for women and people without a high-school diploma.
TENUOUS CONNECTIONS
black job applicants might have been passed over due to sexism and racism. Some women may have left their jobs after having children, either willingly or because of a lack of adequate parental leave or affordable childcare. Black students tend to be punished more harshly than white peers in school for minor misbehaviours; being suspended or expelled can reduce the likelihood that they will pursue and complete college, limiting their job prospects.
n 2020, the US Federal Reserve announced that its goal to maximise employment was “broad-based and Essentially,inclusive”.thismeant
researchers didn’t see this pattern among white, male, or more-educated workers. When the team tracked how employment growth in these groups changed with lower interest rates, the tightness of the labour market didn’t make much of a Otherdifference.analyses
Summer 2022 Issue 117
Thesays.
Theit.
Overall, the study suggests that if the Fed wants to pursue a more inclusive employment goal, it may need to sustain low interest rates for longer during times of economic growth. The agency typically raised interest rates pre-emptively once inflation started to rise towards its target level to avoid high inflation. But taking these steps too early could mean that many women, black people, and those without high-school diplomas never get a chance to be hired.
And even those who do find work might suffer from the “last-in, first-out” phenomenon if layoffs were necessary. When the government discourages lending and investment, companies might let go of workers from those vulnerable groups.
COST OF RAISING RATES
The researchers then created a mathematical model to simulate how firms might react, and how different groups of workers might be affected, in response to different monetary policies.
The Federal Reserve announced in 2020 that it would move from strict to flexible average inflation targeting. Instead of always trying to keep inflation at a specific level, the agency would aim for an average level over time. If inflation started to rise, the Fed might not as quickly take steps to suppress
“The cost of raising interest rates preventatively is primarily borne by a subset of the population,” Matsa says. i
team simulated what would happen to workers under strict and average targeting policies. The model predicted that the new policy that aimed for an average inflation target would lead to more employment growth for less-advantaged groups, particularly in tight labour markets.
suggested that the benefits take time to become apparent. After an interest-rate reduction, the additional employment growth among women, black, and less-educated workers in tight labour markets peaked roughly two years later. But those gains lasted for a long time; the extra employment boost continued for a few years.
“You’re not just leading to them being employed today, but helping them stay in the labour market for potentially years to come,” Matsa says.
“In the tighter labour markets, decreasing interest rates leads to more employment growth,” Matsa
Canada has the fastest-growing population of all the G7 countries — and leading the way is the city of Toronto.
North TorontoAmericaTakes the Upward Path to Rule as Canada’s Golden City
Canada: Toronto
By Brendan Filipovski
>
Sincestoreys.2016,
The city rivals Vancouver for the most expensive real estate in Canada. Despite all this, Toronto falls outside the world’s 20 most-expensive cities. Mercer ranks it at a distant 98th in terms of cost-of-living for expats.
In the 1960s and 1970s, competition between the cities could be gauged by the rising skylines. Many companies switched to Toronto in the 1970s, when talk of independence for Quebec gathered momentum. Today, Montreal is reinventing itself as a cooler start-up scene, and a major North American city in its own right.
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Increased immigration only adds to the city’s multicultural reputation; the BBC once called it the “city of 140 languages”. Almost half of Toronto’s population was born overseas. It has the largest Chinatown outside San Francisco, as well as Filipino, Indian, Sri Lankan, Italian, Jamaican, Portuguese and Greek immigrant Torontopopulations.has
level. In 2019-20, tech jobs in Toronto grew by 26 percent. The city attracts about half of Canada’s total venture capital funds — total funding between 2017 and 2021 was $12bn.
also grown in terms of its global standing in commerce and technology. In 202122, Toronto was ranked second in a list of North and South American cities-of-the-future. It has the biggest technology hub in Canada, and the fifth-largest in North America.
"Several high-profile tech companies have set up facilities in the city, including Cloudflare, Netflix, Reddit, and Twitter. The city narrowly missed out on Amazon’s H2Q and the controversial Sidewalk Toronto project involving Google."
rivalry with Montreal is also being consigned to the past — at least in the minds of Toronto
Genome ranks Toronto-Waterloo as the 14th-best start-up ecosystem in the world, seventh-best in North America. It has over 300,000 tech workers; only San Francisco boasts a higher
The boom has however put developers up against residents wanting to preserve historical buildings. Many have been lost, including the iconic Stollerys building at Yonge and Bloor and the Empress Hotel. Others, such as the Union Station, have been saved by public pressure.
Given all these factors, the skyscrapers of Toronto are likely to continue to push ever-higher as big tech overlaps with the financial sector. i
Toronto’s boom is reflected in real estate, with the average property price now above CA$1.175m. Back in 1994, it was around CA$175,000. Despite the rise of high-storey condos in the downtown area, demand outstrips supply. In Q1 this year, pre-construction condo sales reached a new record for the Greater Toronto Area.
oronto’s overall population has more than doubled in the past 40 years, now standing at 6.3m; it is expected to reach 7m by 2034. It is now the seventhlargest city in North America, larger than Washington, Miami, Atlanta, and San Francisco.
It has been booming for a while, and has surpassed Montreal as the country’s leading centre. Any regular visitor over the past 10 years will have noticed the rising skyline. Toronto has long had a “big city” feel, but over the past decade the number of skyscrapers has soared. It now has 76 of them, with more under construction. The One, at Yonge and Bloor, will reach 85 storeys — the country’s tallest building, and the first over 300 metres in height. And that will quickly be eclipsed by Pinnacle One Yonge, a group of six building that includes one of 95
Several high-profile tech companies have set up facilities in the city, including Cloudflare, Netflix, Reddit, and Twitter. The city narrowly missed out on Amazon’s H2Q and the controversial Sidewalk Toronto project involving Google.
Forresidents.much
As some of Toronto’s grand old buildings make way for new towers of glass and steel, Toronto’s
Toronto began to emerge in the 1880s, with the railroad and consequent westward expansion. Its proximity to the US and Detroit was a boon. But perhaps the biggest shift in economic gravity occurred with the completion of the St Lawrence Seaway in 1954, which allowed ocean-going vessels to travel from the Atlantic to Lake Ontario.
T
"Immigration and trade have long been the growth engines of Canada. Toronto benefitted from these trends. Its growth has created a virtuous cycle, with its multicultural communities and rapid growth acting as magnets to immigration and investment."
of the 19th Century, and the first half of the 20th, Montreal was the region’s leading city. A historical trading post, it became a major port and industrial centre with the opening of the Lachine canal in 1825 (which bypassed the Lachine rapids). Prior to that, shipping lines passed through Quebec City. Along with industrialisation came a burgeoning population and a growing reputation as a financial centre.
Immigration and trade have long been the growth engines of Canada. Toronto benefitted from these trends. Its growth has created a virtuous cycle, with its multicultural communities and rapid growth acting as magnets to immigration and investment. Its political and social contrast to the US — and its proximity to it — helped, as did the revitalisation of Detroit.
Toronto’s downtown population has grown 16.1 percent. The increase is density is palpable and will roll out to surrounding streets. The next-largest growth stat — 9.4 percent — came in suburbs 30 minutes away.
Expanding public transport systems are taking some of the pressure off, and perhaps explain the population growth in the suburbs. Public transit projects under construction include the Eglinton Crosstown light rail (19km), the Ontario rapid transit line (15.6km), and the Line 6 Finch West light rail (10.3km).
Toronto’s’ annual population growth rate began spiking in 2016-18, reaching 1.8 percent in 2019-20. Much of this has been fuelled by increased immigration, an influx of international students, and positive net-migration from other provinces. The impact of Covid-19 could cause a fall in that growth rate; Canada’s overall population growth is at its lowest level since World War I.
What is in the packaging?
good — and keeping that in mind is a critical part of positioning our company for future Federalsuccess.”continues to demonstrate this positive mantra with investment and operational strategies focused on preserving and improving the long-term value and resilience of assets. Sustainability measures are put in place well in advance of the first blueprint for new construction and redevelopment. They are specifically identified for every investment of more than $1m.
The firm prides itself in delivering long-term, sustainable growth through investment in communities where retail demand exceeds supply. This overriding focus has enabled Federal to endure some tough economic cycles. Its commitment has been rewarded with 54 consecutive years of dividend increases — the longest annual dividend growth recorded among American REITs.
Federal credits its growth and resilience to financial discipline and a longstanding dedication to ESG principles which set the foundation for how, and why, it invests. Its portfolio features more than 100 top-notch properties, spread across 25 million square feet of real estate. Locations range from small local shopping centres to urban, mixed-use neighbourhoods. Environmental and social considerations have been front and centre for the firm since the
> Federal Realty Investment Trust: ESG Pays Dividends at Leading Real Estate Investment Trust
Federal’s acquisition of new operating assets requires climate-related risks and opportunities, as well as resource conservation measures, be factored into capital plans.
or more than six decades, US-based Federal Realty Investment Trust has been forging an enviable reputation for the ownership, operation, and redevelopment of retail properties in coastal markets.
initially focused on redeveloping its properties to include outdoor areas. Those spaces quickly became gathering places for local communities. In 2008, the company established a GreenBox standard for building out tenant spaces to minimise environmental impact. Two years later, it became one of the real estate pioneers to develop on-site renewable energy through rooftop solar arrays. In 2012, and the company earned its first LEED certification for its commitment to environmentally friendly design and construction.
Today, Federal boasts the highest solar-generation capacity of any publicly traded shopping centre REIT — and has invested almost $2.3bn in LEED-certified buildings.
‘Itnotonlyhelpsusbeabetterbusiness—itisourbusiness,’saysFederalRealtyCEODonWood.
Don Wood, CEO for Federal Realty
North Bethesda, Maryland, USA: LEED-certified Neighbourhood, Pike & Rose.
The firm champions sustainable design and development by prioritising energy and water efficiency, reuse of materials, waste mitigation. It protects natural habitats by building only on sites which had been previously developed. Project-wide LED lighting, white and green roofing, on-site renewable energy, electric vehicle-charging stations and stormwater
Federal1990s.
“ESG has been a part of our business well before the term was widely recognised,” said Federal CEO Don Wood. “We know that good financial investments can also serve a greater societal
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F
i
Six-story-high LED art installation, "The Conversation"
“We create exceptional places because we have an exceptional culture driven by exceptional people,” says Wood. “I firmly believe that our success is a testament to the inherent sustainability and resilience of our company.
“We remain focused on a growth strategy that is built on a strong ESG foundation. ESG not only helps us be a better business — it is our business.”
Behind all Federal’s actions, and progress, is a team of 300 talented employees that exemplify the company’s ESG commitments. They are empowered by regular opportunities for professional development — and by their positive responses to challenges. Successes are recognised and celebrated; diversity, equity and inclusion are respected. Through good corporate governance, the company drives positive change and performance.
Plaza, lined with murals created by local artists, serves as a retail hub for community engagement, economic prosperity, and the ongoing redevelopment of the Watts neighbourhood. The centre has closed the “grocery gap” for residents by providing convenient access to fresh foods. The centre supports the people of Watts by requiring commercial tenants to hire locally; it also provides scholarship programmes for local youth.
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Somerville, Massachusetts, USA: Assembly Row Today
transition to a low-carbon economy —while delivering increasing value for our shareholders and other constituencies.”
Somerville, Massachusetts, USA: Assembly Row Site in 2005
Federal has committed an additional $2m to Primestor’s Urban Vision Fund dedicated to projects in low- and moderate-income markets.
Somerville, Massachusetts, USA: Assembly Row Riverfest
management are staples in its development and redevelopment activities — and its day-to-day
“Assembly Row encompasses all our objectives for sustainable investment,” says Wood. “With significant local collaboration, we have built a place that serves the local community, supports local residents, and creates lasting value for all Federal’sstakeholders.”investments
Positive transformation is evident across Federal’s portfolio, but nowhere more so than in Assembly Row in Somerville, Massachusetts. What was once an unproductive, contaminated industrial site has been turned into a vibrant, mixed-use property that serves as an economic engine and community anchor for the city.
have served to advance social equity in real estate. Over the past five years, it has worked with Primestor Development, a full-service real estate company focused on economic development in underserved neighbourhoods. Some $425m has been invested across nine properties, including the Freedom Plaza shopping centre in Watts, Los
FreedomAngeles.
neighbourhoods, and reinvesting in them as needs evolve. This means incorporating art into experiences and events that celebrate culture and diversity. It also means corporate and local philanthropic donations to spur economic growth and transform spaces and communities.
Federal’s conscientious strategies don’t stop there. Sustainable investment requires investment in people, and forging deep community connections. This means creating places that meet the needs of the surrounding
“Weoperations.understand that the decisions we make now have impacts for years to come,” said Wood. “Our team continually looks for innovative ways to safeguard our assets, minimise our environmental footprint, and support the
The IMF report shows a reduction in the degree of that dominance, with the dollar's share of central bank reserves falling, down 12 percentage points from 71 percent in 1999 to 59 percent last year. That was not in favour of sterling, the yen or the euro, despite the rise that the euro experienced during its first decade of existence (Figure 1). Instead, it favoured what the IMF calls “non-traditional reserve currencies” — the Australian dollar, Canadian dollar, Swiss franc, and Renminbi — which reached 2.6 percent of the total.
the reduction in transaction costs in the non-traditional foreign exchange markets — including technological improvements in platforms — helped reduce this.
No other monetary system offers an equivalent volume of investment-grade government bonds as that of the US. That volume allows central banks to accumulate reserves, and private investors to use them as a haven — something reinforced by quantitative easing since the global financial crisis. The 2012
It is also worth noting that non-traditional currencies were favoured by a partial search
2:
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up.
Four gravitational factors favour the continuation of the dollar's central position in international financial markets, in trade invoices and payments, and in public and private foreign exchange reserves. The relative expansion of the other currencies depends on how successfully they manage to offset those First,factors.the more extensive installed base for dollar-denominated transactions favours the greenback. The increase in liquidity and
hina would strengthen its international payments system and accelerate the establishment of the Renminbi as a rival reserve currency to reduce its vulnerability. Countries facing geopolitical risks in their relationship with the US and Europe would seize the opportunity to switch out of the dollar system. But there’s a way to go between intention and action.
By Otaviano Canuto
Figure China sees large outflows, while the rest of EM is holding
C
announcement by the-then president of the European Central Bank, Mário Draghi — that he would do “whatever it takes” as a last-resort provider of liquidity for euro-denominated assets issued in the eurozone — was important. The European Recovery Fund was created last year. The global supply of liquid and safe-haven assets usable as central bank reserves tended to widen, in favour of the euro.
Figure 1: Currency Composition of Global Foreign Exchange Reserves 1999–2021.
Dollar GreenbackDominance:Will Endure Current Hardships
Financial sanctions on Russia after its invasion of Ukraine sparked speculation that the weaponisation of access to reserves in dollars, euros, pounds, and yen would spark a division in the international monetary order.
The International Monetary Fund (IMF) recently released a study on the evolution of international reserves since the beginning of the century. “Dollar dominance” — the US's share of foreign trade invoicing and international debt issuance and non-banking transactions — is above what the country's share of international trade, international bond issuance, and crossborder borrowing would suggest.
This remains, despite the falling share of US GDP in the global economy. From the 1970s onwards, it survived the end of gold convertibility and the fixed exchange-rate regime inherited from Bretton Woods. Its presence in banking and non-banking transactions actually grew after the 2007-08 global financial crisis.
But while trade transactions and reserves by central banks and other global public investors may reinforce the Renminbi's position as an alternative currency to the dollar, euro, yen, and pound sterling, the qualitative leap toward its internationalisation as a reserve currency will only happen when confidence in its convertibility is sufficient to convince private investors. It is not by chance that the currency swap lines with China have been little used, while those of the countries with the Federal Reserve have been activated to stabilise flows.
Since the global financial crisis, China has sought to extend the use of the Renminbi in international trade, and as a reserve asset at other central banks. This was followed by a proliferation of foreign exchange swap lines with other countries.
for returns in reserve management. Central bank balance sheets have taken on enormous proportions in recent times. Now, some of them separate what would be the appropriate tranche for liquidity management (the reason for reserves in liquid and low-risk assets, for stabilisation), from another investment tranche, possibly allocated in less liquid but more profitable assets. The search for diversification helped non-traditional reserves.
Recent portfolio foreign capital movements into China show what is at stake, and the potential cost to China. Data released by the Institute of International Finance (IIF) revealed an unprecedented outflow of portfolio (debt and equities) capital from China in the wake of the Russian invasion. Such flows remained stable in other emerging economies (Figure 2). The timing suggests links with the war in Ukraine and sanctions. It is not opportune for China to issue any signs of a sudden departure from the system where it currently operates, nor of a possible collaboration with Russia to help it circumvent sanctions.
The relative dominance of the dollar appears to be declining — but at a very gradual pace. i
Another thing in favour of the dollar would be the absence of regulations restricting liquidity and asset availability, including capital controls. Despite the sanctions on Iran, Venezuela, and Russia, there is a difficulty for Chinese bonds compared to those in dollars and the other three major currencies.
The reserve issuer must accept that large amounts of its currency circulate the world, and that foreign investors help to determine domestic long-term interest and exchange rates. Chinese financial authorities do not appear to be considering relinquishing control. They will probably seek to expand the use of the Renminbi as much as possible while retaining control, and without building some parallel regime to the existing one.
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suddenly on their own in attempting to engineer a soft landing with inflation at a four-decade
Beforehigh?
the 2008 global financial crisis, the consensus was that monetary policy should take
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Kenneth Rogoff:
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who for years have been arguing that fiscal policy – usually meaning deficit spending – needs to play a much more active role in managing business cycles? If it really makes sense to use both monetary and fiscal policy to counter a routine downturn, why are central banks
Fiscal Policy Should Return to Fundamentals
ecent large interest-rate hikes by the US Federal Reserve and the European Central Bank suggest that monetary policymakers are intent on moving forcefully to bring down inflation. But where are the scores of economic commentators
With inflation high and growth slowing notably, what should be done? First, interest rates do need to rise, but central bankers and the International Monetary Fund seem to be excessively zealous
It is true that “helicopter money” and other transfer programs proved extremely effective during the initial stages of the COVID-19 pandemic, helping to cushion individuals while reducing long-term economic scarring. But here’s the rub: No country, and certainly not a large, politically divided one such as the United States or the United Kingdom, has really figured out how to conduct technocratic fiscal policy on a consistent basis, because politics is hardwired into fiscal policy.
Conservatives have to accept that higher taxes on high-income and upper-middle-income individuals are not only fair, but also necessary to achieve social cohesion. Yes, economic efficiency and dynamism are fundamental virtues of the US system, and a major part of the reason why the West is still able to compete with China and Russia in key areas such as technology. But an inadequate social safety net and the failure to tax the economic elite at an adequate rate risks destroying the American model from within.
the lead in dealing with ordinary business cycles. Fiscal policy should play a supporting role, except in the event of wars and natural catastrophes such as pandemics. When systemic financial crises occurred, the thinking went, monetary policy could respond immediately but fiscal policy should quickly follow and take the lead over time. Taxation and government expenditure are intensely political, but successful economies could navigate this problem in emergencies.
Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in Financial Economics, was the chief economist of the International Monetary Fund from 2001 to 2003. He is co-author of This Time is Different: Eight Centuries of Financial Folly (Princeton University Press, 2011) and author of The Curse of Cash (Princeton University Press, 2016).
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the fiscal-policy debate has been dominated for too long by the siren song of pundits who promise that real interest rates will never rise, and that deficit spending will be a free lunch. Modern Monetary Theory is an extreme representation of this view, but it is not all that different from some mainstream economists’ belief that public debt could be much bigger without any negative consequences.
ABOUT THE AUTHOR
Over the past decade, however, the view that fiscal policy should also play a more dominant macroeconomic stabilization role in normal times has gained increasing traction. This shift was influenced by the fact that central bank interest rates ran up against the zero-interest-rate bound. (Some, including me, believe that this argument ignores relatively simple and effective options for cutting rates below zero, but I will not take that up here.) But the zero bound was by no means the entire argument.
about the pace at which that should happen. It is far from obvious that the benefits of bringing down inflation to target by say, the end of 2023, are worth the significant risk of yet another deep recession, given the lingering effects of the recent pandemic and the not-so-distant financial Second,crisis.
Admittedly, there was a certain logic to keeping monetary and fiscal policy on full expansionary tilt as an insurance policy against the pandemic getting worse or another crisis erupting – as in fact occurred when Russia invaded Ukraine. Still, the cost of this approach, in terms of increased inflationary pressures and reduced capacity to respond to the supply shocks triggered by the war, now has to be paid. Those who argued that a surge in inflation was highly unlikely clearly had their heads in the sand.
The right way for governments to redistribute income on a sustainable basis, if that is the goal, is to raise taxes on higher-income individuals and increase transfers to lower-income (and especially very low-income) segments of the population. US Democratic Party congresswoman Alexandria Ocasio-Cortez had that right when she wore a flamboyant “tax the rich” dress to the 2021 Met Gala, albeit she might have added “and the upper middle class” to the slogan.
There are myriad ways for governments to spend money, and myriad possible criteria for deciding who merits support and who should foot the bill. Horse trading and implementation issues mean there will always be inefficiencies, and these tend to be bigger as the spending bill increases. Exactly this happened in the US starting at the end of 2020, when politically motivated fiscal policy resulted in too much stimulus too late.
"With inflation high and growth slowing notably, what should be done?"
Fiscal policy needs to go back to fundamentals and be recalibrated. The longstanding argument that go-go Keynesian fiscal stimulus is the answer to every imaginable economic shock has been exposed as bankrupt. Nevertheless, at this juncture, readjustment of macroeconomic policy should take place gradually if we are to avoid a deep recession. i
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The private sector is a key contributor to the SDGs, and has shown a growing investment appetite since the launch of the goals in 2015. Donors have been engaged through various approaches, blended finance being the one that has increasingly gained traction. Blended finance is the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing
Meanwhile,sheets.donors
DFIs and MDBs are key actors in issuing GSSS bonds in their home markets — but also in developing countries. Despite the rapid growth of the global GSSS bonds market, sub-Saharan Africa accounts for just a fraction of bonds issued. Increasing support from DFIs and MDBs could help to scale-up the market.
T
A Joint Discussion Paper from MSCI
The SDGs represent a mountain for development finance to scale. The system is failing to mobilise at scale, or channel funding to the countries and sectors that need it most. From 2012 to 2020, more than $300bn was mobilised by official development finance interventions, including ODA. After the establishment of the SDGs in 2015, mobilisation increased by 20 percent the following year. In 2020, despite the pandemic, private finance mobilisation slightly increased (by around six percent) over 2019.
Meggin Thwing Eastman, Paul Horrocks, 2018
Effectively mobilising the private sector has typically fallen to multilateral development banks (MDBs) and development finance institutions (DFIs). These have recognisable structures, financial instruments and skills sets with which the private sector can most easily collaborate. As they understand risk and development, they are structured to engage on financial transactions of varying risk and return. Many MDBs and DFIs have a credit rating which gives them enhanced funding raising and credit support, while a portfolio approach to investment ensures that project risks are effectively distributed across balance
he development community is used to responding to crises — but current events, not least the pandemic, have put the UN’s Sustainable Development Goals further out of reach.
A growing number of development actors across the spectrum are committed to designing new approaches. Green, social, sustainability and sustainability-linked (GSSS) bonds have emerged as an important asset class. The bonds are fixedincome instruments that can help to ensure finance targets the SDGs with the necessary scale and development impact.
OnlyOECD: Scale and Development Impact Will Let Us Crest the SDG Mountain
But this was from a low base, and while growth has been significant, it has not met the level needed to implement the SDGs.
Sub-Saharan Africa is largely characterised by private equity investments and bank lending rather than debt market instruments and limited stock markets. Equity tends to have a shortterm perspective, and bank finance is limited in reaching scale. The SDGs, meanwhile, are long-term challenges that require investors with a view of stable pricing and predictable exits. GSSS bonds typically generate returns that match the liabilities of pension and insurers. Sovereign issued GSSS bonds allow governments to access private sector capital and pay for initiatives such as “green” power generation.
INVESTINGINSTITUTIONAL
issuance amounts of GSSS bonds (EUR billion). Source: OECD calculations based on data from LGX DataHub.
The unevenness in overall mobilisation volumes between LDCs/LICs and UMICS is reflected in the different levels of funding directed to social and commercial components of economies. Low-income countries (LICs) and less developed countries (LDCs) mobilised just $4.7bn, or 12 percent, of the total between 2018-2019. This stands in contrast to Upper Middle-income countries (UMICs), which, in the same period, mobilised $19.5bn, or 48 percent of the total.
SECURING SCALE
By Paul Horrocks, Jieun Kim and Esme Stout
For it to work effectively, two key outcomes are required: scale and impact.
Thecountries.financial facilitator between the demands of the SDGs and private sector investment could be another characterisation. Aligning investments with goals of the SDGs, and the needs of economies, is growing. And blended finance is filling-in many of the SDG gaps.
work with these DFIs and MDBs to provide them with the necessary political and financial incentives to capitalise on the private sector turn towards ESG- and SDGfocused investing.
While many DFIs and MDBs are using GSSS bonds, further issuance could be constrained by the need for equity injections — or the risk that credit ratings could be downgraded. Greater issuance would help to expand balance sheets by allowing DFIs and MDBs to undertake more blended finance transactions, helping to address the need for increased breadth of financial capacity and depth into specific sectors.
Co-operation,notcompetition,isrequiredtomeetambitioustargets.
Annual
December
A body of knowledge has been developed that highlights the ability of MDBs to expand lending without impacting the credit ratings, or having minor impact in relation to their credit rating while increasing balance sheet capacity. Even without touching the politically charged question of credit ratings, donors, DFIs and MDBs could join forces and work more efficiently to deliver the GSSS bond market. Donors need to set incentives for DFIs and
NEED FOR IMPACT
Saharan Africa without clarity on the development impact remains a challenge. This, combined with a lack of platforms from listings on stock markets and dominance of private equity, results in a lack of transparency. Without more robust data on the development impact of investments, we cannot effectively channel mobilised finance to the geographies, sectors, and people in most need.
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DFIs and MDBs establish allocation and impact reporting practices, while DFIs and MDBs can help strengthen market discipline. DFIs and MDBs can also provide technical assistance to issuers, and support developing countries to set up green, social and sustainable projects. This is a key requirement for obtaining a GSSS label. Some DFIs and MDBs can act as role models here. The IFC, for example, has issued several local-currency GSSS bonds in emerging markets. This can help to shift investor focus to the region. Pursuing investments in regions such as Sub-
GSSS bonds allow greater deal flow for development actors. The direct effect is more transactions and pipelines of projects delivering development. Development actors and the private sector need to work together. Until then, the necessary scale and impact to create the GSSS Bond markets of tomorrow will not exist. i
of local GSSS bond markets would provide the financial capacity to fund SDGrelevant projects in local currencies, matching revenues with financing requirements. DFIs and MDBs can, at the local level, assist the issuance of GSSS bonds through blended finance, increasing the pipeline of projects that can be aggregated to issue as GSSS Bonds. In regions such as sub-Saharan Africa, this would enable greater transparency and disclosure. This includes debt transparency, and ensuring that bonds are effectively delivering.
help in developing the necessary aggregation for issuance and diversification for institutional Co-operation,portfolios.
A framework with the potential to help policymakers and practitioners is the OECD UNDP Impact Standards for Financing Sustainable Development. At the highest level, the OECD-UNDP standards represent a bestpractice guide and self-assessment tool and improve the transparency of development results. While not directly focusing on the outcome of investments into GSSS bonds, keeping an eye on changing incentives and emphasising the need to manage primarily for impact can help shape impact approaches.
TheMDBs.creation
Scale in the GSSS bond market will require cooperation across development actors. Greater cooperation amongst DFIs and MDBs on bundling projects in sectors, and across regions, would
not competition, is required. The DFIs and MDBs must bring more projects to market in key countries and sectors. The GSSS bonds need to support MDB or DFI activities, including investments in LDCs and social sectors. The resulting capital should have the same goals as Official Development Assistance: leaving no one behind. Donors can be key actors in supporting DFIs and MDBs as issues of GSSS bonds and through blended finance and capacity building advance the pipeline of projects.
Asia VenturePacificCapital — Jakarta’s Rainforest Replacement Comes with Challenges > A purpose-built city is about to be constructed in Indonesian jungle…butistheprojectviable?
Indonesia: Jakarta
By Brendan Filipovski
“leapfrog” developments with patches of richer neighbourhoods and modern roads surrounded by villages-cum-slums with narrow streets. This contributes to the notorious traffic congestion, which in turn contributes to air pollution that is comparable to New Delhi or Beijing.
There are also concerns over the green bona fides of the project; the finished capital will be twice the size of New York city, and will require the clearing of a sizeable chunk of rainforest.
Theproblem.population
Jakarta is sinking by 1.8cm to 4.9cm a year, depending on the area. Fresh water shortages are expected by 2040. By 2050, a third of the city could be permanently underwater. The main cause is the increasing amount of groundwater being used by the population, shopping centres, and other new developments. Jakarta is like a sponge floating on water — with the water level falling. Rising sea levels are compounding the
The government also hopes the project will spur regional development. Two-thirds of Indonesia’s population live in Java, producing around 60 percent of GDP. Kalimantan, by contrast, is sparsely populated and represents just 1.3 percent of the national population. The new capital will also provide a boost to the postpandemic Kalimantan,economy.alongwith
B
This most often happens as a result of regional development or a desire to strengthen national identity. Both factors are true for Indonesia as it looks to build a new capital to replace the sinking city of Jakarta.
"Early plans show a futuristic city with wide, tree-lined boulevards, cycle paths, and an elevated light rail system; 80 percent of commuter routes will be by public transit, bicycle, or foot."
Regardless of what happens with Nusantara, time is not on the side of Jakarta. With or without a move, the federal and provincial government will have to wrestle with a rapidly sinking city. Public sentiment for Nusantara may turn as the tides keep rising in the streets of Jakarta. i
The president also must manage public sentiment about the move. A petition opposing the new capital has been circulating, and there is also the question of Indonesia’s weakened post-pandemic finances. But political support for Nusantara remains strong.
show a futuristic city with wide, treelined boulevards, cycle paths, and an elevated light rail system; 80 percent of commuter routes will be by public transit, bicycle, or foot. In Jakarta, mass transit accounts for 12 percent of commutes. The new city will be surrounded by rainforest, with a generous smattering of green spaces. Construction will be required to be ecofriendly, and buildings energy efficient.
Widodo, however, has closely tied his legacy to the new capital — and should be sufficiency invested to ward off any corruption excesses. He recently appointed Bambang Susantono, a former transport minister and a non-aligned political figure, to lead the Capital City Authority.
For the federal government, the new capital offers a chance to reset: the opportunity to build a modern and ecologically sustainable city. An oasis in the rainforest, far removed from Jakarta’s Earlymorass.plans
In January, Indonesia’s parliament passed the law to establish Nusantara. The name means “archipelago” in Bahasa Indonesian; it is sometimes used as an alternative name for the nation of 17,508 islands. Nusantara will be built between Balikpapan and the East Kalimantan provincial capital of Samarinda. Kalimantan is the Indonesian part of Borneo, north of Java and Jakarta and shared between Indonesia, Malaysia, and Brunei.
It was never designed to be the megalopolis it has become. Can the new capital of Nusantara escape the problems that beset Jakarta, and position Indonesia for a new era of growth?
"The new capital has a central function and is a symbol of the identity of the nation, as well as a new centre of economic gravity," said planning minister Suharso Monoarfa. The main plan is to move all government agencies, the presidential palace, and the administration of the military and police to Nusantara — more than 200,000 employees. Embassies would also be encouraged to relocate there. The central bank and other institutions that work closely with the private sector would stay in Jakarta, the commercial
is dependent on groundwater because of the limited coverage of the water utility: only 32 percent of the population’s needs are met. The patchwork coverage reflects colonial priorities which favoured Dutch residents and their main supporters.
uilding a new capital is a grand idea, but one that should not be taken lightly.
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Jakarta suffers from several natural and manmade problems. It is built on a river delta with 13 distributaries. These often swell with monsoonal rains and regularly flood the city. In earlier times, this made the city prone to malaria and cholera outbreaks. In modern times, the flooding has contributed to subsidence.
the new capital can be realised in all its futuristic and ecological glory. It could certainly be a lasting legacy for the nation, and President Indonesia’sWidodo.plansto
Sulawesi to the east, lies in the middle of the archipelago nation. Building a capital in East Kalimantan would provide a more geographically central location, an important consideration for a sprawling nation.
The new capital represents the country’s largest infrastructure project — and that brings temptation in its wake. In January, the governing official for the area where Nusantara will be built was arrested for corruption, along with several other public servants. International watchdogs point to the recent weakening of law enforcement institutions overall.
East Kalimantan is mostly powered by coal-fired power plants, so a new city in the province could lead to increased GHG emissions. But the net result for Indonesia may be close to zero — most of Jakarta’s power is also from fossil fuels. The new capital will just swap one fossil fuel power station for another. There will clearly be an increase in air travel, and thus pollution, as ministers and public servants shuttle back and forth between Jakarta and TimeNusantara.willtellif
Buildinghub.
move its capital is not unique, even in the region. Myanmar and Malaysia have successfully built new capitals this century. The US, Brazil and Australia have also reaped the benefits from building purpose-made capitals. This includes developmental and nation building benefits.
The new capital will be around two hours by plane from Jakarta. Around 30 percent of the island is covered by rainforest. Some $32.4bn has been earmarked for construction; work is expected to begin in July. By 2045, Nusantara is forecast to be a city of 1.5m people; Jakarta has 10m, with 30m more in the greater metropolitan area.
This colonial legacy is also evident in the development of Jakarta’s neighbourhoods and infrastructure. The city is a patchwork of
President Joko Widodo first floated the idea of a new capital in 2019. Jakarta has been the capital since independence, and was the ruling city under the Dutch, who called the city Batavia. But even then, people were moving to the outskirts to escape the city crush.
a new capital does come with certain challenges; waste disposal and corruption are notable issues. In the past, they have hampered infrastructure projects, and some have failed because corruption has nibbled away at funding.
“We believe the investment returns and the sustainability principles will eventually align, in a similar way to the law of supplyand-demand. Companies that are inline with ESG themes, and have strong governance, are likely to see growth in
AmInvest has been recognised with numerous awards, including one from CFI.co, as an all-round fund manager.
A
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AmFunds Management Berhad’s CEO says she has noticed strong emerging trends towards Environmental, Social and Governance (ESG) investment. “Investors are also becoming more aware of the need for sustainability for the global community,” she says, “and are aligning their values and beliefs accordingly in their investments.
Malaysia: Kuala Lumpur
AmInvest is the brand name for the funds management business of AmFunds ManagementBerhadandAmIslamicFundsManagementSdnBhd.
Sincevalue.”May
Based in Malaysia, AmInvest has 40 years of experience managing unit trust funds, wholesale funds, institutional mandates, exchange-traded funds (ETFs) and private retirement schemes (PRS) — encompassing conventional and Shariah-compliant funds.
2021, AmInvest has launched four sustainable and responsible investment (SRI) qualified funds under its Sustainable Series: Positive Change, Climate Tech, Nutrition, and Health Funds. More funds are in the pipeline.
Goh Wee Peng says the firm works hard to pursue excellence in everything it does, and aims to outperform in our funds against peers and benchmarks. i
> Conventional and Shariah-Compliant Funds Guided by Deep Expertise
Malaysian fund-management firm AmInvest has four decades of experienceinthesector.
mInvest is the funds management arm of AmFunds Management Berhad and AmIslamic Funds Management.
>
or nearly a decade, Chinese President Xi Jinping has been promising to deliver “the great rejuvenation of the Chinese nation.” This promise – which he dubbed the China Dream – took a clearer form with the introduction of the two centenary goals: building a “moderately prosperous society” by 2021 (the centennial of the founding of the Communist Party of China,
CPC) and becoming a “modern socialist country” by 2049 (100 years after the founding of the People’s Republic). Now, China is one centennial down – and, according to Xi, it has achieved its first goal. Is the China Dream within reach?
F
Lee Jong-Wha: Is Pax Sinica Possible?
While the second centenary goal specifies goals like strength, prosperity, democracy, harmony, and cultural advancement, it also represents a
vision of China as a global economic and political power. Ultimately, Xi seems to want to build a Pax Sinica, which would compete with – and even replace – the Pax Americana that has prevailed since the end of World War II.
These are ambitious goals. But China is no stranger to ambition – or achievement. While the CPC made serious mistakes during the
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The external environment is not helping. To sustain economic growth – and thus the CPC’s legitimacy – China must retain its position as a major global manufacturer. It needs to continue securing raw materials and intermediate goods, such as semiconductor chips, through a stable global supply chain, and it must continue exporting finished products to the US and other global markets. This will be very difficult to do, unless China can find a painless way out of its ongoing trade and technology war with the US.
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People’s Republic’s early years, it has since led the country in a remarkable economic and social transformation. For more than three decades, China achieved double-digit annual GDP growth. Hundreds of millions of people were lifted out of Thispoverty.transformation was made possible by “capitalism with Chinese characteristics” – a
to the sociologist Seymour Martin Lipset’s modernisation theory, the growth of an educated middle class often leads to democratisation, as this group demands the rights, liberties, and political participation they come to realise are possible. That is what happened in Korea in the 1980s, and the same could happen in China, though it is difficult to predict what could catalyse such a shift, and when.
China’s record proves that an authoritarian political system does not preclude development and in fact can drive rapid progress. In fact, on the question of which political system – dictatorship or democracy – is better suited to economic development, the evidence is ambiguous.
system that has proved far more effective and durable than many expected. The Chinese state played a central role in mobilising resources, building national infrastructure, supporting export firms, and facilitating inflows of foreign capital and technology.
All of this could undermine the CPC’s legitimacy. With GDP growth flagging, widening income and wealth disparities across regions and social groups threaten to fuel popular frustration, and even political unrest. And this comes at a time when the CPC’s capacity to impose its will is dwindling, largely because of the Party’s own success in creating a strong middle class, which now comprises more than 700 million people, and it is growing fast, not least because of rapidly expanding education. Over the last 20 years, the enrollment rate in tertiary education skyrocketed, from 8% to According54%.
Lee Jong-Wha, Professor of Economics at Korea University, was chief economist at the Asian Development Bank and a senior adviser for international economic affairs to former South Korean President Lee Myung-bak.
This does not, however, guarantee that the China Dream will become reality. As many commentators have pointed out, China faces tremendous internal and external challenges, which could hamper economic development and fuel political instability.
China’s leaders are cracking down on those that defy them – most notably, Alibaba founder Jack Ma (for publicly criticising government regulation) and ride-hailing platform Didi Chuxing (which flouted the government by going public on the New York Stock Exchange). But, while tech giants do need to be better regulated, this harsh approach could impede entrepreneurship and stifle innovation.
Today, China’s per capita income – $10,484 in 2020 – remains far below that of advanced economies, such as Japan ($40,146) and the United States ($63,416), and the chances of continued rapid gains are fading. The GDP growth rate in 2012-20 averaged 6.5% per year – far short of the double-digit figures of the past – and it is expected to decline to 3-4% over the next 30 Moreover,years.China’s fast-growing private sector could pose a challenge to China’s state-capitalist model. Already, large private enterprises are reluctant to follow government directives as they once did.
Daron Acemoglu and James A. Robinson have made the case that “extractive political institutions,” in which political power is concentrated in the hands of a small group of people, lead to “extractive economic institutions,” in which the ruling class exploits the majority. The result, they argue, is weaker incentives for most economic agents to engage in productive economic activities.
Yet China’s extractive political institutions have built inclusive economic institutions. Like authoritarian governments in East Asia – such as Lee Kuan Yew’s regime in Singapore and Park Chung-hee’s government in South Korea –China’s one-party, authoritarian government used its power to implement good economic policies, thereby achieving both political stability and strong economic growth.
Finally, to gain the world’s respect, China will need to start upholding democratic values and norms, and cultivating peaceful relationships with other countries. Pax Americana has survived for so long, because many countries, including China’s neighbors, rely heavily on the US for trade, finance, technology, and security. They will be reluctant to accept Pax Sinica, unless China offers them something better. And that must begin with pax. i
ABOUT THE AUTHOR
For starters, after decades of strict familyplanning policies, China’s working-age population is set to shrink by 170 million over the next 30 years. Meanwhile, rates of return on investment have fallen, productivity growth has stagnated, and China’s underdeveloped financial system does not necessarily allocate resources to the most productive uses, with unprofitable “zombie” enterprises and highly indebted local governments receiving far more than they should.
he challenges couldn’t be clearer. Covid-19 was just as much a public health nightmare as anywhere. Nonetheless Uzbekistan was one of the rare nations which managed economic growth in 2020 (1.6 percent in GDP according to the World Bank), followed by a robust 7.4 percent in The2021.warin
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Despite a pandemic, a European war involving its closest trading partner and the growing threat of a global recession, Uzbekistan is forging ahead with a privatisation program which, it’s hoped, will power its economy into middle-income status.
assets, and a series of changes to capital market rules. Meanwhile, managements of the leading state companies have been going through a quiet revolution, with internationally trained technocrats and ex-bankers inserted to help them navigate through unfamiliar waters.
The National Bank of Uzbekistan is aimed for partial privatisation.
By Fred Harrison
Things are different this time. Major government reforms have been underway since 2016, when the current president was first elected. The privatisation programme and roadmap were unveiled in detail in 2021. Since then, big steps have been undertaken -- a new securities regulator, new agencies responsible for saleable
In the Face of Grim Challenges, Uzbekistan Forges Ahead on Privatisation
T
The process has been remarkably uncontentious, unlike in India where a parallel privatisation programme recently led a local analyst to observe:
Then there is the global economy to contend with. The IMF is projecting a sharp deceleration world-wide for this year and next -- to roughly 3.6 percent growth in 2022 and 2023. The Fund, the World Bank and EBRD are all projecting a sharp slowdown for Uzbekistan, to 3.6 percent growth according to the World Bank. Yet the Uzbekistan Statistics Committee is reporting Q1 2022 growth of 5.8 percent.
All and all, Tashkent, under the presidency of Shavkat Mirziyoyev, is starting to gain confidence in its capacity to surprise international analysts. Mirziyoyev’s predecessor, the authoritarian Islam Karimov, tried a major privatisation programme in 2007. It failed dismally. In essence, state assets were put up for sale on an as-is basis, with few pretences concerning corporate governance or financial probity. The Karimov regime may or may not have felt privatising state-owned companies could be good for the economy, but it was eager for cash. In the end only a few minor assets attracted any interest. All the big enterprises stayed firmly in state hands.
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“Every political party, when in government, promotes privatisation — and opposes it when in the opposition.”
Ukraine has left Uzbekistan confused and worried, albeit as it sticks to its refusal to take sides in the conflict. In normal times, officials would have expected roughly a quarter of all capital inflows, either in equity or debt, to come from neighbouring Russia. That prospect has been largely dashed by the West’s sanctions, although some government insiders think a continuing influx of Russian businesses and entrepreneurs may partly offset the decline.
In all, an eyebrow-raising 620 state-owned enterprises will be put up for sale in whole or in part over the next three years or so. Of these, about 15 are widely regarded as world-class companies, from Navoi Mining, owner of the world’s largest gold mine, to Uzbekneftegaz, the
• Leading gold miner
• White & Case - legal
Although the most high-profile of assets are yet to be auctioned, many smaller transactions have already taken place. Control of Coca-Cola Bottlers Uzbekistan, for example, the largest beverage bottling company in Uzbekistan was acquired late last year by a Turkish bottler. Majority control of the largest cement producer, Qizilqum Cement, was bought recently by a Cyprus-registered but Central Asia owned shareholder group.
A key part of the infrastructure is the domestic banking industry, heavily dominated by stateowned banks. The goal is to reduce state ownership in banking from 60 percent currently to 15 percent. Deals for 75 percent of Poytaxt Bank and 100 percent of Ipoteka Bank are already in negotiation and full or partial privatisations are expected on at least five other major banks, including the largest, National Bank of Uzbekistan, by 2025.
A professional journalist, Fred Harrison is a Managing Director at Belgrave Strategic Communications, a London-based consultancy, and has worked with Uzbekistan for the past three years.
JSC Uzmetkombinat
The Finance Ministry is eager to improve the situation, particularly through the development of an institutional investor base. This will take time. Persuading domestic investors to switch from term deposits to shares or bonds will not be easy, but some companies are already conducting domestic road shows with this in mind.
Fred
Throughout the sector, new managers are being recruited and international standards adopted.
• EY Global - international audit
Almalytk Mining
• Auto manufacturer
• 2020 revenue $2.6 billion
Author: Harrison Regency
• Rothschild & Cie - financial consulting
• Leading iron & steel producer
• 2020 revenue $2.3 billion
• 2020 revenue $4.4 billion
• Copper, gold, silver and zinc reserves
But it has not been solely about auctioning off shares. The Ministry of Finance is seeking to build all the infrastructure needed for a functioning capital markets ecosystem. So, for instance, some of the flotations will be undertaken domestically at first before being taken global. That is in part to give the companies time to organise the internal reforms and restructuring needed. But it is also to attract domestic capital and to raise local liquidity. Foreign banks are being permitted to participate in domestic IPOs without licensing.
UzAuto Motors
• Assets approximately $8.3 billion
Source: Bluestone Investment Bank
• 2020 revenue $527 million
• PwC - corporate governance
nation’s oil and gas flag carrier and contributor of 15 percent of Uzbekistan’s GDP.
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National Bank of Uzbekistan
ABOUT THE AUTHOR
Hyatt
In other words, while the primary aim of Uzbekistan’s privatisation programme isn’t necessarily to fatten state coffers, the Uzbekistan treasury is in fact benefiting from the programme, even now, before the biggest selloffs begin. In the first half of this year alone, the state is expected to gain at least three trillion SOM ($270 million) from small-scale sales, including of about 5,300 hectares of vacant land. i
• Boston Consulting Group - strategy development
consultants are actively pitching for work. For instance, oil and gas giant Uzbekneftegaz, planning a primary share placement in 2023, has engaged:
Hotel scheduled for 100 percent privatisation.
The same can be said of the nation’s heavily state-dominated energy sector. International
MAJOR PRIVATISATION PROSPECTS
Navoi Mining
• 2020 revenue $2.2 billion
Even so, some of the coming IPOs will have to occur abroad, most likely in London. There is simply too little domestic capacity.
• Largest universal bank
• Oil & gas flagship
Uzbekneftegaz
There has already been an impact on neurodegenerative diseases, for example the digital medical application of instrumental activities of daily living (iADL), a predictive biomarker of conversion from mild cognitive impairment due to Alzheimer's disease to dementia in individuals aged over 55.
Despite the great promise, multiple factors — demographic, genetic, and phenotypic — can influence the status of biomarkers and their predictive value.
Gender and sex have a prominent role in the development of many medical conditions. But sex interactions are not always properly addressed in clinical research, which could negatively impact the generalisation of results.
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Increasing digitalisation and the emergence of more precise sensors have ushered in the era of digital biomarkers. The word “biomarker” normally indicates any type of measurement or indicator that marks a biological state of the system, e.g. as blood values or vital signs. Unlike traditional biomarkers, digital biomarkers are objective, quantifiable physiological and behavioural data collected and measured by portables, wearables, implantables, or digestibles.
The digital revolution draws similar parallels. There has been growing capacity in systems biology and medicine to decipher the biological complexity and evolution of diseases. Coupled with access to information and growing interest in patient empowerment via consumer-driven healthcare and social networks, this is heading towards the “4Ps” in medicine;: Preventive, Predictive, Personalised, and Participatory.
Women’s Brain Project & Altoida announce results highlighting sex-based differences. By Nicola Marino & Alberto Ferrari Tech advances bring precision to genderspecific medical treatments, as well as disease predictionandprevention.
Digital biomarkers can enable high frequency, longitudinal and objective measurements. They can monitor patients in real-time to assess response to therapy and disease progression — without the need for clinical evaluation. They often show greater prediction and identification sensitivity than traditional methods.
The increasing integration of digital tools in healthcare will improve disease prevention, diagnosis, and treatment. Core drivers include the emergence and consolidation of care needs at individual and population levels, and the advance of machine learning and AI.
T
Sex is a crucial source of Alzheimer's heterogeneity and a promising target for personalised care. Considering gender in predictive diagnostics, targeted prevention, and gender-specific considerations in clinical trials allows for better diagnostic and prognostic stratification accuracy. It can also accelerate targeted drug development.
One of the key elements to boost understanding of the impact the technology will have is the distribution of information and communication technologies, or devices capable of acquiring, processing, and transmitting information. The smartphone is key. There are 6.6 billion smartphone users, growing at an annual rate of 4.9 percent — 2.9 billion more than in 2016, says the market research report Statista 2022.
According to trends, by 2027 that figure will hit eight Internetbillion.use
The Connected Self: The Era of BiomarkersDigitalinNeurology
has also grown in recent years. In April 2022, 63 percent of the global population — roughly five billion users — was connected. Of that number, 4.65 billion are on social media. The internet penetration rate is the highest value in Northern Europe, some 98 percent of the Wearablepopulation.devices are equipped with sensors that can capture healthcare information in real-time. These portable devices have a higher processing power Moore's Law predicted exponential growth in the computing capacity of microprocessors. This has enabled smaller, more affordable devices.
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he future of medicine will be driven by connected, portable — even ingestible — devices capable of acquiring information with AI-driven, real-time analysis.
Deciphering the genetic code is one of the greatest medical achievements. The entire project cost for the Human Genome Project was around $2.7bn. The human genome contains six billion letters. The first cost about a billion dollars to sequence. Now it's less than $1000, so a one-million-fold reduction.
applications add insight in specific fields of personalised care such as gender medicine, shedding light on the interplay between sex and the prevention and prediction of complex pathologies. The advances increase the understanding and treatment of diseases, and can address sex-related disparities in healthcare for a medicine that is more effective, and more just. i
The Women's Brain Project group suggests that the influence of sex on disease fades with the severity of the illness. It could be hypothesised that men and women differ in several characteristics at baseline, while these are progressively equalised with the progression of clinical symptoms over seven to 10 years.
Summer 2022 Issue 139
Women's Brain Project, Guntershausen, Switzerland
Promising biomarker-based digital technology for early diagnosis of Alzheimer's was used to achieve this goal, using a digital cognitive assessment provided by Altoida, which is known as the neuro-motor index (NMI), which leverages a range of smartphone- or tablet-based activities using augmented reality and finger motor activities to simulate live daily instrumental activities.
Alberto Ferrari Altoida Inc., Houston, TX, United States Women's Brain Project, Guntershausen, Switzerland
Swiss-based research group the Women's Brain Project reported a research study that explores using data from digital biomarkers to identify differences in neurocognitive performance based on gender.
Sex and Gender Bias in Technology and
Precision Medicine could guide clinical practice by improving choices for prevention, diagnosis, and treatment options.
Thetools.new
Nicola Marino
ABOUT THE AUTHORS
Data analysis revealed that healthy males and females have detectable and unexpected differences in neurocognitive performance when evaluated with Altoida. The result is surprising, as it suggests that ignoring the complex interaction between gender and predictive digital biomarkers could compromise the early detection of disease.
Predictive Medicine: gender differences could enable more accurate predictions, critical to planning therapy and treatment options.
Artificial Intelligence:BiomedicineandHealthcareApplicationsHardcoverISBN:9780128213926eBookISBN:9780128213933
The future of research and patient care in general — and in dementia and neurodegenerative diseases in particular — is likely to be dominated by new digital
These findings can impact: Research into the pathophysiological mechanisms of Alzheimer’s, based on sex differences, with opportunities for personalised treatment.
Reading
High-quality education a right, not a privilege, for all, and especially girls.
This requires long-term investments. In Finland, teachers are recognised as key to an education system’s success. They are skilled, motivated, and given professional autonomy. All teachers have a master’s degree that includes pedagogical training connected to practice, and their education is research-
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LONG-TERM INVESTMENTS
Thisbased.is
ince the start of the pandemic, the global learning crisis has expanded to become a crisis threatening education budgets, increasing learning poverty, widening inequality, and undermining sustainable development.
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education must be leveraged in green and digital transformations, and in promoting global citizenship, human rights, peace, and tolerance. It is time to make high-quality education a right, not a privilege. High-quality education must reach people with disabilities, and those living in poor, conflict-affected and disaster-prone parts of the world.
DEVELOPING TEACHERS
not to say one size fits all — but it should inspire and encourage a global re-imagining of education. Rethinking teacher policies is necessary; these must focus on attracting the best candidates and supporting them with motivation and professional development. Gender equality and female leadership must be strengthened to highlight the crucial role of female teachers and girls’ participation.
The first step is to comprehensively develop teacher pre-service education systems. Research-based and practise-orientated university-level teacher education is crucial. So is continuous and tailored school-based professional development.
According to UNESCO, the learning outcomes of some 1.6 billion children have been affected by school closures. It is time for urgent action in Asia and the Pacific to transform education and renew the region’s commitments to building resilient, inclusive, and equitable education
Asian Development Bank: Education Has Become ‘Engine of Sustainable Development’
AsiaandthePacificmusttransformeducationandrenewtheregion’scommitmentstoequitableeducationsystems.
By Ville Skinnari and Woochong Um
S
Countries in Asia and the Pacific should do away with traditional, more authoritarian, and rigid models of teaching and learning.
Thesystems.roleof
Countriesoutcomes.in
Vietnam has raised the quality and attractiveness of its teacher education by making it universitylevel. This has improved student learning
Let’s use the power of holistic education as an engine in doing so. i
The time has come to build forward, better, and greener. Investing in teachers, developing different approaches to teaching and learning, embracing the use of technology, and taking a whole-of-system-approach can help to tackle the education crisis that is unfolding.
and distance education became necessary as a response to the pandemic. It also ensured continued education in times of conflict and crisis. In Singapore, the government plans to enhance education with technology based on experience gleaned from the pandemic.
But making full use of technology requires flexible curricula and skilled teachers with the necessary competencies and resources. Investing in skills is crucial to ensuring that teachers can use tech-enabled analytics to continuously assess student learning.
Effective pedagogical practices are at the heart of improving learning outcomes. So, schools and teachers must contextualise and adapt teaching and learning to meet student needs, focusing on self-directed learners. Learning is not only for passing exams. It requires simplified curricula that support flexibility and a focus on 21st Century
ABOUT THE AUTHORS
Author: Ville Skinnari
Making full use of technology, including the promise of personalised learning technology in education requires flexible curricula and skilled teachers.
Teacher policies must focus on attracting the best candidates to the profession and supporting their motivation and professionalisation.
Equitable, inclusive, and quality education requires governments to look at the entire system, including learning and student well-being. It is essential that students can access adequate health, hygiene, water, and sanitation facilities.
Summer 2022 Issue CFI.co | Capital Finance International 141
Asia and the Pacific should do away with traditional, authoritarian, rigid teaching models, and develop a different approach.
Woochong Um is Managing Director General of the Asian Development Bank.
Ville Skinnari is Minister for Development Cooperation and Foreign Trade of Finland, and a global champion for school meals.
There is global momentum in recognition of the importance of school meals. Ten Asian countries, including China, Japan, Pakistan and the Philippines, are among 60 worldwide to join the Global School Meals Coalition.
Author: Woochong Um
HARNESSING TECHNOLOGY
Teachingskills.and learning need to adapt to new environments, including digital technology. Flexible education systems are more resilient,
ADB was founded in 1966 and is headquartered in Manila. ADB is composed of 68 members, 49 of which are from Asia and the Pacific. The organisation assists its members and partners by providing loans, technical assistance, grants, equity investments, and knowledge 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.
ABOUT ADB
The first half of 2022 has been traumatic. Equity markets have suffered one of their worst six-month periods ever. Government bonds are undergoing a rare, significant decline. And the world of cryptocurrencies has experienced the rude awakening that many had long predicted for it.
Jim TheO’Neill:Dollar Rules
"Historically, the dollar’s strength has usually started to reverse when the sitting US Secretary of the Treasury declares that the currency is too strong and raises the possibility of a US intervention in the market to weaken it."
But now that the US Federal Reserve is tightening monetary policy to try to bring inflation back under control, investors once again appear to be
That leaves two other possibilities. One reason why the dollar’s rule lives on despite what is happening in the US and the world is that there are no significant strategic alternatives to it. The euro, for example, suffers from persistently recurring issues stemming from the makeup of its member states, not to mention the absence of a single euro bond that encompasses the entire Someunion.
commentators would argue that the Chinese renminbi represents a plausible alternative. But until China encourages more widespread use of its currency and allows that usage to be liquid and free, the renminbi cannot pose a major threat to the dollar’s hegemony. True, at their annual conference this year, the BRICS (Brazil, Russia, India, China, and South Africa) discussed how they might promote wider use of their currencies. But we have heard this talk before, and there is little reason to think that such lofty ambitions will be realised anytime
Consider the 1985 Plaza Accord, whereby France, West Germany, Japan, the United Kingdom, and the United States agreed to intervene in currency markets to weaken the dollar against the franc, Deutsche Mark, yen, and pound. Or consider US Secretary of the Treasury Robert Rubin’s public reversal from a strong-dollar policy in 1998, and US authorities’ decision to tolerate a sharp depreciation of the dollar against the euro in the early 2000s. In all of these cases, policymakers stepped in to engineer or assist a dollar decline.
I suspect that those who do decide to sell their dollar holdings today will be happy with that decision in a couple of years. But I would advise them not to follow the currency’s minute-by-minute trading performance in the days after they make their move. Down that road lies only angst and second-guessing. i
et soaring above all the financial-market turmoil is the US dollar, which is now the strongest it has been in 20 years, having appreciated against many other currencies, including the euro. From a standard currency-valuation perspective, the dollar has reached the point at which many investors might seriously consider selling it. It is probably around 20% overvalued against most major currencies such as the euro and yen, and that simply does not happen very often.
"The dollar’s current strength might seem remarkable, considering the fractiousness of US politics and some of the structural issues facing the US economy."
Historically,soon.
Y
The dollar’s current strength might seem remarkable, considering the fractiousness of US politics and some of the structural issues facing the US economy. From endlessly recurring balance-of-payment and current-account deficits and an aggressive stance against major foreignexchange-reserve holders to culture wars over guns and abortion, there is more than enough to keep US society at a boiling point.
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the dollar’s current overvaluation, it could strengthen even further unless some new headwinds appear. What could these be? First, and most obviously, the Fed could decide that it got things wrong and suddenly start easing its policy stance again. Such a move might seem unlikely; yet it is worth noting that the US bond market is undergoing a dramatic reversal, and the US money market is now starting to price in Fed interest-rate cuts (from levels higher than they are today) beyond this year. As a very successful macro-fund manager once said to me, if there is one thing that you can be sure about with the Fed, it is that it will change its views at some point.
the dollar’s strength has usually started to reverse when the sitting US Secretary of the Treasury declares that the currency is too strong and raises the possibility of a US intervention in the market to weaken it. I have no doubt that this could happen once again under Janet Yellen – though, until there is more evidence of declining inflation expectations, it might be a bit early for such a Inmove.anycase,
favoring the dollar as their safe haven. In theory, higher inflation in a country is supposed to erode its currency’s purchasing power. But under today’s conditions (as in so many other periods I experienced during my days as a currency analyst), markets have a choice of betting on the Fed getting inflation under control or investing elsewhere in an uncertain world. For most, the choice is Moreover,obvious.despite
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But I would hasten to add that currencies usually don’t reverse course for valuation reasons. Rather, it normally takes action by policymakers to trigger a decline.
A second possibility is that other major central banks start to outpace the Fed with their own policy tightening, as has happened during previous periods of dollar decline. But, given the state of most other economies, this scenario seems unlikely.
A BRIEF HISTORY OF TIME GETS A NEW CHAPTER
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.
Summer 2022 Issue CFI.co | Capital Finance International 143
“I have wondered about time all my life.” - Professor Stephen Hawking
The first of its kind MC20: Fuel consumption (l/100 km): combined 11.5 - CO2 emissions (g/km): combined 261 - Efficiency class: G The stated energy values correspond to the WLTP standards. CO2 target value 118 g/km, average CO2 emissions 169 g/km. THE NEW MASERATI MC20 - A TRUE OBJECT OF DESIRE Discover more on maserati.ch
