Investment Times Newspaper 2023 Edition | Issue 13

BoG defends financing of gov’t expenditure for last year

Engen, Vivo Energy merge their Africa businesses

The combined group will have over 3,900 service stations and more than two billion litres of storage capacity across 27 African countries.

Engen is the clear market leader in South Africa with about 1,300 service stations across seven African countries while Vivo Energy on the other hand is a major pan-African retailer and distributor of fuels and lubricants to retail and commercial customers, with over 2,600 service stations across 23 African countries using the Engen and Shell brands. further noted that “PETRONAS will sell its 74 per cent shareholding in Engen to Vivo Energy at completion.

The Phembani Group, PETRONAS’ long-standing partner in Africa and Engen’s B-BBEE shareholder, is continuing its strong association with Engen and will remain invested as a 21 per cent shareholder in the South African business.”

The transaction is expected to further benefit employees of Engen through a newly implemented five per cent employee share ownership programme, resulting in Engen South Africa being 26 per cent owned by pre-

ported the bank’s financing of the government in 2022 as a crisis management tool to help keep government machinery running and the economy together.

BoG said while the IMF and the central bank saw the lending to be “suboptimal,” “it was agreed that this temporary arrangement was needed.”

financing of the government in 2022 that it was inaccurate that the IMF came and uncovered the extent of the deficit financing.

The central bank has come under pressure in recent times over its decision to support the government’s budget in 2022, with some describing the decision as reckless.

On a net basis, the BoG last year

Burkina Shippers Council opens

in Ghana to boost transit trade

The Burkina Faso Shippers Council has opened an ultramodern office complex at the Tema Port enclave to facilitate transit trade between Ghana and Burkina Faso.

Al Hassane Sienou, the Board Chairman, Burkina Shippers

Council, said the office was built as part of a vast infrastructural programme embarked on by the governing body of the Council through its strategic development plan.

Mr Roland Somda, the Minister of Transport, Burkina Faso, said the

is more inflation complexity ahead

By Mohamed A. El-Erian

Ghana Investment Fund for Electronic Communications (GIFEC), an Implementing Agency of the Ministry of Communications and Digitalisation responsible for programmes to close the Digital Divide, has been commended for its strong operational and financial position by a member of the Public Accounts Committee (PAC) of Parliament –Isaac Yaw Opoku –Member of Parliament for Offinso South Constituency, who led the review of GIFEC's statement of operations and financial position by the PAC, on 3rd February, 2023.

He observed that GIFEC posted an impressive

CFAO expands Mercedes-Benz distribution network in Africa

CFAO expands Mercedes-Benz distribution network in Africa    CFAO is expanding distribution for luxury automaker Mercedes-Benz in four more African countries: Cameroon, Côte d’Ivoire, Ghana and Senegal.   These four markets add to the existing CFAO Mobility network of Mercedes-Benz dealerships, established over the course of a 23-year partnership with the German brand, which is cementing its position as a leading manufacturer with a pivotal role to play in shaping future mobility solutions.   Distribution network growth in these four African countries dou -

bles CFAO Mobility’s coverage

and confirms its drive to continue developing this key partnership at the premium end of the market.

Back in 1999, CFAO Mobility acquired a number of Mercedes-Benz dealerships in Kenya and Tanzania, then extended the

network to Mauritius and Madagascar in 2016.

Mercedes-Benz vehicles are now sold in eight countries. They include a fully customizable range of sedans, SUVs and vans featuring iconic models like the C-Class, the GLE and the S-Class. CFAO Mobil-

BoG defends financing of gov’t expenditure last year

financed the government to the tune GH¢44.5 billion.

The bank in statement said the IMF team assessed it to be necessary but part of a comprehensive solution to be addressed in the government’s economic policies and programmes to be supported by the IMF.

By Benson Afful

The statement signed by the Secretary of BoG, Ms Sandra Thompson, also explained that the crisis that the country found itself in last year meant that the central bank lending was critical “to avert a disorderly default of both servicing for domestic and external debt.”

It noted that the funding helped to

finance critical imports to keep the economy on the stable path.

The bank said it was compelled to re-state its earlier assessments on the matter and address misinformation and inaccuracies while helping to anchor the discussions in the public domain.

PAC commends GIFEC for its prudence and strong liquidity position

7.2% increase in surplus of income over expenditure, compared to the previous year, significantly improving its liquidity, as a result.

He concluded that GIFEC's “financial position is very good.

Non-current assets increased by 14.5%, current assets by 20.1%. Their liquidity position is very strong and (has) even improved over the previous year. In fact, they did well and need to be commended.”

On progress of the Ghana Rural Telephony and Digital Inclusion Project (GRT&DIP), GIFEC’s flagship project, Mr. Prince Ofosu Sefah, Administrator (CEO) of GIFEC commented about its unprecedented nature, as begun in late 2020.

He mentioned that 473 out of the 1,008 (50% of the planned 2,016 Rural Mobile Sites

being deployed by the Project) have completed and are active and delivering voice and data services to citizens.

He assured the Committee that plans are far advanced and efforts are being expedited to resolve all technical difficulties being encountered, to ensure that the remaining Sites are all built and activated this year.

He concluded that equipment for the construction of the remaining 50% of the 2,016 Sites are actually in the country, awaiting funding for deployment, which is expected in the near-future.

The GRT&DIP forms part of GIFEC’s flagship Rural Telephony Programme, which is funded by the Government of Ghana (GoG), through a strategic agreement with Huawei and China National Technical Import & Export Corporation

Engen, Vivo Energy merge their Africa businesses__

viously disadvantaged parties.

The CEO of Vivo Energy, Stan Mittelman, was quoted in the release as saying that; “Vivo Energy’s focus has been to invest to grow our business, and I am proud that we have more than doubled the size of our network since our formation in 2011.

Four years ago, we acquired the Engen business in nine African markets, and have since worked to enhance and develop these.”

He further explained that Vitol’s acquisition of 100 per cent of Vivo Energy last year brings more opportunity to grow even faster adding that; “Completion of this transaction, which reunites the Engen brand across

(CNTIC), funded by the China EXIM Bank to establish 2,016 Rural Telephony Sites in as many communities across the country, envisioned to provide mobile network coverage to about 3.4 million more citizens. GIFEC supervises the implementation of this Project, working with Technical Partners, on behalf of the Government of Ghana, represented by the Ministry of Communications and Digitalisation (MoCD). This unprecedented Project has been spearheaded by the Minister for Communications and Digitalisation, who also chairs the Board of Trustees of GIFEC, positions she has held since 2017.

Vivo

Andrew Takyi-Appiah, Co-Founder and Managing Director of Zeepay

Africa, will be a step change in our growth and represents a significant commitment to the South African market whilst enhancing Vivo Energy’s portfolio in other important markets.” The Managing Director and CEO of Engen, Seelan Naidoo on his part said; “This is an exciting opportunity for

Engen to build on its market leading position in South Africa and a number of southern African countries.

It allows us to leverage our strong brand equity, leading retail footprint, extensive supply chain capability and unrivalled customer service to be a leading contributor to Vivo Energy and Vitol’s ambition to build a stron -

ger and more successful pan-African energy champion. Engen is excited to become part of the enlarged business and this will set up our business to be stronger and more successful than ever before.”

Engen and

Energy have merged their respective African businesses in a bid to create one of Africa’s largest energy distribution companies.

Burkina Shippers Council opens office in Ghana to boost transit trade

office complex would enhance the Shippers Council’s operations and help it deliver on its mandate.

The mandate includes ensuring regular supply of products and goods to Burkina Faso in the best conditions pertaining to cost, speed, and security.

The Council also assists shippers and protects their interests, which contributes to the competitiveness of Burkinabe export products on the international market, among others.

Mr Frederick Obeng Adom, Ghana’s Deputy Minister of Transport, called for a strengthened collaboration toward the shared objectives of both countries.

This is line with the African Continental Free Trade Area (AfCFTA) objectives, which aimed at, but not limited to, reducing poverty and shared prosperity among member

CFAO

ity also offers a wide array of services throughout its network, including after-sales and OEM parts.

Firmly focused on the future in partnership with Mercedes-Benz, CFAO Mobility is this year preparing for the launch of progressive and intelligent all-electric models in the Mercedes-EQ range and the construction of a fully self-sufficient dealership in Mauritius to rise to environmental challenges and meet the growing expectations of a demanding clientele.

open mind about the trajectory of inflation, including by avoiding an over-simplified transitory narrative that risks obfuscating the real issues facing the US economy.

“Transitory” is a comforting notion suggesting a short-lived, reversible phenomenon. Critically, the concept assumes away the need to adjust behaviors. After all, if an inflation scare is only temporary, the best way to deal with it is simply to wait it out (or, to use a policy and market term, “look through it”). That is why this narrative is particularly dangerous. By encouraging complacency and inertia, it could exacerbate an already serious problem and make it harder to solve.

The US Federal Reserve’s initial response to rising inflation is a case in point. In 2021, the world’s most powerful and influential central bank rushed to characterize higher inflation as transitory. It doubled down on this approach even after the data went against it, refusing to pivot for too long.

The Fed’s repeated mischaracterization delayed crucial policy responses at a time when the persistence of inflation was starting to influence corporate price-setting and workers’ wage demands. As a result, the Fed not only lost credibility but also inflicted unnecessary pain on millions of American households, particularly the most vul-

countries. Mrs Sandra Opoku, the Director of Tema Port, gave the assurance that the Ghana Ports and Harbours Authority (GPHA) would continuously improve on all measures to sustain the transit trade.

The GPHA began with the provision of lands to the transit representatives to build offices and warehouses to support their administrative and operational activities.

She said in a bid to reduce the cost of doing business in Ghana, especially for the transit customers, the GPHA granted rebates on its cargo volumes, and 21 days rent-free for all transit cargo, with automated ports processes to reduce delays.

Source: GNA

Plans are also underway to open other dealerships in Africa—all completely self-sufficient and green thanks to the use of solar panels, in line with the Group’s goal of achieving carbon neutrality by halving its emissions by 2030.

The CFAO Group, Corporation For Africa & Overseas, contributes to growth and industrialisation in Africa while catering to the continent’s emerging middle class.  With a revenue of over €6.9 billion, access to 47 of the 54 coun-

nerable segments of the population. While a few economists have never given up on the transitory inflation thesis, the vast majority already realized last year that it was a regrettable analytical and policy error. That makes the current re-emergence of this narrative even more perplexing.

A recent article in Politico noted that “There is also at least some reason to believe that [the economists and policymakers] who assured [Americans] that inflation would be transitory, including Fed Chair Jerome Powell, might have been kind-of-sort-of right, though the transitory period was just longer and uglier than expected.”

This is unfortunate. Not only does it force a time dimension on an inherently behavioral concept, but it also ignores the fact that the Fed’s initially fumbled response forced it into one of the most aggressive, front-loaded series of interest-rate hikes ever, including four consecutive 75-basis-point increases. Moreover, while US inflation has been slowing, it is dangerous to suggest that the problem is behind us.

Looking ahead to the rest of the year and early 2024, three possibilities stand out for me. The first is orderly disinflation, also known by critics as “immaculate disinflation.” In this scenar-

Vodafone Ghana's 101 year-old customer receives wonderful Vodafone package to connect with greatgrandchild!

tries on the continent, and nearly 21,000 employees, CFAO is a key player in mobility, healthcare, consumer goods, infrastructure and energy.

The Group partners with leading international brands and covers the entire value chain – imports, production, distribution – in line with the highest quality standards, drawing on 170 years of hands-on knowledge and local expertise.

By Mohamed A. El-Erian

io, inflation continues to come down steadily toward the Fed’s 2% target without damaging US economic growth and jobs. The dynamics involve primarily a labor market that avoids excessive wage increases while continuing to anchor strong economic activity. Given what else is going on in the economy, I would put the probability of this scenario at 25%. The second scenario is one in which inflation becomes sticky. The inflation rate continues to decrease but then gets stuck at 3-4% over the second half of this year as goods prices stop declining and services inflation persists. This would force the Fed to choose between crushing the economy to get inflation down to its 2% target, adjusting the target rate to make it more consistent with changing supply conditions, or waiting to see whether the US can live with stable 3-4% inflation. I do not know what the Fed would choose in such a case, but I would put the probability of such sticky inflation at 50%, so I hope it has given this scenario some thought. Lastly, there is the possibility of what we can label “U inflation”:

In a heart-warming moment, Madam Rosina Attoh-Korkoi Konuah, a beloved Vodafone Ghana customer for over 25 years, was gifted with the power of connection on her 101st birthday. The Vodafone team, accompanied by an exquisite bouquet of fresh fruit, presented Madam Rosina with a brand-new smartphone loaded with airtime and data, to enable her to easily

prices head back up late this year and into 2024, as a fully-recovered Chinese economy and the strong US labor market simultaneously drive persistent services inflation and higher goods prices. I would put the probability of this outcome at 25%.

This is not just about multiple scenarios with no single one dominating. It is also about probabilities that must be viewed with caution.

Former US Secretary of the Treasury Lawrence H. Summers captured well the prevailing mood among many economists: “It’s as difficult an economy to read as I can remember,” he recently said.

This sense of uncertainty is evident in the short-term outlook for economic activity, prices, and monetary policy, as well as long-term structural shifts like the clean-energy transition, the rewir ing of global supply chains, and the changing nature of globaliza tion. Heightened geopolitical ten sions also play a role.

Whatever happens, the worst thing we can do is fall back into complacency. Powell, after cham pioning “transitory inflation” for too long, is now warning against it.

“There has been an expectation that [inflation] will go away quickly and painlessly and I don’t think

communicate with her great-grandchild who she’s yet to meet, and to stay connected with family and friends.

As the Vodafone team entered Madam Rosina's room to make their presentation, the room was instantly filled with warmth, laughter and the sound of a family connected by love and community.

Angela Mensah-Poku, Vodafone Ghana’s Director for Digital Transformation and Commercial Operations said, "Madam Rosina is an

that’s at all guaranteed,” he said recently. “The base case, for me, is that it will take some time. And we will have to do more rate increases…”

Simplistic economic narratives, especially comforting ones that entice those looking for shortcuts, often mislead much more than enlighten. This was the case with the transitory inflation narrative that, while discredited in 2021-22, is now reemerging. It is also the case with those who are predicting with a high degree of confidence a US recession (I am not in that camp), only to dismiss it as “short and shallow” in order to regain their economic comfort zone.

old student of Achimota School and has been a loyal customer of Vodafone’s for over 25 years –since the days of Ghana Telecom. From our conversations with her, we learned that she wanted to see her great-grandchild who had been born recently. Both mother and child live abroad, and Rosina was unable to see them because she did not have a way to connect. That’s why we wanted to gift her with a special Vodafone Package and

There is more inflation complexity ahead

expands Mercedes-Benz distribution network in Africa-

CFAO is expanding distribution for luxury automaker Mercedes-Benz in four more African countries: Cameroon, Côte d’Ivoire, Ghana and Senegal

help her connect with her family in a new way.”

A joyous Rosina said the gesture was a demonstration of the company’s commitment to appreciating its long-serving customers.

"She has been a loyal customer for so long, and it is an honour to have her as part of the Vodafone family," said Shirley Konadu Kyere, Vodafone’s Customer Loyalty Manager, who was present during the visit. "She always has a warm smile and kind words for us, and we’re glad we could do something special for her." For close to 14 years, Vodafone Ghana has been present

in the very fabric of Ghanaian culture and way of life; delivering innovative customer-centric solutions and empowering its 7.1 million customers. With unwavering commitment to the needs of customers, Vodafone continues to lead the way in providing unsurpassed customer experiences. Speaking at her home, and amidst her surprise, Madam Rosina expressed her joy and appreciation for the gesture shown by Vodafone. She further encouraged everyone to prioritize staying connected with their loved ones and thanked Vodafone for making it possible for her to do same.

Madam Rosina’s daughter, Sarah, spoke to the Vodafone Ghana team, saying, "She had a lovely day! She was so happy and had us in stitches with her stories. She showed off her presents to everyone who cared to see! Thank you so much for everything." The Vodafone team set up Madam Rosina's new phone and helped her make her very first video call to see her granddaughter. The Vodafone Ghana team urged loyal customers to expect more rewards, visits, and engagements in the coming months.

The Africa We Want Series with Baptista

Africa’s blueprint

By Baptista S. H. Gebu (Mrs.)

and master plan for transforming Africa

Baptista is the author of the book: Prepare for the Future of Work and the CEO of FoReal HR Services in Ghana. As a Hybrid professional, building a team of efficient & effective workforce is her business. Affecting lives is her calling! She is a Public and Keynote Conference Speaker, a Professional Connector and a Researcher. You can reach her via e-mail on bap.tista@outlook.com Follow her social media pages and the hashtag #theFutureofWorkCapsules #FoWC #forealhrservices

How do we drive investment to the transformed Africa with our master plan and blueprint for the continent?

The Minister of Transport, Kwaku Ofori Asiamah, has asked players in the maritime space to collaborate effectively in the development of relevant strategies for the operations, extraction and utilization of maritime resources.

According to him, the mandate of the Maritime Organisation of West and Central Africa (MOWCA) is essential and efforts should be championed for its effective and efficient operation.

“I must reiterate that; no single Member State can make significant strides on their own. Areas such as maritime security, maritime safety and navigation, port and infrastructure development, environmental protection, fisheries amongst

others can only become effective when approached with a coordinated and integrated effort,” the Minister said this at the 17 Extraordinary Session of the General Assembly of MOWCA in Accra.

Mr. Asiamah who is also the chairman of MOWCA also encouraged members to focus on actions that will ensure its people benefit while tackling some deep-seated issues, including rules of procedure, financial regulations and conditions of staff.

Further, Mr. Asiamah stated that member states dependence on imports of finished goods and exports of raw materials can only be facilitated by shipping which is a major

activity in maritime industry.

It is estimated that about 80percent of international trade is done via maritime space, with the minister adding that shipping remains the most-effective way of transporting any large/bulk amount of goods over a great distance.

The Minister of Foreign Affairs, Shirley Ayorkor Botchwey, who was the guest of honour indicated that the organization must begin frank discussions on current developments in Green Shipping initiatives which involve the use of alternative fuels with low or zero carbon, in place of fossil fuels -that is fast becoming the new way of shipping.

To this end, she urged Africa’s Maritime Industry to be prepared for the cost ramifications of the impending transition to cleaner fuels to Ship-owners translating to increased freight rates.

“I will urge MOWCA to consider the effects of the market-based measures under discussion within the International Maritime Organisation on our economies. It would also be pertinent to identify possible ways to benefit from any fund arising thereof, in order to minimize the effects of the transition on all players, particularly Least Developed Countries LDCs) and Small Island Developing States (SIDS).

Dr. Paul Adalikwu, the Secretary-General of MOWCA disclosed that the organization has firmed up plans to set up the Maritime Development Bank to be located in Nigeria, of which MOWCA’s global profile is being ramped up through her firm and active mutually rewarding links to the global International Maritime Organisation and the emergence of a pan-African Maritime organization. MOWCA’s objective is to serve the regional and international community for handling all maritime matters that are regional in character. MOWCA unifies 25 countries on the West and Central African shipping range..

Rotary’s Vocational Service Month ends with a call to imagine rotary through vocational service

The Vocational Training Teams committee on behalf of Rotary International District 9102 to include Ghana, Togo, Benin and Niger recently launched two major projects – the Knowledge Bank and Vocational Service Projects ahead of its January vocational service month celebration.

On behalf of the District Governor Victor Yaw Asante, the District Vocational Training Teams Chair together with its fellow Country Chairs and committee members for this Rotary year; encouraged partners in service to come deposit their competencies into the created virtual knowledge bank project and join in to celebrate the forgotten avenues of Service.

This project was launched virtually by the District Governor. Ahead of

By Baptista S. Gebu

the launch, major stakeholder engagements were carried out with several blocks to include the Council of President, Rotaractors, Francophone and Anglophone blocks. During January - the vocational service month, the committee took turns to support the district imagine rotary through vocational service.

The Chair, further called on all to imagine fearlessly a sustainable future using business and professional life as the foundation and vocational service a major force in promoting same. To Rotary International, the object of Vocational Service she said is to encourage and foster high ethical standards in business and professions; the recognition of the worthiness of all useful occupations; the dignifying by each Rotarian of his occupation

as an opportunity to serve society.

This January - the committee encouraged all Rotarians, Rotaractors and Interactors to; pride themselves of being able to use their professional stature and knowledge to make things happen in the district and in our communities.

As a district goal, all were encouraged and reminded of the need to visit the learning center today to continue learning in order to be part of the winning team. Rotary provides humanitarian service, promotes high ethical standards in all vocations, and helps build international understanding, goodwill and peace.

With our progressive attitude, all partners in service were called to do everything in their power to dis -

tinguish their profession and promote its highest ethical standards to improve the quality of life all in our community and district at large.

Partners in service were admonished this year to pause to reflect on the 4-way-test as we ask if; – “Of all the things we think, say or do:

1. If It is the TRUTH?

2. Is it FAIR to all concerned?

3. Will it build GOODWILL and BETTER FRIENDSHIPS?

4. Will it be BENEFICIAL to all concerned?”

Rotary is a global network of 1.4 million neighbors, friends, leaders, and

problem-solvers who see a world where people unite and take action to create lasting change – across the globe, in our communities, and in ourselves. Solving real problems takes real commitment and vision. For more than 110 years, Rotary's people of action have used their passion, energy, and intelligence to take action on sustainable projects. From literacy and peace to water and health, Rotarians are always working to better our world, and stay committed to the end.

The knowledge mismatch

By Dani Rodrik

Knowledge holds the key to economic prosperity. Technology, innovation, and know-how all come from learning new ways to produce the goods and services that enrich us. Knowledge is also the archetypal “public good”: new ideas can benefit everyone; and unless governments or monopolies restrict their dissemination, usage does not diminish availability. This is especially important for poor countries, because it means that they do not have to reinvent the wheel. They can simply adopt technologies and methods created by richer countries to drive their own economic development.

While economists and policymakers have long appreciated the economic significance of knowledge, they have not paid sufficient attention to the conditions that make it useful. Context matters: any mismatch between the conditions under which ideas are generated and the specificities of the environment where they are applied can significantly reduce the value of acquiring knowledge.

For example, corn is grown all over the world, but it is subject to different environmental threats, depending on the local ecology. Research and development efforts have naturally focused on developing resistance to pests that are most common in North America and Europe. As a result, thousands of biotech patents are geared toward the European corn worm, but only five unique  patents are for innovations protecting against the maize stalk borer, which predominantly affects Sub-Saharan Africa.

Having studied these and many other examples, economists Jacob Moscona and Karthik Sastry of Harvard University argue that the inappropriateness of technologies developed in advanced economies can pose a significant obstacle to agricultural-productivity growth in low-income areas. According to their analysis, the technology mismatch in crop-specific pests and pathogens alone can account for 15% of the global disparity in agricultural productivity. In a recent panel discussion organized by the International Economic Association, Moscona and other experts provided a wide range of illustrations of inappropriate technologies at work.

Mireille Kamariza, a bioengineer at UCLA, described how the development of diagnostic technologies for tuberculosis and other infectious diseases that chiefly affect low-income countries has lagged far behind diagnostic technologies for rich-country diseases.

When COVID-19 hit rich countries, hundreds of diagnostic tests became available within months. By contrast, it took more than a century to achieve comparable progress with respect to tuberculosis. Moreover, advanced tuberculosis-diagnostics techniques still rely on trained technicians and a steady supply of electricity, which may not be available in low-income settings. Mismatch can also occur within  countries when technologies tailored to the interests of certain groups are deployed more widely. Automation and digital technologies, for example, can be inappropriate if they produce undesirable effects for many workers. As Anton Korinek of the University of Virginia notes, all innovations are double-edged: they can enhance productivity in the aggregate, but they can also generate sharp redistributive effects favoring capital owners over workers. And when the overall productivity gains are not very large, they can easily be outweighed (from a societal perspective) by the negative redistributive effects – a phenomenon that economists Daron Acemoglu and Pascual Restrepo  call “so-so” innovation. Robots provide the clearest example of this adverse shift against workers, and artificial intelligence is expanding the range of domains where distributional conflicts can become significant. As Korinek points out, chatbot software that replaces human workers enhances the returns to AI engineers and firm owners, while displacing workers with less

than a college education. The impact is magnified in developing countries where low-cost labor is the sole source of comparative advantage. Moreover, knowledge is embedded not only in seeds or software but also in cultural norms. At the same IEA panel, economist Nathan Nunn talked about a different, temporal kind of mismatch where knowledge and practices that were appropriate for a society at one time can later become dysfunctional. Cultural traditions pass on useful knowledge to future generations. Religious rituals, for example, can help to coordinate crop planting, and particular cooking techniques imparted by a family’s elders can protect against dietary toxins. But since cultural norms evolve slowly, rapid changes in society can produce an “evolutionary mismatch.”

Drawing on his work with Leonard Wantchekon, Nunn gives the example of Africa’s traumatic experience with transcontinental slavery. Communities in Africa that had the most extensive contact with slave traders developed a deep mistrust of outsiders, leaving them with a cultural inclination that is counterproductive for developing a flourishing market economy in today’s world. Similarly, Americans’ aversion to redistribution appears to reflect the country’s high degree of economic mobility in the past, rather than current realities. Whether they take the form of inappropriate technologies or cultural practices, such mismatches need to be addressed if knowl-

edge is going to benefit a society. One strategy is consciousness raising. That is how the environmentalist movement helped steer consumer demand away from fossil fuels and mobilize support for the development of renewables. A similar “technology for workers” movement could redirect innovation in a more labor-friendly direction. Enhancing the voice of relevant stakeholders – such as workers or poor countries – in decisions about innovation and technology would guard against the adoption of inappropriate technologies.

Public policies are also critical.

The Green Revolution in the twentieth century was motivated  by the explicit recognition that enhancing agricultural productivity in low-income countries would require developing high-yield seed varieties suited to tropical environments. Though we lack a similar multilateral effort to close global technology gaps today, Moscona points to several middle-income countries (India, Brazil, South Africa) that have the capacity to develop technologies more appropriate to developing economies.

But even in those countries, innovation tends to follow the norms and preferences of Silicon Valley, rather than local needs. Policymakers and innovators alike would do well to remember that it is not knowledge, but rather  useful knowledge, that empowers us.

The Giving Capsules: A Prosperous Africa whose development is people-driven is the Africa we want

“It is clear that we must find an African solution to our problems, and that this can only be found in African unity. Divided we are weak; united, Africa could become one of the greatest forces for good in the world”. –

Osagyefo Dr. Kwame Nkrumah

Africa’s blueprint and master plan for transforming Africa begins with a prosperous Africa based on inclusive growth and sustainable development, where an integrated continent is politically united and based on the ideals of Pan-Africanism and the vision of Africa’s Renaissance.  An Africa where good governance, democracy, respect for human rights, justice and the rule of law is observed and protected.

An Africa which is peaceful and secure with a strong cultural identity, common heritage, shared values and ethics, whose development is people-driven, relying on the potential of the African people, especially its women and youth, and caring for children. An Africa which is strong, united, resilient and influential with global players and partners is the ideal Africa we want.

The blueprint and master plan for

By Baptista S. H. Gebu (Mrs.)

transforming Africa must consider and work towards an Africa which has an integrated high speed train network with an African commodities strategy which has established a functioning African Continental Free Trade Area (AfCFTA) operating an African passport where free movement of people is enabled.

The Africa we want must silence the guns, be able to implement the grand INGA Dam project and establish a single African air-transport market, an annual African Economic Forum, an African financial institution, the Pan – African e-network, the Africa outer space strategy, an African virtual and E-University be able to put in place a cyber-security, great African museum as well as an encyclopedia about the continent.

The world’s populations reached 8 billion on November 15, 2012 according to the latest United Nations estimates and revisions from the UN, Department of Economic and Social Affairs, Population Division, released in 2022. It is projected to reach 9 billion in 2037, and 10 billion people in the year 2058. It is said to have doubled in 40 years from 1959 when we were 3 billion people to 1999 when we were 6 billion. We are currently (2022) growing at a rate of around 0.84 % per year, adding 67 million people per

year to the total according to 2022 estimates from the United Nations. Africa is not a country but a continent and civilization began in Africa. The population of Africa is  now around 1,416,097,444 (1.4 billion) as of November 2022, based on the United Nations estimates. Let’s then know and understand the Africa we want in the Agenda 2063 blueprint. I serve you the Africa we want blueprint including its 7 aspirations and 15 flagship projects focusing on one of the flagships projects of Agenda 2063.

According to The Organization of African Unity (OAU), “AGENDA 2063 is Africa’s blueprint and master plan for transforming Africa into the global powerhouse of the future. It is the continent’s strategic framework that aims to deliver on its goal for inclusive and sustainable development and is a concrete manifestation of the pan-African drive for unity, self-determination, freedom, progress and collective prosperity pursued under Pan-Africanism and African Renaissance.

As an affirmation of their commitment to support Africa’s new path for attaining inclusive and sustainable economic growth and development, African heads of state and government signed the 50th Anni -

versary Solemn Declaration  during the Golden Jubilee celebrations of the formation of the OAU /AU in May 2013.

The declaration marked the re-dedication of Africa towards the attainment of the Pan African Vision of an integrated, prosperous and peaceful Africa, driven by its own citizens, representing a dynamic force in the international arena and Agenda 2063 is the concrete manifestation of how the continent intends to achieve this vision within a 50 year period from 2013 to 2063 thinking of the Africa of the future. Agenda 2063 encapsulates not only Africa’s aspirations for the future but also identifies key flagship programmes  which can boost Africa’s economic growth and development and lead to the rapid transformation of the continent. Agenda 2063 also identifies key activities to be undertaken in its 10 year implementation plans which will ensure that Agenda 2063 delivers both quantitative and qualitative transformational outcomes for the African people.

Agenda 2063 seeks to deliver on a set of seven aspirations each with its own set of goals which if achieved will move Africa closer

to achieving its vision for the year 2063. These 7 aspirations reflect our desire for shared prosperity and well-being, for unity and integration, for a continent of free citizens and expanded horizons, where the full potential of women and youth are realized, and with freedom from fear, disease and want.

The flagship projects of Agenda 2063 refers to key programmes and initiatives which have been identified as key to accelerating Africa’s economic growth and development as well as promoting our common identity by celebrating our history and our vibrant culture. The flagship projects encompass infrastructure, education, science, technology, arts and culture as well as initiatives to secure peace on the continent.

According to information available from the AfCFTA Secretariat, AfCFTA is the largest free trade area in the world measured by the number of countries participation with a combined gross domestic product of $3.4 Trillion as it connects 1.3 billion people now 1.4 billion across the 56 countries. As at December 2022 54 out of the 55 member states of the AU have signed the AfCFTA agreement. 44

African countries have deposited their instrument of ratification with the African Union commission.

The interesting bit of the discuss is that, AfCFTA has the potential to lift 30 million people from extreme poverty as its expected to boost Africa’s income by some $450 billion by the year 2035 representing a 7% gain.

The creation of this single market for goods and services will allow African countries to trade amongst themselves duty-free and quota-free. The agreement to establish this AfCFTA was signed far back in March 2018 in Rwanda on the 21st day in Kigali however trading officially commenced on January 1, 2021 two years down the line. And commercially meaningful trading officially also started in October, 2022 exactly on the 7the day of the month.

The creation of this one single market for goods and services will facilitate the movement of people in a bid to deepen the economic integration of the African continent. As an objective, this ideal prosperous Africa must promote its development to be people-driven this it can achieve by

creating a free market for goods and service where the possibility of successive rounds and negotiations are possible. When AfCFTA is people driven, this will contribute to the movement of capital and natural persons which will facilitate investments building in party states. A people driven Africa must promote as an objective an industrial development achieved through diversification and regional value chain development, agricultural development and food security amongst others.

When its people drive, it will create and increase employment for the people of each African country, enable the citizens to take advantage of economies of scale and become more competitive. It will also support the countries to enjoy a better terms of trade whiles promoting favourable market access to the largest one single market.

To become a member, African countries are expected to sign the agreement and deposit their instruments of ratification with the African Union Commission. Ghana is currently a state party to AfCFTA since May 2018.

To export under this trade arrangement, there are some conditions to be met. One, one must comply with the AfCFTA rules of origin and goods must be in the liberalized tariff schedule of the destination country, amongst other additional procedures to be looked at in subsequent editions.

The Africa we want is possible.

Let’s face neither east nor west but face forward. “I am not African because I was born in Africa but because Africa was born in me –Dr. Osagyefo Dr Kwame Nkrumah”

Baptista conference speaker, a Hybrid Professional and the Executive Director of ProHumane Afrique International, a charitable, development & think thank organization working with communities & individuals to create sustainable solutions to transform communities through diverse pro-poor initiatives. Follow this conversation on our social media sites: Linked-In/ Twitter/ Facebook/ Instagram: ProHumane Afrique International. Hashtag: #behumane #thegivingcapsules #prohumaneafriqueint #fowc

The Africa We Want Series with Baptista Africa’s blueprint and master plan for transforming Africa

By Baptista S. H. Gebu (Mrs.)

How do we drive investment to the transformed Africa with our master plan and blueprint for the continent?

Africa’s blueprint and master plan for transforming Africa begins with a prosperous Africa based on inclusive growth and sustainable development, where an integrated continent is politically united and based on the ideals of Pan-Africanism and the vision of Africa’s Renaissance.  An Africa where good governance, democracy, respect for human rights, justice and the rule of law is observed and protected.

An Africa which is peaceful and secure with a strong cultural identity, common heritage, shared values and ethics, whose development is people-driven, relying on the potential of the African people, especially its women and youth, and caring for children. An Africa which is strong, united, resilient and influential with global players and partners is the ideal Africa we want.

The blueprint and master plan for transforming Africa must consider and work towards an Africa which has an integrated high speed train network with an African commodities strategy which has established a functioning African Continental Free Trade Area (AfCFTA) operating an African passport where free movement of people is enabled. The Africa we want must silence the guns, be able to implement the grand INGA Dam project and establish a single African air-transport market, an annual African Economic Forum, an African financial institution, the Pan – African e-network, the Africa outer space strategy, an African virtual and E-University be able to put in place a cyber-security, great African museum as well as an encyclopedia about the continent.

The Africa we want is possible and attainable we need a change mindset to accept this reality as we pull in investment. I want to encourage you to see the glass as half full and not half

empty as an expression of optimism. I envision the Africa we want is possible when we know about it, work towards it and build it together! It’s the power of choice. Let’s emancipate ourselves from mental slavery and accept the grass is greener here. We need that change mindset first.

The outside media portals Africa as poverty stricken and needy; which is far from the ideal truth, a situation which will not pull in the right investment. Africa must tell the African story the Africa way.

The ideal Africa we want must not wait for other continents to tell its perceived story misconstrue from the idea reality.

Africa is not a country but a continent and civilization began in Africa. The current population of Africa is 1,416,097,444 as of November 9, 2022, based on the latest United Nations estimates. The Africa we want must invest into its own research. Most often than not, one is tempted to quote other sources due to non-availability and in some cases lack of relevant data. The narrative is changing and its welcome news.

Kofi Annan is quoted to have said; “Knowledge is power. Information is liberating. Education is the premise of progress, in every society, in every family”. Let’s then know and understand the Africa we want in the Agenda 2063 blueprint. The world’s populations reached 8 billion on November 15, 2012 according to the latest United Nations estimates and revisions from the UN, Department of Economic and Social Affairs, Population Division, released in 2022. It is projected to reach 9 billion in 2037, and 10 billion people in the year 2058. It is said to have doubled in 40 years from 1959 when we were 3 billion people to 1999 when we were 6 billion. We are currently (2022) growing at a rate of around 0.84 % per year, adding 67 million people per year to the total according to 2022 estimates from the United Nations.

According to The Organization of African Unity (OAU), the precursor of the African Union; the Africa we want must encompass these.

“AGENDA 2063 is Africa’s blueprint and master plan for transforming Africa into the global pow -

erhouse of the future. It is the continent’s strategic framework that aims to deliver on its goal for inclusive and sustainable development and is a concrete manifestation of the pan-African drive for unity, self-determination, freedom, progress and collective prosperity pursued under Pan-Africanism and African Renaissance The genesis of Agenda 2063 was the realization by African leaders that there was a need to refocus and reprioritize Africa’s agenda from the struggle against apartheid and the attainment of political independence for the continent which had been the focus of The Organization of African Unity (OAU), the precursor of the African Union; and instead to prioritize inclusive social and economic development, continental and regional integration, democratic governance and peace and security amongst other issues aimed at repositioning Africa to becoming a dominant player in the global arena.

As an affirmation of their commitment to support Africa’s new path for attaining inclusive and sustainable economic growth and development, African heads of state and government signed the 50th  Anniversary Solemn Declaration  during the Golden Jubilee celebrations of the formation of the OAU /AU in May 2013.

The declaration marked the re-dedication of Africa towards the attainment of the Pan African Vision of an integrated, prosperous and peaceful Africa, driven by its own citizens, representing a dynamic force in the international  arena and Agenda 2063 is the concrete manifestation of how the continent intends to achieve this vision within a 50 year period from 2013 to 2063 thinking of the Africa of the future.

The need to envision a long-term 50 year development trajectory for Africa is important as Africa needs to revise and adapt its development agenda due to ongoing structural transformations; increased peace and reduction in the number of conflicts; renewed economic growth and social progress; the need for people centered development, gender equality and youth empowerment; changing global contexts such as increased

globalization and the ICT revolution; the increased unity of Africa which makes it a global power to be reckoned with and capable of rallying support around its own common agenda; and emerging development and investment opportunities in areas such as agri-business, infrastructure development, health and education as well as the value addition in African commodities.

Agenda 2063 encapsulates not only Africa’s aspirations for the future but also identifies key flagship programmes which can boost Africa’s economic growth and development and lead to the rapid transformation of the continent.

Agenda 2063 also identifies key activities to be undertaken in its  10 year implementation plans  which will ensure that Agenda 2063 delivers both quantitative and qualitative transformational outcomes for the African people.

Africa’s Seven (7) Aspirations for the Future.

Agenda 2063 seeks to deliver on a set of seven aspirations each with its own set of goals which if achieved will move Africa closer to achieving its vision for the year 2063. These 7 aspirations reflect our desire for shared prosperity and well-being, for unity and integration, for a continent of free citizens and expanded horizons, where the full potential of women and youth are realized, and with freedom from fear, disease and want.

Aspiration 1: A prosperous Africa based on inclusive growth and sustainable development.

Aspiration 2: An integrated continent politically united and based on the ideals of Pan-Africanism and the vision of Africa’s Renaissance.

Aspiration 3: An Africa of good governance, democracy, respect for human rights, justice and the rule of law.

Aspiration 4: A peaceful and secure Africa.

Aspiration 5: An Africa with a strong cultural identity, common heritage, shared values and ethics.

Aspiration 6: An Africa, whose development is people-driven, relying on the potential of African people, especially its women and youth, and caring for children.

Aspiration 7: Africa as a strong, united, resilient and influential global player and partner.

The Fifteen (15) Flagship Projects of Agenda 2063

The flagship projects of Agenda 2063 refers to key programmes and initiatives which have been identified as key to accelerating Africa’s economic growth and development as well as promoting our common identity by celebrating our history and our vibrant culture. The flagship projects encompass infrastructure, education, science, technology, arts and culture as well as initiatives to secure peace on the continent. It includes;

1.Integrated High Speed Train Network.

2.Formation of an African Commodities strategy.

3.Establishment of the African Continental Free Trade Area (AfCFTA).

4.The African Passport and Free Movement of People.

5.Silence the Guns by year 2020.

6.Implementation of the grand INGA Dam project

7.Establishment of a single African Air-Transport Market (SAATM)

8.Establishment of an annual African Economic Forum

9.Establishment of the African Financial Institutions

10.The Pan – African E-Network

11.Africa outer space strategy

12.An African virtual and E-University

13.Cyber security

14.Great African Museum

15.Encyclopedia Africana

The Establishment of the African Continental Free Trade Area (AfCFTA). According to information

available from the AfCFTA Secretariat, AfCFTA is the largest free trade area in the world measured by the number of countries participation with a combined gross domestic product of $3.4 Trillion as it connects 1.3 billion people now 1.4 billion across the 56 countries. As at December 2022 54 out of the 55 member states of the AU have signed the AfCFTA agreement. 44 African countries have deposited their instrument of ratification with the African Union commission. The interesting bit of the discuss is that, AfCFTA has the potential to lift 30 million people from extreme poverty as its expected to boost Africa’s income by some $450 billion by the year 2035 representing a 7% gain.

The creation of this single market for goods and services will allow African countries to trade amongst themselves duty-free and quo -

ta-free. The agreement to establish this AfCFTA was signed far back in March 2018 in Rwanda on the 21st day in Kigali however trading officially commenced on January 1, 2021 two years down the line. And commercially meaningful trading officially also started in October, 2022 exactly on the 7the day of the month.

The creation of this one single market for goods and services will facilitate the movement of people in a bid to deepen the economic integration of the African continent. As an objective, this ideal prosperous Africa must promote its development to be people-driven this it can achieve by creating a free market for goods and service where the possibility of successive rounds and negotiations are possible.

When AfCFTA is people driven, this will contribute to the movement of capital and

natural persons which will facilitate investments building in party states. A people driven Africa must promote as an objective an industrial development achieved through diversification and regional value chain development, agricultural development and food security amongst others.

When its people drive, it will create and increase employment for the people of each African country, enable the citizens to take advantage of economies of scale and become more competitive. It will also support the countries to enjoy a better terms of trade whiles promoting favourable market access to the largest one single market.

To become a member, African countries are expected to sign the agreement and deposit their instruments of ratification with the African

Union Commission. Ghana is currently a state party to AfCFTA since May 2018.

To export under this trade arrangement, there are some conditions to be met. One, one must comply with the AfCFTA rules of origin and goods must be in the liberalized tariff schedule of the destination country, amongst other additional procedures to be looked at in subsequent editions.

“It is clear that we must find an African solution to our problems, and that this can only be found in African unity. Divided we are weak; united, Africa could become one of the greatest forces for good in the world”. The Africa we want is possible. Let’s face neither east nor west but face forward. “I am not African because I was born in Africa but because Africa was born in me – Dr. Osagyefo Dr Kwame Nkru -

mah”

Baptista is the author of the book: Prepare for the Future of Work and the CEO of FoReal HR Services in Ghana. As a Hybrid professional, building a team of efficient & effective workforce is her business. Affecting lives is her calling! She is a Public and Keynote Conference Speaker, a Professional Connector and a Researcher. You can reach her via e-mail on bap.tista@outlook.com Follow her social media pages and the hashtag #theFutureofWorkCapsules #FoWC #forealhrservices

FX Insights

Weekly Outlook and Review

Naira note chaos in election run-up

Foreign Exchange Down

Two weeks before Nigeria’s election, a scarcity of cash and fuel is stoking chaos in the country. After clashes at empty ATMs and accusations of banks hoarding new Naira bills, the Supreme Court on Wednesday suspended the central bank’s second deadline to end the use of old bank notes. Meanwhile, Africa’s biggest oil exporting nation continues to struggle with severe petrol shortages, with retailers unwilling accept old Naira notes and to sell at official subsidized rates. Amidst concern that cash and fuel shortages will prevent the mobilisation and payment of officials by the Electoral Commission of Nigeria, its Chairman Mahmood Yakubu said on Wednesday that polling will go ahead as scheduled on Feb. 25 and that the Commission is working with the national oil company and the central bank to assure supplies. Turnout to the polling stations could prove the deciding factor, with a Stears poll this week putting Labour’s Peter Obi as favourite in the event of high voter turnout and the ruling APC’s Bola Tinubu given a low turnout. For the currency markets, the lack of physical cash has held the Naira stable against the dollar this week, trading at 747 from 748 at last week’s close. We expect renewed Naira weakness once the new notes are fully circulating and business returns to normal.

Rand hits three-month low as PMI signals contraction

The Rand slumped to its lowest level since November, trading at 17.82 from 17.48 at last week’s close as energy shortages hamper economic activity. S&P Global’s South Africa Purchasing Managers’ Index fell to 48.7 in January from 50.2 in December, signalling a contraction in activity. The country’s capital expenditure also fell by more than a third last year as the government scaled back spending on infrastructure projects. The economy continues to be crippled by ongoing rolling power blackouts, with food insecurity and unemployment rising. We expect the Rand to continue its current downward trajectory in the short term as investors seek better alternatives.

Foreign Exchange

Down 16%

Foreign Exchange

Cedi climbs as Ghana sweetens debt restructuring offer

The Cedi appreciated against the dollar, trading at 12.05 from 12.25 at last week’s close as FX demand eased. The Bank of Ghana sold only $9.2m of dollars in the spot market last week, compared to $40m at the previous Jan. 30 sale. Ghana is sweetening its debt swap offer to encourage participation of local pension funds, which would under the latest plan receive their full interest payments but over a longer time horizon. Other bondholders will receive lower interest payments as part of the debt swap. Ghana is also expected to convert around GHS40bn of loans it owes to the central bank into bonds as part of the broader restructuring plan to unlock a $3bn IMF bailout. As the country continues to advance with its restructuring efforts, we expect the Cedi to appreciate in the near term.

Egypt Pound nears record low after Moody’s cut

The Pound weakened against the dollar, trading at 30.43 from 30.28 at last week’s close, continuing its slide towards its record low 30.50 hit in early January. Moody’s Investors Service cut Egypt’s credit rating one notch to B3, six levels below investment grade, citing reduced ability to deal with external macroeconomic shocks while the economy undergoes a structural adjustment towards private sector and export-led growth. Companies face deteriorating conditions as output prices rise at their fastest pace in six years and purchase cost-inflation is the highest in more than four years. We expect the Pound to continue depreciating until structural reforms start to take effect.

Foreign Exchange

Down 93% Down 90%

Foreign Exchange Down

Shilling strengthens as Uganda resists rate rise

The Shilling strengthened against the dollar, trading at 3674 from 3684 at last week’s close. Uganda’s central bank kept its benchmark interest rate on hold at 10% for a second consecutive monetary policy meeting. The bank last raised by 100 basis points in October, with rates ending the year 350 basis points higher than they were at the start of 2022. Policymakers said the decision to hold rates was aimed at containing domestic demand pressure and supporting economic recovery. The bank said it expects inflation to slow to its 5% target by the end of the year despite inflation edging up to 10.4% last month. In the near term, we expect the Shilling to weaken amid continued food and energy price inflation. 4%

Kenya Shilling at new low while deficit narrows

Foreign Exchange Down

31% 10%

The Shilling slipped to a fresh low against the dollar, trading at 124.92 from 124.62 at last week’s close amid sustained pressure from importers to meet their obligations and broader dollar strengthening. Shortages of foreign currency in Kenya have continued to weigh on business growth in the country. Despite such strains, the current account deficit was lower than forecast last year, coming in at 4.9% of GDP compared to 5.4% in 2021 on the back of increased exports and diaspora remittances towards the end of the year. The central bank had expected the deficit to hit 5.6% in 2022. With dollar demand continuing to outweigh supply, we expect the Shilling to remain under pressure in the coming days.

Murega Mungai

Trading Desk Manager, AZA Finance

Mitch Diedrick

Forex Dealer, AZA Finance

WEEKLY MARKET REVIEW FOR WEEK ENDING - February 3, 2023

January 20,2023

WEEKLY MARKET REVIEW FOR WEEK ENDING - February 3, 2023

January 20,2023

January 20,2023

WEEKLY MARKET REVIEW FOR WEEK ENDING - February 3, 2023

WEEKLY MARKET REVIEW FOR WEEK ENDING - February 3, 2023

January 20,2023

By Marek Dabrowski

On November 9, 2022, the Euro pean Commission published a  blueprint for reforming the European Union’s economic-governance framework. Among other things, the document envisions a more integrated approach to EU economic surveillance, strengthened national ownership, simplified rules for governing fiscal risks, and better enforcement of those rules. But the details of the proposal raise doubts about the feasibility of achieving these goals. Specifically, the fiscal component of the proposed framework leaves three fundamental questions unanswered.

The first question is whether the new rules would prevent sovereign insolvency. As of 2021, seven eurozone countries had general government gross debt exceeding 100% of GDP, which means that it is only a matter of time before financial markets become neBy Marek Dabrowski rvous about some countries’ debt sustainability. But the Commission’s proposed method of dealing with excessive debt is even more lenient than the old one under the Stability and Growth Pact (SGP).

The blueprint rejects the previ-

ous “1/20th rule” for debt reduc tion on the grounds that requiring governments to cut their debt each year by 1/20th of the excess above 60% of GDP is too demanding. Instead, the Commission wants member states with “substantial” or “moderate” debt challenges to negotiate a medium-term fiscal plan that will include a downward debt trajectory. The document neither elaborates on the speed of the fiscal adjustment –that will be detailed later in the methodology for debt sustainability analysis (DSA) – nor specifies the criteria for categorizing debt challenges as “substantial,” “moderate,” or “low.”

A second question concerns the blueprint’s promise of greater simplicity. The old rules were criticized for being too complicated, and for relying on fuzzy categories such as potential output or cyclically adjusted fiscal positions. Since these indicators are hard to measure and forecast, producing them has consistently given rise to arbitrary assumptions and methodological doubts. Here, too, the new framework would take things even further in the wrong direction. Member states are to present a medi-

um-term fiscal program based on a multiannual adjustment path that the Commission will provide after conducting a DSA. These proposals will then be negotiated with the Commission before receiving final approval from the Economic and Financial Affairs Council (ECOFIN). At first sight, this approach looks attractive, because it departs from the current one-size-fits-all practice. But, given the mandatory nature of fiscal-adjustment programs backed by potential sanctions, a more individualized approach will inevitably lead to much more bargaining between member states and the Commission (and potentially ECOFIN). After all, many different assumptions and variables could factor into negotiations –from the DSA, the fiscal-adjustment path, and its impact on growth, to other factors such as macroeconomic conditions and special fiscal needs (like those relating to the green transition). Complicating matters further, the new surveillance framework will operate largely on the basis of forecasts, whereas the old SGP primarily monitored actual variables. Obviously, economic projections can be subject to all manner of errors and faulty as-

they cannot predict unexpected shocks.

Given the need to shape fiscal policy according to approved medium-term fiscal programs (with potential sanctions for delivery failures), member states will have strong incentives to negotiate for less ambitious adjustment paths, and to suggest rosier macroeconomic forecasts. And while the Commission will try to push for more ambitious paths to avoid the risk of fiscal crises, member states will have the informational advantage in this overly complex process, because they know domestic conditions better than anyone else. And we already know from experience that larger, politically influential member states will tend to receive favorable treatment. The third question concerns the lack of political appetite to enforce fiscal rules. Between 1997 (two years before the euro’s introduction) and 2021, the general government deficit exceeded 3% of GDP (the maximum level  established by the Treaty of the Functioning of the European Union) in eurozone countries in  143 out of 394 observations.

Greece and Portugal each breached the deficit ceiling in 18 of those years, while France did so in 17, and Spain in 12. Similarly, general government gross debt exceeded the 60%-of-GDP limit of 229 times out of 394 observations. Austria, Belgium, Greece, and Italy never recorded a gross debt below the threshold, and France did so only twice (in 2000 and 2001). Portugal’s debt exceeded the limit for 20 years, and Germany’s did so for 19 years. The number of eurozone members with debt above 60% of GDP grew steadily, to 12 out of 19 in 2021. More importantly, despite the numerous breaches of the Treaty’s deficit and debt limits, the financial sanctions envisioned in the SGP were never adopted. Clearly, eurozone member states have a collective-action problem that any debate about future fiscal discipline will need to address head-on. (In this light, the Commission’s proposal for introducing reputational sanctions also looks problematic, both in terms of potential efficacy and political acceptance.)

Fiscal discipline is essential for euro stability, and for financial