Investment Times Newspaper 2023 Edition | Issue 6

Fostering

BoG, banks agree on disbursements over cocoa bills

that while Cocoa bills, like the Bank of Ghana bills, were designed as instruments to be held just by nancial institutions, unfortunately some nancial institutions sold their instruments to their retail clients.

The move to allow the banks use COCOBOD’s investments with them to pay such clients is, therefore, to help reduce the cash ow challenges on the retail holders.

The release, however, noted that the nancial Institutions have agreed to roll over their cocoa bills investments after an attempt by the Bank of Ghana to reissue a new six-month Cocoa bill to raise fund to cover the maturing obligation failed.

On Thursday, January 19, a six-month Cocoa bill with face value of GH¢940.42 million matured and the central bank went through the usual process to reissue on behalf of COCOBOD, a new Cocoa bill to raise funds to pay the matured bills.

Unfortunately, this auction failed and was severely undersubscribed, resulting in a shortfall of GH¢ 855.42million.

There were media reports that COCOBOD had failed to honour its Cocoa bills obligations and had rolled over the bills without even informing investors.

But after a meeting held on Friday, January 20 among the banks, COCOBOD and Bank of Ghana, it was agreed that all institutional investors will roll over their maturing cocoa bill for Tender 6155.

“COCOBOD has assured us that the outlook for the 2023 crop season is good and Cocoa purchasing are ahead of last year.

“We, therefore, expect that this short-term cash ow challenges facing COCOBOD will be resolved soon to enable it meet its obligations to investors,” the release noted.

FNB disables Visa card for crypto exchange …as it reinstates customer accounts impacted by debit transaction issues

First National Bank (FNB) says it has completed engagements with its payment gateway partners and has decided to reverse all debit transaction passed on to some customer accounts as a result of transactions initiated on binance.com, a cryptocurrency exchange.

The bank explained that it had series of engagements with it gateway partners and the outcomes con rmed the bank’s position on the settlement of the transactions on Binance.

The Head of Retail Banking, Akweley Laryea, explained that customer complaints on the foreign exchange adjust-

Evelyn Duke appointed Acting MD of SIC Brokerage

ments and their e ects on account balances necessitated further investigations in the transactions.

“Reviewing the details of customer complaints required that we quickly engage with our payment gateway partners to con rm the nature of these transactions and the complexities of the settlements which

involved international merchants outside Ghana,” she said. These customers transacted in Ghana cedis and that is how they paid for the transactions. The process however required a multi-currency settlement, and we are still engaging our partners to resolve this amicably, she added.

She said as an interim measure,

SIC Brokerage Limited has appointed Evelyn Duke as the Acting Group Managing Director of the company.

She replaces Eno Ofori-Atta, who resigned from the Group as the Group Managing Director on December 31, 2022.

A statement issued by the Ghana Stock Exchange (GSE) in Accra on Monday, January 23, and copied to Graphic Business said Mrs Duke’s appointment took e ect from December 6, 2022.

all FNB Visa debit cards will be disabled for transactions on binance.com until the bank realigns the settlement processes with all stakeholders.

“For now, our cards will not be enabled for crypto exchange and related transactions. We entreat our customers to abreast with the terms and conditions on our accounts,” she said.

"SIC Brokerage announces for the information of the general investing public that the Board of Directors of the company have appointed Mrs. Evelyn Duke as the Acting Group Managing Director of SIC Financial Services Ltd and SIC Brokerage Ltd, e ective December 6, 2022.

"She replaces Mrs. Eno Ofori-Atta, who resigned from the Group as the Group Managing Director on December 31, 2022," it said.

Lack of climate adaptation investment could cost emerging markets billions by

Failure to invest the bare mini mum needed to withstand projected climate damage could cost emerging markets hundreds of billions in climate damages and lost GDP growth this decade, according to a new study by Standard Chartered.

The Adaptation Economy, which investigates the need for climate adaptation investment in 10 markets – including China, India, Bangladesh and Pakistan – reveals that, without investing a minimum of USD30 billion in adaptation by

2030, these markets could face projected damages and lost GDP growth of USD377 billion: over 12 times that amount.

The projection assumes that the world succeeds in limiting temperature rises to 1.5°C, in line with the Paris Agreement. In a 3.5°C scenario the estimated minimum investment required more than doubles to USD62 billion and potential losses escalate dramatically if the investment is not made.

Examples of climate adaptation

The Bank of Ghana (BoG) has agreed with the Ghana Cocoa Board and commercial banks

projects include the creation of coastal barrier protection solutions for areas vulnerable to ooding, the development of drought-resistant crops and early-warning systems against pending natural disasters. India to bene t the most from adaptation investment Among the 10 markets in the study, India is projected to bene t the most from adaptation investment. The market would require an estimated USD11billion to prevent climate damages and lost growth of USD135.5 billion in a 1.5°C warming scenario – equal to a thirteen-to-one return for the Indian economy of investment in climate adaptation.

Meanwhile, China could avoid an estimated cost of USD112 billion by investing just USD8 billion. And Kenya could avoid costs of an estimated USD2 billion by investing USD200 million in adaptation.

Market Minimum investment required (1.5°C) (USD) Economic bene t (USD)

India 10.6 billion 135.5 billion

China 8.1 billion 111.9 billion

Indonesia 4 billion 39 bil-

lion UAE 2.7 billion 31.5 billion

Nigeria 1.5 billion 19.9 billion

Bangladesh 1.2 billion 11.6 billion

Egypt 900 million 8.6 billion

Vietnam 600 million 8.9 billion Pakistan 600 million 7.6 billion Kenya 200 million 2.2 billion

The case for adaptation Even if the world’s nations manage to achieve the goals of the Paris Agreement, measures to adapt to climate change must be pursued alongside the global decarbonisation agenda, with the banking sector having a critical role to play in unlocking nance.

The USD30billion investment required for adaptation represents only slightly more than 0.1 per cent of combined annual GDP of the 10 markets in the study and much less than the estimated USD95 trillion emerging markets require to transition to net zero using mitigation measures, as out-

lined in Standard Chartered’s Just in Time report.

The Adaptation Economy also surveyed 150 bankers, investors and asset managers and found that, currently, just 0.4% of the capital held by respondents is allocated to adaptation in emerging markets where investment is needed most.

However, 59% of respondents plan to increase their adaptation investments over the next 12 months. And on average, adaptation nancing is expected to rise from 0.8% of global assets in 2022 to 1.4% by 2030.

Marisa Drew, Chief Sustainability O cer, Standard Chartered, said: “This report makes it clear that irrespective of e orts to keep global warming as close to 1.5C as possible we are going to have to incorporate climate-warming e ects into our systems and adapt to its reality.”

“All nations will need to adapt to climate change by building more resilient agriculture, industry and infrastructure, but the need is greatest in emerging and fast-developing economies with a disproportionate risk of exposure to the negative e ects of rising temperatures and extreme weather.”

“We must urgently recognise that adaptation is a shared necessity, and as our Adaptation Economy research so e ectively highlights, inaction creates a shared societal burden of exponentially increasing cost. The nancial sector has a crucial role to play in directing capital towards adaptation and creating the proof points to demonstrate that investing in adaptation can be a commercially viable attractive proposition for the private sector.”

Failure to invest the bare minimum needed to withstand projected climate damage could cost emerging markets hundreds of billions in climate damages and lost GDP growth this decade, according to a new study by Standard Chartered.

The Adaptation Economy, which investigates the need for climate adaptation investment in 10 markets – including China, India, Bangladesh and Pakistan – reveals that, without investing a minimum of USD30 billion in adaptation by 2030, these markets could face projected damages and lost GDP growth of USD377 billion: over 12 times that amount.

The projection assumes that the world succeeds in limiting temperature rises to 1.5°C, in line

with the Paris Agreement. In a 3.5°C scenario the estimated minimum investment required more than doubles to USD62 billion and potential losses escalate dramatically if the investment is not made.

Examples of climate adaptation projects include the creation of coastal barrier protection solutions for areas vulnerable to ooding, the development of drought-resistant crops and early-warning systems against pending natural disasters.

India to bene t the most from adaptation investment

Among the 10 markets in the study, India is projected to benet the most from adaptation investment. The market would require an estimated USD11billion to prevent climate damages and lost growth of USD135.5 billion in a 1.5°C warming scenario – equal to a thirteen-to-one return for the Indian economy of investment in climate adaptation.

Meanwhile, China could avoid an estimated cost of USD112 billion by investing just USD8 billion. And Kenya could avoid costs of an estimated USD2 billion by investing USD200 million in adaptation.

Study analyzes effects of European chicken exports to Ghana

The EU regularly exports large quantities of poultry meat to West African countries. These exports have been criticized for harming importing countries in West Africa and exacerbating poverty there. The reason: Cheap imports depress the local price of chicken, making life di cult for local smallholders.

Researchers at the Universities of Bonn and Göttingen have now used the example of Ghana to calculate the e ects that would result if the country

were to signi cantly increase its import tari s for poultry meat or even stop imports completely. The result: Prices would indeed rise domestically, but most local households would not bene t. The study has been published in the journal Food Security.

The EU mainly exports chicken parts in large quantities to various West African countries, including Ghana. "The topic is much discussed when it comes to poverty, international trade and Europe's role

for the agricultural sector in Africa," says Prof. Dr. Matin Qaim of the Center for Development Research (ZEF) at the University of Bonn. He and his team used nationally representative data from about 14,000 households in all regions of Ghana in their current study. They combined this micro data of production and consumption with a trade model. The approach is new in this context: "Such a combination of micro and macro data has not been used before to study the e ects of poultry imports on di erent populations in West African countries," says Matin Qaim. Previous case studies focused primarily on poultry producers.

The researchers calculated what the e ects would be if Ghana were to signi cantly increase its import tari s for poultry meat or even stop imports completely. The result: Domestic prices would, in fact, rise. If imports were stopped, local producers would get over a third more for selling their chicken—though most households in Ghana would not ben-

e t.

"This is because prices for consumers would also increase, and there are signi cantly more consumers than poultry producers," explains lead author Isabel Knößlsdorfer of the University of Göttingen. On the producer side, another factor is that many smallholder households produce poultry primarily for their own consumption, so they are less a ected by prices.

Disadvantages for most households

In their analysis, the researchers also distinguished between poor and less poor households in urban and rural areas. "We show that all of these groups would be worse o on average without poultry imports than with the imports. Poor households would eat 80% less chicken if imports were stopped," says Isabel Knößlsdorfer. Demand for poultry meat is rising sharply in many African countries and cannot be met by domestic production alone, she explains. These basic ndings can also be applied to other importing countries in West Africa. "Our results show that international

agricultural trade can have important positive development effects for West Africa," Knößlsdorfer emphasizes.

"A reduction in meat consumption in Europe would be entirely desirable for sustainability reasons, but in Africa the situation is di erent. Meat consumption is still very low in most African countries, so the cheap availability through imports improves the local supply and nutrition situation with proteins and other important nutrients," says Matin Qaim, a member of the Transdisciplinary Research Area Sustainable Futures and Cluster of Excellence PhenoRob at the University of Bonn.

"Of course, local agriculture in Africa also needs to be strengthened and promoted, however, striving for local self-su ciency does not make sense for all products," Qaim says. While a few households su ered from cheap imports, many more households bene ted. According to the team, it makes more political sense to target disadvantaged households instead of imposing general import restrictions.

Fostering recovery and transformation in Africa to reduce inequalities and vulnerabilities

the past two decades, which have reduced poverty levels in Africa with the share of the population living in extreme poverty decreasing from 55 to 35 percent between 2000 and 2019, 667 million people still live in extreme poverty in 2022.

t equally. For example, between 2004 and 2019, the top 10 percent of wage earners received about 75 per cent of total income. High inequality, along with high levels of poverty, creates a vicious cycle in which structural bottlenecks persist, rendering the population in Africa perennially vulnerable to both economic and non-economic shocks.

Agenda 2063: The Africa We Want, of the African Union, is higher than it has ever been before.”

attended by African ministers of Finance, Planning and Economic Development, representatives of member States, entities of the United Nations system, pan-African nancial institutions, African academic and research institutions, development partners and intergovernmental organizations.

A preparatory meeting of the Committee of Experts of the

Conference of African Ministers of Finance, Planning and Economic Development will precede the 55th Session followed by the ministerial segment of the Conference which will deliberate on the development agenda of Africa on the back of a raft of economic and political challenges facing the continent.

Despite high growth rates in

ECA’s Acting Executive Secretary, Antonio Pedro, said global shocks are turning millions of vulnerable people into the continent’s new poor, reversing decades of progress, citing that the COVID-19 pandemic has pushed an additional 55 million Africans below the poverty line.

Mr. Pedro said even when growth rates were high in Africa, everyone did not bene-

“The ability of African countries to e ectively tackle poverty and inequality is now severely constrained given declining economic growth, narrowing scal space, rising debt, commodity shocks and tightening global nancial conditions,” said Mr. Pedro, adding that, “The risk of missing the poverty and inequality targets set out in the 2030 Agenda for Sustainable Development and

The 55th Session of the Commission aims to renew focus and action on reducing poverty, inequality and other factors that have left the African population continuously vulnerable to these scourges.

Mr. Pedro urged that recovery efforts must be pro-poor and inclusive, with a view to fostering a new social contract that o ers equal opportunity for all.

Considerable opportunities to reach these goals exist on the continent and beyond, including through activities carried out under the African Continental Free Trade Area, green invest-

Banks seek shorter maturities in local debt -swap deal

Banks are holding out for better terms in a domestic bond-exchange program aimed at easing the government’s debt-service burden. This is according to Bloomberg.

No bank will make a pro t in 2022 if they accept the new bonds o ered under the exchange, and some face collapse, according to two people familiar with ongoing talks between the government and lenders, who asked not to be identi ed because they’re not authorized to speak publicly.

Ghana is restructuring most of its public debt, estimated at ¢467 billion ($39.2 billion) as at the end of September 2022, to qualify for a $3 billion bailout from the International Monetary Fund. Local bondholders have been asked to voluntarily exchange ¢137.3 billion of debt for new bonds that will pay zero interest in 2023 and less than existing securities in ensuing years.

The repayment of principal for

the new bonds won’t start until 2027 and ends in 2038, under current terms. Banks are negotiating for principal repayments to start by 2026 and end around 2033, the people said.

Banks, which own about a third of the existing securities, will make losses on the di erence between the net present value of their current holdings and the new bonds, the people said. They will have to make provision for the losses in their books to satisfy accounting standards, they said.

While the Bank of Ghana set the risk-weight of new bonds at zero percent for capital adequacy ratio calculations, auditors have disagreed, calling for full provision, the people said.

The Ghana Association of Banks, which declined to comment on the terms under negotiation, got approval from the Ghana Stock Exchange for members to delay ling 2022 nancial statements by a month to April 30, 2023, it said in a statement Thursday.

A nance ministry spokesperson declined to comment. Citigroup Inc. estimates net-present-value losses for bondholders of as much as 77% in 2023, it said in a January 4, 2023 note to clients.

Ghana is “con dent” it will reach an agreement with banks and close its debt ex change o er on Jan. 31, Fi nance Minister Ken Ofori-Atta said in an interview with Ac cra-based Joy News late Thurs day. He also said the zero-cou pon in 2023 was being recon sidered.

The government is targeting 80% participation in the do mestic debt swap program. It’s also engaging with bilateral creditors through the Paris Club to reach a restructuring deal by the end of February, and it’s in separate talks with holders of external debt to re structure eurobonds.

Over the next month, Ghana aims to make enough progress to go to the IMF Executive Board in March to secure a nal approval for its program,

Ofori-Atta said. The country seeks to lower its public debt from an IMF estimate of 105% of gross domestic product in 2022 to 55% by 2028.

Since Ghana launched its exchange program on December 4,

2022, there’s been pushback from several investor groups, resulting in three deadline extensions so far. The government has set up a 15 billion cedi fund to support the banking sector.

Fostering recovery and transformation in Africa to reduce inequalities and vulnerabilities

ters of Finance, Planning and Economic Development will precede the 55th Session followed by the ministerial segment of the Conference which will deliberate on the development agenda of Africa on the back of a raft of economic and political challenges facing the continent.

The 55th Session of the Economic Commission for Africa (ECA) Conference of African Ministers of Finance, Planning and Economic Development (CoM2023) will be held from March 15-21, 2023, in Addis Ababa, Ethiopia.

The Session, a statutory meeting of the ECA, will review the state of economic and social development in Africa as well as progress on regional integration.

CoM 2023 will be convened under the theme, ‘Fostering

recovery and transformation in Africa to reduce inequalities and vulnerabilities.’ It will be attended by African ministers of Finance, Planning and Economic Development, representatives of member States, entities of the United Nations system, pan-African nancial institutions, African academic and research institutions, development partners and intergovernmental organizations.

A preparatory meeting of the Committee of Experts of the Conference of African Minis-

Despite high growth rates in the past two decades, which have reduced poverty levels in Africa with the share of the population living in extreme poverty decreasing from 55 to 35 percent between 2000 and 2019, 667 million people still live in extreme poverty in 2022.

ECA’s Acting Executive Secretary, Antonio Pedro, said global shocks are turning millions of vulnerable people into the continent’s new poor, reversing decades of progress, citing that the

Can cedi coins save notes?

In the rush hours of one morning, I was greeted by a heated argument: "Change the money for me. I gave you nice money, and see what you have given me in exchange," requested a passenger.

"This is what I have. Someone also gave it to me. If you don't like, I don't know what to do," explained a bus conductor.

I guess many might have encountered same or witnessed similar happenings in one way or the other. The condition of the Ghana currency in public circles and market places is very worrying.

These are monies government, through the Bank of Ghana (BoG), spend huge sums of cash to print. How long would the Ghana Cedi, especially the notes, su er poor handling?

New notes are printed, and in no time, they are so old, weak and unpleasant to handle.

Gradually, the GH¢1 and GH¢2 notes are being replaced with coins. The GH¢5, GH¢10, GH¢20, GH¢50, GH¢100 and

GH¢200 would only be in notes.

The very group of people who mishandled the one and two-cedi notes are going to have the GH¢5 as the least denomination, followed by the other denominations.

Soon, we may come back and ask what the matter is: the GH¢5, GH¢10, GH¢20, GH¢50, GH¢100 and GH¢200 notes will also su er poor handling in the custody of bus conductors, hawkers, traders and the general public.

One beautiful national attitude was exhibited by Japan in the Qatar World Cup tournament.

Anytime Japan (spectators) went to the stadium, they picked rubbish after a match. Even when they lost the game or their country was not playing that day, they voluntarily kept the stadium spick and span. What a national training!

From the inference made, can't we, as a nation, start training ourselves in similar way, so as to protect our na-

tional currency notes? The central bank spends a lot of money in printing money - both the coins and notes.

Electronic means of transactions should be encouraged and even intensi ed.

Government should partner with the Oil Marketing Companies (OMCs) to o er special discounts or rewards to drivers who purchase fuel and pay electronically rather than in cash.

Advantage should be taken of our educational system. Since many people are in our schools - from pre-school to tertiary, proper ways of handling money should be added to Financial Literacy training.

The Education Ministry, through the Ghana Education Service, may encourage schools to patronise electronic means for collection of their funds to reduce cash handling.

The BoG should roll-out initiatives to partner with the religious bodies to educate their members, since they gather

Mr. Pedro said even when growth rates were high in Africa, everyone did not bene t equally.

For example, between 2004 and 2019, the top 10 percent of wage earners received about 75 per cent of total income. High inequality, along with high levels of poverty, creates a vicious cycle in which structural bottlenecks persist, rendering the population in Africa perennially vulnerable to both economic and non-economic shocks.

“The ability of African countries to e ectively tackle poverty and inequality is now severely constrained given declining economic growth, narrowing scal space, rising debt, commodity shocks and tightening global nancial conditions,” said Mr. Pedro, adding that, “The risk of missing the poverty and inequal-

ity targets set out in the 2030 Agenda for Sustainable Development and Agenda 2063: The Africa We Want, of the African Union, is higher than it has ever been before.”

The 55th Session of the Commission aims to renew focus and action on reducing poverty, inequality and other factors that have left the African population continuously vulnerable to these scourges.

Mr. Pedro urged that recovery efforts must be pro-poor and inclusive, with a view to fostering a new social contract that o ers equal opportunity for all.

Considerable opportunities to reach these goals exist on the continent and beyond, including through activities carried out under the African Continental Free Trade Area, green investments, digital transformation, and reforms to the global nancial architecture, he said.

wallet should be cultivated and practiced by leaders, to serve as example to the citizenry.

The "respect" accorded foreign currencies like dollar, pound, and euro should be given to our Ghana cedi; notes and coins.

Bus conductors, hawkers and traders should be enforced to use aprons with pockets, bags or big purses where electronic transactions are not available or possible and cash is received.

Churches should educate their

members to use envelopes and o ering bags or baskets for cash

Folding and pressing monies hard in the hands should be discouraged. Failure to take pragmatic measures now would soon see the GH¢100 and GH¢200 Cedi notes in bad state as the GH¢1.00 and GH¢ 2.00 notes. Save the Ghana Cedi today!

Richard Amoako-Sey Child Worker & Courtesy Coach,

Accra.

E-mail:amoakoseyrichard90@gmail.com

COVID-19 pandemic has pushed an additional 55 million Africans below the poverty line.

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The AfCFTA, an opportunity for Africa’s youth to accelerate trade and industrialization

areas critical to the AfCFTA, the challenges of infrastructure gap, lack of access to modern technologies, funding, electricity and broadband internet keep the youth on the sidelines of the free trade area.

At an online presentation meeting organized by the Regional Integration and Trade Division (RITD) of the Economic Commission for Africa (ECA), nine young mentees who have completed RITD’s “Youth for AfCFTA Mentorship Programme”, presented their nal assignment to senior sta in ECA.

Noting that young people can inuence policy decisions in favour of the AfCFTA in addition to providing labour, Ms. Jessica Debby Ndjadila, mentee of the Essay group, said Africa’s youth understood the technology enablers of the free trade area such as Information Technology, supply chain management, and nancial technology.

“African governments should prioritize intellectual property rights protection,” Ms. Ndjadila said, calling for scal policies to drive entrepreneurs into content distribution and the democratization of access to broadband connectivity.

The African Continental Free Trade Area (AfCFTA) is an opportunity for young people to accelerate Africa’s industrialization and economic transformation through entrepreneurship, youths say, calling for an enabling policy framework.

Through its Youth Protocol, the AfCFTA recognises that young people can play a critical role in the achievement of the free trade zone by initiating youth-led initiatives in agriculture, nancial technology, IT and in the creative industry.

However, they note that across the youth-dominant trade areas critical to the AfCFTA, the challenges of infrastructure gap, lack of access to modern technologies, funding, electricity and broadband internet keep the youth on the sidelines of the free trade area.

At an online presentation meeting organized by the Regional Integration and Trade Division (RITD) of the Economic Commission for Africa (ECA), nine young mentees who have completed RITD’s “Youth for AfCFTA Mentorship Programme”, presented their nal assignment to senior sta in ECA.

The youth participants highlighted that the AfCFTA presented huge entrepreneurship opportunities for them but that governments need to implement supportive policies and investment to ensure their participation.

Ms. Mie Vedel-Joergensen, Associate Expert in Economic Affairs, Market Institutions Sec-

tion of the Regional Integration and Trade Division (RITD) at the ECA said mentees of the “Youth for AfCFTA Mentorship Programme” are winners of a competition launched in March 2022 which led to the mentorship programme in ECA.

The competition with the topic; “The African Continental Free Trade Area (AfCFTA): What is in it for young Africans?” was developed by the Youth Alliance for Leadership and Development in Africa (YALDA) in collaboration with the AfCFTA Secretariat, Afreximbank, the International Trade Centre (ITC), the UN Development Programme (UNDP) and ECA.

The competition encouraged participants to develop essays, infographics or animation to communicate the potential impact of the AfCFTA on youth in Africa.

According to YALDA, the competition aimed to break information asymmetry among youth on the AfCFTA and promote a bottom-up approach to the policy formulation and implementation by harnessing innovative youth-driven solutions that will contribute to active youth engagement in the popularization of the AfCFTA.

Noting that young people can in uence policy decisions in favour of the AfCFTA in addition to providing labour, Ms. Jessica Debby Ndjadila, mentee of the Essay group, said Africa’s youth understood the technology enablers of the free trade area such as Information Technology, supply chain management, and nancial technology.

“African governments should prioritize intellectual property rights protection,” Ms. Ndjadila said, calling for scal policies to drive entrepreneurs into content distribution and the democratization of access to broadband connectivity.

Africa also needs to operationalise the Pan African Payment and Settlement System (PAPSS), a centralized payment and settlement system for intra-African trade in goods and services developed in 2022.

The platform would increase the competitiveness of and investment in youth-dominated start-ups in Africa.

Another group of youth developed an infographic to highlight the bene ts of gender inclusion in the AfCFTA. Noting that Sub Saharan Africa was losing an average of $95 billion annually as a result of gender inequality, the youth felt that investment in mobile and digital solutions can bridge the gender gap in Africa where the proportion of women using the internet was 25% lower than men.

“Implementation of the AfCFTA would increase employment opportunities and wages for unskilled workers and help close the gender wage gap,” said Mr. Richard Muraya, a youth whose group developed an infographic highlighting the opportunity cost of gender inclusion in the AfCFTA.

Mr. Stephen Karingi, Director of Regional Integration and Trade Division at ECA said young people fully understand what the AfCFTA is all about and their information products should be

The youth participants highlighted that the AfCFTA presented huge entrepreneurship opportunities for them but that governments need to implement supportive policies and investment to ensure their participation.

Ms. Mie Vedel-Joergensen, Associate Expert in Economic Affairs, Market Institutions Section of the Regional Integration and Trade Division (RITD) at the ECA said mentees of the “Youth for AfCFTA Mentorship Programme” are winners of a competition launched in March 2022 which led to the mentorship programme in ECA.

The competition with the topic; “The African Continental Free Trade Area (AfCFTA): What is in it for young Africans?” was developed by the Youth Alliance for Leadership and Development in Africa (YALDA) in collaboration with the AfCFTA Secretariat, Afreximbank, the International Trade Centre (ITC), the UN Development Programme (UNDP) and ECA.

The competition encouraged participants to develop essays, infographics or animation to communicate the potential impact of the AfCFTA on youth in Africa.

According to YALDA, the competition aimed to break information asymmetry among youth on the AfCFTA and promote a bottom-up approach to the policy formulation and implementation by harnessing innovative youth-driven solutions that will contribute to active youth engagement in the popularization of the AfCFTA.

Africa also needs to operationalise the Pan African Payment and Settlement System (PAPSS), a centralized payment and settlement system for intra-African trade in goods and services developed in 2022.

The platform would increase the competitiveness of and investment in youth-dominated start-ups in Africa.

Another group of youth developed an infographic to highlight the bene ts of gender inclusion in the AfCFTA. Noting that Sub Saharan Africa was losing an average of $95 billion annually as a result of gender inequality, the youth felt that investment in mobile and digital solutions can bridge the gender gap in Africa where the proportion of women using the internet was 25% lower than men.

“Implementation of the AfCFTA would increase employment opportunities and wages for unskilled workers and help close the gender wage gap,” said Mr. Richard Muraya, a youth whose group developed an infographic highlighting the opportunity cost of gender inclusion in the AfCFTA.

Mr. Stephen Karingi, Director of Regional Integration and Trade Division at ECA said young people fully understand what the AfCFTA is all about and their information products should be promoted in giving policymakers the right narrative about the free trade area. Besides, the youth have well demonstrated the potential of the AfCFTA and the issues that must be addressed by the protocols developed for the realization of the free trade area

The energy transition confronts reality

By Daniel Yergin

The “energy transition” from hydrocarbons to renewables and electri cation is at the forefront of policy debates nowadays. But the last 18 months have shown this undertaking to be more challenging and complex than one would think just from studying the graphs that appear in many scenarios. Even in the United States and Europe, which have adopted massive initiatives (such as the In ation Reduction Act and RePowerEU) to move things along, the development, deployment, and scaling up of the new technologies on which the transition ultimately depends will be determined only over time.

The term “energy transition” suggests that we are simply taking one more step in the journey that began centuries ago with the Industrial Revolution. But in examining previous energy transitions for my book The New Map, I was struck by how di erent this one is. Whereas technology and economic advantage drove earlier transitions,

public policy is now the most important factor.

Moreover, previous energy transitions unfolded over the course of a century or more, and they did not wholly displace the incumbent technologies. Oil overtook coal as the world’s top energy source in the 1960s, yet we now use three times more coal than we did back then, with global consumption hitting a record high in 2022.

By contrast, today’s transition is intended to unfold in little more than a quarter-century and not be additive. Given the scale of what is envisioned, some worry that macroeconomic analysis has been given insu cient attention in the pol-

icy-planning process. In a 2021 paper for the Peterson Institute for International Economics, the French economist Jean Pisani-Ferry notes that moving too rapidly to net-zero emissions could precipitate “an adverse supply shock – very much like the shocks of the 1970s.” He warns that a precipitous transition “is unlikely to be benign and policymakers should get ready for tough choices.”

Developments since energy markets began to tighten in the late summer of 2021 point to four big challenges to watch out for. First, owing largely to the disruptions caused by Russia’s war in Ukraine, energy security has become a top priority again. For the most part, keeping the lights

on and factories operating still requires hydrocarbons, so energy security means ensuring adequate and reasonably priced supplies and insulation from geopolitical risk and economic hardship.

Even with climate change remaining a central focus, US President Joe Biden administration’s has urged domestic companies to increase their oil production and released supplies from the Strategic Petroleum Reserve at a far greater scale than any previous administration. In Germany, the Greens in the governing coalition have spearheaded the development of the country’s capacity to import lique ed natural gas, with the rst deliveries of LNG from the US arriving this month through infrastructure built in less than 200 days. Energy security is not something that is going to be assumed away in the years ahead.

The second challenge concerns scale. Today’s $100 trillion world economy depends on hydrocarbons for over 80% of its energy, and nothing as massive and complex as the global energy system can be transformed easily. In an important

new book, How The World Really Works, noted energy scholar Vaclav Smil argues that the four essential “pillars of modern civilization” are cement, steel, plastics, and ammonia (for fertilizer), each of which is heavily dependent on the existing energy system.

Given these starting conditions, will solutions like veganism help? Smil points out that ve tablespoons of petroleum are embodied in the system that gets a single tomato from cultivation in Spain (including the required fertilizer) to a dinner table in London. Yes, energy e ciency could be improved. But the main e ects will show up in developed countries, rather than in the developing world, where 80% of all people live, and where rising incomes will drive up energy demand. That points to the third challenge: the new North-South divide. In the Global North – primarily Western Europe and North America – climate change is at the top of the policy agenda. But in the Global South, that priority coexists with other critical priorities, such as boosting economic growth, reducing poverty, and improving health by targeting indoor air pollution from

burning wood and waste. Hence, for many in the developing world, “energy transition” means moving from wood and waste to lique ed petroleum gas.

This divide was vividly illustrated last year when the European Parliament passed a resolution denouncing a proposed oil pipeline running from Uganda through Tanzania to the Indian Ocean. MEPs objected that the project would adversely a ect the climate, the environment, and

“human rights.” Yet they cast their votes from a body located in France and Belgium, where per capita income (in current dollars) is, respectively, 50 times and 60 times greater than in Uganda, where the pipeline is seen as a foundation for economic development. The resolution provoked a furious reaction. The deputy speaker of Uganda’s parliament denounced the Europeans for exhibiting “the highest level of neocolonialism and imperialism against

the sovereignty of Uganda and Tanzania.”

The fourth challenge concerns the material requirements of the energy transition. I see this as the shift from “Big Oil” to “Big Shovels” – that is, from drilling for oil and gas to mining the minerals for which demand will increase enormously in a world that becomes more electri ed.

In a new S&P study, The Future of Copper, we calculate that the supply of “the metal of electrication” will have to double to support the world’s 2050 cli-

mate objectives. Recently, a host of authorities – including the US and Japanese governments, the European Union, the World Bank, the International Monetary Fund, and the International Energy Agency –have all published alarming reports about the expected exponential growth in demand for minerals such as lithium and cobalt.

But alarm itself will not open major new mines, a process estimated to take 16-25 years and which faces ever-more com-

plex permitting requirements around the world. In some key resource countries, governments are openly hostile to mining.

So, while the direction of the energy transition is clear, policymakers and the public must recognize the challenges that it entails. A deeper and more realistic understanding of the complex issues that need to be addressed is essential as the e ort to achieve the transition’s goals proceeds.

Women’s empowerment and market skills improve rural livelihoods

(FVC) funding mechanism.

“The knowledge I gained from the WE-FBS training woke me up,” said Salop. “Before, I didn’t know what risks my farm was facing, how I could make more pro t, how to make a better plan and how to understand the market.”

Hos Salop’s days always began very early. She would cook breakfast for her husband and her three-year-old grandchild before working on her family farm in the village of Pongro in northwest Cambodia. She collected vegetables, fed the chickens and a pig, cleaned her house and dropped her grandchild o at school, all before heading to her full-time day job as a civil servant and member of the Ta Phou commune council. Even though this job generates much-needed additional income for her family, her husband, Day Deat, a smallholder farmer himself, used to be against her working there.

In rural Cambodia, it has been traditionally inappropriate for women to work outside their homes. These deep-rooted social norms result in discrimination and marginalization of rural women, limiting their access to education, resources, employment opportunities and

participation in decision-making processes.

At work at the council, Salop found that she could be condent and assertive, but she felt unable to do so at home. When faced with her husband’s remonstrations, she chose to remain silent.

On top of household tensions due to her employment outside of the home, Salop and Deat were racking up huge losses on their farm as ash oods were devastating their crops. In 2021, for example, they spent approximately USD 2 500 to cultivate cassava but with no returns. This dire situation forced the couple to re-think their livelihoods options and look for alternative solutions. Training to overcome challenges

In April 2022, Salop joined the Women’s Empowerment Farmer Business School (WE-FBS) training provided by FAO in partnership with the Kingdom of Cambodia and nancially supported by FAO’s Flexible Voluntary Contribution

She also highlighted the benets that the training made at home: “Women are empowered to share and discuss with their husbands, which leads to better mutual understanding and a greater willingness to share tasks. This approach has surely helped reduce household tensions as well as domestic violence, while allowing people to learn how to farm more pro tably.”

Since 2021, FAO and Cambodia’s Ministry of Agriculture, Forestry and Fisheries have jointly promoted a series of WE-FBS trainings, an innovative approach to foster gender equality and economic empowerment of rural women and men whose livelihoods depend on agriculture. Through the WE-FBS, women and men farmers become familiar with analysing markets to know what crops to grow, while getting the opportunity to discuss gender roles and challenges, critically re ecting on the root causes of gender discrimination, and come up with solutions.

“We recognize that farmers

cannot reach their full potential in agriculture unless social norms are addressed. So, we use this gender transformative approach to involve men and women to jointly address gender norms through family dialogue, while strengthening farmers’ entrepreneurial skills and enhancing their capacity to create business plans and analyse markets, which are key to the success of their farming businesses,” explained Rebekah Bell, FAO Representative in Cambodia.

Empowered and inspired The training equipped Salop with knowledge, skills and condence. She analysed the trends on her family farm and developed a ve-year business plan that she then presented to her husband, recommending switching from cassava to pig farming, a lower risk market-oriented activity. “We will gain nothing if we keep doing as before because there will be ooding and it always inundates our eld,” she recalled telling him. Until now, she would not have been able to discuss and plan household matters with her husband or point out the disproportional share of work that fell on her shoulders. However, after participating in the WE-FBS activities, she was able to challenge these norms and better communicate with him to change his expectations.

They both agreed to focus on rearing pigs after realizing the potential for swine products in their community. As a result, they increased the number of pigs they rear from one to ten. Following the training, Salop was also able to explain to her husband the bene ts of sharing their tasks more equally. “After discussing our plan, my husband started helping me collect and clean vegetables and feed pigs in the morning,” said Salop with a big smile on her face, noting the positive change in his behavior. She also kept her job as a civil servant.

Currently, Salop is among 60 provincial and farmer facilitators from the Banteay Meanchey and Siem Reap provinces who received training directly from the project’s ve national master trainers. They are expected to transfer the WE-FBS skills to further 600 farmers in these two provinces.

“I am happy with my facilitator role working to transfer knowledge I gained from the training to many other villagers,” said Salop. “I wish everyone from the 11 villages in this commune could join WE-FBS trainings.”

In the WE-FBS training, the FVC-funded project has trained 1 436 farmers, 57 percent of whom are women, and is also promoting gender equality through the establishment of Dimitra Clubs. Dimitra Clubs facilitate socio-economic empowerment, women’s leadership and self-help. They are informal groups of rural women, men and youth who come together to discuss issues, including gender relations, and seek solutions. In Cambodia, FAO, in collaboration with the Village Support Group, has enabled 1 307 people to form 40 Dimitra Clubs in 20 villages of the Banteay Meanchey and Siem Reap provinces.

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Is Europe deindustrializing?

European industry is reeling under the twin threat of high energy prices and President Joe Biden’s In ation Reduction Act (IRA) which, in essence, bribes Europe’s green industries to migrate to the United States. Are Europe’s industrial heartlands about to become rustbelts? Will Germany experience the trauma that Britain su ered as its factories closed, compelling its high-skilled manufacturing-based labor force to accept low-skill, low-productivity, low-wage jobs?

The threat is reverberating in Europe’s corridors of power.

German Chancellor Olaf Scholz moved quickly to propose a new European Union fund that will o er state aid for EU companies tempted by the US subsidies to emigrate. But in view of how slowly Europe moves, especially when common debt needs to be issued to nance anything, it is questionable whether the EU subsidies will counter the US subsidies in a timely and proportionate manner.

Germany’s car industry is a good example of what is at stake. Carmakers were dealt a double blow by the return of in ation: rising fuel prices deterred customers and increased production costs. Given the substantial portion of German industry that relies

on car manufacturing, commentators have begun to agonize over the country’s deindustrialization. Their angst is justi ed, but their analysis misses the crucial point.

By switching rapidly to producing electric vehicles with increasing amounts of renewable energy, German carmakers have already demonstrated a capacity to rise to the challenge of the green transition and rising fossil-fuel costs. If they also receive some state aid, either from the German government or the EU, they will probably continue to produce in Germany as many cars in the future as they did in the past.

But if fear of deindustrialization is overblown, there is nonetheless a point to German – and, by extension, European – anxiety that the whole continent is about to lose ground to the US and China. The shift to electric cars, which energy price in ation has accelerated, is shrinking the power and depth of European capital. In particular, compared to their American and Chinese counterparts, European capitalists have fallen far behind in the race to accumulate, and benet from, what I call cloud capital.

Consider the kernel of German capital’s power: pre-

cision mechanical and electrical engineering. German carmakers, in particular, got rich on the back of pro ts from building high-quality internal combustion engines and all the parts (gearboxes, axles, di erentials, etc.) that are necessary to convey power from such engines to a car’s wheels. But electric vehicles are mechanically much simpler to engineer. Most of their added value comes from arti cial intelligence and smart software connecting the car to the cloud – the very cloud that German capitalists failed to invest in over the past decades.

So, even if EU state aid succeeds in persuading Volkswagen, Mercedes-Benz, and BMW to produce their electric cars in Europe, rather than migrate to America to bene t from IRA subsidies, car manufacturing will never be as profitable in Germany and Europe as it once was. More and more of the pro ts to be made from electric cars will come not from selling the actual hardware but from applications sold to their owners (current and future) – exactly the way Apple makes a mint from “third party developers” that produce apps for iPhones sold via the Apple Store. When one adds to this the value of the data generated by the car’s

movements and uploaded to the cloud, it is not hard to see why cloud capital is already overshadowing the terrestrial capital that Europe is rich in. A similar story can be told regarding the energy sector. Once the pandemic receded and energy prices surged, Big Oil and Gas made a fortune.

The fossil-fuel industry thus gained a second wind, much like how the rise of corn prices in Britain during the Napoleonic wars, owing to the disruption of corn imports, gave British feudalists a second wind. But second winds do not last long. In the 1820s, capitalist pro t overcame the short-term revival of feudalist ground-rent; today, the post-pandemic surge in ination is already expanding cloud capital’s reach into the energy sector.

Fossil fuels are the domain of an unholy alliance of feudal-era contracts and terrestrial capital: The industry relies on licenses to drill on particular patches of land or ocean bed, for which governments and private landlords receive old-fashioned ground-rent. The industry also relies on old-fashioned capital goods, including oil rigs, tankers, pipelines, and oating regasi cation plants, to feed fossil fuels into large, highly concentrated, vertically integrated (or top-down) power stations which, both

aesthetically and economically, recall nineteenth-century factories – William Blake’s “dark Satanic Mills.”

Renewables, in contrast, are best deployed in a decentralized fashion, with solar panels, wind turbines, heat pumps, geothermal units, wave-powered devices, and so forth all horizontally integrated as part of a neural-like network comprising cloud capital. With little need for licenses that incur ground-rent, their productivity depends on smart networks that rely on sophisticated software and arti cial intelligence.

In short, green energy is cloud-capital intensive, much like the electric car industry. Again, even if the EU subsidies ensure that Europe’s industry mass produces solar panels, wind turbines, and other green equipment, Europe will lack access to the value chain’s most lucrative part: the cloud-based capital on which green-energy grids run.

Even if the return of in ation fails to deindustrialize Europe, it will force Europe’s manufacturing industry to adopt production methods that rely a lot more on the cloud capital that Europe lacks. In practical terms, unable to collect sucient returns to cloud capital, or cloud-rents, Germany’s surpluses will su er – and so will a European economy reliant on them.