Business24 Newspaper - July 3, 2020

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AfCFTA: Vegetable producers demand structured funding to survive

Flood control in Accra: GARID project to start in October

BY PATRICK PAINTSIL

Representatives of over 60 vegetables value chain-associated institutions and networks have called for the establishment of a dedicated funding arrangement to help horticultural businesses meet both domestic and continental vegetable demand, especially for those vegetables that the country has competitive and comparable advantage in producing.

The proposed Horticultural Support Facility, they said, should be part of a broader value chain policy that will help the local horticultural sector withstand the threats associated with the implementation of the African Continental Free Trade Area (AfCFTA) agreement.

“This will mitigate the threats to infant local industries, which are likely to collapse with the influx of cheaper commodities produced at low capital cost from all over the continent—coupled with Ghana’s poor fiscal and investment policy arrangements,” said a communiqué that they issued after a workshop in Accra.

A functional value chain policy for the vegetable sector can facilitate economic growth, improved livelihoods and income as well as improved nutrition and enhanced industry performance. These are critical to achieving food security for Africa’s increasing population, they further argued.

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BY EUGENE DAVIS

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Parliament urges Masloc to improve falling loan recovery

BY EUGENE DAVIS

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ECONOMIC INDICATORS

Watchdog urges tough action to combat illegal fishing

COVID-19 testing has cost state US$18m so far

*EXCHANGE RATE (INT. RATE)

USD$1 =GHC 5.6577*

*POLICY RATE

14.5%*

GHANA REFERENCE RATE

15.12%

OVERALL FISCAL DEFICIT

6.6 % OF GDP

PROJECTED GDP GROWTH RATE

1.5%

PRIMARY BALANCE.

-1.1% OF GDP

AVERAGE PETROL & DIESEL PRICE:

GHc 5.13*

INTERNATIONAL MARKET

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BRENT CRUDE $/BARREL

41.50

NATURAL GAS $/MILLION BTUS

1.78

GOLD $/TROY OUNCE

The impact of the COVID-19 pandemic on infrastructure development in Africa

COVID-19 provides extra incentives for committed climate action

1,765.05

CORN $/BUSHEL

329.50

COCOA $/METRIC TON

2,386.00

COFFEE $/POUND:

+5.70 ($108.30)

COPPER USD/T OZ.

220.15

SILVER $/TROY OUNCE:

Copyright @ 2020 Business24 Limited.

All Rights Reserved.

Tel: +233 030 296 5297

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17.07

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EDITORIAL

Time to deal with Accra floods decisively 1

Wash your hands 2

Cover your cough 3

Every year, parts of Accra is flooded during the main raining season.

Between May and July, media reports of flooded homes, cars and people swept away by floods become rampant.

This is not because of the lack of knowledge on the topography of the capital city or a lack of plan but the absence of the political will to see through any comprehensive programme to tackle floods in the city.

One of such projects designed to tackle floods in Ghana is the CONTI project. The contract, dated June 10, 2013 and signed between Ghana and Conti International, had a contract sum of US$593m Some two years after the Parliamentary approval, the original Export-Import Bank of the United States of America component

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

drainage and flood management infrastructure improvement in the capital city. The five-year GARID project is expected to commence in October.

Mr. Atta Akyea said the GARID project will, among others, address solid waste management improvement, informal settlements upgrading, metropolitan planning, and spatial data management.

Business24 believes that for the GARID project to succeed, there should be enough political commitment to see the project through and not abandon it midway because of few dissenting voices that may be affected in the project area.

AfCFTA: Vegetables producers demand structured funding to survive (…CONTINUED FROM COVER )

Wear a mask

of US$538m was reduced to US$280m, and the Standard Chartered Bank component of US$125m was abandoned under a new arrangement of phasing out or restructuring this turnkey project, post-parliamentary approval.

While the financing arrangement for the Conti project was undergoing boardroom massage, lives and properties worth millions of cedis have been lost. The full benefit of the project was never realized.

Works and Housing Minister, Samuel Atta Akyea, has now announced that the Conti project has been replaced with a US$200m World Bank-sponsored Greater Accra Resilience and Integrated Development (GARID) project, which will provide long-term soft credit to government to address

Ghana’s vegetable sector is constrained by fragmented value chain linkages and weak coordination amongst value chain actors, coupled with post-harvest issues of underdeveloped storage, processing and market systems.

But according to the group, the presence of a workable value chain policy with the right support systems that facilitate trade can revitalise the sector to improve health outcomes, promote food security and reduce poverty.

“We agree that local, continental and global trade are vital to generate demand and connect producers to consumers, as they facilitate the supply of horticultural commodities. Urgent action to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture within the vegetable sector is, therefore, extremely crucial,” the group asserted.

To promote the sector, the association also entreated the government to establish industrialised agri-parks and national agricultural technology development centres across the country to serve as the hub for local and exportable green-certified fresh and processed horticultural commodities.

The one-day workshop was convened by the Agency for Health and Food Security (AHEFS) with support from BUSAC Fund and its partners DANIDA

and USAID on the theme, “Systems Approach to Vegetable Value Chain Policy, Pandemic Response and AfCFTA Agreement”.

The AfCFTA initiative will launch a single market for Africa in which member countries will liberalise

up to 90 percent of their goods trade over a five-year period. The initiative is expected to boost intraAfrica trade, which is presently low, and increase the continent’s industrialisation.

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Flood control in Accra: GARID project to start in October

BY EUGENE DAVIS

A US$200m World Banksponsored Greater Accra Resilience and Integrated Development (GARID) project, which will provide long-term soft credit to government to address drainage and flood management infrastructure improvement in the capital city, is expected to commence in October.

According to the Works and Housing Minister, Samuel Atta Akyea, government has replaced an earlier flood management project, the CONTI project, with the five-year GARID project, which is much cheaper than its predecessor.

Appearing before Parliament on Thursday to answer questions on why the Ministry has abandoned the CONTI project and on the alternative solutions being proposed, he said: “Government has secured a better alternative.

This is cost-effective and will give this great nation value for money.”

The GARID project will, among others, address solid waste management improvement, informal settlements upgrading,

metropolitan planning, and spatial data management.

Gov’t to go to court over CONTI project The Minister said the CONTI project contract, dated 10th June, 2013 and signed between Ghana and Conti International, had a contract sum of US$593m, which was materially different from what Parliament approved in the sum of US$538m.

“The difference of US$55m cannot be traced to any justifiable expenditure, particularly against the backdrop that the estimates were computed without proper and adequate engineering drawings, designs and bills of quantities,” he said.

“Two years and four months after Parliamentary approval, the original Export-Import Bank of the United States of America component of US$538m has been reduced to US$280m, and the Standard Chartered Bank component of US$125m has been abandoned under a new arrangement of phasing out or restructuring this turnkey project, post-parliamentary approval,” he added.

Samuel Atta Akyea says government will probe the CONTI project.

He argued that the material differences in contract sums cannot be justified, hence government’s decision to go to court on the matter.

The Minister maintained that Parliament at the time did not have the full complement of the feasibility report and the bills of

quantities to inform the quantum of loans it approved.

“If you pay regard to the scope of work of the GARID project and you measure it with CONTI, you realise that this is a marked improvement on CONTI,” he insisted.

Parliament urges Masloc to improve falling loan recovery

BY EUGENE DAVIS

Parliament’s Finance Committee has urged the Microfinance and Small Loans Centre (Masloc) to improve upon its loan recovery rate, which declined from 64 percent to 55 percent between 2017 and 2019.

The committee made the recommendation in its report on the budget performance of the Office of Government Machinery for the 2019 financial year, which was debated in Parliament on Thursday.

Masloc is an agency under the Office of Government Machinery that provides loans and microcredit facilities to small businesses. The agency provides cash loans and asset finance arrangements to start-ups and also helps existing small businesses with capital for expansion.

Since its establishment in 2006, Masloc has been one of the government’s vehicles for

supporting job creation and improved livelihoods, especially as small businesses dominate the private sector of the economy.

The centre disbursed a total of GH¢99m as loans and towards projects in 2019, according to the Finance Committee’s report. In all, the centre disbursed more than GH¢115m to 97,195 beneficiaries over the past three years.

Dr. Mark Assibey-Yeboah, the chairman of the committee, said Masloc plays an important role in small business financing and encouraged its managers to ensure the centre’s sustainability by improving loan recovery and the organisation’s overall management.

Contributing to the debate on the report, the MP for Kumbungu, Ras Mubarak, suggested that Masloc should be placed under the Ministry of Trade and Industry, instead of it remaining under the Office of Government Machinery, to help improve its accountability.

Dr. Mark Assibey-Yeboah, the economist who chairs Parliament’s Finance Committee, wants Masloc to improve its loan recovery rate.

Joining the debate on a controversial note, Haruna Iddrisu, the Minority Leader, called for a parliamentary probe of the CEO of Masloc, Stephen Amoah, and his deputy, Abibata Shani Mahama Zakariah, who were candidates in the ruling New Patriotic Party’s June parliamentary primaries

in the Nhyiaeso and Yendi constituencies, respectively.

Mr. Iddrisu, who is the MP for Tamale South, said the two should be probed for allegedly engaging in vote-buying during the primaries.

Neither Mr. Amoah nor Ms. Zakariah were available to respond to the allegation.

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Watchdog urges tough action to combat illegal fishing

BY BENSON AFFUL

Steve Trent, Executive Director of the watchdog Environmental Justice Foundation (EJF), has said Ghana’s fishing sector is lagging behind others in terms of transparency of operations, resulting in widespread illegal fishing and loss of revenue for the Ghanaian people.

He said the Fisheries Commission must work with the Ghana Revenue Authority, Ghana Investment Promotion Centre and Registrar General’s Department to fully investigate beneficial ownership of vessels and ensure that the fishing sector complies with all relevant laws.

This, he said, is the only way that the government can ensure that the Ghanaian people receive a fair return on their own resources and that the sector is sustainably managed.

The EJF alleged that around 90 percent of Ghana’s industrial trawl fleet is linked to Chinese ownership. The foundation said these operators work through Ghanaian “front” companies, using opaque corporate structures to import their vessels and register them to obtain a licence.

The watchdog said Ghana’s law expressly forbids foreign ownership of industrial trawl vessels operating under the Ghanaian flag, both in terms of ownership on paper and, crucially, in terms of those who profit from the vessel—known as the “beneficial owners”.

“If properly enforced, Ghana’s new 2019 Companies Act will make it much more difficult for Chinese fishing corporations to illegally use Ghanaian ‘front’ companies to obtain local licences. Designed to improve transparency in company ownership and reveal any vested interests, the act requires clear identification of ‘beneficial owners’ – those that take home

the profits. This new law offers a great opportunity to realise legal and sustainable fisheries,” the EJF said.

“The confusion that front companies create around ownership means that these corporations often go unpunished for serious illegal fishing crimes which are threatening Ghanaian livelihoods and food security,” it

added.

Ghana’s fisheries are being driven to the brink of collapse by industrial trawlers breaking the law. If they are allowed to continue with impunity, without risk that they will be properly sanctioned, national food security and the livelihoods of millions of Ghanaians will be put at risk, the pressure group said.

COVID-19 testing has cost state US$18m so far

BY BENSON AFFUL

Testing for Covid-19 has cost the government about US$18m so far, Deputy Minister of Health Dr. Bernard Okoe-Boye has revealed.

Ghana has conducted more than 290,000 tests since the outbreak of the viral disease in mid-March, representing more than 9,000 tests in every one million population. Each Covid-19 test costs the government about US$60, the Deputy Minister said.

The government has had to increase health spending to cover the cost of managing the pandemic, while the virus is also affecting Ghana’s economy severely, with GDP growth projected to decline sharply and government revenue set for a big hit this year.

In April, Parliament granted a request by the Minister of Finance,

Ken Ofori-Atta, to withdraw an amount of GH¢1.2bn, equivalent to US$219m, from the oil stabilisation fund to finance the Coronavirus Alleviation Programme (CAP).

Part of the amount was used to finance food delivery to the vulnerable during a three-week lockdown of Accra and Kumasi in April as well as subsidies on water consumption from April to June.

The government has also received emergency budget financing from the International Monetary Fund (IMF) through a US$1bn rapid credit facility that was disbursed in April. A portion of the amount was earmarked for subsidies on electricity consumption during the months of April to June.

Ghana’s Covid-19 infections hit 18,630 on Thursday, with 14,046 recoveries, giving an active case count of 4,467 and deaths of 117 people.

Dr. Bernard Okoe-Boye was appointed to the health ministry in April as the pandemic raged in the country.

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The impact of the COVID-19 pandemic on infrastructure development in Africa

BY EMMANUEL AMOAH-DARKWAH & RICARDO REBOREDO.

A

frica has not been spared from the economic crisis triggered by the COVID-19 pandemic. The International Monetary Fund (IMF) is projecting -3.2% GDP growth in Sub-Saharan Africa, while the World Bank also projects GDP growth rates between -2.1% and -5.1%. This article will focus on Africa’s infrastructure projects and parse out the variegated effects that COVID -19 will have on these developments.

According to the African Development Bank (AfDB), Africa is currently facing an infrastructure deficit of approximately $130 billion a year, with a financing gap (a term used to describe infrastructure needs minus the total financing commitment made by all donors) of between $68-$108 billion. This shortfall extends across energy, transportation, water, and sanitation infrastructures, though the former two are among the most pressing in terms of economic development. To illustrate, road densities in Sub-Saharan Africa (SSA) are approximately a third of that of South Asia’s and only a quarter of all roads are paved. This results in travel times that are 2 to 3 times longer than in comparable corridors in Asia.

Similarly, generational capacity in Africa is approximately half of that in Southeast Asia, and 50% of the population of 24 countries in SSA lack access to grid-based energy. Such issues create barriers for market entry and regional integration (which is a major area of concern with the coming into force of the African Continental Free Trade Area (AfCFTA)) while simultaneously increasing national-level vulnerability to macroeconomic shocks.

COVID-19 and Africa’s Infrastructure Development COVID-19 is expected to significantly widen fiscal deficits across the continent, making infrastructure financing harder to come by. As a whole, the pandemic will likely set most largescale development projects back in the short-to-medium term as construction is halted due to labor and material shortages in the wake of lockdowns, cross border checks, and other preventative measures.

Infrastructure projects are notoriously difficult to complete on time and within budget, and the multi-scalar, trans-sectoral uncertainty associated with COVID-19 will only add to existing difficulties in project design and

implementation. Projects in the development phase will require recalculation of viability while those under construction will likely need supplementary negotiations between parties in light of possible liquidity challenges or changes in feasibility projections.

Yet the economic effects of the pandemic will be variegated and largely correlate with existing economic structures.

Project development will also be affected by regional- or national-level factors, for instance, increases in the costs of building materials. In Kenya, input costs have risen between 5% and 10% since the start of the crisis and the Chinese contractor that operates the country’s Standard Gauge Railway (SGR) recently furloughed 4,013 Kenyans and 471 Chinese nationals. Another Kenyan megaproject, the US$3.1 billion Lamu Port, is continuing as planned despite strict epidemic controls at the worksite.

Ethiopia has thus far been spared the worst of the COVID-19 pandemic with 5425 confirmed cases as of 27th June, 2020. National development projects, including the $4.8 billion Grand Ethiopian Renaissance Dam, remain on course. However, the Ethiopian government has had significant difficulties servicing its debts over the last several years and has sought to renegotiate the payment schedules for the Addis Ababa-Djibouti Railway, the Addis Ababa-Sebeta-Mieso-Dewale road project and interest payments on other Chinese debts. These issues have led to a lack of funding for smaller-scale projects, for example, the construction of an electrified railway between Awash and Hara Gebeya was delayed throughout 2019. China accounts for nearly half of Ethiopia’s external debt and has thus far sought to accommodate countries during the pandemic and committed to suspending both principal repayments and interest payments on a number of loans until the end of 2020.

In West Africa, Nigeria’s US$1.5 billion railway line linking Lagos to Ibadan is facing delays due to COVID-19. The line, which is being built by the China Civil Engineering Construction Corporation, was supposed to be completed by May 2020. Nigeria’s economy has been badly affected by the pandemic and spending cuts are likely with the government moving to offset the effects of the oil price collapse. A similar situation faces Ghana, where the government’s plan to augment the country’s infrastructure with a $2 billion Sino-Hydro deal will be negatively impacted by COVID-19.

One bright spot is that long-term projects like the Abidjan-Lagos road corridor remain in the planning/

formulation stages and the AfDB recently released approximately US$13 million to complete needed feasibility studies.

The Role of China’s Natural Resource Backed Lending in Africa China’s strategic interest in Africa is threefold and includes (i) gaining access to energy and natural resources, (ii) expanding of export markets for its goods and services, and (iii) gaining political support for its one-China policy and counterbalancing the dominance of rich industrialized countries. In view of the aforementioned, China’s mostly state-owned oil, mining and construction companies have become major players in the natural resource sector in Africa since 2000.

Resource-backed loans (RBLs) are loans provided to a government or a state-owned company, where: repayment is either made directly in natural resources (in kind) such as oil or minerals, or from a resourcerelated future income stream; or repayment is guaranteed by a resource-related income stream, or where a natural resource asset serves as collateral. Resource for infrastructure swaps involve the exchange of natural resources for infrastructure. China’s Export– Import Bank provided US$38 billion in loans for over 1,000 infrastructure projects in Africa between 2003 and 2011 and this has ballooned over the years.

In 2004, China and Angola initiated a US$2 billion Resource for Infrastructure (R4I) project to finance the reconstruction of infrastructure damaged in Angola’s civil war. At the end of 2011, there were 10 major R4I swaps, either concluded or in the process of implementation in eight African countries (e.g., Angola, Congo-Brazzaville, the DRC, Ethiopia, Gabon, Ghana, Sudan and Zimbabwe) with a total value of approximately $22 billion.

The COVID-19 pandemic and its accompanying commodity price crash will negatively affect these developments. Crude oil prices have fallen by two-thirds since January 2020 while prices of main

food commodities have declined by 9%. Experts have estimated that the global economy is facing an 18-month commodity price dip, though strong demand in large economies or blocs (e.g., China and the EU) may abbreviate the downturn. Commodity dependent countries in Africa particularly oilexporters (e.g., Nigeria, Angola) are among the most vulnerable to COVID-19.

Conclusion Given the sporadic and unpredictable nature of the COVID-19 pandemic, a return to normalcy is unlikely until a vaccine is developed and disseminated.

Additionally, Africa’s position within the global economy as a primary commodity supplier means that it is largely responsive to outside developments and the pace of global recovery will likely dictate the amount of capital available for continental infrastructure projects.

As such, the short-to-medium term outlook for Africa’s infrastructure projects remains uncertain. Longterm, the pandemic could spur redoubled interest in interregional connectivity, leading to the completion of projects like Lamu Port-South Sudan-EthiopiaTransport (LAPSSET); however, others may see isolationism and insulation as the best way to safeguard against future pandemics and privilege nationally focused projects.

Emmanuel AmoahDarkwah is an economist with specialization in economic policy analysis and an ambassador for the United Nations’ Sustainable Development Goals (SDGs).

Emmanuel is a sought after economic analyst locally and internationally.

Notable media houses to have granted interviews with him include BBC, Bloomberg, CGTN, China Africa Project among others.

Ricardo Reboredo is a geographer with a specialization in development, urbanization, and Sino-African relations. His latest work focuses on large-scale development projects and their effects on host country state-society relations. He has written for The Conversation and Business Day among others.

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Reopening Asia: How the right policies can help economic recovery

BY CHANG YONG RHEE

F

or the first time in living memory, Asia’s growth is expected to contract by 1.6 percent—a downgrade to the April projection of zero growth. While Asia’s economic growth in the first quarter of 2020 was better than projected in the April World Economic Outlook— partly owing to early stabilization of the virus in some—projections for 2020 have been revised down for most of the countries in the region due to weaker global conditions and more protracted containment measures in several emerging economies.

In the absence of a second wave of infections and with unprecedented policy stimulus to support the recovery, growth in Asia is projected to rebound strongly to 6.6 percent in 2021.

But even with this fast pickup in economic activity, output losses due to COVID-19 are likely to persist. We project Asia’s economic output in 2022 to be about 5 percent lower compared with the level predicted before the crisis; and this gap will be much larger if we exclude China, where economic activity has already started to rebound.

Clouds on the horizon Our projections for 2021 and beyond assume a strong rebound in private demand; however, this may be optimistic for several reasons: • Slower growth in trade.

Asia is heavily dependent on global supply chains and cannot grow while the whole world is suffering. Asia’s trade is expected to contract significantly due to weaker external demand, with total trade (exports plus imports) projected to decline by about 20 percent in 2020 in Japan, India, and the Philippines.

Reorienting Asia’s growth model toward domestic demand and away from a heavy reliance on exports has begun but will take more time to be completed.

• Longer than expected lockdowns.

Even when lockdown measures are fully relaxed, economic activity is not likely to return to full capacity, due to changes in individual behaviors and measures put in place to maintain physical distancing and reduce contagion. Our

recent study shows that while a lockdown may lead to a contraction in economic activity—as measured by industrial production—of about 12 percent a month, a full reversal in containment measures may increase economic activity by only about 7 percent. In addition, many Asian economies— especially Pacific Islands countries—depend on tourism, remittances, and other services that require in-person contact, which will take a lot longer to recover.

• Rising inequality. Inequality had already been rising in Asia, and our recent research shows how past pandemics led to higher income inequality and hurt employment prospects of those with limited education.

These effects are likely to be exacerbated in Asia due to the large proportion of informal workers, making the recovery more protracted.

• Weak balance sheets and geopolitical tensions.

Weakened household and corporate balance sheets in many Asian countries can weigh negatively on investor sentiment and amplify the effect of increasing uncertainties associated with geopolitical tensions.

But not all recent developments have been negative. Many Asian countries have been able to provide significant monetary and fiscal policy support—often in the form of guarantees and loans to households and firms. And lower oil prices and improved market sentiment and financial conditions are helping the recovery. However, these factors may not last. For example, our recent update on global financial stability cautions that a sharp adjustment in financial conditions—correcting the current disconnect between financial markets and other parts of the economy—could exacerbate already high borrowing costs for many Asian frontier markets and low-income countries, notably Pacific island countries.

Policies for the recovery Asian countries are experimenting re-opening, and policies must be geared toward supporting the nascent recovery without exacerbating vulnerabilities. They must use fiscal stimulus wisely and complement it with economic reforms. The priorities include: Close coordination between

monetary and fiscal polic y.

Monetary policy should help ensure the flow of credit to households and business.

Countries facing higher fiscal constraints could also use the central bank’s balance sheet more flexibly, aggressively, and transparently to support bank lending to smaller firms. In the face of large outflows, balance sheet mismatches and limited scope for macroeconomic policy maneuver, temporary capital outflow measures may be needed.

Resource reallocation. A robust recovery hinges on exiting the current phase of support and transitioning to new policies that help ensure resources are reallocated appropriately beyond the initial focus on preventing bankruptcies of incumbent firms, and thereby strengthen the solvency of firms. For example, flattening the bankruptcy curve by streamlining the restructuring and insolvency frameworks; ensuring that banks are adequately capitalized; and facilitating equity injections into viable firms and risk capital for new firms.

Addressing inequalities. Access to health and basic services, finance, and the digital economy should be broadened. Social safety nets should be expanded to extend unemployment insurance coverage to informal workers.

Addressing pervasive informality

will also require comprehensive labor and product market reforms to improve the business environment and removing onerous legal and regulatory obstacles (especially for startups), and policies to rationale the tax system.

IMF support Since the outbreak of the pandemic, the IMF has offered policy advice, financial assistance, and other support—including virtual initiatives to enhance skills and develop capacity among government officials— to all its member countries. To date, the Fund has provided emergency support to 7 countries across the Asia-Pacific region, with others expressing interest in our emergency financing instruments. Given the large and looming uncertainties at this moment, countries with sound fundamentals may want also to consider use of the Fund’s precautionary credit lines such as the Flexible Credit Line and the Short-Term Liquidity Line to insure against an abrupt tightening in external liquidity.

Indeed, S&P Global and Fitch have both published notes stating that facilities like the Fund’s precautionary credit lines could, by cushioning economies, support ratings. (Source: blogs.IMF.org)

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Digital Financial inclusion in the times of COVID-19

BY ULRIC ERIKSSON VON ALLMEN, PURVA KHERA, SUMIKO OGAWA, AND RATNA SAHAY

T

he COVID-19 pandemic could be a game changer for digital financial services. Low-income households and small firms can benefit greatly from advances in mobile money, fintech services, and online banking. Financial inclusion as a result of digital financial services can also boost economic growth. While the pandemic is set to increase use of these services, it has also posed challenges for the growth of the industry’s smaller players and highlighted unequal access to digital infrastructure. Several actions will need to be taken to ensure maximum inclusion going forward.

to ensure consumer and data protection, cybersecurity, and interoperability across users and national borders. Fintech firms also indicated a global shortage of “coders”—software developers and programmers.

The shift towards digital financial services was already helping societies advance financial inclusion before the pandemic started, benefiting many lowincome households and small firms with typically little access to traditional financial institutions.

Lockdowns and social distancing are accelerating the use of digital financial services, just as the SARS epidemic in 2003 hastened China’s launching of digital payments and e-commerce.

Many countries (for example, Liberia, Ghana, Kenya, Kuwait, Myanmar, Paraguay and Portugal) are supporting this shift with measures such as lowering fees and increasing limits on mobile money transactions.

Africa and Asia lead the way In a new study, we introduce an index of digital financial inclusion that measures the progress in 52 emerging market and developing economies. We found that digitalization increased financial inclusion between 2014 and 2017, even where financial inclusion through traditional banking services was declining. This is likely to have progressed more since then.

Africa and Asia lead digital financial inclusion, but with significant variation across countries. In Africa, Ghana, Kenya, and Uganda are front runners.

In comparison, the Middle East and Latin America tend to use digital financial services more moderately. In some countries, such as Chile and Panama, this likely reflects a relatively higher level of bank penetration.

In most countries digital payments services are evolving into digital lending, as companies accumulate users’ data and develop new ways to use it for credit worthiness analysis.

Marketplace lending, which uses digital platforms to directly connect lenders to borrowers doubled in value from 2015 to 2017. While so far concentrated in China, the United Kingdom, and the United States, it appears to be growing in other parts of the world, such as in Kenya and India.

Benefits beyond financial inclusion Financial inclusion benefits economies and societies as a whole. Previous studies have found that extending traditional financial services to low-income households and small firms goes hand-in-hand with increasing economic growth and reducing income inequality. Our analysis finds that digital financial inclusion is also associated with higher GDP growth.

During the COVID-19 lockdowns, digital financial services are enabling governments to provide quick and secure financial support to “hard-to-reach” people and businesses, as demonstrated in Namibia, Peru, Zambia, and Uganda. This will help mitigate the economic fallout and potentially strengthen the recovery.

The task ahead To tap the high potential of digital financial services in the postCOVID era, many factors need to fall into place. Equal access to digital infrastructure (access to electricity, mobile and internet coverage, and digital ID); greater financial and digital literacy; and the avoidance of data biases are necessary for a more inclusive recovery.

A global survey we conducted with more than 70 stakeholders— fintech firms, central banks, regulatory bodies, and banks— revealed that regulators need to keep up with fast-paced technological changes in fintech

At the same time, it is important to ensure that the fintech landscape remains sufficiently competitive to maximize the gains from digital financial services.

The COVID-19 crisis has presented potential benefits for the sector but also poses challenges for smaller fintech companies: tightening of funding, rising nonperforming loans, decline in transactions and credit demand.

Some halted new lending since the onset of lockdowns. Widespread consolidation and retrenchment of start-ups would lead to greater concentration in the sector and could set back inclusion. In the public’s interest, this points to accelerating the creation of governance frameworks for big fintech companies.

The pandemic shows that the trend towards greater digitalization of financial services is here to stay. To build inclusive societies and address rising inequalities during and after the ongoing crisis, global and national leaders must close the digital divide across and within countries to reap the benefits of digital financial services. This means finding the right balance between enabling financial innovation and addressing several risks: insufficient consumer protection, lack of financial and digital literacy, unequal access to digital infrastructure, and data biases that need action at the national level; as well as addressing money laundering and cyber risks through international agreements and information sharing, including on antitrust laws to ensure adequate competition.

Source: blogs.imf.org.

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COVID-19 provides extra incentives for committed climate action

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he need for a more focused and concerted climate change action has been given an extra boost by the COVID-19 pandemic.

This is according to Dr. Bob Offei Manteaw, a Research Fellow at the Center for Climate Changes and Sustainability Studies at the University of Ghana.

Speaking on the sidelines of the official launch of the National Climate Adaptation Planning Readiness Project in Accra, Dr. Manteaw said the project was timely and important and stressed the need for a cross-sectoral and multi-stakeholder collaborations.

He said the pandemic, currently ravaging havoc on countries and communities all over the world, had exposed the fragility of planetary health and the extent of human vulnerabilities.

“COVID-19 has not only exposed planetary fragilities; it has also given us a fair idea of the nature of the climate crisis and the imperative for focused responses”.

Dr. Manteaw who is a Senior Foresight Analysist for Foresight Planners Africa, and a member of the National Steering Committee of the project pointed out that the COVID-19 exacerbates a number of climate change risks which work together to increase human vulnerability, as well as deepen conditions of poverty particularly

in places like Ghana and other developing regions of the world.

“The impacts of COVID-19 on economic systems around the world have been far-reaching.

Ghana is no exception as people, especially the poor and the venerable, are currently suffering from its evolving impacts, he added”.

He said there was an urgent need for the world and of course Ghana to build new economic systems that value nature as a central source of human wellbeing and environmental health in a PostCOVID-19 world.

The Climate Change Adaptation Knowledge Brokerage Specialist said governments in all countries and at all levels must take cues from the current pandemic to respond to the growing climate crisis accordingly.

He said there was certainly a correlation between the pandemic and climate change and that the source of COVID-19 as learnt was from human interactions with animals and nature, adding, “clearly biodiversity and ecosystems come in as both risk and vulnerability factors.”

“Such interactions, I mean human dependence on ecosystems, are normal and are going on here in Ghana and at great environmental cost. The reality is that not many people know and understand the

complexity of such relationships.

This is why committed climate action is critical and it is also the reason why the launch of the National Adaptation Planning project is timely”.

Dr. Manteaw also emphasized the need for nature and ecosystemsbased adaptation solutions to climate change.

He said: “We need to help people understand human-nature interactions and what that means to our individual and collective survivability”.

“Just as COVID-19 has forced us to be mindful of social risks, that is who and how we interact with, so should we be mindful of biophysical and socio-ecological risks. Safeguarding biodiversity and ecosystems is therefore a requisite to reducing future health risks and to create resilient communities”.

Dr. Manteaw was emphatic about the fact that the ongoing COVID-19 pandemic had animated the critical importance of intentionality and mindfulness among people at all levels and in all places.

He said: “Mindfulness is the new normal and should be applied not only in health emergencies such as the current pandemic, but also in the climate change fight which is also a silent emergency.

“While the current pandemic manifests as a health emergency, it

could be more accurately framed as a planetary health emergency and in ways that capture the multiplicity of associated risks and impacts”.

The Research Fellow at the Center for Climate Change said the launch of the National Adaptation Planning project was timely, and would provide new opportunities and avenues to educate, create awareness and build individual, community and institutional capacity to provide the required leadership for climate action.”

“That this is what we do at the Climate Change Center at the University of Ghana. We train people,” he added.

Dr. Manteaw said: “We build capacity through research, training and knowledge dissemination and as a researcher and practitioner, who has just been given opportunity to play a role in this project, my hope is to do all I can to help the project achieve its set objectives”.

He said the challenge now was for all stakeholders to get on board and that it was time to reflect on COVID-19 as an environmental emergency with significant implications for how we approach the climate change crisis going forward. GNA

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FRIDAY JULY 3, 2020

News

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Ghana’s greatest entrepreneurs, business and corporate executives to be honoured The most prestigious Ghana Entrepreneur and Corporate Executive Awards would be held virtually for the first time this year.

After nine prestigious editions, Entrepreneur Foundation of Ghana (EFG), organisers of the awards, say the virtual awards has been brought about due to the limitations on conferences and social activities announced by the President of The Republic of Ghana to curtail the spread of COVID-19 pandemic.

Award winners would be honoured through a virtual live broadcast on TV3 Network, GTV, UTV and live streaming on Facebook, YouTube and Instagram scheduled for Saturday, 18th July, 2020 at 5:00pm live from Movenpick Ambassador Hotel.

This year’s event is under the theme: “Celebrating Ten Years of Entrepreneurship Excellence and Business Development in Ghana”.

The Virtual Special Guests of Honour are: H.E. Mrs. Claudia Turbay Quintero, Colombian Ambassador, Dean of Diplomatic Corps.; H.E. Mrs. Stephanie

Sullivan, US Ambassador, Guest Speaker, H.E. Sugandh Rajaram, Indian High Commissioner and H.E. Lulu Xingwana, South African High Commissioner.

This year’s award will mark the tenth anniversary Champions of Champions celebration of Ghana Entrepreneur and Corporate Executive Awards to honour Ten (10) Ghana’s Greatest Entrepreneurs of all time Award, Twenty Five (25) Entrepreneurs of the Decade Award (Champions of Champions) 2011-2020 and Six (6) Outstanding Corporate Executives of the Year Award 2019.

The Greatest entrepreneurs of all time are entrepreneurs above 70 Years of age who have revolutionized business, opened opportunities for others and impact felt for generations, their accomplishments are varied and not easily compared.

The Entrepreneurs of the Decade Award criteria are for entrepreneurs and business executives who have built a legacy and have demonstrated Entrepreneurial

Leadership, Sustained Business Performance, Integrity, Vision, Innovation within the past decade and the year under review.

The Entrepreneur of the Decade Award categories include: Overall Best Entrepreneur of the Decade Award, Lifetime Entrepreneurial achievement Award, Outstanding Entrepreneur/CEO of the Decade Award, Entrepreneur Personality of the Decade Award, Business Executive of the Decade, Woman Entrepreneur of the Decade Award, Managing Director (MD) of the The Corporate Executives Award criteria are for corporate executives who have demonstrated Corporate Leadership, Sustained Business Performance, Integrity, Vision, and Innovation within the year under review.

The Corporate Executives Award categories include: Outstanding Board Chairman of the Year, Outstanding Woman CEO of the Year, Outstanding Managing Director of the Year, Outstanding Chief Executive Officer of the Year Award and Outstanding

Manufacturing CEO of the Year award.

We received an overwhelming response from the last nine editions held in 2011, 2012, 2013, 2014, 2015, 2016, 201, 2018 & 2019 with overall presence of 450+ speakers, 5000+ award nominations and 3500+ attendees.

Notable diplomatic corps who have graced the awards as special guests of honour since its inception include: H.E. Robert Jackson, Former U S Ambassador, Sir Roger Gifford, former Lord Mayor of London, H.E Nesrin Bayazit, Former Turkish Ambassador, H.E. Gene A. Cretz, former US Ambassador, Mr. Brian Maxted, Kosmos Energy H.E, Peter Jones, Former UK High Commissioner H.E, Jon Benjamin, Former UK High Commissioner and H.E. Sun Baohong, Former Chinese Ambassador.

Supporting partners are; Entrepreneurs Business Network, Laundry Chief, Business24, Business & Financial Times, Ghana web TV3 Network and GTV.

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FRIDAY JULY 3, 2020

FRIDAY JULY 3, 2020

Agribusiness

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NDPC working on policy document on GMOs

BY REUBEN QUAINOO

Director-General of the National Development Planning Commission (NDPC), Dr. Kodjo Essien Mensah-Abrampa, has hinted that his outfit is developing a policy document on genetically modified organisms (GMOs) for the country’s agriculture sector.

Dr. Mensah-Abrampa said the long-term policy document on GMOs will be launched by the commission in the coming months.

“Innovation in agriculture is instrumental in achieving broadbased social and economic growth in developing countries like ours,” he stressed.

The Director-General made these remarks in an interview with Business24, speaking on Ghana’s agricultural sector, challenges smallholder farmers are facing and

what the commission was doing to support smallholder farmers in the country.

Chief Osman Fukuyama, a farmer at Bereku in the Central Region, who argues in favour of GMOs said its adoption will stand the test of time and enhance agricultural development in Ghana.

He said climate change, poor rainfall and crop diseases had impacted on their crop yields and these instances call for modification of crop varieties by using modern technologies adding that biotechnology was one of the best tools in plant breeding.

“Fears about monopoly and access to seeds were the initial concerns; a number of scientists have walked me through the processes to develop GMOs and now I see the opportunities in the technology” he added.

Dr. Daniel Osei Ofosu, a research scientist at the Ghana Atomic Energy Commission reiterated

Rice farmers still grappling with myriad of challenges –Study The use of farmer-saved seeds, lack of machinery to support commercialization and low use of fertilizers remain some of the many challenges rice farmers face, a study by the African Agricultural Technology Foundation (AATF) has revealed.

A statement signed by Madam Nancy Muchiri, Communications and Partnerships Unit, of AATF copied to the media said the study further showed that with climate change, there were many rice farms that were being abandoned in the respective countries due to high accumulation of salt, leading to salinity.

It said the results of the study confirmed the fact that as African farmers were beginning to innovate, increase productivity, and drive unprecedented progress across entire economies, climate change— as well as a surge of new pests and diseases—threatened the gains.

The said abiotic constraints associated with soil nutrient depletion and imbalances contributed significantly to low rice productivity in Nigeria, Ghana, Uganda and many more African countries.

It said only 9 per cent and 10 per cent of sampled rice producing communities in Nigeria and Uganda respectively, practised exclusive irrigated rice farming and that all the three countries were affected by droughts since most of the farmers practised rain fed agriculture leading to low yields.

It noted that more than half of the sampled farmers in Ghana (52

per cent), Nigeria (78 per cent) and 83 per cent in Uganda used farmer-saved seeds for subsequent production.

“The high use of saved seeds was linked to low yields in crops. Other reasons included; lack of money to procure other inputs (fertilisers, herbicides and insecticides) to guarantee yields,” it emphasized.

According to the statement, there was an emerging trend of youth increasingly taking up roles in rice farming in the three countries with Ghana recording 46 per cent, Nigeria 52 per cent, Uganda 47 per cent, which was an indication of labour availability and signals the sustained future of rice farming.

The statement quoted Dr Kayode Sanni, Rice Project Manager at AATF as saying, “For Africa to achieve desired growth in its agriculture sector and to create jobs for the youth and achieve food security, there is need to put in place reforms necessary to unlock agriculture’s potential.

“These reforms include; access to land, improvement of infrastructure, enhancement of extension services and farmer education, access to markets, finance and good quality seeds and adoption of new technologies”.

He said rice was an important food staple and a major source of carbohydrates in Sub-Saharan Africa (SSA) region, adding that in Nigeria and Ghana, it was the second most important cereal consumed and the third in Uganda. gna.org.gh

that GMOs are safe for humans and the environment.

He reassured that before any GMO food was put onto the market, it would have gone through the necessary safety precautions.

“Biotechnology is a scientific

method of enhancing food quality, safety and production and could cater for the myriad of challenges facing the Agricultural sector in Ghana and Africa in general”, he added.

Youth in cashew farming call for government support

Young people who are into cashew farming in the country have entreated the government to initiate policies and programs that will attract the youth into the sector.

In their view, cashew farming is not attractive considering the prevailing conditions under which they work.

In an interview with a Kumasibased radio station, some youth in the Jaman South District of Bono region who are into cashew farming said cashew production demand a lot of resources so without government’s support, it will be difficult for the farmers to embark on large scale production of cashew nuts enable them to get enough money to feed their families which will, in turn, attract the youth into the sector.

Among the support that the youth want the government to extend to cashew farmers are soft loans and free fertilizers.

The youth suggested that the government include cashew farming in its Planting for Food and Export program so that more state resources could be channeled into that sector.

They also pleaded with the government to eliminate middlemen who are mostly Indians from the purchase of cashew nuts and rather set up a body to buy the nuts directly from the farmers.

This, they said, will guarantee them a good price for their produce.

Notwithstanding all the problems associated with cashew production, the youth said, cashew farming is a lucrative job and appealed to their colleague to venture into it. gardja. org

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FRIDAY JULY 3, 2020

Feature

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Emirates delivers on customer promise, offers travel confidence

BY LANDRY SIGNÉ

In the past two months, Emirates has processed nearly 650,000 refund requests, returning over AED 1.9 billion to its customers and making good on its promise to expedite refunds after the COVID-19 pandemic disrupted travel plans for millions of customers around the world.

In April, Emirates had announced that it would ramp up its refunds capabilities and committed to clear its backlog by August, which at that time stood at nearly half a million requests. The airline had crossed that target by early June, after expanding its processing capability from an average of 35,000 requests a month, to nearly 200,000.

Adnan Kazim, Emirates’ Chief Commercial Officer said: “This pandemic is a black swan event noone expected, impacting travellers and hitting the airline and travel industry hard. At Emirates, we’ve earned our customers’ trust over the years and we value that greatly.

It is tough times for everyone, but we are committed to doing what’s right by our customers. That’s why we ringfenced cash to honour refunds, and invested resources to expedite processing. Our average

processing time for refunds has reduced from 90 days to 60, and as we see lower volumes of new requests we expect this rate to further improve. We still have over half a million refund requests to manage, and expect to clear these within the next 2 months.

We’d like to thank our customers for their patience and trust, and to those who have opted to hold their ticket or rebooked to travel at a later time - we look forward to welcoming you onboard soon.

In addition to refunds, Emirates continually reviews its booking policies and travel products, to offer customers added confidence to plan and book their journeys.

Flexibility and assurance Emirates currently offers travellers flights to over 50 cities, with convenient connections between the Americas, Europe, Middle East, Africa and the Asia Pacific through its hub in Dubai.

Dubai has recently announced that it will re-open to welcome international visitors from 7 July 2020.

With the gradual re-opening of borders over the summer, Emirates has revised its booking policies to offer customers more flexibility and confidence to plan their travel.

Customers who purchase an

Emirates ticket by 31 July 2020 for travel on or before 30 November 2020, can enjoy these fully flexible terms when they book a Flex or Flex plus fare, or if they have to change their travel plans due to COVID-19 related flight or travel restrictions (applicable to all bookings): • Free date change for travel in the same cabin to the booked destination, or to/from Dubai • Free rebooking to any alternate Emirates destination in the same region, or to/from Dubai • Extended ticket validity for 2 years from the purchase date

for future use • Convert the ticket value to a Travel Voucher that may be used as credit towards future travel purchases with Emirates, providing flexibility to reschedule when they are ready to travel again Emirates customers whose travel plans are disrupted by COVID-19 related flight or travel restrictions, can easily request travel vouchers or refunds via an online form on Emirates’ website, or contact their travel booking agent for assistance.

Dubai is ready to welcome international visitors from July 7, 2020. (Source: Emirates)

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