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Virus Pain: Seafarers battle stress and loss of income Move to improve legal framework for borrowing and lending MORE ON PAGE 3

BY PATRICK PAINTSIL

Ghanaian seafarers currently stuck on vessels are battling the stress of isolation while those on land continue to rue their lost incomes as the virus pandemic rages.

The worldwide lockdowns and bans on travel have seen some seafarers stuck on vessels because they are not signing off, and since crew change has been halted, those at home cannot go on board vessels.

This means that the impact of the coronavirus crisis is being felt harshly on both sides of the profession: that is, seafarers stuck on ships and seafarers stuck in their homes.

“Definitely, like all businesses that shut down, seafarers on land at the moment are not earning any money and, of course, the economic effects on their families and dependents are increasing,” Ing. Teddy Mensah, First Vice-President of the Maritime Professionals Club (MPC), the mother

body of seafarers and marine labour in Ghana, told Business24 in an exclusive interview.

He added: “The marine job is such that while you are at home, you are not earning anything; you only earn money during the time you are working and that means as long as they remain at home, they have to depend on their savings, which is not the best for anybody.”

While seafarers at home count their loss of income, those still working on vessels are battling severe stress and isolation because they are “locked down” at sea.

Because of the stress associated with the job, marine workers are normally engaged on vessels for a few months, ranging from three to eight, depending on the intensity of work.

At the end of their service, there is a crew change when the vessel comes to shore for a MORE ON PAGE 2

Post COVID-19: Call for boost to local drug production MORE ON PAGE 3

ECONOMIC INDICATORS

CDD joins opposition to Public Universities Bill MORE ON PAGE 13

How to avoid becoming irrelevant in the digital age MORE ON PAGE 7

Information security risk assessments of suppliers MORE ON PAGE 9

*EXCHANGE RATE (INT. RATE)

USD$1 =GH¢5.6153*

*POLICY RATE

14.5%*

GHANA REFERENCE RATE

15.12%

OVERALL FISCAL DEFICIT

6.6 % OF GDP

PROJECTED GDP GROWTH RATE PRIMARY BALANCE.

1.5% -1.1% OF GDP

AVERAGE PETROL & DIESEL PRICE:

GHc 5.13*

INTERNATIONAL MARKET BRENT CRUDE $/BARREL

35.25

NATURAL GAS $/MILLION BTUS

1.73

GOLD $/TROY OUNCE

1,734.68

CORN $/BUSHEL

329.50

COCOA $/METRIC TON

2,399

COFFEE $/POUND:

+5.70 ($108.30)

COPPER USD/T OZ.

220.15

SILVER $/TROY OUNCE:

17.07

Copyright @ 2020 Business24 Limited.

All Rights Reserved.

Tel: +233 030 296 5297 editor@thebsuiness24online.net

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EDITORIAL

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Wash your hands 2

Cover your cough 3

Wear a mask Brought to you by

LIMITED Copyright @ 2019 Business24 Limited. All Rights Reserved.

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)

Let’s build consensus on new public universities bill The new Public Universities Bill has stoked controversy within the education sector with some teacher unions and educationist strongly opposed to its passage.

The bill seek to harmonise the governance, administration and accountability structures of public universities but critics are particularly worried about the excessive powers it grants to the executive.

For instance, the bill grants power to the president to appoint a vice chancellor “through the backdoor” for the various public tertiary institutions and this is something critics feel may curtail the freedom of these universities.

The University Teachers Association of Ghana (UTAG) said, for instance, a vice

Virus Pain: Seafarers battle stress and loss of income (…CONTINUED FROM COVER ) new set of mariners to get on board.

But now, because of Covid-19, ships are getting to ports alright, but seafarers cannot get off the ships to interact with family, take fresh air or buy basic consumables, all of which add to their stress levels.

“With this situation that we are facing now, people are forced to remain on vessels. Those stuck on ships are being overworked, and because of the stress and isolation associated with the job, the impact of the virus crisis on seafarers could be dire,” Ing. Mensah said.

“It affects their safety of work and sense of judgement; some may not have interest in the job they are doing anymore. The longer they stay at sea, the more their morale goes down; it affects their work performance and safety awareness, which could lead to accidents or disasters at sea.”

Thousands of seafarers remain trapped at sea, on containerships and other cargo vessels, by coronavirus travel restrictions—which is a threat to supply chains, according to the International Chamber of Shipping (ICS).

chancellor that is appointed by the president cannot express concerns on issues without fear or favour. favou The CDD said government has supplied no justification or evidence to support the claim that public universities have “veered away” from their roles or objectives.

“Assuming without admitting that this claim is true, it speaks to the abdication of the responsibility of the regulators in ensuring that public universities stick to their objectives and roles. There is no indication that the existing law establishing various public universities is the root cause of this to justify the need for a new law. If the existing law is

not the problem, there is no need to replace it,” it added.

The new bill is coming to reform the process of governance and accountability in our higher institutions of learning but it must also be noted that that the autonomy of these institutions must be guarded and protected from excessive executive interference.

We urge consensus on this situation and ask stakeholders in the education sector to explore all existing structures to deal with the concerns that are being raised from various parties in whose interest the bill is being introduced.

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Move to improve legal framework for borrowing and lending

BY NII ANNERQUAYE ABBEY Parliament is set to deliberate on a new law to replace the Borrowers and Lenders Act it passed 12 years ago, which has been described by the government and central bank as insufficient to transform the financial sector’s credit administration regime.

The Borrowers and Lenders Act 2008 (Act 773) was enacted to improve on the standards of disclosure of information on lending and borrowing, and to promote a consistent loan recovery and enforcement system by lenders.

But after nearly 12 years, a new Borrowers and Lenders bill tabled before Parliament by the Finance Ministry is seeking to, among others, legislate the creation of a digital collateral registry to replace the manual system put in place by the existing law.

Commenting on the need to repeal the existing law, the bill’s memorandum noted that while the Bank of Ghana has sought to plug the current loopholes through a set of notices and guidelines, that approach is not sufficient.

For instance, last week, the central bank issued fresh guidelines on online payment for the collateral registry—a move, the BoG said, is to address the inconveniences associated with the existing pre-paid mode of payment.

But the memorandum

The new legislation is part of the government’s efforts to boost the country’s financial system

accompanying the new bill argued that: “Whereas the bank’s powers to issue the said notices and guidelines are derived from the Act itself and may be exercised in appropriate situations to fill gaps existing in the laws, administrative notices and guidelines may not be the appropriate vehicle to drive change which borders on legal rights of parties to a credit agreement.”

New bill The bill, which entered the house earlier this month, focuses on collateral administration, providing a seamless avenue for borrowers to register their collateral and for lenders to also call on collateral as and when the need arises.

According to the proposed legislation, a borrower or guarantor may settle the credit amount at any

time, subject to notice requirements and the conditions provided for in the credit agreement.

Also, in the event where a financial institution intends to dispose-off a collateral to defray monies owed to it, the new bill requires that a notice of at least 10 days be given before the sale.

The proposed law also confers investigative powers on the Bank of Ghana to subject to investigation any person suspected to have committed an offence or fraud in relation to a credit agreement.

The bank is also empowered to examine the books and accounts of any lender and to apply to a court for the issue of a warrant to enter and search the premises of a lender.

Reforms The proposed reforms in the bill

come on the back of a number of financial sector reforms championed by the Bank of Ghana in building a robust sector to withstand shocks.

Some of the recent changes include the creation of a deposit insurance scheme under the Deposit Protection Act 2016, which is aimed at providing a safeguard for depositors’ funds when financial institutions fail.

The recent wholesale restructuring of the financial sector also saw the Bank of Ghana establish a new office called the Office of Ethics and Internal Investigations to strengthen good governance within the bank and to promote the highest standards of ethical conduct commensurate with the bank’s mandate.

The office investigates all allegations of misconduct by staff, including any role in respect of the collapse of the defunct banks in the recent clean-up exercise.

Earlier this month, the central bank also announced that it had created a new FinTech and Innovation Office to drive the bank’s cash-lite, e-payments, and digitisation agenda.

A statement issued by the BoG said: “The new FinTech and Innovation Office will be responsible for licensing and oversight of dedicated electronic money issuers (mobile money operators), payment service providers (PSPs), closed loop payment products, payment support solutions, and other emerging forms of payment delivered by non-bank entities.”

Post COVID-19: Call for boost to local drug production

BY BENSON AFFUL Policy think tank Centre for Democratic Development (CDD) wants Ghana’s pharmaceutical supply chain to be realigned with an emphasis on improving the proportion of essential medicines that are manufactured locally, with the aim of driving down the average cost of generic medicines.

In its report titled “Post COVID-19: Expert Views on the Way Forward for Ghana”, the centre said the current situation where these essential medicines cost between 30-55 percent more in Ghana compared to the United Kingdom cannot continue.

“There will be a need to invest in [a] national strategic medicines stockpile. How we navigate these in the short to medium term will have a significant impact on our population profile, overall disease burden and life expectancy,” the report said.

According to the report, with job losses likely and out-of-pocket health

expenditure expected to rise, the National Health Insurance Scheme (NHIS) will have to be revamped to encourage more Ghanaians to use the scheme.

It said the emphasis should be on driving the current out-of-pocket spending down from 40 percent to below 20 percent while increasing the percentage of the population using the NHIS from the current 36.3 percent to close to 60 percent.

If this doesn’t happen, health poverty is likely to affect a large

percentage of the population, the report added.

The spread of COVID-19 to almost every corner of the world has resulted in global health and economic crises. It is now widely accepted that the global economy after the COVID-19 pandemic will shrink significantly.

Ghana’s GDP growth forecast for this year has been downgraded by the International Monetary Fund (IMF) to 1.5 percent. With a population growth rate of 2.2

percent, the result is that Ghana’s GDP per capita is predicted to decrease.

According to the CDD, this crisis has shown that when the entire world is simultaneously hit with a shock, developing economies are more likely to be the hardest hit as they are usually the least prepared and also lack the fiscal capacity to minimise the economic impact on the population—a quarter of which live in poverty.

“It is within this context that we propose some recommendations that policymakers should consider in a post-COVID-19 world,” it said.

“The post-pandemic recovery will be faster depending on the policies implemented during the pandemic.

The more the number of businesses that fail, the harder is the postpandemic recovery. One cannot think about post-pandemic policies without thinking about policies during the pandemic,” the report said.

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Implement healthy food environment policies to prevent diseases-Study A study published this week in the Food Policy Journal, by a team of local and international researchers, has identified priority recommendations to support government policy action towards creating healthier food environments in Ghana.

This study is the first in Africa to successfully apply the Healthy FoodEnvironment Policy Index (FoodEPI), developed by the International Network for Food and Obesity/NCD Research, Monitoring and Action Support (INFORMAS).

The Food-EPI tool and associated process can help to identify critical gaps in national policy action and support the identification and prioritization of actions to address them, by comparing national performance with international best practices.

All around the world, effective government policies are essential to increase the healthiness of food environments and reduce rising levels of overweight, obesity, and related non-communicable diseases (NCDs). Monitoring the level of implementation of policies and actions is an important part of ensuring progress towards better

population nutritional health. The Food-EPI tool has been applied in many countries including New Zealand, Canada, England, Australia, Malaysia, and Mexico.

The Ghana Food-EPI study assessed government actions and intents, implementation gaps, and priorities to improve the food environment compared to international best practices. A national expert panel comprising government and independent experts in nutrition, food, and health policy conducted this assessment.

Forty-three good practice indicators of food environment policy were used, with ratings informed by systematically collected evidence of action validated by government officials.

The policy indicators covered food composition, food labelling, food promotion, food prices, food provision in schools and other public-sector settings, food in retail, and food trade & investment. Other indicators covered leadership, governance, monitoring and evaluation, funding, platforms for interactions; and health-in-allpolicies.

Of the top policy actions

recommended for government action by the national expert panel; legislation to regulate advertising and sale of unhealthy food in children’s settings and the media, as well as providing sufficient funding for nationally relevant research on nutrition and NCDs were ranked as the highest priorities.

Other recommended priority actions to create healthier food environments in Ghana included fiscal policy interventions such as increasing taxes on unhealthy foods and implementing subsidies to increase the affordability of healthy foods. These recommended priority actions provide a feasible and realistic starting point for improving the food environment

and controlling nutrition-related NCDs in Ghana.

As part of efforts to build on the recommended priority actions from the Ghana Food-EPI rating exercise and support public sector actions that create healthy food environments in Ghana, a new study led by researchers at the University of Ghana is underway.

This study focuses on food promotion (marketing to children restrictions), and food provisioning (e.g. improving school nutrition policies/environment).

The current study is code-named MEALS4NCDs Project, which stands for ‘providing Measurement Evaluation, Accountability and Leadership Support (MEALS) for NCDs prevention’.

The Ghana Food-EPI study was part of the Dietary Transitions in Ghanaian Cities Project implemented in Ghana from 2017 to 2019. The full report authored by Amos Laar, Amy Barnes, Richmond Aryeetey, Akua Tandoh, Kristin Bash, Kobby Mensah, Francis Zotor, Stefanie Vandevijvere, and Michelle Holdsworth can be accessed at www.meals4ncds.org.

A record 50,000 Ghanaian families get insurance claims from AirtelTigo and BIMA Telecom operator AirtelTigo and BIMA, a leading provider of mobile delivered health and insurance services, have reached a proud milestone of paying 50,000 claims worth GHS22 million to insured families in the country since the launch of AirtelTigo Insurance.

Under this programme, AirtelTigo and BIMA offer AirtelTigo customers with simple and affordable insurance policies underwritten by Allianz Life Ghana and Prudential Life Ghana. For premium payments as little as GHS2 a month, customers of AirtelTigo and their insured relative can claim GHS30 per night at the hospital up to GHS900 a year, or receive up to GHS3,000 life cover.

With over two million (and growing) Ghanaians covered under the insurance, the accessibility and affordability of AirtelTigo Insurance products has played a key role in helping more unbanked and uninsured get better financial protection. This reaffirms the partnership’s commitment to improving the consumer’s financial security.

Commenting on the milestone, BIMA Ghana’s Country Manager Damien Gueroult, said: “We are proud of this milestone because

the magnitude of the number demonstrates our commitment to helping families in challenging times. It also rewards our efforts in making the claims process quicker and simpler through the use of WhatsApp to receive documents and mobile money to send payouts”.

“AirtelTigo is constantly evolving to meet the changing needs of the consumer. By making insurance accessible through the ubiquitous mobile phone, the hassles involved

in paperwork and claims have been reduced or eliminated. The landmark number of 50,000 paid claims has been achieved by the company’s “customer first” obsession and its quest to make the customer’s life simple” said the Chief Executive Officer of AirtelTigo, Murthy Chaganti.

For his part, the Deputy Commissioner of the National Insurance Commission, Kofi Andoh, congratulated AirtelTigo, BIMA, Prudential Life and Allianz Life on

their work in making insurance more accessible to Ghanaians.

“Insurance penetration in Africa is relatively low, but it is encouraging to see that Ghana has made considerable progress over the last few years. In difficult times, such as the current pandemic, the width of coverage that AirtelTigo Insurance has reached will make a difference in building financial resilience for Ghanaian families, especially those that were traditionally underserved by conventional insurance.”

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FUTURE OF BANKING

How to avoid becoming irrelevant in the digital age

BY EBENEZER ASUMANG “YOU CAN`T DELEGATE DIGITAL TRANSFORMATION FOR YOUR COMPANY. YOU AND YOUR EXECUTIVES HAVE TO OWN IT! EXECUTIVES NEED TO ENGAGE, EMBRACE AND ADOPT NEW WAYS OF WORKING WITH THE LATEST AND EMERGING TECHNOLOGIES.” - Barry Ross, CEO and Co-Founder, Ross & Ross International.

W

ith digital innovations and new business models being introduced at a faster pace than ever, financial institution managers at all levels must evaluate their role in the new marketplace in order to remain relevant.

Embracing the career changes that must be made is often difficult, but it is crucial, both for the individual and ultimately for their institution.

Change is Inevitable One thing is certain in today’s marketplace: Change is happening faster than ever before and will not happen slowly ever again. New technologies are being introduced that are replacing current jobs and dramatically changing the way all jobs are performed. At the same time, competition and consumer expectations are changing the way every organization will go to market in the future, requiring new skills and insights from executives and managers at all levels of the organization.

This era has been labelled the 4th Industrial Revolution, where data, advanced analytics and automation are upending existing business models. The challenge is that most organizations are not prepared for these massive changes, with many lacking the leadership and cultural foundation to be successful.

Responding to Change is not optional Research conducted by the Digital Banking Report elsewhere has shown that there is almost universal awareness that change is happening and that business models need to be adjusted. The problem is that most organizations (and people who work for those organizations) are not acting accordingly.

In fact, in a research, when asked whether organizations considered themselves to be digital transformation “leaders”, only 14% said they were making the changes needed. Possibly more concerning was that 27% considered themselves to be “fast followers,” 31% said they were “mainstream players,” and 28% admitted they were “laggards.”

In other words, while organizations and their teams know that change is needed, the mass majority are either not taking action or are slow to do so.

Lifelong Education is the foundation for Relevancy At times of massive change, being at the forefront of what is happening in the marketplace is the foundation for ongoing survival for businesses and individuals. While many may stop active learning when they graduate from school, leaders today need to continue to absorb knowledge in every form.

Some people decide to reenter the formal learning system while others either rely on classes offered by their organization, or aggressively pursue self-development through reading, videos, podcasts, etc.

As we move from analog platforms to digital business models, learning new skills is imperative. Some of the biggest skill gaps in business today include coding, digital analytics and others not even thought of five years ago. For individuals who want to avoid being disrupted because of career complacency, these are areas where they should focus.

Building a personal Brand is nonnegotiable Most people consider that building a personal brand is only important for those in the media or for those who want to create a buzz around a real or perceived “celebrity status”. In today’s marketplace, nothing could be farther from the truth. With the explosion of search engines, social media and digital-based employment services, creating a digital persona has never been more important. In much the same way that many consumers shop for financial services online as opposed to going to a branch, employers shop for new employees digitally as well. And, the only way

to stand out from the masses is go beyond a simple LinkedIn profile with a chronological career history by including personal articles, shared perspectives, comments on current trends and potentially even videos or audios of presentations.

Organizations are increasingly looking beyond just career accomplishments. They want to know what a future employee stands for and how they think. Sharing articles, insights and perspectives is the best way to accomplish this.

The Importance of Social Media ‘Attention’ Similar to old school advertising with traditional media, social media attention is achieved by leveraging social media platforms to get your message to your intended audience.

What is great about social media attention is that it is still free for most personal objectives. So, beyond just posting your insights and perspectives on LinkedIn, you can expand your reach and effectiveness exponentially by using Twitter, Instagram, YouTube and many other social channels.

Using multiple social media channels helps to illustrate you are an active learner, are embracing the change in the marketplace, are refusing to become irrelevant, and that you have a personal brand.

Don`t be Disrupted by others One must decide not to accept “forced retirement” because the person is viewed as irrelevant. You must love to learn, share insights and help others in the financial services industry so that “being disrupted” will not be an acceptable option. While change is very tough after doing things close to the same

way for decades, one will find that lifelong learning and “disruption to self” are key to survival.

Researching and sharing insights will allow you to be at the forefront of the marketplace and help build a personal brand that resonates with the marketplace.

Notes: h t t p s : // b l o g . k i n t o n e . c o m / business-with-heart/11-digitaltransformation-quotes-to-leadchange-inspire-action h t t p s : // t h e f i n a n c i a l b r a n d . com/90230/innovation-digitaldisrupt-fintech/?internal-link

Ebenezer ASUMANG (CGIA) worked extensively in mainstream banking and NBFIs. He is a Google Certified Digital Marketer, an Author and a Chartered member of the CGIA Institute, USA. www.ebenezerasumang.com /eben_asumang@yahoo.com/0242339145 LinkedIn – Ebenezer Asumang Facebook – Ebenezer Asare Asumang Twitter - @kwabenasumang

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ICT

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Information security risk assessments of suppliers

BY SHERRIF ISSAH Introduction Suppliers are entities (persons, organizations or countries) that provide products and or services to other entities. Suppliers are also referred to as vendors or service providers. Suppliers, in the context of this article refers to vendors, service providers, contractors and subcontractors.

Supply chains have become integral part of modern business operations. Engagements within supply chains require sharing of sensitive information and provision of access to information systems of organizations. This gives rise to information security (InfoSec) risks and can be very disruptive to businesses. It is therefore incumbent on organisations to work closely with suppliers throughout the procurement process (from onboarding to contract termination) to manage InfoSec risks. This needs to be embedded in the procurement / vendor management processes.

InfoSec Professionals need to be involved in the procurement process, with focus on high risk contracts to ensure appropriate controls are put in place to circumvent unforeseen circumstances.

Recent surveys have shown that, most data breaches are caused by third parties. Deloitte has reported that, between 2013 and 2016, 87% of businesses experienced disruptive incidents with third parties. According to Symantec’s 2019 internet security threat report, supply chain attacks increased by 78% in 2018. Third party vendor involvement was one of the major contributing factors to data breaches. Data breaches caused by third parties increased the cost of data breach by over US $370,000 (Ponemon Institute, 2019).

Recent breaches due to suppliers Hundreds of data and InfoSec breaches have occurred globally through suppliers. The following are some of the major breaches in 2019 and 2020.

In 2019, personally identifiable information (PIIs) of about 12 million patients of Quest Diagnostics were exposed via its vendor named American Medical Collection Agency. 3 terabytes of confidential information of FBI were exposed to the public via Oklahoma Department of Securities. Cultura Colectiva exposed over 540 million records of Facebook users’ credentials and comments. Plaintext passwords and email addresses of over 20,000 Facebook users were exposed via a supplier by name At the Pool. Payment card details of several customers of Focus Brands Inc. were exposed via its point of sale (POS) device vendor.

In early 2020, thousands of Instagram credentials were exposed through its supplier: Social Captain.

1.7 million PIIs of Nedbank customers were exposed through its supplier:

Computer Facilities (Pty) Ltd. Also, PIIs of General Electric employees were exposed through its supplier: Canon Business Services.

Standards, frameworks and regulations The need to conduct InfoSec risk assessment of suppliers is an international best practise, adopted by several standards, frameworks and regulations.

The 2011 Information Security Forum (ISF) Standard of Good Practice for Information Security (CF16.1.7) states, “The information security status of each external supplier should be assessed / validated on a regular basis, using a consistent and approved methodology (e.g. based on an industry standard).”

The ISO/IEC 27001:2013 standard (A.15.2.1) states, “Organizations shall regularly monitor, review and audit supplier service delivery”, of which information security forms part.

The 2018 Bank of Ghana Cyber & Information Security Directive (Section 88 (1c)) states, “An institution shall conduct a risk survey of a service provider and/or business partner at least annually.”

National Institute of Standards and Technology (NIST) Cyber security framework version 1.1 (ID.SC-4) states, “Suppliers and third-party partners are routinely assessed using audits, test results, or other forms of evaluations to confirm they are meeting their contractual obligations” COBIT 2019 framework (APO10.05) states, “Periodically review overall vendor performance, compliance to contract requirements and value for money.”

It must be noted that, contractual requirements or obligations of suppliers also include information security obligations, stipulated in contracts.

Procedure for conducting supplier InfoSec risk assessment Figure 1 shows the general procedure for conducting InfoSec risk assessment of suppliers.

Such assessments can be done remotely (through questionnaires) and or on the premises of suppliers. However, conducting the assessment via questionnaires only, may not be very effective, although it is a good starting point.

There are also third-party cyber risk assessment tools, which can be utilized to complement this process. These tools automatically collate and analyze third party cyber risk through passive scanning to provide a risk rating.

Importance of conducting supplier InfoSec risk assessment The importance of conducting supplier InfoSec risk assessment cannot be overemphasized.

The following are some of the importance of undertaking the assessment:

Figure 1: Procedure for conducting supplier risk assessment

1.It enhances the ability to maintain confidentiality, integrity and availability of organization’s information.

2.It increases the reliance and confidence in dealing with suppliers.

3.It significantly reduces the exposure of information security risks to organizations, their customers, and suppliers.

4.It provides organizations with competitive advantage.

5.It ensures compliance to standards, regulatory and contractual requirements.

6.It significantly reduces financial, reputational and operational risks to organizations.

Conclusion Research has shown that, lots of InfoSec breaches occur through suppliers.

Despite the huge security investments and controls implemented by organizations to safeguard themselves, they can easily be compromised through their suppliers. It is in the utmost interest of organizations and their stakeholders to ensure that, their suppliers are as secure as themselves.

Suppliers need to ensure that, InfoSec clauses/requirements contained in contracts with their customers are strictly adhered to. They need to provide full cooperation to their customers when it comes to such assessments because, it is also in their interest to be secured.

Sherrif Issah – (IT GRC Consultant @ Digital Jewels Ltd., and Editorial Board Member of IIPGH) For comments, contact author mysherrif@gmail.com | Mobile: +233243835912

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Aviation

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Tensions with China escalate as US accuses it of blocking US airlines The U.S. on Friday accused Beijing of blocking U.S.-based airlines from resuming flights to China, and ordered four Chinese airlines to file their flight schedules with the U.S. government.

The Trump administration cited a March policy from the Civil Aviation Authority of China (CAAC) saying that carriers could fly no more than the number of flights to China they were flying on March 12, according to a memo seen by Reuters.

However, since U.S. passenger airlines had stopped all flights to China by March 12, the policy “effectively precludes U.S. carriers from reinstating scheduled passenger flights to China,” the government alleges.

The government specifically noted that Delta Air Lines and United Airlines want to resume

flights to China in June. No restrictions have yet been imposed on Chinese airlines. The memo from Washington ordered that Air China, China Eastern Airlines Corp, China Southern Airlines Co, Hainan Airlines Holding Co and their subsidiaries submit schedules

of their flights by May 27.

The Transportation Department told Reuters it has “protested this situation to the Chinese authorities, repeatedly objecting to China’s failure to let U.S. carriers fully exercise their rights and to the denial to U.S. carriers of their right

to compete on a fair and equal basis with Chinese carriers” and called the situation “critical.”

Washington decided in January to bar entry into the U.S. for most non-citizens who had been to China in the previous two weeks to try to blunt the spread of the coronavirus, but did not restrict Chinese flights into the country. A number of major U.S. airlines voluntarily decided to halt their own flights into China in February.

The accusation comes amid heightening tensions between Washington and Beijing, which have traded claims that the other was responsible for the spread of the coronavirus and feuded over Chinese efforts to hold more sway over Hong Kong and Taiwan. (thehill.com)

Investing in airlines amid COVID-19 Frank Holmes, CEO and CIO, U.S. Global Investors answers various questions about the future of airlines in this difficult period.

How long could it take for travel demand to return to pre-virus levels? Will the increase in remote work hurt business travel?

It’s hard to predict when travel demand will fully recover. However, we’ve already seen an increase in commercial air passengers as lockdown restrictions are eased. The number of people the Transportation Security Administration (TSA) screened bottomed at 87,500 on April 14 and since then it’s risen steadily. As of May 20, the TSA screened more than 230,000 people, a gain of about 163 percent from the low.

Remote work has always been a threat to business travel demand.

More companies will likely transition to fully remote working post-lockdown, but I believe some travel will still be necessary for businesses. You can’t replace the human connection of meeting faceto-face with video chat.

Warren Buffett sold his stake in airlines. Do you think this will discourage other investors?

In early May, the “Oracle of Omaha” revealed that he recently dumped his entire stake in the big four U.S. airlines—Delta, American, United and Southwest. As of the end of December, the position collectively stood at around $10 billion. Buffett’s decision to exit airlines seems to have stemmed directly from the coronavirus lockdown and its impact on the travel industry. In other words, it had nothing to do with how the carriers were being managed.

While I agree with Buffett that the COVID-19 pandemic has been a challenge for airlines, I disagree with

his decision to dump airline stocks for that reason. Few industries have escaped unscathed from the virus’ impact, after all. I don’t think Buffett’s exit will deter other investors from the space. Buying the dips in airlines has been profitable, as seen in this chart below.

How can airlines stay profitable with greatly reduced passenger loads?

It’s true. Airlines are burning through cash as they continue operating flights with fewer passengers. Airlines 4 America reported that planes averaged just 17 passengers per domestic flight as of May 10.

In 2019, the average passenger load factor, or the percentage of seats on a plane occupied by passengers, in the U.S. was 84.62 percent. In April, American Airlines reported a load factor of just 15 percent and Southwest said they had a measly 8 percent. But in the month of May carriers are already seeing huge improvements. American is expecting an increase to 35 percent and Southwest between 30 and 35 percent load factor. Once we see second quarter reporting there will be a better idea of how airlines have stayed or not stayed profitable during the pandemic.

With planes flying at limited capacity to enforce social distancing could there be an increase in ticket prices?

Yes, airlines will likely continue to take revenue hits due to social distancing measures. For carriers not allowing passengers to book middle seats, they’re looking at a 33 percent revenue drop per flight.

I do not expect ticket prices to rise because of this. Airlines are trying to incentivize travelers to fly with lower prices and flexibility with rescheduling. For example, United

is allowing passengers to reschedule their trip if a flight is booked over 70 percent full.

Do you see airline stocks as a proxy for the COVID-19 vaccine?

Yes, I believe airlines can be seen as a proxy for sentiment surrounding a vaccine. After all, once a vaccine for COVID-19 is developed and distributed, travelers globally will likely feel more comfortable leaving home and interacting with others.

Legendary value investor Bill Miller appeared on CNBC last week and said that if you don’t own airlines, “you’re making a bet against the vaccine.” I agree with Miller’s optimistic view.

Will the recent decline in fuel costs benefit airlines?

Fuel is one of airlines’ biggest expenses. However, many carriers now hedge oil prices and secure locked-in prices. For example, Ryanair hedges almost 90 percent of its oil consumption, while Southwest is less than 60 percent hedged. Airlines learned from the oil surge in 2013 that locking in lower prices can be beneficial when prices rise, but a weakness when prices fall. Even with higher oil prices, airline stocks can still perform strongly looking at data from 2010 to 2018.

Do you think airlines could become nationalized in the U.S.?

Airlines in the U.S. were deregulated in 1978, incentivizing carriers to compete on fares, routes and services. I don’t think too many people would be in favor of returning to governmentcontrolled airlines. There is a strong competition domestically between the top four carriers – United, Delta, American and Southwest – in addition to many other major players. The government has already issued financial assistance for passenger carriers of $25 billion that was fairly evenly distributed between the top three players.

Southwest is far less dependent on international travel than American, Delta and United, which is part of why it received less aid. There could be continued nationalization of airlines in countries that have a clear flag carrier and were already struggling before the onset of COVID-19. For example, in France, Air France is a clear national airline and in Germany there is Lufthansa.

In Italy, the nation’s largest carrier Alitalia is back in government ownership for survival.

I remain optimistic about the airline industry and economic recovery after the COVID-19 pandemic.

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CDD joins opposition to Public Universities Bill

BY BENSON AFFUL The Centre for Democratic Development (CDD), a governance think tank, has written to Parliament to express why the legislature should not pass the Public Universities Bill into law, a move they say will give the executive too much power in the management of public universities in the country.

“It is the considered view of CDD that government has not made a case for this bill. If there are concerns about the governance of public universities, there are existing structures for dealing with them. The autonomy of public universities must be guarded to enable them meet their objectives and adapt to the ever-changing environment of learning,” the CDD said in a memorandum it submitted to the parliamentary committee on education.

The controversial bill, according to government, seeks to harmonise the governance, administration, and accountability structures of public universities.

The think tank said the justification for the bill that the Auditor-General has cited public universities for grave improprieties in the utilisation of resources almost every year is hardly supported with evidence.

“It is also hardly enough basis for the enactment of a new law to regulate public universities.

Assuming without admitting that this claim is true, there is sufficient existing law to punish or deter

the offending officials who have mismanaged public funds or continue to perpetrate same,” it said.

The think tank cited the Criminal Offences Act 1960 (Act 29), which contains a number of offences including causing financial loss to the state. It also argued that the Attorney-General under Article 88(3) of the 1992 Constitution is vested with prosecutorial powers to prosecute persons for stated financial impropriety.

It added that the Auditor-General is also clothed with powers under Article 187(7) of the Constitution to disallow expenditure which is contrary to law and surcharge persons responsible for incurring or authorising the expenditure.

It said the solution to the alleged grave improprieties in the utilisation of resources is to enforce existing laws and make the prosecutorial and accountability systems work.

“If any of these existing laws—

including those establishing the various public universities—are problematic, the relevant sections must be amended. The availability of the aforementioned existing laws practically renders the objective of this bill redundant.”

The CDD said government has supplied no justification or evidence to support the claim that public universities have “veered away” from their roles or objectives.

“Assuming without admitting that this claim is true, it speaks to the abdication of the responsibility of the regulators in ensuring that public universities stick to their objectives and roles. There is no indication that the existing law establishing various public universities is the root cause of this to justify the need for a new law. If the existing law is not the problem, there is no need to replace it,” it added.

It said the regulators in the education sector must therefore perform their mandate instead of seeking to enact a new law which vests excessive powers in the management of universities in the executive arm of government.

The University Teachers Association of Ghana (UTAG), also in a memorandum to the education committee, stated that the bill has the potential to stifle individual freedom by preventing individuals from speaking or acting without fear or favour if their appointments are to be regulated by the President through the University Council.

United Bank for Africa (UBA) to celebrate African Day The United Bank for Africa (UBA), is set to celebrate African Day with a virtual dialogue on the attainment of the Sustainable Development Goals (SDG’s).

UBA group wide has owned the AU Day celebration for the past few years with a vibrant and colourful presentation of the African culture.

As part of the celebration UBA organizes thought leadership sessions to deliberate on important topics that affect the continent.

The topic for this years’ discussion is; ‘’Domestic Policies, Regional Growth Plans, and A Global Agenda: SDGs & African Development at Crossroads’’.

This year’s session will be panelled

by Abiola Bawuah (Ghana) Regional CEO, UBA West Africa, Roland Kwemain (Cameroon)Leadership Coach and Chairman, Go Ahead Africa Ltd Sobel Aziz Ngom (Senegal) Founder and Executive Director, Social Change Factory and Dr Nalishebo Meebelo (Zambia) Senior Program Coordinator, Regional Network of Agricultural Policy Research Institutes (ReNAPRI. Veteran Nigerian Journalist and Media Consultant Eugenia Abu will moderate the event which

will be hosted via Zoom and broadcasted live on UBA’s YouTube and Facebook feeds due to current global constraints and the need to keep a social distance.

Since inception in 2005, UBA Ghana has established its presence in Ghana as a full financial service institution providing retail, corporate and investment banking services. The bank offers a wide range of unique banking solutions

and products to its customers.

The Bank pioneered the entry of a new generation of foreign banks into Ghana in January 2005. UBA Ghana’s presence in the banking industry in Ghana over the last decade has revolutionized banking in the industry, where competitive innovation in responding to the needs of the customers has become the driving force of the industry.

UBA’s world class customer driven innovations have earned it the confidence of the Ghanaian public; as it continues to provide banking services to a wide variety of customers.

All interested participants and media houses are to register with the link provided below: h t t p s : //w w w.u b a g ro u p.c o m / africaday2020

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Africa’s Hour of Need

BY ABEBE AEMRO SELASSIE

I

t is too soon to tell how heavy the human and health toll from COVID-19 will be in Sub-Saharan Africa. But the pandemic’s terrible economic impact on the region is already clear.

I have worked across SubSaharan Africa on and off since the early 1990s, and the scale of the economic challenge now unfolding is unlike any other during that time.

The region’s expected economic contraction this year – with GDP set to shrink by at least 1.6%, and by 4% in per capita terms – will be its sharpest since at least 1970.

There are several reasons why this pandemic is such a potent threat to the region. For starters, previous African crises, such as those stemming from natural disasters and commodity-price slumps, have always had a differential impact on its economies. But no country will be spared from the economic fallout of the virus.

Although the COVID-19 disease burden in some African countries has so far remained limited, this is the result of aggressive containment and mitigation measures, ranging from complete lockdowns to border closures. Formal economic activity has thus been brutally curtailed across the board.

Moreover, the poor will likely endure the brunt of the crisis.

People who must go out and earn a

daily living to put food on the table for their families are now being required to stay home and practice social distancing. And few of them will be able to work from home.

The significant deterioration of the external environment compounds the impact of these factors.

In particular, tighter financial conditions and sharp commodityprice declines (especially for oil) are exacerbating the challenges facing many economies.

Finally, and regrettably, most SubSaharan African countries’ ability to mount anything approaching the necessary fiscal and monetary policy response is severely constrained.

Many have high levels of public debt and limited domestic savings, and private external financing options have dried up just when they would have helped the most.

What are the region’s governments to do? The critical priority, of course, is to protect their citizens’ health and wellbeing. This requires boosting spending to improve the preparedness of health-care systems and providing targeted cash or in-kind transfers to the most vulnerable groups. Wherever possible, governments should also consider extending liquidity support to small and mediumsize enterprises to ensure their survival through this difficult period. This assistance must be provided in a transparent manner and in accordance with the highest governance standards.

But, more than ever, Sub-Saharan

African countries also need largescale external financing. The International Monetary Fund and the World Bank estimate that the region faces a government financing gap (assuming a modestly supportive fiscal stance) of at least $114 billion in 2020. African governments cannot mobilize this amount domestically.

For its part, the IMF can provide close to $19 billion of rapidly disbursable financing to African countries this year; 26 have already received funding from its emergency facilities. In addition, 19 of the region’s poorest countries will receive direct debt relief, with the IMF Catastrophe Containment and Relief Trust providing grants to cover their upcoming debt-service payments to the Fund.

Other development partners such as the World Bank Group and the African Development Bank are also ramping up financing. And G20 countries have stepped up with an important initiative to suspend debt-service payments until the end of 2020 for poor countries that request relief.

Despite these efforts, however, African governments still face a significant residual financing gap of at least $44 billion for 2020.

The case for the international community to bridge this shortfall is overwhelming. Providing these funds would greatly increase African countries’ ability to deploy fiscal measures to mitigate the pandemic’s adverse effects. And

international lenders would be making one of the most strategic long-term investments possible if they supplemented this financing with further support to buttress the region’s economic recovery.

One way or another, what happens in Africa will shape this century. Just ten years from now, Sub-Saharan Africa will account for more than half of the annual increase in the global labor force.

Moreover, the marginal increase in global consumption and investment demand will increasingly come from this region. The healthier Africa’s population is, the more robust the future global workforce will be. And the more climate-friendly the continent’s urbanization, the greener our future.

The amounts involved are certainly manageable. For example, $100 billion in new financing to support the region’s economic recovery amounts to only about 2% of the fiscal support that G7 governments have injected into their economies in recent weeks. And with global interest rates as low as they are now, it is hard to think of a more opportune time to make such a commitment to Africa – or a more important investment for our planet’s future.

bebe Aemro Selassie is Director of the African Department at the International Monetary Fund.

Copyright: Project Syndicate, 2020. www.project-syndicate.org

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Analysis of the proposal to make Ghana National Gas Company (GNGC) the national gas aggregator

BY AFRICA CENTRE FOR ENERGY POLICY ACEP has sighted a letter dated May 11, 2020 from the Presidency, endorsing and approving a proposal by the Ghana National Gas Company (GNGC) to assign the role of gas aggregator to the company, with further instructions for the expeditious implementation of the proposal by the Minister of Energy.

The original proposal is contained in another letter dated May 5, 2020 to the Minister of Energy with the following in copy; Minister of Finance, the Executive Secretary to the President, Board Chair of GNGC, CEO of Ghana National Petroleum Corporation (GNPC), Director General of State Interest and Governance Authority (SIGA), the Deputy Ministers and Chief Director of the Ministry of Energy.

Under the current arrangement, GNPC occupies the strategic responsibility of gas aggregator with a function to pool gas resources from all upstream sources and sell to bulk consumers. GNGC is primarily responsible for processing of gas and the sale of natural gas liquids.

There has also been the policy flexibility for the GNGC to sell gas to non-power and industrial consumers. Under the proposed arrangement, GNPC will cease to perform the responsibility of gas aggregator to allow GNGC to integrate the mid-stream gas operations (Aggregation, Processing and Transmission).

In 2015, government approved the takeover of GNGC by GNPC as a subsidiary for the latter. A key consideration for this consolidation was to make it possible to have a more integrated management and financing of projects in the oil and gas sector. This was particularly necessary to provide the needed financial securities for the development of the Offshore Cape Three Points (OCTP) project. ACEP’s position on this arrangement was that GNPC had the capacity to manage gas projects and had the financial muscle through its share of petroleum revenues to undertake new gas projects, for the purpose of expanding gas processing and transmission facilities. It is still the position of ACEP that if this had been followed, it could have given GNPC a sharper focus on the oil and gas industry.

It was evident at the time that GNGC could not raise financing to undertake the critical expansion of their processing facility, and also provide financial guarantee for the upstream development as the aggregator. These fundamentals are still true today.

Being a gas aggregator comes at a significant risk imposed by the industry dynamics such as being witnessed with Covid-19 and the usual volatilities. When GNPC securitized the investment of the OCTP project, it was done with the fact that GNPC was the most capable state entity within the value chain to provide securities for the project. GNPC was in such a better position with cash reserves, was lending to government and could negotiate a loan at an interest rate of 4.43 percent from Deutsche Bank. Because of the industry exposures shortly after it negotiated the loan, GNPC’s risk exposure increased and therefore could not access the loan. The result was that the projected counterpart investments from GNPC in the OCTP could not be done. Consequently, the OCTP partners invested on behalf of GNPC and recovered the debt by encumbering almost two years oil lifting of its participating interest in the OCTP project. If GNGC had been the company exposed to such risks, it would likely be nonexistent today as its assets would have been unable to offset the debts. This also means that

OCTP gas which today is the fuel supply backbone of the power sector would not have materialized with GNGC as the aggregator.

Throughout the proposal, GNGC has ignored their lack of capacity to assume and manage the obligations that come with being a gas aggregator. GNGC has proposed a novation of relevant contractual arrangements with both upstream and downstream partners from GNPC to it. The proposed novation of contractual obligations within the sector comes with risks and this requires that the company that wants to assume the obligations show how they will manage the risks.

The designation of a national aggregator is a policy decision within the control of government which can be made for good or bad reasons. However, GNGC’s proposal for relevant gas contracts to be novated from GNPC to GNGC will not be a unilateral decision. The OCTP partners agreed with government to make GNPC the gas aggregator as a condition for developing the project because of GNPC’s financial position. Any decision to novate the existing gas agreement has to be agreed to by the upstream investors.

In the light of the foregoing, it is not difficult to predict on the basis of GNGC’s financial position that no Exploration and Production (E&P) company will novate their Gas Sales Agreement to GNGC. Gas Sector Key Issues The decision of the presidency was based on a document submitted by GNGC which makes a case for adjusting the institutional framework in the gas sector. In that document, GNGC highlights the key issues in the sector.

In ACEP’s assessment, none of the key issues raised is a function of GNGC being the aggregator.

“Consistency with World Industry Models” GNGC in their document has provided examples of some integrated companies as best practice models to assume that their proposed integration model is a world industry model. They however concede that in big markets like the OECD, the functional model is a full disintegration of the value chain; where functions of processing, transmission and distribution are performed by independent companies.

Analysis of various contexts show significant distinctiveness that makes it difficult for anybody to conclude that there is an industry model that ought to be imported into Ghana. In the analysis below, ACEP shows how different the following companies in the comparator countries selected by GNGC are from their proposal.

National Gas Company (NGC) – Trinidad and Tobago NGC’s core activities are the aggregation, purchase, sale, transmission and distribution of natural gas. The company does not operate as a gas processor even though it owns shares in a gas processing company (Phoenix Park Gas Processors Ltd (PPGPL)). PPGPL has a processing capacity of about 1.95 billion standard cubic feet per day, a profitable company which has about 13 times the processing capacity of GNGC. GNGC is comparing itself to a company whose core mandate is different from it as a processor of gas.

Again, the integrated model proposed by GNGC is different from what happens in Trinidad and Tobago.

SONAGAS – Equatorial Guinea SONAGAS forms joint ventures with several other companies to undertake LNG development and gas processing in the country. The company participates in the entire gas value chain as minority

shareholders. The context defines how SONAGAS operates; it is a relatively small market (with a national population of about 1.3 million) which allows for the integration of the power and gas value chain. Marathon Oil and Noble E.G are key companies which lead projects that SONAGAS participates in as a minority shareholder. These consortia process gas and use much of the processed gas for Methane and electricity production.

The situation in Ghana is different; the ownership of the consuming market is not the same as that of Equatorial Guinea. This informed the original plan of separating aggregation, processing and transmission of natural gas in Ghana to ensure fair access to the market.

Nigeria Gas Company (NGC, Nigeria) and Petronas Gas Berhad (PGB, Malaysia) The National Gas Company of Nigeria is a fully integrated midstream company operating as a model equivalent to the proposal by GNGC. However, the company is a subsidiary of the Nigerian National Petroleum Corporation (NNPC).

This model harnesses the upstream commitment of NNPC as a national oil company. This is a similar model that was proposed and implemented briefly in 2016 which would have allowed synergy between upstream and midstream sectors of a relatively small industry in Ghana with 12 consumers. The same model is operated by PETRONAS Global, through its subsidiary Petronas Gas Berhad in Malaysia.

TGN and TGS (Argentina) These are independent private companies operating two segments of the Argentine market. TGS is a privatelyowned natural gas processing and transportation in the south while TGN is responsible for transportation of natural gas in the north and central parts of Argentina. The TGS model is what GNGC operates currently with no restriction on their proposed projects of constructing pipelines to Kumasi and Ivory Coast.

The operations of TGS and TGN show that it is possible to have two companies operating within a segment of the value chain as may be defined by the context.

Petroleum Authority of Thailand (PTT) – Thailand PTT is a completely different model which was set up by the government of Thailand to import petroleum for domestic use. The company has over the years evolved into an integrated oil and gas company by using its financial muscle to propel its subsidiaries into petrochemical business, refinery, and exploration and production business.

This is the bottom up integration model; the opposite of which Ghana was experimenting with GNPC. Gazprom Gazprom operates the top-down integration model, is a global conglomerate and a fully integrated E&P company. The Russian situation cannot be compared to that of Ghana. The country has enough oil and gas resources that allows many independent national oil companies to integrate along the value chain and remain financially sound. This model is an outlier and should not have appeared in GNGC’s proposal.

Summary of Ghana’s Context The function of an aggregator in Ghana today is not a luxurious one. There are many commitments that GNPC has made which have been discussed above as having dented the corporation’s financial position. GNGC does not have the capacity to assume the liabilities of the commitments that come with the role of an aggregator as shaped by the Ghanaian context. Again, the gas sector issues used

by GNGC to make a case for integrating

the gas midstream are issues that could be addressed by the stakeholders in the sector without GNGC becoming a gas aggregator.

It must be noted, that Ghana has paid too much price for political experimentation with the gas commercialization efforts.

The original plan after oil discovery was for GNPC to lead the gas commercialization efforts to ensure that the processing of Jubilee gas coincided with first oil. After the change of government in 2009, that role was taken away from GNPC to allow the establishment of an independent national gas company. This led to significant delays in the setup of the company, sourcing of financing and the construction of the plant. As a result, processing of jubilee gas could not be possible until November 2014.

This delay was harshly paid for by the Ghanaian people when gas supply from Nigeria was disrupted in 2012. If GNPC had progressed as planned to bring on the processing plant in 2011, domestic gas would have been available to substitute the shortfall from Nigeria.

This could have provided relief for the hydro sources of power which was overstretched as a measure to reduce the impact of load shedding until they could no longer operate at their optimal capacity. The consequence of load shedding is documented by ISSER and ACEP to have cost small businesses about $686.4million annually and about $1 billion losses in revenue to the power sector agencies in 2014-2015 period.

The Gas Master Plan recommended that GNGC becomes a subsidiary of GNPC, with GNPC performing the role of a gas aggregator. According to the master plan “The decision to appoint GNPC as the aggregator of gas and making GNGC a fully owned subsidiary of GNPC will improve coordination in the sector and facilitate infrastructure investment and financing.”

This in addition to the security requirement by the OCTP partners informed government’s decision in 2015 to make GNGC a subsidiary of GNPC which was subsequently implemented in July 2016. Unfortunately, the merger only lasted for five months and abandoned after a change of government. The proposal to make GNGC the gas aggregator is therefore not in line with the country’s Gas Master Plan which is a product of institutional and stakeholder consultation with support from USAID. This should not be altered at the wish of one party in the value chain.

Abandoning the Gas Master Plan deflates the confidence of Development Partners in financing future policy development.

Transferring the role of an aggregator to GNGC also introduces significant risks for upstream investment and the power sector. The weak balance sheet of GNGC makes it unattractive to the investor community which has implication for exploration and production. The coincidence of the policy change with the challenging global oil industry on the back of COVID-19 further exposes the country to high investment risks.

Recommendation Make GNGC a subsidiary of GNPC as a response to the implementation of the Gas Master Plan: The optimal option for achieving results in the oil and gas sector for Ghana is to pursue the topdown integration model with GNPC at the top as an anchor. This allows GNPC to support subsidiaries along the value chain with their balance sheet. This also requires that GNPC is refocused to invest its money in the core oil and gas business as has been done by other integrated national oil companies.

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Winning the war against maternal and child deaths BY: TEDROS ADHANOM GHEBREYESUS , HENRIETTA H. FORE, NATALIA KANEM, KEVIN WATKINS

E

ven before the COVID-19 pandemic, the world was not on track to deliver on its promise – included in Sustainable Development Goal 3 – to end preventable maternal and child mortality by 2030. And now the pandemic is jeopardizing precious but fragile gains.

As the world focuses its attention on winning the battle against COVID-19, we must not forget that we are still fighting a war against preventable child and maternal deaths – a war that world leaders pledged to win by 2030. The international community must recommit to that promise and deliver on it this decade.Child survival is perhaps the greatest untold success story in the recent history of international development. Since the early 1990s, the mortality rate for children under age five has plunged by nearly 60%.

And the annual rate of decline has accelerated since 2000, saving millions of lives. Maternal mortality has also fallen rapidly – by nearly 40% over the last 20 years.

These gains are largely the result of efforts to extend the reach of health systems in the world’s poorest countries. Primary health care has been the catalyst for some of the most impressive gains.

Countries such as Bangladesh and Ethiopia have achieved astonishing progress by training and deploying health workers where they can be most effective – namely, in the communities they serve.

International cooperation has been another powerful driver of change.

Aid provided through Gavi, the Vaccine Alliance since 2000 has enabled over 760 million people

to be immunized against deadly diseases, saving more than 13 million lives.

Despite this progress, children and their mothers are still dying at appalling rates. Over five million young lives are still being lost every year – almost half in the first month of life – to preventable or treatable diseases like pneumonia, malaria, and diarrhea. More than 800 women and adolescent girls die every day from preventable causes related to pregnancy and childbirth, owing largely to a lack of reproductive health care.

Even before the COVID-19

pandemic, the world was not on track to deliver on its promise – included in Sustainable Development Goal 3 – to end preventable maternal and child mortality by 2030. If progress over the next decade mirrors the last, over three million children will still be dying annually in 2030.

Maternal survival goals will also be missed by a wide margin.

The danger now is that COVID-19 will widen the gap between the SDG promise and reality. Supplychain disruptions, intensifying financial pressures, and the diversion of health workers and resources are already undermining

service delivery in vulnerable areas. Gavi reports delays on “14 Gavi-supported immunization campaigns,” as well as “four national vaccine introductions,” leaving over 13 million people – many of them children – without vaccine protection. Meanwhile, lockdown policies and fear of infection are deterring people from seeking other kinds of health care. Researchers at the Johns Hopkins University School of Medicine estimate that a 15% reduction in the use of routine health services over a six-month period could lead to an additional 253,000 child deaths.

Another research team at the Guttmacher Institute estimates that even a modest decline of 10% in coverage of pregnancy-related and neonatal health care would result in an additional 28,000 maternal deaths and 168,000 newborn deaths.We have seen this story play out before. During the 2014-16 Ebola crisis in West Africa, the breakdown in routine service delivery caused a catastrophic surge in child deaths from malaria and other diseases, as well as an increase in maternal mortality and stillbirth.

Like Ebola, COVID-19 demands the world’s attention – and cooperation.

Without a vaccine, there is no exit from the pandemic. That is why the development and equitable distribution of a vaccine is so critical. International cooperation to strengthen health systems and deliver the tests, protective equipment, and medical supplies needed to save lives remains a firstorder priority.But we must not allow a new health crisis, however deadly, to increase the toll of old killers on the world’s most disadvantaged children and women. Avoiding that outcome will require a four-pronged approach.

First, governments and aid donors must defend hard-won gains in child and maternal health by protecting budgets for community health services, including maternal health care and immunization.

Next month’s donors’ meeting to decide on Gavi’s funding for 202125 is critical. By heeding Gavi’s call for $7.4 billion in funds, donors would enable the organization to immunize an additional 300 million children in developing countries

over this period – saving up to eight million lives. There is no more costeffective health investment.Second, efforts to build more resilient health systems should be strengthened, with a focus on addressing the weaknesses that COVID-19 has exposed. For example, many of the world’s poorest countries lack medical oxygen, which is essential for treating not only COVID-19, but also childhood pneumonia – which kills 800,000 under-five children each year – as well as malaria, sepsis, and newborn respiratory problems.

Third, it is time to abandon the false notion that universal health coverage is an unaffordable luxury. What is unaffordable is the inequality, suffering, and inefficiency that comes with financing health services through user charges imposed on people too poor to pay. With poverty set to rise, the elimination of these charges and strengthening of publicly financed health systems is more urgent than ever. In fact, universal health coverage is included in the same SDG as preventable maternal and child deaths, underscoring their interconnectedness.

Finally, as financial pressures on health systems mount, we must explore every avenue for resource mobilization. The International Monetary Fund and the World Bank have secured a commitment from the G20 countries to suspend debt repayment from the poorest countries. Surely this is an opportunity to convert money earmarked for debt servicing into an investment fund for child and maternal health.COVID-19 is a devastating reminder of our shared vulnerability. But we are all united by the shared values reflected in our pledge to end preventable child and maternal deaths. As we fight the pandemic, we must hold to that pledge and fulfill the promise made to the children and women whose lives are at stake.

Tedros Adhanom Ghebreyesus, former Minister of Foreign Affairs of Ethiopia, is Director-General of the World Health Organization; Henrietta H. Fore is Executive Director of the United Nations Children’s Fund (UNICEF); Natalia Kanem is Executive Director of the United Nations Population Fund; and Kevin Watkins is CEO of Save the Children UK. Copyright: Project Syndicate, 2020. www.project-syndicate.org

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Developing real estate markets in Sub-Sahara Africa: The fundamentals (…CONTINUED FROM PAGE 21 OF MONDAY, MAY 18, 2020 EDITION)

BY DR. WILFRED K. ANIMODAME, FGHIS, MRICS

S

elected real estate markets in the Sub-Saharan region have shown greatest improvement in investment opportunities in recent years. Countries from this region have taken centre stage by improving transparency to push into the higher frontiers of real estate investment. Five out of eight Sub-Sahara African markets – Kenya, Ghana, Nigeria, Zambia and Mauritius – ranked in the global top 10 improvers by GRETI in 2014.

This first-rate performance suggests affected countries are now targets for international corporate businesses who are seeking real estate vehicles for regional hubs in the continent. To account for the remarkable performance, this study argues that tangible strategies may have been implemented in the respective countries to improve governance and the regulatory framework with the view to promoting investment.

Kenya emerges as the world’s top transparency improver. Specific interventions that have accounted for this excellent performance include increased availability of real estate market data. Potential real estate investors are able to systematically access rental data in Kenya; a significant attraction for international real estate investors.

Credible data accessibility and consistency has been the driving force in the Kenyan real estate market in recent years. Another reason for the top global improver rating is the introduction of a framework for Real Estate Investment Trusts in 2013.The country’s commitment to digitize all land records and establish a database on land rent may be assessed as a premium for Kenya’s outstanding performance.

In comparison, Ghana chalked an improved overall transparency index at the 7th position, accounted for, primarily by the enhanced land registration coverage nationwide.

Operationalized land registries have since 2013 been established in all the 10 regional capitals by the Lands Commission with the view to decentralizing land administration services in the country. Systems for securing title in land, the bedrock of real estate are therefore expanded to promote investment in the real estate sector. Another performance indicator is the ongoing efforts to put in place a new urban planning framework to stimulate real estate investment. Further, the establishment of Credit Reference Bureau, a database on borrowers

in the country earned Ghana its enviable third position on the top 10 global transparency improvers.

Ghana, indeed, is accordingly one of the easiest countries in Africa to register real estate, enforce contracts and access credit; all as critical ingredients for real estate development.

Doing Business Report 2015 ranks Ghana at 70th out of 189 countries for ease of doing business globally.

The real estate market development in Nigeria as per GRETI rating is significant. Ranked 8th in the SubSaharan Africa, Nigeria is reported to be making concerted efforts to improve real estate transparency; Lagos State is archetypal. In 2013, a new comprehensive second Lagos State Development Plan (LSDP) was adopted to streamline the regulatory environment and also promote incentives for private sector participation in real estate investment and other businesses.

An increasing expansion of the country’s land registry is also ongoing. In that regard, Key drivers are land registration initiatives, the creation of Geographical Information Systems (GIS) maps and implementation of an e-approval system for development permits, though on a pilot basis.

Evidence provided by GRETI suggests that South Africa remains the most transparent real estate market in Sub-Saharan Africa.

South Africa is ranked first and also rated as the most transparent real estate market in Africa. It is further rated among the world’s top 20 transparent markets and has consolidated its position with new legislation to establish the World’s 8th largest REIT market.

An indication of how most countries in the sub-region are not covered by GRETI might reflect in the perceptions of global real estate investors and can be estimated by cross-referencing with the wider country coverage of the World Economic Forum’s “Global Competitiveness Index” (World Economic Forum, 2015).

Across countries where both are available, ranking for the two indices correlate strongly at 0.89.

Two of African’s top improvers globally – Kenya and Mauritius – outperformed emerging markets such as Argentina, Ukraine and Mongolia; the only exception is Ukraine, which ranked 76th under GCI with Kenya and Mauritius at the 90th and 39th positions respectively (see Exhibit 1).

The comparison at Exhibit 1 suggests that most Sub-Sahara African real estate markets are currently well within the investment horizons of mainstream global real estate investors on account of GRETI and GCI benchmarks, with more attraction for South Africa, Mauritius, Algeria, Morocco and

Zambia.

A 2015 Global Property Guide, characterizes the selected real estate markets in Africa as possessing generally supportive investment potentials in diverse ways.

In response to the increasingly high attraction of overseas real estate investors to continent, other countries apart from South Africa are now demonstrating competing opportunities. Exhibit 2 provides a handy summary enabling comparison between the real estate investment markets performance in selected African countries.

Specific indicators of rental yields, low transaction costs, low rental tax rate and pro-landlord market characteristics are good investment drivers in the continent.

Others such as political risk, high transaction costs, high inflation and complex land title registration emerge in the Sub-Saharan Africa as restraining forces for real estate market development (see Exhibit 2 for country specifics).

Strong real estate investment demand is driven by substantial yield, which is evident in South Africa, Ghana, Uganda, Kenya and Namibia as moderate or high.

All six real estate markets studied are pro-landlord. For example, in Ghana and Nigeria there are no effective rent controls. Lagos, however, has a “Rent Control of Residential Premises Law”, which is not being implemented. Landlords and tenants in both countries freely agree on rent payable.

Rents are often paid, in advance, for two to three years. Landlords may accept advance payments for only one to one and a half years; however, in that case rents are significantly higher. Similar tenancy arrangements prevail in Ghana with dollar indexed rent for investible properties, but payable in local currency – Cedis.

The pro-landlord rental markets in Sub-Sahara African economies can therefore be explained by fundamentals. Rental income is obviously, market determined.

This research argues that because the supply curve of a real estate investment is highly inelastic, it is basically vertical in the short term, though it may flatten out over time.

Generally, in Africa income, inflation, demographics and local currency-US dollar exchange rate are the major demand determinants for real estate asset. Anything that, indeed, may shift the demand curve in the short term tends to show up in rent or price as the case may be rather than quantities.

The inelastic supply curve of real estate investments therefore explains why most economies in Africa are characterized by prolandlord rental markets. Unless it is restrained by interventions

by Government or institutional investors, demand for real estate, particularly residential, will continue to outstrip supply in most Sub-Sahara African countries, putting upward pressure on rents and prices.

In examining transaction costs and levels of rental income taxes as determinants for real estate markets development in the selected countries, the research relies on the findings of Doing Business Report, 2015. Transaction cost is measured as a percentage of the property value with levels increasing from the least of 1.1% for Ghana to 18.6% for Nigeria; others are South Africa (6.2%), Kenya (4.3%), Uganda (2.6%) and Namibia (13.8%). Such levels of transaction cost impact significantly on the overall investment capital outlay. Investors’ net profit on the other hand is often discounted by the prevailing tax rates in the host country. This finding is characterized by relatively high rates in the studied economies. In Namibia, for example, the total tax payable in the real estate market is 20.7% of profit, the least for the studied countries whilst South Africa levies 28.8%. Rates for other countries are in excess of 30%; for example, Ghana (33.3%), Nigeria (32.7%), Kenya (38.1%) and Uganda (36.5%).

The above analysis notwithstanding, available performance indicators are limited to support the case of African real estate markets in global competitiveness for investment.

This research therefore poses the question: “where are the other fundamental investment performance indicators such as total returns, capital growth, income return and risk that Africa needs to compete with other continents?” Needless to say that researchers and industry practitioners have continued to over rely on relatively “crude” proxies to analyze performance.

Some relevant institutional and market structures are therefore needed to support and promote real estate markets development in Africa. These include first, the establishment of credible real estate database in all countries; second, institutional investors to support quantitative research, governments’ commitment to treat real estate markets as a vehicle for national development; third, smooth discourse between academia and industry, and finally the application of financial models in real estate markets analysis.

(Source: Anim-Odame, Wilfred. (2016).

Developing Real Estate Markets in Sub-Sahara Africa: The Fundamentals. Real Estate Finance. Volume 33. 26-32.)

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Risk and Insurance

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What can possibly go wrong with your firm’s business continuity or recovery plan?

SAMUEL KOFI OHENE

T

o begin, let’s be honest, continuity and recovery may not always work for every firm under each and every possible circumstance or risk.

Just like a broken egg or spilt milk, some uncertainties can simply be a major show stopper and your firm may never recover nor will it ever be the same again when it actually occurs. Severe financial risks which could lead to liquidation, major reputational damage, demise of a keyman, a major disruption in technology, or a sudden change in consumer preferences are just but a few. But there is good news, such major show stoppers are very rare and the impact can be reduced to its barest minimum especially if a firm is prepared for it. But what can possibly go wrong even in ones preparation for uncertain events?

1. A complicated plan. It is ridiculous to use a military tank to kill a house fly. Having a sophisticated plan that does not really fit your company size, structure and staff numbers may actually result in a failed plan during a crises when decisions ought to be made quickly. A business recovery plan is not meant to impress regulators, shareholders, or the board. Keeping things simple, straight forward and clear helps everyone know what exactly to do if a probable dire event occurs.

2. Too simple a plan; We all get that feeling when we want to quickly get a document together and have it approved and feel accomplished in getting that task out of the way.

Unfortunately simplicity may not be the best approach a number of times. A crises response or

business recovery plan is more than just paper work. It is a “call to action” document that will require training of key persons involved and possibly include some simulated practice. Hire a consultant to assist if there is no internal capacity to do so. The investment in preparing for uncertain events is worth the savings on possible losses one would have possibly incurred in future.

3.Outdated plans; Imagine having a recovery plan where Mr Y, the IT head, was to reboot a server and phone call a technician within 5 minutes in the event of a major server stall. The server experiences such major stalls once every six months and the next time it occurs, Mr Y had resigned 8 months ago and the technician in your recovery plan has moved 2 hours drive further from your premises. The recovery plan had not been updated and Mr K, the new IT head, who came in 5 months ago had not been properly oriented. The system stall may affect your operations far more than it would have done because the plan was simply outdated and necessary orientation and adjustments to the recovery response was not done.

A study done by Databarracks, a UK business continuity planning specialist, revealed that less than 46% of UK organisations are confident their business continuity plans are up to date. This means, more than half are believed to be outdated. Our world is changing fast.

The more we know, the better we adopt and become more efficient. A recovery plan for the same situation that worked two years ago may be obsolete now due to a number of reasons ranging from technological advancement, human capital capacity or even market or political dynamics. Recovery plans should have scheduled periods for review

and necessary update per each firms complexity and size as well as external dynamics pertaining to the plan.

4. Exaggerated/underrated risks in the plan; It may surprise many to know the sight of a cockroach may cause someone to scale a wall in fright, whereas another may simply swat it. There’s an African proverb that says “That which caused the vulture to go bald, may end up killing the hen if the same should happen to it”. Firms respond or react to the same situations differently, and there is no one size fits all way of measuring risk across industries or firms. The financial impact, statistical likelihoods of occurrence, the duration, geographical spread or complexity of any uncertain event are popular ways firms assess risks.

However, a firms already existing internal controls, its balance sheet strength, operations complexity and even company culture may lead one to over-state or under state the possible impact of uncertain events.

Not being able to clearly assess and properly rate impact of risks when they actually occur may either lead one to spending far more in planning for a recovery when the impact is negligible, or preparing too little for an event you underrated when it was actually a show stopper. Thankfully, independent risk assessors exist across various industries and have experience across diverse firms and can use that experience and skill to help put your company’s own situation in perspective.

5. A plan without a risk transfer strategy; The objective of business recovery is to get back to (good) business as quickly as possible after a disruption. Often times, due to the pure risk nature of these uncertainties, insurance can be a

close to perfect recovery strategy for most firms in several types of risks. In some parts of the world, if your risk is not speculative, and you can measure it, then you can insure it. Insurance has evolved to meet the needs of a changing market.

From damage or loss of physical property and equipment, to data related insurance, to law suits, to Keyman Insurance to Business Continuity Insurance, there will most probably be an option for your firm to transfer some risk either through traditional insurance or through another risk pooling strategy befitting the firm. With only a few exceptions, businesses should include risk sharing strategy as part of the recovery plan where ever possible. This most probably turns out as a win-win situation for both the business and its clients and helps absolve firms from major financial burdens as a result of uncertainties.

Samuel Kofi Ohene is a professional risk analyst with specialties focused on actuarial and statistical techniques in financial and operational risk management coupled with intuitive and innovative thinking. For comments, contact him via email, sohene15@ gmail.com.

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MONDAY, MAY 25 TUESDAY MAY 26, 2020

Africa Economy

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Malabo scam: Nigeria suffers major blow as UK court rule in favour of Shell, Eni A London judge on Friday ruled against Nigeria in the country’s pursuit of justice over the controversial Malabu deal, saying the $1 billion suit against international oil giants Shell and Eni could not go ahead in England.

Against the wish of the Federal government of Nigeria, the defendants Eni, Shell and others had earlier asked the court to decline jurisdiction under article 29 of the recast Brussels Regulation, as the Italian case against the companies is still ongoing.

On Friday, Judge Christopher Butcher ruled that England has no jurisdiction to try the case as it involves the same essential facts as a separate Italian criminal case.

In his written decision, the judge said the English case has both the same essential facts and parties as a parallel proceeding in Italy also brought by the Nigerian government over the Malabu deal.

The ruling is a victory for the oil companies, whose former and

current executives face corruption charges linked to the Malabu scandal, a 2011 deal involving a Nigerian oil block known as OPL 245, a discussion that has spread throughout courtrooms in Europe.

Officials affected in the scandal have denied wrongdoing.

“We maintain that the 2011 settlement of long-standing legal disputes related to OPL 245 was a fully legal transaction with Eni and the Federal Government of Nigeria, represented by the most senior officials of the relevant ministries,” Shell said in a statement.

The Nigerian government said in its own statement that the Italian criminal case has a completely separate legal basis from the U.K. civil case and it would seek permission to appeal.

Eni declined to comment.

The Malabu oil scam, which has been under investigation for over four years, relates to the billions of dollars paid by oil giants, Shell and ENI, into a Federal Government

Nigeria’s economy to shrink 8.9% in worst case, says finance minister

Nigeria’s economy could shrink as much as 8.9% in 2020 in a worst-case scenario without stimulus, Finance Minister Zainab Ahmed said on Thursday, a deeper recession than forecast after oil prices plunged due to the coronavirus pandemic.

Ahmed told Nigeria’s highest economic advisory body, the National Economic Council, that the contraction could reach 4.4% in a best-case scenario, without any fiscal measures.

But with stimulus, the contraction could be kept to just 0.59%, she said.

The pandemic and an oil price plunge have not only hit growth but also dented the state’s main source of income, creating large financing needs and weakening the naira.

“We will go into recession – but what we are trying to do is to make sure that it is shallow so that we will quickly come out of it, come 2021,” Ahmed told the council in a virtual meeting.

She said 40% of Nigerians were poor and the crisis would increase poverty.

Ahmed said Nigeria had over 6,000 confirmed cases of the novel coronavirus, but that this could rise to almost 300,000 by the end of August. So far 200 people are confirmed to have died with the virus.

A World Bank director taking part in the meeting said the Bank was planning a package for immediate fiscal relief for Nigeria.

Ahmed said the proposal was worth $1.5 billion and intended for Nigeria’s states to provide relief at sub-national level. She said it could be disbursed by September.

Nigeria’s first quarter revenue from crude sales was 940.9 billion naira ($2.6 bln), missing its target by 31% due to the oil price crash, she said.

Ahmed said Nigeria has $72.04 million in its oil savings account as of May 21, compared to $325 million in November. ((businessday.ng))

account, for OPL 245, considered the richest oil block in Africa.

OPL 245 is perhaps the most talkedabout asset in Nigeria’s oil industry.

It covers 1958 square kilometers and holds over 9 billion barrels of crude

oil, equivalent to nearly one quarter of Nigeria’s total proven reserves.

Experts claim that the deposit can power the whole of Africa for twenty years. (businessday.ng)

SA gives green light for citizens based in other countries to travel

Home affairs minister Aaron Motsoaledi has approved essential travel for South Africans who want to return to countries where they are based.

The decision, made after consultations with the department of international relations & co-operation and the national coronavirus command council, was announced on Saturday.

Many South Africans who work or live overseas and were in the country when the Covid-19 lockdown came into effect late in March have been unable to travel abroad because of the travel restrictions imposed by level 4 and level 5 of the lockdown.

In a statement, Motsoaledi said South Africans who wished to leave SA were permitted to

depart only for work, study, family reunions, to take up permanent residency and to receive medical attention.

South Africans wishing to return to the countries where they reside would have to have a copy of their valid South African passport and a letter confirming their admissibility under the current circumstances from the embassy or other diplomatic/consular representative of the country they want to travel to.

If returning by road or connecting via flights, the proof submitted needs to include permission from each transiting country.

They will also be required to produce proof of means of travel such as air or bus tickets and the intended date of departure. (businesslive.co.za)

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MONDAY, MAY 25 TUESDAY MAY 26, 2020

Automobile

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2020 Nissan Kicks launched in Thailand with E-Power hybrid For quite some time already, Nissan has been selling the Kicks in several markets around the world like those in the Americas as a B-segment rivalling the likes of the Honda HR-V and Toyota C-HR. The Japanese maker now wants some action in the Thai B-segment fray whereby competition has just been renewed this year with the arrival of the Mazda CX-30 and facelifted MG ZS. So while the Kicks is all-new for Thailand, it isn’t so on a global basis.

Because the Kicks is now three years old in its generation, a mandatory mid-life facelift has been given to it which is what Thais are getting.

Note the sharp-looking headlamps and V-motif front grille which is an evolution of Nissan’s current design language. The interior has been tweaked in looks to a lesser extent and shares similarities with those in the Almera sedan.

For the first time on a global basis, though, comes a hybrid powertrain for the Kicks. The so-called E-Power version makes the Kicks the second model in its class in Thailand to come with petrol-electric power.

Because of this, the Kicks is quite a new Nissan. This is why the

The Nissan Kicks E-Power has become the second Thai B-segment SUV after the Toyota C-HR to come with an efficient petrol-electric powertrain.

introduction of it in Thailand has been dubbed as a global premiere.

Is E-Power full-electric?

It isn’t, despite what you’ve might been hearing here and there. As said earlier, E-Power is basically a petrol-electric hybrid, just like in the C-HR. However, the operation of the hybrid in the Kicks is unique due to the positions of the electric motor, petrol engine and other hybrid bits.

Without getting technical, you just press on the gas pedal and go – just like in any other car or hybrid -- and

enjoy some benefits in fuel economy E-Power has to offer.

In the Kicks E-Power, a 1.2-litre three-cylinder petrol engine is coupled to CVT automatic and an electric motor producing 129hp and 260Nm of torque.

Nissan sources say the Kicks has an average fuel consumption of 23.4kpl and CO2 level of 100g/km.

The C-HR, meanwhile, is powered by 122hp 1.8-litre petrol-electric hybrid and is capable of 24.4kpl and 95g/km. With prices ranging from 889,000 to 1.049 million baht

spread over four grades, the Kicks E-Power is around 100,000 baht cheaper than the C-HR, which has a range of 1.069-1.159 million baht in hybrid form.

Aside a combination of reasonable prices and fuel economy, Nissan is touting several driver-assist technologies not only governing the hybrid system but also the driving characteristics.

There’s all-round view, automatic braking and warning of moving objects around the vehicle, as such.

Six airbags are standard across the range.

Apart from the usual warranties, the lithium-ion battery and electric system in Kicks E-Power cover 10 and 5 years respectively.

This is not the first time Nissan is selling a hybrid in Thailand. There’s the bigger X-Trail SUV, although with a different working concept from E-Power.

Although the Juke has been sold in Thailand several years ago for the Thai B-segment, it isn’t so anymore.

The second-generation replacement is now only available in Europe and Japan with a more upmarket feel than ever.

Hertz files for bankruptcy, stunning us automakers as leaders scramble for solutions Late last night, Hertz filed for bankruptcy. The restructuring has sent shockwaves through the US auto industry, according to CNN. What’s driving the decision?

Reduced air travel. The TSA reports that domestic flights are down 94%.

As a result of this massive shrinkage, car rental rivals Avis Budget Group and privately-owned Enterprise are also hurting.

The ripple effect of reduced travel has crippled the rental car industry.

Now, major auto manufacturers like Ford, GM and Fiat Chrysler are seeing a vast aspect of their annual sales threatened.

Last year, Hertz bought US$1.7 million US automobiles - or about 10% of the US auto industry production.

What are the implications for Detroit - and the US economy as a whole - as the coronavirus finds more corporate victims?

At the start of the year, Hertz had 568,000 vehicles parked at 12,400 locations across the globe.

The company’s overall revenues in 2019? $9.8 Billion. But carrying cars on a balance sheet is a pricey proposition: in March of this year the company was servicing nearly $19 billion in debt- with only (only?) $1 billion in cash available, according to CNN reports. But the bankruptcy filing has broader implications than just Hertz’s balance sheet.

Turning cars into cash: difficult In the US, Hertz employs 38,000

people. So far, 12,000 have lost their jobs and 4,000 have been furloughed, according to media reports````````````. To gain some breathing room, the company renegotiated with lenders on debt due in April - extending the payment deadline to May 22.

That was the day the company filed for bankruptcy.

To be clear, bankruptcy is a restructuring - not a declaration that the company is going out of business. Hertz already abandoned part of its fleet, selling 54,000 cars in March - but the cancellation of auto auctions (and the closure of many new car dealerships) has blocked the company from continued relief.

Rival Avis Budget Group is in a little better shape, but will cut its new car purchases this year by 80%.

These rental car companies will hopefully be able to come out on the other side - but they will be reshaped into something quite different than the structure we see today.

A Somber Statement Forbes reports that Hertz CEO, Paul Stone, issued this recent statement: “With the severity of the COVID-19 impact on our business, and the uncertainty of when travel and the economy will rebound, we need to take further steps to weather a potentially prolonged recovery.” So far, his company’s shares are down 82% for the year, and falling. “Today’s action will

protect the value of our business, allow us to continue our operations and serve our customers, and provide the time to put in place a new, stronger financial foundation to move successfully through this pandemic and to better position us for the future.”

As US automakers struggle to bring plants back online (halting production in some locations due to COVID-19 outbreaks), the news from Hertz and others points to a perilous future. US automakers account for approximately 3.5% of the US GDP, employing over 1.7 million people. According to the Center for Automotive Research, almost 5% of all US jobs are supported by the auto industry, generating $500 billion in annual wages and $70 billion in tax revenues.

With over 1.5 million cases confirmed in the US, as of today, COVID-19 has claimed over 94,000 victims. Beyond those statistics from the CDC, Hertz and the US auto industry are feeling some very troubling symptoms. As rental car companies jettison an estimated 1.5 million cars from their fleets, there’s a good chance consumers will be able to get a great deal on a used car. But will that sweet deal be tasty enough to bring these companies through an economic crunch?

How will unemployed consumers make that down payment, when they need the money for rent and groceries? And what do those nearly-new deals mean for new car sales, when the market is flooded with alternatives? Only time will tell.

(Forbes)

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News

MONDAY, MAY 25 TUESDAY MAY 26, 2020

ACEP disagrees with giving gas aggregator role to Ghana Gas

BY BENSON AFFUL The Africa Centre for Energy Policy (ACEP) says it disagrees with government’s decision to appoint the Ghana National Gas Company (GNGC) as gas aggregator instead of the Ghana National Petroleum Company (GNPC), which is currently holding that position.

ACEP’s reaction follows a letter from the presidency that approves a proposal to assign the role of gas aggregator to the Ghana Gas Company.

The energy policy think tank argued that GNPC still has the capacity to manage gas projects as well as the financial muscle through its share of petroleum revenues to undertake new gas projects for the purpose of expanding gas processing and transmission facilities.

Under the current agreement, the GNPC is the gas aggregator with responsibility to pool gas resources from all upstream sources and sell

Benjamin Boakye is the Executive Director of ACEP. The energy think tank says it is more optimal to have GNPC as gas aggregator.

to bulk consumers, while GNGC is primarily responsible for the processing of gas and the sale of natural gas liquids.

According to ACEP, the government’s proposal means GNPC will cease to perform the responsibility of gas aggregator to allow Ghana Gas Company to integrate the mid-stream gas operations—that is, aggregation,

processing and transmission.

ACEP said being a gas aggregator comes at a significant risk imposed by the industry dynamics, such as being witnessed with Covid-19 and the usual volatilities.

“When GNPC securitised the investment of the OCTP project, it was done with the fact that GNPC was the most capable state entity within the value chain to provide

securities for the project,” ACEP said.

The energy think tank argued that GNPC was in such a better position with regard to cash reserves, was lending to government, and could negotiate a loan at an interest rate of 4.43 percent from Deutsche Bank.

“Because of the industry exposures shortly after it negotiated the loan, GNPC’s risk exposure increased and they could not access the loan.

The result was that the projected counterpart investments from GNPC in the OCTP could not be done.

“Consequently, the OCTP partners invested on behalf of GNPC and recovered the debt by encumbering almost two years’ oil lifting of its participating interest in the OCTP project,” ACEP said.

It added that if GNGC had been the company exposed to such risks, it would likely be nonexistent today as its assets would have been unable to offset the debts.

“This also means that OCTP gas, which today is the fuel supply backbone of the power sector, would not have materialised with GNGC as the aggregator,” ACEP said.

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Feature

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Time for a selective debt jubilee

BY WILLEM H. BUITER

The COVID-19 crisis will leave many private and public borrowers saddled with unsustainable debt.

We are still in the “pre-Keynesian” supply- shock- cum- der iveddemand-shock phase of what is likely to be a global depression.

But once the virus is mostly vanquished, households will engage in precautionary saving, and businesses will be reluctant to commit to capital expenditures, driving a further decline in aggregate demand – the Keynesian phase.

Deficit-financed fiscal stimulus, monetized where possible, will probably be the only tool capable of closing the output gap.

As the issuer of the world’s dominant reserve currency, the United States faces fewer constraints than other countries on the federal government’s ability to borrow and to monetize public debt. Its economic-policy response so far – the Coronavirus Aid, Relief, and Economic Security (CARES) Act – earmarks $2.3 trillion for income support, grants, loans, asset purchases, and other guarantees.

According to the Congressional Budget Office, the legislation will increase the federal deficit by “only” around $1.7 trillion over the next decade. The difference reflects the $454 billion set aside to fund guarantees for emergency lending facilities established by the US Federal Reserve, on the assumption that these guarantees will never actually be called upon.

If only it were so. Another $3 trillion fiscal bill, recently passed by the Democratic-controlled US House of Representatives, will likely be adopted in some form by the

Senate, and still more stimulus may follow after that. Lawmakers are realizing that, even in the US, many state and local governments will not have the means to weather the crisis without the benefit of debt and loan guarantees or direct transfers from the federal government.

What’s true in the US is true everywhere: government programs to support economic activity will lead to an explosion in public debt and private debt owned by the public sector. In the eurozone, an existential crisis is looming, owing to a controversial recent ruling by Germany’s Federal Constitutional Court and the unwillingness of the eight New Hanseatic League member states to contemplate public-debt mutualization. The European Union’s new €240 billion ($263 billion) Pandemic Crisis Support mechanism is small potatoes, amounting to just 2% of eurozone GDP. Without more EU support, Italy may soon face the unpleasant choice of crashing out of the euro or remaining in without being allowed to implement the fiscal stimulus it needs.

To be sure, a new Franco-German proposal envisions a €500 billion (3.6% of EU GDP) European recovery fund, to be financed through capitalmarket borrowing by the EU (whose annual budget barely exceeds 1% of the bloc’s GDP). It is unclear how much of these funds are truly additional and over how many years they would be spent. If these funds were provided to fiscally challenged member states in the form of grants, as the French and German governments favor, that would amount to debt mutualization, raising the possibility of a veto from the New Hanseatic League. But if the European Commission were instead to issue loans to member states on market terms, Italy could find itself

on a fast track out of the eurozone.

Fortunately, there may be another way forward. Across most advanced economies, much of the additional private debt accumulated during the crisis will likely end up being owned by public entities, including central banks, and most of it will never be repaid. To protect their independence and political legitimacy, central banks should not act as fiscal principals. And yet, in the case of small and medium-size enterprises, it is simply obvious that COVID-19-related debt will have to be forgiven. The national Treasury will need to compensate the central bank for any losses it incurs.

For publicly traded companies the debt held by public creditors should be turned into equity, in the form of non-voting preference shares, which would minimize the impression that the pandemic had inaugurated a new era of central planning. Again, the national Treasury will have to indemnify the central bank for any losses it incurs. An equitization option should be attached to all newly issued public debt. The resulting equity instruments could represent claims on part of the government’s primary budget surplus, or their interest rates could be linked to GDP growth.

But poorer countries will not have this option. According to the Brookings Institution, emerging markets and developing countries already owe about $11 trillion in external debt and face $3.9 trillion in debt-service costs this year. In April, the World Bank and the International Monetary Fund offered a modicum of debt relief to many of these countries, and the G20 agreed to a temporary payment standstill for official debt, which paved the way for hundreds of private creditors to

do the same.

Yet these forms of assistance offer too little, too late. The fact is that most of these debts never should have been issued in the first place.

Grants are the proper way to transfer resources to low-income countries.

After World War II, the Marshall Plan involved only grants; today, the case for “corona grants” to low-income countries could hardly be stronger.

Under the IMF and the World Bank’s 1996 Heavily Indebted Poor Countries (HIPC) initiative, some 36 countries received full or partial debt relief. It is time to return to that idea, starting with a comprehensive round of debt forgiveness for the world’s poorest countries. This selective jubilee should include debts owed to the IMF, the World Bank, other multilateral lenders, national sovereigns, official bodies like state-owned enterprises, and private creditors.

Debt is a dangerous instrument.

For far too long, the world has used it to avoid awkward but unavoidable decisions. In the midst of an unprecedented global crisis, something will have to give.

Willem H. Buiter, a former chief economist at Citigroup, is a visiting professor at Columbia University. © Project Syndicate 1995–2020

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