CFI.co Winter 2019-2020 by CFI.co

Capital Finance International

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Winter 2019 - 2020

AS WORLD ECONOMIES CONVERGE

Ursula von der Leyen, President of the European Commission:

MADAM EU PRESIDENT ALSO IN THIS ISSUE // NASDAQ: SDG AWARENESS AND ACTION // IBM: THE TRUST ECONOMY KLAUS SCHWAB: CAPITALISM // OECD: ACHIEVING ELUSIVE SDGs // DELOITTE: INSURTECH BOOM UNCDF EXECUTIVE SECRETARY JUDITH KARL: INTERVIEW // UNOG: WHAT DOES THE PCP DO FOR SDGs?

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First Thoughts

First Thoughts According to US presidential adviser Kellyanne Conway, PR man Sean Spicer’s claim that Donald Trump’s 2017 inauguration was the largest in history was an example of “alternative facts”. She would later flesh-out the latter construct as “additional facts and alternative information”. While traditionalists may have thought they had caught a glimpse of the emperor’s new clothes, Fox News was supportive of Conway. Alternative facts, it opined, were simply different perspectives. It should come as no surprise, then, that soon after Spicer’s spin the shops began to sell-out of George Orwell’s frighteningly prescient book 1984 — which swiftly hit the number six spot on Amazon. Australia’s right-wing politician, senator and former fish-and-chip shop proprietor Pauline Hanson claimed a year earlier that her country was being “swamped by Muslims”. She claimed to be sharing facts, but an examination of the census records showed no hard evidence to back up her statement.

Our leaders ravenously use social media and barely have the time to fully consider their position on an issue, let alone undertake the necessary research. Rarely do these missives open with the words “I think” or “In my (occasionally humble) opinion…”

Emotional intelligence, or EQ, is a far better predictor of business success than IQ, and critical for dealing with colleagues — but we should be communicating to stakeholders with hard facts. Consumers (particularly Millennials) are starting to demand this as they embrace the imperatives of doing business the ethical way. Alternative facts and dubious opinions are not going help us achieve the UN’s 17 Sustainable Development Goals — and there is a rock-solid business argument for ticking them off pronto. Like Jacob Rees-Mogg, let’s go back to the 17th century for inspiration, and consider how political discourse was evolving then. There was a resolve to distinguish reason from emotion in search of peaceful politics that would allow space for expert voices and modern science. It worked then, and should be our guide now. And the lonely voice of youth cries, “What is truth?” 9

First Thoughts

Political pronouncements of this kind appeal to emotions and beliefs, and so cannot be placed under quite the same level of scrutiny as scientific claims. But have we not gone too far down this road?

We could once rely on newscasts for the facts, and nothing but the facts, but too often these days even commentators who try to tell it like it is are liable to shift the story out of context. The Pew Research Centre, in March 2018, quizzed 5,000 Americans to find out if they could recognise factual news (that which can be confirmed with objective evidence). The results showed that most were able to identify three of five messages as the real McCoy, which sounds good — but is only slightly better than guesswork.

> Correspondence

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I read with interest (CFI.co Autumn) the article on public transport and battery power. It looks like we are going to be deep sea mining for cobalt to meet the growing demand for electric vehicle batteries. As of now, the major provider of cobalt is the Democratic Republic of Congo, responsible for two-thirds of global output. Questions hang over the extraction model used in there and there are worries about potential armed conflict. But there are also concerns over deep sea mining. The amount of sand and silt churned up may endanger marine life far beyond the mining sites. Henko de Stigter, of the Dutch marine research institute NIOZ, warns of the danger of humans doing to oceans what it has done to the land. We must heed this warning. MAURITS DE JONG (Eindhoven, Netherlands)

According to the Corporate Human Rights Benchmark, many bigname companies do not make clear how they identify and address human rights issues. Among the worst culprits are Starbucks and Costco (both with a score of 8.5 percent against an average of 24). Congratulations to Adidas, Rio Tinto and Unilever for scoring better than 75 percent. At least one of the “bad boys” mentioned above disputes the rating and it is encouraging that, once named and shamed, companies manage to climb the ladder quickly. I hope alleged poor performance is the result of bad communication rather than anything more sinister — but consumers expect better. Remember we have “boycott”. TAMSIN SWATHE (Toronto, Canada)

Your Autumn issue profile of Inez Murray (head of the Financial Alliance for Women) tells it like it is. Banking and other financial service companies are missing out by offering inadequate services to women (who are largely prudent and loyal customers). It is shameful that 73 percent of women worldwide are unhappy with their present banking services and a similar percentage of emerging market and female-run SMEs can’t get close to funding their business needs. As your writer says: you can, and should, bank on women. COMFORT KWEDHI (Windhoek, Namibia)

Winter 2019 - 2020 Issue

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How on earth is Argentinian president-elect Alberto Fernandez going to manage the country’s $330bn debt burden (including the third that is due for restructuring)? Fernandez has badmouthed the IMF (which granted the country $57bn in bailout funds last year) and criticised the incumbent’s realistic austerity programme. Fernandez, a leftleaning Peronist, prefers to stimulate growth through increased social spending. Whichever way you look at it, there are challenges: inflation, growth, central bank reserves, investor interest (or lack thereof), and of course the poverty line and unemployment. Argentina is in crisis and must start engaging with the IMF. The new president should clarify his plans as a matter of the utmost urgency. MATEO GONZALES (Montevideo, Uruguay)

Your article How AI Can Promote Social Good (Autumn 2019) made interesting reading — but misses the point for Luddites like me. Yes, the technology has great promise. Yes, it is impressive and can be applied to almost any industry or sector. But rest assured that the effects for humanity will be uniformly negative. Anything that can be misused eventually will be. “Computer says no” is already a meme, and with good reason. You can’t argue with zeroes and ones, and programming is king. Engaging with a human by telephone — at any level of corporate officialdom — is already rare. Very soon we will be judged, and quite possibly chastised and punished, by robots considered to be smarter than us. Smarter they may be, but compassion and empathy are more important values. Call me paranoid, but I fear for what this technology may someday bring. ROY COETZEE (Port Elizabeth, South Africa)

> Editorial Team

Sarah Worthington George Kingsley Jackie Chapman Tony Lennox Kate Stanton Brendan Filipovski John Marinus Ellen Langford Bella Scotton Dane Cobain

Columnists

Otaviano Canuto Evan Harvey Tor Svensson Lord Waverley Ian Fletcher

Distribution Manager William Adam

Subscriptions Maggie Arts

Commercial Director John Mann

Director, Operations Marten Mark

Publisher Anthony Michael

COVER STORIES Klaus Schwab What Kind of Capitalism Do We Want? (14 – 15)

UNCDF Q&A with the Executive Secretary: Judith Karl (18 – 20)

IBM The Trust Economy: What’s My Data Worth? (28 – 31)

Evan Harvey, Nasdaq: SDG Awareness and Action (32 – 33)

OECD

DISCUSSION PAPER Ensuring Mobilisation and Impact Remain Aligned to Achieving Elusive SDGs (36 – 37)

Capital Finance International Meridien House 69 - 71 Clarendon Road Watford WD17 1DS United Kingdom

T: +44 203 137 3679 F: +44 203 137 5872 E: info@cfi.co W: www.cfi.co Editorial on p14-15, 22-27, 90-91, 190 © Project Syndicate 2019

Printed in the UK by The Magazine Printing Company using only paper from FSC/PEFC suppliers www.magprint.co.uk

Deloitte: InsurTech Boom Unlikely to Drive More Innovation Without Insurer Reinvention (136 – 137)

UNOG on Perception Change Project: What Does the PCP Do for SDGs? (186 – 187)

INSTITUTIONAL CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

FULL CONTENTS 14 – 47

As World Economies Converge

Klaus Schwab

Michael Møller

UNCDF

Judith Karl

Book Review

Nouriel Roubini

Joseph Stiglitz

Mohamed A El-Erian

IBM

Ian Fletcher

Evan Harvey

Nasdaq

Tor Svensson

OECD

Tony Lennox

Lord Waverley

Naomi Snelling

Brendan Filipovski

48 – 55

Winter 2019 - 2020 Special: Women of the World Unite

56 – 91

Europe

Reitan Convenience AS

Nordea Asset Management

Enfuce

SG Finans AS

Olbia Costa Airport

AMC Natural Drinks

CBRE

Fondex

Anna Dé

Kommunalkredit Austria AG

EEX Group

Shahnaz Radjy

Annalisa Gigante

SID Bank

Shail Deep

CERN Pension Fund

Matthew Eyton-Jones

Ana Palacio

Fondo Pensione Nazionale

92 – 109

CFI.co Awards

Rewarding Global Excellence

110 – 125

Africa

First Pension Custodian

Rokel Commercial Bank

First Ally Capital Limited

Exxaro

Dane Cobain

Kellogg Insight

126 – 137

Middle East

Government of Ajman

SFO Group

Tactical Management

My Clinic

Linklease

Deloitte

138 – 145

Editor’s Heroes

Men and Women Who are Making a Real Difference

146 – 159

Latin America

Banco FINCA Ecuador

Marc Simper-Allen

Banco Hipotecario

ACTIVE RE

Unity

FAMA Investimentos

160 – 169

North America

Pavilion Global Markets

Fitch Ratings

PwC Bermuda

170 – 189

Asia Pacific

Government Pension Fund

Benjamin F Jones

Krishnamurthy Subramanian

Lakshay Dayal Mathur

Tadau Energy

Insurance Corporation of Afghanistan

Alisher Sultanov

UNOG

UNCDF

190

Final Thought CFI.co | Capital Finance International

> Klaus Schwab:

What Kind of Capitalism Do We Want?

hat kind of capitalism do we want? That may be the defining question of our era. If we want to sustain our economic system for future generations, we must answer it correctly.

The second model is “state capitalism,” which entrusts the government with setting the direction of the economy, and has risen to prominence in many emerging markets, not least China.

Generally speaking, we have three models to choose from. The first is “shareholder capitalism,” embraced by most Western corporations, which holds that a corporation’s primary goal should be to maximise its profits.

But, compared to these two options, the third has the most to recommend it. “Stakeholder capitalism,” a model I first proposed a halfcentury ago, positions private corporations as trustees of society, and is clearly the best

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response to today’s social and environmental challenges. Shareholder capitalism, currently the dominant model, first gained ground in the United States in the 1970s, and expanded its influence globally in the following decades. Its rise was not without merit. During its heyday, hundreds of millions of people around the world prospered, as profit-seeking companies unlocked new markets and created new jobs.

Winter 2019 - 2020 Issue

But that wasn’t the whole story. Advocates of shareholder capitalism, including Milton Friedman and the Chicago School, had neglected the fact that a publicly listed corporation is not just a profit-seeking entity but also a social organism. Together with financial-industry pressures to boost short-term results, the single-minded focus on profits caused shareholder capitalism to become increasingly disconnected from the real economy. Many realise this form of capitalism is no longer sustainable. The question is: why have attitudes begun to change only now? One likely reason is the “Greta Thunberg” effect. The young Swedish climate activist has reminded us that adherence to the current economic system represents a betrayal of future generations, owing to its environmental unsustainability. Another (related) reason is that millennials and Generation Z no longer want to work for, invest in, or buy from companies that lack values beyond maximising shareholder value. And, finally, executives and investors have started to recognise that their own long-term success is closely linked to that of their customers, employees, and suppliers. The result is that stakeholder capitalism is quickly gaining ground. The change in direction is long overdue. I first described the concept back in 1971, and I created the World Economic Forum to help business and political leaders implement it. Two years later, attendees at the Forum’s Annual Meeting signed the “Davos Manifesto,” which describes a firm’s principal responsibilities toward its stakeholders. Now, others are finally coming to the “stakeholder” table. The US Business Roundtable, America’s most influential business lobby group, announced this year that it would formally embrace stakeholder capitalism. And so-called impact investing is rising to prominence as more investors look for ways to link environmental and societal benefits to financial returns.

"Business leaders now have an incredible opportunity. By giving stakeholder capitalism concrete meaning, they can move beyond their legal obligations and uphold their duty to society."

We should seize this moment to ensure that stakeholder capitalism remains the new dominant model. To that end, the World Economic Forum is releasing a new “Davos Manifesto,” which states that companies should pay their fair share of taxes, show zero tolerance for corruption, uphold human rights throughout their global supply chains, and advocate for a CFI.co | Capital Finance International

competitive level playing field – particularly in the “platform economy.” But to uphold the principles of stakeholder capitalism, companies will need new metrics. For starters, a new measure of “shared value creation” should include “environmental, social, and governance” (ESG) goals as a complement to standard financial metrics. Fortunately, an initiative to develop a new standard along these lines is already under way, with support from the “Big Four” accounting firms and led by the chairman of the International Business Council, Bank of America CEO Brian Moynihan. The second metric that needs to be adjusted is executive remuneration. Since the 1970s, executive pay has skyrocketed, mostly to “align” management decisionmaking with shareholder interests. In the new stakeholder paradigm, salaries should instead align with the new measure of longterm shared value creation. Finally, large companies should understand that they themselves are major stakeholders in our common future. Clearly, all companies should still seek to harness their core competencies and maintain an entrepreneurial mindset. But they should also work with other stakeholdersto improve the state of the world in which they are operating. In fact, this latter proviso should be their ultimate purpose. Is there any other way? State capitalism, its proponents would say, also pursues a long-term vision, and has enjoyed recent successes, especially in Asia. But while state capitalism may be a good fit for one stage of development, it, too, should gradually evolve into something closer to a stakeholder model, lest it succumb to corruption from within. Business leaders now have an incredible opportunity. By giving stakeholder capitalism concrete meaning, they can move beyond their legal obligations and uphold their duty to society. They can bring the world closer to achieving shared goals, such as those outlined in the Paris climate agreement and the United Nations Sustainable Development Agenda. If they really want to leave their mark on the world, there is no alternative. i ABOUT THE AUTHOR Klaus Schwab is Founder and Executive Chairman of the World Economic Forum. 15

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Winter 2019 - 2020 Issue

Clarion Call to Unite Behind Push to Achieve SDG Targets By Michael Møller

In September 2019, UN Secretary-General Antonio Guterres announced a Decade of Action for the SDGs — a clarion call to accelerate progress for people and planet.

make-or-break aspect of this push is to unlock the resources needed to finance the 2030 Agenda. Bridging the investment gap — estimated at between $2.5 to $3bn per year — will require partnerships involving the public and private sectors. The level of investment required to achieve the SDGs makes it abundantly clear that governments alone cannot achieve them. Private investors must be encouraged to align investments with sustainability-driven portfolios. The focus for investors must move away from niche to mainstream. Despite increasingly positive signals, sustainable investment remains largely misunderstood and fuelled by misconceptions. Significant efforts must be made to connect financial actors with development practitioners, ensuring there is a common language and a common understanding of what qualifies as a sustainable investment, and providing a pipeline of investable projects. Initiatives such as Building Bridges Week, held last October in Geneva — organised by a partnership of the UN SDG Lab, Sustainable Finance Geneva, the Canton of Geneva, the city of Geneva and the Government of Switzerland — exemplify the level of collaboration that is needed to connect key actors from all sectors and to create incentives for engagement. While the positive response to Building Bridges Week demonstrated the appetite for socially responsible investments, it also highlights the need to accelerate the momentum. Sustainable finance will not just happen on its own, and driving the required mindset shift requires the commitment of leaders to bridge the SDG investment gap. i A CAREER CIVIL SERVANT WITH A MISSION TO ADVANCE THE UN Michael Møller has 40 years of experience as an international civil servant in the United Nations. His career began in 1979 as the UN High Commissioner for Refugees, and he worked for the organisation in various capacities in New York, Mexico, Iran, Haiti, Cyprus and Geneva. CFI.co | Capital Finance International

"Private investors must be encouraged to align investments with sustainability-driven portfolios." In 1995-1997, he served as senior political adviser to the Director-General of UNOG. Between 1997 and 2001, he was head of the Office of the UnderSecretary-General for Political Affairs at the UN headquarters. From 2001 to 2006 he was director for Political, Peacekeeping and Humanitarian Affairs in the Office of the Secretary-General, while serving concurrently as deputy chef de cabinet of the Secretary-General for the last two years of that period. Møller also served as the Secretary-General’s Special Representative for Cyprus from 2006 to 2008, and was the executive director of the Kofi Annan Foundation from 2008 to 2011. From 2013-2019, he served as the director-general of the United Nations Office in Geneva, and as secretary-general of the Conference of Disarmament, with the rank of UN under-secretary-general. In recognition of his efforts, Møller received prizes from the City of Geneva, the Union Suisse des Attachés de Presse, the Fondation pour Genève. He was most recently honoured by the Canton and Republic of Geneva, who conferred on him the Bourgoisie d’Honneur. He is now the chairman of the Diplomacy Forum of the Geneva Science and Diplomacy Anticipator Foundation, senior adviser to Macro Advisory Partners, honorary president of the Digital Health Global Initiative Foundation, honorary president of the Advisory Board of the Defeat Non-communicable Diseases Foundation, honorary president of Art for the World, member of the executive board of the Kofi Annan Foundation, and member of the advisory boards of other foundations.` He was born in 1952 in Copenhagen, Denmark, and earned a Master’s degree in International Relations from Johns Hopkins University, US, and a Bachelor’s Degree in International Relations from the University of Sussex, United Kingdom. i 17

> Q&A with the Executive Secretary of the UNCDF:

Judith Karl HOW WOULD YOU SUM UP IN THREE SINGLE WORDS WHAT CHARACTERISES YOUR TEAM AT UNCDF? • Innovative • Nimble • Trusted WHAT ARE YOU TRYING TO ACCOMPLISH? We aim to make finance work for the poor. In the current global financial ecosystem, finance flows are unequally distributed, and scarcest in the areas where sustainable development needs are the greatest. But this does not have to be an inevitability. There are built-in incentives and structural rigidities that can be changed to create more conducive financial pathways that work for those left behind. If we move from billions to trillions under the existing architecture, we will likely just perpetuate current inequalities with larger sums of money. So at UNCDF we look deeply at what localities, what populations, and what SDGs are most adversely affected by these asymmetries, and we design new financial pathways to show that financial eco-systems can be more inclusive, more accessible for a wider range of actors, and more SDG positive. Our 2019 publication Blended Finance in the Least Developed Countries shows that of the private capital mobilised as a result of blending, only 6% landed in the LDCs. And that 6% is volatile, i.e., highly concentrated in a handful of countries, sectors, and transactions. Of course there are reasons that the investment climate is harder in LDCs and we don’t deny those. But we also know that perceived risk is sometimes higher than real risk; and that current pricing and incentive structures do not work for smaller ticket sizes, and harder to reach localities. This requires a stronger “handshake” between development agencies that provide TA, development finance entities that tend to work at the sovereign level and/or at big ticket sizes, and commercial investors/banks. UNCDF sits at the nexus – a hybrid development/finance agency with flexible capital. After all, it is in the real economy that sustainable development meets people’s lives; it is in the local markets, SMEs, local infrastructure, and local financial ecosystems that people find their opportunities, make their living, and determine the education, health, and development outcomes for their families. By deploying innovative finance models that successfully crowd-in public and private finance, we can create the demonstration effects that develop and transform markets; shift the dynamics of financing towards the local level; and, ultimately, catalyse the system change 18

that helps ensure we truly leave no one behind. In the process, we are working to ensure that the financial ecosystem can be a force for good and for the achievement of the 17 Sustainable Development Goals for all.

IS THE HARDEST CHALLENGE DEPLOYING CAPITAL TO THE COUNTRIES THAT NEED IT THE MOST? Yes, we find that capital is often least likely to reach the people and places that need it most. This is not only true for least developed countries in general, but even more so for secondary cities and remote regions within these countries. Since the global financial ecosystem is sovereign based, it substantially favors national governments when it comes to accessing capital. At present, countries, as well as large corporations can easily access capital markets, while even large cities in the developing world lack such direct access. National governments in many developing countries also possess a monopoly on taxation, which means that local governments are unable to raise or retain revenues at the local level. Municipalities in LDCs are often limited to the budgets they receive from the central government, which are insufficient for meeting the range of basic services expected by citizens, let alone investing in local economic development and catalytic infrastructure. Furthermore, the lack of flexibility in official development assistance and its distribution means that such resources are allocated to specific projects, with local governments unable to finance the most pressing local development needs. UNCDF’s longest standing practice on local development finance works to expand the local fiscal space through inter-governmental fiscal transfer systems and mechanisms, as well as by addressing the legal and regulatory bottlenecks that limit fiscal resources from flowing to local economies. We also work with municipalities, domestic banks and the private sector to promote local economic development and SDG-responsive investments. By increasing local access to finance, primarily from domestic capital markets, we enable local catalytic investments in priority thematic areas. One of those priority thematic areas is women’s economic empowerment, which in turn positively impacts achievement of a range of other SDGs. Last year, 50% of UNCDF’s localised investments primarily targeted women, while 60% of the jobs created went to women. Similarly, climate change is another priority area where increased local investment is needed in order to build resilience. Since we started working CFI.co | Capital Finance International

on climate resilience, UNCDF has mobilised approximately $75 million, which has supported 240 local governments in 14 countries, to mainstream climate adaptation and resilience into their budgeting and planning processes. Through increased climate finance and technical assistance, local governments in some of the most vulnerable regions have been able to design and implement over 600 local adaptation investments. HOW CAN UNCDF CATALYSE MORE CAPITAL FLOWS, INCLUDING PRIVATE INVESTMENT CAPITAL, TO GO INTO THE TOUGHEST MARKETS AND REACH THOSE WHO ARE CURRENTLY LEFT BEHIND? UNCDF recognises that in order to bring capital flows into LDCs at greater scale, changes to the ecosystem to support investments in the Least Developed Countries (LDCs) need to be found. UNCDF aims to create demonstration effects in this space by employing three broad approaches: Embed investment decisions in larger changes to markets that are supported by technical assistance and programming; Move beyond transaction by transaction approaches and develop a portfolio based approach to investment; Only engage when no other actor in the financial ecosystem is willing or able to do so, so we are addressing a real gap – if another investor is willing to finance, we are not needed. As a hybrid development and finance institution, UNCDF can support market development while also identifying specific companies or transactions that merit support; UNCDF can provide business advisory and investment capital to suit the different needs of the company or project at every stage of its development. UNCDF’s approach to capital deployment is to leverage its concessional resources to crowd-in more commercial finance. This can be done through on balance-sheet direct investments and through third-party managed off balance-sheet investments. The UNCDF LDC Investment Platform (LDC IP) serves as the organisation’s centre of excellence on structuring and deployment of investment finance. The LDC IP demonstrates to domestic and international investors that LDC markets can and do generate returns, provide opportunities for successful investment, and merit the attention of a wider range of investors. It also helps a number of companies advance to the next level of growth where more commercial funding will replace the concessional funding. At the same time, our programme areas (or other parts of the UN system) use those demonstration effects to support policy and regulatory improvements as well as scale-up of what works by other actors.

Winter 2019 - 2020 Issue

Through the LDC IP, UNCDF can directly provide loans or guarantees between $100,000 and $500,000. As the companies and projects grow, they can be passed to third-party managed off balance-sheet blended finance vehicles for growth capital between $250,000 and $2.5 million. When the companies or projects need more than $2.5 million, they should be healthy enough to gain financing from development finance institutions or fully commercial sources. WHY IS WOMEN’S ECONOMIC EMPOWERMENT SO IMPORTANT FROM THE STANDPOINT OF FINANCE? We have to look at whether, how and when finance works for women. Women are drivers of inclusive prosperity. When women’s incomes rise, health and education outcomes improve for themselves, for their families, and for their communities.

"UNCDF’s longest standing practice on local development finance works to expand the local fiscal space through inter-governmental fiscal transfer systems and mechanisms, as well as by addressing the legal and regulatory bottlenecks that limit fiscal resources from flowing to local economies."

For these outcomes to materialise, financial ecosystems need to be designed with women in mind. The current financial mainstream in most countries perpetuates barriers rather than clears them. Women make up the majority of the globally unbanked. They often lack access to financial tools and face social norms that discourage them from using these tools when they are available. And women face persistent challenges in bringing their economic activities into the formal financial sector, often paying higher interest rates, experiencing a higher loan rejection rate, and frequently being asked to provide more collateral than men — despite the fact that women are typically under-collateralised and less likely to own property. And local infrastructure endowments (roadways, markets, transportation options) are seldom designed with women’s movements, childcare needs, and safety in mind. There are many proven models for redesigning how women can interact with, and make empowered decisions in, the financial ecosystem. It requires a change in the way the financial and infrastructure services are designed and promoted: we need more women engaged as architects of these services, while being understood in all of their economic roles – as consumers, decision-makers, income earners, and heads of households. Digital financial innovations constitute one promising frontier for positive change, but again – there is nothing inherently inclusive about digital solutions, unless they are designed to rethink financial pathways head on. Fortunately many of our digital innovators have the courage to disrupt, we just need more actors who share that vision. In today’s economy, equality for women and women’s economic empowerment are one and the same. And women’s economic empowerment is a key driver of practically the entire SDG agenda. Finance needs to embrace this reality, and stand behind the investments that will bring it to scale. WHAT IS THE ROLE OF UNCDF WITH REGARD TO ALL THE 17 SDGS? HOW DO YOU ADD VALUE? By strengthening how finance works for poor people at the household, small enterprise and municipal levels, UNCDF contributes to SDG 1 19

on eradicating poverty and SDG 17 on the means of implementation. UNCDF’s development focus also contributes to a number of other SDGs including SDG 5 (Gender Equality); SDG 7 (Clean Energy); SDG 9 (Industry, Innovation and Infrastructure); SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action). When we look at the whole SDG agenda, we see a set of goals that provides an opportunity map for the world. These goals are our north star, where we all need to point to in order to achieve a sustainable, inclusive and prosperous world. So we see our greatest value in our demonstration effect, and in our ability to shift perceptions about what is possible, what is profitable, and what is sustainable when we translate “leaving no one behind” into reality. A lot of that effort is what SDG 17 is all about - transformation achieved through partnerships. We help define Executive Secretary: Judith Karl the problem, then ask market players and/or governments to work with us to design and regulation, and an open digital payment the solution, test what works, then bring it to ecosystem. As host to the Better Than Cash scale. We learn together with policy makers and Alliance, we look at how the digitisation of regulatory bodies, share knowledge, and show the payments in the public and private sectors can solutions marketplace how innovation can change achieve critical mass to drive mobile wallet the sustainable development equation. uptake and – critically – integration into the wider financial ecosystem. This is where transformation WHAT IS THE IMPORTANCE OF MOBILE HANDSETS can really begin. IN FRONTIER AND PRE-FRONTIER MARKETS E.G. IN AFRICA? As we see it, meaningful digital financial Mobile technology is critically important in these inclusion has to provide the capability for the markets. They are stretching the boundaries of traditionally underserved—women, youth, financial services well beyond what brick-and- MSMEs, smallholder farmers—to meet their daily mortar institutions are capable of. But what we needs, as well as to improve their marketability have also found is that a mobile wallet is only as and competitiveness in the digital-economy age. good as the amount of capital in it, and the real life problems it can help poor people solve. To HOW HAS BLENDED FINANCE BEEN SUCCESSFUL? that point, financial inclusion is a means to an Blended finance is one of many instruments the end. It is not an end in itself. international community can use to help shift the flow of capital to investments and markets We also have a tendency to believe that digital that are otherwise being ignored. But there economies are inherently inclusive. But the are challenges, and no magic bullet. Having reality is that this is not a given. Findex data has published two annual reports on blended finance shown how progress in digital financial inclusion in the LDCs with the OECD, we have found may lead to a widening of the gender gap in some that a very small portion of commercial finance contexts. mobilised by official development finance reached the LDCs—6% as of our most recent This is precisely why we have launched our digital edition. But we also highlighted several case strategy, Leaving No One Behind in the Digital studies that provide clear proof of the potential Era. It is a natural progression for our work in that blended finance solutions possess. financial inclusion, which we are implementing in more than 20 LDCs. We focus on helping One case study from our 2018 edition of Blended countries to make important decisions about Finance in the Least Developed Countries digital infrastructure, innovation ecosystems and involves the Central Africa SME Fund (CASF)—a enabling policy frameworks that will result in $19 million fund that provides private equity, national digital economies that are inclusive and long-term debt and technical assistance to SMEs sustainable. We work on innovation sandboxes in the Democratic Republic of Congo and the with regulatory authorities and market players, Central African Republic—that was launched and deploy a digital economy index to determine by XMSL, a Dutch private equity fund. The barriers to readiness and inclusion. The International Finance Corporation (IFC) provided strategy sits on four workstreams: empowered the anchor investment and technical assistance customers, inclusive innovation, enabling policy funds, totaling just over $13.5 million, which 20

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catalysed $6.5 million in additional equity investments. As of the 2018 report, CASF provided finance to 32 SMEs across 10 sectors in these markets, exiting four investments completely while returning over 50% of invested capital to investors, performing in line with initial return targets. Additionally, more than 500 jobs have been created at portfolio companies since investment by CASF alone. Our 2019 edition showcases an example from a domestic financial intermediary in Nepal—the Town Development Fund (TDF). Relying on a combination of loans, upfront cash contributions, and grants from the Government of Nepal, TDF has supported over 70 towns in the financing of water-sector projects. TDF’s executive director credits their blended finance model with providing access to safe drinking water and basic sanitation facilities to 87% of Nepal’s population. Clearly, blended finance approaches can help mobilise resources to help LDCs bridge financing gaps, as well as create demonstration effects that narrow the gap between the perception of risks in these markets and the actual levels of risk. This is why we offer clear action items to improve the use of blended finance in LDCs: including expanding the involvement of LDCs in blended finance policy discussions; improving impact measurement and transparency; and encouraging concessional finance providers to engage with their boards, donors and LDC governments in finding innovative ways to take more risk and experiment with new solutions.

HOW DO YOU TURN THE SDG ROAD MAP INTO AN OPPORTUNITY FOR CREATING FINANCE FOR LDCs? I have always seen the SDGs as an opportunity map – for businesses, for money managers, for all of us. After all, it lays out the profile of what a prosperous, inclusive, and sustainable world needs to be. Today’s private customers, consumers, savers, and investors are increasingly proactive in directing their dollars towards value for the planet and for the future they want to see. The challenge to all of us is to design the pathways that make it more attractive to direct our collective resources toward that good. And that is where UNCDF plays a role. We are helping to answer the “how” question, by creating demonstration effects and showing new approaches to address old problems. In the process, we are making finance work for those too-often underserved by the global financial ecosystem. That potential for transformation— and the promise of the SDGs to leave no one behind—is what motivates UNCDF, now and into the future. i

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> Book Review The Ethical Business Book by Sarah Duncan

Customer Commandments and Importance of the ‘R’ in CSR:

Ignore This at Your Peril

The Ethical Business Book, 168 pages. Published (2019) by LID Publishing Limited, London. Reviewed by John Foot

arah Duncan is to be congratulated on producing The Ethical Business Book, a timely and important presentation of “50 ways you can help protect people, the planet, and profits”.

The author makes a strong business case for taking the ethical road, and companies ignore it at their peril. She explains that traditional corporate social responsibility (aka CSR, often a bolt-on after the money has been made) is being superseded by new ethical standards for business. We are now required to live up to society’s expectations while generating profits. Business owners should be thinking about the “triple bottom line”, which measures not only profitability but also integrity and sensitivity to the environment. Duncan’s tone is never hectoring, and she is sympathetic to individuals and companies that need to take baby steps. “Don’t be afraid of the half-way house — all businesses are a work in progress,” she writes. “Companies just need to be able to legitimately say that initiatives are being set in train and this is part of an ethical journey to better things.” The reader is challenged to produce an action plan for greater employee engagement and happiness. It’s a no-brainer when you consider that, according to The Macleod Report, wellmotivated staff generate 43 percent more revenue (with 12 percent higher productivity), take far fewer sick days, and are 87 percent less likely to quit. That’s going to ease the recruitment budget somewhat. Mahatma Gandhi is credited here with having carved out the Ten Customer Commandments (in essence “Though shalt look after them”). But looking after — and retaining — customers as consumer conscience rises will depend partly on their commitment, too. Some will be ready to switch to similar businesses that display better sustainability credentials. Marketing in this new era moves from manipulation to authentication, adding the values and proof of ethical impact that customers demand. Duncan suggests reinventing BOGOF to “Buy one GIVE one free”. She commends Toms Shoes (a raft of support to the needy), Mindful

Chef (school meals for poor children), and Hey Girls (free sanitary towels to those who could not otherwise afford them). Advertising seems to be confined to the informative (which may sadden those who consider the better commercials to be minor works of art). This guide will be useful to those who are aware they should be doing something for the environment, but aren’t sure quite what. It’s also an admonishment to people who stuff old newspapers in with household waste when no one is looking. Never again, Sarah, I promise. In the UK, as elsewhere, teenagers’ interest in the Brexit saga is rightly giving way to concern for the welfare of the planet. Young people are worried and in five years, 75 percent of the workforce will be Millennials — who are already shunning companies with poor ethical standards. The Baby Boomers may have eased-off on their CFI.co | Capital Finance International

idealism, but those born in the 1980s and ‘90s appear to be in for the long haul. The author tells us that this is the age of the ecoleader, who recognises that quality, profitability, sustainability and social responsibility are connected. So how do we lead, follow and adapt? This little book could help. Duncan writes well, wasting not a word. The layout and illustrations are superb, with plenty of room for reader response. The author invites us to consider our position in relation to the new business ethics and jot notes in the book. She is realistic about the time needed to reflect on these matters before putting pen to paper (take heed, Dr Phil) and this would seem to be a very useful exercise. It’s a small volume that could be devoured at one sitting — but it will be referred to many times thereafter. i 21

> Nouriel Roubini:

Why Financial Markets’ New Exuberance Is Irrational

his past May and August, escalations in the trade and technology conflict between the United States and China rattled stock markets and pushed bond yields to historic lows. But that was then: since then, financial markets have once again become giddy. US and other equities are trending toward new highs, and there is even talk of a potential “melt-up” in equity values. The financial-market buzz has seized on the possibility of a “reflation trade,” in the hope that the recent global slowdown will be followed in 2020 by accelerating growth and firmer inflation (which helps profits and risky assets). 22

The sudden shift from risk-off to risk-on reflects four positive developments. First, the US and China are likely to reach a “phase-one” deal that would at least temporarily halt any further escalation of their trade and technology war. Second, despite the uncertainty surrounding the United Kingdom’s election on December 12, Prime Minister Boris Johnson has at least managed to secure a tentative “soft Brexit” deal with the EU, and the chances of the UK crashing out of the bloc have been substantially reduced. Third, the US has demonstrated restraint in the face of Iranian provocations in the Middle East, with President Donald Trump realising that CFI.co | Capital Finance International

surgical strikes against that country could result in a full-scale war and severe oil-price spike. And, lastly, the US Federal Reserve, the European Central Bank, and other major central banks have gotten ahead of geopolitical headwinds by easing monetary policies. With central banks once again coming to the rescue, even minor “green shoots” – such as the stabilisation of the US manufacturing sector and the resilience of services and consumption growth – have been taken as a harbinger of renewed global expansion. Yet there is much to suggest that not all is well with the global economy. For starters, recent data

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the situation in the city is worsening, making a forceful crackdown likely in 2020. Among other things, a militarised Chinese response could derail any trade deal with the US and shock financial markets, as well as push Taiwan in the direction of forces supporting independence – a red line for Beijing. Fourth, although a “hard Brexit” may be off the table, the eurozone is experiencing a deepening malaise that is not related to the UK’s impending departure. Germany and other countries with fiscal space continue to resist demands for stimulus. Worse, the ECB’s new president, Christine Lagarde, will most likely be unable to provide much more in the way of monetary-policy stimulus, given that one-third of the ECB Governing Council already opposes the current round of easing. Beyond challenges stemming from an aging population, weakening Chinese demand, and the costs of meeting new emissions standards, Europe also remains vulnerable to Trump’s oft-repeated threat to impose import tariffs on German and other European cars. And key European economies – not least Germany, Spain, France, and Italy – are experiencing political ructions that could translate into economic trouble.

from China, Germany, and Japan suggest that the slowdown is still ongoing, even if its pace has become less severe. Second, while the US and China may agree to a truce, the ongoing decoupling of the world’s two largest economies will almost certainly accelerate again after the US election next November. In the medium to long term, the best one can hope for is that the looming cold war will not turn hot. Third, while China has shown restraint in confronting the popular uprising in Hong Kong,

Fifth, with crippling US-led sanctions now fueling street riots, the Iranian regime will see no other choice but to continue fomenting instability in the wider region, in order to raise the costs of America’s current approach. The Middle East is already in turmoil. Massive protests have erupted in Iraq and Lebanon, a country that is effectively bankrupt and at risk of a currency, sovereign-debt, and banking crisis. In the current political vacuum there, the Iranian-backed Hezbollah could decide to attack Israel. Turkey’s incursion into Syria has introduced many new risks, including to the supply of oil from Iraqi Kurdistan. Yemen’s civil war has no end in sight. And Israel is currently without a government. The region is a powder keg; an explosion could trigger an oil shock and a renewed risk-off episode. Sixth, central banks are reaching the limits of what they can do to backstop the economy, and fiscal policy remains constrained by politics and high debts. To be sure, policymakers could turn to even more unconventional policies – namely, monetised fiscal deficits – whenever another downturn occurs, but they will not do so until the next crisis is already severe. Seventh, the populist backlash against globalisation, trade, migration, and technology is worsening in many places. In a race to the

bottom, more countries may pursue policies to restrict the movement of goods, capital, labor, technology, and data. While recent mass protests in Bolivia, Chile, Ecuador, Egypt, France, Spain, Hong Kong, Indonesia, Iraq, Iran, and Lebanon reflect a variety of causes, all are experiencing economic malaise and rising political resentment over inequality and other issues. Eighth, the US under Trump may become the biggest source of uncertainty. Trump’s “America First” trade foreign policies risk destroying the international order that the US and its allies created after WWII. Some in Europe – like French President Emmanuel Macron – worry that NATO is now comatose, while the US is provoking rather than supporting its Asian allies, such as Japan and South Korea. At home, the impeachment process will lead to even more bipartisan gridlock and warfare, and some Democrats running for the party nomination have policy platforms that are making financial markets nervous. Finally, medium-term trends may cause still more economic damage and disruption: demographic aging in advanced economies and emerging markets will inevitably reduce potential growth, and restrictions on migration will make the problem worse. Climate change is already causing costly economic damage as extreme weather events become more frequent, virulent, and destructive. And while technological innovation may expand the size of the economic pie in the long run, artificial intelligence and automation will first disrupt jobs, firms, and entire industries, exacerbating already high levels of inequality. Whenever the next severe downturn occurs, high and rising private and public debts will prove unsustainable, triggering a wave of disorderly defaults and bankruptcies. The disconnect between financial markets and the real economy is becoming more pronounced. Investors are happily focusing on the attenuation of some short-term tail risks, and on central banks’ return to monetary-policy easing. But the fundamental risks to the global economy remain. In fact, from a medium-term perspective, they are actually getting worse. i ABOUT THE AUTHOR Nouriel Roubini, Professor of Economics at New York University's Stern School of Business and Chairman of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com. 23

> Joseph Stiglitz:

The End of Neoliberalism and the Rebirth of History

t the end of the Cold War, political scientist Francis Fukuyama wrote a celebrated essay called “The End of History?” Communism’s collapse, he argued, would clear the last obstacle separating the entire world from its destiny of liberal democracy and market economies. Many people agreed. Today, as we face a retreat from the rules-based, liberal global order, with autocratic rulers and demagogues leading countries that contain well over half the world’s population, Fukuyama’s idea seems quaint and naive. But it reinforced the 24

neoliberal economic doctrine that has prevailed for the last 40 years. The credibility of neoliberalism’s faith in unfettered markets as the surest road to shared prosperity is on life-support these days. And well it should be. The simultaneous waning of confidence in neoliberalism and in democracy is no coincidence or mere correlation. Neoliberalism has undermined democracy for 40 years. The form of globalisation prescribed by neoliberalism left individuals and entire societies CFI.co | Capital Finance International

unable to control an important part of their own destiny, as Dani Rodrik of Harvard University has explained so clearly, and as I argue in my recent books Globalization and Its Discontents Revisited and People, Power, and Profits. The effects of capital-market liberalisation were particularly odious: If a leading presidential candidate in an emerging market lost favor with Wall Street, the banks would pull their money out of the country. Voters then faced a stark choice: Give in to Wall Street or face a severe financial crisis. It was as if Wall Street had more political power than the country’s citizens.

Winter 2019 - 2020 Issue

How can wage restraint – to attain or maintain competitiveness – and reduced government programs possibly add up to higher standards of living? Ordinary citizens felt like they had been sold a bill of goods. They were right to feel conned. We are now experiencing the political consequences of this grand deception: distrust of the elites, of the economic “science” on which neoliberalism was based, and of the money-corrupted political system that made it all possible. The reality is that, despite its name, the era of neoliberalism was far from liberal. It imposed an intellectual orthodoxy whose guardians were utterly intolerant of dissent. Economists with heterodox views were treated as heretics to be shunned, or at best shunted off to a few isolated institutions. Neoliberalism bore little resemblance to the “open society” that Karl Popper had advocated. As George Soros has emphasised, Popper recognised that our society is a complex, ever-evolving system in which the more we learn, the more our knowledge changes the behavior of the system. Nowhere was this intolerance greater than in macroeconomics, where the prevailing models ruled out the possibility of a crisis like the one we experienced in 2008. When the impossible happened, it was treated as if it were a 500year flood – a freak occurrence that no model could have predicted. Even today, advocates of these theories refuse to accept that their belief in self-regulating markets and their dismissal of externalities as either nonexistent or unimportant led to the deregulation that was pivotal in fueling the crisis. The theory continues to survive, with Ptolemaic attempts to make it fit the facts, which attests to the reality that bad ideas, once established, often have a slow death. If the 2008 financial crisis failed to make us realise that unfettered markets don’t work, the climate crisis certainly should: neoliberalism will literally bring an end to our civilisation. But it is also clear that demagogues who would have us turn our back on science and tolerance will only make matters worse.

Even in rich countries, ordinary citizens were told, “You can’t pursue the policies you want” – whether adequate social protection, decent wages, progressive taxation, or a well-regulated financial system – “because the country will lose competitiveness, jobs will disappear, and you will suffer.” In rich and poor countries alike, elites promised that neoliberal policies would lead to faster economic growth, and that the benefits would trickle down so that everyone, including the poorest, would be better off. To get there,

though, workers would have to accept lower wages, and all citizens would have to accept cutbacks in important government programs. The elites claimed that their promises were based on scientific economic models and “evidence-based research.” Well, after 40 years, the numbers are in: growth has slowed, and the fruits of that growth went overwhelmingly to a very few at the top. As wages stagnated and the stock market soared, income and wealth flowed up, rather than trickling down. CFI.co | Capital Finance International

The only way forward, the only way to save our planet and our civilisation, is a rebirth of history. We must revitalise the Enlightenment and recommit to honoring its values of freedom, respect for knowledge, and democracy. i ABOUT THE AUTHOR Joseph E Stiglitz, University Professor at Columbia University, is the co-winner of the 2001 Nobel Memorial Prize, former chairman of the President’s Council of Economic Advisers, and former Chief Economist of the World Bank. His most recent book is People, Power, and Profits: Progressive Capitalism for an Age of Discontent. 25

> Mohamed A El-Erian:

How the IMF Can Battle Gradual Irrelevance

his year, I didn’t attend the October annual meetings of the International Monetary Fund and the World Bank in Washington, DC. Instead, I paid close attention to reports of the gathering and talked to people who were there whom I respect. What emerged is depressing for the wellbeing of the global economy. In particular, the prospect of continued weakness and fragmentation pressures will compound the challenges to the credibility and effectiveness of multilateral institutions. 26

The convening power of the IMF and the World Bank is unquestionably strong, if not unique. Every year, their annual meetings attract top economic and financial officials from more than 180 countries, as well as a far larger number of private-sector representatives. It’s an exceptional global gathering, not only for officials to exchange views but also for corporate networking. Over the last few years, the official meetings have increasingly been overshadowed by the CFI.co | Capital Finance International

ever-growing number of parallel events, notably diminishing the gathering’s contribution to better policymaking. In fact, this year, I couldn’t find a single person who had paid much attention to a key policy output of the meetings – the communiqués issued by the two institutions’ top policymaking committees. This is in stark contrast to the past. I vividly remember the days, not so long ago, when officials prepared diligently for these policy discussions.

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Monetary and Financial Committee (IMFC), the Fund’s top member-country policymaking panel, is preceded by the release of two flagship IMF publications on economic and financial trends (respectively, the World Economic Outlook and the Global Financial Stability Report). These are supplemented by press conferences and speeches involving many Fund officials. The themes are then picked up in a host of seminars, as well as in presentations by national officials. As a result, many policy implications are covered well before the IMFC meets.

foresee the aftermath of the 2007-08 financial crisis.

Yet, as much as I respect and admire the multilaterals, and I have done so for decades, I fear that this explanation is too partial. Yes, the IMF maintains an impressive analytical edge, owing to its talented and dedicated staff as well as its unique links to countries. Yes, it has made important strides in improving its understanding of the relationship between financial markets and the real economy. And, yes, it has bravely taken the lead in shining more light on the economic impact of gender inequality and climate change. But its forward-looking analyses have too often proved to be backward-looking, and its quantitative projections have consistently been subject to considerable revisions.

These shortcomings raise broader concerns. They increase the tendency toward beggarthy-neighbor policies at the national level and intensify pressures for fragmentation and disorderly deglobalisation. They also expose the global economy to the risk of financial disruptions that would further undermine already fragile and insufficiently inclusive growth dynamics.

Even more worryingly, the Fund’s policy recommendations – especially those pertaining to the advanced economies – have little impact (to put it politely). One need only look at the widening gulf between what IMF officials have said and the bland, repetitive language of the IMFC communiqués. The policy insights fall on more deaf ears when finance ministers and central bankers are back in their national capitals, underscoring the current ineffectiveness of what once was a key opportunity for improving win-win policies.

Private-sector participants would eagerly await their outcome in the hope of gaining a better understanding of the global economic outlook and the prospects for key national and international policy initiatives. Markets were known to move on particular remarks, which is why officials would spend hours refining the communiqués, lest they be misinterpreted. The charitable reading of this change is that the substance has shifted to the parallel events. Consider the IMF. The communiqué of the International

Many of the key reasons for this diminished influence have little to do with the multilateral institutions themselves. Politics in many advanced economies has turned increasingly inward, amplifying disdain for policies advocated by the Fund. Years of low and insufficiently inclusive growth have narrowed the scope for international policy cooperation, instead fueling disrespect for global norms and the international rule of law. And even the inclination to use the Fund in pursuit of national interests has waned: the US has simply opted to weaponise its own economic tools directly. But the IMF and the World Bank are not blameless. For starters, they have been too slow to implement internal reforms. Both institutions also could be quicker to own their recent mistakes, such as those concerning Argentina’s latest financial debacle, the excessive growth of debt among the least developed economies, and the failure to CFI.co | Capital Finance International

In addition, the cherished principle of uniformity of treatment of member countries has been visibly stretched, often in a way that has further dented the standing and credibility of institutions whose governance is still informed by the past. In particular, Europe has long been overrepresented relative to emerging economies, and Europe and the US retain a monopoly over the leadership of the IMF and World Bank, respectively.

Multilateral organisations often complain that major governments’ weak appetite for institutional reform limits the scope for improvement. After all, these countries are not only the largest shareholders, but also have sometimes blocked initiatives supported by the vast majority of other member states. Admittedly, the IMF and World Bank are constrained by the world in which they operate. But their managements also have tended to shy away from embracing reform initiatives and making them their own. Rather than acting as a catalyst by underwriting the considerable reputational risk involved with approaches that inevitably face resistance, they often have been pushed to the sideline. With both institutions now under new management, there is a new window for launching a process of beneficial change for the global economy. Let’s hope that last month’s disappointing annual meetings can serve as a wake-up call. There is no worse fate for these organisations than gradual irrelevance. i ABOUT THE AUTHOR Mohamed A El-Erian, Chief Economic Adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-Chief Investment Officer, was Chairman of US President Barack Obama’s Global Development Council. He is President Elect of Queens’ College (Cambridge University), senior adviser at Gramercy, and Part-time Practice Professor at the Wharton School at the University of Pennsylvania. He previously served as CEO of the Harvard Management Company and Deputy Director at the International Monetary Fund. He was named one of Foreign Policy’s Top 100 Global Thinkers four years running. He is the author, most recently, of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse. 27

> Ian Fletcher, Director IBM IBV

The Trust Economy

What’s My Data Worth? How Do Organisations Ensure We Get a Fair Return?

CFI.co Columnist

The driving force behind “stakeholder capitalism” – the theme of this year’s World Economic Forum meeting at Davos – is the conviction that businesses should balance the needs of all their stakeholders rather than explicitly favouring investors. I believe that’s a particularly apt reminder in the data-rich universe we inhabit today. Data is growing at a seemingly unstoppable exponential rate, as we leave indelible digital fingerprints on everything we touch; indeed, it’s now widely regarded as one of the world’s most valuable assets. But there’s mounting concern that some of the stakeholders who generate that data aren’t reaping their rewards. In the right hands, data becomes a tool for the greater good, helping to unearth cures for previously incurable diseases, improve communications and create innovative services that enrich our lives. In the wrong hands, it becomes a weapons-grade technology, influencing our actions through the use of behavioural science and sentiment analysis, with machines predicting our every move. So it’s time that we – the real owners of our personal data – reflect on its true worth and the potential ramifications of its misuse. It’s also time that senior executives ensure we get a fair return on the data we share. IBM’s latest Global C-suite Study shows what’s required.

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CFI.co Columnist 29

FROM PERVASIVE TO PERSUASIVE Data is changing the way we live. Algorithms know what we do and where we do it, what we think and how we feel. In fact, they may even know us better than ourselves. They can be used to make product recommendations, personalise the prices of big-ticket items and nudge our purchasing choices, sometimes so subtly that we are unaware of being influenced. Increasingly, they also make important decisions on our behalf. It’s becoming almost commonplace for enterprises to ask their customers to trust a bot or an algorithm to determine whether they get insurance cover or a mortgage. Used benignly, data enables organisations to fulfil people’s genuine needs and desires. But not all organisations are benign. Both governments and corporations have been guilty of intrusive surveillance. And in what are arguably the worst abuses, personal data has been utilised to manipulate the political choices people make, threatening the very foundations of democracy. Pervasive intelligence is evolving into persuasive intelligence – and persuasive intelligence can be put to positive or pernicious ends. So it comes as no surprise that many individuals are becoming increasingly reluctant to part with their personal data. In one recent survey, for example, the majority of respondents had little or no idea how much governments and companies knew about them, didn’t trust governments or companies to handle their data “properly” and didn’t believe that they were getting a fair trade for the data they shared1.

CFI.co Columnist

This rising wariness on the part of citizens and consumers has profound implications for politicians and business leaders everywhere. Our personal data belongs to us, but institutions and corporations often function as its custodians. Senior executives and public servants must thus be able to demonstrate that they will treat our data ethically, protect it effectively and give us a reasonable share of the value they derive from it. They must show, in short, that they are deserving stewards of our data. DATA AND TRUST ENTWINED In the 20th edition of the Global C-suite Study, “Build Your Trust Advantage”, the IBM Institute for Business Value (IBV) set out to explore what’s needed to lead in a world brimming with bytes. The IBV discovered that data has become inextricably entwined with trust. The widespread erosion of trust, on the part of consumers and B2B customers alike, has changed what organisations can – and should – do with data. It’s also transforming the value equation. Where data alone was once an enterprise’s unparalleled asset, it must now factor in transparency and integrity. Data matters, but trust determines its worth2. The IBV interviewed 13,484 C-suite executives from 20 industries and 98 countries, with surprising results. During the course of its research, the study team identified an elite group of just 9 percent of respondents whose organisations are data leaders. 30

"It’s time that we – the real owners of our personal data – reflect on its true worth and the potential ramifications of its misuse." The IBV refer to them as Torchbearers, this group excel at innovating and managing change. They have also surpassed their peers in terms of revenue growth and profitability. So what accounts for this stellar performance? The Torchbearers have fused their data strategy with their business strategy and operate in a data-rich culture. They also set the bar high for the value they expect to gain from data and typically exceed their targets. But what’s most notable of all is that they put customer trust centre stage – in marked contrast with the organisations represented by the rest of the interviewees (see Figure 1). PAST THE TIPPING POINT The trust customers once gave, almost blindly, to brands and institutions has been slipping away for some time now. Data sharing among organisations has also become constrained by a mutual lack of trust. Witness the fact that 36 percent of B2B buyers in a recent survey didn’t believe they “got the full picture” from their vendor during the sales process3. The IBV’s analysis suggests that trust has passed its tipping point. All organisations face a future in which changing customer sentiment and new regulations could severely constrain their access to prized personal data. But the most advanced enterprises recognise that, if they want to enjoy the huge revenues that new business platforms and the application of artificial intelligence could provide, they will have to build – or rebuild – customers’ faith in them. An organisation’s ability to earn a trust advantage depends on how good it is at creating trust in data and how well it engenders trust from data. Three basic principles – transparency, reciprocity and authenticity – guide the way Torchbearers handle data and how they engage their customers. A CLEAR VIEW The first requirement is transparency. Customers demand transparency of data associated with products and services and, in the case of personal data, assurances that it’s kept safe and used in a fair manner. Their purchasing decisions depend on detailed product information: data about how products are manufactured and under what

"Just 9 percent of the senior executives the IBM IBV interviewed head organisations that are data leaders and put customer trust centre stage." CFI.co | Capital Finance International

61% more

Torchbearers Other organisations

51% | 82% Figure 1: The power of trust. Torchbearers focus on using data to strengthen their customers’ trust.

conditions, reviews from users and influencers, accreditations from third parties and more. Brands must prove their credentials. Often, that proof takes the form of customer reviews or buyer testimonials. But some organisations are also turning to blockchain networks, where they can verify that they have honoured their brand promise, whether that promise is speed of delivery, eco-friendly sourcing and manufacturing or anything else. Transparency constitutes evidence that an organisation and its offerings are what the organisation claims they are. Endorsements, coupled with detailed and visible information about the safety and quality of goods, go a long way in establishing trust. THE RULE OF RECIPROCITY Reciprocity is equally vital. Most C-suite executives understand that to get access to data, they have to give something meaningful in return. The challenge? Organisations often don’t know what their customers would consider a fair exchange. Moreover, customers sometimes have mixed feelings about the benefits to be gained by sacrificing their privacy. Unpublished research by the IBV shows that only three in ten consumers feel strongly that the risks outweigh the rewards. ANSWERING FOR THEIR ACTIONS The last element is accountability. This covers a broad range of issues, including respect for customers’ privacy and a commitment to data security. The Torchbearers prioritise data privacy: 45 percent see it as a top competitive advantage, second only to customer relationships. But it can be very difficult to discern precisely where customers draw the line. Take personalised car insurance premiums based on telematics. What one customer perceives as added value may seem like “big-brother” scrutiny to another. Data security can, likewise, be a vexed issue. It’s clearly imperative that all organisations establish policies to combat cyber risk and protect customers. Yet security has become something of a tug of war – a battle between the need to create frictionless customer experiences and the need to authenticate transactions. Excessive caution impairs customer engagement, while too little caution endangers an organisation’s reputation and destroys customers’ trust in it, if their data is hacked.

"Get it wrong, we risk trapping ourselves in a 'matrix' of our own making."

92% more

Torchbearers Other organisations

36% | 69% Figure 2: Feast versus famine. Torchbearer C-suites have extensive access to accurate and actionable “360-degree” customer data.

That said, a good data privacy policy can shield organisations from the worst of the fallout from a data breach by offering customers transparency and opt-out control over their personal information. Conversely, a flawed policy can exacerbate the problems. In one study of Fortune 500 companies, firms that failed to explain their data privacy practices saw their share prices drop sharply when they experienced a data breach, whereas firms that provided customers with a high level of control saw no significant change in their share prices4. THE CASE FOR SELF-CONTROL Today, customers demand transparency about how their personal data is being used; tomorrow, they may insist on exerting full control over the information. People know that their data is being used, but they don’t necessarily know how, where or for what purpose. They are becoming more guarded about what they share and, if businesses cannot convincingly demonstrate the value their customers get in exchange, those customers will insist on recovering their privacy. Some organisations, anticipating what they consider inevitable, are already making that possible with self-sovereign identity models. Self-sovereign identity puts the management of private data in the hands of individual customers and trading partners. Users supply proof of their identity in the form of digital attestations from the pertinent authorities. They can also preprogramme permission for their data to be used by different entities in different situations, including granting permission to use it for analytics.

Self-sovereign identity models have enormous potential. They can be used by the partners in a supply chain or an industry alliance to encourage data sharing with accountability, or by airlines and

Of course, self-sovereign identity models still require trust, but it’s trust in a diffuse infrastructure rather than a single entity – and blockchain is the technology that makes such an infrastructure possible. It enables multiple organisations to collaborate by forming a decentralised network much like the Internet itself, with private-key cryptography to ensure the confidentiality and integrity of the data. BIG DATA, BIG TRUST Something certainly has to change. Digital trails are disappearing, as new legislation requires that organisations secure customers’ consent to use cookies and delete their personal data on request. Regulations are also restricting the sharing of data among business partners. In some cases, conglomerates are finding that they can’t even share data among the companies they own. The problem is particularly acute in industries that have been dependent on third-party data to get closer to end-users. Executives are growing wary of how trustworthy that data might be and wondering whether third-party data, beset by new regulations, will suddenly dry up. Yet the standouts in the IBV’s study aren’t daunted. Seven in ten Torchbearers already have a treasure trove of reliable, actionable customer data (see Figure 2). The business leaders who head these organisations also realise that trust is integral to its retention. Enterprises that have earned their customers’ trust are better placed both to keep the data they currently hold – since their customers are less likely to demand that it be purged – and to collect more data in the future. MODELS FOR MUTUAL BENEFIT With trust in their data as their guiding light, the Torchbearers are confident of their ability to test new models and enter new markets. New business models have become contingent on access to ever-bigger, ever-broader data. But some of the innovations made possible by new technologies seem just as likely to raise the bar on customer trust as to satisfy it. Personalised health insurance premiums based on tracking how much people exercise or make other positive lifestyle changes are a case in point. CFI.co | Capital Finance International

CONCLUSION Like it or not, we’re entering an era in which our very lives are shaped by ones and zeroes. We all have a stake in this new world and a role to play in determining whether data becomes a force for evil or for good. If we get it wrong, we risk trapping ourselves in a “matrix” of our own making, a dystopian future in which predatory institutions harvest our data, algorithms dictate our choices and a few profit at the expense of the many. If we get it right – if public and private enterprises alike use our data in a trustworthy fashion and warrant the faith we repose in them – we could enjoy a better, richer existence than humanity has ever experienced before. i Global Citizens & Data Privacy. Ipsos-World Economic Forum. 2019. 2 “Build Your Trust Advantage: Leadership in the era of data and AI everywhere”. IBM Institute for Business Value. November 2019. ibm.co/c-suite-study. All subsequent references to the report come from this source. 3 Ellett, John. “B2B Buyers Don’t Trust Vendors—And That Is A Huge Opportunity for Marketers.” Forbes. October 10, 2018. 4 Martine, Kelly D., Abhishek Borah, and Robert W. Palmatier. “Research: A Strong Privacy Policy Can Save Your Company Millions.” Harvard Business Review. February 15, 2018. 1

The views expressed are those of the author and do not necessarily represent those of IBM. ABOUT THE AUTHOR Ian Fletcher was educated in the UK, building a successful career in IBM Global Services. With more than 30 years’ experience in technology and business consulting services, Ian leads the IBM IBV C-suite Study research for MEA. He also runs IBM’s thought leadership programme, advising clients on business transformation and strategy. Ian specialises in the impact of the Fourth Industrial Revolution and, in turn, its impact on the C-suite and society. ABOUT IBM IBM is a leading cloud platform and AI solutions company. It is the largest technology and consulting employer in the world, with more than 380,000 employees, serving clients in 170 countries. ABOUT IBM INSTITUTE FOR BUSINESS VALUE The IBM Institute for Business Value, part of IBM Services, develops fact-based strategic insights for senior business executives.

IBM Global C-suite Study: ibm.co/c-suite-study 31

CFI.co Columnist

But the crucial point is that users retain control of their data, in much the same way that people retain control of their own birth certificates and passports. Users can also choose which piece of data to share when they are required to confirm a particular claim. So, for example, an individual who needs to prove that he or she is qualified to drive could provide a statement to that effect, endorsed by the relevant agency, rather than a driver’s licence with all its additional details. The requester gets what it needs to know – and nothing more.

other organisations cross-sharing data through industry alliances. They can also facilitate ‘just-intime identification’ – where, instead of stockpiling personal data, an enterprise keeps the minimum required to identify a returning user and then requests any extra data it needs to execute the next transaction when the transaction is about to take place.

However, organisations that have already won a reputation for integrity can stake out a differentiating position by embracing such models and seizing opportunities that are too risky for less trusted brands. The most successful examples of this approach typically involve enterprises that follow the rule of reciprocity and give customers something they truly value as a quid pro quo for the data they share. These organisations also take great pains to use the data transparently and responsibly.

> Evan Harvey, Nasdaq:

SDG Awareness and Action A Report From the Global Exchange Community

The UN Sustainable Development Goals (SDGs) seek to alleviate social, economic, and environmental problems by the year 2030, but progress has been slower than necessary and scattershot in impact. Certain SDGs tend to attract awareness and action from companies if they are closely related to their business objectives, but others (#1 No Poverty, for example, or #14 Life Below Water) seem relegated to specialist intervention. The goals themselves are nonbinding, absent government adoption and mandates, and there are only a handful of standards for the management and/or reporting of SDG performance.

ost of the world’s stock exchanges support the SDGs. Industry advocacy and support takes many forms, including participation in the UN Sustainable Stock Exchanges Initiative and the UN Global Compact. Some exchanges have also integrated the work of the SDGs into the sustainability tools and support that they provide to listed companies, leveraging events, white papers, and webinars to demonstrate the market value and business impact of the SDGs.

CFI.co Columnist

Yet a relatively small number of companies are publicly reporting progress against the SDGs, which implies that the 2030 target is in serious jeopardy. Notable exceptions from the Nasdaqlisted roster include Intel, Microsoft, Symantec, and Starbucks – each reporting steady progress and specific metrics – but most large companies are notably absent from the conversation. Small- and medium-sized enterprises (SMEs), fundamental building blocks of job creation and international development, seem to be particularly silent. The most recent Sustainable Development Goals Report (UN, 2018) cites certain factors for this, including a lack of expertise and resources, especially in developing economies. Given this seeming gap between advocacy and performance, we wanted to examine the level of SDG awareness, action, and efficacy within the global exchange community. WFE provided CFI. co an understanding of SDGs-related industry practices based on a WFE survey. Under Chief Executive Nandini Sukumar, the WFE created a set of Sustainability Principles that (among other things) formalizes industry commitment to the UN SDGs by accelerating 32

Question: Are the UN SDGs well known/well understood in your market?

development of sustainable finance and promoting awareness in the capital market. Ms. Sukumar, citing the WFE Annual Sustainability Survey1, says, “73% of the exchanges with sustainability initiatives have some form of SDGspecific initiatives. These initiatives include education programs on SDGs for issuers, disclosure guidance and offering SDG-related products in their markets.” Certain SDGs (#5 Gender Equality, #8 Decent Work Conditions, and #13 Climate Action) are the most engaged among WFE members. SURVEY RESULTS We sent questions to the Sustainability Working Group — a subset of WFE members that are especially committed to sustainable business integration — and received responses for more than half of them. Participating exchanges included B3 (Brazil), Bolsa de Valores de CFI.co | Capital Finance International

Colombia, Borsa Istanbul, Bourse de Casablanca, Dubai Financial Market, the Egyptian Exchange, Ho Chi Minh Stock Exchange, Johannesburg Stock Exchange, London Stock Exchange Group, National Stock Exchange of India, Shanghai Stock Exchange, the Stock Exchange of Thailand, and the Taiwan Stock Exchange. Two members elected to remain anonymous, and Nasdaq itself has contributed to the industry data in this article. We found that awareness and valuation of the SDGs is nearly universal, yet actionable progress is not being measured. The SDGs are vital to capital market function, particularly for listed firms and their respective supply chains. Without reaching for the Goals, one responding exchange said, “Neither the capital markets nor the real economy will be able to survive in the coming decades.”

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"Notable exceptions from the Nasdaq-listed roster include Intel, Microsoft, Symantec, and Starbucks – each reporting steady progress and specific metrics – but most large companies are notably absent from the conversation." • 80% claim that the SDGs are well understood in their market • 87% believe that the SDGs are a fundamental part of the sustainable economy • More exchanges (54%) do not measure SDG progress than do (46%) Wanting to press further, we asked this question: How does your exchange engage, inform, or otherwise communicate with issuers and other stakeholders about the UN SDGs? The disparate range of answers may help to explain the gap between industry awareness and industry action, as there is no global standard for measurement – but it’s also clear that the responding exchanges are proactive.

Taiwan Stock Exchange cited strong information disclosure, corporate governance, stewardship responsibility, sustainable product development, and market capacity building as evidence of their commitment to SDG progress. Other exchanges cited index development as a key driver. Other exchanges were more candid about market inhibitors. Further support from stakeholders including issuers is needed to allow exchanges to move forward more aggressively.

An influential joint report from the UN SSE and the WFE (How Exchanges Can Embed Sustainability Within their Operations: A Blueprint to Advance Action, 2019) makes one point clear: “The imperative of sustainability as embodied in the SDGs demands deep transformative change from both business and CFI.co | Capital Finance International

public policy. For exchanges, the incorporation of sustainability considerations is likely to be a determinant of long-term performance and resilience in a changing world.” i WFE, “WFE Sustainability Survey - Exchanges Advancing Sustainable Finance” (April 2019). 1

ABOUT THE AUTHOR Evan Harvey is the Director of Corporate Responsibility for Nasdaq. He also serves on the Board of Directors for the UNGC US Network and chairs the Sustainability Working Group at the World Federation of Exchanges.

CFI.co Columnist

“The SDGs are recommended as a global reporting framework for listed companies in LSEG ESG reporting guidance,” according to the London Stock Exchange Group (LSEG). “FTSE Russell — the global, multi-asset index provider part of LSEG — develops investment tools that incorporate alignment with the SDGs in the index design.”

OTHER INDUSTRY INITIATIVES The UN and exchange leaders had previously identified the SDGs that most pertain to the industry and the various ways that capital markets can help deliver on the Goals. Per this guidance, the SDGs that receive special emphasis from Nasdaq and others include: • #5 Gender Equality. Ensuring women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life. • #12 Responsible Consumption and Production. Encouraging companies, especially large and trans-national companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle. • #13 Climate Action. Improving education, awareness raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning. • #17 Partnerships for the Goals. Enhancing the global partnership for sustainable development complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technologies and financial resources to support the achievement of sustainable development goals in all countries, particularly developing countries.

Author: Evan Harvey

> Tor Svensson, Chairman CFI.co

AI-Powered Data Analytics is the New Gold in Health Ecosystems Today we are living faster — and surviving longer. But the methods we used to know cannot keep up.

e, the participants in the whole ecosystem — the clients, the doctors, the hospitals, the public sector, the administrators, the insurers — are all victims in the current system.

"AI + high touch care = smart health"

We need to reengineer our health ecosystems by creating better processes, centred on the user. We need new practices for better living, where health is a part of the way we want to live, not a restriction on our way of living.

Dr Chiang found that new technologies can support the medical examiner but not replace the patient-doctor relationship.

For insurers we need friends for our health and partners in the ecosystem. We need to change the way we secure the well-being for everyone by finding smarter ways to live; with universal healthcare for all. The practice of medicine is transforming with Artificial Intelligence (AI) methods of machinelearning. The rapid improvements in computer processing have already improved such AI-based systems’ accuracy and efficiency of diagnosis and treatment. The question is whether AI-based deep learning systems will eventually replace physicians or will just augment their role. IBM’s Watson has long toyed with consolidating and AI-empowering all global medical information available for the benefit of the practitioner and the patient.

CFI.co Columnist

World-renowned medical doctor and healthcare technology expert Dr Chun Yuan Chiang of IHDpay Group concludes that AI cannot fully replace the "high-touch" nature of medical care. However, technology can assist in diagnosis, especially in situations where patients have long, complicated medical histories. High-Touch means interaction with human beings as opposed to transacting with computers through high-tech. The term was invented by John Nisbett in his bestseller Megatrends from 1982. Dr Chiang spoke on a conference panel which included Jai Verma of Cigna International and Dai Ying of GE Healthcare at the CNBC EastTechWest Conference in November 2019 in Guangzhou, China 2019. 34

Dr Chun Yuan Chiang

The digital healthcare leader says AI enhances the process. Transcript from the conference: Dr Chiang: “Up to this moment, historically and experience-wise, medical care is still a “high touch” business, so there's still some controversy whether it can at this stage 100 percent replace the doctor-patient, direct sort of interaction.” Moderator: “Right. I think that's the issue itself. I mean, some people worry that when you're sick, you still want to see the doctor. I mean, nothing can replace the human factor altogether. But being a doctor yourself, would you say that AI is useful?” Dr Chiang: “I’ll give an example. I came across a mother who has a pair of twins. She tried to enter the data and some suggestion was given to her. One of the twins recovered and the other one got sicker and refused to eat. The first one was jumping and playing around, and the second one become very drowsy. In that situation, what can you do? Take the child to see a doctor. So, I think AI helps the doctor. “But I don't think at this stage we are even close to 100 percent sure that AI can replace the historical high touch care, you know, with a temporal type of doctor-patient relationship. The example of this twin is a good one because AI did talk of probabilities, not image matching. It is different, image matching is different. So in terms of treatment, you need personalisation. “In terms of diagnostics it is a different category. So I would say at the end of day, all patients want recovery, to relieve their pain, and not just get a diagnosis. I think it’s definitely helpful, particularly in diagnosis and also in long cases, complicated cases, when the medical history is CFI.co | Capital Finance International

so long that the doctor doesn't have time to read it all. “If there is an education system that can support all players of digital health, that will make the ER even more useful, because then the patient can discharge the file through the provider link with the doctors. Making the time that is required to vet the history, that takes about a half a day. It becomes very efficient and results are on the table before the patient walks into your surgery. “I think the message there then is that it's improving health care, but it's not going to be replacing the human ties. I would say is enhancing that.” Moderator: “And I wonder if you (Jai Verma) can weigh in on this, too, because your patients face different scenarios. If they're overseas, they may not have the luxury of getting into the doctor's office. So, in that case, will AI replace a doctor's visit?” Jai Verma (from Cigna International): “I think so, definitely, because we are building telemedicine in our apps today where you can consult a doctor from the convenience of your home. Not for emergencies, but if you want to consult a doctor in the middle of the night then you have an option to go online and then check with the doctor later. And I think AI and the Internet of Things (IoT) are going to change the way we deliver healthcare. “If you look at medicines, 30 percent of the medical costs, you know, the claims are for medicines, pharmacy. In the earlier scenario, we wouldn't have any access to the pharmacy or to the patients. I think AI and Pharmacare Genomics collecting all this data in a single place would help in reducing the ADR (Adverse Drug Reactions) deaths in the US, 200,000 people die every year of ADR and the majority of the mistakes happen at the time of prescription, or at the time of dispensing medicines. We can reduce a lot of those mistakes and save millions of lives.” THE DIGITAL HEALTH GLOBAL INITIATIVE (DHGI) Chiang’s new brainchild is the Digital Global Health Initiative (DHGI), still under formation. As a global health practitioner, social entrepreneur, and pioneer in the digital medical field he has

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The digital platform provides a one-stop interconnected service that enables both patients and doctors to be verified, consultations (faceto-face and telemedicine) to be scheduled, diagnostic tests to be held, prescriptions to be issued, filled and re-filled via verified pharmacists using traceable quality medications, and all the associated payments including via third-party insurers being honoured in a secure manner. The Initiative enhances overall public healthcare management by ensuring patient- and drug-safety, accountability, as well as combating counterfeit drugs and insurance frauds. In doing so, patient consent, and the safeguarding of personal data to protect their privacy and confidentiality — and maintaining their trust — is recognised as paramount. The system has been successfully tested via some 50 hospitals in the Guangdong and Guangxi Provinces of China. With 15 million subscribers, the platform has served more than 53 million outpatient visits. The initiative is expanding in China, as well as through collaborations in MENA, Asia, and Africa with new centres coming online in 2020.” (Source: DHGI). Dr Chun Yuan Chiang

dedicated significant personal resources to the Initiative which he chairs.

UHC will also need to ensure the integrity of the underlying service delivery systems.

Founded in 2019, DHGI aims to enable the worldwide availability of digital technologies for advancing secure, optimal, cost-effective, and affordable healthcare services.

Of paramount importance is the maintenance of patient privacy and confidentiality, and ensuring that data collected or transmitted are protected and used only with the explicit consent of clients and in accordance with best-practice provisions such as in the European General Data Protection Regulation (GDPR) or equivalent provisions in other countries.

"All countries and leaders have committed themselves to the achievement of the Sustainable Development Goals by 2030. These include SDG3 and the attainment of Universal Health Coverage (UHC),” says DHGI.

That would enable releasing and creating additional value from the essential interactions between health providers, health institutions, and their clients.

The core of the Initiative is centred around an innovative digital healthcare solution pioneered by a leading Chinese provider, the IHDpay Group founded in 2013.

This is exacerbated by the exponential rise in fake provision, counterfeit or sub-standard drugs, corrupt financial transactions, or even sham practitioners and patients. Hundreds of millions of dollars are lost this way. Scaling-up

This is revolutionising the medical and healthcare industry through its state-of-the-art biometric authentication solution that enhances the “trustworthiness” of the healthcare management system.

“However, for all upper-, middle-, and lowerincome countries, UHC is a very big challenge and requires a massive expansion of investment and outreach to those who need curative and preventive healthcare.

CFI.co | Capital Finance International

Now thanks to machine learning, health data is the new gold. But not for you. Not yet, anyways. Currently, the gold is only for the businesses that collect and monetise your data. But your personal health data is yours to own and monetise. New technologies, such as blockchain, will one day help you reap the benefits, also in financial terms. i

ABOUT THE AUTHOR Tor Svensson, Chairman of Capital Finance International (CFI.co), is Senior Advisor to a UN recognised NGO. 35

CFI.co Columnist

This is only feasible — and sustainable — if the models for healthcare provision are rendered more effective and efficient. In turn, that necessitates a radical re-engineering of healthcare processes to strip out inessential costs through streamlining administrative transactions.

Fortunately, rapid advances in digital and biotechnology offer an unprecedented opportunity to scale-up reliable, trustworthy, and costoptimised UHC provision in richer and poorer countries. That has been recognised, for example, by the UN Secretary-General’s High-Level Panel on Digital Co-operation, the UN Department for Economic and Social Affairs (DESA), the World Health Organisation’s new guidelines on digital interventions, as well as the work of the International Telecommunication Union (ITU) on digital health and standards. A range of “smart health” initiatives are also emerging in several countries such as China, the UAE, the European Union, India, and some African countries.

New AI-based systems augment physicians but are unlikely to replace the traditional physician– patient interaction. Clearly, an AI-powered computer combining in a data lake all knowledge and experience about health from hospital data, doctors, literature, medicine history, etc. in numerous cases will be able to augment (support) and thus improve the doctor’s diagnosis and treatment. But taking over altogether - not yet and not soon.

> OECD:

Ensuring Mobilisation and Impact Remain Aligned to Achieving Elusive SDGs By Paul Horrocks, Priscilla Boiardi & Valentina Bellesi

The Addis Ababa Action Agenda provides a framework to harness the finance necessary to deliver the UN’s 2030 Sustainable Development Agenda.

he 17 Sustainable Development Goals (SDGs) guide all countries and stakeholders towards a defined range of areas where efforts and resources are most needed. The Action Agenda calls for support from a broad range of actors, including the private sector, to achieve them. Five years after the international community’s initial commitment, progress has been slow and uneven. On the eve of 2020 — which marks 10-years to 2030 — the OECD is committed more than ever to support SDG attainment. With a pressing need to bridge the annual $2.5tn investment gap in SDG-relevant sectors in developing countries, one of the main challenges is aligning public and private finance to the goals. A significant proportion of financial flows remain unaligned, and even incompatible, with the SDGs. This is not restricted to the private sector. Although Official Development Finance (ODF) is typically the first to venture into unchartered territory, there are inconsistencies in the system, such as the volume of commitments of ODF for fossil fuel-based energy supply and generation. It averaged $3.9bn annually for the period 20162017 (OECD, 2019 forthcoming)1. Bridging the financing gap requires mobilisation of finance to attract commercial finance and minimise investment risk. The first edition of the flagship OECD Private Finance for Sustainable Development Conference (PF4SD) in 2018 focused on mobilisation.

Since then, the OECD — through the DAC Blended Finance Principles — has developed best-practice approaches on financial instruments that can push private capital into SDG-aligned projects, programmes and markets. The financial instruments used by blended finance vehicles are invaluable in signalling the risk-return profiles of projects in various sectors and regions. The graph below demonstrates that, collectively, these have been increasingly effective in mobilising $152bn in private capital for development over the period 2012-17. Included are guarantees and direct investment in companies that are most used. While the 2018 OECD Blended Finance Funds and Facilities survey results show the energy, banking and manufacturing sectors receive the bulk of blended finance, interest in the health and education sectors is growing. Although the results indicate that only a limited volume flows into these sectors, the authors acknowledge this finding may be biased due to the size of financing deals in such sectors (OECD, 2018)2. It is vital that the amount of finance directed to the SDGs increases by a factor of 16 over the next decade. The challenge ahead is to align the trillions floating around the global economy with the SDGs, from the institutional investors and the resources managed by banks and retail investors to remittances to FDI and private philanthropy.

Source: (OECD, 2019) Statistics on amounts mobilised from the private sector by Official Development Finance interventions, 2012-2017

CFI.co | Capital Finance International

One of the main issues is that of impact measurement and management. In the private sector, despite claims of focusing on impact, few investors are transparent in monitoring and tracking their contributions. Many funds claim to be investing in the SDGs, but do not release their methodology (possibly due to commercial confidentiality). This reduces scrutiny as well as transparency, potentially damaging the agenda. The broadest possible definition of sustainable investing is assets under management (AUM) targeting sustainable development to the tune of $30.7tn (Global Sustainable Investment Alliance, 2018)3. If these numbers are accurate, why does the SDG gap still loom large? In the public sector, although a work is being done at the country level, substantive tracking necessitates massive capacity, and remains limited in developing countries. There is an acute need for policy makers to better grasp and measure the actual financial flows. This means developing a coherent approach to what these efforts and flows are trying to achieve, otherwise known as impact. There are many approaches to impact measurement and management, and not one is emerging as a unifying force. However, OECD — as part of the Impact Management Project structured network — is contributing to the development of a robust and commonly agreed impact measurement framework. The launch of the report Social Impact Investment 2019: The Impact Imperative at the 2019 PF4SD Conference marked an important step in achieving this. It is worth remembering that alignment with the SDGs does not only relate the mobilisation of finance and its ultimate impact, but also the elements that need to change to provide better signals, incentives and direction to market participants. Developing countries need to ensure that their policy and regulatory settings enable funds to target SDGs. It is also crucial that innovative projects with potential for growth and jobs creation are supported, while remaining aligned with the national priorities.

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SHIFTING FINANCE TOWARDS THE GOALS Mobilise additional financial resources for sustainable development

Direct all finance and investment to support sustainable development

Increase the economic, social and environmental impact of investments in people’s lives

MOBILISATION

ALIGNMENT

IMPACT

INSTITUTIONAL INVESTORS Investment Funds Insurance Companies Pension Funds

DEVELOPING COUNTRIES

COMMERCIAL BANKS

RETAIL INVESTORS

NATIONAL INVESTMENT FUNDS MDBs/ DFIs

PHILANTHROPY

DONORS

Source: (OECD, 2019) Shifting finance towards the SDGs means aligning the various streams of mobilised finance with investments that support sustainable development impact

1 (OECD, forthcoming) Aligning development cooperation and climate action: The only way forward 2 (OECD, 2018) Blended Finance Funds and Facilities – 2018 Survey Results, Part 1: Investment Strategy 3 gsi-alliance.org/wp-content/uploads/2019/03/GSIR_ Review2018.3.28.pdf, p. 3

investment into developing countries, in particular on policies and approaches that governments can adopt in order to ensure that activities are aligned and impact achieved. Prior to this, Paul was a Senior Executive in Fiscal Group of the Australian Federal Treasury, working on the domestic infrastructure market but also providing policy advise during Australia’s G20 presidency on international policy challenges. Paul has over a decade of Senior leadership at the European Institutions in Brussels, having worked on initiatives such as the deepening of European capital markets in response to the 2008 financial crisis. Paul has degrees from the University of Wales, and Masters from the University of Liverpool as well as an Executive MBA from Vlerick Business School in Belgium.

ABOUT THE AUTHORS Paul Horrocks is Head of the Private Finance for Sustainable Development Unit at the OECD Development Co-operation Directorate. Paul is working on a number of initiatives aiming at encouraging greater private sector

Priscilla Boiardi joined the OECD in October 2019 as Policy Analyst in the private finance for sustainable development team. Previously, Priscilla was Knowledge Centre and Policy Director at EVPA, leading the association’s activities on research, training and

The various donor systems and institutions involved need to be aligned in how they organise and co-ordinate their efforts. The third edition of the OECD PF4SD Conference in January 2020 will focus on this issue, and aims to bring together private finance and development finance actors, governments of developed and developing countries, and other stakeholders to discuss what aligning finance with the SDGs entails. i

Author: Paul Horrocks

Author: Priscilla Boiardi

dissemination. Priscilla has over ten years of research and training experience on social investment, private finance and innovation, including as a Research Associate at the Vlerick Business School and then as a PhD candidate at the Catholic University of Leuven. She has strong expertise in research for business and public bodies, both qualitative and quantitative, and was responsible for the Global Competitiveness Report of the World Economic Forum for Belgium. Priscilla holds a MSc (Hons) in Economics and Management of Public Administrations and International Institutions from the Bocconi University in Milan. Valentina Bellesi is a Junior Policy Analyst in the Private Finance for Sustainable Development Unit at the OECD Development Co-operation Directorate, working on the organisation of the upcoming 2020 Private Finance for Sustainable Development Conference, as well as research and analysis on a series of blended finance-related aspects. Prior to this, Valentina worked on the OECD Multilateral Development Finance report. She also has experience in impact evaluation, having worked at the Evaluation department of the Council of Europe Development Bank and as an impact evaluation research assistant at the Institute of Latin American studies. She holds a Master’s Degree in International Development from Sciences Po Paris and a Bachelor in Economics and Finance from Bocconi University.

Author: Valentina Bellesi

CFI.co | Capital Finance International

> Lord Waverley:

A Rising Star Steps Up to Take Its Place in Eurasia I write this on the morning of the parliamentary elections in Uzbekistan, and do so reflecting on the sense of optimism there and elsewhere.

zbekistan is increasingly seen as the rising star among emerging and frontier markets, a view validated by The Economist, which ranked it as the most improved nation of 2019. In the past three years, it has come a long way in liberalising economic and monetary policies and opening to foreign and domestic private investment. If demography is destiny, Uzbekistan — as the most populous and strategically located nation in Central Asia — was always well positioned to play a leading role. That promise, after decades of a controlled economy following independence, is now being fulfilled through a more open economy with Uzbekistan fast emerging as a regional political power, and a growing economy underpinned by good policy and legal structures.

CFI.co Columnist

STEADY PROGRESS While there has been comment in international media about the weak opposition and limited freedoms, these elections see the participation of the largest number of OSCE observers, including Parliamentary Assembly and Director of OSCE/ODIHR, amid signs of more openness. This was well summarised by one professor of sciences, who explained to me that the improved political environment had prompted him to vote for the first time. The focus in the years immediately after the breakup of the Soviet Union was on establishing and maintaining communal harmony; it is not well known, but in addition to the Uzbek majority the country has multiple ethnic and religious groups. These include the largest number of ethnic Koreans outside the Korean peninsula, as well as Tajiks, Russians, Kazakhs and Uighurs, a legacy of a bygone era. The first concern of the leadership was to maintain stability and order; it seems now that a more confident and united nation is looking outwards. Visa processes have been eased and more countries added to the list of those approved for visa-free/easy visa-entry. The Internet is freely accessible and foreign media reports are largely available without controls or censorship. 38

ECONOMY AND LIBERALISATION Uzbekistan has a diversified economic and trade structure, but the “monoculture” economy imposed upon it by Soviet central planning remains. There are excellent signs that it is now emerging from that policy straitjacket. GDP growth is expected to be 5.9 percent this year, and should be six percent annually during the transition to an open economy. Increased budget spending, rising wages, access to bank credit and improved remittances are all helping sustain growth. There is growth in the agriculture and food processing sectors, in tourism, in transport, logistics and extractive industries. Increased consumer spending is adding to economic output as the 32.8 million population benefits from more employment opportunities and rising wages, lower taxes and access to consumer credits, with retail volume growing by five to seven percent. There has been significant progress in reforming legislation, regulations and administrative processes. The purchase of non-agriculture land is now allowed, as is the purchase of equity in local banks. There is no opposition to the reform programme and no expectation of political instability. VISIBLE RESULTS These efforts have been rewarded with an influx of aid and loans from international financial organisations, such as the World Bank, EBRD and ADB, enabling necessary investment in huge projects to modernise and expand the power system, urban and rural regeneration, irrigation and agriculture. These measures have also supported economic diversification and created opportunities for citizens. Uzbekistan’s ranking in World Bank Ease of Business survey has improved from 76th place to 69th, with gains in such areas as contract enforcement and opening of new businesses. Capital market reforms are under way, with the aim is to make it a source of future capital for privatization and new capital for companies looking to expand. INTERNATIONAL ARRANGEMENTS Uzbekistan is not a member of the WTO, but aspires to be. Measures such as EU Partnership CFI.co | Capital Finance International

and Co-operation Agreement (PCA), the newly signed UK-Uzbekistan PCA, CAREC and arrangements among CIS countries provide assurance on free trade with key economic and trading partners. New agreements, such as those with Turkey and the UAE, bring the promise of trade and investment from new sources. It is understood that the country is considering full membership of the Eurasian Economic

Winter 2019 - 2020 Issue

The pace of growth, wages and budget spending — and the need to weaken the currency — has resulted in a double-digit inflation rate. The CBU has been forced to keep the policy lending rate at 16 percent since September 2018. Entrepreneurs and SMEs face challenges in getting credit, where they face an interest rate of close to 26 percent. Bank debt growth is also causing concern; this is not about absolute debt but poor regulation and transparency, and the preference given to directed lending. However, sovereign debt is less than 30 percent of GDP and the cost of debt servicing is not causing budget strain. ADDRESSING THE CHALLENGES The easier processes have been completed or are works-in-progress. The country now needs to attract investment into a range of industries and services and to create favourable conditions for future growth and diversification.

Minister Sardor Umurzakov: Ministry of Investments & Foreign Trade discussing Uzbekistan's priorities and strategic plans with Lord Waverley

The hard work of addressing institutional structures, developing a cadre of skilled and experienced managers, expanding access to capital to entrepreneurs and SMEs, improving tax and investment policy, moving economic management away from "directed" state companies and major projects and addressing the poorly regulated financial infrastructure must all be addressed. Some initial taxation measures have broadened the VAT base. KEY TAKEAWAYS Uzbekistan seems to be firmly on track to an open economy. Privatisation is the next priority, and it is expected that equity in several banks and chemical companies — together with the country's biggest mining company — will be offered. A new $1bn sovereign bond is expected this year; energy demand will rise by 70 percent and will be a priority for investment, with renewables a big target. The budget deficit rate is expected to be 1.1 percent to GDP, and the CBU is targeting an inflation rate of five to six percent by 2023. The Som is expected to weaken in 2020-21. Policy issues will improve over time. In the meantime, investors will need to be more selective and patient. But the fundamentals remain solid, and investor interest in Uzbekistan will not fade as long as the government's commitment to reform continues. i

Lord Waverley observing the Parliamentary elections with voter exercising his democratic right

ECONOMIC CHALLENGES The picture is not completely rosy. Open borders and liberal trade policies have resulted

in a trade deficit of over six percent of GDP. While this should theoretically be mitigated going forward, the reality is that limited capacity in tax and border enforcement will continue to lead to smuggling and illicit trade. An associated challenge has been the sharp devaluation in the Som currency, which fell by almost 10 percent in August 2019 after the Central Bank removed trading and volatility restrictions. CFI.co | Capital Finance International

CFI.co Columnist

Community and expanding the current limited network of international double tax treaties. The government is expanding regional relationships and trade to position Uzbekistan as a key regional political power and improve trade and investment flows.

ABOUT THE AUTHOR Lord (JD) Waverley Member House of Lords, London

Founder SupplyFinder.com Strategic Advisor SmarterContracts.co.uk jd@lordwaverley.com 39

Power to the (European) People:

EC PRESIDENT

COMES OUT

SWINGING By Naomi Snelling

Boudica or bureaucrat? Wild card for the European Commission presidency, Ursula von der Leyen, envisions a stronger Europe with a mandate to step-up on the world stage.

n the geopolitical earthquake — or ongoing omnishambles — known as Brexit, EU Commission president JeanClaude Juncker and EU Council president Donald Tusk have become household names.

Cover Story

But finally, it’s all change at the top. Enter, stage left, Ursula von der Leyen, president of the European Commission — and the first woman to take the role. This wunderfrau has promised “a stronger Europe” — but what does that mean? Who is this woman stepping unexpectedly into the spotlight?

"Like Merkel, her political persuasions can be difficult to pinpoint and both women have demonstrated tenacity and a willingness to divide opinion to drive through policies they believe in."

Born into European political aristocracy, Von der Leyen studied economics and politics, raised seven children, and earned a medical degree before her meteoric ascent to the top of German politics.

A long-time ally of Angela Merkel, Von der Leyen is the only minister to remain with Merkel since she became chancellor in 2005. Like Merkel, her political persuasions can be difficult to pinpoint and both women have demonstrated tenacity and a willingness to divide opinion to drive through policies they believe in.

In 2013, after a stint as families minister, she became Germany’s first female defence minister.

Von der Leyen was a surprising choice for the top job in Brussels given her waning popularity

in Germany, where she is seen to have failed to boost the Bundeswehr during her tenure as defence minister. But if Von der Leyen’s star is waning in her fatherland, she has plenty of support in the EU. She was nominated by member states and has the backing of the EU parliament. Until her nomination as commission president, Von der Leyen was favourite to succeed Jens Stoltenberg as NATO Secretary General. Die Welt newspaper reported that Von der Leyen "is highly respected in the alliance" and that "all the [NATO] defence ministers listen when she speaks". The presidency is tailor-made for a woman who wants to build a more closely integrated and powerful Europe. Elected on July 16, Von der Leyen was due to have taken over as president on November 1, 2019. The date was nudged forward to December

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Winter 2019 - 2020 Issue

1 after the European Parliament flexed its muscles and rejected three commissioner nominees — including Von der Leyen’s friend, Sylvie Goulard, who was nominated by French president Emmanuel Macron. Von der Leyen’s enlightened social policies and passion for sustainability may have endeared her to those in the political centre, but conservatives see her as a symbol of family values. “We have elected . . . a mother of seven children,” said Hungarian prime minister Viktor Orban after the EU summit that led to her nomination. He also tweeted that Von der Leyen’s election was a triumph that “prevented ideological gorrillas (sic) from taking up important positions”. Woven into her pitch for president is an ambition for Europe to have more leverage, impact and respect on the world stage. “I see the next five years as an opportunity for Europe — to strive for more at home in order to lead in the World,” she said. Her ambitions for Europe include leadership in sustainability, an economy supported by strong trading processes, and greater capacity to protect European values and way of life. She gave a rallying call for a European Green Deal and an intention for Europe to become the first climate-neutral continent. “(Climate-neutrality) is the greatest challenge and opportunity of our times,” she says. “We need to invest in innovation and research, redesign our economy and update our industrial policy… I will propose a European Green Deal in my first 100 days in office. This will include the first European Climate Law to enshrine the 2050 climate neutrality target into law.” Von der Leyen is a long-time advocate of European integration. "My aim is (to become) the United States of Europe, modelled on federal states like Switzerland, Germany or the US," she told Der Spiegel in 2011. “Peace, security and development are all mutually dependent. We need an integrated and comprehensive approach to our security… Europe should play a full and active role on a global level at the United Nations in our neighbourhood.”

Cover Story

As defence minister, Von der Leyen pushed for greater security co-operation in the EU. The Financial Times reported: “Prior to her elevation to the most important role in Brussels, Ms von der Leyen won friends across the EU in her job as Germany’s defence minister. Paris welcomed the fact that Berlin agreed to co-operate on a joint Franco-German fighter plane and combat tank, and that the Bundeswehr was deployed to West Africa to support a French stabilisation mission in Mali.”

Von der Leyen stressed Nato’s role in defending eastern Europe, and spearheaded a multinational battle group in Lithuania as part of the alliance’s “enhanced forward presence”, and sent the Luftwaffe to patrol the Baltic states. Von der Leyen has pledged to push for majority voting on external action so that the EU can act rapidly and take its place as a “global leader”. “I want the EU to spend 30 percent more on external-action investment in the next long term EU budget,” she said, “increasing the total to €120 billion.” Which has, perhaps understandably, led British tabloids to speculate about a so-called European army. Von der Leyen has made her support for the accession of the western Balkan states clear. She praised Albanian and Northern Macedonian efforts to secure EU membership. ”We asked a lot of North Macedonia and Albania, [and] they’ve fulfilled it all,” she said. “Now we must be true to our word and start accession talks.” “I want to reaffirm the European perspective of the Western Balkans and I see an important role in the continued reform process across the region,” he said. “We share the same continent, the same history, the same culture and the same challenges. We will build the same future together.” Macron, who backed Von der Leyen’s nomination for president, is fiercely opposed to enlarging the bloc until internal reform has taken place. Headlines have highlighted her promise for a new migration package in the first half of 2020. Leaders have mooted moving beyond an aidbased approach, but Von der Leyen talks about establishing “humanitarian corridors” and emphasises human rights. She also advocates dealing with the problems of migration in the countries of origin. “People do not choose lightly to leave their homes and take a perilous journey,” she said. “They do so because they feel they have no alternative. We need to put the clear focus (on) their countries of origin. We need to invest in their health, in their education and skills, in infrastructure, sustainable growth and security.”

Cover Story

She is fiercely protective of the European way of life, and her migration commissioner was originally given the portfolio title “Protecting our European Way of Life”; she later changed this. Von der Leyen has a portfolio and pedigree that bolsters her credibility for the top job in European politics. She spent her first 13 years in Brussels, where her father, German politician Ernst Albrecht, was chief of cabinet at the Commission of the European Economic Community. 42

President of the European Commission: Ursula von der Leyen

Von der Leyen studied economics at the Universities of Göttingen and Münster and the London School of Economics before switching to medicine. She graduated in 1987 from Hanover Medical School (MHH) and later lived in the US for four years, raising her children, while husband, Heiko von der Leyen, taught at Stanford University.

bedsit adjoining her office at the Commission HQ so she can focus on work. One thing is sure: with her at the helm, the World should get ready for a Europe with a lot more power. i

After returning to Germany, she joined the faculty at the MHH’s department of epidemiology and social medicine, gaining a Master’s in epidemiology in 2001. Her political rise began in 2005, when the Christian Democratic Union (CDU) won the federal elections and she was appointed Minister of Family Affairs and Youth in Chancellor Angela Merkel’s first cabinet. She served there from 2005 to 2009, and as Minister of Labour and Social Affairs from 2009 to 2013. In 2013 she became the German defence minister. When she left office in 2019, she was the only minister to have served continuously in Angela Merkel's cabinet since she became chancellor. Von der Leyden has raised eyebrows for many things — including her decision to sleep in a

Author: Naomi Snelling

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

European Green Deal’s Aims Draw Flak As Well As Praise By Tony Lennox

You could almost see the benign expressions on the faces of Europe’s politicians twitch when a serious-looking Swedish schoolgirl told them: “It’s time to panic. Panic like your house is on fire.”

hen 16-year old climate activist Greta Thunberg addressed the European Parliament’s environment committee in April, she advised them to stop wasting time having emergency debates about Brexit – and to wake up to the real emergency. Thunberg has inspired her generation – and worried others – by adding some apocalyptic fizz to the climate-change debate. She has put a face and a focus to a surge of popular alarm for the future of mankind. And the hornets’ nest being stirred up is delivering a sting to the political establishment. The EU already had plans for a climate-neutral Europe, criticised in some quarters as nothing more than a target-setting exercise when it was unveiled in November 2018. And its limited ambition was underlined when the presidentelect of the EU Commission, Ursula von der Leyen, announced that a new, bolder European Green Deal would be launched within her first 100 days in office. “Europe must lead the transition to a healthy planet,” she said. “I want Europe to strive for more by being the first climate-neutral continent. We need to go further and faster if we are serious about climate neutrality. This is the greatest challenge of our times.” The Green Deal is a cornerstone of Von der Leyen’s presidential vision. By 2050 – or before – she wants the EU to have net zero carbon emissions. She has appointed Dutch politician Frans Timmerman as Climate Action Commissioner. He will be responsible for driving through the plan which has already been described as a quantum leap in the EU’s ambitions. But the Green Deal faces obstacles.

creation of a Carbon Border Tax, which would allow the EU to defend its domestic industries as they adopt carbon-neutral strategies." is too little, too late, and have suggested a 65 percent reduction. The Green Deal would include an extension to the Emissions Trading System to cover the maritime sector, and to reduce the allowances granted to airlines. It will go further to cover traffic and construction. The deal involves the creation of a Carbon Border Tax, which would allow the EU to defend its domestic industries as they adopt carbonneutral strategies. It would impose taxes on imports which do not meet the EU’s challenging standards. Critics of the plan say the tax could be seen as a protectionist measure, triggering retaliation. Von der Leyen’s team are working hard to try to design a Carbon Border Tax which won’t fall foul of WTO rules. One of the most contentious elements of the Green Deal, however, is the Just Transition Fund she plans to introduce to mitigate the uneven social effects of adopting climate-neutral strategies on the EU’s very different member economies. The fund, which will pay for the Green Deal, will require an extra €175-290bn a year for Europe’s energy infrastructure. Carbon neutrality by 2050 will require a continental transformation, affecting energy production, transport, agriculture and construction. Von der Leyen intends to enshrine these aims in European law. Using the language of the battlefield, she said: “We shall leave nobody behind” – recognising that some regions will have further to go than others. CFI.co | Capital Finance International

Poland’s Economic Institute, for instance, has pointed out that fundamental social change will be required, putting ordinary Europeans under great pressure – particularly those in the poorer regions. The Economic Institute has already estimated that Poland will require at least €15bn a year from the Just Transition Fund. The Poles have suggested that social and economic indicators will need to be designed to rank needy member states. They point out that there are different starting points for different countries, for historical and economic reasons. Many of the former Eastern Bloc states are still almost entirely dependent on fossil fuels, and will require more time and investment to transform their economies. There is also the suspicion in these countries that any so-called “new money” required will simply be current funds, re-purposed and re-packaged. Former Eastern Bloc members are not alone in raising concerns about the Green Deal. Members of Greece’s new centre-right government have also warned that its coal-mining regions in western Macedonia need to be protected. Greece will need more EU funds to achieve sustainable energy production, they say. Meanwhile, Greece continues its exploration for natural gas in the Aegean Sea – despite opposition from environmentalists. While many EU nations have made significant moves towards renewable energy, according to the most recent data Poland still relies heavily on fossil fuels, the source of 91 percent of its energy. In Greece the figure is 87 percent. Von der Leyen’s Green Deal is committed to the circular economy – a system which aims to eliminate waste and reuse of resources. Singleuse plastics will be one of the first problems to be tackled, she says. “Those who act first and fastest will also be the ones who grasp the opportunities from the 43

Cover Story

Von der Leyen is keen to be seen as a woman of action. A former German defence minister and member of the centre-right Christian Democrats, she has a steely reputation. In her pitch for the top job she outlined the aims of her Green Deal, committing the EU to a 55 percent reduction in carbon emissions by 2050. Environmentalists, including Europe’s Green parties, say even this

"The deal involves the

There is already some grumbling. Poland, Hungary and the Czech Republic are preparing to dig their heels in, complaining that without a huge injection of EU funds they won’t be able to decarbonise their outdated electricity production systems.

ecological transition,” says Von der Layen. Over the next decade she wants to see a €1tn investment for the Sustainable Europe Investment Plan – part of the Green Deal. Public finances alone will not be enough, she believes. She hopes that private investment will lessen pressure for more green taxes, because that way lie difficulties.

Challenges Aplenty for the EU — but Devil is in the Detail, and the Response

More than 80 percent of passenger transport in the EU is by car. Transport contributes nearly 30 percent of Europe’s CO2 emissions, and these are continuing to rise, leading some to claim that the continent’s transport system is unsustainable in terms of the Green Deal’s carbon neutrality goal.

The EU faces several economic challenges — and the key factor for success lies in the way it responds to them.

It shouldn’t be forgotten that France’s Yellow Vest protests were sparked by citizens angered by a fuel tax – aimed at promoting renewable sources of energy. One of Von der Leyen’s parallel aims during her presidency is to address the question of democratisation, largely by ramping up the involvement of the European Parliament in the work of the EU Commission. This strengthening of democratic legitimacy will be vital if the people of Europe are to respond positively to the imposition of new laws and taxes. Fostering greater co-operation with an EU Parliament increasingly polarised and politically fragmented may prove tricky – and creating a stable coalition will be timeconsuming. It will also be essential if the Green Deal is to succeed. The European Investment Bank (EIB) has moved to end the financing of fossil fuel projects, including those involving natural gas. The new policy, which takes effect in 2021, will focus instead on efficiency and renewable energy projects. Christine Lagarde, the European Central Bank’s new president, has already pledged to make climate change a focus for her organisation.

Cover Story

But the European Commission has come in for heavy criticism from Friends of the Earth (FoE) for its apparent support of 55 new “climate incompatible” gas projects across Europe. FoE say that some of those projects will extend beyond 2050, and their inclusion makes a mockery of the EU’s pledge.

By Brendan Filipovski

n 2017, the EU Area had its highest growth rate — 2.4 percent — since the 2007-08 economic crisis. Since then growth has slowed: 1.9 percent in 2018, and 1.2 expected for 2019. Italy had a brief recession in 2018, and Germany narrowly avoided one this year, recoding a -0.2 percent decrease in GDP in Q2 and a 0.1 percent increase in Q3 (seasonally adjusted). The slowdown in growth was caused by ongoing challenges outside EU control, but the response is crucial. In one of his final speeches as president of the ECB, Mario Draghi suggested that countries with fiscal space should stimulate growth though increased spending. This was echoed by the new president, Christine Lagarde. Of the Big Four economies in the Euro Area — which together epresent 75 percent of total GDP — Germany is the only one capable of increased fiscal spending (chart 1). The IMF has advised the other three to build fiscal buffers to ensure stability. Germany would benefit from fiscal stimulus to infrastructure via an impact on growth and future productive capacity. Back in 2017, the European Commission reported that German infrastructure investment was below the EU averages, particularly in the areas of buildings and civil engineering. Following unification, there was an investment boom — but what followed was underspending and a project backlog; a lack of engineers and construction workers has not helped. Incidents such as the 2018 closure of a Hannover airport because of a crack in the runway underscore the point.

The proposed termination of funding for coal, oil and gas has rattled industrialists, notably in Germany, where efforts are under way to try to soften the new restrictions. Some natural gas projects should continue to be eligible for funding, they urge.

If the backlog is problematic for fiscal stimulus, then tax cuts to reduce labour tax would be a good option. Germany has the second-highest tax wedge of OECD countries at 49.5 percent; the average is 36.1 percent.

Ursula Von der Leyen may have a green dream, but she’ll need all of her skills to put Europe’s house in order. Not forgetting, of course, that the house is on fire. i

The conditions for stimulus are generally favourable. Eurozone inflation remains low (1.7 percent in 2018) while Germany’s low growth rate means little risk of overheating.

Germany has committed to a 0.5 percent increase in spending and a 0.4 percent decrease in revenue collection in 2019, but boosting EU growth will be difficult because of legislated debt limits. Germany, already strict with its fiscal deficits, it placed tougher debt limits on itself in 2009, and enshrined them into its constitution. Federal government deficits must be no more than 0.35 percent of GDP and state governments must run balanced budgets from 2020. The new limits came in because of alarm at the increase in public debt following post-crisis fiscal stimulus. It increased from 64 percent of GDP in 2007 to 82 percent by 2010. Since 2011, the federal government has met the new limit, running seven consecutive surpluses. Public debt is now at 60 percent and expected to drop to 50 percent by 2023. Monetary policy is maxed out. The EU financial system is awash with funds, but supply is struggling to create demand. Growth in gross fixed-capital formation has been falling since 2015 and, as a percentage of GDP, it remains below immediate pre- and post-crisis levels. Supply is also reaching its limits. The ECB interest rate has been negative since June 2014, and was decreased to -0.5 percent in September. There is no room to encourage depreciation of the euro exchange rate to help exports. Quantitative easing provides a way around negative rates — but it does not escape the inefficacy of excessive liquidity. The ECB restarted quantitative easing in September (QE2). Negative rates and quantitative easing also have stability risks. Negative interest squeezes bank lending margins, while the ECB will have to move onto riskier assets classes if quantitative easing is prolonged. To help banks with negative rates, the ECB introduced a two-tier system for bank reserves. The biggest contributor to the EU slowdown has been the US-China trade war. It has directly affected some EU exports (25 percent tariffs on steel and 10 percent on aluminium) but the bigger effect has been on global trade. Global

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Winter 2019 - 2020 Issue

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Chart 1: Public Debt as a percentage of GDP

trade growth in the first half of 2019 was at its lowest level since 2012. Similarly, global economic growth for 2019 is forecast to be at its lowest level since 2008-09. Growth in EU Area exports has slowed: exports increased by 4.1, and 4.2 percent in the first and second halves of 2018, compared with 7.8 and 7.3 percent in 2017 (half-year on half-year). The trade-war will continue to weigh on EU growth in 2020. Negotiations between the US and China are ongoing, but no settlement is imminent. Recent talks have narrowed their goals to a “phase 1 solution”, but even this will take time. A worst-case scenario would be a breakdown in talks and an escalation in tariffs. Another scenario is China stalling negotiations until after the 2020 US presidential election in the hope of a Democratic victory. There is also a scenario in which the EU becomes more involved in the trade dispute. In May 2018, Trump said European and Japanese cars and car parts posed a threat to US industry. He asked the Commerce Department to investigate and in May 2019, he declared European cars and car parts a security threat — but postponed a decision on 25 percent tariffs until November 2019. It looks likely to be postponed once more. The decision will probably come down to removing protection on manufacturing and agriculture. The EU is reluctant to include agriculture as part of any deal. In the meantime, the US has announced retaliatory tariffs on a range of EU goods after the WTO ruled that Airbus had unfairly benefitted from EU subsidies. The ingredients for escalation are there.

CFI.co | Capital Finance International

A decline in European car production and sales will hamper growth. Automotive is a major sector in the EU, with 19.2 million vehicles produced in 2018. Cars are also the biggest export (6.5 percent of the total by value). The industry’s global supply chain has left it exposed. In 2018, the production of passenger cars decreased by 1.8 percent and exports by 1.6 percent. It has also been adversely affected by domestic policy changes. In the wake of the “dieselgate” scandal, the EU decreed stricter emission standards. The registration of new vehicles fell by 23.8 percent as a result. Some 50 Chinese cities and provinces have also introduced stricter emissions laws, and this — combined with a decrease in subsidies for electric vehicles and a general slowdown — has led to a collapse in sales for 15 consecutive months to September 2019. And this after a period of non-stop growth since the 1990s. Chinese vehicle sales are expected to decrease by five percent this year. It is the world’s biggest car market (35 percent of passenger car sales) and European car makers are heavily invested: 40 percent of Volkswagen and 20 percent of Peugeot production is in China. It is also the EU’s second-biggest export market. European growth will continue to face challenges of the trade war, Brexit, and weaker car production. Germany can help with increased fiscal stimulus: it has the fiscal space, the need for spending (on infrastructure), and little risk of the economy overheating. The cost of borrowing is at an all-time low. But the challenge of increasing spending is political, not economic. With Angela Merkel due to retire before the 2021 election, the issue will probably be highly charged. i 45

Cover Story

Brexit also continues to weigh down EU growth. The IMF estimated that a no-deal Brexit would decrease EU growth to around 0.65 percent in 2020 — and would have a negative impact until 2023. The estimate considers the effects of tariffs, non-tariff trade costs, border disruptions, and immigration restrictions. Brexit is on hold

until after the UK elections. In the meantime, the uncertainty will negatively affect trade and investment.

> UK

Won’t ‘Move On’ After Brexit: It Will Move Forward By Lord Waverley

Many of the existential issues that have driven a period of prolonged introversion in the UK, hampering its international engagement, have now been laid to rest.

rexit will continue to be the defining prism through which the world views the UK; a fundamental issue of domestic British politics and a key variable in the UK’s future prosperity.

The election mantra of the conservative party — “Get Brexit Done” — resonated with a British public frustrated with indecision and rancorous wrangling. Translating a simple leave/remain referendum into a concrete plan to extricate one of the world’s largest economies from the world’s largest economic bloc was always going to be a tortuous affair. Attempting to chart such a difficult course without a parliamentary majority was a recipe for national psychodrama. Popular exasperation became so great that Prime Minister Boris Johnson’s assurances of forward motion won enough votes from remainers and Labour supporters to revolutionise electoral arithmetic and secure the largest Conservative majority since 1987. So what will this new era mean for British politics and Britain’s place in the world? Will it prove to be the cathartic release voters hoped for, with Britain finally able to move forward? Or will it simply change old problems for new ones as it enters the next Brexit phase? That substantial Conservative majority has blocked any parliamentary avenue for revoking the decision to leave the EU. The scale of the victory also settled the question in terms of popular debate. The election allowed the UK to overcome a key stage in the Brexit process and permit the Withdrawal Agreement to pass the parliamentary hurdles. It will also probably define the terms of the UK’s exit from the European Union.

Cover Story

That said, the European Commission President Ursula von der Leyen is suggesting that an

"So what will this new era mean for British politics and Britain’s place in the world?" extension to the transition agreement may be needed mid-year to complete a comprehensive trade deal, and work out agreements about a series of other issues by year-end. This could mean speculation of “No Deal” is back on the table. The UK will benefit from political stability and a solid parliamentary majority beyond the January 31 withdrawal bill deadline. While moves to dispense or amend the fixed five-year term provision are expected, a general election during the upcoming five-year term is unlikely. The UK’s strength is in its diversity, and this will power an advance on the world stage. This should not detract from the need for government to address the fundamental challenges of uniting the country after the divisive Brexit experience, and to tackle the vital internal decisions and social discords that have been allowed to accumulate. Looking outward will help heal the internal divisions. The significance of this stage of the process should not be underestimated. It will frame the next stage and mark a fundamental shift in the nature of the debate. The trading relationship between the UK and the EU is still to be negotiated, and will be the most consequential

stage for business and the UK’s global trade relations. While this stage will not be mired in the same parliamentary paralysis that has dogged the process thus far, there is still enough uncertainty over the outcome of the upcoming negotiations to hamper business and investment decisions. Johnson has signalled his intention to conduct a major review and restructure of key government departments. In one example of international consequence, he has articulated his long-held view that the separation of the Department for International Development from the Foreign and Commonwealth Office in 1997 was a “colossal mistake”. He now appears intent on merging the two departments. The rationale for the merger is to maximise the value of overseas engagement by creating more natural cross-programme synergies and reducing bureaucratic inefficiencies. The operational challenge of such an ambitious move could lead to disruption for UK policymakers and front-line civil servants. It is to be hoped that disruption will be short-term, but it has the potential to be significant. The UK’s aid budget and diplomatic network are among the world’s largest. The Department for International trade is set to play a central role in international relations and domestic politics as policy setting moves from Brussels to London. Trade policy will involve compromises, and provide fertile ground for political mischief-makers who seek new ways to criticise the implementation of Brexit. The politics and policy of trade are likely to collide in coming years. But should it transpire that exiting the EU is bumpier than anticipated, we have been informed that that the UK would be welcomed back into the fold. i

"The trading relationship between the UK and the EU is still to be negotiated, and will be the most consequential stage for business and the UK’s global trade relations." 46

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> Winter 2019 - 2020 Special

Women of the World Unite to Overcome Barriers and Biases

hether born or made, leaders possess natural talents that are sharpened with every obstacle overcome and opportunity exploited.

For women, and particularly women of colour, obstacles outnumber opportunities. According to Catalyst, a global non-profit that “helps build workplaces that work for women,” women comprise 45 percent of Fortune 500 employees, but only five percent are CEOs and less than 30 percent hold executive or seniorlevel positions. Reams of research proclaim the benefits that diverse leadership brings, yet the corporate world remains slow to react. The problem lies in entrenched cultural biases, not biological limitations. Standard portrayals as caretakers, educators and secretaries can limit a child’s vision of the future. But across the globe, countries and corporations are challenging stereotypes. Girls are increasingly encouraged to consider STEM (Science, Technology, Engineering, and Maths) programmes, which promise higher earning potential. Women represent almost half the global workforce, but they are paid pence on the

pound compared to men. The World Economic Forum (WEF) estimates that the global gender pay gap will take two centuries to close at the current rate of progress. With a programme of public-private partnerships focusing on national action, corporate commitment and global exchange, it hopes to speed things up. It’s all about the bottom line: closing the gender pay gap makes solid business sense. It’s going to cost, but not nearly as much as the revolving door of recruit and release that comes with pay disparity. Cultural biases often hinder and impede women’s professional development. In some countries, women are prized more for their reproductive powers than their economic potential. Even in the most progressive nations, women shoulder a disproportionate responsibility of family burdens. Businesses must develop support systems to help balance professional and personal obligations to achieve an engaged, empowered, and diverse workforce. And if those support systems don’t yet exist, at least take inspiration from these leading ladies of business. Decisive and assertive, diligent and ambitious, these executives have had an impact on industries around the globe and set new standards for what it means to be a boss. i

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Winter 2019 - 2020 Issue

CFI.co | Capital Finance International

> MIUCCIA PRADA ITALIAN FASHION DESIGNER Fashion with Passion — and Penchant for Punk Fearless fashionista and businesswoman Miuccia Prada took over the family empire 40 years ago, succeeding her grandfather, Mario Prada. She, her husband, Patrizio Bertelli, and her siblings, Alberto and Marina Prada, now own 80 percent of the group shares. CEO and lead designer Miuccia Prada has steered the family legacy from high-end luggage to haute-couture fashion, and her defiant style and business acumen have proven profitable. Prada reported net revenues topping $3.4bn in 2018, and Forbes estimated Miuccia’s net worth at $2.4bn in March 2019. Miuccia relishes the opportunity to use fashion as an agent of change. In an interview with Vogue, she said she initially felt conflicted with the superficial scope of the industry, and vowed to create something of significance. “I understand now that I really must have had a big passion because, although I felt unease declaring it to the World, it was never an internal struggle for me,” she said. “I always felt I was on the right path.” Before taking the helm, Prada studied at the University of Milan and graduated with a PhD in political science. She was an active member of the Italian Communist Party and an outspoken advocate of women’s rights. She also trained and performed as a mime artist. Miuccia Prada has always enjoyed challenging the status quo, and pushed the iconic brand to go punk, “not in a superficial way, but in finding a way to change things, to go against the system”. The handbags she launched in the 1980s shattered the rules of luxury accoutrements, forsaking fine leather for a modern nylon knit. She began her foray into clothing in the ‘90s, designing and producing ready-to-wear collections for women and men, and launched the Miu Miu brand for fashionistas with highstyle aspirations but lower budgets. Under her leadership, the Prada portfolio has expanded to include brands such as Fendi, Helmut Lang, Jil Sander, and Azzedine Alaïa. From leather goods and footwear to fragrances and clothing, the Prada emphasis is always on quality craftmanship. She gave up politics for fashion, and refuses “to be political with my brand”. But women’s empowerment is a cause that she continues to support. “We are still here. We are clever, we are great, we have everything. Why are we not equal?” 50

She vented this frustration in Prada’s 2017 Spring/Summer collection, with feminist comicbook superheroes splashed across catwalk and CFI.co | Capital Finance International

clothing. “If people like to analyse, there is a depth,” she said. “Who cares if no one reads it — but it's there.”

Winter 2019 - 2020 Issue

> ZHANG XIN SOHO CHINA CEO Self-made Tycoon Brings Zing and Bling to China’s Skylines

Zhang Xin is the co-founder of SOHO China, the largest real estate developer in the country. With a net worth of more than $3bn, Zhang Xin has earned every accolade accorded her. She began pulling 12-hour factory shifts at the age of 15 to help her family. She quickly realised the transformative power education could have and began saving to study abroad. She was eventually able to fund her studies at Cambridge and went on to work with Goldman Sachs in London, New York, and Hong Kong — where she met her husband, Pan Shiyi. The pair co-founded SOHO China in 1995, with Zhang Xin serving as CEO and Pan Shiyi as chairman. The cityscapes of Zhang Xi’s childhood were utilitarian grey, but she envisioned a more striking skyline. SOHO properties are focal points, soaring structures and organic shapes

constructed of glass and steel, glittering in the daylight and illuminated by night. Over the past 25 years, SOHO China has developed some 60 million square feet of real estate with modern aesthetics and next-generation functionality. Zhang Xi also envisions a brighter future for Chinese scholars. Through the SOHO China Foundation, she funds a $100m initiative to help outstanding scholars to attend top universities. The scholarship programme furthers Zhang Xi’s desire for “China to be integrated with the rest of the world”. She acknowledges that gender discrimination still exists in the country, but challenges outdated stereotypes. “We still see a bias towards boys in the countryside,” she says. “Most abandoned children are girls; we have few women ministers. But women dominate in school and the Olympics, and there are more and more self-made women entrepreneurs.” CFI.co | Capital Finance International

As a self-made tycoon, Zhang Xi has witnessed — and contributed to — China’s rise as a global super power. While she worries that the interminable trade rows with the US are hurting investor sentiment, she’s confident that China can withstand the pressure. “It seems to be that in the US there's a consensus between the left and the right — government and private, media and academia — that China has been a bad actor and needs to be contained,” she told Yahoo Finance. “On the China side, there also seem to be a public consensus that the rise of China is inevitable. And yet, you know, the United States seems to not want to see a strong China to be its rival. And therefore, there is a strong will to contain China. “You’re not going to see a collapse of the economic growth in China. But we're not the 10 percent GDP growth anymore, you know?” 51

> URSULA BURNS AMERICAN BUSINESSWOMAN No Labels, just Grit, Determination, and a Refusal to be Pigeonholed Ursula Burns is the first black woman to run a Fortune 500 company, but she refuses to let labels limit her. Burns was raised by a single mother in the rough public housing projects on the Lower East Side of Manhattan. “Many people told me I had three strikes against me,” she says. “I was black, I was a girl, and I was poor.” Her mother reminded her that those factors didn’t define who she was — and that a good education could take her wherever she wanted to go. Burns heeded those words and secured a scholarship to pursue a degree in mechanical engineering. She remembers feeling like an oddity; most of her peers were white and male. She put her nose to the books and landed a summer job with Xerox in 1980. Burns worked her way from internship to the c-suite. When she took the CEO baton from the outgoing Anne Mulcahy, it was the first time a woman had succeeded another female chief executive. “The thing I valued most about Ursula,” Mulcahy said in an interview with Fast Company, “is that she has the courage to tell you the truth in ugly times.” Burns took the helm at Xerox in the “paperless office” boom. Xerox is one of the few company names to be used as a generic term and as a verb — but Burns foresaw problems. Digital services would soon supersede photocopying, and there were difficult decisions to be made if the company was to survive. During her seven-year tenure as CEO, she spearheaded the $6.4bn acquisition of IT outsourcing services company ACS, which helped Xerox transition from a hardware company to a more future-proof, software-orientated one. The engineer-turned-executive has shared her story through the Lean In initiative, which encourages women to speak with confidence. “My life has been a series of Lean in moments,” she says. “Taking an internship with Xerox in upstate New York, going to an Ivy League school, signingon with Xerox and climbing the ladder to the top.” After 36 years with Xerox, Burns stepped down to look for new challenges; she is now CEO of VEON, an Amsterdam-based telecommunications services multinational with more than 210 million customers. “Dreams do come true,” she says, “but not without the help of others, a good education (and) a strong work ethic.” 52

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Winter 2019 - 2020 Issue

> JAYNE-ANNE GADHIA BRITISH BUSINESSWOMAN Bringing Balance and Vim to the Finance Industry

Jayne-Anne Gadhia, one of the UK’s most respected executives, recently handed over the reins of Virgin Money, the company she launched with the backing of Sir Richard Branson and Norwich Union nearly a quarter of a century ago.

doesn’t sit on the shelf for long. She considered a position on the Financial Policy Committee of the Bank of England before plumping for the role of CEO at the UK and Ireland (UKI) division of Salesforce.

has a market value of $127.5bn. The rapid growth of the UKI market prompted Salesforce to allocate an investment of $2.5bn over five years to increase human capital, data capacity, and office space.

Gadhia says she knows how proud parents must feel when their child brings home a prospective partner to meet the family: no matter how much they like the suitor, it’s hard to let go.

Salesforce expressed delight at her appointment to its largest market outside the US, and the respect is mutual. “I've admired Salesforce from afar for a long time,” Gadhia said. “This is a business with deeply held values and a true focus on transforming the experience of every customer.”

Over her 30-year career, Gadhia has been recognised for her tireless efforts to bring diversity to the finance industry. In 2015, she led a government review into women’s representation and treatment in the sector. She was named the UK’s Women in Finance champion, and has elicited gender-balance pledges from banks, insurers, and asset managers. “It’s a battle we are still fighting,” she said, “but we’ve not lost the war.”

She stepped down from her chief executive role with Virgin Money in 2018 after negotiating the firm’s $2.2bn takeover by Clydesdale and Yorkshire Banking Group (CYBG). Under the deal, CYBG rebranded under the Virgin Money name, making it the UK’s sixth-largest lender. Gadhia continued to serve in an advisory capacity for a while, but an executive of her renown

Founded in 1999, Salesforce is global leader in Customer Relationship Management (CRM), providing companies worldwide with the digital tools to better understand — and connect with — their target audience. The American company is listed on the New York Stock Exchange and CFI.co | Capital Finance International

In recognition of her contributions, Gadhia was made a Dame in the 2019 New Year Honours list. 53

> ALISON NIMMO CHIEF EXECUTIVE OF THE CROWN ESTATE Bowing-out on a High Note As her eight-year term as CEO of the Crown Estate nears a close, Alison Nimmo reflects on the cityscape she has helped to shape and her hopes for the real estate industry. Alison Nimmo’s CV is studded with “dream jobs” in the real estate realm — but she never planned it. She has a love for cities and a fascination with their inner workings, but never really thought about going into property. “But when I landed at Drivers Jonas and did chartered surveying, I found my niche, which was regeneration. I got sent to all the glamorous locations!” She played a part in the rebuilding of Manchester after the Arena bombing of 2017, and in the team that transformed the East End of London as a legacy of the Olympics. “Property as a sector is about how we live and work,” she says, “and what could be more exciting than that?” Nimmo has helped to bring the Crown Estate — which manages a property portfolio valued at more than $18bn — to modern standards of diversity and purpose-driven performance. The estate has gender balance on all issues, including pay, and boasts a staff mix of age and cultures. She hopes the climate she’s helped to foster will encourage more women to enter the field — and stay. “If people don’t feel valued in the workplace then they vote with their feet, and you lose out on the best talent,” she told the professional association Bisnow. Nimmo and her talented team enjoy new corporate digs in the heart of London, with an open-floor plan featuring sit/stand desks, natural light, and air-purified by moss and plants. Gone are the elite corner suites, and the layout of the offices represents a shift towards approachable management. “I love it,” she said. “I think the days of the distant and fearsome CEO — who sits behind a PA and a closed door in a corner office, stealing the best spot and all the daylight — are over.” Nimmo, who was recently awarded Dame status by the Queen, said she was proud to have delivered strong results in troubled times, and of the company’s 11th consecutive year of strong performance. Under her leadership, the group has returned $3.6bn to the Treasury over the past decade. “This has been delivered by a talented team, with a clear purpose and strategy, and a commitment to our chosen sectors.” 54

Nimmo is the first woman to have led the Crown Estate in its 250-year history, but she feels it’s time for a change. She will conclude her contract CFI.co | Capital Finance International

at the end of 2019. “Given where we’re at with the business, and for me personally, eight years feels like a good innings,” she says.

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• • • • •

> Europe

Greece Peers Through Clouds as Crisis Recedes — but Vibrant Economy Relies on Many Factors By Brendan Filipovski

Greece is heading back into the black in terms of GDP, with annual growth of 1.5 and 1.9 percent in the past two years. There was growth in the first two quarters of 2019, and the IMF is forecasting that trend to continue to 2024. The turnaround has been led by an increase in household spending, which has increased by 1.4 and 1.5 percent in nominal terms over the past two years. Falling unemployment has contributed to an upward trend in consumer confidence since February 2017 (chart 1). The Consumer Confidence index is above 100, which indicates that consumers have a positive view of the economy and are more willing to spend than save over the next 12 months. Exports have increased by more than 12 percent since 2017, the largest increase since 2004. There have been gains in travel and tourism, transport, refined petroleum, and ICT services. The contribution of government spending and overall investment (gross fixed capital formation) has been mixed. The figures increased by 0.8 and 9.2 percent respectively in 2017, but decreased by -0.9 and -12 percent in 2018. The previous government coalition, Syriza, reduced government spending and achieved a primary fiscal balance of 4.3 percent in 2018 — above the IMF’s target of 3.5 percent. This was achieved by following the prescribed austerity measures, despite initial resistance and a radical agenda when the Syriza administration took office in 2015. The programme of privatisation continued, and this, along with reduced government spending and some bail-out funds, helped to create a buffer fund of €32bn, around 17 percent of GDP. Notable privatisations included the sale of the state lotteries license, long-term leases for 15 regional airports, a two-thirds sale of the port of Thessaloniki, and a further five percent sale of Hellenic Telecommunication to Deutsche Telekom (it now owns 45 percent). The privatisations proved politically controversial, with delays forced by public and trade union protests 103 102

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Winter 2019 - 2020 Issue

Athens, Greece: Parthenon, Acropolis

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decrease in government spending had a negative impact on an economy already in recession, but — combined with the buffer fund and the abolition of capital controls — it has helped restore investor confidence in Greek sovereign debt. In August 2018, the government sold new bonds for the first time since 2010. The 10-year government yields are close to pre-crisis levels, above the Euro Area average (chart 2). The confidence of creditrating agencies has also improved, with S&P rating Greece at BB- (just below investment grade). FDI has also been trending upwards since 2015, and now sits at 2006 levels. Despite all this, Greece is still below pre-crisis levels for many key indicators. Real GDP remains 24 percent below 2007 levels, and real GDP per capita is 22 percent below. Unemployment (16.9 percent) and youth unemployment (33.1 percent) are falling — but are still around double precrisis levels. Mean nominal monthly earnings are increasing but remain seven percent below 2010 levels. Total factor productivity is 17 percent down on 2007, and has been flat since 2012. Poverty is falling, but inequality has risen. Public debt as a percentage of GDP remains above 2010 levels, at 185 percent, and while it is expected to trend downwards it is likely to remain above 2010 levels for the foreseeable future (chart 3). It is well above the Maastricht Treaty rule of 60 percent, which means that the economy remains vulnerable to default. The government should maintain a fiscal balance until public debt falls to more manageable levels. The existential constraint on government spending will be tested as the centre-right New Democracy party chases growth. Prime Minister Kyriakos Mitsotakis is planning to increase spending and reduce the primary fiscal balance to three percent in 2021, and 2.5 percent in 2022, rather than sticking to the IMF target of 3.5 percent. The new government has also proposed a cut to the corporate tax rate, from 28 to 24 percent. The former PM, Alexis Tsipras, has warned the new government that it risks losing its hard-won gains in investor confidence if fiscal discipline is relaxed too far. The warning is justified: it was the collapse in investor confidence that led to the 2010 crisis. Public debt and policy will face two future challenges. The immediate threat is the US-China trade war. It has already negatively affected global and Euro Area growth, which in turn affects Greek exports. There is also a risk that the EU could become more directly involved in the dispute. The US placed tariffs on EU steel and aluminium in 2018 and recently added several others as a result of the WTO ruling against Airbus. US tariffs on exported cars and car parts is the greater threat for the EU. A Commerce Department called EU vehicle exports a “threat to US national security”, but so far Donald Trump has postponed action. In the longer term, Greece faces economic challenges because of demographics. Its 58

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population is aging and decreasing, and number of working-age adults peaked in 2000. This has been exacerbated by an increase in negative net migration during the debt crisis. Greece could counter this by attracting some of its diaspora home or increasing immigration, but this is a catch-22. The best way to attract migrants and returnees is through increased economic growth. The new government is pursuing growth strategies that do not rely on an increase in spending, or tax cuts to the existing base. This includes greater labour market flexibility through the new Development Law, which allows firms to bargain more at the enterprise level. It also aims to reduce informal employment. Reforms in bargaining and the minimum wage imposed between 201113 have reduced labour costs and boosted employment. The government has also committed to improving the health of the Greek banking system and increase potential private sector credit growth. The percentage of Non-Performing Loans (NPLs) is the highest in Europe. Banks also have low profitability, forcing them to rely on expensive, unsecured funding for liquidity. Deputy Finance Minister George Zavvos will oversee bank reforms and has created a government-backed securitisation scheme for NPLs. Greece has introduced incentives to woo wealthy foreigners to move their tax residency there, and to encourage Greek shipping magnates to relocate their wealth at home. It is also hoping to attract wealthy Chinese businessmen to invest in the country. The previous government had frozen several large Chinese investments, a policy since reversed. The headline investment is in the port of Piraeus, which is part of China’s Belt and Road initiative. Chinese firm Cosco bought a majority stake in 2016, after an initial investment in 2009. The plan is to make Piraeus the main European port for Chinese shipping; it would cut delivery times by a CFI.co | Capital Finance International

week compared with more northern ports. Since 2008, container volume in Piraeus has increased by more than 700 percent. Efforts to increase tax compliance and the tax base would improve the fiscal position, providing greater flexibility for government spending. Improvements such as an instalments scheme for tax arrears will help, but more can be done, particularly in VAT collection. The 2010 crisis occurred when Greece was unable to roll-over maturing bonds. Investors had lost confidence in Greece after EU and IMF inspectors revised its public debt, fiscal deficit and growth statistics in April 2010. This followed Greek admissions in late 2009 that its fiscal deficit would be 12.7 percent of GDP, rather than 3.7 percent. In February 2010 came revelations that the government had hidden some €2.3bn in debt using a cross-currency swap with Goldman Sachs. International ratings agencies responded by downgrading Greece to junk status. The EU and IMF stepped in with the first of three bailouts, and panic spread to Spain, Italy, Ireland, and Portugal. Greece’s public debt and fiscal deficit were worse than those of Argentina when it defaulted in 2001. By 2018, the bailouts had reached €310bn. EU governments consolidated the debt from the hands of private investors and applied a 50 percent trim to selected debt in 2012. In 2019, Greece is growing — but it has a long way to go. Continued growth would be a cure-all, but the Euro Area and world economies are feeling the effects of the US-China trade dispute, and are vulnerable to further escalations. The new Greek government must increase spending to counter any external shock, but maintain fiscal discipline. If it fails in this, it will face the discipline of the market, the EU, and the IMF. Greece may no longer be in crisis, but it has yet to escape its drama. i

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> CEO of Reitan Convenience AS:

Johannes Sangnes Johannes Sangnes is a Norwegian businessman with broad international experience from the convenience industry, having successfully led Reitan Convenience in Norway, Sweden and Finland.

s CEO of Reitan Convenience AS he oversees 10 companies in seven countries. Sangnes believes in valuebased leadership and wants to build solid companies — and successful people — through the group’s vision: “We want to be known as the most value-driven company.” Sangnes drive to create the right set of values in Reitan Convenience is exemplified by his decision to rename the organisation’s “Head Office” the “Support Office”. He then flipped the organisational chart upside-down, with customers on the top, then the franchisees and their employees — and himself at the bottom. Sangnes is a trusted leader in the Reitan Group, Reitan Convenience’s parent organisation, and he has led successful turnaround projects in Sweden and Finland. Sangnes became the CEO of Reitan Convenience in 2016, prior to which he was CEO of R-kioski in Finland from 2012-2015, a new market for the Reitan Group. Between 2009 to 2012, Sangnes was CEO of Reitan Convenience in Norway, and from 2004-2008 he headed the operations of Pressbyrån and 7-Eleven in Sweden as CEO of Reitan Convenience Sweden. Johannes Sangnes believes CSR and sustainability are important points of focus for a convenience business — issues that will be crucial to meeting customers’ future demands. “I am very proud of our franchisees and employees,” he says, “because I know they have a positive attitude towards sustainability. Without them and their involvement we would not have achieved recognition as Best ESG Convenience Retailer in the Nordics and Baltics,” says Sangnes. “The customer is our ultimate boss and we have to stay focused on that fact, and continuously work on becoming even more relevant and valuebased. Value-driven leadership is a performance culture and our structure gives our franchisees the freedom to drive results. “We should always ask: ‘what do we need to do to remove more friction from the customer’s transactions? How do we become more relevant?’ I think it is vital that we focus on our values in our everyday work, to reach our vision: to be known as the most value-driven company.” i

CEO: Johannes Sangnes. Photographer: Ingar Sørensen

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> Reitan Convenience:

Value-Based Leadership to Drive Sustainability Effort With a 125-year history of convenience retailing, Reitan Convenience has an established and enviable position in the convenience market.

ith branches across seven countries in the Nordics and Baltics — and, with its franchisees, almost 14,000 employees — the group had a turnover of NOK 16.1bn ($1.74bn) for 2018. It has a customer base seeking simplicity of choice and believes in value-based leadership.

It cultivates employees’ ability to understand local customers’ immediate needs — and to take responsibility for global challenges. Responsibility is central to Reitan Convenience’s philosophy and values. One of the company’s eight core pillars emphasises the importance of moral considerations in business. This is an organisation that turned CSR — corporate social responsibility — into OR: “Our Responsibility”. Another central value — that of being debt-free — also ties neatly into this ethical structure. Reitan equates this drive to “working hard to become debt-free to Mother Earth”. “There is still much to do as we move forward with this important task to do better for the World,” says Johannes Sangnes, CEO of Reitan Convenience AS. “Our franchisees and employees have a positive attitude towards sustainability, and without them and their involvement we could not have achieved all we have.” Reitan Convenience is part of the Norwegian Reitan Group, with convenience stores Narvesen in Norway, Latvia and Lithuania, Pressbyrån in Sweden, 7-Eleven in Norway, Sweden and Denmark, R-kioski in Finland, R-kiosk in Estonia, Lietuvos Spauda in Lithuania, Northland in Norway, and Caffeine Roasters in Lithuania, Latvia and Estonia. Reitan Convenience has a market-leading position in all countries, and 2,140 sales locations. Reitan Convenience’s corporate social responsibility efforts are centred on three main areas: People, Product, and Planet. The goal is to operate as efficiently as possible while constantly striving to minimise environmental impact throughout the value-chain. Reitan Convenience tasked its suppliers with finding environmentally friendly solutions that did not contribute to climate change. When renovating or establishing stores, as in business, the company focuses on measures 60

to minimise negative environmental impact. Reitan Convenience participates in return and recycling schemes for packaging waste, as well as national and local co-operation initiatives with NGOs and suppliers on waste reduction. People are Reitan Convenience’s most important resource, and the company believes organisations with a positive working environment — where employees feel well treated and respected — are more likely to CFI.co | Capital Finance International

succeed. Creating and maintaining a safe and happy working environment is seen as a prerequisite for profitability. Reitan Convenience believes in individuals, and “developing great people who act based on trust”. “Our people are encouraged to make good decisions by creating a performance culture focusing on personal development and driving results,” says Sangnes. “We want to build successful people and solid companies.

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“In 2018, we carried out programmes including value-based leadership courses, talent programmes, assessments of corporate culture and individual employee engagement programmes.” The result? The Reitan Group was recognised by the Great Place to Work organisation (second place in Norway). It also made the top 10 list for the whole of Europe in the category “large businesses” category. All companies in Reitan Convenience are operated independently and nationally. “Our belief is that the best decisions are made locally, as close to the customers as possible,” says Sangnes. “An evolving understanding of the customers’ needs can only be captured in the stores, where the goods and services are purchased and the meeting with the customer takes place.” Reitan Convenience AS sees its duty as “being a good owner” of the subsidiary stores and franchises, he adds. “We have clear financial standards and make sure all colleagues are equipped with a true understanding of our values for best possible decision-making and execution.” Commuters and customers in a hurry seek frictionless transactions. Strong growth in the sale of takeaway, baked goods and hot and cold drinks is a major trend in kiosk and convenience. “Answering our customers' demands for highquality food and beverages on-the-go, including healthier options, is of high importance to us. Our daily distribution of fresh food, juices and shots to our stores, and the preparation of fresh food on-site ensures freshness and quality in all our products.” Reitan Convenience has succeeded in a competitive market by continuously evolving in high-traffic locations, becoming a preferred partner to landlords and suppliers, and maintaining a strong market position in the countries where it operates. “We have a positive view of the future,” says Sangnes. "Convenience is considered a megatrend around the World, and we feel confident that the market will continue to grow. “We must respond quickly to our customers' needs and follow trends closely so we can react to changing demands. With passion and excellence behind us we hope to expand into new European countries. We want to become the biggest, best, and most profitable convenience retailer in Europe. “We’re proud and humble to have been recognised with CFI.co’s Sustainability Award. The motivation will help us to maintain our continuous efforts, and to take our responsibility seriously.” i 61

> Nordea Asset Management’s Responsible Investments Team:

Using ESG Engagement to Create Value for Investors and Companies Nordea Asset Management’s Responsible Investments Team is tackling climate change one investment at a time.

s sustainability increasingly becomes a critical issue for business risks and opportunities, many investors are gravitating toward those with strong ESG (Environment, Social, Governance) performance. Katarina Hammar, co-head of Responsible Investments at Nordea Asset Management 62

(NAM), believes that positive ESG selection can have strong influence on sustainability factors. Engaging with companies is one of the best ways to create value for investors and holding companies, Hammar says. It’s her job to establish and maintain dialogue between NAM and the companies in which it invests. CFI.co | Capital Finance International

Exclusion of a company is a last resort, she stresses. “We do not give up so easily, because we do not think it solves the problem to just sell the shares in the company. If we do that, we just pass it on to another investor.” Instead, Hammar and her team work with companies to address ESG factors and help them to improve in areas such as pollution,

Winter 2019 - 2020 Issue

"NAM has developed proprietary ESG research models which are continuously developed and upgraded. Combining internal and external analyses enables NAM to identify tomorrow's winners." worker compensation and transparency. When a company does not meet NAM’s standards, engagement is her first line of action. NAM’s Responsible Investment (RI) Team team has travelled to Indonesia to evaluate the sustainability of palm oil plantations, engaged with a food and beverage producer to establish fair labour practices in agricultural supply chains, and worked with a major fashion label to address fair living wage concerns. If a company that is otherwise considered a reasonable investment shows willingness and ability to improve its ESG practices, it can still be included in NAM's strategies. TALK ISN’T CHEAP Engagement begins with dialogue. The RI Team has two goals: to listen to the companies and to talk with stake-holders, including company representatives. This is an important part of the responsible/sustainable investment process. Every year, ISS Ethix, which provides normbased screenings, studies the investments in all NAM strategies. If a company is seen to violate international norms in ESG, the RI Team seeks dialogue. “We first try to hear the company's version of what has happened,” says Hammar. “Then we try to find out how, and within what time horizon, the company plans to rectify the situation. It might take months or even years to change things in more complex cases. “We have different types of dialogues with the companies and choose to do them in collaboration with other investors or on our own. We can be one of the 10 largest shareholders in a company, and we really want to ensure that it handles its ESG risks in the best way possible, and develops its business strategy and capital allocation from it.” Most companies welcome NAM’s RI Team. “Questions regarding a company's ESG risks and opportunities are rarely black and white,” says Hammar. “Companies are happy to draw on our experience and advice. The talks also give us some answers that allow us to better assess the company's future prospects.” STRIVING FOR STRONG ESG PROFILES NAM is a significant shareholder in many companies — particularly in the Nordics, where the asset manager is the largest fund company. This gives the RI Team a unique opportunity to engage in business strategies CFI.co | Capital Finance International

Co-head of Responsible Investments: Katarina Hammar

and ESG considerations. The asset manager has also created a range of solutions focused on companies that have already embraced ESG practices; it's called the STARS. STARS strategies select companies with strong ESG profiles and sustainable business models, running in a responsible manner. Dialogues with companies in the STARS range aim to influence the companies to improve their already strong ESG profiles. NAM has developed proprietary ESG research models, which are continuously developed and upgraded. ESG analysts use a risk model to assess companies and assign them a score based on the ability to responsibly conduct business and whether its products or services are wellpositioned with sustainability megatrends such as climate change and demographics. This risk-modelling integrates external ESG data and scores from several data providers. This offers coverage of over 6,000 companies globally, in terms of their practices and in tracking controversial issues. It also uses specialised thematic brokers’ ESG reports to underpin analysis. Combining internal and external analyses enables NAM to identify tomorrow’s winners. And while data are essential, the final and most important part of NAM’s ESG analysis is engagement. Going beyond the numbers and engaging directly with company management allows NAM’s RI Team to enhance its assessment — and steer companies towards meaningful change. i 63

> Enfuce:

Finnish Game-Changers Revitalise Payment Industry Innovative payment service provider Enfuce, strives for long-term, fast and secure solutions. Just recently they announced My Carbon Action, a pioneering sustainability service for banks, financial service partners and merchants. “We founded Enfuce to enable change and innovation within the financial industry and our service offerings are proof of that,” says CEO and co-founder Denise Johansson.

he five founders had been working at the intersection of payments and digital technologies since the early 2000s. Denise Johansson, Monika Liikamaa, Niklas Apellund, Tom Gråhn and William Ekström met at another payment service provider and decided that they wanted to do things differently. “Our backgrounds are entirely in the financial industry. We have worked both within the business and IT sides of banks, delivering services to the industry for the past 15 years. This gives us a unique position to really embrace the change our industry needs.” The founders asked themselves: “If we were to rebuild payments from the get-go, how would we do it?” It quickly became apparent that cloudbased solutions were the best way forward as they offered unrivalled scalability. “Going to public cloud with payment processing was a bold move in 2016, but we saw no other way to build a scalable solution for the global financial industry. Also the security budget and standard provided by the largest cloud-providers in the world are far more ambitious than any stand-alone company can achieve on its own." Acting on their initiative, they founded innovative payment service provider Enfuce in 2016. A week after it was founded, Enfuce pitched – and won – its first account. That was the beginning of a new cloud-based platform. Enfuce was the first company in the world to run a card-issuing platform on the public cloud and to receive PCI DSS (payment card industry data security standard) certification. “Enfuce is an enabler – we are a hub and integrator that enables our customers to test and launch innovative new payment services,” says Johansson. “It could be a consumer credit, debit or prepaid card, a corporate or fleet card, or tokenised payments. We have the full range of services and the platform to deliver them.” 64

My Carbon Action: a pioneering sustainability service

What makes Enfuce stand out is its extensive product range and a platform that is enabled for the whole world: “Thanks to our scalable CFI.co | Capital Finance International

platform companies could start working with us in Europe for instance and easily expand to Asia or North America.”

Winter 2019 - 2020 Issue

Co-Founder & CEO: Denise Johansson

By combining industry expertise, collaborative partnerships and compliance, Enfuce is delivering long term solutions fast and secure. They have been breaking records when implementing services to their customers. Enfuce integrated Apple Pay for one customer in just three months – and migrated five million cards in less than three hours for another. The arrival of Payment services directive (PSD) 2 offered a range of opportunities for the Enfuce team to use its skills and entrepreneurial spirit to explore the era of open banking. Enfuce Open Banking regulatory service goes further than Application Programming Interface or sandbox test environments. They handle consent management, transaction trails, fraud monitoring, dispute handling and compliance reporting. Enfuce also offers a single point of entry for third party providers (TPPs) to access account information and initiate payments. “I’m so proud of our 100% PSD2 compliant Open Banking API Hub that went live in November when Finland's first TPP transactions were processed via us,” says Johansson. Recently, Enfuce partnered-up with D-Mat, a Finnish consultancy experienced in lifestyle carbon and material footprint calculations, and decided to build a solution to help consumers become more carbon-conscious and give CFI.co | Capital Finance International

individuals accurate feedback based on both purchase history and lifestyle. “Our goal is to unite consumers with banks, merchants, retailers and financial service partners in the fight against climate change.” The new sustainability service is called My Carbon Action and is a fully-automated digital tool for banks, other financial service providers and merchants to help their customers track their actual carbon footprint per purchase. The service is offered as a turn-key solution that can be integrated into existing platforms, such as mobile banking applications. My Carbon Action is based on a validated calculation method called Life Cycle Assessment (LCA). The calculation takes into account the environmental impacts of a product’s entire lifecycle from raw-material extraction, manufacturing and transport to use and disposal. The journey for Enfuce has only just started. Enfuce is now Finland’s biggest fintech start-up, and one of the fastest growing fintech companies in the Nordics. In November 2019 Enfuce announced its new funding round of €10m, led by the early-stage VC firm Maki.vc including venture debt from Nordea, LähiTapiola and Finnvera. Enfuce employs over 50 professionals in the Nordics and has more than eight million end-users on its platform. i 65

> SG Finans AS:

Financing Green Revolution to Keep the World Turning

he financial sector is at the heart of an essential shift to more sustainable development, based on a more inclusive and sustainable economy.

Société Générale is one of the founding banks for the Principles for Responsible Banking, and has been a pioneer of Positive Impact Finance. This calls for a new paradigm: turning Sustainable Development Goals into business opportunities for its clients by developing new financing solutions to bring about the sound and sustainable development of societies. 66

The smart use of resources is a major consideration with the crucial challenges the world faces today. Action is needed — now — on climate change, social inclusion, and the development of emerging economies. SG Finans is implementing a pragmatic, step-by-step approach to develop impact-based solutions. SG Finans AS is a wholly owned company of the Société Générale Group and part of the Société Générale Equipment Finance business line, Europe’s leading player for equipment leasing. Factoring is an integrated part of its services and CFI.co | Capital Finance International

an important solution for clients' liquidity and ability to maintain growth. The company is the number one provider in equipment finance in the Norwegian market, and also holds top spot in factoring: 27 percent for Equipment Leasing and 34 percent for Factoring (based on figures from the Association of Norwegian Finance Houses as of end 2018). With its European network, SG Finans AS aims to satisfy the requirements of Scandinavian businesses for capital-intensive equipment,

Winter 2019 - 2020 Issue

Treasury Management: Team

Norway: Oslo

liquidity and administrative services. It has a broad distribution network, with 15 regional and sales offices in Norway, four offices in Sweden and two in Denmark. The head office is in Lysaker, Bærum, Norway, and at the end of 2019, the company had 358 employees. Teams are helping to develop innovative solutions by exploring new business models and by contributing to various alliances and partnerships. By looking at projects through the prism of their holistic impact on society, SG Finans is tackling world challenges.

GREEN TRANSITION IN SCANDINAVIA In 2018, the company launched an initiative to support clients in the green transition. It aims to relate a substantial part of new financing to climate action projects, including replacement of technology with newer, cleaner technologies, taking steps to reduce emissions or consumption of energy, and adapting to new requirements for greener equipment. SG Finans’ ambition is to be a partner and adviser in the transition to greener technology.

expertise across our full range of investment and financing solutions.”

THE TREASURY TEAM In September 2018, SG Finans signed a climate action credit facility with the European Investment Bank (EIB) to support climate relevant projects with a focus on low-carbon transport solutions in Norway. It has granted financing for projects involving electric- and biofuel-powered buses for public transport, electric bicycle leasing programmes for smart cities mobility initiatives, electric heavy-duty excavators for zero-emissions construction sites as well as specialised equipment for the construction and maintenance of the national rail infrastructure in Norway.

This first round of green funding in partnership with the EIB demanded the implementation of new internal processes to guarantee the highest standards for the use and allocation of funds and the evaluation and selection of green projects and new reporting tools. There was a paradigm shift within the organisation to fully embrace SG Finans’ leading role in the energy transition of the region. The experience has served as a positive impact test case for other European markets.

“We finance projects right at the heart of the Scandinavian economy and are well positioned to advice and support our 50,000 clients in their transition to a greener future,” says Hans Einar Herzog, deputy CEO at SG Finans. “Financing the shift to a low-carbon economy is a momentous task and Societe Generale Group is committed to supporting its clients make the transformation to tomorrow’s world. We share the EIB’s objectives and are glad to include this important collaboration in our sustainable and positive impact finance offering, which brings together all our environmental and social CFI.co | Capital Finance International

In addition, an SME credit facility was signed with the EIB for other markets in Scandinavia, resulting in the allocation of green financing to upgrades of mobile agricultural and forestry equipment to support qualified entrepreneurs in Denmark and Sweden to reduce their carbon footprint, as well as the financing of the first biogas upgrade plant in Denmark from an SME client.

SG Finans has financed a range of climate change mitigation projects, including financing to municipalities for bicycle-leasing programmes for public sector employees since 2016 (to more than 30 municipalities). It also granted financing for a hybrid diesel-electric work boat to serve the aquaculture industry in Norway. It is participating in green initiatives such as Finance Norway’s Sustainability Group and Hordaland County Council’s pilot project to establish the first heavy-duty hydrogen fleet in Norway. It is collaborating with ENOVA, the Norwegian government enterprise responsible for promotion of environmentally friendly production and consumption of energy. i 67

> Olbia Costa Smeralda Airport:

Airports Are Not All the Same — and This Sardinian Exception is Worth a Visit The Olbia Costa Smeralda airport in Sardinia offers a golden welcome to the famous Costa Smeralda.

he airport caters to more 11,000 private jets winging into one of the world’s most beautiful stretches of coastline — and Eccelsa Aviation is the only certified FBO (fixed base operator) on the site.

Eccelsa’s leading-edge air terminal is a symphony in glass and steel, with a finish in beautiful local granite. It lies at the heart of Costa Smeralda, allowing passengers to easily reach it from anywhere on the island by car (or by helicopter, for the adventurous, impatient or well-heeled). Looking at the black-and-white photos dating from the early 1960s, it’s clear that the designers of Costa Smeralda possessed a visionary capacity, as well as the ability to turn dreams into reality. Eccelsa embraces its role of combining professionalism with a touch of charm to deal with a constant flow of discerning clients, and is controlled by the airport management company Geasar SpA. A customer-centric approach and a proactive problem-solving attitude empower the 45-strong professional team, led by general manager Francesco Cossu. 68

“We train hard and strive on a daily basis to meet new heights of service standards,” he says. “In the service industry, service is the key word. “Our mission is to make sure that customers leave our premises happy and satisfied. Tourists are the real asset, not only for Eccelsa and the airport, but also for the entire territory”. Cossu has the passion and energy to tackle all requests to the Eccelsa Aviation operational desks. The 4,000-square-metre terminal includes luxury brand outlets and companies offering exclusive services to high-net-worth individuals. There is de Grisogono jewellery, Maori Yachts, high-end sunglasses, as well as selected delicacies and fine wines from Sardinia and the Italian mainland. The terminal hosts the San Marino Aircraft Registry and the New Jet International and Bombardier sales offices. It features a formidable outer wing that allows guests to enter and exit the terminal directly from their aircraft. (In the “worst case” scenario, passengers will be ferried between terminal and aircraft in a sleek Audi automobile. CFI.co | Capital Finance International

July and August are the busiest months for Costa Smeralda, with 3,000 to 4,000 arrivals and departures each month. The giant wing provides shelter even to large aircraft such as B737s, A319s and A320s. Privacy, security and comfort are the star qualities of Eccelsa Aviation. The operation runs smooth and slick thanks to the Eccelsa team. The terminal’s concierge service can even organise activities — from horse trekking and private aircraft hire to limousine and sports car rentals and yacht charters. Through its sister company Cortesa, Eccelsa also provides first-class in-flight catering, offering a menu of 120 dishes — from simple sandwiches to exotic lobster dishes — all complemented by fine wines. The terminal has a coffee shop and bar, open all day for snacks, local dishes and drinks to occupy and satisfy those waiting for flights. Eccelsa also offers line maintenance services and the option to shelter aircraft in the modern hangars for the duration of the owners’ stay in Olbia. i

Winter 2019 - 2020 Issue

CFI.co | Capital Finance International

> AMC Natural Drinks:

Research & Innovation to Achieve Sustainability & Circular Economy Commitment

MC Natural Drinks is a leader in the research, development, production and sale of chilled fruit juices, smoothies and other high-quality, innovative and functional veggie drinks. Sales have doubled during the past five years and turnover now exceeds 600 million euros, driven by a spectacular growth of 17% in 2018 â&#x20AC;&#x201C; which was accompanied by a 25% reduction in its carbon footprint. 70

This Murcia-based company is one of the two cornerstones of the AMC Group, along with AMC Fresh â&#x20AC;&#x201C; which works with fruits, flowers and other fresh products. The group has become the third largest Spanish business conglomerate for foods sold abroad, with a consolidated turnover of 1,290 million euros in the last fiscal year.

and holds minority technology investments in strategic suppliers in Costa Rica, Poland and India. It sells in the 70 most prestigious retailers in Europe, in over 50 countries worldwide and has experienced large-scale growth in the Middle East and Asia (primarily in Japan, Korea, China and Vietnam).

AMC Natural Drinks has its own production plants in Spain, Holland, England, Portugal,

Sustainability and the circular economy have always been key elements of the research and

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

The AMCâ&#x20AC;&#x2122;s Bio-bottle made from citrus peels from their own squeezing process and potato starch

development programme of AMC Innova, the scientific-technical division of international holding company AMC Natural Drinks. The European Commission and government of Spain have recognised its research excellence in more than twenty pioneering projects of fundamental and applied science.

AMC Natural Drinks is also part of the pioneering LIFE CITRUSPACK Research project, funded by the EU, to create a bio-packaging made out of orange peels from its own squeezing process and potato starch. The company aims to bring the first 100% compostable bio-bottles to the market by 2021.

Many of these AMC Natural Drinks research projects are led by AMC Innova and developed under an Open Innovation model with the best international research centres. These efforts aim to develop, demonstrate and apply continuous improvements in environmental sustainability, natural functionality and bring efficiency improvements in the food and natural drinks industry.

Cosmetic containers, straws, utensils, fruit transport materials will also be made from this orange fiber material and this will have a great impact on reducing the environmental footprint.

AMC Innova designs, researches, scientifically validates and improves the sustainability and natural functionality of food thanks to the development of new value-added products from the squeezing of fruit and vegetables. AMC Natural Drinks develops patented processes, extracting natural bio-actives present in the peel and rinds of fruit such as pomegranate, watermelon and oranges, where nature deposits large doses of valuable nutrition. Thanks to these new technologies, AMC adds value so that the ingredients can be applied in other foods to bring nutritional improvement. The same applies in nutricosmetics, perfumery and natural pharmacy â&#x20AC;&#x201C; being more environmentally friendly, reducing and reusing raw materials (of which not all functionality was extracted) and providing society with a sustainable source of natural added value. CFI.co | Capital Finance International

At AMC, packaging is eco-designed through the most advanced technologies. This allowed the company to reach great milestones and produce food packaging with important sustainability attributes, which consumers value as alternatives to the obsolete model of linear consumption of use and disposal. Since its establishment in 1931, AMC Group has been committed to the principles of the circular economy. Currently AMC Natural Drinks bottles are fully recyclable and incorporate up to 52% of post-consumer re-used plastic. The use of recycled raw materials promotes the recycling and reintroduction in the market of these flows of secondary materials, providing them with a new value and closing the circle of sustainability. In addition, recycled PET (polyethylene terephthalate) has a carbon footprint much lower than virgin plastic. It is also important that technological innovation reduces the weight of the bottles without compromising the quality and safety of the food. AMC Natural Drinks has reduced 71

Sustainability Strategy

Sourcing Lean Ethical Environmental

Sustainable & ethical sourcing. Sedex member since 2006 Leaders in AIJN CSR Platform

International Sedex Award for AMC Natural Drinks Best Ethical Company 2015

New AMC Bio fertilizants from Squeezing Sidestreams

AMC Sustainable Technology for Ocean & Sea water use.

Bioeconomy. Biobased Alternatives.

Continuous Carbon Footprint reduction in our products & activities. AMC Efficiency Plans implemented & strictly monitored

AMC Natural Drinks Sustainability Pillars

R&D to Improve Water reduction & efficiency

Organic water treatment plant to get clean energy at our sites, since 2001.

Professional AMC 1 Spanish Company with Lean British Recognition in 2012 Lean manufacturing team

Strategically located AMC International sites for optimal logistics & Carbon Footprint reduction

at our sites

Circular economy: R&D that transforms side streams intro added value new natural ingredients “Zero waste to a Landfill” UK award 2012

December 2019

State-of-the-art AMC Natural Drinks squeezing site for Mediterranean fruits

more than one million kilos of raw material in the past five years. All other components of food packaging are also part of the AMC eco-design programme. For example, the label is made of a material fully compatible with the PET of the bottle at the recycling level, since they have different densities and must be easily separable in the recycling plants. The reduced size is also relevant – covering less than 60% of the bottle surface, thus favoring the correct selection of materials when passing through the selectors in the recycling plants to identify the label components from the bottle. The company avoids the use of black plastic in the cap and other components of the container, 72

AMC Vlissingen: one of the AMC state-of-the-art bottling sites in The Netherlands

since this type of plastic is invisible to the optical detectors of the selection plants and in many cases ends up in the landfill. Antonio Muñoz Beraza, co-CEO of the AMC Group and CEO of AMC Natural Drinks, won the Spanish National Innovation Award of the Ministry of Economy and Competitiveness, and this was presented by the king of Spain. Along with this recognition, AMC Natural Drinks has been honored with numerous prestigious international awards for innovation, sustainability, quality and health. These include the New York SOFI Special Innovation Award and the Japan International Beverage Award. It has also achieved the PLMA ‘Salute to Excellence’ award for the best European product – presented CFI.co | Capital Finance International

in Amsterdam) on three different occasions, as well as the environmental award ‘Zero Waste to Landfill’ by Marks & Spencer UK, and the European Sedex Awards for ethical practices and society. Further, Via Nature, an AMC own brand, was distinguished as ‘Best Flavour of the Year’. Today, the AMC Group is an international agrifood group with 70 companies throughout five continents, over 5000 employees and provides a well-regarded reference and benchmark for innovation, research, patents and competitiveness. i

For further information, please see: LinkedIn: AMC Natural Drinks Web: amcnaturaldrinks.com

> CBRE - Adapted Retail & Alternative Assets:

Corporate Real Estate Strategy in Current Economic Environment By David Casas AlarcĂłn CBRE Property Management Accounting Lead

A change in the building occupiers' challenges, combined with investorsâ&#x20AC;&#x2122; aversion to risk, will drive strategies in 2020.

hile the economic slowdown in global growth from the highs of 2017 had been forecast, the deterioration in the second half of 2018 has deepened into 2019.

The manufacturing sector has been particularly affected. There are indications of a two-speed economy emerging, with consumption and personal spending performing better than the trade sector. The components of this shift have implications for global growth patterns, the direction of monetary policy and the short- and medium-term shape of the cycle. The manufacturing-led slowdown certainly took a hit from the US-China trade dispute, accentuated by a variety of localised but coincident factors. These include the shift to lower-emissions production in Germany, and prolonged uncertainty for British manufacturers over Brexit. Until recently, the major bright spot from a global perspective has been the US, but here too some cooling is apparent with, for instance, the pace of new hiring weaker in 2019 than the previous year. Further weakening is expected as job growth wanes and the impact of earlier fiscal stimulus diminishes. World economic growth, having run at over three percent per annum in 2017-18, is expected to slow to closer to 2.5 percent over coming years, with weakening evident in North America, Europe and developed nations in Asia Pacific. This is a more gradual outlook than the previous version, which predicted a sharp slowdown in the second half of 2020 associated with general tightening in interest rates. The weaker short-term picture removes the rationale for interest rate rises, as do lower inflation expectations and generally low levels of actual inflation â&#x20AC;&#x201D; despite rising employment and low levels of unemployment in many parts of the World. While there are still risks that inflation could yet take off, the main central banks seem to be putting interest rates hikes on hold until economic indicators begin to improve, suggesting 74

Figure 1: Investors risk appetite compared with 2019. Source: CBRE Research, Global Investor Intentions Survey, 2014 to 2019.

a more gradual process of normalisation for the US and Europe. Taking the EMEA region in more detail, most larger countries reflect at least some of the global pattern described above almost everywhere, with only moderate improvement (Germany, Italy) or further slippage in growth rate (Spain, France, Sweden, Poland) anticipated in 2020. Recent data paints a mixed picture: industrial output falling in Q1 in most of the major economies, and retail trade numbers looking weaker in recent months, alongside rising employment and some indications of upward pressure on wages. Heightened political uncertainty remains a feature of the European landscape, notably in the UK where the Brexit process is likely to stifle investment for longer, but also in Spain, France and Italy. Central and Eastern Europe (CEE) has generally shown more resilience on recent short-term measures. Where many of the larger western European economies will struggle to post GDP growth of 1.5 percent per annum over the next three years, typical CEE growth rates are higher and in some cases (Poland and Hungary) could exceed three percent. CFI.co | Capital Finance International

Markets in sub-Saharan Africa will continue to see GDP growth above three percent and rising. Inflation remains high relative to European levels, but is showing signs of being brought under control. These trends also appear in diluted form in much of the Middle East, albeit with greater risk from oil price fluctuations and Gulf region geo-politics. AN OVERVIEW OF THE OFFICE MARKET: RENTS The CBRE EMEA office rent index rose by 2.4 percent in the year to Q2 2019. This represents a slowdown in growth compared with most of the previous two years, when rents were rising at 3.5 percent or more. There are widespread variations in market conditions in the main city markets. Some are still seeing rental growth running at over 10 percent per year, including Berlin, Hamburg, Budapest, Sofia, Lisbon and Porto. More seeing rental growth running at between 5-10 percent, including Madrid, Frankfurt, Amsterdam and London. At the other extreme, a combination of high supply levels and erratic demand is pushing rents downwards in southern and eastern markets including Moscow, Istanbul and Dubai.

Winter 2019 - 2020 Issue

Figure 3: Fit-out cost multiplier relative to London property

OFFICE MARKET There are several factors working to support office market activity: the strength of the service sector relative to manufacturing in many economies, continued job growth in office-based employment sectors, and — on the supply side — generally controlled levels of new building and the removal of obsolete stock tending to push vacancy down.

that strengthened earlier in the cycle are easing (London, Dublin, Paris), while late-cycle recovery markets are still improving (Madrid, Milan and Brussels). Among the major CEE markets, Moscow, Warsaw and Budapest were all up in Q2 2019 compared with Q2 2018, but weaker when comparing H1 2019 with H1 2018.

This translates into a strategy change. In 2018, 12 percent of investors had planned to close the year with a lower purchase of assets than in 2017. This year, a remarkable 36 percent are planning to close 2019 with a reduced purchase portfolio compared with the previous exercise.

Rates of growth in leasing levels are starting to ease in line with the late stage of the cycle, and the constraining effect of low and falling levels of vacancy are restricting occupier choice.

RISK APPETITE DROPPING Most investors whose risk appetite is lower see asset pricing as the biggest obstacle to investment and are concerned about a property market bubble. While 42 percent of investors with higher risk appetites are also concerned about asset pricing, another 32 percent cite

WORKPLACE TRENDS The greatest challenge facing building occupiers over the past 12 months has been economic uncertainty, according to the CBRE 2019 EMEA Occupier Survey. This is particularly true for those in the professional services industry, although challenges vary across sectors: technology

There isn’t a clear pattern to differences between cities across the region, but generally markets

CFI.co | Capital Finance International

“limited asset availability” as their primary concern.

be used to estimate the probable costs to build the same facilities across EMEA. It provides a fitout cost multiplier relative to the cost of building in London. Adapting property to market trends to support occupiers’ challenges and retaining talent come at a cost, which can depend on location, and should be a key element of the profitability analysis for decision-making. i

Figure 2: Purchase level expectation compared with the previous year. Source: (see figure 1)

companies are most concerned with workforce/ talent preferences, whereas banking and finance companies see technology as the main challenge. For life sciences, the main concern is tightening regulation and legislation. There is growing concern over the shortage of skilled labour. To address this, organisations have identified four ways to enhance their appeal to prospective employees via Procurement and Fit-out, Flexible Space, User Experience and Technology. PROCUREMENT & FIT-OUT: SEARCH FOR USERFRIENDLY BUILDINGS In last year’s survey, cost-reduction was the single most important driver of corporate real estate strategy, with employee engagement coming fourth. In 2019, cost reduction dropped to fourth position, employee engagement rose to second and talent attraction and development to third. People are an increasingly important consideration. Buildings that offer an adaptable mix of fit-out types, traditional (vs flexible) space, diverse working environments, price points and amenity. These and those which are technology enabled will compete for occupiers. FLEXIBLE SPACE: THE NEW TREND There is continued growth in corporate demand for flexible space, with 45 percent of companies expecting to make use of it over the next three years, compared with 25 percent currently using it. The main motives are cost reduction and shortterm demand increases. But using flexible space to attract and retain talent is becoming a key agenda item. Nearly a further third of employers see it as a way of testing alternative workspace models. Companies increasingly view flexible space as a way of supporting their talent agenda and, in many cases, are still at an experimental stage. Hybrid solutions offering a balance of dedicated offices, meeting spaces and small co-working areas should prove popular. Over 50 percent of 76

professional services companies intend to make significant use of hybrid space over the next three years, compared to only 30 percent of life science companies. ENHANCED USER EXPERIENCE Only a third of organisations have a formal User Experience (UX) strategy or plan to introduce one. For those that do, 63 percent view it as a key competitive advantage and nearly half see it as part of a wider change programme. Over a third of organisations have plans to hire a UX lead, so formal UX programmes will probably rise. The priorities are again people-focused; improved collaboration; productivity gains, and talent retention and attraction. The emphasis on aspects of environment such as thermal comfort, security and amenities point towards a focus on physical elements of the building. Although community elements attract a lower rating, these aims are often satisfied by other means. TECHNOLOGY: SUPPORTING TALENT Technology strategy involving buildings, skills and process design continues to be a major area of focus, and 60 percent of companies expect tech innovation to have an impact on their operations over the next three years. Some 85 percent ranked AI and machine learning in their top three technology concerns. About 70 percent intend to raise their level of investment in real estate technology in the next few years. This is particularly the case for banking & finance companies.

ABOUT THE AUTHOR David Casas Alarcón is an economist at the university of Malaga, Spain, with more than 10 years of experience in the real estate and finance industries. In 2012, he took over the role of Outsourcing Analyst for Capgemini Consulting, where he advised the company’s real estate clients on the most efficient solutions for financial process externalisation. Since 2016, Alarcón has been part of the CBRE Corporate Outsourcing Hub in Warsaw, which drives the finance process transformation for property management and other CBRE business lines across Europe, Middle East and Africa (EMEA) region, delivering efficiencies and compliance. ABOUT CBRE CBRE Group, Inc is a commercial real estate services and investment firm. It is the largest company of its kind in the world. It is based in Los Angeles, California and operates more than 450 offices worldwide and serves clients in more than 100 countries. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. The CBRE Global Investors subsidiary sponsors real estate investments via investment funds and direct investments that it manages. As of September 30, 2018, the division had US$104.5 billion in assets under management. The Trammell Crow Company subsidiary is the largest commercial real estate developer in the United States, according to Commercial Property Executive's annual ranking.

The two most popular real estate technologies are smart building sensors for occupancy management and energy management controls. By contrast, future intentions for real estate technology investment focus on occupant navigation apps and Internet of Things, both of which are more people-centric. INVESTMENT COST CONSIDERATIONS Investors need to consider the occupier increasing demands in agile working places when defining the investment strategy for 2020 onwards. The CBRE Fit-Out cost estimation can CFI.co | Capital Finance International

Author: David Casas Alarcón

Winter 2019 - 2020 Issue

> Fondex:

Trading Reinvented Fondex, an award-winning, CySEC-regulated broker, is raising the standards in online trading.

he recent CFI.co award for Best Technology Corporate Leadership in Southern Europe has sealed the broker’s reputation among its faithful and growing client base.

In a volatile and competitive market, Fondex has secured its place by constantly striving to offer its clients advanced tools and features, while also remaining true to its key value, transparency. Trading with Fondex means trading with an advantage. With more than 1,000 instruments across seven asset classes, traders can diversify their portfolio and develop their trading skills. Keeping up in a rapidly evolving environment is key to achieving goals in this world. Fondex provides traders with a pioneering platform as their main trading tool. CEO: Alex Katsaros

The recently launched version of Fondex cTrader combines four ways of trading within the same interface, amplifying the experience and eliminating the disruption of switching between platforms. Traders have a wide choice to give them a competitive edge: manual trading, copying top-performing strategies, using cBots to automate their trades, or following free, inplatform trading signals. Fondex cTrader is equipped with the latest technical analysis tools and risk-management features. Being also available on desktop, web and mobile, the platform allows for seamless trading anywhere, at any time. In such a competitive industry, the difference is in the details. Seeking the best value and ROI, traders are not ready to compromise or drop their standards. With price-streaming from Tier1 liquidity providers and employing the most advanced technology for the execution of orders, Fondex clients benefit from seamless order execution. With raw spreads starting from 0.0 pips and the lowest cTrader commissions globally, Fondex offers traders ultimate transparency, the most competitive market rates and optimal trading conditions. The firm knows that trading sometimes requires assistance and provides a professional support team — primed and ready to help, 24-hours-a-day, from Monday to Friday. “We are honoured to have received the Best Technology award from CFI.co,” said CEO

Alex Katsaros. “In Fondex, we offer the best technology through our exclusive, custom Fondex cTrader platform which provides access to more than a thousand global markets via all modern devices. Our years of experience in Liquidity allow us to combine the best global platform with raw spreads starting from 0.0 pips, while charging the lowest commissions in the World. In regards to corporate leadership, I've always upheld integrity, fairness, and transparency to be the core values of Fondex, which is the reason we have gained our client's trust and loyalty. We CFI.co | Capital Finance International

aim to keep improving our core product while retaining our values to continue providing traders a powerful ecosystem that helps them achieve their financial goals. By always striving to improve our clients’ experience, we can mutually succeed and evolve. ” ABOUT FONDEX Fondex is a trade name of TopFX Ltd, which is registered as a Cyprus Investment Firm (CIF) and licensed by the Cyprus Securities and Exchange Commission (CySEC) under licence number 138/11. i

For more information, visit fondex.com 77

> Anna Dé:

A New Initiative for Women Entrepreneurs Launches in London Venue: The Princess of Wales lovetheprincess.com // Photography: Lars Christiansen onthehill.pics

Anna Dé

Anna Dé with women entrepreneurs

Women entrepeneurs - launch event

Anna Dé with guests

n a chilly evening of November 20 this year, women gathered in Primrose Hill on the northern fringe of Regent's Park in North West London.

strong social network for women business owners to lift us up when we’re down and celebrate our successes. It’s not about perfection, but being our own best version, and I believe we can only do that with the support of others.

They were from various business backgrounds, based in Primrose Hill and further afield, and this was a great networking opportunity. It was also a chance for them to share their thoughts on an exciting initiative. As someone who has recently launched several business ventures — and as a resident of Primrose Hill — I started this initiative to meet up with other self-employed women to share stories and expand our network. I love being an entrepreneur, following my passions and making a difference to the world. However, it’s not all sunshine and rainbows. It can be challenging — and even more so without a supportive network. It takes a certain mindset to become an entrepreneur and being comfortable with risk-taking is essential. Women are typically more risk-averse than men and more cautious about starting or scaling a business. Present were women at all stages of their entrepreneurial journey. The idea is to forge a

If you’re a female entrepreneur and would like to get involved in our exciting new initiative for women entrepreneurs and you live in and around Primrose Hill, I would love to hear from you. i

Contact: anna@anna-de.com // anna-de.com

"Ask yourself everyday: ‘Did I help another woman today?'" Christine Lagarde

ALISON ROSE REVIEW OF FEMALE ENTREPRENEURSHIP

• Only 1 in 3 UK entrepreneurs is female and fewer UK women choose to become entrepreneurs than in best practice peer countries. • Advancing female entrepreneurship represents a £250 billion opportunity for the UK economy. • Looking across the entrepreneurial journey, UK women are less likely to go from intention to starting a business and half as likely to scale their businesses (calculated based on data from Global Entrepreneurship Monitor, 2016 data, YouGov Banking Survey 2017)

• Three opportunities to help more women succeed as entrepreneurs: 1. increase funding directed towards female entrepreneurs; 2. provide greater family support for female entrepreneurs; and 3. make entrepreneurship more accessible for women and increase access to support.

The Alison Rose Review of Female Entrepreneurship, published 8 March 2019: gov.uk/government/publications/the-alisonrose-review-of-female-entrepreneurship

"There is no limit to what we, as women, can accomplish." Michelle Obama 78

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Winter 2019 - 2020 Issue

> Kommunalkredit Austria AG:

Always First with Speed and Precision Kommunalkredit Austria is a specialised bank for infrastructure and energy financing with a clear objective: to create sustainable value to improve people’s lives.

ienna-based Kommunalkredit (KA) is partner of choice for corporate and financial sponsors active in the construction, acquisition and operation of infrastructure and energy projects. It matches the needs of developers and project sponsors with the growing number of investors seeking sustainable investment opportunities.

"What sets Kommunalkredit apart is its will to participate in creating a better world by enabling the development of sustainable infrastructure."

Those investors include insurance companies, pension funds and asset managers, and public financing of infrastructure investments is key in KA’s business model. It maintains strong relationships with local communities on one hand and international clients and investors on the other.

What sets Kommunalkredit apart from other financial institutions is its will to participate in creating a better world by enabling the development of sustainable infrastructure. Kommunalkredit aims to provide benefits to communities, fight climate change and promote sustainability.

KA is an “infra-banking” expert which combines in-depth industry expertise and structuring know-how to provide tailor-made solutions for its clients. It adheres to its motto of “Always first – with speed and precision”. This is reflected by swift decision-making and reaction to market developments.

The concept of sustainability is firmly embedded in its business model and processes. In 1997, KA established an EMAS (environmental management system) that it has since developed. Its commitment to sustainability is evident: it has become the first Austrian issuer of a Social Covered Bond.

The European infrastructure market is evolving – and so is KA. The demand for investments is increasing, which is why Kommunalkredit provides a range of products, from financial advisory services to arranging and underwriting of senior and junior debt, as well as asset management through the Fidelio KA platform. KA is also expanding in the areas of acquisition finance, hybrid/corporate finance, and financial advisory services.

Investments in infrastructure serve as a tool for answering social needs. This is reflected in KA’s core investment segments. Infrastructure is essential to the efficient functioning of society. Improvements in this area have a positive effect on economic growth, at local, regional and global levels. As Kommunalkredit’s CEO Bernd Fislage says: “Infrastructure is the backbone of society.”

By giving populations improved access to essential services — water, electricity, roads, schools and hospitals — the standard of living will be improved. Fislage has been a member of the executive board of Kommunalkredit Austria AG since February 2017, and chief executive since September 2018. He has established a clear path for the company: to take “always first” as an obligation to improve every day, to be nimble and flexible, and to stay committed. He has three decades of international experience in capital-market, institutional and bank financing, as well as in infrastructure, energy and transport. His banking career spans more than 25 years, including 18 in leading regional and global management positions with Deutsche Bank. Fislage was in charge of Deutsche Bank’s global asset finance, and had regional responsibility for its structured finance business (ABS, CRE, illiquid trading) in Germany, Austria and Switzerland. Previously, the Technical University of Darmstadt graduate worked for NatWest Markets and BHF Bank. i

CEO: Bernd Fislage

Their investment segments Energy & Environment

Communication & Digitalization

Energy supply & distribution Renewable energy Water supply & treatment Waste management & disposal

Broadband & Fibre optic Data centres

Transport

Roads, bridges, tunnels Airports, ports, waterways Rail/light rail, rolling stock

CFI.co | Capital Finance International

Social Infrastructure

Nurseries, schools, universities Hospitals, nursing homes Court buildings and correction facilities Administrative buildings

Natural Resources

LNG terminals Pipelines Storage

Global Commodity Exchange Map for EEX Group in 2020 The global commodity exchange EEX Group’s growth path marches on for 2020, with 2018 and 2019 outstanding years.

he group’s global positions are: number one in power, number two in emissions, and number three in natural gas. It has an established presence in Europe, Asia and North America, connecting more than 600 trading participants from 36 countries worldwide via 17 offices worldwide. Traders have faced many uncertainties such as MiFID II (Markets in Financial Instruments Directive) and Brexit. Yet for 2018, group sales revenue increased by 19 percent to €267.7m. The group generated significant volume growth in power (up 32 percent) in the spot and derivatives markets — maintaining its position, for the second consecutive year, as the number one global exchange in power trading. In the natural gas market, the group saw major volume growth in the short end of the curve, with the spot markets achieving double digit growth rates (up 33 percent) compared to the previous year. Its emissions business also saw success in 2018, more than doubling its overall volume, recording a year-on-year increase of 110 percent. Futures and options, in particular, saw growth in trading. The group aims to continue to complete its product range in existing and new markets. In the power futures markets, EEX has continuously expanded its regional reach to 17 market areas over recent years. In 2019, it continued to expand by launching products for the south-eastern European market — including Bulgaria, Serbia and Slovenia — in co-operation with local partners. On EEX’s gas platform PEGAS, products for 12 European gas hubs are currently available, including the recently launched offering for Spain. Plans for the future include an increase in market share in existing markets. EEX is in constant dialogue with its customers to develop its product range and increase liquidity. To this end, it is working to reduce market entry barriers for new and existing customers. This includes solutions to fulfill regulatory obligations in commodity markets: One example is the group’s regulatory reporting services for different 80

regulations such as MiFID II, EMIR, MAR, and REMIT. The group will continue to put forward innovations in the energy and commodity sectors, as shown by its engagement in the ENERA project or the B2B platform “enermarket”. CFI.co | Capital Finance International

EEX will also evaluate an extension of its offering for long-term trading by adding Cal maturities up to Y+10 in order to support long-term PPA hedging. The group will also continue to explore inorganic growth opportunities which could contribute

Winter 2019 - 2020 Issue

to its vision of a preferred Global Commodity Exchange Group. The acquisition of Grexel enables it to further develop the markets for energy certificates in Europe. (Since February, Grexel Systems has been fully owned by EEX.) The group has recently redefined its Asian business with the launch of EEX Asia and Cleartech. The strategic repositioning under two separate brands enables better service for clients through greater focus and specialisation in each business area. EEX Asia is now the Asian Exchange of EEX Group, offering futures contracts on freight and seaborne commodities such as fuel oil and iron ore, with contracts clearing through ECC (European Commodity Clearing). In March 2019, Nodal Exchange introduced Trucking Freight Futures – the world’s first exchange contract. In May, PEGAS launched an LNG contract based on the Japan-Korea Marker index. In July 2019, EEX Group announced its plans to extend its Power Derivatives offering in the first half of 2020 by launching Trade Registration services for Japanese Power Derivatives. Following meetings with the Ministry of Economy, Trade and Industry (METI), it confirmed plans to launch clearing services for financially-settled Japanese power derivatives is allowed under the Japanese Commodities Derivatives Act. In September, Powernext and EEX announced their intention to merge, subject to required regulatory and stakeholder approvals. The exchange will offer all products at a single marketplace while simplifying the admissions of new participants. Members will be able to easily trade a larger EEX portfolio including gas, power and emission allowances. As a result, customers will gain access to increased trading opportunities and a growing liquidity pool, while continuing to benefit from cross margining effects as ECC will remain the central counterparty for clearing transactions. In November, EEX Group and US-based Nasdaq Futures (NFX) announced that they had reached an agreement to sell NFX’s futures and options exchange business to EEX Group. EEX Group will acquire the core assets of NFX, including the portfolio of open interest in NFX contracts.

CEO: Peter Reitz

The transaction involves the transfer of existing open positions in US Power, US Natural Gas, Crude Oil, Ferrous Metals and Dry Bulk Freight futures and options contracts to EEX Group’s clearing houses Nodal Clear and ECC. i 81

> Stronger Together:

Investing in Sex and Gender Equality is Good for Humans (and for Business) By Shahnaz Radjy and Annalisa Gigante

Hollywood has made billions by bringing science fiction to the screen, dystopian narratives about elites living longer and having better access to healthcare than working class.

Aspirin has been shown to lower the risk of heart attacks – in men. Women’s response to antiplatelet therapy is different.

But we need not look to fiction for such narratives. For all its knowledge, technology, and resources, our world is rife with examples of social segregation.

In healthcare, women get the short end of the stick. As one patient (and journalist) writes, “[W] omen wait longer for pain medication than men, wait longer to be diagnosed with cancer, are more likely to have their physical symptoms ascribed to mental health issues, are more likely to have their heart disease misdiagnosed or to become disabled after a stroke, and are more likely to suffer illnesses ignored or denied by the medical profession.”

rom Elysium, starring Matt Damon and Jodie Foster, to In Time, starring Justin Timberlake and Olivia Wilde, such tales tend to centre around a hero/heroine fighting to bring justice and equality to fundamentally flawed societies.

One that may not seem obvious is the line drawn between genders, in particular when it comes to health. This has an impact on society as a whole, and reinforces systemic and societal inefficiencies, perpetuating inequality and generating avoidable costs. This autumn, a new preventative drug, Descovy, was approved by the American Food and Drug Administration (FDA) for HIV. It was approved for everyone except “individuals who have receptive vaginal sex – meaning cisgender women. The clinical trial leading to Descovy’s approval used only men and trans women. So the FDA stated that, given the lack of data, it was not possible to judge its safety or efficacy for women. Further studies were deemed necessary… For diseases which affect both sexes – and this is very much the case for HIV – there is no plausible rationale for excluding one sex from clinical trial design. Research guidelines from the FDA and the European Medicines Agency (EMA) discourage this practice. It goes against global efforts for universal healthcare access, and one might even say that it is against human rights. THE BIGGER PICTURE In the US alone, eight of 10 drugs withdrawn from the market posed a greater threat to women than to men. This wasted resources, time, funding, raw materials, and unusable end products, not to mention increased healthcare costs. For reasons ranging from tradition to scientific ease, biomedical research tends to focus on men. This must be carefully considered, because 82

This imbalance inherent to most healthcare systems goes against the United Nations’ Sustainable Development Goals numbers 3 (Good Health and Wellbeing) and 5 (Gender Equality). These are two of the 17 goals society needs to reach to achieve a better and more sustainable future. WBP co-founder and CEO: Antonella Chadha-Santuccione

diseases can affect men and women differently. As a result, a male-focused approach leads to less than optimal treatment, and increased overall healthcare costs – especially when the treatment does not work as hoped or, worse, leads to complications. In preclinical animal research, male mice are mainly used – initially because female hormonal cycles were thought to affect results, and then from force of habit. Researchers often fail to specify the sex of the animals used in research, making it impossible to know whether the results can be extrapolated to apply to male and female systems. At the next level of research, Phase I and Phase II clinical trials, women are still under-represented. By Phase III trials, there is no stratification of the patient population by sex or gender. But risk factors, symptoms, diseases progression, and treatment are different for men and women, with different responses to adverse events and to drugs. CFI.co | Capital Finance International

The good news? This isn’t just a problem; it is an opportunity. While gender equality in business is still a workin-progress, some key lessons can already be translated to healthcare from the sector. If women participated more equally in the workplace, it could drive $28tn in growth. Research from MIT and McKinsey shows that female corporate leaders stand out in their way of incorporating leadership and people skills with teamwork, and serve as role models for the change they seek. More broadly, gender-balanced and racially diverse teams perform more effectively – and are essential in today’s multicultural context. In spite of the corporate world still figuring out how to best integrate gender equality at the next level, and across the board, a few lessons from business can shape our discussion. 1. Principles and values matter, but money is what makes the world go around. We should frame the issue not just in terms of social justice but also cost-effectiveness.

Winter 2019 - 2020 Issue

2. It isn’t enough to acknowledge the problem; incentives must be implemented to nudge people and institutions to make the necessary changes. 3. We manage what we measure, so sex and gender differences must become part of the data points we collect, analyse, and improve upon. THE IMPACT OF TECHNOLOGY Sex (nature) and gender (nurture) are both factors that affect health. While gender refers to socially-constructed roles and identities, it is no less relevant than the biology behind sex. Women are more likely to take on caregiving roles and have less access to education. The latter is a factor in every aspect of health, including brain and mental health (and the only certain preventive factor for dementia later in life). What’s more, 40 percent of health-related issues stem from socio-economic factors which predominantly affect women, including lower education, lower income, and lower job status.

This is why in 2016, a group of scientists, artists, healthcare professionals, and technologists founded the Women’s Brain Project (WBP), a non-profit that pushes for differential research based on sex and gender, making precision and personalised medicine the norm. Precision medicine will lead to more efficient drug discovery and early diagnosis, saving healthcare systems a lot of money and providing better care. To come back to Descovy, the HIV-prevention drug: in the absence of data relative to the female population, the FDA did the right thing in granting approval only for men and trans women. However, this approach, if not properly regulated, could backfire. The risk is that by approving drugs only for one sex, the process will encourage discrimination, which would not guarantee a lifesaving drug to all the interested parties: humans.

This challenge of sex and gender bias is a red thread that threatens to colour everything we do. Novel technologies, including AI and big data initiatives, are prone to biases.

While Hollywood continues to imagine utopias and future technologies, we have an opportunity to be part of the movement that will take society to the next level in terms of health systems.

Facial recognition software has been found to harbour gender and skin-type biases, with accuracy at its highest for lighter skinned males, and at its lowest for darker skinned females.

WBP strives to bring together cross-sectoral experts to address these challenges in a thoughtful, provocative, hands-on way. By combining the power of business, technology, and science, sex and gender differentiation has the potential to sidestep fictional utopias and make things better within our lifetime.

How can we work together to leverage technology alongside sex and gender differences for improved access to health and better business outcomes? DIFFERENTIATED RESEARCH AND PRECISION MEDICINE Sex and gender differences remain mostly underrepresented in medical and clinical research. This leads to insufficient understanding of treatments for individual needs, and higher healthcare costs. In other words, addressing sex and gender differences is a multi-billion-dollar opportunity. Precision medicine, which ensures that the right drug is given to the right individual at the right time, is a step in the right direction.

In 2020, the organisation will focus on three core initiatives. As part of the Global Alliance on Women’s Brain Health, led by Meryl Comer, WBP has joined an international partnership for the launch of the #BeBrainPowerful campaign in Switzerland. It will also be partnering with Women’s Health Action and Mobilisation (WHAM), led by Carolee Lee. In September 2020, the WBP Forum will take place in Zurich. It brings together 300 participants to showcase the latest science in sex and gender research for brain and mental health. In 2019, the theme was Sex and Gender Differences in Mental and Brain Health: The Gateway to Precision Medicine. CFI.co | Capital Finance International

WBP will be fundraising as well as finding investors and partners to create a Precision Medicine Research Institute for sex and gender medicine in brain and mental health. If you’re still reading, start a conversation with us! We welcome diverse backgrounds, opinions, and skillsets. It’s not a coincidence that WBP co-founder and CEO, Antonella ChadhaSantuccione, was named Top 100 Women and woman of the year in Business in Switzerland. We will be acting on this unique opportunity, and hope you will join us in breaking the system so we can make it better. i ABOUT THE AUTHORS Shahnaz Radjy is a member of the Women’s Brain Project executive committee and holds an MBA in Healthcare Management from the EHESP as well as a Bachelor of Arts in Biology from the University of Pennsylvania. She worked for 10 years in chronic disease prevention and workplace health at the World Economic Forum in Geneva, and the Vitality Institute in New York. She is based in rural Portugal where she runs an ecotourism project while working as a freelance science communication consultant and writer. You can follow her on Twitter under @sradjy. Annalisa Gigante is an advisor to the Women’s Brain Project. She is a chair, board member and a CEO, with a background in technology and life sciences. Former CTO at LafargeHolcim, and executive committee member of Adecco Group, Gigante started her career at Bain & Company in Milan in the retail and consumer practice, and has a track record of award-winning innovation for 30 years. She studied Natural Sciences (Bio) at Cambridge University (Queens), has an MBA from SDA Bocconi, and further education at IMD. You can follow her on Twitter under @GiganteAnnalisa. 83

> SID Bank:

Engine of Slovene Economy Maintains Its Green Focus Slovene Export and Development Bank is a national promotional, development and export bank, as well as an export credit agency.

ccording to its mission and mandate, sustainability is one of SID bank’s main objectives. It acts with responsibility towards its stakeholders, as well the shareholder, society and environment. Environmental responsibility is a major challenge for modern society, and SID bank has influenced green and circular economy implementation since 2010 through its financial services.

SID Bank is owned by the Republic of Slovenia and provides long-term financial services for supplementing financial markets with the emphasis strengthening the Slovenian economy, creating jobs and ensuring sustainable development. With the balance sheet of €2.5bn, €420m capital and €12m profit in 2018, SID Bank’s main objective is to fill gaps and intervene in

CFI.co | Capital Finance International

the market by providing commercial banks and insurance companies with financial and insurance instruments such as long-term and other loan facilities such as mezzanine, various risk-sharing schemes and non-marketable insurance and equity financing. It also provides financing within the framework of the Investment Plan for Europe. Financing for developmental, environmental, infrastructural, RDI and other projects is made available to

Winter 2019 - 2020 Issue

President: Sibil Svilan

companies of all sizes. This comes either directly or through financial intermediaries (on-lending) with a special focus on SMEs, municipalities, research and educational institutions, and legal entities that qualify as eligible borrowers under several dedicated programmes. The new loan programmes financing in 2018 exceeded €400m for 2,200 companies, mainly SMEs. The provision of modern financial services and tailor-made solutions with favourable conditions is motivated by SID Bank’s moto, “Ideas beyond frontiers”. It relies on its funding instruments and conditions, close cooperation with other national and multilateral development financial institutions, ministries, state-owned funds and other stakeholders. Particular attention is paid to the proper qualitative risk assessment of all projects which ensures adequate funding conditions. This includes environmentally friendly support for society and production by means of Green Bond issuance in 2018, through which SID Bank intends to provide €75m for environmental protection, renewable energy sources, energy and material efficiency as well as environmentally friendly products and services in the next three years.

"As an initiator of the circular economy concept in Slovenia, the bank wants to see it implemented in practice. It formed its own methodology for evaluating the potential of companies for circular transformation." Financing for projects entailing the energyefficient reconstruction of public buildings and sustainable urban development projects contributes to energy efficiency across all sectors. Its support of the revitalisation of urban brownfields was enabled by ESIF funds, with SID Bank acting as the Fund-of-Funds manager. Appropriate financing and insurance services allow exporters risk mitigation and facilitate stable expansion in foreign markets. SID Bank’s ability to provide coverage for projects with mid- to long-term maturity — not covered by commercial banks and insurance CFI.co | Capital Finance International

companies — supports the internationalisation of Slovenian companies. As the national export credit agency acting on behalf of the Republic of Slovenia, SID Bank provides export credit and investment insurance, reducing the risks incurred by Slovenian companies operating in foreign markets. SID Bank also provides insurance to commercial banks and reinsurance to insurance companies. SID Bank Group has insured and financed international commercial transactions of Slovenian companies for €1bn and covered 20 percent of Slovenian export in more than 100 countries. CORPORATE SOCIAL RESPONSIBILITY As an initiator of the circular economy concept in Slovenia, the bank wants to see it implemented in practice. It formed its own methodology for evaluating the potential of companies for circular transformation. The “Five Balance Sheets” business assessment is a comprehensive framework for evaluating businesses by considering environmental and social effects. The assessment of companies is valued and placed in interest rate policy to enable favourable financing for circular economy projects. of These companies generally have sustainable long-term business models and enable swift achievement of environmental, social and economic goals. i 85

Drowning in Data? AI Lifeboat Could Come to Save Financial Services and Insurance Sectors By Shail Deep

A global study explores challenges thrown up by rampant data collection.

ompanies are amassing data to optimise performance, identify trends and meet consumer expectations – but supply is overwhelming the ability to deal with it.

Almost 75 percent of global financial services and insurance executives admit they are challenged by data’s fractured nature and sheer volume. And yet, an Aite Group study commissioned by TransUnion found that executives in financial services and insurance industries plan to continue securing data sources. The executives want to incorporate more AI and machine learning (ML) technology into their analytic platforms to help them make sense of the information overload. The study explored analytical processes, tools and data sources, as well as the operational effectiveness of analytics solutions used by the financial services and insurance industries. The quantitative online survey recorded the feedback of 682 marketing and risk executives at financial institutions in the UK, the US, Canada, Hong Kong and India. The proliferation of AI and ML is expected to continue over coming years, with 68 percent of UK executives – and three in four globally – considering integrating new analytic technology. With good reason: it can shorten the analytic lifecycle from months to just days. With the variety of data sources becoming increasingly diverse, TransUnion chief product

officer Shail Deep isn’t surprised. “It’s only by correctly analysing the data that we can draw meaningful insights,” he says. HELP WANTED The study found that inflexible legacy technology, talent shortages and regulatory barriers were hampering the effective use of analytics. Most financial institutions lack a single, cohesive analytics platform, says Tiffani Montez, senior analyst at the Aite Group. This leads to multiple approaches – by line of business, role and channel – across institutions. To address the issue, many financial institutions are centralising their data into a single platform. Enhancing analytic capabilities through AI/ ML technology is seen as a top priority, with differences across geographies. Some 14 percent of global executives are unable to implement AI/ ML into their analytical models. Slightly more UK executives than that average (18 percent) indicate similar limitations. Globally, 66 percent of respondents – and a slightly lower number of UK respondents (58 percent) – believe this technology to be a major competitive differentiator. The data scientist talent shortage is another pressing issue contributing to the global insights gap. Globally, 86 percent of respondents noted challenges with accessing the right talent. In the report, financial institutions reported that they were increasing their investments in talent

and analytics technology – but talso increasing their investments for more data. Financial institutions have placed an increasing amount of influence on the value of expanding data sources. New sources inclulde non-traditional, thirdparty and alternative data among the banking and insurance communities. Over the next two years, 89 percent of institutions globally – 78 percent in the UK – have plans to use alternative data. More than half of global respondents plan to increase spending on most types of data sources, with 65 percent aiming at data such as mobile information about web browsing and app use. In the UK, this percentage was significantly lower at 27 percent, but a third (34 percent) said the integration of new data sources would be “very important” to their business strategies. Only 17 percent of UK firms can integrate new data sources across all analytic solutions. In the UK, 65 percent of marketing executives and 67 percent of risk executives expect their overall budget for data analytics to increase yearover-year. This was lower than the global average of 78 percent and 70 percent. Other challenges cited include data cleansing and preparation. i Author: Shail Deep

Distilling Data in the UK's Financial Services and Insurance Industries. A global study of 682 executives in financial services and insurance companies Aite Group Study commissioned by TransUnion: Current State Assessment: Global Analytics Ecosystem (October 2019)

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

> It’s not Nuclear Physics:

Pension Fund Chief Champions Ethics and Balance Matthew Eyton-Jones is the CEO of a pension fund with a difference: it provides benefits to the staff and fellows of the European Organization for Nuclear Research (CERN) in Geneva.

hat’s right, the same organisation which led the search for (and found) the elusive Higgs Boson particle in the Swiss-based Large Hadron Collider.

Eyton-Jones is not a nuclear physicist, however. His expertise lies elsewhere. The CERN Pension Fund is a multi-asset investment portfolio with more than 7,500 members and beneficiaries, which makes pension payments in 48 countries. Eyton-Jones is a graduate of the Advanced Leadership Programme at Cambridge Judge Business School and the Investment Management Programme at London Business School. He is also a member of the Chartered Institute for Securities and Investment and the Chartered Insurance Institute. He has over 20 years’ experience in the pension fund, investment banking, and investment management sectors. His previous employers include Mercer Consulting, the Bank of America, Goldman Sachs, and the John Lewis Partnership. As well as being an experienced CEO, EytonJones is also an investor and entrepreneur. His interests include public equity, private equity, venture capital, and angel investing.

CEO: Matthew Eyton-Jones

He is currently an investor in CatchApp; the world’s fastest meeting scheduler. His entrepreneurial streak is evident in his work at the CERN Pension Fund, which recently invested in the renovation of a hotel that had been part of the fund’s property portfolio for some years.

By 2017, he was ranked number sixth in the Sovereign Wealth Fund Institute Public Investor 100 Rankings of the public investor executives. His career began in 1997, when he started work as a trainee on the underwriting floor at RoyalSunAlliance in Liverpool; at the time, he pulled in a salary of £7,500 a year.

When the previous tenant moved out, EytonJones saw an opportunity. He partnered with a specialist real estate company to transform and enhance the hotel. “This was not only an excellent value-added investment opportunity for CERN,” he says, “but also a fascinating project with satisfyingly tangible results.”

Eyton-Jones is a member of the World Economic Forum Expert Network, a Life Fellow of the Royal Society of Arts, a Fellow of the Royal Geographical Society, a Member of Chatham House, a Liveryman at the Worshipful Company of International Bankers, and a Freeman of the City of London.

Eyton-Jones joined CERN in 2015, becoming only the third CEO since the fund’s inception in 1955. He has responsibility for managing a CHF4.3bn (£3.36) portfolio invested in public equity, private equity, venture capital, fixed income, commercial real estate, hedge funds, timber, farmland, and money markets.

He believes in giving something back to society and fostering opportunities for others, and has also served on the Alumni Council at Cambridge Judge Business School, as a board member at Villiers Park Educational Trust, and as a member of the Integrity Committee at the Chartered Institute for Securities and Investment. He also CFI.co | Capital Finance International

spent several years serving in the Royal Navy Reserve and is a strong supporter of naval and maritime charities. Unsurprisingly, Eyton-Jones believes in the value of ethical business practices, underwritten by a focus on good governance. Under his stewardship, the CERN Pension Fund has earned best-in-class ratings from its international peers. Part of that success has been improving gender balance, with 33 percent of the board— including the chair — and 60 percent of the staff comprised of women. The chief investment officer and chief operating officer are also female. “Diversity and inclusion are crucial to good governance, along with ethical transparency and accountability,” Eyton-Jones says. The scientists at CERN tend to make the headlines, but behind the scenes, Eyton-Jones and his staff are working hard to ensure everyone can count on a secure financial future. i 87

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

> Fondo Pensione Nazionale:

ESG and Risk Minimisation are Top Priorities for this Progressive Fund

ondo Pensione Nazionale, founded in 1987, is a complementary pension fund for Italian co-operative and agricultural banks.

As a fondo preesistente, a type of fund found only in Italy, it is subject to regulation that prohibit free investment. Fondo Pensone Nazionale (FPN) has a diversified team that with discreet duties to monitor investment risks and to comply with the recent IORP 2 regulation â&#x20AC;&#x201D; something that will have a great impact on pension funds. The FPN financial team is divided in two branches, one controlling direct investments and the other mandates, and with one team member involved in financial reporting and compliance activity. FPN has created an innovative structure of risk management, independent of the financial department, that supervises all risks and complies with IORP 2. This structure is composed of a team of two, one of whom monitors financial risks, while the other focuses on operational risks. The general manager, Sergio Carfizzi, who is also the head of finance, oversees these (and other) activities. FPN is sensitive to ESG issues, aware that they are key factors in ensuring long-term competitiveness. Facing climate change and its consequences, as well as resource depletion, FPN believes public policies needs to be revised. The financial system has a key role to play here: redirecting private capital to more sustainable investments can be part of the solution to achieving a greener and more sustainable economy. FPN has decided to factor ESG considerations into decision-making in direct investment and external mandates. It is developing specific agreements with external managers to integrate these criteria in the investment process.

Direct and indirect investments are structured to avoid exposure to certain sectors or activities, excluding some companies based on criteria such as unsuitable or controversial businesses. Above all, capital is aligned with positive outcomes that enhance the investment process across all portfolios. This avoids the necessity to develop ESG versions of existing portfolios and leaves other products and processes unchanged. The company is developing an ESG score for all its assets that analyses each pillar of E, S and G to become a leader in the sector.

Some have already implemented in Climate Risk Policies, with exclusion criteria that covers companies from coal-power generation, the extraction sector for mining activities, and pipeline companies for tar-sand resources.

It achieved a positive overall net return of +0,15% (overall average weighted return of all investment lines of FPN) for 2018, a year that will be remembered as one of the most trying in the decade.

DIRECT INVESTMENTS FPN has recently invested in the green economy, including forest regeneration and photo-voltaic systems. Every new investment that is evaluated is ESG-orientated.

Financial markets and almost all traditional asset classes registered negative return in that period. FPN kept a lower level of risk than the benchmark for each Investment Line (-27 percent standard deviation for the Raccolta; CFI.co | Capital Finance International

-29 percent for the Crescita, and -34 percent for â&#x20AC;&#x153;Seminaâ&#x20AC;? Investment Lines). General manager Carfizzi has transformed the pension fund, leading it towards greater efficiency and nurturing innovation. He implemented the diversification of investment, with focus on ESG issues, with the intention to invest in the Real Economy. In addition to managing financial processes, he initiated a restyling of investment line design, introducing a lifecycle programme to help fund members make informed choices. He also developed some forms of additional benefit for pension members (Solidarity, RITA). Carfizzi believes that fund members should always take the highest priority, maximising their returns and minimising risk. He promotes caution and order, allowing members to follow the lifecycle logic with dynamic choices. All this is geared to increase collective welfare and adhere to the FPN mission of good Investment, and a greener, better life. i 89

> Ana Palacio:

Europe on a Geopolitical Fault Line

wo months ago, in his address to the United Nations General Assembly, UN Secretary-General António Guterres expressed his fear that a “Great Fracture” could split the international order into two “separate and competing worlds,” one dominated by the United States and the 90

other by China. His fear is not only justified; the fissure he dreads has already formed, and it is getting wider. After Deng Xiaoping launched his “reform and opening up” policy in 1978, the conventional wisdom in the West was that China’s integration CFI.co | Capital Finance International

into the global economy would naturally bring about domestic social and political change. The end of the Cold War – an apparent victory for the US-led liberal international order – reinforced this belief, and the West largely pursued a policy of engagement with China. After China became a member of the World Trade Organization in

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2001, this process accelerated, with Western companies and investment pouring into the country, and cheap manufactured products flowing out of it. As China’s role in global value chains grew, its problematic trade practices – from dumping excessively low-cost goods in Western markets to failing to protect intellectual-property rights – were increasingly distortionary. Yet few so much as batted an eye. No one, it seemed, wanted to jeopardise the profits brought by cheap Chinese manufacturing, or the promise of access to the massive Chinese market. In any case, the thinking went, the problems would resolve themselves, because economic engagement and growth would soon produce a flourishing Chinese middle class that would propel domestic liberalisation. This was, it is now clear, magical thinking. In fact, China has changed the international system much more than the system has changed China. Today, the Communist Party of China is more powerful than ever, bolstered by a far-reaching artificial intelligence-driven surveillance apparatus and the enduring dominance of state-owned enterprises. President Xi Jinping is set for a protracted – even lifelong – tenure. And, as US President Donald Trump has learned during his ill-fated trade war, wringing concessions out of China is more difficult than ever. Meanwhile, the rules-based international order limps along, without vitality or purpose. Emerging and developing economies are frustrated by the lack of effort to bring institutional arrangements in line with new economic realities. The advanced economies, for their part, are grappling with a backlash against globalisation that has not only weakened their support for trade liberalisation and international cooperation, but also shaken their democracies. The US has gradually withdrawn from global leadership. As a result, international relations have become largely transactional, with ad hoc deals replacing holistic cooperative solutions. Institutions and agreements are becoming shallower and more informal. Values, rules, and norms are increasingly regarded as quaint and impractical.

"This has produced a golden opportunity for China to begin constructing a parallel system, centered on itself."

This has produced a golden opportunity for China to begin constructing a parallel system, centered on itself. To that end, it has created institutions like the Asian Infrastructure Investment Bank and the New Development Bank, both of which mimic existing international structures. And it has pursued the sprawling Belt and Road Initiative – an CFI.co | Capital Finance International

obvious attempt to position itself as a new Middle Kingdom. Yet many, including in Europe, are not particularly concerned about the emergence of this parallel system. So long as it brings ready access to project finance, it’s fine with them. As Europe becomes increasingly alienated from the US, many Europeans also believe that they can improve their strategic position by situating themselves on the frontier between the two emerging worlds. That strategy may offer some advantages, including opportunities for arbitrage. But as anyone who lives on a fault line knows, there are also formidable risks: friction between the two sides is bound to shake the foundations of whatever is positioned atop the boundary. This is especially true for the European Union, which is built on a commitment to cooperation, shared values, and the rule of law. If the EU aids in building a parallel structure that contradicts its core values, particularly the centrality of individual rights, it risks severing its meta-political moorings – the beliefs to which its worldview is tethered. A Europe adrift will eventually sink. The solution is not for Europe simply to take America’s “side,” and turn its back on China. (That, too, would run counter to European values.) Rather, the EU must heed Guterres’s call to “do everything possible to maintain a universal system” in which all actors, including China and the US, follow the same rules. In this sense, the recent joint statement by Xi and French President Emmanuel Macron reaffirming their strong support for the Paris climate agreement is promising, as is Europe’s growing recognition that China is not only a partner or economic competitor, but also a “systemic rival.” But this is only a start. Europe needs a robust China strategy that recognises the profound, often subtle challenges that the country’s rise poses, mitigates the associated risks, and seizes relevant opportunities. Achieving this will require perspective and discipline, neither of which comes naturally to the EU. But there is no other choice. As soon as Europe stops defending the rule of law and democratic values, its identity – and its future – will begin to crumble. i ABOUT THE AUTHOR Ana Palacio is former Minister of Foreign Affairs of Spain and former Senior Vice President and General Counsel of the World Bank Group. She is a visiting lecturer at Georgetown University. 91

ANNOUNCING

AWARDS 2019 WINTER HIGHLIGHTS Once again CFI.co brings you reports of individuals and organisations that our readers and the judging panel consider worthy of special recognition. We hope you find our short profiles interesting and informative. All the winners announced below were nominated by CFI.co audiences and

then shortlisted for further consideration by the panel. Our research team gathered additional information to help reach a final decision. In many cases, senior members of nominee management teams provided the judges with a personal view of what sets their companies and institutions apart from the competition.

CFI.co | Capital Finance International

As world economies converge we are coming across many inspirational individuals and organisations from developing as well as developed markets - and everyone can learn something from them. If you have been particularly impressed by an individual or organisationâ&#x20AC;&#x2122;s performance please visit our award pages at www.cfi.co and nominate.

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> COMMERZBANK: BEST UNIVERSAL BANKING SERVICES GERMANY 2019

As Commerzbank approaches its 150th anniversary, it can reflect on the innovation and versatility which has enabled it to thrive for a century and a half. The bank transacts 30 percent of Germany’s foreign trade and is the market leader in corporate banking. Its 800 branches and 36,000 staff serve over 11,000,000 private and small business customers. In a recent survey, Commerzbank achieved an 82 percent approval rate from heads of finance making it the most highly rated German bank among corporate clients. Since 2014 it has pursued a consistent retail banking strategy

in private and small business customers and the implementation of the Commerzbank 4.0 strategy, which has led to 60 percent of all core processes being available digitally, resulted in a net profit of EUR 865m in 2018. Sales processes and customer advisory are being revolutionised through digital data management, but the bank is still maintaining its human touch in the lending, private pension plans, and wealth management sectors – where advisors will always be on hand to deliver a personal service. A three-pronged strategy underlies the bank’s ability to provide a world-

class service: its wide product range in both the retail and corporate banking spheres, its digital transformation helping entrepreneurs to better manage their business, and its personal banking with over 300 branches serving small business customers and over 100 locations offering wealth management expertise. This commitment to offering a wider variety of services than its competitors and innovate constantly mean that the CFI.co judging panel is delighted to present Commerzbank AG with the 2019 award for Best Universal Banking Services Germany.

> THE WASHINGTON POST: MOST INNOVATIVE NEWS OUTLET GLOBAL 2019 Few media organisations can boast the proud and illustrious history of the Washington Post. Since its foundation in 1877, the newspaper has won 47 Pulitzer prizes, including six awarded in a single calendar year (2008). These are tough times for the printed press, but the Post has been successful where many of its competitors have failed: namely in its ability to adapt to technical innovations, to experiment with new business models and to take risks in the new media environment. Always maintaining the highest tenets of traditional journalism, the publication has managed a smooth transition

to a technology-first media company able to compete on equal terms with the competition. Since being acquired by Jeff Bezos in 2013, the Washington Post has vigorously adapted to the new media age: by 2016 it had signed-up over a million digital-only subscribers, a 300 percent increase year-on- year. Moreover, the company has moved into the software space, its proprietary code powering its cutting-edge application. Its in-house publishing platform, Arc, has proved so attractive that both the Los Angeles Times and the New Zealand Herald, amongst others, have invested in its solutions;

sites running on Arc have reached 200 million readers worldwide. Indeed, Arc Publishing, far from distracting from the print side of the business, has provided a financial boost that has arrested the decline in readership of the printed product. The company sees the platform as capable of becoming a $100 million business. The Washington Post has innovated in ways that most media companies have not been able to do and for this reason CFI.co’s judging panel considers it appropriate to confer on the company the 2019 award for Most Innovative News Outlet Global.

> NCB CAPITAL: BEST GLOBAL ASSET MANAGEMENT TEAM GCC 2019

As one of the largest banks in the GCC, Saudi Arabia’s National Commercial Bank (NCB) has been at the forefront of the region’s banking and finance activities for more than 60 years. Also known as Al Ahli Bank, NCB was the kingdom’s first official and licensed banking institution and the first to launch a mutual fund product, offer credit cards, and introduce ATMs. Its investment arm, NCB Capital, has also notched many landmark milestones since its launch in 2007, and now claims over a million clients and US$42.4b in assets under management (as of 2Q19), making it the largest asset manager in the kingdom with a dominant 32.8% market share. The company’s AUMs grew 9.3% over the last 12 months (ending 2Q19), despite the disadvantage of their massive base and turbulent market conditions. This is a vote of confidence in the asset managers’ team by the existing and newly on boarded clients. NCB

Capital (NCBC) team comprises of seasoned professionals who have earned their spurs over lengthy leadership careers in private enterprise and financial management and have deep collective regional expertise. NCBC asset managers chart a confident course for clients’ investment objectives, serving as the steady hand at the helm or providing expert navigation advice. The firm caters to both retail and institutional investors with a full suite of conventional and Shariah-compliant finance solutions, including fiduciary, investment advisory, portfolio management, brokerage, and market research services. Public equities are the flagship component of NCBC’s innovative product line-up, and NCBC offers funds for every interest and investor profile. Despite the volatile market, NCBC equities grew nearly 30 percent year-on-year in 2018. The diversity and range of NCBC asset management offerings CFI.co | Capital Finance International

is remarkable. To ensure that the complete spectrum of investor profiles is served and the cutting edge of market products and innovations are made available to its clientele, the company regularly expands and adjusts its product offerings. NCBC added one Private Fund to its offerings so far during 2019, taking total number of Public and Private Funds to 86. This represents twice the number of funds offered by the closest competitor in this metric. The NCBC team draws upon the vast resources at its disposal — including a well-defined business vision backed by a high-tech infrastructure, sophisticated control environments, and a country-wide presence — to provide clients with investment solutions catered to their needs. For the second year running, the CFI.co judging panel presents NCB Capital with the Best Global Asset Management Team (GCC) award. 93

> WALMART: MOST INNOVATIVE RETAILER UNITED STATES 2019

Very few sectors are as competitive as retail, and the fact that Walmart has gone from a single discount store to the world’s largest retailer in 50 years speaks volumes. The company’s ability to give its customers what they want by giving more for less is undeniable. Of course, as all business leaders know, getting to the top is one thing, staying there another. That Walmart has managed to do so is very much down to innovation. As the world’s largest private employer, it recognises that customer needs are moving along, and

retail work is changing to meet those needs. In 2019, the firm announced a new way to make online grocery shopping even easier – Walmart Voice Order – a service that gives customers the option to add items to their Walmart Online Grocery Cart by simply saying the words. Through a partnership with Apple, that service is now available on Siri. Walmart believes in empowering staff to reach their full potential and has opened 200 Walmart Academies since 2016. These academies provide a clear path to advancement;

more than 52,000 associates have graduated in the past three years. New working practices that maximise the use of technology have streamlined many tasks and allow managers to take on a more solutions-based role, helping their teams meet their goals. Last year, it launched Walmart2World, a global money transfer service that has driven down prices. The CFI.co judging panel wishes to reward its continued dedication to innovation and improvement by naming Walmart the Most Innovative Retailer United States (2019).

> NORDEA ASSET MANAGEMENT AB: BEST ESG INVESTMENT PROCESS EUROPE 2019

When it comes to sustainability Nordea Asset Management leads by example, the firm serves as the investment arm of the Nordea Group, managing assets of more than €200bn. As the largest financial service group in the Nordic region and one of the biggest banks in Europe, Nordea helps align global finance with sustainable development. Nordea Group is one of the 30 founding signatories of the Principles for Responsible Banking which has recently launched a Collective Commitment to Climate Action that has been adopted by 130 banks.

Delivering returns with responsibility has for a long time been a vital part of what they do and part of our mission as a leading European asset manager. The continuous development of a rigorous environmental, social and governance (ESG) analysis that guides the investments is crucial as well as active ownership activities that support a sustainable future. Nordea Asset Management support the Task force on ClimateRelated Financial Disclosures recommendation and view Climate change is one of the single largest threats to the economy. Nordea Asset

management is working on an ongoing basis to assess how companies manage climate-related risks and opportunities. Nordea’s exemplary track record has resulted in regular repeat award wins. The judging panel commends the firm’s proactive approach to responsible investing which has pushed competitors to step up their ESG game — or risk getting left behind. The judges recognise Nordea Asset Management as a pioneer of sustainable finance and the worthy winner of the 2019 Best ESG Investment Process (Europe) award.

> ABA – INVEST IN AUSTRIA: BEST DESTINATION FOR INVESTMENT IN INNOVATION EUROPE 2019

Austria boasts a business-friendly environment, attractive tax benefits, modern infrastructure, skilled workforce, and occupies an important strategic location. ABA – Invest in Austria promotes the country as an ideal destination for new business ventures. ABA – Invest in Austria is the national investment promotion company and as part of the national Economic Development Agency Austrian Business Agency (ABA), the first point of contact for international investors looking to enter the market. ABA – Invest in Austria employs a team of 30 professionals (fluent in 12 languages) whose extensive regional and sectorial expertise 94

provides support and consulting services tailored to individual interests — completely free of charge. Founded in 1982, the company is owned and operated by the Republic of Austria and overseen by the Federal Ministry for Digital and Economic Affairs. Since its launch, ABA has created over 60,500 jobs and attracted some $10.9b in investments. Last year, the company assisted 355 international companies to set-up business operations in Austria, resulting in the creation of nearly 3,000 jobs and investments totalling $809m. ABA – Invest in Austria explains the advantages of doing business in Austria, starting with a CFI.co | Capital Finance International

favourable corporate tax scheme which allows for a 14 percent rebate on R&D spending. ABA – Invest in Austria connects Austria-based enterprises with public and private funding to fuel innovation, particularly in the sciences and technology. ABA appeared on the radar of the CFI.co judging panel last year through its efforts in establishing Austria as a tech start-up hub. As ABA – Invest in Austria continues to hit — and exceed — its 2019 goals, the judges expect another record year. Congratulations to ABA – Invest in Austria, winner of the 2019 award for Best Destination for Investment in Innovation (Europe).

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> FONDEX: BEST TECHNOLOGY CORPORATE LEADERSHIP SOUTHERN EUROPE 2019 Brokers are defined by their trading platform, and Cyprus-based Fondex boasts a powerhouse in cTrader. Fast execution and transparent reporting have won the brokerage a loyal following around the globe. Fondex provides reams of reports detailing information on trading execution times and life cycles, and those reports prove that it’s one of the most cost-effective trading platforms in the world. The pioneering platform offers clients the opportunity to trade over 1,000 instruments across forex, shares, indices, cryptocurrencies, energies, metals, and exchange-traded funds (ETFs). Clients can trade manually, use copy-tested strategies, or deploy bots to trade on their behalf. Manual trading is recommended for traders who already have a good grip on the basics, while novice traders are encouraged to copy

strategies for the desired performance, risk profile, and drawdown. Copied strategies can also be combined to limit risk even further. Trading bots can execute automated operations according to carefully scripted algorithms that act on hard data rather than human emotion. Regardless of the trading method preferred, Fondex encourages informed decisions. Fondex offers some of the lowest commission rates and tightest spreads of the market, enabling customers to reduce costs and maximise account performance. The company registered on the CFI.co radar as Fondex CEO Alex Katsaros touted its benefits via seminars and conferences around the world. The judges are delighted to declare Fondex winner of the 2019 award for Best Technology Corporate Leadership (Southern Europe).

> FONDO PENSIONE NAZIONALE: BEST PENSION FUND GOVERNANCE ITALY 2019 Fondo Pensione Nazionale safeguards the pensions of 31,000 families across Italy, and the team takes to heart its responsibility to deliver healthy yields. The fund has undergone a long period of transformation to hone risk management and foster financial assurance with sustainability concerns continuing to shape its priorities. The fund understands the power of workforce diversity and reports equal representation of men and women team members. Fondo Pensione Nazionale earmarks substantial investments for environmental, social, and governance (ESG) advancement, manages $2b in assets and aims for ESG mastery. Green social sustainability bonds have

caught the attention of the firm as an ideal vehicle for the symbiotic success of people, planet, and profits. The fund operates on the fundamental principles of individual capitalisation and defined contributions. Members may pull early advances from their pension plans for urgent health expenses, first-home purchases, or family emergencies. Upon request at retirement, members are paid pension benefits in the form of capital, financial income, or actuarial income. Fondo Pensione Nazionale represents an integral pillar of the Italian pension system, and the CFI.co judging panel is pleased to recognise the fund with the 2019 award for Best Pension Fund Governance (Italy).

> INSURANCE CORPORATION OF AFGHANISTAN (ICA): BEST INSURANCE COMPANY AFGHANISTAN 2019 At a time when Afghanistan was an active war zone — and most in need of safeguards against the unthinkable — Local businessmen educated in the UK established the country’s first private insurance company. Insurance Corporation of Afghanistan (ICA) was founded in 2007 and has been instrumental in the growth of the nation’s insurance market despite all the political and economic challenges. The current company’s impressive portfolio of insurance protection plans features the usual coverage for health and personal accidents as well as some innovative solutions for niche needs, including business interruption, banking, transport and cargo, construction, medical malpractice, and general liabilities. New Government initiatives requiring compulsory fire insurance for commercial properties is expected to give a boost in new premium income for the Company which shall reflect improvement of construction standards as required by ICA underwriting experts in turn benefiting the country as a whole. ICA develops insurance solutions that are tailored to the Afghan market needs that is always supported by top ‘’A’’ rated reinsurance markets. One of its flagship products is it’s unique group personal accidents & terrorism insurance that is catered for market

needs , while its refined new development — healthcare plus — is finding favour across a broad market base as ICA introduced Assist America emergency Medical EVAC services, the 1st of its kind in the local market offering additional peace of mind to both humanitarian as well as to major organisations. The company has received praise for its leadership role in the Afghan insurance market through deploying unique services combined with the unmatched ability to settle insurance claims on time, and that sentiment was backed by an investment of $5m from the private equity fund InFrontier in 2018 who aims to expand ICA across central Asia. ICA credits this vote of confidence to its dynamic and dedicated team of professionals who seek out the highest levels of customer satisfaction in addition to achieving sound profitable growth. Hence, The CFI.co judging panel believes that ICA has set a high bar for itself — and the competition — to follow. Never content to rest on its laurels, the company continues to fuel product development to best serve the nation’s needs. The judges unanimously declare Insurance Corporation of Afghanistan as 2019 winner of the Best Insurance Company (Afghanistan) award. CFI.co | Capital Finance International

Insurance Corporation of Afghanistan

> SFO GROUP: BEST REAL ESTATE INVESTMENT TEAM MIDDLE EAST 2019

SFO Group (“SFO”) is a leading multi-family office and an active global real estate investor with a disciplined investment strategy. The firm offers asset management services to a number of families, and views real estate as the preferred asset class which, when added to a traditional portfolio, lowers its overall volatility, allowing for capital appreciation during bull markets and the downside protection of a stable source of income in bear markets. Real estate investments therefore constitute a defensive alternative, hedging against inflation while providing geographical diversification. SFO

deploys a team of 20-plus professionals, mostly from its base in Beirut but also via its presence in London, Paris and Miami. The firm has assembled a highly experienced international team that is well equipped in driving its agenda forward and growing its global portfolio of real assets. The team brings on board diverse and complementary experience in PE, advisory and investment banking, with previous tenures of its members at leading global financial institutions and management consulting firms. This results in a balanced mix of youth and experience that makes SFO a proven

dynamic and agile player. The company track record shows that agility trumps size, with a portfolio in excess of $1bn, adding 3-5 new acquisitions each year. SFO is a member of Saradar Capital Holding, a third generation diversified family conglomerate which has been at the centre of the Lebanese financial sector for over 70 years. The CFI.co judging panel is pleased to recognize a company with a history of success and a promising future. Congratulations to SFO, winner of the 2019 award Best Real Estate Investment Team (Middle East).

> KOMMUNALKREDIT AUSTRIA AG: BEST ESG INFRASTRUCTURE FINANCE EUROPE 2019

The focus of Kommunalkredit Austria’s business model is reflected in its mission statement, which promises sustainable success for projects in the areas of energy, environment, social infrastructure, communications technology, and transport. Founded in 1958 and privatised in 2015, the specialist bank has modernised its infrastructure policy through a process of continuous innovation and evolution. Kommunalkredit connects project developers and infrastructure operators with institutional investors seeking long-term asset classes with reliable cash flows. The bank

pursues a three-pronged approach to address social, environmental, and economic issues. It evaluates those same criteria to determine the sustainability impact of financed projects during each credit application process. It keeps a pulse on social concerns by attending town hall meetings, sponsoring events, and maintaining open dialogue through a network of channels. It has developed an environmental management system that guides everything from waste disposal to business travel. Over 70 percent of Kommunalkredit energy consumption is now

fuelled by renewable resources. Through its subsidiary Kommunalkredit Public Consulting (KPC), it provides advisory and management services for every stage of an infrastructure project. KPC also offers the Climate Austria product, which has offset about 240,000 tons of CO2 over the past 10 years. The bank demonstrates good corporate citizenship and advances climate change action. The CFI.co judging panel confirms Kommunalkredit Austria AG as the 2019 Best ESG Infrastructure Finance (Europe) award winner.

> FIRST ALLY CAPITAL: MOST INNOVATIVE FINANCIAL SOLUTIONS TEAM NIGERIA 2019

First Ally Capital has a sharp eye for identifying, and creating, opportunities to foster economic growth across Nigeria. It was founded in 2014 as a fully licensed Nigerian financial advisory firm and issuing house to serve the country’s growing finance needs. First Ally Capital has made progress towards sustainable growth goals by focusing on value-creation and customer service. The firm ensures that its team is armed with the necessary resources and tools to provide clients with effective 96

financial solutions. Team members have proven expertise in mergers and acquisitions, raising equity capital, bond issuance, and financial advisory services. Technology plays an integral role in the drive for continuous improvement, and fintech industry advances are used to benefit all stakeholders. In the digital world, knowledge is power, and First Ally Capital deploys seasoned analysts, economists and strategists to manage its research database. The firm keeps a watchful eye on market trends and CFI.co | Capital Finance International

provides clients with macroeconomic forecasts that are timely, well-researched, and relevant. Diversification strategies led First Ally Capital to claim lateral market shares through its three subsidiaries: an asset management firm, a microfinance bank, and a foreign exchange service. The CFI.co judging panel is impressed by First Ally Capital’s determination and drive, and declares the firm the 2019 winner of the award for Most Innovative Financial Solutions Team (Nigeria).

Winter 2019 - 2020 Issue

> COMMONWEALTH BANK OF AUSTRALIA: BEST PERSONAL BANKING SERVICES AUSTRALIA 2019 Personal banking has always been of paramount importance to the Commonwealth Bank of Australia (CommBank). The bank provides a comprehensive range of services and products that ensure the highest level of personal care and attention. Its savings accounts cover the various expectations of account holders in terms of flexibility, accessibility, competitive interest rates and rewards. The website explains clearly the benefits of each in terms of transactions and savings options, helping customers make the right choice. Its digital offering is impressive; the CommBank awardwinning app is extremely user-friendly and allows individuals to select the features shown on the screen, set saving goals, and track spending. The app sends an alert if customers pay a utility bill twice and issues a warning as the grace period on a

subscription service draws to a close. The bank also has an account for the under 14s and a corresponding Youth App which encourages younger savers to learn how to manage their money in a fun and easy way. The bank offers solutions for teenagers, students and young professionals and is open and receptive to people who have relocated to Australia. CommBank’s credit card awards programme is the country’s largest and can be redeemed with over 150 online bonus partners that include top retailers, hotels and travel agents. Considering the high level of customer care and first-rate loan and insurance solutions provided, the CFI.co judging panel names Commonwealth Bank of Australia as recipient of the 2019 award for Best Personal Banking Services Australia.

> REITAN CONVENIENCE AS: BEST ESG CONVENIENCE RETAILER NORDICS & BALTICS 2019 "People rarely succeed when they do something they don't enjoy," said Odd Reitan, who founded the family business in 1948. His advice - "Do what you love, and with zealous discipline" - is reflected throughout today' s group structure. The Reitan empire comprises five business areas and employs more than 38,000 in the Nordic and the Baltic region. Reitan team members ascribe to a positive and proactive mindset and demonstrate personal responsibility towards environmental, social, and governance (ESG) progress. Reitan Convenience has a network of 2,200 stores in seven countries, providing customers with the products and services they want, when and where they want them. The Reitan group turns an innovative eye towards sustainability and corporate social responsibility (CSR), and Reitan Convenience has major milestones to report

in terms of people, product, and planet. The most important person is the company is the customer and staff a close second. The value system that binds and guides has contributed to the company's status as a top employer, ranked second in Norway and tenth in Europe (Great place to work). Reitan Convenience also offers relief to refugees with work opportunities and language courses. Reitan Convenience is moving away from plastics to product packaging that is bio-degradable and recyclable. Vegan and vegetarian products give the line-up a healthy update. Planet-prioritising upgrades throughout Reitan Convenience facilities have reduced energy consumption. The CFl.co judging panel has no hesitation in presenting Reitan Convenience AS with the 2019 Best ESG Convenience Retailer (Nordics & Baltics) award.

> AL HILAL LIFE: BEST LIFE INSURANCE PROVIDER MIDDLE EAST 2019 Throughout Bahrain and Kuwait, there are few companies that stand as tall as Al Hilal Life as a provider of innovative insurance solutions. Over just a few short years, the company has graduated from promising start-up to serious market contender. Al Hilal Life offers a full suite of insurance solutions to corporate clients, including employee group plans for life and health insurance. Al Hilal Life recommends a Key Man insurance plan to identify those most critical to the business and quantify the cost to replace them. For banks and financial institutions providing personal loans, credit cards, and mortgage plans, Al Hilal Life offers a Credit Life plan that covers outstanding balances in the event of a borrower’s death / disability. Retail clients come to Al Hilal Takaful (a wholly owned subsidiary of Al

Hila Life) for a range of Sharia’a compliant financial solutions, including products such as Family Takaful Savings and Pure Protection Plans. As a subsidiary of Ahli United Bank, Bahrain’s leading bank, Al Hilal Life has deeply entrenched roots in the country and a rapidly expanding presence in Kuwait. Over the past three years, the company has hit every growth target set, reporting an increase in client numbers (from 7,300 to 31,000+) and in corporate premiums (from $746,000 to over $7m). With year-on-year profit growth reaching nearly 40 percent, the CFI.co judging panel believes that Al Hilal Life will be providing security and hope to families and businesses for years to come. The judges name Al Hilal Life as repeat winner of the Best Life Insurance Provider (Middle East 2019). CFI.co | Capital Finance International

> BARCLAYS BANK OF BOTSWANA LIMITED: BEST INCLUSIVE FINANCE BANK BOTSWANA 2019

The Barclays name is synonymous with financial integrity, and in Botswana the bank exhibits a customer-centric focus that has proven profitable and inclusive. Management at Barclays Bank of Botswana believes that a superior digital platform will pave the way to exceptional — and more inclusive — customer service. Of Barclays’ 33 Botswana branches, eight are remote rural locations that provide the only financial services for miles. Investments in the bank’s digital platform, including 115 smart ATMs with touch screens and increased functionalities, have

helped convince many customers to migrate to the digital future of banking. Clients can enjoy the convenience of Internet banking for 24/7 account access and download the mobile app. The app allows customers to buy mobile airtime, pay bills, transfer money locally and internationally, or send money using only a mobile number. Barclays Bank of Botswana offers financial products designed to help clients make the most of their resources, starting with bundled current and savings accounts and tiering up to Premier and Prestige accounts for

the more affluent. It also offers lines of credit and insurance solutions. Business clients come to Barclays Botswana for its bold and bespoke corporate services. It is the country’s dominant bank in corporate investment and takes the time to fully understand the operations and objectives of each client. For its efforts to increase financial literacy and empowerment, the CFI.co judging panel declares Barclays Bank of Botswana Limited as the 2019 winner of the Best Inclusive Finance Bank (Botswana) award.

As a fully government-owned investment and development financial institution, SID Bank takes a long-term approach to boosting the economic potential and competitiveness of Slovenia. The bank promotes sustainable development, providing long-term financial services to supplement financial markets and create new jobs. SID Bank was founded in 1992 to provide financing and insurance products for Slovene exporters and has grown to become a key facilitator — and financer — of international business cooperation. The bank’s organisational structure allowed it to react positively during

the financial crisis, while maintaining a steady course of compliance and sustainability. SID Bank covered international markets, issued bonds, and provided finance during a time when other banks and insurers were struggling to honour their commitments. The bank supports long-term projects that align with sustainable development principles for finance, people, and the environment. Dynamic and well-capitalised, SID Bank has expanded its international presence with a portfolio of customer-centric, value-added services. Flexibility is an essential part of long-term financial engineering, and

SID Bank reacts to changing climates through an analytical lens of corporate governance. The bank champions the export ambitions of Slovenia’s small and medium-sized enterprises (SMEs) and will support their transformation into the multinationals of the future. SID Bank manages European cohesion funds allocated to Slovenia through a fund that advances research and innovation, energy efficiency and urban development. The CFI.co judging panel presents SID Bank with the 2019 award for Best Regional Development Bank (Southeast Europe).

> SID BANK: BEST REGIONAL DEVELOPMENT BANK SOUTHEAST EUROPE 2019

> VARUN BEVERAGES LTD: BEST FMCG CORPORATE GOVERNANCE INDIA 2019

VARUN BEVERAGES

As a licensed affiliate of PepsiCo, Varun Beverages is the second largest franchisee in the world outside of the United States. Varun Beverages produces and distributes carbonated and noncarbonated beverages to be sold under the PepsiCo trademark in 6 countries in South Asia and Africa (India (except Andhra Pradesh, J&K and Ladakh), Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe). Varun operates 32 manufacturing plants across India as well as two in Nepal and four more in Sri Lanka, Morocco, Zambia, and Zimbabwe. Varun’s operations are managed with independence 98

and professionalism to deliver a product portfolio that includes some of PepsiCo’s most iconic brands. For companies in the fastmoving consumer goods (FMCG) industry, good governance and compliance are integral aspects of daily business. Varun Beverages ensures that lines of communication remain open and everyone works according to the same objectives with monthly “checklist” and quarterly board meetings. Varun’s executive board advocates for accountability, responsibility, and transparency throughout its operations. Half of the 10-member board are independent directors, and this CFI.co | Capital Finance International

helps balance the management structure. Compliance is key at Varun Beverages, and it publishes periodic reports demonstrating a long track record of good corporate citizenship. Varun’s thought leadership stays ahead of time and the company has effectively addressed environmental concerns by partnering with government registered bodies across India to manage post-consumption packaging waste and optimise recycling processes. The CFI.co judges are pleased to present Varun Beverages with the 2019 Best FMCG Corporate Governance (India) award.

Winter 2019 - 2020 Issue

> MAX BURGER: BEST SUSTAINABLE RESTAURANT CHAIN EUROPE 2019 Max Burger was founded over 50 years ago in the far northern Swedish province of Lapland, and has made outstanding progress in that half century, today boasting 120 restaurants and over 5 000 employees worldwide with a turnover of 220 million euros. That makes it the most profitable restaurant chain in Sweden, outperforming other well- known international hamburger chains . The company has achieved that while at the same time remaining a family business and maintaining the high standards it set at its inception. Sustainability has always been a huge part of the company’s ethos and it has continued to up the ante environmentally without ever compromising on taste and always using the best local ingredients. For several years Max has engaged experts to conduct an inventory of the company and the food’s total climate impact, from farm to plate, and has planted more than 700,000 trees in Africa to

offset its carbon footprint. This transparency has empowered its customers to better understand the climate impact of the food they eat. Since June 2018, it has offset 110% of its emissions, a figure audited by EY, which make everything on its menu climate positive. 2019 has seen the company set the bar even higher: in May the company launched Delifresh Plant Beef, a self-developed burger that looks and tastes like meat, but is made from plantbased protein; a big step forward in Max’s work to reduce its climate impact – without backing down on taste and quality. It is both this commitment to flavour and first-class service, equally evident in its approach to franchises, that really makes eating at Max Burger a special experience and has convinced the CFI. co judging panel that Max Burger is the worthy winners of the Best Sustainable Restaurant Chain – Europe for the second year in a row.

> CRC CREDIT BUREAU LTD: BEST CREDIT BUREAU NIGERIA 2020 Nigeria’s CRC Credit Bureau was established by 10 regional financial institutions and Dun & Bradstreet, a world player with over 170 years of credit bureau experience. CRC is the largest credit reporting agency in Nigeria, responsible for over 95 percent of the nation’s recorded credit data from commercial banks, non-bank institutions, utility companies, and retailers. This impressive market share is the result of a well-designed organisational structure, fine-tuned processes, and highly principled governance. CRC creates a database of risk profiles deploying diligent research and data mining. Credit providers and borrowers alike rely on CRC Credit Bureau to facilitate informed lending and borrowing decisions with fast, hard facts. Creditors can access the CRC database to check a prospective borrower’s creditworthiness or

tailor new credit products using its techdriven development tools. Catch-22 that it is, accessing a credit line requires a good credit history, whether private person or corporate entity, and CRC foresees fintech partnerships filling the gap in financial inclusion. In partnership with the Fair Isaac Corporation (FICO), a worldwide leader of credit analytics, CRC has developed a methodology to standardise credit scoring across the Nigerian market. Its latest partnership with Nova enables Nigerians who emigrate to the US to take their good credit history with them. The CFI.co judging panel agrees that sustainable retail lending is fuelled by digitalisation and data-driven decisions and confirms CRC Credit Bureau as the obvious choice for the 2020 Best Credit Bureau (Nigeria) award.

> CONCORD INTERNATIONAL INVESTMENTS GROUP: BEST ASSET MANAGER EGYPT 2019 Over the past three years, Egypt has implemented the reforms and austerity measures required to hasten its economic recovery and establish the country as a preferred destination for foreign direct investment. The country has benefited from an Extended Fund Facility arrangement from the International Monetary Fund (IMF) which allocated $12b to support Egypt’s macroeconomic stabilisation and strengthen GDP growth. The final disbursement of the loan was released in July and the IMF arrangement ends in November, but the stage has already been set for success. Officials are confident the policies put in place will continue creating an attractive space for foreign investors. As the first foreign fund manager to be fully licensed in Egypt, the Concord International Investments Group extends a warm invitation to investors hoping to realise attractive returns.

The SEC-registered firm is based in New York City with offices in Cairo and Tokyo, effectively managing Egyptian, Turkish, and US equity and fixed-income securities directly or through the portfolios and funds of its affiliates. The CFI. co judging panel is well-versed in the merits of Concord’s asset management prowess as the firm has been recognised in previous award programmes. With national GDP growth topping 5 percent, unemployment hitting a 20-year record low, and Egyptian bonds outperforming other emerging markets with the highest returns of the year (over 25 percent), Concord is perfectly positioned to capitalise on that momentum. The judging panel is happy to reaffirm its initial — and repeat — decision: Concord International Investments Group takes the 2019 award for Best Asset Manager (Egypt). CFI.co | Capital Finance International

> AMC NATURAL DRINKS : BEST CORPORATE SUSTAINABILITY STRATEGY SPAIN 2019

AMC Natural Drinks is one of the two holdings of AMC Group, a third generation family company founded in 1931, today the third largest Spanish food company in international sales, with a Group turnover of €1290M in the last exercise. AMC Natural Drinks is European leader in chilled fruit juices, smoothies, veggie drinks, natural soups and plant yoghurts & plant “mylks”. AMC Natural Drinks is still setting the very highest standards in its quest to deliver the freshest, healthiest and most sustainable fruit & vegetable drinks through a unique & fully owned vertical integration chain. Growth has been strong, rapid and shows all signs of continuing in this pace. Antonio Muñoz Beraza, CEO of AMC Natural Drinks, and co-CEO of AMC Group with his brother Alvaro Muñoz, learned from his father to understand first the market & the consumer and then develop and create the necessary competitive advantages to bring to the market what it’s needed, with added value and unique points of difference. This lesson, his personal experience, and his solid business background in Deusto (Spain) and Stanford (USA), enabled him to create

almost from scratch, this successful natural drinks international business holding, that has a unique R&D, Innovation, Technology & Sustainability division, AMC Innova, with more than 150 scientists, based on the AMC original headquarters in Murcia, in Spain’s beautiful and fertile south-east. Antonio Muñoz won the Spanish National Innovation Award that is awarded by the Ministry of Economy and Competitiveness, and which was presented by the king and the queen of Spain. AMC Natural Drinks pillars are innovation, consumer centric, natural health, team passion and, above all, sustainability. Antonio attributes their success to focus, vision and a very strict recruitment policy which has enabled the beverages hodling to create a high quality, very professional and committed team of 1.000+ in the 18 years he has lead AMC Natural Drinks business holding. Proof indeed that when a company considers customer satisfaction as an absolute priority, it reaps the rewards. So impressive has been the AMC Natural Drinks story, that the World Economic Forum included the company

in a study of prime examples of how to grow internationally. The study concluded that the company is a model when it comes to partnering with educational institutions and sourcing not just the best local produce but also top local talent, thereby contributing to the sustainable growth of Murcia, and by extension, Spain. The company’s commitment to sustainability includes i.e. using antioxidant watermelon and pomegranate skins in its functional natural drinks instead of wasting them. Other example is how they have created know-how & technology to transform orange peel side stream from the AMC squeezing process to create the first ever natural orange peel bio-bottle as a more sustainable alternative to plastic. Last example, when sourcing from abroad, AMC Sustainability staff first verifies that working conditions, wages and right fair treatment are all satisfactory and aligned with their strong sustainability policy. Having taken all these factors into consideration, the CFI.co Judging Panel is delighted to confer on AMC Natural Drinks the 2019 award for Best Corporate Sustainability Strategy (Spain).

> ACTIVE CAPITAL REINSURANCE LTD: BEST CREDIT REINSURANCE SOLUTIONS FOR INSTITUTIONS LATIN AMERICA 2019 Since its inception in 2007, Active Capital Reinsurance (AC Re) has been proving the benefits of reliable reinsurance solutions. As financial markets worldwide were being buffeted by political and economic unrest, AC Re was recognised for its stable outlook and promising future with an upgraded credit rating of A-. As its reputation grew, AC Re registered on the radar of professional intermediaries around the world, helping the company secure new business from non-traditional markets. AC Re is headquartered in Barbados with offices in Miami, Panama, London, Madrid, facilitating its plans for regional business development. A strategic network of branches and a coterie of accomplished professionals in the reinsurance market have helped to strengthen AC Re’s

market presence in Latin America and expansion into Europe, the Middle East and Africa, and Asia Pacific. The company credits its team of fresh recruits for sourcing unprecedented volumes of new clientele from these markets — and for providing the bespoke service that has kept them. AC Re anticipates a new era of connectivity and client benefits as the company flexes a strategic network from which to oversee its global business. As a previous award winner, the CFI.co judging panel can attest that the momentum has continued to gain steam. In 2019 — and for the second consecutive year — the judges are delighted to present Active Capital Reinsurance with the Best Credit Reinsurance Solutions for Institutions (Latin America) award.

> JUAN ANTONIO NIÑO: OUTSTANDING CONTRIBUTION TO BANKING AND INSURANCE LATIN AMERICA 2019 The distinguished career of Juan Antonio Niño spans more than four decades, and his professional efforts have had an undeniable impact for good in Latin America. Niño is a Panamanian entrepreneur with a prestigious international education and a successful background in banking. He applies the principle of “benefits for all” in his business endeavours. Niño gained experience and esteem during his early years as a regional bank founder and through leadership roles with the Panamanian 100

Banking Association (ABP), Latin-American Federation of Banks, National Council of Private Enterprises of Panama (CONEP), and Panamanian Association of Business Executives (APEDE). Niño now dedicates his time to running Active Capital Reinsurance, the company he launched to provide reinsurance solutions for a global institutional and corporate audience. He founded the company in 2007 and counts most of his early clients among the present portfolio. According to Niño, the beauty CFI.co | Capital Finance International

of business is to turn customers into allies and grow with them. Working closely with clients across three continents, Niño is an advocate of the business case for reinsurance, and his message is well-received in markets near and far. The CFI.co judging panel can confidently identify an industry game-changer, with Niño possessing the necessary vision and drive. The judges are pleased to offer Juan Antonio Niño the 2019 award for Outstanding Contribution to Banking and Insurance (Latin America).

Winter 2019 - 2020 Issue

> CERN PENSION FUND: BEST PENSION FUND GOVERNANCE EUROPE 2019 Scientists at CERN (the European Organization for Nuclear Research) search for answers to timeless questions, pushing the boundaries of knowledge and advancing scientific breakthroughs. Since its inception in 1955, the CERN Pension Fund has provided pension and social security benefits to its staff and fellows, and in 1968 the fund invited staff from ESO (the European Southern Observatory), the world’s most productive ground-based observatory, to join. Today the CERN Pension Fund is a multiasset investment portfolio, which counts over 7,500 members and beneficiaries on its roster and is responsible for making pension payments in 48 countries. The fund gets high marks for governance, with a clearly defined organisational structure, high quality reporting and transparency, and effective board and

committee oversight. The Fund’s CEO, Matthew Eyton-Jones, who was appointed in 2015, has as strong focus on good governance and has worked hard to make sure the CERN Pension Fund is considered best in class amongst its international peers. In particular, the CERN Pension Fund has upgraded the female gender balance of its board from 0 percent to 33 percent, including a female Chair, whilst the Fund’s staff are over 60% female including both the Chief Investment Officer and Chief Operating Officer. As research has proven, more diverse boardrooms and teams leads to improved productivity and higher returns. For an organisation that exemplifies innovation and transparency, the CFI.co judging panel is delighted to name CERN Pension Fund as the 2019 winner of the Best Pension Fund Governance (Europe) award.

> ENFUCE: BEST PAYMENT & COMPLIANCE SOLUTIONS EUROPE 2019 The payments sector is subject to changing regulations, evolving consumer demands, and advancing tech capabilities. A new kind of payment service provider, Enfuce, is capable of not only rolling with industry change but of influencing its trajectory. Based in the Nordics with offices in Finland, Sweden, and the UK, Enfuce is one of the fastest growing fintech companies in the region. The company attributes its success to a workforce of over 50 experts with fintech and banking backgrounds and can-do attitudes. Enfuce works to custom-craft solutions for compliance and collaborative partnerships. The Finnish start-up has achieved a ground-breaking year: launching new product categories — and securing a €5M round of funding in November 2019. Part of this funding is earmarked to develop its new open banking platform and sustainability services. Sustainability and collaboration are two of the company’s founding values, and its latest digital

tool — My Carbon Action — enables consumers to measure the climate impact of their purchases. My Carbon Action is a sustainability service for banks, other financial service providers, and merchants to help their customers track their actual carbon footprint per purchase. The fully automated, payment-based model calculates the CO2 emissions of every purchase, providing environmental insights that enable consumers to seek carbon-neutral shopping while providing businesses with a tool to prove their sustainability claims. Founded in 2016, Enfuce delivers a secure, cloud-based platform and an easily integrated API. It plans to leverage its innovative suite of services, which has already attracted over 8 million endusers, to capture more of the European market in 2020. Secure and fast, scalable and featurerich, the CFI.co judging panel declares Enfuce the 2019 winner of the Best Payment & Compliance Solutions (Europe) award.

> NORDEA ASSET MANAGEMENT: BEST INSTITUTIONAL INVESTMENT MANAGEMENT EUROPE 2019 Nordea Asset Management (NAM) is one of the fastest growing asset managers in Europe with EUR 229 billion in assets under management and a global business model that prioritises client service through its local offices in 18 different cities. NAM’s position has continued to strengthen within different client segments, in particular its diverse institutional client-base, which includes pension funds, insurance companies, municipalities, foundations, etc. NAM currently has investment management agreements with more than 500 distributors, global wealth managers and institutional clients. To meet the demand of institutional clients, NAM has built a strong product offering in both equity and fixed income strategies ranging from European Covered Bonds to High Yield and Multi Asset solutions to address investors’ needs in different market environments. NAM’s internal Multi Asset Team, managing over €100bn AuM, has developed a strong expertise in risk premia and built a wide range of solutions with the specific aim of delivering long-term stable returns.

Being of Nordic heritage, sustainability and responsible investment are deeply rooted in NAM’s DNA. Its first ESG sector screened funds were launched over 30 years ago and NAM has been managing its Climate and Environment strategy since 2008. An early signatory of UNPRI in 2007, NAM considers it its fiduciary duty to care about all factors that are material to clients’ investments, including those that are non-financial such as Environmental, Social and Governance (ESG). NAM has developed a number of equity and fixed income STARS ESG solutions that aim to have a positive impact while delivering attractive returns. Today, NAM manages over €60bn in ESGenhanced strategies. It is this commitment to financial stability and delivering returns with responsibility that has persuaded the CFI.co judging panel to present Nordea Asset Management with the 2019 award for Best Institutional Investment Management Europe.

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> LINKLEASE: MOST INNOVATIVE SME EQUIPMENT LEASING SOLUTIONS UAE 2019

Despite being the backbone of regional and national economies, the full potential of SMEs (small and medium-sized enterprises) is often blocked by hurdles to equipment financing. Founded in 2014, Emirati company Linklease champions asset leasing as an alternative to costly ownership finance. In Dubai, SMEs represent 95 percent of all the Emirate's registered establishments, and a new financial leasing law underscores the government's commitment to supporting the sector. Linklease pioneers leasing solutions to a wide range of industries across

the United Arab Emirates (UAE) and Saudi Arabia; now it's looking to expand its presence across the Middle East and Africa. A team of specialists with over 25 years of experience in the asset-based finance industry has customcrafted conventional and Shariah-compliant leasing solutions for clients in the construction, healthcare, logistics, manufacturing, and printing sectors, amongst other. The Linklease team excels at client anda sset assessment as well as asset managementand asset recovery. In addition to providing new and used equipment

leasing, Linklease offers sale and lease-back agreements as well as equipment management services. The company has implemented a robust tech framework that gives an omnipotent view of assets, able to monitor location and movement with the latest GPS tracking and RFID tagging technology - or even immobilise assets if ever necessary. Recognising a worthy partner of businesses big or small, the CFl.co judging panel presents Linklease with the 2019 award for Most Innovative SME Equipment Leasing Solutions (UAE).

> DEPT. OF FINANCE, GOV. OF AJMAN UAE: BEST FINANCIAL PLANNING PUBLIC SECTOR UAE 2019

The Department of Finance of the Government of the Ajman Emirate (Ajman DOF) does more than crunch numbers; it’s responsible for the strategic planning and implementation of all Ajman government financial activity. Established by government decree in 2002, the department fuels the sustainable development of the region and contributes to the competitiveness of the United Arab Emirates as a nation. In support of national and regional strategic vision objectives, Ajman DOF improves government’s

resource efficiency, upgrading policies and systems to best international standards, and empowering employees through skills-building workshops and training. The training courses, which acquaint employees with governmental accounting standards and familiarise them with Ajman’s unified financial system, have benefited more than 200 employees over the past six months. Ajman DOF has created a digital financial platform — the Smart Financial Planning and Analysis System — to facilitate the

Emirate’s development process and prosperity. It authors the annual Budget, supervises the collection and distribution of government funds, and provides consultation and technical support to government agencies and departments. The CFI.co judging panel believes Ajman DOF is making great strides towards realising its goal of an open, and globally competitive, green economy. The judges are pleased to present Ajman DOF with the 2019 award for the Best Financial Planning Public Sector (UAE).

> TACTICAL MANAGEMENT DWC LLC: BEST PRIVATE EQUITY PARTNER GCC 2019

At Tactical Management, every business opportunity is assessed from a position of social responsibility and sustainability to create long-term, added value for clients and communities. The Dubai-based firm provides independent private equity, multifamily office, and corporate structuring services. Tactical Management eschews the hard-line approach typical of many private equity firms to look beyond the balance sheet and prioritise the people backing each project. It focuses on the substance behind each proposal and considers the future of each business idea. It specialises in helping distressed businesses 102

transform their fortunes and views itself as an effective tool in the restructuring process. When Tactical Management takes on a project, it favours exit strategies that are fluid rather than rigidly set timelines. It prefers to stay in as long as necessary to help correct course and ensure that corporate management stands on a secure footing. Tactical Management hopes to “redefine what investors, governments, and citizens expect of foreign direct investment” by cultivating a diverse project portfolio that prizes integrity and long-term results. The company often comes aboard through related Holding CFI.co | Capital Finance International

Companies or Joint Ventures with equity stakes ranging from 10 to 50 percent and chooses from a variety of projects, from hospitals to fruit processing plants. Tactical Management deploys a 17-person team from its Dubai offices to provide strategic management support to clients around the world. The firm benefits from an established network of banking contacts built up over the years and has created 1,784 jobs via 27 projects in nine countries. The CFI. co judging panel is delighted to present Tactical Management DWC LLC with the 2019 Best Private Equity Partner (GCC) award.

Winter 2019 - 2020 Issue

> FIRST PENSION CUSTODIAN: BEST PENSION FUND SERVICES TEAM NIGERIA 2019 First Pension Custodian Nigeria (FPCN) was founded in 2005 as one of the original guardians of the country’s retirement funds. FPCN is a wholly owned subsidiary of First Bank of Nigeria (FBN), one of the country’s top three financial institutions. Since its launch, FPC has claimed half of the market, including industrial clients, banks and pension fund administrators – and increased custodial assets to more than $7.6m. The company defines success not only in terms of profits, but also customer satisfaction and sustainability. The FPC team exemplifies the company’s core values of professionalism, entrepreneurship, and customer centricity. Clients are viewed more as partners, and the team collaborates with each one to deliver measurable progress towards investment goals. Providing superior service is one of the team’s driving motivations, and the company seeks regular feedback to fuel a process of continuous

improvement. Running a sustainable business requires innovative solutions that create longterm value, and FPCN capitalises on the resources available as part of the FBN Holdings Group. Association with the group benefits FPCN in terms of IT advances and access to a broad base of prospective clients. The Nigerian pension industry presents challenges, from coverage to compliance, but FPCN is well-equipped to prevail. The company is guided by a strong Board of Directors and Senior Management team who articulate and implement the company’s growth strategy. Recent changes in regulations, including interventions like the Micro-Pension Scheme, have opened the market to small and medium-sized enterprises — and led to a boost in business. The CFI.co judging panel recognises First Pension Custodian Nigeria as the worthy winner of the 2019 Best Pension Fund Services Team (Nigeria) award.

> ROKEL COMMERCIAL BANK (RCB): BEST BANK GOVERNANCE SIERRA LEONE 2019 Rokel Commercial Bank (RCB) traces its roots back over a century, when it was a Barclays subsidiary in Sierra Leone. The bank has been locally owned and operated since 1999, with the government as majority shareholder, 65 percent following a recent recapitalisation — and the remaining shares are held by private institutions, organisations, and individuals. There are seven RCB branches in Sierra Leone’s capital city and nearly as many provincial branches, where more than 370 RCB team members strive to uphold the bank’s core values of customer centricity, integrity, initiative, dedication, teamwork, and continuous improvement. RCB welcomed a new Managing Director and CEO in 2017, Dr. Walton Ekundayo Gilpin, who wasted no time in aligning bank

policy with a strategic vision to move the institution forward. The board is made up of 36 senior management team members and four sub-committees (finance, audit, credit, and human resources and administration). The bank follows a strict code of corporate governance and schedules regular meetings to ensure its implementation throughout the network. It reviews and updates policies every three years and conducts internal and external audits annually. RCB ranks among the top three Sierra Leone banks in terms of total assets and plans to leverage its comprehensive suite of digital and mobile banking services to capture more of the country’s massive unbanked population. The CFI.co judging panel presents Rokel Commercial Bank with the 2019 award for Best Bank Governance (Sierra Leone).

> ATLAS MARA BANK ZAMBIA: BEST COMMERCIAL BANK ZAMBIA 2019 Born from the merger of two operational banks, Atlas Mara boasts 65 branches (representing one of the largest networks in the country), 23 agencies, and 176 ATMs. Atlas Mara Bank Zambia’s commitment to business clients is profound, offering world class solutions and all the necessary banking tools. It responds to client needs by developing disruptive products to fit modern lifestyles. The bank’s mobile wallet, Tenga, offers value-added services, including merchant payments, transfers to mobiles or pre-paid cards, and micro-loans and micro-savings. Atlas Mara Zambia has crammed as many features as possible into the mobile wallet and has made it available in seven Zambian languages. The bank’s wide network extends to harder-to-reach rural areas and facilitates

its mission to increase financial inclusion. Atlas Mara Zambia forges partnerships with private enterprises, non-profits, and public entities to enact programmes of impact. The bank partnered with World Panels to donate solar panels to power charging points for people outside the electrical grid. It works closely with central government to deliver various mandates and is collaborating with third-party companies to develop a system to help SMEs build credit history. The bank welcomes the participation of its new majority shareholder, Equity Group Holdings, which has a customer base in excess of 9.2 million and a Moody’s international rating of AA. The CFI.co judging panel presents Atlas Mara Bank Zambia with the 2019 award for Best Commercial Bank (Zambia). CFI.co | Capital Finance International

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> BANCO HIPOTECARIO: BEST SME BANK CENTRAL AMERICA 2019

Banco Hipotecario was founded in El Salvador in 1935, when agricultural business was the primary contributor to Gross Domestic Product (GDP). The National Coffee Association was the main shareholder with 70 percent, the Livestock Association at 20 percent, and private shareholders accounted for the balance. Today the bank’s scope has widened to include all sectors that have the potential to boost national production and employment. Banco Hipotecario bases its business model on the conviction

that small and medium-sized enterprises (SMEs) will bring about the economic future that the country deserves. The bank has developed a dozen SME-focused products and services, starting with working capital and debt consolidation solutions as well as sectorspecific credit line offers. It offers credit lines for businesses or individuals undertaking energy efficiency, clean production, and renewable energy projects. Banco Hipotecario launched an entrepreneurship programme that provides new

and prospective business owners with financial and tech training. The programme also features a digital platform for accessing special credit promotions as well as networking with potential business partners. The bank is dedicated to increasing financial inclusion and has made great strides to encourage female Salvadorians to pursue their entrepreneurial ambitions. The CFI.co judging panel declares Banco Hipotecario as winner of the 2019 Best SME Bank (Central America) award.

> FAMA INVESTIMENTOS: BEST ESG INTEGRATED INVESTMENT STRATEGY LATIN AMERICA 2019

Co-founders Fabio Alperowitch and Mauricio Levi started FAMA Investimentos in 1993 with loads of idealism and pragmatism along with minimal capital raised from family and friends — just $10,000. Since its inception, the Brazilian company has weathered national and global economic crises with steadfast resolve and vision. FAMA Investimentos assesses the investment landscape to stay on top of evolving threats and risks. It has outperformed market indices, both in times of highs and lows. The founders credit their success to an investment strategy that prioritises

community, employee, and environmental wellbeing as much as financial gain. Long before it became common business vernacular, FAMA was well-versed in environmental, social, and governance (ESG) values. The firm shuns industries and companies that don’t measure up to its sustainability standards. FAMA’s longterm approach allows it to proactively engage with each business in its portfolio, offering advice on management, transparency, or ESG issues. By focusing on the qualitative aspects, FAMA can forgive companies suffering a period

of poor performance — but it won’t tolerate bad ethics. FAMA’s low-turnover portfolio features about 15 businesses and boasts an annualised return of 21 percent throughout its 25 years of history. Alperowitch and Levi serve as the fund managers, responsible for around $505m in assets under management, and are supported by a team of dedicated equity analysts, compliance officers, traders, and administrative staff. The CFI.co judging panel confirm FAMA Investimentos for the 2019 award Best ESG Integrated Investment Strategy (Latin America).

> BLUE LAGOON: OUTSTANDING CONTRIBUTION TO ECO-TOURISM GLOBAL 2019

Since its creation over 35 years ago, Blue Lagoon has been taking advantage of the beneficial powers of geothermal seawater from the Svartsengi power plant. In 1995, after intensive research confirmed the healing properties, Blue Lagoon Ltd launched its acclaimed line of skin care products and, four years later, established its pioneering spa resort. Both use the water’s primary elements: silica, algae and minerals to make their customers feel rejuvenated and 104

reinvigorated. In 2018, the resort was named as one of the World's Greatest Places by Time Magazine. The complex now features the Retreat which encompasses a 62-suite luxury hotel, a 4000 sqm subterranean spa, a mineralrich lagoon carved into the centuries-old lava, and a Michelin-recommended restaurant that turns seasonal ingredients into unforgettable meal experiences. The Retreat boasts an exquisite ultra-private suite, Lava Cove, offering CFI.co | Capital Finance International

gourmet dining, in-water massage, and guided yoga sessions with its own mineral-rich lagoon, wood-burning fireplace, dining area, kitchen, butler, and world-class Italian furnishings. This investment in an even more luxurious ecotourism experience complements the original relaxing and enchanting offering. The CFI. co judging panel confirms that Blue Lagoon deserves the 2019 award for Outstanding Contribution to Eco-Tourism (Global).

Winter 2019 - 2020 Issue

> BANCO FINCA: BEST SOCIAL IMPACT BANK ECUADOR 2019 An integral part of FINCA’s global impact finance network, Banco FINCA Ecuador helps low-income, under-banked families with microfinancing solutions that create jobs and encourage asset accumulation. FINCA sees microfinance and fintech as effective tools in the fight for inclusion. Since its launch in 1993, Banco FINCA Ecuador has championed responsible finance practices. The bank became a fullyfledged licensed bank in 2008, and its services range from savings accounts and investment solutions to group and individual microcredit. Banco FINCA Ecuador benefits from a team of dedicated professionals who canvas the country — including hard-to-reach areas — to ensure that everyone is offered financial access. The bank also reports progress for entrepreneurial empowerment, with women representing 60 percent of clients and 70 percent of approved credit going to customers in rural

areas. Banco FINCA Ecuador has caught the attention of the CFI.co judging panel in previous awards programmes, and the judges note its sustainable progress. After a rigorous review of business processes and policies, the bank achieved SMART Certification and demonstrated its commitment to Client Protection Principles. In 2018, Banco FINCA Ecuador sponsored nearly 1,000 hands-on workshops to target financial literacy for age groups ranging from five to 65-plus years. It reached even more people through its digital financial literacy campaigns. Banco FINCA Ecuador deploys proactive outreach and thorough research to dovetail product development along with customer demand. For its ongoing efforts to improve livelihoods through responsible finance, the judges present Banco FINCA with the 2019 award for Best Social Impact Bank (Ecuador).

> CORPORACIÓN MULTI INVERSIONES (CMI): BEST SUSTAINABILITY COMMUNITY IMPACT LATIN AMERICA 2019 As Corporación Multi Inversiones (CMI) celebrates its centennial anniversary, the multiLatina company reflects upon its family-owned legacy. Founded by Juan Bautista Gutiérrez in 1920 with the opening of a small convenience store, CMI has evolved into a highly diversified conglomerate spanning three generations. Business is split between CMI Food — which includes flour mills, sausage manufacturing, and restaurants — and CMI Capital, which specialises in renewable energy, real estate, and financial services. More than 40,000 CMI professionals follow a corporate ethos of “REIR”. While the Spanish word reminds employees to laugh and enjoy work, the acronym calls for Responsibility, Excellence, Integrity, and Respect. CMI is established in 14 countries on three continents and takes a proactive approach to corporate social responsibility (CSR). The company believes

that sustainable investments are impossible in failing communities, and so protects and uplifts the most vulnerable. For 30 years, the Juan Bautista Gutiérrez Foundation has served as the CSR arm of the group, providing funding for health and education projects. CMI puts its principles into action, as is evidenced by recent accomplishments. In 2019, the corporation invested $83m in retail and residential projects in Guatemala, transforming neglected rural areas into thriving social centres. Over the past two years, CMI investments and partnerships have resulted in two renewable energy complexes: the Renace hydroelectric facility in Guatemala and Bosphorus solar power plant in El Salvador. The CFI.co judging panel declares CMI as the worthy winner of the 2019 Best Sustainability Community Impact (Latin America) award.

> FIDELIS FINANCE: BEST ECONOMIC, ENVIRONMENT AND SOCIAL IMPACT SME FINANCE WEST AFRICA 2019 With the right plan and a good partner, companies can achieve purpose as well as profits. That partner in West Africa is Fidelis Finance. The firm’s goal is to strengthen the economic growth of the region by supporting the main economic actors of any nation — SMEs. From its offices in Burkina Faso and Côte d'Ivoire, Fidelis creates adaptive financial products that are tailored to meet their needs. As of today, the mobile sales teams canvass the cities of Ouagadougou, Bobo Dioulasso, and Abidjan expanding the brand’s presence and welcoming new clientele from new countries; Mali, Togo and Benin. Fidelis supports companies to overcome financing constraints with innovative and inclusive credit solutions. The Fidelis product suite includes leasing, credit, and rent-to-own solutions, as well as invoicing, factoring, deposits, and payment guarantees. Fidelis Finance is a corporate citizen. It has placed at the heart of its concerns, the quest for the

wellbeing of its workers and its community through: 1) a good profits redistribution (very competitive working conditions, and donation of medical materials to hospitals), 2) the financing of projects with high social, environmental and societal value added (leasing of 45 garbage collection equipment for the benefit of the town halls in Ouagadougou and Abidjan, and 300 ambulances for the benefit of Burkina Faso’s Ministry of Health to facilitate the evacuation of patients to urban medical centers). The portfolio’s growth is up 45 percent since 2017, when the firm first registered on the CFI.co radar, and the steady increase in loan volume and net profits augur well for the future. For the third consecutive year, the CFI.co judging panel has found good reason to celebrate the firm’s progress and presents Fidelis Finance BF with the 2019 award for Best Social Impact SME Finance (West Africa). CFI.co | Capital Finance International

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> PAVILION GLOBAL MARKETS: BEST TRANSITION MANAGEMENT TEAM NORTH AMERICA 2019

Over the past 50 years, Pavilion Global Markets (PGM) has earned a sterling reputation for its superior service and innovative dedication to transparency, liquidity, and communication. The agency-only broker is based in Montreal but serves institutional clients around the world, offering a global equity execution platform, global research, and transition management services. The Transition Management (TM) team is responsible for 25 percent of PGM business and has established a strong presence in the Canadian market and a growing one in

the USA. The TM department was founded over 20 years ago to assist institutional investors and financial intermediaries with the most efficient and cost-effective implementation of portfolio changes. In 2014, PGM opened two US offices to capitalise on the high-growth opportunities in the American market, and now the company has its sights set on expansion into European and Middle Eastern markets. PGM’s centralised trading desk runs 24 hours a day, six days a week, to provide clients with a high-touch service that enables agile response to market

risks and opportunities. PGM is an employeeowned company with a dynamic business model that is driven by customer feedback for future diversification and innovation. The company consistently receives the highest marks on customer satisfaction surveys. The CFI.co judging panel notes PGM’s transparent pricing schedule and conflict-free executions as further cause for contentment. The judges congratulate Pavilion Global Markets, winner of the 2019 Best Transition Management Team (North America) award.

> KATHREIN PRIVATBANK: BEST PRIVATE BANKING SOLUTIONS AUSTRIA 2019

Austria’s leading bank for wealth management, Kathrein Privatbank, stands rooted by a history stretching back 95 years. The seasoned specialists at Kathrein Privatbank fine-tune investment and asset management strategies with nimble flexibility to match each client’s unique needs. The bank cultivates long-term relationships with high-net-worth retail clients, entrepreneurs, and family enterprises. It also counts institutional investors and private foundations amongst its prestigious clients. The bank specialises in the exclusive services expected by this calibre of

clientele. Kathrein Privatbank is the premier regional partner for all foundation matters, offering consulting and support services for the establishment or management of a private foundation. Entrepreneurs appreciate the bank’s well-earned reputation for discreet consultancy and applaud its educational outreach and networking opportunities. Kathrein Privatbank practices principle-based asset management and is committed to providing objective fiduciary advice with integrity, honesty, and confidentiality. The bank’s dedicated portfolio management

team has been working together for the past 20 years, launching a broad range of funds to fulfil clients’ diverse appetites as well as offering access to other premium third-party investment products. As a subsidiary of Raiffeisen Bank International AG, Kathrein Privatbank forms part of one of the largest banking groups in Europe. The bank has made a tradition of delivering on quality — and the CFI.co judging panel has taken notice. The judges present Kathrein Privatbank with the 2019 award for Best Private Banking Solutions (Austria).

> GROUPE CIOA: BEST BUSINESS VALUE CREATION PARTNER GLOBAL 2019

Since its inception in 1994, Groupe CIOA has taken the view that strength comes from unity. The collaborative model that CIOA has championed demonstrates outstanding value creation through strategic joint ventures with partners near and far. The group network spans 140 countries and some 500,000 member companies, 200 experts, and 2,300 co-developers. CIOA first came to the attention of the CFI.co judging panel in 2018 for its role as a facilitator of international business and provider of 106

multidisciplinary solutions for global enterprises, organisations, and government agencies. Never content to rest on its laurels, CIOA continues to give cause for celebration and the company aims to facilitate business initiatives through a digital ecosystem. Since CIOA’s award last year, it has established several new joint ventures. In Cameroun, CIOA has partnered with NEO INDUSTRY to develop a “BATI-FABLAB” factory to manufacture economic modular steel-frame residences, addressing a shortage CFI.co | Capital Finance International

of approximately one million homes. CIOA has established similar BATI-FABLAB factories in Mayotte and Mauritius. The group also partners with institutional clients, including eight cities in Cameroun where it has created a bridge to connect businesses operators with regional players. Collaboration is the key focus of the CIOA model — and has resulted in the judges’ decision to declare Groupe CIOA as 2019 winner of the Best Business Value Creation Partner (Global) award.

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> ASTON MARTIN LAGONDA: BEST ESG MANUFACTURING STRATEGY UNITED KINGDOM 2019 Power and prestige, intrigue and affluence — these are the symbols evoked by Aston Martin Lagonda, the iconic British luxury car brand. The company has evolved beyond Bond, the fictional spy who once immortalised the brand, to implement a Second Century strategy that prioritises sustainable business practices across operations and throughout the supply chain. Comprehensive environmental, social, and governance (ESG) commitments fuel the company’s sustainable growth plans. The Second Century plan calls for seven new models over the next seven years, with the release of the highly anticipated DBX in November 2019. Orders are stacking up for the brand’s first luxury SUV model, which will be produced at new manufacturing facilities in Wales. Aston Martin Lagonda repurposed the St Athan Royal Air Force hangars into a state-of-the-art facility

that will create up to 750 highly skilled jobs. The new facility, like Aston Martin Lagonda’s three other British production plants, measures up to modern environmental expectations. The company publishes a Responsible Procurement Guide detailing its social, environmental, and ethical responsibilities, and all its suppliers are expected to follow the Aston Martin Lagonda way. The brand is gearing up to launch the first in its hybrid line, the Rapide E, which was unveiled at the Monaco ePrix in May 2019. The company hopes to leverage hybrid technology in a shift towards zero-emissions. The CFI.co judging panel notes the progress made since the company’s past placement in the awards programme and is pleased to declare Aston Martin Lagonda a repeat winner of the Best ESG Manufacturing Strategy (UK) award, this time for 2019.

> ECCELSA AVIATION: BEST PRIVATE AVIATION TERMINAL OPERATOR EUROPE 2019 When people have passion for their work, nearperfection is a likely outcome. Located on the Italian island of Sardegna, Eccelsa Aviation has operated a private and business aviation terminal at Olbia Costa Smeralda Airport since 2003. The dedicated terminal is manned by staff that roll out the red carpet for guests. Eccelsa Aviation put procedures in place to ensure priority aviation services with strict safeguards for safety and security. The customer is king, and staff walks the extra mile to deliver on aviation excellence. The Eccelsa terminal covers 5,000 square metres and features private parking with complimentary valet service, 12,000 visitor capacity business centre, and passenger and crew lounge areas complete with free Wi-Fi, satellite TV, and an outdoor

summer patio for last-minute sunbathing. Eccelsa Aviation offers shopping and dining experiences that celebrate the Italian heritage. The elegant ambience is cinched by the inspired architecture of the terminal, which is reminiscent of the private aviator clubs of the past and combines local building materials and vegetation to create harmony with the environment. Environmental responsibility is a driving force of the company’s progress, and recent achievements include a ban on single-use plastics, improved energy efficiencies, and a reduction in carbon emissions. For a formula of success that prioritises people and planet, the CFI.co judging panel is delighted to offer Eccelsa Aviation the 2109 award for Best Private Aviation Terminal Operator in Europe.

> NCB INSURANCE COMPANY LIMITED (NCBIC): BEST INSURANCE ADVISORY JAMAICA 2019 NCB Insurance Company Limited (NCBIC) helps ease the stress of unforeseen and unexpected eventualities with insurance and investment plans for individuals and groups. As a member of the NCB Financial Group — the largest and most profitable financial group in Jamaica with a strong and growing presence across the Caribbean — NCBIC benefits from the bank’s distribution channels and customer base. NCBIC has found that social responsibility and profitability are not mutually exclusive and has developed a suite of financial products that are win-win for clients and company. NCBIC forges long-term relationships with clients, to safeguard them against risks and lay the foundations for a financially sound future. Individual clients gain peace of mind with NCBIC’s OMNI combination investment-insurance plan, OMNI Educator savings plan, and SMART Retirement plan. The ProCARE

plan provides critical illness protection, while ProVision covers accidental death or dismemberment. NCBIC offers group plans for employee pensions, life insurance, and annuities. It also offers group and individual Creditor Life insurance, which unburdens a deceased’s loved ones from the repayment of outstanding debts. The company envisions a near future where everyone is properly insured and invested, and is pioneering the use of alternative channels to boost financial inclusion. Through strategic stewardship of customer capital and forward-thinking management, NCBIC has become the second largest pension fund manager on the island. The company has proven itself a steadfast financial partner, leading the CFI.co judging panel to declare NCB Insurance Company Limited (NCBIC) as the 2019 winner of the Best Insurance Advisory (Jamaica) award. CFI.co | Capital Finance International

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> DEPT. OF FINANCE, GOV. OF AJMAN UAE: BEST BUDGETING SYSTEMS & PROCEDURES PUBLIC SECTOR UAE 2019

The Ajman Emirati Department of Finance (Ajman DOF) serves as the financial arm of the government to execute the planning and implementation of financial strategy. Ajman DOF provides innovative financial services that contribute to the sustainable development of the Emirates, and enhance the overall competitiveness of the nation. Ajman DOF develops financial policies and legislation, prepares and implements the annual budget, and liaises with regional government bodies. It has also launched a next-generation financial system to maximise national efficiency — and prosperity. The

Smart Financial Planning and Analysis System is Ajman DOF’s pioneering financial platform. The unified system, which is underpinned by AI, has registered remarkable progress in managing Ajman’s governmental resources. It tracks expenses, enables smart planning and analysis, and assesses financial performance. Public financial management is assessed using quantitative indicators to measure performance, provide snapshot summaries at specific points, and show changes over time. Digital dashboards display data in clear and actionable information panels that help government leadership identify

potential problems and generate solutions. The system aims to rationalise government spending, tighten fiscal discipline, and hone financial sustainability to achieve more diversified and sustainable economic growth. It also features tools to analyse and assess financial risks, and can predict the financial impact of future projects. For a breakthrough platform that integrates strategic financial planning with AI-backed technology, the CFI. co judges recognise Ajman DOF as the worthy winner of the 2019 award for Best Budgeting Systems & Procedures Public Sector (UAE).

> SG FINANS: MOST INNOVATIVE CLIMATE IMPACT SME FINANCE SCANDINAVIA 2019

As a key financer of Nordic small and mediumsized enterprises (SMEs), SG Finans also supports regional business growth and climate change action. The company specialises in leasing and factoring services and is serious about sustainability. In September 2019, it attained Eco-Lighthouse certification, the most widely used Norwegian standard to document and demonstrate corporate sustainability efforts. SG Finans submitted to a sustainability audit for the certification and must repeat the process regularly to maintain it. The process also

includes sustainability training to ensure that best practices are anchored throughout the staff, from executives to entry-level employees. The certification is EU-approved and aligns with international environmental standards like EMAS and ISO 14001. In June 2019, the company announced a credit line agreement of over $165m from the European Investment Bank (EIB). SG Finans sees SMEs as stimulators for the transition from fossil fuels to climateneutral economies; 70 percent of the funds were earmarked for SMEs and 10 percent will go to

proactive climate projects. The fresh EIB funding follows a successfully implemented credit line of $100m in 2018 that enabled qualified SMEs to take steps to reduce their carbon footprint. SG Finans aims to cultivate a healthy and balanced portfolio, and as it goes forward, climate risk will be weighed more heavily in each business decision. The CFI.co judging panel commends the company’s sustainability commitments and declares SG Finans as the 2019 winner of the Most Innovative Climate Impact SME Finance (Scandinavia) award.

> KUWAIT INTERNATIONAL BANK (KIB):

FASTEST GROWING ISLAMIC BANK MENA 2019 & BEST SHARIA-COMPLIANT BANK MENA 2019

BANK FOR LIFE

KIB began its journey over four decades ago catering to Kuwait’s emerging real estate sector, but now sees itself more as a lifelong financial partner. While KIB’s early specialisation enabled it to shape the economic and architectural landscape of Kuwait, in 2017 it embarked on a transformation to address the changing economic climate and cater to regional needs. Since then, KIB has operated as a fully-fledged Sharia-compliant bank, embracing the traditions of Islamic finance, 108

modern best practices and next-generation technology. Customer-centricity is an integral aspect of operations, and the bank harnesses the power of fintech advances to pioneer convenient products and secure services that are tailored to client needs. As a repeat winner in CFI.co award programmes, the judges have witnessed KIB’s meteoric rise. In 2018, it was included in the Premier Market segment of Boursa Kuwait, further boosting its investor profile at the regional CFI.co | Capital Finance International

and international levels. In 2019, KIB issued a $300 million AT1 perpetual Sukuk to fuel its local expansion plans and enhance its capital base. KIB’s ambition to be a “Bank for Life,” accompanying clients at every step and with every aspect of their daily lives, is very much evident. Without reservation, the judges declare Kuwait International Bank as winner of the Fastest Growing Islamic Bank & Best Sharia-Compliant Bank (MENA 2019) awards.

Winter 2019 - 2020 Issue

> FITCH RATINGS: BEST CREDIT SERVICES LATIN AMERICA 2020 Over the past three decades, Fitch Ratings has kept a finger on the pulse of the world’s most relevant developing and emerging markets. With more than 1,500 analysts, including 200+ analysts fully dedicated to credit ratings and research in Latin America, Fitch Ratings offers global perspectives shaped by strong local market experience and credit market expertise. Their dynamic teams of professionals, experienced in global analytics and knowledge of local public finance, infrastructure, banking, financial institutions, structured finance and corporate sectors, produce insightful market forecasts and reputable credit ratings. As part of the global Fitch Group, the company ascribes to the same exacting standards of integrity, ensuring that credit assessments remain objective and accurate and that forecasts are underpinned by well-researched — and actionable — data. A leading global provider of credit

ratings, commentary and research, Fitch Ratings has operations in more than 30 countries, with 13 offices throughout Latin America, covering more than 1,600 corporate credit ratings across diverse sectors. As an industry innovator, Fitch Group’s offering includes credit ratings and research, market solutions and services, training and professional development. The Group has garnered a reputation for the reliability of its reports, and Fitch Ratings serves as a crucial regional representative and global contributor. Environmental, social and governance (ESG) concerns weigh on investors’ minds more each day, and Fitch Ratings has taken steps to ensure transparency and accuracy of ESG disclosure in credit rating assessments. The CFI.co judging panel commends Fitch Ratings for its solid market coverage and product line-up. The judges present Fitch Ratings with the 2020 award for Best Credit Services (Latin America).

> MAGHREB OXYGÈNE SA: BEST MEDICAL GAS SUPPLIER MENA 2019 For over 40 years, Maghreb Oxygène SA has provided the people of Morocco with life-saving medical gases, such as gaseous or liquid medical oxygen, nitrous oxide, and synthetic air. The company produces, packages, and distributes them in accordance with the specifications of the European Pharmacopoeia and is certified to ISO standards — a rare distinction earned in the Moroccan market. Maghreb Oxygène has three production facilities in Morocco and ensures quality control is a constant throughout its network. As clear as the products it develops, Maghreb Oxygène distinguishes itself on the Casablanca Bourse as one of the few listings to demonstrate its commitment to transparency with timely and comprehensive reports on process,

progress, and performance. In August 2018, Maghreb Oxygène announced a renewed visual identity, with a crisp, clean logo that expresses its core values of commitment and professionalism and a customer-centric slogan — “Your success, our commitment”. Maghreb’s client list includes hospitals and clinics as well as industrials. The company has noted a boom in business with recent legislation requiring compulsory health insurance. It will build on that momentum with two new value-added products, as it was recently awarded ISO-certification for the manufacture and distribution of carbon dioxide and dry ice. The CFI.co judging panel believes the choice is clear: Maghreb Oxygène SA wins the 2019 Best Medical Gas Supplier (MENA) award.

> UMR COREM: BEST MUTUAL PENSION PROVIDER FRANCE 2019 Union Mutualiste Retraite (UMR) is a French Mutualist, a mutual grouping union, and a non-profit insurance organisation that promotes ethical savings. UMR unites French mutualists behind a collective agreement to offer members the Corem supplementary pension plan, which aims to protect buying power by granting a supplementary pension in addition to the legal one. UMR Corem has been in operation since 2002, providing members with flexible contribution terms to help brighten the golden years and then disbursing annuity payments throughout retirement. Members make contributions that bring tax-saving benefits today and peace of mind tomorrow. The organisation prepares annual reports which estimate annuity schedules according to contribution amounts,

member age, and market performance. As a union of non-profit mutuals, UMR reinvests member contributions in a spirit of solidarity and responsibility. It manages over $10bn in assets with a strong ethical focus. UMR has continued to improve its coverage ratio of the SCR (solvency capital requirement) despite lagging stock markets at the end of 2018. Recent legislation has pushed UMR to restart Corem subscriptions, with the aim to onboard 8,000 new members each year. The legislation has also enabled UMR to offer early exit opportunities for Corem plan members and develop new retirement savings products. The CFI.co judging panel declares UMR Corem as the 2019 winner of the award for Best Mutual Pension Provider (France). CFI.co | Capital Finance International

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> Africa

Fast-growing Ghanian Economy has Hurdles — and Solutions — in Debt Battle By Brendan Filipovski

Ghana is one of the world’s fastest-growing economies for 2019 — if not the fastest. A good government response and help from the IMF put the economy back on track after public debt threatened its stability in 2014. Ghana has always taken its medicine well, but consistent fiscal prudence and structural reforms have taken growth even higher. On April 5, 2019, Ghana completed its four-year (and $918m) extended credit facility with the IMF. Despite a spending blip in the lead-up to the 2016 election, Ghana has largely met the IMF’s three recommendations. With its improved macroeconomic stability, the economy was forecast to grow at 7.5 percent in 2019, up from 6.3 percent in 2018. Inflation is decreasing, down from 17.4 percent in 2015 to 9.4 percent in 2018.

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ince 1984, Ghana has made structural economic reforms under the guidance of the World Bank and IMF, and the economy has been liberalised. The government began to focus on specific conditions rather than picking winners. Exchange rate controls were loosened, trade and FDI were liberalised, subsidies and price controls were removed, and some SOEs were privatised.

90 80 70 60 50 40 30

Export industries were rehabilitated with liberalised controls and improved infrastructure in key regions. These reforms led to an average annual real GDP growth of 5.8 percent between 1984 and 2018. From the Structural Adjustment Programmes in the 1980s, to Vision 2020 in the 1990s and the MDGs in the 2000s, Ghana has long been committed to poverty reduction and human development. It is one of the few African countries to have reached the 2015 MDG of halving its poverty rate. It also halved the under-five child mortality rate between 1998 and 2014, and increased literacy from 58 to 71 percent over a similar period. Challenges such as malaria, AIDS, and income inequality remain, and growth has been interrupted by public debt crises. Ghana is the world’s second-biggest producer cocoa, and has Africa’s second-biggest gold and oil resources. These three industries dominate exports (around 60 percent) leaving Ghana vulnerable to changes in commodity prices. Actual and expected upswings in prices have also encouraged the government to overspend on infrastructure projects, particularly in the lead-up to elections. There were debt crises in the late 1980s, early 1990s, and the early 2000s. By 2003, Ghana had an external debt of $6.6bn and entered the World Bank’s and IMF’s Heavily Indebted Poor Country Programme. Relief was provided in 2005, and by the next year external debt had fallen to $2.3bn. Recent debt problems began in 2012 (chart 1). With the discovery of oil in 2007 (three billion barrels) and the start of production in 2010, the government began to increase its expenditure and debt in anticipation of higher revenue. In 2010, public service pay-scales were reformed, with increases paid over ensuing years. By 2012, the public sector wage bill had increased by 150 percent on 2009 levels. As a result, the primary fiscal balance moved from a 122m Cedi surplus in 2009 to a -1,172m deficit in 2012. Public debt increased by 170 percent over the same period, and this increased debt interest payments in subsequent years. When the price of gold decreased by 21 percent between August 2012 and 2014, exports and government excise revenue were hit. GDP began to slow and the current account deficit (twin deficit) was increasing, putting pressure on Ghana’s international reserves. The currency was also depreciating — down 93 percent against the 112

Chart 1: General Government Gross Debt (percentage of GDP). Source: IMF

dollar between August 2012 and August 2014. This hiked the value of foreign denominated debt. Ghana looked to international debt markets for help, but interest rates had risen. In August 2014, with the growing prospect of unsustainable debt and pressure on foreign reserves, Ghana asked the IMF for help. The credit facility began in April 2015. This was good timing, as the price of oil began to fall in 2014, from $103.48 in August 2014 to $60.90 in April 2015. International reserves decreased by $1.3bn in the second half of 2014 and the currency continued to depreciate. The IMF was able to lend Ghana funds to shoreup its international reserves. It also helped reduce the risk of financial crisis through reforms and consolidation in the banking industry. Capital requirements were increased, and some banking licenses were revoked. Further reducing the risk of public debt crises requires structural reforms, fiscal discipline, and tax reforms. Structural reforms can help decrease the dependence on cocoa, gold, and oil. In 2017, the government launched its new seven-year plan (2017 to 2025) with a new focus on improving agriculture, increasing manufacturing, and fixing energy supply problems. In agriculture, the government is now working with the private sector to develop non-cocoa crops. Land expansion is starting to reach its limits. Gains are possible through intensification and new crop development. Replacing imports of non-traditional agricultural goods — tomatoes and pineapples — is a natural step. Government programmes like the Planting For Food And Jobs are working with the private sector to increase productivity through better use of fertilizers and connecting small-scale farms to value chains. Manufacturing is underdeveloped and has potentially higher productivity. The government’s key One District One Factory initiative is designed to foster food processing. The programme partners with financial institutions to provide facilities to produce goods that are currently imported. An important component is increased access to land through the creation of business parks and special economic zones. CFI.co | Capital Finance International

Structural reforms have potential. Between 1984 and 2011, 75 percent of labour productivity growth occurred within industries. Gains can be had from moving labour to more productive industries. Some has moved from agriculture, but most has gone to service industries with little effect on productivity. The development of manufacturing and food processing could boost productivity. Fiscal discipline is also needed to prevent debt crises and Ghana is making progress here. In December 2018, legislation was introduced that ensures the primary balance remains positive. The fiscal rules are overseen by a new Fiscal Council. The government has prohibited borrowing from the central bank, which should impose further discipline and help with inflation. It is also planning to use longerdated bonds for infrastructure spending, and establish a mineral investment fund for mining royalties. The 2020 elections will test the government’s mettle. Neither of the two main parties has been able to retain power since the restoration of democracy in 1992. Sustained economic growth through sound macroeconomic policy needs to be promoted as an election policy with less reliance on infrastructure spending and public sector wage increases. Erratic electricity supply has long been an impediment to business, and the government has granted a 20-year distribution concession to a private company. Reforms to widen the tax base and improve collection will increase revenue. In 2018, the government introduced measures to capture the informal economy by enforcing the electronic use of Tax Identification Numbers (TINs). Services such as health and car licences will also require a TIN. The government is also improving tax compliance and increasing its scrutiny of mining tax. Ghana looks well placed to break the public debt cycle. The dominance of cocoa, gold, and oil will not be replaced anytime soon so the economy will remain sensitive to commodity price shocks, but the new fiscal rules and the Fiscal Council should ensure prudent policy. Structural reforms will unlock growth, and over time lessen resource dependence. i

> Q&A with CEO of First Pension Custodian, Nigeria:

Kunle Jinadu

His excitement hasn’t faded — and nor has his optimism for the sector. WHAT EXCITED YOU ABOUT THE BUSINESSES YOU WORKED FOR DURING YOUR EARLIER CAREER, AND WHAT EXCITES YOU ABOUT THE BUSINESS YOU NOW LEAD? Kunle Jinadu: My first full employment was with Deloitte Haskins and Sells (now Deloitte Touche), a firm of chartered accountants. I had just graduated from the university and had been selected from the country’s National Youth Service Corps because of my grade. I was excited by my posting to an International firm of accountants. I have matured now, but I still feel excitement. The people I lead give me the impetus to deploy my time and energy to bring about initiatives that drive the company’s narrative. WHAT IS SPECIAL ABOUT THE MANAGEMENT STYLE AT YOUR ORGANISATION, THE TEAM YOU LEAD, AND THE WORKFORCE? KJ: The pension industry reform in Nigeria is fast evolving, and managing a pension custodian had been made very complex by reform. Custody operations as a stand-alone process was novel to the environment. We had to employ transformational and collaborative management styles to inspire our workforce. My company is a member of a larger group, the First Bank of Nigeria Ltd. The group management style allowed subsidiaries considerable autonomy within the group governance framework. HOW WOULD YOU CHARACTERISE SHORT TO MIDTERM PROSPECTS FOR THE PENSION INDUSTRY IN WHICH YOU OPERATE? KJ: The short-term project was to establish pension reform. Pension administration in Nigeria was determined to be unsustainable,

and there was a need to convert to a contributory scheme and move away from defined benefits, which were largely non-contributory. This has been, to a large extent, achieved. The aim is to find benefit adequacy to achieve the goals of adequate benefits for workers. WHAT ARE THE PERSONAL AND BUSINESS STRENGTHS THAT QUALIFY YOU AS A CORPORATE LEADER? KJ: Knowledge of the subject of the business comes first. This is capable of delivering values when combined with situational awareness, collaboration skills, and ability to work with different personal styles. Business strength is situated in knowledge, selfawareness with confidence. Collaborative skill is the acceptance of delegation as a tool for getting results. I think also that a positive attitude helps with creativity. It’s usually not difficult to get my colleagues to see the usefulness of the initiatives. WHAT, TO YOUR MIND, MAKES FOR GOOD CORPORATE LEADERSHIP? KJ: I think the first thing is to understand oneself. One must be honourable, positive, with strength outweighing the weakness. One must be strong in one’s knowledge, have ability to seek information, and be decisive when required. People must have faith in your judgement, and trust your abilities and enthusiasm. It is important to try new approaches, either by personal innovation or by working with a small creative team. When things go wrong, it’s time to wake up the team. WHAT ARE YOUR SHORT-TERM HOPES FOR THE FUTURE OF YOUR BUSINESS, AND FOR THE INDUSTRY AS A WHOLE? KJ: The business is in its 14th year, with considerable growth in all areas. One major hope

"Business strength is situated in knowledge, selfawareness with confidence. Collaborative skill is the acceptance of delegation as a tool for getting results. I think also that a positive attitude helps with creativity." 114

CFI.co | Capital Finance International

CEO: Kunle Jinadu

Winter 2019 - 2020 Issue

"What is certain is that the pension fund administrators remain committed to deploying funds for the benefit of the wider economy." is for consolidation of all the companyâ&#x20AC;&#x2122;s initiatives to ensure the success of digital processes, and guarantee quality service to clients. One of the aspirations of the company is to be the custodian of First Choice and this a target, to surpass clientsâ&#x20AC;&#x2122; expectations and assist with the increase in market share. We hope to shed operational costs to achieve a competitive cost-to-income ratio. For the industry, continuing stakeholder collaboration is needed to tackle various drawbacks to the smooth implementation of the Contributory Pension Scheme. If this is not addressed, it could erode the gains to this point. HOW ARE PENSION FUNDS IMPACTING THE WIDER ECONOMY? KJ: What is certain is that the pension fund administrators remain committed to deploying funds for the benefit of the wider economy. We see willingness to participate in financing for infrastructure that has come into the market space. The operators want enabling government instruments to ensure that funds remain safe and liquid. The largest potential sponsor of infrastructure transactions is the government. The contributory scheme is mandatory, and compels employees and employers in the public and private sectors to collectively save a minimum of 18 percent of an employee's monthly salary into the RSA. This has increased national savings. The fund has come in as an independent financial intermediary, as the nation's private businesses no longer rely on banks as the sole sources of outside capital. The fund has developed the equity market, which has been shown to enhance overall economic development. The Pension Reform Act 2014 made provision for specific institutions that should manage the contributory scheme, including PenCom (regulator), PFAs, and CPFAs, who employ hundreds of graduates of diverse professions. This helps to provide for young graduates who otherwise be roaming the streets in search of jobs. i 115

ICONIC TIMEPIECES With classic Scandinavian timepieces and timeless menâ&#x20AC;&#x2122;s accessories, Georg Jensen prides itself on having designs that every gentleman will truly appreciate. 116

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> Rokel Commercial Bank:

This ‘Gateway’ Bank Named After a River Knows How to Flow and Grow The Rokel Commercial Bank is a gateway to modern Sierra Leonean banking, the second-largest commercial bank in the country in terms of profit margins, depositors’ base and national coverage.

fter a decade of turbulence, the bank was restructured, recapitalised and repositioned in 2014 to regain its place as a dominant force in the country’s banking industry. It is named after the River Rokel, the longest in Sierra Leone. New management was appointed in 2017 to roll out the ambitious benchmarks set by the Bank of Sierra Leone as regulator and majority and minority shareholder. Restructuring kicked off with an aggressive rebranding and marketing programme, with a new logo and innovations that ultimately heralded a paradigm shift in its policies and operations. Public response was remarkable. Rokel is led by an astute and results-orientated managing director and CEO Ekundayo Gilpin. Gilpin is a renowned economist and banker who has worked in more than 38 countries in Africa, South America, the South Pacific, Caribbean, Europe, the US and Asia. He is assisted by management team comprising of 36 senior members of staff. The bank’s board is headed by a chairman and supported by six non-executive directors. The board advises on policy matters and approves limits/expenditure outside management discretions. With several branches across the country and booming performance, the bank now has 400 employees. It has come a long way in just a short time. Back in 2016, it made a meagre profit if Le1.6bn ($1.64m). In 2017, after Gilpin took over with an aggressive marketing and rebranding strategy, profits soared to Le52bn ($6.7m). In 2018, the bank continued its upward motion, registering a Le66bn ($7.6m) profit after tax – a 30 percent increase over 2017. Customer deposits increased from Le770bn ($79m) in 2017 to Le873bn ($89.5m) in 2018. Rokel has adhered to its corporate social responsibility, touching lives and making a difference in society. No financial institution

MD & CEO: Ekundayo Gilpin

has surpassed Rokel Commercial Bank in terms of recognition: it has won more than 30 awards from indigenous and international organisations over the past two years. Rokel Commercial Bank has become a champion for financial inclusion in Sierra Leone. Revolutionary mobile-based products like the Rokel Simkorpor has taken banking to virtually every corner of the country, while its sponsored national debating competitions on financial literacy have invariably helped to broaden the financial knowledge base of a critical mass of young people. The government holds 65 percent shares in Rokel, with 35 percent owned by private institutions and individuals. It provides about 25 percent of all banking activities in the country. CFI.co | Capital Finance International

Originally Barclays Bank, it was established in 1917 and operated with 100 percent shares owned by the parent company – Barclays of England. The name changed to Barclays Bank of Sierra Leone Limited in 1971 after it was incorporated with 25 percent shares owned by Sierra Leoneans and 75 percent Barclays Bank International. In 1999, Barclays transferred 100 percent ownership to the government and people of Sierra Leone, and Rokel. i 117

> First Ally Capital Limited:

A Sharp Eye for Financial Solutions First Ally Capital Limited (FACL) recently hosted an event at Nigeriaâ&#x20AC;&#x2122;s Federal Capital Territory to mark the opening of the Abuja branch of its asset management subsidiary, First Ally Asset Management (FAAM).

n attendance were representatives from the oil and gas, finance, agriculture, insurance and other sectors of the Nigerian economy. FACL offers an array of products and services capable of raising the standards of the financial services industry. Over the course of 2019, the group acted as Co-Issuing House in respect of a major bond issue by a tier one Nigerian bank. It also acted as M&A advisor to the Mauritius-based acquirer of a leading Nigerian asset management business, and launched its first money market fund. That fund was over-subscribed and listed on the FMDQ Securities Exchange. The Group extended its network to Abuja and acquired its new corporate headquarters in the highbrow Ajose Adeogun Street in Victoria Island, Lagos. The First Ally brand has commanded attention for its achievements within a short time. The firm was licensed by the Nigerian Securities & Exchange Commission (SEC) as an advisory, issuing house and underwriting firm in November 2014. FACL was founded with a vision to redefine the financial services landscape through the adoption of global standards and exceptional service delivery. After its first full year of operation, the Nigerian economy slipped into recession, bringing economic and business challenges. Key amongst these were a loss of confidence in Nigeriaâ&#x20AC;&#x2122;s economic direction, the withdrawal of foreign investors and a contraction of the capital market. Established as a dynamic, forward-thinking financial services firm, the company was built to serve the high-end, middle-class and underserved socio-economic sectors. Different vehicles were established to serve these segments. While FACL, the parent brand, provides corporate/project financial advisory and capital raising services to corporates; FAAM, its asset management subsidiary, provides funds and wealth management services on pooled and segregated bases. Particular attention is placed on attracting retail investors into the capital market, which had been the almost exclusive preserve of portfolio investors and wealthy individuals. 118

Founding Managing Director and CEO: Ebenezer Olufowose

Its second subsidiary, Personal Trust Microfinance Bank (Personal Trust) was established 25 years ago as a savings and loans organisation. It was acquired by FACL and converted to a microfinance bank in 2014. The re-positioned bank has a mandate CFI.co | Capital Finance International

to provide services to small- and medium-scale businesses, as well as to under-served sectors of the economy. The growing demand for retail lending products and the fintech evolution have been instrumental in revolutionising banking services in Nigeria.

Winter 2019 - 2020 Issue

With the advances of technology, the path to new banking transactions has opened. Personal Trust plays in this space via a partnership with a leading fintech company. The bank has also developed its own digital lending product, MoniNow, aimed at low- to middle-income salary earners. FACL’s third subsidiary, First Ally Bureau De Change, has its headquarters at the Murtala Muhammed International Airport, providing retail foreign exchange services to the group’s clients as well as travellers. It provides personal and business travel allowances, offshore school fees and mortgage payments, as well as retail foreign-exchange purchases and sales. First Ally harnesses digital technology to build its growing retail franchise. In the words of the founding managing director and CEO, Ebenezer Olufowose, “corporations and individuals face a number of remarkable opportunities and challenges”. “They are tasked with finding lucrative areas for expansion, growth and value-creation,” he said. “They seek insight and direction to decipher where opportunities are highest. They also seek financial support to maximise every opportunity. We fill the gap by supporting organisations and individuals in their move to the area of largest

opportunities. For us, it is courage in the face of reality.” Olufowose, an alumnus of the Harvard Business School, is a respected professional in the investment banking world. He holds a firstclass honours Bachelor Degree in Economics from the University of Lagos, and a Master’s in International Economics from the University of Sussex, England, where he studied as a Sir Adam Thomson Scholar. Prior to setting up First Ally Capital, he was a director with Citigroup, and executive director with Citibank Nigeria and Access Bank. He started FACL with a select group of professionals as shareholders and directors, with Olufemi Akinsanya as chairman. Akinsanya is one of the founders of the Nigerian Economic Summit Group, and a major player in modernising the Nigerian securities market. Other directors include engineer Funsho Kupolokun, a former special assistant to the President of the Federal Republic of Nigeria on petroleum matters. He was previously group managing director of the Nigerian National Petroleum Corporation (NNPC). Biodun Arokodare was group executive director at NNPC, and Ayoola Oduntan is the group managing CFI.co | Capital Finance International

director of Amo Farm Sieberer Hatchery, whose initiatives have been the subject of a case study by the Harvard Business School. Ebenezer Olufowose says the swift achievement of FACL was noteworthy. “We are particularly proud of the combined track record of our team,” he said, noting the diverse industry background of shareholders and directors, management’s wealth of experience and performance record. He also gave credit to the firm’s robust business network and strong capital base. “Our team’s record and complementary skills position us to effectively support clients’ transactions,” he said, “and enable us to create continual growth opportunities for all stakeholders.” “First Ally is a group driven by excellence and integrity through commitment to ethical behavior, innovation and quality. Our core values of trust, integrity, professionalism, client-focus, teamwork and innovation underlie all that we think and do. “We are committed to making First Ally the best place for smart, inquisitive and ambitious people to thrive. We are committed to improving productivity and empowering every person to do, and achieve, more”. i 119

> Exxaro’s Socio-Economic Initiatives:

Empowering Communities and More

t’s been a fruitful year for South African resource company Exxaro, which has bolstered its reputation with concerted efforts in socio-economic responsibility.

The company is devoted to creating to bettering the lives of community residents with meaningful investments. POWERING DIGITAL INNOVATION One initiative saw Exxaro commit R20bn ($1.36bn) 120

to the expansion of its production portfolio at the South Africa Investment Conference. President Cyril Ramaphosa aims to raise $100bn in the next five years through his investment drive, and Exxaro’s investment will help to transform South Africa’s socio-economic landscape. Exxaro is also injecting some R10bn ($680m) into expansion projects in the Lephalale region, site of the flagship Grootegeluk operation, and a further R10bn in the Mpumalanga area, where CFI.co | Capital Finance International

the remainder of the mines are situated. This includes the Belfast mine, the first digitally connected mine in South Africa. The Belfast mine’s digital footprint captures the essence of Exxaro’s 2026 strategy, combining technology and collaboration as a catalyst for significant change. The mine continues to push the boundaries of real-time decision-making and productivity

Winter 2019 - 2020 Issue

progress of digitalisation, job creation, upskilling of employees, and sustainability. POWERING YOUTH DEVELOPMENT The company invests in youth development and an initiative, Youth Exponential Development programme (YDx) — run in partnership with SADICO — helps communities to adapt to the changing environment. It is spurred on by new technologies and the Fourth Industrial Revolution (4IR). Exxaro has invested R40m ($2.7m) in YDx to upskill 34 South African youths from underprivileged backgrounds in “train and trainer” instruction. This focuses on skills such as digital technology (telecommunications, IT, broadcasting and Internet) and Fourth Industrial Revolution concepts such as the Internet of Things (IoT), Artifi-cial Intelligence (AI), robotics, 3D-printing, nanotechnology, autonomous vehicles, cryptocurrency and cybersecurity. With these skills, participants are able to start the digital skills training process for others, and 400 people have already benefited from the programme. Skills development and education are vital to the digital future of the African continent, and programmes like these help Exxaro to have a positive impact on South Africa’s unemployment rate. POWERING COMMUNITY DEVELOPMENT Another way Exxaro contributes to South Africa’s economic growth is through its investment in SMMEs, supporting business owners in a drive for economic transformation. improvements. It started operations this year, producing coal with relatively low sulphur and nitrogen oxide emissions. The shift to digital allows Exxaro’s maintenance teams to remotely monitor equipment to access performance data, facilitating early problem-detection. Coal production at the mine underscores the importance of the future of the resourcee for South Africa, and the pivotal role the commodity plays. Belfast production showcases the

By the end of August 2019, Exxaro had created 178 permanent jobs through its social investments, Enterprise and Supplier Development (ESD) initiatives and Social Labour Plans (SLPs). A partnership with Nasua Mpumalanga has provided Emakhazeni Local Municipality with free community wi-fi. Hotspots are available at the Municipal Hall, Exxaro Business Enterprise Development Centre, Belfast Taxi Rank, Belfast CFI.co | Capital Finance International

Clinic, the community hall, U Save Shopping Centre, 4 Ways Take Away and Kayalami High School. Another example is the Flashing Lites aid initiative. Flashing Lites is a black-owned production studio for corporate films, livestreaming, animation and photography battling high rents and poor cash flow. Exxaro provided funding to secure the future of the business. With this mindset, the company introduced GaNala municipality in Mpumalanga to the new community hall, built by Exxaro and the people of Ga-Nala. It can accommodate 560 people, and will be used for events and programmes to promote individual and community social inclusion. The Ga-Nala community hall is just one of several recent empowerment initiatives and outreache efforts by Exxaro. After purchasing the old Total Coal SA assets in Mpumalanga in 2015, the company has constructed Bonginhlanhla Primary School, in collaboration with Seriti and Eskom, several local maths and science literacy programmes, and refurbished the Ga-Nala landfill site. EMPOWERING PEOPLE Exxaro recently launched its conneXXion building, aimed at enhancing the health and wellbeing of employees while minimising their environmental footprint. The building has a Five Green Star-rating from the Green Building Council of South Africa, with e-parking bays and central staircases, to encourage employees to avoid elevators. The conneXXion building epitomises innovation and represents Exxaro’s commitment to the environment, reducing the carbon footprint, and conserving natural resources. As the unemployment rate falls, Exxaro minimises negative impacts of operations and raises the country’s economy and morale. Exxaro pledges to continue investing in initiatives for underprivileged communities to build a brighter tomorrow. i 121

> Meat-free

Workplaces Hold Genuine Environmental Promise By Dane Cobain

Sustainability is a hot topic, with 66 percent of global consumers — and 73 percent of millennials — willing to spend more for goods that make the ethical grade.

illennials say they would take a pay cut to work for a responsible organisation, and companies are starting to take sustainability more seriously — and not just because of societal pressure. There’s a financial incentive for them. Poor employee health costs $530bn and results in 1.4 billion sick days. Serving meat-free meals can help; even a 0.1 percent improvement in health would save $530m and 1.4 million of those sick days. You’ve probably heard of Meat-Free Monday, founded back in 2003. It’s an international initiative which encourages vegetarian and vegan eating options as a means to improve health — yours, and that of the planet. Companies are keen to support CSR projects, donating time and resources and championing small local businesses. They can also make a difference by changing what is eaten, and served, at workplace canteens and cafes. Nutrition is often an afterthought when there’s a business to run. And while health benefits and animal welfare are obvious positives, they’re not the only thing to consider. The most important benefit is for the environment. A change in diet has a much greater effect on the environment than switching from plastic to paper straws. (And there’s no reason you can’t do both, of course.) If everyone in the United States skipped meat and cheese for one day a week, it would be the equivalent of taking 7.6 million cars off the road. This is good news, because it means that any company of any size can make a positive impact. That doesn’t mean cancelling other CSR programmes, and meat-free food options are cheaper and more available than ever. It’s important to give employees choice. Banning meat products outright can cause dissent. A company shouldn’t be a totalitarian regime that rules by decree. The process should start with education. If you provide healthy choices and follow up with information, employees are empowered and more likely to make ethical choices.

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A plant-based diet has been shown to prevent, and even reverse, heart disease. The Independent recently reported that the meat and dairy industries are the biggest contributors to climate change, outpacing even fossil fuels. Google has introduced more plant-based food options at its cafeterias and events in a bid to be greener. Never mind that global data centre emissions rival air travel pollution and that the energy needs of data centres will triple by 2025. Tech companies are funding innovation to combat inefficiencies. What’s particularly interesting about Google is that it’s pushing for change outside the company. It has partnered with Better Buying Lab and the World Resources Institute to revise restaurant philosophy; only five percent of menu options in the US are vegan. Facebook has been running vegan workshops to educate its employees; workspace specialist WeWork went so far as to ban meat at all of its locations. The German environment ministry became the first government agency to ban meat and fish from official functions in an effort to lead by example. It was a bold decision, and the government came under fire for it. Most companies aren’t ready for such direct action, and that’s OK. Strong statements aren’t for everyone. You can adopt an approach of corporate-sponsored meals meat-free, with employees free to consume what they want. Healthy and environmentally friendly choices become the default. Meat-Free Monday provides a chance for a pilot programme to gauge response. With the correct mix of education and incentive, employees can buy — and bite — into something positive. They can do their bit in the workplace and eat whatever they like for dinner. The main problem is inertia. For us to break that, the solution must be convenient. We’re more likely to recycle if it’s an easy option. By going meat-free, your company can encourage employees to make a big difference one meal at a time. With recent vegan innovations, you don’t have to sacrifice taste, either. Result. i CFI.co | Capital Finance International

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> Take

5: The Case for Being More Authentic at Work Kellogg Insight

When done thoughtfully, authenticity can make for more confident, ethical leaders. Here’s how to ensure you’re being your true self.

es, yes, we know: “Be yourself.” But this tired advice is much easier said than done — especially in the workplace, where we strive to be seen as unflappable superheroes with a singular focus on our jobs.

Indeed, many people are (understandably) hesitant to expose their emotions, fears, and desires to their colleagues, bosses, employees, or customers. “They think that if they are truly themselves, people won’t accept it,” says Brenda Booth, a clinical professor of management at Kellogg. Yet being authentic at work is likely a risk worth taking. Booth and fellow Kellogg faculty members make a powerful case for authenticity in the workplace, explaining how it can make workers more ethical, leaders more confident, and customer relationships stronger. They also share concrete steps you can take to be yourself — from developing an authentic leadership style, to discovering your deeper purpose. 1. WHY YOU SHOULD BE YOUR “WHOLE SELF” AT WORK Everyone has multiple identities that they trot out depending on the social context—say, the business persona at work, the friend persona at book club, and the parent persona at bedtime.

than those who were primed to integrate their identities. The researchers then tested whether the same results hold in the real world. They queried 150 actual employee-manager pairs, and found that when employees reported feeling like their different identities were not integrated, they were more frequently caught by their bosses engaging in bad behaviors (like fudging expense reports or mistreating coworkers). Managers looking to encourage good behavior should take note, says Kouchaki, an associate professor of management and organisations. “It’s in an organisation’s interest to help people feel more control over and cohesion in their identity.” 2. BUILD A PERSONAL BRAND THAT’S TRUE TO WHO YOU ARE One task that can often feel inauthentic: building your “personal brand.” “People worry that selling themselves means giving a false impression,” says clinical associate professor Suzanne Muchin. “But nothing could be further from the truth. Great selling requires the purest form of authenticity.” To Muchin, an effective personal brand consists not of buzz words (“adaptable,” “self-starter”) but of stories that convey a person’s values, principles, and goals. And in an authentic personal brand, those stories will capture what really makes a person unique.

Is there any harm in compartmentalising those disparate identities? Yes, according to Maryam Kouchaki, whose research suggests that people are more likely to engage in unethical behavior when they separate their personal and business lives.

To identify your own authentic stories, Muchin recommends asking yourself, “What’s my unique value proposition to the person sitting across from me? What do I want to be memorable for?”

In one experiment, Kouchaki and colleagues found that priming individuals to see their work and home identities as distinct led them to harbor more feelings of inauthenticity, such as “I am unsure of what my ‘real’ feelings are.”

But Muchin points out that being authentic does not mean going off-the-cuff. When she’s preparing to participate in a panel, for instance, she carefully plots the “beats” of the conversation—the key points she wants to make, the stories she wants to tell, the questions she wants to ask others—but stops short of scripting anything.

And those inauthentic feelings had consequences. In a follow-up experiment, participants who were primed to separate their identities cheated significantly more often in a coin-toss game 124

“You want to be authentic, but you also need to be artful,” Muchin says. “And that requires discipline.” CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

3. GREAT LEADERS KNOW THEMSELVES — AND PLAY TO THEIR STRENGTHS When thrust into a leadership role, many people worry that their “true” self will not be tough or confident enough to hack it. As a result, they often simply start imitating what they see other leaders doing, says Brenda Booth. But Booth and Brooke Vuckovic, an adjunct professor of leadership, argue that great leaders must learn to amplify their true selves instead of borrowing from others. “It is about being comfortable in your own skin so you can lead the organisation in a way where you do not feel like a charlatan,” says Booth. That process begins with discovering your unique strengths. Booth and Vuckovic emphasise that not all great leaders fit the same mold. Rather, what sets them apart is the ability to recognise how they affect others. For example, self-professed introvert Douglas Conant won the admiration of many as CEO of Campbell’s Soup not by making bold, fist-pounding speeches, but by strolling the halls to meet employees face-to-face, and sending handwritten notes to those he wanted to acknowledge. “That was his version of authentic leadership,” says Booth. And it’s important to remember that authenticity does not guarantee popularity. “People may not like what you do even if you are authentic,” says Booth. “But if you focus on what is right for the organisation, then chances are you will earn the respect of the vast majority.”

pair it sells) or entertainment value (such as Marriott International, which introduced an online game that lets players manage a virtual hotel). But just like any friendship, an authentic customer relationship requires sustained effort, Sawhney warns. “It’s an ongoing conversation. You can’t expect customers to tune in only when you have a product to launch.” 5. HOW TO FIND — AND PURSUE — YOUR AUTHENTIC PURPOSE What can you do if your career does not feel true to who you are? Nicholas Pearce has often seen successful executives grapple with that question. “Many of them had achieved great things, but at a certain point they looked back and said, ‘What was it all for?’” says Pearce, a clinical associate professor. “The market applauded them. Wall Street applauded them. But a part of them was dying daily.” In his book, The Purpose Path: A Guide to Pursuing Your Authentic Life’s Work, Pearce lays out strategies people can use to better “align their souls with their roles.” It starts with defining what success should look like for you. Too often, people end up judging themselves using someone else’s scorecard. “People chase after things other people told them they should want,” Pearce says.

4. AUTHENTIC CUSTOMER RELATIONSHIPS ARE STRONGER CUSTOMER RELATIONSHIPS Being genuine matters for organisations’ brands, too.

One way to build a more authentic rubric: Don’t forget about the downsides that come with traditional measures of success, like salary and title. People in high-paying careers, for example, often have to sacrifice their leisure time or forego more meaningful work. Including those kinds of drawbacks in your calculus can help you make better decisions.

In the social media era, customers have come to expect personal connections with brands, says Mohan Sawhney, a clinical professor of marketing. That’s why it’s crucial for companies to embrace the “engagement marketing” model, which aims to establish a deeper, more sustained relationship in which customer needs are genuinely addressed.

Pearce says that talking to mentors, colleagues, and family members can also help highlight core traits and values that you may not recognise through your own introspection. And exercises like the “Johari Window,” in which you and a peer each choose a series of traits to describe you, can do the same.

“If you only talk to customers about what you sell them, they have the option of tuning out,” Sawhney says. “The motto for engagement marketing is, ‘Ask not how you can sell, but how you can help.’”

Once you’ve figured out your end goal, Pearce says, start strategising how to get there. That could mean a career overhaul, or smaller steps like volunteering or enrolling in night classes.

Engagement marketers see advertising, for example, not as a means to an end, but as something that can provide real value. Take Valspar Paint, which built an app that not only sells people paint, but also lets them schedule virtual consultations with a color expert.

“Sometimes we do need to summon the courage to take the leap,” he says, “even if that leap means we don’t necessarily quit our job right away.” i

Other brands authentically engage their customers by offering community (such as American Express, which started a successful online forum for business owners), a sense of inspiration (such as Toms, which donates one pair of shoes for every CFI.co | Capital Finance International

Based on the research and insights of Maryam Kouchaki, Suzanne Muchin, Brenda, Ellington Booth, Brooke Vuckovic, Mohanbir S Sawhney, Nicholas Pearce.

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> Middle East

Oman’s Regional Status and Focus Come Under Scrutiny By Brendan Filipovski

Oman modernised its economy in the 1970s, united opposition, and became a regional mediator. Now with low oil prices and dwindling reserves, it needs another economic transformation. The pressure is on the national budget, which has led to six recent credit downgrades of Oman’s sovereign rating by Moody’s. In the longer term, the country’s stability and regional role are at stake. Oman’s fiscal position, current accounts deficit and public debt are causing concern for its macroeconomic stability. Since 2014, the budget has fallen into deficit (minus eight percent of GDP in 2018). This has led to an increase in public debt and interest payments, adding to future fiscal expenditure (chart 1). It has also been accompanied by a current account deficit of -5.5 percent of GDP (a twin deficit). The IMF and ratings agencies have recommended fiscal reforms and diversification to ensure stability. Oman has made a start with the widening of its tax base to include excise on carbonated drinks (50 percent), alcohol, energy drinks, pork and tobacco products (100 percent). It will introduce a five percent VAT in 2020. 800

700

48 Gross Public Debt (% of GDP) (RHS)

600 500

36 24

Overall Fiscal Balance (% of GDP) (RHS)

400

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200

-12 Interest Payments on Public Debt

100

-24

(Omani Riyals million) (LHS)

-36 2002

2004

2006

2008

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Chart 1: Overall Fiscal Balance, Gross Public Debt, and Interest Payments. Sources: IMF and Omani State Statistical Office

2014

2016

2018

he country’s short-term position is sound because of its large reserves. The central bank holds around $17.4bn in foreign reserves, which have more than tripled since 2006 and represent around five months of imports. Oman’s sovereign wealth fund, the State General Reserve Fund (SGRF), also provides a $13 - $15bn buffer. Without an improvement in the medium- or long-term, Oman risks social instability. Past economic difficulties have led to protests such as the Arab Spring and others on a smaller scale. The number of working-age people will reach a peak in 2040, and creating jobs will be critical for stability. Oman could also lose some of its economic independence and political neutrality in the medium term if fiscal pressure is not addressed. In the event of a crisis, any IMF help would involve strict reform requirements unlikely be popular with the public. If help were provided by richer neighbours, Oman would risk losing its political neutrality. It has long played the role of mediator, maintaining good relationships with Saudi Arabia, Iran, Qatar, Israel and the US. It also works closely with OPEC, despite choosing not to be a member. A turning point came in 2014 with a drop in the oil price (chart 2). In August 2014, Oman’s oil price averaged $108 per barrel; by March 2016 it had fallen by 75 percent to just $27. It has since recovered to around $60, but the IMF does not expect a swift return to the highs of 2014. While Oman’s oil reserves are small at 5.4 trillion barrels (Kuwait has 101.5, the UAE 97.8, and Qatar 25.2), they provide the largest share of the government’s revenue (54 percent in 2019). The next largest revenue item is gas (20 percent). The oil price thus has a major effect on Oman’s fiscal balance. If it falls below $85, Oman’s budget is generally in deficit. Since January 2015, the average monthly oil price has remained below $86 and is currently around $64. Oil is crucial to the balance of payments and the economy. It is the largest export (49 percent in 2017 – crude and refined) and contributes around 35 percent of GDP (2018). The next largest contributor is public administration and defence (12 percent). This dependence on oil is amplified as a problem because Oman’s reserves are nearly depleted, with around 14 years remaining; gas has around 17 years with the use of advanced extraction techniques. In contrast, the neighbouring UAE has reserves that should last 150 years. Diversification is in focus with the impending depletion of oil. In 2017, the government launched a national programme, Tanfeedh, as part of the ninth five-year plan 2016 to 2019. It has been developed in co-operation with the

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Millions of barrels Production of Condensate MTBE & Crude Oil (LHS) 35

USD per barrel Average Price of Crude Oil (RHS) 140

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0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Chart 2: Average Price of Crude Oil and Production (Months). Source: Omani State Statistical Office

Malaysian government and modelled on their economic transformation programme. It focuses on developing key non-oil sectors such as tourism, transportation, logistics, mining, and fishing. Unlike previous plans, however, it has a strong focus on working closely with stakeholders. In 2016, key private and public sector stakeholders were engaged in a six-week programme where goals, KPIs, and processes were clarified. This process has brought a new level of accountability to diversification efforts. In 2017, the government launched the Vision 2040 roadmap with13 economic and social goals, including the goal of Economic Diversification and Fiscal Sustainability. It also includes the option of part or full privatisation of state-owned enterprises (SOEs). Leading SOEs have been asked to submit plans for this. The roadmap will be used in the development of fiveyear plans to 2040. Like Tanfeedh, the roadmap was launched with large-scale stakeholder involvement (a two-day national conference) and workshops. A focus on developing tourism makes sense, given Oman’s geographic position, natural attractions and historical sites. There is also potential for future growth. The strategy focuses on simplifying regulations, privatising attractions (to be integrated with hotel deals), and better leveraging of the business conference market. The government has also consolidated its aviation and airport operations into a single company, Oman Aviation Group, with the aim of improving international marketing and market share.

Oman’s geographical position. There are plans to establish four free zones, including at the deepsea port in Sohar, and Duqm. Sohar is being developed with the help of a Chinese construction company, while Duqm is benefitting from Chinese loans and investment as part of the Belt and Road initiative. Since 2003, China has been one of the largest importers of Oman’s oil. The government is also developing the Omani Shipping Company (OSC), with plans to increase from 49 ships to 71 by 2023. The OSC provides mineral transport and a feeder service to the region’s biggest port in Jebel Ali, Dubai. An increase in ships will increase Oman’s capacity to play a bigger regional role, including thirdparty feeder services for other countries. Vision 2040 also includes a focus on entrepreneurship and start-ups. This is important for creating jobs and increasing the number of SMEs in the country. A key part of this vision was the creation of the Oman Technology Fund (OTF) in 2016 with $200m from the SGRF. The OTF invests in start-ups in Oman and the MENA. The government is also improving the regulatory environment for start-ups with new foreign investment laws and plans to improve the bankruptcy laws. This is key, given that the World Bank’s Doing Business 2019 report ranks Oman at 12 for business taxes and 37 for starting a business — but 100 for resolving insolvency and 125 for protecting minority investors.

Dubai is the biggest tourism success story in the region and provides a template — but also strong competition.

The government is also improving the technological infrastructure for start-ups, including the national fibre-optic network which began construction in 2015.

The government intends to increase Oman’s share of the regional shipping market. Historically it has been a key industry because of

The oil price drop in 2014 may yet prove a blessing in disguise; it has forced the government to contemplate and plan for life without oil. i

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

> Department of Finance, Government of Ajman, UAE:

Ajman Finances in Good Hands

he Department of Finance of the government of Ajman plays a key role in providing financial services for the sustainable development of the emirate.

It was established by Amiri Decree No. (8) 2002 and restructured in 2010 to form the Department of Financial and Administrative Affairs under the Emiri Decree No. (4). It was further modified under the order of Amiri Decree No. (15) of 2012 to form the Department of Finance (DOF). The DOF supervises all the financial affairs of the emirate's government and establishes and implements the emirate’s general annual budget. It works in co-operation with local government Departments, issuing final accounts and verifying the collection of public revenue as well as transferring funds to the relevant agencies. Preparation, adoption and development of government resources with agencies is also part of the DOF remit, preparing bills of laws and local decrees related to financial affairs, consulting and providing technical support in the Unified Financial System of Ajman. Budget Department

The Government Budgets Division has various tasks and responsibilities. It prepares, reviews and updates the current budget and financial planning methodologies in accordance with best practice. It also studies and analyses each draft annual budget and liaises with other departments and authorities. The DOF also prepares the draft general annual budget of the Government of Ajman and monitors its execution, in addition to monitoring and controlling withdrawals, transfers and additions. Trends and performance are analysed against financial revenue. The DOF prepares periodic financial performance reports, studies the potential financial impact of amendments and additional credits received, and drafts decrees and legal resolutions. Cashflow projections are created for the Ajman Government, with comprehensive performance reports, management systems development and government performance indicators. The budgets division excels in preparing medium-term financial plans, and integrating financial and strategic planning. The Smart Financial Planning and Analysis system is a strategic initiative launched by the DOF to

improve the Public Financial Management system by transforming the government’s budgeting system into a performance-based budgeting system. The system enhances the planning, analysis and preparation of the Ajman Financial Plan and budget by partnering with the Department of Finance and local government departments. It represents a qualitative shift in the management of resources, from spending to planning. A mediumterm plan is being created to integrate strategic and financial planning to rationalise spending, financial discipline, financial sustainability and more diversified and sustainable economic growth.

• Processes vast amount of data in real time • Detects and analyses data trends • Uses inbuilt solution generation capabilities The user-friendly screens follow-up the business process “tree” and the credits passed by the data before submission. Risks are analysed and financial impacts on future projects are studied. PEFA is a methodology for assessing public financial management performance. It identifies 94 characteristics (dimensions) across 31 key components of public financial management (indicators) in seven broad areas of activity (pillars).

In line with the digital revolution with artificial intelligence, the system is based on the principles of AI with reports and dashboards displaying information and data to create a more informed decision-making process.

The adoption of these indicators is a strategic initiative to strengthen DOF capacities to assess the status of country public financial management (PFM) systems and develop a practical sequence of reform and capacity development actions.

Features of the Smart financial planning and analysis system: • Recognition and analysis of inputs to deliver quality outputs • Continuous development and improvement, backed by an automated analysis process, which is self-monitored

The PEFA programme provides a framework for assessing and reporting on PFM, using quantitative indicators. It is designed to provide a snapshot of performance at specific points in time using a methodology that can be replicated in successive assessments, giving a summary of changes over time. i

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> SFO Group:

A Disciplined Approach to Real Estate Investing SFO Group is a multi-family office and an active global real estate investor.

t focuses on international direct real estate investment and offers wealth-management services to member families. Real estate is SFO’s preferred asset class which, when coupled with traditional asset classes, lowers the overall volatility of a portfolio. This constitutes a defensive alternative, hedging against inflation while providing geographical diversification. Led by CEO Mohamad Abouchalbak, SFO’s 20-strong team of professionals operates from bases in London, Paris, Miami and Beirut. The team members bring diverse and complementary experience to the table, specialising in private equity real estate, advisory and investment banking, with its members having held positions with global financial institutions and/or real estate investment funds. The result is a balance of youth and experience that makes SFO a dynamic and agile player. SFO follows a disciplined approach to real estate investing by adopting distinct investment strategies in select geographies. It has developed deep knowledge of the markets and the investment landscape. “Our solid track record shows that we are on the right path,” says Abouchalbak, “working with trusted partners to source, underwrite and manage high quality assets in promising locations.” SFO’s US housing programme — which accounts for more than half of its existing portfolio — acquires income-generating assets with long-term appreciation prospects. This provides a hedge against inflation and interest rate hikes, targeting US multifamily properties in secondary cities benefitting from favourable demographics, talent pools and businessfriendly fiscal environments, and generating strong in-place cash flows with predictable yields and solid leasing history. SFO also focuses on student accommodation close to top-tier state universities with sustained enrolment growth and supportive supply and demand dynamics, attracting investors who seek stable income streams. A case in point is the acquisition of Landmark at Creekside Grand, a multifamily community of c. 500 units in Atlanta, Georgia. Atlanta is the economic powerhouse of the south-east, leading job-creation efforts and home to 16 of America’s Fortune 500 companies.

130

Repositioning of Hoche 17: Acquired in 2019, located in Paris, France. Source: ASA

Keller Springs Crossing: Multifamily asset acquired in 2017,

Ridge: Student housing asset acquired in 2018, located in

located in Dallas, Texas, USA.

Gainesville, Florida, USA.

“Our acquisition of Landmark, followed by the implementation of our value-add programme and successful exit, cements our reputation for delivering attractive returns in highly competitive markets,”, Abouchalbak says.

This programme caters to investors seeking currency and geographic diversification, capturing value in the form of capital appreciation realised over shorter holding periods.

The Commercial Value-Add programme represents a third of SFO’s growing portfolio, focusing on the acquisition of under-invested assets by implementing capital improvement programmes. It targets office buildings in select European cities including Paris and Germany’s “Big Seven”. CFI.co | Capital Finance International

As of November 2019, SFO has acquired assets totalling some $1.1bn, comprising more than 4,000 US housing units and 5 million of square feet of commercial space. SFO is a member of Saradar Capital Holding, a diversified family conglomerate with a 70-year-old history of building excellence across sectors and geographies. i

Winter 2019 - 2020 Issue

> Take a Tech Tip From the Top:

Grab It While It’s Fresh and Find Ways to Apply It to Industry and Business By Dane Cobain

We live in a tech-driven society and advances in the area are increasingly governing our lives, from work to leisure.

ith a new decade looming, the race is on to predict the next big hit — and the hot tech of tomorrow could well be the tools we’re already using. Multi-billion-dollar companies are constructed around data, which some pundits call the “new oil”. Andrew Ng, founder of Google Brain and former chief scientist at Baidu, says AI is “the new electricity”. AI means any software that imitates our cognition. Machines that process data in millions of instructions per second (MIPS) are way faster than the human brain. It has applications across every industry, from streamlining drug dosing (and potentially saving $16bn a year) to powering non-player characters in video games. Some 83 percent of businesses say AI is a strategic priority, and the market is set to grow to $190bn by 2025. It is estimated that by 2021, 80 percent of emerging technologies will use it in some form, and 44 percent of executives say it will drive better decision-making. Machine learning (ML), a sister technology in which algorithms are able to train themselves to learn, can deduce things and make predictions. Self-driving cars using ML need only anticipate what a human would do in a given situation. This is achieved by gathering human data and processing it. Other types of ML algorithms function in a similar way. Netflix makes viewer recommendations by crunching data of what users do and don’t like and churn out relevant predictions on whether a viewer is likely to enjoy. AI and machine learning are used to power natural language processing (NLP). This is designed to provide more efficient interfacing between humans and computers. The voice recognition software in your Google Home or Amazon Echo wouldn’t be possible without NLP. Voice itself has an increasingly important role. Experiments are being carried out in Japan to investigate how electronic voice assistants could help guide care of the elderly. This isn’t a niche — the ageing population is growing. Most AI/ML algorithms are powered by cloud computing, able to tap into virtually limitless

"In the US healthcare industry, patients have no control over their data, and it’s scattered across different providers who don’t always cooperate with each other."

Blockchain also has potential in the real estate market. Permanent records could be created, including purchasing history and even when repairs were carried out. It would democratise information and make for a fairer playing field for buyers and sellers. Then there’s virtual reality (VR) and augmented reality (AR), technologies that go hand-in-hand but have important differences. Virtual reality typically uses headsets, and aims to provide an immersive experience in which we’re taken away from our “true” reality and transported into an entirely artificial one. Examples include the Oculus Rift and the HTC VIVE.

resources to scale-up and -down depending on the amount of data. “Big data” is just a convenient term for information stockpiles that are difficult to visualise. In 2018, Forbes reported that 90 percent of current global data was generated in the past two years.

Augmented reality typically consists of overlaying virtual elements on the reality that we see. Examples of this include the digital readouts on Google Glass devices, and the way that Pokémon Go allows players to see digital creatures overlaid on the real world.

It has to be stored somewhere, of course, and blockchain could provide a solution. The underlying technology for cryptocurrencies has potential applications in a range of industries. This decentralised database works in a similar way to peer-to-peer file-sharing, not governed by any agency and essentially “unhackable”, and democratic by design.

AR and VR are associated more with entertainment than business, and that’s where attention has been focused. There’s plenty of room for growth and innovation, and there is already a digital marketplace using advertisements incorporating AR.

In the US healthcare industry, patients have no control over their data, and it’s scattered across different providers who don’t always co-operate with each other. This is not in the patients’ best interests. Blockchain records could be stored in a centralised system giving them granular control over access to their records. The healthcare industry is also ripe for disruption. Imagine a “Netflix” of healthcare which could make treatment recommendations based on what’s worked for other, similar patients. AI and ML could also power drug discovery by enabling pharmaceutical companies to run simulations to determine where to focus their attention. AIpowered medical robots and NLP could help to process doctors’ notes (and decipher their handwriting). CFI.co | Capital Finance International

There’s other stuff, such as quantum computing, that we could talk about — but we’re a few years away true commercial applications. Major trends over the next five years or so will be the more mainstream implementation of today’s cuttingedge technologies. But it’s almost impossible to predict what tomorrow’s emerging technologies will be. If it could be done, they’d already exist. So the best way to prepare for the future is to keep an eye on the present. We need to adapt to technologies quicker than the competition if we want to use it to become industry leaders. Without adopting these technologies and investing, the pace of innovation will slow. With any new development, it’s implementation that makes the difference. Find ways to make these technologies work for you. New technology is only useful if you don’t waste time with gadgets; put it to good use. i 131

> Tactical Management:

Global Goals and Expertise, Specific Focus on Looking After Client Needs

actical Management provides — as the name suggests — strategic management support.

In today’s competitive landscape, businesses operate in an ever-evolving environment of cross-border challenges. Tactical Management is dedicated to helping enterprises seeking to venture into overseas markets to find new ways to stimulate growth and maximise potential. 132

It does this in global markets and operates in nine countries, with associates in the Middle East, Africa, Asia Pacific, the Americas and Europe. Tactical Management has tackled 27 projects since its inception, providing 1,784 jobs and attracting $749m of investment. It operates in three main business divisions: Private Equity, Corporate Structuring and Multi-Family Office. Tactical Management also acts as a global and independent private equity firm. The team CFI.co | Capital Finance International

applies its collective skills and experience to serve clients across multiple industries. It focuses on its clients’ most critical issues and opportunities: strategy, operations, transformation, advanced analytics, global understanding, mergers and acquisitions and sustainability — across all industries and geographies. Tactical Management is one of the leading signature corporate structures company and manage all aspects of corporate structuring for

Winter 2019 - 2020 Issue

General Manager: Raphael Nagel

Business Development Specialist: Fatima Sotto

changing markets by using the advantages of different jurisdictions. Against the changing backdrop of digital innovation and the investment landscape, multifamily offices worldwide are in need of an update to meet the demands of ultra-high-net worth individuals and families. Tactical Management goes beyond wealth management and works on a bespoke service delivery model by removing any conflict of interest and taking charge with asset management advice.

Executive Director: Veronica Cabrera

His multidisciplinary academic background in Germany, UK and Spain and global knowledge in Law and Economics has contributed to his success in strategic planning, global networking, economic improvements and goal attainment. He holds a Masterâ&#x20AC;&#x2122;s Degree in Business and Corporate Law, a Master's Degree in Business Administration and he is on the way of receiving his Doctor's Degree in Engineering and Management of the Natural Environment, and he has a Specialisation in Refinancing and Business Restructuring

companies, partnerships and trusts. The firm has built an enviable reputation for advising on schemes of arrangement and cross-border mergers of regulated businesses.

Tactical Management assembles a global network of multidisciplinary systematic thinkers to design and deliver a specialised, personalised service.

Veronica Cabrera, executive director, is a dynamic and motivated professional with a proven record in generating and building relationships. She has managed projects from conception to completion and has a deep understanding in M&A process and debt restructuring. Cabrera leads and oversees the Dubai officeâ&#x20AC;&#x2122;s experts and is driven by results. She holds a degree in Law, Economics and Study in Refinancing and Business Restructuring.

The range of experience of its team grants the firm a in-depth understanding of the corporate requirements of each client group. Tactical Management also understands the need to deliver swift and innovative solutions, providing the opportunity to remain competitive in fast-

MEET THE TEAM Raphael Nagel is Tactical Managementâ&#x20AC;&#x2122;s general manager, with vast experience in the finance industry. He has held senior management positions in international banks and investment funds over a period of more than 17 years.

Business development specialist Fatima Sotto has years of experience in the field, working closely with managers in collective systematic planning strategies. She is team leader in SME companies in the UAE and Philippines. She holds a degree in Industrial Engineering Management. i

The firm brings functional expertise to the table, coupled with a holistic perspective, unbiased financial advice, timely execution, costeffective solutions and a strict focus on client confidentiality.

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> My Clinic in Saudi Arabia:

Taking the Lead in Premium Care and Relieving the Strain on Patients My Clinic, the largest such out¬patient facility in Jeddah – with a premium approach to patient care – is located on Prince Sultan Street and has been rising in popularity since opening in May 2017.

ehr Nazer, the General Manager, is a man with a positive and progressive approach to healthcare. While talking to him, the reason behind My Clinic's steady success becomes clear; it's the motivation to create a seamless patient journey and experience: "One of the things we focus on is minimising the time patients spend on paperwork and billing: creating ease in the process so they get maximum time with the doctor." On your visit to My Clinic, whether It's for a lab test or dental check-up, you'll find relief in the convenience of their one¬-stop reception desks, where everything from booking an appointment to getting approvals for insurance can be achieved. You'll spend little time finding your way around, as the layout of the clinic is very straightforward – with no excessive directions or signs that can confuse. My Clinic is unlike any other facility in the city. With its simplistic approach to branding and an open space with plenty of sunlight and refreshing plants, the clinic provides patients with a calm and peaceful environment. The walls are uncluttered; there are no charts and visuals filled with medical jargon that is of no interest to patients.

The clinic arranges everything electronically, so you don't have to carry paperwork around to get your treatment.

My Clinic takes patient experience very seriously. Each day, the management team walks around the clinic to help any patients who may have concerns. Service agents work daily on followup calls to gain feedback. Nazer explains, "Our service agents encourage patients to discuss any negative experiences. We review feedback daily and fix any issues that are highlighted. We've been doing this since the day we served our first patient." My Clinic plans to expand in Jeddah and major Saudi cities like

The waiting area on the floor that houses the Children's Health and Women's Health departments features a private nursing station and vibrant playroom, with some rooms having animated wallpaper to ensure a pleasant and fun experience for the kids.

My Clinic offers all clinical specialties with an individualised approach to medical care. Most of their doctors are experienced Saudi consultants with Western Board Certifications. i

The clinic arranges everything electronically, so you don't have to carry appointment slips or other paperwork around when arranging your treatment. A nurse will collect you from the waiting area, take you to triage, and instantly send your vitals to the doctor, who will evaluate them while you're on your way to the consultation room. If the doctor assigns any medication or requires lab tests, the pharmacy and lab will be ready to attend to your needs prior to your arrival. 134

Riyadh and the Eastern Region.

General Manager, My Clinic KSA: Fehr Nazer

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

> Linklease Founder & CEO Steve Thomas-Williams:

A Midlands Man with a Mission

Steve Thomas-Williams is not just another copy-paste banker who has followed a well-trodden path to running financial institutions in the Middle East.

e grew up in the industrial heartland of the UK and left school at 16 to join the local branch of Lloyds Bank. He was raring to get into the business world.

Fast-forward 16 years to 2004. Having completed almost every role in retail and commercial banking, Thomas-Williams had climbed the ladder to become the COO and board member of Lloyds Bank in Dubai. There he worked with Emaar & Nakheel to pioneer mortgages in the UAE as expat-owned property became available. He completed the first mortgage-backed property sale for an overseas bank. Several innovations later (in the fields of credit cards and internet banking), Thomas-Williams saw the region had an appetite for global best-practice — and this was something he understood from his grassroots beginning. Over the next four years, he grew the consumer and business banking sector from a single branch to a multi-branch operation spread across the Middle East. In 2007, he became CEO of Gulf Finance. He delivered strong results and the company won many awards during his tenure. In 2013, Steve Thomas-Williams was voted one of the Top 50 Influential Brits in the UAE by Arabian Business. In 2014 he set up Linklease with his wife Claire — also a senior banking executive — and colleagues Edward Allely, Mathew Kuban and Czes Brodalka. The plan was to bridge the gap between the demand for equipment from SMEs in the UAE and the appetite for global investment into assetbacked structures. It’s a plan the players are all well qualified to perform. Linklease has working partnerships with companies such as Oracle, BLME, Aston Martin and Zoomlion to provide leasing solutions across the Middle East. The scale of opportunity for equipmentleasing in the UAE and surrounding region is daily motivation the Linklease CEO. On one day he’ll be dealing with a clean energy biodiesel business, looking at acquiring refining

Founder & CEO: Steve Thomas-Williams

machinery, the next purchasing vital healthcare equipment for a hospital. Linklease has a pioneering multi-sector operation in the UAE, with operations now expanding into Saudi Arabia, India and Africa. Thomas-Williams is a former director of business development for the British Business Group UAE, and was the contributing editor for a CFI.co | Capital Finance International

nationally acclaimed book, Sink or Swim. The book explores the lessons learnt from businesses that survived the UAE economic downturn in 2009. He’s come a long way from his origins in the industrial Midlands, and is well equipped to deal with the challenges faced by companies growing in the UAE, as the country goes through its own growth revolution. i 135

> Deloitte:

InsurTech Boom Unlikely to Drive More Innovation Without Insurer Reinvention By Sam Friedman, Malika Gandhi, and Mark Purowitz

The InsurTech start-up boom may finally be fading after a decade in which the launch of nearly 1,200 new entities recorded by Venture Scanner was backed by over $16 billion in capital.

et few expect an InsurTech bust any time soon, thanks in large part to increasingly symbiotic relationship developing among InsurTechs and legacy insurers that is helping drive innovation initiatives. Many insurance companies initially viewed InsurTechs with suspicion, concerned whether the more digital-savvy upstarts would look to displace them. But while there are several InsurTech firms competing with established carriers, these are likely to be niche players. In the meantime, a growing number of insurers are becoming part of the vibrant, eclectic, yet still maturing InsurTech community as investors and end-users, now that it is clear most start-ups were launched to help improve their top- and bottom lines, not to drive them out of business. Many of the presentations at the recent InsurTech Connect conference in Las Vegas underscored the need for greater collaboration between the old and new guards. Insurers and start-ups emphasised the importance of working together as part of a broader innovation ecosystem to take advantage of one another’s strengths while counteracting weaknesses. This echoed interviews with a variety of insurance company innovation officers, venture capitalists, accelerators, and rating agencies for Deloitte’s September 2019 report on Accelerating Insurance Innovation in the Age of InsurTech. One of the report’s key messages urged insurers to start dealing with InsurTechs as co-developers and partners, rather than as vendors with a point solution.

3,500

3,261

3,071 3,000

2,740

2,641

2,500 2,000

1,591 1,564 1,500

465

127 55 57 15

2008

407

200

188 35 21 162

2009

450

574 321

80 106 4 10

110 164 37 10

2010

2011

Commercial Ins

147

445

Ins Customer Acquisition

225

685

820

1,148

249

137 46

163 87

2014

2015

2016

Ins Operations

762

394

516

2013

1,640

530

106 22 1

2012

751

443

1,466

1,000 500

480

1,714

853

1,740

613

2017

P2P Ins

368

277

192

283

2018

2019

Personal Ins

InsurTech funding by category/investment year ($Mn) through Q3 2019: Financing for InsurTechs hit highest level through Q3 2019. This despite dwindling number of startups launched, as investors focus on more mature targets.

Accelerating innovation in the age of InsurTech

Such symbiosis is likely to become the consensus approach across much of the industry over coming years. Co-operation can hasten learning curves and shorten development and implementation times. That’s probably why more insurers are looking to team-up with several InsurTechs, mixing and matching capabilities and solutions as needed to resolve systemic challenges in distribution, underwriting, and claims. However, it’s also clear that InsurTechs alone are not likely to produce transformational innovation among legacy insurers. Deloitte found that with or without support, most insurers remain focused on enhancing existing systems, products, and business models, while neglecting to devote time and resources to more disruptive innovations that might differentiate them in an increasingly customer-centric environment.

Most of those canvassed estimated that no more than 10 percent of innovation resources were going towards changing how insurers do business, versus 90 percent used to maintain the status quo — only better, faster, and cheaper. This resource gap between routine legacy upgrades and bolder transformation should be narrowed to fuel bigger picture innovation for the digital age. Innovation should encompass the gamut of insurance company needs. Investments target three main areas: Engaging customers and employees with a different experience, digitalising core/legacy processes and technology, and reimagining the business. While all three may be equally valuable, most insurers appear to be concentrating their efforts on the first two elements.

"Deloitte found that with or without support, most insurers remain focused on enhancing existing systems, products, and business models, while neglecting to devote time and resources to more disruptive innovations that might differentiate them in an increasingly customer-centric environment." 136

Source: Data provided by Venture Scanner, with analysis by Deloitte Center for Financial Services

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

Stakeholders are starting to take notice of these trends and their implications. Insurers face increasing scrutiny by rating agencies examining how effectively they initiate and manage innovation, and how they demonstrate a measurable impact. Shareholders, stock analysts, regulators, and the media — as well as consumers — are also likely to pay closer attention to how well insurers innovate to address evolving exposures, rising customer expectations, emerging technologies, and new competitive threats. Meanwhile, improved technology is probably unable to foster sustainable innovation unless accompanied by more fundamental changes in company strategy, operating models, and culture. This may be a daunting prospect, especially with insurers focused on incremental fixes and upgrades to bolster their aging infrastructure, which often relegates bigger picture innovation efforts to the margins. While many carriers have created corporate venture capital arms to invest in InsurTechs or launched innovation labs to come up with in-house solutions, the impact of such initiatives can be undermined if these drivers are disconnected from the business units they are meant to support. In addition, insurers should not expect start-ups to drive a carrier’s innovation efforts single-handedly, an approach likened during the InsurTech Connect conference to ants trying to steer elephants. Insurers should focus on identifying what customers are likely to demand of them over the coming decade, and how they might collaborate with InsurTechs before competitors beat them to the punch. Becoming more like the bold, entrepreneurial, risk-taking community could be the insurance industry’s biggest innovation challenge. i ABOUT THE AUTHORS Sam Friedman is insurance research leader at Deloitte’s Centre for Financial Services. (Follow Friedman on Twitter at @ SamOnInsurance, as well as on LinkedIn) Malika Gandhi (malgandhi@deloitte. com) and Mark Purowitz (mpurowitz@ deloitte.com) are principals at Deloitte Consulting LLP. Gandhi is Deloitte’s digital transformation leader for insurance, focusing on customer-driven innovation. Purowitz is Deloitte’s global insurtech leader and M&A leader. Visit deloitte.com/ about to learn more about Deloitte’s global network of member firms. 137

THE EDITOR’S HEROES

Heroes that Tackle Harsh Reality — with a Smile

he word “hero” calls to mind a sword-waving warrior on a battlefield, but heroes can take many forms — and their actions can be as modest as raising a smile.

Oprah, who doesn't need a surname for recognition, came from a poor background to become one of the most influential communicators in the world (and one of the wealthiest women of the US).

Being a comedian doesn't make you a hero, of course, but we celebrate the ability to make people laugh in the face of the cruelties and ironies of life.

Trevor Noah, known for his sarcastic gags, was born as proof of his parents' “crime” — a mixed-race marriage in the South-African apartheid regime.

The six heroes presented here have more than just a sense of humour. They seem to be guided by hope, and the certainty that things will get better. They can detect the comedic factor in any situation — a valuable skill in troubled times. Other facets of comedy include a capacity to overcome adversity and a talent for developing social awareness. The audacity of making an audience laugh while tackling the socio-political pain points of the moment is alluring.

Ellen DeGeneres, aka the "female Seinfeld", made history in 1997 by coming out as a lesbian in a homophobic world. Stephen Colbert lost his father and two brothers at the age of ten. The British comic John Oliver draws humour from serious news headlines, pointing out that something is not right, here. Hasan Minjah is a New York-based comedian, actor, and writer from a Muslim Indian family. He has a background in political sciences, and uses acidic humour to pitch into national and international polemic debates.

Generating laughter against the odds can raise spirits and develop resilience. Our featured heroes are walking definitions of the concept.

Bravo to these heroes who invite us to reflect and laugh at the same time, not changing reality but enabling us to view it from a different perspective. i

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Winter 2019 - 2020 Issue

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> TREVOR NOAH A Life Without Boundaries One of the best ways to sum up who Trevor Noah is and what he is about is to quote his own words that define him. “I've lived life without boundaries, which has been great for me. I really, really don't see colors in a weird way. When I saw my dad, I never saw a white man. It was my dad.” Noah has made his presence known through comedy, where he started his career in his home country of South Africa. From there, he ventured out in the world as a stand-up comedian. He has performed in the US as well as in many other parts of the world. Noah has been in the public spotlight in a variety of different roles. He had a small part in a South African soap opera called Isidingo. Then he went on to host Noah's Ark, which was aired on YFM. Throughout his career, he has hosted and co-hosted a variety of different programs. Comedy, however, seemed to be what Noah was born to do. In the early stages of his comedy career, he has performed with many notable comedians. Not just from his home country but with many on an international level. He performed with Paul Rodriguez and Paul Zerdin, to name a few. Comedy has become the platform of success for Noah's life, and it all began as a dare when he was in his late 20s. It became apparent that he was a natural at this and became a leading stand up comedian in his own country before following suit in other parts of the world. He is fluent in many languages and can imitate accents flawlessly, which blends in wonderfully with his comedy acts. His career to date has been a whirlwind of successes, which includes his one-person show The Daywalker, then his single role in The Racist. Throughout his life, to date, Noah has accomplished many firsts. He has done this both on a personal level as well as a celebrity. He was the first to appear on The Tonight Show with Jay Leno as the first African comedian to appear on the show. A year later, Noah had his comedy special, Trevor Noah: African American. Then by 2014, he made his debut as a correspondent for Comedy Central's The Daily Show. This event led to Noah being named as the replacement for Jon Stewart when he left the show in 2015, although there was some controversy about this. Trevor proved his worth and was signed to a five-year extension of his contract in 2017. Staying in keeping with his take on humor, his response to this was, “It's really exciting to renew this contract for either five more years or until Kim Jong-un annihilates us all — whichever one comes first.” What can't be understated is Noah's talent as an author, which is clearly seen in his book

Born a Crime which became a #1 New York Times Best Seller, and received the accolade of one of the best books of the year by Newday, NPR and several others.

Noah is a man of many talents. He has the ability to bring a ray of sunshine into the lives of all of those who get to enjoy what he has to offer.

"It's really exciting to renew this contract for either five more years or until Kim Jong-un annihilates us all — whichever one comes first." 140

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

> JOHN OLIVER British King of Satire Rules the US Airwaves In Last Week Tonight, Emmy-winning comedian, actor and writer John Oliver makes use of his peculiar brand of satire to review current events. His humour didn’t quite fit in his native England, and he decided to try his luck in the US — where he quickly achieved cult status and gathered an army of fans. He is pretender to the throne left vacant by Jon Stewart. It was on Stewart’s The Daily Show that Oliver gained fame. He was its British correspondent for seven years and was guest host for eight weeks in 2013 while Stewart was directing his first film, Rosewater. Oliver’s success as a stand-in led HBO to offer him Last Week Tonight the following year. Stewart encouraged Oliver to accept the proposal, and the Brit made his Last Week debut four months later. Oliver described the show as “not journalism” — “It’s comedy first, and it’s comedy second,” he said — but Last Week Tonight wasn’t just another gag show. Despite its comical segments, investigative reports sustain each episode. Suited and seated behind a desk, Oliver throws verbal punches at heavyweight issues. In an era where Donald Trump has become a target for American comedians, Oliver says he has never treated the president as a joke. But in 2016, he did dedicate eight of his 30 shows to Trump and the election. In an era where Donald Trump has become one of the favorite subjects of American comedians, Oliver claimed that he had never treated President Trump as a joke. Although in 2016 he dedicated eight of his 30 shows to Trump and the election, and a segment about the campaign was viewed more than 31 million times on YouTube, Oliver started to deflect attention from Trump and dedicate his time to other stories that had nothing to do with the White House. Yet, indirectly, most controversial issues raised by his show are somehow associated with the White House or cross its doors. From “charter schools” that receive government’s support but are independent of the public school system to food waste, FIFA members, and Venezuelan corruption — to mention just a few — Oliver wants to give his audience an overview of what happens within and outside American borders. He is married to Kate Norley, an Iraq veteran he met at the Republican Convention in 2009 while he was covering it for The Daily Show. Norley was on a campaign supporting Vets For Freedom.

Oliver was born in Birmingham in 1977, and is a supporter of Liverpool Football Club. With his mother’s family hailing from Knotty Ash and his dad’s side from the Wirral (both Merseyside), he has joked that he didn’t have much choice in that matter.

The comic is aware that his words can have a social impact and considers it a moral responsibility to be rigorous in his research. But he still insists he isn’t a journalist, and his show is merely comedy — regardless of the tenacious investigative work behind it.

"Oliver described the show as 'not journalism' — 'It’s comedy first, and it’s comedy second,' he said — but Last Week Tonight wasn’t just another gag show. Despite its comical segments, investigative reports sustain each episode." CFI.co | Capital Finance International

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> HASAN MINHAJ Unwanted Patriot? Minhaj Banned from Texas Summit Hasan Minhaj, comedian and host of Netflix’s Patriot Act faces the challenge of reinvigorating political satire. Minhaj comments on international issues, using use of his particular brand of humour to convey what’s happening in the world. And his revealing version of reality has sometimes turned him into a public enemy rather than a hero. Equally honoured and reviled for his jokes, the comedian courts controversy and was recently banned from the Howdy Modi community summit in Texas. Patriot Act, the show he hosts, raises awareness on global issues and captures the attention of the younger generation while enraging some of their elders. This is what happened in March, when he devoted an episode to the Indian elections — and the feelings of minority groups about Indian Prime Minister Narendra Modi’s government and policies. After submitting his media credentials to the organisers of the event — where Modi and Donald Trump would address 50,000 people — Minhaj received an email saying his services would not be needed that night. He had made comments about the elections, Modi’s policies, and — worse — he attacked cricket, India’s most beloved game. Having been blacklisted from the media list for the event that would energise the relationships of Indian-Americans and Modi, Minhaj tweeted “Here to celebrate two great nations coming together. India first. But America first too.” He had to watch the event on the screen of his mobile phone, sitting in the parking lot of the NRG Stadium. Ironically, during the event an audio-visual presentation on the theme of prominent Indian Americans was playing on the stadium’s big screen — and one of the faces to be shown was his own… Celebrated for being an audacious individual who had made it in the States, he was banned for having gone too far. His own heritage is Indian, with his family hailing from Aligarh in Uttar Pradesh. His parents migrated to California, where he was born and raised. Minhaj is still fluent in Hindi and Urdu. He attended Davis Senior High and the University of California, Davis, where he majored in political science; he graduated in 2007. In Patriot Act, Minhaj has tackled sensitive topics including Amazon’s questionable practices, Islamophobia, police brutality, censorship in China, drug pricing, mental health and the killing of Jamal Khashoggi, the journalist murdered in a Saudi consulate in Istanbul. Perhaps not surprisingly, Netflix banned this episode in Saudi Arabia.

Minhaj is recognised for his fresh voice and his monologues in front of live audiences. He combines investigative reporting with his personal experiences as an Indian American born to a Muslim family. It’s his unusual way of delivering a

show that takes on serious topics that strikes home. Minhaj is breaking some new ground with a show blending comedy and current affairs. He brings diverse voices into the conversation to portray the world from a different perspective.

"Minhaj is breaking some new ground with a show blending comedy and current affairs. He brings diverse voices into the conversation to portray the world from a different perspective." 142

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

> ELLEN DEGENERES Paradigm’s Breaker Born in Metairie, Louisiana, in 1958, Ellen DeGeneres was raised in a strict religious household. She started her showbiz career in the early 1980s, performing monologues in New Orleans; it was a niche not fully developed and mostly occupied by men. A pioneering spirit seems to come naturally to her. She dared to speak openly about her homosexuality, at a time when Hollywood wasn’t quite ready for it. Ready to fight for her rights, and those of others, she stepped into the battle for LGBTQ rights. DeGeneres has become one of the most influential celebrities of modern times. People like her for her easy-going manner, she has a wealth of natural talent, and her humour usually hits its intended target. She plays with ambiguity, combining masculine clothing with a feminine smile, male gestures with female messages. She has demonstrated that kindness and humour can walk hand-in-hand with firmness. Always a fighter for her beliefs, DeGeneres has turned eclectic style into an identity. For many, she is inspiring for her representation of the American dream in action, underscoring the belief that hard work and effort can — or will — lead to success. She has struggled and succeeded to make a name for herself in comedy. She has fought prejudice against homosexuality and become an admired public figure. She held down menial jobs, including a spell as a waitress, while pursuing her dream of stardom. These are things ordinary people can relate to. Her accomplishments have surpassed even her expectations: she is a queen in the world of US television, a successful businesswoman (having ranked among Forbes 50 most powerful women), and an icon for the gay community. In The Ellen DeGeneres Show, she manages to laugh with people, and never at them. She is at home in front of the camera and is able to generate a sense of complicity with the celebrities she invites. More impressive is the way in which she also aligns herself with the audience. The spectators watching the making of the programmes are made to feel part of the show, and not just passive studio viewers making up numbers and providing canned laughter. She uses humour to bond, always full of witty banter. DeGeneres knows how to make people laugh at their faults — and at hers. She can lighten the mood and reduce tension, avoiding uncomfortable moments even when tackling the most sensitive topics. Her blend of acid-and-sweet conquers hearts worldwide. Aged 61 and married since 2008 with Portia De Rossi, television has been

infatuated with DeGeneres since a monologue she gave on One Night Stand in 1992. In 2003 she launched The Ellen DeGeneres Show, won several Emmys and was twice invited

to host the Oscars. After 15 years of dedication to her talk-show, she resumed the monologue circuit last year, with eight nights of stand-up in three West Coast cities.

"In The Ellen DeGeneres Show, she manages to laugh with people, and never at them." CFI.co | Capital Finance International

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> OPRAH WINFREY A Household Name Oprah needs no introduction. She has made her claim to fame as an outstanding talk show host, media executive, and philanthropist. She is also a woman who is recognised as one who “speaks from the heart.” For Oprah, her journey in the entertainment world could be accredited to the many "firsts" that she can add to her list of accomplishments. She was the first black woman to host a national talk show that ran daily, known to all as The Oprah Winfrey Show. She became the first recipient of the Academy of Television Arts & Sciences Bob Hope Humanitarian Award. She is accredited as being the first black woman to become a billionaire in the US. As a celebrity, she became the first voice on the now-famous Alexa. Her career starts with her move to Baltimore Maryland, where she became the host of People Are Talking. She was content hosting this show for eight years then moved onto hosting her morning show called AM Chicago. As a black female, she was competing in a time slot that also aired the Phil Donahue show. Several months later, Oprah had captured the hearts of 100,000 more viewers than Phil, which put her in the number one spot in the ratings. The launch of The Oprah Winfrey Show took place in 1986 and aired up until 2011. During this time, the show garnered an audience of 10 million with the show airing on 120 channels. In her first year alone, Oprah brought in a paycheck of $30 million while the show grossed $125 million. Oprah had some strong moral commitments, which led her to make sure that her show would not fall into the current trend of tabloid topics becoming the highlight of the majority of talk shows. It was a potentially dangerous situation, as was becoming evident in the reduction of ratings. However, Oprah saw it through which gained the respect of her viewers, and her popularity surged once again. Oprah as been recognised for many achievements, but a trendy one was her introduction of Oprah's Favorite Things. It was introduced to her audience in 1997. It was a list compiled by Oprah that she considered to be her favorite holiday gifts, and it became a yearly event. Oprah's Book Club is something very dear to her heart, as she has been a significant contributor to the publishing world. With Oprah's popularity, she was able to bring recognition to many authors who were unknown at the time and, as a result, became the authors of bestsellers. Then in 2011, it came time for a change for Oprah as she ended her ABC contract. Her final season went out with a bang due to her revealing

of a family secret. It was at this time that she disclosed that she had a half-sister. Oprah had only learned about her half-sister Patricia shortly before disclosing this on her show. Oprah stated, “It was one of the greatest surprises of my life.”

Many people will offer many different opinions as to why Oprah is so widely received as a celebrity. Still, most will agree that it is because of her warm, open, and honest approach while in the public eye.

"With Oprah's popularity, she was able to bring recognition to many authors who were unknown at the time and, as a result, became the authors of bestsellers." 144

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

> STEPHEN COLBERT Variety Really Is the Spice of Life Stephen Colbert is a walking example the variety that gives life its spice. The comedian, actor, talk show host and author has made his mark on many levels. He started down the acting path, but a growing interest in improvisation while attending Northwestern University prompted a change of direction. Colbert’s entertainment journey began at Second City Chicago, a famous comedy and improvisation venue. He was an understudy for Steve Carell, where his fellow actors included Paul Dinello and Amy Sedaris – with whom he developed the sketch comedy series Exit 57. His partnership with Dinellow and Sedaris continued later with the cult TV series Strangers With Candy. But Colbert really came to public attention for his role as Charles “Chuck” Noblet, a gay history teacher in the cult TV series Strangers With Candy. His role as a correspondent on The Daily Show was the springboard he needed to lunge higher on the ladder of fame. He became a household name as host of The Colbert Report. His portrayal of a conservative political pundit earned him a place as a featured entertainer at the White House's Correspondents’ Association Dinner. That performance was criticised for having crossed the line with an off-colour tirade, and didn't impress the audience. But it did catapult Colbert to a new level: The Colbert Report won Emmys and awards when it was aired in 2014. Colbert authored the book I Am America (and So Can You!) and was a contributor to America (The Book): A Citizen's Guide to Democracy Inaction. His political aspirations were made clear when he made a surprise announcement: he had taken a decision to run for the presidency in 2008. That presidential campaign never saw the light of day, but Colbert used the publicity well. He managed to attract $68,000 in donations to help low-income students at South Carolina schools. Later came his “straw poll that makes a difference” initiative, which attracted donations of $185,000 to benefit 43,000 students in the Pennsylvania school system. Cropping his hair to support the troops in Iraq was a statement of solidarity that surprised and shocked some, but brought public praise from a major in the US military who said he found the gesture "very touching". Colbert went on to replace David Letterman's Late Show on CBS in 2015. He saw this as a particular honour, having once said that just

appearing as a guest on the show was “a highlight of my career". Colbert tells it like it is, and his blunt summaries have helped US TV audiences to understand things like the current presidential impeachment inquiry. (He equated the saga with the Game of Thrones, a topical meme and one that had his audience thoroughly entertained.) Dear to Colbert’s heart is the immigration

issue; he said in his 2010 Congressional testimony, “I like talking about people who don't have any power”, and questioned America’s double standards on migrant workers. Sometimes controversial, often divisive, always entertaining, and pretty much always in the spotlight. Whether Stephen Colbert is appreciated or not for his comedy, his voice is one to be reckoned with.

"Dear to Colbert’s heart is the immigration issue; he said in his 2010 Congressional testimony, 'I like talking about people who don't have any power', and questioned America’s double standards on migrant workers." CFI.co | Capital Finance International

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> Latin America

Latin American Youth Pull Themselves â&#x20AC;&#x201D; and the World â&#x20AC;&#x201D; from Doldrums of Unemployment and Pollution By Tony Lennox

On the face of it, Jimena Florez is just a young woman hoping to sell chocolate brownies to Americans. Hers is not unlike thousands of other businesses intent on making a buck from the sweet-toothed citizens of the US.

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hen Barrack Obama addressed an international gathering of young entrepreneurs in Washington in 2015, he singled out Jimena Florez, a young Colombian businesswoman,

for praise.

"If enough folks respond to the challenge, I believe it will pay off for years to come."

Florez was surprised — but not half as much as her compatriots were to see one of their own being praised by the Leader of the Free World. Their country was in the headlines — and, for once, not for drugs, corruption or internecine violence.

Salazar urged governments to step up to the challenge by supporting the entrepreneurial spirit of those using their initiative by setting up microcredit systems to help incubate business. With improvements in digital services, he believed this could stimulate innovation and job creation.

But Jimena’s enterprise has a significant difference. She is driven by a desire to provide natural and nutritious snacks, in the global fight against obesity, and to educate the cacao growers of her homeland to adopt sustainable and organic farming methods.

This has met with a positive response throughout Latin America, nowhere more so than in Chile, where the driver for generating economic growth — the Corporación de Fomento de la Producción de Chile (CORFO) — has launched Start-Up Chile, the biggest accelerator in Latin America.

Her company, Chaak, aims to “unlock children’s potential through the development of food safety and nutrition to improve brain development”.

Start-Up Chile offers financial support to new businesses, and is especially keen to attract those which promise to have an environmental and social impact. It aims to create an extensive network of contacts for mentoring and advice.

At that Washington conference, Obama said: “I’ve met some incredibly inspiring young people… We’ve helped her connect to mentors and training so that she can access new trade opportunities and grow her business. She’s also helping Colombian farmers adopt organic farming (methods) and benefit from access to new markets.” Florez is at the forefront of a growing phenomenon — environmentally-aware, Latin American youth. They are determined to create wealth, and conscious of their region’s ecological tribulations. Growing up in the southern Colombian village of Tumaco, Florez saw the hardships faced by local farmers, economically disadvantaged, lacking clean water and electricity, locked into antiquated and environmentally damaging agricultural methods, and often surrounded by guerrilla fighters. But these farmers grew some of the world’s finest cacao. Jimena left her native land to get a university education in Australia, where she learned about sustainable farming. She returned to Colombia to share what she had learned with her compatriots. Her business may be homespun, but its appeal is international. Youth unemployment is not limited to Latin America, but its effects there are acute. According to data from the UN’s International Labour Organisation (ILO), 20 million young people in the region neither study nor work — these are the Ni-Ni, from the Spanish “Ni estudian, ni trabajan”. This is due to a dearth of job opportunities as traditional industries decline and the labour market fragments. In 2017, the regional director of the ILO, José Manuel Salazar, said the worsening situation was a wake-up call. The region, he added, had to focus efforts on creating a more dynamic, fair and inclusive labour market. 148

The initiative seeks to attract entrepreneurs from around the world to Chile, but it is fair to say that home-grown start-ups are flourishing. Despite its current troubles, which have seen riots on the streets — sparked by young people angered by increases in train and bus fares — Chile is still the most stable government in South America. At the start of the millennium, it relied heavily on raw materials, most notably copper, which accounted for 25 percent of the country’s GDP at the time. Now the Chilean government is committing itself to promoting new industry and commerce, with a focus on youth. The tech sector is seen as key. A government agency, InnovaChile, has been created to foster a culture of modern, connected entrepreneurship. There’s been a significant shift in attitudes among Chile’s youth. Whereas a college graduate would once have pursued a steady job in an established company, more and more are now going into business for themselves. A measure of the success of these initiatives is that today Santiago is frequently referred to as “Chilecon Valley”. Young businessmen and -women are also driven by a desire for sustainability and nature conservation. And their example is inspiring the rest of South America.

As many as 73 percent of youngsters in Latin America receive secondary education, and the literacy rate for under-25s is almost 98 percent. Digital literacy rates are higher than the global average, and Latin America is digitalising at a steady pace. There is improved broadband infrastructure and a proliferation of e-services. This new generation of young entrepreneurs is taking up environmental challenges. Covestro, the UN Environment Programme, sponsors the annual Young Champions of The Earth prize. A recent winner was Maricela Granda, a 25-yearold biotechnology engineer from Ecuador who has developed a water purification process using banana waste. Granda was helping with the family banana harvest in the Sucumbios province when she took a closer look at the stems of the banana bunches. Their structure appeared to be suitable for filtering contaminants from water. Laboratory research backed this up, and a filtration system was developed to eliminate contaminants — including hydrocarbons from oil extraction which pollute the local waterways. This organic use of banana stems utilises something previously considered a waste product. Granda is now collaborating with others to share knowledge and further develop the system. South America is in the front line for climate change-induced weather events, with increasing episodes of drought and flooding, as well as the effects of pollution. Plastic contamination in the southern Pacific Ocean is so high that Chile became the first Latin American country to outlaw single-use shopping bags in August 2018. In the same year, SoluBag, a small Chilean company founded just four years earlier, was the winner of an innovation award for its breakthrough discovery — a plastic bag which dissolves in water. Two young scientists working in Santiago, Roberto Astete and Cristian Olivares, discovered that by using a derivative of limestone instead of the usual petroleum by-products, plastic from went indestructible to soluble. SoluBag is about to launch on the global market, and the two young men are now chief officers of a company with a bright future.

The challenges are immense. According to the International Fund for Agricultural Development (IFAD), improvements to, and investment in, education have improved over the past three decades, but young people in rural areas still face an educational challenge.

The US and the European Union, conscious of Latin America’s crucial position in the global climate change debate, are helping to promote business schemes such as this. The EU’s EcoBusiness Fund, which promotes business practices and consumption systems which contribute to conservation, biodiversity and sustainable use, has pledged millions of dollars to help growers change traditional practices and adopt environmentally friendly farming methods.

Poverty is one of the main drivers of youth migration. According to UNICEF, people aged 15-24 make up nearly 30 percent of Latin American migrants. But progress is being made.

“If enough folks respond to the challenge,” Obama said, “I believe it will pay off for years to come.” It’s a dream that Latin America — and the world — might happily share. i

CFI.co | Capital Finance International

Winter 2019 - 2020 Issue

> Banco FINCA Ecuador:

Everything Is Possible with ‘Small-Is-Beautiful’ Model from FINCA

President and CEO of FINCA Impact Finance: Andrée Simon

CEO: Iván Tobar

quador’s FINCA Impact Finance (FIF) is a network of 20 microfinance institutions and banks that focuses on reaching low-income clients through responsible financial services.

With an average loan size of $800, FIF delivers a double bottom-line of profitability and positive social impact. It has 2.38 million clients globally — more than half of them women. It serves unbanked individuals, families and communities through branch banking and branchless channels such as agent networks, mobile services and digital field automation. FINCA Impact Finance operates according to a social purpose to provide innovative and impactful services to enable low-income individuals and communities to invest in their futures. FIF provides business loans and savings accounts, facilitates money transfers and oversees insurance, and provides e-wallets and other financial services. The network was founded by US-based FINCA International in 1984 to support the development of micro-entrepreneurs through access to responsible finance. Its success led to subsidiaries forming across Latin America,

"Our mission is to help our clients take their business ideas and turn them into concrete action." among them Banco FINCA Ecuador, which was established in 1993. In 2008, Banco FINCA Ecuador transformed from a microfinance institution to full-service bank. Ten years on, it received a SMART certification in recognition of its long-standing commitment to client protection. CEO of Banco FINCA Ecuador, Iván Tobar, highlighted the reasons for the success: “At a social level, microfinance makes a strong impact in a community,” he said, “which is proven to produce greater standards of living and increased employment. CFI.co | Capital Finance International

“Banco FINCA Ecuador has shown remarkable growth with a portfolio increase of over 25 percent, as well as growth in total assets. The solutions it provides have been developed over more than 20 years. “This growth rate shows us two things. First, that we are contributing to the economic wellbeing of individuals, families and communities, and second, that we are offering a portfolio of products and services that are attractive to the Ecuadorian market. “Our mission is to help our clients take their business ideas and turn them into concrete action.” For Andrée Simon, President and CEO of FINCA Impact Finance, “Microfinance is about creating positive social impacts. Responsible financial services come with transparency and financial education for our clients. This ensures that each client understands the purpose and implications of each of our products and services, so that granting a loan is beneficial and empowering for the recipient. That is what sets us apart, our commitment to this social purpose, and that is what gives us a great opportunity to keep growing in the Microfinance market.” i 149

We are not perfect ... 2008 // Winner Euromoney Best Private Banking Service in Austria 2009 // Winner Lipper Fund Awards Austria & Germany 2010 // Winner Feri Fund Awards Germany 2011 // Winner Lipper Fund Awards Austria & Germany 2012 // Winner Lipper Fund Awards Austria & Germany 2013 // 2014 // Winner Euromoney Best Private Banking Service in Austria 2015 // 2016 // Der Börsianer – Rising star of the year in category "Best Banks in Austria" 2017 // Winner GELD-Magazin Fund of Funds Awards Austria 2018 // Winner GELD-Magazin Fund of Funds Awards Austria 2019 // Winner GELD-Magazin Fund of Funds Awards Austria

2019 // WINNER CFI BEST PRIVATE BANKING SOLUTIONS AUSTRIA

Winter 2019 - 2020 Issue

> Time

to Learn a Word in Swedish, and the True ‘Value’ of Business By Marc Simper-Allen

We live in an age of dazzling choice and seemingly endless abundance, yet there exists a deep malaise in the Western world.

ike bubbles of methane released from the seabed, awareness of the impact of our choices reaches our conscious minds only fitfully. We know the “cheap” flight we're on is burning fossil fuel, but we choose not to think about it. We know we shouldn't drive an SUV, but we convince ourselves that we need one. If we are at all aware of the impact we have, we writhe in internal contradiction. It's a classic example of Orwell's double-think, and all but the most insensate of us suffer from it. The contradiction does us no good, and it does the planet no good either. Greater mindfulness of the consequences of our actions, and of what we consume, can only benefit us and the blue-green globe we share. Enter minimalism. A simple way to do less harm, live better, and find lasting fulfilment. A movement, a mindset that might just save the planet and the fortunes of billions of people. Can it really be that simple? Minimalism and mindfulness walk arm-in-arm. A minimalist can choose to go beyond mere tidying; he or she can choose to explore the true consequences of his or her actions. The gains are many: freedom from the weight of possessions, greater clarity and personal responsibility, a better awareness of one's place in the world. Becoming a minimalist is at once liberating and alarming. Things we once held dear, and considered an intrinsic part of ourselves and our existence, cease to be of import. The void their loss creates can cause unease — but it needn't. By easing into the process, one can enjoy the benefits and gradually acclimatise to a new sensation of lightness and mobility. By disengaging from the deep-set habit of acquisition, we can finally separate wants from needs. Minimalism is not just about owning less, it's about doing less, wanting less, taking stock of one's lot and knowing when enough really is enough. To think of the planet as a collection of nation states, geographical regions that are separate and unconnected, is an infantile mindset that has brought us to the brink of environmental collapse. And, to state the obvious, environmental collapse

"Business must have a human face, and develop an elevated consciousness. If the planet falls, we fall." is not good for business. Everything is connected, all is inextricably linked. Family, community, land, shelter, clothing, wholesome food, clean air and water, the wonders of the natural world, liberty, self-sufficiency, healthcare, education: when these basic human needs are met, humanity and understanding blossom. And it is humanity and understanding that the World so desperately needs If these needs are provided for locally, outside of global commerce, so much the better. Local production and consumption engender a sense of care for workers, community and the environment. The global system concentrates wealth for the few; it is a very clever system of exploitation. Its lynchpin is the agency of money, which allows people to consume at a distance and not register the true cost to the planet and humanity as a whole. On an ailing planet, greed and the relentless pursuit of profit are no longer a viable options. Paying lip-service to corporate responsibility is a travesty. Business must have a human face, and develop an elevated consciousness. If the planet falls, we fall. Business must make sacrifices, it must make do with less, influence government for the greater good, drive policy that brings about real change. The consequences of collective inaction at this point in our history are too horrific to contemplate. Before the forces of Nature, we are all equal. It is time for humility and to admit responsibility for the harm that is done in the name of commerce. CFI.co | Capital Finance International

Ruthless competition is not the only way to make a living. Rather than compete on price — a system that ultimately leads to exploitation of workers and a shoddy product — the medieval guilds competed on quality. How radical is that? Agree a fair price for a product and then see who can build the best example of it. The result: a reasonable profit, goods that last, workers who are skilled, customers who are satisfied. Human behaviour has to change. Business has to change. Government has to change. The practitioners of PR and propaganda have to change. Unless there is a radical, cohesive revolution in how we live and think, there will be no business. And that will be the least of our worries. Growth for growth's sake, as a mantra and as an ethos, is short-sighted. Unlimited economic growth does not equate to real human progress. That is a broken, discredited paradigm. Those who cling to it in the hope of wringing out the last dregs of monetary gain are deluding themselves. Heady on the rarefied atmosphere money creates, they have chosen to divorce themselves from the human commonwealth. We have a stark and simple choice. Change our ways. Learn to distinguish between wants and needs. Learn to share what we have. Buy things that are built to last, and can be repaired. Downsize. Donate. Realise that life is not about possessions or social posturing. Life should be joyous, not a constant grind to keep up with the Joneses, or to be seen to be successful. Joy comes from the simplest things in life, the things we take for granted. Do we really want to trade that real wealth for homes full of junk, for landfill sites leaching toxins into the groundwater, for a spent landscape littered with the cast-off wrappings of yet another product that promised so much? There’s enough to go round, enough for everyone to live dignified, fulfilled lives. But it will take a change of mindset to effect it. There is a wonderful word in Swedish: lagom. It means “just enough”. The business community would do well to learn it. i 151

> ACTIVE RE:

Willingness to Embrace Opportunity Brings its Own, Enduring Rewards

ctive Re was born after its Chairman and CEO, Mr Juan Antonio Nino, saw the gap in the regional market of reinsurance solutions and the immense opportunity for business. As he worked with several captives in early 2000’s, by 2007 he embraced the opportunity for change and founded ACTIVE RE. 152

Nino is the sole founder — at the time he had just three colleagues — and each have proven to be crucial to the strategy of continuous growth. All are still with ACTIVE RE, and now hold senior positions. Being the reinsurance business fairly unknown in the Latin American market where the company CFI.co | Capital Finance International

started, it took a bit of guidance (and a lot of trust!) for clients to understand all the benefits reinsurance solutions for their businesses could have. Nino credits the success to the strength of a superb team and a modus operandum that calls for shared benefits. Active Re has become an internationally rated reinsurer of “Excellent Investment” grade.

Winter 2019 - 2020 Issue

CEO: Juan Antonio Nino

The firm's clients include insurance companies, financial institutions and commercial financing companies, marketing and sales companies, construction companies, tourism organizations, co-operatives, and savings and loans societies. It specializes in reinsurance products, from fraud and theft to credit, life and surety bonds.

Learning the language in record time, he was able to successfully finish his master’s degree, and went on to pursue a career in banking. He completed several post-graduate programs in prestigious institutions, including Wharton School of Business, in Philadelphia, and Harvard Business School, in Boston, Massachusetts.

The company’s overriding business philosophy is its motto “Benefits for all” and its operational philosophy: “Put client first, measure risks twice, and after due diligence, pay claims, always!”

Mr Nino possesses a strong business and leadership record and has a deep understanding of the business landscape in the Latin American region thanks to his tenure as president of the Panamanian Banking Association (ABP) and the Latin-American Federation of Banks (FELABAN). He was president of APEDE (Asociacion Panamena de Ejecutivos de empresa) and was the first vice-president of the National Council of Private Enterprise of Panama (CONEP).

The company is headquartered in Barbados, with representation offices in Panama City, Miami, London and Madrid, and looking closely to expand and open a new representation office in Eastern Europe to attend our clients in that hemisphere. The company’s current business focus is to do what we know (risks we know), continue to learn and study the global markets, get strong and trusty allies and everything we do, do it with integrity. Always respect our mission - “Benefits for all”!

"ACTIVE RE continues to evolve, serving more than 70+ countries around the globe."

THE CEO The company’s CEO started working at the age of 13. At 18 he was working shifts in the National Bank of Panama to be able to support his studies in Economics and Finance in the Universidad Nacional de Panama. After his graduation, he was granted a scholarship to study a Masters in Economics in the University of North Wales. CFI.co | Capital Finance International

Almost 40 years forward our CEO continues to breakthrough in the finance and insurance world. His experience and success in the bank industry, where he held senior positions in national and regional banks, and led the most successful bank in credit card issuance in the Central American region, got him to be a pioneer of the industry in Latin America, founding one of the first local reinsurers in 2000; then to found ACTIVE RE in 2007. Now 12 years after its creation, ACTIVE RE continues to evolve, serving more than 70+ countries around the globe, led by Mr. Nino who still actively leads and engages in all important decisions of the company. i 153

> Unity:

Central American Insurance Giant Counts Its People as Assets

nity — the only regional insurance broker in Central America — is focused on delivering the best service to its clients.

That means the best negotiations on insurance programme coverage on all lines: personal, corporate, life and health; offering the best. 154

With a presence in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panamá, Unity consolidates the experience of well-known local firms into one strong regional company — Unity by name, and unity by nature. The company has a vision for the future which focuses on a three-pronged mission: to CFI.co | Capital Finance International

offer exceptional insurance brokerage service throughout the region, to achieve satisfaction for all clients with standardised processes, and to guarantee sustainable growth and profitability. As well as being a leaders in the most important insurance companies of each country where it operates, Unity differentiates itself from the

Winter 2019 - 2020 Issue

CEO: Louis “Tito” Ducruet

competition with a unique methodology — PRO, Personalised Risk Overview. Through this initiative, Unity has designed and created insurance programmes tailored for individual needs. It believes in getting to know a client’s specific needs with regard to business, risk and policy conditions. It also factors in the cost of the most appropriate coverage to insure and protect its properties and human capital. Unity prides itself on being a dynamic and entrepreneurial organisation. “We carry our business from a creative point of view, generating added value for our clients,” says CEO Louis “Tito” Ducruet. “Innovation and initiative development in diverse areas has allowed us to obtain excellent results. “Our service approach processes digital innovation in areas such as operations and digital sales, technological developments and access to international markets. This allows Unity to offer clients a unique experience, adapted to their needs and requirements.” Unity takes seriously its commitments to Social Responsibility and Ducruet says the company’s people are “without question, our most valuable asset”.

"We contribute to the development of the community through a wide variety of actions from social investment to volunteering in the region." CFI.co | Capital Finance International

“Our team members hold in their hands the success of the insurance business,” Ducruet says. “Additionally, we contribute to the development of the community through a wide variety of actions from social investment to volunteering in the region.” Unity partners in corporate volunteering, and works with CentraRSE, SumaRSE, Proyecto Sonrisa, Hábitat para la Humanidad and Ángeles Seguros. i 155

> FAMA Investimentos:

Shared Economy Investment Opportunities that Meet the Highest ESG Standards

f, five years ago someone approached a fund manager and said: “I come from five years in the future and have valuable information. In mty time, you can request a car or taxi ride via an app wherever you may be. There is no need to wait in the street, exposed to safety hazards and the elements. You do not need to exchange money for the service or waste time swiping your credit card. You don't have to tell the driver your destination and, if you're on a phone call, you don't have to interrupt it; just hop in the car and off you go. You have never heard of the company that provides this service, but from the time I come from, there is no one who doesn't use it.”

Supposing this fund manager had, among the top positions in his portfolio, a car rental company. He would probably wonder how dismal the fate of this company would be. Trusting that what the time traveller said was true, he would happily and immediately sell all the shares of the car rental company, believing that he had made the best decision to protect client capital. While this story may seem farfetched, it is not far from reality. In May 2014, when Uber's operations began in Brazil, there was no idea how big it would grow. Localiza - the nation's largest car rental company - was inexorably pitting itself against a strong competitor, an innovative company that would offer high service, convenience and affordable prices. Uber started operations in Rio de Janeiro, but nowadays is available in more than 100 cities, with 600,000 active drivers and 22 million users. Impressive penetration in just five years. More striking, perhaps, is what happened to Localiza. Its market value grew from R$ 8 bn at that time to R$ 35 bn now, the highest in its history. In these 5 years, not only has the company's fleet nearly tripled, but Localiza also acquired Hertz's operations in Brazil. How can this be possible? Isn´t it a nonsense that the company could deliver this sort of growth at such a time? During these five years, Localiza was (and remains) the main holding of the fund that FAMA Investimentos manages. The story of the 156

time traveller and Uber's success dramatises the question we considered while holding our position in such a potentially adverse scenario. And the answer came from the ESG aspects of the company. Our vision for ESG has been embedded in our investment culture and philosophy since our founding more than 25 years ago. Similarly, we seek to invest in companies whose culture is permeated by ESG factors as well. For us, the key ESG-related metrics and KPIs are just quantitative data which, when segregated, contribute very little to the analysis. Trying to understand a company's culture, its extent and its capillarity is much more subjective and abstract and requires not only multiple interactions with different stakeholders but also a lot of field work. Back to Localiza. We have never had doubts about the company's social and environmental concerns, as well as its very high level of corporate governance. It is natural for ESGcultured companies to think very long term, as they are worrying about sustainability not only in the 'green' sense, but also – and especially – as it applies to their own business. Thus, it was not difficult to understand that “urban mobility” and “shared economy” have long been priorities for Localiza. The company, contrary to conventional wisdom, probably celebrated Uber's debut in Brazil, rather than feared it. Consumer behaviour is changing – and changing fast. Many of the most desirable items for young people from a decade or more ago (motor car and home, for example) have changed dramatically, moving from ownership to shared use. Companies that ignore this trend (or believe it will be restricted to expensive and high valueadded goods) risk seeing their business decline, leading to a massive value loses for similarly inattentive investors. Many still have a slightly outdated view of ESG, sometimes confusing it with impact investing, sometimes just thinking of better environmental indicators. CFI.co | Capital Finance International

Brazil: São Paulo

Winter 2019 - 2020 Issue

"Consumer behaviour is changing â&#x20AC;&#x201C; and changing fast." Incorporating ESG aspects leads companies to take fewer risks, be more mindful of changes in their industries and seize opportunities that are ignored by those focusing only on the short term. They will be doing the same as before but just in a much better way. The trend of the shared economy is a reality and not restricted to valueadded goods. Innovative companies, even in more traditional industries such as construction, have already adapted their business models to contemplate a world where using is worth more than owning; or that sharing on a condominium basis is beneficial for all. We could mention MRV, also in our fund, that positions itself ahead of the industry in Brazil, by rethinking the housing market. Lower value goods are already starting to pop up between sharing initiatives. Clothing lending start-ups, while still incipient, already appeal to a fair portion of the population, especially the younger generation. We have little doubt that when this behaviour becomes more mainstream, we will see Arezzo, the largest Brazilian shoe retailer (yes, we have a holding) deeply involved in this area. This company is concerned with sustainability in all stages of its processes, is thinking about social issues, culture and the environment, and will be fully aware of yet another possible consumer move. These examples are not exhaustive and may certainly become obsolete with the passage of time and as technology advances. But integrating ESG into the analysis greatly increases the chances of positioning ourselves with the winners. In such a dynamic world, making investments through simple old accounting and financial forecasts has become too obsolete, to say the very least. i 157

> Banco Hipotecario:

Vision, Dynamism and SDG-Adherence

anco Hipotecario president Celina Padilla Meardi has a vision to create better opportunities for her fellow Salvadorans through banking services.

After graduating from the Universidad Doctor JosĂŠ MatĂas Delgado in 2002 with a degree in Legal Sciences, Padilla Meardi obtained her license as a lawyer and notary.

She believes that updating knowledge in legal, financial and technological areas will help to achieve that goal. She has put her extensive professional training to good use.

Padilla Meardi continued her postgraduate studies and achieved a Master's in International Transactions and Comparative Law from the University of San Francisco. She also

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has advanced studies in the legal aspects of technology and blockchain, and in 2018 graduated in Network Designer Conversations from the Generic Management Skills Programme of Medellin, Colombia. With this experience, a commitment to her country and strong ethical values as a professional, Celina Padilla Meardi took charge

Winter 2019 - 2020 Issue

President: Celina Padilla Meardi

style on four pillars: trust, transparency, respect and communication. This has generated an environment of innovation and development. One of her aims is to enhance the Banco Hipotecario’s adherence to the Principles of Responsible Banking through the Financial Initiative of the United Nations Environment Programme, UNEP FI. This aligns the Banco Hipotecario’s business model with the UN’s Sustainable Development Goals, entrenching the role of financial institutions in the care of the environment at national and international levels. As a founding signatory, the bank has committed to promoting products, services and relationships to support and accelerate changes in the economy necessary to achieve shared and lasting prosperity.

"With a customer-centric and dedication to the modernisation of financial services offered by the bank, Padilla Meardi bases her management style on four pillars: trust, transparency, respect and communication."

of Banco Hipotecario in June 2019. Under the administration of the president of the Republic of El Salvador, Nayib Armando Bukele Ortez, she was charged with generating productivity and strengthening Banco Hipotecario services. With a customer-centric and dedication to the modernisation of financial services offered by the bank, Padilla Meardi bases her management CFI.co | Capital Finance International

Important steps have been taken with the launch of the BH 365 Financial Correspondents and the BH Lite Account, products that will allow thousands of people — some of whom had been excluded from the national financial system — to benefit from banking services. Recently, Padilla Meardi inaugurated the BH Café project, an agency that provides products and financial advice and makes available technological tools, including tablets, free Wi-Fi, a comfortable working space (and delicious coffee — from Salvadoran suppliers). i 159

> North America

Trump’s Bid to Buy Greenland Follows a Pattern… But Why? By Brendan Filipovski

Donald Trump’s interest in buying Greenland seems anachronistic, given the changing world order and the growth of US influence postWorld War II.

West Greenland: Greenland Fiord and Eternity Fiord

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reenland is strategically important to the US. It hosts the northern Thule airport base, with good radar coverage of the Arctic and northern Russia — vital to the US’s missile warning system and space monitoring. During the Cold War, the US built Camp Century in Greenland with plans to stash 600 nuclear missiles underground — Project Iceman — but later abandoned.

The US began operating in Greenland after a Danish request to defend its colonies against the Nazis following the occupation of Denmark. In 1946, Truman offered to buy Greenland, which is largely self-governing. America has a history of territorial acquisitions which began when the conquering, purchasing, and trading of foreign territories was common. Florida, for example, was colonised by Spain in the 16th Century, traded to Britain for control of Havana in 1763, given back to Spain in 1783 as a result of the US War of Independence (Spain was a US ally), and then snapped back up in 1819. Most of these territories were on the North American continent, driven by the notion that the US should expand, and with many believing that this was America’s destiny. Louisiana was purchased in 1803, Texas annexed in 1845, the Oregon Territory acquired by treaty in 1846. The Mexican Cession in 1848 followed the Mexican-American war and included the states of California, Utah, Nevada and Arizona. The Gadsden purchase — southern sections of Arizona and New Mexico — was made from Mexico in 1853, and Alaska was nabbed in 1867. Outside the continent, US acquisitions were often the indirect result of the Monroe Doctrine, and typical of foreign policy during the 19th Century. The US was expected not to meddle in European affairs or colonies, and reciprocation was expected. Trade, not imperialism, was the focus. The most famous application of the Monroe Doctrine was American support of Cuba in the War of Independence against Spain in 1898. With victory, the US gained Spanish colonies including Guam, Puerto Rico, and the Philippines. In the name of strategic defence, the US annexed several Pacific islands during the 19th Century. This included Midway in 1867, Hawaii in 1898, American Samoa in 1899, and Wake Island in 1899. The strategic value of these sites was confirmed during World War II in the battle against the Japanese. The US later took control of the Marshall Islands (now independent), Caroline Islands (ditto) and Mariana Islands (an unincorporated US territory). The US purchased the Virgin Islands — from Denmark — in 1917. The date is significant; 1918 marked the end of World War I, and a new era in international relations. Nation162

"The US purchased the Virgin Islands — from Denmark — in 1917. The date is significant; 1918 marked the end of World War I, and a new era in international relations. Nationstates emerged from old empires, and territorial expansion was discouraged." states emerged from old empires, and territorial expansion was discouraged. The champion of this change was US president Woodrow Wilson. This reflected America’s place in international relations. It was a growing power in the 19th Century, but it was not until WWII that it expanded its international influence. At the end of the First World War, the great powers were exhausted in terms of manpower and finance, and many multi-ethnic citizens had embraced self-determination. Wilson’s “14 points” speech, made to Congress in 1918, was a manifesto for the new era. He argued that international relations should focus on free trade, self-determination, and a rules-based system overseen by an association of nations. After this, the US returned to isolationism, rejecting the League of Nations. It also increased protectionism at the start of the Great Depression with the Smoot-Hawley Tariff Act of 1930. But the first foundations of a new era were laid with the Reciprocal Trade Agreements Act of 1934. Its aim was economic relief (Smoot-Hawley had worsened matters) and it provided a first step towards a multilateral system of free trade; the act allowed the US to enter into trade agreements for the first time. World War II marked the beginning of the modern era of US international relations and influence. Post-war, the US and UK helped to create a new multilateral world order. The aim was to create a rules-based system to avoid the anarchy of the interwar years — and to ensure continued US influence. The United Nations was established in New York in 1945. The US and its four key wartime allies were given a permanent seat on the Security Council, with veto powers over the General Assembly. The US helped to create the post-war financial system through the creation of the Breton Woods institutions (the IMF and World Bank) and the Breton Woods Exchange Rate System. The IMF and the World Bank are headquartered in Washington DC, and the US has majority votes in each organisation. Convention allows the US to select the president of the World Bank. CFI.co | Capital Finance International

Under the Breton Woods system, all currencies were defined relative to the US dollar, which was pegged to gold, something abandoned by Nixon in 1971. But the greenback remains the global reference and reserve currency. This gives the US a key role in international financial stability. The US also led the way in promoting free trade after 1945, which helped spread its influence. In 1947, America helped create the General Agreement on Tariffs and Trade (GATT). GATT was a multilateral agreement for the mutual reduction of tariffs between members. The US had helped draft a treaty to create the International Trade Organisation, a third Breton Woods trade institution, but it was controversial and the US decided not to ratify it. GATT proved successful in lowering protection around the world, and was pivotal in the creation of the European Economic Community. In 1994, the Uruguay Round led to the creation of the WTO. The US projected its influence through its involvement in the creation of the International Bank for Reconstruction and Development, and the Marshall Plan. The States also helped draft the post-war constitutions of West Germany and Japan, which allowed it to shape political, trade, and foreign policy for its new allies. The war led to rapid growth of US overseas military bases, notably Pearl Harbour and Guantanamo Bay, and one on China’s Yangtze River. Bases multiplied as the US military expanded to support its operations in different theatres of war. This process started before America entered the fray, with bases in the UK, UK territories, and Greenland. Once it pitched in, the US set up more throughout Europe, Asia, and the Pacific. Still more were added during the Cold War to counter Soviet influence. There are now around 800 such bases, some temporary and in places such as Iraq and Afghanistan. The US has military units operating around the globe. Its power and influence have grown since the 19th Century. Greenland is still important to the US, but it is unclear what advantage could be gained from purchasing it. i

Winter 2019 - 2020 Issue

> Pavilion Global Markets:

Global Recognition in Niche Market as Company Expands its Horizons Pavilion Global Markets Ltd was founded in Canada more than 50 years ago as an institutional agency-only broker-dealer.

or over half a century, Pavilion Global Markets (PGM) has provided expertise in execution and advice to institutional clients worldwide. Over those years, PGM has continually evolved to meet the needs of its global client base. For example, the company expanded its transition management services into the US in the past five years, and now plans to extend these services beyond North American horizons. “As a private, employee-owned firm, we are committed to serving our clients first,” says president Patrick Belland, “and we focus on being experts in a few services.” Today, the company remains true to this mission, focusing on global securities execution, transition management and global macro research. “We serve over 200 institutional clients worldwide, with a continued concentration in these three, core value-add offerings.” PGM encourages employee ownership and provides a team dynamic that “emphasises excellence in client service”, says Belland. The company benefits from this alignment of employee and client and goals. “We have almost 40 employees and a flat structure that provides our employees the opportunity to contribute at all levels of the business. Company success is shared across all divisions of the business. While the expansion of its transition management services into the US market is relatively new, PGM has been providing transition management services for over 20 years. A focus of this service is rigourous project management coupled with unparalleled client communication. The success of the business has led to a commitment and dedication to that service. “We are also free of the most notable conflicts that challenge providers of these services,” Belland says, “and we always provide full transparency on all of our pricing.” “The opportunity to grow our transition management offering globally provides an exciting opportunity for our business and our employees.”

President: Patrick Belland

“Under Mario Choueiri, our head of transition management, we will continue to focus on offering a fully transparent and conflict-free business model that supports our clients and our growth.” Belland has been with the company for over 27 years and has led it through changes and challenges both in the industry and within the company. “Respect and communication are the foundation of our culture,” he says, “and as a leader, I strive to ensure employees are included and engaged in our overall mission and, ultimately, recognized for their efforts and dedication to client service.” CFI.co | Capital Finance International

Remaining employee-owned and encouraging employee ownership strengthen the level of employee commitment and sense of worth in the company. “Having employees bring ideas forward and lead new initiatives creates a broad sense of leadership across the company,” says Belland. “Communication, respect and recognition provide the opportunity for everyone to be a leader.” The business aims to grow by remaining focused on its areas of expertise and gaining recognition as a global leader in a niche market. i 163

> Fitch Ratings:

Global Perspectives, Strong Local Experience and Credit Market Expertise

itch Ratings, a division of Fitch Group, is a leading provider of credit ratings, commentary and research.

The additional context, perspective and insights the company provides have helped investors fund a century of growth — and make important credit judgments with confidence. Fitch Ratings is dedicated to providing value through independent and prospective credit opinions, and offers global perspectives shaped by local market experience and credit market expertise. The firm — ranked number one in Latin America — has 13 offices in Mexico, Brazil, Colombia, Chile and Central America and more. Some 200 analysts are dedicated to credit ratings and research in Latin America, providing more than 600 corporate ratings and 1,500 banks and financial institutions. It provides 90 percent coverage for Public Finance, Infrastructure and Project Finance markets, and oversees 340 local and cross-border Structured Finance transactions. In the past year, Fitch has undertaken 6,100 investor interactions around the world, and published 11,000 reports globally in 2019, including 1,400 special reports. Drawing on the insight of some 1,000 analysts, the company brings diverse viewpoints together to render objective and forward-looking assessments. What goes in to, and stands behind, that analysis is a world of capability and expertise that spans the local, regional and global fixed-income markets. Capital market participants recognise Fitch Ratings’ transparency in presenting its credit views. Within emerging markets, Fitch Ratings has extensive knowledge of the Latin America region, and rates more entities in regional financial institutions, corporates, structured finance, and infrastructure sectors than any other agency. The company’s credentials have been honed over many years. Fitch combines global expertise and local talents accumulating more than 27 years of local presence through a strong leadership and accomplished staff. i

FITCH RATINGS MANAGEMENT TEAM IN LATIN AMERICA BUSINESS RELATIONSHIP MANAGEMENT Carlos Fiorillo Managing Director BRM Head of Latin America, Mexico City carlos.fiorillo@fitchratings.com Kathleen Holtzman Managing Director, Corporates, New York kathleen.holtzman@fitchratings.com Diego Alcazar Senior Director, Financial Institutions, New York diego.alcazar@fitchratings.com Samuel Fox Managing Director Structured Finance & Infrastructure, Chicago samuel.fox@fitchratings.com Fabio Astolfi Senior Director International Public Finance, Sao Paulo fabio.astolfi@fitchratings.com Erick Campos Managing Director, Central America, San Jose erick.campos@fitchratings.com Rafael Guedes Managing Director CBL and Investors – Southern Hub, Sao Paulo rafael.guedes@fitchratings.com Alejandro Bertuol Managing Director, CBL and Investors – Pacific and Caribbean Hub, Bogota alejandro.bertuol@fitchratings.com Frank Laurents Senior Director, Investors, New York frank.laurents@fitchratings.com

For more information, visit fitchratings.com/latam 164

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ANALYTICAL TEAM Shelly Shetty Senior Director, Americas Sovereigns, New York shelly.shetty@fitchratings.com Charles Sevilla Senior Director, Americas Sovereigns, New York charles.seville@fitchratings.com Daniel Kastholm Managing Director, Corporates, Chicago daniel.kastholm@fitchratings.com Glaucia Calp Managing Director Global Infrastructure Ratings, Bogota glaucia.calp@fitchratings.com Maria Paula Moreno Managing Director Structured Finance, Bogota maria.moreno@fitchratings.com Alejandro García Managing Director Financial Institutions, New York alejandro.garcia@fitchratings.com Eduardo Recinos Senior Director, Insurance, San Salvador eduardo.recinos@fitchratings.com Davie Rodríguez Senior Director Fund & Asset Manager Ratings, New York davie.rodriguez@fitchratings.com Gerardo Carrillo Senior Director International Public Finance, Mexico City gerardo.carrillo@fitchratings.com

Winter 2019 - 2020 Issue

Mexico Pips Plastic Industry with Seed-based Alternative By Tony Lennox

America’s fast food diners are estimated to use 40 billion pieces of plastic cutlery every year – and almost all of them end up in landfill.

abitsofwaste.org, an American campaign group, is campaigning for a global ban on single-use plastics. They say that forks, knives, spoons and straws are contaminated, and too small and too light to be efficiently recycled. They are a massive source of pollution. In Mexico, meanwhile, one man may have come up with a solution in the teardrop shape of the humble avocado. Chemical engineering student Scott Munguía discovered in 2012 that the structure of the avocado pip is similar to that of latex. Conscious of the potential ecological benefits of producing a biodegradable alternative to plastic, he pressed on with his experiments. His research led him to create a compound extraction which, combined with a biopolymer, could be formed into any shape. The material was ideal for the manufacture of items such as cutlery and straws – which, once disposed of, would degrade within 240 days. The breakdown of ordinary, oil-based plastics can take up to 150 years. Munguía patented his invention and founded the company Biofase, and set up a plant to manufacture his environmentally friendly plastics in the Monterrey region.

"Mexico is the world’s largest producer of avocados, supplying 45 percent of the global market, either fresh or processed as guacamole." amounts to 800,000 tonnes annually. The pips of those avocados are discarded there. Bioplastics are at least 40 percent more expensive to produce than traditional plastics, and 80 percent of the industry uses food sources – maize or potato – to produce a biodegradable product. Munguía sees the absurdity of diverting food products to produce plastic alternatives. The benefit of using avocado seeds is that they are a waste product, reducing production costs in line with ordinary plastic. Harvesting and using the 300,000 tonnes of avocado pips discarded in Mexico each year gives Biofase a significant edge.

He now exports to the US, Costa Rica, Canada, Peru and Colombia. Many of his customers are fast food chains, which previously used tonnes of oil-based plastic cutlery every year.

Scott Munguía has presented his invention at conferences across the US, Asia and Europe, and it has been well received. He is a founding partner of the National Bioplastics Commission in Mexico.

Mexico is the world’s largest producer of avocados, supplying 45 percent of the global market, either fresh or processed as guacamole. But the majority of avocados produced in Mexico are consumed there, and domestic consumption

The avocado has been cultivated in Mexico for 10,000 years. Ancient Aztecs revered the fruit, believing it to be an aphrodisiac – and it seems the World could grow to love Scott Munguía’s biodegradable knives and forks. i

"The benefit of using avocado seeds is that they are a waste product, reducing production costs in line with ordinary plastic." CFI.co | Capital Finance International

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> Streaming

Wars Leave Companies Stronger — and Viewers Better Off By Dane Cobain

We live in an exciting time for entertainment. Cable subscriptions are declining as people turn to streaming services “faster than anyone expected”.

his is disruption at a massive scale, and at a rate that it’s unparalleled. We’re talking about an entertainment gold rush, happening in real time right before our eyes.

Sure, it took Netflix 10 years to go from DVD rental service to streaming giant, and the company’s CEO Reed Hastings says that had the company started streaming even two years later, it would have been too late — and Blockbuster would have come out on top. But that was back at the very beginning of the streaming wars, and times have changed since then. Netflix started providing streaming services back in 2007, and in the 12 years since, they’ve witnessed competition from established players such as Apple and Amazon, as well as Hulu and even the mighty Disney. When Netflix first started, it essentially had a monopoly. Sure, there were other streaming services, but it was a bit like the difference between Tidal and Spotify. Netflix was so popular that if a filmmaker was looking for a streaming service release, Netflix was the logical first choice. This was a huge leg-up, because it allowed the company to take its pick of the best content and to negotiate exclusive deals and strategic licensing agreements. It also started investing in original programming in the form of Netflix Originals, providing a constant source of content – and, as every marketer knows, content is king. The company also took a shrewd approach when it came to content selection. It targeted fandom, as with the acquisition of the global rights to Shadowhunters, based on the bestselling young adult novels by Cassandra Clare. Netflix didn’t have to swallow the production costs, and fans of the books picked up Netflix subscriptions. But Netflix’s stranglehold couldn’t last forever, and it was Amazon which posed the first serious 166

"Much of Netflix’s success comes from the power of its recommendations engine, an echo of what made Amazon so popular." threat. It were a little late off the mark, but made up for it through some clever incentives, ranging from new original content to offering free Prime Video to anyone with an existing Prime account. This created an instant user-base overnight, and it acted as the catalyst for first-time subscribers. Amazon has come a long way since its early days as a bookseller, but streaming and video content make sense when you consider its core business model. Much of Netflix’s success comes from the power of its recommendations engine, an echo of what made Amazon so popular. Amazon has made moves into the healthcare industry and experimented with delivery drones, so creating an original television series isn’t exactly a crazy notion. One of Amazon’s early successes was the launch of The Grand Tour, its reboot of Top Gear after the BBC dismissed Jeremy Clarkson, and Richard Hammond and James May left with him. Good Omens (another show based on a popular book) was a commercial success, and the company is in the process of creating a Lord of the Rings TV show, which is reportedly the most expensive TV show in history, with the rights alone costing $250m. But what about Hulu? It might not be as big as some of its competitors, but it still has an impressive user base and the potential to be a serious competitor in the streaming wars. It also has an interesting backstory. CFI.co | Capital Finance International

Winner 2019 - 2020 Issue

"And then there’s Disney, which marked its spot in the movie industry with the 2012 acquisition of Lucasfilm for $4bn, an investment that it has already recouped. The company launched a streaming service of its own called Disney+." Hulu.com was first registered back in 1999 as a personal blog, and it remained that way until 2007 when the owner was contacted by NBC. The site went dark and then relaunched on October 29 that year to allow people to sign up for a private beta. Since then, the company has picked up over 23 million paid subscribers — and is outgrowing Netflix in the US. Its marketing and content creation strategies may not be as aggressive as its competitors, but this is clearly one to watch. And then there’s Disney, which marked its spot in the movie industry with the 2012 acquisition of Lucasfilm for $4bn, an investment that it has already recouped. The company launched a streaming service of its own called Disney+. Google is getting into the game too, and has launched a “cloud-based video game streaming platform”. The company is yet to launch a true on-demand service, but it has plenty of content available on Google Play and a stranglehold on social video thanks to its ownership of YouTube. And there are plenty of other players. Some focus on specific subject matter, like Crunchyroll, which specialises in anime. Others focus on regions, and without specialisation could be left by the wayside. Each of these companies has its own strategy to pick up viewers. It’s no longer enough to have a huge library of leased media content. They need to proactively create their own, and now that Game of Thrones is over, there’s a void waiting to be filled. We’ve come a long way from the early days of the streaming wars. Viewers have more choice than ever as providers fight for eyeballs. For us, this can only be good news. When companies compete, it’s inevitably the customers who end up benefiting. Movies and television shows will continue to diversify and tap into niche audiences. We might have to pay for two or three streaming service subscriptions instead of just one, but we did that with cable packages too. The shows that we watch will get better and better; we’re in for a treat. i 167

> PwC Bermuda:

New Tech and Cybercrime Top List of Concerns in Reinsurance Survey By Arthur Wightman

The inability to deploy new technologies and the readiness to confront structural change top the list of risks — the banana skins — facing the global reinsurance industry.

his is according to a biannual risk report by PwC. Entitled Reinsurance Banana Skins 2019, it reveals fears that the industry is grappling with legacy IT systems as new data sources proliferate.

The second-biggest worry is cyber risk, because of the unknown liabilities of underwriting cyber policies, and the threat of cyberattacks against insurance companies that hold valuable data.

about the costs of mounting claims from more frequent and more severe natural disasters, and the prospect that some risks could become uninsurable. Rounding-out the top five is regulation risk, up from eighth place two years ago. This is largely due to concerns about a raft of new rules such as the EU General Data Protection Regulation and IFRS 17. The remainder of the top 10 mostly focus on operating risks.

Closely linked to these worries, the report notes, is the industry’s concern around change “The impact of climate change is at number management. This reflects worries about three, a new entry in the top 20 and noticeably insurance markets being upended by new higher than for the insurance industry as a technologies, and radical shifts in customer whole,” the report states. “From floods to 1 Technology (2) expectations. wildfires, the frequency of events and the severity of reinsurers’ losses are mounting Technology has opened-up a proliferation of as once-sporadic events become almost data from new sources — such as sensors and commonplace. Internet of Things connectivity — while usheringin ground-breaking advances in risk analytics. “Even greater risks lie ahead if climate change The results are revolutionising risk evaluation continues on its current trajectory. Through and prevention. modelling of the vulnerabilities and their impact, reinsurers have a central role to play The big risk for reinsurers was being left in strengthening prevention and resilience behind as the industry transforms, says Arthur worldwide. The industry can also bring hard Wightman, territory leader of PwC Bermuda, numbers to the debate over how to tackle this and insurance leader of PwC in the Caribbean. global threat.” In this scenario, the front-runners recognise that talent and access to data are as important as the Investment performance, at number six, reflects systems themselves in navigating change. worries that low yields could encourage insurers to take greater investment risks to improve POTENTIAL VULNERABILITIES returns. Doubts were raised at number seven on The inclusion of cyber risk so high on the list the list — the industry’s ability to attract and of banana skins reflects the accumulation retain talent, particularly in technical areas. of exposures and risk of unforeseen losses in portfolios on one hand, and the potential Cost reduction (up two positions to 10) and vulnerabilities within reinsurers’ digitalised reputation risk (up five to 13) both reflect the operations on the other. current mood. Political risk is also slightly higher at number nine, with protectionism, “Successful technological transformation isn’t populism and trade wars of particular concern just a systems issue,” Wightman says. “It for the reinsurance industry. demands buy-in and upskilling throughout the organisation. The workforce needs to embrace “Respondents were more sanguine about the change and see it as an opportunity.” macroeconomic environment (11) and interest rates (14), which were down significantly from The third-biggest concern on the list is climate 2017 — although the survey was taken early change — which received its highest-ever score. in 2019 before concern around current interest The reinsurance industry expressed anxiety rate declined,” the report notes. 168

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Top Ten Risks 1. Technology (2) 2. Cyber risk (3)

3. Climate change (-)

4. Change management (1) 5. Regulation (8)

6. Investment performance (5) 7. Human talent (9) 8. Competition (4)

9. Political risk (10)

10. Cost reduction (12) * PwC’s Reinsurance Banana Skins 2019 (2017 ranking in brackets)

In the bottom half of the table, governance risks were generally seen as under control, particularly corporate governance (18) and business practices (15) — although quality of management is more of a concern for the reinsurance industry. The bottom cluster — including social change (18), capital availability (19), and the UKs departure from the EU (20)—are largely unchanged. The survey also shows the extent to which the reinsurance industry shares risks with the broader insurance community of brokers, life companies, and other respondents. A key difference is that the reinsurance industry places more emphasis on the threat posed by climate change. The score assigned to this

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Author: Arthur Wightman

banana skin (3.86) is higher than the score of any other ranked by the non-reinsurance response. Technology and cyber risk are considered more urgent by the reinsurance industry. Regulation and investment performance are seen as slightly less worrying. The report also assesses reinsurance respondents on how prepared they feel the industry is to handle the identified risks. On a one-to-five scale (one bad, five good), they gave an average response of 3.17, which is higher than the average 2017response of 3.02. The broader insurance industry gave an average response of 3.11 this year (up from 3.02 in 2017). “If we look at the top five risks as a whole,” the report notes, “what’s striking is the extent to which they feed into each other — technology is driving change management risks, for example, just as data regulation and cyber threats are heightening technology risks. “This underlines the importance of looking at today’s fast-evolving risk landscape in the aggregate.” i ABOUT THE AUTHOR Arthur Wightman leads the Bermuda member firm of PwC International Limited (PwC-I). He is responsible for a leadership team whose job it is to sustain and enhance an inclusive, flexible and high performance culture that enables PwC's professionals to develop the leadership skills required to create lasting value for the companies, communities and broader stakeholders they serve. Arthur also serves on the executive leadership team of the member

firms of PwC-I operating across the Caribbean region (Bermuda, Cayman, Barbados, Jamaica, British Virgin Islands, Bahamas and Turks & Caicos). Arthur is also the Insurance Leader and overall Markets Leader of the member firms of PwC-I operating across the Caribbean region. He leads professionals to accomplish our purpose: to help our clients find solutions to their important problems and to work with them and our other stakeholders to build trust in society. Arthur is focused on helping companies to prepare for profound changes ahead and be equipped to seize opportunity. He has significant experience in serving large, multinational clients in various industries with a focus on Financial Services and specifically, the insurance, banking and asset management sectors. He also delivers services to public sector organisations. Arthur delivers a spectrum of services including audit, assurance, deals and consulting services. Arthur has extensive experience in delivering value to boards and executive management and has a strong track record in helping organizations to solve complex problems and realize opportunities through his extensive knowledge of issues, trends and challenges that businesses face. Throughout his career, he has served numerous global financial services clients. His public sector experience includes various Ministries of the Government of Bermuda, the Bermuda Hospitals Board and the America's Cup organisation responsible for delivering the 35th America's Cup. He has experience and relationships with the following regulators: CFI.co | Capital Finance International

Securities and Exchange Commission, Bermuda Monetary Authority, Financial Conduct Authority, Prudential Regulation Authority, Monetary Authority of Singapore, Swiss Financial Market Supervisory Authority, National Association of Insurance Commissioners and Public Company Accounting Oversight Board. Arthur is published and quoted in numerous local and international financial publications and is a frequent contributor to industry events. A thought leader, he has authored many PwC global financial services and insurance and reinsurance sector reports. More recently he has published thought leadership on blockchain in financial services and cyber. Arthur also speaks widely on and is a champion for diversity and inclusion in the workforce. Arthur serves and has served on several Boards of non-profits. He was the recipient of the Queen's Certificate and Badge of Honour in Her Majesty the Queen's New Years Honours, 2018. Arthur is a Fellow of the Institute of Chartered Accountants in England and Wales and member of the Chartered Professional Accountants of Bermuda. ABOUT PwC BERMUDA PwC Bermuda is the largest professional services firm in Bermuda, specialising in insurance & reinsurance, asset & wealth management, banking, government & public sector and private clients. They are part of a network of firms in 157 countries with more than 276,000 people who are committed to delivering quality in assurance, advisory and tax services. They help organisations and individuals create the value they’re looking for. 169

> Asia Pacific

Nudging Zero in the Land of Oz Puts Banks and Funds at Risk By Brendan Filipovski

After three rate cuts this year, Australia’s official interest rate is approaching zero — beyond which lie potential dangers. After nearly three decades of growth, how has it reached this point? Since the 1991 recession, the cash interest rate has fallen from 17 percent in 1991 to 7.25 percent in 2008 — and 4.75 percent in 2011. Since then, the rate has trended down, and after the most recent cut in October it stands at 0.75 percent (chart 1). In August, Philip Lowe, the governor of the Reserve Bank of Australia (RBA), told a parliamentary committee he was prepared to go into negative territory. There have been periods when the economy has started to overheat, but the RBA, like most central banks, has been reluctant to increase interest rates in the times of growth. Late 2016 and early 2017 may have been key turning points. Housing prices were starting to fall, and inflation was stable. Increasing the interest rate would have matched increases in the US, UK and Canada, but the RBA kept its rate at 1.5 percent. When growth slowed in 2019, three cuts were made (chart 2). This reluctance is down to several factors. The RBA’s main mandate since the 1990s has been targeting inflation, a band of two to three percent. Inflation has remained relatively stable, and the RBA’s other main mandates — growth, employment, and the stability of the currency — rank lower in importance. The RBA is sensitive to the increased level of household debt since the 2000s: it is now around 120 percent of GDP, and a 25bps rise today has the same effect as a much higher increase in the 1990s. 18.00 16.00 14.00 12.00

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espite its statutory independence, the bank feels political pressure. The head of Treasury sits on the RBA Board and the government appoints the governor. It is also aware of the government’s sentiments on monetary policy without the need for any direct formal communication. The rate is sticky going up. It has also been sticky going down, with the RBA not wanting to fan the flame under the housing bubble. With no direct prudential levers to moderate the mortgage market, the RBA has relied on stern words. Banking supervision was delegated to a separate public body, APRA, in 2000. If the interest rate falls below zero, consumers and companies still have an extra buffer before they face negative interest rates thanks to the diverse funding sources of the major banks. While local deposits and the short-term money market are key, overseas wholesale markets provide over 17 percent of funding with longterm funding and its higher rates representing 10 percent of the total. The RBA could have been better served by fiscal policy in 2019, a year of slowing growth. During the recession, government policy aided infrastructure spending and one-off grants to taxpayers. Successive governments have been more interested in restoring a budget surplus. Chart 3 shows that in the aftermath of the recession, the cyclically adjusted fiscal balance (the overall balance minus the automatic stabilisers) has been increasing as a percentage of GDP, and is expected to be positive by 2021. In June, the RBA governor suggested that the government stimulate growth through infrastructure spending. The current conservative government is opposed to any Keynesian fiscal stimulus. This reluctance is not unique to Australia. In its October 2019 World Economic Outlook, the IMF argues that “monetary policy cannot be the only game in town. It should be coupled with fiscal support where fiscal space is available, and policy is not already too expansionary”. Through quantitative easing (QE), the US has shown that monetary policy can continue to stimulate growth in a zero-interest rate environment. QE began in the US in 2008 and was repeated in 2010 and 2012. The Eurozone, UK, and Switzerland also used QE in 2008-09. The Eurozone has continued with the programme, while Britain has been using it to mitigate the economic uncertainty of Brexit. The IMF argues that QE has been less effective for its pioneer, Japan, but this may be due to demographics. QE is not radically different to traditional monetary policy. In both instances, a central bank increases the amount of money by using central bank funds to purchase government and commercial bonds.

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8.00 %

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-2 -3 -4 -5 -6 Chart 3: Cyclically Adjusted Fiscal Balance (% of GDP). Source: IMF

The difference is that traditional monetary policy does this with an interest rate target in mind, while QE targets an increased money supply. QE typically involves the purchase of a wider range of financial asset types, including commercial debt, asset-backed securities, and longer-term securities. Zero and negative interest rates encourage spending over saving, but financial crises can ensue. Negative interest rates penalise savers, but as Europe and the US have shown, consumers and companies will keep their money in the bank or buy bonds because of the security factor: better the devil you know. But at some interest rate level, the cost of keeping the money will outweigh that security and demand will switch to cash. This can cause a liquidity crisis, a bank run. The tipping-point is, of course, unknown and may be at a very high negative rate, but once reached irrationality takes over. Sustained periods of low interest and cheap money also encourage asset bubbles. Since the 2000s, Australia’s housing market has been at inflated levels (increasing by over 144 percent in real terms between 1997 and 2015) and despite a slowdown in the past two years, values remain high. This has been accompanied by household debt. A return to buoyant house prices would push this debt higher, and elevate the risk of a housing-led crisis. Negative interest rates also affect the profitability of banks and managed funds. How can the CFI.co | Capital Finance International

banking system remain sound when banks pay borrowers for taking on debt, and depositors are penalised? Many Australian loans now have a zero-interest floor clause to guard against negative interest rates, but zero interest provides little profit advantage over negative interest. Many managed funds are required to hold short-term bonds and deposits as part of their investment mandate. When these instruments provide a negative return, it weighs against the overall return of the portfolio. Given the $2.9tn of assets under management in the Australian superannuation industry (a compulsory retirement savings scheme, most commonly in the form of a managed fund), this is a sizeable problem. Inflation can also become a problem in zero territory. Australia’s inflation has been subdued since the 1990s. Using QE to stimulate the economy — printing money — can increase the risk of high inflation when an economy is overheated, and consumers or governments spend the extra money. In Australia’s case, with a disciplined central bank, any QE will probably be used when growth is slowing, and the effect on inflation is likely to be small. The most likely negative effect from zero or negative interest rates is likely to be increased house prices — which is ironic given that the market’s slowing in 2016 prevented the RBA from increasing rates in line with other major economies. i

Winter 2019 - 2020 Issue

> Tadau's Susanna Lim:

CEO’s Vision of a Zero-emissions Future, with the Means and Drive to Achieve It Malaysia’s Tadau Energy envisions a World without pollution, zero emissions, so that future generations can inherit a healthier planet and clean air.

usanna Lim is the founder and — since 2015 — CEO of Tadau Energy Sdn Tsb (TESB). She believes in challenge limits, not limiting challenges, and has focused on strengthening its core business of renewable energy generation. Under her leadership, Tadau Energy forges ahead in the design, construction, commission, operation and maintenance of solar, wind and other sustainable power sources. The company is a leader in the field in transforming energy generation through advances in connectivity, rural electrification and efficiency. Susanna Lim aspires to enhance innovation and technology while contributing to the nation’s economy. She is committed to achieving sustainable environmental and community development goals via clean energy and bio-agricultural practices. Tadau has received numerous global awards. Hailed by the World Bank for its initiative and innovation, it was the first company in the World to issue a Green Sukuk valued at RM250m ($60m). That earned a coveted “Dark Green” certification from Norway’s Centre for International Climate and Environmental Research (CICERO). “As the CEO, I am entrusted with the responsibilities on Tadau Energy’s strategy and other key policy of the company,” Lim says. “We are commited in delivering to all our stakeholders, investing in our employees, dealing ethically with our suppliers, and generating long-term value for shareholders who provide the capital that allows companies to invest, grow and innovate.” Prior to her foray into renewable energy, Susanna Lim was managing director and founder of legal firm Susanna & Lau Advocates; she has been a solicitor since 2002. In those roles, Lim was responsible for M&A and national development under Public Private Partnership. She graduated with a Bachelor of Law (Hons) from the University of London, and has a certificate of legal practice from the Legal Profession Qualifying Board, Malaysia. She was admitted as an advocate and solicitor of the High Court of Malaya and the High Court of Sabah and Sarawak. “I always believe employees are the greatest assets to the company,” she says. “For success, company culture and empathy are very important. We combined global expertise to provide the know-how and technologies, and paired them with top-notch management professionals to achieve our goals.” i

CEO: Susanna Lim

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GPF Aims To Be the Leader in ESG Investing and Initiatives in Thailand

nder the leadership of Mr Vitai Ratanakorn, Secretary General, Thailand’s Government Pension Fund (GPF) has taken a new approach to ‘Doing well by Doing Good’ through ESG Investing. “His ambition is high. He wants GPF to be the leader in ESG investing and initiatives in Thailand”, Srikanya, GPF’s Deputy Secretary General told CFI.co in a recent telephone interview. “There is no compromise in sacrifying social values through financial values or the other way around. We must achieve both. As a pension fund, our investment is long-term enough to generate both the social values and financial values. Creating social values is not an option but a mandate for pension fund like us.” Srikanya recalled a speech Mr Vitai gave to key executives late last year. “My boss [Mr Vitai] pays most of his attention to ESG investing”, Srikanya said, “it was rather slow in the beginning to get everyone involved. The misperception that ESG investing would have to sacrifice alpha makes many reluctant to focus on it. After repeated internal communication and workshops supported by PRI and OECD, our investment team put their shoulders to the wheel”, Srikanya said. “The first movement in ESG investing was my boss’s initiative to launch ESG-focused portfolio in October 2018. We set aside approximately THB 1 billion ($3.3m) to invest in 33 listed companies in the Thailand Sustainability Investment List. GPF’s ESG-focused portfolio is the first ESG fund in Thailand. The move has made the mark for GPF toward leadership in ESG Investing and Initiatives in Thailand.” Deputy Secretary General: Srikanya Yathip

The setting up of the ESG-focused portfolio is just a first step, Mr Vitai has initiated. His plan is by the end of 2019, GPF must have its own ESG scoring tool to evaluate investment opportunities in Thai stocks and bonds. His 2020’s plan is even more challenging. By the first quarter of 2020, he targets to use ESG lenses for GPF’s investment in all Thai equity. All must be screened, to ascertain that GPF will not have companies with corrupt ESG track records in its portfolio. Mr Vitai’s stroke of genius was to initiate a project so-called ‘Negative List Guideline’, Srikanya said. The project was developed on a conviction that collaborative engagement would enhance 174

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Negative List Guideline MOU

Government Pension Fund Tower

investors’ influence and improve efficiency of the engagement process. “His idea of negative list guideline has gained a tremendous response. We have as many as 32 institution investors signed MOU to become a signatory to the guideline. The agreement is if a Thai listed company breaches good practices in ESG issues, all signatories will discuss firstly on positive engagement.”

ESG-focused portfolio press conference

Representative from the signatories will have a dialogue with the company in question. If the dialogue turns positive and the issues are solved, no action would be taken. The company in question will be sanctioned by investmentpending from the signatories only when the issues are proven having breached ESG practices and yielded damages to stakeholders. The name of the company will then be on the negative list. i ABOUT GPF GPF was established in 1997 as an institutional investor for reserved fund and plan members’ saving fund. Total AUM is THB 937 mil.; in which THB 394 mil is Members’ saving fund and the rest is reserved fund.

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> India’s

Economy Is Slowing Down.

What Happens Next? Based on insights from Benjamin F Jones & Krishnamurthy Subramanian

The country’s chief economic advisor discusses how labour, trade, and energy factor into the country’s economic outlook.

t’s true that no economy can grow forever, but some nations are better positioned than others to continue to expand even in the face of global uncertainty.

What will it take for the Indian economy to keep up the growth pace it has set over the last five years? In September, 2019, the Kellogg School’s Public–Private Interface and the Indian School of Business hosted a discussion between Krishnamurthy Subramanian, chief economic advisor to the government of India, and Benjamin Jones, a professor of strategy at the Kellogg School, to examine India’s economic outlook, how the boom of the last three decades will shape its future, and what structural changes can keep it growing. Jones: India has had an extremely impressive run of economic growth. Income per capita today in India is about four times what it was back in 1992. But now people are talking about some headwinds and the possibility of slower growth. Thinking about the next few years, do you see a slowdown coming? If so, is it just a blip? What concerns you and what do you think India needs most to resolve? Subramanian: Let me start on a positive note. Just to give you a sense of this five-trilliondollar economy: In the first 55 years of India’s existence, we added one trillion dollars in GDP. In the last five years, 2014 to 2019, we added another trillion. And given the changes to the exchange rate, it’s even more impressive. We added about 25 trillion Rupees in 55 years, then about 65 trillion rupees in the space of five years. In about one-eleventh of the period, we have accomplished two and a half times as much. But in order to hit our goals, we need to be growing at 7.5 percent plus. In the last two quarters, growth has dropped to 5.8 percent and 5 percent. So there’s been a slowdown. The slowdown is partly cyclical, having to do with the global economy. But it is also partly structural. 176

We had three governments in a 15-year period, 10 years under the previous political party and then five years under the current one. Before 2004, we were really focusing a lot on structural reforms, but then we took our eye off of them. In the period from 2004 to 2009, we focused a lot more on welfare, so that era was about distribution rather than about growth. The period 2009–2014 was—and I say this without any political affiliation—a period where there was a lot of corruption and scandals leading to a misallocation of resources and lots of nonperforming assets. And then 2014–2019 has been about the cleanup: winding down of the overleveraging and dealing with bad balance sheets. As a result, the investment-to-GDP ratio, which peaked in 2008–2009 at close to 40 percent of GDP, is now at 29 percent. And this is important because if you look at the advanced economies when they were at a stage that we’re in today— whether it is China, other East Asian economies, or other advanced economies—they all grew on the basis of investment, and especially private investment. Jones: That puts India into interesting historical context. The U.S. would be quite pleased to have 5 percent growth, so one should always keep things in perspective, but India is indeed reminiscent of Singapore, China, and other countries we’ve seen that have achieved high investment rates and rapid growth. So investment as a share of GDP is a ratio you want to improve. Some part of that is about credit, banking, and corporate income taxes. But another part is understanding what bottlenecks you hope to resolve that will increase productivity in the economy. Take China. Investors really like the reliability of infrastructure, transportation, and electricity in China. We know that India has challenges in these areas and that the Modi government has big, ambitious plans for progress. What’s next? Subramanian: So labor reforms, land reforms, and sorting out power are the three key areas that we CFI.co | Capital Finance International

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need to work on to grow investment, especially private investment. Our labor laws are still very stringent and unfriendly to investors. We conducted an economic survey of reforms to the labor laws in one of the states in Rajasthan. See, in India, if you’re a firm above a certain size, aspects of the labor law are applicable to you. What Rajasthan did was they increased the threshold size from 100 employees to 300 employees. We showed that as a result, the cumulative annual growth of labor, of capital, and levels of productivity all increased. Land is similar. In order for us to actually build factories or roads, land acquisition is very important, but some laws make land acquisition extremely difficult. For example, to acquire land you have to get the approval of two-thirds of all the people who have a part of the land, which is a very high threshold. That imposes some difficulties on infrastructure. Jones: So that’s really slowing you down? Subramanian: Yes, it is, actually. Also, the government has certainly pushed the envelope in bringing electricity to a lot more people, but there’s work that still needs to be done in terms of appropriate pricing and making people pay. Right now, power is free for many farmers, so they have incentives to use it excessively, which depletes the water table, among other things. Jones: I’ve been interested to see that the Modi government has announced extremely ambitious electricity plans, not just in terms of total energy supply, but also in the share that will be renewables. Solar and wind are meant to be 40 percent of the supply by 2030. One of the challenges of renewables is that they’re intermittent, so they’re hard to rely on. How is India thinking about balancing this desire to go in the renewable direction with the challenge of being able to provide reliable electricity supply? Subramanian: India is a coal-rich country, and the fact remains that we still need to bring power to a large mass of people at reasonably low rates. So we really need to walk this tightrope between ensuring development while also setting an ambitious benchmark for renewable energy. India is taking the leading steps here in targetsetting. And that comes from our ethos. In India for instance, just about everything is worshiped. Rivers are worshipped, animals are worshipped, nature is worshiped. So, increasing the share of renewables in our energy is consistent with our ethos, while also recognising that we cannot go all in immediately. Jones: If you’re thinking about advising Modi and other policymakers about governance reform— rule changes that can help unleash organic 177

“Labour reforms, land reforms, and sorting out power are the three key areas that we need to work on to grow investment, especially private investment.” Krishnamurthy Subramanian investment in the private sector—what kinds of reforms do you encourage?

So, I don’t think that India is so much at the receiving end of trade wars. It is an opportunity.

Subramanian: The key change that needs to happen in India is understanding the difference between pro-market versus pro-business. Somehow, in India, they are taken to be the same.

Now what we need to do really is to set our own house in order. We need to identify those parts of the value chain where we can really plug in. For instance, in the last few years, India’s share of assembling mobile phones has increased significantly, because we are now importing all of the components, assembling them here, and shipping them back. And this is possible because tariffs were reduced, and the mobile-phone assemblers could actually get these components at reasonable prices.

Let me use a recent example: the clamor for the bailout of the automobile sector, which occupies about 14 percent of Indian of manufacturing. Automobile companies’ sales have dipped about 25 percent this year, but that is on the back of profits that they’ve made for the last six or seven years. The narrative that’s been created is that auto sales falling is symptomatic of the economy doing poorly, when the fact remains that there are a lot of other factors at play that are hurting the automobile sector: electric cars, Uber, millennials not valuing assets like cars. I bring this up because in a market economy we have to recognise that firms will sometimes make profits and sometimes make losses. But every time a firm makes a loss, they can’t keep coming back to the government saying, “okay now bail us out,” because that creates the moral hazard of profits being private and losses being socialised by the taxpayer. This is an extremely important behavioral change that needs to happen. Sure, no country has been able to completely avoid that moral hazard, especially in the financial sector. But that moral hazard can’t be allowed to creep into other sectors. So we’re transitioning. I made this comment, and it was flashed in all of the newspapers: I said, “We liberalised in 1991, and it’s been almost 30 years now. At this point, the private sector should be behaving like a 30-year-old adult, not running back to his or her father saying, ‘Dad save me.’” We basically need to recognise all the important principles of a market economy, reduce the presence of the public sector, and bring in a much better credit culture through bankruptcy court. Jones: Trump has created a trade war, largely with China, but not exclusively. What are the challenges that this brings to India? And as supply chains in East Asia get disrupted, is this an opportunity to grow substantially? Subramanian: You know, this question gets asked often. The fact remains that India’s share of global trade is less than 2 percent. So even in a shrinking economy, we can still expand our share. 178

we have never ever defaulted on any obligation. And these are not economic arguments, but spiritual ones. And therefore, when we think about India’s role, especially in today’s world, it involves some of these principles that are just nonnegotiable. Not reneging at all, even if it is economically optimal. Playing the game actually in a fair way. India is going to be the president of the G-20 in 2022. We can show how cooperation can be based on principles. I think India understands its soft power very well and is very happy to put that soft power to good use in leading what we view to be an uncertain world. i

I’ll give you another example. When I was here in the United States, I used to drive a Toyota Camry, which is not a luxury car here. But in India, a Camry is a luxury vehicle. Why? Because duties and tariffs are just humongous. That fact enables many of our less productive automobile firms to continue to survive and remain immune to competition. So we need to be reducing some of those barriers and really enabling trade and joining trade agreements. I’m glad to say that at the highest level of our government, there is clear recognition that we cannot grow by remaining insular, that we have to compete with the best in the business and only then can we grow beyond that 5-trilliondollar economy. Chief Economic Adviser to the Government of India:

Jones: India is a robust democracy, large, and highly diverse: different languages, different ethnicities, religious views, et cetera.

Krishnamurthy Subramanian

There’s a lot of GDP weight in the world right now moving in an authoritarian direction, and I think historians are looking at this period and wondering, “Is this a blip in authoritarianism, or is democracy in reversal?” And it strikes me that India has an incredibly important role to play. So I am curious about how robust you see India’s democracy as being, and whether you think India is going to increasingly take a role as a leader pushing democracy around the world. Subramanian: That’s a very nice question. My answer has two parts. One: I think as a democracy we’re clearly very robust. The elections that happened just a few months back had the maximum number of voters ever voting. We are also clearly an exception because we are a democracy at the level of per capita GDP that we have. Two: there are some principles that define India. For instance, historically we’ve never ever gone and attacked a country. Similarly, in our existence, CFI.co | Capital Finance International

Featured Faculty: Benjamin F Jones Gordon and Llura Gund Family Professor of Entrepreneurship; Professor of Strategy; Faculty Director, Kellogg Innovation and Entrepreneurship Initiative (KIEI)

Winter 2019 - 2020 Issue

> Q&A with CEO of Insurance Corporation of Afghanistan:

Jamal Asfour

Insurance Corporation of Afghanistan

WHAT EXCITED YOU ABOUT YOUR EARLIER CAREER, AND WHAT EXCITES YOU ABOUT THE BUSINESS YOU NOW LEAD? Jamal Asfour: I started my career at Jordan Insurance (JIC) in my home country, Jordan. The interesting aspect of the market was the intense competition. A market player would need to always go for the extra mile in customer servicing standards in order to retain business and grow. This allowed me to learn how to act in the best interests of a client by putting myself in a client’s shoes.

various risk-management scenarios — using Sun Tzu’s rules of assessment, planning and combat in the market place.

While I was head of BD and research at JIC, we encountered an interesting investment opportunity in Iraq which led to the establishment of the Asia Insurance Company (with other Iraqi shareholders). The Iraqi market had no compulsory insurances in place so we had to work from scratch. We launched the first medical insurance programme in the country, partnering with leading reinsurer Munich Re.

A TRACK RECORD FOR DELIVERING RESULTS ICA chief executive Jamal Asfour joined the company in early 2019, bringing with him more than 14 years of insurance experience from across the MENA region.

The tenure in Iraq was very successful and the company is respected as the leading private insurer in the country. Being tagged as the frontier person was not coincidental; I moved to the Insurance Corporation of Afghanistan (ICA) earlier this year. I saw Afghanistan as an interesting country to apply my expertise. It’s quite similar to Iraq in terms of being war-torn. The most exciting element when starting in a new market is achievements that come through adopting benchmarking principles. I researched and compared various countries’ economic progress in insurance across continents that had allowed some markets to quadruple in size in short time frames. The GCC market achieved 300 percent growth from 2006 to 2016, attributable to various factors. Those factors will be studied for applicability from several angles, and the right solution will be tailored to suit Afghanistan’s situation. InFrontier, a major equity fund (partially owned by CDC Group) invested in ICA, and there are plans to expand geographically — which is aligned with my ambitions. WHAT IS SPECIAL ABOUT THE MANAGEMENT STYLE AT YOUR ORGANISATION, THE TEAM YOU LEAD AND THE WORKFORCE? JA: Any organisation’s team members share the same challenge, so I adopt the concept of Peter Drucker (Management by Objectives MBO), starting with the end in mind. We all work as one

WHAT ARE YOUR SHORT-TERM HOPES FOR THE FUTURE OF YOUR BUSINESS, AND FOR THE INDUSTRY AS A WHOLE? JA: I look towards seeing more transparency in the insurance industry in Afghanistan, as unfortunately we still do not have market statistics to benchmark ourselves with others, and see how the industry as whole is progressing.

CEO: Jamal Asfour

unit to achieve the desired objective of sustainable and scalable net profitability. At ICA, we believe an ‘’open door’’ policy is a must for full transparency and openness with team members so common goals can be effectively achieved. HOW WOULD YOU CHARACTERISE PROSPECTS FOR YOUR INDUSTRY, AND WHAT ARE THE KEY CHALLENGES FACING IT? JA: Afghanistan is one of the world’s smallest countries in terms of insurance, so the potential is immense. But various challenges exist, especially the political situation — it’s still considered a high conflict zone. Through peace, I believe all sectors will gain. Afghanistan, according to US research, has more than $1tn in untapped resources. Investors are currently reluctant to get involved due to the situation. I believe Afghanistan will have the world’s highest economic growth percentage for several years if the peace deal goes through. This will affect all industries, and the Insurance sector could grow at triple-digit rates, at least for a short time. Some legal challenges exist that hinder market growth, and we are advising the government on these, in line with international best practice. WHAT ARE THE PERSONAL AND BUSINESS STRENGTHS THAT QUALIFY YOU AS A CORPORATE LEADER? JA: As Sun Tzu wrote in The Art of War, “In the midst of chaos, there is also opportunity.” That reflects my personality of working in conflict zones. Adopting the various strategies of Sun Tzu in running a business operation proved to be very successful. My analytical and financial skills enable me to make decisions more effective through building CFI.co | Capital Finance International

He is a results-orientated CEO with an enviable track record for delivering strategic, technical and operational value. Prior to joining ICA, Asfour headed the business development, planning and research departments at Jordan Insurance Company, a leading Jordanian insurer with branches and interests in the UAE, Kuwait, Saudi Arabia, Iraq and Yemen. In 2011, he was appointed CEO of Asia Insurance in Iraq, and led the company to become the country’s largest and most reputable private Insurer. For three consecutive years, Asfour was named as one of the 50 most powerful individuals in the MENA insurance industry. Jamal Asfour graduated from the University of Kent in Britain with honours in Accounting and Finance. ABOUT ICA The insurance Corporation of Afghanistan (ICA) is the leading & the 1st established (since 2007) insurer in Afghanistan. ICA won the CFI. co Best insurance Company in Afghanistan for the year 2019 in addition to luring the MENA insurance review newcomer of the year award earlier this year. ICA is the preferred local partner of various international insurers which simply solidifies its position as trusted insurance partner that operates according to International best practices. ICA is proud of it's international partnerships with major World Class Reinsurance players in the Lloyds market as well as the likes of Swiss Re & Hannover Re. It places it's reinsurance business through strong ties with leading reinsurance brokers such as Marsh, Aon, Willis and Lockton offering additional peace of mind to it's numerous stakeholders. i 179

> India Needs Concentrated

Effort to Weather Global Financial Slowdown By Lakshay Dayal Mathur

The International Monetary Fund’s World Economic Outlook report predicts that 2019 will be the worst year for growth since the 2008 financial crisis.

he IMF, a specialised UN agency, cited widening conflict as a major cause of the ailing global economy. In 2008, India was insulated from the slowdown by comparatively faster growth, but in this age of global integration all economies are affected. In September, Indian finance minister Nirmala Sitharaman announced a slew of measures to give a fillip to the country’s sluggish economy which had been faltering for the past few quarters (the past 2.5 years if annual growth rates are taken into consideration). Measures included a reduction in corporate tax and rolling back some budget proposals she presented in July. Companies without tax exemptions were paying an effective rate of 34.94 percent. That was slashed to 25.17 percent (effective). For manufacturing entities set up after October 1, 2019, and commencing operations by March 31, 2023, the tax rate is reduced from 29.1 percent to 17.01 percent. This brings India’s domestic company tax rates to a par with the rest of Asia. The announcement was well received by nation’s stock exchange, which registered the secondhighest single-day gain in a decade. Allaying market fears, enhanced surcharges levied on foreign portfolio investors in the Union Budget was also rolled back. Minimum Alternate Tax (MAT) was lowered from 18.5 percent to 15 for companies that avail themselves of exemptions and incentives. The revenue forgone is estimated to cost the exchequer $20.5bn. DOMESTIC AND GLOBAL HEADWINDS Globally, the biggest trigger has been the slowdown in trade. The World Trade Organisation (WTO) has cited rising trade tensions and increased economic uncertainty for growth loss. It predicts the trade volume will fall to 2.6 percent in 2019 – down from three percent in 2018. A flat growth rate is pulling down the global economy.

180

The new head of the IMF, Kristalina Georgieva, described the global situation as a “synchronised slowdown”. She said that larger and emerging economices, such as India and Brazil, had been harder hit, and warned that services and consumption could soon be affected. The US-China trade war and protectionism tendencies – affected by the rise of ring-wing policies, to some extent – have added fuel to what some see as an economic Armageddon. The trade war has caused a fall in India’s exports. It opened its economy in 1991, and has since been affected by global economic headwinds. In the period January to March of 2019, India’s GDP growth slowed to 5.8 percent. The country’s real (inflation-adjusted) GDP was growing at five percent in the June 2019 quarter of the financial year, the slowest growth in six years, or 25 quarters. The previous low of 4.3 percent was recorded in March 2013. Since December 1999, this was the second time that the GDP growth rate had fallen for five straight quarters. The recently released Index of Industrial Production (IIP) by the National Statistical Office estimated that factory output in September contracted to 4.3 percent, the lowest in eight years in the new GDP series with 2011-12 as the base year. This shows the dilapidated condition of three component sectors – manufacturing, mining and electricity. The fall was more extreme than the 1.4 percent drop seen in August, indicating that the economy may have slumped further in the second quarter. Factors affected the growth of Indian economy include the shadow banking crisis, muted consumption demand, a liquidity crunch and the Non-Banking Finance Company (NBFC) crisis. Demonitisation and the hasty implementation of GST also had an effect, hitting SMEs. The central Reserve Bank of India, while announcing a fifth cut in its benchmark interest (repo rate), slashed its GDP growth estimates CFI.co | Capital Finance International

South India: Meenakshi hindu temple in Madurai, Tamil Nadu

Winner 2019 - 2020 Issue

to 6.1 percent, from an earlier estimate of 6.9. Cuts spread to almost every major global institution soon after. The IMF trimmed India’s GDP growth rate projections to 6.1 percent from seven percent, the World Bank to six percent, S&P to 6.3 percent and most recently (as of November 15) Moody’s Investor Service slashed it to 5.6 percent – a new low. Response to the Crisis The government has announced a corporate tax reduction along with several other businessfriendly measures (as discussed above) to address the problem of lack of aggregate demand (AD). The slowdown is not down to lack of production potential or lack of capacity; it is about demand. Textbook economics tell us that different personal choices and policy decisions can change AD components of consumption, investment, and government spending, as well as spending on exports. And since the government has influence here, it has the power to shift AD through its policy decisions. Owing to the $24bn dividend pay-out received from the central bank, some $10n was fed into the banking system; according to data from the reserve and state banks of India, there has been an increase in credit flow for consumers and industry. The uptick in automobile and whitegoods sales does mean the return of consumers to the market. It could be an artificial boost. The real estate sector was given a $3bn bailout for stalled projects across the country. The sector is directly related to steel, cement, furnishings, paints, and could have positive spillover effects. The government’s reluctance to relax the self-imposed limit on fiscal deficit targets is worrisome. In times of AD slowdown, it should take the Keynesian approach of deficit spending. During the 2008-09 global financial crisis, the fiscal deficit was increased from 2.5 percent to six, and that is the reason that India didn’t have a steep decline in growth. Though rating agencies are sensitive to any overruns, India’s borrowings are at least wholly domestic. The government’s decision to consolidate the PSBs should be appreciated, but more action is needed to avert the banking frauds. Public trust has been eroded. With 70 percent percent of the nation’s population based in rural areas, agricultural production – which has been experiencing a negative growth since 2008 – needs attention. The delayed effects of demonetisation can be seen here. The essential goal should be to set the basics right, instead of proceeding with a band-aid application. Reforms should continue because India’s aspirations to be a $5tn economy by 2024 can only be achieved if it does more to avoid the economic Armageddon. i 181

> Tadau Energy:

Set the Controls for the Heart of the Sun: Ultimate Energy Solution is Finding Traction

strong focus on green and sustainability and to provide environmentallyfriendly and cost-effective alternative to conventional power plants has always been a cornerstone of the business ethics of Tadau Energy Sdn Bhd (“Tadau Energy”). Tadau Energy aims to provide solution to resolve energy poverty and lack of electricity issues in rural areas in Malaysia and other developing countries, by sourcing for lands and to propose new methods of renewable energy projects. Tadau Energy has completed Malaysia’s first grid connected Large Scale Solar Project with a capacity of 50MWac in Kudat, Sabah, in 2018 which is in line with the Malaysian Government’s strategic intent of decarbonising the energy sector under the 11th Malaysia Plan (2016 – 2020) and to increase power generation contribution through renewable energy from the current 2% to 20% by 2030. Tadau Energy’s Solar Plant is now feeding renewable energy to around 380,000 households and reduce carbon dioxide emission as much as 2,345 tons a year equivalent to the amount of carbon dioxide absorbed by 2000 acres of forest area. 182

To make the project a reality, Tadau Energy has achieved the World’s first issuance of Sustainable Responsible Investment (SRI) Green Sukuk amounting to MYR250.0 million. This SRI Green Sukuk is a huge vote of confidence of the company’s ability to complete a green project of this size. It also serves national interests as it meets Malaysia’s ambitions to expand its role as a hub for global Islamic financing and to become a centre for Green and responsible Islamic investments in the world. The framework that Tadau Energy used to issue the Green SRI Sukuk was certified ‘Dark Green’, the highest certification level afforded by the Center for International Climate and Environmental Research – Oslo, Norway (CICERO), an independent green certification agency. This affirms the project corresponds to the long-term vision of a low carbon and climate resilient future. In overview, this project has driven economic growth, enhance environmental sustainability and create social equity in the workforce. Job opportunities were created for the local community where at least 200 people were CFI.co | Capital Finance International

employed. The high skill required to build, manage, and maintain the project has also increased the capability of local Malaysians. To this end, Tadau Energy has ensured that the project’s main contractor and international consultancy firm engage local professional engineering firms in an effort to encourage technology transfer and increase the technical skill of local Malaysians. Meanwhile, Tadau Energy implemented corporate social responsibility (CSR) programs to give back to their communities and to make a positive impact whereby it targeted to light up the lives of more than 1000 villagers without access to electricity living in rural areas of Sabah, Malaysia. One of the CSR programmes conducted is providing solar-powered lamps to the electricity-deprived villagers in Kudat. Tadau Energy also seeks to contribute to individual/students/agencies/communities who are appreciative towards the interest in solar energy with our own experience and information. We organized teachers’ visitation to the Solar Plant, learning the first-hand on how solar photovoltaic power works, its environmental

Winter 2019 - 2020 Issue

"Tadau Energy emphasises the use of the latest technology in the solar plant with a smart monitoring system, drone and electrical connection thermal scanning and integrated data analytics for maximum efficiency."

impact, and the key role that solar plays in helping to create a brighter future for Malaysiaâ&#x20AC;&#x2122;s next generation. These are educators of the younger generation who represent our future. Such visitation puts the learning experience in school about renewable energy into context so that they can deliver a message for a cleaner, greener tomorrow. Apart from sustainable energy sources, Tadau Energy appreciates the importance of social

sustainability whereby Tadau Energy has been practicing agro photovoltaics, which is the incorporation of agricultural activities within solar PV farms. The Company has grown a variety of ground vegetables, crops and flowers between the solar panels to prevent wild grass from growing and to control the natural flow of water as well as prevent soil erosion. Agro photovoltaics has made the land more productive as compare to traditional agriculture, improve the resource efficiency and provide additional long-term CFI.co | Capital Finance International

income to the farmers. Currently, harvested crops are consumed by Tadau Energyâ&#x20AC;&#x2122;s own personnel, with the aspiration of supplying to local communities in the near future. Tadau Energy strongly emphasizes on implementing latest technology in the Solar Plant including to upgrade to smart monitoring system, to conduct drone and electrical connection thermal scanning and integrated data analytics for enhancement of operational efficiency. It constantly provides training and workforce development program focus on improving the skills and competency of their employees. Solar energy technologies are nowadays the most popular technologies that the world is pursuing. It is the most promising energy to meet the global future demand as it will never deplete. Tadau Energy will continue their efforts in sustainable use of natural resources and reduce pollution, making a peaceful and clean environment for the future. i 183

> Alisher Sultanov, Energy Minister of the Republic of Uzbekistan:

There Must Be Conservation and Cooling in Uzbekistan

riving from the airport to Uzbekistan’s ancient city of Bukhara, visitors can see a series of new residential buildings on the side of the road, evidence of the building boom currently underway in Uzbekistan. If you look closely, you can see metal frames attached to the outside walls. Most of the frames are empty at the moment, but once construction is complete and the homes are ready to be occupied, the frames will house air conditioners. 184

These air conditioners are a symbol of economic development, of improved living conditions, of aspiration. But, for me, they are also symbolic of the challenge that faces my nation and countless others across the world. Western Europe and North America already have their air conditioners, where they are needed. But now, just as world leaders wake up to the threat of climate change and incautious use of carbon CFI.co | Capital Finance International

fuels, our people want air conditioners too. And why shouldn’t they have them? At the recent United Nations “Agenda for Sustainable Development” conference in New York, we in Uzbekistan played host to energy ministers from across our region, all members of the Asian Development Bank-sponsored CAREC programme. This included Kazakhstan, Tajikistan, Pakistan and Turkey. All of us --

Winter 2019 - 2020 Issue

Energy Minister of the Republic of Uzbekistan: Alisher Sultanov. Photo: Bakhodir Saidov

we are not insensitive to international calls to restrain consumption growth. We believe we can contribute best by producing more efficiently. For instance, we in Uzbekistan generate far too much electricity from high-value natural gas. Hence our recent decision to build our first nuclear plant, using Russian technology. For decades now, our nations have underinvested in energy infrastructure. In my country, some 75% of the electrical production and transmission system is over 30 years old, and some parts are over 50. The situation is somewhat better elsewhere in the region, but not by much.

Uzbekistan: Historic square in Samarkand. Photo: Bakhodir Saidov

ministers representing a total population of nearly 340 million -- face this dilemma every day. Our peoples want better lives and access to what your estate agents call “all mod cons”. But we realise that most modern conveniences consume energy, and energy demand is quickly rising. Some of us – Kazakhstan and Uzbekistan in particular – are major energy producers and

Our governments have all recognised the need to modernise and upgrade, though we have only begun the process. Equally, we are all investing in conservation in our domestic markets -metered power consumption, for instance -and in home insulation. Uzbekistan has raised electricity tariffs to more realistic levels, both so that producers and suppliers can cover their costs but also to encourage greater conservation at the household level. But the critical new development is the emergence of a regional approach where, potentially, capital costs can be spread across a much larger base and where regional financing mechanisms can be developed. Through information sharing and networking, we are all developing more investor-friendly regulatory environments. Whereas in the past such international investment that existed was at CFI.co | Capital Finance International

least partly driven by geopolitical interests and other nations’ foreign policy goals, future FDI should be attracted on commercial terms. Again taking my own nation as an example, we have recently restructured some of our energy enterprises, such that several will soon be seeking external capital. We are encouraging partnerships with global companies, anticipating gaining both capital and knowhow. Likewise, my fellow ministers and I committed our nations to aggressively increase electricity generation from wind and solar sources, seeking to double production by 2023. We see growing potential for cross-border trade in electricity, and full restoration of the power grid which existed when we and several of our neighbours were part of the Soviet Union. An agreement signed in July has been making this possible. This is how lower and middle income nations can continue to develop, despite the acknowledged need to protect the planet. There is pressure on us. There are those who, in their heart of hearts, might think we shouldn’t be installing those air conditioners, that we need somehow to curb our ambitions. There are even arguments that the focus on economic growth is in itself bad for the environment. But that is an argument for inequality and hopelessness. What we need is clean and sustainable energy production, transmission and consumption. i 185

> UNOG on Perception Change Project (PCP):

What Does the PCP Do for SDGs?

egative news dominating the headlines leads people to believe that the state of the World is worsening.

This is a misconception. Positive developments related to global challenges are happening every day — so why aren’t these stories being told? 186

The objective of the Perception Change Project (PCP) is to tell the full story with news that highlights the challenges, while showing solutions, progress and results of the positive impact made by International Geneva. The objectives go hand-in-hand with PCP efforts to promote the Sustainable Development CFI.co | Capital Finance International

Goals (SDGs), and provide simple and practical solutions to achieve them. When the former director-general Michael Møller launched PCP in 2014, one of the priorities was to create a visual overview of International Geneva’s core expertise, along with the main SDGs on which each organisation focuses. PCP created

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SDG Mapping, with over 70 Genevabased organisations participating. The fold-out map converts complex data into a clear and comprehensive visual, offering actors the opportunity to connect with like-minded organisations. The map was updated and made interactive and accessible online. Through the online mapping tool, every researcher is able to get a snapshot of who does what for the SDGs in International Geneva. For a more in-depth understanding of International Geneva’s work, the GVAData project was launched. It is as an easy-to-navigate online compilation of all the current work of over 200 actors in International Geneva. Using constructive feedback, the site was revamped to better address the needs of its target audiences, namely academics, but open to all interested parties. GVAData aims to become the go-to portal for information about International Geneva, and it now includes links to data sites run by other international organisations, as well as a list of SDG resources. The PCP team wanted to raise the profile of the SDGs. One of the most effective ways to do this was by making them visible to travellers passing through airports. The global campaign YouNeedToKnow was created in partnership with the travel retailer Dufry. It was launched at Geneva Airport and later rolled-out in 10 airports worldwide, including Zurich (during the World Economic Forum in Davos), Italy, Britain, Greece, Spain, Portugal, Bulgaria, Morocco and Algeria. The campaign runs during peak traffic periods, and while it reaches a wide audience, PCP also focuses on awareness-driven projects to target niche audiences. It produced a children’s SDG storybook, Fairy Tales for a Fairer World. Traditional tales were adapted to highlight some of the modern global challenges. The book, originally in English, was translated into French, Russian, Chinese, Arabic, Greek, Polish and Spanish by volunteers in the UN translation units. It has been distributed at events including Expo 2017 in Astana, the Salon du Livre in Geneva and at the UN Geneva Open Day.

"PCP, as a communication space, has many touchpoints to connect humanity worldwide to the SDGs, and 2020 is set to be an exciting year."

Following this success, PCP created a booklet entitled 170 Daily Actions to Transform Our World. It encourages individual efforts and reminds the public that no contribution is too small to make

CFI.co | Capital Finance International

a lasting impact. The booklet, in English and French, was distributed to over 7,000 visitors at the UN Open Day in 2018, and 25,000 copies in English, French and Spanish have been allocated to the visitors’ centre at the Palais des Nations. The Global Communication Department at UN headquarters requested to use it as part of the SDGs website, and offered to translate it into Russian, Chinese and Arabic. UNRIC Brussels translated it into Portuguese and Greek. The Danish United Nations Association translated it into Danish, and the United Nations Baku Azerbaijan translated it into Azeri. German and Italian copies have been distributed around Switzerland to promote International Geneva. Design students have turned the 170 actions into GIFs, which have been shared on social media. Social media is a powerful tool for promoting the SDGs. One initiative was the Impact Infographics campaign showing the impact made by International Geneva. PCP collaborated with over 100 partnering organisations to capture important data and translate them into visuals. The SDG Impact Infographics have featured on social media and in the magazine Klvin Mag. PCP launched the SDG Studio Geneva project with UNTV and the SDG-Lab. It produces videos to communicate the work done to advance the SDGS by International Geneva practitioners. The studio is open to individuals dedicated to delivering the 2030 Agenda from governments, businesses, civil society organisations and academia. More than 90 videos have been produced and shared online. Celebrities have been interviewed, including Neymar, Michelle Bachelet, Amina Mohammed and Staffan de Mistura. The videos have notched-up thousands of views on YouTube and Facebook — and the clip of Neymar is one of the most-viewed videos on the UN Geneva’s Facebook page. PCP, as a communication space, has many touchpoints to connect humanity worldwide to the SDGs, and 2020 is set to be an exciting year. i ABOUT THE PCP The Perception Change Project (PCP) is a creative space in the Office of the Director-General at UN Geneva. It aims to change the public’s perception of the United Nations by promoting the impactful work of International Geneva. 187

> UNCDF:

Least Developed Countries Driving Climate Action & Carbon-Free Solutions Through Climate Finance By Vincent Wierda and Sophie De Coninck

he least-developed countries are those most affected by climate change, according to Sonam Phuntsho Wangdi, the secretary of the Kingdom of Bhutan’s National Environment Commission.

Wangdi was appointed chair of the Least Developed Countries (LDCs) climate change negotiating group, which operates within the United Nations Framework Convention on Climate Change (UNFCCC). Wangdi went on to say: “(W)e have the least capacity to adapt and address its damage, and without adequate and sustainable funding, LDCs risk being left behind in the transition to a zero-carbon future.” In developed countries, the reckoning over climate change has largely focused on two debates: the existence or nature of the challenge, and the existence or necessity of political, social and market will to craft solutions. In developing countries, and LDCs in particular, the conversation focuses less on the gap in the finances needed to support climate action, and more on the finances that are available. As Wangdi acknowledges, the lack of capacity to address climate change is directly related to the lack of adequate and sustainable funding. Addressing the finance gap is the reason why UN Secretary General Antonio Guterres has repeatedly called for an annual $100bn from public and private sources to support action projects in developing countries. Creating a source of financing to close the gap is also why the Green Climate Fund (GCF) was created under the UNFCCC, which now has commitments of some $5bn. These initiatives are necessary and welcome, as the effort to support LDCs in adaptation and clean energy will require an array of solutions designed with them in mind. UNCDF has learned that the structural challenges that prevent finance from flowing into LDCs also contribute to the climate finance gap. Domestic economies, the global financial ecosystem, private sector capital and public sector fiscal transfers, local governments lacking public funds to smalland medium-sized enterprises lacking follow-on capital — all these factors play a role in financing climate responses.

"We must consider precisely how climate finance will reach the areas where it is most needed." environment gives them understanding of specific needs on the ground. Their relationships with local organisations, constituencies and citizens allow them to convene stakeholders to make the process an inclusive one. Local legislatures can pass appropriate climate measures with greater ease. But one disadvantage outweighs all of these strengths — the lack of capital. One challenge is local government finance, including the lack of fiscal space or autonomy to generate own-source or local revenue. Municipalities in many LDCs govern in unitary countries, where revenue-generating capacity is held by central governments. National governments concentrate the power to tax, to issue bonds and to create special-purpose vehicles. Because local governments have to rely on fiscal transfers from central governments, local climate projects have to compete with national priorities such as defence, education and healthcare. This is worsened by LDC municipalities’ lack of access to credit in international markets. Municipalities in wealthier nations can issue debt as nations or companies can, but in LDCs they are subject to the national debt ratios of central governments. Benin will probably have an easier time accessing international capital than Cotonou — which holds the majority of Benin’s GDP. According to the World Bank, 80 percent of the 500 largest cities in developing countries are not considered investment-grade.

The finance gap for LDCs is about more than climate finance. Tackling their specific structural finance challenges is essential. Local governments and cities are well positioned to be drivers of climate action. Proximity to the local 188

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These structural challenges are behind our decision to launch the Local Climate Adaptive Living (LoCAL) facility — a country-based mechanism designed to ensure that finance goes to the most important point of impact: the local level. LoCAL has supported and benefited 240 local governments in 14 countries, having mobilised some 75 million USD, mostly for grants and technical assistance, resulting in 600 local adaptation investments. LoCAL establishes a standard, internationally recognised country-based mechanism that channels climate finance to LDC local government authorities. It relies on performancebased climate resilience grants (PBCRGs), which ensure programming and verification of climate change expenditures while offering incentives for performance improvements, technical assistance and capacity building. Municipalities also enact social and environmental safeguards, promoting the effective use of domestic and international climate finance. This was proven when the National Committee for SubNational Democratic Development (NCDD) — the inter-ministerial mechanism of the

Winter 2019 - 2020 Issue

Results

2018 29.7%

46.7% 34.8% Beneficiaries

Tonnes of CO2

33.5% Tonnes of firewood

Products sold

CLEAN ENERGY PRODUCTS SOLD

2014-2018

+250,000

PEOPLE IMPACTED

2014-2018

1 million

Products

Indirect beneficiaries

Products Sold in 2018

Beneficiary Increase in

74,458

2018

347,546

Cambodian government focused on subnational development, which we supported as their implementing partner under LoCAL — in November 2019 achieved accreditation to the Green Climate Fund. The flipside of the climate finance coin is clean energy, the kind of scalable solutions for a lowcarbon, or zero-carbon, future. A structural challenge is the SME finance gap and the challenge of the “Missing Middle”. Many LDCs have to contend with the lack of on-grid electrical capability, affecting economic growth and the day-to-day lives of citizens. In Uganda, 80 percent of the country lacks access to reliable power. At the same time, SMEs in these same markets are innovating promising solutions for off-grid clean energy, including solar home systems, biogas clean cooking solutions and solar-powered mini-grids. Decentralised energy is increasingly linking to other value chains, showing how we are moving from basic access to value addition. These solutions have the potential to be scaled, and can be affordable even for those lacking formal banking or credit. But for many of these SMEs, the challenge is follow-on capital. This speaks to the challenge of the Missing Middle — where SMEs in LDCs are too large to receive microfinance capital, too risky for domestic banks, and too small for larger institutions — including development finance and institutional investors. The potential for scalable, clean energy is trapped in the Missing Middle. Under UNCDF’s “Leaving No One Behind in the Digital Era” strategy, the vision is to empower LDC citizens to use services that leverage innovation and technology, and contribute to the achievement of the SDGs. A crucial part of this work is financing the Missing Middle with respect to clean energy SMEs and financial service providers to drive SDG achievement. Investments across the energy value chain, with technical assistance to get concepts and

FIREWOOD SAVINGS

OFFSETS

2014-2018

132,913

471,745

Tonnes Saved in 2018

Tonnes Offset in 2018

44,528

220,083

Tonnes of firewood

Tonnes of CO2

business plans investment-ready to increase flows of follow-on capital. We reached a landmark moment in the third quarter of 2018, having facilitated the sale of over 250,000 clean energy products since 2014, as well as hitting the one-million indirect beneficiary mark. Between 2014 and 2018, the clean energy product sales we facilitated translated into more than 470,000 tonnes of CO2 offsets. Perhaps more importantly, we are supporting sustainable businesses that are attracting commercial capital to scale the decentralised energy market. Without major reforms in the municipal investment space, the global financial space, or elsewhere, resources will continue to be allocated in ways that entrench exclusion and inequalities rather than overcome them. The climate finance space is an extension of this point, and it can be a game-changer. All viable options to close the finance gap for LDCs will be welcomed. But we must consider precisely how climate finance will reach the areas where it is most needed. That is just as important as considering how much finance there is to be disbursed.

America, UNDP, UNIDO and at the School of Oriental and African Studies. Vincent holds an MSc in Economics from the University of London. Sophie De Coninck joined UNCDF in 2014 as manager for the UNCDF’s Local Climate Adaptive Living Facility (LoCAL) programme, which provides climate finance to local authorities through national systems and performance-based grants. Sophie previously worked for 15 years for the European Commission as programme manager of the EU 'GCCA', for the United Nations Environment Programme (UNEP) in Kenya and for various private companies and research institutes. ABOUT UNCDF UNCDF offers “last mile” finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development. UNCDF pursues innovative financing solutions through: (1) financial inclusion, which expands the opportunities for individuals, households, and small and medium-sized enterprises to participate in the local economy, while also providing differentiated products for women and men so they can climb out of poverty and manage their financial lives; (2) local development finance, which shows how fiscal decentralization, innovative municipal finance, and structured project finance can drive public and private funding that underpins local economic expansion, women’s economic empowerment, climate adaptation, and sustainable development; and (3) a least developed countries investment platform that deploys a tailored set of financial instruments to a growing pipeline of impactful projects in the “missing middle.’’

Author: Vincent Wierda

Author: Sophie De Coninck

Neither is more important than the other when it comes to the LDCs; both considerations are indispensable. i ABOUT THE AUTHORS Vincent Wierda joined UNCDF as a Programme Manager for its CleanStart initiative in 2013 and is now currently taking the role of UNCDF Regional Coordinator for Asia. Vincent has long worked in the field of financial inclusion, starting in 1998 in Ethiopia, and later working throughout Asia and Africa. He has also worked in the fields of SME promotion, business development, agricultural value chains and rural development. In addition to UNCDF, Vincent has worked with the Belgian Development Agency (BTC), Oxfam CFI.co | Capital Finance International

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> Jim O’Neill:

A Living Wage for Capitalism

At 3.6%, unemployment in the United States remains near its lowest level since the late 1960s. There are even signs that people who had previously dropped out of the labour force are being attracted back into it as employers scour a tight labour market for the marginal employee. Consistent with this news, US Federal Reserve Chair Jay Powell has pointed out that wage gains are finally accruing to lower-paid workers.

n another nod to lower-paid workers, in July, the US House of Representatives passed a bill to boost the federal minimum wage from $7.25 per hour to $15 per hour (an increase that would be phased in over seven years). But the legislation has no chance of passing the Republican-controlled Senate. Moreover, the Congressional Budget Office estimates that a $15 minimum wage would lead to job losses for 1.3 million lower-paid workers.

Final Thought

One heard similar objections in the United Kingdom back in the spring of 2016, when thenPrime Minister David Cameron’s government introduced its National Living Wage policy. Yet, over the past three years, there have been no signs of a reversal of employment gains. And in recent months, wage growth has started to pick up after a decade of stagnation, with the Resolution Foundation now predicting that real (inflation-adjusted) average weekly earnings in the UK could exceed their August 2007 peak of £513 ($660). While the topic has yet to feature explicitly in the UK election debate, both Labour and the Conservatives are pursuing programs to boost minimum wages further (they also seem to share the goal of increasing infrastructure spending). In late September, Chancellor of the Exchequer Sajid Javid announced that the minimum wage of £8.21 per hour for workers over 25 would be expanded to include all workers over 21. He also promised that by 2024, the minimum wage will have risen to two-thirds of median earnings. Not to be outdone, Labour has vowed to hike the minimum wage to £10 per hour if elected. Predictably, these statements from both parties raised eyebrows in business circles, and led to warnings of future job losses. And yet I find myself thinking that a higher minimum wage 190

"Despite strong headline employment figures in the US, the UK, and other Western economies over the past decade, business investment spending has remained stubbornly weak, as have productivity and wage growth." might deliver benefits beyond what is captured in the traditional economic calculus. Given capitalism’s growing crisis of credibility, business leaders would do well to consider embracing such policies more enthusiastically. As I have pointed out before, despite strong headline employment figures in the US, the UK, and other Western economies over the past decade, business investment spending has remained stubbornly weak, as have productivity and wage growth. These trends have coincided with a period of strong corporate profits and macroeconomic conditions that, in theory, should be favorable for investment. Indeed, low interest rates, strong profits, and reduced corporate taxation would seem to be a perfect recipe for significantly higher investment spending. But instead, we have witnessed an acute increase in actual and perceived inequality, and a popular backlash against both capitalism and democracy across Western countries. Companies have not responded to the textbook stimuli for investment, either because they don’t see the long-term economic rationale for it, or because they are in less capital-intensive industries and simply do not think that they need any more buildings and equipment. The CFI.co | Capital Finance International

problem, of course, is that without investment, productivity is not likely to increase. And without productivity growth, there is little reason to expect sustainable wage growth. Whatever the reasons for lagging investment, it is clear that public policy has a role to play here. If what we are witnessing is a market failure, it is both reasonable and appropriate for the state to step in and provide the needed investment spending – as both the Tories and Labour are suggesting they will do if they win the UK election. But policymakers can also change the risk-reward calculus for business, and one way to do that is by significantly increasing the minimum wage. Higher nominal wages for low-paid workers can boost real earnings, increase consumer spending, and help make housing more affordable. And insofar as raising the minimum would increase companies’ wage bill, it would create a stronger incentive to replace labour with capital. That could result in reduced output and higher prices, but it could also lay the foundation for renewed productivity growth. In any case, to those who would counter that companies cannot afford to accommodate such a policy-driven change, I would point out that since 2015, aggregate demand has remained strong enough for them to absorb wage increases easily enough. Should such a policy make companies realise that they have a social purpose that is greater than merely boosting next quarter’s earnings, so much the better. i

ABOUT THE AUTHOR Jim O’Neill, a former chairman of Goldman Sachs Asset Management and a former UK Treasury Minister, is Chair of Chatham House.

BROADSWORD