“We know that if we treat our clients well, they’ll in turn trust us and treat us well,” says Dev Srinivasan, Chief Operating Officer for BMO Bank of Montreal Canadian Business Banking: “It’s not a short-term game, this is truly a long-term game.” In the last of our three videos with Dev, he discusses BMO’s mission, and vision for its business brand.
Dev Srinivasan: BMO’s purpose is to grow the good in business and in life. And when you think about that small amount of words there, and how much is embedded in those words, it really excites me.
BMO wants to ensure that it’s doing good by its employees, good by the community, and also wants to succeed in the marketplace. So it’s really all-encompassing, and you can get all of those three things aligned. Banking can often be solely about profits with a number of other institutions; BMO really take care to align those three objectives.
BMO’s culture really has a huge impact on how we work with our clients. We’re very collaborative, and we’re focused in on the client first. We know that if we treat our clients well, they’ll in turn trust us and treat us well. And that really is the key. It’s not a short-term game, this is truly a long-term game. We’re great in good times; we’re even better when challenging times arise.
One of the most important tools that BMO has in terms of ensuring that we truly are growing the good in business and in life is, we have a client advisory council where we take 20 of our top clients from across the country, and we bring them together every six months. And we really look to them to be the voice of the business community: in terms of what’s needed, where are the shortcomings, where are we falling short, where is the industry falling short? And we work really aggressively with the ideas we get from that council to really look to improve and continually move the bank forward.
The vision for BMO Business Banking is to be recognised as a leader globally in commercial banking. We’re doing this in a couple of ways. It’s important for us of course financially to be recognised this way, but we also want to be recognised in the way that we’re achieving that financial success. And again, that comes back to our purpose, which is all about ensuring that we’re giving back to our communities, giving back to our employees, giving back to our clients as well. And if you do all of those things in the right way, you will achieve that leadership.
“There are three [business banking] areas that we’re really focused in on, and align really well with our purpose, which is to grow the good in business and in life,” says Dev Srinivasan, Chief Operating Officer for BMO Bank of Montreal Canadian Business Banking. In the second of three videos with Dev, he explains the common thread that unites technology, women-led, and indigenous businesses.
Dev Srinivasan: BMO focuses in on a broad group of clients; however there are three areas that we’re really focused in on, and aligns really well with our purpose, which is to grow the good in business and in life.
The first area would be technology and innovation. Toronto and Canada in general is really a growing tech hub. Toronto, Ottawa, and Montreal were three of the fastest-growing technology hubs in the world in 2018. This is a hugely important segment, and it is an area where we’re focused in on serving clients across the broad spectrum of their needs. We’re able to deal with venture capital companies that are really the life-blood of the tech space, as well as private equity and the companies themselves as they go public and grow faster.
Second would be women in business. Women-owned companies are growing faster than the overall market, and female entrepreneurs represent 60 percent of new business started. It’s a hugely important population, and we want to ensure that we’re supporting all groups. And if you look at our growth within the bank, we’re actually growing women-owned businesses at about 30-40 percent faster than we are male-owned businesses. So it’s a great opportunity for us to do well in the community, and also do well for our business.
And then finally indigenous banking – a hugely important population in the Canadian economy. BMO has served indigenous communities since 1992 with a dedicated team. This team really partners up with the communities in terms of understanding their unique needs, and ensuring that we’re delivering the services, the guidance, the expertise that is needed to help those communities thrive in a challenging environment.
Women in business, indigenous banking, and technology and innovation; very disparate in a lot of ways, but the common thread that ties them all together is the benefit that they bring to the Canadian population, to the community. And also the huge opportunity it represents from a business perspective. And that is one of the major reasons why BMO is focused in on this space.
“The pace of technology – how fast it’s moving today – is having a dramatic impact on our clients,” says Dev Srinivasan, Chief Operating Officer for BMO Bank of Montreal Canadian Business Banking. In the first of three videos with Dev, he explains how BMO is adapting its processes and working faster, to make sure its clients can do the same.
Dev Srinivasan: The pace of technology – how fast it’s moving today – is having a dramatic impact on our clients.
When you think about how quickly now competitive advantage can be taken away through technological advancements, it’s impacting not only BMO’s clients, but the bank itself. And the pressure is really on for banks globally to really up their game, and ensure that they’re serving clients in a way that is allowing them to keep their competitive advantage.
At BMO, we believe that we are an incredibly strong business partner in this sense, and the advancements we’ve made allow our clients to keep their competitive advantage, and allow them to continue to win in the marketplace.
A great example of how BMO is responding to the change and the technology advancements out there is what we’re doing in the small business space right now.
It used to take the same amount of time to get a $100,000 loan approved as it would a $10m loan. And now what we’re able to do – through Business Express, our platform – that allows us to approve small business loans under a million dollars in under 30 minutes. It’s a huge advancement, and it allows our clients to really move with the pace of technology, and allow them to move ahead of their competitors.
BMO is also updating its processes. When you think about the amount of time that used to be taken by administrative activities, we’re now able through the use of technology, we’re able to reinvest in terms of client service, ensuring that our relationship managers are front and centre with clients, understanding the industries, and ensuring that we’re helping them move along as quickly as possible.
BMO wants to be seen by our clients as somebody that is relevant in the industries that they operate. So a couple of things that we’re doing on that front. We’ve really focused in on verticals that are truly impacted by technology, and the change, and the speed of change. So as a for instance, we’ve focused in on technology and innovation; we’ve created an entire vertical focused on that. And it’s able to serve companies from start-up, all the way up to going public, with the full suite of products and services that traditional banks actually would have a challenge in delivering.
In the automobile sector, Pininfarina occupies a special position. The Italian design house is responsible for some of the most beautiful cars that have ever graced the roads – the Ferrari Daytona, Cisitalia 202 and Alfa Romeo Spider, to name a few.
In March, Pininfarina made a momentous announcement, unveiling its first own-branded car, the Pininfarina Battista. Not only is the vehicle a thing of beauty (you’d expect nothing less), but it’s also one of the world’s first all-electric supercars. After waiting decades to make such a massive move, Pininfarina pivoted from designer to manufacturer with as loud a bang as possible, producing a vehicle that is nothing short of pure ingenuity.
Describing the Battista, Michael Perschke, CEO of Automobili Pininfarina, told World Finance: “While it looks very modern, it’s still a very classic, timeless look. We have the ambition that in 15 [to] 20 years, the Battista will stand in a couple of car museums and is going to be celebrated as probably the most iconic first [electric vehicle] hypercar ever made and also one of the most classic designs in that segment.”
Building a brand
To understand the prestige associated with Pininfarina, it’s important to reminisce a little. The company’s founder and designer extraordinaire, Battista Farina, who later changed his last name to Pininfarina but was generally known as Pinin (meaning ‘baby of the family’), was born in Cortanze, Northern Italy – the 10th of 11 children. With so many mouths to feed in this rural setting, the family moved to the city of Turin in search of a better life.
Pininfarina has been making history for more than eight decades, recurrently breaking the mould and driving automobile design forward
Growing up, Pinin would often visit his brother Giovanni at his workplace, one of Turin’s many carrozzerias, or car body shops. It was there that he first fell in love with automobiles. In 1910, Giovanni set up his own carrozzeria, Stabilimenti Farina, alongside Pinin and another of their brothers, Carlo. Pinin, who was 17 at the time, was placed in charge of design and publicity. His time at Stabilimenti Farina was invaluable but, after two decades, Pinin decided to go it alone and establish Carrozzeria Pininfarina in Turin.
The business quickly found success. The first official Pininfarina design, the Lancia Dilambda, was showcased at the 1931 Concorso d’Elegance Villa d’Este, a prestigious classic car event. Soon after, Pinin wrote that he had “sold a Dilambda spider cabriolet to the Queen of Romania” and that he had begun “to have some of the nobility [among his] customers”.
With Pinin’s reputation blossoming, he continued to build close relationships with mainstream manufacturers. Pinin then made history with the Cisitalia 202 in 1947, which won first prize at the Concorso d’Elegance Villa d’Este that year. The car was not just a boon for the brand; it put Italian car design on the world stage for the first time. The vehicle even became the first car to be permanently showcased at New York City’s Museum of Modern Art.
Then came the partnership for which Pininfarina is most famous: in 1951, Pinin first met with Enzo Ferrari, founder of the eponymous luxury car manufacturer. They agreed on a location halfway between one another’s headquarters as both men were too stubborn to visit the other’s offices. Commentators said the partnership wouldn’t last; not only did it thrive, it produced some of the most iconic cars in history, with some 200 Ferraris designed by Pininfarina to date.
Expansion followed when, in 1953, Pininfarina began manufacturing complete body designs for high-volume manufacturers, starting with the Peugeot 403. The company’s growth continued, prompting it to move production from Turin to a modern factory in Grugliasco in 1958. The Alfa Romeo Giulietta Spider, another of the design house’s first mass-produced vehicles, was a huge success.
In 1961, Pinin handed the reins to his son, Sergio – Pinin passed away just five years later. Sergio pushed forward with his father’s vision, cementing the company’s relationship with Ferrari. Over the following decades, Pininfarina continued to design beautiful automobiles, but it had never manufactured its own – until now.
Shifting gears
At the end of 2015, the Mahindra Group bought Pininfarina for a reported €25.3m ($28m), an acquisition that signalled a major shift for the brand. The business that Pinin founded in Turin 89 years previously now lives on as “mainly a business-to-business company that sells industrial design and engineering services to other automotive industrial clients”, according to Perschke.
Perschke added: “Around one-and-a-half to two years ago, the Mahindra Group, as the key strategic investor behind Pininfarina, made a cautious strategic decision to spin off a separate legal entity that is solely focused on the sales, marketing and promotion of Pininfarina as a [business-to-consumer] business – so a purely client-orientated business unit.”
Anand Mahindra, Chairman of the Mahindra Group, was compelled to pursue an avenue of business that Pinin was never able to. Perschke explained: “[Pinin] always wanted to create his own branded car, but for many reasons, especially due to the very close ties with Ferrari, they never went out of that shadow [of] designing cars for others… and therefore always got limited [to] serving others. And that was something which… Mahindra very clearly said is an unfinished story.”
The road less travelled
In continuing this story, the company went down a surprising new route with an all-electric vehicle. Perschke puts this down to Mahindra too, explaining: “He’s a strong advocate of sustainability and a supporter of the anti-climate-change movement.” According to Perschke, Mahindra’s decision to pursue a self-branded vehicle was based on the requirement that the company would move towards electric vehicles. He told World Finance: “There are plenty of start-ups trying to get into the [electric vehicle] space and one thing they all lack is provenance, exclusivity, luxuriousness, storytelling and an authentic reason to be [ – unlike Pininfarina]… I think that’s where I got intrigued and said it’s a very unique idea because nobody else has [the] kind of opportunity [that Pininfarina does].”
It has undoubtedly helped that electric vehicle technology has progressed immensely in the last decade, while the reputation of electric cars has experienced a massive boost. But to manufacture an electric supercar that’s capable of 1,900 horsepower, 1,696Nm torque and that can go from zero to 186mph in less than 12 seconds, an industry pacesetter had to get on board.
To produce such a high-performing electric vehicle, Pininfarina partnered up with Rimac Automobili, the Croatian electric hypercar manufacturer behind the Concept One – one of the fastest electric vehicles in the world when it was unveiled in 2011. “When we met, Mate [Rimac] and myself professionally fell in love and said, ‘That’s a great partnership’,” Perschke said. “He’s straightforward, he knows what he’s talking about, he’s passionate and he also had the ambition to partner.” He compared their first meeting to that of Pinin and Ferrari: “That was the marriage in the 50s [and] 60s for the combustion engine marriage; I think we had an [electric vehicle] marriage. Rimac [Automobili] is a technology company and Pininfarina is a design company; this resulted in the Battista.”
This union has allowed Pininfarina to tick the three crucial boxes that would make its first own-branded car a success. “First and foremost, we have to give a cutting-edge design, which people fall in love [with],” Perschke told World Finance. “Secondly, we’re not falling short of any other hypercar. Our ambition [is that it] has to exceed any other hypercar because only then will you be recognised and cut through the clutter. And thirdly, we need to fulfil not only the performance level in terms of acceleration and top speed, but we also wanted to give a very good range. And that’s why our range in Europe will exceed 500km in a [worldwide harmonised light vehicle test procedure] cycle in a testing cycle.”
With these features cemented in the Battista, Perschke believes Pininfarina can succeed in its mission for its newest model to be an electric car that people fall in love with. Its reception suggests some already have. When the car was first unveiled at the 2019 Geneva Motor Show, for example, many commentators – from Forbes to Car magazine – highlighted the Battista’s beautiful design. “[It was] not the most stunning electric car, it was the most stunning show car in Geneva full stop,” Perschke said. With this striking, high-performing model, the Battista is helping to fight the misconception that electric cars are slow and ugly.
Pininfarina has been making history for more than eight decades, recurrently breaking the mould and driving automobile design forward. It achieved this again in 2019 with its first self-branded, all-electric car. The Battista is pushing boundaries in the industry, proving the incredible potential of electric vehicles – yet another testament to the extraordinary legacy of Pininfarina.
Duvvuri Subbarao, who served as governor of the Reserve Bank of India between 2008 and 2013, once spoke about the way India’s monsoon season could impact everything from his emotional wellbeing to his career prospects. In his role as governor especially, he was helplessly dependent on the weather: “If it rains, the monetary policy works. Everything is all right. If it doesn’t rain, there is worry.”
Half of India’s annual rainfall usually occurs in just 15 days. As the rainfall that takes place in this critical window has a huge impact on the country’s economic prospects for the year, this turbulent climate has often left India seesawing between deluge and drought. Recently, though, the rains have become even more volatile.
“The climate pattern of India is changing,” Samrat Basak, Director of the World Resource Institute India’s Urban Water Programme, told World Finance. “We are having extremely dry periods followed by a monsoon which is extremely heavy but happens only in a very short space of time. So the number of rainy days is reducing.”
Even when the Indian Government does enact longer-term solutions, these often prove inadequate
This year, the south-west monsoon arrived 10 days late, bringing 30 percent less rainfall than average to the region. This delay, combined with poor rainfall last year, has created drought-like conditions across nearly half of India. Chennai is one of the worst-affected regions, experiencing its most severe drought in 70 years. The city’s four main reservoirs have disappeared in as little as six months.
It’s easy to blame the hardships facing India’s population on climate change, but this isn’t the whole story: India’s water crisis is just as much a product of poor infrastructure and chronically inadequate water management.
Not a drop to drink In a climate where rainfall occurs in such a short space of time, storing rainwater is crucial to ensuring people don’t run short throughout the year. But India has struggled to keep its water storage infrastructure properly maintained. Years of negligence meant that, during the 2018 monsoon, dams in the now drought-stricken state of Tamil Nadu were unable to retain all the water they caught.
What’s more, the government has not preserved the water-catchment areas that occur naturally in the environment. “With unprecedented and unmanaged urban expansion, we have not thought about preserving the local resources like the lakes, wetland and so forth,” Basak said. Chennai, for example, used to have abundant supplies of surface water. These have since been paved over with parking lots and skyscrapers.
Due to the lack of rainwater, lakes and wetlands, most of India’s population is heavily dependent on groundwater: around 25 percent of the groundwater extracted around the world is removed in India. Much of this is done illegally, which only adds to supply problems. In major cities like Bangalore and New Delhi, so-called water mafias rule unchecked, extracting water from kilometres away and selling it to locals at an extortionate premium. The situation became so serious in Chennai this summer that even hospitals were dependent on privately owned tankers to supply water for surgeries. The cost was then added to patients’ medical bills.
In a tragically ironic twist, many of these patients were hospitalised for waterborne diseases. In August, researchers found that over three quarters of the groundwater wells in the north-western state of Rajasthan – the largest in India – were polluted with uranium, fluoride and nitrates, making them unsafe to drink from. If groundwater depletion and contamination continue at their current levels, 60 percent of India’s districts are likely to see groundwater tables fall to critical levels over the next two decades.
In hot water
Surprisingly, the biggest consumer of India’s water is not its city-dwelling population – around 80 percent of India’s water is used in agriculture. This figure is so high partly because state governments in Western India provide free or heavily subsidised electricity to farmers in exchange for groundwater irrigation. “This encourages excessive groundwater pumping and has bankrupted electricity companies,” said Tushaar Shah, a senior fellow at the International Water Management Institute. “Everyone knows this, but no political leader has the courage to rationalise or reduce these subsidies since farmers are a massive vote bank.”
As a result of these incentives, 88 percent of farmers use flood irrigation methods instead of more efficient drip or sprinkler irrigation systems. Attempts to curb groundwater usage are politically complicated, but Philippe Cullet, a professor of international and environmental law at SOAS University of London, believes a change in legislation and regulation is critical to ensure water is used more efficiently on India’s farms.
This change, he told World Finance, must stem from a different way of thinking about water. “What we need is a complete reversal of perspective that takes us back to considering groundwater – and water generally – as a commons that is shared,” Cullet said. “The second thing is that we have to move away from a framework that considers water primarily from the point of view of ‘use’ when the first priority should be protection.”
There are a number of ways the government could promote this approach to water. Incentivising farmers to use drip irrigation or grow less water-intensive crops than sugarcane or rice could be a way forward. Another promising idea, launched by the International Water Management Institute, is to create solar irrigation cooperatives where farms can generate their own solar energy, providing an incentive to save energy and water. Shah is a pioneer of this concept. “The basic premise is that, while it is politically difficult to charge farmers for grid power supplied, it is rewarding to pay them for solar power they generate on their own farms. This will incentivise them to save energy and water to augment income from selling solar power,” he said.
Build, neglect, rebuild
Water scarcity is one of the biggest challenges facing Indian Prime Minister Narendra Modi, and he is keen to be seen tackling it head-on. In response to this year’s crisis, he sent more than 250 civil servants to aid the country’s drought-stricken areas and consolidated the various water ministries into a single entity, named the Ministry of Jal Shakti.
But water conservation experts are concerned that Modi’s administration has a flawed understanding of the issues at hand. As part of his response to the water crisis, Modi unveiled plans to provide piped water to all Indian homes by 2024. While there is no doubt this would have a transformative impact on India, providing clean water to as many as one billion citizens is an overambitious target. Currently, there is no indication as to where the water for these pipes would come from. “Water security plans need to be prioritised over plans for a piped water supply,” Basak said. “Just having pipes but no water won’t work.”
Unfortunately, rather than taking a fresh approach to the crisis, Modi is following in his predecessors’ footsteps. Instead of anticipating crises, India’s state governments have often acted only once the situation reaches breaking point. When this happens, they tend to fall back on expensive quick fixes that temporarily relieve pressure but fail to tackle the root of the problem. For example, when drought struck this year in Tamil Nadu, the state government approved a crash-engineering project to bring in water by rail for the following six months. As well as costing the government $94m, this short-term solution did nothing to improve India’s water sanitation and storage over time.
Even when the government does enact longer-term solutions, these often prove inadequate. Critics have accused the Indian Government of taking a ‘build, neglect, rebuild’ approach: new infrastructure is constructed, but the necessary measures aren’t put in place to ensure it is maintained. This can be seen in India’s traditional approach to water catchment. Currently, India captures only eight percent of its annual rainfall – one of the lowest figures in the world. Meanwhile, many local governments have mandated rainwater harvesting with little effect. After the drought of 2000, Chennai made it obligatory for buildings to have rainwater-harvesting systems installed, but these have since fallen into disrepair. The Rain Centre also found that, while on paper 99 percent of India’s buildings catch rainwater, in reality, this figure is closer to 40 percent, demonstrating a fundamental lack of governance.
With a climate that swings so drastically between drought and monsoon, it is perhaps unsurprising that the government has tended to think in the short term, focusing on fighting fires rather than implementing long-term solutions. But as climate change makes India’s rains even less predictable, the cost of this attitude only grows. The government must now prioritise proper governance and maintenance of its water infrastructure, or risk seeing its major cities dry up completely.
Humans share certain behaviours with whales – most notably what is referred to as ‘culture’. According to The Cultural Lives of Whales and Dolphins, a book by Hal Whitehead and Luke Rendell, culture is “behaviour or information with two primary attributes – it is socially learned and it is shared within a social community”. Whales also have sophisticated means of communication, using an assortment of noises and ‘songs’ to interact with one another. These songs can vary considerably across the globe, akin to the variety of languages we speak as humans.
It is this growing understanding of just how emotionally intelligent whales are that makes commercial whaling such a sore subject. But while it’s an issue that sparks rage in many, others defend it with the utmost ardour. Among the few nations that persist in the hunting and consumption of whales is Japan. For years, the island nation utilised a loophole in the International Whaling Commission’s (IWC’s) 1986 moratorium that permits countries to hunt whales for scientific purposes. According to the IWC’s website, Japan caught a total of 333 pelagic whales during the 2017/18 hunting season to conduct such research (see Fig 1).
It has widely been suggested, though, that this was simply a guise for Japan to continue its tradition of eating whale meat without drawing the ire of the international community. The facade finally faded away in late 2018, when news broke that Japan would be leaving the IWC – in July 2019, for the first time in 31 years, the country reinstated commercial whaling in its waters.
A market at sea
Advocates say that hunting and eating whale is an important part of Japanese culture. Indeed, coastal communities have partaken in the tradition for centuries. Nonetheless, it was not until the Second World War that the consumption of whale meat became widespread in the country – at that time, food was scarce and whale meat offered an alternative source of protein for many. By the mid-1960s, however, whale meat had once again become a niche product.
According to data from the Japanese Ministry of Agriculture, Forestry and Fisheries, the country’s annual consumption of whale meat has fallen from a peak of around 223,000 tons in 1962 to closer to 5,000 tons in recent years (see Fig 2). Hideki Moronuki, the director for international negotiations at the ministry, told World Finance that reduced consumption is not a result of a fall in demand, but rather a drop in supply: “[The] main cause of the decline [in] supply was [the] introduction of a series of regulations by [the] IWC, such as [the] prohibition of [catching] certain whale species i.e. blue, humpback and fin whales. In addition, the supply was drastically reduced due to the introduction of [the] so-called ‘commercial whaling moratorium’ in the late 80s. Since then, only by-products of whale meat derived from scientific research [have been] available.”
Moronuki insists that the consumption of whale meat in Japan has remained stable despite these obstacles: “No sign of decline [in consumption] is detected, although the quantity itself is very low [compared with] the peak period in the 60s.” But according to Rikkyo University researcher Junko Sakuma, this simply isn’t the case, as a considerable surplus of whale meat sits idle in frozen storage units across the country. In fact, earlier this year, Sakuma told Public Radio International that this stockpile amounted to some 3,700 tons.
As labour costs rise and local tastes change, the Japanese Government’s support of the whaling sector increasingly seems like a bad investment
Naturally, the industry has made attempts to increase demand, predominately through nostalgic marketing campaigns aimed at older citizens – whale meat being a familiar taste from their childhood. Success has been limited, though, with whale meat being increasingly unpopular among younger generations. “Most young Japanese prefer hamburgers,” Captain Paul Watson, Founder and CEO of the Sea Shepherd Conservation Society, told World Finance. “In fact, there are more vegans and vegetarians in Japan than there are people eating whale meat.”
Excess supply has caused prices to fall significantly – so much so that the meat started to appear on school lunch menus in 2007. That same year, The Telegraph discovered ‘whale bacon’ was being offered as a bar snack in Tokyo for as little as £3 ($3.70). Northern Japanese fast food chain Lucky Pierrot, meanwhile, began selling whale burgers for $3.50 as early as 2005. At the time, the company said it was hoping to increase the meat’s popularity among locals. There have even been reports of it being used as pet food.
Despite the fall in demand, a survey conducted by Sakuma found that 70 percent of Japanese people support whaling, as it is a point of national pride. “Some people who don’t eat the meat support the industry for nationalistic reasons,” Watson explained. This sentiment is clearly expressed on the Japan Whaling Association’s website, which seeks to justify the country’s whaling practices on its question and answer page: “Asking Japan to abandon [its whaling culture] would compare to Australians being asked to stop eating meat pies, Americans being asked to stop eating hamburgers, and the English being asked to go without fish and chips.”
Moronuki agrees with the website’s outlook: “It should be the people living in [a] respective region [who] decide what they eat in accordance with… availability… and in accordance with their culture, history, religion and so on. If you force others not to eat what you do not eat – since you do not have such [a] background – it is regarded as… cultural imperialism.”
In troubled waters
When asked why Japan had resumed commercial whaling, Moronuki told World Finance: “Japan is surrounded by the ocean and therefore has been dependent on marine living resources as one of [its primary] food sources [since] ancient [times]. We believe that marine living resources, including cetaceans, should be properly used in [a] sustainable manner based on science.”
The problem, however, is that the industry itself is unsustainable, relying heavily on government subsidies. According to The Washington Post, the Japanese Ministry of Agriculture, Forestry and Fisheries has allocated $463m to support the industry this year alone. “Commercial whaling in Japan exists only by virtue of massive government subsidies,” Watson explained. “Without these subsidies, the industry would die. The demand for whale meat in Japan is about one percent. There are thousands of tons in cold storage they can’t sell – it’s a glorified welfare project.”
And while the industry only employs around 300 people, these positions are often hard to fill thanks to Japan’s tight labour market – amid increasingly problematic labour shortages, the whaling industry has to compete with the higher wages offered by more lucrative subdivisions of the seafood market, such as crabbing and tuna fishing. As labour costs rise and local tastes change, the government’s costly support of the sector increasingly seems like a bad investment.
But Moronuki believes it isn’t so black and white: “You have to note that some jobs/activities are not always matters of lucrativeness. In many cases, they are connected to livelihood, culture, tradition, identity, etc. Japan does not have only big cities like Tokyo, Kyoto and Osaka, but hundreds of small communities, some of which [are situated] in remote areas, including islands. Some of them have been dependent on whaling and its related activities (processing, retail, restaurants and so on) [for centuries].”
Good whale hunting
It may surprise many to learn that, in spite of the surrounding controversy, Japan’s reinstatement of commercial whaling has brought some conservation benefits. “Japan never stopped commercial whaling,” Watson told World Finance. “[It] simply changed the name in 1987 to ‘scientific research whaling’ and [it is] now changing the name back.
“[But] the great news is that they have ceased killing whales in the Southern Ocean Whale Sanctuary and they have withdrawn from the IWC, which will now allow the IWC to implement conservation measures without being blocked by Japan. For the first time in history, there is no pelagic whaling and all commercial whaling today is restricted to the territorial waters of Japan, Norway and Denmark.”
With Japan now limiting its whaling activities to its own waters – moving away from the North Pacific and Antarctic – far fewer whales will be killed. “Japan has found a way out of high seas whaling,” Patrick Ramage, Director of Marine Conservation at the International Fund for Animal Welfare, said at a press conference on the topic earlier this year. “And they’ve done it in a way that is elegantly Japanese – it is a win-win solution that results in a better situation for whales, a better situation for Japan [and] a better situation for international marine conservation efforts.”
Many have been quick to express concern or criticise Japan, but as Ramage explained during the conference, the resumption of commercial whaling enables the country to preserve its cultural custom – which is important for both public perception and politicians – while also reducing its whaling activities in what he calls a “face-saving way out”. He added: “In terms of the body count, whales are going to do significantly better under the new commercial whaling programme.”
With Japan now limiting its whaling activities to its own waters, far fewer whales will be killed
Swimming against the tide
While the move is surprisingly positive, Japan is not alone in its perplexing attempts to revive this waning market: Norway also has a rich whaling tradition that dates back centuries, and is one of three countries (the other being Iceland) that still support the practice today. In fact, Norway revealed last year that it would expand its annual quota by 28 percent in a bid to prop up its whaling industry.
“The Norwegian Government has spent millions on PR and lobbying campaigns over the years to keep the whaling industry alive,” Fabienne McLellan, Director of International Relations at OceanCare, explained to World Finance. “But despite government subsidies and marketing campaigns over the past 33 years, domestic demand for whale meat is declining within Norway. According to a survey, many Norwegians eat whale meat only on special occasions and fewer than five percent of Norwegians eat whale meat regularly – and, if so, it is eaten by [the] older generation. So whale meat is not an everyday meal for the average Norwegian.”
To revive the industry, the government has been trying to reach out to students and young people by presenting whale meat as ‘hipster’ food. “Previously, you might have only come across whale meat in the form of a rather unappetising chunk of dark meat hidden in the back of a supermarket freezer counter, or in a restaurant frequented by locals prepared in [the] traditional way, as a ‘steak’ served with potatoes,” McLellan told World Finance.
“However, now we are starting to see the reappearance of whale meat in various… forms, such as whale meat burgers and whale meat skewers accompanied by exotic condiments and sourdough bread, [and] sold in trendy restaurants, [at] music festivals or street market stalls.” Tourists are another segment the government is targeting, with whale meat being offered aboard cruise ships and in dozens of popular restaurants alongside cocktails and craft beers.
With Japan now limiting its whaling activities to its own waters, far fewer whales will be killed
Still, a lack of demand is causing suppliers to turn to unconventional methods to rid themselves of their product: according to McLellan, Myklebust Hvalprodukter, one of Norway’s largest whale meat processors and exporters, donated around 60 tons of the meat to the poor in January 2017. “In the same month, we… learned that, in an apparent effort to boost sales, the supermarket chain SPAR [now] offers whale meat as a sale product,” she added. Even more controversially, McLellan said that more than 113 tons of whale meat – the equivalent of around 20 minke whales – was used as feed for foxes and minks on fur farms in 2014.
In addition to actively promoting whale meat consumption, the Norwegian authorities finance projects aimed at boosting domestic sales, such as the development of cosmetic products, dietary supplements and alternative pharmaceuticals. Myklebust Hvalprodukter, for example, has introduced a range of skincare products derived from whale oil, including a hand cream that can purportedly help treat chronic psoriasis. As explained by Sandra Altherr, Kate O’Connell, Sue Fisher and Sigrid Lüber in the 2016 report Frozen in Time: How Modern Norway Clings to its Whaling Past, the company also sells whale oil ‘health capsules’ that it claims can “increase energy levels and endurance”.
Going to such measures to stop the inevitable seems counterproductive, but as with Japan, there is a cultural component to preserving Norway’s dying whale meat industry. As McLellan noted: “The gap between increasing quotas and [a fall in] actual catches, as well as diminishing demand for whale products, is a clear indication that the Norwegian whaling industry is only kept alive for political reasons.”
End of the line
As evidenced by both Norway and Japan, the demand for whale meat continues to decline. People nowadays are more inclined to opt for a vegetarian option over a meat shrouded in moral ambiguity.
“[The] eating of whale meat is highly unethical because the animal dies an agonising death,” McLellan said. “The whales are killed with explosive harpoons that are meant to detonate in the whale’s brain, which should kill the whales instantly. However, in many instances, something goes wrong and it takes much longer for a whale to die – sometimes more than 14 minutes… and, in one case, even several horrendous hours. There is no humane way to kill a whale.”
There are health concerns to consider, too: according to the Environmental Investigation Agency’s 2015 report Dangerous Diet: Japan Fails in its Duty of Care Over Toxic Whale and Dolphin Meat, 56 percent of the cetacean products it tested contained levels of mercury that exceeded Japan’s legal limit. As stated on the World Health Organisation’s website, high levels of mercury can have “toxic effects on the nervous, digestive and immune systems, and on lungs, kidneys, skin and eyes”.
Whales also play an important role in the health of the environment, supporting the ocean’s delicate ecosystem by helping to regulate the flow of food and ensuring that certain species do not overpopulate the seas. And while whaling advocates argue that the hunting of minke, sei and Bryde’s whales, in particular, is sustainable due to recovered populations, there is no way of fully comprehending the impact that killing these mammals will have.
As explained by the 2014 report Ecological Role of Common Minke Whales in the South-Western East Sea (Sea of Japan) Ecosystem During the Post-commercial Whaling Moratorium Period: “Common minke whales are top predators that feed on commercially important fishes, especially small pelagic fishes such as Japanese anchovy, in addition to small crustaceans such as euphausiids, and thus play an important top-down ecological role in the marine ecosystem.”
It’s also important to note that whale faeces helps stimulate the growth of phytoplankton – photosynthetic organisms that absorb carbon dioxide. The very presence of phytoplankton helps to offset the carbon in our atmosphere and provide a cleaner breathing environment for all animals, making whales a vital contributor to the health of our planet.
But in spite of these facts, whaling persists. Tradition and culture are a crucial part of each and every society; even when we don’t agree with certain customs, there is still a strong inclination to stand by them, for fear of losing even a thread of the complex matrix that forms national identity. Telling a country that it cannot act in a particular manner is a slippery slope, and is likely to draw a fierce response.
But one cannot argue with the economics: tastes are swiftly changing, and the appetite for whale meat in particular is rapidly declining for a host of reasons. It seems almost certain that, despite initiatives to turn things around, this trajectory will continue. For commercial whaling nations, it is up to the relevant authorities and the citizens themselves to put an end to the practice once and for all – while international pressure invariably helps, it’s not a decision that can be made from the outside.
In the case of Japan, its recent move to reintroduce commercial whaling, as controversial as it may seem at first glance, is a good thing – it means that fewer whales will be killed and marks an important end to pelagic hunting. While it’s by no means the perfect solution, it is a step in the right direction. The next will be the natural phasing out of whale meat from the market. Given the cost of government subsidies and waning demand, this seems inevitable, but it’s a day that can’t come soon enough.
Macau’s story is one of dramatic changes. From its origins in 1557 as an isolated fishing village on the South China Sea to its designation as a Portuguese outpost in 1887, the city has undertaken several drastic transformations to meet the needs of the wider world. Today, as one of China’s special administrative regions, Macau is on the brink of another new chapter in its history.
With China’s Belt and Road Initiative progressing, Macau’s reputation as a destination for both tourism and global trade is seeing it attract more international business. The city already has a vibrant economy, but new opportunities are demanding more of the small region’s financial sector. Once again, Macau is being asked to change.
Bank of China Macau Branch (BOCM) has a proud history of supporting the city’s businesses – both large and small – throughout such periods of adjustment. Since its establishment in 1950, BOCM has developed into a full-featured bank. By measurement of deposits, loans and profits, it now makes up 40 percent of the city’s total financial market – a record it has held for some time.
Amid this period of change, BOCM is accelerating its efforts to improve internal innovation, employee development and its core business services. BOCM is entirely focused on helping organisations reach their goals, creating new financial tools and finding improved ways of doing business. It is also committed to supporting its employees in order to develop, attract and retain the most talented individuals. Through these measures, BOCM is building an organisation that can help Macau reinvent itself once again.
Macau already has a vibrant economy, but new opportunities are demanding more of the small region’s financial sector
Business development
Macau, as well as the rest of the Guangdong-Hong Kong-Macau Greater Bay Area, is playing an important role in China’s international development initiatives. BOCM strives to support the Bank of China’s focus on the globalisation and diversification of the region’s economy. To do this, BOCM set up a centre for advancing corporate finance and has built a platform for financing projects in Portuguese-speaking countries. Ultimately, this has expanded BOCM’s local and offshore operations.
Given Macau’s historical link with Portugal, BOCM is well equipped to support projects across the world’s Portuguese-speaking nations – now, its reach is extending even further. BOCM is focused on identifying suitable projects in Central Asia, South Asia, Russia and Mongolia. Primarily, BOCM has specialised in providing convenient cross-border financial services for enterprises targeting foreign investment.
At the same time, BOCM is working to build up the city’s smaller businesses. In cooperation with the Macau Government, BOCM launched a dedicated plan to help develop the city’s small and medium-sized enterprises through loans and other financial support programmes. Financial services such as the Easy Money Personal Loan and Easy-Plus Mortgage are fast, efficient initiatives available to Macau-based entrepreneurs. Around 1,000 businesses have already benefitted from these specialist services.
Recently, access to financial products has been a particularly important issue for Macau’s business community. Following the havoc wreaked by Typhoon Hato in 2017 and Typhoon Mangkhut the following year, many businesses were left in desperate need of financial services to keep them afloat. In response, BOCM developed a loan assistance programme for affected firms, helping around 200 local enterprises quickly get back on their feet. For businesses both large and small, BOCM is always looking for new financial products that can grow with Macau and help people achieve their aspirations.
A campaign of innovation
Despite recent success, BOCM is not resting on its laurels. To be ready for Macau’s future, the bank is embarking on a campaign of reinvention and innovation. This has already resulted in a number of achievements, many of which are firsts for Macau.A particular highlight has been the launch of BOC Pay, a one-stop cross-border application that enables mobile payments throughout the Guangdong-Hong Kong-Macau Greater Bay Area. The system lets customers transfer money by simply scanning a QR code, without the need for a mainland Chinese bank account. BOCM operates across the special administrative region to lead the implementation of this and other smart city services. All of this allows the citizens of Macau and tourists from the mainland to conduct safe, convenient and fast transactions.
Another important project has been the development of Macau’s bond market. Following in-depth studies of the region and its needs, BOCM is utilising its bonds business to help the region reach its goals. Around $1.8bn in bonds have already been issued in addition to the notable CNY 4bn ($566.3m) ‘lotus bond’. This represents the first offshore issuance by the Chinese Government in Macau and has been highly beneficial to the local market.
BOCM has also been actively developing as a yuan clearing centre for Portuguese-speaking countries. Since this function was launched, BOCM has undertaken more than 770,000 transactions totalling CNY 6.4trn ($910bn).
Power to the people
All of these developments have led to great changes in Macau, but it is important to remember that improving people’s lives remains the most important factor. As a financial lender, BOCM has a great deal of power. Cognisant of this fact, it has strived to establish a corporate culture that is beneficial to employees and citizens alike. The bank has hosted a number of public welfare activities, including charity walks and fun runs. Athleticism is particularly important to the bank, and it has set up the Bank of China Sports Scholarship for Outstanding Athletes in Macau to support those striving to achieve peak physical performance. In 2018, BOCM donated over MOP 14m ($1.73m) to primary and secondary schools, colleges and local communities throughout Macau. All of this helps the bank live up to its core business motto: ‘rooted in Macau, steadfast in serving’.
These social development goals look inward as well, with many support services in place to help employees reach their full potential. To expand the international vision of young employees, BOCM regularly selects members of its team to participate in domestic and foreign learning programmes. At the same time, BOCM fully subsidises employees who pursue degrees and other professional development courses, rewarding those who
obtain new qualifications.
In recent years, BOCM has received much credit for its achievements. In May 2018, for example, BOCM won the Excellent Family-Friendly Employer Award, which was presented at the National Committee of the Chinese People’s Political Consultative Conference. The award recognised BOCM’s policy of caring for its employees and helping them balance family life with work. It also rewarded BOCM’s efforts to promote the Macau Government’s family-friendly employment policies.
BOCM has been fortunate enough to receive several other awards in recognition of its work. In May 2019, it was named the Best SME Partner Bank, Macau as part of the Global Business Awards 2019, announced by UK-based magazine The European. Also in 2019, BOCM was recognised in Euromoney’s Asia Awards for Excellence, winning Best Bank in the Macau category. In both of these awards, BOCM was the only Macau-based bank to be recognised.
BOCM has reached major goals across the areas of technology, team building, corporate culture, business performance and inclusive finance. In the future, it will adhere to its corporate credo while taking full advantage of the many benefits offered by China’s ‘one country, two systems’ policy.
Just as Macau acts as a bridge to the rest of the world, BOCM will continue to use the city’s position to build financial bridges to new areas of the economy. The bank will advance with the times, stimulate vitality, foster new opportunities, achieve breakthroughs and accelerate the construction of a world-class financial institution for Macau. For all of the challenges presented by this new chapter in Macau’s history, BOCM stands ready and willing to overcome them.
In April 2019, Access Bank merged with Diamond Bank: now with 29 million customers, Access is the largest bank in Nigeria by customer base. And as well as transforming its customer-facing processes, it’s reforming its corporate governance and compliance framework to keep up with the technological challenges of banking in the modern age. We have two more videos from this interview: about the changes Access Bank is making to serve its more-than-doubled customer base, and its sustainability projects.
World Finance: Tell me about your corporate governance practices; now you’re such a much larger bank than before, this must be increasingly important.
Herbert Wigwe: Extremely so. We have – apart from the traditional things, and the four eyes principle, there’s also – clear delineation of duties. We basically comply with the code of corporate governance by the Securities and Exchange Commission, and by the central bank. But we go far beyond that. Even the board committees look at things to do with technology, with cyber security: because it’s a brand new world. Now data is the new currency! It’s no longer the bank vault.
Now, compliance is a big thing, today in the world. We are beginning to strengthen our entire compliance framework: working together with our subsidiary out in the UK, we are making sure that all subsidiaries are compliant with the global compliant standards. Because the bigger you are, the more you are subjected to scrutiny in the different geographies in which you have a presence.
So it’s changing our thought process, it’s changing the way we look at life, it’s changing the way we look at the world. It’s also enabling us to anticipate the great changes that can come even out of technology that may disrupt our business. And enabling us to be the first to disrupt the business if any such thing was going to happen.
World Finance: You personally must be a lot busier now with the new Access Bank; tell me about your priorities at the moment.
Herbert Wigwe: First of all it’s people: any business is founded on strong people and people management. I mean, irrespective of what you do with technology; it’s people at the end of the day who run all of these things. So that’s the first one.
The second is technology. We were lucky in the deal with Diamond, in the sense that we had the same technology platform. But sometimes getting systems to speak to themselves, so that you don’t disrupt the customer, keep their account details the same, etc – may not just add up immediately. I think it’s going on well, but it remains a challenge.
And thirdly, there are larger issues that have to do with infrastructure. So I’ll give you a simple example. If they switch network, or if there’s an issue across the country: it will affect us, because we have the largest customer base! At 29 million customers it means that one out of every three transactions settles on your platform: at the slightest issue, you feel it more than anybody else.
Now, these are issues that we didn’t have to deal with in the past. But resolving them is the most important thing. Creating the fallback situations, creating backstop arrangements, to ensure that if there’s a problem with the systems somewhere, your customers can also transact their businesses without feeling that hitch.
You know, it’s an interesting time for us.
World Finance: When we met two years ago, you expressed at the time a very strong personal responsibility to the country. Now as you say, one in three transactions landing on your platform: do you feel a greater responsibility than ever to the country and the continent? How are you seeing that reflected in Access Bank moving forward?
Herbert Wigwe: More than ever before. I think with 29 million customers, I begin to understand the impact of our actions on the country. The impact of whatever we do from a digital standpoint, in terms of our contribution to the GDP.
You know, we have 200 million people. We have maybe 50 million unique bank accounts. It means that there’s a market of anywhere between 60 and 70 million that needs to be brought into the formal sector.
What we’re trying to do is to make sure that we use digital to support them – even the bottom of the pyramid. If we can help them, that can begin to have so much impact on our country. One, in terms of financial deepening. Secondly, in terms of the funding and liquidity profile of banks. Thirdly, in terms of the sustainability of the financial services institutions. Fourthly, in terms of the contribution to the GDP of our country.
SMEs, micro-SMEs, represent the bedrock of the economy. And if we begin to serve them more and more and more, it can change our country totally. And I feel a strong responsibility to do that.
World Finance: Herbert Wigwe, thank you very much.
When Herbert Wigwe first created Access Bank, his ambition was to create the most respected bank in Africa. He explains what this means: in terms of expanding financial inclusion in Nigeria and the rest of the continent, supporting women entrepreneurs, and helping launch Nigeria’s Sustainability Banking Principles. We have two more videos from this interview: about Access Bank’s improved corporate governance practices, and what it means to be Nigeria’s largest bank by customer base.
World Finance: When you created Access Bank, your ambition was to create the most respected bank in Africa…
Herbert Wigwe: Absolutely.
World Finance: …financial inclusion, sustainability, obviously extremely important for that; tell me about your sustainability goals.
Herbert Wigwe: I think for us, sustainability is a very important part of our business. Issues that have to do with people, planet and profits – very, very important. So we – together with the Central Bank of Nigeria, several years ago – launched the Nigerian Sustainability Banking Principles. And I think for several years we have been at the lead of it.
Things that have to do with gender balance; we started supporting female entrepreneurs, we introduced things like the maternal healthcare scheme – things which are not very normal, in the context of the continent.
But apart from that, I think the most recent aspect – which gives us a lot of pride – is the fact that we launched a green bond. And that green bond is Climate Bond Initiative certified – it’s the first in the continent.
And the more we do these things, the more we think other corporates will take a lead – and therefore lift up the continent as far as sustainability is concerned. And I think if you keep us side-by-side, most institutions in the continent and world over, I think we’re exactly where we want to be.
World Finance: As you say, supporting women has always been very important to Access Bank – how has that evolved over time?
Herbert Wigwe: When we first started this whole initiative, we initially thought about supporting women financially: professional women, women who were entrepreneurial. And we said, we wanted to take 20 women from zero in terms of turnover, to NGN 1bn in terms of turnover, over five years.
And over the five years – you know, from 2006-11 – I think we did very well.
But we then went and sat back and said, look. This whole thing about gender support can be done differently. There’s so much more apart from finance that we need to give. Finance is important, but it’s not everything.
So we emerged into what we referred to as the Access Women Network. This was about creating a forum where we inspire, connect, and empower women. We created portals through which women could be supportive of themselves. We created portals where we could support women – for instance, if you needed an accountant, you could get an accountant to look at your books at rates that were subsidised. Because for a lot of them who were becoming entrepreneurial, they needed to be taught a bit more in terms of the basic things around accounting, and all of that.
And then we deepened our capacity-building as far as this was concerned. So twice a year we would take women and train them. For those who are at the beginning, early stages of their business, support them from a capacity-building standpoint. For those who were a more mature level, teach them about issues around succession planning for their businesses.
So that was what Access Women Network was built around. And I think today it’s got to a mature stage. We have tens of thousands of women who are part of that network. They meet at different points of time in the year, discussing the typical issues that their gender has to deal with.
World Finance: How does your mission inform what you do? Both in terms of the services that you’re offering to your customers, and also across the continent – working across borders and building your brand?
Herbert Wigwe: Our mission is very simple: it’s setting standards for sustainable business practices. Unleash the talents of employees. Deliver superior value to our customers. And provide innovative solutions to the market and communities we serve.
And what that does, simply, is to say: we will do business, but we will do business responsibly. We will do it sustainably. And it’s something we have been celebrated world over for, and we remain extremely proud of it. So it may not be the most profitable thing in the short term – defined in strict financial terms. But in the larger sense, and looking at it over time, doing business responsibly and sustainably is the only way to live.
Access Bank is now the largest bank in Nigeria by customer base, following its April 2019 merger with Diamond Bank. Herbert Wigwe is Access Bank’s group managing director and CEO; he discusses what the different brands brought to the table, and how the bank is completely transforming its processes to provide the same high levels of service to its now more-than-doubled customer base. We have two more videos from this interview: about Access Bank’s sustainability projects, and its improved corporate governance practices.
World Finance: Access Bank is now the largest bank in Nigeria by customer base, following its April 2019 merger with Diamond Bank. Herbert Wigwe is Access Bank’s group managing director and CEO; Herbert, why the merger? What strengths do the different brands bring to the table?
Herbert Wigwe: First of all, the idea was for us to show the world that coming out of Africa we can create truly global institutions that are digitally led, that are basically reaching out to the bottom of the pyramid.
In terms of the strengths that the different institutions brought, Access Bank on its own had built a strong wholesale business. It had also built a very strong treasury business and was known for strong risk management.
Now Diamond Bank catered for a different end of the market. The micro-SMEs, individuals; it was a very strong digital institution that had about 17 million customers.
What did that do for us? It created an institution where we could serve the large corporates and, using technology, basically ensure transfer of goods and services all the way to the last mile.
But I think the most important for me is the fact that this merger, it would help ensure greater financial inclusion, greater financial deepening, and ensure that in the 200 million -strong people in Nigeria we can basically start to have about 100 million that are financially included.
World Finance: So, how many customers does Access Bank have now, and how is that changing the way you’re having to provide services?
Herbert Wigwe: We have 29 million customers. It’s a totally different ballgame!
So we’ve had to change from being a wholesale bank that would have just put up the large corporates, or the middle corporates; to ask ourselves, ‘What do we need to do, to make sure that payments happen seamlessly?’
Digital is the way to go to reach the bottom of the pyramid. So in the last corporate strategic plan, we said we wanted to become a large, diversified bank. And that was when we started creating a digital banking division. And the whole essence was to use digital means to start to expand our retail proposition. And it was successful.
But in the one that just started, in 2018, retail is much more important. Because we need to address some of the liquidity and funding pressures that we may face as we grow. We need to start creating a global institution in terms of scale; we need to create one that is digitally led, because that is the only way for it to happen. We need to make sure we’ve created one that is scalable, one that is also founded on very strong risk management and other governance frameworks.
World Finance: Give me some examples of the kinds of technologies and innovations that you’re bringing to market.
Herbert Wigwe: One is Access Africa. Access Africa enables us to do a couple of things. First of all, it enables diaspora flows to come into the continent much more easily. The second is that Access Africa enables us to help in settling intra-African trade – and it’s encouraging it. So whether it’s trade between Nigeria and Ghana, Nigeria and Benin, Nigeria and Togo: people can do those things instantaneously. Third, it enables us to basically do some of the things with respect to supporting international trade. This used to be the terrain of the large international banks that left the continent.
We have something called QuickBucks, which enables people to access funding instantaneously. And I’m not talking of 10 minutes, I mean on the minute. And we’re creating those algorithms that allow SMEs and micro-SMEs to be able to borrow instantly – again, of course, taking risk into consideration.
We also have what we call Tamada, which is our own chatbot. And enables people to transact and do whatever they do, through this chatbot. And this is being resolved as if it is a real-life person.
These are some of the things that we’ve brought to the market. And I’m not just talking about Nigeria here – it is happening in every country in which we have a presence. So, those are the big things we’re doing from a technology standpoint.
South Korea is in trouble. Last year, its fertility rate tumbled to a record low of 0.98 children per woman, less than half of the 2.1 needed to maintain a stable population. In the next seven years, it’s predicted that South Korea will become a ‘super-aged society’, meaning one in five citizens will be over 65 years old. This is considered one of the greatest threats facing the world’s 11th-largest economy. Huge declines in South Korea’s working-age population will lead to losses in innovation and productivity throughout the economy, while healthcare services are likely to be strained as demand from the elderly increases.
Since 2006, the South Korean Government has spent an eye-watering KRW 152.9trn ($128.5bn) trying to pull the birth rate back from the brink. Through its state allowance programme, expectant couples can claim KRW 500,000 ($420) to cover prenatal expenses, and subsidies worth KRW 107,000 ($89.90) a month are available for parents with children younger than five. Yet despite these efforts, the fertility rate remains abysmally low. The government is realising that it needs to rethink its approach, and fast.
The price of prosperity
Once upon a time, South Korea was actually trying to bring its fertility rate down. In 1960, women had, on average, six children each. To stabilise the population, South Korea began a family planning campaign encouraging parents to have a “small and prosperous family” by improving women’s education and access to healthcare services.
Confucianism, which upholds that women are solely responsible for the care of children, is still a highly influential school of thought in South Korean society
The thinking behind this campaign was that parents with fewer offspring would be better placed to invest in their children’s education. The South Korean education system is one of the most competitive in the world: when children are at an early age, their parents begin agonising over an eight-hour entrance exam for university that will have a tremendous impact on their social mobility and career prospects. Such a demanding system has helped engender nothing short of an economic miracle in South Korea: the economy grew 17-fold towards the end of the last century. But for the children and families that still go through this process every year, it is far from ideal.
“There is a high cost to the mother in emotional and financial pressures when raising children,” said Gavin W Jones, an emeritus professor at the Australian National University. “If the children don’t do well, the family’s reputation suffers.” These psychological stresses are only exacerbated by the huge financial burden of raising a child. Families in Seoul spend an astonishing 16 percent of their income on private after-school tuition to help their children study for exams. Childcare is also very expensive – despite the state allowance programme, many parents spend roughly $200 a month on childcare.
Today’s South Korean youth have lived and breathed this culture. They’ve seen their parents endure the stress and financial expense of raising a child, and they’re now questioning whether it’s such a crucial life event after all.
Baby strike
In South Korea, Millennials have another name: the ‘Sampo generation’, which translates to the ‘three giving-up generation’. The term is used to describe the cohort of young South Koreans who have relinquished three aspects of life: dating, marriage and children. This trend is particularly prevalent among the country’s young women; many are deciding not to raise a family as they are afraid that doing so would mean forfeiting their careers.
They’re right to be concerned: 40 percent of South Korean women leave the workplace for some time after having children. This creates what’s known as the ‘m-shaped curve’. When plotted on a graph, women’s employment in South Korea rises in their 20s, then plummets around the time they have children before rising again in their 40s, creating a distinct ‘m’ shape. It’s a phenomenon rarely observed in developed countries, and a sign of significant gender disparity in South Korea’s labour market.
Also impacting women’s decision not to have children is the simple fact that motherhood is incredibly taxing. Despite their participation in the labour market increasing, women have continued to take the brunt of domestic chores. Confucianism, which upholds the idea that women are solely responsible for care of children and the elderly as well as maintenance of the home, is still a highly influential school of thought in South Korean society – even among those with more progressive attitudes to gender, these deeply entrenched societal values can be difficult to shake off.
“According to the [Korean Women’s Development Institute’s] Gender and Family Household Survey, 86.1 percent of Korean couples in dual-earner families agree that housework should be equally shared between men and women,” Sirin Sung, a lecturer in social policy at Queen’s University Belfast, told World Finance. “However, OECD data suggests that Korean women still spend four times as many hours on unpaid family work compared with men.”
The government has been slow to acknowledge the impact of gender inequality on the nation’s birth rate. Many women have accused it of being tone-deaf in its approach to the problem. In 2016, the previous government launched a heat map of marriages, births and women of childbearing age across the country, hoping this would encourage competition between different regions. Instead, it was taken down after one day due to a public outcry from South Korean women, who accused the government of seeing them as “reproductive organs”.
A change in direction
The government is finally starting to listen. Learning from his predecessor’s mistakes, President Moon Jae-in has focused the birth rate policy around improving gender equality. “We are now at the last golden time to fix a serious population problem,” Moon said in a speech launching the Presidential Committee on Ageing Society and Population Policy. “We must now focus on how marrying and giving birth doesn’t limit the lives of women.”
One way the government plans to do this is by encouraging men to play a more active role in parenthood. In July 2018, new measures came into place extending paternity leave to two years up from one, and guaranteeing new fathers 80 percent of their normal wages, capped at $1,338 a month. It was hoped this would reduce the childcare burden on women.
However, few men choose this option. Despite government campaigns to normalise paternity leave, men accounted for only 17 percent of parents who took it in 2018. “Men are concerned that the organisational culture of the workplace, which portrays those who take leave as less committed to work, may result in disadvantages for promotion and pay,” Sung said.
Sung also points out that even the gendered naming of these policies could be off-putting for men. “Maternity, paternity and parental leave provision all come under the ‘maternity protection’ scheme,” she said. “Changing the name of this scheme to ‘parental rights’ would help to challenge this gendered assumption.”
Another way the government could help working mothers is by addressing the shortcomings of state-run childcare programmes. Although families are given financial support from the state, this doesn’t guarantee them good childcare – mainly because there aren’t enough daycare centres to meet demand. It’s fairly common for families to remain on the waiting lists of state-run centres for over a year; the lack of affordable care is a key reason why women tend to leave their jobs and become stay-at-home mothers. It’s crucial that the government builds more daycare centres if it’s to convince women that motherhood is something they can comfortably pursue without losing their careers or financial stability.
All work and no play
The average South Korean works 2,113 hours a year – the second-most of all OECD member nations. The government has recognised the impact this might be having on its citizens’ ability to date and spend time with their partners; as a result, the working week has been cut from 68 to 52 hours. To enforce this, Seoul’s city hall cuts electricity to the building at 7pm on Fridays. Some private companies even broadcast reminders telling people to go home.
While this might improve the work-life balance of office workers, it has wide-reaching repercussions for the third of South Korea’s labour force in jobs with irregular hours. To compensate for the number of paid hours they’ve lost, many of these workers have had to take on second jobs. Some of them even work for as long as 19 hours a day.
Moreover, the policy won’t necessarily change the culture behind overworking, which can be just as detrimental to family life. The South Korean work ethic, instilled at an early age, means many prioritise their careers and finances over personal relationships. In a 2018 survey of 1,141 people, almost 70 percent of South Koreans said they were too focused on their careers to get married.
South Korea’s hyper-competitive culture – a source of progress for so long – is now contributing to a major downward trend in its economy. For decades, overworked husbands, stay-at-home mothers and intensely studious children have supercharged the country’s growth, but that growth has come at the expense of female empowerment, a healthy work-life balance and a stable birth rate – key elements needed for sustainable economic success. If the government can improve gender equality and create a better environment for raising a family, it may still be able to turn back the clock on this impending demographic crisis.
Baiduri Bank – the largest conventional bank in Brunei – has appointed a new CEO. Ti Eng Hui has been with Baiduri for the last 20 years, with the latest five spent in key management positions. He explains how he views his mission as he takes over the helm, the lessons he’s learned from outgoing CEO Pierre Imhof, and his ambitions to grow the bank internationally in the coming months.
World Finance: Mr Ti, talk me through the growth and the evolution that Baiduri Bank has seen over the last five years.
Ti Eng Hui: As you know, Baiduri Bank has three core businesses – one of which is retail banking, which has gained significant marketshare over the last five years in mortgages, in personal loans, and credit cards. We also have a core business which is corporate banking – servicing small businesses, all the way to multinational companies.
Another, third, core business, is our hire-purchase arm: a subsidiary company called Baiduri Finance, which specialises in car hire purchases and leasing. So all three core businesses have been doing fantastically well over the last three years.
Over the last three years we’ve had the opportunity to acquire a number of acquisitions – one of which is the UOB portfolio, the retail portfolio that we brought over. So that has given us a tremendous boost in the retail business. 2017 was another good year for us; we brought over HSBC’s retail and corporate portfolio. It’s given us another boost, in terms of assets and profitability by another 10 percent.
Our profit last year has grown by 29 percent, and our total assets have grown by 12 percent.
World Finance: So, what do you see as your mission, as you take over the helm?
Ti Eng Hui: You know, Baiduri has been successful over the last 24 years: this year is our 25th anniversary. And I would like to bring the bank to a new level of service, a new level of capabilities, and a new level of productivity, to meet the challenges in the coming years.
That means building up new capabilities. That means bringing new people to strengthen the team. That means bringing new technologies to support the business; to make sure that we bring new services to our customers. We make sure that the innovation in banking continues to be rolled out.
We need to make sure that our management team will continue to deliver in the coming years, and that we have a good succession plan in place.
Lastly, we need to be more nimble. We need to be able to go forward in such a way that we are able to respond very quickly to the changes in the marketplace, and to be able to take advantage of the opportunities in Brunei and abroad.
World Finance: You’re taking over as CEO from Pierre Imhof; what’s the legacy that he’s left behind?
Ti Eng Hui: Well, you know: Pierre was the CEO for 16 years, and I was fortunate to be his deputy for five.
I’ve learned a lot from him over the years. I think he has a very special skillset in managing conflicts among people. He’s able to bring stability to the bank, to bring growth to the bank. And I think he is a great people manager, able to motivate people to do their best, give people the opportunities to do what they believe in, and best of all, trust his people in delivering what they’re supposed to do.
The bank has been fortunate to have him over the last 16 years, so thank you Pierre, for his contribution.
World Finance: Baiduri Bank has a long history of delivering financial services firsts in Brunei; how will you make sure the bank continues to stay ahead of the competition?
Ti Eng Hui: Well, there’s two things we need to do. One is that we need to continue to invest in technology. New technologies like cloud computing, like fintech, like big data: these are very important tools that we need to have to propel the bank to the next level.
Secondly, I think we need to train our people a lot more. There are new regulations, the banking industry is facing new challenges. So we need to make sure our people are well trained, well positioned, to be able to face the challenges in the coming years.
World Finance: So, in the coming years, in the next five years: what is your ambition for Baiduri Bank?
Ti Eng Hui: You know, Baiduri Bank: it’s a Bruneian bank. It is a bank serving the Bruneian community. It is a bank that will continue to focus on Brunei as a priority market. We will work a lot more with government linked companies (GLCs) to serve them better. We will continue to work with the business community to develop more corporations.
We want also to be able to venture outside of Brunei – and therefore we have plans to go beyond Brunei. And that means developing a strategy for our expansion in a number of Asian countries. So that’s something that we will be working on in the coming months.
To say that the digital transformation or the digitalisation of business is in vogue is nothing new. Artificial intelligence, big data and biorobotics are just a few of the innovations that theorists claim will come to embody the Fourth Industrial Revolution, and are all markers of a wave of development that got underway a number of years ago.
Overwhelming technological disruption will be one of the main challenges facing societies in the coming decades and will present significant tests in terms of cultural transformation. The investment advisory industry is not immune to these difficulties. Already, global corporations are growing inorganically in the investment sector by betting on and integrating with fintech firms, which use algorithms to automatically process everything from account openings to tracking investments. This approach provides benefits such as 24-hour access to services, fixed cost savings and competitive commissions. Clearly, the race to dominate new technologies has begun; now, the winners and losers will start to become clear.
Sophisticated services
At BCI Asset Management, we are aware of global technology trends and appreciate that each region will enter the race in its own time and way, depending on how deeply technology penetrates different markets. The company understands these new parameters and is committed to growing its knowledge and incorporating these technologies with the advice we deliver to our clients. It all starts with the modernisation of our investment process.
The race to dominate new technologies has begun; now, the winners and losers will start to become clear
In recent years, we have introduced new technologies for data analysis, programming and processing with the aim of making better investment decisions. In doing so, we have achieved greater efficiency in our existing routines, many of which are now automated, freeing up time for thinking about new investment themes.
Our team has added new programming languages to its systems, allowing us to generate a proprietary fair-value model for Latin American fixed incomes. This process, formerly based on an econometric multivariate model, is now a model with dynamically calibrated parameters employing a complex algorithm for processing large volumes of data and thousands of iterations to produce a better fit for customers.
Another benefit of the digital revolution is that increasingly sophisticated data science is available. When we research companies to invest in and the issuers whose debt we acquire, we can access more reliable data, which is available in real time and is collected more efficiently than through meetings with a company’s management team.
Acquiring skills
At BCI Asset Management, we are embracing new technology and acquiring knowledge by training our analysts and portfolio managers not only so that we have experts on our team, but so that our entire investment unit has a common language that is in keeping with industry developments. In this regard, we believe we are pioneers in Chile when it comes to incorporating new technologies into the investment process. In fact, the investment team looks for these skills when screening applicants and bringing on new hires. In other words, it is no longer enough to only have specific financial training: we are now looking for innovative thinkers who already have skills in programming, data science and analytics.
These key changes are necessary for businesses to live up to clients’ requirements and earn and keep their trust. Today, BCI Asset Management serves all segments of the industry: individuals, private banks, corporations and institutional investors. With total assets under management worth over $10bn, we are also the fastest-growing fund management company in terms of average managed mutual fund value in 2019.
Our new corporate purpose is to dare to make a difference. We believe we are well aligned with our target audience, which increasingly demands access to distinctive value offerings across segments. In 2020, we will continue to consolidate our presence in Latin America while delivering expert advice derived from our evolving industry knowledge. We will also remain engaged in the digital race that is captivating our industry and, in doing so, continue to lead the asset management business in the region.
Climate change is an issue that is rightly on everyone’s lips. We need to transform our economies and societies swiftly – only then can climate change be combatted and the Paris Agreement become a reality. In order to achieve this, an investment of around €180bn ($201bn) is needed in the EU alone, a substantial chunk of which should come from the private sector.
But sustainability is more than just climate protection. The UN recognised this by adopting 17 Sustainable Development Goals (SDGs) in 2015. These provide a shared blueprint for nations to work in tandem to achieve a more sustainable future for all. They also recognise that ending poverty must go hand-in-hand with strategies that improve health and education, reduce inequality and spur economic growth. Hence, the goals attempt to address the societal challenges we face globally and to leave no one behind.
Shared responsibility
The Liechtenstein Government published its first interim report on the implementation of the SDGs in July, highlighting how sustainable development has been a key priority for some time. For instance, by promoting solar energy since 2015, Liechtenstein has become a global leader in the energy source. Liechtenstein has also launched pioneering public-private partnerships for environmental causes.
Liechtenstein’s financial community and regulatory authorities have considerable expertise in combatting illicit financial flows
To mark World Water Day in March 2017, Waterfootprint Liechtenstein was launched. The principle behind the project is simple: ‘Drink tap water. Donate drinking water.’ With this campaign, Liechtenstein is aiming to become the first country to provide access to clean drinking water to every resident, improving the living conditions of around 37,500 people in the process.
Waterfootprint Liechtenstein is well on the way to achieving its target: to date, more than 22,000 ‘waterfootprints’ have been activated. The government, schools and numerous organisations, including the Liechtenstein Bankers Association, support the initiative and practise the drink and donate mantra.
Collaboration and cooperation
Another of the country’s progressive projects is the Liechtenstein Initiative for a Financial Sector Commission on Modern Slavery and Human Trafficking, which aims to end human trafficking and modern slavery for good. The project is a partnership between the governments of Liechtenstein, Australia and the Netherlands, along with the United Nations University Centre for Policy Research and a consortium of banks and philanthropic foundations. The Liechtenstein Bankers Association and its members are part of these supporting organisations – for good reason.
According to the UN, more than 40 million people globally live in captivity, are exploited by forced labour or suffer another form of injustice. Some 25 million people are forced into labour, 16 million of whom are in the private sector. Although 58 percent of slavery cases take place in India, China, Pakistan, Bangladesh and Uzbekistan, around one million people in Europe also live in similar conditions.
The International Labour Organisation estimates that around $150bn is traded annually worldwide through slave labour and human trafficking. This is where the financial sector comes in: it can be implicated in various ways, such as by handling money generated from such practices, or by financing goods and services whose supply chains include modern slavery or human trafficking. In fact, modern slavery and human trafficking are the largest contributors to money laundering and terrorist financing in the world today.
Driving change
In light of the global nature of this crime and the need to access financial data in order to identify abuse, the involvement of the financial sector is essential. Liechtenstein’s financial community and regulatory authorities have considerable expertise in combatting illicit financial flows, and can play a pioneering role in tackling these crimes. This can be through the promotion of high due diligence standards, the development of responsible investments or the promotion of inclusive financial technologies. For this reason, Liechtenstein banks and the Liechtenstein Bankers Association actively support the Liechtenstein Initiative.
The Financial Sector Commission on Modern Slavery and Human Trafficking has been holding global consultations since September 2018 to discuss how the sector’s approach can be reformed to facilitate responsible lending and investment through industry-wide innovation. Based on these consultations, a catalogue of measures that places the global financial sector at the centre of worldwide efforts is now being devised. This catalogue will not only help to bring those who exploit others to justice, but it will also advise financial institutions on how to protect themselves against these investments and transactions.
It is time to ban unworthy working conditions and forced labour. A ban would also contribute to more climate protection, as legitimate jobs can be regulated to ensure less environmental pollution is caused and taxes are paid. The Paris Agreement can therefore be adhered to, and the holistic approach of Liechtenstein can be used to best implement the much needed-working and climate reforms.
Imagine clean tap water running just once a week, or half the population struggling to rustle up a single meal every day. This, according to Eddie Cross, an MP for Bulawayo South and founding member of the opposition Movement for Democratic Change (MDC) party, is the reality of a “period of harsh austerity” in Zimbabwe that “has [drastically] reduced living standards”.
These tough conditions show little sign of letting up, with the country sinking deeper into an economic crisis that has drawn comparisons to 2008, when GDP growth in Zimbabwe fell to -17.7 percent (see Fig 1) and the currency was devalued to such an extent that a wheelbarrow full of notes wouldn’t even buy a loaf of bread.
In the aftermath of the 2008 hyperinflationary crisis, the country’s leaders were able to agree on a power-sharing arrangement that allowed Zimbabwe to emerge with some semblance of hope. This time round, with the nation’s ruling party refusing to relinquish control or acknowledge the depths of the crisis, no solutions – international or domestic – are forthcoming. Rather, the country seems doomed to sink deeper into a financial depression that will have devastating consequences for its citizens and could take decades to recover from.
Rocky Rhodes
In its short history as a unified country, Zimbabwe has seen its fair share of economic hardship. The area of land that makes up modern-day Zimbabwe had been home to various tribal communities for centuries before it was demarcated in its current form in the 1890s by imperialist Cecil Rhodes and the British South Africa Company. The new state, which was named Southern Rhodesia in honour of its coloniser, remained under the control of the UK until 1965, when it declared itself independent. The following 15 years would be defined by a brutal civil war, which pitted the white colonialist minority government against black guerrilla forces led by, among others, future Zimbabwean Prime Minister Robert Mugabe.
Zimbabwe seems doomed to sink deeper into a financial depression that will have devastating consequences for its citizens
Peace was achieved in the early 1980s, facilitating Zimbabwe’s emergence as an economic star. The country’s GDP grew by an average 5.2 percent during that decade, thanks to an extensive programme of public spending – notably on education and healthcare facilities. In 1992, a study by the World Bank found that more than 500 health centres had been built across the country in the preceding 12 years, while enrolment in secondary schools had increased by 902 percent between 1980 and 1990. For all intents and purposes, the country was well on its way to becoming mythologised as a great African success story.
Mugabe’s administration, however, made a series of poor decisions that impeded the country’s economic ascendance. The first was the manner in which the early 1980s investment drive was carried out. As a fledgling independent nation, Zimbabwe did not have the necessary productivity to support such high spending, so while the new societal infrastructure improved the quality of life for Zimbabwe’s citizens, it also meant the country racked up a significant budget deficit, leaving it extremely short on emergency funds.
The government’s second misstep came in 1998, when it chose to weigh in on the conflict in the neighbouring Democratic Republic of the Congo (DRC). Not only did the cost of this intervention drain what little remained of Zimbabwe’s bank reserves, it also alienated the country from the international community – in 1999, both the World Bank and the IMF suspended their aid provision due to an unwillingness to fund Zimbabwe’s military spending in the DRC. Three years later, the country was suspended from the Commonwealth and subjected to sanctions by both the US and EU amid allegations of political corruption. This isolation decimated Zimbabwe’s agricultural sector, which accounted for around 12.6 percent of GDP at the time.
“Zimbabwe was an agrarian industrial country, with emphasis on the word ‘industrial’,” Stephen Chan, a professor of international relations at SOAS University of London, told World Finance. “It was regarded as extremely hi-tech, growing food for modern international markets.” The application of sanctions, however, severely dampened exports. The industry was further crippled by a drought in 2003, which destroyed the meagre subsistence agriculture that remained and left 70 percent of Zimbabwe’s citizens living below the bread line.
Sick notes
Over the following five years, the country descended deeper into economic crisis. Inflation reached 1,000 percent in 2006 – leading the World Bank to declare Zimbabwe the fastest-shrinking economy outside of a war zone – and the government’s attempts to stop prices from skyrocketing were ineffectual, to say the least. While Gideon Gono, the former governor of the Reserve Bank of Zimbabwe, claimed hyperinflation peaked at 2.2 million percent in July 2008, Bloomberg estimates it was closer to 500 billion percent – a figure that Chan described as “metaphysical”. He added: “You couldn’t offer beggars anything in the street, because they’d just throw it away. It was meaningless. You’d have entire alleyways just full of worthless notes.”
Chan’s vivid image symbolises a wider truth: currency has always been at the heart of Zimbabwe’s economic troubles. In the 1980s and 1990s, as the country remained in relative infancy, one of the most vital tasks for Mugabe’s administration was to ensure the Zimbabwean dollar retained its value in order to support macroeconomic stability. It failed dismally for two reasons: first, it showed an inability to create and maintain national industries that would offer underlying productive value, and second, it proved itself too willing to devalue the currency, which, in turn, caused a greater international PR problem.
The destructive impact of the government’s failure was borne out most clearly in the hyperinflation crisis, but the repercussions continue to this day. In 2009, then finance minister Tendai Biti, who was part of an emergency government of national unity, implemented a recovery plan centred on the adoption of the US dollar as legal tender. While this succeeded in curbing hyperinflation at the time, it has subsequently caused significant issues when it comes to obtaining foreign currency – particularly given the rest of the world’s reluctance to lend to Zimbabwe, which stems from the country’s failure to prove that it has learned its fiscal lesson. “What has come home to roost very recently is that [Zimbabwe] really has no way of sourcing any more dollars,” Chan told World Finance. “No one will lend to [it] anymore, because there never really was a viable repayment plan.”
The government has not been entirely oblivious to these shortages and has, over the past few years, attempted to introduce various currency policies, each with little success. In 2016, bond notes and coins that would purportedly mirror the value of the US dollar were introduced, but they rapidly lost value when citizens realised they had no inherent worth and were not widely accepted as payment. In June 2019, the government – now led by President Emmerson Mnangagwa following the ousting of Mugabe in a military coup in 2017 – went a step further and attempted to introduce an entirely new currency. The RTGS dollar – the first iteration of Zimbabwe’s sovereign currency since 2008 – prevents citizens from using foreign currencies such as the US dollar and pound sterling as legal tender.
In August 2019, Zimbabwean Foreign Minister Sibusiso Moyo claimed that introducing the new currency had stabilised the economy, but with the government refusing to publish inflation data until February 2020, it’s difficult to know whether there’s much truth in his statement. Chan is unconvinced: “There was no real choice because of the lack of US dollars, but there’s no productive value [in the new currency] to pay for imports, so wholesalers are just going to charge more and more money for things.” In other words, the government’s reluctance to reveal inflation information smacks of a cover-up – it does not want to reveal to the world exactly how much of a failure its initiative was with regards to curbing inflation.
Trouble ahead
Anecdotal evidence emerging from Zimbabwe does little to suggest the government has averted an economic crisis. As of June, fuel prices had been hiked to such an extent that the average daily commute costs as much as $20, while 18-hour blackouts have become commonplace in Zimbabwe’s capital, Harare. According to the World Food Programme, an estimated two million people are facing drought-induced starvation, while the same number have no access to clean water.
The current scarcities pose an immediate threat to life for some of Zimbabwe’s citizens, but there are also deeper and more wide-reaching disasters on the horizon, particularly with regards to shortages in HIV and AIDS medication. According to the UN, the country has one of the highest prevalences of HIV in sub-Saharan Africa, with an estimated 12.7 percent of the population living with the disease in 2018. This figure has fallen dramatically from its peak in the early 2000s – thanks, in part, to increased awareness of transition methods and behavioural changes such as the use of condoms. Access to antiretroviral treatment (ART) has also improved as a result of a government programme that started to be rolled out in 2003.
According to the UN, 84 percent of those living with HIV in Zimbabwe were able to access ART in 2018. Within this group, 70 percent were provided with medication by the Global Fund to Fight AIDS, Tuberculosis and Malaria, a multinational organisation that provides grants to nations where HIV is prevalent. In order to unlock these grants, however, governments must contribute a certain percentage of the cost; in Zimbabwe’s case, its leaders must pay $24.2m between 2018 and 2021 to gain access to the full $483m grant.
As a result of the financial troubles currently afflicting the country, the Zimbabwean Government was unable to contribute the $6m sum required in July to unlock the Global Fund’s latest instalment. Consequently, access to ART for HIV patients has been severely restricted, with some being issued a two weeks’ supply at a time rather than the requisite three months, and others being given expired drugs.
“You’ve got the makings of a second stage of the pandemic [of the 1980s],” Chan said. If HIV sufferers cannot gain access to the life-saving medication needed to control their symptoms, cases of AIDS are likely to surge. Infection rates may also rise, as sufferers will not be visiting clinics to collect medication and, as a result, will not be offered condoms at the same time.
In 2016, bond notes and coins that would purportedly mirror the value of the US dollar were introduced, but they rapidly lost value when citizens realised they had no inherent worth and were not widely accepted as payment
Mine for the taking
Of course, not all of Zimbabwe’s citizens are suffering. “There’s an oligarchic class made up of elite governmental and military figures – or those related to such people – who have insulated themselves by some recourse to corrupt means,” Chan explained. Members of this class, which established itself during Mugabe’s reign and has gone unchallenged by Mnangagwa, reportedly enriched themselves through a combination of bribery, overvalued government contracts and the illegal seizure and sale of illegitimate property.
“Transparency International estimates that $100bn has disappeared from the Zimbabwean economy [as a result of corruption],” Cross told World Finance. “The military has been a major beneficiary and has fought to protect its privileged position [under Mnangagwa].” What’s more, this corruption is not the sort that offers a silver lining in the form of job creation or productive value. “Corrupt monies circulated within can be beneficial, even if not always traceable,” Chan said. “But when it’s taken out of the system – or spent on non-productive luxuries, as is largely the case in Zimbabwe – no good is done.”
The diamond market has proven a particularly popular breeding ground for corruption, with a 2008 cable (leaked in 2010) from the US Embassy in Zimbabwe calling the sector “one of the dirtiest” in a “country filled with corrupt schemes”. In 2006, Zimbabwe became a diamond hotbed overnight following the excavation of the Marange diamond fields, which were regarded at the time as the richest natural source of the gems to be discovered for more than a century.
It was hoped initially that the government would utilise the funds derived from mining to reduce the country’s budget deficit; in practice, though, profits have been concentrated in the hands of a select few political and military officials. According to the 2008 cable, these include Gono and former vice president Joice Mujuru, both of whom were accused of skimming hundreds of thousands of dollars a month in illegitimate profits from gem sales. Both Gono and Mujuru denied these allegations.
The Marange diamond fields were also reported to be the site of a torture camp run by the Zimbabwe National Army, the existence of which was revealed in 2011 by the BBC’s Panorama series. Victims told the broadcaster they had been subjected to beatings, sexual assault and dog maulings at the hands of the soldiers there, none of whom are known to have faced repercussions for their actions.
With the government paralysed by a crisis of its own creation, Zimbabwe’s citizens have been left to weather the storm alone
Military impunity remains a significant issue in Zimbabwe today. Not only does this reinforce the existence of corruption, it also creates a culture of fear and violence, robbing citizens of their right to peaceful protest. In January 2019, when trade unions led a work stoppage following a 150 percent hike in fuel prices, security forces shot dead 17 people and raped at least 17 women, according to Human Rights Watch.
No way out
Given the endemic nature of corruption, the dire economic situation and looming public health crisis, the outlook for Zimbabwe is bleak. The most pressing challenge remains the restoration of some kind of economic stability, but with other countries unwilling to offer budgetary support loans and national industry at a standstill, the government will be hard-pressed to drum up any sort of funding soon. Even if it did stumble upon some miraculous money tree, the notes growing on its branches would either be entirely worthless or not accepted as legal tender in accordance with current monetary policy. What’s more, given the level of corruption at the uppermost levels of government, it’s highly unlikely that any new funds would be directed to the sectors suffering critical shortages. Instead, they would find themselves lining the pockets of the well connected.
With the government paralysed by a crisis of its own creation, Zimbabwe’s citizens have been left to weather the storm alone – a nigh impossible task given the absolute lack of basic societal infrastructure. Even the informal economy, which has historically proven extremely resilient in Zimbabwe, is floundering. Last year, in a bid to maintain some sort of viable currency regime, a number of small operators began establishing a grassroots virtual economy, using mobile cash to pay for goods and services. However, this was quickly quashed by the country’s conservative-leaning finance minister, Mthuli Ncube, who introduced a two percent tax on transactions that priced out low-earning citizens.
In a functioning democratic society, the clear response to such an abject failure in economic policy would be to vote out the politicians responsible. In Zimbabwe, though, this is not an option given the monopoly held by Mnangagwa’s party, the Zimbabwe African National Union Patriotic Front (ZANU-PF). Even if there were to be an election, the likelihood of the results being manipulated is extremely high. What’s more, ZANU-PF’s main opposition, the MDC, is by no means squeaky clean, having experienced its own corruption scandals in recent years. “If you’re looking at democratic solutions for the future, then Zimbabwe is currently between a rock and a hard place,” Chan told World Finance.
The one glimmer of light at the end of the tunnel is Zimbabwe’s negotiations with the IMF regarding a bailout programme, which remain at an early stage. However, the IMF is highly unlikely to green-light any loans until Zimbabwe pays off its debts to other lenders, such as the World Bank. Even if loan agreements can be reached, the country will pay a high price for financial assistance. “Terrible austerities have to come and the poorest people will be hit the hardest,” Chan said. This would likely lead to further civil unrest, again culminating in military violence.
As it currently stands, Zimbabwe is a ticking time bomb. With domestic options exhausted, international intervention is crucial to supporting and sustaining the lives of its citizens. If the country is allowed to collapse entirely, the implications will stretch well beyond Zimbabwean borders, leaving the rest of the world to pick up the humanitarian and economic pieces for decades to come.
