2020 | World Finance

Elizabeth Jack-Rich leads Elin Group’s philanthropic efforts in Nigeria

Posted on April 6, 2020July 3, 2020 by Max Tomlin

Few people go from being a bus attendant to running a multimillion-dollar company – but then again, Dr Elizabeth Jack-Rich isn’t like most people. As founder and CEO of Elin Group, Jack-Rich has helped her organisation establish a robust presence across a diverse range of sectors while never forgetting its singular purpose: to establish value for its customers, clients and shareholders.

Admirably, Jack-Rich has not forgotten her roots: even though her success has made her one of the most highly regarded business leaders in her native Nigeria and beyond, she remains passionate about giving back to others so they can benefit from the same opportunities she has enjoyed.

The Elizabeth Jack-Rich Aid Foundation (EJ-Aid), a non-profit entity that supports numerous worthwhile causes, manages Elin Group’s charitable undertakings. These philanthropic endeavours have grown as the group has made several exciting moves in the corporate world. Whether it’s in real estate, power generation, agriculture or aviation, Elin Group is committed to innovation that yields dividends for investors and Nigerian society.

Humble beginnings
As Nigeria continues to establish itself on the global stage, a young entrepreneur with a dream and the tenacity to bring it to fruition is working to empower the nation’s women and youth. Jack-Rich, the embodiment of Nigeria’s next generation of leadership, is on a mission to bring shared prosperity to her fellow citizens. Hailing from a humble background and shaped deeply by her faith, Jack-Rich has embraced entrepreneurship and charity as the core tenets of her life, creating an award-winning charity that supports numerous initiatives focused on reducing poverty and inequality.

Elin Group is committed to innovation that yields dividends for investors and Nigerian society

Born in 1993, Jack-Rich entered the world at a time of great transformation in Nigeria. At the start of the decade, rising oil prices had provided a much-needed economic boost to the country and, in 1999, Nigeria finally transitioned to democratic rule after decades of military dictatorships. Democracy brought with it further economic benefits, with the country’s GDP per capita rising rapidly between 1999 and 2008 (see Fig 1). While such significant change can prove daunting to some, it also creates opportunities for those who take risks and show a willingness to make a difference. It was in this climate that Jack-Rich began to make her mark.

After graduating from the University of Applied Science and Management, Porto-Novo, Jack-Rich embarked on an entrepreneurial journey with Elin Group. Under her stewardship, the privately held conglomerate has grown its presence in numerous sectors, including energy, real estate, agriculture and aviation, among others. With footprints across West Africa and the US, Elin Group’s investment portfolio touches several facets of Nigerian society, drawing on its core operating values of integrity, mutual respect, customer service, innovation and safety.

According to Princess Dato’Seri Maria Amor, founder of We Care for Humanity and creator of the Global Order of Dignitaries and Philanthropists awards, these values are embodied by the group’s founder and guiding light: “Jack-Rich has a ferocious drive in helping the people of Nigeria, uplifting the African continent while doing so. The enthusiasm she has for the sake of people is contagious and powerful.”

Safety first
Despite only being formed in 2018, Elin Group has already had a significant impact on Nigeria. In terms of health, safety and the environment (HSE), all of the group’s projects are guided by the highest regulatory standards, creating the safest possible workplace for employees, contractors and visitors.

To create an environment in which everyone feels safe, Elin Group has adopted a proactive approach to risk management. By identifying potential problems ahead of time, the organisation can ensure the long-term wellbeing of all its stakeholders. Effective risk management doesn’t only keep employees safe, either: assessing, managing and preventing risk gives Elin Group better access to data regarding its work processes, improves communication channels and enhances resource allocation. Moreover, risk management can help with an organisation’s bottom line and prevent any nasty surprises from surfacing.

To achieve its HSE targets, Elin Group has formal procedures in place to identify potential workplace hazards, such as situations and substances that might prove harmful to its staff. Consequently, all relevant personnel receive training in emergency preparedness, accident prevention, accident response and the use of protective equipment.

“By virtue of the nature of the businesses we operate in – be it aviation or oil and gas – the health and safety of our staff, clients and all other stakeholders cannot be compromised,” Jack-Rich told World Finance. “We understand that a lapse in judgment or one careless moment can lead to a fatality. This is why we ensure that we stay compliant with every health and safety policy, as well as all government and statutory regulations. Safety is a core value for us – we have maintained an accident-free workplace since inception and recorded zero downtime due to accidents.”

Protecting employees is part of a broader ethos that Jack-Rich has adopted throughout her career. Although she would not be a successful entrepreneur without a clear understanding of business, finance and hard data, she is careful to remember the importance of maintaining a human touch.

Reaching for the sky
In a monumental step, Elin Group recently announced a deal with Canadian aircraft manufacturer De Havilland Canada, signing a firm purchase agreement to acquire three rebranded Dash 8-400s. The Dash 8-400 promises a significant productivity advantage over other aircraft, as it can hold more personnel than competing 76-seat turboprop carriers and boasts better fuel economy than larger aircraft. According to the De Havilland website, the Dash 8-400 offers over $8m in additional value per aircraft.

Commenting on the deal, De Havilland’s chief operating officer, Todd Young, touched upon the importance of the African market for his firm: “We are delighted to welcome Elin Group to our family of customers and to announce this order – the second booked since the relaunch of De Havilland Canada in June [2019].

“Propelled by the excitement generated by the transition of the Dash 8 aircraft programme to De Havilland Canada, our sales and marketing teams are focusing their attention on building a pipeline of orders to further increase our backlog and reconfirm the Dash 8-400 aircraft’s position as the world’s most advanced and most productive turboprop. Africa continues to be a showcase market for the Dash 8-400, where the aircraft’s speed, hot and high performance, and higher payload capabilities bring significant advantages to new markets within the continent.”

From Elin Group’s point of view, the purchase agreement is a savvy move by Jack-Rich that supports the organisation’s work across numerous industry sectors. Put simply, the ability to transport employees across Nigeria in a fast, reliable and cost-effective manner will prove hugely important to future business developments.

“As a dynamic entrepreneur and a leader with a vision, I am profoundly pleased that De Havilland Canada and Elin Group Nigeria have come together to form a formidable business relationship that will enable Elin Group to deliver [a] cutting-edge service to customers in the aviation sector,” Jack-Rich said at the time of the purchase. “It has always been my vision to collaborate with a company of high technical and innovative repute to see the actualisation of my vision to broaden services in different economic facets. I am particularly proud today about this alliance with De Havilland Canada – the acquisition of the Dash 8-400 aircraft for operations in Nigeria is a step in the right direction and it couldn’t have come at a better time.”

Investing in aviation equipment could bring significant benefits for Elin Group. First, it enables the organisation to enter the private charter space and provide a valuable transportation service. Perhaps more pertinently, though, the purchase of three Dash 8-400 aircraft will permit the company to improve the reliability and efficiency of its oil and gas projects.

The empowerment of women is key to creating a healthy nation – as well as holding women back, gender inequality prevents whole countries from realising their full potential

Green credentials
In addition to its aviation capabilities, Elin Group is a standout leader in Nigeria’s exciting hydrocarbon sector. Elin Oil Services is a cutting-edge oil and gas exploration, development, production and marketing company that serves as a one-stop shop for engineering procurement, construction, oil prospecting and well-drilling solutions. Specialising in the exploration of oil and gas assets, onshore and offshore services, marketing, and the distribution of petroleum products, the subsidiary primarily focuses on the provision of solution-orientated, cost-effective and responsive services in the areas of oil mining and offshore services.

Besides the deal with De Havilland Canada, Elin Oil Services is in the process of acquiring a mobile offshore drilling unit and three multipurpose vessels – all of which are scheduled for delivery this year. These will add to a broad portfolio of existing assets that provides support throughout the entire oil and gas value chain. Jack-Rich knows now is not the time for complacency, though: over the next few years, her company will continue to invest in the acquisition of strategic assets and other ancillary services, such as the storage and distribution of petroleum products. A diversified asset portfolio guarantees the company’s economic sustainability.

Although some may see Elin Group’s work in the oil and gas sector as being antithetical to the environmental values espoused by its CEO, this is not necessarily the case, as Elin Oil Services employs cutting-edge technology to reduce environmental disturbance. The global petrochemical sector has also been exploring ways in which it can continue to provide universal energy access while cutting its carbon emissions. In Nigeria, Elin Group leads the way in this regard.

EJ-Aid helps society’s most vulnerable and marginalised individuals attend high-quality educational institutions and create a better future for themselves

“Detailed assessments of potential environmental, social and health risks are carried out during the planning stage of all new projects,” Jack-Rich explained to World Finance. “The reports from these analyses allow the company to manage and reduce negative risks to the community and environment. Also, environmental impact is a major deciding factor in asset acquisitions at Elin Group. This influenced our decision to purchase three brand new Dash 8-400 aircraft as opposed to cheaper, older, more polluting alternatives.”

Nigeria is blessed with a multitude of natural wonders, from the Yankari National Park, which has one of the largest elephant populations in West Africa, to the magical Idanre Hill, with its mysterious, yet-to-be-deciphered inscriptions. Jack-Rich understands the value of this beauty, making environmental best practice a top priority across all divisions of Elin Group.

Giving back
As well as being a successful businessperson, Jack-Rich has received widespread acclaim for her philanthropy. This drive to add value to humanity led to the creation of EJ-Aid and allowed Jack-Rich to follow in the footsteps of her husband, Tein T S Jack-Rich, who established the Belema Aid Foundation to support much-needed projects throughout Nigeria.

Elizabeth Jack-Rich has continually demonstrated her passion for helping others, supporting families and young people through the issuance of grants, delivery of medical support, facilitation of skills development and provision of many other tools that empower individuals economically. EJ-Aid scholarships, for example, allow less privileged students to continue their studies – both within and outside of Nigeria – and improve their financial prospects. Jack-Rich’s staunch commitment to changing lives for the better is rooted in an expression both her and her husband live by: “God has blessed me to impact my generation.”

More recently, Jack-Rich launched a special interest foundation to support the women living outside of Nigeria’s urban centres: the Opportunity for Rural Women Development Initiatives (ORWODI). ORWODI equips rural women with the basic tools they require to engender positive social and economic change in their communities, further promoting the sustainable development of Nigeria in the process. Having been born into difficult economic circumstances herself, Jack-Rich understands how vital this work can be.

But her charitable outlook and goals do not end there: since being formally established in December 2017, EJ-Aid has dedicated its resources to improving Nigerian lives through empowerment and education. The foundation has awarded more than 50 scholarships to underprivileged children and focuses on giving hope to young, elderly and ex-service personnel across Nigeria, Africa and the wider world. In other words, EJ-Aid helps society’s most vulnerable and marginalised individuals attend high-quality educational institutions and create a better future for themselves. These scholarships have often covered the cost of primary, secondary and tertiary education for orphans, children of widows and disabled individuals.

With regards to economic empowerment, EJ-Aid places a particular emphasis on skills development and business management training. Once courses are completed, seed capital is offered to support and encourage the development of SMEs. According to PricewaterhouseCoopers, SMEs currently contribute approximately 48 percent of Nigeria’s GDP – a significant sum, but one that remains behind other markets. Across the EU, for example, SMEs contribute 56 percent of GDP on average, while in South Africa – Africa’s second-largest economy behind Nigeria – the figure stands at 52 percent.

The work being undertaken by EJ-Aid should stimulate Nigerian SME performance, but that is not its only remit: hunger eradication is a key aim of the organisation, one that is met by improving the availability of food for all citizens, regardless of their economic difficulties. In a country that has the most people living in extreme poverty globally (see Fig 2), such a cause couldn’t be more important.

Honour roll
Jack-Rich has received several accolades in recognition of her work, including an honorary doctorate in leadership and community development from ISFOP Benin University and the Global Woman Humanitarian for Poverty Alleviation Award from the Global Order of Dignitaries and Philanthropists. She also holds certifications from the University of Cambridge’s Rising Women Leaders Programme and Harvard University’s Entrepreneurship Essentials course.

More recently, the National Youth Council of Nigeria bestowed Jack-Rich with the newly formed title Matriarch of Nigeria Youths for her efforts to empower the country’s women. The award drew particular attention to EJ-Aid’s presentation of NGN 110m ($231,820) in start-up capital to 1,100 women. To date, the foundation has empowered more than two million women, contributing over NGN 350m ($737,609) in partnership with the Belema Aid Foundation.

“My focus on women is not for gender bias,” Jack-Rich explained upon receiving the award. “As enablers of growth, it is commonly said: ‘When you empower a woman, you empower a nation.’ No woman should be on the street. My greatest desire is to see the day when no single woman is roaming the streets of Nigeria, but are rather all gainfully engaged in legitimate enterprises, contributing to the uplifting of their families and society at large.”

Such awards are fitting given the great effort Jack-Rich has put into lifting her fellow Nigerians out of poverty. In Abuja and Port Harcourt, for example, she created a two-week skills acquisition programme for women in association with the Small and Medium Enterprise Development Agency of Nigeria. Of the 1,100 beneficiaries, 500 were selected from the Federal Capital Territory and Northern Nigeria, while a further 600 hailed from the Rivers State region and Niger Delta. The participants received schooling in a variety of vocations, including catering, IT, fish farming, poultry management, cosmetology, baking, handicrafts and event planning. At the end of the training, students received start-up funding to begin their journey towards economic prosperity.

The empowerment of women is key to creating a healthy nation – as well as holding women back, gender inequality prevents whole countries from realising their full potential. In fact, according to a 2015 report by McKinsey Global Institute, Nigeria’s GDP could expand some 23 percent by 2025 if women participated in the economy to the same degree as men.

Growing together
Jack-Rich’s purposeful leadership is a hallmark of her business journey and should inspire any budding entrepreneur. When previously asked about what drives her success, Jack-Rich was quick to point to her long-term vision: “I would like to assure you that Elin Group is in this for the long haul and looks forward to expanding other business horizons for our collective organisational wellbeing and the betterment of the entire nation.”

True to the values exemplified by its founder, Elin Group’s leadership team believes it has a duty to act in the best interests of the environment and society as a whole. Since its establishment, Elin Group has committed to empowering the communities it serves with initiatives targeted at reducing poverty and improving the quality of life for local citizens.

Jack-Rich told World Finance that this is the same wherever the company operates: “We believe this is not only about sustaining our business, but about sustaining our core values and who we are. Hence, we ensure our project operations incorporate environmentally friendly practices and socioeconomic benefits into the local community. We have clear responsibilities, duties and standards in our management, boards, stakeholders and operating units. These include our sustainable dealings with stakeholders, effective risk management and audit regulation, and transparent accountability and reporting.”

It is Jack-Rich’s focus on doing the right thing that drives the company’s growth and exceptional performance. She has noted repeatedly that she believes Elin Group should deliver services that not only meet statutory quality demands, but also exceed such expectations. To achieve this, the group has created, maintained and developed leadership guidelines that ensure processes of production and delivery are consistent across the board. Elin Group remains steadfastly committed to ensuring its procedures and engineering practices protect the people and environment of Nigeria.

With the Nigerian economy going from strength to strength, further triumphs are surely just around the corner for Elin Group

A prosperous future
Despite the difficulties inherent to being a young entrepreneur, Jack-Rich remains hopeful and excited about her company’s role in growing the Nigerian economy. Over the next few years, she believes both Elin Group and EJ-Aid can do much to improve financial inclusion in Nigeria, providing further gains to the country’s women and young people. Although access to financial services in Nigeria has improved of late, the proportion of adults with a bank account in the country still sits at a meagre 29 percent, according to Kantar.

“Higher levels of financial inclusion provide a number of benefits,” Jack-Rich explained. “First, it promotes a savings culture. It provides a safe place for savings to be built up, thereby providing a source of funds for emergencies and other existential needs. Second, financial inclusion facilitates access to loans and credit. It provides a platform for broader transactions, helping to grow small and medium-scale businesses. Finally, by increasing the earning potential of women and youth, financial inclusion can lead to poverty alleviation.”

With regards to the business, Jack-Rich is intent on keeping innovation at the heart of Elin Group’s objectives, finding easier, more efficient and cost-effective ways to create value. “Innovation is at the core of who we are,” Jack-Rich told World Finance. “By staying focused on our vision, continuously identifying the gaps, providing the needed intervention and ensuring that a culture of continuous learning is promoted, we will remain successful.”

It is this attitude of never being satisfied, never standing still and always seeking improvement that has stood Jack-Rich and Elin Group in such good stead. In just two years of operation, Elin Group has achieved great success; with the Nigerian economy going from strength to strength, further triumphs are surely just around the corner. What’s clear is that Jack-Rich will ensure these successes continue to benefit all Nigerian citizens.

Finding the right work-life balance when trading

Posted on April 6, 2020April 9, 2020 by Ashton Wenborn

I started trading around 2007, after attending an event with a pensions advisor who put the idea of forex (FX) trading in my mind. As the advisor was speaking, I started to consider ways of building up a pension pot over time. I remembered that the GBP/USD exchange rate would vary considerably from year to year, having noted how changeable exchange rates and currencies were when travelling with my parents as a child.

I asked the pensions advisor if I could convert GBP into USD when the exchange rate was working in my advantage, before converting USD back into GBP as the exchange rate went back in my favour the other way. He replied that this was exactly what he was already doing. He was obviously an FX trader too, and it was this initial thought that led me to FX markets and the start of my trading career.

Another day at the office
I usually start my day at 6:30am, reading up on the latest market-moving news that occurred overnight in the US and Asian sessions before analysing the markets and looking at opportunities for the coming day. I then have breakfast at 8am, after which I monitor the squawk service, write articles, engage with fellow traders and have a mid-morning break when I take a short walk. I continue working until 1pm, when I have a break for lunch, before coming back to my desk and monitoring the markets for the rest of my afternoon. If any special events occur, such as a central bank rate announcement, I will stay up to monitor those before heading back to bed.

What I really enjoy about trading is the stories. I love following central bank and political developments and mapping how they move currencies

Every Monday at 12:30pm, I run the HYCM FX Week Ahead webinar, during which I flag upcoming events that are likely to have the greatest effect on markets. These webinars are free to attend and available on HYCM’s website. On Tuesdays, I run the HYCM Online Trading Workshop, where I go over the principle of pairing a weak currency with a strong currency. This session is designed to be more practical, demonstrating the backbones of making a trade.

Finding job satisfaction
What I really enjoy about trading is the stories. I love following central bank and political developments and mapping how they move currencies. Breaking news that changes a currency’s outlook is particularly exciting. I also enjoy being a guide for other people, showing them how to trade and manage their risk. Helping people trade brings me considerable satisfaction and I get to meet some very interesting people along the way.

Of course, trading comes with its risk. For instance, at HYCM, contract for difference (CFD) trades, are always accompanied by a high-risk investment warning. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage – 67 percent of retail investor accounts lose money when trading CFDs with HYCM. Every investor should consider whether they have a full understanding of CFDs before they start trading.

Giles Coghlan, Chief Currency Analyst at HYCM, speaks at the company’s Becoming a Pro Trader course

If I wasn’t a trader I would like to go into politics as it’s a great way to serve your country. However, finding success in politics is much harder than doing so in trading. A trader would consider a year successful if they brought home a positive figure at the end of the twelve months, but being a successful politician is both harder to measure and achieve. As a politician, it is also easier to be viewed as a villain by other people, regardless of how well intentioned you may be.

Helping people trade brings me considerable satisfaction and I get to meet some very interesting people along the way

Off the clock
In my spare time I like to run, read novels, play tennis and visit the theatre. I love reading classic novels because I believe that if a book has been popular for more than 100 years, it must be saying something worthwhile. I also enjoy philosophical novels because the questions they pose seem the most worthwhile to engage in. I am currently reading the fantasy novel Eragon by Christopher Paolini, which my daughter recommended to me. Once I have finished this, I will start Meditations by the Roman emperor Marcus Aurelius.

When I play tennis at home, I play very badly compared to the rest of my family. My wife played tennis to a national level when she was in her teens and my son and daughter both have high national rankings. My son is competing in a Tennis Europe event in Portugal and has reached the top 16, with a ranking of eighth in the UK for the 12-and-under age group. I find it frustrating getting consistently beaten because I am a sporty person, but that counts for nothing in my household.

A home truth: public-private partnerships are key to solving Africa’s housing crisis

Posted on April 3, 2020April 9, 2020 by Max Tomlin

Unprecedented urbanisation has led to a serious shortage of affordable housing in cities around the world. In 2014, McKinsey & Company predicted that, if trends continued, as many as 1.6 billion people would live in substandard housing by 2025. African countries are among those currently grappling with this crisis – the continent’s housing deficit has not only been fuelled by urbanisation, but also by the growth of its vast population of young people.

Despite the problems facing the housing market, there is cause for optimism. Over the past decade, numerous developments have better equipped us to tackle this shortage: the rise of the sharing economy, for example, offers new solutions to the lack of affordable housing, while social media has empowered young people to voice their discontentment at being priced out of the market.

Governments have been slow to enact innovative housing policies unless forced to by crisis or dramatic change

Global warming, meanwhile, is driving the adoption of eco-friendly construction methods. Developments like this are set to have a significant impact on the industry and may even come to define the next decade of housing in Africa. For that to happen, though, the continent’s policymakers will have to be bolder and much more dynamic.

Shaky foundations
Housing policies in Africa are a hangover from the post-colonial era. Many of the major initiatives carried out on the continent were instigated by newly independent African nations and focused on mass housing – particularly for civil servants, who were usually the greatest contributors to the labour force and, therefore, the largest pool of voters. These policies reflected the conventional wisdom of the time, which suggested governments alone could stimulate demand and generate enough supply for housing.

Today, there is a constant battle between public sector intervention and private sector capacity. The right approach, as with most things, lies somewhere in the middle: public-private partnerships. The private sector neither has the will nor the incentive to take on affordable housing alone, and this is where the government must intervene. Governments, on the other hand, often lack the technical capacity or the systems to deliver affordable housing – areas in which the private sector excels.

Fortunately, there are signs that government policy in Africa is starting to catch up with this reality. The Big Four Action Plan – Kenya’s guiding social and economic development policy – has launched an ambitious affordable housing programme, bringing together both the private and public sectors. Equally, Morocco’s social housing programme has reported tremendous success, making it a key reference point for future study, while newly enacted tenant protection laws in Nigeria seem to be making good progress.

Unfortunately, governments have been slow to enact innovative policies unless forced to by crisis or dramatic change. Consequently, the push for more affordable housing will most likely have to come from elsewhere.

A global problem
This policy gap cannot and should not be construed as a problem unique to the Global South. The 2008 financial crisis was triggered by the mismanagement of the housing market and the exorbitant price of US homes. Alarmingly, the same trends that caused the crisis are still prevalent today: according to The Economist, real house prices have risen by 15 percent globally since their post-recession low, taking them well past their pre-crisis peak. As a result, there is mounting resentment among Millennials who are unable to get on the property ladder as easily as their parents did.

While a lack of affordable housing is a global problem, the challenge is especially pressing in Africa. The continent’s booming population is expected to almost double by 2030, surpassing 2.5 billion, according to the Brookings Institution. By 2050, the Mo Ibrahim Foundation expects more than half of the population to be under the age of 25.

Consequently, megacities such as Lagos, Cairo and Kinshasa – each of which already has a population of more than 10 million people – will continue to expand rapidly while other cities, such as Luanda and Johannesburg, will soon join their ranks. This population boom and rapid urbanisation is creating huge housing deficits: according to El-hadj M Bah, Issa Faye and Zekebweliwai F Geh’s open access book, Housing Market Dynamics in Africa, the continent’s housing backlog stood at roughly 51 million units in 2018. This is an urgent problem that African governments will soon be pressed to address. Over the next decade, numerous challenges could hasten government action.

Africa’s housing deficit has been fuelled by urbanisation and the growth of its vast population of young people

Estate of mind
Housing has always been deeply political, but with the rise of technology – and its ability to coalesce people around a single idea – we can expect to see more social movements emerge in the coming years. It has already had a significant impact in the UK, with The Economist reporting that those who lived in areas with stagnant housing prices were more likely to vote ‘leave’ in the 2016 EU membership referendum.

The same was true of those who voted for the far-right National Rally party (then the National Front) in France in 2017. Housing prices have also added economic impetus to the protests in Hong Kong. Given the resentment of young people struggling to access real estate around the world, it is likely a global social movement or protests on housing will demand attention and action – Africa will not be exempt from this. Perhaps we are not so far away from a global #housing4all movement, after all.

Another trend starting to impact the housing sector is the emergence of the sharing economy. Platforms like Uber and Airbnb have demonstrated how technology can help us commoditise unused assets. There has been much talk of employing the rental model in Africa, and there is some merit to this idea: given the continent’s steep mortgage prices, it is more than likely that rental housing will remain a feature of the market. However, we may soon see some advancement in flexible living arrangements. In fact, shared spaces in which tenancy and ownership are not necessarily fixed-term are already beginning to take shape. The next decade will reveal just how sustainable this model is.

Already, the impact of human activity on our environment is becoming difficult to ignore – we’re seeing more heatwaves, flooding and uncontainable wildfires than ever before. These severe weather conditions have a direct impact on housing and how we develop infrastructure. While the housing industry has often toyed with the idea of using alternative building materials, the effect of climate change may force it – and government bodies – to accelerate the adoption of green innovations into building strategies.

It’s not just global warming we need to factor into our construction methods, though. The Ebola crisis that ravaged West Africa between 2013 and 2016 – and continues to rage through the Democratic Republic of the Congo – can also be viewed as a failure of housing policy. One of the reasons the contagion spread as quickly as it did is because of the density of housing in informal settlements. In the age of global epidemics, we will be compelled to consider how construction interplays with the environment beyond just the materials we use.

As safe as houses
Over the next decade, policymakers’ main challenge will be crafting a policy that not only addresses the aforementioned concerns, but also passes easily across African states. There have already been some positive steps in this direction. For example, the African Union Specialised Technical Committee on Public Service, Local Government, Urban Development and Decentralisation is pushing for a model law – an overarching legal and policy framework that all countries can adapt their national strategies to. This is informed by the recent conceptualisation of affordable housing as a human right.

Advocacy in the next decade is expected to be highly influential in pushing affordable housing to the top of the agenda. However, external forces – such as global warming, youth dissatisfaction, global crises and epidemics – may ultimately force African governments to reprioritise housing.

Technology could also play a pivotal role in alleviating the pressures that the housing sector faces. Africa has always tried to harness technology to leapfrog certain stages of economic development, and blockchain may help to transform the housing industry over the next decade, removing the need for intermediary players and streamlining the registration of property documents and other real estate processes. Smart contracts will be established entirely between the buyer and the seller (or, in this case, the renter and landlord) without requiring any human interaction.

The next 10 years will transform affordable housing in Africa. Admittedly, there is still much uncertainty – many things need to happen in order to drive change. Nonetheless, there are actions we can take today: investors, for instance, would do well to finance projects that benefit Africa’s youth, be it the construction of student housing, multipurpose buildings or rental homes. After all, Africa’s youth is its greatest resource – the best way to ensure a positive future is to invest in it.

Central banks face a year of mounting challenges

Posted on April 2, 2020April 2, 2020 by Max Tomlin

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ICSFS’ fully integrated banking software enables organisations to profit from digitalisation

Posted on April 2, 2020April 9, 2020 by Max Tomlin

As with many industries, the banking sector has been hit by a wave of digital disruption in recent years. Investment in online platforms by digital incumbents and start-ups is significant and, while some banks had the foresight to start investing in digital infrastructure early, many are still struggling to capitalise on the fintech revolution.

Nonetheless, the importance of providing an exceptional online customer experience is more or less undisputed within the sector. According to Deloitte, US retail banks will invest over $15.2bn in digital banking in 2022, while only $11.4bn will be spent on developing branches (see Fig 1).

But developing a high-quality digital platform is far from easy. Increasingly, customers expect a bank’s online user experience to be as seamless as those offered by fintech competitors. For this reason, the system a bank chooses to implement is more important than ever.

ICSFS has embraced innovation and agility as core drivers of value within the global market

As a global software and services provider, ICS Financial Systems (ICSFS) is dedicated to supplying banks and financial institutions with world-class digital solutions. Through its fully integrated banking software, ICS BANKS, ICSFS enables organisations to automate and streamline their services. World Finance spoke to the company’s managing director, Robert Hazboun, to learn how its digital solutions help banks become leaders in their respective sectors.

What challenges do banks face in today’s digital age?
We all recognise that people around the world are now choosing online banking over traditional in-branch banking. Banks and financial institutions are under pressure to adapt to this huge shift in consumer behaviour.

The digital age presents banks with several major challenges. As well as tackling digital transformation and disruption, banks must compete with new players in the digital banking ecosystem and try to stay on top of the continual emergence of new technology. They also need to manage customers’ expectations while winning their loyalty and addressing a host of regulatory challenges. Last but not least, banks must cope with the added operational costs of digitalisation.

How does ICSFS provide solutions to these challenges?
Ever since digital disruption started to transform businesses, ICSFS has embraced innovation and agility as core drivers of value within the global market. In addition to open banking, we provide solutions through open application programming interfaces (APIs) and complete cloud platforms. Our extensive channels also drive empowerment through financial inclusion. In this way, we create multiple touchpoints that help banks expand their customer base. What’s more, we enrich customer service through the unification of digital systems, fostering customer relationships across different channels.

ICS BANKS’ dynamic products are built to be highly secure, scalable and flexible, thereby increasing banks’ market share. Our process automation saves time and enhances consistency and clarity across the business. Finally, our continuous technological advancement lowers our customers’ total cost of ownership.

Having a comprehensive digital solution that caters for a host of world-class technologies is a must for any leading bank. As a fully integrated software solution that covers all aspects of online banking, ICS BANKS puts financial institutions head and shoulders above the rest. With digitalisation taking the sector by storm, and with the pace of change so fast, ICSFS offers robust tools that enable banks to not simply ride the wave of digitalisation, but become leaders in digital banking.

What should a bank look for when partnering with a fintech firm?
Banks should always look for indications that a fintech firm’s solutions will bring real value to their customers. As a long-standing player in the banking technology industry, ICSFS has designed its banking software to meet customers’ expectations and increase customer engagement in banks’ services.

At the same time, our solutions help clients better understand their customers’ needs, providing them with guidance on what services to offer and how to offer them. This reduces the time taken to bring new products to market and gives the bank a more significant competitive advantage.

As well as offering a wide range of technological tools, we deliver implementation services and boast a cost advantage over other banking software providers. In fact, we have the highest-rated customer satisfaction for our implementation experience. ICSFS addresses customers’ fundamental needs and expectations with free-of-charge upgrades and reduced operating costs, all while generating more revenue growth and delivering real value to banks’ customers.

How do you help banks respond to increased competition and rapidly changing markets?
Increasing competition and rapidly changing markets require businesses to stay alert and react quickly to challenges. With new banking technology continuing to emerge, banks around the world are pushed to invest heavily in new tools that will help them manage their operations, connect with customers, promote their services and stay ahead of the competition.

ICS BANKS enables a given bank to meet its customers’ needs by utilising the latest technology, such as cloud availability, open APIs, agency banking, artificial intelligence, robotics, blockchain, cash management systems, chatbots, smart contracts, cardless payments, customer onboarding processes and wearable banking technology.

Having a comprehensive digital solution that caters for a host of world-class technologies is a must for any leading bank

By implementing ICS BANKS, financial institutions will be able to generate new opportunities, enhancing their market advantage and providing a better customer experience, including 24-hour availability, smart banking and lower charges – not to mention greater security and transparency in their transactions.

There are a number of regulatory hurdles within the banking sector. Can ICSFS help banks meet international standards?
After the 2008 global financial crisis, a process of regulatory reform took place within the banking industry. Now, meeting accounting and supervision standards has become a part of day-to-day life for all bankers. However, banks will struggle to meet these standards and provide regulatory reports if the appropriate tools are not deployed.

By harnessing ICS BANKS, our clients can obtain the latest updates on standard regulatory reports and bodies, such as International Financial Reporting Standards, Basel II, Basel III, the Accounting and Auditing Organisation for Islamic Financial Institutions, and the Islamic Financial Services Board, as well as become compliant with the most recent SWIFT standards within planned releases. As a result, ICS BANKS users can enjoy a reduced total cost of ownership and access the specific regulatory reports required by authorities, such as central banks.

Know Your Customer compliance and regulatory challenges such as anti-money-laundering (AML), the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) have also presented difficulties for financial associations. In light of this, ICS BANKS empowers banks to take a more holistic approach and improve their processes for verifying the identity of clients.

ICS BANKS’ comprehensive touchpoints and omnichannel capabilities allow banks to leverage data and acquire desired customer information at any time. ICS BANKS supports AML, FATCA and CRS, while its APIs connect to local and regional authorities for further regulatory and compliance processing. Finally, ICS BANKS’ onboarding user experience cycle is completed with its digital business process management facilities.

How can banks ensure they are sufficiently future-proofed?
Making processes more agile is one of the main priorities of today’s banks. According to KPMG, banks can drive agility in five key ways: first, by changing their culture to focus more on customer value and continuous improvement; second, by connecting with customers; third, by prioritising technological development; fourth, by increasing flexibility through mergers and acquisitions; and finally, by embracing innovation.

Across these five key areas, ICS BANKS offers numerous solutions that drive agility. The platform’s flexibility, integrated design and data inclusion give banks the tools they need to change their culture. Digital touchpoints make the bank available to customers at any time, while strong reporting tools ensure institutions are always one step ahead of customer needs.

In addition, ICS BANKS helps financial institutions stay at the cutting edge of technology through applications such as cloud banking, APIs, open banking and blockchain. ICS BANKS’ customers can also enjoy a clear flow of information online using the platform’s reporting tools. This enables them to easily understand and analyse their status at any time, which can help inform their decisions regarding mergers and acquisitions. In other words, ICS BANKS’ innovative technological tools future-proof banks and transform them into pioneers of their industry.

On top of all this, ICSFS offers banks real financial clarity and a low total cost of ownership. Whether a bank is looking to boost its profitability or cut its operational costs, ICS BANKS provides it with maximum financial efficiency. The system is also designed with a scalability feature to support banks’ growth and lead them through a successful lifetime business. In this way, we stand firmly by our motto: ‘our customers are our partners.’

XM expects an up-and-down year for forex markets

Posted on April 1, 2020April 9, 2020 by Max Tomlin

Apart from its turbulence, 2019 stood out for being the year in which every asset class made gains – thanks, in large, to a fresh injection of stimulus from central banks. Among the major currency pairs, the pound sterling was a surprise winner, while the US dollar remained virtually unchanged and the euro underperformed. Looking ahead to the rest of 2020, many risks still hang over the global economy: Europe and Japan are hardly growing; Americans will vote for a new president in November; the threat of COVID-19 has put governments on red alert; Brexit remains unresolved; and trade wars rumble on. Even the yen, the traditional safe-haven currency, has started to wobble in the face of uncertainty, with only the US dollar still standing tall.

Any appraisal of forex markets should probably begin with the world’s reserve currency, which ended the decade on a high note. While the US dollar did lose ground to the likes of the pound sterling and the Canadian dollar in 2019, it gained strength against many other peers – particularly the euro, which lost 2.3 percent, according to Refinitiv Datastream. This occurred despite the US Federal Reserve’s decision to cut interest rates three times. As such, the US remained an attractive destination for capital flows, offering higher yields than its G10 peers.

With 2020 well underway, the US dollar has only seen its appeal increase – surprising many of the strategists who had predicted the greenback would lose some of its shine among safe-haven investors once the mood on trade improved and global growth picked up. But is the endurance of the dollar’s strength such a surprise given the alternatives for investors? The fact is that it would be difficult to replicate the dollar’s unique status of being a high-yielding safe-haven currency in the current environment.

European monetary policy is near its limits after years of large asset purchases, meaning additional stimulus may not necessarily succeed in boosting the economy

Despite its troubles, Donald Trump’s America is still outperforming Europe and Japan by a mile and, unless something changes to erode the dollar’s yield advantage (such as the Fed cutting rates more aggressively or sustained recovery elsewhere), it’s difficult to foresee any real downside to investing in the greenback.

Fighting it out
The eurozone, meanwhile, had a pretty dreadful 2019; growth slowed as the uncertainties and trade risks associated with Brexit took a heavy toll on the bloc’s export-dependent manufacturers (see Fig 1). The situation was so dire that the European Central Bank (ECB) was forced to restart its quantitative easing (QE) programme just nine months after terminating it.

Although there are some tentative signs that growth has begun to bottom out, a meaningful rebound remains elusive. What’s more, European monetary policy is near its limits after years of large asset purchases, meaning additional stimulus may not necessarily succeed in boosting the economy. What the eurozone needs is a large fiscal stimulus, but with Germany showing little flexibility on its fiscal prudence, all hopes rest on newly appointed ECB President Christine Lagarde to make the case for a relaxation of the eurozone’s fiscal rulebook.

The biggest potential worry for the euro, though, is the White House taking its trade fight to Europe now that it has negotiated deals with its North American neighbours and China. Although the US and the EU have held several discussions since 2018, formal trade negotiations are only expected to begin this year. With France’s digital tax largely targeting US tech giants and a long-running dispute regarding Airbus subsidies casting a shadow over talks, there’s plenty that could go wrong and risk incurring the wrath of Trump, which would most likely result in devastating auto tariffs.

Meanwhile, the threat of a disorderly Brexit has not completely dissipated and is certain to make a return at some point during the year. The euro, therefore, is likely to be stuck in the doldrums in 2020 and continue to serve as a funding currency. If economic weakness persists in the absence of a sizeable fiscal package, the ECB could even ramp up its QE dosage, risking fresh divisions within the central bank.

No end in sight
The world watched on in 2019 as the Brexit stalemate sparked never-before-seen political chaos in Westminster. Having finally left the EU on January 31, negotiations on a future trade arrangement are underway, with the two sides not wasting any time in setting out their red lines, unnerving investors in the process. UK Prime Minister Boris Johnson has remained adamant that the transition period will not be extended, setting an extremely difficult – if not unrealistic – deadline to reach a comprehensive deal. One thing is for certain: markets will not appreciate the prolonged uncertainty, which is being exacerbated by COVID-19. The pound could be facing another roller coaster year, especially once the Brexit headlines start flooding in again.

Johnson’s hardline rhetoric is also unlikely to go down too well at the Bank of England, which faces another year of Brexit-induced impotence. Expectations of a rate cut initially faded after the UK economy rebounded at the beginning of the year, but business conditions could easily deteriorate if a hard Brexit becomes the most likely outcome or if further cuts are required as a result of the spread of COVID-19.

An appetite for risk
As trade tensions heightened in 2019, investors flocked to the safety of the Japanese yen. This year is looking far from predictable for the safe-haven currency, though, with the yen coming under unexpected pressure amid growing concerns about the Japanese economy.

Japan’s GDP contracted sharply in Q4 2019, as an increase in the sales tax and a slump in exports resulting from the US-China trade war hurt growth. Normally, the yen only tends to fall when traders are certain the Bank of Japan (BoJ) will respond to weakness with policy action. But given the BoJ’s exhausted policy toolbox and the uncertainty regarding COVID-19, the yen suffered a selling episode in February, demonstrating it is not immune to global risks and casting doubt on its safe-haven status.

That said, the yen could easily come back in demand if the risks of a pandemic subside and new threats emerge. For example, the success of the ‘phase one’ trade agreement between China and the US depends entirely on the full commitment of both parties – without such commitment, the deal collapses.

Even if the trade truce holds, a new tariff war could erupt in Europe, while the unpredictability of Brexit negotiations and the upcoming US presidential election bring further risks. Although the 2020 presidential race has yet to make its mark on asset prices, investors could shun risky assets like stocks in favour of safe-haven alternatives if a progressive Democratic candidate secures the nomination.

Searching for stability
Chinese GDP growth has been steadily slowing since 2011, and – with US tariffs and the associated uncertainty damaging China’s industrial heartlands – 2019 was no exception. The slowdown would have undoubtedly been more pronounced had Beijing not intervened with monetary and fiscal support.

Just as trade tensions with the US finally started to abate, China was dealt a further blow with the outbreak of COVID-19. By the end of February, the pandemic had shut down large portions of the manufacturing sector and seen strict travel restrictions put in place. Such disruptions could shave as much as 2.8 percent off the country’s first-quarter growth, according to ANZ’s chief economist for Greater China, Raymond Yeung. This would have serious ramifications for global growth, too.

Assuming the pandemic is contained soon, the extent of monetary and fiscal stimulus issued by Chinese authorities will be important in determining the speed of recovery. The US may also give China some breathing room, allowing it to get back on its feet before returning to trade discussions – unless, of course, Trump decides to use China to score political points.

Chimimport is driving economic development in Bulgaria – here’s how

Posted on March 31, 2020March 31, 2020 by Max Tomlin

This interview was conducted on 11/02/2020, prior to the global outbreak of COVID-19.

Bulgaria joined the EU in 2007; since then, its economic fate has been inextricably tied to the bloc. The Balkan nation has exhibited strong growth in that time, but challenges remain – particularly concerning productivity. What’s more, progress in Bulgaria has often been stunted by political uncertainty, with leading parliamentary figures torn between improving relations with Brussels or Russia.

Still, Bulgaria has had many successes. Last year’s economic growth was forecast at 3.6 percent, up from 3.1 percent in 2018. Bulgaria is also home to innovative companies like Chimimport, a holding company that operates across multiple sectors. World Finance spoke to the firm’s executive director, Ivo Kamenov, about the role his company is set to play in Bulgaria’s economic development.

What is the state of the stock market in Bulgaria and South-East Europe generally?
Having suffered several political setbacks since the global financial crisis of 2008, Bulgaria’s stock market has only just started to recover. While there are new investments available and companies are looking to enter the market, many steps need to be taken to further development. Notably, major international players are yet to join the Bulgarian market. This must change if Bulgaria is to attract international investors who can bring know-how and fresh resources to the country.

Investing in human capital and know-how is key to creating a sustainable business mode

Market trends in South-East Europe typically follow global ones, albeit on a smaller scale. The decision to retain zero or near-zero interest rates by central banks and the extremely low – sometimes negative – yields of government securities has forced many investors to redirect resources towards capital markets in pursuit of returns. The most prominent industries across the stock markets in the region are manufacturing, financial services, green energy investment and IT.

It’s also worth noting that public companies in South-East Europe face numerous challenges, including the instability of the Greek and Turkish economies, the integration of countries from the Balkan Peninsula into the EU and the ongoing war in Syria. Brexit is another major challenge – not only because the UK was one of the EU’s leading economies, but also as a result of the ambiguity surrounding any future trade agreement with the bloc.

How is the state of Bulgaria’s economy affecting the development of its private businesses?
Overall, the Bulgarian economy is stable and the macroeconomic indicators are good – all of which creates a favourable environment for the development of private business.

However, the state of the Bulgarian economy still very much depends on the situations of the leading economies in the EU and those neighbouring the bloc. According to Trading Economics, approximately 78 percent of Bulgarian exports are delivered to Europe, with the majority going to Germany, Italy, Romania, Greece, Turkey, France, Belgium and the Netherlands (see Fig 1). A decrease in these countries’ imports would have an impact on Bulgaria.

Which sectors of the Bulgarian economy does Chimimport support?
In its 70-year-plus existence, Chimimport has grown from a successful foreign trade firm, specialising in the trade of chemical products, into a large-scale holding company that brings together nearly 70 subsidiaries and associates. We support the financial services, transport, construction, manufacturing, trade and real estate sectors by investing in and developing companies in these areas.

Chimimport – along with its subsidiaries – is often recognised by prestigious rankings that detail the best-performing companies in Central and South-East Europe. Chimimport’s acquisitions of Central Cooperative Bank and Armeec Insurance are among those that have been celebrated in such a way.

What is your prognosis for Bulgaria’s economy in the coming years and what role do you see Chimimport playing?
Providing there are no shocks in the world economy, nor in the leading economies of the EU, I expect the Bulgarian economy to develop steadily in the coming years. The same applies to the Bulgarian Stock Exchange. Chimimport – together with its subsidiary, Central Cooperative Bank – is among the most liquid companies on the stock exchange and will invariably continue to contribute to the development of the capital market in Bulgaria.

Further, I think becoming a part of the eurozone would play a positive role in the development of the Bulgarian economy, so it is little wonder the government is working to make that happen in the coming years. Such a move would encourage foreign investors to enter Bulgaria’s economy and capital market.

How does Chimimport give back to the local community?
Developing successful companies in major sectors of the Bulgarian economy and investing in human capital are perhaps Chimimport’s greatest social missions. And that is without even mentioning the many corporate social responsibility (CSR) projects we carry out.

There is little doubt that investing in human resources yields the greatest returns. That is why we are working on various CSR projects in the education sector, including the provision of scholarships to one of the best business universities in Bulgaria, the Higher School of Insurance and Finance. We also hope to open a school for pilots and aviation engineers in the near future.

Outside of education, we have been supporting Bulgarian sport for many years, sponsoring the organisation of prestigious international competitions. As chairman of the Kyokushin World Union’s International Professional League and the National Martial Arts Association – the only combat sports organisation accredited by the Bulgarian Ministry of Youth and Sports – I aim to bring the original rules of one of the world’s oldest martial arts, Kyokushin, back to life. The philosophy of Kyokushin and the discipline it imparts can be fundamental to anyone’s development.

What projects does the company currently have in the pipeline?
The projects we hold are as diverse and varied as our portfolio. In every sector that we develop, we create and implement innovations. In the financial sphere, for example, we strive to provide a full range of services to our clients, investing in the creation of completely new products. Further, public trust in the company is high, as we manage established names across banking, insurance, pension and mutual fund management, receivables securitisation and more.

In the transport sector, we develop aviation, river and maritime projects – again, offering a full range of services. In aviation, these include concessions at the Varna and Burgas airports, aircraft ground handling, aircraft repair and maintenance, and much more. In the field of river and sea transport, we provide ship repair, the concession of ports (including those in Varna, Balchik, Ruse and Vidin) and the servicing of sailing vessels.

Chimimport holds a leading position in the trade and manufacturing sectors too, meeting EU standards. The group produces, processes and trades petroleum products, natural gas, cereals, vegetable oils and biofuels. Our construction projects, meanwhile, focus on civil engineering, transport design, building inspection and project management. A growing portfolio of real estate supplements this part of our business.

Ultimately, we aim to offer a full range of services in every segment of our business, providing high-quality products that give Chimimport a competitive edge.

What is Chimimport’s development strategy moving forward?
Investing in human capital and know-how is key to creating a sustainable business model – many businesses have underestimated this over the years and are now experiencing great difficulties as a result.

At Chimimport, we understand the importance of sustainability. Our long-term development strategy includes strategic joint ventures with major international companies in various sectors, establishing franchise partnerships with leading international brands, managing and maintaining stable and sustainable cash flows, and improving people’s quality of life in Bulgaria.

World Finance Islamic Finance Awards 2020

Posted on March 30, 2020March 15, 2021 by Max Tomlin

It may have started life as a niche arm of the banking sector, but Islamic finance has grown to such an extent that institutions the world over – even those outside of Muslim-majority countries – have had to take notice. Islamic finance is predicted to grow five percent throughout 2020, according to S&P Global Ratings, despite some downward pressure being applied due to poor economic conditions in core markets.

In the year to come, the sector is expected to continue its growth, expanding to new frontiers and embracing developments in the industry. The establishment of international bodies like the Accounting and Auditing Organisation for Islamic Financial Institutions will further improve trust in the industry, even as it remains committed to innovation.

The recent slowing rate of growth comes as a concern to some operators, which will have to identify ways to return the industry to the peak levels of growth witnessed a few years ago. The 2020 World Finance Islamic Finance Awards recognise the organisations that are already making inroads in this area, showing resilience when times are tough and laying the groundwork for future success.

Riding the wave
As with many other areas of the banking sector, fintech is set to have a substantial impact on Islamic finance in 2020. In particular, blockchain could provide huge benefits in terms of sukuk issuance. Currently, there are three main challenges related to sukuk, or Sharia-compliant bonds. These concern the traceability of underlying assets, cash flows and investors.

Africa, with its sizeable Muslim population, provides huge growth potential that is only now being explored

Blockchain solves these issues by boosting security and reducing the risk of identity theft. In October of last year, microfinance cooperative BMT Bina Ummah became the first organisation to issue a sukuk on a public blockchain. Other financial institutions have followed suit, benefitting from the transparency that is characteristic of blockchain-based transactions.

The fintech wave could also help bring Islamic finance to a larger market. The widespread use of smartphones has helped to bring a sizeable range of financial services to individuals who would previously have been classified as underbanked or unbanked. In fact, according to PricewaterhouseCoopers, 46 percent of consumers now use digital channels exclusively for their banking needs. Islamic finance needs to find a way of exploiting this trend.

In some parts of the Muslim world, religious concerns can prevent individuals from opening a bank account – this reason was cited by 34 percent of adults in Afghanistan and 27 percent in Iraq and Tunisia, a Thomson Reuters study found. Fintech firms should view this as a huge opportunity and set about launching Sharia-compliant digital wallets that offer individuals a number of services, from microcredit to money transfers, even if they do not present the full array of options that accompany traditional bank accounts.

Furthermore, fintech services could provide advice and education in areas surrounding Islamic finance. Research conducted by Gatehouse Bank last year found that many Muslims still rely on religious scholars for financial advice and more than 60 percent remain sceptical about how compliant with Sharia law some financial products really are. Digital communication provides a way for financial firms to connect with these individuals, allowing them to offer advice and reassurance.

Going to market
One of the major headaches for businesses specialising in Islamic finance is economic slowdowns in their core markets. In many respects, the last year has not proved to be a favourable one, with both the Turkish and Iranian economies faring particularly badly. Other major markets for Islamic finance, including the Gulf states, remain subject to economic turbulence that is dependent on fluctuations in the oil market.

ESG concerns are having a significant impact across the financial world, and Islamic finance promises to be no exception

It is vital, therefore, that Islamic finance products and services make reaching new customers a priority. For example, Africa, with its sizeable Muslim population, provides huge growth potential that is only now being explored. Despite the fact that Islamic finance emerged on the continent back in 2013, it accounts for just 0.5 percent of the world’s sukuk.

“Islamic [banks’] performance in large African banking systems such as South Africa and Nigeria should remain robust over the next 12 to 18 months,” Akin Majekodunmi, Vice President and Senior Credit Officer at Moody’s, explained in a report late last year. “And Africa’s large Muslim population, which is predominantly unbanked or underserved, will continue to provide a solid foundation [on] which Islamic banking assets, and thus earnings, can grow rapidly.”

One way in which financial organisations can assist with the spread of Islamic finance is by improving standardisation. Currently, different jurisdictions have their own criteria for what counts as Sharia-compliant finance, which confuses matters for investors and other bank clients. Fortunately, efforts are underway to create a more standardised environment: the UAE has established the Higher Sharia Authority, which met for the first time in February 2018 and seeks to develop a clear and transparent framework around Sharia products while working with other global bodies to pursue uniformity. Along similar lines, Malaysia is aiming to standardise its Sharia contracts.

Acting ethically
Environmental, social and governance (ESG) concerns are having a significant impact across the financial world, and Islamic finance promises to be no exception. As firms seek to align themselves with a more sustainable and socially responsible corporate world, Islamic finance has an opportunity to take a leading role. In fact, Sharia-compliant finance and ESG principles should sit alongside one another relatively comfortably.

“Islamic finance’s goal to protect life aligns with sustainable finance principles, which emphasise environmental and social protection,” read an S&P Global report last year. “These include… refraining from developing or financing operations that could harm the environment or the health or wellbeing of humankind. Green sukuk is an example of instruments that can be used to finance environmentally friendly projects.”

In terms of governance, Islamic finance is often subject to greater scrutiny than typical products, usually from Sharia boards. Recent data from Refinitiv suggests a direct correlation between ESG criteria and Islamic finance, with Sharia-compliant companies scoring three percent higher in terms of governance. They also performed better according to environmental and social criteria – by 7.3 percent and seven percent respectively.

Once again, pushing their ESG credentials to the fore should help Islamic finance products to reach a broader audience. Many financial institutions are already showcasing the shared principles between the two financial frameworks, and further emphasis in this area will only help matters.

As the Islamic finance market looks to return to the levels of growth it was delivering a few years ago, it should explore its past and future. The sector has a rich history of placing ethical concerns above profit and it should continue to tap into this ideology, but it must also look to technological developments that will help it reach more customers. The World Finance Islamic Finance Awards 2020 highlight the organisations that are continuing to move the industry forward without losing sight of its beginnings.

World Finance Islamic Finance Awards 2020

Best Islamic banks

Algeria
Al Baraka Bank of Algeria

Bahrain
Al Baraka Islamic Bank

Bangladesh
Islami Bank Bangladesh

Brunei
Bank Islam Brunei Darussalam

Egypt
Abu Dhabi Islamic Bank Egypt

Indonesia
Maybank Syariah Indonesia

Jordan
Jordan Islamic Bank

Kenya
National Amanah – National Bank of Kenya

Kuwait
Kuwait International Bank

Lebanon
Arab Finance House

Malaysia
CIMB Islamic

Oman
Meethaq Islamic Banking

Pakistan
Meezan Bank

Palestine
Arab Islamic Bank

Qatar
Qatar Islamic Bank

Saudi Arabia
Riyad Bank

Sudan
Al Salam Bank

Turkey
Albaraka Türk Participation Bank

UAE
Emirates Islamic

UK
BLME

US
Bank of Whittier

Global recognitions

Islamic Banking Chairman of the Year
Sheikh Mohammed Al-Jarrah Al-Sabah, Chairman at Kuwait International Bank

Business Leadership and Outstanding Contribution to Islamic Finance
Musa Shihadeh, Chairman of the Board of Directors at Jordan Islamic Bank

Best Visionary Leader – Strategy & Transformation
Raed Jawad Bukhamseen KIB’s Vice Chairman & CEO

Most Innovative Islamic Bank
Emirates Islamic

Fastest Growing Islamic Bank
Coris Bank International Baraka

Best Islamic Treasury Management
Dubai Islamic Bank

Best Project Finance Provider
Qatar International Islamic Bank

Best Islamic Fund Management
QInvest

Best Islamic Asset Management
Boubyan Capital

Best Islamic Wealth Management
Abu Dhabi Islamic Bank

Best Islamic Investment Banking Services
Boubyan Capital

Best Sharia-compliant Brokerage House
Boubyan Capital

Best Islamic Insurance Company
Tawuniya

Best Islamic SME Support & Finance
Qatar Islamic Bank

Best Islamic Banking & Finance Technology Provider
ICS Financial Systems

Best Core Banking Systems Implementer, Middle East
Masaref Business and Systems Consultancy

Best Stock Exchange for Islamic Listings
London Stock Exchange

Real Estate Sukuk Deal of the Year
Arabian Centres

Sustainable Energy Sukuk Deal of the Year
Majid Al Futtaim

Sovereign Sukuk Deal of the Year
Oman Ministry of Finance

Special recognitions

Best Participating Bank for Customer Service Quality in Morocco
BTI Bank

Best Participating Bank for Customer Service Quality in Turkey
Ziraat Katılım Bankası

Most Secure Bank in Kuwait
Kuwait International Bank (KIB)

Best Islamic Digital Bank in UAE
Emirates Islamic (EI)

World Finance Forex Awards 2020

Posted on March 30, 2020October 22, 2020 by Max Tomlin

Far from being an easy way of getting rich, forex trading requires a great deal of knowledge and skill to deliver success. Many traders seek out the expertise of qualified, experienced brokers to help them identify the currency pairs that could yield substantial profits. This is because the forex market is hugely volatile, and nobody can predict exactly which currencies will increase in value and which will head in the opposite direction.

Nevertheless, several inherent benefits continue to attract traders to the market: forex trading is low-cost, suitable for a variety of different trading styles and provides high levels of liquidity. Further, while volatility can pose significant risks, it also offers sizeable rewards – it all depends on the positions that traders take up before big currency swings occur.

The year ahead certainly promises several geopolitical events that could have a huge impact on the forex space. The World Finance Forex Awards 2020 showcase the businesses that have displayed the foresight to pre-empt these developments and guide their customers to a more profitable future.

Open for business
Forex platforms have always understood that setting foot in the world of trading for the first time isn’t easy. For years, many have made an effort to reach out to potential traders by highlighting the ease of entering the field. For example, forex trading needn’t be a huge drain on an individual’s time: many people start engaging with the forex market on a small scale, using any profit to supplement their income, rather than becoming a trader full-time.

As new digital solutions enter the forex market, traders will have to remember that technology cannot do all the hard work for them

For many forex firms, there is as much of an emphasis on education as there is on having a well-developed trading platform: companies usually offer guides and even live classes to help new traders get off to a good start. Although there is some terminology that may prove unfamiliar – ‘pips’, for example – many forex brokers include glossaries to help cut through the jargon.

Coming up with effective marketing strategies is another way in which brokers are expanding their customer bases. Numerous forex firms publish blogs, which not only provide educational materials but also serve a promotional purpose. Similarly, social media has proven to be an effective method of increasing awareness of the forex market.

Another reason forex is attracting more traders is due to the openness of the market. Unlike securities, forex trading is global and invariably accessible – while stock markets close, forex’s international nature means there is always a market open somewhere. As a result, global currency trading reached $6.6trn per day late last year, according to the Bank for International Settlements.

Simple solutions
Perhaps more than any other financial sector, the forex market owes much of its recent success to technological developments. The internet has made it much easier for traders to receive updates on currency developments, and mobile applications mean trades can be conducted immediately at the touch of a button. In fact, technology has meant forex trading is sometimes even simpler than that.

Increasingly, traders are using software to automate their trades. One of the most commonly used platforms is MetaTrader 4, which allows individuals to employ algorithms that open and close trades when bespoke parameters are met. Excitingly, MetaTrader 5 is due for release later this year and will offer new features to traders, including the ability to view trading history in the form of positions, with all deals related to a certain position grouped for easy comparison. Those who trade using multiple monitors will also benefit from the ability to detach financial symbol charts from the main trading terminal window, giving them more flexibility in terms of how they follow the market.

However, technology also has its pitfalls. One of the tips forex traders are often told is to avoid ‘trading the news’ – this means eschewing the temptation to indulge in knee-jerk trades because of geopolitical developments. Of course, today’s 24-hour news cycle doesn’t help matters here, so forex brokers must encourage traders to take a long-term view.

Although forex brokers shouldn’t trade the news, they must certainly keep an eye on it

Throughout 2020, as new digital solutions enter the forex market, traders will have to remember that technology cannot do all the hard work for them. While there are useful tools for identifying trading opportunities, performing technical analysis and following market developments, they are no substitute for experience and a willingness to learn.

A shift in focus
Although forex brokers shouldn’t trade the news, they must certainly keep an eye on it. Geopolitical developments can help traders determine which currency pairs to trade and which ones to avoid. Looking at the year ahead, there is much uncertainty for forex traders to ponder.

The ongoing trade dispute between the US and China will continue to have a huge impact on the values of various currencies. Perhaps most notably, forex speculators may want to steer clear of the Chinese yuan, unless signs of a resolution start to emerge. The COVID-19 pandemic will also affect global economic development throughout the year and is likely to send traders scrambling to safe-haven currencies such as the Japanese yen and the US dollar. The forex market will be watching intently to assess the extent of the economic damage and whether there are any signs of the virus abating.

Similarly, the US presidential election in November will surely influence the forex market. Traders interested in US dollar markets will need to examine the probable Democratic nominee before assessing the likelihood of that individual beating incumbent Donald Trump at the ballot box. Of course, with so many unknowns in this particular market, traders could simply choose to look elsewhere.

Many forex platforms will offer support to traders who are seeking to explore new markets. They will have a firm grasp of the events that are likely to affect currency pairs in the year ahead, while stressing that nobody can say with certainty what the future holds. It’s for this reason that the best forex firms are keen to emphasise the inherent risks of playing the market. For example, the ability of individuals to employ leverage – essentially borrowed funds – to complete their trades offers the promise of higher profits, but can also significantly amplify losses.

As we move further into 2020, the forex market will undoubtedly experience more unexpected twists and turns, providing traders with new opportunities to make – or lose – money. The most reliable, efficient and honest forex firms will support their customers without being didactic. The World Finance Forex Awards 2020 celebrate the organisations that make it as easy as possible to enter the exciting world of forex – for new and experienced traders alike.

World Finance Forex Awards 2020

Best Cryptocurrency Broker
101investing

Best Partnership Programme
ACY Securities

Best Trading Conditions
BDSwiss

Best Forex CFD Provider
ETFinance

Best Liquidity Solution
FXSpotStream

Best Trading Experience
FXTM

Most Transparent Broker
HFTrading

Best Mobile Trading App
HYCM

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Libertex Group: experienced brokers are essential when navigating volatile markets

Posted on March 30, 2020March 23, 2020 by Max Tomlin

As we embark on not only a new year but also a new decade, volatility seems to be the order of the day. And it isn’t just the markets that find themselves in a state of flux: paradigms are shifting and new powers are rising in both the political and financial spheres. It is becoming increasingly obvious that the US’ days as the de facto global superpower are nearing an end as a star rises in the East.

Meanwhile, cryptocurrency is emerging as the new safe-haven asset, with many in crisis-stricken countries now favouring digital assets over traditional stores of value, such as gold and bonds. Global growth is projected to increase to 3.3 percent in 2020 – up from 2.9 percent in 2019 – but with such unpredictability across the board, anything could happen.

Feeling the tension
It’s virtually impossible to remember a time when the Middle East wasn’t the subject of strained relations, but the current situation is of particular concern given the strength of the two belligerents. US-Iranian relations have been at an impasse since Shah Mohammad Reza Pahlavi was ousted in 1979. Following the Islamic Revolution, the long-lived conflict has essentially been a cold war with flashpoints at various intervals. Over the past couple of months, though, we have witnessed the most serious rise in temperature for some time.

It all began at the tail end of 2019, when Iran attacked an Iraqi base, killing one US civilian and several service personnel. The conflict only escalated from there and appears to have reached a point of no return with the assassination – authorised by US President Donald Trump – of Iran’s highest-ranking intelligence officer, Qassem Soleimani, on January 3.

Uncertainty around the US-China trade dispute has hurt businesses and weighed on the economy

Following the drone strike, the price of oil skyrocketed amid fears of all-out war between the two producers. Subsequently, there was a rapid correction once it became clear that neither side was ready to take such a step.

A war on two fronts
Iran hasn’t been the only target of Trump’s wrath since he took office in 2016. In fact, China and the US have effectively been in a trade war for the past 21 months. Trump has been an enduring critic of China, accusing the East Asian nation of unfair trading practices and intellectual property theft on an industrial scale. At the same time, many in China feel the US is trying to halt its rise as a global economic power.

The US has imposed tariffs on over $360bn of Chinese goods in three phases, the first of which was implemented in July 2018. China has retaliated with tariffs on over $110bn of US products, according to the BBC. Negotiations continue, and in January the two sides signed a preliminary deal. Nevertheless, there are several serious sticking points, and we could still be some way off a mutually satisfactory resolution.

Uncertainty around the trade dispute has hurt businesses and weighed on the global economy. While there’s no doubt China has borne the brunt of the damage from the trade war, US farmers have also suffered greatly – not to mention the average American consumer, who has been forced to pay higher prices for a wide variety of Chinese goods. And while US stocks have done well in recent months, one can’t help but feel that a mutually beneficial trade deal would translate to even greater growth.

Seemingly unsatisfied with engaging in just the one conflict, the Trump administration is now squaring off with the world’s largest trading bloc: the EU. In October 2019, the US Government announced tariffs on $7.5bn worth of European goods, including cheese, wine, olives and many more staple exports.

Most recently, the US has reacted to France’s plan to tax technology companies, such as Google and Amazon, by threatening new tariffs that would see the price of French wine double. Meanwhile, Trump continues to try and garner support for the US’ position on Iran by using European cars as a bargaining chip. Naturally, any tariffs on the EU automobile sector would hit German auto stocks hard, with the knock-on impact likely to see the DAX – the stock market index comprising 30 major German companies – fall significantly.

But it isn’t just the EU that would suffer if things got out of hand. Indeed, International Trade Centre Executive Director Arancha González has predicted a global recession in the event of a full-blown EU-US trade war. Needless to say, such a scenario would be bad news for the world’s indices, with commodities also suffering due to reduced energy demand.

The great unknown
On November 3, 2020, US citizens will return to the polls for the 59th US presidential election, and Trump will doubtlessly be hoping he can ride the coattails of the S&P 500 into a second term. With the country’s finances tipped to improve in 2020, he could succeed – as we all know, incumbents always fare well when the economy is doing well. Having been acquitted in his impeachment trial earlier this year, Trump will go into the election with a record number of people working and unemployment near 50-year lows, according to the US Bureau of Labour Statistics.

His opponent is yet to be determined at the time of World Finance going to print, but one feels that anyone other than Bernie Sanders would have a hard time dethroning ‘the Donald’. After all, the world has been very clear in pretty much every major democratic exercise since 2016: it has had enough of substanceless centrists. Sanders’ potential path to success could lie in galvanising the American left in a crusade against Trump’s rightist populism.

While analysts suspect Joe Biden is the more likely candidate at this stage, the possibility of a Sanders victory must be considered. It would likely see US stocks fall substantially; this could prove to be a knee-jerk reaction that is quickly corrected, or it might just herald the start of a protracted downtrend. Under a Sanders administration, CEO confidence would surely plummet given the stark contrast between Trump’s low-tax, business-friendly policies and Sanders’ fiscal proposals.

Conversely, if Trump can secure a second term, we should expect the markets to respond favourably, with the US dollar likely to strengthen against other major world currencies. And as the eurozone remains in serious difficulty – with the potential for further aggravation by Trump’s trade stance – the euro may well edge even closer to parity.

Starting block
In a world that seems balanced on a knife edge, the question is, where can investors turn for low-risk value storage? Since time immemorial, the go-to safe-haven asset has been gold. It’s easy to see why, when everything about the precious metal screams stability, constancy and immutability – even its position in the reactivity series. Unsurprisingly, the precious metal has enjoyed relatively strong growth commensurate with the increase in geopolitical tensions. And in all likelihood, it will remain a significant portion of any risk-off investor’s portfolio for years to come – it’s just that now there’s a new show in town.

As the threat of economic downturn and currency volatility becomes very real for many, more people are turning to an unlikely safe-haven asset in cryptocurrency, principally bitcoin. It’s perhaps unsurprising, then, that the countries where we are seeing the fastest and most frenzied adoption of digital currencies are those with rampant inflation, serious political instability, high levels of insecurity or any combination of the above.

January saw bitcoin increase significantly in value (see Fig 1) and, with the per-block mining reward set to halve in May, we can expect bitcoin to continue onwards and upwards in the coming months. This gives potential buyers in crisis zones even more reason to buy now, providing them with the chance of not only protecting their savings but growing them too. And it would appear that this is what is happening: our latest data shows that demand for bitcoin has exploded in the Middle East, coincidentally one of the major crisis regions in the world right now.

Like gold, the Swiss franc has always been a favoured retreat for panicked investors preparing for hard times. In fact, a study by economists at the Deutsche Bundesbank found that the Swiss franc strengthened significantly during every major financial downturn between March 1986 and September 2012. The reasons for this are diverse, but it is undeniable that investor confidence in the government and the Swiss National Bank (SNB) has been – and remains – very high.

During the global financial crisis of 2008, the Swiss franc appreciated so much against the euro that, in a bid to keep its nation’s exports competitive, the SNB felt compelled to prop up the euro to maintain an exchange rate of at least 1:1.20. Prompted by popular discontent with this policy, the Swiss regulator announced in 2015 that it would no longer be providing support for the euro. Therefore, should financial turmoil rear its ugly head once more, there would be nothing to limit the Swiss franc’s growth against other major currencies.

Deciding to put your money to work instead of sitting on it and watching its value slowly evaporate may be sensible, but choosing to invest is just the first step – you still need to pick a broker to manage your portfolio. And while you may have a range of criteria in mind, first among them should always be reliability, experience and honesty. With more than 20 years of market experience and a host of international awards under its belt, Libertex ticks all of the boxes. And because you can trade short or long, you’ll always be able to make money whatever happens in the markets.

World Finance Pension Fund Awards 2020

Posted on March 30, 2020March 25, 2020 by Max Tomlin

The world’s population is rapidly getting older. Medical advances are prolonging life expectancy, while changing economic and social conditions are causing many to postpone having children until later in life. By 2050, the number of people aged 60 and over is predicted to total two billion, a huge rise compared with the 900 million registered in 2015.

For pension funds, this provides a huge opportunity, but one that will surely ramp up competition. In a market where the demand for pension products and services has never been higher, it will be up to individual companies to stand out from their competitors by embracing different ways of working and keeping track of new technologies.

Businesses that can make the most of the opportunities being created by shifting global demographics will flourish. The World Finance Pension Fund Awards 2020 shine a light on the organisations that are exploring ways to offer products and services that allow their customers to enjoy a fulfilling life long into old age.

Reliable returns
Pension funds do not always have the best reputation. This is not because they are viewed as risky or ethically dubious – quite the opposite. Rightly or wrongly, pension funds are sometimes seen as boring, failing to capture the imagination of investors in the same way that venture capital or real estate might. Nevertheless, pension funds provide a vital service and, more often than not, solid returns.

Across the globe, the way state pensions are administered has been rethought to cope with the ageing populace

It was something of a surprise, therefore, to read of several major pension funds causing agitation earlier this year, after criticising the culture of ‘short-termism’ pursued by firms and asset managers. In an open letter, business leaders from the California State Teachers’ Retirement System, USS Investment Management and the Japanese Government Pension Investment Fund hit out at individuals who continue to question the importance of sustainability in the investment world.

“As asset owners, our ultimate responsibility is to provide for the post-retirement financial security of millions of families across multiple generations,” the letter reads. “Since our commitment to providing financial stability spans decades, we do not have the luxury of limiting our efforts to maximising investment returns merely over the next few years. If we were to focus purely on short-term returns, we would be ignoring potentially catastrophic systemic risks to our portfolios.”

The letter is part of a growing trend within the pension fund space that takes environmental, social and governance (ESG) issues very seriously. This is not only driven by concerns about reputational risk; it also reflects the opinions of a growing number of pension fund contributors. According to research undertaken by the UK’s Department for International Development, 68 percent of respondents believe their investments should be driven by ESG considerations, while 57 percent want to learn more about how their pension savings impact others and the planet.

The old and the new
Although pension funds may not initially come to mind when talking about innovations in the finance industry, this particular sector has been quick to embrace digital technologies. Automatic enrolment solutions have made it easier than ever for employers to fulfil their pension obligations to members of staff and regulators.

In addition, many pension funds are increasingly utilising machine learning to improve engagement and deliver greater levels of personalisation. The huge quantity of personal data that is now available to financial advisors can provide customers with a more bespoke pension plan – one that takes into account their current financial situation, future goals and ultimate saving aim.

In addition to raising the retirement age, governments and businesses should look at creating more employment opportunities for older individuals

Artificial intelligence is also being employed by fund managers to deliver better returns. For example, Japan’s Government Pension Investment Fund has begun using Sony’s deep learning systems to track and analyse its portfolios. Although the technology is only being employed on a trial basis, a number of interesting trends have already been identified, particularly when asset managers start to drift from their usual investment parameters.

Along a similar vein, pension funds are using artificial intelligence (AI) to improve communication. AI chatbots can offer advice and information to savers through reliable and efficient digital portals, helping to prevent disengagement.

As pension funds increasingly turn to data as a method of gaining a competitive advantage, they are also likely to find themselves targeted by cyberattacks. This data offers lucrative returns for criminals and it will be up to each fund to ensure they have the appropriate safeguards in place. Just last year, the Oklahoma Law Enforcement Retirement System was the victim of a cyberattack that resulted in the loss of $4.2m.

Technology offers huge benefits for pension funds and their customers, but it should always be deployed carefully. Phishing, malware and remote access attacks are just a few of the methods that cyberattackers are likely to employ. It is important that fund managers are prepared for them.

Making adjustments
Across the globe, the way state pensions are administered has been rethought to cope with the ageing populace. This was felt most prominently in Brazil, where a long-debated breakthrough in pension policy was finally made last year. Attempts to reform the pension system in the country have been under discussion for two decades but have always proved politically unfeasible. Doing nothing, however, was set to become economically impossible too – in 2017, the Brazilian Government was forced into a budget deficit of $61.3bn in order to meet its pension obligations.

It was with some relief, therefore, that President Jair Bolsonaro announced the Brazilian Senate had approved his proposed changes to the country’s pension system in October. The retirement age would be raised to 65 for men and 62 for women – a change that is estimated to save the Brazilian state almost $200bn over the next decade. As the benefits of a state pension diminish, private pension funds based in the country may find that their customer base widens.

Across various other countries, there have been calls to increase the state pension age, with differing reactions. Although there is an acceptance that longer life expectancy will inevitably put a strain on social welfare schemes, telling people that they must work further into their old age is a sure-fire vote-loser among the elderly. In addition to raising the retirement age, governments and businesses should look at creating more employment opportunities for older individuals: many people retire not out of choice, but because the job market can be unwelcoming.

Pension funds also have a role to play in helping countries cope with their ageing populations. Currently, the market for private pensions remains underdeveloped – it accounts for just six percent of total pension expenditure across the eurozone. Rectifying this would help reduce pension shortfalls in the future, lessening the social burden placed on governments.

As the pension sector reacts to demographic and technological change, funds will have to adapt in order to deliver the best levels of service for their customers. The World Finance Pension Fund Awards 2020 recognise the organisations that are already achieving this, setting new standards as the industry moves forward.

World Finance Pension Fund Awards 2020

Armenia
Ampega Asset Management

Austria 
VBV-Pensionskasse

Belgium 
Pensioenfonds UZ Gent

Bolivia
BISA Seguros y Reaseguros

Brazil
Bradesco Seguros

Canada
Royal Bank of Canada

Caribbean
NCB Insurance

Chile
Grupo Sura

Colombia
Grupo Sura

Croatia
PBZ Croatia Osiguranje

Czech Republic 
KB Pension Company

Denmark
Velliv

Estonia 
Swedbank

Finland
Elo

France
ERAFP

Germany
Allianz

Ghana
Pensions Alliance Trust

Greece
Alpha Trust

Iceland
Gildi

Ireland
Zurich

Italy
Fondo Pensione Nazionale

Macedonia
Sava Penzisko

Malaysia
Gibraltar BSN

Mexico
Afore XXI Banorte

Mozambique
Moçambique Previdente

Netherlands
PFZW

Nigeria
Fidelity Pension Managers

Norway
Velliv

Peru
Prima AFP

Poland
Pocztylion-Arka PTE

Portugal
Banco Santander Totta

Serbia
Dunav Voluntary Pension Fund

South Korea
National Pension Service

Spain
Pensions Caixa 30

Sweden
AP4

Switzerland
CPEG

Thailand
Kasikorn Asset Management

Turkey
Yapi Kredi Asset Management

US
CalPERS

World Finance Corporate Governance Awards 2020

Posted on March 30, 2020June 13, 2023 by Max Tomlin

In 2019, Time magazine named Greta Thunberg, a young climate activist from Sweden, as its Person of the Year. The award recognises the impact that Thunberg has made in bringing the climate crisis to a wider audience – an audience that now includes businesses, which are well aware that many customers will no longer put up with firms that prioritise profit over the planet.

Today, environmentalism is a strategic goal for many organisations. However, it is not the only imperative that firms are following: good corporate governance comes in many forms, and businesses all over the world are realising how essential it is to long-term success. Far from being a form of moral posturing, corporate governance can help organisations achieve regulatory compliance, retain their best members of staff and attract new customers. The businesses that have been included in the World Finance Corporate Governance Awards 2020 understand this better than most.

To good purpose
In the year ahead, the companies that truly have a grasp on corporate governance issues will convey to all their stakeholders – investors, employees and customers – that they are working with a sense of purpose that is greater than profit.

This purpose can take any number of forms, but increasing the focus on environmental, social and governance (ESG) issues is likely to prove essential. In its 2020 Global and Regional Corporate Governance Trends report, the Harvard Law School Forum on Corporate Governance and Financial Regulation identified a shift in priorities for many businesses in this area.

Far from being a form of moral posturing, corporate governance can help organisations achieve regulatory compliance

“For the first time, in 2020, we see the focus on the ‘E’ and the ‘S’ of [ESG] as the leading trend globally, including in the US, where it traditionally has not received as much attention by boards,” the report read. “Indeed, many of the key global trends for 2020, such as board oversight of human capital management, can be seen as subsets of ESG.”

Organisations like the Task Force on Climate-related Finance Disclosures are only likely to grow in prominence, providing firms with advice on how to increase transparency in terms of their climate-related information. As we move further away from the signing of the Paris Agreement in 2016, and with the likelihood of organisations meeting their commitments becoming increasingly slim, the pressure on companies to live up to their green credentials will grow.

Nevertheless, old-fashioned governance will remain important throughout 2020. Some of the main regulatory challenges for the year ahead include how financial firms will adjust to the end of LIBOR and new data protection regulations, which will only intensify as the use of technology becomes more entrenched in all areas of the economy.

Avoid disruption
For businesses, good governance can easily be undermined by high employee turnover – it’s hard to maintain a position, morally or ethically, without consistent personnel. This is, of course, especially true of leadership positions.

Last year exhibited a general uptick in executive churn, with the third quarter seeing a record number of CEO departures. Businesses would do well to avoid such high levels of turnover again, focusing their efforts on recruiting leadership candidates with a long-term vision that chimes with the company’s ethos. Of course, departures are an inevitable part of corporate life, so organisations should put a contingency plan in place. Appointing an emergency or temporary CEO is one way of avoiding unnecessary disruption.

When recruiting, companies will also find themselves under pressure to improve diversity at the C-suite level and below. In the US, investment advisory groups like Vanguard will continue to promote the benefits of diversity at board level in terms of decision-making and financial results.

With rising levels of inequality seen across the western world and questions of sustainability never far away, capitalism is certainly showing cracks

For companies that want to enjoy these benefits, once again, transparency is important. Businesses are encouraged to publish their perspectives on diversity, their approach to board evolution and any results they’ve measured thus far. Broadening their candidate search will prove useful in this regard. Diverse voices provide businesses with new ideas that might deliver the competitive edge they require.

Although many markets, such as Spain, France and Norway, have laws in place mandating that a certain percentage of board members must be female, for example, progress has been slower elsewhere. There is also criticism that such regulations can turn diversity into a box-ticking exercise. Rather than following the lead of governments, businesses should take a proactive approach to diversity, whether in terms of race, gender, age or any other characteristic. It is, after all, in their best interests; the World Economic Forum reports that higher levels of diversity improve innovation and financial performance.

The stakes are high
For many years, shareholders have been the dominant voice when it comes to determining company policy, whether that is in terms of recruitment, acquisitions or, indeed, corporate governance. However, the year ahead promises to see businesses increasingly move away from this approach to embrace a model of stakeholder capitalism instead. This will mean taking into account public opinion before adopting any corporate policy changes.

With rising levels of inequality seen across the western world and questions of sustainability never far away, capitalism is, if not yet in crisis, certainly showing a few cracks. Businesses have a responsibility to address this, and it is something they have been taking more seriously of late.

Earlier this year, the World Economic Forum published a framework aimed at creating a new form of capitalism centred on the importance of all stakeholders. This was structured around seven pillars: defining corporate purpose; governance mechanisms; corporate risk management; regulation and corporate adaptation; governing disruption; balancing a long-term vision with short-term needs; and cultivating trust.

Committing to the UN’s 2030 Agenda for Sustainable Development will also help businesses adopt the type of policies that benefit wider society and the environment. Although 2030 is a decade away, organisations cannot afford to be complacent. Many of the agenda’s sustainable development goals, including those related to poverty reduction and promoting inclusive societies, will not be easily or quickly achieved.

It is clear that the companies taking corporate governance seriously have already put a number of ESG measures in place. Far from being a knee-jerk reaction to shifting customer trends, these are part of a long-term mission that will benefit customers, investors and employees.

As we move through 2020, regulatory challenges, environmental hurdles and social change will give plenty of businesses pause for thought. Those that react decisively but with careful due diligence are the most likely to achieve long-lasting success. These are the firms that we have highlighted as part of this year’s World Finance Corporate Governance Awards.

World Finance Corporate Governance Awards 2020

Best corporate governance

Angola
Banco Económico

Brazil
Itaú Unibanco

Cambodia
Phnom Penh Special Economic Zone

Canada
Interac

Colombia
Bancolombia

Cyprus
Bank of Cyprus

Denmark
Maersk

Ghana
Databank Group

Hong Kong
COSCO Shipping Ports

Israel
Caesarstone

Jordan
Jordan Islamic Bank

Malaysia
FGV Holdings Berhad

Nigeria
FBN Holdings

Norway
Aker Solutions

Panama
Bladex

South Africa
African Rainbow Minerals

Spain
Iberdrola

Turkey
Şekerbank

UK
Smith and Nephew Plc

US
Avangrid

Best ESG strategy

Russia
Sovcombank

Trading boom brings some relief for coronavirus-hit investment banks

Posted on March 25, 2020 by Ashton Wenborn

Investment banks have seen record trading volumes in the first quarter of the calendar year, particularly in rates, equities and currencies, as the COVID-19 crisis continues to stoke market turmoil. Analysts told the Financial Times that market revenues could increase by as much as 30 percent due to volatility.

The past few weeks have reportedly been the busiest traders have seen since the 2008 financial crisis. According to data from trade organisation SIFMA, an average of 9.3 billion shares were exchanged on US stock markets in February – the highest level of activity since December 2018 – while trading venues such as CME Group and Intercontinental Exchange reported record one-day volumes.

Market turmoil often leads to sudden shifts in asset prices, which helps traders to drive profit

Market turmoil often leads to sudden shifts in asset prices, which helps traders to drive profit. But the gains made by investment banks are likely to be short lived.

Currently, banks are bracing for a gruelling year. The freeze in global merger and acquisition activity could put a serious dent in revenues. As a result, Citigroup analysts said in a note to clients on March 23 that they expect major investment banks to report lower revenues this year. To make matters worse, working from home could present a problem for investment banks’ traders, who need to sit together on a monitored trading floor in order to meet regulatory rules.

More broadly, financial markets continue to suffer. Late in February, the S&P 500 Index fell 11 percent in just five days and the Dow Jones Industrial Average dipped to its lowest point since June 2019. Heightened market volatility highlights the significant uncertainty around how much damage COVID-19 will cause and how long its impact will endure. The best-case projections of large investment banks all depend on the virus’ early containment.

Mexico’s opportunities outweigh tax complexity and regulatory uncertainty

Posted on March 23, 2020 by World Finance

Luis Gerardo Del Valle Torres is managing director of Mexican Law Firm Jáuregui y Del Valle, and author of The Mexican Federal Tax System – Its review under Economic and Legal Principles. In the book he identifies a number of Mexican taxes that disincentivise investment, and suggest they should be revised – but far from easing the compliance burden, Mexico is making international investment more complex. But so is the rest of the world, argues Luis; and Mexico offers greater foreign investment returns that outweigh the uncertainty.

World Finance: Luis, Mexico’s tax system is notoriously complex – what do international investors need to understand?

Luis Gerardo Del Valle Torres: Well, that is right Paul – but all tax systems are complex in the world. And the bad news is that it’s just getting worse.

The OECD has come up with BEPS – Base Erosion Profit Shifting – and that just makes the rules much more complex everywhere.

But Mexico offers higher returns than many other countries do.

Mexico does offer less regulations than other countries do – and that creates more uncertainty. But if you have the right advice, the system is not necessarily more uncertain, because then you’ve got the experience of people that know and understand how the system works.

World Finance: How do international investors typically approach Mexico? What investment vehicles are popular?

Luis Gerardo Del Valle Torres: We have to consider that Mexico is a civil law country. Certain features exist so that international vehicles – JV, Joint Venture vehicles – may be used for investors to participate in, have non-Mexican law applicable, and so get the internal rate of returns that are expected, and still have foreign law applicable.

Investors generally feel more comfortable applying the law of their own jurisdiction – so generally the idea is to find a jurisdiction that is friendly to the country where the investors are based, and that actually has the appropriate links with Mexico. That is what we generally focus on.

World Finance: In your book you identify a number of taxes that disincentivise investment, and suggest they should be revised?

Luis Gerardo Del Valle Torres: That’s right, Paul. For example, there is this provision in the OECD Base Erosion Profit Shifting actions that disallows interest deductions with related parties when they exceed a certain percentage of EBITDA. Mexico is now disallowing interest deductions – but not necessarily with related parties or when paid abroad, but in any situation. So that just puts companies that are in favour of leveraging in a difficult position.

Mexico is as well frequently revising the tax treatment of foreign vehicles that are treated as tax transparent. This transparency is actually key to create joint venture vehicles that will then invest in Mexico – and when these provisions are revised, sometimes this is not taken into consideration.

So you have to learn to navigate in the tax system, as in any other country.

World Finance: But despite these complications, Mexico does remain a jurisdiction full of investment opportunities?

Luis Gerardo Del Valle Torres: Definitely. There are huge investment opportunities; tax systems are complicated everywhere, and Mexico offers foreign investment greater return than many other countries do.

The US is still the largest economy in the world – that proximity gives us certain advantages.

Mexico still has salaries that are lower than those in the US, and that represents an advantage. But it’s not only that: we’ve created a workforce that is very talented, and that has grown in its technical capabilities. So there is a lot of investment in manufacturing, aerospace, automotive; fintech is quickly growing in Mexico. But also when you see the returns, for example, that you get when investing in real estate projects, hotels, condos; these greater returns make up for that complexity and that uncertainty that you can navigate when you have the right advice.

World Finance: Luis, thank you very much.

Luis Gerardo Del Valle Torres: Thank you Paul.

A world of hurt: how pandemics such as COVID-19 affect the global economy

Posted on March 20, 2020July 3, 2020 by Max Tomlin

While the world only became aware of COVID-19 on December 31, 2019, the first person known to have contracted the disease fell ill about a month earlier. Much is still unknown about patient zero and how they came to be infected, but a study by Chinese researchers suggested the individual had no connection to the wet market in Wuhan, China, that was initially identified as the source of the outbreak. One thing is certain: for a month, the novel coronavirus was allowed to spread unhindered, seeping into China’s towns and cities and laying the foundations for a global public health emergency.

Since then, COVID-19 has spread far beyond China’s borders. At the time of writing, more than 253,085 people have been infected worldwide and around 10,406 have died. Japan has closed all of its schools to prevent the virus from spreading, while Italy, France and Spain have gone into lockdown. Other countries around the world warn they will have to take similar measures.

“If some do not do everything that is needed, this can still become out of control, with dramatic consequences in global health and the global economy,” UN Secretary-General António Guterres told reporters during a visit to the World Health Organisation’s (WHO’s) centre for managing emergencies on February 24.

With China so integrated into the world’s supply chains, COVID-19’s impact on businesses has been sprawling and indiscriminate

As a result of the outbreak, the OECD warned on March 1 that global growth could halve this year compared to its previous forecast. Meanwhile, Oxford Economics, a global forecasting and quantitative analysis company, estimated that the virus could cost the global economy $1.1trn in lost income in 2020. COVID-19 has made it painfully clear that pandemics not only pose a huge risk to human life, but to the economy, too.

Fits and starts
In the event of an outbreak, there is a heavy price to be paid for silence. In 2003, it took China about four months to announce the emergence of severe acute respiratory syndrome (SARS), another coronavirus, to the public. According to one estimate, China’s economy slowed by around one to two percentage points that year due to the outbreak and its mishandling.

SARS caught China off guard. Since then, Beijing has improved its healthcare surveillance systems, establishing the China Information System for Disease Control and Prevention, which connects hospitals and clinics, and reports outbreaks in real time. Despite what it recognised as “shortcomings and deficiencies” in its response to COVID-19 (a rare admission of guilt from the Politburo Standing Committee), China has responded relatively well to the outbreak, sequencing and sharing the coronavirus’ genomic data in just 10 days.

It has also implemented the biggest quarantine in history: approximately 45 million people are now on lockdown across 16 Chinese cities. Photographs of Wuhan show empty roads, dormant airports and eerily quiet subway carriages. These images speak volumes about what’s happened to business activity and consumer spending in the region. “The epidemic and associated containment measures create both a demand and supply shock to the Chinese economy,” Francoise Huang, Senior Economist for Asia-Pacific at Euler Hermes, told World Finance. “On the demand side, consumer spending was hit at a usually busy period – the Lunar New Year holidays – putting pressure on the tourism, entertainment and retail sectors.”

Chinese businesses have been hit hard by the quarantine. In February, China’s manufacturing Purchasing Managers’ Index slowed to an all-time low of 35.7, with factory activity contracting at its fastest ever pace. The country’s service sector also witnessed the sharpest activity decline in its history.

Hong Kong International Airport on February 14, 2020. The COVID-19 pandemic has left many streets, subways and airports eerily quiet, with many countries imposing travel restrictions

Under lock and Xi
The quarantine is one of the oldest defences we have against the spread of infectious diseases. It was first used as a protective measure during the 1300s plague pandemic. As the Black Death raged through Europe, city-states imposed sanitary cordons at access points. In Venice, authorities took special precautions against maritime travellers and traders – if a ship was suspected of carrying the bubonic plague, its captain was taken by lifeboat to the health magistrate’s office and kept in an enclosure where they would relay information about the health of the crew through a window. If the magistrate concluded the disease had snuck aboard, the captain and crew were taken to a quarantine centre where they’d spend the next 40 days. There was no medical treatment for the bubonic plague; it was simply a case of waiting to see if they survived.

When the WHO declared COVID-19 a worldwide emergency, it specified there was no need for measures that “unnecessarily interfere with international travel and trade”. Although this may seem like bad advice, public health experts have several reasons to be wary of quarantines and travel bans. For one thing, many consider quarantines to be an inhumane, medieval practice. Almost invariably, uninfected people under quarantine have a higher risk of catching the disease. This was evident when the Diamond Princess cruise ship was placed under quarantine after someone on board tested positive for COVID-19. When it eventually docked, more than 700 people had caught the virus.

Second, as China’s current financial data suggests, the necessity of quarantines and travel bans is a question of huge economic significance. In the 14th century, a travel ban would have had a negligible impact on the economy; today, the global travel industry is worth an estimated $5.7trn and supports roughly one in 10 jobs worldwide. Further, many believe that travel bans are futile. In an interview with Wired, several public health experts – including Georgetown University’s Lawrence Gostin and Johns Hopkins Centre for Health Security’s Jennifer Nuzzo – observed that travel bans did nothing to control the spread of the influenza virus H1N1 in 2009. This is possibly due to unwitting individuals transporting the virus across the globe before the travel ban was implemented.

The sheer scale of the COVID-19 outbreak, however, may warrant aggressive measures, such as China’s quarantine. In the space of two weeks in February, the number of confirmed cases in the country dropped by more than 80 percent as China cracked down on controlling the spread. That said, some experts question whether these statistics are subject to political influence – one of President Xi Jinping’s most pressing aims is to restart the Chinese economy, and quelling panic would certainly help him achieve this.

Unhealthy profits
When SARS struck 17 years ago, China’s share of global GDP was just six percent; today, it’s closer to 17 (see Fig 1). As a result of this considerable increase, any economic shock to China – like that brought on by COVID-19 – is unlikely to stay within the country’s borders for long.

In an International Finance Discussion Paper, Federal Reserve researchers studied what a ‘hard landing’ – a combination of financial stress and a sharp fall in GDP – in China would mean for the rest of the world. It predicted there would be “consequential spillovers to the US and the global economy through both real trade links and financial channels”. With China so integrated into the world’s supply chains, COVID-19’s impact on businesses has been sprawling and indiscriminate. Those affected range from US tech giants to Thai shopping malls and Australian lobster-catchers.

According to data from the UN Conference on Trade and Development (UNCTAD), China is the world’s largest exporter of electronic components (see Fig 2). “A UK manufacturer who imports a certain component or material from abroad might not know the origin of that component – it could easily be from China,” Alejandro Alvarez, Partner of Operations Performance at Ayming, a consultancy specialising in supply chain and operations performance, said in a statement. In fact, Apple warned on February 17 that it was unlikely to meet its quarterly sales guidance in March due to coronavirus-driven production problems in China.

COVID-19 has confirmed what many public health officials already knew: most countries are woefully unprepared to tackle a pandemic

Some countries are particularly vulnerable to this supply chain disruption. In Asia’s emerging economies, more than one third of manufactured goods imports originate in China, according to the Financial Times. As Huang explained to World Finance, the countries most integrated with Chinese value chains are Taiwan and South Korea. South Korea has announced a $356m emergency plan to offer loans to companies that are struggling in the face of a virus-related economic slowdown.

Regardless of where a disease first emerges, some sectors are almost certain to suffer – namely, luxury goods and travel. China has a strong foothold in both of these industries, with McKinsey & Company reporting that Chinese customers accounted for one third of global spending in the luxury goods market in 2018. According to figures from AllianceBernstein and Boston Consulting Group, luxury brands could suffer a $33bn to $43bn hit this year due to reduced demand.

However, there are some industries that – morbidly – stand to gain from the spread of COVID-19. In the immediate aftermath of the outbreak, as stocks of travel-related and luxury goods companies fell, Chinese drugmakers and face mask producers outperformed. Between December 30 and January 13, the most popular face mask brand in China, 3M, gained $1.67bn in market value.

Another industry enjoying an unexpected boost is e-commerce. In Singapore, RedMart reported that online food orders had surged 300 percent in the wake of the coronavirus outbreak. Similarly, Alibaba Group CEO Daniel Zhang said COVID-19 had sparked “explosive growth” in the company’s chat, videoconferencing and task management tool, DingTalk, as more Chinese people opted to work from home.

Spreading panic
So far, what we know about COVID-19 suggests that it could travel much further and faster than other diseases that have recently made headlines, but with less-immediate consequences. According to the WHO, the fatality rate of Ebola is about 50 percent – people who contract it become severely ill and often die within the space of two weeks. This makes it relatively easy to diagnose and contain. By comparison, the mortality rate of COVID-19 is thought to be around three percent. The majority of people who get it won’t become severely ill and won’t die. What’s more, a person with Ebola can’t spread the virus until they develop symptoms – with COVID-19, they can. It’s difficult for someone not to pass on a highly contagious disease if they have no idea they’re infected.

Consequently, some analysts think containment is now impossible. According to James Hamblin, a writer for The Atlantic, many epidemiologists believe that COVID-19 could become a new seasonal flu and that “cold and flu season” may soon become “cold, flu and COVID-19 season”. Hundreds of thousands will potentially die from the disease every year, but the same is true of the flu. Although it may become a major public health burden, it is unlikely to kill huge swathes of the global population in one go.

As COVID-19 continues to dominate headlines, it’s easy for individuals to convince themselves that the threat to their life is serious and immediate. In a survey of 705 people in Hong Kong conducted at the height of the SARS epidemic, 23 percent of respondents feared they were likely to become infected with SARS. The real risk of infection was just a fraction of that, sitting at 0.0026 percent.

In the case of COVID-19, social media has played a key role in amplifying paranoia. “The days are largely gone when the only response to disease threats was a public health response to information exchanged between governments,” Charles Perrings, Co-Director of the School of Life Sciences Ecoservices Group at Arizona State University, told World Finance. “That is still there, but now it is complicated by the fact that individuals and firms are also responding to information shared through social media and the internet.” Put simply, social media hastens the spread of panic and misinformation around a virus, causing the global economy to haemorrhage money – according to Markets Insider, the S&P 500 lost 11 percent of its value over five days at the end of February, its worst weekly drop since the 2008 financial crisis (see Fig 3).

A perceived threat can often have a bigger economic impact than the virus itself. Even before it had confirmed its first case of COVID-19, Australia experienced a wave of panic-buying that left supermarket shelves empty. During an outbreak of H1N1 in Mexico, the mere perception of risk had negative repercussions for the economy: air travel to and from Mexico decreased by 40 percent and exports of pork declined dramatically, leaving the country with a pork deficit of $27m by the end of 2009. Similarly, when Peru disclosed an outbreak of cholera in 1991, its South American neighbours imposed bans on Peruvian food products. The subsequent $700m loss in exports ultimately exceeded the health and productivity costs of the epidemic.

Social media hastens the spread of panic and misinformation around viruses such as COVID-19 and SARS, causing the global economy to haemorrhage money

Prevention is better than cure
COVID-19 has confirmed what many public health officials already knew: most countries are woefully unprepared to tackle a pandemic. In fact, the Global Health Security Index concluded in 2019 that no country was fully prepared for a sudden outbreak. Financing efforts against infectious diseases is one of the major challenges.

In 2017, the World Bank seemed to take a big step towards overcoming this issue when it launched the world’s first pandemic financing mechanism, the Pandemic Emergency Financing Facility (PEF). Through the PEF, investors would cover developing countries against the risk of pandemic outbreaks. But Felix Stein, a senior research fellow at the Usher Institute of the University of Edinburgh and an expert in infectious disease response, believes the PEF is deeply flawed: “The public sector institutions paying for these bonds have a lower cost of capital than the private sector investors. So the public sector should just front its own money rather than paying private investors to do that, as that cost of capital will always be reflected in the coupons.”

As well as lacking in cost-effectiveness, the PEF is a complicated mechanism. “Investors and the global health community are currently having a hard time guessing at whether it will pay out for the coronavirus because the payout modalities – including decisions over when and to whom payments are made – are so complex,” Stein told World Finance.

In 2016, the Commission on a Global Health Risk Framework for the Future stated that committing $4.5bn every year to tackling pandemics would make the world much more resilient. This may seem like a huge expenditure, but considering the World Economic Forum pegs the annual cost of a pandemic at $570bn, it’s highly cost-effective. The real problem is ensuring the money is spent in the right way.

The lack of sanitation and health surveillance in one country isn’t an isolated problem – it’s a health risk to the world

“What the coronavirus shows is that pandemic preparedness is not first and foremost financial in nature,” Stein said. “When we look at the living conditions of the people most vulnerable to infectious disease around the globe, the first thing that comes to mind is not that they need insurance. People at risk need health systems that can spot and treat infectious disease, as well as [provide] access to clean water, sanitation and correct information about how to protect themselves.”

The meat industry is one area where greater hygiene and health surveillance is urgently needed around the world. In China’s wildlife markets, where COVID-19 is reported to have emerged, snakes, civet cats and wolf cubs are kept together in cramped conditions, facilitating the rapid exchange of viruses from one species to another.

The risk of viral exchanges between animals and humans – known as a ‘zoonotic spark’ – is rising around the world, and growing demand for meat is one of the principal causes. High levels of zoonotic spark have been found in West and Central Africa, as well as South and South-East Asia, where livestock rearing is rapidly intensifying. Zoonotic diseases tend to be the most threatening to humans, as we have no prior immunity to them and globalisation makes them very difficult to contain.

“The effect of air travel on the spread of human infectious diseases is very well documented, but we also see the same relation between trade and the spread of animal and plant diseases,” Perrings told World Finance. “The number of new pests and pathogens introduced in any one country goes up with both the number of trading partners it has and the volume of trade with each partner.” In short, the lack of sanitation and health surveillance in one country isn’t an isolated problem – it’s a health risk to the world. “The protection to all countries is only as good as the protection offered by the least effective country,” Perrings added. “The global nature of the problem demands a global response.”

Historically, the response to pandemics has seesawed between negligence and panic. A new infectious virus explodes onto the scene and authorities hunt desperately for a vaccine. All too often, though, the virus subsides before a vaccine is developed – in June 2004, Berna Biotech announced it had stopped trials of a SARS vaccine because it was no longer seen as a priority. The cycle then repeats itself, with research and development sidelined until the next health scare surfaces. COVID-19 is a timely reminder that prevention is far less costly to human health and the economy than the cost of leaving it all too late.

All information in this article is up to date as of March 20, 2020.