Providing businesses with peace of mind in Nigerian waters

A country’s territorial waters provide vital resources. They allow for the importation of valuable goods, enable fishing industries to flourish and often host lucrative oil and gas installations. The wealth that is derived from these waters, however, can make them targets for criminals.

A high level of security is essential for the broader Nigerian economy

In Nigeria, concerns over illegal maritime activity have been growing for some time. Last September, a Swiss cargo ship was attacked off the country’s southern coast, with 12 of the crew taken hostage. Unfortunately, this was not an isolated incident. Between January and March 2018 alone, 22 incidents of piracy were recorded in Nigerian waters. The importance of having robust maritime security in place has never been greater.

At Aquashield Oil and Marine Services, we have years of experience protecting marine vessels and offshore industries. Accredited by various regulatory bodies, including the Nigerian Navy and the Nigerian Ports Authority, we have gained a reputation for delivering excellent service while maintaining the highest ethical standards. As the threat facing coastal and maritime businesses in the Niger Delta intensifies, we remain committed to combatting instances of vandalism, kidnapping and piracy.

Security solutions
Aquashield Oil and Marine Services is a wholly owned Nigerian company specialising in maritime security, logistics and support services, offshore construction, and dredging services. Aquashield’s vision is to be the leading maritime security firm not only in Nigeria, but in the whole of Africa. Our mission is to provide cutting-edge and innovative maritime solutions to our clients, centred on professionalism, exceptional service delivery and integrity.

22

incidents of piracy were recorded in Nigerian waters between January and March 2018

9%

of Nigeria’s GDP comes from oil

Our provision of maritime security solutions was necessitated by an upsurge in militancy between 2007 and 2008 in Nigeria. This threat level is fluctuating constantly, meaning that businesses can’t become complacent, even when security challenges appear to be subsiding. Our highly dedicated workforce, comprising a number of senior security experts, teamed with our high-quality technological capabilities ensures that we can deliver the first-rate security solutions that our clients expect.

Aquashield is one of few companies to have been recently recertified to provide maritime security solutions to a variety of oil and gas companies, shipping corporations and oil servicing firms in Nigeria. A high level of security is certainly necessary for these businesses to prosper, but it is also essential for the broader Nigerian economy.

Oil represents around nine percent of Nigeria’s GDP, and this figure could conceivably increase in the coming years if more reserves are discovered. However, convincing investors to commit to further exploration projects is difficult when security fears persist. In order for Nigeria to make the most of its vast economic potential, security services like those offered by Aquashield are absolutely essential.

Tools of the trade
Whichever service we are delivering, our highly professional members of staff and consultants follow clear operational guidelines. We often work closely in tandem with our clients, covertly gathering maritime intelligence that is then shared with a company’s security department or relevant government agencies.

We also offer the marine transportation of materials and crew to offshore locations, search and rescue operations, offshore oilfield protection, and armed security escort duties for mobile offshore platforms and ships. Harbour terminal security surveillance and protection can also be requested.

We currently operate a fleet of anti-ballistic, fuel-efficient patrol boats with all the attributes expected of a robust maritime security squad. We also have more than 30 associate patrol vessels tied to our fleet through partnership arrangements with national and foreign companies. All our vessels are equipped with world-class, cutting-edge technology, such as automatic identification systems, high-beam searchlights, long-range infrared lighting, radar, night vision goggles, high-frequency communication sets, and Global Maritime Distress and Safety System equipment. With suitable naval guns mounted, our vessels are ever ready to deliver value for money to our clients.

In addition, the company has certification and accreditation from various regulatory institutions, including the Nigeria Civil Defence and Security Corps, the Nigerian Content Development and Monitoring Board, the British Safety Council and a number of other relevant industry bodies. As recipients of the Nigerian Navy’s Memorandum of Understanding for the use of armed naval persons on board security vessels, our specially trained crews are fully authorised to deliver a potent and effective maritime security solution.

Our broad range of marine vessels also ensures that we can handle a wide range of client requests: we can supply anchor-handling tug support vessels, work barges, diving support vessels, pipe-laying barges, crude oil tank vessels and many more. However, our values are just as important as our technologies and vessels. They are what continue to guide us as we strive to keep Nigeria’s coastline safe.

Against the odds: Ursula Burns’ extraordinary rise to the top

Addressing the 2009 class of Rochester Institute of Technology during their commencement ceremony, Ursula Burns reminisced about her own graduation day. “I can assure you that no one at my commencement was pointing at me and predicting that I would be the CEO of anything. Women presidents or CEOs of large global companies were non-existent at that time. Black women presidents of large global companies were unimaginable.” The statement, bold as well as inspiring, summarised the difficulties Burns had to overcome to become the first African American woman to head a major global corporation.

Being bold, outspoken and down to earth is typical Burns

Being bold, outspoken and down to earth is typical Burns. During her stint as the CEO of Xerox, she would be equally bold when speaking to junior engineers as she would be when chatting with President Obama about the challenges of leading a corporation employing tens of thousands of people. As someone who has come a long way to be named by Fortune magazine as the ninth most powerful woman in business, Burns has earned the right to speak her mind.

An improbable success
Burns grew up in the Baruch Houses in Lower East Side New York, by all means a tough neighbourhood in the 1970s. Baruch was one of the notorious ‘housing projects’ – subsidised apartment buildings inhabited by low-income families – often associated in the public’s mind with gang violence. Growing up there was challenging but formative, teaching Burns lessons that would be useful in her career. She would later say in an interview with Fast Company: “There are plenty of neighbourhoods just like it, all around the country… I see kids out there, nowhere to go. Nothing good waiting for them. Any one of them could have been my son.”

Both of Burns’ parents were of Panamanian origin. Her father left the family early, and Burns and her two siblings were raised by their mother. An indomitable woman, Olga Burns would do an array of chores and jobs, from washing and ironing clothes to running a childcare centre out of their apartment, to provide for her children. To make sure they had the best healthcare available, she would often offer cleaning services to a doctor in their neighbourhood.

With Burns’ father being mostly absent from her life, her mother had the most significant influence on her upbringing, endowing her with tenacity and a fierce work ethic that would later help propel her to the top echelons of the US’ corporate realm. In her interview with Fast Company, she explained: “I don’t want to overemphasise this, but not a day goes by when I don’t think about my mother and what she would think about what I just did. I often adjust my approach.”

As the family’s middle child, Ursula had to take decisions that other children of her age would only have to take many years later. One of the key lessons she learned was to speak her mind when necessary. “I learned from my mother that if you have a chance to speak, you should speak. If you have an opinion, you should make it be known,” Burns said in Makers: Women Who Make America, a PBS documentary. Her mother, Burns would recall years later, was a confident woman who, despite her humble origins, had great expectations for her children. Above all, she did not want the bleak surroundings of their household to curb her children’s ambitions. She would often counsel young Ursula: “This is where you’re going to grow up, but this is not what defines you.”

It didn’t. Burns was an excellent student at Cathedral High School, a Catholic all-girls school, showing a particular talent in maths. Her good grades would earn her a scholarship and eventually a bachelor’s degree in mechanical engineering from the Polytechnic Institute of New York University (currently merged into New York University Tandon School of Engineering). She would later obtain a master’s degree from Columbia University.

For a female black engineer, climbing up the ladder of a male-dominated company like Xerox was not a simple task

Employment opportunities were scarce for a young female engineer, but in the summer of 1980 she won a summer internship at Xerox, which held a near-monopoly in document technology at the time. Burns later recalled in an interview with NPR: “I didn’t think, when I walked into the company, that I would be the CEO.” But her ambitions were high: “I did expect to be successful, though. My mother raised us to think that if we worked hard, and if we put our end of the bargain in, it would work out ‘OK’ for us.” It worked out more than OK for Burns: she would stay at the company for nearly four decades, eventually rising to the highest position.

Her climb to the top was not easy. Over the next 10 years, she took up various positions in Xerox’s product development and planning operations. For a female black engineer, climbing up the ladder of a male-dominated company like Xerox was not a simple task.

In 1990, a senior executive, Wayland Hicks, offered her a job as his assistant. This decision would shape her future. As Professor Lisa DeFrank-Cole, Director of Leadership Studies at West Virginia University, told World Finance: “In the male-dominated world of corporate America, [Burns] would need to have male advocates and allies who encouraged her and spoke up on her behalf in order to achieve such a high-level position. It is not easy for women to get a male mentor for the obvious reason that some people may gossip about their relationship. In the corporate world, there are obviously far more men than women in senior leadership, so mentors and sponsors of the same sex are harder for women to get.”

36 years

as a Xerox employee

7 years

as Xerox CEO

$6.4bn

Size of Xerox’s acquisition of ACS under Burns’ leadership in 2009

Burns initially thought that the position was purely administrative – a sort of secretarial role. She would soon realise, though, that this could be her big break – an opportunity to rub shoulders with the company’s top dogs and see how a juggernaut such as Xerox was run. Burns earned respect with her confidence and fearlessness, consolidating her place in the company’s upper ranks. One year later she would move on to become executive assistant to Paul Allaire, then Xerox chairman and chief executive. In 1999, she was named the company’s vice president of global manufacturing. A natural-born creator, she led a team that made network printers, a product necessary for every household and office in the world.

By the time she had been named senior vice president in 2001, a new CEO had arrived. Anne Mulcahy, another long-time Xerox employee who had fought her way to the top of the company, was herself a pioneer of female leadership in the boardroom. She was impressed by Burns’ skills, particularly her outspoken confidence. In her capacity as CEO, Mulcahy began working closely with Burns and eventually became her mentor and biggest supporter. In an interview with Fast Company, she said: “The thing I valued most about Ursula, and why I valued her participation in senior management, is that she has the courage to tell you the truth in ugly times.” Together, they would slowly prepare the ground for Burns’ own shot at leadership.

Burns would later describe in an interview with Fortune magazine her transition to the CEO position as a smooth process: “I had one of the best transitions. I was not inspected every day, but I was guided a lot. If you look at [Mulcahy] and you look at me, we are so different people… Her background and my background are just 180 degrees apart. But we had a commonality that made my transition easy, and that was that we had spent our lives at this company and we loved it. We loved the people in it and we were invested way beyond money or history – we were invested in our hearts and our souls.”

Company in flux
When Burns took up the helm of Xerox in early 2009, she undertook the colossal task of turning around a company that was losing its mojo. As The New York Times put it, the verb ‘xerox’ was by then increasingly being used in the past tense. It would be a difficult feat to pull off.

When Burns took up the helm of Xerox, she undertook the task of turning around a company that was losing its mojo

Founded in 1906, the company had become, by the 1960s, synonymous with one of its inventions: the photocopier. Just like FedEx – and much later, Google – Xerox had the rare privilege of having its brand name enter the daily lexicon of ordinary people, especially in the US. Even today, many Americans use the verbs ‘photocopy’ and ‘xerox’ interchangeably. As Burns would explain later, this was a double-edged sword, potentially hindering the company’s evolution as times were changing.

The company’s success had been based on a research-driven strategy. The gem of the company’s research and development operations was the famous Palo Alto Research Centre (PARC). Many ideas and devices that are widely used today in personal computing, including graphical user interfaces, laser printers, Ethernet cables, the computer mouse and even the very idea of desktop computing, were first conceived in a PARC lab.

As often happens in legacy companies that have found a goose that lays golden eggs, Xerox’s executives would dismiss many of these ideas as irrelevant or not commercially viable. Not unlike Kodak, the company that invented the digital camera only to let competitors commercialise it, Xerox was digging its own grave. In many cases, the company’s researchers would share their findings with two fledgling tech companies that would later spearhead the personal computing boom: Apple and Microsoft.

There was a price to be paid for such complacency. Despite its early advantage, Xerox would never become a major tech manufacturer with a devoted global base of customers, such as Apple. However, it would remain for many decades the leader in the market the firm had created itself: photocopying and printing technology.

But by the mid-1990s, even that advantage had been lost. Like many other US companies at the time, Xerox’s products were threatened by state-of-the-art devices produced by Japanese competitors such as Canon and Ricoh. Xerox was facing an existential crisis that would spark organisational mayhem, including frequent leadership changes and an ill-conceived revamp of the sales department. To top it all off, Xerox was being investigated by the Securities and Exchange Commission for its accounting practices – an excruciating process that required a negotiated settlement to eventually solve. Some analysts went as far as suggesting that the company might have to file for bankruptcy.

Despite its early advantage, Xerox would never become a major tech manufacturer with a devoted global base of customers, such as Apple

In the early 2000s, it was more than obvious that Xerox was failing to catch up with other tech companies in an era of rapid digital transformation. If Microsoft had Windows and Intel had processors, Xerox was still identified in people’s minds with outdated devices: photocopiers and fax machines. Revenues were dropping as printing was gradually being replaced by emails and texting via mobile phones.

In her capacity as Xerox’s new CEO, Burns saw it as her mission to move the company away from what it knew best. Back in 2001, she had been part of a small group of executives who had saved the company from bankruptcy and pushed for diversification, particularly in business processing services. As the company’s head, she now had the opportunity to implement these ideas at full scale. Her engineering instincts, along with her many decades of experience at the company, pushed her to focus on the development of new products and services. To implement the plan, the company had to expand through mergers and acquisitions. Under Burns’ leadership, Xerox acquired ACS, an IT outsourcing services company, for $6.4bn in 2009.

Research at PARC started focusing on software that would make business processes faster and more efficient via AI technology. Many new ideas originated from the Xerox Research Centre Europe in Grenoble, a research hub that was founded in 1993 to prepare the company for a future where its devices would no longer be an office staple. This time had come: Xerox machines had to become smarter and faster to adjust to a new era. They would need to automatically scan, understand and analyse languages, photos and all sorts of data, which ACS had plenty of, from parking patterns and traffic data to healthcare payments.

Xerox was gradually turning from a hardware company into a software-orientated one. It was a rapid transformation that Burns enthusiastically spearheaded, in a way slowly killing the firm she had served for decades and had also come to adore. She would comment in her interview with Fast Company: “Look, it’s cool to be Google… but even Google has to close their books and pay their people.”

A woman of the people
Burns oversaw this radical transformation with a knack for engaging with people, a skill she had picked up from Mulcahy. As she told Fast Company, she had become a “listener-in-chief”, curbing her inherent tendency to speak her mind without taking into account the impact her words could have on other people. As she turned the company – or at least part of it – from a manufacturer to a business services provider, she also reinvented herself. A doer had now become a thinker and a people’s manager who could inspire and lead.

Not every part of the process was smooth, though. Burns had to make difficult decisions, such as cutting a significant part of Xerox’s workforce and outsourcing parts of its operations. By the time she stepped down as CEO in 2016, Xerox had massively grown its business process services, an operation that would later split from the main company. Burns would remark on the difficulty of turning around a big corporation in a 2018 interview with Yale Insights: “What we have to do, particularly the leadership team, is remember the things that were really great about the company but be willing to throw it all out and create a new self… This is where leadership comes in. It’s a delicate balance to try to tear down good things.”

Under Burns’ leadership, the company continued to post impressive revenue figures (see Fig 1), but in 2016, with Xerox’s transition to the new era complete, it was time for her to leave the company she had served for 36 years. She wanted to avoid what she called “the seven-year itch” and, as she remarked in an interview with Fortune several years earlier: “Success is not about money. It’s not about power. It’s about leaving.”

This is a lesson she had learned from her mother: “She would always say that you have to leave the place – any place you are – a little bit better than you came in.”

The trailblazer
Throughout her career, Burns rarely, if ever, exploited her difficult upbringing or played the ‘race card’ – always a difficult subject in the US. And yet, as the first female African American CEO of a Fortune 500 company, her story was a landmark in American corporate history. US media hailed her appointment as a historic moment, drawing parallels with the unexpected rise of Barack Obama, who had become the first African American president just a few months previously.

Throughout her career, Burns rarely, if ever, exploited her difficult upbringing

Black, well-educated, ambitious and raised by a single mother, Burns shares a lot of traits with the 44th US president. As Obama, Burns wears her race – and, in her case, her gender too – as a badge of honour rather than a label to be used for self-promotion. As DeFrank-Cole told World Finance: “Marian Wright Edelman once said, ‘You can’t be what you can’t see’, and I think this quote is appropriate when describing the impact of Ursula Burns. As the first black woman to serve as CEO of a major corporation, she has not only made history, but has given hope and inspiration to many girls who may want to follow her path. She has become a role model for women, and especially women of colour, around the world.”

Despite increasing awareness of the importance of gender equality and diversity in the corporate world, African American women still find it difficult to climb to the top ranks of big companies. Currently, just 27 of the CEOs of Fortune 500 companies are women – and none of those an African American. DeFrank-Cole said: “Women, and women of colour specifically, still face both explicit and implicit bias. Some people see incongruity when they imagine a black woman as a leader. There are too many old tropes about strong, black women that, unfortunately, still live in the minds of ordinary citizens and corporate executives alike. This mindset accounts for black women not being interviewed or selected for high-level leadership roles.”

Having a committed mentor on their side is an important asset for African American women aspiring to become business leaders. Burns’ own career took off when she found her mentor in Wayland Hicks. During a company meeting in 1989, the issue of diversity came up, and one employee asked the executives if the push for more diversity would result in lowering recruitment standards. Hicks, attending the meeting as one of the company’s senior executives, answered in a way Burns later described as “nonchalant”. Irritated, she asked Hicks why he did not challenge the rationale behind the question. The incident did not go unnoticed: Hicks was impressed by Burns’ fearfulness, seeing in her a potential leader for a company that was still stuck in the old ways of doing things.

Although 10 years have passed since her appointment as CEO, its impact on equality in the top echelons of US companies remains unclear. More companies may follow Xerox’s example in the future, DeFrank-Cole hopes: “Now other companies may look at Xerox as an example of how to make diversity and inclusivity a priority – not just with workshops and training, but by hiring a diverse CEO.” However, not much has changed since 2009.

Currently, there are only three African Americans heading Fortune 500 companies, and all three are male. Paolo Gaudiano, founder and CEO of Aleria, a US consultancy focused on diversity in the corporate world, told World Finance: “Sadly, in terms of boardroom diversity and equality, her appointment had no impact. One reason for the lack of boardroom diversity is that the data showing that companies with diverse boards perform better is only showing a correlation, which means that people can choose to believe, or not, that the increase [in] performance is caused by the diversity.”

Gaudiano added: “Even if you believe that it is in fact the diversity that is driving performance, that knowledge does not help you to understand how to go about making boards more diverse. Should you fire half the board in one fell swoop, or spread it out over time? Do you need to have accurate representation that matches the population, or is it enough to add a few ‘token’ individuals? Being unable to answer these questions is preventing even those with good intentions from taking decisive action.”

Just one pioneer who can break barriers, as Burns did, can make a difference, Gaudiano noted: “There is a bit of a vicious cycle: having a more diverse leadership is likely to make a company more inclusive, and thus more likely to attract diverse talent.” He added: “It’s ironic when you think that companies know how to diversify their inventory, their marketing campaigns, their supply chains and their financial assets, but they can’t figure out how to diversify their human capital, which is the most valuable asset and most expensive budget item for virtually every company.”

It’s a man’s world
Of all the hurdles Burns had to overcome throughout her career, perhaps the hardest one was being a female engineer in an industry with a strong male-dominated culture. Data from various surveys show that women are less likely to pursue a career in STEM (science, technology, engineering and maths) subjects and are more likely than men to leave such a career early, both in the US and globally. DeFrank-Cole said: “When girls find themselves in STEM majors in college, depending on the field, they may be one of only a handful of females.

210m

Number of VEON customers

3

Number of African Americans currently heading Fortune 500 companies

“Chemical engineering or computer science majors, for example, do not have many women in them. If a young woman is struggling, she appears to be weak, and may be shunned by other students. She may be thought of as representing her entire gender with a few bad grades, and therefore all women would be deemed incapable (incorrectly, of course) of pursuing these fields in the minds of her male peers.”

Work culture matters too, according to DeFrank-Cole: “Even if a female [student] has strong grades, she still may be left out of some group camaraderie due to being one of only a few females. When she makes it to her first or second job, she starts to tire of the male-centred work environment. She will continually try to prove herself and possibly be overlooked for promotions. She will face microaggressions of a small comment here or an inappropriate joke there that add up to ‘death by a thousand cuts’. Life is too short to work in an environment that is unsupportive, so many women leave STEM careers.”

As one of the most successful female engineers in the history of US manufacturing, Burns is determined to change this culture by promoting the merits of STEM education, particularly for women. She is a founding director of Change the Equation, a not-for-profit initiative aiming to boost STEM education that was launched by the Obama administration in 2010. Obama also picked her to lead the White House national programme on STEM education. In a recent interview with CNN, Burns warned that if graduation rates in these areas don’t increase, the US could become a “server nation’’ that may see its standard of living decline.

Today, she never misses an opportunity to stress how rewarding a STEM career can be. In a recent interview with TIME Firsts, she remarked: “I say this to women all the time, particularly women trying to get into STEM. I guarantee you will be the minority in the room.” She added: “And instead of that being a burden, it should be an opportunity for you to distinguish yourself.”

A bright future
Unlike other CEOs who left the spotlight after stepping down, Burns has not retired. She has served as board director of American Express, Diageo, Uber, the National Academy Foundation, MIT and the US Olympic Committee.

No matter what Burns does for the rest of her life, she already has a place in US history

Not surprisingly, her name has been floated for various positions in public life. Her involvement in Obama’s close circle of informal advisors, including business leaders such as JPMorgan Chase CEO Jamie Dimon and former General Electric CEO Jeff Immelt, has sparked rumours that she could be a candidate for cabinet positions normally reserved for people from the corporate realm, such as secretary of commerce. Not a person with a knack for public relations, however, Burns has dismissed the possibility of being involved in politics, telling Fast Company: “Things move too slowly in government.”

Her latest venture in the corporate world brought her for the first time to the helm of a non-US company. In December, she was named CEO of VEON, a multinational telecommunications services company headquartered in Amsterdam. With more than 210 million customers, the firm is the 11th-biggest mobile network operator in the world.

No matter what Burns does for the rest of her life, she already has a place in US history. She may not be Rosa Parks, inadvertently starting a revolution, but she is a symbol for American capitalism nevertheless: a role model representing a minority within a minority, serving as a guiding light for young women facing hardship and bias. As she recently noted in an interview with Time magazine: “All of us now are pioneers. Every one of us.”

How interest rates are impacting the sukuk market

In its last meeting on March 20, the Federal Reserve stuck to its mantra that it can be patient in waiting to hike interest rates. Despite economic fundamentals in the US being good at present and the fact that growth is expected to be around two percent this year, uncertainty still remains. This stems from a variety of places: US-China trade talks; deteriorating earnings and productivity forecasts; record-high debt levels; shaky market microstructures; the need to leave quantitative easing behind; geopolitical volatility; and a global slowdown in growth. Together, these events signal an increased chance of recession, which could hit at some point at the end of this year or in 2020.

The fixed income market in the GCC region is inversely related to the movement of oil prices

Consequently, central banks – and the Fed in particular – must maintain their cautious stance. Markets, meanwhile, will continue to keep a close eye on the updated dot-plot by the Fed, which indicated no further rate hikes in 2019 and only one in 2020. Indeed, I personally expect that there will be a cut this year or next.

Staying the course
On March 7, the European Central Bank (ECB) announced that it would keep interest rates on hold. At the same time, it made a fresh offer of cheap funding via targeted longer-term refinancing operations for the bloc’s banks. Back in January, the ECB had announced that rates were expected to remain at their current level “at least through the summer of 2019”, but amid escalating concerns about a slowdown in eurozone growth and productivity, it has since indicated that this forecast will be extended, with many experts predicting it will hold until mid-2020 at the earliest. The bank also held its benchmark refinancing rate at zero, while keeping the deposit rate at -0.4 percent.

Over in the US, the 10-year Treasury yield dropped to its lowest level in more than a year on March 22. When long-term interest rates fall below three-month short-term rates, it’s called a ‘yield curve inversion’, which is one of Wall Street’s preferred predictors of a recession. Investors normally demand higher yields to buy longer-term bonds, and when those long-term yields decline, it can signal a slowdown in economic growth.

Oil forecasts
Against this backdrop of slowing economic growth, weaker-than-anticipated demand for crude oil is pushing the oil market deeper into bear territory. At present, there are fears and concerns – especially in regards to China – about where demand for oil is heading.

When preparing his negotiators for a fresh round of talks, US President Donald Trump said on March 22 that a trade deal with China is close. Despite this, together with the fact that trade tensions are negatively influencing Chinese economic growth, US officials have downplayed the possibility of a swift conclusion.

Meanwhile, the Paris-based International Energy Agency predicts that oil demand will grow by 1.4 million barrels per day (bpd) in 2019, while the US Energy Information Administration believes the world will consume an additional 1.5 million bpd in 2019. OPEC’s forecast for 1.3 million bpd in demand growth in 2019 is more realistic, but perhaps too optimistic. For JP Morgan, the outlook is even darker: the investment bank sees the world’s appetite for oil growing by just 1.1 million bpd this year. “The demand growth is expected to weaken again in 2020,” said Abhishek Deshpande, Head of Oil Market Research and strategy at JP Morgan, according to CNBC.

Higher prices, lower issuances
How can this be translated into the sukuk market? The fixed income market – in particular, the frequency in issuances of bonds or sukuk – in the Gulf Cooperation Council (GCC) region is inversely related to the movement of oil prices.

Higher oil prices are enabling some GCC nations to continue their usual spending – namely, to sink their borrowing requirements through debt capital markets, support their budgets by financing their deficits, and to improve liquidity in their banking systems.

The current price of Brent crude has little changed from nearly $67 a barrel, which coincides with the levels that most producers pay in governmental costs. However, not all oil-producing nations are breaking even. According to Fitch Ratings, which calculated the break-even oil price at which Gulf states were able to balance their budgets in 2018, the average for the year varied from $98 a barrel in Bahrain to $85 in Oman, $78 in Saudi Arabia, $64 in Qatar, $62 in Abu Dhabi and $53 in Kuwait.

Both the current and forecasted price of oil is set to encourage sukuk issuances in the GCC as an attractive option for financing government spending. Indeed, there is growing confidence in the sukuk that it could end up being the most widespread financial instrument of the entire Islamic banking industry.

Gulf banks, which benefit from the current low interest rate level, are expected to issue Tier 1 or Tier 2 sukuk to strengthen their capital base, in accordance with Basel III requirements for higher liquidity coverage ratios.

Over time, the sukuk market will become increasingly established, particularly as more sukuk bonds come to market, attracting conventional and Islamic investors alike. This trend will also see liquidity that used to be invested in developed markets invested in emerging markets and the GCC instead. In turn, this growth will assist in shaping and determining the pricing level for the future issuance of sukuk bonds.

Moreover, the growth of sukuk issuances could be boosted when more central banks, financial institutions (whether conventional or Islamic) and regulatory or government bodies join and support relevant non-profit organisations. One such example is the International Islamic Financial Market, which has brought tremendous benefits to the Islamic banking industry by promoting Sharia harmonisation, reducing legal and Sharia-compliance-related costs, and strengthening risk management capabilities. The organisation also educates international investors and issuers through seminars and workshops, increases efficiency in resolving differences and disputes, and encourages standard legal documentation to grant security to reliable investors.

As a result, more players are realising the credibility and profitability of the sukuk by increasing cross-border financial deals in the region. This in turn will help achieve greater growth for sukuk issuances.

Mourad Mekhail is a former Wall Street banker. He earned his MBA in international economies from Trier University, Germany. Since 2011, Mekhail has served as an advisor to the board of directors at Kuwait International Bank, following his previous assignment as Head of International Investment.

Italy’s construction crisis leaves many questions unanswered

It’s tragically ironic that the country that houses the near-2,000-year-old Colosseum, along with numerous other millennia-old structures, is also responsible for infrastructure that it is crumbling after a mere five or six decades of being built.

Despite publicised benefits, the TAV project has received its fair share of animosity from both the public and various politicians

As of late, this sorry state of affairs has come to a head in terms of public backlash. Protests intensified in Northern Italy at the start of the year, with the cause of contention being the construction of a 270km rail line linking the French city of Lyon with its Italian counterpart, Turin. The Treno Alta Velocità (TAV) will include a 57km tunnel under the Alps, which will be one of the longest rail tunnels on the planet. With an expected average speed of 200km/h, the line will significantly reduce transportation time between the two European nations. The TAV also promises to cut carbon emissions and the use of fossil fuels.

A mountain rail route that opened back in 1872 first connected Lyon and Turin, but in spite of some improvements over the years, speed and load weights have remained largely restricted due to topographical challenges. Then, in the early 1990s, came plans for the TAV, with promises to make trade cheaper and more efficient for both countries. Now in full motion, the cost of the €25bn ($28.38bn) project is being split three ways: Italy will foot 35 percent, or €8.6bn ($9.76bn), of the cost, with France paying 25 percent and the EU the remaining 40 percent.

But despite its publicised benefits, the project has received its fair share of animosity from both the public and various politicians. For many, it has been hard to swallow a multibillion-dollar bill when the country’s economy continues to falter (see Fig 1) and renovations to existing infrastructure are desperately needed. And herein lies the problem – as explained by Enrica Papa, Senior Lecturer in Transport at the University of Westminster: “There has never been a culture of planning and maintenance of public assets in Italy, especially transport infrastructures”.

Maintaining failure
The anguish of protestors in Turin is understandable given recent events that have come to epitomise this culture. One rainy day last August saw the horrifying collapse of a bridge in Genoa: a 50m-high section came crashing down onto the buildings and vehicles below, killing 43 people and plunging massive slabs of reinforced concrete into the riverbed nearby. As news spread around the world, the governing coalition in Italy – comprising the League and the Five Star Movement – cast blame on Autostrade per l’Italia, the private firm responsible for the nation’s motorways, calling for a €150m ($170m) fine and the withdrawal of its contract.

Astonishingly, the Morandi Bridge, which was inaugurated in 1967, was the 12th bridge to collapse in Italy since 2004. Five bridges fell between 2013 and 2018 alone. But it’s not just this particular type of infrastructure that is falling apart and causing untimely fatalities: in 2009, for instance, numerous homes in Messina were swept away in floods and mudslides, killing 37 people and injuring a further 95. Despite the area being a high-risk area for hydrogeological activity, with landslides taking place repeatedly over the years, nothing was done until it was too late. In Italy, this kind of story has become all too familiar.

“The tragedy of the Morandi Bridge in Genoa sums up in itself and certifies the lack of a culture of planning and maintenance of infrastructure schemes,” Papa told World Finance. “There had been dozens of other accidents generated by the same tragic lack of maintenance planning – I remember an accident a few years ago on the Naples-Avellino motorway that caused tens of [injuries] due to poor maintenance of the safety barriers.”

The Treno Alta Velocità project

$28.38bn

Cost of the project

25%

of the project will be paid for by France

35%

of the project will be paid for by Italy

40%

of the project will be paid for by the EU

When news about Genoa broke, conflicting information was spouted from various parties. For example, Stefano Marigliani, the motorway operator official responsible for the area, told Reuters that the bridge was “constantly monitored and supervised well beyond what the law required”, and that there was “no reason to consider the bridge dangerous”. It was also reported that restructuring had been carried out in 2016. However, according to The Straits Times, Angelo Borrelli, the head of Italy’s civil protection agency, said he was not aware of any maintenance work on the bridge. This discrepancy alludes to a bigger, more entrenched problem.

Italy’s infrastructure woes find their roots in a construction boom that occurred in the 1960s. “At the end of [the Second World War], Italy was a country on its knees: 50 percent of the residential estate had been destroyed; more than 60 percent of the industrial assets were no longer able to produce; and 70 percent of public assets, especially transport infrastructures, were unusable,” said Papa. Consequently, the incumbent government set forth on a new system of actions and schemes, which saw a flurry of bridges, buildings, roads and schools built.

But the flurry was part of the problem. “The economic and social success… of land use and environmental resources gave impetus, in the post-war years, to a strategy of wild exploitation,” Papa explained. “This happened without any respect, neither for the ecological resources nor for the landscape resources… There was no concern for the primary needs of the local populations and… no simple rules for the government of territorial transformations were implemented.”

According to Papa, one of the government’s biggest mistakes was the transfer of various public infrastructure assets – particularly the most profitable ones – to large companies, or “entrepreneurial families”, in order to reduce costs. “This has led to a substantial financial surplus in the pockets of the dealers but, paradoxically, scarce, sometimes very little, attention to the maintenance of the assets entrusted to them. The disaster of the Morandi Bridge was the epilogue of this announced tragedy.”

Mafia involvement
Given this overarching cost-cutting approach, it may come as little surprise that many of the works in question were made with cheap or weak materials. But what may surprise some is that none other than the mafia aided in this unsavoury goal.

12

Number of Italian bridge collapses since 2004

5

Number of Italian bridge collapses between 2013 and 2018

“Mafia firms generally use poor materials and perform a shoddy job because their goal is to extract a quick profit,” said John Dickie, a professor of Italian studies at University College London and author of several books about the mafia.

Many firms that worked with the mafia used unfortified concrete, a material that contains a higher proportion of sand and water than regular cement. As such, it poses a big risk to the integrity of associated infrastructure projects. “During core sampling analysis of tunnels and bridges, I have found cement blocks with a resistance three times weaker than the norm,” Nicola Gratteri, Catanzaro’s anti-mafia chief prosecutor told The Guardian following the Genoa incident.

He also referred to several sites that were under investigation following their partial collapse. The works had been completed by the ‘Ndrangheta, a Calabria-based mafia organisation that has run riot in the region’s construction sector since the 1960s. Indeed, not only did the business become the group’s second-most profitable business (after drug trafficking), it also received government support when mafia boss Vito Ciancimino became Palermo’s head of public works in 1959.

“The mafia problem undermines confidence in the ability of government and private enterprise to invest efficiently in infrastructure. Political corruption does the same thing. People assume that the money will be wasted or stolen, and so it is difficult to summon the political will to invest,” Dickie told World Finance.

According to Dickie, mafia involvement in public construction works still occurs to this day, and subcontracting in particular is a big problem. “Subcontracts tend to go below the regulatory radar. They can often be awarded without following the rules on fair tendering. Mafia firms like to use subcontracts as a way to disguise extortion payments,” Dickie explained. “Take the case of earth-moving and the disposal of site waste. These are sectors of the construction industry where mafia clans have a strong presence. But that’s not because mafiosi are really good at the earth-moving business. Rather, it’s often because earth-moving businesses are easy to set up and operate: you just need a few trucks and people to drive them. You can then make an inflated bid for a subcontract which, in reality, is just a cover for extortion payments – made in response to mafia threats and vandalism.”

A political football
With incidents such as the Genoa bridge collapse making worldwide news, Italy’s anti-establishment parties have come out swinging, particularly with regards to spending restrictions enforced by the European Union.

To prevent history from repeating itself over and over, Italy needs a fresh approach

“We should ask ourselves whether respecting these [budget] limits is more important than the safety of Italian citizens. Obviously for me, it is not,” Deputy Prime Minister Matteo Salvini, who leads the populist, right-wing League party told the press in August.

His statement, however, stands in stark contrast to previous claims made by governing partner Five Star. Part of the group’s early appeal was its opposition to pricey infrastructure projects, and in terms of the Morandi Bridge specifically, Five Star had dismissed warnings that the bridge was dangerous, referring to them as a “children’s tale”. This comment has since been removed from the party’s website and it has somewhat softened its anti-infrastructure stance, but continues to oppose the TAV despite pleads from the EU to stay on track.

As such discourse illustrates, it would seem that unremitting finger-pointing continues to characterise Italian infrastructure. The Morandi Bridge, for example, saw repeated calls for repairs or a complete overhaul throughout the years, but conflicts between political groups and private companies about whether the spending was justified, and who should bear the cost, endured. In the end, profits were prioritised over safety. Adding insult to injury, the blame for the bridge’s avoidable collapse has shifted from one group to other.

A considerable overhaul is needed. “On a social and political level, Italy needs to stop mourning; the country needs to regain the spirit of [the] 1950s and 1960s, with the desire to look to the future,” said Papa. “[The] populist government is, unfortunately, going towards the opposite direction. The recent discussion of the Turin-Lyon high-speed [railway] is an example.” On the technical level, Papa believes that Italy must define a new infrastructure plan, promote education in the field and place greater importance on new technologies.

Simply, to prevent history from repeating itself over and over, Italy needs a fresh approach – one rooted in accountability and transparency. The involvement of criminal organisations and the highly ineffective system of subcontracting can thus be fleshed out. Following this, rebuilding and maintaining structures with sustainability at the forefront can occur. Certainly, undertaking this mammoth task across numerous sites and regions will cost the country billions – but taking shortcuts didn’t exactly work out the first time round.

Goldman Sachs’ female staff earn half as much as male counterparts

Goldman Sachs International has revealed in its annual pay gap report that its female employees in the UK were paid a mean average of 50.6 percent less per hour than their male counterparts in 2018.

The bank employees around 36,600 people worldwide, 5,500 of whom are based in the UK

This figure is an improvement on the 55.6 percent gap that the American investment bank reported in 2017, but nevertheless signifies that female employees are typically paid less than half as much as their male counterparts.

The firm’s median pay gap was 35.5 percent last year, down from 36.4 percent the previous year. The median bonus handed to female employees remained at 68.9 percent less than that given to men in both 2017 and 2018.

Goldman Sachs is one of the world’s most prestigious investment banks. It was founded in 1869 by Henry Goldman, and took on its current name when Goldman’s son-in-law Samuel Sachs joined in 1882. Today, the bank employees around 36,600 people worldwide, 5,500 of whom are based in the UK.

The bank attributed its substantial gender pay gap to a lack of women in senior management roles, an imbalance that it is attempting to redress. In an email sent to Goldman staff on March 18, the bank set out a target of increasing the percentage of women in its incoming junior analyst class to 50 percent.

In a statement on March 26, Richard Gnodde, Chief Executive of Goldman Sachs International, said the current pay gap was not indicative of its female employees being underpaid for the same work being undertaken by their male counterparts.

“At Goldman Sachs, we set compensation by merit, not by gender or any other factor. We spend significant time on this during the compensation process to ensure that our commitment to equal pay is upheld,” Gnodde added.

He acknowledged, however, that there is much more to be done in achieving equal representation at senior level. Goldman Sachs launched a wide-scale marketing campaign last year entitled #WhenWomenLead in a bid to improve diversity within leadership, in which the bank called gender equality “an economic imperative”.

It appears, however, that this message is yet to be translated to the payroll department.

World Finance Corporate Governance Awards 2019

Investors have high expectations for the companies in which they hold a stake. It is no longer enough for a board to sit back and relax while a business pumps out profits: as hot-button issues gain prominence, a successful company can only stay at the top of its game by employing strong corporate governance.

Corporate social responsibility has moved from a niche buzzword to a pillar of a strong corporate governance framework

Many firms still fail to recognise this, however, and in 2018, corporate scandals occurred left and right. From some of the biggest data breaches in history and tales of corporate fraud to the rippling fallout of the #MeToo movement, numerous companies were embroiled in cases of corporate misconduct.

Scrutiny over these issues is only expected to intensify as 2019 progresses. As the Harvard Law School Forum on Corporate Governance and Financial Regulation said in its 2019 global trends list: “The demand for board quality, effectiveness and accountability to shareholders will continue to accelerate across all global markets.”

Investors are seeking boards with a strong sense of leadership and an equally solid moral alignment. The 2019 World Finance Corporate Governance Awards recognise the companies that have gone above and beyond to prioritise transparency and inclusivity.

Sustainable growth
Environmental awareness and sustainability have risen to the top of the corporate agenda in recent years. Law firm Hogan Lovells’ Corporate Governance Outlook 2019 report said that, for publicly traded companies, environmental and social issues have dominated shareholders’ corporate governance proposals since 2014. In 2018, they were still the most popular proposal topic.

Over the past few years, it has become clear just how multifaceted a challenge climate change has become and how extensive the role of businesses will be in shaping the planet’s future. Asset managers and owners are increasingly interested in integrating environmental and social issues into their investment decisions, but to do this, businesses must provide quantitative data on their environmental impact. Unfortunately, most companies still fail to disclose this vital information, and investors will invariably prioritise the companies that do over those
that leave them in the dark.

Sustainability in business goes beyond the environment. Corporate social responsibility has moved from a niche buzzword to a pillar of strong corporate governance frameworks. With the Millennial generation just as interested in a company’s morals as its profits, CSR reports are now booming in popularity.

According to a 2015 study of Millennials and CSR conducted by Cone Communications, more than nine out of 10 Millennials would switch brands to one associated with a worthy cause. Millennials, who are now aged between their early 20s and late 30s, were also prepared to make personal sacrifices to have an impact on the issues they cared about, including paying more for a product or taking a pay cut to work for a company whose ideals better aligned with theirs.

Achieving sustainable growth is now at the forefront of governance issues in many countries. Although short-termism still dominates the corporate agenda, more investors are looking down the line to see whether the companies they invest in are purely prioritising profits or playing the long game to achieve sustainable growth in the years and decades to come.

Crisis management
In 2018, a large number of high-profile executives were ousted from their top positions due to issues of misconduct, including Carlos Ghosn, the former chairman of Nissan, and Leslie Moonves, the ex-CEO of CBS Corporation. In 2019, the issue of accountability will continue to dominate corporate governance issues as the public’s intolerance for misconduct heightens.

Amy Freed of Hogan Lovells wrote in the firm’s 2019 report that boards will be judged on their ability to respond quickly and effectively to allegations of executive misconduct. “These incidents are costly to companies both in terms of direct costs of response including litigation and settlement, as well as indirect costs of distraction of management from strategic objectives,” Freed wrote. “When violations occur, boards must ensure that they are transparent about oversight failures and the steps that are undertaken to remedy those gaps.”

Beyond those very serious allegations, a number of corporate brands also became tangled up in disastrous social media incidents in 2018. Companies such as Snap and Lockheed Martin both took a reputational hit as a result of poorly thought out social media or advertising campaigns. Social media missteps may be part of the internet’s short-lived and fast-paced news cycle, but they magnify quickly and spread like wildfire if they are not dealt with swiftly. Each company’s crisis management processes must be updated to include their top social media risks so that responses can be prepared and delivered quickly.

This all influences a company’s corporate culture and reputation, which are vital contributors to their overall value. Boardrooms should cultivate this culture in order to protect their employees, shareholders and the company’s future.

Strength in diversity
Investors will not only scrutinise the actions of boards in 2019, but they will also dissect their composition. Diversity in the boardroom – in terms of gender, ethnicity, socioeconomic background and age – remains a top issue for smaller shareholders and institutional investors alike.

In today’s rapidly changing and multifaceted business environment, investors want to ensure the boardroom – and the pipeline of candidates that leads up to it – is equipped with the skills to meet any challenges that could arise. Hosting a diverse range of voices from different backgrounds is one way businesses can strengthen their board considerably. According to Harvard’s Forum on Corporate Governance and Financial Regulation, institutional investors will push for robust, independent and regular board evaluation processes in 2019 that could
result in “board evolution”.

Going forward, it will be key for every board to have strong digital leadership and knowledge of technology and social media. Members of the board must be able to identify the technologies that will directly impact their businesses, as well as understand how the company fits into the wider digital landscape. As such, boards are increasingly likely to recruit younger directors who have not necessarily been CEOs before.

What’s more, the #MeToo movement, which took off in late 2017, extended from the entertainment world to nearly every other sector, including business, in 2018. The issue of sexual discrimination and harassment in the workplace will continue to take a front seat this year, and investors will expect organisations to have an answer for how they will improve gender diversity in their business.

The main issues that are expected to dominate corporate governance agendas in 2019 centre on transparency and inclusivity. Investors will also continue to expect board members to contribute to more than just a company’s financial success. Many businesses will struggle to prosper under this tough scrutiny, but the few that forge a socially responsible path to success are celebrated in the 2019 World Finance Corporate Governance Awards.

World Finance Corporate Governance Awards 2019

Angola
Banco de Fomento Angola

Brazil 
Itaú Unibanco

Chile 
SQM

Colombia 
Tecnoglass 

Cyprus
Bank of Cyprus 

France
Total

Greece
Piraeus Bank

India 
Oberoi Group 

Italy
Enel

Jordan
Jordan Islamic Bank

Kuwait 
Boursa Kuwait

Mexico
Unifin

Nigeria
FBN Holdings

Norway 
NattoPharma

Peru 
Petroperú

Philippines 
Globe Telecom

Poland 
PKO Bank Polski

Qatar
Commercial Bank of Qatar

Russia 
Credit Bank of Moscow

Saudi Arabia
Savola Group

Singapore
CapitaLand 

South Africa
Bidvest Group

Spain
Iberdrola 

Switzerland 
Swiss Re

Thailand
Kasikornbank

UAE 
Emaar Properties

US
AVANGRID

World Finance Islamic Finance Awards 2019

The growth achieved by the Islamic finance sector over the past couple of decades has been striking. In 2017, Sharia-compliant assets reached a total value of $2.44trn, up from $200bn in 2003, according to Thomson Reuters’ 2018 Islamic Finance Development Report. Currently, around 1,400 Islamic finance institutions operate across 80 countries.

In the GCC, fintech has spurred a dynamic transformation of regional markets’ financial offerings

In the banking sector, Islamic lenders have outperformed conventional banks over the past decade, according to the IMF. Moreover, during the decade between 2003 and 2013, the IMF said sukuk bond issuances rose 20-fold to hit $120bn.

In the coming years, the industry is only expected to keep growing. Sharia-compliant financial assets are forecast to reach $3.8trn by 2023, averaging annual growth of 10 percent, Thomson Reuters said. But despite this, on a global scale the industry is still small, representing just one percent of global financial assets. Most of these are only located in the seven Gulf Cooperation Council (GCC) countries, as well as Iran and Malaysia.

This small concentration represents potential for growth in new and current markets. The 2019 World Finance Islamic Finance Awards recognise the sector’s greatest success stories from around the world and identify those that are set to show resilience in the coming years.

Digital influence
The proliferation of fintech across financial sectors has not gone unnoticed by leaders of the Islamic finance industry. In the GCC, fintech has spurred a dynamic transformation of regional markets’ financial offerings. Countries from Bahrain to the UAE have created incubators and accelerators to help get innovative tech start-ups up and running. The emergence of several digital Islamic banks is also revamping the sector by extending Islamic finance’s reach into areas beyond the GCC, including Europe and Africa.

But this technology is also important in GCC countries, and more widely in the Middle East and North Africa region. Financial inclusion is an issue for many countries in the area, with a large proportion of adults not holding a bank account. However, digital-only financial institutions can take advantage of the region’s high smartphone penetration to give these unbanked people access to apps or websites that allow them to transfer money, crowdfund and pay for goods anytime and anywhere.

According to IFN Fintech, there are more than 100 Islamic fintech companies based around the world, from Malaysia to the UK. These include companies that offer Islamic financial robo-advisors and alternative asset marketplaces. Technology could go even further to help those without traditional bank accounts by offering biometric tests, such as eye and fingerprint scans, or voice and facial recognition. Paired with blockchain’s distributed ledger technology, these tools could address the issue of identity verification and protection among unbanked populations.

However, in its Islamic Finance Outlook 2019 Edition report, S&P Global Ratings said that in the medium term, fintech could also lead to some disruptions in the Islamic finance market. S&P said fintech posed “a potential threat to some business lines such as money transfer, especially in the GCC region where expatriates send more than $100bn every year back home”. But in the long run, the agency concluded that fintech will “unlock new avenues for growth and enhance the security of transactions” in the Islamic finance sector.

Standard regulation
Yet another benefit of the digitalisation of the Islamic finance industry is a burgeoning regulation technology, or regtech, sector. S&P said regulations standardising Sharia interpretation and legal documentation could simplify sukuk issuance, calling it a measure that could “unlock the full potential of Islamic finance”. While Islamic finance is known to ban interest payments and monetary speculation, business practices can vary from market to market across the Middle East, Africa and South-East Asia.

The recent Dana Gas debacle helped bring the issue of standardisation into the spotlight. The dispute between the UAE-based energy company and bondholders erupted after Dana Gas said it would not repay a $700m sukuk because it was no longer compliant with Sharia law. In the closely watched case, Dana ended up agreeing to a restructuring deal.

S&P believes standardisation would help the industry gain more widespread appeal among investors, saying: “Investors tend to shy away from the uncertainty they are not able to quantify.” The IMF also hopes to improve regulation in the industry by incorporating Islamic finance into its financial sector assessments as of 2019. “The IMF wants to encourage more consistency in applying Islamic finance rules, having previously warned over the complexity of some Sharia-compliant products that could stifle growth and add to financial instability.” The Islamic finance market could contribute to financial inclusion, deepen financial markets and develop new funding sources, the group said.

Beyond the GCC
The Islamic finance sector received a major boost in 2017 thanks to the development of jumbo sukuk issuances in some GCC countries. Since then, the sukuk market has cooled amid slowing economic growth in core regions. Last year, economic expansion was lower than expected in the area due to low oil prices, global trade disputes and turbulent political situations. Growth is likely to remain slow in 2019 – S&P, for example, only predicted a “mild” economic recovery in the GCC after a sluggish 2018.

But there remain significant opportunities elsewhere in the world. While Islamic finance assets account for over 15 percent of total financial assets in countries such as Saudi Arabia, Kuwait, Qatar and Malaysia, Thomson Reuters found that Cyprus, Nigeria and Australia showed the most rapid growth in 2017.

Africa is a particularly interesting region for Islamic banking. As of 2010, sub-Saharan Africa was home to a Muslim population of around 250 million people. The Pew Research Centre has predicted that figure will more than double to reach nearly 670 million by 2050. The number of Muslim people in North Africa and the Middle East, meanwhile, is expected to rise from 300 million in 2010 to more than 550 million in 2050.

The Islamic Financial Services Board has calculated that the market in sub-Saharan Africa was worth $30bn in 2017. Sukuk have been issued in countries including South Africa, Nigeria and Togo, while the multilateral lender Africa Finance Corporation issued the first sukuk by an African government-backed group in 2017. Meanwhile, Islamic ‘windows’ have opened at banks in countries including Egypt and Kenya. With opportunities across the continent, Africa has garnered the title of Islamic finance’s new frontier.

Beyond Africa, the UK presents a huge prospect for the Islamic finance market. The country became the first western nation to issue a sovereign sukuk in 2014, and now it is the biggest centre for Sharia-compliant finance in the West. There are five licensed, fully Sharia-compliant banks in the UK, and more than 20 additional banks offer some form of Islamic banking. So far, 65 sukuk worth £35bn ($44.9bn) have been issued on the London Stock Exchange, according to TheCityUK. Even so, experts at the group say there is still plenty of room for growth in the UK, as the majority of Muslims in the country are unaware of Islamic finance or unclear about what it means.

With these dynamic prospects for growth, the Islamic finance sector will continue to flourish in the years ahead, bringing financial inclusion to new areas and boosting prospects for a number of regions. The 2019 World Finance Islamic Finance Awards highlight the companies that have helped take the sector to new heights, and those that are poised to pave the way to new markets and opportunities.

World Finance Islamic Finance Awards 2019

Best Islamic Bank

Algeria
Al Salam Bank

Bahrain
Al Baraka Islamic Bank

Bangladesh
Shahjalal Islami Bank

Brunei
Tabung Amanah Islam Brunei (TAIB)

Egypt
Faisal Islamic Bank of Egypt

Indonesia
Bank Muamalat

Jordan
Jordan Islamic Bank

Kuwait
Kuwait International Bank (KIB)

Lebanon
Arab Finance House (AFH)

Malaysia
Maybank Islamic Berhad

Mauritius
Century Banking Corporation (CBC)

Nigeria
Jaiz Bank

Oman
Bank Nizwa

Pakistan
Meezan Bank

Palestine
Arab Islamic Bank (AIB)

Qatar
Qatar International Islamic Bank (QIIB)

Saudi Arabia
Al Rajhi Bank

Turkey
Kuveyt Türk 

UAE
Emirates Islamic

UK
Al Rayan Bank

US
Bank of Whittier

 
Global recognitions

Islamic Banking Chairman of the Year
Sheikh Mohammed Al-Jarrah Al-Sabah, Chairman at KIB

Business Leadership and Outstanding Contribution to Islamic Finance
Musa Shihadeh, Vice Chairman and General Manager at Jordan Islamic Bank

Islamic Banker of the Year
Salah Amin, CEO at Emirates Islamic

Best Islamic Insurance Company
Qatar Islamic Insurance Company

Best Islamic Investment Banking Services
Jadwa Investment Company

Best Islamic Asset Management Company
KFH Capital Investment Company

Best Islamic Trade and Project Finance Provider
Kuwait Finance House

Best Islamic Banking & Finance Technology Provider
Temenos Middle East

Best Islamic Fund Management Company
Al Meezan Investment Management

Best Islamic Investment Advisory & Financial Research
Noor Financial Investment Company 

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

Best Sharia Brokerage House
KFH Brokerage

Best CSR Business Model
Kuwait International Bank

 
Special recognitions

Best Participating Bank for Customer Service Quality in Morocco 
Bank al Tamweel wa Inma (BTI)

Best Islamic Home Financier, US
Guidance Residential

 

World Finance Forex Awards 2019

Since 2016, the foreign exchange market has been characterised by volatility. This instability did not hamper growth, however. Instead, investors piled into the growing $5trn-a-day industry as wild swings in currency values signalled an opportunity for steep profits. A great deal of change occurred in 2018 to keep the landscape lively, such as new regulations for traders across the European Union, an extension of US equity markets’ longest bull run in history, and volatile movements in emerging market currencies.

After the turbulence of the past few years, the forex industry will now have to adapt to a slowdown of global economic growth

After the turbulence of the past few years, the industry will now have to adapt to a slowdown of global economic growth. While markets will continue to be somewhat unpredictable, US stocks, which have spent the past few years ticking higher and higher, are expected to run out of steam in 2019.

Although this does not necessarily mean a recession is on the horizon, it does leave the forex market in an uncertain position. On the one hand, growth will be more difficult to achieve as economic expansion hits the brakes. On the other, as investors become more wary of equities, they may look to forex as an alternative investment product. The 2019 World Finance Forex Awards celebrate the firms that have continued to ride this wave of volatility to stay ahead of the competition.

Rain clouds ahead
In January, the World Bank raised the alarm that global markets would slow down as “darkening skies” hovered over the world’s economy. The coming deceleration is mainly due to trade tensions between the US and China and rising debt levels in emerging markets, it said. As such, the bank cut its global growth forecast for 2019 from three percent to 2.9 percent, as it warned that a slowdown in the US economy – the world’s biggest – raised the probability of a global recession to 50 percent.

Across the Atlantic Ocean, the European Central Bank (ECB) cautioned that weaker momentum in the eurozone would last longer than expected. The ECB’s dampened outlook follows lagging growth in 2018. Moreover, it came just over a month after it halted its €2.6trn ($2.95trn) quantitative easing programme, which ECB President Mario Draghi had said was the driver of Europe’s economic recovery.

Along with the World Bank, the US Bureau of Economic Analysis and many other expert institutions, the ECB also expects the global economy to slow down in 2019 before stabilising.

Businesses are beginning to take note. A study of more than 1,000 global CEOs by the think tank the Conference Board found that a recession was the top fear among business leaders in 2019, up from 19th place in the same survey the year before. This was despite the fact that a survey of economists by Reuters late last year predicted the risk of a US recession was low (35 percent, up from 30 percent the previous month).

A global slowdown, or indeed a recession, will require forex companies to carefully evaluate numerous data points to uncover where profits can be squeezed out. While the situation will present many challenges, it will also offer trading opportunities in this market.

Spectre of volatility
With an economic slowdown on the cards, some experts suspect the rally in the US dollar could come to an end this year. In its 2019 FX Outlook: Peak Dollar report, Dutch bank ING said it remained too early to call, but that the biggest question for the year was when global asset markets will be “released from the stranglehold of high US interest rates and the strong dollar”.

The dollar’s trajectory is typically driven by the decisions of the US Federal Reserve. Last year, the Fed hiked its benchmark interest rate four times, causing the dollar to spike – however, in 2019, it is not expected to announce any new rate hikes.

Further, over the first six months of this year, ING has predicted that the US dollar could see “marginal” highs against the euro and the Japanese yen. That said, over the course of 2019, the US currency is expected to edge lower.

“US rates should be coming off their highs by the end of the year and as US growth converges lower to the rest of the world, expect investors to rotate out of US asset markets,” ING said in its report. The dollar will also be influenced by macroeconomic trends and political events, including any developments between the US and its trading partners.

Elsewhere in the world, the UK is expected to continue to be plagued by uncertainty over Brexit. ING said 2019 is “unlikely to look pretty” for the UK as it continues to tussle with the EU over what an ideal post-Brexit relationship should look like. ING said in the report: “Expect the pound to continue to trade on volatility levels more common in emerging markets.”

For the rest of Europe, despite the fact that “sluggish growth” was blamed on a “relentless stream of ‘one-off factors’” rather than one big issue, ING said it struggled to see how any significant pick-up in activity would materialise in 2019.

More of the same
The Markets in Financial Instruments Directive II (MiFID II) came into force in January 2018 to provide investors with a new legislative framework of regulations. MiFID was first introduced in 2007, but in its original state it focused only on equity markets. Last year’s expansion required other asset classes, including forex traders, to offer more transparency to their clients, such as reporting on trade prices and volumes. Although foreign exchange market players hurried to meet the January 3 deadline for what was possibly the biggest regulatory adjustment in a decade, industry experts have said there is no more transparency in the market in 2019 than there was before MiFID II was implemented.

In fact, a Crédit Agricole survey on MiFID II and its impact on forex markets found that 88 percent of respondents had experienced “no visible benefits to date” following the enactment of MiFID II. Just eight percent said they had experienced increased transparency. What’s more, 79 percent said they had no plans to use the newly available data to interpret or monitor trends.

Despite this, concerns about a negative impact on market liquidity due to the far-reaching transparency requirements have so far not emerged. According to Crédit Agricole’s survey, 84 percent of respondents saw no negative or positive impact on liquidity following the implementation of the new rules. Meanwhile, 79 percent believed the proportion of volumes executed on eTrading venues had remained the same.

Over half of respondents – 65 percent – claimed to have had no issues with the “extensive reporting requirements” under MiFID II. But in another question, 52 percent of respondents agreed that there had been confusion or a lack of clarity around MiFID II and its impact on traders, with 31 percent citing “onerous documentation” as their biggest complaint.

So far, the new regulations appear to have caused little change in the forex market. In the year ahead, the biggest transformations will likely arise from the resolution of certain economic tensions, such as the US’ trade agreements, Brexit and the looming global slowdown. The 2019 World Finance Forex Awards recognise and congratulate the companies that continue to anticipate these changes and have paved the way for success in uncertain times.

World Finance Forex Awards 2019

Best Trading Platform
24option

Best Trading Experience
FXTM

Best Trading Conditions
BDSwiss

International Best Fund Safety
Fullerton Markets

Most Transparent FX Broker
Exness

Best STP Broker
FXCC

Best Forex CFD Provider
Acetop Global Markets

Best Mobile Trading App
24option       

International Best Partnership Programme
Fullerton Markets

Best Forex Customer Service
ATFX

Best Islamic FX Account
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Chinese firms face sanctions for doing business with North Korea

The US has levied sanctions on two Chinese shipping companies after it emerged that both flouted US and UN restrictions in supplying goods to North Korea.

The US has historically led a global charge in forcing North Korea to abandon its missile programmes through the application of heavy sanctions

Dalian Haibo International Freight and Liaoning Danxing International Forwarding had attempted to bypass sanctions against the North Korean regime through “deceptive methods”, according to the US Treasury Department.

Dalian Haibo reportedly worked with a sanctioned company called Paeksol Trading Corporation in the sale and supply of metal and coal to and from North Korea. Liaoning Danxing used duplicitous practices to allow EU-based North Korean procurement officials to purchase goods for the one-party state, the Treasury Department said in a statement on March 21.

Under the terms of the sanctions, both companies’ US assets have been frozen, while US citizens and businesses are no longer able to deal with either firm.

The Treasury Department also issued an advisory list of 67 vessels that it said had engaged in prohibited transfers of petroleum with North Korean tankers, or had exported North Korean coal.

These sanctions are the first to be imposed since talks between US President Donald Trump and North Korean leader Kim Jong-un broke down last month.

The US has historically led a global charge in forcing North Korea to abandon its nuclear and ballistic missile programmes through the application of heavy sanctions; last month’s meeting was hailed as a sign of progress for relations between the two countries.

Negotiations failed, however, when the US refused to drop sanctions before seeing proof that North Korea had terminated its missile programmes. North Korea, meanwhile, was unwilling to give up its weapons while sanctions were still applicable. It became clear that the two countries had reached an impasse, with neither willing to blink first, and the talks were abandoned.

“The United States and our like-minded partners remain committed to achieving the final, fully verified denuclearisation of North Korea and believe that the full implementation of North-Korea-related UN Security Council resolutions is crucial to a successful outcome,” said Treasury Secretary Steven Mnuchin in the statement.

“Treasury will continue to enforce our sanctions, and we are making it explicitly clear that shipping companies employing deceptive tactics to mask illicit trade with North Korea expose themselves to great risk,” he added.

These sanctions come at a moment of uncertainty as to the future of US-North Korea relations. The US has said that it aims to recommence talks with Kim, with Secretary of State Mike Pompeo saying on March 4 that he was hopeful he could send a team to North Korea “in the next couple of weeks”.

North Korea has warned that it is unwilling to reopen discussions, and may even reconsider a freeze on missile and nuclear tests that has been in place since 2017, unless Washington is prepared to make concessions. This latest application of sanctions by the US is likely to anger North Korea in this sense; however, the fact is a programme of sanctions remains the official US policy, and one that it cannot deviate from until another solution is reached.

The US’ actions may also cause a rift with China. At a daily news briefing on March 22, Geng Shuang, a spokesperson for China’s Foreign Ministry, said that the country had lodged stern representations with the US over the sanctions. Sino-US relations are extremely fragile at present, with trade talks set to resume next week in a bid to end a bitter tariff war that has seen a collective $360bn in duties applied to exported and imported goods.

China has strongly opposed international sanctions against its eastern neighbour in the past, but also supports the denuclearisation of North Korea. As such, this latest round of sanctions applied by the US to Chinese companies puts China in a difficult position, forcing it to choose as to which country it wants to ally itself more closely with.

How Portugal engineered a remarkable recovery

When Angela Merkel arrived in Lisbon in 2012, she was met by fierce anti-austerity protests. Demonstrators held aloft banners reading, “Merkel assassin” and “Portugal is not Merkel’s country”. Remaining defiant, she praised Portugal’s prime minister at the time, Pedro Passos Coelho, for making the harsh economic adjustments demanded of him.

Six years after her first visit to the country, Merkel touched down in Portugal in 2018 to discover a country transformed

In return for a €78bn ($88.9bn) bailout from the European Commission, International Monetary Fund and European Central Bank, Coelho was forced to implement a stinging austerity package. “We are aware of the difficulties, but this is the only way forward,” Merkel insisted.

Her words provided little reassurance for Portuguese citizens. Working hours increased, the number of bank holidays fell and holiday bonuses were forfeited. Wages and pensions were cut by 20 percent, along with public spending on health and education. Coelho described the situation as a “national emergency”. The deficit hit 11.2 percent and the economy contracted by four percent.

Coelho brazenly advised young citizens to “show more effort” and leave their comfort zone by finding employment abroad. Thousands of young people, encouraged by the prime minister, flooded out the country as unemployment rocketed. Teachers, unable to find work, were instructed to move to the nation’s former colonies Angola and Brazil. An estimated 120,000 to 150,000 Portuguese citizens emigrated in a single year.

A change of course
Six years after her first visit to the country, Merkel touched down in Portugal once more in May 2018 to discover a country transformed. “I’m very pleased to find Portugal in an optimistic situation,” she said in a joint press conference with the country’s new prime minister, Antonio Costa, leader of the Socialist Party.

Since his election in 2015, Costa has hauled Portugal back from the brink

Since his election in 2015, Costa has hauled Portugal back from the brink. Long forgotten are the painful memories of 2012: in 2017 Portugal registered a GDP growth rate of 2.7 percent, the country’s highest since the beginning of the new millennium. Unemployment, meanwhile, had more than halved to 6.8 percent. The socialist leader managed all this by “turning the page on austerity”, a strategy that initially put him at odds with the European Commission and Berlin.

In 2015, Merkel urged Costa’s newly formed minority government, which was being supported by the anti-establishment Left Bloc and the hardline left-wing Communist and Green parties, to remain committed to the troika’s reform programme. Her then finance minister Wolfgang Schäuble went further as he warned: “Portugal is making a major mistake if they no longer stick to what they have committed to. They will have to request a new programme. And they will get it. But the terms would be severe, and it is not in Portugal’s interests.”

Yet, Costa and Finance Minister Mário Centeno have navigated a political tightrope, finely balancing the act of rolling back austerity measures while maintaining fiscal responsibility. In doing so, they managed to gain favour from both EU officials and their left-wing backers in government.

Merkel, renowned for her stubbornness, avoided verbally conceding she was wrong in her dismissal of Costa’s government. Her support of Centeno, however, in his campaign to be elected president of the Eurogroup in early 2018 did at least signal a relaxation of her faith in austerity politics. Ultimately, the Portuguese minister was successful, becoming the first Eurogroup president to come from a southern European country and the first from a country that had required a bailout.

Furthermore, as 2018 drew to a close, the Socialist Party proudly unveiled their 2019 election-year budget that pledged to deliver the country’s lowest deficit (0.2 percent) since the Carnation Revolution of 1974. Projected economic growth remained healthy and was expected to continue until 2022, with a promise of increased incomes for families.

In 2020, the government expects to register the first surplus in the country’s democratic history, a year ahead of schedule, and the first recorded by a southern European nation since records began in 1995. With enviable poll ratings placing Costa’s party roughly 15 points ahead of its nearest competitors, the Socialist Party looks well positioned to buck the trend of declining popularity seen across centre-left parties in Europe.

Driving the recovery
Though overall public sector spending scarcely increased, there country’s government oversaw a reversal of the Portuguese mindset, creating a more optimistic outlook in a nation famed for its sadness. An increase in household spending, particularly on higher-priced luxuries, has aided the recovery. “What was holding the consumer back was confidence,” Minister of the Economy Pedro Siza Vieira, told Bloomberg. “The austerity programme imposed in Portugal and Europe dragged the consumer to have less confidence and consume less.”

At the heart of Portugal’s recovery has been a tourism boom

At the heart of Portugal’s recovery has been a tourism boom that saw visitor numbers increase by 12 percent to a record 12.7 million in 2017: an increase that resulted in Portugal being named as the top destination at the World Travel Awards. “Portugal has excellent geographical conditions and long-standing historical ties that are proving to be very important, alongside an excellent English speaking workforce,” says Ricardo Costa Macedo, an attorney at Caiado Guerreiro, Globalaw.

Indeed, English-speaking visitors have surged: US tourists increased by 30 percent in 2017, and the UK remains Portugal’s largest source of visitors. In addition, the government has focused on making tourism more sustainable. Secretary of State for Tourism, Ana Mendes Godinho, explains the lessons Portugal has learnt from other nations plagued by overtourism. “We have an action plan for sustainability which is exclusively dedicated to developing tourist products in the lesser-known regions. This strategy has been paying off; the regions with the highest growth rates are the Azores, the centre, the north and Alentejo, which typically have lower levels of tourism.”

Concurrently, increased demand in Portugal as a country has boosted the profile of the nation’s businesses, products and start-ups. Export revenue has increased by more than half since 2008, improving Portugal’s trade position by nearly €20bn ($22.78bn), and creating a newly discovered sense of self-sustainability. Furthermore, as 2018 drew to a close, Portugal signed various agreements encompassing investments of about €400m ($455m), raising the total agreed investment across the year to a record €1.1bn ($1.25bn).

An increase in investment and ample government support attracted Web Summit, the largest tech event in the world, to Portugal in 2016, where it will remain for the next decade. Nestled within the narrow cobbled streets of Lisbon, a boom in the number of technology start-ups has transformed the Portuguese capital into one of Europe’s lesser-known innovation hubs.

“Led by an entrepreneurial spirit,” says Macedo, “the Portuguese Government developed the start-up ecosystem programme ‘Startup Voucher’, which supports the creation of start-ups. [Furthmore,] measures such as the Golden Visa Programme have helped boost the economy.” The number of professional programmers in the country has increased by 16.2 percent, the fastest rate in Europe, and Portuguese technology is also boosting employment, which grew by 6.4 percent in the last year.

Perhaps not all of the credit belongs to Costa. In the view of Macedo, “it was the previous government, led by Passos Cohelo, that put Portugal back on the path to recovery, executing the measures demanded by the IMF”. Wharton finance professor Joao Gomes believes that Portugal has benefited from Europe’s economic recovery as a whole in a few ways: tourism, exports and increased domestic investment. Commentators also note that terrorism in other tourist destinations such as Tunisia and Egypt has sent sunseekers looking elsewhere, the security and safety of Portugal providing an obvious alternative.

Reasons for caution
Despite repairing Portugal’s economic health, economists warn that Costa and his government are not in the clear just yet. “Although Portugal has delivered promising economic results in the past few years and could continue to do so, economic risks have risen, both at the national level and across Europe more widely,” says Ediz Fahri, senior economist at Dun & Bradstreet.

While new opportunities for work are appearing all the time, many jobs remain in the informal sector

The national debt, while decreasing, remains the third highest in the European Union at 124.9 percent of GDP. However, the country received a boost when Moody’s – the final major credit rating agency to have kept Portugal’s debt in junk territory – upgraded the country’s investment category. Once again, Portugal will be eligible for inclusion in JPMorgan’s investment-grade bond indices, affording the government increased financial wiggle room.

While new opportunities for work are appearing all the time, many jobs remain in the informal sector – where wages and job security are low and working hours unpredictable. While a trickle of the Millennials who left in 2012 are returning, the country’s average age has steadily increased and is forecast to hit 46.2 years in 2020, up from 37.9 in 2000.

Costa blamed austerity policies for causing waves of emigration, with citizens suffering from “intolerable levels of poverty”, yet there remains a lack of lucrative professions to convince the two million Portuguese living abroad to return. The drain of young talent provides a long-term challenge to the government, and until a solution is found, Portugal’s economy still remains vulnerable, despite the recent uptick in its fortunes.

Top 5 fastest-growing economies in Africa

Across Africa, examples of foreign direct investment (FDI) are evident. China has taken the lead, with the continent being at the heart of its One Belt, One Road initiative. Now other countries are following suit. Brazil, for instance, built Ghana’s largest flyover in Accra. Germany, meanwhile, launched the ‘Marshall plan for Africa‘ in 2018, which will see it assist in the establishment of infrastructure that will help promote African exports.

Opportunities to invest in Africa have become more abundant than ever before

As governments across the continent continue to take steps to liberalise and diversify their economies, Africa has become home to some of the world’s fastest-growing economies. Consequently, opportunities to invest in the continent have become more abundant than ever before. In light of this phenomenon, World Finance lists the top five fasting-growing economies in Africa, according to the World Economic Forum.

 

1 – Ethiopia (8.5% GDP growth rate)
Efforts to modernise Ethiopia’s economy have paid off. A wave of privatisation, with state-owned companies being sold to overseas investors in China, saw FDI growth hit 27.6 percent in 2016/17. The Ethiopian Government has also stepped up to the plate with substantial state investment to boost infrastructure and support sustainable solutions. Hoping to rival the manufacturing sectors of China and India thanks to its cheap labour costs, the country has also made efforts to improve its trading relationships and promote Ethiopian products. However, the modernisation of the economy has not been all smooth sailing: as the country moves away from its reliance on agriculture, the reforms have sparked public unrest and raised concerns about the government’s human rights record.

 

2 – Côte d’Ivoire (7.4% GDP growth rate)
The Ivory Coast is one of the nations that benefitted from the 50 percent African franc devaluation in 1994. This helped to control the resulting hike in inflation, while making exports more competitive. The nation also benefits from excellent infrastructure, making it attractive to foreign inflows. This is boosted further by the government stepping up a programme called the National Development Plan (NDP) for 2016-20, which is aimed at encouraging investment. Challenges remain, however: the Intergovernmental Panel on Climate Change released a report in 2018 that highlighted the effects of climate change on nations such as the Ivory Coast. The country has a heavy coastal population of 7.5 million, contributing to 80 percent of its GDP.  The report predicts that, on the current path, climate-induced impacts are expected to “drive the loss of coastal resources”.

 

3 – Senegal (7% GDP growth rate)
Senegal is one of Africa’s most stable countries, experiencing three peaceful political transitions since it gained independence from France in 1960. However, increased extremism in neighbouring countries has been a cause for concern in recent years. Senegal’s economy remains highly dependent on agriculture, accounting for 15.4 percent of GDP, though variable weather conditions can play a large part in this figure. Fortunately, the nation has a highly developed tourism industry, and with its extensive coastline, it also operates as a shipping hub – another driving force behind its high growth rates. Dakar, as the capital of the former federation of French West Africa, is home to numerous banks and institutions that serve the continent’s Francophone countries.

 

4 – Tanzania (6.4% GDP growth rate)
East Africa’s second-largest economy, Tanzania, is a nation in transition. But despite the country’s promising GDP growth rates, an estimated 46 percent of the population remains in poverty: many of the gains in GDP have so far been unequally shared between citizens. As with others in this list, Tanzania remains highly dependent on agriculture with no signs of this abating – in fact, between 2014 and 2015, the sector’s contribution to GDP increased by 0.2 percent. That said, the nation is also a regional leader in the financial services sector. The Bank of Tanzania allows non-banking institutions to provide financial services, a daring move that has proved to be rewarding. The country also benefits from a stable deficit that has remained modest – 2.1 percent in 2017/18 – meaning investments into the country pose less risk than others on the continent.

 

5 – Ghana (6.3% GDP growth rate)
Neighbour to the Ivory Coast, Ghana is the third Western African country to feature on the list. The country boasts a rich range of resources: it is Africa’s second-largest producer of gold, and has an abundant supply of diamonds and oil. To supplement trade, Ghana imposes various tariffs or barriers compared to neighbouring countries, and its depreciating currency has made the nation’s exports more competitive. Consequently, agriculture accounts for around 20 percent of GDP, while also employing half of the country’s workforce. However, in 2015, a drop in oil prices and lax government spending forced Ghana to apply for an IMF bailout of $1bn. It is on track to exit the agreement later this year.

Deutsche Bank loaned Trump $2bn despite multiple red flags, new report claims

US President Donald Trump was able to access over $2bn in loans from Deutsche Bank despite the German lender being aware of inconsistencies in his finances, a report by The New York Times has claimed. The bank has asserted publicly that Trump was not a priority client, but interviews conducted by The New York Times with more than 20 current and former Deutsche Bank executives and board members tell a different story.

The report alleged a symbiotic relationship between the two parties, with Trump using his association with Deutsche Bank to deflect attacks on his business nous, while the German lender leveraged Trump’s celebrity to draw in new clients. The White House referred The New York Times’ questions to the Trump Organisation, which refused to comment. A spokesperson for Deutsche Bank, meanwhile, has said: “We remain committed to cooperating with authorised investigations.”

At a time when Trump was considered “a Wall Street pariah”, Deutsche Bank provided over $2bn in loans over the course of two decades, The New York Times reported. The US president is alleged to have bribed Deutsche executives to sign off bond and loan deals with trips to Mar-a-Lago and flights on his private jet. He also reportedly inflated his net worth to $3bn in order to secure loans, which continued to be approved by the bank even after it discovered Trump was worth closer to $788m.

Donald Trump’s chequered financial history, including his relationship with Deutsche Bank, is currently under investigation by two congressional committees

According to The New York Times, Deutsche continued to loan Trump multimillion-dollar sums until as late as 2015. After Trump won the 2016 US presidential election, however, the bank’s executives braced themselves for a public outcry regarding their close ties with the US’ polarising president. Employees at Deutsche’s Wall Street branch were even told not to “publicly utter the word ‘Trump’”, the report stated.

Trump’s chequered financial history, including his relationship with Deutsche Bank, is currently under investigation by two congressional committees and the New York State Attorney General. Next month, Deutsche is expected to begin handing over a wealth of internal documents to both committees, according to people briefed on the matter.

These revelations come at a fragile moment for the lender, which announced on March 18 that it was exploring a merger with German counterpart Commerzbank. The two institutions said that a number of due diligence committees would be set up to go through each of their finances, a process which is likely to reveal some compromising truths about Deutsche’s relationship with Trump, and could even derail the deal altogether.

Evidence of Trump’s financial transgressions, meanwhile, continues to build. In October 2018, a separate investigation by The New York Times revealed that Trump had understated his wealth on multiple occasions to reduce his tax bill. The report also called Trump’s status as a “self-made man” into question, after finding that he had received at least $413m from his father, Frederick.

On February 28, Trump’s former lawyer, Michael Cohen, testified to a congressional committee that Trump had made hush-money payments to adult film actor Stormy Daniels in exchange for her silence about an alleged affair. The US president has repeatedly denied these claims.

With congressional committees dominated by powerful Democrats, it’s highly likely that the president will be held to the full extent of the law for any misdeeds, which could even lead to impeachment if sufficient evidence is collected.

Glencore’s Mumbai office searched in price fixing investigation

The Mumbai offices of Glencore have been raided by the Indian antitrust regulator after it was alleged that the Swiss commodities trader was running a price-fixing cartel.

The raids were part of an investigation by the CCI into allegations that the firms had formed a cartel to raise prices of pulses in 2015 and 2016

More than 25 officials from the Competition Commission of India (CCI) carried out the raids on March 15 and 16, four sources with knowledge of the matter told Reuters. Offices held by Africa’s Export Trading Group and India’s Edelweiss Group were also targeted.

The raids were part of an investigation by the CCI into allegations that the three firms had formed a cartel to raise prices of pulses for the Indian market in 2015 and 2016, when India was facing an acute shortage.

Following two years of severe drought, prices of staple pulses, such as chickpeas and black grams, rose substantially in 2015. In a bid to slash costs, the Indian government introduced duty-free imports, encouraging traders that imported pulses to sell them locally. India consumes about 22 million tonnes of pulses annually, but faced a shortfall of around eight million tonnes in 2015.

The CCI is investigating whether collusion between these three companies kept market costs of pulses artificially high even after commodity prices stabilised. Its probe reportedly began three months ago.

During the raids, the watchdog collected evidence including documents and emails, and questioned officials at the three companies, a government source told Reuters.

When asked for comment, a spokesperson for Glencore told World Finance: “Glencore Agriculture confirms that the Competition Commission of India has conducted a search and seizure at the offices of Glencore Agriculture India. Glencore Agriculture India has limited information on the scope of the inquiry of the CCI at this time. Glencore Agriculture India is fully committed to compliance with all laws and regulations, including competition laws, and will cooperate with the CCI as required.” The CCI had not responded to requests for comment at time of publication.

Glencore is currently facing scrutiny from regulators at the US Department of Justice (DoJ) over its activities in Nigeria, Venezuela and the Democratic Republic of Congo. The DoJ subpoenaed documents relating to Glencore’s business in those three countries dating back to 2007, citing concerns over compliance with the US Foreign Corrupt Practices Act and money laundering legislation.

The commodities trading group, which is worth an estimated $55.6bn, is also being investigated over links to Brazilian oil firm Petrobras as part of the so-called Car Wash investigation. Officials from Glencore, together with counterparts from Vitol and Trafigura, allegedly paid more $15m in bribes to Petrobras.

This slew of on-going investigations across the globe doesn’t reflect well on Glencore’s business practices. The company is likely to face significant legal bills if any of the probes lead to court action, but more critically, negative press has already had a significant impact on Glencore’s share price. News of the Doj’s investigation sent shares tumbling 13 percent last July, with investors concerned as to the long-term impact on their pockets. This latest news may have a similar effect, with some shareholders concluding that continued investment is simply too high a risk.

Internal Swedbank review finds $10bn worth of suspicious transfers

An internal report conducted by Swedbank has exposed roughly $10bn worth of transactions between “suspicious” customers of Swedbank and Danske Bank, Swedish state television SVT revealed on March 15. The amount is more than double the figure reported by the broadcaster last month. The report, dating back to last September, covered an in-depth analysis of about 2,000 customers throughout the Baltic countries.

The revelations come at a time when several institutions have been dragged into a scandal involving Denmark’s Danske Bank

The revelations come at a time when several European and overseas institutions have been dragged into a scandal involving Denmark’s Danske Bank. The US Department of Justice and the country’s Securities and Exchange Commission are currently investigating the lender after it conceded that the near $230bn that circulated through its modest Estonian unit last year was suspicious in origin.

“As we have repeated many times, we act on different signals,” Swedbank CEO Birgitte Bonnesen said in a statement. “Therefore, it was natural for us to act when the disclosures about Danske Bank came out on the market. That was the background to our analysis.”

She added that the lender reported dubious transactions identified to the relevant authorities and expressed faith in Swedbank’s anti-money laundering procedures. The bank, which has 900,000 private and 130,000 corporate customers in Estonia, made four notifications per day to the Estonian finance police based on last year’s transactions.

Swedbank also claimed it had shared its internal report with the Swedish financial watchdog. Following SVT’s initial claims last month, the bank hired Forensic Risk Alliance to conduct an external review. The conclusion of that analysis will be released at the end of this month.

Swedbank has asserted that not all of the transactions named in its internal review are necessarily suspicious in nature, but given that the Danske scandal was original believed to involve only around $200m in questionable flows, the new $10bn figure will be concerning. With Swedbank already under examination by the financial supervisory authorities in Sweden and Estonia, confidence in the Nordic region’s financial sector looks set to take another hit.