Caught in a Bind: Tax Avoiders Excluded from Corona Relief Funds

[caption id="attachment_15323" align="alignright" width="300"] Sultan Ahmed bin Sulayem, chairman and CEO of DP World. Pawan Singh / The National[/caption]

Consider a company that has furloughed a quarter of its workforce, and now intends to fire these 1,100 workers, all the while screaming for the UK government to throw it a £150 million lifeline yet unwilling to scrap a £267 million payout to its owners, a wealthy foreign state that acquired the business last year for £322 million. The company’s boss is now unhappy, unimpressed, and dissatisfied because he has not yet received the funds requested.

However, what surprises perhaps most is the UK government actually considering the request for support filed by P&O Ferries, a company 80 percent owned by Dubai Ports Worlds. Not one to curry favours or mince words, DP World Chief Executive Sultan Ahmed bin Sulayem called the UK’s response to the corona outbreak ‘slow’ and said his shipping company will founder unless it manages to secure £257 million in financial support. He also emphasised the strategic importance of the shipping line and noted that P&O Ferries carries about 15% of all goods entering the UK.

As untold billions in state aid are being disbursed to keep businesses afloat and the economy from imploding, some companies have not yet received the memo: the funds are meant to support workers for the duration of the pandemic and ensure they have a job to return to once the virus has been contained and the lockdown eased. Using state funds to help finance dividend payouts or write fat bonus cheques is simply not allowed, apart from being morally questionable given the present circumstance.

Due to the vast volumes of cash involved, and the need to cut short lengthy due diligence processes normally attached to funding from official sources, it is inevitable that some of the money ends up in the wrong pockets. Like Virgin Atlantic before it, P&O Ferries seems to consider state support a right rather than a privilege.

Admittedly and commendably, the new owners of the shipping line linking UK ports to gateways on the continent have not bought into the elaborate tax avoidance schemes deployed by the P&O Ferries former parent company which was caught out by HM Treasury in 2013 for using ‘tricks’ to obtain £14 million in tax relief. However, the company now sorely and urgently needs to polish its tarnished public image. Sultan Suleyman’s flat refusal to call off the dividend payout caused an unhelpful uproar that may yet convince the government to place P&O Ferries in the same category of demerit as Sir Richard Branson’s Virgin Atlantic.

That airline, owned by the flamboyant billionaire, sought to obtain up to £500 million in financial support. However, the request was denied owing to Mr Branson’s status as a tax exile. Since taking up residence on a private Caribbean island in 2006, the businessman – said to be worth at least £4.5 billion – has paid no personal income tax in the UK. He has now pledged to mortgage his island and sell part of his holdings in Virgin Galactic, the fledging space travel company, to keep the airline aloft.

Mr Branson has also announced 3,000 layoffs and wants to bring in private equity to salvage what is left of his company. To trim the fleet for the sober post-corona era ahead, Virgin Atlantic disposed of its four ageing Airbus A340 aeroplanes, retiring two and selling the other two in a fire sale to the Malta-based charter airline Maleth Aero. The company also retired its last seven Boeing 747-400’s and four Airbus A330’s.

Even so, Virgin Atlantic CEO Shai Weiss keeps talking almost incessantly about a future public-private partnership, indicating that the UK taxpayer is not yet off the hook. Also, rallying private equity to save an airline that was already reporting steep losses before the pandemic may not have met with quite the enthusiasm anticipated.

In the UK and elsewhere, the corona pandemic has caused a shakeout, perhaps long-overdue, of companies that play by the rules and those that dodge the rules but now need help. Businesses that have depressed their earnings using a myriad of complex accounting tricks in order to minimise their tax exposure, now discover that the knife cuts both ways.

Earlier this week the governments of Denmark and Poland decided to no longer support companies that are registered in tax havens. Polish Prime Minister Mateusz Morawieski said that funds from the €22 billion business rescue package he recently unveiled will only be available to companies that pay domestic corporate taxes. “Tax havens are the bane of modern economies,” he added. The Polish prime minister also said that the money is meant to shield companies against foreign takeovers. Mr Morawieski had earlier expressed concern over the ‘encroachment’ of Chinese companies. The €22 billion now earmarked for businesses comes on top of last month’s €45 billion ‘anti-crisis shield’.

Though welcomed by most, the cash infusion is geared towards small- and medium-sized businesses, leaving large corporations to procure their own solutions. According to Grzegorz Baczewski of the Konfederacja Lewiatan employers’ association, this approach may result in big job losses. Large multinational companies employ an estimated three million people in Poland.

The €58 billion released by the Danish government for business support measures is also reserved for companies that are not domiciled in tax havens. However, it is not yet clear what constitutes a ‘tax haven’. Professor Duncan Wigan of the Copenhagen Business School points out that the European Union’s own blacklist does not include tax havens on the continent such as Ireland, The Netherlands, and Luxembourg: “If the restrictions are applied to larger Danish companies that maintain entities in one of those jurisdictions, it would bar the vast majority of them from receiving state support.”

Richard Murphy, a University of London professor in International Political Economy, agrees and says that recipients of state support must also commit to business models that promote environmental sustainability and strengthen corporate social responsibility: “Support cannot be unconditional. Society deserves a return on its invested capital and that includes an end to tax avoidance in addition to enhanced corporate transparency.”

The cruise line industry discovered early on in the pandemic that the usage of intricate tax avoidance stratagems comes with a price. In the US, large cruise operators were denied a slice of the $2 trillion initial support package approved by Congress. The Coronavirus Aid, Relief, and Economic Security (CARES) act specifically excludes companies not registered domestically.

With headquarters in Southampton and Miami, British-American Carnival Corporation’s US subsidiary is technically a Panamanian company and as such unable to apply for CARES credits and grants. Adding to the complication, Carnival’s British operation is registered in the UK and may thus apply for relief. The UK government has so far not excluded foreign-registered companies from receiving state-backed financial support although it is said to be looking into the matter as a result of the public outcry over the improbable plea from P&O Ferries.

Royal Caribbean International, the world’s largest cruise line by revenue and also headquartered in Miami, is incorporated in Liberia where the company pays next to nothing in taxes. With the notable exception of the Holland America Line, now part of Carnival, all major cruise companies operate their ships under exotic flags of convenience from countries both unable and unwilling to offer any help to the troubled industry. With no home port to turn to, more than fifty large cruise ships are currently riding at anchor close to the intersection of US and Bahamian territorial waters, waiting for either tourists to return or liquidators to move in.


Otaviano Canuto: Shapes of the Post-Coronavirus Economic Recovery

Data recently released on the first-quarter global domestic product (GDP) performance of major economies have showed how significant the impact of COVID-19 has been on economic activity and jobs, with large contractions across the board. The ongoing global recession is poised to be worse than the “great recession” after the 2008-09 global financial crisis, especially from the standpoint of emerging market and developing economies. The depth and speed of the GDP decline will rival that of the Great Depression of the 1930s.

But how swiftly will national economies recover once the pandemic has passed? And when will that happen? That will depend on how successful the containment of coronavirus and exit strategies will be, as well as on how cost-effective will be the policies designed to deal with the negative economic effects of coronavirus.

Coronavirus has taken down global economic giants

The U.S. real GDP contracted at a seasonally adjusted annual rate (saar) of 4.8% in the first quarter of the year, the worst outcome since the last quarter of 2008. The second quarter is likely to come even worse, with forecasts pointing to a real GDP decline around 40% saar. These are figures not seen since the Great Depression of last century. More than 20 million U.S. workers lost their jobs in April and the unemployment rate reached levels as high as 14.7%.

The Euro Area is another fallen giant. In the first quarter of 2020, its GDP shrank 14.4% q/q saar, as lockdowns were imposed around mid-March and activity started to run about a third below normal levels. The level of activity may have bottomed last month, assuming that restrictions will be gradually eased in the following weeks. In any case, forecasts point to a 45% annualized rate of GDP drop in the first half of the year.

Japan’s real GDP is forecast to decline by more than 40% saar in the second quarter. Daily increases in the number of infections led the government to prolong the state of emergency for an additional month after May 6th.

China, in turn, suffered first an outbreak-induced sudden stop in February (Canuto, 2020a). There was a rebound in March but not enough to allow a return to previous GDP levels, with manufacturing prospects worsening a bit last month. The normalization of domestic consumer demand and the service sector has been a key driver of China’s economic recovery in the second quarter, but demand conditions have not been much supportive. The plunge in exports last month reflects the global nature of the crisis and expresses the limits of any isolated country recovery, while slump remains underway elsewhere. Domestically, it is worth noticing the hesitancy to consume services even as quarantines were lifted.

The wide variation in first-quarter annual rates of GDP negative outcomes among the giants – U.S (4.9%), Euro area (14.4%), and China (34.7%) – can be associated to their different timings of COVID-19 outbreaks. But they will all have crossed a rough patch at the end of the semester.

The depth and severity of the crisis were displayed in the IMF World Economic Outlook forecasts released in mid-April (IMF, 2020). The IMF expects the global GDP per capita to shrink by 4.2% this year, while it declined by 1.6% in 2009, during the global financial crisis (Figure 1). 90% of all countries are poised to exhibit negative GDP growth this year.

The recovery along 2021 is not expected to be enough to compensate for the ongoing GDP declines and GDP per capita in advanced economies at the end of next year is likely to still be lower than December 2019. Emerging market and developing economies, in turn, are facing a “perfect storm” and, in most cases, performance will be even gloomier (Canuto, 2020b).

How will the economic recovery be shaped?

A post-crisis recovery is expected to begin in the second half of the year, at least in those countries where the coronavirus outbreak may be considered to be past and policies to flatten the pandemic curve can be relaxed (Canuto, 2020c). The shocks caused by Covid-19 have been profound while they last but will invariably be temporary.

How fast will this recovery be, i.e. what will be the country-specific shape of the GDP evolution curve over time? What will this format depend on?

Let us mention four possible stylized formats for such GDP evolution, taken from “the ABCs of the post-COVID economic recovery” outlined by Louise Sheiner and Kadija Yilla (2020). The most optimistic is that of a "V" (Figure 2). After suffering a strong blow during the pandemic, the economy soon returns to its previous trajectory. The loss of GDP during the period of restrictions - due to supply shocks and pent-up demand - is definitive. However, if there are no lasting consequences of the virus outbreak period and the corresponding economic downfall on the production system and on economic agents’ conditions, everything returns to the previous normal.

Something less optimistic and more likely than the previous one is the “U” shape (Figure 2). The effects of the pandemic persist, not least because the norms of social distance remain for some time, but eventually GDP returns to its previous trajectory after a period of decline. Even if sanitary conditions are declared to be normalized, consumers and companies will hesitate before returning to their previous consumption patterns and investment plans.

There are, however, two other more pessimistic trajectories. One is the shape of a "W" (Figure 3). This will be the case if, after a relaxation of “social distancing policies”, new outbreaks of COVID-19 appear, and new rounds of these policies are implemented. This possibility is mentioned by all those who alert against any early lifting of restrictions on mobility and crowding.

Finally, there is a possibility that the damage left by the new coronavirus is permanent or durable. In this case, the recovery takes the form of an "L" (Figure 3). The economy grows again, but at lower levels of GDP over time than would be the case if COVID-19 had not appeared.

Previous investment plans can be shelved. Previously healthy companies may have gone bankrupt due to the abrupt and sudden deterioration in their operating conditions during the crisis. Changes in the pattern of consumption can lead to the permanent elimination of jobs without unemployed workers finding jobs quickly elsewhere. Production processes can be changed to less efficient ways to avoid risks previously not considered relevant. Net worth conditions of families, firms and the government may also suffer significant deterioration during the epidemic.

Certainly, public debt is rising worldwide, something naturally expected as a result of the state's role as the ultimate catastrophe insurer in all countries of the world. Emergency and temporary measures, financed by the public sector, have generally been adopted, aiming to minimize the disastrous consequences of the - temporary but potentially lethal - sudden stop caused by the coronavirus. Not by chance, around the world, governments have announced dramatic income transfer policies for informal workers, boosts to unemployment insurance, special lines of credit for business segments - sometimes tied to job preservation -, tax relief measures and so on.

Strictly speaking, the shape of the recovery will depend on the quality - in terms of cost-effectiveness - of those public policies. On the one hand, there is the burden of public debt. On the other hand, the greater the smoothing of household income streams - especially the most vulnerable and without accumulated savings - and the lower the wave of bankruptcy of healthy businesses under normal conditions, the closer the country will be to the "U" shape than to the "L".

The shape of GDP evolution will also depend on whether previous financial/fiscal fragilities and vulnerabilities are aggravated by the coronavirus-related crisis. Finally, as we noticed in the case of China, global interdependence means that what happens elsewhere also matters locally.

As COVID-19 outbreaks are still unfolding in most places in the world, it is still early to bet on any specific shape of recovery as predominant anywhere.

 Otaviano Canuto, based in Washington, D.C, is a senior fellow at the Policy Center for the New South, a nonresident senior fellow at Brookings Institution, and principal of the Center for Macroeconomics and Development. He is a former vice-president and a former executive director at the World Bank, a former executive director at the International Monetary Fund and a former vice-president at the Inter-American Development Bank. He is also a former deputy minister for international affairs at Brazil’s Ministry of Finance and a former professor of economics at University of São Paulo and University of Campinas, Brazil.

First appeared at the Policy Center for the New South | By Otaviano Canuto

[embed]https://youtu.be/rav3NYLtuhc[/embed]


ISID, McGill University: Updating the DFIs’ Operating Models to Achieve the UN 2030 SDG Agenda

[caption id="attachment_15333" align="alignright" width="300"] Montreal, Canada: the downtown Montreal campus of McGill University[/caption]

The UN General Assembly set the Sustainable Development Goals (SDGs) five years ago. The estimated annual amount of investment needed to achieve them is short — by $2.5tn to $3tn.

The stakeholders that play a key role in directing and mobilising capital to finance the goals have not done enough.

In relation to actions taken by countries towards domestic resource mobilisation for addressing the SDGs, 79 of the 107 national development plans analysed by the UN lack an investment strategy. Countries need to create development plans that are prioritised in their budgets, and that are solidly integrated in their national financing frameworks. This is also necessary to attract capital.

Since total flows of net Official Development Assistance (ODA) in 2018 amounted to “just” $150bn, there are hopes that international financial institutions as well as private capital markets will be mobilised to help address the financial shortfall. However, the international financial system has not taken enough action.

Despite some welcome initiatives, the financial markets continue to operate mostly under short-term commercial goals, taking a conservative approach towards investing in developing countries. Prudential reg
ulations imposed on commercial banks following the 2008 financial crisis made lending to developmental areas like SMEs and infrastructure more stringent. Development finance institutions (DFIs) have a crucial role to play here.

DFIs currently still mobilise low volumes of private capital, especially their “private-sector windows” (PSWs). The provision of guarantees remains low, and the use of financial instruments and structures that have the capacity to result in high financial additionality is minimum. The DFIs’ PSWs investments in the more challenging countries, sectors and segments of the population are disproportionately low. Their investment capacities are overall not maximised as a result of prudent use of capital, limited use of the wide range of financial products that exist in the mainstream financial market, and operating inefficiencies.

DFIs, especially their PSWs, are vital stakeholders in directing and mobilising capital to achieve the 2030 Agenda. Below we expand on these matters and present our recommendations in the following three areas:

Mobilisation of private capital

Offering of financial products and structures with high financial additionality

Maximisation of investment potential

Mobilisation of Private Capital

Based on an analysis of the eight largest MDBs’ PSWs, their direct and indirect mobilisation in 2016 represented $1.5 of private capital for every $1 invested from their own accounts. Direct mobilisation represented $0.40 of private capital for every $1 invested from their own accounts. While these ratios apparently increased in recent years, they remain very low, and must grow by to help address the financing shortfall.

Mobilisation ratios can increase as a result of adapted efforts from dedicated teams, and by using an increased number of mobilisation structures. It is necessary that projects have market terms (including regarding financial returns and tenor), and that they are structured according to market best-practice, or the possible mobilisation volumes are limited and distort the markets

We recommend that the DFIs’ PSWs make use of the broader mobilisation structures that exist in the market. The mainstream financial sector has been using securitisations, credit-linked-notes (CLNs), collateral loan obligations (CLOs), tailor-structured funds and many by-products of these, which may also be used by DFIs for mobilisation purposes.

We also recommend that the DFIs’ PSWs increase their interactions with private capital sources by sharing their investment knowledge and by proposing structures that address their interests and risk tolerance levels.

Offering of Financial Products and Structures with High Financial Additionality
The DFIs’ PSWs have mostly used loans as their primary financial product, and have dedicated limited structuring efforts towards maximising potential. Variable payment obligations and tailored subordinated loans — loan products with high financial additionality — are almost non-existent in DFIs’ portfolios. Guarantees represent a very small portion of the DFIs’ portfolios, with most being low-risk, short-term, and related to trade financing. Guarantees represent a mainstream financial product that possesses a relevant capacity to unlock markets.

We recommend that the DFIs’ PSWs provide a wider variety of financial products, structured for the specific cases when so may result in higher financial additionality.

Maximisation of Investment Potential

DFIs have disproportionately invested in upper- and lower-middle-income countries as compared to low-income countries. Most DFIs present portfolio concentration on a few countries, including high-income ones. In the SDG priority sectors of education, health and energy, DFIs are underserving large segments of the poorest populations. Direct investments in SMEs and infrastructure, which are areas that are fundamental for economic development in developing countries, have also been relatively low.

We believe that the largest limitations to the DFIs’ investment potential result from their current operating models.

In this regard, we recommend making use of the wider range of financial products that exist in the mainstream financial market (and applying dedicated structuring) to finance projects in countries and/or sectors and segments where the risk level is deemed higher.

Internal inefficiencies, namely by: increasing delegation to management while strengthening board oversight of management functioning and deliverables, must be improved by applying the best-practice in commercial and investment banking, diminishing any focus on delivering volumes, incorporating additional specialised personnel from the mainstream financial sector, and adjusting management decision-making process and institutional culture.

We also believe that there is room to increase the utilisation of DFIs’ capital by maximising their balance sheets with tools commonly used by commercial banks, such as securitisations, insurances, and creation of separate investment funds. Risk-diversification must also be increased.

Towards the 2030 Agenda

Collaboration between DFIs and private investors, as well as among DFIs, must improve significantly. In this regard, we suggest maximising the use of DFIs' donor-funded innovation windows and concessional funding windows that focus on least-developed countries and/or underserved sectors and segments of the population. Testing investments can pave the way for private capital. Such windows house professionals with track records in leading innovation in development financing.

DFIs’ actions should be harmonised to avoid duplication. This would involve minimising duplicated due-diligence efforts, as well as business origination and investment structuring.

DFIs-private capital funds should be launched, along with public-private development finance institutions. DFIs must share their own investment financial capacities, including capital.

We believe that the implementation of these points would contribute to achieving the 2030 Agenda. Accomplishing the SDGs is not only dependent on the adaptation of DFIs, but also on complementary effective actions from countries, the international financial system and the private sector, in addition to collaboration among all stakeholders.

About the Authors

[caption id="attachment_15334" align="aligncenter" width="248"] Author: Franque Grimard[/caption]

Franque Grimard is an Associate Professor of the Department of Economics at McGill University. His research specialties are Development and Health Economics, where he is interested in the application of statistical analysis and data collection to applied policy issues such as poverty and social protection, health, gender empowerment, public finance management, corporate social responsibility and extractive industries, and sustainable development. His work on economic development has been published in the Journal of Development Economics, World Development, Economic Development and Cultural Change, the Review of Development Economics and Ecological Economics. Professor Grimard is also the president of the Canadian Development Economics Study Group (CDESG). Operating with an IDRC grant, CDESG is the main research group on development economics in Canada organizing policy panels in the area of development economics, sponsoring developing country scholars to come to CDESG conferences to present their work, building a community of researchers in Canada and abroad to produce research and applied policy in development economics for policy makers in Canada and in developing countries.

[caption id="attachment_15335" align="aligncenter" width="253"] Author: Christian Novak[/caption]

Christian Novak is a Professor of Practice at McGill University - Institute for the Study of International Development (ISID), where his works focus on development financing. Christian is also Managing Partner of FMA - Frontier Markets Advisors, a Canadian firm that provides advisory services to organizations involved in development financing and impact investing. His previous experience includes senior emerging markets and global responsibilities in investment banks and in a leading regional development financial institution, in the areas of risk management and debt capital markets.

About About McGill University's Institute for the Study of International Development (ISID)

ISID's mission is to advance knowledge of the social, political, economic and environmental processes and conditions that enable people and societies to develop their full potential, living long, healthy, meaningful, and productive lives in community with others. The Institute supports critical cutting-edge research through fostering the engagement and collaboration of a multidisciplinary team of faculty, practitioners, and students. ISID’s academic programs aim to train a new generation of passionate and innovative future leaders in the skills they need to conduct rigorous, normative and evidence-based analysis of the concepts, policies, and practices of international development. Through extensive outreach programs that aim to build bridges between academic researchers, international development policymakers and practitioners, and affected communities, ISID strives to create and communicate knowledge that contributes to understanding and solving real world development challenges. Website: mcgill.ca/isid


Carmakers Running on Fumes

French car manufacturer Renault can be bought for a mere €5.7 billion, a trifling sum in an environment defined by trillions gushing from central banks and state coffers to troubled businesses. Already before the pandemic hit, the company was suffering. Last year, profits slumped 99 percent to a paltry €19 million. This year, Renault needs billions in state-backed loans to survive.

In 2019, the company’s almost 181,000 workers pushed over 4.1 million cars through the assembly lines. The Groupe Renault is active in 128 countries and attained a turnover just north of €55 billion, awarding the company the ninth place on the global ranking of carmakers.

However, investors have fallen out of love with Renault as they did with the entire automotive sector, except for newcomers such as Tesla which saw its market capitalisation almost quadruple over the past twelve months. In that same period, Renault shares have lost 75 percent of their value.

The company’s management has now formally suspended its forward guidance to investors, arguing that the future is uncertain whilst admitting that it looks bleak. Renault’s acting CEO Clotilde Delbos put it this way: “Visibility for 2020 remains limited due to expected volatility in demand, notably in Europe.”

In a tell-tale move, Renault abruptly exited the Chinese market by ending its alliance with state-owned car manufacturer Dongfeng. The company reportedly lost €200 million on its China bet after failing to charm buyers. The annual production capacity of 110,000 vehicles dedicated to the joint venture was never fully used and churned out only 19,000 cars last year.

Meanwhile, contributions from Japanese carmaker Nissan, in which Renault holds a controlling stake, dropped by 85 percent. In Q4 2019, annual operating profits fell to €440 million, down 83 percent from a year before.

In another setback for Renault, a proposed merger with Fiat Chrysler Automobiles (FCA) was blocked by the French government over synergy fears and possible job losses resulting from increased economies of scale.

That argument sounds particularly hollow after Prime Minister Edouard Philippe last month showed considerable excitement over a possible merger between FCA and PSA (Peugeot, Citroën, Opel, and Vauxhall) which would create the world’s fourth-largest carmaker.

The tentative marriage proposal is expected to deliver up to €3.7 billion in savings without layoffs or the need to close any production facilities. That pleases Prime Minister Philippe who has repeatedly vowed to protect the country’s ‘industrial heartland’. However, as the push to consolidation gathers speed, Renault may well become the spinster of the car industry. Without a partner to embrace during the lean years ahead, the company will find it increasingly difficult to hold on to its market share.

Renault management last month announced that it will renew efforts to further develop the shaky alliance with Nissan. However, the Japanese car manufacturer faces issues of its own and for now offers cold comfort. Dipping into the red and still reeling over the arrest and subsequent flight of alliance CEO Carlos Ghosn in 2018, Nissan is looking for ways to streamline its production facilities, attract investors, and return to profit. According to French media, the Mitsubishi conglomerate mulls acquiring a 10 percent stake in Renault. A decision is expected later this month.

In the car industry’s equivalence of a Gordian knot, Mitsubishi maintains a 20 percent interest in the eponymous carmaker which, in turn, is 34 percent owned by Nissan Motors that is, for its part 44 percent owned by Renault. To make this scene yet more interesting, Nissan owns 15 percent of the French carmaker’s share capital. The French state also has a 15 percent stake in Renault and a 12 percent interest in the PSA group.

The government of France is very much aware that Renault’s pitiful market capitalisation extends an open invitation to Chinese car manufacturers to gobble up one of the country’s industrial crown jewels. It is not about to let this happen. With the backing of their government, Chinese companies are looking for additional ways to buy into Europe, putting EU governments on edge and sparking a rebirth of economic nationalism.

The BAIC Group (Beijing Automotive Industry Holding Company) already owns 5 percent of German truck and luxury car manufacturer Daimler and has announced its intention to double that stake in order to gain a seat on the company’s board and pass its rival Geely which maintains a 9.69 percent interest.

In 2010, Hangzhou-based Geely surprised markets by taking over Volvo Cars from Ford which at the time was offloading its niche brands, including Jaguar and Land Rover. Geely also owns 8 percent of truck maker Volvo AB.

With car production falling off a cliff almost as soon as the first covid-19 cases popped up in Europe and North America, industry watchers expect a delayed rebound. It is likely to take years, if not a decade, for production volumes to reach pre-corona levels. Consolidation, however, will not be long in coming but may be affected by increased levels of protectionism.

According to Axel Schmidt, an automotive industry consultant cited in The New York Times, former competitors will likely team up to deal with the new normal. He points to the successful collaboration between Volkswagen and Ford for the development of autonomous driving software and associated electronics as a model for cooperation.

This year was supposed to see the global automotive industry turn the long-anticipated 100 million car mile marker. The turn came but headed in the opposite direction with production and sales volumes expected to retreat by well over 25 percent. Discounting China, the first to be hit by the novel virus and also the first to emerge from the pandemic, the decline would be greater still. The almost unprecedented rise in unemployment numbers as an expression of the sharp Corona Recession will undoubtedly cause prospective buyers to postpone purchases and keep their old clunker on the road for a little while longer.

Consumer and business confidence plunged to near-record lows in March and stayed there in April, showing no signs of recovering any time soon. In France, statisticians attached to the ISEE Business School registered the steepest decline in confidence since measurements began in 1980. In Germany, consumers haven’t been this pessimistic in over four decades. The European Commission’s own gauge of morale in the 27-member bloc last month dropped to -22.7, down from -11.6 in March.

For the automotive industry the question ‘how long’ takes precedence over ‘what’s next’ and is increasingly accompanied by an existentialist undertone. The difference between a V-, U-, or L-shaped recession may turn into a matter of life and death for some of the more isolated car manufacturers such as Renault.

In a recent report on the global automotive industry, the World Economic Forum (WEF) calls for a review of outdated legislation that it has identified as the main stumbling block for technological progress. In its assessment, the WEF notes that crises usually also bring opportunities to break with old habits and experiment with new ways. The development of self-driving cars, the WEF suggest, may be accelerated if lawmakers manage to keep up with the dynamics of technological progress. The forum calls for a global standard for registering and certifying self-driving vehicles.

As it happens, Renault has invested heavily in its EZ line-up of all-electric concept cars. The company’s EZ-Ultimo urban transporter, unveiled at the 2018 Paris Motor Show, resembles a motor yacht on wheels and comes equipped with lounge chairs, lamp shades, and other old-world creature comforts. Last year, a slimmed down version of the vehicle received permission for trial runs as a conveyor of the well-heeled between Paris airports and luxury hotels.

A consensus is building around the notion that, in order to survive the pandemic and prosper in later years, carmakers need to break the mould and reinvent the future. Manufacturers did not actually need a novel virus to be reminded of the fundamental change coming to their industry. If anything, the pandemic may speed up the dawning of a new era in individual and collective mobility.

The considerable resources required for adaptive processes cannot be supplied by states. The aid now being dispensed is only meant to secure jobs and ensure the short-term survival of the car industry. Once the pandemic starts to recede into history, carmakers must intensify cooperation and work towards attaining even larger economies of scale than those forged in earlier years. Renault’s job is to find a partner.


SegurCaixa Adeslas: Staying One Step Ahead in World of Health Insurance

SegurCaixa Adeslas is Spain’s leading health insurance company with a 30.1% market share (29.6% in 2018) and a premium income of €2,688 million in 2019.

The company’s leadership is based on the range and quality of its services. Policyholders have access to 1,240 of proprietory and chartered medical centres – as well as 216 private hospitals and a network of 194 company owned dental clinics.

[caption id="attachment_15344" align="aligncenter" width="589"] The company grows consistently above the market. In 2019 SegurCaixa Adeslas beats the Non-Life market (+0,7p.p.) and already reaches 10.5% market share.[/caption]

Its list of medical professionals is the longest in Spain – more than 43,000 specialists. These partnerships improve healthcare results, enhance the link between doctors and patients, and build on client relationships.

SegurCaixa Adeslas has a premium income of €3,863 million and is part of the Mutua Madrileña Group, with CaixaBank as one of its shareholders. In addition to its leadership in health, it is also ranked #1 for accident insurance. It ranks #2 for property insurance and it was the fastest-riser of the 10 main companies last year for motor insurance, with 9.8% growth. It is also a major player in the death and liability insurance fields.

"Innovation is at the heart of the process: seeking and providing services that are agile and in accordance with market and customer needs."

SegurCaixa Adeslas has improved its market share in recent years as it is geared to profitable growth with a policyholder-centred approach. Key to this strategy are the company’s technology transformation and operational model, aimed at delivering best-in-class customer experience and trust.

Innovation is at the heart of the process: seeking and providing services that are agile and in accordance with market and customer needs. The company explores the potential of new technologies for customising services and creating value. Process digitalisation shortens management times and rationalises the use of resources.

One of the main initiatives is Adeslas Salud y Bienestar, the health and wellbeing platform. This customer partnering system brings together in a single tool a series of digital services for proactive collaboration with policyholders.

The innovation commitment also applies to catchment and loyalty strategies in the branch network of CaixaBank’s bancassurance network, as well as traditional insurance channels. For example, last year SegurCaixa Adeslas launched a new range of products, called MyBox, which maintains the premium for 3 years and is based on a unique value offer in the market.

Services are constantly reviewed to ensure they keep pace with customers’ needs – and are even one step ahead – in an evolving market. The company prioritises the alignment of its insurance solutions and processes with proactive and well-informed consumers.


Sobering Words from Fed Chairman Powell

[caption id="attachment_15349" align="alignright" width="300"] Chairman of the US Federal Reserve Bank: Jerome Powell[/caption]

This morning, investors are taking stock after being administered a measure of sobering realism by Jerome H Powell, chairman of the US Federal Reserve Bank. Exchanges in Asia and Europe opened on a low and showed little oomph as the day progressed. All major indices sagged on Mr Powell’s warning that the pandemic could cause permanent damage to the US economy unless Congress and the White House expand financial support to businesses. Failing to do so, he said, will result in a wave of bankruptcies and ‘prolonged joblessness’.

The Fed chairman said that the approximately $3 trillion already released by Congress may not be sufficient to keep companies and households from going under. Mr Powell fears that the Corona Recession may last longer than expected, thus requiring additional support. During a virtual event organised by the Peterson Institute for International Economics, Mr Powell said that the recovery may take some time to gather momentum: “Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”

Mr Powell’s blunt assessment of the country’s predicament may have been born out of frustration. Over the past two weeks, the Fed has approached both Congress and the Trump Administration to explain the limits of central bank interventions and the need to prepare for a longer than expected economic slump. However, the message was lost, and its urgency denied, as the bipartisan resolve to provide succour to the ailing nation has been replaced by bickering. Meanwhile, the administration seems obsessed with forcing an early return to normal and apparently has lost all interest in the medical side of the pandemic.

In Congress, Republicans express a growing concern over the ballooning federal deficit which is on track to reach $3.7 trillion this year. According to the Congressional Budget Office (CBO), the national debt will eclipse US economic output ending the year at 101 percent of GDP. The CBO expects the economy to shrink by 5.7 percent in 2020 and unemployment to reach 16 percent by the third quarter.

In his online speech, Mr Powell warned that now is not the time to fret about deficit spending. He said the US economy is currently facing its biggest shock of modern times and called on lawmakers to prevent ‘avoidable’ business insolvencies which could depress growth rates later on. He also fears that essential job skills may be lost due to prolonged unemployment, further hampering the post-corona recovery.

A survey conducted by the US Federal Reserve Bank and released today shows that in households making $40,000 a year or less, 40 percent of those who held a job in February went without one a month later. Today, the Bureau of Labour Statistics is to announce that another two million Americans filed for unemployment benefits last week, pushing the number of jobs lost to the pandemic to an estimated 33 million.

Appearing of Fox News, Treasury Secretary Steven Mnuchin seemed unfazed and assured viewers that most jobs will return as soon as the economy opens up for business. Mr Mnuchin said that the administration is doing ‘all it can’ to support businesses and household but doesn’t recognise the need to double down yet.

A $3 trillion aid package prepared by Democrats and expected to reach the floor of the House on Friday is superfluous to requirements, according to the Treasury Secretary. Mr Mnuchin called the proposed legislation ‘partisan’ and emphasised that his department has been working with the Fed to prepare a $2.5 trillion Main Street Lending Facility for struggling businesses: “I’ve only allocated half of the money, so to the extent that we need another $2.5 trillion, that’s there as well.”

Mr Mnuchin agrees with Fed Chairman Powell that the pandemic may destroy the US economy but wants to avoid lasting damage by pushing for an early end to the lockdown instead of expanding the federal aid programme.

Yesterday, President Donald Trump clashed openly with Dr Anthony Fauci, the well-liked and respected director of the National Institute of Allergy and Infectious Diseases, who had warned that opening the economy ‘too soon’ could ‘turn back the clock’ on efforts to contain the spread of the novel virus. He also said the early lifting of stay-in-place orders decreed in many states could bring ‘more suffering and death’.

President Trump called Dr Fauci’s advice, given during a Senate hearing, ‘unacceptable’ and went on to accuse the doctor of wanting to ‘play all sides of the equation’. Mr Trump seemed particularly irked by Dr Fauci’s comment on his administration’s ‘cavalier’ attitude to the risk of children suffering ‘deleterious effects’ of the disease.

Medical researchers in Italy have found that some young children who carry coronavirus antibodies are severely affected by an inflammatory syndrome that could be linked to covid-19. In his statement to the Senate, Dr Fauci cited the study – published earlier this week in the prestigious medical journal The Lancet – and cautioned against the reopening of schools.

Physicians in 15 US states have identified 164 children with symptoms similar to the rare Kawasaki Disease. Most cases have popped up in corona hotspots. Medical authorities in the UK, Spain, and France also reported a spike in Kawasaki-like cases amongst children carrying coronavirus antibodies.

Returning to the political fight over the next steps to follow the initial federal response to the pandemic, Senate Majority Leader Mitch McConnell said that he is in no ‘hurry’ to table any new support packages and will wait until after Labour Day – the first Monday of September – to consider his options. The Republican senator then confirmed the, verifiably wrong, notion that his party continues to honour its tradition of prudence in the management of taxpayer money.

Historical data from the Bureau of Economic Analysis show that, contrary to public perception, Republican administrations have added considerably more to the national debt than Democratic ones. Averaging the numbers since the end of World War II, a clear picture emerges that puts paid to the notion that Democrats overspend whilst Republicans cut expenditure.

Fed Chairman Powell considers the increasingly acerbic debate on the hill a dangerous waste of time and stresses the need for immediate remedial action. Senator Patrick Toomey (R, PA) was unimpressed and said that pumping additional taxpayer money into the economy was likely to do more harm than good. Senator Kevin Cramer (R, ND) dismissed Mr Powell’s warnings as the ‘opinion of one man’.

Market watchers and analysists fear that the $3 trillion thus far invested in economic life support may turn out to have been largely wasted should a follow-up package fail to materialise and force companies into bankruptcy before the recovery gets underway. Changing course mid-pandemic, before the curve has truly been flattened, is seen as the worst of all possible outcomes since it does nothing to help bolster business and consumer confidence and threatens to prolong the emergency.

Reports from states that have progressively relaxed lockdown restrictions indicate that a significant number of consumers and workers still prefers to stay at home for fear of contagion. In those states, businesses struggle to keep their doors open for want of staff and customers.

Though President Trump may ignore the admonitions of Mr Powell and Dr Fauci, most investors did take note, heeded the warnings, and headed for the exit. A new normal will undoubtedly dawn before long, but not quite yet. The pandemic must be allowed to run its course before declaring ‘mission accomplished’.


No Quick Recovery for Europe

Just before the weekend, Germany nosedived into a recession after the Statistisches Bundesamt, the country’s statistics bureau, announced a 2.2 percent contraction of GDP over the first three months of 2020. The economy shrank 0.1 percent in Q4 2019. A recession is defined by two consecutive quarters of negative growth.

Germany’s Q1 2020 contraction compares favourably to those registered in France (-5.8%) and Spain (-5.2%) and is at par with the UK (-2.2%). Across the Eurozone, economic activity retreated by 3.8 percent during the first quarter of the year in the sharpest decline since the crash of 2009.

German Economy Minister Peter Altmaier warned that the worst is yet to come and said the nation must prepare to face the deepest recession since the founding of the Federal Republic in 1949. Analysts predict GDP will have lose 6.3 percent by the end of the year. However, Mr Altmaier tried to strike a note of optimism by forecasting that the economy will bottom out next month and stage a strong rebound thereafter with in 2021 GDP growth expected to reach 5 percent or more. A preliminary set of data for April, published by the German central bank, shows a further 4.6 percent slump in economic activity.

The German Institute of Economic Research (Deutsches Institut für Wirtschaftsforschung - DIW) dismissed Minister Altmaier’s optimism as ‘wishful thinking’ and pointed out that the economy is hostage to the novel virus and any recovery remains highly dependent on its successful containment. Moreover, the fortunes of Germany’s large export-oriented corporations are tied to global markets. They may be amongst the first to feel the pinch of increased protectionism and a tentative unravelling of long and complex supply chains.

Market watchers are growing sceptical of policymakers who promise a swift return to strong growth and look to China, the first major economy to emerge from a lockdown, for signs that the recovery may more sluggish than anticipated. Lingering effects such as depressed consumer and business confidence may dampen growth and prolong the recession to a significant degree.

The German government has done more than most to shield businesses and households from the fallout of the pandemic. Breaking resolutely with its tradition of fiscal frugality and prudence, the country swiftly rallied its considerable financial resources to weave a robust safety net. In March, large corporations effectively received carte blanche to draw whatever funds needed from state-owned development bank KfW Bankgruppe which was set up in 1948 to help finance post-war reconstruction and, as such, possesses a vast institutional reservoir of knowledge on breathing life into a ravaged economy.

Smaller businesses and self-employed workers enjoyed easy access to a €50 billion support fund that managed to cut cheques in record time with beneficiaries receiving cash only days after putting in their first application. The state also took over 90 percent of payroll expenses of furloughed workers without attaching many – or indeed any – conditions to its largesse. Most employers merely had to ask for support to be almost instantly granted. In some cases, businesses were able to claim full compensation for idling employees.

According to the International Monetary Fund (IMF), no other country acted so decisively, swiftly, and forcefully to help its citizens and companies weather the pandemic. However, as the new normal set in, cracks began to appear in the system as a disconcertingly large number of small- and medium-sized businesses may have misused the support and major corporations tapping into KfW funds, such as Volkswagen and BASF, announced their intention to keep paying out dividends.

The government has since tightened the rules to assert a measure of control over corporations that make use of emergency funding. However, that has not diminished Berlin’s willingness to support the icons of German industry. It now mulls a series of generous cash incentives to get Germans to buy new cars. The partial re-nationalisation of troubled flag carrier Lufthansa is a done deal in all but name. The government is expected to take a 25 percent stake in the company and will inject whatever funds necessary to keep Lufthansa aloft. Earlier, the governments of France and The Netherlands also promised to do whatever it takes to ensure the survival of their flag carriers.

The European Union has withdrawn its opposition to state aid for privately-owned companies and greenlighted the interventions. It had little choice since governments had clearly signalled their intention to ignore any and all objections raised by Brussels, citing force majeure clauses included in the EU rulebook.

The impressive volumes of state aid made available by the countries of northern Europe contrast sharply with the patchwork of relatively modest support measures decreed in the hard-hit countries of the south.

Spanish plans to introduce a universal income had to be shelved due to budgetary constraints. Support measures that look robust on paper, turn out to be wrapped in a complex web of byzantine-like regulation with exemptions that can be applied to almost any business. The Spanish economy boasts an exceptionally rich and diverse environment of smaller, often family-owned, businesses that poses challenges in delivering state aid to where it is needed most.

Similar troubles initially plagued the British government as well. The disbursement of financial support through high street commercial banks stagnated due to complex regulation and the misinterpretation of rules. At first, many banks refused to assist companies that obtained most of their revenue from export sales. It took repeated official clarifications to remove this misapprehension. Most banks also insisted that entrepreneurs put up personal guarantees in order to receive emergency loans. A second support package removed most of these stumbling blocks and managed to speed up the placement of emergency loans.

Last week, Chancellor of the Exchequer Rishi Sunak promised to keep all present support measures in place until October, scrapping plans to reduce state support for furloughed workers from 80 percent of their salary to 60 percent as of July. The British government has so far refrained from providing large-scale support to the airline industry, forcing British Airways to lay off 12,000 workers and Virgin Atlantic to trim its fleet. Irish carrier Ryanair, Europe largest airline by passenger volume, has also been denied support though its outspoken CEO Michael O’Leary does not complain other than to object to state aid for his rivals which he claims distorts the market.

Of all Eurozone member states, Italy is hit hardest by the virus. The country’s economy is expected to contract by as much as 9.5 percent this year with more than 10 million Italians being demoted from the middle class to a precarious existence at or below the national poverty line. In order to limit the social consequences of the pandemic, the government in Rome late last week unveiled a €55 billion package with goodies for all sectors of society. The legislation covers 464 pages of text and 256 separate articles that provide detailed specifics to who receives what, where, and how much.

Most pundits agree that, whilst well-intentioned, the support measures are unlikely to prevent a major economic meltdown. Both Spain and Italy need substantial financial contributions from northern EU member states in order to return to growth and avoid the recession from cascading into a depression. Later this month, after the European Commission has finished taking stock of the damage, European leaders will reconvene to discuss a major aid initiative that will probably run into the trillions of euros.

The formerly recalcitrant Dutch have already indicated that they may collaborate with initiatives that stop just short of the direct mutualisation of debt and risk. Last month, the Dutch government played ‘bad cop’ and abruptly broke off discussions over eurobonds and other forms of debt pooling, causing an uproar in Italy and Spain. The country was widely seen to act as a proxy for Germany which remains reluctant to offend southern EU member states after it was savagely castigated for its brutish treatment of Greece during the 2010 banking crisis. A Pan-European economic rescue package is expected to be agreed upon by next month offering a modicum of solace to Spain and Italy.


Europe’s Golden Eleventh Hour

[caption id="attachment_15395" align="alignright" width="300"] German chancellor Angela Merkel and French president Emmanuel Macron[/caption]

In true EU fashion, a compromise solution is taking shape for member states unable to power up their economy for the post-corona recovery. French president Emmanuel Macron and German chancellor Angela Merkel have proposed the creation of a €500 billion fund to underwrite the economies of Spain, Italy, and other member states that have borne the brunt of the pandemic.

The money is to be sourced by the European Commission which will receive a one-time only authorisation to issue bonds backed by all EU members. Repayment is to take place via the EU budget boosted by temporary surcharges of contributions using the same ratio presently employed for calculating transfers from national governments to the union.

The plan unveiled on Monday by France and Germany does not go as far as southern member states had wanted. It falls (far) short of the €1.5 trillion Spain and Italy say is needed to prevent the current recession from turning into a depression. However, disbursements from the EU recovery funds need not be paid back and are to be considered grants. Payouts are not linked to a particular reform agenda such as the one imposed on Greece during the banking crisis of the early 2010s.

The government of The Netherlands has promised not to veto the new proposal even though it includes an element of mutualised debt. Finance minister Wopke Hoekstra said that a single bond issue for a specific purpose, and coordinated by the European Commission, is acceptable.

President Macron raised the possibility of introducing an EU-wide tax on big tech companies as a way to avoid a steep increase in national remittances to Brussels. He also emphasised that corporate recipients of EU grants should present sustainable business models that contribute towards the greening of the continent. Both President Macron and Chancellor Merkel stressed the need for speed and called on member states to act swiftly. Looking towards The Hague, President Macron warned that there is no more time to lose.

Earlier, the Dutch government had been vehemently opposed to any and all forms of shared debt, playing the evil twin to Germany which preferred not to be seen as the stumbling block of the bloc. According to Minister Hoekstra, that position is unchanged though not inflexible in light of the urgency of the moment.

The Franco-German plan deftly manages to muddle the sharing of debt to such a degree that it is somewhat acceptable to the Frugal Four and their hangers-on. The relatively modest size of the proposed recovery fund also helps make the idea ‘sellable’ to national parliaments weary of taking on additional financial burdens at a time when spending deficits and debts are skyrocketing.

After Chancellor Merkel publicly signed off on the plan, other northern member states had no option but to cease and desist. Germany, which due to its size represents 27 percent of the EU budget, ultimately calls the shots in Europe.

The proposal serves a larger purpose as well. Although the northern economic powerhouses of Europe are loath to say so, they also need the markets of southern member states to remain buoyant in order to keep their own economies humming. It is expected that in the wake of the pandemic, protectionism will rise throughout the world as some countries may suffer deteriorated terms of trade or struggle to keep their balance of payments on a somewhat even keel. Others may want to re-shore production in order to shorten vulnerable supply chains and gain more control over economic sectors deemed of strategic importance. The union’s common market of 450 million consumers allows for the necessary economies of scale and its smooth functioning is widely considered essential to boost the recovery effort.

Although struggling with a politically divisive divergence of national economic fortunes, most European governments recognise that they are condemned to each other: in an increasingly hostile world marked by a new cold war with tensions escalating between two superpowers, the European Union is, perhaps, more necessary than ever before to preserve a way of life and maintain a degree of relevance on the global stage.

For all its shortcomings – and there are many – the EU is the only tool the minor powers of Europe possess to stave off oblivion. On their own, 25 of the 27 member states would be but a footnote on the world stage. Even France and Germany derive their global prominence from their central role as the union’s pre-eminent powers.

Interestingly, euroscepticism – aka the English Disease – has disappeared almost overnight. Given the magnitude of the Corona Recession, no opposition leader dares suggest following the British example by leaving the union. Although many may grumble over fiscal transfers, virtually none of formerly anti-EU politicians such as Geert Wilders in The Netherlands is foolish enough to suggest an exit. Just as the Greeks before them, Italians also realise that, whilst the union is not perfect, their country’s future remains inextricably linked to its EU membership. The same holds true for Spain.

The European Parliament (EP) is expected to have a say too on the Franco-German support plan. Last week, the EP threatened to veto the next long-term EU budget should it fail to include robust funding for member states hard hit by the pandemic. The parliament adopted a resolution that called on the European Commission, the executive arms of the union, to reserve ‘at least’ €2 trillion for the post-corona recovery effort. The EP also wants to have the final say over the spending of support monies, arguing that it is the only directly elected branch of the union and, as such, must be awarded oversight.

Although the details remain sketchy, the plan proposed by President Macron and Chancellor Merkel signals a monumental change in attitude. By agreeing to a modest and diluted form of eurobonds – a word that both leaders took pains to avoid mentioning – Mrs Merkel has broken a long-standing taboo. This helps explain why Mr Macron displayed an almost unpresidential enthusiasm when announcing the plan. A precedent is being set that may, of course, be invoked whenever trouble arises in the future – as it inevitably will.

That speaks volumes about the size of the economic calamity caused by the pandemic. However, Chief European Analyst Mujtaba Rahman of the Eurasia Group seemed elated by the news and called the plan nothing short of ‘revolutionary’. Mr Rahman points out that the beauty of the proposal resides in the fact that the bonds are issued by the European Commission and do not add to the national debt of individual member states. As such, the shared debt does not affect their credit rating, which is sacrosanct in Germany and The Netherlands – 2 of only 10 countries* worldwide (8 of them in Europe) that boast a universal AAA (stable) rating.

At the eleventh hour, the European Union seems to have made a break-through. Some things never change.

* Canada, Denmark, Finland, Germany, Luxembourg, Norway, Singapore, Sweden, Switzerland, and The Netherlands. Australia maintains a AAA rating, albeit one with a negative outlook. The UK shares an AA+ sovereign credit with the US. Both countries were downgraded a single notch due to their relatively high level of indebtedness. Earlier this month, Fitch signalled its intention to shave another notch of the UK’s credit rating to AA- (stable).


Innovate to Overcome: Financing Health Systems Against NCDs

Non-communicable diseases (NCDs) account for a growing global health burden — and 41 million mortalities each year.

Low- to middle-income countries (LMICs) are disproportionately affected by NCDs. An estimated 97m people (or 1.4 percent of the world’s population) fell below the poverty line because of out-of-pocket healthcare spending in 2010. A lack of investment in NCDs will contribute towards an estimated global financial loss of $47tn in GDP from 2011 to 2025.

The costs of NCDs to health systems, businesses and individuals are significant. Within the next 10 years, cancer treatment costs are expected to rise by one-third , creating pressure in public and private sectors.

There are two key examples global movements taking action to prevent or treat NCDs. The Sustainable Development Goals 3.4 (to reduce one-third of premature mortality from NCDs by 2030), and the increase in countries moving towards Universal Health Coverage (UHC).

Despite these advances, around 100m people are still pushed into extreme poverty by the financial burden of healthcare.

Management of long-term, chronic NCDs is resource intensive, and the risk of catastrophic healthcare expenditure increases in LMICs. Insufficient public coverage and reimbursement for innovative therapies — coupled with the disease burden — exposes patients to treatment costs. Those unable to afford care have no choice but to go without.

Disease funding and optimal cancer-treatment outcomes are linked, and there is a need for innovative models to address the funding gaps.

The global landscape study, Innovative Funding Models For Treatment Of Cancer And Other High-Cost Chronic Noncommunicable Diseases, discovered a range of exciting funding models. While complementing traditional funding, these can have a major impact on those who suffer because of poverty.

The challenge for stakeholders is to identify the models most appropriate for their health system, the needs of the population — and to take action.

An effective NCD response requires strengthening the functions of a health system: providing health care, resource generation, financing, and stewardship. Lack of adequate management for any of these components could devalue efforts. That would result in wasted public resources, unnecessary pain and premature deaths.

The funding challenges are universal and unavoidable, with an increasing financial impact for patients, health systems and economies. Responses vary from region to region, country to country. But there are also commonalities of collaboration that can create win-win partnerships.

Creating opportunities and sharing knowledge ensure that funding innovations are sustainable and scalable in other markets and regions. Successful efforts are often driven by collaborations between funding partners with a shared interest in improving patient care and minimising financial hardship. These collaborations are increasingly driven by the private sector (healthcare industries, private insurers and financers) seeking partnerships with traditional funders.

The NCD funding gap is significant and — without action — it will grow. Innovative health financing can address this challenge, and ensure that patients benefit from the latest scientific and technological advances. Effective control of cancer and other NCDs is possible, and all stakeholders — communities, governments, non-profit organisations, the private sector — have roles to play.

*Details and footnotes for this article are available upon request.

About the Author

[caption id="attachment_15398" align="alignleft" width="119"] Author: Pablo Morales[/caption]

Pablo Ignacio Morales is a Health Systems Strategy Leader at Roche’s Global Access organization. In his role, Pablo collaborates with public and private stakeholders to support the development of innovative and sustainable models to finance access to healthcare. He is currently exploring the potential of financial technology to strengthen health system funding in low and middle-income countries. His educational background is in Industrial Engineering and holds a Masters in Health Economics from the University of Queensland, Australia. Before joining Roche, he built a career as a Strategic Management consultant working for top consulting firms as E&Y and PwC. Additionally, as a consultant for the Inter-American Development Bank he led the design of national health policy changes in Costa Rica. Pablo Morales is currently a full-time resident in Basel, Switzerland.


Money for Nothing

From a mere medium of exchange, money has turned into a pixie dust that, sprinkled liberally, brings economies to bloom and wards off evil thoughts and spirits.

The idea that coin is just a more refined and convenient form of barter no longer has much currency. Likewise, the notion that money has a price is rather old school.

Just 50-odd years ago, double-digit interest rates were considered normal. It was the cost of Keynesian largesse to be settled once an economy had regained the ability to sustain its own forward motion. Since then, however, money has lost most of its value. Whilst the buying power of cash remained largely unchanged, its yield decreased to almost zero and sometimes dipped below that floor.

The sudden, universal, and forceful impact of the corona pandemic has shredded the rulebook that framed economic science – a pursuit that even in the best of times fails to offer the comfort of certainty. Economists have been alternately hailed and exposed as masters of a dark art who provide a bespoke roadmap to the rabbit hole that unlocks a magical wonderland where everything seems possible though nothing is real.

Imagine a world where governments can spend at will because their central bank provides unlimited credit. It is what US Federal Reserve Chairman Jerome H Powell yesterday clarified during a video conference with lawmakers: there is essentially no limit to the financial fire power of the central bank. In that universe, austerity becomes an exercise in masochism. Money – its creation, application, and regulation – has apparently transcended economic theory.

The Institute of International Finance, a trade group of banks charged with mapping systemic risk, has calculated that the global volume of debt is set to rise from $255 trillion to $325 trillion during the course of the year. Classicists who dare express concern over this level of indebtedness, are booed off the stage and denied a platform. A new taboo has been instituted as well: the ‘W-word’ is not to be mentioned. Anyone deriving lessons from the Weimar Era must be silenced. As the outward symptom of an underlying affliction and the canary in the coal mine, inflation is only of interest to historians who – as a class – must be confined to their ivory tower whilst the ‘money boys’ work their magic.

Yet, this new wonderland where trillions may be spent without much thought is also a potentially dangerous place. Much like the virus doing the rounds, it is both novel and uncharted. There are no case studies to provide meaningful guidance. Common sense fails as well. The recent rally of the stock market illustrates that profit and revenue are no longer determinants of price. Strangely, there is some comfort to be had from the first rule of economics – one of the few still standing – which holds that the value of any given product or service is determined by what a fool is willing to pay for it. Buyers, not sellers, set the price.

Here’s another timeless wisdom. Asked how he went bankrupt, Ernest Hemingway summarised: “Two ways. Gradually, then suddenly.”

Europe is, arguably, the most interesting place to watch the unfolding of the Corona Recession and the response of both individual countries and the supranational European Union. Whilst the Americans may enjoy their exceptionalism as controllers of the global mint, and China can revert to its command economy, Europe must break new ground. And it has. The corona pandemic seems to have broken the opposition to a fiscal transfer union.

Prior to the outbreak, a few frugal countries in northern Europe with holier-than-thou attitudes to state finance, tried and succeeded in proving the venerable John Maynard Keynes (1883-1946) wrong. In the midst of an economic downturn, they doggedly stuck to austerity. Expenses were ruthlessly slashed and labour costs curtailed. Consumers got told to forget about instant gratification: No Porsche Cayenne for you because that thing needs to be exported with credit provided by our banks using your money.

Following that, budgets swung into black and debts were paid down or swapped for paper carrying a negative interest rate, turning a liability into an asset. Even so, the unholy urge to expand the holdings of such a lucrative asset was repressed.

Other EU member states failed to see the logic of this approach and kept up their spending levels even after one of them – Greece – overdosed on the financial Kool-Aid. The pandemic currently lashing the union has exposed a curious paradox: one the one hand, all actors turned open the spending taps as far as the spigot goes whilst on the other hand, some of yesterday’s big spenders now clamour for access to the hard-won excess savings of their more frugal fellow EU members who must – so they say – show true solidarity.

This may have been the last stand of the classicists, that seemingly out-of-touch and slightly esoteric bunch of economists insisting on a strict adherence to common sense. Earlier this week, Germany agreed to a French proposal that introduces eurobonds in a roundabout way and opens the gates to a future of debt and risk mutualisation. It is hard to overstate the revolutionary nature of this plan hatched by one of the continent’s least popular presidents and green-lighted by a chancellor ready to depart office.

The Dutch, probably the stingiest of the frugal, have been shell-shocked into submission and no longer offer resistance other than a rear-guard fight to limit the damage. The Austrians, Danes, and Swedes mumble objections but realise full well the futility of opposing the Germans who, again, succumbed to the supposed moral superiority of the French. After three quarters of a century, Paris still somehow manages to subtly invoke history to trump Berlin.

Gradually, then suddenly: Europe has embarked on a novel course through wonderland and seeks to prove John Maynard Keynes right after all. A recession is fought by a spending splurge. It worked in the past and should do so again. The novelty concerns both the size and scope of the exercise and the fact that old rules regarding the cost of money and the setting of prices no longer seem to fully apply. What happens to Keynesianism when exposed to New Monetary Theory (NMT) is anybody’s guess.

The lure of NMT is powerful indeed: ‘money for nothing’ (the free chicks have been scrapped at the request of #metoo) until all resources are fully deployed and inflation kicks in. The trouble for Europe is that the continent’s main economies have delegated their prerogative to print money to the European Central Bank.

This is not a scenario considered by new monetary theorists. In order for NMT to work and provide future bliss for all, the present currency union must be expanded to include a tightly integrated fiscal vector so that the Eurozone becomes one and its central bank can rule without taking into account disparate and often opposing opinions on the management of monetary affairs.

Germany’s apparent capitulation to France heralds the dawn of a new era for Europe. It also introduces an added layer of uncertainty. Whilst there is broad agreement that the economic rubble left by the pandemic requires a large financial bazooka to clear, the long-term consequences of smothering economies in pixie dust are unknown. Money for nothing is, perhaps, the white rabbit’s latest incantation.


Recession or Depression: Nadir Has Passed, Recovery Delayed

The shape of things to come seems not to resemble the ‘V’ promised early on in the Corona Recession. With a little luck, growth graphs may yet turn into a hesitant ‘U’ shape. Die-hard optimists took heart from the latest batch of preliminary PMI (purchasing manager index) data which, even so, remain well below 50 across the board. That level indicates ‘no change’ whilst any lower number signals a gloomy outlook.

In May, the UK Composite PMI crawled to 28.9 from its April low of 13.8 as businesses emerged from the lockdown and took stock of the environment. Financial support offered by the state in the form of credits, grants, and tax deferrals also permeated the battered economy, bringing a measure of relief to entrepreneurs.

The Eurozone Composite PMI also rebounded from 13.6 to 30.5 as restrictions on movement and operations eased. As far as sentiment is concerned, the nadir has been passed. However, analysts caution that it is probably too soon to celebrate. After hitting rock bottom in April, the only way was up, although that direction is likely to hit a ceiling before long. “May was very slightly less bad, but still awful,” says Chief Economist Alpesh Paleja of the Confederation of British Industry.

UK manufacturers seem the least pessimistic of the lot (40.6) whilst the services industry remains locked in gloom (27.8).

PMI indices gauge the level of confidence in the immediate future. A short V-shaped recession should produce a sharp increase to above 50 as economic actors note a pick-up in business. Due to the way PMIs are compiled, designed, and used, depressed returns indicate a continued lack of activity and the expectation that more of the same is up ahead.

In about a month from now, second quarter results will start dripping in. The first full corona quarter is expected to show a nearly unprecedented contraction of economic activity with GDP growth rates nosediving deep into negative territory and businesses reporting dismal results. Eurozone GDP is widely expected to have shrunk by 10 percent over the second quarter. The anticipated second wave of corona infections also dampens spirits as any sign of recovery may prove to be a false prophet of hope.

In Germany, the Manufacturers PMI only staged a barely detectable rebound, moving from 34.5 in April to 36.8 in May. French manufacturers were somewhat more optimistic though by no means ebullient. Elsewhere in the Eurozone, the indices document a profound absence of confidence in the future, emphasising the need for concerted and decisive action by the European Union to lift spirits and get economies moving.

Purchasing manager indices have become the standard gauge for measuring consumer and business confidence. As such, they are considered crucial to determining the overall direction of markets. As long as economic actors continue to spend, business will thrive, and jobs are created. That helps explain why governments and central banks release trillions: money in whatever form is the lubricant that keeps the economy running smoothly. The trick is to convince recipients that they should ‘pay it forward’ and not save for a rainy day in the middle of a downpour.

Previous quantitative easing (QE) initiatives, though much smaller in scope than the present ones, have produced mixed results. For years on end, the European Central Bank (ECB) released vast amounts of cheap and easy credit in an attempt to avoid deflation and spur business activity. However, the recovery that followed the banking crisis of 2009-10 was at best lacklustre. Growth did return but modestly and supported only by massive QE, leading market watchers to believe that the upturn was largely superficial in nature.

Notwithstanding its largesse in disbursing cash, the ECB consistently failed to attain its targeted 2 percent inflation rate, raising further suspicions that the overall market was unable to sustain growth without the benefit of stimuli.

Just before the viral outbreak paralysed business, the ECB had resumed its QE programme in order to encourage growth and ward off deflation. Thus, when the pandemic hit, Eurozone economies were not in the most buoyant of moods to begin with. A ‘V’-shaped recession – steep at both ends of the GDP curve – may never have been in the cards.

In the US, the Bureau of Labor Statistics (LBS) this morning announced that another 2.4 million workers have joined the dole queue pushing the total number of jobs lost since mid-March to 38 million. The only silver lining to be found concerns the slightly lower rate at which jobs are being destroyed. Last week, the LBS reported that 2.6 million US workers had been laid off. A fifth of the US labour force has now been idled as a direct result of the pandemic. Continuing claims for unemployment support increased to 25 million, resulting in a (insured) jobless rate of 17.2 percent.

However, the US Federal Reserve expects economic activity to pick up in the third quarter and grow strongly thereafter. The central bank did warn that a full recovery is not likely to occur before the end of the year. Although its balance sheet swelled to around $7 trillion, Fed Chairman Jerome H Powell promised to keep up the bank’s asset buying programme and told lawmakers earlier this week that he sees no upper limit to the Fed’s ability to support sagging markets. Over the past two months, the US Federal Reserve injected some $2.9 trillion into the country’s economy.

As signs of an early recovery fail to materialise, the prospect of a Great Depression 2.0 looms larger by the week. Just as the protracted slump of the 1930s defined an era and marked a generation, the present Corona Recession may leave an indelible imprint on societies. Countries such as Spain and Italy will find it difficult, if not impossible, to stage a quick comeback even if the European Union comes to their rescue as is now increasingly likely to happen.

During the Greek banking crisis, Eurozone ministers nervously watched developments in Spain and Italy – countries considered too large to rescue, although not too large to fail. Representing just 2 percent of the EU’s GDP, the financial needs of Greece were manageable. However, a wholesale rescue of Spain and Italy with a combined GDP of well over €3 trillion – compared to Greece’s €200 billion – is deemed well-neigh impossible.

The €500 billion support package being worked out in Brussels will undoubtedly ease the pain but may not be enough to return both countries to sustainable growth. In addition to ready cash, Spain and Italy need to tackle inefficiencies and introduce wide-ranging reforms similar to those that pushed Greece back from the brink of national insolvency.

Earlier this week, the Spanish government decided to take the opposite tack by turning back the clock on the labour reforms of 2012 which were credited with pushing down unemployment numbers. The decision imposes additional burdens on already stressed employers. Lacking meaningful government support, Spanish small- and medium-sized businesses are already falling like flies. Any future EU-backed support package may arrive too late for many.


Ayah Bdeir: Innovation, Invention from Mouths and Hands of Babes

[caption id="attachment_15425" align="alignright" width="300"] littleBits founder and former CEO: Ayah Bdeir[/caption]

Get them while they’re young and make it fun, says littleBits founder Ayah Bdeir, and we can ignite a child’s innate curiosity for STEM subjects.

Innovators of science, technology, engineering and mathematics (STEM) are researching and collaborating to deliver solutions for niche problems as well as global challenges. But the progress is hindered, according to Bdeir, by a dearth of women in the industry. Efforts to address the problem at university and professional levels have fallen short.

To get more women into tech careers, we must first “break the cycle,” says Bdeir. “If we want more girls in the boardroom, we have to start in the playroom.”

Bdeir started tinkering as an engineer at an early age. Fascinated by how all the bits fitted together, she deconstructed household electronics to study and reassemble them again. She was born in Canada to Syrian immigrant parents from Lebanon, where the family later returned to raise the children.

Her parents encouraged Ayah and her two sisters to pursue their passions and to ignore any gender-based stereotypes. Her father fuelled her interest in electronics and programming with electricity and chemistry kits. She saw her mother as a role model, a university-educated woman with a fulfilling career.

After graduating from the American University of Beirut with an engineering degree, Bdeir was accepted into the MIT Media Lab graduate programme and moved to the US. It was a pivotal moment for Bdeir, who had experienced such joy as a young engineer-in-the-making, but found her undergrad engineering courses “dry and boring”.

At MIT, she was encouraged to combine her creativity and tech skills to develop solutions and inventions. It was there that she first saw “how you could combine amazing advances in engineering with great ideas of design and social change”.

“I felt like all students should have this experience,” she said.

Bdeir founded littleBits in 2011, beating a rush of STEM-crazed toymakers to market. But the hardware-happy, tech-education company had been brewing as a side project for years. It was never intended to be a product, but an “experiment to make engineering and inventing more fun, more playful and more inviting to people who are not engineers”.

She took the prototypes — magnetically linking electronic building blocks — to a few tech shows, and the response from the younger audience members led to Bdeir’s eureka moment.

“Lines and lines of kids started forming at the booth,” she recalls. “They would build something and ask, ‘Is this how my nightlight works?’ or ‘Is that why the elevator doors always open?’”

She immediately saw the potential for a tech product that engages children and makes them want to learn — and was sure others would too. She found it relatively easy to raise start-up money, securing $850,000 in the initial funding round. Since its launch, littleBits has raised $62.3m.

“The vision was always the same: inspiring people to be creative with electronics. Investors were as enamoured as I was with littleBits’ potential.”

Bdeir was determined to create a gender-neutral product, in part due to her “secret mission” of getting more girls into STEM. She set out to democratise electronic engineering, elevating it from the domain of elite experts. She created a system of colour-coded electronic building blocks with intuitive design and universal appeal.

Bdeir issues an open invitation to transform from passive tech consumers into creative problem-solvers. The first edition Bits are “snuggled in between a Picasso and the Post-it” in the permanent collection of the New York MoMA, where littleBits kits can also be found in the giftshop. Parents can encourage kids to unleash their creativity at home with starter kits (about $100), while school systems and corporate enterprises can schedule onsite professional development sessions (about $3,000). The littleBits line-up features around 10 kits and more than 70 interoperable “bits”.

“We’ve sold millions of products to inventors in more than 150 countries,” she said. “We have more than 300 littleBits Inventor Clubs from Sao Paulo to San Francisco to Bangkok.”

Bdeir is proud to highlight littleBits’ consistent userbase ratio of 35 to 40 percent female — four times the industry average. But she’s determined to do more. In 2019, she joined Disney’s Snap The Gap project, a $4m initiative that provides 10-year-old girls in California with littleBits kits as well as support material and mentorship to stimulate and nurture interest in STEM fields.

After nearly a decade at the helm, Bdeir has stepped down as littleBits CEO, following the company’s acquisition by Sphero, a tech company that has embraced the concept of educational play.

“I am inspired by empowering people to invent,” she said. “I want the next generation of inventors to be equipped with the technology literacy, critical thinking skills and the creative confidence to develop solutions for 21st-century problems. Based on the inventions I’ve seen, we’re well on our way.”


OECD: Key Takeaways From the Third OECD Conference on Private Finance to Realise the SDGs

[caption id="attachment_15430" align="alignright" width="300"] Director of the Development Co-operation Directorate (DCD) at OECD: Jorge Moreira da Silva[/caption]

The third annual OECD conference on private finance for sustainable development brought together more than 600 public and private actors to determine the steps ahead.

There is an urgency for the private sector to shift more resources to sustainable development. At the 2020 OECD Private Finance for Sustainable Development (PF4SD) Conference, there was urgency to find ways to get ahead of global trends using global finance in smarter ways.

The world is 10 years away from delivering on the SDGs, including the goal of eradicating extreme poverty. This means lifting just under 10 percent of the world’s population — around 700 million women and men — from poverty over the next decade. In the meantime, the climate crisis is threatening to overshadow all development challenges and to overturn hard-won gains.

According to the World Bank, the worsening impacts of climate change could force over 140m people to leave their homes by 2050. Furthermore, the planet’s main life support system — the ocean — is under unprecedented pressure.

There are direct implications for 40 percent of the world’s population: those living within 100km of the coast. It is no longer enough to react to crises as they arise. Strategic investments in sustainable development is needed, and this means thinking outside the box.

This means shifting the culture of profit-making; giving returns on investment a new meaning, and creating incentives to match. It means understanding and shaping how the next generation is defining the value of people and planet.

Private finance to sustainable development is increasing, but gaps remain.

Jorge Moreira da Silva, left with OECD Secretary-General Angel Gurría, center

[caption id="attachment_15429" align="aligncenter" width="680"] Jorge Moreira da Silva, left with OECD Secretary-General Angel Gurría, center[/caption]

Shifting just one percent of total global financial assets — estimated at $382tn — could bridge the existing $2.5tn annual investment gap for delivering the goals. The good news is that shareholders are gradually moving from simple profit-making to both profit and purpose.

They are reorienting management towards more sustainable business practices to address ESG issues. The sector has grown in recent years, rising to nearly $18tn in assets, with additional $6tn in sustainable investing to capture some component of ESG. This is a sizeable amount of the $30tn “sustainable investment universe”, suggesting that ESG is more than a fad.

Impact investing is also capturing the growing attention of mainstream investors, whose market size is estimated at more than $500bn and growing. For many impact investors, the SDGs have become a guideline for key performance indicators. At the conference, Travis Spence, MD of JP Morgan Asset Management, highlighted a change in the dialogue around ESG from a “nice to have” to a “must have”.

In investment portfolios, ESG criteria are material factors and the main drivers shaping portfolios.

Long way to go

International capital markets have never seen as much investment as we see today. Yet, too few of these flows are serving the wellbeing of people and planet. Newly released data on blended finance show that private finance, mobilised by development finance, reached $205bn between 2012 and 2018.

But less than six percent went to least developed countries, and less than six percent to social services such as education and health. The majority went to economic infrastructure. This is misaligned with the objective of leaving no one behind.

The PF4SD Conference also dived into alignment of private finance with specific SDGs.

Gender equality – SDG 5

Gender equality is a prerequisite for sustainable development, and interest in gender-investing is increasing. Finance institutions have accepted the “2X Challenge: Financing for Women” and mobilised $2.5m of the $3bn goal. India has launched the world’s first domestically funded SDG bond to help tribal women become self-reliant. As a minimum requirement and a first step, investors need to ensure that their activities do not undermine women’s empowerment.

Climate action – SDG 13

The majority of private finance mobilised for development continues to be channelled into economic infrastructure. Sustainable infrastructure will be the foundation to realise the transformation to low emissions and climate resilient development pathways. There are improved estimates for the additional benefits of climate action, such as reduced pollution and improved land use. With low global interest rates and the window closing on the opportunity to limit temperature rise to below 1.5°C, the time to close the investment gap is now. Technology is on our side, but all pools of finance, and all actors, need to work together. This starts with governments.

Life below water – SDG 14

The “ocean economy” is expected to grow rapidly until 2030 (OECD, 2016[2]) and as more capital enters ocean-based industries, it is critical that investments are geared toward improved sustainability. But the majority of investors are not aware of their investments’ impact on the marine environment, and how a degrading ocean may subsequently affect their portfolios’ performance and value.

Decent work and economic growth – SDG 8

With 30 million young African people expected to enter the labour market every year to 2030 makes SDG 8 one of the most pressing challenges. SDG 8 calls for reducing informal employment, narrowing the gender pay gap and improving working conditions. ILO’s Decent Work Agenda highlights the importance of promoting sustainable enterprises for innovation and growth. High-impact investments create quality jobs. Enhancing social dialogue is a key lever to achieve this agenda, and governments should invest in institutions underpinning multi-stakeholder engagement and social dialogue.

Aligning private finance with the SDGs requires an open dialogue and trust-building between public and private actors. The Kampala Principles on Effective Private Sector Engagement in Development Co-operation aim specifically to guide collective work on making private sector partnerships more effective while ensuring inclusivity at country level.

The road ahead

After five years of slow progress towards financing the SDGs, there is a clear need for more resolute action.

Governments hold primary responsibility. Public policy and regulation must foster public and private investments truly aligned with the SDGs. Capital allocation towards sustainable development means incentivising long-term green investments, and channelling existing finance.

The G7 Ministers of Development have called for a SDG-compatible finance framework to make private investment and savings work better for the goals. At the PF4SD Conference, Cyrille Pierre, deputy director for global affairs, culture, education and international development at the Ministry for Europe and Foreign Affairs of France expressed readiness to take leadership here, with the support of the G7, the G20, the UN and the OECD.

Scaling-up private finance for sustainable development requires data to bridge understanding, measurement and disclosure of risks. The OECD is working to promote a more consistent, standardised measurement of all types of flows for SDG financing, monitoring and reporting as well as that of all finance through the new Total Official Support for Sustainable Development (TOSSD).

Financial institutions, public and private, need to rethink their models and incentives, and partner better to take on the risks of investments in difficult contexts — and there are many. Looking at megatrends, these risks can’t be ignored. We need to invest in stability. With 85 percent of the poorest people living in the top 20 climate-affected countries, these countries’ economic and environmental instability can’t be subsidised with non-renewable activity. Finance must be aligned with sustainable development in the toughest contexts. The cost to global economic, environmental and social stability is too high, and the returns are too great.

The Private Finance for Sustainable Development (PF4SD) conference is an annual OECD event that provides a forum for sharing successes in altering incentives, targeting investment better and improving operations for sustainable development.

The inaugural PF4SD Conference in 2018 explored new ways of mobilising more and better finance. The 2019 edition stressed the need for universal measures of the social and environmental impacts of development finance. In 2020, the theme was aligning finance with the SDGs, convening public and private actors committed to working together to promote a better alignment of global financial flows with the 2030 Agenda in developing countries, including development finance, private investment flows and business activities. i

About the Author

[caption id="attachment_16358" align="aligncenter" width="437"] Author: Jorge Moreira da Silva[/caption]

Since November 2016, Jorge Moreira da Silva has been the director of the Development Co-operation Directorate (DCD) at OECD. From 2013 to 2015, he was Portugal’s Minister of Environment, Energy and Spatial Planning.

About the OECD

The OECD Development Co-operation Directorate promotes co-ordinated, innovative international action to accelerate progress towards the UN’s Sustainable Development Goals (SDGs).