Stellar Approach from Moonfare: Democratising and Digitalising the Private Equity Industry for All

Accessibility issues are holding the private equity industry back — but Moonfare is changing that.

[caption id="attachment_16395" align="aligncenter" width="900"] CEO and Founder of Moonfare:  Dr Steffen Pauls[/caption]

Private equity has traditionally been the preserve of major institutions and billionaires, hurting individual investors and fund managers. For decades, the private equity industry has turned the vast majority of individual investors away.

Traditionally, only pension funds and insurance companies, or the very richest of individuals, have been able to stump-up the £10m minimum usually required to invest in a fund. The difficult and time-consuming work of picking a fund presents another obstacle.

These barriers to entry deprive individuals access to private equity returns, which have outperformed public market equivalents over the past 20 years, according to Cambridge Associates. Keeping individual investors at arm’s length is also cutting off access to a pool of capital vital to fund managers.

Moonfare is putting an end to all that.

“In the very beginning, stock markets were not affordable to ordinary people,” says Steffen Pauls, founder and chief executive of Moonfare. “But prices came down so everyone could invest. I see the same development happening in private markets.”

To help accelerate the shift, Moonfare secures allocation to private equity funds and splits them into smaller tranches using feeder fund vehicles. This system gives individuals access with investments starting at £50,000.

A Radical Notion

Pauls, a serial entrepreneur and former managing director at private equity firm KKR, founded the revolutionary platform in 2016. There had been demand from investors — but little opportunity for them to access private equity.

“Private equity companies had tried to launch what they call a ‘retail’ offering, but it did not work out,” he said. “I went to the big wealth management banks, and to my huge surprise I found there was no or little offering for private equity. I decided to do it professionally, and to do it digitally.”

The company’s pedigree as a prime innovator in the industry was backed up by Series A investment round backed by angel investors — a group largely made up of private equity professionals — indicating that those intimately involved in the market understand the power of Moonfare’s potential to shake up the sector.

This wealth of experience has been brought to bear on behalf of investors, with experienced professionals carrying out full due-diligence on each fund before offering access through the platform.

“We do our own due diligence, which is really powerful,” says Sam Boughton, Moonfare investor solutions manager. “We are not just a brokerage. Every time an investor logs-in they can be confident we have done a 50- or 60-page due-diligence report on each fund. It has gone through the Moonfare Investment Committee, which is formed of people who have been in private equity, often for 20 or 30 years.”

The Investor Journey

As well as opening up the best funds for the first time, Moonfare is making the investment process as easy as possible for its clients.

New investors can sign up on the platform and invest in a fund in as little as 15 minutes, executing know-your-customer and anti-money laundering requirements — not to mention all of the subscription documents in a digital fashion.
Fund access is also offered through selected wealth managers and private banks, broadening access to private equity to investors who may previously have had little opportunity to buy into the asset class.

Highly competitive fees cap the offer, with Moonfare typically charging 0.5 percent per year, on an ongoing basis. The platform takes no performance fee or carry, nor is there any commission or fee paid to Moonfare from the fund manager. As a result, the platform is fund-agnostic and faces no pressure to steer investors to any one fund over another.

The approach is paying off. Earlier this year, CFI.co named Moonfare the best private equity performance transparency platform of 2020 globally. Soon thereafter, LinkedIn named Moonfare one of the top 10 startups in Germany.

Growth Ahead

Investors can choose to back individual funds from the curated selection on offer through Moonfare. These have included some of the best private equity funds in the world, from fund managers such as KKR, EQT, Carlyle and Apax.

The platform exists to give investors choice and access, so a series of venture capital and growth-stage funds have also been offered, including those from Vista Equity Partners and Silver Lake.

Moonfare also conceived its own investment product. The Moonfare Buyout Portfolio enables investors to easily access a portfolio of top-tier funds with one ticket and a disruptive fee structure. It makes the Buyout Portfolio one of the most innovative and competitively priced products in the private equity industry.

As Moonfare grows, more asset classes are becoming available. More recent offerings include infrastructure private equity funds, representing a long-term investment in the economic recovery, as well as co-investment funds.

The same rapid growth trajectory applies to the Berlin-based company’s leadership team. Moonfare has recently appointed Wilson Ng as chief investment officer. Ng brings more than 20 years of experience with him, and until recently headed UBS Wealth Management’s private equity team.

Joining him are new investment director Sweta Chattopadhyay, bringing experience at the £30bn UK Railways Pension Scheme RPMI Railpen, and Ed Cotton, whose past work in private banking at Barclays and at Edmond de Rothschild’s private merchant bank makes him ideally positioned to expand Moonfare’s offering through wealth managers in the United Kingdom.

As the company grows, so will its reach to investors.

Since opening to investments in 2018, almost 1,000 clients have invested more than €450m into more than 20 funds via Moonfare. Total AUMs are on track to exceed €500m by the end of the year. Next year, the platform is expected to reach €1bn, a significant milestone in the revolution democratising private equity.

But Pauls has his sights set on an even more significant target: opening up private markets entirely to individual investors.

“There is huge, unprecedented value creation in private markets, but 99 percent of people cannot participate,” he says.

He hopes that a secondary market, allowing investors to buy and sell without committing to the usual long investment horizons, will inject sufficient liquidity into private equity assets to give ordinary citizens the ability to invest, and give regulators confidence to allow a full opening of the market.

“It would really make private equity accessible to the public, to truly democratise it, from the rich, to the affluent, and to everybody,” he says.

Steffen Pauls, Founder and CEO

After more than a decade at global private equity pioneer Kohlberg Kravis Roberts & Co., Pauls founded Moonfare, a platform that is revolutionising private markets investing. Moonfare recently ranked as one of LinkedIn’s top 10 startups in Germany.

Pauls began his career at The Boston Consulting Group, where he led project teams covering strategic and operational projects at publicly listed European companies. He brought his experience as a consultant to KKR, where as a managing director he was responsible for the German market and resided as a senior member of the company’s private equity deal team.

At Moonfare, Pauls has shifted his focus to the experience of limited partners, or investors who offer their capital to private equity funds. Moonfare both lowers investment minimums and conducts due diligence on funds, eliminating the barriers to entry for individual investors that have long governed the industry. Pauls serves as Moonfare's chairman and chief executive officer, setting the company's overall strategy and leading a team of managing directors.

A serial entrepreneur, Pauls also founded 7 Global Capital, a technology growth fund based in San Francisco; Momentar Advisors, a specialized M&A boutique; and firstfive AG, a financial rating agency.

Dr Steffen Pauls studied and researched for his advanced degrees at the University of Trier, Harvard University, the University of Mannheim and the École Supérieure des Sciences Économiques et Commerciales. He lives in Munich, Germany with his wife and four children.


Harvard Business School Impact-Weighted Accounts: Accounting as a Force for Humility and Prosperity

Amid the immeasurable human tragedy and losses from the COVID-19 pandemic, there are innumerable lessons to be learned.

While it may seem callous to derive such lessons from the disaster so early, finding meaning has been added as a sixth critical step in the grieving process. Thus, I shall propose two lessons for developed economies and how we might act on those lessons using a new measure of accounting.

The first lesson is a reassessment of humanity’s pre-eminence relative to the natural world. Over the course of 20th century, we effectively tamed infectious disease with the discovery of antibiotics and vaccines which resulted in huge decreases in infant and child morality and increases in life expectancy. We invented flight, put a man on the moon, and built the means of communicating instantaneously with all corners of the world. This is not to disregard the devastating effect of HIV and AIDS globally, however, even there human ingenuity produced medications that transformed it from an acute fatal disease into a chronic managed long-term disease.

Even amid expert warnings about rising antibiotic resistance, climate change, pollution, and potential pandemics, there was always a confidence in the power of human ingenuity to come up with solutions for all of these challenges. Nature, it seemed, had been conquered.

The COVID pandemic has caused a dramatic reckoning with that thinking. In less than four months, an unheard of disease has spread all around the world, effectively halted huge segments of our economy, placed billions under lock-down, sickened millions, and killed hundreds of thousands. No facet of our prior life is untouched.

"Instead of viewing labour as expendable and an expense and taxation as something to be minimised or avoided, this pandemic exposes the critical role that workers and the government play in societal stability."

Across developed countries, panicked shoppers watched as staples like toilet paper and flour were emptied from shelves for weeks and powerful businesses were forced to shutter entire operating segments. Humanity is now left with a profoundly greater understanding for the fragility of our economies, our livelihoods, our health, and way of life.

We have learned how dismissals of threats that seem disconnected from our lives, such as a disease emerging on another continent, can have devastating consequences. The decades of warnings of climate scientists about the devastating effects presented by climate change are now more salient; perhaps now we will begin to seriously consider the direct impacts that we are having on our natural world and listen to the experts instead of treating our environment as a great commons to be exploited.

One of the biggest challenges to enacting climate action is that the environmental damage and impacts on human health from climate change are not intuitively understood by business leaders and investors. Therefore, a system is needed to effectively communicate the complexity of language and measurement of climate change issues to the business community.

That is the power of impact-weighted accounts, which seek to convert organisational impacts into monetary terms. In this way, the negative externalities of corporations or investors today are translated from an esoteric measure into a real monetary cost that is being imposed on others. Further, these impacts can be compared between organisations and the degree of the “free meal” enjoyed by the actors and true cost of production becomes apparent. In this way, armed with the newfound knowledge of our own fragility, we may foster a greater respect for the natural world.

The second lesson is on interdependence within society. Critiques of late capitalism have remarked at the unequal accrual of benefits to owners of capital versus labor leading to starkly bi-furcating inequality and standards of living among the lower and upper classes. American capitalism, in particular, has been deemed particularly ruthless and cruel given its lack of a social safety net and guarantee of healthcare amid historically unprecedented economic wealth. Indeed, it is not that these are unaffordable programmes; rather, as a society, we do not care to solve these challenges given the bias toward individualism and myth of the self-made person.

In this paradigm, those who are wealthy are revered as the smartest or most talented and, implicitly, the poor are so through their own fault for not taking advantage of the opportunities available. This trope of the lazy poor underpins the debate about expansion of social programs: if the successful worked for theirs, why should they give up any to help others?

Little acknowledgement is given to the innumerable idiosyncratic factors that contribute to success including educational and economic opportunities, changing demographics, globalisation, and luck.

This pandemic has laid bare the fallacy of this belief system. Seemingly overnight truckers, grocery store, delivery, and other front line and supply chain workers, many of whom are paid at or below the living wage, became hailed as heroes and essential. The true systemic interdependencies and benefits that accrue to those at the top of society became starkly clear. When it comes down to it, rich or poor, we all need to eat and few grow enough of their own food to survive on their own for long.

Everyone benefits from a stable society and robust civic institutions that promote strong public health and educational systems which guarantee an ample supply of talented labor, functioning courts and laws that ensure the enforceability of contracts, and roads and bridges which reduce the cost of logistics.

Instead of viewing labour as expendable and an expense and taxation as something to be minimised or avoided, this pandemic exposes the critical role that workers and the government play in societal stability. Here too, impact-weighted accounts have the potential to provide transparency.

In the future, it will be possible to quantify in monetary terms the amount excess value extracted from workers by paying below a living wage, not providing benefits, or the under-investment in a business’s licence to operate by underpayment of tax. This lesson was abundantly clear to cruise operators who were left out of two US stimulus packages because they domiciled for tax and labour avoidance in offshore jurisdictions, resulting in paltry tax payments on billions in revenue.

The dialogue around accumulation of wealth and responsibility to pay a just share of that back to society could be profoundly changed. Investors would receive an impact-weighted performance report from investment managers which will show not only their financial returns, but the degree to which those returns added to, or were at the expence of the environment, workers, the government, or society.

The result will be clear illustration of the extent to which decisions and investments are extractive of and dependent on others and with it the utter disproval of the myth of individualism.

About the Author

[caption id="attachment_14775" align="aligncenter" width="271"] Author: Robert Zochowski[/caption]

Robert Zochowski is the Program Director and Senior Researcher for The Impact Weighted Accounts Project, the Social Impact Collaboratory, and the Project on Impact Investments at Harvard Business School. Previously, Rob was a Vice President at Goldman Sachs where he had roles in Investment Product Innovation, Strategy & Development, Alternative Investment Strategies, and Private Wealth Management. Rob has consulted with the National MS Society and the World Wildlife Fund and was a 2019 Three Cairns Climate Fellow focused on mitigating the environmental effects of charcoal use in Mozambique. Rob received his MBA from Columbia Business School in the Executive Program where he concentrated on Social Enterprise and Impact Investing, graduating Deans Honors with Distinction (top 10%). He was featured in Poets and Quants annual 100 Best & Brightest Executive MBAs list. Rob is the 2019 recipient of the Carson Family Changemaker Award which recognises commitment to the field of social enterprise. Rob earned his Bachelor’s Degree in Economics from Georgetown University where he graduated Magna Cum Laude.


Lockheed Martin President and CEO Jim Taiclet: Next-Generation Battlefield Integration

[caption id="attachment_16405" align="alignright" width="300"] President and CEO: Jim Taiclet[/caption]

Notoriously slow in absorbing customer feedback and adjusting to market dynamics, the US defence industry is at long last becoming much more responsive to the needs and concerns of buyers. Lockheed Martin, the world’s largest purveyor of military hardware with sales topping $60 billion last year, is leading an industry-wide shift towards a more commercial business approach.

The company has been handsomely rewarded for its pioneering role by investors who pushed its share price to about $300 – a 220 percent increase in six years’ time and almost four times the gains made by the Dow Jones Industrial Average over the same period.

Lockheed Martin’s exceptional performance may be attributed – almost exclusively – to Marillyn Hewson who stepped down as CEO in June after leading the company since early 2013. Hewson has stayed on as chairperson of the corporation whilst its executive management was entrusted to industry outsider Jim Taiclet who surprised analysts during his first conference call with a string of rather blunt off-the-cuff remarks that contrast rather sharply with Hewsons’ always carefully scripted and polished comments.

Taiclet seems not the least worried about the possible negative impact of the pandemic on defence spending and revealed that Lockheed Martin is now actively scouring for takeover candidates. Almost immediately, investors identified drone-maker Kratos as a possible target and sent that company’s stock soaring. Kratos is developing the low-cost stealth XQ-58 Valkyrie which is to be deployed in swarms.

In his call with investors, the new Lockheed Martin CEO also took the Pentagon to task over the reimbursement of company-funded research into the military applications of 5G technology. Taiclet is a big fan of what he dubs 5G.mil which includes connecting all weapon systems into a vast and presumably smart network. However, going forward, the company wants the Pentagon to pick up the R&D tab, sensing that next-generation network connectivity ranks amongst the Pentagon’s priorities.

After spending almost 20 years at American Tower, a communications real estate trust, Taiclet knows a thing or two about networks. His stated ambition is to lessen Lockheed Martin’s dependency on hardware platforms and prepare the company for a digitised future, recognising future platforms will only be as effective as their software is smart.

Taiclet enjoys plenty of room for manoeuvring after his predecessor successfully dealt with a large number of legacy issues such as those plaguing the company’s F-35 Lightning II fighter plane. Formerly known as the Joint Strike Fighter, the plane suffered from delayed development, huge cost overruns, and iffy performance, being repeatedly shot down in combat simulations by the F-16 Fighting Falcon, the plane it is meant to replace.

Though the company has managed to solve most issues with the fighter, and even managed to bring its unit price down to around $80 million (after president Donald Trump loudly complained about the escalating cost of the programme), Lockheed Martin lost a large order in Germany after that country decided to join France in the development of Europe’s next-generation fighter.

In a rare moment of candour, Hewson last year seemed to dismiss the ‘Future Air Combat System’ as she held out hope to yet sell the Lightning II in Germany, arguing that the plane’s service life could extend well into the 2070s. The aircraft remains central to Lockheed Martin’s expansion in Europe as the company expects to increase its sales in the region by 30 percent or more over the next few years.

Jim Taiclet is sanguine about Lockheed Martin’s prospects and points to increased defence spending as the main reason for his optimism. Even though the covid-19 pandemic may affect budgets, he and other contractors estimate that another $100 billion has already been tagged for spending and will flow into the industrial base over the coming years, helping the industry survive largely unscathed the pandemic.


The Right Side of History: Germany Occupies the Moral High Ground

The latest annual Gallup poll on the standing of nations seems to indicate that President Donald Trump has failed to Make American Great Again. The survey found that Germany remains the world’s most admired country with the US, China, and Russia trailing far behind and virtually deadlocked in second place.

Germany took the lead three years ago after the US lost its lustre and saw its global approval rating plummet with 18 percentage points. The sudden drop in the country’s popularity was caused by a marked shift in opinion amongst traditional allies. In Europe, 61 percent of respondents disapprove of US leadership. In Australia and Japan, an even higher percentage of people are unhappy with the performance of the country under a president who repeatedly states that he has vastly improved the international standing of the country.

Last Friday, US Secretary of State Mike Pompeo claimed that his country is ‘perfectly positioned’ to lead the free world as it seeks to rein in expansionist China. Apparently out of touch with global reality, and blissfully unaware that most US allies have pinned their hopes on the November election and the subsequent ejection of President Trump from the White House, Mr Pompeo has set his country on an ill-advised and ill-timed collision course with China – at the precise moment the world has more important issues to deal with.

Under its current leadership, the US regrettably lacks the moral heft to face off an adversary that is, admittedly, the source of much evil. As it happens, global opinion isn’t fooled by China either. That country has lost its lustre too after it imprisoned a million or more Uighurs in concentration camps, stifled Hong Kong’s democracy, threatened neighbours, stole intellectual property, hacked into networks, and kept the world in the dark over the origins of the corona pandemic. In fact, a great many of the troubles currently besetting the world can be traced directly to China.

Though the US Secretary of State is right insofar as China needs to be reminded of the responsibilities that come with superpower status, Mr Pompeo couldn’t be more wrong when he asserts that his country must deliver the message. The United States may eventually resume leadership of the free world once its electorate has come to its senses and put a more thoughtful, reasoned, and pragmatic leader in the White House.

For now, all eyes are on German Chancellor Angela Merkel and her steady hand. Mrs Merkel is, arguably, the only world leader left with credibility. She speaks for Europe with a moral authority that remains unchallenged and towers over a field of populist posers ranging from the accident-prone Boris Johnson in the UK to Vladimir Putin, the Russian conniver-in-chief, and Jair Bolsonaro, the Brazilian copycat Trump.

It is not so much a question of ideology or opinion, as it is one of experience and tact. With the possible exception of Mr Putin, Messrs Trump, Johnson, Bolsonaro, and a host of even lesser populists are found sorely lacking in administrative competence, ethical values, and political expediency. Vladimir Putin is the exception for he understands power politics, is a skilled diplomat, and instinctively knows how far he can push before resistance stiffens and tension may escalate – qualities that are essential for any world leader aspiring to greatness.

In the midst of a pandemic and on the cusp of a second wave of viral infections, and with the global economy on life support, the world stands in need of clear and decisive leadership yet is being led, at this crucial junction in human history, by a collective of clowns and wannabe potentates.

Derided for being slow to react, complex in its workings, and fragmented to a fault, the European Union is nonetheless the last sizeable bastion of political decency left – and that says more about the present state of the world than it does about the EU. The bloc’s soft power stands as a beacon of hope to millions, possibly even billions, who yearn for a return to normalcy in international relations.

The 27-strong EU has shrugged off the departure of the UK without much ado or theatrics and managed to unanimously agree on a spending package of €1.8 trillion in just four days. The bloc has demonstrated a maturity, resolve, and sense of purpose that was wholly unexpected by those who considered it yesterday’s news. It also, belatedly, answered Dr Kissinger’s rhetorical question: When you need to talk to Europe, you call Berlin.

The importance of German leadership is hard to underestimate: Chancellor Merkel is unique amongst global leaders for knowing where to find the right side of history – and how to land there. She’s also the embodiment of caution, becoming irritable only when pressed for a snap decision. What makes Mrs Merkel special amongst her peers – is she has any left – is that she dares update or change her opinion when faced with new fundamentals.

Recognising the outsized impact of the pandemic earlier than most, she turned on the proverbial dime to ditch Germany’s ‘Schwarze Null’ policy that prevented the government from running fiscal deficits and deployed the country’s almost limitless wherewithal to aid those in need of support – including fellow EU member states. Where others dithered, or denied reality altogether, the German chancellor moved swiftly and decisively to meet the challenge.

No longer hampered or much burdened by the country’s unfortunate past, but still mindful of its legacy, German diplomacy has filled to void left by the bickering superpowers and the swashbuckling second-tier powers to assume moral leadership – and do so in the most unassuming of manners. When London or Moscow wish to express their concern over EU policies, they call Berlin.

Adding to Mrs Merkel’s credibility is the fact that Germany didn’t seek a leading role on the global stage but was awarded one by default. China too knows who’s in charge of Europe and President Xi Jinping has so far refrained from challenging Europe, even as the EU expresses increased criticism of his rule at home and his shenanigans abroad. To attack the moral high ground requires a dedication to political ethics and diplomatic etiquette currently lacking to either one of the so-called superpowers.


Jenny Lee, Managing Partner of GGV Capital: ‘Geek’ Mentality Coupled with Passion for Disruption Makes a Neat Niche

[caption id="attachment_16438" align="alignright" width="300"] Jenny Lee[/caption]

The Forbes Global 100 VC Midas list ranks the world’s best dealmakers in hi-tech and life science venture capital investors. Jenny Lee has made it to number 10 — the highest-ever female ranking.

The managing partner of GGV Capital, Shanghai, is consistently recognised among the world’s top 100 venture capitalists of either sex, and focuses on innovative tech, robotics and AI start-ups. Lee describes herself as “a geek” who is always on the lookout for disruptive technology and passion in the entrepreneurs with whom she works.

The Cornell University and Kellogg School of Management graduate has helped 10 early-stage companies to go public over the past 15 years, and she has been involved in a good number of M&A exits. She established the first GGV office in China and reopened its Singapore presence just last year. There are three general partners of GGV in China and another three in the US, but the company’s focus is not on countries but on sectors, and seeking out talent.

Lee’s view is that there are important insights to be gained from all cultures. Her strong experience in operations and finance situate her well to support board members and entrepreneurs in China. She received Business China’s Young Achiever award for developing relationships between that country and Singapore through technology and investment. She is a board member of eHang Technology, Keep, Kingsoft WPS, niu.com, Phononic, Xiaozhan (education), 51zhangdan (finance) and UC Web, until it was acquired by Alibaba.

E-commerce is important to GGV. In 2003, it was attracted by the charisma and vision of Jack Ma and became an early investor in Alibaba. At the time there were less than 10m internet users in a Chinese population of more than a billion. The challenge was to get more people online, and purchasing.

In the past 17 years, GGV has invested in e-commerce companies in China and the US — but it has pursued an interesting trend: “non-online” expansion. With labour costs rising, enterprise services are increasingly important in both countries. GGV is helping SMEs adapt to outsourcing and software solutions.

There is also a social interest focus at GVV, which includes gaming, and an understanding of how traditional business can change and prosper through online opportunities. Frontier tech interests for Lee and GVV include transport disruptions and autonomous driving. Twenty years ago, Lee — who trained as an electrical engineer — worked on the design, build and testing of drones. Industrial automation, or robotics, is getting a big push from the Chinese government, and GVV is active in the concierge and hospitality sectors.

Artificial intelligence interests at GVV are less about hardware and more about the potential of machine learning. The company is interested in finance applications such as the detection and reduction of credit card fraud.

Lee characterises herself as “always curious” about coming trends, and credits herself with an ability to suspend disbelief when talking to founders. Her company’s Discovery Fund invests in 20 to 30 early-stage businesses each year. For later rounds, GVV is prepared to write cheques of up to $50m. Typically it looks to be lead investor with board representation.

When not investing, Lee enjoys travelling the world and living in the wilds. Travel for her is not just about meeting people, it’s about the majesty of nature, and gaining a better understanding of our planet.

She maintains the perspective that there can never be an entity that is too big to fail. There will always be a place for start-ups to engage the market, focus, make a difference, bring change, and disrupt. Wherever the founders of nascent business can be found, Jenny Lee will be there too, ready to listen.


Asian Development Bank: Urban Transport Can Rebuild to Create a Greener Future

[caption id="attachment_16463" align="alignright" width="300"] Tokyo, Japan: An almost empty business district in Tokyo after Tokyo governor advice people to stay home to prevent against the spread of coronavirus in Tokyo, March 29, 2020. Photo: Richard Atrero de Guzman / ADB[/caption]

COVID-19 has resulted in drastic changes in travel behaviour. Society must now address how to better manage the mobility of people and goods for the post-pandemic period.

The coronavirus pandemic has highlighted the interconnected nature of life in the 21st century, with the virus reaching nearly all corners of the globe in a matter of weeks.

Drastic behavioural and lifestyle changes have been adopted on a global scale almost overnight, shifting the way we work and live, redefining our transportation needs, and posing a new and complex array of challenges.

Transport was perceived as a major risk in the spread of the virus. Now it will have to support different needs of the population throughout the various stages of recovery, while containing the risk of a resurgence of the disease.

This raises a fundamental question: how will society manage the mobility of people and goods during the pandemic recovery and post-pandemic period?

A new life during lockdown

Mobility restrictions in response to COVID-19 have resulted in drastic changes. Lockdowns across the globe have forced millions of workers to work from home, and schools to shift to e-learning. With the closure of bricks and mortar shops and restaurants during the containment period, consumers flocked to online shopping and food delivery, even in developing countries where the penetration rate for online services was traditionally low.

Before the pandemic, transport contributed to about 23 percent of global carbon emissions. Road traffic and aviation are the main contributors of emissions from transport, respectively accounting for 72 percent and 11 percent of the transport sector greenhouse gas emissions.

Although drastic lockdown measures around the world have brought world economies to their knees, satellites have recorded compelling data on how the concentrations of carbon dioxide and air pollutants have fallen drastically, bringing clear blue skies to many cities.

In Manila, where my organisation, the Asian Development Bank, is headquartered, traffic plunged 80 percent overnight after the lockdown was declared on 15 March. Elsewhere, in New York City, one of the US cities worst affected by the virus, a 35 percent reduction in traffic levels was reported in March. This resulted in about 50 percent fall in carbon monoxide emissions, which come primarily from traffic, and a corresponding five to 10 percent drop in CO2 levels. Similar trends have been observed in northern Italy, Spain, and the UK.

Public transport is a more efficient, affordable — and, in many cases, green — way to travel. But under pandemic conditions, there are naturally concerns about physical proximity while riding public transport. As the lockdown deepened across the People’s Republic of China, demand on buses and subways fell by about half in March–April 2020 compared to the same period in 2019, while walking and cycling showed a 25 percent increase.

Challenges of reopening

Initial trends in cities that have reopened show drops in public transport use, although this varies depending on available mobility options. As the experience of developing Asia shows, the poor suffer most as they more often lack access to transport. If walking or cycling are not options, then their choice is to continue using public transport or not to travel.

In the case of Beijing, analyses suggest that traffic levels have increased steadily since initial dips in February 2020, while public transport use has dropped by half. By early April 2020, congestion exceeded the same period in 2019. This trend is a cause for concern since if it continues and is seen on a wider scale, it could set back decades of effort in promoting sustainable development and more efficient urban mobility systems. On the positive side, Beijing has seen a 25 percent increase in cycling, while cycle-sharing schemes have shown a 33 percent increase.

Beijing’s rapid resurgence of traffic holds an important lesson — there is only a short window of opportunity for cities to implement low-carbon alternatives that lock-in the improved air quality conditions that were gained during the movement restrictions at the peak of the pandemic.

There is no doubt that some rebound to old ways of working, learning and leisure will be seen after the containment period. However, the post-pandemic era affords the opportunity to maintain and develop new practices.

Restoring public confidence

The pandemic has also highlighted the need for more robust transport system that is green, and resilient to future disasters. Technological advances, big data, AI, digitalisation, automation, and renewables and electric power can potentially offer fresh innovations to tackle changing needs, giving rise to smarter transportation.

Two key challenges lie ahead. The first is how to address capacity on public transport to maintain safe distancing requirements. The second is how best to regain public confidence in public transport, especially given that the poor in developing countries often do not have the option of switching to private transport.

More effort is needed to reassure public transport users of safety. The confidence of passengers on public transport should be restored through protective measures such as cleaning, thermal scanning, tracking and face covering. Further study to explore how protective and preventive measures can be stepped up to allow relaxation of safe distancing requirements and mitigate capacity challenges.

A possible future trend may be the consolidation of services and rationalisation of routes to better serve the emerging demand patterns and practices.

As countries enter the recovery phase, further preventive and precautionary operating measures and advanced technology should be implemented to enable contactless processes and facilitate agile response. Demand management measures can facilitate crowd control in bus and train stations and airports. As a complementary measure, non-motorised transport capacity could be expanded to absorb spillover demand from public transport, as has been seen in China.

Mass public transport is the lifeblood of many economies. Government policies and financial support are essential to enable public transport operators to stay viable and continue to support the sustainable movement of passengers and goods.

Delivering greener infrastructure

More sustainable design and construction methods, early warning systems and disaster response plans need to be put in place to enhance governments’ readiness for future disasters.

In most cases, existing narrow streetscapes in densely populated urban areas are not adequate to meet safe distancing requirements. To promote more use of non-motorised transport, infrastructure will need to be re-configured to comply with new requirements.

Many European cities have already embarked on ambitious expansion plans to promote walking and cycling. There has been a reallocation of existing public spaces and road space, retrofitting them with semi-permanent or permanent structures to enhance safely distanced walking and cycling.

Berlin was one of the first cities to substantially expand its cycle networks in mid-March. Pop-up bicycle lanes have even cropped up in less expected locations in Asia and South America.

In the wake of the COVID-19 experience, Manila has announced plans to make bicycle lanes a permanent feature on some of its busiest roads, while Bogota is expanding its existing bicycle lanes. But obviously across developing countries, this trend is still nowhere near its potential in terms of scale.

Towards a new normal

Transport planners, operators and policymakers must now face how to respond to a new normal. There has never been a more pressing time to rethink and reimagine options to address problems, and to link these with long-term sustainable objectives.

There is an opportunity for public transport to play an important role in promoting a better balance. It can achieve this through more active promotion of clean vehicles, the provision of quality travel alternatives in public transport, and promotion of walking and cycling to enhance overall health and wellbeing.

Our actions today will impact the environment and quality of life for future decades to come.

About the Author

Bambang Susantono is vice-president for Knowledge Management and Sustainable Development at the Asian Development Bank. Previously, he was the Acting Minister and Vice-Minister of Transportation of Indonesia, and Deputy Minister for Infrastructure and Regional Development at the Office of Co-ordinating Ministry for Economic Affairs.

About the Asian Development Bank

The Asian Development Bank was founded in 1966 as a financial institution that would be Asian in character and foster economic growth and cooperation in one of the poorest regions in the world. ADB assists its members, and partners, by providing loans, technical assistance, grants, and equity investments to promote social and economic development. Under its new long-term Strategy 2030, ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific region, while sustaining its efforts to eradicate extreme poverty. ADB is composed of 68 members, 49 of which are from Asia and Pacific.


Interest Rate Hike Key to Turkey’s Economic Fortune

[caption id="attachment_16470" align="alignright" width="300"] Recep Tayyip Erdoğan[/caption]

Amidst the cacophony produced by Messrs Trump and Jinping, the drumbeat of a small war was almost drowned out. Last month, a flotilla of eighteen Turkish warships converged on Kastellorizo, an idyllic island of the Dodecanese, to ‘protect’ a research vessel conducting seismological soundings to look for oil and gas on a part of the East Mediterranean continental controlled by Greece. Fighter jets from both countries flew at low altitude over the tiny island, just two kilometres off Turkey’s Anatolian coast, scaring startled sunbathers off the beaches with sonic booms.

Tensions subsided only after German Chancellor Angela Merkel told Turkish President Recep Erdogan in no uncertain terms that his display of military might was ‘completely unacceptable’. The word tantrum was reportedly mentioned. Chancellor Merkel also warned that any shooting would instantly trigger the imposition of comprehensive and crippling sanctions by the European Union. In a clear sign that US diplomacy no longer carries any noticeable weight, both Athens and Ankara lodged their appeals directly to Berlin, bypassing Washington altogether.

The chancellor’s swift and decisive intervention almost immediately convinced President Erdogan of the wisdom to recall his fleet and order the research vessel back to port. Just like it did to force through unanimous approval of the EU’s €750 billion post-pandemic recovery package, Germany flexed its financial muscle to remind Turkey who’s in charge – and calls the shots.

Admittedly, President Erdogan was an easy target. Whilst boisterous at home, his international standing as a regional powerbroker has weakened in tandem with the Turkish economy and the country’s increasingly precarious financial position.

Whilst President Recep Erdogan dispatches his navy on an impossible mission and fiddles with symbols of religion in nominally secular Turkey, Ankara is burning through its forex reserves at a rate that transcends caution. According to a recent estimate by investment bank Goldman Sachs, so far this year Turkey has spent some $60 billion in interventions to support the lira’s (undeclared) dollar peg. The country’s central bank leaned heavily on swap agreements to support $54.4 billion in short-term borrowing. As a result, the value net foreign assets – considered indicative of net reserves – dipped to minus $32 billion.

The forex interventions have mostly been an exercise in futility. Even though the central bank was spending $1 billion daily to support the currency, by the end of last month the lira had plunged to a near-record low against the euro. The slump was slightly less pronounced against the dollar, given its own weakness vis-à-vis the euro.

Market analysts and strategists seem hard-pressed to detect a silver lining and doubt the ability of the Turkish central bank to keep inflation down after President Erdogan again signalled his strong opposition to a rate hike.

With its benchmark interest rate at 8.25 percent and annual inflation currently running at 12.6 percent, the central bank has few, if any, options left. Market watchers now seriously consider the possibility of a ‘disorderly depreciation’ of the lira should the negative interest rates, and the resulting credit push, persist much longer.

After two consecutive years of running a modest (and exceptional) current account surplus, Turkey slid into a substantial deficit yet again after foreign investors pulled some $13 billion out of country and the pandemic kept tourists away. Last year, Turkey welcomed over 45 million visitors who spent some $32 billion. That crucial source of forex has almost completely dried up with the number of arrivals in June dropping by a staggering 96 percent and resorts reporting occupancy rates of five percent or less.

The plight of the country hasn’t improved with the Erdogan Administration’s moves to curb access of foreign investors to the country’s equity market. Late June, index provider MSCI warned that it mulls degrading Turkey to frontier market status after the government introduced a slew of measures that, amongst others, ban short selling and stock lending. To protect the Turkish lira against ‘unwarranted speculation’, three foreign-owned banks were temporarily banned from trading. In its annual review, MSCI noted that the steps taken have ‘severely restricted the ability of institutional investors to hedge portfolio risk’.

The corona pandemic has acerbated – and exposed – the systemic weaknesses that granted Turkey a place amongst the ‘Fragile Five’ – a term coined in 2013 by a financial analyst at Morgan Stanley to group emerging market economies that depend on notoriously fickle foreign investment to underwrite their growth ambitions. The five constitute a moving target. Some countries drop out whilst others are added. Morgan Stanley includes Turkey (alongside Argentina, Egypt, Pakistan, and Qatar) since November 2017. The list was originally compiled to denote countries suffering significant capital outflows in the wake of the 2008-2010 banking crisis and as a result were experiencing severe difficulties in bridging their current account deficit.

President Erdogan and Finance Minister Berat Albayrak, his son-in-law, seem to believe that Turkey can yet master the inherent contradictions of a pegged exchange rate and an independent monetary policy, all the while maintaining the free flow of capital. A self-declared enemy of the ‘interest rate lobby’, President Erdogan refuses to contemplate an end to the credit boom which benefits both households and businesses – and inflates growth. Distributed mainly via state-owned banks, credit volumes started to swell in the run-up to the March municipal elections. Whilst that, and a national spending splurge, pulled the country out of its recession, the economic rebound was not enough to avoid a poor showing at the polls.

Unable to put the genie back in the bottle with a virus raging and the economy tanking, the Erdogan Administration is betting on a relatively quick return to global normalcy which would see tourists flock to the beaches and rescue whatever remains of the season – and the national accounts. However, the gamble seems unlikely to pay off. A nascent second wave of infections may be taking shape, forcing millions to endure staycations this summer. Moreover, making waves with wargames and deploying the turquoise waters of the Eastern Mediterranean as a pawn in grandiose geopolitical manoeuvrings is probably not the way to revive the country’s fortunes.


Snap-It App: App For Plumbers, By Plumbers

“Don’t chase the money”, the old saying goes, “solve a problem – and the riches will follow.” Anybody who has lived in London would know about problems with plumbing — repairs are time-consuming and expensive.

One reason for the delays is getting the (right) spare parts to the client. Parking. Taking off again (losing the prepaid parking slot). Getting stuck in traffic. Queuing up at the point of distribution. Is the part available? Returning to the impatient client. Parking space taken. Client yelling: “I have waited all day! Where have you been?”. You get the picture.

Young, award-winning London entrepreneur to the rescue. Viktor Muhhin (“Vik”, 34) set out to match this problem with an app. Qualified as apprentice plumber and now running multiple service teams, he has the experience and appreciates the challenge. Naturally competitive, he dived into the fray of app developers and created Snap-It: a retailer and a market place technology that enables tradesmen to do more by selling materials directly to tradesmen and delivering them from on-boarded partner stores throughout London.

The start-up got initial seed funding of £363k from reputable and successful angel investors such as Jack Beaman (founder of Syft), Matt Smith (professional footballer, Millwall FC), and Alex Macdonald (velocity.black). Adam Blair (ex Funding Circle, SeedLegals) continue to support the venture with outstanding success.

"I invested in Viktor’s business because I think he’s solving a real world problem I’ve had experience with myself. I love both his plan and his team."

- Matt Smith

With the assistance of angel investors, and by taking a pay cut as well as investing his last savings, Vik set out to solve a problem: how to save time for plumbers who are always late. His new company has an ethos, beautiful in its simplicity — allow plumbers to buy time.

The technology and the ecosystem his young team of seven is developing is more complicated. The tech team is headed up by the Finnish whiz kid Timo Tuominen (Nokia, lead developer MoneyCorp), who is focused on the app’s ease of use and smooth backend integration for the multiple users: customers, plumbers, drivers, inventory holders, administrators, and managers.

[caption id="attachment_16521" align="aligncenter" width="900"] Team: Snap-It London office[/caption]

The app is integrating client service with conveyer belt part dissemination from large suppliers while also allowing small independent suppliers to grow their sales. The logistics part of the app has unique proprietary algorithms that exploit the idle time of Uber, fleets and couriers and utilises geofencing for the nearest transport solution, e.g. from an airport drop-off where the expenses can be passed on.

Streamlining the process of sourcing, procurement and delivering (by contactless drop off) the spare parts creates value by enabling the plumber to boost the number of billable hours. Other major advantages include more cost-effective customer services and transparency.

Lower fuel costs and reduced traffic congestion add to the carbon neutrality and environmental benefits for London.

Snap-It Limited (snap-it.app) is already an agile technology company with a proven track record of customer satisfaction at each part of the vertically integrated B2B2C supply chain. Turnover is on a trajectory of doubling every 12 months.

Openminded and driven by nature, not resting on his laurels, Vik has set his mind set on growth. He is in the process of expanding into Birmingham (the UK’s second-largest city), and then we take Manhattan. Vik’s expansion path includes widening his catalogue trade to include boiler parts and electrical parts.

In addition to scaling sales, he sees opportunities for system cost savings when consolidating the purchasing power of independent operators and suppliers through new buyer groups with better bargaining clout.

The fund is seeking £1.5m by issuing new equity at a company valuation of £5m. No wonder investors are queuing up. Guided by the past value creating growth as well as the drive of the principal, this company is set to go places and solve problems.

Read the artcile from CFI.co Summer 2020 Issue.


IBM CEO Arvind Krishna: Preparing Big Blue for a Quantum Leap

[caption id="attachment_16527" align="alignright" width="300"] IBM CEO: Arvind Krishna[/caption]

Frustrated by the limitations of ‘regular’ programming, IBM CEO Arvind Krishna is looking for a breakthrough in quantum computing. He expects Moore’s Law to work its magic before long and usher in a new era that may see processing speeds boosted by a factor of a million or more.

Though the future is not quite here yet, IBM took its first rudimentary quantum computer system ‘live’ a few years ago to grant programmers free online access and an opportunity to tame its fickle yet powerful quantum bits (qubits). Last year, the company launched the IBM Q System One, the world’s first commercial quantum computer, housed in a 27m3 airtight glass cube.

Krishna, a former head of IBM Research, firmly believes that current limitations such as the number of qubits that can be linked to form a system, and the length of time a qubit can be kept in a quantum state, will be overcome. At the forefront of the industry-wide quest to harness jittery qubits, IBM last year unveiled the world’s biggest yet quantum computer: a 53-qubit machine with a decidedly sci-fi appearance and of a physical size not far removed from Colossus, the living room-sized first-ever programmable computer designed by Tommy Flowers (1905-1998), an engineer of the British General Post Office, in 1943 to help crack German ciphers during WW2.

A passionate technologist, Krishna attaches supreme importance to maintaining an edge in quantum computing, a field that may offer IBM a second change to get it right, reap the rewards of invention, and become the sixth big tech giant. The company, an American blue-chip icon that lost most of its lustre to audacious upstarts in the 1990s, has now rediscovered the excitement of pushing the envelope and leading the way.

Under Krishna the company has regained some of its former corporate swagger. Morale has been boosted and with that, IBM’s ability to compete with the likes of Amazon, Google, and Microsoft.

With Krishna’s elevation to CEO on January 31, four of Silicon Valley’s largest companies are now led by Indian-born technologists. All but Sundar Pichai at Alphabet succeeded CEOs with a sales or marketing background. The remarkable rise of the engineers is considered proof that for big tech companies to thrive – and survive – the nerds need to be moved from the basement into the corner office.

Whilst Ginni Rometty, Krishna’s predecessor, received praise for pushing IBM towards cloud computing, the company’s stock languished and lost about 25 percent of its value during her eight-year tenure. Over that time, the broader US stock market gained some 150 percent in value.

Krishna may well owe his promotion to the bold decision he masterminded to acquire Red Hat, a leading provider open source enterprise software. The biggest-ever takeover staged by IBM cost the company $34 billion but opened a universe. Mr Krishna correctly identified an opportunity to acquire an essential piece of technology that will allow IBM customers to link their work processes to the company’s own cloud, keeping everything inhouse and bypassing giants such as Amazon, Google, and Microsoft.

Krishna realises better than most that growth and profits are driven by integrated end-to-end solutions that gives users to option of staying in a single environment or enter a multi-cloud ecosystem. Red Hat, responsible for pushing the Linux operating system to maturity, straddles all clouds and offers IBM access to a vast community of developers. Programmers tend to gravitate towards platforms with the largest mass. The best and brightest minds have been attracted to Amazon Web Services (AWS) and Microsoft’s Azure. With Red Hat in its constellation, IBM may begin to exert some pull and make up for lost time.

Arvind Krishna, an IBM veteran of thirty years who has fifteen patents to his credit, is also charged with reducing his company’s exposure to its legacy. IBM still derives about 70 percent of its revenue (totalling $77 billion in 2019) from the sale of hardware – a sector that shrinks by 5 to 10 percent annually as processing power shifts to the cloud, leaving behind relatively small, slim, and simple terminals with like profit margins to manufacturers.

In a sign that the company is determined to reclaim lost ground, former Red Hat CEO Jim Whitehurst was installed as IBM president, a position usually reserved for the company’s heir apparent. With two experienced tech visionaries at the helm, ‘Big Blue’ is not only back in the race for IT supremacy, but betting everything on next-generation computing.


Chinese Tech Companies Face US Ban

This is perhaps not the best time to confront China. The corona pandemic is far from over and its effects on global markets has only begun to reverberate. An economic depression may well be in the making. Not that the US stock market has taken note: there, the party never seems to end. Until, of course, it does – as it must.

In fearsome times such as these, concerted joint action is the probably the better option. However, live to fight another day is an alien concept to US President Donald Trump whose all-or-nothing attitude to life has caused him to file six times for bankruptcy in his chequered career as a self-described and -anointed real estate mogul.

On Friday, Mr Trump signed a vaguely worded executive order giving US companies 45 days to unwind their business dealings with the messaging app WeChat and the video-sharing platform TikTok. Almost immediately after the order was unveiled, investors dumped shares in Chinese tech companies, lopping off some $75 billion in market value. Shares in WeChat owner Tencent, traded on the Stock Exchange of Hong Kong, nosedived ten percent within minutes of the announcement before recouping almost half their initial losses when bottom feeders intervened. Other Chinese IT giants such as Alibaba and JD.com, two ecommerce platforms, also took a severe hit.

Whilst political pundits regard the president’s move as opportunistic and an attempt to revive his sagging political fortune and standing, investors are worried that the ambiguous wording of the order may herald a much wider ban on US dealings with Chinese tech firms. This would be particularly damaging to Tencent’s gaming business which has benefitted handsomely from lockdowns and stay-in-place orders. Before Friday’s sharp retreat, the company’s stock was up 40 percent for the year.

Tencent is remarkable not only because it managed to claim the top spot in the global online gaming industry after a string of strategic acquisitions, but also because the company had so far managed to stay well under the White House radar. In 2017, Tencent bought a five percent stake in electric vehicle manufacturer Tesla for $1.78 billion, prompting Elon Musk to proclaim the new stakeholder a ‘valued adviser’.

In May, Tencent caused some concern amongst Western policymakers after the University of Toronto Citizen Lab, an interdisciplinary research effort that tracks the interplay between digital media, global security, and human rights, proved that the company actively monitors foreign accounts on WeChat to filter out messages with a political content and use these to finetune the censorship algorithms to which it subjects domestic users of its apps. A recent Citizen Lab research paper detailed Tencent’s prominent role in helping Chinese authorities perfect their mass surveillance system and detect – and silence – any dissenting voices.

Though President Trump’s executive order is not entirely misguided given China’s brazen use of high-tech to muzzle its society, his timing is both off and suspect. So far, US investors have largely ignored the Trump Administration’s brinkmanship. Even in this plague year, the Nasdaq Composite has scaled record heights, ignoring both the pandemic and the threat of a major trade war as it added 22 percent to its value.

However, US tech companies are not immune to the woes now besetting their Chinese competitors, counterparts, and partners. Apple generates about a fifth of its sales ($260 billion last year) in China. CEO Tim Cook noted that three out of every four iMacs or MacBooks sold in the country are snapped up by first-time buyers. Apple shares doubled in price over the past five months and the company is now on the cusp of becoming the world’s first $2 trillion corporation in living memory.

The Dutch East India Company, in business from 1602 until its demise in 1796, would have possessed a $8.3 trillion market cap today. Even the British South Sea Company, which never turned a profit and created the mother of all asset bubbles, was once valued at $4.5 trillion. Apple has some way to go yet before it truly leaves an indelible mark on history.

China is crucially important to other large US tech companies as well. The five largest chipmakers – Broadcom, Intel, Nvidia, Qualcomm, and Texas Instruments, each depend on China for between a quarter and half of their sales volume. Though Facebook is banned from the country, Chinese companies still advertise on the social network, spending multiple billions of dollars annually to reach new customers.

Even the iconic NBA receives $300 million annually from Tencent in return for the right to broadcast its teams’ games in China. Other major sports leagues such as the NFL (football), NHL (ice hockey), and MLB (baseball) have similarly lucrative deals in place with Chinese content distributors.

President Trump now wants all that gone in under seven weeks. It may take a few days for the news to sink in at Silicon Valley headquarters. Perhaps, no-one believes that Mr Trump will actually have his executive order carried out. After all, just a few days ago the Microsoft executive team had to deal with an entirely new form of corporate taxation invented on the spot by a president who seems increasingly detached from reality. During one of his daily ramblings, Mr Trump demanded Microsoft hand over a sizeable chuck of cash to the Internal Revenue Service should it succeed in buying the video-sharing app TikTok from its Chinese owners for $34 billion. Mr Trump claims some form of ownership of the impending deal and demands a cut even though no legal provisions currently exist to tax mergers and acquisitions. These are interesting times indeed.


Ambareen Musa, Founder & CEO of Souqalmal: From Mauritius with Love for Fintech, and lots of Ambition

[caption id="attachment_16544" align="alignright" width="300"] Image credit: Souqalmal[/caption]

Ambareen Musa, founder and CEO of financial aggregator marketplace Souqalmal, sees a glowing future for fintech — and she believes in striking while the iron is hot.

“The opportunity for fintech is absolutely massive,” she told Forbes magazine. “It’s only at the start, we’re extremely nascent at the moment, and as regulations get better, as customer adoption gets better, and as even the technology gets further and further, I think we have an opportunity that cannot be missed.”

Mauritian Musa is an entrepreneur with an international background. She studied in Australia, graduating with a business degree and launching her first start-up shortly after.

Musa moved to London in 2004 and worked for GE’s financial arm, GE Money, covering various positions in marketing, financial literacy, customer advocacy and e-commerce. She is credited as the force behind the UK’s first online financial literacy initiative, moneybasics.co.uk.

She moved to the UAE in 2008 and consulted for Bain & Company Middle East on financial services projects. Musa was surprised to find no single comparison website for financial services in the region. Within four years, she had assembled a team and attracted the funding to bring Souqalmal to life.

Souqalmal has been hailed as a market influencer and champion of financial inclusion and education. It’s the largest financial aggregator marketplace in the region, boasting more than 3,200 retail banking, telecoms, insurance and education products from providers across the UAE and Saudi Arabia. The company arms consumers with a transparent marketplace and unbiased data to enable commitment-free comparison shopping of financial and insurance products in the MENA region.

Souqalmal raised $10m during its latest series B funding round with the help of three major investors: GoCompare Group (a listed UK aggregator with scalability experience), RTF (Ryiad Taqnia Fund, a lead investor with a Saudi market advantage) and UAE Exchange (a financial services provider with a customer base of 15m).

Faisal Galaria, the chief strategy and investments officer of GoCompare, commented on the companies’ shared customer-centric focus and drive to save users time and money. RTF’s Ivo Detelinov called Souqalmal “an ambitious, sharply focused, and very efficient organisation”. Promoth Manghat, UAE Exchange CEO, praised Musa for her contagious energy and dubbed her the “new economy leader”.

As a regular guest writer for Entrepreneur Middle East, Musa shares advice for those in the start-up and scale-up stages of business. She talks about her mistakes so others can avoid making them, and advises founders to recruit a good crew, and entrust them with responsibility.

“The hardest part was to trust someone else with what I believed was the core of my business,” she wrote. “In the early stages, a lot of the growth revolves around the founder, but trying to do it all alone was not necessary.”

She encourages entrepreneurs to seek a co-founder, someone with a similar vision to share the burden, and urges them not to underestimate the funding process. Above all, she says to trust those “gut feelings” that tingle and twitch when something isn’t right.

Since its 2012 inception, the aptly named company — which means “money market” in Arabic — has diversified its service offering and expanded its market presence in accordance with a strategic growth plan. Its insurance business division registered 800 percent growth from 2018 to 2019, while efficiencies in marketing and service delivery have cut customer acquisition costs by 80 percent. It has introduced three new insurance verticals (travel, yacht and bike) to its growing list of comparison services.

“We’re on track to building a successful business, one that’s built to last,” she said. “Whether it’s a new service, a new geographic expansion, or a new project that’s set to shake things up in the industry — there’s always something exciting brewing at Souqalmal.”

Musa serves on the UN Secretary-General’s Digital Financing Task Force to promote the Sustainable Development Goals.


CANPACK Group: Poland-based Packaging Manufacturer Expands Globally, Enters US Market

[caption id="attachment_16562" align="alignright" width="300"] CANPACK Group: US Facility[/caption]

Pennsylvania’s Lackawanna County is heading back to the future thanks in part to a $366 million investment by a Polish manufacturer of packaging products – the area’s largest financial commitment in over a half century. Once one of the leading industrial capitals in America, this lush valley nestled along the Lackawanna River took on a welcome new shine after CANPACK Group of Poland announced plans to build the company’s first US manufacturing facility near Scranton – a proud city enjoying a cultural renaissance and where the county’s newest Medical School calls home.

Covering a surface equal to about eleven soccer fields and bringing more than 400 high quality jobs to the area, CANPACK Group’s state-of-the-art plant is slated to start the production of aluminium cans by the end of next year.

Pennsylvania Governor Tom Wolf is excited that a previously abandoned brownfield site returns to productive use: “CANPACK Group is known throughout the world for its manufacturing strength, and we are thrilled that the company has chosen Pennsylvania for its entry into North America.”

Governor Wolf called the investment in Lackawanna County ‘historic’ and emphasised the company’s dedication to the pursuit of excellence in corporate citizenship. Earlier this year, CANPACK Group joined the United Nations Global Compact, a business framework underpinned by a set of ten sustainability principles. Signatories commit to proactively support and further the UN’s global sustainable development goals.

“By thinking and acting in a sustainable manner, we recognise our responsibility as an employer, packaging manufacturer, member of local community, and business partner. Our three pillars of sustainable development – care, sustain, recycle – clearly define the direction of CANPACK’s activities and reflect the expectations of all company’s stakeholders,” assures Group CEO Roberto Villaquiran who joined the company last year to accelerate growth, broach new markets, and boost innovation.

"CANPACK Group is known throughout the world for its manufacturing strength, and we are thrilled that the company has chosen Pennsylvania for its entry into North America."

With well over thirty years’ worth of experience in the packaging industry, Villaquiran is particularly thrilled with his company’s first foray into the US: “Our customers are amongst the largest beverage producers in the world. In order to be their partner, we need to be here, in the United States.”

In a way, the vast facility being erected in Lackawanna County represents a novel experience for the company. At the brownfield site, in Olyphant Borough just to the northeast of Scranton, a long-vacated industrial complex had to be demolished to make way for the new plant.

Global Expansion

CANPACK Group usually develops greenfield sites such as the 65,000m2 industrial plot it acquired in Tocancipá, just north of the Colombian capital city Bogotá, where the company late last year inaugurated a plant capable of churning out up to 1.3 billion aluminium beverage cans annually.

Though the initial plan called for a production volume of 1.3 billion cans a year, capacity will be scaled up to 1.9 billion within months of the official opening to accommodate the exceptionally strong demand. The Colombian facility was the first of its kind to offer customers bespoke sizes besides the 330ml and 355ml industry standards.

The company moves and acts in tandem with its customers. The brand-new plant in Colombia was built to supply AB InBev, the world’s largest brewer. “The decision to speed up expansion into the South American market was founded upon the strong and trust-based relationship CANPACK Group has established with AB InBev,” says Peter F Giorgi, CEO of the group’s parent company Giorgi Global Holdings.

With operations spanning five continents, CANPACK Group maintains 28 manufacturing facilities, employs nearly 8,000 people, and markets its products in over 100 countries. In its corporate trajectory of thirty years, the company has come to lead the beverage packaging sector in Central and Eastern Europe before striking out further afield.

Building on its success, the group has expanded progressively into Western Europe, Africa, Asia, and Latin America, attaining a global footprint in the process and gaining economies of scale that drive both growth and profits. CANPACK Group believes it is now the fourth largest manufacturer of aluminium cans in the world with an installed annual production capacity that exceeds 26 billion units. The group also produces some 18 billion bottle closures and around 700 million pieces of metal containers for the food industries in addition to 2 billion pieces of glass packaging a year.

This dynamic approach to business has allowed CANPACK Group to significantly broaden its geographical footprint which, in turn, minimises the company’s exposure to economic downturns whilst adding to both corporate resilience and sustainability. “That is very important to us and to our customers,” says Villaquiran: “Care, sustain, and recycle are keys to delivering on sustainability and meeting the expectations of all stakeholders.” In Poland, its home market, CANPACK Group has helped to create and maintain a recycling chain that is considered amongst the most efficient in Europe and manages to reclaim and re-use up to 80 percent of packaging materials employed.

In the US, CANPACK Group’s new facility will also boast an onsite Center of Excellence comprised of an operations and customer experience center to showcase the company’s research and development efforts, lithographic expertise, accomplishments, and capabilities, and – crucially – how these translate into a tangible value proposition.

Value Proposition

Recognising that packaging is where the product meets the consumers’ eye, CANPACK Group has been pushing the envelope with solutions that are not just in tune with environmental considerations, but also connect with consumers in a meaningful way, enhancing and energising their experience with products that stand out.

Analysts agree that the use of metal conveys a premium feel to packaging and addresses consumer concerns over recycling. The company offers beverage containers in twenty different sizes and finishes. CANPACK Group has also pioneered a number of technologies that improve the design and printing possibilities, support efficiencies along the production process as well as enable to significantly lower the packaging’s environmental impact.

The outlay is expected to pay off handsomely as the global light metal packaging market is set for strong and sustained growth according to a recent industry insiders report.

The group’s customers have been quite receptive to the company’s continued robust growth. CEO Villaquiran explains that since 2017, his company has either opened new factories, or expanded existing ones, at a clip of two per year. Industry insiders expect CANPACK Group to keep up its present growth rate for the foreseeable future.


Anshula Kant, MD and CFO of the World Bank Group: Power of Capital Markets in the Battle Against COVID-19

[caption id="attachment_16584" align="alignleft" width="300"] MD and CFO of the World Bank Group: Anshula Kant[/caption]

Managing Director and World Bank Group CFO Anshula Kant reflects on the crisis engulfing the world, and the opportunities we have to build back.

I can’t remember a time in my life when a single event has mobilised the entire world, with health care workers, governments, the private sector and multilateral development banks all focused on the same problem.

Each organisation, each sector has a role to play – including capital markets. But how exactly can bond issuers and investors help?

The pandemic has cost lives and disrupted livelihoods on an unimaginable scale. As governments begin to slowly reopen their economies and societies, the effects of the crisis will linger, especially for poor and vulnerable people.

Countries’ financing needs are rising dramatically for both the short and medium term, first to tackle the health emergency and then to start working toward a sustainable recovery. Many developing countries rely heavily on revenue sources such as remittances, commodity exports, and tourism and are likely to be disproportionately affected by an anticipated global recession. Tax revenues are falling as well, while these countries’ access to financial markets will be sharply curtailed.

Even before the crisis, capital markets were critical for strengthening outcomes for countries and their people. As access to these markets deteriorates for many, the multilateral development banks (MDBs) provide an essential service. These institutions maintain long-term country engagements and can act swiftly to make funds available. MDBs can be one of the few resources countries can tap into, especially during market volatility.

As the pandemic continues to unfold, the World Bank Group is acting fast and decisively to help countries respond and get their development progress back on track: we have pledged to make available up to $160bn over 15 months. We are assisting over 100 countries to set up emergency health operations, protect households, save jobs and businesses, and get money to people most in need. Our assistance will also include support to address the medium- to long-term social and economic repercussions of the pandemic.

We are also collaborating with other MDBs and bilateral agencies to increase co-financing for operations so projects can quickly expand, and our partner institutions have also made commitments of between $70 and $80bn.

The International Bank for Reconstruction and Development (IBRD), the original member of the World Bank Group, is one of the largest global bond issuers, offering safe, liquid, and high-quality investments to direct global savings to critical use. It has been pioneering capital markets for over 70 years, and the franchise we have created provides a platform for innovation and leadership. We use the triple-A-rated credit quality of IBRD and, recently, the International Development Association (our fund for the poorest countries) to build and deepen capital markets and scale up impact as we raise awareness of global issues such as gender equality, access to clean water and ocean resources, food loss and waste, and health and nutrition. Our dialogue with investors, transparency on how we use bond proceeds, and engagement on global issues are particularly important now.

Over two days in April, IBRD raised $15bn from global investors. This included the largest-ever US dollar-denominated bond to be issued by a supranational, as well as benchmark issuances in British pound, Euro, and Swedish krone through our Sustainable Development Bonds. We have since followed up with another $4bn benchmark issuance.

Our ability to tap capital markets during difficult times demonstrates the interest investors have in supporting sustainable programmes that strengthen countries’ capacities to fight the pandemic.

But this wasn’t easy. We laid the groundwork with investors over years. This time we reached out to explain the World Bank’s health programme, and how we are helping countries strengthen their response and health systems during the pandemic. We expanded the dialogue with existing investors and welcomed new ones.

Since the crisis began, there has been increased interest in ESG investing. Globally, we see a variety of approaches, ranging from “COVID response” bonds to social and sustainable bonds that are embedded within an issuer’s existing issuance framework. Many investors are taking a holistic approach, connecting their investments to impact and progress on the Sustainable Development Goals (SDGs). As of mid-May, investors have supported more than $65bn in COVID-related issuance [1]. The benefit of such bonds is the transparency and disclosure on use and allocation of proceeds, so investors can seek return alongside impact. Communication with investors and other market stakeholders remains key as the focus steadily shifts to impact and sustainability.

The pandemic has crystalised the opportunity for sustainable investment to benefit everyone. Issuers and investors can lead the way, but the focus must be on transparency. Issuers should be aware that investors are assessing the risks and opportunities of their investments through the lens of ESG and/or the SDGs. Issuers should explain how they are using investors’ funds to make a positive difference for society. And investors must look at their entire portfolio to see how they can use the power of investment to contribute to sustainable development, and demand transparency from issuers so that they can make informed decisions.

The pandemic is still in its emergency phase in much of the world. But countries are already recognising that it will be imperative not just to recover, but to build back stronger. By connecting investments to sustainability goals and by ensuring transparency, issuers and investors can help in the fight against the pandemic and shape a more resilient and sustainable future for all.

[1] According to the FT (May 15, 2020): ft.com/content/03dbe400-1bea-4475-bda7-2fbc1d9ce062

About the Author

Anshula Kant was appointed managing director and chief financial officer of the World Bank Group in October 2019.

She is responsible for financial and risk management of the group. Among other key management duties, her work includes oversight of financial reporting, risk management and mobilisation of IDA and other financial resources.

Through her work at the State Bank of India (SBI), Kant gained more than 35 years of experience in the financial industry. As CFO of SBI, she managed $38bn of revenues and total assets of $500bn. Most recently, she served as SBI managing director from September 2018 to August 2019.

With direct responsibility for SBI’s Risk, Compliance, and Stressed Asset Portfolio, she led the creation of investment opportunities while empowering risk management throughout the bank.

Anshula Kant earned her Bachelor’s degree with honours in Economics from Lady Shri Ram College for Women, and completed her Master’s in Economics from Delhi School of Economics.


UBX: Exponential Opportunities for Businesses and People through Digital Transformation

[caption id="attachment_16599" align="alignright" width="300"] President and CEO of UBX Philippines: John Januszczak[/caption]

In 2018, two years after taking the bold step to digital transformation, Union Bank of the Philippines (UnionBank) spun off its fintech and corporate venture capital arm: UBX.

UBX Philippines is predicated on a future where financial services are invisible, seamlessly embedded into the experiences and activities that truly matter to businesses and people. It leverages compelling ecosystems and data to explore new possibilities — making financial services more instinctive and accessible.

The company continues to build and invest in open platforms, as well as in technologies that allow others to innovate, adding value whether they collaborate or compete. The impact of financial inclusion can unlock the potential of businesses and people.

The first year of UBX has seen the commercial launch of four ventures, namely i2i, Sentro, Bux and SeekCap — with more than 60,000 clients on-board. The digital platforms of UBX have provided its clients much needed access to technology, and have created marketplaces that would otherwise have been impossible during the Covid pandemic.

i2i was created to bring digital transformation to unbanked and remote communities. UBX has partnered with the Rural Bankers Association of the Philippines (RBAP) and has expanded to include thrift and savings banks, co-operatives and non-banking financial institutions such as remittance centres to make digital fund transfers possible.

A mobile ATM service has also been made available for basic transactions such as cash withdrawal and balance inquiry. It is now recognised as the largest financial network in the Philippines.

SeekCap was created to support the MSMEs (micro, small, and medium enterprises) that make up the majority of businesses in the Philippines. It is a unique digital platform that includes lenders such as Progressive Bank, UnionBank, EON SME Credit Card, and Esquire Financing Inc. SeekCap can offer companies legitimate sources of credit without the inconvenience of a traditional loan application.

To support online vendors, UBX developed Bux and Sentro. Bux is an end-to-end payment gateway for e-commerce that can be directly embedded onto the seller’s platform for a seamless transition from the product page. Sentro, on the other hand, is a straightforward online shop builder. It creates an instant e-commerce ready website for budding virtual entrepreneurs.

Sentro protects both seller and buyer from fraudulent transactions, and can facilitate the logistics and delivery of products. In addition to Bux and Unionbank, other payment venues for Sentro transactions can be accessed through 7-11 branches or via Dragonpay.

i2i, SeekCap, Bux and Sentro have furnished businesses and clients with the vital tools to ride out the coronavirus crisis. UBX has exceeded all expectations, and has been recognised by several industry awards.

For UBX, financial inclusion means opening its doors to any company wanting to venture into the fintech area. QLab, a one-stop-shop for web, mobile, and platforms design and development, is UBX’s technology service consultancy provider. It co-creates solutions for businesses, powered by a team equipped with full-stack development capabilities and end-to-end and services.

UBX will continue to have the first-mover advantage in the fintech industry by offering products and services that use innovative digital platforms and technologies.


Bank One Ltd: From Africa, for Africa, with a Wealth of Regional Understanding

[caption id="attachment_16602" align="alignright" width="300"] Head of International Banking: Carl Chirwa[/caption]

In its 12 years of existence, Mauritian-based Bank One has built a strong reputation — regionally, and way beyond its borders.

Leveraging the strength of a highly qualified team with decades of combined African experience, Bank One has firmly established its footprint on the continent, and mastered the complexity of its main markets. Along with coverage of new geographies in 2019 come enhanced value-added products to fulfil the needs of customers and meet rapidly changing market dynamics.

Onshore and offshore presence

Bank One is uniquely positioned as a strong and reliable banking partner “from Africa, for Africa”. Its two shareholders, Mauritian conglomerate CIEL Ltd and Kenya-based I&M Holdings, have an extended presence onshore that provides access to key African markets. From I&M’s extended branch network across East Africa to CIEL’s high potential and successful expansion in Madagascar, Bank One has fully embraced the opportunities arising from those markets.

Over the years, it has built strong capabilities to facilitate investment and support regional trade across Africa while serving the needs of customers onshore and offshore.

Bank One is considered today as the only Mauritian bank which can boast such a footprint across Africa and the Indian Ocean Region. Its onshore and offshore presence is a fundamental part of its exclusive value proposition, and the strong African credentials which enables it to create differentiated value for its clients.

Bank One’s international strategy has been pivotal to its success over recent years. “Our robust Trade Services proposition targets top-tier Sub-Saharan Africa Financial Institutions,” says Head of International Banking Carl Chirwa, “where we see excellent opportunity to create sustainable value and build long-lasting relationships with the commercial banks across the continent.

“Over the years, we have expanded our international banking team capabilities with a focus on strengthening our expertise in financial institutions, trade finance and relationships with Africa-focused DFIs. In 2018, I joined as a seasoned banker from Africa to oversee our International Banking activities and a Head of Financial Institutions, who also comes from Africa, was recruited a year later.

“Our real market insights and team diversity have been greatly beneficial as we set out to grow our international business coverage in Africa and beyond.”

Strong African credentials

In the last quarter of 2019 and the first quarter of 2020, Bank One won significant Lead Arranger mandates totalling $100m from Central Banks in Sub-Saharan Africa. Bank One was able to structure and arrange short-term syndicated currency swap facilities to allow Central Banks in the region to enhance hard currency positions and support international trade transactions.

Bank One has gained enviable expertise in consistently executing transactions while adding value to banks in the Sub-Saharan Africa region. “As a result, our services are well-appreciated by the markets,” says Chirwa, “and we are considered a trusted and reliable partner.”

Supporting economic growth

Mauritius remains Sub-Saharan Africa’s preferred international financial centre, and the last investment-grade country in the region with the mandate to attract Foreign Direct Investment and Trade Flows into Africa.

Bank One takes advantage of the strong offshore credentials of the Mauritian jurisdiction and encourages global investors to use its transaction banking platform as a “hub-and-spoke” to safely springboard into Africa.

Geopolitical, regulatory, legal, tax and operating environments differ widely across the 54 countries that make up the African continent. Bank One accompanies foreign investors to help them navigate these challenges through its thought leadership and trusted advisor status. The bank promotes intra-Africa trade and facilitates economic growth in the region by providing trade and project finance to large corporates, and foreign currency solutions to financial institutions.

[caption id="attachment_16603" align="aligncenter" width="600"] Bank One: Head Office[/caption]

The African Continental Free Trade Area

Bringing together countries with a combined population of more than one billion people — and a combined GDP of more than $3.4tn — the Africa Continental Free Trade Area (AfCFTA) will be the world's largest free-trade area allowing the free movement of business travellers, goods and investments.

Collectively, Africa needs to take crucial steps to boost trade, such as fostering skills for entrepreneurship and providing more access to credit and capital. Discussions at the recent World Economic Forum on Africa highlighted the need for business and political leaders to facilitate continental joint ventures to build strong production and manufacturing networks.

Intra-Africa trade has been historically low, and intra-African exports were 16.6 percent of total exports in 2017, compared with 68 percent in Europe and 59 percent in Asia. This points to significant untapped potential.

“As the African Union steps up on the implementation of the Action Plan on Boosting Intra-African Trade (BIAT),” says Carl Chirwa, “we believe the newly created giant African market will be the next growth engine for the continent.

“Bank One is uniquely positioned to be at the forefront of this journey by facilitating cross-border payments and enabling trade financing and investment into Africa. We stand ready to support international investors, African Financial Institutions and regional corporates that will be taking centre-stage as the AfCFTA deepens and strengthens African trade over the coming months and years.”


Johan Marthinus - Absa Bank Seychelles: A Pioneering Force Changing the Financial Landscape

[caption id="attachment_16606" align="alignright" width="300"] Managing Director: Johan Marthinus Van Schalkwyk[/caption]

Absa Bank (Seychelles) Limited is part of Absa Group Limited, an African financial services group that aims to be the pride of the continent. Formerly known as Barclays Bank (Seychelles) Limited, the Bank has operated in Seychelles for over 60 years.

The Bank rebranded to Absa on 10 February 2020. Absa is a truly African brand, inspired by the people we serve. We are determined to be a group that is respected globally and that Africa can be proud of.

We are making strides in becoming a digitally-led bank” for instance. It’s a journey we are on already and will keep innovating. We believe in possibilities, in the actions of people who always find a way to get things done. We believe in creating opportunities for our customers to make their possibilities real and in supporting them every step of the way.

Additionally, with the underlying improvements in technological capabilities and connectivity and the proliferation of mobile devices, we know there are exciting times ahead for the digital transformation of the market.
We believe we have a role to play and intend to leverage digital technology to expand reach and access of financial services but also provide affordable services.

We have a stake in creating inclusive growth in Seychelles and in delivering financial services in a socially and environmentally responsible manner. Opportunity and success can only be enabled through all people being treated equitably, having good health, and having access to education and income opportunities. Recognising the link of our sustainability to that of the communities where we operate, we bring together distinct yet complementary strategies and implementation activities that generate direct and indirect economic, social and environmental impacts across the market that will play a positive role in bringing people’s possibilities to life. We’re also turning banking on its head in Seychelles with our range of Absa Vertical Cards. The cards are designer cards that are packed with advanced functionality, including contactless tap.

For our small-to-medium-size businesses, our soon-to-launch MySMETool will allow customers to carry out business functions online. The tool will enable them to able to simplify their planning and cash-flow management, easily interact with financial institutions and get real-time updates on their business, enabling growth.

Absa Bank Seychelles also recently introduced Chat Bot through WhatsApp, making us the first bank in the country to use WhatsApp, putting a virtual banking assistant in the palm of customers’ hands. We have what we call ‘The Absa Chat Bot’ that is on call 24/7, 365 days a year so that our customers can receive answers to their questions in real time and at their own convenience.

Fingerprint and facial recognition has also made banking more convenient for our customers. If their mobile device has this capability, then biometric access gives them an added layer of convenience and security. It lets customers open our banking app with a smile or a touch to pay bills, transact, buy airtime and much more, even when travelling.

We also have a long-standing commitment of being a force for good within the communities in which we operate, extending impactful and solutions-based initiatives across the country, either through colleague programmes or through local partners.

Absa Bank Seychelles currently has nine branches and 21 ATMs across the country.

Absa Bank (Seychelles) Limited is regulated by the Central Bank of Seychelles.

About Absa Group Limited

Absa Group Limited (‘Absa Group’) is listed on the Johannesburg Stock Exchange and is one of Africa’s largest diversified financial services groups.

Absa Group offers an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance.

Absa Group has a presence in 12 countries in Africa.

The Group’s registered head office is in Johannesburg, South Africa, and it owns majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa (Absa Bank), Tanzania (Absa Bank Tanzania and National Bank of Commerce), Uganda and Zambia. The Group also has representative offices in Namibia and Nigeria, as well as insurance operations in Botswana, Kenya, Mozambique, South Africa, Tanzania and Zambia, and an International Representative Office in London and New York.

Career Highlights of Absa Managing Director

Johan Marthinus VAN SCHALKWYK, Managing Director of the Bank since 13 August 2015, has served in several senior roles in his banking career. He began his banking career in 1974 and held various executive positions at both NedBank and Standard bank in South Africa. His experience covered multiple areas in banking, ranging from being responsible for product environments, operations, project management and customer channels. Johan joined Absa in 2013 as the Managing Executive for customer channels and was amongst others responsible for managing and optimising the Barclays South Africa branch network and ATM footprint which resulted in significant cost savings, productivity enhancements and revenue generating opportunities for the bank. Prior to joining Absa, Johan was the Head of Card Division, and later the Head of Retail Banking Business Operations for Standard Bank in South Africa. He was also a non-executive director on Bankserv’s Board of Directors where he served on multiple strategic executive planning and management committees. He is a vastly experienced Executive in Banking and holds a B. Com (honours) in Business and Administration, and a B. Com in Business Economics and Industrial Psychology.