UNCDF: Revolutionising International Municipal Finance is Focus of Bid to Tackle Climate Change and Open Global Markets

[caption id="attachment_13749" align="alignright" width="300"] Author: Jaffer Machano[/caption]

“They have been drivers of progress throughout history, and now – as the knowledge economy takes full flight – they are poised to play a leading role in addressing the challenges of the 21st Century,” wrote former Mayor of New York City Michael Bloomberg in a piece he penned in 2015.

Bloomberg was referencing the remarkable power of cities as drivers of innovative and critical solutions, most notably to the threat of climate change. He also correctly acknowledges one of the key barriers preventing investments in climate resiliency and sustainability, especially in the developing world. “To borrow money in the capital markets, for instance, cities need a credit rating; outside of the United States and Europe,” he wrote, “however, many lack them.”

This one sentence speaks to a larger, undeniable reality: that the kind of global financial system that accommodates local government finance in the developing world simply does not exist

This is why the United Nations Capital Development Fund (UNCDF) has partnered with United Cities and Local Government (UCLG) and the Global Fund for Cities Development (FMDV) to create the first international fund focused on enabling access to municipal finance, which will have a target starting value of $250 million.

"What cannot be overlooked is the fact that cities in developing countries are effectively blocked from capital markets."

But that is just one prong of the reform effort that began in earnest last year at the High-Level Meeting On Municipal Finance in Malaga, Spain. The second prong involves advocating and advancing a comprehensive strategy that would fundamentally change investment decision-making as it relates to municipal finance—from calling on central governments to ensure fair and reliable national transfers to highlighting investments in intermediary cities and advocating for change in the international financial architecture to disaggregate national and subnational debt.

To understand the motivation for this bid for global financial reform, it is best to start with an appreciation of the exact challenge Mayor Bloomberg spoke of.

Frozen Out

Much of the international conversation regarding local economic development or municipal finance has traditionally focused on fiscal centralisation; specifically, how it drains subnational governments of revenue and growth. That is an essential point. A joint report published by the OECD and UCLG found that subnational tax revenues as a percentage of GDP in federal countries was nearly three times higher than those revenues in more centralised countries. For those fortunate local governments, the political autonomy they possess in a federal system also comes with fiscal capability and better service delivery to the community. For local governments in centralised countries, the opposite is the case.

What cannot be overlooked is the fact that cities in developing countries are effectively blocked from capital markets. According to the World Bank’s Low Carbon Liveable Cities Initiative, only 4% of the 500 largest cities in developing countries are considered “investment grade” by international standards. This data point is more disheartening when just $1 invested in creditworthiness can help mobilise $100 of greater investment, according to the World Bank. From a practical standpoint, municipal governments are unable to procure the infrastructure projects, place bankable investments in the pipeline, or explore financing mechanisms to finance climate resiliency projects – a fundamental reason for the climate resiliency infrastructure divide between developed and developing countries.

To focus solely on climate resiliency, despite its enormous importance, is to have an incomplete appreciation for what is at stake. Ensuring that cities and communities are sustainable encompasses far more than SDG 11 of the Sustainable Development Goals. Practically every goal under the SDGs runs through sustainable cities, from clean water and sanitation to affordable clean energy, to sustainable goals relating to industry, innovation and infrastructure.

Municipal finance will also be critical to achieving the kind of sustainable urban development necessary to end poverty. To support future job creation in the context of the Fourth Industrial Revolution, it is necessary to create – by 2030 – between 470 million and 600 million jobs. Ensuring that this job creation is not consolidated to the developed world, thus becoming a driver of global wealth inequity and poverty, requires local development in Least Developed Countries (LDCs). And that requires the global financial system we seek. Not the one that we have.

The Ten-Year Old Lesson

Ten years ago this April, the G-20 unveiled an intervention package intended to confront the worst economic crisis since the Great Depression of the 1930s. A core element of the package was leveraging capital of more than a trillion dollars to drive global trade, spur demand, and unlock credit. Another element involved efforts to change the decision-making environment so that the choices and policies that led to grave economic shocks, even if they were Black Swan events, would rarely be implemented again – from increasing capital requirements to implementing domestic and international oversight.

It doesn’t take the threat of the dissolution of global credit markets to draw an invaluable lesson from the G-20’s response. If global financial reform is necessary, that reform effort needs to have two prongs: one focusing on the systems that enable the access of capital, and the other on the decision-making ecosystem that drives capital flows.

The first prong emerged during last year’s High-Level Meeting on Municipal Finance, with the decision to create the first international fund for municipal investment – a fund jointly designed by United Cities and Local Government, the Global Fund for Cities Development, and the UNCDF.

The core of the fund’s work will be providing capital to bankable projects, marrying international capital with the commercial, actionable intelligence that comes from local governments’ awareness of local needs. The fund will also rely on innovative financing tools, including blended finance where we would leverage concessionary capital to catalyse private sector investment. And at this year’s High-Level Conference in Malaga, the investment manager who will independently establish, structure, fundraise and manage the prospectively $250 million fund will be named. The fund will also act as a catalyst in attracting investors for worthy commercial projects in cities within developing markets. This effort will support the reforms needed to further deepen the access to capital by cities in these parts of the world.

The other prong involves changing the decision-making environment by changing the perceptions of international finance actors - from governments and institutional investors to organisations and enterprise philanthropists. The goal is to get these actors to understand how investment in local governments can advance global interests, as well as deliver real return on investment. That is why we are advocating for and working to enact other policy measures based on recommendations from last year’s conference in Malaga.

One approach is utilising the tools of financial innovation. Luckily, there are a variety of innovative financing tools at our disposal: promoting municipal investment bonds as financial intermediaries, with commercial guarantees that can raise capital; influencing asset allocation strategies of institutional investors; and blended finance vehicles. These tools will go a long way towards minimising risk and catalysing greater investment at the local level.

Another approach is to increase and sharpen the investment focus on intermediary or secondary cities. While the attention on municipal investment for sustainable development has increased, much of that focus has been on megacities with populations of a million or more. As a result, intermediary or secondary cities needing support to build legal frameworks, administrative capacity, and access to capital markets are overlooked. That is despite the fact that many of these cities feature large, fully formed economies. One reason these secondary cities have been ignored by investors is a simple misunderstanding of risk, thinking that these cities are too risky.

Finally, and perhaps most importantly, we are advocating for a dramatic change in public accounting when it comes to debt, specifically to address the challenge Bloomberg outlined. Developed economies are able to separate different types of debt for the purposes of their creditworthiness profile. But developing markets do not have that luxury. That means that municipal governments must carry the weight of national debt as their creditworthiness is assessed. Our response is to address public accounting on national debt, relative to subnational debt; to seek ways to adequately account for municipal debt independent of national debt, especially when local governments borrow in local currency. This will go a long way towards creating a more level playing field for localities in LDCs, while providing would-be investors and donors a better understanding of the potential risks and returns on their investments.

Financing Progress; Advancing History

There is one source of optimism that fuels our work to reform the global financial system. Despite the challenging environment relating to municipal finance, interactions with investors and donors have shown that they are interested in subnational investment at the international level. Most investors understand the need to invest in subnational debt. The overriding question investors and donors have is not “why invest”, but “how can I invest?” Our work intends to offer a strong answer to both questions.

Our optimism, however, stands closely with our sense of urgency. The adverse consequences we risk experiencing in the future are as acute and as grave as the consequences associated with 2008 and 2009. There is no path to achieving practically every worthy global interest we have – scaling climate resiliency, eliminating poverty, and continuing economic growth – that does not run through local finance.

A new global financial system to support local finance will ensure that cities continue their tradition of driving progress throughout history. In the process, those cities will be positioned to do more than be a part of 21st Century history. They will be able to write it.

About UNCDF

UNCDF is the UN’s capital investment agency for the world’s 48 least developed countries. It creates new opportunities for poor people and their small businesses by increasing access to microfinance and investment capital. UNCDF focuses on Africa and the poorest countries of Asia, with a special commitment to countries emerging from conflict or crisis. It provides seed capital – grants and loans – and technical support to help microfinance institutions reach more poor households and small businesses, and local governments finance the capital investments – water systems, feeder roads, schools, irrigation schemes – that will improve poor peoples’ lives. UNCDF programmes help to empower women, and are designed to catalyze larger capital flows from the private sector, national governments and development partners, for maximum impact toward the Millennium Development Goals. For more information, please visit www.uncdf.org and subscribe for news, follow @UNCDF on Twitter and UN Capital Development Fund on Facebook.


Vice-Prime Minister Kocho Angjushev: Pulling Macedonia Out of a Limbo and Into the European Union

[caption id="attachment_13754" align="alignright" width="300"] Vice-Prime Minister Kocho Angjushev (right)[/caption]

What’s in a name? In the case of Macedonia, an entire country’s future.

Macedonia, a candidate for accession to the European Union since 2005 and equally anxious to join NATO, has been unable to start accession processes over a dispute with Greece – which claims that the name Macedonia applies to its two northernmost administrative regions, and fears a resurgence of Macedonia’s desire to reclaim lost territory.

The dispute reached its climax in 1994 in the aftermath of the chaotic dismantlement of Yugoslavia, when Greece closed its border with Macedonia. The 18-month embargo that followed ended only when the government in Skopje agreed to remove all irredentist clauses from its newly-minted constitution – and the Star of Vergina, the nation’s ancient symbol, from its flag.

In return, Athens agreed to recognise the Former Yugoslav Republic of Macedonia (FYROM), although it would refer to the republic as The Party of the Second Part with Skopje as its capital – the cumbersome formal description used in the agreement – in all government correspondence.

"It is simply not healthy for a small country to remain without any partnerships. Macedonia is a European country and, as such, needs to pursue compatibility with the rules and systems in place."

As it happens, names matter a great deal in this part of Europe where borders, until quite recently, were fluid and countries do not necessarily overlap with nations – or vice-versa. It took another 15 years for Greece to accept the inclusion of Macedonia in any agreed-upon name for the republic. Athens finally agreed upon a composite appellation with a geographical qualifier. Based on the “Prespa Agreement”, the country name shall be the Republic of North Macedonia after Parliaments in both countries ratify this change in the beginning of 2019.

"With the name issue nearing a resolution, the country has been invited by the EU to start accession talks in 2019, while the process of NATO integration is well under way and Macedonia will most certainly become its 30th member country."

IMF Upbeat

The International Monetary Fund (IMF) is upbeat about Macedonia’s prospects, and predicts economic growth will accelerate from the 2.8% forecast for 2019 to more than 3.5% annually. The IMF also had praise for the country’s banking system, which it called “well capitalised, liquid, and profitable”. But it recommended a strengthening of governance standards and the judicial system to reduce tax evasion. The IMF also suggested labour market reforms to combat unemployment.

Vice-Prime Minister Kocho Angjushev, whose portfolio includes economic affairs and co-ordination, explained the finer points of the deal with Greece. “The language and nationality will remain Macedonian,” he said. “Only the country’s official name is set to change slightly with the inclusion of a geographical descriptor. It is a highly sensitive issue that can, and does, inflame passions on both sides of the border. However, we have been frozen for 27 years in this process, all the while waiting at the door of the European Union.”

Angjushev is a successful businessman and a pragmatist. Meeting with CFI.co in Geneva, he emphasised the importance of EU accession. “As a small country with only two million inhabitants, located in the middle of the Balkans, we need to become part of a bigger entity in order to ensure our survival. Throughout the region, countries are joining the EU and NATO. Serbia is set to commence the accession process, and Albania has already been admitted to NATO.
“It is simply not healthy for a small country to remain without any partnerships. Macedonia is a European country and, as such, needs to pursue compatibility with the rules and systems in place. This also favours stability, not just from a security standpoint, but also the economic stability that allows for sustained development. For investors, few things are as important as the rule of law, political stability, and predictability. EU membership allows us to consolidate these and adopt the highest standards. This government and its predecessors already did a lot to ready the country for EU accession by putting in place regulations, procedures, and systems that match those of the union.”

Locking-In Progress

The vice-prime minister hopes for a speedy resolution. Brussels agrees that time is of the essence. The Macedonia government of Prime Minister Zoran Zaev displayed political courage to break the impasse surrounding the name issue. To lock-in the progress, EU membership is considered vital. Talks are now set to begin in June.

Macedonia faces an EU reluctant to accelerate its expansion into the Balkans as it grapples with nationalism in some member states. It is fearful of fanning the flames with a renewed enlargement push.

Still, Angjushev is optimistic. “Of course, the negotiation process … usually seems to take between six and eight years. I think Macedonia will be at the lower end of that timeline, because we are properly prepared. For example, we can open and close the chapter (of the acquis communautaire) energy almost instantly, since we already fulfil all obligations in this area. While we still have work to do on the rule of law, and in the internal security sphere, we may keep these chapters for later as progress is made.
“I think that we will spend less time in chapters concerning the economy, finance, and politics since we have already implemented a lot of legislation derived from the European Union. However, the strengthening of the rule of law and the fight against all forms of corruption need to be dealt with pronto. It is essential that we get this right. The political will is there, so the moment is now.”

Compared to EU accession, NATO membership seems a breeze. Conditional on solving the name issue, Macedonia has already been accepted as a provisional member. “This means that it is not necessary to have the new NATO summit to discuss our application,” says Angjushev. “Accession to NATO may be finalised by its ministerial conferences, and these take place regularly. According to the rules, member states have one year to ratify our membership. By the beginning of 2020, we expect to have joined the alliance as a full member.”

The Economy

Without significant natural resources, industry and agriculture have been primed for accelerated growth – with a series of reforms to increase productivity and competition. Angjushev says that the early results look encouraging, with industrial output growing (6% annually) and exports up by 40% over the past 12 months. An increasing volume of direct foreign investment (FDI) finds its way to the country’s free zones and elsewhere. Angjushev reveals that FDI volumes have tripled as a result of the reforms. “Investors can spot our comparative advantages, and know how to find us. Now it is up to us to connect with the European Union – and through it, with global markets.”


Wing (Cambodia) Limited Specialised Bank: Mobile Banking System is Taking Wing in Cambodia

In Cambodia, 16.5 percent of the population lives below the national poverty line, and 83 percent of citizens are still unbanked. The result is that critical financial services, such as sending money to relatives, can sometimes be impossible.

Since its launch in 2009, Wing has worked to create a mobile banking ecosystem that is tailored to the needs of the Cambodian people, even in remote areas. It has created a network of more than 6,000 Wing Cash Express (WCX) agents who act as facilitators to the banking process. These agents define the Mobile Financial Services landscape in Cambodia, and through them Wing touches the lives of more than 4.5m customers.

In 2018, Wing Agents’ revenue increased by 18 percent. Wing believes in diversity, and 60 percent of its WCX agents are women, who are now financially independent and able to take care of their families.

The company’s goal has been to ease financial access to opportunities for underprivileged sections of the community, allowing them to participate in the country’s economic development.
Besides providing basic services such as money transfers, bill payments, phone top-ups, and online and offline cash payments, Wing offers outbound money transfer services to the Philippines, Vietnam and Thailand. This has enabled foreigners and migrant workers to make secure transfers in real time using the Wing Money App.

Wing is the first payment services provider in South East Asia to acquire Mastercard Worldwide Merchant online services. Its Online Mastercard allows both the banked and unbanked to participate in e-commerce, from buying an online game to ordering a book from Amazon. This product, along with Wing’s digital payment system using QR codes, has enabled some 30,000 small enterprises to grow their business.

Wing’s “physical” Mastercard provides customers with rewards programmes at more than 8,000 points-of-sale in Cambodia, and in 200 other countries.

In 2018, Wing donated $35,000 to the Garments Manufacturers Association in Cambodia. In collaboration with GoGreen Cambodia, it has mobilised its agent network, staff and customers to volunteer on World Clean-up Day to clear waste build-up in cities.

CEO Manu Rajan says Wing places great emphasis on outstanding performance to sustain innovative financial solutions. “Financial literacy is the driving force for financial inclusion,” he says, “and Wing has taken up several initiatives to reach out to it customer bases, with special focus to underprivileged sections of the community.

“We communicate details of our products and services with hands-on demonstrations, and we believe in giving back to the community.”


Tickmill: Fostering a Best-Execution Regime in the  Brokerage Industry

As the retail Forex business matures and grows, the importance of providing high quality execution is more important than it has ever been.

It has become a regulatory mandate to provide transparency and integrity in the financial markets. With the aim of strengthening investor protection, “best execution” is based on the premise of acting in the best interest of the client by ensuring fairness and transparency in the trade execution process.

Regulatory Requirements

Considering the changes to the financial regulatory landscape and the introduction of MiFID II in 2018, investment firms are expected to focus their attention on providing best execution for their clients by monitoring and thoroughly testing the execution quality.
In line with MiFID II, brokerages are also required to provide information on the main execution venues they relied on for each of their products, and outline the methodology used to assess the quality of execution provided. Besides monitoring, the regulation stipulated by the European Securities and Markets Authority (ESMA) requires firms to oversee the appropriateness of their arrangements and policies on a pre- and post-trade basis to compare the quality of execution available from competing venues — before the trade — against the quality that was actually achieved.

"New data technology such as algorithmic analysis and cloud computing makes it easier for brokers to optimise and evaluate their execution performance."

Regulatory bodies such as the UK Financial Conduct Authority expect firms to have contingency plans in place for periods of market distress and high volatility.

Foreign exchange brokers must rigorously evaluate the factors affecting the quality of execution of client trades, including the client characteristics (whether the order is for a retail or professional client), the size, nature and type of the order, and the speed and likelihood of execution.

Best Execution and Technology

There are many developments aiding the implementation and assessment of best execution. Data, analytics and technology are some of the key elements that firms tap into. Providers of financial services are expected to have robust internal reporting processes and controls, supported by a technological infrastructure that can take in, store and supply data in a timely manner.

New data technology such as algorithmic analysis and cloud computing makes it easier for brokers to optimise and evaluate their execution performance. The monitoring process is based on enhanced technologies that can crunch large data sets in real time, and whose analysis can help formulate actions to improve performance.

Upholding Best Execution Standards – The Example of Tickmill

Tickmill, the global provider of Forex and CFD products, takes pride in having an effective monitoring capability in place to measure best-execution performance. The broker takes the evaluation and implementation with professionalism, and in doing so, it strictly adheres to benchmarked policies, systems and controls.

The monitoring efforts of the company are based on a variety of metrics, taking into consideration all the relevant factors for attaining the best possible outcome for clients. Tickmill uses sophisticated digital tools that extract data about client transactions and the quality of execution across all relevant asset classes. This procedure is vital in determining the effectiveness of its order execution arrangements, and to correct potential deficiencies in the process and policy.

The dealing team monitors pricing on a retrospective basis, conducting regular reviews to ensure consistency in-line with the underlying market. This is primarily achieved by keeping track of data feeds and other pricing mechanisms while also assessing controls, alerts and statistics to identify any inconsistencies. The team closely monitors other significant parameters of trading, such as spreads and slippage, and any discrepancies are swiftly reported and corrected.

With a good understanding of the importance of low trading costs and the impact of costs on trade execution, the company sources the best available prices from selected liquidity providers. The company carries out periodic due diligence, and reviews of the liquidity providers and the quality of their service and execution. By following this procedure, the firm ensures clients benefit from the best possible prices, for instance spreads starting from 0.0 pips.

The company’s compliance and risk management functions play a key role to ensuring the firm exercises consistent standards and processes when executing trades on behalf of clients — regardless of the type of instrument or client involved in the transaction. Compliance also make sure policies, terms and conditions, and other disclosures about best execution are clearly communicated to improve clients’ understanding of the company’s approach.

Tickmill believes that adopting best-execution practices generates sustainable value for its clients, and enhances transparency in the wider financial ecosystem. It is committed to maintaining its systematic approach to ensuring quality of execution, while at the same time regularly reviewing and streamlining the relevant procedures and policies.


Lord Waverley - Blockchain: New Way of Doing Business in a Changing World

Blockchain is little understood, but it will simplify transactions, improve reliability and reduce costs.

[caption id="attachment_13913" align="alignright" width="300"] Author: Lord Waverley[/caption]

Focusing on blockchain technology today will ensure being relevant tomorrow.

To better understand the potential of blockchain, it is necessary to follow the current, future and practical applications of its technology. In an increasingly interconnected world, and as we move into the era of big data, mobile communications and online services, we need assurance that our personal information is secure. Businesses are expected to know who their clients are, and must be able to verify that transactions are legitimate.

There was a time that, when buying a book, you went to the bookshop, picked the book from a shelf, paid in cash, and left. Today you need only make a verbal command to Alexa, Amazon’s voice service, and ask it to send the book directly to your home. To complete the transaction, add information about who you are, your voice profile, your financial details and address.

"The development of blockchain may be in its infancy, but the technology is here to stay. The numbers speak for themselves. Forecasting a mere $38bn valuation by 2021, the global research group Gartner is predicting an explosion of market growth beyond that date: $360bn by 2026, and $3,16tn by 2030."

Various parts of that information will be used for practical reasons, to inform suppliers, dispatchers, accounts teams, and couriers. More importantly, however, your personal information is now a valuable commodity which — in a worst-case scenario — could be misused for fraud, or used to generate information on your behaviours. This, in turn, can be processed to sell you more services in the future.

Data protection laws such as GDPR, anti-money laundering regulations and the general requirement to Know Your Client (KYC) have put great pressure on businesses to alter their practices to protect customers. All of this must be underpinned by a technology that provides absolute security and transparency that, when required, reduces rather than increases the transaction costs. In a world were customer journeys are no longer linear events, businesses will require the technology that can deliver a digital experience whereby customer value is derived in more meaningful ways.

The Internet of Value

Businesses today operate using disparate sources and versions of data with inefficiencies, waste, poor customer experiences and, often, fraud. Blockchain is transforming the world by providing businesses with an opportunity to restructure their data into a single database that can be shared across their entire supply chain. It can provide companies with the opportunity to achieve meaningful digital transformation that has been termed Decentralised Digital Business Transformation. Using blockchain, businesses will be able to take what are typically seen as “back-office” processes and move them front and centre as a means of creating a more meaningful digital experience for the internal and external customers across all industries and sectors.

We still find ourselves living in a digital world with analogue features, a world where you can e-mail your bank, but due to the complex nature of old banking architectures we must wait three to five working days for disparate ledgers to confirm that the payment has been received. Meanwhile, although the payment has been made, suppliers will not provide goods or services until it has cleared.

In a digital era, you can “send value”, with blockchain ensuring that business transactions are secure, with necessary records attached, and can work where information needs to be simultaneously distributed between transacting parties. Blockchain offers a single, distributed ledger shared through the network, with every single transaction captured via a series of blocks that are cryptographically hashed and stored, preventing double-spending and instantly settling transfers of value in a matter of minutes, or even seconds.

Bitcoin is not Blockchain…

The popular press has ensured that Bitcoin is high in the public consciousness. It could be said that Bitcoin is an application of blockchain technology in the same way that Facebook, Google and Amazon are applications of the Internet. Blockchain provides an underlying mechanism for the data that flows through these applications; decentralised and distributed, rather than using the centralised architecture of the internet today.

Many believe that Bitcoin and blockchain are no different to one another. Many businesses leaders are thought to base their blockchain strategies on the perceived limitations of Bitcoin. Forward-thinking competitors have, however, recognised the transformative impact that blockchain technology can have across multiple areas of their businesses, such as to their supply chain and how they manage international payments. Certain CEOs of the world’s biggest brands believe the hype around Bitcoin — to the extent they have not pursued a meaningful blockchain strategy. The links to financial crime, or other referencing to Bitcoin over the last decade, have had a negative impact on the speed of adoption of blockchain. This is unhelpful misinterpretation.

The Potential of Blockchain Technology

Thanks to another application of blockchain, Ethereum, business leaders recognised that this technology can transform more than just payments. Ethereum allows for the transfer of value once pre-defined rules have been met. This has opened-up a world of possibilities for blockchain, and over the past three years there has been a myriad of applications being built for businesses across multiple industries and sectors.

Examples of blockchain are already making real difference to the way the business and management of information is conducted.

Record-Keeping — Land Registry

Registering property titles is well suited to using blockchain technology. Accurate, tamper-proof records underpin the smooth working of real-estate markets. Transfers of ownership of the asset should be indisputable, and reductions in transaction time and cost would be welcomed by all involved. Many countries, including the UK and Brazil, are progressing with projects to put records of land title into the blockchain.

Provenance of raw materials, food, and goods

It can be challenging for businesses to demonstrate that their products are ethically sourced, authentic and safe, due to the complexity of global supply chains and disparate sources of data. Blockchain makes this manageable at low cost. Manufacturers in the food industry, for example, are now able to verify the country of origin of raw food products and confidently certify that produce is organic.

Blockchain-enabled technology is being developed to allow the tracking of oil, ensuring that customers do not inadvertently purchase embargoed or substandard produce. Materials can now be tracked to source. The aerospace and automotive industries can now guard also against the use of fake components. Increasingly, manufacturers need to know that metals and rare earth products are coming from environmentally sound and ethical sources.

Healthcare Records

There is a huge potential to find operating efficiencies in the management of healthcare information. Public health in the developed world is suffering from resourcing constraints. The complexity of managing data that multiple users can have access to, and the sensitivity of health data, has led to continued dependence on paper-based systems. There are even examples of the continued use of fax machines to transfer information in a supposedly secure manner. Blockchain based record management is perfectly suited to management of records, particularly those needing to comply with onerous data protection rules.

Financial Services

The financial services sector is experimenting, using multiple blockchain technologies across multiple areas of business and financial instruments. One of the first is “tokenised security” being initiated for a large conglomerate in Asia (SGH Global) using the EOSIO blockchain built by Smarter Contracts. The token will be issued using a London-based, FCA-licensed platform: London Derivatives Exchange (LDX). LDX recognised blockchain could be applied to streamline middle- and back-office processes and procedures, reducing costs, friction and risks associated with the industry.

Banks are also able to transform the way they run KYC and AML processes and procedures, with investors able to track their investments in real-time and with ease. They can ensure payments on the achievement of milestones, or triggers.

Cross-border settlements are also particularly suited to blockchain-enabled solutions. Less mature markets in emerging economies can now benefit from the speed and security of blockchain-enabled transaction-management based in the main financial centres. This will reduce the cost of finance in places where money has previously been hard to reach.

Distribution of Aid

Governments, NGOs and development banks have often struggled to ensure that money reaches its target, with the constant fear that the funds may be misappropriated. The World Food Programme, for example, has been using blockchain to deliver money directly to Syrian refugees so that they can buy food. No cash, no intermediaries.

Major Projects

Major construction and infrastructure projects have multiple contracting parties, complex staged payments, and are sensitive to delay. Contracts subject to dispute and delayed payment can spiral into delay and cost over-run. Blockchain will simplify the process, ensure that contractors are paid what is due on-time, and reduce project overheads. Many large infrastructure projects sponsored with aid, or via development banks, will also benefit from the removal of intermediaries and ensure that payment reaches its target. This lessens the likelihood of financial leakage, and improves the prospect of contracts being competed to-time and on-budget.

Credit Passports

Despite the vast amounts of financial information available, the emergence of digital banking and the globalisation of work, many of us find it hard to prove that we are financially sound. Even when having a good credit score with one of the agencies it is hard to verify its basis, and unlikely that it would be of practical use in another country. Blockchain will ensure that your credit score will be an open book, enabling you to travel with your “credit passport”.

A Chance to Lead

The development of blockchain may be in its infancy, but the technology is here to stay. The numbers speak for themselves. Forecasting a mere $38bn valuation by 2021, the global research group Gartner is predicting an explosion of market growth beyond that date: $360bn by 2026, and $3,16tn by 2030.

Conclusion: become a leader in this space before forward-thinking competitors force you to follow their lead.

About the Author
Lord (JD) Waverley
Member
House of Lords, London

Founder
SupplyFinder.com

Strategic Advisor
SmarterContracts.co.uk


Financial Services CEO Puts the Pedal to Metal and ADGM Goes Scorching Ahead

[caption id="attachment_15695" align="alignright" width="300"] ADGM Financial Services Regulatory Authority CEO: Richard Teng[/caption]

Richard Teng is the CEO of the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), an internationally recognised and award winning financial centre in the United Arab Emirates' Capital.

ince joining ADGM in March 2015, Teng has been at the helm of the FSRA, one of ADGM's three independent authorities. Working closely with ADGM's Registration Authority and ADGM Courts, he played an instrumental role leading up to the launch of ADGM in October 2015. As CEO of the FSRA, he is in charge of the entire spectrum of financial services within ADGM: banking, insurance and capital market sectors with integrated prudential and conduct supervisory responsibilities.

To support the growth of ADGM as an international financial centre, Teng fronts and leads several initiatives, including the strategic development of financial services offerings in Abu Dhabi. Within three years of its launch, ADGM was awarded Financial Centre Of The Year (Middle East and North Africa, or MENA) for three consecutive years in 2016, 2017 and 2018 by Euromoney’s Global Investors Group.

As a testament to ADGM’s achievements in the FinTech arena, Deloitte and the Global FinTech Hub Federation jointly recognised ADGM as the top fintech hub in MENA in 2017. In 2018, ADGM was named FinTech Regulator of The Year (MENA) by Seamless Middle East and Most Innovative FinTech Regulator of the Year by FinX Awards, lending further endorsement to ADGM’s international standing as a progressive regulator.

ADGM is the fastest-growing asset management hub and financial centre in MENA, and recognised as the top regional REIT management hub. Among its many firsts, ADGM introduced the first private REIT regime, the first comprehensive regulatory framework to govern crypto exchanges and ICO issuances, as well as the first regulatory fintech sandbox in the region.

To transform the capital formation landscape in MENA, ADGM has partnered with the Shanghai Stock Exchange to develop an International Belt-and-Road Exchange. With more than two decades of regulatory leadership and financial sector development experience, Teng is frequently featured on international forums, sharing thought-leadership on financial services, FinTech regulations and Belt and Road developments.

Prior to taking up the leadership of FSRA in March 2015, Teng was the Chief Regulatory Officer of the Singapore Exchange, and held the position of director of corporate finance at the Monetary Authority of Singapore.

Richard Teng holds a Masters degree with Distinction in Applied Finance from the University of Western Sydney, Australia, and graduated with a First.

About Abu Dhabi Global Market

ADGM an international financial centre (IFC) in the capital city of the United Arab Emirates, opened for business on October 21, 2015. Established by a UAE Federal Decree as a broad-based financial centre, ADGM augments Abu Dhabi’s position as a global hub for business and finance and serves as a strategic link between the growing economies of the Middle East, Africa and South Asia and the rest of the world.

ADGM’s strategy is anchored in Abu Dhabi’s key strengths of private banking, wealth management, asset management and financial innovation. It is comprised of three independent authorities: ADGM Courts, the Financial Services Regulatory Authority, and the Registration Authority. ADGM as an IFC governing Al Maryah Island, which is a designated financial free-zone. It enables registered financial institutions, companies and entities to operate, innovate and succeed within an international regulatory framework based on Common Law.

For more information about ADGM, visit adgm.com or follow @adglobalmarket on Twitter.


Banco Santander Chile Management: Chilean Bank Taken Into  New Territory by Vibrant Leaders

[caption id="attachment_15698" align="alignright" width="300"] President of the Board of Banco Santander Chile: Claudio Melandri Hinojosa[/caption]

Claudio Melandri is the president of the Board of Directors of Santander Chile, and Santander Group’s country head for Chile.

He began his career in Banco Concepción and in 1990 joined the group, where he has held various roles, including regional manager of the branch network, manager for Human Resources, and manager of the Commercial Bank.

Melandri was also executive vice-president of Banco Santander in Venezuela for three years, in charge of the creation of the commercial area in that country. He was CEO of Banco Santander Chile from January 2010 to March 2018, until he assumed the mantle of president of the Board of Directors.

Claudio Melandri has a history with Santander going back more than 30 years. He became a leader within the Chilean financial industry and pioneered a series of transformations which enabled Santander to transform its banking methods. One of the most recent projects which embodies the bank’s new method of client interaction is Workcafés, a new format launched in 2016 which combines top financial advisory services, a co-working space and a coffee shop.

This 100 percent Chilean innovation has been successfully exported to other countries where Santander Group operates, including Spain, Brazil and Portugal, with plans to include the United Kingdom.

Chile has 43 Workcafés and is expecting to finish the year with 60 branches using the format, evidence of the success and positive reception of the Workcafés. This new model implicitly shows the characteristic Melandri methodology: every project must carry the stamp of excellence in its execution.

In terms of corporate governance, the board — presided by Melandri — is the bank’s most senior body, and represents the interests of all stakeholders. Each director contributes to the progress of the institution, according to his or her area of specialty. They are part of a number of committees kept abreast of the details of company management.

Santander Chile has a solid administration team, with Miguel Mata as CEO. Mata has been with the bank since 2002. Under his charge are 12 divisions that make up the bank’s administration, including commercial banking, middle market, Santander corporate and investment banking.

The solid management of the Santander Chile team has earned it several accolades, including Best Bank in Chile and Best Managed Bank in Chile.


Ronald Gutiérrez — Experience Pays Off for Banco Ganadero CEO

[caption id="attachment_15704" align="alignright" width="300"] General Manager: J Ronald Gutiérrez López[/caption]

J Ronald Gutiérrez López is a renowned Bolivian businessman and economist, born in Santa Cruz de la Sierra, Bolivia.

He has more than 30 years of experience in the banking sector — 16 of them dedicated to leading Banco Ganadero. In February 2003, Gutierrez assumed the position of general manager.

In 2016, the businessman was elected to preside over the Association of Private Banks of Bolivia (ASOBAN) in the city of La Paz; he continued in that role until last year. ASOBAN is a non-profit organization comprising the top banks that make up the Bolivian financial structure. Its objective is to propose, design and programme policies to promote the development of financial services.

J Ronald Gutiérrez López graduated in Economics from the State University of Campinas (Unicamp) in Sao Paulo, Brazil, where he also attained a Masters in Economics. He has a specialty in strategic planning from the University of the North in Illinois, US, and another in senior management from the Incae Business School in Costa Rica and Miami. He has participated in conferences and congresses in Bolivia, the US, Europe and Asia.

Gutiérrez is described as an optimistic, moderate and simple person — qualities that have contributed to his successful career over the past three decades. Gutiérrez reaffirms his commitment to the sector and promotes education and financial inclusion programmes to contribute to the economic development of the Bolivian population.

Through ASOBAN, he has worked to better represent an important sector for national development. He has fulfilled a valuable interlocutor role with authorities, and shown the ability to unify a vision that promotes stability and growth.


Ian Fletcher, IBM: Immersive Transportation and the Internet of Everything

As we enter the Fourth Industrial Revolution, we may come to the stark realisation that nothing will ever remain the same. We are being exposed to continuous change, exciting new areas of innovation and groundbreaking technologies that are transforming the fabric of our world. While we may accept the inevitability of change, we also do so with some reticence and trepidation as we try to visualise what the future will look like and what our role in it will be. What is more certain is that we will be living in a completely interconnected world, where many decisions are either influenced or made for us through Artificial Intelligence (AI) linked with smart devices to produce data-driven insights. The outcome is the same: We will be fully connected to and integrated with future technology, developing an interdependency and reliance on its outcomes.

This article is the fourth in a series about the Fourth Industrial Revolution (4IR). Here I explore the phenomenon of how the ‘Internet of Everything' is enabling an immersive transportation experience. In doing so, I will also explore some of the challenges to do with trust, transparency and accountability.

To fully understand the growing impact of 4IR, we must first cast our minds back to the end of the Third Industrial Revolution, now cresting, which was made up of three eras of computing – Counting, Programmable and Cognitive. The current Cognitive Era – built upon the capabilities of AI – is as much a cultural phenomenon as an advance in technology. Artificial intelligence is one of the most important technical developments in our lifetimes - flowing like electricity through everything, fueled intelligently by our personal data which generates the current, and becoming the “modern day competitive edge”. When combined with other transformative technologies like the Internet of Things (IoT), 5G mobile networks, edge computing, cloud, quantum and neuromorphic chips that mimic the synapses of the human brain, we create a landscape full of potential for exponential change. With billions of smart sensors connected to every device imaginable and all communicating simultaneously, we start to perceive a real-time immersive world unfolding before our eyes.

Transportation-as-a-Service

Over the next few years, our transportation ecosystem will change beyond all recognition, becoming more economically and environmentally viable. Manufacturers are keenly aware of the big issues on the global agenda: Climate change and carbon emissions, energy optimisation, sustainability, city overcrowding and central government initiatives to reduce the number of vehicles on the roads. In response, they’re having to look at alternative business models such as Transportation-as-a-Service to address these challenges.

Transportation-as-a-Service is enabled by the advent of autonomous vehicles, the Sharing Economy and the expansion of on-demand services. It’s also starting to become part of the mainstream. According to the “Future Today Institute Tech Trends” 2019 report, the customers’ mindset is changing with regard to the way that transportation assets are owned, operated and managed. It estimates that car sharing services will serve over 20 million users worldwide by 2020.

With the potential global reduction in car ownership threating traditional business models, manufacturers are experimenting with consumption-based, pay-per-use structures such as a ride-sharing model in Dubai called Udrive. Even the larger, more established manufacturers are starting to provide rentals by the minute or mile in some urban centres. Manufacturers are also testing out new business models like Audi on demand, Care by Volvo and Porsche Passport, which gives members access to 22 models of Porsche for a recurring monthly fee. With car ride-sharing services already well-established, new platforms are extending into transportation modes including micro-mobility, electric scooters and motorcycles. This paradigm shift is taking place at surprising speed, forcing manufacturers and service providers to become more agile around providing customers with the choice to buy, hire, rent or subscribe. Even the used car market is getting in on the act. With algorithm-based vehicle pricing, potential customers can evaluate dynamic information that accurately describes the state of the vehicle (well beyond its age and miles) as well as a range of financial options that better suit consumers’ needs.

Connected Cars

The first and most likely transition into the immersive transportation ecosystem will be the connected car. This is where we see technological capabilities like the Internet of Everything, 5G, AI and data-driven insights coming into their own and completely reshaping the foundation of the industry.

A connected car is a vehicle containing devices that connect and exchange data with networks and services inside and outside the vehicle. The connected car market is estimated to be worth in excess of USD 200 bn by 2025, according to a recent study by IBM’s Institute for Business Value – “Securing privacy for the future of connected cars”.

There are three categories of connected cars:

Connected-only vehicles: Equipped with integrated systems such as internet access and a local area network that controls basic systems across the vehicle. At its most basic, the software runs an integrated entertainment and communication system.

Semi-autonomous vehicles: More advanced features such as convoy cruise control, automatic brakes and parking assistance.

Fully-autonomous vehicles: Capable of sensing the external environment and navigating without any human input. It may include embedded AI and real-time data connectivity.

Each vehicle can process up to 25 gigabytes of data per hour, which represents new data opportunities for vehicles to communicate with each other (V2V), network (V2N), infrastructure (V2I), pedestrian (V2P) and everything (V2X), all driving an increased demand for an array of interconnected services.

Immersive Experiences

As the connected car world evolves, we will have to accept that many of our traditional driving tasks will instead be done for us using AI. Ultimately the human factor may be completely removed from the control of the vehicle. This provides an opportunity for manufacturers to develop more immersive experiences such as entertainment, intuitive navigation, advanced route planning, weather updates and recommendations about nearby places en route. With technologies like Voice Search Optimisation (VSO), we will soon be talking to a smart speaker, head-up displays, our car’s dashboard or our mobile digital assistant in order to avoid the traditional distraction of modern driving. Vehicles can be integrated with smart home functionalities (V2H) that allow drivers to enable devices (such as lighting, heating, entertainment systems or garage doors) before arriving home. Wearable devices can also be integrated into the functionality of the connected car in order to obtain smarter and safer mobility. Finally, new security capabilities are emerging with advanced facial recognition that uses our biometric data to interface with smart glass to open, start or communicate directly with communication systems. Companies such as Global e-dentity are emerging that use biometric vascular/bone structure matching systems for face or full body recognition, claiming staggering match rate accuracy levels of 1 in 7.5 billion.

Widening the Net

New connected ecosystems will also develop around remote maintenance, traffic management, driver assistance, vehicle emergency, safety, entertainment and wellbeing that use advanced analytics to diagnose problems like a breakdown in real time. Governments see the potential of the connected car to reduce road accidents and deaths, limiting a car’s speed using automatic braking and intelligent driver-assistance systems that are designed to strengthen driver safety as well as provide a more comfortable, easier driving experience.

Insurance companies could be on to a real winner with the connected car. It will be possible to use IoT sensors, telematics and advanced analytics to measure driver behavior, to analyse how the driver reacts – or equally importantly, how the vehicle reacts – to provide more accurate calculations for premiums and usage. New technologies use radar and video sensors to warn the driver of an imminent crash, in addition to being able to track an accident in real time, understanding the vehicle’s speed, direction, weather conditions and culpability. In the event of an accident, these systems then notify the nearest service capable of providing road and/or medical assistance for automatic dispatch.

The connected car market is shaping up to be a major force in the new immersive transportation world and is attracting investment from existing manufacturers as well as new players. Companies like RPMAnetworks (CIOTA-Connected IoT Automobile) in the UAE are starting to emerge, which use hardware and software-based technologies that can be installed into a new or existing vehicle within minutes, instantly converting it into a connected car. This opens up new markets for millions of existing vehicles, accelerating the adoption of the connected car and setting the trend for autonomy. This technology could become widely available as soon as 2020 and may even become mandated if the business case for governments, insurance companies and manufacturers is sufficiently compelling.

The real market opportunity for this connected ecosystem, however, is the ability to facilitate data monetisation through the collection of vast arrays of data to support the forthcoming autonomous car, healthcare and insurance markets. This data will fuel the autonomous market, providing the source for the necessary artificial intelligence, machine learning and data visualisation capabilities.

Looking ahead

Over the next decade we are likely to witness the introduction of self-driving cars, autonomous vehicles, drones and even the flying taxi. The Dubai Government’s Self-Driving Strategy expects it to account for 25% of all road transportation by 2030. Recognising its potential to transform economic value, governments around the world are reevaluating and redesigning the urban mobility architecture required to support it. For this to occur, self-driving or driverless cars will need to be at Level 5 autonomy, whereby they are capable of driving themselves anywhere on the planet, sensing the environment, navigating in all weather conditions, without limitations. The reality is that AI and machine learning is not yet advanced enough today or does not have the required volume of data to support Level 5 autonomy in the real world. It’s a bit like a 5-year-old child in a new school, still learning and trying to find their way around. Level 4 (partial autonomy) self-driving cars are much more realistic and could be for sale much sooner.

Look to the skies

While we wait for the race for driverless innovation to unfold on the ground, exciting innovation is happening above us. It is widely recognised that Uber revolutionised the sharing platform for click-and-ride, and now it is expanding its transportation network to aerial ridesharing (planned for 2023). This ambitious vision uses the top of skyscrapers for point-to-point travel between suburbs and cities to avoid traffic congestion, creating a new user experience that is environmentally conscious. For autonomous cars and flying taxis to become a reality and accepted within society, the industry needs to come up with new insurance systems, new legal rules and government legislation. It needs to be clear who bears the cost if an accident happens!

Conclusion

The Internet of Everything is happening all around us and we must accept its inevitability as part of everything we do and connect to. It represents great excitement, new ways of thinking and innovation that will change our lives. We all generate masses of personal data today, both with and without our consent, which represents huge monetisation opportunities for us as well as the companies that mine it. But as we move headlong into this new immersive world of autonomy, Artificial Intelligence and data, we must do so with caution and with the understanding that there will be a price to pay for progress; our privacy is seriously at risk.

Technology companies, governments, manufacturers and software developers must all incorporate privacy features into the design and build of everything – before the driver gets behind the wheel or the passenger enters the ride-share. If trust is to be achieved, immersive security must become an integral part of the solution, recognising that this connected world comes with ownership, responsibility and accountability. Organisations must consider how to address and govern potential ethical issues that are inevitable with this new technology. Unchecked, concerns about trust, privacy and transparency will become a barrier to adoption. Governments also play a major role here, enacting legislation covering AI ethics, bias and data transparency. It is our data that is fueling the new world. The purpose of AI is to augment human intelligence and enhance our lives, not the other way around.

The views expressed are those of the author and do not necessarily represent those of IBM.

About the Author

[caption id="attachment_12846" align="alignleft" width="252"] Author: Ian Fletcher, IBM Institute for Business Value Director MEA[/caption]

Ian Fletcher was educated in the UK, building a successful career in IBM Global Services. With over 30 years’ experience in technology and business consulting services, Ian leads the IBM IBV C-suite Study for MEA. Ian also runs IBM’s thought leadership programme, advising clients on business transformation and strategy. Ian specializes on the impact of the Fourth Industrial Revolution and, in turn, its impact on the C-suite and society.

About IBM

IBM is a leading cloud platform and AI solutions company. It is the largest technology and consulting employer in the world, with more than 380,000 employees, serving clients in 170 countries.

About IBM Institute for Business Value

IBM Institute for Business Value, part of IBM Services, develops fact-based strategic insights for senior business executives.


An Exclusive Interview with Gabriel Chaleplis, Founder: The Leader That Makes Leaders

[caption id="attachment_13955" align="alignright" width="374"] B2B GAMING SERVICES Founder: Gabriel Chaleplis[/caption]

What helps to differentiate you from the competition?

Gabriel Chaleplis: Since the beginning of the internet, platform-providers around the globe faced a crucial challenge: Online betting and gaming can be a market of minute margins. In the last 20-plus years, very few companies managed to stay in the business, fewer still managed to maintain leading positions. The majority were spaced-out and marginalised along the way.

The key learning from this, is that we are in this one technology-intensive market, where the margin is not the objective. The objective is not that more people will lose their money, for companies in the business to increase their profits. We are in this one market that the margin may only be the result of an optimal operational architecture that places people and compliance first.

This being our philosophy, we never offered a unidimensional solution to our clients. Rather, we focused on excelling an agile and intelligent business model.

What are the key reasons for the success?

GC: Clients need to make important decisions on unknown factors. No platform can serve future needs on past ingredients. In my mind, the game of leadership is a sprint and a marathon at the same time.

I understand the key reason for our success to be that we research more and “do” less, in the traditional sense of trial-and-error. When clients get our solution, they are confident of a leading and sustainable matrix which triggers player fascination, is commercially-wise and socially-minded, but also empowered to inspire customers by transforming data into intelligence.

What to your mind will be the key market developments over the next three years?

GC: We live in the age of continuous connection. Hence, the experience offering will continue to be the battleground of our sector which will keep on witnessing exponential growth. We will see more of a personalised experience in real time, the rise of social gaming, as players will be more apt to share experiences with other players. Products will further embrace trends to the genre of fantasy sports. The worlds of “online” and “offline” will keep coming together in tighter enterprise solutions under the single drive of customer engagement.

Innovation is said to be the key to future success; how do you encourage an innovative culture?

GC: The company taps the maximum of the potential in our people, our clients and partners worldwide. We are a powerhouse for effectuating possibilities and carving new business standards. Innovation for us is not just about “doing things differently”. It is about cultivating the valid pathways for development, evangelising for positive change.

"We earn our leadership everyday."

As a group, we have found it more important to focus on the means, instead of focusing just upon the ends of a subject. It is not technology for technology’s sake. We believe in data for good.

How are you protecting vulnerable gamblers?

GC: The key challenge with vulnerable players is to be able to help them effectively. First you have to be able to identify the incident through systems architecture in our platform. Next, you need to complete your assistance through customer services.

Our platform ensures locating the incidents early, through a 360-degrees preventive model, employed so that each identified case does not escalate or get out of control. This approach to compliance, responsible gambling and risk-management is a developing systems architecture which originated more than 20 years ago. Then, getting the customer information was passive, and problem gamblers were eliminated from the platform.

This model then progressed to an active paradigm, an equivalent to development of an immune system. Detectors were developed to lessen threat exposure and reciprocate with sustainable loops. Later we evolved into the pro-active architecture, which may best be described as the stage of data robots and multiple shields developed to address responsible gambling on various levels.

Currently, the architecture is progressing towards its intelligent future. What this means, practically, is that the system is able to utilise sheer volumes of data history and minimise the human intervention for detecting or addressing non-responsible gambling effectively, as well as minimising security risks to almost zero.

If you had to be away from your team and could only leave them with a piece of guidance, what would this be?

GC: With my team we have progressed from a dream, to a team, to the Dream Team. The one piece of guidance I have often shared with them is to keep on with their profound focus on excellence-in-action. We earn our leadership every day. And it’s all in the platform. i

Find out more at:

www.b2bgamingservices.com
www.b2bgamingservices.com/corporate-communications


Gabriel Chaleplis Leads the Way Into the Intelligent Future of Betting and Gaming

[caption id="attachment_13961" align="alignright" width="400"] B2B GAMING SERVICES Founder: Gabriel Chaleplis[/caption]

B2B Gaming Services (Malta) Ltd is an industry leading provider of comprehensive platform solutions to sports betting, casino and games in regulated markets.

Its best-of-breed platform, world-class sportsbook, award-winning in-play betting, omni-channel offering fully managed service packages have made the company the partner of choice for top-tier clients for more than two decades.

The operation was initiated in 1997 in London by world-leading entrepreneur, Gabriel Chaleplis, who pioneered initiatives fostering the future in the fledgling online betting and gaming sector in Cyprus, Germany, Greece, Italy, Romania, South Africa, Spain, and the UK.
Chaleplis, configuring and capping ahead strategic initiatives for ROI intensive solutions, foresaw the demarcation of boundaries between business providers, aggregators and operators. Since 1997, he centred the operation to span of the entire spectrum.

The footprint of B2B Gaming Services includes several milestones which have kept the company at the forefront of the market. An agile and intelligent operational model makes the company a powerhouse of possibilities, offering modular and scalable solutions for flexible and sustainable growth within different regulatory frameworks and jurisdictions.

To Chaleplis, operational compliance is essential when implementing innovation. B2B approaches corporate and social responsibility under a 360-degree preventative and pro-active model to encourage responsible gambling. Technology has allowed the cultivation of valid pathways for effecting positive change, detecting and addressing irresponsible gambling and minimising security risks. Seamless, round-the-clock service is the new challenge for technology.

"An agile and intelligent operational model makes the company a powerhouse of possibilities, offering modular and scalable solutions for flexible and sustainable growth within different regulatory frameworks and jurisdictions."

B2B technologies are getting smarter, achieving breakthroughs in customer protection and experience, as well as ROI potential. The company anticipates a rise in social gaming, with overlapping online and offline worlds.

“It is not the economic offering, not even the service per se that makes the matrix work,” says Chaleplis. “It is the experience offering, the next battleground for our business. The challenge for us is actually to stage these experiences and implement an intelligent future.”

The operation was initiated in London, UK in 1997. A year later, the company acquired sports betting and casino license in the UK. By 2005, was the first European operator to be granted AAMS betting license from the Italian Government, operating also in Germany, Romania and Cyprus. In 2006, became a Public Company at AIM, The London Stock Exchange. In 2007, was licensed by the Malta Gaming Authority and in 2008 became the third biggest land-based sports betting operator in Europe with 1800 betting shops. In 2012, was licensed to operate in Greece and by 2015, reached the leading position of the online betting market, having turned the tide of an entirely monopolistic industry until then.

Gabriel Chaleplis and B2B GAMING SERVICES have also scooped the most prestigious awards and distinctions in the US, Europe and Greece, earning a leading position among tech giants, thought leaders and decision makers in the land and online betting and gaming sector, sharing wisdom with this fast-track community.

Accepting to showcase the habitat of an intelligent future, Gabriel Chaleplis is never ceasing to offer an in-depth perspective which places people and compliance first.

Emboldened by scooping the most prestigious awards and distinctions such as the "National Champion for Malta" title and the "Entrepreneur of the Year Award" at European Business Awards 2015/2016 among 33.000 companies in 32 European countries, "The International Entrepreneur Excellence Distinction" granted to him in Greece (2017) and the unique honor to be among the three global finalists for "Compliance Lifetime Achievement" at the Gambling Compliance Global Regulatory Awards (2018), to mention only a few of Company distinctions, Chaleplis is enhancing the extensive footprint of the Company at the forefront of the market, on "a class of its own", future-ready since 1997.


Ann Low, US Department of State: Combat Corruption by Enabling Tax Payment - El Salvador Case Study

[caption id="attachment_13966" align="alignright" width="300"] El Salvador[/caption]

In May 2016, the US Department of State funded a project in El Salvador’s third-largest city, Santa Ana, to discover whether incentives for business registration and enabling tax payments could reduce corruption and rebuild trust in government.

Two years later, the results are in — and they are promising, as well as worrying. A third of the small business owners surveyed reported that they suffered from extortion, and half had considered migrating to the US to escape corruption. Less alarming, but troublesome, was the unsurprising discovery that tax payment forms were too numerous and too complex, and many businesses didn’t have a reliable way to calculate how much tax they owed. Less than 10% of El Salvador’s working age population filed income tax returns in 2015, despite those filings being mandatory for all workers with yearly incomes above $4,064.[1]

Business registration creates records, alerting federal and municipal government agencies that a business exists and is taxable. In El Salvador, “informal” businesses — with no legal right to exist[2] — employ more than 60 percent of the labour force.   Most businesses are not registered because compliance with administrative procedures is too difficult and costly. The owners of these businesses, and their employees, are vulnerable to extortion and bribery from gangs and unscrupulous government officials.

"The project recognised that Salvadorans need immediate improvements in the areas of personal safety and welfare to cut illegal migration to the US."

The project recognised that Salvadorans need immediate improvements in the areas of personal safety and welfare to cut illegal migration to the US. In 2015, El Salvador was labelled the most violent country in the world, with 104 homicides per 100,000 population[3] (4.9 homicides per 100,000 population in the US[4]). Salvadorans had an average of 6.9 years of schooling and $6,898 per-capita annual income.  Americans had 13.4 years of schooling and an average per-capita income of $54,941.[5]

The project provided technical assistance (skilled people paid by a donor) from the United Nations (UN) Business Facilitation programme to help Salvadoran government staff simplify business registration, tax payment, and the provision of public services. They created novel IT approaches, a citizens’ hotline, and training programs. They harvested data from the new systems to simplify work processes and make compliance with governmental obligations easier.

The project design was demand-driven (responding to requests from the government of El Salvador), and informed by expert advice from the UN and the US Department of State.  It leveraged three existing UN Business Facilitation systems in El Salvador, and substantial in-kind contributions. Altogether, the government of El Salvador and municipality of Santa Ana assigned 45 staff to the project. Officials from 11 Salvadoran government agencies contributed.

Salvadoran Project Leader’s Perspective

The results are best highlighted by Nelson Pérez, the Salvadoran Project leader. “We developed or expanded nine systems to improve governmental services, and we built a mobile app to track progress,” he said. “Initially, we planned to document the process to pay taxes, create an anti-corruption hotline (call centre) in Santa Ana, register businesses and issue identity cards to entrepreneurs to prove their legal status.

“The processes for small businesses to register and pay taxes were so complex that we were unable to promote massive business registration because we first needed to identify and document all the steps to pay taxes, which was much harder than we anticipated. Then we needed to begin simplifying processes so entrepreneurs could fulfill their obligations without having to hire an accountant or spend several days each month on governmental paperwork.”

The project added national level tax payment information for individual merchants and companies to the national business registration website (https://miempresa.gob.sv/). “We established 32 public-private partnerships to offer immediate benefits from business formalization, such as access to lower cost credit,” said Pérez. For the first time in El Salvador’s history, a small business can find all the information it needs to pay national level taxes on one website, including downloadable forms, and it can compare an array of benefits (health services, insurance, credits and guarantees, technical assistance) available to formalised businesses from 32 private sector suppliers.

While the expanded website is a major improvement, there are still 14 mandatory annual or monthly filings, involving multiple dates, forms and government agencies. There are also municipal-level obligations, which were documented for Santa Ana and San Salvador, but not for El Salvador’s 260 other municipalities.

“In July 2017, my government made the national business registration website the unique channel for registering a business in El Salvador,” said Pérez. “The quantity of registrations through the online system increased 392 percent over the life of the project — from 1,735 in 2016 to 8,528 in 2018.”

This represents a significant improvement in legal compliance and potential  increase in tax revenue.  “Once we documented how to pay taxes, we simplified some of the most frequently used and cumbersome processes.”

The work began with the automation of the process for filing the mandatory annual statistical solvency certificate, so companies no longer need to travel to the office of DIGESTYC in San Salvador to file. That office estimated the online process saves each of El Salvador’s 26,000 registered companies about $40 per year in opportunity costs, amounting to $1 million annually.

“In Santa Ana, we automated issuance of the municipal tax solvency declaration, which reduced processing time by 86 percent and eliminated the possibility for municipal agents to delete files or forgive obligations as happened in the past. Businesses in Santa Ana can now go to the city hall and get the tax solvency declaration in less than an hour.

“We interviewed small businesses and discovered that not only were tax payment forms too numerous and too complex, many businesses didn’t have a reliable way to calculate how much taxes they owed. We learned that a third of our 20 sample entrepreneurs suffered from extortion, and half had considered migrating to the US to escape corruption.

“We also learned that the amounts the entrepreneurs paid the extortionists were typically greater than the taxes they owed, and that the extortionists were typically gang members who threatened the entrepreneurs’ families with violence. Were entrepreneurs able to pay taxes and count on police services to keep their persons and property safe, everyone would be better off.

“When we launched the anti-corruption hotline in Santa Ana in mid-2017, operators received many calls about inefficient municipal services.  Gross administrative inefficiency is considered corruption under Salvadoran law.

“We realised that to rebuild trust in government, we had to create an online administrative system for Santa Ana, so the operators could direct complaints, such as poor electricity services or missed garbage collections, to offices that could help. We discovered many municipal offices didn’t have, or enforce, standard operating procedures for providing services, so service levels were inconsistent. We worked with government agents to document 44 municipal procedures online, involving 210 steps, 124 documents, 17 laws, and 19 municipal employees (https://santaana.eregulations.org/).

“In that process, we discovered Santa Ana had over 200 taxes, permits, and fees which were not well publicized and inconsistently collected, giving the impression that compliance was unnecessary or arbitrary.”

Santa Ana received 870 calls on the hotline through January 2019, including calls about gang members infiltrating the municipal police, bribes to municipal agents in exchange for incorrect registrations, public employment in exchange for money, and extortion. This co-operation led to eight corruption cases being transferred to the General Prosecutor’s office.

“When we focused on creating the entrepreneur card, we discovered that many small business owners did not have the time to comply with the multiple documentary requirements and complex formalities that are mandatory to register a business and work formally,” said Pérez. “We partnered with the Small Business Administration (SBA) and the National Registry of Natural Persons which entrepreneurs can join with just a copy of their national ID. The MYPE registry gives entrepreneurs access to technical assistance, fairs, and expositions to help their businesses grow.[6]   As of March 2019, 3,700 entrepreneurs had joined the MYPE registry.

“During the project’s two-year life span, we trained over 500 government officials and trusted third parties, such as lawyers and accountants, on how to use the new systems, including how to harvest productivity data to identify bottlenecks and improve services. For example, by analysing information in Santa Ana’s new tax database, the tax manager identified 30,000 accounts that didn’t receive invoices because the addresses were located in dangerous areas and that 54 percent of households that did get bills had not paid their municipal services taxes.

“My government needs to further simplify business registration and tax payment to enable widespread compliance.  It also needs to implement more content management systems in government agencies, so taxpayers get better services.  Rebuilding trust in government requires a sustained effort, but we are headed in the right direction.” [7]

The Mayor’s Perspective

According to Milena de Escalon, the mayor of Santa Ana (2018—2021), the “Línea ciudadana unidos contra la corrupción” (citizens hotline), Santa Ana’s online administrative systems, and the behind-the-scenes work processes that those systems track have increased productivity and transparency in the municipality and improved municipal services.

"Since the citizen’s line was launched, 870 cases have been addressed, resulting in improvements to public lighting services, solid waste collection services,  maintenance of public works (sidewalks, walkways, streets), and inspections of businesses that were reported to violate regulations.  At the same time, the system has motivated municipal officials in all departments of the municipality to be more responsive to requests for public services, so that citizens don’t complain about them.  And the system has made it possible to detect acts of bribery by municipal employees.

“We hope to continue expanding the project with the United Nations and the Department of State of the United States, so that we can offer more municipal procedures online and facilitate the declaration and payment of taxes,” said Mayor de Escalon. “I have personally guaranteed the transparency of this project by requiring that cases be sent from the Citizens hotline Contact Centre to the mayor’s office, which distributes the cases to the corresponding dependencies within the municipality, tracks them to resolution, and ensures that citizens are notified through the Contact Centre of actions taken to resolve their complaints.”[8]

The UN’s Perspective

According to Frank Grozel, the UN Business Facilitation Programme manager, who oversaw the project’s implementation from Geneva, “The El Salvador project brings the world closer to a replicable model of technical assistance that can enable widespread business registration and tax payment.

“My team had a decade of experience helping governments reduce corruption and enable economic growth through administrative systems and trade portals.  Now we have experience simplifying tax processes and integrating IT solutions with a citizens’ hotline and public-private partnerships.

“I believe many reform-minded governments could improve governance in a few years through a four-tier process of technical assistance. First, simplify one ministry’s processes and put them online (estimated costs $200,000).  Second, pursue a more complex project to standardize more administrative functions online, implement a citizen’s hotline, develop public-private partnerships, and provide businesses with a simple accounting system, modelled on the El Salvador project (estimated costs $750,000 annually for two years). Third, re-think tax rules to make compliance easier for small businesses, who are over 90 percent of potential taxpayers in most countries.

“Fourth, once compliance is simplified, implement a communications campaign (estimated costs $1 million annually for several years) educating entrepreneurs about how to register businesses and pay taxes.  Throughout the process continue improving all government services and expanding partnerships with the private sector, so new taxpayers experience immediate benefits from legal compliance, such as access to lower cost credit and the ability to bid on government contracts.[9]”

Conclusion

The El Salvador project provides reform-minded governments and donors with a tested, low-cost model to reduce corruption and improve public services through technical assistance from the UN Business Facilitation programme.  The government of El Salvador and municipality of Santa Ana were able to simplify compliance with their laws and improve services through a citizens’ hotline and online administrative systems.

Their combined efforts, and those of UN staff, multiple US agencies, other donors, and private enterprises who co-operated with this project generated measurable results in just two years. In the process, the project identified areas where more work must be done to simplify governmental processes, expand access to municipal and national services and enable payment for those services.

The El Salvador project creates a replicable process to improve governance, enhance security, and build trust in government by enabling and encouraging formalisation of small businesses and tax payment.

Additional Accomplishments

Contributed to a 22-place improvement in El Salvador’s World Bank 2018 Ease of Doing Business rating.

Created baseline statistics for the nation and municipalities of Santa Ana and San Salvador against which progress can be measured.

Created a system for the secure exchange of information among government ministries and with the user.

Continuity: Upon the project’s completion, the government of El Salvador committed 15 staff to continue maintaining, updating, and improving the online business registration and tax information system (https://miempresa.gob.sv/), the municipality of San Salvador committed staff to maintain its system (https://sansalvador.eregulations.org/), and the municipality of Santa Ana committed five staff members to maintain the citizens’ hotline and its administrative system (https://santaana.eregulations.org/).

Created a certificate programme with the National School of Public Training (ENAFOP) to begin institutionalising data-informed policy making.

Partnered with the electric company, to inform over 70,000 households about the Santa Ana citizens’ hotline in their January 2018 electric bills.

Created a prototype government central board which the government could build to track business registrations and compliance with rules for businesses in El Salvador.

Created a prototype simple accounting system which the government could integrate with a simplified tax payment process to enable easier compliance with governmental obligations by small businesses.

About the Author

Ann Low is the Knowledge Leadership Division Chief at the US Department of State. She designed the El Salvador project with the UN and the Government of El Salvador, Identified funding, and monitored implementation.  She has represented the United States on boards and committees of multiple UN agencies (UNDP, UNICEF, UNCTAD) and international organizations (APEC, OECD, ITC) evaluating their programs and developing best practices.

References

[1] UN Business Facilitation Program  Manager Frank Grozel based on data from the Finance Ministry.

[2] International Labor Organization, ILOSTAT, Informal Employment, last updated February 15, 2019, https://www.ilo.org/ilostat (accessed February 17, 2019).   In addition, the project estimated that in 2015, 91% of El Salvador’s working age population did not file income tax returns, despite those filings being mandatory for all workers with incomes above $4,064.

[3] El Salvador National Civil Police (PNC) records.

[4] Index Mundi, Intentional homicides (per 100,000 people) - country ranking, https://www.indexmundi.com/facts/indicators/VC.IHR.PSRC.P5/rankings (accessed February 3, 2019).

[5] United Nations Development Programme, Human Development Reports, 2018, http://hdr.undp.org/en/2018-update (accessed February 2, 2019).

[6] National Identification database and National Taxpayer database News coverage,  August 15, 2018, https://elmundo.sv/mypes-podran-registrarse-en-linea/ (accessed February 10, 2019).

[7] UN Business Facilitation Program, Interviews with El Salvador Project Team Leader, Nelson Pérez, by author, February 6 -10, 2019.

[8] Note from Mayor Milena de Escalon, Santa Ana, February 2019

[9] UN Business Facilitation Program, Interviews with Program Manager, Frank Grozel, by author, February 6 -10, 2019