WorldPensionSummit 2013

13-14 November 2013 | Amsterdam

WorldPensionSummit is the only platform 'for and by' Pension Professionals. At the Summit you can exchange knowledge and share the latest innovative ideas for a sustainable pension provision. The WorldPensionSummit 2013 offers key analysis, insights and ample room for discussion amongst peers. Experience the many ‘crossroads in pensions’ in plenary sessions. Choose from the 35 dedicated tracks and special Summit briefings. Meet top experts and key authorities in the field of retirement management, pension fund strategy, social security, employee benefits. Learn from key questions and actual best practices in Pensions. More than 350 pension professionals from over 45 countries meet at the Summit every year!

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For REGISTRATION & INFORMATION go to www.worldpensionsummit.com. Use the special conference code for 20% discount: MEDIA2013WPS20


Michelle Obama: A Debt of Gratitude

The 2012 speech by Michelle Obama at the Democratic National Convention in support of her husband was undeniably brilliant and a political tour de force. She connected with the aspirations of millions of worried voters by recalling the personal stories of the Obamas - which were, of course, in stark contrast to those of the Republican candidate. At least one commentator noted that if Obama were to be re-elected he would have a greater debt of gratitude to his wife than any other president in history. She may also have helped him secure his second term by assuring women voters of his worth.

Michelle Obama studied sociology and African American studies at Princeton University, graduated from Harvard Law School in 1988 and then took up work at a Chicago law firm. Her later appointments have included Assistant Commissioner of Planning & Development at Chicago’s City Hall, Founding Executive Director, Chicago Chapter of Public Allies (which prepares young people for public service) and Associate Dean, Student Services at Chicago University.

"At least one commentator noted that if Obama were to be re-elected he would have a greater debt of gratitude to his wife than any other president in history."

In 2010, the First Lady launched ‘Let’s Move’ a camp to fight childhood obesity and in the following year ‘Joining Forces’ in concert with Dr Jill Biden. ‘Joining Forces’ was established to respond to and support the needs of military personnel and their families.

Since her husband became president, Michelle Obama has demonstrated that she could easily have a prominent political future in her own right and perhaps as part of a double act to rival that of the Clintons. There is no question that she has acceptance, popular appeal and the relevant skills, but is there any inclination on her part?  It would seem unlikely at this point but at one time there was also doubt about Hillary Clinton’s motivation.


Powerful Leadership from Sonia Gandhi

[caption id="attachment_3535" align="aligncenter" width="466"] Sonia Gandhi, President of the Indian National Congress[/caption]

Sonia Gandhi, aged 66 and widow of former PM Rajiv, is India’s most powerful leader and the longest serving president of the Congress Party. Elected in 1998, Gandhi was the first foreign born president of Congress since Indian Independence. She is the leader of the ruling party in the world’s second most populous country and tenth largest economy. Her son Rahul is next in line to take over in the dynasty.


IMF Statement on Cyprus

[caption id="attachment_3542" align="alignright" width="300"] Christine Lagarde and Olli Rehn[/caption]

Statement on Cyprus by Olli Rehn, European Commission Vice-President and Christine Lagarde, Managing Director of the International Monetary Fund.

The Cypriot authorities have put forward a multi-annual reform programme to address the economic challenges facing the country. Its goals are to stabilize the financial system and achieve fiscal sustainability in order to lay the foundations for a recovery of economic activity and the growth potential that will preserve the longer-term prosperity of the population.

The programme builds on important steps already taken by Cyprus to address the problems in the two largest banks and includes a set of measures aimed at ensuring a stable, sustainable and transparent financial sector.

While the Cypriot government has already adopted important fiscal consolidation measures, the programme entails a well-paced fiscal adjustment that balances short-run cyclical concerns and long-run sustainability objectives, while protecting vulnerable groups. The social welfare system will be reviewed with the view to ensuring sustainability and social fairness.

The programme puts forward comprehensive structural reforms to set the conditions for growth and job creation.

Significant challenges lie ahead for Cyprus. The European Commission and the International Monetary Fund stand by Cyprus and the Cypriot people in helping to restore financial stability, fiscal sustainability and growth to the country and its people.

Press Release No. 13/102, April 3, 2013


China: The Big Spenders

Thanks to rapid urbanization and rising disposable incomes in their country, Chinese tourists spent $102 billion during their travels in 2012, more than any other nationality, making the Asian nation the world’s number one tourism source market, the United Nations said today.

According to the World Tourism Organization (UNWTO), the volume of international trips by Chinese travellers has grown from 10 million in 2000 to 83 million in 2012. Their expenditure abroad has also climbed rapidly, increasing by 40 per cent from 2011 to 2012.

In addition to urbanization and rising incomes, other factors such as the relaxation of restrictions on foreign travel and an appreciating Chinese currency have contributed to this boom in tourism.

“With this sustained growth, China has become the largest spender in international tourism globally in 2012,” UNWTO said in a news release.

In 2005 China ranked seventh in international tourism expenditure, and has since successively overtaken Italy, Japan, France and the United Kingdom. With last year’s surge, China leaped to first place, surpassing the top spender, Germany, and the United States. Both of these counties spent close to $84 billion in 2012.

Other emerging markets have also increased their share of world tourism spending over the past decade. Russia saw an increase of 32 per cent in 2012, spending $43 billion, which brought it from seventh to fifth place in the international tourism spending rankings.

“Emerging economies continue to lead growth in tourism demand,” said UNWTO Secretary-General Taleb Rifai. “The impressive growth of tourism expenditure from China and Russia reflects the entry into the tourism market of a growing middle class from these countries, which will surely continue to change the map of world tourism.”

Brazil also experienced a significant increase, which allowed it to move from the 29th position in 2005 to the 12th position in 2012.

Countries which have traditionally ranked high in tourism expenditure also experienced growth albeit at a slower pace than emerging economies. Spending on travel abroad from Germany and the US grew by 6 per cent each, while UK spending grew by 4 per cent allowing the country to retain its fourth place in the list of major source markets.

Expenditure by Canada grew by 7 per cent, while both Australia and Japan grew by 3 per cent. France and Italy were the only countries in the top ten to record a decline in international tourism spending of -6 per cent and -1 per cent, respectively.


Minister Okonjo-Weala: Right Place at the Right Time

[caption id="attachment_3554" align="alignright" width="174"] Ngozi Okonjo-Iweala, Minister of Finance, Nigeria[/caption]

When Dr. Okonjo-Iweala departed the World Bank in 2011 to become Nigeria’s finance minister, she was managing director and second in charge. It was no surprise that in the following year her name appeared on a short-list for the WB presidency. She didn’t get the job but it is widely considered that she was by far the best candidate. At CFI.co we believe that the World Bank’s loss was Nigeria’s gain.

Okonjo-Iweala had also been finance minister (2003 – 2006) in an earlier administration. These were very different times and her crowning glory was in securing an $18 billion debt write-off from Nigeria’s creditors. She also ensured Nigeria’s first sovereign debt rating which resulted in significant foreign investment in the country.

"At CFI.co we believe that the World Bank’s loss was Nigeria’s gain."

Nigeria is now experiencing strong economic growth and her challenge is to see that the distribution of its benefits is fair. Income inequality would hinder sustainable growth but CFI.co believes that this strong leader is in the right place at the right time. She is a fearless opponent of corruption in all its forms.

Ngozi Okonjo-Iweala is a world renowned economist but more than this a role model for all talented and ambitious women in Nigeria and throughout the continent of Africa. We also believe she has much more to offer the world.


Costa Rica's Chinchilla: A Social Conservative

[caption id="attachment_3567" align="aligncenter" width="442"] Laura Chinchilla, President of Costa Rica[/caption]

One of two VPs in the previous administration, Laura Chinchilla was the first female president of Costa Rica when she assumed that office in May 2010.  Since coming to power she has had to deal with the Nicaraguan border crisis and reforms to correct the country’s staggering deficit. Chinchilla has championed ecotourism and placed a moratorium on oil exploration.

Chinchilla has written extensively on judicial reform and public security and before taking up office was a consultant on these matters in Latin America and Africa. She is a social conservative opposing the separation of church and state and supporting a ban on the ‘morning after pill’.


GCC: A Reliable Partner in Energy Supply

[caption id="attachment_3573" align="alignright" width="219"] Ali bin Ibrahim Al-Naimi, Minister of Petroleum and Mineral Resources, Saudi Arabia[/caption]

Saudi Oil minister Ali bin Ibrahim Al-Naimi believes that future demand for oil will remain strong, despite the difficult global economic situation. Speaking at the opening session of the Doha Energy Forum on April 1st he said, “The expectations of energy demand and growth are still positive.”

The minister noted that energy markets have become more complex, as new resources and technologies have come into play. “There are continuous investments in the field of renewable energy sources,” he said. “If we want to meet the growing demand in the twenty-first century, we need all energy sources. The Gulf Cooperation Council commitment to the stability of energy markets has been one of the constants during the past thirty years. The GCC member states are continuously able to meet global demand resulting from global economic growth or temporary supply interruptions. I am confident that this approach will continue.”

Al-Naimi added, “We welcome the access of all sources of new energy to the market. I do not see that we should be worried about new supplies of energy sources in light of growing global demand. It is true that there are more companies and countries that compete to win a bigger share of the market, but it is also true that the market is large.”

Al-Naimi pointed out that the use of natural gas helps activate the petrochemical sector, creates new jobs for citizens, and assists GCC countries in meeting required environmental standards. “Regarding the Kingdom of Saudi Arabia, the usage of gas locally helps to relieve the demand for fluids, which grants us more energy for exporting,” he said. “But it is clear that the GCC states will remain a reliable partner in the world energy supply."


Britain Mourns Lady Thatcher: Greatest Post-War Premier

[caption id="attachment_3579" align="alignright" width="226"] Margaret Thatcher[/caption]

Margaret Thatcher - the ‘Iron Lady’ who governed Britain from 1979 to 1990 - died peacefully today at the age of 87 years after suffering a stroke.

Baroness Thatcher was Britain’s first female prime minister and transformed the country’s economy with her trade union reforms and privatisations of nationalised industries.

She also gave Britain a powerful voice on the international stage. The defeat of Argentina after its invasion of the Falkland Islands was perhaps the defining moment of her premiership. By the late 1980s, Margaret Thatcher was standing tall alongside Ronald Reagan and Mikhael Gorbachev and played no small part in the collapse of the Soviet Union.

Thatcher is regarded – even by many of her fiercest critics – as Britain’s greatest prime minister since Winston Churchill led Britain to victory in World War II.


Countdown to the 2013 Global Diaspora Forum

Following the unparalleled momentum and success of the 2011 and 2012 conferences, the third annual Global Diaspora Forum (GDF) is truly going global this year with simultaneously streamed events from around across the world. Join leaders in business, technology, investment and trade, government, and other prominent members of global diaspora communities as they uncover new ways of collaborating around innovation, technology and youth-focused engagements. Find out about all of the latest Global Diaspora Forum news by following us on Twitter (@DiasporaIdea, #2013GDF)  and click here to download the save the date announcement.

The signature 2013 Global Diaspora Forum in Washington, DC will officially open on Monday, May 13, 2013 at USAID and continue on Tuesday, May 14, 2013 at the U.S. Department of State. Multi-city satellite GDF conferences will begin on Friday, May 10th in Los Angeles, California and continue on May 14-15th in Dublin, Ireland and Silicon Valley, California. Hundreds of others have registered to hold grassroots  Diasporas@ “unconference” to inspire and connect a generation of young diasporans.

Invitations to and reservations for the Global Diaspora Forum in Los Angeles, Dublin, and Silicon Valley can be requested through the individual reservation systems for each relevant forum. All 2013 GDF and Diasporas@ events, including the “unconference” events, held outside of the U.S. Department of State and U.S. Agency for International Development premises are independently hosted by third party organizers under the auspices of IdEA, but are not organized, funded or operated by the U.S. Department of State or the U.S. Agency for International Development. All views and opinions expressed in these forums and events are the views of individuals and do not necessary reflect the views of the U.S. Government, IdEA, or the independent event organizers.

If you have questions about this year’s Global Diaspora Forum or would like to host your own satellite event, please contact us at info@diasporaalliance.org.


Gillard Under Pressure: Unfairly So?

[caption id="attachment_3597" align="alignright" width="208"] Julia Gillard[/caption]

Julia Gillard was born in Barry, South Wales in 1961 but renounced her UK citizenship on entering the Australian parliament in 1988. Her family had moved to Australia when Julia was five years old. She was the first PM since Billy Hughes to have been born overseas, the first never to have married and the first woman to be deputy PM, leader of the country and head of the Australian Labour Party. Perhaps unsurprisingly, her political hero is the Welsh Labour politician Aneurin Bevan.

As chief-of-staff to John Bundy, Leader of the Opposition in Victoria, Gillard had the responsibility for drafting affirmative action rules with the target of pre-selecting women to contest 35 per cent of Labour’s winnable seats. She also played a role in founding ‘Emily’s List’ a pro-choice fundraising and support network for women.

Gillard has been the subject of quite vicious sexist taunts and misogynistic attacks during her parliamentary career. When Peter Slipper, former speaker of the Australian parliament was accused of sexual harassment and attacked by her opposition opposite number Tony Abbott, Gillard sensed some hypocrisy in the air and memorably turned on Abbott in parliament to remind him of her sufferings. Her speech last year was applauded by, among others, the political leaders of the United States, France and Denmark.


IDB Approves US$ 617 Million in Development Funding

The Islamic Development Bank (IDB) recently approved US$ 617 million towards funding development projects including  important projects in the areas of education (US$ 174 million for Indonesia), electricity (US$ 319.6 million for Iran, Uganda and Bangladesh), agriculture (US$ 80 million for Morocco), sanitation (US$ 15 million in the Republic of the Maldives) and health (US$ 10 million for Mozambique).

The Board Members concurred to raise IDB’s participation in the capital of the Istanbul-based “Kuwait Turkish Participation Bank Inc.” by nearly US$ 18 million to stand at US$ 65 million. The approvals also included US$ 750,000 as grants under IDB’s Waqf (religious endowment) Fund for educational projects for four Muslim communities in non-member countries namely in Botswana, Nepal, Thailand and Fiji. The Board took note of technical assistance grants of US$ 450,000 approved by the President to Afghanistan for the education sector and to ASEAN (which includes three IDB member countries - Brunei Darussalam, Indonesia and Malaysia - in its membership) for the fishing sector.

Bearing in mind the success of IDB’s medium term note program and the rising financing needs in its member countries, the Board agreed to raise the size of IDB’s Sukuk program from US$ 6.5 billion to US$ 10 billion. (Sukuk is the Islamic finance equivalent of ‘bond’.)  It is worth mentioning that IDB’s cumulative Sukuk issuance since August 2003 is expected to reach US$ 7 billion by the end of the year.

IDB president Ahmed Al-Madani was announced an Editor’s Hero in the Winter 2012 issue of CFI.co: IDB Hero Al-Madani: Resources, Creativity and Credibility


President Kirchner: Another Peron?

[caption id="attachment_3619" align="alignright" width="156"] Cristina Fernandez de Kirchner, President of Argentina[/caption]

President Kirchner, who has been in office since December 2007, was re-elected in 2011 and may have her sights on a third term - which would require an amendment to the constitution.  She was the first elected female president of Argentina and the second to hold that office after Isabel Peron in the 1970s. Her landslide election victory resulted from a popular policy of wealth distribution. She is an admirer of the Peron dynasty and the widow of Nestor Kirchner, a former president of the country.

Kirchner’s administration has not been without criticism and there have been allegations of corruption and crony capitalism. Early in the New Year the IMF censured Argentina for failing to comply with international standards for compiling inflation and economic growth figures.  The country is experiencing its highest inflation for a decade. An anti-government demonstration in November attracted up to half a million protestors. However, the opposition is in very poor shape and things look more promising for the government now that GDP is improving.


The IMF on Low Income Country Bounce Backs

[caption id="attachment_3627" align="alignright" width="218"] Rupa Duttagupta, Deputy Chief of the World Economic Studies Division, Research Department, IMF[/caption]

Low-income countries have bounced back in the past two decades. Analysis in the International Monetary Fund’s latest World Economic Outlook (WEO) suggests that dynamic low-income countries are on a stronger economic footing today than before the 1990s, and therefore better placed to stay on course.

After a first wave of growth takeoffs—expansion in per capita output for at least 5 years averaging at least 3 ½ percent a year—by low-income countries in the 1960s and early 1970s, there were fewer in the 1980s. Growth in many of these countries decelerated as global economic conditions deteriorated. A second wave of takeoffs started in the 1990s.

A key concern today is whether recent takeoffs by low-income countries could unravel like some did in the past, especially if global growth remains sluggish. The IMF study suggests that such risks are lower today. The study analyzes growth takeoffs in more than 60 low-income countries over the past six decades.

More Sustained Takeoffs

The authors find that recent takeoffs by low-income countries have lasted longer than those before the 1990s: more than half of today’s dynamic low-income countries continued their expansion through the Great Recession.

Growth takeoffs are not confined to commodity producers; they were accomplished by low-income countries that were rich in resources, manufacturing oriented, and others. “There also seems to be more at play than strong global conditions in helping takeoffs, as many low-income countries, whether resource- or manufacturing-oriented, were unable to take off despite supportive global conditions,” said John Bluedorn, one of the study’s authors.

Takeoffs in both generations typically paid off, with a 50–60 percent rise in per capita income over the 10 years after takeoff, in contrast to much smaller gains for low-income countries that did not take off (see Chart 2). “This is an important message for some two-thirds of today’s low-income countries that have yet to experience a growth take off,” highlighted Jaime Guajardo, another author of the report. “That said, concerns rise from the fact that some takeoffs in the previous generation eventually experienced reversals in income gains. The question in many policymakers’ minds is whether this time is different.”

“The key takeaway for today is that LICs must avoid overstimulating demand or accumulating excessive external debt despite ultra-low global interest rates.”

Policy Foundations Firmer in Recent Takeoffs

The research finds important similarities between takeoffs in both generations. Both saw higher investment rates and export growth than low-income countries that did could not take off. This underscores the well-established roles of capital accumulation and trade integration in development.

There are also striking differences across the two generations, providing assurance that today’s takeoffs are more resilient than those in the past. Countries in recent takeoffs saw declines in inflation and in public and external debt levels, whereas past takeoffs resulted in wider imbalances. “This is partly related to countries’ greater reliance on foreign direct investment, and partly because strong growth was upheld despite lower investment than in the previous generation,” said Nkunde Mwase, another coauthor of the study.

Recent takeoffs have also seen a stronger record on structural reforms and institutions, such as a lower regulatory burden, better infrastructure, higher education levels, lower income inequality, and greater political stability.

Reform Momentum Should Continue

Drawing on historical experiences, the study shows that although low-income countries were able to take off by reducing imbalances, not all maintained their progress. Those that persisted in addressing vulnerabilities or implementing reforms that helped raise productivity enjoyed sustained growth (Indonesia and Korea in the 1960s to the 1980s). Where imbalances widened, takeoffs ended disruptively or were interrupted even after decades of strong growth (for example, Brazil in the 1980s and Indonesia in the 1990s).

“The key takeaway for today is that LICs must avoid overstimulating demand or accumulating excessive external debt despite ultra-low global interest rates,” said Rupa Duttagupta, who led the research work.

The study concludes that if today’s dynamic low-income countries preserve momentum in their policy reforms, they are likely to avoid the setbacks that afflicted many of their predecessors. “Sustained effort is needed to reduce imbalances, and confront many challenges, such as growth that is concentrated in a few sectors, or that has not yet translated into broad-based rise in living standards and declines in poverty levels,” Duttagupta stressed.


Millenium Goals: Ban Ki-Moon Calls our Hero Malala Yousafzai

The United Nations on April 5th called for accelerated action in the next 1,000 days from governments, international organizations and civil society groups to reach the eight anti-poverty targets known as the Millennium Development Goals (MDGs) by their deadline at the end of 2015.

“The MDGs are the most successful global anti-poverty push in history,” UN Secretary-General Ban Ki-moon said from Madrid, where later he formally kicked off the campaign tagged “MDG Momentum – 1,000 Days of Action.”

“The Goals have helped set global and national priorities, mobilize action, and achieve remarkable results,” he added.

The eight time-bound MDGs address poverty and hunger, education, gender equality, child mortality, maternal health, combating AIDS, malaria and other diseases, environmental sustainability and a global partnership for development.

According to UN figures, since the MDGs were adopted by all UN Member States in 2000, global extreme poverty rate has been cut in half and two billion more people have gained access to safe drinking water.

In addition, according to those figures, maternal and child mortality have dropped. The world continues to fight killer diseases, such as malaria, tuberculosis and AIDS. Plus, a record number of children are in primary school, with the number of girls equalling the boys for the first time.

Given the importance of education in the MDGs, Mr. Ban chose to speak by Skype with Malala Yousufzai, who was shot in the head and neck for opposing Pakistani Taliban restrictions on female education in the Swat area of Pakistan.

Ms. Yousufzai told Mr. Ban that she is in good health and wants to use education “to achieve peace and happiness”.

The Editor chose Malala Yousafzai as one of CFI.co’s Heroes after she was targeted by the Taliban.


Dairy Price Surge Hits UN Food Price Index

A sharp surge in the price of dairy products pushed the overall costs of food one percentage point higher in March, the United Nations reported today, while world wheat production remained on track to reach its second highest level ever, barring adverse weather.

Releasing its latest monthly Food Price Index (FPI), the UN Food and Agriculture Organization (FAO) said the dairy component of the index, which carries a 17 per cent weight in the overall calculations, jumped by 22 points to 225, one of the largest recorded changes, due to hot, dry weather in Oceania that has cut into the production of milk and its various by-products.

The dairy prices used in FPI are based on the exports of New Zealand, the world's largest dairy exporter, accounting for about one third of global trade. Export prices for dairy products have also risen for other important exporters, such as the European Union and the United States, but not to the same degree.

“The exceptional increase is in part a reflection of market uncertainty as buyers seek alternative sources of supply,” FPI reported. “In addition, dairy output in Europe has yet to come fully online after a particularly cold winter, which has delayed pasture growth to feed dairy animals.”

On cereals, FAO’s latest Cereal Supply and Demand Brief, reported an overall positive outlook with wheat crops already well advanced and plantings for rice and coarse grains expected to increase in the coming months owing to attractive prices.

"The dairy component of the index, which carries a 17 per cent weight in the overall calculations, jumped by 22 points to 225, one of the largest recorded changes."

“World cereal production in 2013 could recover strongly barring unfavourable weather in major producing regions,” it said, maintaining its March outlook that global wheat production this year is expected to increase by 4 per cent to 690 million tonnes, the second highest ever after the 700 million tonnes produced in 2011.

The FAO slightly revised the 2012 crop production estimate upward by nearly 3 million tonnes, which now stands 2 per cent lower than the record set in 2011.


Mines and Money Beijing 2013

Mines and Money Beijing is China’s leading conference and exhibition focusing on Chinese outbound investment into international mining projects.

With over 1,000 representatives from China’s leading mineral resource investors and 100 international mining companies in attendance this year, Mines and Money Beijing will provide unparalleled opportunities for China’s resource investors to source their next overseas mining investment opportunity.

Make sure you are at Mines and Beijing this year to benefit from a packed conference agenda including thought leadership keynotes, mining company spotlight presentations, investor panels and analyst insights.

Browse an international exhibition of mining investment opportunities, where China’s leading resource investors, will be able to meet with mining companies from around the world to discuss outbound investment strategies and international mining
investment opportunities.

Mines and Money Beijing 2013 highlights will include:

Expanded exhibition featuring 60+ mining investment opportunities from around the world

New online meeting planner and onsite meeting zone to help facilitate meetings between mining companies and buy-side investors

Updates on China’s resource acquisition and outbound investment strategies following the selection of the new government

Discussion on opportunities for Chinese outbound investor to partner with international mining companies and leverage their experience of investing into the world’s key emerging mining regions

High-value networking between mining companies and a wide range of serious outbound investors, from major SOEs and sovereign wealth funds to PE funds and investment holding companies

Africa mining investment-focused Summit

Expert masterclass on how to structure a successful outbound investment deal

Market analysis and investment opportunities in key in-demand commodities: Coal, iron ore, copper, aluminium, nickel, zinc, precious metals and more…

Mines and Money Beijing 2013 will bring together international mining project developers and Chinese outbound investors with capital to invest.


IMF: The Risk Side of Exceptionally Low Interest Rates

[caption id="attachment_3664" align="alignright" width="240"] US Federal Reserve[/caption]

Several years of exceptionally low interest rates and bond buying by some advanced economy central banks have improved some indicators of banks’ health while supporting the economy and financial stability, according to new research from the International Monetary Fund.

In its latest Global Financial Stability Report, the IMF analyzes the effects of central bank policies on banks and financial stability since the global crisis. Central banks have taken bold policy actions that have reduced banking sector vulnerabilities and stabilized some markets, such as the interbank and mortgage securities markets. But the policies may have undesirable side-effects that could put financial stability at risk the longer they are in place.

The IMF said so far these risks are not showing up much in banks, but could be shifting to other parts of the financial sector, such as to so-called “shadow banks.” There is also some concern that the prolonged period of low interest rates is encouraging banks to roll over nonperforming loans rather than repairing their balance sheets.

"The policies may have undesirable side-effects that could put financial stability at risk the longer they are in place."

“So far, so good, but if the time that central banks have provided through their unconventional policies is not used productively by financial institutions and their regulators, at some point we can expect another round of financial distress,” said Laura Kodres, chief of global stability analysis in the IMF’s Monetary and Capital Markets Department and the head of the team that produced the analysis.

Potential Risks

Despite the positive short-run effects for banks, there are financial risks associated with these central bank policies, which are likely to increase the longer they are maintained, according to the IMF.

The analysis found some aspects of this unprecedented monetary policy may be delaying balance sheet repair in banks and could raise credit risk over the medium term. This would explain the increase in market perceptions of bank default risk in response to central bank policy announcements, the IMF said.

Risks may also be shifting to other parts of the financial system not examined in the report, such as shadow banks, pension funds and insurance companies—or to other countries. Monitoring these risks requires improved data collection by those responsible for monitoring system-wide risks on nonbank financial institutions, as well as intrusive oversight by financial supervisors.

The report cautions that some risks may materialize when central banks end the measures taken in the wake of the global crisis.

Uncertainty about asset sales by central banks could lead to shifts in market sentiment and rapid price changes that could result in losses for bond holders—especially banks and central banks. The degree to which long-term yields may rise from their currently compressed levels, which would make bond prices drop, heightens this concern.

Losses could hurt weakly capitalized banks in the short run, although the IMF said the net effect of interest rate increases may be positive for banks over the medium term as their lending picks up.

Policymakers Should Be Vigilant and Flexible

"The report says that central bank policies should continue to support the economy and financial stability until the recovery is well established."

The IMF said policymakers need to be vigilant and assess the emergence of potential and emerging financial stability threats. They also should use targeted policies designed to foster bank balance-sheet repair and reduce their vulnerability to market disruptions. By reducing the risks in the financial sector, micro- and macroprudential policies will allow greater leeway for monetary policy to support the economy.

The report identifies specific measures that could prove helpful to contain credit risk and funding challenges for banks, such as robust capital requirements, improved liquidity requirements, and well-designed dynamic forward-looking provisioning. Because the experience with some macroprudential tools is still relatively limited, the IMF recommends that policymakers closely monitor the effectiveness of their policies and stand ready to adjust them as needed. Coordination with other economic policies, such as monetary and fiscal policy, will also help reduce the reliance on macroprudential tools.

To minimize adverse effects on market sentiment, the IMF points out that it is important that central banks communicate clearly about their strategies to exit from their extraordinary policy measures, ahead of their implementation.

The IMF will publish more analysis from the Global Financial Stability Report on April 17.


UN Report on International Investor Disputes

Foreign investors are increasingly resorting to investor-State arbitration to settle investment disputes, with a record number of cases filed last year, according to a new report released on April 10th by the United Nations Conference on Trade and Development (UNCTAD).

The report, “Recent Developments in Investor–State Dispute Settlement (ISDS)”, showed that 62 new cases were filed in 2012, of which 68 per cent of respondents were from developing or transition economies.

“Recent developments have amplified a number of cross-cutting challenges that are facing the ISDS mechanism, which gives credence to calls for reform of the investment arbitration system,” said James Zhan, Director of UNCTAD’s Division on Investment and Enterprise, which published the report.

Foreign investors challenged a broad range of government measures, UNCTAD reported, including revocations of licences, breaches of investment contracts, irregularities in public tenders, changes to domestic regulatory frameworks, withdrawal of previously granted subsidies, direct expropriations of investments and imposition of taxes.

Nine decisions in 2012 awarded damages, including the World Bank's International Centre for the Settlement of Investment Disputes (ICSID), which ordered Ecuador to pay $1.77 billion to Occidental Petroleum Corp as compensation for taking over its assets in 2006. The monetary award was the highest in the history of Investor-State Dispute Settlement (ISDS).

In addition, for the first time in treaty-based ISDS proceedings, an arbitral tribunal affirmed its jurisdiction over a counterclaim lodged by a respondent State against the investor.

"By the end of 2012, the total number of known cases reached 518, and the total number of countries that have responded to one or more ISDS claims increased to 95, according to UNCTAD."

The overall number of concluded cases reached 244, out of which approximately 42 per cent were decided in favour of the State and 31 per cent in favour of the investor. Approximately 27 per cent of the cases were settled.

“The ISDS mechanism is already a source of considered reflection in numerous bilateral and regional IIA negotiations. However, a multilateral dialogue on ISDS could prove more effective in bringing about a harmonized approach to reform,” Mr. Zhan said.


IMF Mission to Egypt: Improvement in Targeting of Energy Subsidies

[caption id="attachment_3682" align="alignright" width="185"] Cairo[/caption]

A staff mission from the International Monetary Fund visited Cairo during April 2-15. At the conclusion, Andreas Bauer, Mission Chief for Egypt, issued the following statement:

“The mission made progress in the discussions with the Egyptian authorities on their economic program and possible financial support from the IMF.

“The authorities have already taken valuable first steps to improve the targeting of energy subsidies and are seeking to broaden their revenue base. They intend to build on these steps with further actions to address - in a socially balanced way - the country’s fiscal and balance of payments deficits, and create conditions for a sustained recovery of the economy.

“The mission was encouraged by the constructive positions and views expressed by the representatives of political parties on economic reforms and possible IMF support. All sides concurred on the need to protect the vulnerable sectors of society when implementing reform measures.

“Discussions with the authorities will continue with the objective of reaching agreement on a possible Stand-By Arrangement in support of Egypt.”


UNIDO: Nowadays it’s Tough on Tigers

[caption id="attachment_3688" align="alignright" width="240"] Indonesia[/caption]

Poorer developing countries may find it much harder under current conditions to foster industrial development and structural change than earlier generations of states that hauled themselves out of poverty, like the so-called Asian tigers, according to new book prepared by a specialised United Nations agency.

“They face a more complex, and daunting set of circumstances than the developing countries that embarked on industrialization after 1950,” the UN Industrial Development Organization (UNIDO) warned. “These changing and challenging circumstances require new thinking, and in particular new paradigms to guide researchers, policy makers, and international development organizations in the future.”

The book, presented in London this week and entitled ‘Pathways to Industrialization in the Twenty-First Century: New Challenges and Emerging Paradigms,’ analyzes the circumstances and challenges facing developing countries in industrialization, and offers fresh ideas for new paradigms to carry forward industrial policy in the future.

“They face a more complex, and daunting set of circumstances than the developing countries that embarked on industrialization after 1950.”

It was co-edited by UNIDO Director of the Development Policy, Statistics and Research Branch Ludovico Alcorta, and is the result of a study prepared by UNIDO in partnership with the UN University’s World Institute for Development Economics Research (UNU-WIDER) and the Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT).

Over the last two centuries, the experiences of the first wave of industrialized countries in Europe and the United States, and the more recent experiences of the East Asian Tigers (Indonesia, Malaysia, Thailand, China, India, and Viet Nam), have illustrated the transformative nature of industrialization, Mr. Alcorta said.

“There are reasons to believe that industrialization will continue to be one of the major engines of growth, transformation, and socioeconomic development. Industrial development enables a more rapid advancement toward developed country living standards. But many challenges remain, and new challenges have arisen,” he added.

“These include: integration into global value chains; the shrinking of policy space in the present international order; the rise of the Asian driver economies; new opportunities provided by resource-based industrialization; the accelerating pace of technological change in manufacturing; how to deal with jobless growth in manufacturing; creating adequate systems of financial intermediation; and how to respond to the threats of global warming and climate change.”

UNIDO’s mission is to promote and accelerate sustainable industrial development in developing countries and economies in transition. In recent years, it has assumed an enhanced role in the global development agenda by focusing its activities on poverty reduction, inclusive globalization and environmental sustainability.

It carries out two core functions: as a global forum, it generates and disseminates industry-related knowledge; and as a technical cooperation agency, it provides technical support and implements projects.


Organisation of Islamic Conference: Contemporary Challenges of Member States

[caption id="attachment_3700" align="alignright" width="300"] Baku, Azerbaijan[/caption]

Issues concerning unemployment, the development of human resources and enhancing social protection feature prominently in the cooperation agenda of the OIC. Deliberations on the contemporary challenges of OIC Member States and modalities for consolidating intra-OIC actions will engage the attention of the 2nd OIC Conference of Labour Ministers in Baku, Republic of Azerbaijan (25-26 April 2013).

Under the theme: Decent Work for Sustainable Welfare, the 2nd Ministerial Conference is taking place after a first Ministerial Meeting held in Istanbul, Turkey, on 10 September 2011. Ministers from OIC Member States and representatives of relevant OIC institutions, relevant regional and international organizations are participating in the Conference.

The Conference is to be addressed by Secretary General of the OIC Prof. Ekmeleddin Ihsanoglu and focus on the various aspects of OIC collaboration in the domain of labour and social protection. Presentations on issues on the Conference agenda will dwell on strategies for collaboration on occupational safety and health, reducing unemployment and increasing human capital resources. Other issues include the welfare of foreign migrant labour and labour market information strategy.

[caption id="attachment_3701" align="alignleft" width="136"] Organisation of Islamic Cooperation[/caption]

The Conference is expected to consider a Programme of Action on integrated support for SMEs enhancing best practices to address the challenges of informal employment, particularly the incorporation of non-registered workers into formal employment, and strengthening and promoting the cooperation among the member states in the field of education and vocational training.

In order to fast-track the implementation of the various decisions of the Conference and to consolidate joint OIC action on critical labour issues, the Conference will also consider the adoption of a Framework document. This programmed execution of OIC decisions falls within the context of the recent reforms introduced under the OIC Ten Year Programme of Action.


IMF on Global Financial Security: Old Risks, New Risks

The global financial system is far more stable than it was six months ago, but a number of challenges remain. The International Monetary Fund’s latest Global Financial Stability Report says that recent rallies in financial markets will not be sustained, and new risks are likely to emerge, unless policymakers address key vulnerabilities.

The report focuses on two persistent old risks, which are the legacy of the crisis.

In spite of the recent improvements in market conditions, credit is not adequately flowing in the euro area periphery.

Small and medium-sized companies, which are the backbone of employment, are particularly affected by the increased cost and limited supply of bank credit.

The periphery corporate sector is also facing a large debt overhang, which was built up before the crisis. The report identifies a weak tail of listed companies in the periphery that need to reduce their debt over time. The required debt reduction by these companies accounts for a fifth of the total debt of listed periphery corporates analyzed in the GFSR. This poses a challenge to their economies and financial stability.

"Bank balance sheet repair has not been completed and progress has been uneven, according to the IMF. Banking systems around the world are in different stages of repair."

The report shows that the process is largely completed in the United States, but not so in Europe. Many banks in the euro area periphery countries still need to make further progress in strengthening their balance sheets. And important banks in the core countries are still too dependent on wholesale funding markets. Furthermore, the global financial reform agenda is incomplete, prolonging regulatory uncertainty. This leaves banks less willing to lend.

“Addressing the old risks is essential to leave the crisis behind, but it also reduces the need for continued accommodative monetary policies. This will prevent new risks from growing and becoming systemic,” said José Viñals, Financial Counsellor and head of the IMF’s Monetary and Capital Markets Department, which produced the report.

New Risks

The report also identifies new risks linked to easy monetary policies that were put in place to fight the crisis. These policies have been essential to support the economy. But their use over a prolonged period may create side effects, such as excessive risk taking and leverage, and asset bubbles.

The IMF said there are signs of new risks in the United Sates. U.S. corporate fundamentals are strong, and leverage is in line with typical historical patterns. But corporate debt underwriting standards are weakening rapidly. In addition, continued low interest rates are prompting some pension funds and insurance companies to take further risks to close their widening funding gaps.

Also, easy money in advanced economies is spilling over to emerging markets. Borrowing on international markets by emerging market corporates has been growing at a record pace, exposing them to foreign currency risks and rising leverage. This makes emerging markets more sensitive to volatile capital flows.

Above all, the eventual unwinding of prolonged monetary easing in the United States could expose these vulnerabilities and destabilize credit markets.

Policy Recommendations

The report calls for stronger policies to reduce financial fragmentation in the euro area, in order to help unblock the flow of credit to the economy and increase the resilience of the currency union.

Policymakers can achieve this by completing the banking sector repair and by moving steadfastly towards full-fledged banking union. Also, the flow of credit to solvent small and medium-sized enterprises needs to be improved. And private debt overhangs need to be addressed to complement the clean-up of bank balance sheets.

The IMF also called for renewed political commitment at the global and national level to complete and implement the financial regulatory reform agenda. Without greater urgency toward international cooperation and comprehensive bank restructuring, weak bank balance sheets will continue to weigh on the recovery and pose ongoing risks to global stability, according to the IMF.

Policymakers must also address new risks:

In the United States, policymakers need to keep banks safe. As for nonbanks, they must be vigilant and proactive by restraining too rapid increases in leverage and by encouraging prudent underwriting standards. All this requires appropriate microprudential and macroprudential policies.

Emerging market economies must keep the guard up against deteriorating bank asset quality and disruptive short-term capital flows. At the same time, prudential policies should be deployed to ensure adequate buffers in the financial system and to prevent the excessive build-up of leverage and asset price bubbles.


CBI: The Only Way is Exports

[caption id="attachment_3719" align="alignright" width="300"] John Cridland[/caption]

As official trade figures disappoint yet again, the Confederation of British Industry is unveiling a new package of export-boosting measures to help British firms unlock overseas opportunities. They include an incentivising tax break, a review of the practicalities of the Bribery Act and making export finance schemes easier to access.

Although the UK is making progress in the fast-growing economies of Asia and Latin America – specifically the BRICs (Brazil, Russia, India and China) – it still lags behind some of its international rivals. Only this week, official trade figures showed that the UK’s deficit on trade in goods and services was £3.6 billion in February, the largest in six months.

In a new report, The Only Way is Exports: renewing the UK’s role as a trading nation, the CBI says growing mid-sized companies with the potential to enter new markets must be at the forefront of any export-led recovery.

But it warns too many businesses are impeded by the perceived risks and costs of exploring new overseas markets, with only one fifth of the UK’s SMEs exporting, compared with a quarter across the European Union.

John Cridland, CBI Director-General, said:

 “Global trade has been one of the bedrocks of UK economic strength but to cement our position as a leading exporting nation in the future we need more active Government support."

“While we are making progress in some fast-growing markets, weaker than expected economic growth (in our major trading partners) has held us back. We also have a heavy dependence on imports: ships are arriving in UK ports bringing in more goods than they take back.

"The growing middle classes of Asia and Latin America want to purchase leading UK branded goods and services, so there is every reason for the UK to be confident as long as businesses continue to make headway.

On export performance being embedded in all government sector strategies, Mr Cridland, said:

“To lift exports, business and government must build on those sectors where we excel, such as automotive and public services, as part of a wider industrial strategy.

On a new tax credit for SME exporters:

“Breaking into new markets can be a huge leap for small and medium firms, which is why we’re calling on the Government to introduce a new tax credit to help them get a foothold internationally.

On a review of the practicalities of the Bribery Act:

“Businesses tell us that they are being hamstrung by the sheer complexity and level of paperwork involved in complying with the Bribery Act. We accept without question that bribery is morally and legally wrong, but the Government needs to review the way the Act is affecting smaller firms on the ground.

On access to export finance schemes:

“Export finance schemes will be fundamental to success, so the Government must rapidly deliver on their existing plans and make it easier for companies to participate.”

Exports to high-growth markets have grown strongly since 2008, with the value of total UK exports to the BRICs rising by 42% between then and 2011. But the UK is starting from a low base.

Furthermore, despite the depreciation in sterling and the comparative advantages the UK has in some sectors – the UK enjoys a surplus in services trade (+4.6% of GDP in 2012) – export performance has not been as strong as might be expected. In 2011, the UK’s goods exports to the BRICs were just 5% of its total goods exports, compared with higher proportions for other major exporters – notably Germany (10%) and the US (12%).

The UK has persistently run a trade deficit since 1998, and its share of global exports fell to just 3.4% in 2011, almost half that of 1980 (6.2%). And according to the OBR’s latest forecasts, net trade will only contribute 0.1 percentage points to GDP growth in each of the next five years.

The CBI’s 11 recommendations to boost export performance are:

Businesses must match capabilities to changing demand

1. Businesses and trade associations should take targeted action to strengthen domestic supply chains, invest and build key capabilities for the future

Putting exports at the heart of industrial strategy

2. Plans to boost export performance in emerging markets must be embedded in all government strategies for sectors

3. The Davies Commission must deliver a strategy for the short, medium and long term to boost capacity and promote investment in connectivity across the UK

4. The Government must work with industry on the review of the current night flights regime to ensure it carefully considers the needs of the air freight sector and its delivery cycles in the future

5. The Government should ensure that the EU uses its economic weight to press for robust IP protection provisions in international trade negotiations. This requires active UK engagement on IP initiatives in Europe

6. The UK needs to develop a reputation for being open to top talent, by streamlining processes and setting out which key markets are to have premium visa services

7. The Government should review the impact of the Bribery Act on competitiveness, with a particular focus on small and medium-sized enterprises

Setting the right resourcing framework

8. Prioritise increasing awareness of UKTI and UK Export Finance, with particular attention paid to communication with SMEs

9. To support high growth export champions, the government should introduce a New Markets Incentive – a targeted tax credit to underpin exploratory export activity by SMEs

10. The Government must urgently deliver and intensively market the UK Export Finance direct lending facility

11. Incorporating export finance schemes in to the planned Business Bank will create a ‘one stop shop’ for business finance


UN Expects Subdued Asia-Pacific Growth in 2013

Growth in Asia-Pacific remains subdued due to the impact of persistent weaknesses and uncertainties in the developed economies, the United Nations reported last week, urging Governments to implement macroeconomic policies that focus more on inclusivity and sustainable development.

The report, the Economic and Social Survey of Asia and the Pacific 2013: Forward-looking macroeconomic policies for inclusive and sustainable development, argues that macroeconomic policies can play a vital role in reorienting the region towards a more inclusive and sustainable growth path – a high priority of its post-2015 development agenda.

The Survey cautioned, however, that “much lower growth compared to recent years could become a new normal for many regional economies if present economic trends were to continue,” and this could cause an estimated economic output loss of about $1.3 trillion by the end of 2017.

According to the report, the flagship publication of the UN Economic and Social Commission for Asia and the Pacific (ESCAP), the growth rate of the region’s developing economies is projected to rise to 6 per cent in 2013 from 5.6 per cent last year, but compared to 7 per cent in 2011.

“The global economic conditions remain challenging for the region. Since the beginning of 2013, we have witnessed some measurable improvement in global financial markets, however we have not seen robust improvement in the real economy,” Pingfan Hong, Chief of the Global Economic Monitoring Unit at the UN Department of Economic and Social Affairs (DESA), told journalists in New York.

The survey estimated that since the onset of the global financial crises in 2008, GDP for the region had lost about 3 per cent if compared with the trend growth of the region before the crises, a loss of roughly $870 billion in output.

“The 2013 Survey reminds us that this is no time for complacency, as the need for a more inclusive and sustainable pattern of economic and social development continues to be critical,” UN Under-Secretary-General and Executive Secretary of ESCAP, Noeleen Heyzer, said in her preface to the Survey.


WTO on the Future of Trade: It’s All about Convergence

Extracts from an address by WTO Director-General Pascal Lamy, April 24th

[caption id="attachment_3739" align="alignright" width="158"] Pascal Lamy[/caption]

According to the Panel, “Regulating trade opening is only one of the many challenges facing a rapidly integrating world economy. But it is also one where we already have a system which has shown its resilience. Like all assets, it needs not just proper maintenance. It also needs investment in the future. We offer this report as a call to action and a contribution to further reflection – action and reflection that we believe are essential to address our current stasis and the real risk this carries of imposing significant economic, social and political costs across the globe.”

This report offers "food for thought" to our members as they think about their medium to long-term trade policies and also about the medium to long-term prospects for this organization.

The report does not offer quick fixes to conclude the Doha Round; it was not intended to do so. What is says about the Doha Round is that there is a political imperative as well as an economic rationale to conclude it. But many of the issues addressed in the report are of direct relevance to unlocking the Doha Round.

The report has three parts:

Chapter 1 looks into how trade can work for growth, development, jobs and sustainable development. It may sound a bit obvious for many of you but the panel felt it was important to start with placing trade in the broader context of a set of other domestic policies that need to be in place for trade to work; "trade as a means, not as an end" says the report.

Chapter 2 looks into what are the shaping factors of trade for the future:

The continuous technological progress which is at the heart of globalization

The rise of investment on par with the growth of trade

The rise in value chains

The rise of emerging countries: South-South trade was 10 per cent of world trade 20 years ago, now it is closer to one-third of world trade

The centre of gravity of trade opening is moving South

The increase in preferential trade agreements and bilateral investment treaties

Non-tariff measures as "the" obstacles to trade in the future.

So what to do against this background?

Chapter 3 looks into a set of suggestions they freely offer to the WTO members. If I had to capture the essence of their suggestions in one word, that would be "convergence":

Convergence of the trade regimes of the WTO members, reflective of the evolution of their progressive economic and social development

Convergence of the non-multilateral regimes with the multilateral trading system

Convergence between trade and other public policies, i.e. greater coherence in non-tariff measures

Convergence of trade and other domestic policies, such as education, innovation and social safety nets.


Islamic Development Bank: Member Country Partnership Strategy

The Member Country Partnership Strategy (MCPS), introduced in 2010 as an outcome of the Islamic Development Bank Reform Agenda, is a tool to mainstream the newly adopted post-reform business model of the IDB Group. This new business model embodies three operating principles of pro-activeness (reaching out to clients instead of waiting to be approached), inclusiveness (seeking the support and cooperation of all stakeholders) and prioritization (allocating available resources to the most urgent and priority needs of member countries). It is thus a strategy document that guides the operations of the IDB Group in its member countries over the medium-term (3-5 years) clearly specifying comparative advantage and niche areas for the IDB Group (IDB, ITFC, ICD, ICIEC and IRTI) as well as financing instruments and role play. The MCPS also endeavours to promote mutually beneficial partnerships among member countries such as transfer of technology, cross-border investments, trade exchanges and sharing of country experiences, etc., which are collectively known as “Reverse Linkages” (RL).

As an IDB Group undertaking, the MCPS is intended to enhance Group synergy and development results by aligning member country priorities with the IDB Group Vision 2020 and capacity. In addition, the MCPS provides the IDB Group a platform for structured dialogue with member countries and other stakeholders with a view to having an “inclusive” country strategy. Through these consultations, the MCPS enables the IDB to forge strategic partnerships and other joint initiatives with many development partners.

"The MCPS also endeavours to promote mutually beneficial partnerships among member countries such as transfer of technology, cross-border investments, trade exchanges and sharing of country experiences."

The MCPS preparation follows a two steps process. It starts with the formulation of a concept note asserting the importance of the MCPS framework in articulating member country needs; diagnosing member country’s development situation and future aspirations; gauging these against Government’s development strategies and plans; assessing the lessons learnt from IDB’s own experience; suggesting possible support areas for future intervention by the IDB Group, etc. The second step in the process is field visit for consultations with an array of stakeholders including the government, civil society, private sector and development partners, etc., and subsequent preparation of the strategy.

So far, the IDB has prepared nine MCPS on Turkey, Indonesia, Mali, Uganda, Mauritania, Pakistan, Kazakhstan, Senegal, and Morocco. Ten others are under preparation.


CFI.co Meets Enrique Gómez Junco: A Q&A Session with the Founder of Optima Energia, Mexico

[caption id="attachment_15156" align="alignright" width="300"] Enrique Gómez Junco[/caption]

What would you say most motivates you?
I like to be able to create something from scratch - something different, something better. I want us always to be the leader in what we do. I especially enjoy BIG challenges.

What excites you?
I am excited by entrepreneurship, new ventures and helping others to achieve their dreams. I want to take Optima Energía all the way to be the leading provider of energy efficiency solutions in Latin America. I want to keep Optima growing in fast mode, to build an organization that can do anything with the best talent in our market.

Do you think entrepreneurs are made or born?
It can be either. I know for a fact that we all need both. Having someone that can inspire you, someone that can teach you, someone that can share knowledge is crucial to the decision to initiate a project.. School programs, incubators, accelerators, mentors, are part of the environment that will help entrepreneurship develop.

"I like to be able to create something from scratch – something different, something better."

Where did you grow up?
I grew up in Monterrey, Mexico, part of a very united family. My father was a great example of hard work and honesty and had a huge commitment to our community. He was always a high level professional with the courage to create personal businesses even towards the end of His career.

Did you have any key mentors or people who deeply influenced you?

Mike Ahearn, ENDEAVOR Global Board Member and funder of First Solar, the biggest solar energy company in the world.

Fernando Fabre, President of Endeavor Global

Pedro Aspe, former funder of ENDEAVOR México, and co president of EVERCORE.

Salvador Alva, former president of Pepsico Mexico, and President of Instituto Tecnologico de Monterrey.

Are there any highlights from your youth you would like to mention?
I was fortune to participate in the pilot entrepreneur program at my university; the first company to be born was Tecnologico of Monterrey and they now have one of the biggest entrepreneur university programs in the world. In my years with Optima Energía (up to now 24) I have been fortunate to have had world class mentors, opportunities to assist to the World Economic Forum (WEF) as Global leader for Tomorrow (GLT), be selected as an ENDEAVOR entrepreneur organization that transformed me and Optima Energía. And that inspired me to create ENDEAVOR E + E, an organization that supports early entrepreneurs through mentoring, with more than 250 professionals helping entrepreneurs in nine different cities in Mexico.

Do you have any hobbies?
I enjoy helping entrepreneurs and water skiing.

Did you have any life-changing experiences that put you on the path to what you’re doing today?
At university the entrepreneur pilot program, and then ENDEAVOR: an accelerator program for high potential growth companies. It has been wonderful to have world class mentors helping my career.

What are the key attributes you look for in your staff?
I look for a positive attitude, accountability; they should place no limits on what is possible. companies are successful because they have good staff.
What are the most frustrating factors that have held back expansion?
Expansion is always painful, you need to make decisions regarding evolving standards and people that help you starting and crating with you your venture. Have not the right talent in place while you are expanding is painful.

If you could set up Optima anew, would you do anything differently? Why, and what would you do?
I would get help faster, have an independent board of directors earlier, make decisions faster with less heart and more brain, Identify opportunities that can be standardised, reproduced and go into mass production.

What’s next for Optima? What are you looking forward to achieving?
We will grow during the coming years by more than 50% a year. We will maintain our leadership in energy efficiency and be the company that will transform Latin-America into a continent of low carbon emission cities. i


IMF: Anything that Works to Create Jobs

[caption id="attachment_3766" align="alignright" width="248"] Tharman Shanmugaratnam[/caption]

A broad mix of policies is needed to help put the global economy on a sustained and balanced growth path, the IMF said as it wrapped up the 2013 Spring Meetings against a backdrop of an uneven global recovery.

In its discussion at the Spring Meetings in Washington, the IMF’s policy-steering committee, the International Monetary and Financial Committee (IMFC), drew sharp focus on the need to boost growth and create jobs.

“Growth and jobs were a very strong focus of our discussions,” said Singapore Finance Minister Tharman Shanmugaratnam, who chaired the twenty-seventh meeting of the IMFC on April 20.

“There was also a strong and common recognition that achieving growth and jobs cannot rest on one policy alone. There is no single bullet that will get us to normal growth and some normality with regard to jobs,” said Tharman.

Robust policy mix

IMF Managing Director Christine Lagarde underscored the focus on job growth. She said a mix of policies can help to move the world beyond the “three-speed” recovery—where some countries are doing well, others are on the mend, and others are lagging behind—that has emerged since the IMFC last met in October 2012 at the Annual Meetings in Tokyo.

“Every policymaker is keen to develop jobs and to respond to the demands of the young population in particular,” Lagarde said at a news conference following the IMFC meeting.

“Anything that works to create jobs” is on the table, said Lagarde, “starting with growth and a good policy mix which relies on not just one policy but a set of policies that will include fiscal consolidation at the right pace, structural reforms. . .and monetary policy, which provides the breathing space.”

Policies to boost growth were a focal point, said Tharman, who added that the IMFC saw accommodative monetary policy appropriate in the short term but added fiscal and structural policy action is needed too.

“The emphasis was toward a better balance of strategies—monetary, fiscal and structural—with a strong emphasis on medium-term fiscal and structural reforms rather than an overly heavy reliance on monetary policy,” said Tharman.

Focus on sustainable growth

The IMFC, which represents the Fund’s 188 member countries, said in a communiqué that an uneven recovery is emerging but growth and job creation are still too weak. “We need to act decisively to nurture a sustainable recovery and restore the resilience of the global economy,” it said.

The IMFC’s key priorities for the months ahead include:

Advanced economies

Accommodative monetary policy is still needed to help bolster growth but needs to be accompanied by credible medium-term fiscal consolidation plans and stronger progress on financial sector and structural reforms. In the euro area, further progress in repairing bank balance sheets and reducing financial fragmentation is crucial.

Emerging market and developing countries

With activity picking up, policies should be recalibrated to rebuild buffers and guard against financial vulnerabilities.

Low-income countries

Continued robust growth in many low-income countries provides room for replenishing policy buffers while addressing pressing infrastructure and social needs. The Fund needs to closely monitor the sustainability of the Poverty Reduction and Growth Trust (PRGT) in relation to the needs of low-income countries.

Restoring resilience

The Fund should continue to focus on jobs and growth as a basis for tailored policy advice, in collaboration with other organizations.

IMF surveillance

The IMF should conduct further analysis on the impact of unconventional monetary policy on capital flows and asset and commodity prices, the role of capital flows in driving exchange rates, and global liquidity.

Governance reforms

The IMFC urged members who have yet to complete the necessary steps to ratify the 2010 reforms without delay and for the IMF Executive Board to agree on a new quota formula as part of the Fifteenth General Review of Quotas.

The IMFC also welcomed the directions set forth in the IMF’s Global Policy Agenda —an action plan that outlines the membership’s policy priorities and how the IMF can assist.


Saudi Aramco PhD Student Wins MIT Research Award

[caption id="attachment_3773" align="alignright" width="300"] MIT[/caption]

Zeid Al Ghareeb, a Saudi Aramco sponsored student pursuing a Ph.D. in Petroleum Engineering at the Massachusetts Institute of Technology (MIT), has been awarded a Seed Fund grant of $150,000 for doctoral research from the MIT Energy Initiative (MITEI).

The proposed research was endorsed by founding and sustaining members of MITEI, including Saudi Aramco, BP, Shell, Schlumberger and Chevron, among many others.

Al Ghareeb was recognized for his research titled “Optimum Decision Making in Reservoir Management Using Reduced-Order Models.” Al Ghareeb’s research focuses on broadening the application of oil reservoir simulation for decision making in light of geological, operational and financial uncertainties using fast, physics-based reduced-order models. The award will help in tackling real world problems.

Incorporating operational and financial models with geologic models throughout the decision-making framework is not common, according to Al Ghareeb, and will require collaboration with energy economists, engineers and geologists.

[caption id="attachment_3777" align="alignleft" width="201"] Zeid Al Ghareeb[/caption]

This multidisciplinary approach to reservoir simulation and management is expected to include seminars and summits through MITEI to address this challenge and emphasize the effect of coupling these models in the reservoir optimization and decision-making process. The goal is to make this process educational to engineers and scientists, and attractive to energy economists.

A recent memorandum of understanding between Saudi Aramco and MIT will help expand the partnership between the school and the company, and includes research encompassing renewable energy, energy efficiency, energy economics, CO2 management and conversion, desalination, advanced materials and a range of hydrocarbon production areas, such as computational reservoir modeling and simulation, geophysics and unconventional gas.


Improved Resource Efficiency is Key to Asia-Pacific Progress

The Asia-Pacific region, which has overtaken the rest of the world in consumption of raw materials as affluence and manufacturing increase, must boost its resource efficiency or risk losing ground in lifestyle, economic growth and environmental sustainability, according to a UN report released on April 24th.

From 1970-2008, consumption of construction minerals increased 13.4 times, metal ores and industrial minerals consumption 8.6, fossil fuels 5.4, and biomass 2.7 times, according to the report released by the United Nations Environment Programme (UNEP), entitled, ‘Recent Trends in Material Flows and Resource Productivity in Asia and the Pacific.’

The report highlights the region’s inefficient use of resources as measured by material intensity - consumption of materials per dollar of Gross Domestic Product (GDP) - as an area of serious concern. Currently, material intensity for Asia-Pacific is three that of times the rest of the world.

“Each dollar of GDP requires increasing amount of materials,” said Park Young-Woo, Director of the UNEP Regional Office for Asia and the Pacific.

The report found that the region is moving from biomass to a minerals-based economy, indicating that the most-populous countries like China and India are transitioning from agrarian to industrialized economies, UNEP reported.

According to figures cited, China is responsible for over 60 per cent of the region’s total domestic material consumption, and India for 14 per cent.

The rise in use of metal ores and industrial minerals use in India indicates that the country is entering a rapid acceleration phase in its transition to an industrialized economy, the UN agency notes.

Growing affluence and material intensity were the primary drivers of raw material consumption, and any attempts to regulate the industry would have to address both, the report stresses.

“The findings of the report conclude that countries in Asia and the Pacific face even greater challenges to make the transition of current economic growth patterns towards green growth, and to transform the economies into truly green economy, despite the strong efforts in development of policies and strategies by member countries,” said Mr. Park.

The report recommends the establishment a global harmonized database that shares material use data for all countries as an important step in helping policymakers and businesses anticipate resource issues, and to provide academia with reliable data to support decision makers with the policy relevant science.


Poland’s Power Surge

The European Bank for Reconstruction and Development (EBRD) is supporting the modernisation of the Polish power sector with a long term senior loan of up to PLN 283 million (€69 million equivalent) for the construction of a new combined cycle gas turbine (CCGT) power plant in Stalowa Wola, a city of around 65.000 inhabitants in the South East of Poland.

The new plant will have a capacity of 449 MWe/240 MWt generated by the country’s first large scale gas fired power plant. The new facility will replace the old coal-fired power units at the Stalowa Wola plant and is expected to lead to a carbon emissions reduction by at least 950.000 tonnes of CO2 per annum.

The project company is owned, in equal shares, by Tauron Wytwarzanie S.A. and PGNiG Energia S.A., subsidiaries of the leading Polish power utility Tauron and the country’s biggest gas company PGNiG, respectively (together the Sponsors). The project is part of an ambitious Polish energy investment programme driven by the need to decommission and replace obsolete, inefficient and ecologically harmful power units from the 1950s and 1960s. The new gas-fired plant will meet all EU and local environmental standards.

“The Bank is proud to invest into the modernisation of Poland’s power sector with the aim of strengthening efficiency and lowering emissions."

The EBRD funding of PLN 566 million was equally divided into a loan of up to PLN 283 million (€69 million equivalent) to be taken on its own books. PLN 283 million was syndicated to Pekao S.A.. The European Investment Bank (EIB) will provide a parallel loan of up to PLN 566 million. The total project costs are estimated at around PLN 1.56 billion, with the remaining funding to be provided by the Sponsors.

Nandita Parshad, Director, Power and Energy Utilities said: “The Bank is proud to invest into the modernisation of Poland’s power sector with the aim of strengthening efficiency and lowering emissions. Replacement of old coal-fired generation units with a modern gas-fired unit allows an increase of combustion cycle efficiency, as well as significantly lowers CO2 and NOx emissions. In addition the project will reduce the Polish dependency on the coal-based power generation.”

The EBRD has been one of the most active investors in Poland in almost all sector of economy since 1991. To-date the Bank has invested EUR 6,046 million of its own funds in Poland for the total projects’ value of EUR 31,313. The energy sector is one of the Bank’s top priorities in Poland given the climate change challenges that the country is facing on its way to diversification of its energy mix and reduction of the CO2 emissions.


CFI.co Meets Asad Aziz Ahmed

[caption id="attachment_4094" align="alignright" width="227"] Asad Aziz Ahmed: Managing Director of Gulf African Bank, Kenya[/caption]

Mr Ahmed brings over 30 years of experience in banking, credit management and in formulating and managing strategic and operational change in financial institutions. He brings in-depth knowledge of strategy formulation and implementation, performance improvement initiatives and change management programmes. Mr Ahmed has held various senior management positions in the Middle East and Canada.

Joining Gulf African Bank from the global financial advisory firm, Alvarez and Marsal Ltd. where he was Managing Director and Head of Middle East, Mr Ahmed served earlier at National Bank of Fujairah as General Manager.

With a master's degree in business administration from Institute of Business Administration, Karachi, Pakistan, Asad Ahmed is also a Certified Public Accountant (CPA) from Illinois, USA, and a Certified Credit Professional (CCP) from the Credit Institute of Canada. He is a Fellow of the Institute of Canadian Bankers (FICB) and has a diploma from the Association of International Bond Dealers.

In addition to serving as Executive Director on the Board of Gulf African Bank, he is a Director of Nairobi Hospice and a member of the Governing Council of the Kenya Bankers’ Association.

Gulf African Highlights in 2012

CFI.co award winner: Best Islamic Bank, Kenya, 2012

May: As Kenya’s first fully Shari’ah compliant bank, Gulf African entered into partnership with Kenya School of Monetary Studies to support Islamic Banking training. As part of its corporate social investment, the Bank has volunteered some of its experts to teach at the college on a gratis basis, as well as offer internship to select students undertaking a Diploma in Islamic Banking. An annual prize for the best student in Islamic Banking diploma program has also been instituted by the Bank.

Asad Ahmed said at the time, “With the increase of Islamic banking evidenced by most commercial banks opening Islamic windows, it’s not easy to get the right human resources that really have a deeper understanding of Islamic finance. This poses a challenge where the need for training and development is constant. At Gulf African Bank, we strive to share Islamic finance knowledge and make Shari’ah banking accessible to all Kenyans as an alternative way of banking available to everyone. Since Islamic finance is knowledge based, sharing this knowledge is the key to growth”

July: Gulf African launched a new facility - totally dedicated to serving the needs of women by the women - called an Annisaa Centre.

“We believe that women need specialised banking services because of their unique roles in the society as wives, mothers, business women and career women. Our ladies only account seeks to satisfy the various needs of women with special benefits designed to fit their needs perfectly. At the launch of this account we promised to give holders innovative financial solutions and to continuously come up with new ways to deliver our services. This is an exclusive centre for the women by the women and it is one of a kind in the country. All personnel serving in this centre are women.’’ Mr Ahmed pointed out.

October: Gulf African Bank held a colourful ceremony on Tuesday, October 9, 2012 at Nairobi’s Norfolk Hotel to reward winners of the Deposit Mobilization Campaign – Inua Akiba Inua Jamii. Present at the event were Her Excellency the Tanzania High Commissioner, Dr. Batilda Burian, Deputy Head of Mission to Saudi Arabia, Mr Ibrahim Barnami, Consul General of the Cyprus High Commission Mr Larkos Theokli among other invited dignitaries. The Bank rewarded a total of 13 winners with cash prizes and ipads. The main prize was a trip for two to Hajj.

In his remarks, Mr Asad Ahmed said, “As part of our CSI initiative, the bank will donate Ksh. 200, 000 from the proceeds of this campaign to Mama Fatma Children’s Home. As a bank we believe in continued commitment to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. We respect cultural differences and find the business opportunities in building the skills of employees and the community. We will endeavour to identify programmes that are related and add value to the communities in which we operate and exist in while at the same time respecting the cultures of these communities, protecting the environment and strengthening the communities.”


GCC Eyes Fast Growth Africa

Sub-Saharan Africa has been experiencing strong growth in recent years, which is expected to continue. This boom creates an opportunity for GCC corporations and investors, according to Qatar National Bank Group, as the region is well endowed with resources and people, but largely lacks the capital needed to fund its development.

The IMF's latest World Economic Outlook forecasts that Sub-Saharan Africa will grow at a rate of 5.7% in 2013-18, which would make it the second fastest growing region after Developing Asia (largely driven by China). This compares with the 4.2% rate forecast for the MENA region. Growth prospects are also broad based across Africa-two thirds of the countries are forecast to grow faster than 5.0% in 2013-18 and all but two above 3.0%.

Africa's growth is mainly driven by a youthful population, which is growing at a rapid rate of 2.5% and becoming increasingly urban and middle class. Economic growth is also being supported by the expansion of mobile communications (nearing a 70% penetration rate) and improving transport infrastructure, much of it built with Chinese support. This is helping to harness Africa's resources which include metals and minerals, oil and agricultural products. The continent is also benefiting from the lowest level of conflict in decades and improving governance in several countries.

Out of the 45 countries in Sub-Saharan Africa, three-South Africa, Nigeria and Angola-represent about 60% of the region's US$1.3trn GDP, and so attract much of the attention from foreign investors. Also companies in South Africa and in the Maghreb, which have regional operations, can serve as routes for investment in the continent. The GCC has long established links with countries in the Horn of Africa and the Sahel, and is also increasingly connected with other parts of the continent.

"The IMF’s latest World Economic Outlook forecasts that Sub-Saharan Africa will grow at a rate of 5.7% in 2013-18."

Some of the countries experiencing the strongest growth in Africa are benefiting from the exploitation of their natural resources or are rebounding from a low base after a period of conflict. Both factors contributed to Angola's rise over the last decade and for similar reasons South Sudan, the newest and one of the poorest country on the continent, is expected to see 21% growth in 2013-18, as it restarts oil exports.

However, many of the continent's most dynamic economies have been driven by other factors. For example, Rwanda, one of the top 3 performers over the last six years with an 8.1% growth rate, has no oil resources and instead has attracted investment due to efforts at improving its business environment, which is now ranked third in the region and 52nd internationally by the World Bank.

Some GCC companies are already engaging in parts of Africa in sectors such as transport infrastructure, telecoms, real estate, banking and agriculture. The major GCC airlines operate flights across Africa, serving as a natural hub linking it with Asia. DP World has port operations in Senegal, Mozambique and Djibouti. In telecoms, Ooreedoo is bidding for a controlling stake in Maroc Telecom, which would also give it exposure to 13m customers across four Sub-Saharan countries where the firm operates. Etisalat already owns stakes in operators in Tanzania, Nigeria and other parts of West Africa. In real estate, Kingdom Holdings of Saudi Arabia, for example, owns hotels in Kenya, Zambia and Ghana.

In banking, QNB Group has branches in two Sub-Saharan countries, South Sudan and Mauritania (aside from its extensive presence in North Africa. Gulf investors have also taken stakes in various local banks, such as Istithmar in Kenya's shariah-compliant Gulf African Bank (a CFI Baking Awards winner). The 250m Muslims in Sub-Saharan Africa, 30% of the total population, are potential customers for both conventional and Islamic banking.

Agriculture is a particular area of interest to GCC investors, to support the Gulf's food security. The continent has large amounts of underutilised land, substantial water resources, and low yields on much of the land that is cultivated. In this context, well placed and socially responsible capital investment could boost productivity. At the same time research and cooperation on suitable crop varieties and cultivation techniques, such as that planned under the Qatari-led Global Dry Lands Alliance, could help farmers working marginal land.

QNB Group expects that Africa will continue to experience strong growth for many years ahead, gradually closing the income gap with wealthier regions. This will create further opportunities for GCC companies and investors.