Jamie Smith: Champion of Tech that Keeps Crypto Functioning was Once in the Doubters’ Camp Herself

[caption id="attachment_19853" align="alignright" width="300"] Jamie Smith: CEO of the Global Blockchain Business Council. Photo: Boris Baldinger[/caption]

Jamie Smith has great enthusiasm for blockchain, the secure distributed database technology that underlies cryptocurrency major players such as Bitcoin, Litecoin and Ethereum.

The former White House deputy press secretary has held senior communications positions in organisations such as the BitFury Group, the Linux Foundation and, more recently, WestExec Advisors. BitFury Group, a blockchain transaction processor, said on appointing Smith as global chief of communications that it looked forward “to telling the BitFury blockchain story to the world”.

At the 2018 World Economic Forum in Davos, Smith played a major role in promoting blockchain. She leads global initiatives designed to fundamentally change the way the global community does business, transfers value, and opens up new doors to prosperity. But Smith herself once had a poor understanding of blockchain.

After leaving the White House, and on maternity leave from a job in communications, she was approached by a former colleague who pitched the blockchain opportunity to her.

“I think I said something along the lines of, ‘Are you crazy? That’s criminal money, I don't want anything to do with this’,” she told the BBC.

Smith's initial concept of blockchain was that it was synonymous with Bitcoin, and in those early days Bitcoin was, for many, synonymous with crime. Further investigation brought home to her the true potential of the technology as an enabler of secure financial transactions – not just between major financial institutions, but between individuals.

“The original internet was created to move information, and it did. The information we send to each other, has to be actually stored somewhere, so it's stored in databases,” she said. At that time, security wasn’t the primary objective, and data began to accumulate in massive, silo-style databases.

“The problem is hackers are getting really good at getting into those silos, and once they are in, it’s party time.” If hackers gained access to one system, they had access to all. With blockchain, silos are broken up into a decentralised system. The technology results in a decentralised, immutable public record. The data (block) is stored in an indelible, append-only public database (chain).

“Instead of breaking into a house, now you have to break into a town or city full of houses,” she explained. And those hackers would have to break into every block in the entire chain — at exactly the same time.

Smith compares the evolution of blockchain to the evolution of the internet. Early adopters moved fast, as they tend to, and the general public has begun to understand the technology better — and to recognise its potential outside of the world of cryptocurrencies.

“Blockchain technology has the potential to make the world a more efficient, frictionless place. The amount of people around the world living in either broken systems or entirely corrupt systems is staggering. If done right, blockchain could positively reform entire systems.”

The technology has already been incorporated across applications and industries: music streaming services and licensing agreements, global supply chains, transactive energy platforms, health data management, product traceability, environmental footprint tracking, charity accountability, real estate record-keeping, pharmaceutical security, fraud-proof ticketing, smart contracts, secure document exchanges and peer-to-peer payments. And other markets are ripe for disruption.

Smith has two decades of communications experience and her previous posts include policy aide to Congresswoman Nita M Lowey and communications director for former Secretary of State Madeleine Albright. She was traveling press director for Hillary Clinton.

As a member of the World Economic Forum’s Global Future Council, she has helped to shape the narrative around blockchain technology and create a roadmap for its use.

“There is so much opportunity to enhance global expansion, make businesses more profitable and ensure that every individual around the world can profit as well,” she says. “There is a huge trickle-up and -down impact. If we get it right.”


Nepal SBI Bank Ltd (NSBL): The Most Preferred Bank for a Transforming Nepal

Nepal SBI Bank Ltd (NSBL) was established in July 1993 and has emerged as one of the leading banks in the country.

It has 977 skilled and dedicated local employees spread across 118 outlets. The network consists of 88 branches, 19 extension counters, three branchless banking outlets, seven provincial offices and a corporate office.

NSBL also has a fully owned merchant banking subsidiary, Nepal SBI Merchant Banking Ltd (NSMBL).

[caption id="attachment_19866" align="aligncenter" width="413"] Dipak Kumar De[/caption]

Mr. Dipak Kumar De, General Manager of State Bank of India (SBI), is currently the Managing Director & Chief Executive Officer of Nepal SBI Bank Ltd. (NSBL).

As Head of the Management team, Mr. De is responsible for ensuring qualitative growth in business, improvement in efficiency parameters and enhancement of stakeholder value at NSBL.

Mr. De started his career in 1995 as a Probationary Officer in SBI and has held diverse portfolios, including Banking Operations, Branch Management, Credit Analyst, Trade Finance, International Banking, Transaction Banking, etc.

During his 25 year career with State Bank of India, he has held several important positions: Assistant Manager (Trade Finance) at Antwerp, Belgium, Manager & Credit Analyst at MCG; Branch Manager of 4 different Branches; Head (New Business) at SBI DFHI Ltd. (a subsidiary of SBI). He has also been Vice President (Credit & OPS.) in Paris, Regional Manager in Kolkata and DGM (D&TB-CAG) at Corporate Centre, Mumbai.

Mr. De is the Administrative Head of NSBL, deputed under the Technical Services Agreement between NSBL and its foreign joint venture partner SBI. He holds a Master's Degree in Science, Post Graduate in Executive Management Program (SPJIMR). He is also holder of Diploma in International Banking & Finance, Diploma in French Language, Diploma in Computer Application & COBOL.

Mr. De is a Certified Associate of Indian Institute of Bankers (CAIIB) and also a Certified Anti-Money Laundering Specialist (CAMS). He is an alumnus of prestigious S.P. Jain Institute of Management & Research (SPJIMR).

[caption id="attachment_19863" align="aligncenter" width="346"] Md. Rizwan Alam[/caption]

Md. Rizwan Alam, Deputy General Manager of State Bank of India (SBI), is the Deputy CEO & Chief Financial Officer of NSBL.

As Dy. CEO & CFO, Mr. Rizwan Alam is responsible for developing and overseeing aggregate Business Plan, Business Operations, Treasury Operations, Credit Operations and assists the Managing Director in identifying new opportunities, drafting prospective programmatic budget and determining cost-effectiveness of prospective service delivery.

Mr. Rizwan Alam started his career in 1997 as a Probationary Officer in SBI and has held diverse portfolios including Banking Operations, Branch Management, Credit Analyst, Trade Finance, Treasury Operations, International Banking, etc.

During his 23 year career with State Bank of India, he has held several important positions viz. Credit Analyst at Commercial Branch-Ahmedabad; Dy. Manager (Credit Division) of Branch;  Branch Manager of  3 different Branches; Dealer (Forex & Derivatives) / Manager(Forex) at Global Markets; Chief Manager at Regional Business Office and AGM & faculty (Credit and International Banking) at the State Bank Institute of Credit & Risk management, Gurgaon.

Md. Rizwan Alam holds a Master’s Degree in Science and has completed CAIIB from the Indian Institute of Banking & Finance (IIBF). He also holds Diploma in Computer Applications, Moody’s Certificate in Commercial Credit, Certified Credit Officer by IIBF, Certificates in International Trade Finance, Foreign Exchange Operations, MSME Finance, Micro Finance, NPA Resolution, AML & Know Your Customer, Digital Banking, IT Security, Prevention of Cyber Crime & Fraud Management and Certified Information System Banker. He is also the director of the Board of Nepal SBI Merchant Banking Ltd., a wholly owned subsidiary of NSBL.

[caption id="attachment_19864" align="aligncenter" width="376"] Yadvender Kant[/caption]

Mr. Yadvender Kant, Assistant General Manager of the State Bank of India (SBI), is the Chief Operating Officer at NSBL.

As COO, Mr. Kant is responsible for overseeing the overall operations of the bank and ensuring the efficient working of various verticals and departments that ensure profitability.

Mr. Kant started his career as probationary officer at the State Bank of India in 2001 and has held diverse roles during his 19 year career there. They include Regional Manager of the Mohali Region, Chief Manager (private secretary to chief general manager, Chandigarh Circle). He has also been Chief Manager of the Ladwa District, Kurukshetra.

Mr. Yadvender Kant holds a Master’s in Business Administration (MBA) and has completed a CAIIB from the Indian Institute of Banking & Finance (IIBF). He also has a Post Graduate Diploma in Financial Advising, has certification in Trade Finance, Anti Money Laundering and Know Your Customer, as well as microfinance and IT security. He is also the Chairman of Nepal SBI Merchant Banking Ltd., a wholly owned subsidiary of NSBL.


Investment House: Team Efforts Bring Qatari Company to the Fore, with Rewards, Awards, and Exciting Plans for the Future

Qatar-based Investment House recently celebrated its 20ᵗʰ anniversary – with a flurry of awards.

[caption id="attachment_19870" align="aligncenter" width="900"] Qatar: Doha[/caption]

The criteria for recognition included financial stability, profitability, continuous growth, assets quality, compliance with regulations and Shariah rules – in addition to a significant increase in customer base.

Investment House was acquired in late 2018 by a group of Qatari businessmen with a shared vision. The injection of capital and fresh blood went hand-in-hand with the introduction of modern business strategies, allied to opportunities in the Qatari wealth management market.

It also helped Investment House to overcome market competition. The company provides its clients with investment opportunities that seek to maximise value and minimise risk.

Investment House chairman and managing director, Mohammed Bin Ahmed Al Suwaidi, said the awards came as the company was contributing to the economic renaissance of the Qatari economy. These efforts were supported by the country’s emir, His Highness Sheikh Tamim bin Hamad al-Thani.

Suwaidi pointed out that public recognition was an indicator that the company was on-track to meet its goal of serving its customers, the nation, and society.

The awards – including two from the CFI.co judging panel – put extra responsibility on the company “to enhance, develop and innovate the business”.

“We will continue to apply the tactics and strategies which have proved a success since the acquisition of the company in late 2018,” he said.

[caption id="attachment_19871" align="aligncenter" width="900"] Chairman & Managing Director: Mohammed Bin Ahmed Al Suwaidi[/caption]

Yousef Abdullah Al Subeai, CEO, said Investment House demonstrated an efficient team effort, and the value of the company’s investment approach in the fields of asset management and investment banking. “The awards make us proud,” he said. “We’re grateful to our customers, and appreciate their trust in us.” He was happy with the validation of the company's investment solutions “that have succeeded in meeting the individual requirements for lots of customers”.

Investment House is a provider of comprehensive services related to investment and wealth management, including IPO, M&A, and private equity services, as well as real estate investments and financial advisory. Also in the frame are asset management services such as founding and managing funds and investment portfolios, and trading in international markets.

Investment House provides financial planning for individual and corporate clients through its qualified team of advisors and financial planning managers. They recommend suitable investment products that meet clients’ needs in terms of targeted return, investment period – while considering individual risk tolerance.

The solutions and services provided by Investment House are designed to guide customers towards profitability over the long term. The team has extensive experience in the investment field, as shown by a successful track record. The team distinguished itself with a range of products and investment solutions offered to the Qatari market since its acquisition in 2018. These have attracted individual and institutional clients and increased AUM by more than 600 percent in the past two years.

Investment house has developed a range of solutions related to logistics services on maritime transport, where it has acquired 10 vessels. The company has also made strategic alliances to provide investment opportunities in the European real estate sector, particularly in France and Germany.

In addition, Investment House is braced for the future; it has promising local and international investment solutions planned for the year ahead.


Always Adapting Skilfully to Change: BAWAG Group Strategy Brings Success Before and During Covid Year

BAWAG Group AG is a publicly listed holding company headquartered in Vienna, serving 2.3m retail, small business, corporate and public sector customers across Austria, Germany, Switzerland, the Netherlands and other developed markets. The Group operates under various brands and across multiple channels offering comprehensive savings, payment, lending, leasing, investment, building society, factoring and insurance products and services. Delivering simple, transparent, and reliable financial products and services that address customer needs is the clear strategy across the group.

BAWAG Group’s business model is based on the following strategic pillars:

Growing in its Core Markets

The group’s foundation is Austria with a focus on the DACH/NL region and developed markets

The objective is to grow profitably into current account market share entitlement in Austria and address the significant market opportunities in retail products across the DACH/NL region

Organic growth drivers: partnerships & platforms, enhancing digital engagement and growing its share of wallet of 2.3 million customers

Inorganic growth drivers: pursuing earnings-accretive M&A meeting group RoTCE targets of at least 15%

Focus on Customer-Centricity

Build multi-channel and multi-brand franchise from branches-to-partners-to-platforms-to-digital products

Physical network focused on high-touch and high-quality advisory

Leverage technology to simplify processes and reduce complexity

Enhance analytical capabilities to improve customer experience

New partnerships and lending platforms to provide 24/7 customer access

Drive Efficiency Through Operational Excellence

Focus on the things that can be controlled through “self-help” management is part of the group DNA

Simplify, standardise, and automate product offerings across all channels

Create simple end-to-end processes across the Bank

Continuously optimise processes, footprint, and technology infrastructure

Embrace various forms of technological change and invest judiciously in technology

Maintaining a Safe and Secure Risk Profile

Maintaining a strong capital position, stable retail deposits and low risk profile

Focus on mature, developed, and sustainable markets

Applying conservative and disciplined underwriting in markets that are understood with focus on secured lending

Maintain fortress balance sheet

Proactively manage and mitigate non-financial risk

BAWAG Group’s Response to the COVID-19 Pandemic

BAWAG Group entered this health crisis from a position of strength, having transformed the business over the years to withstand economic downturns. The group has strong capital levels, solid funding and liquidity, and an efficient platform that generated mid-teen returns pre-COVID. This allowed BAWAG to play its part in supporting customers and local communities, protect its franchise and continue to grow the business. The events of the past year will forever change how BAWAG operates.

Services to customers: The entire branch network remained open in 2020. Customer service centers, such as call centres, maintained full capacity throughout the pandemic and provided “take care calls” with useful and proactive information for customers. In addition, the digital banking teams simplified processes by creating online application forms allowing retail & SME customers to request payment holidays and allowing SME customers to easily access government-guaranteed lending programmes.

Social initiatives: A total of €40,000 was raised via BAWAG P.S.K.'s crowdfunding.at platform for projects with a COVID-19 focus. In addition, €150,000 was donated for school support for children in poverty.

COVID-19 bonus for employees: BAWAG Group has paid out a special COVID-19 bonus of €300 to all active employees in recognition of their special commitment during the challenging months of the crisis. Employees in branch sales who had worked during the first lockdown had already received a bonus in the summer.

Strategic Highlights

Further simplification of operations: A concerted effort was made to centralise and enhance operations, which will ultimately result in greater simplification:

Merger of easybank with BAWAG P.S.K.: The merger was successfully completed in 2020. This strategic step pursues the goal of simplifying the existing participation structure and at the same time maintaining and further developing easybank as an independent brand.

Merger of SÜDWESTBANK with BAWAG P.S.K.: This was successfully completed in February 2021. Sales activities and client service in Germany continue with the Südwestbank brand, but under the license of BAWAG P.S.K.

Additionally, a decision was made to consolidate domestic and international retail & SME businesses, to drive greater simplification and standardisation across the business.

Digital Banking Strategy

The banking industry across Europe continues to undergo a significant transformation and still faces multiple headwinds driven by subdued economic growth, continued negative interest rates, broken cost structures, over-leveraged balance sheets, pricing pressure, increased regulatory costs, and sub-par technology. The focus on efficiency and driving operational excellence is part of BAWAG Group’s DNA. Customers are looking for a more rewarding and engaging experience with targeted products and services while having 24/7 access to manage their financial lives. BAWAG aims to fulfill these needs and to better leverage new and existing technologies to enhance the overall customer experience. Thus, the group is building a multi-channel and multi-brand Retail & SME franchise from branches-to-partners-to-brokers-to-platforms leveraging digital products and technology across its entire customer value chain.

Example of digital SME product innovation:easybank has recently made it possible to open business checking accounts for SMEs of the most diverse legal forms within a maximum of 15 minutes and in a purely digital manner. It is not necessary to upload additional documents.

Newly launched online trading product family: In April 2020, easybank launched the new easybroker product family and completely restructured its online trading. For the first time in Austria, easybroker products make it possible to conduct online trading without incurring expenses for your own bank. Thus, easybank demonstrates its commitment to affordable and clear investment products and broad access to the capital market for its customers.

Updates of digital banking apps: In 2020, BAWAG P.S.K.’s klar and easybank digital banking apps were again continuously expanded and improved. This year, customers were offered a total of 14 updates with improvements and added functions. In total, more than 7.6m transfers have been made for a total of nearly €3bn, through the klar and easybank apps to date.

 Corporate Social Responsibility: A commitment to responsible and profitable growth reflecting ESG considerations

For BAWAG Group, acting sustainably means managing the balance between economic success through pursuing a low-risk, efficient, simple and transparent business model honouring the principles of this strategy paper – and embracing ecological and social objectives. Fundamental cornerstones of the BAWAGs sustainability strategy are the human rights, the 10 Principles of the UN Global Compact, the seven UN Global Compact Women’s Empowerment Principles and the 17 UN Sustainable Development Goals. Some highlights of 2020 are:

Sustainable investments share doubled within a year: In 2020, 22% of the Amundi fund volume from BAWAG P.S.K. and easybank customers went into sustainability funds. As of December 31, 2020, the share of customer investments in Amundi sustainability funds in the total portfolio of BAWAG P.S.K. and easybank was 8%. Within one year, this share has doubled. In addition, the “Amundi Ethik Fonds” was the top-selling fund in the retail segment for the first-time last year.

Reduction of CO2emissions: As a result of the continued push to switch to green energy suppliers at all BAWAG Group locations and the reduction in business travel, the group’s greenhouse gas emissions have been cut by almost half compared to 2019.

ESG is embedded into the strategic roadmap: For the upcoming years, BAWAG Group has set numerous ESG goals to contribute to a sustainable future, e.g. the reduction of own Scope 1 and Scope 2 CO2emissions mid-term, the introduction of lending criteria and exclusion criteria for specific industries (successfully completed in April 2021), the issuance of a green bond (subject to market conditions), and the switch to 100% green electricity mid-term.


Texans Sports Star JJ Watt has Acumen, Altruism, and Ability

[caption id="attachment_20035" align="alignright" width="300"] Photo by Mark Brown/Getty Images[/caption]

American football was all abuzz wondering where celebrated NFL free-agent Justin James “JJ” Watt would end up after negotiating his release from the Houston Texans.

Watt had a decade-long career in Texas, winning over fans on and off the field. They were broken-hearted to lose Watt — but Cardinals’ fans are delighted that he has chosen to make his nest in Arizona.

Watt explains how he converted his dream of NFL stardom into a reality. He broke down that giant, moon-shot goal by first studying former achievers and using their stats as a guideline. Then, he put in the hard work to reach nearly superhuman size, strength and speed.

But the Wisconsin-native is admired for more than his brute strength and broad shoulders; he also has sharp business skills and a big heart.

Watt, three-time defensive player of the year, received a flood of $99 donations to his namesake foundation during his short two-week span as a free agent. (Watt wore the number 99 jersey with the Texans.)

“Presumably attempts at bribes, judging by the messages attached with some,” he joked. “Kids all over the country will benefit from your generosity. I’m truly thankful.”

The defensive end established the Justin J Watt Foundation in 2010. The foundation’s motto — dream big, work hard — is a reflection of his personal story. “Success isn't owned,” he says. “It's leased; and rent is due every day.”

His foundation has made hundreds of small-scale donations, most in the $1,000 -$5,000 range, to support after-school athletic programmes in 500 schools and 36 states. It organises an annual charity football game that has raised some $5.4m since 2013.

When Hurricane Harvey hit in 2017, Watt took to social media to drum-up support for those affected. He set a modest crowdfunding goal of $200,000 — and raked in more than $41.6m. The fund has helped to rebuild 1,183 homes and 971 childcare centres in Houston, according to Sports Illustrated, which named Watt as its Sportsman of the Year in 2017.

Watt keeps an active social profile, providing millions of followers on Facebook and Twitter with a carefully curated glimpse into his life. “I think he could write a book on how to present yourself on social media,” said Brad Arnett, who has trained Watt ever since he switched from hockey to football at age 15.

“I know that my parents read social media, I know that my grandma sees my social media, and I know that there's a whole bunch of kids out there that see my social media,” Watt says. “So every single time that I post something, I read it over and over and over again, from everybody's perspective — from my grandma’s perspective to a little fifth-grader's perspective, to a parent's perspective, to my teammates' perspective, coaches, everybody. Just reading it over can make you re-think everything. There are plenty of tweets I don't send. A lot of 'em hit the chopping block.”

Watt applies this same disciplined focus to everything he does. He subjects himself to a gruelling routine to stay in top form and endeavours to learn something from every experience and encounter.

As a charismatic man with lots of moolah, Watt gets plenty of invitations to hang out with A-list celebrities and business leaders from a wide range of backgrounds.

“We definitely talk about things career-wise — how do you handle it; how do you get to be where you are?” Watt shared via NFL News. “I love learning about other industries. And obviously I can't use everything in my own life, but I try and learn from it and say, OK, what can I use here, how can I apply this?”

Watt has picked up some shrewd negotiating skills. He signed a $100m six-year contract with the Texans in 2014, which included $51.9m in guaranteed base pay, a $10m signing bonus and an annual salary of around $16m. His Cardinals’ contract is for two years and $31m, with $23m fully guaranteed.

Watt has supplemented his sizable earnings with an impressive array of endorsement deals: Gatorade, Reebok, Verizon, Ford, HEB Grocery, NRG Energy, Papa John’s, American Family Insurance, Bose, Yahoo! and Fantasy Football.

Watt is married to fellow professional athlete Kealia Ohai, who plays soccer for the Chicago Red Stars of the NWSL and the US Women's National Team.


BancSabadell d’Andorra: Top Performing Funds for a Sustainable and Innovative Future

[caption id="attachment_20061" align="alignright" width="300"] Miquel Alabern, chairman, and Sandra Estebe, head of the group's management company.[/caption]

The bank’s ability to continuously improve its investment fund offerings is exemplary. And innovation at BancSabadell d’Andorra is always accompanied by rigorous management based on prudence and effective risk control, under the highest ethical and professional standards.

Launched in 2020, the BSA Sustainable Future Fund (the first under Andorran law) focuses on investments selected according to Environmental, Social and Governance (ESG) criteria.

In the same year, BancSabadell d'Andorra also offered retail investors its BSA New Technologies Fund, which achieved a yield of 27.95% in only half a year of operations (from 17 June).

Finally, in May 2021, the bank brought to market its new BSA Asia Fund, which selects companies and countries across the continent that are expected to perform well over the next five to ten years.

BancSabadell d'Andorra's asset management company is led by Sandra Estebe and has a very stable and cohesive team with more than 15 years’ experience. It currently manages 549 million euros and, during the past three years, has increased investment funds under management by more than 8%. It markets and manages a wide range of funds and investment companies, which currently include a total of 27 FIMs (13 available to all types of investors and the remainder to the more experienced) and nine SICAVs.

In recent years, BancSabadell d'Andorra has mainly made sectoral or thematic investments such as those focused on technological development, climate change and socio-demographic change, which anticipate a transformation of society and generate significant investment opportunities. These structural mega trends stand out for their growth potential and allow customers to invest in the long term across geographics and sectors.

BancSabadell d'Andorra’s asset management company was named as a CFI.co 2021 award winner and declared Best Asset Management Solutions Andorra.


A Man for All Seasons and All Reasons: NBE Governor Takes Bank to the Forefront

[caption id="attachment_20064" align="alignright" width="300"] Governor of Ethiopia’s Central Bank: Yinager Dessie. Photo: © Mustafa Kamaci/Getty Images[/caption]

Yinager Dessie is the governor of the National Bank of Ethiopia (NBE), an institution entrusted with maintaining price stability, ensuring sound financial system and facilitating economic growth in the country.

Dessie has diverse expertise in policy-design and implementation at regional and federal government structures. His solid academic credentials and hands-on experience in financial sector operations have equipped him to shoulder the duties and responsibilities of heading the country’s central bank.

The NBE is one of the key macro-institutions steering overall socio-economic growth and management. After acquiring his first degree in economics in Ethiopia, he received a second from the International Institute of Social Studies in the Netherlands — and a third from the University of National Resources and Life Sciences in Vienna.

Dessie has received training in various areas from Harvard University, Yale University, the London School of Economics and Wales University. Before becoming the NBE governor, he was minister at the National Planning Commission, guiding the macro-economic management of the nation.

He participates in the NBE Board of Directors, the Macro-Economic Team presided by HE Abiy Ahmed, the Prime Minister of Ethiopia. He is vice-chairman of the National Financial Inclusion Council, and board chairman and board member of various public institutions and public-private partnerships.

Since his appointment as governor in 2018, the NBE has seen various transformative measures which have impacted the country’s financial sector development, macro-economic stability and growth and foreign exchange management. Despite external and internal challenges, including the emergence of the pandemic, the country’s economy has continued its growth trajectory.

The financial sector has outpaced the challenges of Covid-19, expanded and remained stable. In collaboration with key stakeholders, under his guidance and close supervision, the demonetisation process which began in September 2020 was successfully completed. It has resulted in increased financial inclusion, intermediation and financial resource mobilisation through the banking system.

Under Yinager Dessie’s guidance and supervision, over 1000 dedicated employees and managers have been doing their best to enhance the bank’s efficacy and improve its service delivery. The application of incentive packages and capacity-building initiatives has helped to attract and retain professionals and attain the stated goals and strategic objectives of the bank.

The operational independence accorded to the bank, and its accountability to the highest government authority, has helped the NBE to forge ahead with its reform agenda over the past three years — and it aims to deliver more in the years to come.


National Bank of Ethiopia (NBE): Putting the Central Bank at the True Centre of Economic Revival

[caption id="attachment_20067" align="alignright" width="300"] National Bank of Ethiopia[/caption]

The National Bank of Ethiopia has, since its establishment in 1963, done its utmost to remain a valid entity dedicated to the inclusive socio-economic development of Ethiopia, and a trusted partner in the bid for world development and prosperity.

The NBE, throughout its history, has navigated varying economic systems, challenges and opportunities to remain true to its vision, mission and objectives. Particularly during the last decade, it has contributed to rapid and sustained double-digit economic growth, macro-economic stability, and poverty reduction.

It has achieved this by adhering to its vision of becoming one of the strongest and most reputable central banks in Africa. It has also remained faithful to its mission of maintaining price- and exchange rate stability, fostering a sound financial system and creating an environment conducive to economic growth.

As a result, Ethiopia enjoyed six percent economic growth in 2019/20 against a backdrop of the pandemic, which disrupted socio-economic ecosystems worldwide. Developing countries, such as Ethiopia, have been hit hard, but its economy is projected to grow by about 8.5 percent in 2020/21. Despite inflationary pressure, largely arising from food prices, per-capita income is expected to increase along with other development indicators.

The Ethiopian financial system has continued to show robust expansion, growth and stability aided by reform measures undertaken over the past three years. The three-year IMF programme arrangement under the Extended Credit Facility and an arrangement under the Extended Fund Facility form part of its reform program.

"Particularly during the last decade, it has contributed to rapid and sustained double-digit economic growth, macro-economic stability, and poverty reduction."

With the implementation of the ambitious three-year Home Grown Economic Reform Plan and the introduction of the 10-year perspective plan, Ethiopia is poised for remarkable growth, despite external and internal challenges.

The economic reform plan focuses on addressing imbalances and rebalancing growth. It has three main pillars. They deal with macroeconomic and financial sector reforms to correct foreign exchange imbalances, control inflation, safeguard financial stability and ensure debt sustainability; structural reforms to ease institutional and structural bottlenecks to productivity and job creation; and sectoral reforms to address institutional and market failures in key strategic sectors.

As part of this reform agenda, and in-line with the IMF programme, NBE has begun undertaking far-reaching reform measures to bring about fundamental changes to its operational modalities and policy deliverables as indicated in its core mandates.

The NBE is in the process of realising the establishment of a capital market after long years of hiatus, which is expected to open broad vistas for market, based inclusive economic growth, investment, savings, and technological transformation. It has begun operationalising a new monetary policy framework which will enable it to use and expand the mix of its policy tools kit to achieve its stated vision, mission and objectives.

Over the past two years, the bank has issued and/or harmonized dozens of directives and proclamations pertaining to financial sector development, access to finance and financial inclusion, foreign exchange management, external sector development, transfers and remittances as well as international reserve management, payments systems and other policy measures that would enhance FDI and employment.

Directives for the introduction of open market operations and standing facilities have been issued. Development of financial markets has also been given emphasis by setting infrastructure and strengthening the legal framework for financial transaction and development of interbank money markets.

In response to the pandemic, the NBE has used innovative ways of mitigating the negative impacts on businesses, investment, employment and economic activities. The bank provided lines of credit to commercial banks to bolster their liquidity and to provide and restructure loans, and eased some of the stringent regulatory and supervisory provisions. These measures have helped the country’s economy to ride on a sustained growth trajectory with minimum loss of employment.

The NBE undertook a demonetisation process late in September 2020 which brought remarkable changes in financial intermediation, financial inclusion and the savings culture of society. As a result of this and related measures such as limiting cash holding and cash withdrawal limits, there has been a significant increase in deposit accounts and savings in formal financial institutions.

Accordingly, over 7.2 million new deposit accounts were opened with more than Birr110.8bn in new deposits. The demonetisation process has also helped to fight against illicit transfers, tax fraud and tax evasion as well as cross-border contraband trade and anti-money-laundering practices.

The National Bank of Ethiopia is undertaking capacity building initiatives to attract and retain its highly valued professionals with a view of achieving its core mandates as a modern and technology-driven, proactive central bank. It highly values its partnership with the major development partners, including the IMF, the World Bank and its correspondent banks, and will continue to work in a collaborative spirit. The bank continues to act independently with a view of effectively discharging its duties and responsibilities — and to contribute to Ethiopia’s sustained socio-economic development.


Evan Harvey, Nasdaq - SPACs and ESG: Convergence or Collision?

The capital markets love nothing more than a new idea, especially one that promises to reward a little due diligence with a lot of return. The idea of ESG (environmental, social, and governance) has tantalised investors in this way. According to the Forum for Sustainable and Responsible Investment, ESG investing is now a $17T market in the U.S. alone, up 42% over the last two years. But there is another, even newer idea on the horizon—Special Purpose Acquisition Companies, or SPACs—and its relationship with ESG investors may run both hot and cold.

It may appear that I am blending two entirely different phenomena in this analysis. ESG is about performance measurement, tangible and intangible value creation, leveraging new signals to find an investible (and sustainable) edge. The practice requires an enlightened investment philosophy, or at least a willingness to evaluate and model new data. SPACs, on the other hand, are mere forms. A SPAC serves as a shell company with only one real goal: “raising money through an IPO to eventually acquire another company” (CNBC, 30 Jan 2021).

The SPAC form – sometimes called a “blank check” company – has been around for almost thirty years, but rarely listed on major exchanges or brought to market by bulge-bracket firms. But in the last 12 months, “more than 700 SPACs have flocked to New York exchanges, seeking to raise about $227B” (Bloomberg, 25 Mar 2021).

[In the interests of full disclosure, I should mention that Nasdaq has been a leading exchange in this space for more than a decade. In 2020, 71% of all U.S. business combinations – including Opendoor, DraftKings, and Luminar Technologies—made their debut on our market. In fact, Nasdaq continues to advocate for rule changes that would provide more opportunity and governance for SPAC listings.]

"The SPAC form – sometimes called a “blank check” company – has been around for almost thirty years, but rarely listed on major exchanges or brought to market by bulge-bracket firms."

How does this listing form affect ESG-minded investors? On the plus side, “more than 20 SPACs have launched with environmental, social and governance principles in the past year, raising more than $5 billion through their IPOs” (Pitchbook, 16 Feb 2021). This serves a vital need in the market, because the demand for ESG-themed investments has outpaced the supply of ESG-positive public companies. And the boom has driven attention to some very ESG-friendly businesses, especially in the electric vehicle (EV) sector.

By some estimates, more than twenty EV SPACs came to market in 2020 alone. If you add up the IPO valuations and related PE rounds for those deals, that indicates a capital raise of $10B. Some of the most prominent brands in last year’s flurry include Nikola (EV and alt-fuel heavy duty trucks), Fisker (EV SUVs), XL Fleet (traditional fleet transformation and EV retrofitting) and Canoo (EVs built on skateboard engineering). But many EV-adjacent companies have also generated deals – battery makers, fuel cell innovators, charging infrastructure builders – leading to an industry transformation.

In terms of the climate crisis, this transformation may be right on time. Despite the modest environmental gains brought about by the lockdown and a limiting of climate destruction, the planet is still in dire shape. Over the last year, atmospheric emissions from travel and transportation were dramatically reduced, air and water quality was (at least marginally) improved, and yet “it merely slowed the accumulation of carbon in the atmosphere, leaving the world on course for more than 3.2C of warming by the end of this century (The Guardian, 29 Dec 2020). That would mean catastrophic sea rise, climate migration, weather instability, social and economic disruption – in short, a much more unpleasant (if not unsustainable) planet.

New investment and R&D in a field that directly addresses our climate imperatives is much needed. And there are good reasons why EV deals seem lately to be so popular. The SPAC structure itself can offer EV founders more efficient access to capital and the ability to build value. In a rapidly developing sector, this process moves much faster than it does on the PE side; the timeline from IPO to M&A is typically less than 24 months.

Lower interest rates tend to promote more investor appetite for risk and high-growth potential targets. In a world where electrification is commonly assumed to be necessary and immediate, EVs fit that bill. Because of the high-capital, high-competition environment that venture EV makers face, SPACs provide a vital channel for more of them to actually get to market.

Many SPAC filings specifically cite ESG dynamics as a business driver, well beyond the EV space – public benefit companies, social enterprises, projects based on specific diversity or inclusion targets. Demand is outpacing supply for these companies, too. But SPACs cannot specifically identify a future acquisition target at the time of the IPO, so ESG-focused investors must take some of this on faith. Without any data-driven proof points for investors to assess the ESG worthiness of the (actual, eventual) company, will they be willing to provide capital at the same level?

SPAC investors do have some safeguards, however. Regulations regarding the governance of transparency of SPAC listings is continuing to evolve. The theme, strategic intent, leadership history and sponsor qualities associated with a SPAC project can be assessed. Investors can also exit the deal if they don’t like the eventual acquisition target – so they would get their money back, if not their time.

Despite these concerns, alt-fuel innovation is an inevitable part of our environmental destiny. Businesses must not only manage their own resources efficiently and responsibly, but also seek new ways to reduce the global burden. Many argue that capital markets provide the only ecosystem that has the power and reach to actually address climate change – an existential threat to economic self-determination. And it may well prove that “the rise of SPACs is a capital markets innovation that matches the urgency and scope of our global sustainability challenges” (GreenBiz, 18 Feb 2021).

About the Author

Evan Harvey is the Global Head of Sustainability for Nasdaq. He also serves on the Board of Directors for the UNGC Network USA and the Global Sustainability Standards Board for the GRI.


Banking CEOs Tell IBM What is Essential In A Post-Pandemic Reality

[caption id="attachment_20094" align="alignright" width="300"] Paolo Sironi[/caption]

“Uncertainty is the new normal” as reminded by Kristalina Georgieva, chairperson of the IMF, during her CNN interview in late 2019. The pandemic outbreak has been the most unfortunate realisation of this awareness. Growing uncertainty has been affecting people’s health and job safety. A globalised society was forced into periodic and geographical lockdowns. The value chains of interconnected businesses were suddenly disrupted. At the same time, the planet continuous to face an existential threat due to protracted environmental damage.

The last year has been a moment to take stock in an entirely new way. Whether COVID-19 impacts subside from here or persist, 2020 served as a dramatic inflection point. Never before has the entire planet reconfigured its behavior simultaneously, participating in lockdowns, quarantines, and enforced social distancing. For businesses and governments, the implications have been extreme, with assumptions and plans radically altered. From Asia to the Americas, the status quo has evaporated both within and across industries. The future is murkier than ever - yet presents both new opportunities and new risks.

To better understand this singular moment, the IBM Institute for Business Value (IBV) launched its most extensive Chief Executive Officer (CEO) research project ever. Building on almost 20 years of C-suite studies, the IBV gathered insights from more than 3,000 CEOs and the most senior public sector leaders across the economy and around the world, supplementing its own deep expertise with that of Oxford Economics, a leader in global forecasting and quantitative analysis. In addition, IBV hand-selected two dozen CEOs for extensive, exclusive interviews that delve into the mindsets, themes, and challenges that top leaders are grappling with right now.

What was learned is truly insightful. From emerging expectations around remote work to accelerated technological adoption, the leading practices of yesterday and requirements of tomorrow are far from aligned. The central, overarching question of this new era: what will it take to be essential - to customers, employees, community, and investors? The participating CEOs emphasized almost uniformly that focusing on the sharpest edge of their businesses, what differentiates their organizations and delivers the most value, has become the overarching imperative. Out of the chaos has come clarity: get rid of diversions and indulgences, root out “tradition for tradition’s sake,” and exploit distinctive advantages. This applies externally, in products and services, as well as internally. Who is essential to your organisation, and what is essential to the operation of your business? The IBV conversation with global CEOs also unveiled that a retrenchment - focusing on the basics - may be equally as important as we move beyond the COVID disruption into whatever comes next.

Almost 300 CEOs of banking and financial market institutions participated to the 2021 CEO Study. In particular, CEO Piyush Gupta of Singapore-based DBS Bank explained IBM that “If you can embrace agile setups, experiments, and constantly nurture a learning culture, then you become adaptive and nimble, which means you can respond a lot more quickly to opportunity and changes in the environment.” Looking ahead, banking CEOs recognize like never before the importance of purposefully preparing for changes -whether driven by competition, government, or external events - and having an infrastructure that can adjust rapidly. The challenge often lies in identifying the clear impact of agile initiatives, while in some cases, even “agile chaos” has resulted. Therefore, agile ways of working need to be more purposeful. They should include a clear focus on business outcomes and guidelines that indicate where innovation will lead to essential next-level advantages - so that agile initiatives result in material, valuable changes and real-world impact.

Banking and financial market CEOs revealed to IBM where they are focusing their thinking and decision-making going forward, which can be summarized into a set of top concerns, the identification of business priorities to face these concerns, and the clear awareness of business and technology enablers to gain effective agility operating under growing uncertainty.

First, bank CEOs recognise they must continue to deal with the pandemic fall-out as economies open up. Strategic business decisions are informed by changed market reality and macroeconomic conditions especially in Europe and North America. On the one side, there is not yet clear evidence about how much damaged was done into the economy and the resilience of businesses and families. On the other side, accelerated digital competition and broader adaptation of society to mobile interactions is reshaping market reality, and exposing traditional institutions to the need of adjusting their business models faster than ever to the digitisation of financial services. At the same time, CEOs across Asia are paying renewed attention to recent regulatory intervention at the intersection between business and technology, as epitomised by People’s Bank of China call to ring-fence the scope and breadth of fintech innovation by suspending Ant Group’s IPO in late 2020.

Second, bank CEOs reflected on what it takes to address uncertain market and macro-economic conditions. They clearly indicated the necessity to develop and strengthen the ecosystem of partners to access new banking and non-banking capabilities “as a service” faster and cheaper on hybrid cloud platforms. Opening the innovation box to the cloud-based contribution of partners and complementors becomes business critical to gain speed, while staying adaptive and nimble.

Third, they identified the need for resolution of emerging cyber risks as a key business enabler to tackle the challenges of accelerated digital adaptation, remote working, and borderless interactions. As banks open their technology and business borders, the recent wave of ransomware attacks to adjacent industries reveals that the “security entity” is not the firm anymore because cybersecurity spans outside bank borders into the ecosystem of partners. Therefore, bank CDOs do recognise that cybersecurity solutions are clear business enablers, and that protecting the weakest link in the ecosystem is crucial to fast-track trusted innovation on cloud platforms, competing and successfully addressing the growing uncertainty of market and macro-economic conditions.

Finding what‘s essential - the sharp edge of the knife for an enterprise - this is the priority. Transformation is never complete, especially for an ambitious company committed to avoiding complacency and any self-delusion that its market position is automatically secure. “You are not going to be perfect,” says Fernando González of CEMEX to IBM. “Part of the investment is not going to pay off. But it doesn’t matter. You try to understand what is not working properly, you stop doing that, and you focus on what you think can really pay off.”

Access the 2021 CEO Study and more IBV research on IBM.com/IBV

About the Author

Paolo Sironi is the Global Research Leader in Banking and Financial Markets at IBM, Institute for Business Value. He is senior advisor for selected global accounts, assisting service teams in Board-level and C-level conversations about business model adaptation in platform economies. Paolo founded the German start-up Capitects, then acquired by IBM, and directed the quantitative risk management department of Banca Intesa Sanpaolo. He is one of the most respected Fintech voices worldwide and co-hosts the European edition of Breaking Banks podcast. He is celebrated book author on digital transformation, quantitative finance and economics, and keynote speaker at major international events.

Website: thePSironi.com


CORDET: A Year Like No Other – Success Through Resilience and Momentum

While the world has witnessed huge dislocation and financial instability following the global pandemic, CORDET has demonstrated unique resilience and momentum, strengthening its reputation as a leading alternative credit investor. It has completed 31 new transactions since March 2020, providing tailored support and flexible financing solutions to new and existing borrowers.

The CORDET Mission is to offer commitment beyond credit, enabling transformational growth in Northern-European mid-market businesses, and delivering attractive risk-adjusted returns for its investors.

Success Through Resilience

COVID has highlighted the growing need of smaller mid-market companies for alternative financing solutions, because the crisis accelerated the retrenchment of banks from this segment of the market. CORDET provides support to these smaller companies, with a focus on the UK and Ireland, Nordics, DACH and Benelux. It invests exclusively within its circle of competence in sectors where it has extensive knowledge and experience, and the resilience of CORDET’s strategy has been confirmed by its consistently strong performance. The team has so far successfully completed more than 75 transactions with a gross debt value of more than €1.0bn.

CORDET has gone above and beyond expectations to support its existing portfolio companies and drive growth, which has involved providing waivers and extending additional facilities to portfolio companies where capital was required. To date, none of these facilities have been drawn upon as a result of COVID-19 impact, clearly reflecting the strong financial health of CORDET’s portfolio companies. Notable examples of CORDET’s bespoke and solutions-driven approach during this challenging period include the introduction of a revolver to a PE-owned portfolio company in June last year to ensure that the company has a liquidity solution in place for potential investment requirements when business resumes post international lockdowns.

“It has never been more important to maintain a clear focus on responsible investment considerations to protect and nurture portfolio companies, as well as identify new opportunities. CORDET is uniquely positioned to support long-term value creation in the smaller mid-market by filling the gap left by banks and traditional credit providers and providing flexible financing solutions with an entrepreneurial and partner-driven relationship approach.”

- Magnus Lindquist Co-Managing Partner

CORDET’s decision-making processes, guidelines and principles provide a strong framework to ensure responsible investment. CORDET believes it is crucial to understand the environmental, social and governance (ESG) aspects of the businesses in which it invests and appreciate that these aspects represent instrumental elements of long-term value creation. CORDET has been a signatory to the United Nations Principles for Responsible Investment since 2014, receiving a consistently strong rating of A and A+, and has taken significant steps over the past twelve months to advance its responsible investment agenda and demonstrate its long-term commitment to ESG. In November 2020, CORDET announced that it provided financing to support the acquisition of Biototal AB, a niche Swedish circular waste solutions business, by a Swedish PE firm. This investment is an excellent example of CORDET’s investment strategy in action, with Biototal benefitting from non-cyclical supply-demand dynamics proven to be insulated from the pandemic, as well as benefitting from structural ESG trends from increasing demand for sustainable agriculture and circular waste solutions.

Success Through Momentum

CORDET has demonstrated its “all-weather” investor approach over the past couple of years, consistently investing in new deals both in the benign environment pre-pandemic and in the current period of heightened uncertainty. While some lenders focused solely on their existing portfolios, CORDET has closed 27 transactions with new borrowers since March 2020, all with COVID-resilient business models. CORDET has therefore maintained momentum and demonstrated that it is resolutely supportive of borrowers across its target geographics and is capable of capitalising on new opportunities to enable transformational growth.

[caption id="attachment_20107" align="aligncenter" width="587"] Recent Sample Transactions[/caption]

In total, CORDET has executed 31 new transactions since March 2020 across four existing borrowers and eight new borrowers, representing total committed capital of c. €217m (primarily to finance new acquisitions, growth capex and add-on acquisitions). All these transactions were closed following the onset of the pandemic, and CORDET believes this demonstrates an unprecedented level of investment activity, capability and flexibility.

The team also completed the standout exit of CSAM, a leading provider of niche eHealth solutions in the Nordics, which conducted an IPO in October 2020. As an alternative credit investor, CORDET has been instrumental in CSAM's growth story by supporting the company on four separate add-on acquisitions, with the investment providing a strong overall return to Fund I. In June 2021, the team secured the exit of Nordax, a €22.4m loan to a leading Nordic specialist bank. The repayment came on the back of the sponsor, Nordic Capital, and Nordax raising a large publicly listed bond to finance a contemplated acquisition.

CORDET has also maintained momentum through its ongoing fundraising and team development. In addition to its continually active deployment and pipeline, CORDET has managed an efficient and disciplined fundraising for Fund II, which has attracted high-quality institutional investors despite the difficult fundraising environment. The CORDET team has gone from strength to strength following its recent expansion, which has included developing its separate operations team and bringing additional services in-house such as loan administration and bookkeeping on special purpose vehicles. CORDET has demonstrated its ability to grow as well as fully institutionalise as a business, and this has unlocked an additional resilience and capability while offering a better service at a lower cost for CORDET’s investors and partners.

[caption id="attachment_20109" align="aligncenter" width="274"] George Velikov: Recognised as one of the Private Debt Investor's "Rising Stars" for 2020[/caption]

CORDET is passionate about developing its junior and mid-level investment professionals and promoting a diverse, inclusive, and supportive culture where talented individuals can thrive. This has been recognised recently, with Rebecca Fels and George Velikov being recognised by leading industry award bodies.

[caption id="attachment_20110" align="aligncenter" width="279"] Rebecca Fels: "Investment Leader of the Year Sweden" at the Finance Monthly Women in Finance Awards 2020[/caption]

CORDET’s management style is progressive and nurturing, with twice-weekly round table meetings where everyone is invited to contribute. These are important factors for maintaining team cohesion and participation as the company continues to grow and develop as a leading alternative credit investor in its target markets.


Ørsted: Danish Power Company Driving the World’s Carbon-Neutral Bus

Danish multinational Ørsted has in a 10-year span gone from one of Europe’s most fossil-fuel-intensive utilities to the world’s most sustainable energy company.

The Ørsted story began in 1973, when Denmark moved to strengthen national energy independence by extracting oil and natural gas from the North Sea. The state-owned company was originally called Danish Oil and Natural Gas, also known as DONG.

Ørsted’s transition from black to green energy began within its first couple decades of operation — and it continues to gain momentum. It pioneered the world’s first offshore wind farms in the early ‘90s and has since pushed its portfolio to an increasing share of renewables.

Ørsted decided to rebrand in 2006 to reflect its ambitious vision of powering the whole world with green energy. The company immediately began to turn lofty intentions into decisive action. From 2006 to 2020, Ørsted reduced its carbon emissions by 87 percent and increased its share of renewable energy from 17 to 90 percent. It has invested more than $30bn since 2010 to bolster renewable energy assets and will invest another $31.5bn exclusively in green energy over the next four years.

In a press release in January 2020, Henrik Poulsen, Ørsted’s former CEO, announced the company’s ambitious plan to become carbon-neutral by 2025. “We’ve come very far in reducing our emissions,” he said, “and Ørsted is more than two decades ahead of what is required by science to limit global warming to 1.5°C. Halting climate change requires action at all levels of society, and we need that action now. Especially within production and use of energy, which account for 73 percent of all global emissions.

“We’ve transformed from producing energy based on fossil fuels to producing carbon-neutral energy. We’ve seen a real strengthening of our business and shown that a rapid green turnaround is possible.”

Poulsen hopes that the company’s transformational journey can serve as inspiration for countries or businesses seeking radical systemic change. “It’ll be challenging to reach a carbon neutral footprint by 2040, and it’ll require significant innovation in all parts of our supply chain. Many of the green technologies to be used to decarbonise our supply chain exist, but they’re not yet cost-competitive. With the 2040 target, we want to help drive the necessary innovation forward to mature the green technologies in the industries that supply to us.”

After eight years at the helm, Poulsen has stepped down, leaving the carbon-cutting targets to his successor, Mads Nipper.

Nipper spent over two decades working his way through the ranks at the LEGO Group, from media consultant to chief marketing officer and a member of the management board. Poulsen had also worked with LEGO prior to Ørsted.

Nipper left the toys behind to become the CEO of Grundfos, a global leader in advanced pump solutions. Grundfos’ share price more than doubled during his tenure — reversing an inherited trend of declining profitability — and the company got a boost in green credentials as well.

“Anchored in a clear sustainability vision, Mads has led a highly successful transformation of Grundfos over the past six years that has reinforced the company’s position in an increasingly competitive market, while also strengthening financial performance,” said Thomas Thune Andersen, chair of Ørsted’s board of directors. “With his deep commitment to sustainability and the green agenda, his strong personal leadership, extensive CEO experience and his distinguished track record in leading global companies, the board is confident that Mads Nipper is the right person to lead Ørsted in the next phase of our exciting journey.”

Nipper jumped at the chance to get more directly involved in the fight against climate change, which he believes is the world’s most pressing challenge.

“As one of the five largest renewable energy companies in the world and with a clear ambition to be a leader in the global energy transformation, Ørsted is in a unique position to make a difference in the fight against climate change,” he said. “I’m very excited to join the team and to continue Ørsted’s successful journey to become one of the future global leaders in renewable energy.”

While the new CEO may lack energy-sector experience, he makes up for it in passion, drive and commitment. Nipper aims to supercharge green transformations by levering the group’s capabilities and knowledge to accelerate climate protection. “We aspire to be one of the true catalysts of systemic change to a greener society, by continuing to prove that there is no long-term trade-off between sustainability and financial value creation.”

The company makes a strong case: it’s on-track to become the world’s first major energy company to reach net-zero emissions, while providing investors with industry-leading returns. Ørsted has more than quadrupled its market capitalisation since its IPO launch five years ago.

The company’s strong performance has garnered well-deserved praise. At the start of the year, it was named by Corporate Knights as the most sustainable energy company and second-most sustainable company across sectors in the 2021 Global 100 index. CDP, a non-profit organisation that rates companies on their climate disclosure, has also awarded Ørsted top marks.

“Every company must transition to a sustainable business model to contribute to the fight against climate change — and to stay in business,” Nipper said. “The Ørsted transformation is not a ‘one size fits all’, and our learnings may not be applicable in all companies, but I hope that by sharing our learnings and insights on how we’ve been able to transform and perform at the same time, we can help inspire other companies to engage in a faster green transformation.”

Ørsted has expanded the scope and detail of its sustainability reports to encourage knowledge exchange and dialogue. It urges consumers to become climate activists and help protect our only home by increasing the demand for renewable energy on power grids — and putting pressure on politicians and businesses to get cracking on green energy technology.


PwC - Nigeria’s Local Government System: Challenges and Opportunities Abound

[caption id="attachment_14974" align="alignright" width="300"] Author: Folajimi Akinla[/caption]

To most Nigerians, June 12, 1993 — Democracy Day — is a date that brings bitter-sweet memories.

It is remembered as the date when, after 14 years of military rule, Nigerians participated in what are, to date, regarded as the most free and fair presidential elections ever conducted in the country.

Unfortunately, the results of that election were annulled, and the country was plunged back into another six years of military rule.

This year’s Democracy Day was marked by pockets of peaceful demonstrations across the states of the Federation. Citizens’ frus-trations stem from rising insecurity, food inflation, pervasive corruption in the public sector, a recent ban on micro-blogging site Twitter and poor governance across all the levels of government. Most citizens believe all three levels of government — federal, state and local — have performed below par. In recent times, there has been more focus on the role local govern-ments can play as the closest government to the people.

Origins and Current Legal Framework

Ironically, the idea of the local government system is to bring the government close to the people. Nigeria’s local government system can be traced to the Native Authority Ordinance of 1916, which was passed by the British colonial government to lever-age the existing traditional administrative systems in different areas now known as Nigeria.

Though resisted by the Eastern and Western regions for being undemocratic as it did not fit well with the traditional adminis-trative system in those regions, the Ordinance remained in force until the 1946 Richard Constitution, which introduced new regional assemblies.

"There is also a grave concern relating to the calibre of people elected as chairmen and officers of local government councils."

In 1950, the Local Government Ordinance was passed. This introduced democratic values. It also marked the beginning of fed-eral and regional dominance over local government administration, which was evident throughout colonial rule and has en-dured through the post-colonial era to contemporary Nigeria.

The current local government system can be traced to the 1976 and 1988 reforms. Currently, there are 768 Local Government Areas (LGA) and six Area Councils in Nigeria making a total of 774 LGAs across the states in the federation. Though local gov-ernments are a creation of state legislation (which define the structure, finance and composition of the areas), the National Assembly must make consequential provisions to the Constitution before any new local government is recognised.

Funding, Functions and Powers

Nigeria operates a revenue-sharing system where the federal government allocates funds from the Federation Account to the three tiers of government. Section 162 (5) provides that amounts standing to the credit of the local government shall be allo-cated to the States for the benefit of the local governments. Sub-section (6) provides that each state shall maintain a “State Joint Local Government Account” into which shall be paid all allocations from the Federation Account as well as all funds from the state governments.

Local governments do not determine what amounts are allocated to them. The House of Assembly of each state has responsibil-ity for determining the statutory allocation of public revenue to the local government councils within the states.

The implication is that the local governments do not have direct access to funds accruing to them from the Federation Account since the funds are held in trust by the state governments who determine how much, and when, the funds will be disbursed to the local governments.

The functions of local governments are set out in the Fourth Schedule to the Constitution. The functions are straightforward and generally devoid of complexities. The functions include consideration and making recommendations on economic devel-opment of states, construction and maintenance of roads, streets, street lightings, drains and other public highways, provision and maintenance of primary, adult and vocational education, development of agriculture and natural resources (except exploi-tation of minerals), and the provision and maintenance of health services.

In addition, local governments have powers to make-over bylaws and impose tax on all areas within their remit (television and radio licenses, cemeteries, burial grounds, outdoor advertising, sewage and refusal disposals).

Criticism

Many Nigerians feel detached from the government. If the idea of the local government system is to bring the government close to the people then the system is not working fulfilling its primary objective. Hardly do local governments construct roads in Nigeria. At best, local governments apply coal tar or gravel to make the surface of roads motorable. The same applies to streetlights; over 90 percent of roads are poorly lit. In the few instances where the streetlights can be found, the materials used are usually sub-standard.

In the few instances that local governments have completed projects such as public libraries, slaughterhouses, places of voca-tional learning and so on, these initiatives are usually always run-down due to a poor maintenance culture.

With respect to the local governments’ revenue-generating powers, most residents claim to be overburdened by multiple taxes and levies imposed by various local government agents and officers.

According to the Lagos State Inland Revenue Service’s (LIRS) — the tax authority of Nigeria’s economic hub) — website, local governments are authorised to collect 21 taxes and levies including shops, kiosks, markets, signboard, advertisement, vehicle radio, television and radio licences and rates.

Similarly, according to a recent study conducted by PwC on the average cost of compliance for micro, small and medium Scale Enterprises (MSMEs) doing business in Nigeria, 51 percent of respondents in Abuja and Lagos claim that they pay (28 percent) or sometimes (23 percent) pay unofficial levies or fees to the local governments. These unofficial fees are estimated to be some-times as high as 10 times the official rates.

There are also concerns of a lack of transparency by the local governments on how funds collected are applied. According to one respondent, “Local government does not have published information on fee expectations, they knock on door and bring outrageous fees”.

In the same survey, 31 percent and 29 percent of respondents in Lagos and Abuja respectively claim that they do not know what the fees are for. In many instances the local government officers do not issue receipts. There is no central database where local governments publish their annual budgets.

There is also a grave concern relating to the calibre of people elected as chairmen and officers of local government councils. The criteria for qualification into local government council offices is set rather low. To be eligible to contest as a chairman, a person need only be educated up to at least secondary school level. It is interesting to note that the criteria do not require the person to pass or successfully conclude the school certificate examinations. Because of this, many of the aspirants are unen-lightened and are in some cases political thugs used by politicians during elections. The character of some of those elected or appointed as local government council chairs is questionable.

Challenges

Most of the challenges faced by local governments stem from lack of autonomy. Ideally, each tier of government ought to be independent and should be allowed to carry out their constitutional functions free from any form of restriction.

On their part, local governments argue that, by virtue of their set-up, they are not autonomous in areas of finance and opera-tions. Many local government councils claim that funds which should, by the constitution, accrue to them are withheld by their respective state governments. As a result, local governments are hampered from carrying out their constitutional roles.

Interference by State Governments

In many instances, state governments have refused to conduct local government elections into the local government councils. Instead, state governments, as political favours, appoint acquaintances and party loyalists as caretakers. This has eroded whatev-er semblance of a merit-based system a democratic process would have provided.

Some states have even gone as far as dissolving local government councils because the councillors were elected on the plat-form of a different political party. In one state, the governor, without adhering to due process, dissolved the local government councils of 148 local governments. Though the Supreme Court deprecated this action, it is often the case where state gover-nors use the local government system to further their personal gains.

As a result, the local governments operate at the whims and caprices of the state governors who use them as an extension of their rule in a state.

No Political Autonomy

The constitution does not adequately provide for the structure of local government system. Rather, state governments are vested with power to determine things such as tenure, elections, composition of the local government councils. This subjects the local government system to the control of the state governments and does not encourage uniform development across the federation.

Recommendations

To restore the trust of citizens in the local government system, the existing laws — for example, the constitution — must be amended to give financial autonomy to local governments. Centrally allocated funds should go directly to the local govern-ments instead of through the states. The existing anti-graft agencies can investigate and prosecute officers for any misappropria-tion of such funds.

The minimum qualification to run for office into the local government must be reviewed. The bar must be raised. Setting a minimum standard of having a university degree does not guarantee success, but it helps to weed-out political thugs and mis-creants.

State governments should play supervisory roles and must not usurp or dictate the day-to-day operations of their local govern-ments. State governors can also cause to be prosecuted any officer indicted for misappropriation of state funds given to the local governments.

State governors should be barred from interfering in local governments, especially where the officers are elected on the plat-form of a political party that differs from the governor’s party. Where possible, such interference must be penalised by law following a verdict of a competent court.

With respect to elections, residents of local government areas must be given powers to remove elected officers by way of a referendum on specific grounds set out by law.

Local governments must not only be mandated by law to publish revenue and expenditure. Failure to do so should come with penalties. There must be more transparency in relation to the levies imposed.


Poland Closes the Gap and Calms Covid Jitters with a Bold Programme of Reform

[caption id="attachment_20130" align="alignright" width="300"] Poland: Warsaw[/caption]

The pandemic has brought an end to its 30 years of GDP growth for Poland — but this should be seen as an interruption rather than a break.

Poland does it again. Since Solidarity brought the end of communist control, the country has been the poster child for economic growth in Central Europe.

Some have described it as a miracle. Poland is forecast to return to growth this year and next. It should finally catch up with its western neighbours.

The country’s economy has weathered the crisis well, with real GDP falling -2.7 percent in 2020 compared to -6.6 percent for the Euro Area. This was the first time in three decades that annual GDP fell. It was also the first time in 19 years that Poland had a recession. Growth is expected to rebound to 3.5 percent in 2021 and 4.5 percent in 2022 (IMF).

This resilience is due in part to the mild first wave of Covid, and severe but sharp second and third waves. Poland was quick to impose strict measures in each case, but equally quick to remove them. With the first wave, Poland imposed public restrictions on March 10, 2020, but began to lift them on April 20 as part of a four-stage plan. That was reached on May 30 and most things were open by September 18. After the first wave, Poland applied a regional approach that provided greater flexibility.

"Internally, the market reforms started to dismantle the central planning model and bureaucracy."

Vaccinations have also been picking up speed. This did not start until December 23, but as of early May tallied 13.8m doses with around 9.7 percent of the population immunised. This is a similar percentage to Germany (9.4 percent) and Ireland (10.2 percent).

The government also responded to the crisis with measures equivalent to more than 13 percent of GDP in the first wave alone. This included wage subsidies, microloans for entrepreneurs, a liquidity program for businesses, and an increase in unemployment benefits.

Poland’s economic reforms over the past 30 years helped the economy’s pandemic recovery. It is a highly diversified free-market economy with a strong services, manufacturing, and agricultural sectors.

Back in 1989, its current economic strength was the stuff of dreams. Solidarity had won a partially free election, but there was much work to do.

Under Soviet Russia’s partial control, it transformed from an agrarian to an industrial economy. Mining, shipbuilding, and steel became key industries.

But by the late 1980s, economic conditions were bleak. Industrial production began to decrease in the late 1970s despite continuing capital accumulation and investment in foreign technology. Living standards fell while the government’s deficit and foreign debt increased. The government responded by printing money; hyperinflation ensued, reaching 30 percent per month by late 1989. The economic situation was unsustainable.

On top of this, Poles had to line up for food and goods due to general shortages. The service and consumer goods sectors were underdeveloped. Unsurprisingly, the period was punctuated by strikes and unrest. In this turmoil, Solidarity was able to gain power. “Socialism never fulfilled its promise of prosperity,” says Polish economist Leszek Balcerowicz.

The new government opted for economic shock therapy under the auspices of Jeffrey Sachs. Deputy Prime Minister Leszek Balcerowicz was a willing disciple. As a professor from the Warsaw School of Economics, he devised a plan of fiscal discipline, currency stability, monetary control, and rapid market reforms. The goal was to emulate the western-European economic model and to converge to their living standards.

Internally, the market reforms started to dismantle the central planning model and bureaucracy. Price controls and subsidies were removed, and new commercial laws and institutions were created. Some state-owned enterprises were privatised.

Externally, the economy was opened to trade, investment, foreign competition, and new technology. Sachs believed that speed was critical for Poland to be at the front of the line for western investors.

At first, the free-market medicine was bitter. Real GDP decreased by -7.2 percent in 1990 and -1 percent in 1991. Unemployment also increased. Inflation took time to slow down, reaching 586 percent in 1990. The removal of price subsidies was also unpopular.

But the economy soon stabilised and began to grow. In 1992, real GDP grew by two percent. Between 1993 and 2019, it averaged 4.2 percent. Poland even escaped recession during the 2008-09 debt crisis. Over the same period, the Euro Area averaged 1.6 percent. Underpinning the growth has been an increase in productivity and consumption.

Even more impressive were the rapid structural changes in the economy. Entrepreneurial spirits burst forth. Private businesses sprang up everywhere, particularly in the service sector. By 1994, over two-thirds of the workforce was working in the private sector. On the other side, heavy industry continued to decline and many SOEs closed.

Multinational companies also began investing in Poland. They recognised its domestic market potential and its strategic position in central-eastern Europe. Poland quickly became part of the global value chain.

Joining the EU in 2014, was a further boon to investment, trade, and growth. Poland joined the OECD in 1996 and was reclassified as a High-Income Country by the World Bank in the mid-2000s.

Some commentators point to the underperformance of the gradualist approach in other former Iron Curtain countries such as Romania and Bulgaria. They also point to the initial chaos and oligarchic state-capture in Russia.

The Balcerowicz Plan was controversial when introduced and remains that way. While there were clear winners, namely a new entrepreneurial class, older workers and unskilled workers suffered. It is important to note that economic growth has been relatively evenly shared in Poland. The percentage of the population living under the poverty index of $10 per day has halved since 2005. Over the same period, income inequality as measured by the Gini index has also fallen. Contrast this with increasing inequality in many western countries.

Education levels continue to improve. Poland’s PISA results for 2018 were above the OECD average. The number of Poles with university degrees doubled between 2004 and 2018 and is now at a similar level to Germany.

Poland must continue its strong growth to realise its dream of catching its western neighbours. It increased from nine percent of the Euro Area’s GDP per capita in 1990 to 40 percent in 2019. In contrast, Russia went from 18 percent in 1990 to 30 percent in 2019.

Areas where Poland can continue to make progress include increased R&D expenditure. Poland’s expenditure on R&D has increased from 0.64 percent in 2000 to 1.32 percent in 2019. But it remains below the OECD average of 2.5 percent.

Business conditions could be improved. While Poland ranks first in trading across borders in the World Bank’s 2020 Doing Business report, it is 128th for starting a business and 77th in paying taxes.

The good news is that these and other similar areas are easier to improve than the reforms made in the 1990s. Poland has come a long way and has a long way to go — but the gap is closing.

By Brendan Filipovski


Home REIT: Home Is Where The Heart Is: Helping Vulnerable Britons Find Shelter — and a Future

Home REIT Plc (Home) is a real estate investment trust listed on the premium segment of the UK Listing Authority.

It was admitted to trading on the main market for listed securities of the London Stock Exchange in October 2020. Since its IPO, Home has delivered over 3,400 beds across more than 620 high quality, fit-for-purpose homeless accommodation properties. Home works with local authorities, charities and housing associations to create safe, targeted and tailored new residential supply to meet a critical social need.

Home is dedicated to tackling homelessness in the UK and targets a wide range of sub-sectors, including women fleeing domestic abuse, people leaving prison, individuals suffering from mental health or drug / alcohol issues and leaving foster care.

In an effort to end the homelessness cycle, Home puts a particular focus on ensuring operators offer training and rehabilitation in its properties. The aim is to provide individuals with the skills and confidence to find long-term accommodation and reintegrate into society.

To provide security of tenure for the charities that operate the homes — as well as security of income and low cost of debt for investors — Home acquires only assets let or pre-let to reliable tenants on long leases. Those leases are typically 20 to 30 years to expiry or first break, with affordable rents that are index-linked, or feature fixed uplifts.

Government funding for each resident generally represents the full cost of care and housing. It is paid via the Department of Work and Pensions to the relevant local authority, which then passes funds directly to the company's charity association tenants.

Home is targeting 7.5 a percent plus per annum total net return. An inaugural dividend of 0.83pps has been paid, and the company is on track to deliver its 2.5pps first year dividend, in line with the objectives set out at the IPO.

The fundamentals driving the continued growth and performance of Home are:

The critical need for further accommodation due to an increasing number of homeless people and a lack of affordable, fit-for-purpose homes.

The statutory duties (Housing [Homeless Persons] Act 1977, Housing Act 1996, Homelessness Act 2002 and Homelessness Reduction Act 2017) placed on local authorities to secure accommodation for people who are unintentionally homeless and in priority need. They must also provide meaningful help to any person who is homeless, or at risk of becoming homeless, irrespective of any priority need status.

The increasing unsustainable cost borne by local authorities in providing accommodation to the homeless. The severe shortage of fit-for-purpose housing means that local authorities are often compelled to house individuals in bed and breakfast hotels and guesthouses. These are significantly more expensive than the expected cost of housing an individual in one of Home’s properties, and do not provide the appropriate facilities or long-term support.

The Investment Adviser and the AIFM are wholly owned subsidiaries of Alvarium Investments Ltd. Alvarium Investments was established in 2009 and has grown to become an international multi-family office and asset manager. It manages assets worth in excess of $18bn (including $10bn of real estate assets) for families, individuals and institutions. It has more than 200 employees and 10 offices around the world.

The Investment Adviser comprises property, legal and finance professionals with experience in the real estate sector. The team has capitalised and transacted more than £1.5bn of property assets, with a focus on accessing secure, long-let and index-linked UK real estate through forward funding and built-asset structures.

The core management team of the Investment Adviser:

[caption id="attachment_20133" align="aligncenter" width="279"] Jamie Beale: Partner/Fund Manager[/caption]

Jamie Beale has significant experience in public and private real estate markets, specialising in the long income, social housing and forward-funding commercial space.

Prior to joining Alvarium, he spent six years in the City of London as a real estate lawyer where he acted for leading developers and property funds on a variety of deals, from large-scale residential developments to commercial property transactions.

Beale co-founded LXI REIT, a FTSE 250-listed commercial real estate fund and a private social impact real estate fund in 2018, which has grown to become one of the largest social impact funds in Europe.

[caption id="attachment_20134" align="aligncenter" width="274"] Gareth Jones: Partner/CFO[/caption]

Gareth Jones has been active in various disciplines across the UK equities and fund management market for 10 years. He began his career as a chartered accountant with Ernst & Young.

Having acted as a CFO for public and private companies, Jones went into fund management in 2014, overseeing the finance function for a newly established social housing private equity fund. Prior to joining Alvarium in 2018, he was a director at Civitas Housing Advisors, investment adviser to Civitas Social Housing Plc.

[caption id="attachment_20135" align="aligncenter" width="275"] Charlotte Fletcher: Partner/Head of Transactions[/caption]

Charlotte Fletcher is a qualified solicitor with responsibility for managing and implementing transactions. Prior to joining the team, Charlotte trained and practised within the commercial real estate team at Travers Smith LLP, where she advised property funds, developers and lenders on a range of matters, including commercial and residential development and forward funding, acquisitions and disposal, re-financing, and landlord and tenant work.


BlueRock Group: As Solid as a Rock and Building a Reputation for the Right Reasons

Zurich-based real estate investment boutique BlueRock Group is one of the lucky few to weather with pandemic with poise and profit.

It not only kept up its investment pace, it has grown in recent months despite widespread uncertainty. The economic crisis has not touched the BlueRock portfolio to any significant degree. Returns have not been affected, and office space has seen no considerable vacancy or implications on rental income. When the occasional problem did pop up, the asset management team was able to find satisfying solutions for both tenant and investor. One such solution was lowering rent for a period of time in exchange for an extended tenancy agreement, increasing the value and sustainability of the investments.

The Business Development department did notice a deceleration of the overall real estate market, as could be expected. Nevertheless, the BlueRock Group has been busy finding new investment opportunities, defying the curbing market pace, and improving its investor experience.

Various internal readjustments and standardisations have resulted in an even more coherent representation of the group, and have shown further development potential sooner than anticipated. A new business analyst, as well as the expansion of the corporate services department, facilitated a flowing transaction process.
In keeping with BlueRock’s long-standing experience, two office buildings were added in a deal that was closed in June. The recently renovated properties, with a letting area of around 15,000sqm, are situated in the popular office location of Eschborn, a sub-market of Frankfurt. The Grade A office buildings have an 85 percent occupancy rate and BlueRock plans to use its know-how and the expertise of the asset management team to fully lease the vacant space within six to eight months. Even though the recent “home office” trend acts as a deterrent to some investors, BlueRock strongly believes in its newly acquired deal and is convinced that it will be able to deliver on business plan predictions.

Research shows that the Eschborn vacancy rate for Grade A buildings are at just seven percent, and are highly sought-after. It should be added that the top rent in the Frankfurt sub-market is at €23-25 per sqm, while the average rent of the new BlueRock project rests well below this, and is greatly under-rented.

Since winning the award for Best Boutique Real Estate Investment Solutions DACH in 2020, the BlueRock Group has developed and is executing a new strategy in the Berlin residential market. By being active in the German capital since 2015, BlueRock has become expert at locating and realising the potential in the residential market, specifically with multi-family houses. Berlin is still greatly undervalued compared to its German and European peer cities, even though it has excellent systematic fundamentals, plus a thriving and continuously growing economy.

It notoriously lacks more than 200,000 residential units and has, in the past 10 years, produced a house price appreciation of 20.4 percent per annum — with no signs of slowing down. A lag in construction is reinforcing the high demand for housing units. The recent commotion concerning the Berlin Rent Cap added an interesting twist to the market, as it kept some major players out of Berlin while it lasted. Thanks to a superb network and a strong local team, BlueRock has been able to build a substantial seed portfolio of multi-family houses in the centre of Berlin, at unbeatable

purchase prices that average €2,500 per sqm. The median purchase prices in Berlin are almost double that. With this carefully planned strategy, the investment boutique is pursuing a major value-adding angle, and plans to add living space such as side-wings and penthouses. It is also undertaking long overdue refurbishments of the existing area. BlueRock Group is the only firm in the market with such a product in its portfolio. A unique investment opportunity was realised during the time of the tough rent-cap regulation, when others were not ready to take the risk or do the intensive ground work of buying single assets.

This presents a major advantage for the Swiss firm and its clients. BlueRock Group intends to greatly expand the seed-portfolio, and envisions a scale-up of some €300m in value for this strategy. The residential sector has been majorly expanded within the group and should accompany BlueRock and its investors for many years to come.

The Berlin portfolio is a great example of what BlueRock Group truly stands for. Investors can be assured that every detail of the deal, no matter how small, has been scrutinised and weighed against set investment principles — without compromise. Taking the best-in-class approach on every level facilitates the best outcome and security. Strict due diligence and stringent investment benchmarks are never relinquished. As managing partner Ronny Pifko says, “I cannot guarantee you an outcome, but I can guarantee that I have done my utmost for you.” The high rate of returning investors as well as the addition of various institutional class investors confirm this statement and substantiate the high level of client service and transparency.

Positioning itself as a boutique investment firm perfectly explains the way BlueRock works. The group knows what its investors are looking for and can answer their ambitious demands. From the first approach of a potential investor to the last distribution after closing, there is full transparency and consideration towards different expectations. An investment product will only be presented when all possible questions or deviations have been explored and potential risks responded to. During the investment period, quarterly reports are a given, and any concerns or special interests during investment term are being dealt with directly, discreetly and in a service-orientated manner.