State Investment Corporation Ltd (SIC): Mauritian Investment Body Has Country’s Best Interests in Mind

[caption id="attachment_21032" align="alignright" width="300"] Chairman: Jairaj Sonoo - C.S.K[/caption]

The State Investment Corporation Ltd (SIC) — the investment arm of the government of Mauritius — was founded in 1984 with the objective of funding high-growth entrepreneurial ventures and helping businesses to industry-leading positions.

SIC has proven itself a valuable partner for local and foreign entrepreneurs and owns a diversified investment portfolio which has seen continuous growth to be worth $176.7m (as at December 31, 2020).

The SIC is structured into three main business clusters: gaming, property, and portfolio management. As an apex body, it is supported by key subsidiary companies:

• Capital Asset Management Ltd (CAM)
Asset and fund manager CAM provides asset allocation advice, equity and fixed-income portfolio construction. Its services include the development of strategies for local and foreign markets and private equity appraisal.

• Prime Partners Ltd (PPL)
PPL provides a range of corporate services to the SIC Group of Companies and to some state-owned enterprises, including insurance, banking and financial institutions. Services include corporate secretarial, accounting, and share registry.

• SIC Development Co Ltd (SICDC)
SICDC is responsible for channelling funding through a line of credit from the EXIM Bank of India to public sector entities in Mauritius for major infrastructure projects, the Metro transport system and social housing among them.

[caption id="attachment_21033" align="alignleft" width="300"] Managing Director: Goolabchund Goburdhun - G.O.S.K.[/caption]

As the investment arm of the government, SIC supports entrepreneurship in impact projects. In this process, it works with three organisations:

(i) Development Bank of Mauritius Ltd (DBM)
The bank has been at the forefront of socio-economic development by providing finance to micro, small and medium enterprises (MSMEs) through tailor-made products and industrial space to entrepreneurs setting-up their enterprises.

(ii) Investment Support Programme (ISP) Ltd
This is wholly government-owned. It devises financial schemes to provide leasing and factoring facilities to micro-entities, SMEs and Mid-Market Enterprises (MMEs). It also provides corporate guarantee facilities secured by SIC.

(iii) SME Equity Fund Limited (SEF)
The objective of the SME Equity Fund is to provide equity and quasi-equity financing to local companies. The SEF invests in start-ups, expansion projects, and new lines of business. SEF comprises of shareholders (including SIC) from the public and banking institutions in the ratio 57.5 percent:42.5 percent.

The Context of Covid-19

Following the outbreak, the government of Mauritius sponsored several support measures for impacted entities, including loans and leases at preferential rates to SMEs, equity/quasi equity, and corporate guarantee to banks — across all economic sectors.

In this respect, SIC, DBM, SEF and ISP have agreed to operate a one-stop cell (guichet unique) to receive and process applications for financial support. These state-owned entities operate in synergy and have leveraged advanced IT technology and platforms to enable the timely processing of applications from date of submission to approval, as well as subsequent performance monitoring.

The Way Forward

State Investment Corporation Ltd is committed to maintain leadership, empowerment, and employee engagement at all levels to sustain growth and development. As part of its investment management activities, there is a gradual and smooth portfolio transition to emerging sectors. This strategy is expected to translate into a resilient portfolio for long-term growth and sustainable returns.

The board of directors of the SIC comprises professionals with wide experience in finance and business management:

Jairaj Sonoo - C.S.K., Chairman

Goolabchund Goburdhun - G.O.S.K., Managing Director

Premode Neerunjun, Director

Kritananda Naghee Reddy, Director

Anandsing Acharuz, Director

Cader Jaunbocus, Director

Mohummad Shamad Ayoob Saab, Director


Geidea Fuelling Growth for SMEs while Expanding Across MENA — and Beyond

Geidea is a fully licensed payment-service provider of digital banking technology, point-of-sale terminals, and business management solutions for financial institutions and SMEs.

Founded in Saudi Arabia in 2008 by entrepreneur Abdullah Faisal Al-Othman, Geidea’s mission is to empower merchants of all types and sizes with the tools to start, manage, and grow their business. The company believes that the latest payment and commerce technology should be accessible, affordable, and intuitive to use.

Geidea operates under the ownership of UAE-based Gulf Capital and its founder, Abdullah Al-Othman. At the Geidea helm is group CEO Renier Lemmens.

Lemmens was appointed this year, and is mandated with the responsibility of driving Geidea’s strategic regional growth, strengthening strategic partnerships in payments and financial networks, and identifying emerging business opportunities.

Lemmens also serves as the point-person for regulatory authorities and key stakeholders. He has extensive experience in the payments field, providing Geidea with unique expertise and insight in fintech innovation. He previously served as CEO of PayPal Europe, Middle East, and Africa, and was a board member of the UK digital banking app Revolut, and chairman of Divido and TransferGo.

Under his guidance, the company made significant strides in 2021 as it strategically expanded across the Middle East in North Africa. Earlier this year, Geidea became the first non-banking institution in Saudi Arabia to be granted an acquiring license. It was a major milestone for the kingdom’s fintech sector, and the announcement cemented Geidea as a category-defining start-up.

In March, the company signalled its intent to transform digital payments within the SME space with the launch of Phone POS technology. The ability to transform smartphones into point-of-sale terminals empowers businesses of all sizes to gain a foothold in the online economy.

Following the launch of Phone POS, Geidea entered into strategic partnerships with global payment institutions — including Mastercard, Visa, and major Saudi player SABB Bank — to scale the technology across the MENA (Middle East and North Africa) region.

Building on its successes in the kingdom, Geidea expanded into Egypt in May and received a payments facilitator licence from the Central Bank of Egypt. It cemented partnerships with Egypt’s leading entities, including the National Bank of Egypt and Banque Misr, to support the country’s drive towards digital transformation — and the goal of financial inclusion for all.

Geidea has begun its expansion into the UAE, too, and has cemented a partnership with leading fintech Magnati, the payments arm of First Abu Dhabi Bank. The collaboration will offer a suite of tailored payment solutions for UAE-based companies across the banking, retail, food and beverages, wholesale, hospitality, and healthcare sectors.

Based in Riyadh, Geidea has more than 700 employees and some 100,000 merchants. It provides support to 600,000 payment terminals and ATM networks. The company is rapidly expanding with branches across the GCC, the UAE and Egypt. There are plans for further growth in 2022.

Click here for print version.


SATORP Knows the Value of People, Pride, Professionalism, and Partnership: Four Ps That Are Keeping This Giant Refinery At The Top of Its Game

One of the world’s largest refineries, the Saudi Aramco Total Refining and Petrochemical Company (SATORP) joint venture, recently increased its capacity to 460,000 barrels per day (bpd) from the planned 400,000.

The refinery always aims to maximise shareholder value — and consider the environment: its refined products meet the most stringent global specifications. SATORP is capable of refining Arabian Heavy Crude oil to produce diesel, jet fuel, gasoline, LPG, and petrochemical products such as paraxylene, aromatic benzene, and propylene.

The company benefits from being close to the Arabian Heavy Crude supply system and its prime location within the excellent facilities and infrastructure of the Jubail Industrial City. It also has access to the export facilities at the King Fahad International Port (KFIP).

"SATORP always looks for more efficient and innovative ways to streamline and increase shareholder value."

SATORP is blessed with assets like no other, as it is operated by a highly professional workforce committed to growing the company into a world-leading integrated refinery and petrochemical facility capable of benefitting from fuel and petrochemical cycles.

On its continuous journey towards the excellence, SATORP has won many important awards which reflect its best performance in Operational Excellence, Health, Safety and Environment. Satorp excellence awards included 2019 and 2021 Saudi Aramco President’s Excellence Award, 2018 Total Refining and Petrochemical Orient Safety Award, 2021 Total Safety Award 2021, and crowned its achievements with King Abdul Aziz Quality Award, the highest prestige award in Saudi Arabia

Key Advantages

SATORP’s process facilities feature proven technologies that include the deep conversion technology that enables production of a high percentage of light products and value-added petrochemicals. The design configuration incorporates an integration between fuels and petrochemicals.

The refinery treats 100 percent Arabian Heavy Crude with a profound conversion, leading to no fuel-oil production with its coker. It is the first refinery in Saudi Arabia — and one of the biggest in the Middle East — to produce petroleum coke and paraxylene.

Its configuration is based on two crude oil trains, and both trains include a Crude Distillation Unit and a Heat-Integrated Vacuum Distillation Unit. The twin-train arrangement provides operating security and flexibility.

Compared to other refineries, SATORP is a step ahead when it comes to economic diversification and maximisation of hydrocarbon value. It provides ultra-clean fuels and chemical products that create value and meet growing global demand for greener products.

SATORP is mainly an export refinery; its production meets the most stringent global specifications to reach the profitable markets of Europe, the US and Asia. SATORP started the ISF facility to supply the Saudi Aramco bulk plant with diesel and gasoline (P91 and P95) for the domestic market. This ensures the safe and efficient distribution of fuels to the Eastern Province, with positive impacts downstream.

The refining process is top-of-the-line in terms of conversion, with zero percent fuel production. It aims to maximise the value of each molecule processed: hydrocracking capacity, FCC conversion, and naphtha reforming. These units are all part of a scheme geared towards petrochemicals components and high-value fuels (10ppm diesel, low-density jet fuel).

At an early stage, a strategy was put in place at the very start to use proven and best-in-class technology. This strategy includes very advanced tools in terms of data processing and unit optimisation.

SATORP’s main units are equipped with advanced process control to monitor units’ performance and improve entire performance with better yields, minimal give-aways and reduced stabilisation periods.

A complete software package links operations — maintenance, mass balance, performance control — in the projects.

SATORP leverages digital technology to efficiently manage plant optimisation, inspection, maintenance and project change-management. All individual process units are represented with process models linked to represent the whole refinery, a key tool to monitor actual vs theoretical performance.

The refinery has been designed to meet the stringent environmental regulations of the Royal Commission for Jubail and Yanbu. A state-of-the-art bio-treating facility ensures effluents and sulphur recovery units comply with the highest standards. All stack emissions and effluent releases are monitored.

Project Financing

SATORP is considered as a key strategic asset for Saudi Aramco and TotalEnergies. SATORP enjoys a strong relationship with top-rated banks from local and international financial institutions.

SATORP always looks for more efficient and innovative ways to streamline and increase shareholder value.

It has won the King Abdul Aziz Quality Award, the most prestigious award in Saudi Arabia, as well as the 2019 and 2021 Saudi Aramco President’s Excellence Awards, and top honours for Operational Excellence and most improved Health, Safety & Environment. This award and others

The execution of the factoring facility which was created within project finance parameters was recognised by CFI.co, reflecting the overall team spirit and present SATORP culture of excellence inspired by SATORP’s 4Ps: People, Pride, Professionalism, and Partnership.


Unity Willis Towers Watson: Old as the Ages, Wise as the Hills, a Global Leader with History and Scope

[caption id="attachment_21043" align="alignright" width="300"] Executive Director for Central America: Louis Ducruet[/caption]

Unity Willis Towers Watson is a global leader in consulting, brokerage, and financial solutions.

It offers reliable and extensive services to clients on every continent except Antarctica. Unity Willis Towers Watson has been operating in Latin America for more than 50 years, with offices in the region’s main markets and more than 3,000 collaborators. It administers more than two million individuals through its life and benefits insurance plans. Its operations in Central America date back over 40 years, with six regional offices, more than 500 collaborators, and some 760,000 policy holders.

Unity Willis Towers Watson’s value proposal centres on providing an integral service offering consulting, brokerage, and solutions, through four key business segments. Those are Investment, Risk and Reinsurance, Corporate Risk and Brokerage, Human Capital and Benefits, and Benefits, Delivery and Administration.

The firm’s unique perspective allows the identification the critical intersections between talent, assets and ideas, maximising client potential. While many companies focus exclusively on loss mitigation, Unity Willis Towers Watson demonstrates how a unified standpoint — considering people as well as risk — leads along the road to growth.

With more than 45,000 employees around the world, the company values have been honed to guarantee a responsible and professional performance. Those values define the business approach: a focus on the client, teamwork, integrity, respect, and excellence.

More than 40 years ago, the firm’s executive director for Central America, Louis Ducruet, began his career in the insurance industry.

One of the greatest impacts Ducruet has had on the business has been the creation of insurance programmes designed to meet the specific needs and requirements of local and global clients.

After more than four decades which have taken him to the top of his career, Louis Ducruet has extensive knowledge and deep experience on the insurance industry and its diverse lines of business.

He has participated in the Panama Canal Risk Management Programme and has been involved in the creation of all the firm’s regional client programmes. He has actively participated on various insurance industry committees, and presided on the commission that created the Captive Law of Insurance and Reinsurance of Panama.

His experience and knowledge are in demand extramurally as well. In addition to his responsibilities at Unity Willis Towers Watson, Ducruet participates in other companies and associations.

These other duties and obligations include Capital Bank, of which he is a founding partner and director. He is also director of Foresza, a factoring company, and is a partner and director of printing company Formas Eficientes and Visa and Mastercard personalisation company Fesa Card.

Ducruet is a member of APEDE (Asociación Panameña de Ejecutivos de Empresa de Panamá, or the Panamanian Association of Business Executives of Panama). He is a former director of the Ronald McDonald Foundation, a member of AMCHAM, the American Chamber of Panama, and was a founding partner and director of Capital Bank and Subsidiaries.

The Unity Willis Towers Watson Editorial Unity was established in 2008, with broad local and regional knowledge on insurance brokerage. It recently united forces with Willis Towers Watson. The partnership combines 193 years of history and enhances a presence in 140 countries.

At Unity Willis Towers Watson, human capital is considered indispensable for continued growth and assured customer service, focused on high quality and world class standards.

Its collaborators are a driving force for sustainable growth, committed to social responsibility through national development initiatives, corporate voluntary service and awareness programmes promoting healthy lifestyles.

Corporate sustainability has been central to Unity Willis Towers Watson over the years. It ensures a long-term approach based on the economic, environmental and — most of all — social pillars.

Those guidelines apply within the organisation, to the firm’s collaborators, and to its clients. The aim is to improve organisations, and through them, general quality of life.


Emerging Market Debt Has Promise that GoldenTree Understands and Harnesses — Even In Trying Times

Macro-economic crosscurrents have led to a broad opportunity set in credit markets, and global credit manager GoldenTree has delivered compelling returns to investors despite the turbulent times.

[caption id="attachment_21046" align="aligncenter" width="577"] Lead Portfolio Managers: Matias Silvani and Vladimir Liberzon[/caption]

GoldenTree Asset Management, to give it its full title, is an employee-owned firm founded in 2000 by Steve Tananbaum. It is one of the largest independent global credit asset managers, with some $46bn in AUM across a broad platform of alternative and fixed-income strategies, with a dedicated offering in emerging market debt.

GoldenTree's value-based investment approach — consistently implemented over 25 years — emphasises a high margin of safety, attractive relative value, and a catalyst to drive total return. The team comprises 65 professionals with an average of 15 years of investment experience.

GoldenTree’s dedicated emerging markets debt (EMD) strategy opportunistically invests across EM sovereign, quasi-sovereign, and corporate debt in hard and local currencies. GoldenTree has been investing in EMD since its inception, and has made over $25bn in these investments.

The dedicated strategy is managed by lead portfolio managers Matias Silvani and Vladimir Liberzon, who each have more than two decades of expertise in the area. Before joining GoldenTree as head of emerging markets, Silvani was MD and head of New York Sovereign Emerging Markets Debt at JP Morgan Asset Management, responsible for portfolios worth $15bn.

"The strength of GoldenTree’s EMD team, and its differentiated approach, has resulted in a fund that has outperformed the JP Morgan EMBI Global Diversified by an average of nearly 230 basis points per annum, net of fees and expenses, through the end of Q2 2021."

Before joining GoldenTree, Liberzon spent a decade at Goldman Sachs Asset Management, where he was a portfolio manager for hard currency EMD across the entire GSAM fixed-Income platform. The lead portfolio managers are supported by a team of analysts in New York, London, and Singapore. The EMD specialists work collaboratively with the firm's 65-person investment team, which has expertise across industries and asset classes, as well as significant legal and restructuring expertise.

The strength of GoldenTree’s EMD team, and its differentiated approach, has resulted in a fund that has outperformed the JP Morgan EMBI Global Diversified by an average of nearly 230 basis points per annum, net of fees and expenses, through the end of Q2 2021. On a calendar year basis, the strategy has outperformed every calendar year since inception by preserving capital during drawdowns and generating outperformance in years of strong market returns. Compared to its peer group, as measured by the Lipper Emerging Market Hard Currency sovereign universe, the strategy has outperformed by over 330 basis points per annum, net of fees and expenses, through the end of Q2 2021.

Since inception, GoldenTree's EMD strategy’s annualised return has consistently been in the top decile of its peer group, as shown in the Mercer Insights Database. GoldenTree has achieved these results through an investment process focused on fundamental country and security selection that considers the entire capital structure of emerging market countries and opportunities in securities excluded from the EMBI GD.

GoldenTree's strategy has been optimised to capture a broad opportunity set with the ability to invest in securities issued by nearly 90 sovereigns, along with quasi-sovereigns and corporates across EM domiciles. The approach, applied to the asset class, has been successfully executed since 2000.

[caption id="attachment_21047" align="aligncenter" width="1200"] As of June 30, 2021 and since inception of the GoldenTree Emerging Markets Fund on March 21, 2017. Returns are sourced from the Mercer Insight Database, and are stated gross of fees. Mercer maintains the peer universe and determines the appropriate peer universe for the GoldenTree Emerging Markets strategy. Calendar year-ends are only displayed for years in which the GoldenTree Emerging Markets strategy has a full year track record. March 2017 performance is for a partial month. The Fund was incepted on March 15, 2017. The Fund was not fully ramped until March 21, 2017; as such is the case, the return period begins March 21, 2017. A holding period return methodology was used to calculate the return during the ramping period, whereby the full contribution amount was applied to the March calculation. Please note that the figures above are audited through year-end 2019. Past performance is not indicative of future results.[/caption]

The investment process is complemented by a proprietary system, the FSI, designed in-house specifically for the Emerging Market asset class. The FSI outputs a score that quantifies the credit quality of each sovereign within the strategy's investable universe. The emerging markets team aggregates data from sources including the IMF, International Institute of Finance, World Bank, Bank for International Settlements, and national authorities. An important differentiator is the forward-looking nature of the data incorporating GoldenTree's projections and analysis.

This analysis is based on extensive research involving discussions with fiscal and monetary policymakers and third-party providers of alternative data that can provide meaningful insights. GoldenTree's proprietary system allows the emerging markets team to efficiently collect data, analyse the data, and calculate a real-time FSI score. The FSI database also allows the team to analyse macro-economic thematic exposures, such as sovereign sensitivities to various commodities. The team also incorporates GoldenTree’s macro-economic views into portfolio construction, and is deliberate with its duration exposure and correlation to variables. This FSI database enables the team to continuously perform relative value analysis on the sovereign universe and creates a foundation for decision-making.

GoldenTree ESG considerations

ESG considerations are incorporated into the team’s analysis. GTAM has partnered with Verisk Maplecroft, a leading data-modelling and risk analysis firm that calculates and maintains indices that measure environment, political, social, and economic risks. The UN’s Sustainable Development Goals (SDGs) provide a framework for assessing emerging market countries from an ESG perspective. Verisk Maplecroft has mapped their proprietary ESG / risk indices to each of the 17 SDGs.

The goals include eliminating poverty and hunger, and promoting education and gender equality. Others are environmentally focused, including climate action, protecting wildlife, reducing waste, and providing basic infrastructure. They require progress across sectors that address economic and environmental sustainability as well as social issues.

Through the team's decades of experience, GoldenTree believes an actively managed and opportunistic approach is optimal to capitalise on opportunities in EMD. GoldenTree views local currency as an opportunistic exposure in the strategy, seeking to gain exposure to the asset when it is optimal and being deliberate with exposures so local assets do not adversely impact the strategy's volatility or return profile.

GoldenTree does not have a required minimum exposure to local currency investments. It will exit or avoid investments entirely when the risk-return profile is unfavourable. This provides an advantage over managing blended EMD strategies with more index-constrained guidelines that force the manager to own an investment regardless of the fundamentals.

GoldenTree takes an index-aware approach to ensure a comprehensive relative value analysis. It views the index as an important risk-management tool, providing insights into exposures of the strategy relative to the index. It is important to monitor various portfolio characteristics such as correlation and Beta to the index.

GoldenTree’s EMD team has identified a breadth of opportunities across the asset class. In 2021, as in previous years, sector, security selection and active portfolio management have been critical to generating out performance and delivering positive performance through a year when most EM benchmarks were negative.

The firm’s investment team, its process, and the flexible nature of its strategy, enable GoldenTree to identify investments with the most attractive risk-return profiles across market environments.


Interview with Firas Sleiman - Partner and Technology, Digital & Cyber Leader at PwC in Qatar: Digital Leadership

[caption id="attachment_21050" align="alignright" width="300"] Firas Sleiman (left)[/caption]

About Qatar and Digital

What technology or digital trends should the Qatari leader watch out for and invest in for the next decade?
In the next few years, the focus of public and private sector CxOs and digital leaders will gradually shift from applications and data centers, to client and experience-centric models through data liberation, monetisation and analysis. Data will become one of the core assets of most organisations, and a key enabler of revenue, market dominance and operational optimisation. As data takes the center-stage, enabling technologies will undoubtedly emerge, such as cloud, analytics as a service, IoT and cyber security.

What are digital opportunities for Qatar to lead regionally?
Qatar has always been at the forefront of education, research and innovation. The country's investments in education and research make it a prime location for regional digital innovation hubs, accelerators, incubators and think tanks. Additionally, the availability of low cost energy and real estate will allow Qatar to take a regional lead in cloud data center hosting, and other digital platform free zones.

Which sectors have the highest need, dependency or readiness for digital transformation?
Given Qatar's commitment on sustainability and renewable energy, the energy sector is a prime candidate for further transformation and optimisation using data, analytics and IoT. Additionally, as the public sector grows with Qatar's booming economy and its investment in education, healthcare and immigration, those public sector domains will highly benefit from additional digitisation, and a customer-centric view of simplification using technology. As the new generation of nationals and expats take leading roles in the society, their expectations from digital are high, and their service needs are ever-growing.

About PwC

What are your investments, no-regret bets and digital themes for the next few years?
In line with our view and predictions on digital trends and opportunities in Qatar and the region, we are making several investment bets around 4 main themes:

Data as an Asset: make data a priority and success factor in every organisation.

Cloud First: use native cloud services and platforms to accelerate value and growth.

Security at the Core: build-in protection at each layer of the organisation's ecosystem.

Innovation in Transformation: get ready for a disruptive digital future to meet the new generation's needs.

What advice and tips would you give to growing digital leaders in Qatar?
Focus on quality rather than cost. From our experience, we find that it is far more expensive to build a low quality product and try to fix it, rather than build it right the first time, even at a higher initial cost. For most organisations, we find that the real cost of low quality is not measured in money and additional costs alone. The reputational brand damage, loss of client loyalty, demotivation and turn-over of staff, and long time-to-market due to rework, are some of the unfortunate consequences of low quality.

About Firas Sleiman

Firas Sleiman brings 24+ years of experience in the US and MENA regions, focused on leading effective tech and consulting organizations through growth and value generation, solving complex business and technology challenges through cross-domain modern IT architecture, C-level IT, digital and data strategies, large-scale technology and cloud transformation, big data analytics and agile product implementation.

About PwC in Qatar

PwC is strongly committed to Qatar where they established their practice in 1981. Today they have more than 350 people, including 12 partners, 25 directors, operating from their office in Doha. PwC has contributed to iconic government projects supporting the state of Qatar working together with local organisations towards achieving social and economic development and Qatar’s National Vision 2030.

Through their Assurance, Advisory, Tax and Legal Services practices based here they advise a wide range of clients including family-owned companies, high-profile local businesses, industrial and service companies, and global organisations. They are also the lead business advisors to the Government and some of the largest public sector entities in Qatar.

As part of their commitment to Qatar, PwC’s Academy is dedicated to the learning and development of Qatari nationals as well as improving the knowledge, skills, competence and expertise of people in finance and business; to help organisations across the region grow and retain their talent. Due to their long history of delivering services from this region,they have extensive experience of working with clients in most industries. THeir experts work together to provide seamless advice to their clients who can be assured that PwC complies with all legal requirements set by the various regulatory bodies in Qatar.

Their people understand the local market and culture and are passionate about working in one of the most exciting and dynamic places in the Middle East.

See on YouTube: Qatar's Differentiators - Digital Transformation

See print version.


Lord Waverley and Paul Baker: The Promise, Potential and Pitfalls of Britain’s Relationship with Africa

The concept of Africa Rising is truer today than ever. Despite the pandemic disruption that has caused the continent’s first negative output growth in 27 years, Africa’s performance over the past decades has been remarkable.

Many African countries have made significant improvements in terms of business environment and overall macro-economic performance, creating opportunities for growth and development.[1] In Ethiopia, gross domestic product and per-capita purchasing power parity have increased by 150 percent since 2009.[2] The technological advances brought about by the Fourth Industrial Revolution are allowing Africa to address some of its major challenges.

[caption id="attachment_21103" align="aligncenter" width="900"] Figure 1: UK Trade with Africa, 2020. Source: IEC; UNSD; DIT[/caption]

In the health sector, countries like Rwanda and Ghana are deploying drones to deliver medication, blood products and medical supplies to remote areas. In financial services, the fintech industry is transforming lives in rural and urban areas.[3]

There have also been significant improvements in leadership and governance; citizens are demanding accountability from their leaders and institutions. From 2008 to 2017, the Mo Ibrahim Foundation highlighted 34 African countries that improved national governance. As highlighted by Signe, since 2016 meaningful elections have led to changes in Benin, Comoros, Ghana, Lesotho, Liberia, São Tomé and Príncipe, and Sierra Leone.[4]

Africa’s ambitions are growing, too, through the vision of a pan-African common market. Africa Vision 2063 states that the continent aims to become “integrated, prosperous and peaceful”, driven by its citizens and representing a dynamic force in the international arena.

The African Continental Free Trade Area (AfCFTA) represents the latest step towards that objective. Originally foreseen in the Treaty Establishing the African Economic Community (AEC Treaty), the potential of the AfCFTA is huge. With 54 contracting parties, it brings together more than a billion people and a combined GDP of some $2.6tn. That has the potential to lift 30 million people from extreme poverty and 68 million from moderate poverty. It could also increase real income gains by seven percent by 2035.[5]

Open markets for African goods and services, increased mobility and the reallocation of resources should lead to economic and industrial diversification, structural transformation, technology improvement and a boost for human capital.[6] AfCFTA can pave the way to prioritised, strategic investments in sectors with a comparative advantage, fostering development of industries that could make African businesses regional and international players. Increased regional integration from the agreement is expected to increase the economic diversification.

However, in order to multiply the benefits, a comprehensive vision of trade and development is needed.

In this context, the UK has the potential to be Africa’s partner-of-choice for trade, investment and development. Promoting a rules-based trade system, forging investment and advancing partnerships and technology between the UK and Africa, has potential for both sides. A lot of work must first be done to reinvigorate the existing commercial ties.

Trade and investment between the UK and Africa have barely advanced over the past decade, even before the pandemic hit. A report by the Select Committee on International Relations and Defence says, “there has been ‘a flatline’ in UK trade with, and investment, in Sub-Saharan Africa”.

The stock of UK foreign direct investment was only £2bn more in 2018 than in was in 2008. The UK was the fourth-largest source of FDI to Africa in 2017, accounting for six percent of FDI stock.[7] The UK does not have any trade agreement with 40 of the African nations, and has rolled-over the EU’s former trade agreements with 15 African nations. It has lost the former EU trade agreements with four of those nations, and there is a lot of catching-up to do.

The UK will also have to compete with established and emerging partners. China, specifically, has used its Belt and Road Initiative to strengthen its presence by investing in 52 of the 54 African countries. It is poised to enter the 53rd in Sao Tome and Principe.[8] China's FDI stock in Africa totalled $110bn in 2019, contributing to some 20 percent of Africa's economic growth.[9]

The UK should also take note of the efforts of the EU, one of Africa’s traditional development partners, which in 2020 issued its EU-Africa Strategy. This aims to boost economic relations, create jobs, and deepen the EU-Africa partnership.

The future of Africa does have some risks and roadblocks. The pandemic has highlighted some of them, including the urgent need to enhance health systems and increase emergency planning and preparedness. Supply chains that rely on just-in-time deliveries have been disrupted, prompting some nations to impose restrictions to combat shortages of pharmaceuticals, medical equipment, food, technology, and natural resources.[10]

Poverty in Africa remains stubbornly high, with 437 million of the world’s poorest people merely surviving in Sub-Saharan Africa, where 10 of the world’s 19 most unequal countries are. By 2030, the World Bank forecasts that Africa could be home to 90 percent of the world’s poor.[11]

The AfCFTA will not be a panacea for Africa’s trade and integration barriers. Non-tariff measures, unaffordable intra-continental transport costs, poor connectivity, and weak infrastructure remain challenges for coming years. It is more expensive to send a parcel from Mauritius to continental Africa than it is to do so from France, China, India or even Brazil. Peace remains fragile, as do Africa’s relatively young democracies.

But growth prospects are substantial, and the UK-Africa investment summit this year testifies to that. Brexit represents an opportunity for Africa to strengthen its ties with the UK.[12] Britain can, and should, position itself as powerhouse for services, investment environment, standard-setting and governance. But a comprehensive and detailed strategy is needed to address the African continent’s challenges and needs. Trade ties with the AfCFTA parties must be strengthened to reduce tariff barriers, minimise non-tariff measures, and harmonise domestic regulations and regulatory practice.

Further negotiations between standard-setting bodies should take place, with support for British firms exporting to Africa and for African firms exporting to the UK. The UK should reinvigorate its position as a source of FDI to build the necessary capacities for Africa to thrive.

Africa: much to do, much to be gained — for all.

About the Authors

Lord Waverley is a Member of the House of Lords and the founder of SupplyFinder.com.

Paul Baker is CEO of International Economics Consulting.

References
[1] Sangafowa Coulibaly, B. (2017). Is Africa Still Rising? Brookings, October 6. Available from: brookings.edu/opinions/is-africa-still-rising/
[2] Oqubay, A. (2020). Will the 2020s be the decade of Africa’s economic transformation? Overseas Development Institute, January 14. Available from: odi.org/en/insights/will-the-2020s-be-the-decade-of-africas-economic-transformation/
[3] Signe, L. (2021). US trade and investment in Africa. Brookings, July 28. Available from: brookings.edu/testimonies/us-trade-and-investment-in-africa/
[4] Signe, L. (2020). Unlocking Africa's Business Potential: Trends, Opportunities, Risks, and Strategies. Brookings Institution Press, ISBN 9780815737391.
[5] WB (2020). The African Continental Free Trade Area: Economic and Distributional Effects. The World Bank Group
[6] UNCTAD (2015). The Continental Free Trade Area: Making it work for Africa, UNCTAD Policy Brief No. 44, December, p. 1.
[7] UK Parliament (2020). The UK and Sub-Saharan Africa: prosperity, peace and development co-operation. Select Committee on International Relations and Defence. Available from: publications.parliament.uk/pa/ld5801/ldselect/ldintrel/88/8802.htm
[8] Venkateswaran, L. (2020). China’s belt and road initiative: Implications in Africa. ORF Issue Brief No. 395, August 2020, Observer Research Foundation.
[9] Ze Yu, S. (2021). Why substantial Chinese FDI is flowing into Africa. London School of Economics. Available from: blogs.lse.ac.uk/africaatlse/2021/04/02/why-substantial-chinese-fdi-is-flowing-into-africa-foreign-direct-investment/
[10] Government of Canada (2021). Minister of Foreign Affairs – Transition book. Available from: international.gc.ca/transparency-transparence/briefing-documents-information/briefing-books-cahiers-breffage/2021-01-fa-ae.aspx?lang=eng
[11] Chakravorti, B. & Chaturvedi, R. S. (2019). Research: How Technology Could Promote Growth in 6 African Countries. Harvard Business Review, December 04. Available from: hbr.org/2019/12/research-how-technology-could-promote-growth-in-6-african-countries
[12] Graham, S. (2021). Perspectives on post-Brexit Africa-UK trade: Opportunities and Challenges, in Thuynsma, H. A. (eds). Brittle Democracies? Comparing Politics in Anglophone Africa, ESI Press.


Invasion of the Robots! Beware, Beware! Just Because We Can Doesn’t Mean That We Should…

AI, facial-recognition, machine learning… where should humans draw the line when it comes to automated ‘job theft’? Yogesh Patel gives it some thought.

Hammers, spanners, screwdrivers, scissors: tools of all shapes, sizes and functions have acted as catalysts for human progress — but could they also be our undoing?

We’ve defined past eras by the tools we used to forge them: stone, iron, bronze. In the thick of what we may as well call the Computer Age, our reliance on technology is exponentially increasing.

With the advent of automation, machine learning and AI, there are some distinct fears. Will all our jobs be taken by robots? Will super-intelligent AI depose us, and maybe even turn on us?

Starting with the least dramatic of those fears, yes, it is likely that some workers will be replaced by robots. Many thousands already have been, across industries and sectors. A report by consultancy firm McKinsey puts a positive spin on it with an estimate that as automatons arrive in the workplace (2015 to 2056), productivity will rise by 1.4 percent. Most jobs roles will be affected in some way, the report concludes. When it was written in 2017, however, it was assumed that changes would be gradual.

As with so many things, the Covid-19 crisis put many of those transformations on fast-forward.

Social distancing and quarantines have shown that resilient business strategies revolve around adaptability and flexibility. Many industries have had to reconsider the question of how robots could help to keep businesses afloat.

At Brigham and Women’s Hospital in Boston, Spot the Dog — the latest quadrupedal mechanical “canine” from Boston Dynamics — is being put to good use. Via remotely operated instruments attached to Spot, doctors are able to screen patients from a safe distance, all the while measuring temperature, pulse, and oxygen saturation.

In India, hospitals are using the robot Mitra — it means “friend” in Hindi — as a pastoral care assistant. It connects patients with loved ones via video link. Its slightly creepy, bug-out “eyes” house cameras for facial recognition of individuals it has met before. Mitra can also be used for remote consultations, a useful tool even without a pandemic.

Robots have also been used to improve hygiene, entering a potentially infected room and spraying disinfectant or shining ultra-violet light to detect bacteria or blood.

In China, December 2019, the concept was taken a step further. Companies such as Shanghai-based Keenon developed its vehicles to disinfect public areas using LIDAR (Light Detection and Ranging), machine “vision”, and sensors.

Other customer-facing professions have been given the android treatment. In Wuhan, e-commerce giant Jingdong Century Trading Co delivered packages via drone to relieve overworked warehouse staff. It kept goods moving in the remote shopping boom at the beginning of the pandemic — and the firm plans on soon rolling-out robot waiters at franchised restaurants.

But — as things stand, in employment terms — there’s no need for panic. Robotics companies are a long way from being able to pull a Skynet. But the sector is gathering momentum.

In 2020, China produced 31 percent of all robots manufactured — but many still require human operators. While complete automation of a complex role is still a way off — and may in some cases prove impossible — machine integration is not. Supplementing pre-existing roles with automated alternatives, in a push for greater efficiency, is on the horizon.

Data gathering and analysis are the type of time-intensive roles that benefit from automation. That 2017 McKinsey report notes that data-related activities then made up 51 percent of activities in the US, and $2.7tn in salaries.

While sceptics may see this as a loss for us mammals, it may be anything but. When US companies began outsourcing manufacture to Asia, its overall economic situation improved. Goods were produced at lower cost, and priced accordingly. The same effect could be seen with robots. Although they are expensive to develop and implement, the long-term costs are lower when compared with human workers.

The generation of machines that follow Spot and Mitra could be the breakthrough bots that change production as we know it.


Wilbur Addison Smith (1933-2021): Lion of African Literature

[caption id="attachment_21118" align="alignright" width="300"] Wilbur Addison Smith. Source: successstory.com[/caption]

A charming chauvinist, addicted to adventure, and in his personal life often as ruthless as the characters depicted in his fast-paced novels, Wilbur Addison Smith conquered the apex most writers quietly aspire to but seldom reach: the ability to ignore critics, speak freely, and disregard societal and political convention.

Smith offered no opposition to reviewers who refused to grant him admittance to the cathedral of high literature and readily agreed that he was in the business of churning out ripping yarns – 49 of them in total, selling an estimated 140 million copies worldwide. The effete literary world did not at all match the writer’s old-fashioned notion of masculinity which had been thoroughly instilled by a somewhat larger-than-life father.

Herbert Smith, a former boxer and metal worker who ended up running a 25,000-acre cattle station in Northern Rhodesia, present-day Zambia, never touched a book and tried his best to suppress young Wilbur’s trance-like fascination with derring-do Biggles stories and John Buchan’s late-imperial adventure novels. Sent to boarding school in Natal, South Africa, to lay the groundwork for a “proper” career, the young Mr Smith continued to read voraciously and dabbled in writing whilst duly climbing the educational ladder up to Rhodes University in the Eastern cape where he obtained a degree in Commerce.

Securing a job first at the Goodyear tyre company, and a few years later at the Inland Revenue Service, Smith never renounced his love of the written word and regularly burnt the midnight oil, “getting nowhere” as he recalled in his 2018 biography. However, the iron discipline paid off and in 1964 his full-length debut novel When the Lion Feeds was accepted for publication. Writing, Smith once remarked, is not a game for sissies: “If at first you don’t succeed, try, try, and then try some more.”

Before long, Wilbur Smith was recognised as master of high-octane adventure, liberally sprinkling his work with violence, power, sex, and extreme yet believable daring to captivate a fast-growing body of loyal followers. He would take his readers on wild rides from his native Africa to tropical islands and from Ancient Egypt to the rise of the ANC (African National Congress) and its anti-apartheid struggle, venturing outside the beaten path with periodic escapades to other landmarks of history.

However, it was the epic 17-volume Courtney Series – published between 1964 and 2019 – that established Smith as the chronicler ‘sans pareil’ of the human drivers of history. Tracking multiple generations of the swashbuckling Courtney family from the 1660s to the late 1980s as they make their way around the globe – suffering, fighting, triumphing, loving, exploring, exploiting, and living their times to the hilt and beyond – Mr Smith bested James Michener at his own game and added significant more “sweep” to the genre. He also added a colourful cast of virile characters, driven by rivalry, revenge, and passion, describing their exploits meticulously – careful not to skip even the tiniest detail in scenes that kept readers both enthralled and pining for more.

In his personal life, Smith lived almost as passionately as the protagonists of his door-stopper novels. His disciplinarian father gifted Wilbur a Remington rifle for his eight birthday and the boy shot his first lion only five years later. A dedicated conservationist in later years, Smith at various times owned aeroplanes, part of an island in the Seychelles, farms, and homes in the UK, Malta, Switzerland, and Cape Town. Married four times, he became estranged from his three children after his third marriage sparked a family feud of sorts. Danielle (née Thomas) Smith died in 1999 from brain cancer. The writer adopted her son Dieter from a previous marriage although they ended up in court over the division of assets.

As his popularity rose, critics soon dropped Smith as their favourite. The initially raving reviews he received quickly turned sour with later works being dismissed as “dad’s books” and worse. However, sales continued unabated as did the writer’s formidable output. Smith invariably sat down to write – and let his imagination flow – at eight in the morning for an uninterrupted stint of seven hours. In an ultimate testament to his capabilities as a novelist, the few attempts to bring his tales to the big screen failed rather miserably.

The chauvinist and politically incorrect side of the writer occasionally popped out and was on full display in his 2018 memoir On Leopard Rock. Here, Smith confessed to a certain pride in having fathered three children without “ever having changed a nappy.” In his reminiscences, Smith also deplores the lack of “real men” in today’s world and makes no excuses for the wildlife he admits to having “slaughtered” and the elaborate schemes he deployed to avoid the taxman.

Wilbur Smith, novelist and adventurer, born on January 9, 1933, continued to write until hours before his passing from undisclosed causes in Cape Town on Saturday, November 13. He is survived by his fourth wife Mokhiniso Rakhimova and three children from earlier marriages.

By Wim Romeijn


The Fed vs the Communist Party

[caption id="attachment_21163" align="alignright" width="300"] Author: Mads Pedersen. Photo: PR / Human Edge[/caption]

Recent quarters, months, and weeks have seen a remarkable clash between the goals of the US Federal Reserve and Chinese Communist Party.

One is trying to expand credit into a "supercharged, super-fair recovery", the other trying to rein-in what they see as excessive capitalism in general and, particularly, as market excesses.

This is not a war between enemies, or even a battle in a traditional sense. But it is a significant clash for the global political narrative and economic development in coming years. In the short-term, global market stability is at stake.

Supported by low interest rates and strong earnings, US equities made further progress since the last edition of the Human Edge Global Market View publication, and we had another strong quarter across mandates and funds. The situation was very different in emerging markets caught between a strong US dollar and Chinese politics.

We at Human Edge hold little exposure in this sub-asset class and don’t see the sell-off as a reason to add. To assess whether to remain fully invested in equities, or “risk on”, as we call it, in a tense environment like this, we rely on our algorithms and their daily assessment of the risk to global financial stability.

"It would be foolish to assume that some of the best-educated and best-informed people in the world would not have foreseen that the blows that they delivered to these growth companies would have devastating consequences."

Since 2011, these algorithms have been set up as a traditional investment committee, with human analysts and portfolio managers organised in "teams" covering macro, fixed-income, credit market, equities, and market risk. Compared to a traditional investment committee, the algorithms are more concise and consistent in their communication and conclusions, which they provide every morning around 4am CET. Like markets, the Fed, the Communist party, and their regulators, the algorithms work every day, winter and summer.

We have often discussed the perspective of the Fed and the US Administration; let’s now focus on the action in China. What initially looked like a campaign focused on tech tycoons has developed into something more akin to a massacre of Chinese equities, expressed by the decline in the Nasdaq Golden Dragon China Index, (HXC), the Hong Kong index, CSI 300 and in DIDI, seen in Figure 1.

[caption id="attachment_21164" align="aligncenter" width="900"] Figure 1: Global equity market. The US moves on while China corrects.[/caption]

This campaign has a primary goal, but also produces collateral damage. It’s clear that the Chinese Communist Party is happy to encounter less rivalry from billionaires for the attention of society, which runs across the board from public prestige to cash and data control.

The same holds true for cryptocurrencies. On one hand, Bitcoins collide with the environmental goals of the Chinese government, and the governments of most other developed countries. On the other, decentralised finance and crypto currencies collide, in general, with government control of markets and movements of capital. This is not in the interest of a country such as China, with controls on movements of capital.

Human Edge therefore cautions anyone from excessively celebrating the recent bounce in crypto prices. A more interesting development will be the digital currencies from the Swiss and the Chinese central banks, and whether they can be used to ease global transactions without upsetting the US Department of Justice.

The fact that the clampdown started more than half a year ago and included Ant Financial, the politically sensitive education sector, and the Didi listing, makes it clear that even though Chinese market regulators have talked to local and western banks and calm the situation, the aims are backed by the real powers in the Communist Party.

It would be foolish to assume that some of the best-educated and best-informed people in the world would not have foreseen that the blows that they delivered to these growth companies would have devastating consequences. It is likely that even the latest game of chicken — in which the Chinese "blinked first" — was part of the original strategy.

As our market risk algorithms show, stay positively positioned is warranted, because the recovery is on-going, markets are well supported, and the outlook favours equities and credit risk over high-grade bonds and duration. We therefore remain fully invested in these types of assets, together with our long held US equity and USD overweight, across our USD, Euro and CHF mandates and funds.

We maintain a 100 percent equity allocation in our Systematic Equity Allocation Strategy, significantly above the long-term balanced level of 60 percent. The year-on-year return is a respectable 25% percent at the end of Q3. The year-to-date return is 15 percent. The associated ACCI SA fund is comfortably in the top 10 percent of its peer group.

In our multi-asset mandates and funds, we retain the full allocation to equities and the enhanced 30 percent allocation to high yield bonds with duration of around 3 years. These portfolios are up 9-12 percent year-to-date. and 12-15 percent year-on-year— all dependent on risk level and currency.

In our Global Fixed Income Opportunities strategies and funds, we maintain our high-yield bond positions. These portfolios are up two percent year-to-date and eight percent year-on-year. It is worth noting here that the current short duration positioning has not helped much in recent months but should find support if the Fed's renewed optimism regarding the US recovery turns out to be justified.

The Chinese Market Massacre and Global Markets

Human Edge has a long record of participating in and chairing investment committees, and for a number of years we were simultaneously running a traditional committee and a virtual committee of algorithms.

In recent years we have shifted to the virtual version, where the actual Global Investment Committee is a group of virtual "analysts" represented by algorithms which are combined to form an aggregate reading. They always have a consistent and updated conclusion (much easier to understand than policy language of economists).

At the moment, that conclusion advises us to stay invested in equities. Unless there is more noise from China, global investors are probably best advised to ignore it. This is not always the case, but as opposed to the situation in the second-half of 2015 and early 2016, the rest of the world is running full steam ahead.

According to our analysis data for equities, fixed income, macro, monetary policy, and looking at market momentum and the vulnerability of market sentiments, the correction in Asian markets is visible at the segregated data level. When we combine these data to obtain an overall reading, we get a rather solid signal of 0.4 — much like in early 2017.

Figure 2 shows the readings of these algorithms in 2015 and 2016 the collapses during that period. Figure 3 shows the situation on the macro side of the economy back in 2015. After a severe setback in the commodity sector, investment demand and commodity prices took a severe blow, credit spreads widened, and financial conditions tightened in a classical reflexive move of self-reinforcing deteriorations across macro and markets.

[caption id="attachment_21165" align="aligncenter" width="900"] Figure 2: Return across bond market - US aggregate bonds index. Note: ACCI Global Fixed Income Opportunities (blue line) is managed by Human Edge.[/caption]

Now the situation is different, because the Fed’s fixed-income market operations — and the strong cyclical position of the US economy — support credit formation and markets. So does the extreme profit recovery, much stronger than expected by a chorus of equity analysts and macro strategists.

The reading of our profit algorithms remains at 1.0, the maximum capped-out reading, and well above where they went even in the period January 2015 to July 2017, as shown in Figure 3.

[caption id="attachment_21166" align="aligncenter" width="900"] Figure 3: USD yield normalisation continues as government bonds sell off.[/caption]

Our profit algorithms are useful, because they have helped us to remain fully invested and to enter the market in early 2016 and stay invested in 2017 — which proved to be beneficial. And while we maintain that earnings is a lagging indicator, we also know that selling early feels great for the portfolio manager who executes the sale or for the analyst who recommends, but it is not necessarily quite as beneficial for the actual investor.

Other important factors are technology trends, optimism, exuberance and nervousness and the panic probabilities of the markets. The aggregate result of our algorithms have not changed much. For the time being, we remain fully invested. If the algorithms change across their respective thresholds, we will change our positions — accordingly and decisively.

The clash between the US Federal Reserve and Chinese Communist Party is not a war; the main goal is not to inflict damage. But it is a significant battle, with the global narrative and global markets at stake. It would be optimistic to expect the result to be a stable equilibrium. And it was probably judicious for the Communist Party to blink first.

In our experience, the Chinese authorities know what they want to achieve on a one- to five-year horizon. They will then move back and forth as they feel their way. The overall target is to re-establish respect for, and the undisputed authority of, the Chinese Communist Party.

The immediate effect has been the largest slaughtering of potential and prospective unicorns in Asian history and a severe correction in Chinese and Hong Kong equity markets and their US sister listings. As of July 28, the Nasdaq Golden Dragon Index was down 50 percent from its peak and on the morning of the 30th it was down 20 percent for the month.

In this context it is worth remembering that a core lesson learned the hard way is that the Chinese cannot control the value of their own currency, since any significant movement has uncertain consequences for exports, imports and growth.
The US is a large economy with limited dependence on trade and strong and well-tested institutions. The Chinese economy is driven by domestic demand for investment and consumption, but China is a large economy with a dependence on foreign trade and new institutions. No one is more aware than Xi Jinping, for example, that the presidential re-election is locked in a fixed framework and can be changed.

Returning to the currency and markets, England, Germany, and France learned long ago that they cannot control their currencies, interest rate levels and financial markets, independently of the US or the Fed. We also expect the Chinese to maintain the nationalistic façade, while in practise the issue will remain hidden under a capital account that remains closed for the masses — and for the publicly known billionaires as well. It is now clear that to be rich in China is a lot less glorious than it used to be.

For the current leadership in China, the number one institution is the Communist Party — and it has lost too much control in relative and absolute terms. Xi has therefore made it a top priority to turn this development around. Such a development is not easy to control or stop once it has started, and it should therefore be assumed that the trend will continue — but it is unlikely to bring down global finance.

The Chinese depend on global trade and will keep it open. They don’t depend as much on their currency reserve as they used to, so maybe they could sell their holdings of US treasury. A simple calculation might solve the issue. If the Chinese hold $1,200bn, this will equal 10 months of current QE. If they had $3,600bn, it would require three years’ worth QE at the current run rate.

In both cases, it could be an extension to the QE. If this were to happen overnight, it would be very disruptive. In some ways the situation would be comparable to the moment when world realised that Covid was not just a Chinese problem, but a global one. It would therefore require a pandemic-like response from the Fed and the Treasury.

And it could take weeks to get the situation under complete control, because markets would be very volatile. It is unlikely, however, that $2tn in fiscal support would not be required. Also, BOE, BOJ, SNB and even the ECB would probably help; in this case, hopefully without the president feeling the need to say anything unhelpful or unwise.

By Mads Pedersen Managing Partner & CIO of Human Edge


Swiss Precision, African Spirit: Brahms Group's Daouda Fall has Found the Perfect Balance

Switzerland-based and Africa-led, the Brahms Group was born as a consultancy in 2009 — and has grown into an established player in project development and impact investment.

[caption id="attachment_21182" align="aligncenter" width="900"] CEO:Daouda Fall[/caption]

In the firm’s consultancy days, founder and CEO Daouda Fall raised some $50m for projects in biotechnology and renewable energy. Still at the helm in 2021, his focus now is mostly on developing impact investment projects in Sub-saharan Africa, where the population is expected to grow to 2 billion by 2050.

The group’s main business interests are in sustainable energy resources projects, agricultural industry, and civil works — including real estate and construction. The Company creates eco-systems around its projects and is looking at setting up its first project development fund of USD 100 Million in 2022. Its interest in energy, agriculture and finance stems from Daouda Fall’s conviction that these sectors and economic development are coupled.

Brahms Group leads the origination and development of various major projects in West Africa. It is a diversified group in terms of its business lines, with a strong industrial and international finance network — and deep understanding and experience of Sub-Saharan Africa.

The company is currently developing Guinea’s largest industrial project in downstream oil and gas: a refinery, a storage terminal and port related infrastructure. It is structuring over $350m to finance the project via the Brahms Group financial network.

Brahms Group is also developing a 12,000-hectare agricultural project in Senegal in partnership with the Senegalese Sovereign Fund.

With his international background, born in Paris with parents from Senegal & Guinea, Daouda Fall has lived in numerous countries which gives him an international eye in the Company’s local activities. Daouda Fall, currently based in Geneva, began his career with Citigroup and JP Morgan. At Citigroup, he managed ultra-high-net-worth clients and created a solid professional network in the Middle East and Africa. At JP Morgan, he worked as a hedge-fund specialist.

Daouda is a board member and managing partner of Ascon Group, an international trading company. Besides its trading activities, Ascon Group is currently developing a Biomass Project in Namibia and promoting water treatment systems for local communities. He is a former board member of mining and logistic company the Mesa Group, where he developed business opportunities.

Daouda Fall was also a consultant for the China Mining United Fund.

Daouda Fall is a laureate of the Choiseul Institute think-tank that elects the 100 most influential young economic leaders in Africa, and holds a Master’s in Global Political Economy from the University of Sussex. He is a regular speaker at conferences.


Ferdinand Grapperhaus, Jr: Putting a Brave (and Smart) Face on the World’s New Constructions

[caption id="attachment_21205" align="alignright" width="300"] PHYSEE CEO and co-founder: Ferdinand Grapperhaus, Jr[/caption]

The building industry is one of the main contributors of greenhouse gas emissions. According to a 2019 report from the World Green Building Council, the energy used to heat, cool and light buildings accounts for 28 percent of global carbon emissions.

Ferdinand Grapperhaus, co-founder and CEO of PHYSEE, is working to change those gloomy figures. He and CTO Willem Kesteloo founded the company in 2014, as a spin-off of the oldest and largest Dutch public technical university, TU Delft. The university remains a shareholder and collaborator of PHYSEE via Delft Enterprises.

“The name PHYSEE comes from ‘physics’ and ‘seeing,’ so we make physics central to our perspective and try to make the world a better place,” Grapperhaus told Tech.eu. As a physics engineer, he credits a large part of the global climate crisis to buildings, which account for 40 percent of total global energy consumption — and he’s intent on accelerating an energy-neutral future, using dynamic façade solutions designed for user well-being and sustainable impacts.

PHYSEE creates SmartSkin façades and glass coatings featuring sensor and solar technology that can reduce a building’s energy consumption by up to 30 percent. The company has given new functionality to a material that’s been around for 5,000 years. It has developed two distinct glass coatings, one for use in residential and commercial building and another for greenhouses. The latter converts harmful UV light into photosynthetic active radiation — allowing for a seven percent increase in crop growth.

“Six years ago, we started with developing coatings, but right now we are an R&D company and a data company,” Grapperhaus said. “And the latter has been a pivot over the past six years, which I never anticipated.”

The company works with manufacturers, providing the sensors and solar components. Then PHYSEE offers a data service which ties everything together. The PhyseeHub stores and processes localised data from the SmartSkins to generate actionable insights. Sun-shading and façade ventilation are controlled by automatic actuators to take advantage of natural light, cutting costs by reducing the need for heating, cooling and artificial lighting.

“The projects that we are actually selling right now have a payback time within five years, which makes it a very attractive prospect for our customers,” Grapperhaus said. “And besides the value proposition, they enable our customers to build in a much more energy-friendly way.

“And if we can now scale our business with the right funding, we can set up different commercial activities in different countries by actually increasing the speed of adaptation and also disrupting the building energy markets.”

PHYSEE was named as the Dutch start-up of the year when it launched and as Europe’s best energy start-up the following year. It won the World Postcode Lottery Green Challenge in 2016 and was selected by the Dutch Chamber of Commerce as the Netherland’s most innovative company in the in 2019.

This recognition has helped PHYSEE secure $14.7m over five funding rounds, including investor support from Phase2.Earth, Adunare, Job Dura and EDGE Technologies. The latest injection of growth capital, totalling $9.3m, was finalised early this year.

“The fact that we have been able to quickly close the second half of our Series A investment round by attracting capital from new and existing investors, is a testament to PHYSEE’s potential and the focus from leading real estate developers to invest in sustainable and comfort-increasing technology. We look forward to deploying this new capital to accelerate the roll-out of our smart and sustainable building platform and to speed-up the commercialisation of our light-converting coatings.”

The company refers to employees as PHYSEEonairs, and it’s a tight-knit group where corporate culture and product development is continuously shaped by weekly safe-space, brainstorming sessions. The multi-disciplinary team, which is 30 percent female, is made up of 12 nationalities fluent in eight languages.

“We have been swimming against the tide for six years because we see that things can — and must — be done differently,” Grapperhaus said. "We spend 90 percent of our time in buildings and for a more sustainable future, we need to develop and use them in an innovative way, both at home and in the office.”


World Bank: Sustained Global Solidarity Needed to Achieve Global COVID-19 Recovery

[caption id="attachment_21217" align="alignright" width="300"] World Bank Managing Director of Operations: Axel van Trotsenburg[/caption]

The pandemic has affected virtually everyone in the world, but its impacts have been hardest on the poor and vulnerable, deepening inequalities and exacerbating underlying challenges. Now more than ever, global solidarity is needed to address the widening gaps between rich and poor countries – particularly when it comes to responding to this crisis, enabling access to life-saving COVID-19 vaccines, and meeting the compounding impacts of climate change.

To respond to the pandemic, the World Bank Group stepped up with the largest crisis response in our history. Between April 2020 and June 2021, we deployed over $157 billion to fight the pandemic’s health, economic, and social impacts — an increase of more than 60% over the 15-months before the pandemic. We supported countries to address the health emergency and to strengthen health systems while ensuring that social protection systems were inclusive and able to support vulnerable households, preventing more households from falling into poverty.

"The World Bank has made $20 billion in financing available to low- and middle-income countries to purchase and distribute COVID-19 vaccines, tests and treatments and to strengthen immunisation systems."

Some $50 billion of this historic WBG crisis response went to the poorest and most vulnerable countries through the International Development Association (IDA), the world’s largest source of concessional loans and grant finance. IDA’s global partners meet every three years to replenish IDA funds and review IDA’s policies, with the most recent replenishment of IDA’s resources (IDA19) finalised in December 2019. In a stunning and very promising show of global solidarity earlier this year, IDA donors and borrower countries agreed to advance the IDA20 replenishment by 12 months, with a pledging conference to be held in December 2021.

The same solidarity is needed to critically step up equitable access to COVID vaccines for all countries, a prerequisite for economic recovery both domestically and globally. Together with the IMF, WHO and WTO, we formed a Multilateral Leaders Taskforce (MLT) on COVID-19 to accelerate access to COVID-19 vaccines, therapeutics, and diagnostics by leveraging multilateral finance and trade solutions. Our goal is to vaccinate at least 40 percent of people in every country by the end of 2021, and at least 60 percent by mid-2022.

The World Bank has made $20 billion in financing available to low- and middle-income countries to purchase and distribute COVID-19 vaccines, tests and treatments and to strengthen immunisation systems. We are partnering with the African Union to support the Africa Vaccine Acquisition Trust (AVAT) with resources to allow countries to purchase and deploy vaccines for up to 400 million people across Africa. This is critically important with less than 3% of the African population vaccinated.

There is also an urgent need to ensure timely delivery of doses ordered. The latest data collected by the MLT on vaccine delivery shows that less than 3% of doses pre-purchased by or for low-income countries have been delivered. Delivery schedules not being met is unacceptable.

Helping countries recover sustainably from the COVID-19 crisis and regain lost ground on poverty reduction cannot happen without the world also rising – united – to meet the challenges of climate change.

Poor countries generally emit the least but are the hardest hit by climate change - whether through volatile weather events, destruction of crops, reduced water resources or environments that have become so hostile that people have to leave their homes and migrate to new areas.

The stakes could not be higher. Our latest research, the Groundswell 2.0 report, shows that climate change could drive 216 million people to migrate within their own countries by 2050, with hotspots of internal migration emerging as soon as 2030, spreading and intensifying thereafter.
o avoid aggravating inequality, we need to work together to help countries pursue a path to a green, resilient and inclusive recovery so they can achieve lasting economic growth and good development outcomes without degrading the environment.

The World Bank Group is stepping up to provide countries with support, having increased its climate financing over $26 billion in the last fiscal year, which is 25% above FY20 (which was itself a record). The Bank’s new Climate Change Action Plan for 2021-2025 commits 35% of Bank Group financing to climate, on average, over the next five years, with at least 50% of World Bank climate finance supporting adaptation.

In the same timeframe, the Bank Group will align financing with the goals of the Paris Agreement, while helping client countries meet their Paris commitments, including supporting and implementation of their Nationally Determined Contributions and Long-Term Strategies. Support is yielding results, including in the world’s poorest countries. In Niger for example, over 1 million people benefited from flood protection and sustainable land and water management activities increasing their resilience against natural hazards.

Our collective responses to poverty, inequality, climate change and fragility are defining choices of our age. We must tackle these challenges together because no country can manage them alone. Strong and sustained international cooperation will be key to reversing increases in poverty, reducing inequalities, and ensuring that every country is on a pathway to emerge stronger from this crisis.

By Axel van Trotsenburg World Bank Managing Director of Operations


Inflation, Used Cars, Silicon Chips and Supply-Demand: Links in a Worrying Chain

Chips — no, not the potato or chocolate kind, the electronic ones – are a driving force behind a spike in inflation.

Whether it’s cars or computers, we depend on silicon chips — and a global shortage is having some serious effects on the US economy.

Inflation, the relative rise in prices measured through a combination of goods and services, is — to some economists — a clear measure of economic health. Institutions like the Fed and BOE make it their job to keep track of inflation — and regulate it. Head of the Fed Jerome Powell said in October that he expected inflation to continue rising into 2022.

So, what does that mean?

Understanding why high levels of inflationary pressure are bad goes beyond the rising cost of your week’s shopping. While that’s a concern, the level of inflation in the US — gauged at 6.2 percent in October 2021 — is downright scary. To put that into context, the Fed is aiming for a sustained rate of two percent.

High inflation can lead to a number of economic consequences, from the erosion of relative purchasing power to decreased borrowing, but a crucial question is this: Why it is so high?

There are two answers to that: a global lack of supply, and a surplus of spending money. The automotive industry encompasses both.

Cars are constantly improving in terms of efficiency, gadgetry, and features. Where they go, hardware must follow. That means bigger screens, more processing power and — crucially — more chips. But global supply chains are struggling to match the growing demand.

The cause is multifaceted, although a large portion of the blame can be placed squarely on the pandemic. Social distancing guidelines caused the closure of many component-producing facilities, leading to a fall in global supply. In Malaysia, government-imposed closures came in with such force that police were summoned to keep workers from entering factories.

These chip shortages have impacted several industries, causing a fall in the total supply level of many electrical goods. That has kicked-up inflationary pressure — and the solution still isn’t clear.

The other side of our inflation story is, of course, demand. In August 2020 the used-car market surged, as people splashed-out on new vehicles. But the shortage, remember?

Used cars were the next-best option; in the UK, sales doubled to 2.17m units in the second quarter of 2021, compared to the same period one year ago. The same situation played out in the US, and the median cost of used cars jumped 21 percent from the year before.

As the pandemic’s worst effects gradually recede, people are finding themselves with more disposable income. A fall in consumption across-the-board in 2020, and the continuous supply of government mandated stimuli, have effectively put money in wallets. People are looking to buy.

The simultaneous reduction in supply and increase in demand caused a spike in general prices, aka inflation. The real test comes in deciding the best way to manage the imbalance: how should companies and businesses try to resolve the supply-demand problem?

A change in consumer preferences is one result of the pandemic — moving away from potentially germ-ridden public transport, for instance, and a renewed interest in electric vehicles. According to a report by McKinsey, interest in sustainability is burgeoning. The management consultancy firm believes that as consumers realise the impact they are having on the environment, there will be a global shift towards EVs and hybrid vehicles.

The rise in inflation sparked by a sudden interest in used cars and the lack of new cars is probably a short-term affair. Whether companies can leverage the situation to some kind of benefit remains to be seen.

By Yogesh Patel


Recipe for Success: Blend Inspiring Partners with Hard-Working Teams and Have a Proven ‘Killer’ Product

FasterCapital is an online incubator/accelerator diverse and inclusive global company whose expert team works with partners in media, deal-flow, start-up co-support in portfolios, and co-investments.

It is connected with 180 ecosystem players including SeedStars, Oasis500, Softweb, Techcode.

How has your personal journey prepared you for running a global incubator and accelerator for start-ups and entrepreneurs?

I have started my journey as an entrepreneur in 2002. I was lucky to start working on mobile apps back then. I started a company in 2002 and we were the first to publish a game on AT&T. The company expanded rapidly and we got a valuation of $3M from a public company in 2005. From 2002, I’ve always been present in the intersection of technology and business. My academic studies and career combine both aspects. By 2009 and with the surge of demand for mobile apps and IT startups, there were lots of non-technical entrepreneurs working on establishing businesses and it was difficult for them to find the right technical cofounders. I was able to devise (along with cofounders) a model where FasterCapital will become the technical cofounder and invest half of the money needed. Providing professional and cheap technical development per equity has allowed us to attract lots of startups and help them succeed. We developed later a similar model where we provide business development per equity through our Grow your Startup program. We also provide assistance in raising capital for startups and SMEs.

Please describe the FasterCapital ecosystem

FasterCapital’s ecosystem is big and strong and it has been built over the years. It mostly consists of investors, mentors and representatives worldwide. Our ecosystem members are enthusiastic toward our unique model and approach to help startups. The community is open, and we work with inspiring people. Our ecosystem partners’ team have worked hard — especially last year — on expanding our network and joining forces with other organisations that are supporting start-ups to create valuable collaborations.

"The 'ideal' business is one that has proved itself to be worthy in real life."

Give two pieces of advice to a digital start-up that’s seeking finance

1. Plan well and assess risks wisely: many entrepreneurs unfortunately jump direct just because they are enthusiastic. While enthusiasm is necessary but it’s not sufficient!

2. Be ready to pivot a lot. You will eventually discover that some of your assumptions were wrong. Those who survive are those who can pivot always and quickly!

Another piece of advice is to work on your product; everything else will fall into place. When you’re working on a tech project, your one and only hero is the product. This is the number one priority. Validate the concept as well as you can, don’t be afraid to make big changes where necessary, build and test your product, then start acquiring customers.

That sounds like 10 pieces of advice combined but it isn’t. Create a killer product and investors will come to you. It always has been, and will always be, the story of success.

What is unique about female entrepreneurs and start-ups by women?

I think the main unique aspect is the real value they are bringing to communities and societies. Women entrepreneurs are bringing attention to issues, social or not, that have not been addressed by their male counterparts. There is a gap in the ecosystem (which has been dominated by male founders) for such innovation and for new startups that approach social networks from a female perspective.

Also, many women have acquired valuable specialist expertise that we need. Many innovative edtech solutions are being put forward by former or current women teachers as women make up a greater percentage of educators. So, the expertise and reclaimed potential of women will enable a much better stance, and a much more practical and well-informed approach to building a business.

Please describe the ideal business from a fundraising perspective

Let me start by saying that investors should not have an “ideal business” in mind when looking for funding opportunities. They should have a flexible and open approach. However, there are some elements that contribute to making the business more appealing from a funding point of view.

First of all, the team behind the start-up; it’s a must for the founder to be truly passionate, professional, skilled, dedicated and able to handle the future challenges. After all investors are investing in the team more than in the idea. For the idea to be successful, you need good execution.

Second is a valid market opportunity. If it is not clear how you are going to be different from your competitors, chances are you will not create an impact.

Third, the “ideal” business is one that has proved itself to be worthy in real life. Not all investors are risk-takers, some need evidence that this business is worth their money, so businesses with big sales and revenues definitely have the upper hand.

How does FasterCapital manifest intelligent capital and start-up support?

Our model mostly revolves around smart capital. All of our programmes provide participants with services in addition to 50 percent of the costs needed as an investment. We are committed as long-term partners with entrepreneurs in our network, and we make sure we offer expertise and advisory — not just money. FasterCapital becomes an investor and a supporter of the start-up and our team works hand-in-hand with the start-up team. This creates a perfect environment for small businesses to grow. We also encourage smart investments through our Raise Capital programme by matching the founders with investors who are either industry experts or who have already invested in similar startups and who have the experience needed.

How many businesses and jobs (including also consultants) have FasterCapital helped to create?

FasterCapital has helped create jobs for more than 6000 people in more than 470 startups. It has also created an opportunity for over 1,000 mentors to be featured on the website to connect with founders. We have also more than 1,000 representatives and regional partners on a global level.

Where do you see hubs of dynamism in the region?

If you are referring to the Middle East region, then GCC countries — especially Saudi Arabia and the UAE — and Egypt are the go-to markets for creative minds. We are a global incubator, so on a global level, the US is surely always leading on this front. Germany and the UK are also one of the most dynamic hubs for start-ups.

You must get some great insight from all the business plan submissions…

Sure, I’m very lucky to work daily with such innovative people. Being in contact with passionate and talented entrepreneurs inspires me and keeps me updated with the world’s latest technologies and trends. It also enables me to predict and foresee what the next big thing might be! I can also put some of my experience with entrepreneurs and we can work together to improve the offerings and address some of the problems that they might be facing. The real-life lessons and stories of hard work, and teamwork, are invaluable and inspiring.

How do you envision technology innovation and digital transformation in the future?

AI has been taking over many aspects of our lives for the past 20 years and I guess AI will be taking most of creative jobs in the coming 20 years. Many have predicted this in the past and failed but now it’s different. The advance in AI, processor speeds and the creation of new hardware processors dedicated to AI will change the game. Hopefully, this will be for the benefit of humankind: to distribute and use resources more efficiently and wisely. I am generally positive about the future, but I bear in mind that technology is a powerful tool that requires wise people at the helm.

[caption id="attachment_21234" align="aligncenter" width="387"] CEO: Hesham Zreik[/caption]

Hesham Zreik, CEO of FasterCapital.

See the interview in CFI.co Autumn 2021 print version.


Energy Sector Grapples with Hydra-Headed Problems of Global Supply and Demand

At the recent COP-26 climate summit in Glasgow, government officials and leaders of international organisations put the spotlight on the energy sector.

This year marked the first meeting of the Energy Transition Council, formed to accelerate the shift to cleaner power sources. The members pledged to double private investment by 2030 and set the target for developed countries to quit coal by 2030 (developing countries get until 2040).

An energy crisis is ravaging the UK. Supply, as a result of the pandemic, has been slow to bounce back. In the early days of Covid, demand for oil dropped by 20 percent, and prices per barrel collapsed. Brent crude (the international benchmark for Atlantic basin production) dropped from $64.3 to $42 per barrel in 2019. Since then, production shortages have caused fuel scarcity across the UK — and the highest fuel prices on record.

The rising price of oil is indicative of a wider issue plaguing the UK population. At the time of writing, around 25 energy companies have been forced to close, unable to remain profitable under the price ceiling set by energy regulator Ofgem. Ordinarily, this would be a relatively manageable setback for the sector. But now there is decreased supply from Russia and increased demand from Asia — worsened by the closure of some North Atlantic refineries.

Residents who lost their energy supplier have switched to the more stable, but more expensive, energy giants. But these conglomerates are hesitant to take on new customers with fuel prices as high as they are.

Centrica-owned British Gas, based in Windsor, has agreed to take on stranded consumers — but expects compensation. Ofgem has admitted that the price cap will need to be raised again next April. The regulator says that although these companies are expecting a short-term loss, they are acquiring loyal customers. As smaller suppliers prove unable to weather the supply drought, public confidence will shrink. Larger, more durable providers will get a larger userbase — without sacrificing price or profit.

Crude oil could be just the first of the non-renewable energy sources to take a tumble. Not every UK motorist has been affected. EV users didn’t have to worry about fuel costs, and — according to Volkswagen Financial Services — their numbers will grow. More than a third of British motorists are said to be considering trading in fossil fuel-burning vehicles to “go electric”.

It’s a shift that can be seen across the globe. An International Energy Agency report indicates that the green energy sector is holding up well. In 2020, renewable energy sources accounted for almost 90 percent of the increase in global power capacity. Driven by growth in China and the US, renewable power capacity has hit a record of almost 200 gigawatts.

COP26 and the pandemic have shifted the narrative. To the delight of climate activists, green energy is becoming a reality. Consumers are increasingly aware of the impact of their choices, and are seeking out environmentally aware businesses.

Those that can best match the trend will reap the benefits.

By Yogesh Patel