Old Mutual today announced the appointment of Iain Williamson as Chief Executive Officer, effective immediately.&nbsp;This appointment concludes an extensive process initiated by the Board to appoint a permanent CEO for the Group.



A seasoned executive with nearly 30 years’ experience built across the Old Mutual Group, Williamson has long played a strategic role in shaping the business into the premium Pan-African financial services giant that it is today, championing mutually positive futures for its more than 13-million customers.



An Actuary by profession, Iain&nbsp;joined Old Mutual in 1993 and following various roles across employee benefits and personal finance, he relocated to London to a Corporate Development role at the then Old Mutual plc.



In 2003, he returned to South Africa, serving in a number of roles across distribution, technology and finance before being promoted to CFO: Retail Affluent and subsequently Managing Director of the Retail Affluent segment.



He was appointed as Old Mutual Emerging Markets’ Finance Director in 2015, and then as Chief Operating Officer in 2017.



He has twice acted as Interim Chief Executive Officer, first in 2017 and then again since May 2019 to date.



“We are delighted at Iain’s appointment. Over the last year, Iain has worked to steer Old Mutual through some significant leadership and operational challenges, demonstrating resilience and an acute sense of business acumen aligned to the Group’s values, purpose, and strategy. On behalf of the Board, we wish to thank him for his contribution during this time. We are confident that he will continue to galvanise the organisation around the delivery of its strategy and purpose and we look forward to working with him in this regard,” says Old Mutual Chairperson, Trevor Manuel.

Old Mutual’s Iain Williamson gives updates on R4bn COVID-19 cover

Old Mutual appoints new CEO

On the largely virtual Africa Day celebrations, in May, the current African Union Chair&nbsp; South African President Cyril Ramaphosa spoke of “a new Africa”.&nbsp;



As the continent battles a mounting Pandemic crisis is this is simply more empty political rhetoric which tends to get dusted off every Africa Day or will a better Africa emerge from the flames of Covid-19? If so what will this “new Africa” actually look like?&nbsp;



President Ramaphosa believes the Covid-19 pandemic has started to create a unity that Africa aspires to but which has all so often proved elusive:&nbsp;



“Day by day, across our continent, we are seeing the unity that is our strength being put to the service of saving lives and supporting the vulnerable.&#8221;



In webinar after webinar there’s no doubt that many African business and political leaders share President Ramaphosa’s optimism. They sense this pandemic really is a turning point to bring about the change everyone on the continent is so hungry to see.&nbsp;



The Nigerian entrepreneur Tony Elumelu says “the pandemic presents an opportunity to reset Africa, create employment and eliminate poverty”:



“Africa must embrace the new normal. The disruptions we’ve seen across healthcare, logistics, supply chain, and the digital economy are here to stay. This presents a unique opportunity for a united Africa as a strong regional bloc acting in a coordinated fashion”.



He has called for a Marshall plan to galvanise the entire continent and mobilise people and resources to address Africa’s needs. That is also the conclusion of The African Union’s Special Envoy on Covid-19 Dr Ngozi Okonjo-Iweala:



“We can see this pandemic as an opportunity for the continent. We have to specialise our countries to manufacture the things we need so we can trade with others. We need to produce good jobs for our young people and empower our women and youths and put them at the centre”



Several of these themes have also been expressed in many African-related webinars. There is much talk about how this Covid-19 crisis has smashed international supply chains and how the future is now regional. There are many calls for investment to encourage African SMEs to create local supply chains in their communities to boost employment.&nbsp;



While Africa hasn’t yet suffered the ravages of the Pandemic on the scale that has hit countries like the UK and USA, the impact has still been devastating. Economic activity in Sub-Saharan Africa is on course by contract by 2.8% this year, the deepest on record. The collapse in oil prices has hit Africa’s second and third&nbsp; largest economies- Nigeria and Angola- hard, while the collapse of tourism and a drop in demand for agricultural exports to Europe have&nbsp; devastated economies from Kenya and Ethiopia to Cote D’Ivoire, Mauritius and the Seychelles.&nbsp;



South Africa, the continent’s largest and most developed economy, is expected to experience its deepest recession for a century with a 7.1% contraction in output.



Covid-19 cases are now present in every African country. African leaders have come together quickly to help each other fight the pandemic. In contrast to countries like the US and the UK they saw the risk early.&nbsp;



Within days of the first case being reported in Egypt African Union Chair Ramaphosa called a meeting of African Union leaders, and he put his own South Africa into lockdown before a single death had been recorded. Now African Health and Finance Ministers meet every week in virtual conference to co-ordinate their response and share intelligence with the Africa Centre for Disease Control and Prevention.



Cameroon has sent planes to the DRC to help that country get medical support its more remote areas, the African Development Bank has denoted $4 million to South Sudan to bolster its fragile health system, while the African Union has launched a medical supplies platform for all 54 African countries. This is designed to make medical supplies, test kits and protective equipment available across the continent.



It feels a much better response than we’ve seen in many countries in the global north and President Ramphosa says he believes this collaboration can form the beginnings of a more united Africa in a post-Covid-19 world.&nbsp;



He’s assembled an all-star team of senior Africa leaders who are already working on plans to implement the lessons of the crisis and rebuild Africa’s damaged economies. Leaders like the former Head of the African Development Bank Donald Kaberuka and the former Nigerian Finance Chief Ngozi Okonjo-Iweala see economic integration as a long overdue remedy to many of the continent’s economic woes and essential to developing a strong manufacturing base.



One key component of this plan will be the African Continental Free Trade Area which will be launched early next year to create the largest free trade area in the world, worth three trillion dollars with a market of more than a billion people.&nbsp;



The expectation is that this free trade area will encourage African manufacturers to trade with their neighbours, develop industrialisation, and reduce the traditional dependency on goods imported from outside the continent.&nbsp;



SMEs currently account for 90% of all businesses in Africa. Any transformation is going to require support for this sector through investment and training. These SMEs will be given training and financing to deliver solutions for Africa across manufacturing, healthcare, energy, digital innovation, infrastructure, agriculture and other sectors.&nbsp;



There are more than 600 Tech Innovation hubs across Africa. Africa’s digital revolution will emerge from them, especially in the sectors of e-commerce, distance learning for schools and universities to train better educated populations, and big opportunities in renewables and energy infrastructure to start plugging the continent’s electricity deficit.



Agribusiness is also thought to be ripe for investment. With the opportunity to move more and more of African’s millions of farmers from subsistence to commercial enterprises, there’s no reason why Africa can’t become the world’s bread basket.



The Covid-19 crisis has also brought about a realisation that Africa has great opportunities in health care. Africa currently imports most of its ventilators, masks and personal protective equipment for its doctors and nurses. It also imports almost 100% of its drugs and medicines to the tune of $15 billion a year. There are massive opportunities here for African companies to produce many of these materials, create generic drugs and local supply chains.&nbsp;



I’ve seen many more blueprints for the future of Africa in webinar discussions during this long lockdown. What unites them all is a general agreement that when we finally emerge from this pandemic&nbsp; it mustn’t be back to “business as usual.”&nbsp;



Peter Burdin is the former Africa editor for the BBC.

Peter Burdin

COMMENT: What will be the new Africa post COVID-19?

As any South African business person will tell you, the Covid-19 pandemic has been a stressful time to be running a company. However, as we have worked to mitigate the effects of Covid-19, we have also gained a glimpse of what the future of business might look like. It is an exciting prospect.



This is not to downplay the incredibly difficult time we find ourselves in. Lives are being lost, people are falling ill, quarantine regulations are forcing families into heart-breaking situations. Lockdown has come with its own hardships and has also led to the downfall of several businesses.



These are terrible outcomes, and one feels for our fellow South Africans.&nbsp; However, the crisis has also taught us something.



In our business, when the state of disaster was first declared, our initial focus was to understand how regulations applied to us, and then to ensure the safety of our staff and our customers.



People are remarkably resilient, and it was a pleasant surprise to see that staff and customers settled into a new routine within a couple of days.



However, there would be no getting away from the economic impact of the global shutdown. The statistics from the first two weeks of the lockdown were unprecedented. Some businesses saw their income streams evaporate overnight.



As a business in the telematics, fleet management and vehicle recovery space, we saw our call-outs decline to almost nothing. For the first time in our history, our metrics reflected no criminal incidents on certain days.



We were not busy, which was worrying, but the quiet period gave us a chance to critically evaluate our business and consider how we would structure our operation going forward. This was Design Thinking made manifest. We had a chance to structurally reinvent ourselves.



We also started to notice some interesting things. For instance, despite social distancing and remote work, we were having more conversations with our customers than ever before. We were mostly checking on how they were managing the lockdown and finding solutions around payment relief to help each other through the lockdown.



But we came to realise that customer service is not a function of physical interaction. It can be done just as effectively – more effectively, even – by digital means. The power of technology allows one to speak to the entire workforce at any given moment.



Similarly, with internal staff communication. Through our weekly newsletters, virtual town hall meetings and other engagements during the lockdown, are staff relations have in fact improved.



As a direct result of this enhanced staff engagement, and suggestions from staff, we will be launching four innovative new products to market following the lockdown period.



We have found that we’re probably more productive as a business, and we’re communicating better with our partners, customers and co-workers than ever before. We are determined that after the lockdown, we will embed these more effective digital ways of working into our operations.



We also found ourselves taking a closer look at our assets. Metrics showed our staff were as effective working from home, which has forced a fundamental rethink about our premises, and the need for a centralised campus.



We are now looking at becoming a remote-working organisation by design. We are also enhancing our ecommerce capability.



On a more human level, our company has been blessed to have been spared any serious Covid-19 incidents. But the threat is real. This has led us to interact on a more humane, empathetic and sincere level – as clients, suppliers, partners and colleagues.



Staff are supporting each other, practically by sharing lifts to work, or by forgoing leave or financial bonuses. We are coming to understand how much we all mean to each other.



This also has implications for customer relations. When we start relating from a position of empathy, and we feel fulfilled at really being able to help each other, then customer centricity becomes easier to implement.



When the initial lockdown was declared, and business slowed to a trickle, we also looked at how we might make the most productive use of our staff. We decided to invest in training, through our learning platform with Udemy.



Staff uptake on the various courses has been phenomenal. We have found such a hunger for further education and self-improvement, that we have come to a new understanding of ourselves as a “learning organisation”. It seems the more knowledge we provide, the more appetite there is to learn. Two-thirds of our workforce are enrolled in training courses.



On the AI front, while we have always used artificial intelligence to gain insights, the pandemic has forced us to make better use of it. Today, we use chatbots to manage customer queries and to enhance CRM management.



Our response times are now quicker, and metrics show that customers are happier. We have seen that putting the customer at the centre of your business is not just about face-to-face meetings. You can use technology to serve your customers better. This is what we plan to do.



It has not been easy, but our business will survive. We will emerge from the pandemic as a transformed, more digital, customer-centric organisation, with a deeper culture of learning, and stronger human bonds with our people.



Those human bonds are what business is all about. The pandemic didn’t quite teach us that, but it did remind us. Our shared humanity is what holds us together.

image002 (1)

COMMENT: How I grappled with business during COVID-19

Five years into the African Development Bank’s ambitious New Deal on Energy for Africa (NDEA), the Bank’s investments are set to provide electricity access to around 13 million people and deliver about 55,000 km of distribution lines, and 6,700 km of transmission lines, of which 3,200 km are for regional interconnections.



The NDEA called for a substantial increase in investments to realize the Bank’s High 5 priority to “Light Up and Power Africa,” which aims to mobilize finance and expertise to expand access to reliable, sustainable energy for more than 200 million Africans through investments in power generation, inter-connections, transmission and distribution. This effort is critical to unlocking Africa’s vast economic potential, enabling the growth of value-adding industries and services, and, most importantly, unleashing the ingenuity of the continent’s 1.3 billion people.



The strategy was grounded in the recognition that partnerships are central to its success. In collaboration with African countries, the Bank’s interventions have ranged from setting up the right enabling policy environment, supporting utilities, to increasing the number of bankable energy projects. Additionally, the Bank is accelerating major regional projects and driving integration through the Program for Infrastructure Development in Africa, whilst also supporting bottom-of-the-pyramid energy access programs.



Priority was given to investments in low-carbon technologies, set to contribute to over 2 GW of additional generation capacity by harnessing the large, hydro, solar, geothermal and wind resources of the continent. Yet this is only the beginning, as much of the work to date has been centered on setting up the right frameworks to mobilize different partners and alternative forms of capital to tackle the various challenges in the sector at country, sub-regional and regional levels.



Indeed, mobilizing partnerships and rolling out countrywide energy transformation are continuous works in progress. In 2019, as testament to the Bank’s efforts in enhancing dialogue and consensus, the G5 Heads of State endorsed the Bank’s Desert to Power initiative, intended to build the world’s largest solar zone across the Sahel by adding up to 10 GW of solar generation capacity through public and private interventions. The Yeleen Solar Program in Burkina Faso – the first of dozens of similar projects expected to flourish across the Sahel region – will provide energy to 150,000 households in rural areas through solar mini-grids and solar home systems, and an additional 52 MW of grid-connected solar generation, enough to power 30,000 new households.



Achieving the objectives of the New Deal on Energy for Africa will require a significant increase in private sector investments. The Bank catalyzes more private investments into independent power producers and off-grid projects through partnerships with project developers, commercial banks, private equity funds, institutional investors and other development finance institutions. Over the past five years, the Bank’s interventions reached $1.5 billion in private sector operations, corresponding to 1.7 GW additional generation capacity through independent power producers.



In addition to mobilizing concessional resources through bilateral and multilateral sources – notably from the European Union, Green Climate Fund and Climate Investment Funds – the Bank hosts the Sustainable Energy Fund for Africa (SEFA), one of the largest multi-donor technical assistance and concessional capital funds in the continent, designed to catalyze private sector participation in renewable energy.



In 2019, the Bank converted SEFA into a special trust fund to widen its interventions into green mini-grids to accelerate energy access to underserved populations; green baseload to support clean generation capacity; and energy efficiency to optimize energy systems and reduce energy intensity. SEFA is expected to contribute to the electrification of more than 7 million households by 2030.



The Bank is also actively supporting the mobilization of commercial capital through blended finance solutions. The Facility for Energy Inclusion, which was operationalized in 2019, is a $500 million investment platform organized around two funds – off-grid and on-grid – to provide flexible debt products, including in local currency, to emerging business models in the small-scale renewable energy space. The Facility for Energy Inclusion will contribute to more than 3 million new connections by 2030.



To enhance institutional performance and improve the enabling conditions to attract much needed investments, the Bank has also implemented initiatives such as the Electricity Regulatory Index to monitor and benchmark regulatory performance against best practices, the Sustainable Utilities Transformation Agenda, to build sustainable utilities and energy institutions, and the Africa Energy Portal to provide accurate, up-to-date data on Africa’s energy sector. In 2019, the African Development Bank reported that an additional 96 million African households had gained access to electricity between 2015 and 2019, with countries like Rwanda on track to achieve universal access by 2025. Despite this encouraging progress, close to 600 million Africans still lack electricity access and achieving universal access goals under SDG7 still requires greater and swifter efforts to meet the demands of Africa’s growing population.



Addressing electricity access remains a costly enterprise, with the International Energy Agency placing the price tag at around $120 billion annually through 2040, four times higher than current levels.



While our direct financial contribution is modest by comparison, we are confident that its judicious application to catalytic power projects, innovative financial structures, sector reform processes and acceleration of decentralized solutions will get us far in our mission.



Dr. Kevin Kariuki, Vice President, Power, Energy, Climate Change &amp; Green Growth, African Development Bank

VP Kevin Kanina Kariuki

COMMENT: A New Deal on Energy for Africa

The Zimbabwean economy seems to go from bad to worse, as authorities leave behind a trail of policy missteps.



The government announced late on Friday that monetary transactions on mobile-based money platforms are suspended, potentially impacting up to 80% to 90% of all transactions.



This unprecedented move leaves Zimbabweans stranded with almost no mode of transacting. Residents with money stored in any of these mobile providers need to visit a local bank to liquidate their accounts.



The most prominent players in the industry include EcoCash, One Money, MyCash, and Telecash. EcoCash is the biggest non-banking financial institution and holds no less than ZWL$8bn on its mobile money platform.



In a statement following the announcement, the company urged its 10 million users, most of whom do not have bank accounts, to remain calm.



The government is accusing mobile money providers of economic sabotage and malpractice, which have led to the creation of a parallel central bank.



The government’s animosity towards non-banking financial institutions is nothing new.



Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya voiced his support for the government and issued a monetary policy statement over the weekend specifying revised conditions to the ban.



“The unprecedented measures have been necessitated by the need to protect consumers on mobile money platforms which are being abused by unscrupulous and unpartisan individuals and entities to create instability and inefficiencies in the economy,” the statement read.



Meanwhile, trade on the Zimbabwe Stock Exchange (ZSE) is also suspended and investors are frantic and deeply concerned over what has happened to their money.



This is a blow for Zimbabweans who usually turn to the local bourse to safeguard the value of their money against rising inflation and currency depreciation.



Yet not long ago, officials were still upbeat about the Victoria Falls Stock Exchange (VFEX) and the foreign investment it would unlock.



On Tuesday, June 30, the RBZ proceeded to hold the second weekly foreign exchange (FX) auction.



Last week saw Zimbabwe’s currency peg to the US dollar end after the weighted-average rate was calculated at ZWL$57.4/$, thereby setting the new exchange rate. At the latest auction, this rate was calculated at ZWL$63.7/$.



The Zimbabwean dollar has been in freefall since the start of the year as a lack of confidence erodes its value. We believe this trend is likely to persist while foreign exchange reserves remain at distressingly low levels.



The latest move is simply another desperate attempt to enforce the use of a currency with no credibility.



We have stated before that the economy is in a state of dysfunction, characterised by irrational policy measures.



The banning of mobile money services further exacerbates confusion and turmoil in Zimbabwe’s monetary environment.



Jee-A Van Der Linde, Economist

Zimbabwe tightens coronavirus lockdown in capital Harare as cases hit 203

Hello?  – How Zimbabwe’s got the wrong number when it comes to mobile money

The African continent is home to what is considered a huge growth opportunity – agriculture. With 65% of the world’s available uncultivated arable land, potential exists for African countries to reach their developmental goals and become major players in the global food system.



Despite the continent’s abundance in arable land and water resources, its economies and communities are yet to reap the benefits. Agribusinesses in Africa still face serious challenges and as a result, the sector remains largely untapped.



With poor supply chain channels, inadequate infrastructure, poor access to markets, and a lack of access to know-how of modern farming practices, tools and equipment, smallholder farmers, who contribute 70-80% of the continent’s food production, cannot migrate from subsistence to commercial farming.



The developed world now considers technology as an essential enabler to modern day farming, and without transformation, sub-Saharan Africa risks falling even further behind on the competitive scale; this while the sector remains an important driver of economic growth and employment on the continent. It then becomes critical to consider ways to support and develop what is seen as Africa’s rural last mile. Technology and mechanisation have proven to enhance productivity, yields, cost reduction at scale, improve quality and farm profitability.



While smallholder farmers remain an important grouping, it is one that is typically overlooked by many financial institutions. Many have tried to crack this market but have been unsuccessful.



Agritech solutions, for example, are transforming traditional farming practices and there are now more than 350 active agritech start-ups on the continent who are responding to the potential opportunity. But without connectivity or access to finance, it is often difficult for emerging farmers to take advantage of the benefits of modern farming technologies.



The real challenge lies in delivering a range of financial and non-financial services to farmers and food producers on the continent. It is impossible to overcome this alone. An ecosystem involving multiple players will ultimately close the gap.



This type of ecosystem and platform thinking are the latest themes coming out of international research and stems from the exponential growth of businesses like Alibaba and Amazon. These businesses bring together a network of ecosystem participants to create new markets for producers and consumers.



Standard Bank believes there is a significant opportunity to grow sectors on the continent by partnering with other players to build new platforms and models that enable clients to access services for their financial needs and beyond.



We are embedding this design thinking across all areas of the business, but more actively in Agribusiness where, in 2019, we started on-the-ground research in Uganda to understand the pain points experienced across the agricultural value chain. This would be the starting point of the agriculture ecosystem project.



Our team engaged over 150 stakeholders from farm to fork (input suppliers, farmers and aggregators, to industries involved in processing and value-addition) with a view of building the OneFarm platform to help address these pain points.



This platform aims to bring together a network of digitised solutions that could unlock the ability of all our clients – from input suppliers to off takers and corporates who facilitate the trade – and ultimately improve the quality and quantity of agricultural output across the continent.



Through this exploration, we have learned that education is a fundamental enabler to help farmers to realize the benefits of digitised solutions. The team employed an agronomist to provide training on best practices to the farmers and manage demo farms to better understand the effects of adopting good agronomic practices. In this first iteration, some farmers have increased their capacity by over 100% simply as a result of being able to access finance.



We hope that through OneFarm, we can create a culture where farmers and co-operatives embrace the opportunity to formalise themselves knowing the benefits it will unlock.



In Nigeria, through our investment in Founders Factory Africa, we partnered with local agritech FoodLocker to create a marketplace platform, where machine learning is leveraged to forecast foodstuff demand. This enables large-scale buyers to efficiently procure fast-moving consumer goods and fresh produce from smallholder farmers.



The intention of OneFarm and other initiatives that we have launched within Agribusiness is to leverage platforms to impact a lasting difference in the lives of rural agricultural players. This forms part of greater vision to go beyond the role of financiers or bankers to provide all-encompassing services that drives the ecosystem and helps communities move forward.



Louis van Ravesteyn, Head: Agribusiness – Pan Africa, Standard Bank Group.

shutterstock_123544153

How to grow a fortune in the golden fields of Africa.

By Anu Shah



Covid 19 has brought unprecedented economic uncertainty across the world and tech companies think hard about the future and investments.



Especially, since the FANGs of the world are sitting on cash reserves larger than the GDPs of some countries. Infact Apple and Google are shopping aggressively for the strategic companies at a discount. For instance, Apple acquired NextVR &nbsp;for $100Mn, Amazon acquired Zoox for $1Bn. So what does the future of the tech start-ups and venture capital look like? To understand that let&#8217;s take a look at how does a venture capital works.



Typically, a venture capital firm raises money from the largest and most diversified institutional investors with a fund life of roughly 10 years. New investments are made in the first two to three years of a fund’s life. Venture capital creates a large reserve to make follow-on investments through the end of a fund’s term. As a rule of thumb, investors reserve $1 for every $1 invested in an early-stage company. The combination of long fund terms and dedicated reserves helps mitigate the effects of turbulence on funds and portfolio companies.



The United States venture capital industry has existed for 50 years. It has weathered many storms and is ready for anything. There the venture capital industry aggregated $275Bn in the last six years. Using both a fund-by-fund analysis and averages across the industry, it is estimated that the industry has $150Bn of “dry powder” of which likely $76Bn is earmarked for reserves for existing companies and $74Bn for new investments.



This present level of reserves is strong relative to any recent cycle. While one can be optimistic, albeit cautiously about a large reserve to help start-ups through this fundraising drought, venture capitalists will change their strategy drastically to advance further, here are some tips for the industry: &nbsp;



1. Be very selective about investing: Venture capitalists have invested $280bn in the last two years. In the case of backing companies at current levels, we would run out of reserves in four quarters. Hence, there will be increased scrutiny and diligence in investing, more focus on unit metrics cash flows, sustainable and profitability; over traction and growth at the expense of high cash burn; &nbsp;having said that, funding for innovative technologies, such as personalized medicine, online education, remote workforce solutions, and reliable Internet connectivity, will be bullish.



2. Prioritise existing portfolio companies for funding: Since 2014, more than 10,000 US companies in the U.S. that have been funded. Many companies have exited, found profitability, or already have strong balance sheets, but many more do not have alternatives and will need capital assistance. Venture capitalists will use the reserves to support their portfolio first.



3. Redirect focus on institutional investors for raising new funds: In good times, capital can come from a variety of sources including hedge funds, mutual funds, and wealthy individuals. When the cycle turns, these alternative sources can substantially pause their investing or exit the industry indefinitely, leaving only institutional investors as a primary capital source. Hence venture capitalists trying to close the new funds will double down on one channel, putting more pressure on the performance and exits of current portfolio companies. 4. Employ alternate investment and fund raising tools to continue funding: Alternate tools, such as fund recycling, that is, investing profits from old investments into strong existing portfolio companies, crossover investing, that is, investing from newer funds into older funds, and formal and informal co-investment vehicles.This will provide a boost to the industry’s reserve capacity to continue investing in the start-ups.

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COMMENT: How to make money from venture capital in the uncertain world of COVID-19

Antonio Pedro during ECA at 60_GREAT PIC

The Day After COVID-19: Overcoming the Novel Coronavirus double jeopardy in Central Africa

Fitch Ratings-London/Hong Kong-26 June: The South African government&#8217;s intention to stabilise debt levels within four years, as set out in this week&#8217;s emergency budget, is unlikely to be achieved, Fitch Ratings says. This reflects persistent challenges in reducing expenditure, boosting growth and insulating public finances from struggling state-owned enterprises, as well as reflecting the impact of the coronavirus pandemic, which will drive a sharp rise in debt/GDP this year.



Wednesday&#8217;s emergency budget revised the consolidated budget deficit projection for the current fiscal year (FY21; ending March 2021) to 15.7% of GDP, over double the 6.8% projected in the original budget in February. The main factor is a sharp fall in tax revenues due to the economic fall-out resulting from lockdown measures, as well as the general hit to the economy and some tax relief. The government expects the main budget revenues to be ZAR300 billion &#8211; 6% of GDP &#8211; lower than previously anticipated.



South Africa has recorded 100,000 coronavirus cases and this number could rise substantially, according to government modelling. Nevertheless, the government expects non-interest expenditure to be just ZAR36 billion (0.7% of GDP) larger than projected in February, as the emergency budget plans to offset substantial additional spending on health and economic support through savings in other areas.



We view the government&#8217;s forecast of gross loan debt rising to 81.8% of GDP in FY21, much higher than the 65.6% in the original budget, as realistic. However, we believe its expectation that debt will peak at 87.4% in FY24 is optimistic. This would require sufficient fiscal consolidation to achieve a primary budget surplus in that year, which would be South Africa&#8217;s first since 2008, towards the end of the commodity boom.



The government aims to cut expenditure by ZAR230 billion over FY22 and FY23 relative to earlier plans and then implement additional cuts, complemented by small tax-raising measures. Details will be presented in the Medium-Term Budget Policy Statement in October.



Revenue projections beyond the current fiscal year appear conservative, and revenues may exceed government forecasts (the government predicts that revenues will still be ZAR202 billion below its February projections in FY23). However, Fitch believes planned expenditure cuts seem ambitious not least because they would significantly weaken the economic recovery. South Africa&#8217;s recent experience highlights the challenges of meeting fiscal targets. February&#8217;s budget abandoned the earlier target for a primary budget balance by FY23 (excluding support for state-owned electricity company Eskom).



Social and political factors, including exceptionally high inequality, powerful trade unions and deep divisions within the governing African National Congress, present significant hurdles for spending cuts. For example, the government has still not agreed the wage bill savings with public sector trade unions for FY21 that were included in the February budget. A comprehensive adjustment of the large public sector wage bill may not be possible until the current three-year agreement expires in April 2021, and negotiations then are likely to be difficult.



Key reforms to Eskom that would support the economy and reduce the burden on the public finances, and relatively minor measures to accelerate GDP growth, have also faced significant political hurdles. Although the challenges in restructuring state-owned flag carrier South African Airways, which filed for business rescue protection last December, are small from a macroeconomic standpoint, they illustrate the difficulty in addressing budget pressures from troubled state-owned enterprises in the face of trade union opposition. Our downgrade of South Africa&#8217;s Issuer Default Rating to &#8216;BB&#8217; on 3 April resulted from the lack of a clear path towards government debt stabilisation as well as the expected impact of the coronavirus pandemic-related shock on public finances and growth. The Outlook on the rating is Negative. A continued rise in government debt/GDP and failure to formulate a clear and credible path towards stabilising the government debt/GDP ratio could lead to negative rating action

SA Finance Minister Tito Mboweni delivers his emergency budget

#SpecialBudget2020: Finance Minister Tito Mboweni delivers emergency budget (full speech)

South Africa unlikely to sort out its debt in four years – Fitch.

Finance Minister Tito Mboweni’s emergency budget on June 24 was meant to provide a roadmap showing how the government intends to deal with a dire fiscal situation.



Unfortunately, the speech underwhelmed on detail.



We already had a good idea of what the Treasury expects with regard to the economic and fiscal outcomes this year -due to the ‘leaks’ over the weekend- &nbsp;but what we were looking for was detail on how Mr Mboweni plans to manoeuvre the ship back on course.



The Treasury now expects GDP to contract by 7.2% this year compared with the 0.9% growth rate expected in February; the fiscal deficit is expected to reach 15.7% of GDP in FY 2020/21 compared with the 6.8% of GDP deficit projected at the start of the year; while public debt is now expected to end the fiscal year at 81.8% of GDP from 65.6% of GDP previously.



In the official budget publication, the Treasury puts forward two scenarios: active and passive. The passive scenario refers to the debt trajectory if current trends persist, while the active scenario incorporates all the intended adjustments.



The passive scenario sees public debt remaining on a strong upward trajectory, reaching 114% of GDP by 2024/25, while the active scenario sees public debt peaking at 87.4% of GDP in FY 2023/24.



Mr Mboweni noted that the government needs to find spending adjustments of about R230bn over the next two years.



Tax measures of R40bn over the next four years will also be required.&nbsp; Details with regard to these tax proposals will be given in the 2021 budget. Nothing was said about South African Airways (SAA). The Land Bank will be recapitalised with R3bn.



No further information was given with regard to the ongoing public sector wage dispute or the government’s intentions after the current bargaining round ends next fiscal year.



Mr Mboweni stated that this year, nearly half of all consolidated revenue will go towards the compensation of workers in the public sector.



On the ongoing wage dispute, the finance minister stated, “Minister Senzo Mchunu is negotiating with our partners in the labour movement to find a balanced solution that sets compensation at an appropriate, affordable and fair level. We wish him well.”



It is important to note that the R230bn in spending cutbacks required over the next few years is in addition to the R160bn cut to the public-service wage bill set out in the 2020 budget. In commenting on the latter, Mr Mboweni stated: “Failure to achieve these reductions will require larger reductions to wages and other spending areas in the outer years of the spending framework, and higher revenue increases.”



Mr Mboweni confirmed that the country would be borrowing $7bn from international finance institutions.



During his post-address media briefing, the finance minister said that South Africa would be asking the IMF to approve a $4.2bn loan in early July.



It was previously said that the country would be making use of a $1bn facility from the National Development Bank- that is, the BRICS Bank-&nbsp; meaning the balance is likely to come from the World Bank.



Approaching the IMF and World Bank for assistance will rankle many within the ruling African National Congress (ANC) and its alliance partners. Mr Mboweni found himself in the cross hairs in April when ANC Secretary General Ace Magashule and his alliance counterparts called on President Cyril Ramaphosa to reject an approach to the IMF or World Bank for assistance in the fight against Covid-19 following comments by the finance minister.



The perhaps unavoidable decision to turn to international finance institutions will no doubt expose ideological cleavages within the alliance, as Mr Mboweni, with the presumed backing of Mr Ramaphosa, may be seen to have crossed a red line.



No major intentions with regard to policy reform were mentioned. While a budget reading does not usually play host to such announcements, many hoped that the unprecedented nature of the situation would encourage bold action.



Mr Mboweni did, however, state that a firm policy basis has been laid by the Treasury’s Towards an Economic Strategy for South Africa paper, which was considered by Cabinet and accepted last year.



After conceding that progress has been slow, partly attributable to Covid-19-related delays, the finance minister stated that “we are now ready”.



Another noteworthy comment by Mr Mboweni, in referring to the policy shifts put forward by his policy document, went “One of these is to shift away from the electricity supply system that was introduced in 1923, when George V, the Queen’s grandfather, was the king of what was known as the Union of South Africa. The last few years have shown the inefficiency of this archaic system. Provisional allocations to Eskom were made on the understanding that government’s Electricity Roadmap would be implemented.&nbsp; Progress is slow.&nbsp; The principle of zero-based budgeting is that we must see demonstrable value for money: Eskom will need to show progress in meeting the milestones as laid down in the Roadmap. This is non-negotiable. Progress on the other reforms will be given in the MTBPS [Medium-term Budget Policy Statement].”



The emergency budget describes a desirable fiscal destination but does not provide a credible roadmap to get there.



Mr Mboweni used a significant proportion of the speech to give listeners an economics and history lesson on sovereign debt crises, suggesting that there are a few that still need some convincing.



Given that the current wage dispute is ongoing in the courts, it is understandable that no further details were provided on the matter.&nbsp; But given the importance of containing this spending, the lack of a medium-term plan left the speech wanting.



Furthermore, Mr Mboweni highlighted the severity of the fiscal situation by starting the speech with a striking statistic: “This year, out of every rand that we pay in tax, 21 cents goes to paying the interest on our past debts.”



This, combined with the fact that around half of all consolidated revenue will go towards the compensation of workers in the public sector, clearly shows why the country is in such a fiscal mess.



Jacques Nel &#8211; Economist

THE WEEKEND READ: Analysis– a budget long on words but short on detail.

As the restrictions imposed on the movement of people and social interaction begin to lift, people will soon take their first steps into a world that will be very different from the one that they had known pre-COVID-19.



Major trends that were gaining momentum before the pandemic hit, have accelerated in its wake. Digital apps have been central to this rapid and meaningful shift, mainly because they have brought accessibility, convenience and simplicity to the lives of consumers. Online shopping, on-demand video streaming, virtual meetings and the like, have been adopted by more people than ever before. But as we enter into this ‘new normal’, how will this affect the way we work, both now and in the future?



While many industry sectors are counting the costs of the COVID-19 crisis, businesses that have adapted and moved swiftly to serve their customers and their employees, are reaping what they have sown. Accelerated digital transformation that harnesses reduced human interaction, automated tasks, and increased productivity are simplifying the lives of employees during a time where the lines between work life and personal life are blurring.



Employees are finding less time for everyday self-care such as exercise, preparing food, and family time, let alone for arbitrary errands, like paying utility bills or renewing a driver’s licence. Buying items that aren’t considered essential or in-demand is even more complex. How can an employee source, pay and get delivery without having to spend time searching the internet for suppliers that are operating and have stock? Hey Jude, for example, is the world’s first human-powered digital assistant for busy people and gets things done quicker and smarter than they can do so themselves. Virtual assistants take care of a member’s everyday problems and personal tasks, so that they can focus on doing their job. By embracing digital technology within organisations, employers can help make their employees’ lives so much easier.



Digital technologies are also being used to improve the onboarding processes of businesses. While acquiring talent isn’t a priority for many employers right now, HR departments will still need to onboard employees at some point and train them remotely. Augmented reality can equip HR departments in creating immersive experiences for training and fast-tracking employees at home. Virtual assistants can be used to walk employees through an onboarding environment and be on standby to offer advice.



Since colleagues and supervisors won’t be able to meet face to face any time soon, employers can leverage the power of digital recognition platforms for peer-to-peer recognition. Specialist software can automate recognition and rewards systems to enable co-workers to remotely send and receive digital celebration cards, or social recognitions like virtual high-fives.



With new digital technologies and platforms being rolled out by the week, employers have more options at their disposal for encouraging their people to adopt healthy lifestyles. A major side effect of remote working are unbalanced lifestyles, and the over-eating, lack of exercise, and high levels of anxiety and stress that come with it. Digital technologies like Hey Jude offer innovative ways of managing employee mental health and wellness. Apps have been developed for this purpose, and can relay interactive voice conversations and animations to help workers adjust attitudes and reduce anxiety and depression.



By embracing and migrating to emerging technologies, businesses can better position themselves to navigate the unchartered post-COVID-19 business landscape that lies ahead, and keep their companies on course, now and in the future.



Marcus Smith – Technical Director, Hey Jude

Clarification on COVID-19 “hotspots” as SA moves to level 3 lockdown

How we can make money after COVID-19

The world has been reeling from the financial crisis and Covid19 crisis with reverberations being felt throughout the real economy on production, consumption, jobs and well-being. At times like these, we are all reminded of just how intertwined our future prospects have become and forced to reflect on how history has led us to our current circumstances. The economic progress of past decades has improved the material well-being of emerging economies while South Africa experienced deep looting of state owned companies, established with a centred vision to solve socioeconomic conditions.



The energy sector played a role in creating an enabling manufacturing processes, rapid standardization, industrialization and also make life more comfortable and enjoyable. Energy is the “oxygen” of the economy and the life-blood of growth in a developmental state such as South Africa. Acknowledging that the core problems in Eskom spring from broken generation and the solution is to lose the unproductive and attract the skills, investment and expertise to sort out the existing fleet, is crucial to turning Eskom around.



The challenge is, solutions focused on restructuring debt or finding new capital allocations doesn’t redress the critical deal with the broken vertebrae at the power utility, but cancelling Eskom contracts can assist and have cost effective electricity to help the industrial development and transitioning the economy to sophistication or innovation driven. Eskom’s expensive electricity generation inefficiencies, which are the cause of the growing debt, the collapse of South African manufacturing industry and expensive mining sector, needs be changed and that’s possible through prioritizing new service providers that are affordable.



The government can fix the Eskom problems and they don’t need to sell any division of Eskom to operate well, the president needs to restructure the energy facility as his main priority moving forward, to position South Africa as a manufacturing hub for the continent, that wìll prepare for upstream industrial production and reduce unnecessary imports to the continent.



The PIC propositions to Eskom bailout are steps leading us to the envisioned capable state. The PIC&#8217;s . Reuel Khoza highlighted that the impact of the bailout to Eskom and reduce financial crisis the power utility faces for about R400-billion in debt. Tatana Khoza further indicated that, Jointly the GEPF and the PIC have bonds with Eskom and those would amoun, while their proposed feasible solution of using R250-billion in PIC funds to pay some of the utility&#8217;s burgeoning debt are strategically placed to rebuilding the power utility as the core oxygen for the South African economy.



The PIC manages more than R2-trillion on behalf of the Government Employees Pension Fund (GEPF); Unemployment Insurance Fund (UIF); Compensation Commissioner Fund (CC); Compensation Commissioner Pension Fund (CP) and Associated Institutions Pension Fund (AIPF). The PIC’s role is to invest funds on behalf of its clients, based on the investment mandates set by each client and approved by the FSCA.



For PIC to be a catalyst of continental economic integration and a global investor and realise their vision to be a global leader in impactful investing, they need to prioritize re-establishing Eskom as a centre for continental solutions in energy, for Industrial development to peak the Africa continental free trade agreement and prepare for a great pie of the targeted or projected materials boom in the next 40 years.



It is a huge risk for the economy to neglect Eskom as diversified portfolio investments will yield lower Interest Rates of Return than expected and the economy will not recover from recession and COVID-19 crisis, as energy is a key driver for an economy.



Today’s global energy and materials industries are characterized by significant shifts, which are creating new opportunities. New trends and technologies are changing the way energy is produced, delivered and consumed, Eskom must adapt quicker. In parallel, and under the current production-consumption model, world demand for raw materials could double by 2060. South Africa must benefit and be a key player in every global economic boom.



Investment, innovation and public-private collaboration are needed to accelerate the transition to a more sustainable, secure and affordable energy system, while optimizing the net social and economic value delivered by materials. Strong partnerships and commitments within the energy and materials industries and across their value chains are essential.



South African focused economic development and Industrial production is needed to be used in pushing the boundaries of the energy and materials future through high-level, multistakeholder taskforces, bringing together leaders from the electricity industry, the oil and gas sector, the mining and metals industry, and chemical and advanced materials companies across the value chain.



Miyelani Mkhabela is the Executive Director for Antswisa Transaction Advisory Services

miyelani mkhabela

OPINION: If Eskom is oxygen let us breathe.

The unjust killing of George Floyd troubled my soul, and brought me to tears. The global outcry prompted by the deaths of Floyd, Breonna Taylor, Ahmaud Arbery, and many others has prompted a much needed discussion on racial justice. The stories I have heard about the injustices in the United States today has triggered a reminder for me of South Africa’s apartheid that was similar to America’s Jim Crow. While advancements were made with the U.S. Civil Rights Movement in the 1960s, and apartheid ended in 1994 just over a quarter century ago, both countries still deal with structural and historical inequality that affects access to quality education, health and finance.



In South Africa, the recent global protests are a harsh reminder of historical inequality along racial lines. The celebration of Youth Day in our country commemorates the Soweto uprising and South Africa’s own ardent protests which have shifted from calling for democratic freedom then to economic freedom now. Protests are powerful because they bring people together to build social cohesion by rallying around a set of noble values. A common value for all nations to mobilize around is the reduction of inequality. We need to address and acknowledge those who are— and continue to be— marginalized in order for our countries to move forward.



As we see more and more division in the world, we must focus on establishing social cohesion in our communities by sharing our personal stories. Storytelling is the cornerstone of the human experience and human connection. Through stories we construct our world. In my book “My Blood Divides and Unites”, I tell my story and those of others around the world. There is power in your story and how it can connect to others, bring healing from lingering emotions and instil a culture of empathy. As I write in my book My Blood Divides and Unites: ‘’That’s because empathy— listening to the other person with an open heart and connecting with the other person’s feelings even if you don’t agree— can put you in the other person’s shoes, and that can often be a catalyst for repairing and strengthening broken, even hostile, relationships.’’



In the book I call on individuals, businesses, government and the media to use stories and actions to become inspirational leaders. There are many examples of true leadership and reconciliation that happens at a grassroots level. Individuals across all levels of society are utilizing the personal and professional tools at their disposal to engage in racial reconciliation, however, this reality is not always displayed by the media. I believe we can and should share positive stories of racial harmony and social cohesion. We must be intentional about being inspirational leaders in the area of racial reconciliation in order to motivate our peers to play their parts in ending inequality.



In closing, an extract from my book:



“Now is the time for inspirational leaders to move the needle and change the hearts of individuals and nations by bringing people together….”



Who is today’s Rev. Martin Luther King? Who is our Nelson Mandela, our Abraham Lincoln?&#8230;.I cannot say who the leaders history remembers and writes of will be, but I can say with absolute certainty that everyone can inspire others with their forgiveness,kindness, and authentic desire to connect. Each and every one of us can be an inspirational leader amongst our families and friends, and in the workplace and place of worship. Each and every one of us can be a “mini King,” and from this many, a few will rise to inspire us to even greater heights. Of this I am sure.’’



Jesmane Boggenpoel is an experienced business executive and former Head of Business Engagement at the World Economic Forum in Switzerland. She has served on the boards of various international organizations.

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OPINION: How the death of George Floyd should make South Africa ask: where is the next Nelson Mandela?

What we see in Africa is a remarkable paradox where the economic shock is outpacing the dreaded health crisis. The peak of Covid-19 infections has probably not yet been reached, yet recession and unemployment are very much present, resulting in serious consequences for the already hard-hit private sector. &nbsp;



The transmission chain of this economic contraction is actually quite simple. It starts with falling commodity prices- like oil, copper and rubber- and disruptions in supply chains heavily dependent on the Chinese and European markets.



The abrupt suspension of tourism and flying is also a huge hit for African economies. Health prevention measures and the automatic decline in the purchasing power of a large majority of consumers are naturally slowing the momentum of domestic markets. The informal sector, which accounts for an average of 80% of employment on can’t survive without daily business.



Without downplaying the strategic value of the health response and the funds allocated, the emergency is both economic and social, since mortality on the continent is so dependent on the growth curve. With demographic trends at less than 3%, Africa is creating poor people, yet the International Monetary Fund (IMF) forecasts economic growth of -1.6% in the sub-Saharan zone in 2020 and a drop in real per capita income of 3.9% on average. The African Union (AU) expects the loss of at least 20 million jobs.



This challenge puts the private sector in the frontline. It is being impacted today but it is the prerequisite for a recovery tomorrow, provided that it hasn&#8217;t collapsed by then. The battle for jobs and against poverty is therefore being fought on the corporate front.



All stakeholders have to be fully mobilised to tackle this unprecedented challenge. It&#8217;s not about helping the continent – a bygone notion – it is about investing and continuing to finance the changes that have been successfully undertaken since the early 2000s.



From this point of view, under the impetus of the African Union, the United Nations Economic Commission for Africa (UNECA) and bilateral and multilateral donors, the macroeconomic policies undertaken in recent weeks to, first and foremost, restore budgetary room for manoeuvre to African States, are obviously moving in the right direction. Whether it is the debt moratorium, the massive provision of liquidity, or the use of Special Drawing Rights, everything must be put on the table, and quickly.



However, we also need to go deeper into the micro-economy to save SMEs and safeguard regional and continental champions. They are the stalwarts of African resilience. To achieve this, a two-pronged approach is needed to facilitate the flow of the promised funding to economic players, through targeted supply-side policies and innovative pooling of intervention tools.



One of the key priorities is to channel funding from international donors to the private sector through the rapid introduction of ad-hoc financing vehicles that can both identify the companies to support and manage these public funds efficiently and accountably. Institutional donors will have to rely on players in the field with strong operational capacity.



Given the urgency of the situation, conventional capital investment tools may not be the most appropriate due to the time required for due-diligence and other negotiations with shareholder groups with differing interests. It makes sense then to give preference to debt, quasi-equity and guarantee instruments to provide breathing space for companies with high potential in the medium and long term, but that are threatened in the short term by the effects of the Covid-19 pandemic. &nbsp;



The second priority concerns rapidly increasing bank liquidity levels and refinancing capacities to meet current requests for maturity extensions, as well as to prepare for the post-Covid recovery, which is going to need significant financing in order to be as reparative as possible. While States, Central Banks and donors are on the frontline in this respect, it goes without saying that managers and their shareholders must be fully involved.



For the first time in the history of humankind, all the engines of the global – and therefore African – economy are being hit by a pandemic. The response cannot be classical and orthodox. It must be strong, massive and inclusive. Only then will we be able to save jobs and avert the threat of a setback for Africa, which is at the epicentre of all the economic, social, demographic and climatic challenges of the 21st century.



Vincent le Guennou, Co-CEO of pan African investment fund Emerging Capital Partners (ECP)

OPINION-COVID-19: Why African business must win the battle for jobs on the corporate front.

<figure>
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 Prime Minister Abiy Ahmed speaking during a press conference on general elections in Addis Ababa, Ethiopia.
 Minasse Wondimu Hailu/Anadolu Agency via Getty Images
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<a href="https://theconversation.com/profiles/yohannes-gedamu-432503">Yohannes Gedamu</a>, <a href="https://theconversation.com/institutions/georgia-gwinnett-college-2416">Georgia Gwinnett College</a>

It’s two years since a surprise leadership change took place in Ethiopia. Introducing himself with a <a href="https://borkena.com/2018/04/02/ten-points-abiy-ahmed-made-in-his-speech/">historic speech</a> to the nation, the new Prime Minister Abiy Ahmed preached democracy as the only future for the country of more than 110 million.

The initial reforms were breathtaking. So much so that imagining democracy became justifiable. But Abiy’s administration inherited an extraordinary set of problems. 

Apart from the challenge of democratising an authoritarian state, it had to deal with ethnic violence and conflicts. And massive internal displacement of citizens.

Two years later, the government seems to have controlled the issue of internally displaced people. Resettlement programs appear to have been mostly successful. 

And there’s been considerable progress in ensuring peace and stability. News of violence is now mostly confined to two areas where the Oromo Liberation Army operates.

Beyond domestic politics, the volatile Horn of Africa also posed major challenges to Abiy’s leadership. But Ethiopia’s former arch-rival, Eritrea, is no longer a regional adversary. 

In addition, Abiy played a major role in the Sudanese transition from chaos to some political promise. And the fact that he changed the loud silence between Somaliland and Somalia into potentially history-making meetings also deserves recognition.

But, looking back over this period, Abiy’s major achievement could be viewed as the dismantling of the 28-year-old Ethiopian People’s Revolutionary Democratic Front and the birth of a nationally unified political organisation, the Prosperity Party. This is not without its challenges too, however. 

These developments have reinvigorated opposition groups afresh. In particular, the Tigray People’s Liberation Front, a regional political organisation that had major dominance over the old revolutionary front, has now emerged as a major political foe to Abiy’s Prosperity Party.

This poses a menace to Ethiopia’s path to reform. As a result, Ethiopia’s road to democracy and national elections, which were due to be held in August, is now facing two challenges: a global pandemic, and deteriorating relations between the Tigray regional state and the Prosperity Party, which is in charge of the federal government, and the remaining eight regions and two city administrations.

<h2>National elections</h2>

In its fight against the COVID-19 pandemic, Ethiopia has so far done a promising job. But cases continue to grow – slowly but alarmingly. 

Abiy cited the pandemic as a reason to postpone the national elections. The current administration’s five-year tenure was set to expire come September 30, 2020. Debates on the legitimacy of the government after that date have dominated national discussions.

The government proposed a number of options. One was to dissolve parliament and declare a state of emergency. Another was to request a special constitutional interpretation of the challenge. Yet another was to extend the tenure of current incumbents. 

The opposition was consulted and the issues were discussed in parliament. The decision that was finally taken was to ask for a judicial review process to provide a constitutional interpretation. These are done through the Council of Constitutional Inquiry, which then submits its recommendations to the House of the Federation for discussions and a decision.

The House of the Federation is the upper house of Ethiopia’s bicameral legislative branch. Its legislative authority is limited to powers on budgetary allocations, powers to interpret the constitution, and to safeguard the federal constitutional framework. 

Based on House’s decision, the chamber postponed the national election. 

The decision was not received well by the Tigray People’s Liberation Front. The regional parliament in Tigray has since defied the federal government’s decision, and announced it will hold its own elections. 

<h2>High stakes</h2>

This decision has wide-ranging implications. By holding an election without the supervision of the National Electoral Board, the Tigray People’s Liberation Front is undermining Ethiopia’s federal constitutional system.

Going it alone is a reflection of the front’s loss of power since the demise of the Ethiopian People’s Revolutionary Democratic Front coalition. This has weakened its resolve to maintain Ethiopia’s constitutional system.

The decision poses a threat to Ethiopia’s promising democracy. It has ignited an unprecedented level of tension between the Tigray region and the federal government. If this situation deteriorates further, the country’s fledgling democracy could regress. 

So far, Abiy’s administration has ignored the threat from the Tigrayan People’s Liberation Front. This could lead to undesirable repercussions. 

The federal government’s reluctance to address the crisis in Tigray might lead to renewed violence. This could in turn harm government’s response to the public health crisis caused by the COVID-19 pandemic. 

Finally, unless addressed, the deteriorating relations between the federal government and the Tigray region could further unravel Ethiopia’s dangerously designed federal system that in any case, is in need of major revision.

For democracy to take root in Ethiopia, the Tigrayan People’s Liberation Front’s defiance to the country’s constitutional order must resolved.<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/140750/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important" />

<a href="https://theconversation.com/profiles/yohannes-gedamu-432503">Yohannes Gedamu</a>, Lecturer of Political Science, <a href="https://theconversation.com/institutions/georgia-gwinnett-college-2416">Georgia Gwinnett College</a>

This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/abiy-put-ethiopia-on-the-road-to-democracy-but-major-obstacles-still-stand-in-the-way-140750">original article</a>.

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Abiy Ahmed put Ethiopia on the road to democracy: but he still has a lot to do, here’s why

The Fourth Industrial Revolution takes the automation of manufacturing processes to an unprecedented level, with the introduction of smart, autonomous systems that are capable of self-cognition, self-optimization and self-customization. While these processes present numerous opportunities for producers and manufacturers, it creates a heightened level of uncertainty for policymakers and development practitioners. This is partly due to the new challenges that will arise, especially in terms of employment, educational systems and industrial policies.



The June 16 1976 Uprising that began in Soweto and spread countrywide profoundly changed the socio-political landscape in South Africa, yet 44-year later youth unemployment is still a struggle. The youth &nbsp;&nbsp;unemployment rate in South Africa&nbsp;is expected to be 70 percent by the end of 2020, as Covid19 puts jobs at risk for about 1.6 million to 2.5 million in South Africa. The International Labour Organization estimates&nbsp;1.6 billion jobs to be lost because of COVID-19 that could make it even worse for South Africa.



Secondary challenges for youth are the current Education that’s not aligned with the needs of the Fourth Industrial Revolution and Future Revolutions and financial exclusion at institutions of higher education and training.



Ultimately, the aim of Industrial revolution awareness for youth and families is to explore the potential impact of Industry 4.0 and digital technologies on developing countries and youth participation in the future job market, given the changing dynamics. The transformative potential of digital technologies is clear and must therefore be properly understood and utilized to take advantage of opportunities, while mitigating the challenges, specifically for the youth.



Youth training Forum to adapt with current and future industrial revolution focusing on Soft skills (uniquely human skills) such as creativity, complex problem-solving, emotional intelligence and critical thinking, which will be irreplaceable by machines; Technical skills ( Computer programming, coding, project management, financial management, mechanical functions, scientific tasks, technology-based skills); Entrepreneurship ( Initiative, innovation, creativity, industriousness, resourcefulness, resilience, ingenuity, curiosity, optimism, risk-taking, courage, business acumen, business execution) needs to be &nbsp;considered for the empowering of young people and ensuring inclusiveness and equality.



There is a general consensus that Socio-economic features in South Africa including structurally high unemployment and income and wealth inequality are longstanding and deeply-entrenched constraints on the country&#8217;s growth potential. Deep inequalities – South Africa&#8217;s income inequality is among the highest globally, as measured by the Gini index – and resistance to reforms from key stakeholders limit the government&#8217;s room to adopt and implement structural reforms.



Adaptive challenges&nbsp;are volatile, unpredictable, complex and ambiguous in nature.&nbsp;Solutions&nbsp;to this type of&nbsp;challenge&nbsp;usually require people to learn new ways of doing things, change their attitudes, values and norms and adopt an experimental mind-set.



South African progress has also been distributed unevenly, both within our demographics such as race, gender and generations. Adding to the problem, however, is the fact that certain sections of the population, often women, children, people with disabilities and majority groups, are systematically left behind.



Reducing poverty, youth unemployment and inequality must be the main objectives of South African private and public leaders.&nbsp; The 2030 Agenda aims to ‘end poverty in all its forms everywhere’ (SDG 1) and to ‘reduce inequality within and among countries’ (SDG 10). The significance of the issues of poverty and inequality is also manifested in the implementation principle of the 2030 Agenda ‘Leave no one behind’ (LNOB). Leaving no youth behind will assist South Africa not to create future unemployment and add to welfare spending to the continuous generated future dependence, a big risk for the nation that needs to be mitigated. The SDG 1 and SDG 10 of the 2030 Agenda and the ‘Leave no one behind’ principle needs to be practically strengthened for the South Africa, in building a developmental state.



South Africa will need to solve it’s intractable challenges to reinstate it’s economic development and growth objectives, through an economic investment collaboration to re-establish mining, agriculture and manufacturing sectors, to reactivate the services industries for a holistic economic development and growth national happiness improvement. Miyelani Mkhabela is an Executive Director at Antswisa Transaction Advisory Services

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Youth Day 2020: OPINION: Why a changing world means more trouble for South Africa’s youth.

<h3 class="wp-block-heading">KEY POINTS</h3>



<ul class="wp-block-list"><li>Benedict Oramah reappointed President of African Export-Import Bank for another five-years.</li><li>Between 2015 and 2019, Afreximbank disbursed more than US$30 billion in support of African trade with over US$15 billion channeled towards the financing and promotion of intra-African trade.</li></ul>



By Afreximbank



Cairo, 14 June 2020: – Shareholders of African Export-Import Bank (Afreximbank) have voted and re-appointed Prof. Benedict Oramah as President of the Pan-African multilateral financial institution for a second 5-year term.



The decision was announced today in Cairo following Afreximbank’s 27th&nbsp;Annual General Meeting of Shareholders which was held by circulation of resolutions due to the COVID-19 pandemic situation.



In an acceptance statement released shortly thereafter, President Oramah told Shareholders that the Bank’s ultimate goal under his second term of office is the realisation of Africa’s strategic ambition to create an integrated market.



“We want an Africa where the foundations of the African Continental Free Trade Agreement (AfCFTA) are laid expeditiously so that the 84,000 kilometres of borders that have divided us for ages can begin to come down,” said prof. Oramah who added that AfCFTA would “drive the industrialisation of Africa, support the emergence of regional value chains, turn Africa’s creative and cultural assets into engines of growth, grow jobs for the continent’s youth, convey respect to Africans wherever they may be and better prepare the continent to compete more effectively in the global markets.”



Prof. Oramah highlighted that between 2015 and 2019, Afreximbank disbursed more than US$30 billion in support of African trade with over US$15 billion channeled towards the financing and promotion of intra-African trade.



“We will aim to double intra-African trade financing so that by the end of my term, it will constitute no less than 40% of the Bank’s total assets, with aggregate disbursements, on a revolving basis, over the 5 years exceeding US$30 billion,” he announced.



In office since 2015, Prof. Oramah’s re-appointment was one of the key decisions taken by shareholders during the Bank’s 2020 General Meeting.



A resolution proposing the re-election of Mr. Stefan-Luis Francois Nalletamby as a director representing Class “A” Shareholders and Mr. Kee Chong Li Kwong Wing as a director representing Class “B” Sharefolders was also approved by the meeting.



In addition, the 2019 audited accounts were approved, as well as the proposal to raise an additional US$500 million in equity within Afreximbank’s current Strategic Plan dubbed “IMPACT 2021-Africa transformed”. The approval to raise additional equity was in recognition that an amount of US$1 billion earlier authorized to be mobilized had almost been fully raised.



“I make a commitment that with your support, the Bank will remain well capitalised throughout my term of office and beyond. We will continue our efforts to diversify sources of equity to include the markets while ensuring that the Bank’s development focus remains unchanged,” President Oramah assured the Bank’s Shareholders.

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COMMENT: How to make money from venture capital in the uncertain world of COVID-19

The Day After COVID-19: Overcoming the Novel Coronavirus double jeopardy in Central Africa

South Africa unlikely to sort out its debt in four years – Fitch.

THE WEEKEND READ: Analysis– a budget long on words but short on detail.

How we can make money after COVID-19

OPINION: If Eskom is oxygen let us breathe.

OPINION: How the death of George Floyd should make South Africa ask: where is the next Nelson Mandela?

OPINION-COVID-19: Why African business must win the battle for jobs on the corporate front.

Abiy Ahmed put Ethiopia on the road to democracy: but he still has a lot to do, here’s why

Youth Day 2020: OPINION: Why a changing world means more trouble for South Africa’s youth.

Benedict Oramah reappointed as President of African Export-Import Bank

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