Major International Business Headlines Brief::: 08 June 2021
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Major International Business Headlines Brief::: 08 June 2021
<https://www.nedbank.co.zw/>
ü Economy faces 'long Covid' if debts not tackled
ü Donald Trump calls Bitcoin 'a scam against the dollar'
ü Economy faces 'long Covid' if debts not tackled
ü 'Five-day office week will become the norm again'
ü E-bike sales boom despite high prices and confusing rules
ü Colonial Pipeline: US recovers most of ransom, justice department says
ü Apple in talks with CATL, BYD over battery supplies for its electric car
-sources
ü More Chinese firms could fall under Biden’s broader investment ban
ü Asia shares pare gains on caution, oil falls again
ü 'Zombie' companies likely to keep commercial insurance rates rising
-Swiss RE
ü Nvidia asks Chinese regulators to approve $40 billion Arm deal - FT
ü U.S. Republicans vow to oppose Yellen’s G7 tax deal, casting doubt on its
future
ü BAT raises sales growth outlook as more smokers switch to less harmful
products
ü Japan upgrades Q1 GDP on smaller hit to domestic demand
ü Tanzania: Value Addition On Agri Products Vital for Competitive Goods
Exports
ü Nigeria: Inside Nigeria's Lucrative Employment Racketeering Where
Applicants Pay for No Jobs (1)
ü Rwanda: Cogebanque Launches Campaign on Digital Banking
ü Nigeria: Russia, China Seek Areas of Collaboration With Nigeria's Atomic
Body
ü Kenyans Say Nothing to Celebrate on Thursday's Budget
<https://www.facebook.com/Hyundaizimbabwe/>
Economy faces 'long Covid' if debts not tackled
Hospitality, retail and leisure firms are facing huge levels of debt as the
economy reopens, industry bodies have told the government.
Kate Nicholls, the boss of Hospitality UK, warned of "long Covid for the
economy, if you're not very careful".
Speaking to the Treasury Select Committee, other trade bodies said
government support had not been adequate during the pandemic.
Ms Nicholls told MPs that the industry had amassed £2.5bn of rent debt.
She added that the hospitality sector was coming out of lockdown with
another £6bn worth of government debt accrued through schemes such as the
Coronavirus Business Interruption Loan Scheme (CBILS).
"While government measures have been really helpful in terms of setting out
a framework for easing the burden of government backed debt, we're not
seeing that translated through on the ground by banks" she said.
Rent debts
Ms Nicholls told the committee: "We've got £2.5bn of historic rent debt,
which currently falls due in one hit on 1 July when the moratorium ends, so
we urgently need those moratoriums extended."
She added that one in five of her members are saying there will be
insolvencies and site closures, if the issue is not resolved.
A commercial rent moratorium - a temporary ban on evictions - was introduced
in March 2020, but comes to an end on 30 June.
She told MPs it was particularly worrying for businesses with multiple
sites: "If you've got 50 sites in your hospitality business, you've probably
got 50 different landlords, and all it takes is one landlord to be
recalcitrant and to not concede or negotiate, and it could be enough to
trigger insolvency across the whole of the estate."
Concern was also expressed about the next stage of the reopening of the
economy.
Step four of the government's roadmap for lifting lockdown restrictions on
21 June would see all legal limits on social contact removed, nightclubs
allowed to reopen and restrictions on large events and performances lifted.
Ms Nicholls said the uncertainty around this date was not helping the
industry and its financial recovery.
I can't guarantee June lockdown easing - minister
Could a third Covid wave delay 21 June changes?
"While we've got restrictions that are uncertain about 21 June, we can't
lift those moratoriums without facing a real calamitous impact on those
businesses," she added.
She added that there was strong demand among consumers as restrictions
eased, but most firms were still operating at a loss due to capacity
restrictions.
Helen Dickinson, chief executive of the British Retail Consortium (BRC),
told MPs that rent debt was a problem for her sector too.
She said protections over historic rent needed to be kept in place, to give
landlords and tenants time to negotiate over the coming months.
"The end of June is upon us imminently and therefore the decision does need
to be communicated as quickly as possible", she told MPs.
"We've lost around 5,000 shops during the course of 2020. Whether we lose
more shops going forward than we need to, will depend on the rent moratorium
decision, and what happens with the business rates review."
Ms Dickinson told the committee that footfall into retail locations is still
down 30% on where it stood pre-pandemic.
Mark Tanzer, chief executive of travel trade body Abta, told the committee
that travel companies were also looking for a "complete step change" in the
government's attitude towards the industry.
"The summer season accounts for two-thirds of travel business and we're in
it now and no one is travelling," he said.
He stressed that the small number of countries on the UK government's green
list, which removes the need for passengers to quarantine on arrival, meant
"our members have been living on no revenue".
"Worse than that, they've been having to pay refunds and do rebookings," Mr
Tanzer told MPs.
Like Hospitality UK and the BRC, Mr Tanzer called for a rent moratorium
extension, as well as an extended furlough scheme, saying the travel
industry had been hardest-hit by the pandemic and needed targeted support.
"I really do fear for losing a generation of travel companies if we don't
act and get some financial support in from now," he said.
The Department for Business did not immediately respond to the BBC's request
for comment.-BBC
Donald Trump calls Bitcoin 'a scam against the dollar'
Former US President Donald Trump has told Fox Business that he sees Bitcoin
as a "scam" affecting the value of the US dollar.
"Bitcoin, it just seems like a scam," Mr Trump said. "I don't like it
because it's another currency competing against the dollar."
He added that he wanted the dollar to be "the currency of the world".
His comments come on the back of news El Salvador plans to make the
crypto-currency legal tender.
The price of Bitcoin has been falling steadily since early May and so far
has not recovered.
The falls were widely attributed to China banning banned banks and payment
firms from providing services related to crypto-currency transactions, as
well as electric car maker Tesla announcing it would no longer accept the
currency a week before that.
Is Bitcoin actually a threat to currency? Here's what experts we spoke to
think.
'Bitcoin is a threat to all major currencies'
Justin Urquhart-Stewart, co-founder of Seven Investment Management and the
Regionally investment platform, thinks Bitcoin does have a potential threat
of destabilising currencies "because it has taken off in such a way that
it's created a popular appeal without any sound financial strength".
He blames the rise of Bitcoin on figures like Elon Musk "behaving stupidly",
which makes the general public perceive that the crypto-currency is
credible.
"Bitcoin is dangerous because it's trying to create a level of credibility
to unreliable and wholly unfounded value," he tells the BBC.
"Quite often, unsophisticated punters are drawn in at the wrong time to
something they think they can make a quick buck on - to them, it doesn't
matter what it is, whether it's Bitcoin or GameStop or AMC, it's something
you can bet on."
He says that a rising trend of young people who are somewhat tech savvy,
"like hobby technologists", are taking huge risks because they haven't been
educated about finance properly.
Mr Urquhart-Stewart strongly believes the national curriculum should include
education on how to develop family finances over generations.
"What we have now is a young generation of punters who have no knowledge of
financial planning and development," stresses Mr Urquhart-Stewart.
"They understand how to buy and sell things, but they have no concept of how
to create longer-term wealth."
No threat to the dollar
In contrast, Neil Wilson, chief market analyst for Markets.com, thinks
Bitcoin is definitely not a currency.
He says that to qualify as a currency, it must have the following functions:
"I call Bitcoin more of a security, like a stock or bond," says Mr Wilson.
"Although it's appreciated massively, it's far too volatile to be a currency
- it moves around more than most stocks do."
He says that with Bitcoin, people are mostly buying it to hold onto and
invest, rather than spending it frequently.
And as to Mr Trump's assertion that the crypto-currency is threatening the
US dollar, he disagrees, although it could be a slight threat to gold.
"The means by which America exerts influence over the world is predominantly
by the dollar, and it's not going to give that up, so I don't see Bitcoin as
a threat whatsoever," he says.
"Governments don't like other people creating money - they've seemed to
tolerate crypto-currencies for some time, but they will eventually get their
own digital currencies established and will squeeze Bitcoin out into the
margins."-BBC
Economy faces 'long Covid' if debts not tackled
Hospitality, retail and leisure firms are facing huge levels of debt as the
economy reopens, industry bodies have told the government.
Kate Nicholls, the boss of Hospitality UK, warned of "long Covid for the
economy, if you're not very careful".
Speaking to the Treasury Select Committee, other trade bodies said
government support had not been adequate during the pandemic.
Ms Nicholls told MPs that the industry had amassed £2.5bn of rent debt.
She added that the hospitality sector was coming out of lockdown with
another £6bn worth of government debt accrued through schemes such as the
Coronavirus Business Interruption Loan Scheme (CBILS).
"While government measures have been really helpful in terms of setting out
a framework for easing the burden of government backed debt, we're not
seeing that translated through on the ground by banks" she said.
Rent debts
Ms Nicholls told the committee: "We've got £2.5bn of historic rent debt,
which currently falls due in one hit on 1 July when the moratorium ends, so
we urgently need those moratoriums extended."
She added that one in five of her members are saying there will be
insolvencies and site closures, if the issue is not resolved.
A commercial rent moratorium - a temporary ban on evictions - was introduced
in March 2020, but comes to an end on 30 June.
She told MPs it was particularly worrying for businesses with multiple
sites: "If you've got 50 sites in your hospitality business, you've probably
got 50 different landlords, and all it takes is one landlord to be
recalcitrant and to not concede or negotiate, and it could be enough to
trigger insolvency across the whole of the estate."
Concern was also expressed about the next stage of the reopening of the
economy.
Step four of the government's roadmap for lifting lockdown restrictions on
21 June would see all legal limits on social contact removed, nightclubs
allowed to reopen and restrictions on large events and performances lifted.
Ms Nicholls said the uncertainty around this date was not helping the
industry and its financial recovery.
"While we've got restrictions that are uncertain about 21 June, we can't
lift those moratoriums without facing a real calamitous impact on those
businesses," she added.
She added that there was strong demand among consumers as restrictions
eased, but most firms were still operating at a loss due to capacity
restrictions.
Helen Dickinson, chief executive of the British Retail Consortium (BRC),
told MPs that rent debt was a problem for her sector too.
She said protections over historic rent needed to be kept in place, to give
landlords and tenants time to negotiate over the coming months.
"The end of June is upon us imminently and therefore the decision does need
to be communicated as quickly as possible", she told MPs.
"We've lost around 5,000 shops during the course of 2020. Whether we lose
more shops going forward than we need to, will depend on the rent moratorium
decision, and what happens with the business rates review."
Ms Dickinson told the committee that footfall into retail locations is still
down 30% on where it stood pre-pandemic.
Mark Tanzer, chief executive of travel trade body Abta, told the committee
that travel companies were also looking for a "complete step change" in the
government's attitude towards the industry.
"The summer season accounts for two-thirds of travel business and we're in
it now and no one is travelling," he said.
He stressed that the small number of countries on the UK government's green
list, which removes the need for passengers to quarantine on arrival, meant
"our members have been living on no revenue".
"Worse than that, they've been having to pay refunds and do rebookings," Mr
Tanzer told MPs.
Like Hospitality UK and the BRC, Mr Tanzer called for a rent moratorium
extension, as well as an extended furlough scheme, saying the travel
industry had been hardest-hit by the pandemic and needed targeted support.
"I really do fear for losing a generation of travel companies if we don't
act and get some financial support in from now," he said.
The Department for Business did not immediately respond to the BBC's request
for comment.--BBC
'Five-day office week will become the norm again'
The five-day office week could become the norm again within two years, the
Centre for Cities think tank has told the BBC.
A blend of home and office work is expected to be popular while the UK
recovers from the pandemic.
But some analysts then anticipate a shift back to pre-Covid working patterns
for many.
Currently, people who can work from home are still advised to do so.
However, that is likely to change if the government ends all social
distancing restrictions on 21 June.
"I expect we will see three or four days a week in the office as the UK
recovers," Paul Swinney, director of policy and research at Centre for
Cities, told Radio 5 Live's Wake Up to Money programme.
"Over the longer term, I'm quite hopeful that we will see people return five
days a week.
"The reason for that is, one of the benefits of being in the office is
having interactions with other people, coming up with new ideas and sharing
information."
He said people could not do this by scheduling a three o'clock meeting on a
Tuesday - it had to happen randomly.
"If you're in the office on a Monday but someone else is in the office on a
Wednesday, then you're starting to miss out. Or, if your colleague is in the
office and having a meeting with your boss and you're not there, all of a
sudden that changes the dynamic again."
Office for National Statistics data published in May revealed most people
did not work from home in 2020, however the proportion of workers who did
more than doubled during the pandemic. That hit the office property market
while prompting lots of discussion about the future of the workplace.
Demand for more city centre office space does now appear to be rising -
albeit from a very low point.
Figures from Savills estate agency show office take-up by square footage in
the UK's six biggest regional cities has gone up significantly since the
second quarter of 2020, the start of the pandemic.
The estate agency said it was also seeing "record rents" for some top tier
office space in Greater London and regional city areas.
Sectors signing some of the biggest regional office deals were public
services, education and health.
Office providers have struggled during the pandemic. On Monday, the shared
office firm IWG warned of a sharp profits drop.
Nevertheless, the company said it was seeing "unprecedented demand" for its
flexible office services as many more businesses adopted hybrid working.
'Most firms want a five-day office'
Jessica Bowles, director of strategy at commercial property developer
Bruntwood, which operates in Manchester, Birmingham, Leeds and Liverpool,
told the BBC her firm has also seen a lot of demand for flexible and
serviced office space on short leases.
"We've had really strong take-up. People want flexible terms.
"What's interesting is that it's corporates wanting to do that as well as
small businesses and SMEs."
But hybrid working does not mean flexible office space leases are any
cheaper as "flexibility is priced in". Most firms also want to keep a
five-day office, she said.
"Most businesses that have got space with us now want to maintain having an
office, and they don't see that they could give up the office for a certain
number of days a week - they just want to use the space differently.
"That means more collaborative space, fewer banks of desks, places where
people can come together and create and innovate."
She added that while hybrid working was growing in popularity before
Covid-19 struck, the working pattern could be "challenging" for firms if
some staff were at home, while some were in the office.
"I think from a personal, and a business level, we'll see more people seeing
the value in coming together to collaborate. But Fridays are always pretty
quiet in the office and I don't expect that to change."
Businesses reliant on office worker trade are hopeful their fortunes will
soon improve.
In Birmingham, cafe owners and siblings James and Naomi Morris are looking
forward to the arrival of more commuters to the city centre. They set up
their business, Morridge, in 2019 specifically to target city workers.
James told the BBC he'd started to see more commuters coming into the cafe
again.
"Over the past few weeks, office workers have slowly been returning. People
are starting to work in the cafe - a lady came in for breakfast the other
day and took a couple of work calls.
"Wednesdays and Thursdays are our busiest days."
He said he is expecting more workers to return to the city centre later in
the month if the remaining Covid restrictions are lifted on 21 June, and
said his customers had told him they expected more of their colleagues to
return in September.
"It's looking good. I think it will all come back around."
But the prospect of a post-Covid mass return to the office - on even a
hybrid basis - will not necessarily be universally welcomed by employees.
Staff at Apple reportedly launched a campaign to push back against boss Tim
Cook's plans for workers to be in the office at least three days a week by
September.--BBC
E-bike sales boom despite high prices and confusing rules
On a warm and uncomfortably humid afternoon in Washington DC's sprawling
Rock Creek Park, 53-year old Dutchman and former World Bank executive
Gregory Maassen is swiftly biking up an exceptionally sharp incline - barely
breaking a sweat as he pedals.
"The hills are pretty steep here," he says. "Despite the fact that I like to
bicycle - as most Dutch people do - it was not practical. That's how I got
into e-biking. I got one in 2019 and the rest is history."
Mr Maassen, the founder of a 250-person strong E-bike Lovers club in the US
capital, is one of hundreds of thousands who have turned to electric
bicycles for fun or to get around their cities and towns.
Put simply, an e-bike is any bicycle that uses an integrated electric motor
to assist in propulsion. While some come equipped with a throttle and can be
used like a moped, they can all be pedalled - a distinction that legally
separates them from electric motorcycles.
In the US, the industry, rather than the government, broadly puts e-bikes
into one of three categories.
Class 1 e-bikes are equipped with a motor that provides assistance only when
pedalling, with the assistance stopping when the bike reaches 20mph (32km/h)
while Class 2 e-bikes come equipped with a throttle that can be used to
propel the e-bike to that same speed.
Class 3 bikes come equipped with a motor that provides assistance only when
the rider is pedalling, stopping when the e-bike reaches 28mph (45km/h).
According to Mr Maassen, however, the classification system remains
confusing, with riders themselves often not knowing exactly what kind of
bike they are using.
"It's difficult to understand what they are, because they all look the
same," he explains. "It's very often just a matter of software that makes a
difference.
"Then you have conversion kits. People build their own e-bikes, and there's
no classification at all, or people buy stuff on the internet, with who
knows what kind of specifications," Mr Maassen adds. "That's very difficult
to enforce."
Industry experts say the sector is riven by varied rules and regulations
across local jurisdictions or internationally, with governments,
manufacturers and industry groups offering a dizzying array of ways to
compare and contrast e-bikes.
In the US, for example, the National Park Service ignores the industry
classification system and instead deems that e-bikes of any class can
operate on park grounds alongside bicycles, provided their engines do not
provide more than 750 watts of power.
While in the EU and UK, e-bikes that travel at more than 15.5mph (25km/h)
and generate more than 250 watts of power without the bikes pedals being in
motion are legally considered mopeds or motorcycles - and subject to
separate regulations.
"It's frustrating, to say the least," says Richard Alvin, a London-based
former adviser to the UK government and group managing director at EV
Powered, a firm that analyses and reviews electric vehicles.
"The whole principle behind e-bikes is to make it easier for cyclists to
travel further distances in an environmentally friendly way. Often, they
invest a lot of money in the purchase and could potentially be unable to use
it to its full potential due to differing interpretations of the laws."
Claudia Wasko, the California-based vice president and general manager of
Bosch eBike Systems Americas, says that confusing rules - along with media
and marketing materials that wrongly identify vehicles as e-bikes - could
have even more serious consequences.
"Using them on facilities designed and designated for the use of bicycles
and e-bikes may result in user conflicts, may be illegal if being ridden in
areas designated for bicycles, or if equipped as a bicycle, may jeopardise
efforts to promote uniform laws and gain wider acceptance."
Yet the confusing regulations have done little to dampen growing public
enthusiasm for the technology.
In the US alone, e-bike sales rose 116% from $8.3m in February 2019 to $18m
(£12m) a year later - just before the impact of Covid - according market
research firm NPD and the advocacy group People For Bikes. By February this
year, sales had reached $39m.
Terika Haynes, the chief executive and founder of DT Scooters, a
Florida-based online retailer specialising in electric scooters and e-bikes,
says suppliers were often unable to keep up with demand during the pandemic
due to factory closures and supply chain disruptions.
"We're still dealing with it. It was unfortunate, it was our time to shine
with everybody wanting to get out, exercise, and wanting to buy an e-bike.
But the supply just wasn't there."
However, once these issues subside Ms Haynes believes e-bike adoption will
continue to grow, partly as a result of increased usage as an alternative
form of urban mobility, or by companies using them as easier alternatives to
bicycle tours in cities across the globe.
As an example, she notes that DT Scooters was able to bulk purchase a number
of e-bikes - at "a really good wholesale price" - that were originally
intended to be used by a ride-sharing company in Europe before the pandemic.
In the shorter-term, the relatively high price of e-bikes may be prohibitive
for casual riders. They often cost between $1,500-4,000 (£1,000-2,800), with
some higher-end machines costing up to $10,000, depending on which
accessories are included.
"Prices are going up, and that's across all categories of both analogue
bikes and electric bikes," says Ryan Birkicht of Pacific Cycle, which sells
e-bikes under the Schwinn brand.
"The supply chain is still stressed and [manufacturers] are getting charged
more for circuit boards or different electric components. I would imagine
that for several years we are going to continue seeing the costs of electric
bikes go up."
In the long term, he says prices will fall as more e-bikes are produced, and
more potential e-bike riders are exposed to the technology.
"Electric bikes are something exciting. When you throw your leg over an
e-bike, that's when it kind of clicks. It provides a lot of opportunities to
do things maybe you wouldn't be able to on an analogue bike. I'd just
encourage everyone to give it a shot."--BBC
Colonial Pipeline: US recovers most of ransom, justice department says
The US has recovered most of the $4.4m (£3.1m) ransom paid to a
cyber-criminal gang responsible for taking the Colonial Pipeline offline
last month.
DarkSide - which US authorities said operates from eastern Europe and
possibly Russia - infiltrated the pipeline last month.
The attack disrupted supplies for several days causing fuel shortages.
According to the firm, the pipeline carries 45% of the East Coast's supply
of diesel, petrol and jet fuel.
On Monday, Deputy Attorney-General Lisa Monaco said investigators had "found
and recaptured" 63.7 Bitcoin worth $2.3m - "the majority" of the ransom
paid. Since the ransom was paid the value of Bitcoin has fallen sharply.
The US government has recommended in the past that companies do not pay
criminals over ransomware attacks, in case they invite further hacks in the
future.
It has since urged companies to increase security measures against
ransomware attacks like this. Commerce secretary Gina Raimondo said on
Sunday that President Biden would raise the issue of such attacks with
Russian leader Vladimir Putin in a meeting planned this month.
Colonial Pipeline took itself offline on Friday 7 May after the
cyber-attack.
In a statement Joseph Blount, chief executive of the Colonial Pipeline
Company, said his firm was grateful for the "swift work and professionalism"
of the FBI, which helped to recover the ransom.
"Holding cyber criminals accountable and disrupting the ecosystem that
allows them to operate is the best way to deter and defend against future
attacks," he added.
In America's ongoing fight against the scourge of ransomware, this is a
major victory.
Stealing back a ransom is, to my knowledge, a first and it shows how far the
US is willing to go to deter cyber-criminals.
It sends a powerful message to the gangs who have been operating with
impunity for years in states like Russia.
Perhaps deliberately, the DoJ are being vague about exactly how they did it.
All they are saying is that the "private key" to the criminal's Bitcoin
wallet is in the "possession of the FBI".
With this key, which is effectively a password, agents were able to simply
log in and send the digital coins to another wallet they control.
The cyber-security world is abuzz with rumours and theories about how they
got hold of the password.
Perhaps the key was found on seized servers, or gifted by an angry insider,
or handed over by a cooperative company used as part of the criminal
infrastructure.
Either way, it's a big moment and it is sending shockwaves.
After the attack in May, Colonial made a cryptocurrency payment, and in
return the company received a decryption tool so it could unlock the systems
compromised by the hackers - although that was not enough to restart systems
immediately, according to the Wall Street Journal.
Mr Blout told the newspaper he authorised the payment on 7 May after
discussions with experts who had previously dealt with DarkSide.
He said he "didn't make [that decision] lightly," but believed "it was the
right thing to do for the country."
Mr Blount added that it would take months before some business systems were
recovered, and estimated that the attack would ultimately cost the company
tens of millions of dollars.
At the time of the hack, the DarkSide criminal gang acknowledged the
incident in a public statement.
"Our goal is to make money and not creating problems for society," DarkSide
wrote on its website.
"We do not participate in geopolitics, do not need to tie us with a defined
government and look for... our motives," the group added.-BBC
Apple in talks with CATL, BYD over battery supplies for its electric car
-sources
Apple Inc (AAPL.O) is in early-stage talks with China's CATL (300750.SZ) and
BYD (002594.SZ), about the supply of batteries for its planned electric
vehicle, four people with knowledge of the matter said.
The discussions are subject to change and it is not clear if agreements with
either CATL or BYD will be reached, said the people who declined to be named
as the discussions are private.
Apple has made building manufacturing facilities in the United States a
condition for potential battery suppliers, said two of the sources.
CATL, which supplies major car makers including Tesla Inc (TSLA.O), is
reluctant to build a U.S. factory due to political tensions between
Washington and Beijing as well as cost concerns, the two people said.
It was not immediately clear if Apple is also talking to other battery
makers.
Apple, which has yet to make a public announcement about its car plans,
declined to comment. CATL, the world's biggest automotive battery maker, and
BYD, the world's No. 4, also declined to comment.
Shares in BYD extended gains on the news to be up 5.4% in Hong Kong in late
afternoon trade and closing 6.5% higher in Shenzhen. CATL reversed earlier
losses to finish 0.5% higher.
Apple is in favor of using lithium iron phosphate batteries that are cheaper
to produce because they use iron instead of nickel and cobalt which are more
expensive, the four people said.
It has been working on self-driving technology and has targeted 2024 for the
production of a passenger vehicle, Reuters reported in December. read more
People familiar with the matter have previously said Apple's planned EV
could include its own breakthrough battery technology. It was not
immediately clear if the discussions with CATL and BYD involved Apple's own
technology or designs.
The discussions come at a time when the U.S. government is looking to
attract more EV manufacturing. U.S. President Joe Biden's proposed $1.7
trillion infrastructure plan includes a $174 billion budget to boost the
domestic EV market with tax credits and grants for battery manufacturers,
among other incentives. read more
Many battery makers are ramping up production to meet soaring worldwide
demand as car makers accelerate their shift to electric vehicles to comply
with tougher emission rules aimed at tackling global warming.
Chinese battery makers are expected to grow at a faster pace than their
foreign peers thanks to further expansion of the world's biggest EV market,
SNE Research said in a June report.
Reuters reported last week that CATL is planning a major new automotive
battery plant in Shanghai, continuing a blistering pace of expansion that
will cement its lead as the world's No.1 supplier. The factory would near
Tesla's China manufacturing operations. read more
Our Standards: The Thomson Reuters Trust Principles.
More Chinese firms could fall under Biden’s broader investment ban
President Joe Biden’s order last week banning U.S. investment in certain
Chinese companies is broader than a similar one signed by his predecessor
Donald Trump and has a lower bar, making it easier to add more companies
later.
Legal experts say it also may help the administration avoid embarrassing
defeats in court after a ban imposed near the end of the Trump
administration failed to hold up against legal challenges.
Biden’s order will prohibit U.S. investments in about 60 companies in
China’s defense or surveillance technology sectors.
"It's broader in scope and it's a much lower standard for listing," said
Washington lawyer Kevin Wolf, a former Commerce Department official, adding
it should better withstand legal scrutiny.
The new order prohibits investments in companies that "operate in or have
operated in" China's defense or related materials sector, or in surveillance
technology, or are owned or controlled by someone who does. Its aim is to
limit the flow of money to companies that undermine U.S. security or
"democratic values," which allows listings for human rights abuses.
The Trump ban was placed on Chinese military companies as defined years ago
in the National Defense Authorization Act: companies owned or controlled by
or "affiliated with" the People’s Liberation Army, a government ministry or
the People's Republic of China's defense industrial base.
The revised order eliminates the requirement for a direct link to the
Chinese state, using the more vague language that a company must "operate
in" the defense or surveillance sectors.
The Trump order needed to be shored up after three companies went to court
to challenge it. Two got their designations halted, and there's been no
ruling in the third case.
"Courts are usually reluctant to overrule the president when he makes a
national security determination," said Bill Reinsch, a senior advisor at the
Center for Strategic and International Studies (CSIS). "The fact that they
did so suggests really poor drafting on the part of the Trump people and a
poor defense of the decisions made."
"ARBITRARY"
Beijing-based smartphone maker Xiaomi, which lost some $10 billion in market
capitalization in the month after it was included on the list of banned
firms, was the first to bring a case to try to expose flaws in Trump's
order.
The judge halted Xiaomi's designation in March citing a lack of evidence it
was affiliated with the PLA or PRC, and calling its listing "arbitrary and
capricious."
The government's evidence included an award given to Xiaomi's chairman,
which more than 500 entrepreneurs had received since 2004, including the
leaders of an infant formula company. It also cited Xiaomi's investments in
5G and artificial intelligence technology, but the judge noted they are fast
becoming standard for consumer devices, not just military modernization.
The judge also noted errors in the government's decision memo, including
incorrectly quoting the statute at issue, and said the government did not
meet the definition of "affiliated with," namely, "effectively controlled by
another or associated with others under common ownership or control."
Last month, the Biden administration agreed to remove the company from the
list.
Luokung Technology Corp, a mapping technology company, won a similar initial
ruling.
Neither Xiaomi, nor Luokung nor Gowin Semiconductor, the third company that
challenged its designation, are on the revised list.
Major Chinese firms included under both orders include China National
Offshore Oil Corp (CNOOC) (0883.HK), Hangzhou Hikvision Digital Technology
Co Ltd (002415.SZ), Huawei Technologies Ltd (HWT.UL) and Semiconductor
Manufacturing International Corp (0981.HK).
Hong Kong-based lawyer Wendy Wysong, who had been considering bringing cases
over Trump’s order, said Biden’s listings appear to be on more solid ground.
"It may be harder to challenge the designation because the underlying
rationale presumably won't be so weak, and the designation criteria is not
as narrowly worded," said Wysong.
Many more companies could be affected by Biden's order depending on "how
aggressive the U.S. administration wants to be," said CSIS's Reinsch.
“In theory it could expand the universe rather significantly,” he said.
Our Standards: The Thomson Reuters Trust Principles.
Asia shares pare gains on caution, oil falls again
Asia stocks reversed early gains on Tuesday, with traders sidelined ahead of
U.S. inflation data and a European monetary policy meeting this week while
oil prices lost more ground on worries over the fragile state of the global
recovery.
E-mini futures for the S&P 500 index were up 0.07%, while FTSE futures were
flat, pointing to a subdued start for European markets.
MSCI's gauge of Asia Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.36%
in the afternoon session, wiping out morning gains. Hong Kong's Hang Seng
Index (.HSI) declined 0.42%.
China's benchmark CSI300 Index (.CSI300) dropped more than 1.3%, weighed
down by liquor makers, as investors worried about lofty valuations and
Sino-U.S. tensions.
Japan's Nikkei 225 (.N225) inched down 0.19%, as losses in market
heavyweights offset gains in drugmakers after Eisai Co's (4523.T) Alzheimer
drug received U.S. regulatory approval.
Kyle Rodda, market analyst at IG, said there was a lack of catalysts for
markets as investors were waiting on the sidelines for meaningful news and
data points.
"It's been quiet. The primary concern of the market is inflation and central
banks," he said. "... Overall we are seeing negative sentiments regarding
risk assets."
The European Central Bank holds its policy meeting on Thursday, the same day
the U.S. consumer price index figure is due, potentially fuelling talk of
tapering by the Federal Reserve. In Asia, China inflation data is due on
Wednesday.
"The start of a new week has not seen much by way of price action across all
asset classes," said Ray Attrill, head of FX Strategy at National Australia
Bank.
"It's hard to avoid the sense the global markets are for the most part now
simply lurching from one big event risk to the next with not a lot to see
in-between," he said.
Australia's S&P/ASX 200 (.AXJO) was the only major index remaining in
positive territory, trading up 0.18%.
MSCI's All-Country World Index (.MIWD00000PUS) advanced 0.1% on Monday,
hitting its sixth record close in seven days, after the G7 nations reached a
landmark deal on Saturday to back a minimum global corporate tax rate of at
least 15%.
The deal lifted shares of technology giants such as Microsoft (MSFT.O) and
Facebook (FB.O) as their future tax obligations become more predictable.
read more
Oil prices lost more ground on Tuesday as concerns about the fragile state
of the global recovery were heightened by data showing China's oil imports
fell in May.
Brent crude widened losses to $70.96 a barrel by 0530 GMT, off 53 cents or
down 0.74%. U.S. oil was off by 47 cents, or 0.68%, at $68.76 a barrel.
Gold prices edged lower on Tuesday, weighed down by an uptick in the dollar.
Spot gold was down 0.12% at $1,896.71 per ounce, as of 0534 GMT.
The dollar index (.DXY) rose 0.1% against its rivals, making gold more
expensive for other currency holders. USD/
Our Standards: The Thomson Reuters Trust Principles.
'Zombie' companies likely to keep commercial insurance rates rising -Swiss
RE
The expectation that hundreds of so-called zombie companies will fail over
the next few years and drag on the economy is among the major concerns
prompting insurers to reduce risk and charge higher premiums, a trend likely
to continue as failures increase, Swiss Re AG (SRENH.S) said on Tuesday.
Zombies - which lack the cash flow to cover the cost of their debt - are "a
ticking time bomb" whose explosive effects will be felt as governments and
central banks withdraw measures that have helped keep these companies alive
during the pandemic, Jerome Haegeli, chief economist at the Swiss insurer,
told Reuters.
The sober prediction comes as stock prices hit records and the U.S. economy
appears headed for 6.5% growth this year. Yet these strengths are illusory,
Haegeli said, because they are based on temporary fiscal and monetary
support.
Haegeli said the proportion of companies that are zombies certainly
increased during the pandemic, as central banks flooded markets with money
and governments provided relief. At the same time, U.S. company bankruptcies
fell 5% in 2020, Swiss Re said in a report on Tuesday.
Before the pandemic, about 20% of listed firms in the United States and UK
were zombies, and 30% in Australia and Canada, the Bank for International
Settlements said in September. By comparison, zombies constituted about 15%
of listed companies in 14 advanced economies in 2017 and 4% before the 2008
financial crisis.
Insurers are being cautious as they forecast where the economy will be in a
year or more, Haegeli said. They are reining in underwriting risk, being
more prudent about investment portfolio asset allocations and even taking
precaution on insuring operations and supply-chain risk.
"They are not getting fooled by the short-term picture," Haegeli said. "If
you look at the market today, everything looks great. However, it's
illusionary to think that this environment can last" as "life support" is
withdrawn in coming months. And that will bring an increase in long-overdue
bankruptcies.
"I'm concerned that you're going to see a sudden spike in defaults because
the default rates are so low," he said.
Insurers also are likely to continue raising prices to be sure they are
adequately pricing the risks ahead, he said.
Global commercial insurance prices started rising in 2017 and have climbed
since, including an 18% rise in the first quarter of 2021, according to data
from Marsh & McLennan Companies Inc (MMC.N).
Our Standards: The Thomson Reuters Trust Principles.
Nvidia asks Chinese regulators to approve $40 billion Arm deal - FT
Nvidia Corp (NVDA.O) has submitted an application to Chinese competition
regulators to review a $40 billion takeover of UK chip designer Arm, the
Financial Times reported on Tuesday, citing people familiar with the matter.
The application was made in recent weeks and sets in motion a period of
scrutiny that could take up to 18 months, according to Chinese antitrust
lawyers, the FT report added.
Nvidia said last month it expects to close the Arm acquisition by March
2022, after having struck a deal with SoftBank Group (9984.T) in September
2020. read more
The Japanese conglomerate, meanwhile, is in talks with banks for a loan of
about $7.5 billion tied to the Arm sale, Bloomberg News reported on Tuesday,
citing sources, with Mizuho Bank Ltd coordinating the deal.
In February, Bloomberg reported that the U.S. Federal Trade Commission had
opened an in-depth probe into Nvidia's agreement to buy Arm. read more
Nvidia Chief Executive Jensen Huang had told the Financial Times last month
the U.S. chip company had "started the process" of engaging with Chinese
regulators and was confident the deal would be cleared within the time frame
set by Nvidia.
Our Standards: The Thomson Reuters Trust Principles.
U.S. Republicans vow to oppose Yellen’s G7 tax deal, casting doubt on its
future
Several top U.S. Senate Republicans on Monday rejected Treasury Secretary
Janet Yellen’s G7 deal to impose a global minimum corporate tax and allow
more countries to tax big multinational firms, raising questions about the
U.S. ability to implement a broader global agreement.
The opposition from Republicans may push President Joe Biden to attempt to
use budget procedures to pass the initiatives with only Democratic votes.
It left lawyers and tax experts in Washington wondering whether it could get
done without crafting a new international treaty, which requires approval by
a two-thirds majority in the evenly split 100-member Senate.
"It's wrong for the United States," Republican Senator John Barrasso said of
the tax deal struck on Saturday by finance ministers from the G7 wealthy
democracies.
"I think it's going to be anti-competitive, anti-U.S., harmful for us as we
try to continue to grow the economy and certainly at a time when we're
coming out of a pandemic," Barrasso, who chairs the Senate Republican
Conference, told reporters at the U.S. Capitol.
In the landmark agreement, G7 finance ministers agreed to pursue a global
minimum tax rate of at least 15% and to allow market countries to tax up to
20% of the excess profits - above a 10% margin - of around 100 large,
high-profit companies.
Yellen said the "significant, unprecedented commitment" would end what she
called a race to the bottom on global taxation.
In exchange, G7 countries agreed to end digital services taxes, but the
timing for that is dependent on the new rules being implemented.
The deal could pave the way for broader buy-in by G20 countries and some 140
economies participating in international negotiations over how to tax large
technology firms such as Alphabet Inc's (GOOGL.O) Google, Facebook Inc
(FB.O), Amazon.com Inc (AMZN.O) and Apple Inc (AAPL.O). All are expected to
be included in the new, broader mechanism, which is targeted for a final
international agreement in October.
Republican Senator Pat Toomey said the deal would drain tax revenues away
from the U.S. Treasury to other countries, adding that he hoped some
Democrats would be unwilling "to subject the American economy to this kind
of misery."
"There will be no Republican support for this, and they'll have to do this
on a party-line vote. That needs to fail," Toomey told Fox Business Network.
TREATY OR NOT
Daniel Bunn, an international tax expert at the Tax Foundation, a
right-leaning think tank in Washington, said he believed that establishing
new taxing rights on 100 multinational firms would require a new tax treaty.
The U.S. Constitution gives the president the right to make international
treaties "if two-thirds of Senators present concur." U.S. participation in
some international treaties has been hampered by domestic partisan divides,
in which a president approves the deals but they are not ratified by
Congress.
Manal Corwin, head of KPMG's Washington National Tax Practice and a former
U.S. Treasury official, said Yellen's G7 deal could be done through
legislation that overrides existing bilateral tax treaties - using a simple
majority as part of budget reconciliation procedures.
With Vice President Kamala Harris as the tiebreaking vote, Democrats control
51 votes in the Senate, but cannot afford to lose any Democratic votes.
Senator Ron Wyden, asked how much can be done with the budget reconciliation
procedures and what would require a super-majority vote, said: "Those are
all questions that lawyers are now immersed in."
Wyden, who chairs the tax-writing Senate Finance Committee, told reporters
that deterring the use of tax-haven countries and ensuring minimum levels of
corporate taxation were "in the long-term interest of American workers."
"There’s a lot of heavy lifting to do here," Wyden added. "It’s going to
take a number of months, that’s for sure."
Toomey, who sits on the Finance Committee, said he believed Democrats could
push through the tax changes with only Democratic votes, without a treaty,
but added that would require the United States to “surrender” and agree not
to oppose changes imposed by other countries.
Our Standards: The Thomson Reuters Trust Principles.
BAT raises sales growth outlook as more smokers switch to less harmful
products
British American Tobacco (BATS.L) on Tuesday raised its annual revenue
growth forecast to more than 5% at constant currency as the cigarette
maker's focus on newer products like e-cigarettes and tobacco-heating
devices pays off.
The company had previously forecast revenue growth in the range of 3% to 5%.
It, however, kept unchanged its growth expectation for adjusted earnings per
share in the mid-single digit range.
The maker of Lucky Strike and Newport cigarettes said the raised forecast
comes as "new category" products had gained shares in all key markets,
including the United States where menthol cigarettes and flavoured cigars
are facing a possible ban.
The company also said it expects its full-year cigarette volumes to be ahead
of the total industry, which it expects will be down about 3% this year.
It said 1.4 million more consumers started using its new category products -
e-cigarettes, tobacco heating and oral nicotine products - in the first
quarter, bringing its total non-combustible user base to 14.9 million.
Our Standards: The Thomson Reuters Trust Principles.
Japan upgrades Q1 GDP on smaller hit to domestic demand
Japan's economy shrank less than initially reported in the first quarter on
smaller cuts to plant and equipment spending, but the coronavirus pandemic
still dealt a huge blow to overall demand.
Separate data showed growth in bank lending slowed sharply in May, while
real wages posted the biggest monthly jump in more than a decade in April,
in signs that the world's third-largest economy was gradually overcoming
last year's pandemic hit.
Among the mixed indicators are some reassuring signs for policymakers, who
are worried Japan's recovery will lag major economies that have rolled out
COVID-19 vaccines much quicker and are able to reopen faster.
The economy shrank by an annualised 3.9% in January-March, not as bad as the
preliminary reading of a 5.1% contraction, but still posting the first fall
in three quarters, Cabinet Office data showed Tuesday.
The reading, which beat economists' forecast for a 4.8% decline, equals a
real quarter-on-quarter contraction of 1.0% from the prior quarter, versus a
preliminary 1.3% drop.
The revised gross domestic product (GDP) decline was mainly due to a smaller
fall in public and capital spending, which both eased less than initially
thought, offsetting a slightly larger fall in private consumption.
"Overall, capital spending and private consumption remained weak, which
showed weakness in domestic demand," said Takeshi Minami, chief economist at
Norinchukin Research Institute.
"The vaccine issue is the most important thing for the (economic) recovery,"
he said, adding that the vaccination rate would need to come to about 50% to
boost economic recovery prospects.
Capital spending shrank 1.2% from the prior quarter, better than a
preliminary 1.4% decrease, and matching the median forecast for a 1.2% loss.
Government consumption fell 1.1%, a smaller drop than a preliminary 1.8%
decline.
Private consumption, which makes up more than half of gross domestic
product, dropped 1.5% from the previous three months, worse than the initial
estimate of an 1.4% drop.
However, Economy Minister Yasutoshi Nishimura said spending could recover as
consumers return to the streets.
"If infections subside, there'll be pent-up demand from not having been able
to go eating out or travelling," Nishimura told reporters after the release
of the data.
PANDEMIC IMPACT
Net exports - or exports minus imports - subtracted 0.2 percentage point
from growth, while the hit to domestic demand pulled it down by 0.8
percentage point, not as bad as a preliminary contribution of minus 1.1
percentage point.
The better-than-expected revision comes after household spending and exports
jumped in April, though the gains were inflated largely by the comparison to
last year's deep pandemic-driven plunge.
Total lending by Japan's banks grew 2.9% in May from a year earlier, slowing
at a record pace from a 4.8% increase in April, Bank of Japan data showed on
Tuesday.
Inflation-adjusted wages, a barometer of household purchasing power, rose
2.1% in April on a year-on-year basis, the government said.
The bank lending slowdown was due largely to the base effect of a
COVID-driven surge last year, while a drop in consumer prices and rebounds
in overtime pay and compensation for part-time workers helped lift wages.
Separately, Japan's service sector index, based on a survey of workers such
as taxi drivers, hotel workers and restaurant staff, fell one point from
April to 38.1 in May, down for a second straight month, a Cabinet Office
survey showed.
The government has come under political pressure to water down an already
stretched fiscal target this year as the cost to combat the health crisis
accumulates. read more
Some analysts expect Japan's economy will contract again in the current
quarter - pushing it back into a technical recession - as an extension of
coronavirus emergency curbs for Tokyo and other major areas hurts domestic
demand.
Our Standards: The Thomson Reuters Trust Principles.
Tanzania: Value Addition On Agri Products Vital for Competitive Goods
Exports
WITH fiscal 2021/2022 budget day across the corner, the expert and business
people, viewing forthcoming submission contrast previous budgets, the budget
to be read, will at least give a focus on key issues to help enhance the
competitiveness of Tanzanian products in both for the domestic and
international markets.
In my opinion, it is not adequate to think that revising the existing tax
rate, or studying of regulatory framework or more importantly investing in
technology alone would be sufficient to boost the competitiveness of locally
produced products. What is necessary based on evolving market dynamics is
value addition and value creation that continue to entice buyers.
In line with what is expected to crop out of the big budget for 2021/2022,
of late, the Deputy Minister for Industry and Trade, Exaud Kihage, when
inaugurating an exhibition which was structured by small industries
development organisation aka SIDO, resonated on the need for small and
medium enterprises to continue producing quality products that would permit
them not only to fight competition in the local market but enter foreign
markets competitively.
Much as quality products would make small and medium enterprises and
agro-processors at whatever level survive in the markets, without vigorous
strategy designed to uplift these processors to add value and create value,
Tanzania products will not easily be able to infiltrate competitive markets.
Observations resonated by the trade and industry permanent secretary at the
Tanzanian National business council (TNBC), sounds great but addressing to
remove hurdles plaguing Tanzania's business environment is one thing but
conforming to invisible hands that run competitive markets is most important
mainly on markets served by imports from various sources that Tanzania may
desire to enter.
For instance, the term value-added especially on agriculture- related
products gets pitched around a lot, but then what does it mean? What follows
might elicit heated debate, but through my assessment, many of our
agronomists in Tanzania want to increase productivity and adding value to
raw agricultural products to reap good returns of their investment.
To realize this, on the other hand, agronomists, in my opinion, need to
think in new and different ways and break away from centring all of their
efforts on production, which has remained to be a noise from those who think
to know more but narrow-minded. But what could be the best options to add
value or specifically capture value or creating value for our agronomists?
Available studies confirm that capturing value relates to capturing some of
the value that is added to a product beyond production by handling or
marketing. Unquestionably, to date studies on these issues shows that the
agronomist's share of every shilling that end-user i.e. consumers pay for
food, for example, has been decreasing over the years.
Please, note agriculture is just an example in point, but this trend also
happens to other products. To place my run-in perspective, in the African
context, reliable in book form data and its analysis illustrate that returns
on farmers especially small ones feeding most of us in urban areas continue
to drop over years. In the 1970s, for instance, according to data was about
USD 0.33 per USD 1 invested and in recent years, this return to farmers has
dropped to about less than USD 0.16 per USD 1 worth spent.
The agronomist in Tanzania and other raw producing nation similar to
Tanzania, as a whole continues to get less and the rest profits go to
processors, distributors and marketing agents. Local manufacturers and
processors cannot compete competitively to enjoy what the export market
offers.
Such fact alone amongst others sounds disheartening but illustrates the
potential opportunity to attain more value to help boost processors and in
this case, farmers are needed. But the question is how can this be achieved?
One very successful option that could help can be through creating alliances
in cooperatives or limited-liability businesses that can chain resources to
achieve common goals.
Equally, direct marketing could also serve as means to capture the value and
this can be done in a variety of ways on both a small or large scale. In
addition to value addition, creating value is another strategy that could
also help by involving developing products that are differentiated in some
way.
The key to success, in my view, is to align how products are valued to make
consumer feels there is added value to the product(s). Thus why from a
humble balanced economic viewpoint when two products or services have
similar core features, or can be sourced from more than one area and above
all can be produced by different firms, competition results.
And if our products aren't in line with evolving trends, it will be next to
impossible to penetrate the export market competitively or prosper well in
emerging markets. A competition-based pricing strategy involves setting
product prices based on competitors' prices and production costs rather than
on their costs and profit goals.
If there is a close gap between costs and the actual selling price then
there is going to be even greater competition on price in addition to
quality. And failure to have a product(s) in a way it can appeal to buyers,
no matter how much can be available domestically; such products cannot
competitively and easily sail in the markets, especially markets beyond
county's borders.
Thus why in a perfect world there would always be a larger margin between
costs and selling price to comfortably increase profits. But in real terms,
there is no perfect world that could permit a country such as Tanzania sale
its products without a designed strategy in place to penetrate such a
market.
Thus why, the expected reading from the finance and planning minister, to be
tabled this week, need to go beyond business as a usual statement.
Reading 176 pages document presented in the parliament for fiscal budget for
2021/2022 ministry of agriculture, for example, one easily can't miss
anxiety from the legislators call for measures that would help to raise the
contribution of the agriculture sector to GDP at more than 26.9% recorded in
2019.
But the key question remains how do we as a country achieve a higher
contribution to GDP if there isn't a robust strategic plan that in my view
isn't anywhere in the Ministers budget speech (agriculture) read in the
house during the 2021/22 fiscal budget presentation?
I might be mistaken but to the best of my knowledge is the low and untimely
application of science, technology and innovation in agriculture in Tanzania
responsible for the inability of the nation's agricultural products to
compete globally when compared to our neighbours within the region.
Where are we getting approach wrong? When are we going to stop with stories
arts of reviewing this or revising that on issues that only in my opinion
just need less than 20% of effort and resources and instead centre on 80% on
setting that would strictly land Tanzanian processors and producers to enter
export market competitive?
It is well known across many circles that Africa's economy is profoundly
reliant on agriculture, and going to published data the sector accounts for
about 35% of the continent's Gross Domestic Products (GDP), 40% of its
exports and 70% of employment in the content. Based on these facts, Tanzania
is well placed strategically as a nation with substantive arable land for
various crops.
In my opinion, many challenges confronting the nation as far as export is a
concern would be solved if there is in place an approach that would lead to
a point of supporting technology advancement in favour of the nation's
industrial economy policy to increase local innovation.
The element of science and technology in modern agricultural practice, for
example, is more than 90% if we consider the whole agricultural value chain.
It is low at the ease of science and technology in agricultural practice in
Africa that has stemmed in low productivity, low harvest and tied with
deficiency of value creation, inability to compete internationally happens.
Despite these constraints, I am persuaded that Tanzania goods from an
agricultural point of view to industrialbased products have incredible
potential to earn enormous revenue both local and forex. What is important
is to ensure that within government corridors is to do away with conflict of
interest within government institutions.
Revisiting some supervisory issues to make sure they are brought into line
with the mission to stimulate domestic production base is essential but more
important is how to add value, how to create value and align decisions
support Tanzanian based processors to meet market standards that are more
and more becoming competitive locally and internationally.-Daily News.
Nigeria: Inside Nigeria's Lucrative Employment Racketeering Where Applicants
Pay for No Jobs (1)
Nigeria's huge unemployment problem has left millions of graduates at the
mercy of unscrupulous recruitment firms who charge applicants money but
hardly give jobs.
A middle-aged woman stretched her right hand forward, her words uttered with
practiced nonchalance. She promptly instructed this reporter to pay a N3,
000 'registration fee'.
By now, her face had contoured into a smirk, and her demeanor like that of
someone in haste. Behind her stood a heap of files and papers, mostly
abandoned and dust-ridden.
There were some books and an old dictionary on her desk, from which she
would later pick a flyer. She is a staff of Esther Breakthrough Nig.
Limited, a recruitment agency operating from the busy streets of Ojuelegba,
in the heart of Lagos, Nigeria's commercial nerve centre.
It was in January 2020, two months before the Nigerian government announced
lockdown measures to curb the spread of the coronavirus pandemic. This
reporter had posed as a job applicant to document the ordeals of Nigerian
job seekers in the hands of recruitment agencies in Lagos and other parts of
the country. Located on Number 82, Clegg Street, Ojuelegba area of Surulere
in Lagos, Esther Breakthrough is one of the oldest recruitment agencies in
Nigeria's commercial capital.
But upon getting into the reception unit of the recruitment firm that windy
morning, this reporter was mandated to pay money in order to secure his
chances of getting a job.
"Once you pay for registration, just relax and go home," the middle-aged
staff told this reporter, unperturbed by the noise filtering in from
motorists moving along the busy Ojuelegba corridor.
"We will invite you for an interview, or send you to where there is a
vacancy very soon."
Apart from the money, the woman also demanded a copy of the reporter's
curriculum vitae and a passport photograph. She then handed him a flyer
detailing the various 'available' jobs and the presumed remuneration
package.
"Choose the job you want and let me know," she said upon receiving the
N3,000 'registration fee', now grinning.
The average job on the flyer had N50,000 listed as the presumed salary, and
the list included opportunities for 'Front Desk', Bar Men, Housekeeper,
Cook, Customer Care Officer, Chef, "Dest Recovery Officer " (sic), Laundry
Men, and Security Officers. There were also opportunities for Hotel
Managers, Lawyers, and Factory Workers, but those placements had no specific
remuneration details attached to them.
Upon satisfactory perusal of the flyer, this reporter told the woman that he
would prefer the job of a "Customer Care Officer", and she nodded in
agreement. She thereafter told our reporter to go home as he would be
"invited very soon".
Dashed Expectations
But contrary to her promise, many months after the payment of the
'registration fee', this reporter was not invited for any interview nor was
he called for any job opportunity.
"They don't have any job to give anybody," says Tolulope Abioye, a Lagos
resident who claimed to have gone through similar ordeals at Esther
Breakthrough Ltd. Mr Abioye, who now works on the Island in Lagos, said the
organisation has been in the practice of "milking job seekers" for more than
a decade.
"Esther Breakthrough has been doing this for over 10 years, milking job
seekers," he said in an interview with PREMIUM TIMES.
"When I was a fresh graduate, many of us paid money to these people. They
will ask you to pay N2,500 and submit your documents but the truth is that
you won't get any job.
"My NYSC savings went into registrations and payments made to Esther
Breakthrough and other companies claiming to be recruiting graduates in this
Lagos."
Like Mr Abioye, over a dozen young professionals based in Abuja and Lagos
told PREMIUM TIMES in separate interviews that they have had to pay varying
amounts of money to secure jobs through phony recruitment agencies in the
nation's commercial hub and elsewhere.
Salam Kareem, an Abuja-based accountant, explained that he once attended an
'interview' where they were made to pay N20,000 after what he described as a
"long, winding interview process." He never got any job thereafter.
On his part, an Ilorin-based civil servant, who preferred to be identified
simply as Abdullahi, claimed that 'the job recruitment industry in Nigeria
is an avenue for multi-million naira racketeering.'
According to him, many of the people running the phony recruitment
organisations are "stupendously rich" because they make so much from
unemployed graduates desperately searching for private-sector jobs in the
midst of the government's failure to create job opportunities.
Recruitment agencies like Esther Breakthrough are common in Lagos and other
major cities across Nigeria, PREMIUM TIMES' investigation showed. Due to
Nigeria's unemployment crisis, job seekers desperate in search of employment
opportunities often besiege these companies.
Crisis
In March, the National Bureau of Statistics (NBS) said that the unemployment
rate in Nigeria increased from 27.1 percent in the second quarter of 2020 to
33.3 percent in the fourth quarter.
The NBS in its report said the number of active working population in
December 2020, representing those within the age bracket of 15-64 years, was
122.05 million Nigerians.
In June 2020, the number of active working age Nigerians was 116.87 million.
According to Nigeria's statistics bureau, at least a third of the 69.7
million labour force either did nothing or worked for less than 20 hours a
week, making them unemployed. Another 15.9 million worked less than 40 hours
a week, making them underemployed.
A Bloomberg report said in March that Nigeria surpassed South Africa on a
list of 82 countries whose unemployment rates were tracked, with Namibia
leading the list with 33.4%. The report said Nigeria's unemployment rate
surged to the second highest on a global list of countries monitored.
Over the years, the number of people looking for jobs has been rising as
population growth continues to outpace output expansion. According to the
United Nation, Nigeria is expected to be the world's third most-populous
country by 2050, with over 300 million people.
Data from the NBS shows that the nation's GDP per capita declined by 0.02
percent, 4.16 percent and 1.78 percent in 2015, 2016 and 2017, respectively.
In January, food inflation climbed to 20.57 per cent year-on-year, making it
the highest since July 2008. Analysts blame the rise on COVID-19 pandemic
disruptions, dollar shortages, and lingering restrictions on imports of
certain food items, and incessant attacks on farmers.
In the midst of the biting economic reality, the nation has seen a surge in
cybercrimes and sundry criminal activities among unemployed young people,
while others desperately looking for jobs are being ripped off by fake
recruitment companies.
No Exception
Several months after normalcy returned due to Covid-19 and the attendant
disruption brought by the nationwide lockdown, PREMIUM TIMES' reporter
returned to Esther Breakthrough at its Ojuelegba office. It was in the first
week of March 2021, and this reporter again disguised as a job seeker.
Unsurprisingly, this reporter was asked to go through the same routine of
money payment and document submission.
"The pandemic has changed many things but we will call you once there is
opening," a female receptionist said upon being asked about the prospect of
getting job placement. PREMIUM TIMES' reporter, however, left the firm with
a promise of returning to make the payment but he never returned to the
agency.
Sanya Daniel, a resident of Surulere area who spoke with this newspaper,
explained that the company is 'notorious' for such practice, adding that
PREMIUM TIMES' reporter's experience was no exception. He also dismissed
claims that Esther Breakthrough may not have been able to help this reporter
secure a job due to the coronavirus pandemic.
"It's not because of the pandemic, they just don't have anything to offer
beyond extortion," he said.
"There was no pandemic over 12 years ago when they collected money from me
and my friends and we got no jobs. Many young people in Surulere and
environs already know them; they don't even go near Esther Breakthrough
because it is a waste of time and money.
"To be fair to them, I know one person who got one 'small' job from them.
But, my brother, I also know more than 30 people who never got anything
despite making payments at different periods.
"What I have realised is that it's a gamble. They ordinarily don't have any
job to give but they are ready to extort millions of desperate young people.
So whenever they manage to get one single slot, they will just throw it out
to as many people as possible."
Mr Sanya narrated the ordeal of one of his friends who, three months after
making 'registration' payments at Esther Breakthrough, was asked to resume
work at a nearby bucateria in Surulere.
"My friend didn't know until he got there and realised it was a neighborhood
'Buka'," Mr Sanya said amidst laughter.
"Upon getting to the 'Buka', he almost fainted. He was a graduate of
accounting."
In April, a fellow who picked Esther Breakthrough's telephone number when
PREMIUM TIMES sought to put to the organisation details of its findings
promptly hung the phone. Later in May, this newspaper visited Esther
Breakthrough's head office in Ojuelegba but the company declined to respond
to PREMIUM TIMES' findings.
Mr Sanya explained that apart from Esther Breakthrough, young Nigerians pay
higher amounts in other recruitment agencies, especially in big cities like
Lagos.
Jide Abdul, a Lagos-based real estate consultant, told this newspaper he
once paid N20,000 at a private recruitment firm which had over one hundred
graduates in attendance.
"I remember it was around 2014 and the interview was held around Ogba in
Lagos. There were many young people there that day," he said.
"So you can imagine how much these guys make from young people due to the
state of unemployment. It's a huge, massive, multi-million naira industry."
PREMIUM TIMES' findings showed, however, that phony recruitment agencies are
fleecing young graduates even in cities outside Lagos.
Best Consult, Abeokuta
In Abeokuta, Ogun State, Deborah Ashade and two other graduates of the
National Open University (NOUN) told PREMIUM TIMES of their ordeal in the
hands of 'Best Consult', a recruitment firm operating from the Adigbe end of
the Ogun State capital.
According to Deborah and her friends, in 2020, the company sent them
invitations for job interviews and they paid the sum of N5,000 on the day of
the said interviews. They never heard from the company thereafter.
When PREMIUM TIMES visited the location of the company in Abeokuta last
March, residents said the recruitment firm suddenly vacated the space, and
nothing was heard of its founders' whereabouts afterwards.
The experiences of Messrs Jide and Sanya, as well as Deborah and her friends
are not rare in Nigeria, a nation where many young people are unemployed,
and others have been pushed toward the edge of desperation, depression, and
death.
Ese Oikhala, a Consulting Associate at SBM Intelligence, a Lagos-based
think-tank, said the country's persistently high unemployment and
underemployment rates, coupled with two recessions in the last five years
and a pandemic which ground most business activities to a halt, have
obliterated all hope and fed a sense of desperation on the part of many
Nigerians.
She explained that despite their education, Nigerians are chasing a
shrinking pool of jobs, which pay low wages amid a high inflationary
environment.
"Set amid the backdrop of worsening economic conditions and anemic job
growth, Nigerians will do anything to secure any advantage, including
chasing unlikely job schemes, high-risk investment vehicles and starting
small online enterprises," she told PREMIUM TIMES.
She called on the government to boost local and foreign investors'
confidence as it is critical to attracting the investment necessary to fund
capital projects and create the jobs necessary to tackle unemployment and
the current low growth environment. She also canvassed for smart regulation
and elimination of policy uncertainty.
"Tax concessions, reducing red tape and sector-specific incentives would
help stimulate activities in key sectors such as agriculture, manufacturing,
trade and transport, boosting economic activities and helping operators
achieve economies of scale," she added.-Premium Times.
Rwanda: Cogebanque Launches Campaign on Digital Banking
Cogebanque Rwanda has launched a new campaign aimed at assisting its clients
to embrace digital banking.
Dubbed "Tugyendane," the drive was first introduced during the Tour du
Rwanda 2021, as a pledge to customers that the bank is committed and ready
to manoeuvre and walk with them through the current difficult financial
times.
"With the ongoing Covid-19 pandemic, we at Cogebanque understand the
financial repercussions that it has had on many people including individuals
and businesses at large. It is for this reason that we decided to launch the
#TugendaneNaCogebanque campaign," read a statement from the bank.
"We believe that now more than ever our customers should feel that we are
their banking partner of choice thanks to our specifically structured
banking solutions that are there to make their banking experience more
enjoyable and beneficial to them," it went on.
The campaign's goal is to encourage more of the bank's existing and
potential customers to embrace its digital banking solutions which include:
Mobile application (Coge mBank), USSD (*505#), Online banking platform and
Card solutions (Mastercards and Smart cash cards).
During the drive it, the bank will educate its clients about its savings
products and loan solutions which, if exploited in the right manner can
positively impact their financial status.
"Additionally, we will also be encouraging people to seek our services from
our agent network who are spread out in all parts of the country as a means
to facilitate them in getting our services without necessarily having to
visit our branches," goes a message from the bank.
During the campaign lucky winners will be selected on a weekly, bi- weekly
and monthly basis to win various items including Motorcycles, Sports
bicycles, Home appliances like TVs and Fridges as well as smartphones to
mention but a few.
The winners will be selected based on the frequency with which they use
Cogebanque's digital banking solutions as well as transaction value.
This will come as an addition to the awards that were already given out
during the Tour du Rwanda 2021 where lucky winners were given different
branded items and cash rewards that were deposited to their accounts as well
as Cogebanque cards.
The campaign is set to run until the end of July 2021 to allow as many of
the bank's existing and potential customers to benefit from its services and
the rewards being given out during the campaign.-New Times.
Nigeria: Russia, China Seek Areas of Collaboration With Nigeria's Atomic
Body
The Chinese and Russian envoys to Nigeria have separately visited the
Nigeria Atomic Energy Commission (NAEC) in search of areas of collaboration
in the nations' bid for nuclear energy for peaceful use.
Charge D'Affaires of the Russian Embassy in Nigeria, Mr. Valery
Shaposhnikuv, was received by the Acting Chairman, NAEC, Prof. Yusuf Ahmed,
who briefed him on the collaboration between the two countries on Nigeria's
nuclear energy programme. During the meeting, the parties discussed
preparations towards the visit of the delegation from the Russian Federation
on the strategic partnership between the two countries on Nigeria's nuclear
power plant, which is expected hold in July 2021.
The proposed visit, a statement from NAEC stated, was aimed at further
discussions on Inter- Governmental Agreement(IGAs) signed between the
federal government and Russia.
According to NAEC part of the discussions centred on the 2009 cooperation on
the development of nuclear energy for peaceful use and the 2012 cooperation
on the design, construction, operation and decommissioning of NPP in the
federal government.
It noted that the 2016 construction of a Multi- Purpose Research Reactor
(MPRR) complex in the country also formed part of the talks during the
meeting.
In the same vein, the newly appointed Ambassador of the People's Republic of
China to Nigeria, Mr. Cui Jianchun, has visited the commission to
familiarise himself with areas of interest between the Asian country and
Nigeria.
During the visit, the statement noted that extensive discussions were held
in areas of manpower training and capacity development, research and
infrastructural development on nuclear science as well as technology.-This
Day.
Kenyans Say Nothing to Celebrate on Thursday's Budget
Nairobi — Ahead of the budget reading Thursday, Kenyans are worried of with
reports of possible increased taxation at a time of the COVID-19 pandemic
that slowed the economy and rendered many jobless
National Treasury Cabinet Secretary Ukuru Yattani was set to table the
2021/2022 budget at the National Assembly in what will outline government
taxation and expenditure for the next 12 months.
Unveiling of the country's biggest budget yet, at Sh3.6 trillion has ignited
fears of massive taxation as the government seeks to funds its mega
infrastructural projects and loans.
"Life has really become unbearable and I cannot lie to you that things are
going to change after Thursday," said Jackson Waweru a photographer based at
Nairobi's Uhuru Park, "I hardly eat and when I do it is not food that I
would like to be eating on a regular day."
In as much as Waweru has despaired and his hopes for a better tomorrow have
diminished over the years, he has pleaded with the government to consider
reducing the prices of basic commodities like maize flour so as to cushion
Kenyans.
"We need to eat and the least the government can do is make life bearable,"
he said.
On his part, Brian Yego was candid about his lack of enthusiasm on this
year's budget and faulted the government for being insincere in its pursuit
to improve the livelihoods of Kenyans at a time the country's public debt
continues to be a concern to many.
"I cannot ask the government to improve the lives of Kenyans anymore. I
cannot ask it to reduce the prices of basic commodities because that has
become a tired song. They should know however, that we are watching," he
said.
For Mary Wambui who despite being hardened by the harsh economic reality
remains hopeful of better tidings. She asked the government to consider
prioritising more funding in agriculture.
"Feeding my children has become a challenge lately, the government should do
something about it either by reducing the prices of basic commodities or
subsidise them," she said.
Rosemary Omondi who is also confident that her economic condition will
change pleaded with the government to set aside more funding for small
business enterprises, particularly for women who are keen to improve their
conditions.
"We need to be supported and helped and during the budget I would be keen to
see if the government has set aside funds that will help us grow our
businesses," she said.
Concerned by the sluggish COVID-19 vaccination exercise in the country,
Dickson Odongi noted that he hopes more resources will be diverted to the
health sector so as to boost efforts in containing the spread of the virus
and help vaccinate more people.
Kenya had vaccinated a million people by June with the AstraZeneca vaccine
and was sourcing for Jihnson&Johnson and Pfizer to innoculate at least 70
percent of the adult population that remains vulnerable to the disease.
"The whole world is in a crisis and if you check the number of vaccinated
Kenyans that number is just too low so why can't they pump more money on the
health sector so that they can save Kenyans," he said.
While it is a gloomy outlook which has been worsened by the government's
growing appetite for foreign loans, CS Yattani has downplayed fears that
Kenya's debt is unsustainable.
The outbreak of COVID-19 in Kenya in March 2020 has seen the government
borrow billions in an effort to bolster its response measures.
According to the latest statistics from the Central Bank of Kenya (CBK),
Kenya's public debt as stood at Sh7.3 trillion as at January 2021.
Under this year's budget, the Executive is the biggest beneficiary after it
was allocated Sh1.89 trillion followed by Parliament at Sh37 billion and the
Judiciary at Sh17 billion.-Capital FM.
Invest Wisely!
Bulls n Bears
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INVESTORS DIARY 2021
Company
Event
Venue
Date & Time
Companies under Cautionary
ART
PPC
Dairibord
Starafrica
Fidelity
Turnall
Medtech
Zimre
Nampak Zimbabwe
<mailto:info at bulls.co.zw>
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been compiled from sources believed to be reliable, but no representation or
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opinions expressed and recommendations made are subject to change without
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companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
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