Major International Business Headlines Brief::: 04 March 2021
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Major International Business Headlines Brief::: 04 March 2021
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ü Budget 2021: Rishi Sunak warns tax rises to follow spending spree
ü Sands selling Las Vegas casino to bet big on Asia
ü Budget 2021: Million more set to pay income tax by 2026
ü Amazon Fresh till-less grocery store opens in London
ü Top Glove bets on pandemic boom to propel ambitious $1.9 billion HK listing
ü Texas attorney general welcomes power grid operator ERCOT's move to fire CEO
ü Oil strengthens on prospect of OPEC+ maintaining supply cuts, drop in U.S. inventories
ü Texas power grid names firms with unpaid bills, cuts off second
ü U.S. judge rejects SEC bid to expand Rio Tinto fraud lawsuit on Mozambique coal business
ü Amazon's first cashierless store arrives in Britain in sign of global expansion
ü Nigeria: Why Nigeria's Crypto Crackdown Is Misguided
ü Uganda: Standard Bank Reviewing Oil Pipeline Financing Concerns
ü Morocco: Nigeria, Morocco Endorse Protocols for Fertilizer Plant
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Budget 2021: Rishi Sunak warns tax rises to follow spending spree
Chancellor Rishi Sunak has warned that a spending spree to support workers and spur investment will be followed by tax rises as the economy recovers.
The UK's rapid Covid-19 vaccine rollout is expected to help the economy get back to its pre-pandemic size six months sooner than previously expected.
Official forecasts expect growth to hit 4% this year, while an extension of the furlough scheme will limit job losses.
Mr Sunak said future tax hikes were needed to stop "irresponsible" debt.
UK leading on vaccines
The government's independent forecaster, the Office for Budget Responsibility (OBR), said the UK had been at the "vanguard" of the discovery of new and effective vaccines.
It said this will foster a "swifter and more sustained" economic recovery, with the pace of growth expected to strengthen to 7.3% in 2022.
UK GDP growth
This would be the highest growth rate since official records began in 1949 and help the economy to return to its pre-pandemic size in the middle of next year.
Mr Sunak unveiled plans to spend tens of billions of pounds more over the next two years to support the economic recovery, including tax breaks designed to encourage business investment.
However, the chancellor said tax rises were also needed to help repair the public finances.
Mr Sunak announced that corporation tax will rise from 19% to 25% for large companies in 2023, while day-to-day spending by government departments will be cut by a further £4bn a year.
Mr Sunak said it would be "irresponsible to allow our future borrowing and debt to rise unchecked".
Chris Sanger, head of tax policy at EY, described the Budget as "three years of support, followed by three years (and more) of pain".
Mr Sanger added: "Time [is] the Chancellor's friend in his aim of replenishing the Government's coffers."
'Euphoria' to spur spending
The government's target to have all adults vaccinated this summer is expected to pave the way for the lifting of public health restrictions.
The OBR noted that British households had built up a savings war chest of around £180bn in the past year.
It expects a quarter of this to be spent as lockdowns end, saying there could be a "degree of euphoria", especially among better-off households who "treat themselves" when the economy opens up.
The main thrust of this Budget is significant extra immediate crisis support, both in terms of the furlough scheme and self employed support, and a radical "super-deduction" policy to encourage business investment right now.. That is £60bn extra in one year and it comes from borrowed money. That leaves borrowing in the coming financial year significantly higher than expected. A much larger proportion of the exceptional world war-style borrowing over the past year will stay in place in the coming year.
The happy result of this is that unemployment, though rising, peaks at a much lower level than previous expectations, just over 6%, rather than, say, 10%. This is a consequence of both the vaccine rollout and the support package, leading to a reopening of the economy over summer.
The jabs and then the jobs. But then the payback, with a massive rise in £16bn corporation tax and the £8bn changes to thresholds for the last two years of the Parliament. The Conservative manifesto commitments on not increasing VAT, income tax or national insurance are binding here.
So Rishi Sunak is left with the first rise in corporation tax since Dennis Healey's 1974 Budget. It turns a careful strategy of using corporation tax as a lever for foreign investment on its head. For many in the vanguard of the Conservative Brexit movement, very low levels of this tax were one of the building blocks of "Singapore-on-Thames". Singapore is staying in South East Asia.
The timing of this tax rise at the end of a Parliament is not the normal order of things. But the Covid pandemic is far from normal.
However, the watchdog warned that economic uncertainty remained "considerable", and would depend on controlling variants of the virus.
Labour leader Sir Keir Starmer said the chancellor was "betting on a recovery fuelled by a consumer spending blitz".
He added: "The chancellor may think that this is time for a victory lap, but I'm afraid this Budget won't feel so good for the millions of key workers who are having their pay frozen, for the businesses swamped by debt, and the families paying more in council tax."
Unemployment is expected to peak at a lower rate of 6.5%, keeping it well below levels seen during the 2008 financial crisis.
However, this means half a million more people are expected to be out of work by the end of this year.
Unemployment is expected to peak at around 6.5% at the end of 2021, lower than previously forecast by the OBR
Government borrowing is expected to rise to a peacetime high of £354.6bn this year to help pay for economic support measures.
The size of the UK's debt pile is also expected to remain larger than the economy until at least the middle of the decade.
Mr Sunak said: "It's going to take this country - and the whole world - a long time to recover from this extraordinary economic situation. But we will recover."
The cost of economic support measures has climbed to £344bn
Income tax allowances frozen
>From April, he will also freeze the amount of money employees earn before paying income tax at £12,570 until the middle of the decade.
The OBR estimates an extra 1.3 million people will start to pay income tax by 2026 as a result of the freeze.
The level at which employees start paying the higher, 40% rate of tax will also be frozen at £50,270 from April, dragging an extra million people into the band within five years.--BBC
Sands selling Las Vegas casino to bet big on Asia
Casino giant Las Vegas Sands is selling its world-famous Venetian casino in a $6.25bn (£4.5bn) deal to invest the money in its Asian businesses.
The sale comes just two months after the death of Sands chief executive and chairman Sheldon Adelson.
Sands will use the proceeds from selling the Venetian to expand its operations in Singapore and Macau.
The firm is currently building a London-themed resort in gaming hub Macau with the help of David Beckham.
Mr Adelson pushed hard into Asia and under his management revenue in Macau overtook that from its Las Vegas operations. He was involved in talks to sell the Las Vegas properties before he died.
"This company is focused on growth, and we see meaningful opportunities on a variety of fronts," said new chairman and chief executive Robert Goldstein.
"Asia remains the backbone of this company and our developments in Macau and Singapore are the centre of our attention."
Its Venetian complex includes the luxury Palazzo hotel and the Sands Expo Convention Center.
London calling
One of Sands' new projects in Asia is the $2bn Londoner Hotel which it hopes will win back tourists to Macau after a dramatic fall in numbers from the Covid-19 pandemic.
The Londoner Hotel features suites designed by David Beckham, while a Gordon Ramsey restaurant will open later this year.
The resort will also feature a 96-metre tall replica of Big Ben, a Crystal Palace inspired atrium and a full-scale replica of the Eros fountain once building finishes this year.
The casino giant also owns Marina Bay Sands in Singapore.
"London is an iconic city and we anticipate this addition will further raise the profile of Macau, while increasing the number of visitors as our other flagship properties have done," Sands China president Wilfred Wong told the BBC.
Macau is also betting on technology to help the gambling hub recover from its Covid-19 induced economic slump.
In June the city will host 'Beyond', a technology event loosely modelled on the massive CES trade show in Las Vegas.
"Casino operators have been putting a greater emphasis on lifestyle, tourist attractions and high-level entertainment such as Cirque du Soleil to attract non gamblers," said Benoit Badufle, a luxury tourism expert at Horus consulting firm.--BBC
Budget 2021: Million more set to pay income tax by 2026
More than one million people are set to start paying income tax in the next five years, official forecasts say, due to a move announced in the Budget.
Chancellor Rishi Sunak said that the threshold at which the tax starts being paid will be frozen until 2026 after a rise this April.
It means getting a pay rise could pull people into a higher rate of tax.
Commentators have called it an increase in an individual's tax burden "by stealth".
The chancellor said that he wanted to be honest with the British public about the way in which money would be raised to pay for support schemes during the coronavirus pandemic.
At present, people start paying 20% income tax when they earn £12,500 a year, known as the personal allowance.
The first £12,500 they earn is tax-free with the 20% rate only being charged on everything they earn above that amount, up to the higher rate tax threshold.
The starting point for paying the higher 40% rate is £50,001.
These thresholds will go up to £12,570 and £50,270 in April, but will then be frozen until April 2026.
The Office for Budget Responsibility, the government's official but independent forecaster, said this policy would bring 1.3 million more people into paying income tax and one million more into paying at the higher rate. This is known as fiscal drag.
While the Scottish government has the ability to vary tax rates and bands under its devolved powers, the tax free personal allowance threshold is set by the chancellor and applies to the whole of the UK.
Income tax freeze will raise £8bn by 2025-26
The OBR said that, when taking the rise in the cost of living into account, it would effectively bring the personal allowance in 2025-2026 to the level it was in 2014-2015.
The Budget documents show this hits middle to higher income earners the hardest.
The policy will bring an extra £8bn a year into the Treasury coffers, compared with what it would have received if it had raised the thresholds in line with inflation.
The Conservative manifesto pledged that the main rates of income tax, national insurance and VAT would not rise, and this does not break that pledge.
"The next few years will see the burden of tax on individuals rise quietly by stealth," said Jason Hollands, from financial advisers Tilney.
"But given pre-Budget fears of a potential Viking-like raid on personal wealth, middle-class Britons - particularly those with savings and investments - can sleep a little easier tonight."
Becky O'Connor, head of pensions and savings at Interactive Investor, said: "Freezing allowances is a back-handed way of raising taxes, as wage inflation and asset price inflation increase the number of people pushed over the thresholds at which they have to pay more tax.
"Frozen allowances and thresholds have a habit of remaining fixed for many years, dragging more people into tax charges over time."--BBC
Amazon Fresh till-less grocery store opens in London
Amazon opens a till-less grocery store in London later on Thursday - its first "just walk out" shop outside the US.
Visitors to Amazon Fresh scan a smartphone app when entering and are automatically billed as they leave.
The store stocks hundreds of own-brand items as well as third-party products, and also serves as a place to collect and return goods bought online.
Campaigners have raised privacy concerns but one retail expert said the opening marked a "watershed moment".
"Having a physical presence will enable Amazon to address some of its weaknesses, like the mounting cost of deliveries and returns," said Natalie Berg, an analyst with NBK Retail.
But she said she did not believe it would pose a threat to the major chains in the near term.
"Supermarkets have had a few years now to prepare and test their own checkout-free shopping concepts."
Amazon's approach, however, promises a more "frictionless" experience than other retailers.
Visitors only have to place an item in a bag or otherwise carry it out to be charged by the store, which is located at the street entrance of a shopping centre in the borough of Ealing.
By contrast, retailers including Marks and Spencer, Tesco and Sainsbury's require consumers to scan items into a smartphone or other device.
The US firm is so confident of its tech that it says shoppers are not under any obligation to check all the items were accounted for.
"When you're finished, you're free to walk out," said Matt Birch, director of Amazon Fresh Stores and an ex-Sainsbury's executive.
Cameras and sensors
The technology involved was pioneered at the firm's similar Amazon Go stores in the States, which opened to the public in 2018.
However, recent advancements mean the system can now cope with customers selecting from different bouquets of flowers, magazines and greetings cards - it could not distinguish accurately enough between one choice and another before.
It involves the use of hundreds of cameras and depth-sensors, and software developed using deep-learning artificial-intelligence techniques.
However, it does not involve facial recognition.
Instead, users must identify themselves on arrival by scanning a barcode displayed within their account on the standard Amazon Shopping app.
One civil liberties group has raised concerns.
"[It] offers a dystopian, total-surveillance shopping experience," said Silkie Carlo, from Big Brother Watch.
"Amazon's intense tracking of shoppers will create larger personal data footprints than any other retailer. Customers deserve to know how and by whom these records and analytics could be used."
The company has said it will only associate information collected in-store with a customer's Amazon account for up to 30 days, and has further details about how it uses the data on its privacy site.
Expansion plans
Amazon said it had sourced many of its own-brand groceries - including milk and eggs - from UK suppliers itself.
In addition, it has launched an "Our Selection" sub-brand for "premium" products including desserts.
Other items come from Morrisons and Booths, supermarkets with whom its has pre-existing ties.
The store also contains a booth where orders can be delivered from its online store.
And customers can return goods by scanning a code without having to repackage or relabel the item.
"Hand the product over and we'll do the rest for you," said Mr Birch, adding he plans further stores on some of London other high streets as well as its city centre.
The Ealing store's customer area covers about 2,500 sq foot (232 sq m) in total, which is much smaller than a typical supermarket.
Amazon also operates seven Whole Foods Market supermarkets in the UK.
And there have been persistent rumours that it might try to expand further in the sector by buying one of the larger chains.
However, the company is also offering to sell its Just Walk Out technology as a service that can be installed in other companies' stores.
And ultimately it might decide there is more money to be made pitching this to the established supermarkets than challenging them head-on with bigger stores of its own.
Amazon has barely made a dent in the overall UK grocery market, but it's clearly got big ambitions for food.
It's been ramping up its online service, with free same-day deliveries for Prime members, putting pressure on rivals.
The traditional supermarkets have been improving their technology over the past few years and the pandemic has accelerated the changes.
Sainsbury's, for instance, has had a huge take-up in its SmartShop system where shoppers can pick up a handset and scan items as they go.
Amazon technology removes checkouts and friction altogether.
Moving into bricks and mortar is another milestone for Amazon.
Its new range of own-branded products is also eye-catching.
When it comes to convenience stores, being able to grab and go could prove very popular. But location is key.
And most of the best convenience-store sites in densely populated, urban districts have already been taken.
This launch won't pose a big, immediate, threat to the big established grocers but they know only too well that Amazon has the potential to be a hugely disruptive force and has already forced them to up their game.--BBC
Top Glove bets on pandemic boom to propel ambitious $1.9 billion HK listing
HONG KONG/SINGAPORE/KUALA LUMPUR (Reuters) - Malaysia’s Top Glove Corp Bhd is betting that pandemic-induced sales can provide enough fuel for its $1.9 billion Hong Kong listing to break through the headwind of U.S. sanctions and the prospect of slower growth as vaccinations become widespread.
Analysts said the unknown pace of vaccination programmes mean the world’s largest medical gloves maker could command a higher price for its stock by listing sooner rather than later, while the firm when announcing its plan on Friday talked up post-pandemic sales likely exceeding pre-pandemic levels.
The bullish stance comes even as Citigroup Inc and UBS Group AG opted out of working on the deal in the wake of the U.S. sanctions on Top Glove over allegations of forced labour practices, people with knowledge of the matter said.
Top Glove’s sales benefited greatly from the COVID-19 pandemic but the company also suffered an outbreak causing 5,000 infections, one death and rebuke from investors including BlackRock Inc.
With vaccination programmes underway worldwide, analysts foresee the end of the supernormal cycle for the medical gloves industry, pointing to potential over-capacity and rising costs.
Those concerns have rendered Top Glove stock Malaysia’s most shorted. Short interest is at 2.69% of its share capital and 4.2 days of average daily trading volume.
“The company might find it difficult to attract new investors to the Hong Kong offer unless they offer HK shares at a significant discount to the market price due to bad press coverage,” said LightStream Research analyst Oshadhi Kumarasiri, who publishes on Smartkarma platform.
“But at the end of the day, if it’s offered at a substantial discount to the market price, it won’t be that hard to find subscribers.”
REPUTATIONAL RISK
Top Glove was in talks with Citi, UBS and China International Capital Corp (CICC) to manage the listing, Reuters reported in October.
Citi and UBS opted not to sponsor the deal late last year due to heightened concerns about Top Glove’s rubber farming processes and the reputational risk of working with a U.S. sanctioned company, said the people, who declined to be identified as they were not authorised to speak with media.
U.S. Customs in July sanctioned imports from some Top Glove subsidiaries, whose sales make up 12.5% of the firm’s sales, after finding evidence of forced labour practices.
UBS and Top Glove could also not agree on fees, another person said.
Citi and UBS declined comment. CICC did not respond to a request for comment.
Top Glove - which will join a small list of companies with three listings, after its primary in Kuala Lumpur and secondary in Singapore - in an email to Reuters said decisions between the banks and the company were made on commercial basis.
“We have cooperated with the (U.S. Customs) in its ongoing investigation and have taken extensive rectification actions to improve our labour practices and enhance our internal control measures,” it also said in the email.
GOOD TIMING
Top Glove plans to complete the Hong Kong listing process by the second quarter of this year as it seeks to expand its investor base to Hong Kong and mainland Chinese shareholders.
Its draft prospectus showed CICC as sole sponsor, though firms typically appoint more banks closer to launch. The U.S. sanction, however, makes it unlikely international investment banks will work on the Top Glove deal, the people said.
Earnings are still way above pre-pandemic levels but markets are already pricing in lower growth. Analysts have cut estimates for Top Glove’s net income by 7.3% on average over the past 30 days for the year ending August, and trimmed revenue by 5%, Refinitiv data showed.
“It’s better to go for a listing now than later because there’ll likely be more uncertainties going forward, such as possibly lower average selling prices for gloves,” said a Kuala Lumpur-based analyst tracking the company.
“No one is sure how fast or how much prices can come down yet, so if Top Glove is able to chalk up good profit and sales now, it’s a good time to do it now.”
Texas attorney general welcomes power grid operator ERCOT's move to fire CEO
(Reuters) - Electric Reliability Council of Texas (ERCOT) has fired its chief executive Bill Magness, Attorney General Ken Paxton said on Wednesday, adding that he welcomed the decision after February’s deadly blackouts in Texas.
A mid-February storm temporarily knocked out up to half the state’s generating plants, triggering outages that killed dozens and pushed power prices to 10 times the normal rate.
“ERCOT’s decision to oust CEO Bill Magness signals accountability for the disaster that swept through our state two weeks ago,” Paxton said in a statement on Twitter.
“(This step) offers the opportunity for new leadership that can more efficiently prepare and direct our state’s resources when dangerous weather strikes,” he added.
ERCOT did not immediately respond to a request for comment late on Wednesday.
The deadly winter storm caused widespread blackouts across Texas, a state unaccustomed to extreme cold, knocking out power to more than 4 million people at its peak.
Oil strengthens on prospect of OPEC+ maintaining supply cuts, drop in U.S. inventories
SINGAPORE (Reuters) - Oil prices rose for a second straight session on Thursday, as the possibility that OPEC+ producers might decide against increasing output at a key meeting later in the day lent support, alongside a drop in U.S. fuel inventories.
Brent crude futures added 61 cents, or 1%, to $64.68 a barrel, as of 0428 GMT, after climbing more than 2% on Wednesday. U.S. West Texas Intermediate (WTI) crude futures gained 28 cents, or 0.5% to $61.56 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, are considering rolling over production cuts into April instead of raising output, as a recovery in oil demand remains fragile due to the coronavirus crisis, three OPEC+ sources told Reuters.
The market had been expecting OPEC+ to ease production cuts by around 500,000 barrels per day (bpd) from April.
“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report
U.S. crude oil stockpiles surged by a record of more than 21 million barrels last week as refining plunged to an all-time low due to the Texas freeze that knocked out power for millions.
With refiners unable to process crude, gasoline and distillate inventories also dropped dramatically, especially in the Gulf Coast region where their declines set records, the U.S. Energy Information Administration said on Wednesday.
“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi.
“Perhaps more interesting is the lack of U.S. shale (production) response to the higher crude oil prices, which is favourable for higher prices.”
Texas power grid names firms with unpaid bills, cuts off second
HOUSTON (Reuters) - Texas’ power grid operator on Wednesday cited 12 energy companies and two municipal utilities for failure to pay their bills for power and services during February’s deadly blackout that has led to the ouster of the operator’s chief executive.
The companies and utilities owe $2.21 billion for power and services during the storm, the Electric Reliability Council of Texas (ERCOT), which runs the grid providing electricity to 90% of state residents, said.
In response to the blackouts, some of which ERCOT imposed to balance the grid after freezing generators went offline, the operator ousted Chief Executive Bill Magness, following calls for his resignation by state lawmakers.
The winter storm created a surge in electricity demand that overwhelmed the grid at the same time the cold temperatures and other faults knocked out nearly half the state’s power plants. High prices for emergency fuel and power saddled the companies that sell, transmit and generate electricity in the state with about $47 billion in costs, an official estimated.
Texas consumers will see higher prices as the storm-related charges and unpaid fees are passed along to remaining providers.
An ERCOT spokeswoman did not immediately reply to a request for comment. Magness is still listed as CEO on the ERCOT website. He took on the role in 2016.
ERCOT officials are scheduled to go before a Texas senate committee on Thursday that is delving into the grid failure and resulting financial crisis facing the state’s power industry.
As part of its duties, ERCOT acts as a clearinghouse, collecting for power and paying the companies that provide the electrons. Defaulting companies can have their customers taken and their outstanding debts are reallocated to all grid users.
The largest of ERCOT’s 14 debtors, Brazos Electric Power Cooperative Inc, filed for bankruptcy on Monday listing $1.8 billion owed to ERCOT. A Brazos spokesman did not reply to requests for comment.
The second-largest ERCOT debtor, Entrust Energy Inc, on Wednesday became the second electric provider cut from the grid in five days. It owed nearly $234,000. Entrust did not reply to a request for comment after normal business hours.
The first company dropped from the grid, Griddy Energy LLC, had its customers moved to other providers after failing to pay an undisclosed amount.
Vinnie Campo, the general manager of renewable power marketer Bulb US, said this week that he supports a proposal before the state’s Public Utility Commission to roll back some $2 billion in service fees.
Bulb was cited on Tuesday as being $30,800 short on grid payments. However, a company spokeswoman said that amount was paid. Wednesday’s list of debtors showed Bulb was $5.1 million in arrears on its ERCOT bills.
“Our primary focus through the storm and going forward is protecting customers from price increases and bill shock,” said Campo. “The market is in need of fixing and fast,” he said, criticizing storm price increases as a “windfall” for generators.
ERCOT’s disclosure of those firms behind on their bills “is perfectly fair game,” said Patrick Woodson, chief executive of retail power marketer ATG Clean Energy, whose company is not on the list.
“I hope they will apply the same standards to identifying the market participants who made massive profits during this disaster,” he said.
U.S. judge rejects SEC bid to expand Rio Tinto fraud lawsuit on Mozambique coal business
(Reuters) - A U.S. judge on Wednesday quashed a bid to widen the scope of a civil lawsuit by the U.S. Securities and Exchange Commission that accused miner Rio Tinto of fraud at its Mozambican coal business, a court filing showed.
The SEC filed a complaint against Rio in 2017 with allegations that it had fraudulently concealed the decline in value of the business.
Rio had acquired Riversdale mining for $3.7 billion in 2011, on the premise it would be able to barge 30 million tonnes of coal per year down the Zambezi river, and rail a further 12-15 million tonnes of coal per year to port.
But it failed to secure government approvals, and discovered the resource was lower than expected, still raising more than $5 billion in 2012 before impairing the assets as coal prices fell the following year, when Chief Executive Tom Albanese departed.
Defendants Rio Tinto Ltd, Rio Tinto Plc, Albanese, and former Chief Financial Officer Guy Elliott had argued that the studies were not complete at the time the capital was raised.
In a 2019 ruling, U.S. District Judge Analisa Torres in New York said the regulator may pursue some claims in its October 2017 lawsuit but narrowed the main fraud claim against Rio Tinto and Albanese to focus on the former CEO’s statements about Mozambique growth prospects.
The SEC argued that some of the dismissed claims should be restored, in light of a subsequent U.S. Supreme Court decision in an unrelated case, but that bid was knocked back on Wednesday.
The surviving SEC case includes a claim that Albanese intended to mislead investors in 2012 by describing the Moatize Basin, where RTCM was located, as a world-class basin coal deposit and long-term growth opportunity.
The Australian Securities and Investments Commission brought its own civil claims against Rio Tinto, Albanese and Elliott.
The case is SEC v Rio Tinto Plc et al, U.S.
Amazon's first cashierless store arrives in Britain in sign of global expansion
(Reuters) - Amazon.com Inc will open its first-ever physical store outside the United States on Thursday.
The world’s largest online retailer said the cashierless store, dubbed “Amazon Fresh,” is located in Britain, in the London Borough of Ealing. It will carry a private UK food brand it’s calling “by Amazon” and will let consumers skip the checkout line when they shop.
The opening is a sign of the Seattle-based company’s ambition to sell food globally and its belief that physical stores are a key way to capture consumers’ high spend on groceries, a category it has yet to dominate.
It so far has worked toward that goal in the United States by acquiring the Whole Foods Market chain in 2017 and testing shoppers’ interests with an array of other formats: about two dozen cashierless convenience stores called Amazon Go, two Seattle-area Amazon Go Grocery stores that are about four times the size, and 10 Amazon Fresh supermarkets in California and Illinois.
As in the Go stores, customers will scan a smartphone app to open the UK store’s entry gates. Ceiling cameras and shelf weight censors determine what shoppers add to their carts or put back, and their on-file credit cards are billed after they exit.
The location, much smaller than a supermarket, will sell prepared meals, some groceries, and Amazon devices, as well as offer a counter for picking up and returning online orders.
Nigeria: Why Nigeria's Crypto Crackdown Is Misguided
Cryptocurrency doesn't have to be a problem. Neither does the Central Bank.
Catching many people by surprise on 5 February, the Central Bank of Nigeria (CBN) issued a ruling instructing banks and financial institutions to close accounts involved in cryptocurrency exchanges. This sparked a controversy that, at first, centred on the veracity of the statement. Some commentators suggested it was fake, pointing to its suddenness and the misspelling of the word "public" for "pubic". Once its authenticity was confirmed, it kicked off an even larger storm of anger and confusion as people debated what the ruling would mean.
Cryptocurrency is a big deal in Nigeria. An estimated $400 million worth of cryptocurrency was traded in the country in 2020. Nigeria is the world's second-largest Bitcoin market after the US. And in a recent survey of 74 countries, Nigerians were the most likely to say they use or own cryptocurrency.
In an economy characterised by high inflation, low foreign exchange reserves, and steep fees for transferring money, millions of people use cryptocurrency - a decentralised digital asset not controlled by any government - as an alternative. In Nigeria, crypto-exchanges such as Buycoins, Quidax and Busha have sprung up almost overnight, facilitating millions of dollars' worth of transactions. Startups like Cryptofully have launched popular services to facilitate remittances. Accelerators have fostered new crypto-based solutions for old financial challenges, led by young tech-savvy developers.
And so, one wonders why the CBN would effectively cripple such a dynamic and vibrant sector. The reality is that the CBN has always approached crypto with caution and, in fact, issued a circular in 2017 instructing commercial banks to avoid transacting in virtual currencies. Its 2021 announcement reiterated this directive, though it elaborated on its reasoning in a 7 February press release. In that statement, it quoted Warren Buffet's opinion that cryptocurrencies are "rat poison squared" before explaining its own position.
The first key part of the CBN's reasoning is "the extreme price volatility of cryptocurrencies". This, it suggests, means that cryptocurrencies are "more widely used as speculative assets rather than as means of payment". In making this argument, it cites "Bitcoin, the best-known cryptocurrency, [which] hit a record high of $42,000 per unit on January 8, 2021, and sank as low as $28,800 about two weeks later".
This argument has some truth to it. Some cryptocurrencies such as Bitcoin are generally recognised and treated as taxable assets and their values may fluctuate wildly. However, it is important to note that there are many different cryptocurrencies and some - such as XLM and XRP - have been specifically designed to process payments.
The second key part of the CBN's justification is that the anonymised and decentralised nature of cryptocurrencies makes them more open to fraud. The internet is awash with anecdotal evidence of crypto-scams around the world, including in Nigeria. There is a rumour that the CBN's crackdown was spurred by a warning from the FBI. Though there is evidence that African countries are ahead of the rest of the world in terms of keeping illicit crypto activity low, fraud is nonetheless a legitimate concern.
However, a blanket ban on cryptocurrency transactions is a very blunt response to this threat. It echoes the decision of the Lagos State Government last year to ban motorcycle taxis, citing fears regarding safety and security. Like with the crypto ban, authorities' concerns may have been well-placed but the harsh restrictions - which were enacted just after startups such as Max.ng, Gokada and Opay had raised foreign investment and hired thousands of workers - caused widespread disruption and wasted a huge opportunity.
Cryptocurrency is in a similar position. Innovation is thriving. Adoption is increasing. And regulation had started reaching a turning point, such as with the Security and Exchange Commission's (SEC) statement on the treatment of digital assets in September 2020.
The CBN's position risks nullifying all the progress made so far and damaging the chance for Nigeria to become a hub for blockchain technology. Should its order remain standing, crypto-centred firms will suffer and the industry might implode. Of course, the sector attracts some of the finest minds, who will no doubt come up with workarounds. Already NGNT, a cryptocurrency pegged to the Naira, is being touted as a potential way to bypass the CBN's restrictions. And startups might find ways to use blockchain technology to survive, including by conducting transactions through peer-to-peer networks, which don't require commercial banks to serve exchanges. But if the CBN attempts to stifle cryptocurrencies at every turn and corner, the future of Nigeria as a blockchain epicentre will be bleak. One cannot continuously innovate against an onslaught of killer policies.
It's fair to say that Nigerian crypto-exchanges typically do their utmost to ensure that the transactions on their platforms are legitimate and traceable. However, it's also fair to say that more needs to be done in the realms of cybersecurity, user education and fintech transparency. Rather than a blanket ban, a partnership between regulatory authorities and crypto-firms could both reduce fraud while allowing Nigeria's economy to reap the greatest benefits from the innovative sector. Cryptocurrency doesn't have to be a problem and neither does the CBN.
Fortunately, the Bank seems to be reconsidering its position and suggested last week that it will work with the SEC to find potential means of regulation. For the sector and the large number of Nigerians that use cryptocurrencies, one hopes that the CBN will come to understand what's at stake and offer some measured and effective solutions rather than misguided bans delivered through typo-riddled letters.
Abubakar Popoola has a BA in Economics from Pan Atlantic University, Lagos. His core passions are history and machine learning, and he is currently building a cryptocurrency fintech, Breeze, to help tackle the problem of forex scarcity in Nigeria.-African Arguments site.
Uganda: Standard Bank Reviewing Oil Pipeline Financing Concerns
Standard Bank Group has said a "preliminary finding report is currently under review" of the key concerns, especially on the environment and social impacts, related to the proposed East African Crude Oil Pipeline (EACOP).
In a statement to an inquiry by Daily Monitor after a group of civil society actors from 49 countries wrote to chief executives of 26 banks to shun the multi-billion dollar infrastructure over environmental concerns, the bank said: "It is following its own internal processes and, along with its advisory banking partners" and has employed an independent environmental and social advisor relating to the project.
"We support responsible investment through assessing and managing our environmental, social and governance risks," the bank said, and that their new fossil fuels financing policy sets out stringent conditions for lending to fossil fuel projects, including requiring project owners to commit to minimising or reducing greenhouse gas emissions.
Last Thursday, some 260 civil society groups wrote to Stanbic Bank and its Standard Bank Group parent company, Industrial & Commercial Bank of China, and Japan's Sumitomo Mitsui Banking Corporation raising "deep concerns" about the EACOP. The banks are financial advisers on the project.
"Contrary to what proponents argue, the EACOP will not "unlock East Africa's potential".
East Africa needs energy security based on widespread rollout of renewables and the millions of clean jobs that come with it, and it needs to protect its natural heritage. At this critical juncture, it needs governments, financial institutions and the energy industry squarely focused on the task of managing a just transition to a low-carbon future," the letter authored by civil social organisations reads in part.
Standard Bank, however, defended that for large infrastructure transactions "we apply industry guidelines and international - International Finance Corporation's (IFC's) Performance Standards."
Civil social organisations first wrote to the banks over the same in 2018 but their calls were ignored.
The second attempt comes at a time of renewed optimism of government and the oil companies reaching Final Investment Decision (FID) "soon."
The capital expenditure for the 1,443km project is about $3.55b (shs13 trillion), 70 per cent of which will be raised from international lenders.
Both government and Total E&P, the lead developer, have previously discounted claims of the negative environmental footprint posed by EACOP.
They say the project is compliant to IFC standards and Environmental and Social Impact Assessment (ESIA) details various mitigation measures.
The voluminous ESIA report for Uganda detailing potential impact on the economy, people, and environment was submitted to the National Environment Management Authority in January 2019.
According to the report, a partially aboveground pipeline was considered but the option was not taken further because of security and safety concerns, risk of interference by people, and its effects on views and the movement of large animals: hence a buried pipeline was selected.
"The significance of the impact was determined without, and then with, mitigation measures applied. Measures to reduce the impacts were developed continually until, as much as possible, an impact was no longer ranked as significant. Any effects left after mitigation are called residual impacts," the study indicates.
For example, on bio-diversity, ESIA details that the pipeline's area of "influence is mostly in habitats which have been changed by humans, but with some natural habitats inside and outside areas protected by law."
Habitats of conservation importance within the pipeline's corridor include semi-evergreen forest and wetland forests, which are categorised as "highly threatened and unique ecosystems" as defined by IFC.
The Ugandan section of the pipeline - from Hoima to Mutukula - is 296km, through 10 districts of Hoima, Kikuube, Kakumiro, Kyankwanzi, Mubende, Gomba, Sembabule, Lwengo, Kyotera and Rakai. The projects affects some 4,121 persons in Uganda and 10,500 in Tanzania where it cuts through 25 districts en route to the Indian Ocean port of Tanga.
Project affected property assessed and valued
The Petroleum Authority of Uganda's corporate affairs manager, Ms Gloria Ssebikari told Daily Monitor all project affected persons have been identified and affected property assessed and valued, and planning for resettlement action plan and land acquisition phases are underway.
"Compensation rates for crops and structures are determined by district land boards while land rates are determined based on market values. All these are based on prevailing market rates for the financial year in question. Since EACOP traverses 10 districts, the implication is that the different districts will have distinct rates," Ms Ssebikari said in an email.
"The [project affected persons] will be compensated as per the valuation reports approved by the chief government valuer and Ministry of Lands. On approval of the valuation reports, the compensation amounts are individually disclosed to the project affected persons in the presence of their spouses."
Civil society organisations, in their letter, however, want the banks to among others publicly commit not to participate in financing the EACOP project, engage with the governments of Uganda and Tanzania and other financiers to promote an energy future for East Africa that does not rely on oil or other fossil fuels, and demand that Total E&P acts immediately to provide adequate compensation to affected persons.-Monitor.
Morocco: Nigeria, Morocco Endorse Protocols for Fertilizer Plant
The MoU is expected to utilise Nigeria's gas and Morocco's phosphate to produce ammonia and phosphate fertilizers by 2025.
The Nigerian government on Tuesday signed a pact with OCP Morocco, a leading global provider of phosphate and its derivatives, to aid the second phase of the Nigerian Presidential Fertilizer Initiative (PFI) in Morocco.
The pact signed by the Nigerian delegation led by the Minister of State for Petroleum, Timipre Sylva, and officials of the Nigeria Sovereign Investment Authority (NSIA), is geared towards boosting local fertilizer production.
This development was disclosed by the managing director of the NNPC in a tweet posted on his official Twitter handle on Tuesday.
"We joined HMSPR Timipre Sylva, OCP Morocco, PFI and the NSIA in Marrakech to endorse protocols that progresses the Ammonia plant establishment in Akwa Ibom. We gave gas supply assurances and NNPC will take equity in the venture. Local fertilizer production will get boost!," his tweet reads.
According to the NSIA, the new MoU is expected to utilise Nigeria's gas and Morocco's phosphate to produce 750,000 tons of ammonia and one million tons of phosphate fertilizers annually by 2025.
Presidential Fertilizer Initiative--PFI
Following the two-day visit of the King of Morocco, Mohammed VI, to Nigeria in December 2, 2016, several agreements were endorsed by the two leaders.
One of these agreements was conceived as a partnership between the Fertiliser Producers and Suppliers of Nigeria (FEPSAN) and OCP, a state-owned Moroccan company and a world leader in phosphate production and its derivatives.
By this, OCP would supply discounted phosphate to Nigeria, so as to help boost the domestic blending of Nitrogen, Phosphorus and Potassium (NPK) fertiliser in the form of NPK 20:10:10, starting in 2017.
President Muhammadu Buhari formally announced the approval and commencement of the initiative shortly after the Moroccan visit, in December 14 during his 2017 Budge presentation.
According to the PFI guidelines, the goal is to achieve the local production of one million metric tonnes of blended Nitrogen, Phosphorous and Potassium (NPK) Fertiliser for the 2017 wet season farming, and an additional 500,000 metric tonnes for dry season farming.
By February 4, 2017, first shipment of potash arrived Nigeria from Europe, while the second shipment arrived early March.
How PFI works
In order to achieve the aim of the initiative, the Central Bank of Nigeria designated the Nigeria Sovereign Investment Authority (NSIA) to manage the nine per cent per annum fund on behalf of FEPSAN.
However, because managing a fertiliser fund is not the NSIA's core mandate, a Special Purpose Vehicle known as NAIC-NPK Limited (where NAIC = 'NSIA Agric Investment Company'), was established to carry this function out on its behalf.
Being that FEPSAN had already successfully negotiated substantial discounts with the suppliers and producer of the four main raw materials needed for fertilizer formulation,which include Urea (36%), Limestone (27%), Phosphate (21%) and Potash (16%).
Urea, and Limestone granules (LSG) are locally-sourced in Nigeria, while Diammonium Phosphate (DAP) and Muriate of Potash (MOP) are imported from Morocco and Europe respectively.
For each batch of raw material required under the PFI, FEPSAN makes available to NAIC-NPK Limited the invoices from the suppliers.NAIC-NPK Limited then pays the suppliers directly, on behalf of FEPSAN, takes delivery of the raw materials, and then supplies these raw materials to the blending plants, which it has already signed on as contract blenders.
For this contract-blending, according to the PFI guidelines, NAIC-NPK Limited pays the blenders a fee.
The blending plants then produce, bag and sell the finished, packaged fertilizer to Agro-dealers and State Governments at the cost of 5,000 per bag, and remit this revenue to NAIC-NPK Limited, for re-investment into the next phase of production.
The PFI is therefore a self-sustaining revolving fund, in which the revenues are re-invested into subsequent production cycles.
Key players
PFI initiative was designed by FEPSAN, an umbrella body of Fertiliser producers and suppliers,in collaboration with the Presidency, while it also signed the Fertiliser deal with OCP, on behalf of the Government of Nigeria.
The chairman of the PFI is the Jigawa state governor, Mohammed Abubakar, and the leadership of FEPSAN.
Meanwhile, the Central Bank of Nigeria (CBN) is the Provider of the Intervention Fund that served as seed capital for the PFI, which was used to open the required Letters of Credit for the suppliers of the raw materials.
The NSIA (The Nigerian Sovereign Wealth Fund), in this regard is operating through a special purpose Vehicle called NAIC-NPK Limited.
Other key players are the Federal Ministry of Agriculture and Rural Development, which inaugurated an 11-member National Fertiliser Technical Committee (NFTC), in March 2016, the Blending Plants accredited under the PFI, and the Agro-Dealers and State Governments who off-take the finished products from the blending Plants and retail to the farmers.
Diversion of fertilizers
According to the 2019 financial statements of the NSIA, despite the best efforts by all parties concerned to forestall stock loss and ensure raw material inputs translate to output for domestic production of NPK 20:10:10, some incidence of unauthorised lifting of the product was discovered at Bauchi Fertilizer Company and Bejafta Group Nigeria Limited.
The NSIA said the development was escalated to the security agencies for investigation, and that the blending plants involved in the fraud were de-listed from participating in the 2020 PFI until the amounts owed, in the sum of ₦600 million and ₦1.031 billion by Bauchi Fertilizer Company and Bejafta Group Nigeria Limited respectively, are fully settled.
The NSIA in the statement noted that line with the relevant accounting standards, the full amount of ₦1.631 billion has been recorded as inventory loss in the financial statements and charged to the income statement.-Premium Times.
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