Items filtered by date: Wednesday, 11 October 2017

Provisional results are trickling in from polling centres across Liberia following Tuesday’s peaceful general elections in the West African country.

Results are expected from 5,390 polling units in 2,080 centres across the 15 counties that make up the country. It is not clear yet how many people participated out of the 2.1 million voters registered for the election, but media reports said turnout was high.

A correspondent in Monrovia reports that polling stations in and around the capital were packed with eager voters, including the aged, many of whom queued up before dawn. Voting started on schedule in the 19 polling centres visited by NAN, but there were reports of late arrivals of materials in some rural areas due to bad roads and poor weather.

It was observed that voting was a bit disorganised in some polling stations in Monrovia as many voters had difficulties locating their voting points. Many, who had spent hours on a particular queue, were directed to other voting points when it was their turn to vote, leaving them frustrated.

The National Elections Commission (NEC) of Liberia said the exercise was generally successful, but some political parties have expressed reservations about the process. The parties that expressed reservations included the Coalition for Democratic Change (CDC), whose presidential candidate is ex-football star George Weah.

Also raising an eyebrow is the Alternative National Congress (ANC) represented in the presidential elections by former Coca-Cola executive, Mr Alexander Cummings. Local media quoted Cummings as saying that he was informed of voting hitches in several places that prevented Liberians from exercising their franchise. He said in some counties, ballot papers arrived after 3 p.m. and many voters with valid voter cards were turned away for many reasons including their names not being on the voter register.

Speaking to reporters while monitoring the elections on Tuesday, Mr John Mahama, the head of the ECOWAS Elections Observation Mission to Liberia, said there were some lapses mainly on the part of electoral officials.

Mahama, who toured polling stations in several counties, attributed the situation partly to late training of presiding and electoral officers. But he lauded the National Elections Commission and the presiding officers for conducting the process peacefully and urged it to learn from the mistakes.

The chairman of NEC, Mr Jerome Korkoya, admitted the flaws while addressing a press conference at the commission’s headquarters in Monrovia on Tuesday.

Korkoya said, “One of the issues was caused by voters joining the queue without consulting the queue controller, and going straight to a polling place without checking if they are in the right place in the polling precinct.

“Affected voters assumed that because they registered in a particular room in a centre, so they went to that particular room during voting.
“In many cases, your name will not be in there but in another room because the precinct where you registered will be spread out into various centres during elections, and your name may be in one of the centres within that precinct.
“A second issue was in cases where a voter is registered twice. These individuals are registered at the last place of registration in line with our policy. You will not be at the original place.’’

On voters not finding their names on the register, the NEC chairman said any one legitimately registered with the commission, who had a valid voter card and was not disqualified should be allowed to vote. He said affected voters would be compensated with more time, and advised other aggrieved parties to file their complaints to the commission for a redress.

Twenty candidates are in the race to succeed the incumbent president and Nobel Prize winner, Ellen Johnson-Sirleaf, who has served out her two terms of six years each. Among the contenders is the incumbent Vice President Joseph Boakai of the ruling Unity Party. 

Elected for the first time in 2005, Johnson-Sirleaf inherited a country that was devastated by 14 years of civil war. She is lauded for restoring order and sustaining peace in the country in her 12 years in office.

Published in Economy

Direct investment in energy infrastructure have proved very successful in developed markets for decades. However, wind and solar energy projects have not been readily available to South African investors. This is now changing and investing in these assets could offer similar returns to property, at lower risk.

The results of a new study, titled Renewable Energy Infrastructure Risk & Return in South Africa, suggests that infrastructure – particularly renewable-electricity assets – deserves a place in the modern investment portfolio, along with conventional asset classes such as equities, bonds, cash, and real estate.

The research, the first of its kind locally, modelled the performance of South African renewable energy infrastructure assets over a 13-year period utilizing historical data, and found that on average, the wind and solar projects’ annual return of 12.98% and 13.16% respectively would have been higher than that of the property index’s 12.85% and slightly below the JSE all share equities’ index of 13.76%, but at considerably less risk than these two ‘traditional’ asset classes.

“In the aftermath of the 2008/09 financial crisis, institutional investors and pension funds have been seeking to spread their investments across a much wider spectrum of assets in the pursuit of new sources of return and means of diversifying risks. Infrastructure has been a beneficiary of this shift in thinking,” says Mich Nieuwoudt, Chief Investment Officer of GAIA Infrastructure Partners and one of the authors of the study.
However, private investment in infrastructure is not new, and in regions such as Western Europe, the private sector contributes to as much as 60% of the funding for new build infrastructure projects. Infrastructure assets as a pension fund investment alternative was first popularised in the United Kingdom following the extensive privatisation of public assets during the Margaret Thatcher administration in the late 1970s and 80s. Other countries soon followed suit.

Infrastructure assets – which include power, transport, and water schemes, among others – as a defining characteristic operate in an atmosphere of limited competition due to natural monopolies, government regulation or concessions and are therefore less exposed to economic and valuation cycles, unlike property. Due to the criteria of operating in an environment of little or no competition, infrastructure assets have the potential to provide investors with predictable returns and long-term, low-risk inflation protection.

However, this is not necessarily the case for all projects, and it is the duty of the infrastructure fund manager to ensure that these characteristics are indeed present and lasting in the assets it invests in, and that the contractual framework which governs the asset’s operating environment supports these financial characteristics.

Access to infrastructure as an investment alternative is now also available in South Africa because of the government's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which has made it attractive and transparent for independent companies to produce electricity for sale to the national utility Eskom. The REIPPPP has been lauded as an international success and has so far not been subject to any accusations of corruption.

The generating capacity and tariff for each REIPPPP project is set for 20 years, adjusting annually with inflation, and is regulated by a power purchase agreement (PPA) between the producer and Eskom. The PPAs are underwritten by the South African treasury in the form of an explicit payment guarantee, which ultimately assigns to the projects the same counterparty risk as a government bond.
There are currently a range of options available for investing in infrastructure, including: investing in listed and unlisted infrastructure funds, directly investing or co-investing in the infrastructure project company, or providing debt or hybrid debt-equity instruments.

Risks common to infrastructure as an asset class are mainly political and regulatory, while asset-specific risks can include project-cost overruns, construction delays, the project not performing to expectations, unscheduled downtime, and interest rate volatility. Infrastructure investments are, however, considered generally low-risk, especially projects that are already operational, as the original operating assumptions are substantiated through verified data.

Nieuwoudt adds: “Our research illustrates that inflation-linked renewable energy investments provide consistent, inflation-beating returns with favorable risk-return and diversification characteristics in comparison to traditional asset classes. The growth of this exciting asset class is therefore justified.”

Published in Engineering

Notwithstanding its many flaws and centuries of criticisms, capitalism is still the dominant economic system globally. What made it so resilient?

Without denying the importance of entrenched interests among ruling classes, I believe the real strength of capitalism stems from the theory of value it has imposed on society. The theory can be summed up as follows: value is only created through market transactions, which are always positive for the economy. The rest - like social costs and ecological impacts - doesn’t matter.

Classical sociologists and economists like Max Weber, Joseph Schumpeter and Werner Sombart saw the adoption of a specific form of accounting for measuring performance in industries - so-called double-entry bookkeeping - as a critical factor to explain the rise of capitalism before and after the industrial revolution. Since then, we have simply assumed that what is good for the firm must be good for society.

As I show in my book Gross Domestic Problem, even socialist systems largely accepted capitalism’s accounting approach, ultimately failing to beat capitalism at its game.

But the global debate is shifting. The Sustainable Development Goals recognise that real value is only created when economic development leads to improvements in social and environmental dynamics. I argue that, by changing our headline indicators of prosperity in line with this new thinking, we can show capitalism’s inefficiencies and contribute to its demise.

Change accounting, change the world

Accounting is not a neutral exercise. As the term suggests, indicators “indicate” the path to follow to improve performance. In the end, governments, companies and societies at large strive to achieve what is counted, while disregarding what is not.

Of all accounting tools, the most powerful is the gross domestic product (GDP), the headline indicator of economic performance. GDP fully endorses the capitalist theory of value: it views market transactions as the only drivers of development, as opposed to non-market exchanges; it considers as positive all forms of production and consumption, regardless of their impact on economic welfare; and it neglects social and environmental impacts. For as long as our approach to economic growth is determined by GDP, capitalism will continue having the upper hand.

The good news is that, for the first time in almost a century of national income accounting, there is now a window of opportunity for change. A growing number of global institutions, including influential actors like the World Economic Forum are calling for a shift beyond GDP.

When we apply any of these new indicators, which integrate social and environmental impacts into the concept of economic performance, the alleged efficiencies of capitalism disappear. For instance, the genuine progress indicator shows that the global economy has massively under performed since the early 1980s, at the same time as free market reforms were boosting GDP. The genuine progress indicator deducts costs of environmental damage and social ills from economic performance.

Using a similar approach, UN-sponsored studies conclude that some of the world’s largest corporations actually generate more costs to society than profits. This is particularly true of fossil fuel and commercial food companies. The negative environmental effects of their operations are estimated to be in excess of USD$7 trillion a year.

The Organisation for Economic Cooperation and Development, the club of the world’s richest countries, has developed a “better life index”. It underlines how prosperity is determined more by factors like community engagement, work life balance, health and the environment than by income.

The organisation estimates that value generated for the economy by families and communities through self-production and informal exchanges – notoriously neglected by GDP – is equivalent to over 50% of everything the market produces.

And what about the non-monetary activities performed by civil society? According to the World Bank, associations have a massive impact on the economy by building the interpersonal trust – a precondition for a functioning market. In money equivalent, their contribution would be over 20% of the value of all goods and services produced by businesses.

These are the real ‘invisible hands’ supporting the economy.

A new world

By portraying corporations as the sole creators of value and by hiding their social and environmental costs, GDP has further entrenched the capitalist grip on power. But as we move beyond GDP, we begin to realise that the emperor has no clothes. A new accounting approach linking economic, social and environmental dynamics – what I call ‘wellbeing accounting’ – can indeed have game-changing effects.

Take fossil fuels. After the recent hurricanes in the US, several experts rightly argued that oil companies should be taken to court and charged with covering the costs of damage.

New accounting would make such an approach automatic. The losses produced by polluting companies would count as ‘negative’ for the country’s growth. This, in turn, would force policy makers to push renewable energies if they want to improve their economic performance.

The alleged virtues of globalisation rest almost entirely on GDP’s blindness to global trade’s environmental and social impact. But new accounting methods do the opposite: they reveal global trade’s negative effects and highlight the more efficient value creation of local and regional exchanges.

Our perception of global leadership would change too. The US and China may look “big” in GDP terms, but the real champions of social progress are some middle powers. These include Costa Rica to New Zealand which have built strong economies while improving the quality of social and natural dynamics.

Moving away from GDP would also benefit developing nations, especially in Africa. It would put an end to the traditional capitalist approach that equates prosperity with exploitation of people and nature, This in turn would allow countries to experiment with new forms of development.

Wellbeing accounting

GDP accounting is what keeps capitalism on life support. As I discuss in two recent books The World After GDP _and _Wellbeing Economy, a shift to new forms of accounting would eliminate the statistical foundations on which capitalism’s credibility rests.

In the end, this is precisely what Adam Smith did with the founding book of capitalism,The Wealth of Nations He questioned the traditional approach to value creation. Smith argued that the real creators of wealth were not the kings and knights that dominated the political scene, but the captains of industry who steered the new industrial market. By shifting the accounting approach, he reinforced the demand for power that would soon lead to the modern revolutions and the dominance of capitalism.

Similarly, well-being accounting shows that an economy promoting the public good and the commons can generate more wealth than the capitalist market. Through new numbers, it aims to embolden all those actors marginalised by the capitalist theory of value. Above all, it equips them with new tools to demand more power and a radically different approach to growth and development. It’s a smart way to beat capitalism by stealth, once and for all.

 

Lorenzo Fioramonti, Full Professor of Political Economy, University of Pretoria

This article was originally published on The Conversation. Read the original article.

Published in Opinion & Analysis

In the midst of a Forex currency crisis, the National Bank of Ethiopia (NBE) has devalued Birr by 15pc and raised the interest rate by two percentage points to seven percent. The devaluation pegs the Ethiopian Birr at 26.91 to the dollar, up from 23.40 Br on the official market. It will be effective from today, October 11, 2017.

The Central Bank justifies the move as an effort to control the inflationary pressure and prop up export earnings. The export proceeds have been stagnant at around three billion dollars for the past three years, whereas inflationary pressure has been in the double-digits for the past two months, having reached 10.8pc in September 2017.

Yohannes Ayalew (PhD), vice governor and chief economist at the Central Bank, announced the adjustment today in a press conference where only the state media was invited to attend.

Seven years ago, the government had made a 17pc devaluation resulting in inflation that had reached as high as 40pc.

"Since investment return is high in Ethiopia, the devaluation won't cause an inflationary pressure and adversely affect import," said Yohannes.

For more than half a year, the official exchange rate stood at around 23 Br to the dollar, while black-market traders sold a dollar for nearly 29 Br.

The current devaluation surfaced almost 11 months after the World Bank (WB), in its fifth economic update, suggested the government devalue the currency to raise the country's competitiveness in the global arena. The recommendation, however, was rejected at the time by Yohannes, although the real effective exchange rate (REER) has appreciated in cumulative terms by 84pc since the nominal devaluation in October 2010.

 

Source: Addis Fortune

Published in Economy

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