Category Archives: European Union

Bankers predict Euro 2021

The covid-delayed Euro 2020 soccer tournament kicks off tomorrow, on June 11, a year behind schedule.

Ahead of soccer tournaments in past years, several banks including Goldman Sachs, ING, Nomura, UBS and ABN Amro have all made predictions of who will win. There’s more attention and interest with global tournaments, such as the World Cup as the larger pool of diverse teams, including from Africa, make such banking predictions more exciting.

So far, only Goldman Sachs has had a statistical team and computers analyze and come up with match predictions. Their model and report shows:

  • Denmark, England, Italy, Netherlands, Portugal and Spain will top their groups. The nations will win all their group matches, except for Portugal.
  • The current European champions, Portugal, are in the tournament’s “group of death” that also features Hungary and perennial soccer heavyweights of Germany and France.
  • The tournament has matches in eleven countries because of covid-19, and playing at home will give an advantage to the home nations. All the group winners host games, along with cities in Russia, Scotland, Hungary, Romania and Azerbaijan.
  • Aside from being in the toughest group, France, winners of the 2018 World Cup, do not have home matches and enter the tournament with poor recent momentum. 
Will Giroud propel France forward?.
  • Belgium is the favourite of the Goldman Sachs model, as well as of many betting oddsmakers.
  • The final and semi-final are at Wembley in England, who will not feature, as they will have been knocked out by Spain in the quarter-finals, after defeating Germany.
  • The semi-final will see Belgium eliminate Portugal as Italy edge past Spain.
  • In the final, Belgium will defeat Italy, in extra time, and win their first Euro trophy.  

Guide to Monaco

A guest post of a trip to the Principality of Monaco, the city-state on the French Riviera, where the Monaco Grand Prix is taking place tomorrow. It’s a normal, but pricey, place for the rest of the year when Formula One is not having a race weekend.  

Getting There: Fly into Paris or a nearby major European city. You will need to get a connecting flight into Nice. 

Nice Airport is fairly easy to navigate especially coming from Paris. There may be additional customs regulations coming from other European countries though. 

Once you exit baggage claim, you can take a train, bus, taxi or helicopter to Monaco. To truly enjoy the wind-down to the Principality, take the bus or a taxi. A taxi will be +$100 so opt for the buses which leave every hour or so. The train is less than $10 but you miss much of the view. 

Getting Around: You can get along speaking English but please, please learn some French if only to read the signs and communicate politely with vendors. The majority of people here speak English, probably better than you but it would behove you to learn their language. 

Staying in Touch:  Safaricom Welcomes You to France! If you are there for a while longer, you should get a SIM in Paris though. 

Where to Stay: Save money and stay in France. The city of Fontvieille in France surrounds the principality and has several hotels. It’s an easy walk to the harbour and there are parts where you can take an escalator or lift down to the port. Go any time after the summer to get hotel deals that are ‘normal’. There are also several AirBnB options but depending on when you go, prices will be higher than you expect. Some try and stay in Nice and commute in which is fine but if you can, stay in the city. 

Visa, MasterCard are well accepted. In November, you can get a decent hotel rate of about $170 a night. Breakfast and lunch may set you back about $120 but you can budget and meal plan for your mealtimes. If your hotel offers a breakfast deal, take it. 

Eating Out:  Food, France, Immigration. Italy is a short train ride away. For the sake of doing it, get on the metro to the city of Ventimiglia, Italy which is accessible from Monaco. You will pass Menton, France where a good chunk of the people who work in Monaco live and after that, a whole new country.

Lunch is a great way to explore the cuisine. Often enough, you’ll be too full to contemplate dinner. There is one supermarket in Monaco – a Spur that is so hidden, good luck finding it. You can always go to the big Carrefour in Fontvieille, France for a big shop. It’s near the Stade Louis II. 

Odd Points: Tipping. A service charge may already be added to your restaurant meal so if you tip, it will be a tip on top of a tip. Keep an eye out on your bill for service compris. 

Shopping & Sight-Seeing: Monaco is super safe. It’s hard not to look like a tourist but make sure to map out a plan before you leave your hotel in the morning. It’s a small country so you can’t really get lost but make sure not to look like a complete boob when walking around. Ladies – unless you are stepping out of a car into a restaurant, you do not want to wear heels exploring Monaco. Be sensible yet stylish. See yachts parked for the winter, some on sale, and pricey apartments, with advertisements in Russian.

La Condamine where the locals shop but you will find every single luxury item in the world in this tiny country. Save your money, park yourself at a restaurant outside and gawp at the fabulous beautiful people. Take home gift – a souvenir at a gift shop in Monaco. Include the receipt. 

Seriously, set yourself up for a lazy weekend brunch or a late evening drink and watch the beautiful people in their natural habitat. We spotted Flavio Briatore!

Sights to See: The streets. Do the F1 grid walk! Also, the Oceanography Museum in Monaco is well-curated and a must-visit for its’ exhibits and breathtaking views outside of the principality. Seriously an underrated and affordable highlight! Depending on when you go, see if there are other events ongoing such as a food and wine festival in November. 

Biggest surprise in the country? At the tourist offices, you can get an entry stamp in your passport!

Mauritius and the EU Blacklist

This week, the East Africa Venture Capital Association (EAVCA) organized a talk about Mauritius that’s facing a European Union financial transactions blacklist.  

Some excerpts:

  • Mauritius has set itself up as a financial hub that attracts and deploys investments across Africa. It has become the place of choice to operate through and 90% of investments into East Africa are done through Mauritius (60% are from the EU). The significance of this is that one panelist said that the Mauritius ban was worse than COVID.
  • Mauritius has complied with 35 of the 40 clauses (including the big 6 important ones), and 53 of the 58 recommended actions on Anti-Money Laundering (AML). There’s high-level commitment to correct the remaining ones, led by the Prime Minister, and the nation has a timetable to address the outstanding issues in 2021. 
  • The blacklist prohibits European investments in new funds in Mauritius, with the ban also affecting all European Investment Bank (EIB), funding, investments, lending and operations. The ban is not retroactive, so they have agreed on a grandfather period, till 31 December 2021, during which funds can continue to operate and by which time they hope the country will be removed from the list. But from October 1 2020, European funds can’t make new invests in funds structured in Mauritius. They have two options – focus on funds not established in Mauritius or invest through parallel structures (institutions that are set-up to co-invest along with funds in Mauritius) 
  •  No African country will benefit from Mauritius troubles as there are few alternatives to that country. Malta and Ghana have also been listed – so likely bases are now Dubai, or within the EU (Netherlands, Ireland, Luxembourg, France) itself.  
  • Kenya and Mauritius have been working on a taxation treaty for 8 years. Kenya has signed 14 tax treaties (including with Canada, France, Germany, India, Norway, UK, Zambia and South Africa), most before 1987, but none had raised as much attention as the proposed Mauritius DTA, as it is which is a low-tax country. Uganda and Rwanda already have Mauritius DTA’s. Kenya’s Parliament opened public participation on a new Kenya-Mauritius treaty for the avoidance of double-taxation in terms of cross-border transactions (property, profits, royalties, dividends, technical fees etc.) and the deadline for comments is October 5 202. But the treaty does not apply to most Kenyan investment firms as a 2014 KRA law change requires 50% of ownership to be in another state to qualify.  

KPMG on Geopolitical Risks and Opportunities

KPMG’s Audit Committee Institute series organized a breakfast session in Nairobi today that assessed the risks posed by global events & trends and the potential opportunities that could emerge. The session took place at a time when countries and industries around the world are gripped by concerns and efforts to contain the spread and impact of the Coronavirus.

Sophie Heading, KPMG Global’s Head of Geopolitics, who is on a tour to speak in different capitals around East Africa mentioned that geopolitics now affects the developed world as much as it does for developing countries. She said that US domestic governance is the number one political risk across the world, and that while there has been a shift in leadership away from the US & Europe (G-7 nation) towards China, currently we are in a G-Zero world in which there is no clear leader.

She referenced three distinct areas of technology, trade and trust in which geopolitics could be traced along, and the opportunities they presented for different African countries.

Excerpts

  • Technology: Advances bring geopolitical power and this is likely to spread to other markets – as seen in the battle between the US and China over spectrum (5G), data, and platforms. China is looking to reshape the Sub-Saharan Africa technological space while the US wants to protect its security interests and intellectual property.
  • Trade: The US and China have decided to decouple and go separate ways and other countries will have to choose who to align with. Both are seeking new alliances, investors, partners, suppliers, staff etc. but this is also at a time that other key markets are increasing their regulations in terms of capital, policies, taxes and data, etc. Foreign aid used to be a tool that Western states used to influence economic events in Africa, but with the Chinese model of financing infrastructure being so successful, she expected that there will be a drop in aid from the West as it is no longer seen as being effective.
  • Trust: There is social discontent across the world as young populations feel that government systems are not meeting their needs. This is different in developed nations versus it is in developing ones. But because of their debt levels, most nations now have less policy flexibility to address their internal issues. Also with global growth having slowed down to about 3%, and which may reduce further to as low as 1.5% with the Coronavirus outbreak, any such interventions may widen the social wealth divides within countries.

She said that there is more need to pay more attention to environmental, social, and governance (ESG) issues. This is something that Europe, and the private sector, have championed, but which other governments have not, while the US, China and India have all stepped back on the environmental front.

She cautioned that Nairobi, which is the second-biggest hub in the region for impact investing, but without the Kenya government signalling its interest in championing of ESG issues, may lose out on future investment and client opportunities.

Toxic Business: Banned in the European Union, poisoning Kenya

Agriculture is one of Kenya’s key income earners contributing 24% of GDP and employing 75% of the population either directly or indirectly. As a result, the demand for pesticides is high and increasing with the need to increase agricultural production to keep up with the population increase. Imported chemical pesticides in the market account for 87% and have more than doubled in four years from 6,400 tonnes to 15,600 tonnes in 2018, yet there are few safeguards to control application.

Every year fresh produce from Kenya is rejected by the European market when it is found to have harmful levels of chemical residue. When returned, it finds its way to local fresh produce markets and is consumed by unsuspecting Kenyans. The result is a huge healthcare burden on households as more people, especially children, fall ill.

A report by Kenya Plant Health Inspectorate Service (KEPHIS) showed that 46% of the fresh vegetables sold in Kenyan fresh produce markets have high levels of pesticides with harmful active ingredients, with Kale (94%) having the highest level of pesticides and herbicides that are harmful to human and animal health.

A small-scale farmer Joseph, who has adequate training in the handling of pesticides, prepares to spray his crops by mixing the chemical with water in a backpack sprayer pump, using his bare hands and no protective mask or clothing, he gives the pump a firm shake to mix the ingredients in it and then proceeds to splash water on the exterior of the sprayer pack to rinse off the chemical overspill with his hands. The small quarter-acre, gently sloping vegetable garden surrounds his family’s house, which further exposes his family to harmful chemicals. He is not aware of the danger of handling these pesticides, only focusing on their efficacy in pest control.

At the local roadside Market, Daniel Maingi of Kenya Food Rights Alliance purchases green capsicum and spinach to take for testing at the University of Nairobi’s Pharmacology & Toxicology Laboratory at the Department of Public Health, where Professor Mbaria confirms harmful levels of chemicals containing toxic active ingredients on the sample vegetables.

The “Pesticides In Kenya: Why our health, environment and food security is at stake” report by Route To Food Initiative (RTFI), makes a distinction between the toxicity of the active ingredient and the toxicity of the chemical product. In the European market, the manufacturer of a chemical product first registers the active ingredient, which is then tested and must be identified by name on the product label.

Of the “247 active ingredients registered in Kenya, 150 are approved in Europe, 11 are not listed in the European Database and 78 have been withdrawn from the European market or are heavily restricted in use due to potential chronic health effects, environmental persistence, and high toxicity to wildlife.”

In a case of double morality standards, these chemicals are available to Kenyan farmers threatening the health of both citizens and the environment by contaminating the soil and water. Most of these pesticides take years to degrade and therefore persist in the environment for many years and many are acutely toxic causing severe long-term toxic effects, disrupting the human endocrine system, and harming wildlife and other non-target organisms that are crucial to the ecology.

The Pesticide Control Products Board (PCPB) set up by the Government of Kenya under the Pest Control Products Act of 1982 regulates the importation, manufacture, distribution and exportation of pest control products. PCPB has registered 247 active ingredients in 699 horticultural chemical products, with more products registered than active ingredients as one active ingredient can be by several companies. Of these, a quarter are banned in Europe and they include big brand names such as Syngenta, Bayer and BASF.

In Kenya, chemical companies host robust carnival-like events where smallholder farmers are bussed in from across the country and paid a stipend to attend. Throughout the festival, no mention is made to farmers about safe handling or protective clothing when mixing the chemicals for application on the crops. The farmers appear to completely trust the chemical companies to have their best interests at heart and do not ask any questions. At these marketing events, several chemicals are presented as solving multiple problems and are touted as the best in the market.

Glyphosate-based agrichemicals have received enormous pushback globally for its carcinogenic properties. However, there are other harmful ingredients that should attract much more attention in use in Kenya, but banned in the European Union. Carcinogenic active ingredients include Chlorothalonil, Clodinafop, Oxyfluorfen and Pymetrozine. Mutagenic active ingredients include Cabendazim, Dichlorrvos and Trichlorfon. Endocrine disruptor pesticide active ingredients include Acephate, Carbofuran, Deltamethrin, Omethoate and Thiacloprid. Active ingredients that hamper development and are harmful to reproductive health include Abamectin, Carbendazim, Carbofuran, Gamma-cyhalothrin, Oxydemeton-methyla and Thiacloprid. Neurotoxic active ingredients include Abamectin, Acephate, Dichlorvos, Glufosinate-ammonium, Omethoate, Permethrin and Thiacloprid.

Before the advent of chemical herbicides, farmers would weed their farms by hand and using hand hoes, this has been increasingly replaced by pesticides even for smallholder farms under five acres. Mono-cropping or monoculture where one crop is planted year in and year out, depleting the soil of nutrients and necessitating the increased use of fertilizers to improve yields with each subsequent year, also encourages the spread of crop pests which require chemicals to treat. Another area that receives little focus is post-harvest storage pesticides. If fertilizers are subsidized, why not include hermetic storage technology (HST) storage bags that provide moisture and insect controls, without pesticides, in this policy?

If we continue to consume chemicals, consciously or subconsciously through the food we eat, the water we drink and the air we breathe, then the next generation we produce will be of a lesser quality than ourselves, as will subsequent generations.

A guest post by Velma Kiome