2022

The International Monetary Fund (IMF) was established to ensure global economic stability. This is done by providing financial assistance to countries facing economic difficulties. In recent years, the IMF has been involved in providing bailouts to several African countries that are struggling with their economies. The IMF bailout comes with certain conditions that some believe is the best solution for Africa’s economic challenges. Others, however, argue that IMF bailouts come with conditions that are often unrealistic and difficult to achieve, especially for economically struggling countries. Moreover, the IMF has been criticized for its involvement in Africa’s economic affairs, with some going as far as accusing the organisation of being responsible for Africa’s economic problems. On the 3rd of April 2019, I lauded the Ghanaian Government for taking an anti-aid stance and opting out of an IMF program back then. Three years later, we’re back at the IMF for a bailout. I know I know… COVID and the Russian-Ukrainian War and post-COVID (if we’re really at the ‘post’ side of COVID) and it’s a new world with new normals and the world is going through a brutal shift etc. but I still have to ask: Is the IMF bailout the best solution for Africa’s economic challenges? Are there alternatives we should be looking at, from a continental perspective? This is an opinion piece. Let’s view the following below as a brainstorming session; the answers of the world much less likely resides in one person’s head. Why do African countries resort to the IMF when the debt to GDP ratios reach a particular mark? It is no secret that many African countries are struggling with high debt levels. In fact, according to the World Bank, the average debt to GDP ratio for low-income countries was 52% in 2017, while it was even higher for middle-income countries at 58%. For some countries, the situation is even direr. So why do African countries resort to the IMF when the debt to GDP ratios reach a particular mark? There are several reasons. First, many African countries rely heavily on external financing. This means they borrow money from other countries or international organisations like the World Bank. As a result, these countries are more vulnerable to changes in global interest rates. For instance, when interest rates rise, it becomes more expensive for these countries to service their debt. This can lead to a debt spiral, where the country is forced to take out even more loans to pay off its existing debt. (“GHANA: IMF Bailout Sought”, 2014) Second, African countries often have weak domestic financial markets. This makes it difficult for them to raise money through bond issuance or other means. As a result, they rely more on external financing, which can be more expensive and difficult to obtain. Third, African countries often have low levels of reserves. This makes it difficult to weather economic shocks, such as a sudden drop in commodity prices. When these shocks occur, the country may need to turn to the IMF for financing. Fourth, many African countries have weak institutions. This makes it challenging to implement sound economic policies and enforce contracts. As a result, these countries are more likely to experience economic crises, which can increase debt levels. (“GHANA: No IMF Bailout”, 2018) Finally, African countries often have large populations. This means there is a greater need for social spending, such as education and health care. However, these can also put a strain on government finances. In summary, there are many reasons why African countries resort to the IMF when their debt to GDP ratios reach a particular mark. This is often because these countries rely heavily on external financing, have weak domestic financial markets, low levels of reserves, and weak institutions. (International Monetary Fund, 2006) As a result, they are more likely to experience economic shocks that can increase debt levels. How will an IMF bailout help to improve Africa’s economic conditions? The international financial crisis that began in 2007 quickly spread around the world, culminating in the collapse of Lehman Brothers in September 2008. This had a devastating effect on global economies, with Africa being particularly hard hit. In response, the G20 countries committed to providing $1.1 trillion to support the International Monetary Fund (IMF) and other international financial institutions. This was intended to help them provide emergency funding to countries affected by the crisis. However, it soon became apparent that this would not be enough to stabilize the global economy. In November 2008, at the G20 summit in Washington DC, it was agreed that a further $250 billion would be made available to the IMF. This money would be used to create a new facility, known as the Poverty Reduction and Growth Facility (PRGF). The PRGF was designed to help low-income countries (LICs) cope with the effects of the financial crisis. It provided them with access to cheap financing, which they could use to support their economies. In addition, the IMF committed to providing technical assistance and policy advice to LICs. (“AFRICA: World Bank Bailout Package”, 2009) The PRGF helped many LICs weather the storm in the immediate aftermath of the financial crisis. However, it did not address the underlying problems that had led to the crisis in the first place.  For this reason, the G20 countries agreed to provide a further $430 billion to the IMF in April 2009. This money was used to create a new facility known as the Flexible Credit Line (FCL). The FCL was designed to provide short-term financing to countries with sound economic policies. It was intended to help them deal with unexpected shocks, such as a sudden loss of export revenue. To be eligible for the FCL, countries had to meet strict criteria for their macroeconomic policies. So far, the FCL has been used by Mexico, Poland, and South Korea. All three countries have experienced significant economic challenges in recent years. However, they have managed to avoid a full-blown crisis thanks to the support of the FCL. While

Finance and Risk are two crucial issues in the world of business that cannot be over-emphasized. Finance is the heart and soul of any business; it plays an essential role from its establishment to its growth.  I’m tempted to define ‘finance’, though most of us have an idea of what one means at the mention of the word; Finance in business refers to the availability of cash or funds to meet the needs and demands of that business. Finance usually is pivotal, in most cases, to starting a business, expanding an already existing one, obtaining capital assets, developing new products, and running your business’s day-to-day operations, among many others. It is arguably the core of every business organization today. Inarguably, finance is an essential resource for businesses to develop, maintain and subsequently operate (Cassar, 2004). Finance is a critical factor that determines the growth of a business or company in many cases (Fielding et al., 2019). Risk, on the other hand, is a constant in every business, every business involves risks, and risk-taking is inherent in entrepreneurship and business. Risk connotes the chance of having an unexpected or adverse outcome (Chen & Kwak, 2017). In other words, the risk is the probability that some event will cause an undesirable outcome for your business. Any form of action or activity that results in a loss of any kind can be considered a risk to an enterprise or a business.  The various risks an enterprise or business can face are generally classified into business, non-business, and financial risks. These risks are a potential threat to every business but understanding their potential impact and how to manage or mitigate them, is important for a business’s success. Financial risk is one of the risks that businesses face most because it is integral to business operations and has a substantial impact on the day-to-day activities of most businesses, and therefore could potentially result in insolvency if not properly understood and managed.  Most start-ups and smaller businesses are likely to face financial risk the most as they enter the market and adapt to market and economic conditions.  There are five main types of financial risk, being, market risk, credit risk, operational risk, liquidity risk, and legal risk; liquidity risk being a major risk that affects almost all businesses. This means that business administrators (or managers) must evaluate the nature of finances available to them, analyse the potential risks and then calculate how such risks will impact the operations of the firm or business (Agyapong, 2020). Financial risks can arise from the improper management of cash flowing in and out of business. Financial risk can also arise from an administrator’s inability to properly manage the company’s debt or financial obligations, which can and will affect its growth and profitability, revenue generation or cash flow, and can impose a major obstacle in the company’s future, possibly resulting in its collapse. Some possible causes which are majorly responsible for creating financial risks for a business entity are as follows: •          The exposure to changes in the market prices, e.g. prices such as commodity costs, interest rates, inflation, and exchange rates. The volatile nature of one market may result in businesses and investors incurring losses.  •          It can arise from the actions or activities of and transactions with other enterprises, including customers, and vendors. •          Internal factors or failures within the enterprise with regards to employees, processes, and systems. Internal failures in aspects such as inefficient workforce management and lower productivity can also expose a business entity to financial risks. •          Unexpected competition that may arise from the entry of arrival firms (competitors) in the market can antecedent an adverse impact on the finance of a business.  •          Sudden changes in economic factors or government activities can expose business entities to financial risks. For instance, the government may introduce a policy or law (tax) that can introduce financial risk to many business enterprises. •          Seasonal issues relating to weather changes can also expose a business entity, especially those in the agricultural sector, to financial risks. Similarly, among the common types of financial risks businesses face include: •          Credit risk This refers to the chances of a business not fulfilling its debt obligation or failing to pay its creditors eg. bank, lender, or supplier. It can also result from giving credit to customers who also default on repayment.  •          Market risk This has to do with the probability of incurring a loss resulting from market volatility, upsurge in interest rates, cost of raw materials, and fluctuation in the exchange rate. Especially in developing countries, exchange rate depreciation tends to affect debt repayments and the competitiveness of their goods and services compared to those goods produced abroad. •          Liquidity risk This also manifests from the business’s ability to meet its short-term financial demands or needs to run the operation of the business. This may arise from cashflow constraints resulting from the decline in revenue, low sales, or an inefficient market. •          Operational risk This has to do with the possibility of loss resulting from the adverse effect of the policies, procedures, and systems the business entity has in place. Technical failure, fraudulent activity, and the inefficiency of workers are some examples of operational risks. •          Equity risk  This involves risks associated with the dealing of businesses or enterprises on the stock market. Poor stock market performance can be disastrous for a business that does not have the financial planning measures in place. •          Legal risk This is any financial losses that arises as a result of legal proceedings. •          Competition risk  This risk emanates from the current competitors of the business.   •          Technology risk This type of risk involves losses incurred from damages to operating systems, acquiring technological infrastructure costs, exposure to cyberattacks or data breaches, telecommunication and connectivity issues, and data integrity. Furthermore, financial stability is vital for a business entity to succeed, grow, and fulfil its social responsibilities. As a result, managing the risks that affect a business’s activities is important, and any staid business administrator or manager needs to guide their business against such financial risks. Wu et al.

“Priorities Maxwell!!! There are increased fuel prices, higher cost of living, rising inflation, not to mention COVID, Monkeypox and other health issues and you choose to write about “noise”?? Well……yes. It’s been on my mind ever since moving to the countryside and there is plenty of literary material around on all other matters for our readers to educate themselves anyway. What do you think of when you think of noise pollution? In a country such as Ghana, one of the first things that may come to mind may perhaps be the loudspeakers of your neighbourhood church or mosque, or perhaps the near-perpetual lack of quiet at the more central lorry stations like Accra-Circle and or Tudu. If you decided to jump continents and countries and found yourself in say, Switzerland, you would find quite quickly that the seemingly mundane and habitual act of flushing your toilet may get you very harshly told off by your fellow apartment building cohabitants, or your landlord or landlady. Apparently, in Switzerland,  any flushing between 10PM and 7PM is considered much too loud and classified as a disturbance and noise pollution. YOU READ THAT RIGHT. GOOGLE IT! I wouldn’t have known about it if it hadn’t happened to a close friend of mine. The pollution that noise causes have crept up on Ghanaians so swiftly and for so long that we often do not even think about it anymore. It often appears to be the unavoidable by-product of development and industrialisation. Businesses and business-like activities are popping up around residential areas like mushrooms growing overnight. In most cases, however, these businesses are not predominantly the cause of any (direct) noise by way of their professional operations, except for some cases. Thing is, there is a great deal of associated noise, such as traffic they bring along both automobiles and pedestrians.  Some of the main causes of noise pollution in Ghana today involve:  If we are being honest with ourselves, the sort of noise pollution we experience in Ghana can indeed be a tad unnerving. But putting our emotions aside, is it perhaps in any way harmful to us?  Does noise pollution in Ghana impact our health?  We have been exposed to heightened decibels (of sound) for so long that we have drifted into a place of not even thinking of it much, beyond complaining about the momentary inconvenience it may cause us from time to time. The Center for Disease Control (CDC) states that sound decibels above 70 decibels for prolonged periods can cause damage to our hearing. For some context in the matter, a typical motorbike engine runs at circa 95 decibels; take this information and juxtapose it with your local street funeral or other similar gatherings, especially ones done on regular basis. Noise pollution has been studied and determined to cause a myriad of health concerns including loss of hearing, stress, high blood pressure, heart disease, sleep disturbances, and so on. National Geographic had the following to say on the health impacts of noise pollution:  “Noise pollution impacts millions of people on a daily basis. The most common health problem it causes is Noise-Induced Hearing Loss (NIHL). Exposure to loud noise can also cause high blood pressure, heart disease, sleep disturbances, and stress. These health problems can affect all age groups, especially children. Many children who live near noisy airports or streets have been found to suffer from stress and other problems, such as impairments in memory, attention level, and reading skill“ Noise Pollution | National Geographic, n.d. The same decibels of noise that cause heart disease, high blood pressure, stress, impaired hearing and so on, are the same that affect most of Sub-Saharan Africa. Nigeria is a notable exception because things such as the population size, the relative degrees of industrialisation and the more perverse use of generators give an unusual and notably upward spike in both the data and the severity and frequency of these aforementioned negative health effects. More on the actual data-backed severity can be read in this study, the full reference is below this article, from the National Center for Biotechnology Information. It highlights effects ranging from negative impacts on fetal development (in pregnant women) to other severities such as type 2 diabetes incidents.  A synopsis of a 2019 Study of Noise Pollution Measurements and Possible Effects on Public Health in Ota Metropolis, Nigeria, by the US National Center for Biotechnology Information. “A look at the literature showed the abundance of evidence of the adverse effects of noise pollution on the general public health. The worsening situation of noise pollution is that it has not been upgraded to the level of the other forms of pollution. Also, recommendations suggested by several authors on the different strategies on tackling noise pollution have not been considered and implemented. However, noise pollution continues to impact negatively on fetal development, annoyance and anxiety, mental health crisis, sleep disturbance and insomnia, cardiovascular disorders in pregnant women, cardiocerebrovascular diseases, type 2 diabetes incidence and medically unexplained physical symptoms. Other auditory and non-auditory effects of noise on health are myocardial infarction incidence, peptic ulcers and disruption of communication and retentive capabilities in children.“  A Study of Noise Pollution Measurements and Possible Effects on Public Health in Ota Metropolis, Nigeria. (2019) If we should take anything from this study, it should be that the growing issue of poorly managed noise pollution in Ghana is obviously not an isolated case. Whether or not hard data exists on this claim, we can easily ascertain at least one salient truth, which is that Sub-Saharan Africa is on the rise. Several countries on the continent are undergoing rapid and/or steady industrialisation and economic growth. This immediately means that more places will be populated and commercialised, and more uncontrolled noise will be generated. This trickles down to mean that we can also expect to see an increase in noise-related health complications as a direct and indirect result (of this).  How might we make things… quieter? One of the first steps to making our cities and