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July 2021 VOLUME 38 | ISSUE 7
06 Editor’s Note Regional Focus 08 Viewpoint 12 View from the top Mahmoud Mohieldin shares Cover Design: his forecasts for economic In Depth Nessim N. Hanna recovery in MENA. 12 Vaccinated: Now Cover Story what? 16 New era for The state hopes the money vaccination rollout Bitcoin and other would return lifestyles cryptocurrencies are and businesses to taking the digital world pre-pandemic normal. by storm, and now central banks are In Brief developing their own 10 A special round up of the versions. latest local news.
At a Glance American Impact 30 Egypt’s Advanced
Cargo Information Paying for the System 26 recovery The U.S. is leading the G7 in trying to impose a The Chamber global minimum income tax rate. 38 Events 46 Member News Market Watch Changing world
32 New secret Media Lite 34 Rethinking nuclear power formula Environmentalists are reconsidering nuclear 48 An irreverent power to ensure governments meet their glance at the press 2030 decarburization targets.
4 Advertorial CCIFE-TAMEER VIP RECEPTION
Under the Patronage of His Excellency Stéphane Romatet, Ambassador of France to Egypt, TAMEER and the French Chamber of Commerce and Industry in Egypt (CCIFE) hosted a VIP Reception on June 22 in the gardens of the French embassy in Cairo. The private event, attended by 100 senior executives from French companies in Egypt, and large Egyptian and multinational corporations, celebrated the appointment of the reputable French DUFKLWHFWXUH ÀUP ´$UFKLWHFWXUH 6WXGLRµ WR FUHDWH WKH FRQFHSW design of an enterprise district called Urban Business Lane (UBL). TAMEER would develop it in New Cairo. This appointment follows several major agreements signed during the recent weeks between France and Egypt, with public and private sector companies. It demonstrates the solidity and consistency of the relations between French and Egyptian business players, founded on good bilateral cooperation between the two countries at all levels and in all areas, and highlights the added value of the French know-how and talents in supporting the growth of the Egyptian society. It also rewards the work done on the ground by the French Embassy in Egypt and the different bilateral organizations, including the CCIFE, in developing and strengthening the relations between the French and the Egyptian business communities. Over the last few years, Egypt’s unprecedented growth results from long-term development vision and leadership, coupled with a unique geographic position and political stability. The Egyptian real estate sector, in particular, is one of the most active property markets in the world and is driven by modern DQGKLJKO\TXDOLÀHGORFDOFRPSDQLHV$VDUHVXOWWKLVVHFWRURIIHUV unmatched business and investment opportunities for international players in the next few years. TAMEER’s managing director, Antoine El Koury, disclosed that the design work of the architecture studio on The Arab World Institute in Paris stands behind their selection for Urban Business Lane. Designed to be a bridge between Western culture and the Arab world, the Arab World Institute promotes the cultural values of the Middle East with its traditional patterns of Arab geometry. As a result, the design was awarded the Aga Khan Award for Architectural Excellence, WKHSUHVWLJLRXV´3UL[G·$UFKLWHFWXUHGHO·(TXHUUHG·$UJHQWµDQGWKH Cultural Personality of the Year from the Sheikh Zayed Book Award. El Khoury stressed the importance of bridges between people and FXOWXUHV WR IDFLOLWDWH GLDORJXH DQG FRRSHUDWLRQ ´:H PDQGDWHG architecture studio, he said, to build a bridge in New Cairo that connects Europe and Egypt. During the event, Martin Robain, architect and co-founder of architecture studio, and Roueida Ayach, a partner, revealed Urban Business Lane’s concept design and the story behind its architecture. The project combined Egypt’s cultural traditions yet inspired by contemporary urban destinations worldwide. He explained that this enterprise district would offer an environment where talents can connect, interact, and create and where companies can strategize, plan, and grow. Walking the pedestrian alleys of Urban Business Lane is like visiting an actual city, with diversity and unity, richness and simplicity, convenience and esthetics. The treatment of the facades is driven by sustainability, light and views. Arabesque- like frames, inspired by middle-eastern language and lifestyle, allow comfort, privacy, and transparency, while glazed panels offer the opportunity of open views on elegant and vibrant landscapes. In addition, the innovative hologram facades of The Gate buildings project Urban Business Lane into the future and stand as a strong signal of modernity on the AUC avenue. Editor’s Note
Director of Publications & Research Khaled F. Sewelam NEW RULES, Acting Managing Editor Tamer Hafez
NEW GAME Contributing Editor Kate Durham
If one thing has characterized Egypt's economic performance since the Consulting Editor global financial crisis in 2008, it is that GDP always grows. Even if there is a Bertil G. Peterson quarter when it shrinks (Q2 in 2011 and Q2 in 2020), the end-of-year perform- ance is always positive. A rebound is seemingly inevitable the next quarter, Senior Writer Ola Noureldin and it lasts until the next crisis. That is the premise of the forecasts going into the fiscal year 2021/2022. Check out Regional Focus for more on that. Writers Those recoveries were attributed to Egypt's huge underserved population Adam Skaria across all sectors. Further support comes from informal jobs, with some Nada Naguib using it to supplement their incomes and others relying on it entirely. Creative Manager Throughout past crises and recoveries, the global economy grew, Nessim N. Hanna thereby ensuring foreign currency inflows to Egypt remained intact. They mostly come from FDI, exports, remittances and tourism. Senior Graphic Designer Emy Emile Those inflows are vital, as Egypt's GDP relies heavily on other countries’ growth. We import almost all our needs, from basic staples such as wheat Graphic Designer to cars, smartphones and furniture, paying for them with hard currency. Verina Maher Worryingly, the world in 2021 and beyond looks very different. The pan- Ahmed Mostafa demic has affected every nation, and global recovery is now almost entirely Advertising & Business Development Director contingent on COVID-19 vaccinations. If those nations experience an infec- Amany Kassem tion surge amid vaccinations, they impose a hard lockdown to reverse it, hurting their economic growth prospects. Additionally, they have been issu- Business Development Coordinators Farah Abdelkader, Farah Diab ing warnings against travel to and from countries lagging in inoculating Mona Hassan, Menna Mohie ElDin their populations. Egypt is lagging. See our In Depth story for more on that. Sarah El Ayoubi, Ali Youssef Meanwhile, global logistics bottlenecks causes shortages of goods, such as the ongoing microchip shortage crisis, which are changing the outlooks Photographers and forecasts of multinationals. Those companies will likely want to build Karim el Sharnouby Said Abdelmessih redundancies close to their most profitable markets. With such dynamics, the government needs to push harder towards Production Supervisor more self-reliance across all sectors. But, so far, there has been disparity. Hany Elias
On the one hand, digital transformation and manufacturing Egypt's first Market Watch Analyst electric car have taken the spotlight. But, meanwhile, agriculture and Amr Hussein Elalfy textiles, among others, still suffer the same problems they had before 2020 in addition to the pandemic-induced challenges. Chamber News Contacts Nada Abdalla, Azza Sherif, TAMER HAFEZ Susanne Winkler Acting Managing Editor
U.S. address: 2101 L Street, NW Suite 800 • Washington, D.C. 20037 Please forward your comments or suggestions to the Egypt editorial office: Business Monthly American Chamber of Commerce in Egypt 33 Soliman Abaza Street, Dokki 12311 • Cairo • Egypt Tel: (20-2) 3338-1050 • Fax: (20-2) 3338-0850 E-mail: [email protected] www.amcham.org.eg/bmonthly
@BusinessMonthly Eg @BusinessMonthly @BusinessMonthly
6
VIEWPOINT
CHANGE IS IN THE AIR The Americans are finally coming to Egypt this month, with investments on the order of $14 billion to be inked with the government of Egypt. Among these investments are Bechtel’s $7.5 billion petrochemicals complex with the Egyptian General Petroleum Corporation, as well as a $1.8 billion desalination plant to be built by an American-led consortium, with the Ministry of Housing, Utilities and Urban Communities as an off-taker. Driven by solar power, this plant will use the latest technology to desalinate water at a significant cost reduction for every cubic meter. On top of this, the government is in discussions with Bechtel for the sixth metro line. One cannot help but notice the positive momentum in bilateral relations, notably after the May 24 phone call between U.S. President Joe Biden and Egyptian President Abdel Fattah el Sisi. Three senior military visits have ensued, including from Special Presidential Envoy for Climate John Kerry, U.S. Envoy for the Horn of Africa Jeffrey Feltman and one at the military level, among others. While the timing may be a coincidence, it still looks like a platform of dialogue is being put in place to build on. There is indeed something in the air. Over the last six weeks we as a business community have been sensing a more proactive change from the govern- ment and an increasing appetite for administrative reform. The government is listening more and actually responding to the private sector’s demands. The new export fund program is more ambitious and more simple. Digitization of government services is on an accelerated track. The most promising news is about the administrative reform program presented by Prime Minister (PM) Mostafa Madbouli. Not only did the announced program touch upon the majority of recommendations offered by business organizations, the follow-up committee for the reforms is headed by the PM himself and includes a number of ministers and business associations. There is finally some light at the end of the tunnel for an inclusive business environment. It will be interesting to follow up on this momentum, which if sustained will be a game changer. Let’s keep our hopes high, and we will keep you posted on how it will evolve.
TAREK TAWFIK President, AmCham Egypt
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$*5:45"34."--)&-*010-*4̊5˧˩˭˥˧˧ˮˮ ˥˦˧˭˧ˬ˥˭˭ˮˮ +8."33*055 .*3"(&$*5:̊5˧˩˦˦˦˩˩˩ ˥˦˧ˬ˦˦˦ˮ˧ˬ˧ 888'&-01"5&&31"-"$&$0.̊'&-01"5&&3!'&-01"5&&31"-"$&$0. EGYPT REPORTED $5.9 BILLION IN FDI IN 2020
Egypt received $5.9 billion in foreign direct investment in 2020, ac- THE counting for 14.5% of the $40.5 billion invested in the region, according to the Arab Investment and Export Credit Guarantee Corporation’s Invest- ment Climate 2020 report. The biggest recipient was the UAE., which received $19.9 billion. The UAE, Egypt, Saudi Arabia, Oman and Lebanon received a combined $38.5 billion of FDI, 95% of the region’s total. NEWSROOMBusiness, financial services and software FDI were the top sectors, accounting for half the investments in MENA. Egypt had led the region in FDI for five consecutive years, land- ing $124.5 billion from January 2015 to December 2019. The country attracted $13.7 billion in FDI in 2019, 56.9% more than last year. Egypt was Africa’s top FDI recipient in 2020, with inflows accounting for 15% of the $39.8 billion coming into the continent.
EGYPT JUMPS SIX SPOTS IN RENEWABLE ENERGY ATTRACTIVENESS Egypt has advanced from 26th place in 2020 to with wind providing 14%, hydropower 2%, the 20th among the world’s top 40 markets in photovoltaic 22% and concentrated solar the 2021 Renewable Energy Country Attractive- power 3% by 2035. ness Index (RECAI). The index is published by The private sector will play a significant role in London-based Ernst & Young Global Limited. delivering most of this capacity. According to the index, the United States and Egypt is already in a position to be a leader in China maintained their top rankings, as East Asia the transition to renewable energy, said U.S. Spe- emerged as an investment destination for re- cial Presidential Envoy for Climate John Kerry fol- newable energy businesses. lowing talks with Egypt’s Foreign Minister Sameh Under its 2030 vision, Egypt plans to increase Shoukry. He added that the country has chances the share of its electricity from renewable to become a leader in solar and renewable sources to 20% by 2022 and up to 42% by 2035, energies worldwide.
CAIRO LOSES GROUND IN AFFORDABILITY FOR EX-PATS
According to an annual cost-of-living survey by HR listed on the index, behind Tunis, Algiers, Istanbul consulting firm Mercer, Cairo is one of the least ex- and Rabat. pensive cities for ex-pats globally. The capital was The three most expensive cities globally for ex- ranked 137 out of 209 global cities in the annual re- pats are Ashgabat, the capital of Turkmenistan, port, down 11 spots from 2020. Hong Kong, and Beirut. The findings are based on prices of more than The Lebanese capital climbed 42 places on the 200 goods and services in each city, including hous- index due its the ongoing economic crisis and col- ing, transportation, food, clothing, household goods lapse of its currency. Beirut is followed in the region and entertainment. Mercer compiles the report by Tel Aviv, which is ranked 15th globally, Riyadh (29), each year to help multinationals calculate how and Dubai (42). The three least expensive cities for much to pay ex-pat employees. ex-pats in the Middle East and Africa are Lusaka Cairo is the fifth cheapest Middle Eastern city (208), Tunis (206), and Windhoek (204).
10 Total health spending equals to EGP 275.6 billion.
Total spending on education equals to EGP 388.1 billion
Members of Parliament signed off on EGP 4.56 billion ($286.4 million) of additional spending for the education and health sectors
PARLIAMENT BOOSTS SPENDING ON HEALTH, EDUCATION NEXT FISCAL YEAR
Members of Parliament signed off on EGP 4.56 bil- its spending by 14% to EGP 1.84 trillion in FY2021- lion ($286.4 million) of additional spending for the 2022 from EGP 1.61 trillion in projected spending education and health sectors. That includes EGP 2 this year. billion to purchase medicine, EGP 1 billion for med- Revenues are forecast to rise 22% to EGP 1.36 tril- ical treatment, and EGP 500 million to fund wage lion during the year. That will be driven by an 18% hikes for kindergarten and primary school rise in tax collection, which will bring in EGP 983 bil- teachers. That brings total spending on education lion compared to an expected EGP 830 billion in to EGP 388.1 billion and total health spending to the current fiscal year. EGP 275.6 billion. Almost a third of the government’s total expen- The government said it expects the budget defi- ditures will go toward servicing debt, rising more cit to improve to 6.7% of GDP, from an expected than 2% to EGP 579 billion. The budget will be 7.7% in the current fiscal year. It should fall to 6.2% handed to President Abdel Fattah el-Sisi for review in FY2022-2023. and sign it into law before the state’s new fiscal Meanwhile, the government expects to increase year on July 1.
Five of the proposed projects include dry ports and logistics centers designed to reduce traffic through sea- ports and cut costs.
NINE PPP INFRASTRUCTURE PROJECTS GET EARLY APPROVAL
Nine proposed public-private partnership (PPP) in- ment with private entities. The Cabinet will receive a frastructure projects have been given preliminary formal proposal for the latter project at its upcoming approval by the Cabinet, said spokesperson Nader meeting. Saad. The projects also include new dry ports in Beni Five of the proposed projects include dry ports and Suef, Sadat City and Borg El Arab, a logistics zone logistics centers designed to reduce traffic through alongside the 6th October dry port, an expansion of seaports and cut costs. That includes the 10th of Ra- the Alexandria and Dekheila ports, and a new cargo madan dry port under a revenue-sharing agree- terminal at Safaga.
11 In Depth
VACCINATED Now what ?
Vaccinations are rolling out across Egypt, fueling expectations for a return to pre-COVID lifestyles and business as usual. But that still might be a long way off. By Nada Naguib
12 In Depth
The world breathed a sigh of relief She knew right away she wanted it when the first vaccine against COVID- because “it’s the only way out.” 19 was approved in November. After However, when a month passed with- months of lockdowns, curfews and out getting her appointment, she financial losses, there was an end in called the MoHP hotline to change sight to a painful pandemic. her location preference. She then got As of mid-June, 3.1% of the Egyptian the appointment that same night. population had received at least one The system is designed to prioritize dose of the vaccine, according to Our healthcare workers followed by peo- World in Data, a science website. With ple of any age with three or more the Ministry of Health and Population chronic illnesses, then two, then one, (MoHP) doubling down on its efforts followed by anyone 65 or older. “This is by opening new vaccination centers according to the priority set by the and launching awareness campaigns, WHO to vaccinate those at most risk,” the number of people vaccinated Haitham Salah, aid to the MoHP min- should continue to rise at a faster pace. ister, told Al Hekaya Ma’ Amr Adib, a The goal is to reach herd immunity, talk show. In March, when the system defined by the World Health allowed anyone over 18 to register,
Organization (WHO) as “indirect pro- they were added to the end of waiting tection from an infectious disease that lists. As a result, some vaccination cen- happens when a population is ters were flooded with requests, form- immune either through vaccination ing very long waiting lists, while other or immunity developed through pre- centers were relatively empty. vious infection.” That can be When the vaccine was launched, achieved when 50% to 90% of a there were only 40 inoculation sites in population is immune. Egypt. By mid-March they tripled to However, some see Egypt’s 138. By that time, however, people road to herd immunity rid- most at risk had already registered at dled with obstacles, while one of the crowded initial 40 centers, others believe it might be and there was a brief period when reached sooner than people not at risk were being vacci- expected if the govern- nated ahead of those who were, Salah ment makes it a priority. said. That was solved by diverting requests to centers near the ones ini- Vaccination tially requested. efforts As of June, there were more than Hala Zaki, a credit man- 400 centers in Egypt administering ager at a leasing com- the Oxford AstraZeneca and pany, registered for Sinopharm vaccines. Zaki, who takes the vaccine in late chemotherapy pills, has received both February, as soon doses of Sinopharm, which were as it was available. reserved for people at risk at the time.
13 In Depth
No one interviewed reported any 40 million doses of the Russian April that number increased to trouble at vaccination centers. “It Sputnik vaccine and 4 million of 525,000. “We are opening our doors was very smooth. From the regis- the American single-dose Johnson and extending a warm invitation to tration to waiting to get the vac- & Johnson vaccine. However, people from around the world who cine, I didn’t stay for longer than an Megahed, speaking to Youm7, did are fed up with staying at home hour,” says Hatem Youssef, a busi- not disclose when the government and desperate to travel for their ness consultant with blood pres- would receive those shipments. summer vacation,” said El-Enany. sure issues who received his With Europe opening back up, appointment in early May. Youssef Economic recovery Egypt is well positioned to recover is awaiting his second dose of the As the number of vaccinated some of its 2020 tourism losses. “It’s AstraZeneca vaccine in late July. Egyptians increases, the govern- not only about policy and politics, Heike Schumann, a German citi- ment is moving to make up for lost it’s about people who are scared to zen living in Cairo and thus entitled opportunities and monetary losses. travel and we will have to convince to receive a vaccine, reported some One sector bouncing back is them. We have to make them feel difficulty picking a location when tourism. The MoHP announced at a safe traveling in a responsible way, registering, but otherwise press conference in early June that and that it’s not dangerous,” said described the process as “very all employees in key locations in Zurab Pololikashvili, secretary-gen- straightforward.” Schumann is the Red Sea and South Sinai had eral of the World Tourism waiting for her second dose of been vaccinated. “Vaccinating our Organization, during a trip to Egypt AstraZeneca vaccine. staff is just one measure we are tak- in August. In May, China’s state-run Xinhua ing to ensure that tourists can Nonetheless, Egypt will not News Agency reported Egypt had return to Egypt’s crown jewels safe- recover its economic losses without received the raw materials to man- ly, quickly and confidently,” said the rest of the world recovering. ufacture Sinovac, China’s other vac- Minister of Tourism and Antiquities Egypt’s main trading partners — cine. Production by the Egyptian Khaled El-Enany. the EU, United States, Italy, Spain, Holding Company for Biological Ahead of the peak summer China, Turkey, the U.A.E. and Saudi Products and Vaccines started in months, the tourism ministry Arabia — were among countries hit June with a rollout expected in July. hopes for a continued resurgence hardest by the pandemic, having According to Khaled Megahed of of visitors. In January, Egypt “all but halted their industrial and the MoHP, Egypt is set to receive welcomed 300,000 tourists and in manufacturing activity,” according
14 In Depth
to a March 2020 economic Hayah news channel that Egypt is access, according to the latest research report by AmCham Egypt. looking to have 50% of the popula- figures by the World Bank. A year later, the focus remains on tion vaccinated by the end of 2021. With both AstraZeneca and containing the virus. A research That would mean increasing Sinopharm approved only for paper by McKinsey & Company vaccinations to nearly 500,000 a adults, Egypt faces a further prob- said, “Governments must slow the day. The ministry announced in lem with about 40% of its popula- spread of the virus before opening May its website was registering tion under the age of 18. Only the up parts of the economy.” 300,000 per day. American-made Pfizer-BioNTech It is uncertain whether enough vaccine is approved for children Not so fast people actually want to be vacci- aged 12 to 17, with current trials test- As the WHO stressed on several nated. Mohammad Badawi, who ing it for use on children as young occasions, the way out of the pan- works at a private university, as five, according to Reuters. No demic is working together on decided not to get vaccinated. “I Pfizer vaccines have been available national and international levels. [am] against the vaccination for in Egypt. “Equitable access to a vaccine, par- healthy people, [as] COVID-19 won't One way to entice people to get ticularly protecting healthcare be as fatal as some of the vaccina- vaccinated is through incentives. workers and those most at risk, is tion side effects,” he says. However, The United States has adopted a the only way to mitigate the public he encouraged his parents, who novel approach to lure unvaccinat- health and economic impact of the both have chronic illnesses, to get ed people to get a shot, including pandemic,” the WHO said on its vaccinated. beer, marijuana, prepaid debit COVAX website, a global initiative Additionally, registering elderly cards, college scholarships and a to deliver vaccines to developing people for vaccines using a website chance to win $1 million. “I think countries. Egypt has received some can be problematic. It was Badawi’s that incentivization for a desired of its doses through the COVAX sister who registered their parents public health behavior is absolutely agreement. for the vaccine. Several people appropriate and has been actually Given the current pace of vacci- report registering elderly parents or shown to be already [effective] in nations, however, herd immunity in older family members who can’t the vaccine campaign,” said the country would take decades to navigate the website themselves. Monica Gandhi, a professor at the achieve. Nader Saad, spokesman Moreover, only 57.3% of the University of California, San for the Council of Ministers, told Al Egyptian population has internet Francisco, School of Medicine. I
15 Cover Story
NEW ERA FOR MONEY In response to the proliferation of Bitcoin and other unregulated, untraceable cryptocurrencies, some nations are looking into developing digital versions of their sovereign currencies. They would offer similar functionality and more stability.
By Tamer Hafez
As the world moves more and more toward the digital "ledger" is stored and visible on all computers using that space, many say money also needs to change. Enter dig- cryptocurrency. Anyone can develop a blockchain or less ital currencies that are more versatile and functional complicated "digital ledger," said Rohas Nagpal, than fiat currencies via a few clicks and swipes on a Primechain Technologies' chief blockchain architect. smartphone, noted Jon Cunliffe, deputy governor of the The first blockchain application was Bitcoin, which can Bank of England, to the BBC in June. "Money is chang- be used to buy goods or services and exchanged for real- ing, and the way we pay for things ... is changing fast. world money via a digital marketplace similar to an e- Cash is declining, and new technologies make it possible stock market. Those using it could access their account for new forms of money not just from banks, but from details by downloading a smartphone app such as tech platforms," he said. Exodus: Crypto Bitcoin Wallet, Trust, Binance and One of those "new forms of money" is Bitcoin, the PointPay Bank. In Nigeria, private banks can create cryp- world's first cryptocurrency introduced in 2009. Bitcoin tocurrency accounts for holders, who can exchange uses blockchain, an innovative technology that prevents them for real money. fraudulent transactions or theft and allows complete "Printing" those cryptocurrencies is known as "min- transparency. According to Investopedia, there were ing," and Bitcoin is the most difficult to mine, making it more than 4,000 cryptocurrencies as of January. Their the most expensive. Mining one coin requires 1,656 kilo- usage has nearly tripled since July 2020, according to watt-hours (KWh) of electricity, enough to power the CoinMarketCap, an online transactions platform. average U.S. household for 56 days, according to Governments and central banks don't regulate cryp- Digiconomist's Energy Consumption Index. In June, tocurrencies, so their dollar value is set by supply, Cambridge University researchers reported that Bitcoin demand and sentiment. Tweets from Tesla CEO Elon mining in 2020 required a total of 132.3 terawatt-hours Musk, Microsoft founder Bill Gates and Berkshire (TWh), more than the electricity used by Argentina, Hathaway's Warren Buffet over the past year have Malaysia or Sweden. "Bitcoin uses more electricity per pushed Bitcoin's value from $10,000 to $63,346, then transaction than any other method known to mankind," down to $33,532 at press time. Gates told CNBC in June. Such a financial system poses several potential prob- However, mining cryptocurrencies such as Ethereum lems for governments and central banks, including is less complex, making them inherently cheaper. A sin- money laundering, transactions that can't be taxed and, gle unit consumes 123.39 kWh of electricity, and between eroding the impact of fiscal and monetary policies. As a July 2020 and 2021, the cryptocurrency used 52.68 TWh, result, many central banks are developing competing according to Digiconomist's Energy Consumption Index. currencies. Meanwhile, Dogecoin, whose creators intended it to mock the cryptocurrency establishment, uses just under Crypto ecosystem 3.5 KWh to make one unit. "Dogecoin was started as a Blockchain technology underlies all cryptocurrencies. It joke in 2013, a way to poke fun at some of the wild is a digital ledger that stores all transactions. They can't speculations in cryptocurrencies," wrote Avi Salzman, a be erased, changed, or hacked, and the blockchain senior writer at Barron's, in May.
16 Cover Story
17 Cover Story
Another factor that determines the price of cryptocur- [Building Blocks] project has now completed its life cycle rencies is how many can be mined. It is an embedded with the WFP Innovation Accelerator." cap within each of those digital currencies. For example, It used Ethereum cryptocurrency to aid 100,000 Syrian there can never be more than 21 million Bitcoins. On the refugees a month throughout the pilot project's two other hand, Ethereum has set its mining maximum at 18 years in Jordan. "With the help of the Building Blocks million coins a year, while Dogecoin has no cap. blockchain, the WFP has been distributing aid more The new development that introduces unprecedent- securely and efficiently to Syrian refugees in Azraq ed functionality in the crypto world is non-fungible Refugee camp in Jordan," said the WFP's project docu- tokens (NFTs), launched in March, making it possible for ment. "It paved the way to a model aid program." virtual and real-world documents and images to be According to U.N. estimates, using Ethereum in the uniquely identified in the digital space. IBM and IPwe in Building Blocks project saved $40,000 in bank transfer April announced they would make, or "mint," NFTs for costs, seeing "tens of millions of [dollars] of aid ... delivered patents and intellectual property documents, "making through the blockchain." them easier to buy, sell and trade," according to the press Meanwhile, the inclusion of those refugees in the release from IBM, which has developed the blockchain WFP's blockchain will give them "a permanent digital that will host those NFTs. identity [to help them] apply for and receive aid and facil- ities," said the WEP paper. For better, for worse Cryptocurrency's growing popularity is apparent as Currently, cryptocurrency users fall into two categories: trading volumes increased nearly threefold last year, speculators aim to make money from exchanging digi- according to CoinMarketCap. That is fueling growth in tal and fiat currencies, betting they can anticipate the mining, which means higher electricity consumption changing trend before everyone else. "Without regula- and more carbon emissions. Technavio, a crypto statis- tions, cryptocurrency is a double-edged sword," Pavithra tics portal, estimates mining activity rose 5.72% in 2020 Rao, a communication specialist at the United Nations compared to a year earlier. (U.N.), wrote in a U.N. blog. "There may be gains from Cryptocurrencies' mining carbon footprint was 90.2 time to time, but any precipitous crash in price could million metric tons of CO2 in 2020, according to Alex de leave investors with no escape route." Advised Buffet in Vries, who created the cryptocurrencies' Energy 2018: "Stay away from it. It's a mirage, basically. In terms Consumption Index. Putting that in context, the of cryptocurrencies, generally, I can say almost with cer- International Energy Agency said the global economy in tainty that they will come to a bad ending." 2020 pumped an additional 75 million metric tons of car- On the other hand, the World Food Programme bon dioxide into the atmosphere compared to 2019. (WFP) has used cryptocurrency. It launched the Building Without crypto mining, global emissions would have Blocks pilot in 2016 and ended it in 2018. "WFP is harness- declined last year. ing blockchain technology as an effective means to "Bitcoin is created when high-powered computers empower people to meet their essential needs. The compete against other machines to solve complex
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mathematical puzzles, an energy-intensive process that transactions, ordering the closure of all accounts. That often relies on fossil fuels, particularly coal," Reuters came after saying in September that it planned to reported in May. According to the Bitcoin Energy regulate its use. Consumption Index, that cryptocurrency generated In May, China banned nearly all crypto mining. 62.82 megatons of carbon dioxide last year, comparable Statistica noted the country accounts for 65% of global to New Zealand, reported CNBC in February. "That is a cryptocurrency mining. "Recently, cryptocurrency prices stunning amount of electricity. It's a dirty business. It's a have skyrocketed and plummeted, and speculative trad- dirty currency," Brian Lucey at Trinity College Dublin told ing of cryptocurrency has rebounded, seriously infring- the Financial Times in May. ing on the safety of people's property and disrupting the Alternatively, SolarCoin, BitGreen and 14 other cryp- normal economic and financial order," the Chinese tocurrencies claim to use clean energy to mine. In addi- authorities said in May. tion, less well-known cryptocurrencies use less energy to In the same month, India banned trading such curren- mine them, and there is not much demand. cies, but not the underlying technology. "From our side, we are very clear that we are not shutting all options," Regulating cryptocurrency India's Finance Minister Nirmala Sitharaman told the Since the creation of Bitcoin, countries have become press. "We will allow certain windows for people to do increasingly divided over cryptocurrencies. In 2018, experiments on blockchain, bitcoins, or cryptocurrency." Egypt's top Islamic figure, Grand Mufti Shawki Allam, Most countries have no restrictions on cryptocurrency, said cryptocurrencies "carried risks of fraudulence, lack of with El Salvador saying it will make it an official currency knowledge and cheating," reported the BBC at the time. this year. "It will bring financial inclusion, investment, "Bitcoin is forbidden in Sharia as it causes harm to indi- tourism, innovation and economic development," viduals, groups and institutions," Allam added, as report- President Nayib Bukele wrote in a tweet in July 2020. ed by Al-Ahram. His decision came as the government is negotiating a The Financial Regulatory Authority has a standing second bailout from the IMF after securing $389 million warning that it doesn't authorize cryptocurrencies or any in emergency aid in April 2020, which didn't sit well with products that use blockchain. IMF officials. "Adoption of Bitcoin as legal tender raises a Egypt is among the nations where cryptocurrencies number of macroeconomic, financial and legal issues are illegal. The list includes Bolivia, which banned them that require very careful analysis," said Gerry Rice, an IMF in 2014, Iran, Qatar, Algeria, Morocco, Bangladesh, and spokesman, in June. Nepal. Meanwhile, Canada, Colombia, Ecuador, Russia, Saudi Arabia, Jordan, Taiwan, Cambodia, Indonesia, and Joining the club Vietnam, have restrictions on cryptocurrencies, but hold- As more economies continue their digital transforma- ing and mining them is legal. tion, they will require the versatility and increased In February, Nigeria's central bank reversed its functionality that cryptocurrencies offer without their conditional-approval stance to ban cryptocurrency volatility. That has led many governments to consider
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issuing digital versions of their paper currencies. That study said over half of the 282 mobile money transfer ser- category of money is called Central Bank Digital vice providers worldwide are in Sub-Saharan Africa. Currencies (CBDCs) or Govcoins, as The Economist Meanwhile, the IMF compared the penetration of called them in June. "These digital currencies respond banked citizens and those with mobile money accounts to the interest [rates] of central banks to stay updated in 13 African nations and found that "today, it is not to guarantee fulfillment of their objectives and func- uncommon for more citizens to have access to mobile tions," economist Natalia Español of Banco Bilbao money than to a traditional bank account." Vizcaya Argentaria, a Spanish multinational financial Experts believe that cryptocurrency could be as popu- services company. "Many central banks are investigat- lar. "Interest in cryptocurrency ... is growing steadily in ing the impact of a CBDC issuance on the financial Africa," wrote Rao of the U.N. "Some economists say it is a system, while others have opted for its issuance and disruptive innovation that will blossom on the continent." are in the development phase." One reason is those countries' reliance on remittances, In December 2019, the Securities Commission of the which take time to transfer via intermediaries such as Bahamas announced the world's first-ever blockchain Western Union and are costly. The World Bank said the digital currency (Sand Dollar) backed by a central bank. average cost of moving fiat money to Africa was the By October, it was tradable. In November, Cambodia's highest globally at 8.2% of total transferred amounts. The central bank launched the Bakong, the digital version of global average is 6.5%. "For Africans in the diaspora send- the riel. Individuals and companies can exchange ing money back home, the cost of bank transfers is astro- Bakongs for dollars or riels, which are pegged to dollars. nomical," Emmanuel Darko, a marketer at Cypheme, a China will likely be the third country to launch a digital digital security company, told DW in June. "It's some- version of its currency nationwide. The e-yuan is a pilot times as high as 20%. But there are some cryptocurren- project with 500,000 users in four cities circulating the cies that allow [people to] practically send money back to equivalent of $30.7 million. Foreign businesses accepting Africa for free." the new currency in China include Starbucks, The other primary reason cryptocurrency usage is ris- McDonald's and Subway. ing in Africa is inflation and lack of confidence in govern- The country’s global economic clout has raised con- ments. "Now you have this alternative to traditional gov- cerns within the Bank of International Settlements that ernment-managed currencies where there's historically the e-yuan could be widely adopted by smaller Asian been so many [policy] errors and negative side effects," countries trading heavily with the world's second-largest Chris Becker, blockchain technologies lead at South economy. "China wants to have more political influence Africa's Investec, told DW in June. "These competing cur- internationally," Edwin Lai, professor of economics at the rencies are operating alongside domestic currencies, Hong Kong University of Science and Technology, told which I think will give these economies an increased the South China Morning Post in June. "One way to level of resilience." achieve this is if other people use your currency more as The third driver of cryptocurrencies in Africa is the large a medium of exchange, for a store of value and as a number of unique active mobile phone subscribers, reserve currency." which has reached 735 million, according to GSM Meanwhile, the EU and U.S. governments also have Associations. "That means more Africans will have the expressed interest in launching digital versions of their tools to plug into the cryptocurrency ecosystem," said currencies. "The ECB [European Central Bank] is pro- Rao of the U.N. ceeding with caution and it is believed the first studies African nations benefiting from cryptocurrencies and tests could be carried out in mid-2021," noted an include Botswana, Ghana, Kenya, Nigeria, South Africa October report by the ECB. In August, Lael Brainard, a and Zimbabwe. They mostly use Bitcoin, according to member of the U.S. Federal Reserve Board of Governors, gobitcoin.io, a news portal. According to Darko, Africans said the central bank was studying the potential conse- prefer using digital currencies “as opposed to their local quences of creating a digital version of the dollar. currencies, which are plagued with hyperinflation," he According to PricewaterhouseCoopers (PwC) Global told DW. In addition, Malawi, Morocco, South Africa and CBDC Index 2021, over 60 central banks have been Zimbabwe are witnessing a boom in cryptocurrency- "exploring CBDCs since 2014, with progress accelerating based remittance service providers, DW reported. as some CBDCs are now entering implementation phas- The broad adoption of cryptocurrencies in Africa faces es," noted the report. some obstacles, such as unexpected government crack- downs. The South African Reserve Bank published a pol- Crypto Africa icy paper in April highlighting the importance of regulat- Africa has been quick to adopt some of the world's latest ing cryptocurrencies. Said Rao: "Government guidelines technologies to solve incumbent problems. A McKinsey could become a slippery slope to regulation."
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A "smart contract" is a program that allows devel- opers to build applications that take advantage of the Ethereum blockchain's security, reliability and accessibility. "Smart contracts expand on the basic idea behind Bitcoin — sending and receiving money without a trusted intermediary like a bank in the middle — to make it possible to securely automate and decentralize virtually any kind of deal or transac- tion, no matter how complex," according to Coinbase, a cryptocurrency trading platform. Some of those "complex" transactions include uniswap, where cryptocurrency holders exchange one digital currency for another, setting the exchange rate between them based on real-time supply and demand. Another type of smart contract manages lending, interest rates and payment of installments. A third allows the creation of cryptocur- The other big problem is low demand due partly to a rencies pegged to the value of the dollar, known as lack of understanding about how cryptocurrencies work. "stablecoins." Innovators could even develop a new "Cryptocurrency and blockchain are easier to under- type of "smart contract" that combines those types, stand by people who are already educated and exposed thereby becoming a crypto-bank regulated by the to technology," said Elisha Akyaw, founder of blockchain. BlockNewsAfrica, to Downtown Africa, a news portal, in However, one must be careful when using "smart October. UNESCO says one in five Africans aged 6 to 11 is contracts" as "once deployed onto a blockchain, not in school, followed by a third of those 12 to 14 and 60% [they] generally can't be altered, even by their cre- aged 15 to 17. ators," noted Coinbase. The seemingly unhinged rise in cryptocurrencies, More tools to come other blockchain tools, and their acceptance among NFTs appeared in 2021, offering a new way to prove own- laypeople puts governments and financial institu- ership of assets in the digital world. That has created new tions under pressure. "Governments and financial business opportunities and ecosystems, such as trading firms need to prepare for a long-term shift in how physical items, including works of art, in the virtual world. money works, as [digital currencies are] momentous It uses the same blockchain technology as cryptocur- as the leap to metallic coins or payment cards," wrote rencies. However, their different nature requires the The Economist in June. "That means beefing up "smart contracts" functionality present in Ethereum and privacy laws, [and] reforming how central banks are other less popular cryptocurrencies. run." I
21 Regional Focus
VIEW FROM THTOPE Mahmoud Mohieldin, Egypt's first investment minister and current IMF executive director for Arab studies, shares his thoughts on the region's economic prospects.
By Tamer Hafez
Since the start of 2020, the global economy has from acute hunger worldwide," said Mohieldin. had to deal with new precedent after new However, macroeconomic figures performed precedent as lockdowns tested nations' deci- better than economists initially feared. sion-makers. In response, they mostly resorted Mohieldin said global GDP shrank in 2020 by to ad-hoc solutions. Today, the world is much 3.5% compared to forecasts that it would con- calmer, thanks in large part to the global vac- tract 5% to 8%. "By the end of this year, global cine rollout. Yet, there is still trepidation about GDP will have recovered what it lost in 2020," he economic recovery. "We can't work with surpris- said. es, not even good ones," Mahmoud Mohieldin, Trade in 2020 also beat expectations, declin- executive director for Arab studies at the IMF, ing by 5.3% instead of between 13% to 32%. "Yet, told AmCham during a May 31 webinar. "Any it's unlikely to return to pre-pandemic levels in surprises would overwhelm the market." 2021," said Mohieldin. In the MENA region, economic recovery could Foreign direct investment fell 35% to 40% last be tricky given the area's diversity. While most year, he said, adding, "It has declined for the past GCC (Gulf Cooperation Council) countries rely five years." The pandemic merely accelerated primarily on oil, those along the Mediterranean that trend, "in part, because developed nations have diverse economies that depend on differ- [that can export capital] wanted to increase ent sectors to fuel their GDPs. "A regional domestic investment to ensure fast-paced approach [to recovery] is interesting," said sustainable GDP growth." Mohieldin, adding that it would not succeed. This year and the next might see some FDI "We need a sector-by-sector, country-by-coun- action in the MENA region. "Huge multination- try approach." als may now be looking to increase their global Yet, there are common factors that MENA footprint to recover faster," said Mohieldin. nations must consider when resetting their "However, their FDI will be in highly selective economies, such as defining the role of govern- sectors and locations." ments in driving GDP and determining how to Likely targets will be the 10 nations compris- capitalize on opportunities from sustainability ing the Association of Southeast Asian Nations and digitization. (ASEAN) and Sub-Saharan Africa. "Net FDI per GDP in the MENA region is worse than those International context two regions," he said, noting that trade within The pandemic significantly hurt individuals individual regions is vital for attracting FDI. worldwide. According to the IMF, "extreme ASEAN countries, which are primarily export- poverty," as per the United Nations definition, oriented, have more dealings with each other increased worldwide in 2020 for the first time than MENA nations do. In 2020, intraregional since the Millennium Development Goals were commerce in ASEAN was 12% to 14% of the enacted in 2000. In addition, the International region's GDP. In MENA, it was 5% compared to Labour Organization reported 250 million jobs 7% in 2013, said Mohieldin. were lost last year, as lockdowns resulted in The IMF official noted that rich, developed companies going out of business or downsizing. countries would likely recover faster than MENA "That doubled the number of people suffering nations thanks to massive stimulus spending
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last year. "Recovery is solid in China and the U.S. [because] of spending on recovery packages. For example, the United States spent 10% of GDP on packages," said Mohieldin. "Lower government spending will mean a slower recovery." That spending invariably means rising national debt. However, developed nations that allocated more stimulus early in the pandemic won't suffer this year. "A report from the Institute of International Finance in April noted global debt has largely stabilized in 2021," said Mohieldin. "That is because of a decline in [debts] in mature countries. Instead, the increase will be in emerging markets, whose debts jumped from $11 trillion to $86 trillion." Another factor favoring developed countries is their fast vaccine rollout, he said. "The U.S., for exam- ple, plans to vaccinate 70% of its population by July 4. In the MENA region, it is 2%."
MENA's survival Each nation's COVID-19 infection curve will dictate its economic recovery pace. Mohieldin noted in the past 18 months, MENA countries had highly diverse experi- ences with infections because each had their own lock- down policies and strategies as they sought to balance lives and livelihoods. In North Africa, Egypt's infection figures in 2020 show twin peaks, similar to an "M" graph. The current trajectory indicates the country is facing its third peak. In Tunisia, infections reached an all-time high and started to drop slightly before significantly increasing again, only to fall.
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The country experienced a similar "false peak" in 2021, from [a weakening] exchange rate and [rising prices of] according to the IMF. Morocco's infection rate rose rela- imports," noted Mohieldin. tively quickly, stabilized, and is currently dropping at a Those diverse metrics indicate a "K-shaped" recovery similar pace to the rise. Its curve resembles a plateau. for MENA nations, where each country takes a separate Qatar had a massive spike early in the pandemic, but path to recovery. "Within each of those countries, sector the government contained it quickly. Since March, the recovery will also diverge," said Mohieldin. "Tech [compa- country has witnessed a second, less severe spike. The nies] and those that altered their positioning in the mar- U.A.E. managed to limit COVID-19's spread early on, but ket will enjoy a lot of growth." there was a massive spike in infections and now are gradually declining. Meanwhile, Bahrain is witnessing Global trends the worst of the pandemic, as its infection rate rose Regional economic and FDI prospects also could be rapidly and then plateaued. Finally, Jordan's experience affected by decisions in other countries and global has been similar to Egypt's "M" trajectory, though infec- trends, said Mohieldin. For example, on May 29, a court in tions are currently declining. The Netherlands said Royal Dutch Shell's plan to reduce Mohieldin compared those countries' readiness to its "carbon intensity" by 20% by 2030 and reach net zero reopen their economies to traffic lights, saying, "None of emissions by 2050 wouldn't be enough to counter cli- them are green." Bahrain, Egypt, Tunisia, and the U.A.E. mate change. Instead, Royal Dutch Shell would have to are "red," indicating a need to control the spread of the cut its emissions relative to 2019 by 45% by 2030. It must virus before they prioritize their economies. Meanwhile, also prove it is working to lower emissions of suppliers Jordan, Morocco, and Qatar are "yellow," according to and consumers by 45%. "This is huge," wrote Tessa Khan, Mohieldin, who recommended a partial reopening of an international human rights lawyer, in a Guardian those economies. opinion piece. "Shell not only has to clean up emissions created by extracting oil and gas, but also has legal Economic outlooks responsibilities in relation to the emissions produced by Those diverse infection-rate curves impacted GDP burning those products." growth in 2020 and forecasts through 2022. Mohieldin Within 24 hours of that decision, ExxonMobil noted that by the end of 2020, all MENA economies announced that Engine No. 1, a climate advocacy hedge except Egypt (3.6% growth) experienced their GDPs fund, now owns a 20% stake in the oil giant and has two shrink between 2% in Jordan and 8.8% in Tunisia. That seats on the board of directors. Chevron, meanwhile, said excludes a few countries, which have social and security its shareholders voted to cut 61% of the company's emis- issues, further hurting their economies. For example, sions generated by burning its products. Lebanon's GDP shrank 25%, Libya's 59%, and West Bank "There is no doubt that this week's news has been not and Gaza Strip's 10.9%. so much a shot across the bows as a direct hit to the hull By the end of this year, the entire region should see of Big Oil," Mark Lewis, chief sustainability strategist at GDP growth. The IMF, however, did not issue a forecast BNP Paribas Asset Management, told The Guardian on for Lebanon. Under the IMF's scenario, Egypt would be May 29. "They will have to recognize now that no amount the only country to see a decline in GDP growth rate of patching up the hole will do; shareholders and society (2.5% this year). Except for Libya, the rest of the region want the vessel completely overhauled." would see GDP grow 2% to 5.7% for the West Bank and Mohieldin noted this news would invariably hurt Gaza Strip. The IMF forecasts Libya's GDP will jump MENA economies that rely on fossil fuel exports, such as 130.9% thanks to reconstruction contracts and a region- Libya, Algeria, and GCC countries. "Things are moving ally recognized government appointment in April. "The super fast," he noted. If those nations don't move quickly, region's overall GDP growth should range from 2% to their economic outlooks may dim in the coming years. 4%," said Mohieldin. "Increasingly stringent regulations will put multination- Next year, MENA economies should continue to grow. als under more pressure. That would impact their [glob- Egypt would witness the second-highest GDP growth al] investment plans," said Mohieldin. "We shouldn't wait rate in the region (5.7%), after the West Bank and Gaza for regulations that force countries into compliance. Strip (6.9%). For the rest of MENA, GDP growth should be Instead, we must anticipate what is needed and act." between 2.4% and 5.4%. The 2016 Paris Agreement, 2015 U.N. Sustainable According to the IMF, inflation will be 4.8% in Egypt, Development Goals (SDGs), and environmental, social while the rest of MENA would be between 0.3% and 5.8%. and corporate governance (ESG) frameworks point the The exception is Libya, which will likely see an 18.2% infla- way for many corporations. "The ESGs relate to market tion rate. "The implications of rising inflation will come dynamics and activists' calls for a cleaner Earth," said
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Mohieldin. "They are ahead of government policies and for sustainability funding to increase from $39 billion in the SDGs in calling for a more sustainable future." January 2020 to $160 billion in March, according to the IMF. Growth opportunities While MENA countries have different GDP structures Big question and economic recovery plans, Mohieldin believes The pandemic added a new dynamic to economic exports, sustainability, and technology will be the recovery, with governments allocating more to stimu- region's principal economic drivers. late consumer spending and support businesses. "That The main sectors benefiting are food and agriculture, is a new dynamic because the pandemic amplified cities, energy and minerals, and health and well-being. inequalities," said Moheldin, noting that surveys across "The SDG framework opened $12 trillion worth of invest- Europe found 60% of youths say "government needs to ment opportunities globally in those sectors," he said. do more to improve their lives." "They represent 60% of the real global economy and are He noted this intervention is necessary for the short critical to meeting SDG benchmarks." run. "An IMF report showed government investments The main obstacle facing those opportunities is the have a multiplier effect on private sector investment. So lack of specialized funding. "Untapped opportunities [in countries need their governments' intervention, partic- sustainable and tech products and services] exist ularly now," said Mohieldin. MENA governments should because of the massive funding gap," said Mohieldin. currently focus on sustainability, digitization, technology According to the IMF, before 2020, the SDG funding gap infrastructure, security and data protection, he added. was $2.5 trillion. The pandemic increased it by $1 trillion, In the long term, high public spending could put while funding from private resources dropped by $700 economies at risk. To bypass such threats, Mohieldin million. "Global assets under management in 2020 were explained that such intervention must support the pri- $118 trillion," he said. "We only need $4.7 trillion." vate sector, stimulate innovation, organize the invest- Diverting those funds to green investments is easier ment environment and be creative. "It should not be a said than done, he stressed. "Those managing the assets source of distortion, bureaucracy and putting govern- are happy with their return-risk mix. That means govern- ment finances under pressure," stressed the IMF official. ments must work on improving the investment climate, Additionally, too much government stimulus might creating more opportunities, and making those invest- backfire. The state is a regulator that can skew laws to ments less risky." its advantage and is a low-risk investor. Therefore, banks MENA governments face an additional challenge: cash and other funding channels may prefer working with flows in portfolio investments or FDI from developed to governments over private sector firms whose risks have developing nations have been drying up for years. To increased because of the pandemic. reverse that trend, MENA governments need to create That crowding out is evident in MENA. "The share of specialized financing tools. According to Mohieldin, they private-sector lending is going down, yet banks are include green bonds and loans, sustainability bonds, improving their metrics," said Mohieldin. "Government social bonds, green municipal bonds, and sustainability- is tax-free, risk-free, and its projects have high credit linked bonds and scores. So it may be low return, but those projects will loans. Globally, those have high liquidity." tools opened the door He noted successful examples of gov- ernment-led investments that don't impede the private sector in Vietnam and South Korea. "Having a balanced industrial policy, good partnerships, dia- logue and discussion are essential," said Mohieldin. "In our region, each country has to tailor the definition of its gov- ernment's role in the economy."
25 American Impact
PAYING FOR THERECOVERY The United States is leading other developed wealthy nations to impose a global minimum corporate tax levy on multinational corporations. By Tamer Hafez
26 American Impact
After spending, and committing to spend, trillions of Tax landscape dollars to reboot their economies, the seven mem- Almost all international tax laws originated in the ber states of the G7 are scrambling to secure fund- 1920s, wrote Tang See Kit, a correspondent at ing. In a June meeting, they agreed that multina- Channel News Asia. They don't address companies tional corporations (MNCs) would pay a minimum doing business in the digital space or tech firms. 15% tax on their global revenues, regardless of "They sell services remotely and attribute much of national tax incentives they enjoy. their profits to intellectual property held in low tax "Historic, game-changing, revolutionary: such has jurisdictions," explained Kit. been the widespread reaction to the recent agree- Ocampo said advanced nations have relied "heav- ment by G7 finance ministers," wrote José Antonio ily" on corporate tax revenue, "thus have been hit Ocampo, a former finance minister of Colombia, in harder by multinationals' tax avoidance. That results The Asset in June. "The ministers also agreed on a in global revenue losses of at least $240 billion each new formula for apportioning a share of tax rev- year." enues from these companies among countries." On the other hand, emerging economies That would bring an end to tax havens and com- attempting to attract FDI and promote investment panies shifting profits to low-tax jurisdictions, such have used tax exemptions to attract investors. Free as Ireland (12.5% corporate tax) while making economic and industrial zones are two options that money in high-tax destinations, such as the United permanently exempt MNCs from paying corporate States, where until 2017, the corporate tax rate was taxes. 35%. Now it's 21%. "That global minimum tax would A prime example is Jebel Ali in Dubai, where com- end the race to the bottom in corporate taxation panies pay no taxes. Meanwhile, Egypt has the Suez and ensure fairness for the middle class and work- Canal Free Zone, which promises reduced corpo- ing people in the United States and around the rate taxes as an incentive to invest in the area world," U.S. Treasury Secretary Janet Yellen said in around the waterway. "Egypt's tax law [which sets June. "The global minimum tax would also help the rates at 22.5%] has removed most tax exemptions, global economy thrive by leveling the playing field except for companies with free zone status," says for businesses." Amr Elalfy, head of research at Prime Holding. There Enforcing a global minimum tax, however, will be are similar zones under different names across the a complex undertaking. Governments could MENA region, all aiming to reduce investment costs change their laws and strategies to develop other by lowering or eliminating corporate taxes. incentives for attracting foreign direct investment Then there are special agreements, such as the (FDI). MNCs would revisit their business footprints. one the Irish government is accused of signing with "It [will] reverse nearly four decades of falling global Apple. The European Commission "determined that corporate tax rates," wrote Aqib Aslam of the Ireland gave Apple a 'sweetheart deal' that let the Regional Studies Division in the IMF's African iPhone maker pay significantly lower taxes than Department in a June blog. other businesses," wrote Kim Lyons, an editor at The Not all countries are happy with the minimum tax Verge. EU antitrust chief Margrethe Vestager noted, initiative, as many would see MNCs exit without any "this is illegal under EU state aid rules" when the tax incentive to stay. Some experts note that if major story broke in 2016. The investigation is ongoing. developed economies agree to a global minimum Some countries offer temporary tax breaks. tax rate, less influential nations might have no "Countries compete vigorously to lure businesses choice but to comply. and investors within their borders by offering
27 American Impact
numerous profit- and cost-based tax incentives, driving It's in the best interest of the wealthiest countries to their tax rates down," wrote Aslam of the IMF. enforce the GMT, even if other nations don't participate. By 2019, the OECD, an organization club of mostly rich "As most of the largest multinationals are headquartered countries, floated the idea of reforming international tax in OECD countries, the majority of the benefits would go laws to prevent such practices. It culminated in the G7's to them," wrote Cobham of the Tax Justice Network. announcement in June of the Global Minimum Tax The U.K.'s Tax Justice Network estimated that G7 (GMT) framework, instigated by the U.S. government. countries would gain a total of $168 billion in increased "This unprecedented progress reflects the [U.S. President corporate income. The United States would see its cor- Joe] Biden Administration's commitment to building a porate tax income rise by 21%, while the U.K., Germany, global tax system that is equitable and equipped to and France would see their revenue increase 15% to 30%. meet the needs of the 21st-century global economy," the Those revenues would increase further if only G7 coun- White House said in a statement. tries applied the GMT to all their MNCs, as they would receive most of those additional revenues via the "top-up How the GMT works tax" mechanism. "The G7 members, with 10% of the The GMT framework would replace the EU's Digital world's population, stand to receive more than 60% of Services Tax, which mainly taxes American tech compa- the additional revenues," said Cobham. nies making money in Europe, according to a June 11 The GMT would mostly impact tech and online joint U.S.-U.K. statement. The GMT also would replace the companies. The new framework gives governments a OECD's Base Erosion and Profit Shifting regulations and universal legal platform to tax tech companies on America's Global Intangible Low-Taxed Income laws. overseas profits. So far, attempts at taxing tech giants, The new global framework comprises two pillars. The including Amazon, Apple, Facebook, and Google in the first requires MNCs to pay the domestic corporate tax EU, have been individual efforts that caused political rate where they operate, not just where they're head- strains. "Big tech companies have predominantly been quartered. That mainly affects tech companies and taxed in their home country, which is often the United those selling to a global market via a virtual marketplace. States," an analysis by The Washington Post noted in "Pillar one is relatively small but politically salient," Alex 2019. "These new ... taxes would mean European Cobham, an economist and chief executive at the Tax governments could take some of the U.S. slice of the pie." Justice Network, wrote in The Financial Times in June. It comes amid "public anger over the failure to tax multina- Diverse reactions tionals focused on large tech companies that can out- The GMT wouldn't work for countries that have long compete more highly taxed local businesses," he said. relied on tax incentives to attract foreign direct invest- Eligible multinationals would make more than 10% ment. "Overall, countries with a moderate tax rate profit margins, and 20% of their revenue comes from system stand to benefit at the cost of 'tax havens' with overseas operations. Estimates predict "this will bring in low or nil tax rates," wrote Sudhir Kapadia, EY India additional revenue of $5 billion to $12 billion a year," wrote National Leader for Tax, in Money Control in June. Cobham in The Financial Times. Christina Wilkie, CNBC's content editor and political The second pillar of the GMT is the corporate tax rate reporter, warned in June that implementing the GMT floor for eligible multinationals. G7 countries in June would "effectively end the practice of global corporations agreed to set it at 15%, which the OECD said would seeking out low-tax jurisdictions like Ireland and the increase their members’ combined tax revenue by $275 British Virgin Islands." billion. That was the middle ground between the lowest That would profoundly affect MNC decisions and their tax rate in the EU, Ireland's 12.5%, and the U.S.-proposed global footprints. "The global minimum tax poses a seri- 21%. ous threat to the business model of many jurisdictions," The approved GMT framework ensures that all G7 wrote Cobham of the Tax Justice Network. countries benefit, regardless of whether other nations According to Trading Economics, a statistics portal, 10 support the new system. "The consequence of a low nations, including several east European countries, effective tax rate for MNCs in a particular jurisdiction is Kuwait, Oman, Tunisia, and Switzerland, tax companies the triggering of a 'top-up tax' in the jurisdiction of its ulti- at 15%. Meanwhile, 17 levied lower corporate rates, with mate parent entity," Dean Rolfe, KPMG's partner and seven tax havens having no corporate tax. head of international tax for Asia and the Pacific, told Kit of Channel News Asia stressed the GMT would Channel News Asia in June. also hurt countries that offer tax breaks and incentives,
28 American Impact
making their effective tax rate much less than the deficits are expected to remain elevated in the near term headline figure. Singapore, for example, has an effec- as countries pump prime activity," said Kapadia. He tive tax rate of 8.5%, according to Guide Me Singapore, estimated that "fiscal holes [amount] to 14.9% of GDP for while its headline rate is 17%. Cobham said Ireland's the U.S., 16.9% for the UK, and 7.2% for the EU," he wrote. "average effective tax rate for U.S. multinationals is just Yellen, the U.S. treasury secretary, told the press in July 2%" despite its headline rate being 12.5%. that by "making big multinational corporations pay their That could dent those countries' investment fair share," the government would have the "resources prospects as part of the incentive for staying is their to fund priorities for domestic renewal – such as infra- lower tax rate compared to advanced economies. "The structure, childcare, affordable housing, and education." tax rate in itself was very attractive for a number of years," said Thomas Byrne, Ireland's minister for Europe, Implementation in a television interview in June. However, the implementation of GMT is challenging. On the other hand, African nations and other develop- Ocampo, the former Colombia official, noted that it's dif- ing economies might benefit from the GMT. It would ficult to dissect an MNC's balance sheet to identify prof- narrow the gap between their current tax rates, ranging its generated in one jurisdiction, as their operations are from 25% to 35%, and countries that increased their cor- highly integrated. "Profits are essentially the result of the porate tax rate to 15%, said the African Tax Administration firm's global activities," he said, suggesting collecting Forum (ATAF) in a note. taxes based on a "formulaic [approach] according to ATAF requests that eligible MNCs' annual global rev- employment, sales, and assets," he explained. enue threshold drop from the G7's $10 billion to just Ian Borman, a finance partner in the London office of under $300 million. It also asks that revenue generated Winston & Strawn, stresses that tax havens may give from routine operations be combined with accumulat- MNCs fresh incentives to counter GMT. That may mean ed free cash flows from past years under the GMT new unfair advantages. "Low tax jurisdictions will use any framework. That effectively means that more MNCs opportunity to replace low tax rates with other incentives would pay GMT. by something else, potentially making labyrinthine tax Aslam of the IMF noted that African countries prefer system even more complex," he wrote to The Global higher GMT rates. "Governments are turning to [global] Legal Post. minimum taxes as a means of preserving their tax Governments that have long relied on tax incentives base," he explained. "This is particularly true in develop- must also now expedite improvements in their business ing countries with weaker tax administrations, which environment. CIMB Private Bank economist Song Seng face major challenges in effectively taxing these large Wun told Channel News Asia that Singapore would still multinationals." attract investors under a GMT despite almost doubling Despite that, Elalfy doesn't believe that GMT would its effective tax rate. "Singapore's infrastructure, rule of make a difference to the status of MNCs in emerging law, stable political environment, as well as connectivity markets. "Emerging markets often have tax rates that to regional and global economies, are among the intan- are higher than 15%. Plus, moving [headquarters] would gibles companies also consider," he explained. "Because involve higher costs which may not justify moving to we know that businesses are in Singapore for more another tax jurisdiction," he explained. than just tax reasons, as long as Singapore's overall package remains attractive, [the new tax rules are] not a Saving the government? significant issue." Kapadia of EY in India noted that the agreement over G20 and OECD nations will start negotiating the the GMT is happening quicker than ever before, and implementation of the GMT with the G7 in July. there is more political push to implement it. "The pan- Yellen, the U.S. treasury secretary, said when the G20 demic seems to have accelerated the pace of reaching a approves the new framework, smaller economies broader agreement on the issue," he wrote in Money may have no option but to comply. "For those that do Control in June. not, there will be an enforcement mechanism to COVID-19 forced almost all wealthy nations to spend pressure those countries to comply," Yellen said as trillions of dollars on protecting their struggling reported by MNE Tax, a specialized news portal. "It businesses, curbing unemployment, and leading invest- doesn't require absolute agreement across the ments. "Government debt levels have surged, and board. It has a way of bringing holdouts into it." I
29 At a Glance
In Partnership with EGYPT’S ADVANCE CARGO INFORMATION (ACI)
In con nua on of the Egyp an tax and customs reform journey in Egypt, the Minister of Finance published Customs Decrees Numbers 38 and 222 of 2021 regarding the Advance Cargo Informa on (ACI). The Head of the Customs Authority has also issued Instruc ons Circular No. 11 of 2021 under which the mandatory implementa on of the IN BRIEF pre-registra on system for shipments will be carried out in accordance with the decisions of the Minister of Finance No. 38 and 222 of 2021, star ng from October 1st 2021 on what is shipped from abroad to inside the country (postponed from July 1st).
Egypt seeks to simplify and facilitate procedures and rules of trade and investment in the country. Accordingly, the Egyp an Customs Authority released the new Customs Law No. 207 of 2020; then Minister of Finance decree No. 38 of 2021 was issued regarding the Advance Cargo Informa on "ACI". This decree was issued to clarify the pre-registra on BACKGROUND of shipments procedures, introducing the e-signature “e-stamp” used in the importa on documents and the new steps for impor ng products.
Advance Cargo Informa on (ACI) is a new customs system that requires cargo data and documents (commercial invoice and final or ini al bill of lading) at least 48 hours before cargo shipment from export country, to enable stakeholders to monitor any risk to the state WHAT IS THE ACI SYSTEM? through the Risk Management System (RMS), with the highest priority given to the security of Egyp an ci zens.
WHO DOES ACI IMPACT? Protec ng against uniden- fied goods or goods from Exporters and Sea/air shipping uniden fied origins suppliers (foreign) companies
Reducing release me and hence the cost of releasing goods
ADVANTAGES ADVANTAGES Using electronic data and documents, thereby dispensing with paper docs Importers Clearance companies
HOW TO PREPARE FOR ACI?
No fy oversea exporters The Egyp an importer Obtain the electronic List advance cargo data Submit cargo data and dealing with e-invoices and registers on the online signature pad from and acquire ACID prior documents (commercial bills of lading at least 48 hrs portal competent authori es to the start of import invoice and final or ini al prior to connec ng with a www.nafeza.gov.eg to access Nafeza opera ons bill of lading) prior to shipment system (Nafeza)*
Registra on Signature Data Lis ng Invoices No fica on
*Through supply chain networks using
30 At a Glance
WHAT IS BLOCK-CHAIN TECHNOLOGY?
Block-chain is a technology that allows a It is simply a series of fixed records/ blocks person (or company) to transfer valuable of data, and is managed by a group of data or documents to another person safely computers that are not owned by any en ty. without the interven on of any intermediary. Data blocks are secured and linked to each other using cryptographic principles.
HOW THE BLOCK-CHAIN TECHNOLOGY WORKS
Block-chain is a simple and innova ve method to pass informa on from person A to person B in a fully-automated and secure manner.
One party ini ates the transac on by crea ng a block.
That block is verified by thousands, perhaps millions, of computers distributed throughout the network.
The verified block is then added to a chain stored in the network, crea ng a unique record associated with other records.
To forge a single record, the en re chain has to be forged on millions of computers, which is prac cally impossible.
WHO ARE THE CERTIFIED BLOCK-CHAIN SERVICE PROVIDERS?
CargoX has developed BDTS (Block-chain Documenta on Transac on System), which offers a plaorm with many applica ons, the most popular of which is Smart B / L ™. CargoX created an open system that uses Block-chain technology and decentralized encrypted data storage to enable the crea on and exchange of informa on and documents.
HOW CAN FOREIGN EXPORTERS SIGN UP ON AND USE CARGOX?
CargoX Plaorm Signup Login hps://help.cargox.digital/en/user-manual/logging-in/login/ hps://help.cargox.digital/en/user-manual/registra on/new-company-registra on/ hps://help.cargox.digital/en/user-manual/registra on/ac vate-new-account/ Data and Document Upload hps://help.cargox.digital/en/user-manual/managing-company-details/your-blockchain-key/ hps://help.cargox.digital/en/user-manual/using-the-plaorm/ hps://help.cargox.digital/en/user-manual/managing-company-details/company-profile/ hps://help.cargox.digital/en/user-manual/using-the-plaorm/compose-envelope/ hps://help.cargox.digital/en/user-manual/managing-company-details/ hps://help.cargox.digital/en/user-manual/using-the-plaorm/transfer-envelope/ hps://help.cargox.digital/en/user-manual/using-the-plaorm/forward-received-documents/
31 Market Watch Stock Analysis
New secret formula
From May 15 to June 15, there was see Spotlight below — and Sharm While obscurity helps certain market another divergence between the Dreams Tourism Investment (SDTI), participants, it does make it more bellwether EGX 30 (down 8.1%) and up 120.7% and 106.3%, respectively. In problematic to see no rational basis EGX 70 EWI (up 3.8%). On a year-to- addition, Wadi Kom Ombo Land Rec- for skyrocketing performances. date basis through June 15, the lamation (WKOL) jumped 66%. It is Elsewhere, the market has been former was off 8.8%, whereas the not clear what is driving these per- busy in part with financial results as latter was up 4.6%. Since the onset formances in terms of fundamentals. companies reported better annual of the COVID-19 crisis, small-cap However, it is often rumored — and first-quarter results, thanks to the stocks in general and the EGX 70 many times confirmed — that certain base-year effect. However, mergers EWI members, in particular, con- high net worth investors are behind and acquisitions news continues to tinued to surprise. Investors need to higher prices of stocks with small surface. For instance, U.A.E.-based look no further than both indices’ market caps and limited free-float Aldar Properties is interested in performance since mid-March shares. As it turns out, it is the new se- SODIC (OCDI), while many suitors 2020: the EGX 30 is down 3%, cret formula for many recent high-fly- seek Alexandria New Medical whereas the EGX 70 EWI is up a ing stock performances. Center (AMES) and Alexandria Na- whopping 121%. This period also Similarly, two real estate names saw tional Co. for Financial Investment ended two days short of the Central their shares jump during the period, (ANFI). Meanwhile, HA Utilities Bank meeting, which usually occurs namely Real Estate Egyptian Consor- wants to undertake a reverse every six weeks. As expected, policy tium (AREH) (up 55%) and Zahraa El- merger with Egytrans (ETRS), rates were left unchanged as they Maadi Investment & Development whose stock rose 25% during the have been for nine months. The last (ZMID) (up 53%). AREH is by far the period. While such M&A deals may time the bank cut interest rates was market’s top performer on a year-to- or may not come to fruition, market September 2020, by 50 basis points. date basis, up 365%. What is interest- participants will have to wait and Two stocks rose to the top during ing is that research analysts cover see if the new secret formula will this period: Rowad Tourism (ROTO) — none of the names mentioned above. stand the test of time.
Rowad Tourism (ROTO)
Rowad Tourism (ROTO) is not your typical 32.8 tourism company. It used to be majority- 31.06 30.14 owned by state-related entities, such as 28.76 Banque Misr, Misr Insurance, and Misr Life In- 27.81 26.33 26.2626.33 28.55 surance. However, their holdings have shrunk, allowing for more free-float shares, constitut- 24.68 25 ing 62% of its 17.3 million shares. Established in 22.49 1994, ROTO has a portfolio of companies op- 19.56 erating in tourism development, construction, leasing, and hotel management, one of which 15.82 17.29 is 5% owned by the Egyptian Tourism Co. (EGTS). ROTO’s market cap more than 12.28 12.31 12.1 12.44 14.59 doubled during the period to EGP 481 million, 13.22 12.39 with 35 million shares traded. 5/17/21 5/20/21 5/23/21 5/26/21 5/29/21 6/1/21 6/4/21 6/7/21 6/10/21 4/13/21 4/16/21
32 Market Watch
EGX 30
10806.23 10812.06 10780.9 10760.95 10731.96 10674.67 10531.83
10369.57 10301.58 10309.06 10240.21 10242.3 2152.26 2165.4 2156.73 2207.91 2156.73 2213.28 2174.84 2221.81 2229.03 2230.89
5/17/21 5/19/21 5/21/21 5/23/21 5/25/21 5/27/21 5/29/21 5/31/21 6/2/21 6/4/21 6/6/21 6/8/21 6/10/21 6/12/216/14/21 6/16/21
EGX 70
2383.5 2377.36 2384.44 2370.65
2330.87 2354.24 2334.24 2324.05 2295.24 2278.33 2286.99 2258.44 2266.83 2241.36 2225.59 2243.24 2230.59 2229.15 2215.78 2210.34
2185.13 2166.69
5/17/21 5/19/21 5/21/21 5/23/21 5/25/21 5/27/21 5/29/21 5/31/21 6/2/21 6/4/21 6/6/21 6/8/21 6/10/21 6/12/216/14/21 6/16/21
Tamayuz 2232.67 2229.03 2230.89
2218.44 2221.81
2218.44 2218.44 2207.91 2213.28 2208.87
2185.23 2179.92 2174.84 2172.15 2165.4 2164.17 2156.73 2156.73
2155.32 2156.73 2152.26 2144.71
5/17/21 5/19/21 5/21/21 5/23/21 5/25/21 5/27/21 5/29/21 5/31/21 6/2/21 6/4/21 6/6/21 6/8/21 6/10/21 6/12/216/14/21 6/16/21
Tamayuz index is an all-new weighted index, launched on June 23rd. It comprises companies with high free cash flows from operations. EGX stresses that this is not an endorsement of those stocks.
33 Changing World
Rethinking NUCLEAR POWER Could nuclear power experience a resurgence as a cheap and clean energy source as nations fail to meet their carbon emission goals? By Adam Skaria
Nuclear power is now firmly back in the spotlight as an the past few years. They increased. That has reinforced increasing number of experts, governments and NGOs calls for the "nuclear option." lead the charge to reposition it as a safe, reliable, and Currently, America is leading the way in nuclear power green energy source as the world comes to grips with to generate electricity. The U.S. Energy Information the effects of climate change. Administration says atomic power accounts for 60% of While many might be wary of it, given that it uses ura- carbon-free electricity in America, well ahead of water nium U-235, a highly radioactive material, nuclear power (19%), wind (13%) and solar (3%). Overall, nuclear power plants have seen many advances to make them safe. accounts for about 20% of America's energy mix. "But "Aside from its reliability ... nuclear power production is nuclear plants reduced capacity slightly during the eco- relatively compact, with a footprint of little more than nomic downturn spurred by the coronavirus pandemic five hectares per megawatt. It would take 3 million solar and lockdown," wrote Jeff McMahon for Forbes in June. panels or more than 400 wind turbines to provide the Co-directors of the Stanford Precourt Institute for same power as a 1-gigawatt reactor, according to the U.S. Energy, on Rethinking Nuclear's website, state, "If we are Department of Energy," said the report. to deeply decarbonize our grid in the long term, it would Accordingly, experts stressed we could not solely rely be prudent for [the world] to keep a diversity of options, on standard forms of renewable energy for all our elec- including nuclear." tricity needs. As Rethinking Nuclear put it, "A 'renewables only' scenario is unrealistic and not supported by sci- King of renewables? ence." With air pollution killing an estimated 7 million people per year globally, according to the WHO in 2014, some Nuclear option argue that nuclear power has the lowest "deathprint" of While Uranium U-235 is a finite mineral, yet the energy all electricity generation methods. Therefore, govern- produced from nuclear fusion produces no carbon diox- ments should consider it safe, provided the obligatory ide. Additionally, a small amount of U-235 could create a measures of safety are strictly applied. lot of energy. That makes it more sustainable for the In a 2013 study for NASA, Pushker Kharecha and James environment than fossil fuels. Hansen concluded, "Nuclear energy … needs to be Spring Power and Gas, a leading U.S. clean energy retained and significantly expanded in order to avoid or provider, "estimates the remaining amounts of uranium minimize the devastating impacts of unabated climate in the world can serve us for the next 80 years," it noted. change and air pollution caused by fossil fuel burning." "If we can turn nuclear fusion into a reality, the source of The Nuclear Energy Institute added, "Because of its energy would be sustainable for the foreseeable future." remarkable energy density, nuclear power requires far There are several reasons why climate advocates are less land than other renewables." That means that gov- considering nuclear power. First, it dramatically limits ernments could conserve more land, which reduces car- carbon emissions, thereby saving the planet and its bon dioxide levels in the atmosphere. Nuclear power also inhabitants while being affordable for developing uses far fewer materials (cement/concrete, glass, steel, nations. Second, solar, wind and hydroelectric power sta- fuel and others) than alternative sources. Solar farms tions might be easier and cheaper to build, but they can't require the most, followed by hydropower, wind and last- produce enough electricity to meet all demand. ly, geothermal plants. Another reason is that efforts to increasingly rely on Additionally, a 2017 study titled Energy Innovation renewable sources didn't dent carbon emissions over Reform Project stressed that regardless of a country's
34 Changing World
energy mix and self-sufficiency, it needs to include In a 2018 opinion piece for the Yale School of the nuclear energy. "While it is theoretically possible to rely Environment, Richard Rhodes maintained, "Studies indi- primarily (or even entirely) on variable renewable energy cate even the worst possible accident at a nuclear plant resources such as wind and solar, it would be significant- is less destructive than other major industrial accidents." ly more challenging and costly than pathways that When it comes to the associated cost of nuclear employ a diverse portfolio of resources," noted a 2017 arti- power, several countries have already proved that cle for the Proceedings of the National Academy of nuclear energy can be highly cost-effective in the long Sciences of the United States of America. term at the expense of more expensive and less efficient Figures from the U.S. Energy Information renewables. Administration's 2020 report on domestic consumption Rethinking Nuclear and Thoughtscapism, a blog and production show that despite two decades of public platform focusing on energy, stressed countries with a and private support, wind power produced less than sizable portion of their electricity generated by nuclear 7.3% of U.S. electricity in 2019. Likewise, solar accounted power, like South Korea and Finland, have demonstrated for less than 1.8%, and hydroelectric power is already that "going nuclear" is the way to create a sustainable close to capacity in the Northern Hemisphere. environment. Additionally, nuclear energy is not as heavily subsi- Debunking myths dized as wind and solar. However, that might change, as There is an undeniable stigma surrounding nuclear some call for governments to extend the same support power, dating to the Chernobyl nuclear disaster in 1986. as wind and solar plants by including nuclear stations in However, the U.N. Scientific Committee on the Effects of the government's renewable portfolio standards. As a Atomic Radiation (UNSCEAR) found "the worst nuclear result, atomic energy, which "could help the United accident in the world at Chernobyl resulted in 28 deaths States reduce its greenhouse gas emissions, is being among emergency responders and 15 deaths from thy- significantly disadvantaged by government policy," roid cancer between 1991 [and] 2005." wrote David Ropeik in a 2017 article for Issues in Science The second leak was in 2011 at the Fukushima nuclear and Technology quarterly journal. power plant in Japan, releasing high levels of radiation into the atmosphere and large amounts of radioactive- contaminated water into the Pacific Ocean during and well after the disaster. Yet, there was one death from radiation. Meanwhile, UNSCEAR found that cancer rates remained stable even among plant workers. Additionally, there was no impact on birth or hereditary defects. However, scientists said that the leak would create a "theoretical" increased risk of thyroid cancer among most exposed children.
35 Changing World
Different approaches power plant (KANUPP) Unit-2 (K-2), a third-generation state-of-the-art reactor with improved safety systems," However, countries are approaching the prospect of Sana Jam