February | 2014 | World Finance

Dr Kamal Munir on whether people’s confidence in microfinance can ever be restored | Video

Posted on February 28, 2014March 6, 2014 by Ashton Wenborn

Microfinance was once considered a revolutionary tool, that would end poverty and empower communities. But tales of borrower suicides and the exploitation of the poor have tainted its image. Dr Kamal Munir from Cambridge Judge Business School, a lead professor of social change and stability, discusses why microfinance is disappointing the developing world and whether there’s a better alternative to it for the world’s poor.

World Finance: Well Dr Munir, there were such high hopes for microfinance. But five years on, why is it said to have disappointed the developing world?

Dr Kamal Munir: So how did we get from the ultimate panacea for global poverty alleviation, to what we see now? I think at least three things happened. As we scaled up and donor money dried up, more private capital came in, looking for returns on this. Now, it is one thing to engage in rhetoric suggesting that everyone, all poor women in the world, are entrepreneurs, but quite another to actually make them so. The mortality rate among small businesses is particularly high, so it was never really going to succeed. So one thing was, during scaling up, as subsidies went away, as operations got bigger, the whole thing simply transformed into what we call minimalist microfinance. Another thing was mission drift. Very quickly, people realised that the poorest were not always the most credit-worth people, so they shifted from the poorest to what they call poor. So the average loan size in this industry has been gradually going up.

The mortality rate among small businesses is particularly high, so it was never going to succeed

World Finance: Microfinance has received a lot of criticism for imposing debt, with some people even going as far as to say that some institutions are profiting from the ignorance of the poor. Well surely this is just about institutions profiting from some of the world’s poorest people?

Dr Kamal Munir: The majority if the assets that are being held in this industry are being held by banks now, who are looking for profits. The costs do tend to be high. If you are going to give out a loan to let’s say 10 people, and the loan size is £100,000 each, you only have 10 people to process. Now you could be dividing that amongst 1000 people, then the processing costs goes up. So the operational costs in microfinance do tend to be high. But still, they should not more than 10-15 percent of the cost of funds. What we see is much more than that, which actually falls into loansharking, which means that we are in the territory where people are making profits off the back of the poorest, the most vulnerable, needy people in society.

World Finance: One of the most contentious areas of microfinance is the level of interest on the loans as we just spoke about, so what happens if they can’t pay?

Dr Kamal Munir: What is supposed to happen is that they will be denied a loan in the next cycle, or there will be peer pressure exerted by the group, because it’s all based on group lending. What happens is, in order to escape that kind of pressure, in order to retain my social capital, I will try to go out and borrow from the village feudal lord, or the money lender, or somebody else in the village, and what often happens is that slowly I will exhaust all the different sources from whom I can borrow, or I will borrow on a short term basis from someone at very high interest rates, and I will get into a vicious cycle of debt.

[P]eople realised that the poorest were not always the most credit-worth people, so they shifted from the poorest to what they call poor

World Finance: Do you think that microfinance concept then can be revisited to work better?

Dr Kamal Munir: If we are looking for poverty alleviation, we should know that so far the impact on poverty has been zero, off microfinance. And secondly, where poverty has been alleviated, has it been alleviated because of the success of microfinance, or has it been alleviated because of other reasons? So, for example, the alternative could be job creation. Countries that have pulled themselves out of poverty have done so by industrialising, by creating jobs, and the logic is simple to grasp. Because let’s say I give out one loan of £100,000 to one person, who sets up a stitching centre, or a factory to make garments, and employs 500 women there as stitchers. On the other hand, I give out loans of $200 each to let’s say 500 women. Now, which venture do you think has a higher probability of success?

World Finance: Well finally, are there better alternative to microfinance for the world’s poor?

Dr Kamal Munir: Micro-enterprises normally are businesses that help somebody survive, if that. And they do not generate employment, and they don’t produce enough returned earning which can be reinvested in the business and the business can be grown. So I think we would be much better off focusing on small and medium size enterprises.

World Finance: Dr Munir, thank you.

Dr Kamal Munir: Thank you very much.

EBRD’s commitment to infrastructure investment

Posted on February 28, 2014February 27, 2014 by Ashton Wenborn

How to pay for infrastructure investments is a vexing issue in developed and emerging markets alike. It is also a top priority for both the public and private sectors, with widespread acknowledgement that the quality and robustness of infrastructure are key factors that affect all countries in a globalised investment landscape.

Economic growth also hangs in the balance. According to recent global analysis by BCG, an increase of $1trn in infrastructure investment worldwide would unleash approximately $1.5trn in additional economic activity each year. Furthermore, a major Africa-wide study – Africa’s Infrastructure: A Time for Transformation, by the World Bank – concluded that a doubling of infrastructure investment levels on the continent (from $45bn to $90bn per annum) would boost GDP by 2.2 percent.

Infrastructure investment not only stimulates economic activity in the short-term during construction, but also drives secondary job creation in the private sector as economic competitiveness improves. Despite being widely acknowledged by governments and the private sector, not enough infrastructure investment is occurring globally.

Regardless of the financing modality chosen – public-private partnership (PPP) or traditional public sector financing – there are three basic commonalities present in all successful infrastructure projects:

A strong underlying business case, generating an economic return through sufficient, lasting demand for the new or refurbished infrastructure;
A robust project structure to achieve bankability, legal enforceability, political and social buy-in and environmental compliance;
Sustainable funding sources, either from user charges alone or in combination with predictable, stable and credible public sector support.

Based on the European Bank for Reconstruction and Development’s (EBRD) experience over the past 20 years, infrastructure projects containing these elements will attract ample financing.

Approach to financing
The EBRD has broad and varied experience involving infrastructure projects using various forms of private sector participation (PSP) approaches, encompassing both PPPs and projects funded with the public sector according to the user pays principle, typically using the public service contract (PSC)/public service obligation (PSO) model. Over the past 15 years, the EBRD has funded some 40 PPPs in the infrastructure sector, including water/wastewater systems, roads, airport terminals, urban transport, district heating, ports and national rail. To date, it has financed €2.3bn in direct private sector financing. These projects leveraged an additional €3.5bn in other private financing from commercial lenders or other co-financiers. The demand for PPPs in the EBRD region remains steady, and has persisted throughout and beyond the 2008-09 financial crisis. In fact, certain countries, such as Russia and Turkey, are planning large pipelines of infrastructure projects.

[T]he quality and robustness of infrastructure are key factors that affect all countries in a globalised investment landscape

Using the PSC/PSO model, the EBRD has financed some 375 projects across the water/wastewater, urban transport, rail, district heating and solid waste sectors, totalling approximately €6.3bn. Importantly for the municipalities and ministries of finance, these projects are typically structured as non-sovereign, off-balance sheet in respect of the municipalities/sovereign, with the municipal utilities (or national transport operator) acting as borrowers. While full-cost recovery tariffs are pursued wherever possible, when public subsidies are necessary based on policy or affordability grounds, performance-based contracting holds the management of these public utility companies accountable under the PSCs/PSOs. This PSC/PSO model has proven resilient over the past 15 years, having withstood serious crises, including the fallout from the financial crisis.

The funding challenge
Infrastructure competes with other social and economic priorities for public resources. In this context, governments in both emerging and in OECD countries find it increasingly difficult to reconcile the financial demands for infrastructure financing based on tax revenues or state borrowing with the need for fiscal sustainability and the urgent need to reign in public debt levels. The ability of governments to deliver infrastructure by means of conventional direct borrowing or funding, known as the ‘general revenue model’, is consequently diminishing rapidly.

It is often not the lack of financing for infrastructure that is the problem – testified by the numerous and very substantial multi-billion dollar private and public infrastructure funds that have been established over the past decade, and that remain, in many instances, under-utilised or even largely undisbursed. Clearly, there are other, more fundamental, issues at play; namely, the lack of properly robust funding mechanisms and the lack of adequate project preparation.

A key issue for accelerated infrastructure development is the ability to pay for infrastructure and its operation. Only if a project has clarity and reasonable predictability of funding sources for capital expenditure and operation and maintenance can issues such as financing and delivery modality be tackled successfully. As such, the funding issue is at the heart of an accelerated infrastructure delivery. Politically, this is also the most uncomfortable issue to address. The easy option of funding through general tax revenues (clandestine funding) has been largely exhausted in most countries. Also, the failure of PPPs to make a larger contribution to worldwide infrastructure delivery can be explained to a significant degree by an inadequate funding basis. Even countries that are most active in using PPPs (such as Chile, Taiwan and the UK), only manage to fund between 10-15 percent of their entire infrastructure investments through PPPs.

Determination to deliver a piece of infrastructure must therefore be coupled with security and sustainability of funding sources. If a credible and strong mechanism to deliver payments is lacking (for example, fare box/user charges, government payments, payment enhancement/guarantee mechanisms, value capture mechanisms, or some combination of all three), the private sector will not engage as developer and financier of infrastructure projects.

It follows that there are certain necessary conditions for accelerated infrastructure delivery, namely the increased application of the ‘user pays’ principle to complement government funding; the need to find and apply realistic complementary means of financing; and the need to roll out solid contractual payment arrangements between the public sector and operators (such as PSCs/PSOs).

Case study: The Romanian water sector

Once robust funding approaches are established, successful examples of systemic uplift of investment levels in infrastructure occur. Concrete examples of the application of increased – but affordable – user charges are well documented. For example, in Romania’s municipal water sector, over the past 15 years, gradually increased user charges have led to significant capital expenditure investment in the modernisation of the country’s water and wastewater sector. The EBRD has been involved in Romania’s water and wastewater sector since the mid-1990s, and the sector-wide revenue growth has increased from approximately $400m in 1994 to approximately $1.4bn by 2011 in real terms. Hence, some $950m in additional revenues is now being collected annually by the country’s water operators compared to the pre-reform situation in 1994.

It is important to understand how this level of revenue growth – which was based on sustained tariff rate increases well above inflation rates – was achieved. First, as a matter of principle, the tariff increases were instituted in connection with the commencement of civil works to modernise the underlying infrastructure, and not once the water service actually materialised 24 to 36 months following the completion of works. Using this method, the water companies and local political leaders informed water customers that the civil works under the roads and at the water plants needed to be paid for primarily by users, and that the works would result in improved service.

When service quality did improve substantially over time, the utility companies gained the users’ trust. The rise in water tariffs has continued to the present day. Today’s average tariff of nearly $1.50 per cubic meter represents a 900 percent increase in real terms since the mid-90s, and yet tariffs remain affordable for most households. The utility companies have flourished as businesses, with many now running healthy cash surpluses. Using a conservative financial gearing ratio of 3:1, this means that the water sector’s operators are now able to make additional capex investments of $3bn versus the pre-modernisation situation of the 1990s. This level of self-financing capability, created over time by improving the underlying funding of municipal infrastructure, is the ultimate test for any multilateral development bank.

Value capture mechanisms
Another source of funding that is increasingly being used internationally is the application of value capture mechanisms, of which there are two main forms: a) a single lump sum payment by the private sector, typically property owners, developers, and/or commercial interests, made up-front (or during construction) to the public sector to offset some of the cost on the public purse of the new infrastructure; and b) an ongoing funding mechanism, which requires recurring payments by the private property owners in the form of location benefit levies, tax increment financing, betterment taxes/special assessment districts, and ‘joint development’ approaches, whereby commercial space is leased out by the infrastructure owner in the vicinity of the new infrastructure. However, value capture is no panacea in the infrastructure space: the first form requires that the public can effectively assemble and group land for development and apply an acceptably assessed increase in land value prior to the infrastructure’s implementation (Hong Kong’s metro system is the best known example, where more than 50 percent of all revenues to the metro company come from value capture at new rail stations); while the latter requires a properly functioning land/property tax system, which remains uncommon in many emerging market countries. London’s new Crossrail line is being partially paid for using a special increase in business property tax levied since 2011 for the next 24 years on all businesses in Greater London. This is projected to create a fresh revenue stream of £4.1bn of a total of £16bn for the new line. The new funding is being used by the Greater London Authority to service the bond obligations that the GLA has taken on to contribute to the project alongside national government financing.

Despite these limitations, particularly for the transport/urban transport sector (such as urban rail), value capture approaches represent the potential to create a broader pool of projects than would otherwise be possible.

Project preparation
The second bottleneck for infrastructure delivery is the difficulty the public sector has in creating a sustained delivery framework to prepare projects adequately and efficiently. This impacts on the pace of delivery for public infrastructure projects in general, and often makes the development of more complex PPPs impossible.

A sea change must occur in the way project preparation is supported and managed. International financial institutions have a role to play in this. Clearly, a greater number of projects must be properly prepared and structured to become bankable in order to change the dynamic of investment levels. From the EBRD’s point of view, while infrastructure financing needs are high, true progress will not be made in reducing the much-discussed investment gap until the project-related ‘institutional gap’ is addressed. For this to occur, comprehensive technical assistance and institutional strengthening is required, where the goal should be to build a critical mass of local experts in the public sector who are able to present well-structured projects to the market on their own accord using their own internal capacities. This is the ultimate litmus test over the medium- to long-term for the effectiveness of any IFI or bilateral donor.

The EBRD’s experience since the early 1990s working in Eastern European economies has shown that well-structured and well-prepared projects will find financing. With a greater focus on selecting projects with a sound business case, underpinning the investment with revenue generation from users, and the use of sound regulatory tools such as public service contracting, a systemic uplift in infrastructure investment can occur. With the right type of support and approach we believe that this experience can be replicated in other emerging market regions.

Iberdrola’s commitment to sound corporate governance

Posted on February 28, 2014February 27, 2014 by Ashton Wenborn

Over the past few years, investors and stakeholders have become more attuned to the importance of corporate governance, demanding that companies recognise their responsibilities to the communities in which they work and the many people affected by their actions. Companies today are required to implement good governance and responsible initiatives across all they do if they are to be considered successful.

“Good governance requires a constant effort to communicate governance policies to all your stakeholders and not just investors,” says Ignacio Galán, Chairman of Iberdrola. “Corporate sustainability and responsibility should be embedded in every aspect of the company’s life. It’s not just about talking but about doing.”

The company is a model of industrial success that has prioritised clean energy and has generated value for its shareholders for more than a century. “We believe that a common sense of belonging and trust results in a much higher productivity,” says Galán. “Without ethics and corporate governance practices, it would hardly be possible to align employees with business goals and it’d be impossible to run a successful business. Therefore, we need good governance and we need our employees to believe in corporate social responsibility. Although management teams lead changing processes, it is actually the employees who implement those changes and their adaptability that delivers.”

This focus on matters of corporate governance has had a profound impact on the energy industry. Whether it stems from governments, regulators, stakeholders or communities, companies are subject to unrelenting scrutiny from all angles. “It is in the industry’s best interest to be as transparent as possible,” says Galán.

Energy leader
Iberdrola is the leading electricity utility in Spain by market share, and has established itself as one of the main operators in the UK and the US, where company investments have increased three fold over the last five years. It has consolidated its leadership position in Brazil, through Neoenergia and the acquisition of distribution company Elektro, and is also Mexico’s largest independent power producer with more than 5,000 megawatts (MW) of generating capacity that will be increased significantly in the coming years (see Fig. 1). With total assets worth $30bn in the US, Iberdrola is the country’s second-largest wind power producer and provides electricity and gas to a population of six million throughout New York and New England.

In addition to Iberdrola’s extensive industry experience, corporate governance has played an important part in driving the company’s longevity. “Given that Iberdrola is over a century old and engages in a very traditional and mature line of business, an emerging trend in corporate governance towards the end of the 20th century posed important challenges, which we continue to find responses to,” says Galán.

The Bilbao-based energy utility is a private sector company whose focus lies primarily on energy generation and distribution, with an emphasis on security of supply and high quality service. Based on market capitalisation alone, Iberdrola is among Europe’s top five energy providers.

With an overall workforce of 30,600 employees, the company has a generation capacity of some 46 gigawatts (GW) serving 100m people worldwide. However, what really differentiates Iberdrola is not the scale of its business but its diversified generation mix.

“Iberdrola’s commitment to environmentally friendly energy sources has consolidated us as the world leader in renewable energies,” says Galán, in reference to the company’s 24,000+ MW renewable capacity; mainly wind and hydro assets. “Of the total generation capacity, 60 percent is free of greenhouse gas emissions, and the environmental policy of the group has positioned us as number one in this space, according to the Dow Jones Sustainability Index.”

Environmental responsibility
The energy industry has suffered its fair share of criticism in recent years, especially with regards to carbon emissions and pollution. However, Iberdrola has demonstrated how it is that industry leaders can address longstanding environmental concerns by employing forward-thinking initiatives and a responsible company culture.

“Sustainability is part of Iberdrola’s DNA,” says Galán. “Here we have a holistic approach to sustainability and aim for long-term consumer, shareholder and employee value. We believe that sustainability is not only related to environmental issues, but also to how the entire business operates and its impact on society, and that sustainable development has to be implemented through responsible principles and practices, while taking into account the needs and expectations of our shareholders.”

Iberdrola’s sustainability initiatives extend to the communities in which it works, as well as the company’s hundreds of thousands of shareholders worldwide. Galán believes transparency to be a crucial part of Iberdrola’s policy, and sees independent input as an effective way of identifying how the business is performing, “as it is independent parties who approve our sustainable footprint as a whole.”

“In terms of environmental achievements, we are a world leader in wind energy and a heavy investor in new technologies,” he says. “We have a fund called Perseo, which invests in start-ups dedicated to research and development in new energy generation technologies as well as those allied with the objective of global carbon emissions reductions.”

It’s not just about talking but about doing

Iberdrola’s continued efforts have seen the company take a prominent place in the Dow Jones Sustainability Index and the Carbon Disclosure Leadership Index. And in keeping with its strict environmental initiatives, the company has outlined a pledge to keep emissions per kWh at least 20 percent below that of the anticipated European electricity average in 2020.

In the period through 2003-13, Iberdrola allocated €25bn to the development of green energies, which represents the highest figure ever invested by a company in this field, on the basis of known data. Based on this short history of sustainable investment, Iberdrola’s commitment to a more sustainable world and an economy that creates value for the community is plain to see.

Factors for success
Galán is quick to dismiss Iberdrola’s industry expertise as the company’s single most important measure of success. “Longevity is indeed an indicator of a successful and sustainable project, but it’s certainly not the only one. In order to increase our chances of evolving and growing all the time, we need to have a strong identity, adapt to an ever-evolving environment, and balance our relationships with people and institutions both inside and outside the company. We have engaged in a process of continuous improvement in corporate governance processes and practices, and I think the company has reached a commitment to its shareholders, many of whom are pensioners who have trusted their lifetime savings.”

Iberdrola is one of Spain’s most active companies in terms of shareholder engagement, which is something the group prides itself on. In recent years, Iberdrola has implemented the best practices of corporate governance, which is reflected in the composition of the company’s governance bodies.

Total transparency
Iberdrola’s board of directors has experienced its fair share of changes over the past 20 years. Back in 1991, after the merger of the two companies that formed Iberdrola, the board consisted of 38 members. Fast-forward to the present and the board now seats 14 – of whom 10 are independent parties from four different nationalities – and includes four women.

The company’s Appointments and Remuneration Committee ensures that nominees are upstanding and qualified persons widely recognised for their expertise and competence, seeking to ensure that the selection of candidates results in an appropriate equilibrium of the board that enriches decision-making and contributes multiple points of view. Also, to counterbalance the role of the executive chairman, Iberdrola appointed a lead independent director in 2009, who was endowed with the powers to call board meetings, include new items on the agenda, and coordinate non-executive directors.

The company’s reputation with regards to corporate governance is unparalleled in Spain

“The board is continually reviewing and enhancing its corporate governance processes, with the aim of providing total transparency,” says Galán. And the communication between corporation and shareholder extends further still. “We encourage the participation of all shareholders,” he says, “so that we can gain a thorough understanding of our shareholder base. We believe that providing a sound basis for pro-active shareholder engagement is fundamental for the continued success of the company.

“Today, more than 650,000 retail and institutional Iberdrola shareholders throughout the world have invested in our company, and in return we offer them a model that is reliable, predictable, sustainable and profitable. We are an independent company that is not controlled by any particular shareholder, and instead, all shareholders are the central figure in Iberdrola’s corporate governance system.”

The company’s reputation with regards to corporate governance is unparalleled in Spain, best evidenced by Iberdrola being the company with the fewest votes against board proposals of all the blue-chip index Ibex-35 constituents.

Iberdrola’s commitment to matters of corporate governance shows an awareness of how decisions made by corporates can affect individuals on a global scale. The answer to a sharpened focus on matters of governance, says Galán, “is engaging with all shareholders, and allowing them to participate in key decision-making processes.”

Boris’s advisor insists Western economies must embrace change | Video

Posted on February 28, 2014February 28, 2014 by Ashton Wenborn

The EU and UK economies are said to be improving, but much change is still needed in order to cement a stable future, says Gerard Lyons, the Mayor of London’s chief economic advisor.

World Finance: Well Gerard, what do you look for to gauge the strength of the economy?

Gerard Lyons: There’s a whole host of different factors, the quantitative measures are very important, we have economic statistics about the current state of play. But also you need to actually dig a bit deeper and look at the underlying structure of the economy, because we not only want an economy to do well in terms of the near-term, the cyclical factors, we very importantly want the economy to be resilient and sound for the future.

[We] want the economy to be resilient and sound for the future

What this crisis did highlight is the disparities both within cities and across economies. So you have people who are still unemployed, you have people on zero hour contracts, you have people in part time work, so it’s important that you actually don’t just look at those people that are doing well, you actually create an enabling environment, an environment to basically serve the needs of everyone. It’s important to take, in my view, a top-down approach to what’s happening to the global economy.

What we’ve seen is how interlinked the global economy has become. The emerging economies – China, India, Brazil – maybe five, 10, 15, 20 years ago, they would have been seen as remote for many people here in the west. But now what we’ve seen, not just because of the crisis, but in terms of what you, or I, or indeed everyone buys, the brands and everything, we now very much live in the global economy. And it’s interesting to note that despite the financial crisis in the west, the world economy had continued to grow, so the important thing is for us in the west, in the UK and in London, is to continue to position ourselves to succeed in this changing and growing global economy.

World Finance: Looking to the improving EU and UK economy now, and have you seen other economic policies or stimulus that countries have implemented that could also be applied here to aid recover?

Gerard Lyons: Whichever economy one looks at, the outcome depends on the interaction between the fundamentals, policy and confidence, and when one looks at the UK the fundamentals did really take a big hit as a result of the crisis, but the economic fundamentals appear to be improving. The policy environment has been very much geared to initially addressing the crisis; that has, in the last 12 months or so, focused more on ensuring recovery gathers momentum. And monetary policy in some respects has acted as the shock absorber, interest rates remaining low, liquidity being added, and the fiscal situation is starting to be brought under control.

London: A hub for the highly-skilled

1.5m

High skilled jobs in London

1.2m

New York

800,000

Los Angeles

650,000

Hong Kong

As a result, if thinking about fundamentals, policy, and the last thing, confidence, because of that on the fundamentals and policy side, confidence now is finally starting to really improve here in the United Kingdom. It’s initially consumer confidence, as demands picks up it’s now feeding into business confidence as well, banks are also lending a lot more, particularly in terms of the south-east of England, but also in terms of clusters across the country as well.

World Finance: How do you see the future of the UK as a financial capital?

Gerard Lyons: There was a very interesting report that came out from Deloitte this year, talking about international cities, and looking at the type of high skilled jobs that you need, and what was staggering was how London really was well ahead of the competition. According to that survey, 1.5m high skilled jobs are here in London. The next closest city was New York at 1.2m, then it was Los Angeles I think just under 800,000, then Hong Kong about 650,000.

So what we have here in London is high skilled jobs not just in the banking sector. Even though we had a financial crisis, the reality is that when you look outside the banking sector here in London, at the business, professional, legal, consultancy services, they all did pretty well.

World Finance: Well finally, you recently suggested during an event at the Pattison Institute of International Economics that you foresee a huge upturn in economic prosperity. Where is this stimulus coming from?

Gerard Lyons: There is already an upturn in prosperity, but the prosperity has been seen in terms of the last few years very much across the emerging world. The western economies were hit hard by the financial crisis. But the important thing about globalisation and the fact that more people across the world are being brought into the global economy, is that the net result is that the world economy gets bigger.

But in moving from where we are now to where the world economy will be in the future, there are some winners and there some losers. So the important thing is for economies and different sectors in the west to adapt and change, so when you look at the world economy there are certain industries, certain creative industries, sporting industries, financial sectors, that might appear to be better positioned, so it’s very important to bear in mind that in terms of looking at the winners and losers, economies in the west not only play to their strengths, but try to actually make sure that their people have the right skill sets to be able to adapt.

The challenge is that many people don’t like change, so what we have to bear in mind is that we have to embrace change, but in embracing change we don’t only play to our strengths, but we actually create the skill sets that allow economies to be able cope not only with shocks, but seize the opportunities as well.

World Finance: Gerard, thank you.

Gerard Lyons: Pleasure.

Pension Fund Awards 2014

Posted on February 28, 2014August 7, 2019 by Ashton Wenborn

Austria
VBV Pensionskasse

Belgium
Integrale

Brazil
HSBC Fundo de Pensão

Canada
British Columbia Teachers Pension Plan

Caribbean
Guardian Life of the Caribbean

Chile
AFP Capital

Colombia
Colfondos

Croatia
PBZ Croatia Osiguranje

Czech Republic
PF – Ceske sporitelny

Denmark
Industriens Pensionsforsikring

Finland
Fennia

France
EADS

Germany
Allianz

Iceland
Almenni

India
Tata AIG Nirvana

Ireland
Allianz Group Pension Scheme

Italy
Fonchim

Mexico
Afore XXI Banorte

Netherlands
Pensioenfonds Horeca en Catering

Norway
Nordea Norge Pensjonskasse

Peru
Prima AFP

Poland
ING PTE

Portugal
CGD Pensoes

Russia
Stalfond

Serbia
Dunav Voluntary Pension Fund

South Africa
Sentinel & MEPF

Spain
Ibercaja Pension

Sweden
Kapan

Switzerland
CERN Pension Fund

Turkey
Garanti Emeklilik

UK
Pension Protection Fund

Uruguay
Republica AFAP

Islamic Finance Awards 2014

Posted on February 28, 2014August 7, 2019 by Ashton Wenborn

Best Islamic Bank, Afghanistan
Ghazanfar Bank

Best Islamic Bank, Algeria
Al Salam Bank Algeria

Best Islamic Bank, Azerbaijan
Kauthar Bank

Best Islamic Bank, Bahrain
Bahrain Islamic Bank

Best Islamic Bank, Bangladesh
Al-Arafah Islami Bank Limited

Best Islamic Bank, Brunei
Bank Islam Brunei Darussalam Berhad

Best Islamic Bank, Djibouti
Saba Islamic Bank

Best Islamic Bank, Egypt
ADIB Egypt

Best Islamic Bank, Indonesia
Bank Syariah Mandiri

Best Islamic Bank, Jordan
Jordan Islamic Bank

Best Islamic Bank, Kazakhstan
Al Hilal Islamic Bank

Best Islamic Bank, Kenya
First Community Bank

Best Islamic Bank, Kuwait
Kuwait International Bank

Best Islamic Bank, Lebanon
Al Baraka Bank Lebanon

Best Islamic Bank, Malaysia
CIMB Islamic Bank

Best Islamic Bank, Nigeria
Jaiz Bank

Best Islamic Bank, Oman
Bank Nizwa

Best Islamic Bank, Pakistan
Burj Bank

Best Islamic Bank, Qatar
Qatar Islamic Bank

Best Islamic Bank, Saudi Arabia
Alinma Bank

Best Islamic Bank, Senegal
Banque Islamique du Sénégal

Best Islamic Bank, Switzerland
Bank J Safra Sarasin

Best Islamic Bank, Turkey
Türkiye Finans Katılım Bankası

Best Islamic Bank, UAE
Dubai Islamic Bank

Best Islamic Bank, UK
Bank of London and the Middle East

Special Global Recognitions

Islamic Banker of the Year
Ahmad Meshari Muhaidi, Acting CEO at Qatar First Bank

Business Leadership and Outstanding Contribution to Islamic Finance
Musa Shihadeh, Vice Chairman, General Manager at Jordan Islamic Bank

Best SME Islamic Finance Provider
Qatar Islamic Bank

Best Islamic Asset Management Company
KFH Capital

Best Islamic Fund Management Company
Saudi Fransi Capital

Best Islamic Private Wealth Management Company
Bank J Safra Sarasin

Best Islamic Finance Advisory Firm
KFH Capital

Best Sukuk Deal
GACA Sukuk, HSBC and NCB Capital

Best New Islamic Fund
AlAhli Global Growth and Income Fund, NCB Capital,

Best Takaful Provider
Weqaya Takaful Insurance and Reinsurance Company (KSA)

Best Islamic Finance Training Institution
ETHICA Institute of Islamic Finance (Dubai – UAE)

Mega Projects Awards 2014

Posted on February 28, 2014August 7, 2019 by Ashton Wenborn

For full information on the winners, please click here.

MASDAR CITY

MONTERREY VI (CONAGUA)

GDF SUEZ PEAKERS IPP

THIKA IPP

BORDO PONIENTE WASTE TO ENERGY

TARAHUMARA PIPELINE

DAUVIN (SENAGUA)

LONDON ARRAY

KHAZAR ISLANDS

CIDADE INTELIGENTE BÚZIOS

ALPTRANSIT

EMAL PHASE II

ALQUEVA DAM

BIOCEÁNICO ACONCAGUA CORRIDOR

FUJISAWA SUSTAINABLE SMART TOWN

JAKARTA MASS RAPID TRANSIT

AKALTARA ULTRA MEGA POWER

AL JUBAIL DESALINATION PLANT

HYDERABAD METRO

SHANGHAI TOWER

Corporate Governance Awards 2014

Posted on February 28, 2014August 7, 2019 by Ashton Wenborn

Angola
Banco de Fomento Angola

Australia
Telstra

Bahrain
Bahrain Bourse

Belgium
Solvay

Brazil
Bradesco Bank

Canada
Intact Financial Corporation

Chile
Empresas Copec

China
Ping An Insurance Group

Colombia
Empresa de Energía de Bogotá S.A.

Croatia
INA-Industrija Nafte

Denmark
Grundfos Holdings

Finland
Metso Corporation

France
Veolia Environnement

Germany
SAP AG

Hong Kong
CLP Group

India
Nucleus Software

Israel
Teva Pharmaceutical Industries

Italy
Pirelli

Japan
Sumitomo Mitsui Trust Group

Kuwait
CRC (Al-Tijaria)

Malaysia
AmBank Group

Mexico
Grupo Financiero Banorte

Nigeria
Zenith Bank

Norway
Norsk Hydro

Oman
Ahli Bank

Pakistan
Engro Corporation

Portugal
Inapa

Romania
OMV Petrom

Saudi Arabia
Ma’aden

Singapore
SingTel

South Africa
Woolworths Holdings

South Korea
KB Kookmin Bank

Spain
Iberdrola

Sweden
Swedbank

Switzerland
Nestlé

Thailand
TISCO Financial Group

Turkey
TSKB

UAE
Abu Dhabi Commercial Bank

UK
Vodafone Group

USA
American Express

Tamer Group at helm of healthcare in Saudi Arabia

Posted on February 28, 2014February 27, 2014 by Ashton Wenborn

Saudi Arabia has made remarkable progress in the past decade: heavy investment in social development, reduced public debt and relaxed investment regulations and tax laws are just a few of the initiatives put in place by the government to encourage a climate for private investment.

The young population is better educated and more willing to accept change than it previously was, and Western social values are not seen in the same negative light they once were. Nowhere in the country has this social progress been more visible than in the healthcare sector, where new hospitals and clinics have sprung up across the country, answering the needs of a growing, multifaceted workforce.

Humble beginnings
Back in 1922, when a young doctor by the name of Mohammed Said Tamer established the Kingdom’s first pharmacy in Jeddah, there was an acute need for medicine in the city both for residents and for the hundreds of thousands of pilgrims that passed through it on their way to the holy cities of Mecca and Medina. Dr Tamer established the pharmacy to fill this void and provide a service to the community.

Over nine decades later, that modest pharmacy has expanded to become the leading conglomerate operating in the fields of pharmaceuticals manufacturing, medical instruments and supplies, high-end third-party logistics services, pharmaceutical retail, and the distribution of nutrition, wellness, beauty and prestige products. The group’s companies include joint ventures with some of the leading pharmaceutical companies in the world.

For instance SAJA, the Saudi Arabian Japanese Manufacturing Company, is a joint venture with leading Japanese pharmaceutical companies Astellas and Daiichi Sankyo, which are the second- and third-largest pharmaceutical companies in Japan, respectively.

Tamer Group has continued to outpace the healthcare market in the last five years, increasing its business an average of 25 to 35 percent per year

Tamer Group companies invest in state-of-the-art medical facilities such as the JCI-accredited International Medical Centre (IMC) in Jeddah, and in Arab Company for Pharmaceutical Products (ARABIO), an emerging niche in biopharmaceuticals – the first biological manufacturing facility in the Gulf Cooperation Council (GCC) medical sector.

Partnership is an area of focus for the company. In today’s complex business environment, cooperation and synchronisation of strategies is important in reaching desired objectives. Partnership provides a better model for collaboration and ensuring satisfied customers. The company’s principals are its partners, and together they are one team.

Looking forward, the Tamer Group is focused on partnering with local and international firms to expand its drug manufacturing business. The company recently purchased 500,000 square metres of land on which to build logistics and manufacturing facilities. It is also working to increase its footprint in the retail sector, and has established a joint venture with two large pharmaceutical distribution companies to invest in a chain of pharmacies in the Kingdom and neighbouring countries.

Tamer Group’s third-party logistics company has established an efficient 3PL that was selected by major international companies like Nestlé and Kraft (Mondelez) to be their third-party logistics services provider across the Kingdom.

Healthcare in Saudi Arabia
Tamer Group has continued to outpace the healthcare market in the last five years, increasing its business an average of 25 to 35 percent per year. As the market has matured, it has evolved from a simple product distribution company to a full-scale healthcare institution, which imports, manufactures, distributes and promotes products, as well as providing after-sales service to the healthcare community.

Healthcare in Saudi Arabia

$5bn

Estimated worth of the Saudi Arabian pharmaceutical market

4,000

Pharmacies

6,000

Registered and generic medicines

4.3%

Amount of GDP spent on healthcare

The Saudi Arabian pharmaceutical market is estimated to be worth over $5bn, and is growing. Over 4,000 pharmacies distribute around 6,000 registered and generic medicines, making Saudis the largest consumers of pharmaceutical products in the GCC and MENA region. Annual health costs are estimated at over $600 per capita, and the Saudi Arabian government spends 4.3 percent of its GDP on healthcare, making it the biggest spender in this sector.

There are over a dozen pharmaceutical plants producing mainly generic drugs, but with 1.6 doctors per 1,000 population, and a dearth of beds, the market is underdeveloped: the Kingdom still imports over 80 percent of its medicines.

The government has encouraged increased private sector engagement in healthcare and, recently, the Tamer Group has worked with several prominent institutions to establish ARABIO, a vaccine factory to supply vaccines to Saudi and neighbouring countries in the MENA region. The government considers this a strategic commodity that will be available in the event of a crisis or pandemic, and the ARABIO has taken the lead by opening the first vaccine production facility in the Middle East.

Human capital development
But growth and prosperity has not distanced the Tamer Group from the spirit of philanthropy and service to the community that characterised it from the very beginning. That spirit continues to this day and pervades all aspects of the group’s operations, as Tamer recognises that human capital is vital to its prosperity. As such is at the centre of its attention, from its commitment to developing its employees to its community, environmental and social programmes.

“Empowering, training, developing and matching the skills and competencies of the Saudi nationals to the requirements of the job market is key to the success of the economy of this country and of the Tamer Group’s future. The private sector needs to focus its efforts to support the government’s programmes of nationalisation and to strive to cover the mismatch in competencies between the educational offering and the practical skills and specialisations required in the private sector, particularly when it comes to healthcare.

“The shortage of Saudi pharmacists in the Kingdom, which is estimated at 30,000 plus, is one of the examples of this mismatch,” said Ayman Tamer, Chairman and Managing Partner of the group.

Hiring and training women is also a priority for Tamer Group, and it aims to increase the number of female employees from 60 at the moment to 300

The Tamer Group takes it upon itself to train its employees on the job. Having set up training academies, the group enhanced the overall performance, job satisfaction and retention rate of new employees thanks to its carefully designed intensive training programme, which is co-sponsored by the Human Resources Development Fund. Hiring and training women is also a priority for Tamer Group, and it aims to increase the number of female employees from 60 at the moment to 300, or 10 percent of its staff, and to encourage them to participate and compete for leadership positions in the organisation.

Furthermore, the group’s strategy to develop its human capital capabilities includes a scholarship programme to enable employees to pursue higher education and agreements with various universities in Saudi Arabia to recruit trainees and permanent staff. Ongoing workshops on topics like healthcare and safety, and initiatives like staff exercise and health assessment programmes complement the educational and training offering.

All these reflect the fact that employees are indeed at the centre of the group’s endeavours and help to explain why last year Tamer Group was voted as the second best work environment in Saudi Arabia in Al Eqtisadiah’s newspaper annual ranking. While the group does its part to contribute to community-building in the Kingdom, it would like to see a more concerted effort among private companies in this area.

A platform for CSR
“It is the duty of every leader to have dual responsibility, one for the performance and success of his organisation and the other for his contribution to the community,” said Tamer. The initiative that perhaps best illustrates Tamer Group’s engagement with the community is its corporate social responsibility platform, SA’AID. The name of the programme means ‘forearm’, which symbolises the part of the body that connects the ‘community’ to the hand, which symbolises ‘the company’.

Three generations of managers have lead Tamer Group since 1922. The Group is committed to developing human capital and CSR initiatives — Three generations of managers have lead Tamer Group since 1922. The group is committed to developing human capital and CSR initiatives

In English, ‘SA’ is an abbreviation of Saudi Arabia, while Aid represents reaching out and collaborating. SA’AID is structured to address five main areas or arms: namely, health awareness and education; art and culture; environmental conservation; workplace wellness; and women’s empowerment.

As a leading healthcare group in Saudi Arabia, Tamer Group understands that health education and prevention is a service of utmost importance to the community, given the prevalence of lifestyle-related diseases among the youthful population. As such, the group engages with the Saudi population through holistic approaches that incorporate technology, social media, and school and community activities.

Partnering with the Ministry of Health, schools, universities, malls and other pharmaceutical companies, Tamer Group works to raise awareness about the effects of lifestyle-related conditions like obesity, diabetes, and hypertension by building sustainable programmes such as health education films, through which SA’AID aims to build a digital library that will be uploaded through social media and distributed to all public and private hospitals and healthcare centres.

“I would like to see the group on the path to continued growth, all the way acting as an agent of social development in Saudi Arabia,” said Tamer. “And, thinking outside the box, I envision the possibility of branching out into additional business lines to address the needs of the Saudi society, such as the establishment of training centres aimed at developing soft skills.”

Morocco’s banking sector strong, says BMCE Bank CEO Othman Benjelloun

Posted on February 28, 2014February 27, 2014 by Ashton Wenborn

While there is uncertainty as to whether banks can be trusted once more on an international scale, Morocco’s banking sector fulfils its role as a responsible lender to the economy as well as funding the country’s various reforms and structural projects, providing support to large companies and SMEs.

A number of key indicators are testimony to the strong growth momentum seen over the past decade. Banks in Morocco have had total assets tripled while shareholders’ equity has quadrupled. Resources have grown by 123 percent and loans to the economy have risen by 225 percent over the same period. The country’s net banking income has doubled against a backdrop of improved risk management with the non-performing loan ratio declining by 14.2 percentage points.

Another indicator underlining the banking system’s commitment is the proportion of loans to the economy in the GDP, which is currently standing at 87 percent, having risen by more than 30 percentage points in just five years from 56 percent. The Moroccan banking system continues to demonstrate its strong fundamentals. In the first half of 2013, banking institutions listed on the Casablanca Stock Exchange saw their consolidated net income rise by six percent to $702m.

The source of growth
The search for profitability has not been undertaken at the expense of risk provisioning. In the first half of 2013, loan loss provisions rose by 16 percent to $380m. At the same time, the non-performing loan ratio of 5.4 percent in June 2013 is altogether manageable given Morocco’s economic potential. Similarly, banks have continued to expand their branch networks across the entire kingdom with more than 1,750 new branches being established. The percentage of citizens with a bank account currently stands at 55 percent versus 24 percent in 2002.

In 2014, there will be a greater demand for Moroccan products, resulting in a stronger export growth

Over the medium term, the future development of Morocco’s banking sector naturally lies in its expansion into other African countries. Already in 2012, the continent contributed almost 16 percent to the net income attributable to ordinary shareholders of Morocco’s three leading banks. The latter themselves account for two-thirds of the deposits and loans of Morocco’s banking system.

Another indicator of this solidity is the fact that Morocco’s central bank, Bank Al-Maghrib, has strongly encouraged credit institutions to implement the new international capital adequacy requirements under Basel III. The deadline for implementing measures that included raising the required level of shareholders’ equity and complying with short-term liquidity ratios was the second half of 2013.

Meeting solvency requirements
In order to measure the impact from implementing the Basel III regulatory measures, banks have already conducted impact studies in association with the central bank, which show that they are already capable of implementing these new measures. The required solvency ratios, nine percent for Tier One capital and 12 percent for the total solvency ratio, have already been met.

In economic terms, the Kingdom of Morocco has benefited from the state’s ability to respond immediately to its need for inclusive and balanced social development. The political stability in Morocco – which is highly valued by the investment community in a region characterised by political upheaval – has underlined the country’s attractiveness. Initial data for 2013 suggests that Morocco is once again the leading recipient of foreign direct investment into North Africa.

The Moroccan economy continues to grow in line with the trend established over the last 10 years, at an average annual rate of more than 4.6 percent. By implementing a series of sector-based plans in agriculture, industry, renewable energies, tourism and offshoring, and by increasingly diversifying its trading partners to include emerging countries, the Moroccan economy has continued to deliver robust growth and increasingly diversifying its trading partners to include emerging countries. The rest of the world – excluding Europe – now accounts for 40 percent of the country’s trade versus 30 percent in the early 2000s (see Fig. 1).

Morocco's-GDP-and-export-figures — Source: IMF. Post-2013 figures are IMF estimates

For 2013, household final consumption expenditure was expected to rise by six percent, taking over from government spending due to budgetary constraints, while non-agricultural activities are likely to register, once recorded, an increase in added value of more than three percent. In 2014, there will be a greater demand for Moroccan products, resulting in a stronger export growth thanks in part to the eurozone’s recovery and sustained demand in emerging countries. This means non-agricultural growth should rebound by almost four percent.

Revising the Moroccan banking sector
One of the government’s longer-term objectives is to progressively reduce the budget deficit to below three percent of GDP by 2016. The country’s various sector plans should increasingly bear fruit and, in contributing to a reduction in the balance of payments deficit, further boost the Moroccan economy.

Morocco’s banking sector

1750

New branches

55%

Citizens with a bank account

In 2014, additional measures are likely to be adopted and aimed at enhancing the ability of the Casablanca Finance City to attract and capture new foreign investment. This multi-sector investment hub will be a catalyst for the further development of Morocco’s capital markets.

The Kingdom of Morocco benefits from a rich political legacy, strong spiritual and cultural historical ties with Africa, and is a logical connection for entering the sub-Saharan African markets. With this in mind, BMCE Bank will continue to work towards delivering sustainable growth and creating value. In Morocco, by reorganising BMCE’s branch network through territorial divisions, its decision-making process will be decentralised in the interest of customers. The range of products and services will continue to be adapted to meet the specific needs of local customers and the bank will endeavour to provide banking services to as many citizens as possible.

The successful transaction of an international bond issued by a private sector Moroccan company further underlines BMCE’s international ambitions. Overseas expansion will result in the bank generating an increased share of its revenues from foreign currency sources and diverse geographical regions. BMCE’s expansion in Africa, through the Bank of Africa Group, will be central to its strategy in 2014. The long-term objective is to cover virtually the entire continent over the next 15 years.

Argentine tax regulations are crippling competitiveness, says Grupo GNP

Posted on February 27, 2014February 27, 2014 by Ashton Wenborn

The second largest country in Latin America and the eighth at global level, Argentina has an estimated population of around 40 million. Its developing economy is based mainly on primary exploitation and the manufacturing of natural resources, through local employees trained for that job. Argentina’s growth potential can be related to the non-conventional hydrocarbons field (shale gas), which is known locally as ‘Vaca Muerta’ (Dead Cow). It is considered the second biggest field in the world regarding non-conventional hydrocarbon gas reserves, and fourth in terms of oil. It is estimated that the appropriate exploitation of this field could, in the future, place the country as a global player for oil and gas in an approximately 10-year horizon.

The country is one of the few that possess abundant reserves of lithium, which is fundamental for the production of electric batteries. Together with Bolivia and Chile, these three countries represent more than half of the global reserves of the strategic mineral. In an estimated total of 40 million worldwide, Argentina has six million lithium tons reserves.

A new contender for BRICs
The appropriate development of these natural conditions means Argentina may join a new generation of BRIC countries, defined by a high level of political stability, high growth rates, a great amount of natural resources, and a highly qualified workforce that also has favourable conditions to increase trade.

Already in 2006, Takashi Kadokura, researcher of the BRICs Research Institute of Japan, developed the VISTA concept, which included Vietnam, Indonesia, South Africa, Turkey and Argentina, as the new emerging generation to consider in the worldwide scenario. Currently, Argentina’s economy sustains its growth through the exportation of agricultural products, such as soya, wheat, seed corn and its derivative manufactured products. In that sense, Argentina is in third place as global exporter of soya, behind the US and Brazil.

[T]his situation of high tax pressure has contributed to take away competitiveness from Argentine companies

The country also possesses a manufacturing sector oriented to the local market, and a strong services sector with high added value – software, audio visual content – that contributes to a considerable flow of export.

In terms of GDP, over the last decade Argentina has grown around seven percent annually. However, there were significant distortions in matters of taxation. Firstly, there has been a growth insurgence of the state related to the economic development of the country.

To finance the state’s growth, tax pressures have been noticeably increasing over the last decade. This has converted Argentina into a country with the highest tax pressure of Latin America, according to CEPAL – displacing Brazil from that position. In this sense, the tax pressure has increased 20 points, going from 22 percent of GDP to approximately 42 percent.

Regressive tax factors
This significant growth of public spending has been accompanied by the increase in the relative importance of non-sharing national revenues, from the national government to provincial governments (See Fig. 1). This fact received a contribution by the creation of taxes over the exportation of goods and over bank account transactions.

The decrease of the relative weight of public resources in local government hands has resulted in the increase of tax aliquots of certain regional taxes such as stamp tax and turnover tax – both of which are collected by local governments.

From the origin of the state incomes point of view, Argentine tax collection is fundamentally based on income and VAT, which represent approximately the 14 percent of the GDP of the country. By definition, the VAT is considered a clearly regressive tax, as it affects each individual equally, independently of a person’s contribution capacity. This tax represents a collection of eight percent of the GDP, and the income tax the remaining six percent. The percentage of this last tax in respect of the GDP results quite inferior to international standards, due to, mainly, the existence of a portion of the informal economy still high in relation to the total country economy.

Even though the income tax considers the contribution capacity of the individuals, in Argentina, the lack of actualisation of deductions and tax scales in accordance with the increase of the general price index, means in practice, income tax has become regressive as a result of the payment of nominal incomes tax affected by an inflation rate around the annual 12 percent. Certain distortionary taxes such as exportation and importation right and bank transactions tax represent approximately the five percent of the GDP of the country.

As we previously mentioned, total tax pressure represents approximately the 42 percent of GDP. We arrive to this figure adding to the national taxes mentioned before (income tax, VAT, exportation and importation rights and bank transactions tax), provincial taxes such as turnover tax and stamp tax.

Within the last decade, Argentina has transformed a good tax system into one based on regressive and distortionary taxes that affect individuals

It is clear that this situation of high tax pressure has contributed to take away competitiveness from Argentine companies opposite the companies from the rest of the economies of the region and globally. Within the last decade, Argentina has transformed a good tax system into one based on regressive and distortionary taxes that affect individuals and the competitiveness of companies, interfering with business development and employment. In view of this scenario, a comprehensive tax reform should be put together with a sustainable and viable administration of public finance.

Therefore, the pillars of that reform should include applying the tax adjustment for inflation and the actualisation of deductions and tax scales that could stop the income tax payment over fictitious incomes. It should also include the reduction of distortionary taxes such as the bank transactions tax, letting its calculation be a payment on account of other taxes – specifically income tax in regards to exportation rights. Finally the setting-up of tax incentives to SMEs, as well as the reduction of informal economy should also be a factor.

The horizon of reforms
At Grupo GNP we believe that in the medium term the necessary reform of the tax system will occur, so as to generate the desirable convergence of Argentine tax pressure to more reasonable levels regarding international standards.

Meanwhile, companies based in the country and foreign investors who wish to invest in Argentina should, in view of the preponderance of tax factor in business, give a hierarchical structure to the analysis and decision-making in this business aspect. The focus for Grupo GNP is to perform efficient administration on outstanding tax matters in Argentina, and the rest of the countries in Latin America, as well as the strategic and business focus that has distinguished the organisation since it was founded, resulting in strong growth over the last few years.

Strongly specialised in tax and business consulting, the company offers high quality services and commitment, supported by a profound technical knowledge and focus on business, at a national and international level. The professional team is highly adept in the industry, working to the best tax strategies that allow clients to maximise the result of their business, with quick answers adapted to their needs.

How Victor is opening the skies to private aviation

Posted on February 27, 2014February 27, 2014 by Ashton Wenborn

Over the past 25 years, the commercial aviation industry has seen significant change thanks to the introduction of what are known as ‘open skies’ agreements. They have deregulated the industry, allowed for increased competition on routes and thereby reduced prices. In contrast, private aviation is still stuck in an era where charter prices aren’t usually displayed on a broker’s website and when a rate is given it is up to the customer to find out whether all costs are included and who the operator is. The problem is magnified by the bewildering array of aircraft ranging from size and seats to speed and range. Fittingly, it isn’t governments that are opening the industry to competition, but the private sector, and one company is leading the way.

The current number of turbo-prop and private jet journeys taken to, from and within Europe is over 600,000 per year. Only three of the top 20 city pairs in Europe are pure leisure routes – 17 of these are dedicated to business travel. The company is Victor, and transparency is the hallmark of its online private jet charter service. It is a pioneer in a number of ways. Crucially, Victor does away with the middleman and connects customers with the aircraft operators. Clive Jackson, the company’s CEO, is championing transparency and regulations in the air charter broker industry. But rather than simply wait for legislation to come, he has elected to lead by example.

Transparency and pricing
Membership of Victor is free and no prepayments are required. Members get access to over 600 aircraft, which operate from 40,000 airports worldwide. But the company’s scale is just the start. The really unique trick that fuels Victor’s system is the pricing structure. There are no hidden charges and quotes give an all-inclusive price, along with actual photographs and age of the aircraft being booked. Members can compare quotes from leading, named operators, book and pay online.

This transparency puts power back in the hands of private aviation customers

This transparency puts power back in the hands of private aviation customers. This creates a price-point that is driven by supply and demand. Not only can members see the supplier, they can see how many suppliers are available to offer them a jet, to fly from A to B at any point in time. If there are several, they can expect to pay a good price, and if there are only a few, they can expect to pay a premium. In contrast, the usual business model can be used to maximise profit for the intermediary as commissions can vary widely.

“The way private jet charter is sold is unregulated. This is not financial services,” says company CEO Jackson. “There is no regulation about the amount of commission you can make, there is no regulation about the disclosure that you have to make as to how much commission you’re adding on or creaming off, and in fact there is no disclosure or obligation to say that you can’t get commission from the client and then also commission from the supplier.”

With Victor, buyers complete their purchase online and the cost comes to no more than five percent over the cost of the jet charter, rising to 10 percent with a bespoke travel planning service. That’s all made absolutely clear upfront to the customer. And customers aren’t the only ones who benefit from this unique company. Typically, when single journey legs are booked through brokers, the plane returns from its destination empty, unless customers have been found who want to travel on the returning aircraft. In this case it has always been necessary to charter the whole aircraft, but through Victor, members can also buy empty legs and offset their charter costs.

It is hardly surprising that many owners of private planes are concerned about reducing the running costs of their aircraft, particularly in the current uncertain economic climate, and as a result list their jets on Victor’s website. “Our clients are often highly educated individuals with successful track records in business, many of whom have created wealth by making sensible investments and business decisions. At the same time, nobody wants to feel taken advantage of,” says Jackson. In fact, it is this line of thinking which led to him coming up with the idea for Victor.

Flight captain
Jackson has the polished look you would expect from a frequent private jet traveller. He is a serial entrepreneur in the online space and in 1993 founded digital marketing agency Global Beach. It became one of the leaders in its sector, working with many Fortune 500 and FTSE 250 companies including Bentley, Canon, HP and Unilever. In 2001, he spun out AutoTorq.com, a new business providing bespoke dealer marketing and services to car manufacturers and their dealer networks, across 53 countries.

Victor offers access to:

110 International operators

663 Aircraft

20,000

Airports

400m

Route combinations

Like many good ideas, the company was borne out of personal need. Jackson owns a second home in Mallorca and used to travel between there and London on BMI. The service was cancelled in 2009 and on the last flight he sowed the seed that became Victor. Frustrated that the airline was closing the route, he quickly polled his fellow business-class passengers to see how they intended to get to Mallorca in future. He left the flight with eight business cards and the idea of setting up a service which coordinated jet charterers on the island in order to offer a more luxurious way to travel there.

He was driven by the mantra of enabling customers to get more hours out of their day through the flexibility of private aviation. The service was initially offered through his website flyingmajorca.com but by the end of 2010, the destinations had expanded well beyond one island, and a name change was due.

Victor may sound like an unlikely choice but, in fact, the name is closely connected with the aviation industry. It is part of the NATO phonetic alphabet, but that isn’t the whole story. It is a name that works in 23 different languages and means the same thing. It really personifies the type of member that’s using the company’s service. The company recently secured a further £5m of Series A funding, with the main cornerstone investor being Jackson. His presence, along with the strength of the core product and plan, led to the funding drive being over-subscribed. Additional investors are understood to include a cross section of high-net-worth individuals, leading entrepreneurs and businessmen, investment bankers and hedge fund owners.

The company plans to use the funds to grow its team, invest in the technology behind its platform and expand the business beyond Victor’s original territories of the UK and continental Europe to Russia and the US.

“Europe, Russia, CIS and US are our priority markets for now,” says Jackson. “We recently joined the Russian United Business Aviation Association and signed a Russian cooperation agreement with Dexter (strategic partner of Vistajet in Russia), paving the way to launch our jet charter services on the Russian mainland.”

The company is also noticing a surge in the number of aircraft in Africa, so this may also provide opportunities for growth over the next five to 10 years. To take advantage of this, and fuel further international expansion, a Series B fund raising is planned within the next 18 to 24 months.

Up and running
More than 4,400 members – including large corporates and governments, live event customers, high-net-worth individuals and the who’s who of the entrepreneurial and sporting world – are currently using the company’s services. In just 24 months, Victor has generated in excess of 1,000 jet charter bookings and was ahead of forecast growth for 2013.

42 percent of genuine quote requests result in a booking, and 50 percent of all first time jet charterers book again within 90 days

42 percent of genuine quote requests result in a booking, and 50 percent of all first time jet charterers book again within 90 days, unseen in any element of e-commerce before. This is no exaggeration, as the typical conversion rate – the proportion of visitors who make a purchase – is reportedly only thought to be between four and eight percent for an internet giant like Amazon.

To further drive sales, the company is capitalising on the flexibility of private aviation by operating pop up services for travellers attending events like the World Economic Forum, the TEFAF art fair and Lamborghini’s Super Trofeo – the world’s fastest one-make motor racing series. Victor has also been confirmed as the private aircraft partner to Ryder Cup Travel Services for the 2014 Ryder Cup in Gleneagles, 23-28 September.

Unsurprisingly, these services allow travellers to pop up at the destination, often at very short notice, without having to divert from the fastest route or spend a night in a hotel. It suits the company to a tee and gives the traveller more time to enjoy the event.

In an unregulated private aviation industry, this impressive company is setting the benchmark for creating a fast, transparent and trustworthy service that challenges the status quo of the existing broker monopoly.

Ann Cairns on the growth of credit card use in emerging economies | Mastercard | Video

Posted on February 27, 2014 by Ashton Wenborn

The growth of credit card use in emerging economies signals continuing development of these markets. But how can we understand what different countries need when it comes to financial inclusion? Ann Cairns, President of International Markets for Mastercard, sheds some light on the subject.

World Finance: Well Ann, obviously Mastercard is growing five times faster in emerging economies as it is in the United States. So what does this mean for emerging economies in terms of spending patterns and also development?

Ann Cairns: Well, obviously there’s a big secular shift that’s going on from cash into electronic payments, and that’s why you’re seeing some of these growth rates in some of the countries in the world. Sometimes governments are driving that shift, and they see that it’s very good for their economy to reduce the amount of cash, because not only does it save them money, sometimes up to 1.5 percent of their GDP, but it also increases transparency, and it really allows commerce to flow.

World Finance: Why is financial inclusion so important for emerging economies, and in turn the world economy?

There are actually 2.5bn on the planet today who don’t have access to any type of financial products

Ann Cairns: There are actually 2.5bn on the planet today who don’t have access to any type of financial products, and interestingly there’s something like 93m people in Europe, and if you’re actually excluded from the financial system, how do you do things that we would expect to do in everyday life? Particularly in places like Europe, where you might want to buy something on the internet, you may want to buy an aeroplane ticket, or a train ticket, and all of these things start to happen electronically now, so if you don’t have access to that it has a big impact on your life.

World Finance: Well we will talk about emerging economies, but just staying with Europe for the time being, and how are you addressing financial inclusion in this area?

Ann Cairns: One of the best examples is actually Italy, because 20 percent of the population who could have bank accounts don’t have bank accounts in Italy. And what the Italian banks have done, they’ve got together and created a pre-environment where they’ve put actually account numbers on pre-paid cards, and you can spend on the card, you can receive money on the card, and so they’ve created effectively a light bank account which really helps population.

World Finance: So now what markets are Mastercard focusing on in terms of credit cards and why are you choosing these markets?

We’re in over 210 countries and territories, so we’re pretty much focused on the whole world

Ann Cairns: Well we’re actually in over 210 countries and territories, so we’re pretty much focused on the whole world, but we look at some countries that are going through major change cycles, such as for example India, that’s rolling out its national identity program, Nigeria that’s doing a similar thing, countries like Mexico where you have a lot of different companies now trying to reach the small business providers, countries like Brazil where you are starting to see a revolution going, from card to telephone payments, and we work in all of these areas with partners on the ground to just try and reach the consumer in any way that works for them.

World Finance: So how do you approach the different markets, do you have a one size fits all approach?

Ann Cairns: We definitely couldn’t do a one size fits all philosophy because obviously there are big cultural differences, there are big timeline differences between where a country is and its development. I think, though, you could say that a tremendous amount of people have mobile phones now, and so the level of mobile phone readiness is high practically everywhere in the world, and that’s why we’re not just working with one or two mobile operators, we’re working with them across the whole world. So people like DoCoMo in Japan, Telefonica in Latin America, Deutsche Telekom, and Weve here in the UK, because what we’re trying to do is keep pace with what the market is demanding in the various countries.

So, for example, here in the UK you’re seeing things like, you can get on buses now, London transport, and just tap with your card. You’ll be able to do that with your telephone, because near-field communication is being rolled out here. In some of the more emerging economies, you’ll probably see mobile phone be used much more often than point-of-sale machines because the infrastructure isn’t there in the first place, so those economies can actually leapfrog and go to mobile more quickly.

World Finance: Is it more difficult then in emerging economies, because obviously they need to catch up in terms of financial inclusion, but then you’ve also got the rate that technology is advancing, so does that cause problems?

I think that the rate the technology is advancing actually helps the situation

Ann Cairns: No, I think that the rate the technology is advancing actually helps the situation, because when we start to roll out capability in Africa, there weren’t the landline infrastructures that we would have piggybacked off in previous geographies, so we started to roll out satellite technology to actually hook up to our global network. So these things actually advance what’s happening.

World Finance: Well how do you approach countries such as China, for example, where companies might have the monopoly in that country? Obviously China has UnionPay.

Ann Cairns: We’ve been working with UnionPay for a number of years, if you were in China you would see actually cards that are co-branded Mastercard and China UnionPay, and what happens is the Chinese cardholders can use our network when they’re travelling and UnionPay network isn’t available to them. So we actually have quite a good coexistence on the cross-border side. Obviously we’re very keen to do more things domestically in China and were thrilled that the Chinese have actually agreed with the World Trade Organisation that they will open up to foreign companies to play in the local arena, but we’re just not sure exactly when that’s going to happen.

World Finance: Ann, thank you.

Ann Cairns: Thank you very much.

Tarmin CEO Shahbaz Ali on the benefits of big data for FSOs

Posted on February 27, 2014February 25, 2014 by Ashton Wenborn

By now most individuals have heard of ‘big data’ in some shape or form at a business level, and key decision makers have been busy determining what value they can derive from an organisation’s data, and how much budget should be allocated to manage this task. It’s not whether big data is important, but how the data should be managed and prioritised.

Big data was originally a conversation that began within IT teams, struggling to manage and store the mass of information as a result of daily business operations in a more online and connected world. Since the phrase was originally coined, it has now been cemented as a priority among boardroom agendas as executives realise the potential business value that an organisation’s data contains.

This is particularly true for financial institutions – a big data sector that arguably stands to gain more from the data explosion than any other industry. According to a recent study commissioned by New Vantage Partners, the conversation is further along with financial services organisations (FSOs) than most other industries in making use of predictive analytics.

Deciphering terminology
The management of big data and predictive analytics go hand in hand. Traditionally, and certainly for banks and FSOs, data storage has been purchased on an initial cost basis (CAPEX) with little regard being paid to the annual costs of items such as support and maintenance, IT staffing, power and the hardware and software needed to accommodate growth.

Big data by numbers

60-80%

Of all data in the financial services industry is unstructured

71%

Of FSOs are already using big data and analytics

Now, we are seeing numbers of organisations move beyond the hype, implementing big data analytics that help answer real business questions. Earlier this year, Intel made some noise about how its early forays into the space had resulted in as much a $8.94m payout, and the New South Wales government was noted for having rapidly adopted analytics as a result of its data centre consolidation programme.

In order to benefit from big data, organisations first need to better understand their unstructured data, and how and where it functions within the company. Typically, it is found in silos, and across multiple applications and platforms.

Looking to address this issue, ‘Data Defined Storage’ is an emerging category that unites application, information and storage into a single architecture, placing data at the centre of the equation. This enables data to define the architecture rather than vice versa. Users, applications and devices can access a repository of captured metadata. Once this data is available and transformed into information, the organisation can access actionable business insights, supported by an infrastructure that is both flexible and can scale in parallel with data volumes.

Banks and other FSOs are turning to big data, using insights taken from daily transactions, market feeds, customer service records, location data, and click streams to carve out new business models and services to transform their go to market strategies. Between 60 to 80 percent of all data in the financial services industry is unstructured, which causes major cost and compliance challenges, increasing business risk and making it difficult for organisations to gain value from their data.

These challenges can be resolved by implementing an infrastructure based on data defined storage – empowering organisations to look at their data as an asset instead of as an ongoing cost centre.

Knowledge into power
By recognising data defined storage as a new approach to managing, protecting, and realising value from large amounts of data, users and applications can gain access to a central repository of captured metadata and data.

In order to benefit from big data, organisations first need to better understand their unstructured data

With this knowledge, organisations are empowered to access, query and manipulate the critical components of the data, transforming it into business-ready information that can answer vital business questions, as well as deliver new insights not previously possible. Data defined storage also provides a flexible and scalable platform for storage of the underlying data.

Aside from providing answers to important business questions, there are many other benefits for FSOs, particularly when it comes to compliance, information governance automation and unification of data. By improving and automating information governance processes such as the indexing of data, data classifications, tagging and improved corporate compliance, FSOs increase their effectiveness.

This is realised through streamlining business processes to improve search capabilities, conducting early case assessments and other enterprise data-centric activities. The availability of regulatory compliance reporting allows organisations to stay one-step ahead of regulatory requirements and ensure transparent communication with teams, offices and relevant stakeholders.

As financial data flows into organisations, users can automatically separate the different log data that is generated by the trading platforms as flat text files, and dynamically assess content and type. Then, based on its business value, they can automatically separate and tag data types such as trade log data, relevant market data necessary for best execution retention, relevant market ticker data, and generic ticker data from irrelevant markets.

Each of these different data types have various business values, and can be deployed for multiple purposes, ranging from tracking and processing trading activities and satisfying regulatory demands to driving predictive analytics for future trading. The data can either be saved for long-term retention on tape, or destroyed if it is useless, like generic ticker data from irrelevant markets.

FSOs often overlook the ability to monetise unstructured data within the business. This data contains the sum total of all knowledge within the enterprise, which holds value to third parties as well as improving processes internally. By implementing a data defined storage infrastructure, FSOs are able to mine the net worth of their data and manage through data-in-place dash boarding and analytics. This creates potential cost savings and increases a competitive advantage.

The benefits of big data
For the last few years, there has been a lot of talk about big data and its potential value to business. Looking ahead in 2014, we will begin to see true success stories emerging as organisations begin to make good on their quiet preparation and investment to uncover the value of their data.

3 big benefits

Improved business efficiency

Reduced business risk

Enhanced business agility

Delivering mission-critical business value is most certainly linked to advanced data strategies that can address the spectrum of challenges and opportunities that are dictated by unstructured data. According to a survey by the University of Oxford and IBM’s Institute of Business Value, a massive 71 percent of financial services companies were found to already be using big data and analytics. As a result FSOs have realised that data is critical in delivering a competitive advantage in an industry that continues to rebuild after a worldwide financial crisis.

As businesses of all sizes look to optimise data as a strategic asset, the goal is to make data management invisible to end-users. To use an analogy, most car drivers are not interested in how the engine functions, but rather are only concerned with what happens when pressure is applied to the gas pedal. With a data defined storage solution, the equivalent of the car is an application that provides a unified approach for compliance and search while enabling security – and all at the data level – not the device level.

By embracing data defined storage, FSOs and other organisations will be able to benefit from three core business benefits. Firstly, improved operational efficiency for reduced total cost of ownership by up to 80 percent over time; secondly, reduced business risk by addressing data security and information governance challenges. Lastly, it will enhance business agility and decision making for improved revenue growth.

The data-driven world we live and work in today demands a new way of managing and storing data. Following the financial crisis, FSOs must also adhere to a changing regulatory environment that looks to better protect businesses and their customers from data privacy and security threats. Organisations must better utilise available technology to help improve operational business efficiencies and maximise knowledge gained from critical business data.

Smart CEOs, CIOs and the new emerging role of Chief Data Officer are already working on how they redefine the way in which they hold data within an organisation. Whether they look to build in-house or work with a trusted partner, they need a technology solution that can be deployed with their existing technology infrastructure and applications, grants access for various access levels and enables a dashboard of real-time, data-in-place analytics.

With a true visualisation of business data, FSOs will be able to offer more tailored services, based on better insights and understanding of the industry and their customers. Designing storage with data at its heart also lowers the total cost of ownership for FSOs.

At a time when IT budgets are being squeezed across the board, investing time and budget into a data defined storage infrastructure will resolve many challenges and provide a sustainable competitive advantage, all in one simple implementation. On-track CEOs will ascertain who they can identify to help them better manage and gain value from data.

For more information, visit tarmin.com

Grupo Energía de Bogotá to expand its energy empire

Posted on February 27, 2014February 26, 2014 by Ashton Wenborn

Energy means development, evolution and growth. This has been one of the reasons why throughout my professional career I have been involved in energy-related topics, and today more than ever, I am certain of the importance of the sector in any country in the world.

An example is the fact that over the 117 years of its history, Empresa Energía de Bogotá (EEB), parent company to Grupo Energía de Bogotá, has played a fundamental role in the progress and development of the energy sector, not only in Colombia, where it is based, but in other Latin American countries where it operates, such as Peru and Guatemala.

We have invested in these countries armed with our long-standing knowledge and expertise in the energy chain (generation, transport, distribution and commercialisation). That expertise has seen us recognised as a sound corporate group, and also demonstrates the faith we have in Colombia, and the Americas.

Our energy projects do not only contribute substantially to development in the countries where we operate, but they also contribute to competitiveness, reducing poverty levels and improving the quality of life of the entire population. But we are aware that this is not enough. We strive to become a model of global responsibility under which we base all our endeavours alongside our main stakeholders, such as communities, vendors, clients and workers.

One of our most significant challenges is strengthening ourselves as a corporate group, always working with the highest quality standards, with a high regard for the community, respecting the environment and acting as a fundamental growth pillar in the areas where we have presence.

Grupo Energía de Bogotá

$7.9bn

Total assets, Q3 2012

$8.2bn

Total assets, Q3 2013

68.1%

Percentage Grupo Energía de Bogotá owns of TGI

We take pride in knowing that EEB is among the 54 world companies that are part of Global Compact Group Lead; that as of January 2014 we will be part of the board of directors of such a select group; and that in 2013 we were ratified in the Dow Jones Sustainability Index (DJSI), under the category of emerging markets. The DJSI is the main world benchmark measuring the contribution companies make to sustainable development and economic, social and environmental performance.

Similarly, we were the first company in Colombia and among the first in Latin America to receive certification regarding efficiency and responsible use and consumption of energy. This acknowledgement was awarded after the external auditing company Bureau Veritas Certification successfully completed the ISO 50001 certification process.

Another relevant fact relates to corporate transparency, carried out by Corporación Transparencia por Colombia, which improved our rating from 86 to 94 in 2013. At the same time, we were selected in the fourth round of sound corporate practices by the business integrated planning model.

Partnerships and holdings
Over the years, we have been regarded as one of the leading groups in the energy sector in Colombia. Through EEB, we transport electricity to the largest market in the country with the highest demand rates, and further participate in the distribution of electricity through our affiliate company, Empresa de Energía de Cundinamarca (EEC).

Likewise, we own 68.1 percent of TGI, the largest gas transport company in Colombia, which services the fastest-growing market in the country and operates 3,957km of gas pipelines, with a transport capacity exceeding 730 MPCD (million cubic feet day). It is of the utmost importance that we participate in the sale of the 31.92 percent of TGI’s stocks currently in the hands of the financial company, Citigroup.

Should this operation be successful, Grupo Energía de Bogotá would be the owner of almost the entire stock of a sound and growing company, which would further increase revenues for the corporation.

In addition, we hold significant stocks in companies such as Emgesa (energy generation), Codensa (distribution and commercialisation of energy), Promigas (transport of natural gas) and Gas Natural Fenosa (distribution and commercialisation of natural gas). Although we do not hold control over these companies, we do receive significant revenues from their operations.

[W]e own 68.1 percent of TGI, the largest gas transport company in Colombia, which services the fastest-growing market in the country and operates 3,957km of gas pipelines

We have consolidated our portfolio in countries that we deem significant to our dividends. Thus, in Peru, our affiliate Contugas has a 30-year concession contract to transport and distribute natural gas in the Department of Ica and our affiliate Cálidda (also a 30-year concession) is in charge of distributing natural gas in Lima and Callao. In that same country, together with ISA, we participate in REP and Transmantaro, which operate 63 percent of the electric power transmission system in the country.

In Guatemala, our affiliate company Transportadora de Centroamérica (TRECSA) is in charge of the construction of the largest energy infrastructure project in the country and it is predicted that it will be ready to begin electricity transmission services in 2014. We constantly strive to become one of the largest energy groups in the Americas.

Therefore, we would like to continue to expand to other countries such as Brazil, Chile, Ecuador, Panama, Mexico and Canada. Our commitment saw results when we were appointed to the Presidency of the Regional Energy Integration Commission (CIER – by its Spanish acronym), which aims to achieve energy integration in South and Central America and the Caribbean.

It is worth highlighting that CIER comprises companies and entities in the energy sector of South America and related members of the Americas and Europe, which seek to foster regional energy integration by developing technical cooperation activities and the exchange of knowledge and experience among member countries.

Grupo Energía de Bogotá’s appointment to CIER reinforces the company’s reputation as a strong entity, with a portfolio including controlled and non-controlled companies, allowing it to become one of the most important energy corporations in Latin America. This trust constitutes a new challenge that must be answered with hard work, loyalty and, above all, commitment to strengthening the energy sector in the region.

Bidding war
We have set out to achieve an ambitious goal: to take over the third-largest energy generation company in Colombia, Isagen, in which we already hold a stock of 2.5 percent. We are aware that to achieve this, we will be bidding against very prestigious companies, but we will be forthcoming and will prepare ourselves in the best way possible to win the bid. Through the acquisition of Isagen, we would also secure one of the country’s largest energy generation projects – the hydroelectric plant in Sogamoso – with which we would hope to revamp electric power export and supply to neighbouring countries.

In addition, we are currently developing five projects in different areas of Colombia, which were awarded by the Energy Mining Planning Unit (UPME), an entity attached to the Ministry of Mines and Energy. These initiatives are of increasing importance, as they are aimed at ensuring that electricity services reach the main cities in the country. Also, as part of our growth strategy we would like to participate in the next UPME tender offers, which will strengthen national expansion and development with projects amounting to $2.2bn.

As shown, to achieve our purpose we do have in place an ambitious investment plan for the next four years amounting to $7.5bn, which will ensure our growth as a corporation. In this regard, I must state that our results have been acknowledged by national and international companies. Accordingly, Fitch Ratings ratified for a second consecutive year EEB’s corporate credit rate in local and foreign currency, maintaining grade BBB – with a stable outlook.

On the local scale, Fitch also confirmed EEB’s ratting as AAA, the highest in terms of credit quality. Likewise, Moody’s and Standard & Poor’s ratings qualified EEB’s corporate credit rate with grade Baa3 (with stable outlook) and BBB- (with stable outlook), respectively.

Today we are an international point of reference in the public utilities market, in large part due to our dedication to upholding the institutional nature of the company as defined by the relevant regulatory and legal frameworks. We operate with legal assurance and apply the knowledge and the experience we have acquired.

This overview clearly evidences our constant growth, which means that we have a great responsibility not only to our shareholders, but also to our clients, vendors and, in general, with all the communities and stakeholders with whom we work. We are mostly a public stock company from Bogota, but now have significant undertakings in the wider country and abroad. Together with our main stockholder, the District of Bogota, we have committed to growing in a responsible and sustainable manner.

This strategy has received the support of our minority stockholders, evidenced by the fact that EEB’s share negotiated in the Colombian Stock Exchange was the leading valued stock during 2013, growing around 20 percent (see Fig. 1). I am convinced that we still have a lot of energy for growth. Energy as a driver for work – generating value for our country and anywhere in the world.