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Author: itsupport
Argentina’s libertarianism gamble, has it worked?
One hundred years ago, Argentina, a country blessed with vast natural resources, was arguably one of the wealthiest nations in the world. But after the Great Depression, successive governments embarked on unsustainable, populist spending strategies which have resulted in years of political and economic instability, aggravated by corruption, record inflation and the country becoming the International Monetary Fund’s (IMF) biggest debtor (see Fig 1).
With a repressed economy and 57.4 percent of the population (27 million people) living in poverty, the country was crying out for change. Enter revolutionary, libertarian, economics professor, Javier Milei.
“We are the only political force with a specific plan to end inflation, unemployment, health problems, education, food, housing and all the debts Argentine democracy owes the Argentines,” Milei announced.
But what is libertarianism? According to the Encyclopaedia Britannica, libertarianism is “a political philosophy that takes individual liberty to be the primary political value.” In other words, people are free to make choices about their own lives and are solely responsible for the choices that they make. And the basic foundations on which libertarianism sits are “private property, markets free from state intervention, free competition, and the division of labour and social cooperation, in which success is achieved only by serving others with goods of better quality or at a better price.”
Implementing a drastic vision
Milei’s election manifesto focused on drastic reforms aimed at ending Argentina’s economic instabilities, specifically completely overhauling the state, cutting public spending by 15 percent of GDP and slashing taxes, ‘dollarising’ the economy to stabilise inflation and abolishing the central bank, shutting down or privatising state-run companies and bodies that he argued “serve as shelters for people receiving salaries without contributing meaningful work,” and cutting red tape for businesses.
Positioning himself as an outsider, this anti-establishment rhetoric resonated strongly with the disillusioned electorate, especially those outside the major metropolitan areas, who felt neglected by the political elites and were fed up with the status quo and the legacy policies of former President, Juan Perón. They saw Milei’s vow to dismantle a “corrupt and inefficient state” and his promises of drastic economic reform as a beacon of hope against soaring inflation and declining standards of living. While his victory was overwhelming, winning in 21 out of the 24 provinces, and beating his nearest rival by 55.7 percent to 44.3 percent, demographically, his support varied. For younger voters who felt their future was being put at risk by the ongoing economic crisis, his libertarian, free market ideas were particularly appealing, with the strongest support coming from younger men, along with considerable support from middle- and upper-class voters. However, the female electorate were less supportive, as many were more concerned about his socially conservative stances on issues like abortion.
Painfully slow progress
But after a year in office, has much changed? Unfortunately, not yet. Economies are not like Broadway productions, and despite a change in government, no star will be born and nothing miraculous will happen overnight, however radical the promises. That said, days after his inauguration, Milei set to work reducing the size of the state and tackling the country’s fiscal challenges which he saw as vital to achieving his goal of a budget surplus.
On the fiscal front, he reduced the number of cabinet ministries from 18 to nine, devalued the peso by 54 percent, cut 30,000 public jobs, slashed state subsidies for fuel and transport, and suspended all new public works contracts. This resulted in a Q1 2024 budget surplus of 275bn pesos ($284m), the first since 2008, and one that amounted to 0.2 percent of GDP. At time of writing, Argentina had recorded a government budget surplus for every month in 2024. And while Milei has, for the time being, had to scale back on his election promises to dollarise the economy and abolish Argentina’s central bank, these fiscal moves have also been supported by the IMF, who have released $4.7bn in loans.
Additionally, this shift to more conservative economic policies has encouraged investor confidence, with Argentina’s international bonds due in 2041 rising by seven percent immediately after his election, and, at the index level gaining 60 percent by March 2024.
The currency devaluation and austerity measures have contributed to sinking the economy further into depression
When he took office, Milei did warn that things were likely to get worse before they got better, and despite these apparent initial successes, he has still faced significant challenges in his first year. Core inflation rate peaked at 300 percent in March 2024, and even with subsequent monthly drop-offs, still remains over 200 percent.
Poverty rates have increased significantly, with the Instituto Nacional de Estadistica y Censos Republica Argentina (INDEC) reporting that over 60 percent of Argentines now live in poverty, up from 41.3 percent in the second half of 2023, with the cost of a total basic basket (CBT), food and non-food essentials, seeing a year-on-year increase of 230.1 percent, according to August 2024 figures. And if that wasn’t enough, the currency devaluation and austerity measures have contributed to sinking the economy further into depression, with government figures released in September showing a third quarterly contraction.
Frustrated with Milei’s cuts to welfare programmes and the closure of public services, such as the state news agency, and with no end to their suffering, Argentina has seen widespread social, and sometimes violent unrest, particularly from marginalised communities and left-wing groups.
Constant challenges of opposition
But Milei and his policies are not solely to blame. A lack of support from hostile lawmakers in both houses of the Argentine government has been the biggest roadblock to his planned reforms. For while he won the presidential vote handsomely, his party, La Libertad Avanza (LLA), won only 15 percent of the seats in the Chamber of Deputies, and just seven out of the 72 seats in the Senate.
Ten days after taking office, in December 2023, he issued an emergency decree (DNU 70/2023), to fast-track the changes he considered necessary to “consolidate economic stability” by side-stepping the Chamber of Deputies, although it still required Senate approval. The decree contained over 300 law amendments including facilitating the privatisation of state-owned enterprises, deregulating energy, transportation, healthcare, and other sectors, abolishing price control, and removing workers’ rights (including their right to strike). This sparked large-scale protests from the electorate, along with a fierce legal and political backlash. The Senate rejected DNU 70/2023 in March 2024, with Milei arguing that senators were more concerned with protecting their own interests rather than improving Argentina’s prospects, and insisting the decree remain in force unless it was rejected by the lower house, or declared unconstitutional by the courts.
In contrast, his Omnibus Bill, also introduced in December 2023, was a much broader legislative reform package, with over 600 articles that sought to codify Milei’s reforms aimed at overhauling Argentina’s economy through deregulation, privatisation and fiscal discipline. It sparked intense debate, and in its initial form was rejected by both chambers. It also prompted a 12-hour general strike in Buenos Aires in January 2024 just 45 days into Milei’s presidency, to protest against the proposed reforms, coordinated by the umbrella union, the General Confederation of Labour (CGT). Following significant revisions, the bill passed through the Chamber of Deputies in late April, and although it remained focused on reducing the state’s role in the economy, aligning with Milei’s libertarian philosophy, the number of articles were reduced to just over 300 and some of the measures were softened, especially those involving the labour market. However, negotiations continued in the Senate amid a volatile political climate, which led to a political stand-off. To gather support, Milei introduced the May Pact, a 10-point agreement promising further tax reforms and fiscal balance across the provinces. The Senate finally passed the slimmed-down Omnibus Bill in June, and the May Pact was finally signed in July.
In September, Milei set out his 2025 budget proposals. Built around a zero-deficit approach to stabilise the economy, it focused on understanding how much money is available before allocating funds, but to achieve this he also proposed significant cuts to public spending, particularly on social programmes and subsidies, which sparked concern from opposition parties and social groups. The budget also forecast a dramatic drop of annual inflation from the current 230 percent to 18.3 percent by the end of 2025, with monthly inflation dropping to one percent, along with a five percent GDP growth forecast for 2025, despite Argentina currently being in recession. The administration believes these austerity measures and fiscal discipline will help the economy recover faster.
Don’t cry for Milei, Argentina
Opposing parties have strongly criticised the proposals, accusing Milei of further hurting the working class with significant public spending cuts, while investors have responded cautiously to the proposal with many viewing it as a step towards restoring market confidence in Argentina. But public reaction has been mixed. While Milei’s supporters back the proposals, there is widespread concern about the social impact of big spending cuts.
Overall, in his first year, Milei has made significant waves with his libertarian agenda, but with no government majority, has faced considerable resistance from opposing parties. Unfortunately, his early popularity with the electorate has also waned, resulting in public discontent. For the people of Argentina change cannot come fast enough, and hopefully, given the chance, Milei’s reforms will have the desired effect, and things will indeed, get better.
Can Bretton Woods adapt to a changing world?
When Russia invaded Ukraine in the winter of 2022, it immediately exposed once again the limitations of the two global institutions – the International Monetary Fund and the World Bank – that are supposed to coordinate policies to deal with the resulting economic crisis. In the wake of the attack the US Treasury Secretary Janet Yellen, also a former chairwoman of the US Fed, warned that the defeat of Russia requires measures that the IMF and World Bank may not be able to apply: “We will need to modernise our existing institutions – the IMF and the multi-lateral development banks – so that they are fit for the 21st century where challenges and risks are increasingly global.”
A key figure in the Biden administration, Yellen was referring to a whole host of challenges such as sanctions against Russia, intensifying trade disputes, big-power rivalry that is creating geopolitical tensions and, perhaps most concerning of all, the decline of the 80-year-old Bretton Woods institutions that were originally designed for exactly this purpose. Bretton Woods was instrumental in rescuing a world devastated by wars, incompetent governance and geopolitical confusion. As Kristalina Georgieva, managing director of the IMF, pointed out earlier this year: “In 1944 the IMF was forged from the ruins of two world wars. In the decades leading to our creation, populism had swept over much of the globe and the old world order was in chaos. After Bretton Woods, the world saw dramatic increases in global integration and wellbeing for which the IMF played a key role.”
Bretton Woods was born in July 1944 when delegates from 44 nations, led by the US and the UK, met in New Hampshire for what was known as the United Nations Monetary and Financial Conference. Out of the rubble they created a new economic order based on international coordination for the purpose of reconstruction and growth. Hence the birth of the IMF and World Bank.
Yet as Georgieva explains, here we are again: “Eighty years later the global economy is once again in a moment of significant turmoil as countries recover from the pandemic and conflict has flared across Europe, the Middle East, and Africa.” And in the middle of all this the looming issue is whether the Bretton Woods Institutions (BWIs) are up to the task in a much bigger, much more complex global economy. And if not, what is the alternative?
“Today we face many of the same challenges as we did at the time of our inception,” summarises Georgieva. “Yet again, in Europe a military power has invaded a neighbour – and flares of regional wars add to global risks. Yet again, populism and protectionism are on the rise. On top of that, we are grappling with global mega-trends such as climate change and the demographic transition, as well as disruptive technologies such as AI and digital currencies.”
Global economic fragmentation
Most economists agree that the world is splintering into ‘global economic fragmentation’ (GEF) at the very time that it needs the opposite. In technical terms GEF is seen as a policy-driven reversal of global economic integration that threatens capital flows to low-income countries, hinders innovation in emerging markets, and discourages cooperation on international crises. In other words, we are going backwards by focusing inwards.
“In our increasingly fragmented world, nations have focused on reshoring essential goods and supply chains, including minerals crucial for green technologies, semiconductors, and military hardware due to concerns over national security and geopolitical motives,” explains the IMF, which is grappling with the threat of its own irrelevance. “In immediate terms the effects are seen in higher import prices, segmented markets, diminished access to technology and labour, reduced productivity, and lower living standards,” the IMF states.
Bretton Woods was instrumental in rescuing a world devastated by wars, incompetent governance and geopolitical confusion
The triggers of this fragmentation are tariffs, subsidies, currency wars, protectionism, industrial policies and sanctions. Between them, they are stifling the globalised trade that would help rescue the situation. In short, countries are taking sides and pulling in different directions. The result is a general undermining of the very global financial stability that is the raison d’etre of Bretton Woods.
As a result many countries face the threat of declining wealth. As recent research shows, advanced economies and emerging markets could face permanent losses of up to four percent of gross domestic product. The consequences? Debt crises, social instability, and food insecurity, with the most vulnerable nations being the worst hit.
In hard numbers, according to a recent IMF paper, the spread of GEF could add up to a long-term decline of up to seven percent in global economic output. The price of that would be catastrophic, estimated at about $7.4trn.
A crossroads situation
It may be a much-used word, but economists are in no doubt that we face another crossroads, without being anywhere near to agreeing a Bretton Woods-type solution. “Looking forward, we can choose the path of instability and confrontation. Or we can choose the path of cooperation and shared prosperity,” concluded Georgieva.
But is reform of the BWIs possible? According to macro-economist Amin Mohseni-Cheraghlou of Washington DC’s American University and leader of the Atlantic Council’s Bretton Woods 2.0 Project, the IMF and the World Bank face “existential challenges.” For proof he cites a formidable list comprising the emergence of new players, game-changing new technologies such as AI, and two decades of financial and social upheavals in the form of the Great Financial Crisis, devastations wrought by Covid, and the enormous problems posed by climate change, particularly in Sub-Saharan Africa. And as non-western economists regularly point out, at least two of these scourges – climate change and the GFC – started in the west.
One of the problems, argues Mohseni-Cheraghlou, is that power in BWIs lies in the wrong hands. That is, the leadership is firmly anchored with the US, Group of Seven and EU at a time when “economies that are not part of the high-income club are playing an increasingly large role in global trade and finance.” In hard numbers, the EU and US control about 40 percent of votes even though “their relative prominence in the global economy has eroded.” And Chinese researchers would agree, citing how China has been repeatedly blocked from a role in the BWIs that, they argue, is commensurate with the country’s undoubted economic might. Political scientist Qin Yaqing, a professor at Shandong University, insists that what he calls “US hegemony” of these institutions must be replaced by a global governance system that is “multi-level, multi-issue, and multi-organisational.” In common with Beijing, he actually believes in economic fragmentation because it suits China better. It would allow China to “operate nimbly across regions, issues, and organisations, and choose allies to achieve various objectives. Ultimately, the fragmentation of global governance institutions would further realise the demise of the previous hegemonic order,” he argues.
Belt and Road project
Needless to say, most western countries and several Asian ones are extremely nervous of an increasingly militant and assertive China assuming a dominant role in a post-Bretton world. In fact, they are already halfway there. As American political scientists point out, China’s Belt and Road project has pulled many countries into Beijing’s net. Of the 24 members of the UN who voted not to condemn Russia’s invasion of the Ukraine, two were Russia and North Korea, as would be expected, but the other 22 are all beneficiaries of Belt and Road. Perhaps more revealing of China’s own hegemony among the more disaffected nations, no fewer than 49 of the 58 who abstained from voting are also part of the Belt and Road.
We can choose the path of instability and confrontation. Or we can choose the path of co-operation and shared prosperity
Looking forward, the IMF and World Bank must now work with a much more complex world of international financing because their own pockets are nowhere near deep enough. As Yellen explains, “experts put the funding needs in the trillions, and we have so far been working in billions.”
On the bright side there is a host of new lenders out there such as state-led development finance institutions, regional multi-lateral development banks, sovereign wealth funds and pension funds. At the last count there were, for instance, over 40 multi-lateral development banks and financial institutions, while the number of purely national development banks has jumped to at least 50. There are also no fewer than 130 sovereign wealth funds deploying $12trn between them. Public pension funds boast $24trn in global assets while the private pension funds have $42trn of assets in their coffers.
Additionally, in the last 80 years the number and financial power of multi-national corporations has exploded. As Mohseni-Cheraghlou notes, they “command economic and technological might larger than many countries.” In hard numbers the multi-nationals account for nearly one-third of global GDP and a quarter of global employment. Consider that in 2023 the revenue of just one of the multi-nationals, Walmart, was larger than the GDP of over 170 countries.
In summary, Bretton Woods was designed for a different era and desperately needs to be modernised to cope with this new and infinitely more complex one. The institutions have adroitly navigated storms before, for example the Nixon administration’s abolition of the gold standard in 1971 that was a huge shock to the system.
Yet quite apart from what one economist called “intractable geopolitical tensions,” there is a lot on the Bretton Woods table. Economists sum up a few of them: an unfair global tax system, a fire-fighting role in crises such as Covid (Yellen believes the response to the GFC was “too timid and short-lived”), the rapid mobilisation of capital to support developing countries, and reform of the World Trade Organisation (China favours regional trading blocs that help it circumvent WTO rules). Altogether, it is a huge package and one that will test the twin pillars of Bretton Woods to the limit.
Can the world of finance learn from Hollywood?
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Is gross national happiness the way forward?
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Unfinished business at the World Trade Organization
Governing the World Trade Organisation (WTO) is not a job for the faint-hearted. Each of the past six WTO director generals has a story to tell, which often is not pleasant. When he opted to walk away before the end of his second term, Brazil’s Roberto Azevêdo, who led the organisation from 2013 to 2020, had a difficult time trying to explain his decision. Few bought his explanation that centred on allowing the WTO General Council ample time and clarity in selecting his successor. To most, he caved in due to extreme pressure, particularly from the US. Under then President Donald Trump, the US had done a good job in amplifying assertions that the WTO was an irrelevant body.
Today, the clouds are yet again gathering and Ngozi Okonjo-Iweala, current and seventh WTO Director-General, is not sitting pretty. To observers, Okonjo-Iweala has enjoyed a rather smooth time in office since taking over the leadership of the multilateral trading system in March 2021. Though she has presided over a period with less noise and fewer attacks directed at the WTO, on achievements the jury is still out. “She has done her best in a very difficult political context,” Victor Crochet, a senior associate at the Belgium-based law firm Van Bael & Bellis told World Finance. Having made history by becoming the first female and first African to head the global trade watchdog, Okonjo-Iweala’s first term is set to come to an end on August 31, 2025. The Africa Group, one of the five United Nations regional groups, has already fronted her for a second term. She has obliged, stating she still has “unfinished business.” Among them is overseeing the operationalisation of an agreement on ending fisheries subsidies, achieving a breakthrough in global agriculture negotiations, reforming the WTO’s struggling dispute settlements system and decarbonising trade. “For my second term, I intend to focus on delivering,” Okonjo-Iweala told Reuters in September.
A decorated CV
In seeking a second term, Okonjo-Iweala has the head start of incumbency. Also, a competitor is yet to emerge. During a WTO General Council meeting in July, 58 members encompassing the 44 African Group voiced their willingness to support her reappointment and sought for the expediting of the selection process.
Many have praised her down-to-earth demeanour, hard work and achievements during her first term. If no member objects and no other candidate emerges, she could secure a second term by the end of the year.
Apart from incumbency, the Nigerian economist, who in 2019 also took out US citizenship, boasts of a decorated and rich curriculum vitae. She is also a trailblazer on many fronts. When she turned 70 in June this year, many could not fail to admire her inspiring journey that started in the dusty village of Ogwashi-Uku in Delta State, Nigeria and which was greatly shaped by her academic parents’ value for education. Both had PhDs, her father’s being in economics. Years later, she would follow the same path. “I was taught that education is a privilege, not a right. And education is not for you to enrich yourself, but to see how you can enrich others,” she told David de Ferranti, author of Reformers in International Development: Five Remarkable Lives, a book that traces Okonjo-Iweala’s life and career from childhood to the present day.
Strong belief in the transformative power of education saw Okonjo-Iweala traverse the corridors of Ivy League universities in the US like a colossus. She holds a bachelor’s in economics (magna cum laude) from Harvard University and a doctoral degree in regional economics and development from the Massachusetts Institute of Technology (MIT). For the mother of four who tightly holds to the virtue of humility, the plenitude of accolades is awe-inspiring. She is the recipient of 21 honorary degrees, has been listed in Forbes Top 100 Most Powerful Women in the World for seven consecutive years, twice named by TIME as one of the Top 100 Most Influential People in the World and once by the Financial Times as one of the 25 most influential women.
Okonjo-Iweala can take pride in a long career serving a retinue of companies and organisations. However, her long tenure at the World Bank and in public service in Nigeria stands out in adequately preparing and equipping her for the WTO top job. At the World Bank, where she spent 25 years as a development economist rising to the number two position of managing director, operations, her achievements remain remarkable. Part of them included spearheading several initiatives to assist low-income countries, managing to mobilise $50bn in grants and low interest credit in 2010.
In Nigeria, serving two times as finance minister under presidents Olusegun Obasanjo (2003–06) and Goodluck Jonathan (2011–15) are among the brightest feathers in her illustrious career. As the first woman to hold the position, her unwavering determination to clean the country’s rotten macroeconomic sphere was heroic. Among her greatest achievements was leading a team that negotiated for the wiping out of $30bn of external debt, including the outright cancellation of a whopping $18bn.
Streamlining the management of public coffers by enhanced transparency and fighting corruption was another key accomplishment. Part of the cleaning involved dismantling oil cartels that were siphoning money through dubious oil accounts. Okonjo-Iweala told de Ferranti that while auditing $11bn of oil accounts, it emerged that $2.5bn was fraudulent. The government refused to pay and the cartels did not take it kindly. They kidnapped her 83-year old mother, a medical doctor and retired professor of sociology. “That was a very challenging moment because to think you will be the agent of your parent’s demise, it is a very tough thing to bear,” she recounted.
Second term landmines
The chilling ordeal of her mother’s kidnapping is long past. Yet, the renowned development economist is facing a tribulation of a different kind – securing another term at the helm of the WTO. It goes without saying that the main reason the African Group had been pushing for an early start to the selection process was the US elections. With Trump back on centre stage there is consternation that history is about to repeat itself. During his first term in office, Trump’s administration tried to block Okonjo-Iweala’s appointment. And on the campaign trail, that concluded with his success, the Republican Party candidate had not changed his loathing for the WTO, an organisation that he has repeatedly termed as “horrible” and whose rules he openly disregarded as president with unilateral tariffs and attacks on its dispute settlement system.
Under the Joe Biden administration, the WTO has repeatedly been at loggerheads with the US largely due to the dispute settlements system. Based on the fact that it loses disputes too often, the US has continuously blocked the filling of vacancies of the WTO’s Appellate Body, the highest adjudicating organ under the watchdog’s enforcement function.
“The WTO is not apt at finding political consensus and solutions to tricky situations. It is much better at technical issues,” Crochet tells World Finance. He adds that with current political and economic tensions, it is unlikely that an agreement on reforming the dispute settlements system could be achieved without an overhaul of the substantive rules themselves. In essence, the standoff is bound to be prolonged indefinitely, to the chagrin of a majority of members. The ripple effect is not just a loss of confidence but gives credence to critics who hold the global body is gravitating towards losing irrelevance.
Relevance is a word that continues to hover uncomfortably on the WTO. Okonjo-Iweala knows this all too well. In February this year, during the WTO 13th Ministerial Conference (MC13), she admitted that the global body will always have its “naysayers and detractors.” For that reason, only success can change the tone about the WTO, both within and without. “We need to show the world that not only does the WTO underpin over three-quarters of global goods trade, it is also a forum where members deliver new benefits for people through trade,” she noted.
Though WTO’s relevance remains under constant scrutiny, the importance of the multilateral organisation in maintaining a semblance of order in global trade cannot be gainsaid. Indeed, in a world where rising protectionism, rogue trade wars and predatory practices are on the rise, the WTO remains the most impartial adjudicator. This arises from the fact that it represents 166 member countries that account for more than 98 percent of global trade valued at $32trn annually. To put it in context, it means that about $86bn of goods crosses borders every day.
At its base in Geneva, Switzerland, the global body provides a forum for members to negotiate trade agreements, enforce a network of existing treaties, settle disputes and monitor trade practices. The original and most prominent, the General Agreement on Tariffs and Trade (GATT), was negotiated after World War II based on a US proposal for an international organisation that would negotiate and enforce trade law. The successor of GATT, WTO came into force in 1995 alongside the dispute settlement system. While the GATT regulated trade in goods and reduced tariffs and other barriers, the WTO also covers services and intellectual property.
Basket of achievements
Though the jury is still out on Okonjo-Iweala’s achievements so far, the overriding consensus is that the celebrated author of several books and champion of women’s empowerment has done a relatively good job under excruciating circumstances. During her tenure, the global trade environment has faced unprecedented challenges the ripple effects of which have meant the WTO cannot vacate its position of constantly being at a crossroads. When she took office, global trade was just starting to show signs of recovering from the Covid-19 pandemic. At the peak of the pandemic in 2020, trade plunged by about $2.5trn, a nine percent decline compared with the level in 2019. Recovery has been swift and this year global goods trade is projected to post a 2.7 percent increase.
Apart from leading the WTO at a time of recovery from the pandemic, Okonjo-Iweala’s tenure has also been characterised by disruptions of global trade by geopolitical mayhem. The Russian invasion of Ukraine, the worsening crisis in the Middle East, fears that China is planning to invade Taiwan, and the war in Sudan among others means that global trade continues to be impacted by disruptions that are beyond the WTO’s control.
We need to show the world that not only does the WTO underpin over three-quarters of global goods trade, it is also a forum where members deliver new benefits for people through trade
For the WTO, its purview of control is ensuring order in the global liberal trading system. Though created specifically to facilitate the flourish of private companies, the system’s seamless nature has been disjointed due to the invasion of state-owned enterprises, with China as the antagonising factor. Owing to this fact, it has been a tough period for Okonjo-Iweala in trying to ensure all countries remain committed to the idea of open markets and trade integration.
While countries like China, India, Bangladesh, Vietnam, Mexico, South Africa and many others have open markets to thank for significantly contributing to their socio-economic transformation, the bug of protectionism is today spreading fast. Okonjo-Iweala reckons that protectionism, which largely undermines WTO rules, can only lead to fragmentation. “We are concerned about the emerging fragmentation that we see in the trade data. We are seeing that trade between like-minded blocks is growing faster than trade across such blocks,” she told the BBC earlier this year.
Inability to contain the spread of protectionism, coupled by concerns that the WTO rulebook has lost its powers in a changing trade environment that has also seen the proliferation of digital trade, has many questioning whether the WTO is still the global trade sheriff. Besides, many wonder whether the global club still has the wherewithal to spearhead predictable, stable, free, fair and open trade.
WTO has watched helplessly as the US and the European Union (EU) slap China’s electric vehicles with 100 percent and 38 percent tariffs, respectively. On its part, the EU cited “unfair subsidisation” in China that “is causing a threat of economic injury” to EU electric car makers for its decision. China, meanwhile, has retaliated by launching an anti-dumping investigation into EU pork imports. Obviously, the investigation is a ploy that is bound to end in new tariffs.
Weihuan Zhou, Associate Professor at the University of New South Wales in Australia, tells World Finance that under the current structure, Okonjo-Iweala needs to be commended for ensuring the WTO maintains some sense of grip in shaping global trade. “She has done a fantastic job in maintaining the effective functioning and leading role of the WTO in addressing a raft of challenges during and after the Covid-19 pandemic,” he observes.
He adds that one of Okonjo-Iweala’s most creative contributions has been reshaping the thinking of the global trading system to one of ‘re-globalisation,’ which counteracts longstanding criticisms of globalisation and the rising trend of de-globalisation. The new thinking has been instrumental in the success of key negotiations. Most notable was the reaching of an agreement on fisheries subsidies in June 2022.
Described as a historic achievement, the agreement was a win for ocean sustainability. By prohibiting harmful fisheries subsidies, it is expected to protect the world’s fish stocks from depletion. A total of 86 WTO members have formally accepted the agreement that requires two-thirds of members to consent to be operational.
Under Okonjo-Iweala, substantive progress has also been achieved on e-commerce talks. Having been initiated in 2017 and formal negotiations commencing five years ago, by July this year a total of 91 nations participating in the talks had managed to achieve a stabilised text.
Once completed, the e-commerce agreement will be the basis for global rules on digital trade. Apart from benefiting consumers and businesses, especially macro, medium and small enterprises, it is expected to play a pivotal role in supporting global digital transformation.
Talks on the investment facilitation for development (IFD) agreement have also made progress. A substantive pact could significantly push foreign direct investments, particularly among emerging and developing nations. This is because it has the potential to improve the investment and business climate, thus making it easier for investors not only to invest but also to conduct day-to-day activities and expand operations with no obstacles. The fact that in June 2022 Okonjo-Iweala was able to facilitate an agreement on Trade-Related Aspects of Intellectual Property Rights, allowing countries to suspend patent protections on Covid-19 vaccines thus boosting production in developing nations, increases confidence that a deal on IFD could be reached sooner than later.
Falling short where it matters
Okonjo-Iweala has reasons to feel elated for her achievements so far. However, two critical areas stain her otherwise stellar record. Granted, manoeuvring the gridlock on agriculture talks and dispute settlements reforms has proved difficult. Having inherited the murky swamp, Okonjo-Iweala risks joining a long list of WTO bosses who come and go without a breakthrough in agriculture.
In October, her frustrations were conspicuous. Following a meeting of the Trade Negotiations Committee on agriculture, the most she could say was that she detected a “meeting of minds.” In essence, although there is a ray of light, the tunnel remains agonisingly long despite the world grappling with over $640bn in trade-distorting agricultural subsidies that shouldn’t be there. “I sense that there is a willingness to try to break the gridlock on agriculture and to try and move the process forward,” she noted.
The same misfortune shrouds dispute settlement reforms. Though Okonjo-Iweala continues to advance the idea that the reform of the system is a “collective desire of every member,” the US does not agree. In 2022, MC12 set a target of end of this year to have a fully and well-functioning system. This was reaffirmed by MC13 earlier this year. With mere weeks before year’s end, the target is proving to be a pipe dream. The main reason is the US has refused to support the reform proposals, particularly on the thorny appeal/review issues. “The main unfinished business on Okonjo-Iweala’s agenda is certainly the reform of the dispute settlement, which is still far from getting somewhere. Without achieving this reform, it is likely that the WTO will continue to lose relevance,” Crochet told World Finance.
Granted, the WTO is bound to remain as the backbone of the multilateral trading system. However, a growing number of experts are of the opinion that its continued legitimacy, credibility and efficacy require stronger leadership to reform the existing decision-making model based on consensus. “Creative approaches are needed to facilitate negotiations,” reckons Zhou. He adds that to ensure transparency, certainty and predictability in global trade, the global body must find ways of ensuring its rules and regulations remain sacrosanct.
Okonjo-Iweala has admitted the decision-making by consensus process is “frustrating,” and largely contributes to the snail pace of negotiations. However, it is necessary. This is because it accords the same power and voice to all members. Mongolia, with a population of 3.7 million and exports valued at $11.8bn, has the power to stop any agreement from being concluded, same as India with a population of 1.4 billion and exports valued at $452.6bn.
The fact that global trade blocks are crumbling means that Okonjo-Iweala will face a daunting task of rebuilding if she secures a second term. So far, she has not demonstrated any signs of the abrasiveness that can come in handy in resolving disputes and achieving breakthroughs in negotiations. This has earned her respect and prevented direct confrontations. However, when her tenure is finally documented in the annals of history, this might not count for much. What will count is her shrewdness in ensuring stability and order in the global trading systems.
At the heart of progress: Banorte’s role in Mexico’s growth
Grupo Financiero Banorte has been following its own aspirational philosophy for over a century. Moment by moment, in each location and region of Mexico, with each generation, in the relevant changes of the country, it has helped people to take advantage of opportunities and overcome complex situations in all areas of their lives. It is with this character that we are today the strongest and largest Mexican financial group.
Our history is intertwined with that of Mexico. Every decision, every loan, every business supported, and every project financed leaves a footprint that impacts families, businesses and entire communities. Because when they prosper, Mexico prospers, and so does Banorte.
We understand that hidden opportunities are always present and Banorte knows how to take advantage of them. For this reason, it is not surprising that our origin is in the capital of the booming state of Nuevo León, in the north of the country, distinguished by its industrial vocation. We were created with the knowledge and ambition to meet the needs of Monterrey companies that today are a symbol of entrepreneurial spirit, innovation and resilience. Already at that time, the customer was at the centre of our nascent ambitions. On November 16, 1899, Banco Mercantil de Monterrey was founded, a local bank that years later would evolve into a regional bank.
Our next predecessor, Banco Regional del Norte, was created almost half a century later, in 1947. Both financial institutions merged in the 1980s to create Banco Mercantil del Norte, today known as Banorte, which through a strategy of investments, mergers and acquisitions achieved the diversification and strengthening of its banking platform with national coverage.
As a result, we integrated businesses that today allow us to offer the most diversified portfolio of financial services in the market: banking for individuals, companies of all sizes, and governments, as well as international banking, insurance, fund management, brokerage, and retirement savings, among others.
Banorte’s history is one of transformation and progress. We have evolved, modernised and embraced every innovation, always reinforcing our essence: customers at the centre of everything we do. This vision made us migrants of evolution: we adopt with agility and opportunity each technological transformation, which is why we are digital pioneers, offering financial products and services that respond to the needs of each of our customers.
Becoming the best financial group
Focusing on the recent stage of the group’s technological, cultural and business transformation means reiterating our founding principle, which is to have the customer at the centre of everything we do.
In 2014, we conducted an in-depth analysis of the organisation to identify areas of opportunity and define the path we should follow from now on. The goal was ambitious: to become the best financial group for our clients, investors and employees.
The goal was ambitious, to become the best financial group for our clients, investors and employees
In 2015, we launched the ‘Strategic Plan Vision 2020,’ setting out ambitious five-year goals in terms of profits, profitability and efficiency, but above all with the firm intention of making a difference in the customer experience. How did we achieve this? With talent, technology and innovation. First, we increased the physical and digital means for transactions, allowing customers the option of either accessing Banorte services in a branch, attended efficiently and expeditiously by an executive, or digitally – anywhere and at any time.
Thanks to these efforts, today we have an infrastructure that allows us to have an omnichannel approach to our customers, which translates into enhanced support and a closer relationship with all our users.
To provide this unique experience and exceed our clients’ expectations, we have had to take a collaborative approach, focusing on a continuous process of evolving from a bricks and mortar operation to a modern, digital enterprise. We have improved our branches through digitisation, making them increasingly efficient and functional, while freeing up executive capacity to provide a more focused and personalised experience for the customer, when needed.
In terms of the digitalisation efforts set out in our 20/20 vision, we have developed a central data repository to get to know our customers better; we have consolidated the customer experience through innovative techniques and customer data analysis, and have built layered, flexible, agile and responsive architecture to provide an unparalleled digital experience for our clients.
Our analytics team utilises machine learning and behavioural analysis to further personalise the services we provide, and we also use this analysis for fraud prevention by using predictive modelling.
All these changes and their respective results were achieved thanks to the work of the cells, multi-disciplinary and collaborative groups in which ideas come together and converge to generate projects that add value to the institution, employees, investors, society and, of course, our customers. This model continues to date and is a source of initiatives for the growth and consolidation of Grupo Financiero Banorte.
Banking in a digital world
In 2020, in the wake of the global pandemic, we reflected on the accelerated digital transformation that confinement brought about in society. The result was an ambitious strategy, the ‘Plan one, two, three,’ set for the period 2021 to 2023. The vision was renewed: to be the best financial group for our clients, investors, and employees, and an equally ambitious mission was redefined: to position ourselves as the number one in banking in a digital world, while maintaining leadership in profitability and sustainability.
To achieve this, we relied on these three plans. The first of these was aimed at providing a one-to-one seamless digital experience, integrating the full range of our products, reducing the processing time for these and improving the customer experience. We developed and released a new version of the Banorte Mobile app for the benefit of all our customers.
Our second plan for this period was to modernise our technological infrastructure to not only drive hyper-personalisation, but also to help us compete with challengers in the digital realm.
The third step in our strategy for this period was to launch a 100 percent digital bank, which we did in January 2024, when we launched Bineo. With this model we seek to share cost efficiencies with our customers through rewards programmes, points accumulation and commission benefits.
In this way, we remain more competitive than ever. Today Banorte is a digital bank with branches. All these actions have earned us national and international recognition, which materialised with the ‘Best Banking App,’ ‘Best Digital Consumer Bank’ and ‘Best Retail Bank’ in Mexico awards conferred by World Finance.
Making something extraordinary
This year, 2024, we celebrate our 125th anniversary, commemorating our history of effort, hard work, innovation, citizenship and social commitment. We know that people expect extraordinary actions and services from us. The actions taken over the last 20 years have positioned us as the Mexican financial group at the heart of the country.
We adapt, react nimbly, and anticipate customer needs to put the ‘extra’ in extraordinary
But now is not the time to rest on our laurels. We are currently assimilating the accelerated changes that mark the new era. To this end, we have continued on with our strategic plans, adding four, five and six on from the previous period. These plans represent a continuous process for us, but namely they are to: be the best experience in the market, provide the best customised offer on the market, and be the best business operation of the financial system.
In this way, we adapt, react nimbly, and anticipate customer needs to put the ‘extra’ in extraordinary. With the renewal of our strategy, we will give traction and rhythm to everything we have built. We will focus on returning to our essence as a financial institution, but equipped with technological infrastructure, innovation, talent and cell culture, multidisciplinary and collaborative teams focused on continuously improving processes and results, their ultimate goal being to offer the best customer experience.
Mexico is our home, and we will stay here. Our commitment to the country is unwavering, we honour the past and now our eyes are set on the future. Challenges await us and we are prepared to meet them. Together we will continue to do the ordinary in an extraordinary way! At Banorte, the next 125 years will once again be written hand in hand with Mexico.
Investing securely: A global commitment to trust and transparency
As Garnet Trade, we have been operating in the global forex market since 2010. For the past 14 years, we have always aimed to provide our investors with secure and efficient investment services, along with premium customer service. As part of our journey, we continue to offer premium services to investors worldwide under the motto ‘Forex for All.’ To further this ambition, we now have a firm presence in Europe and North America, with offices in Macedonia and Canada. Additionally, we have an office in Sydney, Australia. While expanding globally, our foremost mission remains to provide secure investments for all our investors.
At Garnet Trade, ensuring the security of our investors’ transactions is our top priority under all circumstances. Our licences, which formalise our diligence and high standards in the industry, further reinforce this assurance. As an Australia-based institution, we hold a licence from ASIC (Australian Securities and Investments Commission), one of the most reliable and respected regulators in the world. The ASIC licence guarantees that Garnet Trade operates at the highest standards and offers a secure, transparent, and ethical trading environment to its investors. This licence also acts as a guarantee for the institution’s reliability and long-term sustainability in the industry.
Another important licence we hold comes from FINACOM (Financial Commission), an independent international regulator. This reputable organisation, with representatives in many countries, plays a crucial role in ensuring the security of our investors’ accounts. FINACOM’s compensation fund provides protection up to €20,000 in case of potential mishaps, offering an additional layer of security. This protection not only ensures financial safety but also helps our investors feel secure, knowing their rights are safeguarded against potential issues. Our collaboration with the Financial Commission underscores Garnet Trade’s commitment to customer satisfaction while reinforcing the importance we place on transparency and trust in our relationships with investors.
Security as a priority
Additionally, we indirectly protect our investors through our Mwali licence. Regular audits conducted by Mwali enhance account security and strengthen our commitment to financial transparency and regulatory compliance. The Mwali licence ensures that financial records are meticulously maintained, and necessary reports are submitted promptly, further reinforcing the robustness of our audit processes. This ongoing commitment to transparency and security is also reflected in how we manage and maintain investor satisfaction.
Investor satisfaction has always been a priority for Garnet Trade, and we strive to go beyond the guarantees provided by our licences to enhance this satisfaction. Our highly skilled and knowledgeable team plays a significant role in enhancing investor satisfaction through the services we offer. We assign expert financial advisors to support and guide our investors at every stage of their forex market journey. These advisors directly communicate with our investors during working hours, providing daily financial data and updates on the economic calendar. Our expert investment advisors share customised fundamental analyses tailored to investors’ needs, helping them better understand market conditions. Alongside these analyses, we also offer product-based technical analyses, providing the necessary information for our investors to make informed and strategic decisions. This comprehensive support system is further strengthened by training programmes designed for new investors.
For investors new to the global forex market, our experienced team provides comprehensive forex training. These training programmes aim to help investors understand market dynamics and develop effective trading strategies. Investors gain both theoretical knowledge and practical experience tailored to their individual needs. After completing these programmes, they are supported in gaining real-world experience in real market conditions. At Garnet Trade, another of our top priorities is to ensure that our investors have a successful investment journey by developing their knowledge and skills. Supporting investors through education is an integral part of our service approach, which is grounded in the philosophy of accessibility.
Comprehensive support
One of our core principles is accessibility. At Garnet Trade, we offer 24/7 live chat support to instantly respond to our investors’ needs. This service aims to provide immediate solutions to any challenges they may encounter in dynamic markets, ensuring a secure and seamless trading experience. This continuous and accessible support not only resolves issues but also creates a safe environment for our investors. Accessibility also extends to our digital platforms, which keep our investors informed.
One of the services we offer our investors is the Garnet Plus mobile application. This app, developed entirely by our institution, aims to provide financial information and support to our investors. In addition to offering insights about Garnet Trade’s product range and promotions, the mobile app provides insights into products not available in the forex market. Investors can view product-specific explanations and follow separate news feeds.
With the economic calendar within the app, they can monitor the market and access trend forecasts prepared with computer-based technical analyses. Garnet Plus is a critical resource for investors, both for gathering information and supporting investment decisions. Through the app, investors can easily watch educational videos developed by our institution and receive instant updates on the institution’s advantages and developments. This ease of access complements the wide range of instruments and services we offer.
At Garnet Trade, we offer our investors over 160 instruments spanning various asset classes, including indices, currency pairs, metals, energies, and cryptocurrencies.
Our product range continues to expand to meet investor demand and is enriched as part of our global expansion strategy. While offering global services, we aim to comply with local regulations and develop new partnerships to increase our international presence. Among our sponsorships are globally recognised brands such as SC Braga, MotoGP – Honda LCR, Galatasaray Women’s Volleyball Team, and AS Monaco Basketball Team. In the future, we plan to establish new partnerships and participate in social responsibility projects. This global expansion is also recognised through numerous awards and accolades.
Garnering respect
The numerous awards we have received from independent global organisations in finance and the forex industry have earned us recognition and respect worldwide, and we are proud to share these successes with our investors. As we celebrate these achievements, we continue to offer flexible solutions for investors with diverse needs.
Our expert investment advisors share customised fundamental analyses tailored to investors’ needs
Investors who are short on time or uncertain can use Garnet Trade’s Copy Trade system, where trades executed by master investors are automatically copied. Additionally, the Introducing Broker (IB) system allows IBs to refer new investors through a personal link and earn a percentage from the trades made by these referrals. These innovative tools, along with unique offerings such as Garnet Money, support investors’ strategies.
One of our other advantages is Garnet Money. This is an unwithdrawable bonus offered to support investor margins based on specific categories or campaigns. Along with offering unique trading solutions, Garnet Trade aims to make a positive contribution to the world through our sustainability initiatives.
Garnet Trade is committed to sustainability, adopting the ideology ‘There is no Planet B.’ We are aware of environmental crises such as resource depletion, climate change, and ecological imbalances, and this heightens our sense of responsibility. Protecting the future is crucial, as our existence depends on the health of the planet. While our motto is ‘Forex for All,’ our mission extends to protecting a livable world for future generations.
At Garnet Trade, we aim to create positive changes for our planet through future collaborations focused on social responsibility and environmental protection. We believe that everyone should embrace this responsibility and integrate sustainability into their lives. Because our future is in all of our hands.
Lessons from the Dominican Republic’s rising economy
Impressive economic growth and increasing diversification plus an array of government-funded infrastructure developments is fuelling economic opportunity for investors in the Dominican Republic. A secret sauce, or a succession of sound policy-making supported by special economic zones and serious long-range planning?
Productivity is up. The implementation of many market-orientated reforms from the 1990s have matured and come good. For major banking players like Banreservas, higher foreign direct investment means more commercial and retail opportunities, strengthening its hand across digital banking and fintech.
This year’s re-election of President Luis Abinader with almost 60 percent of the vote reinforces the country’s economic stability narrative. Now, in a new interview for World Finance, Banreservas executive president Samuel Pereyra says that while the compliance and tech pressure is immense, the chance to meaningfully improve lives and develop new products is profitably paying off.
Between 2020 and 2023, Banreservas profits and total assets were sharply up, thanks to tourism, SME business and construction. How sustainable is this growth for the next three years?
I am optimistic about sustainable growth in our country’s key sectors, such as tourism, SMEs and construction. Tourism has diversified post-pandemic, attracting a broader audience with a lot of innovation going on. However, investing in infrastructure and training is crucial to maintain competitiveness. For SMEs, digitalisation and government initiatives to help financing will support our growth. We feel the construction sector is recovering due to housing and infrastructure demand, but adopting sustainable practices is crucial.
Overall, these sectors have great potential for growth in the next three years as policies that promote investment and sustainable development continue. Banreservas supports all these sectors for the greater well-being and prosperity of all Dominicans.
How long can a dual office set-up that blends digital and customer-facing operations remain before going 100 percent digital? Or will a part-physical commitment stay in place indefinitely?
In our experience a hybrid approach, blending digital operations with face-to-face interactions, is the right mix. In other words, dual offices provide flexibility, catering to customers preferring personalised service, especially for more complex financial matters.
The trend, yes, is towards more digitalisation. A dual set-up is sustainable if it is aligned with customer expectations. So I would say the future is definitely hybrid, focusing on digital while maintaining personalised service. The key really is agility in adapting to market demands.
How much of your growth hinges on ex-pat business and services, or Dominicans living abroad? How will this market grow sustainably over 2024 to 2030?
Dominicans abroad play a big role in driving our economy, both in local consumption and business growth. We think this market will grow sustainably between 2024 and 2030 due to digitalisation, facilitating quicker and more secure transactions, plus more interest generally in investing in the Dominican Republic. For us it is crucial to improve financial services for the diaspora, including strengthening representative offices, tailoring products, and offering personalised service. This will consolidate our relationships with Dominicans abroad, ensuring robust growth, we anticipate.
How much is the remittances market worth and how profitable is it?
The Dominican Republic’s remittance market was up 3.1 percent and hit $10.3bn in 2023, a record year. Remittances are crucial for families and to stimulate overall economic growth. For us, the sector’s profitability stems from money transfer services and complementary products – it is very competitive and that is a driver for more innovation across a lot of different services, putting the customer front and centre. The remittance market also impacts local socio-economic development by promoting consumption and investment in SMEs. Innovation and inclusion in this segment are crucial for future growth, a focus for Banreservas in the years ahead.
How many digital customers do you have – and how much will this grow by in the next 12 months, do you think?
Banreservas boasts 1.7 million active users across digital channels, processing 13 million transactions a month through our App Banreservas and TuBanco (web version). More digital advancements, like the new digital token, digital accounts and digital fixed term deposits, provide clients with convenient self-service options also. In the next 12 months, we anticipate a 40 percent increase in users, driven by tech improvements and new services. A continued focus on financial inclusion – this is very important for us – will contribute to the expanding digital user base.
In 2023 around 85 percent of transactions were digital. Where will this be by the end of 2025, do you think?
By 2025 digital transactions will likely become the norm, with significant growth in mobile payment platforms and digital wallets. We anticipate the proportion of digital transactions to increase beyond 85 percent, with services like loans and financial advice conducted digitally.
Emerging technologies like AI and blockchain will also enhance security and efficiency. Banks have to adapt by offering innovative solutions and prioritise a customer-centric experience, driving the shift towards a more digital economy.
In terms of digital services, does the bank subsidise the internet data consumption use of customers? If so, by how much?
We understand access to digital services is essential for our customers, especially in an environment where digitisation has become increasingly important. For this reason, since 2021, we have put in place ‘Data Patrocinada,’ where Banreservas covers the total cost of data consumption associated with the Banreservas App.
Users of the Banreservas App, for example, who have data services from telecommunications providers in the Dominican Republic, can make balance inquiries, pay bills and settle credit cards, as well as make other transactions, in an immediate and safe manner.
What digital niche markets are you looking at getting into in future?
We are probing several digital niche markets to drive growth and promote financial inclusion. Key areas include leveraging technology for cost-efficient, customer-orientated solutions, collaborating more with fintechs than in the past, and implementing digital financial education and inclusion platforms. There is a lot going on in this space.
Our ‘Bancarizar es Patria’ programme exemplifies our serious commitment to financial inclusion, we feel, offering few requirements and providing educational resources. By focusing on collaboration and innovation, we aim to adapt to our clients’ needs while fostering genuine social equity and the country’s broader development.
What about your digital security programme – where are the biggest risks coming from, and how will your clients be protected from them?
Security is a huge priority for us, from prevention and detection to cyber. We absolutely prioritise securing our technological infrastructure and are actively educating our customers about best security practices. We have built our own Cybersecurity Operations Centre (SOC) equipped with state-of-the-art technology and certified staff for 24/7 monitoring and response. Also, our blog, ‘Your Security,’ provides customers with timely information for asset protection. We have combined advanced technology, ongoing education plus a very agile threat response. We feel we have created a very secure environment for our clients – we continue to work very hard here.
What proportion of your digital business is from low-income customers or the financially excluded? And will this ratio rise in the next 12 months – if so, by how much?
More than 50 percent of our digital customers are from low-income or financially excluded segments. We expect this to grow in the next 12 months as we expand our offer, targeting underserved communities to drive financial inclusion – for as many of our people as possible. Our average month-over-month growth in digital savings account openings exceeds 20 percent.
I would say the future is definitely hybrid, focusing on digital while maintaining personalised service
Also, our social responsibility programme – we take this very seriously indeed – aligns with the National Development Strategy, promoting socio-economic development through initiatives in education, financial inclusion, entrepreneurship, and co-operative development. The ‘Reservas del Futuro’ scholarship programme supports outstanding students, while the Banreservas Cultural Centre fosters culture and education.
How does it integrate with your social responsibility programme more widely?
Banreservas’ social responsibility programme integrates closely with our overall strategy by supporting vulnerable communities through initiatives in education, financial inclusion, entrepreneurship and cultural development. Our ‘Reservas del Futuro’ scholarship programme benefits outstanding students, while the Banreservas Cultural Centre consistently fosters arts and culture.
We also have Voluntariado Banreservas, our social arm, working to cut the needs of the less fortunate sectors of the country, building a world of possibilities and hope that generates a positive impact on the future of our nation.
We always aim to support national talent, promote cultural growth, and provide opportunities for artists to connect with diverse audiences. By this we contribute meaningfully to the social and cultural development of the Dominican Republic, aligning ourselves with the National Development Strategy.
How does your digital coin programme work – how challenging has it been to develop?
Currently, this type of currency is not regulated by the Central Bank of the Dominican Republic, nor does it have the authorisation of the Monetary Board for its issuance and use as a means of payment for any transactions. This presents significant challenges that limit our ability to offer cryptocurrency-related products in a safe and effective manner.
While we are observing trends in the cryptocurrency market and its evolution, our primary focus remains on strengthening our traditional services with new tech, ensuring the security of our services while maintaining the trust and satisfaction of our customers.
How do you differentiate digital accounts with traditional deposit accounts, characterised by fixed terms and interest rates? Do digital products offer a better deal?
To encourage digital adoption with our digital savings account, we have implemented a new strategy that offers a differentiated value proposition compared to traditional savings accounts. We now have a defined fee structure with highly valued benefits for both existing and new customers, who can connect with the bank 100 percent digitally without a minimum opening deposit requirement. Also, digital accounts are exempt from minimum balance charges, making them very attractive to customers.
What is your risk management approach to currency risk – are you increasingly blending your USD exposure with CNY, for example?
Our risk management approach focuses on neutral or long positions in USD and EUR to meet market demands. We have a robust structure for identifying, measuring, monitoring, and communicating risks, integrating three lines of defence. We deploy Value-at-Risk (VaR) and Expected Shortfall (ES) to measure exposure to exchange rate risks, and our Risk Appetite Statement defines tolerance and capacity levels. Monitoring indicators, exposure limits, and alert levels are tracked and reported to decision-making bodies. This is a comprehensive as well as responsible risk management stance, we feel.
In your judgement, what condition is the Dominican Republic economy in at the moment – and how is it positioned for 2025?
The Dominican Republic’s economy is growing, with positive signs in sectors like tourism, construction and SMEs. GDP growth is robust, and foreign investments, exports and remittances are vital supporting pillars here. It really is encouraging. But inflation and public debt management are challenges that do need prudent fiscal and monetary policies to maintain stability and confidence.
Looking ahead to 2025, optimism is very much warranted, I feel, as projections now very much show a strengthening of major sectors and economic diversification. Aligning with global trends like sustainability and financial inclusion will enhance our country’s competitiveness. By addressing challenges, the Dominican Republic can more reliably seize incoming opportunities. We have a lot to be proud of and excited about.
What structures are in place to balance the bank’s role as a government-owned entity with its commercial banking operations?
We balance the state-owned entity status with commercial operations via a strong corporate governance structure. We have an autonomous board of directors with public and private sector experience ensuring decisions are always based on efficiency and profitability. Also, we have specialised committees which oversee key areas, balancing our public and commercial objectives.
We supply full transparency, disclosing financial reports and undergoing rigorous audits. There are strict policies around potential conflicts of interest, maintaining our independence and robustness in management while safeguarding market competitiveness. We feel we have got the mix right.
How does Banreservas manage potential conflicts of interest given its ties to government?
Banreservas manages potential conflicts of interest through a series of policies and practices designed to ensure transparency and integrity in our operations. Firstly, there is a governance framework that includes a robust code of ethics, which establishes clear guidelines for all our employees and executives regarding decision-making. Additionally, we maintain a clear separation between our banking functions and government decisions, allowing us to operate independently.
We contribute meaningfully to the social and cultural development of the Dominican Republic
We also conduct regular internal audits and external reviews to ensure compliance with established regulations and standards. This not only reinforces our transparency but builds trust among our customers and partners. Finally, we promote a culture of reporting situations that may represent a conflict of interest, ensuring the right measures are taken to address them promptly and effectively. Through these efforts, we aim to operate with the utmost responsibility and ethics in our actions.
What banking innovations can you reveal for 2025 and beyond?
In 2024, Banreservas made substantial strides in innovation. Our 2025 goal is to solidify our market leadership in the Dominican Republic and our international offices. Our digital transformation journey will persist, ensuring we remain reliable, efficient, agile and digitally driven without compromising our human touch. So we will be a more international, efficient, customer-centric service institution preparing ourselves for a dynamic, accessible future that’s genuinely inclusive for every Dominican wherever they are. We think that is very exciting.
Uruguay is experiencing an economic boom
Between the Uruguayan countryside and the South Atlantic Ocean lies Punta del Este, a vibrant coastal city unlike any other. Cosmopolitan culture, gorgeous beaches, vast nature preserves, a progressive and safe community and a robust economy close to the capital, Montevideo. Punta del Este is the perfect place at the heart of Latin America’s most favourable tax haven – and the world is catching on.
No longer just a second-home market for high-net-worth Brazilians and Argentinians, Punta del Este is seeing a swell of Americans and Europeans looking for a place to activate their wealth, for a ‘plan B,’ or a geopolitical hedge in an uncertain world. The Uruguayan government makes it easy and attractive. Expats can claim tax residency with just 60 days in Uruguay if they purchase property worth $480,000, compared to 183 days in Florida. If you make a $2.6m investment then there is no residency requirement at all. The payoffs are immense: no taxes on foreign investment income for 11 years. And there are amazing opportunities to take advantage of the favourable tax climate, from tech to real estate.
Uruguay’s economy is at the beginning of a boom. It is the third-largest software exporter per capita in the world. Thousands of start-ups have recently launched. Major VCs like Andreessen Horowitz are investing billions. Google has invested $850m in a new data centre in Montevideo, where IBM and Microsoft have also set up offices. Netflix is doubling down with film production. Momentum is building in the sustainable agricultural sector as well. This is just the tip of the iceberg.
All of these economic conditions, and more, are simultaneously putting Punta del Este on the map for discerning real estate audiences. And there is but one address on their mind: Fasano Las Piedras.
At the heart of this iconic destination is a hotel designed by Pritzker Prize-winning architect Isay Weinfeld. Fasano Las Piedras also has a private airport, five restaurants, an Arnold Palmer golf course, tennis courts, an exquisite spa, organic gardens, private beach access, a world-famous equestrian centre, a polo field signed by Nacho Figueras, and now an exclusive collection of branded residences – private homes set within verdant hills, rolling along the coastal landscape.
Luxury real estate
For the homes, the brilliant architect Carolina Proto of Estudio Obra Prima has crafted four distinct design concepts, ranging from one- to nine-bedrooms and constructed on three- to 15-acre parcels. Expanding on Weinfeld’s vision for the first phase of Fasano Las Piedras, Proto is now introducing the region’s most exquisite private homes.
The Country Residence is 6,500 square feet, including five suites, a staff room, a home office and a large swimming pool with an outdoor dining area.
Uruguay’s economy is at the beginning of a boom
The Polo House, designed in consultation with Nacho Figueras and positioned alongside the development’s world-renowned polo field and golf course, is available in two configurations: a 4,700-square-foot, three-suite residence and a 6,500-square-foot, five-suite residence, both featuring a staff room and a sweeping wrap-around terrace with a custom parrilla dining and barbecue pit and a large private pool.
The Farm House is inspired by traditional Uruguayan country estates, spanning 17,000 square feet with seven suites, two staff rooms and a swimming pool. Any four of these custom-built, turn-key homes can be constructed on a range of lots sized from one to 15 acres.
These residences were conceived for today’s global citizens who prioritise ease, who require discretion and the highest level of service, who desire more than a tax haven; they want the best quality of life. Buyers can customise the size and design of their home to fit their unique lifestyle.
In a serene location at the epicentre of Uruguay’s economic boom, Fasano Las Piedras is the most compelling branded residential offering in Latin America right now. With prices starting at around $2.6m, it is still a value play compared to other branded destinations in Mexico and Costa Rica, none of which compare in tax favourability.
As Douglas Elliman-Knight Frank’s global expert on branded residences, I am thrilled to represent Fasano Las Piedras. Please see fasanolaspiedras.erinboissonaries.com for further information.
Leading the way to carbon neutrality
At BA Glass, sustainability is not just a corporate target; it is a long-term commitment that drives our innovation, shapes our strategy and influences every decision we take. Our focus on the environment and society spans decades, but recent achievements have highlighted our dedication to sustainable development.
BA Glass’ sustainability framework is built on six key pillars: people, social accountability, environmental responsibility, shareholders, customers and consumers. These pillars guide our approach to sustainability, from the employees and communities’ development to the environmental impact of our operations and the satisfaction of our customers.
An ambitious goal has been set to become carbon neutral by 2050. While aligning our strategy with global initiatives such as the Science-Based Targets Initiative (SBTi), we are leading the way in reducing emissions and creating value for all stakeholders. In line with this vision, BA Glass aims to reduce Scope one and two emissions by 50 percent by 2035. Our efforts in this area have already yielded significant results. At our plants, 100 percent of electricity consumption is sourced from renewable energy, resulting in zero Scope two emissions. This achievement is just a part of our journey toward sustainability, as we continuously explore new technologies and partnerships that can help us reduce our carbon footprint.
Fostering commitment
Our commitment to the environment extends beyond energy use. We are actively working to enhance circularity within our operations. By partnering with Plataforma Vidro+ initiative in Portugal, where BA Glass operates, we aim to foster commitment among stakeholders in the national packaging glass value chain. In Romania, with the deposit and return system underway, we expect to drive significant increases in the glass collection rate.
This journey goes beyond meeting specific goals – it is about rethinking how we operate at every level
As a core part of BA Glass’ strong commitment to environmental sustainability, reducing the impact of our packaging is a top priority. Acknowledging the environmental issues tied to plastic, we have started several projects to reduce plastic waste in our processes.
In addition, we are also replacing cardboard with circular layer pads, resulting in a nine percent drop in cardboard usage per ton of production. At BA Glass we are also focused on the development of lightweight glass packaging, a key element in our strategy to reduce both Scope one and Scope three emissions. In 2023 alone, the lightweight programme has consistently reduced the volume of glass used in packaging, leading to a mitigation of over 1,000 tons of CO2 emissions.
Among the most remarkable innovations is the ECO furnace development, a technology that aims to revolutionise glass production using 100 percent renewable energy. By transitioning from natural gas to renewable electricity, green hydrogen, or biofuels, we expect to significantly reduce our energy consumption and CO2 emissions.
Collaborative workshop
Beyond all these efforts, our partnerships with clients are key in driving sustainability forward. Through initiatives like Collab2Zero, a collaborative workshop designed to create a step-by-step action plan with our clients, we are working together to reduce our carbon footprint across the entire supply chain. Furthermore, our transport strategy is also at the forefront of innovation. Our initiatives in this field, such as the increasing use of dual trailers, electric, bio-LNG trucks, and a combination of road, rail, and short-sea shipping, have collectively improved efficiency, leading to notable CO2 emissions reductions.
Alongside all these initiatives, at BA Glass we are actively conducting extensive pilot projects to replace traditional raw materials with innovative, carbon-free alternatives that help us to reduce our emissions. These changes, as well as our ongoing collaboration with all the stakeholders in the value chain, are potentiating our positive impact on the environment. We recognise that sustainability is a shared responsibility and, by fostering partnerships with customers, suppliers, and communities, we aim to create a ripple effect of positive change, driving the entire industry towards a more sustainable future.
BA Glass’ recent improvements towards the environment are part of a cohesive strategy that will continue to evolve. This journey goes beyond meeting specific goals – it is about rethinking how we operate at every level, forging a path to a greener future.
Mitrade’s sustainable growth strategy
The rise of retail trading during the Covid-19 pandemic brought more individual traders into the Contract for Difference (CFD) market. This has led to a boom in CFD broker growth and a rapid evolution of the CFD brokerage industry characterised by increased competition, regulatory tightening and the growing sophistication of traders who expect more advanced tools and platforms. As one of the fastest growing brokers in recent years, Mitrade recognised these industry and consumer shifts and has developed a proprietary platform that is both intuitive and comprehensive, with a diverse product offering that appeals to beginners and experienced traders alike. With a steadfast commitment to sustainable business development, Mitrade has been awarded the Most Sustainable FX Platform (Global) in 2024 by World Finance.
Building sustainable relationships
The regulatory landscape for CFD brokers has evolved significantly in recent years, with a key focus of protecting retail investors from high-risk exposure. Australia, Europe and parts of Asia have introduced leverage caps and imposed stricter regulations on how brokers can advertise and market their services, particularly regarding high-risk promises or bonus schemes. Additionally, enhanced Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance has made client onboarding more complex and costly.
These increasing regulatory requirements along with rising operational costs are reducing profitability, but by maintaining full compliance with global regulatory standards, CFD brokers can minimise legal risks, sustain operations and increase their trustworthiness with clients. Additionally, regulatory tightening has pushed brokers to innovate and find alternative revenue streams, build sustainable, long-term relationships with clients, and use automation and technology to streamline processes and improve the overall client experience, which are also key to achieving growth.
Mitrade operates across the globe with entities regulated by the Australian Securities and Investments Commission (ASIC), the Cyprus Securities and Exchange Commission (CySEC), the Cayman Islands Monetary Authority (CIMA) and the Financial Services Commission (FSC) from Mauritius. Mitrade’s philosophy is to provide a transparent, simple and regulated trading environment for users through their user-friendly proprietary platform.
Mitrade offers clients advanced risk management features, which help to protect both the client and the broker, fostering trust and reducing regulatory risks to create a secure trading environment for clients.
Strengthening user trust
As traders have diverse preferences for asset classes, offering a wide range of tradeable instruments – such as stocks, commodities, forex, indices and cryptocurrencies – broadens market reach and attracts a more varied client base. When market conditions in one asset class are less favourable, brokers can shift focus to more active markets to maintain stable revenue.
Brokers must be ready to embrace change and technological advancements like AI, data analytics, and automation
Traders are also more likely to remain loyal to a platform where they can access multiple assets in one place, providing them opportunities to diversify their portfolios across different markets. Introducing special features like premium accounts, subscription models, or specialised tools for advanced traders can help reduce dependency on trading volumes alone. By remaining aware of market trends and catering to the evolving needs of traders, such as by offering emerging asset classes like cryptocurrency and ESG-related instruments, brokers can increase trading activity, revenue and client engagement, while reducing churn rates and fostering loyalty.
Mitrade is a multi-asset broker offering a diverse portfolio of financial instruments covering a wide selection of CFDs in forex, commodities, indices, shares, ETFs and cryptocurrencies.
With the rise of mobile trading, convenience and accessibility have become paramount. Traders are increasingly favouring mobile platforms and expect the same advanced tools, real-time data, and functionality as desktop versions provide. Brokers must deliver fully optimised mobile apps without sacrificing capability, thereby ensuring traders can execute strategies seamlessly on the go. Mitrade offers an intuitive, secure and user-friendly platform across web, desktop and mobile apps. With a simple and accessible interface, real-time market updates, trading analysis and risk management tools, the platform easily meets the needs of all different types of traders.
Putting customers first
With increasing competition in the broker market, maintaining differentiation and fostering customer loyalty can be challenging, especially as today’s traders are more informed and expect better platforms and top-tier customer service. Building sustainable client relationships must therefore begin even before clients sign up.
Through targeted digital and localised marketing strategies, brokers can tailor campaigns that attract specific trader demographics and expand into new markets. Providing educational resources such as trading tutorials, webinars and market analysis, helps not only attract new traders, but also fosters trust and credibility, positioning the broker as an industry expert.
Mitrade understands that client education is critical for long-term retention and growth. When clients feel empowered, they are more likely to stay engaged and make better-informed trading decisions. Therefore, we provide our customers with comprehensive education resources to enhance confidence and increase trading activity. By reducing the frequency of impulsive, high-risk decisions, education also helps protect clients from large losses. Mitrade is dedicated to delivering quality customer service, offering 24/5 support aligned with global trading hours, provided by a team of dedicated customer service officers. In addition to live chat bots and a detailed FAQ, clients can seek support through email and inquiry forms. Robust customer support combined with continuous education in risk management, market analysis, and trading strategies helps reduce client churn and improves profitability.
Mitrade’s commitment to high-quality products and services has earned it multiple customer satisfaction and happiness awards, reflecting our clients’ trust and loyalty.
Technology at the heart
For companies like Mitrade, technology is at the heart of our ability to scale and grow, and ensures our competitiveness in a rapidly evolving market. Our user-friendly, mobile-first platform offers real-time market access, analytics, and a reliable trading experience that supports active trader retention. Fast trade execution and low latency are critical in time-sensitive markets, and our advanced risk management tools – such as stop losses and negative balance protection – help limit excessive losses for clients and reduce exposure to negative balances, ensuring regulatory compliance.
Mitrade’s philosophy is to provide a transparent, simple and regulated trading environment for users
Leveraging technology has allowed us to expand into new markets, automate account management, streamline client onboarding, and monitor compliance, effectively scaling operations without proportional cost increases. The widespread adoption of artificial intelligence (AI), big data analytics, and algorithmic trading over the last few years are driving growth. AI chatbots are helping improve customer support, while personalising trading experiences through tailored market insights and analytics, helping our clients make more confident decisions. Analysing large data sets also helps brokers, like Mitrade, understand customer behaviours and market trends, leading to optimised product offerings, reduced churn, and improved marketing strategies. Furthermore, real-time market monitoring supports better customer trading insights, reducing the risk of non-compliance with improved transaction monitoring.
Technology plays a pivotal role in Mitrade’s sustainable growth, competitiveness and market differentiation. AI personalisation, such as personalised dashboards and automated insights, will be key to providing a tailored and engaging experience for traders. As demand continues to grow for strategies involving learning alongside experienced traders, such as social and copy trading, what remains essential is advanced data and analytics tools that help retain both novice and seasoned traders. We see that future growth will be driven by access to expanding markets, such as cryptocurrency CFDs and other digital assets, and introducing advanced mobile features such as biometric security, one-click trading and push notifications.
Future outlook
Unlocking sustainable growth over the next decade will continue to be a challenge with evolving regulations and client expectations. Brokers must be ready to embrace change and technological advancements like AI, data analytics, and automation to provide personalised insights, predictive analytics and automated risk management. Expanding CFD offerings to include new asset classes such as cryptocurrencies, renewable energy, and ESG-related assets can help attract eco-conscious clients and align with global trends. Improving the client experience through comprehensive educational resources and dedicated support can strengthen both acquisition and retention.
While regulatory challenges persist, they contribute to a more stable and trust-based environment, allowing only well-capitalised and compliant brokers to operate. Brokers that can adapt to regulatory changes and continue innovating will be better positioned for long-term growth.
Cork’s sustainable revolution: from stoppers to aerospace
Cork is one of nature’s most remarkable materials. It is a renewable, biodegradable, and versatile resource, cyclically harvested without damaging the trees it comes from. It grows in the Mediterranean, where, for centuries, cork oak forests have not only supported a diverse ecosystem but also acted as vital carbon sinks, capturing large amounts of CO2.
Recognised as World Finance’s Most Sustainable Company in the Wine Products Industry, at Amorim, our role has been to take this naturally sustainable material and find new, innovative applications for it. Though most widely known for cork stoppers, which we produce at a scale of over 5.6 billion annually, cork is being utilised in increasingly diverse industries. Our work spans from creating products for the aerospace sector to eco-friendly sports infills, demonstrating the adaptability and potential of cork beyond its traditional uses.
Innovating with every stopper
One of the key areas of our business remains the production of cork stoppers for wine, spirits, and sparkling wines. Each day, we manufacture over 22 million stoppers, serving markets like France, Italy and the US. But it is not about quantity – our research and development team continues to refine the quality and sensory performance of these stoppers, ensuring they meet the highest standards.
A critical part of our sustainability actions involve responsible forest management
A major breakthrough has been our ability to produce cork stoppers with non-detectable levels of the molecule Trichloroanisole (TCA), a compound that can affect wine. This achievement combines traditional craftsmanship with scientific research and innovation, benefitting both winemakers and consumers.
Cork processing companies are a driving force in creating an economic interest for forest owners to maintain their properties. As such, cork stopper production, as the most valued product in this ecosystem, makes a significant contribution to climate change mitigation, making it a much more sustainable choice than alternatives such as aluminium or plastic.
A key principle in our operations is ensuring that no part of the cork goes to waste. Any cork that is not used for stoppers is repurposed into other applications, from flooring and insulation to advanced materials for industries like aerospace. This approach allows us to operate within a 100 percent circular economy, where every byproduct is transformed into something valuable.
Amorim Cork Composites is a prime example of how this circular economy works. The by-products originating in the cork stopper manufacture are ground down and used to develop innovative products, demonstrating how sustainability and innovation can go hand in hand. With the growing demand for sustainable materials across a variety of industries, we are constantly exploring new applications for cork.
Forest management and climate action
Our work is not limited to what happens in the factory. A critical part of our sustainability actions involve responsible forest management. Cork oak forests not only supply the raw material we need but also play a vital role in capturing CO2. We have implemented innovative practices to make cork oaks more resilient to climate change, pests, and diseases, while also planting new forests and improving the health of existing ones.
In fact, through a combination of research and intervention, we are working on decreasing the time it takes for the first cork harvest from 25 years to just 10–12 years. This increases the economic interest and viability of the forest.
For every tonne of cork harvested, the forest is capable of sequestering up to 73 tonnes of CO2
Cork oak forests are one of the world’s natural carbon sinks: for every tonne of cork harvested, the forest is capable of sequestering up to 73 tonnes of CO2. This ability to capture carbon and retain carbon for long periods of time, since the tree is not cut down and lives an average of 200 years, makes cork one of the most environmentally friendly materials available today.
According to a life cycle analysis conducted by PwC Naturity, cork stoppers are significantly superior to artificial closures in five of the seven indicators analysed. Namely, non-renewable energy consumption, solid waste generation, contribution to the formation of photochemical oxidants and the contribution to the eutrophication of surface waters and greenhouse gas emissions. These findings reinforce cork’s position as a sustainable material with significant environmental benefits, particularly in reducing our carbon footprint.
More than 150 years of history
Corticeira Amorim is the largest global exporter of cork and the oldest cork company in the world in continuous operations since 1870. We are also the world’s largest cork processing company, with a presence in almost 30 countries in five continents and the largest distribution network in the sector. We have a diversified client base of over 30,000 customers and more than 93 percent of our sales are made outside of Portugal, where we are based.
Sustainability is deeply rooted in Corticeira Amorim’s DNA, and we are proud to see our efforts recognised with this award, which highlights our commitment to efficient resource management, sustainable consumption, process circularity, ecosystem protection, and the development of our people.
Nigeria’s success in harnessing investment
Total revenue for investment banking in 2024 is projected to hit $142.16bn, fuelled by a sharp increase in private equity activities, growing capital demands, and the adoption of sustainable finance practices. The market is expected to grow to $194.05bn by 2028 with further developments in AI-powered solutions, digital assets and the deepening of ESG initiatives. The future of investment banking will be shaped by advancements in tech and adherence to sustainability.
The past year has marked a pivotal period for the investment banking sector in Nigeria, one of Africa’s largest economies. An increasing need for capital is spurring capital-raising activities, mergers and acquisitions, and sustainable finance across key industries like financial services, telecoms, real estate, consumer goods and energy sectors.
Coronation Merchant Bank (Coronation MB) is an adviser to corporates and governments and is positioned to harness these opportunities. The four trends that will shape the future of investment banking in Nigeria are: commercial paper (CP), infrastructure investment, mergers and acquisitions (M&A) and Islamic finance.
Commercial paper
In a rising interest rate environment, with a need for alternative sources of funding from expensive bank loans, commercial papers have emerged as a vital source of working capital finance for investment-grade corporates. In 2022, Nigerian companies raised ₦1.5trn ($910m) via CP issuances (₦252bn – $153m – in 2022). This growth in issuances underscores the importance of CPs to corporates at a time of prohibitive bank loans.
Corporate issues span various sectors from manufacturing, financial services, health, agriculture, and the retail sectors of the Nigerian economy, reflecting the wide acceptance of this mode of working capital financing. Some major transactions in 2023 were MTN Communications’ ₦374bn ($227m) raise across multiple issuances. Other CP issuances like Dangote Cement, Flour Mills of Nigeria and Nigerian Breweries had issuances of ₦150.97bn ($92m), ₦221.28bn ($134m) and ₦116.49bn ($71m) respectively.
We expect more corporates to continue to leverage M&A to achieve strategic growth
Of the several commercial papers raised during the year, Coronation Merchant Bank raised an aggregate amount of ₦343.43bn ($209m) for Dangote Sugar, Dangote Cement, and 27 other issues with a view to increasing our activities in the space going forward.
The CP market is not without its attendant challenges, ranging from inflationary pressures to the various monetary policy measures put in place to curb this. However, our long-term outlook for the CPs remains optimistic as corporates continue to search for working capital funding and the flexibility of CP programmes.
Infrastructure investment
Owing to the Nigerian infrastructure deficit, which necessitates investments of about ₦30trn ($18.2bn) over the next 30 years, fund managers have registered infrastructure funds of ₦1.5trn ($910m), with ₦230bn ($140m) raised over six years. These funds have been deployed to the health, transport, telecoms and energy sectors.
Coronation MB, the lead issuing house on the series one offer of the Coronation Infrastructure Fund, raised ₦8.79bn ($5.3m). This issuance represents the largest amount raised and the highest subscription percentage in the market for a maiden infrastructure fund, surpassing the previous rates of 33.375 percent and 24.70 percent made by similar infrastructure funds.
Within the next year, five fund managers seek to establish new funds, a testament to the increasing recognition of infrastructure funds as an investment class by institutional investors (pension funds, for example), some of which possess the largest pool of funds domestically.
Mergers and acquisitions
Following CBN’s directive to raise minimum capital requirements for deposit money banks effective April 2026, various banks have sought out means to recapitalise. The recently announced merger between Unity Bank and Providus Bank is a case in point, with more M&As to be announced by other deposit money banks in their bid to remain operational and competitive. Other M&As in financial services include Access Holdings’ acquisition of ARM, Sigma and First Guarantee Pensions, resulting in the second-largest pension manager by assets under management (Coronation MB acted as a financial adviser on all Access Bank mergers and acquisition transactions), CardinalStone’s acquisition of Radix Pension and GTCO’s acquisition of Investment One Pension Management.
In stockbroking, there was Zedcrest’s acquisition of RMB’s stockbroking arm. There was EverQuest Acquisition’s share sale and purchase agreement for a 100 percent equity stake in FBNQuest Merchant Bank.
Other sectors like energy, entertainment and fintech also witnessed M&A activities. These were the acquisition of Shell’s onshore oil and gas assets by some Nigerian businesses, Universal Music Group’s acquisition of a majority stake in Mavins Global, and Carbon’s acquisition of Vella Finance. We expect more corporates to continue to leverage M&A to achieve strategic growth, and Coronation MB is poised to advise on these transactions.
Islamic finance
The non-interest finance market grew by $0.76bn from $2.30bn in 2021 to $3.8bn in 2023, moving from 0.075 percent to 0.9 percent of the global finance market within the same period. This represents a viable opportunity for growth due to Nigerians’ large Muslim population and its currently unbanked demographic in the North-West and North-East.
The investment banking sector will be crucial in efficiently directing capital to support the country’s long-term success
There is increasing acceptance of non-interest finance with the introduction of ₦100bn ($61m) sovereign sukuk issued by FGN in 2017, and six subsequent issuances totalling ₦1.092trn ($664m) to fund infrastructure developments – 4,000km of roads and bridges – and the recent sukuk issuance in October 2023 for ₦652bn ($397m).
With support from regulators, CBN, SEC and FMDQ, there is ample room for growth for Islamic finance in Nigeria. Recently, Trustbanc, under the wakalah structure, established its first NICP programme under FMDQ’s revised framework, allowing companies to issue shariah-compliant short-term instruments. Coronation MB played a critical role as the first arranger of this NICP programme under the updated framework.
Nigeria’s investment banking sector is evolving to meet the unique financing needs of both corporates and the government. Key trends underscore the sector’s role in fostering sustainable corporate and economic growth. Commercial papers and Islamic finance instruments, such as sukuk, are vital for short- and long-term financing. Corporates can drive growth through organic expansion or M&As. The Federal Government’s increased use of sukuk for infrastructure funding, alongside private sector involvement, bodes well for Nigeria’s economic future.
Moving forward, the investment banking sector will be crucial in efficiently directing capital to support the country’s long-term success.
Peru’s pension system reform: the day after
For years, Peru has been in dire need of a reform to its pension system. The approval of seven laws between 2020 and 2023, which allowed for ‘extraordinary’ withdrawals from individual pension accounts – meaning the withdrawal of funds that should have been reserved for retirement security – alongside regulation that approved in 2016 the withdrawal of 95.5 percent of account contents upon reaching retirement age, had distorted the system’s purpose. Additionally, only 30 percent of the country saves for retirement through the pension system, and multiple regulatory hurdles limit the adoption of more flexible saving regimes. This, together with the lack of a minimum pension, further underscored the urgency for change.
A few months ago, after extensive political and technical discussions, Congress approved a law to address this need, marking a clear first step in the right direction towards a more inclusive and effective pension system. Once the law is implemented by the Executive branch, which must officially set the rules and details for how the law is to work in practice, the next step will be to promote a national conversation about how we envision our future, as well as to refine certain aspects of the current reform.
We are making significant efforts to promote financial literacy
The important point, however, is that the deadlock has finally been broken and the benefits for Peruvians are self-evident. To begin with, the new law aims to put a stop to fund withdrawals, allowing nine out of 10 Peruvians participating in the private system – who are currently at risk of having no savings left in their accounts – to rebuild their retirement funds. Also, the law has established a minimum pension, conditioned to the individual’s saving discipline and frequency. Furthermore, it opens up the pension sector to increased competition, which should result in better services as fund administrators strive to attract participants. Additionally, new commission structures based on fund performance respond to user demands for different types of fees.
In short, the implementation of the new law can lead to a healthier and more robust pension system. The question now is: what happens the day after? As I mentioned, there is still work to be done on our journey towards a strong system. Much of this responsibility lies with the government, in its capacity to reduce the informal labour market and to address regulations that hinder competition. Our challenge now, as pension fund administrators, is to change how our affiliates, and Peruvians in general, value the pension system and to keep making efforts to get closer to them, and to innovate vigorously in a largely traditional industry.
But I must insist that we should not see this recently approved law as the culmination of the reform process. This is just the beginning. We still have to tackle, for example, the ‘auction’ process where a single winner among the administrators gets new affiliates automatically, which goes against increasing competition and allowing the creation of differentiated value, beyond fees, from fund managers.
Also, we need more commitment from the Government and the private sector in imparting information as to why it is important for people to save money in the pension system, employing new education methods based on behavioural science. We must not sit back and relax.
Transparency is key
At Prima AFP, we put our clients at the centre of our decisions, and an important part of that commitment is to make our services more approachable and transparent. For years, the pension system has had a distant relationship with its affiliates, partly due to the nature of the service itself – a long-term savings scheme intended to be accessed at the age of 65. Additionally, the system of individual capitalisation accounts, through which investments are made to supplement savings with returns, can be too arcane for some users to fully grasp. But we believe our affiliates deserve to know how the system works and to be informed about how their funds are performing – whether the results are positive or negative – and where their money is being invested.
As the reform progresses, it is essential for pension fund administrators to lead by example
We see this as a way to build trust with the people we work for and, also, to establish healthy channels for communication and information sharing. Our aim is to be empathetic, and with this in mind, when sending our monthly reports to our clients about their funds, we use simple graphs and language instead of complex and tedious investment jargon.
At the same time, we are making significant efforts to promote financial literacy, for example, through a series of online courses on our webpage and on our YouTube channel called ‘Ahorrando a fondo,’ where we address the most pressing questions about the pension system. Additionally, we have implemented special tools on our website that allow users to calculate their ideal pension and stay informed about the latest laws and regulations.
Simplify to include
Technology and digitalisation are vital to how we manage our relationships with clients, but we also see them as a path to offering more inclusive services. For example, there is no reason to make it difficult for independent workers to contribute to their pension funds. To simplify this, users can now add money to their funds using ‘Yape,’ Peru’s most popular digital wallet. This is a simple decision that can have largely positive consequences. Additionally, we have virtually eliminated the need to visit physical branches, as all our procedures can now be completed through digital channels. However, all this does not mean the experience at our branches has diminished in quality, as we continue to cater to the needs of all types of clients.
In general, at Prima AFP, we believe that as the reform progresses, it is essential for pension fund administrators to lead by example, offering transparent services, embracing innovation and promoting financial literacy. Building trust with our affiliates is key, while also ensuring we actively represent their interests in national discussions about the future of the pension system and, more importantly, the future of our country.
