Αντώνης Σαμαράς Πρωθυπουργός της Ελλάδας from Greece, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

Due to severe poverty and disorganisation, Afghanistan has faced an economic collapse especially after the Taliban takeover on 15th August 2021. Moreover, the growing humanitarian crisis affects half the population as well.

The UN secretary, General Antonio Guterres spoke to reporters in the UN headquarters where he said “the international community must find ways to inject cash directly into Afghanistan’s economy to avert its total collapse as a growing humanitarian crisis impacts half the population.” In addition to that, he also discussed how the Taliban had broken promises by saying “broken promises lead to broken dreams for the women and girls of Afghanistan,” on Monday.

The EU foreign policy chief, Josep Borell said in an interview on Monday with a Spanish newspaper, El Pais “we thought we would have an acute (migration) crisis because of Afghanistan, but it has not yet happened. And it will not happen if we prevent the economic collapse of the country. 75 percent of the Afghan budget comes from foreign transfers. And now they are all frozen”. He also added that “economic collapse can occur. We have to prevent it, without recognizing or supporting the government as such.” This discussion took place across countries when the UN urged the world leaders to put money into the Afghan economy to save the country. After this discussion, the German Chancellor, Angela Markel stated that the country should not “descend into chaos.” Whereas, US President Joe Biden stressed that the aid given to Afghanistan should be via independent international organizations.

So far the money provided to Afghanistan has been in millions which can only cover the emergency needs. However, Guterres told reporters that a massive UN humanitarian aid operation is underway in a race against time so aid can reach before the winter months. According to him any measure that includes channeling the cash through the Taliban should be avoided at all costs. This is because after the Taliban takeover, the banks were closed for several days and even when they opened accessing cash was still difficult. In addition to that, due to many business owners leaving the country to escape the Taliban, the employees are without salary whilst the prices of necessities continue to increase. Furthemore, women can no longer work to support their families. This is all mostly due to the Taliban takeover.

The UN and the global community are trying to reach and help the people of Afghanistan without recognising a Taliban government, which is quite difficult. Many people are stuck in tents while winter is approaching so if something is not done immediately the people will suffer. This is of course, very difficult because the money needs to reach the people and not the Taliban. It is hoped that the UN can help provide a solution which will help the people of Afghanistan soon. 

Economic development is work in progress for most African countries. However, a significant milestone that could propel further growth is the African Continental Free Trade Agreement which was signed by 54 out of the 55 African Union Nations in March 2018. This agreement resulted in the creation of the African Continental Free Trade Area (AfCFTA) believed to be inclusive of 1.3 billion people across Africa with a combined GDP of 3.4 billion USD. 

The AfCFTA aims to boost intra-African trade by providing a comprehensive and mutually beneficial trade agreement among the member states. The agreement covers trading of goods, services, investments, intellectual property rights and a competition policy. Trading under the AfCFTA started in January 2021, and with phase two of the AfCFTA being implemented, various macro-economic prospects for Africa’s growth and development have been projected. Based on the eight strategic objectives of the AfCFTA, it could be a gamechanger for doing business and investing in Africa, although some challenges are imminent. 

Intra-African trade has been low in the past. In 2018 for instance, intra-African exports accounted for only 15% of Africa’s world exports. Also, between 2017 and 2018 intra-African exports increased by only 1%, while Africa’s exports to the rest of the world increased by 22%. Africa has not been trading with itself. However, with access to a market of 1.3 billion people through the removal of tariffs from 90% of goods, it is expected that intra-African trade will be boosted by 50%. It is expected that lesser tariffs will imply competitive pricing; thus, promoting demand for goods produced and traded within Africa. It will also enable small and medium scale enterprises (SMEs) and large corporations to set up assembly firms in other African countries to access cost effective means of production and thereby increase their bottom lines. The elimination of tariffs will further provide a cheaper source of raw materials from other African countries for these industries. This will be particularly achievable where a conscious effort or policies are enacted by African Governments to promote the demand for ‘Made in Africa’ goods.

The creation of a single market through the AfCFTA is an opportunity for economic integration and development of member countries. Historically, more than 75% of African exports outside of the continent consisted of extractive commodities. Manufacturing represents only about 10% of total GDP in Africa, on average. The AfCFTA is an avenue for African countries to pursue an industrialization agenda to transform their economies with substantive investment in the manufacturing sector. Africa’s manufacturing sector is projected to double in size with the potential to create over 14 million jobs. The size of access market implies that industries can take advantage of economies of scale if they increase production levels. Employment opportunities and income levels can grow as projected by a World Bank Report that the pact could lift 30 million people from extreme poverty by 2035.

Additional benefits based on the objectives of the AfCFTA include increasing foreign direct investment (FDI) through the protocols on investment, protecting intellectual property, and protecting women traders by enabling them to trade through formal means.

Despite the prospects for economic growth in Africa, poor infrastructure may hamper efforts at deriving economic prospects through the AfCFTA. Estimates from the African Development Bank (AfDB) indicates that the continent requires substantive investments in infrastructure to make up for the deficit. A thriving single market rides on the availability of effective transport networks, electricity, water, information, communication, and technology systems to facilitate the movement of goods across borders. However, Africa’s infrastructure paradox is a reality which needs to be addressed to achieve the economic benefits of the AfCFTA. The implementation of the Programme for Infrastructure Development in Africa (PIDA) is ongoing since 2012, but it needs to be facilitated to develop enhanced infrastructure to propel a conducive environment for doing business in Africa and attracting foreign direct investment.

The widened gap between countries with large manufacturing bases and enabling physical and industrial infrastructure compared with those with little infrastructure could hamper efforts at attaining unified benefits from the AfCFTA. Countries such as South Africa, Kenya, Egypt, Morocco, and Ethiopia are in a better position to gain the expected benefits of the AfCFTA due to their advanced state of economic development and integration, and since investors will be drawn to investing in these already established industries. Where smaller economies do not move to develop their infrastructure, the cost of lost revenue from the elimination of trade tariffs may not be replaced by increased investment or trade with these smaller nations. 

As the phase two on the implementation of the AfCFTA is ongoing, the potential economic and business landscape is changing with endless opportunities for doing business in Africa. The AfCFTA is an incentive for SMEs as well as large corporations in Africa to re-structure their operations, engage in consultations to identify business opportunities, break barriers, establish strategic partnerships with other business entities within their value chains, and develop new markets to expand their presence and brands. 

There is a need for increased investment by governments in infrastructure and technology to create an enabling environment for domestic and foreign investment in various sectors within the value chain. For instance, in Ghana, the ;1 District, 1 Factory’ (1D1F) policy, free zones enclave, and the industrial policy for the automotive industry are policies aimed at attracting investors into the country to propel industrialization. Businesses that take advantage to produce for the African market are in the best position to maximize the benefits of the AfCFTA. There should also be a focus on promoting the consumption of ‘Made in Africa’ goods to grow the market base for increased intra-African trade. Although some African countries are yet to ratify the AfCFTA agreement, it will no doubt transform the dynamics for doing business and investing in Africa as well as achieve economic integration for the continent with time. Indeed, as Chief of Staff at the AfCFTA Secretariat Silver Ojakol said, “Economic integration is not an event. It’s a process… We must start somewhere.”

Physical currency has been in use since ancient times. Historical civilisations such as the Roman empire are well known for their use of coins. Indeed, the unique characteristics of physical currency established its acceptance by central banks as legal tender to facilitate trade in various global economic systems demonstrates just how essential it is to everyday lives. The rise of cashless payment has of course been greatly beneficial, but is it so successful that physical currency is threatened with extinction?

Cashless payments are defined as digital methods for exchanging financial transactions between two parties. Cashless payments are however not legal tender on their own; they are a backing to existing physical money controlled and owned by a consumer and provide an alternative to using traditional paper or coin currency. Various terminologies such as digital payments, electronic payment or mobile money have also evolved and generally describe forms of cashless payments. Types of cashless payments include: bank cards, contactless payments, mobile wallets, Quick Response (QR) Codes, Point Of Sale (POS) devices, Gift cards and vouchers, and electronic clearance devices. The Centre for Finance Technology and Entrepreneurship further describes the following as types of digital payments: biometric authentication, mobile point of sales, contactless payments, smart speakers, social media payment options and cards to codes. 

Common historical data suggests that PizzaHut may have been one of the first retailers to execute a cashless transaction. The company began allowing people to order pizza on its website as early as 1994. Similarly, Coca-Cola offered the first mobile payment transaction in 1997. The beverage retailer created special vending machines that enabled consumers to pay for their drinks by sending text messages from mobile devices. Furthermore, more recently, in 2011, Chinese company Alipay designed a QR code payment method, which allowed partnering offline stores to accept payment by scanning an individual’s QR code in Alipay wallet.

Cashless payments may have started up as the exception, but are now widely accepted as the rule for executing payments around the globe. The projection by Statista states that, mobile payment transaction volumes could rise from US$25 billion in 2016 to nearly US$275 billion in 2021. There has been a seismic shift in consumer preferences for how people purchased products in the COVID-19 pandemic era. Covid has encouraged a surge in cashless payments. 

The benefits of e-payments are a win-win for customers who make payment through these systems and for businesses. Consumers and businesses today cannot but relish how easy, convenient and fast most cashless or digital payments are. Customers can use various e-payment options to pay instantly for goods from the comfort of their homes. Businesses can receive multiple payments at any point in time from customers without the pressure of serving customers at a single payment point. The need for trips to the bank to deposit cash is also reduced. 

Cash is vulnerable to loss in circumstances such as theft, fire or flood. Cashless payments reduce this risk of loss. This is particularly advantageous to cash intensive businesses where theft by employees is a major threat. Cashless payment methods are secured with features such as personal identification number (PIN), tokenization, encryption, Secure Socket Layers (SSL). There are many more features so that even where technological device for payment transaction is lost, cashless money may be retrieved. There is also less burden on customers to carry huge sums of cash for daily transaction with a fear of loss. 

Cashless transactions are conducted through technological devices such as smartphones, laptops, POS devices, etc and these are reliable sources of evidence of payment or tracking, which may be referred to during any dispute of a transaction. Businesses may also track transactions for bookkeeping and accounting purposes.

Cashless payments are not without drawbacks though. The use of cashless payments and digital payments, include service fees charged by service providers. Also, the investment in software, hardware, and training of employees to automate payment systems and the requirement for availability of certain conditions such as telecommunication network, internet connection also makes it unusable in locations or circumstances where these are unavailable.

Concerns over fraudulent activities by cybercriminals and mobile money fraudsters is perhaps the biggest threat to the reliability of cashless, payment methods. These security issues include increased vulnerability to hacking, data breaches, and customer data sharing with third parties. Businesses and consumers who have their accounts hacked, cards stolen, or PINs stolen may lose substantial amounts of money from these fraudsters. The most common means of cyber fraud include identity theft, phishing, ransomware, SMART cities, cyberespionage and distributed denial of services. Research by TransUnion , a global information and insights company, showed a staggering increase in digital fraud attempts. Financial technology companies may invest in increased security systems to make cashless payment systems safe and reliable. However fraudsters are forever up to new tricks to circumvent safeguards. 

It has therefore become imperative for consumers and businesses to adopt safeguards to control the risks of fraud in cashless transactions. For consumers, basic security measures such us regularly changing passwords or PINs, maintaining high confidentiality of passwords, blocking or avoiding fake or deceitful websites and making online purchases from verified business pages, could minimize the risk of cashless account theft or fraud. Increased consumer preference for cashless payment also indicates that businesses can gain a competitive advantage if they offer customers safe and secure cashless payment options. Increased investment in technology and establishment of risk management systems could minimize these threats. Furthermore, central banks are expected to promote the formulation of policies and regulations on cashless payments, to ensure security of customers and businesses. 

As consumers and business have skilfully adapted to technological innovations in the digital landscape, the plausibility of a cashless payment economy being the rule and not the exception, becomes imminent. Sweden has set the pace, with a target to become a cashless economy by 2023; other countries may well follow the same path in due course.

Bitcoin and other cryptocurrencies have been around for some time now and have attracted a huge market ranging from the average person to big names in business and politics. Countries have reacted with different views to the emergence of this new currency and expressed concerns over its management and decentralised nature. In an announcement on Friday, the Central Bank of China declared all cryptocurrency transactions as illegal, effectively banning them from the Chinese market. Banks have been prohibited from facilitating or having any affiliations with the crypto market.

China has been used as a popular bitcoin mining centre and has been subjected to a harsh crackdown on mining centres since last year. The mining industry for crypto has hence fled with several losses to recover this year with China, the largest crypto-currency market closing down. Earlier this year Bitcoin faced losses of up to $30 000 due to the actions of the Chinese government and continues to be in a state of decline. 

The release of the official statement immediately saw Bitcoin falling by over $2,000 and shutting down many of its important transactions. It is reported the new home of bitcoin mining is being set up in Texas, United States and may even reap benefits for the US in the future. The United States has not yet indicated its opinion on the developments and what it means for them. China on the other hand, has expressed its clear disapproval of an untracked monetary system like cryptocurrency from existing and operating within its country.

The dangers of Bitcoin are not unknown, it has been linked with countless cases of money laundering, weapons, and drug trafficking and hence it does not sit well with many established economic and political institutions. Other reasons include the lack of control government systems have over a privately owned currency like Bitcoin creating a conflict of interest. Amongst other countries that have banned the use of crypto are Bolivia, Indonesia, Turkey & Egypt.

The ongoing struggles in Lebanon have resulted in a huge chunk of the population struggling to make ends meet. With about half of the population currently living below the poverty line, families are finding it difficult to cover the essentials to survive. Lack of access to food, medicine, shelter, and money from the banks is a serious problem across the country. 

The collapsing economy, alongside the nation’s failing political system, has left the Lebanese people feeling frustrated at how the government has been handling the back-to-back crises the country has faced over a number of years. 

Financially, the value of the Lebanese Pound (LBP) has been plummeting since March 2020, accelerated by the pandemic and political unrest. Then, one Great British Pound (GBP) was equal to around 1,700 LBP, whereas today it is north of 2,050 LBP. This has resulted in stagnant wages being unable to cover even the most basic of living costs for lots of people. 

In August of 2020, the Lebanese government was forced into resigning after numerous anti-government protests across the county, which were sparked by the explosion which centred at the port in Beirut. The incident killed at least 200 people, left about 5,000 people injured, millions were made homeless, and it pushed the entire country into even further economic turmoil.

Discontent with the Lebanese government was already running rampant by that point, due to concerns over deeply rooted corruption. For years, citizens have struggled to get the government to cater to the most basic of needs; they face daily power cuts, limited public healthcare and lack of safe drinking water. All the while, there is a huge economic disparity, with the rich truly shadowing the general population in terms of standard of living. 

These factors have all pushed a struggling nation even further into debt, financial ruin, and political uncertainty. 

Global leaders have spent decades staging various forms of intervention across the Middle East, with President Emmanuel Macron being the latest to announce an aid event to be hosted for Lebanon next year on 4^th August, the first anniversary of the Beirut disaster. 

Even with international aid, Lebanon will still need both stable internal leadership, and time, to get through these troubles.