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How Oil Price Shocks Impact African Economies

By Dr. Paiman Ahmad and Alexander Ayertey Odonkor

Similar to other regions with abundant natural resources, the BP Statistical Review of World Energy report for 2018 indicates that Africa has 7.5% of global oil reserves.¹ Revenue generated from oil resources on the continent is a key driver of economic growth in energy-exporting African countries. Highlights from the African Economic Outlook report for 2020², shows the economy of Africa grew at 3.4% in 2019 with North Africa, contributing the largest as the region accounted for 44% of economic growth on the continent – the boost in economic growth in North Africa is partly attributed to oil revenue. Revenue from oil has been a major determinant of economic growth in North Africa – the region experienced economic growth decelerations when oil production was interrupted by the Arab Spring which commenced in the latter part of 2010 in Tunisia³. Conversely, higher levels of production and export of oil by Libya contributed immensely to the improved economic growth of the region after 2016⁴.

Although other sectors such as agriculture in Morocco played an instrumental role in propelling economic growth in North Africa, as high yield increased economic growth in the North African country from 1.2% in 2016 to 4.1% in 2017, revenue from oil has been the essential fount of growth in the area.

In Sub-Saharan Africa (SSA), where oil exporting countries account for almost 50% of the region’s Gross Domestic Product (GDP), oil contributes as high as 90% of the total fiscal revenue⁵ of oil exporting countries and serves as a major source of foreign reserve.

Source: International Monetary Fund (IMF) Country Report

Oil exporting countries in SSA rely heavily on revenue from oil, a condition that has tremendous impact on the development⁶ of the region – the decline in GDP growth in SSA from 5.1% to 1.4% in 2014 and 2016, respectively, was due to oil price shocks, when the price of crude oil fell by 56% within a seven-month period. Oil has a significant impact on the African economies. Between 2007 and 2017 oil producing countries on the African continent generated $3.3 trillion⁷ in revenue from oil – this amount is more than seven times the value of foreign aid the region received within the same period. Revenues from oil improves economic output in Africa but fluctuations in the price of oil has an enormous impact on countries in the area – between the middle of 2014 and January 2016, the price of oil declined by 70% as a result of global oversupply of the commodity. This outcome had adverse effect on both oil exporting and oil importing countries in Africa as GDP growth declined⁸.

Source: AfDB, OECD & UNDP

However, an increase in the price of oil is not always deleterious to all net oil-importing countries in Africa as is widely known in energy economics, that an increase in the price of oil will have a positive impact on net oil-exporting countries⁹ or an increase in oil prices will have a negative impact on net oil-importing countries. A study published in the volume 139 of Energy (Elsevier)¹⁰ in 2017, defies this analogy – the research work, which focussed distinctively on the impact of oil price shocks on small oil-importing economies suggests that an increase in the price of oil in Liberia (small oil-importing country) stimulates the country’s economy. This is mainly as a result of the intensive labour and capital employed in the process of reallocating resources from oil-intensive sectors when oil prices are high – the economic output of labour and capital when the price of oil increases, far exceeds the contribution of oil revenue in Liberia. Similarly, findings from another research¹¹ that was published by Heliyon (Elsevier) in 2019 reveals that net oil-importing developing countries: Cape Verde, Liberia, Sierra Leon and the Gambia respond positively to an increase in global oil prices as GDP per capita increases in the short term in these African countries.

The impact of oil price shocks does not only vary in different countries but it also varies across different sectors of the economy. In 2019, the International Monetary Fund (IMF) released a paper¹² that assessed the impact of declining oil prices on banks in oil-exporting countries in SSA – the findings of the research show that the nature of response for banks to a fall in oil price in SSA depends mainly on the ownership structure of the banks. The impact of declining oil prices on domestic banks is relatively severe as these local banks eventually become illiquid and the value of their financial assets depreciates – this is because indigenous banks in SSA constantly lend to a large number of customers during periods of declining oil prices, and fail to increase funding. The quality of assets deteriorates, leading to an increase in non-performing loans.

On the other hand, when oil price declines, foreign banks which are known in Africa to operate with a conservative business model reduce lending and increase the quality of their assets and funding thereby reducing credit growth. In the case of Pan-African Banks (PABs), even though they also increase lending when the price of oil falls, they concurrently reduce their holdings in Government securities – the impact of the decline in oil prices depends largely on the size of the Pan-African Bank. Whiles large PABs record a decline in the quality of assets, small-sized PABs experience an increase in the quality of assets.

Contemporary research has shown that whether a country is an oil exporter or an oil importer, a change in the price of oil has an impact on the expected cash flows of corporations as oil is a valuable commodity across all levels of the economy. According to the International Monetary Fund, oil price shocks have an undeniable influence¹³ on stock markets. Oil price shocks have an impact on inflation, exchange rate, monetary policy, fiscal policy, corporate income and the entire economic activity. In Nigeria¹⁴, Africa’s largest economy (with GDP of $337 billion) and also the largest oil producer and exporter, where oil accounts for 8.4% of GDP¹⁵ as the economy diversifies, the stock market depicts the golden rule thus, ‘‘oil up, stock down’’ – an increase in oil prices results in a decline of stock returns¹⁶.

In contrast, in South Africa, Africa’s second largest economy and the largest importer of oil on the continent, South African stock returns¹⁷ responds positively to an increase in the price of oil that is caused by a positive shock to demand and reacts negatively to supply shocks. Exhibiting, clearly the variation in the impact of oil price shocks in oil-importing and oil-exporting countries in Africa. Quite recently, the Journal of African Trade (Elsevier)¹⁸, published a  study which examines the co-movement between oil prices of the Organization of Petroleum Exporting Countries (OPEC) and Africa’s six largest Stock markets: South Africa (JSE), Egypt (EGX), Morocco (CSE), Nigeria (NSE), Kenya (NSE) and West African Economic and Monetary Union (BRVM10) indicates that apart from Egypt and South Africa, the co-movement of oil prices and the stock market is relatively low in Africa – whiles the Nigerian stock market and the other stock markets are not adequately developed and poorly integrated into the global oil market, the South African stock market which is by far the largest in Africa and the Egyptian stock market have a strong long-run co-movement with oil – a condition that exposes these two stock markets to global oil price fluctuations.

Several factors determine oil price fluctuations on the global commodity market: whiles OPEC + (OPEC Plus) controls 55% of the global oil supplies and about 90% of discovered oil reserves¹⁹ – the group which is made up of OPEC and top non-OPEC oil-producing countries has a considerable influence on global oil prices. However, the OPEC Bulletin Commentary for April 2015²⁰ cites market speculations as a significant contributor to oil price fluctuations.  In a new-fangled development, the outbreak of covid-19 is the latest dominant factor in the form of a pandemic to have an immense impact on global oil prices – the negative supply shocks experienced on a global and regional level, emanates largely from a reduction in oil production as a result of a section of the oil workforce being infected and quarantined for treatment.

The contagious nature of the coronavirus has prompted the enforcement of lockdowns which has a negative impact on business activities, restricts transportation of goods and services in Africa and other regions of the world – the World Bank policy brief for April, 2020²¹ suggests that countries in North Africa and the entire MENA region will suffer a greater impact from a decline in aggregate consumption and investment as the coronavirus continues to spread to Europe and other parts of the world. The shocks from covid-19 is intertwined with the collapse of global oil prices attributed to the failed negotiation between OPEC and its allies – in early march, 2020, OPEC proposed a reduction of 1.5 million barrel per day(mb/d) for the second quarter of 2020. Thus, 0.5 mb/d and 1 mb/d reduction for non-OPEC and OPEC, respectively. Notably, Russia rejected the proposal, an action which instigated Saudi Arabia, the world’s largest exporter of oil to increase oil production to its full capacity (12.3 mb/d) and also offer close to 20% discounts in key markets – The price of oil declined more than 30% and continued to fall after that episode.

Global oil price shocks is mostly pinned on tension between OPEC and its allies as the cartel has not been able to operate as a unified force despite the fact that many different countries joined the organization for a common goal (Ahmad, 2016)²². The diminution in global oil prices will have catastrophic effects on oil-exporting African countries, especially those that rely heavily on oil revenue.

However the oil price-exchange rate nexus for the two largest economies on the continent: Nigeria and South Africa seems to be the identical. Although Nigeria is the largest oil exporting country and South Africa is also the largest oil importing country in Africa, empirical studies for the two countries shows that an increase in oil prices leads to a depreciation of both the South African rand²³ and the Nigerian Naira²⁴ vis‐à‐vis the United States dollar. This prevailing oil price-exchange rate nexus for Nigeria and South Africa is not the same in all dimensions of the two economies and even other parts of the continent– whiles agricultural commodity prices are neutral²⁵ to global oil prices in South Africa, the situation is quite different in Nigeria.

Even though there is no long-run relationship between oil price and any agricultural commodity in Nigeria, in the short-term, oil price has a positive and a significant impact on local food items such as maize and soya bean – oil price also has a negative effect on the price of commodities such as rice and wheat but the impact is negligible²⁶. In other parts of Africa, such as East Africa²⁷, the dynamics for oil prices and local food prices is quite disparate – analysing data on the price of petrol and maize suggests that global oil price affects the price of local foods (maize) via transportation cost rather than biofuel or production cost.

As a non-renewable energy, oil is a volatile commodity that derives its price mainly from the supply and demand dynamics of the international markets – the current downward trend of global oil prices which began with the spread of covid-19 has led to a decline in oil price from $56.10 per barrel in December 2019 to less than $30 by the middle of February 2020. For many developing countries, where the oil sector is the primary driver of growth, this unexpected fall in oil prices will slowdown economic growth, a challenge Collier (2007)²⁸ identified as one of the traps many resource rich countries in Africa and Middle East frequently experience.

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About the Authors

Dr. Paiman Ahmad is an academic with research interest in oil price politics, energy governance, rentier economies and sustainable development in developing economies. She holds a master’s degree in International Affairs and Public Policy Making (Bilkent University-Ankara) and a PhD in public administration from National University of Public Service. Her research works have been published by reputable journals such as Public Money & Management, Journal of Public Affairs and top-tier academic publishers: Palgrave, Springer and many others.

Her Academic Affiliations are: University of Raparin, Lecturer in Law and Administration Departments. Emails: [email protected]. [email protected]. Rania-Sulaimania-Kurdistan Region-Iraq. Visiting lecturer at Tishk International University: International Relations & Diplomacy Department, Faculty of Administrative Sciences & Economics, Kirkuk Road, Erbil- Kurdistan Region -Iraq. Email: [email protected].

https://scholar.google.hu/citations?user=88EszakAAAAJ&hl=en
https://www.researchgate.net/profile/Paiman_Ahmad
https://orcid.org/0000-0002-5887-3782

Alexander Ayertey Odonkor is a chartered financial analyst and a chartered economist with a stellar expertise in the financial services industry in developing economies. Alexander has completed the International Monetary Fund’s (IMF) program on Financial Programming and Policies – with a master’s degree in finance and a bachelor’s degree in economics and finance, he also holds a postgraduate certificate in mining from Curtin University. His research works have been published by the Global Business Review, International Journal of Economic Development etc.

References

1 BP ‘‘BP Statistical Review of World Energy 2018’’, 67th Edition. London, UK. Available at:https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2018-full-report.pdf (Accessed: 19 May, 2020).

2African Development Bank Group ‘‘African Economic Outlook 2020: Developing Africa’s Workforce’’ Available at: https://www.afdb.org/en/documents/african-economic-outlook-2020 (Accessed: 19 May, 2020).

3 World Bank (2012)‘‘Middle East and North Africa Economic Developments and Prospects, October 2012: Looking Ahead After a Year in Transition’’. Middle East and North Africa Economic Developments and Prospects. Washington, DC. United States. Available at: https://openknowledge.worldbank.org/handle/10986/11979

4 African Development Bank Group ‘‘North Africa Economic Outlook 2018’’ Available at: https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/2018AEO/African-Economic-Outlook-2018-North-Africa.pdf (Accessed: 19 May, 2020).

5 World Bank (2015) ‘‘Global Economic Prospects: Having fiscal Space and Using it’’ 1818 H Street NW, Washington DC 20433, United States. Available at: https://www.worldbank.org/content/dam/Worldbank/GEP/GEP2015a/pdfs/GEP15a_web_full.pdf (Accessed: 19 May, 2020).

6 Coulibaly, B. S. & Madden, P. (2020) ‘‘Strategies for coping with the health and economic effects of the COVID-19 pandemic in Africa’’ Brookings Institution, 18 March [Online]. Available at: https://www.brookings.edu/blog/africa-in-focus/2020/03/18/strategies-for-coping-with-the-health-and-economic-effects-of-the-covid-19-pandemic-in-africa/ (Accessed: 19, 2020).

7Dapel, Z. (2019) ‘‘The Time Is Right for African Nations to Break the Resource Curse’’ Foreign Policy, 1 November [Online]. Available at: https://foreignpolicy.com/2019/11/01/low-oil-prices-exporting-african-economies-break-resource-curse/ (Accessed: 20 May, 2020).

8 AfDB, OECD, UNDP ‘‘African Economic Outlook 2016: Sustainable Cities and Structural Transformation’’Availableat:https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/AEO_2016_Report_Full_English.pdf (Accessed: 20 May, 2020).

9International Monetary Fund (2015) ‘‘Global implications of lower oil prices’’ Availableat:https://www.imf.org/external/pubs/ft/sdn/2015/sdn1515.pdf(Accessed: 20 May, 2020).

10Gbatu, A.P., Wang, Z., Wesseh Jr. P.K.&Tutdel, I.Y.R.(2017) ‘‘The impacts of oil price shocks on small oil-importing economies: Time series evidence for Liberia.’’ Energy, 139, 975–990. https://doi.org/10.1016/j.energy.2017.08.047

11Gershon, O., Ezenwa, N. E., &Osabohien, R. (2019) ‘‘Implications of oil price shocks on net oil-importing African Countries.’’ Heliyon, 5(8), e02208. Available at: doi:10.1016/j.heliyon.2019.e02208.

12 International Monetary Fund (2019) ‘‘Coping with Falling Oil Prices: The Different Fortunes of African Banks’’Washington DC, US Available at:https://www.imf.org/en/Publications/WP/Issues/2019/06/17/Coping-with-Falling-Oil-Prices-The-Different-Fortunes-of-African-Banks-46955 (Available at: 19 May, 2020).

13 International Monetary Fund (2000) ‘‘TheImpact of Higher Oil Prices on the Global Economy’’ Washington DC, US. Available at: https://www.imf.org/en/Publications/Policy-Papers/Issues/2016/12/31/The-Impact-of-Higher-Oil-Prices-on-the-Global-Economy-PP77(Accessed: 19 May, 2020).

14 Naidoo, P. (2020) ‘‘Nigeria Tops South Africa as the Continent’s Biggest Economy’’ Bloomberg, 4 March [Online].Available at: https://www.bloomberg.com/news/articles/2020-03-03/nigeria-now-tops-south-africa-as-the-continent-s-biggest-economy (Accessed: 19 May, 2020).

15 PricewaterhouseCoopers ‘‘Nigeria’s GDP Positive signals for 2017’’ Available at: https://www.pwc.com/ng/en/assets/pdf/economy-alert-march-2017.pdf (Accessed: 19 May, 2020).

16Asaolu,T.O&Ilo, B.M (2012) ‘‘The Nigerian stock market and oil price: A co-integration analysis’’Kuwait Chapter of Arabian Journal of Business and Management Review, 1 (5) (2012), pp. 28-36

17Chisadza, C., Dlamini, J., Gupta, R. &Modise, M. P.(2016) ‘‘The impact of oil shocks on the South African economy’’,Energy Sources, Part B: Economics, Planning, and Policy,11:8,739-745,DOI: 10.1080/15567249.2013.781248

18Gourène, G.A.Z.  &  Mendy, P. (2018) ‘‘Oil prices and African stock markets co-movement: A time and frequency analysis’’Journal of African Trade, 5 (1–2) (2018), pp. 55-67, https://doi.org/10.1016/j.joat.2018.03.002

19 Cohen, A. (2018) ‘‘OPEC Is Dead, Long Live OPEC+’’ Forbes, 29 June [Online]. Available at:https://www.forbes.com/sites/arielcohen/2018/06/29/opec-is-dead-long-live-opec/#6ca92cc2217a (Accessed: 24 May, 2020).

20Organization of the Petroleum Exporting Countries ‘‘Gambling on oil: The price the market pays’’ OPEC Bulletin Commentary April 2015. Available at:https://www.opec.org/opec_web/en/press_room/3007.htm (Accessed: 24 May, 2020).

21 World Bank (2020) ‘‘Coping with a Dual Shock: COVID-19 and Oil Prices’’ Available at:https://www.worldbank.org/en/region/mena/brief/coping-with-a-dual-shock-coronavirus-covid-19-and-oil-prices (Accessed: 24 May, 2020).

22 Ahmad, P. (2016). ‘‘Political tension in OPEC’’, PRO PUBLICO BONO – Magyar Közigazgatás, 2016/2, 118–137. https://folyoiratok.uni-nke.hu/document/nkeszolgaltato-uni-nke-hu/political-tension-in-opec.original.pdf

23Fowowe, B. (2014) ‘‘Modelling the oil price–exchange rate nexus for South Africa’’, International Economics, Volume 140, Pages 36-48, ISSN 2110-7017,https://doi.org/10.1016/j.inteco.2014.06.002.

24 Muhammad, Z., Suleiman H. &Kouhy, R. (2012) ‘‘Exploring oil price—exchange rate nexus for Nigeria’’ OPEC Energy Review,36, 383–395. doi:10.1111/j.1753-0237.2012.00219.

25Fowowe, B. (2016) ‘‘Do oil prices drive agricultural commodity prices? Evidence from South Africa’’, Energy, Volume 104, Pages 149-157, ISSN 0360-5442, https://doi.org/10.1016/j.energy.2016.03.101.

26Nwoko, I.C., Aye, G.C., & Asogwa, B.C (2016) ‘‘Effect of oil price on Nigeria’s food price volatility’’Cogent Food &Agriculture, 2 (1) doi.org/10.1080/23311932.2016.1146057

27 Dillon, B.M & Barrett C.B (2016) ‘‘Global Oil Prices and Local Food Prices: Evidence from East Africa’’, American Journal of Agricultural Economics, Volume 98, Issue 1, January 2016, Pages 154–171, https://doi.org/10.1093/ajae/aav040.

28 Collier, P. (2007). ‘‘The Bottom Billion: Why the poorest countries are failing and what can be done about it’’, ISBN-10: 0195374630, ISBN-13: 978-0195374636, Oxford University Press. https://www.oxfordmartin.ox.ac.uk/publications/the-bottom-billion-why-the-poorest-countries-are-failing-and-what-can-be-done-about-it/

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When is the Right Time to Buy Bitcoin?

The bitcoin price has started trading flat for this year and this is due to the financial and economic damage caused by the coronavirus pandemic. For the month of March this year, bitcoin price has dropped to $4,000. Luckily, it is climbing once again to $7,000 starting last April. People own cryptocurrencies for several reasons. Some individuals opt to store these cryptocurrencies as value because of the limited supply of Bitcoin. Others choose to store it as they wait for its value to become higher than the U.S. dollar so they could earn more profit. There are also those who buy Bitcoins just because they use it in their daily transactions as they travel around the world or shop for groceries. Lightning Wallets such as Lastbit even make it possible to pay in stores that don’t accept bitcoin.

Although Bitcoin is still not recognized as a legal tender across Australia, it is not deemed illegal to use it for financial transactions. Proof of this is the fact that the Australian Taxation Office announced in 2018 that it will be imposing taxes on Bitcoins, as a property that will be under the rules of the CGT or Capital Gains Tax. Thus, more and more Australians are also investing on Bitcoins these days. Today, many people are using Swyftx to trade BTC in Australia. However, the best time to buy Bitcoin still remains in the dark for some Bitcoin traders, especially for those who are still new in this industry. According to studies conducted by bitcoin experts, the best time for purchasing bitcoins couldn’t be etched on rock since the cryptocurrency industry is highly volatile. However, some findings from studies and observations made by cryptocurrency analysts reveal the following:

 

The Price of Bitcoin Tends to Decrease on Mondays

During weekends, the demand for Bitcoin will tend to slow down. In turn, its price is also more likely to go down when Monday comes. However, Bitcoin price will also soar high again during Fridays and Saturdays. 

Some People Prefer to Buy on a Weekend

Some findings from studies made also reveal that many people decide to buy Bitcoin during the weekends and make transactions from the start of the week. In turn, volumes increase on the first day of the week, but people should be more cautious in their behavior by the rest of the week. 

Avoid Buying During Pay Days

Those who have been in the Bitcoin trading industry know that they should avoid purchasing bitcoins during the time when employees earning salaries are being paid. This usually occurs in the middle or by the end of the month. The reason for this is obvious. When people have more money to buy Bitcoins, the demand for this cryptocurrency increases along with its price. 

Use a TDM Analysis Software to Figure Out the Best Time

If you’re looking to buy Bitcoin but are not certain when is the best day of the week to do it, it is best to use a software or get advice from a bitcoin broker who helps you make sound analysis. With this software, it will become easier for you to find out whether it is best to purchase Bitcoins at the start of the week, when there is an uptrend or if it is best to sell towards the end of the week when a downturn occurs so you are more likely to get the best price. 

One of the best things about the cryptocurrency world is its promise for a more transparent way of banking, which is something that people could not expect from the current mainstream banking. Cryptocurrency promises immutability and decentralization which helps ensure that everyone involved in the network has a clear idea of what is currently happening within the system. 

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How to Find Genuine Essay Writing Service?

A genuine essay writing service comes in handy for almost all students due to the massive amount of coursework they have to handle during a semester. Dealing with exams and coursework requires a lot of effort and time management. In this case, it is a good idea to redirect some tasks to an essay writing service which can help you get part of the load off your shoulders. 

When deciding to outsource your essays, identifying a reliable provider can be challenging. Are they equal in service quality? How can you distinguish an honest essay writing service from a fraudulent one? Keep reading to find out how professional companies provide their services.

Reasonable prices

Who doesn’t care about money? Everyone does care, especially students who try to save as much money as they can, but using low-cost online writing services might not be a good idea. Creating an excellent essay takes a lot of time, so you can’t expect unusually low prices from reputable service providers. 

However, it doesn’t mean you should overpay for high-quality content. Search online or refer to a reliable company to do your coursework at a fair price. 

Refunds 

More important than finding an affordable service is not wasting your money on low-quality essays. Therefore, check the guarantee policies on the company’s site to make sure they have a solid refund policy. Almost all professional essay writing services pay back your money in case the services are subpar.  

Professional writers 

Writing a professional essay needs both experience and expertise. Professional writers have strong research and critical analysis skills. They can also create effective outlines and write with excellent precision. What’s more, professional essay writing services only hire writers with academic degrees in your intended area of expertise. If you don’t see any of these points mentioned on the company’s website, they’re probably not a legit service provider. 

Direct communication 

Make sure the agency allows direct communication with the writing specialist. Direct contact saves a lot of time since you can discuss the topic, outline, formatting, and any other challenging issues before the essay is written. Many essay writing services allow direct contact via email, chat, or instant messages.     

Writing styles 

Different essay types require different writing styles. For example, a narrative essay should tell a story. In contrast, a descriptive essay is more about painting a picture, and an expository essay just explains proven facts. Creative writing services recognize these different writing requirements and match the writing style perfectly. 

Deadlines

Meeting deadlines is crucial to getting good grades. A reliable essay writing service is committed to delivering the project on time. Besides, they usually offer refunds in case of not finishing the job on the agreed date.  

Plagiarism-free content

Plagiarism implies copying content from elsewhere without citing the sources. However, plagiarized writing can be easily detected by specialized software. So, as the client, you should expect to receive original and unique content. This proves once again that you should never order cheap or free service providers. Honest online essay writers usually deliver a free similarity report along with their work to prove that the text is original.  

Round-the-clock customer service

Customer service is crucial for essay writing services, primarily when the work is delivered. You might have some questions, or you may face some problems. Customer satisfaction is the main aim of any company. So, they never ignore customer’s negative complaints. Uninterrupted customer support allows you to solve any issues in the shortest possible time.  

Proofreading and Revisions 

Proofreading is an essential part of any writing project because even the best writers occasionally make mistakes. Ideally, writing services assign a qualified proofreader to review the writer’s work for grammatical errors, typos, and clarity. Check their proofreading procedures before placing an order and talk to customer support if you have any questions.  

Also, don’t forget to check the company’s terms to make sure they support revisions. Most probably, the delivered draft will need some changes, and the company should have the procedures for handling these modifications. Almost all professional essay writing services apply minor revisions for free, but major issues require an extra payment. 

Positive reviews

Positive reviews are typically a sign of high-quality service, but be careful about fake reviews. Some companies create fake positive comments on their website to convince new users that they provide great services. To make sure they’re trustful, check the reviews in some reliable review platforms like Yelp.com and which.co.uk.   

Privacy

You probably worry about your personal information or educational data ending up in the wrong hands. A professional essay writing service takes your worries into account and guarantees to keep your information safe. Don’t forget to check their privacy policy to make sure of that.       

Bottom line

We all need academic help every once in a while. The most important thing is to choose the right service provider that ensures your educational success. Remember that not all essay writers are equal. They differ in quality of the service, so take your time to sift through their sites and carefully read their reviews before making a decision. 

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Seven Benefits of Hiring A Freight Forwarder For Your Business

In this competitive business environment, most companies strive to expand their market share to generate more profit. Several companies operate beyond borders and have gone global. The import and export of goods and raw materials are critical for a company’s success. Besides, corporations often need to send their products from one city to another in the same country. Many companies do not possess in house resources for transporting goods from place A to place B. They get freight quotes and hire the best freight services that do the job for them while ensuring the safe transportation of the products.

To make things easy for the business owner, freight forwarding companies help transport goods from the manufacturer to the customer or the retailer. Considering an international transport service like TSL Australia is a good way to dip your toes in the industry. They operate as an agent of the company and offer an economical yet safe transfer of products. Some freight forwarding companies provide International transportation, while some work on a national level. They work as a travel agent, but not for people, instead of merchandise.

Freight forwarding companies work with suppliers, carriers, logistic providers, and other clients. They have means of deporting huge consignments, and they plan and arrange the whole process of transportation. A general misconception is that they pick up stock, and then deliver it to the final destination. Freight forwarders’ job is not as simple, as the process requires extensive paperwork, which also involves trading regulations. Moreover, freight forwarders can give you a piece of better advice regarding what mode of shipment would suit your corporation.

Freight forwarders provide their services through different modes. Their expertise is generally reliable, and business owners feel relief after assigning the task of transportation to them.

 

Following are the different types of freight forwarding:

  • Air Forwarding

Air forwarding involves planning and arranging the transport of freight from one place to another through airplanes.  Furthermore, air forwarding does not take much time, and contrary to popular belief, it is not expensive either.

  • Land Forwarding

Land freight forwarders are ideal for massive projects that require back and forth transportation of bulky items. Large-scale construction projects usually hire land forwarders for the safe transfer of tools, raw material, and other stuff. If you are from Illinois you can safely rent shipping containers in Chicago since they are considered among the best in the world.

  • Ocean Forwarding

Companies prefer ocean forwarding over air and land freight forwarders when they need to send large items in high quantity. Ocean freight forwarders have the expertise and are aware of laws regarding transferring cargo. Besides, ocean forwarding is cost-effective as compared to air forwarding, especially if it involves transporting goods internationally. Since most companies do not own airplanes, ships, or trucks, they take advantage of freight forwarders.

 

The advantages of hiring freight forwarders are numerous, and below we are listing a few of them:

1. Timely Pickup and Delivery

Companies often lose clients because they are unable to cater to customers’ needs on time. When a package is lost overseas, clients find themselves at a loss as there is not much they can do. Freight forwarding has emerged as a profession, and these companies offer timely delivery of your cargo. A legit freight forwarding company has proficient workers who show professionalism from planning the transportation process, till the delivery. A successful and credible logistics services company can make a world of difference to your businesses’ efficiency and productivity. 

2. Efficient Track Systems

It may take a reasonable amount of time for your consignment to finally reach its destination. Companies fret about losing their merchandise on the way. Moreover, when they have a tracking system of their cargo, they feel at ease. Although there are options for delivering goods through other services, authentic freight forward companies keep track of your cargo. They have an easy-to-implement tracking system in place, owing to advancements in technology. Due to tracking enabled freight forwarding, clients know when their shipment will reach them or the desired destination.

3. Security

The most significant benefit of hiring freight forwarders is that they offer the utmost security. You can be at peace that your stuff is in reliable hands despite sending your valuable cargo to faraway lands. Freight forwarders have proper tools, equipment, and compartments to keep all kinds of stuff. They ensure to keep fragile pieces with maximum care. Full proof packaging keeps the small and delicate items intact. Freight forwarders work with proper digital and manual documentation, which is why they offer a guarantee that your stuff will be safe.

4. Cost-Effective

The bigger your package is, the more expensive it would be. However, freight forwarders offer comparatively reasonable shipments. Since you will not be the only one sending packets through them, they can provide you with a better price. Moreover, many freight forwarders offer discounted rates to regular clients and to those who send large shipments. They have means of transporting items in bulk quantities and staff to ensure that process goes smoothly, which is why they offer the first-class service at economical rates.

5. Accurate Documentation

It is no secret that companies who have experience in a particular field operate professionally. For business owners,  full or partial truckload shipping across international borders can become the worst nightmare if a carrier shows a disparity in legal documentation. The two countries which are involved in the business transaction don’t necessarily follow the same set of laws and regulations. Incomplete and inaccurate documentation can lead to lengthy delays, and banks can put the transaction of your money on hold. Freight forwarders ensure that all paperwork is immaculate, take care of your documentation, and deliver cargo following legal procedures.

6. Inventory Management

Freight forwarders have a vast network spreading across miles. Hiring a freight forwarder will save you from hiring different people for different tasks. Freight forwarding companies have resources that aid in managing inventory efficiently. Freight forwarder offers hassle-free, fast services that help you in expanding your business.

7. Warehousing

Businesses hire freight forwarders to ship goods in bulk quantity. Although freight forwarder ensures that your shipment will reach its target, they also keep an option of warehousing if, for some reason, they are unable to deliver your goods. Approved freight forwarders offer storage in case your shipment land at a foreign land. They have a warehouse where they keep the client’s staff and make sure that inventory remains secure.

 

Conclusion

Freight forwarders have proper knowledge of logistics and work through appropriate channels. International shipment usually involves more than one mode of transport, and different ways have different rules. Freight forwarders have the know-how of the regulations, and they provide transparent lawful service.  A wise approach is to hire a licensed freight forwarder, which allows you to track your cargo. When a company has ambitions to expand its reach, it needs to transport goods to distant locations. Dealing with numerous service providers could be a headache, and hiring freight forwarder is an easy and effective solution.

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5 Kitchen Appliances on Which You Can Save Money

It is not surprising to say that kitchen appliances are one of the necessary purchases of life. Just like a car or furniture, they help increase the home’s value. With so many options available out, it becomes overwhelming for a buyer where it is fruitful to invest money. Be the need is for the oven, fridge, juicer, or any other appliance, making a smart move is necessary. Although the purchase of kitchen appliances depends upon your lifestyle still we are describing you here the kitchen appliances on you can save money and make life easier to live.

Kitchen appliance prices increase with the increasing needs of a homeowner. If you want to save money on kitchen appliances, then prefer kitchen appliances that carry features that matter you the most. Keep yourself in budget and focus on the lifestyle you live. Avoid purchasing kitchen appliances that have similar features but are expensive in terms of price. They are never a good deal for you and your family.

 

Kitchen Appliances: Where You Need To Invest or Where Not?

Blender over Food Processor

A blender is a must appliance of every kitchen space. Not only mesh the food items perfectly but it also costs less than your food processor. Plus, they are more durable and can last many years to come. When it comes to using, one can easily access it without much knowledge. It is worth investing in this if you do not need all the functions that are available in the food processor. If protein shakes are part of your regular, then go for this option as it meets every budget.

Cheap Juicers over Expensive One

A market is full of countless cold press masticating juicers to serve your daily needs. All those who are fond of citrus juice can consider shopping for the cheap juicers. No doubts! An expensive juicer carries advanced features but if those features are not important for you, then you can go with a cheaper one. It will save lots of your money in the long-term and you can spend it on other new home appliances.

One-door Refrigerator over Built-in refrigerator

A purchase of a one-door refrigerator helps you be in your budget and save a lot of money. You can compromise with the size if you have a small family. Whereas built-in refrigerators are generally taller than freestanding models. Just focus on the features that save your loads of money i.e. energy efficiency. Don’t make a mistake of investing in the refrigerator that isn’t energy-efficient and you are only buying due to its latest features.

Ovens over Microwave

Another way to save money on the purchase of kitchen appliances is to shop for oven over the microwave. The reason is that oven can be used for multiple purposes like baking, grilling, roasting, and reheat food. Whereas, a microwave is designed only to cook or reheat food. So, it better goes with oven rather than investing in both separately.

Go with the purchase of conventional over as they make use of just waves to heat food rather than entire space. All this means, they are energy efficient as compared to the traditional ones. Plus, always make choice for a reliable brand rather than expensive one. Paying in a reliable brand means you are away from the use of unnecessary features. Your importance is on the durability as it ensures that the kitchen appliance you are buying is going to last for many years to come.

The same can be said for grills and smokers. If you have an outdoor kitchen, these are worthy appliances to invest in as well. It can be tricky to find the best models though, so we recommend that you check out this page for reviews and tips.

Coffee Maker over Coffee Machine

If you are a kind of person who is addicted to coffee, then it is good to buy a coffee maker rather than investing in an expensive coffee machine. Due to its simple functionality and limited features, a coffee maker can be considered as a cheaper option. Plus, it is an energy-efficient option as it doesn’t consume much electricity for the preparation of coffee.

 

Where to Shop for Kitchen Appliances?

Choose the platforms that sell kitchen appliances with free delivery at your doorstep. This will save the extra cash that you pay on the delivery of the product. And the delivery charges you save can use for paying other bills. Prefer to do shopping during off or special seasons. Have patience and wait for the best deals on your home appliance. You can surely get decent discounts you never even wondered or imagined. Also, follow the platform that sells high-quality appliances on great discounts. Kamado bbq is a good place to start for this.

So, these are a few appliances on which you can spend money without thinking much. All are multi-purpose. Don’t worry about their cleanliness as they are easy to maintain without frequent repair or replacement. Be healthier than before by bringing the best kitchen appliances at your home today!

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Coronavirus pandemic triggers banks to improve cyber security

By Alyn Hockey, VP Product Management, Clearswift

At the time of writing (June 2020) the world is tentatively emerging from the coronavirus lockdown that we have all been living through for the past three months. The cost to human life and health has been unprecedented and beyond that, the global economy is set for a period of turbulence and uncertainty as we look to rebuild and refocus on normal life.

Banking and the wider Financial Services (FS) sector is undoubtedly vulnerable and facing a period of change. During the lockdown itself, banks have faced many challenges: the logistics of most of the workforce suddenly working from home; customers unable to speak face-to-face with advisors; the pressure applied by the overall economic uncertainty and a wave of increased cyber-attacks.

FS cyber security is challenging enough at the best of times. Clearswift research in 2019 revealed that 70% of financial companies had suffered a cyber security incident in the last 12 months. Less than a quarter of the respondents felt they had an adequate level of budget allocated to cyber security within their firm.

What fresh cyber security threats has coronavirus brought along in its wake and how can banks use this pandemic as an opportunity to improve its overall cyber security strategy?

 

The cyber threat facing banks

The multiple threats that FS firms face can be categorised into two distinct camps – to steal or to disrupt. Stealing personal data that maybe used to compromise customers through their identities being stolen, which in turn can lead to their accounts being ransacked. 

Disruption, due to political reasons can disrupt the trading of an FS firm and could result in a loss of revenue. Both types of attacks carry similar consequences: reduced business and reduced customer confidence and the risks of heavy fines if personal data is comprised.

Cyber criminals have not been slow to utilise these threats during the coronavirus crisis and with banks operating in a state of greatly heightened anxiety, are more vulnerable than they might be usually. With people concerned about the current situation, banks are receiving more queries from customers about short-term loans and for general business advice and attacks could come from such a route.

There has also been a spike in coronavirus-based phishing campaigns. These are well-crafted, look authentic to the untrained eye and are designed to trick people into opening them. These campaigns prey on people’s concerns about the current crisis and who are more likely to click on a malicious link now than they usually might be.

Homeworking even when not in the grip of such a crisis has security issues, but with many FS employees working from home during the lockdown, there have been further security concerns. Staff may be tempted to access corporate systems via unauthorised home systems, while other family members might use the employee’s laptop or device at home – kids printing out their homework, checking personal email – and this can be an easy route in for a hacker using phishing or social engineering lures based on coronavirus.

It’s also true that homeworkers lack the usual office-based security measures – no web gateway security, intrusion detection/prevention systems.

 

Addressing the threat

Part of the problem for banks in mitigating the threat is that the threat landscape is so wide, varied and evolving. Malware, ransomware and phishing are all still widely deployed tactics, while social engineering techniques, weaponised documents and weaponised websites change all the time. Keeping up with what is going on is a major challenge for any FS firm and especially so during the coronavirus, with internal security teams stretched in a number of different directions. 

Ideally FS firms will have already prepared for being breached and will review this process regularly. Assuming they’ve not created a breach response playbook there are several things they will need to do. Identify how the attack happened and work to contain the situation so that it doesn’t continue. This may involve taking systems offline to perform a thorough investigation. Once they know how it happened and what was impacted and the risk assessed, the entity can start to work through the process of communicating to customers with a clear message about what has happened and how it’s being dealt with. 

If a data breach concerns personal data, then the entity should contact the Information Commissioners Office (ICO) and Financial Conduct Authority (FCA) within 72 hours of becoming aware of the breach. Once the systems have been restored, then it’s a question of reviewing not only how to secure the entity better through technology and process, but also to evaluate any lessons learnt throughout the breach. When a new plan has been finalised then it should be tested through simulation so that staff can learn how to deal with the next one.

 

What the banking industry can learn from the pandemic

Although the lockdown has been tough for banks, and the uncertain economic future could be even tougher, it can also act as a period of learning and reflection for executives, especially around how they approach cyber security. There is a clear need to take cyber security even more seriously and up the pace of innovation and deployment of effective data protection and threat mitigation strategies. This includes working with the right technology providers and ensuring that staff are using all of the features and measures available to them.

Addressing cyber security effectively should always cover the combination of people, processes and technology, and the current pandemic allows FS organisations to look at where they are with all three. With so many employees working from home, there have had to be quick training exercises taking place to demonstrate best practice in this area and what processes to follow should any employee think they have been the victim of a cyber-attack.

When the lockdown is over it is not unreasonable to think that many more people will now work from home more regularly. All the measures that were put in place to facilitate pandemic home working should remain, but it’s also an opportunity to put in place new measures.

Such times can act as a trigger for a bank to reinforce its cyber security processes and to remind employees of the need for extra vigilance. This should certainly extend to providing advice and technical help to make sure employees are as well-protected working from home as they are from the office. The impact of coronavirus will be with us for a long time and no FS organisation wants the additional headache of a serious security breach.

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About the Author

Alyn Hockey is VP of Product Management at Clearswift. Alyn has had an extensive career in cybersecurity, co-developing the MIMEsweeper range of products and working across departments within Clearswift, managing technical support, research and currently product management.

A techie at heart, Alyn spends much of his time talking to customers about the latest technologies and presenting on product lines, gathering information on how to improve those product lines to meet customer demands and the ever-evolving cyber threat.

Why the Technological Process Does Not Affect Our Interest in Slot Machines

Why do we love slot machines? So much that there are over 1 million slot machines spread across the world—1 million in physical locations only, and it does not include the sheer number of online slots!

Today, let us take a look at the reasons why we are so fascinated with slots, even if we have the technological advancement to forget about them.

They Are Easy to Understand

Slot machines are games of chances. As such, it does not require any form of thinking. Blackjack and poker are games of skill. What this means is that if you make a bad decision and lost, you feel guilty.

The only way to win in a slot machine is to make a combo. Usually, you just have to line up at least three symbols to win. The player only has to pull the trigger to make the reels spin, and then wait for the reels to stop.

Even if slots have evolved over the years from 3-reel to 5-reel grids, the basic concept of a combo remains the same. Players do not need to learn a new technique, as everything that happens in a slot game is purely random. You cannot influence the game results, so you do not have to learn a new skill to beat it.

They Are Affordable

Most online slots require only £0.10, and you should be able to spin it. It is so unlike many games where you need to bet at least a pound or a dollar to be able to participate.

The great thing about slots is that even if you bet a small amount of money, you can win a huge prize. Some slots pay as much as 5,000x your line bet, which means that the prizes are paid out in the same proportion no matter how small your bet is.

The usual deterrent for gambling is the cost. What makes slot machine so attractive and enduring is that you can bet a penny and come out with hundreds of dollars. Even if you bet the highest amount per spin, which usually costs no more than £10, you can still win the jackpot prize, which can be as high as millions of pounds.

There are even stories of people who played slot machines for the first time and won the jackpot. Slots are loved because they are fair—and anyone who has a penny has an equal chance of winning a big prize.

There Is a Wide Variety to Choose from

For a long time in its history, slots only showed classic symbols. Most of these are fruits or the Lucky7. Today, there is an endless number of slot symbols—and developers have penetrated every possible industry.

Here are some examples:

  • Movie-branded slots

  • Superhero-branded slots

  • Alien-themed slots

  • Sports-themed slots

Apart from using various symbols in different industries, slot machines have also evolved. In the 1800s, slot machines used to only operate with three reels. Now, the slots operate on five reels, and some of them no longer operate on a single grid.

Here are some examples of modern slot machines.

  • Colossal – these are large grids that are usually made of five reels and twelve rows. Colossal grids are on the right side of the main 5×3 grid, and you do not have to pay extra to activate them.

  • Double grid – these are slot machines where there are two same grids, with one on top of the other. The main symbols are the same, but each grid has its set of special symbols. Slots like this do not charge double—you spin two sets of reels for the price of one.

  • Symbol combo – these slots are not your usual sets; in these slots, you make a symbol combo by merely matching three symbols vertically or horizontally. They are like arcade games  where you only need three side by side symbols to win, regardless of tier position in the reels.

Multiple grids are not the only evolution of slot games. Today, there are wilds, scatters and other bonus symbols that can trigger a wide variety of bonuses and jackpot rounds.

They Give Us Pleasure

When you spin the reel of a slot machine, you anticipate if you win. It creates a build-up in your brain. If you landed a winning spin, your brain releases dopamine. For a fleeting time, your attention is focused on the screen, and you experience a short kind of high.

Dopamine is a hormone that gives us the feeling of pleasure. What makes slot machine so addicting is that you never know if the next spin is going to reward you with the big win. It is this anticipation that keeps us hooked to it

It also has what is called a near-miss mechanic. Many times, you spin the reels and miss only one symbol, and you would have made a big win. Your brain thinks that if you are lucky to miss only one symbol, then your succeeding spins may be the winning round to get that most coveted jackpot prize.

As a result, our brain begins to develop a behaviour of anticipation, which can only get fulfilled after landing a win, regardless of the size of the prize.

Summary

Slot machines will be here to stay. They have endured the test of time. Slots have been around for 200 years, and they are not going anywhere.

At best, we need to accept that these one-eyed bandits are truly a part of our culture. They are mesmerizing, to say the least, and they can be addicting. Slots are the best example of the enduring quest of humans to beat the odds, and they have already found their way in our social lifestyle.

Slots today are free to play. You can find them in slot review sites, demo sites, games developer sites, and even social media platforms. These free slots no download no registration are played everywhere, and what we need to do is to exercise caution to protect our money, instead of shunning these machines that we have so loved for over two centuries.

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Weighing in on the Role of Sukuk in Combating COVID-19

By Greget Kalla Buana

The Coronavirus Disease (COVID-19) has not only caused a serious health crisis, but has also had pressing economic, social, and political ramifications globally. According to the IMF, the economic impact is worse than the 2008 recession. Many countries have incurred higher foreign debt, including Indonesia. The World Bank has estimated that the outbreak will slash the country’s economic growth to 2.1 percent.

Having the largest Muslim population in the world, people in Indonesia pay much attention to the lockdown strategy exemplified during the lifetime of Prophet Muhammad as a hadith says, “If you hear of a plague in a land do not enter it; and if it breaks out in the land where you stay, do not leave.” Some also refer to the Prophetic manners, which is to cover the mouth when yawning and sneezing.

In addition to that, zakat as an Islamic charitable giving whose potential collection up to US$16 billion has been in the spotlight. Zakat, along with other Islamic donations, such as infaq, sadaqah, and waqf are acting as a reliable social safety net in the society. Islam has more than that, including financial stimulus for the battle against the outbreak.

The Government of Indonesia issued US$4.3 billion in bonds to combat the current economic turmoil which may threaten the achievement of the SDGs. The dollar-denominated bonds are part of Government’s plan to complement the fiscal measure. Despite being issued amid the pandemic, the bonds are not pandemic bonds.

Pandemic bonds are a type of catastrophe bonds (CAT bonds) or insurance-linked securities (ILS)—an investment vehicle whose values are driven by insurance loss events issued by insurance company, financial institutions, and governments—to protect against the cost of a pandemic by transferring specified risks from issuer to investors. Investors receive higher coupons in compensation for the risk of losing the principal upon occurrence of qualifying perils, and the issuer receives the money to cover their losses.

CAT bonds have been issued around the world, most notably in Africa (Democratic Republic of Congo, Kenya), Asia (Japan, Philippines), and Latin America (Chile, Colombia, Mexico, Peru), which comprise natural disaster and adverse climatic conditions, such as drought, earthquake, flood, hurricane, tsunami. It bolster the case for Indonesia to issue these bonds considering three major disasters occurred in 2018. Since the ongoing outbreak can be construed as a natural phenomenon, the same approach can be used to issue pandemic bonds.

In 2017, the World Bank launched the first pandemic bonds worth US$500 million scheduled to mature on July 15. Unfortunately, COVID-19 has threatened losses that the bonds would likely pay out. Since the bonds require certain death rate to occur as part of its trigger criteria, they have been criticized as “nonsensical”.

Given that Indonesia holds the lead in regularly issuing sukuk (Islamic bonds) it is timely to explore them as an alternative solution for the current financial conjuncture.

 

New formulas to old problem

Sukuk are a good way to access large scale financing by structuring instruments that promote social good through risk sharing. Unlike conventional bonds which are essentially debt, the underlying asset in sukuk should be considered. As sukuk grant partial asset ownership, investors have the right to receive profits, meaning that selling sukuk is selling benefits of the ownership. Combining sukuk with other Islamic finance instruments is interesting.

First, sukuk retakaful. Takaful is an Islamic insurance where members pool money to protect one another against loss. It is based on tabarru’ contract of which a portion of the contribution is treated as donation, hence, it is not solely for commercial purposes. According to a report by IMARC Group titled Takaful Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2020-2025, global takaful market reached US$23.7 billion in 2019 and projected to reach US$48.1 billion by 2025. The growing takaful market has resulted in much greater demand for retakaful—a shariah-compliant reinsurance—due to limited capital to cover the whole risks in takaful portfolio.

In conjunction with CAT bonds, reinsurance shifts part of the risk to strengthen insurance sectors in spreading losses to a wider group of risk carriers. This risk-sharing is important in the case of CAT bonds whose risk is low in probability, yet high in severity. CAT bonds are an example of conventional insurance securitization—transforming illiquid asset into securities—which transfers risks from issuer or sponsor to capital market investors. Such scheme, by definition, is a reinsurance mechanism.

In Islamic securitization, asset-backed is the most suitable method due to the transfer of assets as well as the most effective in preventing crisis, especially if the likelihood of moral hazard increases. Sukuk retakaful are one way of takaful securitization. Both sukuk retakaful and CAT bonds are uncorrelated with the financial markets and unaffected by economic conditions that make them more appealing to investors. They solely rely on predetermined catastrophe incidents. Consequently, the coupons are stable even when the market goes down.

However, sukuk retakaful, by concept and structure, are different from any regular sukuk of which principal must be returned to the investor. Sukuk retakaful are basically insurance securitization, which are structured for a relatively short-time maturity (three to five years) and expected to be purchased by institutions, namely mutual funds, pension funds, sovereign wealth funds, not individual. Investors receive a coupon that is greater than other fixed-income securities for two actions: contributing money and bearing catastrophic loss when it happens.

Unlike CAT bonds that expose investors to the risk of substantial losses when triggered, sukuk possibly provide a different attitude since the issuance of sukuk retakaful promotes an asset-backed securitization to investors. The risk of loss can presumably be modified using sharia-compliant pricing model as well as the presence of underlying assets in sukuk. Although existing studies on sukuk and takaful do not document the practice of sukuk retakaful, merging the distinctive feature of sukuk (asset-backed) and the nature of takaful (tabarru’) can be an innovation to boost both financial and real economy.

Second, waqf sukuk as known as cash waqf-linked sukuk (CWLS). A social investment where cash waqf invested in sukuk. This type of sukuk does not require the actual coupon to be given to sukuk holders, but harnessed to finance social projects. The principle of perpetuity that preserves the waqf asset and redistribute the benefits distinguishes it from other endowment or charitable fund.

The Indonesian Government, for the first time, has issued CWLS SW001 through private placement in March. The Rp50 billion (US$3 million) sukuk is for five years with investment returns in the form of discount and 6.15 percent coupon. The discount, which is paid once at the beginning of transaction, is used for renovation and provision of medical equipment to support the development of Retina Center at a waqf hospital Achmad Wardi while the coupon is paid every month to finance free-of-charge cataract surgery services at the same hospital. It demonstrates how exactly waqf sukuk multiplies the benefits.

Through Presidential Decree No. 7/2020, Government appointed the National Disaster Mitigation Agency (BNPB) to lead emergency measures regarding COVID-19 considering it as a catastrophic plague. Financing disaster recovery is governed in accordance to Law 24/2007 on Disaster Management of which the Government is responsible for relief operation, infrastructure reconstruction, and financial assistance. The Agency has estimated an ideal disaster fund of Rp15 trillion annually. However, the available resource is away from that figure. How can waqf sukuk help address this gap?

Through private placement, waqf sukuk can be expanded to the market without excluding individual participants. Since there is approximately US$12 billion cash waqf potential stored in the society, financial intermediary institution eligible to receive individual cash waqf should be present to increase the collection of cash waqf. The more people donate cash waqf, the higher value of sukuk can be issued.    

The next waqf sukuk issuance is expected to put in a framework of COVID-19 responses. In the context of unprecedented pandemics, waqf sukuk helps provide additional amount as part of front-loading strategy. Proceeds of the sukuk can be used for building additional infrastructure while the return can support relief operation and financial assistance, in particular provision of personal protective equipment, cash transfer or cash-for-work for those losing their jobs.

Third, murabahah sukuk. A less commonly used sukuk structure, which is intrinsically a sale and purchase agreement based on shariah principle. Murabaha itself is a contract of sale at an agreed cost-plus-profit, hence, the murabahah sukuk include a disclosure of the original cost and the mark-up price.

In 2014, vaccine sukuk using murabahah sukuk structure were issued by International Finance Facility for Immunization (IFFm) for US$500 million to help finance the immunization program with Gavi, the Vaccine Alliance. It was followed by $200 million vaccine sukuk one year after signaling warm market reception. The vaccine sukuk brought the concept of socially responsible investing to the market by delivering social returns to the world in the form of live-saving mission.

In late 2018, IFFm completed a private placement of US$50 million vaccine sukuk with Islamic Development Bank as the investor. To date, there are many COVID-19 candidate vaccines under development. Nevertheless, it requires commitment in terms of funding from governments or any supranational entities. Vaccine sukuk is a proven solution that worth tapping into.

Global sukuk issuance is set to grow modestly in 2020 with a projected increase to nearly US$75 billion (US$71 billion last year) according to rating agency Moody’s. Within the last 15 years, the overall growth of sukuk market amounted to a compound annual growth rate of 30.6 percent (Islamic Financial Services Board, 2019). It is the fastest growing segment of Islamic Finance industry.

In Indonesia alone, domestic sukuk market has not been significantly affected by the COVID-19. The Government has absorbed Rp14 trillion (~US$900 million) through 10 series of Sukuk Negara just within last month with Rp25.1 trillion oversubscribed. Thus, sukuk appetite is relatively high amidst the pandemic.

Ethical finance that is put to social and environmental use is getting massive concern during this pandemic. Islamic finance incorporates social elements, even within its commercial universe. Sukuk aim for such a social good and can potentially be leveraged to help combat the COVID-19. By attaining business goals in a way to benefit the society as a whole, sukuk eliminate the counterintuitive issue.

Lastly, development investment must be ‘fit for purpose’. To build back better after COVID-19, prospective and corrective measures need to be integrated. The above-mentioned sukuk can manifest both of them along with social intention to increase resilience of human and the planet.

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About the Author

Greget Kalla Buana is an Islamic Finance Specialist graduated from Master of Islamic Finance and Management, Durham University, the United Kingdom. His work experiences have always been in Islamic Finance sector, such as Dompet Dhuafa, Islamic Banking Department of Indonesia Financial Services Authority, and United Nations Development Programme.

What Effective Trading Strategies Can Be Used During COVID-19?

In the post COVID-19 era, remote occupations, including e-Commerce, virtual education, counseling, banking, and communications are going to dominate. But what of trading strategies?

 

In a Post COVID-19 Economy What Trading Strategies Might Work?

The world has witnessed the wrath of the coronavirus on a mass scale. Unfortunately, the damage is far from done. Pain, suffering, and loss of life has been coupled with unprecedented economic chaos, with hundreds of millions of people left jobless, wondering how they are going to pay for basic necessities. As the global economy slows to a crawl, and personal disposable income dries up, individuals are forced to make really hard choices. As a trader in the post COVID-19 economy, different types of trading strategies must be employed now, given the new normal we are all faced with.

For one thing, the global economy has undergone what economists call a shift. When these shifts occur, the ‘demand and supply’ curve abruptly moves in a different direction. This necessitates a rethinking of conventional trading methodology to accommodate new market conditions. The effectiveness of remote work is evident for all the world to see. Office workers that traditionally commuted to work, interacted face-to-face, and completed tasks in person are now taking their vocations, skills, and abilities online. This is having far-reaching implications for the global economy.

Even with the lifting of restrictions, and the loosening of social distancing, there has been a paradigm shift in the workplace, in the retail arena, and in all forms of economic interaction between human beings. As a trader, one of the essential elements necessary to profit from rising and falling markets is liquidity. When liquidity levels are low, market instability results. This dramatically impacts trading strategies. Among traders, the switch to home-based trading activity has been hampered to a degree by poor telecommunications networks, and unsuitable mobile reception. In the wake of the March 2020 market crash – the worst since the global financial crisis of 2007/2008/2009, traders and investors were scampering for cover across-the-board. While certain UK and US banks maintained trading activity on the floor at the exchanges of London and New York, this was the exception rather than the rule.

The trading climate, and the strategies that are employed to profit from rising and falling stocks, commodities, indices, and currency pairs hinges upon a variety of factors – many of which are not economic in nature at all. The expressions of fellow traders, the speculative sentiment that pervades the trading floor, the actions of key market players – these elements may be noticeably absent from the scene with the new-age, post coronavirus era. Isolation brings with it a unique set of challenges which need to be adapted to current market conditions. With liquidity in question, traders embrace different strategies to profit from the ebb and flow of the market.

 

The Market Has Switched to Buy-Side Trading Post Coronavirus

Increased uncertainty and extreme volatility have given rise to a new normal in the trading arena. Business Continuity Plans (BCPs) have been formulated by the most strategic of all enterprises, in an effort to counter the dramatic and unprecedented changes that businesses may face. Difficulties are part and parcel of the trading realm, but few people could have anticipated the devastation brought about by the global pandemic. Businesses which have successfully negotiated the coronavirus pandemic have done so with meticulous planning. It begins with the fusion of contingency planning, IT, and risk management elements. By putting these plans in place, several businesses have successfully moved away from buy-side activity to work from home activity. A myriad of challenges exists; notably security of access to servers from outside of business organizations.

From a trading desks perspective, this new normal requires ongoing innovation, distributed risk, and integration between external systems and internal systems. Massive and unprecedented investments in new technologies are needed to benefit from the new milieu. Research and development, AI, AR, algorithmic systems, pricing engines, and new strategies are needed. The new strategies will encompass things known as portfolio life-cycle solutions, with a tech-driven approach to activity. New tools and resources will need to be developed and implemented to facilitate buy-side traders in these volatile markets. Multi-dimensional trading processes will need to be simplified and optimized for the new normal.

 

How Are Traders Benefiting from the Volatility?

In March 2020, global bourses collapsed. What followed was whipsaw activity, with markets rising and falling at an unprecedented rate. This type of uncertainty is not for the risk averse; it is risk-on to the extreme. One of the key measures of volatility – the VIX – rose dramatically in Q2 2020, with the CBOE volatility index (VIX) averaging 32.83 in 2020 to date, opening the year at 12.47. This is double the average closing price of the VIX in 2018, and more than double the average closing price of the VIX in 2019. When volatility levels are high, people are selling stocks en masse. Known as the ‘Fear Index’ the VIX is an important measure of trader sentiment and it certainly factors into the type of trading strategies that are employed.

 

Important Trading Strategies Come to Light

Several important trading strategies have come to light in recent times. These must be viewed against the structural changes that society is undergoing as it pertains to socio-economic systems across the board. No doubt there has been a dramatic widening of the wealth gap between poor countries and wealthy countries. This is to be expected. However, the disequilibrium will move towards equilibrium over time. In the interim, there is plenty of money to be made by trading on systems, practices, technologies, and innovations that will bring about the rebalancing. Currencies like the GBP, EUR, USD, CAD, and JPY are being traded as emerging market economies start to show structural cracks post-virus. Investors tend to pull their resources from unstable regions with high volatility, in favor of lower-risk opportunities. At a time where runaway growth is an anomaly, developed economies are proving to be a safe haven for traders. Of course, there are many opportunities in developing countries for savvy traders to benefit from.

Industries that have been hamstrung include travel and tourism, including airlines, cruise ships, hotels, restaurants and the like. Pharmaceutical corporations working on vaccines, plasma, and antibody testing are showing promise. Day traders have increased in number at independent trading platforms across the board. As people stay home and try to earn their keep, they are turning to penny stocks and implementing short-term day trading tactics and strategies to shore up their portfolios and grow their net worth. While oil prices have cratered and rebounded, gold has shown resilience as a hedge against portfolio erosion. By focusing on a mix of tradable instruments which can mitigate the impact of a tsunami of negative sentiment, it is possible to prevent loss and turn a profit.

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8 Signs Your Business May Need Executive Coaching

Executive coaching is something most businesses can benefit from, no matter their size or the stage in their development. Executive coaching allows decision-makers to make better decisions, stay on top of the most recent advancements and developments, positively influence teams & key players, and provide much-needed assistance in times of change
It can also help you find issues within your organisation’s structure that could affect collaboration, communication, accountability, performance, and efficiency. However, too many businesses still don’t realise the importance of Sigmoid Curve, coaching, or how their business could gain from it. Here are 8 signs your business may need executive coaching.

You Can’t Break Out of the Rut

Personalised executive coaching may be the next step when team building seminars and a steady stream of consultants haven’t been able to break your organisation out of its rut. Helping individual leaders identify their weaknesses and build on their strengths could help them do better. Alternatively, it may help them deal with the issues holding their teams back like customer retention, sales closing rates, or employee productivity.

Your Business Is Unable to Move Forward

It is easy to keep doing what you’ve always done. The problem is that the business world is always changing, and your traditional customer base may be changing or passing on. Competitors who are more willing to adjust to new market realities will be able to out-compete you. There are also cases where technology may be eroding demand for your product. There can be a number of obstacles to your business growth, During that time you can consider finding a business coach who will help you throughout the path of developing your business. Some of the items that the coach will help you include: developing an entrepreneurial mindset, time management strategies, gaining more customers, creating business systems and many more. 

The worst is that some businesses are unable to change out of a lack of vision. They may become paralysed as a result, and prefer staying in their comfort zone, even if it means steadily losing market shares. Others will try all sorts of different strategies with no rhyme or reason, and wonder why they’re failing. Executive coaching could help your upcoming leaders become the visionary you need to pivot the organisation, and introduce them to new methodologies that could have effects on the whole organisation.

You Can’t Retain Middle Management

One sign of problems in the organisation is a lack of cohesion in the C-suite. This becomes worse if you’re dealing with constant turnover. High turnover rates also affect middle management, which can have future implications for your business. For one, your organisation is losing experienced middle managers who could’ve eventually become leaders in the C-suite. And, if you can’t retain middle managers, chances are you’re losing a lot of their loyal team members too.

A potential solution to both issues, however, would be to use coaching for executives. Senior management coaching could reduce turmoil at the top level of the organisation, calming the churn at the next level of the organisation. You could also use executive coaching to cultivate the next generation of leaders. This can be done through The BCF Group who provide one on one coaching geared towards executives and senior management. Through the executive coaching from BCF Group, they’ll learn how to set priorities, accept feedback, and evaluate challenges. Their coaching doesn’t only focus on the business aspect either; it helps executives find a better work-life balance, which will eventually lead to less turnover.

Another benefit of offering executive coaching for middle managers is that it may reduce the conflict and stress senior executives deal with. You’re also demonstrating to these middle managers that the company values them and sees a bright future for them with the firm. Furthermore, you might eliminate the blame game that results in good people being fired instead of the real root cause being addressed.

Morale Is Low

Low morale impacts your business in a variety of ways. Not only does it have a direct impact on turnover, but it could also result in lower productivity. In some cases, it could end up in a negative workplace culture that turns off potential customers.

If you want to turn things around, it often has to start at the top. Executive coaching can help the business’s leadership make the necessary changes to improve morale over the long-term. For example, they can help a manager break out of a negative mindset that is pulling everyone else down.

There’s Too Much Drama at Work

Dealing with customers and business disruptions is a normal but stressful part of the job. However, there is a serious problem if there is too much drama at work. This might be due to managers overreacting to any problems that arise or lacking the soft skills to deal with problems in a peaceful manner. Or people at all levels may be rushing to snap judgements and acting based on assumptions that get in the way of both communication and problem resolution.

Executive coaching can teach managers soft skills, conflict resolution, and how to maintain perspective. This will reduce the number and impact of volatile situations, and there will be far less risk of key personnel quitting at random.

Your Business Lacks Clear Goals

While a wide majority of businesses will have goals, they’re not always the most productive. Many will lack clear goals, and not understand why they aren’t making any progress. This might be because they have no real mission or are using bad strategies. This is where you could use a fresh outside perspective.

An executive coach can help you come up with simple business goals tied to your overarching vision that can be clearly communicated to your team. You might be surprised by what they could do if you set the right key performance indicators. A coach can also help you make decisions so that you’re always moving toward your desired end goal.

You’re Personally Compromised

There are some cases where conflicts of interest could stop you from making the correctives needed, or you may be too close to the situation, project, or the people involved. It can sometimes be difficult to be objective when it comes to a pet project or reprimand someone who you’re personally close with. An executive coach will be able to come in without bias, and will also be able to address possible internal issues without creating personal rifts.

You Have Doubts on the People You’ve Assigned

Through our expertise, evaluations, and personal experiences, we gain a general sense of IT staff augmentation and who would be a good candidate for certain roles.  But there are times when we have to admit that we were wrong. Still, this could all be interference, and you might see inexperience as incompetence in some cases.

What an executive coach could do is come in and evaluate the leaders in your organisation. They will then be able to validate your choices or concerns. They could also work personally with some of your executives to help them develop the skills and aptitudes needed to fill their role better. Or they might make recommendations as to where they would be more suited.

Executive coaching can transform both individuals and organisations, and it is an invaluable resource for any business. It can help you overcome the hurdles holding you back or determine your path for the future so that you can move forward with confidence. But, more importantly, it will be an investment in your most valuable players, and help them realise themselves while reinforcing cohesiveness and loyalty.

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