Managing Risk to Build a Better Belt and Road Expert comment sysadmin 4 July 2018

Risk management is a key part of economic development. China could use some simple principles for managing risk to improve the prospects of its flagship infrastructure initiative.

One of the original motivating forces for China’s Belt and Road Initiative is risk management: the aim being to use infrastructure to drive economic development, so improving political stability and creating a favorable impression of China in countries bordering China and beyond.

Yet these investments themselves are inherently risky: large-scale, debt-financed, long-term infrastructure projects in countries that often have weak governance, undefined or poorly-executed rule of law and corruption. China has experience managing infrastructure risks within its borders in its own ways, but it has much less experience overseas.

And, while well-executed investments can enhance stability, the same investments, executed poorly, can create their own backlash in countries that see costs exceed benefits. This increases rather than reduces risks – not just the risks of defaulting on loans, but also the risk of damage to physical assets, loss of life and deteriorating relations with China.

Moreover, China states its desire for greater private sector and non-Chinese involvement in Belt and Road. This will be needed if China is to realize some of its larger ambitions for the initiative. But companies seek attractive returns – adjusted for risk. It is the perceived and actual riskiness of projects that makes commercial involvement a challenge. Focusing on the risk rather than return may be the better place to start to attract partners alongside Chinese institutions.

The risks on the Belt and Road

Overall, these risks fall into four categories.

The first and most critical issues are when projects cannot even get initial funding. Concerns about compliance, corruption and project governance combined with high costs and low revenues mean that the numbers simply do not add up. Working on any of these dimensions to improve them means more projects will get off the ground.

Secondly, there are the familiar risks during construction – budget overruns, unforeseen design issues and work delays, all commonplace in such challenging operating environments. Alongside these are risks to personnel caused by internal tensions and security challenges.

Thirdly, once completed, financial and non-financial risks remain. At its simplest, revenues may fall short and the project debt cannot be repaid. A series of other factors may reduce willingness to pay: difficulties in enforcing penalties against non-repayment; fiscal pressures elsewhere in the budget; popular resistance to sending money to overseas financiers. And the completed projects and individuals operating them often remain at risk to local political tensions and security challenges.

Finally, throughout the whole process, projects risk stirring up resentment and hostility rather building stability through economic growth. Incumbent governments may make project commitments that fit their own interests rather than those of the country – or at least are perceived to do so. Sri Lanka and Malaysia offer current examples. The way in which projects are implemented can compound the problem – for example, if promised job creation among local contractors does not happen or local ethnic rivalries are not taken into account.

Approaches to risk

How then to address these risks? Some simple principles about risk management highlight avenues to explore and institutions to get involved.

First, what can actions be taken to mitigate or reduce the risks and who is best-placed to do this?

Secondly, who is best-placed to bear and accept risks that cannot be reduced at an economical cost? Should the risk be diversified across many different parties so that each bears only a portion of the risk or rather concentrated and held by those who are knowledgeable on the specifics of the risk?

Thirdly, for those who end up bearing the remaining risk, how large is it and what actions are needed now to protect against future loss?

The myriad of risks along the Belt and Road suggests a myriad of risk solutions and participants. Putting that all together is in itself a skill and will not happen of its own accord. It requires active planning and structuring of which partners to involve where in a way that makes sense for all involved. Three areas stand out.

Successful construction is more than an engineering exercise. It requires positive engagement with local communities; credible, active communication of the benefits that the project brings; and protection of the people and equipment involved in the work. Doing this well means understanding the specific situation on the ground in often remote regions and acting accordingly.

Donor agencies, NGOs, other multinationals and provincial and national governments all have experience to bring to the table. Chinese contractors have demonstrated success in rapid, low-cost implementation and are learning about how to work in a wide range of countries. This is, though, an opportunity to draw on the experience of contractors from other countries, local subcontractors and the experience of multilateral organizations.

Financing is at core about the risk/return-based allocation of capital. The raison d’etre of the insurance sector is risk management. Multilateral institutions have a complementary role to play alongside private sector financial institutions. Drawing on this experience can play an important role in making investment projects economically attractive and bankable.

The opportunity to match the investment portfolios of long-term institutional investors with the long-term financing needs of infrastructure has long been a topic of discussion: the Belt and Road provides a new menu of projects. These approaches all thrive on verifiable data, standardization and transparency clarity and standardization.

Not all projects will fit these requirements, but some will. And in all cases, drawing on sector- and country-specific risk management experience from banks and insurers can reduce risks.

Government can be thought of as the ultimate back-stop, a risk manager for its people across the entire risk spectrum. Actions that strengthen the capacity of all governments involved to assess and address risk mean more effective risk management, greater success and the avoidance of ‘debt traps’.

Examples include sharing experience between countries; multilateral or bilateral support with the assessment of financial burden and debt terms; support to strengthen governance and oversight of project implementation; and approaches that ensure the involvement of affected local populations. Making use of dispute resolution procedures that are accepted by the key participants reduces risk all round.

Countries, businesses and individuals grow through the judicious taking of risks. But unnecessary risk-taking is wasted effort. Belt and Road projects will be most effective when those best-placed to tackle risks and opportunities are encouraged to do so.

Protecting universal human rights: Imagine a better world Explainer Video NCapeling 19 November 2021

Short animation examining why protecting and defending human rights ensures an equitable response to humanitarian crises and addresses economic inequality.

Human rights are not policies that can be overturned, they are not granted by governments. They belong to everyone as human beings.

For the most part, states are meeting their commitments to defend and protect universal human rights. But increasingly some governments are beginning to shy away from their obligations, and some are even actively seeking to subvert human rights.

And the regional and international bodies created and charged with defending these rights are being challenged by the rise of new powers and political movements.

Chatham House is built on big ideas. Help us imagine a better world.

Our researchers develop positive solutions to global challenges, working with governments, charities, businesses and society to build a better future.

SNF CoLab is our project supported by the Stavros Niarchos Foundation (SNF) to share our ideas in experimental, collaborative ways – and to learn about designing a better future.

Expert

DNA polymerases are today used throughout scientific research, biotechnology, and medicine, in part for their ability to interact with unnatural forms of DNA created by synthetic biologists. Here especially, natural DNA polymerases often do not have the “performance specifications” needed for transformative technologies. This creates a need for science-guided rational (or semi-rational) engineering to identify variants that replicate unnatural base pairs (UBPs), unnatural backbones, tags, or other evolutionarily novel features of unnatural DNA. In this review, we provide a brief overview of the chemistry and properties of replicative DNA polymerases and their evolved variants, focusing on the Klenow fragment of Taq DNA polymerase (Klentaq). We describe comparative structural, enzymatic, and molecular dynamics studies of WT and Klentaq variants, complexed with natural or noncanonical substrates. Combining these methods provides insight into how specific amino acid substitutions distant from the active site in a Klentaq DNA polymerase variant (ZP Klentaq) contribute to its ability to replicate UBPs with improved efficiency compared with Klentaq. This approach can therefore serve to guide any future rational engineering of replicative DNA polymerases.

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22 July 2020

Will Africans’ calls for better democracy be met? The World Today mhiggins.drupal 29 July 2022

Voters want the continent’s ageing leaders to step aside to usher in a new age of political engagement and robust democracy, say the experts of Afrobarometer.

Across Africa, recent years have been marked by both encouraging democratic highs and troubling anti-democratic lows. Notable advances from last year include the Gambia’s successful presidential election, a ruling-party transition in Zambia and the first democratic transfer of power in Niger. In the lead up to this, add Malawi’s retake of its flawed presidential election in 2020 and an earlier succession of oustings of long-serving autocrats in Sudan, Zimbabwe and the Gambia. 

Contrast these gains, though, with setbacks elsewhere, including increasing restrictions on opposition parties in Benin, Senegal and Tanzania; the use of violence and intimidation during elections in Côte d’Ivoire and Uganda; and military coups, with the latest in Burkina Faso this year and last year in Chad, Mali, Sudan and Guinea.

These contradictory developments join dire warnings from experts that democracy is losing ground on the continent. But what can we learn about the state of democracy on the continent from Africans themselves?

Afrobarometer, a pan-African, non-partisan research network, has been surveying people about their views on democracy, governance and quality of life for more than 20 years. After interviewing nearly 50,000 citizens across 34 countries during Afrobarometer Round 8, which spans 2019-2021, we find that despite the efforts of some leaders to undermine democratic norms, Africans remain committed to democracy and democratic institutions.

They believe that the military should stay out of politics, that political parties should freely compete for power, that elections are an imperfect but essential tool for choosing their leaders, and that it is time for the old men who cling to power to step aside.

But their political reality falls short of these expectations. The perception of widespread and worsening corruption is particularly corrosive, leaving people increasingly dissatisfied with political systems that are yet to deliver on their aspirations to live in societies that are democratically and accountably governed. And although citizens find myriad ways to voice their concerns, they feel that their governments are not listening.

Simply put, Africans want more democratic and accountable governance than they think they are getting.

Africans’ democratic aspirations

Over the past decade, democracy watchers have been alarmed by declining trends in Africa. Concerns have been exacerbated in the past two years as some governments have taken advantage of the Covid pandemic to limit freedoms, restrict fair campaigning or postpone elections. Activists fear that supposedly temporary rollbacks in hard-won governance reforms could become permanent.

But for the most part, African citizens remain committed to democracy and democratic institutions. Across 30 countries that Afrobarometer has surveyed consistently since Round 5 (2011–2013), most indicators are strong and quite steady.

For example, seven in 10 Africans say that ‘democracy is preferable to any other kind of government’. While this is down modestly from 73 per cent a decade ago, more specific indicators seem to affirm popular commitment to democracy. Large and steady majorities consistently reject authoritarian alternatives, including one-person or ‘strongman’ rule (82 per cent), one-party rule (77 per cent) and military rule (75 per cent), which is clearly rejected even in many of the countries rocked by recent military coups.

Africans also express strong support for a limit to presidential terms, a feature of democratic governance that researchers and activists argue nurtures political participation, demonstrates that change via the ballot box is possible, and reduces the risk of personality cults, authoritarianism, corruption and coups. Across 34 countries, an average of 76 per cent favour limiting their presidents to two terms, including a majority (54 per cent) who ‘strongly’ support this rule. Term limits enjoy majority support in every surveyed country. 

The public’s democratic commitment is undergirded by strong and in some cases growing support for core democratic institutions. Support for multiparty competition and parliamentary oversight of leaders remains steady, while expectations that governments should be accountable to the courts have increased significantly over the past decade.

In addition, growing numbers of people say it is more important to have a government that is accountable to the people rather than one that just ‘gets things done’, an especially strong indicator of deepening commitment to democratic norms among citizens. 

Trouble at the polling booth

Elections remain a central, though controversial, institution of democracy for Africans. They have served as the foundation for real change, as in Zambia last year. But in other cases, such as Uganda’s January 2021 poll, they have been marred by violence and human rights abuses, as well as the weaponization of Covid to justify restrictions on campaigning.

The public is also sceptical about the capacity of elections to bring about real change: fully 50 per cent say they do not think elections are effective in enabling voters ‘to remove from office leaders who do not do what the people want’.

At the same time, large majorities report positively on their country’s election environment. Asked about their most recent election, at least eight in 10 say they did not observe intimidation (87 per cent) or interference (81 per cent) by security forces and did not fear violence (80 per cent).

We must keep in mind that these encouraging averages can obscure deep problems in some countries. For example, while only 3 per cent of Namibians say votes are ‘often’ not counted fairly, between a quarter and one-third cite inaccurate counts as a frequent problem in Zimbabwe, Sudan and Gabon. 

In addition, confidence in the fairness of the media environment is drastically lower, on average just 36 per cent.

But perhaps most importantly, almost nine in 10 Africans (87 per cent) say they are free to vote as they choose, including sizeable majorities in every surveyed country. And a solid majority of 63 per cent rate their most recent election as completely or mostly free and fair. 

All of this may help to explain still-strong support for competitive elections as the best system for selecting leaders. A robust three-quarters confirm their commitment to elections, though this has fallen slightly over the past decade, probably reflecting disillusionment with electoral processes that are too often torn by violence and produce contested results. 

A growing number of people may also be recognizing that elections, especially poor-quality ones, are not enough to guarantee democracy and better governance, and that a healthy democracy must include such other features as government accountability, respect for the rule of law, responsiveness and citizen participation.

The ‘democratic disappointment’ gap

To what extent does political reality align with Africans’ democratic aspirations? Our findings suggest that it is falling well short of expectations.

While a slim majority has steadily reported that their country is a ‘full democracy’ or one ‘with minor problems’ over the past decade, satisfaction, however, has dropped to 43 per cent in that time. 

What explains this growing dissatisfaction? Other indicators of democratic supply offer some clues. While ratings of election quality have held steady, favourable public assessments of presidential accountability to parliament and to the courts have both declined.

The rising scourge of corruption

But one of the most significant driving factors may be burgeoning corruption, a trend that appears to parallel declining democratic satisfaction. On average across 34 countries, around six in 10 say both that corruption in their country increased over the past year, and that their government is doing a poor job of controlling it.

These perceptions matter. Over time, when perceptions of corruption rise or fall, levels of dissatisfaction with democracy tend to follow suit. 

In South Africa, dissatisfaction with democracy grew steadily alongside scandals involving President Jacob Zuma, and has continued to rise under his successor, Cyril Ramaphosa, whose office has been tainted by ‘Farmgate’ and a major Covid-relief scandal. The ‘Fishrot’ scandal in Namibia has had similar consequences.

Are governments listening?

African citizens are raising their voices, calling on their governments to fulfil their democratic aspirations. Since April 2017, the Carnegie Endowment for International Peace has recorded more than 70 episodes in 35 African countries of protests focused on issues ranging from demands for democracy in eSwatini to resisting police brutality, presidential third-term attempts and Covid restrictions. 

Citizen participation and government responsiveness are cornerstones of democracy. But are governments listening?

Voting is the most obvious and popular way for citizens to express themselves, and Africans take advantage of this opportunity. Two-thirds said they voted in their most recent national election. But elections occur only occasionally, and they force individuals to compress a wide array of views into very few choices. How do Africans find their voice during the long intervals between elections?

Many invest in personal efforts to act as agents of change. In fact, nearly half say they joined with others to raise an issue at least once in the past year, and a third contacted a political leader. A quarter report they acted with others to request government action. Less common but still important modes of engagement include asking for help from or lodging a complaint with government, contacting the media, and joining a demonstration.

These robust levels of citizen engagement suggest that people feel they can make a difference. Unfortunately, decision-makers aren’t always receptive or responsive to citizen voices. Less than a quarter of people think local government officials listen to them – and even fewer think their members of parliament do. 

What is more troubling is that fully two-thirds say they are at risk of retaliation or some form of negative consequences if they take action by reporting incidents of corruption. 

Lack of government responsiveness and respect for popular voices may have direct implications for both citizen engagement and citizen satisfaction. For example, we find that people are more likely to contact leaders or take other actions to solve problems if they believe that government officials respect and listen to them; that they will get a response if they raise an issue; and if they do not need to fear retaliation. 

Similarly, when we compare country averages for government responsiveness to the percentage of citizens who are satisfied with democracy, we again find positive associations. 

When governments are responsive, citizens are more likely to engage in addressing community needs and to be satisfied with their political system and optimistic about the future. Respectful and responsive governance has the potential to spur citizen action to solve critical development challenges – and may be the cure for what ails democracy.

Eight ways to build better African cities The World Today mhiggins.drupal 2 August 2022

Young professionals from across the continent tell Emmanuel Adegboye how city life could be improved: from high-speed rail to people-centred urban planning.

Ahmed Elsawy, 33, Director of Talent
Cairo, Egypt
We must amend employment law in Egypt to support individual contractors to match with the global demand for short-term and project-based assignments within the tech and service industries. While we have a new, decent education system, I think we should care more about foreign languages to have a higher rank when it comes to the global competition of skilled workers.

Iman Abubaker, 31, Urban Mobility Project Manager, WRI Africa
Addis Ababa, Ethiopia
Rapid urbanization and increased motorization have exacerbated the city’s urban challenges. Addis Ababa would benefit from safer street design and people-centred city planning. Urban amenities should be located within walking and cycling distances. For longer trips, the city needs to invest in improving the accessibility, safety, integration and multimodality of its public transport system. I would love to see more pockets of green spaces and parks all around the city. 

Bree, 31, Project Manager
Nairobi, Kenya
I have a love-hate relationship with Nairobi. I spent four years smack in the middle of the city while attending the University of Nairobi. Being in the middle of all the hustle and bustle made the transition to a sleepy-ish coastal town easy. I would happily trade matatus [shared taxis] for tuktuks any day. I do miss the conveniences that come with a big city like a 24-hour grocery store and delivery services on those lazy days.

Mfon Bassey, 30, Co-Founder, TalentX Africa
Lagos, Nigeria
The government should improve the road networks and public transport systems, because the common challenge most Lagosians face is commuting from point A to B without traffic. There are so many private cars on the road because the public transport system isn’t optimally efficient yet. Once you take away the commute time most workers spend just to get work done, we’ll surely have happier Lagosians.

Olga Kiconco, 32, Innovation Strategist
Kampala, Uganda
As one of Africa’s fastest-growing cities with a projected 112 per cent population growth by 2035, there are a number of critical changes that need to be made in preparation for this. Our leaders should embrace coherent policies that will catalyze socio-economic transformation. We need to hold them accountable for better infrastructure and delivery of public services, while taking personal responsibility to protect our environment against the prevalent threat of climate change.

Etienne Amougou, 30, Curator/Arts Project Manager
Yaounde, Cameroon
What would make Yaounde better would be a good ecosystem that provides more opportunities for young people. If it was possible, I would like to see the creation of more cultural spaces, like parks, zoos, cinemas and sport areas. Also, we could use a more effective approach to waste management – sometimes we have trash everywhere in the ’hood.

Valentino Fernandez, 23, Writer
Johannesburg, South Africa
 We need better transportation to bridge the inequality gap and allow the youth to access spaces to be inspired and create change. Apartheid spatial planning is still affecting us. People of colour were relegated to the outskirts of the city, and very little has changed. It’s virtually impossible to move out of your childhood home, which means you’re looking at a two-hour commute every morning and two more hours to get home. I would like a reliable, affordable, high-speed rail system.

Jean-Louis Mbaka, 34, Co-Founder and Director, Education at Kinshasa Digital
Kinshasa, DRC
Our youth must receive a sufficient education that is in line with the strategic requirements of their future workplaces. By 2030, more than 130 million jobs in Africa will require digital skills, according to the International Finance Corporation. To close the gap between the conventional educational system and the labour market, our organisation is providing training for digital jobs. Initiatives like ours must be supported if the current and next generations are to have the means for their economic and social advancement. Scaling up investments in vital facilities like the internet is also necessary.

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When the brain experiences an injury, it can be difficult to definitively diagnose a concussion as the trauma is often limited to inside the skull and cannot be accurately assessed, according Reuben Kraft, a professor of mechanical engineering at Penn State. Kraft's research team is using computational methods and tools — such as custom mouthguard sensors — to model and predict injury in the human brain. 

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