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Clean water plan offers billion-dollar opportunities

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It is both a national disgrace and a huge business opportunity. In one of the world’s largest and wealthiest emerging economies, nearly half the population lack proper sewage services and 35m struggle without clean drinking water in their homes.

“There are 100m people in Brazil without access to mains drainage,” says Gustavo Montezano, president of the national development bank BNDES. “When you talk about social inequality, environment and health, you have to talk about sanitation services.”

Brazil’s deficiencies in water and sewerage are the consequence of decades of neglect, part of a broader lack of infrastructure investment which the conservative government of President Jair Bolsonaro is moving to address.

This year, congress approved a government-sponsored bill opening up the sanitation sector to private investment. Previously almost exclusively the preserve of publicly owned monopolies, these services are now being opened to bidding from private companies, which can tender to run them for 30 years and improve coverage.

Workers install a sewage system in the city of Curitibanos. Nearly half of Brazil’s population lacks adequate sewage services © Miguel Schincariol/AFP via Getty Images

“As of today, six to seven per cent of the sanitation sector is controlled by private entities,” says Cassio Gouveia, managing director of investment banking at Itaú BBA, a commercial and investment bank. “We expect this percentage to increase substantially after passage of the new law.”

Industry experts estimate that up to R$700bn ($130bn) of contracts could be tendered in coming years. International infrastructure groups such as Canada’s Brookfield and Singapore’s sovereign wealth fund GIC are among those bidding via their local units. Both have already submitted winning bids in auctions for concessions to offer services.

“It’s a golden opportunity,” says Luis Alberto Andrés, lead economist for the World Bank’s infrastructure programme in Brazil. “The new law . . . has most of the elements we see as a potential game-changer for this sector . . . the challenge these days is the actual implementation.”

One of the key uncertainties is whether Brazil’s congress will insist on a clause it inserted into the bill during debate, which would allow existing sanitation contracts to be renewed for 30 years without competitive tender. President Bolsonaro vetoed that clause but congress could yet overturn his decision.

Another question mark hangs over regulation: the national sanitation watchdog ANA is charged with overhauling a patchwork of local regulation to ensure a level playing field, but this process is still under way.

Juicy premiums

In any case, Mr Montezano is confident that cash-strapped municipalities across Brazil will be tempted by some of the juicy premiums that may be on offer if they put their services out to tender.

In an auction of sanitation contracts in September covering some 1.5m people in Alagoas state in Brazil’s impoverished north-east, BRK Ambiental, owned by Brookfield, beat several competitors by paying a premium of $R2bn reais ($373m), he says. The company expects to sign the contract later this month.

‘This could be the biggest reduction of social inequality in the history of Brazil’ — Gustavo Montezano, BNDES
Gustavo Montezano, BNDES: ‘This could be the biggest reduction of social inequality in the history of Brazil’ © Evaristo Sa/AFP via Getty Images

“It was a very strong indicator,” Mr Montezano says. “This agenda is financially profitable beyond the social impact . . . now the states and mayors are calling us asking for projects.”

The states of Acre and Amapá are due to tender water and sewage contracts next, followed by the state of Rio de Janeiro. Others have expressed interest.

“In our view this programme of sanitation could be the biggest reduction of social inequality in the history of Brazil,” Mr Montezano concludes.

Henrique Carsalade Martins, CEO of Brookfield Brazil, compares the nascent opening of Brazil’s sanitation sector to moves a quarter of a century ago to liberalise electricity generation. “It’s the first step in a long road,” he says. 

Brookfield has assets of $26bn under management in Brazil and invests in a portfolio of infrastructure, including toll roads, ports, railways, electricity generation, agribusiness and property.

A water treatment plant in Rio de Janeiro. Brazil’s government argues that allowing private companies to run such services is the best way to modernise them © Marcelo Sayao/EPA

In some Latin American countries such as Chile political opposition to privatised public services has increased recently, amid consumer complaints over high prices and poor quality, but Mr Martins is confident that Brazil’s sanitation reforms will not be reversed.

“The federal, state and municipal governments don’t have money to invest and the investment needs are very big,” he says. “The pandemic also brought home the importance of basic sanitation and access to treated water.”

State entities have historically proved unable to deliver adequate investment in these services, partly because of political priorities, Mr Martins explains.

“They are important but they don’t get you votes,” he says. “Some people even say in Brazil that sanitation works differently [in local politics] to bridges because it’s all underground, the works are not above ground, so you don’t see them happening.”

What nobody doubts is the urgent need for Latin America’s biggest economy to tackle its investment deficit. 

“Infrastructure development will be key to Brazil’s recovery and halting the descent into poverty for millions of Brazilians,” says the World Bank’s Mr Andrés. “Access to water and sanitation remains a public health priority and the need to rapidly expand access to basic services is critical.”



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Pakistan’s prime minister survives confidence vote

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Pakistan’s prime minister survived a vote of confidence on Saturday after the shock defeat of his finance minister earlier in the week underscored the fragility of the ruling coalition.

Imran Khan took 178 of the 172 votes needed to win after the former cricket captain was forced to seek a vote to prove he had a majority to govern after his finance minister lost his senate seat in a tightly contested race.

The prime minister alleged that around 15 of his lawmakers had been “bought” to vote against Abdul Hafeez Shaikh, who led government negotiations with the IMF, after opposition-backed former prime minister Yusuf Raza Gilani took his Senate seat.

“Imran Khan is not going down in the near-term, but he stands politically weakened by the events of this week,” said Asfandyar Mir, a South-Asia analyst at Stanford University, “he will be playing defence from here on”.

Khan said after the vote he would continue to battle corruption and pledged the economy was on the right track. “We are on the way to economic recovery,” he said.

The vote of confidence was seen as a test of Khan’s popularity at a time the opposition is ramping up pressure on him.

The Pakistan Democratic Movement (PDM), a coalition of opposition parties including the Pakistan People’s Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N), has since late 2020 intensified its campaign for Khan’s removal by banding together and holding rallies across the country.

Leaders of the PDM have accused Khan and Khan’s Pakistan Tehreek-e-Insaf party (PTI) of securing its 2018 victory with the backing of the powerful military. Leaders of the PTI and the army deny the claim.

Analysts said that the vote was unlikely to end Khan’s problems. “Imran Khan remains the prime minister but his government’s agony is not about to end,” said Ayaz Amir, a former member of parliament and commentator. “Increasingly the initiative has gone to the hands of the opposition and Imran Khan is left to react.”

Khan’s election as prime minister was widely seen as marking a new chapter in Pakistan’s politics. His anti-corruption platform was popular among middle class and youth voters, who saw him as a break from politics dominated by the country’s wealthy elite.

But he has faced criticism for his failure to lift the economy — Pakistan is under a U$6bn IMF loan programme — and to deliver on his promise to create an Islamic welfare state.

“The poorer segment of Pakistan’s population have been hit the hardest. The prices of food items have risen sharply under this government and that’s a big issue for our people,” said Shaista Pervaiz Malik, an MP for the opposition PML-N.



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White House warns of ‘large number’ of victims in Microsoft hack

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The White House has warned that hackers may have compromised a “large number of victims” in the US by exploiting recently disclosed vulnerabilities in Microsoft software. 

Jen Psaki, White House press secretary, said on Friday that there was currently an “active threat” from hackers exploiting four flaws in Microsoft’s Exchange email application, which the tech group disclosed earlier this week. Microsoft has blamed a Chinese state-backed hacking group for the attacks.

“This is a significant vulnerability that could have far-reaching impacts,” Psaki said. “We are concerned that there are a large number of victims and are working with our partners to understand the scope.” 

Brian Krebs, a cyber security researcher, claimed in a blog post on Friday that at least 30,000 organisations “including a significant number of small businesses, towns, cities and local governments” had been hacked in the past few days following Microsoft’s disclosure, citing multiple sources briefed on the matter. 

On Tuesday, Microsoft published a blog post in which it said a group of hackers had launched “limited and targeted attacks” to gain access to emails. It also said the hackers had tried to go deeper into victims’ computer systems in order to lurk there unnoticed for a long period of time.

Microsoft has attributed the campaign to a group of Chinese state-sponsored hackers called Hafnium. China on Wednesday denied responsibility, according to a Reuters report. The White House did not link the campaign to any particular country.

It is unclear who has fallen victim to the attacks. Microsoft said that Hafnium has tended to target “infectious disease researchers, law firms, higher education institutions, defence contractors, policy think tanks, and NGOs” in the past.

Late on Thursday, Jake Sullivan, National Security Adviser, said in a tweet that the White House was “tracking . . . reports of potential compromises of US think tanks and defence industrial base entities”. 

He and Psaki urged the government, private sector companies and academic institutions to patch their systems after Microsoft issued fixes for the vulnerabilities. 

The concerns come after revelations in December that a sprawling cyber espionage campaign, likely backed by Russia, had been targeting US government agencies and businesses unnoticed for at least a year.

Authorities are still struggling to understand the scope of the fallout from the SolarWinds hack, which has prompted calls for President Joe Biden to prioritise US cyber security. The Biden administration is now preparing sanctions and other executive orders in response to the hack. 

James Lewis, a cyber expert at the Center for Strategic and International Studies, said it appeared that Microsoft and the US government had uncovered the Chinese attack while “poking about looking for SolarWinds”.

“This is the downside of a big hack by somebody else as it increases the chance that you’ll be found out,” Lewis said. “The Chinese should send the Russians a bill.”



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Polish women count cost of tough abortion curbs

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Even before Poland all but outlawed abortion, Zofia has been thinking about moving abroad. But the near-ban that took effect earlier this year helped her make up her mind: this autumn she plans to move to Prague in the Czech Republic.

“I feel better there, freer, and being a woman there doesn’t make me feel weaker or worse,” she said. “I love my life in Warsaw. But when the [abortion ban was mooted], I thought, I don’t want to live here any more . . . And I don’t want my kids to live here.”

The 31-year-old artist is one of thousands of Polish women outraged by the tightening of the country’s abortion laws which, even before the overhaul, were among the strictest in the EU. Their anger centres on a ruling by the Constitutional Tribunal in October last year, which declared that a 1993 law allowing abortions in the case of severe foetal abnormalities was unconstitutional.

The ruling came into force in January, leaving only two grounds for an abortion in Poland: a threat to the mother’s health or if the pregnancy is a result of rape or incest. Such cases made up just 2.4 per cent of the 1,100 legal abortions in Poland in 2019.

Hundreds of thousands of Poles took to the streets when the ruling was announced in October, and activists have called for another round of protests on International Women’s Day this Monday. Polling suggests that a majority of Poles back some form of liberalisation.

Anti-abortion campaigners, often guided by their religion in what remains one of Europe’s most strongly Catholic countries, say the change was needed to protect the rights of unborn children.

“An unborn child is a separate person, which has its own body and its own rights. A child must not be deprived of the fundamental right of every human being — the right to life,” Kaja Godek, one of Poland’s most prominent anti-abortion campaigners, wrote on Facebook last month.

A pro-life poster in Krakow. Many Polish opponents of abortion are guided by faith in one of Europe’s most strongly Catholic countries
A pro-life poster in Krakow. Many Polish opponents of abortion are guided by religion in one of Europe’s most strongly Catholic countries © Omar Marques/Getty Images

But activists say the ruling will force women to give birth to babies with such severe abnormalities that they have no chance of survival. They also say the government has done too little to help the families of children born with disabilities, who receive only limited support.

“I’m terrified because for me as a woman in reproductive age, it means getting pregnant in Poland became dangerous. And I’m afraid for my sister, for my colleagues and friends, for my relatives and for many other women I meet every day as clients,” said Kamila Ferenc, a lawyer from the Federation for Women and Family Planning, a women’s rights group.

“They will be in a horrible position . . . they have lost the possibility to decide freely on their own, because it’s not so easy to have an abortion outside the system.”

In the past, Polish women who could afford it were able to seek abortions in neighbouring countries with more liberal laws, such as the Czech Republic or Slovakia. But with the pandemic limiting travel, experts say women are likely to turn to the internet to buy drugs from overseas that would allow them to carry out abortions at home. Women are not prosecuted for self-managed abortions carried out before the 22nd week of pregnancy.

“It used to be the case that illegal abortions were through surgical procedures by doctors and back-alley providers. Then abortion tourism rose in the early 2000s after Poland joined the EU. Now we are seeing an increase in self-managed abortions, which can be less of a financial and emotional burden,” said Maria Lewandowska, a researcher into reproductive health at the London School of Hygiene and Tropical Medicine.

Justyna Wydrzynska, from Abortion Dream Team, a group that helps women who want to terminate their pregnancies, said that since the abortion rules were tightened in January, the organisation had received three times the normal number of calls from women seeking help.

“We get around 600 to 700 phone calls a month. Around 100 of them need to go abroad [for an abortion], and for the rest, . . . these are mostly people in need of pills, assistance in taking pills or post-abortion care,” she said.

“Often they are human dramas. Some people approach it in a task-oriented way, others very emotionally. Sometimes it is very difficult.”

Despite the huge protests last year, women’s rights groups acknowledge that as long as Poland’s conservative-nationalist Law and Justice party remains in power, the prospect of the laws being loosened is minimal. But they hope that in the long run, the debate sparked by the ruling will lead to greater support for liberalisation.

“The factual situation of pregnant women is worse. But on the other hand I think we are now on a better track to change the situation than when [the previous government led by the centre-right] Civic Platform ruled and everybody thought everything was all right,” said Ferenc.

“There is more courage in society to speak about abortion. People educate themselves and each other. I think that we now have more solidarity and strength in society to fight for reproductive rights. ”



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