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The Lesson from Argentina for Nigeria on Leadership

By
Ndubuisi Ekekwe
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0

Nations rise and fall on leadership. Companies rise and fall on leadership. One major American technology company recorded 22 consecutive quarterly revenue declines. Then, a new CEO came, and revenue started growing. The nation of Argentina for close to 12 years did not know what it was to balance its books. A new guy came as president, and the nation has balanced a monthly budget within a full month at work:

“In a significant economic development, the Argentine government achieved its first monthly budget surplus in nearly 12 years during January. This milestone comes as new President Javier Milei, a far-right libertarian who took office in December, continues to push for strong spending cuts and fiscal responsibility.

“January marked the first full month in office for President Milei, and it ended with a positive balance for public-sector finances of US$589 million (approximately S$800 million) at the official exchange rate. This surplus includes payment of interest on the public debt. The achievement is noteworthy as it represents the first monthly financial surplus since August 2012 and the first surplus for a January since 2011.”

Good People, elections have consequences in boardrooms and nations’ capitals.

Argentina achieved Balanced Budget in January, first time in Over a Decade

Argentina achieved Balanced Budget in January, first time in Over a Decade

By
Paul Ugbede Godwin
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0
TOPSHOT - Argentine presidential candidate for the La Libertad Avanza alliance Javier Milei waves to supporters after winning the presidential election runoff at his party headquarters in Buenos Aires on November 19, 2023. Libertarian outsider Javier Milei pulled off a massive upset Sunday with a resounding win in Argentina's presidential election, a stinging rebuke of the traditional parties that have overseen decades of economic decline. (Photo by Luis ROBAYO / AFP) (Photo by LUIS ROBAYO/AFP via Getty Images)

In a significant economic development, the Argentine government achieved its first monthly budget surplus in nearly 12 years during January. This milestone comes as new President Javier Milei, a far-right libertarian who took office in December, continues to push for strong spending cuts and fiscal responsibility.

January marked the first full month in office for President Milei, and it ended with a positive balance for public-sector finances of US$589 million (approximately S$800 million) at the official exchange rate. This surplus includes payment of interest on the public debt. The achievement is noteworthy as it represents the first monthly financial surplus since August 2012 and the first surplus for a January since 2011.

President Milei has been actively negotiating with the International Monetary Fund (IMF) regarding Argentina’s US$44 billion loan. He has made it clear that achieving a balanced budget is non-negotiable. “The zero deficit is not negotiable,” stated Economy Minister Luis Caputo on February 16.

Milei’s campaign promises include getting rid of the Central Bank and replacing the local currency with the dollar. His right-wing populist stance has resonated with voters who are frustrated with Argentina’s prolonged economic malaise. The country has been reeling from a devastating drought that severely impacted its cash crops.

Currently, Argentina has a 30-month $44 billion loan program with the IMF. Amidst this backdrop, Milei met virtually with IMF officials to discuss his economic vision for the nation. During this hour-long meeting, he assured them that his administration would not default on payments to the multilateral organization or any sovereign debts.

Milei outlined his Liberty Advances party platform, which includes several key points: Fiscal Adjustment. He proposes a significant fiscal adjustment, even more substantial than what the IMF demands. Opening Up the Economy, Milei aims to open Argentina’s economy further.

Labor Law Modernization, he advocates for modernizing labor laws. Deep State Reforms: His team plans to slash spending through comprehensive state reforms. Monetary Reform: Milei wants to end the Central Bank’s role in monetary policy.

Milei, an economist by training, advocates for sharp cuts in spending and a reduction of public debt as steps toward dollarization of the economy. His administration has already implemented significant economic reforms, including a 50% devaluation of the peso, lifting of price controls, and substantial interest rate increases. Despite these efforts, Argentina faces significant economic challenges. The country experienced an inflation rate of 20.6% in January.

Argentina faces significant economic challenges, and its history is marked by cycles of growth and dysfunction. Despite being Latin America’s second-largest country by area and the third-largest economy in the region, Argentina has defaulted on its sovereign debt nine times.

The country has leaned on funding from international institutions and, more recently, from China. The legacy of Peronism, a populist movement founded in the 1940s, has deeply divided Argentina’s political culture.

In recent years, Argentina has grappled with mounting debt, including tens of billions of dollars in loans from the International Monetary Fund (IMF). The election of anti-establishment President Javier Milei in 2023 appears to mark a sharp departure from the status quo.

President Milei has promised drastic economic and political restructuring, emphasizing greater cooperation with the United States and the West. This could include downgrading the Mercosur trade bloc and distancing itself from China, Argentina’s second-largest trade partner.

The economic situation in Argentina is dire. The country has experienced almost 100 per cent inflation in February 2023 — the highest level in 32 years. Galloping inflation has led to a phenomenon economists call ‘‘unanchored expectations,” where prices increase so rapidly that people lose track of what things are worth. Shopping becomes a treasure hunt as consumers compare prices across multiple supermarkets to find the best deals.

Ferrari Now Accepts Dogecoin as a Payment Method

By
Paul Ugbede Godwin
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0

In a bold and innovative move, Ferrari, the prestigious Italian car manufacturer, has redefined the standards in luxury automotive by now accepting Dogecoin as a payment method for their exclusive sports cars in the United States. This decision comes after Ferrari introduced the possibility of making transactions in Bitcoin and other cryptocurrencies for car purchases in 2023, with imminent plans to extend this option to Europe.

Enrico Galliera, Chief Marketing and Commercial Officer of Ferrari, announced this groundbreaking decision in an interview with Reuters. The choice to accept cryptocurrencies as a form of payment was driven by requests from customers and dealers alike. By integrating Dogecoin, Ferrari aims to expand its appeal to those who have been successful in the cryptocurrency sector.

In 2023, Ferrari introduced the possibility of making transactions in Bitcoin (BTC) and other cryptocurrencies for the purchase of its luxury cars in the United States. The company has imminent plans to extend this option to Europe as well. Enrico Galliera, Chief Marketing and Commercial Officer of Ferrari, announced this decision in an interview with Reuters, emphasizing that it was driven by requests from customers and dealers.

The move to accept cryptocurrencies as a form of payment aligns with Ferrari’s strategy to expand its appeal to successful individuals in the cryptocurrency sector. Enthusiasts in the United States can now make cryptocurrency payments based on their needs, catering especially to wealthier customers. The company is actively evaluating opportunities to extend this option to other payment service providers, with the goal of implementing it across different regions.

Despite concerns about the carbon footprint associated with cryptocurrencies, Ferrari remains optimistic about driving climate action. The exponential growth of cryptocurrency has come at the expense of the environment, but there are ways to mitigate its impact.

Cryptocurrency mining, particularly for Bitcoin and Ethereum, is energy intensive. Each Bitcoin transaction consumes a significant amount of energy—approximately 980 kilowatts, equivalent to three weeks of electricity for an average Canadian household. This process generates a substantial amount of carbon emissions, which inevitably affects the global climate.

To address this issue, organizations and researchers are exploring various strategies to reduce the carbon footprint of cryptocurrencies:

Data Center Location Optimization: Moving data centers to low-temperature areas with more favorable climates can significantly reduce energy consumption by minimizing cooling system demands. By choosing suitable locations, organizations can improve energy efficiency and decrease their environmental impact.

Renewable Energy Sources: Utilizing renewable resources such as wind, solar, and hydropower for cryptocurrency production can help reduce carbon emissions during power generation. By shifting away from fossil fuels, organizations can contribute to a more sustainable future.

Blockchain Transaction Verification Methods: Some large blockchain organizations are experimenting with new transaction verification methods. For instance, the Ethereum Foundation is exploring a method called “proof of stake,” which reduces energy consumption by an impressive 99.95 percent per transaction. Innovations like this can significantly enhance sustainability.

Win the AI Future with Tekedia AI in Business Masterclass

By
Ndubuisi Ekekwe
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0

We do not promise to make you a technical prodigy on AI (artificial intelligence). But we promise to help you understand  the business of AI – and by doing just that, you can plan for that AI future, for your career or your business. More people and more companies in Africa are choosing Tekedia AI in Business programs, than any local equivalent. Our cases are local . Begin today https://school.tekedia.com/course/aibusiness/

Implication of Capital One acquiring Discover for $35.3 billion

By
Paul Ugbede Godwin
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0

Capital One Financial is set to acquire Discover Financial Services according to a report from The Wall Street Journal. The deal, which could be announced as early as Tuesday, would bring together two of the largest credit card issuers in the U.S. and significantly expand Capital One’s credit-card offerings.

Discover shareholders will receive 1.0192 Capital One shares for each Discover share, representing a premium of 26.6% based on Discover’s closing price of February 16, 2024. The transaction is entirely in stock consideration.

The merger between Capital One and Discover has powerful strategic implications.

Payments Network Expansion: Discover has built a valuable global payments network with over 70 million merchant acceptance points across more than 200 countries and territories. Despite this impressive reach, it remains the smallest of the four U.S.-based global payments networks.

By acquiring Discover, Capital One gains scale and investment, enabling the Discover network to compete more effectively with larger payment networks and companies.

When the transaction closes, Capital One shareholders will own approximately 60% of the combined company, while Discover shareholders will own the remainder.

The acquisition brings together two companies with long-standing track records of delivering attractive financial results, award-winning customer experiences, breakthrough innovation, and financial inclusion.

Discover has built a valuable global payments network with 70 million merchant acceptance points across more than 200 countries and territories. However, it is currently the smallest of the four US-based global payments networks.

By acquiring Discover, Capital One aims to add scale and investment to enhance the Discover network’s competitiveness with larger payments networks and companies. This move aligns with Capital One’s goal of building a globally competitive payments company.

The combined credit card business will be better positioned to deliver industry-leading products and experiences for consumers, small businesses, and merchants.

The combination of Capital One and Discover is expected to generate $2.7 billion in pre-tax synergies and add at least 15% to adjusted earnings per share by 2027. This strategic merger aims to create a formidable force in the credit card industry by combining the networks and capabilities of both companies.

Capital One: Known for its commitment to modern technology, Capital One has been building a payments and banking company that leverages innovation and customer-centric experiences.

Discover: With a global payments network spanning over 200 countries and territories, Discover has established itself as a leader in merchant acceptance points.

Discover’s global payments network boasts an impressive 70 million merchant acceptance points, yet it remains the smallest of the four US-based global payments networks. The acquisition by Capital One adds scale and investment, positioning Discover to compete more effectively with larger payments networks and companies.

This move aligns with Capital One’s long-standing vision to work directly with merchants, leveraging its customer base, technology, and data ecosystem to drive sales for merchants while providing great deals for consumers and small businesses.

LinkedIn News Summary

Capital One has reached a deal to buy Discover Financial valued at $35.3 billion, the company announced late Monday. The sale will create the largest U.S. credit-card company by loan volume, according to Bloomberg, and is the largest deal in the world so far this year. The acquisition reflects a more than 26% premium over Discover’s current share price. If the deal passes muster with regulators, buying a credit card network will give Capital One a new source of revenuein the form of merchant fees.

  • Capital One has in recent years been working to attract premium customers like Discover’s, who spend more and are more loyal, per Bloomberg.
  • Discover shares dropped significantly last year, after the company revealed it had found some compliance issues; its CEO subsequently stepped down.
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