Sol-Gel Technologies Reports Second Quarter 2019 Financial Results and Corporate Update

  • Top–line generic product revenue of $7.8 million
  • TWIN Phase 3 trials are fully enrolled and remain on track to report results in 4Q19

NESS ZIONA, Israel, Aug. 13, 2019 (GLOBE NEWSWIRE) — Sol–Gel Technologies, Ltd. (NASDAQ: SLGL), a clinical–stage dermatology company focused on identifying, developing and commercializing branded and generic topical drug products for the treatment of skin diseases, today announced financial results for the second quarter ended June 30, 2019 and provided an update on its clinical development programs.

"With the positive results reported from our Epsolay Phase 3 trials in papulopustular rosacea and top–line results expected later this year from the now fully enrolled pivotal TWIN program in acne, we remain confident of our ability to lead these programs through both the clinical and regulatory pathways to successful commercial launches," commented Dr. Alon Seri–Levy, Chief Executive Officer of Sol–Gel. "Additionally, we continue to generate meaningful revenue from our generic collaborations, which support the funding of our ongoing plans for TWIN and Epsolay as well as our proof–of–concept study for SGT–210 which we expect to initiate in the first quarter of 2020."

Corporate Highlights and Recent Developments

  • In the second quarter, Sol–Gel generated revenue of $7.8 million from its collaborative arrangement with Perrigo.
  • In July 2019, Sol–Gel received Notice of Allowance from the United States Patent and Trademark Office for a patent covering TWIN for the treatment of acne vulgaris. The newly granted patent will extend protection to July 2038, which Sol–Gel believes will prevent the launch of AB–related generic of TWIN during the life of the patent.

Clinical Program Update

  • Epsolay met all primary and secondary endpoints in both Epsolay Phase 3 trials, with statistically significant improvement seen as early as Week 2 compared with vehicle.

  • Enrollment in the two pivotal Phase 3 TWIN trials in acne vulgaris has been completed with top–line results expected in the fourth quarter of 2019, as previously announced.
  • Results from a bioequivalence study for generic 5–fluorouracil cream, 5%, for actinic keratosis, continue to be expected in 2019 followed by a filing in the U.S. of an abbreviated new drug application expected in 2020. This study is part of a collaboration with Douglas Pharmaceuticals.
  • During an investor event held on July 25th, Sol–Gel announced an expansion to its development pipeline to include SGT–210, a topical epidermal growth factor receptor inhibitor, for the potential treatment of palmoplantar keratoderma (PPK) and non–melanoma skin cancer. A proof of concept study of SGT–210 in PPK is expected to begin in the first quarter of 2020.

Financial Results for the Three Months Ended June 30, 2019

Revenue in the second quarter of 2019 was $7.8 million. The revenue was due to sales of a generic product from a collaborative arrangement with Perrigo.

Research and development expenses were $11.4 million in the second quarter of 2019 compared to $5.8 million during the same period in 2018. The increase was primarily due to an increase of $6.2 million in clinical trial expenses related to Epsolay and TWIN partially offset by a decrease of $0.2 million in manufacturing expenses for TWIN and a decrease of $0.4 million in share–based compensation expenses.

General and administrative expenses were $1.6 million in the second quarter of 2019 compared to $1.5 million during the same period in 2018. The increase was primarily due to an increase of $0.2 million in legal expenses and an increase of $0.2 million in payroll expenses, partially offset by a decrease of $0.3 million in share–based compensation expenses.

Sol–Gel reported a loss of $4.9 million for the second quarter of 2019 compared to a loss of $6.9 million for the same period in 2018.

As of June 30, 2019, Sol–Gel had $14.4 million in cash, cash equivalents and deposits and $35.5 million in marketable securities for a total balance of $49.9 million. Based on current assumptions, inclusive of the recent offering, Sol–Gel expects its existing cash resources will enable funding of operational and capital expenditure requirements into the first quarter of 2021.

About Sol–Gel Technologies

Sol–Gel is a clinical–stage dermatology company focused on identifying, developing and commercializing branded and generic topical drug products for the treatment of skin diseases. Sol–Gel's current product candidate pipeline consists of late–stage branded product candidates that leverage our proprietary, silica–based microencapsulation technology platform, and several generic product candidates across multiple indications. For additional information, please visit www.sol–gel.com.

Forward–Looking Statements

This press release contains "forward–looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward–looking statements, including, but not limited to, the clinical progress of our product candidates, plans and timing for the release of clinical data, our expectations surrounding the progress of our generic product pipeline, and the sufficiency of our cash resources to meet our operational and capital expenditure requirements. These forward–looking statements include information about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward–looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," or the negative of these terms or other similar expressions. Forward–looking statements are based on information we have when those statements are made or our management's current expectation, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward–looking statements. Important factors that could cause such differences include, but are not limited to: (i) the adequacy of our financial and other resources, particularly in light of our history of recurring losses and the uncertainty regarding the adequacy of our liquidity to pursue our complete business objectives; (ii) our ability to complete the development of our product candidates; (iii) our ability to find suitable co–development partners; (iv) our ability to obtain and maintain regulatory approvals for our product candidates in our target markets and the possibility of adverse regulatory or legal actions relating to our product candidates even if regulatory approval is obtained; (v) our ability to commercialize our pharmaceutical product candidates; (vi) our ability to obtain and maintain adequate protection of our intellectual property; (vii) our ability to manufacture our product candidates in commercial quantities, at an adequate quality or at an acceptable cost; (viii) our ability to establish adequate sales, marketing and distribution channels; (ix) acceptance of our product candidates by healthcare professionals and patients; (x) the possibility that we may face third–party claims of intellectual property infringement; (xi) the timing and results of clinical trials and studies that we may conduct or that our competitors and others may conduct relating to our or their products; (xii) intense competition in our industry, with competitors having substantially greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do; (xiii) potential product liability claims; (xiv) potential adverse federal, state and local government regulation in the United States, Europe or Israel; and (xv) loss or retirement of key executives and research scientists. These and other important factors discussed in the Company's Annual Report on Form 20–F filed with the Securities and Exchange Commission ("SEC") on March 21, 2019 and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward–looking statements made in this press release. Any such forward–looking statements represent management's estimates as of the date of this press release. Except as required by law, we undertake no obligation to update publicly any forward–looking statements after the date of this press release to conform these statements to changes in our expectations.

SOL–GEL TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
December 31, June 30,
2018 2019
Assets
CURRENT ASSETS:
Cash and cash equivalents $ 5,325 $ 14,388
Bank deposit 1,000
Marketable securities 56,662 35,519
Accounts receivable 7,826
Prepaid expenses and other current assets 2,987 1,097
TOTAL CURRENT ASSETS 65,974 58,830
NON–CURRENT ASSETS:
Restricted long–term deposits 462 467
Property and equipment, net 2,604 2,454
Operating lease right–of–use assets 952
Funds in respect of employee rights upon retirement 642 675
TOTAL NON–CURRENT ASSETS 3,708 4,548
TOTAL ASSETS $ 69,682 $ 63,378
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Accounts payable $ 2,924 $ 2,767
Other account payable 1,971 4,063
Current maturities of operating leases 526
TOTAL CURRENT LIABILITIES 4,895 7,356
LONG–TERM LIABILITIES
Operating leases liabilities 323
Liability for employee rights upon retirement 878 957
TOTAL LONG–TERM LIABILITIES 878 1,280
COMMITMENTS
TOTAL LIABILITIES 5,773 8,636
SHAREHOLDERS' EQUITY:
Ordinary Shares, NIS 0.1 par value "" authorized: 50,000,000 as of December 31, 2018 and March 31, 2019; issued and outstanding: 18,949,968 as of December 31, 2018 and March 31, 2019 520 520
Additional paid–in capital 190,853 192,340
Accumulated deficit (127,464 ) (138,118 )
TOTAL SHAREHOLDERS' EQUITY 63,909 54,742
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 69,682 $ 63,378

SOL–GEL TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Six months ended
June 30
Three months ended
June 30
2018 2019
2018 2019
COLLABORATION REVENUES $ 93 $ 14,151 $ 49 $ 7,793
RESEARCH AND DEVELOPMENT EXPENSES 10,462 22,233 5,817 11,440
GENERAL AND ADMINISTRATIVE EXPENSES 2,660 3,332 1,518 1,638
TOTAL OPERATING LOSS 13,029 11,414 7,286 5,285
FINANCIAL INCOME, NET (409 ) (760 ) (379 ) (359 )
LOSS FOR THE PERIOD $ 12,620 $ 10,654 $ 6,907 $ 4,926
BASIC AND DILUTED LOSS PER ORDINARY SHARE $ 0.75 $ 0.56 $ 0.36 $ 0.26
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE 16,761,158 18,949,968 18,949,968 18,949,968

For further information, please contact:

Sol–Gel Contact:
Gilad Mamlok
Chief Financial Officer
+972–8–9313433

Investor Contact:
Chiara Russo
Solebury Trout
+1–617–221–9197
crusso@soleburytrout.com

Source: Sol–Gel Technologies Ltd.

Mexican Women Use Sunlight Instead of Firewood or Gas to Cook Meals

Reyna Díaz checks the marinated pork she is cooking in a solar cooker at her home in a poor neighbourhood of Vicente Guerrero, Villa de Zaachila municipality, in the southwestern Mexican state of Oaxaca. The use of solar cookers has made is possible for 200 local women to save on fuel and stop using firewood, providing environmental and health benefits. Credit: Emilio Godoy/IPS

Reyna Díaz checks the marinated pork she is cooking in a solar cooker at her home in a poor neighbourhood of Vicente Guerrero, Villa de Zaachila municipality, in the southwestern Mexican state of Oaxaca. The use of solar cookers has made is possible for 200 local women to save on fuel and stop using firewood, providing environmental and health benefits. Credit: Emilio Godoy/IPS

By Emilio Godoy
VILLA DE ZAACHILA, Mexico, Aug 13 2019 – Reyna Díaz cooks beans, chicken, pork and desserts in her solar cooker, which she sets up in the open courtyard of her home in a poor neighborhood on the outskirts of this town in southwestern Mexico.

“My family likes the way it cooks things. I use it almost every day, it has been a big help to me,” Díaz told IPS as she mixed the ingredients for cochinita pibil, a traditional pork dish marinated with spices and achiote, a natural coloring.

She then placed the pot on the aluminum sheets of the cooker, which reflect the sunlight that heats the receptacle.

Before receiving the solar cooker in March, Díaz, who sells atole, a traditional hot Mexican drink based on corn or wheat dough, and is raising her son and daughter on her own, did not believe it was possible to cook with the sun’s rays.”I learned while working with the local women. It was hard, like breaking stones; people knew nothing about it. Now people are more open, because there is more information about the potential of solar energy. In rural areas, people understand it more.” — Lorena Harp

“I didn’t know it could be done, I wondered if the food would actually be cooked. It’s a wonderful thing,” said this resident of the poor neighbourhood of Vicente Guerrero, in Villa de Zaachila, a municipality of 43,000 people in the state of Oaxaca, some 475 km south of Mexico City.

One thing the inhabitants of Vicente Guerrero have in common is poverty. But although they live in modest houses that in some cases are tin shacks lining unpaved streets and have no sewage system, they do have electricity and drinking water. The women alternate their informal sector jobs with the care of their families.

Diaz used to cook with firewood and liquefied petroleum gas (LPG), which she now uses less so it lasts longer. “I’ve saved a lot,” she said.

Women in this neighborhood were taught how to use the solar cookers and then became
promoters, organising demonstrations in their homes to exchange recipes, taste their dishes and spread the word about the benefits and positive changes that the innovative stoves have brought.

The solar cookers are low-tech devices that use reflective panels to focus sunlight on a pot in the middle.

Their advantages include being an alternative for rural cooking, because they make it possible to cook without electricity or solid or fossil fuels, pasteurising water to make it drinkable, reducing logging and pollution, helping people avoid breathing smoke from woodstoves, and using renewable energy.

The drawbacks are that they do not work on rainy or cloudy days, it takes a long time to cook the food, compared to traditional stoves, and they have to be used outdoors.

In Mexico, a country of 130 million people, some 19 million use solid fuels for cooking, which caused some 15,000 premature deaths in 2016 from the ingestion of harmful particles, according to data from the National Institute of Statistics and Geography (Inegi).

Lorena Harp (L), head of a project that promotes the use of solar cookers in Mexico, shows retired teacher Irma Jiménez how to assemble the device, in the poor neighborhood of Vicente Guerrero, Villa de Zaachila municipality, in the southwestern state of Oaxaca. Credit: Emilio Godoy/IPS

Lorena Harp (L), head of a project that promotes the use of solar cookers in Mexico, shows retired teacher Irma Jiménez how to assemble the device, in the poor neighborhood of Vicente Guerrero, Villa de Zaachila municipality, in the southwestern state of Oaxaca. Credit: Emilio Godoy/IPS

The main fuel consumed by 79 percent of these households is LPG, followed by wood or charcoal (11 percent) and natural gas (seven percent).

In Oaxaca, gas and firewood each account for 49 percent of household consumption.

Of the state’s more than four million inhabitants, 70 percent were living in poverty in 2016 and nearly 27 percent in extreme poverty, according to Inegi. Twenty-six percent lived in substandard, crowded housing and 62 percent lacked access to basic services.

Oaxaca is also one of the three Mexican states with the highest levels of energy poverty, which means households that spend more than 10 percent of their income on energy.

Solar cookers can help combat the deprivation.

They first began to be distributed in Oaxaca in 2004. In 2008, activists created the initiative “Solar energy for mobile food stalls in Mexico”, sponsored by three Swiss institutions: the city of Geneva, the SolarSpar cooperative and the non-governmental organisation GloboSol.

Cocina Solar Mexico, a collective dedicated to the use of solar energy for cooking, was founded in 2009. With the support of the non-governmental Solar Household Energy (SHE), based in Washington, an economical, light-weight prototype was built.

In 2016, SHE launched a pilot project in indigenous communities to assess how widely it would be accepted.

“I learned while working with the local women. It was hard, like breaking stones; people knew nothing about it. Now people are more open, because there is more information about the potential of solar energy. In rural areas, people understand it more,” Lorena Harp, head of the initiative, told IPS.

The four-litre pot, which has a useful life of five to 10 years, costs about $25, of which SHE provides half. The group has distributed about 200 solar cookers in 10 communities.

Harp said it is a gender issue, because “women are empowered, they have gained respect in their families.”

The southwestern Mexican state of Oaxaca fails to take advantage of is great solar power potential. The picture shows a rooftop at a solar panel factory in Oaxaca City, the state capital. Credit: Emilio Godoy/IPS

The southwestern Mexican state of Oaxaca fails to take advantage of is great solar power potential. The picture shows a rooftop at a solar panel factory in Oaxaca City, the state capital. Credit: Emilio Godoy/IPS

Despite its potential, Oaxaca does not take advantage of its high levels of solar radiation. Last June, it was listed among the 10 Mexican states with the lowest levels of distributed (decentralised) generation, less than 500 kilowatts, connected to the national power grid, according to the government’s Energy Regulatory Commission (CRE).

In the first half of the year, Oaxaca had an installed photovoltaic capacity of 6.69 megawatts with 747 interconnection contracts, in a country where distributed generation only involves solar energy.

This Latin American country registered 17,767 contracts for almost 125 megawatts (MW), almost the same volume as in the same period in 2018 -when they totaled 35,661 for 233.56 MW, although there were more permits. Since 2007, CRE has registered 112,660 contracts for 817.85 MW of solar power.

Luís Calderón, president of the Oaxaca Energy Cluster, says things have evolved quickly.

But “there is a lack of precise, reliable information and certainty about the savings achieved with distributed generation, which is generated for self-consumption while the surplus is fed into the grid. In addition, there is no policy in the state,” Calderón, also a member of the National Solar Energy Association, told IPS.

In 2018, Mexico registered a total installed capacity of 70,000 MW, three percent more than the previous year. Gas-fired combined cycle plants contributed 36 percent, conventional thermal 17 percent, hydroelectric 18 percent, coal almost eight percent, wind just under seven percent, and solar only 2.6 percent.

But the government of left-wing President Andrés Manuel López Obrador, who took office in December, is driving the exploitation of fossil fuels and standing in the way of the growth of renewable energies.

It plans to modify the Business Ecocredit initiative, led by the government’s Electric Energy Saving Trust for micro, small and medium enterprises for the acquisition of efficient appliances. The measures include eliminating the 14 percent subsidy and a limit of some 20,000 dollars in financing, but the government has yet to define its future.

In addition, the Oaxaca government’s plan to create two cooperatives for energy for agricultural irrigation does not yet have the 1.75 million dollars needed for two 500-kilowatt solar plants in the municipality of San Pablo Huixtepec to serve 1,200 farmers in 35 irrigation units.

The local women don’t plan to stop using the solar cookers, in a neighbourhood ideal for deploying solar panels and water heaters. “We’re going to keep using it, we’ve seen that it works. We’re going to promote this,” Díaz said, while checking that her stew wasn’g burning.

The SHE assessment found that the solar cookers were widely accepted and have had a positive impact, as nearly half of the local women who use them have reduced by more than 50 percent their use of stoves that cause pollution. Some use the pots up to six times a week, and they have proven to be high quality, durable and affordable. Users also report that the solar cookers have saved them time.

Harp said more partners and government support were needed. “There’s still a long way to go, there are many shortfalls. Something is missing to generate truly widespread use, perhaps a comprehensive policy,” she said.

Promoting Women’s Safety in Latin America

By Renata Avelar Giannini
RIO DE JANEIRO, Aug 13 2019 – Every year, over 12,000 women are killed in Latin America. The region is plagued by extremely high levels of violence, and a vacuum of state power persists. Public face of this violence is caused by paramilitary, guerrilla, gangs and armed groups. 

But there is an interrelated side of domestic violence that plays out in the private domain. The relationship between these two are yet to be understood, as is the potential of the Women, Peace and Security agenda (WPS) as a fundamental ingredient to sustainable peace and a life free from violence and fear.

The WPS agenda is a United Nations invention. Amid the increasing recognition of women’s and girls’ rights since the creation of the organization in 1945, it was only in the year 2000 that the organization recognized that conflicts affect women and girls, men and boys differently.

Notwithstanding the considerable expansion of engagement with the agenda globally, there is a persistent gap in Latin America. The engagement of local women’s organizations has been limited, while governments are yet to fully grasp the central importance of the agenda in terms of promoting sustainable peace.

Women are systematically excluded from conversations concerning peace and security in the region, rarely included in peace negotiations and are the minority in police and military forces. The WPS agenda has an enormous potential do recognize and address some of these issues

Only six countries in the region launched National Action Plans (NAP) to implement the agenda, and with the exception of El Salvador and Guatemala, Argentina, Brazil, Chile and Paraguay mostly focus on their missions carried out abroad.

Ultimately, the gruesome reality of local women living in areas dominated by organized crime, or those that have joined these groups is yet to be understood or recognized by local governments.

There is little evidence on how women’s lives are affected by the extremely high levels of violence that plagues the region. Not only data is limited, only few policies dedicated to addressing violence against women are evidence based.

To make matters worse, there is a normative gap when it comes to addressing these challenges. While NAPs do not recognize these challenges, national legislation focuses on domestic forms of violence. The interplay between private and public violence as well as the direct and indirect effects of organized violence on women in the region are mostly ignored.

To illustrate, 38% of the world’s homicides occur within the region, which makes up only 8% of the global population. 43 of the 50 most violent cities in the world are located in Latin America.

Urban violence has particularly impacted women, who are not only targeted by organized groups, but also at home, where gender-based violence has spiked. According to the Economic Commission for Latin America and Caribbean (ECLAC), 40% of women in the region have been victims of physical violence and another 60% suffered emotional violence at some point in their lives.

Women also consist the primary victims of human trafficking and are often caught up in the crossfire of armed groups, when they are not directly target due to their relationship to members of different groups or gangs.

Violence affects their ability to access formal education, achieve economic independence and even political participation. It also bears the brunt of indirect forms of violence that are rarely recognized, including caring for the injured, emotional trauma among many others.

In Brazil, literally thousands of mothers have lost their sons in marginalized communities, where they are murdered on a daily basis.

Throughout the Americas, women have also joined armed groups and organized crime, serving in various types of roles from combat to support. This is particularly apparent in Colombia, where women made up 44% of the fighting force for Revolutionary Armed Forces of Colombia-People’s Army (FARC-EP).

However, even when women take part in these groups, they are often in less powerful and more vulnerable positions. The increased incarceration of women in the region is strong evidence of that. And what is worst, organized crime is born within prison, and that is where we are putting them.

Women are systematically excluded from conversations concerning peace and security in the region, rarely included in peace negotiations and are the minority in police and military forces. The WPS agenda has an enormous potential do recognize and address some of these issues.

However, countries in the region must recognize their high levels of violence and implement NAPs that are adequate to the reality of women living within boundaries. In times where political turbulence may disrupt the women’s rights agenda in many parts of the world, it is increasingly important to build evidence to inform policies and strengthen civil society groups who are in a unique position to remind governments of their commitments to women’s rights and their physical integrity.

 

GGGI GREENISM Online Magazine: Stories from GGGI Around the World

By GGGI
SEOUL, Republic of Korea, Aug 13 2019 (IPS-Partners)

(GGGI) – In June, the Global Green Growth Institute’s (GGGI) staff members and country offices around the world committed to living and promoting sustainable lifestyles. To further this initiative, GGGI published GREENISM Vol. 2, an online magazine featuring stories of GGGI’s Green Office Month events and activities across the organization to spread ideas on how to lead green lives.

GGGI’s Green Office Month is a campaign to promote sustainable living practices and office operations throughout the month of June. As this year’s World Environment Day theme was Beat Air Pollution, GGGI offices around the world contributed efforts towards living a green lifestyle, including hosting a gardening class at the Seoul HQ and by participating in an organization-wide competition titled the “GGGI June Eco-Challenge” to promote sustainable living practices. This volume of GREENISM also features GGGI stories from around the globe, GGGI’s Green Office, and ways to fight air pollution.

 

 

Many individual actions can make a difference in our communities. Therefore, a large part of the GGGI Eco-Challenge was to commit to making changes toward a sustainable lifestyle and to spread the word for others to join in to protect our planet. In Burkina Faso, participants encouraged each other to ride bikes or walk to reduce air pollution that would have been caused by taking cars. In Cambodia, GGGI staff members made individual pledges to commit to a sustainable lifestyle, such as using reusable bottles or composting.

 

 

It’s now more important than ever that we collaborate to preserve the planet, as air pollution is becoming a severe threat to our health and well-being. Exposure to outdoor and indoor air pollution is estimated to cause 7 million deaths per year according to the World Health Organization. It’s time for all of us to start lowering this amount and reducing air pollution levels to limits below the WHO’s guidelines, to improve both our environment and health.

Join us in the fight against air pollution and start making a difference today! To discover sustainable home and office ideas, read GGGI’s Greenism Vol. 2 here: http://online.anyflip.com/asvh/wdhw/mobile/index.html

 

Towards a Sustainable Future: Case of China’s Economic Transformation

By Zhengian Huang and Daniel Jeong-Dae Lee
BANGKOK, Aug 13 2019 – The Asia-Pacific region is at a crossroads. The traditional export-oriented, manufacturing-driven growth is facing headwinds from sluggish external demand and rising protectionist trade measures. 

New technologies have increased the likelihood of labour-intensive jobs in the region becoming automated. Meanwhile, many countries have witnessed widening income and opportunity inequalities. Rising environmental risks and climatic disasters add further burdens to the future development agenda.

There is an alternative scenario in which China pursues a holistic approach to structural reforms that achieves innovative, inclusive and sustainable development growth paths simultaneously

Now the questions that most developing countries in the region face are: Can they achieve economic convergence by following the traditional growth path? How can they balance economic growth with social inclusiveness and environmental sustainability?

This article addresses these questions by using China as an example.

China’s economic development is outstanding in terms of pace and scale. Over the last four decades, China’s economy has become the largest in the region, and has transformed from a predominantly agricultural one to an industrial powerhouse, and is now increasingly service-oriented.

However, strains from rapid structural changes have become clearer. Prominent among these are the country’s slowing population growth and labour force expansion, its decelerating productivity growth as available technologies approach the technological frontier, distributional tensions resulting from rising inequality and strains on the carrying capacity of the natural environment.

Economic simulations through 2030 suggest that under the business-as-usual (BAU) scenario, GDP growth would hold up at a rate of around 6 per cent in the short-term but would experience a sharp drop by 2030 as economic efficiency declines. At the same time, urban-rural income gaps as well as inequality within urban and rural areas would remain wide, leaving pockets of poverty.

China’s energy consumption and carbon emissions would continue to rise, failing to meet its commitment to the Paris Agreement (see BAU scenario in figure A, B and C).

 

There is an alternative scenario in which China pursues a holistic approach to structural reforms that achieves innovative, inclusive and sustainable development growth paths simultaneously

Figure: Alternative scenarios for China in 2030
Source: ESCAP, based on DRC-CGE model.
Note: BAU = baseline scenario; ING = innovative growth scenario; ICG = inclusive growth scenario; SSG = sustainable growth scenario; and ALL = innovative, inclusive and sustainable growth scenario.

 

 

However, there is an alternative scenario in which China pursues a holistic approach to structural reforms that achieves innovative, inclusive and sustainable development growth paths simultaneously.

Under this scenario, the country could maintain relatively high rates of economic growth, even as external demand remains sluggish, the labour force shrinks, and capital accumulation slows.

Accelerated urbanization, a rising “middle-class” population and increasing government transfers to optimize the social protection system could narrow rural and urban income disparities.

China’s total energy consumption and carbon emissions could peak in 2025, five years ahead of the timeline for the Paris Agreement, if a new carbon tax is implemented and non-fossil fuel energy assumes a greater share of the energy mix (see ALL scenario in figure A, B and C).

Recent policies and measures show that China is giving more weight to the quality of growth. First, China is pursuing supply-side reforms, focusing on technology and innovation. The country has established objectives to become an “international innovation leader” by 2030.

Second, actions are underway to improve the inclusiveness of economic growth. China has established objectives for eliminating absolute poverty by 2020.

Fiscal transfers to enhance social protection have been increased, while more funds have been deployed for rural infrastructure, agricultural subsidies and discounted loans.

Third, China has taken serious steps to curb pollution while speeding up the transition to clean energy. China aims to get 20 per cent of its energy from renewables by 2030. In late 2017, a carbon emissions trading system was launched in the country.

Such policies should be pursued in an integrated manner in order to reduce trade-offs and maximize synergies. In the Chinese example, policy priorities on technology and innovation could boost growth in GDP but might worsen income inequality, given technology’s effect of favouring capital over labour and favouring skilled over unskilled labour (BAU and ING scenarios in figure A and B).

Policies to reduce carbon emissions would be more effective if combined with new technologies and innovation which improves resource efficiency (SSG and ALL scenarios in figure C).

Scenarios on China’s potential policy paths towards a sustainable future shed some light for other developing countries. While a country’s economic growth may inevitably trend down as it matures, the quality of growth will differ significantly depending on the policy choices made.

It’s highly important and urgent for policymakers to switch their mindsets to prioritize policies that support people and the planet. This is not an easy process. Continuous policy efforts are required to balance development between the social, environmental and economic dimensions to ensure long-term prosperity.

 

This article is based on a recent ESCAP report China’s Economic Transformation: Impacts on Asia and the Pacific. Please click here to view it.

 

Are Jair Messias Bolsonaro and Donald John Trump a Menace to the Planet?

Credit: Amazonian Network of Georeferenced Socio-Environmental Information

By Jan Lundius
STOCKHOLM / ROME, Aug 13 2019 – We live in different worlds. The ones of friends, family and work colleagues. Worlds which are overshadowed by other, much bigger ones. Global spheres of international finance, politics, climate change, etc., contexts that might threaten our smaller circle of relationships; our family, our income, our general wellbeing, in short – our entire existence. However, even at those levels there exist small circles of acquaintances and associates able to make decisions that affect the entire humankind. Let me take one example – the regimes of U.S. President Donald J. Trump and Brazilian President Jair Messias Bolsonaro, which are menacing our global natural habitat.

Ten years ago, I flew across the Amazon Jungle, amazed by its immensity though also alarmed by scares where thick greenery had been cleared away and substituted by dismal remains of dead trees, or dry cattle pastures and soy plantations. Logging and mining are the greatest dangers to Amazonia since its exposed soil is generally old, weathered, acidic, infertile, and subject to compaction from intense solar radiation.

Within the framework of the Intergovernmental Panel on Climate Change (IPCC) thousands of scientists and other experts write and review reports informing the work of the United Nations Framework Convention on Climate Change (UNFCCC), an endevour involving the governments of more than 120 countries. The IPCC, which in 2007 was rewarded the Nobel Peace Prize, was established in 1988. The U.S. Government was the main force for making the IPCC an autonomous intergovernmental body supporting a consensus between the participating nations.

At regular intervals, the IPCC presents comprehensive assessments on climate change and its impact on ecology, human society, and food production. In 2013, one of its reports declared that:

      Climate change is occurring, it is caused largely by human activities and poses significant risks for – and in many cases is already affecting – a broad range of human and natural systems. […] Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia. Atmospheric concentrations of carbon dioxide, methane, and nitrous oxide have increased to levels unprecedented in at least the last 800,000 years. Human influence on the climate system is clear. 1

Nevertheless, several influential world leaders and their sycophants refuse to accept unequivocal findings and warnings issued by the IPCC, among them the U.S. president, who continues to make badly informed, even mind-numbing statements, like:

      My uncle was a great professor at MIT for many years, Dr. John Trump, and I didn’t talk to him about this particular subject [climate change], but I have a natural instinct for science, and I will say that you have scientists on both sides of the picture. […] Everything I want and everything I have is clean. Clean is very important — water, air. I want absolutely crystal clear water and I want the cleanest air on the planet and our air now is cleaner than it’s ever been. Very important to me. What I’m not willing to do is sacrifice the economic well-being of our country for something that nobody really knows. 2

While speaking about any scientific issue he does not know much about it is common that President Trump refers to ”Uncle John”, to whom he quite obviously did not speak about climate change, since Dr. Trump was a professor of engineering at a time when the phenomenon was hardly spoken of outside limited expert groups. 3 Donald Trump likes to refer to John Trump, who died in 1985, arguing that ”Dr John Trump at MIT, good genes, very good genes, OK, very smart”. The current U.S. president assumes he has superior genes as well:

      I’m speaking with myself, number one, because I have a very good brain, my primary consultant is myself and I have a good instinct for this stuff. […] I’m a gene believer. Do you believe in the gene thing? I mean I do. I have great genes and all that stuff, which I’m a believer in. 4

On 8 August this year, the IPCC launched a 1,200-page Special Report of Climate Change and Land, highlighting that human activities directly affect more than 70 percent of earth´s ice-free land. A quarter of this land is already severely degraded. Five hundred million people are currently living in areas experiencing desertification, while agriculture continous to use 70 percent of the earth´s freshwater. Our planet´s vegetation currently absorbs 30 percent of CO2 emissions, which contribute to global warming, but the ongoing clearing of forests increases average world temperature at an alarming speed, while access to freshwater is constantly decreasing. During the last decades, the average temperature has increased by 1,53 oC. 5 This critical situation could probably be reversed if agricultural and forestry methods are drastically changed from a present state of overexploitation, characterized by excessive use of pesticides, nitrogenous fertilizers, mechanization, wasteful irrigation and other harmful practicies favoured by large-scale agricultural producers.

Let me return to Jair Messias Bolsonaro and his acolytes. The world’s largest tropical rainforest is currently under a lethal threat from President Bolsonaro, a powerful supporter of large-scale agribusiness he is complaining about foreign pressure to safeguard Amazonia. Bolsonaro is following in Trump´s footsteps, for example by threatening to withdraw from the Paris Agreement. His Minister of Foreign Affairs has called global warming a plot by “cultural Marxists”, while Bolsonaro declares that ”Amazonas is ours and ours alone”, accusing ”foreign NGOs” of intending to steal natural resources of its rainforest from Brazil and hand it over to European exploiters. Furthermore, he accuses indigenous groups of keeping Amazonia away from the Brazilian people, trying to maintain it ”at a prehistoric level”. Accordingly, Bolsonaro has withdrawn governmental support to FUNAI, the National Indian Foundation, which up until now has carried out policies related to indigenous people. He has also eliminated the Climate Change Division of the Ministry of Environment, as well as two departments that dealt with climate change mitigation and deforestation.

On 6 August this year, the Brazilian National Institute for Space Research (INPE) reported that 4,700 km2 of the jungle had been cleared since Bolsonaro´s inauguration on January 1st and in June alone, deforestation had been 278 percent more than for the same month in 2018. Bolsonaro immediately fired INPE´s director, Ricardo Galvao, accusing him of being in the service of ”some NGO´s” and that he himself would not fall victim to any ”environmental psychosis”. 6

Bolsonaro appears to belong to the same breed as President Trump. He behaves like a narcissist obsessed by his own worth and righteousness. Bolsonaro´s regime is already after half a year threatening not only Brazil with a moral and ecological meltdown, but the entire world as well. On March 28th The Economist described Bolsanero´s government as being in a state of monumental confusion. Apart from the economic team, it is a warring assortment of retired generals, mid-ranking politicians, evangelical Protestants and far right ideologues. “Nobody knows where he´s going, what´s the course he´s setting,” says Fernando Henrique Cardoso, a former president, of Mr Bolsanaro. “He goes forward then back, all the time.” 7

Despots like Hitler, Stalin, and Mao Zedong have proved that a single man and his acolytes can bring death, hardship, and devastation to millions of people. Remembering men like those and learning about the views, aspirations, and actions of people like Trump and Bolsonaro make it imperative for all of us to become aware of the craziness of these two leaders and the fatal consequences of their actions. All humanity must now join forces to support national and global efforts to save our planet.

1 https://www.ipcc.ch/report/ar5/wg1/
2 https://www.cnbc.com/2018/10/17read-transcript-of-aps-interview-with-president-trump.html
3 Davidson Sorkin, Amy (2016) ”Donald Trump´s Nuclear Uncle”, The New Yorker, April 8.
4 Collins, Eliza (2016) “Trump: I consult myself on foreign policy”, Politico, March 16, and Mortimer, Caroline (2016) “Donald Trump believes he has superior genes, biographer claims.” The Independent, September 30.
5 https://www.ipcc.ch/2019/08/08/land-is-a-critical-resource_srccl/
6 Gatinois, Claire (2019) ”Déforestation record au Brésil, le jeu dangereux de Jair Bolsonaro”, Le Monde, August 9.
7 Bello, Andrés (2019) ”Jair Bolsonaro, Brazil´s apprentice president”, The Economist, March 28.

Jan Lundius holds a PhD. on History of Religion from Lund University and has served as a development expert, researcher and advisor at SIDA, UNESCO, FAO and other international organisations.

The Missing Women in Finance

Hiring women as financial intermediaries can serve the dual purpose of increasing women’s usage of bank accounts, and their employment | Photo courtesy: Pixabay

By Renana Jhabvala, Sonal Sharma, and Soumya Kapoor Mehta
Aug 13 2019 – Women comprise a very small proportion of the financial industry workforce, and this has implications on the way female clients use and benefit from financial services.

The Indian financial landscape is undergoing a dramatic change. India witnessed a surge in bank account ownership during the 2011-2017 period: 80 percent of Indians owned a bank account in 2017–an increase of 45 percentage points since 2011. This surge is primarily attributed to the Pradhan Mantri Jan Dhan Yojana (PMDJY).

However, this push for financial inclusion has not achieved its true objective, which is to ensure that all citizens not only have access to bank accounts, but avail other facilities that come with it–formal credit, insurance, and overdraft, to name a few.

According to the Global Findex database released by the World Bank, roughly one out of two bank accounts in India remain inactive, about twice the average of other developing economies. Worse, the gender gap in these inactive accounts is notable: 54 percent of women account holders report not using their account, as opposed to 43 percent male account holders.

It is clear that hiring women as financial intermediaries can serve the dual purpose of increasing women’s usage of bank accounts on one hand, and their employment on the other

This gap needs to be considered against the more general narrative on outcomes for women in India, and progress therein. While there has been a big shift in girls’ education in the last decade or so–with more girls enrolling in higher secondary and college education–India’s abominably low female labour force participation rates mean that many girls, despite their aspirations, are passing out of schools with no employment prospects.

The debate on low female labour force participation and the reasons for it are intensive, and have sparked an entire research industry. However a study 1 we at SEWA commissioned as part of the World Bank’s Skill India Mission Operation (SIMO) focuses on the possible solutions, one of which is identifying work opportunities available for women in India’s financial sector.

Can the financial industry be a prospective employer for the many, now more educated women, seeking work outside their homes?

Why is this a matter of interest? Because evidence shows that women tend to use their bank accounts and save and borrow more if they are served by female bankers and financial intermediaries.

 

So, what did we find?

First, female staff comprise a very small proportion of the financial industry workforce. The Bharat Microfinance Report 2017 by Sa-Dhan reveals that the total microfinance workforce in 2017 stood at 89,785 workers. Women comprised only 12 percent of the total workforce and 11 percent of the total field staff.

Our primary study confirmed these dismal numbers on women’s employment in the financial sector. Most of the field agents and employees of the financial institutions we interviewed were male. Perhaps the most dramatic example was that of microfinance institutions where we found that while all the clients were women, all the officers in the field were male.

Second, SEWA’s own studies suggest that women tend to save and borrow more when they are served by female financial intermediaries.

A basic income pilot conducted by SEWA in the state of Madhya Pradesh in 2011-12 compared the extent of financial inclusion in villages where SEWA operated through its network of vitya saathis (female banking correspondents) and villages where SEWA was not present.

It was found that in non-SEWA villages where no basic income was transferred, women held only 24 percent of their savings in financial institutions such as banks and cooperatives (figure 1). In comparison, in SEWA villages, 64 percent of women’s savings were in formal financial institutions.

Other internal studies of SEWA in Bihar and Uttarakhand also show a positive impact of financial intermediaries on women’s savings, and livelihoods.

 

More women put savings in financial institutions in Madhya Pradesh when in touch with a female banking correspondent | Courtesy: SEWA

 

Putting these two facts together, it is clear that hiring women as financial intermediaries can serve the dual purpose of increasing women’s usage of bank accounts on one hand, and their employment on the other.

 

The job opportunity for financial intermediaries is tremendous

According to the Reserve Bank of India (RBI), of the nearly 460 million basic saving accounts opened in scheduled commercial banks between March 2010 and March 2018, nearly one in every two was opened through business correspondence agents or financial intermediaries. Such is the importance of these agents that the National Skills Development Corporation (NSDC) estimates 3.7 million incremental jobs for financial intermediaries between 2016 and 2022.

This leads to three important policy insights:

  • Financial intermediaries are capable of carrying out financial functions and are perhaps better than a brick-and-mortar financial institution in reaching out to remote areas owing to their mobility.
  • There is ample opportunity for mobile agents to act as representatives of financial institutions.
  • The potential for hiring women as such agents is high.

Yet, a report by the Helix Institute of Digital Finance (2015) on the Indian financial agent network finds that of the 2,682 active financial agents surveyed across rural and urban locations, only about 10 percent were women.

If these levels were raised to 30 percent, then of the 3.7 million projected jobs, 1.1 million could be taken up by women financial intermediaries, benefitting women account holders in the process.

Women face barriers to entering the financial workforce

  • Women are not aware of jobs in the financial sector. There are few counselling centres in schools and colleges that expose girls to jobs in this sector.
  • Not many girls and women think of financial institutions as possible employers, and if they do, the government ones are the most coveted.
  • Women also feel that they do not have the skills required to make a career in finance; some fear the pressure of targets.
  • Constraints on mobility and security present further restrictions as does the hesitation of seeing no female peers among existing staff.
  • A male culture in the sector also serves as a barrier, with male staff often socializing over a drink, late after office hours; bonding events that tend to exclude women.
  • Managers, on their part, are reluctant to hire women. When asked why there were almost no female staff in his bank, a bank manager emphasised “daudne wala sales officer chahiye” (we need sales officers who are capable of running).

 

It is clear that most of the obstacles cited above seem to be related to the socially determined roles that women have been traditionally assigned. Both men and women view women’s abilities and aspirations through these lenses. This determines why women are either unaware of the opportunities, or are hesitant to enter the field. It also illuminates why managers fail to encourage women to apply, or when they do apply, only assign women back office jobs.

These barriers call for more awareness campaigns in communities about the importance of employment for women. Equally, some supply side shifts are needed.

 

They may include:

  • Employing more female financial intermediaries
  • Raising awareness about these jobs, knowledge building and career counselling
  • Raising awareness among potential employers about the advantages of employing women and what they need to do to attract and retain them
  • Providing financial support to buy laptops, point-of-sale machines, and two-wheeler vehicles for women who wish to become intermediaries
  • Enabling access to technology
  • Examining existing training modules and re-orienting them towards training women as financial intermediaries.

At the policy level it requires partnerships between organizations like the NSDC, the Sector Skill Councils and the Association of Banks to create an ecosystem that works towards employing more women as financial intermediaries.

It also requires collection of gender disaggregated data by financial institutions on employees, agents, banking correspondents, customer service providers and other financial intermediaries and making these figures publicly available to track gender discrepancies in the sector.

*Sanchita Mitra was a contributing author to the larger study that this article draws on.

 

Footnotes
  1. Between August and September 2017, the Self Employed Women’s Association (SEWA), India, which has been working for decades to empower women in the informal sector, commissioned a study as part of the World Bank’s Skill India Mission Operation (SIMO) to identify work opportunities available for women in India’s financial sector. The study drew on primary interviews with staff of financial institutions and technology service providers (TSPs) to banks as well as women themselves  across four states in India: Delhi, Bihar, Maharashtra and Punjab.  These were buttressed with desk reviews of other reports, and insights from many small areas studies that SEWA has been conducting on the obstacles women face to opening, using bank accounts and to accessing funds should they want to finance any entrepreneurial venture.

 

 

Renana Jhabvala is an economist, with a 40 year long association with the Self-Employed Women’s Association (SEWA), known for her writings on informal women workers. She served as the Chancellor of Gandhigram Rural University from 2012-2017. She was a member of the UN Secretary General’s High-level Panel on Women’s Economic Empowerment, and has also been honoured with the FICCI Lifetime Achievement Award. In 1990, she was awarded a Padma Shri by the Government of India.

Sonal Sharma is an urban development practitioner who works on issues of informality, gender and land rights. She currently leads monitoring, evaluation, and learning for an urban land rights project for women workers in the informal economy at SEWA Bharat. Previously, she has worked with SEWA’s affordable housing finance company and researched on the issue of manual scavenging. She was an Urban Fellow at the Indian Institute for Human Settlements, and has completed her MA in Development Studies from Ambedkar University.

Soumya Kapoor Mehta is a development economist who has been writing on issues of poverty, social inclusion, social protection, and female labour force participation for the past 15 years. Formerly with the World Bank, she has several articles, World Bank and UN reports, and two books to her credit including one on the potential of basic income as a policy for India. Soumya holds degrees in economics from the University of Cambridge and St Stephen’s College, Delhi.

 

This story was originally published by India Development Review (IDR)