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First Move with Julia Chatterley
Cyclone Amphan Hits Eastern India, Bangladesh; Mnuchin And Fed Chair Powell Offer Different Views On Recovery; Inovio Makes Progress In Developing Coronavirus Vaccine. Aired 9-10a ET
Aired May 20, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:05]
ANNOUNCER: This is CNN Breaking News.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Welcome to the show this Wednesday. I'm Julia Chatterley, and we begin with Breaking News.
A massive cyclone making landfall in Eastern India near Bangladesh. It's one of the most powerful storms ever recorded in the Bay of Bengal.
Millions of people have been forced to leave their homes with widespread damage expected.
CNN senior international correspondent, Sam Kiley has all the latest for us. Sam, terrible at any time, terrible at a time of social distancing
during a pandemic. Really, really tough. Talk us through what we know so far.
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Julia, you're absolutely right. A very, very major double blow to Bangladesh and India as
this storm makes landfall.
Just in the last hour or so, the storm has broken out of the sea if you like on to land, just more or less on the border between West Bengal and
Bangladesh, we understand.
The good news is that the power of the storm that had been the equivalent of a category five hurricane, or a super typhoon equivalent when it was a
very deep cyclone out in the Bay of Bengal has dissipated somewhat to the equivalent of a category two hurricane.
So, that means that wind speeds though are at 100 miles an hour to 160 miles an hour, where the eye of the storm is hitting in Calcutta itself.
They've been recording 100 kilometers an hour. People are losing obviously the roofs of their houses, the trees are coming down, crops are very
importantly, at this time when there's been such a lockdown in India and Bangladesh are being destroyed.
But in the case of Bangladesh, 2.4 million people have been evacuated from the path or the presumed path of this storm. About 200,000 in India, but in
both cases, the authorities are saying that they're reasonably confident that they've been able to get people out of the way.
And because of the very strict social isolating systems that have been in place, they have, they say, been able, at least for now to be able to avoid
most of the problems with overcrowding that one would assume would apply in this sort of catastrophe, partly because of their experience in the past,
relatively recent past of dealing with these cyclones.
And partly because they had enough warning and they have been working very hard to socially isolate in both countries. But that said, schools that
have been closed because of coronavirus have now been opened up to take in the extra capacity for housing people in Bangladesh and in India.
They are also issuing masks to people in Bangladesh. They're asking migrant workers who have been heading to that area to mask themselves.
They're doing, they say, what they can and really effectively, it is likely to intensify over -- the humanitarian situation -- over the next few hours
because it's the storm surge, Julia, the surge in the levels of water at sea that matter especially to places like Bangladesh, up to 17 feet, three
or four meters there, at least on that Indian eastern seaboard -- Julia.
CHATTERLEY: And we were showing some pretty dramatic pictures and images of waves hereto. Sam, to your point as well, any suggestion here, given the
additional logistical challenge of trying to evacuate people and socially distance, that people are afraid to do that. They're afraid to be in a
tighter community in some kind of evacuation situation and actually they're afraid of COVID-19, perhaps, more afraid of COVID-19 and don't want to
evacuate.
KILEY: Well, you make a very interesting and pertinent point and that's exactly why Indian officials in some areas of Odisha and Calcutta have
indicated that they actually had to force people out of their homes because the immediate, the clear and present danger potentially was this very, very
heavy cyclone coming in, as opposed to what the individuals and families felt at the time was that they were in much greater long term danger if
they were squeezed in with other refugees from whom or other refugees from the cyclone, from whom they've been socially isolating in their own
villages, perhaps.
But that is something that the authorities are trying to impress on the population, excuse me that they have under control. Whether or not they do
is going to be very difficult to assess.
And across the region and here in the Middle East where there's been Ramadan, it may sound a bit of a left turn there, but Ramadan has meant
that people have been trying sometimes illegally to get together, and there have been upticks in the levels just from that kind of social pressure in
the levels of infections in the Middle East.
And there are very clear concerns that the same thing as a consequence of this cyclone is going to have the same effect on concentrating, moving
people around, breaking their socially isolating bubbles, and inevitably there's going to be, they fear, the health authorities there, another
uptick in countries that really -- we really haven't any idea at this stage, the extent, the real extent of the corona infections anyway,
particularly not in Bangladesh and India.
[09:05:29]
CHATTERLEY: As you said, double tragedy. Sam, thank you for the update there. Sam Kiley, thank you so much and we will come back later in the show
to keep you updated on the latest developments and of course, our hearts go out to all of those impacted.
For now, take a look at what we're seeing for U.S. stock futures. We've had solid results from retailers Target and Lowe's. Neither company providing
guidance on future quarters.
This of course, is the new normal now. We fly blind. It means choppiness, perhaps even range bound trading. We've got a tug of war going on between
the economic hope on the one hand and our reopening reality that we keep discussing on the other.
The White House now saying some 67 percent of U.S. businesses have opened back up, and that additional stimulus may not be necessary.
Oh, you know, my view. I'd argue opening up doesn't mean customers are coming flooding back. All the workers are being rehired -- too early to
tell.
Compare and contrast, the St. Louis Fed now estimates the U.S. economy is set to shrink almost 50 -- five zero -- percent this quarter.
My view in the absence of answers, authorities must be prepared to spend more if necessary, on emergency support.
More clarity, though, too needed.
On the medical front, we were hopeful, but skeptical of a Moderna study result that lifted stocks on Monday if you remember. It was just eight
people.
Well, stocks fell yesterday, apparently on fears that the excitement might have been premature. Moderna shares as you can see falling over 10 percent.
Take a look at the global picture at this moment. I call that uneven. The U.K. government in focus as it begins selling conventional bonds with a
negative yield for the first time.
What that means is they basically get paid to borrow money. In this upside down, some governments can borrow money at this moment for free. And the
fact is, sadly, so they should.
Let's get to the drivers. Richard Quest joins us on this. Wow, Richard, lots to discuss. As always, I want our viewers to cast their mind back to
what we saw yesterday from Jay Powell, from senators in the United States.
Jay Powell, I think walked away as the adult in the room, just kind of to reiterate the scale of the crisis here and saying, guys, you need to be
open to doing more, if that's what it takes.
RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: Yes, good morning. You come to me just as I've got a bit of a coughing fit underway.
CHATTERLEY: Sorry, Richard.
QUEST: Not untoward. No, no, I'm fine. It has nothing to do with COVID or anything like that. I just had a glass of water and it went down the wrong
way. And the effectual, you all rapidly witnessed.
Look, I think the fascinating part about this is you summed it up right at the beginning, when you say it's between hope and reality.
I don't think there's a huge amount of ground between Mnuchin and Powell, other than how they now choose to express it.
So Mnuchin doesn't want to spend another $3 trillion, because obviously that all falls for the deficit. He hopes things will get better. But Powell
is a realist, and his reality is, if you do not do more, it will not get better.
Now, history will probably have proven that Powell is right, because of the way the economy works, but I'm not quite sure why Mnuchin would wish to
talk up when economics, you can only talk for so long.
Eventually, the facts become clear, and the reality is obvious.
So, 57 percent or 67 percent or whatever it is, of the economy is over. You nailed it when you said nobody is buying, nobody is going back into the
shops, nobody is going in large numbers or will be to movie theaters, or getting on planes.
So, Powell, as you say, probably has the advantage of the argument.
CHATTERLEY: Yes. And I'm with you. I wish I could argue but I couldn't agree more on everything we just are flying blind at this stage.
QUEST: Now, by the way --
CHATTERLEY: You can argue with yourself, Richard.
QUEST: No, no. I did a good reading this morning on those negative interest rates on that U.K. guilt, three year-guilt, because I wasn't sure how it
work.
If you bought it, does it mean instead of getting a coupon, you pay the government every month in interest? It doesn't.
Apparently, you still have a coupon. You still receive an interest payment every month or every quarter.
But at the end of it, you don't get all your money back. Therefore, the effective yield if you hold to maturity is negative.
Sorry, that was my moment of Geeksville this morning, and I read it over breakfast that I felt I had to impart.
[09:10:16]
CHATTERLEY: Thank you so much, and that was the follow up question I probably should have asked, and you didn't need it because you answered the
nonquestion.
Anyway, it's such an important point, though, at a moment when interest rates are so low, and to your point as well, you're adding to the deficit
and that has to be a concern. It just can't be the concern right now.
The long term sadly, unfortunately, in this case is the long term.
Richard Quest, thank you so much for that.
QUEST: Thank you.
CHATTERLEY: Now, the nature of the recovery also will depend greatly on whether a vaccine is available and there's another promising update perhaps
on that front.
Two days after that very, very early stage report from Moderna, we're hearing good news from Inovio. Its stock is soaring premarket.
Senior medical correspondent, Elizabeth Cohen has more. Oh, Elizabeth, it's animals. It's not even humans. But we're getting excited.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: I know. Well, so if Moderna was very, very early, Julia, this news from Inovio is very, very,
very early.
These are animal studies that show that when they gave -- when they vaccinated mice and guinea pigs, they developed these neutralizing
antibodies. That's what you and I talked about a few days ago with Moderna.
So, these antibodies glom on to the virus, which is a good thing, disable it, preventing it from invading human cells. A good thing.
All of this is good. It's good to see this an animals. Inovio says they are doing the same studies in humans and will have some news to give us next
month, but we all need to remember, this is a marathon not a sprint. I'm probably going to say that a hundred times over the next six months to a
year.
This is a marathon, not a sprint. It is a step. Could things still go wrong? Absolutely.
Lots of things look great in animals, but don't work out so well in humans or to the Moderna data, lots of things work out in humans in the lab. You
can see in the lab that it does what it's supposed to do to the human cells, but then when you actually do it in the real world, it doesn't work.
There are so many places where this can go wrong or as one doctor said to me, so many places, it can go sideways. We can go sideways and then move
forward. We can go sideways and then go backwards. All sorts of things are possible.
But this is a positive step forward and this is good news. Hopefully, if it worked in in animals, it will work in humans in the lab and then in real
life.
CHATTERLEY: Yes, we just -- we just want to jump all of those stages, and unfortunately, good science takes time, and that's the reality, as much as
we're accelerating it through this process.
There were some cautions raised, and I think perhaps we've already had the discussion about that Moderna study and how comprehensive it was.
We know it was tiny, is there anything new in some of the caution that came to light overnight, Elizabeth?
COHEN: No, I mean, you and I talked about this caution on Monday. I mean, this is -- it is eight people -- and we emphasized that on Monday. This is
eight people.
Is it a good sign? Absolutely. When I talked to outside scientists who were unrelated to this work, were they excited? Absolutely.
But did they say at least 10 times this is only eight people. And it is possible that things can still go wrong.
When you see these antibodies work in the lab, that doesn't mean it's going to work in real life. What we have to do is vaccinate thousands of people
or maybe even 10s of thousands of people, put them out into the world and see if they have lower rates of infection compared to people who were not
vaccinated with the COVID vaccine.
If indeed at the end of the day that you see that they have lower rates of infection. That's when we get to declare success.
We are months and months away from that.
CHATTERLEY: Yes, sadly. And we were there on Monday because we have you. Elizabeth Cohen, thank you so much for your wisdom as always.
COHEN: Thanks.
CHATTERLEY: Aircraft engine maker, Rolls Royce is cutting at least now thousand jobs. That's almost 20 percent of its workforce.
Rolls Royce, the latest inevitable victim of the near shutdown of air travel worldwide. Anna Stewart joins me now. Anna, that's the key here.
When you see a collapse in travel as we've seen the supply chains, and all the businesses in them come under severe pressure, too, and this is the
result.
ANNA STEWART, CNN REPORTER: Terrible news on the job cuts, but as you say, not really surprising to me given how tied the fortunes of Rolls Royce are
to the aircraft makers.
We already had news from Boeing that they were going to cut 16,000 jobs. Airbus had furloughed 6,000, but they say they're bleeding cash. So, you
can expect probably a restructuring at some stage later in the year.
Now, these job cuts will hit the U.K. hardest. That's where two thirds of their civil aerospace operations are.
Currently they have 4,000 of these U.K. workers under the government furlough scheme. Now, this has been great. Where there have been a sudden
uptick in unemployment if companies run out of cash; however from August, it has been extended.
But from August companies will be expected to contribute some money towards those salaries again. So, companies are having to recalibrate. Can they
sustain their current level of employment?
[09:15:10]
STEWART: For lots of them, it is a simple no. Particularly for Rolls Royce, it relies on those aircraft makers. They rely on those airlines and the
airlines are relying on well, the pandemic easing, lockdowns lifting and also crucially, people feeling safe and wanting to travel -- Julia.
CHATTERLEY: Yes, you know, it's interesting. It comes as the AITA, of course, give what their guidance on what travel should look like in the
future, and I was just scanning some of the bullet points.
Safety and science first, makes sense. And it's not an excuse to skip environmental goals going forward. But we're seeing those playing out
organically anyway.
The balance here is quite fascinating, beyond the bigger challenges.
STEWART: It really is. I was actually fascinated by this roadmap AITA has put out. They represent most airlines around the world, some 300 airlines,
and you know what? It's going to change how you travel from before you even leave home.
They want to share data with governments, so contact tracing can happen. They want to do temperature checking at arrival and destination airports.
They want to see facemasks on the planes, right through to the interesting immunity passports, if the science backs it, if governments are willing to
adopt that.
They are looking at all sorts of measures, but actually what was really interesting by AITA's roadmap wasn't necessarily what's in it, but what's
not in it.
For instance, they do not want to see that middle seat on planes being removed. They don't think that will help. They say facemasks on plane,
temperature checking in the airport should be sufficient.
And they also don't see any kind of quarantine for people arriving at any country because that will severely depress people that want to travel, and
they just don't see any more downward pressure on airlines.
But these measures they say, should keep people safe and should be able to support airlines as they get back up and running -- Julia.
CHATTERLEY: Yes, it's the balance, isn't it, of running an efficient business? Can you do it with fewer people, seats missing in the middle, but
at the same time, keep people safe, and it's a challenge for these guys. It's a challenge for the entire business community.
Anna Stewart, thank you so much for that.
Now, while the pandemic has closed many air routes, it's opening some very new ones, too.
Etihad says it flew from the UAE to Israel, for the first time ever to deliver humanitarian aid to Palestinians.
CEO Tony Douglas spoke with our Richard Quest.
(BEGIN VIDEO CLIP)
TONY DOUGLAS, CEO, ETIHAD AIRWAYS: In terms of the humanitarian flying that we've been doing, I can tell you, I thought I had a reasonably well-
developed knowledge of geography.
We've been flying to places we hardly knew existed. We've been an doing extensive amount of humanitarian aid.
The governments of the UAE has generously been donating support all around the world, and you're absolutely right. As we speak now, that craft is just
about to leave Ben Gurion and are -- being given vital medical aid to the Palestinian people, and who knows? The world continues to change.
I imagine there's destinations that we've been flying in the past that we will no longer find economic value in going forward.
And equally there are probably places that will emerge as a result of the economic changes that will be around all of us that we will find
opportunity in
Etihad is a high-class carrier. Etihad's home is Abu Dhabi, where standards are extremely high. We are, we believe, one of the safest places in the
world and when this thing finishes, and for sure it will do, what we want to make sure is the standards that we're able to deliver are the standards
that the traveling public will want to enjoy when the world is ready to fly again.
(END VIDEO CLIP)
CHATTERLEY: When the world is ready to fly again.
All right, we're going to take a break here on FIRST MOVE, but still to come, cash was king in Nigeria until COVID-19 hit. As electronic money
keeps the economy going, I speak to the CEO of digital payments company, Paga.
And storm over a coffee chain. NASDAQ delists Luckin Coffee after a fraud scandal.
We've got all the details, next.
(COMMERCIAL BREAK)
[09:22:13]
CHATTERLEY: Welcome back to FIRST MOVE live from New York, where we're still looking at a higher start for U.S. stock markets this morning, helped
along by gains from retailers, Lowe's and Target, both reporting strong sales in the first quarter as consumer snapped up essentials during the
lockdown period.
Target's results though, and you can perhaps see that in the performance of the stocks there tempered by higher labor costs and consumers passing on
big ticket items, too.
It was all about essentials. Consumers' demand, of course will be crucial to what kind of recovery we see for the U.S. economy and beyond.
Well, I can tell you, a new Bank of America survey shows just 10 percent of fund managers expect a quick V-shaped bounce. So, as steep drop and then a
sharp recovery.
An overwhelming majority believe, we are still stuck in a bear market. Joining us now is Kristina Hooper, Chief Global Market Strategist at
Invesco. Kristina, great to have you with us, and to see you looking well. Just give me a sense of that survey there.
Just 10 percent of fund managers are saying we're going to see a V-shaped recovery, and yet, I look in aggregate, stock markets and that feels like,
it tells a different story.
KRISTINA HOOPER, CHIEF GLOBAL MARKET STRATEGIST, INVESCO: Well, I think that's because what we've seen is a real decoupling of markets from the
economy.
Stocks are moving in a very different direction because they've been helped so much by extraordinary monetary policy stimulus, whereas there's a
recognition that the economy is going to move a lot more slowly.
But as we saw on the global financial crisis, this is a true decoupling.
CHATTERLEY: Can that continue? Or do you think we get to a point, maybe we're already in that point where we're pretty range bound while we watched
to see what the data looks like, and whether and what kind of shape recovery we get over the coming months?
HOOPER: I think we can certainly be range bound, but we have to recognize that there's likely a Powell put under stocks, not dissimilar to the
Bernanke put under stocks post GFC.
And so, this level for stocks could continue for some time, although I would expect fluctuation on a day-to-day basis driven by news flow.
CHATTERLEY: You know, it was interesting. I was looking -- as I was listening to the hearing on Capitol Hill yesterday, the sheer number of
pages, the list of things that the Federal Reserve has done here. Do you think they're out of ammunition? Or do you think to your point, if it's
required, Jay Powell will step up.
The bigger challenge here perhaps is what Congress needs to do and that is to support the underlying fundamentals here.
HOOPER: Well, Jay Powell is clearly channeling his inner Mario Draghi, in that he is willing to do anything, whatever it takes and he has been very
clear in that messaging.
So, while the Fed has done a lot, I think it certainly can do a lot more.
[09:25:12]
CHATTERLEY: What's the risk that it was falling on deaf ears yesterday?
HOOPER: Well, that is a big risk. We saw that during the Global Financial Crisis and that there wasn't enough fiscal stimulus. And as a result, we
saw that decoupling and we saw an exacerbation in wealth inequality. That could easily happen this time around.
Certainly thus far, we've seen good fiscal stimulus, but it absolutely has to continue, and I think Jay Powell is delicately trying to tell Congress
that. I think other Fed officials are being more forceful like Eric Rosengren, who came out much more bluntly yesterday and said we need more
fiscal stimulus.
CHATTERLEY: I mentioned earlier on the show that the St. Louis Fed is saying that we could see a 50 percent collapse in the U.S. economy. We're
looking at unemployment rates of 20 to 25 percent at peak, according to some predictions.
How quickly can you recover when we're still challenged by the health crisis? I struggle to be able to judge this. I'm not sure how any analyst
out there is.
HOOPER: Well, it's unclear. We're learning new things about this virus every day, but reopenings are happening. Hopefully, they are being
carefully done and so we don't have any resurgence in infections, but that remains an unknown.
That's why it is absolutely critical that we do get that fiscal stimulus. That is there to provide solvency and enable a more robust recovery when it
can occur.
It is absolutely critical to do that. We're seeing China do that right now, and that really is the appropriate playbook in this kind of crisis.
This could be a very deep but fast recession, or it could be deep and slow. And really it is up to Congress at this point to dictate that.
CHATTERLEY: For those people out there that are saying, look, I do have the next five to ten years perhaps to invest at this moment. What is the
message?
Because beneath the surface, tech stocks have done pretty well, healthcare stocks and then you've got the financials that are showing how -- perhaps,
how dangerous the economic situation is. They've been beaten up. Energy, too.
How do you look at some of the sectors here and judge, where's the value, and where to stay away from?
HOOPER: Well, we always suggest that investors take a long term perspective when investing, sort of be well diversified.
But those that want to move around tactically, it seems far more likely that we have a slower more uneven economic recovery, which would suggest
the defensive, the secular growth sectors, such as tech and healthcare are likely to perform better at least in the initial stages of the recovery.
At a certain point, with the development of therapies and the development of a vaccine that could easily turn into a more V-shaped type recovery,
where one would assume that cyclicals outperform.
CHATTERLEY: Yes. So, we're back to what I keep saying, the stimulus and the science. The balance of the two things.
Kristina Hooper, great to have you with us. Stay safe, please, and fantastic to chat with you this morning. Chief Global Market Strategist at
Invesco.
All right, we're back after this with the market open and of course, we'll head back for a look of what's going on in India and Bangladesh with that
cyclone. Stay with us. We're back after this.
(COMMERCIAL BREAK)
[09:31:39]
CHATTERLEY: Welcome back to FIRST MOVE with another look at our breaking news this morning. A powerful cyclone making landfall in Eastern India near
Bangladesh. It is a densely populated region that is under coronavirus lockdown.
CNN's Meteorologist, Chad Myers joins us now. Chad, great to have you with us. Just tell us what we're seeing right now and what you expect for the
path of this storm.
CHAD MYERS, CNN METEOROLOGIST: The storm a couple of hours ago came on shore, we call that landfall. The center of the eye crossing over land
proper.
We have a storm surge with this and that's the saltwater on the east side of the storm that's going to get pushed up into these bays and estuaries,
somewhere in the ballpark of 4,000 kilometers of tributaries in this area.
Right now, it is 160 kilometer per hour storm. Now, 47 hours ago, Julia, this was a 270 kilometer per hour storm. So yes, it did lose some steam.
But that doesn't mean that it lost its surge.
We're still going to have the equivalent of a category four to category five surge on the east side of the eye because it was a five for a while.
It was a super typhoon. It was a catastrophic cyclone.
Remember, hurricanes, cyclone, typhoon -- all the same thing, all the same product except just in different oceans. So, they have different names.
That's how this is going to work.
This thing got so big. It is all the way from Lisbon to Warsaw with the cloud cover with this and why is that important? Because that increases the
amount of surge, that bubble of water, that five meter bubble of water that's under the storm right now that is moving on shore.
So, a much higher storm surge than let's say, if it was a category two Atlantic hurricane, the entire time. Very populated area here. Go to Google
Earth and you can just look at all these tributaries and estuaries and see that there are family farms all along this.
If you were anywhere within five to 10 meters above sea level, it was time to go and certainly anywhere near sea level lower than that, it was time to
go, too.
And then think about that, all of the people that are trying to stay locked down, try to have social distance and try to get in a bus or whatever, and
move away from this storm.
And as they moved away from it, what are they going to get next? Heavy rainfall. Salt water coming from the south to the north, rainfall trying to
flood the other direction.
This will be a very deadly storm, I'm afraid, if it already hasn't been a deadly storm already, clearly making landfall now. People are just trying
to stay out of the way -- Julia.
CHATTERLEY: Yes, we called that double crisis earlier. Very worrying. Chad, thank you so much for that update there. Chad Myers.
And we'll bring you the very latest on this dangerous storm throughout the day here on CNN.
All right, for the time being. Let's take a look at the early action, too, on Wall Street. Stocks are solidly higher in early trading, thanks in part,
as we've mentioned, to the first quarter results from the retailers like Target and Lowe's.
Target reporting that 11 percent sales rise, and get this, a whopping 140 percent plus rise in digital sales. Another example of how consumer trends
have changed so dramatically or at least accelerated in the wake of COVID- 19.
In the meantime, take a look at oil. The rally continues with Brent and U.S. crude currently over two percent higher. Oil in fact has rallied more
than 70 percent this month as producers cut output and demand bounces back from historically low levels.
It's a 70 percent rise from, yes, low levels. That's clear.
[09:35:19]
CHATTERLEY: To put this in context, take a look at this. U.S. crude still down around 50 percent year-to-date.
All right, cash economies like Nigeria have been upended by COVID-19. Banks are closed. Cash handling has become a potential health risk and bank
transfers are of limited use when 60 percent of adults remain unbanked.
Stepping in to fill this void is digital payment company, Paga. It's a mobile phone platform through which people can send and receive money,
which means they can work, shop and move money even during the pandemic.
It has 15 million users and processes three and a half million transactions a month. Joining us now is Tayo Oviosu. He is the CEO of Paga. Tayo, great
to have you on the show.
Just explain in your words how Paga works, because I know you have what I believe, around 25,000 agency businesses that facilitate these transactions
all over the country, in your own words.
TAYO OVIOSU, CEO, PAGA: Julia, thank you very much for having me on here. It's a real great pleasure.
So, Paga is a mobile payment service and what we are doing is solving two problems fundamentally. One, is the use of cash and as you mentioned, the
Nigeria countries like Nigeria, use of cash is very significant. And then the second is access to finance.
And the way we do it is by combining a physical network of mom and pop shops, pharmacies, grocery stores of neighborhood communities, all over the
country to offer services to the mass market, as well as providing a digital service on any mobile phone, including the most basic mobile phone
on all mobile networks.
So, if you have any type of phone, you could just dial star-242-hash, and you could access the Paga menu and you can do your transactions, regardless
of what mobile network you're on.
Or you could go into the App Store if you have a smartphone and download the Paga app. If you're one of those who are, you know, one of the 40
percent of Nigerians who are banked, you can link your bank accounts and use Paga so you can use Paga with even multiple bank accounts or your bank
cards.
Or if you're like the mass market and most people who are not banked, you can go into a Paga agent and fund your wallet and then perform your
transactions that way or just use the agent directly and the agent will perform the transactions for you.
So Julia, if you were in Ikorodu in Nigeria and you wanted to send money to your cousin in Abuja, you could just go to a Paga agent and say, here is
cash. Help me fund my transaction. So essentially, helping process my transaction.
So essentially, what Paga has done is really take informal economies that are very cash driven and started with a path of digitizing them.
CHATTERLEY: I've got so many questions from that. Break it down for me very quickly, what proportion of people going into one of these mom and pop
stores as you said, and doing these transfers versus downloading the app versus perhaps just sending money via mobile phone?
Can you give us a sense of how this breaks down and perhaps how it's evolved over the last few weeks?
OVIOSU: Yes, so actually, until late last year, the bulk of our transactions is really people going into those physical locations, and with
25,000 agents in a country where they're not really that many ATMs, it was providing a real service to the banked and the unbanked and continues to.
And we're now seeing a trend towards digital and then we've also been pushing and driving towards. And actually, what's going on now with COVID-
19 is it is helping to accelerate that.
We've seen in this quarter, it's not over. But in Q2, we've seen almost 330 percent quarter over quarter growth in new signups for the Paga wallet, and
this is people using star-242, right?
So, these are mostly people with basic mobile phones and registering for the account. And we've seen an uptick in the transactions that we're
getting from people using Paga on their own as they look for options as they're not able to during the lockdown and were not able to go out perform
their transaction.
CHATTERLEY: Yes, I mean, lockdown has had that effect. So, this is a vital resource for people that simply can't get out there.
Talk to me about commissions. How much does it cost to do this? Because it also matters for things like remittance, too, and you can talk about that.
OVIOSU: Yes, if you go to a Paga agent and you want to send money to someone, the typical amount that people send on average is about 14,000
naira. It would cost you about 100 naira, which is just shy of 50 U.S. cents, it be a bit lower than that now with all that's going on with the
currency.
[09:40:16 ]
OVIOSU: But if you were to do that on your own, from Paga, you can send money to anyone using their mobile phone or their e-mail for free.
And if you were to send that same amount to a bank account, we would do it for 15 naira. So, at least half the cost if you did it by yourself.
But really what we're driving here is for people to, you know, to use the service for free and everyone who has an account, very similar to PayPal or
Venmo, sending money to somebody else within the system is free.
CHATTERLEY: So, I was just doing some math there, I believe you've got 15 million users, population of around 200 million in the country. So, it's
around seven and a half percent. How quickly do you think this can grow? What kind market share can you get here?
OVIOSU: Yes, I think we've laid the strong foundation needed to really win this market. And I think there's an opportunity to, in the next five years,
have somewhere in the 40 to 50 million users on our platform, right? And we're talking about the adult population here, right?
So really, our goal is we want to make life possible for people and that's the ethos of what we do, because we don't think it's about the payment
itself, it is about what you are trying to actually accomplish.
Whether that is to get your daughter to go to school, right, or whether that is to buy, you know, a birthday present for your wife, right? Whatever
it is, you're trying to accomplish, payment is just one element of it and we want to simplify that for you.
CHATTERLEY: Yes, it's vital for small businesses as well when we're talking about that proportion of people that are simply unbanked if you want to
foster growth in your business.
Speaking of growth in your business, you have and have expansion plans in Ethiopia. Mexico was also an option. What has COVID-19 meant for those
plans, too, and for your business itself?
OVIOSU: You know, our Board and investors and our team are really much -- I've looked at this and said, look, this is the opportunity for us because
we do see the trends of the world is going to go more to digital, right?
You know, the use of cash is very dangerous, for many reasons, but now, there are health reasons as well. So, we're very excited about Mexico and
really, what we're doing is we're looking at large countries where they're very informal, right?
Mexico is the 15th largest economy in the world and the second largest in Latin America. But yet 65 percent of Mexicans are unbanked and 90 percent
of Mexicans don't even save in a formal financial institution, right?
So our platform and what we have done in Nigeria, has learnings that we think we can take to such markets, right, where we can digitize informal
markets and also work with -- provide a service that provides significant convenience to those who are even banked as well, as well as the mom and
pop shops, right?
And I think this is what really led to the recent partnership we did with Visa and we're very excited about that collaboration because it's a global
collaboration where every Paga user is going to soon have a Visa credential.
And that means that they can they have greater access wherever they go, wherever Visa is accepted, as well as Visa customers have access wherever
Paga is accepted both in Nigeria, Mexico, and Ethiopia and other markets as we get them.
CHATTERLEY: You know, it's not often that I begin a conversation and I end it with more questions, actually than I have asked, so we are going to have
to continue this conversation.
OVIOSU: I would love to continue it some time.
CHATTERLEY: Fantastic.
OVIOSU: And thank you so much for having me. And I actually just noticed that you did show on my birthday, so good, good signs.
CHATTERLEY: It is a good sign. For both of us, clearly.
OVIOSU: Yes. September 10th.
CHATTERLEY: Great to have you on. Stay in touch, please, sir.
OVIOSU: Please, stay safe.
CHATTERLEY: And stay safe.
OVIOSU: Thank you.
CHATTERLEY: Yes, you too.
All right. We're going to take a break here on FIRST MOVE. But coming up, but some dirty dishes for you. Some restaurants reopened, an experiment
that shows you some of the challenges in the air of social distancing. Stay with us. That's coming up.
(COMMERCIAL BREAK)
[09:47:20]
CHATTERLEY: Welcome back to FIRST MOVE. Going out for meals is something most of us love to do and can't wait to get back to, but what does it mean
in practice in the pandemic era?
CNN's Randi Kaye shows us what it means for consumers, but also the challenges for businesses ahead. Watch this.
(BEGIN VIDEOTAPE)
RANDI KAYE, CNN CORRESPONDENT: Get some in and should I rub it all together as well?
KAYE (voice over): This yellow-tinted glue is a mixture of petroleum jelly and fluorescence solution.
(BEGIN VIDEO CLIP)
DR. PATRICK HUGHES, FLORIDA ATLANTIC UNIVERSITY: Under an ultraviolet light, this will glow.
KAYE (on camera): Okay and that's going to simulate germs on my hand.
HUGHES: Correct. So, this will simulate contact spread, you know from you to other things that you've touched and maybe touched by someone else.
(END VIDEO CLIP)
KAYE (voice over): Dr. Patrick Hughes is an ER doctor who oversees the Emergency Medicine Simulation Program at Florida Atlantic University.
(BEGIN VIDEO CLIP)
KAYE: Hi, ladies.
UNIDENTIFIED FEMALE: Hi.
(END VIDEO CLIP)
KAYE (voice over): He invited us to lunch designating me the so-called spreader. So, we could see how germs on my hand which could be coronavirus
droplets could spread in a restaurant setting.
At our table, we keep our masks on to protect ourselves and each other.
(BEGIN VIDEO CLIP)
KAYE: For you.
UNIDENTIFIED FEMALE: Thank you so much.
UNIDENTIFIED FEMALE: Yes, sure. Thanks.
(END VIDEO CLIP)
KAYE (voice over): I pour water for everyone at the table.
(BEGIN VIDEO CLIP)
KAYE: This is great. You guys are having us for lunch.
UNIDENTIFIED FEMALE: Sure.
(END VIDEO CLIP)
KAYE (voice over): And pass around the food, wondering if I'm passing around the virus, too.
(BEGIN VIDEO CLIP)
KAYE: Chips?
UNIDENTIFIED FEMALE: Oh, yes. Awesome. Thank you.
(END VIDEO CLIP)
KAYE (voice over): We also share the salt and pepper. Then it's time to turn on the ultraviolet lights to see what I may have spread.
Remember, I was the only one with what could have been the virus on my hand.
(BEGIN VIDEO CLIP)
KAYE: You didn't have any germs on you, I was the spreader. So, when you look at my hands and look how it transferred to some of you just by sharing
items at the table or a knife, in this case, or a water glass, I mean even -- it only takes a little bit, right, to make somebody else sick.
(END VIDEO CLIP)
KAYE (voice over): How about that bowl of chips I passed around?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You can see where she touched the edge of the bowl to pass it around, the simulated germs, you know, stuck right to the surface.
KAYE: And then everybody else touches the bowl.
(END VIDEO CLIP)
KAYE (voice over): Same with the salt and pepper shakers, and the pitcher of water. There was contact spread on the cups and menus to even my lunch
friends.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This is the spot where when Randi came in to have lunch with her friends, she touched right on the shoulder just to greet everybody
and you can see the outline of her palm print, her handprint right on the shirt.
UNIDENTIFIED MALE: It's quite scary the amount of spread that one person can have in a room like that.
KAYE (on camera): We also wanted to see what would help happen if you're out for lunch or dinner with a friend or your family at a restaurant and
somebody coughs, so let's turn up the lights and let's see the cough.
(END VIDEO CLIP)
[09:50:10]
KAYE (voice over): There were now more droplets on the bowl of chips, the menus and the water pitcher, too.
(BEGIN VIDEO CLIP)
KAYE: Look at happened to the fork after that simulated cough. Those would be real germs if that was a real cough on my fork. I would have picked up
the fork not being able to see those germs with the naked eye.
(END VIDEO CLIP)
KAYE (voice over): Even the woman sitting to my right several feet away from the mannequin that coughed had droplets on her face.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You can see it's on her face, her glasses her mask.
KAYE: If she wasn't wearing the mask, she would have breathed it in.
UNIDENTIFIED MALE: Correct.
(END VIDEO CLIP)
KAYE (voice over): Randi Kaye, CNN, Boca Raton, Florida.
(END VIDEOTAPE)
CHATTERLEY: Wow. Still to come on FIRST MOVE, the NASDAQ tells China's Luckin, time to wake up and smell the coffee. I'll explain, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Luckin Coffee investors, as you could see seem to have lucked out. The Chinese firm only listed in May last
year, if you remember, now, they are being delisted. Clare Sebastian is here to explain.
Clare, I remember distinctly this listing. I remember speaking to the CFO and wondering what on earth investors were grasping and buying here because
of the lack of information. It turns out, no one was sure, quite frankly. Talk us through the details.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, I think lack of information and it turns out some of the information we had didn't turn out
to be true.
All of this, the threat to delist from the NASDAQ, which came out yesterday, the suspension of the shares for more than a month which ended
today -- that is related to an accounting scandal that was revealed, Julia, in early April.
It turned out that the company had fabricated sales to the tune of about $310 million over the second and third quarters of last year, literally
just after they had gone public in the U.S.
That of course has led to a serious loss of trust on Wall Street for a company that, by the way, was really very well loved by investors. It
surged on its IPO. It peaked. And it was -- it IPO'ed at $17.00. It peaked at about $50.00 in January.
When it was suspended, it was worth $4.39 a share, and as you can see today, investors are not sticking around to find out.
It is for the moment still listed on the NASDAQ. The company says it's going to appeal. It's going to request a hearing that will happen 30 to 45
days from the time it requests it. So, until that point, it will remain listed.
But the future, Julia, looking very uncertain for this company that was supposed to take on Starbucks in China.
CHATTERLEY: Yes, and Starbucks were pretty skeptical about their growth strategy and how they seem to be buying market share.
But there's a bigger question for me here, Clare, and that is, these Chinese companies in particular, corporate standards, don't follow
accounting rules of the United States or wherever they're listing in this case and President Trump, to be fair has argued that perhaps we need to
take a closer look at this. I'm in favor of that, I think.
[09:55:10]
SEBASTIAN: Yes, I think there's a bit of momentum behind this at the moment, Julia. The SEC, we know has been looking at the difficulties
involved in auditing foreign listed companies in the U.S.
They've been talking to the big audit firms in the U.S. about how to deal with this. The President, as you say has spoken out about it.
And I think that, you know, there was a report as well from Reuters this week that the NASDAQ is looking at tightening rules around a foreign,
especially, Chinese IPOs, so certainly the authorities are looking at this and I think this particular case, it's such a high profile scandal that the
CEO and the COO have now also been fired, will sort of be a cautionary tale going forward.
CHATTERLEY: Yes, for individual investors that get to pick and choose, it's one thing, but for pension funds that invest in an index, you don't get a
choice here and so that's the challenge.
Clare Sebastian, thank you so much for that.
That's it for FIRST MOVE today. Stay safe and I'll see you tomorrow. Have a great day.
(COMMERCIAL BREAK)
[10:00:00]
END
