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Quest Means Business
EU Food Fraud Probe; Horsemeat Lab Tests; DNA Testing; Currency War Fears; European, US Markets Update; Airbus Battery Switch; Asteroid Close Encounter; Russian Meteor Shower Injures 1,000
Aired February 15, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, HOST: From London to Brussels to Bucharest, the race is on to contain the growing horsemeat crisis. Tonight, we hear from Romania's prime minister and also Britain's environment secretary.
Plan B, sell new batteries. Airbus acts to avoid Boeing's Dreamliner disaster of late.
And uncharted territory. Why sponsors of Oscar Pistorius now face something of an unprecedented dilemma.
Hello, I'm Nina Dos Santos and this is QUEST MEANS BUSINESS.
Good evening. Tonight, taking immediate action. The EU says that it will test meat from every member state as it tries to put a lid on the growing horsemeat crisis. Also today, Dutch authorities launched their own investigation, a criminal one, into a company accused of falsely labeling beef. The scandal has now spread across no fewer than 12 countries and is still escalating.
An abattoir in Romania was initially implicated, and from Bucharest, we can go over to the country's prime minister, Victor Ponta, who joins us in our bureau there.
Prime Minister, first of all, what is your reaction towards the fact that obviously Romania was the country where everybody pointed their finger at? You have said systematically that yes, we exported horsemeat, but it was properly labeled as horsemeat.
VICTOR PONTA, PRIME MINISTER OF ROMANIA: Good evening. I would say that this is not a usual scandal. This is a serious, serious problem, because the trust of the European consumers, even the American or outside European Union consumers, it's a very serious issue.
That's why we have tried to check immediately, the Romanian authorities, the French ones, the British ones, to find out who is guilty, to punish the companies who frauded the meat source and the origin.
And I would say that we should greatly improve the standards and the procedures in the European Union in order to know exactly where the food is coming, what is the origin of this, and if there's something wrong, to be able to punish very fast the companies involved.
DOS SANTOS: And indeed, from an EU perspective, there has been a growing appetite for doing that. We've already seen papers floating back and forth and agreements being signed today. But from Romania's point of view, have you found any evidence of fraud here n the food chain, that horsemeat has left a Romanian abattoirs labeled as beef?
PONTA: Fortunately, fortunately, according to all the results of the checks of Romanian authorities, European authorities, but even the investigation made by the media, fortunately all the companies on the Romanian national land, they have respected the standards.
Right now, it's the time to cooperate very fast to find out if the French company or somebody else is guilty and then to punish them and, as I told you before, to improve the European procedures and regulations
DOS SANTOS: But you're a rather big exporter of horsemeat, so presumably you need to defend Romania's image here. What has this done to Romania's image, to have the finger pointed at it? Again, you have systematically said so far that, yes, you exported horsemeat, but it was properly labeled. Was it?
PONTA: This is what resulted from all the checks, that we are not among the first exporters or producers of horsemeat in Europe, but we do produce. And the two companies which were under suspicion, they proved to respect all the standards and to be respecting all the standards.
It's going to be a very sensitive issue, because it's very easy to lose the trust of the public and it's very difficult to get it back. But that's why we should cooperate much faster and much better in the future.
DOS SANTOS: Now, that's exactly what I wanted to come to. Trust is so easily lost and, particularly here in the United Kingdom, many people of my generation remember endless scandals about food safety such as, for instance, salmonella scares, also BSE, et cetera.
It takes a long time to reestablish that trust, but somebody will eventually have to pay here. Will it end up being the retailers or the consumers?
PONTA: The first reaction, at least on the part of the authorities, should not be anger. It should be -- to understand the legitimate concern of the consumers, not to try to protect the companies. I'm telling you very straight, if Romanian companies are proving to be involved, I would be the first one to react and to punish them.
But the most important issue in this affair, it's the public trust, and I think that this is the right of every European citizen, and not only the European citizens, all the -- consumers around the world, to know exactly that the food is safe and the origin of food is very clear.
That's why the fraud that has been committed should be punished very harshly, and I salute the position of the French government on this.
DOS SANTOS: Ever so briefly, if I may, obviously this isn't just a mislabeling issue. It could be a food safety issue if it turns out that this horsemeat exported that came from Romania contained traces of the chemical bute. Your reaction to that?
PONTA: My reaction is that, once again, we will go back and we will check everything, we will be very transparent, and if everything is according to the standards, of course, we will inform and we will ask for fair treatment. If something went wrong, we will be the first to react and to punish the companies involved.
But for the time being, according to all the -- data that not only the Romanian authorities but the European authorities have gathered, it seems that in Romania, all the standards have been respected.
DOS SANTOS: The prime minister of Romania Victor Ponta, thank you very much for coming on QUEST MEANS BUSINESS this evening.
Well, results from tests ordered by British authorities have also revealed the scale of the problem here in the United Kingdom. Out of 2,501 tests, the Food Standards Agency says that it found 29 samples testing positive for traces of horse DNA.
A little earlier today, I got the chance to speak with the UK's environment secretary, Owen Paterson, and I asked him if the government should be doing more to manage the food industry.
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OWEN PATERSON, UK ENVIRONMENT SECRETARY: How food businesses organize themselves is down to them. Government does not micromanage food businesses.
But they all operate within the framework of European law, which makes it completely clear that they are responsible -- they are ultimately the key agents in guaranteeing to the consumer the validity and the safety of the products they sell.
So, these tests are very important today. They show the vast majority of products do not contain horse DNA, and they show the importance of completing the tests, I had hoped by next Friday, so that the food businesses can get out and reassure the consumer.
DOS SANTOS: Obviously, this doesn't just concern the UK. There are now 12 countries where we found contaminated beef that includes horsemeat and various other types of animal products, such as, indeed, pork. This is a major European problem. When are we going to get to grips with it?
PATERSON: Well, that's why I was in Dublin over a couple of weeks ago, talking to Minister Coveney, as Ireland has the presidency. That's why I talked to him on Monday and discussed the possibility of getting together a rapid meeting of the key countries.
And I rang several key figures, I rang the French minister, the Romanian minister, and Commissioner Borg, and we convened that meeting, which delivered exactly what I wanted. Because the big problem under the European arrangement at the moment is not enough testing goes on.
Too much is taken on trust. Too often, a piece of paper is taken to guarantee the contents of a pallet or a truck, and I want to see more testing. So, I'm delighted that from that meeting came an agreement to have Europe-wide testing for three months.
And yesterday, I was at Europol, because the UK Food Standards Agency has instigated proceedings there, the first country to do so, and with the full support of the French and the Irish, we will now have a pan-European coordinated investigation.
We are quite determined to get to the bottom of this. It is not acceptable for any consumer to be presented with a beef product to find that it contains horse. And that's why testing is vital. So, our tests today have a real role in convincing the consumer, and that's why we must convince the consumer further with more tests by the end of next week.
DOS SANTOS: It's interesting that you mentioned Romania there. Some might say you were quite quick to point the finger at Romania, but Romania says that yes, it did export horsemeat, but it was labeled as horsemeat.
PATERSON: I've been incredibly careful not to point the finger at anyone. We know that Romanian horse material has been exported, and I talked to Dominic Constantin earlier in the week, and I met him at our meeting on Wednesday, and he is absolutely emphatic that they have behaved correctly, that their procedures are impeccable, and that horse has been invoiced and shipped.
And actually, Minister Le Foll, who I talked to this morning, confirmed that he is happy. So, I've been absolutely scrupulous in not pointing the finger at anyone. But sadly, a number of countries are involved in what looks like an international conspiracy, and that's why I've played an absolutely lead role in getting pan-European coordination through Europol.
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DOS SANTOS: Well, as you just heard there, the UK environment secretary saying that the way food is tested is very much at the heart of this scandal. Erin McLaughlin actually visited a laboratory in Wales to see exactly how that procedure is carried out.
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JOHN ROBINSON, FOOD TESTING EXPERT: We're getting a range of different foods. We're getting raw products, such as the beef burger here, sausages, mince. We're also getting processed foods, these would be things such as lasagne, we've got a meat sample of lasagne here.
ERIN MCLAUGHLIN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Business is beefing up at MTD Laboratories, an independent testing facility in Wales.
ROBINSON: We're going to break down the food so it releases the DNA.
MCLAUGHLIN: John Robinson is a food testing expert. He says food companies large and small have hired MTD to test their beef products for the presence of horse DNA, part of the checks recently mandated by the British government.
ROBINSON: It goes in this robot here. To it, we add some chemicals, which are going to bind any horse, should it be present.
MCLAUGHLIN: Robinson says companies are testing a range of products, including what he calls highest-risk meat, meat that is highly processed with a complicated supply chain.
MCLAUGHLIN (on camera): So, this is an example of a graph that would indicate a product had horse DNA.
ROBINSON: We've got a number of different curves. We've also got a curve which shows that there is some horse in this product. In this particular case, it indicates that between 40 and 60 percent horse.
MCLAUGHLIN: Can we derive anything else from this information?
ROBINSON: All you can tell is that there is horse in this product.
MCLAUGHLIN (voice-over): The testing takes around two to three days and costs up to 170 pounds per sample. That's a little more than $260. Robinson declined to tell us if his firm has found any horsemeat so far.
MCLAUGHLIN (on camera): Given what you've seen and what you know about processed meat, what's on your dinner table?
ROBINSON: I do eat a small amount of processed meat, but generally I prefer to buy fresh cuts of meat and make my own food from that, which I historically have. You've got a better control on what's there.
MCLAUGHLIN (voice-over): And better control is what this kind of testing is all about, as government and food companies try to assure customers that what's on the label meets reality.
Erin McLaughlin, CNN, Cardiff, Wales.
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DOS SANTOS: "Sparring over currencies is inappropriate, fruitless, and self-defeating." Those are the word of the ECB president. After the break, currency manipulation concerns are front and center as the G20 finance ministers meet in Moscow.
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DOS SANTOS: Hello and welcome back. G20 finance ministers toned down the rhetoric on the prospects of a currency war at a meeting in Moscow today.
Elite communiques seemed to suggest that Japan will not eventually be singled out for its recent decision to implement lax monetary policy, a policy which has caused the yen to plummet of late and also encouraged other nations to competitively devalue their currencies, or at least weaken them as well. But the BOJ's governor seems to be steadfast in his approach.
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MASAAKI SHIRAKAWA, GOVERNOR, BANK OF JAPAN (through translator): Countries around the world are conducting monetary and fiscal policies so as to stabilize their own economies. In Japan's case, too, we are conducting monetary policy focusing on the stability of our domestic economy by escaping deflation and achieving sustainable growth under price stability.
I believe each country's policies aimed at stabilizing their own economies will lead to stability of the global economy on the whole.
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DOS SANTOS: Let's take a look at the possible battle lines of this potential currency war, starting out with the enfant horrid, if you like, the Japanese yen. This chart shows you how the US dollar's been trading against the yen, so as you can see, the dollar's been appreciating, while on the other hand, the Japanese yen has been falling in value.
Japan's weapon of choice is a strategy called Abenomics, named after its prime minister, so we're talking about depressing the value of its money to boost its huge export machinery. The prime minister, Shinto Abe, deliberately denies trying to do this, though you can see by the dollar's appreciation against the Japanese yen, this is the ultimate effect that his stimulus has had of late.
And Japan, it seems, isn't the only country to be boosting growth through these kind of currency measures. In fact, the United States has done the same as well of late. And that's affected the US dollar's trading relationship against the euro.
This is how the single currency has been doing against the dollar. As you can see, it's been appreciating. In fact, Europe is one of the only major economies not to be printing money and stimulating inflation. As you can see, the result is close to a 5 percent rise in the euro against the US dollar over just the last three months alone. You can see it's peaked at nearly 1.3650 recently.
So, what's the response coming from Frankfurt? Well, the head of the ECB, Mario Draghi, says that the recent strength of the single currency actually reflects a renewed confidence in the health of the EU economy.
Valentijn van Nieuwenhuijzen is the chief economist at the investment management company ING Investment Management, and he told me that the euro at its current levels is nowhere near the kind of levels where we see cause for concern.
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VALENTIJN VAN NIEUWENHUIJZEN, CHIEF ECONOMIST, ING INVESTMENT MANAGEMENT: If you realize that currently the trade rate of the euro is still five percent below its 2011 level, more than 10 percent below its 2010 level, I do think that the recent rise is not yet a bit problem.
And realize, this happens in a backdrop where the global economy is improving and where broad financial conditions in the euro area have really eased a lot. So, I'm not really concerned over this.
DOS SANTOS: How concerned are you about the prospect of the eurozone getting left out in the global race to stimulate the largest economies. We've of course got Japan printing money --
VAN NIEUWENHUIJZEN: Yes.
DOS SANTOS: -- like billio. We've got the United States doing the same thing. And then again, the eurozone doesn't seem to be keen to get inflation going for the benefit of growth.
VAN NIEUWENHUIJZEN: No, that is absolutely true. And I do think that therefore Europe will lag these other countries and will lack the momentum in the broader global economy. Maybe it will fight with the UK over the last place there.
But it will still benefit from better growth coming out of these regions. So, yes the eurozone will underperform the US, probably even Japan, certainly underperform emerging markets. But it will still show a cyclical pickup throughout the year.
DOS SANTOS: Let me talk about guidance in the central banking world, because of course we've got, especially here in the UK, the Bank of England is poised to have a new person at the helm, and it seems as though he's planning on targeting data like Ben Bernanke is at the Fed. Do you agree with this kind of approach?
VAN NIEUWENHUIJZEN: Well, I do think indeed that we are faced with challenges that are of a completely different nature than the ones we had over the last 30, 40 years. And new problems really ask for new solutions. And in that sense, I do appreciate the flexibility of thinking of the current set of central bankers.
And what you have is now to BOJ, really, a change in their stance. It's -- the US has changed it, the UK's now considering it. And of course, here also, Europe is lagging a little bit. But I think generally we're moving away from explicit inflation targeting only and really more aiming policy at a broad reflection of these economies. Not explicit nominal GDP targeting, but still broader reflection.
DOS SANTOS: So, when this cycle does get going, and eventually the recovery does come -- according to Mario Draghi, that could be end of this year, early next year --
VAN NIEUWENHUIJZEN: Yes.
DOS SANTOS: -- there's room, still, for the ECB to cut rates between here and then. That could be the only chance they have left.
VAN NIEUWENHUIJZEN: Well, there has always been room for the ECB to do more with respect to rates. And it's somewhat --
DOS SANTOS: How much, though?
VAN NIEUWENHUIJZEN: Well, all the other central banks have basically cut interest rates to zero. They're still 75 bases from what's left in there, respectfully, easy be. And the eurozone is clearly the weakest leak in the global economy still at this point. So, why not follow their counterparts and also politicians are trying to do a lot more --
DOS SANTOS: Especially with pressure on the currency, here.
VAN NIEUWENHUIJZEN: Especially -- because that will have a big impact on the currency.
(END VIDEOTAPE)
DOS SANTOS: Speaking of currency wars, there, European markets actually finished the week on a bit of a mixed note, with investors focused on, of course, that G20 meeting in Moscow.
We saw a round of downgrades by, in particular, CitiGroup, taking some of the UK miners down -- talking about Randgold, Fresnillo, falling, those kind of companies. And as you can see, that has the FTSE 100 closing on the flat line. CAC 40 and the other eurozone markets not faring too well on the day.
And if we take a look at the Dow Jones Industrial Average, that market's also trading in the red, as you can see, below the crucial 14,000 mark, which was the kind of high that we saw of late.
I might remind you that as we stand at the moment with the Dow down about 40 points in the last hour or so of trading, we also have the three major markets, the Dow, the S&P, and the NASDAQ poised to close the day in the red, as well. So, it's been a bit of a lackluster performance in the last couple of hours of trading stateside.
Airbus is scrapping plans to include lithium ion batteries in its new A350 plane. That's the battery technology used in Boeing's grounded Dreamliner fleet. Although it hasn't actually shown that lithium ion batteries are unsafe at present, Airbus, it seems, doesn't want to do anything to jeopardize its current delivery schedule of these planes.
Jim Boulden is here in our London studio with more on this. This is going to have some pretty severe implications for, all things, from weight, isn't it?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: It is. But I think it's smart for Airbus to get ahead of the game, because deliveries of these A350 XYBs are for next year.
So, it has a window of opportunity right now to say look, Boeing's had these problems, we know these problems exist, we don't know what the problems are, but let's get ahead of the game and let's make a decision now.
So, they have done what they call Plan B, go back to the heavier batteries, the ones that have been used in the past. But maybe the planes -- these batteries that they're going to replace are 30 to 40 percent lighter, but we are talking about massive airplanes.
And it's interesting, remember, Fabrice Bregier talked with Richard at Davos about this whole idea of outsourcing and the lessons learned from the 787. And let's remind ourselves what he said at Davos.
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FABRICE BREGIER, CEO, AIRBUS: We need full transparency from our teams for the first thing. And then we need also to control some functions. Sometimes we went too far away on outsourcing work. We need to make sure that we control the architecture of the aircraft, so as to have the safest and best aircraft.
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BOULDEN: And we must remind ourselves, of course, Boeing's 787s remain grounded, and as we look at the share prices, we can talk about the fact that -- the fact that Airbus has done this I think really means that Boeing's going to take -- it's going to take a long time until we know how Boeing's going to change their mind.
If they're going to go back to the old batteries, are they going to go to the new batteries -- continue to go with the new batteries, and we haven't even got a decision yet from the FAA.
One of the thoughts here is that the Federal Aviation Administration in the US will actually decide that these batteries cannot be used these new wave planes. Don't know that yet, but of course, Airbus is preempting that decision either way.
DOS SANTOS: It sounds like it is, and it will certainly ramp up the pressure for Boeing. Jim Boulden in our London studio this evening. Thanks ever so much for that.
Well, get your binoculars ready, because we're just moments away from an asteroid flyby. Plus, we'll take a look at the space -- the space rocks that sent shockwaves right across Russia earlier today. That's next and plenty more.
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DOS SANTOS: Hello and welcome back. Well, right now, our planet is having a very close encounter. Take a look at these. These are live pictures of this asteroid, 2012-DA-14 -- or as you can see, that's an observatory shot at the moment -- and it's just made its closest approach to Earth at 17,200 miles above the Earth's own surface.
That's the closest range ever recorded for an object of this kind of size, and closer than many of our weather and communication satellites actually pass by this planet's atmosphere. If you're in the right spot, you should be able to see it with binoculars, a telescope, or otherwise even just a camera zoom, if it's a particularly sophisticated camera.
Now is actually your chance to look at it, because during the next few minutes, the asteroid will get as close as it will ever get before it zooms right past. So, there you have it, those are pictures there from NASA's website.
Well, NASA says that this devastating meteor strike over Russia's Urals region is not related to the other asteroid we're talking about, the 2012-DA-14. Russian state media says that around about 1,000 people were injured as shockwaves battered buildings and blew out windows earlier today. We can actually just listen to the blast captured on one amateur video.
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(PEOPLE SHOUTING IN RUSSIAN)
(EXPLOSION)
(PEOPLE SHOUTING IN RUSSIAN)
(GLASS BREAKING)
(MAN SHOUTING IN RUSSIAN)
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DOS SANTOS: Powerful pictures, there. News agency RIA Novosti says that 3,000 buildings have sustained damage as a result, and that 20,000 emergency workers have been mobilized.
Martin Archer is a space physicist at Imperial College London. I'm delighted to say he's in our London studio with us this evening. So, this is really interesting. We've had two close encounters of another kind, if you like, space encounters, one in Russia that we didn't seem to know an awful lot about or expect, then of course this massive one that just happened now.
MARTIN ARCHER, SPACE PHYSICIST, IMPERIAL COLLEGE LONDON: Yes. So, we've known about 2012-DA-14 for about a year now, and we knew it was going to have this record-breaking pass by Earth.
But this meteor was just something that we all found out when we woke up this morning. It was not expected at all. We didn't know it was coming anywhere near us. We didn't know that there was anything that was going to impact on the atmosphere at all.
So, it just proves that actually there's a lot of stuff out there in the near-Earth environment that we don't know about because the sky is very big and we can't look at it all at the time.
DOS SANTOS: How worried should we be about this?
ARCHER: I don't think you need to be worried, right? So, this is a very rare event, this meteor. Mostly meteors just completely burn up in the atmosphere. The ones that do make it down generally hit areas that don't have people. This is just one of those ones that's had an impact and has caused some injuries and damage to buildings. But you shouldn't be worried.
DOS SANTOS: The DA-14 2012, that is significant, isn't it, as an event? Also for space watchers. It's come closer to our planet than much of the space junk out there hovering in the atmosphere in the orbit?
ARCHER: Oh, yes. It's great that it's passing so close by. It gives us a great way of understanding asteroids, to look at them, and there could be things in the future.
DOS SANTOS: We're just looking at live pictures for our viewers that have just tuned in. You can see the asteroid that had just -- that's just coming through, that's the closest encounter that's ever had, this famous DA-14, the 2012-DA-14. It's a rather big asteroid, as well, isn't it? If it made impact on land, you'd know about it.
ARCHER: Oh, yes. This is one that they would call a city-killer if it were to come down. So, it's not like wiping the dinosaurs out size, but certainly if it was coming to wherever you live, I would get out of there. It could take down a whole city. And it's only half the size of a football pitch.
DOS SANTOS: OK, Martin Archer there, space physicist from my old university, Imperial College. Thank you very much for coming on QUEST MEANS BUSINESS this evening.
Up next, as Oscar Pistorius denies murder charges in the strongest terms, we'll take a look at how scandal can shake the sport world and also the sponsors in it. (Inaudible).
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DOS SANTOS: Hello and welcome back, I'm Nina dos Santos. These are the headlines on CNN this hour.
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DOS SANTOS (voice-over): The European Union is ordering all member states to begin immediate tests of processed beef products for horse DNA. They will also test for the presence of an equine drug that could be harmful if consumed by humans. Beef adulterated with horsemeat was first discovered in Ireland last month.
Nearly 1,000 people were hurt and hundreds of buildings damaged when a meteor slammed into the Earth's atmosphere over southern Russia. The bright light in the sky was followed by a sonic boom that sounded like a massive explosion. Most of the injuries, though, were minor.
The world is getting its closest look yet at an asteroid. The space object 2012 DA14 passed within just 27,000 kilometers of the planet around about eight minutes ago. NASA calls this a very close call.
Venezuela's communications minister says that President Hugo Chavez is unable to speak after undergoing a tracheotomy. The official displayed these pictures of Mr. Chavez surrounded by his children at a Cuban hospital. He hasn't been seen in public since undergoing cancer surgery back in December.
South African Olympian Oscar Pistorius is rejected charges that he shot and killed his girlfriend on Valentine's Day. The track star was officially charged with the murder of Reeva Steenkamp today in Pretoria but a bail hearing won't happen until Tuesday.
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DOS SANTOS: Oscar Pistorius' big name sponsors haven't said yet whether they'll continue to work with him in the future. But Nike has pulled an advert that shows Pistorius running along with the onscreen text, quote, "I am the bullet in the chamber." British Telecom and Oakley expressed condolences but had nothing further to comment on for the time being.
South African satellite television channel M-Net said that out of respect and sympathy for the bereaved, it's pulling its Oscar campaign featuring Pistorius. You can see here one of the billboards that was being taken down earlier today. Nigel Currie is the managing director of the sports marketing agency, brandRapport. He's in our London studio with more on this.
Obviously, we don't want to comment on the case at hand, because we don't want to prejudice Oscar Pistorius' charges and trial. But this brings us into unknown territory, doesn't it?
NIGEL CURRIE, MANAGING DIRECTOR, BRANDRAPPORT: This is completely new stuff. I mean, we've had some famous sort of upsets in the past. We had Tiger Woods and that was trumped by what happened with Lance Armstrong. Now this, I mean, just absolutely is unbelievable and takes it completely into new territory.
DOS SANTOS: What can sports sponsors do differently here? Because from the outside looking in, a lot of these characters were relatively unknown until we had brands like, for instance, Nike backing them and putting them on the billboards everywhere. Perhaps the pressure of celebrity stardom could play a factor in the demise of some of these sport stars.
CURRIE: Well, it's -- sponsors have traditionally had sort of morality clauses in their contract, which is sort of designed to protect them if somebody does something wrong. And in the old days, it was usually just something as simple as drugs or something like that.
But the last 5-6 years, things have just gone so mad, there's been so many different things, you know, cheating in sport, you know, with that Formula 1 incident, where someone deliberately crashed a car. We had cheating in rugby, where they pretended to have blood and things like that. So there's lots more things which are happening now, which are making sponsors more wary.
DOS SANTOS: Should sponsors be playing more of an active role in trying to keep these sports clean?
CURRIE: I think they want the sports to be clean. The actual onus is on the governing body, the people who run the sport. It's their duty. That's their job, to keep the sport clean. You know, it's just probably the pressures, the huge amounts of money that are coming into sport now that it's having this sort of effect.
DOS SANTOS: Well, that's what I wanted to come to, because obviously as somebody in a brand market agency that deals with sport stars, do you first-hand witness this kind of pressure that being thrust into the limelight has brought? Because we've seen that with a number of British stars here that have gained celebrity status during the Olympic Games, (inaudible)?
CURRIE: Look, in the last 20 years, sport has become huge business. It is multi-multi-million pound deals. And getting through competitions and getting to certain levels is worth millions of pounds to individual athletes and individual teams and franchises.
DOS SANTOS: Now this isn't the first time, though, that we've seen sponsors obviously reevaluate their partnerships with certain stars when they face criminal investigations. But actually, when those criminal investigations -- and one case in the United States were dropped, they decided to responsor the person. What does that mean for a company, brandwise?
CURRIE: I think there's no doubt, you know, brands want to be associated with the top players and the top teams. That's one of the big objectives. It's certainly an objective for Nike. You know, they've got to give stars and teams the benefit of the doubt. And until sort of proven guilty that they tend to sort of stick with them, as Nike have done -- tended to do in the past.
DOS SANTOS: Nigel Currie, thanks ever so much for joining us there, Nigel Currie there, who's the managing director of the sports marketing agency, brandRapport.
Well, speaking of sports, the woman who circumnavigated the globe (inaudible) attempting to apply that very same principle to the global economy. After the break, Dame Ellen MacArthur speaks to me about the (inaudible).
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DOS SANTOS: She circumnavigated the globe alone. And now Dame Ellen MacArthur says that her circular economy could mean billions of dollars in cost savings for industry as well as cheaper products for everyone out there. I spoke to her earlier and began by asking her what long distance yachtswomen, what they have to do with economics, basically. Take a look.
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ELLEN MACARTHUR, CEO, ELLEN MACARTHUR FOUNDATION: I guess it's a very unnatural transition for those who see it for the first time. But for me, it was very clear. I understood from sailing around the world what finite means and that you need everything for your survival on the boat with you. What you have is all you have.
And yet when I translated that to our global economy, when I stepped off the boat at the finish line, I realized ultimately our economy runs in the same way. We have these finite resources. And I set about on a journey of learning. This lasted for five years, speaking to scientists, experts, speaking to economists, looking at how do we use resources in global economy?
How does it function? How does it work? How many years have we got left? How do we used these products, services and materials? And the more I learned, the more I realized that we used our materials in a very linear way.
We take something out the ground; we make something out of it. And ultimately most of it gets thrown away. And in the long term, with 3 billion new middle class consumers, that can't work in a global economy to allow everyone to have the products and services we've had.
DOS SANTOS: What kind of recommendation for you are you putting forward as part of this research? I've noticed that you've said that companies and basically the world economy can save literally hundreds of billions of dollars.
MACARTHUR: When we looked at the circle economy initially, we looked at the basic model, which makes sense. If you can cycle materials biological and technical and change business models, it would work in the long term. But we didn't know the numbers. So just six months into the creation of the foundation, this was toward the end of 2010, we went to talk to the --
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DOS SANTOS: This is your foundation?
MACARTHUR: Correct; this is the Ellen MacArthur Foundation, which has a goal to accelerate the transition to a circular economy. We went to Mackenzie (ph) and we asked them the questions. Does the circle economy decouple growth from resource constraints? Does the circle economy create profit for business? Is it profitable for business?
And is it profitable for the wider economy? And when looked at the manufacturing sector within the E.U., the answer was yes, yes, yes, yes it does decouple growth from resource constraints. Yes, it is profitable for business in all five cases we looked at, it was profitable for businesses. And yes, it was good for the wider economy to the tune of $630 billion U.S. just within the E.U.
DOS SANTOS: Are you saying, though, that the current economic model is broken, if you like?
MACARTHUR: Well, if you take our current economic model, it's based on a linear system compared to the circular one, where we tend to take something out of the ground, make something out of it and ultimately that product would get thrown away.
If you take a, you know, washing machine or a car, it's made for that linear system. The manufacturer makes money when they sell that product and to sell the next product to make more money, they need to buy more raw materials; whereas within the circle economy, you'd look at the whole system. You'd look at how you design the product, how you'd market the product.
Do you sell the product or do people pay for the service of that product? So those materials can be recovered and put back into the system.
DOS SANTOS: So it's not exactly broken, but it's unsustainable.
MACARTHUR: I think when we see that we have 3 billion new middle class consumers coming online by 2025, when you look at the fact around basic raw materials, and in the year run-up to last January, we'd seen a 500 million euro increase in the average E.U. car manufacturers' raw material budget per annum.
You know when you pan that out into the future, when you look at the ever-increased pressure on those resources, actually we can't afford to have cars in 50 years' time if those prices continue to increase. So this is about decoupling growth from those resource constraints.
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DOS SANTOS: Dame Ellen MacArthur there, the lady who circumnavigated the globe, is trying to apply the same phenomenon to economics, as you can see there, with her theory of the circular economy.
On that note, it's time to say goodbye. Thanks so much for watching me, Nina dos Santos in London. That's it for QUEST MEANS BUSINESS. MARKETPLACE AFRICA continues here on CNN (inaudible).
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ROBYN CURNOW, CNN HOST: You're watching MARKETPLACE AFRICA. I'm Robyn Curnow in Sangano (ph) in central Malawi. Now this is a country that's blessed with fertile soil and in many places, yields are improving because farmers are receiving much needed agricultural advice by tuning into local radio.
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UNIDENTIFIED MALE: You are listening to Farm Radio on 102.16 FM.
CURNOW (voice-over): This is Farm Radio, where local farmers are taught the tricks of the trade through the airwaves. This man is writing today's script, audible agricultural advice that'll reach thousands of listeners.
REKS CHAPOTA (PH), FARM RADIO INTERNATIONAL: (Inaudible) radio in Malawi is (inaudible) issue why because most of our farmers, as you know, they're illiterate. They're kind of people to read newspapers or pamphlets or booklets.
And even televisions are not as rare in the community. So radio is actually the only source of critical information to our farmers. And statistics are showing right now that over 60 percent of the (inaudible) at least own a radio.
CURNOW (voice-over): Reks Chapota (ph) heads his operation in Malawi, an initiative that comes from Canada. Farm Radio International, a non- profit organization based in Canada, has been partnering up with African radio broadcasters since 1979 . And here in Malawi, people are still tuning in and turning it up and writing down tips. And they often do this at radio listening clubs.
CHAPOTA (PH): The issue of radio listeners clubs is very critical to our (inaudible) because we do understand that when farmers come together in a group to listen together to a radio program, thereafter they are able to discuss and dialogue on whatever listened to and then they're able to use that in their various fields. So indeed, the issue of radio listeners clubs is very critical in this approach.
CURNOW (voice-over): Malawi has one of the largest rural populations in Africa, with about 80 percent of its citizens living off the land. In this rural village, TVs, iPods and smartphones are hard to find. But radio is an age-old mass communication tool and in this country people gather together to get critical information about health, education and of course, farming.
CURNOW: Malawi's economy is largely based on agriculture. Most people here are farmers. The land is their livelihood, which is why local farm programming is just so important.
CHAPOTA (PH): Right now, we are promoting (inaudible) growing, not only for food, but for income. So we say that if our farmers are able to produce good (inaudible), which can fetch good prices at the market, then that is very beneficial to their income security.
CURNOW (voice-over): This local farmer relies on his farming income to pay for his children's school fees and clothing.
He tells me that he's expecting his harvest to increase this year, as he's now planting two groundnut (ph) rows on a ridge instead of one, advice learned from Farm Radio, a project that government agricultural adviser, Patrick Chimuvi, finds very successful.
PATRICK CHIMUVI, GOVERNMENT AGRICULTURE ADVISER: (Inaudible) in the (inaudible) village, there is a level who are (inaudible) in time. But after listening from the radio, they have vested their maize in time. And most of them, they divested in May. Most often they used to harvest in June.
But after listening on the radio, they used to harvest their maize, their crops in May, which was very important, because whenever you -- there's a (inaudible) time of harvesting, you -- there's a loss of product.
CURNOW (voice-over): From preventing a loss of produce to increasing harvests, lessons learned over the radio waves that they hope will improve lives and livelihoods in this community.
UNIDENTIFIED MALE: For sure, we know that if they improve their famine situation, they're in -- then their income improves but also the nutrition improves and their whole livelihood changes for the better.
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CURNOW: The power of radio to change lives. Well, how do you improve people's lives? By breaking down borders so there's more trade between African countries. After the break, I'm going to cross a border and find out.
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CURNOW: My left foot is in Mozambique and my right foot is in Malawi. Crossing borders in Africa is not normally this easy. Border posts are often choked with bureaucracy, corruption, red tape. How does all of that frustrate doing business on the continent? Well, here's Phillips Oduoza (ph).
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PHILLIPS ODUOZA (PH): Africa has been growing in the last 10 years. When you look at the average GDP of Africa as a whole it is growing faster than the global GDP. And individually, the (inaudible) are growing and we see a lot of potentials. We see a lot of values. Again, we are beginning to see stable environments, stable political environment.
We believe that there should be a lot of money in Africa. And when you look at it, the foreign direct investment that has been coming into Africa in the last 10 years has been on the increase. So there is really value in the (inaudible) African countries. And we want to integrate the (inaudible) African countries through trade and economic development.
CURNOW: So that's what you want as a bank. But as a person, we've been talking about how difficult it is for the CEO of a major bank to do business in Africa.
ODUOZA (PH): (Inaudible), one of the major issues that we've been trying to deal with, it has not been easy to move from one African country to the other of one particular region to the other because you require a visa and at times it takes a very long way before the visa is granted. If I am from a particular region, for instance, the ECOWAS (ph) region --
CURNOW: Which is West Africa.
ODUOZA (PH): -- which is West Africa, and you are going to order African countries, you may require as much as about 40 visas to enter the West African countries. And we need to break down this barrier. We need to disintegrate the barrier that we have the free flow of capital, free flow of people and then the trade is going to get a lot bigger.
CURNOW: We can talk about opportunity. But when it boils down to it, it's the practicalities of doing business that is still so hard.
ODUOZA (PH): Probably you are right. And for us, the business people, we believe that these barriers need to be broken down. They need to be disintegrated. We believe that the African leaders should walk towards dismantling this particular barrier because it is a very, very big drawback to doing business in Africa.
The opportunities are there and you would like to come into these opportunities, we like to assist in the economic development of Africa. And as a bank you deal with presence in 19 African countries. It's facilitating the trade on most of the West African countries.
And also we should be talking about a currency, you know, (inaudible) to convert to allow free flow of money between the various countries, and capital and so on. And we believe that that is going to assist in the integration of the various African countries.
CURNOW: So you talk about currency. You've alluded to it. How difficult is it to literally move money around the continent?
ODUOZA (PH): I can tell you it is also as difficult as -- or time- consuming as getting the (inaudible) cross between one country and the other. We believe that the currency issues start, you know, (inaudible).
For instance, there is no reason why in ECOWAS region, which is the Economic Community of West African States, why we should not have a single currency so that if you are in Nigeria, you would be able to deal with a currency and do transactions in Ghana and vice versa and so on.
So we should be thinking of the (inaudible) and come up with a single currency so that we can facilitate through it and we can also improve the economic development of Africa as a whole.
CURNOW: Do you engage with politicians? Do you tell them this? I'm assuming you. And what is their answer?
ODUOZA (PH): They are working on that. The only thing is that it's taking a long while because I think everybody has come to that realization that for Africa to move forward, for us to tap those opportunities that we have in Africa, must cooperating, must work together.
And I believe that the leaders are looking at it. In terms of business, talking to governments, that is already going on. But I think we need to do more.
CURNOW: Because we talk about your African footprint, but what we're getting a sense of is that no matter how big somebody is in Africa, how much money they want to spend or invest in the continent, it's the small things, like red tape, like problems across borders, like visas, all of that.
And it's all -- it all boils down, though, to policy, doesn't it? It's the politicians who are holding back, in a way, Africa's development.
ODUOZA (PH): Well, you are right. And I think that's, you know, the government of the West African countries must work together. It is mandated. They must work together. They're --
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CURNOW: But who's going to push them to do it?
ODUOZA (PH): They must -- they must break down these barriers. And the (inaudible) has been talking. But I think they are beginning to do that, but not at the pace that we want. We want it to be done at the speed of light. And for banks, transactions at this point in time take just, you know, (inaudible) time, should be (inaudible) without, you know, any form of delay.
And we believe that if we remove these barriers, there is going to be a lot of economic development that is going to take place especially banking, there (inaudible) and the (inaudible) in Africa, which is one of the things that United Bank of Africa (ph), PAC (ph), is beginning to do with the mobile (ph) money that we have just launched under (inaudible).
We are trying to do some form of financial inclusion and bring people outside of banking system to be banking. And we are beginning to see quite a lot of that, you know, taking place, so (inaudible) level has been on the increase and so on. So as the CEO of (inaudible), I would like to go from Nigeria to (inaudible) without any delay.
I would like to go from Nigeria to Mozambique and go and see the business of (inaudible) without any delay. And go to (inaudible), go to the various countries. I don't want any delay. I want to do these transactions and then come back, you know, quickly.
CURNOW: It's all about borders and breaking down barriers, isn't it?
ODUOZA (PH): Basically. We have to break down the barriers. We have to dismantle these barriers because they are constraining the business. And once we break down these barriers, I believe that Africa is going to take off as quickly as possible.
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CURNOW: Now you can find links to other interviews as well as photographs from our trip here in Malawi at CNN.com/MarketplaceAfrica. I'm Robyn Curnow. Thanks so much for watching. And please do join us again from one of Africa's other marketplaces. Goodbye.
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