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Quest Means Business
Joe Biden Touts Economic Opportunity in Climate Plan; New I.A.T.A Chief Slams E.U. over Travel Restrictions; Markets Dip On Reports Biden Will Propose Tax Hike; Germany To Impose New Lockdowns In High Infection Areas; IATA Chief Slams Politicians Over Travel Restrictions. Aired 3-4p ET
Aired April 22, 2021 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN BUSINESS HOST: It was a middling day in the markets. That was before a White House news flash, which sent the Dow into a
tailspin. This is the way the market looks at the moment. You can see exactly what happened.
The market was down, and it was all because of the prospect of tax increases and more proposals. We`ll talk about it and get details.
The markets and the day so far, one of the largest job creation opportunities in history. The U.S. President says green growth is key to
tackling climate change.
And it`s talk of tax rises, as we say that has the markets in a tailspin and a tantrum.
Also, tonight --
(BEGIN VIDEO CLIP)
WILLIE WALSH, DIRECTOR GENERAL, I.A.T.A: I`m shocked at how disjointed the E.U. has been.
(END VIDEO CLIP)
QUEST: Willie Walsh, the head of I.A.T.A no longer holding back on E.U. politicians and their policies on aviation. Exclusive interview on this
We are live in New York on Thursday. It`s April the 22nd. I`m Richard Quest, and I mean business.
Good evening, tonight, Joe Biden has been stressing both the Earth and the economy must benefit in the fight against climate change. It is Earth Day,
and the President opened a Virtual Climate Summit with dozens of world leaders.
It was the U.S.`s ambitious move, when he promised that the United States will cut its own emissions to half of 2005 levels by the end of the decade.
It`s an effort as Biden says that offers a historic job creation opportunity and he says investing in a greener future will have long
lasting and far-reaching benefits.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: All of us and particularly those of us who represent the world`s largest economies, we have to step
up. You know those that do take action and make bold investments in their people in clean energy future will when the good jobs of tomorrow and make
their economies more resilient and more competitive.
So, let`s run that race, win more -- win more sustainable future than we have now overcome the existential crisis of our times.
(END VIDEO CLIP)
QUEST: Now that spirit was echoed by the British Prime Minister Boris Johnson, who said the U.K. economy offers proof that sustainability can
(BEGIN VIDEO CLIP)
BORIS JOHNSON, BRITISH PRIME MINISTER: We can build back better from this pandemic by building back greener and don`t forget that the U.K. is -- in
the U.K., we`ve been able to cut our own CO2 emissions by about 42 percent on 1990 levels, and we`ve seen our economy grow by 73 percent.
You can do both at once, cake, have, eat, is my message to you.
(END VIDEO CLIP)
QUEST: Bill Weir is CNN`s chief climate correspondent. Bill, there will be lots of our colleagues who will be talking about the politics of all of
this. Focusing on the business side, the Prime Minister and the President cake, have, eat. They are getting over this idea that it`s not hugging a
tree, but it`s growing the economy, too.
BILL WEIR, CNN CHIEF CLIMATE CORRESPONDENT: Exactly. It is big golden carrots in addition to a lot of scary sticks about the cost of inaction.
Swiss Re, the big reinsurance company put out a report today and said if nothing is done, global GDP will take an 18 percent hit, the biggest
countries that would suffer, China 25 percent, U.S. around 10 percent. Even if they meet the Paris Accords, there`s so much carbon already in the
atmosphere. They`re predicting a four percent drop by the mid-century, but yes, it`s the idea of an Industrial Revolution 2.0 creating massive new
fortunes for anybody who can come up with a cement that could sequester its own carbon or a green hydrogen that you can use to make steel instead of
It is a tough sell in some parts of Appalachian, where mining communities have been promised things before. If you`re a fracker or a driller being
told, yes, you can easily switch over to geothermal. That`s one that`s kind of hard to swallow.
But Biden had to go big today to try to win back some goodwill from around the world who is not so sure about where we`re going to land depending on
the latest election.
QUEST: Yes. And John Kerry, the climate envoy was -- had to reassure on this question about U.S. commitment, and he basically said it was now
unassailable, and it couldn`t be reversed.
But you know, and I know that if Donald Trump or similar was re-elected, or was elected in four years` time, there could be another reversal of
policies. That`s the way the democracy works.
WEIR: Exactly, exactly. And in a one-party system like China, they want to build a new solar, you know, array, it gets built without any sort of
environmental impact study.
Here, President Obama tried to come up with a Clean Power Plan, because really, the power and transportation sectors are the biggest emitters, but
the Supreme Court stifled that plan. These rules that regulate these parked sectors of the economy are slow by design, and so democracy is kind of the
worst system to deal with a problem like this.
But Biden and the scientists from NASA to the Pentagon say, you`ve got to try and the clock is ticking.
QUEST: Now, while the President was speaking to world leaders, Greta Thunberg was talking and taking U.S. lawmakers to task over fossil fuel
subsidies, which is always a thorny subject in this country.
Remotely speaking, she said companies and countries are making empty promises.
(BEGIN VIDEO CLIP)
GRETA THUNBERG, CLIMATE ACTIVIST: And it may seem like we are asking for a lot, and you will of course say that we are naive and that`s fine. But at
least we are not so naive that we will leave things will be sold through countries and companies making vague and distant insufficient targets
without any real pressure from the media and the general public.
(END VIDEO CLIP)
QUEST: I wonder, Bill, when Greta sort of attacks those who are the most transparent whilst leaving so many who are doing damage, less transparent.
I wonder whether that`s helpful.
WEIR: It`s a good question. It`s probably more helpful if the -- you know, 16-year-old, who eats at the same dinner table as these heads of states or
CEOs puts the same argument to them, holds their feet to the fire.
The closing speaker after this conga line of Xi and Putin and Bolsonaro was another Friday`s for future activist, a Mexican-American named Xiye Bastida
and she said, you call us naive. You`re the naive ones who think you can have endless Summits and these sorts of talks without doing anything,
without putting any teeth into your plans.
And of course, it`s out of the mouths of the young here that has really forced a movement pre-pandemic.
But whether or not that we are off, who is to say? But we`re at least at a conversation point in the United States, where it is a cost benefit
analysis not complete denial.
QUEST: Thank you, Bill Weir, our chief climate correspondent.
Now, as Greta Thunberg mentioned, many corporations have pledged to cut carbon emissions. A new research suggests those efforts have fallen short.
Less than 25 percent of companies are on track to meet the goals of Paris by 2050 according to analysis by Arabesque.
I spoke to Prince Charles about this issue earlier this year. And he told me, companies are the ones who must step up.
(BEGIN VIDEO CLIP)
PRINCE CHARLES, HIS ROYAL HIGHNESS, PRINCE OF WALES: It`s now suddenly that there is greater awareness of what is required. But at the same time,
there`s still out of the 40,000 listed companies around the world, there is still -- there are still very few who have a proper carbon transition --
climate action transition plan in place.
So there`s still a huge mountain to climb and a lot more people to convince.
(END VIDEO CLIP)
QUEST: Now, Maria Mendiluce is with me, the CEO of We Mean Business Coalition, which is lobbying for change on behalf of hundreds of companies,
including giants like Apple and Amazon joining me from Pamplona in Spain.
I saw your letter up, your open letter, which has now been signed by many hundreds of companies, but there is this underlying issue that many
companies -- I mean, I know they`ve all put forward their numbers. They`ve met this target. They`ve met that target, but the reality is according to
Arabesque, the top 30 percent have not met their own targets.
MARIA MENDILUCE, CEO, WE MEAN BUSINESS COALITION: Yes, I think there is a lot of progress to be made. I think what is important today is that we have
a very clear direction for the next decade.
It is very clear that companies need to remove emissions from all their operations. They need to scale up renewables by electric vehicles and
reduce the carbon in the materials that they use.
Many of these companies have said science-based targets, they have started the journey. We are seeing some results of those companies that have
started the journey and it is clear that before the signal maybe was as clear as it is today, with the U.S. stepping up, U.K. as well, European
Union did it a few months ago, Canada, Japan, China, and India. So, these signals from governments are clear and business need to step up. And the
companies that have signed the letter have said so.
QUEST: Do you favor carbon trading schemes as a way of reducing, I always think with carbon trading, the end goal is there, but it is almost allowing
people to have free passes until the last possible moment.
MENDILUCE: I think carbon pricing is really important, whether it is taxes or carbon market mechanism, because it prices the externality, and it is
included in any business decision, but that`s not enough.
We need regulations. We need standards. We need carbon pricing. We need leadership.
We have today, renewable energy that is competitive. We have electric vehicles that are becoming competitive. So it`s also true that the
technologies that exist are making it very attractive for companies to invest and to use those technologies and to replace fossil fuel emitting
QUEST: And yet, at the end of the day, we still do rely on fossil fuels. I mean, the majority of heating and power is coming from fossil fuels, and
even though the Gulf countries themselves are aiming to shift away from it, it still forms the backbone.
Now, when you`ve got many investment groups and banks shunning the fossil fuel industry, what does that do in this environment? At the end of the
day, as long as we are still reliant on fossil fuels, they ask -- be it natural gas, which is better than coal, et cetera, they are still going to
require needed investment?
MENDILUCE: Well, you might have that view, but I think many other companies see that renewables are cutting up. They are representing a large part of
the power generations in many countries. With green hydrogen, the potential is even bigger.
So, the issue on power grids, everybody agrees that renewables is the future. On electric vehicles, we have seen that the advanced and the
decreased price of batteries also are allowing those technologies and vehicles to come to the market at a much greater pace.
And so now, I think most of the attention is: how are we going to reduce the emissions from heat? Low current temperature heat can be electrified,
but what happens with high temperature heat? Well, there`s a lot of groups that are working on it, Mission Possible Partnership is one of them, and
there are solutions that are existing that we need massive investments, and that is why it`s really important, the investments that the U.S. and other
governments are announcing these days.
QUEST: Okay. Maria, are you in favor of companies penalizing CEOs in the same way that we reward them for meeting targets? Should they be penalized
through their remuneration if they fail to meet the sustainability targets?
MENDILUCE: Absolutely, absolutely. I think companies, the companies -- many of the companies that have signed the letter have agreed to set science-
based targets and will have those validated.
Now, we need to move from commitments to accountability through actions, and this is what is going to be really important after the COP 26 Glasgow
is how do we put in place a mechanism to understand that accountability? And if companies have said that they`re going to step up their game, well,
let`s see. And if they don`t, let`s point to them.
QUEST: Maria, good to see you. Thank you. I appreciate it.
Now join CNN for a Climate Town Hall on climate policy. Senior Biden administration officials will take questions on how the Biden plan will
remake U.S. climate policy, Friday night, 10:00 p.m. Eastern Time; Saturday morning, of course at the same time if you`re in Hong Kong.
There is a new man running the top trade group for airlines and aviation. Willie Walsh tonight in an exclusive interview tells me he is not afraid to
get tough with world leaders if they don`t offer needed help. Our exclusive interview after the break.
QUEST: The new head of the International Air Transport Association, I.A.T.A, says he is shocked and disappointed at how poorly the E.U. has
handled travel restrictions.
Willie Walsh says Europe hasn`t done enough to coordinate away out of the pandemic. In his first broadcast exclusive interview, he tells me Brussels
has missed a chance to prove its worth.
(BEGIN VIDEO CLIP)
WALSH: I`m shocked at how disjointed the E.U. has been particularly in a post Brexit environment, when I think they had the opportunity to
demonstrate to everybody that there was incredible value in being part of the E.U. It`s disappointed me as a European to see how uncoordinated the
activity has been.
(END VIDEO CLIP)
QUEST: Now, Willie Walsh says the risk is that there is no global coordination as flying picks up again. The picture is very different
depending on where you are flying to and from.
So, in the United States, we are through the worst of it says Doug Parker at American Airlines. Domestic flights are coming back, and now, the CEO
says he is working on a U.S.-U.K. travel corridor bridge or something along that. That comes as European aviation is struggling. The new list of the
world`s busiest airports today does not include a single European city in the top 10.
The E.U. relies on international travel, which is heavily restricted. Domestic travel, of course, as an intra-country much smaller.
And so, in Asia, it`s all about the domestic markets, too. The world`s busiest airport, Guangzhou in China up from number 11, the year before. And
that`s the scenario as the Northern Hemisphere heads towards summer, when there had been so much hope that things were going to be a little bit
Well, Willie Walsh has only been IATA`s top job for a few weeks. I spoke to him in his first interview as DG. He told me the problems facing the sector
are truly unprecedented even now.
(BEGIN VIDEO CLIP)
WALSH: The industry actually has gone through quite a massive challenge unlike anything we`ve seen before and we are now looking at forecasts of
about $48 billion of losses in 2021, which is a huge figure. But that`s a big improvement on where we were last year.
So, it represents about 23 to 24 points of margin. I think that`s one good way of looking at it and it clearly hasn`t happened without really hard
work by airlines around the world and very tough decisions by airline management teams all across the industry.
QUEST: That said, do you still expect other airlines to go under? I mean the requirement for more financing in 2021, both government and private
sector when airlines have already stumped up. Do you see more going out?
WALSH: I think those that have survived have a good chance of seeing through 2021, but there will be challenges. If you look at the additional
debt that the industry has taken on, about $220 billion of additional debt. So over $650 billion of debt on airline balance sheets.
I think the challenge will come as we get into more international activities and airlines try to ramp up their flying and match the capacity
that they are providing with the demand that`s likely to be there.
And that`s why, we are saying, governments need to give us you know, a warning and a plan as to how they are planning on how they`re going to open
because getting that right is going to be critical, because it could actually lead to an increase in cash burn by airlines, if it`s not done
QUEST: The fear is, isn`t it, that the reopening and the restarting is going to be as chaotic as the closure?
WALSH: Yes, I think that is a challenge. You know, we`ve been, I think, disappointed is probably an easy way of saying is at the way governments
have lacked coordination in the way they`ve gone about this. We really do need to see a coordinated approach.
You know, we`re looking at a global industry and it`s no good unless all parts of that industry are working in tandem. So I think there is a risk
that, you know, will be -- I don`t think chaotic, I think it will be disjointed, and clearly would be better for everybody if we were more
QUEST: Just looking at the moment, I mean, the U.S. domestic is picking up. Asia, intra-Asia is still dreadful. You`ve got isolated bubbles between
Australia, and New Zealand, but European aviation is going to be -- it`s difficult to see how it restarts.
WALSH: Yes. So, if you look at it, so I think you`ve highlighted an important difference between various segments around the world, the U.S.
domestic market is about 66 percent of their total market. So clearly, that hasn`t suffered because there aren`t restrictions or many restrictions on
internal travel within the U.S., and talking to airline CEOs there, they`re very optimistic actually about 2021 because they see strong demands, and
particularly on the leisure side.
Europe domestic travel is about 11 percent of the European industry. So, they don`t have a big domestic operation. It`s really dependent on
international travel getting going again. And that`s the big difference.
Now, I think what you`ve seen is, a few months difference between the recovery in the U.S. and a recovery when it starts in Europe. But you know,
getting international travel moving again is very important.
QUEST: You know, I see the U.S. carriers adding routes, and doing it quite fast, actually, very much, even some international routes. I see Europe,
just basically having being stuck, not having direction of what they can expect, so they can plan ahead.
WALSH: Yes, you know, as a European, and somebody who has always been proud to say I`m Irish and European, I`m shocked at how disjointed the E.U. has
been particularly in a post-Brexit environment, when I think they had the opportunity to demonstrate to everybody that there was incredible value in
being part of the E.U.
It`s disappointed me as a European to see how uncoordinated the activity has been, how every country has gone about this crisis pretty much on the
roll. That has been frustrating and disappointing, and I hope we see that addressed very quickly because, you know, if you look at Europe, the great
successes of Europe are the European projects, if you want to call it that has centered around freedom of movements, has centered around the ability
for Europeans to go anywhere and work anywhere, and to do it in a cheap and reasonable fashion and that has been put up huge risk at what we`ve seen.
So, you know, we always get into politics. I`m really disappointed with politics in in Europe at the moment and it needs to be addressed.
QUEST: There is an argument that will say, well, the airline industry got through last year. It`s had huge amounts of public support, rightly so. But
now the airline industry is fine. It`s okay. It will slowly but surely rebuild itself bit by bit, and we don`t need to worry.
WALSH: I think the industry will rebuild itself, but it will take time, and I think you would expect management teams and airlines to be more cautious
as they start to rebuild.
I don`t see networks coming back to where they were because, you know, every airline has a long tail of new destinations that they`re serving that
will take time to build out profitability in an environment where your cash is king as it always is, but more so than ever where balance sheets have
Airlines will be cautious about reintroducing flights, and there are certain parts of networks that I think, you know, won`t come back for some
So, you know, the industry will repair itself. It`s been incredibly resilient. It`s demonstrated that, but it`s got a lot of work to do.
QUEST: You`re sounding measured at the moment.
WALSH: I have to get used to being more diplomatic in this role than I used to be. So talk to me again in a couple of weeks.
QUEST: That`s what I was going to ask you. At what point are you going to have to raise the temperature in terms of the bully pulpit that you now
WALSH: Well, I am raising it already, you know, as you would expect, so I think, I.A.T.A has done a great job, but I think we do have to become more
forceful. I think people need to hear what`s going on.
I think there needs to be a strong voice asking questions and demanding answers. You know, and as I said, I don`t have any issue with sensible
restrictions being put in place. But I am going to challenge if those restrictions continue to be in place when the reason the restrictions that
have been put in place have now been addressed and largely removed.
QUEST: Willie Walsh talking to me a moment, I talked to him earlier.
Next, we head to Germany where a new law allows the government to enforce local lockdowns to curb COVID-19. A German business leader about the law`s
economic ramifications, in a moment.
QUEST: Markets are taking a dive on reports that the U.S. President is planning on raising taxes on wealthy Americans. The Dow is off more than
300 points at the moment.
President Biden reportedly have got plans to nearly double the tax on capital gains, nearly 40 percent for those earning more than a million
dollars. He plans to spend that money on childcare, education and paid leave for workers.
Paul La Monica is joining me now.
Paul, I am surprised. We knew this was coming. What is it in the sort of the White House leak? The White House information? What is it in the
proposal that`s got people concerned?
PAUL LA MONICA, CNN DIGITAL CORRESPONDENT: I think clearly, Richard, that we have still a gradual recovery from COVID-19 for the economy, the market
has word back to life. And some investors must be nervous that if the capital gains tax word arise this sharply it might reduce the incentive for
buying and selling stocks, which would be bad for the markets. But I think there are a couple of things to unpack here, Richard.
One, this is a proposal that is just basically a leak at this point. It`s not been confirmed yet by CNN, there`s a Bloomberg report primarily that`s
moving the market. You have to think this is a bit of a trial balloon that the President realizes he`s going to have a tough negotiation, not just
with Republicans, but some of the more conservative members of the Democratic Party. And by that I`m talking primarily about Joe Manchin who`s
already talked about, you know, not being in favor of the big spike in the corporate tax rate.
So, I struggle to see how this goes through easily and would be something that should sync the markets. I think there might be a bit of an
QUEST: Right. I mean, the tax plan, we know higher taxes are coming in some shape or form. But the devils in the detail, for instance, on the state and
local taxes, were high tax states like New York and Massachusetts are going to fight for credit cards. But I wonder -- I guess how far the final will
look from the original?
LA MONICA: Yes. I agree. I think that if we have learned anything from the early days of the Biden administration, President Biden is a career
politician. He has been in Washington for an eternity, for decades. He knows about the art of negotiation and how to get things done by working
with the other party, as well as members of his own party like Joe Manchin, who may not agree with this.
I think in some respects, President Biden may be throwing a bone to the progressive wing of the party, Elizabeth Warren, Bernie Sanders, who
incidentally, recently wrote a CNN business op ed where he talked about potentially raising the estate tax, instituting a financial tax on
transactions as well. So clearly, there`s a desire from the progressive wing of the party for higher taxes on the wealthy and corporations.
Biden recognizes that but he`s got to play ball with the Sanders and Warren`s of the Democratic Party, the Joe Manchins of the Democratic Party,
and then oh, yes, some Republicans who -- he doesn`t want to completely lose any support from that.
QUEST: We`ll follow carefully, and you`ll be there to help us understand. Paul La Monica, thank you. In Germany now, there have been protests over
new lockdown measures coming into effect in areas with high COVID numbers.
(BEGIN VIDEO CLIP)
QUEST: Pictures from Berlin there, hundreds of people have been demonstrating against the law and against the central government more power
to fight what is the third wave. Germany has now reported 30,000 new cases today. The total is well above three million as you can see from the chart.
New lockdowns are putting a return to work even further in the distance for German companies.
Christian Klein is with me, the CEO of the software giant SAP. It`s one of Germany`s largest companies, over 100,000 employees worldwide. He joins me
from Walldorf in Germany. Obviously, you`re a global company, but let`s just focus if we may, just for the first second or two on the situation in
Germany and what seems to be deteriorating new cases at a time when obviously vaccines are coming along. How is it affecting you?
CHRISTIAN KLEIN, CHIEF EXECUTIVE OFFICER, SAP: Yes. Thanks, first of all, Richard, for having me. And look indeed, you know, compared to the U.S.
Europe in general is way behind the U.S. when it comes to the supply of vaccine. But despite all the difficulties, I also see it from the positive
side because there is more supply coming. We have BioNTech, we have asked for AstraZeneca and also where we shortly there`s also new supply coming
And also, today I saw a report that actually by end of May end of -- mid of June, everyone in Germany actually also has the chance to get vaccinated.
So, there`s, you know, light at the end of the tunnel. So, I`m also pretty sure I`m really confident that you know in -- by half year too, we actually
can also come back to almost business as usual.
QUEST: What does business as usual look like in terms of for example, returning people to the office? One of the things I noticed, and it goes to
your strategy of boosting SAP`s cloud business. I say, of course, you`ve got to -- the cloud business is up over 70 percent, double digit growth of
11 percent. This increase in cloud suggests big bricks and mortar and boxes in offices, computers in offices, thing of the past.
KLEIN: Yes. Which are indeed. And we are very well aware that also after the pandemic, at the workplace of the future will look different than
before the pandemic. A lot of people will stay also remote at home working from home. And our software needs to cater for that. And also, we need to
also offer new collaboration, color opportunities for the end users of our software. We of course, have to drive automation across all enterprises.
We just talked about COVID. Now, we are actually also offering our software to Pfizer, to Moderna, and actually they are also we need to hold up the
supply chains of these companies in times like that. So new intelligence software also fostering collaboration is key, also after the pandemic.
QUEST: So that`s in terms of the business side of it, but you`re also running the giant company yourself with 100,000 employees of your own. What
policy and I know it`s not going to be one size fits all. But what`s the principle you`re going to adopt for those who want to continue working from
home for the foreseeable future, possibly forever?
KLEIN: Yes. So, I actually also saw some of the announcements of our partners and competitors. And they are now saying, OK, they completely worn
also be flexible when it comes to the future of work so that every employee can decide, do I work from the office or from home. Actually, in all
fairness, I have to say at SAP, we had this flexibility all the time, especially in the U.S., our employees are not always living close to the
So, we provided this flexibility. And we leave it up to the employee to decide, you know, do I bet on our work from the office, for example, an
engineer when you code software. Sometimes it`s good to be together but also in other parts of the company, we completely leave it up to the
employee to decide and gift this employee is also disempowerment to decide on their own.
QUEST: I want to talk finally, climate change (INAUDIBLE) in the summit. Every company and every CEO that I`ve spoken to tells me about their
targets that they`ve met, and they`re this and they`re that, and Trump, it`s a great long length. But that still ignores the fact that the latest
survey shows that a quarter of companies have failed to meet the target. And globally, we are going to fail to meet the 1.5-degree target of Paris.
So, I know we`re not patting ourselves on the back. But do you think that CEOs need to get real?
KLEIN: Yes. And you are touching a topic which is really close to my heart, because last year, at -- in Davos at the World Economic Forum, the climate
change was all over. And the pandemic came and actually it moved a little bit backwards. But to all CEOs I`m talking to, it`s actually at the top of
their priority list. But many companies still today`s talk about to really measure the carbon footprint because you can only act in a when you have to
And this is where actually SAP comes in with our Climate 21 initiative. I mean, think about it. With our software, we show our customers, how
productive they are across the value chain. And now we got to implement a new currency with the carbon footprint in our systems to really provide
this transparency to our customers. So, we have our own climate goals. But we really want to enable all enterprise to measure carbon footprint and
also act on it decisively.
QUEST: Good to see you, sir. Thank you very much for joining us. We will talk more about this. It`s a subject close to our heart in the future. The
CEO of SAP joining me from there. Now, I want to show you the markets because if you just look at the way the day has gone,
what happened? What happened, you may well ask that took the market down so sharply and heavily. The report from the White House that`s going to
propose a tax hike for wealthy Americans specifically for the capital gains tax.
If you look at the triple stack, you`ll see that across the board the market is down with -- and it`s pretty evenly down across the board which
shows that it`s not a rotation. It`s not anything individual to tech or big tech or big chips or anything like that. This is because of the market
worrying about the tax plans. Is it an overreaction? We`ll get it just on that in the days ahead. That`s the QUEST MEANS BUSINESS (INAUDIBLE) I`ll be
back at the top of the hour.
QUEST: And we`ll will make a dash for that closing bell. It`s going to be ugly when it does happen. But next, for you connecting Africa. Let`s see
ELENI GIOKOS, CNN CORRESPONDENT: Welcome to Connecting Africa. I`m Eleni Giokos. Telecommunications infrastructure like this has kept us connected
over the past year even during lock downs and the inability to travel. It`s technology that has kept business and economies moving, accelerating
Africa`s digital transformation.
First, this month, we introduce you to the connectors. African giants bringing the continent together. Ralph Mupita is the CEO of Africa`s
largest mobile network. And he`s gearing up for growth.
RALPH MUPITA, PRESIDENT AND CEO, MTN GROUP: Hi. I`m Ralph Mupita. Group President and Chief Executive Officer for MTN group. I`m Connecting Africa
through advancing digital and financial inclusion.
We`re seeing the demand it`s surging, it`s not abating last year alone 110 percent increase in data traffic, that`s significant. Basically, doubling
the data traffic every year. If you think about that there`s a significant amount of investment data centers, fiber, ensuring that you`ve got enough
coverage to enable people in rural areas to be able to also access the internet.
GIOKOS: It`s the telco industry enabling those businesses.
MUPITA: Were very squarely plugged in. We`re going to spend approximately $10 billion worth of capex over the next five years to ensure that Africa
has the infrastructure to power its growth.
GIOKOS: Do you see yourselves and the definition of what a telco is? A communications company is starting to evolve in the next few years and what
would that mean for you?
MUPITA: That`s exactly what we`ve painted out in ambition 2025 we will be based simply saying that we`re going to have the strongest connectivity
business across Africa with 85,000 kilometers of fiber across the African continent.
MUPITA: You know that kind of coverage is going to increase. But on top of that connectivity, or five platforms that will accelerate growth, financial
services is going to be a big part of that. Digital Services, gaming music, video. And then we have what we call the Africa API marketplace, we bring
small businesses together, expose them to a platform and allow them to exchange data, and through that exchange of data, ultimately monetize and
create, you know, sustainable businesses.
GIOKOS: So, when I talk about the continental free trade area, and we say intra Africa, trade needs to increase from the current 15 percent that
we`re at right now. Can it truly be done without a strong telco sector and without executives like you thinking big?
MUPITA: I would argue that it`s not possible that we get to the, you know, the kind of growth that is anticipated under the agreement. Without the
telecommunication sector, there is a massive fiber build and data build required over the next three to five years across the African continent.
And with unified regulations, you`ll be able to move from country X to Y, with your investment secure, that, you know this investment will yield the
So, the Free Trade Agreement, I think is super important. And the telecommunications sector can play a massive role there.
GIOKOS: I`m thinking border posts, I`m thinking transactions that are going to be increasing as we start to see more trade occurring. You need big data
MUPITA: Particularly when we move into the 5G era. 5G is coming to Africa. We`re not going to get left behind. And as you start thinking about, you
know, future technologies, and how they can drive African growth, you know, we will be right there as MTN for sure. And looking at how these
technologies can be harnessed to drive socio economic progress in the various countries that we operate.
GIOKOS: Here at Vodacom, Africa`s largest telco by market cap, executives are thinking big after a 40 percent jump in mobile traffic during the
pandemic and launching South Africa`s very first 5G mobile network, now CEO Shameel Joosub wants to create a leading pan-African tech company.
SHAMEEL JOOSUB, CHIEF EXECUTIVE OFFICER, VODACOM: My name is Shameel Joosub. I`m the group CEO of Vodacom. And we are on a mission to connect
the next 100 million people in Africa.
GIOKOS: What do businesses around Africa tell you that they need, and they want in this kind of pandemic world?
JOOSUB: I think first and foremost, they need connectivity. And they need connectivity in all parts of the country. But they also need access to
distribution, they need to be able to distribute their products. And that`s why we, introducing the Alipay app into Africa where people can effectively
sell their products to a global audience.
GIOKOS: So, from a telco company to a tech company, what does Vodacom need to do to evolve into a pan-African tech player?
JOOSUB: It`s a couple of evolutions actually. You know, on the telco side, it`s about 5G and really being able to provide and taking connectivity to
everyone. And in every country being able to make it possible for everybody to have access to data. But also moving beyond the connectivity layer,
moving into new services like IoT.
GIOKOS: The Internet of Things or IoT solutions enables businesses to become a lot more efficient. Now, these radio frequency identification
antennas are monitoring stock in this building in real time, it`s speaking to the labels on the products and to the point of sales. It also doubles up
as a security system. Other antennas are currently monitoring climate control, depending on how many people have walked into this building.
In 2019, Vodacom acquired a 51 percent share in South Africa based IoT.nxt to help digitize key industries, like mining with the design of underground
trackless mobile machines.
JOOSUB: There`s a lot of things that can actually be done with IoT and where it`s already being deployed. It can be used in farming, where you can
predict the outcome of a crop as an example. And so, the coupling of 5G with essentially the IoT capability makes it more possible to do real time
solutions and use things like autonomous vehicles and so on.
GIOKOS: So, tell me about how we you link businesses together.
JOOSUB: With the Alipay voter pay platform as we call it. It`s creating the opportunity for you to trade way beyond your geographical area. So you can
firstly, you know, before if you had a physical store, you were limited to a certain geography. What this does is it opens it up firstly within that
broader country, but also to -- that there`s no reason why a -- someone sitting in Nigeria cannot supply someone in Kenya.
JOOSUB: And moving into this free trading environment just allows companies to trade across multiple geographies. And I think that becomes really
GIOKOS: hearing the telco executives all saying the same, you know, they want to be the biggest, they want to be the most significant on the
continent. Are you feeling things are heating up right now?
JOOSUB: Yes, but I think there`s space for everyone. And if we work together, we can connect not just people, but we can connect schools and we
can drive a different form of education and we can truly transform the continent.
GIOKOS: Coming up the race to become Africa`s leading mobile money platform.
GIOKOS: East Africa is home to one of the world`s leading mobile money platforms M-Pesa. It was pioneered by East Africa`s largest telco Safaricom
and now co owned by Vodacom. CEO Peter Ndegwa believes that M-Pesa has the potential to become Africa`s leading mobile money platform, facilitating
cross border trade.
Long before mobile money apps were big in the U.S., Europe and Asia, M-Pesa was leading the charge here in Kenya.
PETER NDEGWA, CHIEF EXECUTIVE OFFICER, SAFARICOM: Safaricom is famous globally for M-Pesa which is the most successful mobile money platform in
the world. We transact $4 billion U.S. a month through M-Pesa. It contributes more than 50 percent of GDP of Kenya in terms of transaction
GIOKOS: Created in 2007, M-Pesa is simple. Money is sent back and forth like a text message. And you don`t even need a bank account. Safaricom has
big ambitions for the platform.
NDEGWA: Our intention is that M-Pesa will be the mobile money leader in Africa. Absolutely no question. And we believe that we can go directly and
partner with the telecommunication companies across the region or laterally do it ourselves where we have telecommunication infrastructure.
GIOKOS: This has placed Safaricom at the heart of Kenya`s economy. M-Pesa is now live in seven countries. 41.5 million active customers carried out
over 12 billion transactions in 2019. And with the African Continental Free Trade Area coming into play, Safaricom sees even more opportunity for M-
Pesa to help connect businesses across borders.
NDEGWA: We have started to sign contracts with the companies such as visa to create operability and also to enable trade but also visiting --
visitors can have less friction. We also need to make sure that we reduce the cost -- the cross-border cost of interactive both in enabling digital
infrastructure to talk to each other between banks and telecommunication companies but also between wallets of telecommunication companies. There`s
still a lot of work to do.
GIOKOS: East Africa breweries have expanded their relationship beyond M- Pesa. And are branching out to Internet of Things solutions.
JANE KARUKU, MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, EAST AFRICAN BREWERIES LIMITED: We`ve invested in the business with a tech platform from
orders to cash. So, a salesperson has a handheld device whenever they go to an outlet and it is with this outlet that you take in a lot of data. For
example, the sales he needs to do for the day, the temperature of the fridge and the merchandising and a lot of other things that are required
for when a salesperson is selling effectively.
KARUKU: And it`s really good for us because it`s just making us be more tech enabled in terms of the way we do business and stay more connected
with our customers. Since we started doing this thing, we have seen a five percent uplift in sales in outlet and we are quite happy with this.
QUEST: Hello, I`m Richard Quest. It`s all a dash to the closing bell. And we`re just minutes away from the end of trading. And the story of the day,
the markets dropped on reports, the White House is going to propose a tax hike for wealthy Americans. It`s an increase in the capital gains tax. If
you look at the numbers, you can see absolutely clearly where that leak came of what`s likely to be the tax proposal.
And the triple stack shows that all three markets are sharply lower by roughly the same amount which shows its broad based and deep. The new head
of IATA says he`s disappointed and frustrated with European politicians. Willie Walsh says there`s a lack of coordination over lifting travel
restrictions in the EU. In an exclusive interview Walsh tell me, freedom of movement itself in Europe was at risk.
(BEGIN VIDEO CLIP)
WILLIA WALSH, DIRECTOR GENERAL, IATA: You know, if you look, the great successes of Europe or the European project if you want to call it that, as
centered around freedom of movements, has centered around the ability for your parents to go anywhere and work anywhere and to do it in a cheap,
unreasonable fashion. And that has been put out huge by what we`ve seen. So you know, politics, I am really disappointed with politics in Europe at the
most and it needs to be addressed.
(END VIDEO CLIP)
QUEST: As trading comes through then European stocks are all higher. The CAC quarante was up almost one percent after France announced a slow easing
of COVID restrictions, DAX up and that`s despite tough regulations and you`re locked down in parts of Germany. The CEO of SAP says light at the
end of the tunnel in the second half of this year. A reminder again, the Dow, the NASDAQ and the S&P 500, Dow sharply lower on the use of worries
over U.S. taxation increases.
And that`s your dash to the bell. I`m Richard Quest. Whatever you`re up to in the hours ahead, I hope it`s profitable. The closing bell is ringing. On
the other side, "THE LEAD" with Jake Tapper.