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Burning Issue: Can Tech Innovators Save South Africa’s ‘Fire Capital’?

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When she woke up to her neighbors’ shouts outside, Lundy’s three-year-old toddler was already choking with the smoke that had seeped into their shack in Imizamo Yethu settlement on the outskirts of Cape Town, South Africa.

“I just took my baby and ran away,” said Lundy, who declined to give her full name, recalling the 2017 fire – one of the worst to hit the seaside city, dubbed South Africa’s “fire capital” – which left her and about 15,000 others homeless.

After taking her child to hospital to treat him for smoke inhalation, Lundy went home to find everything had burned down.

Devastating fires occur with alarming frequency in South Africa’s tightly-packed slums where shacks are built next to unpaved paths too narrow enough for a car, never mind a fire engine, to pass through.

More than 5,000 fires break out in South Africa’s informal settlements each year, according to official data, often caused by people using open flames for cooking, lighting and heat, or by faulty electrical appliances.

Lumkani, a team of South African entrepreneurs, has developed two innovations to save both lives and homes: an alarm to alert residents to danger and insurance to help those who lose their property to get back on their feet.

The value of losses to fires in informal settlements is increasing every year, reaching almost 180 million rand ($13 million) in 2017, according to the Fire Protection Association of Southern Africa.

“The real solution to shack fires is end of shacks,” said Francois Petousis, one of four-year-old Lumkani’s co-founders.

“But ultimately you need these interim solutions,” he added, as fires trap people in “extreme cycles of poverty”.

He described how a colleague was fired from his previous job in a fast-food restaurant for being absent for five days after his home burned down. It took him 18 months to get another job.

“That cycle (of poverty) needs to be broken … Life is unbearable enough in informal settlements as it is,” he said.

TERRIFYING

Unlike ordinary fire detectors, Lumkani’s alarm – a small blue box attached to the ceiling which uses one battery in about 10 years – rings not only in the burning shack, but also in neighboring homes within a 60-metre radius.

It detects a rapid rise in temperature instead of smoke or particles in the air, and also alerts the local fire department, while neighbors receive an automatic SMS warning them of the fire’s location.

“Even if you’re at work, you can know there’s a fire in your community,” said Petousis, which gives users the chance to run home or alert friends to come and help.

Communities are often key to fire prevention, he said, describing how neighbors destroyed their own homes in Imizamo Yethu in another 2017 fire to create a fire break, which meant only 10 out of 220 shacks burned down.

“The communities are the first responders and they work really well,” he said, while acknowledging that having to demolish your own home to stop others losing theirs remains “a pretty terrifying reality”. 

About 24,000 South Africans have installed the alarm since its launch four years ago, mostly in densely-populated settlements in Johannesburg and Cape Town where fires often spread quickly and gut entire neighborhoods.

Several thousand homes in Bangladesh’s capital, Dhaka, also have the alarms, through a partnership with a local charity.

Lumkani hires agents from the communities who install free alarms in homes, which are either paid for by charities or given to them for free after buying Lumkani’s insurance.

The insurance scheme, costing about $4 a month, targets informal settlement residents and has been bought by about 1,000 people so far.

David, a local hairdresser with a steady stream of clients, decided to pay 60 rand a month for the insurance after he lost his whole salon and equipment in the massive 2017 fire.

“I don’t want to lose everything again,” he said, explaining that he was only able to recover with help from friends and family.

But 60 rand a month is too much for many people in Imizamo Yethu – like Paula, who lives in a cramped two-room shack with a gas stove perched on her living room floor and makes ends meet by selling roasted chicken feet to locals.

“I can’t find a better job, there’s no work here,” she said. “So everything I earn I spend on food and other essentials.”

But alternatives to deter fires also cost money – from decorating homes in intumescent paint, which swells up when heated protecting the material underneath, to safer stoves.

For Richard Pithouse of the University of the Witwatersrand, who has written extensively on urban poverty, such innovations fail to address the root causes of the problem – lack of investment in decent housing.

“The primary issue is that people are living in shacks … When people are using gas to cook or candles for light in a tiny cramped space, made of highly flammable material, fires are obviously going to happen,” he said.

“The single biggest thing you can do to make a real intervention quickly is to electrify these places. Electricity is vastly safer and that’s a question of political will – and that political will has largely been absent.”

After the devastation of 2017 and near loss of her son, Lundy works 12 to 14 hours a day at a cafe selling deep fried doughnuts and other snacks, earning around 1,200 rand a month.

She is thinking about buying the insurance.

“I’m worried about another fire. But what can I do?” she said, pointing to nearby shacks which were still scorched black with soot. “I don’t have another place to stay.”

-Inna Lazareva

Current Affairs

As Wealthy Depart For Second Homes, Class Tensions Come To Surface In Coronavirus Crisis

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Topline: As New York City’s coronavirus cases exploded in recent weeks, residents fleeing to second homes have come under intense scrutiny and push-back, prompting officials in multiple states to create highway checkpoints screening for New Yorkers and a national travel advisory for the entire Tri-state area, highlighting the dramatic roles class and wealth will play in the pandemic. 

  • With over 56,000 coronavirus cases in New York, privileged New Yorkers with secondary homes are fleeing the City with massive effect on vacation home communities: the population of Southampton has gone from 60,000 a few weeks ago to 100,000 and rental prices in Hudson Valley rocketed from $4,000 to $18,000 per month—posing a threat to small-town hospitals that are ill-equipped to handle caring for high numbers of coronavirus patients.
  • In wealthy New England island communities like Nantucket, Martha’s Vineyard and Block Island that are heavy with secondary homes and short on hospital infrastructure, officials are going so far as to cancel all hotel, Airbnb and VRBO reservations while stationing state troopers and the National Guard to maintain flow on islands and, in the case of Rhode Island, instating 14 day mandatory quarantine on all people traveling to stay in the state from New York, New Jersey or Connecticut.
  • As outrage has grown at the privileged fleeing the city while middle and working classes remain confined in New York City apartments, there’s been social media clapback at ostentatious displays of wealth in isolation: Geffen Records and Dreamworks Billionaire David Geffen ultimately deleted his Instagram of his $570 million megayacht captioned: “Sunset last night..isolated in the Grenadines avoiding the virus. I’m hoping everybody is staying safe” after it sparked outrage on social media.
  • New York City’s poorer boroughs are hit hardest by coronavirus: Brooklyn and Queens, where median income is  $56,015 and $64,987, respectively, remain the epicenter of COVID-19, compared to Manhattan with average income of $82,459, which has been less permeated by the virus and is home to many of Manhattan’s wealthiest enclaves—and those most likely to have residents with second homes elsewhere.
  • On Saturday, President Trump said he was considering quarantining parts of New York, New Jersey and Connecticut, then, backed down and issued a domestic travel advisory for the tristate area that discourages residents of these states from non-essential domestic travel after “very intensive discussions” at the White House on Saturday night, said Dr. Anthony Fauci on CNN today: “The better way to do this would be an advisory as opposed to a very strict quarantine, and the President agreed.”
  • “Due to our very limited health care infrastructure, please do not visit us now,” reads a travel advisory from Lake Superior’s Cook County in Michigan, exemplifying vacation towns’ plea to travelers and second home owners across the country to stay away. 

Background: Coronavirus cases in the United States have skyrocketed to 124,000, with deaths doubling from 1,000 to 2,046 in two days. Since those with COVID-19 can be asymptomatic for days, their presence in remote communities may be deadly, as they can spread the virus and wreak havoc on rural hospitals. The clash between wealthy and poor, also creates state-versus-state hostility, as federal support is limited and essential to states overcoming coronavirus.

Alexandra Sternlicht, Forbes Staff, Under 30

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Moody’s Downgrades South Africa To Junk

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Credit ratings agency Moody’s has downgraded South Africa to junk status on day 2 of the country’s nationwide lockdown.

President Cyril Ramaphosa’s economic reform plans have been slowed by the coronavirus pandemic. The downgrade adds salt to injury for South Africa as it currently struggles with a recession it slipped into in early March.

“The unprecedented deterioration in the global economic outlook caused by the rapid spread of the coronavirus outbreak will further exacerbate South Africa’s challenges” said Moody’s.

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What You Need To Know About AfDB’s $3 billion “Fight COVID-19” Social Bond

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Landmark transaction, largest Social bond transaction to date in capital markets

Abidjan, Côte d’Ivoire, 27 March 2020 – The African Development Bank (AAA) has raised an exceptional $3 billion in a three-year bond to help alleviate the economic and social impact the Covid-19 pandemic will have on livelihoods and Africa’s economies.  

The Fight Covid-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries, and asset managers including Socially Responsible Investors, with bids exceeding $4.6 billion. This is the largest Social Bond ever launched in international capital markets to date, and the largest US Dollar benchmark ever issued by the Bank. It will pay an interest rate of 0.75%.

The African Development Bank Group is moving to provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.

“These are critical times for Africa as it addresses the challenges resulting from the Coronavirus. The African Development Bank is taking bold measures to support African countries. This $3 billion Covid-19 bond issuance is the first part of our comprehensive response that will soon be announced. This is indeed the largest social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries,” said Dr. Akinwumi Adesina, President of the African Development Bank Group.

The order book for this record-breaking bond highlights the scale of investor support, which the African Development Bank enjoys, said the arrangers.

“As the Covid-19 outbreak is dangerously threatening Africa, the African Development Bank lives up to its huge responsibilities and deploys funds to assist and prepare the African population, through the financing of access to health and to all other essential goods, services and infrastructure,” said Tanguy Claquin, Head of Sustainable Banking, Crédit Agricole CIB.

Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected nearly 3,000 people across 45 countries, placing strain on already fragile health systems. 

It is estimated that the continent will require many billions of dollars to cushion the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in desperate efforts to contain it. Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel, and driving many economies toward recession. 

Commenting on the landmark transaction, George Sager, Executive Director, SSA Syndicate, Goldman Sachs said: “In a time of unprecedented market volatility, the African Development Bank has been able to brave the capital markets in order to secure invaluable funding to help the efforts of the African

continent’s fight against Covid-19. Not only that, but in the process, delivering their largest ever USD benchmark. A truly remarkable outcome both in terms of its purpose but also in terms of a USD financing”.

The Bank established its Social Bond framework in 2017 and raised the equivalent of  $2 billion through issuances denominated in Euro and Norwegian krone. In 2018 the Bank was designated by financial markets, ‘Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards.

“We are thankful for the exceptional level of interest the Fight Covid-19 Social Bond has raised across the world, as the African Development Bank moves towards lessening the social and economic impact of the pandemic on a continent already severely constrained. Our Social bond program enables us to highlight our strong development mandate to the investor community, allowing them to play a part in improving the lives of the people of Africa. This was an exceptional outcome for an exceptional cause,” said Hassatou Diop N’Sele, Treasurer, African Development Bank.

Fight Covid-19 was allocated to central banks and official institutions (53%), bank treasuries (27%) and asset managers (20%). Final bond distribution statistics were as follows: Europe (37%), Americas (36%), Asia (17%) Africa (8%,) and Middle-East (1%).

Press Release by the African Development Bank

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