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.com. Hello and welcome to World Business Report from the BBC World Service.
I am Busy Adebayo and on this edition...
We're in Washington, where President Trump wants Federal Reserve Governor Lisa Cook removed after fraud allegations tied to her head. housing records was just pushing back saying she wouldn't step down.
Also, Generation Z born in the late 90s through the 2010s are moving from TikTok to trading apps. as retail investing takes off.
And on our Africa series today, we shine a spotlight on South Africa's fast-growing film industry and its global ambitions.
Well, let's begin, by the way, with US President Donald Trump's call for Federal Reserve Governor Lisa Cook to be removed following fraud allegations tied to her housing records.
Cook, who voted with Fed Chair Jerome Powell to keep interest rates on hold after July meeting, has rejected the accusations and says she will not step down.
Our correspondent Erin Delmore joins us now from New York.
Erin, tell us. What more do we know about the allegations against Lisa Cook and the basis for the president's call to remove her?
Hey there. Well, a lot of focus today here in the US is on how unusual territory We are in at this moment.
Normally, what we would see is an indictment.
And that would have all the facts around what someone is being charged with with the information that leads to that charge.
This is surrounding allegations of mortgage fraud, but in this instance...
Lisa Cook has not been indicted. And so the president is alleging. that mortgage fraud has taken place and going so far as to say on his social media account that he is firing her.
But we don't have the information that shows where this allegation comes from, or whether it is true and verifiable.
That is the kind of thing that would normally be adjudicated by a court of law.
So we are in a bit of murky territory here at this moment.
Certainly, the president has made plain that he wants her out. now she has the option of going to a court having a court issue an injunction And that would allow her to stay in place in her role while this is being adjudicated while these allegations are being adjudicated by a court. and has indicated that that could be a pathway forward for her. saying that she'll stand pat and saying that the allegations aren't true.
And so... That's the moment that we find ourselves in here, but remember there are seven seats on the Federal Reserve Board of Governors.
And if she were to not be in place and President Trump appointed someone else...
He would have then put in place four out of seven members.
And that would then be, of course, a majority of seven.
The president really wants to see interest rates cut.
He's been playing about it. He's been clear that he wants to see Fed Chair Jerome Powell out of his job.
He's been clear about that also, although we've seen market reaction that the market doesn't necessarily want to see that gets a bit shaky when Trump suggests it.
But now we're on a new frontier. Now, let's talk about, you know, her role as a governor.
I'm talking about Miss Cook now. Can you actually explain where her role sits at the U.S.
Central Bank, the Federal Reserve? Sure, sure.
So there is a committee and that committee votes on whether to raise or lower interest rates or keep them steady.
Now Jerome Powell is its chair, but there are other committee members.
And what's really interesting is that we do get a glimpse into what those members are thinking.
You know, the big headline every time the Fed meets is whether or not they're going to change interest rates.
There are policy speeches by Powell himself, but we get something called a dot plot.
And that shows us whether members voted to raise or lower interest rates.
And actually at the most recent meeting, two members did vote to lower interest rates.
And just to be super clear with our audience, what that means is...
It makes the cost of borrowing money cheaper.
When interest rates are lower, it becomes cheaper and easier to borrow money.
And so you do tend to see businesses spend more and individuals spend more.
And and that's the kind of thing that certainly presidents like to see because it takes a. a bit of pressure economically off of their constituents and tends to be a popular move.
And anybody who's taken out a loan on a house or a car has really felt the impact of even just a quarter point of interest rate cuts.
To be clear here, the overwhelming majority of people think the Fed will cut interest rates in September.
That was the expectation before any move was made to fire Lisa Cook. we are in the upward 80 percentile in the betting markets of whether people think that we will see that.
So it's nearly a sure thing at this point.
And that makes the president's timing a bit interesting also.
And from the conversations you've had, I believe, what are they saying about... how unusual it is for a certain president to try to dismiss a Federal Reserve governor.
So I put that to somebody in our morning show here, just in a different arm of the BBC.
And that financial advisor couldn't overstate how unusual this moment that we find ourselves in.
And President Trump has shown this to be his tactic in realms outside of the business world.
Certainly when we talk about deportations in the United States, he has shown. that his administration wants to act on allegations and not proceed through a court of law. to come to a final conclusion on somebody's innocence or guilt and then proceed with deportations. it seems here that the allegation for him is enough to to move forward in taking moves to fire Lisa Cook.
And that in itself is unprecedented. Normally an allegation like that would go before a judge or a jury.
And then we would see the results of it.
So this is really something that President Trump did make clear on the campaign trail. and something that is popular in certain sections of his base to really be to be very strong handed in these kind of moves here.
But it is. very different tact. We have never seen this before.
I can't overstate how unusual this is. Many thanks, Erin Delmore, our correspondent from New York there.
Well, Stephen Moore is the author of the book Trumponomics and a former economic advisor to Mr. Trump. during his administration.
Sevenmore told the BBC on Tuesday that He was inclined to think the president should have the right to fire members of the Fed, but he expected challenges to this.
It may go up all the way to an unresolved issue whether the President of the United States has the authority to to fire the Federal Reserve chairman and or other members of the Federal Reserve Board.
I believe that the president should be able to have the this power because the the fed has to be accountable to someone and if the president can't fire a Federal Reserve officer, then who can't?
And so I think, but the courts will decide this.
Now, in this particular case. This woman, Ms.
Cook, is alleged. to have committed mortgage fraud.
There is strong evidence that she has done that.
But she's not convicted yet. So we do have a presumption of innocence in this country.
Let's bring in Kenneth Rogoff, who is a professor of economics at Harvard University and former International Monetary Fund chief economist. economist.
Many thanks for joining us on World Business Report.
What's your view on this move by President Trump to fire a certain Fed governor?
Well, I think it's a mistake on his own behalf You heard from your correspondent that people like interest rates to go down.
That's true. But if the markets become convinced that the Fed's going to become soft on inflation, they're going to cut interest rates too much.
Long-term interest rates, car loans, mortgage rates, students' rates, they're going to go up because lenders have to be covered for inflation.
So I don't think it's a good move. And I think I couldn't disagree more with your previous speaker on the issue of whether the Fed should have the right to fire members of the Federal Reserve Board.
I think Federal Reserve independence has served us well.
And unlike Supreme Court judges, they don't have infinite terms.
That said, the allegation, and it is only an allegation, is very awkward.
This isn't, you know, unrelated to her role at the Fed where they're one of the most important regulators of mortgages in the financial system.
Nor do I take the issue that it's purely, you know, legalism.
Was there fraud? I'm sure when she was considered for the position, she had to testify to not having any conflicts that would create a problem.
And I don't know if she pointed this out, but she should have.
And if she didn't, that's very problematic.
And finally, of course, what's really ugly about this is selective persecution.
I mean, there's virtually not a living person, which if the government turns its full force and intelligence against you.
They can't find something. So it's very, very awkward.
And so are you saying that these allegations actually rub off on the Fed's credibility?
Oh, they are allegations. Lisa Cook, needs to address them.
She should get a hearing. I don't know what the right format is.
But if true, of course it rubs off on the Fed's credibility.
It is a regulator. And when ordinary people are applying for mortgages, And they say that they have two primary residences in order to get a favorable interest rate on the second one, that's deeply problematic.
It makes the system not work. So there's a real problem, but on the other hand, it's just very ugly to see selective prosecution.
Kenneth, we've talked a lot on World Business Report about pressure from the Trump White House on America's central bank.
Before President Trump's attempt to fire Lisa Koch, we spoke to Claudia Sam, who was an accountant. at the Federal Reserve.
Take a listen to what she said about threats to the bank's independence.
This is a very dangerous path to go down in the US and all over the world when politicians take control over this. central bank, it leads to bad economic outcomes, typically higher inflation and financial instabilities.
This is not the first time this has happened in the history of the Fed, but if the Trump administration is successful and they're trying lots of strategies to But if they're successful, this is bad for the US economy and potentially the global economy.
So Kenneth, you agree with Claudia there.
Is it that serious a threat for the US and potentially the global economy?
Oh, absolutely. This is a threat to stability, financial stability, inflation stability. not just in the US, but over the whole world, because the dollar is the bulwark of international markets.
I think if Trump succeeds in doing this, he's going to take a big step towards towards having other countries move away from the dollar over the long run and diversify.
It's a big mistake on his part. I can say that about his tariff strategy.
I can say that about his attacks on institutions.
That said, as in many things Trump does, there's sort of a grain of truth you know in the background there that is awkward for the Fed and for people who take a knee jerk reaction to saying, Anything he does is wrong.
And for regular Americans, why would it matter if the Fed is in? independent or under any form of political control.
It's worked very well to keep down inflation, to have the Fed independent.
Trump is very crude about saying he wants much lower interest rates.
But believe me, every president behind closed doors says that.
And of course, Nixon back in the 70s was recording his comments behind closed doors.
He bullied the Federal Reserve into lowering interest rates and to pumping money into the system.
And the 1970s was an awful period, very high inflation, slow growth. and there's a fear of repetition.
The anchor, of the Federal Reserve's independence and what it's done for the global monetary system has really been phenomenal.
It should be understood that Both sides in the US, the Democrat progressives and the MAGA Republicans don't like Federal Reserve independence.
Trump is not the only one complaining about it, but I think they're both wrong.
And so do you think this would pressure the Fed really to lower interest rates?
It will have the opposite effect in the short run that any governor who is on the fence will vote against lowering interest rates.
And again, All the Fed controls are the very short-term overnight interest rates, When people think they're being too soft and cutting them too fast and creating too much demand pressure, they worry there'll be inflation and it pushes up the interest rates that ordinary people borrow at.
We've saw that today. We've seen that every time.
Trump has attacked the Fed. Many thanks, Kenneth Rogoff, Professor of Economics at Harvard University.
Right, let's bring in Fiona Sincolta, who is Senior Market Analyst for Citi Index. and she joins me now.
Fiona, let's start by talking about the political turmoil in in France, where the confidence felt looming for the prime minister and protests still bubbling, of course.
How are investors reacting? Could we see similar jitters spread to the UK or the US?
Well, so the markets are reacting. We're seeing that French stocks, so the CAC, that's the French index, is underperforming the broader markets, down around 1.5% today.
It's the second straight day of declines.
We're also seeing bond... yields rise. And this is basically, as you mentioned, on concerns that France's minority government could collapse in a vote of no confidence next month.
Now, that vote of no confidence is for the 8th of September.
There is a concern potentially that this may spread. it's the reason for the vote of no confidence is basically in response to sort of sweeping debt-cutting plan, which is not going down well across the political spectrum.
Will it spread? It doesn't look like this sort of thing would spread naturally. there is always obviously that potential of unrest moving across.
But I think this is looking to be a very much... a France-specific incident, which is why we're seeing the euro remain relatively In fact, it's rising today.
And we're just seeing the French CAC really being the notable indicator.
Decliner. Right. Another news we've been tracking is President Lee of South Korea, who's met with his US counterpart Donald Trump.
And we've seen Boeing and Korean Air sign in at 36%. billion deal for more than 100 planes as part of a package of trade agreements.
What kind of impact has that had on Boeing's share price?
Yeah, this is some really good news for Boeing.
We've seen the share price rally today.
It's up around 2.2%. So some very good news for a company which has obviously been in the headlines for all the wrong reasons. in recent years.
So yeah, as I said, we've seen a 2.2% increase in the share price today.
So good news. All right. Stay with us, Fiona.
We'll be back with you in just a moment.
World Business Report from the BBC World Service.
Let's head to... Southern Africa now, where Botswana's President Duma Boko has declared a public health emergency. assess the country's medical supply chain has collapsed, leaving... hospitals and clinics short of vital medicines.
The army has been called in to deliver emergency support. and the government has set aside more than $7-10 million in emergency funding.
Here's our Africa correspondent, Nomsa Maseko, speaking to the BBC's Judy McFarlane earlier.
It's quite serious because the president declared yesterday that there would be a public health emergency and this is linked to the high price of medicines and also a shrinking national budget, and also cuts in aid from the US.
And The shortage is across the board, you know, because...
This includes a range for a range of illnesses including hypertension, cancer, diabetes and TB, asthma, mental and sexual health, and also non-emergency surgeries have been postponed until further notice.
Namsa, what are the reasons for this? Why has Botswana found itself in this position?
Well, it's because of two reasons. Firstly, because Botswana makes up 80% of the sales, in fact. of diamonds in the country make up 80 percent of Botswana's foreign earnings but Sales have weakened in recent years.
And also another reason is the fact that the US cut aid.
And that has also led to shortages. In fact, some of the aid that was cut off from the U.S. has also forced and often as catering for children living with HIV to be shut down.
So this announcement was made earlier this month on the 4th. of August by the health minister.
And then yesterday, we saw the president spring into action about the kind of changes. that will be made to ensure that clinics and hospitals do have medicines as soon as possible.
Nomsa, what are the wider implications of this?
I mean, the Ministry of Health also says that it's temporarily suspended some referrals for surgeries.
Yeah, so the implications here are the fact that none emergency surgeries are going to be postponed.
But there is some form of reprieve because We saw earlier today and also yesterday that medication has been dispatched to various countries. health facilities, and that is being done by the military.
And lastly, Nomsa, before you go, what are people saying?
How are they reacting about this? Well, people are actually pleased that the fact that this was announced earlier this month.
And now the president has announced steps to, that will be taken to ensure that this problem is dealt with so people do have confidence in this government.
We continue our month-long Africa series on World Business Report today with a look at South Africa's fast-growing film industry.
I spoke to Zimbabwean filmmakers Tapisu and Joel Chikapapiri. a husband and wife team based in Cape Town and they started by giving us a picture. for industry today and how it connects with the global movie business South Africa has got a very vibrant film and television industry.
It's been quite... nurtured since the beginning of our democracy 30 years ago, well, 31 years this year. and that we've got a very competitive local to global market industry.
And we have what is also known as a very vibrant hyperlocal industry, and that's generally productions that are made to entertain our local market.
And actually, they tend to entertain our local market in South Africa and for the rest of the continent.
What actually makes South African film industry unique compared to other film hubs? in Africa like Nollywood for instance which is arguably one of the largest and perhaps the most popular coming from Africa.
Yeah, I think obviously South Africa is probably more integrated into the global film industry in the sense that we have a lot of official cooperation treaties with most of the European countries, France, Germany. the Netherlands, the UK, Canada as well, which allow us to produce international films that can come here using access to funds that are co-production funds.
We have the challenge notwithstanding, we have an incentive, a cash rebate, which gives up to sometimes between 45 and 50% for local movies. and circa 25 to 30% for international films that come and shoot here.
And that's been the mainstay. That's been the foundation that's built the industry to get us to this point.
Recently, our government has been in the process of signing further co-production treaties with our African counterparts.
So I think we've got one That's almost done with Nigeria now.
We've got an MOU with Ivory Coast. working on one with Kenya.
So that's exciting that it will enable us to work much closer with our African partners.
And what about the streaming platforms now, which we've seen change the way films are made and distributed worldwide?
How are you adapting to this shift? Well, I think we welcome the presence of the streamers.
Over the past three to five years, Netflix and Amazon came in with a big bang.
You know, we ourselves as a company, we had a... a long-term agreement with Amazon where we sold 20 films to them.
So I think we welcome them. If you look at what's happening specifically in film, it means those films go straight to the streamers.
So pre-COVID. South Africa had quite a viable theatrical business.
If you walk into a cinema, you'll be able to find If you look at five posters in a multiple cinema, one of them was always a South African film. post-COVID, you know, that's died completely and we are fortunate enough that in this year we've released Two films theoretically.
We have a film now called Hunting Jessica Brock that's actually in the cinemas now.
So we're trying to revive that to give the films a window so that they can still get seen theatrically before they get exploited in all the other windows.
And would you call the invent of this global streaming platforms an opportunity or a threat to local? storytelling I think it's an opportunity I mean it's an opportunity also for us specifically because you know, our business, the niche of our business is quite focused.
So we, in terms of our IP business and where we produce content, our focus is purely telling the African story.
And we see the African story as being told anywhere where there's African people.
And so we're not just limited to African continents.
So we're looking at making films in the UK, in Canada, in the Caribbean. uh in france just where we think at least is we can try and reach you know two million sort of you know uh african people African diaspora.
Diaspora people. And so that's really our target.
So we think it's an opportunity. Who do you see as the end customers here?
The African filmmakers who need a home base? or the international studios looking for cost-effective and high-quality production hubs.
Well, for me, the audience is actually, the customer is the people that I'm viewing.
So the studio is nice to have. We want to access those high budgets that are available funds that are available. but we need to make films for African audiences African diaspora audiences of which we know there's millions around the world. and what I also call friends of Africa, you know, people that are really interested in our continental stories.
And we saw with, say, for instance, the success of The Woman King, which we service here in South Africa, that there is a real hunger and wanting of African women authentic African content.
The industry of course has a lot of potential as we've seen but We're dealing with economic pressures.
We're dealing with power outages and all of that.
How are you producers navigating these challenges?
I think the biggest challenge that we're currently facing is linked to our government's inability to carry on implementing existing policy that enable an environment where we can create high-end productions and keep people in our industry employed and and create further employment, not just for people who work, craftsmen in our industry, but service providers that service our industry in terms of whatever needs we have, catering, cars, equipment, lighting, that kind of stuff.
So when our government fails, it then has a huge impact on the industry and actually almost At the moment, it kind of feels like the industry is on its knees because of the local government challenges.
And then, of course, there's the global international challenges that are also factors that affect us, for instance, A year ago, there was obviously the writers and actors strike in America that affected a lot of the servicing companies in South Africa.
Because it meant for the period that the strikes were happening, we were on hold.
Filmmakers Tapiso and Jolta Kapapiri in Cape Town there.
Well, let's talk about Generation Z, born in the late 90s through the 2010s. and they are shaking things up, not just on the streets of social media, but in retail investments too.
Business Daily caught up with one of them, 27-year-old Bhavya Joshi in India.
I largely invest in the stock market, but through a friend.
I make sure that some portion of my income goes into this because I feel that it is very important for me. to secure my future right now at the age of 27.
And as we all know that price hike is a reality for all of us.
So it becomes essential to start investing in my 20s for me.
Jonas Incota, Senior Market Analyst for Citi Index is still with us.
Let's talk about this quickly. As millennials, you and I, How does this compare?
How is this generation faring in the investment world?
Do you know what? I think they're much more savvy and much more open to information perhaps. than our generation.
I know speaking amongst my friends that sort of those that haven't a background in the markets or investing are quite cautious to move into it whereas I think this younger generation are sort of seeing getting much more exposure through influencers on Instagram or TikTok.
Many thanks, Fiona. If you want to get more on this topic, search for Business Daily wherever you get your BBC podcasts.
We'll be back much later.
