Return to Transcripts main page
QUEST MEANS BUSINESS
Summit Success; Cameron Locks and Loads; Obama Arrives in South Africa; Italian Unemployment; European Markets Down; Obama's Arrival in South Africa; Bumpy Q2 Ends; Gold Slumps
Aired June 28, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: It's a jobs boost for Europe's youth. Tonight, the EU Commission president tells us he's confident for the future.
Also, smuggling charges for the monsignor. The first arrest in a corruption scandal at the Vatican bank.
And an uphill climb. The race is on to rebuild the Tour de France brand.
I'm Richard Quest. It's Friday, still in New York, and of course, meaning business.
Good evening. Tonight, Jose Manuel Barroso, the president of the European Commission, tells us that employers stand ready to take young people on, new jobs, and to beat youth unemployment with help from the European Union.
The EU has pledged $8 billion to tackle spiraling levels of joblessness. There's the creation of the youth training scheme guaranteeing jobs and training schemes to all.
This is not additional money, it's part of a new seven-year budget, which has just been agreed. The budget stands at $1.2 trillion. It was an all-night wrangling following months of negotiations, of course, and is the first time, incidentally, that the EU budget will actually in real terms fall.
Leaders urged the European Investment Bank to double its lending to small businesses. As you might expect, there's still some discussion to be done about from where the money is to come.
So, to the summit and the details of the summit. Nina Dos Santos is in Brussels tonight. Just looking at the speech or jots of the speech that Barroso gave, he describes it as "a good day of work for Europe." A good - - certainly a full day of work, but "a good day of work for Europe." Put that into context of those out of work, Nina, and is he right?
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: Yes, obviously, Richard, it's a far cry from the red carpet of this building to the jobs lines, where about 7.5 million people under the age of 25 across the European Union are currently spending the best part of their time.
So, as you were just saying, there is a huge irony, isn't there, here, Richard, that Mr. Barroso and the 27 heads of governments and state here in the European Union do have jobs. But of course, they're having to legislate for people who find it so difficult to get on the employment ladder.
Part of this is to do with stimulating the private sector, but a lot of it will also hinge on whether the funds allocated today will really be put to good use by those individual member states. And that's a point I put to Mr. Jose Manuel Barroso a bit earlier. Take a listen.
JOSE MANEUL BARROSO, PRESIDENT, EUROPEAN COMMISSION: I think it's a great contribution. Of course, it will not solve all the problems we have of youth unemployment, but it's great. We saw the commitment.
And not only the commitment, we saw concrete results, because now we were able to mobilize 6 billion euros for the next two years. And in fact, there are more resources, financial resources coming for this huge problem that is probably the most dramatic issue we have now in Europe is the high level of youth unemployment.
DOS SANTOS: There's been all this talk about on a national level, per member state, creating these guarantee schemes for jobs to make sure that people get a job or an offer of education and training within four months of graduating. How in practice is that going to work?
BARROSO: That was the deal that we have done, and in fact, member states, they have agreed that it was possible to commit to this very ambitious objective. Yes, it's very ambitious. I believe it is possible because precisely we have now created these new instruments. So, the instruments --
DOS SANTOS: But how does that instrument actually work?
BARROSO: For instance, European Investment Bank, together with funds from the European Union, that creates a loan facility for SMEs that can hire people, including if they don't want to give immediately a full-time job, apprenticeships or in-job training. This is the way it's going to be designed.
But of course, we leave a great, let's say, space for the countries, according to their specific circumstances, to design their own programs. We are not -- and I think it would be a mistake to impose a one-size-fits- all model.
DOS SANTOS: Now, all of this hinges on getting the individual member states to try and play ball as well, to add to the kind of initiatives that you're putting on the table today, because that's how the EU is supposed to work. How confident are you that getting 27 -- soon to be 28 of them to do that. Is that an option?
BARROSO: I -- I think I'm -- I can be confident. We were now the heads of state and governments of these countries. They assumed very formal, very clear responsibilities, saying that they are going to present their plans.
And since now there is the incentive of the money that they can get if they present the plans, I think they will do it. They will implement the plans for youth employment
DOS SANTOS: You've achieved quite a lot over the last three days or so: banking deal, budget deal, and now a deal on youth unemployment. You must feel pretty proud of yourselves.
BARROSO: I'm very happy because, in fact, it was not easy. I have brokered the final deal between the institutions council where the member states are in the parliament on the next multiannual budget. We have it. Now we have it.
We also were able, in spite of all the negative comments that sometimes we listen, we were able to see progress, concrete progress, for instance, for the banking union. The member states have now agreed on the rules for resolving or making the recovery of banks.
This is extremely important because it shows that the governments are drawing the lessons of the crisis, and they understand it is by polling their competencies and their sovereignty that we can, indeed, establish a real economic and monetary union.
DOS SANTOS: Now, it's a step in the right direction, but many people say the figures that have been assigned to the drawing board so far are really a drop in the ocean.
And the other issue we should mention, Richard, is that Croatia is going to be joining the European Union as of Monday next week. They've got a youth unemployment rate of 51 percent and rising. So obviously, just as they try and tackle these issues --
QUEST: Nina --
DOS SANTOS: -- the figures are likely to get worse.
QUEST: Now, Nina, whilst you were talking, an e-mail dropped into my e-mail box from Barclays research. Barclays research summed -- they title -- they title it as being "EU summit disappoints." They say a lot of what was said there was expected and so forth, discussing various things, there were few surprises. So, disappoints.
Now, if you put that into the context of the British prime minister, who likened himself to an action hero, ready to shoot down French attempts to slash Britain's $5 billion rural rebate, the so-called British rebate, disappoints perhaps. David Cameron says the rebate stays and would always stay.
(BEGIN VIDEO CLIP)
DAVID CAMERON, PRIME MINISTER OF BRITAIN: I won't name too many names, because we've all got to get on when these rows are had and these rows are finished, but it's a very frustrating way to do business, but the rebate is completely secured.
But I'm frustrated I had to go through that battle all over again. But in this time, you have to be ready for an ambush at any minute, and that means lock and load and have one up the spout and be ready for it, and that's exactly what I did.
(END VIDEO CLIP)
QUEST: You have to be ready for one, lock and load and be ready for one up the spout. The man looked absolutely exhausted, and I suspect you're pretty tired too, tonight, this Friday night.
DOS SANTOS: Oh, yes. We were burning the midnight oil until about 1:00 in the morning yesterday, and those leaders just kept talking around the dinner table. It sounds as though David Cameron had an awful lot to chew over there, and a lot of it left a sour taste in his mouth.
He's referring, of course, to the 1984 Fontainebleau rebate that Margaret Thatcher famously negotiated. The French in particular have tried repeatedly to try and renegotiate this, rip this rebate away. You'll remember that David Cameron tried to veto the last budget when they had an EU summit here in October of last year, made himself very, very unpopular for that.
And apparently just as dinner was going to be wrapped up at 1:00 in the morning, Richard, the French tried to lobby to reopen negotiations, but it seems as though with his military prowess, I might say, and lock and load strategy, he rebuffed that one.
QUEST: Nina Dos Santos in Brussels. You'll be getting the Eurostar home first thing tomorrow morning.
To South Africa now, where President Obama's plane has been landing in Pretoria. It is evening there, it is now mid evening, and Air Force One has just touched down. The president has been in Senegal. He will be going onto Tanzania afterwards.
Live pictures coming to us, which is why a bit of movement up and down. Obviously the cameraman more concerned with -- well, I'm not sure what the cameraman's concerned with.
It's an interesting visit, this one, to South Africa, because it so very much overshadowed by the gravely ill Nelson Mandela, who's in a hospital in Pretoria. We'll talk more about that subject in just a moment or two.
Staying with the theme of the program tonight, bearing in mind the jobs summit, the growth summit in Brussels, tonight, four out of every ten young Italians are without a job. An appalling statistic, and as a result, Italy is suffering an exodus of highly educated young people. Many of those are going straight to Germany. There are jobs on demand.
And here's the question, though: if you can't speak the language, what does Germany have to offer? They're going anyway, as Ben Wedeman explains.
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The Goethe-Institut, funded by the German government, has seen numbers of students in its German courses in Rome jump by more than 20 percent in the last two years. Julia is studying architecture, but says there's no work here. She doesn't want to emigrate, but sees no other choice.
"It's here that I really want to live," she says. "I love my city, I love my country, and I'm sorry I don't have the opportunities here that I can have abroad."
And it's not just Italians who are looking to Germany. Joanna is from Poland.
JOANNA DUBIEL, STUDENT: Yes, Germany for me, personally, it's the best country to go and to live.
WEDEMAN (on camera): In Poland, no?
DUBIEL: No. No, not now.
WEDEMAN (voice-over): Institute director Susan Hoehn says the Institute's branches in Spain have seen even bigger jumps in enrollment.
SUSAN HOEHN, GOETHE-INSTITUT IN ITALY: It's 60 percent in the last two years, and we are looking for teachers and we are looking for space, and it's incredible. It's also a little bit sad, I think.
WEDEMAN: At Rome's biggest university, La Sapienza, students are well aware the job market is grim. Youth unemployment in Italy is almost 40 percent.
"As soon as I finish university," says Claudio, "I won't find anything. I'll go abroad."
WEDEMAN (on camera): In 2012, more than 80,000 Italians left the country, many of them young. That's a 30 percent increase over the year before.
WEDEMAN (voice-over): Italy's young, it seems, are ready to kiss their country good-bye.
Ben Wedeman, CNN, Rome.
QUEST: Now, despite the agreement in Brussels, the European market closed down at the end of the week. They were dragged down by a lackluster market in the US, not huge movements. The Paris CAC 40 down off the worst of the session, off just over 0.6 of a percent.
The rebound we've seen this week tapered off to a large extent. HSBC has downgraded its own global growth forecast, blaming instability in emerging markets. Coming up next on the program --
QUEST: -- to the US and how the Dow's trading. The Dow is on track to end a bumpy quarter. It's a respectable result for the quarter. Look at that, we're just 15,000 on the nose thereabouts. After the break, I've got the details.
QUEST: Air Force One has landed at Waterkloof Air Force Base just outside Pretoria in South Africa. The plane is now on the ground, the president of the United States having flown from Senegal. Marine One, that is the helicopter that will take the president from Waterkloof to Johannesburg, where he will, of course, spend the night. He's expected to, of course, be boarding that shortly.
In Johannesburg -- you're going to see a lot of that sort of movement on the camera. It's live television, and it is coming to you from South Africa this evening. The guard of honor now being formed that will welcome the president.
What is the goal of this trip? Well, it has certainly changed both in tone, in nature and, perhaps, even in purpose and design over the last few days. Brianna Keilar is in Johannesburg for us. Whatever the investment opportunities, the wish to cement relations between two close allies, Brianna, the Nelson Mandela gravely ill is going to play into this.
BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: That's certainly right, Richard, especially here in South Africa. But we even see that -- saw that on President Obama's first stop in Senegal. He as well as first lady, Michelle Obama, paying tribute to Nelson Mandela, really at almost every turn.
Now, President Obama is here for an extended visit in Africa, three stops, going all over the continent. And part of it was certainly stressing economic ties. China recently superseded the US as Africa's biggest trading partner.
And while when you look at GDP, Africa's accountable for really just a small slice of the global economy, the growth here is substantially -- almost twice that of the average global economic growth. So, it's seen as a place where there's opportunity, and other nations are certainly seeing that.
President Obama, the White House saying that they've listened to business leaders in the US saying, hey, we want to get involved there. So, he was here to promote US trade and investment, but he was also here to talk about expanding democracy in Africa.
That's part of the reason why he was in Senegal, a democracy, has a history of democracy, but also just recently sort of went in the right path away from incumbent who was trying to change the constitution for a third term.
Here in South Africa, obviously, the situation, the health situation of Nelson Mandela playing a big role in this, but I think, Richard, it's also allowing him to kind of point to Nelson Mandela's example at this very sensitive time when he does talk about promoting democracy here in Africa.
QUEST: But Brianna, on this point, he says -- the president said he'd no need for a photo op, and obviously he's going to assess the situation on the ground. You know the White House, you know this family, you've covered this White House.
Forget the politics for a moment and the optics for a moment. For the president, would it be considered an important moment if -- would he consider it important, do you think, to pay respects, to go and see Nelson Mandela?
KEILAR: I think he would consider it important, certainly, because it is of a -- Nelson Mandela, and he's talked a lot about this, and not just here recently, as Mandela's health has been ailing, but he wrote the forward in Nelson Mandela's 2010 book.
Back when he was in college, the first time he really spoke publicly was at an event, an anti-apartheid event, and he was reading Nelson Mandela's writings while Nelson Mandela was in prison. He took a lot of inspiration from this, he's talked about this over the years. So, I think that's important, but I also think that because of the sensitivity of --
QUEST: And I'm interrupting you -- I'm just going to interrupt you Brianna, because there we do see the first family coming down the steps about to step onto South African soil. And not surprisingly, of course, with the daughters, with Michelle, there.
President Obama is now in South Africa. I'm guessing the ambassador and the various dignitaries will be meeting Mr. Obama at the bottom of the steps. Forgive me for interrupting you. Do carry on. We're talking about the significance of this visit and the importance if he does decide to go and visit Nelson Mandela.
KEILAR: That's right. And I'll revisit that in just a moment, but just as you're watching, this is President Obama, of course, with the first lady, his two daughters, as well as Michelle Obama's brother's daughters. So, a cousin to Sasha and Malia, who is there along with the girls' grandmother, Marian Robinson. So, an extended family trip here in South Africa.
But I think, Richard, would he like to meet Nelson Mandela again? I think that would be important, but I also think that considering the state of his health, I truly think that the president doesn't want to get in the way of that, and that there's also other ways the White House will say for him to pay tribute to Nelson Mandela.
He is expected to again go to Robben Island, where Nelson Mandela's 27 years in prison, he spent 18 there. He's visited the cell, Mandela's cell before, and he talked about it being a very moving experience for him. So, he and the first family are expected to do that again.
President Obama did not completely rule out, depending on the circumstances of Nelson Mandela's health, that he would meet with him, but he also kind of downplayed expectations --
KEILAR: -- that that may happen. He said he didn't want to be intrusive as the family's dealing with his health. And you can imagine, certainly that would be the case on a presidential visit, but I think just out of common courtesy as well.
QUEST: Brianna, I'm going to take you straight back into our home world of economics and business on this visit. You talked in our first -- in your first answer about China, and obviously the wish of the US. Can the US -- what's it got in its arsenal?
China has got trade. China is pumping money into Africa. China is almost bribing its way, if you like, into Africa, into the various -- in the sense of it is giving aid, it is giving assistance, it is making itself. Can the US do similar?
KEILAR: This was actually a point, Richard, that President Obama discussed on Air Force One with reporters as he came from Senegal for the long flight to South Africa.
And he sort of took a little bit of a jab at China, and he said that China is -- kind of as you described their methods here of becoming economically engaged in Africa. And he said they're really trying to look to Africa for its natural resources. They're not necessarily doing things that create a lot of jobs.
We want to be involved, the US wants to be involved, but we want to do it in a different way. So, that's kind of the spin he was putting on that, Richard.
QUEST: Brianna, thank you for the insight. Brianna Keilar is in Johannesburg. President Obama is in Pretoria, he's at the air force base outside Pretoria. Many thanks, Brianna. Incidentally, that air force base is the one where the Gupta family landed in a very controversial incident earlier this year.
Coming up next, let me tell you about what's happening on the US stock market. Stocks are mixed, the final trading day of a volatile second quarter.
QUEST: There's the market. After selling off at the open, the Dow pared most of its losses and may even manage a gain for the week. Investors are focused on the Fed, and that's been fueling volatility. And what a wild quarter it has been.
The Dow is up more than 2 percent over the quarter -- over the quarter, it is up more than 2 percent between April and June. But in a graph that, frankly, looks like the Himalayas or the Alps, they've been all over the place. Volatility galore as a result of Fed comments. Just look at that. From the beginning of the quarter, down at 14,600, way up to 15,400, back down again, now back up again.
The Fed governor Jeremy Stein said the US central bank could consider winding down its stimulus program in September. The Fed chairman said the massive bond-buying program could end this year. We had Fisher saying it's not going to tend before the numbers start to show an improvement. Gold --
QUEST: Polls are hitting bullion down 25 percent in the April to June period. If the Dow -- I'm not sure we can go between those two graphs, but whereas the Dow was going up and down, up and down, in a sort of roller coaster, stomach-churning sort of way, the gold graph has been very much in one direction, with just a slight rise at the end of April. This is the worst quarterly slump on record for gold.
Felicia Taylor has been watching gold for us tonight, joins me now. Felicia, why -- all right, I can -- we can talk technical, if you like, and the dollar's up, therefore gold is down. But is there more to it than just that?
FELICIA TAYLOR, CNN CORRESPONDENT: Yes, there is more to it than just that, and that's one of the questions that I posed to Tom Vitiello of Aurum Options Strategies, because there is definitely a correlation.
And as you and I have spoken about, when the dollar is up, gold goes down, and there's a very good reason for that. Because obviously, if the dollar is stronger, you can buy more of that commodity, which makes it less valuable. But Tom really has the better explanation.
And by the way, that steep decline is the worst we've seen since 1975. If you compare it to London prices, it's the worst we've seen since 1920. Take a listen to Tom.
TAYLOR: Gold prices slip about 25 percent this quarter. That's the largest price slip since about 1975. And London prices have slipped since -- what they haven't seen since 1920. What's behind this?
TOM VITIELLO, AURUM OPTIONS STRATEGIES: I think you're seeing a lot of investor pain and liquidations. I think the fundamentals drove it a couple of months ago, but once you get under certain levels, it's just people who are underwater, and eventually, they just puke it out. And that's basically what's happened.
And especially since it's the end of the quarter, I think people are just trying to take the pain and end the quarter and start fresh in the beginning of the new quarter.
TAYLOR: Can you explain the correlation between gold and the dollar? Because when we see the dollar rise, gold usually falls. What is that about?
VITIELLO: Well, that's just people hedging, basically, currency risk, and they feel a weak dollar usually the play there is to buy gold as an inflation hedge. But we really -- most people thought we'd have inflation by now. We have not had it. We have disinflation. The inflation rate is going down.
So, people kind of bailing on the trade, and now we hit these levels and people just get out of the pain and they take their losses.
TAYLOR: Do you anticipate that this kind of a slide is going to continue? At some point, buyers are going to step in again, one would anticipate, but getting back to that 1800 level is going to take some time.
VITIELLO: Yes, it'll take a lot of time. I think a lot of people lost money here that didn't really expect to lose money. Everybody's a long-term investor until they start losing money. So, it'll take a long time for people to recover. But you never know. This could continue, and it's not guaranteed that there's a bottom anywhere close. But it could bottom out and then skid sideways for a while also.
TAYLOR: What was the sentiment in the last couple of days. It's a little quieter right now, there's no question about it, so sentiment is easing, but was there a panic sell-off?
VITIELLO: Well, I think last night, we had -- we made the new lows, it happened around 9:00 last night in the Asian session. So, you get spurts of it. It'll collapse, and then it'll settle down. So, you get these -- you get some panic, and then people settle in and they accept the price that it's trading.
TAYLOR: So, you heard Tom talk about disinflation. That is where inflation is actually below that 2 percent optimum level that the Federal Reserve has talked about. But the other concern out there that a lot of traders have been telling me is that they're really concerned about deflation, where inflation could go below 0 percent. That's going to continue to pressure gold. Richard?
QUEST: Felicia Taylor, who will be watching gold in the days and weeks ahead. Coming up after the break, on the eve of the Tour de France, the disgraced cyclist Lance Armstrong makes a blunt admission about his time in the race. It's QUEST MEANS BUSINESS, it's Friday, and you're most welcome.
QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The President of the United States, Barack Obama, has arrived in South Africa. Air Force One arrived at Pretoria a short time ago. The country is his second stop on a three-nation tour of the continent. The White House says Nelson Mandela's family will be the ones to decide whether Mr. Obama visits Mr. Mandela at his hospital in Pretoria.
Mandela is still in a critical but stable condition, according to a spokesman for the African National Congress. The 94-year-old has been in hospital for some three weeks. Nelson Mandela's ex-wife, Winnie Mandela, gave a statement on Friday, saying his condition had improved but remained delicate.
New video from Egypt shows more protests getting out of hand. One person has been killed in Alexandria. There have been several large pro- and anti-government demonstrations across the country. And more large rallies are expected over the next 48 hours.
A source tells CNN that the U.S. Justice Department is investigating the retired Marine general James Cartwright. He was the vice chairman of the U.S. Joint Chiefs of Staff from 2007-2011. NBC News is reporting that Cartwright is under investigation in connection with a leak of classified information about Stuxnet (ph), the computer virus.
The BlackBerry share price has plunged on Friday. Results for the smartphone maker were far worse than expected. It reported a net $84 million loss in the quarter.
(END VIDEO CLIP)
QUEST: A Vatican priest, a former spy and a financial broker have all been arrested in connection with what police are calling an extremely sophisticated attempt to smuggle big money into Italy. CNN's Atika Shubert explains more.
ATIKA SHUBERT, CNN CORRESPONDENT (voice-over): In the same week that Pope Francis opened a committee to investigate the Vatican Bank, Italian police arrested a Vatican priest for allegedly plotting to bring more than $25 million in cash to Italy aboard a private jet from Switzerland.
Monsignor Nunzio Scarano worked as a financial analyst in the office that administers Vatican properties. Prosecutors believe he worked with a former Secret Service police officer and a financial broker to fly the cash to Rome under armed escort.
Now the alleged plan, which took place in July last year, did not succeed and no cash left Switzerland but all three now face possible corruption charges.
Scarano is also under investigation for withdrawing more than $700,000 from a Vatican bank account to pay off personal debts. The alleged plot to fly cash from Switzerland was discovered as part of a wider investigation into Vatican financial dealings in Italy. The Vatican said that Scarano had already been suspended from work more than a month ago after it had been told he was under investigation.
The timing of the arrest just after Pope Francis turns his attention to the Vatican Bank may simply be a coincidence. But Italian prosecutors say their investigation is ongoing. And there may be more to come -- Atika Shubert, CNN, London.
QUEST: (Inaudible) cycling's going up for the Tour de France. But its recent doping scandals continue to overshadow the start of this year's milestone race. We'll be in Corsica after the break.
QUEST: On Saturday, close to 200 cyclists will embark on the 100th edition or running of the Tour de France. Any celebration will be muted as the race continues to be haunted by the Lance Armstrong doping scandal.
On the eve of the competition, the disgraced cyclist has now claimed it would have been impossible for him to win the race without doping. Tour organizers are trying to shift the focus back onto the race. An official video promoting the 100th tour focuses on the breathtaking scenery at the start in Corsica. Notably absent are any of its past victors.
Amanda Davies is in Corsica as the cycling world gears up for the start of the tour.
I mean really. I mean, what on Earth? All right. They can do the best they can, 100 years, woo woo. But it's so tainted for the last 20 of them.
AMANDA DAVIES, CNN CORRESPONDENT: Richard, it is just the most incredible story. I can confirm Corsica is absolutely stunning. I am currently standing on a ferry that has been sailed into this tiny little village that is Porto-Vecchio, just to house the international media who are coming to Corsica to cover the Tour de France.
And we were all coming, expecting to be talking about a celebration as you said that was the 100th Tour de France before the race is even started. We were obviously expecting far too much.
And Lance Armstrong and drugs are once again dominating the headlines because of that interview that Armstrong conducted with a French newspaper, "Le Monde," saying that, yes, it was impossible to win the tour without drugs being involved.
As you can imagine, the current leaders of cycling have slammed those comments. So, too, has the organizer of the Tour de France, Christian Prudhomme.
And the current riders are just feeling very resentful at the moment that despite all the movements in the right direction, that they have made, everything is being taken away from them because of this continued accusation and suspicions surrounding drugs in that sport.
I've been speaking to quite a few of them in recent times because of the series that we've been running on CNN, "Changing Gear." Part 5, the final part, is about the future.
DAVIES (voice-over): A day at this year's Euro d'Italia could have convinced you that cycling's never been better. In some ways, that's true. But for those at the top, there's a clear message.
UNIDENTIFIED MALE: You had your chance. You messed up.
UNIDENTIFIED MALE: You have cleaned up the sport. Now we have to clean up the image.
UNIDENTIFIED MALE: It's time for a new agenda. I think cycling has hit rock bottom.
DAVIES (voice-over): Can cycling truly move on with the current leadership at the helm? There's calls for president of world cycling's governing body, Pat McQuaid to go and September's election could bring his controversial tenure to an end.
BRIAN COOKSON, UCI PRESIDENTIAL CANDIDATE: Brian Cookson, UCI presidential candidate. I think the first priority for the international cycling has got to be putting to bed once and for all these allegations about collusion and cover-up. We've really got to investigate those things, transparently and independently and publish those results.
DAVIES (voice-over): Despite its political problems, cycling's popularity continues to grow both at the professional level and the recreational one. It's a sport that's gone from geek to chic.
CHRISTIAN PRUDHOMME, DIRECTOR, TOUR DE FRANCE (through translator): You've got in Western societies a bicycle comeback on a daily basis, for going to work, for going out with your friends, for sport. And this link must be strengthened right up to a champion, a rider in the Tour de France.
DAVIES (voice-over): The global reach of the sport is on the up with tours of Beijing and Marne and Qatar added recently. This year, we've seen the development of the first-ever African professional team as well, MTN Quebeca.
SONGEZO JIM, PROFESSIONAL CYCLIST: For us, when we win races, we mobilize more kids on their bikes in Africa, so which is great. We're doing a change in Africa.
DAVIES (voice-over): Songezo's just one of the current generation predicting a healthy future for cycling, even if suspicions about doping persist.
TAYLOR PHINNEY, PROFESSIONAL CYCLIST: As a young rider, I'm happy that they're clearing out that brass (ph) and making it possible for us in the future to compete in a clean sport.
BRADLEY WIGGINS, 2012 TOUR DE FRANCE WINNER: Whatever sport is, you'll always get people that are cynical and doubters. But you know, by continuing to do what we do and answering these questions and putting ourself (sic) up there to be shot at, in time it might take 15 years. I think, you know, we all gain credibility.
DAVIES: Richard, last year's winner Wiggo won't be competing this year. He's out injured. But 198 riders will start on Saturday with the aim of winning this, the yellow jersey. But despite everything that's happened, this race, that shirt is still the pinnacle of their career.
QUEST: Amanda, we thank you for that in Corsica tonight.
The weather forecast it's Wimbledon. Jenny Harrison is at the World Weather Center. I'm going to Wimbledon tomorrow. It better be good.
JENNY HARRISON, CNN METEOROLOGIST: It will be good, Richard, but I'm going to start first of all telling you the weather conditions in Corsica, glorious day for the start of the tour; temperatures you can see there in the mid- to high 20s all day long, despite the different elevations, very mixed in Europe. We've got high pressure across the west.
We've got cool conditions across central regions. It is hot across the southeast. Now you mentioned Wimbledon, of course, and I can tell you that for the next few days, the temperature on the increase, partly cloudy skies, some good sunshine for Saturday, very nice weather conditions.
Indeed, Richard, we have been talking about Wimbledon all week long. I've been testing your knowledge. My first question to you today, come on, get ready, quick fire question, the quick crowd, old money, gallons of water, how many gallons of water does it take for them to keep the courts in pristine condition?
Quick. Come on.
QUEST: During Wimbledon fortnight?
HARRISON: During the fortnight, how many --
QUEST: Three hundred and -- 10,000.
HARRISON: No, too many; 3,000 gallons. How many umbrellas do they (inaudible) to the public? How many umbrellas, Richard, do they sell to the public?
QUEST: Two thousand 850.
HARRISON: Far too low, 10,000 umbrellas. It's a wet climate, Richard. (Inaudible) climate.
How many bananas do the players eat, just the players? How many do they eat?
Come on, Richard.
QUEST: Seven hundred eighty-six.
HARRISON: You are so low, 12,000. You're terrible at this. I'm going to carry on until I'm told to stop.
How many towels do they sell? I've given you the answer. I've been told to stop, 25,000.
QUEST: Twenty-five thousand!
HARRISON: Yes, there's the answer. Look, I'm going to have another one.
How many tennis balls -- come on, quickly -- how many tennis balls do they use during the fortnight?
QUEST: Fifteen thousand, 427.
HARRISON: Fifty-four thousand. You're terrible at this.
You'll be eating these. How many portions of strawberries do everybody eat, do the spectators eat during the fortnight?
QUEST: Tons and tons and tons of them. Jenny Harrison, thank you.
HARRISON: That many.
QUEST: World Weather Center.
There will be a few less tomorrow.
That's QUEST MEANS BUSINESS tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you in London tomorrow.
ROBYN CURNOW, CNN HOST: Hello and welcome to MARKETPLACE AFRICA. I'm Robyn Curnow. Now when U.S. President Barack Obama touched down in Senegal earlier this week, it was a much anticipated return to the continent for a president who has roots in Kenya.
But during his first term, Obama was largely absent from Africa, leading many to question whether U.S. interests on the continent had waned. Well, that's a question I put to Don Gips. He's Obama's point man for Africa and was a former ambassador to South Africa.
DON GIPS, FORMER AMBASSADOR TO SOUTH AFRICA: The world is a complicated place. He's got many things on his plate. But the thing that always struck is Africa was one of the things that he was passionate about. And even though he didn't get to visit here as much as he wanted in the first term --
CURNOW: (Inaudible) the criticism was he only spent 24 hours in Africa in his first term, which didn't make many Africans happy.
GIPS: No, and I -- and it didn't make him happy and he sent his family here to South Africa, incredible trip with Michelle Obama and the girls and his mother-in-law to represent him. And I think he would have come. I think he wanted to come for the World Cup, but we had a little oil spill that got in the way. And the schedule just didn't allow for it first term.
Even if he wasn't here, I can vouch as ambassador he was so focused on it.
CURNOW: So what are the issues in terms of American foreign policy on the continent? I mean, is it about terrorism, for example, issues around Mali? I mean, is that a focus in terms of new potential Al Qaeda hot spots with more than fostering developmental growth?
GIPS: No, I think it's this balance. And the issue -- President Obama, right at the end of the first term, issued the presidential policy directive on Africa, which really laid out an economic growth story of democracy and governance story. Security was one of the legs, but only one. And then empowering people through health and education.
It's a very broad agenda. Of course, what gets attention in the news is the Malis, the Sudans, the Somalias. But behind the scenes, what's going on day after day is trying to build a prospering, growing Africa that, again, is providing jobs for the incredible youth bulge that's going to hit Africa.
CURNOW: So as you look 10, 20, 30 years down the line and the potential and the pitfalls for Africa's growth -- and we're talking here about the continent as one here, which we know it isn't, there's many -- there's much criticism that the U.S. is perhaps missed the boat, particularly when it comes to China's role in Africa, that perhaps the Chinese have really taken advantage of the potential on the continent. Does the U.S. feel threatened in a way by the Chinese in Africa?
GIPS: It's the question I got most as ambassador. And look, here's my simple answer: the opportunities in Africa are huge. And it's going to take the Chinese; it's going to take American investment.
It's going to take European investment. I do think more American companies need to engage in Africa and it's part of what I hope to do in my private sector life, is help bring more companies here, expose them to the opportunities and the risks.
CURNOW: It is a level playing field, though? Because from what I understand, from speaking to businessmen, both Chinese and Americans and many others across the continent is that many people in Africa feel the Chinese do business differently. And the Americans perhaps might be more conservative.
They're limited by the Foreign Corrupt Practices Act. There's a sort of -- more of a hands-off fearful attitude to doing business in Africa.
GIPS: Well, I'd like to say there's an American way of doing business in Africa and I think part of what we're trying to do now as a government and the private sector is say to African governments, this is the right way to go forward. And the more you create a transparent level playing field, the better it ought -- you are for everybody.
If Africa's going to realize its potential, you need to introduce transparency and good governance across the continent. And I think there are African leaders who are starting to push that agenda.
There's another challenge we haven't talked about, which I also think African leaders are recognizing or starting to pursue, which is how do you break down the barriers to trade across African countries? I think this is critical for a number of reasons.
One is it obviously creates bigger markets, which means more companies can come invest, easier to do business and it reduces the cost of goods for Africans. I also think it helps when the transparency issue, because the more you have one government, I mean, one set of rules governing the continent, the harder it is to cheat on that, the less opportunities there are for corruption.
So I think this is an incredibly important component of what's going to be happening in the continent over the next decade.
CURNOW: That was Don Gips, the former U.S. ambassador to South Africa, who's now the chair of the South Africa-U.S. Business Council.
Up next, life insurance on the go, how companies are tailoring their services to a growing market.
CURNOW: Welcome back. Now saving for the inevitable is nothing new. But life insurance and funeral policies have been slow to reach Africa. That could now change.
CURNOW (voice-over): Saying goodbye to a loved one is part of life. And now for many on the African continent, saving for that day is becoming a necessity. When someone dies, funeral insurance pays enough to cover the cost of everything related to the burial.
To buckholt (ph), Maria Mashiachidi (ph) says it's important.
MARIA MASHIACHIDI (PH): We're living in a world of ups and downs and no one is ever sure how much life he has in this world. So you need to be covered.
CURNOW (voice-over): While many Africans save informally, she's one of the few with a funeral policy.
Her friend, Sarah Mseke (ph), says she needs one.
SARAH MSEKE (PH): I don't have a funeral plan, but I'm planning to go to my bank and get one.
CURNOW (voice-over): Doug Lacey (ph) of Leapfrog Investment (ph) says even though sales of all types of insurance are low they are improving.
DOUG LACEY (PH), LEAPFROG INVESTMENT: If you have a look at the insurance penetration levels in Africa, they're exceptionally low. In many parts of the continent, it's below 1 percent insurance premiums as a percentage of the gross domestic product. And you would typically expect developing and emerging markets to be spending between 2.5 percent and 4 percent of GDP on insurance.
CURNOW (voice-over): Margaret Dawes (ph), executive director of Sunlands Emerging Markets (ph) agrees.
MARGARET DAWES (PH), SUNLANDS EMERGING MARKETS (PH): Demand for insurance products is growing on an ongoing basis. The middle class in (inaudible) emerging. The demand for a product is increasing.
CURNOW (voice-over): Regular life insurance costs more because it pays out more. Mashiachidi (ph) says funeral insurance is less expensive but just as important.
MASHIACHIDI (PH): The funeral is very expensive because from the initial stage, you have to, let's say, start from informing the family, making proper arrangements. You have to have the food for the day of the funeral. Sometimes some of the family, they prepare their tombstone and do it immediately after the funeral. It depends. But it's expensive.
CURNOW (voice-over): Here's the problem: it's a new concept and perhaps even culturally unacceptable for many.
DAWES (PH): Funeral coverage is very well accepted in urban Africa and in places like Ghana, where there's a huge funeral culture. In East Africa, funerals are very, very taboo subject. It's very difficult to go and sell somebody a product when they don't want to talk about the fact that there's a possibility they will die.
Savings parts are a lot more popular in East Africa. Knowing the African consumer is an incredibly important part of the job. The African consumer in East Africa is different from the African consumer in West Africa. So there's no one size fits all.
CURNOW (voice-over): According to Lacey (ph), this is where many insurers go wrong when it comes to doing business in Africa.
LACEY (PH): Many of the traditional insurers have not yet worked out how to reach and service the emerging consumer. And Leapfrog (ph) looks to partner with businesses who have a desire to change their traditional business model to reach the emerging consumer.
CURNOW (voice-over): One of the businesses they've parted with is BIMA, a Swedish microinsurance company that's using Africa's mobile revolution to introduce insurance to Africans.
LACEY (PH): BIMA facilitates the distribution of insurance products to prepaid customers of mobile network operators.
CURNOW (voice-over): And in a continent where there's an estimated 650 million mobile users, this seems to be a smart solution. At first, the insurance is offered as a loyalty program.
LACEY (PH): So the BIMA agent sits where the prepaid airtime is sold and then registers the people buying the prepaid airtime for the insurance product.
So if you spend above a certain amount per month with a mobile work operator you will get an insurance product based on a multiple of the -- of the expenditure. And once the prepaid customers have felt the benefit of the loyalty program, they actually migrate to paying for insurance, which is again distributed and sold through the network.
CURNOW (voice-over): BIMA's also adapted its collection methods to better fit the economic structure in Africa.
LACEY (PH): And if you look at the economic structure in Africa, many people receive daily incomes as opposed to monthly checks. And BIMA have created capabilities where they collect premiums on a daily basis.
So if a person pays $1 a month for insurance, and BIMA will collect that in 5 cents a day over20 days. Now many of the traditional insurers do not have that capability. And this is the revolution that BIMA is bringing to the African insurance market.
CURNOW (voice-over): And Sarah Mseke? She was planning to buy insurance at the bank when we told her about using her phone, she confessed --
MSEKE (PH): I don't have time to go inside a bank and go pay. So actually me being able to buy (inaudible) pay for my funeral cover, makes things easier and convenient for everybody.
CURNOW (voice-over): A new way of thinking for a traditional product in a changing market.
CURNOW: And of course, you can find all of our stories online at CNN.com/MarketplaceAfrica. From me, Robyn Curnow, goodbye.