By Jim O’Neill, chief economist at Goldman Sachs, coined the Brics acronym
In an FT.com Op-Ed
The visit by South Africa’s PresidentJacob Zuma to Chinathis week with a large entourage of businesspeople and officials has understandably drawn a lot of comment. He is no doubt keen to promote close ties with Beijing, which just last year rose to becomehis country’s largest trading partner. It is against this background, with a number of African nations appearing to have escaped the hang-over from the global credit crisis, that increasingly I am asked whether the “s” in Brics may be worthy of becoming an “s” for South Africa – and whether Africa collectively should be thought of as having the same bright future as the Brazilians, Russians, Indians and Chinese in that group?
AfterSouth Africa’s successful hosting of the football World Cupmore and more people are focusing on the opportunities of Africa. The continent’s combined current gross domestic product is reasonably similar to that of Brazil and Russia, and slightly above that of India. Moreover, of the “next 11” countries – as my colleagues and I have dubbed the group of populous emerging countries after the Brics with the most promising outlooks – two are in Africa: Egypt and Nigeria. In this context, and as South African officials talk enthusiastically about their aspirations for a quasi-Bric status, I have been giving further thought to Africa’s potential to become a Bric-like economy.
If you were to think about Africa collectively, and consider it in the same framework that informs our 2050 scenarios for the Bric, next 11 and other major economies, you would see an economy as big as some of the Brics. If you then look at the potential of the 11 largest African economies for the next 40 years (by studying their likely demographics, the resulting changes in their working population and their productivity) their combined GDP by 2050 would reach more than $13,000bn, making them bigger than either Brazil or Russia, although not China or India.
Interestingly, nearly half of this GDP would originate from Egypt and Nigeria, so the progress of those two nations is crucial to the continent’s potential. Among the other 11, South Africa has a critical role to play as it is more developed than the others, and also somewhat of a gateway to southern Africa. South Africa itself however does not have enough people – just 45m – to be a Bric in itself. But Nigeria, at 180m or more, is not far off 20 per cent of Africa’s population. It could, if it got everything right, be bigger than any of Canada, Italy or South Korea by 2050.
If Africa wants to be thought of as a Bric it should not be as hard as it is often made out. We maintain an index of 13 different variables that are critical for sustainable growth and productivity. We call this our Growth Environment Score (GES), and estimate the data annually for nearly 180 countries around the world. The scores can range from 0 to 10, with higher scores indicating higher productivity or sustainable growth. Of the next 11 countries, South Korea has a score of 7.4, the highest, a level consistent with the best of the developed world. Nigeria has a score of 3.5, the second lowest.
This might seem bad, but for the four Bric economies the score is only 4.9. For the 11 African countries, the average score is 3.5. So to achieve their 2050 potential, the African countries have to raise their scores significantly. Stable macroeconomic policies focused on low inflation and avoiding excessive government and external debt are perhaps the easiest targets. Among the micro components, we identify the stability of government, improving the rule of law, improving the most basic levels of education, spreading the use of mobile telephone and internet – there have already been impressive developments here – and perhaps most importantly eradicating the chronic corruption seen throughout many African nations.
South Africa demonstrated itwas a worthy host for the 2010 World Cup. Now it is up to Africa’s major countries and their leaders to build on this. Let us hope an idea such as muzzling media coverage; a current proposal of South Africa’s ruling African National Congress, does not become law. This would be a step very much in the wrong direction. Transparency and helping to foster an environment conducive to business are what Mr. Zuma and other African leaders should be concentrating on. Otherwise the dream of an African Bric will remain just that – a dream.
In order to make it as easy as possible for investors to find the help they need quickly, the 21-member Alliance For Investor Education (AIE) today launched an updated version of the “one-stop information shopping” site at http://www.HelpForInvestors.org to pull together 16 key links into a single Web page.
The easy-to-use list shows investors where to check out financial professionals, how to report investment fraud, the best help for dealing with other major problems – including broker bankruptcies, identity theft and 401(k) claims – and filing arbitration and mediation claims.The content featured in the updated http://www.HelpForInvestors.org cuts across the entire investment community represented in AIE’s membership ranks.
Founded in 1996, the Alliance for Investor Education Web site at http://www.InvestorEducation.org provides investors with access to a full range of information they need to make wise investment decisions.
The 21-member Alliance for Investor Education is dedicated to facilitating greater understanding of investing, investments and the financial markets among current and prospective investors of all ages.
[A Better sub-head might have been “One-Stop Un-Shopping for the Remorseful. Ed]
Consumers have a new, easy-to-use, Consumer Help Center that puts them within one click of all the information they want from the Federal Communications Commission.
The new portal launched today at www.fcc.gov/consumers will allow consumers to learn about different issues in telecommunications, make it easy for consumers to find out what’s going on at the FCC, get tips for making the best choices in purchasing communications devices and services, have their voices heard by filing comments on issues that interest them, and file a complaint when there are problems.
The FCC’s Consumer Task Force, an inter-bureau group established by Chairman Julius Genachowski at the beginning of 2010, produces the Consumer Help Center.
The Task Force has led several recent initiatives on major consumer issues. The Consumer Help Center includes:
Everything consumers need to know about Bill Shock and Early Termination Fees — two common issues that affect wireless customers, plus:
Savvy Traveler tips — advice on making phone calls when travelling abroad.
Broadband Speed Test — consumers can test the speed of their broadband service.
Fact Sheet Library – more than 150 consumer Fact Sheets on telecom subjects.
·Links to additional resources on a range of issues, including privacy
·Links to file a complaint to the FCC or comment on our rulemakings.
·Blog posts about consumer issues — with consumer comments welcome;
·News releases, statements, and FCC actions.
The site will be updated to include new FCC consumer initiatives as they are launched. [Lobbyists permitting. Ed]
It is just a website the real test will be their response time.
Will they keep you hanging on the telephone?Just like the near monopoly Telco’s?
Do you cherish a secret desire to serve the armed forces? But scared of the early morning drills ?
Want to see yourself close to the jungle vardi, but cant get out ofyour night pyjamas?
Well, now you can HAVE your tawa roti and EAT it too !
eFarm has been invited by the South Zone Army HQ located at Chennai to set up and run a vegetables & fruits outlet for the jawans of ATNK&Kregiments (that’s andra, tamilnadu, karnataka & kerala).
Well, though we technically dont get into retail side, but the command coming fromnone less than a Major General , we had to gladly oblige. It is great honour and a prestigious account for us.
And to further extend our social obligations we have agreed to operate this on a non-profit basis so that the jawans who fight on our battefields and the farmers who toil in the farm fields are linked with minimal intermediation costs.
In this context, we thought we would extend this to some of our otherwell wishers too to join in this unique venture. We are trying to set up a storefront ,and any reduction in the setup/operational costs would be passed on as savings to the jawans. These are some items we are in process of purchasing .
If you work in a company which makes them and would like to donate a piece ororganise it through a csr grant , or even work out a factory rate would be a great value add:
Point of sale station ( 1 number)-PC, digital scale,- A refrigerator ( 200+ L , double door)- A 1.5 tonne split AC (300 sq feet store area)- A deskphone + cordless unit (store phone)- Insurance for the store (fire, theft etc ?)So, recruiting all facebook farmvilleans, playstation rambo’s, here’s a chance to proudly proclaim ‘
I TOO serve the Indian army’..You can reply to :venky@matchboxsolutions.inor contact us at044-43577236 with your options…<author is an IIT alumni heading a agri supply chain startup called efarm. more details at :www.efarm.in>
African countries are playing a more strategic role in international affairs. Global players that understand this and develop greater diplomatic and trade relations with African states will be greatly advantaged.
For many countries, particularly those that have framed their relations with Africa largely in humanitarian terms, this will require an uncomfortable shift in public and policy perceptions. Without this shift, many of Africa’s traditional partners, especially in Europe and North America, will lose global influence and trade advantages to the emerging powers in Asia, Africa and South America.
China’s re-engagement is for the most part welcome, as is that of the increasing numbers of emerging powers such as Turkey, South Korea and Brazil that see Africa in terms of opportunities - as a place in which to invest, gain market share and win access to resources.
Economic fortunes across Africa are now diverging, making it less meaningful to treat Africa as a single entity in international economic negotiations. Despite this, it is in the global interest that the African Union should be granted a permanent place at the G20. In turn, a more focused, sophisticated and strategic African leadership is needed.
Proposals to tax and regulate bank compensation are fast gaining momentum, but they fail to address the core issue, says Booz & Co CEO Shumeet Banerji
As Wall Street and the major European banks — led by the newly notorious Goldman Sachs — report record quarterly results and record bonus accruals, the public and policymakers have grown increasingly frustrated. Their outrage stems from incredulity. How could institutions saved by the taxpayer 18 short months ago possibly be paying out staggering bonuses now, to the very people who caused the crisis? Moreover, how did these institutions come to make so much money in the first place?
In parallel to this outrage is the growing realization that a globally coordinated approach to bank regulation is unlikely. As a result, governments and regulators will be restricted in their ability to address some of the core issues because of jurisdictional arbitrage, and may be viewed as taking insufficient action to “do something about the banks.”
Perhaps as a consequence, the authorities have adopted an increasingly retaliatory posture. This includes some extraordinary actions, such as the pursuit by the SEC in April 2010 of Goldman on fraud charges in the U.S., unthinkable only a few months ago. More generally, policymakers on both sides of the Atlantic are looking at punitive new tax measures. The bankers have responded with the increasingly defiant claim that they are victims of the war for talent, merely doing what it takes to ensure they have the best people to do “God’s work.”
Meanwhile, still unanswered is the most critical question: Why did the system go out of control in the first place? Most bankers surely understood that taking such unprecedented risks might result in catastrophic institutional failure and enormous loss of personal wealth. Why wasn’t that enough to keep them from taking the course they did? If global policymakers better understood the answer to that question, they would be able to take much more effective measures.
The real answers to these questions have less to do with villainy or lax supervision than with inherent moral hazard. Addressing this hazard would be the right reason for political leaders and the boards of banks in the U.S., Europe, and elsewhere to be interested in bankers’ compensation. Today, the urgent question that remains unanswered is whether the proposals that are moving ahead will address moral hazard adequately and thus prevent another systemic crisis.
Private philanthropy and remittances from the developed to the developing world in 2008 totaled nearly twice the amount of government aid, a new report says.
Private giving and remittances - money sent by immigrants in the U.S. back to their home countries — totaled $233 billion in 2008, compared to $121 billion in government aid, says the 2010 Index of Global Philanthropy and Remittances published by the Center for Global Prosperity at the Hudson Institute in Washington, D.C.
U.S. philanthropy to developing countries, including contributions from foundations, corporations, private and voluntary groups, individual volunteers, religious organizations, and colleges and universities, totaled $37.3 billion in 2008, up slightly from $36.9 billion in 2009.
That compares to $26.8 billion in aid from the U.S. government to developing countries.
Remittances alone from the U.S. to developing countries totaled $96.8 billion in 2008, the biggest outflow ever from the U.S. to developing countries.
Remittances from all countries to developing countries totaled $336 billion in 2008, up 17 percent from 2007.
“We have documented how private resources are transforming developing countries and challenging foreign aid to be more effective and collaborative,” Carol C. Adelman, director of the Center for Global Prosperity at the Hudson Institute, says in a statement to Philanthropy Journal.com
The Center for Global Prosperity provides a platform—through conferences, discussions, publications, and media appearances—to create awareness among U.S. and international opinion leaders, as well as the general public, about the central role of the private sector, both for-profit and not-for-profit, in the creation of economic growth and prosperity in any country.
The Senate isn’t quite finished regulating the credit card industry.
Senators have surprised the industry with unexpected, tough amendments
that would limit interchange fees and allow caps on interest rates.
The amendments that pass will be included in the financial reform bill being
debated in Congress. Both would be significant blows to the bottom line
of credit card issuers.
On Monday, Senator Sheldon Whitehouse (D-R.I.) introduced an
amendment that would require credit cards to follow the laws of the state
where a customer resides rather than the laws of the state where the credit
card company builds its headquarters. Many issuers have their headquarters
in South Dakota or Delaware that have fewer consumer protections and
laws that enable issuers to charge higher interest rates.
Banks warn that of the difficulty of complying and the “avalanche of
lawsuits” that will arise with differing state laws. It could also mean that
less credit would be available for banks and small businesses.
Guest article submitted by Bill Hardekopf, CEO of LowCards.com, his contacts can be found at the end of this piece.
Last week, the Senate passed an amendment sponsored by Senator
Dick Durbin (D-Ill.) that could reduce interchange fees that credit card
processors charge to merchants and allow stores to give customers
discounts for paying with cash, check or debit cards.
The Durbin amendment is good news for retailers, but bad news for issuers,
processors such as Visa and MasterCard, and some cardholders.
“The CARD Act reminded us that regulations have consequences. When the
government adds new rules and regulations that cost banks money, banks find
ways to charge the consumer more in other areas to make up the lost
revenue,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit
Card Guidebook. “Banks warned that the CARD Act would bring higher rates and
fees. And they did. Issuers weren’t bluffing then and they aren’t bluffing
now. If this passes, consumers may not be happy with what the regulations
mean for them.”
The interchange fee is a stealth fee that receives little attention from the
average consumer, but it provides important revenue to credit card issuers.
Each time a consumer uses a credit card to make a purchase, the bank and
card processor charge a fee that is approximately 2% of the purchase price.
If a consumer makes a $100 purchase with a credit card, the retailer gets
approximately $98. The remaining $2 is the interchange fee and is divided
three ways: about $1.75 goes to the card issuing bank, $0.18 goes to the
Visa or MasterCard association, and the remaining $0.07 goes to the
retailer’s merchant account provider.
In 2008, banks collected an estimated $50 billion in interchange fees. The
interchange fees provided vital revenue for issuers during a time of high
defaults and losses.
According to The Nilson Report, consumers made 36 billion debit and
prepaid card transactions and 20 billion credit card transactions in 2009.
Last year, the interchange fees averaged 2.23% for American Express, 2.06%
for Visa and MasterCard and 1.88% for Discover.
Retailers have lobbied Congress against the interchange fee for years,
complaining that the fee is too high.
Provisions of the Durbin Amendment The amendment will allow stores to give customers discounts for
paying with cash, check or debit cards. The seller can also decline credit
cards for small dollar purchases (interchange fees exceed profits on some
sales).
The amendment will direct the Federal Reserve to issue rules to ensure
that debit interchange fees are “reasonable and proportional” to processing
costs. It does not give the Fed the power to set interchange fees.
“Keep in mind that ‘reasonable and proportional’ is open-ended. It does not
put a cap on the fee,” says Hardekopf.
Cost of Reform for Cardholders Banks say they charge the interchange fee to cover operating costs to
process credit card transactions, to maintain the processing network, and to
protect against fraud. They warn that if the interchange fees are cut, they
will have to find other ways to recoup these costs. This could force them to
once again squeeze credit and raise the cost of credit cards at a time when
economists and retailers are hoping for looser credit to boost the economic
recovery.
Interchange fees are used to underwrite “free” credit card loans and
credit card rewards. If the funding dries up, so could the benefits for many
cardholders.
“The interchange fee has helped subsidize credit cards for people who pay
their balance in full every month. The interchange fee allows issuers to
make money from every cardholder, even for those who pay off their balance
every month and do not pay an annual fee. If issuers can’t make money on
these accounts, they are likely to add fees to make these accounts
profitable or close the accounts. Issuers aren’t charities that give away
free loans, cash and airline tickets” says Hardekopf. “Consumers that have a
rewards card with no annual fee or debit cards with rewards may be the first
to see the changes.”
Retailers will save money, but will they pass these savings onto consumers?
“It would be surprising if retailers significantly cut prices because of
this. Many retailers and merchants are also struggling and need every dime
they can get.
If consumers currently don’t know they are paying this fee,
there will probably not be a large outcry if the price doesn’t change,”
says Hardekopf. “Consumers may find the biggest savings with
merchants that give discounts for alternative payments.”
Effect on Smaller Banks and Credit Unions The amendment’s debit fee requirement exempts banks and credit unions with
assets under $10 billion (99% of banks and credit unions), allowing them to
collect the higher fee. However, these cards will cost more for merchants
to accept. While merchants have to accept all cards in the Visa and
MasterCard network, they can set a higher minimum payment for a community
bank-issued card, encouraging consumers to use another card or form of
payment. This could hurt the smaller banks and credit unions because the
interchange fees are an important source of revenue for their own credit
cards, which typically charge lower rates and fees than the big banks.
Results of Similar Legislation In 2003, Australia’s central bank required that the interchange fee be cut
in half, to less than 1 cent. According to the New York Times, banks and
credit card companies claim the lower fees have cost them about $1 billion
Australian dollars annually, or $919 million, and there have been several
changes in Australia’s credit card industry. Banks have reduced credit card
reward programs. Banks now require customers to pay their credit card bill
faster. Annual fees have increased for reward programs.
The Senate could vote on the Financial Reform Bill on Wednesday. If
it passes, leaders of the Senate and the House (which has passed its own
bill in December 2009 that does not include these amendments) will meet the
following week to negotiate differences between the two bills. The Senate
and House would each vote one more time on this compromise bill before
President Obama signs it.
LowCards.com (http://www.lowcards.com) simplifies the confusion of
shopping for credit cards. It is a free, independent website that helps
consumers easily compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest introductory
rates. It also gives an unbiased ranking and review for each card.
The LowCards.com Complete Credit Card Index (http://www.lowcards.com/CreditCardIndex.aspx) is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1060 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for ten years.
For more information, contact Bill Hardekopf at 1-800-388-1910 or billh@LowCards.com
Whether in energy, healthcare or micro-investing, is there a real business model in sustaining the world’s resources and improving the quality of life for its inhabitants? INSEAD Knowledge attended the IESE Net Impact Doing Good and Doing Well conference in Barcelona recently, and found evidence that many companies and individuals are finding there are business models, if you are prepared to think creatively and be just a bit audacious.
The idea of putting the corporate brand on the balance sheet is an audacious proposition.
One that can revolutionize marketing, change the role of everyone responsible for the health of brands, and make the US
more competitive in the world.
The gap between marketing and finance has never been greater. And, the
chasm will never get smaller unless valuing the intangible brand and
putting it on the balance sheet becomes a reality. The fault doesn’t
reside with marketers; rather current accounting standards are
inefficient for valuing brands.
[Guest column from:James R. Gregory, CEO CoreBrand (www.CoreBrand.com) with thanks, Ed.]
_____________________________________________________________________
Financial standards don’t account for increased value when intangible
assets are key drivers of the brand. Corporate financial statements and
annual reports are insufficient for assessing the performance of the
brand value.
In 2007, I spearheaded a blue ribbon committee that approached the
Financial Accounting Standards Board (FASB). The group, an academic, a
CFO, an accountant, and myself, approached the board of directors and
petitioned them to change the way they account for brand value.
One of the results was FAS 157, which allows for valuing the corporate
brand only when a company is bought or sold. Unfortunately, it does not
value the brand over time, or the way brand equity is actually created.
While a step in the right direction, it didn’t give us the tools we
were looking for.
Today, we have an opportunity to create a win/win situation for
marketing and finance. Every professional communicator knows inherently
the amazing value of branding. We experience this value creation every
day. Unfortunately, we don’t have a way to account for this value and
when marketing budgets are not accountable they tend to be under-funded.
We see an opportunity because accounting standards are changing. FASB
and IASB (International Accounting Standards Board, the primary
accounting standard authority in Europe) have been coordinating efforts
to develop one global accounting standard. IASB has a more open-minded
view of brand value so this is an encouraging development for a full
discussion of the topic.
Where there is change, there is opportunity. Communications
professionals and the organizations to which they belong should take
advantage of this time of change to get their fair share of the
marketing budgets.
The metrics for measuring brand value have advanced by light-years.
Interbrand, Millward-Brown, Corebrand, and others have been working on
brand value metrics for the past twenty years. But, we’re competitors.
We all keep our data and our analytics inside a black box. What I
suggest is a change to the status quo. We should find the best value
measurement practices in the industry. We should work cooperatively to
identify how value is created, and devise the best possible way of
valuing brands.
Here’s what CoreBrand brings to the table. We know everything a company
says and does impacts the corporate brand. As a result, the brand
impacts financial performance in two ways: revenues and stock performance.
Product branding relates to the revenue side of the equation. You build
brand power, measured as “familiarity” and ”favorability” toward the
brand, which impacts sales, earnings and cash flow, and ultimately,
stock performance.
But, there’s also a direct relationship between corporate brand building
and stock performance. This impact is the ”reputation” portion of the
intangible asset, known as goodwill, which is a very stable number and
this is the number that should be on the balance sheet.
Drilling deeper you can analyze both sides of these value equations with
two different models. On the product branding side, look at market share
analysis and business share analysis, then project market share at
different spending levels. Then, through a discounted cash-flow
analysis, evaluate Return on Investment (ROI).
On the corporate branding side, you need consistent, quantitative
research over time. Model against industry peers and the stock market,
then project ROI based on improving the position and market
capitalization. Finally, evaluate ROI performance based on improving the
brand equity and value.
The benefits of valuing your brand are significant. The corporate brand
is an intangible asset that represents the reputational portion of
goodwill. It averages about 5-7% of the market cap of every company in
the CoreBrand 800 (companies tracked in the Corporate Branding Index.
The corporate brand can be accurately consistently measured and valued
over time. You can measure it against specific competitors, peer groups
and entire industries. It can be managed like other business assets.
And, it can grow or lose value over time on an ROI basis.
There was recently an article in The Wall Street Journal (April 10,
2010), “Reality Stars go on to Stock Success” about CEOs appearing on
Undercover Boss, and the fact that their stock price increased after
each episode. Well, as my daughter would say, ”Duh.” We know it works
and it’s a very consistent model.
The red bar is a “peer group.” It can be your competitors. It can be an
industry. It can be any number of companies you want to evaluate
against. That’s the brand equity value you measure every single quarter.
Then, you have the client’s brand equity; again you evaluate it
quarterly contrasted against the peer group. Finally, you evaluate the
improvement or decline on a quarterly basis, as well as the
communications pressure. It becomes a simple, clean dashboard for the
corporate brand.
This is a more realistic and meaningful valuation approach than current
royalty relief methods, and a more logical answer than the profit-
analysis method. CoreBrand has over 20 years of quantitative research on
over 800 companies across 49 industries to support these valuations.
This brand equity valuation allows you to look at your brand over the
continuum of time, which allows a company interested in its past
performance to go back in time and evaluate what happened if or when we
did something. You can identify specific events: a change of management,
an advertising campaign, reorganizations or mergers. You can evaluate
what happened, because that data exists in our archives.
This evaluation tool is a systematic method for budgeting, evaluating
ROI, or simply setting the value of the company’s reputation. With FASB
and IASB working hard to bring these accounting standards together, we
have an enormous opportunity to put the brand on the balance sheet.
