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.
BP’s flawed handling of the environmental crisis in the Gulf of Mexico is creating an identity crisis for the company, according to management professors Hamid Bouchikhi of the ESSEC Business School in France and John R. Kimberly of the Wharton School.
The two wrote about BP’s equally faulty treatment of the 2005 explosion at the Texas City refinery in their book, The Soul of the Corporation: How to Manage the Identity of Your Company. Now they offer six steps that BP should have taken to mitigate the damage — and that other companies should consider when it’s their turn to cope with crisis.
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.
Count me among those that believe that the G-20 is one of the better approaches to global governance in a world that desperately needs improved international policy coordination. While the G-20 has not gotten to where it could and should be, its periodic meetings provide us with important insights into global policy issues.
Ed: There follows a dissection of the G20 communiqué and the piece ends with:
I fear that all this may continue to catch off guard at least three dimensions that are still significant in today’s marketplace:
Mindsets that have difficulties recognizing regime shifts, preferring instead the illusionary comfort of the more familiar cyclical frameworks;
Approaches that focus excessively on rates of change and inadequately on levels; and
Investment portfolios that are over-exposed to equity and credit risk, and that maintain insufficiently hard interest rate duration.
In concluding, I would repeat what I said early yesterday morning when asked by a reporter
“What does the US jobs report mean for markets?”
” Investors should keep their seat belts on and tight.”
M-PESA customers to enjoy banking services on their mobile phones
[PESA meaning money in Kiswahili, so literally Mobile Money]
Nairobi based Equity Bank and Safaricom have launched an ultimate bank account that facilitates customers to transfer money to and from their M-PESA Equity bank accounts via their mobile handsets while enjoying other benefits that come with their bank account.
7.6 million Kenyans have bank accounts out of an estimated bankable population of 19 million.
This new service will push the banking frontier to reach out to the unbanked population by enabling Kenyans with mobile phones to easily open bank accounts.
Speaking at the launch Safaricom Chief Executive Officer Michael Joseph said
“M-PESA is proud to launch another new initiative with our partners Equity Bank by offering a new service that will target customers who are looking for the convenience of a bank account that uses M-PESA as the tool to deposit and withdraw money into their accounts. This is a great idea that will drive customers to save money into their bank accounts and enjoy the benefits of having the added value services of both M-PESA and Equity Bank account”.
This new innovation gives an opportunity to all unbanked Kenyans with mobile phones to enter the financial system and enjoy the freedom of modern banking. It is a revolutionary step in demystifying banking and making it easy for every Kenyan to keep their money in a safe and secure place.
Equity Bank’s Chief Executive Officer, Dr James Mwangi said
“This partnership marks the convergence between banking and telecommunications which will indeed take financial services to the last mile. Our partnership symbolizes how brands can maximize on their synergies to develop solutions that will hasten Africa’s development agenda. Technology is one of the key agents that will drive economic growth by introducing convenience and efficiency to empower ordinary citizens to become agents of poverty eradication. This is in line with our vision of championing the social economic prosperity of the people of Africa.”
The launch of M-KESHO is in response to identified M-PESA customer needs for a convenient and affordable to keep their money that they can access through agents including Equity Bank auto branches (ATMs).
[Kesho meaning “tomorrow” in Kiswahili, so literally Mobile Savings]
Through M-KESHO, over 4.5 million Equity Bank account holders and over 9.5 million M-PESA customers will now enjoy a linkage between the two services.
Recently, the two firms offered all registered M-PESA customers the ability to withdraw M-PESA from the over 650 Equity Bank ATMs.
The inter-linking of the M-PESA system, Kenya’s first mobile money transfer service with conventional banking infrastructure like Equity Bank’s presents a ground-breaking innovation that is a fitting platform for the development of new services in line with the two organization’s vision of deepening financial inclusion.
Financial access is a key component of the economic pillar in Kenya’s Vision 2030. Safe and secure savings, access to credit and affordable insurance are financial services needed by all including the low-income households who lack access to these services. The bottom of the pyramid, the majority of who are still unbanked seek for opportunities to access affordable financial services. This partnership helps expand access to financial services. Dr James Mwangi also serves as the Chair of Kenya’s Vision 2030 Delivery Board.
About Equity Bank
www.equitybank.co.ke
Equity Bank is the leading Microfinance Bank in Africa, listed at the Nairobi and Uganda Stock
Exchanges. It is the largest bank in the region in terms of customer base with over 4.5 million bank accounts that is 54% of all bank accounts in Kenya and has presence in Uganda & Southern Sudan.
The vision of Equity Bank Ltd is to champion the social economic prosperity of the people of Africa while its purpose is to transform the lives and livelihoods of our people socially and economically by availing them modern, inclusive financial services that maximize their opportunities The Bank has evolved with growth and strength of capability to become an inclusive bank for all because of its low cost business model.
The Bank runs on a Global Robust State of the Art Information Technology Computer System supported by Infosys, HP, Oracle and Microsoft. The multi-currency, multi-company, multi- country system has a capacity of 35 million accounts and a processing speed of 300,000 transactions per minute. This system is integrated with WAY 4, an online Card Management System that has multi-institution and multicurrency transaction processing capability and has the ability to handle over 60 million cards with speed performance of 180,000 transactions per minute. The Robust System is backed by a comprehensive Business Continuity and Disaster Recovery System.
About M-PESA
www.safaricom.co.ke
Launched in partnership with Vodafone in March 2007, Safaricom’s global acclaimed award-winning MPESA is the first commercial mobile money transfer system in Kenya. Designed to answer to the needs of the unbanked and people outside the formal financial system, this trailblazing innovation has had phenomenal success, to global acclaim. According to March 2010 figures, M-PESA serves a growing clientele of about 9.5 million subscribers through an agency network estimated at over 17,000 units. It has handled over Sh405 billion in person-to-person transfers since launch.
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.
A poll of 1,000 likely 2010 general election voters was conducted on March 4-8, 2010 by the bipartisan polling team of The Mellman Group and Ayres, McHenry & Associates. The poll has a margin of error of ± 3%. Here are some key results.
THE FINANCIAL CRISIS AFFECTED AN EXCEPTIONAL NUMBER OF AMERICANS
46% have either lost their job, or had a family member or close friend lose a job due to the financial crisis; 53% have lost some, most or all of their savings.
FINANCIAL REFORM IS A HIGH NATIONAL PRIORITY
74% of voters believe that the chances are 50-50 or better that the U.S. will experience another financial crisis in the next three years.
Most Americans believe that reforming the financial sector is a top priority for the nation, even in the face of other pressing issues such as health care, education and immigration reform, and the war in Afghanistan.
59% of voters felt Congress and the administration should support financial reform now, over other priorities.
INACTION WILL HURT INCUMBENTS
50% of voters say they would view their member of Congress more favorably if reform is enacted this year, while only 18% would view them less favorably.
ALL KEY ELEMENTS OF REFORM MATTER
Each of these major elements of reform was supported by over 80% of voters: An early warning system to address signs of trouble in the system; Ending “Too Big to Fail” and bailouts; Increasing market transparency to protect investors and families; Giving consumers better information about business practices.
AFTER HEARING THE ARGUMENTS FOR AND AGAINST THE PROPOSED REFORMS, VOTER SUPPORT FOR LEGISLATION INCREASED
At the start of the survey, 29% opposed reform, and 40% supported it.
After details were explained and arguments for and against reform described, opposition stayed at 29% but support rose to over 60%.
Click on the link below to read the poll findings.
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.
Is Andrew Cuomo (Andrew Cuomo news) bent on further reform of the credit rating process?
The New York Times reports that the New York attorney general has initiated an investigation of eight banks with an eye on determining whether they provided misleading information to rating agencies.
The banks are Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), UBS (NYSE: UBS), Citigroup (NYSE: C), Credit Suisse, Deutsche Bank, Credit Agricole and Merrill Lynch. Cuomo has already taken look at various pieces of the credit ratings conundrum.
These actions led to deals in which the agencies agreed to ask for more information from issuers and changes in fee practices.
Altogether, these piecemeal actions add up to much less than significant reform, in the eyes of the agencies’ many critics. Indeed, recent congressional hearings have uncovered some sad practices that were all too rife. Big banks luring away agency employees, who turn around and interact with their former colleagues, and lots of gaming of the system.
We’ll see if anything really changes. One aspect of this mess is whether the banks provided misleading data to the agencies. That would hardly be surprising. Banks provided loan data, which agencies fed into their models.
One example of gaming: Banks would simply change the names of services to make it seem like the loans came from a diverse set services, when in fact they came from just one. We may see more action against the agencies. The SEC has already sent a wells notice to Moody’s.
