Sunday, April 29, 2012

Land reform similarities: US and Zimbabwe

I went for a walk this afternoon around my neighborhood with the for sale signs and the people moving out. I wondered where all the people go. I know some people who lost their jobs, homes and then moved away. I know people who lost jobs, homes and stayed but downsized. When I think about the changes to my affluent town I am frequently reminded of the changes in Zimbabwe. I also recently happened to finally have watched the movie Mugabe and the White African which chronicles the case of Ben Freeth and the SADC tribunal ruling on Land Reform in Zimbabwe. It occurred to me, while I was walking in my neighborhood, that America has created a kind of Land Reform program of its own. It has redistributed property from American families to banks. This redistribution of land has many similarities to the program of Land Reform in Zim.

My neighbor has had it share of foreclosures but I failed to find out exactly how many of the years. Recent statistics show that 1 in every 303 housing units in the state of California is foreclosed.   That sounds like a lot to me. I wonder who gets those properties? If a home is foreclosed it goes back to the bank who held the loan or mortgage. So the banks now own the house. Banks like Bank of America, Wells Fargo, Bank of New York, and JP Morgan are beneficiaries of foreclosure. They now own those properties.

It is true that some properties are resold to new American homeowners, about 33% of sales are resales from foreclosures. So what happens to the balance? What if the banks own them ? What does it mean socially, politically and economically that banks own so much property in California?

The new sub-prime mortgage loan process that relaxed lendee credit and income requirements was spearheaded by banks and mortgage lenders. Now the banks own those failed mortgage lenders and the banks own the homes as well. The US government permitted this through its determination not to regulate.

Homeowners have tried to sue banks and argue to keep their homes because of the deficiencies in the assignment of mortgages to MERS the mortgage electronic registration system leaving the bank not with the title but the homeowner. These cases are not successful as the courts do not support the homeowner but instead support the bank in order to maintain the status quo.

It's official. I do live in Africa. Let's go through the similarities between the land reform programs.

The government of Zimbabwe passed laws to redistribute land. The US government failed to regulate MERS and the entire driver of the subprime lending fiasco, collateralized debt obligations. Both government activity of failure to act resulted in homeowners losing their homestead and suing in the courts.

Both land reform programs, one intentional one incidental, resulted in courts being slow to see the homeowners point of view. Africa is actually ahead of the game on this point. SADC declared land reform illegal in Zim. In the US, the courts pretty much rubber stamp foreclosures.

Lawyers have been trying to argue for more scrutiny by courts in these cases in order to recognize the numerous legal deficiencies in the foreclosure process giving an advantage to the banks. But these cases are few and far between.

The US land reform program resulted in transferring property to banks. In Zim, former white owned farms are redistributed to indigenous Zimbabweans, who sometimes also work for the Zim government. Two programs that may have had one purpose to begin with or on their face, but resulted in the same thing: dispossession, economic downturn and a complete lack of faith in the process and rule of law.


Thursday, April 26, 2012

Portrayal of African men by Hollywood

This video is clever. It attempts to contradict the stereotype of African men depicted in Hollywood. The African Man  video does ask for money at the end which is also funny in its own way.

I never wanted to admit that Hollywood has a tremendous influence on how Americans see certain parts of the World. Maybe I am in is hard to admit that a country with access to Google and Wikipedia cannot be bothered to find out even the geography of Africa. Truth be told, before I did research on Africa I myslef suffered (and continue to suffer) from ignorance.

But as my students love to tell me....that is what the internet is for. 

Monday, April 23, 2012

Art in Africa

The New York Times has an excellent series on Art in Africa.  It is from the perspective of an Art Critic. It is very interesting.

Please check it out.

Also, I am busy planning my trip to Africa in May/June. I think, as of now, I will visit Malawi, Kenya, and Tanzania. I plan to see good, good friends and really enjoy my time in Africa without having to attend a conference. Instead, I go because I want to enrich my understanding....very noble !!!  

Wednesday, April 11, 2012

TED talk on the African Capital Markets

This 2011 You Tube link is a video of Yale World Fellow, Nicky Newton-King, the Deputy CEO of the  Johannesburg Stock Exchange (JSE) talking about the "Elephant in the Room", referring to strategies to move African Exchanges forward and African Exchanges refusal to adopt them. She listed three important strategies to attract more investors to African Exchanges.

1) Harmonisation of laws
2) Cross-listing of Securities
3) Creation of Regional or Pan-African Exchanges

The talk was exceedingly rudimentary-I am not sure what qualifies one as a Yale World Fellow- but interesting. I did agree with her last two points. Cross-listing of securities may be feared but will increase liquidity for the company and all boats will rise with that tide. Exchanges do serve issuers by providing the facility for raising capital. Cross-listing helps facilitate investors finding new, emerging market companies by appearing several places, ideally on a large exchange and on a smaller one.

I also agree that the development of more regional exchanges can only help. East Africa is well on its way toward a regional exchange, even though that has been true for awhile. Ms. Newton-King did not mention this but did use East Africa as an example of where a regional exchange might work.

Finally, I disagree that Harmonisation of laws in Africa, whether exchange procedure or governance, will help anyone. Once again we must remember the poor Southern African Development Community (SADC) Tribunal. 15 African states are members of SADC and yet when the Tribunal ruled against Zimbabwe in the Land Reform case of Ben Freeth and Luke Tembani in 2008, a decision upheld by the South African Supreme Court, it was ignored and then ultimately disbanded in 2011. For Harmonisation of laws to work among even a few exchanges, there needs to be a dispute resolution process in place that functions in a reliable way. Just like African Exchanges don't want to be part of an African Board in SA, they don't want to end up in court there either. So there will need to be a dispute resolution body for exchanges, investors and issuers to take their disputes to.

SADC is not the only alternative for resolution of disputes but for Southern Africa a SADC-like organisation could be developed. Harmonisation is always tricky, in my opinion, because of the potential power imbalances that cannot be rectified. It is usually the laws of the dominant party which are adopted and that is not always good for everybody involved.

More on SADC soon. Watch the video if you can. It is interesting and has some good slides!              

Tuesday, April 10, 2012

Africa Board closing

Maybe a little stale news that the Johannesburg Stock Exchange's (JSE)  Africa Board is closing. That Board was an attempt to consolidate and use economies of scale to increase profits for investors in Africa. by listing stocks on the JSE. Companies from all over Africa would have been able to take advantage of the benefits that such a well capitalized Exchange can provide....but it is closing.

That is interesting since interest in investment on the Continent is increasing. What else can explain this lack of interest by Companies to list on the JSE?  

I really don't know except to say that certainly US Companies are very particular about where they trade. Do companies from Philly trade in Cincinnati or Boston...when regional exchanges existed? I think regionalism is natural and nationalism is to. The JSE has a very interesting idea that might be profitable if there were a way around the fact that the JSE resides in SA. That seems a shame for profits and a victory for those little exchanges that just want to be and exist.    

Sunday, April 8, 2012

Sokwanele is a civic action support group for Zimbabwe. They have a blog and newsletter that reports on things going on in Zimbabwe.

They have begun a new project-the Zimbabwe Land Series. Sokwanele invited two scholars to write monthly articles about land reform in Zimbabwe. These articles will provoke thought and are intended to invite comment by Zimbabweans world-wide to participate int he conversation through comments.

 This is the first in the series describes why land reform will always define Zimbabwe:

Tuesday, April 3, 2012

Lots going on in the Capital Markets in Africa...but first take a look at this:

All about the governance at Universities by Faculty Senates.