Monday, December 28, 2009

SITI East Africa

A securities training institute has been launched in East Africa. The Securities Industry Training Institute (Siti East Africa) is based at the Uganda Securities Exchange (USE) in Kampala, Uganda.

This initiative is financed by the IFC. The board members of Siti East Africa include representatives of all of the exchanges of East Africa-Rwanda, Uganda, Tanzania, and Kenya. It is a capacity building initiative.

The curriculum was agreed by all of the exchanges. It contains 4 distinct courses: a Fundamentals course, Markets participants course, Officers and Directors course and Specialty seminar. The objectives of the entire program are to widen the base of knowledge that the capital markets rely upon to regulate itself and to function in a capable way with the public. The program targets directors of companies, brokers as well as policy makers and financial professionals.

The modules as described on the USE website cover such things as Client account management, payment and settlement, and Legal Aspects of the Securities markets. These fundamentals are essential for any market participant let alone financial market professionals. One of the objectives of SITI is also to conduct programs on Information Technology and Clearing and Settlement. This is absolutely necessary for the exchanges of East Africa.

I think this program is utterly awesome. But it is financed by the IFC so it is basically US subsidized. Right now I am struggling with whether that is entirely a bad thing….

The US financial markets have fairly stringent standards when it comes to broker education and examination. This is not replicated in the UK or elsewhere. Typically, the English are far ahead of us in education but here they fall behind I am afraid. I think this is absolutely the right thing at the right time. With worrying activities in Kenya as far as broker activity, requiring education and potentially examinations of financial industry professionals can only be a good thing.

Moreover, the potential for the involvement of information technology is enormous. A guy who works for SWIFT spoke at ASEA in Abuja. I met him at the water table between speakers at ASEA and accused him of being part of a global mafia controlling the transfer of international payments (swift code and all that). He said, ’rubbish!!’ and explained that they are completely transparent. (Ian Bessarabia, SWIFT). I did really believe him and I think he has something that Africa wants. SWIFT can provide clearing capabilities for exchanges. AND the fact that they are already so internationally connected means there may be some bullying but ultimately they provide credibility. ALSO, they can document easily all transactions so should disputes over trades occur resolution may be nothing more than production of the paper trail- rather than something more arduous requiring testimony or worse-lawyers. All of this sounds too good to be true, so it probably is. HOWEVER, I think that sometimes fear of bullying or too much corruption or fear alone prevents progress.

Take this Nigerian student on the Northwest flight to Detroit. People do things. Countries do things and organisations do things. If we begin to forget the differences between all of these things we might as well forget surviving global warming let alone the next 10 years.

People do things. Progress dies when we stop seeing with our hearts and our inner sense. Politics is number one right now in the US…not reason and progress.

Africa has many progressive initiatives. This education is run by the IFC but I don’t care about that. I no longer care where people come from. I only care about people as humans. What difference does it make anyway? Enough crazy politicians want to seem effective and make us sit for the last hour of a transatlantic flight. Well ok.

I choose life. I see people and they do things good and bad and I see that too and I am not confused.

I encourage everyone to develop this skill.

Wednesday, December 16, 2009

Totally cool poster of Zimbabwe money

A friend has created a two-sided poster of the crazy progression of Zim dollars during hyper-inflation. It is amazing.
This picture shows both sides of the poster. It is for sale-$10 USD.
Let me know if you want one. I already have mine!!

Wednesday, December 9, 2009

Abuja-one last time

Sunrise Day 1
National Football Stadium
National Mosque

Driver shouting, "Did you get the picture? Did you get it!!!!? Take a picture of this bridge! Did you get it???!"

Village in the distance
Abuja, city gate


Monday, December 7, 2009

Arik airlines saved my life!!

I had a hell of a time getting out of Abuja, because BA completely let me down. What is more important is that all the people at Arik airlines and those at the Abuja International airport saved my life. They rushed to help me and I am not exaggerating.

The man behind the counter, the money changers, the ticket man, security, the ladies at the gate. They took pity on me. I was FRANTIC when BA refused to let me on the flight because I was late, another story completely. BA wanted to put me on the flight to LAGOS!!! and then to London the next day. Unacceptable because I was due to meet my new supervisor.

Arik rushed me on to a plane that left 15 minutes after the BA flight. And BA was rule oriented for what??

The Nigerians in Abuja dispel everything I have ever heard about Nigeria. Across cultural, racial and religious lines they saved me from the Lagos airport and got me to London. I am eternally grateful and I will NEVER FLY BA EVER AGAIN!!

To be clear the Arik airplane was brand spanking new, clean and the staff was friendly, efficient and exceedingly polite.

I found Abuja to be the complete opposite of everything everyone has said.

Nigerians are the Americans of Africa-misunderstood, misjudged, a little naughty, self-deprecating in their humour and a good deal of fun to be around.

Pictures to follow as I am in London right now freezing. Back to So Cal tomorrow then I will load the pics of the National Mosque and the city gate of ABUJA!!!!

Friday, December 4, 2009

Beautiful Abuja!!

Nigeria has been wonderful. Abuja has beautiful sunrises and sunsets. I hope to capture that on film tomorrow and post.

The ASEA meeting has gone well. There are about 300 attendees. The panels have been informative but because some speakers did not show there have been substitutions.

So far the best speaker was the Governor of the Central Bank of Nigeria. He was very plain spoken regarding the recent banking crisis in Nigeria and said that there are serious problems that he is addressing. I will write a fuller report when I get back.

The conference was not fully attended by all African Exchanges but a fair amount of CEOs showed up. Today there was an excellent discussion on technology in the aFrican Capital Markets. I want to consider how such developments compliment or overlap with the law. It seems to me that if technology is excellent, some legal infrastructure may be forgone without losing confidence in the integrity of what is being done...whatever it is...but in my mind market integrity.

Saturday, November 21, 2009

Bridging the gap between what we want and what we do.

Ethan Zuckerman posted a very interesting blog a few days ago. He pondered the connection between compassion and action. He asked, “Here’s my question: does it matter if action is effective or ineffective if we can demonstrate that action leads to more interest in a topic and more knowledge acquisition?”

He suggested that perhaps the lack of interest in the developing world, by the media and average Americans, is actually a lack of information. This information gap might be bridged through Social Media as a tool of information rather than just a networking tool. I don’t know about the social networking stuff. I very much like the informing part.

Zuckerman raises this interesting question of information in order to inform rather than for any other reason: for profit, for political advantage, in order to harm. Well, the purpose to inform is to allow the possibility of change: political, social and economic. The informing however is arguably neutral. I love this idea—tout simplement comme ça. I want to inhabit that space. This struck me because I spend a lot more time than I thought I would informing people about Stock Exchanges existence in Africa as opposed to discussing the law or regulation. People don’t know. Why is that?

Informing here, should be distinguished from Education. As Prof Larry Backer has explained, formalised education can be a tool of control.

Within that context, the internet is freer that educational institutions to raise awareness and inform.

A lawyer in the state of New Jersey recently formed a non-profit to provide low-cost legal education to the public. Her idea is to provide the public with the legal information they have a right to concentrating in areas of concern today such as, bankruptcy, foreclosure, immigration and healthcare law. She covers New Jersey and where applicable, federal law. We connected on

This week launched its global network of idealists. This new venture seeks to bridge the gap between good intentions and our actions. It is concerned with the same thing that Zuckerman is. How can we take all of these good intentions and put it to use with technology. Idealist wants to connect like-minded people starting with people already in it's own network.

I like what Ms. Jackie Crosby has created. It is an extension of what Legal Aid Organisations are doing. However, they are often over-worked and under-staffed and cannot spend the time necessary to educate the communities where they are situated. Of course, many of these networking and connection efforts are computer-based so they exclude members of society who have no computer. Those that are more accessible to everybody are more practical and do the most good. I would love to see something similar to inform people about the developing world. Unfortunately, information about the developing world does not seem necessary.

Ultimately, I think information is the key. No one can predict what this information will produce. What I have described here all begin with good intentions. People do not always do rational things with information. I predict the positives will outweigh the negatives and encourage you to visit, This site is full or gorgeous pictures of an Africa that we rarely see in the media and almost never on the BBC--Re-branding Africa is the goal. They need some pictures of stock exchanges on there!!

Friday, November 20, 2009

My passport and me.

I am thrilled to report that after many phone calls and only $65 passport with an attached visa to Nigeria is winging its way across the North American continent-from D.C to my humble and sunny, little town in Southern California. The total cost to me, including Express mail and paying a service to help me get it=$350.

It was an international effort and I thank and thanked the chaps at the Nigerian Stock Exchange for their assistance as well as the staff at the Nigerian Embassy in D.C. !!

Beautiful Abuja here I come.

Thursday, November 19, 2009

Why is it so difficult to get a Visa to Nigeria?

Not only for US citizens but also for Africans (so I have heard), the Nigerian visa is elusive.

Getting a visa for Uganda was easy and very inexpensive. The 'visa' for Zimbabwe was given at the Harare airport. I did note that Americans pay a smaller fee than Brits for entry to Zimbabwe. Teasing the English guy behind me in line about that did NOT go over well. Anyway, who knows how these things are calculated really?

I do know that I leave for London next weekend, on my way to Nigeria, and the Nigerian consulate in Washington DC has my passport, and not a small amount of my money already, and they don't seem to be able to get my visa to me for several weeks. I believe their explanation that they have a large number of visa requests at this time causing a backlog. Sadly, I was unable to keep my inner dialogue.....inner....and did say, out loud, that this was an excellent opportunity to get more money from me--given the tight spot I was in. Did I confirm the ugly American stereotype? Oh well, Nigerians like to call themselves the Americans of Africa. Perhaps, that will be in my favour.

How will this resolve? I sent a plaintive email to the African Stock Exchange Association (ASEA) conference organisers who previously assured me that my visa application would go without a hitch. I heard back almost immediately. Some poor gentleman from the Nigerian Stock Exchange whose Blackberry was still on, said he would help me in the morning. Mobile phones in sub-Saharan Africa are pretty awesome things!! They do everything, pay your bills, act as a bank account. My mobile service is exceedingly lame in comparision.

I think I will get to Nigeria. I mean I plan to get to London first with my trusty US Passport. A little more money may be extracted but it is worth it to me. The 2009 ASEA conference theme is the Global Financial Crisis and African Capital Markets-a fascinating topic!! Abuja, Nigeria sounds lovely and realtively safe. I am jazzed about going.

Tuesday, November 10, 2009


Manzanita Tree
Cahuilla Indians of California ground acorns into flour and left these holes from their efforts. (women did the grinding...they were strong!)
Beautiful San Jacinto Mountains!

Financial Market Social Responsibility

Late this past summer, I spent an evening at an exclusive rooftop bar in New York City drinking Prosecco with elite lawyers employed by top, top white shoe law firms. Fuelled by liquid courage, I floated my whole responsibility idea for them to critique. I suggested that they might have some responsibility for the global financial crisis since many of them helped create the agreements for banks and financial institutions that made credit default swaps possible. They actually helped invent CDOs. I suggested that the damage done was global and that their responsibility extended beyond the tiny island of Manhattan, across many oceans.

The best way to describe their responses is to refer to an episode from the original Star Trek television show called The Cloud Minders. Each elite lawyer was convinced they were from Stratos and I was a Troglyte. I was an inebriated, insane Troglyte with sub-standard reasoning skills. They were contracted to do a job, which they did-full stop.

I did not expect much else but I was impressed with the uniformity and vigour of the response. Context is everything. No responsible thought other than one motivated by profit is capable of being conceived in the world’s financial capitals. Change must come from elsewhere which causes dismay since their arms, financial firms, are very long. Regardless, I continue to think my thoughts and irritate whomever I can with them. Insanity is trying the same thing over and over and expecting a different result………uh oh.

IESE Business School at the University of Navarra has suggested that, along the same lines as Corporate Social Responsibility (CSR), financial firms need to begin to embrace responsibility for their actions and the consequences of those actions. (See endnote) This would not be a responsibility that resides only at the corporate level. All professional participants in the financial market would be responsible players. The paper locates the idea in CSR rather than ethics because it is more palatable.

CSR is extremely popular and people embrace it because it has high look good factor and low do something factor. That does not mean it is useless. It just means that it is diluted. However, it has a tremendous amount of literature supporting and describing it. This has value.

There is a large normative dimension to the global financial crisis. It is prevalent mostly in terms of moral hazard discussions. This is helpful from a theoretical standpoint but decisions continue to be made to save those firms that made ‘bad’ decisions. (See Citigroup) Having said that, the whole discussion continues to be infused with a moral dimension which is some kind of step forward.

This kind of thinking can inform the financial reforms currently being considered in some legislatures. The White Paper in the US is considering imposing a fiduciary duty on stock brokers which is a movement forward. The reforms will need to go further and consider the affect that the financial crisis has had on the developing world. Here is where the reliance on CSR becomes less tenable.

There are other examples of making firms more responsible global citizens. The commitment of private industry to the Millennium Development Goals (MDGs) is one such example. For awhile, when times were good, firms such as Goldman Sachs signed on to support efforts to achieve the MDGs. As part of that initiative, private financial firms consider how their actions affect the MDGs. Private firms, regardless of whether they are multi-national, participate in the global financial community and should take responsibility for that. The inclusion of private industry in the MDG global initiative recognizes the role powerful firms play.

Additionally, concepts of sustainability, preserving the future for our future earth inhabitants, are pervasive in the same dialogue and can extend responsibility from solely domestic to international quickly. The global recession has jeopardised sustainability. Poverty has increased and vulnerable countries have suffered the most.

These ideas are value laden and increasingly the discussion surrounding then includes private industry. Financial Market Social Responsibility simple specifies a particular industry and asks it to be responsible.

I hope to give a Post-Graduate seminar on this at the University of Warwick in England in a few weeks. As I prepare for that I will elaborate here. Antonio Argandoña, Can Corporate Social Responsibility Help us understand the credit crisis?

Tuesday, October 27, 2009

Day of the Dead and Facebook

WARNING: potentially inadvertent insensitive commentary about the dead

A little off topic, but I have been thinking about this for awhile. Two of my friends, who were also friends on Facebook, passed on within the last 6 months. I see their profiles pop up on my page now and again and sometimes Facebook even reminds me about them through various prompts. I have been wondering, lately, what should happen to their pages?

For one of my friends, after she passed on, people posted kind words and memories of her on her page. It really was a lovely and an immediate way to participate with the community of people who lost her, acknowledging that loss. But it has bothered me, as the months have gone on, to see her picture pop up and have Facebook ask me to suggest friends for her.

This morning, I saw a BBC article on this exact thing. Facebook has decided to address the matter by allowing the pages to remain as a memorial to the former Facebook member. Only friends will be able to visit and see the memorialised page. Nowhere in the article did Facebook announce that family members could ask that the page be removed. Indeed, the head of security of Facebook, Mr. Max Kelly, went as far as to say, "When someone leaves us, they don't leave our memories or our social network."

Uh, yeah, the dead actually do leave our social network. There may be some people in society whose social network include the deceased but I believe that is a minority of the population and they probably do not have Facebook pages. WTF??

I think Facebook is amazing. It allows people to re-connect, stay in touch with friends who live far away, and socialise in this new way that is playful and instant. Having said that, in any social gathering there are downsides-stories of people bullied, complaining about work and then getting sacked. Beyond that, there is something else that is happening. The keeping dead people in our social network provides a glimpse of Facebook's greedy but successful underbelly.

Last week, a US District Court judge in San Jose, California approved a settlement for Lane. et al v. Facebook, Inc., N.D. Cal., Case No. 5:08-cv-03845-RS, a class-action filed by Facebook users. The suit concerned Facebook's Beacon system that tracked member's online buying activities-activities that occurred while members were NOT on Facebook. The tracking took place without member's knowledge. Those purchases were then detailed on the member's page through a news feed along with a related advert for a similar item. For example, the main plaintiff of the class action bought a ring online as a gift for his wife. That purchase was posted on his Facebook page and his wife saw it. The claims were for violation of the Electronic Communications Privacy Act, Computer Fraud and Abuse Act, Video Privacy Protection Act and the California Computer Crime Law.

The $9.5 million settlement pays plaintiffs, anywhere from ($1000-$15,000), but most of the monies go for plaintiff attorney fees ($3 million) and the funding of an Online Privacy Foundation ($6 million). The Foundation will promote online privacy and security. Promoting online privacy and security is something Facebook is already required to do under Federal Trade Commission mandates and California law. See

The settlement negotiated by lawyers resulted in Facebook having to do what it is legally obligated to do and pay the lawyers for the privilege. This is Social networking at its finest.

We old, middle-aged. cynical, and skeptical observers, waiting patiently for reply messages from college students on Facebook or the newly employed in cities far away, know nothing of this kind of situation. After all, it is not possible that Facebook is really a marketing scheme intended to use our personal data to target us for the appropriate product. It is all fresh and new and about Social Media and people over 40 are so clueless.

Wake up Generation X & Y-you sheep!! This is the same old thing, just a different day. No one is protecting your privacy and only the lawyers are getting paid.

Dead people still have pages because Facebook wants to keep track of their friends and relatives for marketing reasons. Grief is intensely personal.

Let's show some class and reject this thinly veiled attempt to have a community who may or not may not care watch our pain so they can make a buck.

Monday, October 26, 2009

Zim Exchange

It does seem absurd to talk about, given that the ‘unity’ government is on the verge of collapse, but what will be the structure of the new securities regulation governing the Zimbabwe Stock Exchange?

Rather than focus on the negative, I think we should all just embrace Zim as representative of every relationship in our lives that perhaps involved a domineering figure or some dysfunctional union where other people were for it but you were sceptical of its success in the long run. This is in line with the way I see France as someone’s former lover who was once young and urbane but is now just old-in an endearing way.

On the other hand, the stock exchange of Zim is like the one thing you did right in the particular relationship…it made money and might just make more…AND it has this fabulous electronic board that displays the ticker and all the quotes. Seriously, often in times of turmoil, the best medicine is to contemplate the minutia.

The Zimbabwe Stock Exchange (ZSE) is currently governed by the Securities Commission. The Securities Commission came in to being through the Securities Act [Chapter 24:25] (Act No. 17 of 2004). It has had some difficulty gaining respect. In March of 2009, after the ZSE re-opened, the Commission attempted to have a meeting to inform brokers of the role of the Commission in securities regulation. It was poorly attended. This indicated more about habit and tradition perhaps than any intention to snub the new regulator. there is little information on what has hapenned with the regulator since.

By August of 2009, reported that the ZSE was going to de-mutualise and trade as a company on the ZSE. This is permissible under the Securities Act.

I just wonder why a Securities Commission structure was chosen to govern the exchange as opposed to a Financial Services Authority (FSA) type of regulation as in the UK-where one regulator governs all financial related industries…? The single securities regulator is very American in style-such as the Securities and Exchange Commission (SEC) in the US. It is a popular structure and can streamline governance since the Commission will be singualr in focus.

De-mutualisation will introduce a new way of regulating. The Commission would regulate the exchange under securities law, but the exchange would be a company and will have a Board that is responsible for the exchange as a company. The will be Corporate Governance issues. All de-mutualised exchanges continue to have a public function. They are symbolic and some can continue to be self-regulatory organisations (SRO’s) even after de-mutualisation. They are responsible for continued market surveillance and broker regulation-how this will take place can differ. A separate organisation can be established such as Financial Industry Regulatory Authority (FINRA) in the US.

Often in emerging economies, de-mutualisation can simply mean that the exchange wants to be competitive within the world of exchanges. De-mutualisation is therefore not significant in a regulatory sense, rather it is an economic move.

In Zim, it is difficult to know why things are done. It is most likely seen as a way to compensate for the lack of funding and resources. Understanding, why things are done may assist in predicting how regulation will work or not under the regulatory regime.

Excitingly, things happen without an answer to the question WHY in Zim. We will continue to monitor the regulatory developments and try to determine is some sense can be made. Regardless, the exchange will most likely de-mutualise and regulation is most likely of little concern to the authorities. It will however need to be sorted in order for the exchange to be competitive in a global way. So, we will continue to monitor the news, even if it is quite focused on bad men and big men, for news of exchanges, and try to determine how the ZSE will be regulated moving forward-despite the nagging political problems.

End Notes

The Herald, 17 March 2009, Business Section pg 5. 14 August 2009, Zimbabwe:Government to End ZSZE Monoply

Jennifer Elliot, IMF Working Paper, Demutualisation of Securities Exchanges: a Regulatory Perspective, WP/02/119, September 18, 2002.