by Mark Weston | Feb 4, 2010 | Africa, Economics and development
Last week I met someone high up in the Sierra Leone branch of Ecobank. He proudly told me the history of his bank.
In the 1980s, because of widespread instability and the collapse of most African economies, Western banks like Barclays and Citibank pulled out of the continent. West Africa was left bankless.
Seeing this, West Africa’s chambers of commerce got together and decided that instead of allowing the Westerners’ withdrawal to cause further damage to African businesses, they would set up a bank of their own. The chambers of commerce didn’t have any money, however, so ECOWAS (the Economic Community of West African States) stumped up the initial capital. The chambers of commerce didn’t have banking skills either, so they talked to Citibank in New York and drew up a contract whereby Citi would set up the new bank, run it for its first four years, and train Africans to take it over after they left.
Lome, the capital of Togo, was chosen as Ecobank’s headquarters, as Togo was the only stable West African state at the time (it was ruled by a dictator). After four years, and having made good money out of the deal, Citibank handed the new entity over to Africans. Ecobank now has branches in thirty African countries, Paris and Dubai, and is planning to open up in London and New York. And it’s still run entirely by Africans.
by Alex Evans | Feb 4, 2010 | Economics and development
John Michael Greer has just posted the latest instalment in a series of essays on collapsonomics over at the Archdruid Report – here’s a sample. I don’t agree with everything he’s been arguing in his series – but it’s thought-provoking stuff and definitely worth a read.
I’ve mentioned more than once in these essays the foreshortening effect that textbook history can have on our understanding of the historical events going on around us. The stark chronologies most of us get fed in school can make it hard to remember that even the most drastic social changes happen over time, amid the fabric of everyday life and a flurry of events that can seem more important at the time.
This becomes especially problematic in times like the present, when apocalyptic prophecy is a central trope in the popular culture that frames a people’s hopes and fears for the future. When the collective imagination becomes obsessed with the dream of a sudden cataclysm that sweeps away the old world overnight and ushers in the new, even relatively rapid social changes can pass by unnoticed. The twilight years of Rome offer a good object lesson; so many people were convinced that the Second Coming might occur at any moment that the collapse of classical civilization went almost unnoticed; only a tiny handful of writers from those years show any recognition that something out of the ordinary was happening at all.
Reflections of this sort have been much on my mind lately, and there’s a reason for that. Scattered among the statistical noise that makes up most of today’s news are data points that suggest to me that business as usual is quietly coming to an end around us, launching us into a new world for which very few of us have made any preparations at all.
by David Steven | Feb 2, 2010 | Climate and resource scarcity
One of the most significant developments at Copenhagen was the emergence of the BASIC coalition – Brazil, South Africa, India and China – which negotiated the final details of the Copenhagen Accord with the United States.
My understanding is that BASIC was formed at China’s instigation. China agreed a Memorandum of Understanding with India in October 2009, committing the two countries to working closely together at Copenhagen. It then invited Brazil and South Africa to join the party, at a meeting in Beijing a week before Copenhagen started. Sudan was also invited to represent the G77.
According to Jairam Ramesh, India’s environment minister, the four countries decided that they’d walk out of Copenhagen together if necessary:
We will not exit in isolation. We will co-ordinate our exit if any of our non-negotiable terms is violated. Our entry and exit will be collective.
During Copenhagen, China worked extremely closely with India, with the two delegations meeting up to six times a day. It also engaged intensively with the other members of BASIC. In the final meeting with the Americans, China agreed to accept a limited international monitoring of its targets (India claims to have pushed China on this point).
The decision was also taken to drop language, setting a deadline for turning the Copenhagen Accord into a legally binding agreement. South Africa and Brazil both appear to have been unhappy with this decision.
Since Copenhagen, the BASIC countries have met once and have agreed to continue to get together on a regular basis. They want the Copenhagen Accord to set the stage for a ‘twin track’ agreement – with tough and binding targets for developed countries through Kyoto #2 and voluntary commitments for themselves under a new agreement.
No-one really knows how the US would fit into this picture. It is also increasingly clear that they and the US left Copenhagen with quite different impressions of what will happen next. The US believes that large emerging economies now have “very explicit activities and obligations”. I don’t think they believe they are committed to anything significant, beyond what they agreed at Bali or put on the table on a voluntary basis before Copenhagen started. (more…)
by Leo Horn Phathanothai | Feb 2, 2010 | Cooperation and coherence, East Asia and Pacific, Global system
In sync with Chinese Vice Premier (and likely PM-in-waiting) Li Keqiang’s address at Davos, an interesting piece appeared today in the Global Times (the international news arm of the Chinese Communist Party’s official People’s Daily, i.e. a mouthpiece), which is revealing about the Chinese leadership’s continued ambivalence towards projecting China as an emerging superpower. Excerpts of the article entitled ‘managing the world’s rising expectations‘ follow:
The world has been expecting more from China, especially since the financial crisis. But between the increasingly high expectations and China’s real capabilities, there is a huge gap, which is evident in the 2010 World Economic Forum that opened Wednesday in Davos, Switzerland.
At the forum attended by about 2,500 leaders from over 90 countries and regions, China is expected by many to purchase Greek bonds, to continue holding US treasury bills, and to lead global recovery while under the onslaught of protectionism.
Even those who are blaming China’s monetary and trade policies for causing tensions in the post-crisis period expect that China should save the world’s economy.
Though such expectations may boost national pride among a section of Chinese, there is a strong case for China to remain clear-headed about the reality it is facing.
On the one hand, it is an emerging economy, with its 8.7 percent GDP growth in 2009 and its soaring middle class population.
On the other hand, it remains a developing nation, with its per capita GDP ranked 106th and over 100 million people below the World Bank indicated poverty line.
The world’s expectations, unless cautiously managed by China, could jeopardize the hard-earned fruits of labor accumulated in the past six decades.
As The Economist once shrewdly observed, “China’s own world view has failed to keep pace with its growing weight. It is a big power with a medium-power mindset and a small-power chip on its shoulder.” The cautious attitude of the leadership reflects concerns that a ‘superpower’ role in international affairs would: (i) make it difficult for China to avoid adopting positions that will add complexity to decision-making and may be at odds with the raw pursuit of national self-interest; (ii) divert its attention and resources away from addressing domestic issues. The more cynical, such as Yan Xuetong, the Director of the Institute for International Studies at the elite Tsinghua University, go as far as to suspect a Western conspiracy to ‘trap’ China and ‘exhaust our limited resources’ by locking it in to onerous international agreements and obligations. Li Keqiang’s address at Davos was in keeping with Deng Xiaoping’s dictum of keeping a low profile in international affairs. It was a reminder that the national interest will remain paramount even as China’s voice and involvement on global affairs rises. Along similar lines, see also the report on China’s participation at Davos in today’s FT: ‘West too busy with its crises to engage east’.
by David Steven | Feb 1, 2010 | Economics and development, Global Dashboard, Global system, UK
Today, I launch a new paper on risk and resilience in the UK housing market. The report calls for a fundamental shift in the way in which the UK mortgage market is regulated and the how it operates.
The paper is published by the Long Finance Foundation, which is a counter to the short-termism that has brought many first world economies to the brink of penury.
The initiative began with a conundrum – “when would we know our financial system is working?” – and aims to “improve society’s understanding and use of finance over the long-term”. Intent on igniting a global debate on longer-term finance and related issues.
The paper – Time to Stop Betting the House – is being launched at a Long Finance conference on Enduring Value with Brian Eno, Stewart Brand, Faisal Islam, and Avinash Persaud. It argues that:
- The FSA has failed to understand the scale of challenges facing the British mortgage market, which represents one of the greatest sources of financial risk facing the public.
- Its regulatory reforms, far from offering the ‘one-off shift’ that Adair Turner has promised, are timorous and unfit for purpose.
- They leave over-leveraged borrowers highly vulnerable to future economic volatility – with the potential for a second housing crisis to come sooner rather than later.
The paper then sets out two very different visions for a more resilient mortgage market; Edited Choice reduces complexity in the market whilst increasing choice, Melt the Glue creates resilience from the ground up, decreasing the government’s direct involvement during a transitional period where diversity is also reintroduced into the market.
The aim of the report is to catalyse debate on how the financial services industry should be structured in the future – and challenge the thinking of the next government.
You can download the full report here.
