Friday, August 10, 2012

10 Business Blogs in East Africa


Bankelele
There are quite a few business blogs in East Africa, worthy of reading. In fact, there are way more, than 10, but that's a catchy title for the search engines. Here's a list of some business blogs found in over 10 categories, but feel free to add more in the comments section.

Architecture/Infrastructure
- Architecture Kenya  is about architecture in Kenya and tracks large projects. 
- East African Energy is about energy issues.
- new  Tom Makau on telecoomunications and the Power industry
- Thika Road Blog is all about Kenya's new Highway from Nairobi to Thika. 
- Ujenzi Bora is about real estate & building best practices.


Many Americans Die with ‘Virtually No Financial Assets'


Economist's View
The importance of Social Security:
Study: Many Americans die with 'virtually no financial assets', by Peter Dizikes, MIT News Office: It is a central worry of many Americans: not having enough money to live comfortably in old age. Now an innovative paper co-authored by an MIT economist shows that a large portion of America's older population has very little savings in bank accounts, stocks and bonds, and dies "with virtually no financial assets" to their names.
Indeed, about 46 percent of senior citizens in the United States have less than $10,000 in financial assets when they die. Most of these people rely almost totally on Social Security payments as their only formal means of support, according to the newly published study, co-authored by James Poterba of MIT, Steven Venti of Dartmouth College, and David A. Wise of Harvard University.
That means many seniors have almost no independent ability to withstand financial shocks, such as expensive medical treatments that may not be covered by Medicare or Medicaid, or other unexpected, costly events.
"There are substantial groups that have basically no financial cushion as they are reaching their latest years," says Poterba, the Mitsui Professor of Economics at MIT.
However, the study — one of the first to examine Americans' end-of-life finances — also reveals a diversity of outcomes among senior citizens. Between 1993 and 2008, it found, unmarried older individuals had median wealth of about $165,000 roughly a year before they died — a figure that includes current and future Social Security income, job-related pension benefits, home equity and financial assets. In the same period, the median wealth for continuously married senior citizens, roughly a year before they died, was more than $600,000.
"There is a lot of divergence in how people are doing," Poterba says. Those disparities also complicate the public-policy issues relating to the new findings.
"One of the clear messages is that it is very hard to do a one-size-fits-all retirement policy," Poterba says. "We need to recognize that, for example, if we were to substantially reduce Social Security benefits for those later in life, that there is a share of the elderly households for whom that would translate very directly into reduced income, because they seem to have accumulated little in the way of financial resources." ...[continue reading]...
Republicans would likely respond that people have so few assets because they rely upon the government to take care of them -- cut Social Security and they'd save more -- but history suggests otherwise. There's a reason we have a Social Security program (and other programs such as Medicare), and reducing benefits would make it even harder than it already is for a substantial number of the elderly.

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Social Investment: A Review of the Literature


Financial Access Initiative Blog
The concept of social investment has received growing attention over the last decade. The core idea is simple: investing in organizations that produce a substantial positive soc​ial outcome -- and at least some financial return. Advocates for social investment frequently use the phrase "doing well while doing good."
While there has been much discussion of social investment, there has been relatively little actual investment. The one area where substantial flows of capital have emerged under the social investment umbrella is microfinance. Thus, there are important lessons and insights for social investment as a whole to be gained by examining the experience of the microfinance industry in trying to marry profit and social returns.
Over the last two decades, microfinance has grown from a promising experiment to a burgeoning industry that serves over 200 million people worldwide.

Cochrane’s Incomplete and Misleading Summary of the Evidence on Deworming


Innovations for Poverty Action Blog
Summary: The Cochrane Collaboration's recent summary of the evidence on treating school-age children for soil-transmitted intestinal worms (or STH) is incomplete and misleading. While we do not comment on the evidence of the health and cognitive outcomes reviewed, we continue to find that the educational benefits alone justify mass school-based deworming. We strongly endorse the WHO and Copenhagen Consensus's recommendation to mass treat children for STH.  

The Cochrane Collaboration recently updated their review of the evidence on treating school-age children for soil-transmitted helminths (intestinal worms which infect nearly a quarter of the world's population). While many of the methodological flaws in the 2007 review have been addressed, the new review is still incomplete and provides a misleading summary of the evidence on mass deworming. Deworm the World, Innovations for Poverty Action (IPA), the Center for Effective Global Action (CEGA) and the Abdul Latif Jameel Poverty Action Lab (J-PAL) all encourage countries with moderate to high worm loads to mass treat for STH because it is one of the most cost-effective ways of increasing school attendance. These results remain unchanged and more recent studies (see below) have only strengthened the case. We have not yet carefully reviewed Cochrane's summary of the evidence on height, weight, anemia, and cognitive outcomes (although others have commented), but the educational benefits alone are sufficient to justify mass school-based deworming.


Losing the Courage of Your Convictions


SSIR Opinion & Analysis
There's an old saying, "If you don't stand for something, you'll fall for anything." Unfortunately, it's probably got things exactly backward. The more you stand for and the more beliefs you strongly hold, the more likely you are to fall for anything—anything that confirms your existing beliefs.
There's only one way to fight back, to not fall for anything: skepticism. Skepticism about everything—what you "know," what you believe, even your own motives—is one of the most critical habits of mind to cultivate (I believe, but take that with a grain of salt).


Development Controversy a Sign of Sophistication

SSIR Opinion & Analysis

The international development world is currently hosting rows about whether two poverty-alleviation programs actually work.

The Millennium Villages Project, founded by economist Jeffrey Sachs and supported by Angelina Jolie and others, aims to help nearly 500,000 out of extreme poverty. A paper published in June in The Lancet, a leading health journal, was scrutinized and roundly criticized for the logic and analysis it used to argue that observed changes were due to the Millennium Villages rather than changes already taking place in society.

The second row concerns treating children in less developed countries for intestinal worms, which are endemic in many countries. Because the worms share a child's food, they are thought to contribute to malnutrition, reduced physical and cognitive development, and lethargy. Deworming children has been found by randomized control trials to reduced absenteeism from school, and hence is recommended by the World Health Organization and the Copenhagen Consensus Center, a think tank that publicizes the best uses of development money. But a systematic review and meta-analysis published last month by the respected Cochrane Collaboration, focusing on non-educational outcomes, found that "deworming children seems like a good idea, but the evidence for it just doesn't stack up."

The striking shift here is not in the details or merits of the specific programs, but in that these rows happen at all. They are precisely how science is supposed to work. For instance, Maxwell published his theory of electromagnetism, which turns out to be inconsistent with the maths of radiation from a black box, and from that tension arose the much broader quantum theory. Andrew Wiles published his "proof" of Fermat's last theorem in 1993, somebody spotted an error, and Wiles revised and strengthened the proof as a result. In Einstein's math for his general theory of relativity, the Russian mathematician Alexander Friedmann found a term being divided by zero ("a complicated form of zero," a physicist once said), which suggested—contrary to the prevailing view—that the universe is expanding, subsequently confirmed by observation and from which cosmologists have estimated the universe's age.

International development has become much more scientific in the last 15 years: evaluating ideas through randomized control trials; publishing enough detail about a program's methods and results that it can be replicated elsewhere; subjecting analysis to peer review; and publishing in respected journals. The organizations whose data are being contested should be proud that their data are capable of such contest. They contrast starkly with much activity in charities, philanthropy, and even social policy where performance data are often too scarce, too private, too vague, and/or otherwise too flaky to be meaningfully debated.

Science—knowledge—progresses through vigorous public debate about rigorous data. This process has shown that many things that everyone "just knew" to be true are actually false—from the "fact" that the Sun goes round the Earth, to the "fact" that severe brain injuries should be treated with steroids, a common practice until 2005 when randomized control trials showed it to be fatal. Similarly, many things which we "just know" to be true about international development are being shown by this careful, empirical, scientific approach to be false: providing more text books to Indian schools rarely actually improves learning; microcredit does not singlehandedly lift millions out of poverty; anti-malarial bednets should not be sold but rather given away for free; cooking stoves that use less wood as fuel do not always reduce respiratory diseases from reduced smoke inhalation.

The current rows are therefore a sign that international development is moving beyond "just knowing because I saw it with my own eyes" into properly understanding what works. We need more and better data to enable more quality debates on many subjects about development—debates that get settled, not by personalities or popularity or politics, but by the evidence.

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We’re Talking. Who’s Listening?

The CEP Blog

In a perfect world, our ideal audiences would read every one of our tweets, consume every blog post, and make sure not a day goes by they don't check Facebook for our latest updates.

But we know it's not a perfect world, and for proof we have the results of a Center for Effective Philanthropy survey that examined grantees' engagement with foundations' social media. For any tweeting, blogging, or Facebook-using foundation that presumes their grantees are paying routine attention to what they're writing, posting, and featuring through social media channels, this study may surprise, but I don't think it should disappoint.

Even though the results show that social media is not the favored means for learning about the work of their funders, there's much to be comforted by in what the survey identified as information sources grantees do rely on to stay current about the work of foundations that support them. (More on that in a moment.)

Why shouldn't these findings disappoint? Let's start with the obvious. Social media is ubiquitous and it covers just about every subject under the sun. Because of the volume of content pumped out daily, we're forced to be choosy about what we want to read, what videos we want to watch, what things we want to comment on. It may be, at least for some, that social media is more useful as a supplemental information source that helps them stay on top of news and reports they otherwise might miss were it not served up through a daily diet of tweets, blog posts, and Facebook updates.

Also, instead of rushing to mark these findings as a failure to communicate, I think it's more important to make note of what the survey tells about where grantees are more likely to turn for information about the funders that support them—i.e., what is already working.

As the report states:

On average, grantees find social media to be less helpful for learning about the foundation than individual communication with foundation staff, group meetings with foundation staff, foundations' published funding guidelines, and foundations' websites. The greatest differences in helpfulness ratings exist between the in-person communication resources—individual and group meetings with foundation staff—and social media.

To me, that finding is another example that while social media is meant to be social, it's not always personal. And as much as we'd like to believe it's two-way, there's a lot about it that's one-way. I say something, you respond. You respond, and I comment again. Even if that back and forth happens in real time, it's not a conversation. It's not the same as a face-to-face meeting—or even a Skype chat.

Also, I tend to think of social media as a tool that's more effective at helping establish relationships with audiences that aren't necessarily "us" or part of "us," but people who are more than one step removed.

Grantees are not a faceless, anonymous audience. Foundations know their grantees by name. They know what they look like. Program officers have probably met many people at the organizations they're supporting.

As much as the survey answers some questions, it also raises others that deserve follow-up. Among them, "Why aren't grantees relying more on foundation's social media?" My hunch is that they don't think of themselves as an audience for foundation tweets and blog posts. And, as the survey shows, they already get what they need from other sources. There might be other answers worth knowing.

Other questions we ought to be asking include: what do foundations do to engage grantees in their social media? Do they simply treat grantees as another audience? Do they attempt to specialize content? Do they provide information that might appeal more to grantees than others? If the answers to those questions are "yes" and these efforts aren't paying off, then it seems we've overstated the value of social media in this context as an effective communications channel. If so, let's next turn our attention to see how effective it is at reaching other audiences.

Similarly, what if foundations—instead of targeting grantees as recipients of their social media output—made more of a conscious effort to engage grantees as social media content creators? As an example, The Heinz Endowments for the past several years have been offering a place on the foundation's website, called In the Spotlight, where organizations tell their own stories "directly as they know best." Heinz doesn't control the content, instead gives grantees carte blanche to post whatever they want about themselves and their work.

To some, even in today's free-wheeling social media environment—where foundations still like to exercise as much control over their content as possible—Heinz acknowledges for them that fear proved unfounded.

Says Linda Braund, communications manager:

"Some people at the Endowments were genuinely worried that we could run into trouble with inappropriate content, and that was the biggest obstacle that I faced in getting the Spotlight online. I'm not saying that you shouldn't be aware of what's being posted—I get an email with a link every time anything is posted to our site so that I can check it out. But, don't let fear of what your grantees are going to say stop you from allowing them to post directly without waiting for approval from you. We have gained a lot of rich, authentic content on our site about the work our grantees are doing in the community—without a lot of work and time on our part."

Whether social media is still a brave new world or part of our everyday life, several things are clear. We have more questions than answers. Social media is still a work in progress. There's plenty of room for experimentation.

But, as we've learned, thanks to CEP, there are limits to what social media can do and for whom.

 

Bruce Trachtenberg is Executive Director of The Communications Network. You can find him on Twitter @bsttrach.

Join the conversation about the findings featured in Grantees' Limited Engagement with Foundations' Social Media on Twitter using the hashtag #cepsocialmedia.

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Tuesday, August 7, 2012

Big Banks Fall Back On Three Myths

The Baseline Scenario

By Simon Johnson

Global megabanks have had a tough summer.  Jamie Dimon, vociferous opponent of restrictions on reckless risk-taking by big banks, presided over large losses due to exactly such behavior in the London office of JP Morgan Chase.  HSBC, which prided itself on running a uniquely decentralized management model, was found to have violated – massively, over many years, and in a uniquely decentralized manner – US money laundering and other laws; the head of global compliance resigned while on the witness stand during a Senate hearing in July.  And Barclays – which had bulked up on the strength of its capital market activities – conceded that traders from that part of the company had conspired to rig Libor, a key benchmark for global interest rates; in the ensuing public outcry, the top two executives were forced out.

And last week Sandy Weill, who amassed a vast fortune building Citigroup and pushing to dismantle the constraints on such megabanks' activities, concedes that the entire exercise was a mistake.

"I'm suggesting that they be broken up so that the taxpayer will never be at risk, the depositors won't be at risk, the leverage of the banks will be something reasonable,.."

According to American Banker, former top executives calling for the biggest banks to be broken up now include Phil Purcell, former chief executive of Morgan Stanley; John Reed, former chairman of Citigroup; and David Komansky, former chief executive of Merrill Lynch.  (I am asking American Banker to bring their slide show on this issue out from behind their paywall.)

Backed into a corner, representatives of these Too Big To Fail banks and their allies are forced to fall back on perpetuating three myths.

First, their critics are "populists" who do not understand banking or economics.  But this is belied by the credentials of the people raising serious issues with how global megabanks currently operate.  The American Banker highlights the critiques of Richard Fischer, president of the Dallas Fed (and experienced financial sector executive), Tom Hoenig (former president of the Kansas City Fed and currently number two at the Federal Deposit Insurance Corporation, F.D.I.C.), and Sheila Bair (former head of the F.D.I.C. and now chair of her own Systemic Risk Council – of which I am a member.)

As I wrote here last week, Fed Governor Sarah Bloom Raskin has emerged as an important voice calling for rethinking key aspects of big banks, including why they should have implicit government backing for their securities and trading operations.  Mervyn King, governor of the Bank of England, and Jon Huntsman, former Republican presidential candidate, have also expressed articulate and well informed proposals for making big banks less dangerous – primarily by forcing them to become smaller.

In this context, you should read Neil Barofsky's new book, Bailout, a compelling critique of how the bailout process was handled, including the treatment afforded to banks and the relative lack of effort that went into directly addressing problems with mortgages.  The pushback from the Obama administration is that Mr. Barofsky is some form of populist – in contrast with the supposedly responsible professionals of the Treasury Department (many of whom were previously or have subsequently become employees of large financial firms).

But a close reading of Mr. Barofsky's narrative and analysis confirms what was evident to anyone who studied the reports he produced when he was Special Inspector General overseeing the Troubled Asset Relief Program (or SIGTARP, in the jargon).  Mr. Barofsky is a distinguished law enforcement professional who was given the job of preventing fraud and abuse in the congressionally-mandated bailout program.  His efforts to ensure TARP was run effectively and more in line with taxpayer interests were opposed by senior Treasury officials almost at every turn.

The true issue is not populism vs. responsible bankers.  Big banks have become a dangerous special interest with powerful friends.  It is the reformers who are responsible.  Executives who run megabanks – and anyone who supports their continued existence – are the ones who have become reckless and damaging to society.

The second myth is that a "cost-benefit analysis" would show that the Dodd-Frank financial reforms are not worth pursuing.  This is actually a clever – or perhaps devious – legal strategy that is being pursued in a low profile but effective manner.  Even well-informed people in Washington frequently have no idea how much damage this myth can still cause within the rule-writing process.

Fortunately, Dennis Kelleher and his colleagues at Better Markets are fighting hard against this myth.  In a report released this week, Kelleher, Stephen Hall, and Katelynn Bradley point out that the industry never wants to take into account the real costs of the crisis – millions of jobs lost, growth derailed, lives disrupted, and massive damage to our public finances.

We had a frank discussion of this report at the Peterson Institute on Monday, and I was struck by how many people have a hard time getting their minds around the scale of the damage wrought by large financial institutions that got out of control.

This relates also to the third myth – which is the claim that financial reform will hurt our growth prospects.  Again, as laid bare by Better Markets, it was reckless risk-taking at the heart of our financial system that led to the largest crisis since the 1930s; the damage will be with us for a long time.

Some dramatic government actions helped to reduce the impact on the real economy – and we avoided a Second Great Depression.

But, as Neil Barofsky makes clear, there is almost nothing about these bailout measures that should make you feel good.  Putting the big banks back on their feet, with essentially no conditions requiring real change, was a mistake – reinforcing the moral hazard and implicit government subsidies that are now at the heart of our financial system.

Today's global megabanks are too big to manage.  It is not "the market" in any sense that keeps these firms at their current scale; this is the largest and most dangerous government subsidy scheme on record.  Such subsidies can only be ended by government action – it is time to break up the largest banks.  Make them small enough and simple enough to fail.

An edited version of this post appeared yesterday on the NYT.com's Economix blog; it is used here with permission.  If you would like to reproduce the entire post, please contact the New York Times.


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The tree versus the shadow

The Official Google Blog
Character is like a tree and reputation like its shadow. The shadow is what we think of it; the tree is the real thing. —Abraham Lincoln
When I was looking for investors for my startup in 1997, I was a lot more interested in the values and character of my potential investors than in the name of the firm on the door. My first investors were not from Sand Hill Road or Palo Alto, but were people I knew would support my company (and me) in the ways we most needed help.

As an entrepreneur, you want to know if your investors will be there for you, help you do the right things, and encourage you to persist and evolve when things seem dark. Perhaps most of all, you want to know they've been there before, and that they'll be calm and confident when things go wrong—when giving up sounds like a pretty good option.

At Google Ventures, we try to be the kind of hands-on investors that quietly help to build companies. We try to be the kind of investors we sought as entrepreneurs ourselves. Starting a company can be a lonely business, and it helps to know you've got someone on your side who has been through it before.

Today, we're launching a new Google Ventures blog as an experiment, hoping it will help you get to know the people and companies at Google Ventures a little better. We'll share how we think about things and why, if you're an entrepreneur, you might want to talk to Joe, Rich, Kevin and the rest of the team.

Posted by Bill Maris, Managing Partner, Google Ventures

(Cross-posted from the Google Ventures Blog)
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