We inherently believe that if we had a chance to change the world, we would do something dramatically different. In reality, when people get into positions of power, they get bogged down with the mundane and eventually become conformists; it’s easier to adapt than to change. Having lived through five economic cycles over the last 30 years, I asked myself what I would do differently if I had control of the world at a time when the world economy is gutted by the pandemic and the World Health Organization (WHO) has stated that the worst is yet to come. With these onerous terms of reference, one is compelled to think of extreme measures to provide relief to the dire and helpless situation that the majority of people around the world find themselves in.



In any crisis, what becomes most critical is the availability and flow of money within our economies particularly to the small- and medium-sized enterprises (SMEs). It’s recognized that almost 70% of employment comes from the SME sector. However, in difficult times, the cash-tap dries up and money flows to this all-important sector dries up. Commercial banks are best known for the adage “offer an umbrella when there is no rain” and as entrepreneurs in the SME sector will validate this as banks ask for 100% cash collateral when things get tough. That is risk mitigation 101.



When unemployment is at 30% and when almost 70% of the global population is at risk, there is this select group of institutions that continue to do well. These are a majority of the listed companies and the financial services sector in general. I am quoting from my Publisher’s Note in FORBES AFRICA in June 2020: “Continuing to look at our magical numbers, global GDP is flirting around $100 trillion and total global debt is around $250 trillion (give or take a few trillion). The market capitalization of the 60 main exchanges in the world is around $70 trillion. In terms of profitability, just the S&amp;P 500 companies were projected to deliver approximately $1.5 trillion in profits in 2020, the global banking sector would deliver profits of $250 billion to $300 billion and the technology sector approximately $356 billion. These numbers are larger than the GDPs of most countries. The numbers for Africa are not as high but there are thousands of businesses that are doing well and will continue to do so after the pandemic is over. It’s, therefore, clear that while we have problems from time to time, we also have the resources to fix them; many times over. Hence, it’s time for us to go back to the drawing board and start from zero by redefining our purpose, the difference we need to make and the legacy we will leave.”



Let’s also put two other terms of reference on the table relating to banks. Bank closures and failures on account of bad debt write-offs, non-performing assets or over leveraged balance sheets, seldom come from bad loans to the SME sector or to farmers in the agricultural sector. History is a witness (as Google can validate) that the majority of causes come from lending to large corporates, poor governance and through fraud. Secondly, even in crisis, as central banks reduce interbank rates, commercial banks seldom pass this on to the SME sector; beneficiaries are once again people who can afford the higher interest rates.



Rather than rearticulate, I want to quote from the same note in June: “If we are to be truly reincarnated, the script must be rewritten and inequality must be the first value for rehabilitation. In reality, even though resources are abundant, the gaps have continued to widen and the levels of poverty have increased. This is largely because of how we have developed the economic value chain; people that make the most money are the financial engineers who are trading stocks and not those sweating in the field manufacturing products and delivering services. The cocoa bean, sugar or chicken farmer make 6% of the amount that the retailer makes selling the finished products, who in turn, makes 50% less than the equity trader, who makes the most money trading on the stock. Anna, the tea lady in our office in Johannesburg, was charged an annual interest rate of 26% by one of the top banks to pay the college fees for her only son; no recourse. This is exploitation and needs to change through radical reforms of our entire banking system and the capital markets to harbor on making them very efficient but not for profit; the profit needs to be reinvested at the grassroots level. We need more farmers ploughing the fields, as, at the end of the day, we cannot eat “paper stock”.”



Let’s agree that governments cannot be the answer to all the problems. Governments can provide stimulus, change policies and even print money (if that is indeed a solution), but at the end of the day, the real cash that is available is in the financial system to include capital markets. Even when the entire world economy has come to a standstill, the people who continue to make profits are those that are feeding off the financial services trough. &nbsp;



My over-simplified list of actions, as radical as they may sound, are mild in contrast to what is needed today. I would increase the capital of all multilaterals and Development Finance Institutions (DFIs) by pro rata contributions from the wealthy nations, but ensure that in turn they (including the World Bank and IMF) reduce lending rates significantly and waive interest for three years on all national debt for developing countries. Secondly, to shut all capital markets and exchanges for two years, stop all exits from private investments for two years (rather invest in venture and growth capital), no dividends are paid by listed companies for two years, ensure all cash raised in funds goes into growth capital, interest cap on loans to individuals at the lowest income bracket, and 100% of profits from banks, insurance, credit card, listed companies, investment banks, audit firms, consultancies and property development companies is channeled back to government coffers to support the core sector industries particularly agriculture, healthcare, SMEs and infrastructure (including low-cost housing). To plug some loopholes, no increases in salaries or any bonuses or incentives provided to any employee (other than the lowest income groups) for two years. It may put a small percentage of people through minor but endurable inconvenience but 70% of the world will see some measure of improvement.



The Greek physician <a href="https://www.yourdictionary.com/Hippocrates">Hippocrates</a>, is known to have said: “For extreme diseases, extreme methods of cure, as to restriction, are most suitable.” This, when translated by many people in history, has led to a common phrase “desperate times call for desperate measures”. Well, the time for procrastination is over and it is time to act. If I had the reins of the world, I most certainly would take draconian measures for better good.



– The writer is the Founder and Publisher of FORBES AFRICA

Rakesh Wahi 035

Desperate Times Call For Desperate Measures: What Could Be Done For The Greater Good

When Citigroup opened 2020, the most ambitious projects at the $2.2 trillion in assets lender involved major partnerships with technology companies best known for their internet, social media and ecommerce platforms.&nbsp;



In China, nearly 70% of the payments that Citigroup handles for customers are done through AliPay, the payments business spawned by Alibaba. Citigroup’s digital payments technologies are also present on other popular social messaging platforms like LINE and WeChat. The mega-lender recently launched a credit card partnership with fintech Paytm in India and in Singapore it uses chatbots on Facebook Messenger to help answer customer service inquiries. In November 2019, the bank made a big splash in the United States by unveiling a digital checking account with Google Pay.



These partnerships are part of a new reality for the banking industry’s most important players like Citigroup: Innovative and seamless digital banking capabilities are paramount in a business where basic financial products have become commoditized and rock-bottom interest rates make it hard for lenders to differentiate. Consumers are instead voting with their smartphones, demanding the ability to conduct their financial activities safely and easily on mobile phones and their desktops.



Never were these growing demands more important than during the coronavirus pandemic, which forced countries around the world to announce lockdowns to combat the spread of the virus. Unable to visit bank branches, consumers turned to mobile apps and online services to get transactions done. In the U.S., Citi saw an 84% increase in daily mobile check deposits in May and a tenfold surge in activity on Apple Pay as quarantined customers used digital and contact-less tools to handle their financial activities. The lender’s Mexican operations saw an 80% increase in mobile app logins in March. Downloads of its mobile app surged 116% from February to April, while digital bill payments rose 78%.&nbsp;



“Banking has changed irrevocably as a result of the pandemic. The pivot to digital has been supercharged,” says Jane Fraser, president of Citigroup and CEO of its gigantic consumer bank. “We believe we have the model of the future – a light branch footprint, seamless digital capabilities and a network of partners that expand our reach to hundreds of millions of customers.”



Citi’s increasingly digital approach is visibly evident in Forbes’ second ranking of the World’s Best Banks, based largely on customer satisfaction surveys. Citi rates highly in six of the 23 countries where customers were surveyed (Citi has retail operations in 19 countries).



Forbes partnered with market research firm&nbsp;<a href="https://www.statista.com/" target="_blank" rel="noreferrer noopener">Statista</a>&nbsp;to measure the best banks in nearly two dozen countries. Statista surveyed more than 40,000 customers around the globe for their opinions on their current and former banking relationships. The banks were rated on overall recommendation and satisfaction, as well as five subdimensions (trust, terms and conditions, customer services, digital services and financial advice). Between 5 and 75 banks were identified as top banks in each country, based on the total evaluations collected, the number of banks in the specific country and the scores achieved.



The 2008 financial crisis didn’t just usher in an era of consolidation and low rates that reshaped the banking industry globally, it also coincided with the mass adoption of the smartphone and a shift to digital banking. In the wake, a crop of web-first lenders emerged to challenge the world’s biggest banks and made offering end-to-end mobile banking features a matter of survival. The coronavirus only affirmed that there’s no looking back.



Amsterdam-based ING, ranked highly in eight nations, leading banks worldwide on our list in its reach. The lender, which has a legacy that dates back to the mid-1800s, is a technological pioneer in the banking industry, creating digital bank ING Direct in 1997 at the dawn of the internet age. While ING operates hundreds of bank branches in the Netherlands and Poland, it is known as an entirely web-based bank in markets like Australia, Germany and Spain where it ranks in the top-five.&nbsp;



ING now handles some 4.5 billion digital contacts a year, according to Aris Bogdaneris, head of challengers and growth markets at ING, and it is embarking on an effort to make its digital services uniform worldwide. “We are inspired by the giant technology platforms and their customer engagement,” says Bogdaneris, who points out that user experiences for technology platforms like Uber are the same, regardless of where a customer is located. “We started measuring ourselves more against these platforms than against traditional banks,” he adds.



Now, with Covid-19 affirming most digital banking trends, Bogdaneris wonders whether ING will go all-digital. Says Bogdaneris, “Where we have physical distribution and literally closed branches, [the question is] do we reopen them again? Do we actually need them?”



The other banks that rated highly in more than five regions include HSBC and Santander at six apiece, and digital bank N26, which rated first in Austria and Italy second in Spain and France, and #29 in Germany. Founded in 2013, N26 stands out because it has no physical branches but offers free ATM withdrawals worldwide and recently raised $270 million as part of a Series D round that valued the firm at $3.5 billion.&nbsp;



Digital upstart Nubank is the top-rated bank in Brazil, beating out an oligopoly of legacy banks on our list. “The penetration of the internet and the penetration of smartphones created a window of opportunity for us,” says founder and CEO David Velez. “Even as a startup we could compete head-to-head with the big banks. Suddenly, you didn&#8217;t need billions of dollars to build bank branches and you didn&#8217;t need hundreds of millions of dollars to buy mainframes from IBM. You could use the internet to acquire customers,” adds Velez, “It enables a model that has fundamentally lower costs and a better user experience.”



Growth at Nubank, which operates throughout South America, has been staggering. In 2019, the lender saw its customers surge from 6 million to 20 million and its private valuation now stands at $10 billion.



If there’s any doubt that digital-first banks are the way forward, Velez offers a surprising statistic: Since the pandemic began, Nubank has seen a surge in customers aged sixty and over, the types of clients many bankers once believed would never leave traditional branch networks. Over the past 30-days, for instance, some 300 clients above the age of 90 have become Nubank customers.



Digital banks rated well in the United States as well. Online-only Discover and Capital One ranked #23 and #30, while neobank Chime ranked #36. All three beat out mega-lenders JPMorgan Chase, #36 and Citigroup #71. The other big four lenders, Bank of America and Wells Fargo, didn’t make the top-75.



USAA was the highest-rated bank in the U.S. The bank is open to members of the U.S. military and their families and has more than 13 million members.



&#8211;<a href="https://www.forbes.com/sites/antoinegara/">Antoine Gara</a>, Forbes Staff, <a href="https://www.forbes.com/banking-insurance">Banking &amp; Insurance</a>

Lifestyle late night working Barcelona.

The World’s Best Banks: The Future Of Banking Is Digital After Coronavirus

The dramatic surge of violent Cash-In-Transit robberies in South Africa has the cash services industry fighting back.
If you’re moving money, it could all end in tears, gunfire and a sickening explosion. This is the misery of the road in the Cash-In-Transit (CIT) business in South Africa.
With over 180 heists in the first seven months of this year alone, injuring at least 62 guards and killing seven, private business is trying to find ways to make money out of thwarting these thieves.
“The challenge is that this is such a sophisticated level of crime that everyone in our industry is really looking at it and saying this is really difficult to combat. This is quite tough,” says Roy Alves, the Sales Director of Axis Communications.
The Swedish company has been manufacturing security cameras in South Africa for the last two decades. It’s been approached to assist with its technology in combating CITs.
“What we’re seeing is that this is an organized crime. This is not a random hit on a vehicle carrying cash. This is syndicated crime that has intelligence. They’re either listening on radio frequencies, or listening on telephone conversations, or having information on the roots of these vehicles,” says Alves.
The leading providers of security equipment to the CIT and banking industry, AllCash Technologies, hosted a high-level panel discussion recently in Midrand, Johannesburg, which looked at ways to impede these heists.
Interpol’s #TurnBackCrime campaign Ambassador, Andy Mashaile, was one of the panelists.
“In 2017, 136 billion rands went through the veins of the financial system, and out of 10 heists, 465 million [rands] was stolen. Only 33 million [rands] of that was recovered,” said Mashaile.
<a href="http://www.forbesafrica.com/cover-story/2016/09/01/terrible-time-list-bank/" target="_blank" rel="noopener">READ MORE: ‘A Terrible Time To List A Bank’</a>
The other two panelists were Guateng province’s MEC of Community Safety, Sizakele Malobane, and retired police crime statistics expert and independent analyst, Dr Chris de Kock.
Malobane pulled no punches in giving the perpetrators of CIT heists a stern warning.
“We want to send a message to criminals that we are aware of your arrogance and we’ll deal with your arrogance decisively.There are many ways to deal with it. We can actually respond either by protecting the money… also, we can return fire with fire,” said Malobane.
The use of high-caliber firearms in CIT heists has raised many eyebrows. 
De Kock came armed with statistics that posed crucial questions to the panel. He said 11% of these robberies involve high-caliber firearms.
“These firearms should not be in the hands of the public at all. We’re talking of R4’s (rifle), R5’s (rifle), AK’s (AK-47) and whatever,” said De Kock.
In response, Malobane dispelled some of the suspicions around police involvement.
“It’s not only from the police that these arms are coming from. Most of them, honestly speaking, are actually coming from other countries. These are the kind of weapons that are not used or legal in South Africa, that get used in the process of committing that particular crime,” said Malobane.
Just outside the discussion, AllCash Technologies demonstrated ways to help combat the scourge of CIT heists.
It showed the use of its vehicle vault protection device, called the protection dispensing unit.
The unit is for the protection of assets in the vault area of the vehicle. Once activated, it releases a solid block of polyurethane foam, which envelopes the money, and then hardens into a solid block within two minutes.
In the case of an attempt to blow up the cash van, the explosion hardens the foam, which absorbs the blast.
Also in display here was the Cash Defender MK3, designed to allow the safe movement of bank notes outside of a cash van.
Once activated, it releases smoke and stains the banknotes, rendering them useless. 
Back at the panel discussion, the mining industry, and the use of its explosives in these heists, also came under scrutiny.
“Before we even investigated some of the mining companies, some of them approached us and indicated that ‘we suspect that our explosives are the ones that are being used for CIT’, but not only for CIT, they’re also used for the illegal mining by zama-zamas [hustlers]. So there is an investigation there and I hope that very soon we’ll actually be cracking that particular case,” said Malobane.
For the Interpol ambassador, it was the dark web that was of concern.
Mashaile said 90% of the internet’s usage lies within the dark web, where criminals meet.
“Me and you, and your viewers only use about 10 percent of the internet. The deep web, or dark web, is where a lot of crime is committed. That’s where you can access the hitman industry. That’s where your masterminds in heists meet and communicate freely on that space of the deep web and the dark web,” said Mashaile.
To the crime expert and retired police statistician, the real concern lies within the patterns picked up from his experience.
De Kock says before he left the police in 2013, one of the patterns he noticed was that once one crime is seemingly combatted, criminals move on to the next.
“When we started to manage these figures down from 394 (heists per year) to 182 (heists); 145 (heists) when I left, when it was managed down, it immediately jumped from CITs to ATM bombings. So we must be very careful…the moment you do something, in sociology, we say you have unforeseen consequences,” said De Kock.
Police, government, security companies and the South African community as a whole have had enough of CIT heists. 
For now, the weapons against them are vigilance smoke and foam.

Crime scene blurred law enforcement and forensic background

South Africa Fights Back Against Cash Heists

Samsung has brought mobile payment solution, Samsung Pay, to South Africa. The innovative payment service is available to ABSA and Standard Bank cardholders on both Visa and MasterCard platforms. Security comes first with 5 layers, including fingerprint and iris recognition as well as tokenization to secure all your cards. It’s well on its way to become the new way to pay.

Smartphones have truly become an extension of who we are. It is safe to say that the first thing most people do when they wake up is to look at their mobile phones to check feeds, check messages, just generally check everything, in an always connected world. With Samsung Pay, Samsung South Africa aims to make your eligible Galaxy smartphone a tool that enriches your daily life.
As one of the world’s largest smartphone and technology innovators, Samsung’s core motivation behind developing and implementing Samsung Pay is to give South Africans a smart way of banking at their fingertips, with the security to give them the peace of mind to use it.
Loading cards from participating banks is as easy as scanning and verifying them and adding your iris, fingerprint or pin code authentication.  Once set up, it’s so easy to use. Simply swipe up from the home screen of any eligible Samsung smartphone, no need to search for the app, then select the card, enter your security verification and tap or swipe your phone on the speed point.
Tokenisation is the key to protecting consumer information when it comes to electronic payments. To achieve this, all sensitive account information is replaced with what Samsung refers to as a token. The token replaces information with a series of numbers that are card and mobile number specific. Payments are made using the token which means that this payment method adds another layer of digital security so that information is never vulnerable even in cases of theft. The token can be deactivated without going through the process of cancelling the account.
Cardholders are given a mobile payment solution that will not only benefit the digital footprint in South Africa but will make banking a less tedious process. Head of Digital Solutions for VISA in sub Saharan Africa, Geraldine Mitchley, says Samsung Pay is a life changing payment solution.
“Considering the number of smartphone users in South Africa, it is expected to reach over 25 million by 2022, we are seeing that the phone is the one item people will always have with them and VISA supports payment solutions that fit people’s changing lifestyle,” she says.
How does it work?
Samsung Pay can be used wherever Absa or Standard bank debit or credit cards are accepted on both VISA and MasterCard platforms.  The first step is downloading the app from the Google Play Store and registering your cards with your password method of choice. Then it’s simply a matter of swiping up from the home screen and then swiping or tapping their Samsung Galaxy smartphone at participating outlets. The Samsung devices that currently support Samsung Pay include the Galaxy Note 9, Note 8, S9+, S8+, S8, S7 Edge, S7, A8 and A7( 2017 edition). The 2017 edition of the Galaxy A5 will be compatible in September 2018.
No terminal updates will be needed by operating merchants in order to accept payments. Payments are made without any extra cost; the only fees that apply are banking fees.
Samsung Pay truly is innovation at its best, so get Samsung Pay, and make your next payment an adventure of innovation!
&#8211; Gypseenia Lion

paythere-1

“Samsung brings smart, effortless payments to South Africa”

On June 27, the <a href="https://www.atmia.com/news/the-atm-turns-50-this-year/4665/" target="_blank" rel="noopener noreferrer">ATM turns 50</a>. Former U.S. Federal Reserve Chairman Paul Volcker once described it as the “<a href="https://www.theatlantic.com/technology/archive/2015/03/a-brief-history-of-the-atm/388547/" target="_blank" rel="noopener noreferrer">only useful innovation in banking</a>.” But today, the cash that ATMs dispense may be on the endangered list.
Cash is being displaced in so many ways that it’s hard to keep track. There are credit cards and electronic payments; apps such as Venmo, PayPal and Square Cash; mobile payments services; cryptocurrencies that operate outside the purview of central banks; and localized offerings such as Kenya’s mPesa, India’s Paytm and Bangladesh’s bKash. These innovations are encouraging cashlessness across communities worldwide.
It’s reasonable to expect cash to follow the path of other goods that have been replaced by digital alternatives, such as photos, music and movies. Will cash – and the ATMs that dispense it – experience a “Blockbuster” moment and disappear from our neighborhoods?
Not so fast. Cash will likely become less popular, thanks to the high cost of using cash and the growing array of alternatives. But I expect it will remain with us forever. The future will be “less cash,” rather than cashless.
<h1>The cost of cash</h1>
As of 2013, approximately <a href="http://www.mastercardadvisors.com/cashlessjourney/" target="_blank" rel="noopener noreferrer">85% of the world’s transactions involved cash</a>.
Reliance on cash is quite uneven across the world. While Singapore, the Netherlands, France, Sweden and Switzerland are among <a href="https://www.raconteur.net/technology/the-decline-of-cash" target="_blank" rel="noopener noreferrer">the least cash-reliant countries</a>, in Malaysia, Saudi Arabia, Peru and Egypt, only 1% of transactions are cashless. Even some highly advanced countries, such as Japan, are still highly reliant on cash.
<a href="http://www.pymnts.com/amazon-entertainment/2017/united-states-cash-usage/" target="_blank" rel="noopener noreferrer">Cash usage in the U.S. is still high</a> relative to EU countries. In 2015, cash usage in the U.S. represented 13.1% of its GDP, whereas it represented just 7.1% in France and 4.5% in Switzerland.
Concerns about social equity offer one motivation for lawmakers to push for cashless alternatives. My colleague <a href="http://fletcher.tufts.edu/CEME/about/People/bios/mazzotta" target="_blank" rel="noopener noreferrer">Benjamin Mazzotta</a> and I have studied the <a href="http://fletcher.tufts.edu/InclusionInc/Programming/Research/Cost-of-Cash" target="_blank" rel="noopener noreferrer">costs of cash across a wide range of countries</a>, with a particular focus on the U.S., Mexico, Egypt and India. Our <a href="https://hbr.org/2016/05/the-countries-that-would-profit-most-from-a-cashless-world" target="_blank" rel="noopener noreferrer">research</a> shows that the poor and those with less access to institutions bear a disproportionate share of these costs of using cash.
In the U.S., for example, cash usage imposes a regressive tax on consumers, with the highest impact on people who do not have an account with a bank. <a href="http://fletcher.tufts.edu/CostofCash/~/media/Fletcher/Microsites/Cost%20of%20Cash/CostofCashStudyFinal.pdf" target="_blank" rel="noopener noreferrer">We found</a> that the unbanked pay four times more in fees to access their money than those with bank accounts. They also pay $4 higher fees per month for cash access on average than those with formal financial services. Such fees include those charged for payday lending, buy-here-pay-here auto loans and check cashing. The unbanked have a five times higher risk of paying cash access fees on payroll and EBT cards.
Poorer consumers also have to spend far more time getting cash. On average, Americans spend 28 minutes a month traveling to get cash, but that time isn’t evenly distributed. People who don’t use a bank spend about five minutes longer getting to the place where they can get cash, and unemployed people spent nearly nine minutes more.
In the meantime, other scholars have argued for the benefits of a “less cash” society. <a href="http://press.princeton.edu/titles/10798.html" target="_blank" rel="noopener noreferrer">Ken Rogoff at Harvard</a> has argued that eliminating higher-denomination banknotes can prevent currency from being used to fund illegal activities.
<h1>A world without cash</h1>
A combination of public and private initiatives are currently chipping away at the global predominance of cash, with some countries moving more quickly than others.
<a href="https://www.theguardian.com/business/2016/jun/04/sweden-cashless-society-cards-phone-apps-leading-europe" target="_blank" rel="noopener noreferrer">Sweden</a>, already high on the cashlessness scale, may become the first country to come close to a truly cashless state. Sweden’s history in banks promoting cash alternatives dates back to the 1960s, with digital bank transfers used to pay wages. Cards also become more popular in the 1990s, when banks also started charging a fee for checks. The app, Swish, developed by the major banks, is widely used today for digital money transfers by nearly half the population. Many businesses discourage use of cash, and retailers are legally allowed to refuse cash.
In several other countries, governments are experimenting with innovative digital alternatives. In 2012, the Royal Canadian Mint launched <a href="http://www.cbc.ca/news/technology/mintchip-nanopay-1.3402059" target="_blank" rel="noopener noreferrer">the MintChip</a> project, recently handed over to the private sector. The plan is to store cash on computer chips, enabling the transfer of money between chips through encrypted messages.
In some countries, the private sector has led the way, creating “less cash” societies in the unlikeliest of places. Consider Somaliland, one of the poorest countries in the world. It stands at the forefront of a mobile payment revolution with <a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2013/07/Telesom-Somaliland.pdf" target="_blank" rel="noopener noreferrer">its ZAAD platform</a>. At over 30 mobile payment transactions a month on average, the average citizen of Somaliland is far ahead of the rest of the world’s average of 8.5 such transactions per capita per month.
Perhaps the most dramatic nudge toward “less cash” was experienced recently in India. Last November, the Indian government made a high-risk, high-stakes move by demonetizing the 500 and 1,000 rupee banknotes, in effect <a href="https://hbr.org/2017/03/early-lessons-from-indias-demonetization-experiment" target="_blank" rel="noopener noreferrer">voiding 86% of cash in circulation</a>. Their initial aim was to root out corruption and illegal activity funded by cash. New 500 and 2,000 rupee banknotes were issued, so consumers had to go to a bank and exchange their demonetized currency.
In a country that is <a href="http://fletcher.tufts.edu/~/media/Fletcher/Microsites/Cost%20of%20Cash/COC-India-lowres.pdf" target="_blank" rel="noopener noreferrer">almost 90% reliant on cash</a>, this move led to disrupted enterprises, unpaid wages and long lines at banks. Mobile wallet players were the unqualified winners of the decision, with market leader Paytm claiming <a href="http://www.dnaindia.com/money/report-435-spike-in-paytm-traffic-after-government-scraps-rs-500-rs-1000-notes-2271904" target="_blank" rel="noopener noreferrer">a 435% increase in traffic and a 250% increase in overall transactions and transaction value</a>.
However, despite the surge in mobile payments after demonetization, cash in India remains resilient. In March, five months after demonetization, <a href="http://www.hindustantimes.com/india-news/post-demonetisation-cash-use-back-in-vogue-despite-e-payment-push/story-K9MPFmMKcm1YrbrjDSJFuK.html" target="_blank" rel="noopener noreferrer">cash withdrawals</a> were actually 0.6 percent higher than a year earlier.
<h1>The future of cash</h1>
What explains the resilience of cash, despite its costs and a growing array of alternatives?
Cash is unique among payment instruments in that anyone can transact, any time, any place, with no third parties involved. With this freedom comes strong privacy protection. Currency neither knows nor cares who holds it or when and where a transaction occurred. People have a visceral sense of security when they have cash with them. Much of this sentiment was uncovered in our <a href="http://fletcher.tufts.edu/InclusionInc/Programming/Research/Cost-of-Cash" target="_blank" rel="noopener noreferrer">Cost of Cash studies</a> spanning multiple countries.
These thresholds will, of course, evolve as our societies become more digitally native. However, old habits and perceptions take a long time to turn over. Some merchants will resist the costs of new equipment or fees that accompany cash alternatives. Cash is also <a href="http://fletcher.tufts.edu/InclusionInc/Programming/Research/Cost-of-Cash" target="_blank" rel="noopener noreferrer">considered more convenient and versatile</a>, while with digital transactions there’s always concerns about hacking and fraud.
So, no matter where we are in the world, let us celebrate the ATM’s half-century of service. The human connection with cash will be hard to break. Though cash may become less popular, rest assured that there will always be someone who will stop you in the street asking for directions to the nearest ATM. &#8211; Written by <a href="https://theconversation.com/profiles/bhaskar-chakravorti-274926" target="_blank" rel="author noopener noreferrer">Bhaskar Chakravorti</a>, Senior Associate Dean, International Business &amp; Finance, Tufts University
Originally published in <a href="https://theconversation.com/africa" target="_blank" rel="noopener noreferrer">The Conversation</a>
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Cash is falling out of fashion – will it disappear forever?

Banks and investors are reluctant to risk money in untested projects. Start-ups are left penniless and broken across Africa. Nairobi-based entrepreneur Erik Hersman struggled for capital from banks unwilling to take a risk. Crowdfunding was the answer.
“We had to make sure that we made this innovation come alive and crowdfunding made it easier. Although the process of marketing the idea while being funded is hard, it is worth it,” he says.
Through online crowdfunding platforms, people pledge small amounts of money to projects for 90 days, for a reward.
Hersman turned to crowdfunding and met people that gave his new business a lifeline.
“It wasn’t just about raising money for the project but we also wanted to test out if anyone else wanted this product. Sometimes something sounds great in our heads but no one else would be interested,” he says.
Using Kickstarter, one of the many crowdfunding sites in Africa, he raised over $160,000 for BRCK – a device that helps people go online where electricity is scarce. It can hop between Ethernet, Wi-Fi and 3G and 4G.
“We looked at the market and we were asking ourselves, why are we trying to connect to the internet using devices that are made in Europe and the US when we have a different infrastructure in Kenya; so we started designing and developing a new way to connect to the internet.”
BRCK began shipping units in July 2014. Thousands had been sold to 54 countries by February 2015. The company employs 40 people.
Hersman is grateful for crowdfunding and says entrepreneurs should use it.
“It is not currently well used and understood in the continent but I wish more people could make use of it,” he says.
Entrepreneur Patrick Schofield, co-founder of Thundafund, a crowdfunding site based in Cape Town, says many businesses fail in their first year and good ideas rarely see the light of day.
“Crowdfunding is the most powerful mechanism we have in Africa. If you have a really good idea and people like it, they will support it. People can put $100 for a good idea, for example, but they are sceptical to put down $5,000 for something that hasn’t been tested,” says Schofield.
“Through the process of the campaign, we test if the idea is viable and if there is a market for it. The entrepreneurs say how much they need to execute their plan. If the target is not reached, the donated funds are returned to the funders.”
Thundafund claims it has funded 170 projects worth R6,123,843 ($550,000).
“There are a lot of ideas around how you can thank or reward backers. This is a very important part of crowdfunding because it will determine how well your campaign will do. For example, you can offer the product you want funding to create as reward, early access to the product or service for example when looking for funding for an album, you will offer signed CDs, VIP access to shows; you can make your backers part of the project and much more,” says Schofield.
Crowdfunding platforms like Malaik, AngelList, EarlyShares, and Seedrs offer equity.
Malaik spokesperson, Vias Lustig, says equity crowdfunding is great, but has drawbacks if not well managed.
“An early-stage company that has raised financing from a hundred different investors through an equity crowdfunding platform will have more trouble getting follow-on investment from venture capitalists,” says Lustig.
Malaik, based in West Africa, acts as a nominee. All the crowdfunded money is channelled through a special purpose vehicle (company formed for investing in equity) that appears on the entrepreneur’s books as a sole investor.
“Smaller investors that participate in equity-crowdfunding are also less likely to contribute and help the entrepreneurs with their business plan, since they have smaller incentives. Malaik also thought about curbing this when developing its model by adopting a lead investor format, this way the lead investor takes at least 25% of the equity round, thus ensuring the company has a larger, more invested individual that can possibly act as an advisor,” says Lustig.
Lustig claims equity crowdfunding could take advantage of the $140 billion to $160 billion gap in finance for African SMEs, because they enable many investors to commit small amounts of capital that would usually be out of the question.
The founder of London-based The Crowdfunding Centre, Barry James, says crowdfunding has not had a massive impact in Africa because of a lack of awareness.
“The UK lagged far behind the US four or five years ago until we started to tackle this. Even now, only a small percentage of people in either country are getting the help and funding they could from crowdfunding, so it has a long way to go,” he says.
“If you’re writing a book, the best advice is to write about what you know. The same is true with crowdfunding and entrepreneurship. That said, campaigns in the tech category tend to raise the most money, while games and comics have the highest rate of success – around 50 percent.”
In South Africa, Schofield says consumer products, arts and entertainment projects are the most supported.
The future could be brighter for struggling entrepreneurs, if you have a dream that draws a crowd.

If you want to get Ahead Draw A Crowd – But Be Careful

<h3>What is a budget deficit?</h3>
A budget deficit occurs when a government’s expenditures become more than the revenue it has collected. It is common for governments to run a deficit and to use debt (bonds) to finance them. The interest from the debt needs to be paid out each year. If debt is too high, creditors’ concerns about a country’s ability to repay its debt rise and will hence demand higher interest rates. It becomes harder for governments to raise funds as their debt levels rise too far.
Faced with this problem, a country can either default or restructure its debt.
<h3>Defaulting</h3>
Argentina defaulted in 2001 on $81 billion worth in bonds and opted to devalue its currency to be able to pay its debt.
In 2012, Greece experienced the largest restructuring in history. After years of living beyond its means, high budget deficits and the poor economic climate made it difficult for the country to make payments on its bonds and led to downgrades and high interest rates on new debt. It eventually became too expensive for the country to roll over its debt, leading to the Greece debt crisis. The country is moving towards recovery.
<h3>Another route</h3>
Much closer to home, in April 2009, Liberia bought back $1.2 billion in commercial paper from its private foreign creditors. The debt, twice the country’s GDP and a quarter of the foreign debt, was bought back at an almost 97% discount of the face value. This was achieved after two years of negotiations and with the help of the World Bank, Germany, the United States (US), Britain and Norway.
In 2007, Liberia’s debt totaled $4.9 billion, 700% of GDP. That year the World Bank and African Development Banks reduced the country’s debt by $400 million and $250 million respectively. The previous default was in the mid-1980s.
Last year the world saw the US government’s shutdown. The financial year ended and a new budget had to be agreed upon by the House and Senate; without this, non-essential services were put on hold. The second issue was that the government had run a large budget deficit and its repayments were due. The Democrats wanted to increase tax while the Republicans called for a reduction in spending. A deal was struck and disaster averted.
In the first couple of months of the new financial year, the government’s deficit was reduced by 22%. Federal revenue climbed by 10% in the same period.
<h3>South Africa’s deficit</h3>
Rising debt costs and below target tax receipts are not helping ease South Africa’s debt. The 2013/14 budget deficit is forecast at 4.6% of GDP. Public sector borrowing increased to 7.4% of GDP in 2012/13. The country’s finance minister, Pravin Gordhan, has already vowed to maintain spending limits curbing wage growth. For the 2012/2013 tax season the South African Revenue Services collected R814 billion ($75 billion). Lower economic growth rates in recent years have made it hard to continue using tax revenue to reduce the budget deficit, and there has been an increased reliance on foreign investors to help finance budget deficit.
The South African government adopted a counter-cyclical fiscal policy to shield the country from the recent recession, which worked. On the flip side, the country moved from a surplus of 1.7% of GDP to a deficit.
It is clear, that unlike the general public, governments have a lot more options available to them when they fail to pay their bills. The lights won’t get shut off and the furniture repossessed.   FL

shutterstock_123347431

Deficits And  Debt Ceilings

Virtually all that stuff has to be dug out of the ground. Mined. Then manufactured, transported, sold and consumed.
First, it has to be found, where it hides, mostly deep underground. So, exploration companies with their massive machines, technology, geologists, agronomists, hydrologists, geophysicists and acoustical engineers flock to the Mining Indaba at Africa’s Southern tip. As do prospectors, who tell exploration companies where to look.
Then come the investigative drillers, reserve definers, junior miners and risk assessors, metals analysers, remote camp builders and computer software writers. Feeding at the edges, as always, are the lawyers.  Next come those who do actual mine construction. Here, the big boys get involved: banks, investors, partners, governments, fund managers, engineers, employment agencies. Lawyers move in. And we still have nothing tangible, nothing yet taken out of the ground to feed metals and minerals to a hungry populace.
<div id="attachment_1586" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-1586" class="size-medium wp-image-1586" src="/wp-content/uploads/2013/03/Minister_Shabangu-300x200.jpg" alt="" width="300" height="200" />Minister, Susan Shabangu</div>
Once gold, copper, coal, iron ore, bauxite and a hundred other elements surface from undergound, a new breed of people get involved, until the cars, jewellery, electricity or cellphone gets the stuff into consumer hands.
The extracted total of mining production is worth two trillion dollars, putting the worth of the whole industry and associated ones at about $2,000 trillion.
The Indaba itself? Probably worth $20 million. And its value to Cape Town? Ten times that.
There are 3,000 listed exploration and mining companies, half of them in Canada. The three deepest mines are in South Africa. Coal is easily the most valuable mined commodity, with 7,700 million tons a year worth an annual $693 billion. The next three are iron (2,000 million tons worth $238 billion), gold (257,000 tons worth $132 billion) and copper (16 million tons worth $122 billion). All these numbers from Chris Hinde of IntierraRMG, who ran “A three-hour PhD in Mining” at the 2013 Indaba.
Besides the 7,532 people registered for this year’s event, there were around that number again hanging around, often in suites near the venue, organising meetings with those who are registered.
One top chief executive of a mining company told me: “I don’t bother to go in anymore, otherwise I have to say ‘hi’ to a lot of people instead of just talking to the ones I need to meet. I take a room and get investors to see me privately.”
In the Cape Town International Convention Centre (CTICC) itself are hordes of people in black suits and red ties, anxious looking if they need money, urbane if they are investors or lawyers. Milling about, chatting, drinking, eating and of course networking.
Oh, and there are speeches as well. As a fraction of total delegates, the audience for scheduled addresses seldom exceeds half, which is still close to 4,000 listeners in the hall. Yet the talks are fascinating, especially the women this year. South Africa’s minister of mines, Susan Shabangu, tried to allay investors’ fears about real nationalization but failed to convince them that creeping resource nationalization in the form of taxes, labor laws, fees, licences, community demands and union demands were not a threat to investment. One mine owner muttered: “We’ve already been nationalized, we just didn’t notice it…”
Anglo American CEO, Cynthia Carroll, responded by telling the minister and her Cabinet colleagues: “Mining companies need to work in partnership with their employees and trade unions, to move on from conflict and to build positive relationships for the future. Partnership between business and government is also critical, particularly in ensuring that development objectives and initiatives are aligned. Partnership is essential. But it isn’t easy. Partnership is about dialogue—not monologue. It requires listening as well as talking. And above all it requires understanding and acceptance. Companies need to understand that in a vibrant democracy there will always be a lively political debate, in which not all the views expressed will be to the liking of business. In return, governments and political parties need to accept that business has an important role to play and a legitimate voice that deserves to be heard. Business is a partner, not a pariah.”
The third tough woman speaker was Mamphela Ramphele, who told delegates to be patient when asked if she was creating a new political party.
Her substantive address damned the current government by saying, to a ripple of laughter: “For the most, mining tax revenues vanish in the black hole that is the central fiscus and end up funding large rural estates for presidents.”
She took the audience on a tour of the key issues needing frank discussion if a viable and sustainable future for mining is to be forged. How do you build a mine to best share the resource? How do you deal with legacy issues to enable co-ownership of risk and reward? What needs to change to create sustainable economies and socio-political systems?
There were many speakers, each with platinum-plated wisdom to convey. It can get too much, so I took a tour of the 400 stalls in the exhibition center, mostly manned by Australians—who love Cape Town, seem to despise their government and see Africa as the future of mining globally.  Every single one told me they were happy to be at the Indaba ($12,500 per stand), would be back next year, and did not expect to do business but were there to collect leads for future business.
Jonathan Moore, MD of the Mining Indaba, said because it attracted investors and mining chief executives, it should probably not grow to be very much bigger as quality could suffer.
“It was started by a bright female entrepreneur, Sandy Lawrence, who realized when SA came out of apartheid there would be an opportunity. The first one only had about 200 people, but after it grew bigger she sold it to a private equity firm who held it for about five years, and Summit Business Media, based mostly in New York, bought it in 2007. She thought the intent of the event should be to drive foreign dollars into African mining.”
It has certainly done that.
“I bring 15 people from the USA but employ locals for PR, tech, IT, printing, signage, transport, bags, building stands, some 50 to 60 temps, security. We fill hotels, flights, restaurants, the CTICC, taxis, shops.”
“The CTICC is world-class, as are the staff. Everyone is happy to have it in Cape Town, and the city benefits big time. The world is still waking up to what this continent of Africa has to offer. The Indaba has moved in unison with that awakening and in a few decades things will be very different from now. We haven’t come close to tapping Africa’s mining resource.”
Levels of optimism are high, despite Marikana and the platinum recession. New finds everywhere, all bigger, better, richer, higher grade. Only the Australians seem unhappy, probably because they have to return to a depressed economy coupled with boring politicians.
Africa is on the move. Most of the stuff that has to be dug out of the ground, metals and minerals and increasingly oil and the gas, will come from Africa. Those who will reap the rewards of doing that are the people who people the corridors of the Mining Indaba. It is simply one of the world’s most successful conferences.

Digging For Profits

It’s a warm, overcast, spring afternoon in Julius Nyerere Avenue in the heart of Maputo amid the hooters and rattle of people driving home from work through the potholes. On the side of the road in front of brand spanking new bank headquarters, a group of urbane bankers chat quietly and shift from foot to foot in expectation.
The building used to be a hotel as rundown as the streets that run by it. “This was a ruin; now look at it,” says one of the senior managers proudly. A small curious crowd has gathered. The word is out that one of the richest men in the world is about to arrive. A car sweeps in like a summer breeze off Maputo Bay; a group of people jump out. “Which one is he?” says someone nearby.
<div id="attachment_147" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-147" class="size-large wp-image-147" src="/wp-content/uploads/2017/04/290-647-1024x683.jpg" alt="" width="474" height="316" />Banco Unico branch in Maputo, Mozambique; 15 September 2011 &#8211; Photo by Brett Eloff.</div>
Closing the door behind him is the man himself, dressed in grey suit, with a red-striped shirt and matching tie; Américo Amorim—the 212th richest man on earth, according to FORBES in 2010, worth an estimated $4 billion. With a gentle smile and handshake, he blends into the waiting crowd of bankers and could be one of them. If you are looking for a billionaire who wears his eminence lightly, look no further than this man; a man who not only admires Nelson Mandela, but also appears to subscribe to the great man’s approach to humility.
Make no mistake, there is an iron will behind the smile and a reputation in Maputo—born of his latest deal—as a tough negotiator. Amorim, who made a fortune from putting corks into the world’s bottles, was in Maputo to see where a chunk of his fortune has gone. The 77-year-old entrepreneur’s empire is in a joint venture with Portuguese conglomerate Visabeira, which owns 61% of Mozambique’s newest bank, Banco Unico, which has opened in Maputo with $20 million in initial equity share capital. The remainder, aside from a small stake for management, is owned by Mozambique-based private companies and pension funds.
<div id="attachment_166" style="width: 484px" class="wp-caption alignright"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-166" class="wp-image-166 size-large" src="/wp-content/uploads/2011/11/290-76-683x1024.jpg" alt="" width="474" height="711" />High-rise construction in Maputo, Mozambique; 14 September 2011 &#8211; Photo by Brett Eloff.</div>
Amorim, speaking through aninterpreter, is not fazed by his lofty FORBES ranking: “I am indifferent to that. My passion is to build companies&#8230; My happiness is to be busy.” Amorim has certainly been busy for almost his entire adult life. He took over the management of the family cork business at the tenderage of 18, when his parents died; from that moment, according to his close colleagues, Amorim has worked at least 12 hours a day in more than half a century as an entrepreneur. The Amorim Group has its roots in a small family cork business started by Amorim’s grandfather in 1870. The business is based in the tiny town of Mozelos, 19 kilometers from Porto, near the Portuguese forests, which hold more than half of the world’s cork. The young Amorim took to the family business with a will and travelled the world to sell cork.
In 1958, he journeyed to the then unfashionable Soviet Union and Eastern Bloc to strike deals. It made his company Portugal’s biggest exporter to Eastern Europe. In 1962, Amorim invested 75,000 euros ($102,000) in the business, to modernize and mechanize; the company consolidated cork production in Portugal and down the years expanded into Spain, Tunisia, Morocco, Algeria and Sardinia.
Nearly 60 years on from the young Amorim’s first day in the office, the family empire declared sales of 457 million euros ($621 million) in April and posted profits of 20.5 million euros ($27.8 million) for 2010. The company is the world’s largest manufacturer of corks, making three billion a year. One in four corks popped around the globe is made by Amorim’s company. Like the corks, Amorim’s investments have also popped up far and wide, including: 33.44 % of GALP, Portugal’s energy company; a share in Spain’s third largest  financial institution, Banco
Popular; and in BIC, a commercial bank in Angola. Despite this vast wealth, Amorim has no time for fast boats and private jets—corks are his business and passion. In fact, rare passion flows in the interview when the thorny subject of plastic bottle stoppers comes up. “Plastic is not appropriate for wine.
Nature never spoils. The champagne industry has been in existence for 320 years and it has never stopped using corks. Corks are always preferred by people with good taste. It (plastic stoppers) is a bad taste idea,” he says. So why is this man, with a passion for corks, throwing millions into Mozambique’s often uncertain banking sector with its past allegations of corruption? Legendary investigative journalist Carlos Cardoso was gunned down in a Maputo street in 2000 while at the heart of an investigation into corruption in banking in Mozambique.
<div id="attachment_167" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-167" class="size-large wp-image-167" src="/wp-content/uploads/2011/11/290-289-1024x683.jpg" alt="" width="474" height="316" />Portuguese billionaire &amp; majority shareholder of newly launched Banco Unico, celebrates the opening of the bank&#8217;s headquarters in Maputo, Mozambique; 14 September 2011 &#8211; Photo by Brett Eloff.</div>
A lot has changed in the last 10 years, but there is still talk among sources in the know in Maputo of murky goings on in the banks. But Amorim is unconcerned. “I don’t consider Mozambique a risk. It has stability and its institutions are functioning. It is a rich country with a lot of raw materials and minerals… I have investments in 37 countries around the world, including Europe, and even there, there is corruption. It’s not a thing that bothers me.” The rewards for risk in Mozambique could be high for those with light feet and an eye for a fast return. In the week that Amorim landed in Maputo, the first coal exports from the mighty Moatize project, near Tete in the north-west corner of the country, was railed down the Sena railway line and exported through the northern port of Beira.
The Moatize expects to ramp up to four million tons of thermal coal a year, for electricity production. It has a target of 52 million tons by 2026, according to consultants working on the project. On top of this, BHP Billiton runs the Mozal smelter, just to the south of Maputo; South African energy giant Sasol is investing $300 million into the Pande gas field 600km north east of the capital. In Maputo itself, foreign investors have brought the swinging construction cranes back to the skyline as they build offices and homes for the newly wealthy.
Mozambique, once the poorestcountry in the world, where less than two decades ago even food was scarce, is growing fast and the financial industry is growing with it.
A report by KPMG in 2009 said the banks of Mozambique were highly profitable, despite the international financial crisis, seeing a profit of $116.4 million for the year, up 17.9% on 2008. Revenue from loans grew by 13.3% and bad debts were less than 2%. New anti-corruption laws are on the way, even though they are greeted with scepticism by many Mozambican business people. “It will exist only on paper,” chuckled a young Mozambican entrepreneur over a beer in a nearby restaurant.
One Mozambican who is bullish about his economy, to say the least, is Joao Figueiredo, the home-grown CEO One of the many cranes operating in the heart of Maputo of Banco Unico. He predicts that the economy will grow at 10.5% by 2013, compared to the current growth of 6.6%. Even so, Banco Unico could struggle to lend in the early days in the face of high interest rates. The International Monetary Fund is urging Mozambique to keep a tight monetary policy to fight inflation of around 12.8%, even at the risk of a slowdown in the economy.
Despite this, the repo rate came down in August, but before anyone got too excited, it went down to 16%. Couldn’t this be a problem for the new bank on the block? Not exactly, says Figueiredo. “When you look at the market you have to look beyond the short term to the long-term possibilities of Mozambique… The economy appreciates in terms of long-term. There is potential for the future, especially in the mining sector. The stability of the inflation rate and itsdecrease from the beginning of the year is a good sign.” Banco Unico is trying a different approach to break into a market which is dominated by four major banks. Its branches are all designer furniture and soft background music, more airport lounge than bank; there are no queues and there’s coffee while you wait for your consultant to deal with you one-on-one.
It is clear that the bank is aimed at the moneyed middle class, which, the cynics point out, excludes most of the population. Fernando Lima, a veteran Maputo journalist, says: “There are inefficiencies in the banks here. They are expanding but don’t have the human resources to keep pace. There is a lot of poaching of top staff. People also want to see more competition among the banks.” Figueiredo says: “The four biggest banks have 90.2% of the market. It is a concentrated market. There is competition, but there is room for more.
Room to grow as a financial system… The system is not yet mature and that contribution we can give to the market. There is space for more banks, but there are things you need to know before coming to Mozambique. You can’t come with foreign concepts because they won’t work here.” Banco Unico plans to go regional in the future; it appears the world’s 212th richest billionaire is in for the long haul. The interviews in the offices overlooking Maputo harbor, conducted to the crash of waves below, are over. It is night now and the many colored lights of the ships in the harbor shine forth like beacons.
As I thank Amorim for his time and patience he says, through the translator: “You don’t get tired when you love what you do.” For now, Amorim loves putting foreign direct investment into Mozambique, an emerging economy that needs it more than most.

Tag: Banks

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