Camp Amalinda, Zimbabwe June 2014

http://www.campamalinda.com/

Investing in Africa

Boring article but another cool graphic, this time by Bloomberg, on investment in Africa.

I was in Zambia and Zimbabwe in June. It was fun to take pictures of the construction projects we drove past. Lots of local workers and one to three Chinese guys. China is doing a whole bunch of building in Africa. The Hydro-electric plant at Lake Kariba was amazing. It is all good. I just am dubious about the longevity and motivation of the whole thing.

Unfortunately or fortunately, the US has a unique relationship to Africa. Even to be distinguished from the Brits.I have so much hope that the Oooooobama administration will see the potential for partnership!!

Frontier Markets 2014

Very cool graphic in the Wall Street Journal of World Frontier markets.

Enjoy!

African Leaders Summit Washington D.C

It is time to focus on Africa.
Time for both President Obama and myself.

Please read this great OP-ED article by Tony Elumelu in the Wall Street Journal, HERE posted on CP-Africa.

Unfortunately, the press about Ebola is very sensational. Many American will focus on that in the upcoming week rather than the Leaders Summit.  Nothing to be done about that other than to keep banging the drum.

As Tony Elumelu says  " Africa is ready for business and open for investment"

Central African Stock Exchange Handbook 2014

The CASE Handbook 2014 is available. It is an amazing compilation of publicly traded company profiles in Zambia, Zimbabwe, Malawi, Botswana and Zimbabwe.

I recently visited Zambia. The development (and traffic) is spectacular!!

Please check out the handbook if you have any interest in these markets!!

US Securities Exchange Commission investigates Congress

The SEC is investigating leaks from a US Congressional Committee that links a Congressional aide to an insider trading case. As a country we invent new ways to evade securities laws, and create awesome ways to catch the bad guys !!

Inequality and the Capital Markets in sub-Saharan Africa

There are many linkages between international securities organizations and emerging capital markets in East Africa: how financial globalization encourages financial integration in the global economy: which institutions influence that integration in the African capital markets: and what kinds of inequalities might be understood or unearthed in the context of that current arrangement.

Securities related international organizations such as International Organization of Securities Organizations, the World Federation of Exchanges, promulgate best practices in the securities industry regulation for world stock exchanges and are part of an interrelated network of international organizations that influence stock exchange activity and regulation including: the World Bank, the International Monetary Fund and the Organization for Economic and Co-operative Development. Similar to the establishment of Stock Exchanges in economies with no financial infrastructure or investment culture to support them, these best practices are implemented wholesale by East African Exchanges with the promise of membership in a global economic community. Functionally, however, the best practices do not take into account local capacity or conditions. 

As Professor Andrew Hurrell stated, “Institutions reflect, but also actively shape, communities.” This paper describes the international securities organizations and considers how they influence regulation in emerging markets and is a preliminary attempt to understand that role in terms of inequality.

This year the International Organization of Securities Commissions published its first Securities Market Risk Outlook[1] with a narrow focus on securities markets and the potential systemic risks currently existing or could develop, threatening the financial system as a whole. International organizations promulgate best practices in the securities industry regulation for world stock exchanges. Frontier, emerging, and developing exchanges comply with these recommendations wholesale frequently without the resources to customize them.[2] Currently, the developed exchanges and international organizations setting those best practices are dominated by the West. African financial markets have lagged behind others for most of the twentieth century.[3] 

The global financial crisis underscored the need for the developed world to review its existing legal and financial frameworks and changes were enacted: Dodd-Frank, establishment of the Financial Stability Board to name a few. However, those same organizations still serve as gatekeepers to entrance in the global financial markets. The world realized the fragility of the governance of its banking system and the global connectivity we already existed in. The rules and regulations that governed our capital flows were connected to our mortgages and our jobs: law, society and economy in complete overlap. The reforms addressed multiple layers of that overlap. (FSB, IOSCO)  The powerful nations who caused the crisis struggled, and continue to struggle, with their legal response to it. And yet, that response will have ramifications for developing markets who may or may not have had the same risk factors leading to the crisis, but may need to adopt reforms, for example new rules for derivatives[4], as a new standard for best practices. Those regulations reflect a political and social reality that does not yet exist for many developing exchanges and for most of the markets considered in this Article. Securities regulation for emerging markets is best understood as the confluence of sociological, economic, political and legal discussion. Markets involve investors, companies, brokers,

The very existence of markets in developing economies raises questions about development, political will of the society and the rules that will regulate those markets presumably creating investor confidence and ultimately attracting outside investors to further support growth and development. The overlap of disciplines are belied by the literature. Capital markets in the developing world and the regulation of them are frequently written about from an economic or wealth maximizing perspective.[5] This literature focuses on the markets as vehicles for growth or economic development as well as quantifying that growth. Indeed, much of the economic literature is from the World Bank whose economic publications, researched by Economists from the United States and Europe, have served to promote and drive the debate over economic policies.[6] How do concepts of law fit into this discussion and what role does law play in this arena? The rules and regulations, promulgated by international organizations, are surely more than just orders or commands with respect to markets.[7]

I will be writing about these ideas and thoughts in the next few weeks and will share them here.

---

[1] IOSCO Securities Market Risk Outlook 2013-14 available at http://www.iosco.org/library/pubdocs/pdf/IOSCOPD426.pdf (last accessed..........) The purpose of the report is to “assist national regulators in implementing IOSCO’s two new principles on identifying,assessing and mitigating systemic risk (Principle 6), and on reviewing the regulatory perimeter (Principle 7) Id page 6.

.

[2] Cite my paper

[3] Financial Regulation in Africa: An Assessment of Financial Integration Arrangements in African Emerging and Frontier Markets,  Iwa Salami, Ashgate 2012. Foreward by Rosa Lastra

[4] IOSCO new principles

[5] Pistor and the La Plante

[6] Sebastian Edwards, as well as The Global Diffusion of Markets and Democracy, Eds Beth Simmons, Frank Dobbin, and Geoffrey Garrett, Chapter Introduction: the diffusion of liberalization, p 16.

[7] H.L.A. Hart, The Concept of Law, Claredon, 2^nd edition, 1997, p.13.