Tuesday, 30 December 2014

Shooting off the hip and the diplomatic service

By Sunduzwayo Madise
30 December 2014

In a game of chess, whatever gambit you chose, the idea is always to plan ahead. You must always be several moves ahead and consider the: what if scenario. What is important also is whether you have a backup or an 'escape route'? And in every game of chess the king must always be protected. The king is not the most powerful piece in the game, but is the most important. He must be shielded and protected at all times. When the king is captured or cornered it is curtains; game over. Now clearly this game was conceived when the thought of a female sovereign was inconceivable – how times have changed! We will return to this analogy of chess but let us extend the discussion to another aspect of the sovereign. Traditionally, ambassadors were personal representatives of the sovereign. They were appointed and accountable to the sovereign. However in recent times we have noted that sovereignty has moved from a person (such as the Queen) to the state. This is the state of affairs in Malawi where we have a constitutional democracy and the doctrine of separation of powers calls for checks and balances between the three arms of government. Under this doctrine we have a head of the executive, head of the legislature and head of the judiciary. All these are under the head of state. In the UK the Queen is head of state, the Prime Minister is head of the executive. In Malawi the President is both head of the executive as well as head of state. However in making his decisions, he will do so as either head of state or head of the executive. Where his decision needs approval by another arm of government, then clearly he is exercising functions of head of the executive. To ensure that there is checks and balances with the doctrine of separation of powers, modern democracies now require that certain positions like of ambassador be approved by Parliament. Parliamentary approval is a recent addition to the doctrine of checks and balances. The President as head of the executive appoints, then another body, Parliament approves this appointment. When Parliament has approved, the President as head of state now sends the envoy yonder. Ideally this system should ensure that the candidate that gets the final nod is the right candidate to represent our state. Two recent appointments in which both appointees have turned down (or as they said themselves: “opted out”) amidst rumours of rejection by the recipient countries have prompted the writing of this piece. If true, this demonstrates a failure in the system at many levels.

I can say without fear of contradiction that both Dr Heatherwick Ntaba and Mr Thoko Banda are highly intelligent people. Hearing Mr Banda reminds me of the extremely articulate and highly intelligent Aleke Banda, his father. In the days of old we did not call Dr Ntaba talking computer for nothing. The man has a grasp of issues and speaks with conviction. Yes the fact that he speaks the Queen’s language with such finesse adds up to the mystique. Sadly however intelligence is not always equal to wisdom.

Mr Banda was appointed Ambassador to Zimbabwe. It later transpired that he had said some not-so-flattering things about the comrade.  It is rumoured Harare made it clear that the Ambassador-designate was persona non-grata. Mr Banda then went on various media trying to explain himself; and in the process said that in fact he had not been consulted before the appointment. Ooops!  Now people have asked: is Mr Banda not entitled to air his opinions? What happened to freedom of speech? And therein in lies the problem. He may be so entitled but maybe the question to be asked is whether he was wise to be so blunt, especially if he was planning for political office or diplomatic service. I read the article that caused all the furore and it reminded me of the phrase shooting off the hip. Shooting off the hip in this regard describing a person who does not censor their actions or words. At this point I recall the song by Robert Fumulani; ukayenda kumasiya phazi osati mulomo chifukwa mulomo uzakupeza.[1]

Which brings us squarely to the good doctor. During the time of the late Bingu, Dr Ntaba was part of the President’s press and PR team. And one thing you can bet on Dr Ntaba is that he will never disappoint. So during those politically charged moments when the British High Commissioner was given orders to leave, resulting in a tense diplomatic stand-off, Dr Ntaba naturally had to be on the side of the big kahuna[2]. Do I believe that Dr Ntaba believed the strength of his own arguments? No, definitely not. Do I believe that he nonetheless spoke with passion and conviction? Definitely yes. What was clear was he was shooting off the hip. Once again we have a situation where Dr Ntaba may not have been wise considering posterity. In hindsight he was not wise at all. He ought to have censored his words or exercised an element of restraint. But it is easy for us to say this after the fact, but nonetheless it is a lesson which hopefully others have learnt from. Therefore rumours that London indicated that Dr Ntaba would not be received as our emissary by the Queen are not surprising. In fact what is surprising is that these appointments were made in the manner they were in the first place.

When the Secretary to the President and Cabinet (SPC) was asked about the recent appointments to parastatal boards (in which some folk turned down and cried I was not-consulted), the SPC boldly said they do not consult before making appointments. That got me worried. I read in that response that they either do not have time to consult (which is worrying) or they do not bother to consult (which is very worrying). And if this consultation does not extend to ambassadors then it is even more worrying. And should we be surprised when one day a person happily rotting in their grave is appointed?

I did say earlier that this has exposed failure of systems at many levels. How are candidates appointed to key positions vetted? Is there even a process of vetting candidates?
If we refer back to the chess analogy, shouldn’t we have someone or some pipo planning ahead and contemplating what the other side might do? The Catholics gave us a good name for this, devil’s advocate.[3] Shouldn’t we have someone play devil advocate? Dig out any dirt and lay it on the table? And like a game of chess, shouldn’t we have someone getting into the shoes of the 'opponents'? Now I am aware that Public Appointments Committee (PAC) of Parliament is not exactly an opponent in the traditional sense but in this game theory, the other side is treated as though they are. Shouldn’t someone pre-empt PAC and what they will say or ask? Shouldn’t someone conduct an individual risk analysis for all key positions before they are thrown to the lion’s den? Now playing devil’s advocate does not mean that the candidate will not come out successful, it just helps to prepare for any nasty surprises. And surprises have an uncanny habit of being brutally nasty. As it is said forewarned is forearmed.

Let us start with our intelligence service(s). I am aware that the intelligence service performs important state functions to ensure that our country is safe from its ‘enemies’. However it is no secret that intelligence services do more than this. Intelligence services do a lot of information gathering. So let us assume the President intends to appoint one Mr Thoko Banda as Ambassador to Zimbabwe, shouldn’t the first thing be a request to the Director General of the National Intelligence Bureau (NIB) for a full dossier on Mr Banda before the President makes it official? Now let us be honest, information gathering these days is a different business altogether comparing to the days of old. It is a sophisticated art which depends on use of technology. For one it needs a lot of resources. I cannot say it for a fact, because I do not know, but if there are no high speed and high capacity computers and fast access to data channels (including the internet) at NIB offices then Government needs to invest in this yesterday. Furthermore, to make sense out of data collected, needs analysis. Qualification for intelligence analysts should not be being a party royalist. We need people who have been trained at least at tertiary level. They should be able to read chatter on the internet; social media and draw a picture based on evidence. Intelligence analysts think in multi-dimensional visions. They look at pieces of information and draw patterns. They connect dots which most of us cannot. Like a game of chess they contemplate the next move and several moves ahead. All intelligence organs the world over are now using the internet as an information gold mine; usually within the law but at times outside the law. There is always a big brother watching; what he is watching though is what matters. Information not gossip; not opinions is what counts. Analysts should be able to dig out information of every intended appointee such that a dossier is presented to the President before the actual appointment is made. So if the NIB cannot do this for people appointed as Ambassadors then it is clear more resources and efforts need to be injected to enhance its information analysis functions. Put simply, a dossier should have been presented to the President indicating that there were likely to be problems in having Mr Banda appointed to Zimbabwe and Dr Ntaba to the UK. It is elementary actually when one thinks about it, so basic that it boggles the mind how this was even allowed.

Let me digress a little here. I am told that two appointees; Mr Banda and Mr Voice Mhone all said they mothers come from Thyolo. Now only a stranger in Jerusalem would fail to connect the importance of Thyolo; the home district of the President. My question is why is this information even important or necessary? Did PAC actually ask these two Malawians where they mothers come from? If so then I have big problems on the mandate of PAC. Should they be discriminating Malawians based on their origins really? Shouldn’t being Malawian enough? Reminds me of the Traffic Police when they stop you for a traffic offence and ask for your tribe! Really? What has my being Ngoni got to do that I maybe a bad driver? I hope the Police are aware that this is a colonial left-over legacy which profiled Nyasalanders! I decided a long time ago that my tribe is Malawian. This has irked several people but I have decided to stick to my convictions. Now this doesn’t mean I am not proud of my Ngoni heritage but I refuse to be containerised in this imperial manner 50 years after our independence. In the UK, where we got these regulations from, no one asks this anymore. In fact it would be a scandal if a Police Officer did that!

So back to the issue at hand, and to conclude, Government should have information on its people. This does not mean spying on them although it is an open secret that all governments spy on their subjects anyway. In fact you would be naïve if you think they do not or should not, especially in these days when there is so much digital footprint left in all our digital voyages. No organisation can succeed without an element of spying and information gathering. No leader can successfully lead his or her people without gathering information about those being led or governed. It is just part of the business. Collecting vital information that can enhance decision making is therefore part of management. Before the President appoints people to become board members of parastatals, he should have a dossier about each of them to see whether they are fit and proper for the appointments. Then there needs to be a mechanism to obtain their prior approval, especially if there are indications that they may reject the appointment. This information can only be provided by those in the information gathering business. Ideally the President or his emissary should actually have chat with any person targeted for a public appointment of state importance to ensure the issue of acceptance is taken out of the way. Sometimes in this chat, the appointee-to-be may actually indicate any bottle-necks or pitfalls that exist and a plan may be worked out in advance (hoping in the honesty of people to tell the truth). Crucially before he appoints any Ambassador, the President must satisfy himself that they will pass the PAC test as well as have no barriers to be accepted by the recipient country. Does this mean that background check will guarantee that PAC will always approve the President’s appointees? No, but the answer to this lies in the realm of politics which is outside the scope of this piece.

[1] Ideally when you travel, leave a good name (of your conduct), avoid leaving a bad image (bad mouthing) because the character will one day surely catch up with you (or your ‘bad mouth’ will follow you)
[2] Big kahuna was coined by Ralph Tenthani and Dr Ntaba tried to convince the nation that it was a derogative reference to the President. He was of course wrong. Big kahuna is a term referring to the boss, leader or chief. See http://en.wiktionary.org/wiki/big_kahuna
[3] http://en.wikipedia.org/wiki/Devil%27s_advocate

Tuesday, 16 December 2014

Rationale of Regulating the Financial Services, Models of Regulation and Need for Regulatory Independence

Theory suggests that the primary role of financial institutions and capital markets is to facilitate the allocation of resources in an uncertain environment across space and time.

Therefore regulation of the financial sector has a crucial role to play, especially in the development of third world countries, most of whom have enormous wealth disparities between sections of their populace. A key objective of regulation is to redress information asymmetries that sometimes exist in financial services businesses usually to the disfavour of the consumer.

Although most often the regulator is also the supervisor, the role of the regulator and that of the supervisor are. In most jurisdictions however, the powers to regulate and to supervise the activities of the financial services sector reside in the same institution. The regulatory framework of financial services often comprises primary regulation, secondary legislation and guidance and (policy) directives and directions issued by the regulator.

This paper looks at the rationale for regulation, the different models of regulation in the financial services and what they are aimed to achieve. The paper also looks at the broad objectives of regulation even in the absence of a unified theory of financial service regulation, such as investor protection, ensuring fairness, reducing contagion, protection against malpractices and maintaining consumer confidence.

The paper also analyses the pros and cons of single, twin-peaks and multiple financial regulator and why regulators need to be independent [but accountable] whilst at the same time avoiding industry capture.

Although the paper discussed regulation broadly, it discusses financial services regulation in the context of the Malaŵian financial regulatory framework with a brief overview of the regulatory models in the United Kingdom and Zambia.

Keywords: financial regulation, Malawi, regulatory independence, rationale for regulation, regulatory models, regulatory theory, single peaks, twin peaks, Zambia
working papers series 


Monday, 15 December 2014

Solving the Remittance Dilemma

Sunduzwayo Madise 

University of Warwick; University of the Western Cape; University of Malawi
November 27, 2014

American International Journal of Research in Humanities, Arts and Social Sciences, 8(1), September-November, 2014 

Remitting money in sub-Saharan Africa has always been a problem because of infrastructural problems affecting the region. Malaŵi, being a land-locked least developed country has been greatly affected by this. The country is agro-based with a majority of the population living in villages in the rural areas. Traditional means of remitting money have proved to be either expensive or unreliable. With the advent of the mobile phone, mobile network operators have devised a solution to the age-old problem of remitting finances to rural areas. The paper looks at how the mobile network operators in Malaŵi have addressed the remittance dilemma by taking advantage of the ubiquitous nature of the mobile phone.

Keywords: financial inclusion, Malaŵi, Malawi, mobile money, payment system, remittance


Payment Systems and Mobile Money in Malawi: Towards Financial Inclusion and Financial Integrity

Sunduzwayo Madise 

University of Warwick; University of the Western Cape; University of Malawi
November 27, 2014

ANULJ 2014 Vol 2(2) 71-96 

Abstract:      Malawi, like other African countries, has witnessed a recent surge in mobile phone usage. The increase in phone usage has been accompanied by an increase in mobile phone based products. Two such products in Malawi are Khusa M’manja (‘money in the hands’ in the local language) and Mpamba (money in the context of ‘start-up capital’ in the local language). These products, and the services they contain, allow the phone user to use his or her mobile phone as a wallet or purse: he or she can load money into the phone, send and receive money, make deposits and withdrawals, purchase goods and services, and pay bills. Khusa M’manja is provided by Airtel, while Mpamba is provided by Telekom Networks Malawi (TNM). Khusa M’manja and Mpamba may be said to be close relatives of M-Pesa, a financial service that was developed in Kenya by Safaricom. The introduction of M-Pesa has led to an increase in money circulation, roping in those who would otherwise have been left out by the formal financial sector. The mobile money platform has been lauded as an effective means of ensuring financial inclusion of the unbanked, which constitute a large proportion of Africa’s Sub-Saharan population. For many, therefore, the introduction of mobile money services into the national payment system is a welcome development. However, balancing between the competing interests of financial inclusion and financial integrity remains a serious challenge.

Keywords: mobile money, payment systems, khusa m'manja, mpamba, M-pesa, regulation, remittance dilemma, financial inclusion, financial integrity, unbanked