Vicky Jones, Norton Rose Fulbright: Debt Capital Markets - A Funding Solution for SMEs and Projects?

[caption id="attachment_6002" align="alignright" width="255"] The Hague, Netherlands[/caption]

There has been remarkable growth in corporate bond issuance in Europe since 2000, particularly in the aftermath of the financial crisis. Issues by European non-financial corporates rose almost 20% in the first half of 2013 to US$333bn [1]. This is the highest figure since the record highs of 2009. The drivers of this growth from the perspective of investors and issuers are well-known. The question is how to harness the current liquidity in the debt capital markets and extend the enthusiasm for investment grade corporate issuers to funding other sectors of the European economy.

This article looks at recent innovations in bond financing outside investment grade corporates. We take the Netherlands as an example of a country where support from tax and other authorities has enabled debt capital markets (DCM) initiatives and has helped to develop an attractive environment for the location of financing vehicles for the issue of debt securities. The size of the market for Dutch corporate bonds has doubled since 2007, reaching a record high of EUR 105bn in the first quarter of 2013 [2]. The majority of issuers are large companies which are listed and/or rated.

The Funding Problem for SMEs and Infrastructure Projects

The debt capital markets could be helpful in resolving two concerns facing Europe: How to bridge the funding gap for SMEs and how to diversify funding options for public-private partnership (PPP) infrastructure projects. Pre-financial crisis, a prospective project or a successful SME could rely on bank loans to provide the cash needed. Not so today: Banks have been forced to deleverage and tighten their credit standards (particularly with respect to riskier investments) as a result of nationalisation, internal policies and Basel III. SMEs and project sponsors need new sources of finance.

The importance of SMEs is undisputed. They account for more than 98% of Europe’s businesses and provide more than 67% of the jobs in the EU [3]. However, while there are large differences across Europe, the past few years have seen a general reduction in SMEs’ access to finance. This is a crucial problem as many depend on debt to enable growth and to keep trading.

“The importance of SMEs is undisputed.”

The Netherlands has suffered in particular. A report by the policy department of the European Parliament describes the Netherlands as “an outlier, because SME profitability is not as weak as in southern Europe, but there are similar financing obstacles” [4]. Only 46% of SMEs were granted the full amount of credit they requested during the period from October 2012 to March 2013 [5].

There is also no shortage of projects which need to be financed or refinanced across the EU. The Dutch government stated in its negative response to the Europe 2020 Project Bond Initiative that there is sufficient private funding for projects in the Netherlands. This may be true, but there is not the depth of funding available to enable more than a couple of consortia to submit a valid bid for a project in the procurement phase. This reduces competition and potentially increases costs for the government.

Matching the Cash Rich with the Cash Poor

Outside the banks, there is liquidity in the markets. Matching those with money with those in need of it and, ideally, providing fees to the traditional lenders in the market (the banks) is the challenge. Crowdfunding and peer-to-peer lending (increasingly popular in the Netherlands) can assist with small loans, but DCM may hold solutions for bigger financings.

Most readers will recognise the challenges faced by the markets in persuading participants to issue on or invest in the debt capital markets. On the investor side, institutional investors are often limited in the amount of unlisted and unrated debt they can buy and, while the experience of retail investors differs across Europe, Dutch private investors have not been so active in the debt capital markets perhaps due to government regulation of Dutch pension funds not incentivising people to seek their own investments. On the other hand, many SMEs are unaware of DCM as a funding option or are put off by the impression that it will result in increased disclosure and reporting, entering into relationships with unknown investors, extensive marketing and relatively high advisers’ costs. Different difficulties face project finance SPVs; for them an important barrier is that there have been too few project bonds to encourage institutional investors to invest the time and resources necessary to understand the products and their credit risks.

The Advantages of DCM

The benefits should be worth the effort. The debt capital markets allow institutional investors to diversify their portfolio, private investors to obtain higher returns, companies to access a broader range of investors and often to enjoy less restrictive terms and project sponsors to tap institutional investors with long-term investment requirements which match the long-term cash flows of the project.

It is still early days, but the following recent developments in EU, DCM, and the Dutch market in particular, indicate an enthusiasm to assist SMEs, projects and investors.

EU Support for the Debt Capital Markets

It helps that the EU is trying to encourage the use of bonds to finance SMEs and projects. In July 2013, the European Central Bank announced it will continue to investigate the possible acceptance of mezzanine tranches of guaranteed securities backed by SME loans as Eurosystem collateral. EU support for project bonds is also demonstrated by the budget made available through the Europe 2020 Project Bond Initiative, a joint programme by the European Commission and the European Investment Bank (EIB) designed to stimulate capital market financing of large infrastructure projects.

July also saw the announcement of the first successful use of project bond credit enhancement and issue of an EIB supported project bond. The bonds formed part of the financing for the Castor underground gas storage project in Spain. The A11 road project in Belgium has also been tipped to use this EIB product.

DCM Solutions for SMEs

Perhaps the most obvious DCM option for an SME is to conduct a private placement. This is an active sector in the US where investors overcome the lack of publicly available information about SMEs by investing in companies which operate in industries they know well or even operate in themselves.

The appetite for private placements of SME bonds in Europe has grown as the financial crisis has continued, but lack of publicity and information relating to bonds issued by smaller, private companies has limited demand. A possible solution to this is a platform for European private placements by SMEs reported in the Netherlands in July 2013 which should offer SMEs the chance to raise their profile with potential investors.

The initiative has broad support from the Dutch government and regulators as well as Dutch banks, some larger insurance companies and the big four accountancy firms. The stated aim is for the platform to extend to the UK, France and Germany and talks are already being held with insurers in those countries. It would help this type of arrangement if equal regulatory treatment of SME debt could be agreed across the EU.

Although details are still being worked through, our expectation is that such a placement platform would still not reach as many investors as a traditional debt listing. In this respect, the Dutch stock exchange (NYSE Euronext) has had an exchange-regulated market since 2005, called Alternext, which is aimed at companies with market capitalisation of under EUR 1bn. There have been relatively few issues on Alternext by SMEs (the most recent being in May 2012) and, presumably with this in mind, NYSE Euronext launched EnterNext in July 2013. With its own teams and resources, EnterNext is more focused on encouraging initial equity and debt issuances by Dutch SMEs through lower cost, standardised issuance procedures.

Another possible alternative is to “bundle” SME loans into larger products. This diversifies risk and could improve marketability. An example of such bundling has been seen in Germany where the first covered bond programme was established by Commerzbank. The Commerzbank programme was established in December 2012 and is backed by loans to SMEs established or located in Germany and involved in a range of different industrial sectors. The regulatory treatment and cost saving of this instrument could lead to its replication in other European countries with attractive covered bond legislation. A product similar to a covered bond is reportedly currently being developed by banks in France with a view to easing SME funding.

DCM Solutions for Projects

[caption id="attachment_6006" align="alignright" width="166"] Author: Vicky Jones[/caption]

The development of the PEBBLE platform by ING and the Commute product by NIBC are important indicators of DCM innovation in the Netherlands. PEBBLE (which is slightly easier to say than Pan European Bank to Bond Loan Equitisation) provides standard documentation to be used by banks to diversify funding options and match investors with long-term investment needs with an investment that generates reliable, long-term cash flows.

Through an issue of long-term (over 25 year) notes privately placed to institutional investors, a medium term subordinated loan and a short maturity revolving credit facility, it attempts to provide something for everyone. Sponsors obtain cheaper funding and tap a broader range of investors who could facilitate larger projects while institutional investors get access to a higher quality long-term investment backed by government cash flow in the form of availability payments with construction risk mitigated (through subordination of the loan and the pari passu nature of the revolving credit facility). It is proposed that the senior notes make up approximately 85% of the funding so DCM investors will be playing a pivotal role.

PEBBLE has not caught on in the way which was envisaged when it was launched in 2012, but there remains hope that, once investors become comfortable with this initiative, it will be used extensively.

The high quality of Dutch infrastructure projects means that they are well-placed to benefit if a deeper market for project bonds develops. A bond option was mooted as part of the finance package for the A1/A6 road project and it is anticipated one will be included in the financing arrangements for many of the upcoming projects in the Netherlands not least because of government support for broadening the investor base. However, there are limits to the breadth of the investor base because committed finance is required for bids on public projects and this is tricky to prove with a retail bond.

Conclusion

The support of the EU and the Dutch government for new sources of funding is evident, but success requires both institutional and individual investors to educate themselves as to the risks and rewards of the new products on offer. There is talk in the market that the current popularity of corporate bonds has led to a bubble which is likely to burst. However, with few signs that banks will make a swift return to the lending market, companies in need of finance do not have many places to turn. One has to hope, in particular, that once institutional investors have tasted the benefits of a project bond, their appetite will not be quickly sated.

About the Author

Vicky Jones is a banking lawyer based at the Amsterdam office of Norton Rose Fulbright.

[1] Floating rate bond issuance jumps in Europe, Christopher Thompson and Ralph Atkins, Financial Times , 29 August 2013
[2] Omvang bedrijfsobligaties gegroeid tot boven EUR 100 miljard, Statistisch Nieuwsbericht, De Nederlandsche Bank, August 2013
[3] Report on improving access to finance for SMEs, Committee on Economic and Monetary Affairs, Philippe De Backer, 21 December 2012
[4] Economic and Scientific Policy: Banking system soundness is the key to more SME financing, Directorate General for Internal Policies Policy Department, July 2013
[5] Survey on the Access to Finance of Small and Medium-Sized Enterprises in the Euro Area, October 2012 to March 2013, European Central Bank, April 2013


MIGA (World Bank): Energy in Africa - The Many Sides of Sustainability

[caption id="attachment_6020" align="alignright" width="130"] Author: Antonio Barbalho[/caption]

Africa is booming—mostly. Much of the continent has experienced strong and sustained economic growth over the last two decades. Many countries have also been shielded from the recent Great Recession due to favorable commodity prices and relatively weak ties to the advanced economies that have come into difficulty.

Development indicators for health and education have improved significantly. But Africa is a diverse region and its growth is multi-speed. The continent’s most fragile countries have experienced low and irregular growth, largely as a result of conflict. And serious development challenges remain in a continent where governance and transparency are weak; infrastructure is underfunded; health and education indicators are still poor in comparison to other regions; and the energy deficit is high. While some have argued that energy is a strong contender for the most viable route to development, it is important to note that only one third of people living in sub-Saharan Africa have access to power.

As the political risk insurance arm of the World Bank that provides guarantees to the private sector, we underline that the sector has been a powerful instrument in bridging the region’s energy gap and the its role is growing swiftly. But, the reality is that there are few truly good projects in the short term and those that do exist are facing increasing complexity.

“As the political risk insurance arm of the World Bank that provides guarantees to the private sector, we underline that the sector has been a powerful instrument in bridging the region’s energy gap and the its role is growing swiftly.”

Why? Many of the reasons we are already familiar with—structural inadequacies, monopolistic ownerships, difficult market and grid access for new actors, limited innovation, and political risk. Now, we have added other considerations that have resulted precisely from the opening of the sector to sustained private-sector involvement. Some important dynamics here include increasing interest from the BRICS and other countries (primarily in Asia) as sources of investment; expectations of capital safety from investors; and increasingly sophisticated demands from host countries as their experience with the private sector increases.

These dynamics need not be show-stoppers—to the contrary—but they do need to be bridged.

In Africa, the interplay between energy supply and demand has been particularly difficult. It is estimated that at least $40 billion a year is required to meet future demand in the African power sector, compared with current yearly investment of less than one-quarter of this amount.

On the demand side, Africa’s population is growing quickly, compounding the energy shortage problems even further. On the supply side, measures need to be put in place to ensure the sector works well and is financially viable. There is a lot of work to do in this regard.

“It is also important to note that these credit enhancement tools offer benefits that extend beyond financial security to the investor or lender.”

One important word connects supply and demand: Sustainability. The word has several meanings in this context. To be sustainable in Africa, energy needs to be as green as possible, diverse, and affordable. A very important point to underline here is that if the energy sector in Africa is to be sustainable, it needs to be cost-effective both for the population it serves and to ensure the survival of providers.

Sustainable energy for the continent goes far beyond the sector’s environmental credentials. The challenge is a formidable one. Indeed, with Africa already grappling with a significant energy deficit and the climate change agenda moving forward, what has been difficult will become worse.

How can governments, investors, and financiers manage these challenges? These players need to be creative and use credit enhancement where it can be applied to continue to attract new investment and new models.

Here, risk insurance products like those offered by MIGA have a very important role to play. Investment guarantees offered by MIGA (as well as other public and private-sector providers) have generally been viewed in the rubric of political risk insurance. Yet, they are increasingly becoming important as a credit enhancement tool that can ensure a more stable, long-term partnership for energy providers and off takers—as energy projects inevitably involve an insurable commitment from a sovereign or sub-sovereign.

How Does this Work? Thika Power Plant in Kenya

When What’s Good for the Government is Good for the Energy Producer.

MIGA’s recent support to the Thika power plant in Kenya is a good example of how credit enhancement can work in practice. The project is particularly important as it represents the first time an international commercial bank has provided long-term financing to a power scheme in the country.

While the Kenyan power sector has gone through relatively successful reform since the late 1990s, with a number of long-term power purchase agreements (PPAs) supported by international investors, private-sector investment and long-term commercial bank financing has remained difficult—partly due to the perceived country risk after the civil disturbances following the 2007 election. Heretofore, independent power projects (IPPs) were funded mainly through international or bilateral development finance institutions or export credit agencies.

The Thika project is one of three thermal IPPs awarded through an international competitive bidding process to address rapidly growing demand, limited electricity generation and connections, and over-dependence on drought-prone hydropower in Kenya. The project also addresses the Kenyan government’s attempts to achieve a more stable and diversified energy mix to increase the country’s energy independence and reduce reliance on expensive and inefficient emergency diesel plants.

The project consists of the development, design, construction, and operation of an 87MW thermal power plant in the town of Thika, located about 35 kilometers from Nairobi.

Thika’s commercial lender is Absa Capital from South Africa, which augments financing from the African Development Bank and the International Finance Corporation (IFC). This breakthrough was made possible largely due to an innovative structure that has three key elements to the payment security arrangement: letters of credit backstopped by World Bank partial risk guarantees to support short-term liquidity; a power purchase agreement with KPLC; and a letter of support from the Kenyan government with termination payment clauses guaranteed by MIGA.

The new structure used in this project was particularly interesting because it substantially reduced (and deferred) the contingent liabilities for the host government, while making the plant viable from the perspective of international commercial banks.

The Thika power project has also benefited from the synergies of three World Bank Group instruments: an IFC loan, a World Bank partial risk guarantee, and a MIGA guarantee. The World Bank Group institutions worked together closely to coordinate and share due diligence, maximize efficiency, and reduce the burden on the sponsor and other lenders.

It is also important to note that these credit enhancement tools offer benefits that extend beyond financial security to the investor or lender. Put simply, they compel projects to maintain certain standards that are in line with global best practices. For example, MIGA-supported financing must go through credit committees that examine the project’s bona fides. Our environmental and social safeguard policies are also a powerful tool for identifying risks, tightening development costs, and improving project sustainability. Projects are expected to comply with those policies and guidelines, as well as applicable local, national, and international laws. This adherence to standards is an important added value in energy projects in particular.

Looking to the Horizon: What’s Next?

As project complexity increases — for investors, lenders, host governments, and the environment — so structures will have to evolve. Creativity in applying new applications to not-so-new products like political risk insurance is the only steady approach in this environment.

From MIGA’s perspective, this approach is not only bankable, but essential to improve the lives of hundreds of millions of people who live in the 25 African countries that are currently experiencing energy crises. Without electricity for homes, factories, and hospitals, the continent’s recent economic successes and development gains are a reality for only a portion of the population.

There is another boom in Africa: the effective partnership of the private sector, host governments, and other actors (like MIGA and many others) that are working to achieve good and lasting investments in energy.

About the Author

Antonio Barbalho is Sector Manager for Energy and Extractive Industries at the Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group.


Nasir Ahmad El-Rufai, Good Governance Group: Stunted Potentials Hobble Africa’s Giant

[caption id="attachment_6029" align="alignright" width="199"] Author: Nasir Ahmad El-Rufai[/caption]

These days, Nigeria is often in the news for the wrong reasons. It is a country devastated by poverty, insecurity, corruption and terrorism; the governance challenges are immense, while most public policies deliver poor outcomes.

The budgeting process is a fictographic art, featuring much drama and a growing disconnect from the imperatives of development. True to that tradition, the 2013 budget is by July still a matter of unsettled contention between the executive and legislative branches of government. Unconstitutionally and therefore unlawfully, the nation’s savings account – the Excess Crude Account – is being rapidly drawn down. So much so, that it is likely to fall from about $11bn in February to zero by October 2013.

Yet this sorry impasse and the pervasive impunity do not define Nigeria. Its diverse peoples are an energetic, often optimistic lot trying to build their lives despite the trammels imposed by governmental incompetence and paralysis. Nigeria is Africa’s largest country and second largest economy. It could easily be the continent’s largest market if some congruence should emerge between government action and national aspirations.

Such congruence was in the works from 2004-2007. During that time a variety of reform measures began to improve government finances and shrink the participation of the state in business by privatizing many state-owned enterprises. Ports were made more efficient as well and new thermal power plants finally got built to improve patchy levels of electricity generation. A modern national identity system came into being while the banking system was strengthened. Nigeria was even poised to launch a national mortgage system to reverse its embarrassing housing deficit. Also, for the first time a coherent roadmap for a solid mineral sector emerged alongside efforts to reduce the cost of governance.

“On a macroeconomic level, the government needs to both shrink and become more efficient.”

The success of the debt relief campaign reflected the international community’s confidence in the soundness of the economic programme then being feverishly unleashed. Nigeria did not suddenly become an El Dorado; but it was clearly beginning to get a grip on its problems using solutions that were market-driven and propelled by a vision that the proper role of government is to merely provide the infrastructure and the rule of law (and order) that create the confidence needed for people to grow and unleash their talents.

The vision was to make this the last generation to just speak about Nigeria’s potentials. We were determined to realize those potentials, confident that we had the talents to create wealth from the vast endowments bestowed on our country.

Why then the stasis since late 2007? Political power must always be tied to national purpose. The inheritors of power were strangers to that concept, and mostly did not feel obliged to uphold the reforms. Where they did, they lacked the political will to see it through. Even conceding to the ever changing dynamics of life, the broad thrust of the programmes Nigeria needs to implement is obvious: The 2004-2007 reforms are unfinished. They should constitute a new starting point for development - focused governance.

Perhaps that will be the single agenda item for the post-Jonathanian Nigeria. However, it is clear that the current leadership doesn’t want to tread the road less travelled. We will nevertheless outline what needs doing. It is not rocket science but does require personal integrity, character and perseverance on the part of the nation’s leadership – qualities that appear to be in great deficit in the Jonathan administration.

On a macroeconomic level, the government needs to both shrink and become more efficient. The public service is in many ways unfit for purpose, with a mismatch between the skills required and the excess personnel it carries. A set of incentives must to be arranged to make the public service once again an attractive career choice for our most talented.

Certain sectors of the service also need to grow. Nigeria needs more police, health workers, teachers and judges. But the share of national income consumed by the state has to decrease. A strict monetization policy has to be implemented: Securing a public service job, or getting elected to office, should not be a license for leading a lifestyle that would make some royals envious.

“Unconstitutionally and therefore unlawfully, the nation’s savings account – the Excess Crude Account – is being rapidly drawn down. So much so, that it is likely to fall from about $11bn in February to zero by October 2013.”

The expense on human capital has to grow and needs to be more efficiently allocated. The failure rates in the final secondary level exams show that we are not equipping our youth with the skills needed for the 21st century. Our tertiary education is also mired in mediocrity. The emergence of private universities merely glosses over, rather than addresses, the problem. Access to basic healthcare is also problematic, and we continue to record scandalous rates of maternal and infant mortality. The vote of no confidence in the healthcare system is seen not merely in the N4 billion Nigerians spent in 2010 on medical tourism, but also in the fact that the government makes provisions to send its top officials abroad to obtain proper medical care.

Spending priorities and the allocation of resources have to be calibrated to reflect the urgent necessity to build infrastructure in Nigeria. The personnel and overhead cost of governments should no longer dominate budgeting which must begin to prioritize capital expenditure in both national and subnational budgets. Having a healthy and well-educated population able to compete in today’s global village is more important than the perks that seem to occupy and distract many public officers.

The abandoned efforts at developing a national mortgage system should be revived to create a source of sustainable, long-term financing and a basis for a veritable housing revolution. This would help create better planned neighbourhoods in addition to the civic pride, social stability and sense of security that home ownership fosters.

Unleashing entrepreneurial energy also requires that strong regulatory competencies be developed across the board. As our banking system so notoriously demonstrated, effective supervision and enforcement of rules and regulations are critical to the overall performance of the nation’s economy.

Thus, Nigeria has room for an economic explosion; a revolution in development with tectonic consequences for Africa. But all these depend on getting the politics right. Enterprising investors can still make money from the chaos that is the Nigerian economy today given the reservoirs of unmet needs across many sectors. This, however, is not contributing in any meaningful way to the unleashing of the nation’s vast potential nor does it foment sustainable economic growth the country needs.

About the Author

Nasir Ahmad El-Rufai is the Deputy National Secretary of the opposition All Progressives Congress (APC). He was at various times Presidential Adviser (1998-99), Director General of the Bureau of Public Enterprises (1999-2003), Minister of the Federal Capital Territory (2003-2007) and member National Energy Council (2007-2008).


Absalon Project: Sustainable Funding for African Housing

Sub-Sahara Africa has experienced strong economic growth and has developed a more stable political environment over the past twenty years. Fast population growth and a significant movement of people from the countryside to the larger cities has resulted in a shortage of urban infrastructure and housing. Local governments are under heavy pressure to ensure adequate infrastructure, housing and jobs.

By Alan Boyce, Sam Waweru and Wagn Erik Nørgaard

Absalon Project, a joint venture between affiliates of VP SECURITIES and Soros Fund Management, is offering systems and know-how to introduce the Danish Mortgage Model on a global basis, and is currently undertaking implementation studies in several African countries.

A major issue in the housing sector is the lack of funding for potential homeowners. The financial industry currently offers very limited amounts of mortgages, usually to only to selected customers. Access to mortgages is restricted for the fast-growing middle class and the low-cost housing segment. If mortgages are offered, they are typically with an adjustable rate, of short duration and with relatively high costs for the borrowers. The funding of the mortgages is done on balance sheet, with deposits. This funding model creates significant risk to both the borrowers and the financial system, and limits the volumes.

“The Absalon SaaS solution makes it possible for the local mortgage companies to focus on both the customers and their needs, while the Absalon staff will take care of all IT and systems related issues. The customers get in one agreement an integrated solution with all the experience emanating from more than two centuries of mortgage operations integrated in the system.”

- Wagn Erik Norgaard, COO, Absalon Project

The Danish Mortgage Model, which has been around since the Great Fire of Copenhagen in 1795, eliminates many of these problems. It was the best performing system in Europe during the recent financial crisis, needing no sovereign bailouts or support from central banks.

First, it is a private system in which all mortgage originators can participate on equal terms, as long as they meet the rigorous regulatory requirements. There are no Government Sponsored Enterprises (GSEs) enjoying a quasi-monopolistic position.

Second, mortgage originators are required to retain credit risk and to perform the servicing functions. The originators are not allowed to take any interest rate risk. This perfectly aligns incentives, making the outcome of the borrower the same as it is for the mortgage bank.

Third, the mortgages are funded by the issuance of standardized bonds, creating a large and liquid market. The Danish mortgage bond market is the largest, always performing, non-taxpayer guaranteed mortgage bond market in the world.

Finally, the asymmetric nature of most mortgage systems (like in the US) is replaced by what the Danes call the Principle of Balance. Every mortgage is instantly funded by a bond of the same amount and tenor, and the two remains interchangeable at all times. Homeowners can retire mortgages not only by paying them off, but also by buying an equivalent face amount of bonds at market price.

“The Danish system enables homeowners to preserve the equity in their houses in periods with raising interest risk. There is a tendency that housing prices fall during such periods. At the same time they can buy back their bonds in the market – at a discount and at market price, and then refinance a lower amount at a higher interest rate. This protects homeowners against insolvency and makes the labor force mobile.”

- Alan Boyce, CEO, Absalon Project

Because the value of homes and the associated mortgage bonds tend to move in the same direction, homeowners should not end up with negative equity in their homes when interest rates rise. To state it more clearly, as home prices decline, the amount that a homeowner must spend to retire his mortgage decreases, because he can buy the bonds at lower prices.

The Danish mortgage market is EUR 375 billion in size, quite large for a population of only 5.3 million people. The traditional Danish mortgages are 30 year fixed rate mortgages, as well as a variety of 3, 5, 10 and 15 year fixed rate loans. Local insurance companies and pension funds are significant source of demand for the bonds, due to their longer term duration. Foreign investors are big buyers of Danish mortgage bonds as well.

Pension funds have been introduce in many countries in Africa, all looking to invest in high quality, long duration securities. Furthermore, large scale residential communities are being developed which need permanent funding options for the future homeowners.

Kenya is a good example of a country that has both the need for affordable housing finance and strong demand for high quality investments. It has a population of approximately 45 million people but less than 20.000 mortgages. Housing Finance, the leading mortgage bank in Kenya, has worked with Absalon Project for a couple of years before a decision was taken to enter into an implementation study.

“We have been investigating a number of different mortgage solutions and are seriously considering one along the Danish model, as it fits perfectly into what we try to achieve at Housing Finance.”

- Sam Waweru

Sam Waweru, Housing Finance Chief Finance Officer, explains: “We have been investigating a number of different mortgage solutions and are seriously considering one along the Danish model, as it fits perfectly into what we try to achieve at Housing Finance. We are looking for sustainable and low-risk funding to offer cheaper and better mortgage products to our customers. He continues: “The funding of mortgages at equal terms in the capital market takes out a lot of risk for us which we can use to lower the cost to our customers.”

Housing Finance sees also other benefits of the new model. As the model by definition funds mortgages by issuing standardized bonds in the market, they can save a lot of management time and reduce financial risks. They can then use their short term deposits to finance shorter term lending.

Absalon Project offers business and technical consultancy and Software as a Service (SaaS) solution, which means that all services will be delivered through the internet, and the local companies can focus on the business side and support of the participating banks, while Absalon Project will handle all IT related issues.

Factbox
VP SECURITIES A/S (VP) is the Central Securities Depository (CSD) in Denmark. It manages all registration of ownership, clearing and settlement of all securities in Denmark. VP is seen as the back office of all securities handling in Denmark. It was the first CSD to dematerialize securities in the world, with bonds in 1983 and shares and certificates in 1988.

About the Authors

Alan Boyce has enjoyed a long career in the capital markets. Currently, he is chief executive officer of Absalon, a joint venture between affiliates of Soros Fund Management and VP Securities, where he works to implement the beneficial aspects of the Danish mortgage system in the United States and other countries around the world.

Boyce was senior managing director at Countrywide Financial, responsible for management and leadership of the bank’s investment, hedging and funding strategies. He oversaw secondary markets, securities and loan purchase activities, commercial mortgage origination, MSR hedging, reinsurance, as well compliance with the Community Reinvestment Act. He was at Countrywide from March 2007 to June 2008.

Prior to joining Countrywide, Boyce served as Director of Special Situations at Soros Fund Management LLC. During his tenure with Soros, he managed a portfolio of assets of the Quantum Funds and had principal operational responsibilities for the bulk of Soros’ investments in Latin America. Boyce was a full time employee at Soros from August 1999 to March 2007.

Before joining Soros Fund Management, Boyce served as managing director at Bankers Trust. He was in charge of fixed income arbitrage, the bank’s mortgage portfolio and compliance with the Community Reinvestment Act. He was with

Bankers Trust for 14 years. Prior to that, he worked for the Federal Reserve Board in Washington, D.C.

Boyce holds an MBA degree from Stanford University and a Bachelor of Arts degree in Economics from Pomona College, where he graduated magna cum laude.

Wagn Erik Nørgaard is COO and a founding member of the Absalon Project. He has more than 35 years of experience in IT development and operations of large-scale financial systems.
Nørgaard joined VP Securities (for the second time) in June 2003 to represent Danish activities in Absalon. He was responsible for the successful development and implementation of Absalon’s first company - Hipotecario Total (Hito) in Mexico.

Prior to VP/Absalon Nørgaard was CEO of SMT Data a Danish software company that delivers solutions focused on performance and capacity management for IT infrastructure. Before that he was head of sales for the Nordic region at Hitachi Data Systems.

Nørgaard’s first stint at VP Securities saw him as Vice President and head of IT. At VP he was responsible for the development and implementation of large IT infrastructure projects including the dematerialization of Danish shares and the introduction of an electronic trading system at the Copenhagen Stock Exchange.

Nørgaard holds a BA in Computer Science as well as a BA in Organization and Economy from the Copenhagen Business School. He has also participated in management training at IMD and Henley business schools.

Sam Waweru is a business graduate from the University of Nairobi’s School of Business and a qualified certified public accountant, as well as a member of the Institute of Certified Public Accountants of Kenya (ICPAK).

Sam boasts a vast experience in the accounting and auditing fields and is currently the finance and administration director at Housing Finance. As such, he heads the entire Finance and Administration Division of the company and its subsidiaries.

Sam started his career at Ernst & Young, one of the big global accounting and auditing firms, and has served in accounting and auditing disciplines at various companies spread over ten different African countries and in the UK. These companies include Lonrho Africa Plc, Aga Khan University Hospital, and Uchumi Supermarkets Limited.

Sam is widely travelled within the African continent, Europe, North America and Asia. He is a keen golfer and is a member of Muthaiga Golf Club, Limuru Country Club and Parklands Sports Club.


Sahel Countries Set to Receive Record Amounts in Aid

[caption id="attachment_6047" align="alignright" width="201"] Andris Piebalgs[/caption]

The countries of the Sahel region are set to receive unprecedented levels of aid to help them overcome poverty and political strife. The European Union and the World Bank have pledged to disburse no less than $8bn in fresh aid to six countries: Mali, Mauritania, Niger, Chad, Senegal and Burkina Faso.

The EU is concerned about the security in the region and hopes that its $6.5bn contribution will significantly improve the security situation in the Sahel. “Security is a prerequisite for growth and without it there can be no progress,” said EU Development Commissioner Andris Piebalgs as he returned from a four day visit to the region.

The World Bank has earmarked an additional $1.5bn for the poverty-stricken Sahel countries. This extra aid comes on top of the bank’s existing programs for the region. Over the coming two years, the World Bank will initiate and support various hydropower, irrigation and telecom projects in the six countries that have been chosen to spearhead regional development.

World Bank President Jim Yong Kim was joined by EU Commissioner Piebalgs and UN Secretary-General Ban Ki-moon on a fact-finding mission to the region in early November and concluded upon his return that, “the people of the Sahel desperately need more secure living standards.” Mr Kim added that the World Bank hopes that its aid may help build “a new path for economic growth.”

“Security is a prerequisite for growth and without it there can be no progress.”

- Andris Piebalgs

A large chunk of the EU development aid now pledged will go to projects aimed at improving the quality and reach of governance over the coming seven years. All too often in the Sahel, states are unable to exercise full control over their national territory, leaving vast swaths of lands to rebel groups often susceptible to religious fanaticism.

Mali is set to receive $670m in EU aid to help its government gain control of its northern regions where, despite a large-scale French military intervention earlier this year, Islamist insurgents reportedly still hold sway.

While the EU is mainly concerned with security issues, the World Bank aims for the accelerated development of the Sahel region. The bank’s private sector arm, the International Finance Corporation (IFC), will put up $300m to support business development. The IFC expects its engagement to result in a multiplier effect by attracting private investors in its wake.

Similarly, the World Bank’s Multilateral Investment Guarantee Agency (MIGA) is set to provide up to $585m in political risk coverage over the next year for a natural gas project in Mauretania which has the potential to fuel economic growth in neighbouring Senegal and Mali as well.

UN Secretary-General Ban Ki-moon emphasized the fact the challenges in the Sahel respect no borders and thus call for approach targeting multiple countries. Mr Ki-moon said that “fighting fires” remains crucial but must not be allowed to overshadow the need to address the underlying issues of delayed and faltering development. “We now need to clear away the problems that ignite conflict and cause instability.”

Meanwhile, in The Netherlands the government mulls a sizeable military contribution to the stabilization effort in Mali. The Dutch have been asked to make up the scheduled withdrawal of part of the French force. The government in The Hague has now given the green light for the deployment of up to 400 troops supported by helicopter gunships and fighter planes. The Dutch military contribution is meant to bolster the severely undermanned and underpowered UN MINUSMA (Multidimensional Integrated Stabilisation Mission Mali) force that took over from the French in July and is now charged with maintaining the peace.


NEPAD: Towards the AU Agenda 2063 - Africa Building Momentum From a Decade of Achievement

 At the dawn of the 21st century, African leaders were faced with a set of new realities: Globalization, the end of the Cold War, and lessons from the challenges and experiences of the Organization of African Unity (OAU). These are arguably most likely to have added to the momentum that led to the formation of the African Union (AU), with its promise of greater integration, peace and prosperity.

This year marks the 50 year celebration of the establishment of the OAU. In this article, we attempt to identify some of the features that make the continent a better place today and describe the challenges that lie ahead for the AU as it crafts its recently announced Agenda 2063, intended to benefit African people as a whole over the next half century.

The New Pan-African Institutions

The transformation of the OAU into the AU marked a sea change in the nature and character of continental institutions. The AU established a peace and security architecture that had the specific intention of intervening in conflicts with a view to resolving them. It is also meant to be an innovative instrument of promoting and sharing good practices on governance through the African Peer Review Mechanism (APRM). The other goals identified early on focused on eradicating poverty, facilitating economic growth and development, and ensuring that Africa is well represented internationally in support of the continent’s objectives.

“The continent is making important strides on conflict resolution and governance issues.”

The adoption of the New Partnership for African Development (NEPAD) as the socio-economic blueprint for the continent was also a decision with far-reaching implications. The NEPAD programme is premised on Africans leading their development processes (politically and technically), promotion of regional integration, gender equality and developing the capacities of African peoples to participate in their own development processes, including those in the diaspora.

The Rising Continent

It can be argued that over the last decade - through the AU and its NEPAD program – African leaders have contributed towards the creation of an environment conducive to development on the continent.

As pointed out in the Africa Progress Report 2012, drawn-up by the Kofi Annan Panel, the continent is making important strides on conflict resolution and governance issues. Multiparty elections are now firmly established; there have been moves towards greater transparency; and armies have, by and large, stayed out of politics. Many countries have also become more peaceful.

Such successes have also been replicated on the socio-economic front. From 2000 onward, levels of annual economic growth in Africa have been impressive, averaging some 5% until the onset of the global economic recession. The World Bank called this “the longest expansion in 50 years”. The International Monetary Fund (IMF) notes that in the nearly five years since the 2008 crisis, Africa has grown faster than in the years before the crisis. Regional output grew 5.1% last year and should remain high, though perhaps slightly weaker as reflected in the rather subdued World Economic Outlook released in July 2013.

This recent experience of African countries is quite significant because it has not been limited to commodity rich countries. Economic growth in most countries now seems able to attain levels higher than population growth (see table below).
There is also evidence of a few structural changes that are taking place more rapidly since the turn of the century. These bode well for the future and include the declining share of agricultural in GDP (some places recorded a drop from 40% to 15%) and the increased contribution of industry.

Africa’s progress over the last thirteen years is also illustrated by its endeavours to meet the Millenium Development Goals (MDGs). For example, a recent report with contributions from both the AU and United Nations Development Programme (UNDP) notes that Africa is on track to achieve the targets of universal primary education; gender parity at all levels of education; lower HIV/AIDS prevalence among 15-24 year olds; increased proportion of the population with access to antiretroviral drugs; and increased proportion of seats held by women in national parliament by 2015.

The 2012 report further notes that in some cases Africa’s achievements exceed those of regions such as Southeast Asia, Latin America and the Caribbean.

Many of these successes can be attributed to Africans themselves. Levels of debt have been reduced, government spending supportive of growth has increased. This has significantly enhanced the attractiveness of African economies to domestic and international investors.

As a result of lower debt levels, African countries are now better able to adopt far-reaching policies for their sustained development, including investment in infrastructure and human capital. This is taking place despite a dramatic fall in the volume of development aid received.

[caption id="attachment_6055" align="aligncenter" width="544"] Table 1: Leading African performers 2002-2012- GDP per capita. Source: based on Chandy et al, Brookings Institution, 2013.[/caption]

The role of the African private sector in this success story cannot be understated. The Ernst & Young Africa Attractiveness Survey (2012) found that intra-African investment in new projects increased by an average of 23% every single year between 2003 and 2011. Since 2007 this rate has accelerated to an average of 42% a year. The report further indicates that this trend is being led by Kenya, Nigeria and South Africa. Over the last four years, investments from Kenya and Nigeria are reported to have grown at higher rate than is recorded anywhere else in the world, at 77.8% and 73.2% respectively.

Challenges Ahead

Africa’s recent success is reflected in its ability to achieve and maintain peace and security across the continent although pockets of conflict remain. By all accounts measures to address these realities are in place but problems remain.

Africa’s economies are also growing though it is acknowledged that the gains are often neither inclusive nor shared. Various analysts have noted that the aggregate performance of African economies hides significant diversity across and within countries. Growth often fails to reduce poverty levels. In other parts of the world, growth has impacted societies in a much more equitable way (see for example World Bank’s Africa’s Pulse, April 2013).

Inequality also remains high. Over the next twenty years, African poverty is expected to drop by a substantial 24 percent but its share of global poverty may rise to 82 percent. In its short-term forecast, the International Labour Organization (ILO) also expects the number of unemployed people in Sub-Saharan Africa to rise by 5.4% and by 4.3% in North Africa by 2015. The outlook for youth unemployment doesn’t look any more promising.

Africa’s socio-economic challenges are clear. However, better growth prospects and the availability of resources will enable African countries to achieve even more success and meet MDGs in areas such as under-5 mortality, maternal health and undernourishment.

Africa’s Road Ahead

As correctly observed by many, including analysis at the Organization for Economic Co-operation and Development (OECD), African governments and peoples have been the main players in this new era of progress.

The continent now has in place the requisite institutions for addressing its problems and to sustain the current positive trends. It may also be able to widen the benefits of the opportunities that it faces, especially as an emerging growth pole of the global economy with more than a billion people depending on its fortunes.

These changing fortunes emerged when Africa took its destiny in its own hands. Such an approach should inform its relations with the emerging BRICS (Brazil, Russia, India and China) and older centers of global economic power, such as the United States and Europe.

Without a doubt the success of the last decade must lead to increased African self-confidence. It also must ensure that the processes it has initiated to develop long-range strategies for development, re-affirm the importance of the following guiding principles:
• People-centred development
• Promotion of democratic values and standards
• African ownership and leadership of processes for its own development.

This approach may imply less acceptance of the need for a ‘paradigm shift’ as this undermines the progress that Africa has made over the past decade on its own.

Similarly, the emphasis on ‘governance’ should not make Africa feel that institutional weaknesses cannot be overcome as was seen in countries that experienced long spells of growth and managed to lift millions out of poverty (e.g. East Asia early 1960’s, China and Vietnam circa 1980).
Africa will need to continue to emphasise the role of a capable and people-focused state. Its ability to develop partnerships with broader civil society, including the private sector, will continue to be crucial, as will be the conscious efforts to import, modify and rapidly invent the institutions vital for dynamic industrialization and structural transformation.

Mkandawire (2001) makes the important point that we wish to underline. The real issue is no so much the “building” of the African state but rather “making it a more accountable and more efficient instrument for addressing the issues that African’s have reason to consider fundamental”.
Civil society, particularly business, must also become a more significant part of efforts towards domestic resource mobilization.

It is encouraging to see the growth of intra-African investment, as earlier mentioned, but there is scope for improvement in harnessing domestic financial resources and narrowing resource gaps through better functioning financial markets. This will further reduce reliance on foreign aid and allow local ownership of development processes.

Conclusion

Projections for the next half century suggest that Africa can realize a vision of a united, prosperous continent at peace with itself and boasting well diversified, competitive economies from which extreme poverty and inequality have been eliminated.

Africa is a continent that has many opportunities: Land and mineral wealth abound and an eager youthful and growing population. The prospects of urbanization and a changing global environment clearly favour emerging regions.

The AU and its NEPAD programmes represent a step taken. Now is time for careful planning to anticipate the new challenges and opportunities ahead and formulate an adequate response to them. It will be important that the development of the AU’s Agenda 2063 incorporates the values, principles and successes attained to date.

Mgidlana works for the Presidency and the Nepad Planning and Co-ordinating Agency but the views expressed are his own. Maziya is a research fellow at the agency.(This is the second article in a series exploring the evolution and focus of Pan-African institutions, challenges and prospects facing the continent and implications for the AU’s Agenda 2063).

About NEPAD

The New Partnership for Africa’s Development (NEPAD) is a flagship socio-economic programme of the African Union (AU). NEPAD’s four primary objectives are to eradicate poverty, promote sustainable growth and development, integrate Africa in the world economy and accelerate the empowerment of women.

The NEPAD Agency is a technical body of the AU that advocates for NEPAD, facilitates and coordinates development of NEPAD continent-wide programmes and projects, mobilises resources and engages the global community, regional economic communities and member states in the implementation of these programmes and projects. The NEPAD Agency replaced the NEPAD Secretariat which had coordinated the implementation of NEPAD programmes and projects since 2001.

The strategic direction of the NEPAD Agency is premised on six themes: Agriculture and Food Security, Climate Change and Natural Resource Management, Regional Integration and Infrastructure, Human Development, Economic and Corporate Governance as well as Cross-Cutting Issues including Gender, ICT and Capacity Development.


USAID: Science and Engineering Diaspora Networks –  Communities Mobilizing to Solve Global Development Challenges

[caption id="attachment_6061" align="alignright" width="226"] Scientist: Sarbajit Banerjee
Source: Douglas Levere, UB Reporter, University of Buffalo[/caption]

In a research lab at the University of Buffalo (UB), New York, scientist Sarbajit Banerjee and his colleagues have honed in on a confounding problem - how to efficiently cool homes in hot climates. These researchers are testing the potential of coatings roofs and windows with vanadium oxide, a synthetic compound that reflects heat once the temperature reaches a critical point. Banerjee and his team believe they have found a so-called “moonshot” solution – a radical solution using breakthrough technology to address a global problem – which in this case can be applied for sustainable low-cost housing in developing countries. Banerjee stresses the enormous environmental implications: “This technology is of particular interest in developing countries, where the use of air conditioning is rising. Not only is this straining nascent power grids, but it’s also dumping hundreds of millions of tons of carbon dioxide into the atmosphere. And this isn’t just a problem for houses, but also for cars, where by some accounts vehicle air-conditioning units in the United States alone use 7 billion gallons of gasoline each year.”

Banerjee is both a diasporan and a scientist – he emigrated from India and is currently an Associate Professor of Chemistry at UB and co-director of UB’s New York State Center of Excellence in Materials Informatics. Individuals like Banerjee make up a community of diasporans in the science and engineering fields. While affinity to their country of origin often creates a lasting emotional bond, their pedagogy instills a degree of objectivity and scientific rigor to solving problem sets.

At USAID and the State Department, we recognize that harnessing both this affinity and the expertise of science and engineering diaspora networks can help tackle some of the greatest problems developing countries face while bridging cultural and economic gaps between the United States and the rest of the world.

“The U.S. government is striving to offer more opportunities to build strong collaborative partnerships in science and technology around the world.”

In May 2013, Banerjee was invited to give a lecture titled “Windows and roofs that adapt to the outside environment: Toward greener housing in the developing world” at the Global Diaspora Forum. His eight-minute lecture was one of several TED-style talks featured in a Solve for <x> event at the forum in partnership with Google to amplify science-based “moonshot” thinking. “Moonshots” are described by Google as radical solutions that use breakthrough ideas and cutting-edge technology to address global problems that affect millions or billions of people.

Banerjee’s lecture was part of the third-annual forum which is co-hosted by the U.S. Department of State’s Office of Global Partnerships and the United States Agency for International Development (USAID), to celebrate the role of diaspora communities in development and diplomacy. In 2012, an initiative called Networks of Diaspora for Engineers and Scientists, or NODES was launched as a partnership between the Department of State, the American Association for the Advancement of Science, and the National Academy of Sciences. NODES connects diaspora scientists across boundaries and in the past year has convened scientists and diaspora groups from over 30 countries.

NODES and similar efforts by other U.S. government agencies recognize that science diplomacy is not just a smart tool that brings experts together for collaboration under a “non-political” umbrella but an imperative in order to address some of the most pressing global challenges of our time that will depend on innovative thinking and technological breakthroughs for scalable solutions. An often-neglected byproduct of these collaborations is that science and engineering diasporans also play the role of “cultural translators” to communicate inventions in the U.S. that may have even greater utility in other countries.

There is great potential for U.S. diaspora scientists and engineers to play a pivotal role in knowledge transfer, entrepreneurship, and commercialization of ideas in their countries of origin or heritage. Take for example the research work of Imran Khan, an Assistant Professor in the Department of Pathology and Laboratory Medicine at the Center for Comparative Medicine at the UC Davis Medical Center. Khan, together with his colleague Paul Luciw in the same department led the development of a low-cost, quick screening technique to identify whether children have reached a deadly stage of tuberculosis.

At least 600 million people in Pakistan, India and Bangladesh are infected with the tuberculosis bacterium Mycobacterium tuberculosis and about 400,000 die from the disease in South Asia every year. This new screening which can benefit millions of people worldwide resulted from research collaborations with their Pakistani colleagues at the Arid Agriculture University and Punjab University under a joint Pakistan-U.S. Science and Technology Program funded by USAID and the State Department.

The U.S. government is striving to offer more opportunities to build strong collaborative partnerships in science and technology around the world. In 2011, USAID launched the Partnerships for Enhanced Engagement in Research (PEER) Science program, a partnership between the USAID and the NSF that provides funding support to researchers from 87 eligible countries working collaboratively with NSF-funded scientists based in the U.S. These collaborations can lead to dramatic breakthroughs in development-related topics such as natural resource management in the Philippines, water issues in the Middle East and North Africa, biodiversity in the Lower Mekong Region and Brazil, and climate change adaptation in the Maldives.

While some may chide the “brain drain” of highly-skilled individuals who leave their countries of origin for better opportunities, the fact is that there are many science and engineering diaspora networks that maintain ties and help build scientific capacity in their home countries.

Take for example the efforts of the Caribbean diaspora to establish a Caribbean Diaspora for Science, Technology and Innovation, a collection of Caribbean professionals who have an interest in building scientific capacity to benefit the development of the Caribbean Region. Or of the Irish scientific diaspora community to create the Wild Geese Network of Irish Scientists to connect Irish scientific, technological and engineering diaspora, disseminate information about funding opportunities and forge networks to create bilateral partnerships.

The global challenges in access to energy, sustainability, agriculture, health, education and infrastructure that underlie poverty require not just resources but talent. The community of science and engineering diasporas in the United States is a valuable asset and a key stakeholder group in our diplomacy and development policies. Their expertise, combined with an inherent cultural awareness and sensitivity that cannot be acquired, can help the U.S. government dream bigger and find the next “moonshot” solutions as we reshape the way we think about science for development.

About the Author

Romi Bhatia is a Senior Advisor for Diaspora Partnerships in the Global Partnerships Division at the US Agency for International Development. He is part of the core team that is helping to drive the Agency’s engagement with diaspora communities in the U.S. in order to achieve development objectives of the Agency.

Sources
• http://www.buffalo.edu/news/releases/2013/05/053.html
• http://pakistanlink.org/Community/2013/Sep13/06/05.HTM

Questions and inquiries about how to partner with USAID can be directed to: robhatia@usaid.gov


Grant Thornton Hong Kong: Managing Innovative Technologies - CloMoSo

What is CloMoSo?

[caption id="attachment_6079" align="alignright" width="210"] Author - Amy Chiang:
Senior Manager, Advisory, Grant Thornton Hong Kong Limited[/caption]

CloMoSo is the convergence of the trendiest and hottest technologies that are being adopted by IT-savvy businesses to enhance communication and collaboration, and to leverage IT services instead of IT assets to increase flexibility and decrease costs.

Clo: cloud computing
Mo: mobile applications
So: social media

The CloMoSo phenomenon is happening at a much faster rate than big technology shifts of the past such as client/server architecture and the internet. Company executives are faced with the challenge of understanding the new concepts of CloMoSo, and to decide whether to adopt these new technologies. Once the decision is made to adopt the technology, there is the difficulty of maximizing the benefits and opportunities and dealing with the associated risks.

Cloud Computing

Cloud computing is the conducting of business functions on shared, off-premise computing systems. Exhibit 1 summarises the differences between on-premise and off-premise computing.

There are a number of potential advantages to the off-premise delivery of computing. These include:

Lower upfront capital expenditures

Less management time spent acquiring, maintaining and operating computer hardware and software

Anywhere, anytime access to new capabilities

The flexibility to scale from one user to hundreds of thousands around the world.

Although it is a common assertion that cloud computing saves money when compared with on-premise computing, the reality is much more complex; the savings occur only if careful management drives lower total spending. Management will need to institute policies that actively capture the lower cost of certain types of computing activity and effectively constrain the risks of runaway expenditures in the highly scalable cloud environment.

[caption id="attachment_6068" align="aligncenter" width="583"] Exhibit 1: Differences between on-premises and off-premises computing. Source: Grant Thornton.[/caption]

Requirements such as dedicated servers or storage due to security concerns will drive up costs and decrease the capacity for savings. Limitations on locations and staffing – as well as interference with the provider’s normal operations – will add costs that are ultimately reflected in the contract terms. Other important risks with cloud computing include:

Vendor lock-in

Difficulty in service level measurement

Data security & privacy issues.

A survey conducted by ISACA in 2011 on the use of cloud technology in Hong Kong and wider China shows that 20% of enterprises plan to use it for non-mission-critical IT services this year, double the number from last year. Meanwhile, the number of enterprises that plan to use cloud computing for mission-critical services rose from 7%to 11%.

Mobile Applications

Over 5 billion people globally have a mobile phone, and over 1 billion have a smart phone. In mainland China and Hong Kong alone, there are over a billion mobile phone users. Mobile technology can help corporations to transform how tasks are done or open new avenues to interact with clients, employees and business partners.

Businesses are already confronted with a demand for accommodating a BYOD (bring your own device) model, where employees bringing personally-owned mobile devices to their place of work, and use these devices to access privileged company resources such as email, file servers, and databases. A survey conducted by Grant Thornton LLP in 2012 of US chief audit executives (CAE) on emerging risks found that mobile technology was their second biggest concern (cyber-security being the number one concern).

Social Media

Tweeting, blogging, and friending are common terms used in the world of social media, and they are becoming a part of business vocabulary as well. Many companies are just now starting to take a serious look at the benefits of social media in business, and they are looking even more closely at the risks involved, such as fraud, theft, defamation, cyber-bullying and invasion of privacy among others. A survey conducted by Financial Executives Research Foundation, Inc. (FERF), working in partnership with Grant Thornton LLP in 2011 found that almost half of the senior financial executives who responded to the survey felt that social media will be an important component of corporate marketing efforts going forward.

For many companies, social media is the proverbial double-edged sword. It offers both opportunities and risks. For now, the governance regarding social media remains very fragmented. As social media cuts across many areas of a company, including HR, marketing, communications and legal, any policy surrounding it should be the result of a multidisciplinary approach.

In conclusion, a company contemplating the use of CloMoSo to enable business growth can expect numerous benefits and opportunities, including:

Speed of direct communication with clients

Better visibility, online exposure and increased traffic to the company website

Opportunity to build relationships and intimacy with customers

Ability to monitor and understand customer perceptions of the company’s brand

Ability to measure the frequency of the discussion about the brand

Early warning of potential product or service issues

However, if done incorrectly, it can also lead to system failures, data privacy breaches and data security issues. This is where external consultants can be of assistance - to assess the company strategy, and to mitigate risks. Whether the company is just adopting one of the technologies, or adopting a convergence of cloud, mobile and social media, there are huge opportunities, and great risks involved. i

About Grant Thornton Hong Kong Limited

Grant Thornton Hong Kong Limited is a member firm of Grant Thornton International Ltd (Grant Thornton International). The firm is fully-integrated with Grant Thornton China and part of a network of 17 offices providing seamless access to 120 partners and over 2,700 professionals across mainland China and Hong Kong. For more information, visit www.grantthornton.cn.

Grant Thornton is one of the world’s leading organizations of independent assurance, tax and advisory firms. These firms help dynamic organizations unlock their potential for growth by providing meaningful, actionable advice. Proactive teams, led by approachable partners in these firms, use insights, experience and instinct to understand complex issues for privately owned, publicly listed and public sector clients and help them to find solutions. Over 35,000 Grant Thornton people, across 100 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work. For more information visit www.gti.org.


UN Concern over Job Creation for Youth in Least developed Nations

There should be a greater emphasis on job creation in the world’s 49 poorest nations, where the number of young people of working age is increasing by 16 million per year, says a new report released yesterday by the United Nations Conference on Trade and Development (UNCTAD).

The youth population – aged 15 to 24 years – in the least developed countries (LDCs) is expected to soar from 168 million in 2010 to 300 million by 2050, when one in four youths worldwide will live in an LDC.

The LDC Report 2013 recommends that the Governments of these countries intensify efforts to employ this vast resource – which is currently largely underemployed, or trapped in vulnerable, low-paid jobs – to improve prospects for economic progress.

It calls for a break with “business-as-usual” policies, and a shift towards policies aimed at spurring inclusive growth and the creation of more and better quality jobs.

“Given the clear demographic challenges, the LDCs will need to make significant efforts to generate a sufficient quantity of jobs and offer decent employment opportunities to their young population,” said UNCTAD.

“If this is not achieved, the likelihood is that poverty, social instability and international emigration rates will rise.”

The report cautions that while LDCs enjoyed relatively high gross domestic product (GDP) growth rates from 2002 to 2008, economic progress did not translate into correspondingly increasing levels of employment. In fact, the countries with faster GDP growth had relatively lower employment creation.

UNCTAD notes that demographic trends in the LDCs are such that millions of new jobs will have to be created every year over the coming decades. For example, in Niger there were 224,000 new entrants into the labour market in 2005 – a number that is expected to increase fivefold, to 1.4 million, by 2050.

In Ethiopia, there were 1.4 million new entrants in 2005, and that figure is expected to rise to 2.7 million by 2030 and to 3.2 million by 2050. In Bangladesh, there were 2.9 million new entrants in 2005; this figure will peak at 3.1 million by 2020, and decline thereafter.

The report says that the world’s LDCs should take steps to improve GDP growth, through the generation of employment that pays a living wage and has safe working conditions, and through investment to develop productive capacities.


Ukraine Opts for Moscow Leaving EU Empty-Handed

[caption id="attachment_6088" align="alignright" width="269"] Ministry of Foreign Affairs of Ukraine[/caption]

Brussels is baffled, rattled and stunned. The mood in Europe’s capital has turned into one bordering on not-so-quiet diplomatic despair since the Ukraine government on Thursday bluntly suspended preparations for the signing of a comprehensive trade pact and political association agreement that was to bring the country into the EU’s orbit. Both deals, years in the making, were scheduled to be signed and sealed at next week’s EU - Ukraine summit meeting in Vilnius, Lithuania.

Instead, Ukraine president Viktor Yanukovych announced that his country was seeking a “renewed dialogue” on trade issues and economic cooperation with neighbouring Russia. The Ukraine will now also consider joining the Eurasian Union – Mr Putin’s answer to the European Union which so far has attracted only Kazakhstan and Belarus.

A Kremlin spokesperson on Thursday evening said that Russia welcomes Kiev’s desire to “improve and develop” trade relations while Sweden’s Foreign Minister Carl Bildt bemoaned the move in a tweet, noting that “politics of brutal pressure evidently work.” As a keen supporter of the EU’s march eastward, Mr Bildt was instrumental in forging the now scrapped deals.

The last minute change of heart suffered by the Ukraine government leaves the European Union’s eastern initiative faltering, if not in tatters. Thursday’s diplomatic debacle follows the one of last September when Armenia caused consternation in Brussels by suspending any and all negotiations with the EU regarding closer trade and political relations – generally seen as a first and essential step toward a membership application.

"The last minute change of heart suffered by the Ukraine government leaves the European Union’s eastern initiative faltering, if not in tatters."

For the moment, the EU remains in talks with the Georgia and Moldova governments on establishing closer ties as part of its European Neighbourhood Policy Initiative. However, these countries are now too beginning to experience the full extent of Russian ire and may indeed succumb to it.

The scope of Mr Putin’s diplomatic coup is not yet grasped by most EU officials, some of whom still seem to cherish faint hopes for another eleventh hour about-face by the Ukraine government at the upcoming summit in Vilnius. Their undying optimism is, however, not connected to any developments in the real world and merely serves to underscore the shortcomings of the EU’s own foreign policy and its unrealistic expectations.

Knowing of President Putin’s heavy-handed approach to issues affecting his country’s interests, the European Union should have been much better prepared for the Kremlin’s onslaught. As it happens, they weren’t and the EU has now painfully discovered the limits of its “soft-power” – so touted by Mr Bildt and other, rather woolly-headed, diplomats.

The Kremlin’s resounding victory should not at all have come as a surprise. It is not as if President Putin is a grand master in the art of diplomacy; he is just a street-smart politician and a leader who knows how to effectively wield power.

Over the past few months, the French and Polish had repeatedly warned that the negotiating tack chosen by the EU in the Ukraine seemed primed for failure. By insisting, at the behest of the Germans, on an end to “selective justice” – a euphemism to describe the country’s courts subservience to both political and corporate interests – EU negotiators forced Ukrainian president Yanukovych into a position of great personal discomfort.

Though fully recognizing the need for an independent judiciary, the Ukraine president is loath to order the discharge of former prime-minister Yulia Tymoshenko from prison where she has languished since late 2011 after a conviction on charges the EU believes were trumped-up. The EU had made her release a precondition for the signing of any deal.

President Yanukovych and Yulia Tymoshenko are sworn enemies. Her release would have resulted in a severe personal loss of face for Mr Yanukovych and might conceivably have fatally undermined his grip on power.

The French in particular had warned that hinging a momentous shift in geo-political power on the fate of a single individual did not seem a wise course of action. Now the EU must face up to the fact that its diplomatic clumsiness has resulted in Mrs Timoshenko staying behind bars and Mr Putin racking up yet another major triumph. In fact, the EU has absolutely nothing to show for its efforts.


A Crowded Room with Barry Sternlicht and Kent Swig: New Financing for Real Estate

By David Drake

Crowdfunding is taking real estate financing by surprise and the big players are taking notice.

When Joe Rubin (FundingPost) and I were planning for this Real Estate Investing conference we knew that crowdfunding’s foray into real estate is a promising innovation to the financing and investing industry. We were compelled to bring people, entrepreneurs and investors, media and spectators, to join in the talks in order to sharpen the game.

The Hakimian Organization, developer of the stunning and luxurious 75 Wall Street condominium atop the Andaz Wall Street, chimed in and readily hosted the 150+ current and future realty entrepreneurs and investors who signed up for the event. The glorious rooftop lounge, with the astounding 360 degree view of the city from its floor to ceiling glass windows, was the perfect setting. The full day event heralded the future growth of capital formation in real estate and invigorated a new group of angel investors and venture capitalists.

“For the first time ever, I felt like all real estate companies, small, medium and those who have relied on institutional capital for decades are starting to realize that crowdfunding is going to revolutionize capital formation in real estate."

Joe Rubin, together with five of his angel and venture capitalist friends, was excellent in the pitch workshop where he guided with the pitches that the audience practiced. Showing how real estate fund managers, investors and entrepreneurs can further hone their pitching skills is a fine art in itself.

Barry Sternlicht, CEO of Starwood Capital, is now managing $30 billion in several funds from energy to hotels globally. He shared how his trepidations and hard work had led him to where he is today. He did acknowledge that he should take more celebration in the successes yet he worries about everything. “Work hard and read” - learn what the people are saying and what the sentiments are. He reads all the time.

Kent Swig of Swig Equities and owner of Halstead Property, Helmsley Spear and Brown Harris Stevens brokerage has several thousand employees and real estate brokers in New York. He shared how he was blessed with his grandfather’s last name that had built a real estate empire in San Francisco. Still, he shared his challenges and failures and reminded us that we all need breaks - whether it was the receptionist letting you through or a doorman opening the door. It is a people business and the relationships make you a leader.

[gallery link="none" columns="2" ids="6105,6106,6107,6108,6109,6110,6111"]

The panel on crowdfunding, that represents among them iFunding $3.5 million, Realty Mogul $8 million and Fundrise $7.75 million, got the investors’ attention as the day grew older. All 3 firms have almost raised a total of $20 million. People are looking up and taking notice of this new way to raise capital. The most interesting questions for them were mostly on how they differ from each other in terms of operations and structure. Sydney Armani of CrowdFund Beat moderated the panel as his interests are to invest in real estate Software-as-a-Service.

Jilliene Helman of Realty Mogul says, “For the first time ever, I felt like all real estate companies, small, medium and those who have relied on institutional capital for decades are starting to realize that crowdfunding is going to revolutionize capital formation in real estate. Even better, they are eager to participate. This is very different than the conversations we were having one and two years ago with real estate companies who were highly skeptical. The industry is beginning to realize crowdfunding for real estate is here to stay."

Charles Cecil of Southwest Strategies and my friend of 18 years shared the panel with the leading Italian lawyer Alessandro Lerro. Lerro represents family offices in Europe that are looking at cash flow producing realty in the US while advising the Italian government to improve on capital formation in real estate. He is coming out with a new book this Spring on Investing in Italy which discuss the opportunities existing in real estate as well as agri-tourism and the food and wine industry.

Jake Bisenius of Amcap Fund manages $1 billion for retail and shopping center acquisitions while Teresa Martin of the Real Estate Investor Association made a strong case for new members to join. Gerard Rem, an astute investor of distressed NY properties shared his experiences at court where he picked up troubled assets the last 30 years. Investors of funds with $1-$100 million attended. Landlord of 6 buildings in SoHo John Pasquale said, “This was the best realty event I had ever encountered”.

From the audience, Robert Stillman of Creative Mortgage Resolutions LLC, said, “Having listened to Barry Sternlicht, I realized my goals aren't set high enough. What an encouragement he was to me. Kent Swig also had a very unique presentation filled with so much common sense advice that just goes a long way toward success…. Outstanding event! The networking, the people and the information were extremely helpful in energizing me into kickstarting my business to the next level.”

Joe O’Connor from VisorPoint says, “Great event! The networking overall was very good. Having a tech background, I love the innovation coming to this industry.”

There are several interesting changes in the law that the real estate industry is pursuing. The JOBS Act now allows advertising for investors and soon the crowdfunding law may become legal. We discussed how this would affect the realty industry and the impact will be profound in the next 18 months.

The energy in that crowded room cannot be missed nor dismissed. This is a conversation that is definitely worth nurturing and pursuing. Dennis Irvin, CEO of Rockefeller Group, will be speaking at the next event in March with other movers and shakers, as well as interesting key players in the industry.

The Soho Loft will continue to trailblaze talks on capital formation that bridge institutional and alternative financing groups and models. April 3-5 we partnered with Thomson Reuters to bring together the new kids on the block and the old boys of financing under the Innovative Investing Symposium in Boston. September 17 and November 5 we collaborated with TreveriMarketSA in a series to join together Broadway Avenue and Wall Street for a meaningful discussion on the impact of the JOBS Act on the entertainment industry.

Do you have questions and topics that you want to be discussed in this growing real estate financing conversation? Send them to us. Better yet, join us this March 2014.

David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity advisory firm, and The Soho Loft, a financial media company helping firms and funds to advertise to investors, QIBs and family offices in compliance with the new SEC law 506c. You can reach him directly at David@LDJCapital.com.


World Bank Response to Philippines Typhoon Disaster

[caption id="attachment_6120" align="alignright" width="242"] Benigno S. Aquino[/caption]

“We have been encouraged by the resilience of the Filipino people and the determination shown by President Aquino and his team as they work to recover from a disaster of unprecedented scale,” said World Bank Group President Jim Yong Kim. “With overwhelming demands, the relief, recovery, and reconstruction effort will take time. The World Bank Group is committed to supporting the government’s efforts to rebuild people’s lives no matter how long it takes.”

During the phone call, Kim updated President Aquino on a package of assistance amounting to almost US$1 billion, which can be delivered in a few weeks.  Kim said he mobilized World Bank staff to facilitate quick delivery of the US$500 million emergency budget support loan with teams working around the clock, due to the urgent nature of the situation in the Philippines.

“We have been encouraged by the resilience of the Filipino people and the determination shown by President Aquino and his team as they work to recover from a disaster of unprecedented scale.”

The additional US$480 million is financial assistance for the National Community Driven Development Project (NCDDP), which can be used for emergency response. The project could immediately support typhoon affected communities rebuild community-level or livelihood related infrastructure such as water, rural roads, schools and clinics, using retroactive financing. The project will empower communities themselves to lead the reconstruction effort, by offering a transparent way for people to identify their own needs.  This project will scale up the successful Kapit-Bisig Laban sa Kahirapan-Comprehensive Integrated Delivery of Social Services (KALAHI-CIDSS) program.

President Kim also informed President Aquino of the quick deployment of the Bank Group’s disaster specialists who are now helping the government in Manila assess damages and identify priority areas for immediate recovery and reconstruction support. The Philippines can continue to draw from the World Bank Group’s experience in post-disaster work from Turkey, India, Aceh, Sri Lanka, Pakistan, Bangladesh, and Haiti.

The World Bank Group is also looking at restructuring existing investment projects to support reconstruction of affected communities. Further assistance will be offered through new investment or results-based operations to support medium- and long-term reconstruction efforts, when the government’s Yolanda Recovery and Reconstruction Plan is completed.


Cyprus on the Mend?

By Delia Velculescu, IMF Mission Chief for Cyprus

Speech given at the Economist Conference, Nicosia, November 25, 2013

[caption id="attachment_6123" align="alignright" width="273"] Delia Velculescu[/caption]

Much has already been accomplished in the relatively short time since the approval of the stability program for Cyprus. Let me give three examples.

First, to address significant vulnerabilities that had built up in Cyprus’s large banking sector, the two largest and insolvent banks were resolved and merged. Following two independent asset reviews, the new Bank of Cyprus was fully recapitalized, accounting for recognition of current and future losses, and exited resolution at end-July.

No taxpayer money was used in this process. This allowed for broader burden sharing of costs and prevented an otherwise unsustainable increase in public debt.

More recently, the third largest commercial bank, Hellenic Bank, was also recapitalized, including with foreign participation, and without use of state support.

Second, to unwind the deterioration in public finances that took place in the years preceding the crisis, the authorities approved upfront an ambitious fiscal adjustment of 7 percent of GDP for 2013-14. Measures underway, together with prudent budget execution, allowed them to maintain a primary budget surplus through end-September, despite a deep recession underway. As a result, fiscal targets under the program were comfortably met, and end-year targets remain well within reach.

"Following two independent asset reviews, the new Bank of Cyprus was fully recapitalized, accounting for recognition of current and future losses, and exited resolution at end-July."

Third, to restore the sustainability of the pension system and strengthen the economy’s competitiveness, key structural reforms were implemented early on, including to the pension system and the COLA wage indexation mechanism. Some results can already be seen: a recent review of the pension system confirmed its long-run viability; and there are signs that the downward wage flexibility is helping to cushion jobs.

Through these actions, the authorities have demonstrated strong resolve to take very difficult but necessary decisions.

Still, the costs of unwinding large pre-crisis imbalances could not be fully averted.

The economy is undergoing a painful, but unavoidable, adjustment. Output contracted by 5.7 percent in the third quarter relative to a year ago, and the unemployment rate climbed to just above 17 percent at end-September. Disposable incomes are falling, and credit to the economy is contracting.

Capital controls were introduced in early March to avert a potential collapse of the banking sector. While domestic restrictions have been gradually relaxed, non-resident clients of foreign banks as well as fresh inflows of capital have been fully exempted from controls, restrictions remain a drag on activity.

Still, the economy has been more resilient than expected, with private consumption declining by less than projected, and tourism and exports holding up. Tax receipts have been recovering since April relative to GDP, and sentiment has improved through October. While the recession this year is projected to be less deep than initially projected, it is expected to continue next year, with a total cumulative fall of close to 13 percent in 2013-14 and risks tilted to the downside.

What is needed to bring back growth and prosperity for the Cypriot economy?

Strong macroeconomic policies are paramount to restoring confidence, macroeconomic stability, and growth.

First, the restructuring of the financial sector needs to be completed to allow a clean-up of the banks’ balance sheets and the eventual return of sustainable credit growth.

The authorities will need to complete recapitalization with state aid and the consolidation of the cooperative sector, while ensuring an adequate governance structure.

Both banks and coops will need to implement their restructuring plans to address large and growing NPLs, in the context of the recently-established arrears framework and code of conduct, while putting in place incentives to facilitate voluntary negotiations and prevent strategic defaults.

The new roadmap to relax capital controls provides an orderly and predictable framework to ease restrictions as key milestones in the bank strategy are reached. It is state rather than time contingent, and allows for flexibility in the face of changing circumstances.

Second, fiscal policies need to balance short-run cyclical concerns with long-run sustainability objectives. Given the ambitious adjustment already underway, additional measures are envisaged for the outer years to place public debt on a sustained downward path.

Third, the authorities have committed to complement these efforts with structural reforms to strengthen budget processes, improve revenue administration, privatize state-owned companies, and revamp the welfare system so as to better protect vulnerable groups during the downturn.

In addition to strengthening macroeconomic policies, an adaptation of the business model away from financial services and toward other services, where Cyprus has a comparative advantage, is also needed. Tourism and business services (legal, consulting, accounting) are expected to support the recovery and medium-term growth. These sectors benefit from a low corporate tax regime, educated labor force, strong institutions, and low structural barriers to growth. Prospects from the exploitation of gas reserves provide an upside for long-term potential growth.

To conclude, the authorities have a full agenda ahead. The difficulty of their task should not be underestimated, as the recession continues and large risks remain. Nevertheless, one should not forget that the most difficult decisions have been taken to address the root of the problems in Cyprus. The authorities have now a unique opportunity to use this momentum and turn their economy around.


Deficits Matter, but Not the Way You Might Think

[caption id="attachment_6130" align="alignright" width="99"] Bob Veres[/caption]

By Bob Veres. This originally appeared on Advisor Perspectives.

Congress is coming off of a bruising debate over the deficit ceiling – a preview of what we will experience again in a few months. The economy is growing slowly – some would say incrementally, after the 16-day government shutdown. Unemployment is a lingering problem, and the Fed's quantitative easing (QE) program works in reverse; that is, instead of boosting economic growth in any visible way, any hint of ending it spooks the markets.

What's to be done about this mess?

Stephanie Kelton, Associate Professor of Economics at the University of Missouri/Kansas City, believes that the root of all these problems can be found in a fundamental misunderstanding – shared by Democrats, Republicans and mainstream voters alike – about the government's balance sheet. She argues, plausibly, that the whole idea that we should control the deficit at all is costing our nation trillions of dollars in lost output. The result is lost income, savings, wealth and prosperity.

"As a society, we don't understand government finance," says Kelton. "Most people – including most economists, think that it operates by the familiar rules of household finance. Therefore, we find it plausible when we hear politicians and government watchdogs urging us to balance the budget, control the urge to spend and pay down the debt."

“As a society, we don’t understand government finance.”

- Stephanie A. Kelton

The mantra on the right: the federal government has to stop spending money it doesn't have. The mantra on the left: we need higher taxes on "the rich" in order to balance the budget and pay down the federal deficit. Moderates call for a little bit of each.

"We act like there is some limited amount of money available," says Kelton, "and that government competes for savings with the rest of the economy, and that too much competition for savings drives up interest rates, and higher interest rates crowd out all productive private investment. We act like the federal government is walking a fine line between solvency and insolvency – that if the debt gets too big, our creditors may begin to get nervous, downgrade our debt, our interest rates go up, and suddenly we end up like Greece."

Yes. So? "That picture has no economic meaning whatsoever," says Kelton. "None."

Currency by keystrokes

These days, you might see Kelton presenting her out-of-the-box economic perspective at financial industry conferences – most recently at the Financial Planning Association's Retreat and the Northern California Regional Conference – and you are starting to hear similar ideas expressed in the op-ed pages of the Financial Times and other media outlets. She describes herself – and a number of other influential economists – not as a deficit hawk (Pay off the debt now!), or a deficit dove (Pay off the debt as soon as the economy is stabilized!), but as a deficit owl.

The owls, she says, have a very different way of looking at our economic and policy options. They ask: What if there are no limits on how much money the government has? If that were true, what would you do differently?

Before a reasonable person answers that question, he or she would have to be convinced that there really are no limits. Kelton opens the discussion by noting that the modern financial system is very different from the one on which that many economic textbooks are based. In 1971, the global monetary system changed in a fundamental way when President Nixon took the U.S. dollar off of the gold standard. This ended a system of fixed exchange rates, where other countries pegged their currencies to the U.S. dollar, and through the dollar, to gold.

This much you know. But what were the consequences of that shift? "Uncomfortable and unsettling as it is for many people to contemplate," says Kelton, "we have a true fiat money system. The United States government has something that households don't have. It has the power to create the currency that we all live by."

Continue Reading on Advisor Perspectives

Stephanie A. Kelton is Associate Professor of Economics at the University of Missouri-Kansas City. Dr. Kelton has undergraduate degrees in both Business Finance and Economics from California State University, Sacramento. After finishing her undergraduate degrees, she studied at Cambridge University, England, where she completed a M.Phil. in Economics, while on an Rotary Scholarship. She then spent a year at The Jerome Levy Economics Institute of Bard College, in upstate New York, on a fellowship she won through Christ's College, Cambridge, that led to her Ph.D. dissertation at the New School for Social Research.

About the Author

Bob Veres's Inside Information service is the best practice management, marketing, client service resource for financial services professionals. Check out his blog or subscribe and receive, free of charge, the recent report on how advisors are charging fees, or the report on the six dimensions of client service at: www.bobveres.com