Saturday, November 7, 2015
Africa's biggest economy chokes growth; The Uberization of money; Returning an award in India
1 Africa’s biggest economy chokes growth (George Osodi in Washington Post/Gulf News) Nigeria’s economy is growing at the slowest pace this decade as oil prices drop. Companies are complaining they can’t get the dollars they need to do business. And trading in the naira has long since dried up.
There are many good reasons why Godwin Emefiele, who runs the central bank of Africa’s biggest economy, should lift currency controls and let the naira depreciate. One of the things holding him back is politics.
Devaluing the naira may give opposition parties the opportunity to claim that Emefiele’s main supporter, President Muhammadu Buhari, has lost control of the economy. With his backing, the policy chief will be able to resist his critics into 2016 before the worsening economic slump eventually forces him to capitulate, according to Standard Chartered and Bank of America.
Africa’s top oil producer introduced curbs on buying foreign-exchange from late 2014 in a bid to prop up the naira as prices for crude, the source of two-thirds of government revenue and 90 per cent of export earnings, plummeted. These measures have all but fixed the exchange rate at 198-199 per dollar since March, even as other oil exporters from Russia to Colombia and Malaysia have let their currencies slide.
Barclays and HSBC Holdings still think the central bank will be forced to weaken the naira to between 220 and 230 before the end of 2015. The International Monetary Fund says the currency measures are detrimental to Nigeria, where growth slowed to 2.35 per cent on an annualised basis in the second quarter. Former central bank Governor Muhammadu Sanusi II said last week his successor was “in denial” if he thought he could continue propping up the naira.
2 The Uberization of money (Zachary Karabell in The Wall Street Journal) When it comes time to buy a home, you will probably revert to procedures that were created in your grandparents’ era. You will assemble financial documents and present them to a loan officer at a bank, who will take weeks to determine what you can borrow and at what rate and then present you with a narrow menu of costly options.
Imagine instead a simple online interface that could generate a tailored credit score for you. It would connect you to lenders ranging from banks and credit unions to pools of individuals who want to lend privately at a negotiated rate for whatever duration you agree on. You could shop around, combine different types of financing and arrange a mortgage package that best suits you, all within a few hours.
We aren’t quite there yet, but we may be soon. Over the next decade, the familiar 20th-century modes of banking and investing will give way to something very different. We are on the verge of the Uberization of finance, which will bring multiple new opportunities but also a range of new risks.
The ubiquitous ride-sharing company uses a simple device—the smartphone—to connect people who want rides with people who want to drive them. Uber is a high-tech middleman that is making the intermediaries of the past obsolete. The financial world is one of the most mediated industries on the planet, and that is precisely what is about to change. Uberization also means using vast amounts of data to make those connections feasible.
Technology is one source of this shift, but so is legislation. The Jobs Act of 2012 contained a seemingly innocuous provision making it easier for startups to raise money from investors previously deemed too poor to dabble in such ventures. At the end of October, the Securities and Exchange Commission finally approved the rules. As a result, any company or person with an idea can solicit and raise up to $1 million without most of the onerous regulatory and reporting requirements of the past.
Whatever the risks, the Uberization of finance is no fad or stunt. Many of today’s startups may implode, as most do, but the spread and democratization of capital—and the proliferation and analysis of data—are irresistible trends. They will offer new opportunities to millions of people, entrepreneurs and investors alike. They also will unlock a vast amount of money, energy and talent, and to that we simply should say, bring it on.
3 Returning an award in India (Arundhati Roy in The Guardian/The Indian Express) Although I do not believe that awards are a measure of the work we do, I would like to add the National award for Best Screenplay that I won in 1989 to the growing pile of returned awards. Also, I want to make it clear that I am not returning this award because I am “shocked” by what is being called the “growing intolerance” being fostered by the present government.
First of all, “intolerance” is the wrong word to use for the lynching, shooting, burning and mass murder of fellow human beings. Second, we had plenty of advance notice of what lay in store for us — so I cannot claim to be shocked by what has happened after this government was enthusiastically voted into office with an overwhelming majority. Third, these horrific murders are only a symptom of a deeper malaise. Life is hell for the living too. Whole populations — millions of Dalits, Adivasis, Muslims and Christians — are being forced to live in terror, unsure of when and from where the assault will come.
Today, we live in a country in which, when the thugs and apparatchiks of the new order talk of “illegal slaughter”, they mean the imaginary cow that was killed — not the real man who was murdered. When they talk of taking “evidence for forensic examination” from the scene of the crime, they mean the food in the fridge, not the body of the lynched man.
Which writer can write what Saadat Hasan Manto wrote in his Letters to Uncle Sam? It doesn’t matter whether we agree or disagree with what is being said. If we do not have the right to speak freely, we will turn into a society that suffers from intellectual malnutrition, a nation of fools.
I am very pleased to have found (from somewhere way back in my past) a National award that I can return, because it allows me to be a part of a political movement initiated by writers, film-makers and academics in this country who have risen up against a kind of ideological viciousness and an assault on our collective IQ that will tear us apart and bury us very deep if we do not stand up to it now.