The Future of Cell Phones in Africa

This week due to popular demand, we are returning to our discussion on Cell Phones in Africa. Or more specifically, the future of them.

Okay, Africans do use cell phones for phone calls- we’ve established that. But they use them way less then Canadians.  Why? Because calls cost a lot money.  Remember, there are very are few unlimited phone and text packages here,  and they are generally too expensive for the average Burkinabe.  So they text alot!

But what I found fascinating here – and blame it on the fact that I left Canada about five and a half years ago and I am totally disconnected – is the other use for cell phones.

Many locals use the phone as payment system.

Banking in Burkina

The penetration of the banking system in Burkina Faso is marginal compared Canada . The average Burkinabe does not have a bank account as the average Burkinabe does not work in the formal economic sector. Instead of banks, the cell phone is used to transfer money..  Burkinabe send money to their loves one while in the country – or while working abroad by using their cell phone.

Airtel is the most common used telephone company for transferring money.  Each small village I have been to, and I mean small, has an Airtel kiosk where the person who receives the money can go and get it.  All they need is the verification code and their National Identity card if they have one… but in villages, like small towns, everyone knows everyone so there is not a big problem with stolen identity!

The impact of this service on the population is, you can imagine, tremendous.  There is no longer a need to go to a Western Union, which are usually not found in the small villages and which requires identification documents that many people in these villages don’t have.

Another important benefit to paying with the cell phone is the ability to pay bills at distance, including school fees.  In Côte d’Ivoire, and in Burkina, parents are now able to pay their kids’ school fees by phone.  This means that the mother (normally…) does not have to walk to the school, wait in line for hours and then be subject to the administration for bribery… because of course, parents have to pay the administrator who register their children a little something to make sure that the kids gets registered to the school.

 

So there are many little ways in which the cell phones have changed the lives and culture of their users here.

Burkina Uprising

Like other places in the world, cell phones have also had geopolitical ramifications here as well.

On October 30 and 31st, 2014 the Burkina uprising happened.

Cell phones were instrumental in keeping the population abreast of what was going on and for the opposition to communicate with its members to tell them where the march was going and what to do – or not. The cell phones allowed people to post to social media –   and in spite of the government’s efforts to block internet, thanks for the use of cell phones, we all were apprised of what was going on.

In the end the internet, such as it is, was restored quickly!

Reality Stranger than Fiction: JP Morgan and Minority Report

Can you be fired or arrested for a crime you haven’t yet committed, but most likely will? JP Morgan thinks so – and they’ve developed new algorithms to monitor their employees and stop rogue trading behaviour before it happens.

Stay tuned to find out how and why they’re doing this.

Transcript

Amanda: Remember the movie Minority Report? It was a few years ago, and Tom Cruise’s smouldering eyes aside, the general gist of it revolved around arresting people for crimes they hadn’t yet committed, but were going to. Well, reality is becoming even stranger than fiction, as JP Morgan attempts to stop rogue trading behaviour before it happens.

And Tom Cruise doesn’t even star.

Jeremy: In a scene reminiscent of the movie Minority report, the Tom Cruise thriller, JP Morgan is using predictive analytic software to stop rogue trading behaviour before it happens. Let’s discuss.

Archana: JP Morgan has paid $36 billion in legal fees over the recent times, and since the financial crisis – and that’s led to the company unveiling a new algorithm that helps it to pinpoint rogue employees before erroneous trades happen.

Shaheerah: As Archana mentioned, they’ve paid $36 billion in legal bills. One of the famous ones was the 6.2 billion London Whale Fraud. And this both hurts their reputation and it hurts their profits as well. Now if they can actually cut legal and other expenses, the investment bank’s return on equity would actually rise to 13% as opposed to the 10% they made last year.

Jeremy: What kind of data points do you think they’re analysing to predict this rogue behaviour guys?

Shaheerah: Well, there are a lot of factors that will go into this new deduction software, some of them will include: are these workers skipping the compliance classes; are they breaking the personal trading rules; or are they reaching the Market risk limits? The whole point of this software is to predict the themes and the patterns in their employee behaviour, so it’s actually pretty cool. You’re trying to predict how a human is going to behave. And one thing I think is that they should really be keeping an eye on the middle managers and the top-level executives, as opposed to the lower level managers. It’s the top-level executives that have the access to the data, and have the authority to make the decisions, and they know all of the internal systems and controls.

Archana: Algorithmic misbehaviour prediction is apparently a booming business. Again, this all boils down to big data and data analytics which we’ve been talking about of late quite extensively. And going back to what we specialize in as well, so P4Capital we do understand the space and we do have the right kind of candidates who are experienced doing data analysis, and working with some of the latest and greatest in terms of software tools that are out there.

Jeremy: Okay, both of my colleges here have mentioned that JP Morgan has spent $36 billion in legal fees, and this will be a measure to help reduce those fees and reduce scandals that occur, but I think they’re going to be hitting some new legal actions and sanctions against them. When you try to discipline a trader for something that he hasn’t done yet – is that really going to hold up in court? You’re just opening up a whole new can of worms I think.

Archana: Absolutely, I do agree with Jeremy – it is a very tricky space to venture in, but I guess it’s more for the compliance team and the regulators to show to the institutions out there that they have the right kind of checks and balances in place, so that if JP Morgan again faces a similar situation that it has witnessed in the past, it would have its books in order.

Shaheerah: And just apart from this software, they are also spending money as well. So the company has hired 2500 compliance workers, and they spent $730 million over the past 3 years to improve operations. They’re also  equating a special surveillance unit to monitor the other electronic and telephone communication in the investment bank. So if you go back and look at the fraud investigations that they’ve done, a lot of it could have been caught earlier on if they were checking the emails and the phone calls that the employees were having.

Jeremy: Yeah, a company like JP Morgan must have billions of emails going through their systems in a year. That’s a lot of work for 2,500 compliance people to be monitoring. I can see where there’s some value added to automating this to the Big Brother.

Amanda: What if people go outside of JP Morgan, and employees just send emails from their private servers?

Jeremy: That can probably be monitored as well, depending on how they’re using it. I don’t know about the legality of that.

Archana: So in the past JP Morgan and some of the other investment banks as well have used dedicated whistle-blower phone lines and email addresses where workers could actually email anonymously with tips to the management if they do see any fraudulent behaviour. Obviously this is a step up for them in terms of using technology to monitor behaviour of their employees. Also another interesting thing is that this is obviously just part one – the algorithm is just part one of the entire review of the investment bank’s work culture. The second part is obviously is HR and training related – JP Morgan is invested heavily in terms of training their employees and also to identify and fix areas where potential lapses could occur.

Shaheerah: And I also just wanted to bring some more facts to the discussion. It’s a fact that each year more than 30 million consumers actually fall victim to investment frauds – it’s a pretty big number. And the average loss for an investor is about $15,000 dollars, as well as individual losses could be all the way up to millions of dollars. And this happens because there’s nothing really suspicious in the beginning. I mean high returns and the financials seem legitimate, and this could go undetected for years. And it’s always usually in the end when you finally find out, and you start to investigate what has happened.

Archana: The new program that’s actually being rolled out would be tested in the trading part of their business first, and then the bank will spread it out throughout their global investment banking division, as well as their asset management division, and their complete roll out would happen by 2016.

Jeremy: JP Morgan has always been a market leader and they’re one of the première investment banks out there, so I imagine that there’s a bunch of other banks watching with bated breath to see if this experiment works. So only time will tell.

 

That was the P4Capital team discussing JP Morgan’s new initiative of stopping internal banking crimes before they happen. Want to know more? Check out our website  and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.

Digital Platforms to Enhance your skills

Welcome to a new edition of the P4Digital Round Tables!

Have you heard about SAS? Do you know how to use it? This week we break down what it is and what other skills and platforms are needed to make you and your company competitive.

Stay tuned and enjoy

Transcript

(more…)

Done like Kraft Dinner

Kraft is in trouble. Accused of manipulating the derivates market to control the price of wheat, they are being investigated for misconduct.

But is this manipulation really as bad as it seams? The P4Capital executive team discusses the nature of the derivates market, and what crime, if any, Kraft has actually committed.

Stay tuned.

Transcript

In this week’s P4Capital discussion, the executive team talks about everyone’s favourite food – Macaroni and Cheese! Well, not really –  instead they explore the controversy surrounding Kraft and their manipulation of the derivatives market.

So enjoy some Easy Mac and stay tuned.

Jim: Today’s topic is Kraft versus the CFTC

Jeremy: Yeah, now I don’t see what the big deal is here. Kraft is being accused of manipulating the derivatives market for futures on wheat because they bought some wheat futures that they didn’t intend to actually receive delivery on, and the CFTC apparently has a problem with that. But isn’t this pretty much the whole nature of the derivatives market?

Jim: Absolutely it is, and if we take a look at what is the regulators problem, is what they’re saying is that they don’t want others onto the market that can take the market into an artificial place. So for example we all know that Kraft is probably the single biggest buyer of wheat because of their cereal divisions in North America. So they can be a somewhat easy target for a regulator to go after, and it’s not actually Kraft that they’re after – it’s all the others that could come onto the market and play Kraft behaviour. So for example the Jeremy empire comes onto the market and buys a billion dollars of the wheat futures out there – what does that mean for Kraft? Kraft is now going to have to pay a premium on the remaining crop if you will. All sorts of interesting things can happen from that point in time on, including a major rise in consumer price.

Shaheerah: Yes and they usually only keep about two month supply in the inventory. They never actually had 15 million bushels wheat like with this transaction, which is actually three times their storage capacity. Some of the wheat that was involved in this transaction is actually used in other products like cookies and crackers which is not even made by Kraft group. That’s kind of fishy.

Jim: So there’s a famous case where, the three of you are far too young to remember, but it was the Hunt brothers cornering the silver market back in the late 70s. And again, that’s a traded future or a traded commodity if you will. I’m sure that the aged regulators that will be of my vintage will remember that, and are saying to themselves okay it’s not silver and the Hunt brothers, it’s wheat and Kraft. I’m sure that’s part of this ruling as well too.

Amanda: Could this impact stretch out beyond just Kraft and wheat?

Jim: I think it’s a slap on the wrist. Don’t know – Jeremy, what are your thoughts?

Jeremy: Well again, I think we’re kind of making a mountain out of a molehill. The actual amount that Kraft got on the trade was about 5.6 billion dollars, that’s probably a daily profit for them. I mean – what’s the big deal? Other people trading in and out of wheat futures can affect the market adversely as well.  Are we going to stop allowing wheat future trading?

Jim: Yeah, I think it’s the precedent they’re after. I truly believe it’s the precedent of trying to corner a crop  or a metal. That’s my contention at least.

Shaheerah: Yeah, so when they buy all these futures, why does it make the stock price go down?

Jim: Could be a couple of reasons for that one. A the major buyers off the marketplace being Kraft, so the rest of the crop from different wheat boards and the farmers involved in that could be doing a bit of panic selling, so that could be reason one. Or two, which is probably closer to the truth, and that is you have bumper crops which are plentiful, and you get more supply than normal, and since there is a spoilage factor you can’t keep that for years and years. You have the supply but what happens on the demand curve is that it doesn’t change at all and the pricing elasticity falls, and possibly that would be the main reason the price would fall.

Jeremy: Well spot price is the daily price, so I don’t necessarily see how when Kraft buys wheat futures how that would negatively affect the price today. How do you see that happening?

Jim: Yeah, I don’t disagree on crop pricing aspects of it, but usually spots are also used for trend too. I’m just saying it could be your computer generating systems are saying, “hey, wait a minute, the trend is going to be down.”

Jeremy: Yeah, it could be.

Shaheerah: And they actually went as far as to do an investigation and they found some internal emails from the procurement team at Kraft, which said that Kraft was in line to save seven million dollars on the commercial cost of wheat, and make up to three million from moves in the futures market if all goes according to plan.

Jeremy: I say well done Kraft!

Jim: Same here! Hoo Hah! It’s well done, and isn’t that what the corporate treasury is supposed to do?

Jeremy: Yes, agreed!

 

That was the P4Capital team discussing the derivates market, and mistakes that Kraft committed. Want to know more? Check out our website  and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.

Internet in Africa

 When I talked to a friend of mine about writing a short piece on the internet in Burkina, she told me make sure to tell everyone that there is only one word to describe it… moan… And she works at the European Union offices… so I can only conclude that they are not, unlike the Canadian embassy here, connected to the satellite via a Canadian communication system.

I suppose I should find myself lucky we have internet at all, given how poor this country is and given how little technical infrastructure there exists… but ‘moan’ just the same!

According to OOKLA Net Index, Burkina consistently rates 196th on the household download index.

This comes from data analyzed between November 13th, 2014 and Feb 25th, 2015, using 5728 unique IP addresses for a total of 12,699 total tests.  It is fair to say that 196th place squarely places the country at the very bottom… well, I hear that Eritrea still has a dial up internet (I am dead serious), so maybe we are not quite the last… but pretty well down there.  These results made the front page of the local papers, no need to say.

There is ONE optic cable coming from Togo.  There is a new one that will be coming from Côte d’Ivoire… but for the time being, it is still in the planning… So ADSL is only available in ‘large’ cities like Ouaga and Bobo Dioulasso and only since 2011. And internet at home is mostly offered by ONATEL, the state telephone company.

Internet keys are available from Airtel (who else) and I hear Telmob.  They are rare to find and when available, they are snapped quickly by users… so, of course, they are always in short supply.  When we moved December 2013, I tried to find one until such time as I would be connected at home with ONATEL… to no avail.

Internet connections are, of course, not dedicated.

A dedicated connection for 128 kpbs without satellite connection is only offered by one provider from what I can understand – and it is 157$. If you dedicated that with satellite connection that cost jumps to 223$.

Yes there is G3+… if you can get it. My cell phone does not, and many of my friends express frustration because it is often down.

Given that many Burkinabé live in the country side or in areas without electricity, it will be no surprise to you to hear that the penetration of internet in this country in rather limited.  There are lots of internet café,s but few shops and restaurants that offer wi-fi.  Although to be fair, it is becoming increasingly available.   Internet literacy is also, evidently, very low.   Very.

The use of email address are dismal! Employees in private enterprise will still use their own personal email address to deal with clients on line (which is not frequent).

For government officers, , let’s just say that unless you get a younger officer with a smart phone and a personal computer he takes at work (and yes, I have seen that a lot!), you usually get no internet communication.

When I worked a few years ago (and it has not changed since) the older government officials I dealt with often had a computer on their desk, but it was not connected.  All it did was collect dust – and trust me, in this country, that expression takes a whole new dimension as dust is everywhere all the time. Burkina Faso is  located in the Sahel desert.

 These older officers all insisted that I contact them by phone.  But as their phone and/or the line was and is pretty bad, making conversation at times is nearly impossible.

Regular texting became part of my doing business.  But more often than not, I would simply go visit them at their office.  Reports, by the way, are often typed on a typewriter somewhere.

Internet connection regularly goes off … and I mean a few times a day.  I am reading the news and then, bang, I am offline and cannot get to the next article.  These outages are usually short.  They are frustrating but no big deal – unless you are downloading a program, then it means starting all over again.

But the internet connection regularly goes off for longer period of time.  The reason? It’s usually because some poor soul, not knowing what their  doing, is digging and hits that one cable, damages it, and then the whole town goes ‘MOAN’.

Sometimes these cuts are put back together with silver tape and you have a bit of a connection … but it is painfully slllloooooowwwww.

Some areas of town have an internet connection that work better than others.  Zone du Bois (center) works better when it works – but Ouaga 2000 (at the limit of the city) has a more consistent internet because it is closer to the location when the cable ends.

Of course, downloading a movie or an episode of your favourite show will take anywhere from 3 hours (194kb) to days.  I avoid HD files because it is almost impossible, and before you ask – Netflix is not available here.

For  this ‘high speed’ service (I am supposedly getting 512K, up from the 216 when I arrived in 2011) I pay 50,000 CFA, or $105.00.  So next time you complain about your internet service and/or cost, remember that it is way worse elsewhere in the world!

BUT… giving the low penetration of computers in private homes, I love to see the kids playing in the streets with the animals or with whatever they make toys of instead of being glued to their computer. I love to go to restaurant and see people talking to each other as opposed to texting and being glued to their cell phone, and yes, I do appreciate having the poor internet I have simply because I have internet and I can connect to my family and friends back in Canada,  even if my Skype connection is nearly impossible.

Living abroad has taught me so many things – but the one that is the most important is to appreciate and enjoy every little thing we have.  I know it sounds corny but, it is the truth.

Trends for top talent.

Skills become obsolete just as quickly as new talents are needed; continuously evolving as the world around them change.

The P4Capital team investigates what skills are desperately needed in the capital markets today, and how companies can capture them.

Stay tuned.

Transcript

Amanda: Who are the people your company should be looking for? What skills should you have to make yourself appealing to those employers? In this week’s round table discussion, the P4Capital executive team examines who the top talents are, and what skills they possess.

Stay tuned.

Jim: Today’s topic is about what needs we have seen in the technology/ capital markets area since the beginning of January of 2015.

Archana: For those of you just tuning into our weekly podcasts, a quick round of intros – we are the P4Capital team. A division of the established Planet4IT staffing agency, and we are the people who are close to the market makers – the Capital Markets as well as the wealth management professionals. And yes, we are nearing the end of the of the first quarter, and what we plan on doing, just like Jim said, just discussing in terms of where financial technology stands, and also a quick handbook for job aspirants; what are the skills that would be in demand for the rest of the year.

Shaheerah: I just want to start out with the importance of the capital markets: capital markets are where  both Canadian and International companies from all over the world come to raise capital in order to run their businesses and to expand globally. And it’s going to be done both through debt and also through equity. And Capital Markets is also a place where companies can come out and they can seek advice on potential transactions and strategic advice on implementing their business plans. And although this is a male dominated industry, there is now a growing need for women in the field as well. And you will see a lot of companies are launching new programs in order to attract more females into this career.

Jim: The interesting part is in the trading side of the financial institutions business, is we’ve gone through 36 months of high frequency routers, dark pools, low latency – and the rationale behind all that was to get better analytics on the trade, get better understandings of liquidity; obviously there’s been a heavy influx of new regulations and reporting. And that’s kind of affected the old creaky systems that have populated the world. So the talent, not only are we looking for the best and brightest of the female and male side, but we’re also looking for difference makers now too. And we hope to carry on more conversation about that momentarily.

Jeremy: Risk Data Aggregation and Reporting, RDARR* as it’s written sometimes, seems to be a big hot button topic for all of our clients. There’s a Basel 3 deadline with 21 months to go now, December 21 2016 that needs to be met, and all the banks and financial players in town need people who understand risk and are able to put it together into a model that will make sense for decision makers.

Archana:  Some of the trends that we’ve witnessed so far, and something that we’re definitely going to see more of, going forward, obviously the falling oil prices that’s been a hot button topic really, and a lot of the banks and financial services companies have been majorly impacted with the falling oil prices. Another thing that’s happening that we’ve witnessed is restructuring: a lot of banks are shutting down and really focusing on their core business and trying to automate a lot of these processes that don’t really have direct customer interaction. Another thing that we’ve witnessed, and this is definitely a growing, trend is  I call it the deconstruction of the traditional walls that have surrounded the large investment banks and how they’ve been privy to customer information and access to all this data. So this deconstruction obviously is happening as we speak, because access to data in this changing market is majorly on the rise. And another growing trend where banks are losing out on hiring talent is definitely to the digital guys, so banks are revamping their strategy to attract the brightest minds that are out there.

Jim: The position growth, if you will, I’ve also kind of thought to myself was interesting it’s core programming: Java, C, C#, C++. I  haven’t as yet seen the advanced analytics programming needs that the digital world is demanding, the R’s, the Matlabs, s and those types. We’ve also seen a heavy influx of business analysis. So people, as Jeremy alluded to, anything that has a strong element of risk process knowledge is in great demand out there. Traded products, front office products – also in great demand out there. Traditional, other support jobs like software package support or infrastructure support, not as much. But hardcore developers yes, hardcore business analysts with solid process knowledge, yes.

Archana: I agree with Jim that we haven’t seen so much of big data and data analytics on the capital markets, side, but I do think that’s something that’s set to change going forward. A lot of these data scientists have been employed by these capital markets firms. They’ve largely been restricted to governments, risk and compliance areas, but increasingly they are going to be used in the front office, and working hand in hand with the Quant guys.

Jeremy: Especially when we get to the phase where banks are going to be analyzing data in real-time, they’re really going to bring in some new and dynamic solutions. We’re really going to see that in the next year.

Jim: I’m hoping though that those people are still available for them Jeremy. We’ve seen in our Planet4IT part of the business, where people with knowledge of how to program advanced algorithms are being captured by game companies, big market data companies that have a service feel to them. And where do they draw them from? Obviously the traded markets, and the people that learned their skills there and have applied them successfully, and they’re being offered great sums of money to do so. I’m 100% in agreement that the front office people will have to come back onto the market, but I think they’re being overshadowed right now by the need for regulation people.

*RDARR stands for Risk Data Aggregation and Risk Reporting program

 

That was the P4Capital team discussing the Trends for Top talent, and how to be competitive in the workforce. Want to know more? Check out our website  and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.