Fraud in Non-Profit Organisations

“I wrote an article on this a few years ago and interviewed a few experts on fraud in non-profits and why it tends to go undetected for so long. One theory was that non-profits are too trusting and assume that people who work for them respect the spirit of charity that the organization is built on. Unfortunately this isn’t always the case and a lack of internal controls combined with the limited staffing typical of non-profits makes it easier for employees in accounts to steal. Accounts payable fraud seems to be among the most prevalent, possibly due to situations where due to staffing limitations, one employee is responsible for too many financial tasks without checks and balances. If you’re interested in reading the article, you can find it here: Fraud in Non-Profits

Dawn Lomer

The quest for economic freedom in South Africa is proving to be the ANC’s downfall

The quest for economic freedom in South Africa is proving to be the ANC’s downfall

The conventional interpretation of economic freedom in the Western world refers to the freedom individuals have to work, produce, consume and invest in an economy. But in South Africa it is interpreted as the material security of people.

It is this economic freedom that continues to elude many in post-apartheid South Africa. The fruits of economic prosperity have not necessarily trickled down to the broader population.

South Africa is ranked among the top five unequal countries globally with a Gini-co-efficient of 0.63. This is high. The index measures income distribution in households, with 0 representing perfect equality and 1 perfect inequality.

Using the Palma index, which measures the distribution of income ratio between the richest 10% and poorest 40%, South Africa is also highly unequal with a score of 7.5.

A key criticism against inequality measures is that they do not consider the impact that social welfare grants can make on reducing poverty. The Human Development Index shows that, while there has been some improvement, life expectancy is only 61 years and the average years children spend at school is ten.

South Africa’s welfare system has been expanded. But the government led by the African National Congress (ANC) is accused of giving people social grants instead of true economic freedom.

At the birth of the South African democracy in 1994 the idea of freedom was intimately linked to that of transformation, not just politically, but socially and economically. Democracy implied not just changing the state. It entailed a more inclusive ownership of the economy, with all citizens sharing in the country’s wealth.

This was evident in many ANC discussion documents, including its “Ready to Govern” policy guidelines for a democratic South Africa released in 1992. The first step to transformation was to secure political power. This would put the ANC in a better position to advance social and economic change.

In conceptualizing the role of the state, the ANC envisaged that it would remain the gatekeeper and driver of the transformation project. In its self-conceptualization, the ANC would continue to fight for the complete liberation of people.

After political power was seized, the liberator (as in the ANC) would then be charged with leading the complete socio-economic rebirth of society through transferring wealth from the rich to the poor. This would be done through a developmental state, which would seek to actively guide economic development to meet the needs of the people.

What is interesting is the sense of entitlement to govern that emerges. The liberator party, through state capture and cadre deployment, would advance the democratic aspirations of its people to wealth, prosperity and economic freedom. This of course implied a moral and ethical elite that carried the best of the people at heart.

Economic transformation of unequal societies in a democratizing context is difficult. It requires a creative mix of policy options underpinned by a commitment to social justice.

Two out of 54 African states have successfully pursued a developmental agenda while maintaining a degree of democratic legitimacy: Mauritius and Botswana. For a democracy to endure, the people must see it as legitimate and to be delivering the promised goods.

As South Africa enters its third decade of democracy, the socio-political environment is becoming increasingly volatile as inequality deepens. The country has high unemployment rates, and protests against a lack of basic services are an almost a daily occurrence. Business confidence is slowly declining in the midst of sluggish economic growth. We also cannot ignore the rise of systemic state corruption. And the failures of the education system could condemn future generations to a life of poverty and hardship.

In response, the ANC has sought to undermine institutions that should hold it accountable. These include the public protector and the the media. It has blamed history for the country’s economic woes. It has also undermined the doctrine of separation of powers and used cadre deployment to entrench patronage for state capture.

Democratic stability is being undermined through unethical actions, endemic corruption, and a lack of delivery on key socio-economic issues. This is exacerbated if a sense of entitlement to govern emerges within liberator parties. They eventually see themselves as accountable to the political party and not the people. They begin to believe that the liberator will govern forever.

Because the ability of people to hold the liberator accountable diminishes, discontent finds expression in violent and destructive service delivery protests. People opt out of the formal mechanisms of participation, such as elections. A little less than half of South Africa’s voting age population now do not participate in elections. Support for the ANC among the voting age population has declined to 35%.

In the midst of South Africa’s incomplete liberation because of a failure to make good on the promise of economic freedom, a mediocre track record of delivery on key socioeconomic issues and growing political volatility, the question that emerges is whether the liberator will relinquish power if the people will it so.

South Africa will hold local government elections next year. It seems that the ANC will either lose municipalities or win with smaller margins, thus reducing its dominance of municipal councils. Will the party respect the voice of the people, even when a vote is cast for another political party?

Inequality creates breeding grounds for revolt and instability, even against liberators. Societies only remain patient for so long before they start demanding the promised fruits of democracy and freedom. This can either be through the ballot box or through outright revolt. For South Africa, the 2016 municipal elections may very well give the country a glimpse into what extent the will of the people is indeed respected.

Joleen Steyn Kotze Associate Professor, Nelson Mandela Metropolitan University

Source: Quartz Africa

Volkswagen to refit cars affected by emissions scandal

BERLIN, Sept 29 (Reuters) Volkswagen (VOWG_p.DE) said on Tuesday it will repair up to 11 million vehicles and overhaul its namesake brand following the scandal over its rigging of emissions tests.
New Chief Executive Matthias Mueller said the German carmaker would tell customers in the coming days they would need to have diesel vehicles with illegal software refitted, a move which some analysts have said could cost more than $6.5 billion. In Washington, U.S. lawmakers asked the automaker to turn over documents related to the scandal, including records concerning the development of a software program intended to defeat regulatory emissions tests.

In separate letters, leading Republicans and Democrats on the House Energy and Commerce Committee requested information from both Volkswagen and the U.S. Environmental Protection Agency as part of an investigation into the controversy. Europe’s biggest carmaker has admitted cheating in diesel emissions tests in the United States and Germany’s transport minister says it also manipulated them in Europe, where Volkswagen sells about 40 percent of its vehicles.

The company is under huge pressure to address a crisis that has wiped more than a third off its market value, sent shock waves through the global car market and could harm Germany’s economy. “We are facing a long trudge and a lot of hard work,” Mueller told a closed-door gathering of about 1,000 top managers at Volkswagen’s Wolfsburg headquarters late on Monday.
“We will only be able to make progress in steps and there will be setbacks,” he said, according to a text seen by Reuters.

Volkswagen did not say how the planned refit would make cars with the “cheat” software comply with regulations, or how this might affect vehicles’ mileage or efficiency, which are important considerations for customers. It said it would submit the details to Germany’s KBA watchdog next month. Manipulating emissions results allowed Volkswagen to keep down engine costs in a “clean diesel” strategy that was popular in Europe and at the heart of a drive to improve U.S. results.
Mueller was appointed CEO on Friday to replace Martin Winterkorn. German prosecutors said on Monday they were investigating Winterkorn over allegations of fraud.

EMBARRASSMENT
The crisis is an embarrassment for Germany, which has for years held up Volkswagen as a model of its engineering prowess and has lobbied against some tighter regulations on automakers. The German car industry employs more than 750,000 people and is a major source of export income. Economy Minister Sigmar Gabriel told reporters he was not worried about damage to the economy from Volkswagen’s problems, “at least, not if we deal with it sensibly.” There must be no “soft pedalling, no obfuscation and no covering-up” by Volkswagen, he added.

The KBA had set Volkswagen an Oct. 7 deadline for a plan to bring diesel emissions into line with the law. Investors are impatient for answers too. A survey of 62 institutions by investment banking advisory firm Evercore ISI found around two-thirds said it would not be possible to invest in Volkswagen over the next six months if costs, fines, legal and criminal proceedings were outstanding or inadequately quantified. VW’s brand image has also slumped this month, market researchers YouGov said, citing a survey of about 2,000 consumers.

Volkswagen said previously about 11 million vehicles were fitted with software capable of cheating emissions tests, including 5 million at its VW brand, 2.1 million at luxury brand Audi, 1.2 million at Skoda and 1.8 million light commercial vehicles. Refitting 11 million cars would be among the biggest recalls in history by a single automaker, similar in scale to Toyota Motor Corp’s (7203.T) 2009-2010 recall of more than 10 million vehicles over acceleration problems, though dwarfed by the number recalled by multiple carmakers due to faulty Takata Corp (7312.T) air bags. Volkswagen sold 10.1 million vehicles in the whole of 2014. The company said last week it would set aside 6.5 billion euros ($7.3 billion) to help cover the cost of the crisis. But analysts think that may not be enough, as it faces potential fines from regulators and prosecutors, as well as lawsuits from cheated customers. Spain’s industry ministry said on Tuesday Volkswagen’s local business had agreed to return fuel-efficiency subsidies on vehicles that had broken rules. It said Spain, which offered subsidies of 1,000 euros for energy-efficient car purchases, would ask for the money back from the car manufacturer and not consumers. Volkswagen shares dropped 4.1 percent to close at 95.20 euros ($107.09) in European trading on Tuesday.

Mueller also said Volkswagen’s core VW division, struggling with high-fixed costs and low profit margins, would be given more autonomy, akin to the independence enjoyed by premium flagship brands Audi and Porsche. Analysts have long urged the company to tackle underperformance at its core mass-market brand, and to dilute control from the center which has been blamed for product delays and problems adapting to local markets. A source familiar with the matter also said the executive committee of Volkswagen’s supervisory board would meet on Wednesday to discuss progress with the company’s investigations and engaging U.S. law firm Jones Day to lead an external probe. Klaus Mohrs, mayor of Wolfsburg where Volkswagen employs around 70,000 people, said on Monday he expected a sharp decline in business taxes due to the crisis, and announced an immediate budget freeze and hiring ban.

The emissions scandal has sent ripples through the global car market too, with manufacturers fearing more costly regulations and a drop in diesel car sales. The European Commission is working on plans to reform the European system for approving new models of cars by the end of the year.

Basic Layout of a Bankable Business Plan

July 31, 2015 in Business

In writing a bankable business plan, form and structure are as important as the content and substance of the plan. It is therefore important to discuss the basic formation or layout of a business plan that will make a reasonably good impression on your bankers or financiers.

by Clive Mphambela

Generally, a well-written business plan will show the reader that you are serious if it is well presented, looks good, is catchy to the eye as well and generally professionally presented. Here is what I suggest must go into your plan.

The Executive Summary: This is the most important section of your business plan. It summarises everything that is in the rest of the business plan in a compelling and interesting way. It should be the first thing your readers will see; the executive summary will either grab your readers’ interest and make them want to read the rest of the business plan or it will put them off, get them to put it down and forget about it. More than anything else, this section is important because it tells the reader why you think your business idea will be successful, in high-level terms.

This means that the executive summary should be the last section you write but it should be positioned at the beginning of your business plan. You however write this last after you have worked out all the details of your plan, and you are in a better position to summarise it. Yes, it must be a summary! Short and sweet, to arouse sufficient interest in the readers! Generally, it should be no more than two pages.

biz-plan

The Contents Page: Sets out the various chapters and their headings in their order of appearance in the business plan. The contents page will tell the reader where to find what information and help them in locating specific sections in your business plan. It must be included directly following the executive summary. You are advised to keep the content titles short and broad; i.e., avoid detailed descriptions or whole sentences in your table of contents.

Company Description: This section should include a high-level look at how all of the different elements of your business fit together. This section should include information about the purpose of your business as well as list the primary factors that you believe will make your business a success.
When defining the purpose of your business, be sure to list the marketplace needs that you are trying to satisfy; include the ways in which you plan to satisfy these needs using your products or services. Finally, list the specific individuals and/or organisations that you have identified as having these needs. For example, some primary success factors might include a superior ability to satisfy your customers’ needs, highly efficient methods of delivering your product or service, outstanding personnel, or a key location. Each of these may give your business a competitive advantage.

Market Analysis: This section should illustrate your knowledge about the particular industry your business is in. It should also present general highlights and conclusions of the marketing research data you collected when you were conceiving the business idea; however, the specific details of your market research studies should be moved to the appendices section at the end of your business plan.

This section should also include a clear description of the industry and its outlook. You must show an understanding of the industry size, number and variety of customers, etc. Include your target market information, an evaluation of your competition. You must describe who they are and how you compare to them, especially in the eyes of customers. Make it clear how your business offering is different.

Share the promotions and tools you intend to use in order to meet your target market expectations.

Explain your pricing and other elements of your marketing plan.

For limitations of space, we will stop here for now. We are not done just as yet. Next week we cover the last parts of drafting a bankable business plan.

l Clive Mphambela is a banker. He writes in his capacity as Advocacy Officer for the Bankers’ Association of Zimbabwe. BAZ expressly invites players in the MSME sector and all other stakeholders to give their valuable comments and feedback related to this article to him on clive@baz.org.zw or on numbers 04-744686, 0772206913

Tanzania’s ruling party picks works minister for presidential race

DODOMA, July 12 (Reuters) – Tanzania’s ruling party on Sunday named Works Minister John Magufuli as its candidate for this year’s presidential race, a move that means he will most likely become the next president of the east African nation. The Chama Cha Mapinduzi (CCM) party has ruled Tanzania for five decades and its candidate is widely expected to win the Oct. 25 election, taking over from President Jakaya Kikwete, who has served a maximum two terms. The announcement followed a divisive party vote on a short list that had omitted Edward Lowassa, 61, a former prime minister who had been seen as leading the field. He resigned as premier in 2008 over corruption allegations in the energy sector, which he denies.

From a final list of three, Magufuli, 55, beat two female contenders: former senior U.N. official Asha-Rose Migiro and African Union ambassador to the United States Amina Salum Ali. “The result of voting from this conference is John Magufuli (87 percent), Ambassador Amina Ali (10 percent) and Dr. Asha Migiro (3 percent),” CCM said via Twitter, ahead of a formal declaration by the party. Party officials did not say why Lowassa had been left off a short list, that initially included five, that had been whittled down from 38 hopefuls by CCM’s central committee, chaired by the president.

Tanzania has been one of Africa’s most politically stable nations and has not been torn by the debate raging in parts of the continent, where some presidents have been eying third terms despite constitutional restrictions. Lowassa has yet to comment. But one aide had said that he if he was not picked he could still make a bid for the presidency as an opposition candidate. The main opposition parties promised last year to field a single candidate in the election, but experts say they may struggle to overcome years of mutual suspicion and infighting.

Grass is Browner on the Other Side

https://www.youtube.com/watch?v=fk09oQUlgno

“This book was written so that we may take heed and remold our story. I am certain that when enough of us become aware of how we are being exploited by the economic engine that creates an insatiable appetite for the world’s resources, and results in systems that foster slavery, we will no longer tolerate it. We will reassess our role in a world where a few swim in riches and the majority drown in poverty, pollution, and violence . We will commit ourselves to navigating a course toward compassion, democracy, and social justice for all.”

― John Perkins, Confessions of an Economic Hit Man