A number of people at #tech4africa, the excellent conference organised by Gareth Knight (@oneafrikan), asked whether I’d make the copy of my introduction to the panel on Unlocking Mobile Payments available. You can find the text after the fold. Attribution will be appreciated, but feel free to use it however you wish.

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ICASA, the South African telecommunications regulator, has cancelled a proposed auction of radio frequency spectrum, in bands which would have been useful for wireless broadband services. Its reasons? It can’t decide what technology to dictate, among others. What a mess. Here’s my take, published at ITWeb yesterday: Just sell it already!

Here’s a round-up my latest columns and articles:

The bonsai economy, on The Daily Maverick, prompted by president Zuma’s promises of tighter labour law in his May Day speeches.

The death of an industry, on ITWeb, which celebrates the coming demise of a telecoms sector (least-cost routing) that existed merely because of a temporary market inefficiency.

South Africans rock Texas, which appeared in print in Brainstorm magazine, and contains a detailed report-back from our trip to South by South West, including some pretty cool notes on technology in Africa.

I trust you’ll enjoy reading them as much as I enjoyed writing them.

That’s the question I’ve been asking myself recently. I’d been cautiously optimistic about Siphiwe Nyanda’s early moves as the communications minister in Jacob Zuma’s new South African government, but things are looking increasingly grim for the general, as I discuss here: The general’s reversal.

My previous column at The Daily Maverick, Break the banking cartel, argued that the banks are unlikely ever to solve the problem of a generalised, cash-like, electronic transaction infrastructure that addresses the entire market, both rich and poor, local and foreign, buyer and seller, banked and unbanked.

Lest that argument be interpreted as a denunciation of bankers in general, I thought I’d question why everyone believes politicians when the latter blame the economic crisis on the former. Bankers are a product of their legal and regulatory environment. Hence, In defence of bankers.

The current rise in food prices is very, very dangerous. Not because food will be more expensive, but because chances are the government will intervene to prevent this.

The unions in South Africa have already called for a food price freeze. This merely serves to show that they didn’t bother paying attention in Economics 101. Nor bothered to witness the results of price controls in our neighbouring no-crisis zone, Zimbabwe. If you cap prices, you cause shortages. Simple. Fact. Nothing can change that except complete nationalisation of the entire supply chain, and even then, the difference will be made up from tax, so lower real incomes will keep the real price of food the same.

The danger is that there are enough communists, socialists, interventionists and developmental-statists in government that they might just listen to the unions. If only to pander to the population and avoid the counter-productive impact of strikes and riots.

A recent commentary by the grandiloquently named Swaminathan S. Anklesaria Aiyar, picked up by the Wall Street Journal Asia, makes a good example of India. His conclusion is similar to mine, posted a few weeks ago:

India’s current food price problem isn’t a market failure. Rather, it’s a government failure to allow markets to work. The only sustainable solution is to pull back the subsidies and protections. But sustainability is the last thing on the minds of politicians competing to win the next election with ever-higher subsidies.

It’s a simple truism that in a free market, the solution to high prices is high prices. High prices drive prices down by stimulating production and discouraging unnecessary consumption. It is also true, however, that artificial costs and inefficiencies introduced into the supply chain by government intervention merely serve to perpetuate the supply-demand imbalance.

Our government should indeed take drastic action, by removing any and all regulations, subsidies, tariffs and other red tape from the agricultural sector. It should take drastic action to ensure that any pending land transfers are expedited (or cancelled) as quickly as possible, to prevent otherwise productive commercial farm land lying fallow. It should take drastic action to guarantee farmers — including new farmers on restitution or redistribution lands — gain full title to their property, so they can raise working capital by using their land and equipment as collateral. It should take drastic action to complete its long-overdue audit of state-owned land, and make suitable land available to emerging farmers and communities. And it would do well to take to heart the lessons Aiyar cites from India’s agricultural policy and its history of government intervention.

Everyone asks what government can do. Instead of acting innocent and blaming corporate collusion, this is what the government can do. This is positive action. This is taking the moral high ground. And it had better do these things quickly, or people might start thinking the unions actually have the right idea. I can think of no more dangerous result of food price inflation than that.

A calamity is unfolding. A disaster wrought, not surprisingly, by the lack of a free market in broadcasting in South Africa. I’ll quote from local rock DJ Benjy Mudie’s webpage:

Dear Rock of Ages listeners & fans,

Those of you that were listening to the show last Thursday would have heard the sad news that Rock of Ages is coming off the air at the end of March 2008. Radio 2000 has advised me that they are not going to extend the show’s contract and so after nearly 5 years of playing the best in classic and new ‘retro’ rock, both international and local, South Africa’s only rock show, Rock of Ages, will broadcast it’s last show on Thursday 27th March 2008.

There has been an outpouring of disappointment and anger at this decision and scores of listeners have emailed the station voicing their unhappiness and I understand that there are several petitions doing the rounds as well. If you would like to have your say on this please email the Program Manager of Radio 2000, Cuthbert Mashigo at cuthbert@radio2000.co.za. I would respectfully appeal to you to keep your comments polite, non-personal and non-political. I’m not sure if the protests will result in a reversal of this decision, all things are possible ….. however the important thing is that you have the right to speak out if you should choose, the SABC is a public broadcaster and as such is accountable to the people.

What is it with the SABC and rock music? Even PW Botha’s censors had more respect for rock. (Or maybe it just scared them.)

This is a disgrace. And a disappointment. It’s sad. And you and I pay with our tax and TV licence money for the SABC. You do pay your TV licence, don’t you?

But even if you don’t, it’s not like Benjy can get together with the likes of Chris Prior, Neil Johnson, Phil Wright, Rafe Levine, Leon Economides, and David Blood and start a rock/blues/jazz/metal station of their own. You can’t get frequency without the government’s permission. The state-owned SABC sits on most of it, and has no incentive to use it more efficiently.

You also can’t get a broadcasting licence without the government’s permission, and the government decides “what the market can bear”. Since when? Why shouldn’t the market decide what the market can bear? I’d reckon there’s a pretty reasonable niche market for rock, and it’d do just fine, especially if you spice it with some blues and jazz. You’d reach a pretty diverse audience, too, from teenage rockers to old hippies who would have remembered the sixties if they hadn’t been there, from avant-garde black professionals to angry white metalheads, from alternative and goth chicks to midlife-crisis bikers. But if I’m wrong, or these people have no money to spend on advertised products, why shouldn’t a rock station be allowed to go bust if it turns out there’s no market for it?

Here’s the text of my own e-mail to Mr Mashigo:

The last time I felt driven to write to a radio station I had to use a fax machine, because e-mail wasn’t around. That was in 1993, to express my disgust that Radio 5 was firing Chris Prior, who at that time had by far the best rock show on radio. I still enjoy the home-made tapes I made of his features as a teenager. In fact, the bulk of my education in music is thanks to Chris Prior, yet the SABC unceremoniously dumped him.

Then Benjy Mudie picked up the baton with his excellent Rock of Ages show, introducing listeners to excellent music, both old and new, that simply doesn’t get airplay anywhere else.

Now I hear his show may be cancelled.

Because of our restrictive licencing regime, it simply isn’t possible to create new genre-based radio stations in the vein of Classic FM, which means that SABC Radio, as the public-service broadcaster, has a responsibility to cater for all needs and tastes not covered by commercial stations. It also has the resources to do so on a channel like Radio 2000, which is usually given over to sport commentary or simply anonymous auto-queued music (good though it often is).

Other than the occasional news and talk radio, I do not listen to any music radio other than Benjy’s excellent show. I feel like I belong, there. It would be a great shame were it to be taken off air. It would also be contrary to the SABC’s public service mandate, I suspect. Since I pay tax and TV licences, and a private rock station won’t get licenced in a month of Sundays, this is most distressing.

Let’s help Benjy get back on air. Thursday evenings won’t be the same without him. E-mail Mashigo now.

Update: Leon Economides, who used to present the Priority Feature with Chris Prior in the good old days, commented to point out where radio rock hides these days in South Africa. It’s like the late 1960s in the States. AM only. Groovy, and all that. Thanks, Leon.

I’ll admit, I’m one of those people who are thrilled to see the back of Eliot Spitzer, New York’s law unto himself. I’m just disappointed that his fall was prompted by a petty sex scandal.

Spitzer made a career out of screwing people he shouldn’t have screwed. But since he went around destroying the careers of high-profile people, often with no basis in fact, and with little more moral justification than the puerile principle that every Goliath must be wrong and every David right, I really would have preferred him being taken down by one of his victims, such as Hank Greenberg or Dick Grasso. I wish the victims of Spitzer the judge, Spitzer the jury and Spitzer the executioner, had been able to defend themselves against their inquisitor.

Problem is, he didn’t often bring those victims before a court, where his self-aggrandizing crusades might have faced rational, independent scrutiny. He preferred extortion and public humiliation as his weapons of choice. He preferred to denounce the heretics from his bully pulpit, and club them with the extraordinary legal powers he wielded.

Take Dick Grasso, for example, who got publicly humiliated with disclosures and insinuations that were none of Spitzer’s business. By all accounts, Grasso did a great job keeping the New York Stock Exchange competitive against both upstart competition and foreign stock exchanges. The NYSE’s board thought fit to pay him handsomely for those services. Yet for some reason, Spitzer thought he had a right to second-guess the NYSE’s own shareholders. He thought he had the moral justification to publicly challenge Grasso over his remuneration, using absurd arguments about the stock exchange’s culpability for the behaviour of listed companies, or worse, that the performance of a stock exchange should be judged on whether share prices rise or fall. If that’s what Spitzer really wanted, he should have nationalised stock markets and got it over with, rather than singling out apparently innocent executives to strong-arm.

Speaking of innocent, the case of Maurice “Hank” Greenberg is even more blatant. Spitzer forced this long-serving head of an insurance company into a hasty resignation not by charging him in court, but by calling his actions illegal on television and threatening the company that employed him with indictment. If Greenberg had indeed broken the law, Spitzer’s duty was to charge and convict him in an independent court. It would have behooved him to do so without creating a media circus around it. But though he had been entrusted with the power to prosecute, Spitzer declined, preferring public insinuation as his billy-club. Last time I checked, falsely accusing someone of a crime on television constitutes defamation, not justice. As for the threat of indicting Greenberg’s employer, AIG, we know what such action can do to a company: Arthur Andersen was indicted, but was exonerated on appeal. By then, however, there was no company left to save. Justice delayed is justice denied, in such a case: indictment can be a death sentence for a company. It is an extraordinarily powerful, extraordinarily blunt instrument. Use it judiciously, or not at all. Spitzer abused it to ruin the careers of people he had no intention of giving their day in court. If he wasn’t entirely false, but had made good on that threat, he would have robbed shareholders, destroyed jobs, reduced competition and punished policy-holders, just to feed his monumental ego and burnish his political stature as a supposed corruption buster. In his crusade against what he saw as corporate corruption, Spitzer came to epitomise the corruption of state power.

If he wants to screw around and hurt his family, that’s between him and his family. It’s reprehensible, but a man’s private moral failings are his own business. Granted, he was breaking New York law, and no person given a position of public trust should get away with doing so. Granted also that he exposed an office of public trust to the risk of blackmail and extortion, which is a grave offence. But still, it is an unsatisfying end to his career. He should have crashed and burned in one of the dogfights he picked with innocent high-fliers. That would have been justice served.

Follow the logic here:

The government will table draft legislation intended to regulate the private health sector, including private hospitals, within two months, Health Minister Manto Tshabalala-Msimang said on Wednesday.

“It is clear that we cannot sustain unregulated private health care service delivery in this country and at the same time regulate the medical schemes industry,” she told the National Assembly.

“We must therefore regulate the providers and the industry as a whole.”

Of course, once the industry as a whole is regulated, they’ll find that they cannot regulate the health industry and sustain unregulated medical supplies, cleaning services, labour, construction, equipment manufacturing or import… in fact, they cannot sustain unregulated anything.

All aboard? Next stop, central planning. Funeral services will be held in the dining car once a day and twice on Sundays.

Prompted by Wessel van Rensburg’s comment on another post, I dug through my archives to find a story I wrote for CIO Africa in September 2004, on Somalia’s telecommunications industry. It is not available online, but I have permission to quote it here in full:

Absent rules, luxuriant growth
Somalia’s telecom sector: a case study in anarchocapitalism
By Ivo Vegter

“A wild rose roofs the ruined shed / And that and summer well agree.” — Samuel Taylor Coleridge, A Day Dream

The most unlikely places throw up the most unlikely tales. Though Somalia has had no government for over a decade – or rather, because of this – international call rates are the lowest in Africa, most of the country has telephone coverage, and you can get an Internet account in a day.

When Somalia’s former ruler, General Muhammad Siyad Barre, was ousted in January 1991, the country rapidly degenerated into turmoil. The country has been fought over by secessionist factions and warlords ever since. A shortlived attempt at US intervention led to a famous withdrawal, and more recent peace negotiations in neighbouring Djibouti have spluttered fitfully without achieving much by way of either peace or effective government.

Before the collapse of the Barre regime, there had been 8 500 fixed lines, most of which were in the capital, Mogadishu. Even that meagre public switched telephone network was destroyed, leaving the country entirely bereft of telecommunications of any description.

Yet, when Walter Brown, an African telecommunications expert with the International Telecommunications Union (ITU), was asked by the Ugandan delegation to a 1999 conference on rural telecoms about the best way to introduce a mobile phone operator, he suggested talking to the Somali delegation. At the time, the Somalis had a deal on the table for a tenth of what the Ugandans could extract from likely equipment vendors.

Speaking to CIO Africa at Johannesburg’s Kind of Blue, the jazz restaurant to which he has since retired, Brown says, “My presentation to the ITU conference said that technology lends itself to a private sector approach, by moving away from circuit-switched telecoms to packet-switching even in rural areas. It can be done cheaply, using any bearer you wish – radio, powerline, satelite, copper, fibre – and you can deal with any vendor you like.”

He recalls: “I made many friends, but made enemies of large industry players who needed to dump circuit-switching technology somewhere. Many delegates said the environment didn’t allow them to speak out.”

Not so the Somali delegation, which had no government to answer to, no vendors to mollify, and no legacy systems to consider.

According to the CIA World Factbook, the small industrial sector has been looted for scrap metal – among the country’s chief exports – and there is no formal banking sector. Yet despite this seeming anarchy, Somalia’s service sector has managed to survive and grow.

“Telecommunication firms provide wireless services in most major cities and offer the lowest international call rates on the continent,” it states.

Accurate statistics are hard to come by in a situation as fluid and chaotic as Somalia.

While the ITU estimated there to be about 10 000 main lines in operation at the end of 2000, the latest World Factbook figures, which date to 2002, estimate that there are 100 000 main telephone lines, 35 000 mobile phones, and 89 000 Internet users.

Writing in the United Nations Development Programme (UNDP) magazine, Choices, reporter Finbarr O’Reilly quotes Abdi Karim Mohamed Eid, manager of private telecommunications company Telesom, as saying, “If you add up the other companies, there may be around 20 000 Internet subscribers in [the northern region of] Somaliland. That’s much more than we anticipated initially and it’s a remarkable achievement given that there is no backing from the international community. This is solely done by the Somali business community. We are really proud of that.”

According to O’Reilly, 87% of the country now has telephone service, and some operators claim to be able to install fixed lines withing two days of applying, and establish Internet accounts within 24 hours. His figures of 105 000 fixed and 39 000 mobile lines back up the CIA’s numbers. An older report from the Somali Telecom Association (STA) state that 47 out of 74 towns have telephone service. And international call rates are as low as $1 per minute.

“It was clear supply and demand,” says Brown. “There was a need, and it got supplied. The service is reliable, because operators know if there is no service, there is no money. And you can get service within days of applying.”

The STA was formed at the behest of the UNDP and the ITU, in order to address the problem that to reach all people will telephones in Somalia, people had to subscribe to at least three different networks.

“With no government, no regulator, and no policy, they formed interconnect agreements,” says Brown. “Vendors didn’t take them seriously, until they started making money. Now companies like MCI help broker deals for Somali operators. Tariffs are set according to supply and demand, and are the cheapest in Africa.”

He adds: “They did well, and were able to advise Uganda to get rid of their oversight yokes.”

Not that complete anarchy is necessarily a good thing, of course. Though nobody imposes taxes on telephone calls, protects incumbent monopolies, demands exorbitant licence fees or imposes counter-intuitive technology restrictions, nobody collects refuse, supplies reliable electricity or provides adequate security either.

But Somalia’s experience with free-market telecommunications shows that the continent’s penchant for regulation, red tape and big government is not the solution to local development challenges.

It adds a new dimension to the existing weight of evidence that argues the benefits of telecommunication for the developing world.

“Consider the ITU study on the transport sector in Yemen,” explains Brown, “where simply providing communication long highways cut the costs of trucking companies by as much as 80%. Or the study in Sri Lanka, where farmers improved their income by 70% simply using a public telephone box.”

Somalia is a case study for the truth Brown learnt in a career spent at telecoms operations ranging from Zimbabwe’s PTC to the Iridium satellite venture to the ITU: “Oversight should not manage. It should lead, encourage and incentivise.”

Left free to innovate, an entrepreneurial people will find ways to succeed despite the most adverse of circumstances. Development goals foisted upon them by supranational organisations merely sound lofty. Liberalisation plans managed by government merely sound responsible. What makes the difference, in the end, is mere supply and demand.

2004 (c) CIO Africa, BDFM Publishers

Another knighted saint-in-the-making is spouting sanctimonious rubbish. This time it’s the former CEO of Shell.

“If the world is to end the threat from climate change, we need to produce more with less energy,” says Mark Moody Stuart in a column on the BBC website. He’s both entirely wrong, and perfectly right. Climate will continue changing and present threats, whether we produce more with less energy or not. But producing more with less energy is worth doing for its own sake. Sounds like profit to me. Okay, so far we agree.

“To address the climate challenge we need to reduce the carbon content of our energy by at least half,” he continues. But Sir Mark, that’s exactly what we’ve been doing anyway! I’m surprised you didn’t know this!

From a chapter on decarbonisation by Nebojsa Nakicenovic, in a United Nations University textbook chapter on the subject, I’ve copied this chart (note that the Y-axis doesn’t start at the origin):

And that’s where Moody Stuart goes off the rails. Claiming that he’s a great believer in consumer choice and markets, he proceeds to demand government regulation. In fact, quoted in a follow-up article, he’s quite explicit. He wants inefficient cars banned outright, and wants “very tough” efficiency standards imposed on other sectors too.

“Nobody needs a car that does 10-15mpg,” he says. So much for consumer choice.

The idea of government regulation of commerce and trade is, of course, as old as the hills. It’s usually made either by people who don’t understand commerce and trade, or by people who have a vested interest in government protection from competition.

You can bet your bottom dollar if a company or businessman lobbies for regulation, they stand to gain from it, somehow. Usually, CEOs gab about how governments should enforce their personal ideals of social or environmental consciousness only after they’ve retired. When they don’t, it’s because they have a vested business interest in regulation. They may, for example, have cornered a niche in social or environmental consciousness. Or they might feel their own company stands more to gain (or less to lose) from regulations than their competitors.

Take this Moody Stuart fellow, for example. What might his interests be? Creating a fluffy, green image for Shell? Perhaps. I know this is a huge issue for Shell (as I’m sure it is for other oil companies). Oil companies spend millions upon millions to do and say all the right things. It’s good marketing and good corporate politics. But he’s no longer CEO of Shell, and I can’t remember him being so adamant about fuel efficiency and “very tough” standards when he was actually in charge — even though it has been an issue, one way or another, since the 1970s.

But what other motives might he have? Well, let’s see. Now that he’s retired from Shell, he is a director at Accenture and a member of the Global Reporting Initiative. Now he’s suddenly demanding regulations. Guess who gets to “help” companies meet these regulations, at top-dollar hourly rates? Bingo, you guessed it: the GRI and Accenture.

I’m pretty sure there’s a benefit to Anglo-American of such regulations too. After all, Moody-Stuart is also chairman of Anglo, and he wouldn’t be demanding laws that would hurt Anglo. Perhaps it’s just that he wants other industries to be as heavily regulated as mining, to level the playing field for competition to attract capital. Or he wants to build a green and fluffy image at Anglo too. It could simply be something as crude as increasing the market (by government fiat) for profitable mining by-products to go into these fancier cars.

Just because the retired CEO of an oil company said more govenrment regulation is a good idea doesn’t mean it actually is a good idea.

Some retired CEOs waffle far too much. Perhaps they should be put out of our misery upon retirement. “Here, sir, your golden handshake, and your golden handgun. Thank you, and farewell.”

Imagine. That would profit Anglo American too.

Most people just don’t believe the environmentalists. They think they’re being had. And they might just be right.

Of the more than 500 peer-reviewed scientific papers published on climate change in the last three years, less than half endorse, either explicitly or implicitly, the theory of anthropogenic global warming, a new survey has found. While few reject it out of hand, a plurality are neutral on the question.

Among the public, only four in ten Americans think there is evidence that humans cause climate change. and more than half of all Britons, says the BBC, believe politicians and scientists exaggerate global warming “to make money”.

And they’d be right. The very same BBC reports that a study by the UK Taxpayers’ Alliance finds that the government collects almost twice as much in green tax than is needed to pay for the “carbon footprint” those revenues are meant to “offset”. The change the government pocketed? More than £10 billion. Per household, that’s £400 pounds the greens and the bureaucrats are stealing.

Meanwhile, those “offsets” include such eco-friendly efforts as providing foot pumps to replace diesel-driven water pumps in the third world, so rural farmers can do long days of the sort of hard labour that a century ago was outlawed as too harsh for British prisoners.

You’d think that if British environuts are going to exploit third-world slave labour to salve your conscience, they’d at least figure out how to do it at a profit, so you can get a decent tax rebate too. Mind you, I guess someone has to pay for their fancy hybrids, solar panels, hemp fashions and organic artichokes.

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