what FIFA has shown us about decentralised democratic systems

The global soccer fraternity was shaken in 2015 when the US Department of Justice (DOJ) decided to charge and arrest high ranking FIFA executives for “rampant, systemic, and deep-rooted” corruption. Where the FIFA saga becomes more disturbing is that the electoral system and its concomitant outcomes may in certain circumstances be not too dissimilar to national electoral systems and their outcomes, particularly in a decentralised democracy such as our own. Funds transferred from national government that are meant for economic development can become particularly fungible when expenditure decisions and accountability are similarly decentralised.

Salvage value and the uncertainty of write-off thresholds

In taking out car insurance, we like to believe that our insurer will always act in our best interests, and would not write-off a client’s vehicle unless they absolutely had to. In truth, however, the interests of the insurer and the insured are not always perfectly aligned and may at times be diametrically opposed to each other. This problem can become particularly perverse when insurers include the salvage value of a vehicle into their decision-making process.

Is South Africa’s social expenditure pattern sustainable?

Despite South Africa’s notable accomplishments in the last 20 years of democracy, a number of significant challenges remain. Notably, the unemployment rate stood at 25.5 percent in the second quarter of 2014, over 13 million children are reported to be living in households that are below the poverty line, and 32% of all children live in households where no adult is employed. In principle, the roll out of social programmes is indeed a necessary and noble expense, especially given SA’s history.

To hike or not to hike interest rates?

The South African Reserve Bank (SARB) has a difficult decision to make ahead of its Monetary Policy Committee (MPC) meeting and announcement on Thursday 17 July 2014. It needs to decide whether or not to hike interest rates, and if so, by how much. This is against the backdrop of a grim macro-economic environment.Currently, the inflation rate stands at 6.6%, clearly outside of the SARB’s inflation target range. At the same time GDP growth has fallen into negative territory at minus 0.6%.

What Zimbabwe’s new constitution means for provincial leadership

From its Independence in 1980 until 2008, Zimbabwe was governed by the Lancaster House Constitution, a document that was hurriedly put together as part of the ceasefire agreement. Despite being amended 19 times the Constitution retained centralised power in the national government and the President. The President handpicked provincial governors and the Minister responsible for local government. These presidential appointees not only ran all local government structures but could also dissolve local government structures in the “interests of good governance and public administration”. The new Constitution accepts the principle of devolution, but fails to devolve any specific powers, leaving the definition of roles and responsibilities open to interpretation. Despite a constitutional shift in the right direction, in practical terms, it seems likely that there will be a continuation of the current situation in Zimbabwe, whereby political power remains centralized within the national government.

Spreading the gains from regional financial sector reforms

In 2012, the SADC launched negotiations on the liberalisation of trade in services for six priority sectors, including banking and other financial services. It is expected that these negotiations shall be finalised within three years. In theory, the liberalisation of trade in banking services is expected to improve service quality as well as access to banking services. In practice, the experience of many Southern African countries does not always stand up to the theory.

Economics – complicating the obvious

The standard first year definition of economics states that “economics is the study of how individuals and groups make decisions with scarce resources in order to best satisfy their wants, needs, and desires”. I recently had the opportunity to apply my university training to analyse a decision I was faced with in my personal life. It all started when my children’s school sent a newsletter to all parents declaring that hence forth, they will charge a penalty fee for children that were either picked up late from school or dropped off late for school.