Trump / Huawei : La Chine dans le viseur

Une intéressante émission sur France 5 pour comprendre le bras de fer commercial qui s’est transformé en guerre froide technologique entre la Chine et les Etats Unis.

Les points clés de la discussion sont comme suit :

  • La dominance technologique (numérique) est devenue primordiale. De plus en plus, elle va définir les rapports de force dans le 21 siècle
  • Le leadership chinois technologique est affirmé dans certaines spécialités comme l’intelligence artificielle. Cependant, bien qu’il soit possible que le géant mondial des télécoms Huawei dispose d’un plan B, pour l’instant, l’entreprise est très dépendante des applicatifs (Android) et des microprocesseurs américains
  • Au-delà de la rhétorique, les Etats Unis et la Chine sont mutuellement très interdépendants sur le plan commercial actuellement et savent que les deux vont souffrir en cas d’une rupture commerciale
  • Les États-Unis redoutent un espionnage technologique chinois et omettent de dire que les Etats Unis eux-mêmes n’hésitent pas à le faire (Exemple : NSA)
  • L’Europe, qui il y a une ou deux décennies, était un acteur influant dans les télécoms et les technologies informatiques est aujourd’hui reléguée au rang de spectateur. Les divisions actuelles sur l’Europe n’arrangent pas les choses  
  • La démarché de Trump s’explique notamment par prochaine l’échéance présidentielle américaine. Trump se porte plutôt bien dans les sondages actuellement avec une bonne croissance économique et un taux de chômage aux plus bas
  • Sur le plan militaire, la Chine a renforcé sa puissance notamment en niveau naval
  • Bien que ça ne soit pas apparent en façade, le pouvoir chinois n’est pas monolithique (Faucons de Pékin versus Colombes de Shanghai)

Doing well while doing good: Moving Islamic banking beyond the CSR paradigm

Financing the SDG agenda internationally requires trillions of dollars. Obviously, governments’ investments are not enough to provide the needed financial resources. Thereby, the private sector in general and the financial sector in particular are required to bridge the financing gap and support the achievement of SDG’s. To illustrate, Arab countries would need a minimum of 230 billion USD a year to finance sustainable development. Unfortunately, corporate social responsibility initiatives are not only ineffective but also unsustainable because such initiatives approach social and environmental issues from the sidelines. Indeed, when corporate sustainability is managed outside a firm business model, its performance and even its existence tend to rely strongly on the firm’s financial performance. Not surprisingly, financial objectives are usually prioritized when they conflict with other goals.

It is true that many Islamic banking institutions undertake several social initiatives ranging from Qard Hassan and energy conservation to zakat payment and charities support. Yet, on average, Islamic banks’ social and environmental initiatives have been rather weak or poor. Islamic banks’ performance in this field is even lower than conventional banks. Many research reports also point out to the low levels of disclosures of Islamic banks with respect to ethics and sustainability. Today, Islamic banks need a paradigm shift by embedding sustainability into their core business model and reconcile their positioning with their ethical roots. In other words, doing well while good instead of doing well and later doing good (sometimes).

Based on an international benchmark of companies that pursue financial and social goals simultaneously, a recent research article sheds light on key success factors to succeed in this paradigm shift and reconcile profitability and sustainability. The benchmark identified four best practices.

  • Setting goals and monitoring progress: Well-constructed goals are important to for dual-purpose companies. Key performance indicators can be built using metrics developed by international NGO’s such as the Global Reporting Initiative and the Sustainability Accounting Standards Board and B-Lab.
  • Structuring the organization: It is impossible to succeed both on financial and sustainable fronts if the organization structure is not designed to support both perspectives. More specifically, the company has to supplement traditional organizational structures with mechanisms for surfacing and working through tensions created by the economic and social perspectives.
  • Hiring and socializing employees: Embedding a dual-purpose focus in the organization DNA requires a workforce with shared values and behavior. Hiring, training and socializing are crucial to get that right.
  • Practicing dual-minded leadership: The board and the management have to manage the tensions that rises when trying to align impact and finance. The company’s governance and leadership must manage tension proactively while committing to the dual goals

Islamic banks engaged in blending profitability and sustainability need to be aware that tensions and trade-offs are inevitable especially when ecosystems supporting such a transition are embryonic or inexistent. Taken together the four levers presented above can make the endeavor more likely to succeed.

Empowering social enterprises through the waqf institution: The case of SDG 3 (good health and well-being)

The problems our planet is faced with are complex and all-spanning. Global environmental degradation and climate change are coupled with increasingly alarming social fracture and economic disparities. Governments alone have failed to provide solutions to those wicked and highly interconnected problems.

In the past fifteen years, a new generation of entrepreneurs have attempted to address the social and environmental complexities at local and regional levels through the so-called social innovation. However, these social entrepreneurs face major hurdles including financing and scaling their products and services. On the other hand, the Waqf institution, considered in the past centuries in Islamic civilization as a major enabler of social and economic welfare, has remained relatively disconnected from modern capital markets and their various forms to achieve growth.

In a paper published in the proceedings of the Waqf and Sustainable development symposium held at Istanbul Sabahattin Zaim University last summer, Dr. Fadwa Chaker and Dr. Wail Aaminou demonstrate how the Waqf institution can be placed at the heart of sustainable economic development by bridging the demand and supply sides of social innovation through structured and efficient mechanisms. The authors firstly describe the theoretical grounding behind social innovation and its role in driving large-scale social impact and sustainable growth. Then, they discuss the Waqf institution as an unconventional instrument for wealth redistribution and eventual economic prosperity. Drawing on the preceding literature discussion, they present a conceptual framework that describes the mechanism through which the Waqf institution can boost inclusive growth by bringing together multiple for-profit and non-profit stakeholders. The authors illustrate the presented framework with the case of good health and well-being as one of the important UN sustainable development goals. In doing so, they show how Waqf helps social innovators address the structural challenges of financing and scalability and how this innovative instrument can thus be considered as a paramount lever for achieving sustainable development.

To download the full paper, please click here

Leveraging Income sharing arrangements to finance education

Source : Koç University, Turkey

Providing quality education is a critical goal in the sustainable development agenda. Indeed, when people are able to get quality education they can break from the cycle of poverty and enjoy healthier and more sustainable lives. Education is also crucial to fostering tolerance between people for more peaceful societies.

OIC countries are far from Ensuring inclusive and quality education for all and for promoting lifelong learning. According to the 2018 report “Education Quality in the OIC Member Countries “, these countries have struggled with a lack of progress in improving education quality in the last two decades as shown in international assessments. Furthermore, the gap between OIC and non-OIC countries seem to have widened over time. Mobilizing financings for education is one of the challenges not only in OIC countries but also globally with  education fees on the rise and students struggling with large debt balances. To illustrate, in the United States student debt reached a new height in 2018 — a $1.5 trillion. A typical student borrower will have $22,000 in debt by graduation.

Income sharing arrangements (ISA) seeks to address this issue by providing alternative financing schemes. Students financed through ISA do not pay tuition nor fees upfront. Instead, the financier (the university or any third party) gets a fraction of their salaries after graduation if certain conditions are met (typically, when the salary exceeds a certain threshold).

On paper, interest of all stakeholders in the ISA scheme seem aligned:

Students have incentives to join ISA, especially those from low and middle-income families;

  • Universities using ISA financing are keen on attracting brilliant students who can make it to the job market. In addition, the university will make sure enrolled students are better prepared for the job market;
  • Recruiters hire well-trained students with skills matching their expectations.

ISAs have gained prominence as an alternative to traditional debt schemes, especially in the US where they are provided by academic institutions (eg. Purdue, App Academy…) or financing start-ups (eg. GS2, Align…).

Given the shortcomings in education achievements in developing and developed economies, this product is worth developing by financial institutions along with the nonprofit sector. It will allow a better alignment of finance and SDG #4 (Ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all) and will provide financial institutions with the opportunity to diversify out of debt-like instruments.

Espresso : Pourquoi il faut se méfier des sociétés de marketing en réseau !

En quoi consiste le marketing en réseau ? Le marketing en réseau (ou marketing multi-niveaux) consiste à distribuer des produits et services par des commerciaux indépendants qui recrutent (parrainent) d’autres commerciaux qui également font la même chose. Un commercial est rémunéré sur la vente des articles et les recrutements ainsi que sur l’activité commerciale de ceux qu’il/elle a recrutés. Plusieurs sociétés suivent ce modèle d’affaires telles que FOREVER LIVING, QNET et HERBALIFE.

Comment expliquer le succès du marketing en réseau ?  La vente des services & produits en réseau permet d’augmenter la force de vente d’une manière exponentielle. Son succès provient du modèle de rémunération attractif pour les commerciaux qui disposent d’un réseau de commerciaux actifs important. En fait, ces sociétés vendent très bien le rêve de l’indépendance et l’accès rapide à la richesse appuyés par des exemples de commerciaux qui ont réussi (on oublie de dire au passage que ces cas de réussite sont minoritaires et que la grande majorité perd de l’argent où en gagne peu).  C’est pour cette raison que ces sociétés insistent sur le développement personnel ainsi que sur la création d’une forte culture d’appartenance.

En quoi consiste la vente pyramidale ? Un modèle d’affaire où les participants sont exclusivement rémunérés sur le recrutement de nouvelles recrues. Cette pratique est légalement interdite.

Pourquoi le marketing en réseau s’apparente à la vente pyramidale ? La similarité entre les pratiques de vente en réseau et les structures pyramidales (basées exclusivement sur le recrutement de nouvelles recrues) est souvent pointée du doigt. En réalité, un commercial qui rejoint une société de vente en réseau n’a pas du tout intérêt à vendre des produits (commission perçue une seule fois) mais plutôt à intérêt élargir et  maintenir son réseau de commerciaux (commissions récurrentes et qui augmentent quand le réseau s’élargit). Ainsi, dans les faits, la vente en réseau s’assimile à un schéma pyramidal avec une focus sur le recrutement, avec une répartition inégale des revenus entre le haut et le bas de la pyramide et avec un grand « Turn over » provenant des commerciaux qui perdent leurs investissements en droit d’entrée (souvent sous forme d’achat de produits).

Vous voulez en savoir plus ? Article rédigé par l’auteur sur le marketing en réseau et ses similarités avec la vente pyramidale appuyé par des simulations multi-agents.

Why should Islamic banks support the Principles of Responsible Banking?

Source : PRB UNEP-FI

On November 26, 2018, at its Global Roundtable in Paris, UN Environment FinanceInitiative (UNEP FI) and 28 banks from around the world launched the Principlesfor Responsible Banking (PRB) for a six-month public consultation. The PRB representa voluntary commitment to a more responsible and sustainable way of bankingthat will contribute to the achievement of society’s goals.

The PRB proposes a framework around six principles:

  • Alignment: Ensuringthat the banks’ business strategy is consistent with individuals’ needs andsociety’s goals, as expressed in the SDGs, the Paris Climate Agreement andrelevant national and regional frameworks;
  • Impacts: Holistically assessing and managing the risks, opportunities and impacts resulting from banking activities. Banks have also to continuously improve their positiveimpacts while reducing their negative impacts;
  • Clients andcustomers: Working with clients to encourage sustainable practices and to enable economic activities that create shared prosperity forcurrent and future generations;
  • Stakeholders: Proactively collaborating with relevant stakeholders to further the objectives of these Principles;
  • Governance and Culture: Implementing banks’ commitments through effective governance processes, management systems and a culture of responsible banking;
  • Transparency and Accountability: Periodically reviewing the implementation of the Principles and being transparent about and accountable for the impact.

Although both conventional and Islamic banks can adopt the principles, I do feel that Islamicbanks can better leverage such principles for at least four reasons:

  • PRB strengthen the value proposition

Today, Shariacompliance dominates the value proposition of many Islamic banks, which makesattracting customers on a non-religious ground challenging for such banks.  Moreover, Islamic banks’ customers expect banks to be strongly involved in economic, social and environmental issues becausesuch a positioning is in line with its core values. With PRB, Islamic banks will integrate sustainability across all business areas, resulting in a stronger value proposition. 

  • PRB offers international recognition  

The PRB frameworkguides Islamic banks in their sustainability journey and allows them to highlighttheir achievements to both a national and international audience. This recognition is particularly valuable when reaching out to new customer segments.

  • PRB is more needed in OIC countries

The scale offunding and technical support required to achieve the ambitious 2030 agenda arefar beyond the scope of OIC governments’ budgets and traditional funding mechanisms. Consequently, there is a vast gap to be filled, and Islamic banking can play a leading role, especially that the industry’s underlying principlesemphasize, among others, the values of social justice, transparency and risk sharing

  • PRB is more effective in agile contexts

In many countries, Islamic banks are relatively young with a smaller size compared to their conventional counterparts. Therefore, Islamic banks are more agile to adapt their business model to the PRB requirements.

To sum up,The PRB framework provides a timely opportunity for Islamic banks to harmonizethe business model with their core values, ensure continued growth and channelfunds for sustainability friendly projects and initiatives.

This article was first published in Islamic Finance news Volume 15 Issue 49 dated the 5th December 2018

Espresso : Les recettes de la Banque Mondiale pour reformer l’éducation dans la région MENA

Source : Banque Mondiale
  • Quel est le problème ?  Contrairement à la Corée du Sud, les pays de la région MENA n’ont pas été capables de récolter pleinement les retombées sociales et économiques de l’éducation malgré les importants investissements et efforts consentis au cours des 50 dernières années et la croissance impressionnante du taux de scolarisation à tous les niveaux.
  • Quelles sont les causes ? Quatre types de tensions ont empêché l’éducation d’évoluer pour offrir un apprentissage qui prépare les élèves à un meilleur avenir. (1) les diplômes versus les compétences ; (2) la discipline versus la liberté/créativité ; (3) Le contrôle/centralisation versus l’autonomie ;et (4) la tradition versus la modernité. Ces tensions se manifestent dans la classe, l’école et la société d’une manière générale.
  • Quels sont les impacts ? Un système d’éducation sclérosé impacte négativement et d’une manière directe la création de richesses au sens large et le bien-être social dans la région MENA.
  • Qu’est ce qui devrait être fait ?   Les pays MENA doivent s’attaquer aux quatre tensions en mettant en place un système éducatif qui prépare tous les élèves à un avenir productif et prospère. Un tel système serait moderne et flexible et favoriserait une culture de l’excellence et de la créativité dans l’apprentissage. Cela permettrait également de tirer profit des technologies de l’information et adopter des approches modernes afin d’offrir aux jeunes les compétences dont ils ont besoin pour définir leurs trajectoires de vie et s’adapter aux changements locaux, nationaux et mondiaux. Enfin, un tel système reposerait sur une vision nationale partagée en liaison avec les objectifs de développement généraux du pays. Finalement, sans un réalignement du marché du travail pour stimuler la demande en compétences, la contribution du secteur de l’éducation à l’économie ne sera pas pleinement réalisée.