Looking for something in particular?

• Home
• Education
• News
• Featured
• Directory
• Archives
• Business
• People
• Images
• Contact Us

FAS 115 (Impairment Accounting) for Dummies.

June 1, 2010 | Leave a Comment

“Begin from where you are” - Anonymous.

Flavor Flave Banking Corporation based in Far Far Away,  originated a loan as follows:

• Principal amount $380,000
• Interest Rate is 10%
• Annual Contractual Payments is $61,845
• Trade & Settlement Date is 1/1/2006
• Maturity Date is 12/31/2015
• Net Loan Origination Cost Charged to customer is 7,600
• Therefore, net cash outflow on day zero is ($380,000 - 7,600 = 372,400)

This loan is classified as available for sale. Per guidance in FAS 115, certain debt and equity securities classified as available-for-sale should be reported at fair value with unrealized changes in fair value excluded from earnings.

Requirements & Assumptions:

• Calculate the book value/carrying value of the loan as of 12/31/2010.
• Two quarters prior to period ended 12/31/2010, the fair value of the loan was significantly less than the book value.
• The borrower’s credit rating has been downgraded from AAA to CCC in the last six months (CCC is less than investment grade based on S&P ratings)
• Flavor Flave Banking Corporation considers these two events as other than temporary impairments (OTTI)

Based on the calculations in the attached MS Excel workbook, the amortized cost basis as of 12/31/2010 is $231,631.77.

In order to calculate the fair value of the the loan as of 12/31/2010 we need the following information:

The fair value of the loan is the net present value of the remaining future cashflow stream from the date the OTTI event occured.

The projected LIBOR yield curve (Hypothetical) is as follows:

12/31/2011 - 14%
12/31/2012 - 15%
12/31/2013 - 16%
12/31/2014 - 17%
12/31/2015 - 18%

The remaining future cashflow stream are as follows:

12/31/2011 - 61, 845
12/31/2012 - 61, 845
12/31/2013 - 61, 845

12/31/2014 - 61, 845

12/31/2015 - 61, 845

Where
K = Fixed payment made on each payment date
L = Notional principal in swap agreement
ti = time until maturity (over the life of the swap)
ri = LIBOR zero rate corresponding to maturity ti
e = exponential

The amount of the OTTI impairment is therefore, the amount by which the fair value  is less than the book/carrying value as follows:

*The FV was calculated using continuous compounding method…..discrete compounding method may be more appropriate in certain cases.  Evaluate your situation on a case by case basis.

FAS 115 (para. 16)  states that for individual securities classified as either available-for-sale or held-to-maturity, an enterprise shall determine whether a decline in fair value below the amortized cost basis is other than temporary. For example, if it is probable that the investor will be unable to collect all amounts due according to the contractual terms of a debt security not impaired at acquisition, an other-than-temporary impairment shall be considered to have occurred.  If the decline in fair value is judged to be other than temporary, the cost basis of the individual security shall be written down to fair value as a new cost basis and the amount of the write-down shall be included in earnings (that is, accounted for as a realized loss). The new cost basis shall not be changed for subsequent recoveries in fair value. Subsequent increases in the fair value of available-for-sale securities shall be included in the separate component of equity pursuant to paragraph 13; subsequent decreases in fair value, if not an other-than-temporary impairment, also shall be included in the separate component of equity.

Accounting Entries to Record OTTI Impairment:

Dr  Earnings      $37,305.72

Cr Loan (asset account)    $37,305.72

(To record OTTI impairment on a loan/asset)

Balance Sheet Presentation:

Loan - Book Value     —     $231,631.77

Less: Impairment —        ($37,305.72)

Net Value —                    $194,326.05

NOTE: This is a rather simplistic example.  We will deal with a more robust example in the near future .  We will also discuss FAS 65 LOCOM in the future and also talk about how to calculate your loan loss provisions using the expected loss approach.

Bibliography:

• Options, Futures and Other Derivatives “Fifth Edition”  John C. Hull 2003
• Financial Accounting Standard 115 - AICPA
• Financial Accounting Standard 91 - AICPA
• Professional Risk Managers Handbook - Financial Instruments & Financial Markets (www.prmia.org)
• Other textbooks.

NOTE ON TREATMENT OF ISSUANCE COST PER GUIDANCE IN PARAGRAPH A41 OF FAS 159:

“A41. The Board considered whether to provide guidance on how reported interest should be determined for receivables and payables reported at fair value pursuant to the fair value option. The Board noted that the issue of determining interest when financial assets and financial liabilities are measured at fair value is not new and would best be resolved in a different project. During its redeliberations, the Board affirmed that the fair value option project does not address methods for recognizing and measuring the amount of interest and dividend income and that an entity should provide a description indicating how interest and dividends are measured and reported in the income statement. However, the Board clarified that origination fees and costs related to items for which the fair value option is elected should be expensed as incurred. No amendment to FASB Statement No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, is required because that Statement does not apply to loans measured at fair value with changes reported in earnings.”

NOTE: Thanks to our partners at Blackinsey & Company for providing the solution.  Blackinsey & Company is a top tier strategy & management consulting outfit based in Washington, DC.  This was created under creative commons and is copyleft.  The interpretations and analysis presented in this article are purely for pedagogical exercise and Black Herald cannot be held responsible for any error of commission or omission.  Thanks for visiting our website.  You are always welcome .

If you like this article check out:

FAS 91 for Dummies and stay tuned for the following:

• FAS 133 for Dummies
• FAS 91 for Dummies (Sample with Prepayments)
• FIN 46 for Dummies
• FAS 115 for Dummies
• FAS 123(R) For Dummies

FAS 157 - Fair Value Accounting for Dummies.

December 4, 2009 | Leave a Comment

“We should acknowledge immediately that, no matter how sophisticated mathematical models have become, they are idealizations of reality.  They are bound to be approximate at best; at worst they can be misleading.  Nonetheless, they are indispensable.” - Jacques Pezier.

WASHINGTON DC - FAS 157 simply requires that financial instruments should be marked-to-market every reporting period and that changes in the fair value or market value of securities (gain/loss) be taken into earnings.  FAS 157 has three (3) hierarchies, they are explained as follows:

• Level 1 - If the financial instrument in question is quoted on the stock exchange, the security should be marked to market using market data.
• Level 2 - If the financial instrument is not quoted and securities similar to the one been valued are quoted, the financial instrument should be valued using the market data of its peers as proxy.
• Level 3 - If the financial instrument is not quoted and no proxy data is available, the securities should be marked to model.

NOTA BENE: Note that Level 1 > Level 2 > Level 3.

We are going to use a  Level 3 illustration (using a foreign currency swap) to further explain the concept.  The FAS 133 elements will be treated in a later lesson, however, this example will form the building block of our FAS 133 illustration which will be coming shortly.

In order to fund expansion into other countries Cashflow Inc., borrowed $500M from a consortium of lenders.   Worried about exchange rate fluctuations and other macro-economic indices, TFLASH, the CFO of Cashflow Inc.,  entered into a foreign currency swap as follows:

• Receive 10% per annum in CNY  and pay 7% in USD per annum.
• Swap will mature in one year i.e. time left on the swap agreement is 1 year.
• The principal in USD is $500M.
• The principal in CNY is $500*6.83840 = CNY 3,419.2B.
• Interest Yield is 5% and 8% in China and US respectively with continuous compounding.
• 1 US Dollar = 6.83840 Chinese Yuan Renminbi  as of December 2, 2009.
• 1 Chinese Yuan Renminbi (CNY) = 0.14623 US Dollar (USD)  as of December 2, 2009.
• 1 US Dollar = 6.89293 Chinese Yuan Renminbi  as of December 2, 2008.
• 1 Chinese Yuan Renminbi (CNY) = 0.14508 US Dollar (USD) as of December 2, 2008.
• Transaction was entered into on December 2, 2008.

VALUATION:

Vswap = Bond Value in Local Currency - Bond Value in Foreign Currency*Exchange Rate

DAY 1 - December 2, 2008

Value of Swap is Zero.  The notional is exchanged in both currencies.

December 2, 2009 - Cashflow Inc. reporting date.

Value of Foreign Currency Receiving Bond is Calculated =

Value of USD Paying Bond:

Value of Foreign Currency Swap a gain.

MARK-TO-MODEL ACCOUNTING ENTRIES:

Dr.  Swap Asset $29.31M

Cr.  Unrealized Gain - Earnings - $29.31M

PS: The above illustrations will form the basis for a lesson on FAS 133 Accounting for Foreign Currency Swap that will be treated shortly.

NOTE: Thanks to our partners at Blackinsey & Company for providing the solution.  Blackinsey & Company is a top tier strategy & management consulting outfit based in Washington, DC - Blackinsey & Company is an equal opportunity employer and we do not discriminate based on race, color, national origin, sexual orientation or gender .  This was created under creative commons and is copyleft.  The interpretations and analysis presented in this article are purely for pedagogical exercise and Black Herald cannot be held responsible for any error of commission or omission.

Thanks for visiting our website . In the coming series, we will focus on cash flow and foreign currency hedges.  We will also examine other types of derivatives namely forwards, futures, swaption, equity index and other exotic and examine different valuation tools including binomial theorem and Black-Scholes.  Other third-party valuation tools will also be discussed.

Introducing The Khan Academy

November 28, 2009 | Leave a Comment

“Education is the New Ball Game Y’all” - Anonymous.

Is your child struggling in school?  Do you need help with your schoolwork?  Well, look no further, help is here - The Khan Academy is a repository of video tutorials for a wide range of subjects including but not limited to Physics, Probability, Linear Algebra, Geithner Plan, Mortgage Backed Securities, CDOs, GMAT, Chemistry and Trigonometry.  If you enjoy studying or you simply want to take your game to the next level, then visit www.khanacademy.org to learn.  Not only is this website free, Khan is one of the best teachers in the world and explained the subjects in a clear and lucid manner.   Remember education is light - it will free you mentally and help you achieve your dreams.   Regardless of what you want to do in life, education will take you there, you will dine with Kings and Queens and you will be the head and not the tail.  So embrace education and learn because you are what you know!!

About The Khan Academy:

Salman Khan (Sal) founded the Khan Academy with the goal of using technology to educate the world.  Sal received his MBA from Harvard Business School.  He also holds a Masters in electrical engineering and computer science, a BS in electrical engineering and computer science, and a BS in mathematics from the Massachusetts Institute of Technology.

The Khan Academy and Salman Khan received a 2009 Tech Award in Education -   The Tech Awards is an international awards program that honors innovators from around the world who are applying technology to benefit humanity.

Haters - A Poem By Maya Angelou

November 16, 2009 | 3 Comments

“There are three  important things in life - hope, love and faith.  Of these three things, the most important is love” - Holy Bible.

A hater is someone who is jealous and envious and spends
all their time trying to make you look small so they can look tall.

They are very negative people to say the least. Nothing is ever good enough!

When you make your mark, you will always attract some haters…

That’s why you have to be careful with whom you share
your blessings and your dreams, because some folk can’t
handle seeing you blessed…

It’s dangerous to be like somebody else… If God
wanted you to be like somebody else, He would have given you what He gave them! Right?

You never know what people have gone through to get what they have…
The problem I have with haters is that they see my glory, but they don’t know my story…
If the grass looks greener on the other side of the
fence, you can rest assured that the water bill is higher there too!

We’ve all got some haters among us!

Some people envy you because you can:
a) Have a relationship with God
b) Light up a room when you walk in
c) Start your own business
d) Tell a man / woman to hit the curb (if he / she isn’t about the right thing)
e) Raise your children without both parent being in the home

Haters can’t stand to see you happy.
Haters will never want to see you succeed.

Most of our haters are people who are supposed to be on our side.

How do you handle your undercover haters?

You can handle these haters by:

1. Knowing who you are & who your true friends are (VERY IMPORTANT!!)
2. Having a purpose to your life:
Purpose does not mean having a job. You can have a job and still be unfulfilled.
A purpose is having a clear sense of what God has called you to be.
Your purpose is not defined by what others think about you.
3. By remembering what you have is by divine prerogative and not human manipulation.

Fulfill your dreams! You only have one life to live…when its your time to leave this earth, you ‘want’ to be able to say, ‘I’ve lived my life and fulfilled ‘my’ dreams,… Now I’m ready to go HOME!

When God gives you favor, you can tell your haters,
‘Don’t look at me…Look at Who is in charge of me….’

Sample MBA Recommendation Letter (Version 2)

October 29, 2009 | Leave a Comment

NOTA BENE: This is a draft and designed to help you with your MBA applications.  Created under the  Creative Commons rule and it is copyleft.  Use as a guide for your essays.  I plan to collate and refine the essays I have posted on Black Herald and  publish a book of MBA essays in the future.

MBA Essay - Six Substantial Accomplishments (Part 2 of 6)

August 9, 2009 | 1 Comment

“Because I think in a broader way, I feel like I am able to make better decisions” - Takafumi Horie.

One of my most substantial professional accomplishments occurred when I was deployed by a top tier professional services firm, Blackinsey & Company, to evaluate the adequacy of a Vendor Management Framework developed by SYNERGY (a Fortune 100 company) to manage outsourcing risks.

In order to test the adequacy of the framework, I researched knowledgebases and benchmarked the framework against best practices; though SYNERGY’s  framework contained many elements of a standard vendor management procedure, two critical components were missing.  Firstly, while the framework required SYNERGY’s employees to perform risk assessments in order to identify the key controls within the processes been outsourced, the framework did not provide the step-by-step instruction to accomplish this objective.  Secondly and much to my chagrin, deviations or exceptions (management override) to the vendor management framework were required to be reviewed and approved by an employee at the staff level.

To address these gaps, I recommended that before a business process is outsourced, the departments initiating the purchase requisitions should first and foremost review process documentations such as SOX* narratives, flowcharts (system and process), policies and procedures to identify the key controls within the process in question.  After identifying the key controls, these controls should be categorized into two buckets namely (a) controls that will be outsourced to the external service providers and (b) controls that will be managed internally.  Once the controls been outsourced are identified, SYNERGY should get assurance from the vendors that they have adequate infrastructures in place to safeguard the outsourced controls from been compromised.  This objective can be achieved by obtaining and reviewing professionally certified documents such as SAS 70 report from the vendors.

I also recommended that exceptions or deviations from the third-party framework should be reviewed and approved by an employee at the Executive Vice President level rather than by an employee at the staff level because exceptions to the framework constitute management overrides and should be handled by employees who understand the risk-return dynamics of their decisions (e.g. an Executive Vice President).

I consider this a great accomplishment because I completed the project in two days although the review was initially scheduled to last for two months. The management of SYNERGY was very impressed with the quality and timeliness of my review and awarded additional multi-million dollar contracts to my consulting firm.   Once again, I moved the ball to the end zone and helped a client - a Fortune 100 company -  find solutions to a critical business problem, winning new businesses for my company in the process.

* Sarbanes-Oxley.

NOTA BENE: The topic I chose in this essay is random and not a real accomplishment for me.  It is  just a rhetorical exercise. This is a draft and designed to help you with your MBA applications.  Created under the  Creative Commons rule and it is copyleft.  Use as a guide for your essays.  I plan to collate and refine the essays I have posted on Black Herald and  publish a book of MBA essays in the future.

Survey Reveals the Top Supporters of Engineering Programs at Historically Black Colleges & Universities

February 27, 2008 | Leave a Comment

PRESS RELEASE 

(Baltimore, MD) February 26, 2008 — An annual survey conducted by US Black Engineer & Information Technolog (USBE & IT) magazine reveals the 2008 Top Supporters of Historically Black Colleges and Universities (HBCUs). The survey, in its sixth year, was completed by the engineering deans of the 11 HBCU engineering programs and the Advancing Minorities’ Interest in Engineering (AMIE) corporate academic alliance.

The survey targets two groups—corporate businesses and government agencies. Boeing, Lockheed Martin Corporation, Northrop Grumman, Caterpillar, Raytheon Corporation, and Siemans lead this year’s list of corporate businesses that support the HBCUs efforts. The U.S. Department of Energy, NASA, the National Science Foundation, the National Institutes of Health, the U.S. Army Corps of Engineers, and the U.S. Department of Defense lead in the government agency category.

The 11 HBCU’s invited to participate in the survey are: Alabama A&M University, Florida A&M University, Hampton University, Howard University, Jackson State University, Morgan State University, North Carolina A&T State University, Prairie View A&M University, Southern University and A&M College, Tennessee State University and Tuskegee University. These 11 schools produce 33 percent of the country’s black engineers.

The HBCU deans consider the following factors while making their decision: support for infrastructure modernization and enhancement, research, participation on advisory councils, faculty development opportunities, scholarships, student projects, stipends, co-op’s, and career opportunities.

USBE & IT magazine will salute the top corporate and government agencies in the Deans’ Edition of the magazine in June 2008. To view the entire list, please visit www.blackengineer.com .

Career Communications Group, Inc. (CCG) produces the annual Black Engineer of the Year Awards Conference, Women of Color Technology Awards Conference, and Minorities In Research Science Conference. In addition, CCG publishes US Black Engineer & Information Technology, Women of Color, Science Spectrum and Hispanic Engineer & Information Technology magazines.

Please click below for the Adobe pdf version of the press release -Top Supporters of Engineering Programs at Historically Black Colleges & Universities - Press Release.

Theory X & Theory Y

January 22, 2008 | Leave a Comment

It is imperative to understand management & motivational theories and apply them in your daily work activities. There is no gainsaying the fact that Corporate America is very competitive and you will most certainly encounter different personalities and people with different motivations as you trudge along in the rat race. Having sufficient knowledge of different motivational thoughts may prepare you to deal with some challenging situations at the workplace.

Today, we will be examining Theory X and Y developed by Douglas McGregor in the 1960s. This theory is widely used in human resources, behavioral and organizational management. It is divided into two extremes coined Theory X and Y respectively. First, let us examine Theory X.

Theory X
A Theory X manager believes that an average worker lacks ambition and would avoid work and responsibilities whenever he can. He also fervently believes that most workers are naturally lazy and requires close and comprehensive systems of controls. He believes in passing the bulk and thinks employees are only interested in looking out for themselves and their sole purpose for working is money.

He will blame the worker first in most situtations without questioning whether it may be the system, policy or lack of training that deserves the blame. This type of manager will constantly look over your shoulder, micro-manage you and stifle your creativity. He constantly uses negative reinforcement to motivate his staffs and constantly reminds them of what they did wrong and down plays their strengths. A Theory X manager is caustic and enjoys a narrow span of control. This type of managers abound in the corporate world. He enjoys to see his workers suffer and believes in a dictatorship type of leadership. He will often give employees gifts in order to make them let down their guards (a trojan horse) and subsequently manipulate them even more.

Theory Y
This is the polar extreme of Theory X and a Theory Y manager believes that the average worker is self-motivated, ambitious, loves to work when provided with the necessary tools. He uses the concept of positive reinforcement to motivate his workers and works with the employees to get the most out of their work (job satisfaction and job enrichment).

He believes in substance over form hence ensuring that employees are not bogged down by rules and this leads to better productivity. He believes that the satisfaction of doing a good job is a strong motivation in and of itself. A Theory Y manager will try to remove the barriers that prevent workers from fully actualizing themselves. This is the better type of manager to have.

Analysis
What type of managers do you have? What type of manager are you? Knowing the answers to these questions are imperative to your career and will prepare you to make some career defining decisions. Are you in an environment where you are restricted, micromanaged and believe you cannot grow?

Are your managers supportive of your ambitions both within the workplace and in your personal life or do they just see you as a tool, a raw material that can be used and then discarded? Well, knowing the personality of your managers will help you answer those questions and determine whether you should take that leap of faith or stay in your current position for the long haul.

Also, be wary of your administrative managers/coaches, they are not necessarily your friends and empirical evidence has shown that they are usually used as the eyes and ears of upper management and would gladly sell you out in order to get in the good books of their own managers.

Keep personal information private and never let them know you don’t like your work as this would be reflected in your bonus and performance evaluation at the end of the year. Remember, everything you tell your coach will be used against you when the time is right. So before you start spilling the beans when next you have a one-on-one discussion, think twice!

ABTI-American University of Nigeria - Yola.

September 16, 2007 | 5 Comments

ABTI-American University of Nigeria was created in response to the demand for high-quality, American-style higher education in West Africa. Each year, thousands of West African families send their sons and daughters to universities in the United States. Many of these students would prefer to study here, in Nigeria, if a comparable education were available. Now these students do have a new option: AAUN.

The mission of AAUN is to offer an education that is in every way the equal of what a student would experience at the best universities in the United States. The majority of the distinguished faculty are American; the campus facilities are world class–superior even to those found at most American campuses. The academic programs are built on the American model and are consistent in every way with US accreditation standards.

The University was created in partnership with the American University in Washington, D.C., an institution with an international reputation for excellence.

AAUN is a career-oriented-institution, with the goal of meeting the professional aspirations of students and the demand by local and international employers for highly trained staff. All students, regardless of academic specialty, will receive extensive training in information technology. Upon arrival, every student will receive a laptop computer, complete with essential software. Wireless, high-speed Internet access will be available everywhere on campus, indoors and out. Every student will learn the principles of entrepreneurship so that, regardless of major, they will be prepared to achieve personal prosperity and to contribute to the economic development of the region. AAUN will be free of the disruptions and interruptions to the academic year too often seen at other Nigerian universities.

Our goal is to educate the next generation of leadership in West Africa. We are committed to being an important part of the solution to the continent’s pressing social and economic challenges. If you share our vision for West Africa, and if you are a high school student who will be graduating near the top of your class, we’d like to talk with you about what AAUN has to offer.

Undergraduate Fields of Study
Following are the undergraduate programs offered at AAUN.

School of Information Technology and Communications
BS Software Engineering
BS Computer Science
BS Information Systems
Concentrations:
Networking
Database Administration
Management Information Systems
Information Security and Assurance
BS Communications
Concentrations:
Telecommunications & Wireless Technologies
Journalism
Advertising
Digital Media
Film and Television

School of Business and Entrepreneurship
BS Business Management (BS) with
Concentrations:
Accounting and Finance
Economics and Finance
Management and Marketing
BS Finance

School of Arts and Sciences
BS Natural and Environmental Science
BS Petroleum Chemistry
BS Economics
BA International and Comparative Politics
BA Literature

MESSAGE FROM THE UNIVERSITY’S PRESIDENT

“Why go to the U.S. when the U.S. is coming to us.” These were the words of Isaac A. when he enrolled in American University of Nigeria as a freshman in September 2005. Today, Isaac is a junior (third level) majoring in Economics in the School of Arts and Sciences.

Isaac’s words are right on target. Students can get the same high quality American education in Nigeria at much less expense than they can in America. Now in its third year, American University of Nigeria is thriving. Let me tell you a little about the university’s accomplishments and plans.

The University began operations in buildings and dormitories graciously loaned to it by ABTI Academy, the residential secondary school located across the street in Yola. Today, AUN has five beautiful new buildings on the permanent campus , including two modern, three-story dormitories, and another eight fully equipped dormitories on the temporary campus.

All of our buildings are state-of-the art, air-conditioned, structures that are built to code. The entire campus is wireless and secure. Class rooms are equipped with proper lighting, white boards, data projectors, and furniture. Laboratories have the latest equipment . The library has access to the full range of information available in data bases and through the Internet. Dormitory rooms, many of which contain en suite conveniences, accommodate a maximum of four students. Administrative and faculty offices are spacious.

The student population is increasing, both in number and excellence. Each year’s student count rises by over 20%. They come from all parts of Nigeria, and more are coming from other countries on the continent such as Zambia and Cameroon. By 2009, we expect a student body of almost 1000 and a growing global constituency.

In the grandest tradition of American higher education, faculty members represent nations from all over the world. Though over 90% of our teaching staff obtained Masters or PhD degrees in the United States, professors and administrators originate from locations as diverse as Egypt, Ghana, Russia, Venezuela, India, Kenya, America, Nigeria, and Korea. They bring to our students American training and global perspectives.

When the university launched, it was guided by a ten-year business plan. An updated strategic plan is now underway to assess the needs of Nigerian students and businesses so that new programs will produce students imminently employable and ready to help build the Nigerian economy. The Board of Trustees, which has governed the university since its inception, includes prominent Nigerian leaders in business, industry, and government service, as well as major international leaders.

AUN also continues to play a role in the community. The African Center for ITC Innovation and Training, funded initially by a grant from the McArthur Foundation, enrolls members of the local business community at a discounted rate. Academic departments hold community-based seminars that offer skills relevant to local needs such as business statistics and banking reform.

As the campus looks forward, we anticipate new dormitories, a new library, and other buildings to support the broad mix of programs in business, entrepreneurship, IT, communications, and the arts and sciences, with an auditorium large enough to host the university’s first graduation, which is less than two years away. That is the graduation in which Isaac will take part. When he enters the world with a Bachelor’s degree from AUN, the full meaning of his words will ring true. Not only has a quality American education come to him, he will have stayed in Nigeria where he will contribute in-country to the future that lies ahead of him and his fellow graduates of American University of Nigeria.

I am honored to serve as the Acting President of American University of Nigeria, a university that was built to educate the next generation of leaders. I welcome the support from all members of the community, those who are close by and those who live and work internationally, and I look forward to mutual, productive and successful relationships in the years ahead.

Sincerely,

C. Michael Smith, Ph.D.
Acting President, ABTI-American University of Nigeria

For more information about the school including faculty, please visit the university’s website at www.abti-american.edu.ng

African Leadership Academy

September 15, 2007 | Leave a Comment

History

African Leadership Academy was founded in 2004 with the belief that ethical leadership is the key to transforming the African continent. Founders Fred Swaniker, Chris Bradford, Peter Mombaur, and Acha Leke sought to create an institution that would develop, connect, and support those individuals who will lead the continent toward a peaceful and prosperous future. In the two years that followed, the founding team built a powerful network of advisors and developed a robust, sustainable operating model for the Academy, a world-class, pan-African secondary institution on the outskirts of Johannesburg, South Africa.

In 2006, these efforts were rewarded when Founders Fred Swaniker and Chris Bradford were recognized as “two of the 15 best emerging social entrepreneurs in the world” by Echoing Green. The momentum only continued in 2007 with the identification of our initial campus and the announcement that Christopher Khaemba, one of Africa’s finest educators, will join African Leadership Academy as the inaugural Dean of School. Dean Khaemba brings extensive experience as a school leader and is noted for his ability to inspire and develop students from a wide variety of socioeconomic backgrounds.

Today, African Leadership Academy is recruiting its first class of 100 young leaders from across the continent for entry in September 2008. We are also hiring a world-class faculty from across Africa and around the globe and developing a broad range of partnerships.

Founding Beliefs

Five key beliefs drove the establishment of African Leadership Academy and determined the focus and design of the institution.

Address the Underlying Causes of Problems
To create lasting change in Africa, it is necessary to make investments that treat the causes, and not just the symptoms, of under-development in Africa. We believe an undersupply of leadership across all sectors is the root cause of many of Africa’s problems. Africa needs strong leaders throughout society, in the spheres of politics, business, health care, education, the environment, and beyond, to create positive change and generate growth and prosperity.

The Power of One
History has seen countless examples of the power of individual leaders to catalyze the actions of large groups of people and unleash massive positive change in society. In South Africa, Nelson Mandela and Desmond Tutu led a peaceful transition from oppression to democracy. Wangari Maathai inspired environmental and political activism by women across Kenya. Bill Gates and Steve Jobs transformed the global economy with their innovations in computing, and Muhammad Yunus created a new path from poverty to prosperity by developing microloans at the Grameen Bank.

The Power of Youth
Many great leaders begin “changing the world” at a young age – when they believe the whole world is open to them and they are free to chase their big dreams. Nelson Mandela was only 26 when he and Walter Sisulu established the ANC Youth League. Bill Gates established Microsoft at 19, and Steve Jobs launched Apple at age 21. We need to invest in Africa’s leaders when they are young and dreaming and give them the confidence they need to bring their ideas to the world.

ALA Values

Great leaders find strength in a robust system of values. At African Leadership Academy, six core values form the foundation of our program. Our faculty, guest speakers, and mentors will embody these values. Students will be expected to uphold these values throughout their time at the Academy and long after they have left our campus.

Integrity
We are people of our word, with the courage to do what is right.

Curiosity
We challenge the status quo and take the initiative to pursue new ideas.

Humility
We are thankful for our opportunities and are aware of our limitations.

Compassion
We empathize with and care for those around us.

Diversity
We respect all people and believe that difference should be celebrated.

Excellence
We set high standards for our own achievement and celebrate the achievements of others.

The Need for Pan-African Cooperation
We believe that a pan-African approach is required to catalyze growth and development in Africa. African leaders must understand and collaborate with peers across the continent to remove barriers to trade, end conflict, and stimulate widespread positive change.

Entrepreneurship is Fundamental to Growth
Africa needs entrepreneurial leaders across all sectors who will throw off the constraints of existing institutions to change the paradigm and create value on the continent. Most entrepreneurs in Africa today are “subsistence” entrepreneurs, with small businesses and meager incomes that allow them to support only their families. To break the cycle of poverty and generate significant growth, however, Africa needs large-scale entrepreneurs.

The Founding Team

Fred Swaniker
Founder & Chief Executive Officer

Fred, a Ghanaian with a Pan-African background, is the Chief Executive Officer of African Leadership Academy. A proven entrepreneur, Fred first had the idea for African Leadership Academy while living in Nigeria in 2003. He brings deep experience launching and managing private educational institutions of excellence in Africa. For the past nine years, Fred has been a director of Mount Pleasant English Medium School, one of the top-performing private elementary schools in Botswana. More recently, Fred founded and led the launch of the Summer Academy at Cape Town, now Global Leadership Adventures. In only nine months, Fred led a team to secure a campus, recruit a teaching staff, develop the program curriculum, and recruit 71 students from 13 countries to the inaugural program in June 2005. In the two years since launch, Global Leadership Adventures has more than doubled its enrollment and expanded to three campuses around the world. Fred also gained entrepreneurial experience when he helped launch Synexa Life Sciences, a biotechnology company in Cape Town that today employs 20 South African PhD scientists.

Fred brings a unique pan-African perspective to African Leadership Academy. He grew up across the African continent, living in Ghana, the Gambia, Botswana, and Zimbabwe, and he has lived as an adult in South Africa and Nigeria. During his time as a consultant for McKinsey and Company, Fred provided strategic advice to the management teams of large companies in Ghana, Nigeria, Tanzania, and South Africa.

Fred has an MBA degree from the Stanford University Graduate School of Business, where he was named an Arjay Miller Scholar, a distinction awarded to the top ten percent of each graduating class. Fred also holds a B.A. degree magna cum laude in economics from Macalester College in St. Paul, Minnesota, USA.

Chris Bradford
Founder & Chief Operating Officer

Chris brings a unique hybrid background in education and business to his role as Chief Operating Officer of African Leadership Academy. An experienced teacher, Chris spent two years as a Peter Ling Teaching Fellow at Oundle School, one of the largest coeducational boarding schools in the United Kingdom. At Oundle, Chris taught GCSE science and A-level economics courses and counselled students interested in attending universities in the USA. His former students went on to study at universities including Oxford, Cambridge, Stanford, Dartmouth, and the London School of Economics. In addition, Chris has worked with The Broad Foundation, one of the leading educational foundations in the United States.

Chris also brings corporate and entrepreneurial experience to African Leadership Academy. He worked in brand management with the Procter and Gamble Company and as a management consultant with the Boston Consulting Group in Chicago. In Africa, Chris helped launch the Summer Academy at Cape Town in 2004 by leading concept testing, curriculum development, and marketing plan development. He later taught in and directed the program.

Chris has a BA degree summa cum laude from Yale University, an MA in Education Administration from Stanford University, and an MBA from Stanford University. At Stanford’s Graduate School of Business, Chris was named one of five Siebel Scholars in recognition of his academic excellence and extracurricular leadership.

Peter Mombaur
Founder (Not an executive of ALA)

Peter is a German citizen who has spent most of his professional life in Africa. Peter has been based in Nigeria for the past five years, where he initially worked as an independent consultant but consequently set up his own management consulting firm, Mombaur McCabe. His client base includes Africa Holdings, the Africa Private Equity arm of the Oppenheimer family; United Bank of Africa, the largest bank in West Africa, and clients in the telecommunication and insurance industries. Peter also served as the West African CEO of Emperion, a data telecommunications company providing Corporate VSAT and FWA solutions. Prior to this work, Peter was an Engagement Manager for McKinsey & Company, where he did project work in South Africa, Kenya, Tanzania, Ghana and Nigeria.

Peter attended university in Germany, where he received a Master’s degree with honors in Mechanical Engineering from the University of Aachen, an honors degree in Law from the University of Hagen, and a degree in Economics from the University of Bayreuth.

Acha Leke
Founder (Not an executive of ALA)

Acha, a native of Cameroon, is a Partner of McKinsey & Company based in the Johannesburg office. At McKinsey, Acha has served a broad range of clients across Africa in fields including telecom, health care, oil & gas, and banking, and he was the first black Partner elected by McKinsey’s Johannesburg office. His client projects have included strategic investment decisions, business building, growth strategy, and turnarounds. He started his career with McKinsey in the USA and transferred to the Johannesburg office in 2002 to drive the firm’s expansion across Sub-Saharan Africa. This work has taken Acha to countries across the continent, including South Africa, Nigeria, Kenya, Uganda, Cote d’Ivoire, Senegal, and Botswana. Prior to joining McKinsey, Acha worked for three years as a part-time consultant to electronics and telecommunications companies in Silicon Valley, California, USA.

Acha has a Ph.D. in Electrical Engineering and an M.S. in Industrial Engineering and Engineering Management from Stanford University. He also holds a B.S in Electrical Engineering summa cum laude from the Georgia Institute of Technology. At Georgia Tech, Acha graduated as the first black Valedictorian in the university’s history. He is fluent in English and French.

To learn more about the school, its governing board, faculty and admission process please visit the school’s website at www.africanleadershipacademy.org .

Categories

• Black Herald Polls
• Business
• Directory
• Education
• Fashion & Entertainment
• Featured
• General
• Graduate Education
• Leadership
• News
• People
• People - Up & Coming
• People in Government
• Sports

Recent Posts

• Steve Jobs’ 2005 Stanford Commencement Address
• Can Africa continue to grow?
• Announcement - African Banker Awards 2010
• FAS 115 (Impairment Accounting) for Dummies.
• “Flo I Love U” Music Video

Copyright © 2010 blackherald.com · Black Herald African Magazine · Log in