“The only way to be truly satisfied is to do what you believe is great work” …. Steve Jobs.

AUGUST 29, 2010 - Drawing from some of the most pivotal points in his life, Steve Jobs, chief executive officer and co-founder of Apple Computer and of Pixar Animation Studios, urged graduates to pursue their dreams and see the opportunities in life’s setbacks — including death itself — at the university’s 114th Commencement on June 12, 2005.

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Gross corruption, constant wars, and irrational economics long made Africa a poor, troubled continent where natural-resource companies were almost the only multinationals that dared or cared to do business. But in the 1990s, the picture improved. The wars started subsiding. Many governments balanced their budgets and created a better, safer environment for companies, both foreign and domestic. And the African consumer began to stir. Now 80 million households earn at least the equivalent of $5,000 annually, the point where discretionary spending commences—an increase of 80 percent in eight years. Meanwhile, the continent’s GDP has been rising steadily, at around 5 percent a year, for the past decade, reaching $1.6 trillion in 2008. Last year, Africa was one of just two regions (the other was Asia) where GDP rose.

Is all this good news sustainable? At the 2010 Fortune Global Forum, in Cape Town, South Africa, McKinsey Publishing’s Rik Kirkland spoke with Absa’s Maria Ramos, Coca-Cola’s Bill Egbe, and McKinsey’s Norbert Dörr to find the answer.

Story and video culled from McKinsey Quarterly (McKinsey & Company).

The African Banker Awards is by invitation only.  Attendance is free but subject to approval. To secure your place at the event, please register by the 15th August.

Organized by African Banker magazine and IC Events, the African Banker Awards is designed to recognize the reforms, rapid modernization, consolidation, integration and expansion of Africa’s banking and financial system. African Banker, the only pan-African magazine dedicated to banking in the continent, organized this event to celebrate excellence and best practices in the flourishing African banking landscape.

Participants of the African Banker Awards will include CEOs and senior representatives from the leading African banks, financial institutions, international investment banks and private equity groups working in Africa. The event will also be attended by executives from intergovernmental organizations as well as African Heads of States, Government Officials and Diplomats from all over the world.

For further information on the Awards, including this year’s categories, please visit www.africanbankerawards.com.

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

Video was shot by yours truly TFLASH Dizzlerama (BHTV) and the M2Show duo of Roger Muntu and Jean-Louis Mafema (JL).

Shot on 5D Mark II and Canon FD Lenses adapted using Kenko 1.4X Mount Converter for FD-EOS.

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“Boldness has genius, power and magic in it.  Begin it now” — Johan Wolfgang Von Goethe.

New York (CNN) — Two Somali women are making a splash in the New York fashion scene, designing a range of clothes that take their inspiration from Africa.

Identical twins Ayaan and Idyl Mohallim were born in Somalia, but left for the United States aged nine to escape the civil war.

They grew up in Washington D.C. before going to college — one in Boston and the other in Michigan. After graduation they headed for New York City and set up fashion label Mataano — the Somali word for twins.

Seeing that New Yorkers were wedded to wearing black, the Mohallim twins were determined to brighten up the city with a splash of African color.

Ayaan told CNN, “We came into this industry and realized that with a lot of the clothes that we saw, everything was black.

“You know in Africa, with everything you wear it’s almost like the peacock theory — people want to be noticed, they want to stand out.

“So the world’s taking notice. It’s not about designers going to Africa for a safari and coming back with an animal print and big bangles and saying ‘here’s your one trick pony.’

“Africa is not a homogenous place — it has different cultures. So now there’s a medium for it and there’s more designers that are traveling abroad and bringing that aesthetic to this market.”

The pair have been in business for less than two years, but they are taking inspiration from the entire continent of Africa, drawing on the traditional dress of specific regions and subcultures. Their childhood in Somalia has left a lasting impression that can be seen in their designs.

“The Somali woman has strength and we want to evoke this through our collection,” said Ayaan. “So we design really flowy, beautiful dresses that have a nice strong print that showcases the strength these women really have.”

“For our Spring 2010 collection we also used Somali references and inspirations,” said Idyl.

“There was one silhouette that’s worn by every woman in Somalia, called a ‘dirac.’ We didn’t want to recreate it too much, we just wanted to introduce that and say ‘it’s relevant and you can wear it in a western culture.’”

But while they are fusing traditional African clothing with modern Manhattan sensibilities, they have to be sensitive to cultural differences in their more conservative homeland.

“We got a lot of feedback from Somalis everywhere,” said Idyl. “A lot of our consumers and fans are writing us and saying ‘you guys are making beautiful clothes but some of them are not modest enough, especially not for the Somali culture and Somali woman.’

“So that’s something that we really had to pay attention to and try to create something for everyone, while staying true to the collection.”

The twins’ new collection will debut on runways in South Africa this summer during Africa Fashion Week. They say it’s a big step in the right direction, but they have their sights set on expanding even further.

“In the next few years we definitely want to expand our business,” said Idyl. “We want to go global. We want to be in Europe, the Middle East, and especially Africa.

“We want to speak to the global consumer — and not just for women — we’ve been getting a lot of requests from men.”

As they grow beyond the boutiques of Brooklyn and Manhattan, the twins believe their story is one that resonates with people from all backgrounds.

“We’re bringing a positive story and people connect with that because we’re following the American dream and we’ve overcome a lot of obstacles,” said Idyl.

“We’ve had to assimilate, but at the same time there are so many immigrants, so many different individuals doing that throughout the Diaspora, throughout Africa, so there is a positive story that needs to be told.

“I think it’s really refreshing to hear a different side of Somalia … that we’re not all pirates!”

Culled from CNN

“Y’all know how we do it!!  Wrap your arms around yourself and squeeeeeeeeeeeze real tight - We’ve all, just been hugged and we love you for free sugars” - Mo’nique (Weeknights on BET)

WASHINGTON DC APRIL 2010: The 2010 National Cherry Blossom Festival® will be held between March 27 and April 11. This year’s festival marks the 98th celebration of the original gift of the 3,000 cherry trees by the city of Tokyo to the people of Washington, DC in 1912.  Please enjoy this video montage produced by our Director of Photography (DOP) TFLASH for BHTV.  Happy Easter!!

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“To everything there is only a season” - King Solomon.

WASHINGTON DC, MARCH 2010 -  Mohammed Al Amoudi (Ethiopian & Saudi Arabian) -  is the richest black man in the world with a networth of $10B - though sometimes considered an Arab, as far as race is concerned, he is a black man (Yemeni father and Ethiopian mother).  Oprah Winfrey, American television icon is the richest black woman (2nd richest black person) with a networth of  $2.4B.   The third richest black person is  Patrice Motsepe, 48, (South African)  with a networth of $2.3B.  Aliko Dangote, 52 (Nigerian) and Mo Ibrahim (Sudanese-born, now UK Citizen) both with a networth of $2.1B  tied as the fourth richest black men.  Rounding up the list is Michael Lee Chin (Jamaican native turned Canadian) ranking as the fifth richest black man with a networth of $1.0B.  To read more about these billionaires, click on their names for a direct link to Forbes Magazine.

The man set to become the new owner of Gatwick Airport, tells Sky News how he is going to shake-up Britain’s airport business. In an exclusive interview with Jeff Randall, Adebayo Ogunlesi, chairman of Global Infrastructure Partners, said he is going “to make Gatwick a truly first class experience”.

However he cautioned it would take “somewhere between 12 and 18 months” before passengers started noticing a difference at the airport.  GIP agreed a £1.51bn deal with Gatwick’s current operator BAA last week, which represented a “good price”, Mr Ogunlesi said. The fund, which invests in the energy, transport and waste sectors, has already spent over £1bn so far this year, encouraged by falling asset prices. Mr Ogunlesi said the UK’s strong regulatory framework and attractive assets made “Britain a wonderful place to invest”.

“We love Britain,” Mr Ogunlesi added. The sale of Gatwick to GIP, which is subject to approval by the European Union, is due to be completed by the end of the year. The airport is currently run by BAA, which posted a pre-tax loss of over £780m in the first nine months of the year. The airport operator said it lost £225m on Gatwick after being forced to sell the airport by the Competition Commission.

Culled from Sky News.

” Did you know that before the genocide in Rwanda, the word for rape and the word for marriage were the same ?” - Chris Abani.

WASHINGTON DC - Chris Abani tells stories of people: People standing up to soldiers. People being compassionate. People being human and reclaiming their humanity.

About Chris Abani:

Chris Abani’s first novel, published when he was 16, was Masters of the Board, a political thriller about a foiled Nigerian coup. The story was convincing enough that the Nigerian government threw him in jail for inciting a coincidentally timed real-life coup. Imprisoned and tortured twice more, he channeled the experience into searing poetry.

Abani’s best-selling 2004 novel GraceLand is a searing and funny tale of a young Nigerian boy, an Elvis impersonator who moves through the wide, wild world of Lagos, slipping between pop and traditional cultures, art and crime. It’s a perennial book-club pick, a story that brings the postcolonial African experience to vivid life.

Now based in Los Angeles, Abani published The Virgin of Flames in 2007. He is also a publisher, running the poetry imprint Black Goat Press.