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Strengthening Financial Stability through Deposit Insurance Scheme

IKANYENG SEGONETSO

If a bank collapses today, beyond interventions that may include management takeover by the regulator and perhaps bail out by the government, what compelling mechanisms of recourse could be promulgated in the 21st century where banks can have a fair share of the bailout with little to no knock-on effect on the tax payers’ funds?

In the current regulatory environment, are depositors’ funds guaranteed in the likely event that a particular bank goes bust? Do regulators have unambiguous resolution framework that provides for reimbursement of depositors in the event of a bank failure? These are some of the hotly debated topics in recent times particularly after the global recession. The aftermath of the 2007/2008 global financial crisis has brought with it a plethora of regulations laced with a layer of fees particularly in the banking sector, a phenomenon that is supposedly aimed at minimizing idiosyncratic risks in the banking system, with the initial objective of protecting tax payers’ funds used to bail out banks in financial distress.

Since the 2007/2008 episode, regulators have not only focused their efforts on the asset and the liability side of the balance sheet, but also the equity portion. They have consistently dished out a menu of advanced rules in an attempt to overhaul measurement methodologies used to effectively proxy, with a higher precision, risk quantification on written assets of the banks with a further microscope on off-balance sheet activities.

Constant accounting and regulatory changes remain the biggest threat to the viability of the banking business, with the banking sector arguably leading the pack as one of the most regulated industries, perhaps only after the pharmaceutical industry. Whilst there has been talks and discussions around the implementation of IFRS 9(the accounting standard is expected to impair banks’ capital adequacy ratios by 60bps and an estimated 18% increase in provisions – topic for another day), the buzz word now in the South African financial markets, and indeed other emerging markets, is deposit insurance scheme (DIS). At a very high level, deposit insurance scheme refers to the complete set of legal, operational and financial arrangements that should be in place to facilitate efficient, transparent and fast protection and/or compensation of covered deposits in the event of a bank failure.

A little over five months ago, the South African Reserve Bank (SARB), National Treasury and their counterparts proposed an establishment of an explicit deposit insurance scheme for South Africa aimed at creating a safety net framework for deposit holders should the banks fail. This new development followed key findings from the World Bank’s Financial Sector Reform and Strengthening Initiative Programme as well as the reviews from International Monetary Fund’s Financial Sector Assessment Programme.

On this basis and in part from the review of South Africa’s resolution framework, and given the failure of several banks in South Africa, the National Treasury and the SARB have decided that the country needs an explicit and privately funded deposit insurance fund that can reimburse depositors in the event of a bank failure or that can assist in funding the chosen resolution option. As reported by the news portal IOL, Saambou was placed under curatorship in 2002 and African Bank (Abil), which did not take deposits, collapsed three years ago after R8.5bn black hole. IOL further states that the core challenges of Abil were that is granted too many loans to people who could not afford to pay them back. When borrowers failed to honor their obligations, the bank was left with a massive hole in the balance sheet. However, the South African Reserve Bank (SARB) stepped in to save the bank.

In May this year, the SARB published for public comment, a discussion paper specifically dealing with deposit insurance scheme for South Africa. A process to reach agreement on the funding mechanism of such a scheme is currently being undertaken by officials at the SARB in consultation with the banks, the general public, academics and the banking industry experts. The objective of the exercise is to set up a level playing field where deposit holders could comprehend features of protection afforded to them in the so called “explicit guarantee” and to quell expectations that government will always implicitly protect their deposits in the event of a banking crisis.

In the proposed DIS which is also applicable to all the banks, deposits up to a limit of R100 000 per individual, and up to R100 000 per all non-financial, non-government entities would be guaranteed. It would be applicable to all types of accounts through an aggregate, single customer view. Essentially this means that if an individual has R70 000 in a cheque account and R30 000 in a savings account at a certain bank, the entire collective amount up to a threshold of R100 000 would be covered under the scheme.
 

The same would apply for that individual’s accounts at another bank, and each respective bank they keep deposits with. In the likely event that a bank enters distress or gets liquidated through insolvency proceedings, depositors’ money would be guaranteed by the scheme. Again, the guarantee means that depositors can withdraw their money even if their bank fails. This assurance is intended to give the customers security about their savings so that in the event of rumors of a bank collapse, they do not run helter-skelter and withdraw their funds haphazardly.

Some of the key features of the proposed deposit insurance scheme are as follows:

The scheme will be a separate legal entity with its own legislative framework and governance requirements, but it will be physically located in the SARB.

The scheme will cover bank deposits up to R100 000 per depositor per bank. If the scheme does not have sufficient funds to cover deposits, the SARB will provide a funding line to the scheme for emergency funding purposes. This emergency funding will be covered from liquidation proceeds and contributions by the remaining banks.

Where the owner of an account can be identified easily (for example, single accounts and joint accounts), the scheme will pay out depositors within 20 working days after a bank’s deposit accounts have been closed. It may take longer for the scheme to pay out the holders of accounts who cannot be identified easily (for example pooled accounts).

It will be compulsory for all the registered banks to belong to the scheme. The scheme would be consulted whenever the SARB receives an application for a new banking license.

The following rules are proposed with respect to deposit coverage:

Small and medium enterprises (SMEs) are generally covered. Because of the difficulty in distinguishing between SME and non-SME businesses, the recommendation is to cover all private non-financial business entities up to the coverage limit, regardless of the size of their deposits or their legal identity.

Foreign national’s deposits and foreign currency deposits held at domestic branches of South African banks will be covered

Deposits will be covered on a gross basis or net basis. Gross coverage ignores any amounts that the depositor may owe the bank, while net coverage entails deducting from the deposit the amounts borrowed from the bank.

Deposits at foreign branches and subsidiaries of South African banks abroad will not be covered  Pooled accounts will be treated as a single account, except in the case of pooled accounts where professional practitioners hold deposits on behalf of clients.

In the case of a joint account, each account holder will be covered separately, up to the cover limit. The deposit balance will be split equally between the account holders, unless the underlying documentation specifies a different arrangement. The following deposits are excluded form coverage: deposits by banks, deposits by the non-bank private financial sector, including money market unit trusts, non-money market unit trusts, insurers, pension funds, fund managers and other private financial corporate sector institutions, deposits by government and quasi government related institutions, bearer deposit instruments such as negotiable certificate of deposit (NCDs) and promissory notes (PNs).

The SARB strongly believes the above structure would ensure that the cost of a bank failure, in particular, does not fall disproportionately on the most vulnerable consumers, or those who are least able to protect themselves through diversification, hedging, financial structuring or other sophisticated risk-management measures. It is widely believed that DIS is a necessary complement to prudential regulation and supervision on capital requirements chiefly because banks take on substantial risks when they are leveraged. In that sense, the banks are required to contribute to deposit insurance by paying their fair share in capitalizing the scheme without having to incur further costs, a phenomenon that may negate the intended purpose.

How can it be possible for banks to fund the scheme without necessarily incurring further costs? In a carefully designed strategy, the SARB proposed a partially pre-funded approach for the DIS, with the central bank providing the required liquidity in a payout and additional emergency funding in the event of shortfalls. According to their calculations, the pre-funded portion of the scheme would need to be about 5% of the deposits in the banking sector as it currently stands, which translates into a fund of circa R17 billion which the SARB intends to administer in-house.

How this is funded still needs consultation with players in the banking sector, but in order to alleviate this initial funding cost, the SARB is willing to consider lowering the cash reserve requirement (CRR) from the current 2.5% to 2.0% of liabilities, as adjusted, which will release circa R17 billion funding requirement for the DIS. Once this one-off adjustment is implemented, banks will be required to maintain a CRR of 2.0% and a separate DIS requirement of 5.0% of covered deposits.

A major concern with regards to DIS framework is that explicit deposit protection could result in excessive risk taking by institutions and depositors, otherwise referred to as moral hazard in which banks could engage is risky behavior knowing that there is insurance cover. Even though regulators could have a hard time singling out moral hazard, banks would remain subject to stringent regulation and supervision in which regulatory penalties would be expected to be imposed on banks that take on more risk.

In Botswana where banks are highly capitalized at a consolidated level and as characterized by less levered balance sheets, and low savings levels, DIS framework might not be an immediate need, but as Basel III regulations kick in, specifically regulatory framework that deals with funding and liquidity requirements (liquidity coverage ratios, net stable funding ratios, and leverage), DIS might be warranted. Transformation of the deposit franchise from wholesale contractual savings dominated by pension funds and fund managers to more behavioral savings on the part of retail consumers would further put pressure on the need for such a scheme as savings level go up and financial inclusion gets more pronounced.

One might argue that local banks can be bailed out by their parent holding companies offshore, however, such a resolution in a wind-up scenario could proof difficult for regulators, especially the validity of the legal recourse. For example, in the proposed DIS for South Africa, deposits at foreign branches and subsidiaries of South African banks abroad are not covered.

Additionally, establishment of more indigenous banks and the exponential growth of savings and credit co-operative societies (SACCOS) would require policy makers to set up and/or review the resolution framework to protect less financially sophisticated depositors in the event of a bank failure, thereby providing a reprieve on tax payers’ funds. As this DIS takes shape in South Africa and other emerging markets, there are so many important lessons to be learnt by regulators, the government, academics and banking sector experts in the discourse of strengthening financial stability.

Ikanyeng Segonetso writes from Johannesburg
Feedback: concerned_4life1@hotmail.com

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Internet Connectivity in Botswana: Time to Narrow Digital Divide

19th October 2020
Elon Musk

On Friday October 9, 2020, President Masisi officiated at a function that most appositely spoke to his passion and desire to kick-start the crystallisation of the Fourth Industrial Revolution, or 4IR in short, in Botswana. In his keynote speech, the President hailed the partnership between Gaborone City Council and BoFiNet to launch free Internet access of one-hour duration daily in selected “Wi-Fi Hotspots” across the city for all and sundry.

The pilot project has actually been years in the making, having been initiated in April 2014, when the BOCRA-supported Universal Access and Service Fund (UASF) was established. UASF levies 1 percent on the gross annual turnover of flourishing ICT outfits and is now using this to subsidise the Internet access price in the Hotspots of Gaborone, which are to be found at shopping malls, bus stations, hospitals, and airports in the main. The facility, which is provided courtesy of the BoFiNet Wi-Fi infrastructure, will in the fullness of time be rolled out in Kasane, Maun, Francistown, Palapye, Serowe, and Mahalapye too. As of the end of 2019, UASF collections totalled P43.2 million according to BOCRA’s latest Annual Report.

A point President Masisi underscored at the launch was the imperative that “all citizens have access to the Internet so that the ideal of leaving no one behind as envisioned by the sustainable development goals is realised”. It also exhilarated me that the President underlined that “innovation and creativity will be the bedrock of economic diversification in our country”, a priority I besought government to pursue with impassioned as opposed to rhetorical resolve in one of my earlier articles under this very column.

Certainly, Pillars 1 and 2 of the only minimally accomplished Vision 2016 goals envisaged, amongst other things, an informed and innovative Botswana. With the Wi-Fi Hotspot dispensation now upon us, are we on course to deliver on this sooner rather than later?

FREE INTERNET COULD FULFIL MEGA DREAMS FOR THE CITIZENRY

Granted, one hour of free Internet per day is not that bad as a starting point, but it is a drop in the ocean when juxtaposed with the larger global picture, whereby some countries, which include the industrialised West, the Scandinavian countries, and the Baltic states of Lithuania and Estonia, offer qualitative public Internet service free of charge all-day long. In Finland for one, broadband (high-speed Internet access) has been a legal right since 2010. In other words, if a citizen for one reason or the other does not have the opportunity to surf the web, he or she can sue the state for redress.

For the impecunious individual who wishes to do meaningful and comprehensive research, however, one hour can be very limiting. To just give one example, it takes me up to two full days to gather material for a single one instalment of the contents of this column, of which Internet-sourced data is key. This is because not every bit of worthwhile information is available at just one click of the mouse. In some cases, the requisite information is simply not available at all and by the time that dawns on you, a full day will have gone by.

There is also the question of whether the Hotspots are amply equipped with desktops, let along being sizeable enough, to cater to the stampede of the city residents who will want to be one of the earliest birds to catch the worm given that access is certain to be on a first-come-first-served basis. An Internet Hall under the auspices of government would serve the purpose best, with the unused Orapa House as a possible venue proposition.

As for nationwide and limitless free Internet access, we still have a long way to go being a Third World country but the earlier we get there, the greater the rewards we reap in the long-term. Google, Facebook, Twitter, to mention only a few, are today multi-billion operations thanks to the added benediction of the Internet epoch. Years back, Elon Musk and five others started PayPal – a means of sending money, making an online payment, and receiving money – using the Internet medium. In 2002, E-Bay acquired PayPal for an eye-popping $1.5 billon, with Musk personally garnering $165 million. As I write, Musk is the 6th richest person on Earth, with a net worth of $82.3 billion.

It is the ready platform of the Internet that helped catapult him to the dizzying pecuniary heights he has since scaled.  We will probably never be able to mint a dot.com-facilitated dollar billionaire in Botswana, but even mere Pula millionaires or part-millionaires can do as half a loaf is better than nothing. If Internet was freely available to every citizen, such chances would be greatly enhanced.

WE LIVE OUR LIVES ONLINE

In the past, Internet connectivity may have been a luxury but the advent of COVID-19 has made it an essential component of the new normal – a lifeline. Students have had to receive lessons online amid stop-go lockdowns of huge swathes of a country. Executives have had no option but to network or collectively liaise using teleconferencing or by way of Skype. Telemedicine, or caring for and consulting with patients remotely, has become the order of the day, especially in the developed world. We have seen live-streamed religious services and of course some people have been working from home.

Even before COVID-19 struck, we were routinely conversationally engaging with family and friends on social media platforms such as Facebook and Whatsapp. Some of our monthly transactions, like telephone bill settlements and DStv subscriptions, were effected online. Needless to say, we have literally been living our lives online. Electronic transacting in any case, whether by mobile phones or via the web, substantially curtail queuing time at banks and precious other pay points anywhere, gets people to spend more time in the workplace than out of it, and therefore boosts productivity as personal errands to do a thing or two are notorious for eating into invaluable man-hours.

There’s also government’s espoused vision of having Botswana transformed into a knowledge-based economy. Without universal access to the Internet, this aspiration will remain a pipe-dream. Knowledge certainly is power, whether this be political, economic, or scientific. Botswana will never come to be anywhere near the economic might of Singapore or the technological feats of South Korea if it relegates knowledge attainment to the back burner of its core aspirations. An Old Testament prophet was spot-on when speaking on behalf of his god Yahweh lamented that “my children perish for lack of knowledge”, HOSEA 4:6.

The paradox is that the digital divide both on the continent of Africa and in Botswana is as glaring as ever. Only four out of ten people in Africa have Internet access and according to the global business data platform Statista, which has insights and facts about 170 industries and more than 150 countries, Botswana has an Internet penetration of only 47.5 percent. It lags 20 other countries on the continent, who include Kenya (the continental leader at 87.5 percent); Mauritius (67 percent); Nigeria (61.2 percent); Swaziland (57.3 percent); Zimbabwe (56.5 percent); South Africa (55 percent); and Zambia (53.7 percent).

A study by the Mc Kinsey Global Institute postulates that if Internet use proliferates in Africa at the rate mobile phones did in the early 2000s, the continent stands to add as much as $300 billion to its economic growth by 2025. The World Bank also says achieving universal, affordable, and good quality Internet access in Africa by 2030 will require an investment of $100 billion. In Botswana, the National Broadband Strategy (NBS) aims to achieve universal broadband by 2023. It is aligned to BOCRA’s 2019-2024 Strategic Plan, whose main goal is to deliver the NBS aims at an affordable price tab. Is the time frame realistic?

THE PRICE OF AN ARM AND A LEG!

For universal Internet access to be tenable, first both the access and the medium of access have to be affordable to every literate person out there. Sadly in Botswana, smart phones, which allow for Internet access anywhere where there is a cellular network, do not come cheap. The asking price at the very least is upwards of a thousand Pula. That is a prohibitive price for the greater majority of our population who struggle to eke out a living just to keep body and soul together. The likes of BOCRA and BoFiNet should help out here by subsidising the price of these devices, at least for a period of time till economies of scale result in a natural reduction of the price.

As for the going price of Internet access in Botswana presently, a study of 228 countries earlier this year by cable.co.uk found that Botswana was among the 14 most expensive countries in this regard. I can attest to this myself as I have to fork out a minimum of about P400 a month to enable me the use of the Internet without any hiccup save for the sporadic network downage or the now endemic power outages. To many a people, P400 a month amounts to the proverbial cost of an arm and a leg as it constitutes a substantial proportion of average monthly income. In countries such as Egypt and Mauritius, one can have Internet use every day of the week at any time of the day for only 0.5 percent and 0.59 percent of average monthly income.

In a bid to ameliorate the prohibitive Internet access price in our country, the University of Botswana was forced to shell out a whopping P7.8 million to provide the student populace with free SIM cards to enable them download teaching material under the restrictive COVID-19 climate. Botho University also entered into an arrangement with Orange whereby their students could have online access to learning materials and teaching instruction at only P2 a day, P10 a week, or P30 a month, though data was capped at 200 megabytes a day. Both these initiatives by two of the country’s premier institutions of higher education must be lauded.

If the cost of mobile broadband data has to organically come down drastically, it is essential that we move from a consolidated market – the triopoly of Mascom (with 51 percent market dominance), Orange (34 percent), and Be-Mobile (15 percent) we have in Botswana – to a multi-operator market. In its latest annual report, BOCRA reports that in 2018, the three operators had combined revenues of P4.4 billion and combined profits of P826 million. One wonders why this rather brisk bottom line does not translate to a proportionate paring down of the consumer price or does it have to do with the fact that the operators’ greed knows no bounds?

BOTSWANA NEAR TAIL-END OF GLOBAL BROADBAND SPEED LEAGUE

If the truth may be told, Internet speed in Botswana is no longer as glacially slow as it was a year or two back. That does not mean it is lightning swift. In fact, it is among the slowest both on the globe and on the African continent.  At the download average of 1.92 megabytes per second (mbps), Botswana ranks 165th in the world and is 22nd in Africa according to statistics furnished by cable.co.uk. Our case is all the more stigmatic as we trail even comparatively poorer countries such as Zambia, Zimbabwe, Mozambique, and Sudan.

Taiwan has the fastest Internet in the world at 85.02 mbps, followed by Singapore at 70.86 mbps. Whereas it would take 22 hours for one to download a 5 gigabyte movie in oil-rich Equatorial Guinea, the worst-ranked African country, and 6 hours for Botswana, it would take only 8 minutes in Taiwan.  In Africa, it is not South Africa (8.4 mbps, 75th in the world), the wealthiest country, which leads the pack. It is Madagascar at 22.57 mbps (33rd globally). This is one of the poorest countries on Earth, with four out of every four citizens living on less than $2 a day.

Botswana in fact is way below the minimum speed of 10 mbps required for consumers to fully participate in a digital society according to tech experts. I need not emphasise that time is money. It is time BOCRA and BoFiNet saw to it that we pulled up our socks in broadband speed to serve on trawling time. Regrettably, in Botswana things move very slowly and it will probably be another ten years or so before we come to stand shoulder-to-shoulder with Madagascar. As for ever catching up with Taiwan, well, the less said the better.

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The Babylonian Captivity Ploy

19th October 2020

Nebuchadnezzar has the Jews exiled to his own domain to sabotage Jerusalem’s prospects of hosting King Anu, “Our Heavenly Father”

In 590 BC, General Atiku, King Zedekiah decided he would no longer be the puppet of Babylon. Just like Nebuchadnezzar, he wanted to be in full and unmitigated control of the Holy City in the event King Anu pitched. But he was under no illusion he could throw off the yoke of Babylon singlehandedly. So in the fourth year of his reign he – once again against the advice of the far-sighted prophet Jeremiah – joined a coalition that was being formed by Edom, Moab, Ammon, Tyre, and Sidon resist Nebuchadnezzar.

Upon getting wind of the rumours of this scheme, Nebuchadnezzar summoned Zedekiah to Babylon to administer to him a warn and caution statement but it seemed he took no heed. The following year, Nebuchadnezzar decided to pounce: he captured all the cities of Judah except three, one of which was Jerusalem and which he proceeded to besiege for the third time.

Finding himself in dire straits, General, Zedekiah made an alliance with Pharaoh Apries of Egypt and indeed the latter rushed to reinforce him. In the ensuing lull in hostilities, Nebuchadnezzar pulled a stunt by lifting the siege and Apries withdrew. No sooner had Apries done so than Nebuchadnezzar hemmed in on Jerusalem once again: Zedekiah was on his own. Jerusalem was under siege from January 587 to July 586 BC. The following, General, are the circumstances and aftermath of the siege according to one chronicler:

“Conditions in the city became increasingly desperate. Although the people had had time to prepare, their food supplies eventually began to run out. Cannibalism became a grim reality. Despite Jeremiah’s counsel to surrender, the King refused to do so and just as the last of the food in the city was exhausted the Babylonians broke through the wall.

“Zedekiah fled with remains of his army, but was overtaken and captured near Jericho. From there, he was brought before Nebuchadnezzar at his field headquarters at Riblah, his sons were executed in front of him, and he was blinded. From there, he was taken in chains to Babylon. The key members of his cabinet were executed before Nebuchadnezzar at Riblah shortly afterwards.

“A large part of the population of Jerusalem was put to the sword and everything of value plundered. The bronze articles from the Temple were cut up and removed and the building together with the palace and the important houses were set on fire.  “In order to ensure that the city would never rebel against him again, Nebuzaradan, the commander of the Imperial Guard, ordered that the walls be demolished. All who survived in the city were carried off into exile in Babylon, with the exception of the very poor of the land.

The starving population exchanged whatever riches they had left for food, its leadership and priesthood were gone and the Temple burnt. The Babylonians soldiers oppressed the survivors and forced them to work for their food.” The remnant of poor people that were spared, General, were meant to serve as farmers and wine dressers. These people had previously been landless peasants and presented the least risk to the Babylonians, but were required to work the land to prevent the fields falling into disuse.

WOULD KING ANU CONDONE NEBUCHADNEZZAR’S ACT?

Nebuchadnezzar was not the first King to deport a people from their own country, General. The pace was actually set by the Assyrian King Adad Nirari I (c. 1307-1275 BC), who thought the best way to prevent any future uprising was to remove the occupants of the land and replace them with Assyrians. But Nebuchadnezzar, General, had an ulterior motive for the deportations, which only the “Illuminati” of the day were privy to. He wanted to make Jerusalem desolate and decrepit so that when King Anu arrived, he would avoid it like the plague and instead focus on the glittering Babylon.

His aim was to kill off entirely the competition posed by Jerusalem. Says Zechariah Sitchin: “The expectation, it seems, was that the arriving god (Anu) of the Winged Disk (symbol for planet Nibiru) would come down at the Landing Place (Baalbek) in Lebanon, then consummate the Return by entering Babylon through the new marvelous Processional Way and imposing Ishtar Gate.”  But in the event that he indeed pitched, would the pro-Enlilite Anu take kindly to being deflected to a city (Babylon) other than Jerusalem when it had been specifically designated for his ultimate hosting on the planet by virtue of its geometrical centrality?

Having taken over Nippur’s prediluvial role to serve as Mission Control Center after the Deluge, Jerusalem was located at the center of concentric distances to the other space-related sites. Aptly calling it the “Navel of the Earth” (EZEKIEL 38:12), the prophet Ezekiel had announced that Jerusalem had been chosen for this role by God himself. “Thus has said the Lord Yahweh: ‘This is Jerusalem; in the midst of the nations I placed her, and all the lands are in a circle round about her,” EZEKIEL 5:5. “Determined to usurp that role for Babylon,” Sitchin further notes, “Nebuchadnezzar led his troops to the elusive prize and in 598 BC captured Jerusalem.”

CIRCUMSTANCES OF THE EXILE SITUATION

Altogether, General, the Babylonian captivity – the deportation of the Nation of Israel to Babylon – spanned 70 years counting from the first deportation of 598/597 BC.  Meanwhile, Judah was renamed Yehud Province by the Babylonians and a puppet Jewish governor was appointed to administer it. (The post of King was abolished, making Zedekiah [reign: 597-586 BC] the last substantive linear King of the Jews.) His name was Gedalia, whose father had been an advisor to King Josiah (reign: 640-609 BC).

Gedalia set up his capital not in Jerusalem but in Mizpah. That, plus the fact that he didn’t have a drop of Davidic blood in him, made him a marked man to Jewish nationalists and traditionalists from the word go. Not long after his appointment, Gedalia was assassinated by a family member of the deposed king Zedekiah. From that point on, General, no Jewish governor was installed until after the end of the Babylonian captivity.

Exactly what were the circumstances of the deportees, General? The image that immediately comes to mind is that of a concentration camp kind of setting reminiscent of the Jewish people’s fate at the hands of Nazi Germany. That, General, is a gross misconception. In Babylon, the Jews enjoyed every privilege, including citizenship if they so desired. They were not enslaved or in bondage of any kind. Their own individual abilities were even tapped into to help advance Babylon in one way or the other.

Reading PSALM 137:1–2, the surface impression one gets, General, is that the Jews in Babylon were beset by a most disagreeable set of circumstances. “By the rivers of Babylon, there we sat, sat and wept, as we thought of Zion (Jerusalem). There on the poplars we hung up our lyres.” Well, that was pure nostalgia, which is a natural impulse when a people have been displaced, General. A notable historian presents to us the more accurate picture in the following words:

“The deportees, their labour and their abilities, were extremely valuable to the Babylonian state, and their relocation was carefully planned and organised. We must not imagine treks of destitute fugitives who were easy prey for famine and disease: the deportees were meant to travel as comfortably and safely as possible in order to reach their destination in good physical shape.

Whenever deportations are depicted in Babylonian imperial art, men, women and children are shown travelling in groups, often riding on vehicles or animals and never in bonds … Deportees were carefully chosen for their abilities and sent to regions which could make the most of their talents. Not everyone in the conquered populace was chosen for deportation and families were never separated. Those segments of the population that had actively resisted the Babylonians were killed or sold into slavery, but the general populaces became absorbed into the growing empire and were thought of as Babylonians.”

Another historian has this to say, General: “It is assumed that the Jews had to render labour to the Babylonians, but generally they enjoyed a great deal of freedom. Some of the exiles, like Daniel and his three friends, rose to positions of power within the Royal Court of Babylon and many others became wealthy. Later, during the Persian period Jews like Mordecai, Esther, and Nehemiah all found themselves in key positions in the government and were able to act on behalf of their people because they took Jeremiah’s advice.” Indeed, General, Nehemiah rose to become the cup-bearer of the King, that is, the King’s most trusted official.

The King-in-exile himself, Jeconiah, enjoyed particularly special privilleges both when he was in prison and after his release. Captive kings and high-ranking officials received monthly rations of grain and oil. Archaeological evidence recovered from the Royal palace in Babylon provides support for Jeconiah’s presence there and lists the daily rations set aside for him and the members of his family.

The Bible itself, General, does not shy away from underscoring Jeconiah’s privileged status in Babylon as highlighted in JEREMIAH 52:31-34 thus: “In the thirty-seventh year of the exile of Jeconiah King of Judah, in the year Awel-Marduk became King of Babylon, on the twenty-fifth day of the twelfth month, he released Jeconiah King of Judah and freed him from prison. He spoke kindly to him and gave him a seat of honour higher than those of the other kings who were with him in Babylon. So Jeconiah put aside his prison clothes and for the rest of his life ate regularly at the King’s table. Day by day the King of Babylon gave Jeconiah a regular allowance as long as he lived, till the day of his death.”

 

JEREMIAH PAINTS SORRY PICTURE OF MARDUK’S FATE

The destruction of Solomon’s Temple by King Nebuchadnezzar, General, was according to the Bible the ultimate blasphemy. Ishkur-Adad, the Jehovah under whose auspices the Temple was built, was not in the least bit amused. He straightaway had the prophet Jeremiah step forward and pronounce the comeuppance both on the King and his colossal empire.

Now, biblical prophecies, General, should not be taken at face value. Their fulfillment were documented after the events they purported to foretell had already taken place, not before they happened. Much of the Old Testament corpus was compiled in the 6th century BC, during and after the Babylonian captivity (the Book of Malachi, the last prophet, was written circa 400 BC, and the Book of Daniel was compiled just after 164 BC). So we have to bear that in mind, General, when we read of fulfilled prophecies so that we decide whether to contemplate the story warily or give it the benefit of the doubt.

Jeremiah announced that the destruction of the Temple was going to be avenged by Yahweh (JEREMIAH 50:28). In addition, Adad instructed him to make the following proclamation: “Declare among the nations and proclaim, set up a banner and proclaim, do not conceal it, say: Babylon is taken; withered is Bel; confounded is Merodach … For out of the north a nation has come up against her; it shall make her land a desolation, and no one shall live in it; both human beings and animals shall flee away.” – JEREMIAH 50: 1-3.

Jeremiah, General, made this statement circa 561-60 BC. It can be easily dated because it was in this timespan that Merodach, Nebuchadnezzar’s successor, was on the throne. Jeremiah served notice to the world that Babylon was to be supplanted by a new power from the north, who turned out to be Persia. Jeremiah also spelt out the imminent fate of the Babylonian god Marduk, who was also known as Bel, meaning “The Lord”: he was to “wither”, or cease to be a factor in the affairs of mankind. In the case of Merodach, all Jeremiah said of him was that he was to be “confounded”, that is, so overwhelmed by problems as to lose a sense of focus. One wonders, General, why Jeremiah, if he was the great prophet he was touted to be, didn’t foresee the assassination of Merodach and directly allude to it in his prophecy.

The prophet Daniel says in his waning days, Nebuchadnezzar had his mind taken away and ate grass like an ox. This, General, is a fanciful story which is found only in the Bible and nowhere in the Babylonian annals. “There is no independent support for the tradition in Daniel of Nebuchadnezzar’s seven years’ madness, and the story probably arose from a fanciful later interpretation of texts concerned with events under Nabunaid, who showed apparent eccentricity in deserting Babylon for a decade to live in Arabia,” says Encyclopaedia Britannica.

Meanwhile, did Marduk indeed get to wither, General?

NEXT WEEK: FROM EXILE TO EXIT

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Understanding Botswana’s trade dispute resolution framework: Industrial Action

19th October 2020

In Botswana, the Trade Disputes Act, 2016 (“the Act”) provides the framework within which trade disputes are resolved. This framework hinges on four legs, namely mediation, arbitration, industrial action and litigation. In this four-part series, we discuss this framework.

In last week’s article, we discussed the second leg of Botswana’s trade dispute resolution framework-arbitration. In this article, we discuss the third leg, namely industrial action.

Industrial action is generally defined as a situation where the employer and employees use their bargaining power to exert pressure on the other to achieve a particular result. It entails such things as strikes and lockouts.  In terms of section 2(1) of the Act, Industrial action means “a strike, lockout or action short of a strike, in furtherance of a trade dispute”.

In terms of section 2(1) of the Act, “a strike means the cessation of work by a body of employees in any trade or industry acting in combination or under a common understanding or a concerted refusal or a refusal under a common understanding by such body of employees to continue work.”

A lock-out is the employees’ equivalent of a strike. In terms of section 2(1) of the Act, a lock-out is defined as “ the closing of a place of employment by an employer in any trade or industry or the suspension of work by such an employer or the refusal by such an employer to continue to employ any number of his or her employees in that trade or industry.”

While on a strike, employees use their numbers to inflict economic pain on the employer by withdrawing their labour, in a lock-out, the employer uses its power by not providing employees with work, thereby inflicting economic harm on them in terms of the ‘no-work, no pay’ principle.
In terms of section 2(1) of the Act, an action short of a strike means “any method of working (other than the method of working commonly known as working to rule) undertaken by a body of employees in any trade or industry acting in combination or under a common understanding, which method of working slows down normal production or the execution of the normal function under their contracts of employment, of the employees undertaking such method of working.”

In terms of section 42(1) (a) of the Act, it is obligatory to refer a dispute of interest for mediation before resorting to a strike or lockout. Also, in terms of section 42(1) (b) of the Act, a party must give the other party a 48-hour notice before the commencement of a strike or lockout. In terms of section 43(1) of the Act, before a strike or lockout commences, the parties have to agree on the rules regulating the action, failing which the mediator must determine the rules in accordance with any guidelines published in terms of section 53 of the Act.

These rules include those concerning the conduct of the strike or lockout and any conduct in contemplation or furtherance of the strike or lockout including picketing and the use of replacement labour. In terms of section 43(2) of the Act, the latter is, however, subject to the provisions of subsection (4) of the Act.

Employers are not allowed to engage replacement labour if the parties have concluded an agreement on the provision of a minimum service. In terms of section 43(3) of the Act, such prohibition also applies if no minimum service agreement is concluded within 14 days of the commencement of the strike or lockout.

In terms of section 43(4) of the Act, a trade union is allowed to picket outside the employer’s premises during a strike or lockout if the parties have concluded an agreement on the provision of a minimum service or if no such agreement is concluded within 14 days of the commencement of the strike or lockout.

The Act prohibits strikes and lockouts that do not comply with the aforesaid provisions or an agreed procedure. The prohibition also applies if the strike or lockout is in breach of a peace clause in a collective labour agreement.

In terms of section 45(1) of the Act, strikes or lockouts are also regarded as unprotected if the subject matter of the strike or lockout is not a trade dispute, is regulated by a collective labour agreement, is a matter that is required by the Act to be referred for arbitration or to the Industrial Court for adjudication, or is a matter that the parties to the dispute of interest have agreed to refer for arbitration.

In terms of section 47 of the Act, employees in essential services are not allowed to take part in a strike. Similarly, employers in essential services are not allowed to take part in a lockout. It is, however, worth noting that, although an essential service employee who engages in a strike commits an offence and is, in terms of section 48(1) of the Act, liable to a fine not exceeding P 2 000 or to imprisonment for a term not exceeding 12 months, or to both, there is no punishment for an essential service employer who locks out its employees.

In terms of section 48(2) of the Act, the punishment applicable to an essential service employee who engages in a strike, is also applicable for any person who causes, procures, counsels or influences any essential service employee to engage in a strike.

Where there is a trade dispute involving parties in an essential service, it should be reported to the Commissioner by an organisation acting on behalf of the employer, employers or employees. The provisions of section 6(3) apply in respect of a report of the trade dispute made in accordance with section 6 (1).

Where a trade dispute is reported in accordance with that section, it is deemed to have been reported to the Commissioner under section 6. Where there is failure to settle a trade dispute reported to the Commissioner in accordance with section 6 (2) within 30 days from the day on which the trade dispute was reported, the Commissioner may immediately refer the trade dispute to an arbitrator if the dispute is a dispute of interest, except in the case of a collective dispute of interest where the employees are represented by a trade union, or to the Industrial Court if the trade dispute is a dispute of right.

*Ndulamo Anthony Morima, LLM(NWU); LLB(UNISA); DSE(UB); CoP (BAC); CoP (IISA) is the proprietor of Morima Attorneys. He can be contacted at 71410352 or HYPERLINK “mailto:anmorima@gmail.com” anmorima@gmail.com

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