With the era of low interest rates and ample liquidity coming to an end, some of the world’s richest families have made (or are planning to make) major shifts in asset allocation, the new 2023 UBS Global Family Office Report shows. The survey, released today, covers 230 “family offices,’’ each handling investments for a single wealthy family. The families have a collective net worth of nearly $500 billion, or an average of $2.2 billion each.



The average portfolio breakdown of those surveyed in 2022 is 55% in traditional asset classes (down from 57% in 2021) and 45% in alternatives (up from 43% last year). But lurking below those broad categories is a more significant shift–away from private equity and towards long out-of-favor fixed income.



With yields on short-duration fixed income currently at more than 5%, a third of those surveyed by UBS are already holding such debt. Moreover, nearly half plan to make significant or moderate increases to fixed income holdings in 2023 and beyond.



“We’re seeing that liquidity is a big factor in decision making,” Charles Otton, UBS’ head of global family and institutional wealth for the Americas, tells&nbsp;Forbes. “We all got very used to money being free, but now people are valuing liquidity and adjusting their portfolio accordingly.”



A similar Global Family Office Report, released by Blackrock earlier this year, also shows that money managers for the rich tweaking their portfolios. Almost half of the 120 offices surveyed in that report said they planned to change investment strategy or make portfolio adjustments this year. Many have jumped into fixed income and private credit in response to the current market environment.



“By seeking maximum flexibility and leveraging a broad toolkit, portfolios can pivot nimbly across duration, regional and sector exposures in response to rapidly shifting conditions,” wrote Rick Rieder, BlackRock’s chief investment officer of global fixed income.



Family offices are shifting allocations when it comes to alternative investments. While U.S. family offices’ allocation to alternatives was roughly the same from 2021 to 2022 (declining modestly from 36% to 34%), direct private equity exposure dropped dramatically (from 24% to 14%), according to UBS. Meanwhile, allocation to hedge funds rose significantly over that same period (from 4% to 7%). This trend holds true globally as well: As uncertainty abounds in markets, there has been a reemerging emphasis on active over passive investment management.



While there is still some private equity exposure among family offices, most have been reducing direct private equity investments in the near-term, instead turning to PE funds, private debt and infrastructure. Rather than searching for brand new private equity companies, which are often riskier investments, family offices are now favoring private market businesses that have grown to a certain point and have some kind of EBITDA, Otton observes.



Many of those surveyed also plan to reduce exposure to real estate this year, the report found. “There is a general caution creeping in given higher rates and some softness—though more commercial than domestic residential real estate, where investment remains strong,” explains Otton. Over the longer term, however, roughly a third of family offices still plan to increase exposure in this sector once capital becomes more available and valuations are lower.



While allocations to emerging market equity have largely held flat in recent years, family offices plan to increase their exposure in that space throughout 2023 amid China’s reopening and an apparent peak in the U.S. dollar. Nearly half of their assets are still in North America, but the majority of offices plan to increase their allocations to Western Europe for the first time in years.



The UBS report also sheds light on the top concerns for family offices in 2023, with many remaining cautious about an uncertain global economic growth outlook. High inflation was the top worry last year, and while that was cited by many again, that has now been supplanted by geopolitical concerns at the top of the list, according to the survey. In the United States, however, people are much more focused on the state of the economy, with the likelihood of a recession as the biggest concern among family offices there.

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Rich Families Making Major Changes To Asset Allocation, New Reports Find

Words and Curation: Chanel Retief and Lillian Roberts Art Director: Lucy Nkosi Photography: Katlego Mokubyane Photography Assistant: Sbusiso Sigidi Studio: NewKatz Studio, Johannesburg CNBC Africa Videographer: Thabo Mathebula Video Editor: Chanel Retief Styling: Bontlefeela Mogoye and Wanda Baloyi Outfits supplied by: Kworks Design; Imprint South Africa; House of Suitability; LSJ Designs Hair &amp; Makeup: Makole Made



Four years ago, Brian Bosire told FORBES AFRICA that his hope for UjuziKilimo was that it would reach over 10,000 farmers. Speaking to us during the photoshoot for this feature at the NewKatz.Studio in Johannesburg, he tells us he has now reached over 26,000 farmers.



“Our vision is really to see a world of empowered smallholder farmers working at the cutting edge of technology in terms of how they make decisions on the farms, how they access financial support, and also the knowledge they need to improve productivity from the farms,” Bosire says. 



Bosire’s passion for smallholder farming started as a boy in a small town in southwestern Kenya known as Kisii.



“I come from a farming village in Kenya, and my parents–their first career was farming,” Bosire says. “They were smallholder farmers, so as I grew up, it formed the core of what I understood about food production and the economy; a sole source of livelihood in our family.”



The ESRC STEPS (Social, Technological and Environmental Pathways to Sustainability) Centre concurs with Bosire’s assessment that smallholder farmers are key to the country’s food security and economy. “Small farms account for 75% of the total agricultural output,” ESRC STEPS Centre writes in a 2023 report.



Bosire, as a qualified engineer, wanted to find solutions for these farmers that would not only be beneficial to them from an economical perspective but from a social one too.



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And with that, his business was born. UjuziKilimo–which is Swahili for ‘knowledge farming’– processes millions of data points each day to create a complete soil and agronomic data pool that is both field specific and highly accurate.



Soil Pal, a handheld sensor, acts as a soil parameter to quickly and easily measure the content of the farmer’s soil, and produce the right amount of data for the farmer to receive actionable information within five minutes on the best crops that will do well on the land and the fertilizers they would need.



Part of the UjuziKilimo experience is also FarmSuite, which is a complete farm management, predictive farm analytics, intelligent insights and recommendations software to power decision-making for farmer groups, co-operatives and service providers.



“Our technology is actually ensuring that farmers are moving away from guesswork. Because traditionally, farmers have been led by intuition to make decisions on which crops will do well.”



Part of this empowerment is looking at how much opportunity lies within the African landscape when it comes to agriculture and technology.



“We also understand that unlike developed countries, Africa is the place of opportunity when it comes to the uptake of technologies that we&#8217;re seeing and developing at the moment,” Bosire adds. “The fact remains: smallholder farmers form the majority of the people producing food at the moment, but unfortunately, you still realize that a majority of those farmers are living below $2 or $3 per day.”



According to the United Nations’ Food and Agriculture Organization’s report, The Economic Lives of Smallholder Farmers, three billion rural people live in about 475 million small farm households, working on land plots smaller than two hectares. Smallholder farms in Kenya are only marginally large as they are 0.47 hectares and in Ethiopia the average small farm size is 0.9 hectares.



“Many are poor and food-insecure and have limited access to markets and services. Their choices are constrained, but they farm their land and produce food for a substantial proportion of the world’s population. Besides farming, they have multiple economic activities, often in the informal economy, to contribute towards their small incomes,” the report read.



For UjuziKilimo, it’s about seeing smallholder farmers get a return on their products as they contribute to the future of food. The data that is being collected from the soil as well as the interaction with farmers is what Bosire actually uses to ensure these farmers have access to aspects like insurance and financing, “because of the richness of the data that we have can be developed over time”.



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MEET COVER STAR Brian Bosire: “Africa Is The Place of Opportunity…”

Boeing is partnering with Equatic, a Los Angeles-based startup that removes carbon from the ocean, in a first-of-its-kind deal to buy a massive amount of carbon credits and green hydrogen that’s likely worth at least $50 million.



Under the five-year arrangement, Equatic will remove 62,000 metric tons of carbon dioxide for the aerospace giant and supply it with 2,100 metric tons of “green” hydrogen generated as a byproduct of its technology. Equatic declined to provide a value for the agreement, though it’s more than double the size of a 25,000-ton CO2 elimination contract competitor&nbsp;<a href="https://www.jpmorganchase.com/news-stories/jpmorgan-chase-seeks-to-scale-investment-in-emerging-carbon-removal-technologies" target="_blank" rel="noreferrer noopener">Climeworks just announced with JP Morgan Chase</a>. Climeworks values that deal—which doesn’t include hydrogen fuel—at more than $20 million. (The financial company is also contracting with startup Charm Industrial to put captured carbon underground as “bio-oil” made with agricultural scraps.)



The deal arose from plans for a technology partnership between the companies related to large-scale CO2 removal facilities Equatic is developing, said Lorenzo Corsini, the startup’s principal advisor, who declined to discuss specific details.



“This catalyzes the development of the technology and it&#8217;s a leap of faith by Boeing,” Corsini told&nbsp;Forbes. Boeing is “serious about removing carbon dioxide from the atmosphere and knows that they need to invest upfront to do this.”



Equatic recently spun out of UCLA’s Institute for Carbon Management and is part of a new wave of companies with a mission to slow the buildup of climate-warming CO2 by pulling it out of the atmosphere. Unlike the approach of rivals such as Climeworks, Charm and CarbFix, which absorb CO2 from the ambient air and store it, Equatic’s focus is using electrolysis to remove CO2 from seawater and convert the carbon into seashell-like material that it believes won’t harm the aquatic environment. Hydrogen, which is increasingly seen as a promising clean fuel for industrial applications and transportation, is also a byproduct.



“Reaching aviation’s sustainability goals will require a multi-faceted approach and Boeing sees immense value in Equatic’s technology,” Sheila Remes, Boeing&#8217;s vice president of environmental sustainability, said in an emailed statement. “We are excited to partner with Equatic on both green hydrogen feedstock and carbon dioxide removal.”



Equatic focuses on oceans as they’re Earth’s largest CO2 reservoir. Founder Gaurav Sant, director of the UCLA initiative, believes its approach amplifies natural processes and is the cheapest, most energy-efficient way to achieve gigaton-level CO2 removal and produce hydrogen from nonpolluting sources. The amount of CO2 removed is also measurable “down to the gram,” the company said.



(For more on Equatic see&nbsp;<a href="https://www.forbes.com/sites/alanohnsman/2023/04/12/equatic-startup-co2-green-hydrogen/?sh=6a2da83a426a">An L.A. Startup Aims To Turn The Oceans Into A CO2 Sponge And ‘Green’ Hydrogen Machine</a>)



That’s important because of growing skepticism around carbon offsets, such as those sold by Verra, the biggest certifier of carbon credits. David Antonioli, the non-profit’s CEO, stepped down this month after acknowledging that a significant portion of credits it’s approved is not based on reality, according to a&nbsp;<a href="https://www.theguardian.com/environment/2023/may/23/ceo-of-worlds-biggest-carbon-credit-provider-says-he-is-resigning" target="_blank" rel="noreferrer noopener">report by&nbsp;The Guardian</a>.



Equatic began operating pilots in Los Angeles and Singapore in April to demonstrate the technology. A larger “sub-commercial” facility is set to open as soon as late next year in Singapore, integrated within an existing desalination plant. It will be able to remove 3,500 metric tons of CO2 annually. Equatic then wants to have its first commercial plant running in about three years with the capacity to remove 100,000 metric tons of CO2 and generate 3,500 tons of hydrogen annually. That’s about three times the size of Climeworks’ Mammoth plant under construction in Iceland, which will be able to capture and store 36,000 tons of CO2 annually when fully operational.



The company is in the process of raising $100 million for research and plant construction costs. It’s already taken in $30 million from backers including the Chan Zuckerberg Initiative, Anthony and Jeanne Pritzker Family Foundation, Grantham Foundation for the Protection of the Environment, National Science Foundation, Singapore’s Temasek Foundation, PUB: Singapore’s National Water Agency and the Energy Department.



Corsini estimates Boeing’s purchase agreement is the fifth-largest CO2 elimination deal that’s been announced. Equatic had previously announced that financial services company Stripe is buying CO2 offset credits from its small pilot facilities. Boeing will get credits from the Singapore plant that is to open by early 2025 and Equatic’s first commercial facility, the location of which hasn’t been announced.



“Because we’re still engineering and building those plants, we haven&#8217;t started really reaching out more systematically to clients to fill the pipeline,” Corsini said. In addition to Boeing, “we also have a number of other partners. Expect some more announcements soon on that,” he said, declining to elaborate.

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Boeing Bets On Startup Equatic With Massive CO2 Removal, Hydrogen Deal

Gaurav Dhar, a tech investor and second generation fintech entrepreneur in Dubai, has a keen eye on the sector in Africa, saying the continent will see larger and larger funds coming into enabling environments–and there are also some key lessons from the Middle East.



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“THE CONTINENT OF AFRICA HAS ITS OWN PATH OF ADOPTION FOR TECHNOLOGY, INFRASTRUCTURE AND THE DIFFERENT ECONOMIES… THERE IS HUGE POTENTIAL BUT THE UNLOCKING OF IT HAS TAKEN DIFFERENT TRAJECTORIES…”
</blockquote>



At the Dubai Fintech Summit in May, Gaurav Dhar is outside the lavish Madinat Jumeirah hotel where the event is being held, walking out of the venue into the afternoon sun in a dapper blue suit. Like the weather by this chic coastal property, he is warm and welcoming, referring to our chat a few weeks earlier.



As the Group CEO of Marshal Fintech Partners, these are the events you will typically find him at in the spiffy Middle Eastern emirate, those that focus on investments, fintechs, startups, venture capital, entrepreneurship and innovation.



Just like Dubai, the city he was born and raised in, his specialties too are as dynamic and diverse. 



Like any third generation expatriate, Dhar says he has a great sense of pride locating his activities out of the glistening emirate, yet doing business for the world, even for Africa.



“I consider myself an ambassador of the UAE. I have Indian roots, but for all intents and purposes, I consider myself an honorary Emirati. Because there is this pride when you [have been] part of the story of building this country in some way, shape or form.” Dhar’s grandfather came to the United Arab Emirates (UAE) in the early 1970s to become the General Manager of General Motors, when the country had just been carved out as seven emirates from its hitherto existence as the Trucial States.



Dubai was still a dusty city being developed around a port, bringing in tidings and tidy profits from the sea.



“The UAE was its own little paradise, and now is this behemoth global player… Our business evolved along with the country–it was a very side-by-side story,” says Dhar about how after his grandfather, his father, Anil, too followed in the late 1970s and took to “the landscape that was fresh, exciting, mixed and new”.



He worked at Unilever and Texas Instruments before “manifesting his own destiny” and deciding to go his own, turning around an office furniture and supplies company, slowly implementing it also as a technology-focused enterprise, incorporating typewriters, photocopiers and fax machines, as more and more businesses in the region started looking for ways to formalize and store work.



“My father wanted to follow the next trend…and understand the space where again, he could control his own destiny, as opposed to waiting for Xerox or Microsoft to tell him what to do, how to build or what his revenue could be,” recalls Dhar. Called Marshal Equipment and Trading LLC, the company started in the UAE, expanding across the Gulf Cooperation Council states and Africa. “It has been profit-generating for over 35 years and consistently growing,” says Dhar, speaking from his new office on Dubai’s ritzy Sheikh Zayed Road, also home to the almost-kilometer-long Burj Khalifa, the world’s tallest tower. When his father started his business, it was in a small office in Deira–a historic district bursting with character, old forts, wind towers, the legendary Clock Tower and the shimmering waters of the creek.



As a curious child growing up in this space, watching the business evolve, Dhar’s answer to questions while studying at Doon School in India was always that the family was in “payments technology”. His mind was already on the job.



The business grew from one country to another and so did the public penchant for payments technology slowly gaining currency in the boardrooms and bourses of Dubai as “people also started understanding the blocks that make up the fintech system”.



When Dhar–who studied law at the University of Exeter in the United Kingdom and calls himself “a second generation fintech entrepreneur”–first started exploring fintech, it also took a little convincing to get Dhar’s dad, who is 70 this year, to get on board.



“When we started talking in 2015 about the concept of nonprofit generating companies that are pure valuation-based, you can imagine his reaction, as a businessman, it was initially to say this is not going to fly, this is not going to work as a concept, because it’s very easy to spend money, but it’s very difficult to make money.”



Dhar started spending time in San Francisco, Hong Kong, Vietnam, India and other places to understand more of what was happening in the “high-risk, high-return, high-failure-rate” venture capital space in this regard.



About seven years ago, Dhar, in his personal capacity, started investing in fintech in the Middle East, Asia, Africa, Latin America, and the United States, and three years ago, the company’s name changed to Marshal Fintech Partners–as it got acquired by a sovereign wealth fund in the Middle East.



With over 19 years of experience under his belt in various aspects of business, Dhar now has a well entrenched interest in fintech ecosystems and solutions.



“It’s very exciting to be a part of this evolution, where the ecosystem from a startup or investing point of view has started maturing and we were part of that as it started again…



“If I were to have an intellectual conversation in detail about payments technology with my father, he is extremely wellequipped, because he was there as it was being written, assembled, and literally adopted by all parts of the ecosystem in the Middle East, so he’s extremely capable,” smiles Dhar.



The business growth has been organic, as the entire ecosystem works mutually on codependency and reciprocal relationships from a technology, landscape, business and venture capital perspective. Along the evolution journey, through these collaborative interactions, Dhar says he has also formed networks and friends with “tangible value exchange” and “a genuine desire” to drive economic growth and create job opportunities in the Middle East and Africa.



The Middle East has historical ties with Africa, and Dhar continues to build connections on the continent, often featuring founders of African fintechs and Web3 startups on the podcast series (on Spotify, Apple, YouTube) he hosts every week. “The continent of Africa has its own path of adoption for technology, infrastructure and the different economies… there is huge potential but the unlocking of it has taken different trajectories…



“Let’s not forget that the Middle East has a lot of sovereign wealth, and they have been engaging in investing internationally for decades…So along with that wealth comes access to knowledge, learning, and exposure, so it has been much faster.



“I think the African continent again has it in pockets, but it’s not been [able to] move that timeline faster to have the whole continent benefiting from the influx of capital. So these are very separate ecosystems with different outcomes,” he says.



But there is no doubt there are massive opportunities and synergies between both regions.



“What you’re going to see is larger and larger funds in Africa, either pooled from Europe, or within Africa itself. Entrepreneurship still needs funding and fueling.”



“Whoever is going to be the most-friendly regulator is going to win, then the most-friendly telco operator is going to gain massively; and then the third is with the government allowing people to understand subsidized ecosystems to spark long-term talent staying in those ecosystems, and the understanding of educating properly what is happening in that ecosystem.” Effective partnerships between the government and the private sector is one thing the Middle East has done extremely well, he adds. 



“They have written the playbook for this essentially–the marriage between the government or the federal ecosystem and the private sector has been very close. They talk to each other and push each other to do bigger and better things. And one of these things in the UAE is the venture capital space. And that perhaps is something that needs to happen more in Africa.”



Also a board member of the MENA FinTech Association, a trip to Africa is on the cards soon, but when Dhar is not spending his time on advisory boards and “giving back” to the entrepreneurial community, he dabbles in his other interests: F&amp;B, collecting vintage cars and hosting vintage car rallies every year, where all roads eventually lead to Dubai.

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Guru Of Fintech: The Dubai Entrepreneur With An Eye On Africa

<h2 class="wp-block-heading" id="h-topline">TOPLINE</h2>



Apple announced that its new 15-inch MacBook Air—the world’s thinnest 15-inch laptop, according to Apple—will be available starting next week, marking a middle-price point offering for the company that previously had a significant price difference between its smaller MacBooks and larger models.



<h2 class="wp-block-heading" id="h-key-facts">KEY FACTS</h2>



The new model will weigh in at 3.3 pounds and come in four colors.



Bergeron said the laptop will have Apple’s M2 chip, making it 12 times faster than Intel-based MacBook Air; it is quoted at an 18-hour battery life.



The new model will start at $1,299 and be available next week, while the 13-inch MacBook Air powered by the same chip will start at $1,099; the 13-inch MacBook Air with an M1 chip—Apple’s older version—will drop below $1,000, now priced at $999.



Customers can order the new model starting Monday.



<h2 class="wp-block-heading" id="h-key-background">KEY BACKGROUND</h2>



Apple didn’t previously offer a 15-inch version of its MacBook Air—which comes in 13-inch options—or its MacBook Pro, its larger laptop that comes in a 14- or 16-inch option. The new model will provide a choice to users who don’t want the extra computing power of the MacBook’s 14- and 16-inch models, but do want the option of a screen bigger than 13 inches. The last time Apple offered a 15-inch laptop of any kind was 2019, but Apple&nbsp;<a href="https://www.theverge.com/2019/11/13/20961717/apple-macbook-pro-16-inch-model-screen-discontinued-display-laptop" target="_blank" rel="noreferrer noopener">discontinued</a>&nbsp;its 15-inch MacBook Pro that year in exchange for the 16-inch option. Apple’s laptop prices have historically been high, too, with the 16-inch MacBook Pro starting at $2,499. Moving forward, the lower price and bigger screen size is meant “to deliver even more value and choice to everyone,” according to the Apple release.



<h2 class="wp-block-heading" id="h-what-to-watch-for">WHAT TO WATCH FOR</h2>



The big announcement expected from Apple’s Worldwide Developers Conference is the company’s long-awaited mixed-reality headset that is rumored to have both virtual reality and augmented reality compatibility. The device is rumored to look like ski goggles, The Verge&nbsp;<a href="https://www.theverge.com/23728368/wwdc-2023-date-time-live-stream-watch-how-to-rumors" target="_blank" rel="noreferrer noopener">reported</a>, and is supposed to have external sensors to help users navigate reality.



<h2 class="wp-block-heading" id="h-forbes-valuation">FORBES VALUATION</h2>



Tim Cook, Apple’s CEO, who kicked off the keynote address Monday at the Worldwide Developers Conference, is&nbsp;<a href="https://www.forbes.com/profile/tim-cook/?sh=612f5e173ea4">estimated</a>&nbsp;to be worth $1.9 billion by&nbsp;Forbes.



Forbes Daily: Get our best stories, exclusive reporting and essential analysis of the day’s news in your inbox every weekday.Sign Up



By signing up, you accept and agree to our&nbsp;<a href="https://www.forbes.com/terms-and-conditions" target="_blank" rel="noreferrer noopener">Terms of Service</a>&nbsp;(including the class action waiver and arbitration provisions), and you acknowledge our&nbsp;<a href="https://www.forbes.com/privacy" target="_blank" rel="noreferrer noopener">Privacy Statement</a>.



<h2 class="wp-block-heading" id="h-further-reading">FURTHER READING</h2>



<a href="https://www.theverge.com/2023/6/5/23739220/apple-macbook-air-15-features-specs-price-release-date-wwdc-2023" target="_blank" rel="noreferrer noopener">Apple’s new 15-inch MacBook Air is the ‘world’s thinnest’</a>&nbsp;(The Verge)



<a href="https://www.bloomberg.com/news/live-blog/2023-06-05/apple-worldwide-developers-conference" target="_blank" rel="noreferrer noopener">Apple Headset, iOS 17, New Mac: Live WWDC 2023 Analysis With Mark Gurman</a> (Bloomberg)

Apple Store Opens In Knightsbridge

Apple Announces Plans For Its Largest MacBook Air Yet At Developer Conference

Zimbabwe&#8217;s Parliament recently passed the controversial Patriotic Bill, raising concerns about its impact on democratic freedoms and international relations. Critics argue that the law, which penalizes actions seen as undermining national interests, curtails freedom of speech, association, and assembly, and could isolate Zimbabwe on the global stage.



Zimbabwe’s Parliament passed the controversial Patriotic Bill into law on the evening of March 31, 2023. President Emmerson Mnangagwa&#8217;s ruling Zanu-PF government has long sought to enact this bill, claiming it strengthens aspects of the criminal code protecting national interests. However, critics within and outside Zimbabwe view it as one of the most oppressive laws yet, intended to stifle criticism and free speech, particularly during a sensitive time as the country approaches general elections in late August.



The Bill was first proposed after the controversial 2018 general elections, which saw Mnangagwa elected amidst contested results and protests that resulted in at least six fatalities, seemingly in response to opposition to Mnangagwa’s rule.



Broadly, the Bill criminalizes actions deemed to &#8220;willfully damage the sovereignty and national interest of Zimbabwe&#8221;. These include, among other offenses, planning state boycotts, sanctions, or any acts deemed as &#8216;subversion&#8217; of the state. Penalties for these transgressions include deprivation of citizenship and possibility of the death penalty, which the government had previously committed to repealing (REF).



Activists, journalists, and civil society organizations have denounced the passing of the Bill as another act by the ruling Zanu-PF under Mnangagwa to repress free speech and opposition, particularly as the country moves toward the upcoming general elections.



A risk and political analyst who specializes in sub-Saharan Africa, Marisa Lourenco believes that critics of the bill have a point. “Since the dawn of independence in Zimbabwe has been guided by principles of authoritarianism rather than any effort towards democracy…” says Lourenco to FORBES AFRICA. “Not only does it give the government more tools with which to suppress the opposition and civil society with its vague clauses—which nations are hostile, for example, is there a defined list?—but it also seems to be a way for the Mnangagwa administration to control the narrative around its performance as the government attempts to get some of its debt pardoned and access international financial markets.”



A cooperative of civil society members, including the Media Alliance of Zimbabwe, Zimbabwean Congress of Trade Unions, and the Zimbabwean Election Support Network, issued a media statement opposing the bill&#8217;s passage.



&#8220;A very sad day for Zimbabwe today as that country&#8217;s parliament has passed the Patriot Act bill into law,&#8221; tweeted prominent Zimbabwean journalist Hopewell Chin’ono. &#8220;It seeks to destroy freedom of association and assembly. Free speech is now dead, and any Zimbabwean holding a meeting with a foreign government official will be jailed.&#8221;



The primary opposition party, the Citizens’ Coalition for Change (CCC), was similarly critical. &#8220;Democracy is in distress as a report from Parliament confirms that the Patriotic Bill, which is considered unlawful and perilous, has been approved after amending the Criminal Code,&#8221; tweeted the party&#8217;s official account.



The ruling Zanu-PF and President Mnangagwa originally took power in 2017 during a military coup that ousted long-reigning Robert Mugabe.



The country currently scores 28/100 regarding political rights and civil liberties among countries worldwide, according to research organization Freedom House. On Tuesday afternoon, Zimbabwe summoned a top United States diplomat over a tweet the official US Embassy Zimbabwe account posted, encouraging citizens in the country to register to vote.



“We are likely to see heavy-handedness [from the state] and also the banning of demonstrations, disruption of opposition campaigns, etc,” continues Lourenco on the upcoming elections. “Having said that, widespread political and social instability is unlikely. I also expect voter turnout to be the lowest in post-independence



Zimbabwe. People have lost all faith in a ZANU-PF-led government to effect any kind of real change, and the hope that accompanied Mnangagwa’s ascension to the presidency faded soon after the 2018 elections and has been completely snuffed out by now.”



The bill&#8217;s passage, say experts, seems to align with protecting the ruling party ahead of the elections on August 28.



June 2 was the last day for citizens to register to vote. A report earlier this year by electoral advocacy group Team Pachedu flagged evidence of the Zimbabwean Electoral Commission’s (ZEC) delimitation report for signs of gerrymandering, among other irregularities.



Questions are being raised anew about whether the Patriotic Bill will hamper further critique of the ruling Zanu-PF in the run-up to what is likely to be a strongly-contested election, and whether it might be used to suppress the media and reporting of the event.

Zimbabwe’s New Parliament Building, Funded By China, Readied For Its Debut

Elections Ahead In Zimbabwe, And Criticism For Country’s New Patriotic Bill

Swimming sensation Chad le Clos, also a former FORBES AFRICA 30 Under 30 list-maker, is getting back to his best just a year out from the Olympic Games in Paris and feels he still has a lot to give.



South Africa’s prince of the pool Chad le Clos has, by his own admission, had a torrid few years in which his form dipped and personal issues began to take their toll.



He has not gone into great detail about his problems away from the pool, except to say both his parents facing respective battles with cancer, the Covid-19 pandemic and an unhealthy coaching environment all had a devastating effect on his mental health.



But there are signs that he is getting back to his best just a year out from the Olympic Games in Paris and he is now looking forward to a new beginning, rather than stewing on what has gone on in the past.



His gold medal in the 200-meter butterfly at the World Short Course Championships in Melbourne late last year came in a personal best time of 1:48.27.



He burst into tears following the win, which followed a poor showing at the Tokyo Olympic Games where he admitted his severe depression left him feeling “numb”.



“I&#8217;m very happy with everything that&#8217;s happened in the last six to eight months,” Le Clos tells FORBES AFRICA. “Since I&#8217;ve made a change to my new coach (Dirk Lange), and have based myself in Frankfurt, things have started to fall into place again, and I&#8217;ve got my head right.



“And, obviously, winning the 100m and 200m butterfly at the World Short Course Championships in Melbourne last year was a huge boost to my career, it was one of the most important moments of my life, not just my career.”



He says there were lessons learned from Tokyo and resulted in a change in his career path.



“I was in probably the best shape of my life but then not being able to swim for six months (due to the Covid-19 pandemic) and falling behind all my competitors was obviously tough,” he says.



“But there were lessons there, I think I just had to maybe not put so much pressure on individual things that have happened in my life. If I’d taken a step back, and not rushed my decision-making, it might have been a better avenue to go down.



“I made the best decisions I thought possible for myself, even though they probably weren&#8217;t right at the time. But, you know, things happen, and we learn from those mistakes.”



At the age of 31, Le Clos is in some ways the ‘old man of the pool’, with many of his competitors in their late teens or early 20s. But he feels he still has a lot to give.



“I&#8217;ve had a really hard three years and I don&#8217;t count the last four years of my career. I wish I knew what I know today, seven, eight years ago in terms of my training environments, I believe that my career would have would have been different for sure. But I&#8217;m looking forward,” he said.



Adding to his four Olympic medals (one gold and three silver) is a major goal in Paris next year and he believes it is certainly possible. He also hopes it will not be his last Olympics.



“In terms of my last chance to win a gold medal at the Olympics, I think it&#8217;s definitely more realistic for me to win next year than it wouldn&#8217;t be in Los Angeles (in 2028),” he said.



“I still feel very strong and did my best time (in Melbourne) at 31 years of age. Not many swimmers have done that.



“I think short course, for sure, I&#8217;ll still be very dominant for many, many years to come. And I’m not writing off the LA Olympic Games either.”



As for life after the pool when he finally hangs up his goggles?



“I haven&#8217;t exactly thought too much about the future. But I think I have a lot of really great people around me, a great team that will help me make those decisions,” he says. “We&#8217;ve raised a bit of money now and are helping a lot of local swimmers in the underprivileged communities, which is something I&#8217;ve been very passionate about.



“My dream would be to have an academy in Cape Town, but unfortunately, they don&#8217;t have the facilities. So if anyone is reading this…l know I can make it make it work!



“I’m very passionate about being in South Africa. So after the next Olympics, I think I will want to spend a bit more time back home.”

Melbourne 2022 FINA World Short Course Swimming Championships – Day 6

South Africa’s Prince Of The Pool On New Beginnings

Over 6,000 murders in three months. Recent crime statistics point to underlying social tensions, wealth inequality, organized crime, and scrutinize the government&#8217;s response, including police reform and crime intelligence in South Africa.



South Africa’s Minister of Police, Bheki Cele, recently presented the country’s quarterly crime statistics to the public, and the results reveal a bloody conflict being waged in one of Africa’s central hubs. In just three months, over 6,000 people were murdered in the country, almost three murders every hour. Increases in attempted murder, assault, and vigilantism were also observed. Delving deeper into the numbers reveals a population under immense pressure from social tensions, wealth inequality, and organized crime. “We established that 872 of the murders were attributable to arguments, misunderstandings, road rage, and provocation,” said Major General Sekhukhune, the head of Police Crime Research and Statistics, during a presentation of the statistics on May 30. Opposition parties and human rights organizations across the country responded with fury to the numbers, citing a failure of the government to reverse a steadily increasing tide of crime.



“We can no longer allow violent crimes to continue with impunity. The justice system has to act as a deterrent, and the first step is ensuring that the police can conduct thorough, efficient, and transparent investigations into all killings, and ensure that the perpetrators are charged in accordance with the law,” Amnesty International South Africa Executive Director Shenilla Mohamed said in a press statement. The Democratic Alliance (DA) Shadow Minister for Police was similarly biting. “Criminals have declared war on the people of South Africa. Crime is spiraling out of control,” said the DA’s Andrew Whitfield in a statement responding to the statistics. While much of the crimes reported represent interpersonal conflict, experts point to a confluence of issues such as lack of trust in the police and a normalization of violence as salient factors in the high numbers.



“People are often exposed to violence [in South Africa], whether it’s in their homes or the communities… a higher level than in many other parts of the world,” says Gareth Newham, Head of Justice and Violence Prevention at the Institute for Security Studies (ISS), to FORBES AFRICA. “And so we kind of get caught in this way in which people generally think that violence is normal–and when you think about this is normal, you could use it.” This normalization is clear both in normative criminal acts, and the increasing rates of vigilantism or mob justice, also seen in the recent crime statistics. Newham makes it clear that this is also indicative of a high level of distrust in the willingness and capability of the South African Police Service to police crime, resulting in citizens taking the law into their own hands. This vigilantism was most prominently visible in the July 2021 Unrest in the country which saw many community policing forums, private security members, and ordinary citizens band together to protect their homes and businesses against rioters, an action which begot both criticism of such vigilante justice as well as further highlighting public mistrust in the police service. “The state has the legal authority to use violence in order to enforce the accepted rules and regulations of the country,” says Newham. “And when that breaks down, other actors start using violence for their own interests, whereas the state suppresses rights in the public interest.” Also under scrutiny are the country’s intelligence and crime intelligence capabilities, with the last few weeks seeing the murder of an eyewitness outside of a courthouse as well as the murder of a wanted Bulgarian fugitive in the suburbs of Constantia, in Cape Town. While the published statistics don’t deal directly with the actions of police crime intelligence, these recent visible crimes highlight the need for proper action, and formed part of President Cyril Ramaphosa’s budget speech yesterday, May 31, emphasizing that reform of the intelligence service more broadly was underway as part of the implementation of the recommendations by an



Expert Panel on the July 2021 Unrest commission. Newham, however, highlights that despite this political posture from the Presidency, there has been little clarity or accountability in these structures. “We only have his word that he&#8217;s reforming the intelligence services because there&#8217;s been zero plans presented publicly in any forum about what those reforms look like,” he continues. “But nowhere in the public sphere, not before parliament or anywhere else are there clear plans on what’s to be done in terms of Intelligence.” Increases in the rate of kidnapping underscore the need for performance within the Police Crime Intelligence services, says the DA’s Whitfield. “The 51.2% spike in kidnappings over the last quarter points to a failure of crime intelligence and a well-entrenched culture of impunity among criminals who no longer fear consequences for their criminal actions,” he said. Despite the dire nature of South Africa’s crime statistics, police claim to be taking strong steps to combat the rising numbers, with Minister Cele having recently deployed 3,000 new law enforcement officers in Gauteng, and 10,000 new police recruits having joined as constables at the end of 2022. The Police Service also had some noted successes, with a major Rwandan genocide suspect arrested last week. Fulgence Kayishema was alleged to have participated in a massacre in 1994 that caused over 2,000 deaths in Rwanda, and was arrested after an intelligence-driven operation.



Several men believed to have been part of an Israeli syndicate were also arrested and face extradition after an intelligence-driven operation late last year, both instances pointing to continuing function within the Police Service. An additional $3.5 million has also been allocated to high-risk jurisdictions and specialized units are being further developed to deal with high-risk actions, said the minister Cele. &#8220;The SAPS is also enhancing specialized tracking teams who will be trained further at provincial and district level, to effectively track and apprehend offenders.” Experts believe that the challenges, primarily structural, are not likely to be rectified within the short term.



“For the last five to 10 years, certainly the crime statistics indicate that there hasn’t been an improvement,” says Newham. “It’s not that we don’t have the resources or the people… what we lack is political leadership… and policy and strategy around reducing crime.” However, with South Africa approaching a cold winter suffering from low levels of service delivery, high costs of living, and an unreliable electricity supply, the specter of the previous 2021 July Unrest raises its head, and it’s clear South Africans increasingly require strong action from the state and the police. “If the government continues failing to create a safe environment for all, it is violating the right to life and security of the person, and must be held accountable. The buck stops with the government,” added Mohamed.

Members of SAPS and SANDF enforce lockdown regulations in Sea Point and Parklands

‘Spiraling Out Of Control’: Recent Stats Reveal South Africa’s Crime Conundrum

Salima Mukansanga boasts many historic firsts.



We look back at our interview with Salima Mukansanga, the international football referee from Rwanda who is also a listed referee for FIFA since 2012 and continues to make waves. In 2019, she was an official at the FIFA Women&#8217;s World Cup in France.



In 2022, Mukansanga became the first woman to referee at the African Cup of Nations. She was also a referee at the FIFA World Cup in Qatar last year.



A winner in the sports category at the FORBES WOMAN AFRICA Awards on March 8 this year, she was also a spotlight speaker at the FORBES WOMAN AFRICA Leading Women Summit on the same day, as she dwelt on how she kick-started her career, and how it was a rough journey to stardom.



The trailblazing referee said to FORBES AFRICA after the awards win: “Actually, the inspiration [came] from my mentor, he was a FIFA World Cup referee in 2010 and 2014. So this man, I consider him the one who opens dreams for me, because without him I couldn’t be here…


<div class="wp-block-image">
<figure class="aligncenter size-full is-resized"><img loading="lazy" decoding="async" src="https://cms.forbesafrica.com/wp-content/uploads/2023/06/GettyImages-1245003421.jpg" alt="" class="wp-image-58396" width="672" height="447" srcset="https://cms.forbesafrica.com/wp-content/uploads/2023/06/GettyImages-1245003421.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2023/06/GettyImages-1245003421-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2023/06/GettyImages-1245003421-768x512.jpg 768w" sizes="(max-width: 672px) 100vw, 672px" /><figcaption class="wp-element-caption"> (Photo by Mustafa Yalcin/Anadolu Agency via Getty Images)</figcaption></figure></div>


“Because, remember the women–in Africa, where we concede that in a field dominated by men there’s no chance–but this man gave me a lot of inspiration, along with my brother and my dad who always tell me ‘you are going to reach higher, just keep following your dreams’.”



When asked if the future holds more refereeing for Mukansanga, she says she is going to do more.



“No, it&#8217;s about the performance. And then, if I&#8217;m not going to be a referee, I&#8217;m going to be part of the refereeing family. Like being an instructor, being a coach, all those things are part of the refereeing career. So, I want to stick with it.”



“Ninety-nine percent of the people sending me messages were women. They supported me…Even if she doesn’t know me, it doesn’t matter. It’s each and every woman, especially African women, who want to reach higher, like me,” she also said on receiving the FORBES WOMAN AFRICA Sports Award.

FIFA World Cup 2022 – Referees Media Day – Friday 18th November

The Rwandan Football Referee Shooting For The Stars

Consumer research indicates that South Africans are suffering under high levels of inflation, with food products amongst the most affected. Consumer retailers are also feeling the knock-on effect. Loadshedding, repo rate increases and global politics are a confluence of pressures upon South Africans, which has seen many look to where non-essential expenses can be cut.



Since the inception of the Covid-19 pandemic, South Africans have been beleaguered by escalating cost-of-living increases, with food items experiencing considerable inflation. In response, consumers are altering their spending habits and consumption patterns, slashing non-essentials.



A monthly report known as the Household Affordability Index reveals that the average food basket of staple goods has surged by 10% from May 2022 to May 2023. Assembled by the Pietermaritzburg Economic Justice &amp; Dignity Group (PMBEJD), the report demonstrates the shocking escalation in costs for consumers since the start of the pandemic, with the average cost of a household food basket per month rising by 57.4% from March 2020 to May 2023.



Consumers are not passively accepting this. Recent research by InfoQuest, an online research agency, suggests that luxuries such as television service subscriptions, gym memberships, and insurance were among the first expenses to be eliminated as South Africans strive to endure challenging economic times.



The squeeze is not solely affecting consumers but is also keenly felt further up the chain. Tiger Brands, the country&#8217;s largest food producer, recorded a 19% drop in share price by Wednesday after unveiling interim results. The two main factors propelling the decline were decreased sales volumes due to strapped consumers and loadshedding, with the only growth being spurred by price hikes.



&#8220;Tiger Brands&#8217; performance&#8230; was affected by a challenging operating environment due to extended periods of loadshedding, while high levels of inflation and lower disposable income adversely impacted consumer behavior in terms of volumes and basket,&#8221; the report noted.



Other retailers such as retail conglomerate Pepkor observed similar losses, further emphasizing the consumer squeeze. Pepkor, which owns retailers Ackermans and Pep, saw its share price tumble 10%, noting in its investor presentation that consumers &#8220;have no choice but to prioritize spending on necessities to cope with high levels of inflation, particularly the increased cost of food and transport.&#8221;



Recent hikes in the South African Reserve Bank (SARB) repo rate have also put pressure on consumers, with a growing number of people resorting to credit facilities to get by. The increase marks the 10th hike by the SARB since 2022.



The diplomatic conflict between the United States and South Africa over the secretive docking of a Russian vessel last year, coupled with the ongoing electricity crisis, have also witnessed the South African Rand depreciate to record lows against the US dollar, further constraining the spending capacity of the South African consumer, especially concerning fuel costs.



With President Cyril Ramaphosa having tabled the Presidency&#8217;s budget vote today, he acknowledged the hardship of South Africans, particularly regarding the persistent loadshedding crisis. &#8220;We face a difficult winter ahead,&#8221; said Ramaphosa.



Some warmth might be on the horizon however, with Stats SA recording a decline in annual consumer inflation as of the end of April, this despite some notable increases in the Consumer Price Index basket, indicating there might be some relief for consumers in the months to come.

Pick n Pay Stores Ltd. Launch New ‘QualiSave’ Brand Cut-Price Supermarket

Unpacking South Africa’s Soaring Food Inflation And ‘A Difficult Winter Ahead’

TikTok has stored the most sensitive financial data of its biggest stars — including those in its “Creator Fund” — on servers in China. Earlier this year, CEO Shou Chew told Congress “American data has always been stored in Virginia and Singapore.”



Over the past several years,&nbsp;thousands of TikTok creators and businesses around the world have given the company sensitive financial information—including their social security numbers and tax IDs—so that they can be paid by the platform.



But unbeknownst to many of them, TikTok has stored that personal financial information on servers in China that are accessible by employees there,&nbsp;Forbes&nbsp;has learned.



TikTok uses various internal tools and databases from its Beijing-based parent ByteDance to manage payments to creators who earn money through the app, including many of its biggest stars in the United States and Europe. The same tools are used to pay outside vendors and small businesses working with TikTok. But a trove of records obtained by&nbsp;Forbes&nbsp;from multiple sources across different parts of the company reveals that highly sensitive financial and personal information about those prized users and third parties has been stored in China. The discovery also raises questions about whether employees who are not authorized to access that data have been able to. It draws on internal communications, audio recordings, videos, screenshots, documents marked “Privileged and Confidential,” and several people familiar with the matter.



In testimony before Congress earlier this year, TikTok CEO Shou Zi Chew claimed U.S. user data has been stored on physical servers outside China. “American data has always been stored in Virginia and Singapore in the past, and access of this is on an as-required basis by our engineers globally,” he said under oath at a House hearing in March.



TikTok spokesperson Alex Haurek said in a statement that “we remain confident in the accuracy of Shou&#8217;s testimony.” ByteDance did not respond to a detailed request for comment. At publication time, neither company had answered basic questions about whether sensitive tax information of U.S. citizens is stored and accessible in China.



Over the last year, TikTok has been touting its plans to cordon off Americans’ data from China in a $1.5 billion undertaking called&nbsp;<a href="https://www.buzzfeednews.com/article/emilybakerwhite/tiktok-project-texas-bytedance-user-data" target="_blank" rel="noreferrer noopener">Project Texas</a>. That initiative has been central to negotiations with the Biden administration on a deal that would allow the wildly popular app to continue operating in the U.S., despite longstanding national security concerns about its Chinese ownership and the potential for the platform to be used&nbsp;<a href="https://www.forbes.com/sites/emilybaker-white/2022/12/22/tiktok-tracks-forbes-journalists-bytedance/?sh=5a6afb397da5">to surveil</a>&nbsp;or influence the 150 million Americans using it. But since those talks hit a snag late last year, with both FBI Director Christopher Wray and Treasury Secretary Janet Yellen speaking out about national security issues with the app, the Biden administration (through the Committee on Foreign Investment in the U.S.) has demanded that TikTok split from its Chinese parent company or face a possible ban.



“There’s ongoing litigation over TikTok that is not yet resolved,” Yellen, whose department leads CFIUS, said at a hearing in March. And many in Congress have cast doubt on Project Texas altogether: “I don’t believe that it is technically possible to accomplish what TikTok says it will accomplish through Project Texas,” California Republican Jay Obernolte told the TikTok CEO at the March hearing. “There are too many backdoors.”



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Even if TikTok was not a subsidiary of a Chinese company, this would be pretty alarming IT security malpractice.”Former White House and CIA national security lawyer Bryan Cunningham
</blockquote>



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Identity theft using stolen social security numbers is&nbsp;<a href="https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft" target="_blank" rel="noreferrer noopener">not uncommon</a>&nbsp;in the U.S., and the Chinese government&nbsp;<a href="https://www.nytimes.com/2020/02/10/us/politics/equifax-hack-china.html" target="_blank" rel="noreferrer noopener">has been accused</a>&nbsp;of stealing personal financial information from Americans before. One expert told&nbsp;Forbes&nbsp;this is precisely why TikTok’s mishandling of such information is troubling.



“Even if TikTok was not a subsidiary of a Chinese company, this would be pretty alarming IT security malpractice,” Bryan Cunningham, a former national security lawyer for the White House and CIA, told&nbsp;Forbes. He described tax records as some of the most sensitive data there is.



&#8220;It could be just bad IT practice, it could be they felt like they had a legitimate business need,” Cunningham said of TikTok. “But whatever the nuance of that turns out to be… if you store information in the PRC, you better assume that the intelligence services can have it if they want it. They may not target you, but boy, on the face of it, it&#8217;s highly questionable.”



TikTok and ByteDance did not respond to questions about how many people at the companies can access creators’ financial information, where those employees are located and whether there has been unauthorized access to this data. They also did not respond to queries about how long TikTok users and vendors’ payment data had been stored in China and whether it still is today.



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<h2 class="wp-block-heading">Raising regulatory alarms on both sides of the Atlantic</h2>



TikTok or ByteDance&nbsp;employees in China having access to American users and businesses’ sensitive financial records is potentially problematic for geopolitical reasons, particularly against the backdrop of intense regulatory scrutiny in the U.S.



Though there is no national privacy law in the U.S. to protect against the mishandling or misuse of personally identifiable information,&nbsp;<a href="https://www.congress.gov/bill/117th-congress/house-bill/8152/text" target="_blank" rel="noreferrer noopener">one top contender</a>&nbsp;introduced last Congress would require companies to clearly disclose in their privacy policies whether data they collect “is transferred to, processed in, stored in, or otherwise accessible to the People’s Republic of China” and other adversaries. And though a past Federal Trade Commission&nbsp;<a href="https://www.ftc.gov/news-events/news/press-releases/2019/02/video-social-networking-app-musically-agrees-settle-ftc-allegations-it-violated-childrens-privacy" target="_blank" rel="noreferrer noopener">settlement with TikTok</a>&nbsp;(then Musical.ly) dealt with a markedly separate set of issues—children’s privacy violations—the agency could take that order into consideration when evaluating the company’s conduct today.



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Jessica Rich, former director of the FTC’s Bureau of Consumer Protection, said in a case like this, the agency would likely consider whether the company had made false or deceptive statements about how it handles users’ information—in a privacy policy, for example—or if the handling of that information had created a real risk of harm. She would not comment specifically on TikTok and ByteDance.



TikTok’s policies suggest that it takes appropriate steps to protect its users’ data. Creators who join TikTok’s Creator Fund&nbsp;<a href="https://www.tiktok.com/legal/page/global/tiktok-creator-fund-terms/en" target="_blank" rel="noreferrer noopener">agree to</a>&nbsp;“all” TikTok policies, including&nbsp;<a href="https://www.tiktok.com/legal/page/us/privacy-policy/en" target="_blank" rel="noreferrer noopener">privacy terms</a>&nbsp;stating that “certain entities within our corporate group… are given limited remote access to information we collect” if it’s necessary for the platform’s operations. They also emphasize that “we use reasonable measures to help protect information from… unauthorized access.” (It does say TikTok may transmit user data to servers outside the U.S. for storage or processing, and that no data storage or transmission is guaranteed to be secure.)



Rich, the former federal regulator, said that if any company claims to be locking down access to information but then making it available to employees around the world who do not need it, the FTC could see that as a deceptive statement and grounds for a potential data security complaint. She also said that the agency generally views financial information and social security numbers as more sensitive than email addresses or phone numbers, and that it may scrutinize those data-sharing cases more aggressively.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“I would like everything to stay in the U.S.—like, I wouldn&#8217;t see why it would ever need to be stored on a China database.”TikToker and Creator Fund member Zack Fairhurst
</blockquote>



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TikTok’s storage of European creators’ bank information in China could also be problematic under Europe’s privacy law, the General Data Protection Regulation.



Even as TikTok launched&nbsp;<a href="https://newsroom.tiktok.com/en-ie/project-clover-ireland" target="_blank" rel="noreferrer noopener">Project Clover</a>—a Project Texas counterpart across the Atlantic—to safeguard the data of its European users, the Irish Data Protection Commission (TikTok’s lead regulator in the European Union) is already conducting&nbsp;<a href="https://www.dataprotection.ie/en/news-media/latest-news/dpc-launches-two-inquiries-tiktok-concerning-compliance-gdpr-requirements-relating-processing" target="_blank" rel="noreferrer noopener">two investigations</a>&nbsp;into whether the company has complied with GDPR. One of those probes is looking specifically at whether TikTok has unlawfully transferred European users’ personal data from the EU to China, and whether it was adequately transparent with users about how it was handling their information. Gabriela Zanfir-Fortuna, vice president for global privacy at the Future of Privacy Forum, said ByteDance tools storing European creators’ data on servers in China could be problematic for that reason.



&#8220;This is the sort of thing that would confirm there are transfers [of personal data] to China happening, so I&#8217;m sure they would be interested in knowing this,” she said of Ireland’s privacy watchdog. (Just last week, the body issued&nbsp;<a href="https://www.forbes.com/sites/siladityaray/2023/05/22/meta-fined-record-13-billion-for-violating-eu-privacy-rules/?sh=2eff164772c9">a record $1.3 billion fine</a>&nbsp;to Facebook parent Meta, one of TikTok’s biggest rivals, over its own data transfer issues.) GDPR also requires companies to restrict access to sensitive user data on a need-to-know basis, Zanfir-Fortuna added, raising questions about how broad access to these payment tools has been and whether it was necessary.



The Commission would not comment on its ongoing inquiry into TikTok except to say it expects a public update after this summer. TikTok’s&nbsp;<a href="https://www.tiktok.com/legal/page/eea/privacy-policy/en" target="_blank" rel="noreferrer noopener">policies for Europe</a>&nbsp;say “certain entities in our Corporate Group, located outside your country of residence (see&nbsp;<a href="https://www.tiktok.com/legal/transferee-countries" target="_blank" rel="noreferrer noopener">here</a>), are given limited remote access to this information” and that this access is “secure and only granted where necessary under strict security controls.” The link included (“here”) lands on a 404 error page.



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<h2 class="wp-block-heading">Creators reacts</h2>



TikToker&nbsp;<a href="https://www.tiktok.com/@maddzak?lang=en" target="_blank" rel="noreferrer noopener">Zack Fairhurst</a>,&nbsp;a member of its Creator Fund who participated in the company’s blitz on Capitol Hill this spring, told&nbsp;Forbes&nbsp;he had no idea his tax information and social security number might be stored in China. (TikTok brought some creators to Washington in March to raise awareness around&nbsp;<a href="https://www.forbes.com/sites/alexandralevine/2023/03/22/how-a-tiktok-ban-would-affect-creators-businesses-economy/?sh=3cbf8eb25608">the benefits of the app</a>.)



“It wouldn&#8217;t really make sense for it to be over there,” Fairhurst told&nbsp;Forbes. “I would like everything to stay in the U.S—like, I wouldn&#8217;t see why it would ever need to be stored on a China database. … I am actually surprised by that.”



Other creators recalled uploading social security and financial information into TikTok but told&nbsp;Forbes&nbsp;they were unfazed by the possibility that it’s stored in China because putting themselves out there online is par for the course for those who want to build audiences and careers through social media.



&#8220;There are so many more pressing issues in the U.S.,”&nbsp;<a href="https://www.tiktok.com/@kathrynanja?lang=en" target="_blank" rel="noreferrer noopener">Kathryn Cross</a>, a 24-year-old creator in the TikTok program, told&nbsp;Forbes. “My mom grew up in China, so I just know that the Chinese government is so stringent about maintaining a proper public figure, essentially, that they would never allow something like a Cambridge Analytica scandal to compromise their global position.”



“The benefit TikTok has brought to people&#8217;s businesses and lives, and the innovation behind the For You Page, to me seems so much more valuable than any minute chance that China&#8217;s storing our data… more so it seems like a foreign policy type of conflict,” she added.



Internet star and TikTok Creator Fund member&nbsp;<a href="https://www.tiktok.com/@yourrichbff?lang=en" target="_blank" rel="noreferrer noopener">Vivian Tu</a>—a former Wall Street trader who doles out financial advice under the handle “YourRichBFF,” said joining any app’s monetization program is “a calculated risk.”



&#8220;If you&#8217;re okay with being on TikTok,” she told&nbsp;Forbes,&nbsp;“you probably don&#8217;t care that much about your banking information being everywhere it&#8217;s stored.”



Emily Baker-White contributed reporting.

Trump Approves TikTok Takeover By Oracle And Walmart

TikTok Creators’ Financial Info, Social Security Numbers Have Been Stored In China

The just-concluded Basketball Africa League saw influential figures from the NBA and global basketball community coming together in Rwanda to celebrate the growth of the sport on the African continent.



Egypt&#8217;s Al Ahly team won the 2023 Basketball Africa League (BAL) Finals, beating Senegal&#8217;s AS Douanes in a commanding 80-65 victory. The high-energy playoff series was held in Rwanda’s capital Kigali from May 20 to 27 and captivated basketball fans worldwide.



Al Ahly&#8217;s triumph joins the ranks of Egyptian rivals Zamalek (2021) and Tunisia&#8217;s US Monastir (2022) in the coveted trophy club, further solidifying their hegemony in African basketball. The BAL, now in its third edition, has showcased the immense potential and growth of basketball in Africa, reaching fans in 214 countries and territories, broadcasted in 17 languages. This year&#8217;s finals marked another milestone for the league, attracting esteemed personalities from the basketball and entertainment worlds from all over the globe.



The presence of renowned personalities added a touch of glamor and buzz to the BAL Finals. Among them was President Paul Kagame and his wife, Jeannette Kagame, Forest Whitaker, the internationally acclaimed movie star and National Basketball Association (NBA) Africa investor, and FIBA President Hamane Niang. Joining them were BAL Ambassadors and NBA Africa investors Luol Deng, Joakim Noah, and Ian Mahinmi to mention just a few, who were all raising the flag high for African basketball.



Another distinguished guest in attendance was Pops Mensah-Bonsu, the President of G League Operations for the New York Knicks, who proudly represents his Ghanaian heritage. Mensah-Bonsu&#8217;s presence further emphasized the international recognition and support that the BAL has garnered, with influential figures from the NBA and global basketball community coming together to celebrate the growth of the sport on the African continent.



Victor Williams, NBA Africa CEO, who was also in attendance, expressed his enthusiasm for the BAL&#8217;s impact, stating: &#8220;With the BAL, we&#8217;ve been able to go from playing in a bubble to playing in front of fans, in multiple cities. We have built audiences from all over the world, coming to watch the game, and we&#8217;ve had the privilege to be part of various caravan stops like Kigali this week.&#8221;



The league&#8217;s ability to engage global audiences and create excitement has been a driving force behind its success, highlighting the tremendous potential for basketball&#8217;s growth in Africa.



The BAL&#8217;s impact extends beyond the basketball court, generating economic growth and attracting investment in host cities. Amadou Gallo Fall, President of BAL, commended Kigali for its support and commitment to showcasing Africa in a positive light.



&#8220;Kigali is a beautiful African city where we&#8217;ve established relationships over the years,&#8221; he said. &#8220;We appreciate its focus on opening up to the rest of the world. I&#8217;m impressed by the development of the incredible infrastructure in our sports sector, which is world-class.&#8221; Gallo Fall further highlighted the significance of Kigali as the ideal location to launch the BAL, stating: &#8220;When we launched the BAL and



had to play in the middle of the pandemic in 2021, this is the only place where we found the conditions favorable to play a full inaugural season.&#8221;



The BAL&#8217;s success is not only measured by the thrilling competition on the court but also by its ability to unite fans and inspire a new generation of basketball players across Africa. As the league continues to grow and showcase the continent&#8217;s extraordinary talent, it opens doors for collaborations, investments, and cultural exchanges, fostering a positive narrative of African excellence in sports. The league is bringing the continent closer together as a united force to be reckoned with, and its impact will continue to be felt for years to come.



As the final buzzer sounded, and Al Ahly celebrated their hard-fought victory, the significance of the BAL&#8217;s impact became clear. The league has not only become a platform for African basketball talents to shine but has also become a catalyst for economic development, tourism, and international collaborations.



Looking ahead, the future of the BAL shines bright. With each passing season, the league continues to expand its reach, captivate global audiences, and inspire the next generation of African basketball stars. The success of the BAL has opened doors for partnerships, investments, and collaborations, providing a platform for African athletes to showcase their skills and aspirations on an international stage.



The triumph of Al Ahly in the 2023 BAL Finals, and the support from fans coming from all over the world, underscores the transformative power of basketball in Africa. From Cairo to Kigali, the BAL has become a symbol of African excellence, unity, and progress. With its continued growth and support from key stakeholders, the league will undoubtedly play a pivotal role in shaping the future of African basketball and elevating the continent&#8217;s sporting prowess on the global stage.

Al Ahly v A.S. Douanes – African Basketball League

Egypt’s Al Ahly Dominates 2023 BAL Finals: Transformative Power Of Basketball Driving Growth And Uniting Fans In Rwanda

<h2 class="wp-block-heading" id="h-topline">TOPLINE</h2>



Ugandan President Yoweri Museveni signed a&nbsp;<a href="https://www.jurist.org/news/wp-content/uploads/sites/4/2023/03/Anti-Homosexuality-Bill-2023.pdf" target="_blank" rel="noreferrer noopener">law</a>&nbsp;Monday that threatens life sentences or the death penalty for those engaging in same-sex activities, renewing international concerns over human rights that could cause Western powers to cut off millions of dollars of aid to the African nation.



<h2 class="wp-block-heading" id="h-key-facts">KEY FACTS</h2>



The Anti-Homosexuality Act—passed by Parliament in March—affirms an existing law that allows life sentences for people who engage in same-sex relations, and adds several more drastic measures, including allowing the death penalty for HIV-positive people who repeatedly have sex with someone of the same gender.



It also calls for prison sentences of up to 20 years for “promoting homosexuality” and up to five years for touching someone with the “intention of committing an act of homosexuality.”



Foreign aid providers like the United Nations and some Western nations have&nbsp;<a href="https://www.ohchr.org/en/press-releases/2023/03/uganda-un-experts-condemn-egregious-anti-lgbt-legislation" target="_blank" rel="noreferrer noopener">critiqued</a>&nbsp;the law, arguing it violates human rights and could make it increasingly difficult to educate about and treat HIV.



Activist groups aiming to educate Ugandans about safe same-sex relations have expressed concern the law will hinder the fight against HIV, which affects 1.4 million Ugandans,&nbsp;<a href="https://aidsinfo.unaids.org/" target="_blank" rel="noreferrer noopener">according</a>&nbsp;to the UN.



<h2 class="wp-block-heading" id="h-key-background">KEY BACKGROUND</h2>



The law builds on 2014 legislation that held similar stipulations and was signed by Museveni, but was ruled invalid on procedural grounds by Uganda’s Constitutional Court. Another similar law in 2019 was vetoed by Museveni, who&nbsp;<a href="https://www.monitor.co.ug/uganda/news/national/museveni-hints-at-plan-not-to-sign-sexual-offences-act-3396024" target="_blank" rel="noreferrer noopener">cited</a>&nbsp;adverse “foreign policy implications” for Uganda if it enacted drastic anti-LGBTQ legislation. Following its attempt to pass the Anti-Homosexuality Act in 2014, U.S. President Barack Obama’s administration&nbsp;<a href="https://obamawhitehouse.archives.gov/blog/2014/06/19/further-us-efforts-protect-human-rights-uganda" target="_blank" rel="noreferrer noopener">sanctioned</a>&nbsp;Uganda, redirecting and stopping some aid to the country’s government. President Joe Biden’s administration has said it will also&nbsp;<a href="https://www.reuters.com/article/us-usa-biden-lgbt/biden-calls-for-expanded-efforts-to-protect-lgbtq-rights-globally-idUSKBN2A42KF" target="_blank" rel="noreferrer noopener">consider sanctions</a>&nbsp;on countries with anti-LGBTQ legislation, including&nbsp;<a href="https://www.whitehouse.gov/briefing-room/press-briefings/2023/03/22/press-briefing-by-press-secretary-karine-jean-pierre-and-nsc-coordinator-for-strategic-communications-john-kirby-11/" target="_blank" rel="noreferrer noopener">Uganda</a>. The United States alone provides roughly $950 million per year to Uganda, much of which goes toward health assistance,&nbsp;<a href="https://www.state.gov/u-s-relations-with-uganda/" target="_blank" rel="noreferrer noopener">according</a>&nbsp;to the State Department.



<h2 class="wp-block-heading" id="h-chief-critic">CHIEF CRITIC</h2>



The Anti-Homosexuality Act violates “the rights to freedom of expression and association privacy, equality, and nondiscrimination,”&nbsp;<a href="https://www.hrw.org/news/2023/03/09/uganda-new-anti-gay-bill-further-threatens-rights" target="_blank" rel="noreferrer noopener">according</a>&nbsp;to Human Rights Watch, which promotes LGBTQ protections globally. HRW is at risk of not being able to operate in Uganda, as the country has identified at least 26 nongovernmental organizations it is considering banning for “promoting homosexuality,” HRW reported.



<h2 class="wp-block-heading" id="h-crucial-quote">CRUCIAL QUOTE</h2>



“The imposition of the death penalty for same-sex intimacy – including so-called ‘serial homosexuality’ – is an egregious violation of human rights,” the UN&nbsp;<a href="https://www.ohchr.org/en/press-releases/2023/03/uganda-un-experts-condemn-egregious-anti-lgbt-legislation" target="_blank" rel="noreferrer noopener">said</a>&nbsp;in a March statement about Uganda’s bill, arguing the implementation of the death penalty constituted “arbitrary killing” that breaches the International Covenant on Civil and Political Rights.



<h2 class="wp-block-heading" id="h-further-reading">FURTHER READING</h2>



<a href="https://www.wsj.com/articles/ugandan-lawmakers-amend-anti-lgbt-bill-criticized-by-u-s-6ff67e37?mod=article_inline" target="_blank" rel="noreferrer noopener">Ugandan Lawmakers Amend Anti-LGBT Bill Criticized by U.S.</a>&nbsp;(Wall Street Journal)



<a href="https://www.reuters.com/article/us-usa-biden-lgbt/biden-calls-for-expanded-efforts-to-protect-lgbtq-rights-globally-idUSKBN2A42KF" target="_blank" rel="noreferrer noopener">Biden calls for expanded efforts to protect LGBTQ rights globally</a>&nbsp;(Reuters)



<a href="https://www.washingtonpost.com/business/energy/2023/05/29/explainer-what-s-uganda-s-anti-gay-law-and-how-does-it-impact-lgbtq-rights/ff815492-fe1d-11ed-9eb0-6c94dcb16fcf_story.html" target="_blank" rel="noreferrer noopener">Why Uganda’s LGBTQ Community is Under Renewed Fire</a> (Washington Post)

President of Uganda Yoweri Museveni in Algeria

Uganda Passes Drastic Anti-LGBTQ Law—Including Death Penalty

This is the first year the Ocean Race has been attempted since 2018, with 11 boats taking part in a journey expected to last six months, finishing early July. During the Ocean Race stop in Cape Town, South Africa, recently, French sailor Kevin Escoffier spoke about how you discover more about yourself in the high seas than in any other sport.



The Ocean Race has long caught the imagination of many a sailor, a chance to traverse the high seas in a battle of physical and mental strength that pushes those who take part to the very limit of their endurance.



First attempted in 1973, it is in essence a race across the globe, making various ports of call along the way, with the quickest to navigate the various legs the winner. 



This is the first year the event has been attempted since 2018, with 11 boats taking part in a race that is expected to last all of six months, finishing in early July.



The boats will cover 32,000 nautical miles (59,200 kilometers) and there are seven legs, starting in the Spanish port of Alicante, before stops in Praia (Cape Verde), Cape Town, Itajaí (Brazil), Rhode Island (United States) and Aarhus (Denmark), the first of three In-Port races along with The Hague (Netherlands) and Genoa (Italy).



Although shorter than previous races (which have lasted up to nine months), the 2023 edition is certainly still very challenging and the real danger of upset in, at times, treacherous conditions is always there.



Frenchman Kevin Escoffier, who is skipper of the boat Holcim PRB, is in his third Ocean Race, having finished third in 2014 and won in 2018.



He admits it is hard graft but says you discover more about yourself in these conditions on the sea than in almost any other sport.



“You learn a lot about yourself, about the sea and about your boat very quickly, because there is no room for error,” Escoffier told FORBES AFRICA during the Ocean Race stop in Cape Town.



“I am lucky that I have experience in my crew because you need that if you hope to be successful. It is a very challenging race and there are many things that can be a setback.



“We only launched this boat in May 2022, so from that point of view it is very new. Not all boats are the same. They have their own character, and you have to learn that personality quickly.”



Although it is a race, Escoffier says the key as a skipper is actually to pace yourself, the crew and the boat. Trying to push too hard on any of those three things can have dire consequences.



“You have to find a steady rhythm, not always trying to be at 110% of what the boat is able to do. You don’t want to push too much because the boat can be at sea for 35 days or however long the leg is. It can be exhausting for everyone.”



Escoffier is the leader of crew, but even though he has won this race before, admits key to his role is allowing other people to contribute and to utilize his crew’s knowledge to the best of their abilities.



It is a lesson for life too, about being willing to hear what those around you have to say and not lead with absolute authority, even if it is ultimately your reputation on the line.



“It’s very important in a crew to use all the experience on board, even if they do not have experience in the Ocean Race itself.



As a skipper, you have to be able to listen to everybody and that each person is able to come with their skills and their ideas, even if it is ultimately up to me as the skipper to decide what to do.



“I always encourage the crew to come with their own ideas and find solutions to go faster by pushing less on the boat, if that makes sense. How can we be more efficient?”



Escoffier says that, even months into the race, they are still trying to work out the best combinations for Holcim PRB to reach optimum performance in all weather conditions.



“We are still working on the sails, in each leg we are modifying the speed of the boat, depending on the twin speed and the twin angle we are using, and monitoring the software that we have on board,” he says. 



“We’re always learning and pushing a bit harder, but there’s plenty to do, we’ve got a long list of what we want to try in the race.



“We learn every day how to go faster. And it’s amazing how fast these boats can go, but again, the race is long and it’s very, important… I know from my previous Ocean Races that you have to adapt as you go along.



“You cannot say, ‘we will start the race like that and finish doing the same things’. You have to adapt to what is happening around you.”



All of the stops in the race present a chance for the crew to explore the country they are in and find their land legs again. The boats spent around two weeks in Cape Town.



“It is the third time I have come to Cape Town, and I had a great time with my wife and family, it was a chance to see them again,” Escoffier said. “It’s a beautiful city and a door to the Southern Seas in the head of all sailors.



“That means it’s the ‘Hell’s Door’ for us,” he joked, in reference to the treacherous third leg in the Southern Atlantic that is the most challenging of the Ocean Race.



“But it’s so beautiful in Cape Town, I like to eat and there is so much good food, so I enjoyed that a lot. We had a wonderful time.&#8221;

The Ocean Race 2022/2023: Cape Town Leg 3 Start

The Ocean Race Stopover In Cape Town And Lessons From The Sea

As bank failures rattle investors and test regulators, it&#8217;s time to rethink America’s financial system. One old solution, despised by regulators, might be just what the doctor ordered.



<abbr>N</abbr>estled on the&nbsp;second floor of a suburban office building in Fairfield, New Jersey, not far from Interstate 80 and just down the hall from an opthalmology center, are the offices of Financial Northeastern. Its chief executive, Jeff Zage, 60, could be one of the saviors of the troubled $23 trillion U.S. banking industry. Zage is a money broker, and for the past 38 years, his firm has specialized in underwriting certificates of deposits for needy banks. These deposits are generally bank-run-proof—they are not redeemable prior to maturity unless the deposit holder dies or becomes mentally incapacitated. Over the last 12 years, Zage’s small firm has quietly raised some $150 billion for banks small and large, connecting them with business owners, municipal treasurers and wealthy individuals eager to park sums of $250,000 or less in FDIC-insured accounts around the nation. Thanks to the Federal Reserve, interest rates on CDs maturing from three months to ten years are now above 5%. That means business is good for Financial Northeastern, which makes a small fee on each CD it brokers. But Zage repeatedly demurs when&nbsp;Forbes&nbsp;asks him for a photograph or even just a face-to-face meeting.



“I am a very unassuming individual,” he says. “I try to do my best to stay under the radar.”



Thirty-six years ago, it was a different story. Zage—then just 24 years old—his older brother Steven and their team of young cold-calling brokers were making millions providing funding to the nation’s ailing $1.2 trillion savings-and-loan industry in the form of high-rate CDs. A 1987&nbsp;Forbes&nbsp;article headlined “WE’RE THE LIFEBLOOD” pictured Zage popping out of the sunroof of his new car, his brother reclining on the hood. The story chronicled how regulators at regional Federal Home Loan Banks were calling brokers such as Financial Northeastern and Merrill Lynch to funnel billions to prop up zombie thrifts, mostly in Texas. Those S&amp;Ls had gotten into deep trouble after newly deregulated deposit rates soared by investing in commercial real estate, junk bonds and other risky assets.



When the dust settled, 747 savings-and-loans were shuttered and FSLIC, the insolvent government insurance fund backstopping the industry, was absorbed into the FDIC. The debacle cost U.S. taxpayers $124 billion, about $300 billion in current terms, or the equivalent of 2% of America’s 1989 GDP. Money brokers were blamed for worsening the S&amp;L crisis. Pundits called them a “cancer” afflicting the system because they peddled “hot money” that surged in and out of banks chasing the highest yield. In 1991, new regulations enacted by the FDIC made Zage’s bread-and-butter product, so-called brokered deposits, practically toxic to banks. Regulators warned against using them and increased FDIC insurance premiums for those who did. Today few of the nation’s 4,700 banks hold significant amounts of them.



But perhaps they should.



Silicon Valley Bank didn’t have a single brokered deposit on its books on March 9, the day depositors withdrew $42 billion in just 10 hours. Hot money? Sure—but it’s all hot these days. SVB’s $1 million-per-second deposit run was sparked by a handful of tweets. Dozens of fintechs, including Chime, Mercury and Robinhood, are more than happy to assist you with fast, frictionless money transfers. When Apple, backed by Goldman Sachs, announced in mid-April that it was offering an FDIC-insured savings account yielding 4.15%, it sucked in nearly $1 billion in four days. Non-banks, in the form of money market mutual funds like those offered by Vanguard and Fidelity, love hot money too. According to the Federal Reserve, over the last 13 months, $1 trillion in deposits has fled commercial banks for higher-yielding uninsured accounts.



Despite their pejorative “hot money” nickname, Zage’s FDIC-insured brokered CDs are far stickier than any of these bank savings accounts. Plus, there is strong evidence from a niche group of so-called industrial banks, which are in stellar financial condition while relying heavily on this funding, suggesting that this sort of heat is a stabilizing force. But brokered CDs alone won’t cure what’s ailing our nation’s banking system. The fact that after 40 years they continue to be stigmatized by regulators—and consequently shunned by banks—points to a larger problem. Bank regulation, with its multiple state regulators and three primary federal watchdogs—the Federal Reserve, the FDIC and the Office of Comptroller of the Currency—is stunningly inefficient, laden with political baggage and miles behind a quickly changing marketplace.



Part of the problem comes from clinging to old-fashioned banking ideals like “core” deposits, thought to be foundational to community banking and the soundness of our system. SVB and First Republic were far from the only banks caught flat-footed when the Fed hiked rates 10 times in the last year. According to FDIC call report data, 31 FDIC-insured banks with total assets of $30 billion are sitting on losses in their securities portfolios in excess of their tier 1 capital&nbsp;(see “Underwater on Main Street,” below).&nbsp;And that’s just the ugliest tip of the iceberg. Nearly 400 banks with combined assets of more than $3.7 trillion have losses amounting to more than half of their tier 1 capital. Virtually all these institutions are local community banks, most with assets of less than $300 million. Fortunately, few of these sick minnows are likely to have lots of uninsured deposits exceeding $250,000—or the external pressure of being publicly traded like Silicon Valley Bank and First Republic.



“In light of recent bank failures, the question is really not whether we need to rethink what a brokered deposit is or what hot money is, but what is a core deposit anymore?” says Jelena McWilliams, former chair of the FDIC and now a managing partner at Washington, D.C., law firm Cravath Swaine &amp; Moore. “Long-term, the community banking model will have to change. These small banks basically cannot survive unless they engage in fintech partnerships because it’s an easier and less costly business model to attract customers. But for whatever reason, the regulators in Washington are very averse to fintech.”



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<abbr>S</abbr>upport for&nbsp;community or “Main Street” banking dates to the founding of the republic, when populist Thomas Jefferson squared off against federalist Treasury Secretary Alexander Hamilton, an elitist who wanted to create a national bank. Jefferson believed it was unconstitutional and a threat to the young democracy, in part because it would concentrate funding in the big cities and away from small, developing agrarian communities. Hamilton prevailed in 1791 with the establishment of the first central bank, but in 1811, Congress failed to renew its charter. It wasn’t until 1863, when the Union needed to finance the Civil War, that the national banking system was created.



This historic bias enabled small-town banks to proliferate, and by 1929 there were nearly 26,000 banks in the U.S., one for every 5,000 Americans. The stock market crash and Great Depression sparked a blizzard of bank runs on these often-undercapitalized institutions: In the four years before the FDIC was established in 1933, nearly 6,000 U.S. banks and savings institutions failed, costing depositors $1.3 billion, about $31 billion in today’s dollars.



Ever since, the number of community or “Main Street” banks has been shrinking. There are currently 4,676 FDIC-insured banks, but on average 200 of them are merged out of existence each year. Dwindling numbers have done little, though, to weaken the strength and resolve of small banks’ primary lobbying group, the Independent Community Bankers of America (ICBA), which spent nearly $4.8 million lobbying in 2022, according to Open Secrets, including about $1.3 million in donations spread around Congress, the largest chunk to the House Financial Services Committee. The ICBA’s stated goal is to “keep money local and invest in communities.”



“They’re politically powerful because they’re on every single corner,” says bank consultant Mayra Rodríguez Valladares. “There’s actually rare bipartisan support for community banking.”



Adds former FDIC chairwoman McWilliams, “There is a strong sense in Washington that these small banks matter. Large banks don’t understand local conditions where a loan may have originated in the past based on ‘I’ve known your grandfather. He was a man of his word, and I trust that you’re going be the man of your word.’ [The ideal] is Norman Rockwell–esque.”



The ICBA asserts that big Wall Street banks are transactional, making decisions based on “predetermined credit boxes,” while community banking boils down to relationships. Of course, this is largely nonsense. Small banks use—or should use—precisely the same metrics in evaluating creditworthiness that larger ones do. There is no evidence of any bank of any size in the year 2023 making a loan because it “knew your grandfather.” On the flip side, in many ways, Silicon Valley Bank, with its $212 billion in assets, was practicing community banking.



“SVB was built exactly the way the regulators say a bank should be built: customer by customer, relationship by relationship. No hot money,” says bank regulatory expert Paul Clark of Seward &amp; Kissel. “Everything was ‘You want a line of credit from me, you keep your deposits here.’ Those are so-called core deposits.”



Moreover, because regulators were never especially precise in their definition of core deposits, except for the fact that brokered deposits should mostly be avoided, clever entrepreneurs and financial institutions over the years have figured out ways around the prohibitions and FDIC insurance limits.



In 2003 an Arlington, Virginia, company called IntraFi launched a deposit swapping service called CDAR (Certificate of Deposit Account Registry), which allowed banks to offer wealthy customers and businesses the ability to deposit up to $50 million. The big deposits are chopped up into $250,000 increments and placed at various FDIC-insured banks in IntraFi’s network. Banks that accept the deposits are then able to place their own over-the-limit deposits through the network.



“For me it’s being able to retain multigenerational customers that have accounts that will exceed the $250,000 limit,” says Jill Castilla, president of Citizens Bank of Edmond, Oklahoma, which has deposits of about $330 million, 18% of which are “reciprocal” thanks to IntraFi. “So now they don’t have to manually place those funds in different institutions to ensure they have coverage.”



Citizens’ $58 million in reciprocal deposits is not considered brokered by the FDIC but instead fall under the “core” deposit designation. Likewise, if you’re a bank that advertises your CD rates online using services like Bankrate, NerdWallet or Forbes Advisor, the high-rate deposits you bring in from across the nation typically qualify as “core.”



Then there are the multiple, and often confusing, brokered deposit “exemptions” granted by the FDIC to various banks, including those working exclusively with fintechs. FDIC-insured $1.8 billion (assets) Evolve Bank &amp; Trust of Memphis, Tennessee, provides banking services for large fintechs like Dave, Affirm and Mercury, but shows only 0.3% of its deposits are brokered.



Sourcing deposits outside your home market is apparently okay with regulators so long as you avoid broker-dealers like Zage, or UBS, Bank of America or Wells Fargo. Iowa’s Luana Savings Bank, a 115-year-old family-owned bank located in a town of 300 people amid thousands of acres of cornfields, found this out the hard way.



From 2016 to 2020, Luana’s assets more than doubled to $1.7 billion as its ambitious president, David Schultz, became one of Iowa’s biggest agricultural lenders. Luana and its six small branches were unable to attract enough local deposits to fuel its growing business, so Schultz connected with brokers that allowed him to fund his loans with out-of-market CDs with similar maturities. As assets climbed toward $2 billion, brokered deposits accounted for 60% of the total.



Luana’s operating stats have been exemplary, its return on equity averages 19% and it was a perennial winner of Des Moines–area “best bank” awards. Still, alarm bells sounded at the FDIC regional office, and in 2021, it and the Iowa Superintendent of Banks issued a cease-and-desist order claiming Luana was taking “excessive” risks and operating in an “unsafe and unsound” way. It also fined the bank $14.5 million and cut off its access to Federal Home Loan Bank loans. Schultz, who declined to speak to&nbsp;Forbes,&nbsp;told the&nbsp;Des Moines Register&nbsp;at the time that the charges were manufactured, and sued the FHLB.



Ultimately Schultz decided fighting regulators wasn’t worth it, so without admitting or denying the charges, Luana signed a consent order in 2022 and agreed to add independent directors to its board and reduce its reliance on non-core deposits.



<abbr>A</abbr>mong banks,&nbsp;the biggest users of brokered deposits are a small group of FDIC-insured institutions known as industrial banks. There are 24 of them, representing only $250 billion in total assets, but they are extremely well capitalized and profitable&nbsp;(see “Industrial Strength,” below).&nbsp;They are also despised by the ICBA and the Federal Reserve, and barely tolerated by their regulator, the FDIC.



Sometimes referred to as industrial loan companies (ILCs), these banks are FDIC-insured and -regulated, but their parent companies are typically commercial or financial institutions. The first ILC was formed in 1910 to make loans to industrial workers who couldn’t obtain credit elsewhere. Over the years companies like General Electric, Target and Goldman Sachs have owned ILCs. Today their owners include Harley-Davidson, Pitney Bowes, UnitedHealth Group, BMW, Square and USAA. Only a few states, including Utah, Nevada and California, can authorize their charters, and though they’re subject to the same rigorous FDIC application process and examinations as other banks, they’re exempt from Federal Reserve oversight because their parent companies, which are required to support their ILC with capital, aren’t bank holding companies.



Industrial banks can offer savings accounts, credit cards, loans and mortgages, but are prohibited from offering checking accounts or financing their parent company’s products. Pitney Bowes Bank, for example, doesn’t make loans to purchase its postage meter machines, but it can finance and manage shipping payments for its thousands of small-business customers. Industrial banks tend to be specialized and branchless, which is why many rely heavily on brokered certificates of deposit for funding, which they use to match asset maturities.



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One of the most profitable and well-capitalized banks in the nation, Nevada-chartered Beal Bank USA, is an industrial bank owned by Texas billionaire Andy Beal. It has $32 billion in assets and, as of March 31, 93% of its deposits were brokered. It’s currently offering one-year CDs yielding 4.65%.



Toyota Financial Savings Bank is another well-capitalized Nevada ILC, set up to provide savings accounts, mortgages and commercial loans to the company’s 35,000 U.S.-based Toyota and Lexus employees. Under its new chief executive, Mara McNeill, a former JPMorgan Chase auto finance executive—she graduated from the Air Force Academy in 1993 but also has a JD from Georgetown and a master’s in public policy from Harvard—its assets have grown from $1 billion in 2020 to nearly $6 billion, funded to a great extent by broker deposits, which currently stand at 58% of the total.



“It can be economically advantageous to have core deposits. You don’t have as much in fees from the FDIC,” McNeill says. “But at the same time, you’ve gotta pay for the salespeople to go out there and get those accounts. And so, you know, there’s a fee here and a cost there.”



Other successful but little-known industrial banks, all based in Utah, include Comenity, an $12 billion credit card lender; Nelnet, a $1 billion specialist in student loans; and Wex, a $6.5 billion bank offering gasoline charge cards to small and midsize fleets with discounts from refiners like Chevron and Exxon. Until a few years ago, $2 billion Medallion Bank specialized in financing taxicab medallions. But Uber and Lyft forced a hard pivot to lending for recreational vehicles and boats, and financing home contractors. Virtually all its funding comes from brokered deposits. “Our Deposits Don’t Run,” reads a headline on its website.



Industrial banks currently represent about 1% of all bank assets, but the ICBA apparently views them as a dire threat to community banking. In July 2005, when Walmart applied for an industrial bank charter, the ICBA helped orchestrate a tidal wave of thousands of alarming letters to the FDIC and Congress. Their message: Just as Walmart killed mom-and-pop retailing, an industrial bank charter would help it eliminate Main Street banks. In fact, efficiency-minded Walmart merely wanted to streamline credit card processing, saving money on bank fees, and would have been precluded from offering banking services directly to its customers.



The FDIC, under chairman Martin Gruenberg, ignored Walmart’s application. Then, a full year after the retailing giant submitted its forms, the FDIC announced a six-month moratorium on approving all ILC applications, ostensibly to “determine if any emerging safety and soundness or policy issues exist.” Walmart withdrew its application in March 2007, and that six-month moratorium wound up lasting 14 years, until Jelena McWilliams took over as FDIC chairperson and approved Nelnet and Square’s application.



“Martin Gruenberg does not like nontraditional banks. And so they just slow-walked the applications when they hit Washington,” says George Sutton, general counsel for the National Association of Industrial Bankers and Utah’s former commissioner of financial institutions. “Eventually it just goes into a black hole.” (The FDIC declined&nbsp;Forbes’&nbsp;interview requests.)



Banking crises are always about trust and stability, something traditional banks no longer have a monopoly on. Most people now trust Apple and Toyota more than their community bank. The next generation of banking customers care little about charters or regulatory turf wars and are savvy enough to know that hot money offering higher returns, whether from their local bank, fintech or broker, is smart money.

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