– Wei Gu is a Reuters columnist. The opinions expressed are her own –

America may have fallen out of love with Wall Street, but China hasn’t. That’s one way to read CIC’s just-announced $1.2 billion investment in Morgan Stanley — funds that allow the investment bank to repay Tarp money to the U.S. Treasury.

This looks to be an aggressive vote of confidence in the beating heart of U.S. financial capitalism.

Up to a point, but it is also a defensive move.

The truth is that CIC is kicking itself after turning up a chance last autumn to become Morgan’s main shareholder at a rock bottom price, letting in Japan’s Mitsubishi UFJ which bought a big stake at prices which now look sensible.

CIC is not in such a happy position. It bought $5.6 billion of Morgan Stanley convertible securities with a conversion price of $48 to $57 in 2007. When Morgan Stanley’s shares slumped to only a quarter of that price last September, the then beaten-down bank asked CIC to plough in more money.

Facing a big backlash at home for big paper losses on its investment in private equity firm Blackstone and also the Morgan Stanley stake, CIC demurred.

Acting as a sort of rainmaker, former U.S. Treasury Secretary Henry Paulson called up a top Chinese official, promising that Morgan Stanley would not be allowed to fail, according to people who are familiar with the matter.

By asking the Chinese to raise its stake beyond 10 percent, he essentially offered to waive the rule that would have required the Chinese group to be regulated in the U.S. were it to own more than 10 percent of a financial firm.

While that was tempting for CIC, fear still won out over greed and the Chinese resisted Paulson’s entreaties.

That left the field clear for Mitsubishi UFJ, to step in. It paid $9 billion for a 21 percent stake through a mixture of common stock (purchased at $25.35 a share) and convertible preferred shares, with a conversion price of just over $30 per share, roughly half what CIC paid a year ago.

The deal also diluted CIC’s stake to about 7.7 percent. Morgan Stanley’s shares have since risen. Mitsubishi has used its stake to carve out commercial ventures with the U.S. bank.

CIC’s fresh investment at least allows it to reverse last autumn’s humiliating dilution, although Mitsubishi has resisted being diluted, maintaining its stake at the 21 percent level.

But it is not clear it does much more for CIC than that. True the deal allows them to average down their in-cost. But it may simply confirm their reputation as a sort of reverse-Buffett, buying only when the market is greedy and sitting things out when it is fearful.

Earlier this month, Zambian economist Dambisa Moyo argued that Africa needs Western countries to cut long term aid that has brought dependency, distorted economies and fuelled bureaucracy and corruption. The comments on the blog posting suggested that many readers agreed. In a response, Savio Carvalho, Uganda country director for aid agency Oxfam GB, says that aid can help the continent escape poverty - if done in the right way:

In early January, I travelled to war-ravaged northern Uganda to a dusty village in Pobura and Kal parish in Kitgum District. We were there to see the completion of a 16km dirt road constructed by the community with support from Oxfam under an EU-funded programme.

The road is bringing benefits in the form of access to markets, education and health care. Some parents say their daughters feel safer walking to school on the road instead of through the bushes. Many families have used the wages earned from construction work to pay for school fees and medical treatment. This is the impact of aid.

Having lived and worked in east Africa, I have witnessed the positive effects of aid. But done badly, it can be very limiting and even has the potential to create more harm. To avoid this, it must be provided within an enabling environment in which it is used as a catalyst for change and not as an end in itself. Governments must show leadership through an accountable system.

For individuals, access to resources – including aid - is like an investment. Aid can build up poor people’s assets, support good governance and enhance skills and capacities to bring about transformation. But it can become a bane when it makes communities dependent, lazy and hopeless. Governments, aid agencies and the United Nations need to ensure the delivery of aid is well planned and coordinated, leading to higher self-reliance among poor communities.

Aid is also beneficial when trade is fair. There are several examples in Africa, like the case of coffee farmers in Uganda, where aid has been used effectively to improve the overall quality of the coffee seeds, thereby giving farmers better prices for their produce. When they have access to markets at home and abroad, they generate income which is ploughed back into increased output, better access to health and education, and overall improvement in the quality of their lives. To make this happen, developed countries need to stop procrastinating and put in place fair trade practices.

Aid works well if governments are accountable – in other words, when they are responsible and encourage active citizenship. On this continent, civil society is still weak and needs to be nourished. But stopping aid will not resolve frustrations about poor governance, which is partly a result of weak public scrutiny. Aid should be used to help fight corruption and promote accountability through active input from ordinary people.

As I have argued here, receiving aid is not just an act of charity. It should be understood as the right of poor communities to a life of dignity. As stated in international conventions, people have a right to good health, food, water and education. We all need to ensure the planet’s resources are equitably distributed. As Mahatma Gandhi said, you must be the change you want to see in the world.

So what do you think? Which argument is most convincing?

Far from being all bad news for Africa, the global financial crisis is a chance to break a dependence on development aid that has kept it in poverty, argues Zambian economist Dambisa Moyo, who has just published a new book “Dead Aid”.

Moyo’s book, her first, comes out at a time when Western campaigners, financial institutions and some African governments have been warning of the danger posed to Africa by the crisis and calling for more money from developed countries as a result. The former World Bank and Goldman Sachs economist spoke to Reuters in London.

“I’m not saying its going to be easy, I’m just saying that there is a real opportunity for policymakers to focus on coming up with more innovative ways of financing economic development. In a way the crisis actually provides the African governments with the situation where they cannot rely on aid budgets coming through from the West.”

Moyo believes more than $1 trillion in development aid over the past 50 years has only entrenched Africa’s poverty, distorted economies and fuelled bureaucracy and corruption. She sees alternatives such as encouraging trade - particularly with emerging markets - encouraging foreign direct investment, microfinancing for enterprise and seeking funds from capital markets.

Moyo is not discouraged by the fact that all those options appear more difficult in the current environment.

“It just means the onus is on African governments to come up with a more compelling story as to why African governments are overseeing real asset investment not derivative products we don’t really understand.”

“If you focus on traditional markets like Europe and the United States, you come to the conclusion that markets are really damaged and it’s very hard to raise money in those markets, but if you start to look towards China for example which has $4 trillion of reserves, all of a sudden you could see there might be another opportunity to do a bond issue in the Chinese market for example.”

“The model that’s coming up, that I’m proposing, is essentially one where Africa and Africans become equal partners with the rest of the world, not one where there is kind of a donor and a recipient, where Africans are kind of viewed as secondary citizens,” she said.

“There is no other system, whether a political system or a business system, that has stayed as the status quo for 60 years when we all know it’s not doing what it’s supposed to do, it’s not generating growth and it’s not alleviating poverty.”

Moyo is not worried about the impact of aid being taken away:

“It actually tends to pool at the top so it’s not like the average African is going to suffer. They don’t see the aid anyway. Essentially it‘s going to really affect the bureaucratic processes at the top and would really impact on corruption.”

“You could take me to country X in Africa and say ‘look at this girl here and she’s going to school because of aid’. Yes, that’s true but on a macro aggregate perspective these economies are not growing. They’re not growing fast enough to ensure that when that girl is done with her schooling she can find a job.”

Moyo is unimpressed by Western campaigners such as rock stars Bob Geldof and Bono calling for lots more aid for Africa.

“I fundamentally object to the notion that Africa needs more aid and I do think it’s time to have many more Africans speak out, especially the policymakers, because many of the policymakers actually don’t support aid  and yet they stay in the background and they allow this money to come into the economy.”

“You very rarely see Africans on the global stage saying ‘actually we would like to have much more aid please’.”

“I do think a gap has opened up to allow other people to formulate a view on coming to the global debate and offering opinions as to what they think Africans want. But maybe we should start a website called ‘Ask the African’ because I think you might be quite surprised to find that people say ‘we want jobs’, I wouldn’t mind a flat screen television, I wouldn’t mind having my kids go on holiday sometimes ...’”

Picture: Helen Jones photography

Davos leaders have traditionally looked to the long term and have largely been keen on helping all nations of the world to benefit from economic development. But with politicians and businesses tied up with short term concerns about the economic crisis there’s a risk at least that efforts to spread development and to ward against the threat of climate change may go on hold, at least for a time. Reuters News asked delegates at the World Economic Forum’s annual meeting to share their thoughts on whether we should be concerned about development and sustainability slipping down the global agenda.

The announcement by a U.S. investor that he has a deal to lease a swathe of South Sudan for farmland has again focused attention on foreigners trying to snap up African agricultural land.

A few months ago, South Korea’s Daweoo Logistics said it had secured rights to plant corn and palm oil in an even bigger patch of Madagascar - although local authorities said the deal was not done yet. Investors from Asia and the Gulf are looking elsewhere in Africa too.

Investor interest in farmland – not only in Africa – grew sharply after food prices shot to record highs last year. Although commodity prices have fallen since, there is still anticipation of long term demand growth once the world emerges from its current economic troubles.

Philippe Heilberg, chairman and CEO of New York-based investment firm Jarch Capital, told Reuters he saw ripe opportunity for decades in south Sudan’s Mayom county. The deal covers land nearly twice the size of the Indian Ocean island of Mauritius.

Land is being leased from General Paulino Matip Nhial, Deputy Commander-in-Chief of the Sudan People's Liberation Army (SPLA) - the armed wing of the ruling Sudan People's Liberation Movement (SPLM) in semi-autonomous South Sudan. Jarch Management is also buying an interest in a local company from Matip’s son.

But should Africa be handing out its land to foreign investors and will the local people and countries involved be the ones to benefit?

This commentary in the Financial Times made comparisons with the colonial grab for Africa’s resources and points out the damaging legacy that remains.

“There is a need for investment if the continent’s full agricultural potential is to be achieved. At a time of growing shortages, there is also an obvious need for African governments to prioritise domestic supplies. If the continent is to avoid repeating history, the big deals and speculation should come later,” it said.

Is it wise to discourage such investment, though, if investors are willing to bring big money to put the land to more efficient use than is currently the case? While some areas of Africa are densely populated and every scrap of ground is farmed, other hugely fertile areas are barely used.

Investors argue that they can bring jobs long term and will improve local infrastructure - perhaps more so than if they were taking land for less emotive mining or oil concessions - as well as increasing food supplies and foreign exchange earnings. Elsewhere in the world, mechanised agriculture and bigger farms have led to major productivity increases - although environmentalists argue they can cause damage too. Despite their best efforts, African governments have not always proven themselves the best at managing agricultural resources. Might Africa miss out on development that has helped fuel broader economic growth in countries such as Brazil?

Land ownership could also prove contentious. In the distant past, it was often held by communities as a whole or vested in traditional authorities. State officials now often have the greatest say. That opens the potential for official abuse of yet another valuable resource. Since governments can come and go unpredictably that also means an increase in risk for investors and can only be a further encouragement to cut costs for a quick return.

Heilberg said Jarch felt comfortable investing in Mayom and that the local politicians and population would be accepting of the investment.

"With risk, you have to look at risk and reward together - this is why we pick our areas very carefully," he said.

So is major foreign investment in land a danger to Africa or is it an opportunity that the continent cannot afford to miss? Is there a way of making it work for everyone’s benefit? What do you think?

(Picture 1: A farmer cuts rice plants to sow at a paddy field in Ivory Coast, REUTERS/Luc Gnago)

(Picture 2: Boys carry sacks of weeds through fields of rice in Senegal. REUTERS/Normand Blouin)

On Jan. 14 Reuters hosted a live video Q&A with our renowned photographer Finbarr O’Reilly about his experiences in the war-torn Democratic Republic of Congo. Finbarr addressed what drew him to Africa and the most difficult aspects of being a photographer in a war zone.

Finbarr is still available to answer questions, submit them in the comments section below or send a Twitter message with the hash tag "#finbarr" .

Check out "Death all around," his multimedia report from a Congolese refugee camp, dispatches from Chad and Afghanistan, selected photos from his portfolio, and an audio slideshow from his most recent Congo assignment.

****

On my latest trip to report on Congo's seemingly unending cycle of violence, I wanted to go beyond generic images of downtrodden refugees and brutal conflict.

I spent two years in Democratic Republic of Congo and Rwanda from 2002 to 2004, covering the regional war that engulfed much of central Africa, and I grew to admire the strength and humour of the long-suffering Congolese.

I returned in November to cover the rebel offensive on the eastern town of Goma. When heavy gunfire erupted while I was photographing at Kibati refugee camp, I was quickly offered shelter in a flimsy tent by Boniface Buhoro, a tailor trying to protect his sister and three-year-old son.

Such kindness is typical of Congo ʼs resilient population, subject to miserable circumstances, misrule and war. Refugees frequently offered warm greetings, friendly smiles and handshakes in squalid camps where they may not have eaten for days.

Amid the chaos of fighting, people fleeing their homes and the demand for quick news pictures, I tried to slow things down by taking intimate portraits.

By shooting with a very low depth of field, I hoped to extract my subjects from their surroundings and portray them as individuals with names and stories that matter.

More than five million people have died, most from lack of access to food or basic health, during a decade of fighting in Congo. This makes Congo 's enduring conflict the deadliest since World War Two.

Most of the victims perish far from sight, deep in the bush. This time, death seemed all around.

Driving to the front line early one morning, mist hung over the road and smoke from Nyiragongo volcano darkened the sky.

Marking the first rebel position were the bodies of two government soldiers, a bullet through each of their skulls.

Traveling north later, I reached the hilltop village of Kirumba , where local Mai-Mai militiamen had clashed with government troops fleeing the Tutsi rebel advance.

The army quickly buried their dead, but the Mai-Mai corpses were set on fire by beer-drinking troops.

I found them the next morning, fat still bubbling on one charred corpse, its genitals cut off. Another body had an umbrella stabbed into its face. Soldiers joked and laughed.

Back near Kibati camp, I followed a funeral procession into a sun-dappled banana grove. A tiny purple casket containing the body of eight-month old Alexandrine Kabitsebangumi, who had died from cholera, was being lowered into the dark earth.

The grove was filled with graves. As women sang a haunting hymn, the mourners moved aside, allowing me to photograph.

There's no joy getting a good picture from a baby's funeral.

Another victim, another memory, another ghost.

Congo is still defined by Joseph Conrad's book, Heart of Darkness, which described "the vilest scramble for loot that ever disfigured the history of human conscience." The horror Conrad depicts in his haunting novel, written more than a century ago, lingers today, with Belgian colonial greed replaced by rapacious warlords and profiteers still raping the nation's vast resources at a great human toll.

But signs of hope linger. I covered the tumultuous run-up to 2006 elections and after tense days of photographing riots, mob violence and gun battles in Congo's capital Kinshasa, I would head not to the nearest bar, but to a dilapidated compound, home to children crippled by polio. There, among dozens of twisted bodies and withered limbs, the day's tension melted away.

The 100 children at the Stand Proud compound in Kinshasa must rank among the world's most disadvantaged. Handicapped, impoverished, often rejected or abandoned, and living in Africa's deadliest war zone, they should have little to celebrate. Instead, the lively "polio kids" offer an oasis of hope, unity and optimism in a vast country marked by despair. Despite their polio-damaged legs, wrapped in casts or makeshift braces fashioned from scrap metal, the children dance enthusiastically to loud Congolese music or challenge visitors to madcap games of soccer.

These moments, along with the brave, resilient people I met in refugee camps define the country's character more than the misery and violence.

– Mark T. Williams, a finance professor at the Boston University School of Management, is a risk-management expert and former Federal Reserve Bank examiner.  The opinions expressed are his own. —

It looks like the oldest trick in the book was used to allegedly bilk wealthy investors, banks, charities, endowments, and hedge funds out of their money.  How could sophisticated investors have been duped by what could potentially be the largest Ponzi scheme in U.S. history?  The answer may center on their due diligence prior to signing up with the investment firm run by Bernard Madoff, accused of masterminding the massive fraud.

Due diligence is the rigorous process undertaken to evaluate the controls, credibility, and capabilities of an investment firm prior to putting money at risk.  This process doesn’t stop once a money manager is chosen, but continues over the life of the relationship.  The $50 billion in reported losses and the fact that this scheme went undetected for so long are stark reminders that there is no substitute for solid investor due diligence and ongoing monitoring.  Unfortunately, it has taken a down market to expose such fraud.

The following are 10 steps to help to reduce the chance of fraud.  (Note: Until a human fraud meter is perfected, such risk can never be completely eliminated.)

1.      Find a great money manager not a great friend.

Make sure the candidate pool is based on professional reputation, capabilities, investment track record, size of audit firm, and level of overall risk controls.  Deciding on the right money manager should be a pure business decision.  Confusing this business relationship with friendship or a person’s golfing handicap can cloud sound judgment.

2.      Conduct your own independent due diligence.

Regardless of who else might be investing with a potential money management firm (relatives, acquaintances, movie stars, or billionaires) don’t neglect your duty of completing your own thorough due diligence.  It’s dangerous to blindly assume that those that have a lot of money can also pick the most honest money managers.

3.      If you can’t do your own due diligence, hire a qualified agent to do it.

There are consultants and hedge funds with the expertise to conduct thorough due diligence.  But delegating this duty does not mean you can consider your work finished.  There must be constant monitoring, reporting, and ongoing dialogue between the investor, the agent, and the investment management firm.

4.      Remember that risk and return always goes together.

Investment returns mirror the level of risk taken, a fundamental investment management principle.  If investment returns are steady, regardless of an up or down market, it would suggest that there is a deviation from this principle.  Returns never lie and are a great “red flag” monitoring tool.

5.      Money management firms are not charities; they are commission driven.

Many good money managers who are not good marketers hire salespersons to talk up their services.  Be aware that the person selling you on an investment manager might be motivated more by their commission than any commitment to help you.  Ask to have all sales commissions put in writing.

6.      Money manager diversification is your best friend.

Large investors should consider diversifying, using more than one investment manager.  Doing so will avoid putting all your eggs in the hands of one firm and will reduce the financial consequences of fraud.

7.      Asking questions is great but getting clear answers is even better.

Investment related questions must be asked frequently with responses monitored and documented.  If questions are not being fully addressed, not provided in writing, or if the story changes over time, it might be a warning sign that it is time to take your money and run.  Examples of basic questions include:

a.      How is the money being invested?

b.      Where are the returns coming from?

c.      What are the portfolio performance benchmarks?

d.      How is the portfolio performing relative to these stated benchmarks?

e.      What is the level of portfolio risk being taken relative to expected return?

8.      Conduct on-going monitoring of the relationship.

Once money managers have been chosen, on-going monitoring is needed to insure that the firm(s) continues to act, walk, and talk as they have represented themselves.  Like fruit, people can rot over time.  You need to know when the fruit flies start appearing.

9.      Good returns do not mean due diligence can be stopped.

With all investment returns come a level of risk.  Make sure your money is not exposed to excessive risk taking.  Be suspicious of consistent returns that do not track with market fluctuations.

10.     Money managers that are highly regulated tend to have reduced levels of fraud.

Fraud can persist anywhere, but banks with investment management divisions are highly regulated at the federal and state level.  For investment clients, these extra layers of oversight can be a safety net against fraud losses.  Banks also tend to be very concerned about reputational risk events and are focused on developing tighter internal controls to minimize fraud.  As added protection, if fraud occurs, banks tend to have more assets to go after when filing legal action.  They also tend to be motivated to settle legitimate fraud based lawsuits to avoid the negative publicity.

Sudan's President Omar Hassan al-Bashir was in a jubilant mood when he announced to crowds of supporters that he was declaring a ceasefire in Darfur.

From his body language, you might have thought he had already ended the crisis and achieved his goal of avoiding a possible indictment by the International Criminal Court for alleged war crimes in Darfur.

In the build-up to his speech, supporters surged to the front of the crowd waving sticks and punching the air with their fists to show their support for the army officer who came to power in Sudan in a coup in 1989. There was almost a party atmosphere.

Tanzania's foreign minister Bernard Kamillius Membe was greeted with cheers as he announced that Sudan had shown that African countries could look after their own crises.

"The International Criminal Court is an irrelevance," said the Tanzanian minister. "You are masters of your own destiny. Africa does not need outsiders to resolve its conflicts."

But after the celebrations were over, serious questions remained as to what impact the ceasefire and other new measures would have on the festering Darfur conflict and the ICC prosecutor’s hope of putting Bashir on trial.

Diplomats quickly spotted loopholes in the text of Bashir’s speech.

Bashir promised an "unconditional" ceasefire in Darfur – but in the same sentence added that it would come into force "provided an effective monitoring mechanism be put into action and observed by all involved parties."

That amounted to "a pretty big caveat" given the difficulty of establishing ceasefire mechanisms in Darfur in the past, one diplomat told me, speaking on condition of anonymity.

Analysts also questioned why Bashir had not announced any freeing of political prisoners from Darfur, another of the recommendations of the government-backed forum that came up with the proposal to call a ceasefire.

Even some officials appeared sceptical.

“Peace in Darfur will not come until the two sides sit down together and agree the issue,” said one, who declined to be named.

Past ceasefires in Darfur have come and gone bringing little change for the estimated 2.5 million Darfuris driven from their homes by more than five years of fighting.

Will this one be any different, particularly since Darfur rebel groups have said they will continue to fight and have dismissed Bashir’s ceasefire as a public relations sham? What difference could it make in a region increasingly at the prey of bandits? Could it be enough to convince sceptical Western countries to agree to postpone any indictment of Bashir?