Trade and technology advances are helping African banks and corporates weather the pandemic.
African corporates have taken some heavy hits from the Covid-19 pandemic. Working capital cycles have been disrupted. Many firms have been forced to seek rescue, including debt moratoriums and restructurings, while their governments have turned to emergency funding from the African Development Bank and other multinational lenders.
Happily, the continent’s big private-sector players are applying some valuable lessons learned from other crises of the past few decades, including drought, armed conflict and epidemics. Guinea’s mining sector, for example, played a role in addressing the Ebola crisis. And the African Continental Free Trade Area (AfCFTA) is widely expected to open up opportunities.
Another expected enabler is the cloud. Last year saw an exponential increase in utilization of cloud services. Standard Bank, which is Global Finance’s 2021 regional winner for Best Bank for Cash Management and Best Bank for Liquidity Management, announced last March that it was moving its core SAP banking systems onto the Microsoft Azure cloud platform.
Digital initiatives such as treasury management systems and supply chain financing platforms will have the greatest positive impact on corporate treasuries in Africa in the foreseeable future and in the long term, says Themba Rikhotso, head of Transactional Solutions, Transactional Products and Services, South Africa, at Standard Bank.
“These systems combine with API [application programming interface] technologies that promote integration with multiple banking platforms across geographies, integrated to budgeting and procurement systems,” he notes. “So, they are able to provide real-time cash visibility, cash concentration and forecasting.” Bringing these functions together allows corporate treasuries to discount their own invoices and will, he believes, have the greatest impact on corporate treasuries in Africa, by providing the most needed relief to their burdened working capital cycles.”
Business continuity remains a key concern. Societe Generale, which takes this year’s titles as Africa’s Best Bank for Payments and Collections and for Outstanding Achievement in Treasury Operations During the Covid-19 Pandemic, was able to rely on a long-established local network. “We have also actively promoted alternative banking solutions ... preserving our clients’ payment and collection activities while limiting human interactions,” says Alexandre Maymat, head of Global Transaction and Payment Services. Based on a network of third-party agents, such as retailers, with whom the bank has formed partnerships to supply products and services, YUP is a contactless mobile wallet that allows businesses to pay money or collect it from the unbanked.
The limits on physical contact that are prompted by Covid-19 are also changing how corporates interact with their banks. “Prior to the pandemic,” says Rikhotso, “our relationship with our customer was heavily social, with more emphasis on face-to-face engagements and a great deal of physical exchange of documents and other elements.” Now, much more of this activity is going digital. Some longtime processes that slowed response to customer complaints—including terms and conditions that required physical verifications and signatures—have changed rapidly to allow digital signatures [such as DocuSign] and other electronic forms of verification.
Customer relationships have remained strong with the move to digital interaction, as Standard Bank emphasizes its commitment to continuing support for customers through the pandemic.
“The biggest lesson for us was that the journey to digital transformation needed to happen much faster,” says Rikhotso, “enabling us to free up our teams to have time to ask value-adding questions and listen to our customers.” Recent well-received improvements have included enablement of straight-through processing (STP) for outward payments and the Swift GPI Tracker, which provides customers with end-to-end payments tracking.