Digitalization furthers financial optimization and brings inclusion to the continent.
Sophisticated treasury management systems (TMS) in Africa are no longer the sole domain of international banks. Regional banks now offer similar services—enhanced with local knowledge.
Corporate treasurers are expected to drive greater efficiencies these days, according to Daniel Morais, head of Liquidity Management, Transactional Products and Services, Corporate and Investment Banking (CIB) at Standard Bank, which won the Best Bank for Liquidity Management award.
“The treasury function is shifting from a decentralized to a centralized management structure,” he says. “Therefore, reliable information on a real-time basis, greater control of liquidity across single and multiple jurisdictions and a lower cost of doing business are becoming critically important for corporate treasurers.”
Standard Bank has embarked on a co-creation journey, with a single entry point for clients via the bank’s TMS. “This allows CFOs and treasury teams to manage their value chains end to end, which ultimately frees up time, allows for optimal liquidity management and reduces costs,” Morais adds. “But, most importantly, we go the extra mile to offer bespoke liquidity-management solutions to our corporate clients.”
Bespoke services have been vital during the pandemic. However, African companies still face liquidity challenges, says Isaac Kamuta, group head of Cash Management and Client Access at Ecobank, our pick as Best Bank for Cash Management.
“First there is yield—the returns they can get from excess funds, compared to the rate at which they borrow what they borrow,” he says. “Also, trapped cash—many customers are sitting on huge local currency balances, which are surplus; and they are unable to transfer it due to FX shortages.”
Kamuta adds that cloud computing is helping African banks enable companies to boost their working capital. “Customers are able now to have better visibility of their cash, resulting in better and faster decision making; and it is now much faster and easier to implement cash solutions.”
Another way technology enables corporates is via ongoing innovations in payments. “Corporate clients are always looking for efficiencies and processing of payments in real time,” states Lizelle Pienaar, head of Corporate Transactional Banking at Rand Merchant Bank, winner of the Best Bank for Payments & Collections award. “Mobile payments allow our clients the ability to process these payments in real time as well as making use of an alternative payment tender type to help drive optimization to their end customers, who traditionally do not have bank accounts. So ultimately, our corporate clients have a wider variety of methods to execute these payments seamlessly and instantly. Mobile payments have also been a key enabler for our corporates in driving their digital strategy.”
Pienaar says the easing of telecom restrictions has enabled financial inclusion for the unbanked population via their mobile phones. “This enabled retail customers to use various channels such as USSD [unstructured supplementary service data] and mobile money at point of sale in order to purchase goods and services, leading to less cash circulating and more digital and safer methods of making payments.”
Covid-19 undoubtedly accelerated the need to provide more digital cash management services in Africa as companies increasingly request real-time capabilities, such as timely liquidity positions, real-time payments and receivable notifications.
The African Continental Free Trade Agreement, which will remove trade tariffs across the continent, has also been a driver, as companies large and small prepare themselves for cross-border e-commerce opportunities. Seamless payments and receivables functionality, the ability to forecast cash flows, and the automation of functions such as onboarding will help businesses trade and grow across the region.