Many corporations globally are struggling to deal with massive economic and political upheaval. Yet, given the unique and often challenging economies that make up the African region, companies here are uniquely qualified to handle uncertainty and volatility.
“As anyone who has worked in Africa will know,” explains Sachin Shah, head of cash management products, transactional products and services at Standard Bank, which won Best Overall Bank for Cash Management in Africa in this year’s awards, “one of the key requirements is to be able to understand and navigate a rapidly changing landscape from an interest [rate], exchange [rate] and other benchmark perspective.” Shah says African companies are more prepared to deal with volatility than companies in more-mature, stable economies.
The World Bank predicted lower levels of growth in Sub-Saharan Africa in 2016, with growth falling from 3% in 2015 to 1.6% in 2016. Growth has suffered—in part due to lower prices for resources and commodities—but there is still optimism that growth will remain higher than levels seen in other regions, says Shah. “The drive to diversify dependency away from resource-heavy sectors into the consumer, infrastructure and manufacturing sectors continues across the continent,” he notes, “and will set markets up for improved growth rates as the resource environment improves.”
Volatility and regulatory uncertainty play a role, but not all key developments in the region are negative, says Shah. “With the advent of increased innovation, we continue to work with our clients to evolve their approach to payments and collections, with a view to both reaching more clients and [reducing] their working-capital cycle.” Shah points to digitization, disruption and innovation as key themes that will resonate across most regions this year.
The development of regulations surrounding foreign currency payments and “trapped cash” present a challenge for fully harmonized, regional treasury centers; but “there are some opportunities emerging that will [ultimately] contribute to improved payments outsourcing and processing,” says Shah. “On a positive note, East Africa continues to be one of the regions at the forefront of driving the adoption of electronic and alternative payments mechanisms.”
Mobile payments and collections are a key driver for change in Africa, as companies “positively disrupt their own value chains within a region where more people have mobile wallets compared to bank accounts,” notes Shah. “This enables access to more clients for [the companies’] own products and services, as well as improvements to their working-capital cycles through direct client engagement.”
In conjunction with this payments revolution, African companies are increasingly taking advantage of improved infrastructure to set up shared service centers, and they are making better use of data to improve treasury visibility and forecasting.
“Concerted efforts and partnerships between the public and private sectors in these markets continue to diversify growth into new sectors, sustain job creation and spur the growth of small and medium-size enterprises, which is encouraging,” says Shah.
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Africa |
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Best Overall Bank for Cash Management |
Standard Bank |
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Best Bank for Liquidity Management |
Standard Chartered |
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Best Provider of Short-Term Investments/Money Market Funds |
STANLIB |
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Best Bank for Payments and Collections |
Ecobank |
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Best Bank for Working Capital Optimization |
Standard Chartered |
AFRICA
Best Overall Bank for Cash Management
Standard Bank
Standard Bank has been around for 152 years and has a presence in 20 countries in Africa. It is a leading pan-African bank supporting intra-African trade and the global and regional cash management needs of corporate clients. Its Business Online digital banking portal offers ease-of-use with such features as single sign-on and multibank account management and reporting. On the working capital front, the bank has “created a dedicated team in South Africa which conducts in-depth analysis into the working capital cycles” of clients, says the bank, along with benchmarking and analysis of how process reengineering can enhance working capital management.
It is one of few banks with the ability to help multinational clients with regional liquidity management solutions for markets such as Mozambique, Nigeria and Angola. The bank’s Global Liquidity Management System allows corporate clients to “view and manage their cash management schemes with Standard Bank on a real-time basis, allowing treasurers to optimally manage intraday liquidity risk, in addition to optimizing overnight cash working capital interest yields.” Companies can thus take advantage of real-time cash pooling services combined with real-time consolidated balance reporting.
Best Bank for Liquidity Management
Standard Chartered
Standard Chartered is in the midst of a $2.9 billion investment to 2018. Our ‘Here for Africa’ campaign further demonstrates our commitment to the region. It has a direct presence in 15 countries in the region.The bank offers corporate clients with optimized solutions for liquidity management, such as true end-of-day cross-border sweeps offering same-day value. It can provide multi-currency, multi-entity global interest optimization, and automated options on surplus and overnight cash for yield enhancement.
Standard Chartered also offers best-of-breed digital solutions for optimizing liquidity management, such as Straight2Bank Liquidity—a global liquidity platform that provides companies with greater visibility of global liquidity, along with improved control and operational efficiency.
Best Bank for Payments and Collections
Ecobank
Ecobank has the largest pan-African corporate banking network of any bank, along with a strong local presence in the markets where it operates. It offers a comprehensive payables management solution—Ecobank OMNI—to enhance payment processes and improve controls. It also boasts the largest banking network in Africa. The bank is in the midst of rolling out Ecobank Masterpass QR, a mobile payment solution that it expects to have live in 33 countries by 2020.
The bank offers custom collections management offerings, tied to its digital receivables management solutions. As an example, when a major Nigerian telecoms company wanted to integrate its point-of-sale and bank branch collections into its ERP system, Ecobank delivered. Notes the bank: “The objective was to allow their field sales representatives who collect cash from customers to easily deposit the cash into the company’s account with amounts deposited updating their ERP system for easy reconciliation.”
Best Provider of Short-Term Investments/ Money Market Funds
STANLIB
While the investment manager is rooted in the history of Standard Bank, which was founded in 1862, the current iteration of STANLIB began life in 2002—the amalgamation of seven different asset and investment management holdings of Standard Bank and Liberty Life. STANLIB has boots on the ground in 10 African countries, with over R586 billion in asset under management.
The asset manager offers a range of investment options, including the STANLIB money market fund.
STANLIB’s Cash Management team seeks out products “that could maximize clients’ short-term cash returns and aims to offer liquidity,” says the firm. “Fixed-interest portfolios are made up of varying investments in the bond, money market and other income securities. These portfolios aim to provide interest income over the short- to medium-term.”
Best Bank for Working Capital Optimization
Standard Chartered
Standard Chartered has been growing extensively in the major markets of the region, and investing heavily in solutions that fit this diverse marketplace. It offers market-specific receivables discounting and supplier finance solutions and is one of the world’s best providers of tailored trade finance solutions—all of which help clients to most effectively optimize liquidity.
In addition, the bank stands our for its ability to design and implement unique solutions for specific corporate problems. As an example, the bank was mandated to set up a multi-market cash management solution to improve efficiency for a mobile infrastructure provider, enabling “automated transaction initiation and information flows through SWIFT, Onsite Cheque Printing and Local Bank Cheque leading to maximization of ROI and ERP investments,” said the bank. The solution provided full visibility of account and transaction initiation across markets, 24/7 centralized check disbursement, increased control of cash disbursement and allowed the company to benefit from optimized yield, via the bank’s liquidity management solution.
