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“That said, to achieve the right level of governance, it is important for multinationals to be in tune with their local markets. So, increasingly,
we are seeing global corporates cut back to having two or three regional treasury centres. And if the Middle East and/or Africa is part of
the company’s growth agenda, then Dubai is a great place to locate a treasury hub.”
Whist deciding to locate the regional treasury centre in Dubai rather than in Africa might provide numerous strategic advantages, it does not
de facto solve the cash management challenges that treasury in Africa involves. Citi’s 2014 Treasury Diagnostics results reinforce that
corporate treasurers have a “need for speed” real time treasury management, continued centralisation (efficiency and control) and an acute
focus on risk management. As a result, real time and quality data analytics to help clients manage their business and assist with bank
account rationalisation, control and visibility are critical. Aldred adds “Citi believes that mobile and tablet technology combined with
integrated FX Payment solutions will drive value, efficiency and be extremely relevant for our clients as the treasury organisation continues to
centralise and become even more efficient. This view is supported by our clients and the key treasury trends that we see.”
According to Gursel, some of the most common questions asked by Middle East corporates looking to do business in Africa revolve
around: enhancing visibility with real-time balances; managing FX, country and counterparty risk; centralising payments and trade
finance activity; domestic and regional cash concentration structures; compliance and control; and last but not least, connectivity
standards and formats, such as XML and SWIFT.
“There is no one-size-fits-all approach to overcoming these concerns,” he adds. “The answers or solutions will certainly vary from
company to company, and while I would encourage corporates to of course maximise their bank’s physical network, today it is critical
to understand how SWIFT connectivity and sophistication is changing the tide with ‘virtual branches’ and how banks are enhancing
the connectivity for our clients. And don’t settle for a piecemeal solution. Yes, achieving the right level of local capability is important,
especially in Africa, but it is also important that your bank can deliver platform consistency across the region. Otherwise, the
integration and efficiency benefits of setting up the regional treasury hub will be severely diminished.”
Seizing the opportunity
Embracing digitisation will also be key to making the most of the African markets, says Gursel. “After all, digitisation is changing the
way everyone – businesses, governments, and consumers – handle financial flows.”
“Mobile banking, for example, has revolutionised financial inclusion, and trade dynamics, in Africa: in February 2015, mobile network
operators in Kenya facilitated 80,000,000 payments to m-wallets, compared to 2,500,000 ACH payments via banks. Therefore, consumers,
corporates and banks are all in an era of technology-adaptation in Kenya. From a treasury perspective, mobile payment approvals and
authorisations are now available across Africa. And with electronic banking also available in every country, real-time visibility is achievable,
and on a multi-bank basis in many instances.”
“As digitisation takes hold across Africa, the reliance on traditional bank branches is being challenged. Bricks and mortar presence is
no longer a must-have and electronic formats are making for a much more efficient financial infrastructure,” explains Aldred.
“Treasury centres have a similar opportunity to rationalise and streamline their operations, whilst also leveraging technology and
innovation to gain visibility and manage cash and trade flows across Africa – all from the unique vantage point that Dubai affords.”
SWIFT traffic from Dubai to Africa
16
SWIFT Traffic from Dubai to Africa?
2013
2014
2,500
2,000
1,500
1,000
500
0
South Africa
Algeria
Tunisia
Ethiopia
Ghana
Kenya
Libyan Arab Jamahiriya
Mauritius
Morocco
Tanzania
Uganda
Zimbabwe
2,122
3,014
Total countries
2014: 42% increase
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