Citi Perspectives Fall 2019

Citi Perspectives  | 13 12 | Treasury and Trade Solutions Gursel says that Dubai has also become an established location for treasury centers being a “time- zone-friendly, flight-friendly location to get into Africa.” And one newcomer, Gursel notes, is Casablanca, with the Moroccan government rethinking its tax regime to compete with Dubai and the Middle Eastern markets. “It’s also becoming an easier place to do business and a doorway for new organizations entering the continent. I suspect we will see more treasurers considering this location in the future.” Running treasury operations from the Netherlands, Melissa Howe, Banking Specialist at Booking.com, says that having a local team that is close to an individual market within Africa is still important. At the very least, it aids immediacy of response to regulatory change — and African countries often experience frequent regulatory movements. As such, Booking.com already has finance operations in Kenya, making Nairobi its natural choice of location, and this ear-to-the-ground is a significant help for group treasury. Meanwhile, for Alouis Ngoshi, EMEA Regional Treasury Director, Cummins, the model is one of flexibility, largely in response to the challenging regulatory environment of its multi-market presence. Normally, he says, treasury would centralize, given that this helps to improve visibility and responsiveness over cash. “Africa is different. That’s why we set up regional teams, specifically to focus on the regulatory environment.” There were some obvious location choices in Africa for Cummins but West Africa presented an interesting alternative. “We have an expert located in West Africa, to focus on that region and help relationships with some of the West African banks,” says Ngoshi. While this local approach has its obvious benefits, “it’s a constant struggle between how we keep everything at the center but still get that vital local knowledge on the ground,” he explains. “As such, the ultimate aim is for Cummins’ Africa treasury structure to be similar to what the company has in Europe and the U.S.; but it’s not easy. We are excited to learn about new technologies that are opening up different possibilities to solve this challenge.” Another location that is growing in popularity for treasury hubs is Nigeria. Foluso Ayo-Olaiya, Nigeria Head, Sales, Treasury and Trade Solutions, Citi, believes that the country has some distinct advantages. The “sheer magnitude of Nigeria in terms of population, with thriving commerce and talent, and its free trade and production zones are the driving force for more and more corporates to see the country as the cluster-office for West Africa, even covering East African operations,” she explains. “In addition to having decision-making clustered in Nigeria, service provision is being aggregated here too,” she notes. For example, “the sophisticated payments system in Nigeria is enabling payments services providers to cover multiple geographies from Nigeria, thereby creating a tech payment gateway to support decision-making and execution hubs within the country.” In addition, there is a great deal of focus by the government on creating a more investment-friendly environment. As that develops, she believes “we will see more treasury hubs in Nigeria.” Technology is flipping the script While technology is an enabler of new hub locations, it is also a disruptor that is transforming the treasury landscape in Africa. One of the main areas of technology disruption is e-commerce, says Gursel, which is naturally impacting payments and collections. “Numerous African-based e-commerce platforms have taken off, particularly across Sub-Saharan Africa (SSA). These are feeding new consumer expectations into the corporate treasury world, of faster, more seamless electronic payment methods. Banks are also having to adjust their offerings accordingly, in order to support the new asks.” For European or American corporates operating a treasury hub in Africa, approaches to centralization are being redefined, as a result of regulatory changes and technological evolution.