Reflections on Africa

What attracted you to the role at Standard Bank?

Having built up a wealth of experience over more than 30 years with North American and European multinational corporations (MNCs) at Bank of America Merrill Lynch, I was keen to leverage this experience in new ways, which the opportunity at Standard Bank provided. Africa offers enormous potential as a strategic growth market for MNCs in many industries, which is only now starting to flourish, so it was an ideal time to join the bank which has such an important role to play in facilitating corporate expansion, enabling economic development and fuelling poverty reduction.

Standard Bank itself is an exciting place to work, not least due to the diversity and reach of the markets in which we operate and the range of activities in which we are engaged. We have a presence in 18 African countries with 1,249 branches. We employ approximately 49,000 people across retail, corporate and investment banking and wealth management. All our branches are part of the Standard Bank Group, but the ownership in each country can vary between 100% and 51% depending on local shareholding requirements in each country. This is quite a new experience for me, but it is also the experience shared by our multinational clients operating in Africa.

How do client demands of their banking partners in Africa differ from requirements in other parts of the world?

Some requirements will inevitably be the same everywhere in the world: credit quality, geographic coverage, quality of solutions and services, and reliability of processing. Typically, treasurers will turn to their lending banks first to ascertain whether they can support their requirements in specific countries in Africa. This is often difficult in practice however, where global banks have a presence at all in an African country, this is often limited to a single branch. When working in Africa, MNCs are not simply seeking a bank that has a branch in the country, they need their bank to have a considerable depth of coverage and detailed understanding of the cultural, regulatory and market conditions that exist. Consequently, they will look to banks with particular strengths in Africa such as Standard Bank.

As a universal bank with strength in retail, corporate and investment banking, we have the depth of expertise, presence and solutions that our clients require in the markets in which we operate. Our universal banking profile is also important for individuals employed by our corporate clients. Many people responsible for setting up banking relationships and establishing their company’s financial framework in a country are expatriates, so they need their bank to support both their personal and corporate banking requirements. Furthermore, these individuals will often have little experience of working in Africa compared with other parts of the world, so the personal contacts, relationships and support that we can offer is invaluable.

In North America, Europe and increasingly in Asia and Latin America, MNCs are seeking regional cash and liquidity management solutions. To what extent does this apply in Africa?

At Standard Bank, our TPS business (Transactional Products and Services) of which I am a part, leverages our pan-African network to bring together working capital solutions to include host-to-host, electronic banking, documentation, customer relationships etc. Consequently, we are able to provide a high level of consistency and cohesion in our solutions, technology and relationship model in each country. However, our customers are approaching Africa on a country-by-country basis - partly as they often have a presence in a limited number of countries, and partly due to the diversity in currencies, exchange controls, legal, regulatory and market frameworks. Regulations continue to change rapidly; for example, in Angola, the Foreign Exchange Law for Petroleum and Gas operations will require that companies in the energy business pay suppliers in local currency in the future, so companies need to ensure compliance with local requirements before considering whether a regional approach is feasible.

To what extent are treasurers able to manage their cash and treasury requirements for their African business from a regional or global treasury centre?

In most cases, activities such as payments and collections need to be conducted locally, depending on the country in question. However, these will typically be under the remit of a head office treasury centre in the case of European companies and EMEA treasury centre for North American companies, which is largely driven by time zone considerations. It is difficult to integrate activities in countries in Africa with regional or global liquidity structures for the reasons above, but by working with a bank such as Standard Bank, treasurers can have the same visibility over cash and access to communication channels for their business in Africa as they are accustomed to in other regions.[[[PAGE]]]

While the differences in currencies, culture, market, tax and regulatory that exist clearly pose challenges, what other issues would you note?

Early investment in Africa has related primarily to natural resource extraction and infrastructure development. When bidding on projects, companies need to put in place bid bonds as part of the tender process, possibly followed by performance bonds in some cases and so they need an expert banking partner to navigate this process correctly. An essential requirement when starting business in any country is to ensure that employees and contractors are paid in a timely, secure and auditable way. This is more challenging in parts of Africa with a large unbanked population, necessitating solutions such as mobile banking, tellers and mobile branches that can be taken to operations on payday. These discussions are typically part of a far broader banking dialogue including foreign currency management and hedging, fleet financing, trade finance and a range of other issues, which is often more comprehensive than treasury is accustomed to in other regions.

What changes are you seeing in the type of companies investing in Africa?

What is notable is not necessarily a shift in the type of companies that are investing in Africa at this stage, but the pace of investment. With growth projections in many parts of Africa outstripping most other regions, and growth slowing in Asia, the potential in Africa for industries such as natural resources and commodities, infrastructure and construction, power, communications, agriculture, healthcare, education and increasingly consumer goods is phenomenal. Companies in these industries are realising that they need to invest quickly to leverage this potential.

With income inequality a major issue in many parts of Africa, how is economic growth benefitting the poorest?

Addressing inequality in wealth distribution should be a priority for every organisation operating in African countries, but sadly solutions are by no means simple. By generating income for individuals and governments through employment and taxes, individuals increase their economic power and governments can invest in initiatives that bring universal benefit such as infrastructure, education and healthcare. Business practices are different in many parts of the continent, but as a bank authorised by regulatory authorities in the UK, we conduct rigorous KYC procedures, with even more stringent requirements in higher risk countries, to develop confidence amongst our customers and employees.

Finally, having now spent nearly a year at Standard Bank, what are your personal reflections on spending time in Africa and working for the bank?

Standard Bank has already proved a remarkable and inspiring place to work, not least due to the quality of the teams in each country and people’s enthusiasm to enable growth and prosperity across the continent. Having spent a considerable time with my previous employer, it is easy to take your ‘internal network’ for granted, which needs to be developed from scratch when starting with a new organisation. This takes time and effort, focusing on building relationships in every country, but the outcomes are extremely rewarding.

Culturally, doing business in Africa is quite different to my experiences in Europe and North America. The pace and priorities tend to differ, which brings both advantages and disadvantages, but respecting and working with these cultural differences is essential to success. Personally, it has been highly fulfilling to see how we can make a real difference to the companies with which we work in the 18 countries that comprise our network in Africa, and the communities in which we operate. This would not be possible without the ‘ground up’ approach that we take, understanding and responding to the detailed requirements in each country and developing solutions accordingly. In an environment where so much vulnerability exists, it is gratifying to witness the value of relationships in creating certainty, trust and success.