Standard Bank Drives Deepening of Africa’s Capital Markets

 
by Rob Porter, Head of Flow Sales, Global Markets Division, Standard Bank and Themba Rikhotso, Head of Sales, Transactional Products and Services (TPS), Standard Bank

Managing in excess of USD1tr in trade flows each year, Standard Bank is Africa’s largest supplier of liquidity in local currencies. As such, Standard Bank’s efforts to deepen African capital markets are recognised by policymakers on the continent beyond the 20 African markets in which the bank has a presence. 

“Standard Bank is relentless in providing support to our businesses with a view to improving liquidity and drive growth across the African continent,” says Rob Porter, Head of Flow Sales, Global Markets Division, Standard Bank. 

At Standard Bank there is a visible excitement about Africa’s huge potential. The bank’s success in Africa as well as its historical and deepening commitment to the continent - especially in these changing times when other global players are reducing their commitment to Africa - attracts people who are passionate about realising the incredible opportunity that this continent offers, Porter explains.

This places Standard Bank in a unique position to materially improve the infrastructure of finance by deepening the liquidity of bond and forex markets. “We do this by importing good infrastructure intelligence into markets while also recognising and growing the many pockets of domestic excellence increasingly emerging across the continent,” he says. 

That said, illiquidity is impossible to solve quickly. It is also certainly not something that can be achieved by good corporate treasury management alone. Instead, “the evolution of capital friendly macro-economic policy, consistently and transparently applied over time is what the ratings agencies view to provide the grades that give comfort to long term capital commitment,” Porter advises. 

Kenya: a good example of how to get it right. 

While the country has had a long evolution towards a floating currency, the central bank nonetheless managed to resist intermediation during volatile periods. This grew the trust of investors, earned the respect of ratings agencies, and, ultimately, attracted the capital flows. These regular and sustained flows provide Kenya today, with greater liquidity, equipping its central bank to manage volatility without intermediation. The Kenyan shilling in 2016 is a story of stability.

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Beyond the macro-level, however, “simplifying the often complicated ways in which businesses are required to manage liquidity or deal with African economies is what we are good at,” says Porter. “This allows clients to focus on their core businesses rather than administrative burdens.”

Given the increasing scale and regional spread of growth on the continent, “clients increasingly require; improved visibility of cash across operations, tighter control of accounts receivables and payables, and centralised liquidity management – with the ability to integrate these banking services into their own enterprise resource planning systems,” adds Themba Rikhotso, Head of Sales, Transactional Products and Services, Standard Bank.

Corporate treasurers are also increasingly required to optimise working capital, given their strategic view of the business. As such, “Standard Bank’s Working Capital Advisory function assists corporate treasurers increase the turnover of working capital through; financial modelling, process mapping, and benchmarking working capital ratios across sectors,” Rikhotso explains.

Another game changer, this time in forex capabilities, is Standard Bank’s strategic partnership with the Industrial and Commercial Bank of China. While Standard Bank already conducts 2.1 million forex trades each year, the banks’ partnership with the Industrial and Commercial Bank of China provides a unique ability to deal renminbi competitively.

“The internationalisation of the renminbi is one of the most significant developments in the currency market of the decade. With China the world’s second largest economy - and largest exporter - the increasing use of renminbi to settle international trade transactions will become increasingly important in Africa,” says Porter. 

Standard Banks’ current suite of renminbi products includes renminbi letters of credit, spot renminbi, forward renminbi, and options on renminbi. This critical relationship with the Industrial and Commercial Bank of China eliminates third party pass through costs for African importers while removing the exchange rate risk associated with converting USD to Renminbi for African suppliers.  

Rob Porter Head of Flow Sales, Global Markets Division, Standard Bank  Rob is responsible for the Foreign Exchange, Money Markets and Fixed Income customer businesses within Standard Bank’s Global Markets Division. He is based in South Africa and runs a pan-African sales business together with his colleague Sola Adegbesan across 18 countries in Africa where Standard Bank has a physical presence and markets business. He is a firm believer in Africa’s growth potential and is driven to improve the market infrastructure and ease of doing business in Africa for Standard Bank/ Stanbic customers.

Themba Rikhotso Head of Sales, Transactional Products and Services (TPS), Standard Bank  Themba is responsible for all large domestic and multi-national corporations (including all public sector clients) across all industry sectors in South Africa. Prior to this role, he was the Director and Country Head of TPS at CfC Stanbic Bank in Kenya. Before moving to Kenya, he was the Director and Head of Business Development (acquisition) at Standard Bank’s TPS division, responsible for business acquisition for the group. Themba has extensive experience in emerging markets gained in various African countries, and has vast international exposure gained both through providing banking solutions to large corporations globally, and through doing business in China, Australia, Europe and the USA.