Citi Perspectives Fall 2023: Transforming Treasury

24 | Treasury and Trade Solutions Citi Perspectives And now, says Enwereji, “The increasing shift to clean energy technology has boosted demand for key minerals.” This also comes at a time when corporates are increasingly focusing on being environmentally sustainable, and ensuring their business has a positive impact. The focus on the mining and metals industry, in particular, has environment, social and governance (ESG) implications, and it is important for such companies to make strategic investments that have a beneficial social impact, says Enwereji. “This is where banks can play the role of advisers to help multinational corporations navigate these challenges,” she says. In practice, this could mean that the bank works closely with its partners to understand how it finances trade and working capital and ensure that it is done in a responsible way. Because the region is rich in commodities, the bank takes special care to ensure that the right questions are being asked — and answered — about sustainability and the ESG impact. Finding the familiar in the unfamiliar For companies based in North America or Europe, this region may be unfamiliar, but there is much potential that needs to be discovered. In navigating the challenges, it is important to have the right banking partner — one that knows the corporate’s business in its home markets — and can be the guide on the ground to navigate the complexities of each of the local markets. While there are many languages, cultures, rules and regulations to navigate, the region is becoming more connected, which makes it easier for multinationals to do business in multiple markets. The introduction of the African Continental Free Trade Area (AfCFTA), for example, harmonizes many of the rules and trade tariffs, and removes some of the hurdles to doing cross-border trade. There are, however, challenges that remain — such as dealing with different financial infrastructures, the high cost of capital, and various government restrictions. Meanwhile, there are geopolitical challenges in markets like Lebanon, Egypt and Turkey, which require nimble treasury policies in terms of managing currency exposure and the repatriation of funds, for example. Not only does a regional corporate treasurer have to understand the differences of the various markets, they also need to stay on top of the changing nature of the regulations — hence the need for a banking partner they can trust. “We help clients reduce potential risk,” says Enwereji. Apart from risk mitigation, treasurers are looking to centralize their treasury operations, improve consistency and visibility — and they are increasingly expecting to do this in real time. Many corporates in the region are opting to establish shared service centers, for example, to manage multiple countries. And, combined with innovative solutions, the treasurers are able to use a platform that is very robust and familiar —CitiDirect®— in markets that are new to them. Simplifying and giving visibility at a regional level As companies expand in the region, their treasury arrangements can soon become unwieldy, with multiple relationships to manage. In these situations, many need a global bank to simplify and give increased visibility to their treasuries. For example, Vivo Energy Ltd a Pan-African retailer, which distributes fuels and lubricants via service stations and directly to commercial customers, was needing to streamline and centralize its payroll and supplier payments processes from its regional head office in Morocco across 24 countries where it had a presence. Prior to this, the treasury teamwas dealing with different banks, all with different platforms, which was both cumbersome and inefficient. With Citi, they were able to use a single bank across these markets, through its Multi-Bank Transaction Initiation solution. The company could continue to work with its local banks and was able to view all the third-party bank balances and centralize payroll and supplier payments from a single platform.