How treasury fintech is changing the way companies in Africa navigate cash management

Denis O’Brien

27 September 2022 | 4:33PM GMT

There are several challenges for companies in Africa with regard to managing cash but fintech is developing solutions fast to help businesses address these challenges.

There are essentially three categories that one can look at when evaluating companies trying to manage their cash. The first category is the SME or mid-sized company, operating in a single country. These companies, whether in retail or B2B for example, have multiple bank accounts spread across multiple institutions. Principally because banks used to work in silos, they weren’t interconnected. So, if one wanted to buy or sell a product or service, to receive payment one would need an account with each bank.

Now with the proliferation of connectivity, that has allowed people to connect to their bank accounts through online banking. However, it’s still a problem because nothing is centralised so a business owner still has to log in to each individual account and download separate statements to see where their money is. What Ceviant is doing to address that problem is to take away that headache and allow customers to centralise accounts into one location.

In the second category are companies which operate on a regional scale in Africa. Here the problem is magnified because of multiple accounts in multiple countries and in multiple currencies.

And then in the third category, companies which are Pan African or global players, that becomes a far bigger headache. Typically, these companies will already have their own treasury management system, but they won’t necessarily have oversight of what their subsidiaries are doing. And if they do, it’s not going to be in real time. They will be relying on their subsidiary’s CFO or accounts department to acquire that information and then send it upstream.

With such delays in real time visibility, there’s an opportunity where a fintech can support by building rails or connections to the banks, which will then allow customers to see where their money is.

Another challenge we’re seeing is the fast appreciation of currencies. Currently in Nigeria, there have been swings of around 15-30% in the value of the Naira in just one week. The market is extremely volatile.

The same currency volatility is also happening in Ghana, Zambia and in other parts of Africa as well. A CFO or treasurer needs to see information as quickly as possible to be able to make key decisions as to the right time to buy stock or hedge currency risk, thereby reducing exposure. And the only way to do that is to know where the money is, have the ability to move it very quickly, and decide where it needs to be moved to.

In terms of regulation, dealing with anything related to moving money or having any type of access to financial instruments or bank accounts, there needs to be a minimum level of compliance and regulation in some form.

For example, in Nigeria, at Ceviant we have a Payment Solutions Service Provider (“PSSP”), a payment service provider’s license now required by the regulator, the Central Bank of Nigeria (“CBN”). It gives the CBN some degree of comfort that we have a minimum threshold in terms of operations, specifically our technology, processes and, more importantly, our data privacy and security policies.

Reconciling payment of receivables is another area where fintech has an opportunity to improve systems. It’s one thing seeing information, it’s another thing actually knowing that any inflows coming in can reconcile to the accounting system or ERP.

One of the ways fintech is doing that is through virtual accounts. Having the ability to uniquely map individual customers to their own virtual account which is dedicated to them helps eliminate errors caused by manual processes.

In summary, cash management solutions are changing the way companies manage their cash – regardless of their size and complexity. We are seeing it transform businesses throughout Africa and there is a long way to go.

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Virtual Accounts