My working day starts between 7am and 7.30am Cairo time – that’s the time I arrive at the offices even though the official start time for the bank is 9am. Every Monday morning, we have a team meeting where we look at the progress we are making on our departmental scorecard milestones and, more importantly, look at how each team member is doing and whether they need help. We also discuss all the treasury risks at hand and what we should be doing to mitigate them.
African Export-Import Bank (Afreximbank) is a child of necessity born amid a trade crisis in the continent during the 1980s, when Africa was exposed to banking run by western international commercial banks that chose to de-risk by shutting down their operations in the continent. The African Development Bank (AfDB) came up with a proposal for the continent to have a trade development bank that would focus on promoting intra-continental and extra-continental trade. That proposed institution is Afreximbank today. The bank’s mandate is very simple – to promote trade between African nations and Africa trading with the rest of the world.
For example, in 2018, the bank established the continent-wide Intra-African Trade Fair, a platform where businesses from around the continent converge in one place to showcase their products and services to other businesses. The fair is a pivotal tool to broaden and deepen intra-African trade volumes. This year, the event will take place in my home city of Cairo between 9-15 November. In its first two events (2018 and 2021), the trade fair brought together more than 2,500 exhibitors and 77 countries, generating more than $74bn in trade and investment deals.
Raising finance is a huge challenge in Africa
The bank has stood the test of time. For example, when the trade commodity price crisis hit the world in 2016-18, many international players immediately stopped providing trade facilities in the continent. The bank stepped in to give member countries counter-cyclical trade facilities that would enable them to make good any trade obligations that were falling due during the crisis.
The bank also stepped up during the COVID-19 pandemic and subsequent Ukraine-Russia crisis where it offered facilities and guarantees that enabled member countries to access vaccinations, fertiliser and food.
On an individual level, there are many opportunities here at the bank. They include learning new things every day and participating in the wider bank’s strategic objectives. Treasury deals with both sides of the balance sheet – the financing as well as the asset development side of things.
This enables us, as treasurers, to understand in-depth the 360-degree spectrum of the bank’s activities and also deal with various high-level stakeholders, both internally (senior executives, the board of directors and shareholders) and externally (largely, clients and investors/lenders). Another opportunity involves passing on the knowledge that we are exposed to as treasurers to our colleagues and clients, and advising them on how to mitigate financial risks in order to efficiently achieve optimum results.
There is still an appetite to invest in asset classes of African origin, but these investors’ required rate of return is usually on the higher side, which, to an African issuer means high cost of funding
Raising finance is a huge challenge in the continent. The major underlying driver of this is the perceived ‘challenging business environment’ that most, if not all, international investors think about the continent. There is still an appetite to invest in asset classes of African origin, but these investors’ required rate of return is usually on the higher side, which, to an African issuer means high cost of funding.
The bank is rated by international credit rating agencies such as Moody’s, Fitch, Japan Credit Rating Agency and Global Credit Rating. But even though the bank has investment credit rating grades, the cost of funding is miles wider relative to similar issuers with similar credit rating grades in the developed world. This is clear evidence that there is a difference in how investors perceive and price the emerging market risks relative to similar risks in the developed world.
It is a clear corporate finance phenomenon that in a rising interest rate environment, investors run to safety, which means that most investors de-risk what they perceive to be high-risk assets in favour of low-risk assets that are equally paying better returns on a risk-adjusted basis.
Talent is also a challenge. The continent has a small pool of professionally trained treasury specialists. As a result, it takes a long time to recruit new team members. I have a real-life case where we have been looking for a treasury specialist since 2017 and we still haven’t secured one yet. This makes life tough in the treasury space in the continent.
I have been, and go, all around the continent and the rest of the world. Recently, I have been to Kenya, Ghana, South Africa, the UK, Switzerland, DRC and many more. And of course, I must not forget Glasgow, in Scotland, where my family is based. I regularly commute between my two home cities – Glasgow and Cairo.
My advice to the younger ones is that when you make up your mind to pursue treasury as a career, take it seriously. The good thing is that treasury is very practical, evolving, challenging but satisfying. The myriad treasury principles that you study are the same things that you do at work – it’s that practical.
My day usually ends with loads of positive adrenaline and satisfaction about my contributions that day. Among others, I like to go through my to-do list of the day to see how I have done. Before I leave the office, I also write down priorities for the following day – this is imperative!
Chandi Mwenebungu FCT is group treasurer and director, African Export-Import Bank (Afreximbank)
This article was taken from Issue 3, 2023 of The Treasurer magazine. For more great insights, members can log in to view the full issue. If you're not an ACT member, you can sign up for eAffiliate membership.
