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Afreximbank is one of Africa’s most important development finance institutions. Its interventions have helped the continent to weather the 2008/9 financial crisis, the 2014/15 commodities slump and more recently, the Covid-19 crisis, providing financial support to governments and corporates to help cushion the blow.
Some of its most ambitious work today is centred around technology-led innovations to help solve structural issues on the continent. Two of their flagship projects are PAPSS (see below), a payments platform that will enable intra-African cross-border payments without the client having to make recourse to foreign currency and MANSA, a platform that will help conduct due diligence on corporates and be able to connect buyers and sellers.
Technology is thus becoming a key tool to push through the bank’s quest for transforming trade on the continent, and to help it meet its ambitions to employ innovation and find solutions to structural constraints that have held back the continent’s development.
Olaleye Babatunde, Afreximbank’s Director of Information Technology, says the bank’s senior management is technology-savvy and promotes the adoption of technological solutions to problems.
“Over 90% of our system solutions run from secure cloud platforms,” he says. “The bank migrated to the cloud over six years ago – way before any of our industry peers.
“When we look at innovation, it is about optimising end-to-end processes, and then using technology and new ideas to better serve our customers.”
Babatunde explains that the driving principles can be summed up as the “ABCD of Tech – Artificial Intelligence; Blockchain; Cloud; and Big Data.”
Emeka Uzoigwe, Acting Director of Strategy and Innovation, says the department’s work can be defined as “riding the wave of innovation whilst leveraging technology to help solve some of the more profound and long-term structural issues that have held back economic development and regional integration on the continent.”
As a development finance institution, the bank has both commercial and developmental objectives, he adds, and it’s important when developing solutions to balance these two imperatives.
Seismic changes
Over the past eight years, the bank has grown its team from less than 200 staff to a little under 500 today. The IT and Innovation departments have all been strengthened.
“We are aware that digital innovation has created seismic changes,” adds Uzoigwe. “The bank has understood that you need to build and maintain dynamic capabilities to continuously innovate if you want to have long-term stability. In other words, if you don’t innovate and evolve, you actually move backwards.”
Lidibe Konlambigue, Head of Digital Solutions, agrees. “The bank’s own balance sheet and activities are growing fast,” he says. “As a result, the bank has invested a lot to ensure that we have the tech-
nical skills and technical stack to support that expansion.”
A hybrid approach
The bank has a hybrid approach to developing platforms. Some of the work is done by the in-house team whilst other projects are co-developed with partners, as is the case with the Pan-African Payment Settlement System, PAPSS (see below).
The challenges involved are not just technical or technological – but can be regulatory. This often involves working with the regulators when presenting new ideas and solutions. So, with PAPSS, getting the central banks involved early in the development of the solution was critical.
Uzoigwe explains: “The combination of the harmonisation of the different rules and regulations, across jurisdictions, as well as the governance structure of the market infrastructure, were instrumental in managing the hurdles of regulatory issues.”
Many of the innovations at the bank are also
business-led. Once a problem has been defined and ways of surmounting it discussed, the tech teams are then brought in. Technology is there to support innovations.
What keeps techies awake at night? “The issue of security is the one that any CIO will worry about most,” says Babatunde. “Even more so now that people are working remotely.”
To counter this, there are numerous firewalls and protocols such as dual authentication as well as ensuring staff are well versed to look out for any suspicious communication that may be used to compromise the system.
Security is therefore also a key consideration when selecting partner organisations. Lidibe Konlambigue adds: “We implemented five layers of security within the infrastructure, very much like an onion structure. Our modus operandi is simple – we don’t reinvent the wheel. We take the best in class, and we implement following the best practices… and then we assess and stress-test regularly.”
PAPSS to revolutionise cross-border payments in Africa
Normally, when an Egyptian buyer wants to pay his supplier in Gabon, most often he will have to settle the trade in dollars or euros. This will require authorisation from the central bank, involve much paperwork, following which the payments will probably transit through a third bank in Europe or the US, adding further costs.
To facilitate intra-African trade and to be able to trade in African local currencies, Afreximbank is launching a continent-wide platform, the pan-African payment and settlement system (PAPSS).
The idea is to allow buyers and sellers across African countries to make and receive payments in local currency, have this platform to net off payments between countries, and the remaining balance is then settled between the central banks themselves.
It has the advantage of putting less stress on foreign reserves, lowers recurrent hard currency liquidity shortages, reduces costs of intra-African trade and makes it considerably easier for the buyers and sellers.
The project is being piloted in a number of West African countries and at the heart of its success, once the regulatory side is dealt with, is technology.
One of the critical paths within payments is to ensure that two platforms are talking to each other. In terms of payments, the gold standard for international payments today is SWIFT. So when pushing ahead with PAPSS, Afreximbank put out a tender calling for proposals to help design the settlement messaging platform.
The winner of the tender turned out to be StoneX. “It’s important to know that to achieve your goals, you also need to work with solid partners,” says Lidibe Konlambigue, Head of Digital Solutions at Afreximbank.
StoneX, he says, was chosen for its cloud-based solution, its expertise with SWIFT and also, the secure nature of the organisation’s infrastructure and set-up. “The solution was customised to the particular needs of this project and the advantage,” Konlambigue adds, “was that any new features and developments in the payments and settlement space could be bolted on to enhance the service provided.”
David Unsdorfer, Senior Vice-President of Technology Services at StoneX, explains that the project required SWIFT infrastructure for the processing of payments as well as a platform to ensure bank connectivity. He feels that StoneX may have stood out for the quality of the security element within their solution, as well as the resiliency element of their platform – two key aspects of their own platforms.
StoneX are licensed and accredited by SWIFT to offer the full range of services. As a SWIFT bureau, it is always running the latest versions of the software, enabling it to adopt the most up-to-date technologies.
With PAPSS, StoneX will be running the SWIFT infrastructure on behalf of the bank. PAPSS will have its own SWIFT identity, which is being managed and maintained by StoneX, and in addition StoneX will provide a wider variety of SWIFT services to Afreximbank.
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