A private sector mentality in a public sector environment

Rene Awambeng joined Afreximbank in 2016, a year into the tenure of current President and Chairman Professor Benedict Okey Oramah.  

“President Oramah gave me a task,” he recalls, “which was to expand the business; I hit the road running – I got to the Bank on my first day at 7:30 in the morning and chaired my first working group meeting at 10:00.” Until then, he had been Group Head of Global and Regional Corporates at Ecobank Transnational’s London office. Drawn by Oramah’s compelling vision for the pan-African trade finance bank, he joined the team and embraced his brief. 

He reels off a number of achievements the Bank has chalked up since 2016. “We changed the Bank’s customer relationship management and core operating systems and introduced technology to improve our business tremendously. We have introduced new processes that are world class across the entire business and credit chain. 

“When I joined the Bank, we were doing a lot of heavy lifting, which means we were only lending to a few customers. We were covering under 30 countries with about $10bn-$11bn in total assets in 2016. Today, the business has grown and we are covering about 53 countries with a balance sheet in excess of $30bn. Profits have grown threefold and this year we expect them to exceed $550m. Only Libya and Somalia are yet to sign the establishment agreement of the Bank.” Somalia, he says, is close to joining its compatriots, on the back of a $60m telecoms deal that Awambeng says he is very confident of closing. 

“We have grown the books to over 1,000 active clients, with 740 transactions booked and 572 transactions in the pipeline, and we have added more than 500 banks. One key statistic I always use is that when I joined the Bank, we had only 36 Swift key exchanges with banks, including African and international banks. Today we have over 500 Swift key exchanges with banks, which means we have a fantastic exchange network for intra-African trade and facilitation. 

“We actually have banks in Namibia that can speak to banks in Botswana, for example, because we have exchanged swift keys within those banks. Previously all of them had to go up north, either to Europe or to North America before coming back to Africa,” he says. 

Digitisation has been an important part of that strategy, with the Bank investing not just in systems that will enrich the customer experience and improve ease of transactions, but also to enhance internal communications and work flow. This was especially critical during the pandemic, when the team had to pull together from remote locations to continue to serve clients and deliver on critical products that helped sustain the continent through the pandemic. And there is more to come, as Awambeng explains “You know, we had the vision to actually automate and digitise our customer experience across the entire value chain to create a seamless interaction between the customer and the Bank. 

“We are actually developing something called the Customer Online Portal where all our interactions between the bank and our customers will be on that portal. We will offer all our services through the portal, which we plan to launch before the end of August. It is actually ready but we are just waiting to bring in customer service staff so we can launch it.” 

Setting higher targets

In recent times the Bank has, under the current leadership, renewed its commitment to ambitions that Awambeng says were embodied in the founding charters of the institution. Perhaps, previous leaders might have been more focused on stability and the Oramah team is now able to reach higher goals from those solid foundations. 

For Awambeng, this meant that he had his work cut out for him. “The first task that was given to me was to expand the role of the branches. We expanded the coverage and regional distribution of the Bank, leveraging technology to deliver efficient customer service and grow new products around transactional and correspondent banking. We standardised the processes to reduce turnaround time and to deliver on a suite of products for our customers, while also improving liquidity of the Bank,” he says.

It also entailed making more fundamental changes.“Traditionally, DFIs are not deposit taking institutions, so in 2014 we launched the African Resource Mobilization Programme and created the Central Bank Depositary Programme (CENDEP), which has become very successful. Cumulatively, we have collected over $32bn of deposits under that programme since 2014,” he reveals.

The Bank’s management remains committed to the full implementation of Afreximbank’s Africa Trade Gateway project, an ecosystem composed of a number of technology-driven initiatives, including the MANSA platform, the Pan African Payments and Settlements System (PAPSS), The Trade and Investment Regulations Platform (TRADAR regulations), the Trade Information Portal (TRADAR Intelligence), and Corporate Internet Banking.  

Credit ratings agencies have also noticed and adjusted the Bank’s ratings accordingly, which is itself a boost to the Bank’s efforts to raise funds and execute its transformational, pan-African mandate. Awambeng is quite clear where to place the credit for these results. “This has been brought about through the hard work of the leadership team and tremendous support from the Board and shareholders. We have built new products and diversified our product suite [see table].” 

It also hasn’t hurt that there have been renewed efforts to improve the culture at the Bank and improve efficiency, effectiveness and productivity. “We have put clients at the centre of value creation. Everything we do is aimed at improving the customer experience. We don’t just provide the customer with a single product; we facilitate them to move to new markets in addition to the loans that we give them,” he says. 

Rising interest rates in the last year have posed a challenge to lenders and borrowers as costs increase but Awambeng says the Bank is still doing its best to look out for its customers.   

The crises of recent years have also given the Bank an opportunity to expand its mandate. When Covid struck, the Board approved the Pandemic Trade Impact Mitigation Facility (PATIMFA) in March 2020 and the $1.5bn Collaborative Covid-19 Pandemic Response Facility (COPREFA) in November 2020. PATIMFA played a key role in supporting Afreximbank’s member countries to mitigate and manage the financial, economic and health effects of the coronavirus outbreak on the continent, while COPREFA supported African economies to weather commodity price shocks and procurement of medical supplies. PATIMFA was essential to help countries, disbursing over $6.5bn to cushion them from the fiscal repercussions of a once-in-a-lifetime exigency. 

And when vaccines eventually arrived and African countries were struggling to procure supplies, the Bank marshalled a consortium of nations under the umbrella of the Africa Medical Supplies Platform, complete with a $2bn AVATT facility to bulk-purchase critical vaccine supplies for the continent. Similarly the Bank sprang into action in the face of the conflict in Ukraine, launching the $4bn Ukraine Crisis Adjustment Trade Financing Programme for Africa, the sole purpose of which is to help African nations manage the impact the crisis of the food security challenge would have on their economies and businesses. 

The ability to deliver on an ever broadening mandate requires skills and competencies that Awambeng says the Bank has honed over the years. “We have to execute at speed – grow the quality of our assets and diversify it to improve the profitability of the Bank while at the same time trying to handle a very complex stakeholder map. Our stakeholders range from governments, regulators, ratings agencies, clients and the board,” he underscores. 

That means having a nimbleness that is worthy of a private sector operation that may not come naturally to the typical multilateral or development finance institution. “It’s very much a private sector mentality in a public sector environment. We operate like a business in the corporate private sector. We still have the government protocols and immunities as a diplomatic agency but we have to do business with a private sector mind-set,” he says.  

That means remaining unflinchingly African, while striving for standards that are comparable with any other part of the world. It means having a team that works closely together, engaging and consulting with one another on the big decisions. 

“It means that when  a deal comes, we need to understand the nature of the deal, the type of deal to deliver to the customer and we need to allocate resources from compliance, from legal, from coverage, from the product that we are selling, from treasury and from operations. 

“So if we are doing a transaction there may be 10 to 12 people that will be working on that deal but only one person may be dealing with the customer as the coverage person. That is a significant improvement in the process in that there is seamless flow of information within the team so that people are informed at every stage of the process,” he asserts. 

Complex transactions

On the road to becoming a $30bn Bank, Afrexim has been involved in several big ticket transactions. Since the launch of the African Trade Finance Confirmation Programme (AFTRAF) in 2019, Afreximbank has confirmed over 2000 trade transactions worth $6.3bn for over 100 African banks. Access to trade finance remains a significant challenge for African firms. Recent estimates shows that the estimated value of unmet demand for trade finance in Africa was $81.8bn in 2019 and has averaged $91bn over the past decade. Indeed, this is reflected by the low percentage (40%) of African trade that is bank intermediated compared to 80% globally. 

That is not all. “I have also been involved in projects that have had impact in places like Cape Verde, building hotels from design conception to seeing them in reality. In Comoros, I have been involved in getting the country to sign up on providing strategic imports. I have been involved in Eritrea where we are managing all their payments and ensuring they can get all the strategic goods and services they need,” he recalls. Similar support has been extended to Ethiopia for strategic imports and logistics in very challenging times. 

The important thing is that as total assets increased, the quality of the assets improved, as these risks are well thought through, he says. “All these are structured trade finance risks and well calculated. This is not about pushing the Bank to take on unnecessary risks through investments.” 

It is also important, he says, that the Bank achieves its $50bn ambition, which will further empower the it strategically. “When you are a $50bn bank, you are systemic in the global financial system and people have to reckon with you,” he argues. 

Emboldened by its success on the continent, Afreximbank is now reaching outwards. In December 2022, the Bank approved a $1.5bn facility for the benefit of participating member countries of the Caribbean Community. In September that year, nine member states of the Caribbean Community and Common Market (CARICOM) were admitted into the Afrexim community at a historic Africa-Caribbean Trade and Investment Forum held in Bridgetown, Barbados. Today a total of 11 countries have joined. This has given fresh impetus to Oramah’s ambitions to make the Bank a financial home for the larger African community home and away. 

Under the Bank’s sixth strategy, here are plans to extend its network, with representative offices in the UK and UAE while seeking to create and deepen ties with other export-import banks in China and Korea to give the Bank’s ambitions more ballast. 

Back home, the Bank has, in partnership with the African Petroleum Producers Organisation, conceived the African Energy Bank, an African solution to a problem that other continents may not have to contend with. As climate concerns heat up, the oil and gas industry is struggling to attract and retain investment, which, for African countries that are rich in deposits and poor in energy, would pose more than a few challenges. 

The African Energy Bank would provide the funding for exploration and exploitation, enabling the countries to make money off their resources, power their homes and industries and fund their transition to cleaner energy in a manner that is not disruptive to their economies. Awambeng says the energy bank is on the verge of becoming a reality. “All the feasibility studies and business plans have been completed and we are just finalising the establishment agreement after which we will have to establish the host country agreement. Then we will need countries to ratify the agreement and support it in terms of equity and shareholding,” he says. 

Going forward, the Bank will seek to further expand its role, with its six regional offices leading the charge to bring in new deals that could potentially transform the African economic landscape, while also satisfying the Bank’s hunger for growth.  

For the Bank, this means, becoming more agile and sensitive to the demands of its customers and stakeholders and serving them where they are. “Afreximbank has grown beyond a traditional DFI. Today, it is the one stop shop for trade finance solutions in Africa. We are not a typical lending business or typical trade finance business; we are the entire trade solutions ecosystem. 

“Stakeholders come to Afreximbank for advisory services, for trade facilitation, intra- and extra-African financing of debt and  equity, the full suite. They come to us with their problems and we find them solutions, working with other strategic development partners. Sometimes these solutions are even outside the box.” Going outside the box to support Africa may be an odd proposition for a typical bank but as Awambeng says, “Afreximbank is to support Africa. And if we don’t do it, who will do it for Africa?

“The Bank has launched the new five-year strategy to support its growth and mandate between 2022-2026. The five-year plan will enable the Bank to double its size. We will build on the success and lessons learnt in the last medium-term strategy by adapting to emerging developments and growing in a sustainable manner. This will support the AfCFTA and accelerate the process of industrialisation to diversify the sources of growth and trade at a time of global supply chain disruptions.”