Photo of Marion Reuter, Standard Chartered, Lydia Grigo and Anneli Walltott, Sandvik.
By taking a comprehensive and unwavering approach to achieving its centralisation, cash, liquidity and risk management objectives, Sandvik’s project illustrates that although treasury optimisation in Africa can be challenging, treasurers can achieve comparable benefits to other regions.
Sandvik is a high-tech and global engineering group with approximately 43,000 employees with a strong commitment to enhancing customer productivity, profitability and safety.
in partnership with
Sandvik has a centralised approach to treasury and bank relationship management with a global treasury centre in Stockholm. However, with fragmented cash and liquidity, high levels of operational risk and a lack of policy and process consistency in Africa, the group lacked a comparable degree of operational efficiency and control, cash and liquidity visibility and optimisation, and management of risk, compared to other regions.
Consequently, Sandvik was seeking to extend its internal treasury optimisation project, “The Sandvik Way” to its activities in Africa. This included two key objectives:
To enhance corporate governance and risk management to meet international standards and reduce the risk of fraud whilst complying with local regulations.
To improve operational efficiency, standardisation and automation of treasury operations across the continent.
Sandvik’s treasury function includes four local treasurers in Africa who provide dedicated expertise to support the 11 countries that comprise its African footprint. This ‘hub and spoke’ model has been the basis for an extensive centralisation programme for regional cash and treasury management activities. The project comprised three key elements:
Treasury launched a request for proposal (RFP) to rationalise its banking relationships in the region, and ultimately selected Standard Chartered Bank, extending the existing relationship in Nigeria, Tanzania and Zambia to 11 countries, including replacing a variety of incumbent local and international banks in Botswana, Burkina Faso, Ghana, South Africa and Zimbabwe.
The team rolled out a global, standardised payment solution based on FIS’s Trax and SWIFT.
Finally, a domestic zero-balancing solution has been implemented in South Africa to automate and streamline intercompany funding that was previously manual and based on local reporting.
Although many multinational corporations have been successful in implementing cohesive cash and treasury management solutions across core regions such as Europe, North America and parts of Asia, few have been able to achieve the same degree of visibility, control, efficiency and automation in more complex, highly regulated regions such as Africa. Sandvik’s project, in collaboration with Standard Chartered, FIS and SWIFT, demonstrates how global solutions can be applied successfully in the region to achieve comparable benefits as in other markets.
Sandvik is now finalising its centralisation and bank relationship project in Africa, and can now build further on the new structures, organisation and relationship to deliver additional benefits. These include:
Setting up payments hubs in Africa.
Rolling out ‘FX on behalf of’ capabilities.
Reviewing internal invoicing to minimise FX risks and optimise financial efficiency.
These initiatives and others that will inevitably follow in the future, would not be feasible without the strong foundations and comprehensive approach that has been achieved so far
Anneli Walltott, Deputy Group Treasurer, Sandvik.
Improved compliance and control.
Reduced risk of fraud.
Full visibility over cash, liquidity and risk across its African operations through a single connectivity channel.
Liquidity management is now centralised into one bank and one location.
Better use of surplus cash and reduced local borrowings.
Improved payments processing.
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