Afreximbank’s love affair with cutting-edge technology

Afreximbank is one of Africa’s most important development finance institutions. Its interventions have helped weather the 2008/9 financial crisis, the 2014/5 commodities slump and more recently, the Covid-19 crisis, providing financial support to governments and corporates to help cushion the blow, providing liquidity and support for trade flows in and out of Africa.

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 include PAPSS, 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 structure and its size – neither too big nor too small – allows it to be nimble. Its senior management, he points out, is technology-oriented and encourages the adoption of technological solutions to problems.

“Over 90% of our system solutions are through the cloud,” he says. “The bank migrated to the cloud over six years ago – way before any of our industry peers.

“When we look at innovation,” Babatunde adds, “it is about optimising end-to-end processes, and then using technology and new ideas to better serve our customers.” 

He says that the driving principles can be summed up as the “ABCD of Tech – Artificial Intelligence; Blockchain; Cloud; and Big Data.”

Emeka Onyia, from the bank’s Innovation and Product Development division, 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 to balance these two imperatives when developing solutions.

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, Tech and Innovation departments have all been strengthened.

“We are aware that innovation has created seismic changes,” adds Onyia. “The bank has understood that you need to able to build and maintain the capacity to 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 also growing fast,” he says. “As a result, the bank has invested a lot to ensure that we have the technical skills and technical stack to support that expansion. The Tech and Innovation team is now 50-strong, or a little more than 10% of the bank’s workforce.”

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, as with PAPSS, 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 on in the development of the solution was critical. 

“The combination of the harmonisation of the different rules and regulations, across jurisdictions, as well as the governance structure of the platform, were actually instrumental in managing the hurdles of regulatory issues,” explains Babatunde.

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 their staff are well versed to look out for any suspicious communication that may be used to compromise the system. 

Security is therefore also something they pay particular attention to when selecting their partner organisations. Konlambigue adds: “We have five layers of security within their 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… 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 also require authorisation from the central bank, much paperwork and the payments will then probably transit through a third bank in Europe or the United States, adding further costs. 

To facilitate intra-African trade and to be able to trade in local currency, Afreximbank is launching a continent-wide platform, the Pan-African Payment and Settlement System (PAPSS).

The idea is to allow buyers and sellers to deal in local currency, use this platform to net off sales and purchases 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, takes away some of the currency risk against these reserve currencies, 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 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 Information Technology at Afreximbank. 

StoneX, he says, was chosen for its cloud-based solution, its expertise with SWIFT and also, the secure nature of the organistation’s 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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