The Treasurers Roundtable2020 Annual Conference

Leveraging Technology to Provide COVID-19 Appropriate Solutions In Africa

Presented by: Isaac Kamuta, Group Head, Cash Management and Client Access

14th July, 2020

Content

• Impact of Covid-19 on Africa and Response by the Financial Sector

• How are Financial Institutions in Africa Responding to this Pandemic?

• Trends in Digital Payments in Africa Before and During Covid-19 Era

• Expectations of the growth of the digital payments landscape and Governments’

efforts in creating an enabling environment in response to changes in consumer

behavior

• What advances in technology can NGOs and Development Organisations

leverage?

1

2

Impact of Covid-19 on Africa and Response by the Financial Sector

What has been the impact of Covid-19 on Africa?

3

Approximately 7,000 reported deaths across 53 countries as at 19th June 2020 (Africanews)

Commentators project one-third of the African working population will be affected (Mckinsey, 2020)

Decline in consumer spending arising from projected job losses and pay-cuts

Potential loss of between $90 billion and $200 billion of GDP growth (Mckinsey, 2020)

Confirmed cases: 267,818 as at 19th June 2020 (Africanews)

How are financial institutions responding to this pandemic in Africa?

4

Extensions in loan periods, restructuring and moratoriums for businesses impacted by the pandemic e.g. KCB Bank, Standard Bank, etc.

Stimulus funding to the vulnerable via mobile payments, e.g. Nigeria and Togo*

Waiver and reduction of transactional fees for digital payments by some Central Banks e.g. Ghana and Kenya

Providing fundraising platforms for regional agencies e.g. AU and Ecobank

*Source: World Economic Forum

Trends in Digital Payments in Africa: Before and During Covid-19 era

5

Pre-Covid 19 – Many African banks had already invested in digital channels such as mobile apps,internet banking platforms

6

7

Also, most large African economies have access to digital channels for payments and actually use them for payments

% of adult population with access to these payment methods

Ghana Kenya Nigeria Rwanda South Africa

Tanzania Uganda Zambia

100 100 100 100 100 100 100 100

42 56 39 37 67 21 33 36

39 73 6 31 19 39 51 28

Cash

Bank Account

Mobile

Data source: www.i2ifacility.org (2019 Report)

8

As expected, there has been a significant uptake of digital channels across most banks in Africa during this pandemic

Examples from Ecobank

Significant decline in in-branch activities in recent months

Strong growth in usage of all our digital channels over the timeframe in scope

These trends have continued even after ease of restrictions and lifting of lockdowns in most African countries

Trend is expected to continue

Expectations in the growth of digital payments and Governments’ efforts to create an enabling environment in response to changes in consumer behavior

9

10

Covid-19 impact on consumer behavior and changing to a new transactional normal

11

Covid-19 impact on consumer behavior and changing to a new transactional normal

Battle of Cards and Wallets?

Banks and the challenge of keeping up with post-crisis payment habits

The habit of distanced payments

Cards or wallets? My bank or another bank?

Digital wallet users – going against stereotypes

Annoying gaps in contactless and online payments

Digital card plus wallet: an enticement to switch banks?

Source: The EY Future Consumer Index

It is expected that there will be a continuous growth in the use of mobile services across Africa

12

Source: 2019 GSMA Report

It is projected that SSA will attain the 500m mark by 2020 driven mainly by the Covid-19 pandemic GSMA projects that half of the growth indicated below will come from 5 countries; Nigeria, Ethiopia, DRC, Tanzania and Kenya

Smartphones currently supersede basic phones in more than half SSA countries (GSMA, 2020) and the above data indicates a strong growth projection within the next few years.

This projected trend could also lead to a strong uptake of QR codes for payments in Africa

How Governments are creating an enabling environment for the growth of digital payments:the case of Ghana’s universal QR Code

13

Launched its universal QR code on 25th March 2020 making it the first African country to introduce the innovative payment solution

Leveraging on the success of the mobile money interoperability initiative in 2018 to leapfrog many countries with respect to Financial Inclusion with this initiative

This QR code is interoperable and therefore provides access to different systems and platforms (mobile wallets, bank accounts, bank cards, etc.)

Some facts about Ghana’s mobile market Mobile penetration- about 137% Mobile money wallets- 15m Growth in mobile money transactions –

about 300% from 2018 to 2019

Risk, Governance & Central Banks…

14

15

Risk, Governance & Central Banks…

• As with any change in the operating environment, there comes associated risks

Things to consider;

• Risk assessment of payment providers

• Security of information transmission – i.e. is it via a secure platform?

• Vendor and beneficiary data validation

• Governance

• How is data being stored and managed, considering GDPR requirements where applicable

• Dual control considerations for all changes

• Business continuity plans

• Fraud mitigation

• Central Banks

• Local banking partners have matured relationships with Central Banks and can be used as a source

for updates to domestic change e.g. FX requirements and amendments to clearing windows

• Utilise economic updates from banking partners to stay aware of macro and micro factors which will

impact Central Bank decision making e.g. access to liquidity and domestic interest rates (where

applicable), recent Zimbabwean stock exchange closure

16

Daily economic updates example from Ecobank Treasury in Paris (EBISA)

MILITARY HAND IN ZIMBABWE EXCHANGE CLOSUREZimbabwe’s security force leaders side-lined the nation’s economic chiefs and forced the

government to close the stock exchange and halt most mobile-money transactions,

according to Bloomberg reporting, citing people familiar with the situation.The June 26 order that sought to stabilize the nation’s currency came after pressure from the Joint Operations Command and was made without notifying the central bank, which regulates the mobile-money industry through which almost all of Zimbabwe’s commerce takes place. The measure is further evidence that senior ruling party and military officials are growing impatient with the administration of President Emmerson Mnangagwa. Inflation has surged to 786%, the local currency has crashed and the country is facing shortages of food and fuel.Elsewhere, Zimbabwe’s Monetary Policy committee yesterday resolved to more than

double the central bank’s main lending rate, “in order to curb speculative borrowing”.

With effect from July 1st, the policy rate moves to 35% from the earlier 15%.

DRC GOVT THREATENS TO QUITDemocratic Republic of Congo Prime Minister Sylvestre Ilunga threatened his government’s resignation

after the justice minister was briefly arrested in a dispute about a proposed law that could affect the

independence of the country’s judicial system.

Justice Minister Celestin Tunda Ya Kasende was detained by police on Saturday and released after

questioning. Tunda is an ally of Ilunga and former President Joseph Kabila and is in a coalition

government with supporters of current President Felix Tshisekedi. Kabila’s allies' control most of the

government’s ministries and both chambers of parliament.

SUB-SAHARAN AFRICA ECONOMY TO TUMBLE

Sub-Saharan Africa's gross domestic product is expected to shrink by 3.2% this year due to the impact of the COVID-19 pandemic, the International Monetary Fund said on Wednesday, more than a previous estimated contraction of 1.6%.In its World Economic Outlook update, the IMF projected that GDP in South Africa, the continent's most advanced economy, would shrink by 8% in 2020, a bigger contraction than the 5.8% forecast in April.For Africa's top oil exporter Nigeria, the IMF also projected a significant economic contraction, with GDP seen falling 5.4% this year after an earlier forecast for a 3.4% contraction.Nigeria faces economic distress not only from the coronavirus outbreak but also from a sharp fall in crude prices.

MAJOR SSA CURRENCIES YTD PERFORMANCE*

*Normalized by a factor of 100, Bloomberg Data.

17

What advances in technology can NGOs and Development Organisations leverage?

18

What advances in technology can NGOs and Development Organisations leverage?

Innovation of new products and services through partnerships with third party vendors –Ecobank continues to invest in product development and partnerships, utilizing feedback from its clients to shape new solutions for their benefit

Promoting financial inclusion by reaching out to the unbanked population - 10m Xpress accounts opened and 45,000 Xpress points in neighborhoods where consumers work and live providing vital services in our markets

Direct Integration with MNOs operating in Africa e.g. MTN, Tigo, Airtel, Orange, etc. – providing a key solution from a secure banking platform to enable delivery of funds to the last mile

Trading with Ecobank is managed entirely remotely, with flexibility on the medium used - active market maker on 360T, FXAll, Bloomberg FX and Ecobank’s own proprietary FX platform - Ecobank e-FX. Providing secure, reliable and efficient transfer of funds into Africa and other frontier markets -Ecobank offers both central and local treasury FX solutions providing flexibility to clients depending on their approach to treasury

19

Thank you!