Tshepo Maeko, Vice President and Head of Agri-Sales: Absa Regional Operations

There are few things more traditional and widespread than agriculture in Africa. While the continent holds around 60% of the world’s uncultivated arable land, Africa remains a substantial net importer of food and has a growing population to feed. Projections are that, by 2050, Africa will have almost doubled its population to two billion, and it is a given that agriculture will play a central role in sustaining and feeding its people.

Agriculture employs close to 50% of the working labour force on the continent, and in sub-Saharan Africa, the sector contributes 23% of GDP. So, why then is agriculture production and the attendant food security so precarious on a continent where farming is such a key feature of life and livelihoods? The one core systemic challenge of agriculture is one of financing the agri-ecosystem.

According to Shalom Ben-Or, Chief Executive Officer of AvenewsGT, developers of an Agri-App in partnership with Absa Bank, there is a need to increase finance to the sector. “Despite the size and contribution of the African agriculture sector, financial institutions such as banks contribute only between 2-7% of all lending to agri-businesses.”

This leads to an annual financing gap of USD 180 billion to the agriculture supply chain in Africa. This state of affairs also plays out in the global picture, as emerging markets require $450 billion annually, but receive only $9 billion in financing from financial institutions, leaving a yawning gap.

Tshepo Maeko, Vice President and Head of Agri-Sales: Absa Regional Operations, believes Africa needs to step up its game. Africa relies on more than USD 47 billion worth of food imports to supplement its own food supply, Maeko said.

The lack of consistent financing and support leads to inconsistent productivity and most African Agri-players will remain small-scale as they can only access small and medium enterprise funding and will never become commercial farmers, according to Maeko. Now Absa is hoping to help change the landscape of agriculture in Africa and create sustainable and impactful agri-businesses.

During a recent webinar hosted by Absa, participants, including Ben-Or and Maeko, spoke of the challenges the sector faces on the continent, but also of the digital solutions, which could help unlock the immense potential contained in Africa’s fertile soil.

One of areas cited as a large stumbling block is the hassle of paperwork; something no farmer has time to deal with when it’s the season to harvest.

The Avenews App allows for the digitisation of all trade documents such as purchase orders, contracts, inventory, invoices, payments, and business contacts, all in real-time. It also allows finance institutions such as Absa to provide tailored financing solutions based on reliable and accurate data.

According to Maeko, Absa is looking to deploy technology that will help Absa collect data, process information, and make informed decisions, which will help Africa fulfil its agriculture potential.

Ben-Or said the inability to increase yields for African farmers came down to trade engagements all along the agriculture value chain between farmers, buyers, and sellers, all of which were still conducted manually and, in some cases, via handwritten invoices.

If the farming entity approached a financing institution with this documentation wanting it validated, the banker will not be able to do so. The informal and poorly documented nature of Agri-trade is one of the primary reasons banks struggle to provide capital, Ben-Or said.

Absa and AvenewsGT have worked together since 2017, with AvenewsGT being part of the Bank’s tech incubator programme, and have launched the digital innovation product in Kenya, with further plans to roll out in Ghana, South Africa, Uganda and Zambia and the other markets in which Absa has a presence. Ben-Or said the Agri-finance innovation platform had already seen great results in Kenya and was easily adaptable to unique market situations and factors.

AvenewsGT, in collaboration with Absa, has created a digital infrastructure that allows for the exchange of documents and information governing the flow of goods and capital and making payments. This created business identities for each of the participants within the supply chain, all the way from the farmers to the large agri-businesses. These digital identities evolve over time and earn creditworthiness.

The Avenews App can be used on any feature-rich cellular device and includes mobile payment processes, allowing farmers to become digital businessmen and women with the ability to earn a creditworthiness identity, as well as access suitable financing services from supportive lending institutions such as Absa.

As a digital first bank and with a deep commitment to agriculture enterprise on the continent, Absa is determined to lead the way towards Africa realising the immense growth potential in the sector.

By Peter Matlare, Deputy Group CEO of the Absa Group Limited and Chief Executive of Absa Regional Operations

Working together requires an environment of trust and understanding, to leverage strengths for optimal value in working towards a common goal, writes Peter Matlare. 

As the COVID-19 pandemic continues to persist in countries across the world, organisations have recognised that it is not, as many had first thought, a short-term problem simply needing a quick response. The extraordinary disruption precipitated by COVID-19 is driving deep structural shifts that will require businesses to make permanent changes to the way they operate.

It has brought to the fore a question asked in boardrooms around the world – what is the role of the corporation in society? And how can it contribute differently and constructively to a changing world?

COVID-19 has highlighted that fostering healthy and productive societies should be everyone’s concern. It has not only shown how vulnerable we are to health emergencies even in this modern age; it has also reminded us how intimately interconnected we are and of the importance of collaboration and co-operation in dealing with issues that affect us all. We are all as strong as our weakest link.

Organisations cannot abdicate their responsibility for facilitating a mutual duty of care. It is not a time for retreating into silos and only looking to health experts to lead the charge in addressing the challenges brought on by the pandemic. Efforts to remedy the health crisis; have triggered severe economic and social disjunctures, which in many developing nations has exacerbated fiscal vulnerabilities.

It is thus imperative that the private sector steps up to its responsibilities by directing its social spending, and re-orientates its strategic business priorities to address acute crises that may arise from time to time, and to contribute meaningfully to achieve long-term, global sustainable development goals.

Global cooperation and efforts directed at finding solutions to prevent the spread of the virus and to put in place longer-term solutions to fight the threat of future pandemics have been laudable.

In some respects, Africa was able to respond proactively to the pandemic, borrowing from lessons learned from managing other health emergencies. In South Africa, the need for a bold response to the HIV/AIDS epidemic in the 1990s informed the country’s comprehensive response to COVID-19. In other parts of Africa, the experience of managing the spread of the deadly Ebola virus, enabled countries to develop a similar response to containment, which has proved life-saving in this crisis.

However, the impact of COVID-19 on developing economies cannot be underestimated. The pandemic threatens to reverse the significant gains made in recent decades to address the socio-economic problems of poverty and income inequality and previously intractable healthcare challenges, such as HIV/AIDS, tuberculosis and malaria.

In the face of these perilous global risks, companies have had to carefully consider how to balance its role in the broader community while managing the impact of the pandemic on their businesses. At Absa, we quickly introduced a coordinated and comprehensive response to COVID-19 across 12 markets in Africa that prioritised the health and safety of our colleagues and customers, while at the same time tailoring implementation plans that addressed the unique socio-economic initiatives of stakeholders in each country.

To date, the Absa’s group contribution to relief efforts has been in the region of $4,5m (R76m), which has funded personal protective equipment, feeding schemes and facilitated access to remote learning. Customers were afforded  financial relief through measures such as debt repayment moratoria and reduced banking costs. Efforts to support and assist our colleagues and customers also precipated an accelerated transition to new ways of working and digital transformation.

Our agile response to the pandemic, however, brought into sharp relief an appreciation that we could not succeed in achieving our objectives alone. The importance of social partnerships – with governments, civil society and other business actors – are critical to crafting a holistic, customised and robust response.

New partnerships and alliances with subject-matter and sector level experts are crucial to helping companies convert internal crisis response efforts into wider organisational shifts, as they provide perspective and tap into the needs of stakeholders at the coalface.

In this regard, Absa has concluded a three-year pan-African Memorandum of Understanding with The Global Fund, a partnership organisation focused on accelerating the end of the AIDS, tuberculosis and malaria epidemics.  It invests billions of dollars every year to strengthen health systems in more than 100 countries in Africa and Asia, and supports a country’s efforts to prevent and treat the three diseases, as well as, more recently, COVID-19, for which it has made available a further $800m.

Recognising that behaviour change lies at the core of how we beat infectious diseases, Absa is working with the Global Fund, to leverage its voice, programs, communication platforms and financing expertise to promote healthy societies for healthy economies, with a particular focus on empowering adolescent girls and young women.  This is a group that is disproportionately impacted by HIV (and COVID-19) as a consequence of gender based violence, social dynamics and a lack of economic opportunities. Absa believes that empowering this group is one of the keys to unlocking the potential of the African continent.

Absa is also exploring how to support innovative finance initiatives undertaken by the Global Fund and it’s in-country principle recipients, to contribute to new and sustainable sources of funding for AIDS, tuberculosis, malaria and COVID-19.

The partnership will initially be focused on supporting Global Fund programmes in South Africa, with an ambition to expand to other Absa countries in the near term.

Underpinning a successful social partnership to navigate social crises or to achieve sustainable long-term goals,  requires building an environment of trust between the different stakeholders so that each understands the others’ role in formulating successful solutions and an understanding of how their strengths can be leveraged to optimise value, while working towards a common goal.

COVID-19 has been a call to action on many levels. The unexpected impact of the pandemic has been to remind companies, governments and other actors of the tenuous links between global health security and economic prosperity; to consider aligning short-term responses with an eye to building longer-term resilience; to adopt a transformation mind set; to recognise the criticality of collaboration and communication to achieving common goals; and to ensure that we draw on leadership from all levels of the organisation and from all aspects of the community to craft robust and sustainable solutions.

Only through partnerships can we build a stronger and more resilient post-COVID world.

Shirley Webber, Head of Coverage: Natural Resources and Energy at the Corporate and Investment banking offering at Absa

A comprehensive mix of renewable and traditional power sources is the future. It’s happening now, and Africa can benefit immediately, writes Shirley Webber.

Africa will play a significant role in meeting the world’s growing oil and gas demands as investments in the resource-rich continent start gaining traction and more sources of energy are opened up. This will be in addition to Africa’s expected growth in renewables and other cleaner sources of energy such as natural gas.

Although COVID-19 and the lockdown regulations imposed to curb its spread have had adverse and far-reaching effects for many sectors, it has accelerated the energy transition from fossil fuels to greener, more sustainable energy, particularly across Africa.

To continue benefiting from this impetus, and to set Africa’s growth on a faster growth trajectory, we need to keep seeing investments and build onto the ones we have – because this is our continent.

As stakeholder and regulatory pressures increase for the world to seek alternative energy sources such as natural gas, wind and solar, we have seen pledges from global corporates to increase low carbon investments. However, that has the potential to decrease Africa’s economic outlook, especially in areas where oil and coal have played such a substantial role in powering local economies. Our continent, though, is also rich in energy metals and minerals used in batteries, like copper, lithium, cobalt and graphite. The investment into these resources will assist in ensuring the economic growth of the continent continues.

Many companies have made changes to how they operate and are cutting back on costs. Yet, to continue to operate in a low-price oil and gas environment, concessions need to be made by governments – especially when it comes to the ease of doing business and ensuring fiscal clarity and monetary stability.

Such behaviour could encourage more companies to invest in Africa as independent oil companies are under pressure to divest to meet their environmental, social, and governance (ESG) targets. Alternative investments from other upstream and midstream companies that are desperately needed could come from countries in Asia and the Middle East.

Africa will continue to see a demand for natural gas and oil and it could become one of the largest growth regions for the liquid, growing faster than the rest of the world, especially for LNG projects under construction or coming on stream in Mozambique, Nigeria, Senegal and Mauritania.

Africa, traditionally, has lacked reliable and affordable energy. We are seeing increased access to power, especially with reference to the material liquefied natural gas projects mentioned, as well as greater investments in wind and solar energy, leading to a hybrid energy solution for Africa.

In fact, some see Dangote becoming the oil giant of the west of Africa from as soon as 2022 as new refining capacity comes on-stream for the first time since the 1960s. Undoubtedly, this will allow Africa to rebalance its supply and demand for refined petroleum products, possibly reducing the dependence on the rest of the world for imports.

With increased investment in gas, this means that gas can be supplied on a more competitive basis into these markets. Natural Gas can play a significant role in augmenting solar and wind power, which are dependent on conducive weather conditions. And unlike coal, for example, where the plants must be run around the clock to provide baseline power, natural gas is much more flexible and can be brought online as needed.

Looking a bit further into the future, stored power is also becoming increasingly prevalent. We’ve seen the cost of battery storage reducing quite significantly over the past three to four years. It is still probably on the more expensive side compared to other technologies, but we expect that over time, as prices decrease, countries and governments will start making more use of this technology. Our continent is rich in battery minerals and countries with these resources will be sought after well into the future.

This technology does have the potential to negatively impact gas, although that potential is a rather long way off. The apparent solution to future power needs is a balanced mix of all available generating sources. However, before countries can get there, governments need to do proper assessments of what the power needs will be over the long-term: 2030 and beyond.

Such an assessment needs to take into account new technologies, as well as the ones we anticipate coming to end-of-life, such as coal fired power plants that are expected to be mothballed. Countries also need to carefully assess each aspect of the value chain, from generation to distribution and consumption and determine which areas are lacking and what can be done to fix them (most sustainably and cost-effectively as possible.)

Energy, after all, is the bedrock of any economy, and Africa needs to start fixing its energy crisis. It is a crisis that could take us back many years from a developmental perspective. However, it is also a crisis that presents an opportunity because of the global acceleration towards alternative energy sources.

We can look beyond the current grid and to a future that promises a sustainable, cost-effective, energy mix for all Africans.

Interview with Arthur Goldstuck and Ina Steyn

In the latest edition of The Future Fast, Absa Group head of resilience Ina Steyn tells ARTHUR GOLDSTUCK why diversity is key to addressing the skills gap in the 2020s.

Globally, women make up 24% of the cybersecurity workforce. In Africa, that figure is a mere 9%. This represents a crisis of diversity, but also a massive opportunity.

Ina Steyn, head of resilience at Absa Group, suggests new thinking about the challenges facing business, and says she is passionate about the latter perspective.

“I was fortunate to attend the 2018 RSA (security) conference in San Francisco. When I arrived, I was overwhelmed with 42 000 attendees at that conference. But it also struck me that most of the presenters and most of the attendees were male, so there were very limited females during that conference.

“I was also lucky enough to be introduced to Jane Franklin from the UK, a renowned speaker on cybersecurity and specifically the challenges that women face. And that planted the seed. How can we address that across the African continent? It brings a unique opportunity for us.”

Within Absa, she started with a programme called Women in Engineering Services, focusing heavily on getting women more engaged in cybersecurity roles. Currently, 120 women are on the programme. While it’s a tiny number, it represents a beginning.

“There’s a very real opportunity for us. Men and women are, by their very nature, wired differently. The way we approach risk, the way we approach a problem, the way we manage tasks, are very different. And if you look across the African continent, we are so entrepreneurial on this continent, just looking at what happened with this pandemic and how people stepped up. We are probably one of the most diverse continents in the world. Can you imagine if we put all of that together in how we shape the future? What absolutely phenomenal outcomes we can achieve purely by tapping into the diversity that’s at our disposal?”

Steyn is deeply aware of the patriarchy that still rules across the African continent, in both traditional systems and the corporate environment, and had to fight her way through the so-called glass ceiling.

“I started right at the bottom of where you could possibly start in a bank. I grew up in an Afrikaans family where my mother was responsible for running the household and raising the kids. So when I entered the workforce at the age of 18, that was my frame of reference, that women won’t really progress in a career, because they have to choose between family and a career.

“I never even thought of pursuing a career in technology. Those are sort of the shackles that are still holding women back, because it’s passed on from one generation to the next. But I think that has shifted significantly. If I look at some of the younger women that I currently coach or mentor, that historic shackle is no longer prominent in how they choose careers, because they realise there’s a lot of support.

“I was very fortunate to have really phenomenal women as coaches and mentors, and I also had a very prominent male that played a significant role. So advocacy and sponsorship goes a long way.”

The opportunity lurking in the skills gap is not confined to one segment of the industry. However, the technologies underlying the fourth industrial revolution, like artificial intelligence, are completely outside the frame of reference of most youth across the continent. The question, then, is how we can we bring that kind of understanding of the opportunity to the grassroots?

“Poverty plays a big role in that,” says Steyn. “If the youth don’t have access to technology to explore it, or don’t have financial support to go and study in those fields, then they won’t know that. Our chief security officer Sandro Bucchianeri grew up on the Cape Flats and he always had this vision, although he worked around the world, to come back to Africa and establish a cybersecurity academy, which is done over the last three years. That Academy, in partnership with the Maharishi Institute, takes children from marginalised families and gives them the opportunity to be exposed to that type of technology.

The idea of the Academy is to take those children off the streets and put them through the Academy, get them interested, and then also help them in the job market once they graduate from the Academy, to find a meaningful job. Now, if we can multiply that across the continent, there’s such a huge opportunity to get more and more of the youth involved in how we craft the future.”

• For Ina Steyn’s full insights into how the skills opportunity can be realised across Africa, watch the full interview on YouTube here.
• Listen to the interview via  podcast here.

This interview was first published on Gadget Magazine.

Announced at the 2020 Global Retail Banking Innovation Awards

24 December 2020

In bringing its customers’ possibility to life, Absa Group Limited’s Regional Operations (ARO) has been recognised as leading industry player at this year’s, Global Retail Banking Innovation Awards (GRB). A Digital Banker initiative, the awards focus on commending cutting-edge banks that blend the best technology with service-oriented mindsets to raise the bar in consumer banking.

The judging panel – comprising experts from leading consultancies including EY and Forrester – selected ARO based on its significant achievements across Africa to date, including successfully completing one of the banking sector’s largest and most complex separation programmes from Barclays PLC. In addition, ARO demonstrated a swift and strategic response to the COVID-19 pandemic, not only assisting customers with payment relief initiatives but also contributing extensively to local social relief efforts.

This accolade also encompassed the bank’s role in driving financial inclusion across the continent. Says Vimal Kumar, Chief Executive of Retail and Business Banking, Digital and CX at Absa Regional Operations, “As a digitally-led bank, we collaborated with innovative partners such as technology platform provider, JUMO, and a mobile network operator, MTN, to provide loans to underserved customers via mobile in Zambia and Ghana. In addition, our Customer 360 data analytics platform has assisted us in anticipating the changing needs of our customers through predictive modelling and multifaceted data science approaches.”

According to Nirav Patel, Managing Director at The Digital Banker, digital has been an impetus to a wave of innovations, both in front-end and back-end. “This has allowed Absa, and its regional operation, to flourish as a leading and digital-first African financial services group. The bank is able to deliver customer experiences that are seamless, convenient and safe to use – and for that they truly deserved to win this award.”

Absa’s approach going forward will be to continue to place the customer at the heart of everything that it does. Adds Kumar, “For Absa, creating opportunities for our customers to make their possibility come alive is a mission always supported by action.”

For more about the awards, please visit: https://digitalbankeronline.com/awards/

While there can be no doubt that COVID-19 has wreaked havoc with markets across the world, and has also made trading foreign exchange difficult, we must not lose sight of the underlying factors, writes Sam Singh, Africa Strategist, at Corporate and Investment Banking, Absa.

COVID-19 has undoubtedly been a defining time in our generation’s history, with effects on global economies comparable in some instances to what was experienced during the Great Depression of the 1930s. The pandemic has also recalled the economic shockwaves of the Global Financial Crisis of 2008/09. One can argue that this episode is like none seen before because it hasn’t emanated from economic factors. The pandemic is also having a broad spectrum of effects on economies and exchange rates globally.

Although global risk sentiment has been a significant driver of currency fluctuations, we would also need to consider idiosyncratic fundamentals when analysing currency movements on the continent over the past year.

Factors that influenced global risk appetite outside of the headline numbers of the COVID-19 pandemic were about fiscal and monetary stimulus measures taken to mitigate the impact of COVID-19 on economies and news about a COVID-19 vaccine and trials of drugs. Later in the year, U.S elections and impending policy implications also influenced risk appetite. Once the US elections and some of the lingering noise around it had subsided, we saw more improvement in global risk appetite and the strengthening of emerging market currencies. Of course, this also coincided with progress on COVID-19 vaccines.

Not every country has a fully flexible exchange rate regime that immediately responds to market forces. In countries where a Central Bank does not intervene too much in the foreign exchange (FX) market, the impact on these currencies emanating from shifts in sentiment had been seen sooner than in countries with more managed regimes.

In some countries where there has been limited movement in currencies initially, we have still seen the effects of the pandemic on the overall balance of payments through a decline in FX reserves or some form of market dislocation. Export volumes had been reduced significantly due to lack of global demand; there wasn’t much new investment inflows and those countries that have liquid fixed income markets had also seen portfolio outflows.

Harder hit are those countries that are heavily reliant on a single commodity although it has not always reflected in the prevailing currency values. When the pandemic first hit, many countries were aware that there would be a large impact on the balance of payments and were bracing for the worst to happen. Some central banks, seeing these rapid shifts, acted quickly to limit the consequences, and not always in conventional ways as policymakers had to tussle with stimulating economic growth but also maintain a decent FX reserve buffer due to the uncertainty and duration of COVID-19.

Despite some interventions in the FX market from some central banks, most currencies across Africa have depreciated. Naturally, as a result of weaker currencies, we have seen an impact on trade. Usually, weaker exchange rates would improve export performance, but not in an environment where there is also very little global growth and demand for a large number of goods and services. For example, weaker exchange rates have certainly not increased in tourists on the continent for the many countries’ that rely on large foreign exchange earnings. Additionally, commodity-rich countries that do not have a diversified export base were not only unable to export their products due to low demand but also saw reduced investments and portfolio outflows to safe havens.

The opening up of borders, optimism around global growth and encouragement from vaccine developments should start to improve African countries’ overall balance of payments and their currency performance.

There are many reasons to be optimistic about improvements in FX markets across the continent, including the fact that many central banks are becoming more prudent and transparent when it comes to interventions that affect currencies and are improving access to foreign exchange. Countries that are negotiating financing facilities from International Financial Institutions have also sought FX reforms. This is not to say that exchange rates won’t fluctuate widely in some cases or be more stable than one would expect in others: there are also idiosyncratic factors to consider during a severe global downturn, in this case, the COVID-19 pandemic.

By Anton Harber – Wits University Professor of Journalism 

When I started in journalism in 1980, you had to be able to type, take notes at great speed, keep a tie in your desk in case you had to pretend to be respectable and dictate a coherent story from your notes on deadline while feeding coins into the “tickey-box”. It helped if you could hold your drink when you went to the bar before updating your story for second edition.

If you made a mistake, your editor would swear at you across the newsroom, tell you how worthless you were and do all they could to humiliate you in the hope you were shamed into not doing it again too often.

A few things have changed. Some of the skills journalists now use include things like OSINT, digital forensics, geo- and chrono-location, social media sleuthing and sophisticated verification tools. You need to know how to keep yourself and your data secure. How to shoot video and still pictures. Handle social media. How to deal with vast amounts of data and find the stories hidden in it. How to work across borders and collaborate with a range of experts on arcane topics. And some human resource skills are useful because you can no longer just rely on systematic humiliation as a workplace methodology.

And that is where the African Investigative Journalism Conference comes in. This year (AIJC2021), in its 17^th iteration, is a hybrid (part face-to-face, part virtual), five-day gathering, hosted simultaneously in five African cities. Having started as a small local conference, it has grown into the largest annual gathering of working journalists on the continent. And for the second time, we have Absa coming on board to support the hosting of yet another conference, but this time around, in five cities across the continent. We expect at least 500 participants from about 30 countries who will choose between about 50 sessions with a total of 160 speakers.

The conference highlights African work, hopefully challenging the simplistic and ignorant view that not much interesting work is coming out of Africa. Our biggest challenge is how much there is to fit into a tight programme, and we are constantly surprised by the range and quality of work that comes to light from across the continent.

We also encourage cross-border collaboration and train journalists in the use of the array of powerful digital tools and other information resources which are now available on the internet. These skills are invaluable for stories like the recent Pandora Papers. To find and verify the stories in this vast trove of leaked documents took enormous technical skill, as did the ability to find and generate the stories hidden in them.

The Pandora Papers story was a powerful demonstration of the importance of investigative journalism to the economy. The Papers exposed not only the use of off-shore trusts and shell companies, often to hide or launder money or evade tax, but that the very people whose role it is to prevent such activity – such as lawmakers – are among those who make use of them.

In a continent where the powerful often operate with a sense of impunity, and the institutions of accountability (like the law) do not always operate effectively, investigative journalists are more important than ever to expose wrongdoing and hold the powerful to account. But to do so, they have to be skilled, resourced and independent – and the AIJC plays a key role in this.

*Harber is the Caxton Professor of Journalism at Wit University, and convenor of the conference.

By Vimal Kumar, Chief Executive: Retail and Business Banking, Digital and Customer Experience, Absa Regional Operations

The COVID-19 pandemic has affected every sector of society across the globe, with everyone impacted from an economic, health and social perspective. While the majority of people have focused on stability and job security during this period, affluent and high-net-worth individuals (HNWI) saw an erosion to their personal net worth as economic activity and investments deteriorated during the pandemic.

As individuals tried to remain as liquid as possible during this period, some of the key trends reflected were the shifting of deposits to secure banks, while automation and digitalisation were further embraced to offer customers the convenience and flexibility to manage their investments at their convenience.

How has COVID-19 affected investors?

The tremendous uncertainty has caused cascading waves of destruction across global economies, and impacted many in the high-net-worth individual (HNWI) and affluent brackets.

COVID-19 has affected all parts of society. In comparison to the working class, where the focus is holding onto jobs, high net worth individuals have been heavily impacted due to the wealth destruction that is occurring. Investors are seeing erosion in personal net worth and a good percentage are worried about consumer confidence due to the global recession, job losses and reduction of investments into economies.

Industries such as real estate, stock markets and mutual funds have suffered significant depreciation. Individuals who leveraged off investments during periods where the economy was stronger are feeling the pinch in many ways trying to keep themselves as liquid as possible. A few of the ways we are seeing this happen is through delaying investments and shifting cash holdings from local to foreign currency.

One of the key trends we are seeing is the significant movement in balances and deposits to secure banks such as Absa demonstrating confidence in the financial sector. Unlike the global financial crisis of 2008 where financial institutions were part of the problem, during COVID-19 banks were part of the solution.

Absa was one of the first banks to respond in the way of relief and payment solutions for all customer segments including suppliers, vendors, SMEs and our high net worth individuals. Through collaborating with stakeholders to build and grow economies, we are ensuring sustainable recovery of this economic downturn. Along with other banks, we have been playing a crucial role in facilitating the movement of funds and ensuring government programmes are utilised effectively, as well as passing on regulatory changes such as lower lending rates very quickly.

Where to from here?

There is a great opportunity for Africa to create an intercontinental supply chain framework. The over dependence on single commodity exports and raw material into the rest of the world is what exacerbates an economic crisis in a continent like Africa.

The free trade agreement is coming at the right time and should spur the movement of commodities on the continent. However, there is a need for governments to come together to shift the conversation to one where the African continent also starts to become a manufacturing hub creating growth and wealth.

Creating the regional trade networks gives Africa the right opportunity to step into becoming more self-reliant because the upcoming trends will see regional trade routes and continental trade routes strengthening while global supply chains begin to weaken.

The macro-economic picture – the bad and the good

Economic forecasting is difficult in an environment that is so fluid, as proven by the second wave of COVID-19 infections which is now sweeping across large parts of Europe. Questions arise as to whether countries or areas should go under lockdown again and what the economic impact of such decisions would be.

How a country will come out of the pandemic will depend on the economic conditions of that country going into the pandemic. Those that were in a deteriorated condition, will likely to be in a devastated state by the end of the cycle.

Such countries may look to debt waivers as a short-term relief option. Whatever the benefits, the long term affects for these fragile economies far outweigh the positive. When countries seek debt waivers, their external ratings drastically drop in the eyes of investors and trading agencies causing them to become less attractive and lead to more expensive investments in the future.

There have been recommendations made to see the G20 consider converting debt into equity in projects instead of a blanket waiver of liabilities. It then allows more buy in from investors and the countries benefiting from the programmes are not required to service the debt but rather build equity.

The second easy go-to option for countries, but which is equally as damaging, is to print money in a bid to stimulate the economy. Printing money can work in certain instances where a country and its economy is strong enough to support such a measure, but in many cases – particularly for fragile economies – this can spell doom as hyperinflation takes root.

The new normal

We still have a long way to go as we adjust to navigating the complexity of the COVID-19 pandemic. However what is clear and evident is that the pandemic has resulted in the banking and financial services sector shifting to a much leaner and optimised way of engaging and managing customers’ needs and expectations. We have further embraced automation and digitalisation in our efforts to offer our customers the flexibility and instruments to manage their investments at their convenience.

The COVID-19 pandemic has impacted everyone on the continent, but it has also presented windows of opportunities for exploring new growth avenues and the potential to rebuild even stronger.

There are no easy paths or get-rich-quick schemes on the right path to managing wealth. Be clear of your risk appetite, seek advice of experts and taking a long term view often looks past short term market highs and lows.

By Trevor Damon, Head of Fraud Strategy, Absa Regional Operations

Cybercriminals and fraudsters never take a rest and neither should you. As our world becomes more digitally focused each day, vigilance and education are key to staying safe and secure.

The impact of COVID-19 has wrecked many lives, economies, and brought about changes that many of us would not have anticipated in our lifetime. However, there have also been positives. We have learnt to value what we have, to appreciate the little things in life.

COVID-19 has also accelerated the adoption of digital technologies, with meetings that would previously have been face-to-face now being held over a plethora of online platforms that offer virtual meeting rooms. The phrase “you’re on mute” probably captures 2020 and the technological change that it necessitated better than any other.

We also used technologies such as video calling and messaging apps to stay in touch with family and friends, schooling, work, and shop. This shift to online living has not gone unnoticed by cybercriminals, who have upped their tactics to try and swindle money out of unsuspecting consumers. Untold damage has been done by cyber hackers, who show they have neither ethics nor morals and attacked as many institutions as possible, including even hospitals and vaccine manufacturers.

Part of living in an increasingly connected and digital world is understanding that our private information is more vulnerable and that incidents of cyber-crime are no longer isolated events but occur daily.

People and companies are being attacked through seemingly simple, yet vital, applications such as email, with phishing attacks continuing to be an issue, even though this is a relatively primitive form of cyber assault.

The passing of 2020 does not mean that the criminally minded will ease up. We must be more vigilant than ever about what information we share, primarily online. 2020 saw a surge in cyber-attacks, and these are expected to continue into 2021 and beyond as our digital and online presence and reach continues to grow.

So, what can consumers do to avoid becoming the victim of a cyber-attack?

Vigilance is key

Vigilance remains an essential defence, and we should never let our guard down; always be alert and conscious. We often become complacent around major holidays, such as the recent festive season, purchasing back-to-school necessities or during upcoming calendar events like Valentine’s Day, and when we are under pressure to get shopping done quickly and cheaply.

The reality is that fraudsters and cyber-criminals never rest. They are incredibly opportunistic and always evolving their tactics.

Another vital protection method is education and awareness of risks. Although banks provide tips to merchants on how to avoid becoming victims, retailers need to play their part in education, while consumers must assume greater responsibility for the protection of their personal information.

Take, for example, when shopping online; malware and phishing sites are set up with the sole intention of tricking consumers into thinking they are making a purchase through a legitimate website, but the fake site will steal login details and empty bank accounts faster than you can get on the phone to your bank.

An email will often land with what looks like a link to a legitimate website, such as popular online retailers. However, that link has been spoofed, and it directs people to a fake site, which often looks real, but isn’t.

In an effort to create awareness around some of the typical hacks that consumers most fall prey to, Absa created these videos to show how easily consumers can fall prey to a cyber-attack without even realising it. https://www.absa.africa/absaafrica/about-us/cyber-security/

So, what should you do?

• Don’t click on links in emails, instead type in the address
• Look out for mistakes in design, such as a logo that doesn’t match that of the real company
• Look for the padlock to indicate a secure website. This looks like the padlock you would use to secure a gate
• A secure website should have the URL “Https.”
• Avoid websites asking for personal information. If in doubt, contact your bank directly.
• Avoid doing online banking or shopping in public places like internet café’s as these are high risk type venues which can leave you vulnerable to data breaches and online fraud

Two-factor (or multi-factor) authentication can be enabled on your device, and many banks offer their customers this type of security to strengthen authentication.   This means that, in addition to logging into a secure site and providing your bank account details, your bank will ask you to verify a transaction through either a one-time pin or the banking app. Absa uses a number of security mechanisms to increase customers’ online banking security and to prevent online identity theft and other threats. These include, among others, Advanced Encryption Software and 3D Secure.

Absa offers identity theft alerts on customers’ credit profile and consumers can also enquire with their local credit providers as to whether they offer this service so that they are informed when credentials are used without authorisation.

Where a customer has fallen victim of a cyber-attack, they should immediately report the incident to their bank. The bank will usually launch an investigation and attempt to try and recover the lost funds. However, if the loss is because of an action on the consumer, such as falling for a phishing scam, the bank is usually not liable, although banks will likely look into each case on merit.

To avoid the paperwork and pain that comes with fraud cases, which no one wants to deal with under the best of circumstances, never mind during a global pandemic, stay vigilant and always check out all the security details on websites.

And as the adage goes, if it seems too good to be true, it usually is.