Given the ongoing concerns around a rising budget deficit, continued unemployment and slowing GDP growth, facilitating economic opportunity remains a key imperative for the South African economy.
International trade, both in the form of imports and exports, is one opportunity for local businesses to grow, says Wayne Epstein, executive co-head of Standard Bank’s Moonshots division, who also looks after Trade and International Payments for Personal and Business Banking.
“There are areas where import and export opportunities are expanding for African companies. China is already a significant import and export trading partner with the continent. Intra African trade is also likely to be further encouraged once the African Continental Free Trade Agreement (AfCFTA), comes into being,” he says.
However, while the opportunities are well known, global trade comes with its own challenges and risks. This may discourage some companies, particularly smaller ones, from benefiting from international trade’s potential.
“Lack of trust is one of the key challenges when a company looks to trade internationally: the supplier has concerns about being paid and the buyer has concerns about getting the goods they ordered on time and those goods meeting their quality requirements. It’s essential to have a relationship with your counter party,” says Epstein.
Another typical impediment to trade is often the lack of access to finance and insufficient working capital. An importer may typically be required to pay a foreign supplier before being able to generate cash from selling those goods months later. This cashflow crunch is exacerbated for companies that are growing.
A further risk is currency fluctuations. The rand, for example, is one of the most volatile currencies currently in emerging markets, and currency volatility adds significant risk to importers and exporters.
The fourth risk is the complexity of the importation process including the regulatory environment, both in terms of exchange control requirements and regulations such as VAT calculations and customs duties. “Companies are justifiably concerned that they’re not submitting the right documents,” says Epstein.
Managing all the relevant stakeholders and activities in the international trade supply chain, as well as being cognisant of all the attendant risks, can be a singularly daunting task for any business, he adds.
“As you can see, there is a lot of complexity and risk that comes with doing international trade and we recognise this,” says Epstein.
In order to help businesses navigate some of these challenges and capitalise on the benefits of growing their exports and imports, Standard Bank has developed a unique end-to-end international trade proposition where they draw on an innovative suite of banking and non-banking trade solutions.
Standard Bank TradeSuite offers businesses a single point of contact for all their clients’ importation requirements - from order to final delivery. “This is comparable to a private banker for imports”, explains Epstein. The service includes supplier tracking, liaising with logistics service providers and monitoring the goods while they are in transit, and ensuring customs is cleared timeously. “We also ensure that any currency fluctuations are covered, in line with the company’s hedging strategy, and that all documentation required for payments and importation is available when needed,” says Epstein. An all-in landed cost per item is also calculated on each order to assist in ensuring that pricing can be done accurately.
“By partnering with our clients through the trade cycle, we are able to gain a deeper reliance on the surety of their supply chain, which ultimately makes it easier for us to assist in the lending process,” he adds. Provision of working capital funding is essential to growth and is a cornerstone of the trade proposition.
“An exclusive benefit to clients of Standard Bank is access to the Standard Bank Trade Club,” reveals Darren Segal, Executive co-head of Standard Bank Moonshots.
The Trade Club comprises of over 15 000 trusted business from around the globe ready to trade with African businesses. This has been achieved by the Bank leveraging its extensive African footprint, its strategic partnership agreement with ICBC (Industrial and Commercial Bank of China) and by helping to establish the International Trade Alliance. “Using technology and artificial intelligence we’re able to, for example, link a grape farmer in the Cape to a trusted wine purchaser in Greece,” says Segal, “providing our customers with access to many new international trade opportunities.”
Access to this curated marketplace, coupled with Standard Bank’s traditional risk mitigation products such as letters of credit and guarantees, protect both buyers and sellers to assist with facilitating safer relationships with trade counter parties and ultimately boosting global trade.
Epstein added that “Standard Bank is committed to opening South Africa to the world and opening the world to South Africa through international trade. This is a key lever to driving South Africa’s growth forward.”