The digital age has increased the volume, depth and speed of data and information that is available. The British American Tobacco (BAT) treasury runs on information ranging from outward-looking economic and financial market coverage, to internal cash-flow forecasts for the trading businesses.
In Africa, information is often of more mixed quality and limited coverage compared with much of the developed world. The major African economies are covered well by external and internal sources of information, but the rest of Africa has more limited coverage. The treasury and banking infrastructure is also less developed, leading to lags in the transmission of information.
For BAT’s treasury, this calls upon more reliance upon intuitive judgement to identify and manage financial risks, drawing upon central treasury experience of operating across the developing world.
Our experience is that speed of response is often vital. Economies can turn quickly and financial risks can rapidly emerge, as the impact on Africa of the current commodity bust and oil crisis illustrates.
BAT has implemented a globally centralised treasury operating model with a design principle that there will be very few treasurer roles retained in the trading businesses.
However, for Africa, the design has been flexed to retain integrated treasurers located in four key Africa business hubs; these roles provide local insights, monitor regulatory developments and enable agile execution in places where it can be difficult to get things done.
BAT’s experience is that it is valuable to have close working relationships with banks that have strong pan-African footprints. In Africa, the treasurer’s conventional toolbox of financial instruments is often not available – this requires treasury to have a collaborative partnership with local business management and banking partners to identify and implement commercial solutions to manage financial risks.
Justin Smith is head of treasury EEMEA at BAT