MENA corporates are on the move. They are expanding both regionally and internationally to diversify and grow their businesses, giving rise to an increased focus on how they manage their treasury operations, and the technology and systems they put in place.
At the same time, their choice of banks has become all the more crucial as they seek out partners that can support their expansion plans, and meet their funding, cash management, foreign exchange and trade finance needs.
In our article on the subject in this issue, one MENA banker is quoted as saying,“The diversification of the economy is a key priority for Middle Eastern governments as they seek to reduce their dependence on the oil and gas industries. They are also looking to bring new expertise and capabilities to the region so that they can diversify their business markets on the ground – and create more employment opportunities for a growing, young population.”
He added that some companies had been expanding internationally for some time and were now moving into their “second phase” because their accumulation of wealth had made the funds needed for such expansion more readily available. “They are in a strong position to put their own capital to work via new and key acquisitions,” he pointed out.
As this expansion builds up – or even because of it – trade finance and treasury management in the region are moving towards more sophistication as corporates look for “top-end” solutions to cash management.
In another article, it is noted that the greatest cause for positivity for trade expansion is, perhaps, the increase in business with Asia – most notably India and China. The spectacular economic rise of those countries over the previous two decades has accelerated trade and investment flows with the MENA region, particularly the oil-producing nations.
The author explains that “as the strongly trade-orientated Gulf economies are set to remain highly active – indeed proactive – with respect to cross-border commerce, the corporate need for ‘top end’ or ‘next generation’ treasury solutions that converge cash and trade has increased accordingly.
“This is largely in response to the growing recognition that it is both difficult and inefficient to work in trade and treasury silos, but also reflects today’s need for increased sophistication of transaction processing visibility and risk management”.
Another growing trend reported in this edition is the rising demand for investment guarantees and political insurance brought about by stability concerns in the wake of the Arab Spring. The belief is that this trend will continue into the foreseeable future.
Trade finance and corporate banking are on the up in Saudi Arabia thanks to strong, double-digit growth in both imports and exports in the Kingdom and continued positive intermediation by Saudi banks in trade flows.
This is confirmed by Cash Management Matters (CMM), which as part of its aim to create transparency in the trade finance market-place in the KSA, has set out the results of its 2011 research in its Tajara Monitor publication.
Currently, the Tajara Monitor analyses the trade finance and corporate banking performance of the 12 Saudi banks that are licensed entities with the Saudi Arabian Monetary Agency (SAMA) and the latest figures are detailed in this issue.