Covid-19-related lockdown measures and travel restrictions mean that collateral managers are having to adjust the way they do business. GTR speaks to Dheerie Govender, CEO and founding shareholder of Africa-based Global Collateral Control (GCC), which specialises in audit, inspection, collateral management and stock monitoring services on minerals, fuel and agri commodities, about the challenges brought on by the pandemic.


GTR: How has collateral management in Africa been impacted by Covid-19?

Govender: The impact has been such that we have not been totally incapacitated, but rather much more limited in terms of what we can do. Countries across Africa shut their borders at different points in time: South Africa was one of the first to go into full lockdown.

From an operational perspective, with us being a South African entity and operating throughout the continent, it’s made it very difficult for us to travel to other jurisdictions. We remain totally reliant on our staff and infrastructure in those countries to supply us with information. The norm is for a third party, an internal or external auditor from South Africa, to conduct the verification of stock. But, owing to these unusual circumstances, our local offices in these countries now send out personnel to physically verify the stock, and the information is then sent to head office.

From a logistical perspective, with ports and borders being closed, there’s been a very limited amount of flow of goods, except for essential goods, namely food products: wheat, maize and other agri commodities that will ultimately be processed. The cross-border flow of goods such as minerals and fuel had stopped. Minerals have seen a backlog due to the congestion at the borders.

In terms of the impact on our business, there have been difficulties, but we have also seen opportunities.

On the minerals side, for example, companies have not been able to export, and have been accumulating stock at mines and on premises. Cashflow constraints have meant that they have had to pledge that stock as collateral – so this is where we have seen an advantage.


GTR: How are collateral managers able to deliver on their responsibilities during strict lockdowns? What have been some of the challenges you have faced?

Govender: Logistics-wise, in each of the territories in which we operate, we have had to obtain an essential services permit, issued by the various authorities, to be able to continue services. But, like I said, those essential services are limited to food products only.

As a company we undertake certain responsibilities in terms of stock and the quality and quantity thereof, and the fact that we, as head office, cannot carry out the verification is of great concern.

To remedy this hurdle, operationally, we are entirely reliant on our in-country infrastructure. So, for example, in normal times, we would employ internal or external auditors that would travel periodically to a site from South Africa to ensure that the theoretical information we see at head office corresponds with the physical goods on the ground.

Additionally, we have looked at the possibility of engaging with ‘competitors’ to go out and audit us, just so that we can have some peace of mind and, in turn, assure our clients with confidence. In Mozambique, we are now doing some work with a company that is in the inspection business for audit purposes.

Another big hardship has been the need for regulatory and health compliance, which we have had to contend with almost overnight, such as health and safety measures. We’ve had to act fast in ensuring that our staff are properly equipped with the necessary PPE, such as masks, in order to not run the risk of them being turned away from sites for not following the proper protocols.


GTR: What has been the feedback from your clients, and how willing have they been to adopt new ways of doing business?

Govender: Our clients are predominantly the larger international and domestic trading community, as well as financiers, both domestic and international. They have all been willing to adopt to the new way of doing business, in terms of online communication and virtual meetings – it’s become a necessity. It’s also opening our eyes to certain cost-saving measures. Technology has come to the forefront to ensure business continuity. We believe that this will be the case for the future and we are adapting as such.


GTR: How is collateral infrastructure going to be impacted going forward?

Govender: Over the last few months the world has witnessed defaults on some major international traders, which I believe will lead to financiers being more reliant on third-party verifications, if not collateral management itself. At GCC, we offer stock monitoring, which can be done periodically, as well as collateral management services (CMAs), which are the full package. Services like these are going to become the norm going forward from a financier’s compliance perspective.