How Nigeria LNG Limited transformed its MMF investments by harnessing the power of technology
After facing an array of challenges while managing its investments in money market funds, the treasury team at Nigeria LNG Limited (NLNG) used automation and APIs to bring sophistication, speed, security and flexibility in managing billions of dollars of cash & investments.
NLNG’s strategic aim is to maintain its prominent position in the global LNG industry through a multi-billion dollar plant expansion plan. The company’s treasury department plays a significant role in achieving this goal by ensuring the security and liquidity of the company’s funds. However, this objective was limited by the manual method and onerous steps taken to manage treasury investments.
This meant that the company had to become more efficient and adopt a digital and automated solution to overcome cash management challenges whilst strengthening controls.
Challenges
For a company holding billions of dollars in cash, primarily in money market instruments, NLNG’s treasury team faced a plethora of challenges in efficiently managing these investments. A particular challenge was in completing the strenuous task of getting money to the fund managers to settle trades, and inability to clear these transactions within the stipulated time window would attract charges.
Also, the treasury team interfaced with multiple fund providers and banks via telephone or paper execution and therefore trade placement and settlement could take several hours. Post trade execution, banks required additional approvals from NLNG when wiring funds to settle MMF transactions – another manual process; and reporting was also done manually by logging into multiple platforms to gather account information from each fund provider.
Technology adoption
The process was inefficient and long-winded, and the treasury team sought a simplified solution that will re-invent the modus operandi, mitigate risk and optimise returns.
Therefore, in collaboration with JP Morgan Asset Management, the treasury team implemented “Morgan Money”, a trading and analytics platform with transformative digital capabilities to overcome its cash management challenges and accelerate its improvement journey through automation/technology whilst strengthening controls.
The treasury team is now able to access multiple MMFs with the benefit of real-time application programming interface (API) execution and also receives instant trade confirmation from transfer agents.
Furthermore, the company utilises auto-settlement as the technology platform communicates to banks a request for transfer to settle MMF purchases while back-end payment tracking and acknowledgement is provided as the payment is initiated. This has helped the treasury team to reduce the time taken to execute and settle MMF transactions from over six hours to only seconds now. In line with its investment policy, the company has successfully automated controls relating to trading & funding, and implemented an input/approver workflow on the platform for duty segregation.
To optimise reporting, the treasury team now uses the fund performance and risk analytics tool on the platform for fund performance, holdings, and other statistics, viewing all these on a single dashboard to allow for quicker decision making.
This seismic transformation from a time consuming/labour intensive process, to a hyper-efficient, error-free and instant automated digital process has given the treasury team precise and powerful liquidity controls with significant efficiency savings, enabling enhanced cash allocation, reporting, and visibility.
Chigbo Enenmo, treasury manager at Nigeria LNG will be speaking at the EuroFinance 10th annual Effective Finance & Treasury in Africa on 7th March 2023 in London, UK. For more information about the event and to register, please visit the website.