Citi Perspectives 2024 Corporates Edition

14 | Services Citi Perspectives Charting the Path for Digital Transformation: Centralizing treasury operations in Africa The centralization of treasury operations is a significant focus for treasurers across Africa, aimed at enhancing efficiencies in cash and liquiditymanagement through advanced technologies. However, the necessity for localized treasury operations to support in-country business entities, local suppliers, and banking relationships remains crucial. Speaking at the 2024 Effective Treasury & Finance forum in Africa, Esther Chibesa, Managing Director, Treasury and Trade Solutions for Sub-Saharan Africa at Citi, and Jyoti Jiwani, Treasury Transformation Consultant for global multinational clients including Anglo American, explored strategic approaches while weighing the benefits of centralized services against the needs for local operational support. Impact of economic challenges on treasury The economic landscape in Africa, characterized by significant local currency devaluations and escalating balances of payments deficits, presents unique challenges for treasury operations in the region. These economic shifts, influenced by fluctuating commodity prices, political instability, and diverse economic policies across the continent, have led to increased volatility in foreign exchange (FX) rates. This volatility poses substantial risks to the asset and liability values on corporate balance sheets, directly impacting financial performance. Profits reported in local currencies may be significantly eroded when converted to more stable currencies for consolidation, thereby prompting the need for sophisticated currency risk management strategies to mitigate the adverse financial impacts and help ensure the stability of treasury operations. Chibesa elaborated on the diverse regulatory environments that further complicate these economic challenges. For instance, in countries like Nigeria, stringent FX controls and repatriation laws govern the flow of currency, creating a complex operational environment for treasury management. She contrasted this with other regions such as Zambia and Congo, where regulations