Citi Perspectives 2024 Corporates Edition

16 | Services Citi Perspectives might be less stringent but still require careful navigation to optimize treasury operations. In response to these challenges, multinational corporations (MNCs) operating in Africa have had to adapt their treasury strategies extensively. Chibesa explains the importance of understanding local regulations deeply, which cannot only vary from one country to another, but also change frequently within the same country. Effective treasury management in such environments involves staying abreast of local financial and regulatory updates, maintaining flexibility in treasury operations, and being prepared to adjust strategies swiftly in response to new economic conditions. Moreover, the balance of payments’ deficits observed across several Africanmarkets affect how companies manage their liquidity and capital. Companies are increasingly required to stage their investments, delay certain expenditures, or even reconsider the scale and timing of their financial commitments in the region. This strategic recalibration is crucial tomaintaining financial stability and ensuring sustained operations despite economic adversities. “These deficits lead to notable currency risk exposure, which significantly affects financial performance. While companies may report high profitability in local currency, these gains are often completely erased when converted to home currencies for multinational consolidation,” Chibesa told delegates at the conference. Centralization: A strategic imperative The advancement of centralization in treasury operations has emerged as a strategic response to the increasing complexity within MNCs operating across African markets. This move toward centralization is primarily driven by the need to enhance control over financial resources, optimize liquidity management, and improve operational efficiencies. Jiwani detailed her involvement in a comprehensive treasury transformation project that extended beyond mere process and system improvements to include organizational structure and cultural changes. This project was initiated to harness the benefits of standardization and automation, which free up valuable human resources from repetitive tasks, allowing the treasury team to engage in more value-added activities. Jiwani emphasized the transition froma regional to a global virtual treasury operation. This shift was not just about process optimization but also about building a resilient global treasury teamcapable of cross-regional support and collaboration. The implementation of a global virtual structure allowed for activities to be shared across regions, leveraging different time zones and capabilities, which enhanced the efficiency and effectiveness of the treasury operations. This approach also facilitated talent development within the company, with team members fromvarious regions participating in global projects, thereby enhancing their skills andmotivation. Meanwhile, Chibesa, drawing on her extensive experience at Citi, discussed the centralization of treasury operations for numerous organizations across Sub- Saharan Africa. She emphasized that the degree of centralization is often customized tomeet specific client needs, with options ranging fromcomplete centralization to hybridmodels. These hybridmodels effectively merge centralized policymaking with decentralized execution, ensuring that strategic decisions aremade centrally while operational activities are tailored locally. This approach not only optimizes control and efficiency, but alsomaintains responsiveness to local market conditions and regulatory environments, allowing organizations to adapt to diverse and dynamic financial landscapes. Furthermore, in addressing the strategic imperatives for centralizing treasury operations, both panelists highlighted several key factors that organizations must consider to optimize their treasury functions effectively. Centralization often revolves around enhancing efficiency and control, which necessitates a deep understanding of both internal organizational structures and external market conditions. Another strategic