Treasury Priorities for Multinational Corporations - Middle East and Africa

16 | Treasury Priorities for Multinational Corporations Chapter 3: Working Capital Effective working capital management is a cornerstone of financial health and operational efficiency for multinational corporations globally, and its significance is amplified within the diverse and dynamic economic landscape of the MEA region. This section delves into the critical components of working capital, exploring how organizations in MEA manage their customer receivables, structure their sales models, navigate import dynamics, and define their supplier payment terms. Production and Export patterns An examination of operational footprints within the selected geographical scope reveals that majority of clients, specifically 73% of respondents, do not operate production facilities in their respective geographies. Conversely, 27% of organizations, do maintain production facilities within their specified MEA geographies. The largest concentration of production facilities are located in The United Arab Emirates, South Africa and Kazakhstan. This indicates a larger proportion of companies potentially focusing on sales, distribution, or service-oriented activities rather than manufacturing in the region. Further insights into the local production landscape pertain to export activities. When asked about the percentage of locally produced goods that are exported, the responses highlighted varying levels of international market engagement . The strategic orientation of local production across the MEA region is distinctly varied. While a significant portion of organizations remains domestically focused, reflecting models seen in self-consumption-driven hubs like Nigeria, others strategically engage in regional and international trade, such as Egypt’s role in supplying broader East African and Middle Eastern markets. % of locally produced goods exported <10% >10%, <50% >50%, <100% 0% 100% 37% 13% 25% 12% 13% A key segment, however, is deeply embedded in export-oriented production, showcasing integration into global supply chains, akin to South Africa’s export focus. This strategic divergence is not arbitrary; it’s intricately linked to efforts to navigate counterparty risk, influence sales models (B2B vs B2C), and optimize market penetration. For instance, the necessity of consolidating wholesalers in Sub-Saharan Africa often stems from counterparty concerns, a dynamic that may differ significantly in the Middle Easternmarket, ultimately shaping how locally produced goods reach their end customers.