Treasury Priorities for Multinational Corporations - Middle East and Africa

26 | Treasury Priorities for Multinational Corporations Repatriating Funds Fund repatriation fromMEA subsidiaries is frequently complicated by capital controls, foreign exchange shortages, and bureaucratic processes. Organizations adopt various strategies based on local regulations, operational needs, and group liquidity management. Below we make a distinction between repatriation practices at country and regional level Organizations in the MEA region are navigating a complex landscape when it comes to managing and moving funds. A sizeable number opt to retain capital locally, often due to the strategic benefit of reinvestment or, more critically, as a response to regulatory hurdles and convertibility challenges that restrict cross-border movement. While a smaller contingent successfully repatriates excess funds to headquarters outside MEA, indicating their ability to navigate local foreign exchange regulations, there’s a clear desire among a segment of businesses to streamline and automate these repatriation processes, highlighting persistent inefficiencies and barriers in the region’s financial environment. This suggests that the ease of capital movement remains a key strategic consideration and often a challenge for businesses operating in MEA. When considering the broader geographical scope of MEA, the propensity for external repatriation increases significantly, suggesting a greater ability tomove funds within the MEA region to a regional hub, even if direct repatriation out of individual countries is challenging. Organizations operating across the broader MEA region demonstrate a significantly more effective and sophisticated approach to liquidity management and fund repatriation compared to operations within individual countries. While repatriation from a single country faces considerable hurdles, the ability to move funds from broader MEA operations to global headquarters is substantially higher. This critical distinction reveals that regional treasury hubs often serve as strategic aggregators, pooling liquidity from various MEA markets before onward transfer. This centralized regional approach enables companies to navigate the diverse regulatory landscapes and overcome individual country- level convertibility issues or restrictions more effectively. It highlights the strategic importance of these regional operations in facilitating capital movement out of the entire MEA region, even as inefficiencies and barriers to seamless fund transfers persist at both the local and regional levels, underscoring the ongoing challenge and strategic focus on optimizing capital mobility within this complex economic environment. O nly 34% regularly repatriate excess funds to HQ outside MEA, indicating significant barriers. Repatriation practice out of country 40% 30% 20% 10% 0% We regularly repatriate excess funds to the HQ outside Middle East and Africa (MEA) We would like to increase the frequency or automate the fund repatriation Funds are retained andmanaged in my geographical scope We regularly repatriate excess funds to another regional hub or HQ within Middle East and Africa (MEA) 34% 26% 8% 6%