Treasury Priorities for Multinational Corporations - Middle East and Africa

30 | Treasury Priorities for Multinational Corporations FX Decision-Making and Execution The locus of FX decision-making and execution within an organization significantly impacts the agility, effectiveness, and consistency of its FX risk management. In a region as diverse as MEA, different models can be adopted based on the level of local autonomy, treasury expertise, and corporate governance structures. The survey data reveals a varied landscape: The most common arrangement is one where FX execution is managed by HQ. This indicates a strong preference for centralized control, likely driven by factors such as: • Economies of Scale: Centralizing execution can lead to better pricing and access to a wider range of instruments. • Expertise Concentration: HQ often houses the most skilled treasury professionals and sophisticated systems. • Consistency andControl: Centralization ensures a uniformapproach to riskmanagement and compliancewith group policies. For organizations where regional or local entities have a role: • Organizations in the MEA region are adopting diverse strategies for managing FX execution, highlighting a strong preference for localized and regional involvement rather than purely centralized approaches. A significant portion empowers regional entities to manage FX execution, allowing for crucial responsiveness to local market conditions and regulatory intricacies. Another notable segment grants substantial autonomy to local entities for FX execution and decision-making, a model that thrives in highly localized markets or for smaller operations. • Furthermore, a collaborative approach, where both local and regional offices jointly manage FX execution, indicates a strategy to harness the best of both worlds: local insights combined with broader regional oversight. The rarity of purely regional management without any local or headquarters involvement suggests that a balanced and context-aware approach, integrating regional expertise with local realities, is generally preferred for effective FX risk management in the MEA landscape. A substantial 19.48% of organizations reported no FX execution at all. This aligns with the previous finding of a significant portion not using hedging instruments, suggesting either a fully naturally hedged position, an acceptance of FX risk, or that their business model inherently avoids direct FX transactions. The dominance of HQ-managed execution, combined with a significant portion of organizations with no FX execution, suggests that local subsidiaries in MEA often operate within a framework where FX risk is either absorbed at the group level or managed centrally. However, the presence of regional and local involvement points to an evolving model where proximity to the market can also be a strategic advantage in FX management.