Mastering treasury in Africa’s evolving financial landscape

Discover the dynamics influencing treasury functions in Africa and why businesses that embrace change will be best positioned for long-term success.

12 March 2025

6 mins

Transaction bankingCorporate & investment bankingTreasury

For corporate treasurers, navigating Africa’s evolving financial landscape requires a combination of technological adaptation, strategic use of regional treasury centres (RTCs), and a shift in corporate approaches to liquidity and risk management.

Our leaders explore how these dynamics are influencing treasury functions in Africa and why businesses that embrace change will be best positioned for long-term success.

Marion Reuter

Managing Director, Regional Head of Transaction Banking Europe and Transaction Banking Sales Europe (UK/EU)

Ruta Jukneviciute

Executive Director, Structured Solutions

Africa’s currency challenges: a moving target

For years, currency volatility has been the defining challenge of cash management in Africa. With over 40 currencies in circulation, treasurers must contend with a constantly shifting foreign exchange (FX) environment, driven by global economic conditions and local market forces. In 2023, many sub-Saharan African currencies experienced sharp depreciation against the US dollar, triggering fresh concerns about liquidity management.

While some currencies stabilised in 2024, corporate treasurers continue to face regulatory complexities as central banks attempt to rebuild reserve buffers and mitigate interest rate volatility. In Nigeria, government efforts to ease FX pressure by permitting crude oil sales in local currency have provided some relief, yet businesses continue to struggle with access to hard currency. Ghanaian manufacturers, on the other hand, are facing worsening liquidity constraints due to high FX demand and supply shortages.

In response, treasurers are shifting away from central FX dependency, opting for alternative strategies such as offshore billing for non-resident customers and operationalising non-resident accounts (NRA) in third countries to receive settlements remotely. Many businesses are also implementing swap structures to facilitate repatriation where FX availability remains constraint. In addition, there is a growing emphasis on maintaining tight cash limits in local currencies and periodically converting to FX for repatriation. These strategies help mitigate the risks of trapped cash in restrictive markets, allowing businesses to maintain flexibility despite ongoing liquidity pressures.

Regional treasury centres: a strategic response to fragmentation

The fragmentation of Africa’s financial system – characterised by different regulatory environments, seasonal variation, currency restrictions, and varying levels of financial market development – has made it challenging for multinationals to manage cash flow efficiently. Historically, companies have relied on dispersed local treasury teams to navigate these conditions. However, a growing number of organisations are centralising operations through regional treasury centres (RTCs), allowing for more efficient liquidity and risk management.

Perhaps paradoxically, given its location outside of the continent, Dubai has cemented its place as the preferred hub for many of these multinational treasury operations, offering superior financial infrastructure, regulatory stability, and easy access to African markets. At Standard Chartered, we have seen some of our clients that once managed treasury operations from Africa relocate to UAE, where they can access a skilled workforce and benefit from a business-friendly regulatory environment. Mauritius has also positioned itself as an attractive hub, offering tax efficiency and a strong financial services sector, though it lacks the extensive corporate banking infrastructure of UAE. Recently, there has been increased interest in setting up RTCs in Mauritius to centralise cash management for operations in countries such as Botswana, Zambia, Kenya, and Uganda, where regulations are more accommodating.

Successful RTCs maintain a hybrid model, centralising decision-making while ensuring that local treasury personnel remain embedded within key African markets. This enables businesses to manage real-time market shifts effectively while optimising cash flow across the continent. Multibank and multi-country reporting capabilities have further improved the efficiency of these RTCs, enabling treasurers to access account balance and currency positions across multiple markets with a single click.

Innovative cash management strategies

To optimise liquidity, treasurers are increasingly implementing intercompany cash pooling, netting structures, and enhanced liquidity forecasting tools. Account and banking rationalisation has become a priority, allowing for greater visibility and streamlined cash management. While multi-entity domestic pooling structures are being widely adopted, cross-border sweeping remains limited due to regulatory restrictions, except in markets such as Botswana, Uganda, and Mauritius.

FX regulations also play a critical role in cash management, impacting liquidity and cross-border transactions. Many corporates are shifting to holding reserves in USD rather than local currencies, where permitted, to preserve value and facilitate easier convertibility. While currency hedging remains an option, the high interest costs associated with African currencies make it an expensive strategy for most businesses. Consequently, many companies are pegging their goods and services to USD, which, in turn, has driven inflation through increased import costs.

The commercial launch of 5G in about 40 markets in Africa makes the region ripe for the adoption of Internet of Things (IoT) technology. IoT opens up new value stream opportunities in production monitoring, smart metering, supply chain traceability, and sustainability initiatives. Banks are collaborating with clients to integrate smart cash management solutions through API-driven data exchange, enabling context-aware payouts, automated FX settlement, and seamless reconciliation. These advancements are driving just-in-time working capital solutions, improving financial efficiency across industries.

Technology’s role in overcoming treasury barriers

As cash management complexity in Africa grows, technology is playing an increasingly vital role in helping businesses achieve enhanced visibility over their finances. One of the most significant developments has been the rapid expansion of African fintech solutions, which have tripled in number since 2020, improving financial inclusion and streamlining payments.

Artificial intelligence (AI) and machine learning (ML) are transforming liquidity forecasting enabling predictive cash flow analysis and proactive risk management. While some treasurers remain cautious about generative AI, robotic process automation (RPA) is becoming a widely adopted tool for reconciliation and compliance reporting. AI-powered fraud detection tools are also enhancing risk management, allowing treasurers to detect anomalies in transactions and prevent financial crime. Additionally, central bank initiatives around Open Banking, supported by fintech and mobile wallet operators, are helping to revolutionise the payments landscape across Africa.

Navigating regulatory and economic shifts

Despite technological advancements and treasury centralisation, Africa’s regulatory landscape remains a key challenge. While some markets have eased FX repatriation restrictions, compliance obligations continue to be a major burden for businesses. Inflationary pressures, rising government debt levels, and sovereign credit rating downgrades have further impacted access to liquidity, increasing capital costs for corporations.

Political changes also play a role in shaping treasury operations. In South Africa, the formation of a Government of National Unity (GNU) between the African National Congress (ANC) and the Democratic Alliance (DA) has created both optimism and uncertainty for businesses. While policy continuity and improved accountability are expected, political tensions could drive FX volatility and impact supply chains.

Furthermore, ongoing discussions on potential amendments to the tax regime are causing businesses to reassess their financial strategies in the region.

Regulatory and financial policy developments will also shape the future of corporate treasury operations. The Pan-African Payment and Settlement System (PAPSS) could further streamline cross-border transactions. However, realising this vision will take time and sustained investment in financial infrastructure and requires regulatory cooperation across the continent.

A future defined by agility and innovation

The next five years will likely see a growing divide between companies that proactively invest in treasury modernisation and those that do not adapt to Africa’s evolving financial ecosystem. Businesses that embrace digital treasury tools, optimise liquidity through RTCs, and strengthen their FX risk management frameworks will be best positioned to thrive in an increasingly volatile economic climate. The shift toward regional treasury centres, combined with advancements in fintech and AI-driven treasury solutions, is helping businesses navigate the continent’s financial complexities with greater agility.

Success in this environment will depend on treasurers’ ability to embrace change, leveraging technology to enhance visibility and decision-making while refining their liquidity strategies. Those who proactively adapt will not only mitigate risks but also unlock new opportunities in one of the world’s most dynamic and fast-evolving economic regions.

As we move further into 2025, one thing is clear: Africa’s treasury leaders will be defined not only by their ability to react to change, but by their capacity to anticipate it and seize the opportunities that change can bring.