Multinational companies can still expand into Africa
Multinational companies moving into Africa are looking for supply chain efficiencies that provide market leading solutions which can optimise balance sheets and the use of working capital, said Standard Bank.
According to Kent Marais, Head of Transactional Products & Services Product Management at Standard Bank there is still interest from multinational companies to expand into Africa due to the higher growth rates on offer than elsewhere in the world, but expectations around more sophisticated solutions are much higher than they were in the past.
“Many of these multinational companies have been exposed to markets like the US and Asia. This means they expect a greater degree of financial sophistication than what many of the markets in Africa have delivered in the past. They are looking for more innovative solutions which can better support their overall working capital requirements, as they expand within Africa,” said Marais.
While Africa remains “a huge investment opportunity”, corporate treasurers are under pressure to improve working capital life cycles and ensure they have enough cash on hand to effectively operate. Their daily tasks include managing the cash on hand, debtors, creditors and the financial needs in their supply chain, which is getting tougher due to the weak economic conditions.
According to the International Monetary Fund’s (IMF) economic update in January, most countries in sub-Saharan Africa will see a gradual pick-up in growth, but to rates that are lower than those seen over the past decade. Projections for sub-Saharan Africa remain relatively high at 4% in 2016 and 4.7% in 2017 – versus 2.1% for advanced economies for both years.
“Africa needs to become more self-sustainable in these conditions. But multinational companies are still very interested in the higher growth rates that are on offer,” Marais added. “There are a lot of positive moves happening and there are superb growth opportunities in the making in certain regions supported by proactive policy changes to support the opportunities,” he concluded.