EuroFinance

Foreign exchange (FX) volatility, regulatory hurdles, and liquidity constraints are the challenges for corporate treasurers operating in diverse markets. In Africa, Latin America, and Asia-Pacific, these challenges are amplified by currency fluctuations, evolving regulations, and geopolitical uncertainties.  Banks play a crucial role in helping corporations manage FX risk and optimise liquidity. From leveraging local expertise and securing FX hedging lines to centralising cash management and restructuring banking relationships, treasury teams are refining their strategies to drive efficiency and resilience. 

By embracing a cross-regional approach and collaborating closely with banks, companies are not just weathering the storm—they are finding opportunities to thrive in volatile FX environments.

For treasury leaders, successfully navigating these complexities requires more than just risk mitigation—it demands strategic agility, deep banking relationships, and a tailored approach to cash and liquidity management across regions.

Africa: diverse challenges and building trust

Africa, with its billion-strong population, abundant natural resources, and growing economic activity, presents vast opportunities for business. However, the region’s complexities require tailored strategies and robust relationships.

Jyoti Jiwani, a treasury transformation consultant at Anglo American, underscored the importance of reliable banking partnerships in addressing infrastructure challenges such as load shedding and political risks. “Our relationship with banks in South Africa is crucial,” Jiwani explained. “A few years ago, we went through an RFP process, and the bank we chose went above and beyond our expectations. They outlined how they could support us in business-critical disaster scenarios, demonstrating their flexibility and ability to help us manage these risks effectively.”

Jiwani also discussed strategic shifts in treasury operations, including moving front-office activities to South Africa and Brazil to leverage local talent and reduce costs. “This transformation has allowed us to focus our London team on complex projects while empowering our African teams to handle stable day-to-day activities,” she said. “Recruitment in South Africa is a challenge, but this transformation gave us the opportunity to think outside the box and aim for a global, virtual, centralised treasury team.”

Cross-border liquidity, regulatory red tape, and FX scarcity—just another day for treasury teams in Africa and the Middle East. Treasurers operating in Africa and the Middle East must be both strategists and problem-solvers, finding ways to move cash through markets where volatility is the norm. At the Treasury & Cash Management in Africa & the Middle East event, treasury leaders from multinational and pan-African companies will break down the realities of operating in these dynamic markets.

Latin America: tackling FX and liquidity risks

Latin America is a region brimming with potential but fraught with significant challenges in treasury management.  “It’s very clear that FX is a great concern,” said Séverine Le Blévennec, global head of treasury at Aliaxis, a Belgian multinational company that specializes in advanced plastic piping systems for water management, construction, and industrial applications. “A lot of our exposure was self-inflicted because we didn’t have the liquidity required in every country. Entities were not always sufficiently capitalised, and there was reluctance to provide corporate guarantees.” Aliaxis addressed these challenges by implementing corporate guarantees and working closely with banks to establish FX hedging lines, significantly reducing exposure.

“We changed our approach and, with a corporate guarantee, were able to secure appropriate liquidity in each country’s local currency.” Surprisingly, it was the first ever corporate guarantee at Aliaxis, so it required intense negotiation with our legal team for nine months, but with the support of our CFO on one hand and some flexibility at the bank on the other, we ultimately made it ,” Séverine added.

By improving liquidity, Aliaxis enabled local entities to repay intercompany loans, which were creating FX exposure on both sides, according to Séverine. “We materially addressed our risk without changing our external exposure or the financial market conditions—simply by sorting out our internal structure and collaborating with banks.”

Leandro Wendt, CFO of Agricola Alvorada, a Brazilian agribusiness company specialising in grain trading, agronomic consulting, and agricultural inputs emphasised the value of local banks for agility and responsiveness. “Local banks are more agile, and decision-making is faster,” he explained. However, for complex needs like hedging and commodity financing, global banks played a critical role. “Barter transactions, where grains act as cash, are unique to Brazil’s agribusiness and require specialised banking solutions,” Wendt noted.

Séverine highlighted the transformative impact of consolidating banking relationships. “When I joined Aliaxis three years ago, we had a fragmented treasury setup with over 40 banks across ten countries. By consolidating to just a few key banking partners, we streamlined processes, automated payment formats, and significantly reduced costs. The benefits have been mind-blowing,” she said, adding that the effort earned the company an Adam Smith award.

As Séverine aptly concluded, “Let’s not just list the hurdles. Let’s fix them, one by one. The banks are developing, and there are solutions.” Wendt echoed her optimism, urging treasurers to work collaboratively with banks to drive progress. She emphasised the importance of a proactive approach when working with banks, stating, “The message is clear: don’t wait for banks to tell you what can be done. Instead, tell them what you need.”

Asia-Pacific: navigating a dynamic business environment

In Asia-Pacific, businesses are adapting to economic shifts and regulatory complexities while maintaining resilience in a rapidly changing environment. Martin Meloun, senior director of international treasury at Edwards Lifesciences, an American medical technology company emphasised the importance of preparedness, citing lessons learned from geopolitical disruptions in other regions. 

Meloun detailed strategies for navigating regulatory complexities. “Collaboration with banks, legal firms, and regulators was key to navigating new financing regulations.” He added, “A dual approach of partnering with international and local banks is critical for ensuring business continuity.”

For cash management, Meloun emphasised simplicity and compliance through intercompany netting and centralised cash pooling in Singapore. The discussion also touched on evolving treasury practices. Meloun added, “Hope for the best, but prepare for the worst. It’s a principle that has served us well.”

Conclusion

International treasury management involves navigating complex landscapes, adapting to regional nuances, and fostering strong partnerships. Africa, Latin America, and Asia-Pacific each offer unique opportunities for growth alongside their challenges. By leveraging innovative strategies and embracing collaboration, treasurers can unlock the potential of these dynamic regions and drive success in a rapidly evolving global economy.