Corporate Risk Management
Challenges in sub-Saharan Africa
Although sub-Saharan Africa has witnessed a substantial improvement in informational efficiency, economic growth and, in some instances, political stability, managing financial risks for corporates on the continent still remains a high priority. Despite attempts to formalise and improve the local equity, interest rate and currency markets, progress is often slow in this region and is further hindered by legal, regulatory and other market factors. Illiquidity in these markets is exacerbated by the fact that banks are not willing to warehouse substantial illiquid risks, and there are almost no secondary markets to lay these off. Multinational corporations (MNCs) looking to expand their footprint in sub-Saharan Africa will face typical financial risk management and hedging constraints, as well as atypical operational and administrative risks.