Raising Capital in Africa: How Nascent Multinationals Navigate Its Institutional Voids

It is generally assumed that multinational enterprises (MNEs) can secure and move funds across national borders with few limitations. However, MNEs operating in Africa struggle to do this, and more so when they are nascent African MNEs. The combination of weak macro-economic conditions, contradictory policies and regulations, and heavy regulatory “oversight” in African countries makes it hard and expensive to obtain both short- and long-term funding – whether in the local or foreign currency. We recommend that MNEs centralize treasury operations in countries with more favorable conditions, train key employees on global financing to close the knowledge gap between them and the developed world, and implement a robust ESG (Environment, Social & Governance) policy to facilitate access to long-term capital from developmental funding institutions. Using a flexible funding structure that allows switching between local and foreign currency, using earnings from the host economy and prioritizing exports can also help ensure access to funds.