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We have observed the same pattern across several African markets.
A multinational signs a long term supply agreement. Volumes are strong. The commercial relationship is excellent. And then one quarter, payments slow down. Not because of cash flow, but because of settlement mechanics. The local entity has the money. It just cannot get it to the supplier fast enough in the right currency.
What tends to happen next follows a familiar pattern, and it affects everyone involved.
The importer faces delayed inventory. Production schedules slip. Customers start looking at alternatives. And if the supplier increases prices to compensate for the payment lag, those costs flow straight through to the importer's margins or end up on the shelf price.
The supplier watches DSO climb. Balance sheet exposure to that market grows. The cost of financing those receivables increases. And capital that could be deployed to win new customers or enter new markets stays locked up, waiting for settlement to clear.
A relationship that took years to build starts to erode in weeks. On both sides.
The hidden fragility
Most supply chain risk frameworks focus on logistics: shipping lanes, port congestion, warehousing. These are visible and well understood.
Settlement risk is invisible until it bites. It sits in the gap between "payment approved" and "funds received." In markets where FX liquidity moves at its own pace, that gap can stretch from days to weeks to months.
For the supplier, it does not matter why. Late payment is late payment.
What we have observed in well-managed operations
The businesses we have seen handle this effectively tend to share a few traits.
They separate FX risk from commercial risk. The procurement team focuses on sourcing. A dedicated structure handles settlement. The two do not get tangled.
They work with intermediaries who act as principal, not just advisers. There is a difference between someone who finds you a rate and someone who takes on the payment obligation. The latter provides certainty.
They settle through compliant channels from day one. No shortcuts, no grey areas. This protects both the relationship and the company's licence to operate.
And they treat settlement infrastructure as a source of commercial advantage. In our experience, the company that pays reliably tends to receive first allocation, better terms, and stronger supplier loyalty. The supplier that receives payment predictably is better placed to offer competitive pricing and prioritise that customer.
Settlement is a two sided problem with a two sided solution
If your business is an importer dealing with FX delays, or a supplier carrying growing receivables exposure in African markets, the settlement layer may be worth examining. Addressing it can release capital, strengthen relationships, and offer both sides a more stable foundation.
We would welcome a conversation about how this works in practice.
For those operating in African markets: where does settlement friction rank on your list of operational challenges? We are curious to hear how others are handling it.
Sources:
Rahri | Settlement certainty for frontier markets