In today’s Nigeria, liquidity is no longer a straightforward metric. It has become a complex and constantly shifting terrain. For business leaders, treasurers, and CFOs, the old models of cash flow management, capital preservation, and investment planning are being stress-tested by an economic reality that is anything but stable.
Over the past decade, we’ve seen sharp swings in exchange rates, recurrent inflationary pressures, policy inconsistencies, rising sovereign debt, and constrained access to credit. These challenges have forced businesses to rethink how they manage liquidity.
The task now is not just to stay liquid but to do so sustainably and strategically in the face of prolonged volatility.
In my years working in Nigeria’s banking sector, including time spent in treasury and corporate finance roles at Guaranty Trust Bank and Access Bank, I have seen firsthand how liquidity challenges can become existential risks for companies that fail to plan proactively. I have also seen how strategic treasury management, when aligned with business realities, can help firms not only survive but grow through economic uncertainty.
The New liquidity reality: more than cash in the bank
For many Nigerian firms, liquidity used to mean one thing, cash. If you had strong receivables, sufficient cash in your account, and perhaps a line of credit from your bank, you were covered. Today, that view is dangerously simplistic.
Liquidity is now about agility. It’s about the ability to move resources quickly, convert assets efficiently, and weather unplanned shocks. It involves not just cash on hand but working capital cycles, credit arrangements, hedging mechanisms, foreign exchange access, and even regulatory foresight.
For example, during periods of tight foreign exchange supply, as we’ve repeatedly seen in Nigeria, companies with dollar liabilities or import dependencies find themselves vulnerable. If they haven’t planned ahead, they may be forced to buy dollars on the parallel market at a significant premium or delay key business operations. Both outcomes hurt performance and damage investor confidence.
Treasury’s role has evolved
In light of these realities, the role of the corporate treasury function has expanded dramatically. Treasury is no longer just about cash management and payment processing. It now sits at the strategic center of the organization, advising the C-suite on liquidity planning, risk exposure, capital allocation, and even scenario modeling.
At Access Bank, I saw how leading financial institutions were beginning to support clients beyond loans and deposits. We were offering corporate treasury advisory, helping firms with cash flow modelling, FX risk mitigation strategies, investment optimization, and working capital analysis. These are not just financial tools; they are business survival strategies.
Treasurers must now think like strategists. They need to understand business models, anticipate policy changes, and align liquidity buffers with both operational risks and market trends. This calls for a new skill set; one that combines financial acumen, technological fluency, and macroeconomic awareness.
FX volatility and the case for diversified liquidity
One of the most persistent liquidity challenges Nigerian businesses face is foreign exchange volatility. The naira has faced multiple devaluations, and the disparity between official and parallel market rates creates distortion across pricing, forecasting, and procurement.
Treasury managers must now adopt diversified liquidity strategies. This means not only holding naira reserves but also finding smart ways to access and preserve dollar liquidity where necessary. Some of these may include:
1.Maintaining FX-denominated revenue streams (for exporters and multinationals).
2.Hedging dollar exposure through forward contracts or swaps (where available).
3.Negotiating supplier contracts with flexible payment terms.
4.Using domiciliary account structures for strategic reserves.
Of course, these strategies require coordination with regulators and close compliance with CBN guidelines. But the point is clear, if all your liquidity is tied to a single currency or banking relationship, you are more exposed than you realize.
Inflation and the erosion of idle capital
Another major challenge is inflation, which silently but steadily erodes the value of idle cash. In Nigeria, where inflation has hovered in the double digits for years, businesses that park excess liquidity in low-interest savings accounts or non-performing assets are effectively losing money.
Strategic treasury management must therefore look beyond “safety”, consider “preservation” and “growth.” Where can surplus liquidity be deployed to hedge against inflation while remaining accessible? Some strategies I have seen used effectively include:
1.Investing in short-dated government securities or money market instruments
Creating corporate investment portfolios with laddered maturities.
2.Exploring commercial paper or bond investments (subject to risk appetite and market conditions)
3.Partnering with fintechs or platforms that offer better yield structures on idle capital.
None of these options are perfect or risk-free. But they represent an evolution in treasury thinking from hoarding cash to managing capital dynamically.
Credit access and relationship banking
Liquidity is not just about what you have; it’s also about what you can access. In Nigeria’s tight credit environment, access to working capital can be the difference between growth and insolvency.
One lesson I learned at GTBank was that companies with consistent, transparent financial reporting, good governance, and engaged banking relationships are often able to unlock liquidity even in tough times. Banks are more willing to extend credit to businesses that demonstrate sound treasury practices, not just collateral.
This is where CFOs and treasurers need to invest in relationships. Your bank is not just a service provider; it is a partner in your liquidity journey. Share your business model, be proactive with reporting, and treat loan covenants as strategic tools rather than compliance burdens. That approach builds credibility and opens doors.
Technology as a treasury enabler
We can no longer talk about treasury without mentioning technology. Digital tools now allow businesses to monitor cash flows in real time, forecast liquidity under different scenarios, and automate investment decisions.
Treasury Management Systems (TMS), cloud-based dashboards, and data analytics tools are becoming more accessible, even for mid-sized firms. The question is not whether your business can afford treasury tech; it is whether you can afford not to have it.
Incorporating fintech solutions into treasury processes also enables better decision-making and reduces human error. Businesses that digitize treasury operations are more likely to respond quickly to market shifts and allocate capital more efficiently.
The Role of leadership: Embedding liquidity thinking into strategy
Ultimately, strategic treasury management must be led from the top. CEOs, CFOs, and board members must champion liquidity planning as a core business function, not just a finance department responsibility.
This means embedding liquidity thinking into capital planning, procurement strategies, pricing decisions, and growth projections. It also means educating non-financial teams about the importance of working capital discipline and timely cash conversion.
The best-run companies I’ve worked with understand that liquidity is not just a finance issue but a company-wide responsibility. Procurement must negotiate better terms. Sales must manage receivables efficiently.
Operations must align inventory with demand forecasts. Treasury’s role is to coordinate these moving parts, providing data, oversight, and strategy.
Conclusion
In a volatile economic environment like Nigeria’s, cash remains king but only if it is well-managed. Strategic treasury management is no longer a nice-to-have. It is a competitive advantage. Companies that prioritize liquidity, diversify risk, and invest in treasury capability will not only survive economic shocks, they will grow through them.
The future belongs to businesses that can move fast, allocate capital wisely, and plan beyond the crisis of the moment. That begins with a treasury function that is empowered, strategic, and fully integrated into corporate decision-making.
If we are to build a resilient private sector that can weather uncertainty and drive inclusive growth, treasury must step out of the shadows and into the boardroom. Liquidity, after all, is not just a number on the balance sheet. It is the pulse of the business.
