Middle East Firms Could Unlock $54.7 Billion In Trapped Cash: Pwc

Publicly listed companies across the Middle East have an estimated $54.7 billion trapped on their balance sheets, presenting a major opportunity to unlock liquidity and strengthen financial resilience, a report showed on Monday.

According to PwC's 2025 Middle East Working Capital Study, in 2024, companies in the region improved net working capital (NWC) days by six days - a 5.6 per cent gain - driven by better receivables collection and inventory management. However, only 9.4 per cent of firms sustained these improvements for three consecutive years, highlighting challenges in embedding long-term efficiency.

“In a year marked by heightened geopolitical uncertainty and supply chain disruption, effective working capital management remains a strategic priority in the Middle East,” said Mo Farzadi, Business Restructuring Services Leader at PwC Middle East.“Companies that take a disciplined approach to cash conversion can unlock liquidity, build resilience, and respond more confidently to market pressures. Sustainable improvements in working capital continue to be a powerful enabler of growth and long-term value.”

Despite regional tensions and weaker oil prices, Middle Eastern companies posted strong growth in 2024, with revenues rising 6.3 per cent year-on-year. Non-oil sectors led the charge, with UAE's non-oil revenue surging 16.8 per cent and Saudi Arabia's increasing 8 per cent. Oil-based entities, however, saw revenue declines due to lower prices.

Since 2020, the region has maintained a compounded annual growth rate of 11.5 per cent, underscoring its economic momentum. Confidence remains high, with 90 per cent of GCC CEOs optimistic about revenue growth over the next year, according to PwC's 28th Annual CEO Survey.

Mergers and acquisitions (M&A) also remained robust, driven by diversification strategies and value creation goals. PwC's TransAct 2025 report highlights M&A - including IPOs and cross-border acquisitions - as a key contributor to top-line growth.

Profitability across the region improved modestly in 2024, rising by 30 basis points after two years of decline. Cost of goods sold (COGS) as a percentage of revenue dropped by 60bps - the first decline in three years - reflecting better sourcing and early gains from localisation. However, selling, general and administrative (SG&A) costs rose by 20bps to 8.1 per cent, with Saudi Arabia showing higher ratios than regional peers, indicating room for operational transformation.

Receivables performance improved, with Days Sales Outstanding (DSO) falling to 81.1 days from 83.9 in 2023. Companies increasingly adopted structured order-to-cash processes, automation, and AI tools to enhance collections. Factoring of receivables - especially in Saudi Arabia and the UAE - has become a popular tool to manage payment delays, though PwC cautions that it may mask inefficiencies in internal processes.

Inventory efficiency also improved, with Days Inventory Outstanding (DIO) dropping by three days. Companies investing in supply chain visibility and planning tools saw benefits, particularly amid disruptions in the Red Sea and broader geopolitical tensions. Localisation efforts helped reduce safety stock and lead times, though PwC notes further opportunities in inventory planning and demand forecasting.

While Days Payables Outstanding (DPO) remained stable, the overall improvement in working capital metrics reflects a growing strategic focus. The COVID-19 pandemic acted as a catalyst, pushing working capital higher on the corporate agenda. This shift is evident in the rise of performance improvement projects and the use of working capital as a lever in M&A transactions.

As capital costs remain elevated, working capital efficiency must be treated as a long-term capability rather than a short-term initiative, PwC analysts said.“Companies that invest in sustained improvement will be best positioned to strengthen balance sheets, improve resilience, and unlock future growth opportunities,” they added.

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