Afreximbank, AfDB offer $.5m to 20 factoring firms
The African Export-Import Bank (Afreximbank) would now tap into the African Private Sector Assistance (FAPA) programme of the African Development Bank (AfDB) to provide the grant.
The scheme, which would advance the interest of Small and Medium Enterprises, is created to raise support for emerging factoring firms in the continent.
In factoring, an exporter or supplier sells his accounts receivable or invoices at a discount to a third party, called a factor, in exchange for immediate cash with which to finance continued business.
Recently, members of the Banking Committee of the Nigerian Senate and the Banking and Currency Committee of the House of Representatives pledged to accelerate the enactment of factoring bill currently in the National Assembly to ensure that it was passed into law.
Afreximbank) had introduced a model law on factoring to provide a benchmark for African national legislatures’ enacting arrangements, aimed at fostering the growth of factoring activities across the continent.
The agreement, signed at the Afreximbank’s yearly meetings and 25th anniversary celebrations in Abuja, is aimed at upgrading the capacity and skill-sets of up to 20 emerging factoring firms.
It is also aimed at providing advisory services to enhance the sustainability of established growth-orientated factoring firms, regulators, financial institutions and business and trade associations in Africa.
The Managing Director of Intra-African Trade, Kanayo Awani, signed on behalf of Afreximbank, while the Senior Director, Nigeria Country Office, Ebrima FAAL, signed for the African Development Bank.
The signing was in the presence of Chargé d’Affaires, Embassy of Austria in Nigeria, Elfriede Geisler, and Ambassador of Japan to Nigeria, Yutaka Kikuta, who represented the FAPA donor countries.
Afreximbank President, Dr. Benedict Oramah, said: “SMEs in Africa have long faced real difficulties accessing external finance for their business activities and this has impeded their growth and prevented them pursuing commercial opportunities.
“Afreximbank sees factoring as a solution to bridge the funding gap facing SMEs, and the agreement will support our strategy to grow Intra-African trade and facilitate greater SME contribution to regional and global supply chains.
“We are championing the development of factoring in Africa, and our support focusses on the provision of credit lines to factors, capacity-building workshops, policy and regulatory inputs, advisory services and technical assistance to promote best practices.
“This Agreement with the ADB, and the Grant from FAPA, will reinforce and grow the availability of effective factoring across the continent and increase awareness of its availability.”
The grant will finance capacity building tailored to address needs, including on-site training, provision of back-office support systems and customised manuals for marketing, credit and risk policy, finance and operations.
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