‘Factoring holds key to small business financing’
The continent’s huge number of small businesses reeling under the challenges of poor access to finance could get relief from factoring, financial experts have said.
Besides, African countries have been urge to legislate factoring and take advantage of its opportunities for expanding the continent’s regional value chains.
Reiterating this call, the Managing Director of the Intra-African Trade Initiative at the African Export-Import Bank (Afreximbank), Kanayo Awani, lamented that despite the potential upside, Africa’s small and medium-sized enterprises (SMEs) continued to face difficulties in accessing finance.
Speaking at the opening of the two-day Regional Conference on Factoring in Dakar, Senegal, Awani, who is also Chairperson of Factors Chain International (FCI) Africa Chapter, noted that in other regions, such enterprises accounted for the largest shares of trade finance transactions concluded through factoring.
According to her, in Europe, factoring represented 10.4 per cent of Gross Domestic Product at 1.5 trillion Euros.
Conversely, Africa only accounted for one per cent of global factoring transactions, a low volume that is largely attributable to lack of information and awareness.
The conference, co-organised by Afreximbank and FCI, the global representative body for the factoring and receivables finance industry, she said, was to equip participants with relevant tools to tap into the opportunities available to grow factoring in the continent, especially in the context of intra-regional trade.
But the Secretary-General of FCI, Peter Mulroy, affirmed that despite the low factoring level in Africa, the continent had achieved important milestones that could help develop it further in the years to come.
“Today we are witnessing the birth of numerous initiatives at the government, ministerial and central bank levels in such markets as Cameroon, Nigeria, Ghana and others.
“This is, in part, thanks to the development of the model law on factoring by Afreximbank, the removal of burdensome stamp duty tax, the development of inclusive policies at the central bank level to promote and support financing to SMEs through factoring, and the push for development of cross-border factoring,” he added.
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