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Afreximbank offers $83m to region’s factors

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Kanayo Awani PHOTO:www.afreximbank.com

Kanayo Awani<br />PHOTO:www.afreximbank.com

A fresh vista has been opened for the continent’s businesses engaged in factoring, as African Export-Import Bank (Afreximbank), approved $83 million lifeline, covering activities since 2012.

Factors are business agents, merchants that buy and sell on commission basis, especially those that buy manufacturers’ invoices at a discount and takes responsibility for collecting the payments due on them.

The Managing Director of Afreximbank’s Intra-African Trade Initiative, Ms. Kanayo Awani, made the disclosure during a sensitisation workshop to promote the Model Law on Factoring, in Abidjan.

Awani, who is also Chairperson of the Africa Chapter of the International Factors Group (now IFG+FCI Union), said that $48 million of the amount had already been disbursed.

She said the bank was also assessing additional factoring lines totaling $90 million for African factors and factoring companies.

She said that the approved amounts included $23 million for factors in Mauritania, $35 million for those in Senegal, $5 million for those in Mauritius, $10 million for those South Africa and $10 million for those in Zimbabwe.

The credit lines under assessment were for institutions in Burkina Faso, Kenya, Egypt, Botswana, Cameroon, Mauritius, Zambia and Zimbabwe.

According to her, in its effort to promote factoring in Africa, Afreximbank was offering lines of credit to factors, providing them liquidity and offering payment risk protection.

It is also raising awareness through educational and training activities and to create enabling infrastructure, including improving the legal environment.

Awani noted that Africa was still not a significant player in the global factoring market and accounted for only 0.7 per cent of the 2.3 trillion euros of world factoring transactions in 2015, with South Africa, Tunisia, Morocco, Egypt and Mauritius accounting for almost all the African transactions.

She however, said that the opportunities for factoring in Africa were broad and that factoring volumes in Africa were estimated to grow from 24 billion Euros in 2012 to 90 billion euros in 2017 and 200 billion Euros in 2020.

“To take advantage of opportunities, there was need to implement regulatory reforms, create awareness, expand credit insurance, attract factors from outside the continent, conduct training and ensure government support, she said.

The Deputy Secretary-General of the IFG+FCI Union, Erik Timmermans, made a presentation on the work of the union to promote factoring on the continent and encourage participation of African factors in the global market.

The Model Law on Factoring was drafted to guide African countries in preparing national factoring laws and was expected to be either adopted or used as a guide to meet local realities.

More than 40 participants representing major law firms and leading financial institutions in the West African Economic and Monetary Union and Central African Economic and Monetary Community regions attended the seminar.

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.


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AfreximbankKanayo Awani
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