Experts pitch supply chain financing to bridge liquidity challenge

Financial experts said supply chain financing (SCF) could help bridge the liquidity gap in third procurement, increase turnover and boost the contribution of the ecosystem to economic growth.

They stated this at the Fiducia Factoring Forum held in Lagos. Organised by Fiducia Data Services Limited, the event sought to explore expert views on how service providers and their clients could explore SCF to increase liquidity in the industry and grow the economy.

The World Bank estimates Nigeria’s SCF at about N2.7 trillion, suggesting a huge gap in the market. Chairman of the Fiducia, Bunmi Lawson, who delivered the keynote at the event, said despite the advancement in the financial system, the small and medium-scale enterprises (SMEs) who play in the SCF are largely unfunded.

“There is a major gap in actually addressing financing for SMEs and supply chain finance provides a unique method for us to be able to address that issue. You will find that a lot of large companies have in their books supplier liabilities that have not yet been paid.

“When you go to most multinationals, even after you supply them, they are going to ask you to wait 90 days from the presentation of your invoice. They are not likely to give you an upfront advance for the supply of those goods and services,” she said while highlighting opportunities for Fiducia.

The company, she said, provides an opportunity for SMEs to increase their turnovers, profitability and support growth.

“The most immediate advantage is that you do not have to tie down your money in stock; you can pay in advance or on time. So, the SME can go on to do other businesses. It enables the expansion of the number of suppliers that corporates have,” she said.