FG targets $1bn from factoring to boost financing for MSMEs
The Federal Government is optimistic that factoring in Nigeria could unlock over $1 billion yearly in financing the Micro, Small and Medium Enterprise (MSMEs).
It called on stakeholders to play the role that will make factoring happen in Nigeria, stressing that factoring has become one of the fastest growing instruments for structured trade finance in the world.
It described factoring as a financial transaction whereby a business sells in account receivables [invoice] to a third party at a discount in exchange for immediate money with which to finance business activities.
According to the government, factoring is also a viable and long-term solution to the problem of limited capital and availability that threatens the growth of small businesses.
The Executive Director, Nigerian Exports Promotion Council (NEPC) Olusegun Awolowo gave the assurance yesterday, in a welcome address to the first National Conference on Factoring and Forfaiting Services in Nigeria, in Abuja.
Awolowo further revealed that the theme of the conference, ‘’Factoring as an alternative instrument for trade finance in Nigeria’, is not only timely but capable of empowering MSMEs, particularly, those with high-quality receivable access to cash flow and capital that will help maintain and grow their businesses.
Declaring the conference open, the Minister of Industry, Trade and Investment, Adeniyi Adebayo urged the National Assembly to expedite action on the passage of the Factoring Bill before it.
He explained that the growing number of participating countries [over 70] and turnover (over $2 trillion) has created more than sufficient attention for Nigeria’s participation.
Adebayo stressed: ‘’It is indeed, a renewed effort to signpost the beginning of yet another initiative that will further unlock numerous possibilities and opportunities, all translating into additional wealth-creation for operators, traders, exporters and many more business people and ultimately, for the country.”
The Minister used the occasion to urge the Central Bank of Nigeria [CBN] to issue necessary guidelines to this effect within extant laws and work with all the stakeholders to submit a roadmap as soon as possible.