10 - 05 - 2017 | |
Facoring services can bridge the gap in the financing of small and medium-sized enterprises (SMEs) in Africa by addressing the challenges SMEs face in accessing funding for business activities.
Ms. Kanayo Awani, Managing Director of Intra-African Trade Initiative of African Export-Import Bank (Afreximbank), stated this at a two-day factoring promotion seminar organised by the bank in Douala, Cameroon.
She said that the effectiveness and potential of factoring services to support SMEs became even higher during periods of financial distress and that, because of its unique features, factoring was well-suited for facilitating financial inclusion of SMEs.
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs.
Awani asserted that Afreximbank had been championing the development of factoring in Africa to support its strategy to grow intra-African trade and facilitate greater SME contribution to regional and global supply chains.
She added that the bank’s support had been through provision of credit lines to factors, capacity-building workshops, policy and regulatory inputs, advisory services and technical assistance to promote best practices. “We are proud to note the increased awareness about factoring in Africa and, more tangibly, the growing number of factoring companies on account of our efforts,” she said.
Increasing factoring transaction volumes and ensuring stronger legal frameworks were also part of the bank’s targets, Awani added.
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