Wednesday, 6 July 2016

News Release: Africa Needs Facilitating Infrastructure To Tap €200-Billion Factoring Growth

With Africa’s factoring volume expected to reach 200 billion Euros in 2020, the continent must put in place facilitating legal and regulatory infrastructure to enable it take advantage of the many opportunities associated with factoring, Kanayo Awani, Managing Director of the Intra-African Trade Initiative at the African Export-Import Bank (Afreximbank), told guests at a seminar in Abuja yesterday.

Ms. Awani, Chairperson of the Africa Chapter of the International Factors Group, which recently signed an agreement with Factors Chain International forming a single organization, was speaking during the sensitization seminar organized by Afreximbank to promote the Model Law on Factoring that was drafted to guide African countries in preparing national factoring laws.
Noting that Africa’s factoring volumes, which stood at 24 billion Euros in 2012 would grow to 90 billion Euros in 2017 and 200 billion Euros by 2020, Ms. Awani, said that there must be improved regulatory reforms and creation of awareness for the continent to reap the full benefits of that growth.
There must also be an expansion of credit insurance, attraction of international factors into Africa, training, and support from governments, she added.
Because of the very limited knowledge of factoring in Africa, there had been little effort by governments and global factoring groups to promote it, continued Ms. Awani. Moreover, Africa, outside of South Africa and the North of Africa, was seen as presenting unacceptable country risks while members of global factoring groups viewed the African economy as not being globally significance.
She announced that, since 2011, Afreximbank had approved $83 million for factors in Africa and that it was currently assessing factoring lines totaling $90 million.
In addition to provision of lines of credit to factors, Afreximbank had also been engaged in raising awareness about factoring through educational activities and in fostering the creation of facilitative infrastructure across Africa, added Ms. Awani.
Introducing the key provisions of the model law to the participants, Edward Wilde, of Squire Patton Boggs Law, London, which helped to draft the law, said government and legislative support were key to any implementation or adaptation to local realities.
The seminar attracted more than 70 participants, including House of Representatives Members Dr. John Dyegh and Ossai Nicholas Ossai, regulators from the Central Bank of Nigeria, and representatives of major law firms, the Nigerian Export-Import Bank and other leading financial institutions in Nigeria.
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.
Manal Mounir Hendy
External Communications

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