Afreximbank unveils new framework to promote factoring in Africa

Oct 27, 2016

It will provide a benchmark for African governments.

The African Export-Import Bank (Afreximbank) has introduced a model law on factoring, which will provide a benchmark for African governments and thus contribute to the development of factoring activities across the continent.

The Managing Director of Afreximbank’s Intra-African Trade Initiative, Kanayo Awani, expects that the document will have a strong impact on the way small and medium-sized enterprises (SMEs) are financed in Africa.

"Its development impact will be phenomenal, facilitating access to finance for excluded small and medium-sized business," she said, quoted by The Guardian.

Factoring is a transaction in which a business sells its accounts receivables, or invoices, to a third party commercial financial company, also known as a “factor”. In exchange, the business will receive immediate cash to finance other activities.

To develop factoring in Africa, Afreximbank has been providing lines of credit to factors, creating awareness building capacity among key players and assisting in the creation of facilitative infrastructure.ADNFCR-2976-ID-801827403-ADNFCR