Factoring Profile: Unleashing the potential of factoring in Africa

Access to finance is considered a major growth constraint for a large proportion of micro, small and medium enterprises (MSMEs) in developing financial markets. In Africa, a significant proportion of firms rate the availability and cost of finance as the most important obstacle to growth. In Sub- Saharan Africa, it is estimated that more than 52% of MSMEs need a loan but cannot access one. (...) The limited access to finance, together with inadequate collateral, has propelled firms to explore other forms of finance that do not entail collateral and other guarantees. Indeed, the use of factoring as a financing instrument is proving to be a viable option, especially for financially constrained firms facing difficulties in meeting collateral requirements.