Afreximbank approves $83 million African factors
The African Export-Import Bank (Afreximbank) has approved $83 million for African businesses engaged in factoring since 2012, Kanayo Awani, Managing Director of Afreximbank’s Intra-African Trade Initiative, has announced in Abidjan.
Speaking yesterday during a sensitization workshop organized by Afreximbank to promote the Model Law on Factoring, Ms. Awani, who is also Chairperson of the Africa Chapter of the International Factors Group (now IFG+FCI Union), said that $48 million of the amount had already been disbursed and that the Bank was also assessing additional factoring lines totaling $90 million for African factors and factoring companies.
She said that the approved amounts included $23 million for factors in Mauritania, $35 million for those in Senegal, $5 million for those in Mauritius, $10 million for those South Africa and $10 million for those in Zimbabwe. The credit lines under assessment were for institutions in Burkina Faso, Kenya, Egypt, Botswana, Cameroon, Mauritius, Zambia and Zimbabwe.
Ms. Awani explained that in its effort to promote factoring in Africa, Afreximbank was offering lines of credit to factors, providing them liquidity and offering payment risk protection. In addition, it was raising awareness through educational and training activities and was helping to create enabling infrastructure, including improving the legal environment.
Ms. Awani noted that Africa was still not a significant player in the global factoring market and accounted for only 0.7 per cent of the 2.3 trillion Euros of world factoring transactions in 2015, with South Africa, Tunisia, Morocco, Egypt and Mauritius accounting for almost all the African transactions.
She however, said that the opportunities for factoring in Africa were broad and that factoring volumes in Africa were estimated to grow from 24 billion Euros in 2012 to 90 billion Euros in 2017 and 200 billion Euros in 2020.
To take advantage of those opportunities, there was need to implement regulatory reforms, create awareness, expand credit insurance, attract factors from outside the continent, conduct training and ensure government support, said Ms. Awani.
Also yesterday, Erik Timmermans, Deputy Secretary General of the IFG+FCI Union, made a presentation on the work of the Union to promote factoring in Africa and encourage participation of African factors in the global market.
The Model Law on Factoring was drafted to guide African countries in preparing national factoring laws and was expected to be either adopted or used as a guide by African countries to meet local realities.
More than 40 participants representing major law firms and leading financial institutions in the West African Economic and Monetary Union and Central African Economic and Monetary Community regions attended the seminar. Also in attendance were Diawara Mamadou, President of the Cote D’Ivoire Parliamentary Committee on General and Institutional Affairs, and Prof. Dorothe Sossa, Permanent Secretary of the Secretariat of the Organisation for the Harmonisation of Business Laws in Africa (OHADA).
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.
