2023 Regional Updates – Africa | FCI
Mackinac Bridge in Michigan
Latest News
2023 Regional Updates – Africa
2023 Regional Updates – Africa
31 August 2023

Every June, FCI publishes its Annual Review, giving an overview of progress made by the world's biggest and most important factoring network. The Annual Review presents FCI's annual figures and global factoring statistics. In this extract, we explore Africa's Regional Updates, presented by Mr Nassourou Aminou, FCI Regional Manager Africa.

2022 Figures

Africa represents a 1% share of the total world factoring volume. Factoring volumes continued to grow in Africa in 2022. The African market adds up to a total of EUR 41 billion, indicating a significant growth rate of 29% compared to 2021, about the same increase compared to the previous year of EUR 32 billion. South Africa, the largest market accounting for over 80% of the entire volume on the continent, witnessed a staggering increase of 38%, and some Countries that led this growth included Egypt, Mauritius, and Tunisia. Indeed, it indicates that the African market continues its strong growth trajectory into the foreseeable future.

Legal, Regulatory and Advocacy

The initiatives undertaken in previous years by Afreximbank and FCI to support regulatory reforms and promote the model factoring law in Africa continue to show success. Progress has been made in West Africa to adopt the law, and in some countries, members of the Central Bank of West Africa (BCEAO) have started the domestication of this uniform factoring law based on the Afreximbank factoring model law, namely: Niger, Togo, Burkina-Faso, Mali. At the same time, DRC changed the banking law to include Factoring into a new banking law as a Banking product to allow banks and non-financial institutions to issue this product. Some countries, notably Nigeria, Kenya, and Madagascar, are still finalising laws in this direction.

Promotion and Awareness

In 2022, FCI and Afreximbank, with the FAPA Grant, held factoring promotion and awareness campaigns through various events. In partnership with the Central Bank of Central African Countries (BEAC) and the National Economic and Financial Council (CNEF) of the Republic of Congo, we held two Conferences in Congo. The conferences strengthened regional knowledge and awareness of factoring and highlighted the new Factoring law in the Republic of Congo. BCEAO, Afreximbank, and FCI hosted a webinar on Factoring and Receivables Finance in Africa, aimed to enhance the capabilities of actors involved in factoring activities in Africa. We hosted a factoring workshop alongside the Afreximbank Trade Finance & Factoring Seminar with the Central Bank of Uganda and the Bank Association. We also organised a workshop with the Egyptian Factoring Federation on empowering sustainable trade flows with factoring. Over 800 participants attended these events, emphasising capacity-building for individuals engaged in factoring activities.

Membership Mobilisation

We have 43 African region members, representing 10% of the total FCI membership. Seven (7) new members joined FCI during the past year. These were Banque Centrale Populaire (BCP), Morocco, VISTA-Gui Bank, Guinea, Industrial Finance Corporation (IFCM), Mauritius, HCH Financial Services, Uganda, DJIKE Factor, Guinea, QUEST Financial Services, Zimbabwe, FIDUCIA, Nigeria. At the same time, we had three terminations in 2022. There are currently five potential new members for the year 2023: Fidelis Finance-Group, Burkina Faso, Edge Plus Capital (EP Capital), Nigeria, Corplease, Egypt, African Trade Insurance (ATI), Kenya, Kweli Financial Service, DRC.

Challenges

Despite the growth in factoring volumes, there remain several challenges, which include insufficient knowledge about the product, education, skills, and experience in the Factoring Industry; legal environment & regulation: lack of legal framework in the different countries, capital requirements; economic environment and access to working capital in some countries: inflation, high-interest rate, cost of lending, securities; difficulties in getting a reliable credit information and credit insurance cover in some countries and buyers; IT system and software to manage properly factoring transactions. Lengthy and costly implementation of factoring business process, training, capacity building, and IT platform. Cultural and language barriers to international factoring.

Outlook 2023

At the end of 2022, we saw the adoption and domestication of the factoring law in four countries in West Africa (Togo, Niger, Mali, Burkina-Faso), resulting in significant enthusiasm for the launch of factoring activities and opportunities studies made by the International Finance Corporation (IFC), who released during the year 2022, some market studies into five countries which showed a lot of interest, with an estimated potential volume and opportunities on Factoring and SCF solutions into different following countries: Morocco ($8 bn), Nigeria ($27.1 bn), Kenya ($28.7 bn), Ivory Coast ($6.5 bn) and Uganda ($ 6.5 bn). Afreximbank’s FAPA Grant is providing some consulting activity under capacities building to train around 19 remaining Banks and emerging Factoring companies into this program, enabling the launch of Factoring activities that will significantly impact the whole African region.

(Photo: © Sadik Boujaida)

Discover more

  • Find out more about the FCI Annual Review 2023 Edition by clicking here.
  • Join us in Marrakech to meet with the FCI membership & other industry players as we discuss the development of our industry in Africa by clicking here