Every June, FCI publishes its Annual Review, giving an overview of progress made by the world's most extensive and important factoring network. The Annual Review presents FCI's annual figures and global factoring statistics. In this extract from the FCI Annual Review 2024, we explore Africa's Regional Updates, presented by Mr Nassourou Aminou, FCI Regional Manager Africa.
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2023 Figures
Africa represents a 1.3% share of the total world factoring volume. Factoring volumes continued to grow in Africa in 2023. The total market adds up to EUR 3 billion, indicating a significant growth rate of 13.5% compared to 2022, about the same increase as the previous year of EUR 41 billion. South Africa, the largest market accounting for over 80% of the entire volume on the continent, witnessed an increase of 14%. Countries that led this growth included Mauritius, Egypt, Tunisia, and others for 158%. This 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. Incredible progress has been made in West Africa in adopting the law. 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 and Côte d'Ivoire. 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
FCI partnered with Afreximbank and the FAPA Grant to conduct factoring promotion and awareness campaigns through conferences, workshops, and webinars. Working with MFW4A and the Association of African Development Finance Institutions (AADFI), FCI held a webinar on Factoring training under the FAPA Grant on 30 March 2023. In partnership with the Central Bank of West African countries (BCEAO), FANAF, and FCI, a Factoring and Credit Insurance workshop occurred during the Regional Conference in Senegal in June 2023. From 31 July to 3 August 2023 in Abuja, Nigeria, FCI organised consulting and workshop training and capacity building for nine emerging and established banks and factoring companies, aligning with the FAPA grant guidelines. This workshop was tailored to beneficiaries’ needs. In October 2023, FCI joined the Afreximbank Trade Finance & Factoring Seminar in Lagos, Nigeria, where it organised a one-day workshop on ’The Future of the Factoring Industry in Africa: Where will we be by 2030?’ in partnership with the Central Bank of Nigeria and NEXIM. FCI also co-hosted with Afreximbank the IATF 2023 Africa Chapter Factoring Exposition & Workshop in Cairo, Egypt, in November 2023.
Membership Mobilisation
We have 46 members in the African region, representing 10% of the total FCI membership. Six new members joined FCI during the past year. These were Fidelis Finance Group, Burkina-Faso; Edge Plus Capital (EP Capital), Nigeria; Corplease, Egypt; African Trade Insurance (ATI), Kenya; Kweli Financial Service, DRC; and Bridge Bank Group, Côte d’Ivoire.
Challenges
Despite growth in factoring volumes, several challenges remain, including insufficient knowledge about the product, education, skills, and experience in the factoring industry; legal environment and regulation: lack of legal framework in different countries and capital requirements; economic environment and access to working capital in some countries: inflation, high-interest rates, cost of lending, and securities; difficulties in obtaining reliable credit information and credit insurance coverage in some countries and with certain buyers; IT systems and software to manage factoring transactions effectively; lengthy and costly implementation of factoring business processes, training, capacity building, and IT platforms; and cultural and language barriers to international factoring.
Outlook 2024
At the end of 2023, we saw the adoption and domestication of the factoring law in one country in West Africa (Côte d’Ivoire), 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 who are showing a lot interested, with an estimated potential volume and opportunities on Factoring and SCF solutions into different following countries: Morocco (USD 8 billion), Nigeria (USD 27.1 billion), Kenya (USD 28.7 billion), Ivory Coast (USD 6.5 billion) and Uganda (USD 6.5 billion). Afreximbank's FAPA Grant provides some consulting activity under capacity building to train around 19 remaining banks and emerging factoring companies in this programme, enabling the launch of factoring activities that will have a significant impact on the whole African region.
(Photo: © Richard Sharrocks)