FCI, in collaboration with Afreximbank, organized on 3 December a virtual workshop on factoring followed by the Annual General Meeting of FCI Africa Chapter. The aim of the workshop was to showcase the benefits and growth opportunities of factoring and bring additional focus on cross border open account trade as well as supply chain finance services in Africa.
The workshop, attracted more than 250 registered attendees from factoring companies, banks and non-bank financial institutions, government agencies, consulting firms and IT providers. It highlighted how factoring plays an important role in financing economic activities and discussed the current state of the factoring industry in Africa, including new challenges, products, market developments and opportunities.
In her opening remarks, Kanayo Awani, Managing Director of the Intra-African Trade Initiative at Afreximbank and Chairperson of FCI Africa Chapter, reminded participants that it was important to continue to advance the course of factoring as a viable alternative finance for Small and Medium-sized Enterprises (SMEs), especially in the context of the commencement of trading under the African Continental Free Trade Area (AfCFTA).
“SMEs - which constitute the greatest proportion of Africa’s industrial fibre, accounting for about 80% of businesses and employing not less than 70% of the continent’s workforce - will play a key role in intra-regional trade under the AfCFTA,” said Ms. Awani. “Given that access to finance remains a key constraint to SME operations, availability of sustainable trade finance, especially for SMEs, will be a the key lubricant to propel the AfCFTA, the single largest trading bloc globally, towards the realization of its aspirations,” she added.
Mr. Peter Mulroy, Secretary General of FCI, gave a rundown of the phenomenal growth in the global factoring volume over the last 20 years. He also provided an overview of the impact of the COVID-19 pandemic on the industry, noting that Africa has experienced the lowest decline in volume in the first half of 2020.
Dr. Barassou Diawara, Senior Knowledge Expert at Africa Capacity Building Foundation (ACBF), presented the evolution of Factoring in Africa. He noted that Africa was trailing behind other regions with a share of global factoring market only accounting for 0.84% in 2019, mainly due to challenges such as weak legal and regulatory framework, challenging domestic environment and limited understanding of factoring products.
The workshop included a panel discussion on the challenges and opportunities of conducting factoring in Africa, with Mr. Khadim Ba, CEO of Locafrique; Mr. Niraj Rambaccussing, Head of SBM Factors; Mr. David Cory, Head of Debtor Management/Business Banking at Nedbank; Mr. Ahmed Shaheen, CEO of Egypt Factors and Mr. Tinashe Tamba, CEO of Harare Receivables Exchange. The session was moderated by Mr. Hugues Kamewe, Financial Sector Advisor at Making Finance Work 4 Africa.
The workshop was followed by the 10th Annual General Meeting of FCI Africa Chapter wherein the achievements of the 2019/2020 activities were presented and the planned activities for 2020/2021 were reviewed and adopted.
Afreximbank, which is Chair of FCI Africa Chapter, has been promoting factoring for over 12 years. From 2018 to 2020, the Bank approved a total of EUR 22.1 million financing to emerging factoring companies in Cameroon, Senegal, Congo, Zimbabwe, Botswana and Nigeria. The current pipeline is at EUR 30 million.
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