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 also presents FCI's annual figures as well as global factoring statistics. In this extract, we explore Africa's Regional Updates, presented by Mr Nassourou Aminou, FCI Regional Manager Africa.
2021 Figures
With the resumption of the Covid-19 crisis, Factoring volumes continued to grow in Africa in 2021. It increased from EUR 25 billion in 2020 to over EUR 32 billion in 2021, representing 28.1% growth. Countries that led this growth included Egypt, South Africa, Mauritius, and Tunisia with 90%, 30%, 23.4%, and 20.5% growth, respectively.
Legal, Regulatory and Advocacy
The initiatives undertaken in previous years by Afreximbank and FCI to support regulatory reforms by promoting the model factoring law in Africa are starting to show success. Notable progress has been made in Congo to adopt the law and in West Africa with the adoption by the Central Bank of West Africa (BCEAO) of a uniform factoring law based on the Afreximbank factoring model law for eight (8) countries (Ivory Coast, Benin, Senegal, Niger, Togo, Burkina-Faso, Mali, Guinea Bissau). Côte d’Ivoire was the first country to start the domestication of the stated law. Some countries are finalizing laws in this direction, notably Nigeria, Kenya, and Madagascar.
Promotion and Awareness
In 2021, FCI and Afreximbank held a series of factoring promotions and awareness campaigns. We hosted the online Regional Networking E-vent Africa & Middle East during March, allowing members to network, discuss business opportunities, and learn best practices. In July, BCEAO, Afreximbank, and FCI hosted the 3-day Webinar series on Factoring and Receivables Finance in Africa, with over 1,000 participants focusing on building the capacities of actors involved in factoring activities in Africa. In November, we partook in the 1st National Conference on Factoring, organised to promote the use of Factoring in the Nigerian financial services mix. We also took part in the Intra-Africa Trade Fair (IATF) to be present and encourage factoring. Alongside the IATF, we hosted two Breakfast meetings to bring together senior officials from Africa and gather financial executives to get up-to-date information and examine the impact AfCFTA will have on SMEs’ liquidity and the important role of factoring.
Membership Mobilisation
We have 40 members in the Africa Region, representing 10% of the total FCI membership. Two new members joined FCI during the past year. These were Global Corp Factoring, Egypt, Research Innovation Finance Solution (RIFSO), Morocco, and there are currently anticipated three new members for the next year 2022 Banque Centrale Populaire (BCP), Morocco, Industrial Finance Corporation (IFCM), Mauritius, HCH Financial Services Ltd, Uganda.
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, and so on. Difficulties in getting reliable credit information and credit insurance covers in some countries and buyers; IT system and software to properly manage Factoring transactions; long and costly implementation of Factoring business process, training, capacity building, and IT platform; and finally, cultural and cultural languages barriers for
international factoring.
Outlook 2022
At the end of 2021, we saw the adoption of the Factoring Law in Congo and eight West African countries, resulting in significant enthusiasm for the launch of factoring activities in several countries like Mauritius, Senegal, Ghana, Côte d’Ivoire, Nigeria, Kenya, and others. Afreximbank’s FAPA Grant is providing some FCI E-Learning courses to 200 candidates and Consulting services to 26 selected emerging Banks and Factoring companies enabling the launch of Factoring activities. Banks are increasingly interested in traditional factoring and the Reverse Factoring program, emphasizing the digitalisation of processes and the innovation of products that meet market needs and risk appetite. Faced with the challenges raised, these turn out to be opportunities to be utilised for the next couple of years in all areas related to the Factoring industry, allowing stakeholders to benefit from factoring.
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