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A word from our Chairman
A word from our Chairman
12 January 2023

On October 17 and 18, the Executive Committee met in Amsterdam. We had a two full-day agenda, and some of the topics we discussed are critical to the future of FCI.  Extensive discussions took place on the global economic environment. After Covid-19 hit the world economy in 2020 and 2021, we are now facing the effects of the war in Ukraine, which have exacerbated the problems which had already arisen during the pandemic: lack of raw materials, higher energy costs, and inflation rates with a consequent increase in prices of goods and commodities. The factoring industry once again has proved its resilience. In many markets, pre-pandemic levels have been reached, and we expect 2022 to record strong factoring performance. Nevertheless, the macroeconomic situation and the high uncertainty are expected to lower the growth in 2023 and increase the portfolio credit risk.

Such an environment has resulted in a general cost-cutting policy that has impacted our organization too.

Financials were reviewed during the meeting, and four major issues were highlighted:

  1. The attendance at the Annual Meeting was good but lower than expected due to Covid19 restrictions, cost-cutting, and difficulties in getting the entry Visa.
  2. The impact of the pandemic on membership significantly affecting NBFI members, the war in Ukraine causing the suspension of the sanctioned members, and some past dues are all still unresolved.
  3. Higher costs in general due to inflation and also stemming from edifactoring projects.
  4. We need to emphasize the importance of education, particularly in the current environment, and attract more students.

Measures were introduced immediately to contrast the situation: deeper dive into expenses in the last quarter, prioritization of the investments, and changes in the strategies will be analysed.

Secretary General - Transition period

As announced in Washington DC, Peter Mulroy will step down as Secretary General at the end of February 2024. Although we have plenty of time to find his successor, we have already initiated the process. To guarantee transparent and objective selection, an Executive Search Firm that will assist us in identifying the best candidate has been chosen, and details will be circulated shortly.

The ideal candidate will have high-profile leadership and a strong international mindset to support members and the industry to the benefit of each country, as well as a firm commitment to international factoring and supply chain finance. Because of the many challenges and changes, we will have to face in the coming years, FCI is looking for someone with a transparent, direct style, able to build consensus and guarantees the retention of current members and the onboarding of new ones to grow the network. Someone who will inspire confidence and trust based on the person’s behaviour.

Annual Meeting

The Secretariat and the Subcommittee are actively working on the structure of the FCI meeting, which will be organized in Morocco next year in September. This year, in Washington, DC, we introduced some changes that were highly appreciated. We also received your valuable input, which will be considered to deliver a program better responding to the new environment. Very soon, details will be circulated, including the registration fee, so that you can include the event in your 2023 budget. I hope many of you will be able to attend next year.

New Membership

After two challenging years stemming from the pandemic, we are pleased to see a surge in new members in 2022. We have already signed YTD 30 new memberships and have an additional 29 that are likely to close in the next 90 days. They are being onboarded from the following regions: South/SE Asia 37%, Africa 22%, America 7%, CEE/SEE/ME 20%, Western Europe 10%, and NE Asia 4%. This bodes well for the association as we enter 2023!

The factoring industry endured the global financial crises much better than many other providers in the financial and insurance sectors. The growth in factoring in 2021 is witnessed by nearly 14%. The EUF reported figures for factoring within the EU for the first half of 2022 of 20%, and the EDI international factoring figures reported by FCI through September 2022 of 33%, which paints a very strong picture of massive growth this year, certainly partially influenced by this inflation cycle. But for FCI, which has been adversely impacted by the external environment, mainly stemming from the war in Europe and the impact of the pandemic in Asia, it paints a different story. The 2022 financial performance of FCI will be challenged due to this environment, and the Executive Committee has prepared contingency budgets for 2022 and 2023 based on this new reality that shows a harsher impact on our association. However, as stated above, we are taking all precautionary measures, including cost-cutting, to ensure we minimize the impact. We view this as a short-term phenomenon and expect to return to a more normalized environment by 2024. We have much change in front of us due to the transition in leadership in FCI, but we also view this as an opportunity to set the stage for FCI for a strong future.

Kind regards,
Daniela

This article has been taken from FCI In-Sight Newsletter November 2022, written by Daniela Bonzanini, FCI Chairman.