February 15, 2018 1.00PM / AFREXIM
African countries should take make
use of factoring in order to take advantage of the opportunities for expanding
the continent’s regional value chains, participants at a regional factoring
conference held in Dakar have heard.
Kanayo Awani, Managing Director of
the Intra-African Trade Initiative at the African Export-Import Bank
(Afreximbank), said on Wednesday at the opening of the two-day Regional
Conference on Factoring that, in spite of the potential upside, Africa’s small
and medium-sized enterprises (SMEs) continued to face difficulties in accessing
Ms. Awani, who is also Chairperson
of FCI’s Africa Chapter, noted that in other regions, such enterprises
accounted for the largest shares of trade finance transactions concluded
through factoring, noting that in Europe, for instance, factoring represented
10.4 per cent of GDP at 1.5 trillion Euros.
Africa only accounted for one per
cent of global factoring transactions, stated Ms. Awani who explained that the
low volumes of factoring in Africa was largely attributable to lack of
information and awareness.
She said that the conference,
co-organized by Afreximbank and FCI, the global representative body for the
factoring and receivables finance industry, was to equip participants with
relevant tools to tap into the opportunities available to grow factoring in the
continent, especially in the context of intra-regional trade.
Ms, Awani added that the event
would provide a regional view on factoring and offer attendees opportunity for
discussions on the current state of the industry, new challenges, products and
markets development. It would also create new skills and networking
opportunities for the participants and give them practical information on
successfully setting up factoring businesses.
Earlier, Peter Mulroy, Secretary
General of FCI, said that despite the low factoring level in Africa, the
continent had achieved important milestones that could help develop it further
in the years to come.
“Today we are witnessing the birth
of numerous initiatives at the government, ministerial and central bank levels
in such markets as Cameroon, Nigeria, Ghana and others. This is, in part,
thanks to the development of the model law on factoring by Afreximbank, the removal
of burdensome stamp duty tax, the development of inclusive policies at the
central bank level to promote and support financing to SMEs through factoring,
and the push for development of cross-border factoring,” he added.
Also speaking, Ismaila Gueye, Coordinator
at the Directorate of Financial Sector and Competitiveness at the Ministry of
Economy and Planning of Senegal, who represented his Minister, said that
African exporters were encountering a loss of competitiveness due to the fact
that factoring and open account trade were not commonly used in Africa as was
the case in all other regions of the world. He commended Afreximbank and FCI
for promoting such financial practices, saying that it would help put local
SMEs on a level playing field with their global competitors.
The conference brought together
more than 80 representatives of central banks, regulatory bodies, government
agencies, legislative authorities, commercial banks, law firms, entrepreneurs,
exporters and factoring companies from West Africa and beyond.
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