KCB Group, East Africa’s largest commercial bank, has launched a reverse factoring programme that will see the early settlement of invoices between buyers and suppliers in Kenya.

The bank has partnered with online financial provider eBiashara (Africa) on the buyer-led invoice discounting scheme.

eBiashara is supplying the IT platform that allows the bank to offer online invoice discounting services that can process “hundreds of invoices simultaneously at low cost while at the same time helping the bank with training, product development and the onboarding of buyers and suppliers”, says a statement issued by the bank.

Speaking at GTR’s East Africa Trade & Commodity Finance conference in Nairobi last week, eBiashara director Maarten Susan told GTR and the audience that this solution is the “best way to finance SMEs” who regularly face issues accessing working capital. “We think more banks will join in Kenya and further afield,” he added. “Banks in Africa have previously not had access to the types of technology that makes this possible, but this is starting to change now.”

We see tremendous opportunities that will benefit both our corporate and SME client base to build much more efficient value chains. George Mutiga, KCB.

Receivable financing is one of the fastest-growing areas in the financial services space, with an annual global transaction volume of US$2.3tn, Susan noted. “We see increasing interest throughout Africa by banks and corporates to develop supply chain finance (SCF) schemes that really work, are cheap to access, and create innovative financial solutions that take advantage of the credit ratings of the strongest players in the chain.”

In a statement, he added that reverse factoring programmes stand to benefit all stakeholders since no software investments are required at either buyer or supplier side. “Accessibility of reverse factoring will have a positive impact on the smaller SMEs that currently have ongoing offtake agreements with buyers but find it difficult to access working capital or expand operations due to stretched credit limits,” the statement reads.

Speaking during the signing ceremony, KCB head of trade finance and financial institutions George Mutiga lauded the partnership saying that it comes at a very good time when SMEs have been the focus of financial institutions to enhance growth.

“Building on our expertise in trade financing, we see tremendous opportunities in SCF that will benefit both our corporate and SME client base to build much more efficient value chains. Reverse factoring allows us to accelerate payments to suppliers at extremely fast turnaround times, and provide timely liquidity for entrepreneurs to build and grow their businesses,” he said.

eBiashara is a joint venture between Financial Access Capital Partners and Telemedia Africa. It is the first commercial offspring of the Finance4Agriculture (F4A) programme aimed at stimulating the financing of food and agriculture. Under the terms of F4A, eBiashara has been mandated to implement world-class SCF product solutions for financial institutions at highly discounted rates.