The African Export-Import Bank (Afreximbank) and global factoring association FCI have received a grant from the African Development Bank (AfDB) to drive the development of the factoring industry in Africa.
The special purpose grant, provided as part of the AfDB’s Fund for African Private Sector Assistance (FAPA) will be used by Afreximbank and FCI to provide consultancy services to start-up factoring companies as well as provide advisory and mentoring services to entrepreneurs, financiers and commercial banks.
According to Afreximbank, Africa’s current share of global factoring transactions is approximately 1%. Despite this low level, Kanayo Awani, managing director of Afreximbank’s intra-African trade initiative, says that she sees a “favourable outlook” for the business as a result of ongoing economic development and the implementation of the African Continental Free Trade Area (AfCFTA), which will increase the need for cross-border supply chain financing.
Awani adds: “The challenge faced in accessing finance has greatly impacted the ability of many SMEs in Africa to grow and to pursue business opportunities. Afreximbank sees factoring as an important solution to bridge the funding gap facing SMEs, and the FAPA grant will complement our strategy to grow intra-African trade and facilitate greater SME contribution to regional and global supply chains. The FAPA grant will also reinforce and grow the availability of effective factoring across the continent and increase awareness and knowledge of the product in Africa.”
With this grant, the amount of which has not been disclosed, FCI and Afreximbank will work to promote factoring as an alternative trade finance instrument in Africa. Nassourou Aminou, FCI’s recently-appointed regional manager for Africa, has been charged with supporting the deployment of the grant, which will include providing scholarships into the FCI Academy’s online courses as well as funding for entrance into the FCI-Afreximbank Certificate of Finance in International Trade (COFIT) programme.