The African Export-Import Bank has agreed to extend a €10mn facility to help Congolese lender Banque Postale du Congo (BPC) expand its factoring business for local SMEs.

The deal, signed in late March and announced last week, will “enable BPC to expand its factoring activities by engaging in domestic and cross-border factoring”, the institutions say in a joint statement.

Over the last few years, Afreximbank and BPC have contributed to efforts which saw the Republic of the Congo adopt a model law giving legal recognition to factoring as an alternative form of trade finance in 2021. Burkina Faso and Niger have since enacted similar legislation.

Afreximbank, which developed the model law on factoring, says the product is an important tool for expanding African trade, particularly for SMEs who struggle most with access to finance.

The pan-African lender says the campaign to promote the model law alongside BPC has “helped bring factoring to the fore as a major alternative to trade finance in the Republic of the Congo”.

“We are confident that this support will enable Banque Postale to capitalise and strengthen its factoring business and allow it to provide adequate support to those SMEs in Congo that have limited access to bank financing,” says Kayano Awani, head of Afreximbank’s Intra-African Trade Initiative.

Calixte Tabangoli, BPC’s CEO, says the bank will fight to maintain what he says is its position at the top factoring provider in Congo.

“We are ready to take factoring to a fundamentally new direction,” he says. “That said, we will need more support from [Afreximbank], and do not be surprised to see us again.”