A supply chain finance platform designed by working capital solutions provider C2FO and the International Finance Corporation (IFC) that targets small businesses in Africa has launched in Nigeria.
CycleFlow, a digital tool that connects micro, small and medium-sized suppliers and their buyers with financial institutions to improve access to working capital, has now gone live after being first announced in 2024.
The platform counts Lagos-headquartered Stanbic IBTC as its first fully integrated bank, with “others being onboarded”, C2FO told GTR.
Local companies that have enrolled in it include food conglomerate Flour Mills Nigeria and telecommunications giant MTN and IHS Towers.
The launch in Nigeria, officially announced in a ceremony in Lagos on April 2, marks the “first phase of a comprehensive nationwide working capital platform strategy designed for Africa and other emerging markets”, C2FO said.
Financial institutions and participating buyers will be able to extend affordable short-term financing to suppliers by purchasing and discounting invoices accepted for payment.
This will allow smaller suppliers to convert sales receivables into immediate cash, based on the better credit risk of buyers, without the need to provide collateral.
C2FO and IFC have said that when fully scaled, the platform could facilitate US$25-30bn in annual financing for local businesses in Nigeria and contribute to the creation of more than 480,000 direct jobs.
“The official launch of C2FO’s working capital platform in Nigeria marks a turning point for our financial ecosystem,” said Segun Ogunsanya, chairman of Nigeria-based CycleFlow.
“By enabling immediate access to funds locked in accounts receivable, we are not just financing businesses; we are powering economic growth across the entire ecosystem. This innovative technology addresses the biggest financial challenges in Africa and ensures that capital reaches the MSMEs that drive our economy.”
Using a supply chain finance platform to bring rapid liquidity to businesses that normally operate on payment terms of 60 to 120 days is “transformational”, C2FO and IFC said.
“Millions of MSMEs across Africa are sitting on receivables they cannot convert into much-needed capital to grow and hire. This platform changes that equation,” said Mohamed Gouled, IFC’s vice president for products and clients.
“We see this as a replicable model for the rest of the continent,” he added.
Small and medium-sized companies account for up to 90% of all businesses across the African continent, according to the IFC, and are responsible for up to 80% of employment.
However, they have traditionally faced barriers to accessing affordable working capital, with the multilateral institution estimating the trade finance gap in Africa to stand at around US$100bn annually.
IFC’s head of trade finance, Nathalie Louat, recently told GTR the gap “disproportionately affects SMEs and women-led SMEs”. Around 50% of SME requests are rejected, she said, “and likely more for women”.
She said supply chain finance was an area of focus for the lender in Africa – where the market is seeing rapid growth but is still small compared to more mature markets in Asia and Europe – particularly as many of the continent’s nations grapple with the effects of the Middle East conflict.
