African factoring firms have received lines of credit worth US$48mn from the African Export Import Bank (Afreximbank) in the last two years, according to Benedict Oramah, the bank’s executive vice-president in charge of business development and corporate banking.
Speaking at a symposium in Cairo last week, he explained that Afreximbank currently has factoring lines totalling US$50mn under assessment for institutions in Burkina Faso, Kenya, Egypt, Botswana, Rwanda, and Zimbabwe.
An Afreximbank spokesperson tells GTR that the bank is keen on encouraging the factoring industry as an alternative trade finance instrument allowing African businesses to trade competitively, especially supporting the participation of African SMEs as indirect exporters in supply chains.
Afreximbank cannot disclose the names of the companies backed due to confidentiality reasons, but the bank says it has been supporting awareness raising activities, including educational events, and fostering the creation of facilitative infrastructure, involving both African banks and non-bank financial institutions.
To this end, Afreximbank is working with the International Factors Group (IFG) to introduce a factoring development product called AfriFactor, which will provide advisory services to African financial institutions seeking to commence or enhance their factoring businesses and support in such areas as establishing factoring businesses, information technology and operations platforms. Afreximbank is unable to provide further details regarding the roll-out of the product.
Oramah also said that Afreximbank is working with the African Development Bank’s Thematic Fund for Private Sector Assistance (FAPA) to support factoring companies in Africa, using FAPA grants that target innovative programmes for small and micro-scale enterprises. A grant worth US$1mn has already been pre-approved, GTR learns.