Factoring, which is a financial management technique allowing a company to liquidate its receivables and recover liquidity, can be an alternative and complementary solution to financing, in particular for SMEs and SMIs the Governor of the Central Bank of the States of West Africa (Bceao), Tiémoko Meyliet Koné declared during the official opening, Tuesday July 13, of the series of joint BCEAO-AFREXIMBANK-FCI webinars on the theme “Factoring and financing of receivables in Africa” .
Meyliet Koné noted that factoring is an opportunity that has yet to be fully exploited by African businesses. He clarified that the African continent represents only 0.9% of the global turnover of the factoring activity in the last five years according to the FCI, mentioned. It is for this reason that the Central Bank has decided to deploy a strategy to promote factoring in the West African Economic and Monetary Union (UEMOA) zone.
A uniform law intended to regulate factoring operations
Through the series of webinars on factoring, the Central Bank reiterates its commitment to create an environment more conducive to the development and financing of economic activities and, more particularly, that of SMEs. To do this, the central bank has adopted a uniform law to regulate factoring operations with specified conditions.
According to Governor Koné, this law confirms in particular that in the WAEMU States, factoring is a credit operation and therefore falls under the exclusive competence of credit institutions. However, in order to reach a larger number of companies, the new law opened up the exercise of factoring activity to microfinance institutions, specifies Tiémoko Meyliet Koné. This according to Peter Mulroy, FCI General Secretary, said he is shaping a promising future for factoring in Africa against a backdrop of economic recovery with positive growth rates announced. For Kanayo Awanie, president of the Africa section of Afreximbank, factoring can help innovative SMEs to grow, support transformation and their development in Africa.
Factoring is an alternative to reach the available external sources of financing
Welcoming the take-off of factoring in African countries such as South Africa and Tunisia, Awanie recognizes the trends observed in Nigeria, Senegal, Cameroon and other countries where an emergence of activity has been noted these last time. According to her, Africa must rely on factoring factors by removing obstacles. She believes that intra-African trade can be one of the ways to develop factoring which she believes will help support SMEs. Awanie welcomes the emergence of national laws in Africa and encourages the promotion of factoring through the development of related laws and capacity building of stakeholders.
The was translated from the original French story.