Thursday, 2 February 2017

News Release: Afreximbank Ties Factoring’s Growth in Africa To Strengthened Legislation

Kanayo Awani, Managing Director of Afreximbank’s Intra-African Trade Initiative

African countries must implement strong legislation to foster the growth of factoring in order to enhance access of the continent’s small and medium-sized enterprises (SMEs) to much-needed finance, participants at a sensitisaton seminar discussing Afreximbank’s Model Law on Factoring heard today in Nairobi.


The seminar, organized by the African Export-Import Bank (Afreximbank) for the financial community, legal practitioners and legislators in East Africa in the wake of last year’s launch of the Model Law, discussed the best ways to develop legal frameworks for factoring using the law.

“Strengthening legislation is critical to promoting the growth of factoring,” said Kanayo Awani, Managing Director of Afreximbank’s Intra-African Trade Initiative and Chairman of the Africa Chapter of Factors Chain International (FCI), in an address to the participants.

According to her, factoring can be the game-changer in terms of addressing the issue of limited access to finance faced by Africa’s SMEs.

Ms. Awani, who noted that a key part of Afreximbank’s Intra-African Trade Strategy was to facilitate greater contribution by SME’s to Africa’s regional value chains,  said that the  objective of the seminar was to present the salient provisions of the model law and to share ideas on the best approach for its adoption in East African countries.

Edward Wilde, Partner at the London office of the Squire Patton Boggs law firm, outlined the concepts of factoring and discussed current international practices and evolving trends.

In a subsequent presentation, Ms. Awani provided details about technical support, advisory services and funding facilities available from Afreximbank to national banks and accredited factoring companies in order to increase the use of factoring as an alternative trade finance instrument available to SMEs in Africa.

She said that since 2011, Afreximbank had approved about $100 million for factors in Africa and that the Bank was currently reviewing $122 million worth of credit lines for factoring institutions in Botswana, Burkina Faso, Cameroon, Egypt, Mauritius, Tunisia and Zambia.

Dr. Enga Kameni of the Afreximbank Legal Services Department said that significant provisions of the model law could be adapted and applied in various ways to refine local legislation on factoring.

The seminar brought together over 40 representatives of central banks, regulatory bodies, legislative authorities, commercial banks, law firms and factoring companies as well as members of parliament from the East Africa region. Held as a knowledge-sharing platform, and expected to lead to the development of clear road maps for the implementation of national factoring laws, the seminar follows earlier sensitization seminars organized in Abuja and Abidjan.

The Afreximbank Model Law on Factoring was launched on 23 October in Cape Town, South Africa, during the seventh Annual Meeting of the Africa Chapter of FCI, on the sidelines of FCI’s annual meeting. The document was drafted by Afreximbank based on recommendations from consultative meetings with factors, government and regulatory bodies, enterprises, legal experts and banks across Africa.

It aims at serving as a benchmark against which African national legislators will be able to compare, contrast, improve or enact new legal, institutional and practical arrangements in order to create enabling environments for the growth of factoring activities in their respective jurisdictions.

Manal Mounir Hendy
Associate
Communications

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