Harare, Zimbabwe, 26 April 2024 – The African Export-Import Bank (Afreximbank) and FCI, the global factoring body, recently held a conference in Zimbabwe to promote factoring as a financing solution for Africa’s small and medium-sized enterprises (SMEs).
Factoring allows SMEs to sell their invoices to a third party at a discount, receiving immediate cash flow instead of waiting for customers to pay. This can be a game-changer for SMEs, which often struggle to access traditional bank loans.
The conference highlighted the significant potential of factoring in Africa. Despite a recent 13.5% growth surge, Africa still accounts for a mere 1.3% of global factoring volumes. Experts believe this gap can be bridged, considering the estimated $330 billion annual SME finance gap on the continent.
“Factoring provides an important alternative to other financing sources,” said Kanayo Awani, Executive Vice President at Afreximbank. She pointed to Afreximbank’s efforts in promoting factoring, including developing a model law adopted by seven countries and providing financing and training to support the industry.
The conference also addressed the critical role factoring can play in boosting intra-African trade under the African Continental Free Trade Agreement (AfCFTA). Neal Harm, Secretary General of FCI, emphasized the ability of factoring to bridge the $2.5 trillion global trade finance gap, a challenge disproportionately impacting SMEs.
Zimbabwe’s Deputy Governor of the Reserve Bank, Dr. J.T. Chipika, welcomed the conference, calling it “timely” for the region. She highlighted the importance of factoring for Zimbabwe’s economy, where SMEs contribute two-thirds of the GDP and women own 60% of them.
