Afreximbank has mentioned Africa should increase its factoring volumes to at the very least €240 billion to spice up small and medium-sized enterprises (SMEs).
Mrs Kanayo Awani, Govt Vice President, Intra-African Commerce and Export Growth at Afreximbank and Member of the FCI Govt Committee, made the comment at Afreximbank’s annual Factoring Workshop in Abidjan, Côte d’Ivoire, based on a press release on the bank’s web site on Tuesday.
She highlighted that factoring, which permits companies to transform unpaid invoices into fast money, is a key instrument for addressing the US$300 billion financing hole confronted by African SMEs, which account for greater than 90% of companies and contribute over 60% of employment and GDP throughout the continent.
Mrs Awani famous that Africa’s factoring market has greater than doubled lately, rising from €21.6 billion in 2017 to €50 billion in 2024, however burdened that to completely drive SME-led progress, factoring volumes should attain €240 billion, or about 10% of the continent’s GDP. Regardless of practically 200 factoring firms working throughout Africa, exercise nonetheless falls in need of its transformative potential.
“Though SMEs account for greater than 90% of Africa’s companies and over 60% of employment and GDP, they proceed to face a financing hole estimated at US$300 billion yearly.
“To catalyse SME-led progress, Africa should scale factoring volumes to at the very least €240 billion, equal to about 10% of the continent’s GDP. Attaining it will require elevated financing, deeper authorized reforms, expanded coaching and robust business partnerships,” She mentioned.
Extra insights
The assertion additionally highlighted the position of factoring in constructing resilient worth chains. Mr Neal Hurt, Secretary Basic of FCI, described factoring and provide chain finance as important for unlocking SME progress, whereas Mr Charlie Dingui, Particular Advisor to the Nationwide Director of the BCEAO, emphasised its significance for socio-economic improvement in West Africa.
Côte d’Ivoire, for instance, affords a $5 billion alternative in factoring, notably in sectors corresponding to cocoa, the place thousands and thousands of livelihoods rely upon well timed entry to finance, the assertion famous.
But, solely 12% of SMEs presently search working capital from formal monetary establishments, with many counting on casual sources on account of excessive prices, strict necessities, and gradual approvals.
The Afreximbank Factoring Workshop is a part of the bank’s ongoing effort to boost consciousness and construct experience in factoring and provide chain finance, important for advancing the African Continental Free Commerce Space (AfCFTA).
Thus far, greater than 5,000 delegates have participated in over 25 capacity-building initiatives, together with the Certificates of Commerce Finance in Africa (COTFIA), Afreximbank Academy packages, and FCI mentoring and on-line coaching schemes.
What you must know
Africa’s factoring volumes have grown from €21.6 billion in 2017 to €50 billion in 2024, indicating rising adoption throughout the continent.
- SMEs on the continent face a financing hole of over US$300 billion, limiting their entry to inexpensive working capital.
- Solely 12–15 million younger Africans getting into the labour market annually will be absorbed with out expanded SME financing instruments, based on Afreximbank.
Afreximbank and companions plan to assist regulators with technical coaching and capability constructing to strengthen oversight of factoring.
Financing assist and world operational toolkits are being prolonged to factoring firms to assist increase the business’s attain, the bank has revealed.
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