African Export-Import Bank (Afreximbank) in collaboration with FCI has conducted a successful two-day virtual networking event for Africa and the Middle East. The event offered an opportunity for the factoring community to examine how its industry has fared through COVID-19. It brought different industry players together to connect, exchange ideas and do business with partners in Africa and the Middle East. Afreximbank, as co-organizer, showcased its Factoring Strategy in a dedicated virtual booth which was visited by over 50% of the participants.
Opening the event on 23 March 2021, Mr. Peter Mulroy, Secretary General of FCI, said that the two-day networking event was designed to allow all members within the FCI network to organize bilateral meetings in order to re-engage with existing correspondents and to meet with new ones.
“We are delighted to welcome nearly 200 attendees today from many of our member countries, but especially from Africa and the Middle East. Over the past 3 years, FCI has on-boarded over 110 new members, of which 70% are from emerging markets. Hence, this venue gives all our members, new and old the opportunity to network, discuss business opportunities, and investigate new services and procedures, ultimately to generate future new business,” said Mr. Mulroy.
Highlights of the two-day conference included an address by Ms. Kanayo Awani, Managing Director of Afreximbank’s Intra-African Trade Initiative and Chairperson of FCI’s Africa Chapter during which she discussed the strategies championing factoring as an alternative financing approach for Small and Medium-sized Enterprises (SMEs) that cannot obtain traditional bank financing.
“We at Afreximbank wholeheartedly believe that factoring, a form of commercial finance whereby a business sells its accounts receivable at a discount, provides a viable and sustainable solution to address the SME financing gap and will help boost SMEs growth and in turn support Africa’s structural transformation and trade development. Factoring provides an important alternative to other financing sources available for SMEs such as bank loans, leasing, venture capital,” said Ms. Awani.
This opportunity was underscored by Dr. Hippolyte Fofack, Afreximbank’s Chief Economist & Director, Research and International Cooperation, who outlined in his presentation the limited penetration and reach of factoring in Africa, and its pivotal role in accelerating prosperity and trade as a useful financing instrument for efficient and off-balance sheet access to working capital in a continent where trade financing gaps have remained stubbornly high.
Trade and investment between Africa and countries in the Middle East have been increasing steadily over the last decade, boosted by shared cultural heritage and geographical proximity. The Middle East became one of Africa’s main trading partners in 2020. The regional networking event provided the opportunity to introduce key industry leaders within the factoring community to further support the expansion of trade between the two regions.
Afreximbank developed a model law on factoring and together with FCI and other partner institutions are supporting African countries through awareness creation, technical capacity building and advocacy for its adoption. The aim is to facilitate an enabling legal and regulatory environment for factoring to thrive in Africa.