The African Export-Import Bank’s (Afreximbank) has held a one-day seminar for legislators and regulators from southern, eastern and northern Africa in an effort to promote the use of factoring as a trade finance instrument in Africa.
The seminar, held in Lusaka, was the second of its kind to be organized by the Bank, following a similar seminar for legislators and regulators from West and Central Africa which took place in Lagos in June.
In an address to the opening ceremony, Afreximbank President Jean-Louis Ekra, who was represented by Dr. Benedict Oramah, the Bank’s Executive Vice President in charge of Business Development and Corporate Banking, had said that absence of enabling laws and regulations was a major impediment to the expansion of factoring in Africa and had had significant negative implication on the ability of SMEs to participate in Africa’s gradually expanding value chain.
“If we want SMEs to form the bulwark of the new Africa we are all looking forward to, we must work towards expanding factoring in the continent,” Mr. Ekra told the more than 80 participants.
According to him, the seminar was aimed at creating awareness about the impediment posed by the absence of enabling laws and regulations and at introducing lawmakers and regulators to best practices in regulating factoring business.
Dr. Michael Gondwe, Governor of the Bank of Zambia, who declared the seminar open, said that given the challenging and highly competitive global trading environment and the evolving nature of international trade finance, better use of opportunities available for factoring could be achieved through acquisition of knowledge and skills. That would, in turn, increase Africa’s share of global factoring business and enable factors to receive the full benefits provided by that instrument.
In factoring, a seller assigns his receivables (invoice) on a transaction to a factor who, in turn, pays him an agreed value. That factor then assumes ownership of the receivables and collects the actual payment for the service/product from the buyer.
Dr. Benedict Oramah, Afreximbank Executive Vice President (right), speaking during the opening ceremony of the Afreximbank Factoring Seminar.