The Nigerian Export Promotion Council, NEPC, is to entrench Factoring and Forfaiting as an instrument of financing export and trade in the country.
Factoring is a financial transaction whereby a business sells it account receivables to a third party at a discount in exchange for immediate money with which to finance continued business activities.
The Executive Director of NEPC, Mr Olusegun Awolowo, made this known on Tuesday, in Abuja during the 1st National Conference on Factoring and Forfaiting Services in Nigeria.
Awolowo said Factoring is one of the fastest growing instruments for structured trade finance in the world.
Speaking on the theme of the conference “Factoring as an alternative instrument for trade finance in Nigeria,” the NEPC Executive Director said factoring in Nigeria could unlock over $1bn per year in financing for Micro, Small and Medium Enterprises.
He said, “A report by Pricewater House Cooper (PWC) reveals that Factoring in Nigeria could unlock over $1bn per year in financing for SMEs.
“It is directed at solving most of the financial challenges witnessed by MSMEs with traditional banking such as excessive interest rate, credit profile constraints and insufficient collateral.
“As a result, Factoring gives MSMEs, particularly those with high-quality receivables access to cashflow and capital that will help maintain and grow their businesses. In a nutshell, Factoring is a viable and long-term solution to the problem of limited capital and availability that threatens the growth of Nigeria’s small and medium-sized businesses.”
Declaring the conference open, the Minister of Industry Trade and Investment, Adeniyi Adebayo, said Factoring would contribute to the implementation of the National Economic Sustainability Plan and Export Expansion Facility Programme.
Adebayo who was represented by the Director, Commodities and Export Department, FMITI, Ambassador Suleiman Adebayo, stated that all stakeholders have a role to play in making Factoring to be successful in Nigeria.
He called for a roadmap with actionable points and definite timelines to ensure a smooth operation of Factoring and Forfaiting services in Nigeria.
He also stressed the need for the passage of Factoring Bill which is currently before the National Assembly.
The Minister also solicited the cooperation of the Central Bank of Nigeria, to issue necessary guidelines within extant laws to ensure the smooth operation of Factoring.
He said, “Nigeria has the size of the market and business volumes to operate the services successfully. It is time the Nigerian stakeholders come together to partake from the huge market.
“I am also aware of the Factoring Bill which is still undergoing legislative processes and I wish to use this opportunity to implore the distinguished Senators and Honourables members present to facilitate the speedy passage of the bill within the shortest possible time.
“I can assure you that Mr. President is keenly interested in any programme or projects that will grow the Nigerian economy”