The Nigerian Export Promotion Council (NEPC) is to entrench factoring and forfaiting as instruments of financing export and trade in the country, NEPC’s executive director, Mr Olusegun Awolowo, has said.
Awolowo said this at the 1st National Conference on Factoring and Forfaiting Services in Nigeria, on Tuesday, in Abuja.
Factoring is a financial transaction whereby a business sells its account receivables to a third party at a discount in exchange for immediate money with which to finance continued business activities.
According to Awolowo, factoring was 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”, Awolowo said that factoring in Nigeria could unlock over one billion dollars per year in financing for Micro, Small and Medium Enterprises (MSMEs).
He stated that the move could be directed at solving most of the financial challenges faced by MSMEs without traditional banking practices 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 cash flow and capital that will help in maintaining and growing their businesses.
“Also, it is a viable and long term solution to the problem of limited capital and availability that threaten the growth of Nigeria’s small and medium sized businesses,” Awolowo added.
The Minister of Industry, Trade and Investment, Otunba Adeniyi Adebayo, while declaring the conference open, said that factoring could contribute to the implementation of the National Economic Sustainability Plan and Export Expansion Facility Programme.
Represented by Mr Suleiman Adebayo, the minister stated that all stakeholders had a role to play in making factoring successful in Nigeria.
Adebayo called for a roadmap with actionable points and definite timelines to ensure a smooth operation of factoring and forfaiting services in the country.
He, therefore, stressed the need for the passage of the Factoring Bill, currently before the National Assembly.
The minister also solicited the cooperation of the Central Bank of Nigeria (CBN) in issuing the necessary guidelines, within extant laws, to ensure the smooth operation of factoring in Nigeria. (NAN)
