PAOSMI-African Regional Conference

PAOSMI ATTENDS THE AFRICAN REGIONAL CONFERENCE ON FACTORING, RECEIVABLES, FINANCE & CREDIT INSURANCE

Abuja, Nigeria – May 26, 2025 – The Pan African Alliance of Small and Medium Industries - PAOSMI proudly participated in the African Regional Conference on Factoring, Receivables, Finance & Credit Insurance, a two-day event held from May 26-27, 2025, in Abuja. Co-hosted by the African Export-Import Bank African Export Import Bank - Afreximbank and FCI, the conference underscored an ongoing commitment to establish factoring as a vital financing solution for Africa's small and medium-sized enterprises (SMEs). This initiative aims to bolster their participation in intra-regional trade and industrialization across the continent.

The conference, themed "Bridging Gaps, Enhancing Trade and Empowering SMEs through Innovative Factoring and Receivables Finance Solutions," provided a crucial platform for strategic discussions and networking. A central focus was the pivotal role small and medium industries (SMEs) are expected to play in intra-African trade under the African Continental Free Trade Agreement (Africa Free Trade Zone - Afcfta). Organized in collaboration with FCI, the global factoring body, the event facilitated in-depth discussions and strategic initiatives to promote and enhance factoring, particularly within the Western Africa region.

During the opening ceremony, Kanayo Awani, Executive Vice President, Intra-African Trade and Export Development Bank, Afreximbank, and FCI Board member, highlighted factoring as a significant alternative to traditional SME financing like bank loans, leasing, and venture capital. Despite factoring's global recognition as an SME financing tool, evidenced by a staggering EUR 3.7 trillion in global factoring volumes, a recent Afreximbank study revealed a stark reality: only 9.2% of sampled African SMEs (90 out of 2,895) utilized factoring.

"This is instructive for two reasons," Awani stated. "Firstly, it shows that factoring has not yet taken off to the extent that it should, with Africa accounting for less than 1 percent of global factoring volumes. Secondly, and perhaps more importantly, it demonstrates the huge potential factoring holds for our continent.

Awani also detailed Afreximbank's contributions, including the development of a model law adopted by seven countries, over US$100 million in financing, technical training for more than 30 emerging factors in 2022/23, and raising factoring awareness among over 3,000 delegates. These efforts have led to a significant doubling of factoring volumes in Africa, from EUR 21.6 billion in 2017 to EUR 41.8 billion in 2023. However, she cautioned that substantial work remains, given the annual US$330 billion SME finance gap and Africa's overall factoring volumes still representing only 1% of the global total.

It is in this context that the theme for the workshop is not only relevant but also timely, reflecting both the urgent need to grow factoring and, at the same time, highlighting the potential of factoring in promoting economic growth in Africa—as seen in Europe and America," Mrs. Awani concluded.

Neal Harm, Secretary General, FCI, emphasized the critical role of "Open account trade finance (Factoring, Supply Chain Finance)" in fostering SME growth and local economies. He highlighted its ability to provide essential liquidity to SMEs by converting their accounts receivable or invoices into immediate cash. There is so much opportunity to fill the trade finance gap that exists across the globe through Factoring and Open Account Trade Finance," Harm asserted. He cited a recent World Trade Organization report indicating a US$2.5 trillion trade finance gap, largely impacting SMEs and emerging markets. He stressed that "receivables are a very strong and reliable asset that is self-liquidating. Factoring, Open Account, and Reverse Factoring are tools that can generate working capital to allow SMEs to grow.

Harm also presented preliminary World Factoring Statistics, which show a steady growth in factoring in Africa, with a 13.5% increase in 2023 compared to 2022, reaching a total volume of EUR 47.48 billion. Despite this progress, this figure represents a mere 1.3% of the global factoring volume of EUR 3.7 trillion, underscoring the vast opportunity for further expansion.

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