General News
[ 2016-10-31 ]
Afreximbank introduces new factoring law
The African Export-Import Bank (Afreximbank) has
introduced a model law on factoring to provide a
benchmark for African national legislatures
enacting arrangements aimed at fostering the
growth of factoring activities across the
continent.
The Afreximbank Model Law on Factoring, which was
unveiled in Cape Town, South Africa, on Sunday
during the seventh Annual Meeting of the Africa
Chapter of Factors Chain International (FCI), on
the sidelines of FCIs annual meeting, is based on
recommendations received from consultative
meetings with factors, government and regulatory
bodies, enterprises, legal experts and banks
across Africa and the world.
Launching the model law, Kanayo Awani, Chairman of
the Africa Chapter of FCI and Managing Director of
Afreximbanks Intra-African Trade Initiative,
predicted that the document would have profound
impact on the way small and medium-sized
enterprises (SMEs) were financed in Africa.
Its development impact will be phenomenal,
facilitating access to finance for excluded small
and medium-sized business, said Ms. Awani, who
spoke on behalf of the President of Afreximbank,
Dr. Benedict Oramah. We have placed the promotion
of intra-African trade on the front burner of our
current strategy and recognise the support which
SMEs need as indirect exporters in regional value
chains.
Calling on regulators and lawmakers to treat the
adoption of the model law with urgency, Ms. Awani
pointed out that strengthening legislation was
critical to easing the way collaterals were
created, perfected and enforced as part of the
financing provided to enterprises through
factoring. Such strengthening, she added, provided
credibility and business assurance to investors.
The model law defines and protects the rights of
parties to factoring transactions, including those
relating to following assignments, nullification
of bans on assignment, exclusion of certain
receivables, rights between factors and clients,
debtor protection, competing rights to receivables
and international factoring.
To advance factoring in Africa, Afreximbank has
been providing lines of credit to factors,
creating awareness and building capacity among key
players and assisting in the creation of
facilitative infrastructure.
In 2015 Africa accounted for only 0.7 per cent of
the 2.373 trillion factoring transactions
recorded across the world, with South Africa,
Tunisia, Morocco, Egypt and Mauritius accounting
for almost all the African transactions.
Participating in the Sundays launch ceremony were
factoring regulators from across Africa,
representatives of international law firms,
members of the Africa Chapter and high level
representatives of the FCI. The launch had been
preceded by two seminars, organized by Afreximbank
in Abuja and Abidjan earlier in the year, which
came up with road maps for implementing local
legal frameworks inspired by the model law.
Another seminar will take place in Nairobi in
November.
In factoring, an exporter or supplier sells his
accounts receivable or invoices at a discount to a
third party, called a factor, in exchange for
immediate cash with which to finance continued
business.
Source – Classfmonline
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