Published: 03 December 2013

African Export - Import Bank (Afreximbank) workshop on "Factoring as an Alternative Trade Finance Instrument in a Competitive World" ended with a call on African businesses to move massively into the field of factoring.

Dr. Benedict Oramah, Afreximbank Executive Vice-President in charge of Business Development and Corporate Banking, told participants in the workshop that although factors advanced 300 billion Euros to some 500,000 clients in 2012, Africa accounted for only 1,2 per cent of the world factoring transactions.

Dr. Oramah said that factoring presented new opportunities for early entrants in Africa and that the outlook for the continent was one of rapid diversification of trade.

He announced that Afreximbank was working on a legislative framework for factoring in Africa and pledged the commitment of the Bank to supporting the development of factoring across the continent.

Dr. Oramah had said that African businesses must be equipped to compete effectively in the new environment resulting from the adoption of open account systems in many markets across the world, explaining that since open account terms had become standard practice in many markets, concerted effort was needed to equip African businesses to compete under such an environment.

According to wikipedia factoring is a financial transaction in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount.

- Afreximbank