The African Export-Import Bank (Afreximbank) has urged all African SMEs to engage factoring as a viable and sustainable solution to address the challenge of access to financing for their businesses.
This is contained in a statement issued on Tuesday by Mr Obi Emekekwue, Director and Global Head of Communications and Events Management at Afreximbank,
Emekekwue quoted Ms Kanayo Awani, Managing Director of the Intra-African Trade Initiative at Afreximbank, as saying that poor engagement of factoring had hindered the growth of Africa’s Small and Medium-scale enterprises (SMEs).
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable to a third party at a discount.
A business will sometimes factor its receivable assets to meet its present and immediate cash needs.
Awani said that factoring was an important alternative to other trade financing sources such as bank loans.