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| | | Title | Factoring as a Catalyst for Small and Medium Enterprises Development and Intra-African Trade | | Author | ACBF | | Subject | Intra-Africa Trade, ACFTA, Small to Medium Enterprises | | Date of Publication | 2023 | | Publisher | African Capacity Building Foundation (ACBF), AFREXIMBANK | | Number of Pages | 37 | | Keywords | Factoring | | Abstract | Background and Purpose: African countries face a difficult road to economic recovery because of the effects of the Covid-19 pandemic and the Russia-Ukraine war. Therefore the African Continental Free Trade Area (AfCFTA) is such a significant development in transforming the trading modalities and integration landscape of the continent. In terms of its letter and spirit, this paper provides an assessment and an evaluation of the SME landscape in Africa, with a focus on the role and functions of SMEs as a force multiplier where factoring serves as an intermediation tool to promote and improve levels of intra-regional regional trade which currently is only 17 per cent of total African trade. Method: The study draws on a wide secondary literature, primary sources, and relevant empirical material. It also includes four case studies that provide insights into the use of factoring in diverse domestic settings. The importance of factoring: Factoring provides SMEs with immediate financing and working capital. Compared to other types of lending such as loans with fixed assets used as collateral, the key advantage of factoring is that it is underwritten based on the risk of the accounts receivable rather than the personal risk profile of the borrower. In Africa’s often weak business environments, the factored receivables are owned by the factor and consequently, are not part of the bankruptcy estate of the borrower. | | ISBN/ISSN | 978-1-77933-659-0 | | Filesize | 1712973 MB | | File Format | PDF | | [ View / download original document ] |
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