Africa's economic transformation is a hot topic, and it's time to shine a light on a crucial aspect: the role of factoring and supply chain finance. The key to unlocking Africa's potential lies in supporting its Small and Medium Enterprises (SMEs), and Afreximbank is leading the charge.
In Abidjan, Côte d'Ivoire, at Afreximbank's annual Factoring Workshop, the focus was on how these financial tools can bridge the financing gap for SMEs and build resilient value chains across the continent.
Mrs. Kanayo Awani, Executive Vice President of Intra-African Trade and Export Development at Afreximbank, highlighted the progress made in recent years. Africa's factoring volumes have seen impressive growth, rising from €21.6 billion in 2017 to €50 billion in 2024, with nearly 200 factoring companies now operating. But here's where it gets controversial: despite this growth, Africa's current factoring activity is still far from its transformative potential.
"SMEs are the backbone of Africa's economy, yet they face a financing gap of US$300 billion annually," Mrs. Awani emphasized. "To drive SME-led growth, Africa must aim for factoring volumes of at least €240 billion, which is equivalent to about 10% of the continent's GDP. This ambitious target requires increased financing, legal reforms, training, and strong industry partnerships."
Mr. Neal Harm, Secretary General of FCI, also stressed the importance of factoring and supply chain finance in unlocking SME growth. He called for practical solutions and collaborative action to turn discussions into transactions.
And this is the part most people miss: Côte d'Ivoire presents a unique opportunity. With a potential factoring and supply chain finance sector valued at US$5 billion, the country could significantly boost its economic development. However, only 12% of SMEs currently seek working capital from formal financial institutions, opting instead for informal sources due to high costs and perceived risks.
Afreximbank and FCI's annual Factoring Workshop is part of their long-term commitment to raising awareness and strengthening expertise in these areas. To date, they've trained over 5,000 delegates through various initiatives, including the Certificate of Trade Finance in Africa (COTFIA), the Afreximbank Academy (AFRACAD), and FCI's training programs.
So, what's next? How can Africa's factoring volumes reach the €240 billion target? And what role can other countries and organizations play in supporting this transformation? These are the questions we should be asking.
Let's continue the conversation in the comments. Do you think Africa can achieve this ambitious goal? What steps do you think are needed to get there?
