The absence of enabling law on factoring in the country may soon be over as members of the Banking Committee of the Nigerian Senate and the Banking and Currency Committee of the House of Representatives have pledged to accelerate the process of enactment.
The factoring bill, which is currently in the nation's legislative chamber, would be given attention to ensure that it will be passed into law by the first quarter of 2018, going by the pledge.
Factoring is a financing method in which a business owner sells accounts receivable at a discount to a third-party funding source to raise capital.
The lawmakers made the pledge during the sensitisation meetings on the Model Law on Factoring, which the African Export-Import Bank (Afreximbank), together with the Nigerian Export Import Bank (NEXIM) and the Nigeria Factoring Working Group held with the committees and representatives of the Central Bank of Nigeria.
According to Afreximbank, the sensitisation meetings were facilitated by NEXIM in the context of the work of the Senate and the House of Representatives to achieve reform of the Nigerian financial sector and promote financial inclusion.
Afreximbank was invited to hold the sessions as important steps in accelerating the enactment of the bill and its pursuit of increased trade across the continent.
The Managing Director of Afreximbank's Intra-African Trade Initiative, Kanayo Awani, urged the legislators to use their powers to facilitate factoring as an alternative trade finance instrument in the country to address the difficulties faced by small and medium-sized businesses (SME) in gaining access to finance.
Awani stated that while SME growth in Nigeria was beyond question, their access to finance, especially from traditional debt and equity sources, remained challenging.
She said that was because SMEs were characterised by poor balance sheets, absence of regular audited financial statements, limited capital, short financial records and inability to provide collaterals.
By instituting an enabling legal framework and adopting the Model Law, .the legislators would help in diversifying and strengthening Nigeria's financial services sector and would ensure that operators took advantage of the opportunities, thereby attracting necessary investments into the sector, she continued.
Afreximbank and NEXIM are championing the process of engaging with stakeholders to ensure that the factoring law is enacted.
Afreximbank provided the resource persons who made presentations on factoring and on the model law, including Peter Mulroy, Secretary General of FCI, the leading factoring and receivables finance association; and David Tatge, from law firm of Epstein, Becker and Green from the United States.
The sensitization meetings in Abuja followed similar awareness creating sessions organised in other intra-African trade hubs- Cote D'Ivoire and Kenya.
The Model Law on Factoring, sponsored and championed by Afreximbank, was launched in October 2016 on the sidelines of the Annual Meeting of FCI.