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Factoring Can Bridge Financing Gap, Says Afreximbank



  • Factoring Can Bridge Financing Gap, Says Afreximbank

African Export-Import Bank (Afreximbank) has reiterated the importance of factoring services in bridging the assessed gap in financing among small and medium-sized enterprises (SMEs) in Africa.

While admitting that the business model was scripted to address the challenges the SMEs face in accessing funding for business activities, the bank noted that it is also important to develop the model across Africa.

In factoring, an exporter or supplier sells his accounts receivable or invoices at a discount to a third party, called a factor, in exchange for immediate cash with which to finance continued business.

The Managing Director of the Intra-African Trade Initiative of Afreximbank, Kanayo Awani, at a two-day factoring promotion seminar in Douala, Cameroon, said the effectiveness and potential of factoring services to support SMEs became even higher during periods of financial distress.

She said that because of its unique features, factoring was well-suited for facilitating financial inclusion of SMEs. The seminar followed similar factoring promotion and capacity-building events organised by Afreximbank in Egypt, Ghana, Nigeria, Tanzania, Kenya, Zambia and Mauritius.

To support its strategy to grow intra-African trade and facilitate greater SME contribution to regional and global supply chains, Afreximbank had been championing the development of factoring in Africa.

The support had been through provision of credit lines to factors, capacity-building workshops, policy and regulatory inputs, advisory services and technical assistance to promote best practices.

“We are proud to note the increased awareness about factoring in Africa and, more tangibly, the growing number of factoring companies on account of our efforts,” she said.
Increasing factoring transaction volumes and ensuring stronger legal frameworks were also part of the Bank’s targets.

The representative of the Governor of the Littoral Region of Cameroon, Aboubakar Njikam, said the country had enacted legislation to regulate factoring in recognition of its importance in unlocking economic development.

Cameroon was sparring no effort in promoting the development and use of the product and the new law provided the enabling environment for its growth in the coming years. Cameroon is among African countries where new factors are emerging and its factoring volumes reached about €40 million in 2016.

In addition to providing networking opportunities for international and sub-regional factoring practitioners, the seminar introduced participants to the principles, mechanics, risks and benefits of factoring using case studies and success stories.

The Afreximbank Model Law on Factoring was also explained to participants, highlighting the ways in which it could be adapted to suit different local regulatory environments.

The seminar was organised in collaboration with FCI, the global representative body for the factoring and receivables finance industry; Afriland First Bank Group; and CamLease, the Cameroonian leasing association. More than 150 finance professionals, legal practitioners, corporates and SMEs from Cameroun, the Central Africa region and beyond attended the event.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts




Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin



Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.


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Crude Oil

Oil Prices Extend Gains to $64.32 Ahead of OPEC+ Meeting




Oil Prices Rise to $64.32 Amid Expected Output Extension

Oil prices extended gains during the early hours of Thursday trading session amid the possibility that OPEC+ producers might not increase output at a key meeting scheduled for later in the day and the drop in U.S refining.

Brent crude oil, against which Nigeria oil is priced, gained 0.4 percent or 27 cents to $64.32 per barrel as at 7:32 am Nigerian time on Thursday. While the U.S West Texas Intermediate gained 19 cents or 0.3 percent to $61.47 a barrel.

“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi. “Perhaps more interesting is the lack of U.S. shale response to the higher crude oil prices, which is favourable for higher prices.”

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are looking to extend production cuts into April against expected output increase due to the fragile state of the global oil market.

Oil traders and businesses had been expecting the oil cartel to ease production by around 500,000 barrels per day since January 2021 but because of the coronavirus risk and rising global uncertainties, OPEC+ was forced to role-over production cuts until March. Experts now expect that this could be extended to April given the global situation.

“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report.

Meanwhile, U.S crude oil inventories rose by more than a record 21 million barrels last week as refining plunged to a record-low amid Texas weather that knocked out power from homes.

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