The Nigerian Export-Import Bank (NEXIM), and its partners on Monday underscored the need for quick passage of the Nigerian Factory Bill to promote Small and Medium-sized Enterprises (SMEs). The group made the advocacy at a meeting with the Senate Committee on Banking, Insurance, and other Financial Institutions in Abuja. Mr Abba Bello, the Managing Director, NEXIM Bank, who spoke on behalf of the group, said that the ‘Factory Bill’, if passed into law, would significantly create a lot of Job opportunities in the country. Bello said that the bank would be partnering with Factory Chain International (FCI), Intra-African Trade Initiatives and African Export-Import Bank (Afreximbank), “to do the needful for effective service delivery”.
According to him, factoring is a short-term, non-bank financing involving the purchase of receivables, which essentially is the conversion of credit sales to cash at a discount. “Factoring transaction is undertaken when a client is a seller of goods or services on credit terms and is done so that the seller and his business can receive cash more quickly with which to finance continued business operations. Over the past four years, the Nigerian Export-Import Bank has been working toward developing factoring as a trade finance instrument designed to promote Micro, Small and Medium Enterprises (MSMEs) development. It also serves as a strategic tool toward financial inclusion in trade services. This has become necessary in view of current challenges to access to finance and the progressive decline in export credits to support exporters, particularly MSMEs,” he added.
In his remark, Mr Enga Kameni of Afreximbank said that factoring was considered a key instrument for supporting SMEs, especially those that do not qualify for traditional bank lending. Kameni said that SMEs accounted for 40 per cent of employment and 30 per cent of Gross Domestic Product (GDP), in low income countries. According to him, SMEs play a key role in intra-regional trade and industrialisation. Earlier, Sen. Uba Sani, Chairman of the Committee, had commended the group for such initiative, saying that the proposed Bill, if passed into law, would promote the integration of Nigeria into the global factoring market. Sani said that factoring was an essential component in the international trade and played a significant role in the promotion of export and import activities of country. “It also enhances the contributions of SMEs to non-oil export trade, particularly within the context of the African Continental Free Trade Area. It also helps to support the diversification objectives of the Federal Government under the Economic Recovery and Growth Plan,” he said.
According to him, it further helps to provide the needed platform for businesses to accelerate their cash flow in much quicker manner, particularly in export related activities. He said that when the Nigerian Factoring Act is passed, it would be critical and strategically serve as a catalyst for more financial flow in the trade sector. “It will also complement the giant effort of government in diversifying the nation’s economy,” he said.
