NEXIM Boss Urges N’ Assembly to Pass Nigerian Factoring Bill into Law

Managing Director of the NEXIM bank Mr. Abba Bello

By James Emejo

The Managing Director/Chief Executive, Nigerian Export-Import Bank (NEXIM), Mr. Abba Bello, has urged the National Assembly to quickly pass the Nigerian Factoring Bill into law to promote small and medium-sized enterprises (SMEs) as well as create job opportunities for Nigerians.

He noted that the legislation has the potential of significantly creating job opportunities for the teeming youth population as well as enhance financial inclusion.

Speaking on behalf of its partners during a meeting with the Senate Committee on Banking, Insurance, and other Financial Institutions, Bello described factoring as a short-term, non-bank financing involving the purchase of receivables, which essentially is the conversion of credit sales to cash at a discount.

This is as committee Chairman, Senator Uba Sani, has lauded the initiative championed by NEXIM Bank, adding that the proposed bill would promote the integration of the country into the global factoring market, when passed into law.

He said factoring was an essential component in international trade and played a significant role in the promotion of export and import activities of the country.

He said: “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 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.”

Promising to hasten its passage into law, Sani said the bill would strategically serve as a catalyst for more financial flow in the trade sector and complement the giant effort of government in diversifying the nation’s economy.

Bello, nevertheless, explained that 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 towards developing factoring as a trade finance instrument designed to promote micro, small and medium enterprises (MSMEs) development.

“It also serves as a strategic tool towards financial inclusion in trade services. This has become necessary in view of current challenges to access finance and the progressive decline in export credits to support exporters, particularly MSMEs,” he said.

The MD also said Bello the bank would be partnering with Factoring Chain International (FCI), Intra-African Trade Initiatives and African Export-Import Bank (Afreximbank), for effective service delivery.

However, a representative of Afreximbank, Mr. Enga Kameni, said factoring was considered a key instrument for supporting SMEs, especially those that do not qualify for traditional bank lending.

He said SMEs play a key role in intra-regional trade and industrialisation hence the need to empower them through factoring.