Afreximbank has stated that Africa needs to increase its factoring volumes to at least €240 billion to support the growth of small and medium-sized enterprises.

This was disclosed in a statement by the Executive Vice President for Intra-African Trade and Export Development at Afreximbank and a member of the FCI Executive Committee,
Mrs. Kanayo Awani, during Afreximbank’s annual Factoring Workshop in Abidjan, Côte d’Ivoire, according to the bank’s website on Tuesday.

She emphasized that factoring, which enables businesses to turn unpaid invoices into immediate cash, is a crucial tool for closing the US$300 billion financing gap faced by African SMEs.

These enterprises make up more than 90 per cent of businesses on the continent and contribute over 60 per cent to both employment and GDP.

Mrs. Awani observed that Africa’s factoring market has more than doubled in recent years, growing from €21.6 billion in 2017 to €50 billion in 2024.

However, she stressed that to fully unleash SME-led growth, factoring volumes need to reach €240 billion, equivalent to roughly 10 per cent of the continent’s GDP.

While nearly 200 factoring companies operate across Africa, current activity remains below its transformative potential.

“Although SMEs account for more than 90% of Africa’s businesses and over 60% of employment and GDP, they continue to face a financing gap estimated at US$300 billion annually.

“To catalyse SME-led growth, Africa must scale factoring volumes to at least €240 billion, equivalent to about 10% of the continent’s GDP. Achieving this will require increased financing, deeper legal reforms, expanded training and strong industry partnerships,” She said.

The statement also underscored factoring’s role in strengthening resilient value chains.

The Secretary General of FCI, Mr. Neal Harm, described factoring and supply chain finance as vital tools for driving SME growth, while Mr. Charlie Dingui, Special Advisor to the National Director of the BCEAO, highlighted its significance for socio-economic development in West Africa.

In Côte d’Ivoire, for instance, factoring presents a $5 billion opportunity, particularly in sectors like cocoa, where millions of livelihoods rely on timely access to finance, the statement noted.

However, only 12 per cent of SMEs currently turn to formal financial institutions for working capital, with many relying on informal sources due to high costs, stringent requirements, and slow approval processes.

The Afreximbank Factoring Workshop forms part of the bank’s ongoing efforts to promote awareness and build expertise in factoring and supply chain finance, essential for advancing the African Continental Free Trade Area.

So far, more than 5,000 delegates have taken part in over 25 capacity-building initiatives, including the Certificate of Trade Finance in Africa, Afreximbank Academy programs, and FCI mentoring and online training schemes.