The Minister of Industry, Trade and Investment, Otunba Adeniyi Adebayo, has called for the adoption of factoring as a major source of finance as against loans and bank overdrafts for Micro, Small and Medium Enterprises (MSMEs) to thrive.
The minister who was speaking at the maiden National Conference on Factoring on Tuesday in Abuja, noted that its implementation in Nigeria would spur growth and ease of access to capital for businesses.
Daily Trust reports that factoring is a source of finance that requires businesses to sell their account receivables (unpaid services or goods rendered to customers) to a factoring agent at an agreed fee when in need of immediate cash to meet up demands.
He said, “The financing is a very simple approach to securing working capital for all businesses without taking bank overdrafts or discounting invoices at steep interest rates.”
The Executive Director of the Nigerian Export Promotion Council (NEPC), Olusegun Awolowo, stated that it could unlock over $1bn per year in financing for SMEs, thus, enabling MSMEs, with high-quality receivables, access to cash flow and capital to help maintain and grow their businesses.
