Afreximbank Pushes for Fivefold Growth in Africa’s Factoring Market as SMEs Face €300bn Funding Gap

By Bheki Dlamini

ABIDJAN – Afreximbank has urged African governments, financiers and industry players to dramatically expand the continent’s use of factoring and supply chain finance, warning that current levels fall far short of what is needed to unlock the full potential of small and medium enterprises (SMEs).

Speaking at the bank’s annual Factoring Workshop in Abidjan, Kanayo Awani, Afreximbank’s Executive Vice President for Intra-African Trade and Export Development, said Africa must grow its factoring volumes from the current €50 billion to at least €240 billion if it hopes to build resilient value chains and lift SME productivity.

Factoring, a financial tool that allows businesses to convert invoices into immediate cash, has been gaining ground across the continent. Volumes have more than doubled since 2017, and nearly 200 factoring companies are now active in Africa. But Awani warned that while the progress is encouraging, it is nowhere near enough to meet Africa’s economic ambitions.

“SMEs make up more than 90% of Africa’s businesses and contribute over 60% of employment and GDP,” she said. “Yet they face a financing gap of about US$300 billion every year. To catalyse SME-led growth, we must scale factoring volumes to at least 10% of the continent’s GDP.”

Experts at the workshop argued that expanding factoring could help solve one of the biggest obstacles facing small businesses across the continent: cash flow. Long payment delays, strict lending requirements, and high financing costs remain a significant barrier to accessing working capital through traditional banks.

Neal Harm, Secretary General of FCI, said factoring and supply chain finance have become “critical levers” for SME growth. “The challenge now is to move from discussion to execution. SMEs cannot grow without timely, reliable access to liquidity,” he said.

IV ZEAL VITAMIN

Representing the Central Bank of West African States (BCEAO), Charlie Dingui stressed that better financing tools are essential for development in UEMOA countries. He highlighted Côte d’Ivoire as a prime example of untapped potential, noting that the country’s factoring and supply chain finance space could reach US$5 billion. This is particularly significant in an economy where sectors such as cocoa support millions of households.

Yet only 12% of Ivorian SMEs seek funding from formal financial institutions, relying instead on informal lenders due to tough loan conditions and slow approvals. “Factoring can offer a lifeline,” Dingui said. “It improves cash flow and stimulates business growth in environments where delayed payments are the norm.”

A market poised for expansion

Afreximbank sees factoring as a crucial pillar in implementing the African Continental Free Trade Area (AfCFTA), where predictable cash flow could help thousands of SMEs plug into regional and global supply chains.

The bank and FCI have already trained more than 5,000 delegates across 25 capacity-building programmes, including the Certificate of Trade Finance in Africa (COTFIA), the Afreximbank Academy (AFRACAD) and various FCI training and mentoring offerings. But officials say far more investment, regulatory reform and local awareness are needed if factoring is to reach its full potential.

For many SMEs, the difference between growth and closure often comes down to whether they can survive months-long waits for payment. Afreximbank’s message in Abidjan was simple: the tools already exist, but African economies must scale them faster.

“If we want SMEs to drive Africa’s economic transformation, we have to meet them where they are,” Awani said. “Factoring is one of the most practical ways to give them the liquidity they need. The next step is ambition and collective action.”