The Deputy Governor, Economic Policy, Central Bank of Nigeria (CBN), Dr. Joseph Okwu Nnanna, has called on the National Assembly to expedite action on the passage of the Factoring Bill currently before the parliament.
Nnanna spoke on the sidelines of the ongoing 25th anniversary and annual general meetings of the African Export-Import Bank (Afreximbank), in Abuja, yesterday.
The CBN chief, who chaired a session on the Nigerian Factoring Roundtable hosted by the Nigerian Export-Import Bank (Neximbank), stated that the passage of the bill would unlock the immense potential inherent in factoring.
Factoring is a financial transaction; a kind of debtor finance in which a business sells its accounts receivable (invoices) to a third party, called a factor at a discount.
Nnanna noted that the benefits of factoring to medium, small and micro enterprises (MSMEs) were enormous, noting that the CBN had pushed to put in place a collateral registry, which has the potential of offering cheaper source of finance than money deposit banks, if the process is operated the way it is supposed to operate.
In his address, the Chairman, House of Representatives Committee on Banking and Currency, Hon. Jones Onyeriri, noted that Nigeria lags behind in the implementation of factoring, stating that its introduction into the financial system would compliment conventional banking.
The lawmaker stated that it was important to expedite action so that factoring would take root in the country, assuring that the parliament would quicken the process of the relevant bill.
In his presentation, the Director, Financial System Strategy (FSS 2020), Mohammed Suleiman, enumerated some of the factors inhibiting MSMEs’ access to finance
According to him, one of such factors was lack of a rating mechanism for the MSMEs.
He disclosed that FSS 2020 was proposing the creation of a rating agency for MSMEs.