PODCAST | Africa is ripe for receivables finance

To start, Federico-

Mm-hmm

... let's maybe set some background for our listeners.

How would you describe the current state of the receivables finance market across Africa?

Right.

You know, five years when I joined, the regions that we wanted to develop was actually, for efcom, was Africa.

And I must say that between twenty twenty-one and now, we've seen a lot of traction virtually everywhere, uh, perhaps with the exception of the largest market, which is South Africa.

But apart from that, I see that all the other markets are coming.

They're coming from virtually zero to something.

And, um, whether it's west, east, north, and also southern, let's say, called Africa, excluding South Africa.

Because the numbers, and, uh, we saw them yesterday officially, um, here at the FCI, uh, fifty-eight, uh, conference.

We see that Africa has grown, uh, two point two percent, I think, uh, in Africa and, um, and the largest market, which is South Africa, basically nothing.

Uh, so the growth comes from, from other regions, especially from Egypt.

Tinashe, could you build on that if possible? Why are certain markets like Egypt more advanced or let's say receptive when it comes to receivables finance?

So if you look at the history of factoring, it was mainly a merchant-based product, and that was very big in the ports.

A lot of merchants would come in with product, and before they, they've sailed out again, there was a need for, for cash flow.

So they would leave their products with different buyers at the port.

In that instance, they'll be looking for an advance payment, and then the goods will be sold while they're away.

So given that historically and looking at the history of Africa, you've identified key ports.

So Morocco and South Africa were very key ports for trade and, and, and that has helped develop.

Looking at it more recently and more legally, it's really to do with the regulatory environment.

South Africa has laws that recognize, um, cession, which is the assignment of receivables.

And more recently, Egypt has developed as a recent, given the adoption, I think they used the Afreximbank model law as, as, as a framework, and they adopted a model law on factoring.

They now have a factoring association.

It's now a regulated service provision, and that has seen Egypt grow from five members to thirty-seven as of today in the last few years.