…As Global factoring volume hits €2.37 trillion***
The planned Truck Transit Park initiative of the Nigerian Shippers’ Council (NSC), would gulp over N4.8 billion, even as investors are jostling to secure a stake in the project.
The Minister for Transportation, Rotimi Amaechi, assured that the N4.8 billion Truck Transit Park (TTP), in eight locations across the country, and another six Inland Container Depots (ICD) are aimed at solving the chaos currently experienced in Nigerian ports.
The Truck Transit Park (TTP) project is a modern state-of-the-art facility situated just off the highways, designed to provide temporary rest location where truck drivers can conveniently park their vehicles in a healthy environment, get accommodation, fuel, food, drinks, restrooms, showers and other basic supplies like oil and spare parts as well as services in high use corridors.
Amaechi said, ”the TTPs have worked in the advanced countries and will also work in Nigeria because we are going to follow the international standards.,”
Chief Executive Officer, the Nigerian Stock Exchange, Oscar Onyeama, at NSC’s breakfast meeting in Lagos stressed the need to exploit the bond market to raise fund for infrastructure projects.
He noted that investment prospects for the transport sector is viable, while calling for lunching of fund that primarily focus on transport infrastructure.
Chairman, Senate Committee on Aviation, Adamu Aliero, said: “There is serious deficit in our infrastructure and the only way we can overcome this challenge is by sourcing for funds and relying on the private sector,”
Executive Secretary, NSC, Hassan Bello said: “Investment benefits of TTP includes; guaranteed returns on investment for the investor; Investors will have the benefit of managing an industrial and logistics hub with numerous incentives”
In the meantime, worried by the slow-paced growth of small and medium enterprises in Nigeria and other African countries, stakeholders have argued in favour of adoption of new and structured trade finance instruments that will de-risk SME financing and promote lending to the sector.
Indeed, data from the global factoring industry showed that Africa recorded only €20.39 billion, representing one per cent of the €2.37trillion global volume in 2016.
With factoring yet to gain ground in Nigeria, trade experts have tasked government on the need to pass the factoring bill into law to deepen its penetration in Nigeria and improve the country’s participation in intra-African trade.
Factoring is a financing method in which a business owner sells accounts receivable at a discount to a third-party funding source to raise capital.
In a typical factoring arrangement, the client (you) makes a sale, delivers the product or service and generates an invoice.
The factor (the funding source) buys the right to collect on that invoice by agreeing to pay you the invoice’s face value less a discount—typically 2 to 6 percent. The factor pays 75 percent to 80 percent of the face value immediately and forwards the remainder (less the discount) when your customer pays.
Secretary General of FCI, Peter Mulroy while speaking at the just concluded Advanced Structured Trade Finance Seminar and Workshops organized by the African Export-import Bank (Afreximbank), in Cape Verde, said factoring is emerging as an important mechanism to bridge the gap in the financing of SMEs, adding that developing this mechanism would also contribute to enhancing trade well beyond national borders.
He explained that there are expectations about the Nigerian market, noting that the passage of the factoring bill into law will further aid the realisation of SMEs’ potential and open up the nation to prospects of factoring to support SMEs as actors in the supply chains.
Managing Director, Intra-African Trade Initiative, Afreximbank and Chairperson of the Africa Chapter of FCI, Kanayo Awani, emphasised the need to redefine the landscape noting that factoring as a percentage of GDP is higher in countries that have a well-defined body of factoring statutes.
Awani said the Bank has also partnered with Nigerian Export Import Bank (NEXIM) who are at the forefront of pushing foreign exchange regime in Nigeria to admit Factors as dealers of foreign exchange in a bid to expand the regulatory regime from Letters of Credit to open account modes of payment.
“Regional integration lowers transaction costs and smoothens the functioning of regional value chains presenting opportunities for development. Africa therefore must diversify, enhance production, and move to more complex products, in terms of value addition.
“The potentials for Africa’s value chain to integrate are promising, and so therefore are the prospects of factoring to support SMEs as actors in the supply chains. Consider that, leather production in Botswana is feeding into the car industry in South Africa; dried mangoes from Gambia are being exported to Nigeria to feed its food and beverage industry; and even Cape Verde’s abundant stones and gravels can feed construction across the region, not to talk of its processed fish capabilities”, Awani added.
Minister of Finance of Cape Verde, Olavo Correia, reiterated the need for trade growth saying, Africa should create an environment that promotes trade and investment in order to enable its economies can grow.
“Our continent needs to grow in order fight the problems we have, such as poverty, and we must speed up the transformation if we want to see results. There is no economic growth without trade and we must work to provide a political, economic and social environment in order to reinforce regional exchanges”, he added.
Correia called for increased support for Afreximbank, saying, “The organisation which helps us needs our support so it can be of service to the whole African continent.”
Guardian NG
