An Insight into Recent Legal and Regulatory Reforms of Factoring in Africa

African countries have witnessed a significant increase in factoring volumes over the past few years, with growth averaging 14.2 % annually. Estimates are that, in monetary terms, factoring volumes will grow to about US$200 billion by 2020. While impressive, growth starts from relatively low volumes and both the growth to date, as well as prospects for future growth, have been hampered by lack of a comprehensive facilitative legal and regulatory infrastructure governing factoring transactions in Africa, as well as lack of awareness on the continent of what the product is (and is not). These challenges range from inaccurate terminology (what some call factoring in one country may not be the same product, as others understand it in another country), lack of judicial precedents, and the absence of appropriate enforcement mechanisms, among other things. In recent years, there has been a concerted effort to combat these issues with progress being made on all fronts. For example, in certain African countries new legislation has recently been enacted governing factoring transactions. This article discusses recent legal reforms in Africa in relation to factoring. It argues that the current growth of factoring internationally, greater awareness of the nature of factoring as a business product, generally, and the efforts of multilateral institutions such as the African Export-Import Bank (Afreximbank) to educate both the market and regulators about factoring will spur more countries to enact factoring leg. Journal of Contemporary Issues in African Trade and Trade Finance, 1(1), 27-40