Togo adopts draft bill to help SMEs thrive by easily resorting to invoice factoring

Banking

Wednesday, 09 February 2022 16:28

Togo adopts draft bill to help SMEs thrive by easily resorting to invoice factoring

(Togo First) - Invoice factoring could soon become more accessible to businesses in Togo. Indeed, the country’s council of ministers adopted last Monday a uniform draft bill covering this activity in the West African Monetary Union member states.

Factoring is a transaction whereby businesses fund their cash flow by transferring their receivables to a third party (the factor). The Togolese government believes it can help SMEs thrive.

"This draft bill is part of the reforms undertaken by the government to support micro, small and medium enterprises (SMEs) and it aims to promote factoring as a financing offer that tackles cash flow issues of businesses, SMEs especially," the council wrote in a statement.

"With this law, we give MSMEs the tools to rapidly auto-finance and sustain their activities. (...) it is a major economic tool for SMEs, providing these businesses with market flexibility and agility," said Prof. Akodah Ayewouadan, minister of communication, and the spokesperson of the government.

In effect, the bill should allow microfinance institutions, which are closer to SMEs, to practice invoice factoring. This is in a context where "only specialized financial services were previously covered by the factoring system,” said Ayewouadan. “Now, this system is being extended to decentralized financial systems, meaning that even microfinance institutions can offer factoring services,” he added.

At present, one of the main players positioned in this segment in the country is the African Lease Togo, a subsidiary of the African Lease Group. It specializes in leasing and factoring.

Ayi Renaud Dossavi

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