Sen. Asuquo Ekpenyong Jnr (Cross River South Senatorial District) Sponsored A
Lead Debate on the Factoring Regulation Bill, 2024 SB. 474
Speaking on the floor of the Senste, Sen. Ekpenyong introduced factoring Regulation Bill 2004.
“Mr. President, Distinguished colleagues, it is with a profound sense of duty and commitment to our Nation’s progress that I rise today to lead the debate on the Factoring Regulation Bill 2004.
This crucial piece of legislation, which was read for the first time on the 11th of June 2024, directly addresses one of the most persistent challenges faced by our small businesses: delayed payments.
Across the country, MSMEs deliver goods or services, issue invoices, and then wait thirty, sixty, or sometimes ninety days before receiving payment. In the meantime, they struggle to pay workers, purchase raw materials, or accept new orders. This cycle of weak cash flow not only traps small businesses but also slows down our economy’s overall growth.
Mr. President, Distinguished Colleagues, MSMEs are the backbone of our economy. Over 40 million strong, they provide the bulk of jobs and contribute significantly to national output. Yet most remain excluded from affordable credit because traditional bank lending depends on collateral they often do not have. The result is a structural cash-flow trap that limits their survival, expansion, and competitiveness.
Factoring provides a tested solution. Instead of waiting months for payments, a business can sell its verified invoice to a licensed factor—whether a finance company or bank—at a small discount. The factor immediately pays most of the invoice value, often up to 90 percent, and later collects from the buyer when payment is due. Unlike a bank loan, which relies on collateral or the SME’s own credit history, factoring is based on the buyer’s creditworthiness and the validity of the invoice.
In this way, businesses can access financing on the strength of their sales, not their fixed assets. Given that invoice factoring constitutes a financial service and involves the trading of receivables as financial assets, it falls naturally within the regulatory purview of the Securities and Exchange Commission, whose mandate is to protect investors, ensure market integrity, and foster confidence in Nigeria’s financial markets.
The Bill before us establishes the legal framework, safeguards, and transparency mechanisms necessary for factoring to thrive responsibly in Nigeria. It provides for the licensing and supervision of finance companies engaged in factoring, ensures that costs and fees are disclosed in plain language, and makes invoice transfers legally enforceable to avoid disputes.
It further aligns with ongoing digital reforms such as e-invoicing and receivables registries, which reduce fraud and make verification faster. Importantly, it encourages government agencies and large corporations to support supplier-financing programs that allow MSMEs to access early payments at low cost.
Mr. President, Distinguished Colleagues, the benefits of this Bill are clear and immediate. For MSMEs: faster access to cash, stronger inventories, timely payrolls, and the confidence to accept bigger orders. For the economy: shorter cash cycles, reduced informality, better payment discipline, and increased investor confidence in a transparent, well-regulated asset class. International experience shows the transformative potential of factoring.
• In Mexico, the government’s Cadenas Productivas program unlocked billions of dollars in working capital for small suppliers.
• In India, online platforms (TReDS) made it possible for MSMEs to finance invoices from both private and public sector buyers.
• In Chile, electronic invoicing deepened the factoring market, while in Brazil, reforms to receivables registries opened safe access to credit for smaller firms.
• Even closer to home, South Africa has seen significant growth in supply chain finance to support its smaller suppliers.
Industry analysis indicates that with clear rules, Nigeria could unlock over US$1 billion annually for small businesses through factoring—funds that directly support jobs, production, and local value chains.
To ensure responsible growth, this Bill mandates periodic reporting on volumes, delinquency trends, buyer concentration, and MSME participation, so that the regulator can monitor performance and adjust rules as necessary.
It also commits to MSME literacy through standardized term sheets, plain-language contracts, and cost disclosure templates, ensuring that small businesses can use these tools safely and effectively.
Mr. President, Distinguished Colleagues, this is not another short-term credit scheme. It is a structural reform—one that converts invoices that MSMEs already hold into usable capital.
By passing this Bill, we will empower Nigerian businesses to hire faster, restock sooner, and grow stronger, without resorting to expensive, collateral-backed debt.
I urge therefore respectfully distinguished colleagues to give their full support to this Bill at Second Reading.
Thank you.
