Fiducia, an investment firm, has partnered with African Export-Import Bank (Afreximbank) to provide liquidity to small businesses in Africa through factoring. Factoring enables SMEs to access immediate cash flow by converting their unpaid invoices into funds. This partnership aims to address the financing gap that many African SMEs face. Fiducia is actively promoting factoring among African businesses and raising awareness about its benefits through joint campaigns and educational initiatives.

Fiducia is currently piloting its factoring solution in Nigeria. The company is collaborating with developmental finance institutions and legal firms to develop a blueprint for the sector and advocate for sector-friendly policies and regulations. By working with these stakeholders, Fiducia aims to create an enabling environment for factoring to thrive in Nigeria and expand across the continent.

The factoring process on Fiducia's marketplace involves SMEs supplying goods to corporate buyers. The SMEs upload invoices, which are validated and approved by the buyers. Funders then bid on the invoices, and Fiducia selects the successful funder. Fiducia facilitates the funding process, ensuring efficient transactions and business growth. The goal is to improve cash flow, inventory management, and overall financial stability within the supply chain ecosystem.

While Fiducia's approach presents a promising solution for SME financing, there are inherent risks. SMEs opting for factoring may have higher default rates compared to larger businesses. Fiducia mitigates this risk by closely monitoring clients' performance and market dynamics to detect potential disruptions in the supply chain. The company also provides financiers with market and sector data to minimize credit risks and allows diversification of portfolios to mitigate concentration risk.

Fiducia plans to expand its factoring services across multiple markets in Africa through strategic partnerships. By leveraging existing networks and expertise, the company aims to make factoring a convenient and reliable financing option for African businesses, including SMEs in remote areas. Ultimately, Fiducia's long-term goal is to contribute to the growth and development of African economies by empowering SMEs, fostering financial inclusion, and driving economic prosperity through factoring.

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