(Ecofin Agency) - The Congolese banking institution has signed a $10.9 million facility with Afreximbank to strengthen the factoring services it offers local SMEs.

The African Export-Import Bank (Afreximbank) announced, Tuesday,  a financing agreement with the Postal Bank of Congo (BPC). Under that agreement, it will provide a €10 million ( $10.9 million) factoring facility to allow the Congolese banking institution to expand its factoring activities both inside and outside DRC.  

"Our 2023-2025 strategic development plan provides for concrete measures to make BPC the first Congolese banking group to have a subsidiary solely dedicated to factoring. We are ready to give factoring a fundamentally new direction. That said, we will need more support," said Calixte Tabangoli, general manager of BPC.

Afreximbank is one of BPC’s long-term partners. Over the past five years, the institution has worked with the Congolese bank on several initiatives to support factoring. This collaboration has notably facilitated the adoption of a law on factoring in the Republic of Congo to create a legal and regulatory environment favorable to the growth of factoring as an alternative funding mechanism for  SMEs.

This additional support will enable BPC to strengthen the factoring services it offers Congolese SMEs. Factoring is a financial management technique whereby a company (factor) assumes another company's receivables, takes care of their collection, and bears losses when any debtor becomes insolvent. The technique solves SMEs’ working capital issues by allowing them to receive payments within a short period, therefore being able to pay their suppliers and taxes and fund their expenses. With factoring, they are no longer required to wait for long periods before being paid for the services and goods they sell. 

Chamberline Moko