(Ecofin Agency) - In the coming years, intra-African trade, especially through the AfCFTA, could boost factoring by making inter-business transactions easier. Currently, the factoring market is still largely controlled by South Africa.

Verdant Capital has made a $2 million mezzanine investment in UsPlus, a South African company that helps small and medium-sized businesses (SMEs) with working capital financing. The investment, structured as junior convertible bonds, is aimed at expanding UsPlus’s factoring operations in South Africa, where access to credit remains a challenge for many SMEs.

"The Fund’s investment will strengthen UsPlus’ capital position and help “crowd-in” more senior debt funding into the business to further grow its balance sheet," said Verdant Capital in a statement.

According to the International Factoring Association (FCI), the African factoring market was valued at around $40 billion in 2023, showing growth but still small compared to the global total of over $3.7 trillion. South Africa dominates the sector, accounting for more than 80% of factoring volumes on the continent, followed by Egypt, Morocco, Kenya, and Tunisia, whose shares remain limited.

Founded in 2015, UsPlus provides financing solutions to local businesses struggling with traditional credit access. The company focuses on manufacturers, logistics providers, farmers, and renewable energy businesses, while also supporting women-led enterprises and sustainable initiatives.

With a portfolio of $38 million and a goal to reach $100 million by mid-2025, the Verdant Capital Hybrid Fund focuses on investments in inclusive financial institutions across Africa, targeting fintech companies and institutions that support micro, small, and medium-sized enterprises (MSMEs).