By Joy Odor Abuja
In a bold legislative move aimed at turbocharging Nigeria’s small business sector, the Senate has opened debate on the Factoring Regulation Bill, 2024 (SB. 474), a potential game-changer that could inject over $1 billion annually into the hands of struggling Micro, Small, and Medium Enterprises (MSMEs).
Sponsored by Senator Asuquo Ekpenyong Jnr of Cross River South, the Bill is designed to break the vicious cycle of delayed payments that has long suffocated millions of Nigerian businesses.
“This is not another short-term credit scheme, it is a structural reform,” declared Sen. Ekpenyong during the debate. “With this Bill, we are converting invoices into working capital and freeing MSMEs from the chokehold of slow payments and inaccessible bank loans.”
Across Nigeria, MSMEs — which make up over 40 million businesses routinely face payment delays of up to 90 days after delivering goods or services.
In the meantime, they’re unable to pay workers, buy raw materials, or accept new contracts, stalling growth and stifling job creation.
The Bill introduces invoice factoring as a licensed, regulated financial service.
It allows businesses to sell unpaid invoices to licensed finance companies or banks known as factors who then advance up to 90% of the invoice value immediately.
Unlike traditional loans, factoring requires no collateral, relying instead on the buyer’s creditworthiness and the legitimacy of the invoice.
SEC regulation of factoring companies
Legal enforceability of invoice transfers
Full disclosure of fees and terms
Alignment with digital reforms like e-invoicing and receivables registries
Mandatory reporting on MSME participation, delinquency rates, and buyer concentration
From Mexico to India, Brazil, and South Africa, factoring has proven to be a powerful tool in unlocking liquidity and boosting small business resilience.
Nigeria could follow suit, unleashing billions in working capital and transforming its economic landscape.
Faster payrolls
Improved inventory turnover
Reduced informality
Stronger supply chains
Enhanced investor confidence
“This Bill will empower Nigerian businesses to hire faster, restock sooner, and grow stronger,” Sen. Ekpenyong stated. “It’s time we stopped starving the sector that drives our economy.”
- The Senate is expected to give full consideration at Second Reading, with overwhelming support anticipated from across the aisle.
