By Kelvin Obambon
The Nigerian Senate has advanced a crucial piece of legislation aimed at resolving the persistent challenge of delayed payments for Micro, Small and Medium Enterprises (MSMEs) across the country.
The Factoring Regulation Bill, 2024 (SB. 474), sponsored by Senator Asuquo Ekpenyong, representing Cross River Southern Senatorial District, successfully passed its Second Reading on Wednesday following what the Senator described as “robust support” from his colleagues.
The core objective of the bill is to address the crippling effect that delayed payments, often extending for months after invoices are issued, have on small businesses’ cash flow, production, and ability to expand.
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Senator Ekpenyong presented the bill as a sustainable, market-driven solution, enabling MSMEs to quickly redeem their pending invoices for immediate cash from financial institutions at a small discount. This process, known as factoring, is intended to empower entrepreneurs to grow based on their sales performance rather than being reliant on fixed assets or collateral for expensive debt.
“This is not just another credit scheme, but a structural reform that empowers our entrepreneurs to grow on the strength of their sales, not their fixed assets or collateral,” Senator Ekpenyong stated.
The proposed legislation also seeks to establish a transparent legal and regulatory framework for factoring activities. This framework will operate under the auspices of the Securities and Exchange Commission (SEC), ensuring investor confidence, transparency in transactions, and protection for MSMEs utilizing the service.
The successful passage to Second Reading means the bill will now proceed to the committee stage for further legislative fine-tuning.
