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CBA to provide working capital for SMEs as they wait for payment

Jeremy Ngunze (L) the Chief Executive Officer of CBA Kenya and Felix Bikpo the Chief Executive Officer of the African Guarantee Fund for Small and Medium-Sized Enterprises (AGF), sign an agreement to extend invoice discounting to corporate customers.

NAIROBI, Kenya, Jun 13 – Commercial Bank of Africa has partnered with the African Guarantee Fund to facilitate Small and Medium Enterprises access working capital on the strength of pending payment.

The Supply Chain Financing solution will allow suppliers access early payment against their invoices with no recourse to credit appraisal.

CBA Kenya CEO, Jeremy Ngunze says the solution is intended to spur growth among SME’s by availing working capital faster to enable them to finance new projects.

Ngunze says corporate buyers will approve and submit their supplier invoices to CBA through an online platform. CBA will then facilitate immediate payments to suppliers with recourse to the corporate buyers.

“We have leveraged technology and teamed up with a provider of financial guarantees, to address some of the key concerns affecting business today. In particular, this solution will spur growth among Small and Medium Enterprises (SME) by availing working capital faster to enable them finance new projects,” Ngunze said.

He says in addition to impacting SME operations; the Reverse Factoring also reduces the administrative burden placed on procurement and finance teams, who ordinarily have to deal with individual suppliers on a regular basis.

Ngunze says the business model has been successful in the United States of America, Europe, South Africa, and some countries in Asia.

“Together with CBA, we intend to track and document the economic impact arising from this development,” said Felix Bikpo, Chief Executive Officer, AGF.

The solution has been developed by Ennovative Capital (ECap), a Nairobi based Fintech.

According to ECap Chief Executive Officer, Kefa Nyakundi, the solution provides a marketplace for SMEs supplying goods and services to creditworthy buyers to trade their approved invoices without the need for the SME suppliers to undergo credit assessment.

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This structured financing model allows participating SMEs to incur debt only when borrowing for expansion, rather than on routine working capital.

“This facility is also applicable to overseas suppliers, therefore, making it a perfect solution for Boosting Intra Africa Trade (BIAT) and therefore facilitating the aspirations in the Africa Continental Free Trade Area agreement signed earlier in the year in Rwanda,” Nyakundi noted.

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