The Pan-African Parliament (PAP) Committee on Monetary and Financial Affairs has concluded a pivotal two-day benchmarking mission to the African Guarantee and Economic Cooperation Fund (FAGACE) in Cotonou, Benin. Thérèse Faye, the mission was a key step in developing the Draft Model Law on Factoring in Africa. Factoring, a financial instrument where a business sells its accounts receivable (invoices) at a discount for immediate cash, is critical for enhancing liquidity and improving SMEs’ access to finance.
This is especially vital for boosting intra-African trade under the African Continental Free Trade Area (AfCFTA).The proposed Model Law is intended as a ‘soft-law’ instrument to guide African Union Member States in establishing a conducive legal and regulatory environment for factoring. * Examine the successful factoring frameworks in Benin and the wider West African region, which benefits from the harmonized OHADA reforms. * Deepen its understanding of FAGACE’s guarantee and financing mechanisms and their impact on Member States’ development.Hon.
Faye emphasized that the mission provided valuable oversight and technical knowledge essential for finalizing the Model Law. Following the approval of the first reading in June 2025, the Committee is set to undertake regional consultations, in collaboration with Afreximbank, in the first half of the next year. This concerted effort underscores the PAP’s role in harmonizing legislation to unlock vital financing and realize Africa’s agenda for inclusive growth and sustainable development.
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