The Pan-African Parliament Committee on Monetary and Financial Affairs has concluded a two-day benchmarking mission to the African Guarantee and Economic Cooperation Fund (FAGACE) in Cotonou, Benin. The mission, led by the Chairperson of the Committee, Hon. Thérèse Faye, aimed to deepen the Committee’s understanding of the modalities and operations of factoring, as well as to assess how the Draft Model Law on Factoring currently under development by the Pan-African Parliament will promote the use of this financing instrument across the continent.
During the Fourth Sitting of the Fifth Pan-African Parliament, held in Midrand, South Africa, the Committee presented to the House a proposal to develop a Model Law on Factoring. The Model Law is intended to serve as a soft-law instrument to guide African Union Member States in addressing the long-standing challenge of financing Africa’s development agenda and priorities, while supporting the promotion of the African Continental Free Trade Area (AfCFTA) and the realization of a prosperous Africa based on inclusive growth and sustainable development.
At a subsequent sitting in June 2025, the House approved the first reading of the Draft Model Law on Factoring in Africa and mandated the Committee to undertake regional consultations. These consultations, to be conducted in collaboration with Afreximbank, are scheduled for the first half of next year. In the interim, the Committee is expanding its technical knowledge to enrich its deliberations on factoring by engaging with institutions and countries where factoring is already being implemented within national jurisdictions.
Factoring has emerged as a critical financial instrument that enhances liquidity, improves access to finance for small and medium-sized enterprises (SMEs), and facilitates trade. West Africa is among the leading regions on the continent with an established factoring ecosystem, supported by an enabling legal and regulatory framework under the OHADA reforms. Several countries in the region have already adopted specific legislation governing factoring.
Highlighting the importance of the mission, Hon. Faye noted that parliaments play a critical role in promoting economic development, supporting regional integration, and enhancing accountability within financial systems. She emphasized that the visit to FAGACE provided a valuable opportunity for oversight, ensured alignment of development financing with national priorities, and equipped Members with deeper technical knowledge of guarantee instruments and financing frameworks, particularly as the Committee advances work on the Model Law on Factoring.
FAGACE is an international financial institution specializing in the promotion of public and private investment and contributes to the economic and social development of its Member States by facilitating access to finance, particularly for SMEs. The benchmarking mission enabled the Committee to:
- Examine the operational, institutional, and regulatory frameworks that support the successful implementation of factoring in Benin and the wider West African region;
- Deepen Parliament’s understanding of FAGACE’s financing and guarantee mechanisms and assess the impact of its interventions in Member States;
- Explore areas where the Pan-African Parliament can support policy, legislative, and advocacy initiatives to strengthen development financing; and
- Consider opportunities for mobilizing additional investments in support of Africa’s development priorities.
