Al Sherouk Newspaper
Increasing Egypt Factors’ Capital to $ 12 m
By HAYAT HUSSEIN. Al-Sherouk, 14 January 2010.
Egypt Factors is planning to increase its paid in capital from $ 5 m to $12 m to meet recent growing demand for factoring services in Egypt.
Factoring companies buy deferred payment invoices and pay all or part of their value to the seller in return for an average service charge of 1%. Then they would collect the invoices from the purchaser.
On the sideline of the International Factoring Promotion Conference, Ahmed Shaheen, General Manager of Egypt Factors, said that, although the company started business in Egypt as early as 2009, it has witnessed fast growth. The turnover of factoring in the last quarter of last year was 250% higher than the third quarter of the same year, which was also 80% higher than the second quarter.
Gross turnover of the company in 2009 reached $60 m, 40% of which was from the domestic market and 60%, the foreign markets. “Eighty percent of our clients”, Shaheen added, “are small enterprises; Capital increase will be phased, and will start with $3 m in the first quarter of the year.”
Ali Moussa, Chairman of Cairo Chamber of Commerce, pointed out during the conference that there were 4 million suppliers in Egypt, 25% of which have transactions not in excess of $10,000 worth of exports per month. This means that they cannot get from banks a documentary credit given the small size of the shipments. Therefore, factoring is a good alternative to finance these exporters.
He added that there were other reasons that make factoring an important and appropriate tool that could be used by Egyptian companies. For one, 95% of businesses in Egypt are small and medium enterprises. In addition, Egyptian exporters have no knowledge of many markets (such as African markets) they wish to penetrate. And here is the role that can be played by factoring. He expected that factoring would play a major role in the domestic market of which its local turnover reaches L.E. 455 billion a year.