Al Ahram Newspaper
Rasheed to the 1st International Factoring Promotion Conference in Egypt:
Factoring is No.1 financial tool to support small & medium enterprises
Al-Ahram, Al-Ahad Al-Ektesadi, January 17th, 2010.
Under the auspices of Ministry of Trade and Industry and the Factoring Chain International (FCI), and with the participation of Cairo Chamber of Commerce, Federation of Egyptian Industries, and Export Credit Guarantee Company (ECGC), Egypt Factors, the first factoring company in Egypt, organized the 1st conference for the FCI last week in Cairo. The objective of the conference was to introduce financial institutions and the Egyptian and Arab business community to the importance of factoring as one of the most active financial tools to finance small and medium enterprises as well as local and international trade.
Eng. Rasheed Mohamed Rasheed, Minister of Trade and Industry, in a speech addressed to 300 bankers and businessmen and delivered on his behalf by Ola Gadallah, Chairman of ECGC, pointed out the significant developments witnessed by Egypt domestic and foreign trade. He stressed the significance of activating mechanisms for financing and guaranteeing trade, being one of the most important elements in developing domestic trade and increasing exports.
Jeroen Kohnstamm, FCI Secretary General, opened the conference and highlighted the growing role of factoring being one of the most appropriate tools to finance trade and small enterprises. He added that factoring as a financial tool has become one of the most widespread tools for funding trade at world level. Turnover of international factoring transactions amounted to 1,100 billion Euros. The role of FCI, he explained, is to promote the factoring activity and raise awareness of it in various parts of the world. A growing number of banks and large financial corporations are getting involved in the factoring business by establishing specialized companies. The number of factoring companies with membership in the FCI is 250 in 66 countries around the globe.
Galal Al-Zourba, Chairman of the Federation of the Egyptian Industries, spoke about the importance of promoting modern finance tools in the Egyptian market such as factoring to support small and medium enterprises as well as to develop the Egyptian industry.
Also, Ali Moussa, Chairman of Cairo Chamber of Commerce, delivered a speech at the conference and stressed the importance of factoring and its role in promoting domestic as well as foreign trade, especially in the sector of small and medium enterprises.
Other speakers included Peter Mallroy, Chairman of the FCI, and a number of its executive committee, who highlighted the significance of factoring as being one of the most important tools for financing small and medium enterprises, and pointed out several benefits that it provides for companies selling their products in the domestic and foreign markets. A complete presentation about the process and mechanisms of factoring was given.
Ahmed Shaheen, Egypt Factors General Manager, stated that Egypt Factors was the first financial corporation to be authorized in Egypt to practice the business of factoring. He added that it was a joint financial corporation with shares owned by the CIB (40%), FIMBank-Europe (40%), and the IFC (20%), an international organization affiliated to the World Bank.
Beginning its business as early as 2009, Egypt Factors has achieved outstanding results in its first year. It provided factoring services to more than 100 industrial, trade and service companies, 80% of which were small and medium enterprises. The turnover during that year was US$ 60 million, with 60% foreign factoring and the remaining, domestic factoring.
The most important sectors that the company had business with were yarn, weaving, furniture, packing and packaging materials, industries, and food supplies.
For the year 2010, the company aims at providing factoring services to a larger number of small and medium enterprises, doubling turnover of factoring transactions, and expanding purchase factoring and domestic factoring to meet the needs of medium enterprises in terms of purchasing from their domestic and foreign suppliers through more flexible payment ways. On the other hand, suppliers get the value of their invoices from the small and medium enterprises immediately, thus having instant access to cash flow.