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Al Mal Newspaper

A Chamber of Commerce members' symposium to be organized next week in support of "International Factoring"

Foodstuff On Top Of Egypt Factoring Portfolio
"At a Rate of 26%"

Wrote: Nashwa Adel Wahab

General Manger of Egypt Factors (EF); Mr. Ahmed Shaheen, stated that the food sector topped the list of sectors comprising the EF factoring portfolio for the first quarter of 2010, holding equity of up to 26% of the total credit portfolio. Meanwhile, the packaging and wrapping sector was ranked second on the list at rate of up to 18% of the total credit portfolio.

The home furnishing sector came third on the Egypt Factors portfolio list at a rate of up to 15%, and followed by the textile sector which occupied the fourth place at a rate of up to 14% during the same period. The petrochemicals sector was then ranked fifth on the list at a rate 9% and followed by the industrial requirements sector which came sixth on the list at a rate of 5%. Meanwhile, the chemicals, furniture and car feeding industries achieved a rate of 13% of the total credit portfolio.

Mr. Shaheen also reported that the Foodstuff and the Packaging sectors are the largest beneficiaries of factoring service in spite of the various trading, industrial and service sectors involved, stating that Egypt Factors moves towards developing these sectors in the upcoming period.

Mr. Shaheen pointed out that a number of new sectors were added to the list of sectors using the factoring service, including the electrical supplies, the chemical substances, the computer systems and the medical supplies sectors, expecting that these sectors would be highly ranked on the list during the upcoming period.

In the symposium held by the Cairo Chamber of Commerce (CCC), in coordination with the CCC Retail Academy, in cooperation with the Egypt Factors and Credit Guarantee Corporation (C.G.C), and in the presence of about thirty trading companies, Mr. Shaheen stated that Egypt Factors properly studies the means for supporting trade, diversifying finance tools to small and medium enterprises and properly using the finance mechanisms through the "local" and "purchases" factoring products. He further indicated that local factoring focuses on rendering services to the small and medium enterprises as it helps them to immediately obtain the liquidity needed for financing the post-dated invoices at a rate of up to 90% of the receivables. He added that local factoring further allows customers to avoid the burdens of collection activities and that Egypt Factors collects the invoices and commercial papers from the punchers on their maturity dates.

Mr. Shaheen also stressed the importance of focusing on "purchases" factoring, stating that this product particularly suits the medium enterprises which relies on post-paid purchases from foreign or local suppliers. He added that Egypt Factors pays the invoices immediately on behalf of its local and international customers, provided that the purchasing company undertakes to pay the invoice on its maturity date. Mr. Shaheen also referred to the privileges of "purchases" factoring, stating that it helps the importers to avoid opening L/Cs or enter into prolonged negotiations with foreign exporters. He added that this product provides immediate liquidity to customers and transforms their sale transactions from post-paid to immediately cashed, which creates faster turnover and doubles the sales volume.

In the conference, Mr. Esam Nafea, C.G.C. Marketing Manager, confirmed his strong relationship with Egypt Factors, stating that C.G.C has improved its capabilities of covering the credit risks of Egypt Factors customers. He added that C.G.C raised the credit risk ceiling for Egypt Factors to 2.5 million Egyptian Pounds and provided credit guarantees rate of up to 50% of the facilities provided by Egypt Factors.

Another symposium is planned to be held by the C.C.C members next Wednesday to discuss the mean for better use, by the small and medium enterprises, of international factoring services as regards the transactions with foreign countries, such as the USA, Russia and Eastern Europe. It is further planned to discuss the export guarantees mechanisms applied through factoring services and the means to improve the companies' solvency thus enabling them to transform their post-paid sales into immediately cashed sales.