Local suppliers to have easy access to funds as financial firms, Lynch Capital and Corlido partner to offer first-ever factoring and supply chain service in Ghana.
The move is to help industry players in the financial market who are making a case for new capital avenues for local suppliers to clear their goods and complete procurement agreements with ease.
One of the challenges most local suppliers in Ghana face has been the frustration of payment delays in the supply chain of services.
Managing Director of Lynch Capital, Fredrick Dodoo said issues of finance continue to impede the growth of indigenous businesses and companies within the supply chain process in Ghana, despite government intervention in promoting industrialization and job creation.
Speaking at the launch of Corlido and Lynch partnership agreement signing, Mr Dodoo said, “factoring and receivables finance are closely positively correlated with general economic growth with a high beta coefficient that is when the economy grows, factoring grows rapidly and when it slows, our volumes fall.”
On his part, the Minister for Business Development, Dr Mohammed Awal, said the partnership further endorses Ghana’s viable business climate.
He said various government interventions including the reduction in the cost of credit has gone a long way to improving investor confidence.
“Government has tried to stabilize the economy. We’ve done a lot to ensure that macroeconomic indicators are improving. Inflation is now a single digit of 9.6 from 15.3,” he said.
Mohammed Awal said, “GDP has been the best in 10 years and Ghana has thus been seen as the fastest growing economy in Africa. All these initiatives have been put in place to create a viable environment for businesses to thrive”.
Meanwhile, the chairman of the board of Lynch Capital, Daniel Asiedu believes new partnerships for invoice factoring will go a long way to strengthen the oil and gas sector.
He said, “the oil and gas industry is not too old and as it progresses these ancillary services becomes very urgent to carry out”
Invoice factoring is a form of financial transaction that involves a business selling its.
Invoices to a third party (called a factor) at a negotiated discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs.
Current data is showing factoring as growing much faster than the European economy, confirming the growing popularity of this kind of funding.
Factoring turnover in 2017 for EU countries exceeded 1.6 trillion with a year on year growth increase of 7.5%.
Globally, the EU accounts for more than half of factoring transactions, contributed by the top five countries (76%), United Kingdom 21%, France 18%, Germany and Italy 14% and Spain 9%.
Africa’s share, however, remained low, representing a poor 1% of global figures. Morocco and South Africa accounted for Africa’s factoring growth in the face of declining volumes elsewhere, factoring however gained a strong momentum in Nigeria 2017.
South Africa remained dominant and accounted for 80% of Africa’s factoring turnover.
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