Nigeria's Senate backed a major financing bill on Wednesday aimed at helping small businesses access cash more easily. The Factoring Assignment and Receivables Financing Bill, 2026, now has support from both chambers of the legislature.
Under this law, small firms can convert unpaid invoices into immediate money without traditional bank loans. Senate Leader Opeyemi Bamidele piloted the debate on the crucial measure.
Bamidele explained the bill creates rules for factoring contracts between sellers and financiers. It clearly spells out what each party can and cannot do, he noted.
"The bill makes provisions for factoring contracts between the seller and the factor, sets out the relationship between the creditor and the factor, and defines their respective rights and obligations," the senator said.
According to Bamidele, this opens doors for alternative ways to finance business operations. It'll help companies across Nigeria maintain steady cash flow, he added.
Senator Adetokunbo Abiru championed the bill during debate as well. Chairing the Senate Committee on Banking, Insurance and Other Financial Institutions, Abiru called it essential for struggling small enterprises.
MSMEs often face serious liquidity problems in Nigeria. Factoring gives them a way out without borrowing from banks.
"In simple terms, what this bill seeks to do is provide a regulatory framework to support financing arrangements that will help most of our micro, small and medium enterprises convert their credit sales into immediate cash," Abiru told colleagues.
He pointed out that factoring already works across Africa. The African Export-Import Bank, or Afreximbank, uses it regularly.
Nigeria's share of the African factoring market remains tiny. The continent's factoring sector exceeds $50 billion annually.
"The size of that market today is in excess of $50 billion, and Nigeria's share is under one per cent," Abiru said. Nations like Egypt and Morocco have captured far larger portions, he noted.
Countries such as these have grown their economies using factoring instruments. Nigeria risks falling further behind without similar tools.
"Countries like Egypt and Morocco have benefited largely from this, and passing this legislation will support our MSMEs in converting credit sales into cash without resorting to conventional borrowing arrangements," according to Abiru.
Lawmakers voted unanimously to support the bill on Wednesday. It then went to the Committee of the Whole for detailed examination of each clause.
The chamber ultimately passed it after reviewing all provisions. Officials say it'll modernize how Nigerian businesses conduct trade.
The law is expected to boost access to finance nationwide. It should also strengthen Nigeria's standing in regional and international commerce.
