The Senate yesterday passed the Factoring Assignment and Receivables Financing Bill, 2026, opening the door for Nigerian micro, small and medium enterprises to tap into a continental debt factoring market worth over $50 billion from which the country currently captures less than one per cent.
The upper chamber concurred with the House of Representatives on the proposed legislation, which establishes a legal and regulatory framework for debt factoring, a financing mechanism that allows businesses to convert unpaid invoices and credit sales into immediate working capital without resorting to conventional bank loans.
Leading the debate, Senate Leader Opeyemi Bamidele, said the legislation would create an enabling environment for alternative financing and strengthen liquidity for businesses nationwide.
“The Factoring Assignment and Receivable Financing Bill 2026 seeks to create a regulatory framework that would facilitate the development of debt factoring as an alternative means of financing for domestic and international trade in Nigeria and provide an enabling environment for it to thrive,” Bamidele explained.
He added that the bill defines the framework governing factoring contracts between sellers and financiers, clearly setting out the rights and obligations of all parties involved.
The proposed legislation’s commercial significance was sharpened by the intervention of Senator Adetokunbo Abiru (Lagos East), Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, who described the legislation as a critical lifeline for small businesses suffocating under liquidity constraints.
Abiru told the chamber that African factoring, driven significantly by the African Export-Import Bank (Afreximbank), had grown into a market exceeding $50 billion, yet Nigeria, Africa’s largest economy, remained a marginal player.
He said,
“The size of that market today is in excess of $50 billion, and Nigeria’s share is under one per cent.”
He noted that Egypt and Morocco had already reaped substantial gains from factoring frameworks similar to what the bill proposes.
“Passing this legislation will support our MSMEs in converting credit sales into cash without resorting to conventional borrowing arrangements,” Abiru added.
In practical terms, the law would allow businesses holding unpaid invoices to sell those receivables to a factoring company in exchange for immediate cash, easing the cash flow pressures that have long stunted growth among small enterprises.
The bill also modernises the legal architecture governing commercial transactions and is expected to enhance Nigeria’s competitiveness in regional and global trade.
Following unanimous support from lawmakers, the bill was subjected to clause-by-clause consideration in the Committee of the Whole before being passed and forwarded for presidential assent.
