Commercial Bank of Africa, a bank linked with the family of President Kenyatta has partnered with African Gurantee Fund, as well as a Kenyan based fintech company Ennovative Capital to develop an online platform to support supply chain financing for Kenyan SMEs.
The platform uses what the partnership refer to as the Reverse Factoring model, which was recently launched during an event held in Nairobi, with top banking and fintech players acknowledging the role of technology in helping increase commerce in Africa.
Through Reverse Factoring model, corporate buyers will approve and submit their supplier invoices to Commercial Bank of Africa through the online platform whereby the bank will then facilitate immediate payments to suppliers with recourse to the corporate buyers. This structured financing model allows participating SMEs to incur debt only when borrowing for expansion, rather than on routine working capital.
In addition to impacting SME operations, Reverse Factoring also reduces the administrative burden placed on procurement and finance teams, who have to deal with individual suppliers on a regular basis.
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