Table 2.7: Crowdfunding for SMEs
F- Factoring
In this section we try to understand the dynamics related to the light use of factoring as a fnancing tool. First, it is worth noting that only 15 from 295 respondents considered this as a viable fnancing tool which brings it down to one of the least envisaged fnancing tools. Along the same line, only 2 of our respondents mentioned using this as a fnancing tool. For those considering factoring as a fnancing option, it seems to be an easy to fnd and operate option. Also, the vehicles used primarily are formal ones (although not through the traditional state banks), meaning that SMEs can deal directly in transparency with factoring agencies and institutions and not be afraid of fraudulent operators. Also, discounting receivables (factoring) happens at reasonable prices so no issue from this side. Finally, out of the two people who used factoring: One would not use it again and the other would use it recurrently. Hence, a need to dig further on reasons why factoring is not really used for African SMEs, is it because checks and promissory notes are not widely used, and the economies are more cash oriented? Is it because the regulatory framework is not strong enough? More research is needed in this area to uncover its related challenges and weaknesses.
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