The Senate has passed for second reading a bill seeking to regulate factoring services in Nigeria, a move aimed at expanding access to finance for small and medium enterprises (SMEs) and improving liquidity across the business ecosystem.
The proposed legislation, sponsored by Asuquo Ekpenyong (Cross River South), seeks to establish a legal and regulatory framework for factoring a financing model that allows businesses to sell verified invoices to finance companies for immediate cash.
Leading debate on the bill, Ekpenyong, a former Cross River State Commissioner for Finance, said the measure would address one of the biggest hurdles facing small businesses delayed payments for goods and services already delivered.
“MSMEs are the backbone of our economy, over 40 million strong, providing jobs and driving growth,” he said. “Yet, many cannot access affordable credit because they lack collateral. Factoring offers a proven solution that turns invoices into usable capital.”
He explained that the proposed law would enable businesses to sell invoices to licensed factors banks or finance companies at a small discount, giving them access to up to 90 percent of the invoice value upfront.
Ekpenyong added that the bill empowers the Securities and Exchange Commission (SEC) to license and supervise factoring firms, ensure transparency, and manage invoice transfers to prevent disputes. He noted that the framework aligns with ongoing digital reforms such as e-invoicing and receivables registries that improve verification and reduce fraud.
Supporting the bill, Garba Madoki (Kebbi South) urged that interest should accrue on delayed payments, especially those from government agencies.
“Invoices, particularly government invoices with a 30-day window, must attract interest until they are paid,” Madoki said.
Also speaking, Yahaya Abdullahi (Kebbi North) described the bill as a “critical milestone” for Nigeria’s SME-driven economy, while noting that Senator Tokunbo Abiru (Lagos East) had previously sponsored a similar proposal. He urged that both bills be harmonised.
Presiding over the session, Deputy Senate President Barau Jibrin commended Ekpenyong for sponsoring what he called a “strategic and timely” bill that would strengthen the informal sector and boost economic growth.
”This bill will help strengthen our economy because SMEs are the backbone of national productivity,” Barau said.
Attempts by Senator Osita Izunaso(Imo West) to have the bill referred to the Senate Committee on Capital Markets, which he chairs, were declined. It was instead referred to the Committee on Banking, Insurance and Other Financial Institutions for further legislative work.
The committee is expected to submit its report within two weeks.
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