Abuja, Nigeria – October 16, 2025
The Nigerian Senate has passed for second reading the Factoring Regulation Bill, 2024, a proposed law aimed at improving access to financing for Small and Medium-sized Enterprises (SMEs) by allowing them to convert unpaid invoices into immediate cash.
Sponsored by Senator Asuquo Ekpenyong, the bill seeks to address one of the most pressing challenges faced by micro, small, and medium enterprises (MSMEs) in Nigeria—delayed payments from clients, which often stretch up to 90 days after delivery of goods or services.
“This bill is a structural reform that will unlock working capital for more than 40 million small businesses across Nigeria,” Ekpenyong said during the debate. “These businesses are the backbone of our economy, and they need financial tools that match the realities they face.”
Factoring, a financial transaction in which a business sells its invoices to a third party at a discount in exchange for immediate cash, is widely used globally to support SME liquidity. The proposed legislation would establish a legal and regulatory framework for such transactions in Nigeria.
Senator Ekpenyong explained that many small businesses struggle to pay workers, restock inventory, or invest in growth while waiting for payments. The resulting cash flow problems, he noted, not only stifle individual businesses but also slow down broader economic activity.
The bill also outlines a comprehensive regulatory structure to be overseen by the Securities and Exchange Commission (SEC). It mandates that only licensed entities will be allowed to engage in factoring, and it requires full disclosure of all costs and fees to protect participating businesses.
If passed into law, the Factoring Regulation Bill is expected to significantly ease financial pressure on MSMEs, enabling quicker access to capital and fostering growth in Nigeria’s informal and formal business sectors.