In a major boost for domestic commerce and small business growth, the Senate has officially passed the Factoring Assignment and Receivables Financing Bill, 2026. This landmark legislation establishes Nigeria’s first comprehensive legal and regulatory framework for debt factoring, positioning the country to tap into an African factoring market currently valued at over $50 billion.
The Senate’s passage of the bill follows concurrence with the House of Representatives. The legislation now moves to the President for assent.
Debt factoring allows businesses to convert unpaid invoices and credit sales into immediate working capital by selling them to financial institutions (factors). This alternative financing mechanism offers a critical lifeline to Micro, Small, and Medium Enterprises (MSMEs), allowing them to bypass the rigorous and often prohibitive requirements of conventional bank loans.
The Factoring Assignment and Receivable Financing Bill 2026 seeks to create a regulatory framework that will facilitate the development of debt factoring as an alternative means of financing for domestic and international trade in Nigeria. It defines the framework governing factoring contracts between sellers and financiers, clearly setting out the rights and obligations of all parties involved.
Senator Bamidele Opeyemi.
Despite boasting Africa’s largest economy, Nigeria currently captures less than one percent of the continent’s booming $50 billion factoring market, which is heavily backed by the African Export-Import Bank (Afreximbank). Nations like Egypt and Morocco have already successfully integrated similar frameworks to accelerate their economic growth.
Senator Adetokunbo Abiru (Lagos East), Chairman of the Senate Committee on Banking, Insurance, and Other Financial Institutions, emphasized the urgency of the bill for cash-strapped businesses:
Unlocking Capital: “Passing this legislation will support our MSMEs in converting credit sales into cash without resorting to conventional borrowing arrangements.”
Economic Lifeline: Senator Abiru described the law as vital for small businesses currently “suffocating under liquidity constraints.”
Key Benefits of the Legislation:
Immediate Cash Flow: Resolves the chronic cash-flow delays that stifle small business growth by turning receivables into instant liquidity.
Modernized Commerce: Updates Nigeria’s legal architecture governing commercial transactions to meet global standards.
Global Competitiveness: Enhances Nigeria’s standing and participation in regional and international trade ecosystems.
Following unanimous support from lawmakers and a rigorous clause-by-clause consideration by the Committee of the Whole, the bill has been successfully passed and forwarded to the Executive for presidential assent.
