In a major boost for Micro, Small and Medium Enterprises (MSMEs), the Senate on Wednesday passed the Factoring Assignment and Receivables Financing Bill, 2026, aimed at helping businesses convert unpaid invoices and credit sales into instant cash.
The legislation, which received the concurrence of the Senate after its passage by the House of Representatives, is expected to unlock billions of naira in trade credit, ease liquidity challenges and strengthen domestic and international trade.
Leading debate on the bill, Senate Leader, Senator Opeyemi Bamidele, said the proposed law would establish a legal and regulatory framework for debt factoring, an alternative financing arrangement that allows businesses to access cash tied down in outstanding payments.
“The Factoring Assignment and Receivables Financing Bill, 2026, seeks to create a regulatory framework that would facilitate the development of debt factoring as an alternative means of financing for domestic and international trade in Nigeria and provide an enabling environment for it to thrive,” Bamidele said.
According to him, the legislation clearly defines the rights and obligations of businesses and financiers involved in factoring transactions, thereby providing certainty and confidence for investors and operators.
He explained that the bill had already passed all legislative processes in the House of Representatives and fulfilled the requirements for Senate concurrence.
Throwing his weight behind the measure, Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, Senator Adetokunbo Abiru, described the bill as a game changer for small businesses struggling to stay afloat due to delayed payments and inadequate working capital.
“In simple terms, what this bill seeks to do is provide a regulatory framework to support financing arrangements that will help most of our micro, small and medium enterprises convert their credit sales into immediate cash and provide liquidity and working capital,” Abiru said.
The Lagos East lawmaker noted that debt factoring has become a powerful financing tool across Africa, particularly through the support of the African Export-Import Bank (Afreximbank).
He lamented that despite the African factoring market being valued at over $50 billion, Nigeria currently accounts for less than one per cent of the market.
“The size of that market today is in excess of $50 billion, and Nigeria’s share is under one percent,” he said.
Abiru added that countries such as Egypt and Morocco have leveraged factoring to support businesses and stimulate economic growth.
“Passing this legislation will support our MSMEs in converting credit sales into cash without resorting to conventional borrowing arrangements,” he added.
Following overwhelming support from lawmakers, the bill was referred to the Committee of the Whole for clause-by-clause consideration before its eventual passage.
Observers say the new law could significantly improve access to finance for small businesses, reduce dependence on bank loans and position Nigerian enterprises to compete more effectively in regional and global markets.
