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2.7 FCI releases World Factoring Statistics survey, reports double-digit growth
Despite the continuation of a challenging global environment, the results of the FCI market survey for 2022 demonstrated the strength and resilience of the factoring and receivables finance industry.
FCI, the global representative body for factoring and financing of open account domestic and international trade receivables, has released their annual World Factoring Statistics report.
The report highlights that the factoring and receivables finance industry once again grew at a double digit rate. 2022’s increase of 18.3% surpasses 2021’s growth of 12.3%. It is estimated that this industry grew by €3,659 billion in 2022.
The year 2022 witnessed an unprecedented growth, setting a historical precedent as the industry experienced the largest single-year increase in volume. The remarkable growth of more than €590 billion YOY solidifies its position as the biggest increase ever reported. This achievement can be attributed to the recovery from COVID-19, substantial government stimulus, a surge in pent-up consumer demand, and the subsequent increase in inflation.
Examining the past two decades, including the robust growth witnessed in 2022, the compounded annual growth rate reached an incredible 8.83%. Domestic and international factoring experienced substantial growth during this 20-year period.
Europe
Europe, which once again was the largest contributor to the industry, represented 68% of global volume. In 2022, the European region contributed €2,499 billion, which is an increase of 18% from 2021. The five largest markets included:
1. Spain, with an increase of 30%,
2. Germany, with an increase of 20%,
3. Italy, with an increase of 14%,
4. France, with an increase of 15%,
5. United Kingdom, with an increase of 8%.
However, multiple markets exceeded growth expectations, including Ukraine (130%), Lithuania (67%), Serbia (57%), Turkey (51%), Cyprus (50%), Bulgaria (49%), Georgia (34%), Greece (33%), and Romania (31%).
Asia Pacific
The Asia Pacific region represents approximately 24% of global volume with €881 billion, which experienced an increase of 17% over 2021.
Within the region, Greater China, including Mainland China (23%), Hong Kong (2%), and Taiwan (2%), accounts for a volume of €671 billion. India demonstrated explosive growth with a growth rate of +83.4%, reaching €15.7 billion, following the implementation of a robust legal and regulatory framework.
Singapore also displayed substantial growth of 52%, reaching €44 billion. On the other hand, Japan witnessed a decrease of 2%, amounting to €57 billion.
The Americas
The Americas region continued its upward trajectory from 2021, with a remarkable growth rate of 47%. In terms of market share, the Americas represent 6% of the total world factoring volume, with an overall figure of €228 billion.
South and Central America, comprising 3% of the total world factoring volume with €124 billion, witnessed a significant increase of 44%. The top three players in this region are:
1. Mexico, with an increase of 112%
2. Chile, with an increase of 41%
3. Brazil, with an increase of 33%
North America, with a nearly 3% share of the total world factoring volume (€104 billion), demonstrated notable improvement, increasing by 7% compared to 2021. Canada witnessed a growth of 15%, while the USA experienced a 7% increase.
Africa and Middle East
Africa accounted for 1% of the total world factoring volume in 2022, amount to €41 billion, indicating a significant growth rate of 29% compared to 2021, which is consistent with the previous year’s increase.
South Africa, the largest market in the continent, contributes to over 80% of the entire volume and witnessed a staggering increase of 38%, solidifying its position as a market with strong growth prospects in the foreseeable future.
The Middle East, representing 0.3% of the global factoring volume, experienced a 2% increase compared to 2021. The most notable growth was observed in Israel, with a 5% increase.
Resilience of the factoring industry
Despite the continuation of a challenging global environment, the results of the FCI market survey for 2022 demonstrated the strength and resilience of the factoring and receivables finance industry. With an impressive growth rate of 18.3% over 2021, the industry has confirmed the expected return to normalcy. Concerns expressed a year ago, including the impact of increased credit risk in the second half of 2022 due to the withdrawal of state support, rising inflation and interest rates, the conflict in Eastern Europe, and the ongoing effects of the pandemic, particularly felt in Asia, have not been reflected in the industry’s statistics.
On the contrary, the significant increase in volume signifies the vital role played by the industry in supporting SMEs and corporates globally. It will undoubtedly be remembered as the most prosperous year of the century. As the global economy continues to recover and adapt to the changing landscape, factoring and receivables finance will remain a critical component of the financial ecosystem, offering valuable solutions for businesses of all sizes.
The collaboration between FCI members, strategic stakeholders, and industry participants worldwide will continue to shape the landscape of factoring and receivables finance, enabling businesses to thrive and succeed in an increasingly interconnected and dynamic global marketplace.
2.8
Lighting the path for Sustainability in Georgia (Part 1)
In 2021, TBC Bank took further steps to enhance the Group’s ESG framework through the development of an ESG strategy, which reaffirms our commitment to make a long-term, sustainable contribution to the country and the region.
Following the EBRD 2023 Annual Meeting and Business Forum in Samarkand, Uzbekistan, TFG’s Brian Canup (BC) spoke with Nino Masurashvili (NM), Deputy CEO, Chief Risk Officer, TBC Bank Georgia, who was recognised with the EBRD Sustainability
Silver Award. Read part one of this two-part interview to learn more about TBC Bank Georgia, why they were awarded the EBRD Sustainability Silver Award, and their plan for continuing to support Georgian sustainability.
BC: What specific sustainability initiatives have TBC Bank Georgia implemented in recent years to promote environmental and social responsibility, and what spurred this movement?
NM: Our aspiration to contribute to sustainable development comes from our role as a leading financial institution in Georgia’s development. We are aware that we have an impact on the country’s economy, business development, employment and societal progress as a whole. With the international expansion of our operations, sustainable development approaches are incorporated into our subsidiaries, as well.
In 2021, we took further steps to enhance the Group’s ESG framework through the development of an ESG strategy, which reaffirms our commitment to make a long-term, sustainable contribution to the country and the region. The strategy defines several key areas for the coming years: a strong ESG governance structure at the board and executive level; a focus on sustainable financing, services, and products; employee diversity, equality, and inclusion (DEI); green and sustainable funding; and a system and approach for impact measurement and reporting.
To
list key achievements in 2022:
GEL 750 million sustainable loan portfolio target for 2022 met. Furthermore, the total volume of the sustainable portfolio reached GEL 782 million, which constitutes a growth of 15.6% in comparison with the end of 2021 (GEL 676 million).
Climate-related framework in line with the Task force on Climate-related
Financial Disclosure (TCFD) requirements established and the second TCFD report published.
Comprehensive ESG training framework covering all employees and different responsibility levels established.
DEI Policy, targets and action plan defined.
ESG strategies in all significant subsidiaries developed.
Since the environmental and climate change issues are accelerated worldwide, we are committed to managing our direct and indirect environmental and social impacts stemming from our operation by developing the continuous enhancement of TBC’s Environmental Management System (EMS).
In 2020, we further strengthened our EMS and obtained ISO 14001:2015 certificate and successfully passed the thirdyear surveillance audit of the EMS in 2022. This certificate serves as a testament to our EMS’s full compliance with international standards.
As part of our EMS, TBC Bank implemented different initiatives to reduce its direct environmental footprint.
To list some of them:
Since 2019, TBC Bank operates a green car fleet, which is comprised of electric and hybrid vehicles.
Since 2015, TBC Bank has contracted a company for paper recycling. TBC delivered more than 250 tons of paper for further processing.
In 2023, TBC Bank started collecting plastic waste and transferring it to a partner company “Polyvim” for further recycling. The goal is to reduce plastic waste, create value-added products, and promote the development of a circular economy in Georgia. As a result of several stages of plastic processing, a high-quality fibre fabric is obtained, which can be used in other industries.
BC: Can you provide some details on what led to TBC Bank Georgia being awarded the EBRD Sustainability Silver Award?
NM: One of the features that the Silver Award considers is transactions with our customers. One of the transactions was the replacement of street lighting in Batumi City, the second-largest city in Georgia. The transaction was structured under a letter of credit product, where TBC Bank acted as an issuing bank facilitating the import of energyefficient LED lighting from Ukraine.
TBC Bank client, ADJARGANATEBA, imported energy-efficient LED lighting from its supplier, SCHREDER TOV, a lighting equipment supplier based in Ukraine.
TBC Bank issued a letter of credit with a post-import finance solution, and it was confirmed by a bank in Germany. This structure allowed the importer to re-pay for the purchased equipment within 3 years while allowing the exporter to receive funds at sight, upon installation of the lights.
Due to the ongoing conflict in Ukraine, the exporter had an urgent need for prompt payment, making smooth transactions crucial. Waiting until the end of the payment period was simply not feasible. Meanwhile, the importer had to prioritise the installation of LED lights and relied on receiving payments from the municipality on a quarterly basis.
TBC Bank matched this payment structure for both the importer and exporter, and satisfied both companies’ requirements. The transaction was also structured under EBRD Trade Facilitation Program.
The goal and the most important focus of the project was energy efficiency. By implementing the project in Batumi:
14,555 outdated lights are being replaced with new energy-efficient LED lights of better quality,
The smart lighting system will improve night visibility, and safe movement on foot, bicycle, and car,
Switching to energy-efficient LED lighting will reduce electricity consumption by approximately 50%.
BC: How have TBC Bank Georgia’s sustainability efforts contributed to the overall development and well-being of local communities?
NM: TBC runs its multi-year initiatives that aim to sustainably empower different groups of society. TBC, as an institution with a major social and economic impact, contributes to the development of areas defined as crucial by the countries’ public sector and cooperates with the National Bank of Georgia and other government institutions in key areas like financial education, job creation, investment attraction, etc.
Apart from information gathered from external sources, TBC assesses its own strengths and competencies and chooses areas of involvement accordingly. We have several principles that guide the choice of initiatives to be implemented. Each project must:
Increase its positive impact on society and the country in the long term and have growth potential,
Be a part of TBC knowledge and expertise: Before getting involved in a certain area, TBC builds expertise in it by increasing its knowledge internally and collaborating with external stakeholders that can contribute to the process with their experience,
Aim at co-participation not just funding: TBC works with partners, supporting them not only by funding specific projects, but also by sharing expertise in communication project management and more.
Some of our priority areas are:
Accessibility and affordability of financial and non-financial services: via our platforms www.tbcbusiness.ge and www.startuperi.ge, we support MSMEs, as well as promote a startup culture.
Women’s economic empowerment: among other initiatives, the empowerment of women in information and communication technologies (ICT) is a focus area.
Educational programmes for youth: scholarships, courses in ICT area, and STEM.
BC: In what ways does TBC Bank integrate sustainable finance principles into its operations and decision-making processes?
NM: The incorporation of our sustainable finance principles started many years ago. First of all, with the introduction of the Exclusion List of activities, we avoid ethically questionable and harmful activities. The list of activities excluded from financing by TBC Bank is based on the Exclusion Lists of the EBRD, IFC, DEG and ADB.
We reject financing activities that violate local legislative requirements, international conventions and declarations of human and labour rights.
Furthermore, all our commercial lending to SME and corporate customers are screened for environmental and social risks in line with the EBRD Performance standards.
TBC strives to increase its positive impact on society and the economy by introducing new financial products and services that are designed to deliver a specific social or environmental benefit.
Green Lending Development
– TBC is a leading partner in Georgia in local renewable energy financing with a core segment in hydropower stations. To make our contribution to the development of sustainable financing countrywide, we conducted local market research to determine how to adapt TBC’s green criteria to the Georgian reality and developed Green Lending procedure, in cooperation with the Green for Growth Fund (GGF) Technical Assistance Facility, represented by Finance in Motion GmbH and financed by the European Union under the EU4Energy Initiative.
This procedure helps the
Bank to identify green and environmentally friendly initiatives and encourages private companies to move to sustainable investments in their businesses. Furthermore, since 2023, we implemented the Green Taxonomy of the National Bank of Georgia, developed in line with the best international taxonomies and sustainability frameworks.
International Fund Raising
– Providing solutions that contribute to the sustainable development of local businesses has been an important target for TBC’s sustainability agenda. To achieve its ESG objectives, the Bank has continued to mobilise financial resources, focusing on the country’s inclusive economic growth and sustainable development. In 2022, the Bank mobilised the wholesale portfolio of $485 million in total, from its International Financial Institutions (IFIs) partners. Attracted facilities are a testament to TBC’s strong commitment to supporting the sustainable economic growth of local businesses, thereby contributing to job creation and bringing long-lasting benefits to the country.
