The National Economic and Financial Committee (CNEF)-Congo popularizes and raises awareness on the laws relating to Factoring and Leasing
05 May, 2022
Thursday, May 5, 2022 in Brazzaville, the Deputy National Director of the Bank of Central African States (BEAC), Panzou Bayonne, opened, on behalf of the Congolese Minister of Finance, Budget and Public Portfolio Rigobert Roger Andely, and in his capacity as Secretary General of the CNEF, the popularization and awareness seminar on the laws relating to Factoring and Leasing in the Republic of Congo.
Law No. 54-2021 of December 31, 2021, governing Factoring activity in the Republic of Congo, defines Factoring as an operation by which the member (transferor or supplier) transfers, by an Agreement or written contract with subrogation effect, its receivables from the factor who, in return for payment, pays it in advance all or part of the amount of the transferred receivables, while bearing or not, in accordance with the agreement, the risks of possible insolvency on the assigned receivables.
There are two kinds of factoring. Firstly, factoring with recourse, which is a Factoring operation under which the factor reserves the right to be reimbursed by the member, in the event of the debtor's insolvency. Secondly, non-recourse Factoring, which is a factoring transaction under which the participant does not guarantee the factor against the insolvency of the debtor.
Factoring has four main advantages: access to additional financing; lower interest rates; coverage of the risk of non-payment (if without recourse); and management directorates.
Law No. 55-2021 of December 31, 2021, instituting leasing in the Republic of Congo defines leasing as a credit transaction intended to finance the acquisition or use of movable or immovable property for professional. It consists of the rental of capital goods, tooling equipment or real estate for professional use, specially purchased or built, with a view to this rental by companies which remain the owners. These rental operations, whatever their name, give the lessee the option of acquiring all or part of the leased property, for an agreed price, taking into account, at least in part, the payments made as rent.
A financial lessor is any credit institution, microfinance institution or any financial institution that finances leasing operations. We call financial leasing any financial leasing transaction relating to movable property consisting of equipment, materials and/or tools necessary for the activity of the lessee. Real estate leasing is defined as any leasing transaction relating to immovable property for professional use, purchased or built at the request and on behalf of the lessee, together with the possibility for the latter, at the latest on expiration of the lease, to gain ownership of all or part of the leased property, etc.
The three main advantages of leasing are: access to additional financing without external guarantee; less cumbersome formalities; and the non-requirement of a personal equity contribution.
This two-day seminar, organized by the CNEF, is divided into 6 panels corresponding to the following themes: the presentation of the Laws through opportunities and challenges; the technique of structuring and setting up a leasing transaction; the technique of structuring and setting up a factoring operation; the sharing of experience of the Postal Bank of Congo (BPC) on the practice of factoring; sharing the experience of BGFI Bank Congo on the practice of leasing; the key factors for the success of the reform (factoring and leasing) and the outlook.
