Can Alternative Financial Instruments Support International Trade Growth?

PrimePoint Partners held an online event for the purpose of presenting the key findings and conclusions from the study on the “Availability of Supply Chain Finance Instruments and the potential for growth in the Macedonian market.” The event was attended by more than 50 business representatives from renowned companies and banks, and featured the following speakers: Lovre Ristevski, from the USAID Factoring Project, Ivana Stankovic, a senior financial analyst at PrimePoint Partners, Ivan Sverko, Head of Risk Management at PBZ Invest, Croatia, Darko Stefanovski, Director of Credit Insurance and Factoring Department, Macedonian Development Bank and Biljana Markovic Stamenova, Managing Partner at PrimePoint.

The presentation highlighted the benefits of reverse factoring, drawing key findings from the use of two surveys: one aimed at assessing the demand side for supply chain factoring (SCF) products, with a focus on reverse factoring, conducted among the biggest companies in Macedonia; and one assessing the supply side, conducted among Macedonian banks, representing 76.5% of the Macedonian banking sector, focusing on their interest and knowledge in SCF and reverse factoring. Both surveys also aimed to outline potential obstacles in implementing reverse factoring and how these may be overcome and minimalized. 

A series of interviews with local and regional International Financial Institutions (IFIs), and other organizations active in the field of SCF were also used to explore their potential and interest in supporting SCF within the Macedonian market. These interviews highlighted that the banking sector is in a relatively stable position, interest in the use of SCF is present and the perceived risk is low. However, the lack of a strong legal framework in Macedonia is perceived as an obstacle for further involvement on the supply side of SCF. Moreover, factoring is limited to legal entities and expansion in the field of financing for individuals could lead to further growth, as well as the forming of a factoring association. A need for education in the field of SCF is evident, especially in regards to factoring for both banking employees and potential clients that would use the products. In consideration of the high level of interest in reverse factoring, especially on the demand side, highlights that with the implementation of the recommendations provided, there remains significant prospects for the Macedonian market.

These recommendations include the need for organizing educational events related to SCF instruments, such as educating financial institutions and raising awareness of available alternative financing instruments. Moreover, organizing a pilot project for the implementation of reverse factoring, where for example several banks and companies from different sectors provide analytical data, building a portfolio of good practices, are recommended, as well as the need for capacity building and training for financial institutions, such as bank officers. Raising awareness through continuous public relations activities and campaigns, such as online events, meetings, and interviews, and the need to analyze the benefits of digitalization in market development were also among the recommendations discussed for implementation. 

It is evident that the Macedonian market has the potential for high levels of growth, especially with the use of supply chain finance instruments. Education and greater awareness of the field of SCF and its instruments within the banking and business sector are hence crucial in fostering market growth in Macedonia. 

To download the PPT of the Supply Chain Finance Survey, please click HERE.

This activity was organized as part of the USAID Factoring project implemented by Factor Trust.  

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