African Alliance is introducing Supply Chain Finance (SCF) as a strategic effort to build a vital ecosystem that addresses systematic failures in the local lending landscape. The ultimate goal is to keep cash flowing, strengthen trade, and shield small suppliers from costly, high-interest financing.
This is according to General Manager Victor Langa, in an interview where he discussed the firm’s groundbreaking introduction of SCF in the country.
Eswatini Observer WhatsApp Channel
What is Supply Chain Finance and why African Alliance is doing it?
Langa explained that Supply Chain Finance is a set of financial solutions designed to improve liquidity for both buyers and suppliers in a supply chain.
“These are solutions widely used globally to support businesses, especially SMEs,” he said. “SCF has been around for more than 20 years, deployed with great success in developed countries because of its simplicity. African Alliance is doing this to build an ecosystem that supports smaller suppliers.”
He said it allows suppliers to turn approved invoices into cash so that they get paid earlier than their normal trading terms — within two to five days after the delivery of goods or services. It also supports buyers to manage their cashflows and even extend their settlement dates.
READ MORE: ERS in bid to close E4.4 billion tax gap
“The outcome is to keep cash circulating in the economy, help small suppliers avoid costly overdrafts and other finance solutions,” he added.
Some of the benefits of the ecosystem that African Alliance is building include buyer-supported programmes that unlock scale and lower costs across the whole chain. This adds liquidity, supports trade, and strengthens the country’s financial system.
How big is the opportunity?
Langa noted that SCF or factoring penetration in Africa is under one percent, which provides vast room to grow and include more SMEs in formal finance.
“Commercial banks and investment banks are failing SMEs because the credit model does not serve them,” he said. “Our involvement is simple, there are private investors and JV partners looking into Eswatini as an opportunity.”
A Typical Scenario
Before SCF, a supplier delivers to the buyer, the invoice is approved, but payment is only due in 30–180 days. To survive that gap, the supplier uses overdrafts or invoice discounting that can cost between two to five percent per month. Cash becomes tight and growth stalls.
“With SCF, once the invoice is approved, the supplier sells it on the African Alliance platform and gets paid within two to five days at a small discount (cost of capital),” Langa explained. “The buyer pays later at the normal or extended due date. The payment is treated as trade payables, not bank debt, and this cuts reliance on overdrafts, keeps cash moving, and supports business growth. SCF gets suppliers paid earlier and lets buyers pay later — so cash keeps flowing and the whole chain works better.”
Why Eswatini Needs This Now
Langa said many businesses cannot get credit fast enough, and some do not have a good credit score. Even when they do get funding, it is usually at a high cost.
“The higher cost of capital and the lack of working capital is the one key factor that destroys SMEs,” he said. “With the African Alliance SCF programme, we will keep cash moving, free up working capital, cut overdraft use, and help firms grow.”
What Success Looks Like
Langa said the African Alliance SCF programme will bring cash into the economy where suppliers will be paid early, buyers get an extended payment period, and the result is strong relationships, more stable supply chains, and inclusive economic growth.
Target Sectors
The African Alliance SCF programme will target logistics and transport, agriculture and agro-processing, manufacturing, staffing/payroll, renewable energy, as well as the ICT/telecom sectors.
Benefits of Using SCF Solutions
Key benefits for SMEs include:
– No recourse for SMEs in the event of a failed business, as the credit view is taken on the buyer.
– No security required, African Alliance does not take your house or personal guarantees like banks would.
– Cheaper finance because the recourse party (the anchor buyer) has the better credit profile.
In Conclusion
“Commercial institutions, including investment banks, are failing to serve SMEs because the credit model does not serve them,” Langa concluded. “African Alliance together with its JV partners are bringing SCF into the country to support local businesses, especially SMEs, by providing the much-needed cashflow and liquidity.”
Eswatini Observer Press Reader | View Here
