The Alliance for Economic Research and Ethics has called on President Bola Tinubu to withhold assent to the recently passed Factoring, Assignments and Receivables Financing Bill, 2026.
In a statement on Thursday, June 11, the group warned that the legislation could create regulatory confusion, increase compliance costs and complicate financing arrangements already covered by existing laws.
It argued that the bill, which was passed by the Senate on June 10 and promoted as a tool to unlock funding for small businesses, is unnecessary because Nigeria already has legal frameworks governing receivables financing, assignments and related transactions.
“The Factoring, Assignments and Receivables Financing Bill, 2026, is a textbook example of the former. It seeks to legislate what is already legal, to regulate what is already regulated, and to modernise what is already modern,” the group said.
“We urge President Bola Tinubu to withhold assent from this bill and instead direct the relevant ministries and agencies to implement the practical, non-legislative solutions outlined above.”
It described the new bill passed as “a classic example of legislative overreach into domains already amply regulated by existing laws, judicial precedents, and centuries-old commercial practices.”
“It is, in essence, a solution desperately searching for a problem,” the Alliance said.
Pinnacle Daily reports that the bill seeks to establish a legal framework for receivables financing, particularly factoring, a financing arrangement that allows businesses to sell unpaid invoices to financiers in exchange for immediate cash.
While acknowledging that Nigerian small businesses face significant financing challenges, the Alliance argued that the problem is not the absence of a factoring law but deeper structural issues within the economy.
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“The problem is not the absence of a ‘factoring law,’” the group stated, pointing instead to high credit risk, weak contract enforcement, macroeconomic instability and low awareness of factoring among small businesses.
According to the group, Nigerian law already provides for assignments through contract law, while the Companies and Allied Matters Act (CAMA) 2020 contains provisions covering charges over book debts and receivables.
It also noted that the Secured Transactions in Movable Assets Act, 2017, established the National Collateral Registry under the Central Bank of Nigeria (CBN) and already provides a framework for registering security interests in receivables.
The Alliance warned that creating a separate factoring regime could introduce unintended consequences for businesses and financial institutions.
Among its key concerns is the possibility of regulatory overlap between the proposed law, the Secured Transactions in Movable Assets Act and the CAMA.
“The bill risks creating a dual registration system, one under the proposed factoring framework and another under the Secured Transactions in Movable Assets Act and CAMA,” the group said.
“Which registry takes precedence? Which authority governs? The bill is silent on these critical questions, inviting litigation and uncertainty rather than resolving them.”
The group also cautioned that the legislation could raise costs for businesses, particularly small and medium-sized enterprises already grappling with multiple taxes, levies and compliance requirements.
“Every new statute introduces compliance costs,” it stated. “For MSMEs already burdened by multiple taxes, regulatory levies, and compliance costs, this is an additional straitjacket, not a liberation.”
The Alliance further argued that the bill could disrupt existing financing arrangements such as invoice discounting, forfaiting and supply chain financing, which banks and financial institutions already operate under current legal frameworks.
It also challenged claims that the legislation would align Nigeria with international best practices, noting that factoring markets in countries such as the United Kingdom and the United States operate largely within broader commercial and secured transactions laws rather than through standalone factoring statutes.
According to the group, Nigeria’s financing challenges require institutional and market reforms rather than additional legislation.
“A law cannot legislate trust, competence, or market confidence,” the analysis stated.
Instead of creating a new legal regime, the Alliance urged policymakers to strengthen the Secured Transactions in Movable Assets Act, improve the National Collateral Registry, expand credit information systems, accelerate judicial reforms and provide clearer regulatory guidance through the CBN.
It said these measures would do more to improve access to finance for small businesses than introducing a new statute.
Calling on the President to reject the bill, the group also urged the lawmakers to focus on practical reforms that address the underlying barriers to MSME financing.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X