After experiencing an unprecedented drop in business volumes and values in 2009, the South African debtor finance industry appears to be back on track, and is showing signs of resuming the steady growth trend it enjoyed between 1996 and 2008.

According to David Cory, Head of Debtor Management at Nedbank, the reason for the sudden drop in business during 2009 is not hard to see. He points out that, as funders of invoices, debtor finance companies are a good barometer of the general state of any country's economy - which makes the decline in the number of invoices 'for sale' to debtor financers understandable given the overall decrease in sales activity in the face of the worldwide economic recession last year.

But Cory says that the converse is also true regarding the relationship between the debtor finance market and the overall economy. Which means that the improvement in invoice volumes seen by Nedbank during the first half of 2010 augurs well for the future of the South African economy as a whole for the rest of the year, and beyond.

'The South African economic cycle generally sees most of the purchasing activity, and invoice financing, occurring from the middle of each year and continuing through to December,' he explains, 'but 2010 appears to have bucked this trend slightly, with increased invoice volumes becoming evident much earlier than usual.'

And while he admits that some of the early improvement seen in South Africa's debtor finance industry can certainly be attributed to the hosting of the 2010 soccer showpiece, Cory is confident that this is not the sole reason for the uptick.

'If debtor financing was the only area of the local financial industry showing improvement, an argument could be made for the World Cup being the primary driver of such improvement,' he explains, 'but when you factor in the simultaneous improvement currently taking place in the South African structured finance industry, this combination of factors would seem to point to a more sustainable strengthening of the country's underlying economic fundamentals.'

Cory also points to the broad base across which invoice financing activity is improving as a further indicator of the potential sustainability of the trend. 'Nedbank enjoys around 30% of the debtor financing market in South Africa,' he says, 'and our books show a steady rise in invoicing activity across the full spectrum of businesses in this country, particularly within the clearing and forwarding, manufacturing, food, and vehicle industries.'

The only economic sector that doesn't appear to be enjoying an increase in sales activity, according to Cory, is the luxury goods industry, but he is of the opinion that this is entirely understandable given the general nervousness of high-end consumers on the back of the financial uncertainty of the past 18 months.