AfDB, Fidelity Bank Sign $50m Financing Agreement for MSMEs
The African Development Bank (AfDB) and Fidelity Bank Plc Tuesday signed a $50 million financing agreement, designed to boost the Nigerian bank’s impetus in promoting the growth of the micro, small and medium enterprises (MSMEs) segment of the economy.
The agreement-signing ceremony in Abuja Tuesday was a formal consummation of the AfDB Board’s October 10, 2018 approval of the facility, which is totally dedicated to financing the MSMEs.
A minimum of 30 per cent of the entire facility will be devoted to wholly women-owned enterprises.
In his remarks at the ceremony in Abuja, the AfDB Senior Director/Country Representative, Ebrima Faao, who signed on behalf of his bank, said the pan-African financial institution was excited with the Fidelity Bank partnership.
“We are excited about this partnership. The lines of credit tended to be general support for SMEs. This one has strong emphasis on gender. It can be considered as a vanguard credit for us.
Our main focus is to reach out to SMEs to give the much needed impact. We count on you to ensure that the requirement for loan disbursement is okay to enable it reach out to the target audience,” Faao said.
He had previously described Fidelity Bank as a niche player, focused on the SME space, adding that the $50 million credit line will contribute to strengthening its presence in its key market segments.
The Deputy Managing Director of Fidelity Bank, Mohammed Balarabe, who also signed for his bank, stated that this line of credit granted to his bank was principally targeted at the MSMEs.
In an interview with THISDAY, he said: “It’s particularly unique because gender has been brought in mainly because 30 per cent of this loan is to be targeted at MSMEs that are driven by women.
“So, that makes it unique. We are very proud to be partners,” he added.
On the criteria for determining the businesses of the 30 per cent of the loan designed for women, Balarabe said: “Obviously, they have to be run by women. Most importantly, it is aimed at businesses at that low level so that they can catalyse development in the country.”
He noted that the MSMEs sector remains the most active in terms of generating employment and fostering development.
Acccording to him, these accounted for his bank’s consistent targeting of that segment.
“That’s why the AfDB has found us fitting to be one of the banks that will be benefiting for onward lending to MSMEs.
“Fidelity is one of the leading lenders to the segment, but for us, it’s not all about lending. Our engagement with MSMEs is more. We take time to find the needs of such businesses, and work with them on how to run the businesses,” he stated.
He disclosed that when it is absolutely necessary, Fidelity extends a line of credit to such businesses at cheap rates, which are far lower than market rates.
The $50 million AfDB facility is aimed at enhancing Fidelity Bank’s liquidity and help meet the demand for medium-term funding to players in the MSMEs segment.
The MSMEs, AfDB believes, account for 30 per cent of Fidelity Bank’s loan portfolio. The selection of the Nigerian bank for the seven-year credit facility, with a two-year moratorium, is based on its strong presence in the MSMEs.
It is also in recognition of the bank’s credit management and strong track record with AfDB.
It had previously received $18 million and $75 million lines of credit from the development finance institution in 2001 and 2013, respectively.
As reported from thisdaylive