Supporting Businesses, Boosting Economic Growth

Rice farming 

Some of the greatest success stories emanate from the most improbable of circumstances, and UMZA International Farms is perhaps one such examples. Funded by Fidelity Bank Plc, the Kano based rice mill was conceived out of a former public servants’ fervent desire to make a positive change in society.

Over the years, the agribusiness company has evolved into a bustling entity that currently plays fundamental roles in the country’s quest to attain self-sufficiency in rice production. Apart from creating job opportunities for young Nigerians, UMZA Farms has its sights set on becoming a major rice exporter.

This is a positive development as the non-oil sector has huge potential of earning Nigeria the much needed Foreign Exchange (FX), thus assisting Nigeria reduce its over-dependence on oil for national income. “Our history is in complete without Fidelity Bank, which supported us since inception in 2010.

“With the help of the Bank, we have grown the business extensively. We started the business with a capital of N500 million provided by the Bank and today, our turnover is up to N10 billon,” said the Chairman of UMZA International Farm, Mohammed Abubakar Maifata in an interview recently.

The endorsement and sentiments expressed by Maifata further underscores the importance of banks in any economy. Banks’ role of mobilizing savings and channeling requisite capital to productive investments and businesses. This redirection of capital to where it is most required is very critical for developing economies. This role is being played very actively since inception.

MSME Focus

It is well documented that no nation can expect to grow in a sustainable manner if Micro Small and Medium Enterprises (MSMEs) are denied access to capital or are permitted access at prohibitive rates. Nigeria’s double-digit interest rates at 14 percent remains a disincentive to MSMEs and banks.

To address this funding constraint, Fidelity Bank Plc, over the years has taking advantage of the myriad of intervention scheme, typically offered at single digits by government institutions such as the Central Bank of Nigeria (CBN) to enhance MSMEs productivity and competitiveness in the global marketplace.

Whilst Fidelity Bank is actively funding projects in Power, Oil and Gas, Telecommunications and other sectors, one area that has benefitted seriously from the bank is the Micro Small Medium Enterprises (MSMEs) sector. Total credit to MSMEs in diverse sectors of the Nigerian economy is well over N52 billion. 

Agribusiness

President Muhammadu Buhari in November, 2015 launched the CBN Anchor Borrowers Programme (ABP), which provides loans at single digit interest rate to farmers. This laudable project seeks to create a linkage between anchor companies actively involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities.

Since inception, the project has disbursed about N45.5 billion, released through 13 Participating Financial Institutions to about 218, 000 farmers cultivating nine commodities across 30 states. As one of the participating Banks in CBN’s ABP, Fidelity Bank has continued to identify and fund bankable project in Nigeria’s burgeoning agriculture sector. 

Rice-specific injected funds of N3.5 million has increased production of the grain from 1.5 million to 4.5 million. In the Nigeria Agriculture Sector report released by the Bureau of Statistics, 29 of 36 states of the country are currently engaged in the cultivation of rice.

The total cultivated areas were estimated at 2,432 thousand hectares, producing about 4,472 metric tonnes per yield. Cumulatively, the fund disbursed by Fidelity Bank has helped Nigeria to save at least N216 billion from rice imports alone. Furthermore, the massive production has also created a new breed of millionaires and lifted many out of poverty.

In addition, Fidelity Bank has disbursed the sum of N2.5 billion out of CBN’s N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF). CBN MSMEDF is a single digit interest rate of nine percent (all-in) facility that can be accessed by Nigerian-owned businesses.

Overall, as proof of its commitment, the Bank’s SME customer footprint as at date is in excess of 600, 000 customers across the geographical regions of the country. The bank currently boasts of a 50 percent SME loan to deposit ratio, which is an indication that the lender remains highly committed to supporting MSMEs in Nigeria, particularly in the area of access to finance.

Strategy

The Bank’s long-running support for the growth of small businesses in Nigeria stems from the recognition that MSMEs are critical agents of economic development and transformation. Providing valuable insights into Fidelity Bank’s approach to supporting MSMEs in the country, the Bank’s Chief Executive Officer, Nnamdi Okonkwo said that the lender set up a full-fledged SME Banking Division to provide one-on-one business advisory to its customers.

Appropriately dubbed Managed SME, the Division has been mandated to build a new crop of entrepreneurs that will birth and power the next generation of conglomerates in Nigeria. In fulfilling this mandate, the Division has developed a suite of tailored low-cost SME banking offerings that has all-round capacity building as its core and straddles the following: Tailored Business Management Capacity Building, Tailored Financing, Market Access, MSME-focused Liability Products and Empowerment Programmes. 

Today, the Bank is deepening knowledge sharing entrepreneurial community

as over 3 million listeners acquire requisite skills to manage their respective businesses on its weekly SME Forum aired on Inspiration FM. “We want to guide aspiring entrepreneurs and business owners on how to run successful businesses. Our goal is to build requisite capacity in order to create the Aliko Dangotes’ of tomorrow”, the Fidelity helmsman stated in a recent interview.

Through its free, dedicated business advisory service offerings and other capacity building initiatives such as SME focused conferences held across the country, the bank has assisted MSMEs raise their level of competitiveness in the global marketplace. On his own part, Fidelity’s Divisional Head, Managed SMEs, Trade Missions & Multilateral Agencies, Osaigbovo Omorogbe said the Bank was really passionate about building Nigerian entrepreneurs.

“We have committed ample human and material resources to run the products and platforms in order to drive this objective. “Its short-term goal is to become the most innovative SME banking business in Africa in the next two years, whilst helping our clients build sustainable businesses of the future. Its long-term goal, as alluded to, earlier on, is to see some of these MSMEs transform into major corporations in the next few years”, he explained.

As part of efforts to attain these objectives, the Bank has restated its support of government’s drive to attain food sufficiency and economic diversification through some of its ground-breaking capacity building and empowerment initiatives for Nigerian MSMEs such as the Dry Season Rice and Wheat Farming Programme in Kebbi State; Youth Enterprise Support Programme (YES-Programme) of the Bank of Industry (BOI); and CBN’s Youth Innovative Entrepreneurship Development Programme (YIEDP).

In recognition of its deep MSME focus and contributions to the development of MSMEs, the CBN recently appointed Fidelity Bank as one of its partner-banks on YIEDP, to work with it, in the pilot phase of the programme and disburse funds to beneficiaries under the scheme.

Export Management Programme (EMP)

In a move hailed by several stakeholders as highly exemplary, Fidelity Bank Plc has devised a strategy to equip customers and non-customers alike with the required skills set to understand the intricacies of exporting the various commodities and minerals which the country possesses in great abundance.

This, the Bank is doing through the Export Leadership Institute (ELI), which was launched in collaboration with Lagos Business School (LBS) and Nigeria Export Promotion Council (NEPC).

Launched in August 2016, the Export Management Program (EMP) is designed specifically to provide impactful, world-class training needed to improve the competitiveness of Nigerian enterprises, particular export-oriented businesses and the associated value players in the global market.

But more importantly, the program seeks to prevent the pitfalls that were prevalent in the past when huge sums of money were lost owing to lack of capacity and knowledge on the part of exporters. Five EMP series have since been held. Over 100 participants have benefited from the knowledge acquired.

Speaking about his experience, Oyewusi Tajudeen of De Epicurean Limited, said: “The program is knowledge-packed, an eye-opener to the essentials. It is totally worth it. I am in the process of achieving my exporting dreams.” For Ndubuisi Chijioke of Jimcol Resources Nigeria Limited, the program was highly encouraging to his aspiration to explore export business opportunities in Nigeria.

“The program has been very informative and encouraging to my aspiration to explore export business opportunities,” Chijioke said. For Amina Ibrahim of Moonstar Nigeria Limited each session proved more informative and interesting. “Every session and every day was better than the last. I highly recommend the program for anyone wanting to venture into exports,” she declared.   

Conclusion

Beyond the numbers and figures that gives credence to the Bank’s exploits in MSME development, the testimonies as exemplified by UMZA and EMP participants provides motivation for the Bank not to rest on its oars. This is because the Bank is convinced that MSMEs are the panacea to the country’s economic woes.

This article was published in a Special Report entitled " Financing The Economy" on The Guardian Newspapers.