The African Development Bank (AfDB) and Fidelity Bank Plc have signed a $50 million financing agreement. The purpose of this agreement is to fund and promote the growth of Micro, Small and Medium Enterprises in Nigeria.
The financing agreement was signed by the Senior Director/Country Representative at AfDB, Ebrima Faal and the Deputy Managing Director of Fidelity Bank, Mohammed Balarabe on Tuesday in Abuja.
The funding which is dedicated to financing MSMEs was approved by the board of the African Development Bank on October 10, 2018. According to AfDB, at least 30 percent of the fund must go into promoting businesses that were owned and run by female entrepreneurs.
Ebrima Faal, who signed on behalf of AfDB, described Fidelity Bank as a niche player in the MSME sector. According to him, the $50m funding will strengthen the bank’s performance in advancing credit to small businesses.
Faal said “We are excited about this partnership. The lines of credit tended to be general support for SMEs. This one has a 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 requirements for loan disbursement are okay to enable it to reach out to the target audience.” Faal added.
Fidelity Bank’s Deputy Managing Director, Mohammed Balarabe, who signed for his bank, said that businesses at the lower level had the capacity to catalyse the development of the economy. He added that the funding was unique because of the gender specification.
Balarabe said “The MSME sector remains the most active in terms of generating employment and fostering development. This is why Fidelity Bank has consistently targeted that segment”.
“That is why the AfDB has found us fitting to be one of the banks that will be benefiting for onward lending to MSMEs. When it is absolutely necessary, Fidelity extends a line of credit to such businesses at cheap rates. Our rates are far lower than market rates.”
The AfDB believes that MSMEs account for 30 percent of Fidelity Bank’s loan portfolio. Hence, choosing Fidelity Bank for the seven-year credit facility, with a two-year moratorium, is based on its strong presence in the MSMEs.
Fidelity Bank’s credit management and strong track record with AfDB were also taken into account. This is considering the fact that the bank had previously received $18 million and $75 million lines of credit from the development finance institution in 2001 and 2013, respectively.