A business that does not grow from inception dies eventually, mostly because of managerial incapability or lack of funds. In order to avoid such occurrence, Fidelity Bank plc, which feels that it is not just running business to make profits, has been consistent in its support to Small and Medium Enterprises (SMEs).
The most striking of all its support is the disbursement of N80 million at 9 percent interest rate to first beneficiaries of the N220 billion Micro Small and Medium Enterprise (MSME) development fund set up by the Central Bank of Nigeria (CBN) in 2013.
Access to finance has been identified as the most critical challenge to SMEs development in Nigeria. There are about 17 million registered SMEs in Nigeria today. In most countries, SMEs account for up to 70 percent or more of all businesses. In developing countries like Nigeria, SMEs suffer from lack of access to finance. First because they do not have tangible collateral to offer, in more developed part of the world, “you have a credit rating system, social identification system; we are gradually getting to that with the establishment of organisations like Nigeria Inter-Bank Settlement System (NIBSS),” Nnamdi Okonkwo, managing director, Fidelity Bank said.
Consequently, in recognition of this the CBN launched the N220 MSMED fund on August 15, 2013, to provide long-term affordable funding for the sub-sector. Sixty percent of the fund has been earmarked for providing financial services to women to cater for their peculiar financial exclusion circumstance.
Also, the ratio of 50:50 of the fund is for on-lending to micro enterprises and SMEs, respectively, which is to be disbursed through deposit money banks.
Last week, at the official disbursement of the fund at the Fidelity Bank headquarter in Lagos, the beneficiaries were excited that they could now access loan at 9 percent compared with 25 percent they were accessing from banks.
The beneficiaries include Peter Ugwuneke, managing director, Petters & Daniels Industries Limited, Onitsha; Anthony Anyabueke, managing director, Pedro Plastics Nigeria Limited, Onitsha, and Uzochukwu Nwadi, from Mushin, Lagos.
“With this, we are going to access more loan for business expansion which will trickle down to the creation of more job for the unemployed youth,” they said.
Okonkwo said at the occasion: “Today, we are here to mark a milestone in something very important to the country and to Fidelity Bank, which is the disbursement of a specialised catalytic loan created for MSMEs by the CBN.”
Okonkwo was concerned that in developing countries, SMEs suffer for lack of funds due to no tangible collateral and credit system.
There are 17 million registered SMEs in the country, and in recognition of the role they play, the CBN set up the MSME development fund for lending with focus on people that play in agriculture, renewable energy, among others, while 60 percent of the fund is set aside for women entrepreneurs.
Meanwhile, the bank has set aside N600 million facility for 75,000 local manufacturers in Aba cluster, Abia State. Apart from the Aba cluster, the bank is also supporting MSMEs in other clusters such as Mandela cluster, Lagos, Awada cluster, Onitsha, Amanbra State, among others.
Also speaking at the occasion, Femi Egbesola, president, Association of Small Business Owners (ABSON), admitted that since the launch of the N220 billion MSMED fund, he had not seen any beneficiary other than the three supported by Fidelity Bank.
“We have been hearing the information in the news that CBN is disbursing funds to SMEs and we have had series of meetings with Fidelity Bank last year, and last week I told press men that I am yet to see beneficiaries. Today, I have not only seen one but three,” Egbesola said.
He promised to ensure that 5,000 of the members of the Association key into the initiative, adding that there were already more than 200 applicants for the fund, saying “this is a milestone in the life of SMEs. We appreciate efforts put up by Fidelity Bank to make sure that SMEs fundings are well structured. The bank is different in its approach to SME support.”
Ugwuneke, who has been banking with the bank since inception, now has 20 machines he uses in his packaging business after being supported by the bank.
HOPE MOSES-ASHIKE
