The African Development Bank (AfDB) has extended a $50 million facility to Fidelity Bank Plc of Nigeria for the growth of Micro Small and Medium Enterprises (MSMEs).
The $50 million facility is designed to boost Fidelity bank’s capacity to promote the growth of the micro, small and medium enterprises (MSMEs) segment of the economy.
At the agreement-signing ceremony on Tuesday in Abuja, it was revealed that the facility is totally dedicated to financing the MSMEs and a minimum of 30% of the entire financial package “will be devoted to wholly women-owned enterprises.”
AfDB Senior Director/Country Representative, Ebrima Faal, who signed on behalf of the multilateral institution, said the AfDB financial was excited with the Fidelity Bank partnership noting that “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.”
He urged Fidelity bank “to ensure that the requirement for loan disbursement is okay to enable it reach out to the target audience.”
Faal added that the US$50 million credit line will contribute to strengthening Fidelity bank’s presence in its key market segments. AfDB believes, the selection of Fidelity bank for the seven-year credit facility, with a two-year moratorium, is based on its strong presence in the MSMEs.
The Deputy Managing Director of Fidelity Bank, Mohammed Balarabe who signed for his bank, stated this line of credit granted to his bank is “particularly unique because gender has been brought in mainly because 30% of this loan is to be targeted at MSMEs that are driven by women. So, that makes it unique.”
Speaking to the issue of how Fidelity bank will select the businesses that will benefit from the 30% facility set aside for women, Balarabe said: “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.”
The MSME sector, he said, remains the most active in terms of generating employment and fostering development which is why Fidelity bank has consistent targeted that segment.
According to him: “That is why the AfDB has found us fitting to be one of the bank’s 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, which are far lower than market rates.”
The $50 million AfDB facility will enhance Fidelity Bank’s liquidity and help it meet the demand for medium-term funding to players in the MSMEs segment.
Fidelity bank had in the past received US$18 million and US$75 million lines of credit from the AfDB in 2001 and 2013, respectively.