Fidelity Bank Plc is one of the financial institutions that has a long-running support for the growth and development of small businesses in Nigeria because of the recognition of critical roles of MSMEs as vital agents of economic development and transformation. The bank which has full-fledged SME banking division last week held a unique forum where it connected funders, trainers to entrepreneurs for necessary financial assistance. DANIEL OBI reports
Importance of MSME
The Small and Medium Enterprises SME sector, including micro businesses have generally been described as engine of economic growth. This has been proven in many economies such as USA, China, India, Malaysia and Singapore where the countries have leveraged the contribution of SMEs to advance their economies.
Size and definition of SME enterprises depend on magnitude of economies but the general understanding is that SMEs are businesses that have a number of employees below certain threshold and certain revenue and assets level. In Nigeria, Bank of Industry, BOI defines medium scale businesses as firms that their workforce is less than 200 but above 50 with total asset of less than N500 m but above N100m.
On the other hand, small businesses are firms with less than 50 employees but above 10 staff with total asset base of less than N100m but above N5m while micro businesses, according BOI are enterprises with less than 10 employees and total assets of less than N5m.
Globally, MSMEs are the engines of socio-economic transformation, including industrialisation, as they provide vital platform to enhance technological and entrepreneur capacity among various segments of people. MSMEs are also said to be important role-players in contributing to the transition of agriculture-led economies to industrial ones.
According to Organisation for Economic Cooperation and Development data, MSMEs around the world account for about 89 % of all companies in the world. They provide the main source of employment, accounting for about 70% of jobs and they are major contributors of value creation.
Countries that understand the potentials of MSMEs have provided policy support to enable the firms under this category to thrive. This support includes lower lending interest rate, funding through co-operatives, tax reduction, training and other necessary infrastructural support to keep the sector healthy.
In Nigeria, MSMEs employ over 80 % of the country’s total 90.5 million labour force, contribute up to 48 % to Nigeria’s GDP and constitute over 80 % of registered exporters in Nigeria, according to the Managing Director of Fidelity Bank, Nnamdi Okonkwo.
Challenges
In spite of these contributions to employment and GDP and potentials to do more, MSMEs, calculated to number over 37 million in the country, according National Bureau of Statistics, remain largely challenged by a number of problems with limited financing options and training on business structure being some of the major drawbacks they face.
Many of them that are successful even in a VUCA (Volatile, Uncertain, Complex and Ambiguous) economy but need support to grow, lack the knowledge on book keeping, how to package their proposals to attract funds and they lack adequate collaterals to secure funds from local and multilateral financial institutions.
Mission for rescue
To bridge the funding gap and other issues in the sector, Fidelity Bank, established in 1988 and known for keeping its promise to clients, last week brought about 1,500 players in MSME sector to meet and interact with different funders.
The programme entitled ‘Entrepreneurship meets capital’ was a relief to many of the operators in the MSME as they got answers to some knotty questions. The funders that met with the entrepreneurs included representatives of CBN, BOI, and Development Bank of Nigeria, DBN.
Among the panelists included representatives of an investment firm, African Capital Alliance and Lagos Business School. In a relax mood and friendly interactions, the panellists were able to explain various funding options available, processes, necessary trainings and how the entrepreneurs can access funds from the financial institutions.
Fidelity Bank did not stop there; it also brought successful players in the MSME sector, including Founder /CEO of Beloxxi Industries, Co-founders of Max.ng and Wilsons Juice respectively and founder of Skretting to tell their success stories as encouragement to the MSME operators.
On the rationale for the conference, considered vital to MSMEs, Okonkwo said Fidelity Bank has done much for MSMEs and will continue on this trend but the bank realised that many MSMEs still find it difficult to obtain funds. “What we have done is to bring funders and those who need the fund for closer interactions on the way forward.
“This is the beginning of a series of programmes that will run across the nation. We will do this every half year until we go round the nation and we will start again”.
He said Fidelity Bank had partnered with BOI and DBN to disburse funds to MSMES. “About N6 billion of BOI has been disbursed by Fidelity Bank. Fidelity Bank has also partnered with Development Bank of Nigeria to the extent the Fidelity has disbursedN9.6 billion of DBN funds. All of these are at single digit interest rate.
“Even the African Development Bank understands what Fidelity is doing with SMEs in Nigeria and that is why the bank granted us $50 million which we received two weeks ago for SMEs. This comes with a proviso that 30 % of the funds should be for women entrepreneurs.
“Some women entrepreneurs attest that Fidelity Bank has supported them.
In this industry, some of our colleagues have ‘owned certain segments’. Some concentrate on fashion, some on food and so on but at Fidelity we are inclusive. That is why we concentrate on SME generally. We are not focused on any specific segment because SMEs need that voice that is all inclusive”, Okonkwo said.
To further encourage MSMEs, the bank recently threw open an entry for grant to MSMEs. A total of 2,500 operators applied. They were taken through rigorous process. This number was scaled down to 50 entries that went through intensive training at PWC experience centre. From the 50 entries, the first winner was given a grant of N2 m and the runner up N1m.
While commending Fidelity Bank on the re-engineered initiative, the Deputy Governor of Lagos State, Obafemi Hamzat said the critical importance of MSME sector warrants that much more attention should be paid by all stakeholders.
Hamzat said fund is essential to any business but most especially to SMEs because most of the time MSMEs don’t have collateral that the banking industry requires. “They also cannot survive on the high percentage of interest that most other businesses do. It is therefore important that programmes like this that assist entrepreneurs to access capital is more relevant. This programme also highlights the fact that entrepreneurs need to have a clearly defined path in order to succeed and allows us to understand that there is no short cut to successes. They just have to do the right thing”, he said.
Endorsing the programme, the chairman of Fidelity Bank, Ernest Ebi said the board is solidly behind the bank’s management in this programme. “From the catalogue of activities of the bank in SME, you will agree that Fidelity is playing a leading role in SME and retail banking space”.
Underscoring the importance of SME, Ebi further said the issue of SME is topical in Nigeria’s economy. “In Fidelity we are giving SME every attention because of its importance to economic growth. If you are talking about stimulating the economy, the nation cannot do without SME”, he said.
Encouraging the MSMEs, the CEO of Beloxxi Industries Limited Obi Ezeude advised them to stay with their passion in business instead of jumping from one business to another.
He said finance is good for business but if the operators don’t know how and where to deploy the fund when it comes, the business will fail. While advising the small business to be dedicated, he told them not to cut corners but deliver value products, be courageous in approaching government agencies and departments for necessary assistance.
The Fidelity Bank service to MSME is worthy of commendation as it will enable entrepreneurs to access funds necessary for their growth. At the end, Nigerian economy is the huge beneficiary.
