Fidelity is not only aiming to be a tier 1 bank by 2022, it has been rated B- by Fitch and S&P Global Ratings, boosting a total asset base of over $4.4 billion, 4.1 million bank accounts, 1.5 million mobile customers. One striking aspect of the bank’s operations is working towards boosting the country’s agriculture sector an area government’s economic diversification policy is looking towards to, writes Yemisi Izuora.
Fidelity bank has ranked amongst the top 10 banks in Nigeria, albeit with a market share of about 5 per cent according to available data.
It is also reputed to be one of six Nigerian banks that conducts an interim audit of its financials and was the first to adopt a market-reflective exchange rate for preparing them.
The bank was also recently rated the fourth best bank in the retail segment by KPMG, a consultancy, in its 2017 Banking Industry Satisfaction Survey (BISS).
The bank already maintains high standards for some regulatory metrics: its capital adequacy ratio was unchanged at 16 per cent in its most recent reporting, above the regulatory minimum requirement of 15 per cent.
The bank has attributed these successes to a strong management team and well-motivated employees.
Fidelity bank is building its expansion initiatives toward tier 1 ambitions through an organic strategy, but would also consider acquisition opportunities if they align with the bank’s strategy.
The new strategies for growth are hinged on three things: digitisation, a focus on core customers and small and medium-sized enterprises (SMEs).
Digitisation, especially via its “Fidelity Mobile” platform, has
In fact, digital banking now accounts for over 25 per cent of the bank’s fee income. The bank is also counting on its digital banking platform to drive down the cost-to-income ratio to 50 per cent, 72.7 per cent in Q1 2018, by ensuring at least 90 per cent of total transaction volumes are via digital channels.
The bank is consistently enhancing its robust electronic banking processes and products thereby deepening hold on the retail and commercial markets, small and medium scale enterprises and niche corporate clientele.
For its SME clients, the bank is building strategies around SME Funding Fair where it aims to fund as many SMEs as possible to the tune of N500 million.
The fair is being considered an an annual event, as Fidelity aims to be the “go-to bank for SMEs”. Fidelity also sees growth potential in the fast moving consumer goods, manufacturing, retail and agriculture sectors and had set a 2018 loan growth target for these sectors of 10 percent.
Commitment To Agriculture
Fidelity Bank Plc., one of the country’s leading financial institutions has an answer to one of the key challenges Inhibiting agricultural development, Funding.
It has therefore, pledged to support ongoing efforts aimed at strengthening Nigeria’s agricultural value-chain by providing innovative funding schemes and technical advisory services to Micro Small and Medium Scale Enterprises (MSMEs) and Commercial agribusiness projects.
The banks decision to move in this direction was driven essentially by the sector’s huge potential to become a major Foreign Exchange (FX) earner and help boost the country’s revenue base.
Nigeria is blessed with over 84 million hectares of arable land suitable for crop cultivation and livestock production. In fact, only 40 per cent of that land mass is cultivated while 1 per cent is irrigated. Nigeria has a youthful population yet to be sufficiently engaged, and these are potentials the bank would like to explore.
With a population of 180 million people, the country has one of the largest economy in Africa with great opportunities for its agricultural, manufacturing and services activities.
The bank has however identified funding constraints, infrastructural bottlenecks, security, food storage and processing facilities, poor research & development, and unfriendly government regulations as some of the critical challenges hindering the development of Nigeria’s agricultural sector.
With well conceptualised intervention, Fidelity bank appear well-positioned to assist investors navigate Nigeria’s evolving economy in relation to business matchmaking, facilitating links to market and liaison with regulatory agencies.
While admitting that agribusiness holds the key to sustainable economic development, the financial institution has moved well beyond assisting businesses involved in food production, processing, supply and marketing activities to focusing on more sophisticated and value-creating areas such as AgriFinance, AgriEducation, AgriHealth, AgriEnergy, amongst others.
Partnership With USAID To Boost Rice Production
In 2009, Fidelity Bank Plc, tidied up an arrangement with the United States Agency for International Development (USAID) and Olam Nigeria Limited to boost the production volume of Sesame seed and rice in Nigeria for export.
The partnership, one of several initiatives the bank has embarked upon to become a leader in Agric-financing in Nigeria will galvanize farmers into large scale farming in Katsina, Jigawa, Benue, Anambra and Ebonyi States.
The first phase of the partnership will see the farmers from these five states benefit from prudent distribution of the sum of N500m under the agricultural credit scheme to ensure an increase in the production of rice and sesame seed in the planting season.
The most interesting thing about this project is not necessarily the volume of funds that will be deployed into agriculture this season but it is that the project is actually an Out Grower Scheme.
An Out Grower Scheme is a contractual arrangement that ensures that a farmer produce is solely meant for an industrial end-user who is on standby to buy them.
Under this arrangement, the farmer works with greater certainty and assurance that there is a waiting demand for his produce at a profit while the industrial user is more certain of a steady supply of raw materials.
Fidelit bank has also been the prime mover in the efforts by Nasarawa State to mechanize farming in the state, injecting massive funding to boost the state’s tractor acquisition scheme.
The Agri Nigeria Scheme
Fidelity bank had made a bold entry into agric-financing when it rolled out four remarkable financial products under its Agri Nigeria Initiative aimed at creating a whole new generation of agri-business entrepreneurs.
The Products under the Fidelity Agri Nigeria initiative are the Trust Fund Facility which funds inputs needs of companies and high net-worth individuals engaged in agric businesses as specified by the Central bank of Nigeria.
The Self-Help Facility component of the Initiative seeks to fund inputs needs of individuals and informal groups engaged in Central Bank of Nigeria, CBN allowable agric businesses.
The Co-operative Union Facility element of the Initiative is aimed at providing the funding needs of formal cooperatives engaged in CBN allowable agric business.
Equally, the Agric Lease Facility, is to support the acquisition of fixed assets required for agric business.The products are characterized by low interest rates, flexible repayment plan and other incentives
Fidelity Bank And AfDB Deal
In 2018, the African Development Bank, AfDB, approved a US$50 million line of credit to Nigeria’s Fidelity bank Plc to support small and medium sized, and women-owned enterprises in selected transformative sectors, including close to a hundred SMEs in manufacturing, health and education.
Approved by the Bank’s Board on 10 October 2018, the facility is fully dedicated to financing micro, small and medium sized enterprises (MSMEs), with a minimum of 30 percent going to women-owned enterprises. The loan will enhance Fidelity Bank’s liquidity and help meet the demand for medium-term funding to players in the target sectors, contributing to improved quality of lives, job and wealth creation and tax-revenue generation.
The facility complements the federal government’s long-term development strategy, as espoused in its Vision 20:2020 agenda.
Aligned with Nigeria’s Economic Recovery and Growth Plan 2017-2020 (ERPG), the funding will ultimately boost enterprise competitiveness and expand Nigeria’s economic base. The ERPG seeks to stimulate Nigeria’s economic growth, catalyse macroeconomic stability, foster diversification of the economy, and enhance social inclusion as well as governance.
The SMEs account for 30 per cent of Fidelity Bank’s loan portfolio.
The selection of the tier 2 Nigerian bank for this seven-year credit facility (with a grace period of two years) is based on its strong niche presence in the SME and mid-sized corporates space.
It is also in recognition of the bank’s credit management and strong track record with the African Development Bank. The bank has previously received US$18 million and US$75 million lines of credit from the development finance institution in 2001 and 2013, respectively.
Fidelity Bank is a niche player, focused on the SME space and this US$50 million credit line will contribute to strengthening its presence in its key market segments, said Ebrima Faal, Senior Director, Nigeria Country Office at the African Development Bank. “The Nigerian financial institution also continues to meet its ongoing credit obligations under the terms of previous support received from the African Development Bank.”
The line of credit to the Nigerian financial institution is consistent with the Bank’s Ten-Year Strategy (2013–2022). It also aligns with two of its High 5 priorities – Industrialize Africa and Improve the quality of life for the people of Africa.
Founded in 1987, Fidelity Bank Plc has grown from its marginal position into a stable banking institution.
Currently the 10th largest commercial bank in Nigeria by asset size, it was listed on the Nigerian Stock Exchange in May 2005.
It has a broad client base of about four million customers nationwide, served from a network of over 240 branches and business offices, supported by alternative service delivery channels like ATMs, mobile and electronic banking, and agency banking channels.
Following its renewed digital banking and retail drive, Fidelity Bank was ranked 4th best bank in Nigeria in the retail market segment in the KPMG Banking Industry Customer Satisfaction Survey (BICSS) in 2017.
Addressing Challenges Of Women Entrepreneurs
In response to major challenges facing women entrepreneurs, in 2019, Fidelity bank Plc, graciously set aside $30 million out of the $50 million it signed with African Development Bank (AfDB), for Nigerian women entrepreneurs.
Fidelity bank said it will continue to ensure gender balance.
The bank is very strong in Small and Medium Enterprises (SMEs) and has disbursed over N3 billion accessed from the N220 billion MSME development fund, to the sub-sector.
The fund is an intervention by the Central Bank of Nigeria (CBN).
Oriental News Nigeria reports that the bank is a heavy player in various single digit onlending facilities, including the agric intervention funds among others, and the Non-Performing Loans (NPL) ratio in this regard has been very negligible.
It is also a strong partner to Bank of Industry (BOI) to support the real sector, and manufacturing in different kinds of production and not just dealing with AfDB alone.