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Fidelity Bank Chatting A New Course For Nigeria’s Agriculture Sector

Nigeria Student Forum / General Discussion / Fidelity Bank Chatting A New Course For Nigeria’s Agriculture Sector

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Sani Ibrahim
Abubakar Tafawa Balewa,University
Agricultural economics and extension
100Level, Nigeria.
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One thing about Fidelity Bank is its operations towards
boosting Nigeria’s agriculture sector an area where the
present government is championing its economic
diversification policy. DAVID AGBA reports
Managing Director/Chief Executive Officer (MD/CEO) of
Fidelity Bank Plc, Nnamdi Okonkwo,
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.
Market-reflective exchange rate
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.
Strong management team
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.
New strategies for growth
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 attracted more than 1 million new
customers over a short period.
Digital banking
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.
Building strategies around SME Funding
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.
Major Forex earner
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.
Funding constraints, infrastructural bottlenecks
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.
Agribusiness holds the key to sustainable economic
development
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.
Fidelity 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 $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.
Economic Recovery and Growth Plan 2017-2020
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.

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