Fidelity Bank, SMEDAN sign MoU to bridge $158.1bn SME financing gap

Fidelity Bank Plc and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) have signed a Memorandum of Understanding (MoU) to bridge SME financing gap in Nigeria.

The MoU, according to both parties, is meant to help small businesses access much-needed capital and capacity development initiatives.

Nigeria’s financing gap for MSMEs is estimated at $158.1 billion, according to the World Bank.

Nneka Onyeali-Ikpe, managing director/CEO, Fidelity Bank, said at the MoU signing ceremony in Lagos that the partnership with SMEDAN reinforces the fact that the bank is a leading supporter of SMEs in Nigeria.

“As a commercial bank, it reinforces the fact that Fidelity Bank is an essentially friendly bank,” said Onyeali-Ikpe, who was represented by Ken Opara, the bank’s executive director, Lagos and South-West.

She said the bank has created a lot of structures to support SMEs and has a capacity training programme for SMEs, a funding scheme, and access to the market.

Onyeali-Ikpe noted that the bank sees a lot of value in collaborating with SMEDAN, stressing that small business owners often think that their problem is mostly financing.

“But we’ve discovered that they need to put the right structure, knowledge and they need to understand their businesses. And so we signed the MoU to build up capacity for SMEs and collaboration in some other key areas they need to help them eliminate the areas that they have been having issues,” she said. Olawale Fasanya, director-general/CEO, SMEDAN, stated that the agency is seeking partnerships with financial institutions to close the $158.1 billion financing gap in the MSME sector. “While banks are supposed to spearhead a funding revolution for businesses especially the MSMEs, the general trend is that most commercial banks and even development banks shy away from funding enterprises captured within the MSME space,” Fasanya said. “Nevertheless, we are aware that some few banks have come up with innovative solutions to provide tailored financing windows to viable enterprises within the MSME space. Our findings have, however, revealed that Fidelity Bank loan portfolio to MSMEs is one of the biggest from the commercial banks,” he said. The SMEDAN chief said the agency was aware of the risk component, hence its proposal/offer to provide BDS to some of the MSMEs that have benefitted from Fidelity Bank products across the country. He said for emerging markets like Nigeria, access to capital should be fast and seamless. “Digital tools are improving the speed and ease with which credit can be disbursed and SMEDAN is willing to partner with as many funders as possible. I am confident that the support by Fidelity to MSMEs will allow other funding institutions to follow your trail,” he said.