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……The Fidelity Bank ApproachThe Fidelity Bank Approach
November, 2014November, 2014
Positioning Nigerian SMEs for Positioning Nigerian SMEs for GrowthGrowth
Our Unique Funding Solutions for SMEs
1.1. Presentation ObjectivesPresentation Objectives
2.2. SMEs in Nigeria:SMEs in Nigeria: ImportanceImportance Key Challenges they faceKey Challenges they face
3. Addressing the Challenges3. Addressing the Challenges The Fidelity ApproachThe Fidelity Approach
Outline….
Presentation Objectives
To provide insights to the To provide insights to the challenges facing SMEs and our challenges facing SMEs and our peculiar approach to providing these peculiar approach to providing these remedies.remedies.
Limited Options
High Cost
Amount
Tenor
Poor managerial/entrepreneurial skills and inadequate processes
Inadequate research/market information to determine business viability
Absence of proper business planning:
Lack of long term strategy and poor business model
Opposition to ownership dilution either through equity or technical intervention, etc
SMEs in Nigeria….Key Challenges they Face
Poor levels of basic infrastructure Power, Roads, Railways, ICT etc.
Multiple Tax System (LG, SG, FG, Touts, etc.)
Low Levels of Security
Stifling business climate due to… Inappropriate, conflicting & duplicated policies, legal and regulatory
frameworks, etc
Limited access to quality human capital Market etc.
SMEs in Nigeria….Key Challenges they Face
Remedies: What They Require in Broad TermsBroad Terms….
….Key Product Elements of this Offering…
Sources of Funds for SMEs…in summary
Equity…
Personal Savings
Contributions from friends & family members
Business Angel
Equity Investments by Venture Capital and Private Equity Firms, etc
Sources of Funds for SMEs…in detail
Debt… 1. Credit Facilities from Commercial Banks….
Term Loans Leases Overdrafts/Working Capital Finance Receivables Financing, etc. Platform/Cluster Specific credits
…Could be any of the above for identified trade clusters/ business groups
Other Sub-Loan Types… Project finance
Under this arrangement, long term funds are made available to support acquisition of long term assets and infrastructure.
The financing is typically secured by the project asset, including the revenue-producing contracts.
2. Facilities from non-bank sources/Government Intervention Individuals, Co – operative societies, DFIs, etc
Tenor, Tenor, pricing, pricing, collateral collateral requiremerequirements still nts still major major issues issues here, for here, for SMEs…SMEs…
Sources of Funds for SMEs…in detail
Others…
Longer terms of payment from:
Suppliers of raw materials/materials used for production
Suppliers of equipment Landlords Other creditors, etc
Customers: Cash payment or Spontaneous Finance
Sources of Funds for SMEs… in detail
Clear business model or concept…. Defined revenue streams Evidence of sustainable growing market
Clear marketing and sales strategy Clear understanding of needs of existing and potential customers & how your
products meet such needs – all based on current and future trends Defined target market & how to reach them Clear strategies for making competition irrelevant and building market share, etc.
Competent and Experienced Management….. Background of management team and key staff Evidence of prior relevant experience Track record of success Robust organization structure Technical partnerships Plans for developing human resources, etc
What Financiers Look for in a Business… in general
Clear Competitive Advantage Proprietary Position (unique product, pricing, technology) Licenses, where applicable
Strong financials Profitability Strong operating cash flows Growth
Reliable Financial Information.... Total project cost Financing Plan (Equity: Debt) Profit & Loss projections (5 years) Operating cash flow projections (5 years) Growth potential
Payback period Possible exit route/strategy
What Financiers Look for in a Business…in general
Banks typically look for the following in any customer they intend to finance:
Secondary repayment source Capacity
Character
Money Promoter must have invested in the business evidencing his commitment
Capital
Collateral Technical Competence Managerial Competence Financials Market size/Profile Service Offerings/Income lines Pricing Strategy, etc
Purpose of the loan Local economic climate and
conditions within the industry and other related industries that could affect the business.
Conditions
A measure of integrity and trustworthiness. Your credentials and references, Credit reports, references from customers, suppliers, staff and other third parties, etc.
What Financiers Look for in a Business… The 5Cs of Credit
Our Unique Funding Solutions for SMEs…
Cluster Lending Products Already Available:
The Aba Shoe & Leather Goods/Garments Cluster Lending Paper
Fidelity Pharmacy Support Scheme Lending Paper
Fidelity Private Medical Support Scheme Lending Paper
Mandilas Fashion Goods Cluster Lending Paper
Other SME-Focused Risk Asset Products on Offer…
The Commercial Support Overdraft …an overdraft scheme created to support SMEs with viable businesses irrespective of the
sector/ industry they play in. SMEs Short Term Loan
This product paper seeks to consolidate the success of the Commercial Support Overdraft (CSO) ….and provides a 90-day working capital loan to trading businesses that meet the product’s RAAC
Intervention Funds on Offer…. N220bn CBN MSME Development Fund
we are a major participating financial institution for the on-lending of these funds to eligible MSMEs.
Products are: Typically Low-cost…Typically Low-cost…
No COTNo COT Very small account opening balanceVery small account opening balance No fixed monthly charge No fixed monthly charge
Enable subscribers access to free, periodic business management capacity building seminars, etc
……..Include:Include: The Fidelity Small Business Account (FSBA):
a tailored, low-cost current account product created to meet the unique needs of registered MSMEs in Nigeria.
FSBA Individual: a current account product created for unregistered businesses to help meet their unique
needs as they transition to formalized/ registered businesses. SME (Fixed):
a tailor-made term deposit product created to meet the short-term investment/ financial management needs of SMEs.
FPSS Corporate : a corporate savings product created to meet the funds management needs of SMEs.
Our Suite of Current & Savings A/Cs Products for SMEs
Shared Web/Internet Marketing and Sales Platform (FidelityConnect)
• an online market place with fully integrated e-commerce capabilities (i.e. online payment engine, delivery logistics, advertising boards, business networking, etc).
Our Other Unique Offerings Underway…
THANK YOU