Balarabe: We Have Developed a Unique Approach to MSME Financing’

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The Fidelity SME Forum is a weekly radio programme organised by Fidelity Bank Plc to educate, inform, advise and inspire budding entrepreneurs in Nigeria. Only recently, the bank celebrated a major milestone with the broadcast of its 150th episode. Its Deputy Managing Director, Mohammed Balarabe provided valuable insights into the bank’s unique methodology in supporting Nigeria’s burgeoning SME landscape. He also shared his thoughts on the Export Leadership Institute – an initiative strategically designed to deliver impactful and world-class export management education to Nigerian entrepreneurs

 

 

 A lot of listeners and entrepreneurs across Nigeria have come to identify the Fidelity SME Forum as a foremost capacity development platform for SMEs in Nigeria.  What is the major objective behind it and what does the bank stand to achieve from it?

Firstly, I would like to seize this opportunity to express our deepest gratitude to our numerous listeners for coming on this amazing journey with us and for being a part of the Fidelity SME Forum family.

As you rightly mentioned, the Fidelity SME Forum is the first capacity building programme of its kind in Nigeria and has also become the capacity development platform of reference for both aspiring and existing entrepreneurs.

The objective of the Fidelity SME Forum is to provide a complimentary business advisory window to our core business advisory offering under the Fidelity Managed SMEs Division to further democratize our free business advisory services to the critical mass of aspiring and existing entrepreneurs in Nigeria.

The programme is designed to inform, educate and inspire the critical mass of aspiring and existing entrepreneurs in Nigeria through practical lessons and business insights provided by carefully selected model entrepreneurs and subject matter experts.

The format of the programme is deliberately designed to bring out the practical elements of the discourse in a manner that addresses the everyday challenges of MSMEs and at the same time provide clear insights to aspiring entrepreneurs.

The Fidelity SME Forum is one of several other ways that Fidelity Bank is helping to empower MSMEs in Nigeria.

But more importantly, the programme is aimed at helping MSMEs raise their management game in order to better position them for growth thereby increasing their contribution to economic development.

Secondly, according to the latest BVN Report by NIBSS, all the banks in Nigeria have a total customer base of about 24 million. On the average, each of these customers have accounts with two or three other Banks with each bank jostling for the lion’s share of the customer’s business.

So for us, the Fidelity SME Forum Programme serves as both a business advisory and capacity building platform for MSMEs and a strategic marketing tool for the building of the critical mass of MSMEs.

Today, we are celebrating a great and important milestone in the lifetime of Fidelity SME Forum. How would you describe the listenership base and how has the bank’s capacity development platform affected the growth of MSMEs in Nigeria? Are there also some testimonials which you would like to share with us?

 

We are very excited to mark the 150th edition of the Fidelity SME Forum. It has been an amazing journey for us and we are very proud of what we have been able to achieve with the programme thus far.  This is not only an important milestone for us but a celebration of the lives that we have touched and businesses that we have helped build through this special MSME capacity development intervention programme.

 

To your question – the listenership base of the programme cuts across various age and professional demographics. It caters to both aspiring entrepreneurs who are looking to make that transition from paid to self-employment and existing entrepreneurs who are looking to take their businesses to next growth levels.

Although the live edition of the programme is broadcast out of Lagos on this station (Inspiration 92.3 FM), the programme has national and global listenership reach via web live streams and podcasts on our website.

Our testimonials are too numerous to mention; however, I will share some insights into some of the poster cases that we have handled.

In January of this year, we had our Regional SME Conference in Kano where we had most of the key SMEs in the North Western part of the country in attendance. Before that, we had one in Enugu and another in Ibadan for the South East and South West Regions of the Country respectively.

In the healthcare space, we have helped a lot of pharmaceutical manufacturing SMEs streamline and reorganize their structures for optimal business performance. We have also provided financing to SMEs in this space through our tailored healthcare portfolio lending products.

In the manufacturing space, we have added a lot of value in the area of business process improvement especially in the areas of accounting and inventory management, translating to increased efficiency and effectiveness for the SME clients in this space.

We have also leveraged our unique lending framework under the CBN MSME Development Fund scheme to make single digit priced credits available to SMEs in this space.

We are also very proud to say that we funded the first indigenous cable manufacturing company in Western Africa and one of the leading transport companies in Nigeria which is now quoted in the stock exchange.

Another interesting case is a beauty & personal care business that we helped to transit from a fringe player to becoming one of the leading players in the beauty & personal care space. Some of these entrepreneurs have returned to the SME Forum Radio Programme on different occasions to share their experiences with the audience.

 

 

Can you give us an idea of the kind of guests that have appeared in the past?

 

From the inception of the programme till date, we have featured a very colorful array of model entrepreneurs and subject matter experts playing across various key sectors of the economy. The interactive nature of the programme affords our listeners the opportunity to ask questions and get real time feedback from featured guests from across all sectors of the economy.

Some of them include Dr. Okechukwu Enelamah, Partner/CEO, African Capital Alliance and Current Minister of Industry Trade & Investments; Ms. Arunma Oteh, Former DG, Securities and Exchange Commission and Current VP/Treasurer, World Bank; Dr. Olusegun Aganga, a former Minister of Industry, Trade & Investment; Mrs. Omobola Johnson, a former Minister of Communication Technology; Mr. Nicolaas Vervelde, MD/CEO, Nigerian Breweries Plc; Mr. Dharnesh Gordhon, MD/CEO, Nestle Nig. Plc and many others especially from the agricultural value chain.

In what other ways does Fidelity Bank plan to elevate the Fidelity SME Forum and the capacity development of MSMEs in general?

 

It has become imperative to expand the scope of the Fidelity SME Forum to markets outside Lagos. The idea is not only to take this capacity development initiative closer to MSMEs in markets outside Lagos but to also tailor the content to fit target local business environments for maximum impact.

The whole essence is to use model entrepreneurs who have thrived in same markets that the MSMEs play in and whose stories the MSMEs can relate with as case studies to inform, educate and inspire the MSMEs in those markets.

In the spirit of reaching out to more MSMEs especially in upcountry locations, we will continue to step up our Regional SME Conferences. In the past 9 months, we have had three targeted and market-focused MSME conferences in Enugu, Ibadan and Kano. We plan to cover more locations this year.  We have also planned MSME-focused creative industry and non-oil export readiness themed conferences for the 2nd quarter and 3rd quarter of this year respectively.

The non-oil export readiness themed conference, in addition to our other non-oil export initiatives, will cater to the business management needs of MSMEs that are looking to venture into the very promising non-oil export space. Also, existing non-oil exporters that are looking to raise their business management game can benefit immensely from the conference.

In between our planned MSME-focused events and programmes this year, our dedicated MSME Business Advisors will continue to work with MSMEs and aspiring entrepreneurs to raise their game in the areas of business management capacity, corporate governance, market access and business process automation/optimisation.

 

Can you give us some insights into the Export Leadership Institute? What is it all about?

 

As further proof of our commitment to helping MSMEs raise their game in the international scene, coupled with our strong desire to help speed up the diversification of Nigeria’s monolithic economy, we are collaborating with The Enterprise Development Centre of the Lagos Business School (LBS) and the Nigerian Export Promotion Council (NEPC) to establish the first export business school in Nigeria. The goal of this initiative is to deliver impactful and world-class export management education to equip Nigerian MSMEs with the knowledge and business management capacity required to compete effectively in international markets.

In addition to the Export Management Programme initiative, we will continue to support MSMEs who are keen to venture into the non-oil export space or who are already playing in this space with our one-on-one business advisory services and our other export readiness capacity development initiatives.

On the funding side, we will continue to support them with our unique export commodity and export cluster focused lending programmes to enable them scale up their export business operations.

 

Non-oil export is an area that Banks are not very familiar with as opposed to imports. How is Fidelity looking to build internal capacity in this area to match its growth ambitions?

 

As I mentioned earlier, we are working on a number of strategic capacity development programmes and initiatives geared towards enhancing the non-oil export capacity and global competiveness of Nigerian MSMEs.

To further underscore the importance of business management capacity development of MSMEs in the non-oil export space and in line with our knowledge driven approach, we have decided to commence from within through internal capacity development of our staff via export master class workshops in all the Regions of the Bank.

The programme, which was designed in collaboration with the Nigerian Export Promotion Council (NEPC) will enable our staff build competencies and skills required to develop customized lending products for MSMEs in the non-oil export space. It will also help them become better prepared to handle the business management and advisory needs of aspiring and existing non-oil exporters.

The workshops will cover a broad range of topical issues pertinent to non-oil exports and will include resource persons and facilitators from relevant government agencies that play key roles in the processing of non-oil exports transactions.

These are all very laudable ideas but how has it translated into incremental value for the Bank in Naira and Kobo?

 

As at today, our SME customer footprint is in excess of 600,000 customers evenly spread across the geographical regions of the country in line with the sizes of those markets. SME deposit liability is in excess of N120 billion and Loans is in excess of N60 billion.

With our very bold ambitions of achieving an even business portfolio split between our Corporate Banking and SME/Retail Banking Business supported by the structures that we have put in place, we expect to double these figures in the next few years.

 

Where do you see growth opportunities for SMEs?

We see a lot of growth opportunities in Manufacturing, Services, Entertainment and Agric Value-chain, especially in the segments that are directly linked to import substitution and export activities.

To take advantage of these opportunities, MSMEs across the board will need to raise their game in the following areas; quality assurance and control, proper corporate governance structures and processes, effective financial management system, improved compliance with regulatory authorities (i.e. NAFDAC, SON, etc.) and product packaging and differentiation.

 We understand that this is a lot of work for MSMEs to do by themselves which is the whole essence of our free business advisory services. It is designed to help MSMEs close some of these structural gaps or connect them with our professional services alliance partners where professional services are required.

 

 

What is your advice to Entrepreneurs in Nigeria?

 

While the current economic headwinds pose a lot of challenges for MSMEs, it also presents a lot of business opportunities for MSMEs, particularly in the non-oil export space. However, MSMEs will need to raise their business management game to take advantage of these emerging business opportunities. With the strict capital controls and escalating value erosion of the Naira, locally manufactured products will become more attractive to consumers, both locally and internationally.  However, product quality is very critical in this regard.

MSMEs in the manufacturing and food processing segments will need to improve on their packaging to be able to differentiate their products from the gamut of competing offerings out there. Customer service is also very important. Resources are very scarce and consumers, now more than ever, want value for their money.

Optimal financing structure is also very important. MSMEs should ensure that they have commensurate equity in the business as too much debt burden could impair the health of the business. It is also important to ensure that the structure of financing is adequately matched to the needs of the business. Short term financing should be used to finance short term needs of the business and long term financing to fund long term needs of the business.

And the last but not the least, competent and experienced business management is very vital. If you don’t have the experience, please outsource or better still visit Fidelity Managed SMEs for free business advisory services.