Fidelity Bank devotes 25% of assets to SMEs
Fidelity Bank says it will devote about 25 per cent of its loanable funds to the small and medium enterprises (SMEs) sector in the coming year, the Deputy Managing Director of the bank, Mr Jim Baiden, has said.
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The amount will add to the GH¢100 million that ProCredit, which Fidelity Bank acquired earlier this year, already disburses annually to businesses within that category.
Fidelity Bank's net loans and advances totalled GH¢827.18 million in 2013 and 25 per cent of it to the SMEs sector in 2015 would mean that the bank will be making available more than GH¢200 million to businesses within that segment.
However, with the Fidelity-ProCredit marriage, Mr Baiden believes that the expertise of the two institutions should enable the new entity to write about 10 times the loan ProCredit dedicates to SMEs.
The sector comprises business start-ups that employ less than 30 people and assets valued below US$1 million. Players in the sector have been marginalised financially due to a number of factors such as their inability to properly keep records of their operations and accumulate enough assets that could be used as collateral for loans.
While stressing the importance of the SME sub-sector to the country's economic development, the deputy managing director said at the third Graphic Business-Fidelity Bank Breakfast Meeting that his outfit had identified the sector as one of the most profitable, hence its decision to commit more resources into the sector.
"The SME sector, although risky, is also very profitable and banks will need to do more to implement and adopt very clear cut policies that will help these businesses to grow and that is what we at Fidelity want to do," Mr Baiden said in an interview after the function.
He said ProCredit, which Fidelity Bank recently acquired, was already committing GH¢100 million and “together we think we can do 10 times more.”
The event brought together players in the financial services sector, policy makers, politicians and civil society and the private sector in general to deliberate on what SMEs can contribute to the socio-economic development of the country.
It was organised by the Graphic Business, the business newspaper of the Graphic Communications Group Limited (GCGL), and sponsored by Fidelity Bank, the current CIMG Bank of the Year.
A former minister of state, Mr Hackman Owusu Agyeman, chaired the event which was on the theme: 'The role of SME development to Ghana's economic development,” with Mr Ekow Spio-Gabrah, the Minister of Trade and Industry, speaking as the guest of honour.
SMEs need close partners
Speaking on Fidelity Bank's experiences with SMEs in the country, Mr Baiden said they were not rate sensitive.
“All that they are looking for is support to fund the growth of their businesses so if a bank can work with them closely, as ProCredit has been doing, to manage their risks and the difficulties that come up on real time bases, they will generate good returns,” he stated.
The Managing Director of the Graphic Communications Group, Mr Kenneth Ashigbey, observed that the time had come for them to go beyond enumerating the challenges the SMEs faced to following through with real time solutions.
“Our challenge has always been execution. Normally, we come out with the challenges and propose solutions but we fail to implement,” he said and expressed the hope that that deficiency would be cured in partnership with all stakeholders in the SME sub-sector.
He gave an assurance that the Graphic Group was prepared to galvanise the support and collaboration of other institutions and individuals in finding lasting solutions to the challenges. GB