……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