Fidelity Bank receives $150m line of credit from African Development Bank
The Board of Directors of the African Development Bank (AfDB) on Wednesday approved $75-million medium-term line of credit (LoC) to Fidelity Bank Plc to fund selected projects in sectors that are critical to Nigeria's transformation agenda and economic growth.
The fund, the continental development bank said, would be tied to growth drivers such as infrastructure, manufacturing and Small and Medium Enterprises (SMEs).
The LoC will be complemented by AfDB arranged-syndicated financing of up to US $75 million on a best-effort basis.
Fidelity Bank Plc is an indigenous universal bank that has been operational since 2001. It has over 200 branches and over two million customers located in the six geopolitical zones of Nigeria. It is thus strategically placed to tap into various sectors and ensure diversification of its client base. As at December 2012, Fidelity had a total shareholders fund amounting to US $1.04 billion. Fidelity is ranked among the top six banks in Nigeria by equity base and eighth in terms of deposits and totals assets. The LoC will complement Fidelity's other fundraising efforts through deposits mobilization and financing lines from Development Finance Institutions (DFIs), commercial banks and proceeds from its recent bond issuance.
The AfDB's LoC will contribute to bridging Fidelity's financing gap by providing much-needed longer-term liquidity to meet its pipeline demands against the background of a financial market that has hitherto slanted towards short-term liquidity inhibiting access to medium- to long-term lending. This financing will allow Fidelity to better serve and fund its clients, increase the tenors of loans to subprojects and expand its loan portfolio, particularly in the manufacturing and infrastructure sectors. Twenty per cent of the LoC proceeds will be dedicated to SMEs.
This LoC is in recognition of the positive impact of the Central Bank of Nigeria's efforts to strengthen its supervisory framework, stabilize and instill confidence in the local financial system as well as improve liquidity and credit flows. This LoC sends strong signals that Nigeria's financial sector has stabilized and confirms a return of confidence to the Nigerian banking sector. It is also symbolic of AfDB partnership role in supporting the private sector to play its rightful and important part in building the Nigerian economy. Moreover, it also highlights the AfDB's commitment to supporting its Regional Member Countries and their governments in strengthening in their financial markets, diversifying their economies and revamping their infrastructure to facilitate stronger private sector participation and contribution to the economy.
Ultimately, this transaction will contribute to improved and longer term liquidity in the banking sector, increase government revenues, import substitution and job creation.