Business News of 2013-12-12

Fidelity Bank, PROPARCO sign $13m pact

Fidelity Bank Ghana Ltd has signed a $13 million agreement with French development finance institution, PROPARCO, to enable the bank to deepen its mortgage financing.

The senior loan agreement follows a similar one Fidelity signed with the agency, which enabled it to enhance its small and medium scale enterprise financing portfolio.

The loan is concessionary enough to enable the bank to channel it profitably and comfortably to mortgaging financing, which usually requires long-term financing to undertake. Fidelity Bank will have up to 10 years to repay the loan, after exhausting five years moratorium within which the bank would make no payment.

The Managing Director of the bank, Mr Edward Effah, signed on behalf of the bank, while the French Ambassador to Ghana, Mr Frederic Clavier, initialled for PROPARCO.

PROPARCO, which offers a variety of long-term financing to the private sector, including loans, equity investments and guarantees, is a subsidiary of the French Agency for Development (AFD).

Official figures put the housing deficit to about 1.5 million but the bank believed the figure could reach five million, considering the size of the adult working population in the country.

Mr Effah said the long-term loan would enable the bank to meet the needs of its clients in the country.

The Deputy Managing Director of the bank, Mr Jim Baiden, underscored the need for using long-term funds to finance long-term needs such as mortgage, which had been difficult in Ghana due to the lack of such long dated funds.

He said it was the contribution of the bank to transform the mortgage sub-sector and help the growing middle income Ghanaians to own their houses.

For his part, the French ambassador said the AFD was committed to facilitating access to finance for local companies through various means, including a guarantee scheme called ARIZ, where AFD could guarantee up to 50 per cent of loans granted by a local bank.

“I am very glad to see that the French development aid, through AFD and its subsidiary, PROPARCO, can provide a complete range of financial tools to address the long-term financial needs of Ghanaian companies and this needs the local banking system for implementation,” Mr Clavier added.

“We believe that strong local banks such as Fidelity Bank have a leading role to play in the development of the financial sector. After a first line of credit in 2011, PROPARCO is very happy to renew today its cooperation with Fidelity Bank,” the Regional Director for PROPARCO, Mr Julien Lefilleur, said.

Last year alone, PROPARCO invested about 350 million euros, almost half of its annual funding, in Africa. Ghana, where it has about $63 million in the financial services sector alone, accounts for almost half of its portfolio in West Africa.

Fidelity Bank has been growing fast over the last seven years since it transformed into a universal bank. The bank has since increased its branch network from a single branch to 50 branches.

It has a plan to be among the top five banks in Ghana by 2014 as it continues to roll out with innovation and tact.