Business News of 2013-12-16

Fidelity Bank, AFD sign US$10m agreement

Fidelity Bank Limited has signed a 10-year US$13million credit facility agreement with PROPACO, a subsidiary of the French Development Agency (AFD), to boost its mortgage financing aim of reducing the housing deficit in the country.

“With this agreement we have the opportunity of lending to our corporate executives who lack funds to buy a house, so they can go out there and get one.

“We have additional funding for our mortgage roll-out; there is a huge housing deficit in the country and a lot of people working in the corporate sector with a very decent income are looking at accessing a mortgage to buy a house – but do not get one because of lack of funding,” the Deputy Managing Director, Mr. Jim Baiden, told the B&FT in an interview at the signing of the agreement in Accra.

The Managing Director of the bank, Mr. Edward Effah, said Fidelity Bank, the 7th largest bank in Ghana in terms of total assets is positioned mainly to cater to corporate, SMEs and retail clients.

He said with an improved business environment and a dynamic private sector, the need for long-term finance in the country is substantial -- adding that the 10-year loan agreement with PROPARCO will allow the bank to meet its clients’ growing need for long-term resources, thereby underpinning their growth.

The French Ambassador, Frederic Clavier, said AFD activities in Ghana focus on three main sectors -- agriculture, urban development, support to local government and energy -- but also has another, the fourth, cross-cutting sector of activities -- which is support to the private sector and financial institutions.

He said access to credit by the private sector is key to economic development through fostering long-term investments.

He said AFD is committed to facilitating access to finance for local companies through other financial tools such as a guarantee mechanism called ARIZ, saying through this instrument AFD can guarantee loans granted by local banks up to 50 percent.

“It is a risk-sharing mechanism to be used when entrepreneurs are not able to provide enough guarantees by themselves.

“I am glad to see that the French development aid, through AFD and its subsidiary, can provide a complete range of financial tools to address the long-term financial needs of the Ghanaian companies. “Of course, these financial instruments need the local banking system for their implementation.” He commended Fidelity Bank for its strong involvement in the financing of companies, either corporate or SMEs.

Julien Lefilleur, Regional Director for West Africa of PROPACO, said the banking sector in Ghana is showing good fundamentals and encouraging prospects. She said for the last 10 years, the country has made substantial progress in developing and improving the stability of its banking system.

She said PROPACO has been accompanying the banking sector through its different partnerships with Ghanaian banks over the last decade, and it has pumped over US$63million into the sector. “We believe that strong local banks such as Fidelity Bank have a leading role to play in the financial sector’s development,” she said.

She said sub-Saharan Africa is where PROPARCO has its longest history of involvement, adding that it has always given high priority to supporting growth in the region.

In 2012, she said, PROPARCO provided unprecedented support to the private sector in the region by investing in £350 million, which is almost 50 percent of its annual funding.

In addition, she said PROPARCO has shown strong commitment in Ghana with a portfolio of more than £60 million. She said it is particularly involved in the financing of the financial sector through its partnerships with various Ghanaian banks and non-banking financial institutions.

“In the financial sector, PROPARCO assists the local banks through equity and debt instruments as well as insurance companies. In Ghana, it is positioned as a partner for banks with focus on the private sector, especially SME financing.”