Fidelity Bank leads customers to conclude over $100m deals at 2021 IATF – Ndukwe

Fidelity Bank Plc’s management, including Nneka Onyeali-Ikpe, managing director, Ken Opara, executive director, Lagos and South-West Businesses, were at the just concluded 2021 Intra African Trade Fair (IATF) in Durban, South Africa, where the bank’s customers closed a total deal size in excess of $100 million. Isaiah Ndukwe, divisional head, export and agriculture business, who was also at the event spoke with some journalists about the bank’s export operations, Hope Moses-Ashike was there. Excerpt.

Why is Fidelity Bank so invested in the Non-Oil Export Business Space?

FOR two strategic reasons: One is to help stimulate the growth of the Nigerian economy and by doing that, expand our market share in the banking business landscape. It is quite logical. When you help in baking a bigger economic pie, the trickle-down effect translates to more transactions for you as the Bank in the middle of the transformation. As you know, there are two growth models. One is import substitution growth model and the other is export-led growth model. The more sustainable growth model or the strategy that is more suited to the Nigerian economy is export-led growth model, albeit, the more painstaking of the two as it requires a lot of heavy-lift. It just makes your economy more competitive over time e.g. improvements in business processes, product design and quality. China is a perfect example of an economy that has leveraged the export-led growth model to become a global manufacturing powerhouse.

The second reason is that our export banking business play is a strategic thrust to enhance the competitiveness of our customers’ businesses and our banking business play. I will explain. Oil price shocks create fiscal and exchange rate problems for Nigeria. Example: reduction in government spending because the oil economy accounts for over 60 percent of our national income, reduction in what you and I spend and general output because of the transmission effects of the macro elements and finally negative shifts in balance of trade and current account, and as you know, these shifts wash down to the exchange rate. The transmission effects of all that I have highlighted affects banking business e.g. limited dollar supply to cover import customers’ foreign currency obligations. Our non-oil export business play helps us to create an alternative foreign currency supply source to service our import customers.

Some of the challenges of exporting business include getting reliable buyers for international deals, products sourcing and quality, how does Fidelity Bank support Exporters?

While it is tempting to lead with our financing offerings, I would say that the most critical way that we support exporters is in the area of export business management capacity development. This is what differentiates us from the other Banks. From a business operations perspective, non-oil export trade requires a total mindset shift. It is a very competitive business landscape especially if you operate in the realms of value-added exports. Hence, human capital development especially around readiness of businesses for exports is a critical foundation block to positioning Nigerian exporters to become more competitive in the global marketplace.

The global marketplace is a brutal ‘free-market’ arena akin to the Roman ‘Death-Fight’ Colosseums. It takes no prisoners and will punish you if you neither come prepared nor have competitive and comparative advantages. If you are exporting something from Nigeria to say, the UK, you are competing with businesses from other countries who are exporting into that same market. So, if you don’t land your product at a cheaper pricing or higher quality than competition, you will be priced out of the market. The global marketplace doesn’t care about your sentiments or product origin/country macro and micro problems. The overriding consideration is value to the final consumer of your product.

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The way we help to bridge these business management capacity gaps is through export business management capacity development programmes, the flagship offering being our Export Management Programme (EMP), a capacity development programme that we co-created with the Lagos Business School (LBS) and the Nigerian Export Promotion Council (NEPC). Here, we teach aspiring and existing exporters how to become better at what they do. Some of the areas that we cover include but are not limited to product or raw material sourcing and effective supply-chain management; quality control and assurance processes; standards and global best practices; packaging, contract negotiation and commercials, export documentation, forwarding, financial management and governance. We then layer tailored and competitively priced financing offerings on top of this to help exporters scale their business operations. We also provide free advisory services to exporters to help drive business optimizations. Another way that we support exporters is in the area of market access development e.g. we brought over 10 of our customers to the Durban Intra-African Trade Fair (IATF) and most have secured product off-take contracts and partnership deals. We also support in export trade documentation services and advisory.

You have been here in Durban, since the commencement of the Fair, has the IATF lived up to your expectations?

Absolutely. The one quick win for us is development of market access for our export customers. We were at the inaugural IATF in Cairo and the connections were quite an eye opener. We took several of our customers with us and also gave them platforms to exhibit and showcase their products. They all secured product off-take contract and partnership deals. Total deal size closed in Cairo was in excess of US$75 million. Same has happened on this outing with total deal size in excess of US$100 million. Another upside is the opportunity it presents for partnerships, collaborations and knowledge transfer. I strongly believe that if we can work on improving general ease of doing business and enterprise competitiveness, Nigeria can be the biggest winner of the African Continental Free Trade Area (AFCFTA).

As you are aware, the IATF is one of the key levers of the AFCFTA in driving regional trade integration in Africa. On take-off, the AFCFTA will help to connect Nigerian businesses to the continental and global manufacturing value chain. This is why it is such a big deal to us and the reason we are taking proactive steps to enhance the readiness and positioning of our customers to take advantage of the growth opportunities that the IATF and the AFCFTA present to their businesses. These opportunities are not only limited to market share expansion but also includes knowledge and technology transfer gains to drive optimizations.

To what extent has the Bank’s non-oil export business play contributed to the bottom-line?

Like I said when I started, our export business play is strategic in the sense that it helps to enhance the competitiveness of our banking business. You have seen our half year numbers, profit before tax jumped from N12 Billion in H1 2020 to N20.6 Billion in H1 2021, that is a growth of 72.4 percent. The growth of our export customers’ businesses and our increased share of that wallet, and the expansion of our new customer and export business footprints are partly what is feeding into the bottom-line.

It is one of the key pillars of our growth initiative as it washes down to other critical areas of our banking business. To further buttress the importance of our export business play to our business as a bank, our managing director, Nneka Onyeali-Ikpe, is here at the IATF and participated actively in facilitating some of the deals we have sourced for our customers. We also have our executive director, Lagos and South-West Businesses, Ken Opara here at the fair. You will agree with me that this is a strong representation and further testament that Fidelity Bank is really keen on driving the export business in Nigeria.