The federal government recently began disbursement of N140 billion interest-free loans to accredited beneficiaries of MarketMoni, the Government Enterprise and Empowerment Programme (GEEP) targeting market women and traders, artisans, youth and farmers across the federation. CHIMA AKWAJA looks at how the fund is stimulating the economy and bringing financial inclusion to the unbanked.
Comprising over 37 million businesses, Micro, Small and Medium Enterprises (MSMEs) form a significant chunk of the informal sector, including market women, traders, artisans, enterprising youths and agricultural workers.
Nothing better demonstrates this critical role of MSMEs in Nigeria than their whopping N38.7 trillion contribution to Nigeria’s GDP of N94.1 trillion in 2015. However, this sector is still hampered significantly by difficulties accessing affordable credit.
According to recent reports on the sector, 85 per cent of MSMEs in Nigeria cite access to affordable credit as a major challenge. Most affected by this uphill battle are women-owned businesses which account for 60 per cent of MSMEs in Nigeria.
It is in a bid to address this challenge head-on that the President Muhammadu Buhari-led administration has established MarketMoni – the Government Enterprise and Empowerment Programme (GEEP), a social intervention programme aimed at reinvigorating the economy at the base of the pyramid, the hotbed of Nigeria’s financially vulnerable.
Empowering the Vulnerable
MarketMoni is a programme unprecedented in Nigeria’s recent history, granting interest-free credit facilities to existing microenterprises of market women and traders, artisans, enterprising youth and agricultural workers.
The scheme of the National Social Investment Office is targeted at expanding the scope and scale of economic opportunity for the financially vulnerable. The Federal Government is executing MarketMoni through the Bank of Industry (BoI), a parastatal of the Federal Ministry of Industry, Trade and Investment.
The Acting Managing Director of BoI, Waheed Olagunju, at an Abuja stakeholder discussion recently, reiterated MarketMoni as a demonstration of the government’s resolve to accelerate development of Nigeria’s microenterprises. “This Federal Government programme aligns with BoI’s goal of inclusive growth and expanding economic opportunity. Access to affordable funds is a primary challenge of MSMEs, and even more so microenterprises as this segment is least understood. MarketMoni is a direct response to this challenge – granting loans at unprecedented rates that cannot be accessed anywhere else.”
“The government identifies with Nigerians working hard to keep their businesses afloat, and will continue to extend its assistance through initiatives of this nature,” said Olagunju.
The ‘no-interest’ loan scheme is accessible to beneficiaries through their accredited market associations and cooperatives. Upon confirmed membership of accredited market associations, provision of Bank Verification Numbers (BVNs), and assignment of a MarketMoni agent, beneficiaries qualify to obtain loans ranging between N10,000 to N100,000 repayable over 6 months, with a one-time five per cent administrative fee to cushion costs.
Explaining why MarketMoni is a true intervention and rare opportunity for this critical segment of the Nigerian economy, BoI Executive Director – Microenterprises, Toyin Adeniji, said that MarketMoni “does not carry the usual interest tag that other such facilities would carry. Instead, beneficiaries only pay a one-time five percent administrative charge which is also spread over six months.
“So if you are taking a loan of N50, 000 for example, you would only pay N52, 500 and it spreads over 6 months. If you took a N20,000 loan, you would be paying back N21, 000. The beauty is there is no other cost or hidden charges as the case is with most credits available to this segment and which run up interests as high as 48 per cent annualised. MarketMoni is a true intervention.”
MarketMoni’s six-month repayment tenure eases the burden on the beneficiary. The entrepreneurs are better able to focus their energies on growing their business rather than meeting aggressive targets. The loan also comes with a two-week moratorium prior to commencement of weekly repayments starting on the third week of the life of the loan.
For example, a N20, 000 loan beneficiary would pay back N875 weekly. A beneficiary who makes a daily contribution therefore pays less than N200 per day which is an amount that can easily be set aside while reaping the benefits of significant injection of capital into their business. There is no other loan facility this affordable for the Nigerian at the base of the pyramid.
Women and Gender Advantage
From the N500 billion budget voted to social intervention programmes for 2016, MarketMoni accounts for N140billion – subject to funding – to target about 1.6 million market women and traders, artisans, enterprising youth and agricultural works over the one-year period. BOI targets women-owned businesses for 60 percent of MarketMoni.
This gender advantage emanates from researched knowledge that difficulty accessing finance is more prevalent among women, and has been a persistent barrier to the comparative participation of women in the micro-economy. Giving an edge to women has become imperative in the light of the multiplicity of roles of women micro-entrepreneurs as breadwinners and home-makers, and more likely participants in microenterprise than big business. A specific targeting of women accelerates the programme’s direct impact on job opportunities at the bae of the pyramid, and a consequent reduction in poverty.
BoI in the Driver’s Seat
At a recent interactive session, Adeniji stressed BoI’s strategic position as a development financial institution with national spread, listing a wide network and structural capacity as core strengths of BoI which necessitated its choice by the government as the implementer of the scheme.
“When this product (MarketMoni) was conceptualised, we wanted the most efficient way to connect with the beneficiaries. BoI was sort of the first choice that the government could work with because it is already an established development financial institution. BoI already had structures that could enable it go to market quickly.”
“BoI also had the ability to develop and scale more partnerships that deal directly withthis hitherto hard-to-reach segment. As a development financial institution, BoI is charged with tackling development in the area of finance. So when we are thinking about development, it’s not just large institutions. Development finance cuts across all scales. So BoI does have the capacity and capability to work across all sectors of the institution.”
“BoI also has offices in over 20 states in Nigeria, so we have quite a spread. By the end of this year, we will have offices represented in every state. We have come up with the concept of aggregators who work as third-party agents with access to the bottom of the pyramid and our beneficiaries. Aggregators work with clusters of associations, cooperatives or groupings. Through them we reach the customers and scale over time,” said Adeniji.
Smart Microfinance Institutions and Micro-Finance Banks have recognised the importance of the scheme and keyed in. Adeniji explained that “MarketMoni recognises that MFIs and MFBs are also closer to our beneficiaries.”
“They have more distribution at the local government level, the ward level and the state level. In addition to aggregators, we also work with MFBs and MFIs. We partner with them. Through them, we are able to extend our reach.”
Sustenance of MarketMoni
The MarketMoni target of 1.6 million beneficiaries was for 2016 but funding slowed down the roll-out. Adeniji assured that the Federal Government was keen on achieving both its 2016 and 2017 targets.
“Last year, we were funded towards the end of the year. Now, we are working on that initial funding that we received – and you can see the impact so far – even with just a pilot component of funds of that to kick off the programme. In 2017, the budget, as we know, has been put forward and this time it is moving much faster.”
“There is an allocation again for the social intervention programme, the total package, with a specific component also for MarketMoni. So, 2017 is going to roll out quickly. We are already disbursing actively in 18 states. The plan of 1.6 million beneficiaries is our baseline. We plan to reach 1.6 million as a minimum because the demand is there. 1.6 million is just what we’ve been charged to do. Our plan is to do more than that with the backing of the government,” Adeniji said.
Meanwhile, MarketMoni awareness is gaining ground across the 36 states and FCT. MarketMoni has received entries from 22,421 market associations worth over three million potential beneficiaries across the country, seeking to be vetted and accredited for the programme and expecting to benefit this year. Disbursements have commenced for vetted beneficiaries. Government functionaries, including Vice President Yemi Osinbajo, Minister for Industry, Trade and Investment, Dr. Okechukwu Enelamah, and the Minister of Women Affairs and Social Development, Senator Aisha Alhassan have been touring the country to see to programme implementation as well as sensitise beneficiaries about the programme.
According to Adeniji, beneficiaries from across 18 states have benefited from MarketMoni as of the end of January and the program will be present in all states by the end of March. “You have to appreciate the fact that when we reel out these disbursements figures, it doesn’t mean there is no activity in other states. We want a situation where if you pick an association known to us and call them even without us being there, you must get feedback from excited beneficiaries with loans disbursed.”
“That’s why we are being very careful that we don’t announce we are everywhere. But in actual fact, we are present in every state – registering, onboarding, verifying, and working with stakeholders. It is quite a complex operation. By the end of this quarter, we will be in all the states – with disbursements. It’s a systematic growth and the train is moving.” she said.
She expressed government readiness to see beyond the very surmountable challenges as it sets its eyes on the bigger picture. “Regarding the challenges that we face, there are several, but they are surmountable. I think initially one of them was that since MarketMoni is a microcredit and government-sponsored, we have to make it very clear from day one that it is not a national cake; it is a loan.”
“You qualify for the loan, get the loan and you pay back the loan because there are others who need it as well. If you don’t want it again, there are others queuing behind you for it. It is a loan and so enforcing that is something we have had to be very innovative about, but so far, so good.”
The scheme also factors in the challenge of cultural peculiarity of certain sections of Nigeria. “Another interesting challenge we are facing is the standardisation of our access to credit across the different regions and cultures. For instance, we learnt about some women cooperatives in the north that are not publicly accessible but are in dire need of credit.”
“So you have to access them without being intrusive as they carry out their trade from home. At the end of the day, everybody is entitled to MarketMoni regardless of their makeup” she said.
Integrating the under-banked and unbanked
“40 per cent Of Nigerians Have Never Had Bank Accounts” was a screaming headline in the dailies in December, 2016, attributed to the Central Bank of Nigeria (CBN). The deputy director, Payment Systems, CBN, Sam Okojere had earlier revealed at a fair hosted in Benin by the CBN for small and medium scale business enterprises, the need for MSME owners, especially microenterprises, to embrace a banking culture, as doing so comes with inherent building of a transaction record, asset tracking, financial safety and economic opportunities from being a “known entity.”
To this end, the implementation of the zero-interest MarketMoni has begun to have a ripple effect on financial inclusion in the nation’s financial sector. Early results of the credit facility show a significant increase in bank accounts opening and BVN enrolment among beneficiaries, especially in rural areas partaking in the scheme.