Comprising over 37 million businesses, 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 addressing this challenge head-on that the President Muhammadu Buhari-led administration has established to 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.
MarketMoni is a program 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 an initiative 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.
BOI Acting Managing Director, Mr. 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 moreso 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 5% 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, Mrs. Toyin Adeniji, explains that MarketMoni “does not carry the usual interest tag that other such facilities would carry. Instead, beneficiaries only pay a one-time five per cent administrative charge which is also spread over 6 months. So if you are taking a loan of N50,000 for example, you would only pay N52,500 and it spread 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 credit available to this segment and which run up interests as high as 48% annualized. MarketMoni is a true intervention.”
MarketMoni’s 6-month repayment tenure eases the burden on the beneficiary. The entrepreneur is better able to focus their energies on growing their business rather than meeting aggressive targets. The loan also comes with a 2-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, 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 base of the pyramid.
From the N500 billion budget voted to social intervention programmes for 2016, MarketMoni accounts for N140bn – 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% of MarketMoni. This gender advantage emanates from researched knowledge that difficulty accessing finance is more prevalent among women, and has been a persistent barrier 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 program’s direct impact on job opportunities at the bae of the pyramid, and a consequent reduction in poverty.
In a recent interactive session with newsmen, Adeniji stressed BOI’s strategic position as a development financial institution with national spread. She listed 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 with this 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, at the ward level, 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.”
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 component of funds of that to kick off the programme and disburse to pent-up demand. In 2017, the budget as we know has been put forward and this time it is moving faster. There is a component again for the social intervention programme, the total package, and the component also for MarketMoni. So, 2017 is going to roll out quickly. We have already started. The plan of 1.6 million beneficiaries is our baseline. We want plan to reach 1.6 million as a minimum because the demand is there. 1.6 is just what we’ve been charged to do. Our plan is to do more than that with the backing of the government.”
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, the Minister of Women Affairs and Social Development, Aisha Alhassan, and Minister for Industry, Trade and Investment, Okechukwu Enelamah, have been touring the country to see to program 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 number is expected to increase by the end of February. “You have to appreciate the fact that when we reel out these figures, it doesn’t really mean we are not in the 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. 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, 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.” she said.
The MarketMoni scheme has not been without its challenges as Adeniji admits. Adeniji 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 not insurmountable. 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 challenge we are facing is the standardisation of access to credit across the different regions. 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 what their makeup is,” she said.
‘40% Of Nigerians Do Not Have Bank Accounts, CBN says’ was a screaming headline in the dailies in December, 2016. The CBN Deputy Director, Payment Systems, Mr Sam Okojere had revealed this at a fair hosted in Benin by the Central Bank of Nigeria (CBN) for small and medium scale business enterprises. The fair shed light on 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 the nation’s financial sector. Early results of the credit facility show a significant increase in bank accounts opening and BVN enrolment amongst beneficiaries, especially in rural areas partaking in the scheme.