The TraderMoni scheme of the Federal Government has generated a significant amount of buzz and national conversation: from those who laud its impact, and those who view it as politically motivated. TraderMoni is one of three microcredit products of the Government Enterprise and Empowerment Programme (GEEP). In this exclusive interview with BusinessDay, a man behind the wheels, and Chief Operating Officer of GEEP, Uzoma Nwagba explains how GEEP was a direct response to the challenge of access to funds for micro-enterprises, and financial inclusion.
What is this GEEP program really about?
GEEP is a microcredit programme that provides much-needed capital to traders, artisans, farmers, petty traders. It is one of the social intervention progammes of the Federal Government, and comprises of three products: MarketMoni, FarmerMoni, and TraderMoni. GEEP was initiated in 2016 by the Federal Government; with an understanding that there are over 30 million Nigerians at the base of the pyramid who are in active commercial activity but never have an opportunity to access credit. In 2017, only 0.04 percent (i.e. less than 1 percent) of bank loans went to this micro segment. These hardworking Nigerians are not “interesting” to the traditional lenders: they have little to no financial track record, they have no collateral, some barely have formal identities. However, they are actively trading and in dire need of capital. They are sellers of the food stuff you cook, the beverages you drink, the airtime you use, and kiosk items you buy. And there are tens of millions of them, across the 36 states and the FCT. GEEP is an opportunity to properly identify and capture these Nigerians, provide them with capital, and in the process onboard them into the formal financial system of bank accounts and mobile wallets – in a way that they can be sustainable recipients of credit. Our goal is to advance financial inclusion from its current mythical state into actualization. GEEP grants interest-free loans of between N10,000 to N300,000 in a graduating scale of N10,000; N20,000; N50,000; N100,000; and N300;000. Traders either start at N10,000 (TraderMoni), or N50,000 (MarketMoni), or N300,000 (FarmerMoni). It all depends on the scale of your current trade, and preparedness to meet the criteria at each level.
The N10, 000 ($27) TraderMoni component of the GEEP scheme has come under huge criticism for the loan value: some Nigerians do not think it is barely anything to help a trader. Was there intelligence that suggested otherwise for which the TraderMoni team settled on N10, 000 as the first level?
Recall that these loans go from N10, 000 to N300, 000. You start at N10, 000 if you are a petty trader – and you quickly graduate to N300, 000 by simply repaying your loans.
More importantly, you would be surprised to know that the GEEP programme did not start with N10, 000 loans. We started with N50, 000 loans. In the process of executing a programme N50, 000 and above, we found something quite startling: the vast majority, I mean up to 90 percent, of our targets did not have inventories of more than N10,000. You would more than double their capacity with a N10,000 loan. We would have missed the scope and scale of this if we had not spent the last 2 years on the field, giving loans, learning more. Besides the fact that this population not only needs small amount for a start, they also do not have the traditional bells and whistles – BVNs, KYCs, bank accounts, collaterals – which are the requirements of traditional lending. So we had to create a product specifically for them, driven by agents on the field, equipped with tablet computers, and disbursed through mobile wallets which only require the trader to have a mobile phone. We believe this can be truly transformative to this sector, and to the lending ecosystem. The results are showing.
In the past 2 years, we have given over 1.5 million loans across the three programs, 1.2 million of which are TraderMoni beneficiaries. The loans are driven strictly by scale of demand.
Where is the money coming from and how sustainable is the program given the time value of money (for which interests are usually charged), and Nigeria’s unique political system where continuity is always an issue?
From Day-1 of GEEP, we instituted the BVN as a non-negotiable requirement. The first application of the BVN was to serve as a unique identifier which checkmates fraud. However, the second application of BVN is even more powerful: for the first time, we have an effective (digital) collateral. People who took the MarketMoni loans, our first GEEP product, accept agreements that the Bank of Industry had the right to block their BVNs if they were in severe default. A blocked BVN means the candidate is unable to operate any of their bank accounts or perform any financial transactions until they fulfil their debt obligation. Obviously, we had to balance this carefully with the overarching goal of financial inclusion. This means that you don’t want to have people included into the financial system, only to block them out of it soon after. So, first we establish the usage and habit of finance and accountability by giving the loans. Next, we communicate aggressively on repayment and defaults, warning severe defaulters of an imminent blocking of their BVN. And then, we select cohorts of defaulters who inevitably get the BVN blocking. We do this while aggressively learning and improving the process. The journey is still an evolving one, but we are absolutely committed to more and more innovation around the collateral problem that has excluded this group from credit for decades. With the advent of technology and innovation – we must think outside the box, seeking for digital collaterals that are effective. You would not believe that the regulation that allows for what we have just done has been in existence since the 1970s. However, without the right advancement in technology (e.g. BVN which means you can finally take action on all accounts belonging to an individual in the entire financial system), there would be no way to execute that regulation. Thankfully, the future is now, and it is our goal to continue to push the boundaries on what is possible.
For the TraderMoni scheme (for petty traders at the very bottom of the pyramid), we are taking a slightly different approach of not requiring BVNs or bank accounts as our targets are significantly less educated or sophisticated. We need to first solve their problem of access and reduce the barriers to that. So, we use what they have: their mobile phones. It is only on the second loan that the BVN and bank account requirements kick on, and therefore the digital collateral. As a result, we make a conscious effort with their first TraderMoni loan to make the carrot more attractive than the stick. That is, we make it very simple to get the next higher loan (N15,000) once the first loan (N10, 000). You literally receive a disbursement in minutes when you dial a USSD code after paying your first loan. We are using TraderMoni to test this model and we are studying the effect because it’s also an opportunity to build knowledge for the ecosystem. What the government learns from this program will be used to drive even private sector lending.
Given such a large-scale programme with a target market that has limited education, how are you able to deliver the numbers you report?
The operation of the program does not mirror its target demographics. What I mean is: the more illiterate or unsophisticated our beneficiaries are, the more sophisticated our operation has to be. All the complexity has to be absorbed by us and taken out of the trader’s experience. We have a highly technology-driven program. Everybody who has a TraderMoni, MarketMoni or FarmerMoni loan is enumerated at their point of trade. What this means is that one of our over 4,000 agents across the country, walks up to them and registers them on a tablet device. I am talking full registration of biodata, GPS location of the trader’s point of trade, information on what the trader does or sells, pictures of them and their trade, address, phone number, BVN (where applicable) which is validated against the national BVN database, background and risk profiles where accessible. We have a sophisticated digital base that connects these tablets of our over 4,000 agents across the country to central systems at BOI, as well as third-party connections to banks and mobile wallets for disbursements and repayment. Similar connections happen for tracking and monitoring of the loan and repayments. The most surprising thing you would find out about the programme is how obsessive we are with its operation. Some members of my team joke that we are a technology company that happens to give loans. With more experience and learning, we will continue to innovate and set the standards. And, yes, this is all possible in a government programme.
What sort of impact does the GEEP program hope to make, how is it being measured/tracked today?
Tremendous impact. For most of our beneficiaries, it starts out like a dream. An agent walks up to you in your market association, at your kiosk, sometimes on the street while you hawk. They speak about a government benefit, and interest-free loan to enable your trade. You are not asked for a collateral, and you are not asked to vote for anyone. They would capture details of you on their tablet, you would get an SMS in days on your qualification, and you would get a disbursement shortly after. Even playing this back to myself now, it sounds crazy, too good to be true. But this is exactly what happens. So you can imagine traders’ skepticism at first, which our agents have to overcome, until disbursements start happening. For most of our over 1.5 million beneficiaries today, this is the first time they have successfully accessed credit in their entire lives. I interact with traders, from Bauchi to Yenegoa, who tell me they have been doing the same trade in the same spot for 30 years, and this is their first time ever experiencing something like this. They are able to invest in their trade, or deal with issues that have been historically disruptive to their trade. They keep their businesses alive, enabling them to pay back in tiny instalments over six months. They are empowered. Most of this is silent; you don’t hear it buzzed around. But this has been the reality of GEEP, every single day, since May 2016.
When a lot of people hear about the GEEP programme (either TraderMoni, MarketMoni, FarmerMoni), they think about how transformative it is for the beneficiaries, but in a lot of ways it’s also life-changing for those of us implementing the programme. Nothing would have prepared us for this scope and scale of impact. Nothing could have connected us better to the realities of the everyday Nigerian. We literally spend the day with them in the markets, get in their heads, support their trade. For some beneficiaries, like tomato sellers in Mile 12 market, TraderMoni represents negotiating power with their suppliers. The traders can now pool more funds together, sometimes up to 15 people pooling N150,000 using TraderMoni, and negotiating for bulk-buying of tomatoes in baskets, bringing their individual costs down by 40% for the same quantities they sell. For others, like the keke riders or cart pushers in the North, it is investing in more petrol and maintenance upfront, enabling much less interruptions during the day to enable them earn more. For the tailor or plank seller on MarketMoni, it is inputs, or light machinery (like a sewing machine or electric saw). For the farmer, we are talking stock feed or fertilizer. The stories are so diverse, and so beautiful. What weaves this all together is a common thread of industrious low-income Nigerians in productive commerce that require credit, and now this requirement has gone from a wish to a reality.
Even when genuine, transparency and accountability have often been the bane of most government intervention projects. How is GEEP any different?
The GEEP programme has a strict governance structure which emanates from the Federal Government through the office of the Vice President. The money is placed in the Bank of Industry (BOI) which has been asked to execute the program. There are signed agreements between the Federal Government and BOI on how the funds will be used, and how the usage must be reported. In the process of our data capture, we also go the full length to ensure that we are compliant with the data points required, and that there are no “ghost” beneficiaries. The project works with a number of private-sector partners whose job it is to enumerate candidates for the loans. We use the private sector to greatly minimize any political interpretation or undertone. After the verification, disbursement and repayment management is done by BOI. Every beneficiary is essentially a loan obligor to BOI.
The Federal Government made an explicit decision to run the program through BOI and to ensure direct engagement with every single beneficiary. This is the reason we have over 4,000 agents wake up every morning and go to the field to have a personal interaction with the traders, capture their information, and sync the data back to the BOI so we can verify and make payments. So we end up with a system where we can tell you everybody who has benefited from the project, their exact location, their picture with the trade, the specific loan amount, when they are scheduled to pay back, how much paid so far, and so on. We also went through several series of scrutiny from the National Assembly before the program budget was approved – and our reporting of the programme has also been held to the highest of standards.
There have been rumors in the news about the GEEP initiatives, especially TraderMoni, being a Vote-Buying scheme of the federal government; how do you respond to that?
First the GEEP program started in 2016, so this is our third year of operation. Our first loan registration was in May 2016. Since then we have been running the GEEP program nonstop across the country. Also we must note that it is the direct field learnings while implementing MarketMoni that led to the introduction of the TraderMoni which started as a mobile-based loan product and kicked off in September 2017. The point is that GEEP program did not start in election season. Very far from it. As at November 2017, over a year ago, even before the country cared who was running for office or not, we had disbursed over 300,000 loans.
Moreover, for those who still push the vote-buying narrative, I always ask: is GEEP (either MarketMoni, FarmerMoni, or TraderMoni) a wrong programme? In other words, is it impacting millions of Nigerians or not? If it is, then why would there be a wrong time to do the right thing? If a pepper seller sees credit she needs, shouldn’t she access it while it is available?
Think about this even more deeply, the vote-buying narrative could even be another patronizing expression of our middle-class privilege and we must always check this. As a middle-class entrepreneur, or business mogul, you can walk into BOI today to borrow funds to grow your business. You walk out with your dignity intact, and possibly with a loan. Sometimes these loans run into tens of millions of Naira, and billons of Naira. Yet, nobody accuses you of being vote-bought, even when you are borrowing the money of a government institution or project. On what basis therefore do we assume that those at the bottom of the pyramid are also not intelligent economic actors who can make rational decisions to better their lives? These are human beings with goals, aspirations, and dignity like you and I. They are not genetically predisposed to bad decisions, or so vulnerable that they would just be bought. Nothing could be further from the truth. If they have a better life, our job is done.
Since I resumed this job three years ago, until now, I have never set my eyes on a Permanent Voters Card (PVC) of any beneficiary. Not one. I would know. There is no such. As a matter of fact, some of the states with our largest beneficiaries are not even states that politically align with the party in power. As long as you are a Nigerian petty trader, you are eligible!
Still on rumors, some TraderMoni beneficiaries have complained of getting less than the N10,000 promised; and reports have suggested the deducted sums were taken out by Iya-Lojas and other value chain players. How is the GEEP team responding to this?
We are aware of those instances and are taking the necessary actions. With a programme of this scale, targeting a segment of the population that is highly uneducated, we know that some people would try to exploit the process and take advantage of unsuspecting beneficiaries. We have even seen instances of people who do not work for the programme, walking into a market with mobile phone tablets and posing as TraderMoni agents. They charge N200 per person who comes to have their data and picture “captured,” whereas this is all just a show.
This is one of those issues where our first reaction has to been to over-communicate, to make it clear to the public and our beneficiaries that TraderMoni is FREE! We do this above the line (mass media), but also below the line (individually to each candidate via SMS and automated voice call in local languages). They should never pay to get registered, and certainly never pay to access the funds from their mobile wallet. We also prosecute and make a public show of any of our agents who engage in any fraudulent activity, and we will be doing much more of this – including blocking their BVNs. As we continue to do more and more of these, we know that, at a point, the public would become our own police. They will report, apprehend, and even prosecute anyone caught in sharp practices. This is already happening.
We have a responsibility to stay ahead of the fraud by not only dealing decisively with it but by also spreading information. If there is one thing I would like to get out of this interview, it is that the readers should report ANY suspected exploitation of Nigerians trying to access this loan. Sometimes it is the market leaders who need to be reported.
One of the goals of the GEEP program is to promote financial inclusion; how does the program achieve this?
It’s quite simple. Financial inclusion is about getting people to use financial services as a habit. By so doing they are building documented histories and track records that will allow them access more financial services: take more loans, buy pension or insurance, save towards their goals and other financial services. However, this requires significant behavioral change, even on the part of the people who would be obvious beneficiaries. They need to stop putting money under their beds. They need to learn to pool resources and increase their purchasing power. They need to open mobile wallets and bank accounts, and use them. They need to have a radical shift in their mindset, and build trust in the financial system to enable them raise their profile. You cannot wish financial inclusion into existence at all. It is a very difficult effort that combines behavioral science with finance, technology, education, while make it all so simple that a grandma can rely on it. GEEP removes the first critical barrier, which is the barrier of engagement. We give you a strong reason to want to try. You can only get our loans by opening a bank account or operating a mobile wallet. You can only repay via the bank or vouchers, no cash. You can only access the next one on your mobile phone. We combine this with increasing investment in communication and education. You cannot achieve financial inclusion via marketing campaigns or market storms, asking people to open bank accounts. You have to give them a strong incentive to do so, and to continue to operate the account. GEEP has been able to achieve this. I call it the convening power of capital.
We are quite pleased with the results so far. Over half of our 1.5 million beneficiaries are first-time operators of bank accounts or mobile wallets. And we see them use those tools even after the loans, and this encourages us. We are committed to targeting everybody who is not financially included. We admit it is going to be a long journey to bring the over 23 million Nigerians and micro-enterprises that are financially excluded or under-included. However, we are also conscious it is an ecosystem so we don’t need to interact with everybody; if it works well for different cohorts of people, it will become contagious.
Tell us about your background and how the GEEP journey started for you.
My background has been in finance and technology, although my first degree was in Electrical Engineering, from Howard University in Washington DC. I started my career working at Goldman Sachs in New York, and then proceeded to Microsoft in Redmond Washington, leading technological projects and operations in the mobile division of the company. I proceeded from there to do an MBA at the Harvard Business School. I have always had a passion for driving projects at a national scale, and doing something that will have an impact on people who don’t have the opportunities that I have had. I feel it is the only way I could remotely appreciate the privileges I have been given by God and people who went before me.
In Nigeria, our biggest social challenge is poverty. I am a strong believer that the most effective way to fight poverty is to accelerate enterprise. At some point, this could all be private sector and industry-driven; but until then, we must be deliberate about achieving what you call “fiscal cushions” on the way there, otherwise the country will implode before our very eyes. For a country as large as Nigeria, the government cannot just be a bystander or umpire – at least not at the beginning. It must be an enabler, sometimes an executor. It must take the risks, push the boundaries, catalyze the ecosystems, until the sector is significantly de-risked and private sector is able to own and drive it completely. So, when my mentor and boss, Okechukwu Enelamah, was nominated as a Minister, it only made sense that I follow him and use the opportunity to try and make an impact in this regard. GEEP was the ripest project to achieve this goal, and the execution was under his Ministry. But I must tell you that, having been to some of the most remote parts of this country, almost clocking 30 states, nothing could have prepared me for this experience and given me a true understanding of Nigeria.
At 31yrs, what do you say to people who think you are quite young to be playing a lead role on such a massive project? How has the journey been, and what drives you?
I consider it a rare privilege to be doing work this important. In a geriatric society like ours, age typically takes precedence over capacity or intellect. I remain grateful to the visionaries who have defied the odds and taken a big bet on me. These people include the Vice President himself, Prof. Yemi Osinbajo; the Minister for Trade and Investment, Okechukwu Enelamah; and the Executive Director at BOI, Mrs. Toyin Adeniji with whom I have worked very closely with over the past 2 years. They see what most other people don’t see: that the future of Nigeria’s leadership is in our young, and that there is a growing tribe of us with some of the best of education, experience, and capacity to serve.
I never wake up any day thinking I am too young to manage an operation of this scale, or that we can’t make it truly transformative. As a matter of fact, I think youth and energy are major advantages. I apply myself totally, and demand the same of the team. We bring the best of technology, innovation, new thinking, to something as stereotypically archaic as government. Imagine driving a government project without a single piece of paper or unnecessary intermediaries in the process. I am talking unique identification, everything interconnected by technology and systems, no forms, no godfathers. We hop on flights on short notice, go to the most remote parts of Nigeria and spend days and weeks there. It is a truly immersive experience where youth can only be an advantage, if not even a requirement. And there is strategic thinking, leveraging on one’s networks including more senior mentors and leadership, while still having the nimbleness to go down market and find the most driven of our young and putting them to work.
DIPO OLADEHINDE
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