The Central Bank has given operators in the microfinance industry up to April 2021 to shore up their capital base. Of course, the idea is that the operators are poorly capitalized and need to bring in more funds to be better able to support the economically active poor people in Nigeria. The need for increased capital base for operators is one that everyone agrees has become inevitable.
The challenge of pulling millions of our citizens out of poverty, as proposed by the present government, is a daunting one and we need to understand that it requires more than platitudes and catch phrases to change the course of social wellbeing of Nigerians. In other words, that task will have to be properly promoted and backed with correct tangible policies and actions. It will also have to be sold to Nigerians in such a way that it stops being one of President Buhari’s personal projects. This course of action is advised by the nature of our current poverty, which is endemic and growing.
To pull so many as 100 million Nigerians out of poverty in a space of ten years is no doubt an ambitious plan. And that is what is actually good about the plan – it is not just ambitious; it is also audacious. Every vision must have that attribute of audacity. The good thing about aiming for the moon, they say, is that even if you fail, you land among the stars. We must all understand that it is not a task that the government can perform alone. There is a tendency among those in government to often feel more Nigerian than the rest of us. This has largely informed the apathy that trails many government initiatives, and led to their failure.
There are different roles that need to be played to really reduce poverty by the magnitude envisaged by the government, and many of them belong to the private sector. It must be inclusive and nationally focused. Often, we neglect our strong points and focus on the weak, on the wrong assumption the strong will take care of itself or remain strong. Northeast may be the centre of poverty and insurgency today but neglecting the struggling people in other places, just because they are yet to boil over, may be the wrong strategy.
Inclusiveness is the word, even if graduated.
Most of the over 730 million people living in extreme poverty in the world are found in Southeast Asia and the Sub-Saharan Africa where Nigeria is holding court as the poverty headquarters. Ending poverty in all its forms is one of the 17 Social Development Goals, which the world has set for itself by2030. This target can only be achieved with inclusive growth, which of course can only come through inclusive policies. The current Gross Domestic Product figures for 2020 have pointed towards an improvement in the growth trajectory of the economy. However, we still cannot say our growth is shared or inclusive. To achieve inclusive growth, we must focus on the rural communities, which host the bulk of the poor.
Although agriculture is a popular occupation of the rural dwellers, and currently in the front burner of government support programmes, we still have not got it right. Sustainable access to inputs and other support resources is still not getting to farmers in the right quantum and at the right time. Subsistence agriculture is still the vogue just as walking about with cattle as a culture is dying hard. There is little or no farming going on in most rural areas, especially the places where real farming took place, because cattle herders and “bandit” have made that impossible.
We must focus attention on the poor and their needs, which stretch from finance to infrastructure. Unemployment and, relatedly, poverty have been demonized as the twin causes of insecurity in Nigeria – the biggest threat to our national survival. But unemployment and poverty are themselves mere symptoms of the failure of leadership, political, economic and social, to provide the Social Overhead Capital that would liberate and empower the mostly vibrant people of Nigeria to pursue their dreams. Public policy is still largely parochial in the sense that we do not invest in the merit of Nigerians.
We invest on the bases of their tribes, clans and opportunism. Investing in the merit of Nigerians means that you encourage them to compete, and that way they up their individual games in participating in the economy – training and education. That will help to create a better crop of citizens than what we currently have. It will engender patriotism and fire innovation. The brand of politics we play in Nigeria is that, at all levels from the national to the subnational, citizens are being forced everyday by discrimination to seek alternative countries. The high wave of emigration to Europe and the Americas is not just a result of globalization. And the pattern of this exodus also tells us that it is not wide spread even among the Nigerians. Only those who feel the system has rejected them seek that ultimate solution.
In all of this, we need to encourage those involved in the economic empowerment of the poor, especially through microfinancing, whom I must commend for the great sacrifice they are making to help the government is its financial inclusion programme, to do more. It is not a fancy job to do microfinancing in an environment where poverty is racing like a wild flood. You bring ten people out of poverty today, insecurity and failure of leadership shoves 50 back in.
In discharging the duty of regulating the industry, we should not see only a group of people with the tendency to play the system and so focus on controls. When we deal with operators, especially as regulators, we must realize that there is a social aspect of the work of an MFB, which is both a financial and social intermediary. When the Government wanted to form an MFB to manage the many funds it accumulated and was unable to pass on to MSMEs, many had suggested that they use the instrumentality of the reach and experience of the big successful microfinance banks to disburse the intervention funds.
But the government preferred to create for operators, a big and more powerful competitor in the form of a government-owned behemoth of an operator called NIRSAL Microfinance Bank. That move, some say, could discharge MFBs of any guilt if they do not reflect the social elements of their nature in dealing with the poor. More important, however, is for NIRSAL to chart the course of the industry, leading the way for all MFBs, with regard to services, outreach and innovation. With so much cheap funds available, it is already a market leaders and should be expected to practice classical microfinance, and restore the industry to orderliness.
Emeka Osuji
