Your bank has just presented cheques to beneficiaries of the CBN loan scheme to small businesses; how much is involved and what makes it special? It is about development.
The only thing that is special about the scheme is that it goes down to the grassroots. Those that were recently presented with cheques under the scheme have never obtained any loan from anywhere. And so 90 percent do not have a bank account.
Now we are bringing them into the banking system and we are also giving them assistance such that they can expand their businesses. So the scheme is important for development. What we have disbursed today is N460m.
But what we want to disburse in Akwa Ibom State for Quintessential Business Woman Association (QBWA) assuming that the CBN would approve all, is about N8bn; but it will be done in tranches because we have 1,550 cooperatives in Akwa Ibom State for QBWA alone which translates to 50 cooperatives per local government area.
So if they are to access N5m each, then that is about N7.75bn but you know that cannot come at a go. So we have to bring in batches. So what we are disbursing today is N460m.
How do you ensure that the beneficiaries are cooperative members and that one section of the state is not being given more attention? There is nothing like that even in the QBWA structure, each local government area of the state has 50 cooperatives, no lo- cal government has more cooperative societies than the other.
When we were disbursing the first batch, we made sure that each local government has five cooperative societies, the amount may differ but certainly, the number is the same. Do they have to pay counterpart funds to qualify them for the loan? What we asked them to pay is 10 percent of the loan.
Those of them that paid N500, 000 and we have given them N2.5m, we would return N250, 000 to them. Because, they paid N500, 000 expecting to ac- cess N5 million but when we went on verification and saw the things they had on the ground, we realised that they did not need N5m.
So we reduced the loan to N2.5m meaning that they will come back for the N250,000.There have been fears about the ability of cooperatives to have access this loan, why was this so? When a programme is launched in the country, you go for it first before complaining.
Last week, there was a publication saying that since the fund was launched, no micro finance bank had been able to access the loan. I showed the publication to some people telling them that this man does not know that I have already accessed the loan.
So the important thing is that you go for it be- fore complaining. But if you try hard, it will also work. I believe in what the CBN did.
Do you have fears about the beneficiaries not being able to repay the loan within the one year period? I do not have fears but as an investor, you cannot see the end from the beginning. I do not have any fear that they would not repay the loan.
Well if the normal training and monitoring is done, I see a 100 percent re- payment because the people we are giving out the loan to are not those kinds of people that will be funny, except one dies. Again, you also see that we are not dealing with individuals.
We are dealing with 20 people in one cooperative society. We believe that they would repay the loan within the stipulated period of one year.
Are the cooperative societies expected to share the amount involved to each member to be invested in any business activity? There are two ways. There are some cooperatives that have a central budget. To such, the money will be used for such a project which we have inspected and given the go ahead.
But they are some of them within the cooperative either in twos or threes; they are forming themselves into other small business. So the money would also be broken into those groups but under the administration of a particular cooperative. So there are two ways.
The way QBWA structures its projects; they have in each state a specific project. In Akwa Ibom, it is based on oil palm. Other states like Cross River is Mushroom, Bayelsa is on snail farming and so on. The cooperatives are trying to create agriculture value chain and a lot of other things within the chain.
There are some that are doing planting alone. There are some that are into processing, there are some that are moving from one end to the other. Though we do not have people in haulage, we are trying to create people in that sector so that we will move the goods to the market.
Read also: DBN ready with N169Bn to support SMEs as NEPC grooms Niger Delta small exporters
Your bank has been in operation for many years, it must have faced challenges? We have been in existing since 2008 operating in Uyo, though we started as a unit micro finance bank, later we moved up to the state as a micro finance bank.
We have been working with the market women, women in the local government areas. I would say the challenge has to do with the environment and the culture of the people. The good thing is that I am from here and used to the challenges.
So far, as a bank, the problem is that of credit payment. But I would want to believe that at the rates we are going, we do not really have much of that experience from the bottom except if you have to give loan to people at the middle and the top which some of us are tempted, otherwise the grassroots or the micro level is always better in terms of loan repayment.
Apart from the challenge as a bank, the other problem is that of manpower. Our capital is not like the commercial bank. Sometime, going for the best hands is always costly for us especially those of us who are not in Lagos.
Apart from working with women at the grass- roots, do you have any special product provided by your bank? We try to reach every client that comes particularly those that fall under our category.
Mostly, we do a lot of trading and transportation. In Uyo for instance, we started with tricycles. When motorcycles were banned, we were the first to mobilise customers to buy tricycles when there was no means of transportation.
As at that time, we brought into the system over 500 tri- cycles and that really helped the people to move around. We also went into a bus scheme where we buy buses and give to customers and allow them to pay back at 10 to 20 percent interest rate within two years depending on how we structured the scheme.
I think we are doing well in transportation and in farming and trading. That is not to say we do not have customers in other areas like artisans and mechanics.
Why has your bank not thought about going into assembling tricycles? Sincerely, we planned for that until about three years ago; the then deputy governor had made an announcement that tricycles would be banned. So we had to do away with that plan.
Unfortunately, up till to- day, tricycles have not been banned. There was a time we were selling between 50 and 100 tricycles, apart from the initial tricycles even till now we still sell tricycles.
If we add it up, we should have up to 1,000 tricycles that we financed. What we did was that we brought from the dealers and then we branded some of them for the customers, but we did not import them.
Many people believe the interest rate for the loan scheme at 9 percent per an- num is high, what do you think? For now, it is the best because that is per annum. If you put it down it would be about 0.75 percent per month.
It is not up to one percent per month. Where- as what the average micro finance bank in the country gives is above that. It ranges between three to seven percent per month. But the loan from the CBN is less than one percent per month. I think it is the cheapest I have seen so far. Because it is 9 percent inter- est., it is going to be about 0.75 percent per month. So if you are getting something below one percent per month, then it is the best we can think of.
If it is that cheap, why did we have the initial pessimism and doubts about the scheme? It was because of the conditions the CBN gave. It is one of the things for which I have faulted the scheme.
While the scheme is fantastic, they cannot run it effectively without taking part of the risk. Because if you want me to help you plan and develop the economy and you are running away from risk taking, am I as an individual or corporate organisation going to be the one that should take the risk for government? Government should be able to take some level of risk in micro financing.
For instance, what I am disbursing today, if it goes bad, am paying back 100 per- cent to the CBN. So who gets the credit? Is the CBN, my company or myself? I think that is why a lot of banks are not going in there.
You are telling me, take this money and give it to the people who do not have any security and you are asking me, if it goes bad, pay back to me. That is why the scheme was slow in attracting patronage.
The CBN should review the guidelines and make it a bit simpler for the banks to participate also be able to take a certain kind of percentage to make the scheme attractive to banks.
