Aderemi Abdul-Bojela is the founder of United Technologies Limited, a company that began manufacturing air conditioners and refrigerator equipment in the 1980s. An innovator with a passion for research and development, he leads a consortium of companies that has produced a consumer credit guarantee Scheme (CCGS) for made-in-Nigeria goods – guaranteed to help manufacturers overcome inventory challenges and enhance the purchasing power of the average citizen. Since 2000 when it started, the Scheme has undergone a number of upgrades and after a successful pilot in 2011, it was shared with the government of the day. The proposed FGN- CCGS which has scaled through the economic and executive council, is poised to make Nigeria’s economy the nexus of Africa’s industrialisation. He spoke with ZEBULON AGOMUO. Excerpts:
What is the FGN- CCGS consumer credit platform?
It is a platform that is connected to banks, insurance companies, credit bills, cooperatives, and all. If you register with the Scheme, you can actually buy the product when you need it because you are a member of the CCGS (consumer credit guarantee Scheme), you walk into our partner store to pick the appliance you want and because it is a CCGS partner store, you will be given a form to fill in your details; where you work, etc and drop it. Everything is automated.
How will the scheme impact Nigerian manufacturers?
Principally, it is to promote and multiply the effects of those things that would help diversify the economy. It would help create jobs; it would enhance and broaden tax collection; it would also stimulate the economy, and affect other auxiliary parts of the economy. The benefits are not only to the government but also to the individuals; it would increase the quality of life of Nigerians. You don’t have to wait for two years or three years to buy appliances in your home or to buy cars and that is how the economy in an advanced economy is being run.
How does this credit scheme improve the quality of life of an average Nigerian?
We have devised a means that if the banks are having challenges with identification, they can actually give loans to people who are in groups and are known to their leaders who can stand for each member of the group like the cooperatives, associations, etc. Look at a cooperative for instance, they have a management team and members under each team, some of them 100, some of them 2000 strong members. We can actually give the money to the cooperative which will in turn disburse it to their members and if any member should default, he/she is known by the executives and will always get them to pay back.
By 2010, we had crafted the Scheme and presented it to the federal government in alliance with First Bank of Nigeria Plc. They saw the merit in it and it went through the economic council and the executive council and got approval. Unfortunately, the cabinet of Goodluck Jonathan changed and the new minister of finance at that time had a different focus. We came to the conclusion that at a point in time, three things are crucial to any project. One: Idea. Is the idea very sound, is it good, is it of benefit to the economy of this country? The second one is Implementation: No matter how good your idea is, if it is not properly implemented, it will fail and three, Time: Time is the most important of all these three items. You might have a brilliant idea, and you might have a brilliant implementation but when the time is not right, it will not take off.
The scheme is to promote and multiply the effects of those things that would help diversify the economy
We decided to continue working and perfecting the project and from 2012 to date, technology has changed dramatically. It enhanced what we had done and we incorporated a lot of things into the Scheme and made it extremely seamless to implement. What we now have is a consumer credit guarantee for made-in-Nigeria goods. The reason why we said made-in-Nigeria goods is that we don’t want to promote imports, we want to promote the consumption of locally-made goods. By doing this, we are creating jobs, and having tax revenue, the economy will be buoyant, the GDP will increase and there will be better security. The issue of security has to do with unemployment, idle youths that have nothing to engage them, and so on and these are the merits and the multiplier effects of this Scheme.
The Scheme will also allow Nigeria to industrialise because Nigerian manufacturers can now mass produce and scale. This means that the cost of their production will be low and they will be competitive and can put imported items and Nigerian items side by side because those imported items are produced at scale from their native quantities but here, we don’t produce at scale because our quantity power is low so if we produce in large scale, who is going to buy them? That’s why consumer credit is positioned to address those challenges. With the Scheme, manufacturers can produce and scale. We already have the CCGS machinery to help them sell what they have produced.
If you need to buy something and you work in a place, you earn a salary, you don’t have to spend your entire salary to purchase items you need. If you want to buy you can actually say I’m willing to pay ten percent of the price as a down payment and I have ten thousand naira to pay and I will spread the ten thousand for the next 12 months. It relieves you of the burden of paying 100 percent at once.
Will there be an outlet that people can walk into?
The manufacturers would have outlets and they’ll also be online and in the market place so you don’t necessarily have to go into a store.
Reda also: National tier IV data centre: Towards boosting Nigeria’s digitalization process
What will be the role of the Federal Government in this scheme?
The role of the government is to back the banks and to provide risk integration to the lenders, by absorbing their losses. It is a ratio issue. If for instance, you collect a premium from one million people and out of that one million, ten default, the premium you collected from the people will help cover the losses and so the government takes over the loss, pays the banks for those who defaulted after which they collect premium from the borrower.
Have you had a pilot run of this Scheme and was it successful?
Yes, we did a pilot with First Bank in 2010 and it was successful. We worked with two cooperatives to do the pilot and we recorded a 100 percent success rate. After the huge success with the pilot run, we then took it to the Federal Government to have a look at what we had done in 2010/2011.
We spent two years running the pilot and we said we had to launch this across the country, which is why we took it to the Federal Government to provide the guarantee. The banks were afraid because they did not have the capacity to deal with one million people at the same time. However, with a promise from the government to give them the backing based on the risk mitigants we had put in place, that their money would not be lost, they were convinced.
What is the guarantee that your money is safe with the borrower?
We have put machinery in place that you cannot just run away and even when the person passes on, there is always life insurance. Even when one loses one’s job and for six months when one is job hunting, payment is also guaranteed. When you join the Scheme there is a five percent provision that you will save in this Scheme.
For instance, if you want a loan of one hundred thousand, what you are going to pay, let’s say your interest is five percent, you will be paying back a hundred and ten thousand but you are expected to add another five percent to make it hundred and fifteen thousand. That five percent is your money but it’s part of the risk mitigant that we put in place so that if there is a default, we will look at everything you paid back plus that five percent so that we can exit you. But if you don’t default that five percent is your own and we can advise you on it. We can say you have this five percent that you have saved for three, four, or five years. Would you like to go into a mortgage, would you like to buy a car? You already have a down payment through this Scheme. So that is part of the instrument of enhancing the quality of life of Nigerians. It would come to your consciousness that when joining this Scheme, in four to five years’ time, I will have access to a mortgage, buy a car or buy stocks for the future. So, it’s an all-encompassing value-added Scheme that would have a multiplier effect on the economy.
Has any other African country executed a similar Scheme?
I can’t think of any for now, but I think perhaps South Africa has something but it’s not similar to what we have.
