• Tuesday, June 18, 2024
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How much impact can GEEP micro loans make?

Loans

Around 1970s, Muhammed Yunus, a Bangladeshi professor of economics, began to give micro loans to poor people. He lent $27 (856 take) to 42 women in a village called Jobra. The women returned with a profit of $0.02 each on the loan few weeks after.

By late 1983, the project had begun as a full-fledged bank for poor Bangladeshis and was renamed Grameen Bank. As little as the loan was in those years, the Grameen bank lifted millions of Bangladeshi out of poverty. By 2013, the bank claimed it had lifted 50 million people out of poverty.

Bangladesh, once ridiculed as one of the poorest in the world, has today raised millions of entrepreneurs who are producers and exporters of fabrics and textiles.

In 2018, Nigeria’s total non-oil export earnings from more than 25 commodities amounted to $3 billion, according to the National Bureau of Statistics (NBS), but Bangladesh earned $33 billion—10 times that from exporting one product—textile.

Bangladesh has 5,000 garment factories today, employing about 20 million people, mostly women, pushing the extreme poverty index down to 12.9 percent, according to the World Bank, as against Nigeria’s 40-45 percent.

Yale economist Ahmed Mushfiq believes that Bangladesh’s recent economic success is attributed to the flourishing garment manufacturing industry, due partly to the micro credit provided by Yunus and his team of bankers.

Yunus’ model has been copied and replicated all over the world and it continues to prove that micro lending to the poor can lift them out of poverty.

Nigeria’s government through the Government Enterprise & Empowerment Program (GEEP) is hoping to replicate the economic revival Bangladesh experienced by giving micro loans to people at the bottom of economic pyramid.

It was set up to start the economic revival from the bottom of the pyramid by providing access to credit for Nigerians who contribute to the economy but have been neglected over the years. In four years, Tradermoni, Marketmoni & Farmermoni have provided loans ranging from N10,000 to N300,000 to petty traders, artisans, small businesses and farmers. This has seen over 2 million Nigerians significantly receive boosts to their businesses. GEEP has been implemented in 36 states of the federation and the FCT with a spread of over 2,600 market clusters.

These loans are not given out at random. Instead, they are done through existing clusters and associations in various markets across the country. This helps in proper tracking of the loans and provision of easy repayment options for the beneficiaries.

GEEP has also been able to provide this access to credit to IDPs in the North East. This has provided the IDPs with a viable way to get back on their feet while also contributing to economic development. To ensure that these loans get to the target audience, market visits are done across the country to engage with beneficiaries as they go through the process.

The programme has become critical due to the prevailing economic situation worsened by COVID-19. Today, 82 million Nigerians live on less than $1 per day, representing 40 percent of the population, according to a recent report done by the NBS. Unemployment rate is estimated at 23.1 percent, meaning that almost one out of every four Nigerians is unemployed.

“It is a good initiative that can make a huge impact on the poor, especially those at the bottom of the pyramid which we find every day on the streets,” Ike Ibeabuchi, a manufacturer and social commentator, said.

There are millions of Nigerians at the bottom of the pyramid. A 2019 report by the NBS and the Small and Medium Enterprises Development Agency (SMEDAN) said that the number of micro, small and medium, enterprises (MSMEs) grew from 37million in 2013 to 41.5million in 2017.

However, micro enterprises comprised 41.469 million (99.8 percent).

Small enterprises comprised 71,288 (0.2 percent), with medium-scale businesses only 1,793 (0.004 percent). This is an indication that GEEP is targeted at the majority poor who mostly do not have access to funds to expand their micro businesses.

Jumai Bello, a merchant of perfumes and beneficiary of the GEEP loan in Bauchi, explained how much impact GEEP loan has made on her business.

“I learnt about the GEEP Marketmoni scheme through my association, the Development Exchange Centre (DEC) in Bauchi State. In my business, I have people who help me sell. I keep detailed records of every product. I applied for the Marketmoni loan and I got a loan of N50,000. I have used the loan to purchase more raw materials for my scents in bulk rather than buying in bits like I used to. There is not much else to say but to thank the Federal Government for this programme. I hope to see more of this kind of people-oriented programmes.”