Following a successful pilot and significant uptick in repayments after the launch of the TraderMoni repayment scratch cards in January 2019, the GEEP team have now extended the cards for MarketMoni loan repayments and have commenced efforts to roll them out on a national scale.
According to the Bank of Industry, the scratch cards were developed because most beneficiaries of the scheme do not have access to banks. The nearest bank to some of the markets is sometimes 20 kilometres or more away. As such, collection channels with wide coverage is required to drive collection.
The new method of repayment leverages vouchers or scratch cards sold at key cluster/market locations with high numbers of petty traders. The cards are loaded the same way Telco recharge cards are loaded; loading the card automatically credits the beneficiary’s loan account, and updates their loan position.
Also, beneficiaries can pay back their loans at any commercial bank in the country through the PayDirect platform. All a beneficiary has to do is walk into any bank and tell the Teller they want to pay their BOI-GEEP loan and give the teller their phone number and the repayment amount. With this, beneficiaries now have options for repaying their loans.
In addition, based on the success of the scratch card pilot, BOI has confirmed its decision to roll out similar voucher/scratch cards for MarketMoni loan repayments. MarketMoni loans start at N50,000 and are for traders with significantly more inventory size than their TraderMoni counterparts. The criteria for MarketMoni loans include having a bank account (and BVN), and belonging to a market association or cooperative society.
TraderMoni and MarketMoni are two of the three interest free, collateral free products under the Government Enterprise and Empowerment Program executed by the Bank of Industry. The third interest free loan program, FarmerMoni, is targeted at farmers within farming clusters; each FarmerMoni loan go from N100,000 to N300,000 depending on the crop being cultivated
TraderMoni loans, which range from N10,000 to N25,000, do not require any collateral for beneficiaries to participate. However, TraderMoni beneficiaries are required to have a mobile phone and must be active petty traders in a designated cluster/market location. This collateral free approach goes against conventional “loan-wisdom”. As such, critics of the TraderMoni program often base their arguments on the feasibility of repayments and the sustainability of the program.
BOI in their responses have often cited the Government’s preference for a carrot approach to drive repayments; the carrot being that whereas the loan starts at N10,000, beneficiaries who pay back automatically qualify for N15,000. Those who pay back their N15,000 qualify for N20,000 and those who pay their N20,000 qualify for N25,000. Ultimately, beneficiaries who pay back the N25,000 get migrated into the N50,000 MarketMoni program. Over the course of this journey, successful beneficiaries would have received up to N195,000 in affordable credit hitherto unavailable to them and their businesses.
BOI recognizes that there is a higher risk of default as a beneficiary climbs up the ladder; however, to mitigate this risk, the GEEP team has introduced a new requirement for accessing the N20,000 TraderMoni loan: a bank account (and BVN). This helps the program achieve two broad goals: Financial Inclusion and Repayment Compliance.
Whilst financial inclusion is easily understood – seeing as a significant portion of the 36million financially excluded Nigerian adults are petty traders and artisans; we view the new concept of using the BVN as a digital collateral to drive repayment compliance, if well implemented, as simply brilliant.
