‘Bottom of the pyramid’ is a common expression in global economics. It refers to the largest but poorest socio-economic group in a society, according to the Business Dictionary. It was first used by Franklin Roosevelt, a former president of the United States, in his radio address entitled ‘The Forgotten Man.’ He used the phrase to describe a group of forgotten, unorganised but the indispensable units of economic power.
This group is often forgotten by the society, but it is an unexploited emerging market worth trillions of dollars, according to Fasiha Subhan and Amira Khattak, in their work entitled ‘What Constitutes the Bottom of the Pyramid (BOP) Market?’
In Nigeria, which is Africa’s most populous country, the people earn less than $1.90 per day, putting them in the category of low-income earners and the poor. They are ignored and neglected, even though they have the capacity to create millions of jobs.
A 2019 report by the National Bureau of Statistics and the Small and Medium Enterprises Development Agency (SMEDAN) said that the number of micros, small and medium, enterprises (MSMEs) grew from 37million in 2013 to 41.5million in 2017.
However, micro-enterprises were responsible for this growth, with the number hitting 41.469 million (99.8 percent). Small enterprises were 71,288 (0.2 percent), but medium-scale businesses were only 1,793 (0.004 percent) from 4,670 before 2013.
The data said that MSMEs contributed 50 percent to Nigeria’s GDP, accounting for 86.3 percent of jobs (59.6million jobs) as of 2017. With micro-businesses making up 99.8 percent, it follows that the majority of these jobs were created by them.
In spite of their contributions, the bottom of the pyramid is often ignored in the economy, with deposit money banks reluctant to provide them with loans needed to grow.
“Nigerian commercial banks are risk-averse. They put so many bottlenecks on the way when you want to access funds,” Ibrahim Maigari Ahmadu, chief executive of Liverstock247.com, Nigeria’s first livestock online marketing and listing platform, said recently.
“Interest rate is very high, which is a major inhibiting factor. Collaterisation is structured to knock you out,” he further said.
He explained that the risk averseness of banks prevents them from funding small and micro as they are not certain about what to get.
According to the NBS and SMEDAN report, 85 percent of businesses could not have access to external financing from 2013 to 2017.
In fact, only 5.3 percent of SMEs had access to bank credit, even with 40 percent of them having relationships with banks.
“Both access to funds and costs are big issues,” said Attah Anzaku, CEO of AgroEknor, exporter to Europe, Asia and the Americas.
“Even if you have the access, the cost is crippling,” he added.
The Federal Government is aware of these challenges, which is why it established the Government Enterprise & Empowerment Program (GEEP) to integrate the bottom of the pyramid into the economy using soft loans.
GEEP 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 two 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. The unemployment rate is estimated at 27.1 percent, meaning that over one out of every four Nigerians is unemployed.