The TraderMoni scheme is arguably one of the laudable Social Investment Programmes of the Buhari administration designed to promote financial inclusion and alleviate poverty in the country. The scheme, an integral part of the Government Enterprise and Empowerment Programme, is a collateral-free micro credit meant to assist petty traders and artisans across the country grow their businesses. Under the programme, administered by the Bank of Industry, traders who are expected to belong to a market union and posses valid means of identification, register for TraderMoni using their phones and following accreditation, become eligible for a collateral-free loan of N10,000. Beneficiaries stand to enjoy higher loan facilities ranging from N15,000 to N50,000 if they repay within the six-month loan period. Since the launch of the scheme, the federal government, through the Bank of Industry, is reported to have disbursed over N15 billion to petty traders across the 36 states of the federation and the Federal Capital Territory. By implication, it has recorded about 1.5 million new entrants into the formal financial system as new operators of bank accounts or mobile wallets. Perhaps to underscore the importance of the scheme in the government’s social intervention programme, the Vice President, Professor Yemi Osinbajo, has been actively involved touring major markets across the country to flag off the scheme.
In view of the increased tempo it has witnessed in recent times, the TraderMoni scheme has been criticized, especially by the major opposition party against the backdrop of the fast-approaching general elections, as a vote-buying and campaign ploy by the federal government. Also, just recently, a top official of Transparency International, Awwal Rafsanjani, was quoted to have said in a programme on Channels Television that the initiative was tantamount to an “official use of public funds to actually induce voters”. Aside the alleged political undertone involving the unapproved use of PVSs as a condition to access the loan, some of the agents of TraderMoni have been accused of insisting on kickbacks from petty traders before getting them accredited for the scheme.
Concerns have also been raised in some quarters regarding its sustainability given that the loans do not require any collateral security. Granted that the strategy of making repayments a criterion for accessing higher amount of loan will result in a high uptake in repayment at the initial stages of implementation, default rates are likely to be higher much later the moment a beneficiary reaches the final level and collects the maximum sum beyond which no other incentive applies. There is also the issue of low penetration as the focus of the scheme appears to be petty traders and artisans in major markets across the country. Its presence has yet to be felt in rural communities without access to mobile phones in view of the fact that applicants are expected to have a valid SIM/phone number properly registered with any of the service providers. These criticisms notwithstanding, the TraderMoni initiative in a country with high rates of unemployment and poverty is quite commendable. In order to achieve higher success rates with respect to financial inclusion and poverty allevation, it is important to equally make rural communities feel the impact of the scheme and more importantly tweak its modus operandi to reflect ownership by community groups while the government is behind the scene providing support. In this regard, the Thailand model readily comes to mind.
By any account, the Thailand micro loan scheme, currently one of the largest microcredit programs in the world, is a success story and a shining example of how to channel micro credit for petty trades and business ventures. Since the launch of the Thailand ‘Village and Urban Revolving Fund’ a few years ago, designed to improve access to ﬁnance, raise incomes and reduce poverty in rural areas, financial access is said to be on the rise in recent years with 88 per cent of the Thai population having access to formal ﬁnancial services. Under the Thailand microcredit program, every village is encouraged to set up a committee consisting of about ten persons that manages the fund and determines the lending criteria, including interest rates, maximum loan size and loan duration usually not more than one year. The committee opens an account at a branch of the intermediary bank in which the fund is lodged. Thereafter, it receives and evaluates loan applications from individuals who are required to provide a minimum of two guarantors before the loans are approved and disbursed through the intermediary bank.
The key lesson from the Thailand experience is that the micro credit scheme is driven by the communities and not the government. Instead of making use of the Bank of Industry with limited reach, the TraderMoni scheme could be better implemented through Micro Finance Banks with significant presence throughout the country. Only recently, the Central Bank of Nigeria unveiled a revised National Financial Inclusion Strategy with the major goal of reducing the proportion of adult Nigerians that are ﬁnancially excluded to 20 per cent in the year 2020 from its baseline ﬁgure of 46.3 per cent in 2010. Without doubt, the TraderMoni scheme promises to go a long way in bringing this about if well implemented. To this end, the government should concern itself more with the provision of an enabling framework for community-based ﬁnancial institutions such as savings and credit cooperative organisations, farmer societies or non-bank microﬁnance institutions to play a more eﬀective role in reaching the most unserved and underserved both by geography and demographic characteristics. In Thailand, 99 per cent of rural communities are said to have access to ‘Village Funds’ which have increased ﬁnancial inclusion and boosted substantially the provision of rural credit. This points the way forward for Nigeria. Therefore, for optimal results, it is important that the TraderMoni scheme is fine-tuned in such a way that the government’s hand is invisible so that beneficiaries feel obligated to repay the loans and not see it as a piece of the national cake.
Uche Uwaleke of Nasarawa State University Keffi is Nigeria’s first Professor of Capital Market and the President of the Association of Capital Market Academics of Nigeria