Timing Is Poor, So What’s Good About TraderMoni?


By Femi Akintunde-Johnson

As most things in life, what is sumptuous meat to one is taboo to another. Last week, and a little more this week, financial analyst, Olufemi Awoyemi, took the current darling of Buhari/Osinbajo administration, TraderMoni, to the cleaners; subjecting it to some purgatory cleansing in establishing that though the intervention is commendable, its ministration has been anything but remarkable.

Awoyemi’s concluding statements are both charitable and remonstrating at once – a type of reasonable punishment invested on a brilliant but lazy student. Hear him: “… The most important Social Intervention is education…but the truth of the matter is that if people cannot eat, you can’t build on anything, apart from the minimum requirement of humanity. So, to that extent, I subscribe to them doing the TraderMoni.  

“But here’s the question: if it took you three years to do TraderMoni… because timing is everything in the implementation of policies…and you’ve coloured the whole process by injecting yourself into the implementation… So, instead of making it a national policy, you’ve made it into ‘our party’ policy…

 “And the argument is valid, whichever party is involved. For example, when they came to Lagos State, and brought (Babajide) Sanwo-Olu (APC Lagos governorship candidate)… Sanwo-Olu is my friend, but in what capacity was he there? I told him his presence there was an abberation…the state should not be funding a campaign.

“So, the timing issue and the optics…take away the argument for some people.  On the efficacy…the long-term objective… where is the funding going to come from to sustain it? So, you’ve given them in 2018, when will you give them in 2019… because there’s no election after February/March…? Are we going to wait till 2023?

“And then the impact… Since you started this scheme some time ago, what has been the impact? And why are you not accountable? So, how do you measure the impact of Iya Risi, who sells salt and locust beans? You said they’ll pay back, since you started it, how many have repaid? In any economy where they mostly buy in cash – and no technology to track transactions – you cannot do anything to them when they spend your money, and relocate to another market.  So, it looks like a good initiative, supported by global best practices, but executed in a poor manner.”

 Following my hint in the opening paragraph, it was obviously critical to seek another opinion which speaks to the sense and structure of the TraderMoni matter, and yet is grounded in the cold reality of occupational economics. Gbenga Badejo, FCA is such a peculiar voice: a financial and forensic audit expert; CEO of Gbenga Badejo & Co; he sits on a number of boards… and he is an Expert-In Residence at Lagos Business School on advising SMEs.

 Badejo was presented with four posers in an attempt to interrogate the dynamics of TraderMoni, and like a skilled forensic pathologist, he calmly set about scalding layers of details off “the crime scene”. He was asked these, without prejudice: Is it sustainable? Does it make economic or developmental sense to dole out unsolicited (and possibly undocumented) grants to traders? Or the critics of TraderMoni are merely grandstanding? What options will you recommend to stimulate m(i)cro economies and SMEs?

 And the following are excerpts of his testimony:

“Is ‘tradermoni’ sustainable?

The Bank of Industry’s total credit disbursed to the industrial sector under the Bank’s various facilities in 2017 rose by 87 per cent, to N123.57 billion, compared with N83.9 billion in 2016. Of the total, large enterprises received N83.0 billion, representing 67.1 per cent, while small and medium enterprises, as well as micro enterprises got N29.5 billion and N11.9 billion representing 23.8 and 8.9 per cent, respectively.

“A sectorial analysis of the disbursements to large enterprises showed that food-processing sector received N20.4 billion, representing 24.6 per cent of the total. This was followed by the gas and petrochemicals sub-sector, N18.0 billion, or 21.7 per cent; solid minerals N11.0 billion, or 13.3 per cent; agro-processing, N10.6 billion, or 12.7 per cent; engineering and technology N10.4 billion, or 12.0 per cent; and interventions funds group N6.8 billion, or 8.2 per cent of the total. The gender business group accounted for 4.1 per cent of the total, amounting to N3.4 billion. (Source: CBN’s 2017 Annual Report)

“We believe that the TraderMoni is sustainable since the beneficiaries are required to pay back the loan over a given period, which would enable the funds to be accessible by other potential traders after a six-month period.

“Our concerns are around the time value of the funds (Inflation) which could slowly diminish the real money value over time (between 2-4 years).  Overall, the government’s objective here is a social one and therefore devoid of any economic returns assumption.

“Does it make economical or developmental sense to dole out unsolicited (and possibly undocumented) grants to traders?

“First of all, it’s NOT a grant and the traders who benefitted are required to have the minimum ‘know your customer’ (KYC) information.

“We agree it makes economic and developmental sense as evidenced from a research documented in the Journal of Sustainable Development Studies on ‘Effect of Micro-Credit on Welfare of Small Scale Entrepreneurs in Nigeria: A Case Study of Oyo State’ by Odunjo, V.O., Osawe, W.O. and Okoruwa, V.O., where the empirical study produced the results revealing that the ‘analysis of respondents’ access to credit showed that poverty incidence was higher (P0=0.4876) among respondents that did not use microcredit than those with access (P0=0.4419)’.

“This supports the notion that the incidence of poverty declines with access to microcredit as Nigeria was recently referred to by the World Poverty Clock as the World Poverty Capital of the world.

“Are the critics of ‘TraderMoni’ grandstanding?

Well, we believe that the timing of the launch at certain locations might have contributed to the general criticism of the Scheme despite its numerous benefits.

“What options will I recommend to stimulate m(i)cro-economic activity and SMEs?

– Cut Interest rate – This will provide an incentive to businesses to spend, thereby stimulating business and investment.

– Education And Development – Spending on education and development is a long term project that will improve labour productivity over time.

– Business Tax Cut – This will increase the incentive for production across industries and bring in the needed Foreign Direct Investment (FDI) Nigeria requires to sustain its recovery from recession.

– Removing Unnecessary Red Tape – Planning restrictions can make it difficult for firms to expand and invest in new capacity. Reducing red tape and levels of bureaucracy reduces a firm’s cost and encourages an environment conducive for investment.

– Improving Transport And Infrastructure – With a deficit transport system, there is usually a degree of market failure – congestion, loss of man hours, pollution, etc. Government spending on improved transport links can help reduce lost man hours and overcome this market failure. Improved transport provision helps reduce the cost of transport and will encourage firms to invest. Transport bottlenecks on our major roads are a major stumbling block for the economy.”

 Unsatisfied with the aforementioned points, Badejo felt the need to add a two-part addendum: “…it will interest you to note that some of these petty traders with total wares of N10,000-N20,000 still manage to do Esusu contribution of N200-N1000 per day, depending on their daily cash flow…for those that  do N1000 per day, that’s like N25,000 minimum savings in a month…so they are able to increase their capacity to do more business.

“I have been involved in an empowerment programme for five years…we give 25 market women and men N20,000 each…Interest-free, and they return in six months with great testimonies of how it has helped grow their business and increased their capacity. For five years, no single default because the loan is administered through the market women/men leaders”.

And for some emphatic “just-in-case-you-didn’t-get-it” flourish, Badejo added: “The (TraderMoni) scheme is a welcome development”. Gbamm!! End of story.

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