The TraderMoni scheme of the Federal Government has generated a significant amount of buzz and national conversation: from those who laud its impact, and those who view it as politically motivated. TraderMoni is one of three microcredit products of the Government Enterprise and Empowerment Programme (GEEP). In this exclusive interview with BusinessDay, a man behind the wheels, and Chief Operating Officer of GEEP, Uzoma Nwagba explains how GEEP was a direct response to the challenge of access to funds for micro-enterprises, and financial inclusion.

What is this GEEP program really about?

GEEP is a microcredit programme that provides much-needed capital to traders, artisans, farmers, petty traders. It is one of the social intervention progammes of the Federal Government, and comprises of three products: MarketMoni, FarmerMoni, and TraderMoni. GEEP was initiated in 2016 by the Federal Government; with an understanding that there are over 30 million Nigerians at the base of the pyramid who are in active commercial activity but never have an opportunity to access credit. In 2017, only 0.04 percent (i.e. less than 1 percent) of bank loans went to this micro segment. These hardworking Nigerians are not “interesting” to the traditional lenders: they have little to no financial track record, they have no collateral, some barely have formal identities. However, they are actively trading and in dire need of capital. They are sellers of the food stuff you cook, the beverages you drink, the airtime you use, and kiosk items you buy. And there are tens of millions of them, across the 36 states and the FCT. GEEP is an opportunity to properly identify and capture these Nigerians, provide them with capital, and in the process onboard them into the formal financial system of bank accounts and mobile wallets – in a way that they can be sustainable recipients of credit. Our goal is to advance financial inclusion from its current mythical state into actualization. GEEP grants interest-free loans of between N10,000 to N300,000 in a graduating scale of N10,000; N20,000; N50,000; N100,000; and N300;000. Traders either start at N10,000 (TraderMoni), or N50,000 (MarketMoni), or N300,000 (FarmerMoni). It all depends on the scale of your current trade, and preparedness to meet the criteria at each level.

The N10, 000 ($27) TraderMoni component of the GEEP scheme has come under huge criticism for the loan value: some Nigerians do not think it is barely anything to help a trader. Was there intelligence that suggested otherwise for which the TraderMoni team settled on N10, 000 as the first level?

Recall that these loans go from N10, 000 to N300, 000. You start at N10, 000 if you are a petty trader – and you quickly graduate to N300, 000 by simply repaying your loans.

More importantly, you would be surprised to know that the GEEP programme did not start with N10, 000 loans. We started with N50, 000 loans. In the process of executing a programme N50, 000 and above, we found something quite startling: the vast majority, I mean up to 90 percent, of our targets did not have inventories of more than N10,000. You would more than double their capacity with a N10,000 loan. We would have missed the scope and scale of this if we had not spent the last 2 years on the field, giving loans, learning more. Besides the fact that this population not only needs small amount for a start, they also do not have the traditional bells and whistles – BVNs, KYCs, bank accounts, collaterals – which are the requirements of traditional lending. So we had to create a product specifically for them, driven by agents on the field, equipped with tablet computers, and disbursed through mobile wallets which only require the trader to have a mobile phone. We believe this can be truly transformative to this sector, and to the lending ecosystem. The results are showing.

In the past 2 years, we have given over 1.5 million loans across the three programs, 1.2 million of which are TraderMoni beneficiaries. The loans are driven strictly by scale of demand.

Where is the money coming from and how sustainable is the program given the time value of money (for which interests are usually charged), and Nigeria’s unique political system where continuity is always an issue?

From Day-1 of GEEP, we instituted the BVN as a non-negotiable requirement. The first application of the BVN was to serve as a unique identifier which checkmates fraud. However, the second application of BVN is even more powerful: for the first time, we have an effective (digital) collateral. People who took the MarketMoni loans, our first GEEP product, accept agreements that the Bank of Industry had the right to block their BVNs if they were in severe default. A blocked BVN means the candidate is unable to operate any of their bank accounts or perform any financial transactions until they fulfil their debt obligation. Obviously, we had to balance this carefully with the overarching goal of financial inclusion. This means that you don’t want to have people included into the financial system, only to block them out of it soon after. So, first we establish the usage and habit of finance and accountability by giving the loans. Next, we communicate aggressively on repayment and defaults, warning severe defaulters of an imminent blocking of their BVN. And then, we select cohorts of defaulters who inevitably get the BVN blocking. We do this while aggressively learning and improving the process. The journey is still an evolving one, but we are absolutely committed to more and more innovation around the collateral problem that has excluded this group from credit for decades. With the advent of technology and innovation – we must think outside the box, seeking for digital collaterals that are effective. You would not believe that the regulation that allows for what we have just done has been in existence since the 1970s. However, without the right advancement in technology (e.g. BVN which means you can finally take action on all accounts belonging to an individual in the entire financial system), there would be no way to execute that regulation. Thankfully, the future is now, and it is our goal to continue to push the boundaries on what is possible.

For the TraderMoni scheme (for petty traders at the very bottom of the pyramid), we are taking a slightly different approach of not requiring BVNs or bank accounts as our targets are significantly less educated or sophisticated. We need to first solve their problem of access and reduce the barriers to that. So, we use what they have: their mobile phones. It is only on the second loan that the BVN and bank account requirements kick on, and therefore the digital collateral. As a result, we make a conscious effort with their first TraderMoni loan to make the carrot more attractive than the stick. That is, we make it very simple to get the next higher loan (N15,000) once the first loan (N10, 000). You literally receive a disbursement in minutes when you dial a USSD code after paying your first loan. We are using TraderMoni to test this model and we are studying the effect because it’s also an opportunity to build knowledge for the ecosystem. What the government learns from this program will be used to drive even private sector lending.

Given such a large-scale programme with a target market that has limited education, how are you able to deliver the numbers you report?
The operation of the program does not mirror its target demographics. What I mean is: the more illiterate or unsophisticated our beneficiaries are, the more sophisticated our operation has to be. All the complexity has to be absorbed by us and taken out of the trader’s experience. We have a highly technology-driven program. Everybody who has a TraderMoni, MarketMoni or FarmerMoni loan is enumerated at their point of trade. What this means is that one of our over 4,000 agents across the country, walks up to them and registers them on a tablet device. I am talking full registration of biodata, GPS location of the trader’s point of trade, information on what the trader does or sells, pictures of them and their trade, address, phone number, BVN (where applicable) which is validated against the national BVN database, background and risk profiles where accessible. We have a sophisticated digital base that connects these tablets of our over 4,000 agents across the country to central systems at BOI, as well as third-party connections to banks and mobile wallets for disbursements and repayment. Similar connections happen for tracking and monitoring of the loan and repayments. The most surprising thing you would find out about the programme is how obsessive we are with its operation. Some members of my team joke that we are a technology company that happens to give loans. With more experience and learning, we will continue to innovate and set the standards. And, yes, this is all possible in a government programme.
What sort of impact does the GEEP program hope to make, how is it being measured/tracked today?

Tremendous impact. For most of our beneficiaries, it starts out like a dream. An agent walks up to you in your market association, at your kiosk, sometimes on the street while you hawk. They speak about a government benefit, and interest-free loan to enable your trade. You are not asked for a collateral, and you are not asked to vote for anyone. They would capture details of you on their tablet, you would get an SMS in days on your qualification, and you would get a disbursement shortly after. Even playing this back to myself now, it sounds crazy, too good to be true. But this is exactly what happens. So you can imagine traders’ skepticism at first, which our agents have to overcome, until disbursements start happening. For most of our over 1.5 million beneficiaries today, this is the first time they have successfully accessed credit in their entire lives. I interact with traders, from Bauchi to Yenegoa, who tell me they have been doing the same trade in the same spot for 30 years, and this is their first time ever experiencing something like this. They are able to invest in their trade, or deal with issues that have been historically disruptive to their trade. They keep their businesses alive, enabling them to pay back in tiny instalments over six months. They are empowered. Most of this is silent; you don’t hear it buzzed around. But this has been the reality of GEEP, every single day, since May 2016.

When a lot of people hear about the GEEP programme (either TraderMoni, MarketMoni, FarmerMoni), they think about how transformative it is for the beneficiaries, but in a lot of ways it’s also life-changing for those of us implementing the programme. Nothing would have prepared us for this scope and scale of impact. Nothing could have connected us better to the realities of the everyday Nigerian. We literally spend the day with them in the markets, get in their heads, support their trade. For some beneficiaries, like tomato sellers in Mile 12 market, TraderMoni represents negotiating power with their suppliers. The traders can now pool more funds together, sometimes up to 15 people pooling N150,000 using TraderMoni, and negotiating for bulk-buying of tomatoes in baskets, bringing their individual costs down by 40% for the same quantities they sell. For others, like the keke riders or cart pushers in the North, it is investing in more petrol and maintenance upfront, enabling much less interruptions during the day to enable them earn more. For the tailor or plank seller on MarketMoni, it is inputs, or light machinery (like a sewing machine or electric saw). For the farmer, we are talking stock feed or fertilizer. The stories are so diverse, and so beautiful. What weaves this all together is a common thread of industrious low-income Nigerians in productive commerce that require credit, and now this requirement has gone from a wish to a reality.

Even when genuine, transparency and accountability have often been the bane of most government intervention projects. How is GEEP any different?