GOLD MINE AT THE BOTTOM OF PYRAMIND

I was opportune to chat with some local shop owners on how they finance their business and some opened up to me that they get loans from Microfinance banks while they repay based on the amortization schedule. I went further to ask of the effect of the loan on their business but it was shocking that there wasn’t a meaningful impact on their business because of the repayment arrangement and interest. So, one of them told me she got a loan of #300,000.00 and repaid #380,000.00 which was about #27% of the loan within a period of 6 months and no moratorium. I got shocked and I asked her whether she had savings against the quantity of goods in the shop and then she said she even borrow to make the repayment.
The effect of this facility is not taking these women out of poverty but increasing it because the truth is that they had a little capital they were working with before they got the loan but at the moment but their capital and profit is lost, instead of advancing the reverse is happening to these people.

This issue will continue to linger until it’s been address with a simplified approach which I tag “SLOW AND STEADY PROFIT”.

I can understand that business is for profit making but slow and steady profit will be a win win case for both the financier and the borrower. If a customer at the bottom of pyramid can take that huge amount in quote and still repay it then I suggest the credit arrangement needs to be adjusted to make the customer conveniently repay the facility, grant access to those who do not have the capacity and also to increase the bank customers. These would in turn have the following effect on the society:
1. Poverty alleviation: the effect of these in poverty eradication is that, the low class will be independent by possessing the ability to foot their bills at their own level while the bank gets her own profit. Basically men who are the head of the family have a token for their family but they get choked when their is no support system leading to out of school children, malnutrition, broken homes, prostitution, e.t,c.
2. Job creation: from a different perspective, I discovered that youths are taking over the menial businesses of their parents using innovative approach in doing same business but the truth is that there is transfer of knowledge from their parents to the new generation, knowledge transfer can only be done when there is a conviction of a bright future in it, eventually the bank will be dealing with CEOs but not traders anymore.
3. Slow and steady profit: high interest rate and low repayment tenure is detrimental to effective repayment and the result of this is increase in NPL. Forecasted figures are realistic when there is proper approach even it may increase due to population of the masses, therefore any system that effectively manage the bottom of pyramid is actually the best and will grow drastically. 27% loan for a person living in the bottom of will only send him or her to adject poverty but a low interest and long tenure will help them to increase with time. Credibility of the customer should not be underplayed in the security arrangement, expenditure plan, family backgrounds and some other basis should be considered paramount before granting the facility.
4. Bringing employment to the street: on the actual fact, a child who sees his or her parent flourishing in their business will not think of working for another man, this in the nearest future like I mentioned earlier would raise CEOs from the street, reducing poverty line, increasing the economic growth, reshape mindset and make destinies rise from backward thought.
5. Economic growth: it is unfortunate that 2/3 of people living in the bottom of pyramid rely on the government for everything and never think of how to integrate their lives other than everyday blaming the government and those they feel should help but didn’t. The fact that we are elites then we should be able to help them see what they are not seeing and most of them would eventually blend along which will drastically decimate the population in that pyramid. It will become a parallel roll over creating unforeseen future opportunities for the country beyond the above listed.

The best way forward is forward together and we rise by lifting others, there are still people who believe in this country therefore their hope has to be rejigged and awaken from it’s slumber, honestly the gold mine in this pyramid is more than the above mentioned. There should be a proper harnessing of this article to achieve the best of it.

Johnson O. Adeomi
Published on Friday 17th September, 2021.
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