TraderMoni — Effective Microcredit Support for Petty Traders
Micro Small and Medium Enterprises are collectively the largest employers in many low-income countries, yet their viability can be threatened by lack of access to risk-management tools such as savings, insurance and credit. Their growth is often stifled by restricted access to credit, equity and payment services. Every government must recognize that access to financial services can therefore raise income, reduce vulnerability and increase investments in human capital. Petty businesses account for a significant share of employment and GDP in Nigeria, but, when they have limited access to finance, the economy suffers a series of negative consequences. Although they are smaller in size, but when put together, they have significant influence on the nation’s economic and social opportunities.
Over 20 million Nigerians in petty businesses are in dire need of capital to grow and sustain their businesses. They cannot access loans to trade, and they therefore remain in a vicious cycle. The Federal Government found that the smaller businesses are less likely to have access to capital — a factor that constrains their ability to grow and become more productive. They are also more likely to rely on informal sources of capital — a factor that is often negatively associated with growth and performance. Access to finance is disproportionately difficult for petty traders in Nigeria because of unfavorable conditionality. The mission of the TraderMoni loan scheme of the government is to break these barriers.
Vice President, Yemi Osinbajo disclosed in June 2018 that the Federal Government had introduced TraderMoni initiative to assist the poorest of traders as well as check the nation’s poverty and unemployment rate. The scheme will empower 2 million petty traders who are selling small items by granting loans to a minimum of 30,000 beneficiaries in each state of the federation and the Federal Capital Territory by the end of 2018.
So far, the programme has been activated in Lagos, Kano, Katsina, Abia, Akwa-Ibom, Osun and FCT and would be extended, in quick succession, to traders in all the States. A lot of controversies has trailed the programme since it was activated in Osun State. Many alluded the kick-off of the programme in the State as a ploy by the APC-led Federal Government to buy the heart of voters in the State, ahead of September 22 governorship poll. This is not true as the government is being sincere enough about its intention on the programme.
The programme is an extension of Market Money which has been in operation since 2016. The new micro credit scheme (TraderMoni), is different because it is for the smaller traders — hawkers, those who are selling bread as well as those frying akara (bean cake) by the roadside and selling roasted plantain etc. People in this category are underrated and receive less attention from government or private financial institutions. The APC administration promised inclusive government and the TraderMoni initiative is an attempt to give equal attention to petty traders, as their counterparts in bigger trade receives.
The money is for the poor as a form of wealth redistribution. The initiative shouldn’t generate any controversy but what is obvious is that the class struggle between the rich and the poor in Nigerian society has come to play. The rich are the ones crying — saying the money cannot lift people out of poverty. The main aim of the programme is to support already established businesses. As such, it is a loan, not “free money” as purported. The scheme is part of the National Social Investment Programmes of the Buhari administration which started in 2016 and houses N-Power, National Homegrown School Feeding Programme, Conditional Cash Transfer, and Government Enterprise and Empowerment Programme (Market Money and Trader Money). Every trader can benefit from the TraderMoni scheme, irrespective of political affiliation.
Things to know about the government’s TraderMoni Scheme
TraderMoni is a collateral-free loan from the Federal Government of Nigeria. The loan is being administered by Bank of Industry, being a bank with the structures and necessary processes to reach out and deliver loans at large scales.
Market activations are like “launch” events to announce the presence of TraderMoni in a State. Like the market activation performed by the Vice President in Iwo, Osun State, it is not the start of TraderMoni in the State, as the programme has already started in every State nationwide. There is no form for TraderMoni and registration is absolutely free. PVC is not a requirement to request for and collect TraderMoni loan. The only requirement to qualify for TraderMoni loan is that you are a Nigerian trader and have a functioning and properly registered phone number.
TraderMoni is designed to lift the status of petty traders. The money a trader can access as loan increases at each repayment. Once you use the N10,000 judiciously and pay back, you get N15,000, and then N20,000, and then N50,000, and then N100,000.
To register for the loan, you need to meet a TraderMoni Enumerator (agent) in your area. TraderMoni has agents in every state, identifying and registering eligible petty traders and artisans. The agents are usually found in key trading clusters and markets in every State. You can be enumerated at your point of trade (where you sell your market). You can also be enumerated where you buy your goods before transporting for sale (for example, at the bakery for bread sellers). The enumerator will enter your details and take two pictures; one with your goods, and another picture of your face. They will complete your registration and answer any question regarding the programme without charging.
You have 6 months to pay back your loan. You are expected to make a small payment of N430 weekly for 6 months, you can pay back sooner and get a higher loan automatically. For your first loan (N10,000), you don’t need a bank account. However after your first loan, you will require a BVN and a bank account for the next loans (N15,000; N20,000; N50,000; and N100,000).
The structure of TraderMoni credit supply provides an effective microcredit support for small business operators in Nigeria. Should funds like TraderMoni become available, majority of petty traders operating in the informal sector will increase their potential. With advantages of collateral-free loan supply, easy accessibility, low administrative and procedural costs, flexibility in interest rates and repayment schedules. The scheme is ideally suited to cater to the lower trading groups.
