Monday, June 3, 2019

[NEWS] SPECIAL REPORT: How Buhari’s Tradermoni, CCT, could ‘ve raised financial inclusion

Shuaibu Sani from Gidan Tsika village in Kiyawa Local Government Area of Jigawa State is a beneficiary of the government Conditional Cash Transfer (CCT) programme. From the N10,000 he is paid bi-monthly, he manages to save N600.
Although Mr Sani’s home is not far from the payment centre – just over two kilometres – he usually leaves his home early to beat the crowd at the payment centre. He told PREMIUM TIMES that on payment days, he abandons everything else just to get the government’s handout which is given to beneficiaries in cash.
Isyaku Ibrahim, Mr Sani’s compatriot from the same village, said he does not save anything from his CCT stipend. He spoke of the opportunity cost of not tending to his farmland and other businesses on the payment days. He complained of being extorted. He said recipients are required to give 10 per cent (N500) of their stipend to the village head.
The Conditional Cash Transfer (CCT) programme was introduced in 2016 as part of President Muhammadu Buhari’s Social Investment Programme (SIP). The CCT involves the payment of N5,000 monthly, paid bi-monthly, to the poorest Nigerians, mostly in rural communities.
The National Cash Transfer Office (NCTO) wrote on its website that the cash-based payment is aimed at “reducing poverty, preventing the vulnerable households from falling further down the poverty line and building their resilience to withstand shocks.”
In April, the Special Adviser to President Buhari on National Social Investment Programme, Maryam Uwais, announced that over 300,000 persons have benefitted from the programme.
Temitope Sinkaiye, the national coordinator of the CCT, told reporters last December that the government has disbursed N15 billion in the 26 states the programme has been implemented in so far.


Undoubtedly, the most controversial of the administration’s social investment programmes is Tradermoni. Just like the CCT, Tradermoni is another cash-based payment. While the CCT is a non-refundable payment given to some of the poorest Nigerians, Tradermoni is intended to be a loan given to petty traders.

Tradermoni’s biggest ambassador is Vice President Yemi Osinbajo. Months before the recent presidential election, the vice president relentlessly travelled across the country, visiting markets and preaching Tradermoni’s gospel to market women and other petty traders.
The programme is coordinated by the Bank of Industry (BOI). At each market Mr Osinbajo visits, petty traders are encouraged to enrol into the programme and are given a cash interest-free loan of N10,000. Consequently, the opposition accused the government of using Tradermoni as a ploy to buy votes from ordinary Nigerians.

There are no credible data on the number of Tradermoni recipients or the amount already disbursed. Despite acknowledging receipt of our email, the BOI did not respond to questions on the amount so far disbursed. But at the inception of the programme, the government promised to give the loan to two million traders.
The initial recipients of the loan were expected to pay back the N10,000.00 to qualify for a second loan of N15,000.00 and recipients can get up to N100,000.00 if they continue repaying.
Although the government has announced the kick-off of the second phase of Tradermoni, it has not disclosed the number of the initial beneficiaries that repaid their loans. It merely vaguely described the repayment rate as “high.”

But reports across the country suggest that the rate of repayment may not be as cheery as the BOI wants Nigerians to believe. For instance, all of the beneficiaries of Tradermoni in Jigawa State who spoke to GUSAULOADED said they have not repaid the first loan.
Sa’idu Ali, a vegetable trader at Yan-Tipper market in Dutse, the state capital, said with the ease the money was handed out, he thought the government was distributing free cash.

“I thought the government will not ask us to pay back the money, he said. Because unlike a bank loan which follows some processes, the Tradermoni loan was done in a day. I know many people who applied and got the money in a day.

Hafizu Idris, a spare parts trader, said although he was ready to pay back the loan, he did not know how to do so.
“I am ready to pay back because they told us that paying back attracts another bigger loan. I also received a text notifying me about paying back the loan, but we don’t know how the process works.”

Social Investment Programme and Financial Inclusion
According to the Enhancing Financial Innovation & Access (EFInA), a UK Department for International Development (DFID) funded organisation that promotes financial inclusion, at 39.7 per cent in 2018, Nigeria has one of the lowest ratio of unbanked population in the world.
The World Bank’s Global Financial Inclusion (Global Findex) 2017 gives a similar number. According to the Global Findex, 62.7 million Nigerians are without bank accounts, access to credit and other financial products.
Although the Central Bank of Nigeria (CBN) National Financial Inclusion Strategy launched in 2012 projected to increase the rate of financial inclusion in the country to 80 per cent in 2020, recent surveys (such as the Global Findex) suggests that the apex bank might have overestimated its projections.
Ironically, while the country’s financial authorities are playing catch up with its task of financially including most Nigerians, experts told GUSAULOADED the government missed a golden chance to include an estimated 2.3 million due to the shabby implementation of the SIP, especially, the CCT and the Tradermoni like countries with similar poverty alleviation programmes did.
For instance, Mexico’s version of the CCT known as Progresa-Oportunidades-Prospera (POP) is a perfect example of how such programmes can be used to deepen financial inclusion. The programme which kicked off in 1998, was cash-based for the first five years until it began a gradual shift from cash-only payment to paying beneficiaries in savings accounts and later through a prepaid card.
From almost 60 per cent cash payment in 2010, POP eventually stopped paying beneficiaries in cash. By 2011, 80 per cent of payment was done via prepaid cards and 20 per cent paid into savings accounts.
Writing in the Journal of Development Studies, Serena Masino of University of Westminster and Miguel Nino-Zarazua, in the paper titled: “Improving Financial Inclusion through the Delivery of Cash Transfer Programmes: The Case of Mexico’s Progresa-Oportunidades-Prospera Programme” explained how Mexico achieve the transition of POP from cash-based payment to savings and prepaid card payment:
“In 2003, the National Savings and Financial Services Bank (BANSEFI), a state-owned development bank, entered a partnership with a network of non-banking institutions known as L@ Red de la Gente (People’s Network) that includes credit unions, savings and credit associations (SCAs), savings and credit co-operatives (SACCOs), and microfinance institutions. They began, together with POP’s National Co-ordination Unit, a pilot phase to deliver POP’s grants in savings accounts.

“The fact that BANSEFI and L@ Red de la Gente targeted communities where POP also operated provided the opportunity to introduce the pilot phase. In 2009, Visa debit cards were issued to pilot beneficiaries who had already been receiving the grant in savings accounts. Pre-paid cards were also distributed, especially among the rural poor who lived in localities with limited banking infrastructure. By 2011, all POP recipients throughout the country received their transfer in savings accounts with debit or prepaid cards.”
Ms Masino and Mr Nino-Zarazau wrote that when beneficiaries of cash transfers are paid through the financial system, it eliminates some of the problems associated with handling cash to recipients such as “long travelling and queuing times for many recipient households.”
“The repercussions were also in terms of opportunity costs for leaving productive activities unattended, and personal safety, as recipients carrying cash were exposed to the risk of theft and assault.”
Overall, their study found that when money is paid through saving accounts or similar means such as electronic transfers or prepaid cards, cash transfer programmes “in addition to their intended social impacts, can contribute to improving financial inclusion and risk management portfolios of the poor.”
“For cash transfer programmes to effectively facilitate financial inclusion, extending financial access per se is not enough. Providing incentives to get people to use a broader spectrum of financial services is also key.”
Not all the government’s SIP’s have, however, failed to improve financial inclusion. A report by GUSAULOADED showed how the government’s Anchor Borrowers’ Programme (ABP) led thousands of rural farmers to join Nigeria’s banking population.

Opportunities Missed

Finance experts who spoke to GUSAULOADED said the government, by its decision to pay beneficiaries of Tradermoni and CCT, who are mostly poor and unbanked, in cash, lost a huge opportunity to deepen the country’s abysmally low financial inclusion.
Iyinoluwa Aboyeji, the co-founder of Flutterwave, a fintech company, said the Nigeria government could have emulated India which used its own version of cash transfer programme to increase financial inclusion.
He said the implementation of the CCT and Tradermoni suffered from a dearth of innovation and expertise which left it open to corruption and exposed the beneficiaries to extortion and huge opportunity cost.
He said the programme was shabbily implemented.
“I thought that was just a bad idea altogether,” Mr Aboyeji said. “There is a lot to learn about that implementation. Really it shows a dearth of competence, if you ask me in the social payment space and also some of the restriction that the World Bank and international organisations and that lack of innovative thinking that comes with the implementation of these programmes. I really think there was an opportunity to do something interesting. Unfortunately, it didn’t happen.”
Mr Aboyeji added that contrary to the argument that the government may have settled for cash payment due to poor internet penetration and connectivity in rural areas, the technology needed to digitalise the payment works perfectly offline.
“The databases are not so large that one cannot store them remotely and securely on the device.”
“Another thing to keep in mind is that you don’t need traditional banks to service anybody in rural communities. Every rural community you go to already has an established trust system. Why not tap into that trust system.




“There is already somebody going around collecting Ajo payment, there is already somebody going around collecting age-grade dues and all that. Why not coopt those systems by making some of the technologies available?
“To do these things securely, there are companies like Tap and Pay. This company, Tap and Pay, they collect revenue for local governments already, and there is no question of connectivity. So, there is a lot of organisations, there is a lot of technology out there that is conditioned for offline. We are not the only one that has connectivity problem in the world, India has too but they are able to find a way and get the right experts to leverage their data expertise and build a social registry that is digital and that works, I think those things are just excuses in my opinion.”
He said the government also missed the opportunity of using the programme to open up the rural economy.
“They should have included the local economy, included the local people. And it should have been open access in such a way that one can leverage the technology and tools to service other sectors. If you are FMCG, you can use it. After all the women are going to use the money they are given from the national cash transfer to buy food. So, there was no reason for them to have done a close cash programme.”
Access to credit
Tunde Ajileye, a finance expert and partner with SBM Intelligence, said the CCT and Tradermoni, if implemented through the technology system, would have a wonderful chance to introduce beneficiaries to access to credit facilities, which would have helped combat poverty and uplift the economy.
“One of the biggest incentives is that you are giving the person access to credit. And that was what Tradermoni and conditional cash transfer would have done for financial inclusion.
“You must give the person an incentive to continue engaging with that system. If they continue to engage there is an impact on the amount they can access or the pool of fund available to them or the kind of transaction they are able to do that they would not have been able to do before.
“That Conditional Cash Transfer, if it has been implemented through technology system, would have enabled you to track behaviour, which would have enabled you to offer well-behaved people more money and all of that.
“You can then ask them for money but what really happens in Nigeria in terms of financial inclusion is that before you give incentive to make them want to be part of the system, you are already asking them to come and contribute or come and save money upfront. The first thing is access to credit and access to some kind of transactions that they usually would not be able to access because of their exclusion from the financial system; either some government service or some social benefits.
“This Conditional Cash transfer would have been a fantastic opportunity but unfortunately what they were doing is handing out cash. It is a terribly wasted opportunity. How are they going to track behaviour if there is no system backing it?
“And once you make anything cash based you clearly do not want any transparency and accountability on how funds are being used. Cash is fungible, nobody can trace it,” he said.
No response from government
Ms Uwais and the NCTO did not respond to emails sent to them for comments. Ismail Imam, Ms Uwais aide, did not return multiple calls made to his telephone for comment. He later responded to an SMS, promising to provide his principal’s comment but did not act on the promise despite several reminders.

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