If claims of malpractices surrounding the ongoing disbursement of the Central Bank of Nigeria (CBN’s) N50 billion COVID-19 Targeted Credit Facility (TCF) for households and Micro, Small and Medium-scale Enterprises (MSME) is anything to go by, then the good purpose of the scheme may be under threat.
While the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank, which is managing the scheme on behalf of the CBN, is doling out figures of beneficiaries, the reality is dominated by allegations of exercise being skewed towards friends and relatives.
As part of the stimulus packages announced by the CBN to help mitigate the impact of the novel Coronavirus (COVID-19) pandemic on the economy and businesses, the apex bank introduced an N50 billion TCF in March to support households and MSMEs badly affected by the pandemic.
The CBN had also in March unveiled guidelines that must be followed by individuals and companies to access the facility. The apex bank had explained that those that could benefit from the fund are households with verifiable evidence of livelihood adversely impacted by COVID-19; existing enterprises with verifiable evidence of business activities adversely affected as a result of the pandemic and enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic.
According to the CBN guideline, activities covered under the scheme include agricultural value chain activities; hospitality (accommodation and food services); health (pharmaceuticals and medical supplies); and airline service providers. Others are manufacturing/value addition; trading and any other income-generating activities as may be prescribed by the CBN.
It said, “The scheme would be financed from the Micro, Small and Medium Enterprises Development Fund and the eligible participating financial institution for the scheme would be NIRSAL Microfinance Bank.”
The apex bank added that the loan amount would be determined based on the activity, cash-flow and industry size of the beneficiary, subject to a maximum of N25m for SMEs. The scheme had recorded about 80,000 applications as at April.
On May 2, the managing director of NIRSAL Microfinance Bank (NMFB), Mr Abubakar Kure, announced that his organisation had started the disbursement of the N50 billion TCF to the beneficiaries. Kure disclosed at a media briefing during the official flag-off of the disbursement in Abuja to some of the beneficiaries.
The NMFB boss said, “The facility is available for service providers in the health sector, trading and all those businesses that have been affected by the Covid-19 pandemic.
“The idea is to provide cash flow which has been disrupted by the lockdown occasioned by the pandemic. The product is intended to provide liquidity for businesses.”
Kure also said, “This initiative is to provide liquidity and allow the economy to normalize. Businesses are hurt. People are hurt. People are no longer staying on jobs.
“By the end of today, they should be able to receive alerts. The idea is to launch the products so that people will know that we have started disbursement.”
He, however, warned that the funds were not a grant, but must be paid back to the bank so that other people can enjoy the facility, adding that the ongoing documentation process started in Abuja because of convenience as the 33 branches of the bank were not functioning optimally because of the lockdown.
But the flag-off of disbursement did not put to rest the issue of trust around the programme with many applicants till complaining about difficulties in assessing the facility.
Little wonder during an interview with ChannelsTelevision nearly two weeks later, Mr Kure, while explaining reasons for difficulties in disbursing the facility to the applicants, disclosed that the nationwide lockdown and restrictions had been a major challenge to the smooth processing of the facility. The situation, he said, was also compounded by the inability of some of the applicants to secure guarantors.
He said, “Currently what we do is that we are using digitalization in the form of emails. We send emails to those who have email accounts, we print their offer letters, send back to them, do the documentations and they can drawdown.
“The most important thing is about the lockdown and that’s why the credit facility was created. It also constitutes a challenge.”
Kure further explained, “We are improving our processes, systems, people to be able to meet up with the expectations. You are fully aware that this loan is for a short term. It’s a short term seamless package by Central Bank intended to cushion the effect on businesses and people. However, because of the lockdown and the restriction of people, there have been delays. We have also noticed the issue around guarantors.”
The NMFB boss also encouraged qualified individuals to come forward and guarantee the approved applicants because they had viable businesses. He said that the ones that had been evaluated were very successful SMEs with the capacity to pay back.
On why the difficulty in disbursing the credit facility considering that it was supposed to be a short term facility to cater for businesses and households during the period of pandemic and lockdown, Mr Kure said, “This is a loan and not a grant, you are required to sign offer letters in terms of documentation that need to be signed so that it requires physical interaction between the bank and the customers. So customers are unable to even come to sign the documentations and customers are even unable to get guarantors.”
However, as part of the solution to this challenge, Kure said the bank was trying to enlighten the customers about other channels of payment like mobile applications and the Unstructured Supplementary Service Data (USSD). He said that those that we’re able to finish their documentation and sign offer letters, a fundamental aspect of the loan, could drawdown.
On the number of applicants that had benefitted then from the facility, the NMFB MD said, “If you go to our website, we have over 1000 applicants that are enjoying the facilities. The buildup is expected in a few days to come.”
He also disclosed that NMFB had received N5 billion from CBN for about 5,000 applicants and they hoped to disburse about 90% of that in a few weeks to come.
The disbursement from the apex bank was collaborated by its director for Development Finance, Yusuf Yila, who said that they had disbursed N5 billion for 5,000 applicants through the NMFB.
On the kind of collateral needed for small businesses, Kure said they were usually soft collaterals that ranged from guarantors to movable assets like cars, equipment, and so on, unlike large volume ticket collaterals for big businesses.
He said the most important thing to consider in the approval was the cash flow and the ability to pay back the facility. He also disclosed that the households constituted about 65% of the applications that were received.
However, to further facilitate the process, the CBN last month announced that households and SMEs applying for the N50 billion COVID-19 TCF would not be required to provide guarantors before they can access the credit facility.
The apex bank also assured all applicants that had submitted their account details for the TCF that they would be credited within 48 hours.
The director, Corporate Communications Department at CBN, Isaac Okorafor, in a statement, urged all successful applicants whose accounts had not been credited, to visit the website of NIRSAL Micro Finance Bank (www.nmfb.com.ng) and input their account details.
Okorafor, however, urged any successful applicant that “do not receive a credit alert within 48 hours to call mobile number: 09010026900 for resolution.”
According to him, the bank’s move was to address the concerns of those who had fulfilled all requirements for the loan but were yet to have their accounts credited, particularly as other persons had begun to receive credit alerts.
He urged eligible households and small businesses to take advantage of the palliatives to revive their businesses and contribute to steering Nigeria away from recession.
Nowhere to be found
Despite all the efforts, checks by Business Hallmark revealed that the said beneficiaries of the facility are nowhere to be found while claims of lopsided exercise in favour of friends and relatives or even ghost beneficiaries are still on the high side.
Out of hundred Nigerians polled at random across the country, not even one person admitted benefitting from the scheme or knowing any household or organization that has done so.
Speaking on Early Rush Show, a morning starter live programme on Star FM 101.5,
A chartered accountant, Mr Olutayo Akinleye, described the NIRSAL disbursement as the highest fraud going on in Nigeria at the moment.
“If you’re not highly connected, there’s nothing for you”, he noted.
Corroborating Akinleye’s position in a conversation with Business Hallmark, a former banker and economist, Mr Victor Ochiegbu, went rather sarcastic.
He said, “But the thinking that it’s skewed towards who you know is a normal thing. If you get it without knowing anyone, you’ve got to be arrested by the DSS and taken in for questioning.”
With all efforts made to meet any of the applicants awaiting credit alert from NMFB yielding no result, one is left to wonder the authenticity of the figures of applicants read on the pages of newspapers from time to time.