Monday 15 April 2019
BUSINESS DAY
Government Enterprise & Empowerment Program
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How GEEP increases financial inclusion ...and its role in National and Economic Development
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he Government Enterpr ise and Empowerment Program (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) depending on the scale of their current trade, and preparedness to meet the criteria at each level. When beneficiaries take a loan and pay back, they automatically qualify for the next higher amount. Each new loan requires simply dialing a USSD code. Disbursements happen in minutes into mobile wallets or bank accounts. One of the primary aims of GEEP is to increase financial inclusion and support for citizens at the lowest base of the economic pyramid. What is financial inclusion? Financial inclusion describe public and private efforts at making financial services accessible and affordable to all individuals and businesses, irrespective of net worth, income and size. Financial inclusion aims at proffering solutions to constraints that exclude people from participating in the financial sector. According to The Global Findex Database 2017, only 40% of Nigerian adults have an account with a financial institution or a mobile money provider. It is clear that financial inclusion targets the financially excluded populace â majority of whom are poor. Lack of access to formal banking infrastructure coupled with illiteracy in rural areas are primary reasons why the unstructured
A GEEP agent registering a petty trader in Ogun state
informal economy has a high number of users. With no access to banks and formal financial services, people adopt traditional methods of saving, and managing day-to-day expenses. Benefits of Financial Inclusion âą Savings: Financial institutions offer traders profitable savings options, irrespective of their level of income or profit. Savings help businesses manage changes in cash flow, especially during downward spikes. This basic service offered by commercial banks serves as the basis for other benefits like microcredit. âą Credit: With bank accounts in commercial banks, microfinance banks can study the saving and spending habits of traders.
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Based on these studies, loans can be offered to SMEs and micro traders. Studies show that access to credit can lead to larger and more profitable businesses. âą Insurance: Microfinance institutions offer micro insurance that can be an important instrument for mitigating risk. âą Easier and Safer Financial Transactions: Commercial and Microfinance banks offer easier, safer and trackable means of executing financial transactions. Transactions done traditionally in informal systems are not digitally documented therefore there is little or no security on such monies. âą More informed Policy making: Policymakers increasingly recognize that a more inclusive
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financial market is directly proportional to economic growth and employment. With the advent of the Bank Verification Number (BVN), and Know Your Customer (KYC), and cashless policy directives of the CBN, the government has access to improved and more accurate citizensâ financial data. Thus enabling the ability to study spending habits, cash flows and other financial activities, thereby improving policymaking. GEEP and Financial Inclusion Financial inclusion requires significant behavioral change, even on the part of the people who would be obvious beneficiaries. They need to stop putting money under their beds. They
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need to learn to pool resources and increase their purchasing power. They need to open mobile wallets and bank accounts, and use them. They need to have a radical shift in their mindset, and build trust in the financial system to enable them raise their profile. It is a very difficult effort that combines behavioral science with finance, technology, education, while making it all so simple that a grandma can rely on it. GEEP removes the first critical barrier, which is the barrier of engagement. It gives beneficiaries a strong reason to want to try. They can only get the loans by opening a bank account or operating a mobile wallet. They can only repay via the bank or vouchers, no cash and they can only access the next one on their mobile phone. GEEP combines this with increasing investment in communication and education leveraging over 4,000 agents across the 36 states and the FCT. The results are encouraging; over half of GEEPâs 1.8 million beneficiaries are first-time operators of bank accounts or mobile wallets. And they use those tools even after the loans. What are the ripple effects? Through GEEP, the Federal government is committed to targeting the over 23 million Nigerians and micro-enterprises that are financially excluded or under-included. The ripple effects of including these traders and artisans financially would be an improvement in collection and management of data in Nigeria. Furthermore, such financial inclusion would lead to an increase in savings, disposable income and economic growth, and ease in making economic policies.