FG uses technology to scale the largest government-led microcredit scheme in the world
The Government Enterprise and Empowerment Program (GEEP) is a micro-credit scheme of the Federal Government of Nigeria executed by the Bank of Industry. GEEP started in 2016 and has empowered 1.8 million micro-enterprises with collateral-free, interest-free loans to grow their businesses; making it the largest government-led microcredit program globally. GEEP beneficiaries are petty traders, merchants, enterprising youth, and agricultural workers in over 1600 clusters and markets across Nigeria.
These people comprise the MSME sector and contribute 76% of Nigeria’s GDP, employing 60% of Nigeria’s labour force. Yet they are often neglected by traditional banks. According to a 2016 report by McKinsey and company limited, 85% of these enterprises cite “access to finance” in their top three challenges. Of all bank loans in 2017, only about 0.4% were lent to this microenterprise segment. Most people in this segment have not used financial services before, see going to the bank as an inconvenience since they cannot leave their wares unattended, and have a natural aversion to technology. They do not have collaterals for bank loans nor can they afford the interest rates on bank loans. The federal government is committed to empowering this segment. They are the Nigerians for whom ₦10,000 to ₦300,000 represents a complete turnaround in their businesses and livelihoods.
Through the Micro-Enterprises Division, BOI and the Ministry of Trade and Investment, the Federal Government designed GEEP to deliver last mile credit using an aggregation model that leverages Technology and market cooperatives as an acquiring structure.
This has enabled the program scale fast: enumerating over 7 million MSMEs in over 1,600 markets across the 36 states and the FCT. Every single day, over 4000 agents go into the markets to onboard beneficiaries.
GEEP agents are equipped with a proprietary application that enables full registration and capture of beneficiary data e.g biodata, information on the market, nature of trade, GPS coordinates of the trade point, association membership and all other data that enables credit assessment. This enumeration platform also employs geo-fencing and mapping to ensure that target beneficiaries at the base of the pyramid, and in the most rural parts of the country are reached.
Data on every captured beneficiary is delivered to Bank of Industry real time to enable verification, appraisals and credit assessment. This is done by a call center staffed with over 120 agents and a number of officials.
Qualified applicants then get disbursements into their bank accounts or mobile wallets that was opened for them by the agent during the registration process. Qualified beneficiaries who do not have phones are given free phones from the over 40,000 phones donated by the Banker’s Committee – a committee representing all commercial banks in Nigeria.
Every loan disbursed is booked automatically on a core banking system that is plugged to all commercial banks in the country; enabling beneficiaries to walk into any bank in the country and make repayments periodically the same way they would pay their utility bills. For beneficiaries who stay far from banks, GEEP developed a repayment scratch-card to ease repayment. Beneficiaries can buy the cards in their local markets and load it as they would a Telco recharge card. This immediately credits their loan account. Upon completion of loan repayments, a subsequent loan offer is made via phone to the beneficiaries
Furthermore, the Federal Government, through GEEP has pioneered the use of the BVN as a digital collateral.
With the power of biometrics, a BVN as digital collateral, mobile data capture, mobile wallets, a 4000-strong agent network, and a well equipped operations monitoring centre, the Federal Government through GEEP has been able to properly target, document, profile, and deliver credit to 1.8 million people in this demographic.
GEEP’s achievement – and continued mission – remains to provide access to finance, and sustainable financial inclusion, and to do this at scale.
Over 1.4 million of the 1.8 million GEEP beneficiaries are first-time beneficiaries of credit from a formal financial lender. Also, the program has seen the detailed enumeration of over 7m MSMEs and their owners. GEEP is also broadening financial inclusion by removing the first critical barrier – which is the barrier of engagement. Beneficiaries can only participate in the program by opening bank accounts or mobile wallets. Over half of the1.8 million beneficiaries are first-time operators of bank accounts or mobile wallets. These people have been observed to use those tools even after the loans.
Through GEEP, the Federal Government aims to empower 20 million Nigerians in active commercial activity by 2023.
GEEP consists of three financial products: MarketMoni is a 6-month interest-free collateral-free credit starting from N50,000 to N100,000 for small businesses under the auspices of their cooperative societies or associations.
FarmerMoni loans start at N250,000 and are tailored to suit the peculiarities of the different planting seasons and farming requirements. The program also includes a guaranteed of-taker which is sourced by the program. These offtakers commit contractually to purchasing of all produce for the purpose of local manufacturing.
TraderMoni provides petty traders with collateral-free microloans starting from N10,000 for their businesses.
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