By Adeyinka Adeniran
Governor Seyi Makinde’s N500million Sustainable Action for Economic Recovery (SAfER) loan support to Small and Medium Scale Enterprises (MSMEs) is keeping many businesses on track. Yinka Adeniran writes:
There is no gainsaying the obvious that the removal of fuel subsidy even though a welcome development that was lauded by stakeholders did not come with an untold hardship on the citizenry. The dwindling naira value against the USD exchange rate is also not making things easy as many businesses see that as an excuse for illicit and greedy profit at the detriment of the citizens.
Businesses, corporate organisations and even individuals are not silent on the negative impact the situation is telling on them.
At the wake of the development, the Federal and state governments both agreed that urgent steps need to be taken to help cushion the effect of the removal.
The Federal Government set the tone when it introduced palliatives and soon almost all the state government followed suit. Aside from an initial N5billion and thousands of bags of rice sent to the 36 states of the federation as palliatives, the FG also came up with the wage award initiative to help workers and pensioners across the country.
Many other state government also keyed in to the ideas and replicated same in their states.
However, Governor Seyi Makinde of Oyo state after acknowledging receipt of the FG’s cash and rice palliatives, noted that the approach, even though laudable was not sustainable in light of the current economic realities and considering the uncertainty that revolves around how long the hard times would likely go away, hence the need to design a more sustainable long term plan that would not only address immediate economic challenges but also be sustained until government at both state and federal levels find a way out of the economic downturn.
SAfER initiative
With data, logic and science, the governor introduced the Sustainable Action for Economic Recovery (SAfER) initiative. The implementation encompasses all sectors including transportation, youth agropreneurs under YEAP. It also provided transportation subsidies through the Omituntun buses and supported healthcare for 50,000 pensioners, while also supporting 10,000 farmers with inputs, among other efforts.
With N500million as take-off for the first phase of the SAfER loan disbursements to traders, artisans, and smallholder farmers in the agricultural sector, Governor Makinde demonstrated the needed political will and an unrelenting commitment towards sustaining his economic expansion plan amidst multifaceted economic turbulence that is adversely affecting other states of the federation.
Within months of its running, SAfER is already proving to be a potent economic stimulator and the gateway to economic recovery and stability.
However, a noticeable part of the initiative is the SAfER loan for Micro and Small Scale Enterprises (MSEs), a sector which may look insignificant but has a larger chunk of businesses driving the livelihood and survival of a vast majority of residents in the state.
To ensure policy effectiveness and guarantee that the loan get to the real people it was intended, seven banks namely: NUT, Full Range, Caretaker, Isale Oyo, Excel, Ebedi, and Kadupe Microfinance banks (MFBs), across the six geopolitical zones of the state were engaged for onward disbursements to all eligible applicants.
Visits to each of the MFBs indicates that N70million was released to each except NUT which got N75 million, as thousands of applicants comprising traders, artisans, and smallholder farmers continued to mount pressure to access the loan which ranges between N50,000 as the least amount to N1million as the highest amount that was accessed by any beneficiary.
The MFBs visited across Ibadan, Oyo, Ogbomoso, Oke Ogun, Iseyin among others across the state, commended Makinde for his foresight by providing what they called bottom-up and an all inclusive problem solving approach to the prevailing economic challenges.
They all regretted that limited people were able to get the loan due to the meagreness of funds disbursed to each MFB while appealing for a more improved amount in subsequent phases in order for the program to spread to more eligible applicants.
While acknowledging that the funds which have since been disbursed 100 percent to beneficiaries, arrived at a critical time of people’s need for business sustenance and revival, the banks disclosed further that beneficiaries of the SAfER loan have started their repayments following the expiration of a three months moratorium period which they stressed remains the key for the funds to continue revolving within the economy.
Loan Administrators views
Managing Director, Ebedi Microfinance bank, Iseyin; Afolabi Abiola said the whole N70million received had been disbursed to about 230 beneficiaries and about N8.6million has been returned as part repayment from those who got the loan.
He said “Last year (2023), we received N70 Million from the state government through the Oyo State Investment and Public Private Partnership Agency (OYSIPA). We disbursed the money to about 230 beneficiaries and we have received the repayment of N8.6million from the beneficiaries.”
Also, the Managing Director, Kadupe Microfinance bank, Saki, Abegunde Olawale shared similar sentiments.
He said “A lot of people have benefitted from the state government loan in our bank here, as at today 400 beneficiaries have gotten their loans, and out of these 400 beneficiaries, we have 352 individuals and we have 48 corporate bodies with registered businesses.
“Out of this 352 we have 182 females and 170 males and they have been doing well. They have commended the state government in strengthening the small scale businesses in the state, because it has really boosted their businesses and their standards of living has improved as a result.”
But, to the Managing Director of Excel Microfinance Bank, General hospital Road, Sango Eruwa; David Oladeji, as good as the loan is supporting the MSEs, it has also helped the beneficiary MFBs by keeping them in business and also allowing them expand their customer base.
He joined other MFBs managers to appeal to the government to sustain the initiative as the number of applicants that could not benefit far outnumbered those who did.
Oladeji said “So far we have disbursed the loan to the beneficiaries and many of them have really appreciated what the governor has done and we believe the program will continue in this manner because we still have a lot of people that their application is still pending.
“The bank itself has been able to derive a lot from this scheme, and one of the benefits we derived is that it has added to our customer base, it has actually increased our customer strength, we have a lot of beneficiaries that have open business account with us and we have been able to make some little interest from the scheme.
“It has also increased our outreach because in the last few years, we have not been able to go to other parts of Ibarapa axis, but because of this program we have been able to move out to other parts of Ibarapa particularly the people of Ibarapa North part of Oyo state.
“We disbursed to 834 beneficiaries out of 1,496 total application we received. The beneficiaries have began the repayment but there are many people who could not benefit yet due to the amount we got from the government.
“The N70million was not enough to cater for a lot of people that applied for this loan. We are expecting the government to add more money in order to extend the scheme to others that have applied for the loan.”
He also wants the government to address the challenge of the level of guarantors required to stand as surety because of petty traders who may nor be able to get any easily.
Accounts of beneficiaries
Virtually all the business centres and owners who were visited confirmed that the SAfER MSME loan has been of great impact on their businesses. From paltry N150,000 to those who got the maximum N1million all attested to the honesty, sincerity and ease with which they access the loan without any political or tribal affiliation whatsoever.
They also said the repayment modalities are not difficult to meet thereby making repayment easy and convenient. The loan was given at a single digit interest rate to the beneficiaries.
Iyabo Busari, a petty trader at Isalu market, Iseyin said she collected N200,000 loan to boost her yam flour and other cooking ingredients business. She said before the loan, she buys goods on credit but with the loan “I was able to stock my shop and I’m doing well with it.
“I don’t know anybody before I was given the loan, I am not a politician, I just collected the form and fill it and I was so surprised that I was selected among the beneficiaries and have been paying back my money.”
Ayuba Olajumoke, a bead maker and fashion accessories seller said she got N250,000 loan from the scheme and “this money has really helped me as I don’t usually go to travel to buy stocks but now I have been travelling to get my shop stock with needed items that will make my business move forward. I heard about the loan on radio, and I went there to collect the form and I was so surprised when I was called that I’m qualified for the loan.”
Also, Alhaji Suliamon Balelayo who sells iron rod said he got N1milion loan to support his business of over 30years to weather the storm of economic hardship occasion by subsidy removal and higher exchange rate.
“I collected N1million from Kadupe Microfinance Bank and I used the money to support my business, I used it to buy iron rods. I have been doing this business for over thirty years but the loan has also helped me more, it has boosted my business. The loan process was seamless, I don’t know politicians, I’m not even a politician but I got the loan after I applied.”
Another beneficiary, Sanusi Shekinat collected N150, 000 which was channelled into her bedspread and curtain sewing business. The fund she said has helped keep her in business when it matters most.
Deborah Ojediran, a charcoal supplier said before the intervention of the government loan, her business was ailing but the loan facility of N1million she got has helped her business to expand as she was able to stand the effect of the subsidy removal.
Experts view
Interactions with other beneficiaries from other zones revealed stories of newfound self-esteem and financial independence.
Business experts and scholars who are observing situations in the state said the SAfER MSMEs loan has evolved beyond its initial objectives. They said it is not just about providing financial assistance alone anymore but about empowering individuals to break free from the chains of poverty.
“These small loans are already acting as a catalyst for economic growth, especially within the microeconomic space as local economies have started witnessing a ripple effect as beneficiaries invest in various ventures from small-scale trading to agriculture to handmade crafts and services. This infusion of capital at the grassroots level stimulates economic activity, creates jobs and promotes a sense of community resilience towards migration from poverty to prosperity”, a business expert, Kolawole Ogundipe said.
However, he added that while the SAfER loan facility looks as a good step in the right direction against palliative distribution, caution was strongly advised, saying “scaling up microcredit programs as SAfER requires careful consideration to prevent over-indebtedness and ensure sustainable growth. Balancing accessibility with responsible lending practices is key to maximizing the positive impact of these initiatives.”
Why SAfER?
The state’s Commissioner for Budget and Economic Planning, who also doubles as the chairman of the SAfER SME sub-committee, Professor Musibau Babatunde, recently led members of the sub-committee on a weeklong monitoring and evaluation visit to participating MFBs and some beneficiaries of the loan across the geopolitical zones of the state.
Speaking during the exercise, Prof. Babatunde explained the efforts of Governor Makinde towards cushioning the effects of the hardship induced by the fuel subsidy removal, stating that the SAfER SME loan support was introduced to support and boost small and micro business enterprises in the state.
He said: “Governor Makinde, in his wisdom, felt there was the need to make a conscious attempt to actually help and enhance the activities of small and micro enterprises in Oyo State. This was how the SME Pillar under the SAfER programme came about.
“We went through the whole procedure, made it a single digit interest loan so that it is accessible and also the term of accessing was made flexible for the beneficiaries across the seven SME-supporting Microfinance banks in the seven geo-political zones of Oyo State.”
He further explained that the monitoring visit was to enable the committee to assess the level of operations of the MFBd and their compliance with the operational framework guiding the disbursements of loan to the beneficiaries, since the state government had disbursed the loans in three tranches to the participating banks.
He expressed satisfaction on the repayment turnout of the beneficiaries, while he also assured applicants waiting to benefit from the laudable scheme that it would soon get to them. He stressed that the loan is without collateral and that the beneficiaries have a three-month moratorium before the commencement of repayment.
Also speaking, the Director-General, Oyo State Investment and Public Private Partnership Agency (OYSIPA), Mr Olatilewa Folami, said the state under Governor Makinde will always come up with poverty alleviation programmes that are impactful to support small and micro enterprises.
He charged the 2, 085 beneficiaries to utilise the loans as expected and repay within the stipulated period of time.
