Olaolu Olusina
9 September 2008
opinion
Lagos — For more than 90 minutes, he held his audience spell bound. Nobel laureate, US-trained Bangladeshi economist, and acclaimed 'Banker to the Poor', Professor Mohammad Yunus, hit the nail on the head on the case of Nigerian stakeholders in the microfinance sector.
No doubt, there is grinding poverty in the midst of abundant resources in the country and no responsible government can be comfortable with this.
Reducing poverty to the barest level by 2015 is also one of the Millennium Development Goals (MDGs) of the United Nations (UN), with Nigeria a member. Stakeholders, analysts agree, have a major role to play in giving succour to the poor and helping to alleviate the scourge of poverty from the society.
Setting the Right Tone
Managing Director, Tradewise Speaker Bureau & Consulting, Mr. Dayo Omotayo, had earlier set the tone for the discussion while welcoming Yunus to a conference with the theme: Roadmap to Sustainable Micro Funding in Sub-Saharan Africa.
According to Omotayo who quoted from a recent research, "Nigeria has the highest rate of collapse of Small and Medium Enterprises (SMEs) within the first five years of operation, due largely to low financial capacity of the entrepreneurs who are thus unable to manage well the gestation period of a growing enterprise."
He also disclosed that there are, today, about 700 microfinance banks listed in Nigeria, with only about 70 of them or 10 percent, functioning.
Omotayo said since microfinance banks are yet to find a good footing in Nigeria, "it is necessary and urgent to create an appropriate window for them to view micro funding somewhere else, particularly where it has had good success."
The Federal Government is trying to give the pride of place to microfinance institutions, because of the belief that they have a role to play in developing the SMEs.
All over the world, SMEs are considered as the engine of growth for industries. But there are fears that if not adequately funded and regulated, these newly licensed microfinance institutions may also go the way of the community and rural banks that came before them.
Stakeholders are therefore unanimous in their conviction that Nigeria cannot afford to fail this time around; moreso, given the role these institutions can play in poverty alleviation and eventual eradication.
Poverty in Nigeria, no doubt, has become an embarrassment to a country with such huge natural and human resources. At the event, the Minister of State for Finance, Remi Babalola, expressed government's concern at the widespread poverty in the land.
"Despite all government interventions to reduce it (poverty), the impact of the different interventions has been insignificant," he lamented.
According to him, "the poverty profile of Nigeria indicates that the incidence of poverty increased from 28.1 per cent in 1980 to 46.3 percent in 1985, declined to 42.7 per cent in 1992, and increased to 65.6 per cent in 1996. By 2007, it declined again to 54.4 per cent."
The Minister added that in absolute terms, the estimated population of Nigerians living below the poverty line in 2007 was more than 80 million people.
The choice of the Bangladeshi model of microcredit was justified, especially with Yunus who is acclaimed to have given a human face to microfinancing. Moreso his approach has become a model for poverty eradication and rapid national economic development in Third world countries.
Omotayo, alluding to this, said, "we brought him (Yunus) here because we want that spirit of success transferred to us in Africa, which harbours the world's largest number of people living below poverty level."
Yunus Intervention
The stage was set for a robust discussion on the way forward for Nigeria's microfinance banks; to learn from the success story of how Yunus turned micro-funding into means of ensuring poverty alleviation and rapid economic development in his native country, Bangladesh.
All those who attended the event in Lagos that day, including government officials, watched how a man who has become noted for his revolutionary approach to poverty alleviation, told the story of a model that has been replicated in more than 100 countries across the world.
"I couldn't believe that people could suffer so much for so little. What excited me was that the problem was so much but the solution very simple," he said as he explained how he became an 'angel' with only $27 and a 'super angel', with an additional $27.
Yunus said he started with a seed fund of $27 to a group of 42 indigent women and thereafter increasing it by another $27 as capital for them to improve their trade and vocation.
"I did not realise what will be the outcome of this. People looked at me as if I had performed a miracle, and jokingly I said to myself, if I can become an angel with only $27, then I can become a super angel with an additional $27," he recalled.
To say that Yunus is an enigma is understating the obvious. An angel, too, he was, to the indigent women of Bangladesh. Through his unique experiment, the women broke the shackles of poverty to have a voice in the running of what later became the Grameen bank, which gave out a billion dollar credit to the 'poorest of the poor', most of them women, last year alone.
Interestingly, Yunus maintained that he never knew where he was headed when he mooted the idea of a microcredit scheme that later turned into a successful trailblazer, saying "I did not pre-determine this. I accidentally bumped into this."
"Despite all odd and initial hiccups, the Grameen bank that you hear about today is not only for the poor, but owned by the poor women of Bangladesh, who as well sit on the bank's board and make decisions," he said.
Yunus explained that he had to struggle for many years with the conventional banks and the government who did not believe that his ideas could work; and added, "all the good things happening today in Bangladesh and Grameen are happening because of the decisions we took at the beginning."
His message is simple. "Poverty is not created by the poor people but by the system. Grameen bank is not about making money. Microcredit is about helping people get out of poverty."
Business, he said, is not all about making money as he maintained that the human being is not a money-making machine but a multi-dimensional being. "All human beings are entrepreneurs," he insisted, as he cited the case of a programme Grameen bank has for beggars under the social business concept.
With a simple interest-free loan of $15 and no timeframe for re-payment, Yunus said, "11,000 out of more than 100,000 beggars on that programme have stopped begging completely, with the remaining only begging part-time."
The economist said he is convinced that it is possible to create a world where nobody would be poor, adding that we can create 'a poverty museum'.
He advocated a change in the orientation to, and concept of, business, saying, "we have to redesign our institutions and concept of business that see business only in terms of money making."
According to Yunus, "we need to open a new kind of business, a social business, doing it not to make money but to impact on other people's lives. We have done it in Bangladesh, a social business that takes out the costs and not the profit."
Prompt Payback Syndrome
The poor women of Bangladesh have been paying back their loans and are being empowered to give their children good education and better their lives with collateral as conditions for loans being de-emphasised.
The ripple effects on socio-economic and political life are quite amazing. "100 per cent of children of Grameen families are in school. There are more than 30,000 students from Grameen families in universities across the world," said Yunus.
"When you see poor people, help them. Because of the initiatives we have taken, a lot of dramatic changes have taken place in Bangladesh."
According to Yunus, "people pay back with simple rules that helped them". He disclosed that Grameen bank now has 7.5 million borrowers in 2,500 branches with 27,000 staff, adding that the break-even timeframe for all the branches is not more than 18 months.
These figures, especially the one billion dollars in credit given out last year alone, no doubt, humbled most operators of micro-finance banks in Nigeria as the money came in from Bangladesh, one of the poorest countries in South East Asia.
The most interesting aspect of the revolutionary changes brought by this simple microcredit model, according to Yunus, is that Bangladesh is one country that is sure to achieve all the MDGs in 2015 if it continues at two per cent growth.
Concerned Inputs
Yet, with all the money available in Nigeria, microfinance banks have not been able to make much impact on the lives of the poor people.
Many of those at the forum wondered aloud whether they were really into micro-financing at all, going by what is going on in Bangladesh; although they flaunt various products and services targeted at people at the lower rung of the society.
The Lagos State Governor, Babatunde Raji Fashola, acknowledged Yunus' message in his remark that his government's micro-finance initiative was solely influenced by his reading of the laureate's exploits in Bangladesh.
"Before then, my concerns about how to assist the poor, when I was preparing for my elections were steered towards concepts of social security made popular by European and America," Fashola said.
He added, "this vehicle of course had also created a problem over time. One of dependence and diminishing productivity, and whilst all of us were looking for a solution, Prof. Yunus demonstrated to us that the poor can pay."
Deputy Governor of the Central Bank of Nigeria (CBN), Mr. Tunde Lemo, raised the issue too while speaking on 'Challenges and Prospects of Microfinancing in Nigeria: Regulator's Perceptive'.
He challenged the operators on the mode of operations, stressing that microfinance banks are different from conventional banks. Lemo stated that, "after registering about 800 microfinance banks in two years, we have started seeing results, reports and we are worried and tend to ask whether so many of them are doing microfinancing at all."
With most of them located in urban centres, analysts wondered what impact they have made on the poor, most of whom live in the rural areas. Observers believe that if the poor in Bangladesh could be so empowered, Nigeria with all her wealth has no excuse to fail her poor people.
The Chairman, Integrated Microfinance Bank (IMFB), Dr. Doyin Abiola, sought a way to factor the poor into the scheme of micro-financing in Nigeria, insisting that microcredit is not charity.
"Perhaps the best way to help the poor is to acknowledge that charitable and commercial microfinance can co-exist as choices in the pursuit of happiness and life more abundant," she stated.
However, IMFB's Managing Director, Simon Akinteye, while urging Nigerians to join the pro-poor movement, described microfinance banking as not just banking but a human face to banking. To him, "it is giving banking a human face. It makes more sense lending to the poor."
Managing Director/CEO, Oceanic Bank International, Mrs. Cecilia Ibru, said, "a world without poverty is possible. We should arise to this challenge, which will solve the social menace of un-employment, illiteracy, insecurity, low life expectancy and low standard of living."
From the revelations of the day and the lessons learnt from other climes, there is no doubt that stakeholders, just as Omotayo said at the beginning, will go back to their offices to chart a roadmap that will ensure the eradication of poverty in the country and offer the poor free access to banking.
If it can be done in Bangladesh successfully, Nigeria, with all her huge natural resources, has no excuse for failing to help a rapidly increasing poor population. Over to all stakeholders.
Be the first to Write a Comment!
Copyright © 2008 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
