The government of Anambra State, Nigeria and Access Bank a local financial institution have recently lunched 2.5 Billion Naira microfinance project. This is good news coming from Anambra State that is bedeviled with high unemployment and capital flight. “Access Bank Plc, a Nigerian commercial bank, has agreed to work with the Anambra state government to launch the state’s first microfinance scheme, by providing an equivalent of USD 16.5 million to selected microfinance institutions (MFIs) within the month. State Governor Peter Obi plans to set up workshops at the local government level throughout the state, in order to monitor progress and train operatives on “effective operation of the scheme.” The petty traders and small scale merchants can get small loans based on their worthiness of character without the conventional collateral and security.
Access Bank and Anambra State must be applauded for this important project. The issues of credit and liquidity availability are the major problems confronting small business in Anambra State and Nigeria. It is not news that the people of Anambra State are business orientated with industrious and enterprising spirit. But issue of finance can become a hindrance in starting and sustaining a business venture. Therefore with the presence of micro financing the lines of credit will become avaliable to the serious merchants and traders in the state.
Governor Peter Obi “has also organized a committee, consisting of himself, representatives of the Access Bank, the Central Bank of Nigeria, microfinance bank operators, and others, who will oversee the program. The criteria for taking out a loan are not based on assets or collateral, but on “proven good character of the borrower.” The MFIs receiving funds are restricting the maximum amount that can be loaned to an individual to be equivalent to USD 3,294.”
The problems of unemployment do contribute to kidnapping and armed robbery phenomenon in the state. The youths and young men must be encouraged to start small businesses and they can be persuaded to attend trade schools. Guarantees must be given to the youths that loans and credits must be extended to them at the completion of the trade schools. This can help to curtail delinquency and idleness among some of our youths who are likely to engage in criminal behaviors. The micro financing scheme can become a possibility in fighting crimes and unemployment in the state. But we must be careful not to over stretch the project for government does not necessarily create jobs but formulate policies with enabling environment that makes job creation possible by the private sector. The prime reason for the micro financing is to provide the needed credits to small and petty traders who do not have the collateral and expertise to get loans from commercial banks.
The chairman of the State Committee on Microfinance, Mr. Eze Echesi is capable of doing a good job for the people of Anambra State. Echesi have to assemble a committee of experts and technical advisers from all walks of life especially traders and merchants to aid him in implementing and running a successful micro financing entity. The Governor of the State Peter Obi who is a successful businessman can be of a great help and adviser to the chairman of the project.
The great thing about micro financing is the ability to directly work with the people at the grassroots; the regular day-to-day traders on the street corners and at village market place. The women in Eke market of Umuoji or Nkwo market of Nnewi and similar towns are the reasons that brought about micro financing in the first place and they are the ones that need credit to run their tiny and mini-business outlets. The danger with the project is that it can become a patronage to favor political ally and well connected in the state. This can be a major problem associated with government involvement. The government joint partner with a commercial bank can become deterrence to such a self-defeating purpose.
A major barrier that might delay the dispensing of a loan is the evaluation and quantification of credit worthiness of the borrower. Most of the petty traders are semi-literates and are not keen to record keepings and documentation of daily transactions. The issues of logistic and location must comes into play therefore the managers of the project must go to the customers, for some of these traders do not have reliable transportation and fares to go to the offices of the loan management. Mass media enlightenment becomes imperative to educate the traders on awareness of the program.
Anambra State government must set benchmarks with deadlines on the project. The government must set a goal and purpose especially what they intend to accomplish with the scheme in next 5- 10 years with regards to business creation and reduction of unemployment in the state. The micro financing cannot be cosmetic and superficial but realistic and pragmatic venture with promising affirmative results to ameliorate the wellbeing of citizens of Anambra State.