Why We Are Investing In The Poorest, Most Vulnerable Among Us – VP Osinbajo
– N-Power with half a million beneficiaries largest pre-tertiary jobs programme in Africa
– Trader Moni collateral-free loans to reach 2m petty traders by year end
– Solar power installed in key markets in several states already
REMARKS BY HIS EXCELLENCY PROF. YEMI OSINBAJO, SAN AT THE 9TH PRESIDENTIAL QUARTERLY BUSINESS FORUM HELD AT THE STATE HOUSE BANQUET HALL, ABUJA ON 8TH OCTOBER, 2018
First, let me very sincerely appreciate everyone for taking the time to attend another Quarterly Business Forum. This as you all know, is the 9th of the series that we have had, and we have taken time to bring all of the relevant ministers and members of the economic team together, to interact with the private sector and I must say that discussions have been extremely useful and has helped a great deal in formulating policy and in improving several of the problems and issues raised throughout the Quarterly Business Forum (QBF).
This is a particularly crucial session of the QBF as it has provided an opportunity for us to discuss what may be, the most crucial issue in our economy which is jobs, and of course, it is going to be even more crucial as the years go by, given the sheer number of young people who are graduating every day.
Job creation has always been a priority of this administration and I must say that it is not just in words. We have devoted time, attention and action to the issues of job creation.
In analyzing the solutions, we were clear that the surest way of creating jobs is by enabling the private sector to do business easily so that opportunities are created in agriculture and the agro-allied industry, services, manufacturing and in all the other areas that the private sector is dominant.
But we realized that would not solve the immediate problems of thousands of graduates who have no jobs or the millions who are at the bottom of the trading pyramid barely making a living. This, we believed created a compelling argument for direct intervention by government.
Our preferred approach has been a practical one. So, while we worked through the Presidential Enabling Business Environment Council, PEBEC, to improve the business environment, and worked on several sector based incentivization schemes, we undertook a hands-on approach to getting MSMEs working.
Our MSME clinics all over the country have been one of those practical steps that we have taken. We have gone to 20 States so far, and I have personally attended 18 of those MSMEs Clinics. What we do is that, in each of those States, we take the relevant regulatory authorities and pre-investment agencies with us – we take with us BOI, CAC, FIRS, SON, NAFDAC, FIRS, etc and they go a day ahead of the formal day to interact with the business and address some of the issues. So there are actual interactions with the small businesses.
Our focus has been to ensure that the regulators understand their role as facilitators, not an obstacle to business, and we have seen a great deal of improvement. For example, NAFDAC has been able to clear a backlog of almost 5000 approvals that were outstanding, and the CAC, which is online, now, has reduced the cost of registration. Instead of paying N10, 000 for business registration, you can now pay N5, 000. (between Oct. 1 to Dec. 31, 2018).
We are also establishing one-stop shops in the States, where all regulators are under the same roof. Of course, the State governments have to collaborate and cooperate with us in order to establish these One-Stop Shops. Many of the small businesses that used to travel round to get the necessary approvals no longer need to do so, because we are now bringing the regulatory agencies closer to them so that they can do all of the registration and other things that they need to do. This is ongoing and we are committed to ensuring that MSMEs are properly serviced, checking NAFDAC, SON and others, trying to see the things that they need to do in order to service the MSMEs better.
We also took the view that since the largest numbers of small businesses in Nigeria are the market women and men and petty traders, we needed to expand the opportunities in these categories.
First, we decided that we would enhance environments in markets and commercial clusters. Our energizing economies project is putting power especially solar power in markets and commercial clusters. We have powered so far, many of the shops in the Ariara Market, Aba; Sabon Gari Market, Kano; Sura market in Lagos, Isinkan market in Ondo, Bola Ige market in Gbagi, Ibadan, Oyo State and Edaiken market in Benin, Edo State.
So, what we have done in many of those markets is to put power in their shops especially solar power. And it is incredible that all of these market women and men are prepared to pay for the service. In their shops, they have meters so that they can actually pay for the power they consume. And in each of the markets they have a centre which services the shops, and this, of course, is done by the private sector in collaboration with the Federal Government. And quite a few jobs have been created around this, as you can imagine.
There are those who even just clean the solar panels and those who service the panels as well, and we intend to expand the scope of this because if we are able to provide power in the market, it means that the men and women can do more, tailors can do more. In fact, just energizing the market alone implies that people can sell longer in the marketplaces; they can refrigerate some of the stuff that they are selling.
For the small businesses also, we expanded the microcredit to small businesses under our Government Empowerment & Enterprise Programme (GEEP): N15.183 billion in interest-free loans ranging from N50,000 to N350,000 have been disbursed to over 300,000 market women, traders, artisans, farmers across all 36 States of the country and the FCT. (By the way, 56% of our disbursements have gone to women).
But I think the Trader Moni programme, which is not targeted to the business elite, but to a very important segment of our economy: these are the millions who are petty traders. So, the Trader Moni is one of the most crucial components of expanding opportunity for millions of Nigerian traders by giving micro-credit to the bottom of the trading pyramid – the smallest businesses; the one table trader; the bread or plantain seller or the Mai Shai. This is the largest segment of our working population, and when you look at their inventory, it is no more than N2,000 or ranges between N5,000 – N10, 000. But they are an important part of the value chain of most goods. I have been to some of the markets where we have given the N10, 000 loan and it is just incredible how N10, 000 can make such a huge difference. We are doing a lot of the testimonies now. I was speaking to a woman at the Nyanya market here in Abuja where we have given out this Trader Moni loans. She had a bucket where she put Ponmo with water. I looked at the whole thing and I said to her, “how much does this whole thing cost” and she said that it is about N2000 and I asked her, “how are you going to make profit from this?” She really didn’t answer, she just turned and looked at the other lady next to her who had her own Ponmo also but in a smaller bucket, as if to say, “I am a big time Ponmo seller, bigger than this other woman who was selling in a smaller bowl.”
The truth of the matter is that these are very important parts of our whole environment. They sell the single sachets of soap, sugar, and spices to the largest numbers of our people. But they are forgotten and ignored in economic plans and budgets and considered too unwieldy and risky for microcredit loans.
Under the Trader Moni Scheme, we decided that we are giving microcredit to 2 million petty traders across the country. We start by giving them N10,000 and when they pay back within six months, we give them N15,000 and then N20,000 until they graduate into the GEEP programme.
By giving them credit to replenish and increase their inventories, we give them a stronger chance, to earn more, while they also service the value chain that they are a part of. But more importantly, we bring them into the formal sector, where they have access to government and private credit and we lift many permanently out of poverty.
An important feature of the program is financial inclusion. So far, we have 349,000 new bank accounts/wallets for beneficiaries and intending beneficiaries. In the second phase, when they get the second line of credit, we insist that they must open bank accounts. We are working now with about 8 banks that are very committed to the Trader Moni Scheme. We have banks who are providing phones, at the moment, we have taken custody of over 300,000 mobile phones. For those traders who do not have phones, they will be given mobile phones provided by the banks free of charge. The banks are also looking forward to the opportunity of opening new bank accounts for the traders. The banks are also mindful of the fact that the Telcos might want to beat them to it because the Telcos are very aggressive.
You have heard already of the N-Power programme. It is the largest post-tertiary jobs project in Africa placing 500,000 young people in existing teaching jobs, there are also the N-Health and N-Agro. Some of our N-Power graduates are also being employed as enumerators for data collection and research because of the new skills they have gained. In addition to these 500,000 N-Power graduates, we have 20,000 non-graduates working and learning as part of the N-Build programme in various construction, automotive and technology sectors.
But we recognize that a great deal more needs to be done and of course the government cannot do it alone. This is why during our focus labs on investment with the private sector, in addition to driving private sector investment, we were also focused on supporting businesses whose capacity to create jobs was high.
Technology perhaps creates the biggest opportunity for jobs for young people. Government has supported the creation of several technology hubs across the country. Just last week, I was at the Genesys Hub in Enugu State and on Thursday, I was at KadHub in Kaduna State, and in each of these hubs, several new businesses are being incubated and several go live daily. Fintech companies are also growing daily.
Our robust N-Power portal was built by a Nigerian software company. All the enumeration and payment for the over 2million and growing Trader Moni beneficiaries are done by local tech or tech-based companies. So, there is a great deal of opportunity for our young people and they are rising to the occasion. We have several things we are doing around technology such as university challenges. I have been to Bayero University in Kano, University of Lagos and Nnamdi Azikiwe will come on very shortly. In all of the places that we have been to, I have seen a lot of great things going on, the young people are vibrant and involved in a number of creative things, so there is plenty of room for the work that they are doing. BOI has recently launched a N10 billion-tech fund that will encourage many of the businesses especially the startups.
In Kaduna, at the hub, I came across a lady who runs a business outsourcing company where she trains and services other companies. Already she is rendering services internationally to many companies. She is training a lot of young men and women who take calls and who can answer inquiries on various subjects from airlines, technology-related businesses, payment systems etc. it is massive and I think at the moment there are about 300,000 people and they are earning a decent income. A lot of the people who are into the service industry believe that because our English language has no tonal interference, they prefer Nigerian men and women rather than people in Asia whom they have used in the past. There is a massive opportunity there as well and we are going to support those efforts so that we can create those kinds of opportunities.
We in the Economic Management Team have also undertaken a rigorous review of the situation and identified a number of measures that need to be taken to address job creation. These include; deliberate engagement with the private sector to develop practical training materials that are relevant to industry which will guarantee off take for those that are trained; an adjustment of the current system that implements the Industrial Training Fund in order to ensure that it provides value to employers in the private sector. We have looked also at several of the ways in which we can track and assist job seekers and supporting private sector efforts in not just identifying opportunities, but in building a data tracking system that will monitor progress.
I am very excited about some of the implementable recommendations that have been made today, in particular, the commitment to some of the work being done by the ITF and the Nigeria Employers’ Consultative Association, NECA, on skills acquisition.
However, I think we must emphasize scale and training and placing large numbers of young people in the workplace. These must take into account the need to provide real value to the private sector through the ITF scheme and where necessary, develop optimal incentives to support the private sector.
I think it will be important that we commit to constituting sector skills councils and encourage the development of these councils for various sectors, especially in sectors we have identified as being of priority for job creation.
In sum, I am convinced that we can crack the jobs problem. And we are in the right direction. First, by investing in infrastructure more than any previous government in the history of our country, we have spent so far, in two budget cycles, N1.7 trillion despite earning 60 percent less. And we are also looking at solving the power problem. We are looking at how to review the existing power structure, review what happened in the previous privatization programme, and how to enhance the capacity of those who are doing the business now to do it better. And to introduce fresh investment in that sector, and generally, we are looking at how to enhance the business environment.
Also, we believe that government direct intervention can be improved. Today, of the 500 billion which we provided in two budget cycles for SIP, we have spent about N250 billion. We have not spent N500 billion because we simply have not been able to allocate that much revenue to it. And the results are obvious. We think that if we spend more we can truly deal with a lot of the problems around what government needs to contribute to job creation. We are looking at how to improve that.
One of the very interesting arguments that occur when you say you want to do a big social investment programme is that several of our traditional type of thinkers on how to open up for job creation insists that it has to be a top-down approach. A lot of the investments should go to enhancing business. But the truth of the matter is that where you have large poor population such as we have, you must do a massive social investment as we have. So, it is for us to look at how to develop those kinds of programmes that address the needs of the poorest and most vulnerable and bring them into the formal market.
I was saying once, to some of the government agencies in revenue generation and policy, that at some point they were able to bail out banks in Nigeria spending close to N5 trillion. Those who owe the banks probably did not number up to 100 and we spent that much money in 2009, 2010, bailing out maybe about 100 or so individuals. So, if we spend N1 trillion bailing out the poor in this country, just N1 trillion every year, we will make a massive difference. Those are the real issues.
I want to thank you for the time and attention that you put to this. I know that we will have yet another Quarterly Business Forum and I hope that you will be with us to complete all of what we have talked about and implement the things that we have spoken about.
I want to thank you too, for the very useful contributions to today’s conversation. I will work with you day by day to do the very best that we can for our nation.
"In sum, I am convinced that we can crack the jobs problem. And we are in the right direction. First, by investing in infrastructure more than any previous government in the history of our country, we have spent so far, in two budget cycles, N1.7 trillion despite earning 60 percent less."