By David Adeoye, (NAN)
Small and Micro Enterprises (SMEs) have been acknowledged as a major sector contributing significantly to the economy of state and country to consequently play a pivotal role in poverty reduction.
In Oyo State, SMEs form the backbone of the state’s economic activities and contribute to achieving the sustainable development goals aimed at mitigating economic hardships.
This recognition of SMEs as a veritable tool for economic growth and development prompted Governor Seyi Makinde’s administration to set aside N500 million for low interest rate loans for their owners.
This development was announced while Gov. Makinde was disclosing the short-term plans of his administration to mitigate the effects of the fuel subsidy removal on the state’s residents on Aug. 5.
The short-term plan tagged “Sustainable Actions for Economic Recovery (SAfER)” has SMEs as one of the “SAfER” packages, a literal usage of the word “safety”.
According to Makinde, the package termed SMEs Stimulation Package is to assist micro business owners, such as traders, artisans and other small business operators, to stay afloat through the loans.
The package, targeting the “poorest of the poor”, the vulnerable and those at the grassroots of the business economy is placed under the Oyo State Investment and Public Partnership Agency (OYSIPA), for the execution of the loan disbursement.
Chairman of the SAfER SMEs Sub-Committee, Professor Musibau Babatunde, said the loans initiative was part of Makinde administration’s efforts to reduce the hardship induced by the fuel subsidy removal.
According to Babatunde, the SMEs loan is the baseline for economic activities in the state.
“It will bring succour to the residents in the midst of economic hardship. The programme has proved to be a master stroke towards helping individuals and households in the state to become stronger financially,” he had said.
The OYSIPA Director-General, Mr Olatilewa Folami, said not less than 2,100 micro/small business owners, out of over 5,000 who applied, have benefited from the N500 million SAfER loan facility since its disbursement began in October.
Visits to the seven selected micro finance banks in the Ibadan, Oyo, Ogbomoso, Iseyin, Saki and Ibarapa zones have shown that the initiative was massively welcomed, based on the number of micro and small business owners who applied for the loan.
Folami pointed out that the loan repayment would create room for other people to benefit, adding that government was targeting about 10,000 SMEs operations to benefit from the programme.
With its acceptability across the six zones of the state, heads of the Micro Finance Banks(MFBs) assigned to disburse the funds made a noteworthy point of interest about the package.
They said pegging the loan interest at the single digit of seven per cent, well below the double digits interest rate being charged by commercial banks, was a very laudable move “and has encouraged many micro and small business owners to apply for the loan.“
The simplicity of the process of obtaining the loan, which is devoid of the normal bureaucratic bottlenecks that characterise loans accessibility in the country’s commercial banks, have really helped the beneficiaries.
“These put together have helped them to access between N50,000 and N1 million, depending on the status of their respective businesses and what the individual applied for,” a bank official said.
Another bank official, Mr Paul Omolayo, the Managing Director of Oke-Bola/Oke-Ado MFB, one of the participating banks, said the SMEs package was not only impactful on the beneficiaries’ lives.
He said the banks have equally benefited.Omolayo who claimed to be the coordinator of all the MFBs involved in the loan disbursement said: “The programme has given the banks opportunity to have more customers.“
Over 80 per cent of the beneficiaries are new customers who hitherto have no business relationship with our banks.”
A cross-section of the beneficiaries in Saki, Ogbomoso, Ibarapa, Iseyin, Ibadan and Oyo zones lauded the SAfER stimulation packages, describing it as “grease in the wheel of our respective businesses”.
The beneficiaries also commended the state government for its commitment to the programme, which they believe would take millions of people away from the poverty level.
They added that it would provide employment opportunities for the less privileged, give hope to the hopeless and provide helping hands to hundreds of petty traders who hawk to survive.
Mr Shittu Rasak, an aluminium pot (“ikoko irin”) moulder in Saki town who took a N250, 000 loan, shared his experience about the SAfER SMEs package, describing it as a “business stimulant”.
Rasak said the loan was a valuable resource which has enhanced an expansion of his business of aluminium pots moulding.
He recalled how he used to limit his monthly production to 10 pots and suspend production until he was able to sell the 10 pots.
“After this I will gather the money realised from the sales to buy raw materials before resuming production again.
“But the N250,000 SAfER loan has transformed my business as I conveniently produce 40 to 50 aluminium pots of different sizes monthly since I now have money to buy enough raw materials.
“I get more profits now because I do buy raw materials in bulk and at a cheaper rate, unlike when I used to buy at retail price,” he said gleefully.” Rasak said.
Another beneficiary in Saki, Balikis Ayuba, a beads maker who also accessed a N250,000 SAfER micro loan, also lauded the state government initiative.
She said such a programme would have a direct impact on grassroots economy and lift millions out of abject poverty.
Ayuba said the loan has made her to get customers’ attraction because she now displays numerous products for customers to choose from, since she has enough materials to produce beads.
A charcoal supplier in Eruwa, in the state’s Ibarapa zone, Mrs Deborah Oyediran, who took a N1 million SAfER loan, testified about how the fund has promoted her charcoal business.
She said investing the loan into the charcoal trade has expanded her business as she now exports charcoal, apart from supplying big industries which use it locally.
Oyediran added: “With this loan which has transformed my charcoal business now, I will soon engage the services of extra hands. I plan to employ three labourers to assist in loading and supply to customers.”
In the Ibadan zone, Mrs Omolara Ogundeji, a petty trader, and Deborah Adedayo, a catering services provider, said the economic impact of the SAfER loan was enormous.
Ogundeji who accessed a N200,000 loan in October said her trading business has been expanded as a result of the loan she invested on it.
On her part Adedayo, who accessed N500,000, said she now does her catering services business with over N700,000, thereby making more gains.
Equally, Mr Oluwafemi Adetunji, a barber who also sells phone accessories, said he accessed N250,000 to upgrade his business.
He declared that his standard of living has started improving gradually as a result of the loan facility which he used to buy more phone accessories.
In the Oyo zone, Mrs Nofisat Wahab, a wholesale seller of soft drinks and wine who accessed N1 million, said the loan has enabled her to expand her business.
“The good thing is that the repayment of the loan wasn’t difficult for me because the interest rate is single digit”.
Also, Mr Michael Babatunde and Mr Timothy Fadipe, cashew and cassava farmers respectively in Ogbomoso, said the loan has been expended on planting more crops to expand their farms.
Babatunde who accessed N750,000 said he has expanded his cashew farm with additional five acres.
Fadipe said having funds to expand his cassava farm had been a great challenge for him in the past, and he quickly embraced the programme when he heard about it.
He added that the N1 million loan had helped him to expand his farm with additional 10 acres.
Latifat Alege and Ganiyat Opeola, both owners of small trading businesses in Iseyin who accessed N1 million each to expand their businesses, testified to the impact of the loan.
Alege said her business status was gradually changing for better due to the fact that she has money to invest on her trading.
Opeola who specialises in the sale of women bags, shoes and jewelleries, described the SAfER SMEs loan as “a saving grace” used to upgrade her business.
She said her shop was with few stocks before she accessed the loan.On measures put in place to ensure that some of the loan beneficiaries do not default in the repayment or abscond with the SAfER loan, Omolayo assured that all was well.
He said all the MFBs involved in the loan disbursement strictly followed the guidelines given to them by the state government to ensure every beneficiary repays, so as to create room for other people to benefit.
“Bank officials carried out thorough investigation on each of the beneficiaries, and visited their business sites to know the business status of the respective beneficiaries.
“This was apart from providing a guarantor who must be a civil servant on Grade Level 10 and above.
“In addition we assigned each of our officers to at least 20 to 25 beneficiaries to monitor them on how they invest the funds on their businesses.
“We gave the beneficiaries a three-month period after which repayment commenced. Now, the first repayment has started coming in from those that accessed the loan in October.
“So, we don’t envisage any problem as regards repayment based on the measures we have on ground.”
Corroborating the MFBs’ views, Babatunde who is Chairman of the SAfER SMEs Sub-Committee said they regularly embark on a monitoring and evaluation exercise to the MFBs that coordinate the programme.
He said this was to enable the team have a grip of the programme, know the challenges encountered by the MFBs in charge, and check their books.
“This is to be sure that they follow the guidelines given to them in terms of ensuring that 60 per cent of the loan go to micro enterprises, 40 per cent go to small enterprises and how the beneficiaries utilise the funds,” Babatunde said.
Some observers have however expressed the fear that the SAfER SMEs package may end up like the other loan programme executed by the previous government.
They said the mentality of many Nigerians is that any fund from government is what they deem the “national cake”.
Babatunde, who is also the Oyo State Commissioner for Budget and Economic Planning, said the programme is no national cake.
“The programme is a revolving loan aimed at stimulating the micro economy and government took adequacy of the business the beneficiaries are doing into consideration before they actually accessed the loan.
“Traceable business addresses of the beneficiaries were known and their respective guarantors must be a civil or public servant from grade level 10 and above so that repayment could be enforced in case of any default.”
Babatunde also ruled out any political consideration as requirement for accessing the loan.
“If and when we bring in political considerations, then the issue of default may set in. But we made provisions for only people who were adequate in terms of their submission and the ones who got the loans are those we are sure will actually pay back the loan.”
This is why residents of the state, especially micro and small business owners who could not get the loan, have implored the state government to release more funds for the programme.
They contended that this would enable more people to benefit from the programme.
(NAN)