Intervention for Petty Traders

 Jonathan Eze writes on the prospects of a scheme launched by the federal government to support petty traders

Trade is an art. This is what comes to one’s mind, when one strolls through the streets of a city. One sees on both sides of the road, different items, so well and artistically arranged at outlets catering to the basic requirements of common people. The people behind these activities are none other than the petty traders.

Thus, petty trading activity has become an important sphere of informal sector which plays a significant role in urban economic life. Petty traders are highly indispensable in the distribution system providing useful services to the community especially the lower middle class and the poor. There are certain commodities which are not capable of being sold to ultimate consumers by the formal sector such as fruits, vegetables, groundnuts, retail biscuits, spoons, pan, cigarettes etc.

 Petty traders have access to a large section of the urban community and do a very useful service to it at low cost of operation. They also make a good contribution to cultural life by selling newspapers and magazines at convenient locations. Urbanites invariably have annoyance and irritation at the roadside petty traders because of their encroachment on public property, without realizing the basic fact that they heavily depend on them for several basic needs.

People living in the urban areas very often treat these petty traders as second-class citizens and they are usually considered as   nuisance.   But the fact remains that these road side petty traders are interwoven in the people’s lives in the cities and towns and hence they cannot afford to be ignored.

Petty trading is indeed a prevailing socio-economic activity serving  a  multitude  of  the  low-income population  in  rapidly  urbanising  developing  countries.

Hence, the jubilation that greeted the recent take-off of a new initiative under the Government Enterprise and Empowerment Programme (GEEP), called the Trader Moni, which was designed to empower two million petty traders between now and the end of the year.

The scheme grants loans to a minimum of 30,000 beneficiaries in each state of the federation and the Federal Capital Territory. The aim is to further enlarge the financial inclusion agenda for all Nigerians regardless of social class and economic status.

The two million mark was expected to be attained on or before the end of this year, with petty traders in Lagos, Kano and Abia States set to be the first round of beneficiaries to draw the collateral free loans.

In addition to the 30,000 loans per state, states with larger populations like Lagos and Kano are expected to get more than 30,000 loans. Across the country, especially in the pilot states about 500,000 potential beneficiaries have so far been enumerated.

In order to identify the beneficiaries, no fewer than 4,000 enumeration agents have been engaged by the Bank of Industry (BoI) which is deploying the new scheme.

Trader Moni is designed to help petty traders expand their trade through the provision of collateral free loans of N10,000. The loans are repayable within a period of six months.

Under the scheme, beneficiaries can get access to a higher facility ranging from N15,000 to N50,000 when they repay N10,000 within the stipulated time period.

 However, the BoI is the driver of the laudable initiative.

According to the Executive Director, Mrs. Toyin Adeniji, “The goal of Trader Moni is to take financial inclusion down to the grassroots. The President Muhammadu Buhari-led administration recognised the contribution of petty traders to economic development and identified the fact that some of them may not have what the commercial banks may require to grant loan, hence, his support for this initiative to help them grow their businesses.”

Also speaking, Chief Operating Officer of GEEP, Mr. Uzoma Nwagba said, “This initiative is aimed at expanding financial inclusion because we have over 23 million Nigerians that are financially excluded, this administration aimed to reach them so that they can grow their businesses.”

In addition to Trader Moni, Nwagba said, GEEP has ‘Farmer moni’ for farmers which avail them opportunity to access up to N300,000 loan each; ‘Market moni’ which targets market women, traders and artisans access between N50,000 and N100,000.

Under the scheme, a petty trader can access N10,000 and pay back N10,250 to qualify for N15,000. Once you payback N15,375 you will qualify for N20,000 loan and when you pay back N21,000, you will get N50,000. All loan categories have payback duration of six months. Repayments are, however, made to BOI-GEEP loan account under PayDirect at banks.

 Contrary to claims in some quarters that small-scale traders must present their permanent voters’ cards (PVCs) before they can access the Trader Moni, it has been reported that traders do not need PVCs for the scheme. Also, no document or property is needed to collect N10, 000 loan, which is the benchmark for traders.

According to the Minister of Trade, Industry and Investment, Dr. Okechukwu Enelamah, the goal of the President Buhari administration is to use the Trader Moni to take financial inclusion down to the grassroots, the bottom of the ladder, considering the contribution of petty traders to economic development.

He added that the federal government is also aware of the fact that many of the petty traders don’t have what the commercial banks require to grant loans.

“This administration is keen to ensure that such traders at that level are able to build their businesses and grow, government said.

Trader Moni was launched in five markets in Lagos State with thousands of beneficiaries already. The Lagos markets already reached are Mushin, Ikotun, Agege, Ketu, and Abule Egba markets.

“The scheme will soon be taken to other states in the country, with Abia and Kano states next in line,” he said.

Beneficiaries are already heaping praise on the Buhari administration for the initiative that will improve their businesses.

Mrs. Mufiat Adewumi, a market women leader in Lagos said the initiative would help ordinary Nigerians who cannot have access to commercial banks’ credit facilities because they don’t have collateral.

“We are happy about the Trader Moni because this is what we have been expecting for long, that the government should assist the masses, especially the traders. We thank the federal government so much.”

Lucy, a pepper seller in Ojuwoye market said she had been hearing about this Trader Moni for a while but did not believe the government will be giving people like her loans. She is a market woman who had been turned away by banks when she needed to expand her business.

But when she saw her fellow traders singing and dancing on stage talking about how they received alerts on their phones and gift items from the Trader Moni, she too decided to try it for herself.

According to her,   right there in the market, without having to leave her wares, a Trader Moni agent came and enumerated her. They took her details, capture her photograph and within 48 hours, she received a credit alert on her phone.

With only N430 to pay every week at selected banks for a period of 6 months, she got the loan and is now part of the financial system . If she repays N10,250 within the stipulated time period, she gets access to a higher loan.

While many are lauding this programme, a Business analyst and a manufacturer, Chief Stephen Eze, told THISDAY that encouraging petty  trading  activities  can  be  perceived  as  a  reflection  of  the  prevailing  social-economic realities  of  present-day  cities,  especially  in  developing  countries.

According to him, it  can  be  argued  that  petty trading  is  a  product  of  unprecedented  urbanisation, especially  the  failure  by  the  formal employment  and  income  generating  sector  to  cater  for  the  low-income  households.

“Petty trading in cities of developing countries therefore has an important role that  cannot  be  ignored  in  the  overall  urban  development  and  management  processes  as  it provides employment opportunities accounting for 60 per cent of urban jobs striving at attaining   and   sustaining   livelihoods   of   many   urban settlers,   specifically   low-income households,” he said.

He urged the federal government to do more in providing an enabling environment for all forms of businesses to thrive.

You Can’t Freeze Bank Accounts of Tax Defaulters, LCCI Tells FIRS

Jonathan Eze

The Lagos Chamber of Commerce and Industry (LCCI) has described the decision of the Federal Inland Revenue Service (FIRS) to freeze accounts of taxpayers, considered to be in default of tax payment, as an act of intimidation.

FIRS had written to select banks as collecting agents with a mandate to subsequently freeze the accounts of defaulters.  Such accounts will be debited to the tune of the alleged tax debt.

Reacting to this development, the LCCI, through its Director General, Muda Yusuf, told THISDAY that tax administration should be in consonance with the basic tenets of the rule of law and the fundamental principles of a good tax system.

It added that tax administration should be consistent with the basic principles of equity, fairness, legality and accountability.

According to Yusuf, “The LCCI is concerned about the recent turn of events, especially the freezing of accounts of bank customers based on tax assessments that are in dispute.

“This provision is draconian and could be used as a tool of intimidation, coercion and harassment of taxpayers.  It should be invoked with utmost discretion and caution.”

The Chamber raised a number of key concerns which included, “Whether the claim of tax liability by the FIRS of the affected investors applies to a final and conclusive assessment which should be an outcome of an exhaustive engagement between the tax authorities and the taxpayer.

“The propriety of appointing banks as ‘collecting agents’ by the FIRS, given the strategic and catalytic role of the banking system in business operations, financial intermediation and transactions among economic players is also an area of concern.

“The legality of freezing the accounts of bank customers by the banks on the directive of FIRS for alleged tax liability, given the contractual relationship between the banks and their customers is quite unfair and unacceptable.

 “Disrupting businesses of account holders of a sudden freezing their accounts for reasons of alleged default in tax payment could cause an irreparable reputational damage to businesses.

“Also, the risk to financial inclusion as SMEs may avoid the use of banks for their transactions if FIRS goes ahead with such action.”

LCCI, however, urged FIRS and the banks to exercise utmost restraint in the adoption of this tax revenue recovery strategy because of the grave implications for investors and the economy. The damage to the economy may be much more than the contemplated revenue.

 “These are not the best of times for investors in the economy.  Many businesses are reeling under a huge burden of high cost of doing businesses.

“They are grappling with high energy cost, astronomical cost of logistics, huge regulatory compliance cost, exorbitant property tax, outrageous cost of funds, multitude of taxes and levies imposed by the states and local governments, high import duty, excruciating conditions at the Lagos Ports and the challenges of corruption.  These are critical contextual issues that should be taken into account.

“Revenue generation is not an end in itself, it is a means to an end.  The ultimate objective is to ensure equity, improve welfare of citizens, create jobs and promote the advancement of the economy.  The activities of agencies of government should be in tandem with the Ease of Doing Business agenda of government and the promotion of the ideals of the Economic Recovery and Growth Plan (ERGP).”