For the vast bulk of Nigeria’s small scale entrepreneurs, it’s fast and easy getting loans on the streets than in the formal banking sector. But it’s not all about roses, the road to liquidating the credit can sometimes be laced with thorns.
By GBENGA OGUNDARE
IT’S just some minutes gone past 9 pm at Council Bus Stop in Ikotun, a crowded surburb around Alimosho Local Government Area in Lagos. Aminat Alli [not real name] sat on a high stool facing a table full of fresh fruitsapples, pineapples, pawpaws, cucumbers, watermelons and oranges. On the table is also a billowing hurricane lamp that provides some illumination with which the young woman attends to customers attracted by her fruits.
Aminat is not going to leave the spot until 10 pm, or sometimes 11, she reveals.
“That’s the idea behind komu le lantern my brother,’ she enthused as the reporter makes his orders.
Well, spare yourself the difficult guess about what the young woman meant by komu le lantern. It simply means ‘your breast on a kindled lantern’, and it’s a slang among traders and artisans to underscore the criticality of the money they borrowed to activate their trades and businesses, usually from thrift lenders in the informal banking sector.
“You must pay back your loan every weekend, so you have to make sure that you make so much money to cover the set target by the time LAPO officers come to pick the money,’ Taiwo Hassan, another trader explains to this newspaper.
“Because if you are unable to meet your target by the time the officers who will collect the money come to your shop, you will blame yourself,’ Taiwo revealed.
Dividends of delays
And the blame for defaulting borrowers is better imagined than experienced, this newspaper learned from Basirat Alomoge, a frozen food vendor in Egbeda, another densely populated surburb of Lagos. The widow and mother of four girls has been a credible beneficiary of the LAPO loan scheme for three years now until recently when she stood in as a guarantor for another friend.
“I took that my friend to LAPo and helped her borrow N150,000 to start a kerosene business. But she couldn’t pay back her weekly target because some unknown touts went to go and burst her kerosene tank where she has her shop,’ Basirat narrates.
That brazen act of vandalism set the kerosene seller back until loan recovery officers from LAPo came calling in March 2016, according to Basirat.
“I normally hawk my frozen fish around the neighbourhood in the morning before I now come back to my shop in the afternoon. But on this particular day, I was just preparing to go out when I saw a crowd ringing bel and making noise in front of my shop,’ she narrates.
Before long, the loan recovery officers led the woman to her friend’s shop where they began their picketing.
“What they normally do is to come in group and constitute a nuisance in front of your shop where they will be ringing bell on your head and singing about your delay in paying your weekly target.”
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That’s not all about the noisemaking, Basirat said. The loan recovery officers will also call the unfortunate defaulter all sort of derogatory names like Onigbese [Debtor],
Alapamasise[Lazy Bone] Iyawo Ole [Wife of a Lazy Man] and so on. And although they carry out their picketing exercise in company of officers of the Nigerian Police Force, the idea is not to arrest a defaulter initially, a LAPO loan recovery officer told this newspaper. Public embarrassment, according to him, is more effective in recovering loans than arresting and locking up defaulters.
“That shame campaign works better than arresting them, because they experience it in the full view of their friends, children and family, the loan recovery officer explained.
“Besides, it is not going to be in our own interest locking them up because that will prevent them from selling their goods.”
That’s if you are not considered a habitual defaulter like Esther Kayode. The roadside gin vendor had been twice unlucky with the scheme. She’s defaulted severally , according to her, and she ended up being locked up in a stinking, overflowing pit latrine until her husband came to bail her out.
“What happened was that I borrowed my husband some money so he could buy a commercial bus for his transport business. It was in the process that LAPO came to my shop and arrest me and lock me up in a toilet at their office in Abaranje when I couldn’t meet up,’ Esther narrates.
The faces of janus
Move over LAPo. Chances are that you’ve never heard of ‘Gurumi’ and ‘Asia’. Both of them are also financial service providers operating like the ubiquitous LAPo. They give loans ranging from N50,000 and N30,000 respectively to first time borrowers without the usual hassles about collateral that the formal banking sector is known for. All a borrower requires as collateral is a meager deposit of N4,000 and insurance premium of N2,000, making it N6,000 altogether, in addition to one guarantor in the case of individual borrowers.
This facility is also subject to upward review depending on the borrower’s assessment as far as liquidating previous loans is concerned.
In the LAPO lending scheme for instance, a borrower is entitled to an initial facility of up to N60,000, payable within 32 weeks, Aminat told this newspaper. And the interest rate is bearable too, she said.
“If you borrow N60,000 for instance, the total amount you will pay back at the end of the eight months period is just N72,000. And from experience, it’s easy to meet up with the terms within that time.”
Make no mistakes! Like LAPO, there is no defaulting with Gurumi and Asia too, National Daily discovered. all of them share a semblance in their loan recovery methodspublic embarrassment of defaulters, name calling, arrest and incarceration in a stinking latrine, and if need be, formal arrest using the Nigerian Police Force.
Severe as the unconventional sanctions meted out to defaulters in these thrift lending schemes, the sanctions are not harsh enough to dispirit the vast crowd of borrowersmostly poor women strewn across Nigeria’s rural communities.
National Daily Newspaper discovered that apart from the glaring fact that a large number of these preponderantly unbanked women are unlettered and ill-equipped to grapple with the formalities of conventional banking procedures, they are also not willing to go through the stress of endless visits to patronize the usual unyielding credit controllers in the formal banking sector when thrift lenders are there with ready cash begging to be accessed.
From an initial N60,000 facility for first time borrowers in the LAPO scheme for instance, a borrower who fulfils her obligations within set timeline automatically qualifies to access up to N90,000 in the next phase of the schemeapproximately 50 percent upward review from the initial loan granted, this newspaper learned.
“It is stage by stage’, Basirat Alomoge enthused, ‘and you can borrow as much as you want so far as your business can support the payment. As for me, I have borrowed 700,000 before when I wanted to start my frozen food business.”
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For LAPO’S Managing Director, Godwin Ehigiamuso, it’s about enhancing the productivity of small scale entrepreneurs in Nigeria, and more importantly elevating the status of women within their households and communities.
Every development and gender equality advocates would agree no less with the LAPO Director. It’s been proven that financially independent women have a greater voice in decision making within family and community set ups, and if this empowerment has to come with some sweats and swears, the average Nigerian woman wouldn’t mind going the whole hog.