Why rural women prefer to raise money through contribution to bank loans

Mercy Jato was the first pack in a contribution among five women. She recently collected N20,000, the day before Kuje market to buy unripe plantain for sale.  “I sell unripe plantain during the dry season when the plantain is usually cheap, and during the rainy season I go back to the farm where I sell […]

Mercy Jato was the first pack in a contribution among five women. She recently collected N20,000, the day before Kuje market to buy unripe plantain for sale.

 “I sell unripe plantain during the dry season when the plantain is usually cheap, and during the rainy season I go back to the farm where I sell produce from my farm land” says Mercy.

 She told Daily Trust Women in Business that she joined the contribution team to raise capital for her business, since it has “increasingly proved difficult" for her to save money for her business.

“About three years ago when I was about to start trading, I didn’t know where to go to for funds since my fellow church members complained about going to microfinance banks and not getting any help from them due to their demands that are unrealistic for some of us “ she said.

“I and other church members decided to start "Adashe" where we save up small amount before market day and the person packing for that week uses the saved fund to get goods to sell on market day” she added.

Rural women’s access to financial resources is limited by biased lending practices that emerge when financial institutions provide stringent lending conditions.

They complained that the institutions consider them inexperienced and therefore less attractive to clients.

Alhassan Jibrin, the coordinator of “Women progressive society”, a cooperative society in Tungan Maje, Abuja told Daily Trust that banks always spring up demands when they visit them for loans.

Jibrin said his group comprising of 77 members who are all women involve in petty businesses, started off as a result of the difficulties it faced in accessing loans from the banks.

“The association started off a few years ago with three women who wanted to access part of the N220b MSME loan that was in the news on radio, but the banks said the women must be in a cooperative first.

They formed the cooperative, then they were told to bring a guardian for them or renter, I then led  to the area council where they were asked to pay registration fee of N10,000” he said.

Jibrin further said these are women who when given the N10,000 the area council was demanding as registration fee, it will be enough for them to start their business.

“Then the bank said that the cooperative should register with Corporate Affairs Commission (CAC) to obtain a form” he added.

Jibrin said the women were frustrated by all the processes and demands that they decided to ignore the banks and other financial institutions and begin saving and raising funds on their own.

“All the wanted was to have capital to start their business, so they started the local savings group called "Adashe" with the aim of achieving the goal of sourcing funds for their petty businesses” he said.

“The group picked up well with more women joining. Then we would gather every Friday and pay N50 and when the money reaches a certain amount we give them out to two women who will use it to run a business. We give them maybe two or  three weeks and then they begin paying back with an interest ”.

“If N5000 is given to you after two months they return N6000, but the women complained that it was too much and so we slashed it to N500 interest,” he said.

One of the group members, Amina Tijjani who sells firewood, said she was contributing N50 every week for about 5 weeks before she collected N1000 to start her firewood business.

“The business has picked up now and I now make profit of N2000 from the sale of firewood” she said.

Patience Moses, a hairdresser in Mabushi also said she prefers borrowing money from cooperatives than going to financial institutions because "the banks treat us as if we are beggars. They begin to demand for what we cannot give and most times waste our time” she said.

Policies and programmes have been initiated by past administrations to support women especially rural women in business, most recent of which is the N220 Billion Micro Small and Medium Scale Enterprise (MSME) loan.

The loan was aimed at boosting production, creating jobs, reducing poverty and ensuring inclusive economic growth and development in the country if adequately utilized.

60 percent of the funds were for women, but there is no specific data of the number of women who accessed the fund two years after the release of the loan.

Also data available shows that the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), spent about N10 billion between 2011 to 2015 in providing interventions for entrepreneurship development across the country.

While the agency spent N592,659,891.78 in 2011, it spent a lot less in 2012 with a total of N155,548,748.00.

But in 2013 and 2014, the agency spent N1,137,000,000.00 and N5,920,845,657.00 respectively while 2015, it spent a total of N2,250,258,848.00, about N3.6billion less than in 2014.

Efforts to get details for 2016 proved abortive.

A 2013 survey on Micro, Small and Medium enterprise, by the National Bureau of Statistics (NBS), shows that 3.6% of people in SMEs have no education with micro enterprises having an average skill gap of 42.10% as against 27.75% in small and medium scale enterprises.

But President Muhammadu Buhari in his 2018 Budget presentation at the National Assembly said his administration will continue to consolidate on the social intervention programme it started in 2016, allocating about N500 Billion, some part of which is aimed at implementing the conditional cash transfer programme as promised.

“Government will also continue to implement the Conditional Cash Transfer (CCT) programme, as well as the National Home-Grown School Feeding programme in 2018. These initiatives are already creating jobs and economic opportunity for local farmers and cooks, providing funding to artisans, traders and youths, as well as supporting small businesses with business education and mentoring” the president said.