How interest-free loans can help Nigeria reduce poverty

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By Uwanna Umosen

One of the major issues in Nigeria is poverty. According to the World Bank, the economic growth of Nigeria is abysmally low and is declining. Currently, the Nigerian economy is growing at the rate of 2.1%, compared to that of 6.3% in 2014 . The rate of unemployment and underemployment increased throughout 2017. About three-quarter of the Nigerian population is now live in extreme poverty and a numerous amount of people in Nigeria are jobless without homes.

From the economic report released in July 2014 by the World Bank, Nigeria has the highest economic growth rates in the world. Our country is enriched with natural resources such as oil and even agricultural produce but sadly, we still end up as the world’s poorest nation. All we need is a high level of sincerity and selflessness to tackle this situation. Majority of the citizens suffering from poverty need an intervention.

The government has tried different means of reducing the nation’s state. The National Poverty Eradication Programme (NAPEP) was established by the government addressing poverty in Nigeria and other related issues. It was targeted at alleviating extreme poverty in the country since 2001. Definitely, there are beneficiaries from operations like this, but it seems they are to no avail, or are slow in showing evidence of the benefits.

One of the best ways to reduce poverty in this country is via interest-free loans. This is simply a loan on which the borrower does not have to pay interest for a particular period of time. It is an easy way to increase employment rate in Nigeria. It supports more people looking for funds to expand their businesses and keep it growing.

Unemployment, defined by the Bureau of Labour Statistics, is a situation where people who do not have a job, have actively looked for work in the past four weeks and are currently available for work.  By statistics given from the International Monetary Fund (IMF), Nigeria’s unemployment rate had risen from 13.4% to 16.5% within 2016 and 2017.

International Monetary Fund News carried out a research, focusing on our country with the title ‘Nigeria: Out of Recession and Looking Beyond Oil’. Concerning our major focus on oil and agriculture alone, it stated that more needed to be done in reducing the unemployment rate and addressing poverty.  With the high birth rate in our country, in years to come, many youths will be unemployed, and there will be a challenge in the per capita growth. This means Nigeria requires quick action to these problems, to avoid hassles in the future.

The Sustainable Development Goals is a United Nations development programme working towards eradicating poverty, ensuring total peace and unity in the world by the year 2030. Nigeria, as a member of the United Nations, has only made fair attempts towards hitting those targets, however, it’s a process that takes some time to get desired results.

In Columbia, poverty alleviation plans, and solutions were created. They had three pillars; employment, poverty reduction and security. However, that procedure failed, and a new poverty reduction strategy was established called GOC. This occurred to monitor and identify the various reasons people suffer from poverty. This specifies the number of people that are poor and helps to allocate funds and means to eliminate extreme poverty.

Brazil in an effort to end extreme poverty established Bolsa Familia. This program directly transfers cash to particularly less-privileged households. There were over 45 million people enrolled in the program and those living in extreme poverty in Brazil reduced from 20.4 million to 11.9 million.

Nigeria can take cue from the following countries that have made remarkable efforts to develop themselves. It is just a matter of time, consistency and cooperation of citizens.

Interest-free loans help citizens become more productive and successful. They are useful to support and inspire young Nigerians to do whatsoever they wish in the future or even at a tender age. With ease, this will solve most of the problems of unemployment in Nigeria.

The International Association of Jewish Free Loans is a great example. It is a network of about 50 free agencies in the world. It is a Hebrew organisation, established about 30 years ago.  “Shabbat Mishpatim” is the Saturday that the Synagogues read “Exodus 24-22″, which states the mission of Hebrew Free Loan. The organisation has agencies all over the world, including Canada, United States of America and Israel.

There are just a few interest-free loans in Nigeria. In the private sector, The Tony Elumelu Foundation is the largest African philanthropic initiative. The foundation has a mission to promote economic and social development in Africa through entrepreneurship.

KB Business Support (KBBS) is an interest and collateral-free cash and mentorship support programme that was conceived with an intent to assist young and hardworking Nigerians who desire to pursue legitimate means to better their lot.

Another is, Zero Interest Multi-Purpose Co-operative Society Ltd, which is an interest free co-operative society operating to provide credit facilities to its members at zero rates of interest for provident and productive purposes.

Apparently, there are two interest-free loans by the government in Nigeria. The Rivers State Government has set aside N200 million monthly as interest-free loans for traders and young entrepreneurs. The State Executive Council approved a direct empowerment for 10,000 women from each local government and 2000 young men to work with the government to stop illegal trading on the roads.

There is a Government Enterprise and Empowerment Programme (GEEP) called MarketMoni, established by the government to provide a financial aid for those that do not have access to the bank or any financial service.

The Federal government of Nigeria is concerned and believes that every citizen, young, old, illiterate or literate can contribute to the economy. So therefore, this enterprise offers loan from the government to help with any trade or small business, for example, market women, traders, artisans, farmers etc.

This system is only for individuals with valid BVNs that are members of a trade group or accredited market association.  This also urges people to get responsible to be beneficiaries from this great deal the government has established.

Entrepreneurship fills up a certain gap in the system, most times, a mind-blowing idea. Sometimes, it can be an improvement of an original idea. Everyone involved in business needs capital, no matter what. Even though there is one existing, new ideas keep on coming on ways to make it grow.

Giving a clear example, imagine a man living in a tattered house, just two rooms, a leaking roof and a local kitchen. He can barely feed his wife and four kids. He is a bricklayer and earns about N10,000 every month, or making matters worse, he earns that amount after each job. But every day, this man dreams of starting up something. All his years of working as a bricklayer, he has come up with awesome plans in his head to improve the profession.

He has no available means of making these dreams come to reality, so he lets them die. “There’s no point anyway, only if I had the money to start this thing. I would make my wife and children happy.”

This is just this man, forced to live in this state. Talk less of thousands of people in Nigeria, who don’t even bother trying because there is no source of money anywhere. Indigents do not have funds to take their sales to another level.

Looking at things from another dimension, in developed countries, a regular man can feed his family by being a bus driver. A fruit seller has a proper home to sleep in and enough food to eat too.

I believe that with interest-free loans as an initiative in Nigeria, the poverty rate will surely reduce. This is because, it promotes innovation in the society. It is also a civilised and proper means of lending people money, to avoid cases of fraud and complaints. It is not only a safer way, but also at the cheapest rate compared to ridiculous interest rates because they even give a chance to pay the interest within a longer period of time.

What thousands of serious-minded people seek for is an opportunity to start what they are longing to begin and to promote their businesses. Now, with the interest-free loan package, people are given the privilege to start their own businesses. If majority of the people in Nigeria with dreams and plans get an opportunity to see what their hands can work on, there are going to be many success stories.

 

 

 

Unwana Umosen, a 200-level student of Covenant University, studying Mass Communication. She is highly skilled in creative writing and has a flair for photography and art. She hopes to be a notable African writer and poet in the nearest future.

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