By Dele Sobowale
“History does not repeat itself; man does.”
— Barbara Tuchmann, Harvard University historian
Tuchmann was a leading expert on the 13th and 14th centuries of European history during which people and leaders in various places and at different times made the same mistakes resulting in hardships for ordinary citizens. But, of all the blunders committed, the most pathetic are those based on the good intentions while forgetting that “the road to hell is paved with good intentions”.
ABP: Farmers owe CBN N463bn as defaults rise.” — News Report, November 2021.
The Nigerian policy framers who created the Anchor Borrowers Programme, ABP in November 2015 and those who introduced the Peoples Bank of Nigeria, PBN, in 1990 were alike in more ways than most people realised.
The two, Presidents, Generals Babangida and Buhari, were professional soldiers who found their ways into political leadership. The Nigerian economy was in distress when they acted. And, they operated with the same basic assumption that providing easy access to credit for millions of people, especially in rural areas, would create jobs, increase agricultural output and lift millions out of poverty at the same time. Despite the fact that PBN was more broad-based than ABP, the two leaders sincerely believed that, if provided easy loans, Nigeria’s poor people would gladly repay. On the last assumption, they were both wrong; totally wrong. ABP is in trouble today because its promoters failed to learn the lessons PBN taught us about Nigeria’s poor people and public money.
How Peoples Bank failed
“The Decree establishes the Peoples Bank of Nigeria, to give basic credit to underprivileged Nigerians involved in legitimate economic activities charging them with a minimum interest of not more than 5 per cent.”
— Explanatory Notes to Peoples Bank of Nigeria, Decree 45, 1990.
What follows is a summary of what I have already published in IBRAHIM B BABANGIDA 1985-1992: LETTING A THOUSAND FLOWERS BLOOM.
Micro-credit financing originated in Bangladesh when Grameen Bank was established to give loans as small as $1 to rural women, mostly, for petty trading. It was a private bank; started very small and eventually grew big. It was run as a real bank. The PBN, which was set up to achieve the same goals as Grameen, was a government-owned bank. That was the main reason why it failed. PBN also started big; with branches in all the state capitals. That was the second reason for its collapse. Politics intruded too much into banking business.
Finally, “In Bangladesh, a relatively poor country, governments had very little money for people to embezzle. “In Nigeria, anything called “government money” inevitably induces the alley cat’s instincts for fish in the people. Perhaps in the beginning the borrowers intended to pay back. But, soon the attitude that each recipient had received a share of the “national cake” became prevalent.”
Thereafter, most borrowers stopped paying back. By the time Babangida stepped aside in 1993, PBN was finished as a project. There is a lesson for the current FG and CBN in the rise and fall of PBN. As things stand right now, and, I will elaborate on that, most of the loans now overdue will never be repaid. However, before explaining why a major loss is inevitable, permit me to make a comment (or is it an appeal?); which governments should always bear in mind.
All critics are not enemies
“Like all God’s creatures, enemies have a purpose in the world. They offer a criticism of one’s conduct, albeit unsought, that is not always provided by friends.”
— Rosenblat, VANGUARD BOOK OF QUOTATIONS, VBQ p 48.
And, even if the critics are enemies, a wise philosopher has reminded us what we should do with our adversaries. We should actually listen carefully to them. We might learn something that would save us and our project or reputation.
Friends, subordinates, staff, political allies etc seldom tell a leader the whole truth — if they know that it will be rejected. Only God knows how many initiatives could have succeeded if only the promoter had paused to listen to those with questions to ask or suggestions to make. ABP was fundamentally flawed because it was offering “government money” to the most risky borrowers. Let me elaborate now.
ABP is a pupulist idea with serial failures
“For the Anchor Borrowers Programme, the sum of 615.4bn had been disbursed to 3,038,899 beneficiaries, out of which, N152.3bn was repaid.” — CBN Report.
The report also acknowledged that N463bn was outstanding. Simple arithmetic tells us that only 25 per cent had been repaid; while 75 per cent of the loans disbursed is outstanding.
Commonsense also tells us that the programme is in deep trouble. Experience with Nigerians and their attitudes to “government money” will lead to a sad prediction. Most of the outstanding loans will never be recovered. Here are the reasons why.
First, in 1992, I worked in the same office building with Peoples Bank at 200, Igbosere Road, Lagos. I was already writing for Vanguard on the Business/Economic pages. One day, there was a great deal of commotion at the bank. Other tenants were prevented from entering or going out. Late Mrs Maria Sokenu, the Managing Director of PBN was visiting the office. Soldiers and policemen were all over the place. Boldly, I stepped forward and shouted “Madam, Dele Sobowale from Vanguard Media, I want to talk to you”. She stopped and told her orderly “Let my senior brother [that’s me] come in.” We went in together. The result of the interview was this. Within two years of its inception, PBN was already experiencing almost 50 per cent un-repaid loans. If it took only two years for 50 per cent of Nigerian borrowers to default in 1992, six years of ABP will result in a higher percentage of Non-Performing Loans, NPLs.
Today’s borrowers are the children of the dead beats of the 1990s. They are mostly chips off the old blocks of rotten wood. FG/CBN under-estimated them.
Second, while PBN’s borrowers had no reason for defaulting, the current beneficiaries have several genuine or fake alibis for not paying back. Here’s one.
Bafarawa provides the perfect excuse
“Our people are harvesting millet in abundance and rice, but people cannot convey the farm produce home. Whoever goes to the farm to convey the crops home will not come back alive.”
— Attahiru Bafawara, former Sokoto State Governor. November 10, 2021.
When ABP was launched in November 2015, there were no bandits in Sokoto State or, in the entire North-West zone of Nigeria. I travelled to Sokoto several times until 2018. By then Zamfara, Katsina and Kaduna were already captured. Today, no Northern state is safe.
Most likely, about 85 per cent of the ABP loans went to the North. That is where “whoever goes to the farm to convey the crops will not come back alive”.
Under the prevailing circumstances, can the CBN realistically expect its money back? Can farmers abandoning harvests and running for dear lives repay loans?
The FG and CBN require Plan B; because ABP has failed miserably.