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SPECIAL REPORT: How inefficiency, lack of transparency flaw CBN’s N50bn COVID-19 loan to small businesses

By Aderemi OJEKUNLE



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As Nigeria faces a second wave of COVID-19 pandemic, CBN’s COVID-19 loan hangs in the balance for small businesses;

Small business owners share mixed feelings over the disbursement of CBN’s ₦50bn COVID-19 credit facility;

Lagos, Abuja lead COVID-19 SME beneficiaries’ list as thousands still expect feedback from NIRSAL MfB;

NIRSAL MfB declined to respond to FOI request; lawyer says action violated section 7 of the Freedom of Information, warranting litigation. 


“Submissions have closed, and we are working on applications for those who applied for the CBN’s COVID-19 stimulus package for Micro, Small and Medium Enterprises (MSMEs),” an official at the NIRSAL Microfinance Bank Headquarters told this reporter.

“If you applied online, you will get a text message on how to get your loan. There are still batches of applicants yet to come out. They are working on them,” she added preferring anonymity.

Her conversation with the reporter is the message of hope thousands of Nigerians are waiting to hear after submitting their loan applications since April, May, and June 2020.

Applicants speaking with front desk officials at NIRSAL MfB headquarters Abuja / Aderemi Ojekunle/Dataphyte

As Nigeria faces a second wave of COVID-19 pandemic, information inadequacy and lack of transparency continue to flaw credit facilities meant for small businesses during the period.

In this special report, Dataphyte’s Aderemi Ojekunle examines issues around the disbursement of the 50 billion Targeted Credit Facility (TCF) launched by the Central Bank of Nigeria (CBN) to assist small businesses.

In March 2020, the Central Bank of Nigeria (CBN) introduced the 50 billion soft loan to MSMEs whose economic activities have been significantly disrupted by the COVID-19 pandemic.

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The Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank Ltd (NMBL) disbursed the stimulus package. In April 2020, NIRSAL said it recorded 80,000 applications, but administrative bottlenecks involved in getting the funds made Nigerians described it as ‘audio money’ (non-existent fund).

Lack of transparency on loan disbursement – Applicants share mixed feelings

Mr Olu Oseni, a 32-year-old graduate of Ladoke Akintola University of Technology (LAUTECH) and an engineer, said he applied for the COVID-19 SME loan. Still, NIRSAL MfB changed it to a Household loan without stating any reason.

“I submitted my application for COVID-19 SME loan in June 2020 with a 500,000 request, but when I saw the offer, it has been changed to a Household loan for 200,000.”

I tried to get the attention of NIRSAL here in Lagos, but they said the processes were being done in Abuja.

“I later decided to accept the offer because the lockdown and COVID-19 affected my business and the family.”

Mr Oseni, howbeit, noted that the loan helped him to fix some things during the pandemic.

Another entrepreneur who identified himself simply as Oke describes NIRSAL Microfinance officials as ineffective in handling the COVID-19 loan. For Oke, the loan acquisition process is tedious and frustrating.

“I applied for the loan. I was shortlisted and went to the headquarters in Abuja on September 14. They gave me a note to their office at the Postal Service Office. At the office, the man in charge said he has his own time, and the head office cannot dictate to him.”

“The NIRSAL process is frustrating because the staff cannot do the job alone.” Mr Okeke advised the Central Bank of Nigeria (CBN) and other government agencies to consider other disbursement organisations.

The story remains unchanged for Mrs Aisha Aliyu, who was livid at NIRSAL’s sluggishness. However, the 34-year-old pharmacist and drug store owner remained optimistic about her second submission in early December.

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“This is my fourth time coming here. Since I did not get the COVID-loan, I have decided to apply for the Youth investment loan. I came here to see If I can submit my documents.
“There is 75 billion again for youth investment. I am praying I can get this; it will really help my business.”

The CBN’s 75 billion Nigerian Youth Investment Fund (NYIF) was set up in October 2020 by the Federal Ministry of Youth and Sports Development to help build sustainable businesses and increase job opportunities in Nigeria.

Sharing her experiences with the COVID-19 SME loan, Mrs Aliyu also expressed dissatisfaction about the inefficient ways of handling loan disbursement by NIRSAL. “Some of my colleagues with whom I applied got a message to accept the loan offer in August, but they are yet to get their money, and this is December.”

But perhaps the most infuriating part for Ms Aliyu was the feedback or rather lack of it. “No one is saying anything, no email, no phone call. Not even on their (NIRSAL) social media accounts. We are just in the dark,” she added.

Repayment hurdles and communication gap

Kayode Adegbola, an advisor at Golborne Road Advisory, said he experienced a seamless process during application.

“For my team and me, it was a seamless process. I applied with my phone number online. A few weeks later, I got a text message and an email requesting me to follow a link to get the cash from a dedicated account created by NIRSAL MfB.”

He, however, decried the inadequate information on repayment plans.

“Unfortunately, we have tried to get information on repayments and the processes for paying back and if we can pay back early.

“We have written to the bank (NIRSAL) but no decisive information yet. My team also visited their offices in Abeokuta and Lagos to get feedback on repayment and how we are going to make a repayment, still no headway.”

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Mr Adegbola said he needs to pay-off his loan since it has fulfilled its purposes. “I am trying to avoid harassment from any agent attached with the credit Bureau for defaulters.”

Hunye Adebayo, a barber and owner of a barbing salon in Satellite town, Lagos, said he received the money in August 2020. He also expressed worry over the lack of information about repayment, saying some of his friends are already insinuating that the government is not collecting the money back.

“I applied for 450,000 but got 700,000.

“I am thinking about how to repay my money, but there is no information on repayment. We submitted our Bank Verification Numbers (BVN), maybe they will start withdrawing at the moratorium date.”

Mr Adebayo urged the CBN to ensure effective communication and properly informed citizens about such facilities.

On the application form, NIRSAL fixed the interest rate at 5% per annum (all-inclusive) up to February 28, 2021. From March 1, 2021, beneficiaries are to pay 9% per annum (all-inclusive).

NIRSAL MfB declines response to FOI request, CBN elusive

For further clarity, Dataphyte sent Freedom of Information petitions to CBN and NIRSAL microfinance bank. The petition queried how much was disbursed so far, and the number of beneficiaries. While the apex bank acknowledged the request, NIRSAL dismissed the bid, noting that the  FOI Act does not apply to a private institution as itself.

Responding to the request, Maishanu H.A, Head, Risk Management and Compliance, NIRSAL MfB Limited stated: “…the Freedom of Information Act 2011 (FOIA) which is created to improve transparency and public information disclosure by public institutions as specifically noted in the Act does not apply to this bank.”

However, this claim is untrue because the FOI act does not exempt private companies using public funds.

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Section 2 (7) states thus: “Public institutions are all authorities whether executive, legislative or judicial agencies, ministries, and extra ministerial departments of the government, together with all corporations established by law and all companies in which government has a controlling interest and private companies utilising public funds, providing public services or performing public functions.”

Maishanu further claims that NIRSAL cannot comply with the FOI request because it could not disclose customers’ personal information.

“…As a financial institution, we are bound by the duty of confidentiality to the Customer of the Bank, and on this ground, the Bank is unable to disclose confidential customer information to a third party, save where there is a Court order, or the Customer authorises such disclosure.”

The Bank argued that one of the requests – a list of beneficiaries – is confidential information, forgetting that it was previously made public on its website, albeit temporarily. Thus, it begs the question as to whether beneficiaries of public funds constitute confidential information.

Mr Edetaen Ojo, a lawyer and the Executive Director of Media Rights Agenda, said the NIRSAL MFB position on the FOI is wrong and inaccurate.

“Under the act, once you utilise public funds or you are using public funds for the public good, the FOI applies to such entities.

“The unwillingness of NIRSAL MfB to release such information suggests something is wrong, and they have something they are hiding.”

The lawyer also noted how the microfinance bank’s actions could attract litigation, seeing as they violated section 7 of the Freedom of Information Act.

As for the money regulator, its tactic was less dismissive and more elusive. Mr Osita Nwasinobi, CBN’s spokesperson, asked the reporter to send questions via WhatsApp. But he never responded, despite repeated reminders and calls.

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NIRSAL MfB also did not reply to messages sent to the company’s official email addresses. Subsequently, the company’s secretary requested that the reporter direct the email to the Managing Director, Mr Abubakar Kure.

Lagos, Abuja lead COVID-19 SME beneficiaries’ list

Notwithstanding, this reporter’s investigation revealed that the NIRSAL Microfinance Bank granted credit facilities to 382 small businesses across the country out of the 80,000 applications it has so far received.

Data from the NIRSAL MfB website showed that Lagos leads with 71 beneficiaries, followed by Abuja with 67 and Kaduna with 21  beneficiaries. Kwara and Kano came distant fourth and fifth with 16 and 13 beneficiaries, respectively.

Additional findings revealed that some small business owners registered their companies only to get the SME credit facility. At least four MSMEs registered businesses with the Corporate Affairs Commission (CAC) after the application deadline. They still got the loan.

The Central Bank of Nigeria and NIRSAL MfB announced the MSME loan applications in March and ended online applications by June 30, 2020.

Specifically, CAC records showed that Zee’S Planete Enterprise and Taimako Titus Farm Ltd applied for registration after the NIRSAL deadline. Also, Olaitan Ultimate Ventures Intl registered with the CAC on July 3, 2020. Another company, Isah Idris Poultry and Eggs Production, got the MSME loan before CAC registration. The company registered as a company on December 3, 2020, according to CAC records.  

Questionable MSME COVID-19 grantees

Also, out of the 382 beneficiaries, 107 small business owners have no record on the CAC portal. Although, this might be due to technical inadequacies with the CAC database. The inadequacies include search query error, the omission of names on the portal, among others.

When contacted on the phone, Mr Aliyu Yazid, the Deputy Director of Public Affairs, Corporate Affairs Commission (CAC), said the commission frequently performs an upgrade on the public search portal.

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“You can try it next time, but most times, if there is no result for the company, it is either the company has not registered, or the name of the company is not well written.

“Most times, they (business owners) may add space between the company name or change some letters. By doing so, it becomes difficult for a searcher to get the desired result.”

Thousands expecting feedback from NIRSAL MfB

Out of 80,000 applicants that applied within the first month, according to NIRSAL MfB, only 382 applicants have benefitted from the loan. This means that only 0.48 percent of the total applicants received a certain amount from the 50 billion credit facility. The remaining 79,618 business owners and other applicants are still expecting feedback from the NIRSAL MfB.

On December 9, 2020, this reporter sampled the opinion of members of a Facebook Group (platform created to help members and citizens secure NIRSAL Microfinance Bank CBN Covid-19 loan through interaction and information dissemination). More than 100 active online members claimed they applied for the loan and are still expecting feedback [E3] from NIRSAL.

For instance, one Abore Gembu said he applied for the MSME loan on June 27th and has not received any feedback from the NIRSAL. “I hope they will reconsider their position and grant approval to all outstanding successful applicants.”

Another applicant, Ms Obiunegbu Chigozie, said she also applied since June 27th and only received an automated message on July 1st, 2020, indicating that her application is in process.

Some entrepreneurs on the group also complained that the NIRSAL MfB portal failed to recognise their BVN details. “Whenever I put my BVN, the portal says it does not exist. I don’t know what is wrong,” Mr Orichi commented on a post seeking clarifications from members.

“When I put my BVN, the website says it does not exist. What is the problem,” Mr Suraj asks.

Mr Oladipo Olawumi Ezekiel said he applied for the MSME COVID-19 loan on the same date with his wife, and they are still expecting to hear from NIRSAL.

“Is there any hope, please I don’t think we will get approved?” another applicant, Abubakar Shehu Abubakar, posted.

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NIRSAL MfB receives backlash on Social Media

On its official Facebook account, NIRSAL Microfinance Bank received backlash for lack of transparency and inadequate information dissemination on the disbursement of the COVID-19 loan.

Mr Bayode J. Omotola, one of the applicants, who commented on a NIRSAL MfB post, complained over the inability to reach the Bank on phone lines and email addresses. Another applicant, Ms Oviero Ebika Happiness Fruebi, the CEO of D’z Sellectionz Empire, also made such complaints on the Facebook page of NIRSAL MfB.

Mr Umarfaruk Dauda said the inability of NIRSAL MfB to respond via its official social media accounts and telephones are creating rooms for scammers and exploitation of grantees.

“I applied for the CBN Covid-19 loan under the SME category in June 2020. Till now, no approval yet. I want to know if the SME loan category is suspended or still pending?, one Mike Ejunka asked in late November without any response from the NIRSAL MfB team.

This reporter reached out to one of the complaints on Facebook, Mr Adebola Moses, founder of DictionCoach. Mr Moses, who complained about the lack of proper communication channels, said he later got the loan approved. He urged the NIRSAL MfB to work on the duration between documentation and disbursement of the loan.

He advised NIRSAL MfB to make more funds available so that a critical mass can access the offer.

On Twitter, applicants also expressed frustration over NIRSAL MfB inability to respond to queries and questions surrounding the COVID-19 MSME loan.  In October, one Inno Saint, @sainte2k, lamented over the inability of NIRSAL MfB to respond to emails or even tweet.

Another Twitter user, Badejo Olugbenga, said he is yet to receive the fund despite completing all processes since September 2020.

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Same pattern at NIRSAL headquarters Abuja

When this reporter visited the NIRSAL office in Abuja, it was the same pattern from the security post to the secretary desk. Applicants dropped their details and reason for visiting at the security post. Officials at the security and reception desks told applicants to continue to check their emails.

When the reporter requested to see the manager or someone in charge of the COVID-19 MSME, the receptionist said they are all not available.

Experts call for transparency, capacity building for effective loan disbursement

Celestine Okeke, a policy expert, said NIRSAL Microfinance Bank lacks the capacity to run smooth loan disbursement. Currently, they are managing five to six credit facilities for the government.

“Most of the NIRSAL staff were hired for Agric-based facilities, moving them into other capacities without requisite knowledge is a huge problem.

“There is no means to track progress. Progressions are no longer valid because of the exchange rate – people have lost jobs, those with businesses looking at how to get funds to run their businesses.

“Vital questions that NIRSAL MfB and CBN failed to answer border on application processes, selection procession, and criteria. Without adequate information on this, businesses that need loans will also want to engage in corruption to get the credit.”

Prof. Mike I. Obadan, a director and member of the CBN Monetary Policy Committee (MPC), urged the effective implementation of the apex bank’s Targeted Credit Facility aimed at households and MSMEs.

In his statement at the end of the 133 MPC Meeting in November 2020, Professor Obadan described the credit facility as one of the needs for Nigeria to exit recession quickly.

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*This report was facilitated by the Wole Soyinka Centre for Investigative Journalism (WSCIJ) under its COVID-19 Reality Check project.

This report was originally published by DATAPHYTE.


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