Economic Policy

Is Trader Moni About Fighting Poverty Or Is It Just Politics?

The Nigerian government recently launched Trader Moni, which provides petty traders and artisans with collateral-free micro loans to help grow their businesses. James Ladi Williams examines the debate over Trader Moni fighting poverty or being another political maneuver.


Two weeks ago, Nigeria’s Vice President Yemi Osinbajo launched Trader Moni, the Nigerian government’s latest scheme to lift 87 million Nigerians out of extreme poverty. As part of the Government Enterprise and Empowerment Programme (GEEP), Trader Moni provides petty traders and artisans with collateral-free micro loans to help grow their businesses. The program targets the ultra-poor, which includes pepper sellers, mobile tailors, and wheelbarrow pushers. The loans range from N10,000 to N100,000 ($28 to $280) and are repayable in six months. Upon repayment, beneficiaries are expected to be eligible to receive larger loans. By providing capital to petty traders that lack access to traditional lending, the program aims to help people escape the poverty trap. It is projected to reach at least 30,000 traders in each of the 36 states and a total of 2 million people by the end of the year.

#TraderMoni has triggered polarizing debates in the country, especially online. While many laud the initiative as a legitimate poverty reduction strategy, others condemn it as a glaring attempt to swing voters in favor of the governing party, All Progressives Congress (APC), ahead of forthcoming state and federal elections in 2019. The September 3rd launch event took place in the south-western state of Osun, where governorship elections will hold in five days. Prospective beneficiaries attended the launch event in large numbers. The Osun state governor also spoke at the event, which could easily have been mistaken for a political campaign rally. “The Federal Government either failed to be Ethically Circumspect or in fact Deliberately decided to CORRUPT the Elections in Osun by handing out Cash to Traders on the heels of the State Elections,” tweeted Oby Ezekwesili, a former Minister of Education.

So, What’s The Truth?

On policy substance, Trader Moni does a couple of things well. First, it targets the right people: poor, hardworking traders. Many argue that a loan as small as N10,000 would make no difference. However, it is worth noting that there are about 20 million petty traders across the country, and for this segment of the population, such small loans might go a long way to support business growth and income gains. One loan could allow a trader to increase inventory and rent a shop.

Second, the program puts cash directly in the hands of those who really need it, without creating new government bureaucratic barriers. Responsibility for the financial management and implementation of Trader Moni falls on the Bank of Industry (BOI). As Nigeria’s largest development finance institution, BOI has a strong record of providing financial services to small businesses and possesses the technical capacity to implement the program. BOI is administering the loans through mobile phones: beneficiaries receive a phone alert when their loan is ready, at which point they can then cash the transfer at nearby mobile money agents or deposit it into their bank accounts.

In short, it appears that the Federal Government is making real investments in the infrastructure needed to give Trader Moni a chance at success. There is no telling yet whether the scheme will accomplish its goals; indeed, the mixed record of past micro-finance efforts around the world should temper our expectations for this one. What we do know, however, is that the government’s efforts have gone beyond the bare minimum needed if this were merely a political ploy.

What About The Politics?

Both the timing of Trader Moni and the fanfare surrounding its announcement provide strong evidence that it is, in fact, politically motivated. The VP and Governor’s remarks at the Osun ceremony were full of praises for the ruling APC government. Beneficiaries also wore bright yellow shirts with the President and Vice-President’s faces printed on them. It is not far-fetched to imagine that some beneficiaries, especially those with very low literacy levels, might mistake the loans as personal gifts from the President.

Unsurprisingly, there is a popular sentiment amongst many Nigerians—at home and abroad—that Trader Moni is more about scoring political points than it is about helping the poor. Some describe the entire affair as vote buying. Everyone criticizing the scheme as a political tool is right to do so, given the glaring evidence. In fact, people on this side of the debate bring the kind of healthy skepticism that is necessary to push government in making sound policy choices, especially on matters concerning the use of public money.

What’s surprising is that proponents of Trader Moni conveniently underplay the political dimensions of the scheme. Because the program aims to help the poor and because it has been well received by its target population, they feel that it is not worthwhile to consider the politics at play. This view is disingenuous. In practice, every government program is a product of some political process and exists in a particular political context. Such process often creates winners and losers, and might even affect the distribution of political power. Good policy always needs favorable politics to succeed, and politicians will never miss the opportunity to reap the maximum political dividends from successful policy.

Policy and politics are always tied together, even in advanced democracies. Timing a policy for maximum political impact is a huge part of politics in the United States—the standard against which many Nigerians judge their country and government.

If a policy begins to favor certain politically valuable groups, for instance, at the expense of others who need help, that is something we as citizens must be vigilant about.

In the meantime, simply criticizing politicians for seeking political gain is like criticizing cats for seeking mice. Ultimately, it is we who hold the power to tie their political gain to the proper governance of our country. Evaluating Trader Moni in light of these political realities is the right thing to do. In doing so, we see that Trader Moni can be about politics and poverty alleviation at the same time. Acknowledging this reality enhances the quality of public debate.

Beyond Trader Moni

Regardless of where you stand on this issue, we can agree on at least one thing: we need to change how we engage one another on Nigeria’s policy and politics. Our binary debates show intolerance for diverse perspectives, leaving us with little room to learn from each other. It is as though we are intimidated by complexity.

Those who ignore the politics at play miss an important point: fighting poverty and advancing a political manifesto are not mutually exclusive. Those who condemn Trader Moni as a useless effort miss a critical point too, that it would take ambitious policies directly targeting Nigeria’s most vulnerable to significantly reduce poverty in the country.

Lifting 87 million people out of poverty no be beans.

Ladi holds a Master in Public Affairs from Princeton University. Previously, he served in the New York City Government, where he worked on anti-poverty programs. He is from Lagos, Nigeria.

Photo Credit: @Trader_Moni

Please note that opinions expressed in this article are solely those of our contributors, not of Political Insights, which takes no institutional positions.

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