Loans

Lagos, Dec. 19, 2023: An organisation,  Citizens’ Gavel, on Monday, called the Federal Competition and Consumers Protection Commission (FCCPC) to do more to  protect the rights of Nigerian consumers.

In a statement in Lagos, Citizens’ Gavel sought sanctions against 30 unlicensed digital money lenders operating in Nigeria.

The statement was signed by its  Communications Associate, Ms Rachael Adio.

Citizens’ Gavel accused the money lenders of violating the rights of consumers through defamation, character assassination and other unethical practices.

It implored the FCCPC to collaborate with stakeholders such as the Central Bank of Nigeria (CBN) and  National Information Technology Development  Agency ( NITDA), to thoroughly address alleged abuse and unethical practices of unregistered and unlicensed digital money lenders in the country.

“Citizens’ Gavel has identified a disturbing trend where unlicensed digital money lenders employ crude, unprofessional and illegal means to coerce customers into settling outstanding debts.

“This coercion involves criminal defamation, harassment, cyber bullying, cursing, cyber stalking, issuing death threats, and breaching data privacy rights.

“With over 600 complaints received against these entities, our investigations have meticulously pinpointed 30 companies engaged in unethical practices.

“The petition emphasises the importance of the FCCPA 2018, the cornerstone legislation for regulating competition and safeguarding consumer rights in Nigeria.

“Despite these regulations, loan apps continue to engage in unethical conduct, including defamation and unfair business practices.

“Citizens’ Gavel implores the FCCPC to collaborate with stakeholders such as NITDA, CBN, and NDPC to comprehensively address the abuse and unethical practices of unregistered and unlicensed digital money lenders,” it said.

The organisation also said that it had compiled a comprehensive report, including evidence of defamation and Corporate Affairs Commission search reports, serving as annexures.

It called for specific and more stringent laws to safeguard consumers from misleading advertisements, false claims and deceptive practices.

Abuja, Sept. 16, 2023: Some stakeholders in agriculture have decried the low recovery of loans granted some farmers under the Anchor Borrowers Programme (ABP).

At inception in November 2015, the ABP was designed by the CBN to provide farm inputs in kind and cash to smallholder farmers.

This was to boost production of food commodities, stabilise inputs supply to agro-processors and address the country’s negative balance of payments on food.

By 2022, the apex bank revealed that at least 4.8 million farmers had benefitted from the programme.

But the programme has been marred by loan default, even as food prices rose significantly within the years it took effect.

According to the International Monetary Fund (IMF), 76 per cent of the loans collected by beneficiaries were yet to be repaid.

The IMF stated that agricultural credit in the country had not succeeded in increasing production due to the difficulty in reaching the targeted farmers.

It said that although the CBN allowed farmers to pay in cash or give the central bank produce of the same value under the ABP, repayments have been very low.

“For the Anchor Borrowing Programme, repayment is also low at 24 per cent, especially since repayment can be made in kind, thereby limiting the tenor of the loans to one year.

“Part of the problem is that the incentive structure for repayment is weak, the recipient loans are not always well targeted and occasionally the funding is used for other purchases,” it said.

Various farmer associations also said that the loans were not disbursed adequately, hence the difficulty in ensuring repayment.

Yunusa Yabwa, the National Secretary of All Farmers Association of Nigeria (AFAN), said that the ABP was abused, adding that it did not meet expectations to boost food production.

He said that most beneficiaries of the programme were not farmers.

“Many people collected the loan to invest in other projects, not farming, and that is why it is difficult to ensure repayment.

“The ABP is a laudable programme, but there are challenges of recovery.

” Some of our members benefited from it, but most people that benefited are not farmers,” he said.

Dr Abdulmumin Isa, CBN’s Director, Corporate Communications Department, said that the apex bank had released N1.08 trillion, as at February, out of which N960 billion was due for repayment.

Isa disclosed that ABP had supported about 4.57 million smallholder farmers who cultivated over 6.02 million hectares of 21 commodities across the country.

ABP guidelines stipulate that upon harvest, benefiting farmers are to repay their loans with produce, which must cover the loan principal and interest, to an anchor, who pays the cash equivalent to the farmer’s account.

But default payments have continued to trail the programme, as over 50 percent loan remained unpaid.

Dr Chiwuike Uba, a development economist and financial expert, has urged Federal and State Governments to use alternative financing options rather than borrowing to finance infrastructure development.

Uba, the Board Chairman of Amaka Chiwuike Uba Foundation (ACUF), gave the advice in Enugu on Wednesday in a statement.

 “As a country, we should check the propensity to accumulate public debt under the pretext of financing capital projects, by actively seeking alternative project financing options, especially through the Public-Private-Community-Partnership (PPCP) arrangement.

He said that fiscal viability could not be created and sustained with a growing budget deficit funded by public debt, lamenting that analysis of the 2023 budget showed that “there is no concrete strategy to jump-start the economy”.

“The N21.8 trillion 2023 Federal Government Budget passed into law by the National Assembly and assented by the President on Jan. 3 is worthy of commendation by Nigerians.

“First, the timely presentation of the budget to the National Assembly offered the minimum time required for an adequate and detailed legislative review of the budget documents.

“The revenue and expenditure projections in the Federal Government 2023 budget, known as the ‘Budget of Fiscal Consolidation and Transition’ appear to be inconsistent with the budget’s policy direction contained in the President’s Budget Speech.

“While the strategic objective of the budget is to ‘maintain fiscal viability and ensure a smooth transition to the incoming administration’, the budget figures are not in agreement and are incapable of achieving the budget objectives.

“First, fiscal viability cannot be created and sustained with a growing budget deficit funded by public debt and no concrete strategy to jumpstart the economy.

“In particular, where more of the public debts are allocated to the financing of recurrent expenses. The average budgeted deficit and the actual deficit between 2015 and 2022 are 56 per cent and 111 per cent respectively.

“In 2016, it was 47 per cent, and 45 per cent for deficit budget and actual deficit, 57 per cent and 74 per cent in 2016; 46 per cent and 143 per cent in 2017; 27 per cent and 94 per cent in 2018; 27 per cent and 101 per cent in 2019.

“In 2020 and 2021, the budget deficit and the actual deficit were 86 per cent and 193 per cent, and 74 per cent and 139 per cent respectively.

“In 2022, the budget deficit is 82 per cent and the actual deficit as of November 2022 is 98 per cent.

“Sadly, instead of reducing the budget deficit, the government has increased the budget deficit to 108 per cent in 2023.

“The average budget deficit between 2015 and 2023 is 62 per cent and this deficit is funded by public debt,” he said.

The expert said that the projected debt service to revenue ratio of 60 per cent in 2023 did not have the capacity to support fiscal viability, especially with the financing of recurrent expenditures with more than 48 per cent of the proposed new debts.

He noted that the more worrisome was the continued violation of paragraphs (a) and (b) of section 41 of the Fiscal Responsibility Act, 2007.

According to him,  the section states that government at all tiers shall only borrow for capital expenditure and human development.

Uba added that the debt service to revenue ratio for the years 2015, 2016, 2017 and 2018 was 32.7 per cent, 44.6 per cent, 61.6 per cent and 54.1 per cent respectively.

“The ratio increased in 2020 and 2021 to 97.8 per cent and 90.9 per cent, respectively. As of November 2022, the debt service to actual revenue ratio was 80.7 per cent.

“On average, approximately 48 per cent of all debts incurred between 2015 and 2022 were used to finance recurrent expenses, contrary to applicable legislation.

“In addition, the average actual capital expenditures as a percentage of total actual expenditures from 2015 to 2022 are 15.3 per cent,” he said.

The expert noted that to reverse this trend, Nigeria needed to put in place a credible budget parameters and deficit reduction plan to cope with the negative impact of high deficits and debt on the economy.

Uba noted that unfortunately, there appeared to be no clear exit strategy for transitioning from current levels of fiscal imbalances to more sustainable levels in the 2023 budget.

“Where is the plan or strategy to reduce borrowing and debt service? To what extent is the strategy achievable when our deficit exceeds 108 per cent of projected revenues and the larger portion of the proposed additional debt proposed to fund recurrent expenditures?

“I am not sure the government is focusing on programme evaluations, value for money, and cost-benefit analysis during the budget process.

“Incidentally, section 44 (1) of the Fiscal Responsibility Act 2007 mandates ‘any Government in the Federation or its agencies and corporations desirous of borrowing to specify the purpose for which the borrowing is intended and present a cost-benefit analysis’.

“Thus, detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied.

“In fact, subsection 2 of section 44 further states that ‘the proceeds of such borrowing shall solely be applied towards long-term capital expenditures.”