Problem with Nigeria: Revision of first-hand account of the AGSMEIS programme (1)

A REVISION of an account of the AGSMEIS programme recently written by Kachi Ogbonna is hereby necessitated by the need to strengthen the facts and add value to the financial value chain. This mental journey through the memory lane is necessitated by a number of issues that will be highlighted along the line.

First, the definition is essential for clarity’s sake. AGSMEIS means Agri-Business/Small and Medium Enterprise Investment Scheme. He was highlighting an important issue, using instances having to do with how popular and articulate policies end up failing to achieve the stated purpose in Nigeria. To make his points clear, without leaving the facts out, copious paraphrases and direct quotes will be made here. According to Ogbonna, “in 2021, my organisation, HTS Business School, received accreditation from the Central Bank of Nigeria (CBN) as one of its Entrepreneurship Development Institutes (EDIs). Our mandate was to train and prepare young Nigerians seeking to access the Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) loan, a flagship intervention designed to boost entrepreneurship and reduce unemployment.”

Here are the operational details: “Through NIRSAL Microfinance Bank (NMFB), the CBN had earmarked hundreds of billions of naira for micro, small and medium enterprises (MSMEs), including agribusinesses. Under the scheme, eligible entrepreneurs could access up to ₦10 million without collateral. The loan carried a single-digit interest rate of five percent per annum, a tenor of seven years and a generous moratorium of 18 months before repayment would begin. For many young entrepreneurs, this was as close as government intervention gets to “free money.” And as with most such opportunities in Nigeria, the demand became overwhelming.” That sounds good, doesn’t it?

The need for safeguards was acknowledged. Recognising the risk of misuse, the CBN under the administration of President Muhammadu Buhari designed a structure aimed at preventing abuse, ensuring accountability and promoting genuine capacity-building. Two key policies defined this structure.” One was the mandatory training through EDIs. Ogbonna noted that “the CBN understood that access to finance alone does not guarantee successful entrepreneurship. Many Nigerians lack basic business management knowledge, an issue that has historically undermined loan repayment rates across various government schemes. To address this, the bank mandated that every applicant undergo training through a certified EDI. Only those who completed the programme and received a certificate of participation could proceed to submit loan applications.”

Here is where a great idea began to be trivialised and procedures corrupted. According to him: “The idea was simple: pair capital with competence. Yet it quickly became clear that many applicants saw the training as a mere formality. A significant number openly declared that they “did not have time” for classes. Their priority was the certificate, not the knowledge it represented. Some offered to pay for the certificate without attending the training at all. Those of us who insisted on full participation, often faced resistance, pressure and, at times, outright hostility. Still, we maintained our stance because the integrity of the process depended on it.”

Second was the policy of non-cash disbursement through accredited vendors. This, according to Ogbonna, was, in principle, even more robust. To reduce diversion of funds, the CBN introduced a vendor-based disbursement system. Approved businesses supplying equipment and other business inputs were onboarded as accredited vendors. He gave details of an example. Under this structure, applicants were required to list the assets they needed. If someone claimed to be opening a tailoring shop and requested ₦10 million, the breakdown might look like this: sewing machines worth ₦9 million, shop rent of ₦700,000, working capital of ₦300,000. In such cases, the CBN would pay the vendor directly for the machines, pay the landlord directly for rent, and deposit only the working capital into the applicant’s account. This system made diversion of funds practically impossible — at least on paper. It was a smart, efficient, near fool-proof mechanism in a country where leakages often plague public programmes.

A lot would have been achieved if the processes were duly and truthfully adhered to. But details of what plagued the programme are available in the second part of this article.

To be continued