By Babatunde Ayedoju

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The 2020 COVID-19 pandemic is one that Nigerians and the world at large may not forget in a hurry because of the experiences recorded at that time. Aside the deaths that were recorded on a daily basis, people were not able to go out and work. A lot of businesses also began to suffer, putting many Nigerians in a risk of hunger.

That was when the word “palliative” entered the lexicon of more than a few people, as Nigerians began to clamour for the government to introduce measures that could cushion the effects of the pandemic and lockdown on them.

Among several measures taken by the Federal Government at that time, the Central Bank of Nigeria (CBN), in March 2020, introduced the N50 billion Transfer Credit Facility (TCF) to support households and Micro, Small and Medium-sized Enterprises that had been particularly hit hard by COVID-19 pandemic and lockdown. The loan was disbursed to the beneficiaries through commercial banks in 2021.

The fund, which was managed by the Nigeria Incentive Based Risk sharing System for Agricultural Lending (NIRSAL) Microfinance Bank, received thousands of applications, charged at five per cent with a moratorium that lasted till February 28, 2021. At the expiration of the moratorium on March 1, 2021, the interest rate reverted to 9 percent.

According to the guidelines released by the Central Bank of Nigeria, those who were to benefit from the fund were households with verifiable evidence of livelihood adversely impacted by COVID-19; existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID-19 pandemic and enterprises with bankable plans.

Beginning from September last year, the NIRSAL Microfinance Bank (NMFB) had started calling for a repayment of the COVID-19 loans given to households and businesses across the country. By January this year, there were already media reports that several beneficiaries had begun to notice deductions of thousands of naira from their bank accounts without any notice from the banks.

A director in the NMFB who spoke to the press on a condition of anonymity had confirmed the loan recovery move by the bank, emphasising that the disbursement was a loan and not a grant as people thought.

The official had said, “Of course, the bank has started getting back its loans. Already, there is a campaign we are running to recover our loans from defaulting customers. The money given is a loan and this was stated from the beginning. There were terms and conditions stated in the loan and they signed it because it was done electronically.”

Information on the bank’s website showed that it expects to recover N2.1bn from 3,523 small-medium businesses and N14.3bn disbursed to 31,462 households in its non-interest-bearing deposit package. It will also recover N112.5bn loaned to 114,476 small and medium enterprises and N261.4bn disbursed to 643,486 households under its targeted credit facility package.

However, some beneficiaries admitted to receiving the loans through third parties who assured them that it was a grant and it would not be paid back.

One of the beneficiaries, Jummy Abatan, said that a family member registered for the credit facility on her behalf and she was made to believe it was a grant, adding that she first noticed a deduction from her bank account last year without any prior notice or subsequent explanation.

She said, “I was not the one who registered for the grant. A family member back then registered for me. Last year, they deducted almost N200,000 from my bank account without any notification. Even some of my colleagues kept asking me that wasn’t it a grant but I don’t understand. Back then the money was paid into one of my commercial bank accounts but later deducted from my account with another bank. That means they must have used my BVN. When it happened, I contacted one of my friends who is a banker. Even that friend of mine could not give an explanation, and I don’t know any of their offices I can go to complain.”

Another beneficiary of the credit facility who gave her name as Vera also said that somebody applied for the loan on her behalf but added that she had always thought it was a grant.

Although she said that she had not noticed any deduction from her bank account for the N500,000 she got, she said that at the moment she does not have any money to pay back a loan of that amount.

Commenting on the development, Dr Edamisan Ikuemonisan, an agricultural economist, pointed out that some times when people are in need, they do not properly read instructions, saying, “A particular caption may read loan, the same caption grant. Grant is always lower than loan. Loan can be N100,000 and above, but I don’t think the Federal Government can give any grant that will be more than N50,000.

“I know of somebody who said he collected almost N800,000. That couldn’t have been a grant but a loan; and such a loan must have been given for businesses. It’s just that a lot of people will collect such an amount and convert it to personal use.”

Dr Ikuemonisan said that, considering the current economic reality in the country, one of the things the Federal Government can do is to write it off as a bad debt. “Those who are affected can come together and make a case for the government to help them write off the remaining part of the debt,” he added.

Dr Bayo Fasunwon, a political scientist, while also noting that a lot of people must have obtained the loan without reading the instructions carefully, said, “Did they sign an agreement at the point of collecting the grant or loan? What was the content of the document? They should revisit that agreement.”

The political economist stated that the exact nature of the fund must have been stated in the application at the beginning, except that some people must have gone ahead with the application without reading and digesting it carefully. He, therefore, said that revisiting the agreement would answer every question on whether it was meant to be a grant from the beginning or a loan.