Subsidy Removal: The Magic Wand of Gov Makinde Through Sustainable Action for Economic Recovery (SAfER)
When Governor Seyi Makinde of Oyo State came into office, he knew that he had a lot of work to do to turn the state around.
Years of neglect and mismanagement had left Oyo’s economy in shambles, with high unemployment, low productivity, and poor infrastructure, coupled with the unimaginable effect of the removal of fuel subsidy by the federal government last in May, 2023.
Upon the removal of the subsidy, Makinde set to work immediately, implementing his “Sustainable Action for Economic Recovery” (SAfER) plan.
The plan focused on boosting economic growth, creating jobs, and improving the quality of life for all residents of Oyo State. And it’s been working.
When the Federal Government of Nigeria removed fuel subsidy on May 29, 2023, the impact was felt across the country. Prices of goods and services skyrocketed, and many people struggled to make ends meet.
But in Oyo State, Governor Seyi Makinde took decisive action to cushion the effect of the subsidy removal on residents.
Makinde launched a series of initiatives to help residents cope with the economic hardship caused by the subsidy removal. He increased the state’s social welfare spending and expanded access to microfinance loans.
These efforts helped Oyo residents weather the economic storm and protect their standard of living.
Makinde’s economic policies have been a success and the residents are now enjoying. This success is in large part due to Makinde’s strategic approach to managing the impact of the subsidy removal.
With the right policies and investments, Makinde has shown that it is possible to cushion the effects of economic hardship on a state’s residents.
One of the key initiatives implemented by Governor Makinde to cushion the effect of the subsidy removal was the expansion of access to microfinance loans in tune of N500 million.
The government worked with local banks and microfinance institutions to increase the availability of low-interest loans for small businesses and entrepreneurs, known as “Sustainable Action for Economic Recovery” (SAfER) plan. This initiative had a significant impact on the economy of Oyo State. It helped to create new jobs, as small businesses were able to expand and hire more workers.
It also helped to increase economic activity, as more people had access to capital to start or grow their businesses. Overall, the microfinance loan initiative played a major role in Oyo.
Many states in Nigeria have responded to the effects of the subsidy removal by providing short-term financial assistance, or “palliatives,” to their residents. These palliatives often come in the form of cash handouts or vouchers for basic necessities.
While these palliatives can provide some relief in the short term, they do not address the underlying economic problems that caused the hardship in the first place. By contrast, Makinde’s “Sustainable Action for Economic Recovery” (SAfER) plan takes a long-term approach to economic development. Rather than providing short-term handouts, SAfER focuses on improving access to capital, increasing economic productivity, and creating new job opportunities. This approach is designed to create lasting economic growth and self-sufficiency, rather than simply providing temporary relief.
SAfER has been successful in Oyo State, and Makinde has expressed hope that other states will follow his lead and focus on creating long-term solutions to economic problems. This approach could help to create a stronger, more resilient economy in Nigeria as a whole.
The microfinance banks in Oyo State have been playing a crucial role in the success of the SAfER plan. They have worked closely with the government to provide low-interest loans to small businesses and entrepreneurs. The banks have also played a key role in providing financial literacy training and business development services to their clients.
The small business owners in Oyo State have embraced the SAfER plan and have seen real results from the microfinance loans. Many businesses have been able to expand their operations, hire more employees, and increase their sales. The businesses have also been able to invest in new technologies and equipment, which has helped them to become more productive and efficient. As a result of the SAfER plan, small businesses in Oyo State are now better positioned to compete in the global economy.
The Microfinance banks saddled with the responsibilities of disbursing the loans to the applicants from Oke Ogun Zone of the state with ten local government areas have their headquarters in Iseyin(Ebedi Microfinance Bank) and Saki (Kadupe Microfinance Bank)
In Ibarapa Zone which has three local government areas, Excel Microfinance Bank in Eruwa, Ibarapa East, was saddled with the responsibilities of giving the loans to beneficiaries.
Afolabi Abiola, Managing Director of Ebedi Micro Finance Bank, Iseyin
Last year we received N70 Million from the state government through OYSIPPA and we were able to disburse the money, so, as at now, we have received the payment of N8.6million and we’ve disbursed the money to about 230 beneficiaries.
“We’ve been receiving feedbacks from the beneficiaries, some of them have been coming to tell us their stories on how the money has helped them in their businesses.
“Individuals received N250,000, while corporate organization received maximum of N1m.
“The government still need to do more because all the money didn’t go round all the applicants that requested for the money,.the Money only cater for just 10% of the applicants that requested for the money.
“The process of the loan is so easy there was no issues, the only issue we have now is that the money is not enough for all the applicants because we have over seven thousand five hundred applicants and we were able to attend to just two hundred and thirty applicants.
“So my advice to the state government is that they should rollover this scheme so that the money can go round, as at today, the beneficiaries have started paying back and we’ve received up to N8.6m.”
Iyabo Busari, a petty trader at Isalu market Iseyin, noted that she collected N200,000 from the state government loan.
“I’m so grateful to the state government I’m selling yam flour and other cooking ingredients, before I used to buy goods on credit but with this loan I was able to stock my shop with the money I collected and I’m doing well with it, I pray to God to continue to assist this government, I don’t know anybody before I was given the loan, I’m not a politician, I just collected the form and filled it and I was so surprised that I was selected among the beneficiaries and I have been paying back my money.”
Ayuba Balikis Olajumoke:
A bead maker said, “I collected N250,000 and this money has really helped me as I don’t usually go to travel to buy market but now have been traveling to get my shop stock with needed items that will make my business move forward.
” I’m so grateful to our government, there is a lot of changes in my shop now compare to what it used to be before, I pray this program continues, I have started paying back my loan, the interest in it is so business friendly, it is very easy, it is so seamless to return and our bankers, we are to return the money within 9 months period, I heard about the loan on radio, and I went there to collect the form and I was so surprised when I was called that I’m qualified for the loan, I’m into bead and makeup business and since have collected the money I’m doing well, there is no any regrets from me so far.
*Abegunde Michael Olawale, the Managing Director of Kadupe Microfinance Bank Saki*
A lot of people have benefitted from the state government loan in our bank here, as at today 400 beneficiaries have gotten their loans, and out of these 400 beneficiaries, we have 352 individuals and we have 48 corporate bodies with registered businesses, out of this 352 we have 182 females and 170 males and they’ve been doing well and they’re commended the efforts of the state government in strengthen the small scale businesses in the state, so of them personally do come to me to appreciate the gesture because it has really boosted their businesses and their standards of their living has increased as a result of what government has done for them.
The sum of N70m was given to us, and the money was distributed to 400 beneficiaries, as at today no fewer than N4m has been returned out of this money and people are still paying as at when due and we believe that this is going to be a sustainable program because our people have started paying back their loan, and that will afford other people to benefit from the scheme, government have come up with a good program and people have tasted it and they’re yearning for more, we have a lot of demands, we please if the government can release more funds it will go a long way in helping the economic situation of the state and the masses in general.
Ahaji Suliamon Balelayo: I collected one million naira from Kadupe Microfinance Bank and I used the money to support my business, I used it to buy iron rods, as I deal with iron rods, have been doing this business for over thirty years and I’m doing well but the loan has also helped me more, it has boosted my business. The loan process was seamless, I don’t know politicians, I’m not even a politician but I got the loan, I have started paying back my money, they asked us to be paying on 29th but I do pay back on 25th, the payment plan was so easy and I advise people to please pay back their loan for other people to benefit from this loan, I was asked to pay back the money with a year and half, I really appreciate the governor of the state for this kind of program, it’s a very transparent program and I really appreciate him for this.
Oladiji David, the Managing Director of Microfinance Bank Eruwa; let me start by appreciating the state government ably led by Engr Seyi Makinde for.this program in order to assist the people of Oyo state, so far we have disbursed the loan to the beneficiaries and many of them have really appreciate what the governor have done and we believe the program will continue in this manner be ayse we still have a lot of people that their application is still pending.
The bank itself has been able to drive a lot from this scheme, and one of the benefits we derived is that it has added to our customer base, it has actually increase our customer strength, we have a lot of beneficiaries that have been able to come and open a business account with us and we have been able to make some little interest from the scheme and it has also increased our outreach because in the last we’ve not been able to go to other parts of Ibarapa Axis, but because of this program we’ve been able to move out to other parts of Ibarapa particularly the people of Ibarapa North part of Oyo state.
The state government was able to disburse N70M to us and as we speak we’ve been able to disburse N65m and we are still expecting other beneficiaries who are yet to bring their guarantors and come over and as soon as they’re able to complete their documentation process we will able to disburse the remaining balance and as of now we have been able to disburse N65m to 834 beneficiaries and they’re benefitting from the scheme and out of these people some of them have been able to meet up with the first payment, the total application we received was 1,496 out of this we are able to disburse to 834 meaning that we still have 662 left that are yet to be catered for.
The fund is not enough to cater for a lot of people that applied for this loan because of that there are lot of them that the available fund on ground will not be able to cater for so we are still expecting the state government to add more to the money in order for us to extend the scheme to other people that have submitted their forms for the loan.
Challenges, there are some reason we noted that we need to improve upon and one of them is that there is this particular bottleneck in assessing this loan by the beneficiaries and that is the aspect of the guarantors, many of the beneficiaries which are mostly artisans and patty traders some of them were unable to provide the guarantors attached to this scheme and I think maybe that’s why some of them were not able to come around and I’m pleasing that in the subsequent ones the government should think of reducing the level of the guarantors that would be attached to this scheme or maybe there will be other replacement of the guarantors that will be provided by the beneficiaries in order to assist those who were unable to have access to personal guarantee of the salary earners to be able to enjoy this particular scheme and be able to to benefit from this scheme too.
Beneficiary, Sanausi Shekinat; I collected the sum of N150, 000 from this government loan and it has been helping me a lot, I have used the money to invest in my business and it’s progressing and have started paying back, I usually pay N21,500 into back every month end and I’m to pay this for seven months. I’m so grateful for this opportunity, I equally plead for more of this program.
Deborah Ojediran, I’m a charcoal supplier, before the intervention of the government loan imma master of this business for long period of time and I’m doing well but this loan has really helped me a lot, I used the money to buy more charcoal, I collected N1million and it has really helped my business and it’s a thing if the joy for me that government supported my business, I collected it two months ago and honestly my business has increased a lot. It is so easy to repay the loan, because they asked us to be paying back every month, the government should continue to help us with this kind of loan so we can continue to grow our businesses with it.
On his part, the Oyo State Commissioner for Economic and Budget Planning, Professor Babatunde Musibaudeen who doubles as the chairman of SAfER programme said, “We are here to supervise the Microfinance Banks that are actually coordinating the Sustainable Action For Economic Recovery (SAfER), the SMEs pillars for the Small and Micro Enterprises which are the pillars of the SAfER program instituted by the state Governor, Engr Seyi Makinde in the wake of this administration of policy to address the hardship occasioned by the subsidy removal and the unification of the exchange rate this has brought hardship to our people and governor Seyi Makinde thought that we need to reflect the economy and bring about resources for small and micro enterprises for them to get their businesses running so that the general price level, price inflation, the challenges of exchange rate and as well as the increase in interest rate will actually not affect their day to day running of their businesses giving the level of the informality, the size of informal sector in Oyo state and it actually started in sometime in October phases 1, 2 and 3 and we felt it becomes necessary for us to come and look at them and if so you look at the flexibility you can see that it’s something that it’s very encouraging, single digit interest rate, three months moratorium and focusing on lower parts of the enterprises in Oyo state, it shows that Governor Makinde is actually taking the economic expansion of Oyo state in a very positive manner.
Babatunde said this cut across all the 7- geo political zones in the state, from Ibadan main city and less city, Oyo, Ogbomoso, Oke Ogun 1 and 2, as well as Ibarapa it has been quite encouraging because the people we’ve met on the field have actually been very happy that the resources given to them has actually helped them in their businesses in one way or the other they’re actually looking for more definitely there so many applicants that are actually applying for the loans but we need to actually take this into consideration in our reports and table it before the Governor perhaps in the next phase of this we want additional resources so we can actually get to more people, the actual fact of this is that such a program like people will always not take it seriously because it’s government initiative but now they’re convinced to a large extent that the government is actually giving them the opportunity to be able to drive their businesses forward.
The repayment period is coming up after the three moratorium that the government has given them, they have commence paying back and we can actually roll over from what people paying back and get more beneficiaries involved into this particular system I’m very optimistic that the phase 2 of the program is coming up because we have seen the success this particular one have actually recorded.
My Olatilewa Saheed Folami, the Director General of Oyo State Investment and Public Private Partner Agency (OYSIPPA);. My assessment on Sustainable Action For Economic Recovery (SAfER) that was approved by the state governor Engr Seyi Makinde last year, it’s a huge project with N5billion and out of the N500million was dedicated to the small and micro enterprises with the loan amount from N50 to N1milion with a single digit interest rate. We have fully disbursed the whole N500million, we did two disbursement last year, one in. October and December, so today we are in Saki West in Kadupe Microfinance Bank during the monitoring and evaluation and we have been speaking with the beneficiaries of the loan program and from the conversation we had with the beneficiaries everybody feel much satisfied with the government program and they’re even asking for government to do more, the citizens are compliance and the banks are given us the confidence that all the money disbursed will be paid so that this program can spread to all of our people in our various local communities.
Over 2,100 beneficiaries benefitted from this round of distribution.
