One cannot but appreciate the beauty of brand new tricycles of Lagos State Rural Transport Initiative Scheme (LARUTI SCHEME), this time with more seating capacity and some other unusual features. Besides, one would commend the initiative of making our society participate in world contemporary technology. Potential beneficiaries are jostling to enroll in the heat of increasing job losses and being a government initiative there is a pre-requisite trust, hence they do not bother to analyze the economics of procurement and repayment. But just a simple patience to examine the economics of this scheme reveals clearly that this is just a scheme to create debt slaves out of potential “beneficiaries”, selling them cheap to the banks even in their father land.
According to Commissioner for Rural Development, Prince Lanre Balogun; in Nigerian Tribune on wed 30th September. “Each beneficiary will pay at least N100, 000 in his account as collateral for the government to give out the vehicle”. He added that, “we expect each beneficiary to remit N2000 daily for a period of one year for the vehicle. The government will not touch their N100, 000 deposits at the bank. The deposit only qualifies them for the scheme.” He states expressly that the scheme would run through a commercial bank, the bank takes custody of the initial N100, 000 that is only qualifying collateral (not an advance payment). And by paying N2, 000 daily for a year excluding 52 Sundays, he would have paid about N620, 000. Many unsuspecting citizens could easily be innocently railroaded into debt slavery quagmire as such, without taking a second look at the way Prince Lanre Balogun was arbitrarily dishing figures and conditions and without considering the economic implications on the other parties involved i.e. the would be drivers.
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If the program was really designed for Rural Transport as claimed then it should reflect the peculiarity of the rural areas where it is clear that patronage in rural communities cannot be as high as central cities in Lagos. And that makes it extremely difficult or even unrealistic for the drivers to meet up daily returns of N2000 to the bank aside of other running cost viz a viz fuelling, greasing and minor maintenance. If at all they meet up, it would barely have excess for the welfare of the driver and his family. But in actual fact, the condition of repayment given by the bank further confirms their anxiety that the scheme would not last, because the fibre built tricycles brought this time are less rugged as the metal built which used to be on the roads and it thereby doubles their financial risk for they meant for the bad rural roads. It is a condition that shows that the bank is desperate to recoup all its commitment fast within a year because the tricycles may not last beyond such period. Meanwhile, these commercial banks spread their car loans on brand new automobile for four years. If these drivers on their own, without any government intervention had approached the banks for such an auto-loan even at an exorbitant bank rate of 24% per annum for a 4years duration on loan, the maximum daily returns would still not have exceeded N815.20k.
A government intervention is supposed to lessen the bargain and burden because government finances are generic from our taxes. How come government intervention only swayed the bargain to the side of the bank at a killing repercussion for the citizens?
The direct implication of this deal is that the scheme would not lessen the rural transport cost as the drivers in the inevitable quest to meet commitment will be torn between the quagmire of hiking their costs and low rural patronage. Loan default and forced labour become the clear reality. The hope that the vehicle belongs entirely to them after a year also may not materialize because the tricycles are too unlikely to last further and those that do not eventually complete their payment before the tricycle packs up would lose their N100, 000 deposit. And, if any one is eventually lucky to pay up through all this baptism of fire, his initial deposit is claimed would be refunded NOT with any interest. In all this, the government hopes to score political points even when it is evidently unsustainable, the bank makes its profit riding on the back of innocent and unsuspecting citizens who at the end of it all have become nothing better than a debt slave to the bank through the LARUTI SCHEME.
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