By Oyewole O. Sarumi
In my over four decades of consulting within the labyrinthine corridors of Nigeria’s economic sector, I have witnessed a recurring tragedy that plays out with the predictability of a scripted drama. It is a cycle of hope followed by despair, of brilliant conceptualization followed by disastrous execution.
The narrative provided regarding the Agriculture, Small and Medium Enterprise Scheme (AGSMEIS) is not merely an anecdote; it is a microscopic view of a macroscopic pathology that has plagued Nigeria since independence. We are a nation blessed with the intellectual capacity to formulate world-class policies but cursed with a systemic weakness in the mechanics of implementation.
As I reflect on the harrowing account of how the AGSMEIS fund, a well-intentioned policy designed to stimulate the grassroots economy, was cannibalized by a conspiracy of gatekeepers and beneficiaries, it becomes clear that our problem is not a lack of vision. Our problem is the human element.
The Central Bank of Nigeria (CBN) and its associated parastatals have, over the years, become graveyards for noble initiatives. From the days of the structural adjustment programs to the more recent interventionist policies of the last administration, the pattern remains unbroken.
The government releases funds intended to fertilize the soil of enterprise, but these funds are intercepted by a network of predatory intermediaries and complicit recipients.
The story of the sewing machines, the vendors, and the fake entrepreneurs is a damning indictment of our social contract. It reveals a society where public trust has eroded to such a degree that the “National Cake” mentality overrides every consideration of collective progress. However, as we stand on the precipice of a new economic era, we must ask ourselves a critical question: If human nature is the variable that constantly ruins the equation, can we remove the human element? Can technology and digital transformation serve as the incorruptible enforcers that our institutions have failed to be? This rejoinder seeks to interrogate these failures deeply, drawing from historical data and projecting a future where code, rather than conscience, dictates compliance.
The Historical Lineage of Policy Failure
To understand the magnitude of the AGSMEIS debacle, one must first appreciate that this is not an isolated incident but part of a historical continuum. In the 1970s, the military regime launched “Operation Feed the Nation” (OFN). The policy was sound on paper: mobilize the population to embrace agriculture and reduce food imports. Yet, within years, it became clear that the fertilizers and tractors meant for peasant farmers had found their way into the private estates of retired generals and civil servants. The farmers, for whom the policy was designed, were left with nothing but slogans.
When we fast forward to the Shehu Shagari administration and the “Green Revolution,” again, hundreds of millions of Naira were poured into the sector. The result was a proliferation of “political farmers”, individuals with no land and no intent to till the soil, who registered cooperatives solely to access government grants. These individuals would collect fertilizers and sell them on the open market, sometimes exporting them to neighboring countries. The administration of the fund relied heavily on paper-based bureaucracy, which was easily manipulated by ministry officials who demanded kickbacks to process applications.
The Directorate of Food, Roads, and Rural Infrastructure (DFRRI) under the Babangida regime suffered a similar fate. While some infrastructure was built, a significant portion of the funds vanished into the hazy nexus between contractors and inspectors. Many roads were certified as completed when they were merely graded tracks that washed away with the first rain. Several boreholes were commissioned that yielded no water. In every instance, the failure point was the human interface, the inspector who took a bribe to sign a certificate of completion, the local government chairman who diverted funds, and the contractor who cut corners. The AGSMEIS failure described in the source material is simply the digital-age grandchild of these previous frauds. The sewing machine vendor in 2021 is the spiritual successor to the fertilizer racketeer of 1980. The persistence of this behavior over forty years suggests that moral suasion and “anti-corruption” slogans are insufficient. We are dealing with a structural defect that requires a structural solution.
The Anatomy of the AGSMEIS Heist
The brilliance of the AGSMEIS policy framework, as described, lay in its attempt to create a “closed loop” system. By refusing to give cash directly to the beneficiary and instead paying the vendor, the CBN attempted to demonetize the intervention. This was a laudable attempt at risk management. The logic was sound: if you want a sewing machine, we buy you a sewing machine. You cannot drink a sewing machine at a beer parlor; you cannot use a sewing machine to marry a second wife. Therefore, the funds must be used for business.
However, the planners underestimated the ingenuity of the Nigerian factor. They failed to account for the collusion between the vendor and the beneficiary. The policy assumed that the vendor’s primary motivation was to sell equipment. It did not foresee that the vendor’s motivation was simply profit, regardless of whether that profit came from selling a machine or facilitating a financial crime. When the vendor agreed to send six million Naira to the entrepreneur and keep three million for “doing nothing,” they effectively converted a commodity-based intervention back into a cash-based transaction. The machine became a ghost; paid for, receipted, but never delivered.
This collusion was enabled by the lack of independent verification. The system relied on the invoice and the receipt, documents that are easily forged or generated for phantom transactions. The Entrepreneurship Development Institutes (EDIs), meant to be the gatekeepers of knowledge, became the gatekeepers of fraud.
By demanding bribes to “push” applications, they signaled to the applicants that the entire process was a transactional game. If you have to pay a bribe to get a loan, you no longer view that loan as a trust to be repaid; you view it as a purchase you have made. You have “bought” the loan, and therefore, the money is yours to do with as you please.
This psychological shift is critical. Once the integrity of the process is compromised at the entry point (the EDI), the outcome is poisoned. The training becomes a farce, the certificate becomes a receipt for a bribe, and the loan becomes a share of the loot.
The Anchor Borrowers Programme: A Parallel Tragedy
We cannot discuss AGSMEIS without examining its colossal sibling, the Anchor Borrowers Programme (ABP). Launched with fanfare to boost rice and maize production, the ABP disbursed over one trillion Naira. The model was designed to link smallholder farmers (holders) with large-scale processors (anchors). The CBN provided loans in the form of inputs, seeds, fertilizers, herbicides, and cash for labor. In return, the farmers were expected to supply their harvest to the anchors, paying off the loan with produce.
In my analysis of the ABP’s unraveling, we see the same “gatekeeper and receiver” pathology. Thousands of fictitious farmers were registered. In some northern states, politicians hijacked the lists, filling them with loyalists, thugs, and family members who could not identify a stalk of rice from a weed. When the inputs were distributed, these “farmers” immediately sold the fertilizers and chemicals in the open market. They saw the inputs not as tools for production but as convertible assets.
Furthermore, the “anchors”, the large millers and aggregators, were often bypassed. Farmers who did actually farm refused to pay back the loans. When the harvest came, they engaged in “side-selling.” Instead of delivering the paddy to the designated anchor at the pre-agreed price, they sold it to merchants from Kano or Lagos who offered a slightly higher spot price. They then claimed crop failure due to floods or pests. The CBN, lacking the manpower to inspect hundreds of thousands of hectares of farmland, had no way to verify these claims. The result was a massive default rate. We saw the spectacle of “rice pyramids” in Abuja meant to symbolize the program’s success, yet the price of rice in the market continued to soar. It was a Potemkin village of success, masking the rot of non-performing loans. The failure was not in the seed or the soil; it was in the inability to enforce the contract and the inability to verify the identity and activity of the farmer without relying on compromised human agents.
The Failure of Traditional Gatekeeping
The central thesis of the provided material is that “Nigeria has never really had a policy problem… the real challenge has always been with implementation.” I would go a step further to argue that the challenge is with analogue implementation in a low-trust society. In high-trust societies, you can rely on an invoice. You can rely on a vendor’s professional ethics. In a low-trust society like ours, where the social contract is broken, every human interaction is a potential point of leakage.
The EDIs were human gatekeepers. They failed because they are subject to greed and pressure. The bank officials were human gatekeepers. They failed because they could collude with politicians. The vendors were human gatekeepers. They failed because the profit from the 50/50 split was easier and faster than the profit from actually sourcing, shipping, and servicing equipment. As long as a human being has the discretion to say “Yes” or “No,” or the discretion to sign off on a delivery that didn’t happen, the system will be gamed. The “Policy 2” described, paying the vendor instead of the applicant, was a brilliant analog solution, but it was still analog. It relied on the integrity of two humans (vendor and buyer) not to conspire against the state. In game theory, if the payoff for collusion is higher than the payoff for compliance, and the risk of detection is near zero, rational actors will collude. That is exactly what happened.
Technology as the New Leviathan: Digitalizing Trust
If we accept that human character acts as a sabotaging force in Nigerian policy implementation, then the solution lies in minimizing human discretion through technology. We must move from a system of “Trust but Verify” to a system of “Zero Trust and Validate.” We must ask: How could digital transformation have saved AGSMEIS and the Anchor Borrowers Programme?
First, let us consider Identity Management. The introduction of the Bank Verification Number (BVN) and the National Identity Number (NIN) was a good start, but it was not fully integrated into the operational flow of these schemes. In a robust digital system, the “entrepreneur” would not just present a certificate. Their identity would be tied to a dynamic reputation score. Artificial Intelligence could analyze the applicant’s transaction history, their social graph, and their business footprint. An applicant claiming to be a tailor who has never purchased a yard of fabric in their recorded digital financial history would be flagged instantly by an algorithm, something a bribed EDI official would ignore.
However, the true game-changer would have been the deployment of Programmable Money, specifically a Central Bank Digital Currency (CBDC) like the eNaira. The CBN introduced the eNaira, but it was treated largely as a digital version of cash. Imagine if the AGSMEIS funds were disbursed not as generic Naira, but as “colored coins” or programmable tokens on a blockchain. These tokens could be coded with “Smart Contracts.” A smart contract is a self-executing contract with the terms of the agreement directly written into lines of code.
In this hypothetical scenario, the ten million Naira loan is issued in eNaira tokens that are restricted. They can only be spent at the wallets of accredited vendors. But we go further. The smart contract can require “Proof of Work” or “Proof of Location.” The vendor cannot just receive the money and send cash back. The transaction could be tied to the Internet of Things (IoT). For instance, the sewing machines provided could be tagged with IoT sensors that register on a central network. The payment to the vendor is only released from the escrow smart contract when the specific machine (identified by its unique digital signature) is geolocated at the address of the entrepreneur and activated. If the machine is not detected online at the business location, the funds are not released. If the entrepreneur tries to sell the machine, the digital lock engages, rendering it useless, and the network flags the anomaly.
Disintermediation of the Vendor
The vendor manipulation described in the prompt is a classic supply chain fraud. Technology allows us to disintermediate, to remove the middleman. Why does the CBN need to go through local vendors who are susceptible to bribery? A digital platform could connect the beneficiaries directly to the Original Equipment Manufacturers (OEMs). If an entrepreneur needs one hundred sewing machines, the order is placed through a central portal directly to the manufacturer or a primary importer. The logistics are handled by a third-party logistics provider (3PL) with track-and-trace capabilities. The beneficiary signs for the delivery using biometrics. The local vendor, who is the weak link in the chain, is removed entirely. The “cash back” conversation cannot happen because the manufacturer in China or the primary importer in Lagos has no incentive to collude with a tailor in a rural town for a few million Naira; their reputational risk is too high.
The Role of Blockchain in Transparency
One of the most insidious aspects of the corruption described is the secrecy. “Politicians collaborated with top officials… to steal 90% of the funds.” In a centralized database, records can be deleted. Files can go missing. A server can “catch fire.” Blockchain technology offers an immutable ledger. If the AGSMEIS funds were managed on a public or semi-private blockchain, every transaction, from the CBN vault to the NIRSAL bank, to the vendor, to the beneficiary, would be visible in real-time. It would create a “glass treasury.”
Civil society organizations, journalists, and the general public could trace the flow of funds. If 80 billion Naira moves to a wallet associated with a ghost company, it is visible. While blockchain does not stop the theft in the moment, it creates a permanent, unalterable trail of evidence that makes the aftermath, prosecution, much easier. The fear of this permanent digital footprint acts as a deterrent. Currently, looters know that paper trails can be shredded. They know that bank databases can be manipulated by insiders. An immutable ledger removes that comfort.
Addressing the EDI Fraud with AI-Driven Education
The failure of the Entrepreneurship Development Institutes (EDIs) was a failure of the education verification model. The applicants didn’t want the knowledge; they wanted the certificate. The EDIs didn’t care about the teaching; they wanted the fees and the bribes. Technology renders this model obsolete. We do not need physical EDIs to train people on basic business management.
A gamified, app-based learning management system (LMS) could have been deployed. The applicant would need to complete modules on their smartphone. To ensure it is actually them taking the course, the app would use random facial recognition checks via the phone’s camera during the lessons. The assessments would be adaptive, meaning the questions change based on the user’s responses, preventing cheating. Only upon passing this rigorous, biometric-verified digital course would the “certificate” be minted as a digital credential (a Soulbound Token) that unlocks the loan application portal. This eliminates the EDI official who says, “Just give me money, I will print the certificate.” You cannot bribe an algorithm to pass a test you haven’t taken.
The Societal Re-orientation: Beyond the Code
While I am a strong advocate for technological determinism in this context, as a consultant with forty years of experience, I must also address the sociological dimension. Technology is a tool, but the user is human. The “entrepreneur” in the story who gladly took the split money to build a house in the village represents a deep-seated cultural distortion. We have a society that validates “smartness” over integrity. The man who successfully defrauds the government is hailed as a wise man, while the one who follows the rules and fails is mocked.
We must use data to incentivize good behavior. This is where the concept of “Social Credit” or “Reputation Collateral” comes in. Currently, if you default on a CBN loan or defraud the system, the consequences are minimal. You might get blacklisted by one bank, but you can open an account in another, or use your wife’s name. A unified digital identity system means that your economic behavior follows you. If you defraud the AGSMEIS scheme, that data point should prevent you from obtaining a passport, registering a vehicle, or buying land. When the consequences of fraud are automated and inescapable, the calculation of the “entrepreneur” changes. The fear of being digitally exiled from the economy becomes a powerful corrective to the desire for quick gains.
A Call to Strategic Action
To move from theory to practice, policymakers must urgently upgrade the eNaira roadmap, transforming it from a mere payment channel into a programmable tool embedded with smart contracts for strict social intervention monitoring. We need not reinvent the wheel; a comparative analysis of India’s “India Stack’, specifically how the integration of the Aadhaar digital ID and UPI payment rails plugged billions in subsidy leakage, offers a blueprint for our own identity-payment nexus. Furthermore, we must domesticate the IoT-enabled asset financing models successfully deployed in East Africa, such as M-KOPA. By tagging government-funded equipment with remote disablement sensors, we convert “ghost assets” into verifiable, performing collateral, ensuring that the machinery of development remains in the hands of the producers, not the predators.
The Future is Automated Integrity
The tragedy of the AGSMEIS loan scheme, as recounted, is a painful reminder that in Nigeria, good intentions are the paving stones of the road to economic hell. The collaboration between the gatekeepers (EDIs, vendors, officials) and the receivers (applicants) created a perfect storm of failure. We saw money meant for production diverted into consumption and construction, fueling inflation without creating jobs. The “Nigerian factor” turned a development policy into a national sharing formula.
However, we need not despair. The era of the “man-know-man” policy implementation is nearing its end if we have the political will to embrace the tools available to us. We must pivot from trusting humans to trusting protocols. The future of intervention programs in Nigeria must be cashless, contactless, and largely autonomous. By leveraging the eNaira for programmable disbursements, using blockchain for immutable transparency, deploying IoT for asset verification, and utilizing AI for identity and credit assessment, we can build a firewall against the specific types of fraud that doomed the AGSMEIS and Anchor Borrowers programs.
We must stop designing policies for the Nigeria we wish we had, a Nigeria of honest brokers and patriotic citizens, and start designing policies for the Nigeria we actually have, a Nigeria of systemic compromise and opportunistic survivalism. By designing for the worst in human nature, we can use technology to enforce the best in policy outcomes. The sewing machines of the future must not be phantom invoices; they must be digitally tethered assets that only unlock value when they are doing the work they were bought to do. Until we automate integrity, we will continue to enrich the merchants of poverty while the true potential of our nation lies fallow. The solution is not more money; it is more code.
Prof. Sarumi, a digital transformation architect, writes from Lagos.
