By Zainab Altine Yusuf
The Kaduna Markets Development and Management Company (KMDMC) has concluded the first phase of the sale of shops at the Sheikh Abubakar Gumi market, Kaduna. In this interview, the Managing Director of KMDMC, MUHAMMAD HAFIZ BAYERO explained how the process was carried out and objective of the whole exercise.
According to reports, 5,381 shops have been applied for at Sheikh Abubakar Gumi Market at the ongoing sale of shops exercise. Does this number represent the people who now own shops, or are there certain processes that still need to be concluded before they can take possession of the shops?
No, this number represents those now eligible to move to the next stage of the process which is subscribing to the mortgage agreement through payment of the 10% deposit. However, they are also free to pay out right or over four installments. We must not forget that our intention right from the beginning has always been to make sure that only the genuine traders purchase these shops and not necessarily middlemen who have those shops in their names, but they are not necessarily traders. The next stage will be a two-step verification process; first of all, to check that – yes it is the shop that you are in that you applied for. Secondly, to see if you are a landlord who managed to get allocation because you have been close to certain political actors at certain times in the last 20 to 30 years.
The market is not a place for middlemen; it is not a place for rent-seekers. We are targeting genuine traders. So, the first step is to check that the names tally with what we have in our records and those registered for those shops. Secondly, it is to check if these people are genuine traders or middlemen. When we find a situation where a middleman applied for a shop, we will call the trader in the shop who has been paying rent to the middle man, to register. We will then simply expunge the name of the middle man and replace with that of the real trader.
There is a balance of 1,165 shops after the first phase of the exercise. Will the shops remain vacant because they were not applied for?
About 5,381 shops that have been applied for are for the genuine traders in the market. But clearly, we have a balance of about 1,165 shops. If you have been following, you will realise that the traders that we have been talking about are those that trade within the Sheikh Gumi Market. Therefore, the remaining 1,165 shops will be open to traders from other locations. But like I said, the caveat is still there; we are giving only genuine traders and not necessarily people who want to buy the shops as some kind of investment for themselves or their families.
You mean the sale of the remaining shops will not be open to all and sundry or for the highest bidder? Must the people that are eligible be traders?
Yes, they must be traders, we will give preference to the traders from other locations that are interested in trading at Central Market. But they can not have the same privileges of having the mortgage applied to them like the 5,500 traders within Sheikh Abubakar Gumi market.
Initially, Kaduna Markets Development and Management Company (KMDMC) said the first phase of the sale will end by July 2020, why did you overshoot your deadline?
If you recall, we were about to start the registration on March 26th, 2020. We wanted the months of April, May, June to be used for registration and verification and up to the end of July to firm up, that’s about four months. Unfortunately, a lockdown was declared that same day by His Excellency, the Governor of Kaduna state, Malam Nasir El Rufai, to safeguard the lives of Kaduna residents from the emerging threats of Covid-19 pandemic. The sale of shops is an activity that attracts a lot of human interaction within small spaces, so we had to suspend until it was safe to do so. In late October, we wrote to the State Covid-19 Task Force, headed by Her Excellency, Dr Hadiza Balarabe, the Deputy Governor, seeking permission to commence as earlier scheduled. Our request was granted and we proceeded with the process.
We have had the months of November and December 2020 within which we managed to register 5,000 shops. Right now, we are doing the two-step verification, which we commenced a few weeks back and we are about to conclude. In addition, we are about to launch the portal for the remaining 1, 000 plus shops; this should not take more than two weeks. The portal requires submission; you upload your documents such as your tax documents, business name registration. We decided to automate the process due to the second wave of Covid-19 and to allow us access and review applications quicker. We believe that within the next two to three weeks, we will conclude all the processes for the sales for the 6,546 shops. Once that is done, those eligible for mortgage will be called upon to pay their 10%.
It is interesting that many people have already begun to pay their 10% without us asking them to do so. We will monitor the lodgments and their names, we will match them later and put funds in the right account. Some of them, probably because of the excitement, have gone ahead to pay into our operational account where we receive normal service charges. Once we reconcile those affected by this, we will present to them their shop keys. Those who have not applied or have not been successful in the application, will be asked to check other markets where we have shops.
Are you saying that those who were not successful in the first phase will be eligible for the sale of these remaining 1,165 shops?
They will be eligible as long as they are genuine traders. We are trying to conclude the two-step verification to let them know their status and to enable them re-apply, if unsuccessful in the first round. We are giving everyone a chance. If you recall, we were supposed to conclude the first phase of the process on December 9. However, we have extended at least on two occasions. We do not want this process’ main aim to be defeated, which is to ensure that genuine traders are occupying these shops and can pay for them over seven years. Of course, some people want to pay in installments over one year, and some have even paid the 100% outright.
Criticisms have trailed the first phase of the exercise. What criteria did you use to ensure a transparent and smooth system?
I do not agree that criticisms have trailed the first round. In fact, the exact opposite has happened. The criticism came at the point of the announcement but it is now in the past as they have since understood our intentions; all that we promised, we have done. The first time we announced that we were considering doing this was in August 2019. We had began the work even before the first announcement, by going around the market and asking people first, whether they were the owners of the shops, in terms of temporary allocation or traders. Of course, we have our records. Hence, we matched this information, and we were able to separate the genuine traders who were occupying the shops and those traders who paid rent to those who had temporary allocations.
If you recall, His Excellency, the Governor announced on December 31, 2019, that on January 1, 2020, all the shops and the interest of KMDMC at Sheikh Gumi had reverted to the state government. So, no one owned any shops as from that point. So, for us, it is those that are trading, not necessarily those with temporary allocation, that were eligible for the right of first refusal. Of course, there were instances where the traders were the people with the temporary allocation and we have allowed them to proceed.
Can you give an insight as to how this mortgage arrangement works. For example, if a trader can not pay upfront and he or she does not have the ability to pay over the seven years and he or she is a genuine trader, will he or she miss his or her right of first refusal?
There will be a point where the bank must call you in and say you are not paying as and when due, so we will be monitoring to ensure those on the mortgage are paying regularly. I believe the Project Steering Committee for the sales chaired by Idris S. Nyam, Commissioner Business, Innovation and Technology has done a fantastic job by working with Sterling Bank Alternative to develop this arrangement that allows them to pay over seven years with just 9% interest. I don’t think there is a better deal anywhere in Nigeria; for instance, most shops that have been bought are mostly below N1.2 million. So, let’s take the higher level, which is N1.2 million. A trader pays N120,000 and he gets the key to his shop. In seven years, the trader is required to pay N1,080, 000.00; that is about N154,000 a year.
Before we commenced this exercise, most of the traders were paying N250,000 to N350,000 to their landlords per year, who in turn pay the company N20,000 – N40,000 yearly without any prospect of ever acquiring the shop. I honestly think that paying less than half price, knowing that you will own it at the end of the day, is enough motivation and I think the price is fair. We came up with the mortgage arrangement which will allow them to pay small amounts over a long period of time.
You are building about 12 markets across the state, will this mortgage template be replicated in all the markets or is it exclusive to Sheik Gumi market?
Yes, it is open to all the markets across Kaduna state because the problems are the same everywhere; genuine traders cannot muster that full amount of money of N500,000 – N3million at a go to put in. And even if they could, we would rather they put in half and then invest the other half in buying the goods to sell in the shops. This is what happens all over the world; nobody is required to pay upfront for goods when they buy, there are payment plans. And you must give these traders all the necessary support and motivation to own these shops and trade in them.
- In December 2019, Governor Nasir El-Rufai approved the decision of Kaduna Markets Development and Managing Company (KMDM) to transfer ownership of shops to traders in Sheikh Abubakar Gumi Market who previously held temporary titles;
- The governor, therefore, approved the immediate revocation of all temporary titles held by allottees as of January 1st 2020;
- Traders who paid their rent and service charge on or before the 31st of July 2020 automatically qualified to exercise their right of first refusal during the application process;
-6,546 units of shops at Sheikh Abubakar Gumi Market were expected to be transferred to the traders who rented shops from middlemen, on an owner-occupier basis;
-The State Government assisted the traders with access to the mortgage with Sterling Bank Alternative at 9% interest, to pay for the shops;
- A Steering Committee chaired by Idris Nyam, the Commissioner of Business, Innovation and Technology, coordinated the sales process;
- At the end of Phase 1 of the exercise, 5,381 shops were applied for, leaving a balance of 1,65 shops;
-The next phase will include: continuous verification of applications received during Phase I and contacting successful applicants, processing mortgage applications for traders who chose the mortgage option, issuance of offer letters and property recovery notices to successful and unsuccessful applicants, respectively;
- Opening of application portal for the remaining 1,116 shops to the public who will only be allowed to pay either outrightly or in three instalments without the option of the mortgage.