Godwin Ehigiamusoe, Managing Director, Lift Above Poverty (LAPO), a financial institution that provide financial services particularly to women. In this interview with Saturday Vanguard Business, he reveals why people’s perception on Micro-finance sector must change and the effort regulatory authorities are making to reposition the sector. Excerpt:
Since inception, LAPO has been contributing its quota to the Nigerian economy by way of empowering Nigerian women mostly, despite the harsh economic environment, what is your strategy?
In providing financial services especially credit to a large number of economically active people particularly women, we have contributed first, to enhancing their productivity and therefore their contribution to the national economy. Secondly, we have also contributed to the provision of mass employment; access to credit enables individuals to set up own businesses therefore engage in self-employment. As it is obvious that self-employment is the best form of employment. In addition, as the need for more staff arises, we create opportunity for employment of youth.
Many micro-finance banks had gone underground, LAPO is still waxing strong, what is the secret of your survival?
There is really no secret about the growth of LAPO. However, a number of factors have contributed to our growth. First is the fact that we have been around for a very long time, as a result, we have been able to develop our capacity and strengthen our systems which enable us to address challenges in our operating environment which other operators may find challenging. Again, we have been able to build a strong relationship with our clients, meet their credit needs and retain their loyalty.
For some micro-finance banks that had operated for years, but now couldn’t forge ahead, what do you think could be responsible for that?
Micro-finance banks are just like businesses and viability of businesses is majorly the function of their internal and external environments. Growth or lack of it depends on how effective the internal system is able to effectively engage the external environment. For instance how do you deal with competition and curtail cost in the face of challenging environment? Somehow we have done pretty well in responding to our operating environment with appropriate institutional structures.
You’ve said one among others, could you also see incompetence as another factor?
Obviously, management is heart of the internal factor. It determines other factors such as formulating sound business plans, designing the right structures and processes to engage their clients and deal with issues and challenges that we all know in the operating environment.
In trying to reduce poverty in the land, you increased your budget in 2011, 2012 to meet up with demand, how is the range of your budget this year?
Usually we set our plan and target over five years. 2013 would see us engaging more clients and by implication delivering larger volume of services, principally credit. So, we hope that during this financial year, we should be able to deliver N61 billion Naira as to our clients.
What is your clients’ response in terms of paying back?
It’s not a matter of borrowers’ cooperating, even though that is important, but the most important factor is what our systems are – are they strong, flexible enough to ensure that we are able to deliver credit in the quantum and at the time our clients require? If you meet those conditions, that is, delivery of response services and as at when our clients need these services they are most likely to meet their repayment obligations with little prompting.
The second factor is the level of training both for the staff who are delivering the financial services and as well as to our clients who receive and use this credit. If you put all these together, the likelihood that you have good repayment performance is always there.
Can you estimate the volume of your clients patronising you?
At a time, it was difficult to put figure down on the number of clients we have because people are coming in everyday and at the same time, we have a few clients who are also dropping out. Our target is that before the end of the year, we should be able to have one million clients actively engaging us for their services.
If micro-finance banks in Nigeria must be revived, what must be done to change people’s philosophy about the industry?
The first thing I must agree with you is, there is an issue of perception of the micro-finance sector in Nigeria. At the moment the perception is poor. This is largely because of its own history of what happened in the last few years, when some micro-finance banks went under. But that is not enough to portray the industry the way people see it.
The fact on ground is that, there are a lot of micro-finance banks, big and small, in urban, semi urban and rural communities that are delivering services such as loans and also providing savings opportunities to people who obviously would not have had opportunity to save in an institution. That is the fact should first be noted.
The issue therefore is, what can we do to deepen the industry, what steps should we take to record better performance in the industry and at the same time enhance the perception of the industry? The good news is that key stakeholders in this industry, the CBN, the NDIC and the micro-finance banks themselves are currently taking some steps to address challenges in the sector.