By Amaka Agwuegbo
The large population and enterprising spirit have been described as the recipe for the rapid growth of the Nigerian microfinance sector.
LapoForecasting the growth of the Nigerian microfinance sector, the Managing Director, Lift Above Poverty Organisation, LAPO, Mr. Godwin Ehigiamusoe, said number and size of Nigerian microfinance institutions, MFIs, would outgrow those of other countries if the twin factors of large population and enterprising spirit are properly used.
Commending the enterprisingness of Nigerians, Ehigiamusoe said “MFIs in other countries tend to gain more visibility than Nigerian MFIs because Nigeria was cut off from the international microfinance market during the military era. But the new microfinance policy framework has changed that because we now have MFIs and MFBs that would live up to expectation if certain factors are taken advantage of.
“The projection for Africa is that in the next 5 years, and considering our population and the enterprising spirit of Nigerians, the number and size of Nigerian MFIs would outgrow those in other countries because the combined factors of large population and enterprise is recipe for rapid growth of microfinance, and Nigerian has both.”
But despite the projection and the growing number of MFIs, poverty has been on the increase in Nigeria as most microfinance banks are targeting a higher class of customers which Ehigiamusoe attributes to the profile of customers of these MFIs.
“The profile of the mainstream customers of MFIs is made up of large number of low income people who are engaged in micro enterprises. Agreed that they target a segment of the micro_enterprise people, but on the whole, their target is that group that has been excluded from the services of commercial banks. But in a couple of years, MFIs would begin to make more impact that can’t be ignored.”
Explaining why LAPO, a pro_poor MFI, delved into the provision of social and economic empowerment services, Ehigiamusoe said these services are offered side by side with microfinance by providing them with financial services and social empowerment services.
“For LAPO, microfinance services are simply intervention in poverty alleviation. Since we believe that some people are confronted by challenges that are beyond money, we have our sister institutes that offer social empowerment services. This is because we strongly believe that poverty is like an octopus with several tentacles, and to effectively address it, there is need to design and deliver services that will tackle it in a very holistic manner.
“To this end, we have designed health programmes to address health related issues of people, particularly those in the rural areas. We also have very creative gender sensitization programmes to address the issue of social exclusion, which is a manifestation of poverty. We also have a very innovative health programme that supports people affected by HIV/AIDS.
“We also realized the need of people for risk management services and we currently provide insurance services through a very reputable insurance company. We address material deprivation with microfinance, which LAPO has become associated with.
“This has become necessary because a lot of people have been excluded from life transforming opportunities like popular participation or education. Also, the girl_child now has a better opportunity to acquire education unlike in the past. But we also have to understand that today’s woman was the yesterday’s girl_child who was deprived and was not adequately prepared to meet the challenges of adulthood, making the poor woman suffer more deprivation that seems to constrain her from reaching her potentials.”
Ehigiamusoe explained that LAPO uses its microfinance services to reach the under-served and this means that those who have access to LAPO financial services equally have access to the social empowerment services.
“We tend to go beyond our client base in the provision of healthcare services in the sense that we have community based healthcare and other forms of health intervention where people have access to training on health or gender sensitization or to micro_business management training.
“Also, in our bid to be effective, we decided to separate the structure that provides these social empowerment services from the one that provides the financial services. Therefore, we have LAPO Development Foundation, an arm of LAPO that provides social empowerment services, but the relationship LAPO Development Foundation has with LAPO is that of being an organization working within the LAPO group.
“So, while LAPO Microfinance finances its loan portfolio with loans from members and banks, LAPO Development Foundation accesses grants.
“The social empowerment services are usually delivered in such a way that people don’t pay much. In this wise, the polices are not cost recovery and you require grants to be able to deliver these to people. So we solicit for grants from donor agencies.
Currently, LAPO is running an agricultural lending pilot scheme in Benin, the Edo State capital which seems to have caught the interest of the rural farmers.
“This initiative specifically targets farmers and what we do is to provide them with loans and extension services, and we also have a training and demonstration center where farmers are trained on making a success of agricultural activities. We have branches that are involved in this and it is still within the purview of LAPO Development Foundation.
“The extension services include training programmes that are organized for farmers which help them have access to the needed farming inputs. This is done by creating easy access to markets for their farm produces. For instance, our borrowers that are engaged in domestic poultry are supported with loans and feeds and we help them have the best prices for their products by creating an avenue through our Benin office for them to sell their goods.
“All we want is to give them the opportunity of selling their produce at competitive prizes because, since they are in rural areas, their goods are under_prized, especially during festive periods.
“We also want to intervene at the various segments of their businesses by providing them with extension services that would support them, we provide them with funds that would enable them increase productivity and also assist them with increased access to markets.”
The LAPO boss said though the project is being carried out only in Benin City, but there are plans to execute such in other states that LAPO operates in.
“Though the pilot test is only in Benin because we have some constraints in meeting the needs of the poor, especially as we have to allocate funds to other projects, but we hope to, in the nearest future, replicate this project in other states that LAPO has offices in.”
LAPO currently records a 2 per cent default rate which Ehigiamusoe attributes to lessons learnt overtime, strengthening of LAPO’s system and increase in staff and borrowers training.