By Providence Emmanuel
LAPO Microfinance Bank, MfB, Limited has increased its authorised share capital by 75 per cent to N3.5 billion from N2 billion. This was done by the creation of three billion additional ordinary shares of 50 kobo each, which ranks pari-passu in all respects with the existing ordinary shares.
This was one of the highlights of the bank’s eighth annual general meeting (AGM) held in Lagos to approve the financial results of the bank for the year ended December 2018.
Speaking at the AGM, Managing Director, LAPO MfB, Mr. Godwin Ehigiamusoe, disclosed that the bank disbursed N137 billion to micro and small enterprises during the financial year, with target of N154 billion in 2019.
He, however, stressed that there is a need for everyone to ensure that the loans that go to the MfB segment of the society come cheaper than what it is now.
He said: “Our shareholders’ fund is in excess of N19 billion but the share capital is a different thing entirely and so, we are increasing it from N2 billion as it were to N3.5 billion and that means we are increasing the number of our shares from four billion to seven billion.
“The first step is for us to obviously be able to open up to private investors especially institutional investors we believe can add value to LAPO in addition to bringing fund to LAPO. Value in terms of their experience in other jurisdiction, being able to bring value to our operations and governance processes.
“There is a huge gap between the demand for credit for people at the bottom end, that is, the owners of micro and small businesses. So as a microfinance bank committed to supporting that end, our major operation is providing credit, we prioritize giving loan to those businesses.
“We are also regulated, so we can mobilize deposit, but our commitment right from when we were an NGO has been to provide loan to owners of micro and small businesses. Our expectations are that we continue to do what we do, first, is to ensure we meet the demand of our clients and potential clients for loan, and secondly to be able to deliver some good returns in terms of financial performance.”
Ehigiamusoe said that business environment in the financial year under focus was quite challenging not just for the MfBs but for most businesses in the country, saying: “The business environment has been quite challenging especially for most businesses not just MfBs and despite that, we did our best to ensure we deliver our usual superior performance. It is for that reason we were able to provide dividend for investors.
“What is important is that the bigger chunk of our profit after tax has been ploughed back into the business and what is going back to shareholders is minimal and the fact that the number of shares in LAPO is small.
“I strongly believe that in spite of the challenges in the economy, Nigeria has a big potential for MfBs in the sense that we have a very large population of people and these people are exceptionally very enterprising, therefore there is need to see how we can support the sector.
“More importantly, it is the desire of everyone to ensure that the loans to this segment of the society come cheaply or cheaper than what it is now. Some solution to that could be the need to have a refinancing structure or institution in Nigeria that would be able to provide low cost fund to MfBs who would then use such fund for on lending. The implication therefore is that the ultimate user, the borrower would access cheaper loan than what they do now.”