BY HENRY OJELU
Godwin Ehigiamusoe is the founder and former Managing Director of Lift Above Poverty Organisation (LAPO) Microfinance Bank Limited. For nearly three decades, the organization propelled by his vision, has empowered millions of poor people across the country by providing them with access to credit facilities.
For this feat, he has received numerous local and international accolades for his passion to emancipate the poor. In this interview, he shares the inspiring story of how he founded the organization, challenges he faced and how he would like to be remembered.
How did your journey to build Lift Above Poverty Organisation, LAPO begin?
I have been a participant in the microfinance space in Nigeria since its inception, and I played an active role in forming the Nigerian Microfinance Policy, Regulatory and Supervisory Guidelines. In the 1980s, when Nigeria was experiencing some economic challenges, the Structural Adjustment Programme was introduced by the then-President Babangida, in collaboration with the World Bank and the IMF, as a way to restructure and diversify the economy, and basically reform the country’s foreign exchange system, trade policies, and business and agricultural regulations. There were a lot of negative side effects on the economic well-beings of Nigerian citizens, and as a result, the need for microfinance and credit support was necessary. Thus, LAPO was started to address the limitations to access and to enable improved economic outcomes.
What is the motivation behind your focus on empowering micro, small and medium sized entrepreneurs with credit facilities?
At LAPO, we recognise the unleavened potential of MSMEs, and the significant role of they play in poverty alleviation and to the economy, as well as the huge financing gap the sector faces. It therefore follows that financial exclusion experienced by MSMEs would be detrimental to the growth and development of the economy.
What are some of the intrinsic organisational values and motivations that set LAPO apart from the increasing mass of microfinance institutions in Nigeria today?
One of our core operational values is the deployment of flexible structures and processes to reach and engage low-income people and owners of micro, small, and medium enterprises. Also, LAPO Microfinance Bank goes beyond credit; its credit plus approach creates access to basic micro-business management training; and maternal and child health tips.
What have been the major growth factors and triggers for your organization’s services and service delivery?
Part of it includes the increasing level of poverty at least at its early stage; the introduction of the Nigerian microfinance policy and regulatory framework in 2005; and of course, LAPO’s commitment to innovation and best practices.
For years, the CBN has put in measures to ensure financial inclusion for all citizens, in your experience, what are some of the major constraints?
Awareness and access are two major constraints to financial inclusion in the Nigerian financial services ecosystem. These two factors, especially, highlight the difficulty of connecting rural areas to cheap and affordable banking services. There is limited access to service points in rural areas. To be clear, financial inclusion is not about banks opening new branches in new rural locations, though it is a part of it. Financial inclusion is concerned with making financial services available through whichever means possible to the intended consumers.
The limited access to finance common amongst under-banked and unbanked individuals and micro-small and medium-sized (MSMEs) is also delimited by utility and access costs. Many rural dwellers believe they do not have enough savings to open a bank account while some do not wish to incur potential associated banking fees (which can be summed up under awareness).
How is LAPO rendering services to eradicate some of the obstructions that have thus far hindered financial inclusion across the country?
Part of the ways we are doing that as an institution is by integrating low-income people into our financial stream through motivational activities, group formation, pre-loan training and provision of support and services beyond credit. We also use client engagement and deployment of our agent banking network. In the past few years, we have rolled up a network of agents to expand our reach and it has proven to be a major factor in our success story.
How are you working with government parastatals, especially those whose core mandate is aligned with your organization’s mission?
We have had cause to provide our extensive footprint across the country to agencies to reach targets of their programmes and services. For an example, LAPO and the then National Poverty Eradication Programme (NAPEP) had some mutually reinforcing relationship. We also have similar partnerships that have proven very successful in our mandate to get as many people as we can out of poverty.
What would you say have been the immediate effects of improved MSME financial inclusion in the Nigerian and African economy?
Micro, small and medium enterprises (MSMEs) play a big role in the Nigerian economy and economies around the globe. Most economies, particularly those of developing countries like Nigeria, march on the shoulders of small and medium-sized businesses. This is because MSMEs are characterized by dynamism, innovations, efficiency, and their small size allows for a faster decision-making process.
The benefits of MSMEs to any economy are easily apparent, they include: Contribution to the economy in terms of output of goods and services; Creation of jobs at relatively low capital cost, especially in the fast-growing service sector; Provision of a vehicle for reducing income disparities and developing a pool of skilled and semi-skilled workers as a basis for future industrial expansion. It also involves providing opportunities for developing and adapting appropriate technological approaches. It is also an excellent breeding ground for entrepreneurial and managerial talent, the critical shortage of which is often a great handicap to economic development, among others.
Improved MSME financial inclusion is important to help the MSME segment develop in all sectors of the economy – agriculture, manufacturing and services etc – because each of these sectors will continue to be very relevant to the overall GDP growth as well as employment generation. Improved MSME financial inclusion will also enable the sector to be the catalyst to bring about socio-economic transformation.
In a male-dominant sector, how do you plan to bring females on board and grant them credit facilities?
Despite increasing awareness among international agencies, donors, governments and the private sector of the benefits of women’s full financial inclusion, the gender gap in financial services persists. Understanding this gap is the key to closing them, and more and better data on women’s access to and use of financial services is critical to this.
Lack of data perpetuates gender gaps in financial inclusion. Financial Service Providers have consistently struggled to provide sufficient financial services to women because they often do not have the data needed to develop an accurate picture of the women’s market and therefore cannot build a business case for targeting women or monitor their own performance with the women’s market. Simultaneously, regulators and other policymakers frequently do not have sufficient data to identify who is or is not being served (access to financial services), who is being served well (quality of financial services), and who is using what services and why (use of financial services). Therefore, they are limited in their ability to develop and monitor effective financial inclusion policies.
We plan to incorporate data-driven policy designs to help close this gender gap. These data-driven policy designs include financial product designs, selection of delivery channels, risk management products and price structure to match the financial needs and preferences of women. Serving women sustainably could build a strong economy and enlarge significantly the clientele of the financial sector.