Support 44 September 2012

CanonsCanons ofof GoodGood LendingLending

! LAPO Loans Are Cheapest In The Nigerian Microfinance Industry Pg 14

! LAPO MfB Disburses 20.5b To Micro Entrepreneurs In First Half Of 2012 Pg 21 Contents LAPO MfB At A Glance Editorial Comment Page 3 Loan disbursed in 2011: NGN 31.5 billion Disbursement target for 2012: NGN 49.3 billion Microfinance Forum Page 4 Disbursement as at Sept.: NGN 32.95 billion Microfinance And Repayment rate: 99.5% Agricultural Financing Portfolio At Risk >30 days (as at September 2012): 0.81% Cover Story Page 5 Canons Of Good Lending Active clients as at Sept. 2012: 712,881 States covered: 26 Field Progress Report Page 7 Regions: 13 Branches: 302 Our Lives With LAPO Page 11

About LAPO MfB Faces Of LAPO Page 12 LAPO Microfinance Bank Limited is a pro-poor financial institution committed to the Interview Page 14 economic empowerment of low-income Nigerians through the creation of access to responsive financial services on affordable and LAPO News Page 21 sustainable basis. The institution was founded as a non-profit entity by Mr. Godwin Ehigiamusoe in 1987 while working as a rural co- LAPO MfB Disburses N20.5b To Micro-Entrepreneurs operative officer. In First Half Of 2012 LAPO MfB Concludes Bullet Proof Manager Training Our Vision LAPO NGO Screens 135 Clients For Cervical Cancer First choice Microfinance Bank delivering 582 Clients Benefit From LAPO NGO Malaria Services responsive financial services while meeting the LAPO NGO Screens 3,585 Clients For High Blood expectations of all stakeholders on a Pressure, Diabetes sustainable basis. LAPO MfB Rewards Clients LAPO Staff Certified As Microfinance Bankers Our Mission To empower our clients through access to affordable financial services delivered in a Support is published by LAPO MfB cost-effective and innovative manner. Limited @ 18, Dawson Road, P.M.B 1729, Benin City, Edo State, Nigeria.

Tel: 234-52-882169/881163. Email: [email protected] Website: www.lapo-nigeria.org

2 Editorial Comment

his edition of Support, like all previous editions of Also, Tim Ogbebor's article entitled “Canons of Good Support is a bumper harvest. From the first page to Lending” is a classic for students and professional bankers Tthe last, our readers are served informed especially of the microfinance genre. The pedagogic piece commentaries and analysis on development-related issues. highlights some of the “doables” or what he calls “canons' of The edition opens with an incisive analysis of the correlation good lending. The piece is a must-read for every practitioner between Microfinance and Agricultural Financing authored of microfinance. by Godwin Ehigiamusoe, the Managing Director and CEO of LAPO MfB Limited. The policy-focused piece calls the Reports from the various branches of LAPO MfB across the nation's attention to the enduring problem of financing country enrich this edition a great deal. The progress of agriculture in Nigeria's political economy and concludes clients in their respective businesses in different parts of the that the idea of using the operational strategies of country is meticulously reported. Special reports on Eleyele commercial banks i.e, priority being given to short term and Port-Harcourt branches are indeed good testimonies of loans and deposit mobilization practices that are not the progress being made by the bank in the field. News responsive to agricultural lending should be reversed to reports on development across LAPO combines to make make microfinance relevant to the national economy. His this edition a must read for all. Happy reading. insightful interview chronicles the progressive growth and development of LAPO MfB over the years, milestones, challenges and issues concerning microfinancing in Nigeria.

Editorial Board

Godwin Ehigiamusoe - Chairman Editor

James-Wisdom Abhulimen - Secretary Executive Editor

Moses Ehigiamusoe - Member

Sabina Idowu-Osehobo “

Ugo Ezeana “ Gender empowerment training organised by LAPO NGO in Lagos State.

Francis Osayomwabor “

Felix Oriakhi “

3 Microfinance Forum With Godwin Ehigiamusoe Microfinance And Agricultural Financing Another explanation for the scanty attention to farming is ascribed to the nature of microfinance products and major challenge and criticism of microfinance operational procedures. For instance, loan duration of most loan products is short, usually less than eight months. Also, today, at least in Africa is its inability to meet the loan sizes are usually small and only sufficient for petty financial needs of farmers. This concern is A trading. These reasons appear plausible. In reality, however, understandable. Despite the prominence given to tourism in they have no valid basis for the exclusion of farmers from Kenya and petroleum in Nigeria, farming remains the main financial services. occupation of most people across the continent. The fact is that poor repayment performance by farmers is In villages and hamlets, men and women are engaged in the due to other factors other than the “acquisition” of wives. oldest occupation. We are frequently told that agriculture Inappropriate operational procedures and poor still ranks the biggest employer of labour and contributor to understanding of the needs of farmers are culprits. For the gross domestic product of most African economies. If instance, farmers who receive loans far into or after farming properly supported, the sector has the capacity to do even season would most probably misapply the facility. Loan more. The neglect of agriculture by commercial banks is misapplication is a sure prescription for repayment default. well known. In the 1970s, in an effort to prompt funding for For microfinance institutions, there is no rule which compel the rural economy, commercial banks were required to open them to make small and short-team loans. From experience, specified number of branches in rural communities. The the real reason for the neglect of agriculture is the rising rural banking programme recorded limited success for commercialization of microfinance. Microfinance left the rural economy in early 1990s when premium was being familiar reasons. Rural branches were considered not placed on sustainability and profit at the expense of impact. viable. For similar reasons, the poor were excluded from Operational strategies and habits were being borrowed from institutional credit. Farmers were considered as bad credit commercial banks. Priority is being given to short-team risk and therefore not “bankable.” loans and deposit mobilization; practices that are not responsive to agricultural lending. Current trends in microfinance practice reveal the same neglect of agriculture. Proportion of loan portfolio of This trend must be reversed to make microfinance relevant microfinance institutions to farmers is insignificant. From to our economic environment. It should be noted that rural Uganda through Cote d'Ivoire to Nigeria, microfinance or agricultural financing does not necessarily compromise institutions and banks pay little attention to agricultural profit making. It only requires innovation in product design financing. This is ironic as the rise of microfinance was and service delivery procedures. Applying the same lending prompted by the desire to meet the financial needs of those and savings mobilization approaches of conventional excluded from formal financial institutions. Added to this is banking to rural financing is a sure prescription for disaster. the fact that early microfinance interventions were targeted Lending should take into consideration the peculiar features at farmers. The reason for this development is familiar. First of farming and farming calendar in deciding facility sizes, is the perception of agricultural financing by conventional disbursement and repayment schedules. For instance, why lenders as a risky business. Statistics are sometimes should loan amount projected for expenses over a farming presented to validate this position. Usually fingers are period of ten months be disbursed at once? This will pointed at the propensity of male farmers to apply their loan certainly lead to misapplication of funds that are not readily required at the point of bulk disbursement. Success has facility to marry more wives rather than acquire farming been recorded through staggered or installment loan inputs. Floods, drought and bush fires add to the risk factors. disbursement, which makes funds available only when it is Despite their commitments to address poverty, micro required. Making profit with impact on the people in finance institutions have not been immune to this negative microfinance requires some measures of imaginative perception of rural financing. interventions.

4 Cover Story

a credit decision. In every credit creation situation, there Canons of Good Lending should be answers to the following questions: ! How much is needed by the customer? By Tim Ogbebor ! What is the purpose of the amount requested? typical bank plays a vital role in the development ! How long does the customer need the money? of the economy. It acts as a financial intermediary ! What is the source of repayment? Abetween the Surplus Savings Unit (SSU) and the ! Is the business for which money is to be applied Deficit Savings Unit (DSU), that is between those able to repay the amount requested? ! individuals /organizations in the society who have money What is the security for the amount? but do not immediately have the business ideas to invest The above questions form the basis for a thorough credit analysis/appraisal and it is from these that the Canons of them in and those who have business ideas but do not have Lending are derived. The Canons of Lending are usually the needed funds to actualise them. The bank therefore called the 5 Cs, 6 Cs or 7 Cs by various authors. They are ensures continuous flow of financial resources for Character, Capital, Capacity or Capability, Collateral, productive purposes. The banks earn a fee generally called Connection or Condition and Cash Flow. We shall examine interest for their effort in matching the haves and the haves them one after the other to highlight their relevance in not. making lending decisions.

In carrying out its intermediation task, the bank, whether Character commercial or microfinance, is faced with a lot of lending The Oxford Advanced Learner's Dictionary defines risks. The money given out to the deficit savings unit may character as “all the qualities and features that makes a not be recovered for one reason or the other. The reasons for person different from others”. According to Spencer, “Not difficulty in collection may range from business failure, education but character is man's greatest need and man's constant changes in the economic policies of the host greatest safeguard”. An anonymous writer wrote the country, unwillingness of the borrower to pay back even following on character; “When wealth is lost, nothing is when he has the funds, diversion of funds, poorly conducted lost; when health is lost, something is lost; when character is project feasibility studies, natural disaster, ill-health, death, lost, all is lost!” The interpretation is that without a good dearth of infrastructural facilities etc. On the other hand, character, a man or woman has no worth. Should we individuals or organizations who have given out their therefore lend to a man who is 'worthless'? Determining the surplus funds to the bank for specific periods must be paid character of a borrower is one of the most important when they demand for their funds. This therefore places a considerations in evaluating a credit request. No matter how serious obligation on the part of the lending bank to ensure buoyant or liquid an individual is, if the willingness to pay that monies given out are recovered as and when due hence his debt is not there, there is no way such a person will repay lenders must imbibe the requisite lending skills as banks can the sum he has borrowed. This is why the credit officer must lose profits and also close shop if they do not imbibe good carefully appraise the characters of the individuals who lending habits. The quality of a bank's loan portfolio to a besiege them daily with innocent faces. For large extent determines its health status. The recent companies/organizations, the character of the individuals revocation of licenses of many microfinance banks in Continued on page 6 Nigeria was mainly attributed to their poor loan portfolio quality which made them unprofitable over time. In some cases, consistent loss making has resulted in negative share capital. Because monies given out to needy customers may not be fully recovered, the term, risk assets are often used to describe a bank's loan portfolio. They are assets because where they are of good quality they constitute a major source of a bank's profitability.

There is no magic formula to good lending. Knowledge, experience, hunch and flair are important. This is why some lenders describe lending as an “art” whereby the credit officer uses his/her critical mind and intuition to take Branch Council meeting in Markurdi 5 Canons of Good Lending Cover Story

! Interview the customer on how he intends to use the amount requested. Ask about his business and capacity to repay the facility. Ask if he has borrowed from other banks in the past and how the loans were paid. You can 'strike gold' from such simple interviews. ! Are there frequent cases of returned cheques on customer's account? ! Has he been engaged in kite flying? ! Consciously seek for informal information from society. A good credit officer must read the newspapers and listen to news broadcasts regularly. ! Conduct Status Inquiry on the borrower with other

CBN Controller, Benin Branch, Mr. V.I.D Oligbo, presenting Bullet Proof banks. CBN also has a Credit Bureau where all banks Manager Training (BPMT) Certificate to Faith Odiase, RM, Osogbo can make references on customers before lending. ! Continues from page 5 Check his/her social and personal lifestyle. Does he frequent parties and 'spray' large sums of money? Is he behind them and the key decision makers must be a husband of many wives and concubines and have thoroughly scrutinized. He/she must therefore set aside all divorced other wives in the past? emotions and sentiments that might affect reaching a quality ! When a credit officer visits a would-be borrower's lending decision. Credit should not be extended to business place or residence for appraisal of his business somebody with a character problem or a company without and verification of residence respectively, he/she must succession. However, determining a person's character is be observant and patient enough to listen to whatever not an easy thing to do due to the complex nature of human side talks neighbours may make during such visits. If behaviour and the limited period available to the credit during such a visit, a credit officer notices a LAPO loan officer to evaluate the borrower's character. The CBN beneficiary in the same line of business for instance, requires that a customer of a bank must open and operate nothing prevents the credit officer from making a his/her account within a minimum period of six(6) months discreet enquiry on the would-be borrower from that before he can be considered for a facility be it loan or person. A few words may in the process prevent the overdraft or any other kind of lending. The time frame is to disbursement of a potentially bad loan. This is not to enable the bank or credit officer watch the account say that all informal information received on a client movements/operations and relate with the customer to must be swallowed line, hook and sinker. determine, amongst other factors, his character and qualification for a banking facility. The question is whether Capital the random visits of the customer to the bank premises Capital refers to the owner's stake in a business. How much within six months can sufficiently expose the customer's has the intending borrower contributed to the business? This character to the lending officer for the purpose of making a is a major consideration in credit appraisal/analysis. Credit judgment on his character. The answer is likely to be NO in officers must make sure that customers requesting for loans most cases. In some cases however, the customer is able to manifest his/her character within six months through issues are adequately capitalised for such request whether the like kite flying, fraudulent tendencies on account, police or capital available is adequate for the volume of business and court interventions, negative comments in the media, the amount of loan being requested. Debt/equity ratio is negative informal information from individuals etc. This is usually a good measure of how well a prospective borrower why the credit officer must make conscious efforts to is capitalised. The size of equity capital is important as it possibly research into the individual's past behaviour and provides the needed cushion in case a business runs into attempt to predict his future behaviour. Some customers murky waters. Also most borrowers are much more likely to intentionally make their account performance robust in the dump an ailing business if the business is solely financed by first six months with the hope of deceiving the bank into a lender as against when the customer has substantial believing they are credit worthy only to secure loans and stake/investment in the business. He will exhibit a 'fight to refuse to pay. The social and personal habits, integrity and finish' attitude to see that the business survives. It is reliability of customers should be ascertained through common to find a business whose paid up capital is formal and informal means. Below are some ways we can N100,000 (USD 641) applying for a loan of N10,000,000 catch a glimpse of a prospective borrower's character. (USD 64,103) or more. Continued on page 9 6 Field Progress Report

Eleyele Branch Makes Progress Established in August 2007, this model LAPO branch has Stories by Abhulimen James-Wisdom recorded impressive achievements in its credit operations. Name of Branch: Eleyele In year 2011 alone, the branch disbursed the sum of Clients: 2,431 N129,815,000 (USD 832,147) to her clients with a Credit Staff: Four repayment performance of 100%, an appreciable No of Unions: 98 improvement over the sum of N115,525,000 (USD 740,545) Loan Portfolio as at September 30, 2012: N58,413,053 disbursed during the year 2010. It currently has a client base (USD 374,442) of 2,431 and 98 credit unions with a loan portfolio of Savings Balance as at Sept. 30, 2012: N29,162,872 N58,413,053 (USD 374,442) as at September 30, 2012. Its (USD 186,941) savings balance has climbed to N29,162,872 (USD 186,941). Repayment: 100% Loan Disbursement as at Sept. 30, 2012: N111,265,000 Osaretin Osarennmwinda told Support that this feat would (USD 713,237) not have been achieved without the doggedness and 2010 Disbursement: N115,525,000 cooperation of the Credit Support Officers who she said are (USD 740,545) passionately committed to their duties. She said the credit 2011 Disbursement: N129,815,000 (USD 832,147) staff are doing all within their powers to make the branch 2012 Targeted Disbursement: N138,369,000 one of the best in LAPO even as she assured that everything (USD 848,890) would be done to sustain the branch's current 100% repayment performance. he branch is key to the success of any microfinance bank or institution. According to Mr. Godwin “At Eleleye branch, we work as a team to achieve success. TEhigiamusoe, the Managing Director of LAPO We actively interact with clients for prompt identification Microfinance Bank Limited, “if the engine is the heart of any and solutions of their problems. Through this effort, we have automobile, the branch is the engine of a microfinance been able to articulate their concerns and views on such vital institution or bank. It is the institutional organ closest to issues as interest rate, loan size and repayment. This service users and plays a vital relationship has translated role in market research and i n t o c l i e n t s ' b e t t e r product development.” understanding of our o p e r a t i o n s a n d t h e LAPO currently operates 294 successes that we have branches across Nigeria with achieved in the branch so Eleleye branch as one of the very far, she said. vibrant ones. Located at No 1, Adanla House, Ibadan, Oyo State, the business activities of the branch is currently supervised by Miss Osaretin Osarenmwinda, a graduate of Political Science. Eleyele Branch Staff

Eleleye branch is creating good opportunity for owners of microenterprises, especially in the rural areas to access credit facilities for the purpose of expanding their businesses. It supports active clients in Eleleye, Ologuneru, Apete, Sango, Agbaje/Ijokodo and Aleshinloye with plans to extend operations to other neigbouring communities in its determination to reach more people. 7 Field Progress Report

Harcourt Branch On The Move with about 2,451 clients and 137 unions. The branch serves active clients in Ekpo Abasi, Omukpa, Ibesikpo, Ikot Name of Branch: Harcourt Effong, Old Odukpani and Ikot Ansa communities, amongst Clients: 2,451 others. Miss Gloria Ehiosun, the branch manager and five Credit Staff: Five Credit Support Officers are saddled with the responsibility No of Unions as at September: 137 of supervising and monitoring loan disbursement and Loan Portfolio as at September 30, 2012: N78,116,401 repayment activities in the branch which is located at No 6, (USD 500,746) Hewett Street, Calabar, Cross Rivers State. The main Savings Balance as at September 30, 2012:N56,720,811 responsibility of the branch is to address the economic (USD 363,595) powerlessness of its clients through the provision of a wide Loan Disbursement as at Sept. 30, 2012: N140,660,000 range of financial services including business loan, asset (USD 901,667) loan, farming loan and festival business loan. 2010 Disbursement: N131,760,000 (USD 844,615) Established in 2007, Harcourt branch has assisted a good Repayment: 100% number of clients to develop their small scale business 2011 Disbursement: N141,690,000 activities. As a mark of progress, over N141,690,000 (USD (USD 908,269) 908,269) was disbursed as loans to clients in 2011 with a 2012 Targeted Disbursement: N173,100,000 target to disburse the sum of N173,100,000 (USD (USD 1,109,615) 1,109,615) in the current year 2012. As at September 30, 2012, the branch had a loan portfolio of N78,116,401 (USD 500,746) with savings balance of N56,720,811(USD 363,595). The branch is blessed with hardworking and credible clients evident in the branch's 100% loan repayment rate.

With more and more people identifying with LAPO and its poverty alleviation initiatives, Harcourt branch is always a beehive of activities as clients, mostly women, throng the office to access various services to grow their businesses towards improving their socio-economic conditions. Harcourt Branch Manager, Gloria Ehiosun (sitting) with staff Gloria Ehiosun highlighted the routine business activities of the branch to include; client training on APO is one of the very few indigenous institutions judicious utilization of loan facilities, business management in Africa which have successfully grown from a advisory services, loan disbursement and repayment Lloose community-based development organization collections, establishment and supervision of unions for into a formalized and regulated microfinance bank. smooth operations, making efficacious projections and Beginning with a disbursement of N100 (USD 0.6) each to general enlightenment on credit issues. three women in 1987, LAPO Microfinance Bank has grown exponentially with a client base of 712,881 as at September She informed Support that Harcourt branch is currently 30, 2012. embarking on a membership mobilization drive with plans to expand operations to more communities in its Harcourt is among the fastest growing branches in LAPO jurisdiction.

8 Canons of Good Lending Cover Story

Continues from page 6 broadcasts. Above all, experience is key as the credit For small scale businesses and individual borrowers who are officer's dexterity in this regard is likely to improve as years the primary targets of microfinance banks (MfBs) and roll by. For small scale traders, a credit officer should have a institutions (MFIs), the quantum of the borrower's funds in fair knowledge of the customer's business. Where this is not the business is equally very relevant. If a small scale the case, a question and answer session with the borrower cosmetics trader in New Benin market approaches an MfB during appraisal of his business can reveal the potentials of or MfI for a loan, the size of the customer's current business the business. The credit officer must also do a painstaking must be ascertained. That represents his capital, ceteris review of the business’ income and expenditure pattern for paribus. If the customer's total stock is worth N300,000 at least one year. A review of the borrower's sales/cash book (USD 1,923) it will be unwise to grant such a customer a loan and expenses book should give the required insight. of N600,000 (USD 3,846) or more even if that is the request of the customer. Except for contract financing and a few Collateral other lending, simple rule of the thumb practice enjoins us to This is known as the asset or property or pledge which a grant the customer not more than an amount that is customer offers the lender to secure a loan. It is a statutory equivalent to 100% of the customer's current stock holding requirement in Nigeria, that is, the Banks and Other i.e. N300,000 (USD 1,923) in this case. This is often based Financial Institutions Act (BOFIA) and the Failed Banks on the assumption that the current stockholding of the and Financial Malpractices Decree makes it a criminal customer is not financed by borrowings from other lending offence for any manager or official of a bank to lend without institutions. This prevents overtrading and gives the lender an adequate security. Collateral should however be regarded some comfort as customer may be able to use current stock as a last resort or a fall back position and not the major to repay the amount borrowed in case the borrowed sum is premise for which loan consideration should be made. lost. Lending risk is higher where the lending institution Collateral only becomes relevant where a customer defaults decides to finance virtually all the stock -in-trade of a trader. in the payment of his loan. Collaterals may range from pure This also explains why lenders request borrowers to deposit cash, share certificates, personal and corporate guarantees, between 20 to 40% of the cost of an asset in the case of asset negative pledges, debentures and landed properties. In or equipment financing. Nigeria, collaterals especially landed properties are very Capacity/Capability difficult to realise. They also take a lot of time to realise as Capacity measures the borrower's ability to repay the loan to the court processes are generally very slow. Many credit be granted. What is the relationship between the borrower's experts have advocated a separate judicial process or court receipts/income stream and its present and future maturing for adjudication of cases relating to bank loans. This is yet to obligations? Is the business viable enough to repay the loan - get the nod of relevant authorities. Today, loan defaulters principal and interest? Is the borrower capable of using the exploit a lot of bottlenecks in the judicial system to frustrate borrowed funds profitably to repay the loan as structured? In loan recovery efforts of lending institutions. For example, which industry does the borrower operate? Is the business loan defaulters run to the courts to get injunctions to stall the seasonal or all year round? What are the borrower's strengths efforts of creditor banks who have decided to sell properties and weaknesses which may enhance or act as a constraint in the repayment of the loan? Does the borrower have adequate for which the bank has duly obtained legal mortgages. It experience in the line of trade? If the business is technical in may take years to lift court injunctions. nature, does the entrepreneur borrower have the required technical skills or is he relying on the services of a hired Consideration for loans by lending institutions must technical expert? How long has he been in the business? therefore be based on the character of the customer, its These are some questions that the credit analyst must find ability to repay the loan and capital available to the business answers to before determining the suitability of the loan. rather than in the size or worth of the collateral submitted to the bank. A young man who inherited a building from his Because the requests from customers would come from father once approached me for a loan for his small sized different businesses/industries, a good credit officer is business some years ago. A review of his request revealed expected to be a 'jack of all trade and master of all'. He or she that his business deserves only a loan of N500,000 (USD must be versatile, inquisitive, an extrovert, a knowledge 3,205) for a six-month period. He was visibly angry when he seeker, a reader of various books especially on business and finance and a listener to local and international news Continued on page 10 9 Canons of Good Lending Cover Story Continues from page 9 their credit officers should watch out for small businesses was told he would only get N500,000 (USD 3,205) as involved in the production of goods whose raw materials are against the N3,500,000 (USD 22,436) he had applied for. not locally sourced, those trading on contraband goods His reply was that his building was worth N10,000,000 such as frozen turkey, clothing materials, jeans, perfumes, (USD 64,103) and wondered why we were considering offering him a meagre N500,000 (USD 3,205). The truth is shoes, drinks and wines etc. These traders risk losing their that the lender does not lend based on collateral value alone. capital and the bank's monies when their goods are seized Character, ability to repay loan and other canons form the usually on the highways. MfBs, just like commercial banks, pillars for a good lending decision. are statutorily barred from lending to traders who deal on contraband goods. A list of banned goods is usually For MfBs and MfIs, collaterals for loans are usually available on CBN's website to guide lenders. personal guarantees. This is to enable the poor who cannot afford tangible collateral benefit from micro loans to On connection, some borrowers have influence in society improve their business. However, criteria for acceptance of which can aid the fortunes of their businesses and invariably personal guarantees must be duly spelt out to avoid abuse. It impact positively on their loan repayment. In the same vein, must not be an all-comers affair. Candidates signing the influence of some individuals in society may place them personal guarantee documents for loans must be duly informed of the purpose for which they are appending their in positions where they can frustrate the recovery efforts of a signatures. The signatures should be appended on red seals lending institution when loans availed them become bad. or on postage stamps while passport photographs obtained Credit analysts should therefore be wary in recommending should be duly crossed with the institutions stamp to avoid loans sought by such individuals for approval. fraud which may involve tampering with or substitution of guarantor's passport photographs. Guarantors must also be Cash Flow individuals who possess reasonable means of income and The strength of a borrower's cash flow is also important in have the capacity to repay the loans being granted. determining the suitability for a loan. Hence lenders in appraising loans for private and public companies often Conditions/Connection request for a cash flow projection covering the expected Conditions usually refer to all the external factors outside tenor of the loan. The cash flow projects the expected inflow the control of a business which may affect the borrower's against all expected expenses of the business on a monthly ability to repay loan as planned. The factors include basis to arrive at a profit before tax. The analyst after government policies, adequate infrastructural facilities, political stability, inflation rate, technological capacity, calculating the size of the cash flow for the duration of the import and export restrictions, taxation etc. For example, loan, would be in a position to match the stream of expected the dearth of infrastructural facilities has been attributable cash flow with the loan repayment. Where the projected net to the collapse of many businesses in Nigeria. Recently, cash inflow falls short of the repayment schedule, the some manufacturing companies relocated to neighbouring appraising officer is unlikely to recommend the requested countries like Ghana due to high cost of operations loan for approval. especially money spent on power generation. These companies spend millions of naira on diesel to power their For petty traders, a review of the sales book of the borrower plants thereby unjustifiably inflating their production costs while matching same with purchases and expenses books which in turn makes them less profitable. This also accounts may suffice in determining the adequacy of the borrower's for why many commercial banks shy away from financing cash flow and profitability for small scale production ventures known to have high t h e s c h e d u l e d l o a n mortality rate in Nigeria due to unstable government repayment over the proposed policies and inadequate infrastructural facilities such as bad tenor. roads and inadequate power supply. This has led to growth without tangible economic development.

Lenders must therefore take note of the above issues when appraising customers' loan request. For MfBs and MFIs, Tim Ogbebor Consultant , Banking Services, LAPO 10 OUR LIVES WITH LAPO

I Am Saving To Secure My Children's Future Stories by Abhulimen James-Wisdom

Name of Client: Mrs. Akinfasoye Yetunde Now in her 7th stage of regular loan of N80, 000 (USD 513), Age: 39 Mrs. Akinfasoye has also accessed KIVA loan, Special and Marital status: Married Children: Five Asset loans from LAPO, ranging between N45,000 (USD Year joined LAPO: 2007 288), N100,000 (USD 641) and N150,000 (USD 961), Branch: Eleyele which she has promptly repaid. She boasts of being able to Name of Union: Success support her family financially, a development that has Position in union: Leader earned her respect and recognition in the family. She plans to Business: Rental and Catering Service invest more in the business, with the support of LAPO, for Current Loan: N80, 000 (USD 513) Location: Shop 31, Lam Adesina Shopping more profit to support her children's educational Complex, Benjamin Bus Stop, Ibadan development and general welfare.

or seven years after graduating from the University of Ilorin, Nigeria, with a Fdegree in English Language, Mrs. Yetunde Akinfasoye could not secure paid employment. Being entrepreneurially inclined, she started to bake and sell snacks to customers in her neighborhood including decorating social event venues for more income. She later got a teaching appointment and taught for another seven years while still engaged in the business.

Not satisfied with the meager pay, Mrs. Akinfasoye resigned voluntarily in 2006 to face the business fully with the help of a loan obtained from a local cooperative society on a monthly interest rate of 15%. She said the high interest rate became an albatross to her business, a reason she and other women in her local church embraced LAPO in year 2007.

She boasts of being able to support her family financially, a development that has earned her respect and recognition in the family.

11 Faces of LAPO

LAPO Management Staff (sitting L-R), Philomena Elijah, CBN Certification Training being facilitated by James Olaniyi of LAPO Sabina Idowu-Osehobo and Honestus Ayobami Obadiora, interracting Academy for Microfinance and Enterprise Development (LAMED) with Community Volunteers during their study visit to BRAC, Bangladesh

Mr Godwin Ehigiamusoe, Managing Director, LAPO MfB (3rd left), Health sensitization during Branch Council Meeting at Sapele, Delta State Mrs Patience Omoregie, LAPO client (2nd left) and other guests at the 20th anniversary of Incofin in Belgium.

Mr. Kingsley Imafidon, Head, Field Operations, exchanging views Chief Field Officer, Agricultural Development with visitors from the IFC during field visit. Programme (ADP), Mr. Godfrey Asiwa, inspecting group work during LARDI agric. extension training at Iguodakpa, Edo State.

Manager, Social Empowerment, LAPO NGO,Mrs. Philomena Elijah, training Moses Ehigiamusoe, GM, LAPO MfB, addressing guests at the closing and acquainting LAPO MfB Client Relations Officers with the social ceremony of Bullet Proof Manager Training organised for senior managers. programmes of the organisation. 12 Faces of LAPO

Mr. Moses Ehigiamusoe, GM, LAPO MfB, Delegates from the International Finance Corporation (IFC) with LAPO addressing senior managers at a monthly Business Review Meeting (BRM). clients and staff during an inspection visit to Osaretin Union, Adesegbe Branch, Benin City.

Osaro Onaghise, LARDI Staff receiving 20 years long service award from Mrs Elizabeth Ehigiamusoe, GM, Micro Investment Support Services LAPO MfB GM, Moses Ehigiamusoe . (MISS), flanked by Itohan Osayi, LAPO Scholarship Coordinator, presenting scholarship cheque to a beneficiary in Lagos state

Sabina Idowu-Osehobo, General Manager Mr Honestus Obadiora, Health Manager, LAPO NGO, presenting Bullet Proof Manager Training Certificate receiving LAPO NGO Certificate of Community Service from the Civil to one of the participants, Mr. Justus Iyekekpolor, Regional Manager, Kogi. Society for HIV/AIDS in Nigeria, in recognition of her immense contributions.

Vincent Lehner, Senior Analyst, Symbiotics Information, Consulting & LAPO clients receiving Business Management lecture at a workshop Services, South Africa, conferring with Cynthia Ikpomwhosa DGM, Corporate organized by LAPO NGO to mark International Women's Day. Affairs and Faith Ojo, Head Monitoring, during his official visit to LAPO 13 Interview LAPO Loans Are Cheapest In The Nigerian Microfinance Industry

r. Godwin Ehigiamusoe is the Managing members of low-income households particularly in rural Director and Chief Executive Officer of communities. The final and perhaps the immediate factor LAPO, a leading development and was the economic crisis in the early 1980s which culminated M in the implementation of the Structural Adjustment microfinance organization with operations in Nigeria and Programme (SAP) in 1986. The effect of the programme Sierra Leone. An experienced microfinance practitioner was harsh on the people. That was the setting when LAPO and author, Ehigiamusoe who began his career as a rural was initiated as a non-profit organization in late 1980s in cooperative officer has won several local and Ogwashi-Uku, Delta State. international awards among which are the Model Entrepreneur Award - Nigeria in 2008 and the Schwab How did it begin? Foundation's Outstanding Social Entrepreneur for Africa LAPO began as a simple act. In the parish where I Award in 2010. In this interview with Head of LAPO worshipped, I gave N100 (USD 0.64) each to three women, Corporate Communications, James-Wisdom Abhulimen, Felicia Monye, Monica Igwubuike and Obiageli Nwoko (a he speaks about the progressive growth and development young lady). In the evening of every Afor market day (a major market in Ogwashi-Uku), I would move round to of LAPO over the years, milestones, challenges and issues collect repayment of N10 per installment. It grew steadily. concerning microfinancing in Nigeria. Excerpts: With steady repayment, a loan capital of N300 (USD 1.92) reached more women within few Afor market days. The pace of development and the essential features of LAPO What factors contributed to the establishment of LAPO? were influenced by my contact with the Grameen Bank of Let me begin from the socio-economic background even Bangladesh in 1989. before the beginning of LAPO. The prompting for the establishment of Lift Above Poverty Organization (LAPO) How did you get in touch with Grameen Bank? could be ascribed to a number of factors. First, was my It was quite interesting. I read about Grameen Bank in ideological orientation as a young man. My years in the Business Times, a Nigerian business paper which I doubt is university in late 1970s coincided with the period of still on the newsstands. Reading about Grameen Bank doing national enthusiasm and the desire to make Nigeria the what I was doing was quite fascinating. I wrote a few lines to greatest nation. At the beginning of the Dr Muhammad Yunus as he was decade we came out of the civil war then known, highlighting what I strong. In 1975, we had a very strong was doing. There was a problem charismatic leader in the person of with posting the letter. In the Murtala Mohammed and Nigeria was features article on the bank at the forefront of the final de- published in the Business Times, colonialization of Africa with massive there was no street address. I support for liberation movements in simply addressed the letter to Dr. Southern Africa. Nigerians were Muhammad Yunus, Dhaka, excited and universities were centers Bangladesh. Fortunately, a month of movements for better Nigeria. This or so later, I received response was the time I was in the university. In with pamphlets and local conjunction with others, I devoted newspaper cuttings on Grameen much time beyond my studies to Bank. I was requested to forward sensitize students who were obviously . Ehigiamusoe a photocopy of the features article potential elites on how to make the on the bank as published in the nation greater through adequate attention to the condition of Nigerian business paper which I did. In addition, I wrote to life of the poor. The second factor was my involvement in thank Professor Yunus for the response and documents and the co-operative movement. My exposure to the cooperative requested for funding support. The letter was published in movement began with my vacation job at the Cooperative one of the early editions of Grameen Dialogue, a newsletter Department in Benin City in 1980. I instantly believed as I of Grameen Bank. Fortunately for me, a Programme Officer still do that properly organized, cooperative societies are at the West Africa office of the Ford Foundation, veritable institutional structures to improve the condition of Continues on page 17 14 OUR LIVES WITH LAPO

LAPO Has Lifted Me

Name of Client: Mrs Ramatu Fatima N40,000 (USD 256) and N50,000 (USD 321) from LAPO, State: Kogi Ramatu Fatima started buying foodstuffs in bulk and later Age: 32 relocated the business to a better location in the market. Children: 3 Current loan of N100,000 (USD 641) from LAPO has made Year joined LAPO: 2005 her a dominant player in the market. Her shop is a beehive of LAPO Branch: Kubwa business activities with customers often jostling to make Union: Togetherness purchases. With this patronage, she is able to sell about Business: Foodstuff N300,000 (USD 1,923) worth of food items monthly and Current loan: N100,000 (USD 641) saves N10,000 (USD 64) monthly for her family and Business location: Kubwa Market, Abuja Nigeria. business development.

With her income, Mrs Ramatu Fatima is now able to fend for herself and support her family budget. “From the proceeds of my business, I am able to feed, cloth and support my children's educational development, healthcare and welfare. native of Kogi State, Mrs Ramatu Fatima is now a This is a great relief to my husband who now accords me successful provisions and foodstuff dealer in more respect.” AKubwa village market, Abuja. When she accessed her first loan of N20, 000 (USD 128) from LAPO in 2007 to Ramatu Fatima attributes success in her business to the scale up her business, many thought she was making a support of LAPO, an organization she said has granted her mistake. Today, her business has recorded remarkable access to a range of financial services to boost her business, improvement. build assets and shield her family from hunger and poverty.

Born in 1980 into a humble family of twelve, Ramatu Fatima was not given good education and skills that could have guaranteed her an empowered adult life as her parents could not afford it. Spurred by her childhood dream to be a banker, she was even farming to educate herself at a time until she was compelled to drop out of school. Under this circumstance, it was clear to her that success in life and the future of her children will depend largely on hard work and personal sacrifice.

Ramatu Fatima started foodstuff business in 1998 with the sum of N4,000 (USD 26) sourced from her mother and joined LAPO in April 2005 when she needed funds to scale it up. Her first loan of N20,000 (USD 128) from LAPO was invested in foodstuff items. The prompt repayment of the loan quickened her second business loan of N30,000 (USD 192). This was also invested fully into the business. With additional loan of 15 OUR LIVES WITH LAPO

debt with creditors who lent me money at a very high I Am Now Economically Empowered interest rate coming to harass and threaten me.” LAPO came into her life at one such time when she was Name of Client: Mrs Patience Omoregie depressed and confused. A friend, Mrs. Queen Enabulele Date of Birth: 1962 introduced her to LAPO and she accessed an initial regular Nationality: Nigerian loan of N8,000 (USD 51) after attending the six-week pre- loan training. Prompt repayment of this loan facility Marital status: Married qualified her for subsequent loans of N10,000 (USD 64) and Children: Six N15,000 (USD 96). With these loans, she revived her Residence: No. 60, Isienmwenro Street, Off dwindling business and since then, there has been no going Sokponba Road, Benin City back on her relationship with LAPO. She has accessed Business Location: No. 233, Upper Sokponba Road, Benin regular and individual loan products of various sums from City LAPO. She pays the sum of N7,500 (USD 48) as weekly Year joined LAPO: 2000 repayment for her last regular loan of N150,000 (USD 962). Branch: Upper Sokponba Union: Divine As she puts it, “knowing that when I repay I can get more Business: Cloths, Jewelries, Bags and Shoes loans gives me confidence and a settled mind to concentrate on my business. It is as if a burden has been lifted from my Current Loan: N150,000 (USD 962) shoulders. My business is now larger. To maximize my profit, l travel regularly to Cotonou in Benin Republic to buy he success story of Mrs. Patience Omoregie speaks clothes, jewelries, bags and shoes in bulk. I have plans to volume of the effectiveness of microfinance as a tool for leeraging out of poverty. With the support of commence travelling to Dubai and Saudi Arabia soon to T purchase goods at cheaper rates. Bulk buying means more LAPO over the years, the little business she started by hawking fairly used clothes along the streets of Benin City in profit accruing to the home for family development. 1998 has grown rapidly with an average monthly profit of N170,000 (USD 1,090) with which she feed her children and Patience Omoregie can look at certain areas of her life support their educational development. before and after meeting LAPO and make categorical statements about her self esteem, decision making in the Patience Omoregie started selling clothes with a personal home, children's education, feeding pattern and health care savings of N15,000 (USD 96) and before coming in contact which she insists has changed for the better. In her words with LAPO, had a long-drawn battle with poverty as “without money you cannot contribute to decision making proceeds from the petty business was barely enough to in the home, like where you live, who goes to what school, augment the family budget. According to her, “Things were how you build your house and even what you eat. You may not financially stable with my husband and l, which put the be listened to but with your own money, you definitely have family under severe financial stress. There was hunger in the home and frustration began to mount. I was constantly in a voice. I am respected in my family and social circles. Now people want to associate with me unlike in the past when l had nothing.

“Four of my children are now graduates while the rest are in school. One of them, Abieyuwa Ekhoguagbon is even working with LAPO. My children are my greatest investment. Before I joined LAPO, some of them had to drop out of school due to financial constraints. My husband was not doing well. I was indebted and barely able to feed the family. If not for LAPO's support, I would probably have ended up a poor wretch”, she declared.

Leader of Divine Union, Upper Sokponba Branch of LAPO, Edo State, Patience Omoregie and her family now own and live in their own home. She is currently building a personal house in the city.

16 Continues from page 14 like any poverty-reduction interventions are usually at two Frank Hicks subscribed to the newsletter. He read the letter levels. First is in terms of service delivery such as how many and requested for a meeting in Lagos. That was how the Ford people are benefitting and the volume of services delivered Foundation provided the first external support for LAPO in and secondly, the impact on the beneficiaries. July 1991. When LAPO won the Grameen Foundation's Award for Excellence in Microfinance in 2006, we felt it was In terms of outreach and services, we have succeeded in fitting to dedicate it to the Ford Foundation and we gladly did. creating a sustainable and regulated financial institution which provides a range of flexible financial services to a How were the early years? large number of people. LAPO client base rose from 355, Early years of the organization were challenging and equally 502 in 2010 to 518,187 in 2011, an annual growth rate of exciting. Here was I, a young idealistic man, brimming with 46% which is remarkable in a challenging environment ideas and with grant support to implement the ideas. I felt it especially at a time when most microfinance institutions was the best thing that could ever happen to me. In addition, I globally are recording negative growth. The client base rose had the fortune of attracting hardworking young men and to 593,111 in May 2012. The volume of loans disbursed to women who with little skills in microfinance (none had any clients has also grown remarkably. LAPO disbursed N13 in Nigeria then anyway) who were fantastic and highly billion, about USD 79.9 million in 2009. This rose to N21.9 committed. We made our mistakes, we corrected them and billion (USD 137,735,849) in 2010 and N31.58 billion in here we are today. The unique thing about LAPO is that it did 2011. This is an average growth rate of 56.5%. We target not start as a project of any international development agency. Perhaps LAPO is one of the very few microfinance N50 billion (USD 314,465,409) as disbursement in the institutions, if not the only one in Africa which was not an current financial year. This is an achievement when one international project but successfully scaled up to be what considers the fact that the average loan size does not exceed and where it is today. N50, 000 (USD 315). As a regulated financial institution, we also provide savings opportunities for our clients. Many people know LAPO as a non-profit organization. When did the institution transform into a micro finance In terms of social performance, how has LAPO fared? bank? LAPO has established people. It began as a peoples' Let me correct an impression. LAPO as a pro-poor organization. The organization has always been committed development organization did not transform into a micro to finance-plus approach even before the current finance bank. What happened was that in 2010, the commendable focus on social performance management organization set up a micro finance bank and transferred the and standards. First, it was natural for LAPO to endorse the bulk of its micro finance operations to the new institutional Client Protection Principles. We have gone further to vehicle. LAPO as a non-profit organization is still involved identify and implement specific steps to put the principles in the provision of a range of social and economic into effect. For example, the elements of LAPO pricing are empowerment services particularly in rural communities. printed and displayed across our branches. Our price is the We came under regulation because we are convinced that the lowest in the Nigerian microfinance market. This can be future and development of microfinance is in an Continues on page 18 appropriate and enabling regulatory environment. There were some misconceptions in a particular case, mischievousness about borrowers making deposits into the loan fund from which they take loans. This was and is still a feature of traditional and non-profit thrift and credit schemes in rural Nigeria and indeed West Africa.

Let us look at the performance of LAPO. What will you consider are the achievements of LAPO?

The achievements of microfinance institutions Ayobami Obadiora, LAPO Health Manager, distributing handbills during Community Health Awareness Programme at Ekpoma, Edo State 17 further reduction of our rates in the second half of this year and in 2013. We can do so because LAPO will progressively reap the benefit of scale and therefore plans to pass the benefits to our clients in form of lower interest rate. I need to also highlight the fact that as a non-profit and even now as a regulated for-profit organization, the profits of LAPO have never been appropriated by anyone as dividends, This explains in part why LAPO has been able to scale up and expand services to many clients and also to provide vital social services such as scholarship awards to children of our clients. Health training organized by LAPO NGO Continues from page 17 Speaking in general term, one understands the emotion attached to pricing in microfinance but what is not helpful is verified easily. As a part of the re-orientation of our credit the tendency to demonize institutions and operators. How officers, the training modules for new and existing staff have else does one explain why one journalist was quick to been reviewed to include Client Relationship Management. categorize all payments including savings under interest In 2010, we changed the official designation of our Credit payment and erroneously used the figure to compute the Officers (COs) to Client Support Officers (CSOs). In 2007, rate of interest! She realized her error later. Good, but much that is even before discussions about social performance and harm had been done. client protection, LAPO as an NGO established a Client Relations Unit with regional client relationship officers Are there other non-financial services offered by LAPO ? appointed in 2011. To effectively address the concerns and As I noted earlier, LAPO is basically a finance-plus grievances of clients, the telephone numbers of client institution. We offer health and social empowerment relationship unit and top management staff are printed on the services to our clients in collaboration with other cover of client passbooks. In 2011, LAPO introduced the In- institutions. We support the education of their children. In Touch programme whereby every member of the 2010, LAPO began to collaborate with a major insurance Management Team is required to work out of the branch company to deliver microinsurance services to clients. Let office five days in a quarter. This has been very helpful in me give details. In 2006, LAPO won the Grameen Foundation Excellence in Microfinance Award. The award keeping touch with activities at the field level including how came with a cash prize of $10,000. LAPO used the amount our Client Support Officers relate with clients. These to set up a scholarship fund. Annually, LAPO makes initiatives have been acknowledged and regarded as contributions to the fund. The scholarship awards cover pacesetting even by our competitors. On transparency, secondary education. We focus on secondary education LAPO obtained the services of Microfinance Transparency because it is a known fact that children from low-income to determine its actual interest rates. households drop out of the education system at that level. A To enhance our reach to low-income households and total of 704 children have so far benefitted from the effectively measure the impact of our services, LAPO has scholarship scheme managed by a Board led by Professor commenced the implementation of PPI which is a tool for Christiana Okojie. In my over two decades of involvement measuring clients' progress out of poverty. in supporting women, I have come to realize that the greatest concern or aspiration of an average poor woman is the future of her children, which invariably means the education of her One of the criticisms of microfinance is in the area of children. This is so because poor women believe and rightly pricing. How do you rate LAPO on pricing? too that they are poor because they did not have access It is natural for pricing to stir up emotions when low-income to formal education. In LAPO, we have come across people are involved. Like most microfinance institutions, numerous forms of injustice arising from customs LAPO has received its fair share of criticisms on pricing. and traditions which poor women suffer. A common one However, LAPO offers the cheapest loans in the Nigerian relates to property inheritance. LAPO in collaboration microfinance industry today. As I said earlier this can be with LAPO NGO operates a Legal Aid Unit which has verified easily. We have also developed a road map for a been helpful in supporting clients in distress. Continues on page 19 18 Continues from page 18 point when we tried to acquire the software, there were few Another area is the provision of insurance cover. Besides untried ones in the market. We did not also get the right life insurance, our clients are provided with insurance for technical support. The worst part of it was that one of the fire in the market place, a risk they usually face. Another guys we turned to assist us in this regards used this particular policy that has excited and helped our clients is the medical challenge to hurt us. He was mischievous. cover for complications arising at child birth. Many poor women have been abandoned by their husbands in hospital Let us look at the microfinance industry in Nigeria. How is maternity wards for lack of funds to meet medical expenses. the industry faring? LAPO has taken this burden away from them and they are Like in most countries, growing a microfinance sector could very happy about it. be very challenging. The challenges are in the areas of policy and regulation, operating capacity and funding. What factors do you ascribe to LAPO's institutional Nigerian microfinance sector has had its fair share of these strength? challenges. The good news however is that all stakeholders There are several factors. First is our drive for excellence. particularly the regulators and the operators have shown We seek to learn. As I noted earlier, LAPO was not sufficient commitment to addressing the challenges. For established as a project of an international development instance, there is the certification programme which seeks agency. We never had a well formulated business plan at the to address skill gap in the industry. Hopefully, the proposed beginning. We grew through learning. While we learn, we re-financing facility will address the challenge of funding. innovate greatly as well. Periodically we do institutional As I have always said, I am optimistic. I see a vibrant sector review and renewal to address emerging challenges. For emerging in the next few years. Here is a nation with over instance the quality of our Board is good. In diversity of 160 million exceptionally enterprising people. This is a skills and experience, it is superb. This was noted in the fertile ground for micro-lending to thrive. To grow the Central Bank of Nigeria's comprehensive examination sector, I strongly feel that commercial banks must show report in September 2011. We have in 20 years built a strong some commitment not in the form of establishing service delivery systems and structures. microfinance banks. No! It should be in the form of building mutually beneficial linkages with microfinance banks. In Our institutional performances are reflective of our some other nations, for example India, there is a statutory operating systems. In the last examination by the Central requirement which makes it mandatory for commercial Bank of Nigeria, LAPO scored 84 points on CAMELS banks to allocate certain percentage of their loan assets to assessment. This shows clearly that LAPO is an outstanding the rural economy. Since most commercial banks do not financial institution. We settled for Deloitte Akintola have the appropriate structures to do this, they rely on strong Williams as our external auditors. Looking ahead, we have microfinance entities through on-lending and agency just completed a 5-year strategy formulation process arrangement. This approach is required in Nigeria if we are facilitated by Roland Berger, a renowned international to achieve meaningful financial inclusion. strategy consulting firm. The pillars of the strategy are People, Technology, Products and Performance Continues on page 20 Management.

What has been the challenges along the way? Of course, there has been challenges. There was the challenge of enforcing credit discipline. Rightly or wrongly, there is a prevalence of poor loan repayment culture in our environment. We were able to address this about twelve years ago. Perhaps the most challenging issue was around getting the right Information M a n a g e m e n t s y s t e m s . M o s t microfinance institutions have also tasted the bitter pill of automating data processing and reporting systems. At a A beneficiary of LAPO's savings reward promo expressing gratitude to management. 19 Continues from page 19 microfinance were to make adequate impact on poverty, Global microfinance has experienced some challenges in grants from donor agencies would be insufficient. They recent years. What is your perspective on this? argued that only commercial funds would be adequate. To understand the current state of microfinance and its Today key performance indicators are now financial apparent challenges requires an explanation of its history sustainability indicators. The good news however is that and issues which defined its growth. I am of the sense that global microfinance leaders and institutions are taking steps the challenge in microfinance has its root in its target; the to ensure that financially sustainable microfinance banks poor if you like. Secondly is what I may call its over promise and institutions work for the poor. Recently, key and lastly but most importantly is the commercialization of stakeholders in microfinance launched what have been microfinance which began at the turn of the century. termed 'Universal Social Performance Standards' which if Anything around the poor invokes a great deal of emotions complied with, will refocus microfinance on clients and and sentiments. When you mention the poor, people readily their welfare. think of charity. So providing financial services to the poor on terms which ensure institutional sustainability is bound to Are you excited over the success of LAPO? stir up emotions. We have seen that in some parts of Asia No. Not exactly in the manner you think. It is with the often exaggerated stories about microfinance- understandable. I have been a part of the organization right induced suicide cases. Other institutions globally have from the beginning. I have seen it grow gradually over the received some punches as well. New studies have since years. It is therefore impossible for me to see the spectacular indicated that suicide incidences are even higher among growth or success which others usually see. However, I am non-microfinance clients in some parts of India. Even with glad to see my colleagues, young Nigerians, traverse rural such scientific conclusions, people will still be sentimental about microfinance. Second, I think that in the celebration communities and urban slums to improve the lives of fellow of the power of microfinance as a poverty alleviation tool, Nigerians with our services. It thrills me. the impression was created that microfinance would end poverty. Many people are therefore looking forward to the What is the future of LAPO? end of poverty instead of assessing the enormous impact As I said earlier, we have just concluded a growth strategy microfinance has made on poverty reduction. Lastly is the which is comprehensive and formulated around a number of increasing commercialization of microfinance. This is pillars. We seek to reach a larger number of low-income ironical. Those who support the idea of taking microfinance Nigerians with a wide range of innovative financial and away from the realm of charity point at the fact that if social services.

LAPO MD, Godwin Ehigiamusoe, (middle) congratulating winners of the 2012 Central Bank of Nigeria (CBN) awards, Gladys Jasper (left) and Ikechukwu Onyemenem 20 LAPO News LAPO Disburses N20.5b To Micro-Entrepreneurs In First Half Of 2012

he Managing Director of LAPO Microfinance Bank while North-West and FCT trailed with N699 and N374 Limited, Mr. Godwin Ehigiamusoe has declared million respectively. Tthat microfinance has the potential to make meaningful contributions to poverty alleviation and overall Ehigiamusoe said the microfinance bank, in addition to national development. economic support also provided free micro-business management training, social and health empowerment Ehigiamusoe, who stated this while reviewing the services as well as awarded scholarships to needy children performance of the bank in the first half of 2012 added that of clients. the microfinance sector in Nigeria has huge potentials for growth. He attributed the performance of the bank during the He revealed that the microfinance bank disbursed the sum of period to the commitment of staff and support from local N20.539 billion to low-income people and owners of micro- and international enterprises in the first six months of 2012. The amount partners adding that represents 50.7 per cent growth over the N13.6 billion it management has disbursed during the same period in 2011. f o r m u l a t e d a growth strategy Analysis shows that owners of micro and small enterprises which is expected to received N20.2 billion while the sum of N339 million was increase its loan disbursed exclusively to food crop farmers. volume to fund Regional analysis shows that clients in South-West got the agriculture and highest loan amount of N11.1 billion followed by South- a l l i e d r u r a l South with N5.1 billion. Similarly, LAPO clients in North- Central received N2.1 billion, South-East, N1.2 billion economic activities.

LAPO Concludes Bullet Proof Manager Training APO has successfully concluded her year-long Other guests at the occasion included Sabina Idowu- Bullet Proof Manager Training for 34 of its Osehobo, GM, LAPO NGO, Jonathan Enadeghe, MD, Ivie Lmanagers drawn from its headquarters and regional Microfinance Bank Limited and Solomon Avbioroko, chief offices nationwide. facilitator of Smeep Consulting services, the franchisee of Crestcom USA. The Bullet Proof manager training, conducted under the franchise of Crestcom USA commenced on June 28, 2011 through June 26, 2012.

Congratulating the trainees, LAPO Managing Director, Godwin Ehigiamusoe, represented by General Manager, Moses Ehigiamusoe, stated that skilled and motivated workforce was critical to the success of microfinance practice in Nigeria. LAPO, he said, accords staff training and development top priority.

CBN Controller, Benin Branch, Mr. V.I.D Oligbo who was a special guest of honour at the occasion, urged other microfinance banks to emulate LAPO to achieve excellence. Moses Ehigiamusoe, GM, LAPO MfB Ltd, presenting Bullet Proof Manger Training certificate to Mrs Patricia Ogwu, Head, Micro Investment Support Services (MISS) Limited, a subsidiary of LAPO 21 LAPO News 582 Clients Benefit From LAPO NGO Malaria Services According to Sabina Idowu-Osehobo, General Manager, LAPO NGO, malaria is a leading cause of death especially among children and pregnant women and a primary cause of miscarriage, maternal anaemia, low birth weight, abortion and stillbirths in the country. She noted that proper environmental sanitation still remains one of the best safeguards against malaria infection.

Idowu-Osehobo urged women to demand for Intermittent Preventive Treatment (IPT) of malaria twice during pregnancy and thrice in special cases as well as to access free anti-malaria drugs and nets for themselves and their children at designated public health facilities. Clients undergoing malaria test She commended the Civil Society on Malaria, APO NGO empowered 582 clients in the first five Immunization and Nutrition (ACOMIN) for partnering months of 2012 with health sensitization and Lservices as well as organized health fora in target LAPO to organize this year's World Malaria Day with the communities across the country to mark the 2012 World objective to promote knowledge that will reduce morbidity Malaria Day which theme was "Sustain Gains: Save Lives: and mortality occasioned by malaria in Nigeria. Invest in Malaria Control".

LAPO Rewards Clients APO Microfinance Bank Limited has rewarded 250 Guests at the occasion, Mr. A.E Osha, Head, Development loyal clients with gift items worth N20million, for Finance Office, CBN Benin Branch, Chief David Edebiri, Ltheir participation in her savings promo and the Esogban of Benin Kingdom, Chief Nosakhare Isekhure, continued loyalty. the Isekhure of Benin Kingdom and Jane Osagie, Coordinator, International Reproductive Rights Research About 4,388 clients across 296 branches won different Action Group (IRRRAG) amongst others, appreciated prices inclusive of refrigerators, television sets, pressing LAPO for the kind gesture and urged other organizations to irons and wrappers at the event which held simultaneously emulate it. nationwide. Speaking on behalf of other recipients, Josephine Imaralu Speaking, Managing Director, Mr. Godwin Ehigiamusoe expressed gratitude to the board, management and staff of said the microfinance bank encourages and rewards clients LAPO for their unwavering commitment to constantly reward customers. who saves towards the expansion of their businesses, adding that LAPO has been providing a mix of financial services to owners of micro-enterprises, particularly women in Nigeria and Sierra Leone, for over twenty years.

He said while most people regard credit as vital to enhancing the income earning capacity of business people, the availability of convenient savings opportunities is critical to gradual asset building among members of low-income households, adding that through accumulated capital, they are able to make meaningful investment, plan for the future and effectively address the challenges of vulnerability. The Isekhure of Benin kingdom, Chief Nosakhare Isekhure, assisted by staff, presenting refrigerator to one of the LAPO savings incentive beneficiaries in Benin City 22 LAPO News

LAPO Staff Certified As Microfinance Bankers

Nigeria. Speaking at the induction and prize award ceremony in Lagos, Deputy Governor, Financial System Stability, Mr. Kingsley Moghalu stressed the need for training and re-training in the microfinance industry, disclosing that the revised microfinance supervisory guideline mandates operators to undergo the certification programme.

Represented by Director, Other Financial Institutions (OFIs), Mr. Olufemi Fabamwo, he urged operators of microfinance institutions to be proactive in their operations. While congratulating them, President, Chartered Efosa Igiewe facilitating staff training on Microinsurance Institute of Bankers of Nigeria, Mr. Segun Aina noted hree top management staff of LAPO Microfinance that 671 members successfully qualified for the award of the Institute's banking professional qualifications in the Bank Limited, Mr. Elijah Osadebamwen, head, examinations conducted under various categories in 2011. TOperations and Information Technology, Sam Nmoemenam, head, Banking Operations and George Iritobor, head, Recovery Unit, were among the 468 Highpoint of the event was the presentation of certificates, candidates recently certified as Microfinance Bankers as prizes and awards to the inductees. well as inducted into the Chartered Institute of Bankers of

LAPO Screens 135 Clients For Cervical Cancer s a part of the efforts to improve the health condition of its clients and women living in rural areas, LAPO NGO recently screened 135 Awomen for cervical cancer. The exercise was designed to assist clients detect cervical cancer early and respond to the challenge through prompt preventive treatment. The aim of the exercise is to mitigate the health and socio- economic implication of such ailments on LAPO clients and their families. The screening would be extended to other parts of the state. Cervical Cancer screening for LAPO MfB Clients

LAPO Screens 3,585 Clients For High Blood Pressure, Diabetes

LAPO screened 3,585 clients for high Blood Pressure (BP) and diabetes in the first five months of 2012, towards preventing and controlling incidence of the diseases amongst clients.

General Manager, Sabina Idowu-Osehobo who disclosed this said those with special cases were referred to health centres for medical treatment, stressing that health counseling and testing are major components of LAPO intervention programme.

High Blood Pressure Test 23 LA int P rod O M uce Y C s ...Improving Lives S HI AVI LD P NGS LAPO Microfinance Bank Ltd rod ’ RC:688867 uct An Easy Opportunity to Secure a Brighter Future For Your Child

Features How to Participate Voluntary 2 recent passport photographs No fixed amount required Application is free Not tied to any loan Withdrawal is at will Benefits Cheques are allowed for deposit Opportunity to build up savings for Children welfare You can save for more than one child Assisting Clients not to interfere with Opening amount is N200 and above their business capital Withdrawal to zero balance is allowed Who Is Eligible Existing Clients New Clients Client Relations Care Lines Head Office Abuja Region Alimosho Region Calabar Region Delta Region Edo Region Enugu Region Ibadan Region 07051192286, 07051192227 07051192226 07051192225 07051192230 07051192231 07051192229 07051192224 07051192220 Ikorodu Region Lokoja Region Ondo Region Osogbo Region Port Harcourt Region Surulere Region 07051093740 07051092223 07051092228 07051092232 07051092233 07051093741

Head Office Lagos Annex 18, Dawson Road, P.M.B 1729, Benin City, 65, Kudirat Abiola Way, Oregun, Edo State, Nigeria Ikeja, Lagos, Nigeria