International Finance Corporation (IFC), a member of the World Bank Group, has signed an agreement to work with LAPO Microfinance Bank (MfB) Limited to pilot and rollout agent banking. This is to increase access to financial services for low-income customers, small-scale entrepreneurs and rural communities.
Consequently, the Corporation has provided a N2 billion (approx. $10m) loan to support LAPO MfB’s lending to micro-entrepreneurs. This is the largest investment IFC has made in a microfinance institution in sub-Saharan Africa.
As the first local microfinance organisation to successfully transform into a fully regulated national microfinance bank, LAPO MfB is a pioneer in the Nigerian microfinance sector. It has grown its client base from 700,000 in 2012 to more than 2 million across 28 of Nigeria’s 36 states, and it aims to increase its client base to up to 5 million by 2017.
In 2012, IFC provided a N800 million facility to LAPO, which contributed to the expansion of its lending activities.
Godwin Ehigiamusoe, CEO, LAPO MfB, said: “LAPO Microfinance Bank has remained committed to its goal of economic empowerment through access to finance. We are taking further steps to increase our reach to more low-income earners and more micro, small and medium enterprises. IFC’s long-term support has helped us and we hope this new project will lead to enhanced financial access for more financially excluded Nigerians.”
Eme Essien Lore, IFC’s country manager for Nigeria, said: “One of IFC’s core objectives is to promote access to finance that benefits the small-scale business sector as an engine of inclusive growth and job generator. Our relationship with LAPO MfB will help us reach out to the critically underserved low-income earning population of Nigeria, to improve financial inclusion and help grow the economy.”
Speaking with journalists at the official signing ceremony in Lagos, she challenged deposit money banks to see MfBs as asset class they could invest in, as she was concerned that Nigerian banks and other institutions were not lending to MfBs, which have a lot of benefits.
“If you look at the MfBs that are borrowing today are borrowing from CBN, the others are international lenders. There are institutions like IFC who are seeing the institutions like LAPO and investing in them, what about Nigerian institutions seeing the value of LAPO in Nigeria. There is a real opportunity to bring other people to the table,” she said.
Lore recognised the various intervention funds from the CBN, but said they were not enough to meet the needs of MfBs and agricultural sector.
“The various actors in this market who want to support entities like LAPO really have a lot of space to manoeuvre. We hope to see more support for high performing institutions like LAPO,” she said.
