By Florence Udoh, Leadership

Mr. Godwin Ehigiamusoe is the Managing Director and Chief Executive Officer of LAPO, a development and microfinance organisation operating in Nigeria and Sierra Leone. In this interview with FLORENCE UDOH, he speaks on the challenges and issues concerning microfinance banking in Nigeria.

What are the factors that led to the establishment of LAPO?
Let me begin from the socio-economic background. The prompting for the establishment of Lift Above Poverty Organisation (LAPO) could be ascribed to a number of factors. First was my ideological orientation as a young man. My years in university in the late 1970s coincided with the period of national enthusiasm and the desire to make Nigeria the greatest nation.

At the beginning of the decade we came out of the civil war strong. In 1975, we had a very charismatic leader in the person of Murtala Mohammed and Nigeria was at the forefront of the final de-colonialisation of Africa with massive support for liberation movements in Southern Africa.

Nigerians were excited and universities were centres of movements for a better Nigeria. This was the time I was in university. In conjunction with others, I devoted much time beyond my studies to sensitising the students who were obviously potential elites on how to make the nation greater through adequate attention to the condition of life of the poor.

The second factor was my involvement in the cooperative movement. My exposure to the cooperative movement began with my vacation job at the Cooperative Department in Benin City in 1980. I instantly believed, as I still do, that properly organised, cooperative societies are veritable institutional structures to improve the condition of members of low-income households, particularly in rural communities.

The final and perhaps immediate factor was the economic crisis in the early 1980s which culminated in the implementation of the Structural Adjustment Programme (SAP) in 1986. The effect of the programme was harsh on the people. That was the setting when I initiated LAPO as a non-profit organisation in the late 1980s in Ogwashi-Uku, now in Delta State.

How did it began?
LAPO began as a simple act. In the parish where I worshipped, I gave N100 each to three women, Felicia Monye, Monica Igwubuike and Obiageli Nwoko. At a major market in Ogwashi-Uku, in the evening of every market day, I would move around to collect repayment of N10 per installment.

It grew steadily. With steady repayment, a loan capital of N300 reached more women within a few days. The pace of development and the essential features of LAPO were influenced by my contact with the Grameen Bank of Bangladesh in 1989.

How did you get in touch with Grameen Bank of Bangladesh?
It was quite interesting. I read about Grameen Bank in Business Times, a Nigerian business paper which I doubt is still on the newsstands. Reading about Grameen Bank doing what I was doing was quite fascinating. I wrote a few lines to Dr. Muhammad Yunus as he was then known, highlighting what I was doing, but there was a problem with posting the letter.

In the features article on the bank in the Business Times, there was no street address. I simply addressed the letter to Dr. Muhammad Yunus, Dhaka, Bangladesh. Fortunately, a month or so later, I received a response with pamphlets and local newspaper cuttings on Grameen Bank. I was requested to forward a photocopy of the feature article on the bank as published in the Nigerian business paper, which I did.

In addition, I wrote to thank Professor Yunus for his response and documents and requested funding support. The letter was published in one of the early editions of the Grameen Dialogue, a newsletter of Grameen Bank. Fortunately for me, a Programme Officer at the West Africa office of the Ford Foundation, Frank Hicks, subscribed to the newsletter.

He read the letter and requested a meeting in Lagos. That was how the Ford Foundation provided the first external support for LAPO in July 1991. When LAPO won the Grameen Foundation’s Award for Excellence in Microfinance in 2006, we felt it was fitting to dedicate it to the Ford Foundation, and we gladly did.

The early years of the organisation were both challenging and exciting. Here I was, a young idealistic man brimming with ideas and with the grant support to implement the ideas. I felt it was the best thing that could ever happen to me. In addition, I had the fortune of attracting hardworking young men and women who, with little skills in microfinance (none had any such skills in Nigeria then anyway), were fantastic and highly committed.

We made our mistakes, we corrected them and here we are today. The unique thing about LAPO is that it did not start as a project of any international development agency. Perhaps LAPO is one of the very few microfinance institutions, if not the only one in Africa, which was not an international project but successfully scaled up to be what and where it is today.

Is LAPO still a non-profit organisation?
Let me correct one issue. LAPO as a pro-poor development organisation did not transform into a microfinance bank. What happened was that in 2010, the organisation set up a microfinance bank and transferred the bulk of its microfinance operations to the new institutional vehicle. LAPO as a non-profit organisation is still involved in the provision of a range of social and economic empowerment services, particularly in rural communities.

We came under regulation because we are convinced that the future and development of microfinance is in an 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 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 as its achievements?
The achievements of microfinance institutions, like any poverty-reduction interventions, are usually at two levels. In terms of service delivery, such as how many people are benefiting and the volume of services delivered, and second is the impact on the beneficiaries.

In terms of outreach and services, we have succeeded in creating a sustainable and regulated financial institution which provides a range of flexible financial services to a large number of people. LAPO’s client base rose from 355, 502 in 2010 to 518,187 in 2011, an annual growth rate of 46 per cent which is remarkable in a challenging environment, especially at a time when most microfinance institutions globally are recording negative growth.

The client base rose to 593,111 in May 2012. The volume of loans disbursed to clients has also grown remarkably. LAPO disbursed N13 billion, about USD 83 million, in 2009. This rose to N21.9 billion in 2010 and N31.58 billion in 2011. This is an average growth rate of 56.5 per cent. We target N50 billion as disbursement in the current financial year. This is an achievement when one considers the fact that the average loan size does not exceed N50,000. As a regulated financial institution, we also provide savings opportunities for our clients.