Most Nigerian microfinance institutions (MFIs) reportedly continue to place conditions on borrowers who are seeking to take out loans, despite the stated policy of the Central Bank of Nigeria (CBN) to de-emphasize such requirements. Approval of a microloan from many MFIs remains contingent on factors such as posting collateral, depositing funds at the loaning institution and the payment of loan application and registration fees. Olufemi Babajide, chairman of the Lagos chapter of the National Association of Microfinance Banks (NAMB), argues that an MFI should not refuse to disburse a loan because a customer does not have collateral.
Godwin Ehigiamusoe, chief executive officer and managing director of Lift Above Poverty Organisation (LAPO) reports that, in conjunction with the MFI’s recent endorsement of client protection principles promoted by the US-based Smart Campaign, LAPO has reduced interest rates charged to its clients from 3 percent per month to 2.5 percent per month and discontinued its loan application fees. Mr Ehigiamusoe added that “We have projected that by January next year; we take it to two percent per month.”
In 2009, LAPO reported to the nonprofit, US-based Microfinance Information Exchange (MIX) total assets of USD 51.1 million, a gross loan portfolio of USD 26.8 million, return on assets (ROA) of 8.84 percent, return on equity (ROE) of 40.6 percent and approximately 195,000 borrowers.
By Jacqueline Foelster, Research Associate
About National Association of Microfinance Banks (NAMB): NAMB is a trade group of microfinance institutions (MFIs) that merged with the Association of Microfinance Banks in Nigeria (AMBN) in 2009. As of March 2011, the Lagos chapter had 187 member MFIs.
About Lift Above Poverty Organisation (LAPO): Established in 1987 in Nigeria, LAPO is a microfinance institution that provides savings, investment and loan products in order to address the needs of low-income households. The majority of LAPO’s clients are engaged in micro-, small and medium-scale enterprises. LAPO’s efforts earned it the “Pro-poor Innovative Challenge Award in Microfinance” in 2002 from CGAP (Consultative Group to Assist the Poor) and the Global Excellence Award for Microfinance in 2006 from Grameen Foundation USA. In 2009, LAPO reported to the nonprofit, US-based Microfinance Information Exchange (MIX) total assets of USD 51.1 million, a gross loan portfolio of USD 26.8 million, return on assets (ROA) of 8.84 percent, return on equity (ROE) of 40.6 percent and approximately 195,000 borrowers.
About Central Bank of Nigeria (CBN): Central Bank of Nigeria (CBN), established in 1958, is Nigeria’s central banking authority. As defined by the 1958 Act of Parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of July 2010, CBN reports total assets of NGN 7.37 trillion (the equivalent of USD 48.6 billion).
Sources and Additional Resources:
MicroCapital.org Brief, March 7, 2011, “Nigerian Microfinance Bank Classic Microfinance Ordered to Sell Assets to Pay Debts to Former Depositors”?, https://www.microcapital.org/microcapital-brief-nigerian-microfinance-bank-classic-microfinance-ordered-to-sell-assets-to-pay-debts-to-former-depositors/
MicroCapital.org Brief, February 22, 2011, “ACCION International’s Smart Campaign to Launch Certification Program for Client Protection in Microfinance”, https://www.microcapital.org/microcapital-brief-accion-international%E2%80%99s-smart-campaign-to-launch-certification-program-for-client-protection-in-microfinance/
MicroCapital.org Brief, October 1, 2010, “Central Bank of Nigeria Revokes Licenses of 224 Microfinance Banks”?, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-revokes-licenses-of-224-microfinance-banks/
MicroCapital Universe Profile: National Association of Microfinance Banks of Nigeria (NAMB), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=National+Association+of+Microfinance+Banks+of+Nigeria+%28NAMB%29
MicroCapital Universe Profile: Lift Above Poverty Organisation (LAPO), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Lift+Above+Poverty+Organisation+%28LAPO%29
MicroCapital Universe Profile: Central Bank of Nigeria, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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