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The Board of Governors of the African Development Bank Group (AfDB) through its private sector window approved on Wednesday, October 1 a USD 12 million line of credit (LOC) equivalent in Nigerian Naira (NGN) to LAPO Microfinance Bank (LAPO MfB) in Nigeria.
LAPO MfB is the largest microfinance bank in Nigeria with 1.1 million clients and 327 branches currently operating in 26 out of 36 states in the country. Given its history of a group-lending model based on a community-based approach, LAPO predominantly focuses on low-income households and women (with females comprising over 90% of its total client base) by providing an average loan size of USD 190.
In spite of its lower-income client base, its total loan portfolio exceeded USD 144 million in December 2013 thanks to its efficient decentralized banking model as well as wide coverage and deep penetration of rural areas. LAPO has successfully achieved its goal to reach over 1 million clients by end of 2013, faster than planned, and targets to reach 5 million clients by the end of its five-year business plan (2013-2017). LAPO has 3,184 staff (1,311 men and 1,873 women staff) across 327 branches to prospect for new business and effectively serve its existing customers on the ground.
The LOC will support proposed project will support expansion of LAPO MfB to achieve its goal to serve 5 million clients by 2017 in Nigeria focusing on low-income individuals (predominantly women) and micro/small enterprises by providing affordable access to finance, saving, credit and insurance in urban and rural areas as well as by expanding its geographic coverage and number of branches. With AfDB’s funding, multifaceted development outcomes are expected for LAPO MfB to: (i) increase the proportion of poor households and small businesses with access to financial services in Nigeria; (ii) deepen its financial sector infrastructure, as it plans to expand their branch network across the country; (iii) promote an inclusive microfinance model that works for the poor; (vi) stimulate product development aimed at meeting diverse needs of low-income households and local enterprises; (v) enhance financial inclusion of women and female entrepreneurs; and (vi) support increased revenue of poor households involved in profitable micro enterprises and also generate more jobs across states in Nigeria.