E-Financial
LAPO Navigates Microfinance through COVID-19
By Edward P. Eze
Microfinance Institutions (MFIs) provide the best access to banking services for the majority of such underprivileged populations whose livelihoods have been worst affected by the pandemic’s disruptions to transportation, customer service, supply etc.
Because these populations generally save little and rely on daily basic income, they are now in greater need of sustainable credit and other pro-poor services that were already provided for them by microfinance institutions before the pandemic hit.
For a country like Nigeria experiencing mass poverty, steep unemployment and other serious socio-economic challenges, the implications are dire.
It means that millions of poor citizens amongst the 40 percent of the population will find it difficult to get back on their feet without the sort of services and support that MFIs provide. It goes without saying that the effectiveness of Nigeria’s MFIs will be critical to rebuilding the economy.
One of the major players in Nigeria’s Microfinance sector is LAPO Microfinance Bank which has an extensive network of branches across the country and accounts for over 27 percent of the Microfinance (MFB) sector.
LAPO MFB’s ubiquitous presence across the country as well as its pro-poor and solid corporate reputation established over nearly four decades have made it the country’s preeminent MFB.
In fact, due to its popularity many Nigerians in the lower socio-economic groups use ‘LAPO’ as a generic name for all microfinance banks, the same way “Omo” has become a synonym for detergents and “Bournvita” used to be for cocoa beverages.
LAPO MFB has approached the challenges of the pandemic with its trademark rigour and thoroughness.
It has made significant strides amidst the historic disruptions brought on by the pandemic whiche emerged in the country just over a year ago.
It has sustained its support to low-income earners, even recording a total disbursement of N12.2 billion as loans to 152,446 rural farmers and owners of Small and Medium Scale Enterprises (SMEs) in 2020.
Announcing these milestones recently, Dr Honestus Obadiora, LAPO’s Acting Executive Director, said the loans were disbursed in 253 branches across 21 states. “We were able to achieve this in spite of the pandemic and we are committed to sustaining this financial support through our development plan to open more branches and reach more clients,” Obadiora said.
The N12.2 billion disbursement represents a 12 percent increase compared to N10.9 billion disbursed in 2019 with portfolio at risk standing at 18.62 percent.
LAPO MFB has recorded other notable achievements during the pandemic including the launch in February, 2020 of its second bond, a N6 billion fixed rate bond which within five months was already oversubscribed by N200m.
However, even with such stellar achievements, LAPO like other MFIs is weathering significant challenges due to the pandemic.
A survey by the Consultative Group to Assist the Poor (CGAP), a global partnership of more than 30 leading development organizations that works to advance the lives of poor people through financial inclusion, shows that microfinance institutions (MFIs) are dealing with rising ‘bad debts,’ which now account for up to 30% of their total loans.
The survey, conducted with the SME Forum, also shows that there is now a higher rate of defaults in loan repayments because of widespread business failures and even outright closures due to the pandemic.
This is a major issue because most MFIs operate with little savings, expecting that small loans will be repaid in a timely fashion and with a low default rate. The fallout of increasing defaults due to the pandemic is that MFIs in turn face challenges repaying banks and their investors.
As a result, the network of trust that is so vital to MFIs is threatened as investors are becoming more cautious about which MFIs they lend money to.
However, reports say majority of MFIs remain reasonably sound financially and widespread bankruptcies are not expected at this time. In the case of LAPO, positive developments such as the enthusiastic response to the recent launch of its bond signal bright prospects for its long-term health.
It is also noteworthy that the pandemic disrupted business operations of many MFIs considerably.
Like its counterparts, LAPO has had to alter physical and onsite operations especially at the start of the pandemic.
The bank demonstrated commendable foresight by closing down its on-site operations across Nigeria on Wednesday, March 25, 2020, ahead of the Government’s lockdown directives for Lagos, Ogun and the Federal Capital Territory.
proactive measure to ensure the safety of customers and staff is in line with LAPO’s well-known reputation for championing public health through investment and public enlightenment.
Interestingly, in a seeming foreshadowing of the pandemic a few months before it began, LAPO played an active role in promoting hygiene through hand washing on World Hand-washing Day, October 15, 2019.
The organization donated items to schools to create awareness about the importance of hand-washing which would turn out to be essential in the fight against Covid-19.
While the pandemic persists, MFIs continue to face challenges meeting physically, communicating, and collecting loan repayments from their clients. International industry experts believe that now more than ever, the value of digital financial channels such as agent networks, e-wallets and mobile banking are vital because these technologies allow for continuity of service and spare customers the risk and inconvenience of travelling to branches as well as protect staff of the MFIs.
LAPO is in a good position to embrace such recommendations to further digitize operations because of its already existing culture of technological innovation.
For instance, in February 2020, LAPO announced plans to implement Oracle’s Flexcube, a budding automated banking software that already powers more than 10 percent of the world’s consumer bank accounts.
The preeminent microfinance bank appreciates that effective digitization must take into account the reality that majority of customers don’t have reliable access to technology.
This is a key component of the conscientiousness required as MFIs navigate the realities of the pandemic and continue to support the poorest segments of the population.
Finally, robust policy support by government is required to assist MFIs maintain asset quality so that they can continue to give out new loans to low-income households or MSMEs as an empowerment and poverty fighting measure.
It is therefore critical for policy makers to make necessary adjustment to extant laws and regulations to achieve this vital objective in order to stave off deepening inequality and poverty to give those at the bottom of the ladder a life line at this very challenging time for the local and global economies.
*Eze is a policy analyst based in Lagos.
United Bank for Africa (UBA) has said that it has strengthened the security of transactions on its mobile application to stop fraudulent debits, unauthorised transfers and withdrawals.
Oliver Alawuba, Group Managing Director and CEO of United Bank for Africa
UBA announced this in a memo forwarded to its customers via email recently.
“We are pleased to inform you that we have further strengthened the security of transactions on the Mobile App.
“Updated authentication options now apply based on the value of transfers,” the memo reads in part.
UBA said in the memo that it had introduced authentication options for transactions of varying amounts to detect and prevent fraud.
According to the bank, transactions of N200,000 or more will now require customers to provide their Personal Identification Number (PIN) and a token number.
For transactions above N200,000 and N250,000, customers will be required to provide their PIN and a One-Time Password (OTP).
They can make use of their PIN and Biometric or PIN and Token numbers to authenticate such transactions.
Customers will be required to provide a PIN and OTP, or a PIN and Token number, when carrying out transactions between N250,000 and N500,000
For transactions between N500,000 and N10 million, customers must enter their PIN and Token to authenticate the transaction.
For transactions above N10 million, customers must use their PIN, Token, and Biometric to complete the transaction.
“The app will guide you, no need to memorise these thresholds,” the bank assured customers in the memo.
Central Bank of Nigeria (CBN), has said that it will be launching a new payment systems vision that will outline where the entire ecosystem is expected to be heading in the next three years.
Olayemi Cardoso, governor of the Central Bank of Nigeria
The vision was co-created with the financial technology players, the mobile money operators, payment service providers across the board.
This was announced by Muhammad Abdullahi, deputy governor, Economic Policy Directorate at the CBN, after the inaugural meeting of the Payment Service Providers Committee.
Olayemi Cardoso, governor of the Central Bank of Nigeria, inaugurated the first meeting of the Payment Service Providers Committee, to reinforce policy coordination, knowledge sharing, and also ensure collective problem-solving by the industry and by the central bank.
The committee is being chaired by Muhammad Abdullahi, CBN deputy Governor, Economic Policy, and co-chaired by Philip Ikeazor, deputy Governor, Financial System Stability Directorate.
Other members of the committee include stakeholders from all the key payment service providers that are licensed to operate in Nigeria as well as a number of regulators, the Nigerian Communications Commission (NCC), Nigeria Deposit Insurance Corporation (NDIC) and the Securities and Exchange Commission (SEC).
According to Abdullahi, the committee is expected to convene on a quarterly basis to interface with players in the industry, to ensure that they collectively solve some of the challenges that are facing the industry.
“The committee is to put Nigeria on the best footing forward in terms of payment system space. As we already know, Nigeria is a world leader in payment service provision.
“The kind of technology and fintechs deployed in Nigeria are far ahead of regional and continental peers. And what we want to ensure over the next five to 10 years is that we continue to maintain this leadership and be able to do much more for the Nigerian economy,” he said.
He stated that setting up the committee had become relevant with the remarkable growth trajectory seen in the digital payment landscape in Nigeria.
“In 2024 alone, the system processed over 11.2 billion electronic transactions, amounting to over N1.07 quadrillion. This is the first time that digital payments crossed the quadrillion naira threshold, representing significant growth.
“The momentum has continued. In 2025, we’ve seen significant growth, and of course, in the first few months of 2026 as well. This is an ecosystem that is significantly growing, that has significant implications for growth in Nigeria, for inclusive growth, for trade, and other significant positives for our country, he said.
The Deputy Governor, Financial System Stability Directorate, and co-chair of the committee, explained that the inaugural meeting, featured discussions such as preliminary issues around how participation is going to be, what the top-line issues are, and some of the committees that would be set up eventually.
He said, “What we intend to do is to be able to solve this in a much faster way. So in the past, companies would have to wait a significant amount of time to interface or lay their concerns to the central bank, and the central bank would have to do supervisory visits—on-site, off-site—to be able to carry out its responsibilities.
“But today, now, we have a platform that brings us all together, that has committees that are working towards specific mandates that can advance the payment systems space, you know, payment service provider space. So what we really have now is that a major bottleneck has been removed, which is the bottleneck of coordination, collaboration, and joint systems thinking”.
On her part, Foyinsolami Akinjayeju, chief executive officer of Enhancing Financial Inclusion and Advancement (EFInA), said that the inaugural meeting of the Payment Services Providers Committee was to ensure that innovation was not stifled.
She said, “The Payment Services Providers Committee will more importantly, allow for inclusive and sustainable growth through access, expansion, strengthening of trust to ensure that no segments of our economy is left behind”.
Also, Premier Oiwoh, managing director and chief executive, Nigeria Inter Bank Settlement System (NIBSS), lauded the initiative describing it as historic and a win for all Nigerians.
For Jay Alabraba, chairman, Association of Licensed Mobile Payment Operators, the initiative is a good one which will help sustain the nation’s growth through active participation of industry stakeholders.
Ghana becomes the first African country to integrate payment into its Citizens’ Identity Card, ditching US-based payment giants Visa and Mastercard in Africa.
The card is now widely accepted in over 190 countries for online, in-store, and ATM use.
It allows for secure purchases, international payments, and offers perks like insurance and emergency assistance.
Ghana Card holders can activate their card using the MyCitizens App or by dialling *402#
Recall that Ghana’s National Identification Authority (NIA), statutory body mandated to establish a national identification system, first announced in September 2025, that the card would allow users to make use of Automated Teller Machines (ATMs), make payments in stores and online, make international payments with over 200 countries, and access other services such as insurance and emergency assistance.
The NIA’s aim for developing this feature is to bolster financial inclusion within the country.
In Ghana, the credit card penetration rate was forecast at 0.6% in 2024 and was forecast to continuously decrease between 2024 and 2029.
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