LAPO advocates DMBs, MFBs linkage for SME funding 

Godwin Ehigiamusoe, managing director of LAPO Microfinance Bank Limited, has advocated for greater access to funding for micro and small enterprises.

This could be achieved by effective financing linkages between deposit money banks and microfinance banks, Ehigiamusoe said while delivering the Professor Adebayo Akerele Annual Lecture of the Faculty of Management Sciences of the University of Benin recently.

He noted that a more sustainable approach to funding SMEs was ensuring that commercial banks with huge funds but do not have the appropriate flexible structures and procedures to engage and serve micro and small businesses, would channel funds through microfinance banks that were community based with the required flexible systems but do not have enough liquidity.

He said such partnership should be prompted by regulatory interventions, which require deposit money banks to allocate specified proportion of their loan assets to the micro and small businesses.

“There are lots of small scale entrepreneurs who do not have access to finance or even have the capacity to meet tough conditions set by deposit money banks when accessing business loans. This is why LAPO is in business to support small scale businesses by breaking the barriers set by commercial banks,” Ehigiamusoe said.

Meanwhile, at the same lecture, Ehigiamusoe said Nigeria microfinance banks provide an average loan value of N250 billion annually to SMEs.

He said in 2015 fiscal year, LAPO alone disbursed N113 billion and hope to disburse N134 billion in the 2016 financial year, saying the 2015 financial year disbursement figure accounted for 45 percent of the total sum disbursed by all microfinance banks in the country during the period

He opined that microfinance institution was potentially empowered to liberate the poor if properly delivered on a sustainable basis, and explained that microfinance institutions were playing vital roles in deepening financial inclusion by integrating the poor and their businesses into the financial system.

He also pointed out that little bits of financial services were transforming lives and empowering low-income people to become active participants in the national economic space.

He however called on governments at all levels to empower low income groups and small businesses through legislations that impose affirmative and continuing obligations on banks to deliver credit services to all segments of the society.