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.
Ola Olukoyede, chairman, Economic and Financial Crimes Commission (EFCC), has announced that the body has recovered lost funds from the CBEX fraud scheme.
Olukoyede did not announce the amount recovered, but he assured Nigerians that the EFCC is taking action against the promoters of the scheme.
The EFCC Chairman emphasised that the suspects found are facing prosecution.
“We have found a lot of people culpable. Those who promoted that scheme are within our jurisdiction and have been arrested. So, at this moment, they are being prosecuted. And we can also say that money has been recovered, even though the process is still ongoing for us to finally forfeit it,” he said.
Olukoyede also urged Nigerians to exercise caution when investing their resources into online platforms.
“Ponzi schemes remain one of the most pervasive threats facing unsuspecting investors. The CBEX case is a clear example. We all remember the outcry that followed the collapse of the scheme, but these unfortunate situations are preventable. Nigerians must begin to conduct due diligence before committing their resources to such platforms,” Olukoyede said.
He also stressed that the body remains committed to fishing out the culprits and recovering the lost funds.
“It was only when the bubble burst that people wanted EFCC to perform magic and recover their money. In the case we investigated in Lagos, which we dubbed Operation Flush, we arrested a large number of foreigners involved in various cybercrimes, including CBEX. I want Nigerians to know that as of today, we have secured close to 150 convictions. Some of them are already serving their jail terms. And when they are through with that, we are going to send them back to where they came from. So we are monitoring them,” he added.
He urged the public to stay vigilant, assuring them that the body will see the case to the end.
“We are no longer the EFCC that drops cases halfway. Whatever we start, we will finish. Nigerians should trust us and believe in our capacity to do justice. Some of these cases are complex and may require cross-border investigations, but we are up to the task,” he said.
E-Financial
Financial Fraud in Nigeria Surges by 45 Percent, 70 Percent of Losses Linked to Digital Platforms – CBN
Central Bank of Nigeria (CBN) has raised the alarm over a significant rise in financial fraud cases in the country, revealing that fraud surged by 45% within one year, with 70 Percent of the resulting losses traced to digital channels, particularly unregulated virtual asset platforms.
Olayemi Cardoso, governor, CBN,
This was disclosed by Olayemi Cardoso, governor, CBN, in a speech delivered on his behalf by Muhammad Sani Abdullahi, deputy governor for Economic Policy, at a public lecture organized by the Economic and Financial Crimes Commission (EFCC) on Thursday in Abuja.
He added that findings from the CBN’s Financial Stability Report 2024 reveal a sharp increase in fraud.
“The CBN Financial Stability Report 2024 reveals a 45% surge in financial fraud cases, with 70% of losses linked to digital channels, including unregulated virtual asset platforms. Furthermore, over 30 Ponzi-style investment schemes exploiting digital currency narratives have been flagged by the SEC and other agencies.
“These developments pose major risks, including loss of consumer confidence, weakening of financial integrity and reputational challenges for Nigeria in the global financial system.
“In Nigeria, over $56 billion in crypto-related transactions were recorded between July 2022 and June 2023, making us Africa’s digital transaction leader. But this growth is not without consequences,” Cardoso stated.
Cardoso noted that while digital innovation has enabled broader financial inclusion, it has also introduced complex regulatory and security challenges.
“The present era of rapid technological transformation has made the adoption of digital financial services in Nigeria, including cryptocurrencies and tokenized investments, increase exponentially.
“The surge in digital innovation has brought benefits, such as greater financial inclusion and also given rise to complex challenges, such as fraud and money laundering,” he stated.
Emomotiti Agama, director general, Securities and Exchange Commission (SEC), emphasized the growing risks posed by virtual asset fraud to investor confidence and market integrity.
“Corruption remains a significant impediment to Africa’s economic growth, social development, and investor confidence.
“Today, as digital innovation transforms financial systems, we face new challenges, particularly the rise of virtual asset fraud and sophisticated investment scams, exploiting unsuspecting investors.
“These threats undermine market integrity, erode trust, and divert resources meant for sustainable development,” he said
Agama reiterated the SEC’s dedication to enhancing investor protection through increased education and awareness on how to identify and avoid fraudulent schemes.
He also emphasized the Commission’s efforts to update regulatory frameworks in response to emerging risks in virtual assets and digital investments, while promoting international cooperation to tackle corruption and illicit financial flows.
Malam Lanre Issa-Onilu, director general, National Orientation Agency (NOA), commended the EFCC for its efforts in combating financial crimes. He warned that the human cost of fraud extends far beyond the financial system.
“Experience has shown that deception is foundational to fraud, and if its impact goes far deeper, it undermines citizens’ confidence in their country. Every Naira lost to fraud causes far-reaching effects.
“It is about a child pulled out of school, a livelihood ruined, and an enterprise destroyed. These crimes are not abstract. They affect people, and our country pays dearly for it.”
He said the NOA had launched a nationwide campaign against the “get rich quick” mentality among Nigerians.
“At the National Orientation Agency, we believe that value orientation is our most powerful tool. That is why we launched a nationwide campaign several months ago against the spread of get-rich-quick syndrome. The initiative is helping all Nigerians, especially young people, to understand that lasting success comes from honesty and hard work, and it takes time.”
Hussaini Ishaq Magaji, registrar general, Corporate Affairs Commission (CAC), stressed the need for regulators, institutions, and stakeholders to remain vigilant and proactive in addressing emerging threats such as fraud, money laundering, and financial manipulation.
Magaji noted the CAC’s ongoing collaboration with the Securities and Exchange Commission (SEC) and other sector-specific regulators to strengthen corporate governance and enforce compliance, ensuring transparency and accountability within Nigeria’s financial ecosystem.
Emomotimi Agama, Director General, Securities and Exchange Commission (SEC) has expressed concern over the growing threat of digital assets fraud, warning that it poses a significant challenge to market integrity and undermines investor confidence.
Speaking in Abuja at an event to mark African Union Anti-Corruption Day, themed “Understanding Virtual Assets and Investment Fraud”, Agama noted that corruption continues to be a major obstacle to Africa’s economic growth, social development, and attractiveness to investors.
He stated: “Today, as digital innovation transforms financial systems, we face new challenges, particularly the rise of virtual asset fraud and sophisticated investment scams exploiting unsuspecting investors. These threats undermine market integrity, erode trust, and divert resources meant for sustainable development”.
He explained that the SEC, as a frontline regulator, remains committed to “strengthening investor education on recognising and avoiding fraudulent schemes.; Enhancing regulatory frameworks to keep pace with evolving risks in virtual assets and digital investments; and Fostering cross-border collaboration to combat corruption and illicit financial flows”.
He stated that the Investment and Securities Act (ISA) 2025 introduced key provisions to regulate virtual assets (cryptocurrencies, digital tokens, and other blockchain-based assets) in Nigeria, with Commission as the primary regulator for virtual assets classified as securities or investment products.
Agama stated that all Virtual Asset Service Providers (VASPs) (exchanges, custodians, brokers) must obtain SEC approval and meet capital, governance, and cybersecurity standards.
On risk disclosures, the SEC DG noted that all platforms must warn investors about volatility, fraud, and regulatory risks, warning that there are stiff penalties for market manipulation, insider trading, and Ponzi schemes.
“The ISA 2025 provides a comprehensive legal framework for virtual asset regulation, balancing innovation, investor protection, and financial stability. The SEC will continue to issue guidelines to ensure compliance while fostering a secure digital asset ecosystem.
“We urge all stakeholders—governments, private sector players, civil society, and citizens—to join forces in promoting transparency, accountability, and ethical practices. Together, we can build resilient markets that drive Africa’s prosperity”, he added.
In his remarks, Ola Olukoyede, Chairman of the Economic and Financial Crimes Commission (EFCC) described virtual asset fraud as a fast-evolving threat to national economic security. “Another rising criminal engagement that has a potential to outpace, even money laundering, on the continent is virtual assets and investment scam”
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