In a conference held jointly by AMSCO and Nigerian Planning Commission, a panel discussion was held on "Increasing Access to Finance" in the context of Nigeria.

1. Dr. Kamakhya Nr. Singh, CFO, LAPO Microfinance Bank http://ng.linkedin.com/in/kamakhyasingh/
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Panel Discussion 1 -- Topic: Increasing Access to Finance
Panelists:
1.Mrs. Eme Essien Lore, Country Manager, IFC Nigeria
2.Mr. Waheed Olagunju, Executive Director, Bank of Industry
3.Dr. Yemi Kale, Statistician General/CEO, National Bureau of Statistics
4.Dr. Friday Okpara, Director (Strategic Partnership & Liaison Small &
Medium Enterprises Development Agency of Nigeria (SMEDAN)
5. Dr. Kamakhya singh, Chief Financial Officer, LAPO Microfinance Bank Ltd
My Structure for discussion
- A. Why increasing access to Finance
- B. Aspects of increasing access to Finance
- C. Finance Plus for handholding and enhancing
capability
- D. Stakeholders to “Increasing Access to Finance”
- E. Providing access to those who have no access in
Nigeria
- F. What is being done by institutions like LAPO MfB

2. Dr. Kamakhya Nr. Singh, CFO, LAPO Microfinance Bank http://ng.linkedin.com/in/kamakhyasingh/
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A.Why increasing access to Finance
a) Empowerment – social, gender, geographical
b) Development – Economical, Financial – Development of self as also to
society/economy (as jobs get created and economic activity gets
enhanced)

3. Dr. Kamakhya Nr. Singh, CFO, LAPO Microfinance Bank http://ng.linkedin.com/in/kamakhyasingh/
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B. Aspects of increasing access to Finance
1. Increasing access to those who already have access –
A) for example providing adequate funding to MSME sector (e.g. Private equity,
venture capital, collateral Management, development capital, etc.), meeting newer
demands for financially included such as leasing finance, mortgage finance, pension
services, etc.
B) Peculiarities of Financing, as per the life cycle of SMEs
-Start-up – Angel funding – SMEs by the lack of scalability may not attract the
typical venture funding
-Term lending
-Working capital finance to help keep the operation running
C) The economics literature on enterprise financing has identified four main
obstacles that may prevent SME from obtaining adequate financing. These
obstacles are as follows:
a) The existence of marked informational asymmetries between small
businesses and lenders, or outside investors;
b) The intrinsic higher risk associated with small scale activities;
c) The existence of sizeable transactions costs in handling SME financing.
d) A fourth problem very often cited in the literature (and loudly lamented by
small entrepreneurs) is the lack of collateral that typically characterizes SME.
Biggest issue in Nigeria (especially, from formal/commercial banking
perspective) is that evaluation/due diligence of borrowers is collateral based
rather than credit-risk based
2. Missing Middle – those enterprises, which are in a category higher than
that of micro enterprises, but are below the category of formal SME
3. Providing access to those who have NO access

4. Dr. Kamakhya Nr. Singh, CFO, LAPO Microfinance Bank http://ng.linkedin.com/in/kamakhyasingh/
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C. Finance Plus – Handholding and Enhancing capability
It’s not enough to provide access to finance, when it comes to “micro” enterprises. At
least in the initial stages, handholding, through training and programmes on
financial literacy. The idea is that borrowers should be in a position to judiciously
use the fun, generate returns effeciently so that they benefit as well as are able to
return.

5. Dr. Kamakhya Nr. Singh, CFO, LAPO Microfinance Bank http://ng.linkedin.com/in/kamakhyasingh/
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D.Stakeholders to “Increasing Access to Finance”
a) Who are the stakeholders
i) Government
ii) Banking Sector
iii)Non-Bank Financial players – MFIs, Insurance, Mortgage, Leasing,
Pension agencies
iv)Service Providers and supporting Businesses – Telcos,
Network/Internet survice providers
v) Media, especially in creating awareness and bringing issues for
urgent attention
vi)Reserch Institutions, NGOs, public in general
vii) Customers
b)What interest would the stakeholders have in “Increasing Access to
Finance”
c) Need to have a strategy where a business case is made for all the
stakeholders, i.e. “Increasing Access to Finance” doesn’t take place at the
cost of business/profit of any stakeholder

6. Dr. Kamakhya Nr. Singh, CFO, LAPO Microfinance Bank http://ng.linkedin.com/in/kamakhyasingh/
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E. Providing access to those who have no access in Nigeria
a) Status of Access to Finance in Nigeria
EFInA (Enhancing Financial Innovation and Access) survey of 2014 report
- There are 93.5 million Nigerian adults, of which 59.8 million (64%) live in rural
areas while 33.7 million (36%) live in urban areas. About 40% of total adult
population is financially excluded.
- 47.8% of the rural population (28.6 million adults) and 24.8% of the urban
population (8.4 million adults) are financially excluded
- 52.7% of the rural adult population and 53.1% of the urban adult population) are
between 18 to 33 years compared
- Formal financial access is skewed towards adults that live in urban areas
- 52.6% of the rural adult population is female, while 55.1% of the urban adult
population is female
- 51.7% of the rural adult population own a mobile phone compared with 82.4% of
the urban adult population
- There are 59.8 million adults living in rural areas in Nigeria, of which:
o 52.7% are within the age bracket of 18 to 33 years, 29.7% have no formal
education, 51.7% own a mobile phone
b) Issues impeding Access to Finance in Nigeria
Barriers to Using Formal Financial Products for the Rural Adult Population:
DEMAND-SIDE BARRIERS
- Irregular income, Unemployed, Can’t read or write,
- Not aware of what products/services are available
- Do not understand the products
- Do not know the benefits of having the product
- Do not know where to get it from
- Do not believe in the product
- Use other ways to do the same transaction
SUPPLY-SIDE BARRIERS
- Banks are too far from where they live and work
- Cannot afford the product
- It costs too much to reach a bank
- Lack of trust – service, settlement of claims, high charges (r. o. intt. and others)
- It is not easy to use
- Services needed are not available
c) Use of technology in accelrating access to finance – Agency Banking, Mobile Money
Banking - Why Agents?
- Should address two of the major supply-side barriers to using formal financial
products such as – banks are too far from where they live and work, and it costs
too much to reach a bank
- Could also address some of the demand-side barriers to using formal financial
products such as – not aware of what products/services are available, do not

7. Dr. Kamakhya Nr. Singh, CFO, LAPO Microfinance Bank http://ng.linkedin.com/in/kamakhyasingh/
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understand the products, do not know the benefits of having the products, and
do not know where to get products from
d) Use a targeted Approach
Target –
i) Segment of Population/Geography - RURAL, YOUTH, WOMEN
ii) Means of providing access – TECHNOLOGY, AGENCY
iii) Environment – ENABLING, SECURE

8. Dr. Kamakhya Nr. Singh, CFO, LAPO Microfinance Bank http://ng.linkedin.com/in/kamakhyasingh/
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F. What is being done by institutions like LAPO MfB
o Status of LAPO MfB – network and financial strength
386 branches across 27 states (+FCT), with about 1.9 million
clients
Total Asset of ~US$242 million and Gross Loan Portfolio of
~US$207 million
Disbursement of 2014 - US$471 million; Projected for 2015 -
US$689 million
o Products and Services of LAPO for addressing diverse needs
of clients
Credit Products - Asset Loans, Business Loans, Enterprise
Loans, Agricultural Loans, Festival Loans, Affordable Housing,
SUFEN
Savings Products - Regular Savings, Festival Business Savings,
Golden Savings, Social Deposits
Insurance Products - Life, Fire, Child Delivery Expense
Innovative Products and Services - Affordable Housing, SUFEN,
Green Products, Agency Banking
o Women Empowerment - More than 90% of our clients are
women; about 60% of staff members are female
o Pillars of Strategy 2013-17 – Clients, Products, HR (Staffs),
Performance Management and Technology
o Non Financial products to bring additional benefits –
Scholarship, Legal Aid (for women who face threats of social
injustice), Health (Offer trainings which addresses issues on poor
nutrition, ill health, discrimination, injustice, gender inequity and
other entrenched obnoxious socio-cultural practices), Insurance