Some call their loans baits, others tag it ‘gbomule lantern,’ simply translated as ‘place breasts on lantern,’ yet, they fill the gap that commercial banks rarely fill. YEMISI OLUSINA writes on the sweet and sour tales trailing the operations of the Lift Above Poverty Organisation (LAPO) Microfinance Bank in Nigeria.
The jaw of a first timer at any microfinance centre of the Lift Above Poverty Organisation (LAPO), will for hours hang slack. This is because of the teeming population of their old clients and new members on each meeting days.
Like bees hovering round their hornets and eyes focused on the presumed cash-filled pocket of the bank, clients from different abodes throng the various centres of LAPO.
Mainly women, LAPO’s customers engage in various kinds of petty enterprises that no conventional bank will consider for any form of loan. For the latter, businesses such as hair-dressing, tailoring, consumables and others alike are petty and never reliable for loan grants.
This standing rule from regular banks, for many years rendered most small and medium enterprises helpless on issues of credit facilities.
With no hope of financial assistance for their dwindling businesses, therefore, the news of LAPO’s largesse to give out loans without collaterals was no doubt a respite. No wonder the absence of the familiar corporate environment at regular banks is of any relevance to these traders as they patiently wait for their turns to collect their loans.
But cheap and magnanimous as this may sound, LAPO’s loans come with a demand. According to Mrs. Remi Esan, a group leader of the bank in Alagbole, a boundary town between Lagos and Ogun State, although the purpose of LAPO microfinance Bank is to assist grassroots business women grow their various business endeavors, the group doesn’t just release money to people just by mere asking. They do not also need to enter any of the LAPO banks before getting the loans but are expected to search for a LAPO group in their vicinities, register and associate with them.
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“There is an application form to be filled by an intending member seeking loan. Applicants must come with a guarantor each and the guarantors must have established business outfits. In addition, they must have records of being in the business before approaching us for a loan,” she said.
As intermediaries between the management of the bank and the customers, these leaders are expected to verify the credibility of the clients. “A group leader and the secretary of any center of the bank, after going through the application form, always take time out to ascertain the applicant’s shop and home address as filled in the form. This will enable us to know how reliable the applicant is. Since we cannot know everyone who approaches us for assistance, the onus rests on the leaders to stand in the gap. This is why these groups are located at different places in a community. It helps us to know more about our members and to trace them,” she explained.
Reflecting on the promptness with which loans are released, Esan said it takes only one week for LAPO to approve the required money once an applicant’s details are verified. LAPO releases money in a maximum of one week. Her words: “We don’t believe in delay tactics because we know the importance of time in business. Time is money and the quicker our clients get the cash they want, the better it is for their businesses.”
Surprisingly, the majority of LAPO’s clients have no happy life-after tales. Their bitter experiences made many give the group all kinds of funny nicknames. Most popular of them was ‘gbomu le lantern’ translated simply as ‘place breasts on lantern.’ Others simply refer to the group as lion’s den.
Explaining the reason for these names was one of the clients, Mrs. Eunice Alabi. A proprietress of a hair-dressing outfit in Iponri, Lagos State, Mrs. Alabi said taking loan from LAPO was one huge mistake of her life.
“LAPO Microfinance Banks are sharks. I regret ever coming in contact with them. I had approached my bank, First Bank, for a small loan of N100,000 but was disappointed when I was told not to expect it as I neither ran a current nor salary account with them. They told me that if I wanted to change to a current account, I would have to run it consistently for a period of six months before I would be considered.” She recalled.
A desperate Alabi did not appreciate this option because of her dare need for fund to save her business, which was on the verge of decline at that period.
When one of her neighbours then introduced her to LAPO group and she got a sum of N40,000 within a week, Alabi thought her saviour had finally come. “It all happened like a dream. I got the money without providing any kind of collateral and with no stress at all. Yes, my shop became transformed and I became the envy of some of my counterparts who had thought an end had come to my business,” recalled an excited Alabi.
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But Alabi’s joy was short-lived. After a week of collecting the loan, the reality of the other side of the loan came heavily on her. She was to attend a meeting every Friday of the week and return N52,000 within 30 weeks.
“It was as if the money came with a curse. I paid every week with my blood. Paying back wouldn’t have been any problem if my business was moving as expected. I was able to pay easily for the first three weeks because I had removed some amount from the loan from outset. After then, it became very hard for me. The officials didn’t take it lightly with me. They threatened me so much I had to go and borrow from a family member to pay them off. I couldn’t sleep. My health went bad. Even my business went down. It was the worst venture I had ever taken and I have promised myself never to go that route again in my life,“ she told The Nigerian Xpress.
If Mrs. Alabi merely had a mere brush with the wrath of LAPO, Gloria Ibe’s wrath was full. For her, it was a relationship that launched her into a life of high blood pressure. Ibe said: “I had no history of high blood pressure until I was introduced to this group called LAPO. Shortly after I was loaned some money to continue my fashion business, one of my kids became ill so much that I spent all I had including part of the loan on hospital bills.”
Pathetic as Mrs. Ibe’s story was, the officials of LAPO were not moved. They were bent on the loan being repaid and made sure it was repaid.
Describing the officials as inhuman, Ibe went on: “I couldn’t make up with the every Friday meeting where we pay our loans because I was still mourning the child. I was surprised that these people could involve police. They traced me to my guarantor’s address and she disclosed my home address to them. The appearance of the policemen in my house was most embarrassing. The shock shoved my blood pressure up and it has remained so till today. To make the matter worse, most people thought I had committed a crime.”
To avoid a worse development, Mrs. Ibe’s husband, according to her, resolved to sell off some of their property to settle the debt.
Another loanee who preferred not to be identified said she was locked up in a toilet because she failed to pay up the debt.
“For about two weeks while I was repaying the loan I collected from LAPO, business became dull and this was because I used to sell my wares by the road side at Berger- Kosoko area. For weeks, tax officers did not allow us to rest; they were chasing us up and down, and packing our goods to their office. I lost some of my goods in the process of trying to escape from the tax officers and I couldn’t come out to sell anything. When the LAPO officials finally caught up with me, they locked me up in one bad toilet. They said that was a warning,” she said.
The fury of the finance house is not reserved for only defaulters. Where a defaulter could not be reached, investigations conducted by The Nigerian Xpress revealed that the guarantor of such a client is made to bear the brunt of the offence.
A 38-year-old Mrs. Abibat Haruna has this sad story to tell:
“I have my shop in the same block with the woman, Mama Aliya who borrowed money from them. She begged me to be her guarantor and I obliged. I didn’t know that she had other plans. We have been together for about two years and she respected me a lot. I had not heard of the strict rules of LAPO before and I never thought she would elope with their money and put me in trouble. When at first, she didn’t come to the shop, I thought she travelled. Innocently, I sent someone to go and check on her, not because I had any fear over the loan but I did that in the spirit of good neighbourliness. When the person who went to her house came back to say there was no trace of her I knew trouble was coming. Predictably, after two weeks of waiting endlessly for Mama Aliya’s appearance at her centre, the leaders simply went after Abibat.
“When these people came, all my explanations seemed to fall on deaf ears. They just told me to begin to pay because that was what I signed when I was standing in for Mama Aliyah. The other option they gave me was to be ready to go and spend some days at the police station. I had no other option than to agree to be paying. One good thing about this is that, I now know the meaning of being someone’s guarantor. I used to think it was an offer given to an important person. Now I know it is a trap set to put someone in trouble.” Abibat concluded.
It was not all bitter tales as some people who benefitted from their loans shared their happy life-after stories with this newspaper. Mrs Ruth Igbayilola is one of them. “This is my fourth year with LAPO Microfinance. My group is around Olori area in Akute. I started with N25,000 and now I can collect N100,000. I don’t think I could have survived without this group. With the loan I have bought three grinding machines that I use to grind pepper and corn in my area. No bank will give me any loan and this one comes handy any time I want,” enthused Igbayilola.
A leader and trader in sun glasses who simply identified himself as Mr. Gabriel is another beneficiary. Gabriel who used to trade in ‘second-hand’ clothes was robbed of N150,000 in the wee hours of October 21, 2010 during a business trip to Lagos from Onitsha. His business was grounded after that incident, forcing him to move his family to Lagos in 2011. For about two years he got himself involved in one menial job or the other in a bid to gather enough money to kick-start return to trading.
Every of his efforts, however, was to no avail until he was introduced to LAPO Micro-finance bank.
He has been with LAPO for a number of years and has no regret associating with the finance house. It was his wife that introduced him to LAPO. “She was the one who joined them first and when they started involving men, I also joined them. LAPO loan has given me relief concerning my business. As at when I joined, I had no relative, friends or any banks to assist me with money. When I approached them, I was given the money I needed and my business has continued to grow,” said Gabriel.
Explaining the secret of his consistence, Gabriel said he always set some money aside everyday to be able to meet up with his contribution by the end of the week “I don’t want to be embarrassed by anybody and since I was the one who signed to abide by the rule, I have no reason to default. I always ensure to save the money I have to return by Thursday when we meet aside, from the first day of the week. I have collected loan from them four times, I now have two shops and I can take care of my family from my business.”
Debunking the general belief that LAPO is evil was Mr. Samuel Ebenalu, the Manager of the Super Mega branch office of LAPO in Akute area of Ogun State. “LAPO is a financial institution founded to assist its customers especially those who are denied credit facilities by the regular banks. LAPO’s loans are not laced with charms. We don’t give clients physical cash, we give cheques that are cashed at any of the reputable banks closer to them. Since there is no demarcation of the money saved by LAPO bank and other monies in the various banks, it is simply impossible for anyone to say the one he or she has collected has been charmed. In other words, we are not the only one who save with banks, how can our own money be different from others?” asked Ebenalu.
Ebenalu, however, blamed complaining customers for their woes. “The truth of the matter is many of these people who approached us for loans to invest in their businesses are not honest with their intentions. They always have a hidden agenda. They divert the money to personal interests different from the purpose for which they requested the loan. Some of them spend the money on unprofitable ventures such as house rents, school fees. Some even expend the money on frivolities like weddings and burial ceremonies,” he pointed out. LAPO credit facility like others from other finance and commercial banks, he stressed, were to be dispensed on profitable ventures that would enable the loanee to repay every week.
“Those who are faithful to their promises are those who invest with the loan and once the business is the type that attracts sales every day, paying back will be easy,” Ebenalu explained further.
When probed on why many complain of the harshness of the manner with which the organization handles defaulters,
Ebenalu said the organization would not look the other way when people default as it was not a charitable organization.
His words: “The organization is a business venture on its own. Its purpose is not only to better its clients, it also needs to make profits, pay salaries and enlarge its outfits. If it does nothing to defaulters, it is likely to go bankrupt and collapse after sometime. No business-minded and focused person or organization prays for this.
If we don’t ensure that our money gets paid, new members especially the ones willing to be faithful will not have any access to the facility. So, it is in the interest of the general public that LAPO stays on in business.”
Strict and harsh as the rules of this microfinance are, Ebenalu said there are exceptions. “It is not everyone and every case that is handled harshly. If we look into a client’s record and we find out that he or she has not been defaulting, we give him or her time and allow the excuse to go. Where a health challenge is a reason, we demand for a doctor’s report and allow the situation to rest,” he said.
As a legal organization, Ebenalu stressed its benefit of insurance policy for clients. “Since LAPO is registered and supported by the Federal Government, it has an insurance policy for each client. Where a shop is razed by fire, we know that this cannot be the fault of the loanee. This is where the insurance policy comes in. There is an amount from every loan granted that is insured, so, our clients are all insured,” he said.
While confirming the bank’s practice of seizing defaulters’ valuables, Ebenalu said humble defaulters are often spared the rod. “If a defaulter will plead for not being able to meet up for the week, she may be pardoned. But some defaulters are never remorseful. They get defensive, use harsh words, call your bluff and ask you to do your worst. In cases like this, the organization will be left with no other option than to employ force to get its money.”
Meanwhile, group leaders are closely in support of the vision of the finance bank. According to one of them, Mrs. Abimbola Animasaun, popularly known as Mama Sarah in Papa Aguda, in the Surulere area of Lagos. There have been instances where members have billed themselves for the payment of some defaulters.
“In my group, we have had to pay the debt of a member when she could not pay again. She was duped by some fraudsters and so couldn’t go on with her business. We have one or two others who were also having issues with their loans. We agreed to share it among ourselves because if a centre is having too many issues with its members, the bank may decide to close the place up and this will affect some of us that the system is really assisting,” she said.
In spite of its stringent methods of operation, Ebenalu said the company, still had a record of irredeemable losses. “There are people who ran away with their guarantors and are not found till today. There are some who fell sick not because of any harassments from the bank and have suddenly died. We have some customers who are currently down with stroke and cannot do anything to repay their debts. We have had to write the loans off and continue with the business. Business is not smooth and favorable all the time. It is always with two sides. Only those who are strong minded and are focused stand the test of times in business,” he asserted.
Advising Nigerians on the need to be faithful to their promises for a buoyant business relationship with the bank at all times, the branch manager urged clients to desist from the act of greed that lead some to borrowing from more than a group, making it difficult for them to pay back. His words: “It is not easy to borrow and pay but if one will be faithful to pay back whatever amount loaned him, the business can only become bigger. I see no reason for anybody to borrow money from more than one centre, when you don’t really have the capability to pay back. This action of greed can only cause you more stress, anxiety, and trouble with the bank.”
Established by Godwin Ehigiamusoe in 1987, the Lift Above Poverty Organisation started with three women who borrowed N100,000 each in Benin City. While two were faithful, one of them wasn’t. The two faithful ones, however, paid up for the third one. Payable at first on a weekly basis and later on monthly, it has since grown bigger with many of its branches all over Nigeria.
