Abstract
The Microfinance system in Nigeria and many sub-Sahara countries has suffered serious setback due to poor loan repayment. This study attempt at assessing the loan-repayment performance of Lift Above Poverty Organization (LAPO). LAPO in Nigeria was chosen to be investigated because of its profile of attaining one million borrowers and disbursement of one billion dollars in micro-credits to smallholders. Secondary data on LAPO micro-credits from different sources from 1990 to 2014 were analyzed using Simple descriptive statistics such as percentages, mean, t-tests and regression techniques. The results of the analyses showed at 0.92 repayment rate and 0.08 default rate, LAPO enjoys high level of repayment and a low default rate. As further shown by the results, this is spurred by the borrower experience, positive effects of the volume of loans borrowed, number of borrowers, number of credit agency staff, and volume of loans repaid. Incentive-driven system and further administrative re-engineering towards enhancing repayment performance is recommended.
Highlights
Micro finance/credit emanated from efforts to reduce poverty, promote income inequality and rural community development designed to encourage financial inclusiveness
The study investigated some important factors related to loan repayment performance drawing from the Lift Above Poverty Organization (LAPO)’s experience and making appropriate recommendations to inform policies
The result of analysis of factors that are strongly related to the repayment performance and the administrative performance using LAPO as case study are reported in the subsequent paragraph
Summary
Micro finance/credit emanated from efforts to reduce poverty, promote income inequality and rural community development designed to encourage financial inclusiveness. Arising from the successes of the Grameen Bank, new generation of credit providers brought the concept of micro finance to the forefront of poverty alleviation, providing relatively small loans to low resource individuals and families [8]. In recognition of this concept, the United Nations adopted Resolution 53/197 in which it proclaimed 2005 as the International Year of Micro Credit and requested that the observance of the year be a special occasion for giving impetus to micro credit programs throughout the world [27]. These studies concentrate on the effects of providing a large amount of money in the form of agricultural loans on the agricultural sector growth [10, 1, 22], with less emphasis on loan
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