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Special Focus on Leading and Value-Driven MicroFinance Banks Growing SMEs in Nigeria

By Guardian Nigeria
02 October 2022   |   8:44 am
Since its inception in 2005 by virtue of the Central Bank of Nigeria’s (CBN) microfinance policy which made provision for short-term financing to MSME’s, microfinance banks have played a significant role in the growth and development of micro, small and medium-sized enterprises, which in turn has boosted the operations of these businesses in terms of capacity and growth

Since its inception in 2005 by virtue of the Central Bank of Nigeria’s (CBN) microfinance policy which made provision for short-term financing to MSMEs, microfinance banks have played a significant role in the growth and development of micro, small and medium-sized enterprises, which in turn has boosted the operations of these businesses in terms of capacity and growth.

Without mincing words, economic growth cannot be achieved without well-targeted and well-organized programs aimed at empowering SMEs through seamless access to factors of production, particularly credit facilities. The provision of microfinance services has proven to significantly increase the capacity for entrepreneurship, allowing individuals to engage in economic activities to become more self-sufficient, create employment opportunities, increase household income and create wealth.

In this special report, The Guardian showcases some MFBs that are driving SMEs development through an array of bespoke services. This includes Addosser Microfinance Bank, Letshego Microfinance Bank, Primera Microfinance Bank, Preeminent Microfinance Bank and Firmus Microfinance Bank.

Bayo Fabiyi, CEO, Addosser Microfinance Bank

ADDOSSER MICROFINANCE BANK: Widening finance options for Nigerian MSMEs

Addosser Microfinance Bank Nigeria Limited was established on May 27, 2008, and the Central Bank of Nigeria granted it an operating license on August 20, 2008. The bank began as a Unit Microfinance Bank, focusing on the retail market with few products and low deposits. It operated from five branches with fewer than 40 employees and less than N100 million in shareholder funds. The bank currently operates as a state-licensed microfinance bank with approximately 125,000 customers spread across 20 branches in Lagos State and ranks among the top 5% of approximately 900 MFBs in Nigeria.

How Addosser MFB is supporting MSMEs

Micro, Small and Medium Scale Enterprises (MSMEs) play a significant role in the economic development of most developing countries. Our approach to the market is holistic, combining advisory and lending services with a key focus on women and young entrepreneurs. Since its inception in 2008, the bank has empowered a total number of 159,326 MSMEs with approximately a N60billion in total disbursement, and over 60% of the total borrowers are women, which indicates that we have a bias toward supporting female Entrepreneurs. The bank also has a women’s Initiative tagged “SME Women Entrepreneur Club” (SWEC) which aims at improving the status of women through various programs such as Capacity Building, Business Clinics, Master Classes and Webinars among others. The SWEC community has a diverse membership base comprising micro and SME female Entrepreneurs, a mix of new entrepreneurs who are start-ups and more established business owners, with varying cultural backgrounds and business sectors, it serves as a platform providing easy access to finance through the female entrepreneur’s loans, access to expertise through tailored capacity building programmes/mentorships and access to market through networking & collaborations among members. Our SWEC community has empowered over 5,000 beneficiaries since commencement.

Thus, In line with the bank’s vision of “Improving the living conditions of everyday people through value-adding products and services”, Addosser would continue to provide tailored financial services and expertise to empower the unserved and underserved in building sustainable small businesses, thereby increasing wealth generation, job creations and reducing vulnerabilities and widespread poverty.

Strategies that have contributed to the growth of Addosser MFB

Our business strategy is hinged on three-pronged strategies of Structural Efficiency, Sustainable Growth and Enhanced customer experience leveraging on our strength as an Institution. Addosser MFB started operating as a Unit Microfinance Bank, with a focus on the retail business with few products and low deposits. It operated from five branches with less than 40 employees and Shareholder funds of less than N100 million. 

Our journey has seen us being upgraded from a unit to a state-licensed Microfinance bank with approximately 125,000 customers spread across 20 branches in Lagos state, the bank currently ranks amongst the top 5% of about 900 MFBs in Nigeria. As one of the leading Microfinance Banks in Nigeria, Addosser MFB has numerous strengths and competitive edges that enable us to thrive in the industry. These strengths not only help to protect the market share in existing markets but also help in penetrating new markets. Some of our strengths include people, products, processes and partnerships.

Growth of Addosser MFB

There is no gainsaying the fact that Microfinance institutions are faced with enormous challenges ranging from infrastructural deficits, leading to the high cost of operations, inadequate skilled manpower, and poor borrowing cultures leading to increased loan loss. In spite of this, Addosser MFB has continued to record unprecedented growth and upward trajectories on a year-on-year basis since its establishment in 2008 which is driven by our in-depth understanding of the needs of our target market and strong connection with our customers who have been and would remain at the forefront of our success stories.

Addressing defaults in loan repayments

Addosser has always been a cash-flow lender with credit decisions primarily based on the verifiable capacity of intending borrowers with good fallback positions. Some of the measures that have helped the bank in achieving the right balance between balance sheet growth, profitability and vis-a-vis portfolio quality /profitability include quality borrower selection through strict adherence to the bank’s credit policy, innovative lending tailored to ensure maximum value for borrowers, effective loan monitoring and collection system with zero tolerance for default. Others include prudent management of resources with effective budgeting and cost control, financial education/sensitization of borrowers on loan utilization and risks of over-indebtedness, as well as loan graduation policies driven by good repayment records.

Future plans

Our long-term goal is to become a one-stop shop and go-to financial partner for MSMEs, with a particular emphasis on young and female entrepreneurs. We intend to expand through a three-pronged strategy of structural efficiency, sustainable growth, and improved customer experience.

With our five-year growth and expansion strategy, we expect to significantly increase our market share by expanding our branch network from 20 to 50 branches and leveraging our agent banking network to increase the provision of innovative financial products to the unbanked and undeserved.

The bank’s short-medium-term plan specifically includes the following:


  • Becoming a National licensed MFB, increase Branch network from 20 to 50 branches and expand the business operation to other states.
  • Increase on our Monthly loan disbursement to MSME currently put at N2Billion monthly to at least N10billion monthly thereby empowering more MSMEs. 
  • Increase our social impact outreach using our 4Es principles of Empowerment, Education, Engagement and Environment. 
  • Grow customer base to a minimum of 1 million. 

Achieving the aforementioned goals would increase the bank’s contribution to bridging financial inclusion and MSME funding gaps, ultimately assisting in the reduction of widespread poverty in Nigeria. We believe that leveraging technology through strategic partnerships will assist us in achieving the aforementioned goals in the most affordable and cost-effective ways possible, given that one of the major impediments to financial access is cost.

Richard Tyotule, Head, Financial Inclusion, Letshego Microfinance Bank

LETSHEGO MICROFINANCE BANK: Improving Lives Through Bespoke Financial Services

Letshego Microfinance Bank is a world-class retail financial services organization that assists businesses and individuals by providing well-tailored solutions for Micro and Small Entrepreneurs, and government and non-government employees. Since its inception in Nigeria in 2016, the bank has recorded outstanding feats in building businesses and improving lives as a Pan-African financial services company with footprints in 11 African countries including Nigeria, Ghana, Kenya, Tanzania, Namibia, Mozambique, Rwanda, Lesotho, Swaziland, Uganda, and Botswana through an array of products and services designed to support every Nigerian across the thirty-six states. Letshego MFB Nigeria’s Head of Financial Inclusion, Richard Tyotule, discusses how the bank is assisting micro and small entrepreneurs (MSEs) in Nigeria.

Value proposition and growth strategy of the bank 

Letshego Nigeria Microfinance Bank is committed to increasing access to simple, appropriate, and affordable financial solutions for individuals and micro and small entrepreneurs (MSEs). Our mission is to improve people’s lives by providing access to long-term capital. Whatever the apparent value, funds used and spent correctly and productively can increase access to more funds and improve one’s future income earning potential.

The support of Letshego’s 24-year strong financial services brand and presence in 11 Sub-Saharan markets has been a key enabler in Letshego’s steady growth in the Nigerian financial services sector. Letshego Nigeria MFB benefits from Letshego Group’s regional experience and is a part of the company’s ambitious digital transformation strategy. Recently, we launched our flagship LetsGo Digital Mall, a digital banking platform where our customers can access a variety of retail financial solutions such as Digital Lending and Savings solutions, as well as multiple access channels such as our LetsGo App and LetsGo Nation at www.letsgo.letsgo. 

Overcoming challenges faced in the Nigerian business environment

Despite the challenges of running a business in difficult economic times, Letshego Nigeria Microfinance Bank (MFB) has remained resilient. Letshego Nigeria MFB has been able to leverage our pan-African presence since the acquisition of FBN Microfinance by Letshego Group three years ago, bringing in global solutions and tailoring them to meet evolving local customer needs. Given the current market conditions, we have implemented stringent cost-cutting measures and digitized our processes in order to develop innovative digital solutions that provide increased value, access, and convenience to our customers. 

How Letshego MFB is supporting Nigerian MSEs

Letshego is a Setswana word meaning ‘support’. We support MSMEs by offering simple, appropriate, and accessible financial solutions tailored to their needs in impactful sectors such as housing, agri-finance, education, and healthcare. We provide a wide range of innovative Small Business solutions, as well as customized solutions, through the LetsGo Digital Mall, our flagship online platform. Among these solutions is the Step-Up Loan, which is intended to assist MSEs in improving business capital, expanding business, or acquiring a business asset, thereby enabling their growth. 

We offer a wide range of innovative solutions that are geared toward Small Businesses and Micro and Small Entrepreneurs (MSEs) as well as customised solutions through the LetsGo Digital Mall, our flagship online platform. Some of the solutions we offer to Small Business Owners and Micro and Small Entrepreneurs include the following: 

  • Step Up Loan – Step up is a business capital improvement loan to help Micro and Small Entrepreneurs to improve business capital, expand business or buy a business asset, thereby enabling their growth. 
  • Education Loan – Education loans are geared towards schools and school owners who want to improve their businesses, for instance by expanding new blocks, building modern laboratories, or purchasing assets such as purchasing a school bus to safely transport students. Letshego Nigeria MFB’s Education Loan also caters for Teachers, Vendors of Edu stationery and equipment and parents for school fees payments. 
  • Agriculture Loan – Our Agriculture Loan is a loan for farmers, processors of farm produce, storage, agricultural equipment dealers and other areas in the value chain.

Addressing defaults in loan repayments

Due to current economic pressures, inflation, and the rising cost of living in Nigeria, our customers may have difficulty balancing competing priorities such as meeting the needs of their immediate families and making mid to long-term investments, including meeting financial obligations such as loan repayments. We have automated our credit review process and credit scoring methodology over the last 18 months, which improves Letshego’s lending risk mitigation and loan book credit quality.

Government’s role in strengthening MFBs

Micro and Small Entrepreneurs (MSEs) are a credible engine of entrepreneurial growth, job creation, and economic development, and governments around the world have begun to ask what they can do to encourage the growth of SMEs and enable them to contribute to the national economy. The most common challenges encountered when starting and growing a Small Business, Micro and Small Enterprise are financial ones. Governments can do a lot to help Micro and Small Entrepreneurs overcome financial and operational challenges, as well as the general business and marketing challenges that they frequently face.

More government support for MFBs should begin with encouraging more collaboration over competition. The government should develop policies that support MFBs that are not owned by commercial banks, as this increases public trust in MFBs. The public’s and MFB’s partners’ perceptions will be influenced by government support.

FIRMUS MICROFINANCE BANK: Adding Value To SMEs For Economic Prosperity

Firmus Microfinance Bank is an independent microfinance company providing financial services to individuals and SMEs. The institution was founded as a response to the need for access to banking services for low-income households and businesses.

With a vision to be the preferred partner in retail financial services that delivers quick solutions to the underserved customers in Nigeria, Firmus MFB is on a mission to provide a platform for quick, efficient and effective services that ensures our customer’s needs are met real time. Bolanle Izebvije Monite the managing director/CEO of the bank speaks on the products offered by the bank and how the bank is growing SMEs in Nigeria.

As a stakeholder in the microfinance industry, what strategies have you adopted over the years that has helped in expanding your portfolio at Firmus Microfinance Bank?

Firmus MFB has taken necessary steps to accommodate SMEs, market traders, and salary earners by giving facilities as low as N50,000.00. Firmus MFB also has group loans, School fees loans as well as asset finance loans.

How would you describe the growth of Firmus Microfinance Bank given the challenges peculiar with the Nigerian business environment?

Firmus MFB has integrated sustainability into its core businesses by incorporating Economic & Social Governance considerations as it has helped us predict and mitigate risk in our operations and business performance.

MSME are important to the economy of any nation, but these categories of businesses are faced with a few challenges, particularly access to funds, how is Firmus Microfinance Bank supporting these kinds of businesses?

Firmus MFB is currently giving these categories of businesses access to quick funds with limited and less verbose processes. However, all necessary documents are well captured. It’s about understanding the world around us, both in terms of technology and improving on strategies. Firmus MFB is proud of our contribution to maintaining this continuity in the retail lending industry.

With rising economic uncertainties and attendant defaults in loan repayments, what measures have you put in place to ensure your balance sheet is not threatened?

Firmus MFB has institutionalised the use of direct debit platforms like RECOVA, REMITA and NIBSS. Proper address verification is done on both applicants’ and guarantors’ addresses, as well as the use of cheques and modern technology to drive repayment.

How do you think the government can further strengthen the operations of MFBs, to further improve their efforts in growing SMEs in the country?

Provision of intervention funds directly to MFBs and not through DMBs. Pronouncements that will restore confidence in MFBs on lending facilities that MFBs will disburse directly.

What are your projections for Firmus Microfinance Bank in the next five years?

To go fully digital before the year 2022, become a national player by 2023, grow our customer base to over 2 million by 2023, support Farmers, become the preferred platform for other fintech, to be the preferred partner in retail financial services that delivers quick solutions to the underserved customers in Nigeria.

Engr. Ekeocha John Odinaka, CEO, Preeminent Microfinance Bank


Preeminent Microfinance Bank (PMFB) was incorporated by the Central Bank of Nigeria on the 13th of May 2019 to provide financial services to small and medium-sized businesses. In just three and half years of existence, the Bank has played a significant role in the growth and development of micro, small, and medium-sized enterprises in Enugu state and beyond, strictly adhering to the policies and guidelines of the Central Bank of Nigeria. PMFB has stimulated economic growth and increased the capacity for entrepreneurship and business development through its various well-targeted financial services and commitments, thereby empowering the numerous SMEs in its clientele.

As a result of these financial engagements and services, Preeminent Microfinance Bank has joined the league of wealth creators, poverty alleviators, and business growers in Nigeria. It is noteworthy that the contributions of the bank to Nigeria’s economic growth occurred at a time when Nigeria and many other countries around the world are experiencing an economic crunch and downturn as a result of the devastating effects of COVID-19, the war in Ukraine, and global inflation.

The unprecedented growth that PMFB has experienced in such a short period of time speaks volumes about the bank’s ingenuity, tenacity, dexterity, and commitment to providing maximum and satisfactory services to its customers. The Board of Directors, management team, and staff of Preeminent Microfinance Bank have over the years engaged in intensive, purposeful, and customer-oriented marketing that has resulted in a two-way growth for both the bank and its customers, driven by strict adherence to its mission of being a top ranking microfinance bank, and the core values of integrity, reliability, competence, excellence, and stability.

According to the Managing Director, Engr. Ekeocha John Odinaka, the bank has followed a strategy of intensive marketing and customer appreciation since its inception. “Strategic acquisition and adaptation of financial technologies is another important strategy that has resulted in PMFB’s unprecedented growth and success.” The management of the bank recognized the competitive nature of the banking environment from the beginning. “It was clear that survival and growth in the industry could only be achieved through the use of enabling resources such as the most recent banking technologies and applications,” he explained.

PMFB provides real-time services to its numerous customers, regardless of their location, by deploying a dedicated mobile app and user-friendly internet banking platform. The obligations of balance enquiry, request for services, issuance of instructions, and other services can be met from anywhere in the world. This is in addition to other e-channel products and services like ATMs, POS, mobile banking, and the use of USSD. 

Odinaka went on to say that the bank has always been committed to assisting medium, small, and micro enterprises (MSMEs) by offering a variety of products designed to help these businesses reach their full potential. “One such product is the micro SME loan, which is specifically designed to provide credit facilities to MSMEs in our catchment area, and the testimonies are clear for all to see,” he said.

On how the bank is dealing with loan default, which is a major issue for financial institutions, the astute CEO explained that the bank has put in place stringent measures to prevent loan default. According to him, such measures include proper verification of guarantors and the implementation of daily and weekly repayment options as opposed to a monthly repayment plan, which has helped to reduce the default rate to the barest minimum.

He urged the government to further strengthen the operations of microfinance banks by reducing taxes on MFBs that finance SMEs as a means of encouraging them to broaden their scope.

True to its name and vision, PMFB has quickly become the preferred microfinance bank in its core market. The bank has grown by leaps and bounds, with a near-100 percent increase in staff strength, turnover, deposit base, and profit growth. To be recognized as one of the ten leading and value-driven MFBs growing SME’s in Nigeria by Guardian Newspapers in its October 1st 2022 edition is a testament to the management team’s dedication and commitment to meeting the needs of the customers. It also attests to the enormous contribution made by the Preeminent Microfinance Bank in stimulating economic growth in Nigeria.

“Our goal is to become the preferred microfinance bank in Nigeria as we work to obtain a national banking license in the future,” he said of the bank’s future plans.

Unwana Esang, CEO, Primera Microfinance Bank

PRIMERA MICROFINANCE BANK: Partnering MSMEs For Growth and Wealth Creation

Primera Microfinance Bank Limited, a subsidiary of Primera Africa Group (“PAG”), is a fully licensed technology and impact-driven bank that promotes growth and financial inclusion by providing financing to individuals, households, and Micro, Small, and Medium Enterprises (MSMEs) (MSMEs). Primera MFB is an emerging leader in the Nigerian microfinance industry, with a strong balance sheet, an experienced Board of Directors, and a competent hands-on management team. Primera MFB, which is licensed by the Central Bank of Nigeria (CBN) and has deposits insured by the Nigeria Deposit Insurance Corporation (“NDIC”), has established a strong presence in the market and knowledge of the market in order to provide value-added products and services to its numerous clients. Unwana Esang, the CEO of the bank, discusses a variety of topics, including how the bank has expanded its operations through the use of technology.

Strategy that sets Primera MFB apart

Over the years, our primary strategy as a bank has been to leverage technology and digital transformation to deliver best-in-class products, services, and client experiences to enable the growth of the individuals and businesses we serve. These have been driven, in particular, by a strategic re-engineering and repositioning of our operational processes, business architecture, employee productivity, and market focus over the last two years. Our four must-win objectives are to significantly improve stakeholder and customer satisfaction, maximize top-line revenue growth, boost employee productivity, and improve operational efficiency.

Survival in the midst of economic crisis

Our bank’s growth is due to the success of our business plan, which is based on the unwavering support of our satisfied customers. We began our transformation into a digitally-driven bank with the successful upgrade of our core banking application and associated enterprise technology platforms. Furthermore, we began re-engineering and continuous improvement of our business processes, which resulted in significantly improved operational efficiencies and an expansion of our value propositions in the personal and business banking sectors. Despite the extremely difficult operating environment, these significant gains in key business and growth indicators were achieved.

How Primera MFB is supporting MSMEs

We are committed to helping Micro, Small, and Medium-Sized Enterprises (MSMEs) thrive, create wealth for our people, and add value to society. As a bank, this is critical because, according to available data, MSMEs account for over 99% of registered businesses in Nigeria, contributing 46% of our GDP while employing over 87% of our workforce. We have developed efficiencies to optimize our lending processes, making our financing lines more accessible and available to our highly valued MSME clientele in a time and cost-effective manner, to assist in addressing the funding gap for MSMEs, which was determined by the CBN in Q3 2021 to stand at N617bn. Primera MFB has demonstrated a consistent commitment to contributing to Nigeria’s economic growth by strategically focusing on key growth sectors in the Nigerian MSME space, with nearly N6 billion in loans provided to MSMEs so far this fiscal year alone.

Approximately 26% of our financing lines were made available to female entrepreneurs in the current fiscal year, more than doubling the 13% share recorded in 2021. Our SME Clinic initiatives are primarily aimed at empowering MSMEs and entrepreneurs by assisting them with company incorporation, financial and economic literacy, sales and marketing assistance, bookkeeping expertise, branding assistance, human capital management, and legal advice. We have created a comprehensive and well-resourced ecosystem to put MSMEs on the path to long-term growth through this initiative.

Dealing with defaults in loan repayments

We have significantly improved our lending and credit underwriting processes and practices by enhancing our ability to assess creditworthiness from loan origination to repayment and closure, enhancing the effectiveness of our KYC and customer onboarding practice, deepening the effectiveness and accuracy of our credit underwriting systems, improving our credit administration systems, expanding predictive early warning capabilities, and deepening our collections and recognition practices. Where our clients are experiencing cashflow challenges, we have developed flexible asset restructuring mechanisms that allow our esteemed clients to meet their repayment obligations and fully repay their loans with greater ease and support.

How microfinance banks be strengthened in Nigeria

Microfinance institutions are especially important for promoting financial and economic inclusion. We believe that supporting the microfinance industry is a key priority of the authorities in Nigeria, and the strong drive for financial inclusion and the development of supporting infrastructure around that, are a testament to this commitment. Further measures will be helpful, such as extending support to the microfinance sector to improve liquidity flows amongst banks in the sector. Additionally, support for players in the microfinance sector who focus on supporting vulnerable segments of the population will go a long way to achieving financial and economic inclusion. It is important for the government to partner with Microfinance Institutions (MFIs) to develop region-specific intervention programs that address challenges around the lack of access to finance, and that seek to meet the financial and economic inclusion needs of each part of the country. Even
stronger engagement with the Nigerian Association of Microfinance Banks (NAMB) by the government and our regulatory and monetary authorities will always be welcome. This will augur well, not only for the microfinance institutions in the country but also for the MSME sector and the nation at large.

Positioning for the future

Primera Microfinance Bank aims to become Nigeria’s preferred banking partner for individuals and SMEs over the next five years. We are leveraging relevant financial technology to achieve that strategic goal, and we are transforming ourselves into not only a best-of-breed and client-centric service provider but also one of the most enjoyable places for young Nigerian professionals to pursue and fulfil their career goals.