Case study from Scale2Save partner LAPO Microfinance Bank in Nigeria tells how
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BRUSSELS, 24 July 2020 – Nigeria's largest microfinance bank, LAPO Microfinance Bank accounts for more than 25% of the microfinance market share. Known as a “pro-poor" organisation, LAPO seeks to improve the lives of people at the bottom of the pyramid. To do this, their mission is to provide life-changing business capital in the form of loans that helps move thousands of Nigerians out of poverty.
Even with roots as a credit-led institution, LAPO always has a vision to also offer its customers savings and insurance products that contribute to their resilience. Doing so helps people build reserves and prepare to absorb shocks when they happen. To this end, LAPO piloted My Pikin & I – a micro-savings product embedded with a free, one-year life insurance and scholarship benefits when customers meet certain savings milestones. This product primarily targets economically productive parents, guardians and women between the ages of 20 and 50 in the low-income bracket.
At launch, however, limited product uptake meant LAPO needed a deeper understanding of how savings and insurance can help customers' lives. It conducted in-depth "customer insight" research with IDEO.org, with results showing LAPO's largest customer group save up money for expenses around their children's education and unexpected outlays. Data also showed customers highly apprehensive about life insurance and confused by the product offering. They did not fully understand product benefits and found agents falling short on the help front.
With a more comprehensive understanding of its customer base, LAPO made a few important changes to its My Pikin & I savings and insurance product. Those included:
• A change in type of insurance offered from life insurance to health, disability, maternity and education. • Improved marketing materials and advertising activities through fliers, posters, digital channels as well as market activations. • Improved service delivery through agents. • Engagement at schools, market associations and trade unions to drive uptake. • Improved transparency through transactional SMS alerts.
• A change in type of insurance offered from life insurance to health, disability, maternity and education.
• Improved marketing materials and advertising activities through fliers, posters, digital channels as well as market activations.
• Improved service delivery through agents.
• Engagement at schools, market associations and trade unions to drive uptake.
• Improved transparency through transactional SMS alerts.
The changes stuck a chord with customers, as they responded positively to changes made. They now say it's easy to access via LAPO roving staff as well as through stationary agents who are business owners situated in communities. Customers use the accounts and save towards each milestone to qualify for the accompanying benefits. LAPO sees it can make a positive difference in people's lives.
While observing impact of their efforts, LAPO's savings and insurance bundle provides an innovative approach that allows low-income families to save up small portions of their income conveniently and flexibly in daily, weekly or monthly cycles. It caters to their needs in areas such as health coverage and their children's education.
Building up resilience in West Africa
Low-income customers, especially women and rural populations, find themselves disproportionately vulnerable to shocks such as natural disasters and violence. They are also the least prepared to recover when a shock occurs given their limited access to and availability of risk mitigating strategies and tools. Many remain underserved, despite evidence showing that well-designed financial products and services can play a critical role in increasing low-income families’ resilience.
The LAPO case study comes from a learning brief that showcases a range of well-designed financial products, services and engagement strategies that help boost low-income families’ resilience in countries like Cote d’Ivoire and Nigeria. Many low-income customers across these countries suffer from the inability to cover costs for unexpected expenditures and are unable to invest to ensure crops are climate resilient, though they rely on the crop proceeds. In rural areas of Cote d’Ivoire, farmers are often not prepared to cover large expenditures such as school fees as their cash flow proves irregular and affected by weather patterns.
The financial services providers featured in this brief, published by Itad, provide case studies on Scale2Save and Savings at the Frontier initiatives funded by the MasterCard Foundation. The case studies explore their approach to product development and delivery with the need for building customer resilience as a key consideration.