In a scandal that exposes deep rot within one of Nigeria’s largest microfinance institutions, LAPO Microfinance Bank (MfB) finds itself engulfed in crisis. The recent jailing of staffer Abiodun Mayowa David for embezzling ₦1 million via an unapproved “self-loan” is merely the tip of the iceberg in a chilling saga of pattern of institutional malpractice, predatory exploitation, and shattered trust targeting Nigeria’s most vulnerable.
The Tip of the Spear: Fraudulent Self-Dealing Exposed
As reported by P.M.EXPRESS and confirmed by court documents, David, 25, brazenly granted himself the loan at LAPO’s Idimu branch between June and October 2023. His scheme unraveled only during an internal audit, leading to which led to his arrest by Idimu Division Police. Charged before Magistrate Mrs. O.A. Layinka, David pleaded not guilty but was remanded in Kirikiri prison until he could meet stringent bail conditions (₦300,000 with two tax-paying sureties). While David faces justice, this case begs a terrifying question: How systemic is this corruption within LAPO?
Beyond One Rogue Employee: A Legacy of Regulatory Wrath
David’s fraud is not an anomaly; it’s symptomatic of a deeper malaise at LAPO. Regulatory bodies have repeatedly hammered the bank:
- 2021 Sanctions: A Recurring Nightmare: The CBN had previously sanctioned LAPO in 2021 for similar offenses – withholding borrower insurance benefits and imposing excessive interest rates, directly contravening microfinance principles designed to protect the poor (Business Day).
- The Interest Rate Deception: Investigations by outlets like Punch Newspapers have consistently exposed LAPO’s practice of advertising low “flat” rates (e.g., 2.5% monthly) while obscuring crippling effective annual interest rates (EIR) often exceeding 100% APR. This deliberate obfuscation traps borrowers in perpetual debt cycles, a 2022 Punch report exposing the maths of this deception ignited public fury.
Customer Outcry: Voices of Exploitation & Despair
Online forums, social media, and complaints portals are littered with devastating testimonials from LAPO customers detailing exploitation. The anger is palpable:
- “Modern-Day Slavery”: “They call it microfinance, I call it micro-slavery,” fumes Amina K. on Twitter (X). “The interest is suffocating. You pay weekly, struggle endlessly, and the principal barely moves. They lied about the true cost! I regret ever walking into LAPO.”
- “Harassment & Humiliation”: “The recovery agents are monsters,” Abimbola T. posted on Nairaland forums. “They come to my shop shouting, threatening, embarrassing me in front of customers. They don’t care if you are sick or had an emergency. They want their money plus their outrageous charges, NOW.”
- “Hidden Charges Galore”: “Insurance I never agreed to! Processing fees! Administrative fees! It’s all hidden until you sign,” alleges Chinedu O. in a Consumer Rights Nigeria complaint. “The loan amount you get is much less than promised, but you pay back the full amount plus mountains of interest. It’s a scam dressed as help.”
- “Broken Promises, Broken Lives”: “I borrowed toiled to grow my petty trade,” shared Fatima S. on a Facebook MFI complaints group. “Instead, all my profit goes to LAPO. My business is stagnant, I’m trapped. Their loan didn’t empower me; it imprisoned me. They prey on the hope of the poor.”
The Self-Loan Scandal: Symptom of Weak Controls?
David’s ability to grant himself a substantial ₦1m loan without immediate detection screams raises deafening alarms about LAPO’s internal controls and governance. How could such a fundamental breach staff stealing directly from the vault go unnoticed for months? It suggests:
- Lax Supervision: Inadequate oversight at the branch level.
- Weak Audit Trails: Systems easily manipulated by insiders.
- A Culture of Impunity? Does a pattern of prioritizing aggressive lending over ethical compliance enable such as this fraud?
This incident erodes trust not just in LAPO, but in the entire microfinance sector meant to be a lifeline for financial inclusion.
The Staggering: Profiting from Poverty?
Despite these scandals and sanctions, LAPO reports massive growth. Its 2022 financials showed a Profit Before Tax of ₦28.3 billion a figure critics argue is built on the back of exploitative lending practices targeting the economically desperate. The contrast between its soaring profits and the CBN’s desperate sanctions for ripping off the system’s poorest clients is stark and damning.
An Institution in Crisis
The imprisonment of Abiodun Mayowa David is a headline-grabbing scandal, but it illuminates a far darker reality within LAPO MfB. Mounting regulatory sanctions, damning investigations into predatory interest rates, and a chorus of traumatized customer testimonials paint a picture of an institution fundamentally failing its mission. Instead of empowering the poor, evidence suggests LAPO is systematically trapping them in debt through deception and excessive charges, while internal mismanagement allows outright fraud to flourish. Until LAPO undergoes radical transparency, genuine client protection reform, and faces stringent, ongoing regulatory scrutiny, its claim to be a force for development rings utterly hollow. For countless Nigerians, LAPO isn’t a bank; it’s a burden.
When TRUETELLS Nigeria reached out to the bank they claimed that the former staff is not in jail.
