CLIENT EXIT SURVEY by liuqingyan

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									              REPORT OF THE FINDINGS FROM THE
                  LAPO CLIENT EXIT STUDY
                        NIGERIA 2003




                      Submitted by Stanley A. Garuba




                               August 2004




Plot 6, S & T Road, Uselu
P.M.B. 1729, Benin City
Edo Sate, Nigeria
Tel. 234 052 600072/600756
Fax: 234 052 600756
Email: lapobn@yahoo.co.uk
        lapo@infoweb.abs.net
                                                            LAPO Client Exit Study           -1-


                                 EXECUTIVE SUMMARY
Introduction
This client exit study is one the activities designed to advance the implementation of the
LAPO Imp-Act Project. It was implemented during the second year of the Imp-Act Project.
The primary consideration that led to the design of the client exit study was for it to serve as a
learning process towards the development of the impact assessment s ystems. However, the
study was equally relevant to LAPO because of the fact that it was experiencing increasing
exits rates. Although LAPO used to keep client withdrawal record, this record contained only
very general reasons why some clients have decided to leave the programme. Those reasons
were basically recorded by the Credit Officer and were subject to the perception of the staff,
and for record purpose only. During the first year of the implementation of Imp-Act Project
the withdrawal record was reviewed across selected branches as. At the end of the review,
little or no understanding was gained in terms of the underlining explanation of clients exit.
Consequently, a formal client exit survey procedure was considered, to find out why clients
were withdrawing from LAPO.

Few basic exit questions were set out to find explanations for exit problem, these include:
determining those who are leaving the organisation; why are they leaving and the explanation
behind their reasons for leaving?

Methodology
The design of the exit survey questionnaire was based on the SEEP/AIMS Client Exit Survey
Tool. The process of the study spanned through the last quarter of 2001, when the exit
instrument was first developed to the first quarter of 2003, when the quantitative data was
collected. The quantitative survey was implemented from January to March 2003. The data
collection process was basically the business of Credit Officers who conducted structured
interviews to gather information from clients who exited during the first quarter of 2003 from
13 branches and in 71 unions. Branch Managers and Area Managers reviewed the returned
questionnaires and crosschecked the data collected. In the end one hundred and thirty-two (n
= 132) completed questionnaires were certified for processing and data analysis. Of these 132
ex-clients, 26.6% exited in January, 38.6% exited in February while 34.8% exited in the
month of March 2003.

In order to gain understanding of the reasons why clients were leaving the organisation, one
focus group discussion and individual in-depth interviews were also conducted with some ex-
clients. One FGD (with eight participants) and ten In-depth interviews were conducted in the
qualitative research processes. The total number of participants, all together was (n = 18).

The data analysis process focused on the profile of the exit clients, their responses to issues
considered helpful and problematic during their years with LAPO and possible relationships
between these responses and the client’s rural-urban location, poverty level, business type
and the number of loans they had taken before leaving LAPO.

Findings
The analysis of the data revealed a number of interesting findings on the profile of clients
leaving LAPO programme, the benefit they enjoy from being a member of LAPO and the
reasons why they left the programme. These results can be enumerated as follow:
                                                           LAPO Client Exit Study           -2-


Profile of ex-clients
    A majority of the ex-clients were in the trade businesses (59.8%).
    The majority of the ex-clients were from the urban areas (65.2%).
    A significant number of the ex-clients exited mostly after their first loan cycle (47%)
     and a substantial proportion also exited after the second loan (31.8%). Cumulatively,
     these two groups of clients constitute as high as 78.8% of all the exited clients.
    Among those who left after the first loan cycle, 89% of them were from the urban
     area, while 50% of those who left after the second loan cycle were also urbanites.
     This indicates a predominantly urban contribution to early programme exits.
    The majority of ex-clients were in the Average Poor poverty group (56.7%).
     Cumulatively, those in the Least Poor, Less Poor and Average Poor group constitute
     81.7%. The Poor and Very Poor constitute a dismal 18.4%.
    Not a single client in the Very Poor category was among those who left in the first
     loan cycle, and only 16% of the Poor left at the end of the first loan cycle.

LAPO Impact
    The two most positive ways that LAPO has helped the ex-clients were in the areas of
     feeding (36.4%) and housing (31.8%).
    Being a union member has helped the ex-clients to make new friends (45.5%), make
     their payments (40.5%) and provided opportunities for advice and support (31.8%).
    On the whole, a substantial majority of the ex-clients felt that their experience with
     LAPO was good (80.2%). But one should not also lose sight of the other 20% who
     felt that the experience did not fall in the good or very good category.
    Generally, about two-thirds of the ex-clients felt that LAPO had helped them a lot
     (66.7%).

Exit reasons
On the negative issues reflected by the ex-clients, the important ones related to the
programme policy and union problems, are as follows:
    47% felt the loan amount was too small. Among those who complained that the loan
       mount was too small, 57% of them were Least Poor.
    Interval between repayments was too short (32.5%).
    Another negative issue raised by 30% of the ex-clients was inefficient loan
       disbursement; mainly rural ex-clients reflected this.
    The issue of the Burden of paying for others who had defaulted (29.5%).
    A quarter of the ex-clients claimed that their unions expelled them (25.5%).
    Some others had problems arising from poor business performance (24.2%) or spent
       their money on crisis (24.2%).
    Finally, the attitude of some staff was found to be an important factor in the problem
       of client exits. Staff attitude in terms of their inability to follow procedures and
       pattern of relationship with clients was revealed basically from the qualitative
       research. The major issues revealed include wrong targeting of clients, inadequate
       pre-loan training for clients and disrespect for clients. Particularly, the issue of wrong
       client targeting has received serious concern of management and the Social
       Development Programme working group of LAPO.
                                                           LAPO Client Exit Study           -3-


Conclusion
In the final analysis and consideration of findings of this study, it is clear that the issue of
loan size is an important factor to the exited clients except those from the poorest poverty
group. Considering the inflationary economic trends, which have influenced very high cost of
living and reduction in the value of the money, the issue of loan size may not actually have
been exaggerated as a contributing factor to the exit of clients. Also, though the issue of small
loan size was important to Average Poor and Poor poverty groups of the ex-clients, but it was
stronger among the Least Poor poverty group. Perhaps the issue of loan size would have been
less important if the Least Poor were not admitted into the programme and if a majority of the
clientele were recruited from the Poorest poverty group.

Essentially, this study has also pointed out the cost associated with the problem of wrong
targeting of clients. From the discussions the issue of wrong targeting of clients has been
strongly linked to the behaviour of field staff. It was pointed out that the inability of some
Credit Officers and their Branch Manager to follow strictly the procedure of clients selection
is a basic problem leading to the inclusion of clients who really do not value the amount of
loan offer by LAPO because it is too small for their businesses. This group of people are not
the exclusive targets of LAPO. Consequently, this problem has gained serious consideration
of management, thus some steps have been spelt out to strengthen the supervision and control
process of the organisation to ensure that Credit Officers adequately observe clients selection
process. These steps include:
i)      Registration of union: Before any new union is registered the Area Managers must see
        all the clients of that potential union and he/she must approved, before loan can be
        disbursed to the union.
ii)     Closing of union: The Area Manager must, first investigate any event leading to the
        closure of a union. No union can be disbanded without the approval of the Area
        Manager.
iii)    Savings withdrawal: Area Manager on a monthly basis must approve withdrawal of
        savings, and this must be after he or she has investigated the reason leading to the
        withdrawal.

The finding on the rural-urban divide equally reveals the general profile of LAPO clientele.
The distribution of the ex-clients was skewed to the urban areas just as a majority of LAPO
clients are located in urban areas. The response that this finding has engendered is the
strengthening of the LAPO Farming loan product to encourage more rural poor people to
participate in the programme.

As a follow-up to this study the organisation has adopted regular client exit monitoring
procedure, with a simplified format based on some of the variables that have been used in this
study.
                                      LAPO Client Exit Study   -4-


                    SECTIONS OF THE REPORT

Executive Summary…………………………………………………………………………...1

1. Introduction…………………………………………………………………………………6

2. Methodology………………………………………………………………………………..8

3. Profile of Ex-clients………………………………………………………………………...9

4. Exit Reasons ………………………………………………………………………………15

5. Exploration of Factor Relationships ………………………………………………………17

6. Summary of Findings……………………………………………………………………...20

7. Discussion of Findings ……………………………………………………………………21

8. Organisational Response ………………………………………………………………….23

9. Conclusion…………………………………………………………………………………24

Appendix 1: Survey Questionnaire ………………………………………………………….26

Appendix 2: In-depth Interview Guide ...……………………………………………………29
                                          LAPO Client Exit Study   -5-


                    LIST OF TABLES AND FIGURES

Table 1: Some LAPO Statistics ………………………………………………………………7

Table 2: Enterprise Profile…………………………………………………………………...10

Table 3: Business Location…………………………………………………………………..10

Table 4: Number of Loans……………………………………………………………….…..10

Table 5: Client Poverty Level….…………………………………………………………….11

Table 6: Client Poverty Level * Business Location …………………………………………12

Table 7: Business Location * Number of Loans …………………………………………….12

Table 8: Business Location * Business Sector ………………………………………………13

Table 9: Positive Impact of LAPO…………………………………………………………...13

Table 10: Benefits of Being a Union Member…..…………………………………………...14

Table11a: Best Description of Experience with LAPO……………………………………...14

Table 11b: Loan Impact……………………………………………………………………...14

Table 12: Loan Repayment Experience……………………………………………………...15

Table 13: Loan Too Small * Number Of Loans……………………………………………..17



Figure 1: Client Exit Trend…………...……………………………………………………….7
                                                           LAPO Client Exit Study          -6-


1. INTRODUCTION
LAPO is a leading microfinance institution in Nigeria. It has a vision to see the emergence of
communities where the people are economically empowered, socially emboldened and
sufficiently aware on maternal and child health problems. Its mission is to empower the poor
with innovative financial services on a sustainable basis. LAPO was incorporated in 1993 as
non-profit Company limited by guarantee under the Company and Allied Matters Act of
1990, in Nigeria. The basic unit of organisation at LAPO is the credit group. Leaders of
groups served by a Branch office constitute the Branch Council.

LAPO currently has activities in South-South and North-Central zones. It focused generally
on areas characterised by: low industrial activities, subsistence farming, and increasing
incidence of poverty. The targeting strategies of LAPO include principles for working area
selection and client selection tool. It criteria for working area selection include: area with a
relatively large number of poor families, area known to have limited access to credit facilities
for the poor and area having Banking facilities. LAPO targets poor people who belong to the
bottom 50% socio-economic status. Its client selection instrument is based on Income,
Feeding and Dwelling. LAPO specifically targets poor people: whose total household income
is unsteady, experiencing irregular daily feeding in household, experiencing irregular cooking
of special food in household, living in poor condition of dwelling place and experiencing
congestion in dwelling place. LAPO uses five poverty group classifications, which are:
poorest, poor, average poor, less poor and least poor. Its primary focus is on the first three
poverty groups from the bottom: poorest, poor and average poor poverty groups.

LAPO provides a range of services to its clients: Credit – Regular Loan, Xmas Business
Loan, Emergency Loan, Asset Loan and Farming Loan; Savings – Regular savings and
Voluntary savings.

LAPO also has a focus in social development programmes and other enterprise development
services, delivered through its subsidiary organisations:

Micro investment: Promotes investment and acquisition of income generating assets among
beneficiaries

Community Bank: Provides opportunities for capital building through savings and credit
facilities for micro enterprises.

LAPO Development Centre : Facilitates Gender, Environment and Leadership Trainings
(GELT); Democracy and Governance (D & G); Skills Acquisition; Micro business
Management Training; Advocacy; Researches and Surveys; and Publications

LAPO Services Limited: A consultancy service structure, offers array of services, which
include: Building the capacity of fledgling micro finance and micro enterprise development
institutions; Human Resource (staff) development training; Facilitating community
development plans; and acting as Plan Implementation Entity (PIE).

LAPO Health: Enhance awareness of members on maternal and child health; Assist
members adopt healthy living practices; Enhance skills to promote community-based action
on communicable/non-communicable diseases; and Conduct investigation and carry out
survey on pertinent health problems in various communities.
                                                                                 LAPO Client Exit Study         -7-


                                   TABLE 1: SOME LAPO STATISTICS
                                 Indicators                         2002               2003         2004
                                                                                                 (As at July)
            Number of clients                                        21,766             24,545        31,597
            Percent of women clients                                     90                 92             98
            Number of Branches                                           22                 27             28
            Loan portfolio ($1 = N125)
            USD                                                     907,281          1,439,444     1,840,688
            Savings (($1 = N125)
            USD                                                     232,029            465,601      656,179
            FSS (%) year ending                                          63               72%          88%
            Number of credit officers                                    69                 90          108
            Portfolio at risk                                          0.11               0.09         0.05

The need for the client exit study
This study was commissioned as one of the activities designed to advance the implementation
of the LAPO Imp-Act Project. It is an attempt to examine the problem of exit of LAPO
clients. LAPO refers to individuals who leave its programme as withdrawal or drop-out 1 . This
study was considered necessary because of the increasing incidence of exits. FI GURE 1
below, shows the trend of exit of clients at LAPO.

                                FIGURE 1: TREND OF EXIT OF CLIENTS


                        30000
                        25000
            Frequency




                        20000
                                                                              Client
                        15000
                                                                              Exit
                        10000
                        5000
                           0
                                 1998   1999   2000   2001   2002    2003
                                                 Year




Although there is client withdrawal record, the record contains only very general reasons why
some clients have decided to leave the programme. These are general reaso ns like client left
voluntarily, delinquent client, default, client relocation, sick client and others. However, the
information was subject to the perceived circumstance of the exit of any client by the Credit
Officer and the information was not analysed.

During the first year of the implementation of Imp-Act Project, the withdrawal record was
reviewed across selected branches, as a first step. At the end of the review, little or no
understanding was gained in terms of the underlining explanation of clie nt exits.
Consequently, a formal client exit survey procedure was considered, to find out why clients
were withdrawing from LAPO.



1
 LA PO considers drop-out as those clients who do no longer wish to take more loan and /or who the
organisation is no longer ready to give more loan and wish to withdraw their co mpulsory savings.
                                                           LAPO Client Exit Study           -8-


This study was implemented during the second year of the implementation of the Imp-Act
Project, on the effort of the research team of LAPO with the support of an External
Consultant. The result of this client exit study is expected to contribute to finding appropriate
steps to reducing the number of exits that is due to negative influence of LAPO’s policies and
operations.

2. METHODOLOGY

Design and imple mentation
The design of the exit survey questionnaire was based on the SEEP/AIMS Client Exit Survey
Tool. During the last quarter of 2001, LAPO conducted a one-day training for staff, in order
to review the draft instrument. After the training, the questionnaire was revised and
developed for testing. In the first quarter of 2002, another staff training was organised to
acquaint staff with improvements in the process. The instrument needed to be translated into
Pidgin English or the Standard English revised to a very simple form as would be easy and
quick for staff and clients to understand. Beside, field officers were also trained on interviews
techniques and the implementation of the client exit survey process.

During the second quarter of 2002, a specific training was organised for field staff in two
branches to pilot implementation of the survey. In the third quarter the survey was piloted
with about eighty-six ex-clients. Data collected were collated and sent to the consultant for
processing and analysis. Very simple analysis usually frequencies was conducted. Somehow
a more detailed descriptive analysis like cross tabulations and correlations were required.
This was done to gain more insight into the kind of analyses that were expected in the actual
exit survey.

After the review of the pilot study, the questionnaire was modified for final implementation.
This was completed and also piloted during the last quarter of 2002. In the last quarter of
2002, LAPO impact committee met to review the client exit study process and therefore
determined the plan for a wide scale implementation of the exit survey across branches. In the
second week of January 2003 branch manager were again train to undertake the survey
process. At the end of the training session, the survey instrument was distributed to the
managers to take to their respective branches. After Credit officers had resumed from the
Xmas and New Year breaks, they were also trained on the implementation of the exit survey.

Data collection process took place from January to March 2003.Completed questionnaires
were collated across branches, processed and sent to the LAPO impact consultant for
analysis.

Data collection
The structured interview technique was used to administer the questionnaires. Data were
simply collected by staff at the occasion of any exiting client. Therefore, the process of data
collection was tied to the normal operations process. Ex-clients were interviewed either
during their savings withdrawal, after prior notice to withdraw membership or during the last
operational contact with exiting clients to finalise the withdrawal process.

The data collection process was basically the business of field officers. Credit Officers
mainly conducted the structured interviews to gather information from clients who exited
during the first quarter of 2003 from 13 branches and in 71 unions. Branch Managers and
                                                            LAPO Client Exit Study           -9-


Area Managers reviewed the returned questionnaires and crosschecked the data collected.
One hundred and thirty-two (132) questionnaires were sent through the research unit at the
Head Office to the consultant for processing and data analysis. Of these 132 ex-clients,
26.6% exited in January, 38.6% exited in February while 34.8% exited in the month of March
2003.

Credit Officers were allowed to interview exiting clients in their branches. The reason is
because the exit survey implementation process was tied to their normal operational routine.
Therefore, it was easier to encourage staff to conduct interviews with their own exiting
clients than to swap staff to other exiting clients or branches and since it was also an on- going
process (for a period of three months). However, in cases where there had been
disagreements between the staff and the exiting clients, internal arrangements were made in
the branch to have another staff apply the instrument to such ex-client. There were many
cases where interviews could not be conducted because of lack of cooperation from the
exiting client and where clients simply absconded and co uld not be reached for interview.
Out of the total number of exited client (n = 1,957) during the first quarter of 2003, staff were
able to conduct only 150 interviews, and out which 132 completed questionnaires were
certified for analysis. The data collection process spanned from January to March 2003.
Though only those who could be reached and were ready to participate in the study made the
sample, the sample frame included all exited clients in the first quarter of 2003.

In order to gain understanding of the reasons why clients left LAPO, the LAPO research staff
also facilitated focus group discussions and individual in-depth interviews for ex-clients. One
FGD (with eight participants) and ten In-depth interviews were conducted in the process. In
all, a total of eighteen (n =18) ex-clients participated in the qualitative research processes.

Data analysis objectives
This report examines (a) the profile of the exit clients in the first-quarter of 2003 (b) the
significant frequencies of their responses to issues considered helpful and problematic during
their years with LAPO, and (c) possible relationships between these responses and the
client’s rural- urban location, poverty level, business type and the number of loans they had
taken before leaving LAPO.


3. PROFILE OF EXIT CLIENTS
Gende r
LAPO clients have always been predominantly female. In the early years, a certain number of
males were admitted. However, there are a few male clients who are in the rural areas and are
often engaged in agricultural production. Consequently, this sample of ex-clients
overwhelmingly consists of 125 females and only 7 males.

Last enterprise
The exit clients varied in the business enterprises that they engaged in before they left LAPO.
The enterprises reported were categorised into Manufacturing, Agro Business, Trade and
Service shown in TABLE 1 below. The more than 50% predominance of Trade business
among these ex-clients is not surprising on account of the fact that trade business is the most
predominant among LAPO clientele about 38.7% in the business profile. Trade business in
this respect includes mainly retail and wholesale businesses on processed wares.
                                                                 LAPO Client Exit Study      - 10 -



                        TABLE 2:ETP
                                 NE
                                 EF
                                  RI
                                  P
                                  IR
                                  SO
                                   L
                                   E




             Tg
             A
             tfr
             rc
             as
             g
             M
             v
             e
             o
             S
             Nn
              iu
              u
              lt
              b
              c
              da
               n
               i
               s
               e                           1
                                           3
                                           0
                                           8
                                           9
                                           1
                                           6
                                           2                 1
                                                             0
                                                             .
                                                             2
                                                             5
                                                             6
                                                             3
                                                             9                2
                                                                              9
                                                                              3
                                                                              0
                                                                              7
                                                                              .
                                                                              8
                                                                              4
                                                                              1




Business location
Looking at these ex-clients from an urban-rural perspective, they are predominantly urban
(65.2%), while the rural represent only 12.9%. While this might indicate a lower client exit
rate in the rural area, it could also be indicative of the fact that LAPO clientele has been tilted
towards urban women, more by accident than by deliberate policy. Percent LAPO profile of
client location presented in TABLE 2 below shows that about 48.7% of LAPO clientele are in
the urban area while 34.6% are located in the rural area.

                   TABLE 3: BUSINESS LOCATION

             U
             S
             tr
             b
             ra
             m
             e
             -n
             U
             a
             o
             R
             T
             un
              i
              b
              l                          2
                                         6
                                         8
                                         9
                                         7
                                         1
                                         3               2
                                                         6
                                                         5
                                                         0
                                                         9
                                                         1
                                                         .                   4
                                                                             1
                                                                             7
                                                                             8
                                                                             6
                                                                             .
                                                                             0
                                                                             3




Years of LAPO me mbe rship
The impact (negative or positive) of LAPO is expected to be associated with the number of
years the client has been with the organisation. Therefore, an examination of the pattern of
exposure to LAPO exhibited by these ex-clients was represented in this study by the number
of loans that the client has taken from the organisation.

                        TABLE 4: NUMBER OF LOANS
             Loans             Frequency       Percent           Cumulative
                                                                  Percent
             1                          62           47.0              47.0
             2                          42           31.8              78.8
             3                          20           15.2              93.9
             4                           6             4.5             98.5
             5                           1              .8             99.2
             6                           1              .8            100.0
             Total                     132            100

A look at the Table above shows that these clients exited mostly after their first loan
experience (47.0%), while a substantial proportion exited after their second loan (31.8%).
Cumulatively, these two groups of clients constitute as high as 78.8% of all the exits in this
sample. Essentially, further investigation has revealed that these stages constitute critical
stage of decisive decision- making for both clients and credit officers in the programme. The
implication is that at this stages clients are more aware of LAPO policy, therefore, are more
able to decide to continue or not to continue in the programme based the experience they
have had. This was very clear during the qualitative follow-p sections. Almost all ex-clients
                                                           LAPO Client Exit Study          - 11 -


discussed with revealed that their expectation especially on loan increase was not met by
LAPO. A majority of the ex-clients felt that the difference between their first loan stage
amount and the second loan stage amount was very insignificant in relation to their volume of
business activities. LAPO then gives N5000 – N8000 to first stage client and N8000 –
N10000 to second stage client, but most ex-clients expected at least 50% increase of first
stage loan during the second loan stage and subsequently through other stages. Equally some
felt that the amount was generally too small for their businesses.

Also on the part of credit officers, they would normally drop some client and close some
unions at these stages for delinquency reasons. Some unions are closed for one negative
reason and another like false clients, multiple loans collection and defaults. It was pointed out
by the operations management that what has contributed to the high incidence of exits was as
a result of the move by the operations department to withdraw all identified bad clients from
its clientele base.

Poverty profile
The poverty level profile presented here is based on an estimate made by the field officer who
interviewed the ex-client using a five-point scale. The resulting pattern of poverty levels of
these exit clients is shown in table 4 below.

                       TABLE 5: CLIENT POVERTY LEVEL
                                                                     % LAPO
            Poverty Group         Frequency          Percent          Profile
            Least poor                       9              7.5              13.0
            Less Poor                       21             17.5              19.4
            Average Poor                    68             56.7              28.0
            Poor                            17             14.2              22.5
            Poorest                          5              4.2              17.0
            Total                          120            100.0            100.0

The majority of these ex-clients fall into the category of Average Poor. However the Poor and
the Very Poor constitute only 14.2% and 4.2% of the sample respectively. This pattern is
indicative of LAPO poverty profile. A significant number of LAPO clientele are in the
Average Poor poverty groups, 28%. The table above also indicate that a majority of the ex-
clients are from the less deprived poverty groups (Average Poor and Less Poor). This has also
been confirmed through the follow- up study where almost all the ex-clients discussed with
confirmed that LAPO loan was a small proportion of their total business capital, only about
20% to 30% maximum contribution. This pattern also reflects the discovered trend of field
officers recruiting clients without following the procedure of client selection strictly, a
majority of the poorest/very poor clients are excluded from the programme with the believed
that they may not be able to meet the obligation of repayments.
                                                                       LAPO Client Exit Study                            - 12 -


                   TABLE 6: CLIENT POVERTY LEVEL * BUSINESS LOCATION
                                                                Business Location
                                                      Urban       Semi-Urban        Rural               Total
         Client    Least Poor     Count                       7             2                                   9
         Poverty                  % within Business
         Level                                          9.1%             7.4%                             7.5%
                                  Location
                   Less Poor      Count                   15                5               1               21
                                  % within Business
                                                       19.5%            18.5%         6.3%              17.5%
                                  Location
                   Average Poor   Count                   43               15           10                  68
                                  % within Business
                                                       55.8%            55.6%        62.5%              56.7%
                                  Location
                   Poor           Count                   12                1               4               17
                                  % within Business
                                                       15.6%             3.7%        25.0%              14.2%
                                  Location
                   Very Poor      Count                                     4               1                   5
                                  % within Business
                                                                        14.8%         6.3%                4.2%
                                  Location
         Total                    Count                   77               27           16                 120
                                  % within Business
                                                      100.0%          100.0%        100.0%              100.0%
                                  Location

                 (Significant level: Pearson Chi-Square = .01).

For further examination of pattern of interrelationship among the above background
characteristics of the exit clients, for instance, what relationship exits between the poverty
level and urban-rural location of these ex-clients? This relationship is displayed in TABLE 5
above, shows a remarkable pattern even in the context of the earlier-noted predominance of
the Average Poor in the entire sample. What is remarkable is that the highest proportion of
these Average Poor is found among the rural ex-clients (62.5%). In fact, among the 5 Very
Poor only 1 is a rural dweller, while the remainders are in semi- urban locations. Moreover, in
spite of a large number of urbanites in this sample, there is not a single urban Very Poor
among these ex-clients.

An examination of the relationship between Loan Stages and Business Location revealed that
among the 62 first loan stage exits, as much as 89% of them were in the urban area, and of
the 42 second loan stage exits 50% of them were urbanites, with 35% semi- urbanites. Among
the third loan stage category, 40% were semi- urbanites with 35% urban and 25% rural. This
indicates a predominantly urban contribution to these early programme exits. This
relationship was highly significant at (.000, Pearson Chi-Square).
                         TABLE 7: BUSINESS LOCATION * NUMBER OF LOANS
                                       CROSSTABULATION
                                                            Number of Loans
                                            1      2       3       4                            5               6       Total
         Business Urban      Count             5      2       7        2                            1                      8
         Location            % Within          5      1                                                                    6
                             Number         88.7   50.0    35.0    33.3                     100.0                        65.2
                             of Loans
                                            %      %       %       %                        %                            %
                  Semi-Urban Count              5     1       8        1                                            1      2
                             % Within                 4                                                                    9
                             Number          8.1   33.3    40.0    16.7                                     100.0        22.0
                             of Loans
                                             %     %       %       %                                        %            %
                  Rural      Count              2      7      5        3                                                   1
                             % Within                                                                                      7
                             Number          3.2   16.7    25.0    50.0                                                  12.9
                             of Loans
                                             %     %       %       %                                                     %
         Total               Cou               6      4      2         6                            1               1     13
                             nt Within
                             %                 2      2      0                                                            2
                             Number        100.0  100.0   100.0   100.0                     100.0           100.0       100.0
                             of Loans
                                           %      %       %       %                         %               %           %
       (Significant level: Pearson Chi-Square = .05)
                                                                                  LAPO Client Exit Study                   - 13 -


The distribution of business type categories along the urban-rural continuum predictably
showed the highest proportion of Trade in descending order of urban (76.8%), semi- urban
(14.5%) and rural (8.7%). Among these ex-clients manufacturing however, was only second
in rank (66.7%) urban while Agro Business rank relatively highest 23.8% among rural ex-
clients. The test of this relationship was not found to be highly significant (.061, Pearson
Chi-Square).
                                          TABLE 8: BUSINESS LOCATION * BUSINESS SECTOR
                                                                            Business Sector
                                                                         Agro
                                                        Manufacturing   business      Trade      Service    None       Tota
         Business    Urban        Count                             2         12            53         15          3   l 85
         Location                 % within Business            66.7%       57.1%        76.8%      53.6%      33.3%    65.4%
                     Semi-Urban   Sector
                                  Count                            1           4           10          9           5       29
                                  % within Business            33.3%       19.0%        14.5%      32.1%      55.6%    22.3%
                     Rural        Sector
                                  Count                                        5            6          4          1       16
                                  % within Business                        23.8%         8.7%      14.3%      11.1%    12.3%
         Total                    Sector
                                  Count                            3          21           69         28           9      130
                                  % within Business           100.0       100.0        100.0      100.0      100.0     100.0
                                  Sector                      %           %            %          %          %         %
Exploring Experiences with LAPO
The survey included questions, which were aimed at tapping the ex-clients’ responses
regarding positive aspects of their participation in LAPO programme, as well as eliciting
responses to those negative aspects of their LAPO exposure that may have jointly contributed
to their leaving. Since no one single issue would influence exit, many of the questions were
presented as multiple choices where several possible combinations were possible.

Positive issues
Two multiple-choice questions were used to tap positive aspects of their LAPO experiences
The first was: “In what ways has LAPO helped your family”? Ex-clients were expected to
indicate the ways in which their families had benefited. The responses were then analysed in
terms of whether an item was mentioned or not mentioned. The resulting popularity of
mention of these aspects of positive influence is presented in TABLE 6 below in descending
order.

                    TABLE 9: POSITIVE IMPACT OF LAPO
      Indicators                                      Frequency           Percentage               Total
      More and better food                                   48                36.4%                  132
      Improved housing                                       42                31.8%                  132
      More informed                                          22                16.7%                  132
      Education children/self                                20                15.2%                  132
      Better family health                                   16                12.1%                  132
      Join social groups                                     14                10.6%                  132
      Better/ more clothing                                  11                 8.3%                  132
      Furniture, utensils, home items                         5                 3.8%                  132
      No help                                                 4                 3.0%                  132
      Others                                                  4                 3.0%                  132

The second question, asked the following: “Please tell me the specific ways in which being a
union member helped you”? The respective popularity of the each of eight items is presented
in TABLE 7. Compared with the popularity of the first mentioned family benefits, the
                                                         LAPO Client Exit Study             - 14 -


usefulness of union membership in providing these ex-clients with new friendships and in
helping to make their weekly payments when they would have defaulted, surpasses that of the
most high ranking family benefit of improvement in household feeding. The follow-up
understanding also revealed this finding where every one of the ex-clients discussed with
generally felt their participation in LAPO could not be said was not useful to them in some
ways. They mentioned that the LAPO loan has contributed to their business profit, which
they either used to support feeding of their family, children’s educational needs like support
school fees and buy books.

                      TABLE 10: BENEFITS OF BEING A UNION MEMBER

             Indicators                            Frequency      Percent         Total
             Offer New Friendships                           60      45.5             132
             Make my Payments                                54      40.5             132
             Advice and Support                              42      31.8             132
             Business Ideas & Contacts                       34      25.8             132
             Training and New Information                    31      23.5             132
             Develop Leadership Skills                        4       3.0             132
             None                                             4       3.0             132
Aimed at summarising LAPO impact, the following question was also asked: “Which ONE of
these best describes your experience of participation in the LAPO programme”? The
resulting responses to the five options presented to them, are displayed in TABLE 10a below.

              TABLE11a: BEST DESCRIPTION OF EXPERIENCE WITH LAPO

                               Frequency       Percent       Cumulative
                                                              Percent
              Very good                 34         28.1            28.1
              Good                      63         52.1            80.2
              No effect                  6          5.0            85.2
              Very bad                   1           .8            86.0
              No opinion                17         14.0           100.0
              Total                    121        100.0
With the majority of ex-clients rating their LAPO experiences as Good (52.1%) and even
Very Good (28.1%), it can be said that cumulatively, 80.2% of them enjoyed an overall
positive experience. Another question: “How would you describe the way the LAPO loan has
helped you?” generated an even more positive assessment as summarised in TABLE 10b
below.
                      TABLE 11b: LOAN IMPACT
                                      Frequency    Percent     Cumulative
                                                                Percent
              Helped me a lot                76       66.7           66.7
              Helped me a little             35       30.7           97.4
              Didn't help me at all           1         .9           98.2
              Didn't help me at all           2        1.8          100.0
              Total                         114      100.0
                                                          LAPO Client Exit Study         - 15 -


Negative issues
Five areas were explored in assessing negative issues regarding their LAPO partic ipation.
First was to know how they would describe their respective experiences in repaying their last
LAPO loans. The result is presented in TABLE 11. From this table three categories of
difficulty are almost of equal popularity even though “Difficult to pay” is slightly ahead with
35.7% choice. This is interesting since it is usually presumed that most clients, who leave, do
so principally because of difficulty in meeting up with their loan repayments.

               TABLE 12: LOAN REPAYM ENT EXPERIENCE
                                        Frequency      Percent    Cumulative
                                                                   Percent
          Difficult to pay                       40       35.7         35.7
          Within my capacity to pay              36       32.1         67.9
          Easy to pay                            36       32.1        100.0
          Total                                 112      100.0


4. EXIT REASONS
The examination of possible reasons for exit are grouped under (1) Problems with
Programme policies, (2) Problems with the Union, (3) Business Reasons, (4) Personal
Problems, and (5) Environmental Economic Problems. Questions in each segment presented
chances for multiple responses and they were 28 in number. This report highlights only those
items, within each of the five segments that are of considerable significance.

Programme policy problems
Eight items were included in this category namely: Loan Too Small, Short Loan Length,
Dislike Loan Time, Short Repayment Interval, Poor Disbursement, High Interest Rate, Other
Program Conditions, and Personal Conflict with Staff. Only two of these recorded more than
20% mention namely: The loan amount is too small---          62 mentions – 47% (N=132)
                     Interval between repayments too short- 31 mentions – 32.5% (N=132)

The problem of loan amount appear to be a general complaints not only of ex-clients but also
common to existing clients of LAPO. In another client satisfaction and qualitative impact
follow-up studies, it has also been revealed that most curre nt LAPO clients want LAPO to
improve on the present loan amount given at different loan stages. Both ex-clients and LAPO
clients discussed with have expressed that the loan amount need to be improved:

   i)      Some pointed out that the increment in loan amount from one stage to another is
           too small. A majority of the ex-clients and even some existing clients claimed
           pointed that there is no substantial difference between the loan amount of one
           stage and the next loan stage amount. For example, they observed that increment
           in loan amount in the following pattern as operated by LAPO N 8,000 (1st stage)
           to N10,000 (2nd stage) to N12,000 (3rd stage) …., does not add real additional
           value to any one previous loan and so is generally the same considering the very
           small increase in wares the increment can contribute.

   ii)     Some also complained of the situation whereby there is no increment in loan
           amount from one lower stage to a higher stage, i.e., giving the same loan amount
                                                           LAPO Client Exit Study          - 16 -


           of lower stage at a higher stage of participation and loan sealing. For example,
           some of the ex-clients said that they left LAPO because when they were qualified
           for a 3rd loan, their credit officer was only ready to give them the same amount of
           loan as was given them on their second loan stage. This was against their
           expectation of steady increase on loan amount as they progress from one loan
           stage to another. However, some field officers has equally confirmed that this
           problem occur at times when there is financial constraints or some union
           reorganisation problem at the branch.
   iii)    They also mentioned that since there is a general rise in the prices of goods and
           services, there is little amount of things they can buy with the very small loan
           offer by LAPO.

   iv)     Generally, they felt it is okay if LAPO should try to understand its credit risk
           initially with the small loan amount given in the first loan stage but with time,
           LAPO ought to make it flexible to approve loan base either on the level of
           business of clients or on the request of union considering the client’s ability to use
           such loan amount.

Proble ms with union
This segment is composed of five issues namely, Burden of Paying for Others, Expelled by
Union, Union was Disbanded, Personal Conflict with Members, and Union Rules and/or
Pressures. Only two of the above items attracted more than 20% mention namely:
               Burden of paying for others-- 39 mentions -- 29.5% (N=132)
               I was expelled by the union-- 34 mentions -- 25.5% (N=132)

In most of the discussions held these issues were common as a result of the style some Credit
Officers adopt in their handling of unions. Some officers’ approach to organisation of unions
creates factions among clients instead of integrating the members into the union. Similarly,
some Credit Officers make some union leaders so powerful by relying on them to get new
clients, run their unions and to determine who to remain in the union or not. The essence of
group dynamics is therefore, reduced to the wish of union leaders. Discussions with some ex-
clients revealed that union leaders often withdraw some clients when they are at defaults but
not with much concern for the situation leading the client to default, as they would want to
avoid the burden of paying for the defaulting member.

Some ex-client who left because they wanted to avoid the burden of paying for others do so
mostly because of the strict application of the solidarity group policy by the Credit Officer
who will always ensures full collection of each instalment from the union. Most of the ex-
clients felt that since they often do not default, therefore, it is unfair when their loans are
delayed because of others who are not able to meet up with repayment at times.

Business reasons
Within this category of reasons are six items namely, Have Enough Capital Now, I need
Seasonal Loan, Found a Larger Loan, Poor Business Condition, Closed Business for
Something New, and I Sold My Business.. Once again, only two of these business reasons
had received more than 20% rate of mention namely:
              Poor business performance---32 mentions --24.2% (N=132)
              I Now have enough Capital---27 mentions --24.2% (N=132)
                                                                 LAPO Client Exit Study              - 17 -


Personal reasons
Purely personal reasons consisted of five items: Spent my Money on Crisis, Income
Supporter Left Me, No Time and Ability to Continue the Business, I am Relocating/
Relocated to Another Place, and Family Member Opposed to my Borrowing. Again only two
of these items attracted more than 20% mention namely:
                I am Relocating/ Have Relocated-- 39 mentions --29.5% (N=132)
                Spent My Money on Crisis---       32 mentions --24.2% (N=132)

Economic environmental factors
This section which consisted of only two items – Business was Ruined by Disaster, and Lost
Customers to New Competitor- but each received less than 20% rate of mention.

From the above analysis, a summary examination of these possible reasons for exit would
therefore place as the two top ranking complaints: Small Loan Size (47%), and Paying for
other Defaulters (29.5%). Incidentally these belong to difficulties with LAPO programme
decisions. In fact, the problem of small loan size cuts across urban-rural differences, levels of
poverty except the Very Poor and loan stages. Indeed the complained about the small loan
size was mostly common to second loan ex-clients (See Table 10 below).

                          TABLE 13: LOAN TOO SMALL * NUMBER OF LOANS
                                                                Number of Loans
                                             1         2          3        4        5        6       Total
  Loan      Loan too      Count                  26        25         9        2                        62
  Too
  Small     small         % within Number
                                            41.9      59.5       45.0     33.3                       47.0
                          of Loans
                                            %         %          %        %                          %
            Not           Count                36       17          11        4         1        1      70
            mentioned     % within Number
                                            58.1      40.5       55.0     66.7     100.0    100.0     53.0
                          of Loans
                                            %         %          %        %        %        %         %
  Total                   Count                62        42         20        6        1        1       13
                          % within Number                                                               2
                                          100.0       100.0     100.0     100.0    100.0    100.0    100.0
                          of Loans
                                          %           %         %         %        %        %        %


As revealed earlier it was also noticed that many ex-clients in their open-ended comments
have complained about what they considered to be small loan increments. This of course
would have shown its effect most on those who had successfully completed their first loan
cycle and had expected more money in the second loan stage.


5. EXPLORING FACTOR RELATIONSHIPS
In order to have understanding of the distribution of both positive and negative aspects of the
experience with LAPO in relation to the ex-clients profile, some of these variables were cross
-tabulated. These profile variables are (a) Poverty Level of the ex-clients, (b) Business
Location (urban-rural), (c) Number of Loans received by the exit clients, and (d) the Type of
Business which the ex-clients last engaged in. Here attention was paid to those top ranking
issues. In addition, because exit analysis is more interested in exploring those push factors
that might have contributed to clients leaving the organisation, focus was more on
understanding those negative issues.
                                                           LAPO Client Exit Study         - 18 -


Client’s poverty level
The evaluation with Poverty Level displayed the highest explanatory power with interesting
discriminant effects on such positive issues as LAPO improvement of client’s Feeding,
Health, More Information, Help to Make My Payments, Give Advice & Support, Make New
Friends. Poverty Level also had interesting patterns of relationship with the following
negative issues of LAPO exposure with appreciable proportions of mention indicated for
various poverty categories:
       1. I was constantly battling with debt (especially for the Very Poor [80%])
       2. I spent the money on a crisis (especially the Very Poor [80%])
       3. My business was ruined by a disaster (for Very Poor [60%])
       4. Weak business conditions (for Very Poor [60%])
       5. Expelled by the union (for Very Poor [60%]; and Poor [52%])
       6. Loan amount was too small (Least Poor [57%]; Poor [52%]; Average Poor 44%])
       7. Repayment interval is too short (Poor [47%]; Very Poor [40%])
       8. Time given to finish loan repayment (Very Poor [40%])
       9. Burden of repaying loan for others (Poor [35%]; and Least Poor [30%])
       10.Relocating/ relocated to another place (Least Poor [44%]; Less Poor [38%])

From the list it is clear that the majority of those who complained about loan size did not
include the very poor group. Though most LAPO clients has been reported are in the Average
Poor and Poor Group, but the above distribution shows that the complaint about the loan size
cannot be fully separated from the influence of the poverty status of clients–The complaint
about loan size was most common to the Least Poor poverty group.

Number of loans
In order to put in the right context some of the details that will emerge in the analysis of the
relationship between the loan cycle of the ex-clients and some of their responses to the
positive and negative aspects of LAPO exposure, it is important to note the special
distribution of the loan cycles as already reported earlier on TABLE 3, namely, that most of
the clients are in the 1st and 2nd loan categories. As such any significant proportion reported
within these two sub-categories would constitute a good number of ex-clients in this sample.
On the other hand, the 5th and 6th loan sub-categories contain only ONE person each.
Anywhere that each of these two persons appears in a table, that person constitutes 100%
representation of his/her sub-category. As such, their “100%” representation could easily be
exaggerated.

Equally worthy of note is that, the 62 first loan persons, 89% are urbanites. Thus members of
this sub-category may be carrying the effects of their urban location as well as their 1st loan
qualities. In addition, there is NOT a single Very Poor client in the 1st loan category, and
only 16% of these 1st loan ex-clients are Poor. Thus also hidden in this 1st loan category are
effects attributable to their less indigent poverty standings. With all these caveats taken into
account, some important relationships between Number Loans and some of the variables in
question can be reported.

Significant proportions of members of the loan categories have indicated the importance of
the following positive aspects of LAPO exposure. (* 5th and the 6th loan groups each contain
only one person).
                                                           LAPO Client Exit Study         - 19 -


More and better food (5th Loan [100%]*; 4th [61%]; 3rd [40%] and 1st [37%])
Improve my housing (3rd Loan [45%]; 2nd [43%]; 4th [35%])
Union gave me advice & support (4th Loan [50%]; 3rd [40%]; 2nd [36%])
Union offered me new friends (5th Loan [100%]*; 3rd[60%]; 4th[50%]; 2nd[45%]; 1st[40])
Training and information (5th[100%]*; 3rd [35%])

The above enumeration indicates clearly that these positive aspects of LAPO exposure cut
across many loan groups. Attention should now go to the enumeration of the importance of
identified negative aspects of LAPO exposure.

       Staff and member pressures (4th Loan [50%])
       Loan amount is too small (2nd Loan [60%]; 3rd [45%]; 1st [42%]; 4th[33%])
       Interest charged is too high (6th Loan [100%]*; 4th [33%])
       Paying for other defaulters (6th Loan [100%]*; 3rd [50%]; 2nd [45%])
       Expelled by the union (1st Loan [34%])
       Poor business conditions (5th Loan [100%]*; 2nd [41%]; 4th [33%])
       Spent the money on a crisis (5th Loan [100%]*; 2nd [38%]; 4th [33%])
       I am relocating/ have relocated (2nd Loan [38%]; 3rd [30%])

Business type
Business enterprise, which the ex-clients last engaged in, was also used to gain further
understanding of the distribution of significant proportions of responses to certain negative
and positive aspects of LAPO exposure. In most of the issues reported below, significant
proportions are reported for only few business type categories. Those not reported are not
significant. In such circumstances the influence of the business type is more restricted to that
particular category. Below is the enumeration of significant proportions within several
business categories of both positive and negative aspects of LAPO exposure.

Positive aspects:
                More and better food (Trade [53%])
                Educate children/ self (Trade [40%]; Agro Business [35%])
                Improve my housing {Trade [54%])
                Better/more clothing (Trade [55%]
                Better family health (trade [44%]; Service [43%])
                More informed (Trade [55%])
                Able to joined social group (Trade [57%])
                Union helped me make my payments (Trade [43%])
                Union advice/support (Trade [55%])

Negative aspects:
                Loan amount is too small (Trade [57%])
                Poor business conditions (Trade [47%]; Service [31%])
                Short loan length (Trade [61%])
                Short repayment interval (Trade [61%])
                High interest rate (Trade [75%])
                Inefficient loan disbursement (Trade [47%])
                Burden of paying loan for others (Trade [43%])
                Expelled by union (Trade [58%])
                                                           LAPO Client Exit Study         - 20 -


Business location (urban-rural)
Lastly, the analysis of the levels of importance of certain negative and positive aspects of
LAPO exposure as viewed from the urban-rural perspective can be presented.

Positive aspects:
More and better food (Rural [41%]; Semi-Urban [38%]; Urban [35%])
Educate children/ self (Rural [35%])
Improve my housing (Semi-Urban [42%]; Rural [35%])
Union helped me make my payments (Rural [53%]; Urban [40%]; Semi-Urban [38%])
Provided advice & support (Semi-Urban [38%]; Rural [35%])
Offered new friendships (Rural [59%]; Semi-Urban [45%]; Urban [42%])

Negative aspects:
       Staff/ member pressures (Semi-Urban [35%]
       Loan amount is too small (Urban [49%]; Rural [47%]; Semi-Urban [41%])
       Short Repayment interval (Rural [30%])
       *Inefficient loan disbursement (Rural [30%])
       Paying for other defaulters (Urban [36%])
       Spent my money on a crisis (Semi-Urban [31%])
       I am relocating/ have relocated (Semi-Urban [35%]; Urban [30%])

A look at the above issues and the attendant rates of their importance, shows that the issue of
loan amount is important to all business locations, while some are restricted to the attention
of only one of the dwelling categories. This analysis above also reflect one negative aspect of
LAPO exposure, namely, Inefficient Loan Disbursement which is restricted in its importance
to rural ex-clients.


6. SUMMARY OF FINDINGS
This exits study has focused on three areas of the analysis of data gathered from exited clients
from LAPO during the first quarter of 2003. In the presentation of the general profile of these
ex-clients, four background variables which characterised the clientele: their poverty levels,
their locations, the types of businesses that they engaged in, and finally the number of loans
they had received before leaving the organisation were considered. This was aimed at gaining
an understanding of the distribution of the ex-clients on these important characteristics that
might be influential in the evaluation of both positive and negative aspects of their past
exposures to LAPO.

Basically like the general gender profile of LAPO clientele, the data showed overwhelming
female ex-clients (95%). These ex-clients were distributed along the urban-rural locations but
also with a high urban majority of 65.2%. In respect of the number of loans they had taken
before leaving LAPO, it was noted that these clients exited at the early stages of loan
participation where 47% had received only one loan and 31.7% exited after two loans. It was
also observed that these ex-clients had predominantly engaged in trade enterprises (53.1%),
though LAPO also has a majority of its clientele to be in trade enterprise. The study also
shows that these ex-clients were predominantly in the category of Average Poor (56.7%) with
only 4.2% in the category of the Very Poor. This finding also reflects the general poverty
profile of LAPO clientele, where a significant number of them (28%) are in the Average Poor
                                                           LAPO Client Exit Study          - 21 -


poverty group, and followed by the Poor poverty group (22.5%) from the poverty assessment
of client of LAPO.

This study also revealed that though these clients have left LAPO, they however enjoyed
some positive aspects of LAPO during their participation in LAPO. The benefits they
reflected include improvements in family feeding (36.4%) and improvements in family
housing (31.8%). Regarding those personal positive aspects of their membership in LAPO
unions, a hierarchy of importance was also achieved with making new friends (45.5%), help
in making my payments (40.5%), and giving me needed advice & support (31.8%) topping
the list.

On the negative aspects that may have contributed to client exits, some related to programme
policy problems and problems with union, mostly encountered include: issues of small loan
size commanding 47%, interval between repayment (32.5%), burden of paying for other
defaulters (29.5%), personal problem of relocation with (29.5%) and a quarter of them were
expelled by the union (25%). Some others had problems arising from poor business
performance (24.2%) or spent money on crisis (24.2%). Another negative issue raised by
30% of the ex-clients was inefficient loan disbursement; mainly rural ex-clients reflected this.
Among those who complained that the loan size was too small, 57% of them were Least
Poor. Not a single client in the Very Poor category was among those who left in the first loan
cycle, and only 16% of the Poor left at the end of the first loan cycle.

On the other hand, the issue of small loan size was relevant [in descending order] to (a)
urban, semi- urban and rural clients (b) clients in the 2nd, 3rd, 1st, and 4th loan cycles, (c)
clients engaged in trade enterprises, and (d) client in the Least Poor, Poor and Average Poor
sub-categories. The positive aspect of Improvement in Family Feeding commands the same
wide-ranging attention. Any policy directed at changes in any of such wide-ranging aspects
(positive or negative) is therefore expected to be of interest to all the relevant sub-categories
of clients concerned.

Finally, another negative reason, which became clearer through the qualitative follow-up
research, is the issue of staff attitude. This issue came out strongly during some of the in-
depth interview and discussion sessions. Some of these ex-clients have picked offences over
the impertinence way some Credit Officers used to approach them, may be due to an offence
committed by any of their union members.


7. DISCUSSION OF FINDINGS
As observed from the findings, a majority of the respondents (65.2%) live in the urban area.
Clearly this is a reflection of the profile of current LAPO clientele. Although it is not a
deliberate policy of LAPO to recruit clients more from the urban area, this certainly has
implication for LAPO in view of its mission since poverty is more concentrated in rural area
than in urban area in Nigeria.

The implication from the urban-rural divide will become clearer when the proportion of
people leaving at the end of the first loan cycle is considered. Among those who left at the
end of the first loan cycle, 89% were actually from the urban areas. When this is related to the
targeting of the Very Poor, one finds that not a single client among those who left at the end
of the first loan cycle is in the Very Poor category. As revealed from the profile of the ex-
clients, the Poor and Very Poor categories account for only 18.4% of the ex-clients. This
                                                           LAPO Client Exit Study          - 22 -


implies that those who are Averagely Poor, Less Poor and Least Poor who constitute 81.7%
are most likely to be dissatisfied with LAPO, or to give problems to the programme that will
necessitate their exit. In that case, if the Very Poor and Poor poverty groups are properly
targeted, the drop-out rate probably will reduce or slow down.

The main complaint by the ex-clients was that the loan size was too small. However, among
those who made this complaint, 57% of them were Least Poor. This majority group of Least
Poor should not have been enlisted as LAPO clients in the first place if the proper tool and
procedure of selecting clients was followed. Equally it was clear from the discussion session
that there is no doubt that a majority of the ex-clients like to participate in LAPO. But the
issue is that their businesses require more money than LAPO currently offers to clients.
Realising that LAPO contribution to their business is little, their commitment to the
programme was reduced to just sending their instalments. Before long such clients start to
default, may be deliberate or not deliberate. Whatever is the case, this provokes the reaction
of the Credit Officer, which sometimes leads to disaffection, and if the situation is not
carefully handled, it may cause such client to leave or be withdrawn from the programme.

There is also the problem associated with poor busine ss performance and spending clients
money on crisis situations. Some felt that there is need for LAPO to show a level of concern
for their peculiar circumstances, which LAPO is not showing now. The need to reconsider the
use of Micro-business education for clients to effectively manage their businesses was a was
expressed by some of the ex-clients who participated in the qualitative follow- up research
and even by existing clients in some other studies. The implementation of Micro-business
package was part of the activities of LADEC, but was transferred to LAPO development
Services as an income generating activity because of lack of fund to continue facilitating the
programme. LAPO clients have not been able to afford this training since it was transferred to
LAPO Consultancy unit for income generation, hence making it inaccessible.

Furthermore, another negative issue that needs to be addressed is the problem of inefficient
loan disbursement. This obviously arises from implementation by LAPO staff. On a closer
look, it would be observed that all the clients who made the complaints (30% of respondents)
are in the rural areas. In which case, the problem has to do with the system of disbursing
loans to the rural clients. The problem of disbursement is currently due to lack of funds and
increasing number of clients competing for the scarce money available.

Finally, there is the view held by most LAPO field staff that the Very Poor people cannot
repay loan. This has actually influenced the way they apply the targe ting instrument to recruit
clients. In the process, the policy of the organisation as it relates to serving the Very Poor is
neglected. This report has shown that it is not correct to assume that the Very Poor do not
have the capacity to repay loans. This study calls for the need to re-orientate all LAPO field
staff, including the Area and Branch Managers, on the need to objectively apply the targeting
tool and to recruit more Very Poor people bearing in mind the focus of the organisation.
                                                          LAPO Client Exit Study         - 23 -


8. ORGANISATIONAL RESPONSE
In considering the problem of exits and the reactions to the findings of this study, LAPO
impact assessment team met twice with the key operations staff and management. The first
meeting was to consider the preliminary findings of the quantitative survey. The second
meeting was held at the end of the completion of the quantitative follow-up research. In these
meetings attention was paid promptly to the issue of organisational sustainability and the
peculiarity of the Nigerian society and the environment where LAPO operates, particularly as
they relate to the causes of exit problem.

It was pointed out that the problem of exit which gain recent attention has been in the LAPO
system but have long been concealed by the way it was not being reported by field staff. Exit
problems became clearer as a result of the drastic step taken to address the problem first by
ensuring the cases observed at the branches are adequately reported. The exit rate became
phenomenally high also because of the response of operations department to withdraw
problematic clients and to harmonise the process of admitting clients. The hope is that with
time the situation will normalises and the retention of good clients will be more sustained.
The pressures that have led Credit Officers not to follow strictly the procedures of recruiting
clients was linked to the fear of not hitting the target in terms of the number of clients per
Credit Officer for operations. Also, was because of the believe that the Very Poor people will
not make them to hit the target rate of repayment, which management normally set at hundred
percent repayment rate.

These problems have gained serious consideration of management. Base on the observations,
management resolved to strengthen the supervision and monitoring processes of the
organisation. Some steps have been spelt out to strengthen the control process of the
operations, to ensure that Credit Officers adequately observe clients selection process. These
steps include:
    1. Registration of union: Before any new union is registered the Area Managers must see
        all the clients of that potential union and he/she must approved, before loan can be
        disbursed to the union
    2. Closing of union: The Area Manager must, first investigate any event leading to the
        closure of a union. No union can be disbanded without the approval of the Area
        Manager.
    3. Withdrawal of mandatory saving: Area Manager on a monthly basis must approve
        withdrawal of savings, and this must be after he or she has investigated the reason
        leading to the withdrawal.

Realising that the problem of exit has also been linked to wrong targeting of client and
attitude of field staff the need to encourage credit officers and not to intimidate them was
considered a good approach. Possible questions was how wo uld the field officers be
encouraged to take work more serious and to follow strictly organisational policy. This
concern has been largely addressed by the development of supervision and monitoring
procedures.

More areas have been created with an Area Manager each and Divisional level monitoring
was also introduced. The emphasis has shifted to field monitoring than just looking records at
the branch offices.

On the issue of rural- urban divide management also considered the concentration of a
different loan products in rural area. Towards this plan, the Farming loan product, which was
                                                             LAPO Client Exit Study           - 24 -


to be strengthened for the rural areas. Since business activity is low in the rural area the
farming loan product with a longer grace period and frequency of repayment was res uscitated
for rural clients. Since a majority of rural dwellers are involved in farming the weekly
repayment system was revised to fortnightly or monthly depending on how convenient for
staff and the clients involved.

On the issue of loan size the need for increase was consider necessary. The reason is because
of the growing unfavourable economic situation. The value of the Nigerian currency has been
falling rapidly; this does not make the loan amount that LAPO offers enough to meet
minimum capital requirement by clients for their businesses. Hence the step up of loan sizes,
albeit, still far lower than what most clients expected. The first loan stage amount has been
increased from N8,000 to N10,000 maximum. Second stage from N10,000 to N12,000 and
progressively. The loan seal has also been reviewed from N30,000 to N60,000.

Irrespective of the cost of exits that the organisation might have experience the LAPO top
management is however optimistic that the problem will soon reduce to its minimum. The
reason is that there is a move to clean up the organisation of bad clients and those not within
the focus of the organisation. This process is backed-up with strict supervision and control
measures as enumerated above.


9. CONCLUSION
In the final analysis and consideration of findings of this study it is clear that the issue of loan
size is an important factor to the exited clients from LAPO except those from the poorest
poverty group. Considering the inflationary economic trends, which have influenced very
high cost of living and reduction in the value of the Nigerian currency, the issue of loan size
may not actually have been exaggerated as a contributing factor to the exit of clients of
LAPO. Also, though the issue of small loan size was important to Average Poor and Poor
poverty groups of the ex-clients, but it was stronger among the Least Poor poverty group.
Perhaps the issue of loan size would have been less important if the Least Poor were not
admitted into the programme and if a majority of the clientele were recruited from the
Poorest poverty group.

Essentially, this study has also pointed out the cost associated with the problem of wrong
targeting of clients. From the discussions the issue of wrong targeting of clients has been
strongly linked to the behaviour of field staff. It was pointed out that the inability of some
Credit Officers and their Branch Manager to follow strictly the procedure of clients selection
is a basic problem leading to the inclusion of clients who really do not value the amount of
loan offer by LAPO because it is too small for their businesses. This group of people are not
the exclusive targets of LAPO. Consequently, this problem has gained serious consideration
of management, thus some steps have been spelt out to strengthen the s upervision and control
process of the organisation to ensure that Credit Officers adequately observe clients selection
process. These steps include:
    i)      Registration of union: Before any new union is registered the Area Managers must
            see all the clients of that potential union and he/she must approved, before loan
            can be disbursed to the union.
    ii)     Closing of union: The Area Manager must, first investigate any event leading to
            the closure of a union. No union can be disbanded without the approval of the
            Area Manager.
                                                          LAPO Client Exit Study        - 25 -


   iii)    Savings withdrawal: Area Manager on a monthly basis must approve withdrawal
           of savings, and this must be after he or she has investigated the reason leading to
           the withdrawal.

The finding on the rural-urban divide equally reveals the general profile of LAPO clientele.
The distribution of the ex-clients was skewed to the urban areas just as a majority of LAPO
clients are located in urban areas. The response that this finding has engendered is the
strengthening of the LAPO Farming loan product to encourage more rural poor people to
participate in the programme.

A follow-up of this study is important to keep track of emergent exit problem. For this reason
LAPO has developed client exits monitoring procedure, which has been integrated with client
existing withdrawal process.
                                                                      LAPO Client Exit Study              - 26 -


ANNEX 1: CLIENT EXIT SURVEY QUESTIONNAIRE

A. Fill in before meeting with client:

Questionnaire number _________ Survey year __________ Date of interview ___/___/___
Client’s Name_______________________________________________________________
Address____________________________________________________________________
Name of Union ____________________________ Branch ___________________________
Sex     __1.Male   __2.Female    No of years in business before joining LAPO ________

Entry date: ________/________/_________              Exit date: ________/________/______
Number of program loans taken _______                Size of last loan____________________
Did borrower repay final loan?        __1.Yes        __2.No (amount default) N___________
Savings N_________________            Leadership position in LAPO _____________________
Attendance      __1.Regular           __2.Fair       __3.Average            __4.Poor
Loan officer (who last worked with client): ________________________________________
Circumstances of departure according to program officer (Mark only one circle)
__1.Client voluntarily left program                          __5.Relocation
__2.Loan group failed so client left                         __6.Illness
__3.Union expelled client because of loan default            __7.Business failure
__4.Program expelled client for fraudulent           __8.Other (specify)_________________
Type of business financed by last loan (Mark only one answer):
__1.Crop production            __ 8.Cloth trading    __ 14.Kiosk for provision/cosmetic
__ 2.Animal production         __ 9.Sell live stocks    __15.Work for government
__ 3.Soap production           __ 10.Sell yam/plantains/fruits       __ 16.Private worker
__ 4.Catering production       __ 11.Shop for foodstuff              __ 17.Labourer
__ 5.Restaurant service        __ 12.Provision/cosmetic shop         __ 18.Help others
__ 6.Tailoring                 __ 13.Kiosk for foodstuff             __ 19.None
__ 7.Salon service             __ 20.Other (specify)__________________________
Location of business:__ 1.Urban__ 2. Semi- Urban             __ 3.Rural
Poverty level: __1.Least poor; __2.Less poor; __3.Average poor; __4.Poor; __5.Very poor

INTERVIEW
(Read to clients):
We would like to find out a litt le about why you are leaving LAPO so that we can change and improve it in the
future. Please think of all the main reasons why you decided to leave the program. We will co mbine your
answers with those of others who have left, to understand why our members leave. Your answers will NOT be
shared with anyone else. This will take only a few minutes. Thank you for helping us.

1.How is your business functioning now?
  __1.No business                            __2.Same as when joined LAPO
  __3.Down fro m when jo ined LAPO             __4.Up fro m when jo ined LAPO
2.Please name the things you liked best about the LAPO program.
  1. __________________________________________________________________________
  2. __________________________________________________________________________
  3. __________________________________________________________________________
3. In what ways has LAPO helped your family?
  __1.More and better food          __5.Better / more clothing
  __2.Educate children/self         __6.Furn iture, utensils, home items
  __3.Improve my housing            __7.Able to jo in other desired social groups
  __4. Better family health          __8.More informed                   __ 9.None
  __10.Other (specify)________________________ ___________________________________
4. How would you describe the way the loan fro m LAPO has helped you?
  __1. Helped me quite a lot                __2. Helped me a little      __3. Didn’t help me at all
                                                                     LAPO Client Exit Study              - 27 -

  __4. Loan was a burden              __9. No response
5. Please tell me the specific ways in wh ich being a union member helped you.
(Do not read answers. Multiple responses possible.)
  __ 1.Helped me to make my pay ments
  __ 2.Provided advice and support when I needed help personally
  __ 3.Gave me business ideas and contacts
  __ 4.Offered me new friendships
  __ 5.Allowed me to develop my leadership skills
  __ 6.Gave me training and new in formation            __ 7.None
  __ 8.Other (specify)____________________________________________________________
6.Which ONE of these best describes your experience of participation in the LAPO program?
(Read answers. Mark only one answer.)

  __1.Very good __2.Good              __3.No effect      __4.Bad     __5.Very bad __6.No opin ion
7. Please name the things you disliked most about LAPO program.
  1. __________________________________________________________________________
  2. __________________________________________________________________________
  3. __________________________________________________________________________
8. In what ways has LAPO caused you problems?
   __1.I was constantly battling with debt.    __4.There was constant pressure fro m LA PO staff
   __2.I had no time for other important things. __5.It generated problems between family and me
   __3.I had problems with union members. __6.None
   __ 7.Other (specify) ___________________________________________________________
9. How would you describe your experience in repaying your last LAPO loa n?
**(Read the answers mark. Only one answer)
    __1.Difficult to pay __2.W ithin my capacity to pay        __3.Easy to pay __9.No response

(Read to Clients)
We are coming to the end of the survey. The next set of questions is about your opinion of the overall program.

10. Please state ALL your reasons for your leaving LAPO program?

A. Problems with Program policies.
Which of the follo wing reasons regarding LAPO policies influenced your leaving?
**Read all the answers (Multiple responses are possible).
  __01.The loan amount is too small _______________________________________________________
  __02.The loan length is too short __________________________________ ______________________
  __03.I do not like the time given to finish repaying the loan ___________________________________
  __04.The interval between repay ments is too short __________________________________________
  __05.The disbursement of the loans is not efficient _________________________________________
  __06.The interest charged is too high _____________________________________________________
  __07.I was unwilling to borrow because of other conditions, (such as obligatory savings, obligatory
training workshops) _____________________________________________________________
  __09. I had personal conflicts with staff ___________________________________________________
         Who? _________________________________________________________________________
  __10. I found a program with better terms.
Which one? ____________________________________________________________________
  __11.Other (specify) __________________________________________________________________

B. Problems with Union.
Which of the follo wing problems concerning the Union influenced your leaving?
**Read all the answers (Multiple responses are possible).
 __12.The burden of having to repay loan for others in union
 __13.The union told me to leave.
Why? _________________________________________________________________________
 __14.The union disbanded
         Why? _________________________________________________________________________
 __15.I had personal conflicts with other members of the union.
Exp lain________________________________________________________________________
 __16.I did not like the rules and/or the pressure established by union.
                                                                       LAPO Client Exit Study              - 28 -

        Exp lain ________________________________________________________________________
 __17.Other (specify) ___________________________________________________________________

C. Business reasons.
Which of the follo wing reasons concerning your business influenced your leaving?
**Read all the answers (Multiple responses are possible).
  __18.I have enough money now for my business ____________________________________________
  __19.My business is seasonal; I will borrow again when I need it _______________________________
  __20.I am g raduating to a loan program that makes larger loans.
Which one? ____________________________________________________________________
  __21.I am unable to repay the loans because of the weak condition of my business (like poor profits,
low sales) _____________________________________________________________________
  __22.I decided to close the business and do something else (like get a job, start a new business)
Why? _________________________________________________________________________
  __23. I sold the business.
         Why? _________________________________________________________________________
  __24.Other (specify) __________________________________________________________________

D. Personal reasons:
Which of the follo wing purely personal reasons influenced your leaving?
**Read all the answers (Multiple responses are possible).
  __25.I cannot continue because I spent the money on a crisis (such as illness, death) or a celebration
(such as marriage) in my family ____________________________________________________
  __26.My spouse (or other adult inco me earner) left me so I do not have the ab ility to continue the
business at the same level _________________________________________________________
  __27.Lack of t ime and ability to continue the business at the same level _________________________
  __28.I am relocating / relocated to another place ____________________________________________
  __29.A family member told me to stop borrowing fro m the program ____________________________
  __30.Other (specify) __________________________________________________________________

E. Environ mental and Economic reasons:
Which of the follo wing commun ity reasons influenced your leaving LAPO?
**Read all the answers (Multiple responses are possible).
  __31.My business was ruined by a disaster ________________________________________________
  __32.I have lost my customers to a new co mpetitor __________________________________________
  __33.Other (specify)__________________________________________________________________

11. Do you think that you may rejoin LAPO in future?
 __1.Yes.         Why? ____________________________________________________________
 __2.Probably
 __3.No.          Why? ____________________________________________________________

(Read to Clients)
Thank you so much for your time. We have come to the end of the interview; may I ask if yo u have any other
comment base on the above discussion on LAPO program?
_________________________________________________________
__________________________________________________________________________________________
_______Good luck and God bless.

Observations by the loan officer about the ex-client and reasons for leav ing:

The ex-client was a:        __1.St rong member           __2.Average member       __3.Weak member

What do you think is the underlying reason for this member leav ing? ______________________ _ ___________
                                                                              LAPO Client Exit Study                  - 29 -


   APPENDIX 2: IN-DEPTH INTERVIEW GUIDE TO INVESTIGATE CLIENTS EXIT
                     (Based on QUIP & MicoSave Interview Guides)
   Research Objective: To understand the reasons for clients exit from LAPO with a
   view to identifying what improvement need to be made to retain good clients.
Introduction:
We lcome, thank you for agree ing to meet with us, I am grate ful for your time .
We work with LAPO. We are curre ntly holding discussion to try to unde rstand clie nts’ reasons for leaving LAPO. We
want to assure you that the information you give us and your specific identity will be completely confidential and will be used
exclusively for our research. For us to learn please express your opinion about LAPO openly. Please do not be concerned that we
have come to trouble you we do not mean anything bad but to try understanding your feelings about LAPO’s services and policies.
The discussions will take about 1 – 2 hours to complete. We would like to take notes from these discussions to help us remember
what we learn and so that we do not miss any of the issues and ideas you give us. As a first ste p, we will want to introduce
ourse lves and would also want to know your name? Is this ok? May we continue ? Thank you.
                   Core Questions                                                           Probes
Warm up Questions
1. Ple ase te ll me the gene ral condition of your business    If inte resting response probe
now?
2. What makes pe ople like you to join LAPO?                       Have these e xpectations be me t?
General Questions
1. Ple ase te ll me how long you we re with LAPO?                  Ho w many times we re you able to take loan from LAPO?
                                                                   What were the loan product(s) you have use d from
                                                                    LAPO?
2. Ho w did you use the very last loan you took from               Was the very last loan appropriate for your needs? If not,
LAPO?                                                               why not?
3. Ple ase te ll me how you made savings with LAPO?                Apart from the mandatory savings how much we re you
                                                                    putting down for the voluntary saving
                                                                   What are your opinions about the ways the savings are
                                                                    operate d by LAPO?
Benefits
1. Ple ase te ll me what is important to you about your            Ho w did LAPO be ne fit you as a pe rson?
involveme nt in LAPO? Please also e xplain why these               Ho w did LAPO be ne fit your household and family?
are important to you.                                              Ho w did LAPO be ne fit your business
2. Ple ase te ll me about the things you really like most in       Why do you like these things?
your involve ment with LAPO.
Reasons for Exit                                                  What are the main reasons why you le ft LAPO?
1. Ple ase te ll me for what reasons why pe ople would         Probe de pe nding on reasons give n, e .g.:
leave LAPO?                                                       Why was the loan amount you rece ive d too small for your
                                                                   business?
                                                                  What was your e xpectations on loan increme nt from
                                                                   lowe r stage loan to the ne xt high stage loan? Etc.
                                                                  What are the changes do you e xpect LAPO to make to
                                                                   these reasons for your leaving?
2. Ple ase te ll me how the decision for people to leave          Who made the decision for you to leave LAPO? Why?
LAPO is made . Please e xplain why the decision is
made .
Areas of Improvement
1. Ple ase te ll me more your opinions about LAPO’s                What are the things you want to be change d or improve d
policies and manageme nt.                                           upon?
                                                                   Why do you want them change d or improve d upon?


   Thank you very much, the discussion has come to an end, do you have any question for us or any
   other thing you want to add?

								
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