Access Bank Liberia kept on lending to microfinance clients despite deadly epidemic

Until a few months ago, clients washed their hands and had their temperatures checked before entering Access Bank Liberia branches in Monrovia. They received their withdrawals from tellers wearing plastic gloves. If they made a deposit, they left the bank praying they’d be alive long enough to withdraw their funds.

Ebola devastated Liberia during a two-year epidemic that ended only in March (with a further outbreak that was declared to be at an end on 9  June). The disease killed more than 11,000 people in the West African country and its neighbours Guinea and Sierra Leone. Anyone infected stood only a fifty-fifty chance of survival. But Access Bank Liberia continued to extend loans to the small retailers, street vendors, and craftsmen who depend on it.

“Ebola was like warfare, but we never stopped lending,” says Horatio Weedor, head of micro lending for Access Bank in Monrovia.

“All the other banks stopped lending. They knew the borrowers might die and not repay the loans. We kept going and this brought us very close to our clients.”

That strategy led to a dip in Access Bank’s capital, though strong results since the end of the epidemic have pushed it back above the legal minimum. Even so, the bank’s holding company is considering a EUR 500,000 capital injection from the European Investment Bank to provide a cushion against potential unexpected events. “Liberia is the kind of country where things happen quickly,” says Friederike Möllers, Access Bank Liberia’s chief executive officer. “In the last five months, we’ve had a continuous profit. But you just don’t know what the next six months might hold.”

Access Bank Liberia microfinance head Horatio Weedor
Horatio Weedor, micro loans head at Access Bank Liberia

Efficient microfinance deals

LFS Financial Systems founded Access Holding Microfinance in 2006 to create banks in developing countries that would lend to small businesses. In addition to Access Bank Liberia, founded in 2009, the Berlin-based company runs operations in Azerbaijan, Madagascar, Nigeria, Tanzania, Zambia, Tajikistan, Rwanda, Georgia and Brazil. Shareholders include national development institutions from the UK and Germany, private microfinance investment funds, the International Finance Corp, and the EIB.

The EU bank’s share of the holding company “is an efficient way to invest,” says Hannah Siedek, an investment officer in the EIB’s microfinance unit. “With one contract, you get an investment that impacts multiple markets.”

The EIB made a founding USD 900,000 equity investment in Access Bank Liberia and approved a loan of up to EUR 1.5 million. So far the Bank has disbursed a total of EUR 1.8 million to Access Bank.

Of the USD 16.9 million in loans Access Bank holds in its portfolio, 98% are microloans of less than USD 7,000 and 65% of its clients are female.

Access Bank Liberia microfinance funds water delivery
Access Bank gave this water-delivery company a grace period on repayments during the Ebola crisis. Now the company paid off the loan and took another one.

Liberia microfinance helps post-Ebola recovery

The potential capital injection would be drawn from the EIB’s EUR 500 million Impact Financing Envelope, which targets investments in Sub-Saharan Africa, the Caribbean and the Pacific that have a high development impact and higher risk than traditional EIB projects.

The significance of Access Bank Liberia was clear during the Ebola epidemic, when it continued to make loans in the face of the devastating disease that killed 29 clients and three members of its staff. All clients were granted a two-month grace period on repayments, and some were allowed even longer. Micro lending head Horatio Weedor called the families of dead clients and told them Access Bank was writing off their loans. “It was the biggest thing they could ask from a financial institution,” he says. “They lost their family member, and then they were worried they would have to pay off a debt as well.”

The bank’s worth has become even more apparent since the World Health Organisation declared the end of the emergency epidemic situation in March. Access Bank is considering the introduction of a mobile banking system that would extend its reach to rural areas. Meanwhile, as Liberians struggle back from the devastating economic and social effects of Ebola, many of the relatives of Access Bank’s dead clients have returned to Weedor for new loans. “These tragedies made us closer to our clients,” he says. “Now the situation is getting better for us and for them.”