The seeming scarcity of cash in most banks and the Automated Teller Machines (ATMs) has continued to provide ‘opportunities’ of exploitations to Mobile money agents, which have become ubiquitous using handy point-of-sale (PoS) machines to provide ‘essential services’ to millions of people without access to cash both in cities and rural areas.
Nigerians, reeling under severe hardship typified by high inflation and dearth of credit for small businesses due to high interest rates are being made to pay higher for the services by the PoS operators as most of them have increased their commissions from N100 per N5000 to N150/N5000.
According to AFP, even on the streets of major cities, they have become a go-to, due to an ongoing shortage of cash at ATMs since a much-vilified redesign of the national currency, the naira, last year.
“There are three of them (agents) on my street alone,” Chi Etche, a 29-year-old media executive, told AFP. “This means I don’t need to take a bike or cab to reach the nearest bank ATM.”
But the reduced purchasing power has increased the level of opposition to their activities, with claims that some are exploiting the country’s financial plight, compounding the worst cost-of-living crisis that Nigerians have faced in decades.
“We are now buying back our money from (point-of-sale) PoS agents,” Ibrahim Adamu, a 39-year-old trader, told AFP. “The commission they charge is increasing and you can hardly get cash from the machines.”
In 2013, the Central Bank of Nigeria (CBN)announced a drive to improve access to financial services across the country.
According to Enhancing Financial Innovation and Access (EFInA), an NGO, by the end of last year, at least 74 percent of adults in Nigeria had access to financial services. Just over half (52 percent) used traditional banks.
CBN’s decision and the cash crunch, however, have given ordinary Nigerians reliant on cash no alternative but to use agents, experts say.
“CBN policies simultaneously raised barriers for banks to offer cash and cash alternatives to their customers in pursuit of its cashless policy mandate,” said Ikemesit Effiong, a partner at Lagos-based risk consultancy SBM Intelligence.
Agents, however, often operate without identity checks of their customers or regulatory oversight, he added.
The apex bank, under the immediate past Governor, Godwin Emefiele announced that it was redesigning the naira in October 2022.
Soon after, Emefiele, ordered a cap on cash withdrawal from ATMs and in banking halls as the presidential election approached.
“Over 85 percent of cash that is in circulation is outside the banks,” he said at the time.
Vaunted as part of the bank’s cashless policy push, the restrictions put pressure on businesses, sparked angry protests, and gave mobile money agents leverage to exploit the cash shortage.
Besides, daily capping of withdrawals from the banks, for which the lenders are equally using to exploit customers, have compounded the plight of customers who are now at the mercy of the PoS operators, while CBN continues to ‘look at the other side.’
More worrisome is the fact that Over-the-counter withdrawals of large sums continue to attract punitive charges,amid long queues in banking halls and frequent ATM service downtimes time.
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That has driven more people towards mobile money agents, said Uzoma Dozie, the founder of challenger bank Sparkle.
‘Excessive Fees’
Many Nigerians accused bank officials of diverting cash meant for ATMs to agents for personal gain.
“Some agents exploit cash scarcity by charging excessive fees for cash withdrawals and transactions,” Dozie told AFP.
“However, this practice isn’t inherent to the mobile money system but rather a symptom of broader cash availability issues and inadequate oversight.”
A few agents told AFP they also get their cash to run their businesses from other sources.
“I go to markets to buy cash from traders and bureaux de change. I factor that into the commission I charge customers when they come to withdraw cash from me,” said Ayo Olaoluwa, 34.
Ifeoma Onwuabuchi, 46, got started with about ₦100,000.
“That’s why you see a lot of people coming into the space. The income is not big but it helps keep me moving,” Onwuabuchi said.
Metrobusinessnews.com (MBN) gathered that some banks are capitalising on the desperation of customers to exploit them, while making cash available to the PoS operators on demand.
“I have an understanding with one of the bankers whose branch is located in Ikeja, who provides me cash on demand. But, it’s not free. But it’s better for me as it increases my volume of business with the attendant higher rate of turnover, which translates into daily profits for me,” an operator at Agidingbi, Ikeja told MBN on Saturday, December 7, 2024.
However, he insisted that proper regulation and enforcement are lacking which have left the concerns of customers unattended while at the same time preserving the “benefits of agent banking”.
CBN governor Olayemi Cardoso insisted that empty cash machines will not be tolerated and warned that defaulting banks “will face stringent penalties”.
“We also urge full regulatory compliance by all stakeholders, including Mobile Money Operators and PoS Agents, to promote digital transaction channels and improve service delivery,” he said.
But “Nigerians are waiting with bated breath when Cardoso would walk his talk to alleviate the ‘added sufferings’.”