TheCable

BY OLUSEGUN ATANDA-MUSA

Nigeria has an unhealthy predilection for scapegoating. FX is galloping, let’s hang it on crypto. The fintechs are doing an amazing job powering digital payments, let’s halt their momentum. Nigerian basketball, especially the men’s game has gone down, let’s blame the players. Finger-pointing and looking for a fall guy seems to be the classic modus operandi for how we roll in these parts.

This extremely sad and tragic behavioural pattern doesn’t give room for a holistic examination of issues and allow for well-rounded answers to be proffered. No society can progress like this because the end result is that nothing changes, mistakes are repeated and we go around in vexatious cycles on a rollercoaster.

The purpose of this intervention is very simple – we must stop this orchestrated campaign of calumny against agency banking. This is because it is very symptomatic of the Nigerian condition as described above and in the final analysis, it will take us back to the times when we queued with tally numbers in heat-infested banking halls. That’s a nod to retrogression and one we should strenuously avoid. That said, let’s unpack the issues.

From time immemorial, there have been banks. There has also always been money in circulation whether as cowrie shells, gold bars, or bank notes. They are the cornerstone of today’s modern, commercial-driven and transaction-reliant society that we live in. So what exactly do banks do? Their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds. And when you need it, they give it back to you as cash and or allow you to make transfers.

Recently, we have seen queries raised about the performance of banking channels, especially the performance of automated teller machines (ATM) in many cities across Nigeria. Customers are venting that these ATMs aren’t dispensing cash and that even the bank branches don’t have enough cash to give customers. As already highlighted, we have been looking for a perceived enemy or imaginary target to take out these frustrations on, and sadly, they seem to have found an easy or soft target in agency banking operators, commonly referred to as POS agents, which is wrong on so many levels.

Firstly, banks have many channels for meeting customer needs – ATMs, mobile and internet banking, USSD, branches, POS agents/agency banking, and ATMs, amongst others. So clearly, customers have more than one tool at their disposal to carry out financial transactions. The begging question then is, why do we have an over-reliance on one particular channel? And when you look at the ATM space, there are roughly about 23,000 ATM teller machines across the country for a population of over a hundred million people.

Also, ATMs as a banking channel are a high cost and high maintenance cost element for banks. Clearly, it is manifestly evident that banks are not investing in the deployment of new ATMs while leaving the old ones to rot. So, if banks are not living up to their responsibility, why are we not calling them out frontally and chastising them for dereliction of duty? Instead, POS operators are being dragged up and down. That’s just plain wrong.

Closely aligned to this ATM cash dispensing brouhaha is another obvious fact – we have a problem: an over-reliance on cash. This is in spite of the many efforts that the government has made to get Nigerians to embrace a cashless society especially in view of some of the associated risks like robbery attacks but sadly, not much progress has been made. The CBN has also introduced charges for cash withdrawal over the counter at banking halls to discourage this love for cash handling. The unintended consequence of this is that merchants, traders and SMEs will find alternatives which might not involve taking cash to the banks. The government must do everything within its power to support fintechs and encourage innovation to fast-track the adoption of digital payments.

Agency banking in Nigeria is a well-regulated industry as the Central Bank of Nigeria has well-laid-down guidelines that define operations in the POS space. There is also the Federal Competition and Consumer Protection Council (FCCPC) supervising happenings in that segment. So it beats my mind that educated folks don’t know that agency banking operators have government agencies checking up on their activities. Anyways, now they know.

The other point that needs to be highlighted is the critical and pivotally infrastructural role that agency banking operators play in the financial services landscape.

POS operations have helped the country fast-track its ambitions to meet set financial inclusion targets. Today, you have agency banking in every nook and cranny of the country, even in many remote areas that have never had a bank before. Which is why they were the saviours and darling of everyone as we saw during the cash crunch saga.

Agency banking operators are providing a service. Feel free to call them human banks. They incur transaction fee costs, there are also costs like the purchase or lease of POS terminals, setting up of physical locations, recurring expenses for trips to banks, data for the POS devices, utility bills and other critical operational expenses. Why then are they being made out to be the villains in terms of the charges incurred by customers when they make cash withdrawals from these agents? It really doesn’t make any sense because they have a legitimate business to run and no one does business to incur losses.

In conclusion, instigators must be reminded that POS operators are legitimate and value-driven businesses and we must not criminalise the useful and valuable work that they do. Otherwise, we risk reversing the huge gains made in inclusivity and plunging Nigeria back to the dark ages of tally numbers and long-winding queues. Can I hear someone say ‘we reject it’?

Olusegun Atanda-Musa is a financial services professional