The current cash scarcity in Nigeria, characterized by long queues at ATMs and exorbitant fees charged by Point-of-Sale (POS) operators, has become a pressing concern for businesses and individuals alike. Tope Dare, Executive Director of e-Business and Infrastructure at Inlaks Computers Limited, attributes this predicament to the flawed implementation and management of the Central Bank of Nigeria’s (CBN) cashless policy. While the policy aims to reduce reliance on physical cash and promote digital transactions, its execution has inadvertently created a parallel cash market that disadvantages ordinary citizens. Banks, often blamed for the cash crunch, are not solely responsible. Regulatory policies, coupled with the inherent challenges of transitioning a largely cash-dependent economy, have significantly contributed to the problem.
The CBN’s cashless policy, while well-intentioned, has had unintended consequences. By limiting ATM withdrawals and encouraging digital transactions, the policy has paradoxically fueled a demand for physical cash. Citizens, wary of potential difficulties accessing their funds, resort to hoarding cash, further exacerbating the scarcity. This scarcity has, in turn, created a lucrative opportunity for POS agents, who have evolved from mere alternatives to traditional banking services into primary cash dispensers, often charging exorbitant fees for their services. This exploitation of the cash crunch has created a vicious cycle, perpetuating the very problem the cashless policy was designed to address.
The proliferation of POS agents, while bridging a gap in financial inclusion, has also introduced new challenges. Due to limited access to legitimate cash sources, many agents resort to unethical practices like emptying ATMs, further limiting access for regular bank customers. This creates a disparity where those who can afford the high POS fees have access to cash, while those who cannot are left stranded. This two-tiered system undermines the very essence of financial inclusion, exacerbating existing inequalities and creating a breeding ground for resentment and frustration among the populace.
The preference for POS services, despite the high charges, underscores a deeper issue. Factors such as proximity, speed, personalized customer service, and readily available cash contribute to the popularity of POS agents, especially in areas with limited access to traditional banking infrastructure. This highlights the failure of traditional banks to effectively cater to the needs of a large segment of the population. The lack of adequate ATM coverage, coupled with restrictive withdrawal limits, has pushed many customers into the arms of POS operators, despite the associated costs.
The stark contrast between the number of POS terminals (approximately 2.7 million) and ATMs (less than 21,500) in Nigeria, against a backdrop of over 63 million bank customers, underscores the growing reliance on POS machines and the inadequacy of the existing ATM network. Low withdrawal limits imposed by banks further exacerbate the problem, forcing customers to make multiple withdrawals, incurring additional charges, and contributing to ATM congestion. This disproportionately affects individuals heavily reliant on cash, particularly those in the informal sector, the elderly, and those less comfortable with digital banking platforms.
While the CBN has taken steps to address the cash scarcity, such as penalizing banks for inadequate cash availability and encouraging customers to report ATM shortages, more comprehensive solutions are needed. Addressing the root causes of the problem requires a multifaceted approach. This includes expanding ATM networks, particularly in underserved areas, reviewing withdrawal limits to align with the needs of the populace, regulating POS agent fees to prevent exploitation, and intensifying public awareness campaigns promoting digital literacy and the benefits of cashless transactions. A balanced approach that considers the needs of all stakeholders, rather than simply penalizing banks, is crucial for achieving the desired outcome of a truly inclusive and functional financial system. Ultimately, the success of the cashless policy hinges on addressing the underlying issues driving the demand for physical cash and ensuring that the transition to digital transactions is equitable and accessible to all.
