Ahead of the yuletide season, customers of Nigerian banks are currently experiencing cash scarcity in the banking halls and are forced to patronise roadside Point of Sales (PoS) operators that now dot every nook and cranny of the country.
This “anomaly” has been severally brought to the forefront as currency outside banks surged by 66.2 per cent in September 2024, reaching N4.02 trillion compared to N2.42 trillion in September 2023, a notable rise of N1.60 trillion in just one year.
This is according to the Money and Credit Statistics data of the Central Bank of Nigeria (CBN).
On a month-on-month basis, currency outside banks grew by 3.8 per cent in September 2024 from August’s figure of N3.87 trillion, translating to an increase of N147.9 billion.
According to Sonny Iroche a Financial & Infrastructure Consultant, there is an urgent need for the Central Bank of Nigeria to beam its searchlight into what he described as a new and unethical trend of the proliferation of POS operators.
He called for an investigation of alleged collusion between top bank officials, bank tellers and these street cash hawkers, which is leading to extortion and economic sabotage
“Since the Buhari-Emefiele Central Bank of Nigeria Naira redesign sometime in 2023, leading to scarcity of the domestic currency, the Naira, a new and unethical trend of the proliferation of POS has emerged, leaving cash-strapped bank customers with no other choice than to patronise these streets cash vendors and hawkers.
“The Nigerian banking sector is facing a crisis of trust and transparency due to an unusual pattern of cash dispensation. There is a growing trend in the complex web of issues surrounding the scarcity of cash at banks’ Automated Teller Machines (ATMs) and banking hall tellers, juxtaposed with street vendors offering cash at a premium through Point of Sale (POS) machines, which is particularly prevalent in the Lagos area.
“It is crucial to investigate the allegations of collusion between top bank officials and these street cash hawkers, leading to extortion and economic sabotage. It calls for better monitoring and accountability from the Central Bank of Nigeria and the top management of some Nigerian banks, who are fingered in this malpractice, to address this malfeasance and restore public trust in the banking system.
“This unwholesome practice has put a big dent on the financial landscape in Nigeria, which has been marred by a troubling trend in recent years: a pattern of cash scarcity at traditional banking channels, such as ATMs and tellers, while street vendors equipped with POS machines offer cash at a premium” he said.
This is one of the several unusual financial practices that are prevalent in Nigeria.
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However, in unbanked areas, the PoS operators are doing a great job in driving financial inclusion and bringing banking closer to Nigerians and providing convenience and comfort for those unable to visit the banking halls, especially in rural areas.
But same cannot be said if urban areas where a bank has several ATMs lines up, with none of them dispensing cash. Yet POS operators hand around same area willing to give any amount a customer may need.
Another unwholesome financial practice is the circulation of dirty and worn-out notes by banks, in contrast to the availability of crisp new notes from street hawkers lurking around and displaying their wares during celebrations such as wedding receptions, birthdays, and other parties.
This highlights a disparity in currency management practices as the deliberate withholding of clean notes by banks, only to be distributed at a premium by street vendors, is a clear indication of economic sabotage and profiteering at the expense of the general public.
“This unethical behaviour not only harms the economy but also perpetuates a culture of indolence, corruption, and impunity.
“It is incumbent upon the Central Bank of Nigeria and the top management of Nigerian banks to be held accountable for this malfeasance in currency management. The failure to address these issues not only undermines the credibility of the financial sector but also jeopardises the financial security of customers.
“Security agencies must take immediate and decisive action to investigate and prosecute those involved in this extortion scheme, ensuring that justice is served and deterrence is set for future wrongdoings” Iroche opined.
In Iroche’s words, “There is no other country that readily comes to mind where such practices occur. It is essential for the CBN and the top management of Nigerian banks to take proactive measures to address these malfeasances and restore public trust in the financial sector” he noted.
Another worrisome unwholesome practice is the insistence of businesses on charging a certain percentage on top of your bills whenever a customer intends to transfer or use his/her debit card instead of making cash payment.
“One time I wanted to buy fuel at a filling station, and I used my debit card. Before I punched my pin into the POS machine I discovered there was a little extra added to the amount I was to buy.
“When I enquired why it was so, the attendant said since I was not paying cash, they had to include ancommission fee because of the POS operator. That they are charged a commission every time a transaction takes place on the machine”, Afolabi Ogundare, a civil engineer shared his experience.
A teacher, Shade Akinsanya also had a similar tale. “I usually go to market at the beginnin of every month to stock our home with needed household items. Sometimes I am forced to buy as many products as possible from one point, because the more points I buy goods from the more charges I have to pay.
“The sellers deduct N50, sometimes N100 when I have to pay with my ATM card. If I complain they tell me to bring cash, which of course is very scarce in Nigeria now. In some cases they also ask you to add the charge even when you offer to make a transfer”, she narrated.
Another peculiar practice prevalent in Nigeria is limit of cash a customer can withdraw from their accounts at a bank’s ATM. While several explanations and excuses have been given for this practice, Nigerians still find it absurd that they cannot get their saved money from their banks as at when they need it. Instead they have to pay a charge, mostly to POS operators before they get access to their hard earned money.
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