Esther is a trader in one of the popular markets in Lagos. She had a bank account where she saves proceeds of her daily sales until she wants to restock her little shop. Then, the only fee charged by her bank was the SMS alert charges. She didn’t mind that because she needed to keep a tab on what comes in and goes out of her savings account at any point in time. She was also very careful to avoid reckless withdrawals that will incur unnecessary charges.
However, all that changed with the recent introduction of a cocktail of charges on accounts by the banks and the introduction of the stamp duty charge of N50 on every transaction of N1000 and above on bank accounts by the federal government. Esther has lost interest in keeping her many in the bank and has resorted to the use of the traditional contributory/savings scheme with the “Esusu” providers.
Although most of the charges and the stamp duty charge were supposed to be levied on current accounts only, the banks have surreptitiously extended them to even savings account and many Nigerians, like Esther too, are finding it difficult to afford mainstream banking and are resorting to traditional banking systems and methods.
The “Esusu” or “contribution club” is a traditional rotating savings and credit association where individuals contribute a particular amount monthly and have access to credit or a lump sum in future without interest or unnecessary charges. This kind of credit association has flourished in Nigeria for generations and is now being practiced more by traders and people who cannot access bank loans or are discouraged from using mainstream banks due to their excessive charges.
Esther confided to BusinessDay that the Esusu contributory club benefits her more as she could access interest-free credit to do her business and pay up in future without the all the hassles that come with accessing a bank loan. She said she may not even be able to access any loan because she has no collateral and no bank will listen to her.
BusinessDay findings also revealed that many workers in the formal sector who compulsorily receive their salaries through the formal banks have also learnt to keep their businesses with the banks to barely essentials. Mr Kelvin, a civil servant in Lagos, said he rushes to the bank to withdraw his entire salary immediately he receives an alert. He said failure to do that, he gets slammed with all kinds of charges by the bank. According to him, the economic recession even makes it very difficult if not impossible to save anything. But even at that, he prefers to use the monthly contributory saving and credit scheme, Esusu, in his place of work than leave any money of his in the bank.
As recession bites and banks reel from the undue exposure in the oil and gas sector and non-performing loans, banks’ moves to make up for these shortfalls from their customers is gradually leading to the financial exclusion of many Nigerians or at best driving them to the traditional banking system.
