On Monday, the eve of the Ramadan celebration, anyone who worked into most of the banks in Nigeria would have noticed the unprecedented crowd of people inside the halls.
At a branch of GTBank in Apapa, the queue for customers waiting to collect cash over the counter was so long, the staircase was nearly blocked, and more people were still trooping in to get some cash for the holidays. The bank even had PoS ready for people with debit cards that couldn’t access the machines due to network. A few minutes later, the bank informed people on the deposit queue that due to network problems, there will be delay in posting their transactions.
At different ATMs around Ajah-Lekki axis in Lagos, people also waited on queues for hours waiting to withdraw cash to spend. Shopping malls and other merchants ditched their PoS machines and transfer options for cash payment because of erratic network fluctuations was delaying transactions and shoppers were beginning to agitate.
At a popular restaurant at Ikorodu, the manager pre-informed customers before they ordered for drinks or meal that money transfers was not allowed, PoS was not working, only cash was accepted. One visibly angry customer whipped out his phone and displayed the message his bank had sent him on Tuesday, 4 June, 2019:
“Dear esteemed customer,
We sincerely apologize for the delay you may have experienced in processing transactions on our digital platforms. This is due to a challenge with our national switching service platform designed for facilitating electronic payments.”
He turned to this reporter and asked “Why does it happen every weekend or holidays when they know people are going to need to make payment?”
It is barely days since Godwin Emefiele, the governor of Central Bank of Nigeria (CBN) commenced his second term in office, but the cashless vision he inherited from his predecessor, the current Emir of Kano, Muhammadu Sanusi II, may miss its 2020 deadline.
For those not acquainted with the vision, the CBN cashless policy was established in 2012 by the Central Bank of Nigeria to curb excesses in the handling of cash. The policy not only sought to address the inefficient handling of money it was also a strategy to bring more Nigerians into the financial system electronically. The CBN alluded to this in the report:
“An efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.”
Following the policy, the CBN adopted the National Financial Inclusion Strategy (NFIS) in 2012. The NFIS was built on four strategic areas of agency banking, mobile banking and mobile payments, linkage models and client empowerment. The NFIS was revised later by the Emefiele-led CBN including a major goal of reducing the proportion of adult Nigerians that are financially excluded to 20 per cent in year 2020 from its baseline figure of 46.3 per cent in 2010.
In less than six months, 2020 will be here and Nigeria could still be nowhere near achieving the target. According to the Nigeria Interbank Settlement System (NIBSS), there are currently 35 million Bank Verification Numbers (BVN) in the country and an estimated 10 million of this number are considered to be financially included and financially served, these being the BVN holders who are actively engaged in financial transactions through banks, Microfinance banks, etc. The remaining 25 million are adjudged to be financially underserved. NIBSS also estimate that 7 million financially underserved individuals do not own bank accounts but enjoy limited financial services through informal arrangements such as cooperatives, esusu, mandatory insurance, etc.
“It follows therefore that only about 42 million (42 per cent) of the estimated 100 million adult Nigerians enjoy some form of financial inclusion while about 58 million (58 per cent) adult Nigerians are financially excluded. EFiNA in a separate study of 2016 estimated that 41.6 per cent of 96.4 million adult Nigerians are financially excluded,” NIBSS stated.
Much of the success of CBN’s financial inclusion drive is hinged on deepening a cashless culture, which means expanding the payment network coverage and scaling technology infrastructure across the country.
Unfortunately, technology infrastructure has not been growing with the pace of adoption. While over 114 million Nigerians are on the internet as at January 2019, the infrastructure that powers the internet is still at a primitive level. NCC reports that broadband penetration climbed to 33 per cent in 2019, it was overwhelming dominated by mobile broadband. The ICT ministry under Adebayo Shittu largely paid no attention to fixing the many challenges facing fixed broadband which is more reliable and efficient.
This has ensured that despite the perceived growth in broadband penetration, the network failures Nigerians experienced never went away.
To be sure, the redundancy in technology infrastructure is not for lack of interests from investors. Over time, it has shown clearly that it requires the right leadership to unlock those investments. For instance, Emefiele’s CBN is yet to issue mobile money licenses to mobile network operators who have expressed interest in providing the service and who have significant capital for investing in the infrastructure. At least 30 business names have applied for registration as payment service banks since 2018 when the CBN indicated that it will be opening up the space for non-banking agents. In fact, in less than 5 months, the PSB licensing period will be one year and the CBN is yet to give an official statement whether it will be going ahead or not.
The CBN under Emefiele however has taken steps at various times to reduce the amount of cash in circulation but it would need to more than double its steps in convincing Nigerians and merchants to stick with the electronic payments. Once Nigerians have faith in them, it could be easier to convince those who are not banked to come on board.
But would Emefiele move quickly in order to save his financial inclusion vision in his second coming?
