The near-collapse of electronic banking in the last one week owing to the frenzy occasioned by the implementation of the Central Bank of Nigeria’s (CBN’s) policy on cash withdrawal limit and currency swap has shown that more still needed to be done to in the area of digital infrastructure provisioning. LUCAS AJANAKU reports.
Thirty-seven-year-OLD Chuks Odinaka had visited Justrite, a super market in Iyana-Ipaja, Lagos for the normal weekend shopping. In view of the agonising wait at the few available automated teller machines (ATMS) dispensing cash in his neighbourhood, he had opted to pay through his bank’s mobile banking app.
Though the supermarket accepts ATM cards on its Point of Sale (PoS) machines, his experience the previous night had made the option of carrying an ATM card a worthless exercise in the last one week or so.
He had gone to a local bar with his friends, wife and two children for the weekend to have drinks and fish pepper soup. With a N10,000 bill to settle, Odinaka reached for his ATM card and asked the attendant to deduct his cash. He tried almost six times but there was no signal and the transaction remained unsuccessful.
“The experience wasn’t palatable at all. I had to resort to the use of my Unstructured Supplementary Service Data (USSD) to try to pay. After a successful payment, cash was deducted from my account but never credited to the merchant. Since they didn’t know me, they insisted I wait till they get transaction alert before they will let me go. The innocent woman, who lamented losing cash to several reversed transactions, insisted I will not leave. It was an embarrassment but it was the situation we found ourselves. After trying unsuccessfully too to use her mobile app to check her account balance, she gave up. Since I had two mobile phones and I live not too far away from her, I left one mobile phone with her. After three hours, she called that she had received an alert,” Odinaka said.
Executive Vice Chairman, Nigerian Communications Commission (NCC), Prof Garba Danbatta, said the growth in the telecom industry has led to convergence in various sectors, especially between telecoms and financial service sector.
According to him, there is no greater demonstration of this than the fact that financial transactions that were once conducted in-person at banking halls are now undertaken on consumers’ mobile devices. “Financial and commercial activities have been digitised, and the most common of these is the USSD, which has brought ease to financial transactions,” he had said.
With this experience, he had seen the worthlessness of his ATM cards. So he went to Justrite armed with his mobile banking app which not only failed him woefully but also embarrassed him monumentally.
Odinaka’s experience is but one of the several ugly experiences bank customers have been going through in the last one week or more. A food vendor, Iya Blessing, stopped accepting transfers because of the punitive cost of collecting her cash from PoS merchants in the absence of bank payments over the counter and ATMs.
Last December the CBN had directed deposit money banks and other financial institutions to ensure that over-the-counter cash withdrawals by individuals and corporate entities per week do not exceed N100,000 and N500, 000.
However, due to the mixed reactions from Nigerians, the apex bank increased the maximum weekly limit for cash withdrawals across all channels by individuals and corporate organisations to N500,000 and N5 million.
The cash withdrawal policy began on January 9, 2023.
According to the CBN, the aim is to boost the cashless policy and reduce the amount of cash outside the banking system.
The bank had directed commercial banks to load their ATMs with the redesigned naira notes in a bid to boost circulation.
The CBN also ordered the banks to halt dispensing the new currency notes over-the-counter. But in view of the sufferings of Nigerians, especially the vulnerable, the bank reversed itself.
He explained that the attention of the apex bank was drawn to complaints from Nigerians who have not been able to access the redesigned notes since the banks started dispensing them on December 15, 2022.
Cash outside banking vaults
CBN, in its money and credit statistics, said currency outside the banks added N108.67billion to N2.84 trillion in October 2022 from N2.73 trillion in September last year.
According to the CBN data, currency outside the banks appreciated by 11.07 per cent Year-on-Year (YoY) from N2.54 trillion reported in corresponding period of 2021.
The statistics revealed that currency outside banks hit the highest record of N2.84trillion in October.
While defending its decision to redesign the Naira, the apex bank in October expressed that some individuals were stockpiling huge amounts of cash outside the banking system.
The CBN Governor, Godwin Emefiele said: “Significant hoarding of banknotes by members of the public, with statistics showing that over 85 per cent of currency in circulation are outside the vaults of commercial banks.
“To be more specific, as at the end of September 2022, available data at the CBN indicate that N2.73 Trillion out of the N3.23 trillion currency in circulation, was outside the vaults of Commercial Banks across the country; and supposedly held by the public.
“Evidently, currency in circulation has more than doubled since 2015; rising from N1.46 trillion in December 2015 to N3.23 trillion in September 2022. This is a worrisome trend that cannot be allowed to continue.”
The statistics had shown that currency-in-circulation (CIC) grew YoY by 11.22 per cent to N3.3 trillion in October 2022 from N2.97 trillion in 2021.
CIC in October gained 2.17 per cent or N70.03billion to N3.3trillion in October from N3.23trillion reported by the CBN in September, the Statistics disclosed.
Stakeholders react
President, National Association of Telecoms Subscribers of (NATCOMS), Chief Deolu Ogunbanjo blamed the flip-flop services of electronic transactions on the pressure exerted on the network owing to the knee-jerk CBN’s cashless policy implementation. He said the current state of access to telecoms services is very poor because of the pressure on the network.
“Cashless is good because it is a global phenomenon but it must be implemented gradually. With the current state of infrastructure now, you will be lucky if you make 10 cash transfers and get alert for two. As a matter of fact, the success rate of electronic cash transfer since the problem started has slumped to between 20 and 25 per cent. The CBN should extend the timeline by another two months,” he said.
But in a swift reaction, the President, Association of Telecoms Companies of Nigeria (ATCON), Ikechukwu Nnamani said the flip-flop service of electronic banking has nothing to do with the strength of current network infrastructure.
Nnamani who is the Chief Executive Officer of Medallion Communication Limited, said the inability of bank customers to make use of either the USSD or app is purely a fault of the banking platforms.
