- Banks demand utility bill, prevent people without electricity supply from opening accounts Residents bank under bed, ground, others
- It’s nonsensical for banks to be rigid with such demand – Ex CIBN boss
Small scale businesses in many rural communities in the northern part of the country are faced with existential challenges following the absence of commercial banks in their neighbourhoods. Many of them have resorted to primitive ways of banking, thereby depriving the economy of the gains that come with saving money in banks. INNOCENT DURU examines the implications in this report.
When the Central Bank of Nigeria in 2018 proposed establishing Payment Service Banks in rural areas across the country to promote financial inclusion and enhance access to financial services for low income earners and the unbanked, Ibrahim Hassan, a native of Bunga area of Bauchi State was elated.
The CBN plan for Ibrahim and other members of his community was seen as a welcomed idea as they hoped that the implementation would make them take orders outside their community and enhance their productivity and economic power.
“We don’t have a bank anywhere around us. It is really affecting my business.
“It was worse during the naira scarcity period. People wanted to buy goods and pay through electronic transfer but because I didn’t have a bank account, I refused to sell to them,” he said.
Worried by the crippling effects of not having a bank account for his business, Ibrahim said he made efforts to go to Bauchi town to open one. The fare wasn’t cheap but his quest to open a bank account and enhance his business compelled him to give it all it takes.
“From Bunga to Ningi where there is a bank is about seven to eight kilometres. It costs between N2,000 and N3,000 to get to where I can get a bank because the road is horrible,” he said.
After spending so much to get to a bank in Bauchi, Ibrahim heaved a sigh of relief, thinking that he would thereafter begin to take orders from any part of the north and the country at large. But his hope was dashed.
“The long process discouraged me,” he said.
“My place is not connected to electricity, yet when I went to open a bank account they asked me to provide a utility bill. Where will I get NEPA bill when I don’t have light in my area?”
Frustrated by the unsavoury development, Ibrahim perished the thought of going further with his plan to open a bank account. Instead, he resorted to one of the Stone Age methods of saving money.
“I dug some holes on my bed, and that is where I keep my money. I am worried that it could be stolen but I have no alternative. If we had a bank in the community, I would keep my money there.
“Apart from farming, I am also into buying and selling. I do travel to Kano for business, but I am always afraid of carrying cash from Ningi to Kano, because anything can happen.
“That would not have been the case if there was power supply or a commercial bank in the community. We need both to make life meaningful for us and to help our businesses grow.”
Continuing, he said: “I am not alone in this. Majority of our people don’t have bank accounts. They are put off when they are asked to provide electricity bills when there is no power supply in the area. It is annoying and discouraging.”
It has also been a distressing experience for Abubarkar Sanni whose ambition to grow his business beyond where it is at the moment has been hampered by his inability to own a bank account.
“I don’t have a bank account, Walahi,” he said in response to a question posed by our correspondent.
“I made three attempts at opening one but the requirements and the queues were discouraging.
“After those attempts, I stopped because I didn’t want to waste the time I should be using to do my business queuing up to open a bank account.
“The distance between my residence and the closest bank is about 45 kilometres. The bank is inside Bauchi and I am staying in Liman Katangu.
“We don’t have any bank in our community. Whenever I am going to the bank, I spend N4,000 on transportation. So, it is not easy for me and other people in my community to go to the bank.”
Disenchanted by his experience, Abubakar said: “I have been saving my money in my house. I have a bucket in which I keep my money. When I put money inside it, I just cover it with something.
“But to be sincere, I am afraid of keeping money at home.”
Asked if he uses any fintech app in lieu of a bank account, he said: “I don’t have any such account because I don’t use an android phone.
“Most of us don’t use android because of the challenges of power supply.
“It is easier to use smaller phones, and that informs why we can’t have Opay or Palmpay accounts.”
For Awual Abubakar, an ambitious businessman, the absence of banks in Kengere area of Bauchi State has become a cog in the wheel of his dreams. Like many others, he had had to travel out of his community a couple of times to open a bank account that could help him realise his dream of expanding his business beyond his community but it was all in vain.
“I am from Kengere Village in Bauchi Local Government Area along Gombe Road,” Awual said as he began to tell how far his community is to where he went to open a bank account.
“My area to where there is a bank is about 25 kilometres. I attempted opening an account last year. When I got there, the customer care officer asked me to wait. I kept waiting, and at the end of the day, I was asked to come back the following day.
“I went there like three times but didn’t get the required attention. I was pissed off by the unpleasant outcome.”
Disenchanted by his experience, he said: “I keep my money at home. I bury it in the ground. I always put it in a leather bag before burying it in the ground.”
Though he has carried out the primitive way of banking for some time, Awual does not really feel comfortable about it.
He explained why he buries his money in the ground: “The challenge is that hoodlums have been raiding my community and kidnapping people. When people are sleeping at night, they come to collect all their money at gunpoint. If you don’t give them, they will threaten to kill you. That is why I bury my money in the ground.
Other rural business people lament
The challenge of opening a bank account is not peculiar to rural dwellers in Bauchi State. Findings revealed that the challenge is widespread and follows the same pattern – banks asking for utility bills and denying them opening an account because they don’t have it.
Gombe State coordinator of Maize Farmers Association of Nigeria, Adamu Tukur, in a chat with The Nation, lamented the effects of not having bank accounts on his people’s businesses.
“My people in rural communities don’t have bank accounts because they don’t have access to bank. This affects their businesses because they cannot do any transaction without cash.
“If there is a challenge with getting cash as we once had, it will shut down their businesses. They will have to sell their goods at giveaway prices so that they can partially recoup their investments.
“If they had bank accounts, that would not happen. They can easily accept electronic transfer. Now if you talk about transfer, they will not even listen to you.”
Adamu also confirmed allegations of banks demanding utility bills from rural people without power supply.
“The rural communities don’t have power supply yet they are asking them to provide electricity bill to open bank accounts. They don’t have NEPA, not to talk of having NEPA bills. Because of that, the banks don’t open accounts for them.”
Aside from utility bill challenge, Adamu also spoke about how the distance of banks to the rural communities also affects their quests for bank accounts.
“The banks have their offices in the local government headquarters and mostly in the state capital. For any of them to come to the town where they can see a bank, they will spend about N3,000 on transportation.”
Asked how the people save their money, Adamu said: “Rural people in this area don’t keep cash. When they come to town to dispose their goods, they use their money to buy goats, sheep clothes and other things. Most of the time, they don’t hold excess cash.”
Also speaking from his base in Yobe State, the National President of Kulen Allah Cattle Rearers Association of Nigeria (KACRAN), Hon. Moh’d Khalil Bello, said his people in rural communities don’t have bank accounts.
“There are about 17 local government areas in Yobe State but only about four have banks. The same applies to Borno.
“They live far away from the town where there are banks. During the cash scarcity period, our people suffered a great deal because they don’t have accounts.
“They have no big phones. The ones they have are just for making calls.
“They don’t keep cash. They only sell things when they need money to attend to pressing needs like marriage.
“They only go to market once in a week. When they sell, they buy all that they need and wait till the following week. They keep the remaining money under their bed on inside a pot.”
PoS to the rescue
The rural dwellers’ frustration of being denied the opportunity to open accounts by banks because they don’t have utility bill has been partially addressed by the coming of PoS business.
Many of them can now take orders from outside their communities but they still strongly believe that PoS cannot adequately address their problems.
“We have only one person doing PoS business here but he hasn’t come for quite some time now,” Awual said.
“He comes from Bauchi to do business here.
“Before the advent of PoS, business was on cash-and-carry basis. If you didn’t have cash to pay, I would not release my goods to you.
“That really affected my business because many customers always asked for account details so that they can transfer money. But since I don’t have and would always insist on cash, they go away.
“That has changed to some extent with the coming of PoS.
“I will be glad if the government can help us with a commercial bank so that we can have places to save our hard earned income.”
Also speaking, Abubakar told of on how PoS has helped to enhance his business.
He said: “If someone wants to buy goods and transfer money to me, I go to a PoS operator to do the transaction.
“I will give the sender the PoS man’s account number and the money will be transferred to him. He will take his charges and give the balance to me.
“The good thing for me is that I don’t pay money on transportation to get to the PoS operator. It is just very close to my house.
“In spite of this, I wish we have a bank very close to our community. Our association discusses this from time to time.
“We are hoping and believing that the government will bring a bank to our community. A micro finance bank will be okay for our community.”
EX CIBN boss condemns demand for utility bills from rural dwellers without power supply
A former president of the Chattered Institute of Bankers, Mazi Okechukwu Unegbu, condemned the rigid culture of demanding utility bills from rural dwellers without power connection, in a chat with our correspondent.
He said: “Honestly, I feel very sad that the government, the Central Bank and commercial banks are illiterate operators. It is very, very sad.
“You know that there is no electricity in those areas and you are demanding electricity bills from them to open bank accounts. That is stupidity. It is a very stupid behaviour.”
In place of utility bill, Unegbu said, “what they could have done to solve the problem is to ask them to get letters of introduction or some form of identification from community heads or their emirs or Obas so that they will be able to open accounts.
“The implication is that they will not have anything to do with banks. A lot of them will keep their money under their beds.
“The implication is that robbers will rob them, knowing that they don’t have bank accounts to save their money.
“Economically, there will be no growth in those areas. These local people are into farming. The government is not encouraging production for people to sell and save money.
“The more money they save the better for the economy and the more investment that those monies will yield.”
He regretted that banks are no more engaged in real banking. “Commercial banks that are supposed to be doing real banking are not doing it. They put so many problems in the face of the people looking for banking services.
“Because of that, real banking is not yielding any result. What they now have is what I call portmanteau banking. Most people are leaving real banking and going into portmanteau banking.”
Explaining what he meant by portmanteau banking, he said: “Portmanteau banking are these micro finance banks that got licences and go online, set up facilities and keep offering services to people.
“Those services they render to people are just one-off. There is no proper banker-customer relationship.
“Real banking is what commercial banks used to do by having a customer, offering services to that customer, making sure that the customer gets satisfied.
“But these days, they don’t care again. The banks are not training their staff. Their staff now operate like portmanteau banks.
“They don’t pay attention to the needs of their customers; they just give them whether-you-like-it-or-not treatment.
“There is no proper customer care in the banks anymore.”
On the place of digital economy on rural dwellers, Unegbu said: “Digital economy is very good, but it is not convenient for rural communities. They demand a lot from rural communities when they want to open accounts. They demand NIN, BVN electricity bill and so on, but those communities don’t have such things. Many of them don’t even know what they mean.
“The process was not properly done for them to get their NIN. There was no population commission near them for them to get their NIN. “Those are the problems that they face in rural communities. That is why digital services may be difficult to operate.”
CBN’s failed proposal to accelerate financial inclusion with rural banks
The failure of the Central Bank of Nigeria to execute its proposal to accelerate financial inclusion with rural banks has in no small measure dampened the confidence of the people in government agencies’ promises.
In 2018, the CBN, as part of efforts to promote financial inclusion and enhance access to financial services for low income earners and the unbanked, proposed the establishment of Payment Service Banks in rural areas across the country.
The CBN released the draft guidelines for the regulation of the proposed banks, but it has all ended up as a talk show.
Reports said a major difference between the proposed banks and the defunct community banks is that the new rural banks would not be allowed to grant any form of loans, advances and guarantees.
By the guidelines, they are expected to have a minimum capital base of N5 billion with capital adequacy ratio of 10 per cent or as may be prescribed by the CBN from time to time.
The objective of the proposed institutions, it was gathered, was to enhance financial inclusion in rural areas by increasing access to deposit products, payment and remittance services to small businesses, low-income households and other entities through high-value transactions in a secured technology-driven environment.
In terms of structure, the payment service banks were expected to operate mostly in rural areas and unbanked locations, with not less than 50 per cent physical points in such areas.
In addition, they are expected to establish ATMs in some areas; be at liberty to operate through banking agents; use other channels, including electronic platforms to reach out to its customers and establish coordinating centres in clusters of outlets to superintend and control the activities of various access points and banking agents.
Also, the guidelines provide that these rural banks are expected to be technology-driven and are expected to conform to the best practices of data storage; security and integrity.
According to the Central Bank, activities they are expected to undertake include “maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme.
“They are to carry out payments and remittance (including inbound cross-border personal remittances) services through various channels within Nigeria; issue debit and pre-paid cards and operate electronic purse.”
These rural banks are also permitted to invest in federal government and CBN’s securities and carry out such other activities as may be prescribed by the central bank from time to time.
On the other hand, the central bank listed the non-permissible items the banks shall not carry out to include “grant any form of loans, advances and guarantees; trade in foreign exchange market; undertake any other transaction which is not prescribed in the CBN Regulation on the Scope of Banking and Ancillary Matters, No. 3, 2010.”
The banks are also required to use the words ‘Payment Service Banks,’ in their names to differentiate them from other financial institutions.
“The promoters of payment service banks shall be required to submit a formal application for the grant of a payment service bank licence addressed to the Governor of the CBN,” the CBN said.
The guidelines also stipulate that they are expected to pay a non-refundable application fee of N500,000 in bank drafts as well as a detailed business plan or feasibility report, among others.
“Not later than six months after obtaining an Approval-in-Principle, the promoters of a proposed Payment Service Bank shall submit an application for the grant of a final licence to the CBN,” it stated.
The application is to be accompanied among other things, with a non-refundable licence fee of N2 million.
As at the time of filling this report, the Central Bank of Nigeria was yet to respond to our inquiry on the allegations of the respondents against commercial banks and what it is doing to make e banks easily accessible to rural dwellers.
