Ubiquity of Mobile Money Agents
Mobile money agents have proliferated across Nigeria, filling the void left by traditional banking, especially in rural areas where banks are scarce. Their presence has become even more pronounced in urban areas due to the ongoing cash shortage following the naira’s redesign last year. Chi Etche, a media executive, notes the convenience of having several agents on her street, eliminating the need for transport to reach an ATM.
Exploitation Amid Financial Hardship
However, there’s growing opposition to these agents due to accusations of exploitation during Nigeria’s severe cost-of-living crisis. Traders like Ibrahim Adamu have criticized agents for inflating commissions on cash withdrawals, which has become necessary as ATM cash availability has dwindled.
CBN’s Push for Financial Inclusion
In 2013, the Central Bank of Nigeria (CBN) aimed to enhance financial service access. By the end of last year, according to EFInA, 74% of Nigerian adults had access to financial services, with 52% using traditional banks. The cash crunch has inadvertently pushed more people towards these agents, as noted by Ikemesit Effiong from SBM Intelligence, who points out the lack of regulatory oversight on these agents.
Impact of CBN’s Cash Withdrawal Caps
The 2022 naira redesign and subsequent withdrawal limits set by then-CBN Governor Godwin Emefiele have contributed to the cash scarcity. With daily ATM withdrawal limits at ₦20,000 for one’s own bank and ₦5,000 from others, alongside punitive fees for large over-the-counter withdrawals, the public has increasingly turned to mobile money agents for financial transactions.
Excessive Charges by Agents
Uzoma Dozie from Sparkle bank acknowledges that some agents have taken advantage of the situation by charging excessive fees, though he clarifies this is a byproduct of cash scarcity and inadequate regulation rather than a flaw in the mobile money system itself. Agents like Ayo Olaoluwa and Ifeoma Onwuabuchi reveal that they often source cash from markets or bureaux de change, reflecting on the informal nature of their business operations.
Regulatory Response and Future Implications
The Association of Mobile Money and Banking Agents of Nigeria has not responded to these allegations, but there’s a call for better regulation. Dozie advocates for regulation that can mitigate these issues while maintaining the advantages of agent banking. Meanwhile, current CBN Governor Olayemi Cardoso has vowed to penalize banks for empty ATMs and stressed the importance of regulatory compliance to enhance digital transactions and service delivery.
