Bloomberg Audio Studios, podcasts, radio news. Nigeria's Central Bank is under pressure to get more money to the country's ATMs as frustration with getting a hold of cash continues to grow.
Getting cash from the bank is so difficult considering the transports, daily expenses like food, what the paybews. You need cash for all of these things. Transportation is to need cash.
With cash machines regularly empty, many people are having to turn to cash agents to access their funds, raising concerns about whether this is increasing access to financial services or just opening up avenues for exploitation.
Because of this custody of cash, we five thousand era we charge two hundred ten thousand is three hundred lot too much too because we buy the cash and federal government also charge Sunday money points.
On today's episode of The Next Africa Podcast, we'll look at Nigeria's cash situation and if the Central Bank's latest actions will make any real difference. I'm Jennifer Zabasaja and this is the Next Africa Podcast, bringing you one story each week from the continent driving the future of global growth, but the context only Bloomberg can provide. Joining me from Abuja, is Bloomberg's nduka or Jinmo ndukah. Great to have you on.
I should note I am at the G twenty right now, so excuse some of the noise in the background, but thanks so much for coming on. Let's just start here. I remember being in Nigeria just a few years ago during the election and it was a challenge to get cash out of the ATMs. Talk to us about the situation now. Is it still just as difficult.
Yes, it is still an issue getting cash from the banks. The banks are not more cultivated to load up their cash pers and just just the easy.
Answers to it.
So and duka. Then the situation has led to a lot of people turning to the so called POS operators. Who are they and how is it working right now on the ground based on your reporting.
So these POS agents, that is a point of self caminals that you find usual in shops and in businesses. But what has happened is that since twenty sixteen, in order to drive financial inclusion across Nigeria, the Center Brank then allowed this POS agent so use these terminals that would otherwise be using shops and businesses.
So then start giving up cash to people that that need cash.
So you find them around street corners, you know, in villages and areas, in places where you won't find banks, you find these pus agents. However, you also find them in the big cities. So you find them in Legos, you find them in a bus, you find them in you know, the busiest parts of the cities where traditionally
you have you know, these big banks. So in Legos, for instance, our colleague million who went to the dec Now that's straight in Ninnginia with the highest concentration of banks you're talking about the biggest banks in Nigeria have
their branches on the street. Both competing alongside them are these pos agents, you knowing their umbrellas and then you just have this this young person usually who has a word of cash you know, in their bag and they are they have been accused of selling cash though I don't think that's the right world. But because of their their commissions, which is pegged around one percent per five thousand nira, multiple feel that's that's extortionists and it's quite high.
But you do find them across you know, every street in Ninsia. They're around two million of them. Just to give you a sense of how proliferated they are. If I got my street now in my neighborhood, they are three of them on my streets. So they're around what one POS agent for one hundred Nigeria to tell you.
How how widespread they are.
What they do carry out the very important function of giving now to people who need cash.
But they have caught the eyes of the Central Bank in recent times.
And I mean when we when we think about financial inclusion especially this was a goal for the Central Bank, why are they so concerned about the proliferation of these POS agents.
The concern is arising from the fact that these POS agents have now morphed from what we know they were originally set out to do to something that is now almost strangulating the financial system.
What is central bank?
The othern envisage was this POS agents basically going to cashalty businesses that would otherwise deposit their cash in the banks. Now these POS agents are going to this business. So they're going to filling stations, they're going to big super markets, they're going to open markets, and they're basically collecting cash.
From these businesses.
So you think of a filling station that would you know, make work millions of narrow the end of it of the day, and ordinarily we take that money to your bank. They're no longer doing that, so that these plus agents are are going to these businesses, offering them higher commissions and buying that cash from them. Now, what that means is that you have millions of nira recirculating in the system which are necessarily getting into the banks.
We are necessarily getting back to the cibion and you have to.
Think of the central banks one of its functions, as you know, managing cash in the system, but that's no longer happening because these pos agents are doing that now. Roughly roughly ninety three percent of total crencing circulation, which is around tup point six billion nera, it's outside the banks at the moment. That's according to the Central Bank from September last year. That has gone up eighty one
percent since twenty nineteen. So that gives you a sense of how big this issue is where you have, you know, millions of nyira billions in dollars now.
Outside of the central banks control.
And that's troubling because you have to understand that Nigeria is at the moment dealing with sky high inflation where you have lots of money in the system and the central bank has raised its interest rates to twenty seven point five percent to tackle all that. So the central bank is in fact aggressively tightening moment supplying the system. But then you have all this money out of the
system that's aft of the central banks control. So it is now trying to walk back on that by trying to see how we can limit the operations of these and pures agents.
And it still seems like Nigeria, like many other African economies, is reliant on cash. Complicate the situation on the ground even more.
Yes it does, Yes, it does.
When you came to Ninjuria and then you notice that there was that huge cash shortage that was the central bouk own policy to try to drive you know, it's it's cash less intentions and make the mistake about it gen and that's really happening where you have people who are transitioning from cash to doing things online, you know, and doing all our cash less transactions. However, there's still a large trunk of the Nigerian economy that is driving
that is so cash heavy. So you talk about the farmers, you know, and it's being in the villages. The only only way they want to transact is in cash. If you don't have cash, they don't do business with you. And you talk about the transports situation in Nigeria. So if you want to feel like a transport fair, if you want to use like the yellow bosses and legos or the taxes in Abuja, the only way you can you can pay them, it's by cash. They don't accept
in you other form of payment. And you think of millions of Nigeria have to use this public transport system every day. So the economy self is reliant on cash. I think also the banks have not really helped the situation.
Most of the banks in Nigeria, the big banks have in the last or six months been migrating their software and that has really cost big hiccups in the in the banking system where you have people unable to make transactions, people able to make payments, and that has really reduced confidence in that system.
This online cash.
List system and Central Bank is trying to promote, so you then have more people falling back on cash to make payments because I mean, cash never feels she does it. Your SMARTPHM I field if you don't have the next work on it. But with cash, you're always on the sieve side, so that that's where the challenge is. And don't forget also nine economy is heavily informal and this three percent of people working the informa kashchevisector. So there's always going to be the need for Nigeria to use cash.
It's gratly changing, I have to say, but I'm not at a pace where you see cash ticket a backseat introductions.
Yeah, unraveling what's been such a long time habit is going to prove difficult. Stick with us in DUCA. When we come back, we'll talk about what the Central Bank is doing to at least try to improve the situation and access to cash. We'll be right back. Welcome back today on the podcast, we're discussing Nigeria's ATM crisis. We have Bloomberg's Induca or Ginmo with us, who reported out on the story. So, Indica, what is the CBN trying to do about this dilemma that they've gotten. It's a
bit of a carrot and stick approach. How do they actually make some progress to the goals that they've set out here?
The Center Bank has in the past threatened to sanctioned banks that you know, don't load.
Up their ATMs.
One of the accusations is that these banks collude with these pus agents because the the bank charges were in the past. Peggy that thirty five naira three times what the pos agents charged per five thousand narraw with Rawal, so it was more equative for some of these banks to then sell their cash, the cash that it goes from the Sibyan to sell this this cash through this
pus agent. So and this coming from the Cibyan. So decipion has that documented and early d last year some banks were sanctioned for doing that for basically taking cash from the sipian and another of them put their cash in their ATMs. We are then giving the cash to these pus agents that we are selling it at a.
Much higher higher commission.
Now the Central Bank is trying to make the banks see value in their own ATMs by now increasing the charges and it's now matching what this pus gents charge.
So it used to be thirty five.
Naira, it's not gone up three hundred ira that's going to come into effect from the first of match. So the Central Bank is hoping that by incentivizing these banks with higher charges, higher commission rates, that they can then load up the ATMs with this cash that they're getting from from the central bank. That is what the central
bank hopes will make the difference. I can sid visioning there because banks have complained from the bank managers I spoke to, have complained that the loading the ATMs to cash is not as attractive, especially when you have a teams that are in the suburbs or not in the city center. If the CIBIAN allows these pus agents to charge as higher as hundred nira. The banks have made a case in the past that they should be allowed to charge us as much.
That is not coming into effect.
But the central bank is now saying, look, we're going to calm down hard on those that don't load their ATMs because if not, we're not going to let you charge what is competitive. You now have the responsibility to load up your ATMs.
When will we know whether this is actually working and improving the situation on the ground. Do you think it will take some time or this to play itself out.
I think it would take some time. We're already seeing piny movements, tiny changes. I've seen people online who are saying that, look, some ATMs, some bank ATMs that have not functioned years have now been revived. A friend of mine in Lego said an ATM across his office that has not worked for a very long time. He went there last week and then it was dispensed in cash. So I think we're going to see that, you know, gradually happen over time.
As these banks, you know, see these charges go up.
However, it's going to take a lot, a lot to get the pos agents out of these news.
The banks are not everywhere.
Yeah, I've told you there are two million PUS agents. There are well less than fifty ATMs across NINEERI according to to the World Bank. So the banks can't compete with these with these pos ages. And that's the.
Facts, and you can read and Duco's reporting on Bloomberg platforms. Now will put a link to that in the show notes. Here's some of the other stories we've been following across the region this week. US Chief Justice John Roberts temporarily let President Donald Trump keep freezing foreign aid payments while the Supreme Court wighs whether to lift in order that would require disbursement of as much as two billion dollars.
Humanitarian groups say the freeze is having a devastating effect, upending hundreds of projects, forcing USA partner groups to layoff or furlough thousands of US workers, and putting people who depend on the assistance at risk of disease and death. And Malawian President Lazarus Chaquerra fired his trade minister a day after protests erupted in the capital over a cost of living crisis in the poverty stricken Southern African nation.
Consumer inflation in Malawi has exceeded twenty percent since July of twenty twenty two, partly fueled by a drought that has increased the cost of corn, a staple food in the country of twenty one million people. Presidential elections are scheduled to be held in September, and you can follow these stories across Bloomberg Now, including the Next African Newsletter. Will put a link to that in the show notes.
This program was produced by Adrian Bradley. Don't forget to follow and review the show wherever you usually get your podcasts. I'm Jennifer's Abasaja. Thank you for listening.