By Dr. Ahmed Adamu
Yesterday, six primary school teachers died on their way to
Katsina to withdraw money from Automated Teller Machine (ATM). They received
their salary alert, and because there is no ATM or Bank branch in their town
(Danmusa), they boarded a commercial vehicle to go to Katsina (114 kilometres
away from their town) to withdraw their little salary, not knowing that they
were drawing closer to their end. The six primary school teachers died on their
way to withdraw their salary. They had a
ghastly motor accident, and will never access the money.
In my recent articles titled ATM
Wahala: The Way Forward, I emphasized on the need to take immediate actions
and policy review to address difficulties associated to access to finance. The
above sad story is just one out of many unfortunate incidents relating to the
inadequate infrastructure in financial sector. In my article, I gave some
suggestions on the way forward, and as such, I drafted a bill regarding this issue to the National
Assembly as a matter of national importance, and I will forward it to a senator
in the National Assembly for review and presentation before the National Assembly. This is the letter I plan to send to the Senator, you can give your inputs before I send the bill to the
senate:
Dear Senator,
As you may be aware that yesterday in Katsina state, six
primary school teachers died on their way from their hometown (Danmusa) to
Katsina, which is around 114 kilometres distance, in order to withdraw their
salary from Automated Teller Machine (ATM). If ATM machines and other means of
accessing finance are available in their locality, these people do not need to
travel to anywhere else to access finance. People suffer so much just to access
their own money. For example, in Katsina Senatorial zone, only three towns have
Automated Teller Machines (ATMs), and these are Katsina, Jibiya and Dutsinma,
and all the remaining eight local governments and their towns do not have ATMs,
and people from these localities have to travel to the three major cities to
access finance. This leads to serious hardship and congestions in financial
access points. Some people have to spent money and hours to come to the major
cities, and they have to wait under scorching heat for hours, many without
eating. In many instances, these poor people do not achieve their objective of
getting the money. The ATMs many times fail due to technical or money
unavailability issues, and it takes time to fix these issues in many access
points.
As a result of congestion in the cities, people who are
residents in the major cities then find it difficult to access finance,
especially when salaries are paid, because, that is the period when there is
acute overcrowding on monetary access points as those living in other towns
have to come to the city to access the little salaries they receive. In
societies like ours, people have to wait for their salaries, and when they
receive the salary alert, they will not spend a minute before they go to the
ATMs. This is why the ATMs are congested in this period.
The fear of this crowding and difficulty in accessing money
make people to keep cash at homes and in their wallet, and this reduces the
government’s ability to control the economy, and increases risks in the
financial sector.
There are many institutional implications and untold
hardships relating to the inadequacy of financial infrastructures. I am worried
about the physical hardship and loss of lives that these inadequacies cause. You can look at the photos below to have a
glimpse of these hardships. Many of the victims cannot voice out their
concerns, and that is why I am writing this letter so that we can speak out on
behalf of these people and to ensure that the relevant laws are reviewed and
actions taken to ease the hardship people undergo.
In my state (Katsina), almost all public servants receive
their salaries through their bank accounts, and they all have to come to the
ATM machines at the same time (end of the month after government salary) to
withdraw money. And because most of the withdrawal are not above N50, 000, they
must withdraw it from the ATM mouth, according the new decongestion policy by
Central Bank Nigeria (CBN). This means majority have to line up before the ATM
machines to get money. However, joining the long ATM lines is not the only
point of sympathy, the frustrating thing is to wait on the line, under
scorching heat, and only to come to their turn and the ATM will tell them
“Unable to dispense cash” or “temporary out of cash” or “issuer inoperative”,
and before the machine can come back to work, it might take long time or the
next day depending on the bank and its location. Another serious difficulty
scenario is when customer tries to withdraw the little money in his/her
account, and the machine refused to give the cash and his/her account is already
debited, in this situation, the customer is left stranded.
Similarly, the reason why most Banks cannot maintain
constant availability of money is because of the poor quality of the money they
receive. Some of the paper money CBN gives to the commercial banks are below
the ATM standard, and as such, they cannot be placed on the ATMs. This is why
despite money availability in Banks, they cannot fund the ATM machines. And if
they place any paper currency that did not meet the ATM standard, the machine will
get jammed and stop working.
Another reason why ATMs fail is because of technical error
on the server of the Banks, thereby making it impossible to execute any
automated transactions. Many times, one wonders what is the role of the so
called ATM Monitoring Team (AMT) and their supervisors, who are instantly
alerted of any failure or cash unavailability on the ATMs? Sometimes, there is
serious reluctance on the side of the AMT, and since they receive special
allowances, then they shall be able to promptly respond and address all ATM
issues even on the weekends.
Another limitation of ATMs is that, no ATM can be uploaded
with over N1m after 6pm to minimise risks of theft and security breaches. As a
result any 10 big customers can exhaust ATM in a night, and then subsequent
customers cannot access cash from the same machine. Even if all ATM issues are
to be addressed, the number of customers have far outnumbered the ATMs.
Solutions and Prayers:
Because of increasing dependence on ATMs in financial
payments, which account to up to 93.3% of transactions on e-payment channels in
recent years, the following prayers/solutions are proposed to address
inefficiencies and difficulties relating to access to finance in Nigeria.
1. 1.
Cashless Economy: Now, whether we like it or
not, no matter how our society resist change, there are changes that must be
embraced. We have to change our payment systems in all payment points or at
least provide options for automated payments via Point of Sale (POS), and this
shall be provided in all shops, filling stations, restaurants, commercial
offices and business, public institutions, educational institutions, etc. There
is need for more incentives to encourage automatic payment systems in local
markets and businesses. Therefore, the Banks and other Financial Institutions
Act 2004 (BOFIA 2004) shall be reviewed to mandate commercial banks to provide
free POS devices to business customers, and reward such customers for using the
POS device for certain amount of transactions. We should not ascribe to
reverting back to cash down salary system, because, without money in Banks,
government will lose its power in controlling the economy. If all payments are
done automatic, then there is no need for this long lines on ATMs, because we
don’t need cash to live, you only need card to live.
2. 2. Reinforcement of Penalties for Banks’ negligence
and inadequacy: The penalties identified
under Sanctions on Erring Banks/e-Payment service Providers for Infractions of
Payments System Rules and Regulations should be reinforced. Some of these penalties
resulting from any avoidable technical error and money unavailability on ATMs
are not strictly reinforced. This is why banks care less about efficiencies of
their payment systems and access points. For example, if any ATM is down for 72
hours without cogent reason, the bank will pay penalty of N100, 000, and if
they refuse to respond to an ATM customer’s complain within 24 hours, they will
pay N100, 000 per day. Considering the
frequency of the use of the ATMs, the chances of their breakdown might
increase, and this underpins the need for close monitoring. The BOFIA 2004
shall be reviewed to increase this penalty to N200, 000 and the penalty shall
commence 24 hours after ATM breakdown to discourage negligence and encourage
efficiency. The sharing ratio of these penalties as specified in the BOFIA 2004
shall be reviewed to include the victimised customers to serve as compensation.
So that the victimised customers will get 10 percent of the share of revenue
from the penalties. Victimised Customers are those that 72 hours (or 24 hours
if reviewed) after ATM breakdown attempted to withdraw from one of their bank
branches and were not successful due to technical or money unavailability issue
or those whose complains were not responded to within 24 hours.
3. 3. ATM Users Associations: Most of Bank customers
are not aware of their rights and the laws, and they are subjected to
unnecessary hardships, and the trauma such ATMs and Bank inadequacies caused
them are not compensated. Therefore, the BOFIA 2004 shall be reviewed to
establish and recognise Association of ATM Users (AAU), which will serve as the
voice of all ATM users, so that the AAU will be monitoring performance of ATMs,
and they should have mobile numbers of the AMT officials and to report to them
any failure or issue on ATMs that they may not know about it, and they should
follow up to ensure all issues are rectified immediately. The AAU shall be
responsible to hearing grievances and complains from all ATM users and ensure
that all complains are addressed within 24 hours. The AAU branches shall be
provided in all towns and villages. They should also help the CBN in
checkmating the inefficiencies of the commercial banks.
4.
4. Local Access to Finance: The BOFIA 2004 shall be
reviewed to permit AAU and qualified individuals to use private cash to meet
local cash demand using POS, and upon submitting their transaction reports to
the respective banks, they receive their money back with some incentives from
the banks as compensation for providing the financial services. Under this reviewed act, any customer that
want to withdraw money, he/she can go to the AAU branch or certified
individuals in his/her town or village, and his bank account will be debited
with exact amount he entered on the POS, and he will receive the same cash
amount from the AAU officials or the certified individuals. AAU and other
certified individuals shall be supported by the Act to source and hold enough
cash to settle local demands. This will reduce the hurdle of travelling to
Major Towns to withdraw money. Alternatively, the mobile money platforms can be
included in the Act, where e-float can be exchanged for cash, and vice versa.
Under this platform, people can hold e-float as token for cash, and they use it
for saving and withdrawing cash and other payment services.
5.
5. Private ATMs: The BOFIA 2004 shall be reviewed
to permits private individuals to operate independent ATM, so as to provide for
much ATMs and provide business opportunities. Private ATM business is a highly
paid business, where individuals can buy their own ATM, and charge customers
per transactions, and later get their money back from Banks. For example, if
you charge N200 per transaction, and your ATM is placed in strategic locations,
you can get up to a thousand transaction in a month, which means you will have
a net revenue of N200, 000 per month. So, allowing this kind of private
business will decongest major cities and ATMs, and will make lives easy, and
will create business opportunities.
6.
6. Review of CBN Banking hall decongestion policy:
The CBN’s N50, 000 restrictions for inside banking hall transactions shall be
reviewed for the meantime, so that even a transaction of N1000 can be executed
inside the banking hall, so as to decongest the ATM points.
7.
7. Improve Quality of Currencies in Circulation:
The CBN should improve the quality of currency in circulations, especially those
held by the commercial banks, so that ATM errors caused by poor currency
quality will be avoided. Any currency that do not meet the required standard is
supposed to be replaced. There should be a nationwide advocacy on proper
handling of currency. The good handling of currency can be reinforced by
reviewing the BOFIA to include section that mandate commercial banks to not
accept dilapidated or unfit notes, and any customer holding dilapidated cash
has to submit such for reissue through the commercial banks after paying a
penalty. This will discourage misuse of the currency and reduce the cost of
currency reproduction.
8. 8. More ATMs: Finally, the Banks shall be
encouraged to install more ATMs in all towns and villages, and they shall be
efficient and responsive to all technical issues and cash unavailability
problems promptly. The BOFIA 2004 shall
introduce the ratio of ATM per customers, so that 500 customers can have one
ATM.
Dr. Ahmed Adamu
Petroleum Economist and
Development Expert
Pioneer Global Chairperson,
Commonwealth Youth Council
University Lecturer (Economics),
Umaru Musa Yar’adua University
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