A persistent shortage of cash in Nigerian banks, following last year’s controversial redesign of the naira, has driven many citizens to rely heavily on point-of-sale (PoS) agents, raising concerns about potential exploitation.
PoS agents, a common sight in urban and rural areas, provide critical financial services to those without access to traditional banking infrastructure. Even in major cities, their services have become indispensable as ATMs frequently run out of cash.
“There are three agents on my street alone,” said Chi Etche, a 29-year-old media executive. “It saves me the hassle of going to a bank ATM.”
However, many Nigerians have voiced frustration over the high fees charged by some agents, accusing them of taking advantage of the financial crisis, which has exacerbated the worst cost-of-living pressures the country has seen in decades.
“We are now buying back our money from PoS agents,” lamented Ibrahim Adamu, a trader. “The commissions are rising, and it’s nearly impossible to get cash from ATMs.”
Origins of the Crisis
The Central Bank of Nigeria (CBN) launched a naira redesign in October 2022 as part of its cashless policy initiative. Around the same time, it imposed stringent limits on cash withdrawals: ₦20,000 per day from ATMs at one’s own bank, ₦5,000 from other banks, and steep fees for large over-the-counter withdrawals.
The cash restrictions were intended to reduce the vast amount of money circulating outside the banking system, estimated at over 85% at the time. However, these measures triggered protests, disrupted businesses, and created opportunities for PoS agents to capitalise on the shortage.
Mixed Reactions
Experts note that while PoS agents play a vital role in financial inclusion, their operations often lack regulatory oversight, leaving room for malpractice.
“Some agents exploit the scarcity by charging excessive fees, but this reflects broader issues of cash availability and inadequate regulation,” said Uzoma Dozie, founder of the challenger bank Sparkle.
A few agents admitted sourcing cash from informal markets, where traders and bureaux de change charge premiums, which they then pass on to their customers.
“I buy cash from traders in the market and adjust my fees accordingly,” explained Ayo Olaoluwa, 34, a PoS agent.
Regulatory Measures
CBN Governor Olayemi Cardoso has vowed to crack down on defaulting banks, warning of stringent penalties for failing to ensure cash availability at ATMs. He also called for stricter regulatory compliance from all financial stakeholders, including PoS agents.
Despite the challenges, proponents believe that with proper oversight, agent banking can remain a valuable solution for promoting financial inclusion in Nigeria.
“Regulation and enforcement can curb abuses while preserving the benefits of agent banking,” Dozie affirmed.