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February 27, 2025 15 mins

Nigeria’s Central Bank is allowing banks to increase the amount they charge for withdrawals at ATMs in a bid to tackle cash scarcity at lenders in the country. Nigerians are increasingly turning to cash agents who use card terminals to provide cash, for a high commission. On this week’s episode, Bloomberg’s Nduka Orjinmo joins Jennifer Zabasajja to explain why these cash agents are so popular and whether the moves by the Central Bank will actually make any difference on the ground. You can read Nduka’s reporting here.

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Episode Transcript

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Speaker 1 (00:02):
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.

Speaker 2 (00:19):
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.

Speaker 1 (00:31):
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.

Speaker 3 (00:45):
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.

Speaker 1 (01:01):
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,

(01:22):
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

(01:44):
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.

Speaker 4 (01:54):
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.

Speaker 5 (02:03):
Answers to it.

Speaker 1 (02:04):
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.

Speaker 4 (02:16):
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

(02:37):
would otherwise be using shops and businesses.

Speaker 5 (02:40):
So then start giving up cash to people that that
need cash.

Speaker 4 (02:44):
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

(03:05):
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

(03:29):
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.

(03:51):
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.

Speaker 5 (04:09):
How how widespread they are.

Speaker 4 (04:12):
What they do carry out the very important function of
giving now to people who need cash.

Speaker 5 (04:17):
But they have caught the eyes of the Central Bank
in recent times.

Speaker 1 (04:21):
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.

Speaker 4 (04:33):
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.

Speaker 5 (04:47):
What is central bank?

Speaker 4 (04:48):
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.

Speaker 5 (05:07):
From these businesses.

Speaker 4 (05:09):
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

(05:33):
system which are necessarily getting into the banks.

Speaker 5 (05:37):
We are necessarily getting back to the cibion and you
have to.

Speaker 4 (05:40):
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

(06:02):
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.

Speaker 5 (06:16):
Outside of the central banks control.

Speaker 4 (06:19):
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.

(06:39):
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.

Speaker 1 (06:52):
And it still seems like Nigeria, like many other African economies,
is reliant on cash. Complicate the situation on the ground
even more.

Speaker 5 (07:03):
Yes it does, Yes, it does.

Speaker 4 (07:05):
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,

(07:26):
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

(07:49):
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.

(08:10):
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

(08:34):
confidence in that system.

Speaker 5 (08:35):
This online cash.

Speaker 4 (08:37):
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

(09:00):
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.

Speaker 1 (09:16):
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

(09:39):
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?

Speaker 4 (09:58):
The Center Bank has in the past threatened to sanctioned
banks that you know, don't load.

Speaker 5 (10:03):
Up their ATMs.

Speaker 4 (10:04):
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

(10:26):
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.

Speaker 5 (10:47):
Much higher higher commission.

Speaker 4 (10:48):
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.

Speaker 5 (11:01):
So it used to be thirty five.

Speaker 4 (11:02):
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

(11:26):
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

(11:48):
to charge us as much.

Speaker 5 (11:49):
That is not coming into effect.

Speaker 4 (11:51):
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.

Speaker 1 (12:06):
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.

Speaker 4 (12:17):
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

(12:37):
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.

Speaker 5 (12:49):
As these banks, you know, see these charges go up.

Speaker 4 (12:53):
However, it's going to take a lot, a lot to
get the pos agents out of these news.

Speaker 5 (13:00):
The banks are not everywhere.

Speaker 4 (13:02):
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.

Speaker 1 (13:17):
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

(13:41):
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

(14:02):
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

(14:23):
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.

(14:48):
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.
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Jennifer Zabasajja

Jennifer Zabasajja

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