Naira became a “commodity” when Nigeria scaled POS agency banking. When that happened, the Naira, among other features, became a “product” or “service” which could be purchased and resold for “gain”. That is not new since we exchange US dollars for Naira and vice versa, but in this case, you are exchanging digital Naira for cash, and vice versa, within the context of the same currency. Endogenously, it means there are many frictions in the availability, velocity and transmissibility of Naira for POS agents to have imposed a fee to fix them.
Simply, the construct of Naira as a national currency is not well optimized at the distribution and availability phases. Otherwise, people cannot be selling Naira as yam, garri or course. Whenever that POS agent imposes that fee, Nigeria has failed you, and diminished the elemental value of Naira since you are using Naira to buy Naira!
People, if you compound that POS agent fee over months, that 1% or whatever becomes a HUGE amount the society is wasting. That is an additional cost on production of goods and services in that local community where everyone is losing 1% of value to “deposit” or “withdraw” Naira.
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[I know it does not affect the big men and women of Nigeria, unlike the 0.5% cybersecurity levy (a bad policy I must add)! But people do pay N10 to collect N1,000 in cash from POS agents. Have you forgotten?]
Remember: the people who invented POS did it to enable payment of goods and services, not for intra-currency exchange, via forms. But in Nigeria, we made the Naira the goods and services, and we’re exchanging them with 2 million POS agent “businesses”.
Good People, the history of money is deep; from the cowry era to the barter era – and to the electronic era. Yes, humans have always figured out how to exchange goods and services for value. And across centuries and kingdoms, the quest for improving the efficiency of that exchange has remained. A moment came in 7th century China when the Tang dynasty invented paper currency. Later on, the Song dynasty in the 11th century made it popular. The Mongol Empire and Yuan dynasty scaled it. The trajectory to frictionless exchange has never stopped.
POS agency banking is vital to Nigeria’s economy since the traditional banking services remain limited. But do not think we are not paying a huge fee for depending on selling and buying Naira to function across local communities!
Naira became a “commodity” when Nigeria scaled POS agency banking. When that happened, the Naira, among other features, became a “product” or “service” which could be purchased and resold for “gain”. That is not new since we exchange US dollars for Naira and vice versa, but in… pic.twitter.com/mvx11zdbBD
— Ndubuisi Ekekwe (@ndekekwe) May 12, 2024
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We see everything as trade, even the things that should be sacred. As the POS agency banking scaled, the same ATMs that served us well at least in the cities became less reliable. We used to be able to seamlessly withdraw around N200k from the ATMs, but even with the imposed N20k limit per day, you are no longer guaranteed of it, either the machines are out of service or no cash available. But the POS agents always have cash.
In some locations, you see a POS agent every 20 metres, some every 50 metres, and they always have cash, charging fees. You go to motor parks, cashiers will tell you bluntly that they don’t accept POS payment or bank transfers, but there’s always a POS agent there, you withdraw and then pay the cashiers. As the cash piles up, the cashiers ‘sell’ it back to the POS agents, and the cycle begins again. The charges even vary significantly, in a place like Uyo, you do N600 for N20k; Onitsha has plenty cash moving around, so you do N200 for N20k.
Is it possible to redesign the operation of POS agency to eliminate fees? Yes, make illegal to charge fees for withdrawal or deposit of naira. Move rewards of agents to volume and frequency, make them the TRUE extension of the banks; their commission should be internal.
Your submission on possible redesign of the operations of POS agency is spot on.
To prevent the future negative impact of this intra currency exchange (its possible to get to the bank in the near future and you are told no cash, go to POS), I think a consensus need to be taken on the modus operandi of the POS agency.
You all are getting this whole thing wrong. A lot of Nigerians keep blaming POS agents. It is not the fault of the POS agent. I think there is need for sensitisation to the public so as not to mislead the people.
Thank you so much Prof for your frequent thought provoking engagements both on twitter, LinkedIn and other social media platforms. But I think this time around, you got it wrong, or maybe not entirely correct. Remember that Agency Banking, which you are incorrectly calling “POS Business”, is not just a Nigerian invention. It is done in India, it is done in Kenya, it is done in Ghana, and it is done in several other countries of the world. Wherever there is need to drive financial inclusion to the last mile, Agency Banking comes in handy as a stop-gap. That was why the Central Bank of Nigeria deemed it wise to adopt the Agency Banking model to drive financial inclusion in Nigeria and went ahead to make regulations on how it can be run.
However, if you eventually found out that there are certain persons that are infiltrating the space and causing lawlessness, just like there are bad eggs in almost every other trade in the world, then call them out directly and don’t attempt to label the entire business as being completely bad the way you have tried to create a stereotype of this “POS Business” according to you.
I wish to inform you that we that are stakeholders in the business have already identified long ago that there are miscreants that have infiltrated the business and are committing all forms of malpractices, including selling of the naira, fraudulent activities, collection of ransoms for kidnappers and so many other vices. We have equally gone ahead to team up with the necessary law enforcement and security agencies within the country to ensure that these evil persons are fished out and decisively dealt with severely.
In the just concluded symposium on financial inclusion that was held in the state house in Abuja, we clearly communicated our position to the team led by Mr. Vice President, Kashim Shettima. And we believe that most of these criminal acts that certain elements commit under the guise of “POS Business” will soon come to an end or at least brought to the barest minimum very soon with the effort we are making presently. We therefore solicit the cooperation of notable persons in the society like your very self Prof. Ekekwe to join our call to sanitize the industry by fishing out and dealing with the bad eggs and not to just sit down and label the entire industry as being bad. Remember you don’t throw away the baby with the dirty bath water.
This industry that you are describing shabbily has at least given employment to at least two million Nigerians, just as you noted here in your tweet. I don’t want to talk about the thousands of transactions that are processed daily via the agency banking channel and the business and social solutions that are associated with it. If you make effort to check reports from the World Bank and Effina, AMMBAN (Association of Mobile Money and Bank Agents in Nigeria) and several other media and financial institutions reports, I am sure, you will be really marveled.
Let me pause here for now. Meanwhile, I will always be readily available for further engagements on this issue. Bye.
We are suppose to be thanking Almighty God for introduction of POS becouse it has make things and life easier in our Rural and urban area for our country Nigeria
It’s so unfortunate when those who are supposed to know deliberately decided not to know and ignorantly mislead people. The negative reporting and perception against agency banking was formed during the cashless policy. Since then majority of public commentator and citizens had a negative thought and believe about agency banking.
Firstly Prof, the industry is financial inclusion not POS business as you decided to derogatorily call the business. It’s Agency Banking and agency banking goes beyond POS. Picking a section of the whole industry service and using that to judge the whole industry is very unfair
This write up and it’s conclusion in particular is condemnable as it’s riddled with jaundiced opinions and generalisations which are capable of misleading the public and causing unwarranted attacks on patriotic POS Operators.
This write up should be brought down for the credibility of this platform and objectivity of its writer to remain intact.
It’s generally absurd and potentially enough to herald social disorder in the country.
The great impacts and interventions that the introduction of POS vis-a-vis Agency Banking has brought on the ease of doing business, ease of trading activities, safety of lives and properties, effective utilisation of working hours, availability during important periods when banks could not work like during Covid 19, Cashless palaver, etc
Thanks
The write up is malicious, misleading and full of misinformation.
How could a person who claimed to be a prof be this shallow minded?
If he has issues with some people or a set of people he should call them out, rather than deliberately misinterpreting and misinforming the masses.
How could a sane mind be of this opinion, trying to send over 2 million people into the labour market, how many employment opportunities has he created?
He decided to downsize the whole financial inclusion into just ‘POS business’ this is nothing but a bad belle kind of reasoning.
This kind of write up should be thrown in the trash bin
If the writer can’t figure out the innovations and convinces this financial inclusion has brought to our people, then we might need to take him back to the era before it.
Do the write want people to travel miles because they want to receive or make payments.
He still wants people to queue in the banking hall just because they want to collect 5000 or less. Staying in the queue for hours trying to pay school fee or bills.
I don’t think anybody would want to pay 1000 to the closest bank to his house to deposit 5000 when he can be done conveniently with 100 within his neighborhood.
For the fact that you don’t use the POS doesn’t mean others don’t.
The use of POS services is not compulsory is a matter of choice.
Once again the write up is full of misinformation and malicious intent, such should be thrown in the trash bin.
I think it is you my namesake that is attacking Prof. Let’s say the truth the POS charges are excessive and literally Naira is being sold. I have paid more than 30% of the amount I want to withdraw. It is insane.
POS Agents and POS Providers should charge only a tiny amount say 0.5-1%. Mind you the POS companies still pay them so the transactions they do apart from the cash they charge upfront.
Most of these guys were recharge card vendors, we didn’t pay that much for recharge cards which is a product. Why are we paying a huge portion of our money to get cash?
I think you are using your one-time experience with one of the bad egg the industry is trying to flush out to judge others. I am sure you have equally withdrawn from other Agent that charges very minimal.
The writer is totally clueless of the knowledge of the industry.That industry was tagged ” financial inclusion” it’s one of the programmes of the central bank of Nigeria aimed at bringing banking services to the inner most parts ot the country,where presence of a physical bank is not feasible..Am sure he is aware of the technological developments that has hit the banking sector where you do not need to be physically present or carry huge cash before you make your banking transactions.But however ,there are still some sets of people,sets of business who do not understand or know how to go about these due to lack of adequate education, facilities and so on.The so called ” POS operators that are now being unduly crucified have been bridging the gap educating, assisting the populace on how to get onboarded in the financial inclusion drive..By helping them get the Bvn issues solved,assist them in opening accounts,ATM card issuance amongst other things.That you have some reservations about how the industry operates doesn’t mean you should call for an outright condemnation,you don’t throw away the dirty water with the baby.If you know how many jobs the industry has created from the Fintech to that agent you see under the umbrella.You will appreciate the industry the more , it’s good to criticize when necessary but please let’s make constructive criticism.
Well the writer of this post is entitled to his own opinion
But if he is residing in Nigeria, the reality is that POS banking agency have saved time lost, saved cost for traveling distance to make transactions only to get to the bank you will be told that no network to initiate a withdrawal or deposit, when the recipient is waiting in another state, maybe he or she is in the market to receive it real time, but get frustrated
For me, POS agency banking is bridging the gap from the unbanked to banked
This is my submission