The weeklong protest against the withdrawal of petroleum subsidy by the federal government exposes the challenges of a cashless economy
When Nigerians rose to protest the sudden withdrawal of fuel subsidy, little did they know they were in for a long-drawn battle. Emmanue Ojo, a technician who lives in the Akute area of Ogun State, was a major casualty of the weeklong protest. For as long as the protest lasted, he agonised over his inability to make cash withdrawals from automated teller machines, ATM. In line with the newly introduced cashless policy of the Central Bank of Nigeria, CBN, in Lagos, Ojo assumed he did not need to keep so much cash at home. Two days into the strike organised by labour, he set out for a nearby bank to withdraw money from an ATM but he was not lucky. The compelling need to get money to replenish foodstuffs at home took him to four other banks in Akute, yet he was unable to withdraw money, as virtually all the ATMs were not dispensing cash. Long queues and erratic network problem characterised ATM services. Quite often, the machines would advice the hapless user to try ATMs in other locations.
Ojo was not deterred. By the fifth day of the protests that crippled commercial activities, he decided to go beyond his neighbourhood in Akute, walking cross a bridge that links Akute with Ojodu, before he could find another bank. Whereas the sixth bank did not yield any result different from his past experiences, the seventh attempt spelt doom for him as his ATM card got stuck in the machine, putting a seal on his hope of drawing money from his account. Apparently disgusted, Ojo had to trek back home, covering a distance of about seven kilometres. “It was so bad I had to trek home because I didn’t want to spend the last money on me by taking a bike,” he lamented.
Ojo was not the only Nigerian that saw the downside of electronic banking while the protest over the removal of fuel subsidy lasted. A Lagos-based woman, who preferred to be simply called Adenike, created a scene at one of the banks during the strike. After visiting several ATM locations, she could not withdraw money from her account as the strike progressed. She met a couple at one of the ATM locations and enquired rather curiously: “Did you get money from the ATM?” The answer was no. The woman collapsed and the couple rallied to her rescue. She told the couple she had no food at home. The couple arranged an emergency rescue package for her.
Many Nigerians had similar experiences while the protest lasted. Indeed, the period was a litmus test for the cashless economy policy of the CBN. Even with all the benefits of the policy, not a few Nigerians have come to terms with the fact that there are still challenges facing electronic banking. Apart from the challenges posed by poor telecommunications networks, most banks were unable to refill the ATMs with cash due to the restriction on movement imposed by labour and civil society organisations. On the rest days declared by the organisers of the protest, some users of ATM cards still had problems withdrawing money from ATMs. Hence many families had difficulty replenishing their food supplies.
At the newly opened Ikeja Shopping Mall, for instance, some shoppers were made to understand that the mall does not accept MasterCard. One shopper was advised to either use a VISA card or pay cash. Unable to meet any of the requirements, he left the mall empty-handed. Out of frustration, customers of banks had considered the prolonged protest as a mark of insensitivity on the part of the labour leaders even when they were warned well ahead of the strike that people should stock their homes with food and other essential commodities. The magazine, however, discovered that while the strike lasted, some banks had attempted to compel their staff to be at work possibly to forestall a situation where customers would not be able to make withdrawals from their ATMs. But that was met with resistance as some of the organisers of the protest raised the alarm over the possible dangers workers in those banks could face.
But in some of the banks where ATMs were still dispensing cash towards the end of the strike, the management of some banks mobilised some operations and information technology staff to ensure that the ATMs did not run out of cash. In some cases, the operations were carried out late in the evening when the protesters must have retired for the day. There were also cases where provisions were made for such staff to operate from nearby hotels.
Beside the inability of the banks to refill the ATMs and network failure, the difficulties encountered by Nigerians in getting cash during the strike period was compounded by the limited number of ATMs in the country. From about 500 ATMs in 2006 when banks began to deploy the machines in the country, the number grew to about 8,000 in 2009 and about 15,000 in subsequent years. However, in 2009, the CBN banned banks from deploying ATMs outside their premises. That was to make way for licensed independent ATM operators to take over the offsite location of ATMs. The banks complied by dismantling all their ATMs that were not located within their premises, bringing down the number of available ATMs in the country. The most affected locations were hotels, eateries and airports. But towards the end of 2011, the CBN reversed the policy.
Current figures also show that there are about 8,567 ATMs with about 10 million card users. There are only three licensed independent ATM operators in the country – Chamms Access Limited, ATM Consortium, ATMC and Corporative Support Services, CSS. Although the CBN policy reversal was in readiness for the cashless policy, the independent ATM operators described the move as inconsistent and adverse to business development. The banks, which sources say compelled the CBN to reverse the policy, lost huge money to the dismantling of the ATMs. Some component units of the dismantled machines were sold at giveaway prices to technicians.
But while some people are still agonising over their experiences with ATMs during the strike, Segun Adeleye, a banker, says rather than expose the limitations of electronic business, the challenge has strengthened the need for it. Most businesses that can receive payments on the website ran throughout the period. For instance, people were able to pay for utilities like DSTV and buy airtime from the comfort of their homes, an indication that ATM cardholders can do much more than just withdraw money from ATMs.
Prior to the takeoff of the pilot scheme of the cashless policy in Lagos this January, banks had advised their customers through various means that payment of bills and top up of airtime could be carried out directly from ATM cards. “We have deployed thousands of ATMs nationwide to facilitate the cashless environment,” one bank wrote in a statement to its customers.
But while the banking sector was on trial during the protest, the Nigerian Stock Exchange, NSE, was running, though skeletally. Market operators say trading activities responded positively as major indicators increased marginally by 0.6 per cent as at Friday January 13, 2012. For instance, the all share index increased to 20,883.89 from 20,725.30 points recorded in January 6, 2012 while market capitalisation rose to N6.581 trillion from N6.531 trillion within the same period. Market analysts attribute the development to the renewed buying activities in the building sector, consumer goods and financial services. “The increase was as a result of huge transactions recorded in the industrial goods sub-sector which was largely contributed by Dangote Cement, Nestle Nigeria, among others. Dangote Cement was the only blue-chip stock that sold about 75,000 units daily during the industrial action. If you multiply 75,000 by N116.51, you get about N8 million. Other stocks that drove the market are Nestle Nigeria, Diamond Bank, Ecobank, among others,” said Funso Adeoye, a stockbroker.
Trading activities at the NSE was made possible through the remote trading platform, a broadband connection that thrives on the Internet. It connects the trading engine at the exchange and the market operators who must have been licensed by the exchange. “We talk to each other through the broadband. The computer of exchange and brokers communicates with each other and it is open to other operators who are connected. This has come to replace the telephone conversation method we used to operate,” says Adebayo Ajayi, managing director, Ned Phillips Capital Limited. Much as the banking sector was not as effective as the stock market during the trying period, there are lessons to be learnt by regulators and operators in both markets. Technology-driven market is the new direction.
Additional reports by Abiola Odutola and David Lawal