News

ATM market serving Africa’s largest economy suffers six years of stagnation

May 15, 2014

Missteps and reversals in regulatory policy have sent a once-burgeoning ATM market into a state of intertia since 2008, a situation that does not bode well for the central bank’s goal of achieving universal financial inclusion.

A report by Business Day said Nigeria's installed base of ATMs has sat at 11,000 through the last six years — a ratio of 11 machines per 100,000 adults.

By contrast, the ratio in South Africa is 60 to 100,000; in the United States it is 173 to 100,000, according to World Bank figures.

The Central Bank of Nigeria is to blame, the report said. The CBN launched an ill-advised policy in 2006 banning banks from operating off-site ATMs. However, IADs could not afford the costs to take over the machines from banks at the exchange rates allowed by the central bank. As a result, banks ended up warehousing the machines.

Despite reversal of the policy, banks have been wary of venturing back into the off-site market, Business Day said.

“From 2006, when ATM deployment started, penetration was growing year-on-year,” Victor Alaofin, CEO of Nigeria-based Ryte Internet Technologies, told the publication. “Yes, the CBN reversed the ban on offsite ATMs but when policy changes abruptly, it affects investor confidence.” 

This week, the CBN issued another controversial dictate, saying that all bankcards retained by an ATM must be rendered unusable before their return to the issuing bank — even if the ATM is owned by the issuer. The CBN explained that the policy was intended to prevent misuse by intermediary parties responsible for returning retained cards to issuing banks.

At a press conference, the CBN was grilled by journalists asking about likely inconvenience to cardholders, according to a report by This Day. A representative said the CBN was working with banks to figure out how to enact the policy without creating undue hardship to accountholders whose card is retained through no fault of their own.

"[W]e are discussing on how it would be done such that the burden would not fall wholly on the cardholders," he said.