By Omodele Adigun
As Nigeria joined the rest of the world on June 27 to celebrate the 50th anniversary of Automated Teller Machine (ATM), slow growth and technical glitches still pervade the cash machine in the country. This was as experts have urged the Central Bank of Nigeria (CBN) to hands-off and allow market forces determine fees charged users by Independent ATM Deployers (IADs).
According to statistics, when compared with peer countries and advanced nations where this “bank in the hole” has increased by leaps and bounds in the last 50 years, Nigeria has not performed up to expectations.
For instance, Brazil, with a population of 200 million, has 20 ATMs per 100,000 people, according to 2016 World Bank Study on banking penetration and growth, while Nigeria has a total of 16 ATMs to serve equal number of bank customers.
Although that figure has been upgraded by the Nigeria Interbank Settlement System (NIBSS), which put the total number of ATMs in the country at 17,594 as at last March, Nigeria notwithstanding lags behind its South American counterpart, which has more than 200,000 ATMs.
The latest global figures, according to the BBC, show that ATM numbers in the BRIC nations (Brazil, Russia, India and China) have gone up sharply and the machines remain a constant, if not growing sight, in Western Europe.
“As of 2014, Russia had the highest number of cash machines per one million inhabitants than any European country. And Russia has seen rapid growth in recent years, according to a report by Payments UK, while growth in India is coming, in part, from the development of solar-powered ATMs in rural areas.
“Portugal had 1,516 ATMs per one million residents in 2014 to make it the country with the highest proportion of cash machines in Western Europe. The UK had 1,074, while the average in the EU was 960. There are now about 70,000 cash machines across the UK, and 176 million cards that can be used to withdraw cash at them.” But in Nigeria, the total number of active ATM cards as at September 2016 stood solitarily at 29.24 million.
“Sweden, typical of a Scandinavian shift towards a cashless society, has the lowest with 333 machines per one million inhabitants.”
As for the popularity of ATMs in relation to cash withdrawal, Payments UK says “the UK recorded 54 cash machine withdrawals per person in 2014 – the highest in the world. Germany and Belgium have the largest amount of cash withdrawn per adult in Western Europe. Adults in these countries on average withdraw over £3,500 a year from cash machines. India has the lowest value of cash machine withdrawals with less than £270 per adult a year. However, this value has slowly increased over the past few years.”
In Nigeria, although NIBSS could not break down ATM transactions per person. It put the total volume and value of transactions between January and March, 2017, at 179 million and N1.5 trillion respectively. And for a five-year period, between 2012-2016, CBN put both volume and value of transactions that passed through the ATM at about 1.98 trillion and over N16.39 trillion respectively.
On year-by-year analysis, the CBN White paper on e-payment Statistics shows that the value in 2012 stood at N1. 99 trillion. It, however, rose above N2.83 trillion in 2013. In 2014, the figure was put at N3.682 trillion and the following year, it jumped above N3.97 trillion before wrapping up 2016 at over N3.92 trillion.
Writing on “Why is Nigeria not Growing Her ATM Population?”, Mr. James Agada, the CEO of CWG Plc, an Information Technology (IT) integration company, blamed the problem on high cost of procuring and maintaining ATMs which do not make investment on the machine a lucrative business.
According to him, ATMs are expensive to procure and expensive to maintain. And because of that, the entire price setting regime adopted by the CBN inhibits investments.
Hear him: “The reason the ATM penetration is not improving in Nigeria is very clear – it is not a profitable business. And it is not a profitable business because the fees paid per transaction is regulated by the CBN and set at an unrealistic level. The entire price setting regime adopted by the CBN, like all price setting schemes elsewhere, is counter- productive and inhibits investments.
“Market forces will and do moderate forces as has happened in the GSM market. To get the ATM penetration growing and reap the attendant growth in business and GDP, the CBN has to let go and allow market forces attract independent deployers to invest.”
Explaining the reasons for this, he said, “Nigerian banks, being shrewd businessmen, have no need to build up cost centres. At costs of $10,000 per ATM, bridging the gap with Brazil will cost somewhere in the region of $2 billion and a further $200 million or more per annum to keep them running. This does not include the additional operational costs around power, communications, cash, security and real estate. However, these costs are not that different in other parts of the world, including Brazil, where one bank alone can have 50,000 ATMs or more. Maybe the banks in other places are a lot richer than our banks or less shrewd than our own. Richer, most definitely – the third largest bank in Brazil is 10 times the largest bank in Nigeria.”