Jane David sat on a stone close to her newly constructed kiosk for her daily business as a Point of Sale agent popularly referred to as a mobile bank agent.
Mrs David looked exhausted, her gaze fixed on the Point Of Sale (POS) machine.
It was a few minutes to 6 p.m. on a Saturday in November. It was already dusk – the sun had calmed, preparing to take its rest.
Mrs David told PREMIUM TIMES that the business moved well during the weekends, so she closes late. The 35-year-old would soon complain bitterly about how the N50 stamp duty charges on POS introduced about a month before was affecting the business in the agricultural settlements around Luvu community in Nasarawa State.
“I just moved here. I used to be at the main road before. People are closing down because customers are losing interest in withdrawing their money from us because of charges. They prefer to keep their money at home or wait for a day to travel the journey to Maraba or Area one in Abuja to withdraw their money,” she said.
Luvu is a community in Karu Local Government Area of Nasarawa State.
Although Mrs David said she had no accurate data, she gave a rough estimate of mobile money agents around the community to be over 50, with half closing down the business due to financial constraints.
Mrs David said it is worrisome that many agents are closing down their businesses because residents have refused to patronise them since the introduction of the N50 stamp duty charges in September.
“We usually charge N100 – N150 on N5000 before, but we have added N50 to it, so we collect N200. Do not forget that POS charge too is there. It is becoming challenging.”
Mobile bank agents provide ready cash for people with debit or credit cards. In return, they deduct the equivalent of the cash given, plus charges, from the owner’s bank account using their POS machines. Such services are common in areas with little or no banking services and ATM machines.
The N50 stamp duty introduced by the CBN has thus increased the charges demanded by mobile bank agents like Mrs David.
Apart from the stamp duty that has reduced patronage, Mrs David, who said she left her teaching job for the business, also highlighted other challenges.
“This business has a lot of challenges, which is the reason why people are closing down. It is capital intensive, and you know it is difficult to access loans. For example, if you are using the banks’ POS for this business, you will close the business early because it takes 24 hours before money drops on banks’ POS.
“You will see people with bank POS machines panicking on a Friday because the money won’t drop till Monday. But for company POS machines such as OPay, the money drops immediately.”
Another mobile bank agent in Kuje Area Council, Abuja, who identified himself as Amos Ufmon, corroborated Mrs David’s position, in a separate interview with PREMIUM TIMES.
Mr Ufmon said most of the agents took loans before starting the business.
“The N50 stamp duty has killed our business. Most of us took loans from friends and family to start the business,” he said.
Explaining the process of being an agent, Mr Ufmon said one must have a registered company and open a current account with a minimum of N200,000 before the POS can be given to you.
Other mobile agents who spoke with PREMIUM TIMES in Abuja and Nasarawa State corroborated what Mrs David and Mr Ufmon said.
PREMIUM TIMES’ checks showed that the agents made a minimum of N2000 profit daily, depending on patronage.
CBN’s stamp duty charge
The federal government recently mandated the Central Bank of Nigeria to strictly implement Merchant Service Charge, which would impose more charges on all POS transactions.
To this end, the central bank issued a circular to banks and other stakeholders titled, ‘Review of Process for Merchants Collections on Electronic Transactions.’ Accordingly, the Nigeria Interbank Settlement System (NIBSS) also issued a circular titled, ‘Returns on Stamp Duty Collection for Merchant Transactions.’
Both bodies are working closely in setting remittance processes that ensure the collection of stamp duty charges for the POS.
The new policy covers every transaction that occurs on the POS platform, rather than the previous regime where charges are made on aggregate transactions. Thus, for every POS transaction of N1,000 or more, a stamp duty of N50 is paid.
The NIBSS data showed the total volume of POS transactions for 2017 stood at 146.3 million which was worth N1.4 trillion; 285.9 million transactions in 2018 valued at N2.3 trillion, and 187.7 million for six months – January to June 2019 worth N1.4 trillion.
Improving Financial Inclusion
Mobile banking like Mrs David’s is one of the methods the CBN hopes to use to increase financial inclusion among Nigerians.
In 2010, Nigeria made a commitment to reduce the adult financial exclusion rate in the country from 46.3 per cent to 20 per cent by 2020.
To attain this, the Central Bank of Nigeria (CBN) adopted the National Financial Inclusion Strategy (NFIS) in 2012.
According to the strategy’s document, the NFIS was built on four strategic areas of agency banking, mobile banking/mobile payments, linkage models and client empowerment.
It also identified four priority areas for guideline and framework development. They include Tiered Know-your-Customer (T-KYC) Regulations, Agent Banking Regulations, National Financial Literacy Strategy, and Consumer Protection.
A major aspect of the financial inclusion strategy is its focus on the end-users of financial services.
The end-user, the CBN said, refers to the adult population in the country, including Micro Small and Medium Enterprises (MSMEs), farmers, artisans, and all economically active people, particularly those in the informal sector.
CBN explains POS directive
A director in Central Bank’s payment system management department, Musa Jimoh, explained the apex bank’s directive on the N50 POS charge.
Mr Jimoh said the stamp duty is a fee regulated by an Act.
“The CBN does not regulate the stamp duty, so, we cannot change anything. Stamp duty, as it is today, has been misinterpreted,” he recently said on a Channels Television programme.
“Our circular that talks about merchants paying stamp duty, according to the law, does not say that the stamp duty should be paid by the consumer. That’s actually a misrepresentation of the CBN’S directive,” he said.
He said no individual should pay N50 in addition to the cost of the good.
“What has happened is that they have transferred this fee, blatantly and openly, to the consumers. This is very wrong,” he said.
He also said the stamp duty is not to be paid by individuals that are consuming the goods and services of the merchant.
“The merchants, who are receiving the money, are the ones who are supposed to pay,” he clarified.
But PREMIUM TIMES checks revealed that most businesses including mobile banking agents, stores and petrol stations in the Federal Capital Territory and Lagos State transfer the N50 charge to consumers who use POS.
PREMIUM TIMES’ checks were collaborated by the Director-General of the Federal Competition and Consumer Protection Commission, Babatunde Irukera, in his recent tweets.
Mr Irukera said the commission will continue to protect consumers first, in every policy, while advising those still deducting N50 POS charge, to stop it.
A financial analyst, Jide Ojo, said the N50 might stamp duty charges may look small, but, if one looks at the millions of Nigerians who engage in financial transactions every day, it is much.
“My worry is the lack of accountability on how much the government is generating with this fifty-naira stamp duty. Who is tracking? Has there been any form of accountability as to whether the banks that are making these reductions are even remitting? Is there a platform that, as that reduction is made, it goes directly to CBN or to the commercial deposit bank, who then will remit to the federal government?”
He suggested that there is a lot of fraud and lack of clarity about the management of this deduction.
“So this fifty-naira reduction stamp duty reduction, stamp duty is supposed to be collected by the Nigerian postal services. Is this fifty naira going into the account of Nigerian postal service as part of their revenue generation or is it going directly into the money deposit bank and they are remitting directly?”
Not Interested In Banking
The central bank believes that the use of mobile banks like Mrs David’s would encourage many unbanked Nigerians, who live in communities with little or no banking facilities, to register for bank accounts.
Across the villages and farm settlements visited by PREMIUM TIMES in the FCT, most of the farmers and local business owners interviewed said they never owned bank accounts, despite the presence of mobile banking in their areas.
Most of them said they use cash for their transactions. The multiple bank charges, now made worse by the N50 POS charge, is a major reason many of these people do not want to own bank accounts.
Even before the introduction of the N50 charge, however, the result of the 2018 Access to Financial Services (A2FS) Survey conducted by Enhancing Financial Innovation and Access (EFInA), showed that mobile money usage was predominant amongst already financially included populations while cash transactions continued to hold sway among subsistence farmers and business owners in rural areas.
Poverty The Main Problem
In Kahodahanu, some of the farmers said there is no point in taking the little they make to the banks when they can barely feed themselves.
For 19-year-old Amina Alhassan, opening a bank account would have assisted in saving, “but it is almost impossible, because, we do not make a profit.”
She said banks remove a lot of charges “and it will affect the rural farmers so much.”
While recounting the daily stress of making ends meet, Ms Alhassan said all the women usually gathered around 7 a.m by the mango tree and set out for a journey of about two hours, to pack five bunches of plantain for N500.
She said coming back from the farm also takes almost two hours.
“The women suffer a lot to make ends meet and we can’t afford to open an account or save any. Banks will still remove too much money from people’s savings and someone like me that is saving to further my education will always be sad if they are removing all those charges from what I am saving. It is not encouraging at all,” she said.
Other women shared similar tales as Ms Alhassan.
While many residents of rural Abuja complain about the new N50 charge on POS transactions, residents of rural communities in Bauchi, Jigawa and Nasarawa lamented the absence of mobile banking in their communities. For them, the presence of mobile banking, even with the additional N50 charge would be a relief.
In Sabongarin Nguwankasa, a farming community about 10 kilometres from Bauchi town, many residents said they have no bank accounts. The few who do said they seldom make use of the accounts.
The village head, Bala Umat, said since they moved to their present location about 32 years ago, they have not had access to banking services.
“I have a bank account through which I am being paid my stipend allowance as a village head. But I have never done mobile banking,” he said.
The 40-year-old village chief said he travels about 12km to the nearest bank in Bauchi to access banking services.
He said the presence of mobile banking in his community would assist people like him and also encourage more farmers to open bank accounts.
“We pay between N400 and N350 as transportation fees on a return trip from Sabongarin Nguwankasa to Central Bauchi, to cash our money, ” he said.
A similar view was shared by residents of Sabon Nguwankasa in Bauchi Local Government Area.
A staff at the Bauchi State civil service, Danlami Abdullahi, said the community has been neglected by the government.
“As for banking, I normally go to the bank in town to cash my salary at the end of the month. That is always once in a month,” he said, lamenting the absence of mobile banking services in the community.
In Jigawa State, Muhammadu Shekarau, a trader in Madobi community in Dutse Local Government Area said there are no mobile banks in the area, despite its closeness to the state capital.
“It’s a seven-kilometre journey to the state capital. Many people in this community have bank accounts, however, there are no financial agents to transact business with. More disheartening is the long queue we normally encounter in the town whenever we go to transact business. Sometimes, we have to leave home earlier in the morning to get access to bank services, on time,” Mr Shekarau said.
Another resident, Sahabi Abdullahi, who works in a bakery, corroborated Mr Shekarau’s experience.
“Even this point of sale (POS) services are lacking in this community. At times, my wife sends me to the city to cash her little monthly stipend from the government. Many a time, I asked her to go there herself, whenever I have other important engagements in the village,” Mr. Abdullahi said.
In its five-year strategy (2019-2024) plan, the Central Bank governor, Godwin Emefiele, said the apex bank’s ultimate goal is to ensure that a 95 per cent financial inclusion rate is achieved by 2024.
Ensuring the presence of mobile banking agents in rural communities in Jigawa, Bauchi and others will surely help to achieve this target as more residents would be encouraged to open bank accounts and use banking services.
However, mobile banking agents like Mrs David believe the introduction of the N50 charge would discourage more people from using mobile banking and thus defeat its purpose.
“If you want to retain your customers, you cannot afford to add such money,” Mrs David said.
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