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According to Tope Dare, Executive Director of e-Business and Infrastructure at Inlaks Computers Limited, Nigeria’s persistent cash shortage has been attributed to poor cashless policies and inefficient currency circulation by banks.
Speaking at a public lecture themed “The Cash War Between ATMs and POS Agents in Nigeria”, Dare argued that regulatory failures—not banking inefficiencies—are the primary cause of the crisis. He emphasized that while digital transactions are being promoted, cash remains essential in Nigeria’s economy.
“The Central Bank of Nigeria’s (CBN) cashless policy has contributed to recurring cash shortages,” Dare stated. “People now hoard cash instead of depositing it in banks. ATM withdrawal limits, intended to distribute cash more efficiently, are worsening the crisis.”
The Rise of POS Agents and the Informal Cash Market
Dare highlighted an unintended consequence of the cashless drive: the dominance of Point-of-Sale (POS) operators in cash distribution. Initially introduced to serve banking deserts, POS agents have now become primary financial service providers, often at the expense of consumers.
“High transaction fees have encouraged POS agents to source cash through informal and, at times, unethical means,” Dare warned. “Some agents withdraw directly from ATMs, depleting cash meant for everyday users, while others purchase cash from businesses in exchange for digital transfers, creating an underground cash market.”
This shift has increased congestion at ATMs, disproportionately affecting traders, transport workers, and elderly citizens who depend on cash but struggle with digital banking.
Why Nigerians Prefer POS Transactions
Despite high fees, a street survey revealed that many Nigerians favor POS agents over ATMs, citing accessibility, speed, and customer service.
As of March 2024, Nigeria had approximately 2.7 million POS terminals compared to fewer than 21,500 ATMs serving over 63 million bank customers. This stark imbalance has accelerated the reliance on POS agents as the primary source of cash.
Additionally, many respondents found POS agents more approachable than bank staff, despite lacking formal customer service training.
Regulatory Response and the Path Forward
Dare acknowledged the CBN’s recent efforts to penalize banks that fail to provide adequate cash. Measures such as increased oversight, customer reporting of ATM shortages, and fines for non-compliant banks have been introduced.
However, he stressed that without a comprehensive review of the cashless policy’s implementation, Nigeria risks further entrenching an exploitative parallel cash economy.
“Public frustration is mounting,” Dare warned. “Urgent action is needed before the situation worsens.”
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