Policy flip flop, banks’ apathy stagnate ATM penetration
Regulatory uncertainties occasioned by the reluctance of deposit money banks to step up investments in the deployment of Automated Teller Machines (ATMs) has seen penetration levels stagnate in recent times, a situation that does not bode well for Nigeria’s quest to achieve financial inclusiveness, according to industry analysts.
Statistics show that Nigerians move N80 billion monthly through the ATMs. Even with the widespread usage and adoption of ATMs in Nigeria, Africa’s largest economy, the population of ATMs has been stuck at the 11,000 mark for the past six years, resulting in an average of 11.39 machines per 100,000 adults, according to latest industry findings. A World Bank report, however, shows that adults in the country account for about 56 percent (95.2 million) of the total population (I67 million).
In stark comparison, Indonesia, with an adult population of about 90 million, more than doubled its ATM installed base from 16,700 in 2011 to 36,500 in 2012, resulting in 37 ATMs per 100,000 adults, about three times the ATM per adult capita in Nigeria.
There has been a general lull in Nigeria’s ATM market, according to industry insiders. They say this is largely due to the Central Bank of Nigeria’s (CBN) misadventure with the Independent ATM Deployers (IAD) experiment of 2008 which barred financial institutions from deploying ATMs outside their branches. This move, according to them, resulted in an abrupt halt in the momentum of ATM deployment by banks in the country.
“From 2006, when ATM deployment started, penetration was growing year-on-year. After the policy changed, it stopped. Yes, the CBN reversed the ban on offsite ATMs but when policy changes abruptly, it affects investor confidence,” said Victor Alaofin, chief executive officer, Ryte Internet Technologies, an indigenous technology company, in an interview with BusinessDay.
Austin Okere, group chief executive officer, Computer Warehouse Group (CWG) plc, said, “A pilot scheme would have uncovered the soft underbelly of the strategy, the major shortcoming being the fact that the cash in the offsite ATMs would have been too expensive for the IADs to carry, and compelled them to charge customers very exorbitant rates, or render them totally unprofitable at the flat rate of N100 per withdrawal, then allowed by the CBN.”
Six years later, according to Okere, Nigeria has less than the 11,800 achieved at the highpoint, “because many banks had to abandon the long-term rents secured for their offsite ATMs and wheel the ATMs into warehouses and parking lots because the IADs could not afford the book value to take on the sites and ATMs”.
The operational lives of those ATMs, about a third of the total volume, were cut short, as they were unusable two years later when the CBN rescinded its decision, he noted.
Speaking in the same vein, Iniabasi Akpan, managing director, Softworks Limited, a major supplier of ATMs, said, “A lot of investments went down the drain with that single policy.”
As at the end of 2013, according to the CBN, there were about 11,000 ATMs in the country. As at 2011, there were 9,640 ATMs deployed across the country, whilst in December 2010, Nigeria recorded 9,958 ATMs.
In a recent note accessed by BusinessDay on Monday, Okere compared Nigeria’s ATM population with its counterparts in other regions of the world.
“South Africa has 60 ATMs per 100,000 adult population, while the United Kingdom (UK) has 124 ATMs per 100,000 adult population,” he noted.
Nigeria clearly has a lot to do in terms of deployment, according to industry analysts, who pointed out that the current number of ATMs was grossly inadequate to meet Nigeria’s vision of being amongst the top 20 economies in the world by the year 2020.
A new report by Ernst & Young, a global business and financial advisory company, has, however, found that bank customers in Nigeria are the heaviest users of ATMs in the world.
Ben Uzor Jr