CBN Head Office
By Malachy Agbo and Festus Akanbi
The planned deployment of 40,000 point of sale (POS) terminals in the Lagos area by January 2012, for the commencement of the pilot scheme on the cashless programme driven by the Central Bank of Nigeria will cost money deposit banks about N2.72 billion to acquire and deploy to traders and major retail outlets across the state.
This is just as traders in major markets in Lagos have expressed dissatisfaction with enlightenment on the scheme, alleging that they are not being carried along by the CBN and banks in the process.
Under the arrangement put in place by the CBN and the Bankers Committee, the pilot scheme, named Cashless Lagos, will be used to test-run the move by the financial authorities to encourage electronic forms of payment in Nigeria before its introduction in other major cities nationwide.
Lagos was selected for the pilot scheme by the CBN and banks because the country's commercial nerve centre accounts for 60 percent of cash transactions nationwide.
Dependable sources in the banking industry, who confided in THISDAY last week, said each unit of POS would ordinarily cost between N80,000 and N100,000, but that the industry negotiated a cost reduction for bulk purchases of N50,000 per terminal.
The amount, they explained, would however go up when the cost of installation and the necessary software are factored, which would raise the cost of each terminal to N68,000.
It was gathered that industry-wide, there were 17,500 POS terminals deployed in Lagos alone by the middle of last week.
However, a source disclosed that only a fraction were operational, adding that connectivity issues resulting in frequent downtime, retailer apathy, and lack of awareness are some of the factors responsible for Nigeria's low POS density per 100,000 users.
Relative to other developing countries, a presentation by the CBN showed that POS penetration per 100,000 users in Nigeria is considerably low.
For instance, POS density per 100,000 users in Nigeria as at June was put at 13; in Uganda - 453; Namibia - 338; India - 67; Mexico - 592; South Africa and Malaysia - 1,063; Brazil - 2,247; Portugal and Singapore - 2,091; and Chile - 486.
However, a survey of major markets in Lagos last week showed that retailers, who are supposed to be end users of the terminals, expressed reservations about the success of introduction of POS terminals as means of payment, saying they were yet to be adequately mobilised for the cashless policy.
The director of publicity, Auto Spare Parts and Machine Dealers Association (ASPANDA), Lagos, Mr. Ozobugha Udoka Bonaventure said: “The issue of POS terminals is a time bomb waiting to explode because this economy is a cash-driven economy and we want to migrate it to a cashless economy overnight.” He said there is no supporting infrastructure to drive the policy.
“At present, we are battling with persistent system failures in the banking system and we are adding yet another headache to it.
“Have you checked the literacy level in the country? How many people can read and write in our country?
“As we speak, no operator has deemed it fit to invite us for a round table discussion on it. We are the main target of the policy, yet there is no communication to say this is what we are doing, and how will it affect your businesses.
“Our people carry cash not because they do not know the implications but because the stress of going through the bank is too much. That is why some of our of people resort to carrying the cash themselves.
“They must create awareness at the grassroots and organise symposiums and seminars for the traders. We have members and we can use our associations as channels or platforms. The campaign should be intensive but we are yet to see that,” he charged.
Speaking in the same vein, vice president, Balogun Business Association, Pascal Udeh said: “They have not reached us in any way. We are waiting for the implementation of the policy to see its efficacy.
“As an individual, I will say that I do not think the country is ripe for such a far reaching policy.
“I also do not think we have the necessary tools to drive the policy. They said the first phase will start in Lagos since April it was mentioned, we are in October and we cannot feel anything.”
Also, Public Relations Officer, Alaba International Market Association, Hon. Zimako Anayo, indicated that traders were still waiting for the implementation of the cashless scheme. He said some of the traders don't have confidence in banks because of their multiple charges.
But some bank executives who spoke with THISDAY said a lot of work has been done to make the scheme a success. They maintained that apart from the resolve of the CBN to roll out the scheme in January, the Bankers Committee was another body that is determined to make a success of the Lagos pilot scheme and as such the issue was thoroughly discussed at last week's Bankers Committee meeting in Abuja.
Managing director, United Bank for Africa Plc, Mr. Phillips Oduoza, who confirmed the determination of the Bankers Committee to kick-start the cashless scheme in the Lagos area next January, said banks are prepared for the launch of the scheme and expressed optimism that Nigerians will key into the scheme.
He confirmed the setting up of a literacy sub-committee at last week's Bankers Committee meeting, saying, the managing director of Union Bank of Nigeria Plc, Mrs. Funke Osibodu had been mandated to steer the sub-committee in a way to reach the target audience.
“They have the framework to drive the campaign,” Oduoza explained.
“The aspect of the planned deployment of POS terminals especially in the Lagos area dominated discussions at the last week's Bankers Committee meeting,” he disclosed.
Speaking about the level of preparedness of stakeholders, Oduoza said banks will roll out before the commencement date.
According to him, the decision by the CBN to rescind its decision on banks' offsite ATMs will serve as a boost to the cashless scheme.
The apex bank recently reversed its directive on off-site ATMs and mandated banks to deploy 75,000 ATMs before 2015.
Managing director, Wema Bank Plc, Mr. Segun Oloketuyi, who shared Oduoza's optimism, said high level discussions were ongoing between POS service providers and the telecoms companies.
He said, “A lot of work is being done as we are working with telecom companies who are expected to provide telecom infrastructure to power the terminals.”
According to him, individual banks are already engaging vendors picked for the scheme. He said the cashless policy shouldn't be seen as a project by the CBN alone, but it should also be seen as an initiative of the Bankers Committee.
He said the committee is already engaging the Lagos State Government, civil servants and cooperative societies in the state in order to pave the way for the eventual take off of the pilot scheme in the state.
He could not say specifically the extent of work done so far, but added that whatever happens, the scheme will take off in January next year, maintaining that there is always room for improvement as time goes on.
Managing director, Valucard Nigeria, one of the firms licensed by the CBN to run the POS terminals, Mr. Agada Apochi would not comment fully on the issue raised by our correspondent, but simply said Valucard is ready to roll out. “We are very prepared because we have the needed experience.”
When prodded further, he directed THISDAY to the company's website for more information.
A source said the CBN was working with telecoms firms to ensure 95 percent bandwidth availability to boost users' confidence in the system. Already, there are MainOne, Glo-1 and SAT-3 cables providing huge bandwidth capacity.
One of the fears raised by critics of the scheme is the lack of adequate bandwidth to drive the cashless policy.
However, managing director, MainOne, Mrs. Funke Opeke told THISDAY that such fears were unfounded, saying on the contrary the network was being under-utilised.
“We have more than adequate bandwidth but our network is not adequately used.” Opeke explained that in terms of implementation of the cashless policy, there is a lot to be done.
She said: “There are other dependent logistics which needed to be addressed,” but assured, “We are working with operators to sort things out, given the fundamental capacity and the will to do it, the cashless scheme is achievable.”
Only recently, the CBN licensed five independent Payment Terminal Service (PTS) providers with the mandate to deploy and manage POS terminals in Nigeria. They are Paymaster, Etop, Citiserve, ValuCard and ITEX.
The apex bank also appointed four POS manufacturers - PAX Technology, Bitel, Ingenico and Verifone - for the scheme.