The absence of banks in most of the Local Government Areas in Borno State as a result of insurgency has forced residents to resort to electronic banking in place of cheques and other paper transactions. Most of the electronic fund transfers are authorized through cards and mobile phones. Daily Trust examines the situation.
The banks were destroyed and ransacked by the insurgents and have remained shadows of their former selves because they have not operated for almost ten years.
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The absence of banks in many local government areas apart from Maiduguri, the state capital, and Biu has limited the opportunities to finance small businesses and eventually trigger economic growth in local areas.
A farmer and livestock merchant at Ngala said, “Farming and fishing are the mainstay of the economy of Northern Borno which consists of the Lake Chard areas. Banks have before the advent of insurgency provided services to the farmers, businessmen, women and various groups; they motivated people for savings and distributed loans to them to start self-sufficient businesses. The economy of the area is now dormant with the absence of banks.”
However, the Point of Sale (POS) services are said to have stepped in to fill the void and many people reportedly use banking apps to carry out financial transactions.
Modu Melaye in Bama town said the three banks which operated there have all shut down following attacks by insurgents eight years ago and that most people use electronic transfers which further reduced banknotes and coins for transactions.
He said, “There are many POS machines in Bama town and most business owners also accept electronic transfers. So, one can walk into a shop and buy goods electronically. Most salary earners who received bank payments usually collect money in physical form from the POS operators. However, people prefer cashless transactions because of insecurity.”
But Ibrahim Modu from the same town said the absence of banks has affected economic growth in rural communities because people could not access loans to start profitable businesses. He said people who engage in short-term buying and selling of items, including farm produce, prefer to save and withdraw their money in banks for many reasons.
“Again, not all salary earners receive bank payments, there are others such as pensioners who receive cheques and have to travel to Maiduguri to withdraw their money. These people suffer to travel to other towns and join long queues of customers to collect money,” he said.
A former councillor, Mola Kareto, from Kareto, Mobbar LGA, said the bank in Damasak, headquarters of the LGA, was closed many years ago before the area was deserted. He said with the return of displaced persons and refugees this year, POS systems were established by private individuals to replace the bank.
He said most local businessmen living in villages do not want to carry physical cash along the major roads to Maiduguri to buy commodities because of attacks and thefts by insurgents.
“Businessmen buy cattle, sheep and other types of domestic livestock and pay for transportation to Maiduguri to sell them and use the money to buy goods. That way is safer because many business owners have gone bankrupt after their money was stolen by insurgents along the road in the past. That is what people did before POS became popular after the restoration of Mobile networks in some places,” he said.
A commercial driver in Kukawa LGA who identified himself as Babagana said returnees in most places patronize POS systems because of the risk involved in keeping physical cash at home or travelling along with it.
“Though attacks on the Monguno-Maiduguri have stopped since March this year, travellers are still nervous and prefer to do electronic transfers.
“The insurgents have in the past blocked the road daily and robbed passengers of their valuables and money. In fact, they searched vehicles and tore the covering materials of vehicles to remove any hidden money. The insurgents know that people move with cash to markets, that is why they accost commercial vehicles. In February this year, they snatched N1m from a trader along Monguno Road and instantly the man started acting in a way that was out of control; he had to be comforted by other travellers. Apart from money, they also snatched vehicles at gun points and in a few instances, forced the drivers to drive the vehicles to their enclaves in the forests before they released them.
“The road is safe now because of the presence of patrols but people do not take chances; they prefer to follow convoys even if it means waiting for a week,” the driver revealed.
Meanwhile, POS operators who receive cash from customers and transfer money to others electronically are said to be at a fix in most cases in the absence of banks, according to one of them, Usaini Lawan in Monguno town. He said though most of the money received from clients is circulated, operators must take surplus cash to banks; money also has to be moved from banks in Maiduguri to business points.
He said operators mostly wait to join military convoys moving to Maiduguri to get security cover before they move cash to banks. He said soldiers offer protection to civilians moving in their convoys and that has averted ambushes by insurgents.
Volunteer security personnel, Mu’azu Misiya, said the absence of banks in most of the towns as result of insurgency has not stopped transactions which involve immediate outflow of cash towards the purchase of goods and services.
“The POS machines are available in many places and businessmen, including contractors, do not exchange cash; they make payments electronically and their goods are delivered to them on time. The only problem is that labourers hired to work on construction sites are paid daily in cash. The money is obtained from the POS operators who could give up to N10 million to their customers,” he said.
Malam Sule Abadam said Nigerian refugees from Malam Fatori town doing businesses along the border with Niger Republic invest their money in banks at Diffa, Niger, while others have to travel through Geidam to some parts of Yobe State to do bank transactions.
A banker, who prefers anonymity, said the government should work together with relevant authorities to revive banks where normalcy has returned at least to provide small businesses with loans and promote rural economy.