Hajia Hasanna Nasiru, teacher: Yes, I spend more this time. I hate going to the bank, so before the advent of ATM, if I went to the bank and withdrew money, I would spend it over a long time, no matter how difficult it would be. But now, even for a not so important thing, I would quickly rush to an ATM, slot in my card and count some currency notes. I spend more now.
Isiaka Adeleke: It has made cash easily available, yet, it has not stopped the saving culture. People still keep fat accounts.
John Emaka: It has reduced the borrowing tendency among us. Even as late as 11:00pm, I do go to ATM machines to withdraw money. The policemen there were cooperative. This makes access to cash easy but really, it depletes savings.
Modern way of saving money came to Nigeria in 1859 with the opening of First Bank office but because of large scale poverty across Nigeria, many were still unbanked. In fact, the number of the under banked, and unbanked is still phenomenal. It is put at “more than 70 percent of the poor not having access to formal finance” as at end of 2007, according Professor Chukwuma Soludo, the Central Bank Governor.
Speaking as guest lecturer at the convocation of the Federal University of Technology, Owerri, Imo State on 15th February, 2008 Soludo said, “Bank Credit is about 30% of GDP and Nigeria has a highly unequal income distribution profile: about 8 percent of those that have access to financial services own about 90 percent of the available deposits.”
This statistics presents a scary scenario for a country of at least 140 million people, based on census figures and the Broad Money (M2) averaging N8,997,817.30 million January this year.
Over the years successive central banks regimes have made efforts to grow deposits and deepen confidence in the financial system based on savings culture awareness but the successes gained eroded with the failed banks during the Abacha regime.
But some respite came with banking consolidation when 25 banks emerged strong and restored some hope that deposits were safe, at least for now. The Nigerian Deposit Insurance Corporation’s (NDIC) reforms which upped the deposit guarantee to N200,000 from N50,000 also engendered depositors’ confidence in the system.
The ATM intervention
The Automated Teller Machine’s (ATM) introduction in Nigeria was not to encourage savings, it was primarily to launch Nigeria into cashless society.
Nigerian banks and the financial services industry in particular, have embraced the concept of e-money. Changes are beginning to take place in the Nigerian financial landscape and customers are increasingly raising the hope of expectations for quality customer services.
ATM was introduced into the Nigerian market in 1989. The very first ATM in Nigeria was installed by National Cash Registers (NCR) for the defunct Societe Generale Bank Nigeria (SGBN) in 1989.
Over the years, the ATMs have grown and banks in the country are now adopting Self Service (ATM) technology because it is cost effective in the long run.
In the past few years, they offer convenience to customers and provide banking services well beyond the traditional brick and mortar service period. They also ensure that a lot of cash is still within the banking system where it can be managed and channelled into productive use, instead of bulk withdrawals that we used to witness in the past.
It is good for customers to withdraw cash that they need by eliminating the risk of loss through theft and fire. All in all it has been win-win scenario for all the parties concerned.
According to Mr Charles Mordi, director research department CBN, “total number of ATMs in Nigeria now is in excess of 1,000 from 700 some three years ago.”
Most industry experts who spoke to our correspondent in Lagos were unanimous that the ATM system is encouraging savings culture.
Mr Yomi Oluyomi, the Treasurer of Union Bank said ATM “has affected savings because you can get your money anytime and anywhere throughout the week.
“Prior to now, a lot of people carry cash because you can need your money anytime. Now with the advent of ATMs, you can withdraw money any time so people begin to save more,” he noted.
“As a matter of fact, you don’t have to travel far to access funds so it encourages people to save. I, as a person, don’t carry cash anymore. Given that there are challenges of communication that makes ATM dysfunctional at certain times, I think it is much better,” Oluyomi added.
“If you check the CBN records, savings have been growing. A lot of people are carrying cards, even Danfo drivers and menial job doers. That means they all have accounts,” he said.
Mordi said the number of people carrying cash has declined significantly. In fact, the number of ATM machines has risen significantly in the last two years by over a thousand by April this year from about 700.
According to Soludo total Banks’ deposit almost quadrupled between 2003 and 2007.
For instance, total savings deposit of Union Bank of Nigeria Plc hit N121.39 billion in March this year, the Group Managing Director/Chief Executive, Dr. Barth Ebong said recently in Lagos.
However, another banker who wouldn’t want his name mentioned in print slightly disagreed: “The truth is that there is hardly any reasonable correlation between savings and the use of ATMs.
“We have witnessed a lot of promotional accounts after consolidation and accounts.My bank have grown phenomenally because of that. ATM, to me, is just a added service or complementary service.”
Problems facing ATM in Nigeria
Oluyomi said ATMs are encouraging savings. But it has indeed got challenges as well.
Said he, “Of course, there are challenges; it has not really got into the rural areas. There are no ATMs in the rural areas unlike the towns and commercial centres.”
Another industry expert who would not want his name in print noted that, with several stories of woes from ATM subscribers, the growth of ATM was diminishing.
“Beside the fact that it is not always functional because of certain faults, the frauds associated with the use of ATM are limiting its use. This also affects people’s desire to save.
“Normal challenges facing other businesses in Nigeria – like power outages, telecoms breakdown and others do affect electronic payment platform like ATM services in Nigeria.”
Another expert said, “There are also staff training issues that are to be sorted out.”