THE National Vice President of the Association of Mobile Money and Bank Agents of Nigeria (AMMBAN), Obioha Oti, has said that with the July deadline directive for registration of point-of-sale merchants with the Corporate Affairs Commission (CAC), Nigeria could witness a setback in the financial inclusion of its unbanked citizens and a rise in transaction costs.
Oti, who spoke exclusively with The ICIR on Thursday, May 9, on the development, said several money agents played vital roles in the financial inclusion of people in localities where banks do not operate in the country.
He said those agents could be pressured out of the business with “short notice” by the Central Bank of Nigeria (CBN) mandating the operators to register with the CAC before end of July this year.
He suggested that the Federal Government engage the mobile money bank operators in better ways to implement the policy to avoid tension in the financial services industry.
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According to Oti, many PoS operators don’t have start-up capital of up to N20,000 and could have issues with a registered business name, which takes not less than N25,000 with the assistance of some licensed business registration agents.
“We are seeking greater engagements with the Central Bank of Nigeria and the Corporate Affairs Commission on this development so that we won’t have our members out of business because of the difficulty in this registration. We have a database of all the registered mobile money agents. We can avail them of this seamless platform for such registration so that the process does not hurt their business and pile up pressure on financial transactions.
“If they just want a CAC portal, it is okay for them to open a portal so that people can submit their information online as such that it can hit the CAC database. This would enable them not to go through the difficult process of going through business registration agents, which could scuttle financial inclusion. If this is not well handled, the crowd could return to the banking hall for cash, which could overheat the system,” he added.
Already, the CAC has directed financial institutions to ensure compliance with the CBN’s order on compulsory registration of point-of-sale operators within the country.
In a statement titled ‘Enforcement of Compliance With Central Bank Nigeria Directive on Registration Before Onboarding’ on Thursday, CAC said it had instructed banks to ensure registration on or before July 7, 2024.
In a letter to all affected banks, signed by the Registrar-General and Chief Executive Officer, Hussaini Magaji, the CAC said the instruction was in line with Section 863(1) of the Companies and Allied Matters Act-CAMA and the CBN guidelines for Agent Banking, 2013.
The CBN had earlier, through a memo issued on April 30, directed all non-individuals on the agent banking authorization, to immediately take steps to register their businesses with the CAC in line with Section 863 of the Companies and Allied Matters Act (CAMA) 2020.
The directive made it mandatory for PoS terminals, whether agents, merchants, or individuals, to register with CAC before the commencement of business.
“The Registrar-General therefore enjoined the banks to ensure maximum compliance with the requirements of the law to ensure economic growth,” the CBN statement added.
Magaji, during an event in Abuja on Wednesday, May 8, said mandatory registration of PoS operators nationwide would reduce kidnapping and help security agencies arrest recipients of ransom payments from kidnap victims.
According to a fraud report by the Nigeria Inter-Bank Settlement System Plc, PoS terminals accounted for 26.37 per cent of fraud incidents in 2023.
Last week, the CBN stopped major fintech firms like Kuda, Opay, PalmPay and Moniepoint from onboarding new customers. The fintech firms later warned their customers against trading in cryptocurrency or any virtual currency on their apps, threatening to block any accounts found engaging in such activities.
Registration could trigger possible hike in PoS transaction costs
Oti (National Vice President of the Association of Mobile Money and Bank Agents of Nigeria) warned that the registration fee with the CAC could trigger a possible hike in transaction costs since the government is already planning an increment in telecommunication tax.
“In summary what we are saying is that the CBN is the regulator of financial business, however, they don’t need to regulate in vacuum. They have to feel the pulse of the nation and see how not to put pressure on the banking hall and financial inclusion. It was last week that the financial inclusion desk was launched in Abuja with a focus on taking it to the last mile. The POS agents are the agents that drive that. By the time you start pursuing them like this, you’re fighting them with lots of fees to pay.”
Findings by The ICIR showed that with an average of one million licensed mobile money agents across the country and a business registration cost of N25,000, the CAC could rake in a minimum of N25 billion from the registration.
A PoS agent, Kofi Kolawole, voiced concerns that the registration process and associated fees would eat into their already thin profit margins. He further warned that the increased transaction costs resulting from the registration would ultimately be borne by customers, potentially dissuading them from utilising PoS services.
Echoing Kolawole’s sentiments, another PoS operator in the FCT, Clement Agbasi, emphasised the contradiction between the registration mandate and the CBN financial inclusion initiative.
Agbasi lamented that the directive could drive customers away from formal banking channels, undermining efforts to bring the unbanked population into the financial mainstream.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.