Mobile money agents have become increasingly visible across Nigeria, particularly in hard-to-reach rural areas, where they offer essential financial services using portable point-of-sale (PoS) machines. Even in major cities, these agents have emerged as a go-to solution due to a persistent shortage of cash at ATMs following the much-criticized redesign of the naira currency last year.
They’re on almost every street, said Chi Etche, a 29-year-old media executive. I don’t have to take a bike or cab to get to an ATM anymore. However, as mobile money agents grow in number, opposition is mounting. Critics argue that some agents are taking advantage of the country’s cash shortage, exacerbating the already severe cost-of-living crisis.
We’re now forced to buy our own money back from PoS agents, lamented Ibrahim Adamu, a 39-year-old trader. The fees keep rising, and it’s hard to withdraw cash from ATMs.
In 2013, the Central Bank of Nigeria (CBN) launched an initiative to increase access to financial services across the country. By the end of 2023, 74% of Nigerian adults had access to financial services, with just over half using traditional banks. However, the CBN’s decision to redesign the naira and the resulting cash crunch have left many Nigerians with no choice but to turn to mobile money agents.
“The CBN’s policies created barriers for banks to provide cash services, which has pushed more people towards agents, said Ikemesit Effiong, a partner at Lagos-based risk consultancy SBM Intelligence. Agents often operate with minimal customer identity checks and lack regulatory oversight.
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The naira redesign, announced in October 2022, was accompanied by a cap on cash withdrawals from ATMs and bank counters, particularly as the presidential election approached. At the time, CBN Governor Godwin Emefiele highlighted that more than 85% of currency was circulating outside banks. Intended as part of the cashless policy initiative, the restrictions strained businesses, led to protests, and gave mobile money agents the upper hand in the cash shortage.
ATM withdrawals are still capped at 20,000 naira (about $12.45) per day for account holders, while withdrawals from other banks are limited to just 5,000 naira daily. Over-the-counter withdrawals of large amounts incur hefty fees, and frequent ATM breakdowns and long queues have further intensified the problem.
These conditions have driven many Nigerians to mobile money agents, according to Uzoma Dozie, founder of the digital bank Sparkle. “Some agents exploit the cash scarcity by charging excessive fees for withdrawals and transactions,” he said. “However, this issue is a symptom of broader problems with cash availability and inadequate oversight, rather than an inherent flaw in the mobile money system.
Some agents even source their cash from alternative channels. Ayo Olaoluwa, a 34-year-old agent, explained, “I buy cash from traders and bureaux de change and factor that into the fees I charge customers for withdrawals.
Despite these concerns, mobile money agents have become an essential part of Nigeria’s financial ecosystem. Ifeoma Onwuabuchi, 46, started her PoS business with ₦100,000 and described the income as modest but enough to sustain her.
The Association of Mobile Money and Banking Agents of Nigeria has not yet responded to requests for comment. However, Dozie emphasized that proper regulation and enforcement could address these concerns while preserving the benefits of agent banking.
CBN Governor Olayemi Cardoso assured that cash shortages at ATMs would not be tolerated, warning banks that fail to comply would face strict penalties. He urged full regulatory compliance from all stakeholders, including mobile money operators and PoS agents, to promote digital transactions and improve service delivery.
