Business

#EndSARS: ATM scarcity to persist amid crisis

The current scarcity of Automated Teller Machines (ATMs) in the banking industry looks likely to continue, following the massive destruction of lenders’ facilities across the country, in recent days, by hoodlums hiding under the umbrella of the #EndSars protests, findings by New Telegraph show. According to latest data obtained from the Nigeria Interbank Settlement System (NIBSS), the number of ATMs as at the end of December 2019 stood at 17, 518 compared to 18,615 in the corresponding period of the previous year.

The drop in the number of ATMs last year is particularly significant given that the Central Bank of Nigeria (CBN), in its 2012 and 2018 CBN Financial Inclusion Strategy Documents had set 93,000 ATM target for the year 2020.

This means that the industry has a really difficult task to make up for the huge shortfall in ATMs (75,482), if it is to effectively help in promoting the apex bank’s cashless policy initiative as well as achieving the country’s 95 per cent financial inclusion target by 2024.

However, the chances of the industry meeting the CBN’s 93,000 ATM target for this year clearly became even more remote in the last one week as thugs took advantage of the #EndSars protests to wreak havoc on lenders’ ATMs across the country.

The protests, which began on October 7 with calls to disband the Special Anti-Robbery Squad (SARS), a notorious police unit that had long been accused of extortion, torture and extra-judicial killings, had been largely peaceful despite reports that groups of armed young men, reportedly, being paid to discredit the #EndSars protests by powerful interests, had been attacking the demonstrators in some parts of the country.

The situation, however, changed dramatically, after armed soldiers, in a bid to dislodge a core group of the #EndSars protesters at the Lekki Toll gate in the country’s financial hub, Lagos, opened fire at hundreds of unarmed youths, killing and wounding a yet to be determined number. This sparked violent reaction from hoodlums, who seemed to have been waiting for the soldiers’ action as a signal to immediately unleash massive destruction on financial institutions and other businesses across the state, especially around Lekki Phase 1, an affluent area, which has well-appointed branches of all the major banks in it. The criminals’ activities resulted in the complete destruction of virtually all the ATM galleries in the locality.

Indeed, an authoritative industry source told New Telegraph that a Tier 1 lender lost 18 ATMs in the Lekki Phase 1 area alone to the vandals and about 50 nationwide. The source said: “Even though the criminals may not have succeeded in stealing cash from all the ATMs they attacked, just by assessing only the destruction to the ATMs at Lekki alone, you can tell that the banks suffered significant losses as a result of this crisis.

There are at least five or six ATMs in a gallery and the current price of an ATM cannot be less than N5million. If one of the Tier 1 lenders is estimating it lost about 50 ATMs nationwide to the crisis, you can guess that the entire banking industry must have lost over 120 ATMs (N600 million) across the country in the last one week.” According to the source, another disturbing aspect of the rampage is that it would take the industry nothing less than six months to replace the damaged ATMs and get them working. The source explained: “It would take at least six months to replace the damaged ATMs.

This is because approvals have to be obtained first, before the orders to import the machines are placed. Then you have to wait for them to be shipped into the country, get them cleared at the ports, before you take delivery and then you start configuration of the ATMs and other processes.” Apart from the prohibitive cost of replacing the damaged ATMs, industry analysts also cite the widespread adoption of mobile payments by Nigerians as another reason why banks would be reluctant to make significant investment in ATM deployment in the near term.

The analysts point out that even before the #EndSars protests, most lenders, as part of their cost cutting strategies, were already scaling down ATM deployment and focusing on encouraging customers to use their mobile banking payment channel. This was corroborated by a bank official, who told New Telegraph that although ATMs continue to be one of the most popular electronic payment channels, the cost of acquiring and deploying the machines, especially in a tough business environment where CBN regulation frequently impacts banks’ non-interest income, is now a challenge for many lenders.

The bank official, who pleaded anonymity, said: “Apart from the millions of naira spent in acquiring them, the cost of deploying ATMs, for instance, to off-site locations where foot -traffic is high is another big issue for banks as they will have to contend with providing security for their staff and facilities.” According to a report released in May last year by banking consultancy, RBR, the number of ATMs around the world declined by one per cent to 3.24million in 2018 due to declining usage of cash in developed markets globally. RBR said four of the world’s five biggest markets for ATMs registered a drop in numbers in 2018, adding that the number of the cash machines fell in China, the USA, Japan, and Brazil. “While the outcome was the same, each of these markets had its own reasons for the removal of ATMs,” RBR said.

It added: “In China, the swift adoption of non-cash payments has contributed to a similarly rapid fall in ATM installations. Branch closures have led to fewer bank ATMs in the USA.” However, RBR said that while the number of ATMs fell in the world’s biggest markets, most countries around the world registered a rise in cash machines due to financial inclusion drives. Still, the fall in the biggest markets offset increases elsewhere. Analysts believe that the decline in ATMs and use of cash could potentially harm certain sections of society.

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