I Am Not Impressed With The CBN’s Transaction Cost- Anthony Kila

Anthony Kila is a political economist and a professor of strategy and development at the Commonwealth Institute of Advanced International Professional Studies (CIAPS).

In this interview with Nigerian Panorama, he discussesthe recent announcement by the Central Bank of Nigeria (CBN) regarding a review of transaction fees for ATMs.

Excerpts.

I am not impressed by the policy. It lacks the grandvision that the Nigerian economy requires.

Instead of making our system bigger, the policy is focused on sharing what we have. It’s more about rationing rather than expanding.

The Central Bank of Nigeria (CBN) and the government need to be careful because they are giving the impression that they are subsidising the banks so that they can catch up on infrastructure and improve services, and they are doing so to the detriment of consumers and citizens.

This is no doubt an additional burden on bank customers. In this case, what should the customers do? What would be your advice for them?

In the mind of the CBN, they think it will cost less for the consumers to use the bank ATM than to use the money in there. But the problem is that somehow, there is a lack of memory. So, we are focusing on consequences without looking at the sequence.

What led us to having money agents in the first place is that the banks cannot serve enough people. When you now say you want to charge more for the banks that are already not capable of serving people so that they can have enough money to develop their infrastructure, you are simply punishing the people.

I think people should focus on looking for areas that are convenient and efficient for them.

The banks are private enterprises; it is strange that the system wants to subsidise them.

Is this not an avenue for the POS operators to begin to hike their charges from what they have been charging?

Well, that is exactly the consequence because if they get money from the banks at a higher rate, they would then transfer that cost to the consumers. Anytime you add or increase the cost of the productive process, it is the consumers who will ultimately pay for it, and this is counterintuitive for a system that wants to work towards financial inclusivity.

I think a good vision would be for the CBN to see the money agents as complementary to the bank. I also think that the CBN, government and all agencies, need to learn to make things bigger, not insist on sharing what is small.

This idea of saying that we are going to increase the cost of banking operations since bank fees are lower compared to money agencies is a wrong analysis. What we should be looking at are countries like the UK that do not charge for transactions. And mind you, the banks in that country make more money than most Nigerian banks, yet they do not charge for manytransactions.

So, I think some people need to get together and have a realistic review of our system. So far, I am not impressed with the policy.

So, what do you think the CBN should have done instead? 

I think the CBN, rather than seeing itself as the defender of traditional banks, should open its mind to say that what interests us is that citizens and consumers should have access to funds. And it should not matter if it is cashless funds or it is cash funds. That way, they will not bother too much about the banks. They will worry about the system.

Currently, the CBN seems to be focused on the actors rather than the system. That is the problem. What the CBN should have done was to ensure that more people were included in the financial system, regardless of whether they were using banks or Fintech.

The CBN should consider what costs less. Given the country’s economy, this is not the time to charge more;it is time to charge less. The CBN should reduce the cost of transactions.

To do so, they should embrace the innovation and technology embodied and symbolised by FinTech. The truth is that banks’ days are numbered unless they adapt to the new world of FinTech and innovation and technology in general, and the CBN needs to understand that reality.