Nigeria: Waiting for the storm to blow over

However, Chidi Odinkalu, Chairman of the National Human Rights Commission (NHRC), described the move as a ‘financial services tax’ on customers who were already poorly served by the banking industry. He pointed out that over 46% of the population was excluded from the financial system and that retail banking was below par in the majority of the 36 states within the federation.

“There is a legitimate question to be raised here,” he continued. “How does this serve the public good? Does anyone know the figures for an average trip to a cashpoint per customer per annum? That would give a sense of how much this tax is worth. With the level of hardship we have here, how many Nigerians can afford this tax?” The NHRC boss said the policy hampers CBN’s plans to provide the unbanked access into the financial services and thus should be reversed.

Supporting the move, Bismarck Rewane, an economist and CEO of Financial Derivatives Company, said it was wrong for the CBN to have removed the charge in the first place. He notes that banks are already carrying the burden of having to pay levies to the Asset Management Corporation of Nigeria (AMCON) and the Nigeria Deposit Insurance Corporation (NDIC) premiums.

Abubaker Suleiman, executive director at Sterling Bank Plc, says that the reinstatement of the fee was intended to limit the cost incurred by banks and does not constitute profit. “Banks are still left with the burden of three free withdrawals a month, which translates to a N195 monthly charge. While this cost is less than the income on medium and high-value accounts, it is sufficient to render most low-value accounts unprofitable, which will force banks to discontinue marketing such accounts.”

He adds that these costs have become a source of concern to investors and could have negative impact on capital flows. “When it comes to the cost of using ATMs, Nigerian banking customers still have one of the best deals you can find in any jurisdiction,” Suleiman says.