Tuesday, 9 July 2013

Nigerian Banks Cut CoT Charges To Lure Unbanked Population

Nigeria’s Bankers Committee on Tuesday has agreed to reduce the Cost of Transactions (COT) from the current N5 per N1,000 ($6.3) to N3, in a move tailored to woo the country’s unbanked population. This was part of the agreement made at the Bankers’ committee meeting held in Abuja on Tuesday.

Although Nigeria is regarded as the most populous nation in Africa, with a population of 170 million, only few of that number have bank accounts — especially those in the rural areas.
The “EFInA Access to Financial Services in Nigeria 2012 Survey A 2012” report carried out by Enhancing Financial Innovation and Access, an independent financial sector development organisation; showed that only 28.6 million people (32.5 percent of adult population) have bank accounts.

The banked group, according to the Chief Executive Officer, EfINA, Modupe Ladipo, refers to people that currently have access to or use a deposit money bank.

The report stated that while there are 72.8 percent of adult females together and an unbanked population of 62.6 per cent of adult males; 76.2 percent of the rural population had no bank accounts. Of the total adult population, 4.6 million adults, representing 5.2 per cent of the adult population, have a microfinance bank account.

Meanwhile, it is expected that the current initiative proposed by the Bankers Committee will further lure the unbanked population to patronise financial institutions.

Speaking to the journalists at the end of the meeting, Access Bank Plc Managing Director, Aigboje Aig-Imoukhuede said the committee will soon unveil the guidelines for the review of other bank charges.

He said, “With financial inclusion, more and more people are using bank services and, therefore, more and more people are becoming used to the concept of bank charges and so on, which hitherto perhaps, did not use this service.”

“So, working with the central bank, we are also going to come up with a new guide, but of course; bank charges cannot stop, especially when you are providing value, but they will come down.”

“One of them, for example, is that in 2013, we are going to move from N5 per mille to N3 per mill on Commission on Turnover, and gradually that will continue to reduce.”

Aig-Imoukhuede noted as a result of ‘efficiency gains’ which are beginning to accrue to the banking industry in terms of earnings, total operating costs of Nigerian banks dropped from N1.6 trillion ($10 billion) in 2011 to N1 trillion ($6.3 billion) in 2012 while the total operating income of Nigerian banks decreased from N1.6 trillion ($10 billion) in 2011 to N1.4 trillion ($9 billion) in the same period.

“The profits you see are not profits made by increasing charges, but profits made from a reduced cost of operations,” he said.

On the customer biometric project, Managing Director, Zenith Bank,Godwin Emefiele, said the bank executives has agreed to commence the customer identification management project between June and July this year; a move he said will help boost consumer lending in the country.

“We discussed the customer identity management project at this meeting. We set up a committee last year comprising nine financial institutions on how to boost consumer credit to Nigerians. We do not have a databank where we can access the information of bank customers and we say setting up this committee will help build a database through a biometric project.”

According to Emefiele, the project will enable all bank customers to have a unique biometric identification number that will allow all the banks to see the information of the customer regardless of whether he has an account with them or not.

“Once you have that unique number and you go to bank ‘B’ from ‘A’ to open an account, once you just show that number, an account will automatically be opened for you,” he explained.

The Bankers Committee meeting was attended by the CBN Governor, Mr. Lamido Sanusi; Director, Banking Supervision, CBN, Tokunbo Martins; Managing Directors, Access Bank Plc, Aigboje Aig-Imoukhuede; Zenith Bank Plc, Godwin Emefiele; Stanbic IBTC, Yinka Sanni; Director, Corporate Communications, CBN, Ugochukwu Okoroafortop executives of Deposit Money Banks as well as other senior officials of the CBN.

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