By Luminous Jannamike, Abuja

Many of Nigeria’s estimated 72 million unemployed and record low 47 million employed population have continued to embrace agency banking as a profitable occupation despite the inherent risks involved.

Flexxy, whose real name is Felicia Okeke, sat that fateful afternoon under an umbrella with a table, two chairs and a stool somewhere in Lugbe District, surrounded by numerous people of different sizes and shapes clutching Automated Teller Machine (ATM) cards.

She is not a customer service employee of any bank, but a Point-of-Sale (PoS) operator with whom the residents in the area access essential financial services such as deposits, withdrawals and cash transfers on a daily basis or whenever necessity demands.

Flexxy, an agency banker a.k.a. PoS agent with  15 months cognate experience, had her trademark record book and the PoS machine well placed on the table.

That afternoon, quick-witted Felicia, a linguistics graduate who has earned a reputation as an accurate and meticulous record keeper courtesy of the guidance of professional accountant who supported her as a technical adviser in the first few months of her foray into agency banking business, was willing to speak to Saturday Vanguard as she had run out of cash, but has sent her staff to the bank to obtain more fiat currency.

“You are lucky about this as I don’t have cash on hand with which to attend to my waiting customers,” the agency banker (or PoS agent) told Our Correspondent concerning the interview she was about to grant.

In another part of Abuja was Ayomide Kayode, a pretty ebony-skinned lady in her 20s with a fleshy frame, donning a white T-shirt, on a pair of blue trousers and a pair of black slippers.

She had a bag (of money) strapped around her waist and a log book and a mobile phone on her table as she clutched her PoS machine to attend to a customer. She is said to be a former digital marketer who has joined the agency banking business.

Felicia and Ayomide are just two out of the thousands of men and women, who practice the agency banking business usually referred to in the street parlance as PoS operator in Abuja and other cities, towns and villages across the country.

Agency banking business

Agency banking is a type of branchless banking that allows the traditional banks to extend their services in a cost-efficient manner through authorized agents. These agents make access to funds much easier and operate everyday including weekends. 

According to Felicia, it is a means for unemployed or poorly paid people to easily become entrepreneurs and, in the process accumulate capital to build wealth. However, the banks, more often than not split all money received as transaction fees from her clients.

Saturday Vanguard investigations revealed that while fees vary in banks, most PoS agents charge N100 per transaction not exceeding N5,000. Charges for the value of transactions above N5,000 are higher and also in ranges. According to some customers who spoke with Our Correspondent, transactions processed at an agency banker can be as low as N1,000 and as high as N100,000. 

“For every N5,000 worth of transaction that I process, I split N100 with the bank. The more money and transactions that get processed through me, the more income I earn,” Ayomide pointed out; adding that she did an average of 48 transactions daily. That is not all; some first generation banks give cash rewards ranging from N50,000 to N500,000 to top performing agents who achieve a pre-determined transaction volume or beat the cash targets set periodically. This is to motivate and incentivise them.

Banks versus PoS agents

For Iveren Kumbul, a former banker who now operates her own PoS terminal, licensed financial institutions are increasingly transferring the risks of cash processing and management to third parties. 

According to her, most commercial banks are aggressively promoting agency banking and that they would do anything to enable the model to succeed because of the awareness that most people would rather be unbanked than go through most of the hassles the banks are known for.

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“Many of the people I deal with don’t want to face the stress of getting cash from ATMs. The few ones that dispense cash are crowded, with customers queuing for close to an hour to make a withdrawal. Also, banks have embraced the COVID-19 containment protocols. Banking halls are being decongested, making it increasingly difficult for customers to carry out transactions at the counters,” Kumbul stated.

Confirming her colleague’s claim, Felicia Okeke a.k.a. Flexxy told Saturday Vanguard that the continued closure of some outlets by banks since the lockdown was lifted has also restricted access to physical banking transactions for most people, especially those in the suburbs. 

“In Abuja, there are PoS terminals on almost every street and junction some of which cluster even around banks whose ATMs are often out-of-cash. So, most people prefer patronizing u(the agency bankers) to wearing face masks, joining long queues and maintain social distances for hours just to make withdrawals inside the banking halls,” she claimed.

Do the clients feel the same way?

“Yes.” Mr. Eghosa Amadasun, a barber said. For him, PoS agents are too good to resist. “As you can see me now, If I want to withdraw money, I have to stop the working for a minimum of 1hr to rush to the nearest ATM machine. Why should I do that when I can take a one minute walk to the PoS shop in my street to collect the money I need?”

Risks and dangers

However, agency banking, like any other business, is fraught with certain risks and dangers. For instance, since the business is usually a one-man show, it is not uncommon for armed gangs to attack PoS terminals, collect all the cash available and sometimes kill the agent. What happens if an agency banker is attacked?

“I have thought about all that; I too am not naive,” said Flexxy. According to her, big bank branches have also experienced attacks that had the criminals successfully bolting away with depositors’ money.

“Business is risky. So, part of the decisions I took before quitting my job as a teacher to start my PoS business was choosing a very busy location where it will not only be easy to attract customer traffic but also difficult for anyone to attack my shop and escape,” she said.

Beside security concerns, other challenges agency bankers contend with in Abuja include network downtimes, particularly in rural neighbourhoods where broadband access is limited. And in many locations across Nigeria’s capital city, agents also struggle with new levies by the FCTA and Area Councils hell-bent on collecting taxes, which many agents argue is unlawful and unfair. 

Profit over Challenges

Flexxy, told Saturday Vanguard that the succour offered by agency banking outweighed the drawbacks involved.

She said, “My business has seen significant growth over the last year. I began with one terminal in December 2020, but I currently have three shops; one shop along Aminu Kano Crescent in Wuse II and two others around Lugbe where I reside with my parents.

“I have employed two people to run one shop each while my younger brother who is waiting for his admission into the university is helping me man the third shop which is nearest to our home. I pay each of them a salary of N25,000 per month which is more than half to the money I used to earn as an English teacher after my NYSC.

“Combined, my shops process about 1,200 customer transactions monthly, with revenue from transactions frequently topping N300,000 monthly from which I pay salaries and maintain the PoS outlets. Were it not for the headaches of daily booking keeping, I would have opened more outlets by now. Hopefully, when I am ready to employ an accountant to manage money books on a day-to-day basis, I will launch my 4th and 5th shops.”

Similarly, Ayomide said business has been good. According to her, “But it all depends (on what a person considers good profit). Most times, I make up to N10,000 in a day. Sometimes, especially on bad days, I make between N6,000-N7,000.”

Low-entry barrier

As building a new bank branch in Abuja could cost more than N400 million to start up and possibly more in monthly operating expenses related to staff, ATMs, security, and off-grid electricity fees, financial services providers have started to realize they don’t need to make these hefty outlays.

Instead, they enable agency banking by making it relatively easy for anyone to become an agent. In fact, many mom-and-pop shops and informal traders, among others, are doubling as agent outlets, with a PoS device in their possession. 

A June 2020 study by EFInA showed 30% of banking agencies in Nigeria are dedicated shops, while over 60% operated it alongside their regular business which indicates that while agents are typically depicted as dedicated financial services outlets within communities, today, anybody with a shop can serve as an agent for a bank or a mobile payments company. 

Though Iveren admitted that she did not take to agency banking as a business immediately after she lost her job as a banker during the mass lay-off of workers that was recorded in the sector at the beginning  of the COVID-19 lockdown in 2020, she was moved by the constant encouragement she got from a senior colleague who told her that banks would push the growth of agency banking more aggressively after the lockdown to reduce the risk of infection in the banking halls.

For Flexxy, she became interested in the business by following a Twitter thread during #ENDSARS protest after some ATM machines were vandalised causing the banks to make a pull-bank.

According to her, “I was contemplating quitting my teaching job, but couldn’t think of anything else to do. However, one day I was scrolling through Twitter when I came across a tweet where a man was complaining about long queues at the few bank ATM dispensing cash. Interestingly, a lot of the replies kept recommending that the person should use a PoS agent. In the replies, many people testified how efficient and fast the PoS service was. Later, the person who made the initial tweet took their advice, went to a PoS agent and got cash in less than five minutes. He couldn’t stop gushing about how time-saving and affordable the service was. This sparked my interest.”

Some of the fintechs in the country which have emerged as the biggest agency banking enablers include Opay, TeamApt, Paga, and MTN, Nigeria’s telecoms behemoth. 

Findings by Saturday Vanguard reveal that all it takes to enter into the business of agency banking, depending on the fintech platform or the bank issuing the PoS devices, is the money for registration and logistics which could be as low as N15,000 while the PoS device is “free” among other KYC requirements. 

Some of the girls who spoke with Our Correspondent said they, however, raised between N100,000 – N140,000 in cash from personal savings as well as family and friends before hitting the streets for business following their pickup of the PoS devices issued to them.

The answer to where agency bankers keep the liquid capital they collect and give to their customer may seem obvious. However, Felicia, Ayomide and Iveren said they deposit most of the cash in the bank. But they all agreed that they keep a small amount of money with them to quickly attend to any financial contingency of their clients.

“Even if one has an underground storage chamber at home it will be suicidal to put your entire liquid capital at home,” Ayomide said.

Other facts and figures

In a 2018 survey by EFInA, 25% of Nigerians who responded to the questionnaire, said “banks are too far” which is unsurprising given there are fewer than 8,000 bank  in a country of 200 million people, and most branches are concentrated in the big cities.

A year before the survey was taken, the Central Bank of Nigeria (CBN) introduced agency banking to deepen financial penetration and inclusion. The model remained a rural affair until recently, when it started taking a root in the nation’s capital city.

Data from Statista.com show that about 542,109 PoS machines were in circulation as of April 2021. The previous year, two of Nigeria’s biggest banks, Access Bank and FirstBank, reported explosive growth in their agent banking units with around 59,000 and 100,000 agents, respectively.

In the same vein, Access Bank has said it added 4.46 million new bank customers through its agents within the last two years. While FirstBank, the commercial bank with the largest agent footprint, reported a 167% growth in annual agency banking transaction value to $16.2 billion in 2020, compared to the previous year.

Likewise, in December 2020, Opay claimed its transaction volume jumped to $2 billion monthly, up from about $300 million in November 2019. And TeamApt, a newcomer to the industry in 2019, also claimed some traction. According to the fintech company, it had signed up over 50,000 agents and processed $3.9 billion in transactions by the end of 2020.

As demonstrated by the testimonies of some PoS terminal operators in Abuja, agency banking, a business model which seems to be dominated by the female folks has risen to become part of a broader conversation about the “sachetisation of the Nigerian economy”. This basically means cutting down financial products and services to smaller, affordable sizes for a predominantly poor mass market.