Afrigather There are about 25 ATM terminals inside Badore, Langbasa and Addo, three main roads of lower than 5km situated throughout the Ajah group in Eti Osa native authorities space in Lagos state, which is extra ATMs than over 20 local governments in Kano state have. The three roads additionally account for extra financial institution presence (9 financial institution branches) than your entire stretch from Abraham Adesanya, Ibeju Lekki, Lekki Free Commerce Zone, to Epe, a distance masking 135.9km.
5 days out of seven per week, many of the over 25 ATM places are empty as a result of the machines are out of service, out of community, or out of money. It’s the identical expertise many financial institution clients face with about 22,600 ATM places, as Inlaks knowledge present, unfold throughout the nation.
Nigeria requires about 60,000 ATMs to satisfy up with its rising inhabitants of 216 million folks and a banking inhabitants of 106 million adults, in response to Tope Dare, government director of Inlaks, the most important ATM operator within the nation, which controls over 50% of the market.
In 2010, Nigeria had roughly about 7,100 ATMs and the quantity grew to over 11,000 in 2011 as a result of the CBN mandated the removing of the offsite deployment by banks. This meant that banks would now not spend money on ATMs outdoors their branches. The CBN seeded the deployment to impartial ATM deployers which couldn’t run the mission as a result of value. The ban was finally lifted, permitting banks to take a position extra in ATMs. The variety of ATMs then grew from 11,000 in 2011 to 16,000 round 2016 and 21,000 in 2019. It grew to 22,600 in 2021, the place it has remained as of December 2023, a sign that funding out there has decreased.
Seventy-six per cent of the whole ATMs in Nigeria are deployed by eight banks. Entry Financial institution has over 4,000 ATMs, First Financial institution has about 3,300, UBA has 2,150 ATMs, Zenith has 2,100 ATMs, GTBank has 1800 ATMs, FCMB has 1,350, Polaris has 1300, and Union has 1,200. A complete of 17,200 are owned by these eight banks.
Consequently, there must be extra ATMs in Nigeria to serve the needs of the banking population, and this has at all times been the case with Nigerian banking companies.
The estimated department depend of the 24 industrial banks is about 4,500, which isn’t sufficient for an estimated 106 million banking inhabitants reported by EFInA. The BVN accounts are at present at 60.1 million and lively checking account holders are about 135 million. The annual development charge of ATMs in Nigeria is about 3%-4%, however this has dropped to under %1 previously two years, because the Inlaks knowledge present.
Nigeria’s ATM per capita (variety of ATMs per 100,000 adults) has additionally dropped from 16.92 ATMs in 2018 to about 16.15 in 2021. The worldwide customary must be 1,000 ATMs per 100,000 bankable adults. Therefore, Nigeria ought to have about 60,000 ATMs when it’s measured in opposition to the distinctive financial institution clients at 60.1 million. Given the 22,600 lively ATMs, there’s a deficit of about 37,400 ATMs. Because the variety of bankable adults retains growing and extra playing cards are issued, it’s anticipated that ATMs will lower in quantity over time, because the banks usually are not deploying extra ATMs.
Progress elements for ATMs
Prior to now, a few of the elements which have contributed to the expansion of ATM deployment within the nation embody banks’ profitability. When banks are worthwhile, they undertake department enlargement and capital expenditure. Banks additionally deploy extra ATMs when their buyer base is rising as a result of because of this extra playing cards can be issued, and there can be a necessity to offer money and extra ATMs for the purchasers. Banks that undertake digitalisation initiatives usually have to deploy extra ATMs. Monetary inclusion initiatives additionally impression the expansion of ATMs positively. Banks may also deploy ATMs in areas with improved energy technology, it is because the price of electrical energy is a significant burden for ATM deployment.
Why traders are wanting away from ATMs
Dare says the ATM enterprise in Nigeria is dealing with its most troublesome instances as a result of excessive value of upkeep, rising adoption of different banking channels, overseas alternate disaster, galloping inflation, insecurity, and uncertainty within the ATM coverage surroundings, all of that are driving traders far-off from the market.
In 2016, the alternate charge for the greenback was ₦250. It rose to ₦325 in 2017 and stabilised between ₦330 and ₦360 by 2019. Dare says shopping for at a charge of ₦380 in 2020 and ₦455 earlier than the Muhammadu Buhari administration left workplace, impacted the unit value of ATMs considerably. Nonetheless, it went from unhealthy to worse when the brand new authorities underneath Bola Ahmed Tinubu dramatically introduced the unification of the FX charge, which pushed the official charge to ₦750. The black market worth for the greenback is at present above ₦1,500.
“A machine that we have been promoting at ‘x’ million naira this time final yr, by at present we’re promoting at 3.5x at present. That is affecting the rent buying value because of FX. The FX can be depending on the customs responsibility and the OPEX. The price of sustaining ATMs has gone up because of inflation, the price of transportation, and the price of spare elements as a result of it’s a must to import spare elements from overseas,” Dare mentioned.
ATMs are additionally seeing fewer investments as a result of most traders are paying extra consideration to different rising digital channels comparable to PoS terminals, cellular app transfers, USSD, and different different channels customers use to make funds quicker and extra handy.
“The speedy adoption of digital fee strategies is influencing client behaviour, resulting in a shift away from conventional ATMs in favour of extra handy digital alternate options,” mentioned Olaoluwa Awoojodu, CEO of E-Settlement Restricted.
The non-profitability of ATMs can be an enormous issue for traders. The interchange payment also referred to as the surcharge payment, is among the lowest on the planet. Right this moment, when a buyer visits an ATM he/she is charged N35 after the third transaction. The payment is mounted by the CBN; therefore banks can not change it with out approval from the regulator. For traders, fixing the payment doesn’t make sense on condition that the unit value for processing ATM notes in Nigeria is among the highest on the planet. Right this moment, it takes a minimal of 150 notes to course of the equal of $100, mentioned a financial institution CEO who needed to stay nameless.
In keeping with Dare, to revive the ATM enterprise, the federal government ought to think about providing a tax concession. Presently the customs responsibility on ATMs is over 25%, whereas the responsibility on photo voltaic merchandise is 5%. ATM policymakers additionally have to de-emphasise money availability in ATMs and champion the improve of the machines to offer cardless fee improvements comparable to Close to Discipline Communication (NFC). NFC is a short-range wi-fi communication expertise that permits units to alternate knowledge with no bodily connection. Customers can provoke a transaction by tapping their NFC-enabled smartphones in entrance of the contactless reader on the ATM. This connection facilitates safe knowledge switch between the consumer’s cellular banking app and the ATM, eliminating the necessity for a bodily card.
“You can too have a convergence of your cellular to the ATM the place you possibly can provoke a transaction in your telephone, and you may go to the ATM to consummate it. ATMs ought to transcend the common capabilities of money meting out to extra superior and modern options and contactless fee at minimal prices. ATMs is not going to die in any nation so long as money is king,” mentioned Dare.
