As cash shortages plague Nigerian banks, POS (Point of Sale) agents are emerging as vital players in meeting the country’s cash needs.

This shift comes in response to the Central Bank of Nigeria’s (CBN) ongoing efforts to manage money supply and promote a cashless economy.

On July 26, 2024, Dele Olaitan (not his real name) visited a commercial bank inside Lagos State University (LASU) in Ojo, hoping to withdraw ₦100,000.

After waiting for over an hour in line, he was told the bank had insufficient funds. “We don’t have cash,” the cashier insisted, leaving Olaitan both frustrated and confused.

This shortage stems from the CBN’s initiative to manage money flow and limit cash dependency. In 2012, the CBN, under Sanusi Lamido, introduced a cashless policy to reduce financial crime and promote digital transactions.

Following public backlash against cash withdrawal limits set in January 2023, the CBN increased the limits to ₦100,000 daily and ₦500,000 weekly for individuals, and ₦5 million for businesses.

Despite this, data from November 2023 showed about 92% of money in circulation was still outside the banking system.

To further drive the cashless policy, the CBN reduced cash disbursements to bank branches, causing widespread cash shortages and creating opportunities for POS operators.

Gbenga Dada, a money agent, revealed, “They said the CBN isn’t releasing money to them, so they’re managing what they have for all customers. They don’t even prioritize their agents.”

Governor, Central Bank, Yemi Cardoso

Abas Ademola, a banker in Ibadan, confirmed this, saying, “Most of the time we ration cash. If there’s cash we can give you the amount you request, but don’t forget there’s a limit to the amount you can get.”

In response to these shortages, POS operators have become crucial. Taofeek Olayemi, a POS operator, shared his strategy: “I go to stores and markets to get cash. I’ve become their friend and sometimes they send me money up to ₦2 million even before asking for it.”

Olayemi’s approach has allowed him to sustain his four POS outlets, which have been essential since the CBN redesigned the naira in early 2023, leading to nationwide cash shortages and unrest.

Similarly, Dada, with multiple POS stands in Lagos, sources cash from market women, explaining, “Market people are the ones helping POS people.

Although some of them charge us, they may ask you to add ₦1,000 or ₦2,000 if they are giving you ₦100,000 but they have to trust you before they give you their money.”

This arrangement benefits both POS agents and traders. Traders avoid the hassle of bank visits, while POS agents ensure cash availability.

“Traders and store owners are no longer taking money to banks. Instead, they prefer to have a money agent who would take the cash from them,” Olayemi added.

POS agents are not only filling a crucial gap left by banks but also driving financial inclusion.

With 1.5 million banking agents in Nigeria and OPay leading with a 37.17% market share, the presence of POS agents offers a convenient alternative to the formal banking system.

Shakirudeen Taiwo, a senior economist at the Nigerian Economic Summit Group (NESG), emphasized, “For an economy largely run by its informal sector, the growing presence of POS agents is a great advantage for agency banking over the formal banking system.”

Taiwo highlighted the practical benefits of POS agents, noting, “The distance between people’s residences and banks is a major reason some Nigerians would prefer to patronize POS operators over banks, regardless of the cost.”

For many, the convenience of POS services outweighs the challenges faced with traditional banking.