In urban centers, they have emerged as a reliable option amid a persistent cash shortage at ATMs, a situation exacerbated by the controversial redesign of the national currency, the naira, implemented last year.
“There are three agents on my street alone,” remarked Chi Etche, a 29-year-old media professional, in an interview with AFP. “This means I don’t have to take a bike or taxi to find the nearest bank ATM.”
However, there is growing opposition to their operations, with accusations that some agents are taking advantage of the country’s financial difficulties, worsening the severe cost-of-living crisis that Nigerians have been experiencing for decades.
“We are now essentially repurchasing our money from PoS agents,” stated Ibrahim Adamu, a 39-year-old trader, in a conversation with AFP. “The fees they impose are rising, and it’s becoming increasingly difficult to withdraw cash from the machines.”
In 2013, the Central Bank of Nigeria (CBN) initiated efforts to enhance access to financial services nationwide.
As reported by Enhancing Financial Innovation and Access (EFInA), a non-governmental organization, by the end of last year, approximately 74 percent of adults in Nigeria had access to financial services, with just over half (52 percent) utilizing traditional banking institutions.
Experts indicate that the central bank's policies and the ongoing cash crisis have left many Nigerians who depend on cash with no choice but to rely on agents.
“CBN policies have simultaneously created obstacles for banks in providing cash and cash alternatives to their customers while pursuing its cashless policy objectives,” explained Ikemesit Effiong, a partner at the Lagos-based risk consultancy SBM Intelligence.
Moreover, agents frequently operate without conducting identity verifications of their clients or adhering to regulatory oversight, he noted.
The Central Bank of Nigeria (CBN) announced a redesign of the naira in October 2022.
Shortly thereafter, Godwin Emefiele, who was the CBN governor at that time, implemented a limit on cash withdrawals from ATMs and banking halls as the presidential election drew near.
"More than 85 percent of the cash in circulation is outside the banks," he remarked during that period.
Promoted as a component of the bank's cashless policy initiative, these restrictions placed significant strain on businesses, ignited protests, and allowed mobile money agents to take advantage of the cash scarcity.
Currently, ATM withdrawals are limited to 20,000 naira ($12.45) per day for customers withdrawing from their own banks, while withdrawals from other banks are capped at just 5,000 naira daily.
Large over-the-counter withdrawals incur hefty fees, and the situation is exacerbated by long lines in banking halls and frequent ATM outages.
This has led to an increased reliance on mobile money agents, according to Uzoma Dozie, the founder of the challenger bank Sparkle.
Many Nigerians have accused bank officials of misappropriating cash intended for ATMs, redirecting it to agents for personal profit.
"Some agents take advantage of the cash shortage by imposing exorbitant fees for withdrawals and transactions," Dozie stated to AFP.
"However, this behavior is not a fundamental flaw of the mobile money system but rather a reflection of broader issues related to cash availability and insufficient regulation."
Several agents informed AFP that they also acquire cash for their operations from alternative sources.
"I purchase cash from traders and bureaux de change in the markets. I incorporate that cost into the fees I charge customers for cash withdrawals," shared Ayo Olaoluwa, 34.
Ifeoma Onwuabuchi, aged 46, began her venture with an initial investment of approximately ₦100,000.
"This influx of individuals into the sector is understandable. While the earnings may not be substantial, they provide a means for me to sustain my operations," Onwuabuchi remarked.
A representative from the prominent Association of Mobile Money and Banking Agents of Nigeria has not yet responded to AFP's inquiry for comments.
Nonetheless, Dozie emphasized that effective regulation and enforcement could mitigate existing issues while maintaining the advantages of agent banking.
Central Bank of Nigeria Governor Olayemi Cardoso has declared zero tolerance for empty ATMs, warning that non-compliant banks will face significant penalties. He further emphasized the need for full regulatory compliance from all stakeholders, including mobile money operators and point-of-sale agents, to strengthen digital transaction channels and service delivery.