The United Bank for Africa (UBA), Access Bank, Zenith Bank, and other Nigerian banks are competing to attract up to N2.7 trillion that’s outside the formal sector, taking advantage of the six-week window citizens have to replace old currency notes with the new redesigned ones.
Lenders including Zenith Bank, First Bank Limited and United Bank for Africa (UBA) have already begun reaching out to existing and potential clients online and in-person to turn in unbanked cash.
The Central Bank of Nigeria (CBN) in October announced a plan to replace N200-, N500- and N1,000 notes from December 15 with the newly redesigned currency notes.
The move to switch the notes may lead to chaos in a country where the majority of the population lives in rural areas away from bank branches. In 2016, Indian Prime Minister Narendra Modi’s move to ban high-value currency led to a long scramble for cash and slowed economic growth.
The old bills, which amount to 85 per cent of the currency in circulation, will cease to be legal tender on January 31. Access Bank, the biggest lender by assets, is looking to attract as much as 30 per cent of the funds through an expanded network of 200,000 agents to reach rural Nigerians who live far from bank branches.
“We are actually going to rural markets and rural areas with our agents now to encourage people to open accounts and deposit cash,” Access Bank head of retail marketing and analytics, Chioma Afe said in a phone interview.
Some have argued that six weeks isn’t enough time for Nigerians, 45 per cent of whom lack bank accounts, to turn in their cash, especially given the country has just 4.5 bank branches per 100,000 people.
The prospect of potentially trillions of naira in fresh deposits has sparked competition among banks looking to boost liquidity. All are building out their agent networks — men and women who sit in markets across the country selling mobile-phone credit and accepting deposits or withdrawals on behalf of banks.