5th March, 2013
A number of key policy decisions usher in a new lease of life for Nigerian consumers
Nigerian consumers had never had it so good lately. In recent weeks, key policy decisions by regulatory agencies, working with the private sector, have meant Nigerians have to pay less, or nothing, for services, whose cost have long been criticised by many as being prohibitive.
On 12 February, Nigerian banks slashed the Commission on Turnover, COT, charged Current Account holders from N5 to N3 on every N1,000 withdrawn. The Bankers Committee, a body of bankers and Central Bank of Nigeria, CBN, officials, which endorsed the downward review of the COT, said the measure was part of its resolve to reduce all bank charges in order to enhance “financial inclusion”. It added the COT reduction was a first step, as plans were in the works to reduce other charges that many bank customers groan over.
Managing Director, Access Bank plc, Mr. Aigboje Aig-Imoukhuede, a member of the Bankers Committee, said banks, working with the CBN, would soon unveil the guidelines for the review of other bank charges. The reduction, he noted, became necessary, as more people now use banking services owing to the CBN’s policy of financial inclusion. The financial inclusion policy is part of the apex bank’s strategy of ensuring that un-banked Nigerians have access to financial services.
“With financial inclusion, more and more people are using banking services and, therefore, more and more people are becoming used to the concept of bank charges and so on, who hitherto perhaps, did not use this service,” said Aig-Imoukhuede.
He, however, said the reviews didn’t mean bank charges would be yanked outright. “…Bank charges cannot stop, especially when you are providing value, but they will come down”, said Aig-Imoukhuede.
The Access Bank boss denied that banks were feeding off customers by charging high fees. According to him, between 2011 and 2012, the total operating expenses for the banking industry fell from N1.6trn to N1trn. “The profits you see are not profits made by increasing charges, but profits made from a reduced cost of operations,” said Aig-Imoukhuede.
In a similarly heart-warming decision, the CBN and the banks, in a joint decision, discontinued the N100 interbank ATM charges. The policy which took effect on 17 December 2012, was hailed by many bank customers, who had long complained about the high fees.
Some banks didn’t initially effect the directive, but they have since discontinued the N100 flat rate customers pay per withdrawal, when they use ATM belonging to a bank other than where they have an account. The banks will now bear the cost of providing the ATM services, so that no matter where a customer is drawing money from, he will not be subjected to any charge for using the ATM. The Bankers Committee likewise said the move was partly aimed at enhancing financial inclusion, as well as encouraging ATM usage in line with CBN’s cashless programme.
The CBN Governor, Sanusi Lamido Sanusi, explained that the initial delay by some banks in complying with the policy was to allow for configuration of their IT infrastructure, so as to ensure a smooth implementation of the policy. “We allowed some time for banks that have not configured their IT to do so and stop charging and hopefully by 17th of December, you are not going to have any customer pay additional charges,” Sanusi said last December.
Also commenting on the policy, Managing Director, First Bank plc, Mr. Bisi Onasanya, said the decision to stop the charge would help to increase the patronage of ATMs, and in effect deepen the CBN’s financial inclusion strategy.
Reacting to the decision, an entrepreneur, Ms. Joy Irhovihi said the removal of the charges was the right thing to do. “Banks have their ways of making money off customers. Their charges amount to a lot of money. They charge for SMS sent to customers, among others. By the way, it’s only in this clime that people get charged for using ATM,” Irhovihi told TheNEWS.
Another bank customer, Dupe Oni described the policy as a welcome development. “The discontinuation of the charges will go a long way in assuring customers that banks are becoming customer friendly,” Oni, a cake maker, told this magazine.
In an another decision that put smiles on the faces of millions of consumers, the Nigerian Communications Commission, NCC, announced on 27 January that, with effect from 5 February, all text messages sent locally across all the telecom networks should not be charged at more than N4.
The Director, Legal and Regulatory Services, NCC, Ms. Josephine Amuwa, who announced the policy said the decision was taken after consultations with the telecom operators. “There was a general recognition that the cost of SMS (short messaging service) is too high, especially in view of the interconnection rate of N1.02 for SMS as determined by the Commission in 2009.
“In accordance with the powers conferred on the Commission under Sections 4 and Chapter V11 of the Nigerian Communications Act (NCA), 2003, the Commission hereby sets a price cap of N4 for Off-net SMS,” Amuwa said.
The NCC official said the commission arrived at the new price cap after “due considerations” of the submissions made by the operators at various consultative meetings. Amuwa said the commission would monitor compliance by operators, adding that failure to adhere to the directives will attract sanctions as provided by Section 111 of the NCC Act of 2003. The regulator, however, said it would not set a cap for international SMS for now, since interconnect rates for international SMS were outside of its control.
The policy which was widely hailed by millions of mobile phone subscribers however rattled some mobile operators. The Association of Licensed Telecommunications Companies of Nigeria, ALTON, an industry umbrella body frowned at the decision, saying it amounted to “micro-managing commercial ventures”, adding that it would not serve the best interest of the industry. A consumer body, the National Association of Telecoms subscribers, NATCOMS, however, endorsed the move.
ALTON President, Gbenga Adebayo, hinged the body’s opposition to the policy on the argument that SMS traffic had drastically dropped over time, due to the rise of instant messaging platforms as Blackberry Messenger, WhatsApp, among others.
“SMS traffic over the last three years or when BB messenger and WhatsApp introduced free internet-based messages, which became popular, has dwindled. So, this last straw that the NCC has thrown is just to kill SMS business for service providers because the revenue there is meagre. A few people use SMS and the NCC is placing a N4 price cap on it. It is very bad for our business.
“Other than the operators, there are other value-adding providers who buy bulk SMS and resell. This kind of directive will kill this business segment. A lot of them have existing long contracts with the operators,” argued Adebayo.
NATCOMS, however, contends that the NCC decision was long overdue, adding that the price of the on-net SMS should even have been reduced to N1, and eventually be totally free, as it’s the case in some countries. “We welcome the development. Since on-net SMS attracts 50 per cent of off-net charges, the operators should reduce on-net SMS to N1 per SMS,” recommended Chief Deolu Ogunbanjo, National President, NATCOMS.
The Consumer Protection Council, CPC, the overall watchdog of the consuming public, has also expectedly welcomed the raft of decisions that has brought a new lease of life for the Nigerian consumer. “It is a laudable action from the regulatory bodies, specifically the CBN and the NCC. It shows our efforts and the pressure from many consumers advocacy groups are yielding fruits. If you don’t complain, nobody listens. What it means is that consumers are no longer going to sit by and watch people take them for granted. It’s important they get value for money,” remarked Engr. Shamm Kolo, Deputy Director, Surveillance and Enforcement, at the Consumer Protection Council.
Kolo told TheNEWS that the CPC had lately observed a marked improvement in the conditions of services to consumers in a number of industries. “Even some airlines are now compensating passengers for flight disruptions. There’s a recent case where Emirates Airlines had to lodge passengers in hotel after a flight hitch. It means somebody is listening. And I expect things to get better in the coming days,” Kolo said.