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Nigerians’ preference for Automated Teller Machine (ATM) continued to grow in the first quarter of 2018, according to new data from the National Bureau of Statistics (NBS). The implication is that pressure on the 17,449 ATMs available nationwide for 84.37 million active cards across the country will only grow and could get to crisis levels if internet service does not improve.
The NBS report showed that 212,270,853 volume of ATM transactions valued at N1.568 billion were recorded in the first quarter of 2018. That represents an increase from what it recorded in the same quarter in 2017 where it hit N1.500 billion.
In contrast, the Nigeria Communications Commission (NCC) has revealed that the number of fixed and wireless lines shrunk by 0.6 percent in March to 136,781, as against the 137,570 recorded in February, showing a decrease of 2.082 lines. To be sure, this is not the first decline in 2018. The number of lines also dropped in January to 137,262 from 139, 344 it saw in December 2017.
The NCC combines both fixed and wireless in its monthly measurement.
While the decline in fixed lines may be attributed to the increased attractiveness of mobile broadband (wireless), a situation where both are in decline has serious implication for the growth of a cashless economy.
It should be noted that the poor state of fixed and wireless broadband infrastructure means internet penetration is more widespread in urban centres such as Lagos, Abuja etc, where internet operators can access relatively reliable infrastructure. It also means that a greater number of ATMs and financial services are concentrated in these urban areas, leaving the most parts of the rural areas underserved.
ATMs need a good internet service to function at full capacity. They need to connect to, and communicate through a host processor. The host processors is analogous to an Internet service provider (ISP) in that it is the gateway through which all the various ATM networks become available to the cardholder (the person wanting the cash).
An executive in one of the companies that provide ATMs services for financial institutions told BusinessDay that more than 70 percent of ATMs are located in just three cities including Lagos, Abuja and Port Harcourt. The same applies to the 84.37 million active cards across the country.
The impact of poor internet services is underscored by the significant number of subscribers migrating from one mobile internet provider to another. The NCC data showed that Airtel gained the most new internet users in March with 401,209 people joining its platform and increasing its subscription from 25,075,110 in February.
Operators like MTN lost 534,769 internet users in March, 9Mobile lost 1,346,470, and Globacom also lost 40,233 internet users.
Although there may be other factors that cause ATMs to break down, poor internet service however is at the top of the list. It is also a disincentive for ATM operators. The state of the internet of a place is a major consideration in whether to locate an ATM there.
Internet penetration is also part of the factors driving the cost of running an ATM. In the place of increasing the number of ATMs they run, most banks have resorted to investing more in their digital offers. But without good internet service the digital offerings will struggle in many parts of the country.
It is therefore incumbent on regulators such as NCC to intensify the drive for internet penetration by providing adequate infrastructure for providers to thrive.
