Banks face difficulties while POS services flourish during the IPOB's sit-at-hom

Banks face difficulties while POS services flourish during the IPOB's sit-at-home crisis in Southeast Nigeria.

The Indigenous People of Biafra's (IPOB) sit-at-home order in southeastern Nigeria has had a profound impact on the banking sector and the economy as a whole. As people avoid banks and ATMs due to security concerns, the reliance on Point-of-Sale (POS) agents has increased significantly. This shift has led to a rise in POS transaction fees by more than 50%, exacerbating the already severe Naira scarcity in the region.

The sit-at-home order has been in place since August 2021 and requires residents to stay at home and businesses to close every Monday in solidarity with the pro-Biafra movement. While initially complied with out of fear and sympathy, recent surveys suggest that only 29% of the population actively supports this directive. The economic implications of the sit-at-home crisis are vast, with SBM Intelligence estimating a loss of N7.6 trillion to the region's economy.

The scarcity of Naira notes has been a persistent issue in Nigeria, with the Central Bank of Nigeria (CBN) attempting to address it through various measures. However, the IPOB's order has intensified the problem, making it challenging for residents to access cash from traditional banking channels. This situation has driven many to POS operators for their financial needs, which in turn has led to the increase in transaction charges.

POS operators have become essential service providers in the region, offering cash withdrawals, transfers, and other financial services that banks cannot due to the limited operational hours. The demand for these services has grown, allowing POS agents to hike their fees substantially. The surge in POS transactions also puts additional strain on the already stretched financial system, as these operators often rely on cash sourced from banks to meet the demands of their customers.

The rise in POS charges has disproportionately affected lower-income earners and small businesses that rely on cash transactions. The scarcity of cash and the increased costs of transactions have led to inflation and further economic hardship for many residents.

The situation has prompted calls for a resolution to the underlying political issues that have given rise to the IPOB's actions and the subsequent sit-at-home orders. The Nigerian government and security forces are working to restore normalcy and ensure that economic activities can resume without fear. However, the persistent nature of the crisis indicates the complexity of the issue and the need for a multifaceted approach that addresses the concerns of all parties involved.

In the meantime, the use of digital banking and mobile money services is likely to increase as people seek more reliable and secure ways to manage their finances during this period of unrest. The government and financial institutions should consider enhancing the digital infrastructure to support these alternatives and educate the populace on their benefits, particularly in regions where the traditional banking system is less accessible or reliable.