Who Benefits From Dysfunction?

The POS system creates perverse incentives that entrench rather than solve banking failures. Distribution companies profit by supplying bulk cash to POS operators instead of filling ATMs. Banks save money by maintaining fewer functional ATMs. POS vendors earn income impossible in a properly functioning financial system.

Meanwhile, ordinary Nigerians pay—literally—for infrastructure that should already exist. Withdrawal fees, security risks from carrying large amounts of cash, and the inconvenience of searching for agents with available funds all represent costs that Kenyans, Ghanaians, or South Africans don't typically bear.

The security implications are alarming. Before POS proliferation, withdrawing very large sums required bank visits with security protocols and documentation. Now millions of naira flow daily through informal networks with minimal oversight. This easy cash access has coincided with rising kidnapping-for-ransom and armed robbery, as criminals know that victims or their families can quickly assemble large cash payments through POS networks.

Former Central Bank Governor Godwin Emefiele's currency redesign ostensibly aimed to reduce cash dependence and push digital payments. Instead, the chaotic rollout strengthened POS networks by making them the only reliable cash source. The policy failure exemplifies how Nigerian reforms often worsen the problems they target.

Real Banking Systems Work Differently

Strong banking systems in middle-income countries provide ATMs at reasonable distances, low transaction costs, and reliable digital payments. South Africa, despite serious infrastructure challenges, maintains functional ATM networks in both cities and townships. Ghana expanded mobile money alongside traditional banking. Rwanda leapfrogged to agent banking with actual oversight and consumer protection.

Nigeria had the resources to build any of these systems. Instead, the country normalized expensive workarounds that enrich intermediaries while extracting fees from citizens who should be able to access their own money for free.

The CBN collects data showing POS transaction growth and presents this as financial inclusion progress. But transactions through thousands of informal agents—each charging fees and operating with minimal regulation—represent inclusion only in the narrowest sense. Nigerians have access to their cash, but at costs and risks that defeat the purpose of banking.

From Workaround to Permanent Feature

What alarms development economists is how quickly temporary workarounds become permanent features in Nigeria. Diesel generators that were supposed to bridge brief power outages now run for decades. Sachet water that was emergency provision became the default drinking water system. Okada motorcycle taxis that filled transport gaps are now the primary urban mobility solution.

POS stands risk the same trajectory. Rather than fixing ATM networks, expanding digital payments, or building reliable banking infrastructure, Nigeria is accepting street-corner cash agents as the financial system. Five years from now, the country will likely have even more POS stands, higher withdrawal fees, and continued celebration of "fintech innovation" that is actually infrastructure failure.

Nigerian fintech entrepreneurs building actual innovations—blockchain payments, cross-border transfers, digital lending platforms—deserve celebration. Their achievements show what Nigerians can accomplish with proper support. But confusing POS proliferation with fintech success obscures the reality: banks are failing at basic service delivery and poor Nigerians are paying the price.

The solution isn't to ban POS agents—many Nigerians depend on them given current bank failures. The solution is fixing the underlying problems: enforce ATM maintenance standards, penalize banks for service failures, reduce cash dependence through reliable digital alternatives, and regulate POS operations to protect consumers.

Until then, the sight of five POS stands on a single street will remain what it actually is: visible evidence of banking system collapse that Nigeria has normalized as innovation.