By: Elvis Eromosele
The Central Bank of Nigeria (CBN) recently mandated that all Point of Sales (PoS) operators complete their registration with the Corporate Affairs Commission (CAC) by July 7, 2024. This directive aims to formalize PoS operations nationwide, boost regulatory compliance, and promote financial inclusion. However, the new requirement poses significant financial and logistical challenges for many PoS operators, who play a crucial role in Nigeria’s financial landscape, particularly in rural and underserved urban areas.
PoS operators provide essential services such as cash withdrawals, deposits, bill payments, and transfers, bridging the gap between the unbanked population and formal financial institutions. Their accessibility and convenience have become indispensable, especially as Nigeria moves towards a cashless economy.
Reports indicate that there are nearly a million registered PoS terminals in the country. According to Statista, “As of 2023, PoS payments in Nigeria were worth over 860 billion Nigerian naira, registering an increase compared to the previous years reviewed. Between 2015 and 2023, the number of POS payments rose significantly.” These figures underscore the integral role PoS operators play in the financial inclusion value chain.
However, the tight registration deadline poses several challenges:
1. Financial Burden: Registering a business with the CAC involves costs, including registration fees, documentation, and sometimes legal services. Many PoS operators, who operate on thin margins, may struggle to afford these expenses. For micro-businesses that often subsist on daily earnings, diverting funds towards registration could mean a significant financial setback. This could lead many to forego registration and potentially close shop.
2. Short Timeline: The July 7 deadline provides operators with a limited timeframe to complete the registration process. Given the bureaucratic hurdles often associated with such processes in Nigeria, this timeline is impractical for many. The urgency compounds the stress on operators, who must balance their daily operations with the demands of registration. They may be forced to pay above the usual rate because of the urgency of the situation.
3. Lack of Awareness: Many PoS operators are not fully aware of the registration requirements or the steps involved. Without adequate support and clear guidance from the CBN or CAC, they may find the process overwhelming. The absence of targeted awareness campaigns exacerbates this issue, leaving many operators in the dark. The National Orientation Agency (NOA) has a role to play here.
4. Operational Disruptions: The focus on meeting the registration deadline may lead to operational disruptions. PoS operators might need to temporarily halt their services to manage the registration process, affecting their income and the communities that rely on their services.
To address these challenges and ensure the directive’s success, several measures are recommended:
1. Financial Assistance Program: The government, in collaboration with financial institutions, could establish a financial assistance program to support PoS operators with the costs of registration. This could take the form of grants, subsidized loans, or fee waivers, alleviating the financial burden and ensuring compliance without jeopardizing operators’ livelihoods.
2. Extended Deadline: Extending the deadline would provide PoS operators with a more realistic timeframe to complete the registration process. An extended period, such as 12 to 24 months, would allow operators to plan and save for the costs involved, reducing the risk of financial strain.
3. Awareness Campaigns and Support: Comprehensive awareness campaigns are crucial to inform PoS operators about the registration requirements and process. The CBN and CAC could collaborate to disseminate information through various channels, including social media, community meetings, and local radio stations. Additionally, establishing support centers or helplines to guide operators through the registration process would be beneficial.
4. Streamlined Registration Process: Simplifying the registration process could encourage compliance. Streamlining documentation requirements and reducing bureaucratic red tape would make the process more accessible. Online registration portals with clear, step-by-step instructions could also expedite the process.
5. Community Engagement and Partnerships: Engaging with community leaders and local organizations can help mobilize PoS operators and provide them with the necessary resources and information. Partnerships with non-governmental organizations (NGOs) and business associations could facilitate workshops and training sessions to aid the registration process.
The CBN’s directive for PoS operators to register with the CAC is well-intentioned, aiming to formalize and regulate the sector. However, without addressing the financial and logistical challenges faced by these micro-businesses, the directive could have adverse effects on the economy. Ensuring the sustainability of PoS operations is essential for maintaining financial inclusion and supporting Nigeria’s broader economic goals.
Source: Elvis Eromosele