More Nigerians have abandoned their bank accounts majorly due to economic hardship caused by sluggish economic growth, rising job losses and reduction in purchasing power occasioned by double digit inflation.

Statistics from the Nigeria Interbank Settlement System, NIBSS, showed that Nigerians abandoned 10 million bank accounts in 2018. NIBSS is owned by all Nigerian banks and the Central Bank of Nigeria, CBN.

According to the company, the number of bank accounts abandoned by bank customers and hence categorised as ‘inactive bank accounts’ rose by 28 percent to 46.7 million in 2018 from 36.7 million in 2017.

Depositor-initiated transaction

According to the CBN 2015 guidelines on dormant accounts, “An account shall become inactive if there has been no customer or depositor-initiated transaction for a period of six months after the last customer or depositor initiated transaction.”

This implies that in just one year, ten million bank accounts recorded zero transactions.

Financial Vanguard analysis also showed a steady growth in the number of inactive bank accounts between 2014 and 2018.

According to NIBSS, inactive bank accounts grew faster than active bank accounts in the past five years, 2014 to 2018.

During this period, inactive bank accounts grew by 73 percent while active bank accounts grew by 35 percent. While inactive bank accounts increased by 19.61 million to 46.7 million in 2018 from 27.09 million in 2014, active bank accounts rose by 24.75 million to 71.2 million in 2018 from 46.45 million in 2014.

Financial Vanguard investigations and the comments from both bankers and bank customers, indicate that factors responsible for the steady and huge growth in the number of inactive bank accounts are many and varied. These include ownership of multiple bank accounts by some bank customers, breakdown in bank-customer relationship, Biometric Verification Number (BVN) issues, incomplete account opening documentation and Know Your Customer, KYC, challenges as well as increased efforts against money laundering and other financial frauds by banks and the regulatory authorities.

However, most of the bankers and individuals who spoke to Financial Vanguard, cited economic difficulties and business failures as well as rising job losses as the major causes.

Okechukwu Uzor, a teacher, does not see the need to continue to operate his bank account.

“I have an account with a zero balance which I have abandoned. If I have the money I will credit the account. The money is not enough to feed talk-less of saving it in the bank”, he told Financial Vanguard.

“The factors mainly responsible for the rise in inactive bank accounts are economic downturn/business failures and inactivity on salary accounts due to loss of job,” said FirstBank in response to Financial Vanguard enquiries.

Last year, the National Bureau of Statistics reported that the number of unemployed Nigerians rose by 3.3 million to 20.3 million in the third quarter of 2018 (Q3’18) compared to third quarter of 2017 (Q3’17).

CBN reacts

The CBN, however, described the rise in inactive bank accounts as a normal feature of the banking industry with profit potentials for banks.

Responding to Financial Vanguard enquiries, Director Corporate Communications, CBN, Mr. Isaac Okoroafor, said: “Incidence of abandoned accounts has always been a feature of the Nigerian banking industry for many reasons.

“A common reason is the cumbersome procedure of complete closure of an account. Many people in a hurry will withdraw to the last kobo possible and move on, abandoning the account for good.

“There’s is also death and the absence or knowledge of a bona fide heir to the estate or poor documentation for inheritance.

“In most cases, abandoned accounts carry relatively low balances compared to active ones signifying lack of interest to pursue them. The banks, however, welcome such developments because the funds represent no-cost flow and eventual profits.

“The above are normal trends in the banking system. However, if the is a recent upsurge in the statistics then fear of law enforcement against money laundering cannot be ruled out especially if the sums in the accounts are heavy.”

•Excerpted from a Vanguard report