By Alfred Koroma
As early as 7 am, crowds of people standing in front of various commercial banks on the busy streets of Freetown. Some doctors, lawyers, students applying for University, and some teachers, waiting for banks to open at 9 am to get out cash. The queues continue inside. To succeed requires an extra patient from customers, often at their detriment. It’s either you fail to go to your office early and spend the rest of the day waiting to reach the cashiers or quit without cash, a typical epitome of the banking sector in Sierra Leone.
Despite rise in digital payment worldwide , banking in Sierra Leone remain largely analogue with payment predominantly cash-based as vast majority of citizens cannot utilize the digital products banks offer.
Amidst this enigma, Bank of Sierra Leone launched a new payment system dubbed as National Payment Switch in May 2023, as an infrastructure to promote cashless banking, end limitations in access to finance and enhance financial inclusion through universal interaction with banks, POS, ATMs and Mobile Payment operators.
Banks in Sierra Leone have been operating on their own. Each bank holds its own ATM and POS, requiring customers to obtain multiple cards from different banks. This has been the case even for mobile payment operators in the country.
With its launching, the national payment switch was presented as an infrastructure to end the payment barrier, allowing banks and other payment companies to interface and work with each other, so people are able to withdraw money from any of the six banks with their ATM card even if they do not hold an account with that bank.
The same would apply to mobile money, allowing telecommunication service providers to interoperate and make digital cash transaction across all networks possible.
Launched but not functioning
An ATM of one of the five banks believed to be operating the National Payment Switch. An attempt to withdraw cash using two separate ATM cards of the switch went unsuccessful.
President Bio referred to the launching of the switch as “the start of new era in our internal banking and financial services sector.” the new infrastructure will cover processing of card transactions carried out through point-of-sale and Automated Teller Machines managed by different financial institutions. And “…yet another bold step forward towards actualizing my SLPP Government’s “New Direction” Manifesto.”
Five months after its launching, the national switch which is believed to be at its first phase, working among six out of the 14 commercial banks, does not appear to be working. It’s rare to find people who have knowledge about the switch, let alone say they are using it.
“The switch itself has not started working. The launching was just a test case.” But it has been presented to the public as though it is working, a banker told me.
Three separate ATM cards tested at three of the banks on separate days and weeks proved unsuccessful with the response: “Issuer or switch inoperative. Please take your card.”
All efforts were exhausted to reach Bank of Sierra Leone to know about the status of the switch, but the Bank refused to speak.
But let say the switch start working in the near future, still a larger portion of the population stands to be excluded from the benefits of the product, as larger area of the country remain unbanked. Only 19.8 percent of the population has access to formal financial services and mobile money, according to a publication by the UN Impact for Capital Development.
And those with access to formal banking services still prefer the traditional methods of banking – going to the bank physically, joining long queues to deposit or withdraw physical cash.
Other perennial challenges – lack of awareness, low digital skill gap, limited network connectivity are all allied factors brazing to undermine the effectiveness of the payment switch.
Kroo Town Road Market, Freetown
An interview with several customers waiting at various commercial banks in the morning hours, public transport representatives, University students and market women at major markets and streets within the capital Freetown reveals the public is in fact, less knowledgeable about the new payment system, its benefits and how it works.
At Kroo Town Road Market in the central area of the city, one fruit and vegetable trader claims to have heard about the payment switch, but appears to hold a different view against it. For her, such infrastructure that allows people to withdraw money from a bank where they do not have an account should not exist.
“I’ve heard about the National Payment System, but I have no interest in it,” the trader told me. “As far as I’m concerned, everyone should collect money where they have an account. It is crook to collect money where you don’t have an account. Thank God I don’t keep money in my account.”
But there are others who said they want to use the switch, but have no knowledge on how it operates.
Also, citizens with accounts outside those six banks where the switch is said to be operating cannot benefit from the payment system. Except at the second phase where it is expected to extend, allowing mobile payment interoperability.
But even when the implementation of the switch would have reached all the stages, Chiedu Ngene, Chief Operating Officer of the United Bank for Africa thinks the major challenge the payment system would face has to do with its general acceptability and awareness.
Additionally, as Alhiji Lewally, Head of IT, Rokel Commercial Bank reechoes the other challenges have do with inadequate power supply, internet connectivity in certain parts of the country where banks have branches. If an ATM is in a location wherein there is a break in communication and customer goes to that ATM, that transaction will not be able to be routed to the switch because of communication break. Which moved me to further seek views on how the switch would work effectively.
Mass production of payment cards
Few account holders in Sierra Leone use cards to perform transactions. The availability of cards is to some extent still bureaucratic. In many cases, people are feeling frightened to acquire cards from banks. The common notion is that a customer need to have huge amount of cash in his or her account to access an ATM, credit or a master card.
Online banking and debit card penetration in the country is still low, projected to have reached 1.43% and 1.62% in 2023 respectively, according to Statista.
It’s a challenge that government need to demystify and ensure people have the confidence that this is a common card that every man can acquire. That would help the switch should work effectively.
There should be a mass production of payment cards for the whole country and make them available to everyone with an account. And ensure everybody in the country is able to use a card and other digital payment products available.
Customers waiting in front of Sierra Leone Commercial Bank
In this age of advance technology, the payment switch can help reduce crowd in banks if only people know about it and are able to use the various digital products the infrastructure provides. But it’s clear so far, sensitization around the scheme is not common.
And as Jones, put it: Even the term ‘National Payment Switch’ is too complex for the people to comprehend. For easy understanding, he suggests the use of light terms, a name that rings through and evokes a national interest.
Then Education, Alhiji Lewally, Head of IT, Rokel Commercial Bank said is the key for the payment switch to work effectively, emphasizing more sensitization, more education is needed to let people have confidence to use the payment switch.
Narrow digital divide
Even before the launch of the National Payment Switch, the future of payment in Sierra Leone has begun evolving, requiring digital capabilities, behaviours and understanding for citizens.
In terms of access, a lot more Sierra Leoneans, particularly those in urban settlements, are having access to digital technologies such as smartphones, mobile computers at a growing rate. But there is still a widening of digital divide in terms of skills. Much of the population lack the basic skills needed to confidently perform financial transactions digitally.
Even though mobile payment has existed in the country for over a decade, people still hand their phones and password to agents to transfer or cash out money. That’s a big challenge and a big risk.
There is a rise of Fin-Tech companies and the use of POS machines in different businesses. Therefore, narrowing digital skill gap would not only help the national payment switch work more effectively, but also boost the country’s economy and enhance inclusion, Savrabh Mehta, Academic Head, Blue Crest, ICT University in Sierra Leone.
“Closing the digital skills gap can foster innovation, entrepreneurship and the growth of digital businesses, thereby contributing to economic development and job creation across various sectors,” Mehta added.
A lot of Sierra Leoneans still queue at the banks, probably because the country have not got an effective digital payment system and the nitty-gritties required to fully adopt digital payment.
But education, with more investment in infrastructure – improving access to reliable internet connectivity and expanding infrastructure that narrows the gap between the bank and unbanked areas, in both rural and urban settings can leverage the potential of the switch.
It is not clear when the government’s national switch will function. However, if the infrastructure ever function, it will be better appreciated if the people are able to use their mobile phones, their cards, computers at the comfort of their homes to do purchasing and perform transactions. . This will have unimpeachable effect on the drive for financial inclusivity the nation is gearing to achieve.