David Ibemere

Nigeria leads the way in abandoned bank accounts in Africa

 The total number of dormant bank accounts in Nigeria rose to 30.37 million despite efforts by banks in the country to retain old customers and attract new ones, representing the highest figure in Africa

The accounts, activated by commercial banks for new holders but later abandoned to dormancy by the customers now constitute 32.56 per cent of the total 97 million activated bank accounts in the country as of February.

Consequently, only 67.28 million accounts that represent 69.7 per cent of the total activated accounts domiciled in commercial banks are functional.

According to the latest industry statistics checked by The Nerve Africa from the Nigerian Inter-Bank Settlement System (NIBSS) Plc, the growing wave of dormant accounts across savings and currents account types in the country has been progressively steady.

In Nigeria, while the banking system is sound and continues to pick up in terms of growth in bank numbers and profitability, the dilemma is the continued existence of large numbers of dormant accounts.

From the report in 13 months from January 2016 up to February this year, in NIBSS website indicated that a total of 8.61 million accounts have become dormant despite the growth in total bank accounts ownership rising to 10 million within the period, jacking up dormant account base to the current figure from 26.042 million it stood at the end Q4, 2016

NIBSS further stated that from a figure of 86 million accounts in January 2016, total account base in the country has grown by 14.02 per cent as 10 million new accounts were activated within the period under review.

Similarly in a finding of two separate studies on East Africa, Rwanda tops the list with 37 per cent of its bank accounts classified as dormant — unused for more than 90 days — followed by Kenya with 25 per cent inactive accounts, according to a study by InterMedia, a Washington-based research firm.

In Tanzania, 24 per cent of bank accounts have been lying idle for more than three months, and 21 per cent of Ugandan financial institution accounts are inactive, the report shows.

Income irregularity was cited by over 40% of the study sample as the main reason for inactivity, while 27% reported being inactive because they had no need to use the available services.

What happens to dormant accounts?

According to guidelines issued by the Central Bank of Nigeria (CBN) in October 2015, on banks’ management of dormant accounts, the apex bank stated: “Three months to dormancy, the bank shall notify the account holder of the status of the account.

“For individual accounts that the bank cannot reach the account holder during the three (3) months period, it shall contact the next-of-kin to assist in locating the account holder(s). “This will be done within one month after the account has been declared dormant.

For corporate accounts, the bank shall contact the directors of the entity or seek information from the Corporate Affairs Commission on the Directors.”