The ongoing dispute between Nigerian banks and telecommunications companies over Unstructured Supplementary Service Data (USSD) charges has reached a critical juncture, prompting the federal government to blacklist 18 banks due to their outstanding debts, which have ballooned to approximately N250 billion. This situation has significant implications for the banking sector, telecommunications operators, and consumers alike.
Background of the USSD Dispute
USSD technology has become an integral part of banking in Nigeria, allowing customers to perform transactions such as money transfers, balance inquiries, and bill payments without needing internet access. However, the relationship between banks and telecom operators regarding USSD services has been fraught with tension. The core of the dispute lies in the unpaid charges that banks owe to telecom providers for facilitating these services.
Growth of Debt
The debt crisis began several years ago and has escalated dramatically. Initially, the total owed by banks was around N40 billion in 2020. By the end of 2021, this figure had increased to N57 billion, and it continued to rise, reaching N80 billion in 2022. As of late 2024, telecom operators claimed that this amount had surged to over N250 billion, prompting urgent action from regulatory bodies.
The Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) have been involved in mediating this dispute. In December 2024, they issued directives requiring banks to pay 85% of their outstanding debts by December 31, 2024. However, compliance was minimal; only four banks adhered to this directive while 18 others remained non-compliant.
Regulatory Action and Blacklisting
On January 15, 2025, the NCC officially announced its decision to disconnect USSD services for the 18 banks that failed to settle their debts. This disconnection is set to take effect on January 27, 2025, unless the banks comply with the payment requirements. The affected banks include major financial institutions such as:
- United Bank for Africa (UBA)
- Zenith Bank
- First City Monument Bank (FCMB)
- Fidelity Bank
- Wema Bank
- Polaris Bank
- Jaiz Bank
- Sterling Bank
- Unity Bank
The NCC’s decision reflects a growing frustration with the banks’ inability to resolve their debts despite multiple opportunities for compliance.
Consequences of Disconnection
The disconnection of USSD services will have immediate repercussions for millions of bank customers who rely on these codes for everyday transactions. Customers will be unable to access essential banking services through USSD platforms, leading to significant disruptions in financial activities.
- Impact on Customers: Many users depend on USSD codes for quick access to banking services, especially in areas with limited internet connectivity. The inability to use these codes could hinder their ability to conduct transactions efficiently.
- Financial Inclusion Concerns: The suspension of USSD services threatens Nigeria’s efforts toward financial inclusion. Many individuals in rural areas rely on USSD technology due to a lack of access to smartphones or reliable internet connections. The disconnection could exacerbate existing inequalities in access to financial services.
- Increased Pressure on Alternative Channels: As USSD becomes inactive, customers may be forced to rely more heavily on mobile banking apps or physical bank branches. However, this shift may not be feasible for everyone, particularly those living in remote areas with poor internet connectivity or limited transportation options.
Stakeholder Responses
The response from various stakeholders has been mixed:
Telecommunications Companies
Telecom operators have expressed their frustration regarding the prolonged debt situation and have called for stricter compliance from banks regarding payment agreements. Gbenga Adebayo, chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), accused banks of deliberately frustrating any resolution efforts and indicated that withdrawing USSD support was their only option.
Banking Sector Reactions
Bank representatives have acknowledged the challenges posed by rising operational costs but argue that a collaborative approach is necessary to resolve these issues without harming customers. Some banks reportedly began making partial payments towards their debts in hopes of averting disconnection.
Government Intervention
The federal government is under pressure to mediate between banks and telecom operators to find a viable resolution. The NCC has indicated that it may disclose the names of defaulting banks publicly as part of its efforts to encourage compliance and transparency within the sector.
Future Directions
Moving forward, several steps can be taken by both sectors to address this crisis effectively:
1. Establishing Clear Payment Structures
Both banks and telecom operators need to work together to establish clear and fair payment structures that reflect the costs associated with providing USSD services while ensuring sustainability for both parties.
2. Enhancing Communication Channels
Improved communication between stakeholders can facilitate better understanding and cooperation regarding payment obligations and service expectations.
3. Exploring Alternative Solutions
Innovative solutions such as creating a dedicated fund or framework for managing USSD service payments could help alleviate some financial burdens on banks while ensuring telecom operators are compensated fairly.
Conclusion
The blacklisting of 18 banks due to their failure to settle outstanding debts related to USSD services marks a critical moment in Nigeria’s banking and telecommunications landscape. With significant implications for consumers and financial inclusion efforts at stake, it is imperative that all stakeholders prioritize finding a resolution before further disruptions occur.
As discussions continue regarding potential solutions, it is essential that all parties work collaboratively towards maintaining essential banking services in Nigeria. Failure to do so could not only disrupt individual financial activities but also hinder broader efforts toward achieving financial inclusion across the country.
In summary, addressing this crisis requires urgent action from all involved parties’ banks must fulfill their payment obligations promptly while telecommunications companies need to ensure fair practices that support sustainable operations. Only through cooperation can Nigeria navigate this challenging situation and safeguard its financial ecosystem against future crises.