As of January 2025, the ongoing dispute between Nigerian banks and telecommunications companies over Unstructured Supplementary Service Data (USSD) charges has reached a critical point, with banks owing telecom operators nearly ₦200 billion (approximately $132 million). This debt has become a significant issue, prompting the intervention of regulatory bodies such as the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC). The situation has escalated to the point where the federal government is considering blacklisting 18 banks that have failed to settle their debts.
The USSD technology, which allows users to access banking services without needing an internet connection, has been widely adopted in Nigeria. It became particularly popular for financial transactions due to its accessibility and ease of use, especially among individuals without smartphones or stable internet access. However, this reliance on USSD services has led to a complex financial relationship between banks and telecom operators.
The debt primarily stems from banks using USSD services provided by telecom operators for various banking transactions. Over the years, disagreements over how these services should be billed and compensated have led to a significant accumulation of unpaid fees. The situation worsened as banks argued that there was no clear agreement on how USSD fees should be shared, leading to disputes over the total amount owed.
Recognizing the growing tensions and potential economic implications, both the CBN and NCC have stepped in to mediate the situation. In late 2023, they facilitated discussions that resulted in a payment plan aimed at resolving the outstanding debts. However, reports indicate that payments have been slow, with many banks dragging their feet in settling their obligations.
According to Gbenga Adebayo, President of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), while some payments have begun, they are not progressing at a satisfactory pace. He expressed concerns that if the current rate of payment continues, the debt could increase due to accruing interest.
The total amount owed by banks has reportedly risen to ₦250 billion as of late 2024, with regulators mandating that banks pay ₦212.5 billion approximately 85% of this total by December 31, 2024. The directive aims to ensure that banks comply with their financial obligations and support economic stability within the telecommunications sector.
Despite these regulatory efforts, many bank executives remain skeptical about the legitimacy of the fees charged by telcos. Some argue that USSD technology is outdated and that telecom operators should take responsibility for collecting fees directly from consumers rather than relying on banks for remittance.
The federal government has warned that failure to comply with payment directives could lead to severe consequences for the offending banks. This includes potential blacklisting from participating in future telecommunications services or facing operational restrictions. Such measures are intended to enforce compliance and ensure that banks meet their financial responsibilities towards telecom operators.
The looming threat of disconnection from USSD services adds pressure on banks to settle their debts promptly. The CBN’s recent circular emphasizes that banks must agree on a payment plan by January 2, 2025, and complete payments for outstanding invoices by July 2, 2025. Failure to adhere to these timelines may result in fines or other regulatory actions.
The ongoing USSD debt crisis has broader implications for Nigeria’s financial ecosystem. As more users transition from USSD-based transactions to internet banking solutions due to security concerns and changing consumer preferences, the relevance of USSD services may diminish further. A report indicated a significant decline in USSD usage for financial transactions down 150% as users increasingly opt for mobile apps and online banking platforms.
This shift poses challenges not only for telecom operators who rely on USSD fees but also for banks that have historically benefited from this service model. As transaction volumes decline, there is pressure on both sectors to adapt quickly to changing market dynamics.
The ongoing dispute over USSD charges represents a critical juncture in Nigeria’s banking and telecommunications sectors. With nearly ₦200 billion owed by banks and regulatory bodies stepping in to enforce compliance, the stakes are high for both parties involved. As discussions continue and deadlines approach, it remains essential for all stakeholders banks, telecom operators, and regulators to find common ground that ensures fair compensation while fostering innovation in financial services.
The potential blacklisting of non-compliant banks serves as a stark reminder of the importance of accountability within Nigeria’s rapidly evolving financial landscape. As this situation unfolds, it will be crucial for all parties involved to prioritize collaboration over conflict to secure a stable economic future for Nigeria’s telecommunications and banking industries.