In September, several media reports said that Nigerian telcos, under the auspices of the Association of Licensed Telecoms Operators of Nigeria (ALTON), resolved their ongoing disagreement with banks regarding an over ₦120 billion Debt for Ussd services.

The resolution, according to Umar Danbatta, former executive vice chairman of the Nigerian Communications Commission (NCC), was that the banks would pay for the debt and future USSD services through corporate billing terms, instead of end-user billing as the banks preferred.

“They wanted end-user billing, but we said the service is being provided to the banks, not to their customers. The banks charge their customers for the service, and they are to pay the telcos in the form of corporate billing, which is neat,” Danbatta said.

However, the banks have not kept to this agreement which was reached after a meeting with the NCC and the then-acting governor of the Central Bank of Nigeria (CBN), Fola Shonubi.

On Wednesday, ALTON said it would withdraw its services and take legal action if the debt is not paid, according to The Punch. “On this issue of USSD debt, if parties have to go to court to get a final resolution, so be it. This is because every effort that is being made by everyone, where we move one step forward, several steps backwards, is not going to work,” Gbenga Adebayo, ALTON chairperson, said.

“This is a commercial agreement that went south. This agreement has a provision for third-party intervention, whether arbitration or heading for the Court of Law, if it is allowed to take its own life, parties will decide where to go. Instead of going to meetings in Abuja with the minister or the CBN, parties would decide where to go according to the agreement,” he added.

How did the USSD debt get to over ₦120 billion?

In 2019, four years after USSD was introduced in Nigerian banks to boost financial inclusion, bank leaders in the country requested the CBN, through the Financial Inclusion Steering Committee (FISC), to make USSD services free for customers.

This change was implemented in October of the same year after receiving FISC's approval. Before this, customers had to pay telcos for USSD services using their airtime, but banks shifted to a corporate billing system during the transition.

However, inconsistent remitting of this payment led to the cumulated debt. In April 2021, when the debt was at ₦45 billion, ALTON's plan to halt the USSD services was interrupted by intervention from the CBN and NCC.

Following the intervention, the CBN introduced a ₦6.98 fee for each USSD transaction session to be remitted to mobile network operators (MNOs)—including MTN, GLO, Etisalat and Airtel, who provide infrastructure for the services to operate, directly from customers’ bank accounts.

“Banks remove charges from their customers but refuse to pay telecom operators. You don’t expect us to keep rendering services when you don’t pay,” Adebayo said.

USSD is one of the major transaction channels in Nigeria. Last year, the value of e-payment transactions via USSD was worth ₦4.494 trillion, a 6.6% decrease from 2021. Currently, Nigerian banks jointly run at least 100 USSD codes. 

However, an anonymous Nigerian bank executive told Aljazeera that “USSD is an overrated banking channel as bank hall walk-ins still carry the bulk of the financial transactions traffic”. “Even if the service is overrated as this executive claims, it should not be a reason to incur debt,” a telco expert said.

According to Adebayo, “The DMBs have continued to incur greater and greater debt, without making commensurate payments. Every time some progress is made, the DMBs come up with reasons to take stakeholders several steps back.”

What's the way forward?

Now that ALTON is considering legal actions will another interference save the day? “Some issues, including price review, should be left to market forces, not to be determined by the government because it is not sustainable,” ALTON chairperson said. “Instead of going to meetings in Abuja with the minister or the CBN, parties would decide where to go according to the agreement.”

Recently, Nigeria's President, Bola Tinubu, appointed Aminu Maida as the CEO and deputy vice chairperson of NCC, succeeding Danbatta, who had held the position since 2015, even predating the bank-telco USSD debt issues.

Until this appointment, Miada was the executive director of technology & operations at Nigeria Inter-Bank Settlement System Plc (NIBSS), the national payment switch jointly owned by the Central Bank and licensed DMBs. He has worked in the banking sector, including fintech, and telecommunication.

“We will work tirelessly [...] while fostering innovation and sustainable growth in the telecommunications sector,” Maida said when he resumed office as NCC CEO.

One way to enable sustainability in the sector is to ensure that the debts are paid in due time, according to some industry analysts.

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