Nigeria’s telecommunications operators are considering the deactivation of Unstructured Supplementary Service Data (USSD) services for banks due to a staggering outstanding debt that has surpassed N250 billion.
This longstanding issue, which has persisted for six years, has seen multiple interventions from the Central Bank of Nigeria (CBN) and the former Minister of Communications, Isa Pantami, but no sustainable resolution has been reached.
Originally designed by telecom companies for providing airtime and subscription services, USSD has become a vital tool in the banking sector, largely because it operates without the need for an internet connection. Despite its widespread adoption, banks have failed to fulfil their payment obligations to telecom operators.
Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), expressed his frustration, stating that banks have benefited from USSD services while neglecting their financial responsibilities.
“Over the last six years, this has not been a straightforward commercial transaction; it has become entangled in political interests,” Adebayo noted. He emphasized that, under normal circumstances, contractual clauses would allow both parties to prepare for potential disputes, but the evolving political landscape has complicated matters, necessitating regulatory clearance for any action.
Adebayo underscored the urgent need to address the outstanding debt, saying, “The reality is that this money has to be paid. We’ve delayed this for too long, and the discussions surrounding it have become excessive. What’s not right is simply not right. This debt has lingered for far too long.”
In May 2023, the NCC granted telecom operators the authority to disconnect banks from USSD services due to the escalating debt situation. According to Adebayo, the debt, which stood at N80 billion in November 2022, rose to over N120 billion by April 2023 and has now exceeded N250 billion.
Some banking executives, including the late Herbert Wigwe, former CEO of Access Holdings, and Segun Agbaje, Group CEO of Guaranty Trust Holding Company, have questioned the telecom operators’ calculation of the debt. Adebayo clarified that while the banks do not dispute their indebtedness, the main contention lies in the amount owed.
“We have records showing that traffic remains consistent, yet the banks have not compensated us for it. They don’t deny they owe money; the dispute is over the figure,” he explained. He further pointed out the irony in the situation, asserting that if the debt were owed to the banks, they would have already engaged in rigorous debt recovery efforts.
The potential deactivation of USSD services could lead to significant disruptions in banking operations, raising concerns about the implications for both the telecommunications and banking sectors in Nigeria.
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