Nigerian banks owe telecom companies a staggering ₦200 billion for utilizing Unstructured Supplementary Services Data (USSD) for banking services. This debt has been a source of friction between banks and telcos for six years, necessitating intervention by the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC).
Following a meeting in late 2023, a payment plan was established. According to three people with direct knowledge of the matter, the banks have begun repaying the debt. Central Bank Governor Olayemi Cardoso played a significant role in urging the banks to make payments.
However, the repayment process has been slow, according to Gbenga Adebayo, president of the Association of Licenced Telecommunication Operators of Nigeria (ALTON). “If you look at the number, it is not going down,” Adebayo told TechCabal. “The ₦200 billion, which consists of the principal sum and the interest, is likely to rise if the payment continues to drag. We believe that our friends in the banks can do better than what they are doing.”
Some insiders claim the banks are deliberately delaying payments as a way to push back against the telcos. “There was no agreement between the banks and telcos about sharing USSD fees from the beginning. The banks only discovered the telcos were interested in the fees when they started to threaten to cut the service,” said a bank CEO who requested anonymity.
Herbert Wigwe, the late CEO of Access Holdings, during a 2021 investor call, stated, “There is no such thing as an obligation due from banks to telcos.” Other bank executives have questioned the transparency of the billing process, challenging how telcos arrived at the debt figure. In 2023, GTCO’s Segun Agbaje argued that telcos should be responsible for fee collection since they receive the entire ₦6.98 fee per transaction.
While regulators have mandated banks to collect and remit fees to telcos, the banks appear to be resisting by slowing the pace of payments. USSD, initially built by telecom companies for airtime and subscription services, quickly became a popular channel for banking due to its accessibility without internet or smartphones. Banks like GTCO launched extensive marketing campaigns for their USSD services, such as the *737 shortcode in 2016. By 2021, Nigerians had sent ₦5.1 trillion via USSD, although this figure declined to ₦4.4 trillion by 2022.
Despite being the fifth most-used payment channel in Nigeria, USSD has the lowest spend-per-transfer (₦10,000) compared to other channels like mobile apps and online transfers, which average ₦70,000 per transaction, according to National Bureau of Statistics data. Telcos argue that USSD is an important channel for banking and that banks should promptly collect and remit the applicable fees. However, given that banks do not profit from USSD and the transaction values are relatively small, they are incentivized to deprioritize it.
“If you want financial inclusion, then you need to bring down the cost of data. And when you bring down the cost of data, you start to eradicate USSD,” Agbaje argued in 2023. With growing security concerns and the ongoing fight against fraud, USSD is becoming less of a priority for Nigerian banks, potentially further slowing debt repayment.
“It (the debt) won’t get resolved so the telcos need to let it go,” said a bank expert who chose to remain anonymous, echoing the sentiments of many bank executives.