Stalled Debt Threatens Financial Inclusion in Nigeria as Telcos Consider Halting USSD Services

2024-12-23

Telecommunication companies in Nigeria, under the umbrella of the Association of Telecommunications Companies of Nigeria (ALTON), are urging the Nigerian Communications Commission (NCC) and Central Bank of Nigeria (CBN) to intervene in a lingering N250 billion debt crisis owed by commercial banks for Unstructured Supplementary Service Data (USSD) services.

Financial inclusion is a critical national policy in Nigeria, aiming to bring more people into the formal financial system. Mobile banking plays a central role in achieving this goal, and Unstructured Supplementary Service Data (USSD) is the backbone of these mobile banking operations. However, a staggering N250 billion debt owed by banks to telecom operators threatens to disrupt these services, potentially jeopardizing the progress made in financial inclusion.

USSD: The Lifeline of Mobile Banking

Unlike internet banking which requires smartphones and data access, USSD operates on basic feature phones, making it a vital tool for financial inclusion, especially in remote areas with limited internet connectivity. Banks leverage USSD for various services, including mobile money transfers, airtime recharge, bill payments, and more.

Mounting Debt Threatens Sustainability

The N250 billion debt has been accumulating for several years, and despite warnings from telecom companies, the issue remains unresolved. While some smaller banks have begun making installment payments, major lenders are yet to take significant steps towards settling their debts. This delinquency puts a strain on telecom operators, hindering their ability to maintain and invest in USSD infrastructure.

ALTON Calls for Timely Resolution

ALTON President Tony Emoekpere has emphasized the urgency of addressing this issue. He warns that the debt crisis not only threatens the financial health of telecom companies but also jeopardizes the progress of financial inclusion in Nigeria. ALTON proposes a practical solution – a timely and equitable debt resolution plan established by the NCC and CBN, along with prioritizing USSD traffic to ensure uninterrupted service.

What Undercode Says:

The escalating debt between telecom operators and banks presents a significant challenge to Nigeria’s financial inclusion drive. Here’s a breakdown of the situation and its potential consequences:

Impact on Financial Inclusion: Disruptions in USSD services due to unpaid debts would disproportionately affect low-income earners and those residing in rural areas, hindering their access to essential financial services. This could lead to financial exclusion and hinder economic development.

Strained Inter-Industry Relationship: The debt crisis creates tension between the telecom and banking sectors. Without a sustainable solution, it could lead to a breakdown in communication and collaboration, ultimately impacting customer experience.

Urgent Need for Regulatory Intervention: The NCC and CBN have a crucial role to play in mediating this dispute. A clear regulatory framework outlining USSD service charges and payment structures is essential to prevent future debt accumulation.

Potential for Technological Innovation: Exploring alternative mobile banking solutions that are less reliant on USSD could be a long-term strategy. This could involve promoting smartphone penetration and internet access in rural areas.

In conclusion, the N250 billion debt crisis between telecom operators and banks in Nigeria is a pressing concern that demands immediate attention. Timely intervention from regulatory bodies and a collaborative approach between the involved industries are essential to ensure uninterrupted USSD services and safeguard the progress made in financial inclusion.