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2025-02-02
The ongoing dispute between Nigerian banks and telecom operators regarding the payment of debts for USSD services has been a significant issue in the telecommunications and banking sectors. Recently, the Association of Licensed Telecom Operators of Nigeria (ALTON) provided an update on the matter, revealing some positive progress. This issue, which began in 2019, has seen USSD debts owed by banks to telecom operators grow from N32 billion to nearly N250 billion by 2024. However, recent interventions and payments are offering hope for resolution.
ALTON’s President, Gbenga Adebayo, expressed his satisfaction with the ongoing efforts and payments made by banks to settle the debts. The situation had reached a critical point, with the Nigerian Communications Commission (NCC) intervening by warning banks that failure to settle the debt could result in them being blacklisted. The resolution of this dispute has gained momentum, thanks in part to the involvement of the Central Bank of Nigeria (CBN) and the NCC. The situation has led to a significant increase in USSD transactions, which are now vital for financial access in Nigeria, particularly in rural areas without internet access.
Summary:
- USSD Debt Situation: USSD debt owed by Nigerian banks to telecom operators escalated from N32 billion in 2019 to nearly N250 billion by 2024.
- Usage of USSD: USSD technology is a critical tool for banking in Nigeria, especially for those without internet access, enabling mobile transactions for millions.
- Key Players Involved: ALTON, CBN, and NCC have been instrumental in addressing the issue.
- Resolution Efforts: ALTON President reports that payments are now being made by banks, signaling progress towards resolving the debt issue.
- Impact on Telecom Sector: The 50% tariff increase by NCC aims to stabilize the telecom industry rather than increase profits.
- USSD as a Growth Driver: USSD transactions in Nigeria reached 252.06 million in volume and were valued at N2.19 trillion in the first half of 2024.
What Undercode Says:
The ongoing conflict between banks and telecom operators regarding USSD payments highlights a larger issue in Nigeria’s financial and telecom sectors. USSD codes, once a simple tool for airtime recharge, have evolved into a powerful mechanism for financial inclusion. The ability to conduct banking transactions via USSD has brought banking services to millions, particularly in rural areas where internet access is limited or nonexistent. This is especially critical in a country like Nigeria, where mobile penetration far exceeds internet access.
The debt dispute between the banks and telecom operators centers on fees for these services. The banks owe telecom operators for providing the infrastructure and technology required to facilitate USSD transactions. As of 2024, the debt owed has ballooned, causing serious strain between the two sectors. This situation not only affects telecom operators financially but also threatens the continued accessibility of USSD services, which could harm Nigeriaās goal of greater financial inclusion.
The intervention by the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) was crucial in de-escalating the situation. These regulatory bodies have provided a neutral ground for both banks and telecom operators to find common ground and avoid further disruption of the USSD service, which is relied upon by millions of Nigerians daily.
Itās important to note that this issue highlights a systemic challenge in Nigeria’s financial infrastructureāhow to reconcile the demands and operations of the banking sector with those of telecom operators, who play a pivotal role in enabling financial services for the unbanked population. The intervention of these regulatory bodies and the resulting payments made by the banks suggest that a resolution is possible. However, the growing debt and increasing reliance on USSD services underscore the need for better financial agreements and policies between these sectors moving forward.
The 50% tariff increase for telecom operators approved by the NCC is a step in the right direction for stabilizing the telecom industry. This tariff increase, while controversial, aims to ensure that telecom operators are adequately compensated for their role in providing critical services like USSD. These adjustments reflect an effort to balance the economic realities of telecom operators with the broader goal of financial inclusion.
USSD codes are no longer just about convenience; they have become a lifeline for many Nigerians. The challenge now is to ensure that all stakeholdersāfrom banks and telecom operators to regulatorsāwork collaboratively to maintain the integrity and accessibility of this vital service.
In conclusion, while progress is being made in settling the USSD debt dispute, this issue underscores the importance of ongoing dialogue and the need for sustainable financial agreements in the Nigerian telecom and banking sectors. As these efforts continue, the broader implications for financial inclusion, especially in rural areas, will be crucial in shaping the future of mobile banking in Nigeria.
References:
Reported By: https://www.legit.ng/business-economy/technology/1638661-telecom-operators-provide-fresh-update-banks-ussd-debt-payments/
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