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2025-01-14
In a significant move that could disrupt Nigeria’s financial ecosystem, major telecommunication companies, including MTN and Airtel, have announced plans to disconnect the Unstructured Supplementary Service Data (USSD) codes of 18 banks. This decision comes as a result of a staggering N250 billion debt owed by these banks to the telcos. The Nigerian Communications Commission (NCC) has reportedly given the green light for the disconnection, which is set to take effect in two weeks. This development threatens to impact millions of bank customers who rely on USSD for seamless financial transactions, especially in areas with limited internet access.
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1. Telecommunication companies are set to disconnect USSD services for 18 banks due to a N250 billion debt.
2. The debt stems from unresolved agreements between banks, the Central Bank of Nigeria (CBN), and the NCC.
3. USSD transactions, valued at N1.19 trillion in the first half of 2024, are at risk of being suspended.
4. The disconnection could hinder Nigeria’s financial inclusion goals, as USSD is widely used by feature phone users and in areas with low internet penetration.
5. The NCC has directed telcos to proceed with the disconnection, with a formal statement expected soon.
6. Only four banks have reportedly paid their dues, while others face suspension in two weeks.
7. USSD transactions have already declined by 54.75% in volume and value compared to 2023.
8. Banks charge N6.98 per USSD transaction but have failed to remit these fees to telcos.
9. The dispute over payment methods has strained relationships between banks and telecom operators.
10. With 231.1 million active bank accounts in Nigeria, the suspension could significantly disrupt banking services.
What Undercode Say:
The impending disconnection of USSD services by telecommunication companies highlights a critical rift between Nigeria’s banking and telecom sectors. This development is not just a financial dispute but a potential crisis for the country’s digital economy and financial inclusion efforts.
The Financial Inclusion Threat
USSD has been a cornerstone of Nigeria’s financial inclusion strategy, enabling millions of unbanked and underbanked individuals to access financial services. With over 231.1 million active bank accounts and a significant portion relying on USSD for transactions, the suspension could reverse years of progress. The service is particularly vital in rural areas where internet connectivity is poor, and feature phones are prevalent.
The Debt Dilemma
The N250 billion debt has been a long-standing issue, with banks and telcos failing to reach a consensus on payment structures. While banks charge customers N6.98 per USSD transaction, their failure to remit these fees to telcos has created a financial impasse. This disagreement underscores the need for clearer regulatory frameworks and accountability mechanisms to prevent such disputes in the future.
Economic Implications
The decline in USSD transactions—already down by 54.75% in value and volume—reflects the growing strain on this service. If the disconnection proceeds, it could lead to a further drop in digital transactions, impacting businesses, individuals, and the overall economy. The CBN’s data shows that USSD transactions accounted for 45.3% of the total transaction value in 2023, highlighting its importance in Nigeria’s financial ecosystem.
Regulatory Intervention
The NCC’s involvement in this matter is crucial. While the commission has approved the disconnection, it must also play a mediating role to ensure that both sectors can coexist without disrupting services. A formal statement from the NCC is expected soon, which could provide clarity on the way forward.
The Way Forward
To avert a full-blown crisis, stakeholders must prioritize dialogue and collaboration. Banks need to honor their financial obligations, while telcos should consider flexible payment plans to ease the burden. Additionally, the CBN and NCC should establish stricter guidelines to prevent similar issues in the future.
Conclusion
The disconnection of USSD services is a wake-up call for Nigeria’s financial and telecom sectors. It underscores the need for stronger partnerships, transparent agreements, and regulatory oversight to sustain the country’s digital transformation. As the two-week deadline approaches, the fate of millions of bank customers hangs in the balance, making it imperative for all parties to act swiftly and responsibly.
References:
Reported By: Legit.ng
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