*The Mobile Network Operators, under the aegis of the Association of Licensed Telecoms Operators of Nigeria, petition the West African country’s telecoms sector regulator to disconnect banks from their USSD transactions platform over more than N80 billion debt overhang

Gbenga Kayode | 绿帽献妻

The considerable gains and landmark contribution of the Telecoms and聽 Information Communications Technology (ICT) sector to the Nigerian economy may soon witness a noticeable decline, if the network providers activate their expressed threat of disconnecting banks and other financial institutions from the Unstructured Supplementary Service Data (USSD) services over more than N80 billion debt owed the Telcos.

The Nigerian Government and sundry industry stakeholders in the West African country’s digital ecosystem have acknowledged that the Telecoms/ICT industry had recorded a substantial contribution to the economy in regard to improved Broadband connectivity/penetration, entrenchment of digital culture among Nigerian consumers, enhanced Quality of Service (QoS), and 18.44 percent contribution to the Gross Domestic Product (GDP) as of Third Quarter (Q3) 2022.

Engr. Gbenga Adebayo, President of ALTON

绿帽献妻 reports the telecommunications operators seem to have exhausted their patience with the Nigerian banks, as they reportedly approached the Nigerian Communications Commission (NCC), as the industry foremost regulator, for approval to terminate the USSD being offered to banks due to over N80 billion unsettled bills.

RELATED Indebtedness: Nigerian Telcos To Withdraw Banks鈥� USSD Services 聽鈹�ALTON

USSD can be used for wireless application protocol browsing, prepaid callback service, mobile money services, location-based content services, menu-based information services, or even as part of configuring the phone on the network, among others.

READ ALSO Digital Economy: Buhari Applauds 5G Spectrum Auctions, Restates Commitment To Expanding ICT Infrastructure

Engr. Gbenga Adebayo, President of the Association of Licensed Telecoms Operators of Nigeria (ALTON), in an interview aired on Channels TV Thursday, December 29, 2022, again said that the operators had sought regulatory approval to implement partial removal of the USSD services extended聽 to banks over the debt overhang.

Rationale for Telcos’ move

According to ALTON, as business entities struggling with operational challenges in the digital ecosystem in Nigeria, the burning issues in the significant industry are not limited to settlement of the banks’ USSD debt alone.

READ ALSO Telecoms & ICT: ATCON鈥檚 virtual stakeholder engagement on Broadband Plan 2020鈹�2025 holds March

It was learnt the Telcos had invested about N250 billion in building the infrastructure, and the USSD fee they are charging is a way to recoup some of the expenses, and not necessarily a push to make a profit.

Adebayo clarified that on the debts, the Telcos have extant “instruments of understanding” with the Chief Executive Officers (CEOs) of the financial institutions regarding debt recovery and settlement.

He, however, disclosed the failure of several banks to offset their debts has compelled the ALTON members to consider outright withdrawal of telecoms and associated services.

READ ALSO: Nigerian Consumers React Over N6.98K Per USSD Transaction Session

Adebayo as well stressed the far-reaching implications of the Telcos’ move to disconnect banks from their services on the expected progressive activation of the Nigeria Digital Economy.

He further urged the government at all levels to continue to regard telecoms equipment as the “critical digital infrastructure”.

READ ALSO USSD/N42billion Debt: We Don鈥檛 Owe MTN Nigeria, Other Telcos 鈹�Banks

He also called for more regulatory intervention, security of telecoms infrastructure, including practical solutions to the disturbing menace of theft of diesel, power generators and batteries at base stations, all of which he stated have continued to affect the QoS to telecoms consumers.

Mode of disconnecting banks from USSD services, if….

Adebayo in the interview, again, emphasised that the disconnection of banks from USSD services would be done in batches, beginning with the highest debtor immediately after the network providers get NCC’s approval in this regard.

The ALTON Chief also affirmed that “we have sought regulatory approval to pursue partial removal.

“We would start disconnecting those who owe us in batches, a highest debtor scenario.

“We don鈥檛 know as regards the timing because we are required to get approval before acting.”

READ ALSO: ATCON Organises Forum To Address Telecom/ICT Stakeholders鈥� Needs In Nigeria鈥檚 Digital Economy

He noted: “But we would certainly commence the process once it is approved.

“The amount is over N80 billion, it is not yet up to N90 billion, but it is up to that.鈥�

Service providers consider legal action against indebted banks

It is recalled the members of the Association for Telecommunications Companies in Nigeria, late September 2022, had said they would consider a lawsuit as part of continued efforts at recover an accumulated debt of over N80 billion banks owe them.

In respect of the option, the Association of Telecommunications Companies of Nigeria (ATCON) reportedly resolved to align with ALTON, in regard to the latter’s threat to withdraw the USSD services they offer to banks because of the debt.

READ ALSO: CBN, NCC Announce Banks鈥� Customers To Pay N6.98k Per USSD Transaction

Engr. Adebayo, President of ALTON, was quoted to have stated: 鈥淲hen the matter first came to the fore about a year-and-a-half ago, the debt was below N40 billion.

鈥淏ut because they refused to comply and pay as and when due, the debt continued to rise.

“Today, it is about N80 billion.鈥�

On why the legal option to retrieve their money from the banks, the telecoms operators affirmed that the legal path had become necessary because the Central Bank of Nigeria (CBN), the banking and financial services regulator, had failed to ensure that banks complied with the payment.

RELATED: NCC Revises USSD Pricing To Protect Consumers

The USSD imbroglio started October 20, 2019, when MTN Nigeria sent a text message to its subscribers, informing them of plans to charge N4.00 for every 20 seconds of USSD transactions.

A few partner banks picked up the message and pushed it to their customers.

Report indicated that almost immediately, bank customers expressed their disappointment at the charge, which many classified as 鈥榠nsensitive鈥� and an extra burden in addition to the many bank charges to which they are subjected.

CBN’s reaction to MTN’s action

Mr. Emefiele, Governor of CBN, who was attending a conference in far-away Washington, D.C., in the United States (US), at the time was forced to issue a statement condemning MTN鈥檚 plan, which would not be allowed to happen.

RELATED Special Feature: Telecoms Tariff Increments, Regulatory Affairs And Consumer Protection

Emefiele also disclosed that the Bankers’ Bank had in a meeting 鈥� sometime, in May 2019, with some telecommunications companies and big banks 鈥渁greed鈥� that the use of USSD was a 鈥渟unk cost鈥�.

A sunk cost has been described as an additional cost on the infrastructure of the telecoms company.

The CBN Chief stated: 鈥淏ut the telecoms companies disagreed with us.

鈥淭hey said it was an additional investment in infrastructure, and for that reason, they needed to impose it.鈥�

According to Emefiele, the big banks and Telcos were later asked to evolve an option since imposing charges on consumers was not an option for the banking sector regulator.

The CBN also said the objective of making USSD services as seamless and affordable as possible is because of financial inclusion in the Nigerian ecosystem.

NCC’s regulatory intervention

The Nigerian Communications Commission later issued a revised guideline, which put the new USSD fee to N6.98, effective from August 2020.

Sequel to the review, the telecoms regulatory Commission noted that the Telcos were being owed N17 billion by banks at the time.

RELATED: Danbatta Restates NCC鈥檚 Commitment To Broadband, Consumer Protection, Digital Economy

It was later the Telcos threatened to switch off support for USSD transactions, if they were not paid the debt, which had grown to N42 billion.

Incidentally, because of the network providers’ threat, the banks agreed to henceforth remit N6.98 per USSD transaction to Telcos, a development that averted the switching off of USSD at the time.

Ministerial intervention and efforts at resolving Telcos-banks’ debt palaver

绿帽献妻 had reported that the Nigerian Deposit Money Banks (DMBs) and telecoms operators have been at odds since 2019 over non-remittance of USSD fees.

It is recalled that the Telcos, in 2019, declared they could no longer provide the services for free, and proposed to take a cut of N4.50k per 20 seconds from the charges bank customers pay.

Nonetheless, the banks did not agree to the proposal, alleging that it would raise costs by 450 percent.

Still, in March 2021, telecoms operators, once more, threatened to suspend the USSD services over N42billion accumulated debt by banks at the time, before it increased to current N80 billion, leading to the intervention of Prof. Isa Ali Pantami, Honourable Minister for Communications and Digital Economy.

The Minister was reported to have written to Mr. Emefiele, Governor of the Central Bank of Nigeria, with a view to halting the impending danger of the disagreement over the debt issue.

Pantami had noted the need for banks to pay up the N42 billion accumulated debt, or risk suspension of the USSD platform.

Why banks should pay USSD transaction debt: ATCON

Mr. Ajibola Olude, Chief Operating Officer (COO) of ATCON, though acknowledged that while some banks had complied with the agreement and remitted the money to the Telcos, there remain several banks that have refused to remit the money till this day, Business Day report said.

Olude said: 鈥淚t seems that the money that was collected is being declared as profits by the banks.

“That鈥檚 what caused the money not to be remitted and customers are paying this money.”

Implications of USSD disconnection on digital inclusion, consumer experience

As part of obvious adverse effects of disconnecting banks from the USSD services, industry experts have said the phase out would not only affect telecoms and financial services consumers but also constitute a setback for the digital inclusion drive in Nigeria with regard to sustainability of the country’s digital ecosystem.

More so, the number of digitally-excluded Nigerian consumers dropped from 40 million to 15 million people 2021, as communities in the country without digital access also dropped from 217 to 112, according to report.

The NCC’s avowed set target of attaining 70 percent Broadband penetration and/or digital inclusion by 2025, in line with the National Broadband Plan, may be negatively affected as well.

Thus as a payment channel, USSD is considered critical because consumers can conduct transactions without Internet connection, a situation which many yet consider ideal for millions of Nigerians in far-flung regions where Broadband infrastructure is either non-existent or very poor in the country as of now.

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