The debt owed by Deposit Money Banks (DMBs) in Nigeria to network providers has increased to N120 billion as of May 2023, as banks failed to remit Unstructured Supplementary Service Data (USSD) charges.
In 2019, the debt stood at N17 billion, but it grew to N42 billion in 2021. Two years later, the banks owe the telecommunications company N120 billion.
Note that the USSD charge is for the usage of bank shortcodes to access financial services offered by banks. MTN Nigeria, Airtel Africa, and other telecom companies receive a commission for providing the USSD platform used by bank account holders.
Stakeholders in the telecoms market have laid the blame at the feet of the Minister of Communications and Digital Economy, Isa Pantami, stating that his decision to suspend the direct billing on customers’ airtime initiated by the Nigerian Communications Commission (NCC) in 2019, resulted to rise in debt.
The end-user billing was expected to end the rising USSD debt, as the banks will no longer charge on behalf of the telcos, but Pantami reversed to banks directly charging customers, placing a flat fee of N6.98k per transaction on USSD, to be shared by both parties.
“This is what happens when you mix regulation with policy making. If the Minister had allowed the NCC to implement its Price Determinant on the use of USSD, we would not be talking about N120 billion debt by now.
“The Minister’s role is to formulate policy for the good of the industry, not to dabble into regulation, which is the mandate of the NCC. The regulator should have been allowed to address the issue in the best interest of the industry. It is now obvious that the Minister had failed in this regard and the industry will not forget even after his exit,” a telecom stakeholder who spoke on condition of anonymity told Nairametrics.
Due to the significant rise in the USSD debt, Pantami called for a meeting scheduled for May 11, 2023, with network providers, banks NCC, and the Central Bank of Nigeria (CBN), but the meeting was ignored by CBN Governor, Godwin Emefiele.
As a result, Pantami wrote to the CBN governor, informing the financial regulator that the absence of Emefiele or CBN representatives was a blow to the meeting, as their presence would have helped in finding a solution to the growing debt.
Consequently, Pantami told the CBN that he has approved the disconnection of banks indebted to telcos if they failed to pay up by May 12, 2023.
“I am sure you will agree with me that this level of debt is not sustainable and non-cooperation by DMBS, especially considering the pivotal role of the telecommunications infrastructure in the implementation of the Federal Government’s Cashless Policy and Digital and Financial Inclusion Objectives.
“In the circumstances, please note that unless the DMBS settle the outstanding financial obligations to MNOs for the USSD services, I have directed the NCC to approve the MNOs’ request for the withdrawal of all USSD services to the indebted DMBs effective 7 pm, May 12, 2023, until the said outstanding debt is fully settled,” the Minister said in his letter to Emefiele.
The Acting Director of CBN Corporate Communication, Abdulmumin Isa, said Emefiele is working to resolve the dispute and has called for a meeting between the affected parties.