NCC to name banks owing ₦200bn USSD debt

The Nigerian Communications Commission (NCC) is set to release the names of 18 banks this week that have not paid their debts for using the USSD platforms of Mobile Network Operators (MNOs). These banks collectively owe a significant sum of ₦200 billion. In response, the NCC is preparing to take necessary actions, which may include suspending USSD services for these defaulting banks.

According to reliable sources, only four banks have complied with the payment requirements outlined in a joint directive issued by the Central Bank of Nigeria (CBN) and the NCC in December 2023. The directive instructed the banks to pay 60% of their outstanding pre-API invoices by January 2, 2025, and to agree on payment plans with MNOs. However, the majority of banks have not yet fulfilled these obligations.

Pre-API invoices refer to the unpaid charges for USSD services incurred before the implementation of Application Programming Interfaces (APIs) in February 2022. Prior to the adoption of APIs, USSD transactions were processed using older and sometimes less standardized methods, which frequently led to disputes between banks and telecom companies over billing and payment.

The proposed suspension of services, which is expected to take effect within two weeks, could have a significant impact on Nigerians who rely on USSD services for banking, especially those without internet access. To mitigate the disruption, the NCC’s upcoming statement will provide guidelines for customers, allowing them to switch to other banks and maintain uninterrupted access to banking services.

The decision by the NCC to publicly name the banks that have defaulted on payments is part of its ongoing efforts to resolve the long-standing debt issues between banks and telecom operators. These unpaid debts have been a contentious issue for several years, with telecom operators expressing concerns about the sustainability of USSD services and even warning that they might withdraw the service entirely.

Despite the growing pressure on banks to settle their debts, many have been slow to prioritize payments, though telecom operators have refrained from suspending services due to the crucial role USSD plays in the country’s economy. According to the CBN’s electronic payment statistics, between January and June 2024, USSD transactions amounted to ₦2.19 trillion across 252.06 million transactions, a significant increase compared to the previous year.

Originally developed by telecom companies for providing airtime and subscription services, USSD has become widely used in the banking sector due to its ability to function without an internet connection. This has made it particularly valuable for individuals in rural areas or those without reliable access to the internet.

In November, Gbenga Adebayo, the Chairman of the Association of Licensed Telecom Operators of Nigeria, mentioned that smaller banks had started making payments toward the debt. However, he noted that larger banks, which are responsible for a significant portion of the debt, have yet to make substantial payments. Adebayo emphasized the need for intervention from the CBN and NCC to resolve the issue, as the large banks’ lack of payments is holding up progress.

In a related development, telecom consultant Ejike Onyeaso expressed frustration over the inadequate payments banks have made for leased lines used for services like USSD. He pointed out that banks generate substantial revenue from these services and should, therefore, compensate telecom operators accordingly. Onyeaso also warned that if telecom providers acted on their threats to suspend USSD services, it could lead to major disruptions in banking operations across the country.