One of my earliest memories of a money fight was one between an alajo (thrift collector) and a borrower. The debtor was screaming at the top of his voice, ‘na money I borrow I no kill person.’ Then he added a clincher, ‘after all Nigeria self dey owe.’ It took the intervention of the Baba Oloja at that time to resolve the issue. The Baba Oloja’s intervention saved the day, prevented a fracas and led to the resolution.
Nigerians are notorious when it comes to defaulting on debt. It doesn’t matter whether as individuals or corporate entities, the bulk of us struggle with paying off debt.
This is precisely why the failure of Deposit Money Banks (DMBs) to pay the debt owed to Mobile Network Operators (MNOs) for Unstructured Supplementary Service Data (USSD) services is not a big surprise. Na our way. Sources say the debt has now exceeded 120 billion. Clearly, Nigerian banks are Nigerians.
Now, the USSD is a communication protocol used by MNOs (telcos) to provide services to their subscribers. It allows users to interact with various services by dialing specific codes on their mobile phones. USSD codes are typically used for activities like checking account balances, transferring funds, or subscribing to mobile services.
Typically, banks utilize USSD services provided by telcos to offer mobile banking services to their customers. This usually involves a partnership or agreement between the bank and the telcos, where the bank pays a fee to the telco for the use of their USSD infrastructure and services. These fees are typically charged based on the volume of USSD transactions or other agreed-upon metrics.
Many times, the exact nature of the financial relationship between banks and telcos regarding USSD services can differ. It could involve the telcos charging the bank directly for the USSD services, or it could be a revenue-sharing arrangement where the telco receives a portion of the transaction fees or service charges paid by the bank’s customers.
Because it is a human agreement, occasionally, there may be disputes or issues related to the USSD debt between banks and telcos. These disputes can arise due to disagreements over transaction volumes, service charges, revenue sharing, or other financial aspects of the partnership. Such disputes are typically resolved through negotiations, dispute resolution or, if necessary, legal channels.
In Nigeria, the banks and telcos have had drawn-out disagreements concerning the appropriate USSD pricing model for financial transactions, transparency of charges, mode of collection and liability for payment of the outstanding and continuous service fees due to the telcos.
It would be recalled that due to the inability of banks to reach an agreement with the service providers concerning the issues, telcos in 2021 sought to disconnect them for the unpaid debts which stood at N42 Billion at that time. However, Prof. Isa Pantami, the Minister of Communication and Digital Economy intervened and asked the MNOs not to disconnect the banks as the action will negatively impact the Digital and Financial Inclusion policy of the Federal Government.
Two years later the issues remain. But this lopsided system cannot be sustained indefinitely. Something must give or the system will collapse.
There are questions that we must seek to answer. What sort of agreement did the banks and telcos have in setting up the service? What are the terms and conditions of the USSD service provision? Does it define roles, responsibilities, service-level expectations, and financial arrangements? What are the performance tracking indicators, success rates, response times, and overall service availability?
What of dispute resolution? What sort of resolution mechanisms are embedded in the partnership agreement? How often do they conduct reviews and audits of the USSD services and associated financial arrangements to ensure compliance, identify areas for improvement, and prevent any potential discrepancies or disagreements? How often?
What is the regulators’ role in all this controversy? Has the Central Bank of Nigeria (CBN) done anything to address the issue or towards resolving the problem?
Unfortunately, the controversy is now set to enter crisis level.
Engr. Gbenga Adebayo, Chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), last week revealed that the Nigerian Communications Commission (NCC) has approved for its members (telcos) to disconnect debtor banks if they fail to pay the debt owed them for USSD services.
He disclosed that the approval was granted because, despite multiparty stakeholder efforts to resolve the situation and prevent any impact on services, the banks have continued to grow the debt without any efforts at reversing the trend.
With the approval for disconnection, the stage is now set for a battle royale. The trouble is that when two elephants fight, it is the grass that suffers. If the telcos and banks decide to wear boxing gloves, the bank customers will bear the brunt of the avoidable crisis.
But it shouldn’t be. The banks collect the monies for these transactions, why is it reluctant to pay out? We, bank customers, know how promptly the banks collect the money, So, why are they reluctant to pay the service providers?
If telcos say that the banks are owing over N120 billion, it means that the banks have naturally gained a similar sum or maybe more. Is there something that is not being said? What prevents the banks from paying?
Can the banks be compelled to pay? Is the National Assembly aware of this face-off? What are they doing about it? Is the Presidency too busy with handover arrangements to wade into this matter?
If the telcos pull the plug, will it force everyone to wake up and act? Has anyone calculated what would happen to the economy and possible impacts on GDP?
These days, while everyone talks of corporate governance few understand the import or significance. It, essentially, means doing the right it. Can the banks say that they are doing the right thing here? Or is corporate governance just talk and no action?
Resolving the matter at this stage requires intervention. There are no two ways about it. The CBN, the National Assembly and the Presidency must step up to the plate. They must intervene.
Much like the Baba Oloja had to intervene to prevent a physical fight and establish a repayment plan for the borrower, the government must now step up and intervene in the USSD imbroglio. Other well-meaning Nigerians can also lend their voices here before the dam bursts.
Undoubtedly, maintaining the USSD service delivery between banks and telcos requires establishing clear communication, setting mutual expectations, and maintaining a collaborative relationship. All these must be settled during the intervention.
To the banks, I say, it is time to change the narrative, accept responsibility and pay what you owe.
Elvis Eromosele, a Corporate Communication professional and public affairs analyst lives in Lagos.