The Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) have issued a directive to banks in the country to pay ₦212.5 billion, which is 85% of the ₦250 billion debt owed to telecom operators for USSD charges, by December 31, 2024. This move comes after years of delays and disputes over USSD payments, which have led to the growing debt.

The December 20 memo, obtained by TechCabal, aims to expedite debt settlement and enforce strict payment timelines. Under the new rules, banks must pay 85% of new invoices within one month of receipt. Additionally, by January 2, 2025, banks and telecom operators must agree on a payment plan to settle 60% of all outstanding invoices before using any telco's USSD platform.

The USSD debt has been a long-standing issue, with banks resisting payment due to concerns over the fairness of the charges and the outdated nature of USSD technology. Segun Agbaje, CEO of GTCO, has been vocal about these concerns, stating, "If you want to charge ₦20 for the service, go ahead. But collect it yourself. Don't come to us." Similar sentiments were expressed by the late Herbert Wigwe, who questioned how telcos determine the fees, arguing that USSD is an outdated technology that will soon become obsolete.

These sentiments, widely shared among Nigerian bank executives, have contributed to the growth of the USSD debt despite previous regulatory efforts. As of November 2024, telecom operators claim banks owe ₦250 billion for USSD services.

Failure to comply with the directive will lead to sanctions, including fines, operational restrictions, or other regulatory actions designed to enforce compliance. However, there are incentives for banks to pay on time. If banks meet specified payment milestones, the NCC will begin the transition to End-user Billing (EUB), where customers – rather than the banks – would directly pay for USSD services. End-user billing is considered the long-term solution to the payment dispute but will only be available to compliant parties.

The directive marks a significant step towards resolving the USSD debt crisis and could have far-reaching implications for the Nigerian telecom industry. As the deadline approaches, it remains to be seen how banks will respond to the directive and whether the debt will be settled in a timely manner.

In the broader context, the USSD debt crisis highlights the need for clearer regulations and more effective communication between stakeholders in the Nigerian telecom industry. As the industry continues to evolve, it is essential that regulatory bodies, banks, and telecom operators work together to find sustainable solutions to these kinds of disputes.