While banks and telecoms operators in other developing countries have continued to introduce incentives to encourage customers to drive financial inclusion, the same players in Nigeria are introducing charges that are not favourable to poor income earners, thereby further threatening Nigeria’s hope of achieving over 50 percent financial inclusion in the nearest future.
Subscribers of telecommunication services in Nigeria have lamented that the new Unstructured Supplementary Service Data (USSD) service charge of N6.98 is exorbitant.
The subscribers stressed that the unresolved dispute between the banks and the telecom operators should not be resolved by taxing subscribers.
This follows after the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) announced that USSD services for financial transactions would be charged at N6.98 per transaction.
Deolu Ogunbanjo, president, National Association of Telecoms Subscribers of Nigeria, described the charge as a step back from financial inclusion which the country longs for.
As Africa’s largest economy, Nigeria has the potential to drive consumers toward financial inclusion, yet internal strife and economic instability have made progress uncertain.
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Six in 10 Nigerians (60 percent) live below the poverty line, with research showing that being poor, rural and less educated are all barriers to inclusion. Today, banking leads the way to financial inclusion, with nearly three in 10 adults (29 percent) having bank accounts.
Three in 100 adults (3 percent) have mobile money accounts and the same numbers (3 percent) have nonbank financial accounts.
After committing to the Maya Declaration, the Nigerian government launched the National Financial Inclusion Strategy in 2012 to reduce the financially excluded to 20 percent by 2020.
Experts say that while this goal is ambitious, the strategy may never see the light of day considering the recent obnoxious USSD service charges.
In a recent interview, Ogunbanjo described the USSD service charges as unacceptable, saying that such a burden should not be placed on subscribers.
“Everything in telecoms that’s meant to put a smile on subscribers’ faces is now being eroded,” he said.
In the same vain, the Association of Telephone, Cable TV and Internet Subscribers also condemned the new USSD service charge. Sina Bilesanmi, its national president, reiterated that the charge was unacceptable and must be rejected by every bank account holder.
“It is exploitative and this act must stop forthwith. I am amazed that the same CBN that was initially opposed to the unjustified increase in USSD service charge in 2019 now made the announcement of the hike,” Bilesanmi said.
“The Central Bank of Nigeria and telecommunication companies must do something to revert to the previous rate.”
The development could be attributed to threats by banks to withdraw the USSD services rendered to telco subscribers due to an outstanding debt of over N42 billion.
Several meetings held among MTN, commercial banks and FinTechs to agree on longer-term pricing structures on USSD services haven’t yielded results.
Funso Aina, spokesperson of telco giant who confirmed this in a statement, said MTN stated that the streamlining it undertook is international standard and best practice as scale is built along distribution channels.
A product manager at a Nigerian bank who craved anonymity said the new fees will discourage people from using the USSD service as poor Nigerians are still struggling to pay other bills and this will affect financial inclusion.
Our suggestion is that the CBN and NCC should prevail on the mobile network operators to reverse the USSD rate downward or provide an alternative cheaper channel for mobile financial transactions for Nigerians.
