USSD Transactions in Nigeria Surge in First Half of 2024 Amid Ongoing Debt Challenges
According to the Central Bank of Nigeria‘s recent electronic payment statistics, Unstructured Supplementary Service Data (USSD) codes facilitated an impressive 252.06 million transactions worth N2.19 trillion between January and June 2024. This figure marks a significant advancement compared to the full-year data for 2023, which recorded N4.84 trillion across 630.6 million transactions.
The N2.19 trillion recorded in the first half of 2024 accounts for 45.3% of the total value of USSD transactions from the previous year and represents 40% of the overall transaction volume. Originally designed by telecom providers for the purpose of selling airtime and subscriptions, USSD has garnered considerable traction in the banking sector due to its accessibility, requiring no internet connection.
The impact of USSD codes is particularly pronounced in Nigeria’s financial inclusion strategy, offering quick and efficient transaction options for users lacking reliable internet access, a common situation in rural regions.
However, this transaction method faces significant challenges, including an outstanding debt exceeding N250 billion, an issue that has persisted for the past six years. Despite attempts to address the problem through interventions from the Central Bank of Nigeria, under the leadership of Godwin Emefiele, and former Minister of Communications, Isa Pantami, a durable solution has yet to be found.
Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), expressed concern that banks have been profiting from USSD services without meeting their financial obligations over this extended period. Recent reports suggest there has been some progress, with smaller banks starting to pay down portions of the N250 billion debt tied to USSD services. However, major tier-one banks, responsible for a substantial portion of the outstanding balance, have not made significant headway in repayments.
While some repayments have been noted, the amounts received have not met expectations. Despite these ongoing issues, USSD continues to be a vital transaction channel amidst various challenges, and the growth of alternative electronic payment methods is also noteworthy. For instance, Automated Teller Machine (ATM) transactions have soared, with N12.21 trillion transacted through 496.44 million transactions in the first half of 2024. Additionally, there has been a marked increase in Point-of-Sale (POS) transactions, highlighting Nigeria’s ongoing transition towards cashless payment solutions.
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