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Banking Sector

Banks USSD Debts to Telcos Hit N47 Billion

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The total debts owed by banks to telecommunications service providers arising from the use of Unstructured Supplementary Service Data (USSD) have risen from N42 billion to N47billion.

USSD is a Global System for Mobile Communications (GSM) protocol that is used to send text messages. USSD is similar to Short Message Service (SMS) but in the banking industry, allows users without a smartphone or data and internet connection to do mobile banking through the use of codes. USSD-based mobile banking can be used for fund transfers, checking account balance, generating bank statement, among other uses.

The huge debts came as a result of deductions made by way of commission by the banks during the course of banking transactions but were never remitted to the telecoms operators that own the infrastructure on which the transactions rode.

An industry source, who spoke on condition of anonymity, lamented the helplessness of the operators to take a decisive action on the issue.

“The debts have grown sharply from N42 billion to N47 billion and it will continue to grow because bank customers will continue to use our platform to carry out convenient banking services. The impact of the N47 billion debt on the industry is significant, especially now that private and public organisations are counting the cost of the COVID-19 pandemic,” the source said.

According to the source, banks are emboldened by the support they are getting from the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, adding that it is that support that has bred impunity.

“Unfortunately, after the last spat we had the Minister of Communications and Digital Economy, Dr Ibrahim Pantami, Emefiele, the banks CEOs and the MNOs met to settle the matter. The resolution was that the status quo ante be retained.This regulatory intervention has tied the hands of the MNOs because they would not want to be seen as being recalcitrant. The MNOs wish they too could get the type of support the banks are getting,” the source added.

Early last month, the banks denied being indebted to MTN Nigeria and other MNOs for using telecommunication platforms to provide payment services.

“There is no such thing as an obligation due from banks to telcos. We chose not to make a public statement out of it because it is not appropriate for us to be found fighting with telcos in public,” Chief Executive Officer of Access Bank Plc, Herbert Wigwe, had said on an investor call in Lagos.

Wigwe is the head of a team of bank CEOs that has been in discussion with MTN Nigeria to resolve a dispute that led some banks to cut off the company from their banking platforms last week. This was after MTN, the West African nation’s biggest telecom services provider, reduced a commission charged on airtime purchases through banking channels by almost half to 2.5 per cent.

The Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, had maintained that at a meeting with CBN and the Nigerian Communications Commission (NCC) terms of the settlement had been discussed and would be agreed in an MoU with both regulators.

“We also don’t want to join issues with the banks but the fact remains that the banks used the USSD channels over more than a year without paying and they can’t deny that the USSD channels services were not made available to them by the telcos.

“The banks debited their customers for use of the USSD channels and they did not pay the telcos for the use of the services.

“They cannot enjoy a service and would not pay. Because no service is free. Not even the banking services offered to telcos.”

Adebayo said the debt remained outstanding and the banks have to pay the telcos because it has become a moral burden since the banks used the services, debited their customers’ accounts but refused to pay the telcos.

The ALTON boss said telcos hoped that the regulators (CBN and NCC) having intervened by preventing operators to disconnect the USSD services will resolve the lingering debt issues.

According to him, the banks owed the operators “and they will pay. Otherwise, let us ask them where the money is deducted for USSD services from their customers. You and I know we were charged for USSD transactions, what is the deduction meant for?”

MTN Nigeria had accused the banks of owing it N40.3 billion as at the end of first quarter of the year, according to its financial reports for the first quarter ended March 31, 2021.

MTN Nigeria Chief executive Officer (CEO), Karl Toriola had said: “As at the end of Q1, N40.3 billion was due to MTN Nigeria. In the meantime, we continue to account for USSD revenue on a cash basis.

“We continue to engage with the NCC, Central Bank of Nigeria (CBN) and deposit money banks (DMBs) to conclude the operational modalities for the new pricing framework that has been agreed upon for USSD services. The mechanism for and timing of the recovery of the industry-wide outstanding debts that exist for USSD services provided to the DMBs form part of this process.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Banking Sector

Safaricom, Access Holdings Forge Partnership to Revolutionize Remittance Corridor in Africa

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Safaricom, the leading telecommunications company in Kenya, has entered into a strategic partnership with Access Holdings, spearheaded by Aigboje Aig-Imoukhuede.

The collaboration aims to revolutionize the remittance corridor between East and West Africa, marking a significant step towards enhancing financial inclusion and empowering millions of individuals across the continent.

The partnership comes on the heels of Access Holdings’ recent acquisition of the National Bank of Kenya Limited, signaling the company’s ambitious expansion into the East African market.

Leveraging Safaricom’s extensive network and expertise in mobile money through M-Pesa, which currently dominates the mobile money market in Kenya, the alliance seeks to create seamless and efficient channels for remittance transactions.

Aigboje Aig-Imoukhuede, the driving force behind Access Holdings, expressed enthusiasm about the collaboration, highlighting its potential to transcend traditional boundaries and foster greater economic connectivity between East and West Africa.

He highlighted the fusion of collective expertise and resources between the two entities, underlining their shared commitment to driving financial inclusion and empowerment across the continent.

The partnership holds promise for addressing the challenges faced by millions of Africans in accessing affordable and reliable remittance services.

By connecting more than 60 million customers and 5 million businesses across eight countries, the collaboration aims to facilitate over $1 billion in daily transaction value, significantly boosting the flow of remittances within and outside Africa.

With the first phase of the collaboration focusing on key markets such as Nigeria, Kenya, Ghana, and Tanzania, stakeholders anticipate a transformative impact on the remittance landscape, paving the way for greater intracontinental trade and economic integration in line with the objectives of initiatives like the African Continental Free Trade Area (AfCFTA).

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Banking Sector

EFCC Urged to Repatriate Recoveries to NDIC for Depositors’ Relief

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The Nigeria Deposit Insurance Corporation (NDIC) has made a fervent plea to the Economic and Financial Crimes Commission (EFCC) to expedite the repatriation of recovered funds to its coffers to facilitate the timely reimbursement of depositors affected by bank failures.

During a recent meeting between the Managing Director of NDIC, Bello Hassan, and the Executive Chairman of the EFCC, Ola Olukoyede, at the NDIC headquarters in Abuja, Hassan stressed the importance of enhanced collaboration between the two agencies in recovering depositors’ funds lost due to bank failures.

Hassan emphasized that the return of recoveries made by the EFCC on behalf of the NDIC would significantly contribute to the prompt reimbursement of affected depositors.

He commended the EFCC for its unwavering efforts in combating corruption and financial crimes, highlighting its crucial role as a key member of the Taskforce on Implementation of the Failed Banks Act chaired by the NDIC.

The NDIC boss also highlighted the existing partnership between the two organizations, which led to the establishment of the NDIC Help Desk at the EFCC in 2022.

He disclosed that several high-profile cases referred to the EFCC were currently under investigation.

In response, Olukoyede reiterated the EFCC’s commitment to collaborating closely with the NDIC to combat financial crimes and safeguard the integrity of the Nigerian banking sector.

He pledged to intensify efforts to repatriate recovered funds promptly, acknowledging the interconnectedness between criminal activities and bank failures.

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Banking Sector

FBN Holdings Announces Key Director Appointments

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Femi Otedola

FBN Holdings PLC, a leading financial services group in Nigeria, has disclosed significant appointments within its Board of Directors.

FBN Holdings Plc Appointments:

  1. Mr. Olusola Adeeyo – Non-Executive Director: With an illustrious career spanning over four decades in Corporate Banking, Treasury, Financial Advisory, and transformational leadership, Mr. Olusola Adeeyo brings a wealth of experience to his new role. He is currently the Chairman of Astral Waters Limited, a prominent water bottling and delivery company licensed by NAFDAC. Mr. Adeeyo’s extensive background includes founding management team involvement in building and nurturing Investment Banking & Trust Company Limited (IBTC), now Stanbic IBTC Bank Plc.
  2. Mr. Viswanathan Shankar – Independent Non-Executive Director: With over 44 years of global financial sector experience, Mr. Viswanathan Shankar brings a wealth of expertise to FBN Holdings. He is the Co-founder and CEO of Gateway Partners, a private equity and alternative investments manager focused on dynamic growth markets. Previously, Mr. Shankar served as CEO – Europe, Middle East, Africa, and Americas, and was a member of the global board of Standard Chartered Plc.

First Bank of Nigeria Limited (FirstBank) Appointments:

  1. Mrs. Remilekun Adetola Odunlami – Non-Executive Director: Mrs. Odunlami boasts over 30 years of extensive experience in enterprise risk management, compliance, and general management. She has held leadership positions at CitiBank Nigeria Limited and served as Executive Director, Chief Risk Officer at FirstBank.
  2. Mr. Anil Dua and Mrs. Fatima Ibrahim Ali – Independent Non-Executive Directors: Mr. Dua brings over 50 years of vast experience in portfolio and risk management, while Mrs. Ali has over 15 years of experience in strategic business planning, marketing communications, and socio-economic development.

These appointments underscore FBN Holdings’ commitment to strengthening its governance structure and positioning for sustained growth in Nigeria’s financial.

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