Nigerian Mobile Companies Block Banks From Text Service Over Unpaid Bill

Nigerian mobile companies are reportedly halting text services to banks over a $259 million bill.

The firms are set to disconnect the Unstructured Supplementary Service Data with banks Gbenga Adebayo, chairman of the Association of Licensed Telecommunications Operators of Nigeria told Bloomberg News Monday (May 15).

According to the Bloomberg report, Nigeria’s mobile network providers and banks have been at odds for two years over the pricing model for certain transactions.

“We have engaged them severally but they refuse to do anything,” Adebayo said. “If we withdraw the service and they feel the impact, maybe they will come to find a way to resolve it.”

The report says that Herbert Wigwe, chief executive officer for Access Corp. and head of the group negotiating with the telecom companies, has previously disputed claims that banks owe money to the phone companies.

Bloomberg noted that the service is vital to Nigeria’s poorer residents in a country where more than a third of the population doesn’t have bank accounts.

The impasse between banks and mobile companies is happening amid a number of sweeping changes to Nigeria’s financial system.

For example, the country — the largest in Africa — in March adopted open banking, becoming the first nation on the continent to do so.

“Although the adoption of traditional banking services is lagging in emerging markets like Nigeria, mobile money is hugely popular and used by millions to send money to peers, make purchases, apply for loans and pay bills, all from money stored in a bank-style account linked to their mobile phone,” PYMNTS wrote at the time.

Against this backdrop, open banking takes on a different flavor in these markets, where a greater emphasis is placed on access to open APIs that allow the integration of mobile money networks and financial institutions.

And last month, PYMNTS spoke with Yele Oyekola, CEO and co-founder at Lagos-based B2B FinTech company Duplo, who said Nigeria’s ban on cash withdrawals from government accounts, as the country attempts to digitize its economy, has been a “massive hindrance” to the growth of business-to-business (B2B) payments.

“[The government and central bank] didn’t take their time — we just went from zero to a hundred. They didn’t give citizens enough time to adjust to the sudden change, which has now had a negative effect on payments entirely,” Oyekola told PYMNTS.

The hard line on cash transactions, which includes strict limits on cash withdrawals at ATMs, came on the heels of a Central Bank of Nigeria (CBN) currency redesign policy launched earlier this year to control inflation and preventing people from hoarding cash — including over 23 trillion naira (about $50 million) in circulation that was not captured by the banks, per Oyekola — for illicit purposes.