Who is to blame for deluge of bank charges?

By Cheta Nwanze

Let me tell a very short story.

On Monday, October 21, on a radio programme where I sometimes offer informed takes on topical Nigerian issues, I said that it was the chief executives of Nigeria’s banks that had insisted that new charges for Unstructured Supplementary Service Data or USSD transactions be passed to customers (instead of the standard practice where they bore the expense) and offered the telcos a sweetener to ensure that the new charges went through. In my analysis of a news report titled, “CBN opposes MTN over mobile banking transaction access,” I said the Central Bank of Nigeria Governor, Godwin Emefiele was being disingenuous in berating MTN for the proposed USSD price increase.

As always, in the feedback, there were a few people who attacked my person and not my position. I find that sadly typical in our slowly evolving culture of ad hominem attacks. We have also, especially in the last few years, enabled some of our worst instincts. We Nigerians have not exactly shown ourselves to be welcoming of foreign businesses and poor MTN has been a favourite whipping boy of late. The following day, an online newspaper published an exclusive report, complete with a memo from the banks that proved I was right after all.

What we have to understand though is that the banks are not evil. It is simply a matter of incentives. Faced with the prospect of extra charges, they did what most businesses would do and opted to pass the charges to consumers.

Emefiele claimed he had directed all commercial banks and other financial institutions under its regulation to shun the move by the telcos to impose charges on USSD services. The regulator said banks had been directed to move their services to telecom operators that are willing to offer such service at the lowest or zero charges if possible. This is nothing short of plain grandstanding.

This incoherent behaviour brings up the critical issue of regulatory body language. Are our regulators working for the betterment of the Nigerian consumer, or for more subversive forces? I say this because the CBN has been tacking more and more charges to the consumer, lending credence to suspicions that its balance sheet is distinctly unhealthy. For the past two years at least, Nigeria has been in the grip of a fiscal crisis. The can has thus far been kicked down the road – by taking loans at ever-increasing premiums – but even these loans are getting a bit harder to come by, so to stave off the inevitable day of reckoning, more and more stealth taxes are being placed on the man on the street. This USSD situation is cut right out of that playbook.

The problem is, up until now, all the parties involved in the USSD issue have opted to shift responsibility for the charges on banking transactions. It bears repeating, over and over, that we only came to know about the new charge through MTN’s notice to its subscribers, and this is unfortunate. Customers from other network operators were surprised to find out that MTN wasn’t charging its subscribers for the service, which according to these customers, they had been paying long before the MTN notice. This brings up the question of how long these telcos had been ripping off their customers without notice. I think that MTN, because of its history with the current government, opted to err on the side of caution.

Now to the dangers.

The first is that the much-vaunted Operation Cashless has effectively died. In many places, and because of the many new charges introduced by the CBN, various vendors are behaving like some of the telcos and the banks in passing on the burden to the consumer. A few days ago, I wanted to buy petrol when I noticed a sign that warned me of a ¦ 50 charge for the use of the station’s point of sale terminal (POS) terminal. I parked my car and went to the nearest Automated Teller Machine (ATM) to withdraw cash. This kind of development and any other bank charges would be detrimental to the CBN’s financial inclusion effort in transiting Nigeria to a cashless economy. Consumers such as myself last week, are already experiencing a deluge of charges that appears to be accompanying this cashless policy thrust. We are charged for using the POS, ATM, and even settling transactions through our mobile banking apps and the web. The introduction of the new USSD charges is, in my view, the final straw that will defeat the cashless policy. As more people move back to cash, the nefarious and deviant, among others, will return.

Back to the tussle between the banks and the telcos, the real story about the charges, as has been shown, is that the push was aided and abetted by the two regulatory bodies involved – the CBN and the Nigerian Communications Commission (NCC). The only party that behaved well in this entire fiasco was MTN: in trying to inform their users of the new charges.

Rather, unfortunately, our leaders know our mumu button, which is to blame the foreigner, which is why until the memo leaks we saw assorted social media accounts and even a few politicians, blaming MTN for what happened over the USSD issue. Now the memos show where the whole thing really originated from.

The blame talk should not take our mind off what the real story is. Nigeria is in dire financial straits and rather than cutting down on their expenditure, our elite are looking to pass the costs of their hedonistic lifestyles to us, the people.

• Nwanze is lead partner at financial advisory firm.