USSD or Mobile Banking: which is Nigeria’s path to financial inclusion?

The past few weeks have busted some of the big assumptions we’ve made about financial inclusion. 

In 2005, expectations were high on the Central Bank of Nigeria’s (CBN) bet that Microfinance banks (MFBs) would be the vehicle for bringing banking services closer to the financially vulnerable. 18 years later, CBN’s mass suspension of 179 MFBs (~20% of MFBs) in May confirms many have fallen far from this objective. 

Another interesting debate concerns the digital rails banks use to deliver banking services to the financially excluded. With banks and telcos at loggerheads over who pays USSD fees, some bank execs propose junking USSD and doubling down on reaching the financially excluded directly via their mobile banking applications. (Note: (USSD stands for Unstructured Supplementary Service Data or quick short-codes like GTBank’s *737#)

Whatever decision banks make will significantly affect close to 17 million Nigerians who could be cut off from banking services if telcos disconnect banks from their USSD platforms. In today’s article, I’ll deal with the latter debate by highlighting some practical implications of a USSD vs a mobile app-led distribution model on financial inclusion.

USSD is clumsy

During a recent company presentation, GTCO's CEO, Mr. Segun Agbaje, made statements that have captured the attention of both industry insiders and the general public.

According to multiple news sources, he asserted that USSD was a clumsy technology and proposed an alternative path to achieving financial inclusion. Mr. Agbaje reportedly suggested that crashing the cost of data could