Banks have continued to deploy technology to ease banking process

Financial accountability has a fighting chance to thrive as home-grown software, Remita drives a culture of probity from the public financial system to the individual level, writes Kunle Aderinokun

Nigeria is ranked the 136th most corrupt country in the world, closely trailing Guinea, Kenya, Uganda, Central African Republic, Congo and DR Congo. Transparency International’s Global Corruption Index for 2015 showed Nigeria still hovering within the range it had maintained on the corruption scale since 2012.

Last year, Nigeria lost a whopping $174 billion to corruption. Even more alarming, a recent report by audit assurance rating company PriceWaterHouseCoopers projects that Nigeria may lose about 37 per cent of its total gross domestic product (GDP) by 2030, if urgent reforms are not carried out in the country’s public and private sector administration. It estimated the cost of corruption per individual at $1,000 in 2014, with the possibility that the figure would increase to almost $2,000 per person by 2030 going by current indices.

When President Muhammadu Buhari assumed office on May 29 last year, he inherited an empty treasury that constrained him from executing developmental projects. He lost no time implementing the Treasury Single Account (TSA) policy instituted by the former President Goodluck Jonathan administration in 2012 without far-reaching effects, since only 217 Ministries, Departments and Agencies (MDAs) complied with the policy.

One year on, the government has identified and closed over 17,000 MDA accounts and transferred the recovered funds to the TSA. Over 900 MDAs and 500 microfinance banks currently comply with the policy. Deposit money banks have also been constrained to diversify their sources of deposit mobilisation rather than rely on these idle funds which yielded interest for faceless individuals and groups while the government was starved of funds.

But analysts argue that the TSA would not have been half as effective without Remita, the payment gateway powering the policy behind the scenes. A McKinsey report for August 2016 justifies the adoption of software such as Remita to drive accountability in the public sector. Tagged ‘Policy in the Data Age: Data Enablement for the Common Good’, the report emphasises that evidence-based governance is the future, and will increase in the run-up to 2020. It explains that this digitalised governance “gives governments the tool they need to be more efficient, effective and transparent; while enabling a significant change in public-policy performance management across the entire spectrum of government activities.”

If e-Governance is the future, some would say Remita is the gateway. Launched in 2006, the software is an electronic platform that helps the government, corporate organisations, SMEs and individuals make and receive payments easily. It aggregates multiple bank accounts, giving customers the ability to perform the complete suite of e-Transactions. With these services, Remita facilitates payment to the government and enables tracking of its finances, and may just be the leverage Nigeria needs to join the comity of nations driving transparency and accountability in their national systems through digitalisation.

Remita is also a catalyst for financial inclusion and domestic growth, being a software that drives digital finance. As if to reinforce this, in its September 2016 report, McKinsey forecasts that “widespread adoption and use of digital finance could increase the Gross Domestic Products (GDP) of all emerging economies by 6 per cent, or a total of $3.7 trillion, by 2025.” It goes on to explain that the additional GDP will generate 95 million new jobs across all sectors of the economy, provide access to 1.6 billion unbanked people, while governments could gain $110 billion yearly by reducing leakages in public spending and tax collection.

As one of the emerging economies, Nigeria is poised to leverage the opportunities associated with this projection. This year’s KPMG FinTech Report says Nigeria is fast becoming a dynamic ecosystem bursting at the seams with opportunities for FinTech start-ups. Currently, less than 50 million people have bank accounts in Nigeria’s population of over 170 million people, 115 million of whom are youthful and use mobile phones for financial transactions.

Not surprisingly, FinTech companies are cashing in to launch products cutting across lending, payment, transfer, purchasing, investing/borrowing and switching. Paga, PayPal, PaywithCapture, QuickTeller, GTMobile, e-Tranzact and Remita are only a handful of the dominant players in Nigeria’s burgeoning FinTech industry. Collectively, they have made financial transactions much easier, eliminating the need for consumers to join long queues in banking halls or restrict their financial transactions to official work hours Mondays through Fridays.

Meanwhile, Remita has gone beyond basic financial services to impact government finance and national bottom lines massively. A case in point was the recent tussle between former Governor of the Central Bank of Nigeria (CBN) and Emir of Kano, Muhammadu Sanusi II, who claimed that the Federal Government had overdrawn its funds in the TSA to the tune of N4.7 trillion. He said this was in violation of the Central Bank Act of 2007 (Section 38.2).

Thankfully, the argument was short due to the system of accountability that Remita has brought to the administration of public funds under the TSA. The records showed that as of December 2, inflows into the TSA stood at N4.4 trillion, out of which government only actually spent N1.913 trillion. This record-keeping was only instituted when Remita was adopted by the government as the payment gateway powering the TSA.

“Corruption thrives in an environment of secrecy, where people believe they can do anything and get away with it,” said SystemSpecs Managing Director, John Obaro, in a recent chat with newsmen. “But when people know that whatever they do can come under the searchlight very easily, that in itself becomes a major deterrent that helps to put some sanity into the system.”

As far as Obaro is concerned, Remita has instilled fiscal discipline that allows government to have control over budget allocations, whilst providing multiple entry points for collections. He argues that the execution of the TSA policy made possible by Remita has significantly reduced government’s debt servicing costs, lowered liquidity reserve needs, and fostered effective use of surplus cash.

Last month, Senior Special Assistant to the President on Trade and Investment, Dr. Jumoke Oduwole, announced the World Bank’s commendation of Remita for driving fiscal accountability through the TSA. At the conclusion of the second Presidential Economic Communications Workshop in Abuja, she emphasised that the World Bank had commended the ease of doing business in Nigeria powered by the duo of Remita and the Corporate Affairs Commission (CAC). This development was not lost on workshop facilitator and renowned economist, Ayo Teriba, who reportedly projected that Nigeria’s business climate would continue turning out high growth projections as Remita accelerates seamless payment processes into the TSA.

For the individual, Remita is also a useful tool. It eliminates the need to log into different bank portals to obtain balances and manually add up totals. It provides users real-time updates of their account balances across banks on a single screen, giving them control over pre-payment and post-payment operations that can be easily integrated with their budgets, invoicing and accounting. With the software, they can pay taxes, levies and tariffs directly to the government without fear of missing deadlines and attracting surcharges that max out their account when they least expect.

In its global report for September, McKinsey argued that digital finance involved more than just unlocking another market for the financial industry. It said the attendant access to basic financial services would drastically scale down inequality, poverty and government corruption, while creating 95 million new jobs.

“Digital payments and electronic records would also save governments about $110 billion a year as money is less likely to go missing on its way to public spending projects or on its way back in tax collection,” the report said.

If President Buhari’s avowed war against corruption is to stand the test of time, analysts advise that his administration align its strategy with these projections in good time. Good enough, digital infrastructure to drive this is already in place and will continue to institute a culture of accountability in the administration of public funds as the onslaught against public corruption continues.