The Managing Director, SystemSpecs, Mr. John Tani Obaro, spoke with Emma Okonji on financial technology trends in Nigeria and how Remita, an electronic payment software, has provided government with data and information to deal with financial imbalance within its system. Excerpts:
Remita is electronic payment software used for making and receiving payments, developed by SystemSpecs and it is currently being used by the federal government for all financial remittances into its Treasury Single Account. What prompted the development of Remita?
Remita was developed some eleven years ago, but before then, we had a software solution called Human Manager, which we developed for the processing of payroll only. The need to automate the payroll process end to end, compelled us into developing the Remita software, to enable organisations that use Human Manager payroll software to do a lot of things simultaneously, beyond just salary payroll, to include payment of taxes, loans, pensions, cooperative deductions, among others. It was designed in such a way that it could address several payment systems from the press of a single button.
So we designed the first phase of Remita to address payments from a single system, to multiple bank accounts for salaries.
After the first phase of development, SystemSpecs took part in pitching for a multinational company and we used Remita for it. It was at that stage we realised the need to develop software that could handle several payment systems, including vendor payment and we went back to the drawing board to add vendor payment to Remita, thereby expanding the features of the software. Today, Remita does beyond salaries and vendor payments system, because we have added financial collections to it. We have also raised the collection process to another level, such that once a customer is signed up on the Remita platform, that customer could receive funds from anybody that has a credit or debit card.
Since the adoption of Remita software by the federal government, to what extent has it been able to block financial leakages within the government circle?
Information is power and one of the ways to control finances is to have information about the finances. That is what Remita was able to make available to all our users. The federal government, for instance, has several ministries, departments and agencies (MDAs) and all of these had over 17,000 bank accounts scattered in various banks, making it difficult for government to know the cash position of all MDAs. But with Remita, government now has good information about the position of government money seated in the Treasury Single Account that is controlled by the Central Bank of Nigeria on behalf of the federal government. So government now has information on the total amount of government money in its account and government also has information of the exact amount belonging to each MDA in the TSA account. The ability to have that information and the ability to disburse funds from the single account, is what Remita is offering, thereby reducing transaction time and creating financial accountability.
We also created a platform for electronic receipts, which means that for every payment made into TSA, there is electronic receipt for such payment, thereby eliminating receipt forgery in every financial transaction. So it has helped government in blocking financial leakages that were hitherto taking place.
So what is the volume of financial leakages that Remita software has saved for government, since its adoption?
I am not in a position to give figures on how much Remita has saved for the federal government, but what we have succeeded in doing is to provide a platform for government that gives government accurate information of all financial transactions within the government circle, just as we have done for some state governments and organisations.
How long did it take SystemSpecs to develop Remita software and what is the percentage of local content embedded in Remita, or is it driven in conjunction with a foreign partner?
Remita is 100 percent ‘Obalende’ developed, that is to say it is 100 per cent local, with no foreign affiliations. It is a product that was developed eleven years ago in Nigeria and we are still building on it to meet various needs of our clients. We listen to our customers, and we think of creative ways to optimise the system and that has brought us to the level that we are today with Remita.
Who are the target audience for Remita software and what percentage of the market segment has not been captured by the software?
SystemSpecs started more like a business to business organisation, and we had the traditional software that we sell to organisations. We also have the Human Manager and Payroll software, which we sell to organisations. So we also sold the first phase of Remita to organisations, cutting across oil and gas, banking, trading organisations, multinationals, small and medium enterprises (SMEs), among others. Later we had the privilege of working with the federal government on the TSA project and also with some state governments. But we are now moving into the retail market, to enable individuals take advantage of the unique our software solutions.
In terms of financial inclusion, how has Remita helped in achieving the CBN’s cashless policy in the last four years?
Before Remita came on board with the TSA project, CBN had actually written to the office of the Accountant General of the Federation (AGF) to get an electronic payment solution to implement the TSA project, but the solution was not available as at then. It was two years later that government knew about Remita and invited us to a bidding process. So Remita has made it possible for government to pay into diverse accounts from a single account. Now we have a platform that is making very complex electronic transactions very easy.
There have been lots of hacking going on in the electronic payment space within and outside the country. What is the guarantee that Remita will not fail?
At SystemSpecs, we give top priority to security. In developing a software platform, the developer puts so many checks in place to mitigate risks like hacking, but no single solution anywhere in the world cannot be hacked, yet that does not stop people and organisations from maximising the benefits of the solution, despite this associated risk. For us, the peace of mind of our customers is uppermost on our minds so we never stop security R&D and never stop reinventing our securities systems. The way, at any point in time we are able to guarantee that our solution can prevent financial leakages.
Last week, the federal government presented the 2017 budget of over N7 trillion to the joint assembly. How can Remita help government in the successful implementation of the budget, in terms of money generation and disbursement?
Remita is a platform to keep track of funds, and also help in the effective utilisation of the funds. The 2017 budget as presented by President Muhammadu Buhari, has rooms for fund collection and disbursement and Remita will do well in keeping tract of the money generated and disbursed in a more transparent manner.
Nigeria’s present economic recession has been blamed on lack of liquidity in the system, occasioned by TSA. What is your take on this?
What Remita has done is to simply put all the resources of the federal government together for easy accountability, and it should not be seen as mopping money out of circulation and creating recession for Nigeria. Imagine you are a group CEO of a group of companies numbering 10 under you and you want to know the financial contribution of each company under you, it becomes easier to have that information, using Remita. So if there is no money in circulation, people should not blame it on TSA, because the TSA has only helped to provide the real state of financial information and has not removed money from circulation. Again, what TSA has helped t in doing, is to help government make efficient use of the financial information that is available, based on financial data created by TSA. What was happening before the adoption of Remita, was that there were lots of financial inefficiencies and there were no financial data to address the ugly trend. Nigerians should know that TSA is for the greater good of the larger society.
What is the impact of electronic payment system on the Nigerian GDP?
A lot of studies have shown that countries that implement electronic payment systems have experienced greater impact on their GDP. They have recorded increased GDP figures ranging from 3 to 5 per cent impact or more and Nigeria cannot be an exceptional country. So without TSA, the Nigerian economic situation would have been worse than what it is today. Without electronic payment system, GDP growth in the country could have been more depressed. Part of what electronic payment does, is to improve the velocity of money in the economy.
Remember that it used to it take a minimum of 28 days to clear a cheque for payment, but with the introduction of electronic payment system, it now take a minimum of two hours to clear cheques for payment. So with the fast payment and clearing of cheques, the recipients of cheques can quickly turn it around and money goes into circulation again, thus increasing liquidity in the system. So in the same vein, Remita has made it a lot easier for people to move around funds to generate value and that is how economies grow.
What is your assessment of cashless economy since its inception, as driven by the Central Bank of Nigeria (CBN)?
From my personal assessment, I would say we have not gotten there yet, but a lot of changes have taken place in the electronic payment system and that has helped grown the economy to a large extent. Although we have not reached where we loved to be as a country, the truth is that there has been significant growth in the electronic payment system, driven by the cashless initiative of the CBN. So a lot has happened in the last four years of electronic payment in the country. Today a lot of transactions are done online and people no longer carry cash in cartons and bags because they know that they can now transact electronically. Yes, people still do a lot of withdrawals using their Automated Teller Machine (ATM) cards, and I do not see this as a true cashless practice. But I see the use of ATM cards declining in the near future.
In the financial technology space, technology startups still struggle with ideas that are commercially viable, that could address present needs. What is SystemSpecs’ contribution to the growth of technology startups?
The truth is that there are lots of ideas out there addressing several needs of individuals, organisations and society, so if any startup is still struggling to come up with marketable ideas, then such startups have no business developing technology solutions because the startup solutions and ideas will be dead on arrival. Startups must have ideas that address real challenges. SystemSpecs is willing to support startups and we have been doing that in various ways, through sponsorships of software development competition at various fora. But for startups to attract support and funding, such startups must be able to develop ideas that can solve real life challenges. We are currently working with startups to empower them in order to upscale their businesses and we are currently looking at three of such startups aunder a scheme we refer to as the Remita Seed Funding.
Nigerians have shown much love for foreign software, and they prefer to partronise foreign software instead of local software. Do you see that trend changing?
Before now, the utilisation of software was skewed toward foreign developers to the detriment of the local ones, but all that is changing gradually. In every bad situation, some good things can come out of it. While some are complaining of the bad side of the economy, some will see the good side of the economy and catch up with it. Take the foreign exchange situation for instance, where the scarcity of forex is forcing people to look inward to locally developed products. Right now, there are so many organisations looking inwards for their software needs because they want to save costs without compromising on quality. From what I see, many of the software needs in this market can be addressed locally. So now that attention is being drawn locally, I see it as big opportunity for the indigenous software industry to make a difference in product delivery, and become more relevant in providing veritable solutions to business challenges. So the forex scarcity is a blessing in disguise for Nigerians.
Going by current trend, there seems to be a noticeable transformation to financial technology space by SystemSpecs. What is actually driving the transformation?
Yes you are right because 25 years ago when SystemSpecs berthed, we initially had a challenge on the choice of name, but what readily came to mind that was closest to SystemSpecs, was the name ‘Financial Software Solutions (FSS), and that was so because of what we have in mind from the outset to drive financial payment systems. Today, we are gradually shifting towards that vision, which is all about financial technology.
Now SystemSpecs is using technology to address financial issues and this is a big market for Nigeria. Like the Global System for Mobile Communications (GSM) , we see financial technology as what will redefine economies worldwide in the coming years and it will cut across many industries. Just like how the GSM now cuts across several sectors, and not just the telecommunication sector. Innovation will continue to be the driving force, recall that organisations that fail to innovate stand the risk of extinction. Kodak used to be the biggest camera industry globally, but today they have gone into extinction because they failed to innovate.
So we are innovating as technology keeps evolving. Organisations and individuals must make payments and these payments rest on financial technology, and that is what will redefine the software industry. The banks for instance, are beginning to work closely with the financial technology industry because it makes their transactions more efficient. Also, financial technology will make investors make more informed decision about their businesses.
SystemSpecs has grown to become a big organisation since the adoption of its electronic payment software by the federal government. Are there plans to list SystemSpecs in the stock exchange anytime soon?
I will rather leave the issue of listing to our financial advisers, but for now, we are concerned about creating solutions that will be very relevant in the new economy.
Unemployment rate is on the increase in the country. How can Nigeria key into financial technology to reduce the rising rate?
This is a very sensitive question because it bothers on the people and the economy. Most people think that automation, which is associated with financial technology, causes loss of jobs, but that is not true. The challenge it poses on us is on the quality of employment that it brings. In the Nigerian society for instance, government is making efforts to diversify the economy in the areas of agriculture and mining, but I see these as short them measures, even though they sound good and are likely going to provide jobs for our youths. What we need as a country is efficient long-term measures to solve unemployment. Take agriculture for instance, where advanced economies of the world are currently creating robots to take over human efforts in agriculture.
Now, if Nigeria decides to invest in our youths in the area of agriculture, how competitive will Nigeria be, compared with countries who use robots to mass-produce agricultural products. By the time there are low cost robots that can do farming more efficiently, then we should realise as a nation that we must not delude ourselves as to think of competing with such countries in the area of agriculture.
While they have machines to do the work, Nigeria will be over-working its youths to generate agricultural products, which could lead to failed health situation among youths. I know it is a sensitive thing to say, especially now that we are in recession, but we have to do those things that will give us comparative advantage over other economies, such a diversifying in the area of financial technology. The number of jobs that alone can create is significant. Also, when a nation becomes more prosperous from the effective utisation of technology, the youth become more creative their talents leading to increased productivity.
SystemSpecs was at GITEX technology exhibition in Dubai in October this year, where it showcased its solutions to the world. What are your plans to take your solutions to other African countries beyond Nigeria?
We are working hard to expand the business beyond Nigeria and we are looking at taking the solution to other African markets. In 2017, we have plans to have aggressive rollout of our solutions in other African markets, and we are already building on the team that will handle this. We are currently at the final stage of the release of our mobile app, which is going to be our flagship solution that we will take to other African markets.
The founder of Facebook, Mark Zuckerberg was in Nigeria a couple of months ago, and he was impressed with what Nigerian tech startups are doing in the area of software development. What is your assessment about Nigeria tech startups?
Nigerians by our very nature, are very industrious people and this can be seen in our youth that are into software development. They are very creative and creativity is actually moving the technology startups forward. Take Nollywood for instance, that have developed themselves to the extent that they have become the toast of other nations, and the next big growth in Nollywood will be driven by technology. Zuckerberg’s visit to Nigeria, no doubt drew a lot of global attention to Nigeria’s tech startups, and they are beginning to attract more attention. So I see vibrant tech startups that will advance their solutions beyond the Nigerian market soon.