" ITREALMS: TSA: FG remit to Remita – ITREALMS

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Monday, June 24, 2019

TSA: FG remit to Remita – ITREALMS

That the Federal Government owes a locally grown multinational Financial Technology solution provider, SystemSpecs millions of Naira, over the adoption of its Remita for the Treasury Single Account (TSA), is least demeaning writes ITREALMS’ REMMY NWEKE, who argues the debt is a much ado shadow over local content and ‘ease of doing business’ mantra.

PMB on TSA: Four years after:Reviewing the four years of President Muhammadu Buhari (PMB’s) administration in Nigeria, an instance that left many industry watchers and stakeholders’ agape was the fact that Federal Government (FG) still owes SystemSpecs millions of Naira over the adoption of its Remita for the FG Treasury Single Account (TSA) via the Central Bank of Nigeria (CBN).

ITREALMS recalls that as soon as this administration came to power in May 2015 and shortly after the emergence of the leadership of the National Assembly (NASS) and by end of first quarter of 2016 came up with a report rejecting Remita contract by CBN.

This led to the 2016 controversies on TSA which ranged for weeks with the Senate submitting that FG’s contract with Remita, a proudly locally-developed and globally acknowledged software solution by SystemSpecs be terminated and overtly paying lip-service on issues of local content in Nigeria as it may affect Financial Technology (FinTech) evolution in the country.
With this, industry stakeholders, including the Nigeria Computer Society (NCS), expected that FG and NASS will review the report positively till date to reflect the so-called ease of doing business in Nigeria.

As at last quarter of 2018, ITREALMS gathered that FG still owes SystemSpecs in respect of Remita, allied banks and other service providers in the ‘TSA value chain’ payments in excess of N10bn for services provided and which as at the time of filing this report may have increased.

Understanding what Remita offers:Investigations by ITREALMS showed that Remita is an electronic payment (e-Payments) and e-Collections solution on a single multi-bank platform. Presently, Remita is in use by many individuals, public and private sector organisations that process over 500 Billion Naira worth of transactions on a monthly basis.

Adopted by the Central Bank of Nigeria (CBN) for the payment and collections of funds on behalf of the Federal Government of Nigeria, Remita is currently used by all 22 commercial banks and some 400 micro finance banks. Some countries beyond Nigeria have shown interest in adopting Remita, for instance, a delegation from the Gambia, were in Nigeria to understudy more closely how to optimise Remita and Treasury Single Account.

Developed by SystemSpecs Limited, Remita has been severally voted as Nigeria's Software of the Year, and indeed a success story as well as a pride to Africa, and has no doubt contributed immensely in revolutionizing the e-payment industry in Nigeria and beyond, just as it comes with an optional Payroll and Human Resource (HR) solution for full integrated processing.

Executive Orders vs NCS Lamentation:
The worrisome indebtedness led to a lot of assumptions including that the Federal Government (FG) may have set aside its own Executive Orders 003 and 005 by refusal to pay SystemSpecs and likes of Chams plc, though these two orders were reputed as landmark when they were signed by Acting President, Prof. Yemi Osinbajo as part of the three orders signed on May 18, 2017, which encouraged government businesses and operations to be conducted in the country, especially in support for local content in public procurement by the Federal Government.

The President, Nigeria Computer Society (NCS), Prof. Adesola Aderounmu, bemoaned the alarming indebtedness in a chat with ITREALMS, urging FG to lead by example. Noting that local content contributions especially from ICT sector to the economy cannot be over-emphasised due to the number of jobs they offer for the teeming youthful population.

He asserted that “This is integral to Nigeria’s economic revival,” lamenting that compliance to the orders is not 100 per cent, thereby raising doubts and questions about full commitment to the much needed prioritization of local content development. Maintaining that one of the pertinent cases was that of Remita, a payment gateway adopted by the Federal Government for its Treasury Single Account (TSA).

According to NCS President, “Up till now the FG has not been able to fulfil its obligation with regard to the services rendered to her through Remita software.” This is despite official declarations, these in practical terms showed extremely low commitment to the implementation of the ICT Local Content Policy.

“It does not show much evidence exists of a structured approach to ensure Nigerian ICT firms are prepared by Government to take advantage of emergent National ICT opportunities,” NCS president bemoaned.

Between CBN and TSA:
Precisely on November 18, 2019, the Central Bank of Nigeria (CBN) proclaimed via circular No. BKS/CSO/CON/DIR/04/043, addressed to all deposit money banks; the Managing Director, SystemSpecs Ltd; and all Licensed Payment Solution Service Providers (PSSPs); intimating them of increase in the service charge on Remita on behalf of the Federal Government of Nigeria and the burden carefully passed on to end-users.

According to CBN the guidelines for payment for services rendered under the e-Collection programme of the Federal Government of Nigeria, stipulated thus:

I. That all Payers using other channels, apart from Cards (Bank Transfers, Mobile Payments, Bank teller points, USSD and all other channels) shall pay the sum of N150.00 (One Hundred and Fifty Naira only), per transaction. Hitherto, the Federal Government, through the OAGF has been bearing the charges on behalf of Ministries, Departments and Agencies (MDAs) and the revenue payers

II. That all Payers using Cards are to be charged N150.00 (One Hundred and Fifty Naira only) plus 0.75% of the amount being paid, subject to a maximum of N1,200.00 (One Thousand Two Hundred Naira only), per transaction.

III. The application of these charges is effective from 1st November 2018

It is necessary to note that this directive is without prejudice to the provision of Section of the CBN Approved Guidelines on Operations of Electronic Payment Channels in Nigeria (April 2016), which stipulated that “A merchant shall under no circumstances, charge a different price, surcharge a cardholder or otherwise discriminate against any member of the public who chooses to pay with a card or by other electronic means.”

CBN stressed that this directive only relates to payment of MDA’s revenue, taxes, levies, penalties, etc to the Federal Government of Nigeria, under the TSA scheme.

Core notes from the circular deductible include was that FG hitherto borne the cost of the charges per transactions on TSA but has since November 1, 2018 decided to pass it to users despite no public enlightenment on this.

Industry observers described the new charge as “a uniform flat fee of N150 + VAT irrespective of the amount being paid to the Government, through any bank in Nigeria.” Although it was still argued that based on the flat rate, like obtained with the N65 on the use of Automated Teller Machines (ATM) in the country, no matter which ATM or Bank ATM in use, it’s a welcome development.

PMB commends TSA:
This came at a time, President Muhammadu Buhari in his address to the 2018 e-Nigeria Conference organized by the National Information Technology Development Agency (NITDA) in Abuja last November, disclosing that FG saved about N24.7bn per month as a result of the implementation of the Treasury Single Account and the elimination of ghost workers from the civil service.

“In addition to the consolidation of accounts and elimination of ghost workers that resulted in a combined monthly savings of about N24.7bn, the TSA facilitated the recovery of huge sums of money including the recent N1.6bn from a single account,” PMB said.

And if based on the above monthly income and supposed “1 per cent charge by Remita” according to the contract terms, it could be safe to say that between May 2015 and May 2019, that the Federal Government, for instance, is owing SystempSpecs via Remita, the sum of N247,000,000 (Two Hundred and Forty-Seven million Naira only), which seems to be the bone of contention when looked at the monetary value rather than the revolution, service, job creation and development such value added by Remita offers. This argument is not far away from those posited by the Senate in 2015 who seemed ignorant of the processes and deserves some education.

For the record, this 1 per cent revenue from every TSA transaction is shared between SystemSpecs, Banks and CBN on the ratio of 50 per cent, 40 per cent and 10 per cent in that order over some 40 months culminating between September 2015 and December 2018, as at the time of this report.

Despite Remita commendations by Mr. President, it is no longer news that the government of the day is not living out what its preaching with regards to ease of doing business, moreso with the consequence like lack of job creation that should have emerged from support services across the states and effects on the economy, industry watchers look forward to a time Federal Government will, repent by seeing local solution developers like SystemSpecs, as the real engine of the economy in this age.

Another set of renegotiation with the likes of Remita developers, SystemSpecs among others playing in this space cannot be over emphasised by taking the local content mantra of this administration seriously, and the Federal Government consciously remitting to Remita what is due to it.

This will encourage a lot of local solution developers in Nigeria, that after all, there is hope for them to create more jobs, with a listening government.

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