Looking gracious in a simple shirt and jacket, he calmly settles down in a chair with a humble mien that belies the respect he commands in the software industry home and aboard. Just back from Glasgow, where the African Scotland Forum honoured him with the Leadership in Technology Award, conferred him with a fellowship of the Centre for African Policy, Development and Research, Scotland and named a research centre after him, his success story, selfless efforts, pragmatic and patriotic activities need no introduction. After a stint in the banking sector, John Obaro left to pursue his passion – writing computer codes. For 24 years, his company, SystemSpecs Limited, has continued to perform wonders thus emerging as a leading provider of e-payment, financial, and human capital software solutions for the Nigerian and African environment. In recent time, the company even became more famous when its innovative product, Remita, software used for the transfer of government’s funds from commercial banks to the Central Bank of Nigeria (CBN) under the Treasury Single Account (TSA) policy of the Federal Government came under a slew of allegations – seen by some as efforts to destroy the TSA project. To set the records straight, the soft-spoken software guru sat with Eromosele Abiodun and Obinna Chima to tell his side of the story
Although Systemspecs has been around for 24 years, the TSA issue and Remita appear to have made the company popular, we like you to tell us how the journey has been in the past 24 years?
I was in the banking industry for about 10 years where I cut my teeth under EbitimiBanigo at the then IMB. After about seven years in which I was heading IT, I felt I needed to do something different. So I started SystemSpecs with a clear vision of being a strictly software house focused on the delivery of extremely innovative and globally competitive solutions from out of Nigeria. We started off by representing a UK firm called System Union in those days, to support a product called SunSystem – they have been bought over by an American firm now called Infor Global Solutions. We started out supporting them in Nigeria, mainly with multinational organisations. Then I felt it was time we did something from Nigeria. So we started what we eventually named HumanManager, which is a robust payroll & HR software in Nigeria. It was not until about 10 years ago that we started looking at the payment space, working with our customers to deliver their pay instructions to the banks, in an electronic form. We started out working with Interswitch, whom we transmit our data to first, they help move them to the banks, who then credit customers’ accounts. Understandably, these were fraught with challenges because of the sort of volumes we were trying to push to the platform. So, we started thinking of what we could do by ourselves and we came up with what we called the Remita-RTGS model. That worked very well in that it allowed us to do a lot of bulk processing payments to the banks, thus we started out gradually. In 2011, the Central Bank of Nigeria (CBN) came in for a routine inspection as part of their response to our application for an e-payment licence. In the process, they discovered that we may indeed have the capability to resolve some of the challenges they were going through. And that was how the discussions and the several trips to Abuja on the Treasury Single Account (TSA) started. They were looking at a couple of options then, including other providers like the Nigerian Interbank Settlement System (NIBSS), the new RTG system they were implementing at the time and us. At the end, everyone- CBN, the Office of Accountant General of the Federation (OAGF) and their foreign consultants – all felt Remita was better for what they wanted to achieve. It was a rigorous process; they had a good number of foreign consultants that worked on the evaluation. I can vividly recall at least three solid presentations that we had to make and on each occasion we provided clear responses to all the questions; they were all very excited that Remita would help in the TSA project.
So when did the project start?
We started in earnest in January 2012 with the outward payments as the project was planned in two broad phases: outward and inward payments. In terms of the commercials, what we agreed was N100 per million for outflows, for the collections however, there was a clause in the contract that catered for the multiplicity of parties actively involved in the field collections. It was therefore stated clearly that the price would determined by all the stakeholders which are: commercial banks, OAGF, CBN and SystemSpecs. So that agreement was signed in 2012, and then we continued with the outward payments as unfortunately, the inward did not take off early as we expected. Fast forward to May, 2013, when the CBN organised a workshop that brought all the parties together as a prelude to starting the inward part of the contract. And as would be expected, one of the topical issues was what to charge. Our recommended price was 1.5 per cent to be shared by all the parties, but the banks recommended five per cent on the reasoning that if the TSA is dutifully implemented, it would result in a loss of deposit floats. So the banks wanted five per cent and CBN recommended 1.5 per cent. A committee was subsequently set up and after extensive deliberations recommended 2.5 per cent to be shared by all the parties. It took a while for any response from Abuja, but eventually, CBN wrote a letter to us and the 24 banks then, that government would only pay one per cent to be shared by all the parties. Unfortunately, the project still did not take off immediately. It was not until the second half of 2014, that a pilot was conducted, when they sent people round different MDAs, tested that everything was fine and the fixed a commencement date of January 2015. Again, that never really happened until the closing moment of the last administration in March 2015. The new administration came in and said there were going to push for TSA and gave a deadline of September 15, 2015 for all accounts in commercial banks to be closed and migrated into the TSA. Now that spurred some serious activities.
How did the issue of one per cent become controversial?
Part of the benefits of Remita is that reports are very comprehensive, showing all transactions openly. Looking at the report, the OAGF was able to determine that a lot of money was coming in and what the corresponding charges were. So on the 14th of September, they proposed that we re-negotiate the figures on the basis that the charges were high. Two days later, specifically on the 16th, we wrote back that we are not averse to renegotiation, but recommended that they should invite all the stakeholders that agreed on the fees ab-initio, for inclusiveness. Thereafter, the noise continued that the money was too much but no concrete steps were taken to address the issue. On the 7th of October, we wrote a reminder that we are still waiting for the renegotiation to determine what the final figure would be. On the 23rd of October, I got a call from the Governor of the Central Bank that we should return the fees that had been earned. And I told him I was planning to see him so that the matter could be resolved, but he said we should return the money urgently because the ministries, departments and agencies (MDAs) were asking for the money. I don’t want to call it a subtle threat, but nobody will like to raise a legal issue with his regulator. Incidentally, before that call, the OAGF had set up a committee to examine the pricing options open to government and what they would recommend. One of the options was to retain the one per cent charge, but place a cap on the absolute figure that it would be applied on. Different figures were bandied – N5,000, N10,000, N100,000 as the maximum charge per transaction. So, eventually the OAGF actually wrote to the Vice President recommending one per cent, with a maximum charge of N10,000 per transaction. So, it was while all these were going on that we got the instruction from the CBN to return the money, which we did as fortunately, we hadn’t blown the money.
What was the total amount that you returned?
We returned N3.8 billion, which was the portion that went to SystemSpecs. We attached a schedule of what the banks including the CBN had earned, to make up a total of about N7.6 billion. We also attached a fairly worded letter to the CBN Governor explaining why they should return the money to us. To be candid, it was a business decision for us to return the money to create a conducive environment for negotiations. In addition, we have worked on this project for about four years and we see a very bright future that was beyond the pecuniary benefit, and that was a much stronger driving force for us. Secondly, we respect the office of the Governor of the CBN enough to bid his wishes. Thirdly and more importantly, we see the future of TSA for Nigeria and we believe that this project is something that this country needs and we don’t want anything to jeopardise it. So, we returned the money honestly expecting that a few days afterwards, the matter would be resolved amicably. Interestingly, just around that period, we were invited to another meeting by the OAGF where they announced to us that they now have approval from the Office of the Vice President that the fees will be one per cent of a maximum of N5,000, which again was not discussed with us. At that point, honestly, we just wanted a closure to enable us focus on our business of software development.
So what caused the whole uproar?
It was a few days after that, that we got wind that the next day a motion would be moved on the floor of the Senate on Remita. So, we were all glued to the television when we saw all the drama going on. With all sense of responsibility, a number of Senators initially supported that motion, but happily there were some Senators that cautioned them and requested that they do proper investigation. N25 billion a day would come to about N9 trillion a year, the budget of the entire Nigeria was about N4 trillion for that particular year. The question was,how could a country be paying twice of its budget to one company? The numbers just didn’t add up. But unfortunately, because of the numbers that were bandied, a lot of emotions were whipped up. Again, when you consider where Nigeria was coming from, with a lot of corruption stories all over the place, you tend not think deep when you hear this kind of wild figures. So, we found ourselves caught in that wave. It was that same time that a newspaper reported that the CBN had recovered N7.6 billion from SystemSpecs. That surprised me because the issue of returning any money was weeks before the Senate hearing and secondly it was not from SystemSpecs, but all the parties collectively. And when all the lynching were going on, nobody was referring to the other parties including CBN itself. The focus was just on Remita and SystemSpecs. It was then it started to dawn on us that there was probably more to it than was obvious. It started to become apparent that the objective was more about destroying the technological base of the TSA, rather than take on the TSA frontally. Fighting TSA frontally would appear to be fighting the president who had shown passion and commitment to the project. So, the strategy was to hit the technology that made the TSA possible. Let’s not forget, this is not the first time Nigeria is attempting TSA, it was first attempted several years ago and was immediately aborted because it couldn’t work. In fact when we started, a number of industry people told me categorically that the project wouldn’t work because the CBN does not have the capacity to do retail. But we approached it from a technology point of view confident that it would work, and it did. Yes, there could be some hiccups, but the system today is up and running.
How did you cope doing this period?
It was a very difficult time I must admit. Our first reaction was to put our papers together since the Senate announced that there was going to be a public hearing. We tried as much as possible not to talk to the press out of respect for the Senate, which created another round of problem because some people felt we should be talking. But even then we knew that the odds were against us, because from the title of the hearing, “Abuse and Mismanagement of TSA”, we were already adjudged guilty before any investigation. So, by the time the facts started coming out that nothing unusual had happened, I believe the Senate Committee found themselves in a difficult position of some sort because they had raised a lot of emotion in the public. And many people started coming to our defence that there was nothing untoward in we did. The press statement we issued at the time also helped a great deal to clarify the issues to truth seekers, who now were armed with the facts to dispel the baseless argument. One of the areas that I think we probably did not communicate well enough was the fee itself. This one per cent which was announced and imposed under a one sided negotiation by government, was not strictly to SystemSpecs. It was 50 per cent to our company, 40 per cent to the deposit money banks and 10 per cent to the introducer which in this case is the CBN. As at outset of this project, the focus was just on collecting cash from the commercial banks, but technology then progressed rapidly in the last few years. There are now a lot on transactions using payment cards, mobile phones, the web etcetera, we included all these technologies and channels at no extra charge to government. Recall, that we also never received any upfront payment to design this software, all these from our sweat. We just wanted to make it easy for any Nigerian to be able to make payment from any channel that is convenient for him.
How did this one per cent compare to other fees in the market locally and internationally?
As at that time you needed to know the number of prices available in the market, we had prices ranging from 1 to 45 per cent. Yes, there was a transaction of up to 45 per cent in this market. The best transactions we had at the time were between 2 and 10 per cent. The truth is that the government had a good deal at 1 per cent. If you go to a good restaurant today and you use your card, chances are that the restaurant owner will get the price you are paying less 1.5 per cent, which is what the CBN approved for card payments. We do not feel that the 1 per cent was out of this world and in spite of that we said we were open for negotiation. I just came back from the United Kingdom and I saw an inscription on the cab saying a convenience charge of 5 per cent will be added to your fees. It is all over the place and here we were out in the cold struggling to defend that 1 per cent is not too high despite that fact that we have asked them to get all the parties together and let us negotiate. As a matter of fact, we were more interested that we were the ones able to provide the technology that made this thing possible and not some foreign software which the country already has way too many of. We believe that if you get it right money will come, therefore money was never our motivation! What was driving us was to put the solution on the table, which we have done.
One of the arguments at that time was that SystemSpecs was not registered or statutorily empowered to collected revenue on behalf of government. When you were signing the contract with the government did this issue came up?
In this country, people just take authoritative positions on matters they know next to nothing about. We are not a bank, banks have their roles! We are a technology firm. As an e-payment service provider, we are licensed by the CBN to provide payment solution services, not as a bank. Banks on their own cannot do TSA; you need some form of technology to back them up. We provided the technology that empowers bank to be able to transport the monies collected to a single account in the CBN. Beyond that, we are able to make all collections transparent and visible to all the over 900 MDAs. Remita is not just a collection platform; it is also payment platform so that these organisations are able to initiate payments of salaries, contractors and all that. They are also able to initiate outward solutions from the same platform. So, I need not be a bank to be able to provide that service. We are licensed as a payment technology provider, a service that could have been provided by any other company. One of the biggest today is Mastercard and Visa, and they are not banks.
Given the clarification that you have provided, where did the N25 billion daily collection allegations came from was it that you did not communicate the matter properly? What do you think was responsible for the controversy?
Along the line I think the whole thing became more of a political issue and people just needed to throw figures to grab attention. That figure which I don’t even want to mention was conjured from nowhere. You would therefore see that in the senate report, they admitted that only N7 billion had come in, but in order to justify their initial position, they now did a projection that if they had waited long enough it would have amounted to the initial figure they bandied. That was why I said the matter was politicised. We are not into politics, we just wants to be left alone to provide technology. Let politicians do their trade and allow professionalism to thrive.
The TSA basically put an end to the impunity witnessed in the past, how happy are you that your company was able to achieve this?
I feel excited that we were able to provide the technology that made this happen in the first place irrespective of the issues. We have proven that it possible to use technology to decipher where the country stands financially at any point in time. About 17,000 bank accounts were closed when TSA was enforced. Now at a press of a button, relevant government officials know the cash position of the country up to the minute. Been able to provide such technology is in itself is very fulfilling. We all know that one of the biggest problems we have in this country is corruption and part of what makes it to thrive is lack of information. A lot of money is spent that nobody can account for, monies are paid into accounts that nobody knows even exist. This technology has put an end to all these. Now for every transaction flowing out of government coffers you are able to track; from who initiated the transaction to who was paid and where the money went to no matter how small or big amount is. Now not everybody will be happy with this development but we believe that if we take a good look at it, it is for the good of our country. We need systems like this to create some level of sanity in our society.That’s what we believe and stand for at SystemSpecs.
We understand that you have returned the N3.8 billion you collected as commission to the CBN. Between when you returned the money last year and now what has changed? Do the government still use your platform? Do the government still pay you commission for the use of your platform and where are we now on the TSA?
Interesting question! Like I said, its been six months now since we returned the money. We originally thought the matter will be resolved quickly. Unfortunately that has not happened. But we left the platform open, it has remained in use and no remuneration has been paid to the service providers. We have had conversations with the office of the Accountant General of the Federation and the CBN but nothing has been done. The downside is that a number of branches of some of the participating banks are beginning to decline processing these transactions. Some still do believing that the matter will be resolved soon. However, it has been challenging, not just for those bank branches, but even for us. You are kind of hanging in limbo not knowing if the government really want to continue with this project. As a business, we have a lot of exciting things we want to do that we cannot as a result of this matter. We want this resolved as soon as possible so that everybody can move on. We wrote to the Office of the accountant general, the CBN and the Minister of Finance seeking for their intervention to close this matter, and it was a positive experience when the Honorable Minister of Finance convened a frontal meeting recently aimed at addressing the issue and resolving the impasse once and for all. Our hope is that resolution will be timely and we can concentrate on scaling up and providing more helpful technology solutions to the nation.
When you say banks are refusing to process these transactions are you saying that they will reject cash from any government agency?
Banks have their own resources and they need to make profit from transactions. If you are providing services to a people and no money is coming in from processing those transactions what do you do? Initially you may not look at the numbers but after a while you begin to take a second look and decline transactions that are not bringing money. Not just because of the freeze on commission but not knowing where you are going. Yes, some banks have remained faithful but we are concerned that this trend should not continue because if it does, then it becomes a threat to not just our business but principally to the TSA itself.
You signed a valid contract with the government to provide your technology for TSA. What is the problem with the contract? Is it that the contract is no longer valid? Why do you think the government has not abided by the terms of the contracts? It is interesting because at the senate hearing, there was a desperate attempt to show that there was no contract. But we showed them the contract and at a point everybody applauded with excitement on how we were able to address all the issues raised regarding the contract. There is indeed a contract. The senate even recommended an amount to be paid in their report; if they were not satisfied with our defence they would not have recommended that we be paid at all. However, if there is a commercial disagreement, speak to that disagreement and not look for a way to muddle things up. A lot of people have urged us to go to court because this is a straight forward matter, but we do not think that should be the first line of action. We know a lot of people who mean well for this country, and when these issues are well understood;there will be an amicable resolution. There is even a clause in the contract that says we can renegotiate if parties are not satisfied with the contract.
If for some reasons the banks come together and pull out of the deal as been threatened, what will be the implication of this action on the country?
Today with all sense of modesty, we have provided a platform that makes it easy for people to walk into any bank and make payments, relevant MDAs are able to monitor what has been paid. We are integrated into the banks and the MDAs systems; the network is so vast and intricate that that if the banks stop collecting funds, it will cause quite some significant disruption to the economic life of these agencies. But I do hope that we do not get to that. Despite all of these you have received accolades both in Nigeria and overseas. Does this not mean that there are people who still recognise the contributions of SystemSpecs to national development? And how does this make you feel? I must say as it is written in the scriptures that in everything we must always thank God. Despite the fact that we have had these attacks, it has also opened us up to some significant recognition from people who appreciate what we have done. This include young people who have come together to recognise us. I honestly cannot count the number of awards that have come in since November last year. People are just celebrating the fact that a Nigerian company was able to do this. We have had people from student movements to professional groups giving us awards. In particular, the two most exciting ones in recent times come from the Institute of Software Practitioners of Nigeria (ISPON) and the African Forum Scotland. The ISPON are colleagues who understand what software development really mean, these are people who will never call software development “doing nothing”. For them to have given us the Software of the Year” award was very encouraging. Secondly, I just came back last week from Glasgow, where the African Scotland Forum honoured us with the “Leadership in Technology Awardl and conferred me with a Fellowship of the Centre for African Policy, Development and Research, Scotland naming a research centre after my humble self.
As an expert and a player in the IT industry, can you tell us how much Nigerians spends on software acquisition and what it would have cost the federal government if for example it was Master Card that developed this software for Nigeria?
My friend Leo Stan-Eke was on CNBC recently and one of the comments he made was this is something that would have cost Nigeria billions of dollars if we had brought in a foreign firm. These are people in the industry who know how these things work. Other countries develop their own and ship out. That is why Nigeria is a dumping ground for all manner of software. The software they use in the office of the Accountant General was developed by a foreign company, BVN was developed by a foreign company, the ITGS they use at the Central Bank was developed by a foreign company, so is the ITAS at Federal Inland Revenue Service (FIRS), all the deposit money banks in Nigeria use software developed abroad. These run into billions of dollars put together that go out of the country. Remita is 100 per cent home grown, it was conceived and developed in this country. Even if we are not exporting it, the mere fact that we are using it in Nigeria is a plus. We have started saving what would have gone out. Why can’t we do like other countries and begin to support our own and prepare it for export. If you know the amount of enquiries we are now beginning to get from other countries, life would have been easier if we have the support of our own government to push this. It will be a net income earner for Nigeria at this time of scare dollars. Rather than kill our own, we should help Nigerian companies to grow
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