Economic Confidential, June, 2009

INTERVIEW

How E-payment can move Nigeria in the Global Development Index!

–John T. Obaro of SystemSpecs

Mr. John Tanimola Obaro is the Managing Director of SystemSpecs – Nigeria’s leading HR, Payroll, Accounting and e-payment solutions provider.  Lately, the company has been in the forefront in the campaign for e-payment system in the country with its product - REMITA - , rated as one of the best indigenous e-payment solution in the country. He is a respected personality in the IT industry for his leading role in the area of software development and deployment. A graduate of Ahmadu Bello University Zaria with a degree in Mathematics and Computer Science and MBA from the University of Lagos, Tani has attended extensive international training and exposures in Business Management and won a lot of awards from different institutions and bodies. He is a member of various professional and statutory bodies including Fellow of the Nigeria Computer Society; National Software Development Task Force; Governing Council of the Computer Professional Registration Council of Nigeria; Science and Technology Commission of the Nigerian Economic Summit Group.  He has at various times worked with the Leventis Group, United Bank for Africa and IMB (an affiliate of the Bank of Chicago) among other institutions.  In this interview with the Economic Confidential, Obaro introduces readers to the challenges of IT in Nigeria, especially with references to the deployment of E-payment in government.

How come your organisation is in the forefront in the campaign for e-payment system in Nigeria?

SystemSpecs has always been involved in payroll processing and in accounting software management. With the enactment of the pension reform of 2004, we saw another opportunity to automate some of the processes that happen post-payroll in organizations. So we developed Remita which essentially starts off from where payroll stops. Immediately the payroll processing is completed, we are able to take the data and send it to the parties that need such information. This includes the banks, pension authorities, tax authorities and the likes. After we completed the development of Remita for payroll, we had a presentation to a multinational organization and they loved the application but then another question came up. They felt uncomfortable processing their payroll while they still need to handwrite checks for their vendors and suppliers. They therefore challenged us to look at that area, which made it more interesting and gave birth to what we now call e-cheques. So we came up with e-cheques under Remita for payment of suppliers and vendors. When again in 2006, we won the Integrated Payroll and Personnel Information System (IPPIS), federal government contract which was supported by the World Bank, we saw it as another opportunity to educate the government on the benefits of e-payment, and from there we have moved on. IPPIS has been a very successful project, today we now have Remita running in a number of organizations. We understand the terrain; we know that for you to have good e-payment system the internal processes of the organization also needs to be automated. We are strong in payroll, we are strong in accounting so the natural follow-up is a good payment engine which is Remita. So we are in the forefront of e-payment in Nigeria, because we know it works, it can add value to our society, we see it as a monumental achievement, we see it as one of the silent revolutions that can move this nation to the next level in the development index

What are the infrastructure and facilities you put in place to ensure that the system is effective?

We have developed a very robust application. We focused a lot on security and infrastructural challenges. With this we were able to come up with a solution which anyone who wants to do real e-payment will find very exciting. All you need is an Internet enabled environment, your notebook and that is all you require. We host the application ensuring 24/7 availability, and so long you have Internet access at your end; you are able to authorize your payments as required.

Lately many organisations, especially civil servants are complaining bitterly about the e-payment which has denied them prompt payment of their salaries same as government contractors?

With all due respect, the noises you must have been hearing are mainly from the MDAs where IPPIS has not been implemented. Generally speaking for the MDAs where the IPPIS project has been implemented, you will find that you do not get the level of noise on the challenges of e-payment. Remember the IT slogan, “garbage in, garbage out.” Many of the MDAs where the payroll is not properly computerized, there is no proper way of ensuring the integrity of data; when such data is put in to a payment engine even if it is christened e-payment, it just won’t work. So under the IPPIS project we did a lot to ensure that good quality data is what is being transmitted to the banks working with NIBSS. Having said that, the other challenge is that many of the MDAs currently moved data up and down in CDs, flash drives, email attachments and abdicate e-payment to their banks, this is very wrong. For as long as an MDA abdicates e-payment to their banks they will not be in control. Banks are banks, let them do banking while you do your own bit on the value chain; by the time that is addressed I believe more MDAs will begin to have fun in the use of e-payment. For the number of the MDAs that have moved on to Remita for instance, part of the comments they have is that where have you guys been all this while, because they having a very interesting experience. I am not saying there are no challenges but as this challenges come, they are able to monitor the status on their systems, maybe account numbers are wrong or maybe a particular bank is not online. So to that extent, I believe the future for e-payment in Nigeria is very interesting.

What is your view on the directive of the federal government for the commencement of e-payment in January 2009?

It is a noble and most constructive directive ever issued by government. E-payment, if properly implemented will push this country high up on the development index. It will promote efficiency in the delivery of government service and catalyze the IT industry. Within a short span that this directive was given a number of IT companies are looking seriously at that area and their eyes have been open to the opportunities therein to enhance the quality of governance. In addition it will reduce corruption, which is a major reason for our underdevelopment. You may recall that Nigeria in the early 70s was one of the 50 richest countries of the world; today Nigeria is one of the 25 poorest countries in the world. E-payment will go a long way in addressing such fundamental issues.

So far how are the agencies implementing the directive on the e-payment?

There are broadly two categories of MDAs- those that have adopted what I call true end-to-end solution which is the True e-payment, and those that are involved in some form of manual operations alongside what they believe is electronic transaction. I’d rather call that e-manual. For True e-payment MDAs, they are able to seat in their offices or wherever with their notebooks or PCs and issue payment instructions directly to their banks. They are able to view all account balances across banks on one screen, monitor the status of all instructions they have given and are able to see why any instruction has not been effectively carried out. They do not depend on the banks to do the running around for them. They take charge directly and they get better results. For example if there is an invalid account number, they can correct it there and then, and they see the transaction paid almost immediately. Or if the bank they are trying to make payment to has connection challenges, they watch as the problem is being resolved and transactions paid. The second are the e-manual MDAs who still carry their schedule to the banks through CDs, flash drives or e-mail attachments to their banks. Now that is not e-payment. From the MDA perspective, they are only trying to shift the ball outside, or in other words, MDAs should take charge of their e-payment not abdicate it to the banks.

Precisely how can you describe the e-payment system?

E-payment means the MDA issuing the instruction from the organizations follows an electronic process within the organisation. The payment moves electronically from desk to desk for approvals before it gets to the bank. What this means is that all approvals are given electronically and their internal workflow is electronically driven. Their instructions are sent to their banks electronically to any of their funding banks and payment instructions are effected to all the banks to which the accounts of their beneficiaries are domiciled from the comfort of the office. The next stage of an e-payment is that all associated schedules are immediately made available to 3rd parties receiving the payments. So, the originating MDA has electronic workflow within their own operations, communicating with their banks electronically and delivering schedules to beneficiaries where appropriate. A typical MDA will be able to view their balances across all their funding banks all on one screen; they are also able to report from their office on all their historical transactions. That is what corporate e-payment is all about. E-payment is fully automated not half automation plus half manual. Once you the initiator still need to engage in some manual operations that is not e-payment. I dare say that it is actually better to remain totally manual than half manual and half electronic, all you will have is a geometric progression of your problems and confusion.

What are the major challenges of e-payment in Nigeria?

People confuse individual e-payment with corporate e-payment. Many of the solutions out there were developed from the individual perspective. That is why the key security focus is on PIN to one person while the security emphasis for a corporate solution should go beyond that. It should be on the workflow, audit features and ability to handle one to many transactions. There is also resistance to change which is understandable; people are learning to get acquainted to technology. However, some people are genuinely scared and don’t know what to do. But I believe that as people begin to see that e-payment works they will drop their guards and embrace it. Another challenge is that there are those who don’t want e–payment at all and will seize every opportunity to make all the negative noise and describe all the things that aren’t possible. Any minor failure will be grossly exaggerated to make the whole situation appear irredeemable. They have various reasons why they do this, which is why we need to appreciate Mr. President’s resoluteness which the Accountant General to the Federation, Alhaji Ibrahim Dankwabo has often restated a number of times; that ‘e-payment is here to stay’.

So what is required against the phobia?

There’s got to be proper education and good confidence building. This will help people to be more cooperative and supportive as we move into the real 21st century. This is one of the reasons why we have started running regular e-payment courses. Interested parties can make their bookings at www.remita.net.

Can Nigeria tackle these challenges especially in the light of inadequate infrastructure it’s currently grappling with?

Challenges are meant to be addressed. Our roads are not the best but we use them to get to our destinations. Same thing with e-payment, we have irregular power supply and slow Internet connectivity but if you want to do e-payment you will do it. Honestly, I appreciate the challenges of our infrastructure; however, I also know that this should not stop us. These challenges can only enhance the ruggedness that our solutions need to survive the test of time.

How can we breach the digital divide in Nigeria?

The interesting thing is that the world is being restructured. We are building a new generation of illiterate people because let’s face it if you are not e-literate you are an illiterate in this new dispensation. You are not able to harness the power of information; you miss out because you live in a narrow world. But if you are IT aware, your confidence grows, you are able to have access to virtually any type of information on the web; and the more information you have, the more intelligent your decision making will tend to become. However, those who where literate in years past because they can read and write in English, are gradually losing out if they do not become computer literate. So we have a new generation of socially handicapped people because they are not IT literate. They cannot benefit from the new world. Maybe we need to begin to think of some assistance to lift up such people. Anyone who is not IT literate is, without being polite with words, is a stack illiterate and a social liability.

Where do you see the sector say in five years to come?

We live in interesting times indeed. I see a lot of interesting changes within the next 5 years. The phone will become a more powerful tool which is likely to make laptops a threatened specie the way fax machines, regular camera and films have been pushed out of the market. If you go to the airport today people still travel with their laptops that will begin to slow down because PDAs will start becoming full fledged computers. I see a lot of applications running on your mobile phone. Mobile phones become your bank and your organizer. It becomes a central part of our daily living. That is a minimum of the kind of changes we would see in the next 5 years.

Nigeria spends over US 500 million dollars on software importation each year, what measures do you think should be put in place to stop this and promote Nigerian software?

I agree the IT & intellectual world is now globalised, so we cannot live in isolation in the IT world. We need to do business with the international community, but we must learn to protect our own turf. It is ironic that when the chips are down the western nations that preach open economy and open borders, protect their own interest. One of the first things Obama is trying to do in the US is to keep jobs within the US. This is the same country that has been preaching to the developing countries why they should keep their borders open. Take a country like India, it is unthinkable that they would give a software project to a company from a foreign country. It is not about how good you are. It will suddenly become some talk about national security or some funny processes before you can even bid. We must begin to believe in ourselves as a country, we must learn to allow ourselves to fall but determine to rise when we fall. In terms of software, I honestly don’t think there are areas where we should depend on the external world. Many interesting things are happening in the Nigerian space, such that anyone who wants to buy software, will do himself a lot of good if he look inwards first. By the time you look you would be amazed at the level of sophistication that now abounds in the software industry in Nigeria. Forget that SystemSpecs is the clear leader for the delivery of Payroll and HR solutions, I think the most ridiculous thing anyone can do today is to buy a foreign software to handle their Payroll and HR. I think it is laughable and ridiculous. Apart from HumanManager, there are a number of other interesting products coming up in the market space. Just yesterday I saw another Nigerian firm, Precise Financial Solutions (PFS), coming up with very interesting solutions, which would not only move Nigeria forward, but also make her a major foreign exchange earner. We have a number of others. Progenics which has done interesting things in the stock market area and companies like e-tranzact. We have quite a lot of upcoming software firms that I believe indigenous solutions should be the option of first choice. Yes, there are areas for some other reasons why you might want to look outside for solutions from foreign countries, but we should try to domicile issues within. You only go out when it becomes absolutely, absolutely, absolutely necessary. For many solutions areas, I don’t think that is so.

What is Remita?

We define Remita as an electronic courier service that delivers funds from one customer’s accounts to beneficiary accounts in the same or other banks including microfinance and mortgage banks; and also delivers the associated schedules to the relevant bodies. Remita also allows the originating institution to keep track of their bank balances across diverse banks, and to also monitor their payment instructions even on an historical basis. It also enables the originating MDA to monitor the status of their current instructions and be able to respond appropriately to the affected beneficiaries.

What specific solutions does Remita showcase? 

Remita would help typical organizations make payment to staff, vendors, contractors and statutory bodies all from the comfort of your office. One of the exciting things about Remita is that as you are paying all these parties, it helps you to calculate taxes which will be delivered to the relevant tax authorities be it the state board of internal revenue or the Federal Inland Revenue. When salaries are paid, Remita deliver funds to all staff accounts irrespective of where they have their bank accounts be it in the commercial or microfinance banks. So you do not need to force your staff to have account in a particular bank. Remita also delivers the appropriate schedules to relevant PFA accounts with the PFCs. So, Remita provides essentially a salary payment administration system and vendor/contractor payment system. We also have a collection module for organizations that need to receive payment from different people especially on an on-going basis.