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Systemspecs grip on revenue collections and payments for the federal government into Treasury Single Account (TSA) is set to be broken but in a way that could also leave indigenous tech providers broken and disappointed.
Systemspecs is the indigenous technology firm that created Remita, the technology behind the successful implementation of the Federal Government’s treasury single account scheme. The TSA has enabled the government to keep track of all its revenues across all its MDAs. So far it is estimated that N8.9 trillion has gone through the TSA all powered by Remita, an indigenous technology.
Interestingly, even though the government has successfully operated TSA and counts it as one of its biggest successes, Systempecs, which developed the scheme has not been paid for its services for at least 17 months.
Sources tell BusinessDay that the last time Systemspecs got paid for collecting revenues on behalf of the government was in April 2016.
The firm charges flat rate of 1.0 percent on all collections made on behalf of the government. This contract was signed in 2011. However, it is also understood that the FG is seeking to renegotiate this contract and is proposing a 1 percent charge on collections based on a cap of N5, 000 per transaction.
This new contract will reduce the initial proposed revenues to Systemspecs by as much as 90 percent. But even while this new contract is yet to be signed, and while the federal government is still owing Systemspecs unpaid commissions for 17 months, a memo recently released by the CBN could end the control Systemspecs has over TSA.
The CBN in a circular dated April 26, 2018 has announced that all licensed Payment Solution Service Providers (PSSP) would be eligible to participate in the sweeping of Federal Government collections to the CBN under the TSA e-collection framework via Nigeria Inter-Bank Settlement System (NIBSS) without direct integration with the CBN.
This circular effectively breaks the monopoly that Remita, a product created by Systemspecs has had on the federal government TSA operations in the country and replaces it with a NIBSS monopoly.
“Accordingly, we advise all PSSPs to work on their various front end solutions to ensure that they conform to the new standard and also establish connectivity with NIBSS before the go-live date,” the circular signed by Dipo Fatokun, director, banking and payments system department reads.
BusinessDay gathered that the go-live date will be at the end of second quarter or early third quarter. At that time, Remita will no more be the sole collector for TSA, rather it would be one of the competitors.
The implication is that PSSP and other players who have been left out of the massive TSA payments, which total about N8.9 trillion a year, can now favourably compete. Banks could also bypass PSSP and make payments to the CBN directly through NIBSS.
“There are no problems with Remita, just allowing room for more players and engendering competition,” Fatokun said.
But sources in the banking industry are questioning why the CBN will be kicking out Systemspecs and replacing it with NIBSS when there are no issues so far with Remita.
“The question is, why the CBN is trying to fix a system that is not broken. This is even more so when Systemspecs is yet to be paid for services it has rendered so far,” one source told BusinessDay.
There is also fear in the tech community that the way the federal government has treated Systemspecs could discourage other tech companies from designing solutions for the government.
Sources at Systemspecs say they are not worried about the new development as they have always put the national interest first. But our source also disclosed that the last time the federal government paid Systemspecs a commission for using the Remita platform was in April 2016. Payments were stopped after the Senate raised questions about the platform and since then, it has yet to resume.
Frustrated by the lack of payment, some players in the federal revenue collection system, especially some of the banks are said to have stopped collecting or are even charging for collections.
TSA was an initiative of the Central Bank and the Federal Government that commenced in September 2015. The solution was implemented for the government by SystemSpecs using their Remita platform. The company successfully bid and was given the mandate to implement the scheme ahead of other bidders including NIBSS, BusinessDay learnt. But NIBSS is now about to be brought to implement the scheme without any competitive bidding process.
When contacted, Ade Shonubi, managing director/CEO, NIBSS, said he only knows that the CBN is trying to allow more PSSPs to participate in TSA collection but does not know the model and how NIBSS is going to be involved.
Remita was integrated into CBN, Office of The Accountant General of the Federation (OAGF), and the banks such that payments made to the FGN and its MDAs reflect in their CBN accounts instantly. Remita also helps the government to make payments of salary, vendors, and other local payments.
So far, a total inflow of N8.9 trillion from Ministries, Departments and Agencies of government has been recorded by the Federal Government since the introduction of TSA, according to Ahmed Idris, Accountant-General of the Federation, who spoke in March in Abuja.
Other players in the industry have also claimed that the Remita platform for collections have become unstable which Systemspecs denies.
“This is just a case of trying to give a dog a bad name just to hang it,” said a source at Systemspecs.
But this claim of an unstable platform is what is said to have forced the CBN to engage with NIBSS, and Unified Payment Services Limited (UPSL) to become alternative collection platforms and prevent Remita to become a single failure point.
The CBN subsequently sent out a circular to all banks and Payment Services Providers that it is now mandating an aggregator model for TSA, the effective date it is yet to be announced. In a separate document previously sent, the NIBSS, the aggregator, would be charging just 0.1 percent as fees. This is against the 1.0 percent charged by Remita.
“Introducing other PSSPs will not degrade payment. It will give government options and drive down costs,” said Johnson Chukwu, managing director/CEO, Cowry Asset Management limited.
But sources in the tech community note that under the new proposal, revenue collections could become more complicated for payers.
Instead of a single payment point, which Remita provides, you will now see multiple payment points which would mean that the contractor at any point in time is considering what payment option to use. There is also the fear that the 0.1 percent collection fee allegedly being proposed will not be profitable for many of the service providers in the long run. This is beside the fact that the government has not been faithful to the contract it signed with Systemspecs, which also raises the risk that it would also not be faithful with the new service providers it is seeking to engage.
Another area of TSA which NIBSS and other PSSPs are fighting to get into is lucrative TSA payments for which Remita charges between N100 and a cap of N5,000 per payment made on behalf of the Federal Government.
However, sources at Systemspecs once more told BusinessDay that the charges are subject to negotiation which the federal government has already engaged Systemspecs on.
Sources have told BusinessDay that NIBSS has offered N10 to FG for payments with faster delivery. Some tech providers believe this offer could also be deception if NIBSS is not putting a cap on the charges per payment. The government could actually end up paying more than N5,000 per payment if there is no cap.
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