Indigenous software needs government’s backing

The implementation of the Treasury Single Account policy in Nigeria dates back to 2012, when former president Goodluck Jonathan’s administration adopted it for outward bound payments.

Finding the right technology that will drive the policy was a major concern, and the project was to be delayed for another two years, until the Central Bank of Nigeria engaged SystemSpecs, a private fintech company that was already providing similar service in Nigeria’s financial sector at that time, through its Remita application.

“In October 2011, after a rigorous evaluation process by the Central Bank of Nigeria (CBN), the Office of the Accountant-General of the Federation (OAGF) and support from their foreign Consultants, Remita was selected ahead of local and foreign options to provide the electronic payment technology to power the Federal Government’s TSA initiative.”, says SystemSpecs founder, John Obaro in an interview.

Like many other projects the Jonathan administration started but didn’t successfully deliver, TSA’s full adoption stalled after the pilot phase for inward payment was done in 2014. However, in 2015, the TSA began to take centerstage. As many would recall, President Muhammadu came on board and turned TSA into one of the most significant fiscal reforms ever realized in Nigeria, by fully mandating all government revenue generating agencies completely adopt the policy.

Today in Nigeria, the government touts the TSA policy like it invented it, even though it is a fiscal reform tool recommended by the World Bank for developing nations in consolidating cash resources, plugging revenue leakage and minimizing borrowing costs. During the moments preceding the last presidential election, TSA became a very useful campaign instrument. And if Nigerians got a naira for every time the current administration flaunted TSA as a project it successfully delivered, by now, the nation may have moved away from being the world’s poverty capital.

Beyond the noise and the façade, the crusades and the rhetoric, Nigeria has been able to outpace most African countries in successfully implementing the TSA policy. Nigeria has also gained and saved a lot. With TSA came an upsurge in revenue as its implementation required the closure of about 17,000 commercial bank accounts where public fund was kept and sometimes hoarded or diverted. However, amidst the praise singing on the gains of TSA, Nigeria has failed to acknowledge its own invention, which is the technology behind payments into the TSA, Remita.

Beyond political support, successful TSA policy hinges heavily on finding the right technology to drive it. This technology allows electronic links between spending agencies, the commercial banks, and the central bank which houses the TSA, and that is what SystemSpecs delivered through Remita. The fact that Nigeria’s TSA is supported by a made-in-Nigeria technology is an uncommon feat, considering how much the country favours and invests hugely on imported software solutions.

Despite the outstanding performance of home-made technologies like Remita, the President of Institute of Software Practitioners of Nigeria (ISPON), Dr Yele Okeremi recently decried the failure of the government to institutionalise local content policy in the software sector and how this continues to impede growth of companies in the sector.

Okeremi agreed that even though SystemSpecs, the developers of Remita, is an inspiring example of a local firm that has been able to solve problems for the government, the company like other Nigerian owned firms has not been given enough regard by the government. “So, you come up with some ingenious solution that is being widely touted as Treasury Single Account and what’s the compensation for it? What is the policy that supports that such innovations are well remunerated and repeated? To the best of my knowledge, it’s not the best that we could have done”, He opines.

“I would have suggested that if we wanted to be competitive globally, we should have been looking more into the software space, and I don’t see much traction in that space from the government side. Of course, from the standpoint of the local entrepreneurs, many people are trying their best. And so, what you see is that when you have a system where people know that they are not protected by anybody, they start fending for themselves. Most of the success stories that you hear about are generated by the efforts of entrepreneurs. I still do not see a national strategy or push to becoming self-sufficient or reliant on local software at all. I don’t see it.”

Earlier in June 2018, ISPON had revealed that hundreds of thousands of jobs are being lost due to our foreign software addiction in Nigeria, and that the yearly capital flight as a result of preference for foreign software is estimated to have risen from N200 billion in 2012 to N400 billion.

According to the body, in the financial services sector GIFMIS at Office of the Accountant-General of the Federation (OAGF) is powered by a software from Estonia; IPPIS at the OAGF is powered by a software from United States; ITAS at Federal Inland Revenue Service (FIRS) is powered by a software from Canada; Bank Verification Number (BVN) at Nigeria Interbank Settlement System (NIBSS) is powered by a software from Germany; RTGS at the CBN is powered by a software from Sweden, while most of the software in Nigeria banks are from India, Jordan and others.

Irrespective of challenges, Nigerian fintech players continue to attract the attention of the international community, with a lot of venture capitalists throwing their financial weight behind viable fintech products in the country. Nigerian tech companies led the bulk of investment on the continent in 2018. Prominent among them were Mines with $13 million, Paystack with $10.2 million, Paga and Flutterwave with $10 million each.

Embracing and supporting indigenous technology remains the only sustainable way for Nigeria to compete with the rest of the world, but only the government can champion this, first, by placing a vote of confidence in indigenous software, legislating that Nigerian solutions be given first consideration before foreign counterparts in the financial sector and most importantly, giving due recognition and compensation to home-made technologies behind projects of national significance.