On 11th of November 2015, the Senate of the Federal Republic of Nigeria passed a motion to cause an enquiry into the TSA project which is driven by our indigenously developed Remita software platform.
In deference to the Senate, we refrained from any public comment on our involvement pending our appearance before the Senate Committee. We made our presentation to the Senate on Wednesday December 9, 2015 and December 16, 2015 and now consider it appropriate to issue an official statement to avail our numerous customers and the public, the benefit of appreciating the facts of the matter.
1. Who We Are:
SystemSpecs is a 24-year-old Professional Software Service firm.
We have three (3) product lines – SunSystems which we market and support in Nigeria on behalf of the Infor Group of the United States and two homegrown products named after what they do.
a. HumanManager for Managing Human Resources, and
b. Remita for the Remittance of funds.
2. What is Remita?
Remita provides a shared services technology platform for Companies, Individuals, Government Agencies and Banks to make and receive payments with ease. Remita is integrated with all Commercial Banks in Nigeria, over 500 OFIs, ERP systems and Portals of several organisations.
3. Selection of Remita for TSA:
In October 2011, we had the privilege of passing through 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 Treasury Single Account (TSA) initiative.
4. Contract as the e-Payment and Collections Gateway:
Contract between CBN and SystemSpecs for the provision of Remita as the gateway for the Payment and Collection of Government revenue was executed on December 14, 2011. The Deputy Governor Operations and the Director ICT signed for the CBN while the Executive Director (Business Development) and Executive Director (Technology Services) signed for SystemSpecs.
The contract clearly specified applicable fees for the Payment (outflows) component of the TSA and indicated that for the Revenue Collection (Inflows), “Appropriate fees shall be agreed between OAGF, Collecting Banks, SystemSpecs and CBN and added as an addendum to the contract”
The platform commenced payment of salaries of public servants in 116 MDAs in January 2012 which has now increased to over 900 without any challenge.
5. The 1% Charge for Inflows:
In line with the contract, the second phase of the TSA; Revenue Collections, commenced with a Stakeholders meeting in May 2013 where fees were agreed by all the stakeholders. A committee comprising of CBN, OAGF, the Banks and SystemSpecs agreed a fee of 2.5%. This was later rejected and reduced to 1% vide a letter received from CBN.
The details of the rate of 1% fixed by the OAGF and the sharing ratio of Platform Providers (SystemSpecs) 50%; Collecting Banks 40% and CBN 10% were also articulated in the renewal contract dated 11th December, 2013 between CBN and SystemSpecs. Thereafter, CBN by a letter dated December 17, 2013 notified all the Banks of the 1% rate.
The full implementation kicked off slowly in March 2015 and gained traction when President Muhammadu Buhari mandated the closure of all FGN accounts held in Commercial Banks by September 15, 2015. This led to a massive one time surge especially for September and October as MDAs sought to comply. The figures of the massive one-time surge was due to the fact that there were huge residual balances in the banks which are not the typical day-to-day collections but were all the same, passed to CBN through the Remita gateway which was found most efficient.
On September 14, 2015, (a day before the presidential deadline for commencement of TSA Revenue collections) the OAGF invited SystemSpecs to an impromptu project review meeting where they expressed concern about the fees considering the enlarged scope of the project.
The basic point of differences arose because while OAGF is of the opinion that the TRANSFER of the initial balances were outside the scope of the intended 1% COLLECTION fees, SystemSpecs is of the opinion that there was only one contracted rate of 1% for any transaction passing through the platform. The system is accordingly configured to calculate 1% charge on any transaction passed through the platform.
We believe that a simple administrative meeting could have resolved this issue without any rancor.
6. SystemSpecs was Not Averse to a Renegotiation:
On September 16, 2015, SystemSpecs presented to CBN, a report of the meeting at OAGF where the issue of fees were raised. As the contracted fees were discussed by all stakeholders, we requested that while SystemSpecs was not averse to a renegotiation and possible review, there was a need to convene an all stakeholders’ meeting for a full carry along of the participating banks with whom we have a back-to-back agreement.
7. SystemSpecs’ Further Call for Renegotiation Meeting:
October 7, 2015, SystemSpecs provided OAGF and CBN with comprehensive project updates and once again reiterated the need to convene an all stakeholders’ meeting to discuss and agree fees which had remained un-addressed since it was raised by the OAGF at the project review meeting of September 14, 2015.
8. CBN Calls for Refund and Zerorisation of All Charges:
On October 27, 2015: SystemSpecs was instructed by CBN to refund all fees earned on the platform in line with the contract, to an account specified by CBN and to suspend all charges.
We had 2 options at the time. Seek legal action or make a business judgment and continue to discuss an amicable resolution especially knowing that CBN is both our Principal and our industry regulator
SystemSpecs opted for a business decision to honour the instruction of CBN as the industry regulator, suspended further charges and remitted the sum of N3,812,422,721.94 representing 50% of the 1% contracted fees. We also attached a schedule of the balance of 50% earlier paid to 20 commercial banks and CBN. Our understanding is that CBN proceeded to debit the banks and also refunded her own portion of the earned fees.
While refunding our own portion of the fees as demanded by our industry regulator however, we accompanied the refund with a fairly worded letter to CBN, stating why the fees legitimately earned in line with our contract should be refunded to us.
9. Current Status:
We have our eyes on the bigger picture and strategically chose to comply with the refund instruction as we did not want the issue of fees, in the heat of the moment to becloud the work we have done in the delivery of the TSA project.
Since this directive, we have continued to deliver our services as contracted.
The platform has continued to be used by CBN for the collection of revenue into the TSA even while charges remain suspended. This in effect means that fees due from March 1, 2015 to date remain unpaid on this “Pay-As-You-Use” system. It is our prayer and expectation that this issue is resolved speedily in the spirit of fairness, equity, justice and rule of law.
A. SystemSpecs is an indigenous software firm that has a proven track record of developing, implementing and supporting its innovative solutions.
B. SystemSpecs involvement in the FGN TSA project has been professional and patriotic based on a valid subsisting contract.
C. We respect the oversight role of the National Assembly and have already shown that we are ready to offer our full cooperation.
D. SystemSpecs has not violated any contractual term, is NOT involved in any fraud of any kind and remains a responsible corporate citizen available and willing to continue to support the Federal Government to realise its lofty goals of responsible governance through the adoption of home grown proven technology.
John Obaro Christopher Kolade
Managing Director Chairman
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