Remita: Homegrown technology driving financial inclusion, economic growth

McKinsey, a worldwide management consulting firm, in September 2016 released a report tagged ‘Digital finance for all: Powering inclusive growth in emerging economies’. According to the report, “Digital finance has the potential to provide access to financial services for 1.6 billion people in emerging economies, more than half of them women. Widespread adoption and use of digital finance could increase the GDP of all emerging economies by 6 percent, or USD 3.7 trillion, by 2025.”

The additional GDP, it explains, will generate 95 million new jobs across all sectors of the economy, while governments could gain $110 billion yearly by reducing leakages in public spending and tax collection.

No doubt, tomorrow’s economy will be built on digital finance as the world looks for alternative and faster ways to achieve inclusive growth, empowering individuals, businesses and governments to carry out cheaper and more effective transactions.

Nigeria as an emerging economy is poised to leverage the opportunities associated with this projection. Indeed, the country is fast becoming a dynamic ecosystem bursting at the seams with opportunities for FinTech start-ups, according to the 2016 KPMG FinTech Report.

At present, less than 50 million of Nigeria’s over 170 million people have bank accounts. However, about 115 million of the country’s youthful population use mobile phones for financial transactions, and FinTech companies are latching on this to launch products cutting across lending, payment, transfer, purchasing, investing/borrowing and switching. Prominent among these are Paga, PayPal, PaywithCapture, QuickTeller, GTMobile, e-Tranzact, Remita, among others, who have collectively made financial transactions much easier, eliminating the need for consumers to join long queues in banking halls or restrict their financial transactions to official week-day work hours.

But beyond basic financial services, some FinTech products, such as Remita, are making enormous impact on government finance and national bottom lines. Remita, launched in 2006, is a home-grown technology driving financial inclusion in Nigeria. As an electronic platform, it is helping the government, corporate organisations, SMEs and individuals to make and receive payments easily. It aggregates multiple bank accounts, giving customers the ability to perform the complete suite of eTransactions.

More importantly, Remita has been the enabling factor behind the success of the Treasury Single Account (TSA) policy adopted by Nigeria on September 15, 2015, a policy that has been lauded at home and abroad for returning over N4.3 trillion cash assets to the national treasury. The TSA is a public accounting system which collates and deposits all government revenue, receipts and income in a single account maintained by the Central Bank of Nigeria (CBN) aimed primarily at ensuring accountability of government revenue, enhancing transparency and avoiding misapplication of public funds. Though it was initiated by the President Goodluck Jonathan administration, its full implementation became a reality under the current President Muhammadu Buhari administration.

Government’s attempts over the years to adopt TSA failed to gain traction owing to CBN’s lack of technological capacity to manage the retail aspect of the policy. RTGS, a foreign e-technology platform expected to drive the payment leg of Nigeria’s TSA project, was subsequently found to be unsuitable for retail payments. Then came SystemSpecs with Remita, which has succeeded in overcoming this challenge.

One year on, the government has identified and closed over 17,000 accounts belonging to ministries, departments and agencies (MDAs) and transferred the recovered funds to the TSA. Deposit Money Banks have also been constrained to diversify their sources of deposit mobilisation rather than rely on these idle funds which yielded interest for faceless individuals and groups while the government was starved of funds.

Earlier in the year, Lai Mohammed, Minister of Information, said the TSA had helped this administration’s fight against corruption, flushed out ghost workers and saved the economy from imminent collapse. Similarly, Vice President Yemi Osinbajo in August disclosed that 40,000 ghost workers had been flushed out of the public service, thanks to the TSA which is powered by Remita. When that figure is multiplied by the N18,000 national minimum wage, it becomes clear that the system is saving the country a whopping N720 million monthly and N8.64 billion yearly.

It is the view of analysts that the TSA’s effectiveness may not have seen the light of day without Remita, the payment gateway powering the policy behind the scenes. One can’t agree more. Indeed, Remita has instilled fiscal discipline that allows government to have control over budget allocations, whilst providing multiple entry points for collections. The execution of the TSA policy made possible by Remita has significantly reduced government’s debt servicing costs, lowered liquidity reserve needs, and fostered effective use of surplus cash.

But beyond this, Remita is also fostering inclusive growth in the country. As Deremi Atanda, executive director of SystemSpecs, said during the recent Gulf International Technology Exhibition (GITEX) held in Dubai, Remita is at the forefront of driving the national financial inclusion policy, and is currently used by about 500 micro-finance banks to meet the needs of many Nigerians who lack access to commercial banking services, empowering them to extend financial services to unbanked Nigerians.

“Remita processes over $30 billion worth of transactions every year, and that’s just within Nigeria. There’s also a roadmap to take Remita to Africa. So if you have a vision to be part of revolutionising payments in Africa at whatever level, driving financial inclusion at the national level, savings, micro-savings and micro-transactions, Remita is best placed to help you achieve that,” said Atanda.

The time has indeed come for Nigeria to celebrate this home-grown technology that is driving a culture of accountability in the public sector and setting the stage for a new economic order driven by transparency and financial inclusion.

 

Nnanna Nwafor