Tsa and remitta: the crucifixtion of john obaro

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John Obaro, the CEO of Systems Specs, owners of Remitta is one of the most unassuming and successful IT entrepreneurs in Nigeria of his generation. He has run SystemSpecs for over 20 years with modest success in a time when the software industry lagged telecoms and the more popular hardware business.

His company built one of the most successful local HR software called Human Manager which lots of organizations in Nigeria use to manage their HR departments. When he entered the payment systems business with Remitta, he was competing among the big boys like Interswitch,MasterCard and Visa. Until recently, few people knew about Remitta and what it did .

That he was trying to get Remitta as a platform to assist the Federal Government clean up its messy accounts made no headlines. Then enter Buhari and the directive to fasten this project which was started by the Jonathan government. It was only Remitta that was prepared to be the platform for this service. Others like Interswitch or Visa can be made to do same but in the time frame demanded by government, I am not sure any of them would deliver. Remitta has been tested to run pilots for TSA.

That Remitta , a locally built software delivered on this mandate should normally be celebrated. And for John, this should be his finest moment after over twenty years of struggling to show that software entrepreneurship can become big. But today, he and his efforts and company are being demonized and crucified. There are all sort of stories about Remitta ripping Nigeria off .

Some outlandishly claim that the company was paid N25b daily for the transfer. Politicians have latched onto the narrative. The senate that is struggling to learn to use Facebook wants to go the roots of the “fraud”.

In our beer parlors and market places, a hardworking Nigerian who had delivered a service to Nigeria is being branded a thief, and in our corruption wearied nation, we are comparing him to people who put their hands in the till and stolen our national reserves.

I will not want to go into the propriety or otherwise of the approximately N9 billion that was paid for his service. But he had a contract and for a while when he was earning little or nothing from his hard work of piloting this service, we did not complain. And no one is querying how much MasterCard, Visa and Interswitch are making transferring money for all of us. Or how much banks have made from COT and other transfer schemes imposed on us without our consent.

As a gracious man, I am told he quickly refunded the money. But he had a contract with Nigeria and can go to court, win and walk away with the money to pay back for years of toil. People who have stolen Nigeria blind did not toil 20 years to make enough money to buy private jets and flashy yachts.

The nature of technology is that you can work for 20 years slaving on an idea and then one day hit a jackpot. Or never do. That in summary is what happened to John.

I am against the crucifixion of John. If Nigeria must diversify her economy, people like him should be beacons that the rest of the society should follow. Who knew you could make billions by not stealing money from the treasury?

By not groveling to power and being rewarded with an oil block, or an import license to import fuel?

It is curious that our senators want to investigate. For people who are importing consultants from Facebook to teach them how to use a social media site popular with teens who are barely out of school, how will they understand that Facebook was started by a teenager and the force of his ideas is minting more money than our oil that fuels their large salaries and allowances?

I hope when they meet John, they will see someone who can call their bluff and that they will be humble enough to understand what his idea means in a Nigeria desperate to build an economy that will serve us all. Including the unhealthy appetite of our legislators.

And for the rest of us who have joined the lynch mob for John, he is not the villain here. And the earlier we realize that the better for all of us.

If the government should refuse to pay him because we demanded so, all for political correctness, we are saying that hard work should not pay. That a man who has an idea should not be paid for it in a world increasingly driven by ideas from technology visionaries who we pay dearly for making our lives easier.

https://www.linkedin.com/pulse/tsa-remitta-crucifixtion-john-obaro-collins-onuegbu

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Anyone who jumps in to crucify John Obaro , I should say, is the typical Nigerian who jumps in just because others are swimming.
The so alleged huge amount Remita got paid was for job done, 1% is reasonable fee for transactions , FGN should have negotiated bettesr. The amount is huge because one company did the job, spread out the collection to different banks and same or more will still be paid when totaled…I praise the Remita team for the capacity to pull off such deal and also executed flawlessly.

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My thoughts on this: https://twitter.com/stigwue/status/665068524482744320. Government is just a big bully.

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I just tire for this government at times, I wished it were Microsoft or Oracle who provided the software, let’s come and hear if they would order refund of the money.

And this is the environment in which we are hoping to write software and be celebrated. God help us.

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This is about John. He’s the CEO and he didn’t act right. Are you telling me that, if I steal my company’s money and I come to you for a service that normally would cost $5 but since I have stolen funds, I offer to pay you $5million - would you accept the deal?

Would you turn your face and tell yourself its just business?

Tell yourself whatever it is you want to so you can sleep well at night, but its wrong. System Specs took advantage of the corrupt system in the previous administration. We know foreign firms do that a lot here but one would have expected more from a home grown firm. 1% of N2.5trillion is too much a fee.

What would have been applicable in a saner society would have been a lump sum but here, everyone wants to take advantage of the system.

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So why is MTN begging for a 2year period before they can repay the fine?

I’m even shocked that younger people are talking like this. Do you know how much is taken out of the system daily thanks to contracts like this?

Or you think when Remita sent that money back, Buhari and Osinbanjo flew to London to get an apartment at Hyde Park?

Let’s all act right, at least for once. This “I wan hammer” mentality is just wrong.

You ask a developer for a fee for a service that would cost N40k but because he knows you’re a newbie,he tells you a lot of gibberish and sends an invoice for N650k. This happens a lot and its not different from what Remita did to the CBN

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I still don’t get it. You mean FGN is a newbie in using such tool or FGN didn’t do a good job at negotiating the transactional charges ?
Or that it was corruption which fixed the charge at 1% which basically was standard for such business, and negotiable for bigger volumes?

I don’t get…we are in for a shocker when we look at the numbers in many other schemes like that, usually spread out to different banks and fiercely lobbied for…

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@Oboraxe

This is why you didn’t get it

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The fee was negotiated since 2012 whether rightly or wrongly and the government should keep to its agreement. Now of course the jealousy factor is fueling the issue. Systemspecs made billions from the deal and its giving some high blood pressure. And so what? Did govt ask how much oracle makes from the oil sector? Or how much Microsoft makes from the computers sold in Nigeria or how much Ingenico makes from POS? Or how much interswitch pays its vendor postillion. Systemspecs should keep the money. It will be seed money for r&d in Nigeria.

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The FG has been sacking contractors since 1849 - its one of the cons of doing business with the government in Africa. I don’t recall you commenting when the FG sacked Bi-Courtney in 2012.

About Jealously: who is jealous? Dino Melaiye for bringing this out or the people who don’t support such a fee being paid to a private firm?

About Mirosoft computers and Oracle being sold in the oil sector - apples and oranges.

We’re talking about private firms doing businesses with the government not with individuals or other businesses.

Apple’s biggest customer include companies like Google, AT&T and the U.S government.

But do you think Apple sells its computers to the United States government at a 6000% markup? Whoever does that will face a congressional hearing. Apple sells its computers to the government at discounted prices. See here: http://www.apple.com/r/store/government/

Here on the other hand, everyone wants to take advantage of the system and when someone points it out, we hear words like “jealously”, “honor your contract”

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. Last I checked the Nigerian govt you so love spent over 3 trillion paying waec products to sit around shuffle paper around and pretend to be doing something while university grads develop holes in their shoes looking for jobs. Further it is the height of irony that one of their employees the dishonorable wife beater and adulter Dino Melaye is there criticizing systemspecs while receiving 250 million salary for doing pretty little.

For systemspecs they signed an agreement with govt and it must be respected. Pay them their share as stipulated and if the buhari govt doesnt like it they dont have to renew their contract when it expires.

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Just checking but is your main logic ‘pay the contract that was agreed’? Irrespective of if it was inflated or marked-up, a contract is a legal document which must be enforced.

I must say I know absolutely zero knowledge about this ‘scandal’, but just reading through the article and subsequent arguments and I was leaning to believe the guy was shabbily treated. But Jimi makes some really strong points (as usual) and sensible arguments. Does anyone have anything else to share (comparable contract) which shows that in a parallel world, this contract is reasonable?

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I honestly don’t understand his argument but I feel he sees this whole thing as “the big guy taking John’s lunch money” . That sort of thing.

If you feel that way @Nwabu, you shouldn’t because this won’t affect System Spec’s balance sheet much. They are big. Its their image, they are really worried about.

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Trying to project the intention of both parties beyond what is in the public domain would just be conjecture.

The alarm around the TSA-Remitta contract has brought to light some points:

  1. Free markets and the ability to charge for services freely versus fair pricing.
  2. Was the contract fair? What makes a contract fair or unfair.
  3. Are you bound to honor an unfair contract?
  4. Can a government renege on the terms of a contract and how should a business manage that

Any ideas?

I think the contract has many learning points and would be discussed for many years to come at least in business cases.

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Well, I still hold a Nigerian passport and the last time I checked Buhari wants to make us great again as a nation :smile:

This same administration or the previous one that signed a contract with Remita?

They are actually planning a N8Trillion budget, hope you’re aware. We’ve never gone that high before and it would be a boost for all sectors, including tech.

Well, life sure is full of those

If there is a direct relationship between his tendency to assualt his wife (I don’t support this) and his boldness to speak up on scandals like this, then I guess Buhari needs more wife beaters in his cabinet.

John Obaro has great advisers and I respect his decision to return the money immediately. You do not act irrationally by threatening the government to “respect its contract” or that you would take them to court. The best they can do now is to re-negotiate a new term for its business with the government.

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For international firms doing business in Africa (especially), they hold some certain things dear:

1.) Cost of running your business won’t include operational cost only but also bribes (Case in point - Richard Branson on running Virgin Airways in Nigeria and Strive Masiyiwa on running Econet)

2.) You can earn extra-normal profits at different periods in time especially when you align with the government in power (Case in point - Dangote Sugar and the ban of importation of sugar in 2013)

3.) Government termination of contracts is normal. If they take one away from you - get another one (Case in point - Bi-Courtney’s contract termination for Lag-Iba and the MMA development and management contract)

4.) Fines would be many - get a negotiator to reduce the fines not a team of lawyers to fight the government (Case in point -Shell, M.V Marevia, Guiness, MTN and more recently Skye Bank)

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I feel your grief Jimi. Agreed, the system is corrupt and we want it fixed. My point here is this Remita contract did not just start with TSA. The Government through CBN (apparently under Sanusi’s tenure) has been using Remita and there was already an existing agreement which I am very sure John did not use ‘jazz’ to make them sign it. Instead of shouting John did this or System Specs did that, re-negotiate the terms of the contract according to business ethics and let’s move on. Why are we making it look like John is the only corrupt one here?

Had the FG signed this deal for Oracle’s JD Edwards, would they wake up at the middle of the road to ask for a re-fund because they now realize they shot themselves in the foot? Were the money far less than the called trillions, would they have batted an eyelid?

It’s great that John returned the money but this KIND OF WAY of doing business is not OK at all. Two wrongs don’t make a right O! You are hearing all about Systems Specs now because it involves “inflated profit” but it is also happening to another smaller company who has done business fairly with the Government and nothing go happen because somebody go think say the money too much, no be just ordinary software wey dem fit “buy” for Ikeja? Toh.

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i won’t be too quick to crucify John…i mean someone must have signed of the contract and also must have read the terms and condition(s), john was doing what Interswitch and etranzact would have done, i think people are hitting this guy too hard because he’s not popular on the newspaper frontpage unlike Interswitch and etranzact.

CBN Agreed to the terms and signed the contract, hold them responsible

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This has nothing to do with fairness and everything to do with responsibility.
Let me say it again one more time. If a storekeeper sells a well known drunk a bottle of star beer for 5000 naira whose fault is it the drunks or the shopkeeper? Systemspecs is no different than Julius Berger who overprices for roads or SAP whose implementation at NNPC must be one of the most expensive in history.

If we are to play the blame game Nigerians should hold the CBN responsible not systemspecs. Heads should be rolling there not asking systemspecs to refund money. An agreement was signed and must be respected. The Buhari government has a right to terminate it but no right to withold payment for work done on a stipulated contractural basis. Its called law and order and is the difference between a jungle and civility and it is clear that Nigerians are so used to lawlessness and intellectual poverty that many dont appreciate the difference.

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Everyone has spoken well.

I am frequent reader of radar bu I registered just to join in this conversation.

CBN should take most of the blame. As regulators in the financial services industry they have many circulars specifying how much to be charged for different services.

“e-collections fees as prescribed by CBN is 0.75% not more than N1,250.” I am surprised that the central bank would deem it fit to flout its own prescription and agree to what is now being termed a criminal fee of 1%.

In the interest of clarity; that is 1% of whatever the economy is projected to earn whether in naira or dollars.

A flat fee would probably have not raised this much uproar as has been done by other service providers in the past.

Other question that beg asking are:

  1. was there a transparent bid process?
  2. NIBSS is 50% owned by CBN, why did it not use its own platform?
  3. why is CBN collecting 10% of the transaction fee? are they now charging the same government they are a part of?
  4. why was the fee not capped?

what the company has achieved is cool, but their technologies rely on infrastructure of established players no different from the voguepays, cash envoys and simple pays.

Kudos to them however!

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