The REMITA scandal

All hell is about to break loose with the story of ‘REMITA’, a software product used by Nigerian government agencies and the CBN to manage the remittance of funds between themselves.

The headline screams, FRAUD| Senate Directs CBN To Stop Payments To Remita, Investigates TSA

If I understand the Remita Gate properly, the federal government entered into a deal that basically procures a software, then perpetually pays the authors of that software 1% of the transaction volume it is used to process.

I don’t get this.

Would any private company enter into that kind of deal? Would a bank procure a banking software, then pay the authors a percentage of the volume of money the software processes?

This is similar to the Alpha Beta issue in Lagos and the Olusola Adekanola brouhaha of years ago where private companies get connected to an unending tap spewing out government money by collecting percentages of revenues in perpetuity.

Here is a spirited defense by one of the REMITA in-house guys:

Banks by the BOFIA Act are meant to collect revenues on behalf of Government. CBN had before the advent of TSA adopted Remita as a platform for assisting it in revenues collection, among other payment services it uses the platform for. Also, prior to the advent of TSA, virtually all banks had been riding on Remita as a payment platform to facilitate their payment and collection services for Government, non-governmental bodies and organizations as well as other business entities and individuals. Several Private Sector companies have used Remita over the years for the same purposes.

The standard service charge paid by all these entities is 1% of the value of transactions they process, and this is the same rate confirmed by the Senate. Except Government through the CBN decides to build and own a platform like Remita for the purpose of assisting it in facilitating the TSA operation, then maybe Government could go in that direction. The 1% service charge is shared between the platform owner, the CBN and the banks for rendering the collection service, regardless of who the service is provided to. Maybe the only tenable argument that could arise from the part of the Senators in my view, could be to request negotiation of the service rate charged for use of the platform, probably because of the volume of transactions generated by TSA. I doubt if the Government in all sense of seriousness, would want to demand that the platform and related services be provided free of charge. The reality is that the TSA operation that recently generated N2.5tn for Government could only have been achieved by the use of a payment and collection platform like Remita. So, the question is not about whether or not the Government needs a platform like that.


For the Senate to then refer to the scheme as being a fraud is at best incorrect and misleading. Contrary to what Dino Melaye was quoted to have claimed, Remita has not contravened the BOFIA Act, because it is not acting as a financial institution. Remita is simply a technology platform that banks and the CBN who are set up by law and governed by the BOFIA Act and other related laws use to collect revenues on behalf of Government. Remita is not a company (Dino referred to it as a ‘Private Company’), it is payment management tool, simplicita! Our Senators should stop playing to the gallery and avoid flying their ignorance at will, just as they’ve done in this case and is it scary? Why wouldn’t they conduct proper fact finding and due diligence, get very informed, before ‘blowing the whistle’? While they should be encouraged to blow the whistle, they also need to know that it should be done with proper diligence.

An outsider to REMITA, but a long term executive in the Banking Industry opined thus:

This is a negative action that will signal investors we are not serious.
Systemspecs Limited developed REMITA and sold it to Government. It was negotiation and a proper contract put in place. Due process should be followed to review the contract. In any case, the senate cannot direct the termination of a contract it is not a party to – that’s a matter to settle in court.

Everywhere in the world, payment services are charged for and this cannot be an exception.

Besides, Dino Melaye cannot suddenly love Nigeria more than his pocket – that’s a miracle beyond the reach of our miracle workers.

There are clearly moral and legal ramifications to this.

If a government signs a contract (even if illegal, immoral or amoral), can / should a new government nullify it.?

Morally, I think this contract is tantamount to fleecing the citizens perpetually. I am guessing a lot of government officials must have been “induced” to keep this on. The fact a private company would not sign this kind of agreement lightly is the fulcrum of my position.

It should be interesting observing how this will play out in court.

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