Nigerians not ready to pay price for development – Yele Okeremi, CEO of PFS

YELE OKEREMI, founder and chief executive officer, Precise Financial Systems (PFS), who also doubles as the national president of Institute of Software Practitioners of Nigeria (ISPON), sat down with Business a.m.’s OMOBAYO AZEEZ in this interview, to dissect the state of the Nigerian software market in relation to local content patronage. He offers insight on how the executive orders and vendor policy introduced by the government to give fillip to local solutions have yielded only limited results. Excerpts:

The Nigerian economy is many things to many people. From your viewpoint, what can you say about the performance of the economy?

There is no way you can divorce the economy from the society because without the economy, the society becomes lifeless and meaningless. If I take a look at the way the economy is, the economy is not as boisterous as it could have been if we had carefully done the right thing; and I will break this down. If you look at the Nigerian economy today, pretty much all we have been doing is running around, running in a circle depending on how far you are from the centre of that circle. The economy is heavily dependent on a single product – crude oil. So, you realize that it is about how far away you are from the epicentre of the petroleum economy that determines how well you are probably doing. For more than 97% per cent of Nigerians, that is the way it is. And that could have been alright if, indeed, the country had no alternatives. But in a country like Nigeria, where there are several alternatives to petroleum, it is certainly not the best. We could have done a lot better having so many of those circles, if the petroleum economy is doing its own and so many other economies are doing theirs.

I see government trying to talk about agriculture as an alternative. I think if you want to talk about agriculture, it will make sense to realize that you would need to do more work than what I see. You cannot look at agriculture from peasant or subsistence standpoint. The countries that are doing well in agriculture are not doing that anymore and I don’t think Nigeria can try to be an exception by saying people should go to the field and start farming. Switzerland is doing better than many countries in Africa. They live on agriculture but they don’t plant cocoa. What they do is part of the agric value chain. They produce chocolate. And behold, their chocolate economy can swallow all the cocoa-planting economies.  So, we need to think further from the way we think. I think one of the challenges we are having with our economy is that anything that does not come out of the ground is not valued in Nigeria and the world has moved away from anything that comes out of the ground.

There have been many disturbing issues in the software market over the years, what is your assessment of the software market now?

I don’t think anything has changed at all. If anything has changed I wouldn’t say a significant change. I was in a meeting about a week ago with the Honouable Minister of Communications and Digital Economy, Dr. Ali Isa Pantami, and he alluded to this fact: “Why is it that when people hear ‘IROKO SOFTWARE” they think it is fake. They believe it is substandard and inferior. The minister said that he was really concerned about that. That tells you that what I said, that I have not seen any significant changes, is not just me quoting myself but the high authorities. So, things have not really changed in terms of how much patronage the local software market is getting or how much we have been able to deploy local technologies. I am not aware of any changes. Yes, there are success stories here and there such as Remita, one of those exceptional stories we have in the country and if you look very well into that story, you will see many challenges, whereas, it would have been a lot easier if things were different. Precise Financial Systems (PFS) is another success story. But the concern is that we don’t have enough success stories in the country to become pervasive, and become our narrative.

I was at the Nigerian Economic Summit Group the last session and interestingly, this conversation came up. You still see people who are respected in their communities and who people know to be smart but they will still tell you that they do not believe in the capacity of Nigerian firms to produce tech solutions. So, for me, I have not seen any significant changes.

Could the observed lack of trust in domestic tech solutions be emanating from lack of competitive capacities by the local practitioners?

The honest answer is yes and no and I will tell you why I said so. It is no because the knowledge of developing software is no secret anymore. Today, we have children as young as nine-years, who can code. And they can do that very well. The capacity to write good code is inherently linked to two things: your intelligence and your creativity and imagination. From what I know as a practitioner in this industry for well over 30 years, I can tell you point blank that Nigerians are not bereft of intelligence or creativity at all. But then, the issues around getting solutions to the market are a lot more complex than just creating solutions. There are so many intricate things around it. For example, the market, first of all, needs to appreciate that there is no feel-safe solution. The market needs to be patient that even if you bought solutions that were written by angels, as long as it will be implemented here on earth, there are possibilities of challenges. And if we learn to be patient with foreigners, we need to learn to be patient with ourselves as well.

I get to see that when a Nigerian company provides a solution somewhere, the clients are not patient at all. For any little thing that is unexpected, there is a lot of noise and the first thing they begin to question is the competence. They will say, “We don’t think you have the capacity to support our business”. I tell people, what is your business and how big is your business? A number of organisations and banks pride themselves as very big but I can bet that there is no big organisation in Nigeria relative to what we have in the western world. Which organisation can we compare with big firms in the US in terms of their financials? None! Simply because you have 2,000 employees you see yourself as being very big; what then do you want to talk about large organisations that have about 200,000 people? So, this kind of issue is like David and Goliath.

These same local companies, if they buy a foreign application and the worst glitches happen, they are calm. The question is that if you don’t understand that the price for development exists, we won’t go anywhere. You are always looking for readymade solution. Those readymade solutions may not always suit you. If you go into a shop to buy a suit for instance, there are sizes and those sizes are based on certain designs of best fit. Yet, after buying it, most of the time, you still have to take the suit for adjustment. So, what I am trying to say is that if you are ready for development, you must appreciate that it is not going to come from abroad. They didn’t design them for you. If you want solution to your own problem, then be prepared to pay the price. Part of paying the price is first, believing in yourself; second, transferring that belief in yourself to your counterparts and thirdly, understands that should there be any unexpected twist at all, together we can weather the storm. If we do that, we will be on the path to development. But as long as we are looking for solutions coming from outside of Nigeria, I think we are going to be there for a very long time.

The Federal Government has pronounced some executive orders to promote local content patronage in the country. Have the orders been having effect on the patronage of local software and tech solutions?

Executive orders are good and they probably have some impacts. But executive orders are very limited. First of all, with an executive order, the best that you can get as guarantee is the lifespan of the government that brought it. The next government is not duty-bound to follow the executive orders. And then, executive orders are also limited in the fact that as long as they are not a statute, people can still find ways around them. I would say the executive orders are good steps that the government has taken but the limitations of executive order still make it very challenging to see the changes you and I want to see to be significant.

Apart from the executive orders, what other elements do you think would be imperative to achieving the desired goals?

The other time you ask about skill gap, and I answered yes and no, I only addressed the ‘No’ part of it and now, here is the ‘yes’. In truth, Nigerians are not inferior to anybody. But if you want to nurture talents, there are certain conditions that must exist in the society, part of which is that you need an environment that is conducive for talent to remain. Some of these things are simple and some are more intricate. The simple ones include security, health care, quality of life in terms of basic amenities such as electricity, connectivity and so on. When those things are not available in a society, talent may find it difficult to be better. You see, talent is like water, it finds its own level. Yes, there is talent, but you cannot provide security, basic amenities, and healthcare and so on.

Conversely, other countries are providing those things and they also need the same talents. What do you think would happen to the talents that you produce here? They are going to migrate to other places. So, Nigeria is experiencing a lot of brain drain and it is increasingly difficult for Nigeria to keep talents. And that has nothing to do with entrepreneurs because a lot of them are also bleeding today. Just two days ago, somebody told me same thing and what could I do? I could not stop him from going because I want better life for my own children. And I cannot guarantee the kind of things he needs. I am only a managing director. I cannot guarantee security, healthcare. Even if he falls sick, God forbid, how well can the healthcare system support him? What I can only do on my own part is give him some money. So, those are the areas at the very minimum, at the national level, that if you want to be serious about pursuing anything in this area, we have to sort them out. Otherwise, we will continue to create talents and they will continue to leave the country. And then inadvertently, what has happened is that Nigeria has become very big bazaar, if I may use that word. We have closed our borders because we are talking about smuggling of rice, and then we have opened our shops to what we call foreign investors. I think that thing should be thought about differently. Although, I don’t have an idea about how much we are saving from smuggling of rice by closing the border, but the amount we are losing by allowing our best brains to be sold very cheaply for foreign interest, who then come back and resell that product that has been developed, I put it that we are spending multiples. So, to me, I believe we are closing the wrong borders, and opening the wrong borders. That is my opinion.

The National Office for Technology Acquisition and Promotion (NOTAP) introduced a vendor policy to develop local capacity through technology transfer. How well has this helped the local software market?

See, there are ways that we can look at these policies and feel that it is the right thing. The structure of the vendor policy in NOTAP is to try to insist that suppliers of foreign software must have a local partner that must also benefit certain percentage from the deal. While it sounds okay, the implementation is challenging. When was NOTAP set up? I don’t remember but I’m sure that NOTAP is more than 10 years old. Therefore, since 10 years, how much of technology has been transferred or acquired locally? That would be the way I would rate the policy. For example, Nigeria has been paying so much for foreign banking solutions, and yes, we say they must have a local partner. To what end can you have the local partners? My expectation is such that it should be that within a period of say three to six years, we must be able to produce and implement this locally. So, if all you are doing is to say that they must pay the local vendor a certain percentage, what you are inadvertently doing is that you are only increasing the cost of doing business. The owners of the technology solutions know how much they must collect. So, what they would do is just factor in the gift that they want to give the local partner and increase the price. The success story should be how many solutions came in as foreign solutions that we are no longer importing. That is the way we should be looking at it, not by merely awarding some percentage to local companies.

The e-payment sector has been experiencing sustained growth as transaction volume and value continue to rise, what is your own assessment of the space?

Yes, e-payment is being adopted. It is obvious and clear that virtually everybody does one form of e-payment or the other.  We must note that this kind of development stands on a tripod: innovation, legislation and the social aspect of it – how people receive the innovations. The financial institutions have done very well for themselves. The Central Bank of Nigeria (CBN) has done very well over the years to bring lot of innovations into payment systems in e-payment space in Nigeria. And these innovations have, in return, brought a lot of changes into the payment system in the country. The CBN has also done well in terms of engaging the community so that the community can appreciate and accept the innovations. But if you look at how the apex bank was able to achieve this, it didn’t go for an act of parliament to realize that, because it would have taken a very long time. The way they did it, however, is that rather than go for an act of parliament, they decided to use conventions. By convention, you just call the parties involved and set the rules. All the parties agreed and they succeeded. E-payment is not only growing, it has come to stay.

How does the larger economy gain from this?

The benefit for the economy is that e-payment increases the velocity of money. That is, it increases the rate at which exchange takes place. Let me give you a very simple example. If I wanted to buy something from you and you came here for the cash which is N2 million, how would you confirm the money paid to you? You will have to count it. The smaller the denomination and the quality of note that you are paid, the more time you will have to use counting. This may take you between 10 minutes and three hours to count the money.

When I used to work in the bank many years ago, there was what they used to call bundle cash. When a customer brings the cash to the bank and the bank says it cannot ascertain the amount, they will keep it somewhere and tomorrow, you would have to come back so that they can count the cash in your presence. Until that happens that you can say you have value for that money. You can see that that is taking time. But with electronic payment, I can transfer N300 million to your account and within seconds, you have the money in your account and you can start using it. You can immediately start to transfer part of it to other people to enhance your own services or products. You can see that automatically, introduction of electronic payment vitalizes the economy in terms of trading. And secondly, if I have to give you as little as N2,000 before, you and I would have to have this meeting. You would need to come down here from wherever you are. There is cost of transportation; there is risk of travelling and there is time involved. On the other hand, with electronic payment, I can be anywhere on the surface of the earth, or even be airborne, and at the same time transfer money. So, that is what electronic payment does for society. We don’t need to sell the e-payment because the benefits to the economy are very obvious.

How does PFS fit into all this?

PFS is a service provider in the financial services sector and a very important player as well in the payment system space. First of all, we empower the entire system in many ways because we have a very close working relationship with the Nigeria Inter-Bank Settlement System (NIBSS) in providing the infrastructure that all the players are connected to; that’s on the one hand. Secondly, we have relationships with banks to enable them offer electronic payment services to their own customers and then, on the third level, we also do business with corporates and individuals who may want to connect to electronic channels as well. We help them automate all those processes. That is what PFS does.

Few years ago, you disclosed that PFS was working with NIBSS to deploy a solution that will make real time truncation of cheque a possibility. Today, 24 hour cheque treatment still holds sway. What is the explanation around the delay?

NIBSS currently runs that application. It went live about three years ago actually. The application for real time truncation of cheques is available with the NIBSS today but right now we are still doing next day value. Although, there have been some reasonable achievements despite this, because some years back, it was 21 days for other country and five days for local cheques, but now we can do next day. And again, I can say that the technologies for the real time are already available, but few other processes such as the convention that needs to be ratified between the parties and the Central Bank of Nigerian (CBN) before this can be brought to the market are what is left. I am optimistic that the ball is in the courts of NIBSS, the CBN and the banks. But as far as the NIBSS is concerned, it is ready. Of course, I don’t speak for NIBSS; I can only speak for PFS but I know all these because of my vantage position. So, NIBSS already has the technology.

Over 26 years down the line, what is the projection for PFS

Well, I think the most important thing for us is that after 26 years, if you know what is good for you, you should change the way certain things are. One of the necessary changes is that we should change the relationship with the company. This means that smart leaders know that you should begin to start thinking about taking a bow and allow younger people to take over the leadership of the company. That is the most important thing that I can tell you.

Secondly, we need to reinvent ourselves in terms of practices. The practices that we had 26 years ago are definitely not what we have today. 26 years ago, every business you wanted to do had to be face to face. Things are changing. 26 years ago, only certain categories of people were sophisticated enough for us to talk to for automation. But today, anyone who carries a mobile phone runs Apps in one form or the other. The market is also changing. So, we need to understand that and reinvent ourselves in the ways we define our customers, in the way we reach our customers, in the way we serve them and in the way we prime them. Those are things that must happen. Meanwhile, the most important thing for us again is that we want a business that will run forever. With this, we are going to have a transition from us who are currently leading to the younger generation. If you come around PFS today, fortunately, you can see right now that my table is clear and blank. This shows that my involvement in the day-to-day running of the business is reducing by the day. People are empowered to make sure that they run the business appropriately. Most important thing is, we have our core values well preserved. The company is very innovative and very agile. We must preserve those values: values of creativity, values of agility and values of respect to our customers. These are internal values. And when we say respect, we really mean that. Whatever we do, we will never make our customers feel bad about our services. We will go the extra mile to serve a single customer and make him satisfied. That is my job now – just to ensure that those values remain part of the business.