The Federal Government of Nigeria has ended its 13-year partnership with Remita, introducing a new system called the Treasury Management and Revenue Assurance System. This change will occur in two phases, as current users transition to the new platform. The government aims to maintain oversight by limiting revenue collection to CBN-licensed providers. System Specs faces significant challenges due to the termination of a lucrative contract.
The Federal Government of Nigeria has officially ended its 13-year collaboration with Remita, a payment solutions provider that has facilitated various financial transactions for the government. This termination poses a significant challenge for System Specs, Remita’s parent company, which processed approximately $30 billion annually in 2016 from dealings with merchants and government entities across different levels.
In place of Remita, the government is implementing a new system called the Treasury Management and Revenue Assurance System, which became operational today. A memo from Oluwatoyin Medin, the Accountant General of the Federation, indicated that the transition to this new system will occur in two phases to mitigate severe disruptions. The first phase, commencing immediately, will handle payments and tax remittances in Naira only.
The second phase, scheduled to initiate on June 1, 2025, will expand functionalities to include transactions involving foreign exchange and integrations with various ministries’ Enterprise Resource Planning (ERP) systems. The transfer process aims to be seamless, providing all existing Remita users with automatic access to the new platform using their former usernames and corporate IDs, as per the memo.
The government has mandated that only Central Bank of Nigeria-licensed Payment Solution Service Providers (PSSPs) authorized by the Accountant General may collect revenues on behalf of government ministries, departments, and agencies. Additionally, contractors engaged with federal ministries are required to register with the Federal Inland Revenue Service (FIRS) to be integrated into the new system. To promote transparency, the system will also automate the deductions and remittances of internally generated revenue by federal agencies.
In conclusion, the dissolution of the partnership with Remita represents a significant setback for System Specs, particularly as the company processed $6 billion in monthly transactions in 2020, including substantial government-related business. Although System Specs has previously demonstrated resilience, the impact of losing this crucial government contract is likely to be felt in its financial performance moving forward.
The termination of the Remita partnership signifies a notable shift in Nigeria’s financial transaction management. As the government shifts to the Treasury Management and Revenue Assurance System, it aims for a smoother transition with stringent oversight for revenue collection by approved providers. However, the dissolution is a considerable challenge for System Specs due to its reliance on government transactions, raising concerns about future financial implications for the company.
Original Source: thecondia.com
