In this interview with Raheem Akingbolu, the Deputy Managing Director of Chams Plc, Olufemi Williams, spoke on the possible lessons Nigeria can learn from the Asian Tigers and how local technology firms can survive the incursion of global technology giants, among other issues.
The Nigerian market is becoming intensely competitive with the influx of global technology players. Given your affiliation with the likes of DataCard, Dermalog, Bitel and Iguard, is Chams PLC maximizing opportunities in the local market?
One of our core values at Chams is innovation, and it has been at the core of our business practice. We are able to anticipate the needs of our market without precluding its cultural context and content by merely transplanting ideas and solutions from the developed market. We work collaboratively with global market leaders to develop innovative solutions for the Nigerian market.
For instance, we are presently working with Datacard, the worldâ€™s leading provider of secure identity and card personalization solutions, to deliver instant issuance of payments cards in the Nigerian market to banks. Same for our on-going work with Dermalog on the Biometric Matching Solution for the banking industry as initiated by the Central Bank of Nigeria (CBN) and Bankerâ€™s Committee, with the support of NIBSS. In the PoS and Access Control markets in which Bitel and Iguard are market leaders, we are also working in a similar manner.
The influx of global markets leaders in technology will no doubt ensure that the market leapfrogs in terms of infrastructure, and may further enhance the ability of innovative homegrown businesses to optimise performance. It would also sound the death of businesses operating outdated technology and providing obsolete solutions. For us at Chams, the unfolding scenario is providing leads and also boosting our potential to make in-road into the West African regional market into Sierra Leone, and outside sub-Saharan Africa into South Africa.
What are the growth potential for homegrown technology firms given the noticeable disappearance of international boundaries and barriers to trade ushering in an era of global competitiveness?
You will recall that as a homegrown company, we won the bid for the first national identity card programme, which was fiercely competitive and dominated by global corporations. The project was awarded to a global corporation, but after a review of their output, it was re-awarded to Chams. We succeeded where a global brand failed, and it can be said that a local firm implemented the first successful national identity card project in Nigeria.
Using the success being recorded by Chams in the identity management, secure identity and payments cards personalization as learning, local technology firms must think global â€“ anticipate trends, be innovative and have clear understanding and the capability to serve the industry they are entering.
There are several successful technology companies in the local market that are thriving, and are providing solutions and services to multinational corporations because of their substantial investments in research and development, capacity building for their people, and standardised business process – which is earning them international certifications for their efforts.
There is also a new wave of mega-technology startups, especially in the e-commerce space, being driven by Nigerians from Diaspora with venture capital funding that are competing head-to-head with the offshoot of multinational technology firms in the local market. The growth potential for homegrown technology firms with the right product, process and human capital are limitless given the present growth rate of the sector. This will further accelerate with improved power supply.
The world continues to be amazed at the growth of the Asian economy. What are the most important ingredients of this growth that Nigeria can borrow from these countries?
Several things are responsible but there are two main things the Asian Tigers economies – Hong Kong, Singapore, South Korea and Taiwan – commonly referred to as Asian Miracles did right. Education has been cited as playing an important role in the Asian miracle, implying that they made huge investment in education.
For instance, the Asian Tiger economies achieved universal primary education before 1970 â€“ with South Korea almost attaining 85% secondary school enrollment around the mid 1980s. Solid investment by their governments in education ensured high literacy level and skills development by their populace.
There is also the implementation of proactive export oriented policies by their governments, and this has been identified as the active force behind the spectacular rise of the four Asian Tiger economies from under-developed to developed economies in about 30 years. The lessons for us a nation is to invest in the education sector â€“ build strong education institution as against Nigerians expending billions of Naira annually on foreign education â€“ and to create a stable macroeconomic environment for business to thrive.
According to a recent assessment report by James O Neill, Nigeria has been listed among the next investment destinations in what was described using an acronym, MINT, how can the country strategically position itself to achieve this goal?
Nigeria has seen inflow of investments from multinational corporations seeking new growth markets because of the size of our market. This is in spite of the challenges associated with doing business in Nigeria such as poor infrastructure, high cost of funds, policy inconsistencies.
If I may ask in which African country can we have 21% interest rate? I read some bit of news somewhere, and it is not cheering because it indicates that an about 1000 companies in the real sector have closed down in the last two decades because of the poor infrastructure, high cost of funds, and policy inconsistencies. It is cheering that there have been political stability in the last 15 years of democratic rule in the country. This should be consolidated in 2015, and it is equally hoped that the power reforms would soon have positive impact on the economy.
By ensuring political stability, good governance, investments in education and infrastructure, as well as reduced cost of funds will bring Nigeria closer to its true potential as the giant economy of Africa.
Technology has become a major enabler for companies and industries – revolutionising agriculture, healthcare, communication etc. What are the potential that Nigeria holds for an institution like yours?
As an emerging market, Nigeria offers significant growth opportunities for the Chams Group because of its foresight in investing information and communication technology infrastructure such as digital malls, transaction switching platform, financial card plants, and a data center, among others.
We are primed to take advantage of these investments, especially in the areas of identity management, transaction payments, and e-government to provide innovative solutions and support services to the financial markets – banks, insurance and pension industry – as well as government and its agencies, and multinational corporations.
Suffice to say that we are primed for leadership of the regional identity management, and payments transactions industry given the fast growth rate of the local technology industry estimated at 30 per cent annually in the last three years, making it one of the fastest-growing sectors of the Nigerian economy.
Technology is being used world over to tackle the menace of terrorism. Nigeria is certainly is not adequately equipped in that regard. Where do we start from as a country in terms using technology to stem the rise of terrorism and crime in Nigeria?
You will recall the Boston Marathon bombings last year; anti-terrorism professionals globally remain impressed that the suspects were captured so quickly. In its wake, law enforcement agencies in countries facing the dangers of attack on soft targets by terrorists are saying they hope to track down terrorists that fast, and prevent future attacks with the help of superior technology as deployed by the United States.
The destructive capacity of terrorists operating in the Northern parts of the country grew remarkably in the last three years. They are proving adept at using modern technology for their own end. Largely, because they engage simultaneously in suicide bombings and guerilla attacks, the required response to their onslaught has been deployment of intelligence, surveillance and soldiers to combat terrorists.
Given the dire consequence of the acts of terrorism, one would passionately urge that we take a leap into equal standing with technologically advanced countries in terms of solutions deployed to combat terrorism.
This would entail looking beyond the traditional use of wiretapping and CCTVs because of their limited use in terms of quality and coverage. Good enough, recent policy enunciation and their implementation by government are geared towards providing infrastructures that empower law enforcement agencies to proactively combat terrorism.
For instance, anonymity and the ability to launch attacks at a time and place of their choosing are tactical advantages utilised by terrorists. With the ongoing deployment of a robust national identity management solution, it provides the long term benefit of eliminating the advantage of anonymity enjoyed by terrorists.
In the long term, law enforcement and anti-terrorist agencies can build on these infrastructures by deploying software, computer models and analytical tools being used by developed countries to identify the terrorist no matter how hard they try to hide, and to take the necessary actions to remove mitigate their untoward threat.
ChamsMobile is one of the licensee granted approval by the Central Bank of Nigeria to operate mobile payments; what is the status of ChamsMobile, and what value does it hope to deliver to Nigerians?
ChamsMobile is focused on delivering excellent mobile payment services to Nigerians across board â€“ even as the semi-urban and rural areas are our focus because of the huge opportunity it can afford the under-banked and unbanked populace to conduct basic financial transactions.
The ChamsMobile solution is branded Kegow. This is distilled from the first letters of Kudi, Ego and Owo which are the vernacular designations for money among the three major tribes in Nigeria.
Kegow enables basic transactions such as airtime vending, utility bills payment, and funds transfer. The solution is designed to be a flexible, secure and affordable way of conducting banking transactions using a mobile phone because it interfaces with traditional payment switches and bank accounts.
Nigerians, irrespective of their educational status, can use the product to transfer money from their regular bank accounts into their virtual account and effect payment for goods and services using any connected mobile enabled device across all the major telecommunication networks in the country.
How well will ChamsMobile leverage the strong Information and Communications Technology pedigree of the Chams Group in e-payment and identity management to differentiate itself?
We will be leveraging the Chams Group e-payment infrastructure, and the robust pan-European e-payment capability of Bancore on platforms such as Visa Electron, MasterCard, Getitcard, VISA and Danske Bank to deliver exceptional value to ChamsMobile users in the areas of international remittances. Our partnership will enable us to extend the frontiers of mobile payment further to allow Nigerians send and receive money from friends and relatives in Europe and other parts of the world.
For this reason, the ChamsMobile payment platform will integrate the revolutionary Bancore mobile payment solution that allows mobile banking subscribers transfer money to any VISA and MasterCard anywhere in the world.
We will also bring our expertise in identity management to bear on our mobile payment services, thereby ensuring the integrity of transactions, guaranteeing our customers peace of mind.
Still on financial services, Chams PLC is collaborating with Dermalog on the banking industry biometric matching solution project. Of what benefit is the project to the financial services sector and the economy?
The benefits of the banking industry biometric matching solution initiated by the Central Bank and Bankerâ€™s Committee are immeasurable to the populace, banks and the national economy. For the populace, and by this, I mean existing and potential bank customers, because it simplifies bank account opening process by breaking down the existing KYC barrier, deepening access to credit, and also mitigating fraud. Available data from the Central Bank of Nigeria indicate that meeting the present banking industry KYC procedure remains a major challenge for a large number of potential bank customers from the informal sector.
For the banks, a simplified KYC procedure will improve efficiencies by reducing paperwork, and the huge cost of validating credentials by third party vendors on a regular basis.
It will boost the number of retail customers of banks in millions, heralding a stronger retail segment for the banking industry leading to improved liquidity, lending and profitability. By this, I mean improved inflow of cash from the Nigeriaâ€™s large informal economy to the banks, and a more robust credit administration regime by the banks, with its attendant positive impact on revenues.
Breaking down of the KYC barrier by the CBN and Bankerâ€™s Committee will benefit the economy in the long term by bridging the gap between Nigeriaâ€™s formal and very large informal economies. This will provide the managers of the economy with accurate picture of the countryâ€™s GDP, and economy – using near accurate data for national planning. All these can only lead to accelerated socio-economic growth and development of the country.
But Identity theft and scams have remained the bane of financial services sector even in countries with advanced technological infrastructure and standardized KYC procedure. What is being done differently on this project with the peculiar Nigerian situation in mind?
Identity thefts and frauds remain major threats globally with the ascendancy of e-payments in developed, emerging and frontier markets. Identity thefts and frauds have continued to pose a significant threat to the financial services sector, in spite of safeguards by market participants and the efforts of regulators.
The banks and the Central Bank must be commended for the framework deployed so far in managing industry frauds in an increasingly sophisticated social milieu in view of the dire infrastructure challenges in the Nigerian market. It is for this reason that the banking industry biometric matching solution is a very timely and welcome development. Apart from easing the KYC challenge facing banks, it will equally reduce the risk of identity theft and payment frauds that may want to arise from the cashless economy initiative being implemented nationwide by the banks and CBN. The biometric matching solution will go a long way in helping to curb fraud in the financial services sector.
How equipped is Chams PLC in terms of the human capital needed to deliver on the banking industry biometric matching solution project? Are you wholly dependent on Dermalog, expatriates or local talents to deliver this project?
Chams has been involved in identity management for a long time. We have worked on the National Identity Management project, and are driving residency project in three states of the federation. We have delivered value in terms of cost savings to state governments by deploying identity management solutions to rid their payroll of ghost workers. Chams is adept at the business of identity management, and have invested in capacity development.
Our people are experienced, certified locally and internationally in identity management, and are able to deploy identity management solutions within 24 hours â€“ that is how adept we have become at doing it. We have done this successfully in various states because we have a locally developed application.
On the banking industry biometric project, we are partnering with Dermalog – patent owners of the verification and matching technology. Collaboratively, Chams and Dermalog will deliver exceptional solution and value to the banking industry.
The 2012 annual result of Chams PLC reflected considerable growth in income, and a return to profitability. But your Q3 result for 2013 submitted to the stock exchange indicated loss. What was responsible for this?
In accordance with International Financial Reporting Standards (IFRS), income can only be recognized when it is earned, or when you have completed a project. The Q3 results for 2013 were impacted by the long gestation period of the projects to be executed. By the first quarter of 2014, income from some of these projects started coming in, changing our financial position.
How is Chams doing in the area of Corporate Social Investment (CSI)? It would seem a lot of quoted companies cut down CSI after the capital market crash?
We have remained committed Corporate Social Responsibility because it is core to our business strategy. It is our fervent believe that corporations must enrich the lives of the people in communities in which it is doing business.
We have built a reputation for doing good business and we are committed to ensuring that the equity and goodwill garnered in this regard are not diminished. Our primary CSR initiative is art oriented, and it is the Chams Theatre Series. We also have the Chams Soup Kitchen, an initiative through which we provide meals for the less privileged and destitute in Lagos State.
What is the future outlook of Chams PLC, considering the fast changing dynamics of the global Information and Communications Technology terrain?
Chams has been around since 1985. From a hardware firm, we have evolved over the years into one of the leading information and communications technology companies of Nigerian origin with strong footprints in the identity management and e-payments industry. We have invested in infrastructure, and have good knowledge of the needs of our stakeholders across sectors.
The Chams Group will remain dynamic, compliant and innovative in its response to market realities and customer needs. We intend to be the most influential technology firm of Nigerian origin meeting private and public sector technology needs, and delivering exceptional value to its stakeholders.