The Federal Government of Nigeria, through the Office of the Attorney General of the Federation, has decided to integrate Remita into the Treasury Management and Revenue Assurance System (TMRAS) alongside other eligible Payment Solution Service Providers (PSSPs). This move highlights the risks companies face when a major policy change alters their market position. As a result, Remita will now compete with other PSSPs for Federal Government revenue collection.
Remita played a central role in implementing the Treasury Single Account (TSA) since 2015, processing trillions of naira in spiking Federal Government revenue. However, issues such as delayed remittances, fragmented accountability, and concerns over transaction fees led to implementation of TMRAS. For Remita, this means a major revenue setback, ultimately affecting its future operations.
The company operated by SystemSpecs, has Federal Government transactions as one of the major sources of income. The introduction of the TSA allowed the platform to consolidate over 15,000 bank accounts into a central system, improving financial transparency and accountability.
However, its reliance on a fixed transaction fee structure meant that as government revenue inflows increased, so did its earnings. The sudden restructuring potentially represents a substantial revenue loss, requiring the company to reassess its revenue structure and operational model.
The direct financial consequence for Remita includes the immediate reduction in income from transaction fees from government collections due to more competitors, which formed a significant portion of its revenue. The previous 1% fee-sharing model, divided among SystemSpecs, deposit banks, and the Central Bank, provided a predictable cash flow. With TMRAS taking over, this income stream is effectively decimated. This change could affect the company’s profitability and potentially lead to cost-cutting measures, restructuring, or strategic realignment.
The policy shift affects not only revenue but also operational sustainability. SystemSpecs has built an infrastructure tailored to handling large-scale government transactions. Without a large volume of transactions from a primary client, the cost of maintaining such a system could outweigh its benefits unless the company secures new clients or repurposes its technology. Workforce restructuring may also be necessary, impacting employee retention and operational efficiency.
Strong corporate governance principles require companies in this type of situation to mitigate risks associated with revenue dependency. Although Remita has other clients, however, the Federal Government is one of its major clients. This brings to fore concerns of overreliance on a single market segment, which exposes an organisation to vulnerabilities when regulatory changes occur.
The shift to TMRAS highlights the importance of diversifying revenue streams, ensuring operational resilience, and engaging in proactive regulatory compliance. Remita’s board and management must now focus on repositioning the company to maintain stability and growth.
This move by the Federal Government requires SystemSpecs to rethink its business strategy. While the loss might be considerable, opportunities remain for the company to leverage its experience in financial technology (fintech) to explore new markets and reinforce corporate sustainability. Below are key strategies to navigate this transition, which other organisations can learn from.
Consolidating on other market segments by expanding beyond government-related transactions is essential. Systemspecs diversified clients in the private sector, offering tailored financial technology solutions for businesses, non-governmental organisations (NGOs), and multinational corporations, means they can withstand this policy shift. Its payment processing systems for e-commerce, subscription-based services, and remittance platforms can create alternative revenue streams.
One of the criticisms of the Remita model, either rightly or wrongly, was the perceived lack of strict oversight and control in preventing revenue leakages. To remain competitive, organisations must reinforce their corporate governance structure by implementing strong risk management practices, ensuring compliance with evolving regulatory requirements, and improving transparency in transaction reporting. They must also establish long-term strategies that prevent dependency on a single revenue stream, to avoid significant revenue loss.
The replacement of Remita with TMRAS serves as a reminder that businesses must continually evolve to remain competitive in changing regulatory environments. SystemSpecs now faces the challenge of adapting to a reduced role in government revenue collection, but the company possesses the expertise and technological foundation to pivot towards new opportunities.
With a strong corporate governance, the company can transition from reliance on a single dominant client to a more balanced and sustainable business model. Proactive adaptation and strategic realignment will determine how well an organisation can recover from a revenue setback and emerge as a stronger player when faced with a major client loss.
Research & Advocacy Department,
Chartered Institute of Directors (CIoD)
28, Olawale Edun Road (Formerly Cameron Road), Ikoyi, Lagos.