Professional Documents
Culture Documents
1. Background Information
2. Definition of e-payment
3. Implications of e-payment
4. Benefits
5. e-payment Option
7. Detailed Guideline
9. Critical Challenges
10. Recommendations
11. Conclusion
Background Information
In the world today, there is economic meltdown. This is having negative impact on the economy
of many nations,including our dearest nation Nigeria. In the light of this, The Federal
Government is therefore presently employing our excess crude oil reserve to finance the 2009
budget deficit because of scarcity of funds. The major revenue earner of the government
continues to suffer decrease in valuation (prices) internationally. Amidst this trend, there is the
fracas in the Niger-delta region which is militating severely against meeting Nigeria’s quota in
the supply of crude to the international oil market.
On the other hand, corruption has eaten deeply into our economy to the point that there is decay
in our governments ministries and parastatals. Little or no wonder the government of the day
headed by Prof (Alhaji) Musa Yar’adua, has launched an irreversible attack on corruption. He is
determined to making sure that the little resources available or to be made available is not
squandered or wasted in any form.
In that light, the President of the Federal Republic of Nigeria, during the presentation of the 2009
Budget to the National Assembly introduced a number of measures for ensuring transparency
and accountability. This will, to a great extent, help in his ambition of delivering good
governance. This brought about the birth of E-payment system. He insisted that all financial
transactions being made by the Federal Government must and should be made electronically.
Following this instruction, the e-payment system started to be in operation since January, 1 2009.
Due to this instruction, several treasury circulars have been issued out by the Office of the
Auditor General of the Federation, Ministries, Departments and Agencies (MDAs) detailing
guidelines on how to implement the e-payment. It has held series of sensitization meetings with
Personal Secretary, DFAs and Heads of Accounts, and also met with the representatives of CBN,
Commercial Banks and National Payment Committee.
Definition of e-payment
This is the method of effecting payments from one end to another end through the medium of the
computer/information and communication technology without manual intervention beyond
inputting the payment data. According to the Accountant General of the Federation, Mr. Ibrahim
Dankwanmbo, this is part of strategies to enthrone a cashless public service and discourage
corruption, while boosting accountability and transparency. There are two options identified in
the implementation of e-payment:
End to End Processing:
End-to-end processing refers to a system that performs a business process or transaction(i.e
following defined steps) from beginning to end, including all intermediate steps, such as data
capture, data processing, analysis, and the generation of outputs. Here, all the processes from
approvals to the receipt of value by the beneficiary are done electronically.
According to renowned e-payment expert and chief executive of Nigeria’s leading software-
based solution provider, Systemspecs Limited, Mr. John Ubaro, explained that what e-payment
entails is that there is an automated end-to-end electronic payment, which could be initiated from
an office, thereby reducing work and not increase it, leading to a pleasant experience.
According to him, e-payment does not mean what is obtained in most of the MDAs, including
manual delivery of payment instructions to banks through Compact Diskettes (CDs), flash drives
or even email attachment.
Maintaining that once a customer hops from one bank’s internet site to another, it is no longer e-
payment, just as he decried the attitude of restricting customers to one bank or even making
payments on one platform, and submitting schedules on another. This, he said, negates the notion
of e-payment. “Once a customer surfaces at a bank branch, it is no longer e-payment,” Ubaro
insisted.
So from the comfort of your home or office, as long as there is Internet linked Personal
Computer (PC), transactions can be carried out which cuts across parties in e-payment sphere to
include the end users, MDAs, corporate entities and individuals, then application service
providers, switches and settlement houses, banks and finally the regulators.
Implications of e-payment
1. Easy Tracking of payments to Beneficiaries’ Accounts hence it will assist Audit Trail;
2. It reduces cases of corruption;
3. It will assist Corruption fighting Agencies like the EFCC and ICPC in cases of
investigation;
4. It is the beginning of a cashless society;
5. Overall increase in the efficiency of operation:
6. Reduced transaction costs;
7. Enable transactions of very low value;
8. Increased convenience of payments:
9. Payment can be made swiftly and remotely using various devices
10. Accountants will appreciate IT more and this will improve the quality of financial reports
generated by MDAs;
11. Economic Growth and Development as Transparency and Accountability improve;
12. Real Time Reporting; and Eliminates writing of cheques:
13. The risk associated with cheques been stolen, forging of signature and disparity between
amount in words and figures has been totally eliminated.
Medium
The medium of sending instructions to the Central Bank of Nigeria and
Commercial Banks will be electronic i.e. soft copy in form of Non-re-writeable
CD with a hard copy conveying and confirming the transaction.
Data Integrity
The integrity of the system is assured by the combined use of electronic copy of
the mandate as well as the hard copy which acts as a confirmation, since it will
contain the authorized signatures of officers in the MDAs.
Elimination of Delay
For the purpose of avoiding delays in the payment procedures, the mandates to effect payment
must reach the paying banks within seventy two (72) hours after approval for payment by the
Accounting officer.
Critical Challenges
The followings are germane:
Lack of Technological Infrastructure – the implementation of e-payment is been
impeded by unavailability of ICT infrastructure. Most rural areas where majority
of small and medium scale industries are concentrated have no access to internet facilities. It is
proactive to also know this: research shows that it will take
an average of 225 years for Africa to catch up in overall economic development
in ICT compared to US (Aniebonam, 2003).
ICT Equipment Costs – where available, the cost of ICT is a critical factor relative to per capital
income. This makes the cost of entry higher compared to developed countries.
Regulatory and Legal Issues – inexistence of proper legal and regulatory framework.
RECOMMENDATION:
Conclusion
Apart from combating effects of global economic meltdown mention at the earlier part of this
presentation, Nigeria should not also be left out in the advancement towards e-commerce which
will compel the world to start trading on the web in not too distant future.
We should all believe and work towards the workability of this new payment regime. There is no
going back on Federal Government pronouncement on the matter.
Let us all join the winning campaign of e-payment where good governance and accountability
thrive.