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In this interview, Femi Adeniyi, Chief Executive Officer of Simplex Business Solutions Limited, spoke with Jide Akintunde, Managing Editor, Financial Nigeria magazine, on the Nigerian pension industry and technological innovation as the backbone of the celebrated pension reform. They spoke on the sidelines of the World Pension Summit: Africa Special, which held on September 27 – 28, at Transcorp Hilton, Abuja.

Jide Akintunde (JA): A trend that is well-entrenched in pension administration in Nigeria is that ICT is playing a dominant role in delivering information and service to pension stakeholders, especially the regulator, National Pension Commission, and beneficiaries. Why is this important in Nigerian pension administration?

Femi Adeniyi (FA): To start with, I must congratulate the “authors” of the Pension Reform Act 2004 – now repealed by PRA 2014 – on a job well done. Without mincing words, the National Pension Commission (PenCom) is one of the best-equipped and most focused regulators in the country. ICT in the pension industry remains the most important factor in helping to enforce and maintain standards while ensuring that contributors have almost comparable experiences across the PFA’s (Pension Fund Administrators). Key operations in the industry like registration, contribution, and monitoring processes are 90% ICT-driven.

JA: As the just-concluded World Pension Summit: Africa Special hunted for innovations in pension, some hints were dropped on how disruptive technologies can help broaden pension and social security coverage, in particular in the informal sector and micro pension. Do you see a prospect that is closer to reality in this regard?

FA: I had a long and profound discussion with a couple of delegates at the WPS on the proposed micro pension scheme. It’s a most welcome development for the industry, the contributors, and Nigeria as a whole. One thing we all agreed on is that it has to be 100% ICT-driven from the outset, otherwise, it will not work. However, this should not require major new investment. The existing IT platform(s) can be used with minimal additional investments.

A starting point, for example, is overcoming the challenge of how to register the informal sector. Informal sector companies are huge in number and widespread. It will be extremely ineffective and prohibitively costly to have PFA marketers chasing prospects with forms to register. Liaising with the Central Bank of Nigeria and Nigerian banks to leverage the existing BVN (Bank Verification Number) platform will totally solve this challenge. The BVN already captures the prospect’s facial identity, name, cellphone number, signature, finger print, and other details. What else do you need? It’s high time we began to leverage and collaborate rather than duplicate efforts or re-invent the wheel.

JA: Your firm has been providing solutions to the pension industry, what value are you out to add to the industry?

FA: We have come a long way with, and in, this industry since its inception. We are very proud to be a part of its success story. Today, our solution (Moneytor) helps PFA’s to monitor and grow about 35% (1.8 trillion naira) of the pension funds invested in various asset classes both in Nigeria and abroad. While on the retirees’ side, our solution helps PFC’s (Pension Fund Custodians) to ensure that over 50% of retirees get their money/pension payments monthly into their bank accounts.

In addition to these, our “Executive Dashboards” Business Intelligence (BI) platform helps Managing Directors, “C-Level” executives, as well as line managers to make far-reaching decisions on the spot. This was hitherto impossible a few years back. While on the move, at home or office, and at any time of the day, decisions to reduce costs, and improve revenue are made based on solid data and accurate information sourced from the different data silos of the company. All these are brought together to a single dashboard that gives everyone “one version of the truth.” Gone are the days where decisions were made based on mere “gut feelings.”

These value-added services are just the beginning and a sign of greater things to come. We will continue to strive to always give our pension clients the tools they need to do their jobs better, safer, and faster by investing in new technologies.

JA: You did mention to me that while the Nigerian pension market is doing well in providing information on contributions and management of pension assets, very little is known yet with regard to payment of benefits under the Contributory Pension System. Why is it important to start a dialogue on this at this time?

FA: The Pension Reform Act took very good care of Retirement Savings Account (RSA) registration and contribution processes. These processes are fully automated end-to-end and they work almost flawlessly, too. However, the retirement process is yet to enjoy such efficiency. This is probably so because at the time the framework for the Contributory Pension Scheme was designed, there were limited real-data or oversight to test-develop the retirement process while the industry was being reformed. Today, the industry has come of age and RSA holders are becoming retirees’, although it is happening gradually.

Most PFA’s and PFC’s today have semi-automated or fully manual processes for capturing, processing, and paying both new and existing retirees. This process is largely un-standardized. It will surely lead to very serious problems in the future if it is not addressed now. The total number of retirees under the new scheme is still under two million. This number is foreseen to double in the next 3-5 years. It is very important for the industry to have a unified process across the board to achieve and sustain the aim of the pension reform. In the words of PenCom’s Director-General, Chinelo Anohu-Amazu, “Pension preserves the dignity of retirees.” The successes being applauded today can only be sustained if retirees don’t have any problems getting their benefits when they retire.

JA: Simplex is about to launch a solution in this regard, what are the core information gaps that your system will help close?

FA: The benefits of our solution to the industry are really unlimited and unquantifiable. For instance, it takes an average of 12-15 days to pay a retiree that has fulfilled all documentation processes. Our solution will reduce this to a maximum of 3-4 days. It will also totally prevent gaps like retiree impersonations, and wrong payments (omission or commission). It will also provide instant feedbacks to retirees, and give them and the entire industry stakeholders peace of mind. Most of all, for PFAs, PFCs, and PenCom, it will help reduce drastically the cost of processing.

JA: Nigerian firms are doing quite well in providing software solutions to the pension industry. Congratulations for being part of that success story. Can we see a foray into providing solutions offshore, and what is your outlook for the software industry in Nigeria?

FA: Absolutely yes! Nigerians are very brilliant, and I mean top talents that are very scarce in other countries. You should ask yourself, why did Mark Zuckerberg visit Nigeria? He has recognized the level of innovative applications originating from this country and he is seeking ways to tap into it. I hope our government will also realize this and find the need to support start-ups all over the country.

Today, our foreign reserves have plummeted and the exchange rate has gone haywire. A sure way of reversing this trend is for more Nigerian IT companies to export their solutions abroad, especially to other African countries. Simplex currently operates in Nigeria and Ghana. We look forward to going into other west-African countries in the next 12-18 months.

But for this drive to be effective, however, it would need to be supported by the Nigerian government by providing incentives to start-ups and established companies to export to other countries. I believe it will have a positive impact on the currency and economic growth.