Akoma Chinweoke and James Ezema
29 June 2008
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Lagos — Mr. Kyari A. Bukar, Chief Executive Officer of ValuCard Nigeria Plc, a company owned by members of the community of Nigerian banks and Visa International Service Association could best be described as an inspiring and accomplished technocrat.
The Maiduguri born expert obtained a B.Sc Degree in Physics from Ahmadu Bellow University, Zaria, before proceeding to Oregon State University, USA where he bagged a Masters Degree (M.Sc) in Nuclear Engineering and attended an MBA programme at Portland State University also in USA.
He worked for14 years at Hewlett (HP), a leading world Information Technology Company where he held various senior management positions and joined FSB International Bank in April 2001, as the executive director in charge of electronic banking, information technology and operations and in June 2004 assumed his current position. In this interview he speaks on how the country can tap from the huge opportunities that digital economy offers as well as how the company enables issuance and usage of cards under international card scheme to develop the Nigerian market. Excerpts.
Key points
*Unlike ATM, Card usuage ensures a cashless economy
*E-payment system increases a country's GDP
*Nigeria's economy growing at a rate nearly twice than others in the world
*Cash culture paints a bad image for Nigerians traveling abroad.
FOUR years after as the arrowhead of this company, how has it been?
*Kyari Bukar...Nigeria cannot afford to be left behind
It has been an interesting journey because ValuCard is the pioneer EMV company in the country with the introduction of the ValuCard e-purse, in 1999 and it was a product that met the expectations and needs of our customers at the time. At this moment ValuCard is no more a payment scheme. We are a payment industry service provider. What that means is that, Valucard does not have her logo or name on cards issued by banks, or logo displayed at acceptance locations. We as a company that is the exclusive joint acquirer for visa international, acquire all transactions at point of sale terminal or over the internet here in Nigeria. Secondly, ValuCard is also an issuer-processor of visa cards and an acquirer-processor, and also offer various solutions in the payment space.
Our issuer-processing services now enable Nigerian banks to issue both domestic and international cards to their customers. By this service, international visa cards issued by Nigerian banks can now be used to pay for goods and services at point of sale abroad or over the internet. Essentially, we offer various innovative products to our customers who happen to be banks as well as merchants. We have various products which enables companies to control and manage their expenses effectively and efficiently by virtue of using visa cards. One of the solutions we will shortly introduce is the V-Money Transfer Service.
This service enables Nigerians in Diaspora and other persons who carry Visa cards to remit money anytime, anywhere. All these and other solutions are done seamlessly, securely in a very fast and efficient manner and also add extreme value to our customers as it is far more cost effective compared to previously existing services. By that I mean that our products are secure as our platform enables the remittance to be done without anyone knowing because the recipient would be notified that they have money on their cards and they can actually use it right there. With the card, they can go to a shop and buy goods and services. They can equally go to an ATM and withdraw the cash. So, they might not necessarily have to go to a bank branch to have access to their account.
The other solution we have is the Non-Resident Investors' Payment solution. This is another service we provide to enable foreign investors to invest their money in the Nigerian capital market conveniently and securely from the confines of their homes or offices, via the internet and without the risk of losing their money to agents or advisers with whom they may not have prior contact or relationship. This will be accomplished with collaboration with the Nigerian Stock Exchange and Central Securities Clearing System Limited. This is another solution that we provide that is basically linked with the great expectations we intend for our economy. Show me any country that is too much dependent on cash, I will show you a highly under-developed economy. So, one aspect of growth or economic development that is very crucial to Nigeria is this aspect of moving to a cashless society by embracing electronic payment system which would serve as a catalyst for accelerating the flow of money. E-payments encourage the velocity of money in the economy which enhances economic growth.
Considering the high level of poverty coupled with lack of technical know-how and financial challenges which have been identified as some of the factors that hinder digital revolution in Africa. How do you think these challenges could be surmounted?
Well, I think poverty is in the mind. Nigeria, by any yardstick should not be considered as a poor country. But at the same time Nigeria is not a developed economy. It is actually a developing economy and therefore we need to be humble enough to say to ourselves that there is actually a lot that needs to be done particularly when one has to look at it from the nature of infrastructure available. That should be a key area that needs to be addressed. It can be done in conjunction with the private sector. No doubt the provision of such services is in the realm of government, the government should not shy away from its responsibility of developing the infrastructure of the country. But at the same time it can offer incentives to private sectors as the private sectors will always show interest whenever there is enough incentives for them to get into these areas. Once there is a return on investment that is appreciable, then the private sector would jump in.
On the issue of whether Nigeria is ready for e-payment or cards. We cannot afford to be left behind. Nigeria is part of the globe, so we have no choice but to embrace the card culture. For example, most people that travel abroad with tonnes and tonnes of cash in their pockets are Nigerians. That gives you the notion that Nigerians are the only people that walk into a hotel abroad with sacks of dollars, even when they have to stay there overnight they actually pay by pulling out cash. And in most markets in the world, they look at them as criminals. Again, if you go to a hotel abroad at night and you want to get a room, I bet you that they are going to charge you highly because you are going to make your payment in cash. But if you have a card, you can actually make you hotel reservation in advance with ease. That way you can enjoy up to 15 to 20 per cent discount.
That basically can be done if you carry an internationally valid visa card that would ensure that you would get a room or whatever you want to purchase at a reasonable rate. Now apply that to the number of Nigerians that travel abroad every year and the savings is substantial. So, there are all kinds of multiplier effects when one moves with cards and there is transparency of transaction. These gains demonstrate to the economy that it is the right way to go. The other thing is lack of infrastructure which makes the business environment very challenging especially as we have issues with power, and telecommunications. But I believe that the telecommunications infrastructure in the country is improving.
We along with our valued
partner, the National Sports Lottery (NSL) are working together and have actually demonstrated that we can deploy a resilient and reliable payment infrastructure. The Point of Sale (POS) terminals which are being deployed by NSL have a technology called NSL Connect which has the capability of using the three GSM operators GPRS communication systems. So, if A fails, they would switch on to B and if B fails, they would switch on to C. These are creative innovative means of overcoming the infrastructural challenges.
Educating customers
Equally necessary is for us to push to help the banks to educate their customers to be using their cards not at ATMs per se but at the point of sale terminals. This is so because when you push ATMs, you are more or less increasing the cash in the market but if you push usage of cards at point of sale terminals, then you are moving the society toward being cashless. I will appeal to the banks to encourage their customers to be using their cards at point of sales terminals.
What are the benefits of e-payment to the country's economy?
E-payment has a number of benefits. A study conducted by Global Insights has shown that for every 10 per cent migration from the cash to cards, the gross domestic product of that country grows by one per cent. So, in essence that brings more benefit to all of us especially as growth in country's GDP would lead to improved living standard for the people. Cultivating the e- payment culture by regulators, financial institutions and other stakeholders would transform the economy. Again, it also makes life easier for bank operations because if we have less paper currency (cash) in the economy, we would have less cost related to cash handling, bullion vans etc.
That cost savings will also bring about efficiency into the system. It is a win-win situation even from the point of view of the merchant because when you have a merchant that is E-enabled, i.e. it has embraced electronic payment system, what you find is that, that merchant location is no more susceptible to fraud, counterfeit of currencies, pilferage or stealing of notes by cashiers and we would have a better management of data since everything is being done electronically. And to the card holder, it means that you don't have to carry cash around, eliminating fear of being robbed as you only need your card to make your purchase.
Capacity building is very vital to growth and survival of businesses in the country. Would you say the country is doing enough in that direction?
Capacity building essentially means a number of things. One of the fundamental things about capacity building is getting the right knowledge and skills. There are three kinds of knowledge. One, is you know. Two, is you know that you don't know and the third, which is very dangerous is you don't know that you don't know.
God forbid for Nigerians to be in that third category because that means that, you are blissfully ignorant. Knowing that you don't know is one step of solving problem. In any aspect of business particularly in e-payment and card business, banks and all other stakeholders should work towards enhancing their competence by building capacity. When this is done, then we would begin to realize that there are certain areas that we are weak and need to be strengthened. To me, that is the beginning of the end. The banks can tackle that aspect by having their staff trained and through restructuring of the units to ensure that knowledgeable competence is there by the right players, with the right portfolio.
In your view how feasible is Vision 2020 which emphasizes on making the country's economy one of the world's top economies?
Vision is articulated so that you can have people line up to achieve a future plan or goal. The vision of the country wanting to become one of the world's top 20 economies of the world did not come out of the blues. There was a Goldman Sachs report about the global economic growth, and that they predicted that the rate at which world economies are growing that Nigerian can emerge as one of the 20 top economies in the world by the year 2025. Basically, it is just a matter of projections. Nigerian's GDP growth is growing at the rate of seven percent or higher in the last few years but global economy is growing at the rate of four percent and what that means is that Nigeria is growing at a rate nearly twice than that of the rest of the world. That also means that Nigeria is taking one or two steps faster than many other countries.
My own take on Vision 2020 achievability is that there is imbalance in the country's economy as the growth rate is hinged on oil price as when oil, prices went up, the GDP goes up too. The big challenge is how do we grow the economy to be somewhere in that league of world big economies. To achieve that, there are some other categories of GDP growth that we need to urgently address.
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