On following the discussion and debate in Ghana about the interoperability matter together with the national address and identification systems by the government to expand the financial market, one realizes that these are such laudable efforts. When realized fully, they will ensure the inclusion of otherwise many people left out in the quest to move unto the next generation of financial transactions including payments, transfers, deposits, and savings. Certain pronouncements by the vice president of Ghana and reportage in the country’s media have led to some misinformation and errors on the matter which this piece seeks to bring to light.
While the efforts of the current government of Ghana for these beautiful motives are commendable, publications in major sections of the media, example www.myjoyonline.com published on Wednesday, October 4, 2017, created some confusion which made the reportage by one Naa Sakwaba Akwa wrong on many levels, some of which are highlighted in the next paragraphs.
Firstly, the assertion that “…the new interoperability system to be rolled out by the Bank of Ghana in November will cost the country less than $4 million” is very incorrect. As a matter of fact, the contract sum is zero dollars and this is because the RFP from Bank Of Ghana (BOG) clearly requested for a build, own and operate vendor. The central bank was not willing to invest any amount into this project, Sibton Switch, on the other hand, was willing to and actually had investor funding to support this initiative from start to completion of the project over a 25-year phase. They had described in their response to the tender how and what the fund will be utilized and at what respective phases of the project.
Huge economic dividend and value to the nation as perceived by the current administration to encourage private sector development could be generated from the execution of the contract. So the expenditure to be incurred in building and operating the interoperability switch infrastructure was to be borne by the private operator (which is Sibton as referenced in the media) and primarily not by the government of Ghana. This means that Sibton which won the bid was going to end up doing the entire work using their own money. It must also be stressed that the figures mentioned in the contract in the media have for the most part been in the Ghana cedi denomination and not US dollars.
Secondly, in a prior publication (June 27, 2016, source, Business and Financial Times (BFT), the leading telecommunication operator, who is also the lead MFS (MTN Ghana), said they invested $2.5billion in network, information, and technology infrastructure alone between 2015 and 2016. From the above, it is obvious no company within the telecom or bank industry would like to put their investment or connect their systems into a less than $4 million investment infrastructure. The interoperable platform must be robust and security advanced to detect and deter fraud and hackers because customers find security to be of paramount importance in this industry. This explains the decision of Bank of Ghana at the time to engage Sibton based on their understanding of the scope of work and its financial implications, hence the investment of over $50 million every year in this infrastructure for the next 25 years to achieve proper financial inclusions.
During working sessions, Sibton engaged the mobile money operators, the banks, and GhIPSS severally in arrangements facilitated by the central banks under the leadership of the head of payment systems. During these interactions, all parties had mutually beneficial cooperations where Sibton continued to have very tight working relationships with the MFS and banks. There is documented evidence to show by way of communications between the respective parties involving said collaborations. “Sibton is ISO certified and has 5 licenses to operate as a switch and this drives them to carry out their work without compromising quality within the industry. Sibton also has a world-class data center located in Accra at their Sibton Office in Ghana and a complete rack co-located backup system at the bank of Ghana data center“, according to their CEO Mr. Peter Denzil Lawson.
Thirdly, it was reported in a news article that the Ghana Interbank Payment and Settlement Systems (GhIPSS) is a subsidiary of Bank of Ghana and can, therefore, do the same work. It is inappropriate and against the international best practice to regulate and provide the service in the same industry. GhIPSS is a subsidiary of the central bank and that does not allow them to carry out the function of interoperability. This practice is not standardized and acceptable internationally and it’s actually a conflict of interest and the reason why the Bank of Ghana saw it wise to engage an independent switch to invest from its own resources and perform the mandate of implementing the Ghana retail payment infrastructure system. This goes along with reducing the costs of transactions for all players in this industry.
The fourth point has to do with the complaint that the cost of implementing the project is too high. The industry standard for none redundancy in switch transactions or interoperability transmitting should be 99.9999%. This is a specialized area which demands 0% failure in performance within the industry. Thus the need to put in the right investment to ensure that the industry, consumers, and the government won’t have problems. The RFP requires an active co-location on business continuity, disaster recovery, and productions site.
A system that transmits over 40,000 merchant transactions and millions of person-to-person transactions on an economic scale and charging very inconsequential rate while rendering world-class service and results but still at very low fees to the end user is what Sibton provides according to a member of their Board of Directors. The government also benefits immediately once implementation commences without any investment due to the fees negotiated by the Central Bank of Ghana and the industry players. For example, the telecoms are charging GH¢2 per transaction today but the moment things become operational cost reduces to GH¢1.5 and the fees go down as it expands to more and more consumers. Fees are expected to get to zero charges as the system becomes a cashless economy over time as envisioned by Sibton.
And finally, Sibton has been very accommodating, patient and tolerant of both industry and the Bank of Ghana since the inception of the project even though a number of publications and claims alluded to Ghana’s Vice-President Bawunia issued via statements of his on public platforms have been unfounded and have painted the wrong perception of the realities against a Ghanaian company that the contract was abrogated, which in actual fact is not the case according to Sibton. This has created investor frustrations, employees’ uncertainty and hindrances in conducting business activities with other commercial entities globally for Sibton. Meanwhile, the procurement process shepherded by the central bank and the vendor Sibton Switch System was investigated by EOCO but nothing adverse was found pertaining to malpractices against the process which led to the award of the contract. The report was later forwarded to the Attorney General’s department sometime in May 2017 for further scrutiny and opinion from the latter hasn’t been disclosed yet.
On the other hand, the case was presented to the High Court of Ghana by one of the vendors who lost out in the tender process. On this occasion, Sibton was validated by the High Court of Ghana to carry on its work, details of the court’s resolve are publicly available at the courts too. Regardless of the court ruling, however, the bank of Ghana has not responded to any of Sibton’s communications till date. The company has cooperated extremely well and exercised restraints from executing its rights per contract terms and breaches of governmental actions and non-collaboration like the suspension without notice or reason of the Sibton deal and other unfairly frustrating measures.
All that notwithstanding, the company is open to dialogue and collaboration on any legislative request for the growth of the economy that will advance a cashless society and is simply asking the media as well as parties affected by this matter to cover all sides of the issue and not report a one-sided version that poorly covers the side of Sibton.
Author: Nathaniel Asante Poku