Chams Plc is the country’s first information and communication technology company to be quoted on the Nigerian Stock Exchange (NSE). In this panel interview, its Group Managing Director Mr Femi Williams speaks on financial inclusion, corporate challenges, among others. Capital Market Editor, Taofik Salako was there.
As the first indigenous company to evolve from computer hardware maintenance to a wholly Information Communication Technology (ICT) company, how has the experience been?
The question is very apt and interesting. It has been challenging and interesting. Chams Plc started business about 34 years ago, in 1985, as a Computer Hardware Maintenance Services company; hence our name Chams, that’s the meaning of Chams. Then we transited from being a hardware company to a network company. Networking became the key or the major project demand of that time, so what we did was to refocus the company into networking. We provided services in the area of wide area networking and local area networking. We’re actually the first indigenous company in that sector. Around 2000, we moved to smartcard technology and that was what led to the formation of Value Card in those days. We were the first to go into it.
After that episode, we moved into identity management solution. That was what led us to the National Identity Card project. Fortunately, that was about the time we went public. We committed a huge amount of money into the project because we believed so much in the solution and we believed it was meant to solve Nigeria’s problems and that if we had gotten it right, many of the challenges we’re still battling with at this age and time, would have disappeared a long time ago. Nigerians are gentlemen. Many of the people that perpetrate frauds, they’re doing it because they know they would not be caught. We’re very religious, gentle, kind-hearted people but because the system is porous and we don’t know ourselves; as such, it’s difficult for the government to plan on one hand and it’s difficult to apprehend people who do bad practices. So, we put a lot of efforts on the project and we actually won the contract and invested heavily on it. But in the wisdom of the government, the project was messed up. We went to court and we made our case over and over in different publications and declarations; we did advertorials, and so many things to get reasons to prevail to no avail. But the cost of litigation was also out of this world. It is very difficult to fight with government. So, as a responsible organisation, we chose to focus on our business and we settled out of court. This accounted for most of the losses we had seen in the past years, because we had to bite the bullet and write off those investments. The last one being the approval we got at the extraordinary general meeting last year. We had gone through the process of balance sheet restructuring and it ended well. So, we have very clean books now. I cannot forecast or predict what the audit will come up with, because our books are being audited now. In the next few weeks, that would be released. But what we are saying is that we are very bold to say that our investors have good reasons to smile, because all the past accumulated debts have been taken off our books for now.
We are a resilient brand. It is a company that has come to stay. We have gone through a lot. We have had transition of first chairman, number two and number three. We have had also transition of Managing Director from the founder to myself, and we are still much focused and doing well as the leading services provider in the country. We are committed to our core mandate despite all the challenges.
Specifically, what are the challenges facing the ICT sector?
In terms of sectoral challenges, ICT industry is very challenging. It has its own peculiar dynamics and it changes rapidly. Before you close your eyes and open it there is a new technology, there is a new opportunity, there is a new infrastructure, and there is a new version, a new megabyte or gigabyte. So, it takes a company that is focused to remain on what they planned to do. Three years ago, we changed the business focus to providing intelligence business solutions and that was what led us to the pilot we are doing with the pharmaceuticals now. We have a project that is running in real estate industry. We are also working with the Computer Village, Newcomers, that is powering Computer Village. We are sure that stakeholders and investors will have reasons to smile. We are going to launch our real estate solution soon. So, you can look at the operating challenges in terms of the rapidly changing products and services, cost and need for continuous retooling to keep up with the pace, not only locally but globally.
How can we adapt technology to solve national problems?
As I said before, our commitment to the National Identity Card project was due to our belief in the potential of identity management as major enabler for national development. Trust me, the problem with the electoral system in Nigeria is partly technological. I’m sure by the time the identity management problem is solved, things would be normal. Now, I have a Bank Verification Number (BVN), you can do business with that number knowing full that there is a human being behind it. I think the National ID number should be something that is unique and important. The day we are able to make that system work, then you will see many things settling well. Luckily, with the job we have done with the BVN in the financial sector, there is a number that people trust. If I tell you this is my BVN number, there is a lot you can know about me even without meeting me. Actually, we are a stakeholder in this, along with a lot of organisations. We are part of the development of the National ID registry through one of our products. Once I give you the number, you can trust it; you can do business with that number knowing full that there is a person somewhere behind that cannot repudiate the transaction. The BVN has demonstrated that it is not impossible. The National ID is going to make it go beyond the banking sector to the other sectors.
So, when we have an identity management settled, there is nothing that stops me from voting from my phone because that number and the person behind it is known and I cannot have two of it. You will realise that you will need a fraction of all the kind of money that is being spent on election. You need zero effort in terms of logistics. I can imagine looking at the eyes of the Independent National Electoral Commission (INEC) Chairman when he was giving his report on the election postponement, though I was also angry like other Nigerians, but I could connect to some of the pains. If you have more than 147,000 devices you want to bring to a centre and configure them, whatever they have to set, let’s even assume you spent 10 minutes doing one; that is 1.47 million minutes. That’s a horrendous task. How do you move all those materials? Nigeria is a very complicated place where you cannot send the materials to every local government area and keep them there for a week before the day of election. You have to move most of them that morning. So, I can connect to some of the challenges they are having. All these will disappear if we use technology to vote.
Even in terms of cost of electioneering and political campaigns, we can see drastic reduction overtime as the new generations of voters embrace electronic campaign, e-campaign. Already, this has started, though it can only work in metropolises, in few areas. There are still villages where there are no electricity and communication facilities, and the funny part is that these are the people that voted most. The people in the remote towns are very religious with their votes. I’m sure as the new generations take over, everything will almost be e-campaign because it is cheaper, it can go farther and more effective. But as it is, many still believe in posters to reach out to people and that may be one of the challenges the new entrants into politics may face.
What will aid technological changes is also change in the composition of the population. I was told about 20 million new voters were registered between 2015 and now. Now those set we don’t know their profiles but if you look at population dynamic, I will assume that 65 per cent of those newly registered voters would be between 18and 40 years. I believe that we are going to learn more from the data after this election. We may not know who they are but we are sure majority of them are youths. They used intensely a lot of social media. I can promise you that in the next two decades, the use of posters will reduce significantly because it’s expensive, the logistics is not easy and it’s dirty; after election somebody has to pack the waste, even though it creates jobs for some people too.
But with more than 80 million voters, can your system deliver on an assignment of such magnitude?
We can look back at our pedigree and be proud that we are a leader in the ICT industry. We brought Nigeria into the Guinness Book of Records through the establishment of two largest Digital malls in the world, a record which still holds till date. Chams has been a part of every major success story in identity management in Nigeria. With the experience and expertise garnered over the years, we have built robust, secure and adaptable platforms that drive identity management, identity transactions and verification services for public and private sector initiatives and businesses. We have leveraged our internal capacity to develop intelligent solutions that are capable of managing and delivering an unprecedented result to the various challenges identified in the technology industry.
Have you benefited in any way from the local content policy?
The local content policy is a very good policy with good intentions. But the implementation, I doubt if we have benefited from the policy. However, the real economic situation in Nigeria is forcing everybody, all customers to look inward. As I told you, we don’t go after government contracts anymore; we do partnerships. We have technologies and we call ourselves computer mechanics. We are very good in technology; so we are always looking for people who have challenges/problems that we can partner so that we can deliver solutions. So, it is the economic reality that is making local content to come to a reality, not the policy implementation itself. Check it out; a lot of organisations are opting for local solutions as alternatives to cut costs.
What are those incentives that you think companies like yours need?
In terms of incentives, we have a lot of partners and what I have learnt overtime is how other countries support businesses. Recently, there was a Polish company that came to solicit our partnership. Trust me, the foreign trade attaché at the Polish Embassy was here with them. Imagine, we did not invite this company; they were just trying to form a new business and thought they should talk to us. But the foreign trade mission followed a business partner to a meeting, it carried a lot of weight but we don’t have that.
When we got the National ID project, United States, Germany and France ambassadors followed us to go and defend the project. We had issues with the National ID, we had issues with our foreign partners, we have no support from our government, zero support and I am very bold to say it. We settled out of court, but some of foreign partners, we will still go after them. Besides every other thing, the government moral support for companies can help to boost their competitiveness and sense of corporate social responsibility.
On incentives, there are many other ones that concern all of us; power is still an issue, communication is getting better and that can make business better for us and a whole of other issues under the purview of Ease of Doing Business.
Do you have any plan to partner strategic investors knowing that ICT is global?
Partnership is a very important part of our ICT industry. If you cannot partner others, you cannot make it. What we don’t do is to take foreign technology and deploy it. We always customise it and turn it to a Nigerian product. In fact, of all the solutions that we have, none of them has up to 20 per cent foreign component. We get foreign components and parts but the core engine will always be of Nigerians and for Nigerians.
How far have you gone with your corporate restructuring?
As I told you earlier, we ran into problem with the botched National ID project. We had invested and got everything set. We had built a mega registration centre for the National ID, where anybody could walk in and walk out with his ID card, all within five minutes. We were set but as I said, what they called ‘wisdom of government’ didn’t make it happen. So, we had huge losses from that venture that affected the company seriously. We then opted to restructure our business. This exercise covers our business model, products and financials. The company’s business model was modified from identity management to intelligent business solutions, thereby carving a niche for us to be more innovative in providing solutions and platforms for private and public sector organisations.
We are very bold to say we are out of the wood. The last tranche of the corporate restructuring was the balance sheet restructuring. We have cleaned our books and we are set on new path of growth. We are undergoing development of two innovative solutions that will be rolled out into the market soon. Our Pharm IT Platform was successfully launched in December 2018 at the Pharmaceutical Society of Nigeria (PSN) conference. It is a technology solution developed for the pharmaceuticals industry to enhance and manage drug distribution. Our subsidiaries have also achieved several commendable feats. We have turned around these subsidiaries to position them for geometric growth and profitability. We have been a faithful company to our shareholders and stakeholders, even when we were making losses, we were telling the whole world why we were making losses. Now the reasons have disappeared. We are in a turnaround mode for continuous growth and profitability by the grace of God.
On balance sheet restructuring, will you consider new capital injection?
Yes, we are working on new capital injection. At the last extraordinary general meeting, we actually got approval to raise new capital and the process is ongoing. Though it is not concluded, it is coming very soon. Let me assure our shareholders that the repositioning has begun to pay off. Despite the challenging, we are positive that our top line and bottom line as well as other major performance indicators shall justify the substance and essence of the restructuring and put smiles on the faces of our stakeholders. I wish to reiterate the commitment of our board and executive management to the growth of the company as we work tirelessly to ensure worthy returns to the investors.