It is no longer news that President Muhammadu Buhari on assumption of office in May, directed all Ministries, Department and Agencies to ensure that all moneys accruable to the federal government of Nigeria is channeled into a joint account called Treasury Single Account (TSA), regulated by the Central Bank of Nigeria.
Most Nigerian's are however not fully aware of the TSA and what the nation stands to benefit from it's full implementation.
But what is a Treasury Single Account?
Treasury Single Account is a public accounting system under which all government revenue, receipts and income and collected into one single account, usually maintained by the country’s Central Bank and all payments done through this account as well.
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Is it constitutional?
Yes.Section 80 (1) of the 1999 Constitution as amended states “All revenues, or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation.
Has it been used before?
In 2012, the government of former president Goodluck Ebele Jonathan introduced a pilot scheme for a single account using 217 ministries, department and agencies as a test case. The pilot scheme saved the country about N500 billion in frivolous spending.
What is the aim and objectives of the TSA?
The purpose of the Treasury Single Account (TSA) is primarily to ensure accountability of government revenue, enhance transparency and avoid misapplication of public funds. The maintenance of a Treasury Single Account will help to ensure proper cash management by eliminating idle funds usually left with different commercial banks and in a way enhance reconciliation of revenue collection and payment.
How Is the TSA Run?
With particular reference to Nigeria, the Central Bank has opened a Consolidated Revenue Account to receive all government revenue and effect payments through this account. This is the Treasury Single Account. All Ministries, Departments and Agencies are expected to remit their revenue collections to this account through the individual commercial banks who act as collection agents.
This means that the money deposit banks will continue to maintain revenue collection accounts for MDA’s but all monies collected by these banks will have to be remitted to the Consolidated Revenue Accounts with the CBN at the end of each banking day.
In other words, MDA’s accounts with money deposit banks must be zerorized at the end every banking day by a complete remittance to the TSA of all revenues collected. The implication is that banks will no longer have access to the float provided by the accounts they maintained for the MDA’s.
What are thr Benefits of the TSA?
From the foregoing, it is obvious that the primary benefit of a TSA is the mechanism it provides for proper monitoring of government receipts and expenditure.
In the Nigerian case, it will help to block most if not all the leakages that have been the bane of the growth of the economy. We have a situation where some MDA’s manage their finances like independent empire and remit limited revenue to government treasuries.
Under a properly run TSA, this is not possible as agencies of government are meant to spend in line with duly approved budget provisions. The maintenance of a single account for government will enable the Ministry of Finance monitor fund flow as no agency of government is allowed to maintain any operational bank account outside the oversight of the ministry of finance.
How will this affect the banking system?
As a matter of fact, deposit money banks stand to lose immensely from the implementation of TSA. This is because of the fact that public sector funds constitute a large chunk of commercial banks deposit. Indeed, it is estimated that commercial banks hold about N2.2 trillion public sector funds at the beginning of sector quarter of 2015.
The TSA when fully implemented, will lead to an increase in deposit interest rates as a major means of inducing customers and most importantly we see a drop in lending and in the profitability of banks.
This situation can lead to banks retenching it's staff just to remain in the market and break even.
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