Suffering amid plenty

• Funds Scarcity Assails Govt In The Face Of N3trn TSA Mop Up
• MDAs Fleecing Unbudgeted Sums Now Handicapped

The office of the Accountant General of the Federation (OAGF) has revealed that, as at the end March, not less than N3trn  Federal Government funds hitherto held in commercial banks have been mopped up and saved at the Central Bank of Nigeria (CBN) vault under the Treasury Single Account (TSA) fiscal policy programme.

The Accountant General of the Federation (AGF),Alhaji Ahmed Idris, who said this, also noted that the number of Ministries, Departments and Agencies (MDAs) on the TSA has risen to 976.

He said that the successful implementation of the policy rests on a tripod, which includes the collection of MDA receipts, payments and budgetary control of their spends.

Noting that with the new fiscal regime, government has stopped borrowing from itself, he explained that commercial banks used to lend government, MDAs’ idle balances through treasury bills and other short-term instruments, as well as, direct lending to agencies at very high-interest rate.

Idris noted that the two core systems supporting the TSA are the Government Integrated Financial Management and Information System (GIFMIS) domiciled at the OAGF and the CBN payment gateway called Remita, which were integrated and deployed in 2012.

Tracing the development and deployment of the innovation, he said: “TSA became fully operational in April 2012 with 93 pilot MDAs accessing their allocations directly from the Consolidated Revenue Fund Account. Incrementally, MDAs on TSA went to 225 in 2013; 345 in 2014, and 706 in 2015. Currently, over 900 MDAs are on the TSA. The adoption of the system provides better information on the cash resources available to government at any point in time and the financing gap that needs to be met.

“Other benefits of the TSA are timely reconciliation of MDA accounts, elimination of commercial banks use of public funds for investment purposes, corrupt association between MDAs and commercial banks, and reduction in the number of government bank accounts outside the CBN thereby strengthening controls, fast-tracking the MDAs compliance with the e-payment and cashless policy of the CBN and improvement in monetary policy management of the CBN with positive impact on inflation,” he added

However, good as the fiscal policy may appear, some believe it remains a paradox, as it was yet to address the core objective of ensuring that government revenue was readily available to address salient demands such as prompt payment of salaries and running costs to oil the wheel of government activities.

Those in this school of thought are quick to point out that since the introduction of the policy, Federal Government funds have been mopped up and stocked in a show-case to create a façade that all was well with the nation financially, when, in fact,government was struggling to meet basic, immediate commitments, like paying workers’ salaries, meeting contractors’ obligations.

Some civil servants, particularly those in tertiary institutions and parastatals, who spoke to The Guardian on the matter, complained that since the introduction of the TSA policy, they have been placed on half salary with no satisfactory explanation for the development, wondering whether the policy was not negating the very essence it was innovated to solve.

One of them, Mr. Pius Karie, of the Federal College of Education, Obudu, in Cross River State, said the staff union of colleges across the country recently returned from an industrial action called to press home the restoration of workers’ full pay as well as payment of owed allowances.

He added that the TSA policy has inflicted hardship on them, as workers no longer fully meet their financial obligations because of inadequate funding of the Federal Colleges of Education since the implementation of the TSA regime, which resulted in a shortfall of allocation to the colleges.

Karie said: “It’s been very tough, as we are owed salaries of several months on end. What we get now is half salary every month, and nobody is talking of promotion and other allowances now in arrears. And when we demanded to know, we are told it’s the TSA; that we no longer receive the allocation that we were used to in the past.”

“We are just managing. Paying children school fees and meeting other obligation is a challenge now. We want the Federal Government to quickly address whatever challenge that is responsible for this,” he pleaded.

In Abuja, the Federal Capital Territory, checks around MDAs indicated a similar scenario, particularly as it relates to recurrent spendings.

At the Federal Ministry of Finance, which is part of the implementers of the TSA, instances of shortage of funds to finance programmes were cited. A case in point was allegedly witnessed last April, when a delegation of the Ministry to the last Spring Meetings of the IMF/ World Bank could not obtain traveling allowances, but were asked to source the funds independently, and promised to be reimbursed after the trip.

Similar cases reportedly abound in other MDAs, where essential work tools are unavailable, with some saying that they are having difficulty in obtaining fuel for their generating sets during power outages because getting invoice from the TSA Account is a ‘Herculean task.’

Weighing in on the matter,Lead Director, Centre for Social Justice, (CENSOJ),Mr. EzeOnyekpere, said the benefit of stopping leakages and shady practices by banks was enough incentive to continue with the policy, noting, “Maintaining bloated, frivolous, wasteful and unnecessary expenditure heads at a time state government revenues have declined due to low oil prices will surely build up another backlog of salaries.”

A Development Economist, Mr. OdilimEweagbara, insisted that the TSA policy remains the best way of checking leakages in government’s revenue and advised the Federal Government and the states to fully embraced the policy to ensure value for money.

Ewegbara, who noted that the TSA benefits both government and the private sector, said,“Imagine non-revenue generating MDAs, in copying their revenue generating counterparts, place their budgetary allocations in multiple high-interest-yielding deposit accounts, and with that divert money meant for financing both capital and recurrent. And in doing so, not only are salaries and wages not paid, but projects are either delayed or permanently abandoned.

“Just imagine also how section 22(1) of the Fiscal Responsibility Act of 2007, which allows revenue generating MDAs to remit only 80 per cent of the operating surplus to the Consolidated Revenue Funds (CRF). And by driving operating costs so high close to 100 per cent, which makes 80 per cent of their operating surplus close to nothing, to the extent that at the end of the year these MDAs remit nothing to CRF. How bad will Nigerians feel on hearing that because of these lacunas and illegalities, government has been losing such mind-blowing revenues in their trillions of naira annually? For example, that between 2009 and 2012 government had N9.4trillion not remitted?”

Noting that the policy would ensure that MDAs no longer access public funds unless money from budgetary provisions, he noted that the policy would lead to the optimal utilization of government cash resources, including creative investment of public funds in the critical development sectors of the economy.

“But with TSA leading to the closure of about 10,000 multiple bank accounts operated by MDAs in commercial banks, banks will have to wake up from their slumber. This is because the era when government’s money is either lent back to government or invested in forex speculations is over. It also means that no longer at Bankers’ Committee meetings member banks will demand that the CBN pursues their self-serving high-interest rates to their benefits and those of heads of MDAs who placed public money in their high-interest-yielding fixed deposit accounts. With TSA, government can easily quarantine its revenues, with intended consequences, including forcing interest rates to naturally nose-dive, since no serious business should be ready to borrow at such double digit rates when the economy is struggling at between four and five per cent,” he said.

He added that the TSA is forcing banks to leave their comfort zone and become creative and inventive as it is the case in modern economies around the world, which is to seek private deposits through investing in the real sector of the economy, noting, “In fact, with economic financialisation soon over, banks will discover that their survival is dependent on their embracement of fractional reserve banking, which is leaving a fraction of private depositors’ funds in reserve while using the main deposits to chase high profit-yielding investments.

“This means that soon the era of economic diversification through industrialization will soon begin. What this also means is that at the next Bankers’ Committee meeting, banks will insist that the CBN revisits its current cash reserve ratio (CRR) on private deposits from 31 per cent to possibly zero per cent, so that they can begin to attract more private deposits.

“But for this TSA policy to be maximised, we need it to be accompanied with the Fiscal Sunshine Bill, which if enacted will open up the financial activities of government in a way that there will be no more hiding place for those who divert or loot government money. For instead, with Fiscal Sunshine Act in place, budgeting process and implementation, including contract awarding should all be in the open for Nigerians to see both how revenues are generated and how public money is being spent by those in government, and why,” he continued.