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Little forward, plenty stops mark TSA operations in four years

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Few months after President Muhammad Buhari took office in 2015, he commenced full implementation of the Treasury Single Account (TSA). The announcement also came with a deadline for compliance by all government institutions.

The Executive Director, Strategy and Corporate Performance, SystemSpecs Nigeria, ‘Deremi Atanda, described the implementation of TSA as the best thing that happened in the country in recent years, as it brought about process efficiency and closed down multiple leakages in government’s businesses.

“TSA, riding on the back of a home grown technology, is currently providing an audit trail to government’s businesses, keeps them running even on weekend and on the spot position of balances.

“The revelation of the inefficiencies inherent in government’s businesses over the years by the implementation of the scheme was a breakthrough for the economy.

“Before TSA, one could not say what account any payment is going to on behalf of the government. Before TSA, government business is strictly done on working hours. But now, it has a single view of its financial position,” he said.

But not too long, the remuneration for the software and payment platform that enabled TSA operations became an issue.

The then Minister of Finance, Mrs. Kemi Adeosun, six months after implementation is TSA, (March 2016), said that more than N2.9 trillion had accrued to the Federal Government due to the scheme.

This led Nigerians to ask many questions, mainly bordering on the availability of funds to implement the Federal budget and why borrowing continues with so much funds apparently available. Clarity of information and accountability issues were raised.

By the end of July 2018, its record has risen to N9.78 trillion in its third year of operations against N4.21 trillion in its first year. Out of the N4.21 trillion in the first year, the embattled Remita collected over N3.65 trillion, while the Real Time Gross Settlement (RTGS), got N287.92 billion and N269.77 billion came from Direct Debit.

The Ad-Hoc Committee of the House of Representatives Committee on the Treasury Single Account, in its report shortly before the end of the eighth assembly, obtained by The Guardian, the lawmakers affirmed that as at July 31, 2018, the platform had processed more than N9.78 trillion, while 1,678 institutions- Ministries, Department and Agencies (MDAs) have been enrolled.

Nigeria had no control of its assets, particularly cash assets, which before TSA, nobody was able to discover that there were over 17,000 accounts operated by Ministries, Department and Agencies (MDAs) and served as leakages to national income.

“Some people were benefiting, instead of the government. These monies were scattered in accounts such that the government does not know what it has, still without interest. When it needs money, it will now go to commercial banks to borrow through Treasury Bill at over 10 per cent. So, it was actually borrowing its money,” an economist Emma Wagbo, noted.

Section 80(1) of the Constitution of the Federal Republic of Nigeria provides for all government revenue to be kept in one Consolidated Revenue Fund (CRF), from which expenditures only occur upon the approval of the National Assembly.

The TSA policy is supposed to ensure that this law is fully complied with. But then, the issue of compliance with the policy by various MDAs took a new twist, which continues to pose challenges to date. Nigerians who could not see the country getting the full benefits of the policy have continued to query the implementations to date.

The recently released 2016 audit report on the accounts of the federation, showed the government’s negligence and complicity in the reign of poor accountability and lack of transparency and violations of TSA provisions.

The Auditor-General for the Federation (AuGF), Anthony Ayine, specifically said: “The extensive violation of statutory financial reporting obligations by Parastatals is of great concern. Stringent sanctions, including withholding financial releases and sanction of the Chief Executives should be imposed on defaulting agencies who do not render timely accounts, as provided in the Constitution and Financial Regulations.

“The Ministries, Departments and Agencies (MDAs) and their accounting officers are reverting to the situation in the past, where they did not promptly respond to audit observations.

“I am concerned about this development, which is a major set back to our accountability process. Where accounting officers fail to respond to audit queries, the implication is that they have no explanation to offer. They should be compelled by the Public Accounts Committees to comply with the audit recommendations on such issues.”

The report detailed unremitted deductions amounting to more than ₦3.79 billion involving over 40 government agencies, including the Presidency, Economic and Financial Crimes Commission (EFCC) and National Assembly, which would have gone to the treasury through the TSA.

Beside observed economic challenges in the country, the failing strategies deployed by the Federal Inland Revenue Service (FIRS) in the collection of tax revenue is leaving billions of naira out of government coffers, thereby shorting the country’s revenue budgets.

Furthermore, other revenue-generating agencies like ministries of Finance; Industry, Trade and Investments, as well as that of Budget and National Planning are increasingly tardy with reports of financial dealings, remittances of revenue, and avoidance of accountability.

Some of the transactions were in breach of the guidelines for TSA operations as they failed in processes and procedures.

In the Ministry of Budget and National Planning, N36.75 million advances granted to some officers of the ministry were still not retired as at March 2017, with most of them granted amounts up to N4million and multiple advances without retiring the previous outstanding.

At the Budget Office of the Federation, about N4.96 billion was made available to the Budget Office of the Federation for Special Purpose Vehicle (SPV) Fund, however, there were no records maintained for the receipt and disbursement of this huge amount.

Accounting books such as Vote books and Cashbooks were not maintained. Payment vouchers were not even raised while making payments.

The only information available was the memo to the Director of Expenditure, requesting for the release of the amount from the scheduling officer, stating that a committee had been set up for the management of the fund.

Also, four MDAs were paid the sum of N19.09 billion from the Service Wide Vote without the approval of the Minister of Finance, some of which were made on a purported verbal directive from the Director-General.

Among the 11 major infractions of the Ministry of Finance include the N48 million paid through a payment voucher dated October 12, 2016, to Federation Accounts Allocations Committee (FAAC) Post Mortem Treasury Single Account (TSA) account being payment for re-appointment of consultants to the Post Mortem Sub-committee of FAAC.

The payment for the consultants was made to a sub-committee of FAAC and not directly to the consultants, while the identity of the Consultants was not disclosed and there was no evidence that due process was followed in the engagement of the consultants.

Furthermore, the mandatory 10 per cent Withholding Tax and five per cent Value Added Tax (VAT) worth N7.2 million was not deducted from the payment made to the four consultants, contrary to VAT Act No. 102 of 1993 and Financial Regulation 234, which says failure to comply would result in sanctions, including fines and/or imprisonment.

The Lead Director of the Centre for Social Justice (CSJ), Eze Onyekpere, said government’s claims of N2.81 trillion held back by its revenue-generating agencies, is an indication of its failures on fiscal transparency and lack of will to enforce rules, as well the shallow coverage of TSA.

It also showed a sustained leakage in government’s revenue stream and a proof of process that is not properly working, explaining that the loopholes are the things a government with proper Fiscal Responsibility Commission should have been plugging.

“But there is an issue that is of more importance in the TSA operation and that is about information and proper accounting of the deductions on stamp duties on banking transactions. Where is that money?

“If people employed to manage government revenues are not remitting it to the source, then what is the essence of the TSA? What is the essence of the Fiscal responsibility Act?” he said.

The Director-General of the Budget Office of the Federation, Ben Akabueze, who recently spoke exclusively to The Guardian on the refusal to remit the surplus fund by Government-Owned Enterprises (GOEs) said it is predisposing the country to financial challenges, with a budget performance at the core of the risk.

He, however, said that the claims dates back to the pre-TSA era and pointed out that while some have started complying, others are still dilly-dallying, but warned that the last notice has been given.

“This is not a behaviour to be condoned. If the government had done that before, maybe, that would have been the cause for the rise, but I don’t think any ego is being massaged now, otherwise, the matter will not be made public now.

“We have called them in open forum and government has laid out its new rules going forward, for dealing with this situation and making it clear that there will be sanction for non-compliance. Nobody is and will be massaging anybody’s ego.

“The process leading to this point did not start today. There has been audit across these agencies, which has taken some time,” he said.

The Director-General of the Debt Management Office, Patience Oniha, also in an exclusive chat with The Guardian, said such behaviour has been behind the endless shortage of fund, leading to further borrowings to keep prod growth.

“There was a move to compel them to remit 20 per cent of the revenue and list of items that are allowable because the government once realised that left for some of these agencies, there would not be a surplus. But such a move did succeed.

“So far, some of these agencies, after an audit, have agreed to pay, but that it should be spread over a period because if you collect the money in bulk, their operations would be stalled. Some have started paying after the audit, but a lot is still behind,” she said.

These are areas where TSA operations will benefit Nigerians and the economy. But has the TSA guidelines been fully adopted?

The Partner/Head of Tax and Corporate Advisory Services at PwC Nigeria, Taiwo Oyedele, said that TSA is a tool for consolidating and managing governments’ cash resources.

“One of the expected benefits is lower debt financing costs by utilising the surplus funds of some MDAs to finance the deficit of others, thereby minimising overall borrowing cost since cash is fungible.

“From all indications, it seems this benefit is yet to be fully realised, given the consistently high level of borrowing by the government despite rising TSA balances. This should receive full attention as a matter of priority to reduce the current high and unsustainable debt service cost to revenue ratio.

“Also, more MDAs should be migrated to the TSA both at the federal and sub-national level. Other features of the TSA should be fully explored and linked to budgeting, budget control, fiscal transparency, suppliers and vendors management, and transactions monitoring.

“This will help reduce challenges with the late release of appropriated funds as well as under-performance particularly with respect to capital expenditures,” he said.

The audit reform bill needed to strengthen processes in the operations of TSA is still challenged. The Federal Audit Reform Bill was introduced to the National Assembly (NASS) as a private member’s bill and went through legislative processes, including a public hearing, passed by the lawmakers, but President Olusegun Obasanjo did not sign it before leaving office in 2007.

During the first term of President Muhammadu Buhari, a second attempt also succeeded in getting the Audit Reform Bill passed by NASS again and transmitted to him in February 2019 for assent, but he ignored it.

A section of the bill sought to empower the auditor-general to a surcharge and withhold emoluments of any officer culpable of the loss of value in public treasury and refusal to respond to audit query. It also empowered him to summon any officer and put the same under oath.

These provisions, when enacted and enforced, would quick wins to implementation of TSA and bridge of gaps in fiscal laws that would expose and incriminate failures to financial rules.

“If you look at audit reports in previous years, you will see a whole lot of money running in billions of Naira, which have not been properly brought into accounts. So it is a weak part of the chain in public finance management and unfortunately, despite the reforms going on, not much has been done in audit reforms,” he said.

“I do not want to believe that the President deliberately does not want to sign the bill, but somebody, somewhere is causing the mischief by not drawing his attention to the bill, otherwise I cannot understand why a President who is leading anti-corruption fight should not be interested in audit bill,” the Executive Director, Media Rights Advocacy, Edetaen Ojo, said.

For the Faculty member at the Lagos Business School, Dr. Austin Nweze, once told The Guardian that the corruption fight has not been thorough and that is why many, especially those close to the national resource, will be looking for a way to help themselves, even now.

He said the administration started off the fight against corruption without establishing and strengthening the institution that will lead the role. It also implemented a noble scheme without, first, letting stakeholders buy into it.

“But most importantly now, there is no equity, probity and fairness. In the society, where others are working and few making it, does not encourage obedience to the overall system. Yes, people are working hard now break or bypass any system,” he said.

The 12-man Adhoc Committee of the House of Representatives, led by Danburam Nuhu Abubakar, while presenting their report to the lawmakers in May 2019, had raised concerns over serial violations of TSA by MDAs, recommending severe sanctions, including “name and shame”, and prosecution.

According to the 12-man Adhoc committee, their interaction with the Director of TSA at the Office of the Accountant-General of the Federation (OAGF) showed the value, which would have otherwise been frittered by public officials in whole or part.

The committee was inaugurated after the House Plenary deliberated on a motion on the need to ascertain the proceeds of the TSA for transparency, accountability and good governance, with a resolution to investigate the matter and report back for further legislation.

“While the coming of the TSA is good, what about the abuse and diversions still ongoing? Some agencies are taking advantage of some provisions to deprive the government of their surplus operations,” Wagbo added.

The committee’s report, corroborating Wagbo’s concerns, raised the alarm over serial violations of TSA guidelines by MDAs, recommending severe sanctions, including “name and shame”, and prosecution.

The lawmakers affirmed that there are collections accounts, which basically are used by the MDAs to collect government revenue from the public, businesses or other MDAs, like the FIRS, Customs, Corporate Affairs Commission (CAC), CBN/NNPC offshore accounts at JP Morgan Chase for crude oil sales.

On the other hand, operation accounts are accounts maintained by MDAs to finance their day-to-day activities and can be funded from payments from the public, businesses, other MDAs, as well as being funded from the Treasury, budgetary allocations for the year.

As usual, there were overwhelming discoveries made during the course of investigations as funds belonging to the Federal Government to the tune of billions of naira and hundreds of millions of dollars were operated outside the TSA by the MDA’s in collaboration with the banks.

“After the meeting with banks, CBN, OAGF, Office of the Auditor-General of the Federation (OAuGF) and Nigerian National Petroleum Corporation (NNPC) on the 15th of August 2017, the committee discovered that over $900 million is still being held outside the TSA.

“While some banks, fully complied with the directive of the Ad-Hoc Committee by remitting these funds into the TSA, it is worthy of note that the sum of about $995.71 million was still held outside the TSA by some other banks.

“This sum of $995.71 million includes the principal deposit and the accrued interest on the deposit. Also discovered was an amount of N1. 207 billion and EURO 23,704.01,” the report noted.

Also, the committee discovered some extra-budgetary spending by the NNPC, as the information submitted by the state oil company showed that BRASS LNG received an appropriation of $511.6 million, while the actual release was $461.54 million in five fiscal years.

It also made another startling discovery of a fund held in another bank by the Federal Ministry of Environment’s Hydrocarbon Pollution Remediation Programme (HYPREP) called FME HYPREP Account, with a balance as at September 2018, at N1.1 billion and $4.9 million domiciled in Stanbic. IBTC Bank.

Due to information asymmetry associated with TSA operations, it is still generally unknown if all banks have finally complied with the directive presently, financial experts said.

The committee said it severally wrote to the Minister of Environment for a status report on this account and for the Minister to appear before the committee to make clarifications in respect of the account in contention but was not honoured by either any submission or appearance.

Other monies also discovered outside the TSA policy was the Nigerian Port Authority (NPA) funds trapped by INTELS, as the investigations revealed that a whopping value of $569.16 million was INTEL’s obligation to the agency.

Among them is NNPC and Federal Ministry of Environment, while the committee’s insistence on sighting the purported exemption letter, led to the discovery and dismay of the lawmakers, that the letter was only conveying the approval of the President signed by an Assistant Director.

As for the Ministry of Environment, the letter could not be produced as of May 9, 2019.

“Applications for Exemptions/ Waivers of all or any MDA’ 3 funds/ Accounts must follow the guidelines on TSA implementation and dully approved, signed by the President only. All existing exemptions/waivers granted to MDAs that do not conform with President’s assent should be declared illegal and transactions carried out fraudulent,” the report recommended.

The report recommended legislations to provide laws to guide and strengthen the enforcement of the TSA Policy, while the House is, therefore, advised to commence the process of enacting enabling laws to cater for the inadequacies of the TSA guidelines.

Mandate the Ministry of Finance, OAGF and CBN to develop and propose funding arrangements with the indebted banks to fashion modalities to enable them to refund all MDA’s outstanding balances to the TSA/CRF. In this regard, a form of facility window may be created by the CBN to enter into a financial arrangement with the banks where public funds were trapped.

It, therefore, recommended immediate suspension of payments outside TSA Policy such as sending manual payment mandate to CBN and transfer of large funds to a transit account at CBN 0r DBMS accounts riot belonging to the Federal Government and making the payment from thereon. This is‘seen as an attempt to ‘ circumvent the TSA Policy.

The MOF and OAGF should immediately commence full reconciliation to determine actual outstanding and defray all financial obligations due to the TSA services providers-Systemspecs and collection banks.

Mandate the Office of the Auditor-General for the Federation (OAuGF) to carry out performance and financial audits on a quarterly and annual basis and publish the same for transparency and accountability.


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