Treasury Single Account: Matters Arising
Finance Minister, Kemi Adeosun
The long-drawn-out implementation of the federal Treasury Single Account (TSA) rule has come to a near conclusion with euphoria upon the discovery that there is at present an average daily balance of N2.3 trillion in the account. Because these TSA funds had hitherto been suppressed and hidden from the federal budgets, they are additional to the Federal Government’s share of the Federation Account (FA). The daily balance is uncannily a shade higher than the preliminary 2016 Budget deficit of N2.2 trillion. The President’s 2016 budget address to the National Assembly indicates the fiscal deficit in part “will be financed by a combination of domestic borrowing of N984 billion and foreign borrowing of N900 billion”.
The Treasury has yet to establish pending MDA commitments, but let the admonition go out that hanky-panky moves to pad such commitments be eschewed. After the several discovered paddings of some provisions in the 2016 Budget proposals are removed and assuming subsequent MDA remittances and payouts record substantial surpluses, a trimmer 2016 Budget with little or no preliminary deficit gap should emerge. Considering the general public aversion to funding the budget with loans particularly the rankling of incurring further external debts, the available resources would save the day.
There should be total compliance with the TSA rule. It has been reported that 726 MDAs, which account for 98 per cent of the federal budget, subscribed to the TSA by year-end 2015. It implies that there remain some 40 straggler establishments to be brought into line. With a little creativity, the TSA shoe would expand and contract to fit all establishments that are wholly or majority government-owned without any highfalutin exception. Pending necessary legislation and with the concerns raised by the Revenue Mobilisation, Allocation and Fiscal Commission about the possible sharing of TSA funds among the tiers of government, the FG should apply the pooled funds to part-finance its budget.
The Minister of Finance, Mrs. Kemi Adeosun, has claimed that the implementation of the TSA rule would, one, improve the processing of collection of revenue as well as engender prompt settlement of matured government commitments and thereby facilitate project completion and service delivery on schedule; two, afford a clear view of overall government finances at any time and so reduce borrowing with the attendant costs; three, eliminate avenues for corrupt self-enrichment by public officials; and four, increase accountability and transparency.
Nonetheless, some of the claims are open to question. For example, public corruption would still luxuriate on padded project costs and fees. Also the TSA collections were in different currencies. So there was embedded corruption when some agencies that collected revenue in foreign currencies reportedly remitted only naira amounts into the TSA. Therefore, remittance should be made as earned in various currencies just as the daily balance should reflect those currencies.
Noting that the country’s revenue base was and is still low, the minister urged her audience of State Accountants-General to brainstorm on how to improve the revenue returns. Although the call for and the suggested ways to improve revenue collection administration were predictable, the minister did not hit the nail on the head. The cause of the low revenue base is an open secret. Nigerian governments and private businesses combined currently access only one-third of the domestic financial sector’s lending capacity based on bank deposits of the private sector alone. The national low revenue base results from the limited volume of economic activity that can be boosted or improved by the utilized bank credit capacity. Two-thirds of the loanable bank credit remains idle because the economy not only lacks macroeconomic stability with a conducive production environment but also, suffers high inflation-induced restrictive monetary policy stance with attendant unattractive high lending rates.
The above adverse economic features arise from the excessive fiscal deficits traceable to the age-long refusal by Nigerian Heads of State/Presidents to allow FA beneficiaries to collect dollar allocations not even by secure and abuse-proof means for conversion via deposit money banks to non-inflationary realized naira revenue. So the first step toward achieving the elusive improvement of the low revenue base must be taken by President Muhammadu Buhari and, by extension, by the Minister of Finance herself. Nigerians have endured enough policy pronouncements that merely skirt the self-inflicted problem at hand.
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10 Comments
Tax the rich, not the poor. Make people pay banded property tax, pay tax on luxury cars, pay tax on unoccupied homes, pay tax for having properties in certain places, tax the wealthy, tax the wealthy and tax the wealthy, then build public infrastructure tirelessly!!!
You are right I pays monthly council tax to local government in UK but the problem with Nigeria is, how many state or local governments know number of houses on ground? All properties in UK are in Land registry just type post code but with Nigeria no. Some houses in Nigeria don’t even have plan or register with each state/local governments and some state/local governments who closed to people don’t even know many building on ground.
It’s another option for government to know looters. How Public Servant is able to buy a plot of N100m and build 10 houses worth over N1B? Nigeria is Looters society.
This is the reason I said, we don’t need to borrow to finance our budget. we need to cut the budget and focus on ensuring all revenue is going into government account, that funds are used wisely and ensure the tax system is fair and progressive. we need property taxes that is based on size of the house. this would ensure all those that looted and built massive houses, would pay to fund infrastructure in the local government area.
Domestic borrowing might be not necessary, foreign borrowing to import plants & machinery’s for infrastructures development & to reduce our $20million per annum food deficit is a good idea.
The TSA should equal the total revenue of the Fed and its organs under the control of the Finance Minister, period. When there are this transit holds from the Treasury, it spells unnecessary detours of money from the incoming revenue pool under any excuse. The idea of the TSA is to look at what we have and manage our spending accordingly. The umbrella TSA is all Government proceeds(earnings) if you may. What did you call it? ‘Federal Government’s share of the Federation Account (FA)’. What makes it difficult then to have the amount in the TSA coffers for clarity?
The new Finance minister has a good head on her shoulders. A lot of things are beginning to make sense in Governance, and chaos that leads to leaks are being eliminated. This Government is good. But it is also very important to keep the good government in power by avoiding unpopular decisions such as creating new taxes for the poor. I’d rather take my risks focusing on the rich. There are too many empty properties in the most expensive areas such as Lekki 1, Banana Island, Maitama, Asokoro, and Wuse 2 sitting idle. This makes no sense and could only have been financed with looted funds. Subdivisions filled with apartments in Asokoro for example , yet empty makes no sense. Owners let them sit for 4-5 years empty while demanding ridiculous rents, and artificially raising the prices of real estate. TAX THEM, and they will be forced to make financial sense with them. People are sitting on looted funds converted to real estate and forcing scarcity inn certain areas to raise values. Let’s put an end to this scam. Yearly real Estate taxes will end this scam.
I doubt if she does. Otherwise why would she order the Federal Mortgage Bank of Nigeria to channel civil servants’ contributions in the NHF scheme to the TSA and thereby precipitate untold suffering for retiring civil servants who generated the Fund exclusively from deductions from their salaries over time. Such monies do not by any stretch of imagination belong to government and have no place in the TSA. The concept and philosophy behind the NHF should not have been too difficult for a Minister who has a good head, as you say, to grasp: that the NHF is essentially savings generated by private individuals who just happen to be civil servants. Such fund must be strictly left for FMBN to manage and disburse in line with laws and regulations guiding the Fund, the fact that FMBN is a govt. parastatal notwithstanding.
It is only in Nigeria that they build a bunch of Houses and let them sit for 5 years without anyone occupying them. Meanwhile, there are a lot of people like you seeking a place to live. These sharks force the prices of real Estate to skyrocket by building in certain areas and demanding prices that are unreasonable. Maitama for example is one of the most expensive Real Estate on the planet.
Can you imagine? They are all artificially inflated by criminals who stole Government money. Then the use them to get loans from Banks and have clean laundered money that they can use for anything. Then Amcon takes over the bad loans, and Government is screwed again. A big racket that is working for them.
TSA is good. It should be refined as we go along. There is a huge problem of reconciliation since the advent of TSA. This should be resolved immediately otherwise this euphoria will not last because it will create a conducive environment for the perpetration of fraud. There was an earlier article in another paper with the same heading a few months back. Shouldn’t this newspaper acknowledge it?
This government should immediately pay attention to the broadband infrastructure as it paying attention to electricity power. Lofty e-finance and e-governance projects will require a robust and reliable broadband infrastructure. Since this government came into power, the wireless and wired inter-network performance has fallen. Internet access is intermittent, banks and even supermarkets complain of network problems etc, it could be sabotage or not, but any government that want to implement revolutionary projects like TSA, e-finance and e-governance must take reliable broadband infrastructure serious. I downloaded the ministry of communication new broadband policy and I got frighten especially when the minister said he was still getting familiar with what is on the ground!
We will review and take appropriate action.