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TSA: Changing the chess game in financial governance


Nigeria's finance minister Kemi Adeosun PHOTO: PHILIP OJISUA

Nigeria’s finance minister Kemi Adeosun PHOTO: PHILIP OJISUA

The Federal Government’s adoption of the Treasury Single Account (TSA) policy is only a little over a year old, but some analysts insist its impact on the administration of public funds has been wide-ranging despite mixed reactions from a cross section of Nigerians.

The TSA was initiated by the administration of former President Goodluck Jonathan to minimise the cost of government borrowing and institutionalise the war against corruption in the public sector. This is in line with Section 80 (1) of the 1999 constitution which stipulates that all revenues raised or received by the Federation…shall be paid into and form one Consolidated Revenue Fund (CRF) of the Federation.

Cash Asset Recovery
Since September 15, 2015 when the President Muhammadu Buhari administration enforced the policy, the government has recovered trillions of its cash assets lying dormant in deposit money banks across the Federation. The President was quick to cite this at the March, 2016 National Executive Committee meeting of the All Progressives Congress (APC) in Abuja. He disclosed the mop-up of over N3 trillion as revenue accruals since the TSA was adopted, assuring that savings from the policy would be channelled into the development of critical sectors of the economy. This was in line with Minister of Information and Culture Lai Mohammed’s subsequent assertion at the All Nigerian Editors Conference (ANEC) 2016 in Port Harcourt, that the judicious management of the TSA had helped promote the fight against corruption and saved Nigeria from imminent collapse.

Analysts like Kalu Aja, CEO, AfriSwiss Capital Assets Management Limited, cannot agree more. “The TSA is a positive and extremely important policy. The policy assists the government in the collection and management of cash and reduces the cost of governance,” he said during a recent online interactive session with newsmen.

Bank Deposit Mobilisation
But as the economic recession bites harder, some stakeholders are counting their losses and faulting the policy. The Nigerian banking system is still reeling from the impact of the TSA. The Afrinvest 2016 banking report disclosed that the sector’s profit fell by 28% in the 2015 financial year due to a mix of factors including the pressure engendered by the TSA implementation which “sterilised approximately N1.2tn from the banking system.”
Earlier this year, the CBN barred nine deposit money banks from the foreign exchange market following their failure to remit $2.334 billion belonging to the Nigerian National Petroleum Corporation (NNPC) to the TSA. First Bank, Diamond Bank, Sterling Bank, Skye Bank, Fidelity Bank, United Bank for Africa, Keystone Bank, First City Monument Bank and Heritage Bank made the list of debtors at the time. But some economic watchers argue that while the banks are quick to point fingers at the TSA, their challenges stem from over-reliance on multiple MDA deposits which, before the policy, yielded them massive profits which they ironically lent to the government at high interest rates.

In a bid to stay afloat, several banks have resorted to staff layoffs, casualisation and job cuts. But Unity Bank Director Rislanudeeen Muhammed insists that is not the way to go. In a recent chat with the press, he said: “Banks…need to begin operating as banks because hitherto, what they practised was arm-chair banking. Now is the opportunity for real banking to emerge rather than the liability generation banking that we currently have.”

Public Sector Turnaround
The same can be said about the nation’s public sector, where agencies reportedly operated about 17,000 poorly monitored bank accounts. Investigations reveal that most of the accounts were spurious, opened in the name of the government but operated by faceless entities that diverted the funds for private use. But industry analysts agree things are looking up. With the TSA, the government can keep close tabs on its income and expenditure, and revenue generated by its MDAs can be tracked.

“The economic challenges affecting our nation demand optimum efficiency in the management of public funds. TSA at the federal level has allowed, for the first time, visibility of the total quantity of government funds at any point in time,” Minister of Finance Kemi Adeosun explained while highlighting the impact of the policy recently.
To buttress this assertion, Vice President Yemi Osibajo disclosed in August that government had introduced major fiscal measures to save the nation’s hard earned income, which includes weeding out a whopping 40,000 ghost workers from the public sector. He said: “Before now, salaries collected by ghost workers monthly ran into billions of Naira that could have been profitably used for the public. We have cut down and are still cutting down on frivolous expenditures.”

Meanwhile, an August 2016 McKinsey research seems to justify government’s adoption of the TSA policy. Tagged ‘Policy in the Data Age: Data Enablement for the Common Good’, the report emphasises evidence-based governance is the future, and will increase in the run-up to 2020. It explains that this digitalised governance is evidence-based and “gives governments the tool they need to be more efficient, effective, and transparent while enabling a significant change in public-policy performance management across the entire spectrum of government activities.”

If e-Governance is the future, some would say the TSA is qualified.

The policy, which facilitates payment to the government and enables tracking of its finances may just be what Nigeria needs to join the comity of nations driving transparency and accountability in their national systems through digitalisation.

Martins is a Lagos-based public affairs analyst

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  • infinity2020

    Even if Nigeria go e governance Nigerians being what we are are we going to be able to put the TSA account under e lock and key to keep out the e fraudsters?

  • real

    what has the saving being used to do. one of the good things from the TSA policy, is forcing bank to operate as banks. now if we can get central bank to stop supporting banks in there forex speculation.