A don at the Michael Okpara University of Agriculture Umudike, Abia State, Prof. Michah Chukwuemeka Okafor, has said that the recent implementation of treasury single account (TSA) in Nigeria will stop banks from profiteering on free money.
The university lecturer further said the initiative would also lead to fundamental changes in the country’s economy and also help improve fiscal and monetary policy coordination, adding that that Nigeria stands to benefit greatly from the holistic implementation of TSA in the country.
Okafor, a fellow of the Institute of Chartered Accountants of Nigeria (ICAN), said this in a paper, titled: “Full Implementation of Treasury Single Account in Nigeria: Implications on the Economy,” which he presented at a public lecture at the Evangel University, Okpoto, Ebonyi State.
He said: “TSA will lead to better fiscal and monetary policy coordination, as better transparency is achieved through reconciliation of fiscal and banking data, which in turn improves the quality of fiscal information and management that will benefit and improve the country’s economy generally, eventually.”
Commenting on the how the policy would affect the banking sector, Okafor said banks’ profiteering on free money was dangerous to Nigeria’s economic growth, saying “our bankers are worried by the absence of free government funds, which makes them look suspect on their activities.”
According to the professor of accounting, implementation of TSA in Nigeria would basically result to fundamental changes in the economy and would help government to unify banking arrangements, guarantee oversight of cash resources, promote efficiency, transparency and accountability in government payments, adding that it would ensure that government has access to funds when needed and reduce overall cost of government borrowing.
He outlined about nine benefits of TSA, among which are guarantee of timely information on government cash resources as complete updated balances will be available daily; better appropriation control, as it allows the Ministry of Finance to have full control over budget allocations and strengthens the authority of the budget appropriation; improvement on the operational control during budget execution in an efficient, transparent and reliable manner; ensuring efficient cash management, such as regular monitoring of government cash balances; supports efficient payment mechanisms because there is no ambiguity as to the volume or the location of the government funds, and makes it possible to monitor payment mechanisms.
Other benefits of TSA that Okafor highlighted include: ensuring bank reconciliation and quality of fiscal data because as he explained, with effective reconciliation between the government accounting systems and cash flow statements from the banking system, the risk of errors in reconciliation processes was reduced and there would be improvement on the timeliness and quality of the fiscal accounts; reduction in fiscal deficit; reduction on bank fees and transaction costs; while unnecessary delays in remittance of government revenue will now be reduced thereby cubing sharp practices to enhance prompt release of funds for projects.