As TSA Clocks One…

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BY Kunle Aderinokun

On September 15, 2016, it will be one full year since the President Muhammadu Buhari administration implemented the Treasury Single Account (TSA) policy, initiated by his predecessor to minimise the cost of government borrowing and maximise the opportunity cost of cash resources.

While the policy has only been in force for a relatively short time, the mix of hard knocks and accolades that this administration has received for its implementation is increasing by the day.

The TSA is a public accounting system, which collates and deposits all government revenue, receipts and income in a single account, maintained by the Central Bank of Nigeria (CBN). It is primarily aimed at ensuring accountability of government revenue, enhancing transparency and avoiding misapplication of public funds. In the case of Nigeria, the adoption of the policy 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.

In recent times, government officials have taken turns to justify the adoption of the policy. They claim it has turned around the country’s fortunes, giving teeth to this administration’s avowed war against corruption in the administration of public funds. Minister of Information and Culture, Lai Mohammed, reiterated these recently when he asserted that the judicious management of the TSA has helped to promote the President Muhammadu Buhari administration’s fight against corruption and saved Nigeria from imminent collapse.

While speaking at the All Nigerian Editors Conference (ANEC) 2016 in Port Harcourt, he claimed that this administration had managed scarce resources prudently, thanks to TSA, the anti-corruption fight and elimination of ghost workers. He actually said the judicious management of the policy was the reason this administration had managed scarce resources prudently, taking the country from the brink of economic collapse in the nick of time thereby “averting Nigeria’s collapse”. Minister of Finance, Kemi Adeosun, made the same submission earlier this year. At a workshop with accountants in Abuja, she emphasised that the TSA had provided the government financial information on the revenues of agencies it funds, reducing revenue suppression.

“This information is being used to drive our programme to enforce compliance with the Fiscal Responsibility Act and ensure that revenue generating agencies generate expected surpluses and remit to the Federal Purse,” Adeosun explained.

President Buhari has been no less vocal in his defence of the policy. When he assumed office on May 29 last year, the president claimed he inherited an empty treasury which constrained him from executing developmental projects that would ease the hardship experienced by Nigerians in line with his campaign promises. As such, he lost no time stipulating that all ministries, departments and agencies (MDAs) pay their revenue into the TSA or designated accounts maintained and operated in the CBN, giving them September 15, 2015 as the deadline for full compliance. During an interactive meeting with the Nigerian community in the United Kingdom back in February, Buhari reportedly berated his predecessors for operating multiple accounts which they diverted into private pockets, assuring that he would make every Nigerian accountable going forward.

True to his word, the President’s implementation of the TSA has been far-reaching and impactful. Before the implementation of the TSA, government agencies reportedly operated about 17,000 scattered and poorly monitored bank accounts. Naturally, this bred a culture of corruption, manifesting in fragmented bank accounts, compromised revenue remittances and deposit dormancy. But the story is fast changing. Today, details of funds kept within the TSA could be accessed by each agency holding a TSA account, including the Office of the Accountant General of the Federation (OAGF) and the Ministry of Finance.

More importantly, government can keep close tabs on its income and expenditure, and revenue generated by its MDAs could be tracked with relevant details such as payer, purpose, time and place of payment, etc. The monetary policy management and control of the CBN have been strengthened, and the losses the government recorded from loan repayments greatly reduced. At present, the government can receive funds from any part of the country, pay salaries without necessarily uploading salary schedules from separate software to the e-Payment platform and has overall, ensured accountability and transparency in financial transactions.

“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,” Adeosun explained while highlighting the impact of the policy recently.

Though the benefits of the TSA may be overwhelming, the policy still has its fair share of critics. A school of thought argues that the TSA is laudable but ill-timed, adopted when the real sector is unable to access credit from banks and the majority of Nigerians are struggling to make ends meet. Recently, the International Monetary Fund (IMF) forecast that the Nigerian economy was likely to contract by 1.8 per cent this year. CBN Governor Godwin Emefelie’s prognosis aligned with this. He disclosed that Nigeria was experiencing economic stagflation, resulting in high rates of unemployment, inflation and a decline in Gross Domestic Product (GDP). Banks have since keyed into this argument, claiming that their inflow is weak lack of payment for TSA services rendered.

So far, Diamond Bank laid off 200 staff, Ecobank 1,040 and FBN projects it will lay off 1,000 staff nationwide so it can stay afloat. Last Tuesday, the CBN barred nine deposit money banks (DMBs) 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 errant banks. CBN officials assured newsmen the sanction would remain in force until the DMBs remit the funds, after which they would be subjected to further disciplinary action.

But some economic watchers assert it has to get worse before it gets better. They explain that the implementation of the policy is timely, and has exposed Nigeria’s weak financial system, built on banks whose claim to strength was reliance on interest generated from multiple deposits which they ironically loaned to the government at high interest rates. On Tuesday, Nigeria Deposit Insurance Corporation (NDIC) managing director, Umaru Ibrahim, was quoted as saying the full implementation of the TSA had signalled the end of armchair banking. He stressed that over three years ago, banks had been warned to diversify their sources of deposit mobilisation to avoid overly relying on government deposits.

“It is an opportunity for banks to refocus on the original purposes for which they were set up to collect depositors’ funds, keep them safe; engage in intermediation to create wealth and jobs for the economy and in the process earn profit for themselves,” noted Prof. Stephen Ocheni of the Department of Public Sector Accounting, Kogi State University, during a recent lecture on the TSA held in Abuja.

Amidst the public debate, the clock may be ticking on the lifespan of the TSA policy just when it is beginning to gain some traction. Indigenous software giant SystemSpecs invented Remita, the software which powers the TSA. However, despite having a valid contractual agreement with the CBN for a 1 per cent service fee to be shared in an agreed formula with the CBN and DMBs, the ICT firm has not been paid by the government. As such, the implementation of the policy may be unsustainable, since SystemSpecs may be unable to provide its service indefinitely while the government withholds its statutory remuneration for services rendered.

“We must promote and reward indigenous entrepreneurs. Except our nation begins to respect intellectual property rights and reward innovation, we must be careful not to scare intellectuals and core professionals from wanting to do any business with government,” SystemSpecs said in a recent press release.

Its Executive Director, Deremi Atanda, reiterated this during an interview with CNBC Africa recently when he argued that it was tough for SystemSpecs to continually render services to the government but remain unpaid indefinitely. “We have taken this challenge upon ourselves for the sake of other IT entrepreneurs,” he said. “It’s not been easy going ahead without being paid for months. But we know that once this is sorted out, it charts the path for others coming into the market.”

If the impasse lingers and the TSA fails, observers say the economy would virtually grind to a halt. Government would basically be cash-strapped and unable to keep tabs on its income and expenditure. Remita is integrated into the commercial bank and MDAs’ systems. The network is so vast that if the banks stop operating the Remita e-collection arrangement, it will cause some significant disruption to the economic life of these agencies. Civil servants would be left unpaid and more significantly, this state of affairs would mark a return to the era of full-scale corruption and misappropriation of public funds.

Government would be forced to resort to borrowing from commercial banks at high interest rates. Unfortunately, the process would not be as smooth-sailing as it used to be, considering that banks are currently grappling with liquidity problems resulting from the implementation of the policy. So, if according to Lai Mohammed’s submission two weeks ago that the TSA “Averted Nigeria’s collapse”, then Mr President must do all that is in power to ensure that the singular most remarkable achievement of this government is not jeopardised, setting us on the path of “collapse”.