TSA implementation: The gains, the challenges

About a year and a half after, our correspondent takes a look at how the Treasury Single Account (TSA), driven by the Office of the Accountant General of the Federation has impacted the economy. Following the introduction of the Treasury Single Account (TSA) policy of the Federal Government, in August, 2015 all accounts of the Projects with the Commercial Banks were transferred to a pool account with the Central Bank of Nigeria (CBN), known as the Treasury Single Account (TSA).

Whilst that project was conceived by ex-President Goodluck Jonathan’s regime, the implementation didn’t happen until President Muhammadu Buhari mounted the saddle. Following the directive from Mr. President, the Office of the Accountant General (AGF) had the statutory mandate to drive the implementation of the policy with support from the CBN.

For a year and five months since the full implementation the Treasury Single Account (TSA) policy, as at the 10th of February, 2017, the total inflow of funds through the mop-up and direct debits by Central Bank of Nigeria amounted to in excess N5.244 trillion, data from the office of the AGF showed.

The Accountant-General of the Federation, Mr. Ahmed Idris said the implementation of the Treasury Single Account has brought about considerable gains to the Federal Government and to the Nigerian economy.

With the TSA he said government has “successfully eliminated multiple banking arrangements, resulting into [the] consolidation of over 20,000 bank accounts; which were spread over Deposit Money Banks across the country. This has further brought about transparency and effective tracking of Government revenues. It has also led to blocking of leakages and abuse, which characterized the Public Finance Management before [the] implementation of TSA.”

“The TSA has taken us out of the era of indiscriminate borrowings by MDAs and saved Government charges associated with those borrowings which amounted to an average of N4.7 Billion monthly prior to full implementation of TSA,” Mr. Idris said.

Mr. Idris also recently disclosed that because of the TSA, in one university they discovered over 100 bank accounts and the University didn’t even know about the accounts. “They said they didn’t know about some of the accounts. If you lose track of what you have it means it has gone. TSA has stopped all that,” he said.

Other benefits of the TSA according to the implementation guidelines include: to ensure availability of funds for the execution of government policies, programmes and projects; control aggregate cash flows within fiscal and monetary limits; improve management of domestic borrowing programme; enable investments of idle funds; improve transparency and accountability in the management of all FGN receipts and consolidate view of government cash flow.

It is not exactly clear how much credit balance is left at the CBN from the TSA accruals but according to CBN data of December 2016, the federal government’s TSA credit balance with the CBN as of 2nd December 2016 was N2.66 trillion.

Currently, over 1500 Ministries, Departments and Agencies (MDAs) have complied with the TSA, including the military and other security agencies Office of the Accountant General, data from the Accountant General Office show.

Recently, at a retreat to review TSA implementation in Nigeria held in Abuja, the AGF, Alh. Idris said the TSA has succeeded in pulling government funds together but it must go beyond that adding that the AGF is seeking credible ways to deepen the impact of TSA on the economy.

“TSA needs to go beyond mere cash management. We should explore the inherent potential of TSA and identify the most economically viable options of resource utilization and deployment particularly during the present economic recession,” he said.

The Vice President, Professor Yemi Osinbajo also recently remarked that with TSA, there is now improved visibility of government revenue and cash flows.

“Before TSA implantation, it was difficult for institutions to determine FG cash positions in a timely manner. Now [it] is clear that an average of N13 billion is accruing to all government agencies, every single working day,” he said.

The managing director/CEO, Systemspecs, a financial company, Mr. John Obaro, speaking on the gains of TSA recently said, “With TSA, the President, the Accountant General, CEOs of government agencies of the federation and other relevant government functionaries can see on a dashboard all that is happening within the economy.

“You know your inflow and outflows and you are able to speak to your cash balance at any point in time,” he said, adding that the cash balance can be deployed for development projects. Challenges One key challenge of TSA is the ignorance of how it works by some Nigerians. Even the AGF recently noted that “the greatest challenge is that people should understand that the TSA is out to achieve efficiency and effectiveness. It is one of the critical aspects of our economic reform. If you are talking of accountability and transparency, the best way to go is TSA”.

There is also the issue of deploying the saved monies into funding the economy. Currently, the government is exploring effective ways of using some of the TSA savings to drive budget implementation. The details are still being fine-tuned but our correspondent leant that the 2017 budget may be significantly financed with proceeds from TSA.

The TSA, at inception, experienced some difficulty in releasing funds to MDAs for their operations but Office of the Accountant General recently declared that “the initial challenges of TSA have been resolved and the Projects are now accessing funds through the TSA.

How the funds can be deployed for betterment of the economy

Funds in the TSA are largely owned by government MDAs, funds that huge chunks of were previously lost to corruption. But now that the funds are no longer being stolen, the MDAs can better utilize them to fund building of infrastructure and providing basic social amenities for the about 180 million Nigerians.

Despite the challenges, the advantages outweigh the disadvantages and indeed the Nigerian economy is better for it.