Banks and TSA pol­icy


Apart from lament­ing the par­lous state of the na­tion’s econ­omy af­ter the Mon­e­tary Pol­icy Com­mit­tee (MPC) meet­ing on Sept. 22, Cen­tral Bank of Nige­ria (CBN) Gover­nor God­win Eme­fiele an­nounced that the reg­u­la­tor had slashed its Cash Re­serve Ra­tio (CRR) to 25 per­cent from 31 per­cent but re­tained the Mon­e­tary Pol­icy Rate (MPR) at 13 per­cent and liq­uid­ity ra­tio at 30 per­cent.

The move, which came as ten­sion mounted in Nige­ria’s fi­nan­cial sec­tor over the im­ple­men­ta­tion of the Trea­sury Sin­gle Ac­count (TSA) pol­icy, in­di­cates that Pres­i­dent Muham­madu Buhari’s ad­min­is­tra­tion is ready to move away from re­stric­tive to ac­com­moda­tive mon­e­tary poli­cies that would stim­u­late eco­nomic growth and job cre­ation.

The CRR re­duc­tion couldn’t have come at a bet­ter time as it will help douse the ten­sion in the bank­ing in­dus­try over im­pend­ing job losses, profit eva­po­ra­tion and the overblown is­sue of liq­uid­ity squeeze fol­low­ing the full im­ple­men­ta­tion of the TSA ef­fec­tive on Sept. 15.

Be­fore now, there were re­ports that some banks had al­ready started down­siz­ing their work­forces.

The 14 per­cent cut in CRR is meant to in­ject more liq­uid­ity into banks and cush­ion the ef­fect of the with­drawal of public funds es­ti­mated at be­tween N1.2 to N2 tril­lion or 10-15 per­cent of bank­ing de­posits, when Fed­eral Min­istries, De­part­ments and Agen­cies (MDAs) fully com­ply with the TSA.

Eme­fiele also said on the side­lines of the MPC’s 246th meet­ing in Abuja that the CBN had not re­ceived any di­rec­tive ex­empt­ing any (MDAs) from the TSA as some of them in­sin­u­ated.

“I have not seen any memo that ex­empts any MDA from the TSA. I will ad­vise all those who think they have been ex­empted to please avoid cre­at­ing con­fu­sion. I will ap­peal to those af­fected by the TSA to please con­tinue to com­ply with the move­ment of ac­counts to the CBN,” Eme­fiele was quoted as say­ing.

Re­ports in­di­cate that while some MDAs have com­plied with the TSA, oth­ers are still strug­gling to do so. But the CBN’s clar­i­fi­ca­tion, it is hoped, would prompt the de­fault­ing or­gan­i­sa­tions to com­ply to save them­selves from pos­si­ble sanc­tions.

The TSA is a uni­fied bank ac­count which en­ables con­sol­i­da­tion and op­ti­mal util­i­sa­tion of gov­ern­ment’s cash re­sources. It is an ac­count or a set of ac­counts through which the gov­ern­ment trans­acts its re­ceipts and ex­pen­di­tures, and gets a con­sol­i­dated view of its cash po­si­tion at any par­tic­u­lar time.

It will help the fed­eral gov­ern­ment block the many leak­ages in rev­enue gen­er­a­tion, in­crease ef­fi­ciency, trans­parency and ac­count­abil­ity in the na­tion’s fi­nan­cial sys­tem. TSA is in­deed a pre­req­ui­site for mod­ern trea­sury man­age­ment which is con­sid­ered as an ef­fec­tive tool for gov­ern­ment to, through the fi­nance min­istry, keep track and have over­sight of all its cash re­sources.

Ef­forts to im­ple­ment the TSA have been on since 2012 but were scut­tled by the lack of po­lit­i­cal will by ex-pres­i­dent Good­luck Jonathan’s ad­min­is­tra­tion and stiff re­sis­tance by com­mer­cial banks that are over de­pen­dent on gov­ern­ment de­posits and the rent sys­tem, rather than en­gag­ing in real bank­ing, giv­ing longterm loans to the pro­duc­tive sec­tor to boost na­tional eco­nomic growth.

The MDAs are re­luc­tant to com­ply with the pol­icy be­cause some un­scrupu­lous top gov­ern­ment of­fi­cials usu­ally de­posit the funds in fixed ac­counts and col­lect mouth-wa­ter­ing in­ter­ests on them.

But the time has come for these shenani­gans to end in view of the de­bil­i­tat­ing state of the econ­omy thanks to the con­tin­ued de­cline of our for­eign re­serves trig­gered by the slump in oil prices and profli­gacy of pre­vi­ous ad­min­is­tra­tions.

Pres­i­dent Buhari must put his foot down and en­sure that the TSA is im­ple­mented be­cause that will go a long way in fa­cil­i­tat­ing his much -vaunted war against cor­rup­tion and drive to re­po­si­tion the econ­omy.

But in do­ing that, he should un­der­stand that the de­lay in re­leas­ing his eco­nomic blue­print, and lack of public state­ments on key re­form ini­tia­tives are do­ing Nige­ria more harm than good as po­ten­tial in­vestors have no idea in which di­rec­tion his ad­min­is­tra­tion is head­ing. The ab­sence of a cab­i­net, es­pe­cially a fi­nance min­is­ter, is also tak­ing a toll on the na­tion.

Un­less these is­sues are ur­gently tack­led, like Eme­fiele ob­served af­ter the MPC meet­ing, Nige­ria’s econ­omy may be head­ing into a melt­down. That will be dis­as­trous.

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