Imperatives of Ihedioha’s Imo Treasury Single Account Launch
Forty days after Rt. Hon Emeka Ihedioha assumed office as the 6th elected civilian governor of Imo State, he made an audacious and far- reaching fiscal policy decision by introducing the Treasury Single Account ( TSA). This was instituted through the ratification of Imo Executive Order 005 by Ihedioha. This fascinating development accordingly made Imo one of the few states in Nigeria that has been able to embrace the TSA regime.
The TSA initiative is a financial charter adopted by several civilized countries all over the world towards ensuring proper management of the public funds. It essentially safeguards public funds through blockage of financial leakages, promotion of transparency, fusion of all government accounts into one, thereby preventing revenue loss and probable dubious tendencies of revenue generating agencies. It was introduced by Goodluck Jonathan- led federal government in 2012 and became fully implemented on August 11, 2015 by Muhammadu Buhari administration
Apart from the fact that TSA constitutes a critical policy thrust of the federal government which Ihedioha has been conscientious about, he was however compelled to introduce it in the state at the dawn of his regime for a number of convincing reasons. First was the recommendation made by the Abraham Nwankwo headed Financial Advisory Committee that made strong and unassailable case for TSA. The committee was set up
by the government to provide a fiscal roadmap for the state and to appraise the past administration’s financial and budgetary processes.
The second and perhaps most significant was the palpable and unbelievable fiscal indiscipline and absurdities that were wide- ranging in the state under Owelle Rochas Okorocha- headed past administration which the new government inherited. For instance, the state government had over 250 accounts in various commercial banks. Besides, some ministries, departments and agencies operated accounts with pseudo names.
Nwankwo Committee which conducted initial investigation into the state of Imo fiscal sector further revealed that payments made in cash and all PAYEs never got into government account but diverted by officials of government. These resulted in the state’s dismal level of internal generated income base.
Nwankwo articulated this disturbing reality more graphically and succinctly. According to him, with Imo’s N6.5b annual IGR; it is ranked 4th in South- east region that boasts 5 states, 24th in the federation and 34th in ease of doing business. While Enugu comes first in South East with over N22b annual IGR, Lagos State tops the 36 states IGR chart with N382b and followed by Rivers State with N112b and Ogun State N84b.
Besides, budgetary administration was debased in the state in the past eight years while due process, transparency and accounting mechanisms were non- existent. The Public Procurement Act that mandates government to advertise, tender and bid, before contracts are awarded was never followed , according to the committee. Contracts were awarded and payments made in the Government House by official fronts and cronies. This resulted in one company preferred to undertake most of the prime contracts. The MDAs thus spawned policy breakers, disoriented fiscal structure and lack of accountable and prudent leadership
While signing Executive Order 005 for the commencement of the TSA in Imo, Ihedioha acknowledged the fiscal indiscipline that pervaded the state in the past eight years. He noted that the introduction of TSA was a revolutionary move by his government to chart a fresh and judicious fiscal regime desirable to enthrone accountability and transparency for the rebirth of Imo economy.
He catalogued the gains his administration intends to engender through the introduction of TSA to include: Enhanced budget administration as payments will be benchmarked within budgetary allocations resulting in financial safeguards; increased revenue generation; full and immediate information on inflows and outflows of cash and proper revenue monitoring and cash management
Stating that TSA is backed by the constitution he submitted that the initiative is underscored by his government’s commitment to the rule of law and due process. He warned government agencies against operating any bank account under any guise outside the purview and oversight of the treasury supervised by the Board of Internal Revenue.
Ihedioha’s position on the gains of the initiative is reinforced by the submissions of local and global financial institutions such as the Central Bank of Nigeria, International Monetary Fund and the World Bank on the utilization of TSA. CBN reckons strongly that TSA policy is capable of scaling down the insolvency being experienced by some states by increasing their internally generated revenue and being infused with the capability to make more intelligent financial decisions.
From IMF perspective, TSA facilitates transparent and stable financial management, through the enhancement of accounting reliability. According to the international financial institution, TSA provides single , complete audit trail for government cash flow and revenue monitoring thereby stimulating internal control. It therefore recommended the establishment of a legal basis to ensuring the promotion of financial accountability.
World Bank notes that in countries with fragmented government banking arrangements, the establishment of a TSA should receive priority in the public financial management reform agenda. According to World Bank, TSA facilitates better fiscal and monetary policy coordination which in turn improves the quality of fiscal structure thereby reducing the debt servicing costs.