THISDAY

Imperative­s of Ihedioha’s Imo Treasury Single Account Launch

- Austin Uganwa - Dr. Uganwa , Senior Special Assistant on Documentat­ion to Imo State Government, writes from Owerri

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.

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