TSA: The Way Forward Or Backward?

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The benchmark price of Crude oil fell from a peak $112 per barrel in June 2014 to $62 per barrel in December of the same year, and the ripple effects have exposed Nigeria’s over-dependence on crude oil as its mainstay. Oil price has been fluctuating between $63 per barrel and $29 per barrel ever since, with the potential to go higher dwindling by the day. As if the implications of this slump were not bad enough on our national finances, past administrations left a tradition of financial mismanagement in their wake, leaving the national treasury almost empty.

When President Muhammadu Buhari assumed office, he swiftly moved to right some of these wrongs by adopting the Treasury Single Account policy (TSA) — initiated by the President Goodluck Jonathan administration to harmonise funds from all Ministries Departments and Agencies (MDAs) into a single account managed by the Central Bank of Nigeria (CBN).

One year after the policy took effect, it is still being vilified at every point, with some going as far as blaming it for the ongoing economic recession. But regardless of what some individuals might have us believe, TSA has the makings to be beneficial to the economy in the long haul, and entrench a culture of probity and accountability in the management of public funds.

We must recall that the TSA is not an isolated policy that the government dreamt up. It is in line with sections 164 (1) and 80 of the 1999 constitution which declares that the Federation should operate a Consolidated Revenue Account. A recent research by the Guardian (2015) however found that this regulation has been flouted since 1967, when General Yakubu Gowon was in power. More instructively, erstwhile President Goodluck Jonathan implemented the policy in 2012 when he ordered 217 MDAs to participate in the exercise, a move which reportedly saved the government a whopping ₦500billion. It would not be far-fetched to argue that the success of this effort spurred President Buhari to enforce the policy across board from September 15, 2015 .

Since that time, over 900 MDAs have been brought on board. Ahmed Idris, the Accountant General of the Federation, announced in May that the TSA scheme received an inflow of over ₦3.3trillion in the first quarter of this year, A departure from the days when these agencies operated over 17,000 bank accounts that bred a culture of misappropriation of public funds in the public sector .

Meanwhile, the withdrawal of government funds lying dormant in Deposit Money Banks (DMB) before the policy took effect has exposed the lapses in in our banking sector. Prior to the implementation of TSA, banks relied on MDA deposits and as a result, reduced their deposit mobilisation efforts. Ironically, they loaned the same funds back to the government at ridiculously high interest rates that did not do justice to the fact that those monies actually belonged to government.

Stakeholders in the banking industry have publicly criticised the TSA policy, asserting that the economic recession and low liquidity in the system is a product of the federal government’s withdrawal of funds from their vaults and onward transfer to the CBN rather than the previous practice of using them. Even if their their argument is cogent, its loophole lies in over-reliance on government funds, which should not be the case for any forward-looking and strong bank in the 21st century. If the banks had heeded the warning given them years ago about this practice, maybe they would have saved the economy lots of money and thousands of sacked workers their jobs.

But the impact of the TSA goes beyond this. Vice President Yemi Osibanjo announced in August that 40,000 ghost workers had been flushed out of the system through the TSA. Critics might say the number counts for naught in contrast to the plenitude of ghost workers in the public sector; however, when the expenses incurred by the payment of salaries to these workers is agrregated, one begins to appreciate the impact of the policy.

The Academic Staff Union of the Universities (ASUU) is another group that has voiced its displeasure with the TSA policy. The body has requested exemption from the scheme in the quest for autonomy and access to foreign grants. But as far as I’m concerned, that is not enough reason to justify exemption. What is good for the goose is good for the gander as well. Some excuse can be made for access to grants, but that call is the sole prerogative of the government that instituted the policy in the first place. After all is said and done, it government is duty bound to spend the recovered funds on developmental projects that citizens can appreciate and relate with. There doesn’t seem to be much justification for President Buhari to write the National Assembly requesting their consent to an international loan of $29.960 billion when N3 trillion is lying unused in government’s vaults. More importantly, the government has to do a better job of educating the citizenry on the benefits of the TSA if we are to avoid much of the misconception and blame games about the policy that have become the order of the day.

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Articles by Lanre Awode