Treasury Single Account: A Viable Tool For Repositioning Government Ministries, Departments And Agencies (MDAs) For Sustainable Development In Nigeria
Treasury Single Account (TSA) policy in Nigeria is a government accounting system under which all government revenue receipts and income from FEDERAL Government’s Ministries, Departments and Agencies (MDAs) are collected into one single account, usually maintained by the Central Bank of Nigeria and all payments done through this account as well in order to enhance accountability of government revenue; transparency and avoid misapplication of public funds. The implementation of TSA policy in Nigeria has generated mixed reactions on it effect on Federal Government’s Ministries, Departments and Agencies (MDAs). Based on the foregoing, the study assessed the effects of TSA on Federal Government’s Ministries, Departments and Agencies (MDAs). To achieve the objective of the study, primary and secondary sources of data were used. Questionnaires were used for the collection of primary data. A sample size of 150 was purposively drawn from the study population which comprises of Federal Government’s Ministries, Departments and Agencies (MDAs. Descriptive statistic (percentages) and Chi -square (X2) analytical technique were utilized in the analyses of data and test of hypothesis. The calculated Chi-square (X2) results for the hypothesis Ho1: Treasury Single Account does not enhance the repositioning of Federal Government’s Ministries, Departments and Agencies (MDAs) for sustainable development, shows; X210.71 and the table X2 value at 5% level of significance was 2.733.The results show that Treasury Single Account has enhanced the repositioning of Federal Government’s Ministries, Departments and Agencies (MDAs) for sustainable development. The study results also shows that TSA has enhanced regular monitoring of government cash balances, accountability and transparency, efficient use of government financial resources, probity, reduction of cost of borrowing and help to check corruption in Federal Government’s Ministries, Departments and Agencies (MDAs). Also the study shows that MDAs in Nigeria have not been able to adequately used TSA to enhance economic development in Nigeria among others. The study recommended among others that TSA should be embrace by all Government’s Ministries, Departments and Agencies (MDAs) at all level of governments; federal, states and local government councils in Nigeria and that MDAs in Nigeria should take advantages of TSA policy implementation to enhance economic development in Nigeria by keying into all aspects of the policy drive and urgently addressing all the shortcoming associated with the policy. The study concluded that TSA is a viable tool that enhanced repositioning of MDAs in Nigeria and as such it should be use to facilitate economic development in Nigeria.
1.1 Background to the Study
Treasury Single Account (TSA) is not a new concept in Nigeria. Chima (2015) opined that the policy was first implemented in 1989 and the implementation was associated with turbulence in the banking industry. The President Olusegun Obasanjo’s led administration centered the idea on the Government integrated Financial Management Information System (GIFMIS). Earlier in February, 2015 the Central Bank of Nigeria issued a circular directing all deposit money banks to implement the Remita e-Collection Platform. The Remita e-Collection is a technology platform deployed by the Federal Government to support the collection and remittance of all government revenue to a Consolidated Account domiciled with the CBN. This marked the beginning of the full implementation of Treasury Single Account (TSA) system in Nigeria. Though section 80 (1) and section 162 of the 1999 Constitution as amended states “All revenues, or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation. Successive governments have continued to operate multiple accounts for the collection and spending of government revenue in flagrant disregard to the provisions of the constitution which requires that all government revenues be remitted into a single account. It was not until 2012 that government ran a pilot scheme for a single account using 217 Ministries Departments and Agencies as a test case. The pilot scheme saved the country about N500 billion in frivolous spending. The success of the pilot scheme motivated the government to fully implement TSA, leading to the directives to banks to implement the technology platform that will help accommodate all MDAs in the TSA scheme (Nairaland, 2015).
The Central Bank of Nigeria (CBN) has opened a Consolidated Revenue Account to receive all government revenue and effect payments through this account. This is the Treasury Single Account. All Ministries, Departments and Agencies are expected to remit their revenue collections to this account through the individual commercial banks who act as collection agents. This means that the money deposit banks will continue to maintain revenue collection accounts for MDA’s but all monies collected by these banks will have to be remitted to the Consolidated Revenue Accounts with the CBN at the end of each banking day. In other words, MDA’s accounts with money deposit banks must have zero balance at the end of every banking day by a complete remittance to the TSA of all revenues collected. The implication is that banks will no longer have access to the float provided by the accounts they maintained for the MDA’s. Different types of accounts could be maintained under a TSA arrangement and these may include the TSA main account, subsidiary or sub-accounts, transaction accounts and zero balance account. Other types of accounts that could be operated include imprest accounts, transit accounts and correspondence accounts. These accounts are maintained for transaction purposes for funds flowing in and out of the TSA (Nairaland, 2015). Chukwu (2015) holds that with the implementation of the Treasury Single Account, Ministries, Agencies and Departments (MDAs) will maintain their individual accounts with the commercial banks, but daily funding of their disbursements are made from the central or main account, which is resident with the Central Bank, just as their closing balances at the end of day are transferred to the main account.
Enterprise Solutions (2015) posits that there are several TSA structures that conform to the TSA objectives, such as centralized TSA account and FGN e-Collection. Centralized TSA is based on centralized transaction processing where the treasury process transactions, access and operate TSA. All revenue and expenditure transactions of government pass through a single account generally maintained with the Central Bank. However, balances in all transaction accounts will be transfer to the TSA main account at the end of each working day. FGN e-Collection is a collection account maintained and operated by MDAs’ in CBN. It is associated with decentralized payment and accounting system; each budget institution processes its own transactions during budget execution and directly operates the respective bank account under TSA system. Request for payments are prepared by individual budget agencies and sent to a Central Treasury payment unit for control and execution and the central payment unit manages the float of outstanding invoices. Pattanayak and Fainboim (2010) opined that the custody of the TSA in most countries is with the central bank, although in theory, the main account of a TSA system may also be held at a commercial bank. In fact, there is no realistic alternative for economies without a well developed commercial banking system. In practice, the government banking arrangements may consist of several bank accounts which can be at both the central bank and commercial banks. However, the balances in commercial banks should be cleared every day and all government cash balances should be consolidated in one central account; the TSA main account of the treasury at the central bank.
Bassey (2015) holds that to beat deadline set by President Muhmmadu Buhari, over 100 Ministries, Departments and Agencies of government (MDAs) were in a rush to beat the deadline. The Central Bank of Nigeria (CBN) made an order first on August 7, 2015 and the order was repeated with a warning on September 4th 2015, following partial compliance by the agencies. The measure is part of President Buhari’s bid to maintain accountability and stamp out corruption in the public service system. A circular issued to all MDAs of the Federal Government by the former Head of Civil Service of the Federation, Mr. Danladi Kifasi, had urged the MDAs to ensure strict compliance with the deadline to avoid sanctions. The circular dated September 4, 2015, entitled “Re: Introduction of Treasury Single Account (TSA) (e-Collection of Government Receipts)” stated: “Further to the Circular Ref. No. HCSF/428/S.1/120 of August 7, 2015 on the above subject matter, it has been observed that a number of Ministries, Departments and Agencies (MDAs) of the Federal Government are yet to comply with the directive therein. “In this regard, Mr. President has directed that all MDAs are to comply with the instructions on the Treasury Single Account (TSA) unfailingly by Tuesday, September 15, 2015. Heads of MDAs and other arms of government are enjoined to give this circular the widest circulation and ensure strict compliance to avoid sanctions.” The Leading MDAs that complied with the directive are; the Customs Service, Federal Inland Revenue Service (FIRS), Nigeria Ports Authority (NPA), Nigeria Maritime Administration and Safety Agency (NIMASA), Federal Capital Territory Administration (FCTA), Nigerian Airspace Management Agency (NAMA) and Nigerian Shippers Council (NSC). It is against this background that the study assessed the effects of TSA on repositioning federal government Ministries, Departments and Agencies (MDAs) for sustainable development in Nigeria.
1.2 Statement of Problem
The order by the President of the federal republic of Nigeria was that all revenues due to the Federal Government or any of the agencies of the federal government of Nigeria must be paid into the treasury single account and maintained by the central bank of Nigeria (CBN). The idea seems a welcome development in Nigeria as it aimed at fighting fraud and the level of corruption in Nigeria. Corruption has become a major issue in the growth and development of the Nigeria economy. Nigeria is a country that is blessed with good resources but due to the high level of corruption, the country loos very poor. According to the director of center for social justice, a civil society group based in Abuja by name Eze Onyekpere defined TSA as a process and as a tool for the effective and efficient management of the finances, banking and cash position of the federal government of Nigeria. Eze Onyekpere stated again that it pools and unifies all government accounts through a single treasury account. Among the issue of treasury single account there are some other advantages which are legion.
The consolidation into TSA made it possible for the timely capture and payment of all revenue due to the federal government into the government coffers without the intermediation arrangement of multiple banking (Vanguard Editorial ,2015) Notwithstanding some of the worries raised against the TSA issues and prospects, most Nigerians seem to be pleased with the implementation of TSA. It is widely believed that business entrepreneur that the scattering of government funds in different commercial banks serve as a conduit for the continuous fraudulent activities by government officials in the MDAs according to John Ocheni. The peoples thought about this new method, is that the leakages would be blocked and openness and accountability enhanced in the running of government businesses. This leakages that used to be there in the system where most people used money as they want and decided what to return and when to return the money to the government will no more be there. With this there will be a better control and management of government revenue
1.3 Objective of the Study
The objectives of this paper are:
- To examine the journey so far in treasury single Account (TSA).
- To identify the prospects of treasury single account.
- To assessed the effects of TSA on Federal Government’s Ministries, Departments and Agencies (MDAs).
1.4 Significance of Study
The study will be of immense benefit to both researchers, the federal government of Nigeria in policy generation and decision making, the study will also reveal the nature of the relationship between TSA and the Nigeria economy; it will discuss the role of TSA in financial management; finally the study will show the effect of TSA on the Nigeria economy.
1.5 Hypothesis of the Study
The following hypothesis was formulated and tested based on the research objective.
- Ho: Treasury Single Account does not enhance the repositioning of Federal Government’s Ministries, Departments and Agencies (MDAs) for sustainable development
- Hi: Treasury Single Account enhances the repositioning of Federal Government’s Ministries, Departments and Agencies (MDAs) for sustainable development
1.6 Scope of the Study
Treasury Single Account: a Viable Tool For Repositioning Government Ministries, Departments And Agencies (MDAs) For Sustainable Development In Nigeria. This study will cover all the leading MDAs in Nigeria. The Leading MDAs that complied with the directive are; the Customs Service, Federal Inland Revenue Service (FIRS), Nigeria Ports Authority (NPA), Nigeria Maritime Administration and Safety Agency (NIMASA), Federal Capital Territory Administration (FCTA), Nigerian Airspace Management Agency (NAMA) and Nigerian Shippers Council (NSC). It is against this background that the study assessed the effects of TSA on repositioning federal government Ministries, Departments and Agencies (MDAs) for sustainable development in Nigeria.
1.7 Limitation of Study
Financial constraints tends to impede the speed of the research student to buy materials and visit other areas of the federal government sector to get information and other materials concerning the research topic but the researcher was able to get meaningful information concerning the research topic.
This researcher still being a student must be involved in one or two departmental activities like seminar presentation, submission of assignment, attendance to lectures etc but the researcher was able to meet up with the time allocated for the completion of the research work.
Findings, Conclusion and Recommendations
Based on the results and discussion of the study the following findings were made: Treasury Single Account has enhanced the repositioning of Federal Government’s Ministries, Departments and Agencies (MDAs) for sustainable development. And the effects are: Treasury Single Account has provided mechanism for proper monitoring of receipts and expenditures; as such facilitates regular monitoring of government cash balances, enhanced accountability and transparency in MDAs, helped to ensures that ministry of finance has full control over budget allocations and strengthen the authority of budget appropriation, allowed the government to see at a glance the daily revenue being generated by the revenue generation agencies as well as identify negative variances and enhanced complete and timely information on government cash resources, eliminated indiscipline in MDAs and ensure adequate funds flow to critical sectors of the economy to catalyze development, facilitated infrastructural development by making funds available for investment in the subsector, stimulate the growth of employment opportunities by making funds available for economic development, helped to check corruption in MDAs and eliminate the possibilities of diversion of government funds, improves operational control during budget execution, improve banks reconciliation and quality of fiscal data and enhanced timely and prompt payment of workers’ salaries in MDAs. The study also revealed that MDAs in Nigeria have not been able to used TSA to enhance economic development.
This study has concluded that TSA policy is a viable tool that enhanced repositioning of MDAs in Nigeria for sustainable development and as such it should be use to facilitate economic development in Nigeria.
The study recommended that
- TSA should be embrace by all Government’s Ministries, Departments and Agencies (MDAs) at all level of governments;
- Federal, states and local government councils in Nigeria and that MDAs in Nigeria should take advantages of TSA policy implementation to enhance economic development in Nigeria by keying into all aspects of the policy drive and urgently addressing all the shortcoming associated with the policy.
- Government should overhaul the capacity of the Federal Ministry of Finance and the CBN to cope with challenges associated with enforcement of the provisions of the TSA.
- Government should secure as soon as possible the appropriate legislative support to facilitate the relevant regulatory environment which will drive the effective implementation of the TSA.
- Another suggestion is that, there is need for more legislation to cover the states and local government level since the policy in question only covered the federal level.
- For TSA policy to be effective the Fiscal Sunshine Bill needs to be put in place, which if enacted will open up the financial activities of government in a way that there will be no more hiding place for those who divert or loot government money. For instance, with Fiscal Sunshine Act in place, budgeting process and implementation, including contract awards, should be in the open for Nigerians to see both how revenues are generated and how public money is being spent by those in government, and why.
- Government should review the TSA policy to specifically safeguard the financial autonomy of the Nigerian educational institutions.
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