Buhari’s Treasury Single Account (TSA) initiative

President Muhamadu Buhari recently ordered the immediate implementation of the Treasury Single Account (TSA) system in all federal government ministries, agencies and departments (MDAs). This initiative is intended as one of the early steps by the administration in prosecuting its campaign for zero-tolerance for corruption, in the nation’s public life. The president’ directive has been […]

President Muhamadu Buhari recently ordered the immediate implementation of the Treasury Single Account (TSA) system in all federal government ministries, agencies and departments (MDAs). This initiative is intended as one of the early steps by the administration in prosecuting its campaign for zero-tolerance for corruption, in the nation’s public life. The president’ directive has been promptly followed by a circular from the Office of the Head of the Civil Service of the Federation (HOCSF) Mr Danladi Kifasi, directing all affected agencies to ensure compliance as soon as possible.
The TSA is an administrative mechanism for consolidating all cash resources of the government, in all MDAs purposely located in various bank accounts, under one unified management and control.  In its execution, the TSA requires that all bank accounts operated by any of the various MDAs be linked and controlled by a central agency especially for instance by the Central Bank on Nigeria (CBN), in the case of this country. In that context therefore no MDA expected to operate a bank account in any bank without the express approval and close supervision of the CBN.
It is particularly recommended for countries that have the challenge of fragmented flow of government cash resources, featuring the collection and disbursement of funds by various agencies and deployment of same without recourse to the any coordinating authority. The 1999 Constitution provides in Section 80 that all government revenue collected by any MDA should be paid into the Consolidated Federation Account, while the government presents to the National Assembly a budget that features the revenue and expenditure expectations in respect of executing the activities of the MDAs.
Lamentably, this provision of the Constitution has been routinely breached by several core revenue generating agencies of government with adverse consequences for the country. Most significant of the consequences have been the disjointed pattern of managing government finances as well as the system-wide high incidence of free funds, which unscrupulous public officials take advantage of to line their pockets, at the expense of the public. The situation can be so acute that often government maybe unaware of availability of its surplus funds lying idle in some bank account, while it goes ahead to borrow money elsewhere, at avoidable cost.
The advent of the TSA is intended to arrest such a situation and avail government a more effective control of its cash resources. Beyond control, other specific advantages of the TSA include the guarantee of timely information on its cash resources, which with the advent of e-banking can be real time and online. TSA will also increase transparency and therefore better management of such funds and the harmonization of government servicing of its obligations to creditors especially local and foreign contractors.
Incidentally the measure has also generated significant concern in the nation’s financial circles, with the Nigerian banks expected to lose as much as N2.3 trillion of their public sector deposit base. Many observers worry that this situation may drive a liquidity squeeze on the banks and adversely affect interest rates which are likely to rise significantly. The ultimate consequence of such a development would be a drop in borrowing and contraction of business and the economy. Yet the advantages of diminished level of corruption in the country’s public life justifies any other sacrifice, including a temporary and reversible drop in tempo of economic activities and makes the TSA a welcome development.
However in implementing the TSA the government needs to identify with some imperatives that will guarantee success for the enterprise. Firstly, 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. Secondly and more importantly 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.