Treasury Single Account: Buhari's Bold Step and the Journey So Far (II)

Treasury Single Account: Buhari's Bold Step and the Journey So Far (II)

The brouhaha between National Assembly, Systemspecs - Remita and CBN is yet to be resolved, Systemspecs is making a sprouted effort to defend her “legitimate earning” of the 1 % as reported in the media. John Obaro, CEO of SystemSpecs owners of Remita reacted to the Senate order to slash the N7.6 billion accrued charges to his organization, commercial banks and Central Bank of Nigeria (CBN) from transfers to treasury single account (TSA) by government agencies to a meagre sum of N656.504 million. Mr Obaro dismissed report in some section of the media that the Senate accused Remita of under-delivering on the substance of the contract, instead, he said the Senate recognised the company’s effort having played a significant role in the life of the nation when it mattered and that the disagreement has only been on the commercial terms of the contract “The Senate Committee further recommended that SystemSpecs’ efforts should be rewarded – albeit on a scale which is quite debatable,” as reported in the media. Nigerians are expecting the relevant authorities to quickly and amicably settle the issue without further short changing Nigeria on the hard earned income. SystemSpects or similar private enterprises can be engaged to develop the capacity of relevant personnel in the government to handle the technical requirements for efficient and successful operation of the TSA.  

 Lack of effective ICT-infrastructure in Nigeria  is another source of apprehension on the use of TSA, the operation of the TSA depends largely on the use of ICT, necessary infrastructure and skilled personnel to achieve the desired goals. Implementation of TSA policy in a given country depends on the stage of development, quality of its public institutions and financial management systems, its technological development and communications infrastructure, and the degree of maturity of its banking system. In Nigeria, weak infrastructure, poor ICT services and tendency of the policy implementers to manipulate it for personal aggrandizement cause apprehension on functionality and sustainability of the TSA policy. 

So far, the TSA Model is being implemented in Nigeria with record of successes despite these apparent apprehensions. Last month (February 2016), President Muhammadu Buhari confessed that his administration had saved N2.2 trillion in three months through the enforcement of the Treasury Single Account (TSA). He made the revelation in London during a meeting with Nigerians resident in the United Kingdom. He was quoted “We are really in trouble. What we discovered was that we tried to enforce what we called treasury single account, TSA. And the reason was simple. This government did not initiate it. It was the previous government. But it was so unpopular to the bureaucracy and the previous government for its own reasons couldn’t enforce it. But when we came and found that we were broke, we said this is the way to do it. And I will just tell you two examples to convince you,” He further said. “First, NNPC, the cow that was giving the milk had more than 45 accounts, Ministry of Defence, that is the military Army, Navy and air force had over 70 accounts. Tell me which account we can trace in these several accounts. So we enforce TSA. We said there must be TSA. By the end of December, coming to January this year, that is last month, we mopped up more than N2.2trn which we have used through the bureaucracy system to raise vouchers and sign cheques so that they don’t go into the next budget.” The N2.2 trillion was raised to 0.7 trillion within one month as reported by the Honourable Minister of Finance, Kemi Adeosun who revealed how much Nigeria has in her Treasury Single Account (TSA). She said the account had accumulated to N2.9trillion, from its initial N2.2trillion in February, 2016. Adeosun however, said the total of sum may not be used to fund the proposed N6.08trillion budget because some part of it will go as operating cost for key revenue-generating agencies of the federal government. Many other commendable discoveries were made as a result of TSA adoption in Nigeria and its advantages outweighed its disadvantages for Nigeria. To buttress this point, the Finance was quoted as saying “TSA has eliminated opportunities for brokerage and other corrupt practices that previously encouraged agencies to accumulate funds with commercial banks rather than apply them to their intended uses. We believe that this will reduce payment delays to contractors, minimise late payment penalties and will consequently improve project completion times and service delivery. TSA has corrected the practice of government borrowing short term funds at high rates of interest, whilst simultaneously having idle funds in various bank accounts.”

Nevertheless, operation of TSA policy in Nigeria faces many challenges; among the teething ones is delay in receiving payment from TSA. Beneficiaries might wait up to three weeks without receiving credit alert after the due process has been completed. This is a serious setback with grave consequence in financial system. ‘Time is money” is an adage best practiced in banking industry; interest rate is time and volume of money dependant, example a 3-week delay in the payment of N1 billion can result to the loss of N11 million at the annual interest rate of 20%. Although, in Nigeria, Banking services are sometime an eyesore in respect time efficiency, it is a common practice to spend hours while waiting to withdraw from ATM or trying to cash a cheque. Customer has nobody or where to complaint as everyone including the bank staff blames the “network” as if this network is not a man made system. For STA to work, banking system must be efficient.

The other challenge is ensuring the receipts paid into TSA are true and correct revenues for the government. Who are to be held responsibilities for making sure that this done? Perhaps, auditors? Well, if auditors were discharging their duties according to the rules, the corrupt practices in Nigeria wouldn’t have reached this exponential proportion. So, government must put in place a transparent and foolproof system to ensure that all government’s dues are correctly paid into STA as at when due.

Lastly, another challenge for implementing STA is ensuring that all existing laws are respected. This is one area where ASUU expressed concern on implementation of TSA in Universities. ASUU is a highly responsible union and the number one stakeholder of university system, the protection of interest of the university system in Nigeria is cornerstone of ASUU struggle and thus it is not entirely opposing  the implementation of STA in Nigeria. However, ASUU concern borders on the university autonomy; what is the role of individual university council on the university finances and TSA operation? Will the operation of the TSA not erode the power of the university council as stated in the university laws? Fortunately, ASUU is not a wheel chair critique, whenever ASUU criticizes an issue it provides alternative. So, government should challenge ASUU to provide the best way to implement TSA in universities without eroding the their autonomy. The confrontational posture being exhibited by government officials on the issue is not healthy, we don’t want anything to disturb the relative peace currently being enjoyed on our campuses.

The Buhari’s breakthrough in TSA implementation has to address these challenges  to achieve the desired results. Furthermore, government must continue to study the policy implementation for improvement as rightly observed by Guardian Newspaper in its editorial of 18/2/2016 "The long-drawn-out implementation of the federal Treasury Single Account (TSA) rule has come to a near conclusion with euphoria upon the discovery that there is at present an average daily balance of N2.3 trillion in the account. Because these TSA funds had hitherto been suppressed and hidden from the federal budgets, they are additional to the Federal Government's share of the Federation Account (FA). The daily balance is uncannily a shade higher than the preliminary 2016 Budget deficit of N2.2 trillion. The President's 2016 budget address to the National Assembly indicates the fiscal deficit in part "will be financed by a combination of domestic borrowing of N984 billion and foreign borrowing of N900 billion" Nonetheless, some of claims are open to question. For example, public corruption would still luxuriate on padded project costs and fees. Also the TSA collections were in different currencies. So there was embedded corruption when some agencies that collected revenue in foreign currencies reportedly remitted only Naira amounts into the TSA. Therefore, remittance should be made as earned in various currencies just as the daily balance should reflect those currencies. Two-thirds of the loanable bank credit remains idle because the economy not only lacks macroeconomic stability with a conducive production environment but also, suffers high inflation-induced restrictive monetary policy stance with attendant unattractive high lending rates".

President Buhari is on his way to make history with his bold step in TSA implementation but he needs the political will and the support and understanding of all Nigerians to achieve success, ride on Baba!