Barely a month following the kick-off of Nigeria’s Treasury Single Account (TSA) a congruence of opposition is building against a policy many say is arguably the country’s single most important initiative against corruption and abuse in the management of public funds.
The opposition is coming mainly from expected sources – competing payment platforms griping over being left in the cold, banks which were the main beneficiary of the corruption laden process that TSA replaced, senior civil servants who believe they are the target of the policy, as well civil servants lacking requisite training in technological applications and who simply resist any change.
Since the implementation of the policy began last month, about N600 billion has flowed from the banks to the Central Bank of Nigeria (CBN) through REMITA, a payment gateway built for the apex bank by an indigenous IT firm, SystemSpecs that has been working with the CBN for more than four years.
It is believed that the banks have also sent to the CBN about this same amount via other payment platforms including RTGS, the real time gross settlement platform, typically used by banks and the Central Bank.
The initial voice in opposition was based on unfounded allegations that SystemSpecs would pocket 1 percent of the total volume processed as transaction fee, but BusinessDay learnt the charge was fixed by the office of the Accountant-General of the federation at well below global average rates for a similar service and that the fee usually accrues to a number of parties depending on the number involved in the transaction at any point in time and this may include; banks, debit or credit card processors, POS terminal providers, mobile wallet platform owners, switching platform owners, Payment Gateway Technology provider.
Asked why the platform is hosted abroad, SystemSpec said, “Our take-off decision was to host the platform with one of the global data hosting leaders, even though it was a more expensive option. The hosting service guarantees that all data on the platform is fully encrypted at the highest level during transmission and storage.
There is however full location replication of the data here in Nigeria.
“It may be worth noting that a number of multinationals who use the platform have commissioned independent evaluation exercises undertaken by top global consulting firms who have certified that Remita hosting meets the highest possible standards available. All data on the platform is highly secured, subject to the highest level of currently available global standards.”
The company also dismissed suggestions that its TSA platform did not have capacity for retail applications, saying, “Ours is a leading Nigerian software firm with over 200 engineers and developers. Remita was designed primarily for the Nigerian financial ecosystem and has been in the market place for over ten years. This shows you that Remita predates TSA, which started just about four years ago.
“Remita was evaluated and adopted as a component of the larger CBN payment infrastructure because of its unique retail and financial inclusion capabilities.
“It may interest you to know that Remita is a fully fledged retail and bulk electronic transactions processing platform with multi-bank and multi-channel functionality on a single platform. It is connected to all commercial banks and has even been branded by about ten banks as an e-payment platform offered to their customers.
In addition, Remita is the only platform in the market today that effectively brings micro-finance banks and their customers into the mainstream of the wider financial ecosystem, as it is in use by about 400 micro-finance banks across all states of the country.”
Until the TSA mechanism was introduced, government ministries. departments and agencies were in the habit of leaving huge deposits in banks where the deposits attracted a paltry interest for government or nothing at all, while the government engaged in huge borrowing via treasury bills for which the government paid up to 13 percent.
The TSA (or a form of it) is the norm in most advanced economies of the world.
It is also similar to what is now normal practice in Kenya, and South Africa.
In Kenya, the TSA has been helpful in keeping borrowing costs down, while in the Philippines the Government saved P1.5 billion ($32 million) from the TSA which is considered an effective tool in establishing oversight and centralised control over government’s cash resources.
“One of the positives of as TSA is that it allows for better controls and management of government finances, plus it allows for real-time knowledge of the government’s financial position. Whereas that was only previously available at the end of a financial period,” Yvonne Mhango, Renaissance Capital’s, Africa economist, told BusinessDay.
“For example, pre-TSA, a government may need funds for some expenditure, and without immediate knowledge of which accounts have X funds, they may end up using debt to finance that expenditure, when it wasn’t necessary to do so.”
OUR REPORTER
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
