• Thursday, February 29, 2024
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Much ado about a single account

Consider the case of a single household that operates 10 different accounts with right of access by every member of the family. Such multiple accounts would obviously be difficult to operate with any high degree of prudence. The household is unlikely to have a full sense of its assets and liabilities in an accurate and timely manner. The fact that every member of the family has a right to write a cheque on any of the accounts is also a recipe for chaos.
I know of a friend who operated a joint account with his wife. He was a rather prosperous accountant. One of these afternoons he decided to use the ATM to withdraw some cash. Bleep, bleep. He brought out his card and went to another ATM down the street. Same bleep, bleep. On getting home in the evening he raised the matter with his wife. He was shocked to be told that she had emptied the account to settle an overdraft liability that she was owing to another bank that maintained the accounts of her own business. Several months down the road, this being England, the mortgage company were soon approaching them to vacate their home, as it was going to be put under receivership. The bailiffs wasted no time in doing what they know how to do best.
Before I get into wahala with my wife – who reads my writings with a very critical eye – let me make myself crystal clear. I am not against husbands and wives operating joint accounts. Depending on the level of financial trust, it can still work well for some. I operate one myself, but, trust me, I have had occasion to issue rather stiff warnings even to my own dearly beloved spouse, a woman of virtue and character!
What is true of households is true of government. Governments that operate multiple accounts are bound to incur huge risks. For one thing, the limitless multiplicity of accounts makes monitoring difficult. Some of the accounts operate illegally and their sole raison d’être is to enable civil servants siphon billions of taxpayers’ money into private pockets. The so-called “dedicated accounts” opened overseas allegedly by the Babangida-led military dictatorship existed for the sole purpose of defrauding the country for the benefit of himself and his cronies. Not even the Finance Minister of the day could tell you how those accounts operated and who were their ultimate beneficiaries. It was a horrendous act of state-led criminogenic kleptomania, if you asked me.
So, we welcome the recent directive issued by President Muhammadu Buhari for all Ministries, Agencies and Departments of government (MDAs) to migrate to the new Treasury Single Account (TSA) that is to be domiciled in the Central Bank of Nigeria. There have been several innuendos and insinuations about the motive behind that presidential directive. Some might be feeling that he is out to ruin the banks, given that so-called “Northerners” have little or no stakes in them. I would respond that, with the current cash reserve requirement (CRR) set at 75 percent by the Monetary Policy Committee, the banks will not be losing too much from the new policy. Some put the figures as low as 60 billion naira. I would also add that any bank that relies solely on government funds needs to re-examine its licence.
Also, in all the civilised jurisdictions that I know of, government money is kept in the government bank. Le Tresor de Francemanages the entire unified treasury of the French Republic as domiciled in La Banque de France. Similarly, the Bank of England maintains all the accounts of the British government as superintended by the Treasury. The CBN Act as revised 2007, expressly states that our central monetary authority shall be the banker to the government. Commercial banks can be used to collect revenue and to perform other simple payment functions, but they cannot be the primary banker to the government.
Sadly, some critics are even suspecting that President Buhari, a retired infantry general, probably still adorns an army khaki uniform under those flowing robes. The PDP opposition have gone to the extent of accusing him of pursuing “communist” economic policies – whatever that means. Without holding brief for this president, I would insist that none of these accusations hold any water.
Lest we forget, the TSA policy was launched as far back as 2012 by the outgoing Goodluck Jonathan administration. I am not one of those who are fond of discrediting everything the PDP administration did, simply because they are no longer in power. There were some things they did well which we must grant it to them. Former President Jonathan’s ultimate undoing was that he pursued a laissez-faire, laissez-passer approach to governance in a manner that allowed some of his ministers to get away with murder.
I once raised the matter of his approach to Boko Haram in a private conversation I had with him in Aso Villa. I was not satisfied with the answer I got. But we have to concede that he did some things well. We overcame the Ebola holocaust that some people wanted invidiously, to visit upon us. Agriculture under Akin Adesina, now president of the African Development Bank Group, made some progress. Some of the investments in the power sector are soon going to come up on-stream, to the benefit of all Nigerians. Like him or loath, the Goodluck Jonathan I know is not a bad person. His main failing is that he lacked understanding of the most elementary principles of government and the state are all about. I suspect he has never read Aristotle.
But all credit to him, Goodluck Jonathan started the TSA project as a pilot in 2012. By the time he left office in May, over 200 MDA accounts, we are told, had already migrated to the new single account. So, President Buhari was not reinventing the wheel with that new directive. He is simply building on some of the foundation that had already been laid by his predecessor.
Sections 80 and 120 of the Nigerian Constitution 1999 expressly require that there shall be a single revenue fund. Some of the lawyers among us have gone into hair-splitting disquisitions about it being a reference to a “fund” and not an “account”. That is what lawyers are paid to do. No wonder, Bonaparte wanted as few of them as he could manage in his royal courts in late eighteenth and early nineteenth century France! He also insisted that the best constitutions should be “short and vague” to give every ruler with a creative mind enough latitude to do as he pleases in order to advance the interest of the state.
For constitutional as well as for reasons of order and good form, I believe the single account is a good idea. It is in fact something we should have done decades ago. But better late than never. There is no stopping an idea whose time has come, if I may echo the great nineteenth century French novelist Victor Hugo. Buhari never promised anyone that he would ascend the High Magistracy of our republic only to organise a wining and dining spree with friends and family. He neither drinks nor smokes nor womanises. He is a good Muslim. Three times he warned that he would come to the presidency with a broom. We obliged him on the fourth attempt. Why are now whining and crying wolf when the leopard appears with its spots doing what leopards are wont to do?
What are the benefits of the single treasury account? I have had a fantastic international finance and development career that has enabled me to visit over 100 countries in all the five continents of the world. I know that countries as wide apart as New Zealand, the Philippines, Chile, Moldova and Uganda have migrated to a single account, with good effect. In all my missions to various countries I have made it a point to inquire how countries manage their public finances.
In my private studies of ancient civilisations from Pharaonic Egypt to classical Greece and Rome, I have made it one of my principal intellectual tasks to find out how states managed their finances and monetary system. I was surprised to find out that the great Roman Empire eventually collapsed mainly because they could not balance their accounting books. There are several other theories for the decline and fall of the Roman Empire, ranging from the barbarian invasion to internal moral decadence of the elites, to even the use of hazardous lead pipes in their public water works. Edward Gibbon, the eminent Enlightenment English historian, singles out the rise of the new Christian religion as spelling the death-knell of Rome.
As a public finance financial specialist, I would weight the problem of poor financial management linked to the folly of imperial overstretch as the one most important factor accounting for the collapse of the august Roman Empire.
Our American friends, with their Invisible Empire, like the Bourbons of old, have learned nothing and forgotten nothing. The domestic debt currently stands at a staggering $18 trillion, amounting to 101 percent of GDP. Among the cognoscenti of international high finance, it is an open secret that the almighty dollar is holding sway only by virtue of America’s brand name and the sheer weight of its nuclear military-industrial machinery and global unipolar hegemony. Sooner or later, something will have to give.
If Nigeria is to avoid these pitfalls as we seek to build a first-rate industrial-technological state; and as we seek to reengineer the prosperity of all our people – North, South, East and West – it is incumbent on us to restructure our public finances to block the loopholes that encourage rent-seeking and ruinous haemorrhage. Government must be run with prudence and we must take every step to balance the books. One of my greatest heroes since my growing years, Obafemi Awolowo, minus the irritating deification about him, was extremely meticulous about public finance to the point that we executed the civil war without borrowing a dime from the international financial markets. The remarkable post-war reconstruction was also implemented without recourse to foreign borrowing.
I pine for those good old days when the wisdom of our government was led by men of the Order of Joseph and Daniel in whom dwelt an excellent spirit. I am convinced the TSA promises to take us on the path to those solutions, quite apart from ensuring lower cost of borrowing by government, ensuring monitoring and providing for fungibility of scarce resources.
I have two worries, though. The first is that I doubt if my highly able colleagues in CBN are ready to take on such a heavy task. More needs to be done by way of human resources recruitment, training and re-orientation. The real time gross settlement system (RGTS) will need to be strengthened in addition to building other technology platforms for smaller amount settlements. They will also need to set up ledger systems for various sub-accounts that will have to be operated. Efforts will also have to be made to bring the second and third tiers of government on board. Systems, people and technology will have to be synchronised so that the orchestra will produce the music we want to hear.
My second worry is the Treasury. Most single accounts are meant to be joint operations between the Ministry of Finance, the Treasury, and the central monetary authority which operates the account. The Treasury in Britain, under the Chancellor of the Exchequer, has over 300 of some of the most brilliant economists in the country. In Japan, the brightest minds in the country are not necessarily in the universities or the banks. They start their careers in the Japanese Finance Ministry and Treasury. Ditto for France, where the Inspecteurs des Finance hold are recruited from the brightest kids of the elite École national d’administration. It’s not a dog’s breakfast. These are extremely clever people who work assiduously in dissecting the economic challenges of their countries while monitoring the budget, ensuring financial prudence and rigorously implementing projects and programmes. Does our Finance Ministry possess such a brains trust? Hardly.
Obadiah Mailafia