The plan to move Nigerian government ministries, departments and agencies (MDAs) to maintain a Treasury Single Account (TSA) has been in the works for a couple of years.
The TSA is a unified structure of government bank accounts that gives a consolidated view of government cash resources. It is a system whereby all monies belonging to the government are domiciled in one account with the Central Bank of Nigeria, with payouts from, and collections into, the account done via an electronic payment platform.
The TSA became operational in 2012 with focus on payments, with a pilot phase involving 217 MDAs in Abuja. Following the success of the pilot phase, the Federal Government somewhat commenced full implementation on January 1 this year, with a directive to all MDAs to close all revenue accounts with banks by February 28. However, it seemed like many ministries refused to comply with the order of the former administration, hence the renewed bid by the new Muhammadu Buhari government to enforce the directive.
The move by President Buhari is commendable. For one, we believe it will go a long way in blocking avenues for corruption among public officials. Indeed, the TSA is one step in the big fight against corruption in Nigeria. Some estimates put out by the All Progressives Congress (APC), for instance, suggest that blocking the leakages in government could save 20 percent of government revenues from the TSA move alone.
It is also our considered view that a fully implemented TSA regime will help clean up Nigeria’s corrupt civil service sector and make top public sector employees less easily enticed by huge sums of money they control. It means that senior civil servants in the ranks of deputy directors, directors and their permanent secretaries will lose a veritable source of illicit funds made from secretly placing funds in fixed deposits with banks.
This is especially important in a period of falling oil prices and government revenues. Nigeria relies on oil revenues to fund about 70 percent of the federal budget and 95 percent of exports income.
As the price of oil plunged 50 percent in the past 12 months, the government has had to run a large deficit this year, with revenues getting squeezed. Nigeria’s 2015 budget has an embedded deficit of N755 billion which will be 75 percent financed by domestic borrowing. Analysts believe that if the policy is fully implemented, there will be a significant reduction in the annual budget deficit of the Federal Government.
Furthermore, we believe that the success of the TSA could also help reduce Nigeria’s public debt and debt service load, as blocking leakages may lead to lower borrowing needs in the future.
President Buhari’s move to fully implement the TSA signals an end to business as usual and a commitment by the Federal Government to significant reforms. This is why we urge the president to put his foot on the ground and ensure it works.
