How House of Reps investigation exposes TSA implementation

In 2012, former President Goodluck Jonathan’s government commenced the implementation of the Treasury Single Account (TSA), a scheme that would primarily drive transparency in the management of government finances.

Commencing with just over 100 Ministries Departments and Agencies (MDAs) as a pilot (outbound transactions only), it sought to bring in all government funds in several bank accounts within the effective control and operational purview of the Treasury (Office of the Accountant General of the Federation).

It was also to curb leakages, facilitate effective cash management and availability; promote efficient management of domestic borrowing at minimal cost; allow optimal investment of idle cash; establish an efficient disbursement and collection mechanism for government funds; as well as eliminate operational inefficiency and costs associated with maintaining multiple accounts across multiple financial institutions.

But a few years into its implementation, there have been allegations of leakages in the system – which is what the TSA is meant to curb.

Consequently, in November 2023, the Public Accounts Committee of the House of Representatives began a comprehensive investigation into the operations of the TSA through Remita, the payment gateway deployed by the Central Bank of Nigeria (CBN) to power it.

BusinessDay recalls that was about the fifth time that the legislature would undertake investigations into the TSA programme since its full commencement in 2015.

The investigations provided the public with an extensive insight into theoperations of the account and exposed major areas of non-compliance by MDAs that can result in massive leakages of government revenue if urgent steps are not taken by relevant stakeholders.

Here are key insights into TSA implementation so far:

N34trn collected through TSA in 7 years

Since its inception in 2015 under the Buhari regime, the government has received payments to the tune of a whopping 34 trillion Naira through the TSA. It is the first time the country is able to have visibility and account for its cash assets in real-time. This was impossible before 2015 when different MDAs operated about 20,000 accounts in different banks with many untoward things happening behind the scenes.

The government tracks all revenue collections with RRR

It is quite impressive that the government is able to track and account for every single kobo of payment received through a unique Remita Retrieval Reference (RRR) code that is attached to every revenue inflow. The RRR is an outstanding feature of the payment gateway deployed by the CBN that enables the government to know the MDAs that received the money, the account into which the money went, the date and time the money was paid, what the money was paid for, and the name of the person that made the payment. RRR seems to have become the ultimate reconciliation reference point for all payers, banks, MDAs for all government revenue collections.

Some MDAs are operating outside TSA

The investigations also unravelled that some MDAs are only partially complying with the TSA Revenue policy while some are in absolute breach. The core objective of the Treasury Single Account initiative is to create a single window through which all inflows and outflows of government can be monitored in real-time for transparency and accountability and especially for the effective management of the government’s cash assets. Some of the defaulting agencies so far identified include Nigeria Customs Service, Immigration, Federal Medical Centres, FRSC, and Nigeria Railway Corporation.

Forex collections are done outside TSA

The TSA was designed to create a single monitoring window for all government inflows and outflows regardless of the currency. Unfortunately, forex revenue collections still occur outside of the TSA framework meaning foreign exchange revenues earned by the federal government are at risk of being diverted into the pockets of unscrupulous entities within MDAs who receive revenue in foreign currency. At a time when the Nigerian Government is looking for how to generate forex and stymie the devaluation of the Naira due to increased demand for the dollar, many say, this should not be allowed to happen. Surprisingly the Accountant General of the Federation (AGF) could not provide an answer to why this is still the case, 8 years after the government initiated the TSA policy.

The TSA collection fee is not 1%

The House of Reps investigations seem to have finally laid the issue of the fee paid to the TSA service providers to rest. This was confirmed to be N150 flat+VAT for all payments irrespective of the amount being paid. The CBN circulars of 2018 and 2020 presented at the sittings confirmed this.

Remita is not owned by the government

The investigations also provided a better understanding of Remita as the company and, also the name of the payment gateway adopted by the CBN for the operation of the federal government’s TSA. The company is a subsidiary of SystemSpecs, a Nigerian software technology investment group which also owns 4 other tech companies.

CBN and OAGF earn revenue from TSA

It was established that the Office of the Accountant General of the Federation (OAGF) who is the beneficiary of the TSA service was earning fees for the provision of services rendered to it. The lawmakers saw this as very strange especially when they discovered that the CBN was also taking out of the fees due to the banks, Remita and other service providers. It is unclear if the OAGF and CBN were able to convince the legislators on the basis of this.