• Thursday, June 13, 2024
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Parliament launches inquiry into financial leakages in TSA: A thorough examination

House moves to suspend introduction of genetically modified crops

In an effort to maintain financial discipline and transparency in the public sector, the House of Representatives (HoR) recently declared a comprehensive investigation into potential financial leakages within the Treasury Single Account (TSA) through the Remita platform. This initiative, which is part of the HoR’s oversight function, responds to concerns raised about the 1% commission charged on funds collected through Remita, sparking debates on the distribution of this commission among key stakeholders.

During a recent plenary session, lawmakers Jeremiah Umaru and Jafaru Gambo, representing Nasarawa and Bauchi, jointly sponsored a motion addressing issues related to the Remita platform. While acknowledging the positive impact of the TSA in creating a cashless economy and enhancing transparency, Umaru, the lead sponsor, asserted that the system has not entirely blocked leakages and abuses.

One of the primary concerns highlighted in the motion is the 1% commission charged on funds collected through Remita. Umaru expressed alarm at the distribution of this commission, where SystemSpecs (owner), deposit money banks, and the Central Bank of Nigeria (CBN) receive a share in the ratio of 50:40:10, respectively. The lawmaker deemed this allocation “alarming and unacceptable.”

The motion, put to a voice vote during the plenary session, was adopted, leading to the establishment of an investigative committee within the House of Representatives. The committee, assigned to the public accounts sector, has been tasked with probing revenue leakages through the Remita platform and examining non-compliance with standard operating procedures and other service level agreements. The committee is expected to report its findings within six weeks for further legislative action.

First of all, it is critical to highlight that the Remita platform, owned by SystemSpecs, is not government-owned but has played a pivotal role in the success of the TSA.

The TSA policy was fully implemented by the Federal Government of Nigeria (FG) in September 2015, thereby requiring all its MDAs to deposit their funds in a single account held at the CBN, as opposed to continuing to maintain such accounts with Deposit Money Banks (DMBs). This move aimed to end the practise of banks lending government funds back to the government at excessive interest rates.

However, since its full implementation, examinations reveal that contrary to regulatory efforts, certain government revenues, including those from the Nigeria Customs Service (NCS), Immigration, Nigerian Railway Corporation (NRC), and Federal Road Safety Corps, and especially foreign currency based revenues, deliberately remain outside the TSA. With TSA funds consolidated through a singular channel characterised by verifiable data imprints, any claims of fund leakages can likely be attributed to revenues not being collected within the TSA framework.

Notably, the National Assembly (NASS) is not seamlessly integrated into the TSA framework. The number of bank accounts operated by MDAs exceeds the previously reported figure of 15,000, totalling over 20,000 accounts. These closed accounts have spawned sub-accounts for around 2,000 sub-agencies. Complete compliance and adherence to the TSA are essential for a comprehensive account of all revenues for the Federation.

Regarding the 1% commission fee, it is imperative to draw parallels with a past incident in 2015 when Senator Dino Melaye accused Remita of imposing such a fee.

At the time, the Central Bank of Nigeria refuted his claims in a letter titled ‘Commencement of Federal Government independent revenue collection under the TSA initiative’. In the letter, the apex bank acknowledged that a 1% fee on collected funds is applicable, with the distribution shared between the solution provider and participating banks.

On the assertions that deposit money banks could delay remittances, it should be noted that in line with the operational design of the TSA system operated by Remita, all government recoveries are directed through Remita to the CBN, preventing them from being stored elsewhere. Complete compliance and adherence to the TSA are essential for a comprehensive account of all revenues for the Federation.

The TSA has made a positive impact in public finance management, and is regarded as one of the most significant initiatives ever undertaken by the Nigerian government to enhance accountability, transparency, and combat corruption in public fund management.

Read also: Tinubu pulls FCT out of TSA, boosting Wike’s authority

It has granted the government greater control over its finances, enabling unprecedented tracking of inflows and outflows. The present moment appears opportune for consolidating these gains and extending the initiative to other nations.

The TSA also showcases the growing potential of Nigeria’s financial technology industry. As global competition intensifies and technology progresses, the imperative to leverage technology for the collaborative creation of value becomes crucial for development. The government should commend Remita as a successful indigenous technology solution, with its achievements deserving consolidation and potential exportation to other countries seeking a more transparent financial system for their governments.

Amid calls for investigation, which have been described as a perennial which-hunt, Remita stands as a pace-setter in Africa’s technology space, and the innovative solutions it offers for public fund management and the private sector merit replication across Africa and the world.

Stevens is a Lagos-based Fintech Analyst