TSA scheme: An antidote to promoting effective public financial management

Recently, the media reported a directive issued by the Accountant-General of the Federation (AGF), mandating all Ministries, Departments, and Agencies (MDAs) to embrace the Treasury Single Account (TSA) without hesitation.

According to the release, the Federal Government has directed all MDAs operating in states to close accounts with commercial banks in adherence to the TSA policy. This directive was issued by the Accountant-General of the Federation, Dr. Oluwatoyin Madein, during a working visit to the Federal Pay Office in Benin, Edo State. Dr. Madein emphasised that no MDA should operate accounts outside the TSA framework unless expressly approved by the President and communicated through the Office of the Accountant-General. She tasked Federal Pay Officers with enforcing compliance and ensuring transparency in financial management.

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This directive appears to be part of the government’s strategy to combat corruption and embezzlement while blocking financial leakages and wastages. Ultimately, it aims to promote the effective management of public finances through the TSA policy.

The Treasury Single Account (TSA) is a unified structure of government bank accounts that provides a consolidated view of government cash resources and financial position at any given time. The Federal Government of Nigeria (FGN) introduced the TSA on September 15, 2015, with the objective of consolidating all inflows (receipts) from MDAs into a single account at the Central Bank of Nigeria (CBN). This is done through designated deposit money banks (DMBs), ensuring that all government revenues are traceable and accounted for in one central system.

“A key feature of the TSA policy is its ability to provide a comprehensive and consolidated view of government revenue, discouraging the duplication of accounts.”

Abiodun (2018) described the TSA scheme as an electronic public cash flow management platform, recommended by the International Monetary Fund (IMF), designed to track all receipts, payments, and balances of public funds across MDAs. This system highlights the consolidated daily cash balance in the government’s treasury at the close of each banking day, with the CBN or an appointed institution serving as the administrator. From all indications, the TSA scheme is a key measure in the fight against corruption, serving as a critical tool for ensuring accountability, transparency, and a significant reduction in the cost of governance. Additionally, it forms an essential part of public financial management reforms under pillar three of the National Strategy for Public Service.

The TSA is instrumental in consolidating and managing government cash resources, thereby minimising borrowing costs. It aims to reduce the proliferation of multiple bank accounts operated by MDAs and to guarantee financial accountability and transparency within government institutions. The Federal Government of Nigeria embraced the TSA scheme to harmonise all government bank accounts into a single structure, ensuring close monitoring of all government revenues. This policy eliminates unnecessary or multiple bank charges resulting from duplicating government accounts in different banks, promotes accountability and transparency within and outside MDAs, and reduces financial mismanagement by addressing leakages, wastages, and embezzlement of public funds. Furthermore, the scheme provides the government with an accurate daily cash balance, facilitating better budget planning and forecasting.

A key feature of the TSA policy is its ability to provide a comprehensive and consolidated view of government revenue, discouraging the duplication of accounts. It also functions as a unified banking arrangement that closely monitors all government inflows and outflows within a given period. If implemented effectively and without compromise, the TSA scheme promises to prevent revenue leakages, ensuring improved transparency and accountability in governance. Operational control is enhanced through efficient cash management, while unnecessary bank charges resulting from multiple accounts are eliminated. More importantly, the scheme plays a vital role in combating corruption and financial mismanagement.

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Despite its many benefits, the TSA scheme is not without challenges. One major issue is the administrative bottlenecks associated with maintaining a single government account. Additionally, there is resistance to change from some government functionaries who are reluctant to embrace the new system. Some critics argue that the TSA scheme is restrictive because it primarily focuses on government revenues and expenditures while neglecting other financial variables.

The TSA scheme remains a crucial instrument in Nigeria’s pursuit of financial prudence, accountability, and transparency. While challenges exist, its implementation can significantly improve the efficiency of public financial management, reduce corruption, and ensure better allocation of government resources. If executed rigorously and without compromise, the TSA policy will serve as a powerful antidote to financial mismanagement in Nigeria’s public sector.

Kingsley Ndubueze Ayozie, KJW, FCTI, FCA—a public affairs analyst and chartered accountant—writes from Lagos.