Treasury Single Account (TSA) is a Federal Government (FG) bank account into which all revenues collected on behalf of FG by its Ministries, Departments and Agencies (MDAs) are deposited and from which the government spends on salaries, projects, debt servicing, among other obligations.
The TSA is domiciled with the Central Bank of Nigeria (CBN). Remita, which was created by an IT firm, SystemSpecs, provides the technological platform for collecting and remitting funds into TSA. To improve classification of receipts, those remitting into the TSA have also been mandated to generate GIFMIS Revenue Reference Numbers.
Not many Nigerians know that the partial implementation of TSA took place as early as 2012. At that time, only government payments were being made from TSA. By 2015, TSA went full circle to include the collection of government revenues from the public. The first Treasury Circular on migration to e-collection was issued on 19th March 2015.
At the very beginning of the implementation of the TSA policy, there were debates about it. The policy attracted applause, curiosity and antagonism.
These debates were fuelled by those who did not understand the policy. But more Nigerians are getting to understand how TSA works.
And indeed, more Nigerians now appreciate what the policy is meant to achieve. They have endorsed it as an efficient government financial management system. But TSA is not unique to Nigeria. It has been adopted by several developed and developing countries including the United States, Britain, France and some African countries.
Recently, a House of Representative Ad-hoc Committee called for an audit of funds which have passed through TSA in the last two years. As we await the full report of the audit, it is important to shed light on the benefits of adopting TSA:
1. TSA helps reduce fraud
The implementation TSA has revealed corrupt activities going on in some government agencies, including the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Joint Admission Matriculations Board(JAMB).
In the past, government funds were often collected by persons acting in the capacity of government. Most of these funds were not remitted to the government without consequences. With TSA, this has been minimised.
2. It loosens up funds for development
Between Sept 2015 and July 2017, the government saved over N108billion on bank charges. In the past, government used to pay an average of N4.7billion monthly on these charges, according to the Accountant General of the Federation. Also, TSA has saved FG from needless borrowing and interest on such borrowings.
In the past, government agencies would deposit sums of money in Deposit Money Banks, only for other government agencies to borrow what had been deposited by their sister agency. Government was paying interest to commercial banks on its own funds!
With the implementation of TSA, funds that would have gone to such wasteful activities are now saved and can be channelled to developmental projects.
3. TSA makes FG Audit processes easier
The centralisation of fund collection and disbursement makes audit easier and quicker. Full electronic payment integration has made it easy to make payment into government account and to actually verify that the funds have been received by the government. Since funds flow into one destination with the CBN, it is easier to query the system and audit it.
Also, funds can be tracked real time. It is possible at every point in time to know the liquid asset of federal government and to know what MDAs are contributing the most.
For those making payments, receipts are electronically generated, transactions can be easily tracked and forgery is minimised since transactions can be authenticated and verified real time, by anyone who has access to the back-end.
4. It promotes effective cash management
In the past, tracking cash assets and finances was complicated and burdensome for government. It was difficult to undertake effective cash management as required by the Fiscal Responsibility Act. The government could not easily determine its cash position at any point in time nor avoid the excessive use of ways and means in financing budget expenditure.
There were often idle unspent balances in MDA accounts. These earned interest for unscrupulous individuals within the MDAs. Also, when commercial banks failed in the past, they took government funds, amounting to about N70billion down with them.
Meanwhile, Domestic debt was growing because borrowing was not aligned with need.
Some government agencies/ ministries were not using up to half of the funds allocated to them. Unspent funds were left in fixed or savings accounts, yielding minimal interests.
Government resorted to borrowing from the bank in such times, even though the banks had cash from other government agencies with them.
This was a complete loss to the government.
5. Eliminates the burden of multiple accounts
Prior to the implementation of the TSA, MDAs operated multiple accounts in various banks for various purposes. There are records which show that at some point government MDAs had at least 20,000 accounts scattered across banks. These came with charges which were humongous.
Recently, the Minister of Information and Culture, Alhaji Lai Mohammed, said the judicious management of TSA and the unrelenting war against corruption is why the country has not collapsed. At a time of scarce resources and diminished revenue, government must be prudent.
TSA has helped to conserve funds for useful projects. With time, the incremental changes effected by the adoption of the policy will reflecting on the broader economy and the lives of ordinary Nigerians.