International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue XII, December 2020 | ISSN 2454–6186
A Critical Analysis of Treasury Single Account Policy in Nigeria
Chief Ajugwe, Chukwu Alphonsus PhD.
Ajugwe Chukwu and Associates
ABSTRACTS: One of the major objectives of establishing Treasury Single Account (TSA) scheme is anchored on the fact, it will wipe out corruption that is prevalent at the MDAs and instill accountability and internal control which is necessary for effective conduct of the monetary and fiscal policy surfeit. However, this objective has not been fully realized as corruption has become cancerous worm that has eaten deep into the fabric of the Nigeria society, and cannot be wipe out by a single policy. However, we cannot deny the fact that TSA has to some extent ameliorates corruption in the public establishments.
Despite the above observed rigidities, some key economic metrics have shown that the policy has created positive impacts on the fiscal and monetary policies: TSA makes it easier for tax collections through technology which confers seamless generation and expenditure of the public revenue. While it has aid the CBN in the management of the monetary policy such as reducing liquidity in the inter-bank market, through seamless management of market liquidity, ensuring monetary and price stability and more importantly reduces the use of Open Market Operation(OMO) and the consequent cost.
This paper will take a critical look on the TSA by analyzing the different theories posited by many financial thinkers, the positive impacts on the economy and the challenges that may prevent in realizing such economic advantages will be analyzed, and, positive recommendations will be proffered.
INTRODUCTION
Prior to the introduction of Treasury Single Account (TSA) the earning by the Government such as; fees and earning, debt, fines, regulatory and general taxes are held in fragmented accounts with Deposit Money Banks (DMBs) and deposited in the Federation account called Consolidated Revenue Fund (CRF) with the Central Bank of Nigeria(CBN). It should be noted that Ministries, Departments and Agencies (MDAs) operate its accounts as it deemed fit with little or no control from the central authorities. These generated a lot of sharp practices and wanton abuses by the operators of the various accounts, made it impossible for accountability, instead it legalized fraudulent activities in the operations of the accounts.
In 2011, Federal Government of Nigeria (FGN) under President Goodluck Jonathan mandated the commencement of the TSA initiative in Nigeria, it did not take off immediately due to bureaucratic rigidities and the need to examine its negative effects on the DMBs as many of the banks depended on the government funds for survival and to stay afloat. However, in 2015, under President Mohammed Buhari, the full implementation of TSA across all Federal Government’s MDAs was mandated to takeoff.
Before the introduction of the TSA, revenue and payment receipts are fragmented that transfer from the Contingency Reserve Fund(CRF) (as authorized by warrants) are also received through the Ministries, Departments, Agencies (MDAs) accounts with DMBs and their expenditures are transacted through these accounts. Thus from the treasury the government funds are distributed to several DMBs accounts, with some MDAs having multiple DMB accounts for overheads, personnel, capital and sometimes term deposits. However, by these arrangement government revenues and payments transactions exist in silos without a unified government banking arrangements for efficient resource management, therefore there was no centralized controlled system of the government revenue and expenditure and there is noway Ministry of Finance can have a clear view of the revenue as noted by Occasional Paper CBN (2017).