FOLLOWING the gains of the Treasury Single Account (TSA) policy that is now operational at the Federal level, the system may soon be adopted in the states. The Central Bank of Nigeria (CBN), last week, released Operational Guidelines for the use of TSA by state governments. The expectation is that their adoption of the system will help to streamline their finances and enthrone transparency in the management of public funds
THE TSA, which came into effect on August 11, 2015, is a payment system in which all revenues due to government are paid into a unified account domiciled with the CBN. Its main objective is to ensure fiscal discipline and transparent management of the nation’s finances
So far, about N2.2 trillion is said have accrued to the Federal Government in the TSA, between August and December, 2015. President Muhammadu Buhari disclosed this much during a recent interaction with Nigerians in the United Kingdom.
Perhaps, in realisation of the gains of the system, the CBN has said that the policy will now be a major component of the financial and treasury management reforms to be undertaken by the states. The apex bank explained that the introduction of the policy to the states was in accordance with its powers, as provided in the CBN Act 2007, Section 47, sub-section 2 (2d).
According to the CBN, the aim of the guidelines is to provide state governments with a clear framework to support their successful implementation of the TSA initiative. This, it says, will be “based on standardized banking arrangements, operational processes and Information Technology infrastructure. The guidelines also provide that government agencies will not operate any bank account under any guise outside the purview and oversight of the treasury.
Besides, the apex bank added that the consolidation of state governments’ cash resources should be comprehensive and encompass all government cash resources, both budgetary and extra-budgetary. It also listed two TSA models for the states to choose from. The first is what it calls the main TSA and associated ledger sub-accounts (where they exist) which must be maintained in a single banking institution, or the main TSA, maintained in a single banking institution and associated Zero balance ledger sub-accounts (ZBAS).
The choice of the TSA will be informed and guided by the availability of clear operational processes and basic technology infrastructure that supports the implementation of the model of their choice.
In addition, each state government is required to inform the CBN Governor of its decision to introduce the TSA scheme, detailing the state’s preferred TSA model and its level of preparedness.
Altogether, this is a step in the right direction and we urge state governments to cue into the scheme, as this will help them manage their revenues better. With most of the states currently facing intense pressure on their cash flows in the face of dwindling statutory federal allocations, the implementation of the TSA scheme will help them to have a better view of their income and expenditure profiles. They will also be able to monitor and control their expenditure for development purposes. Accountability and transparency are two major benefits of this unified accounting system. However, unwavering commitment and sincerity of purpose are needed for the system to work effectively.
It might not be out of place for some states to object to the CBN guidelines, on account of our federal structure, which supports the independence of the states. Under that system, it may appear out of place for a federal institution (the CBN) to be issuing guidelines to state governments.
Nonetheless, the adoption of the TSA is in the greater interest of the states, as it will pave way for the timely payment and capturing of all government revenue in a single government treasury account, without the intermediation of multiple banking arrangements as is currently the case. Moreover, embracing the scheme can help reduce the mismanagement of public funds by revenue-generating agencies, as well as check excess liquidity, inflation, high interest rates and round-tripping of government deposits. These are pitfalls that can be avoided under a well-managed TSA scheme.
State governors and Heads of Ministries, Departments and Agencies (MDAs) should subsume their personal interests under the greater needs of their states and citizens. We believe that the present insolvency of some states will be reduced if they adopt the TSA policy.
Hitherto, the use of multiple bank accounts left room for the misappropriation of huge sums of money belonging to all levels of government in the country. It encouraged unbridled corruption in the management of public finances, with the result that all tiers of governments are now heavily cash-strapped.
We urge the CBN to go beyond these guidelines and put in place proactive measures to correct any lapses or negative impact of the policy. State governments should also put all necessary machinery in place to ensure the successful implementation of the policy.