Financial experts drawn from the Chartered Institute of Treasury Management (CITM), on Wednesday, tasked Federal Government with the need to embark on financial reforms ahead of the presentation of the 2023 budget proposal to the National Assembly.
The CITM Registrar/Chief Executive, Mr Olumide Adedoyin, on Wednesday, said there were no proper safeguards in place to ensure the effective implementation of the Treasury Single Account (TSA).
Adedoyin, who addressed reporters in Abuja said, also called for continuous training and retraining of personnel handling critical sectors of the country’s economy with a view to eliminate the waste of scarce resources.
To this end, he tasked the policymakers and National Assembly with the need to enact laws governing the procurement and domesticate them accordingly.
He said: “Like every government policy, the TSA as it is a function of just an account. It is not an app, it is not a policy, it is just an account. What the TSA tries to do is to make sure that the government has its resources in place and are able to know what they have at any given time.
“Now the first step the government was supposed to take was to do what we call cash pulling. Call up your resources from every bank into one single account. Once you do so, those bank accounts you have should not be closed down, rather you try to moderate them into receiving banks.
“They receive on your behalf but you cannot disburse from those banks, while at the end of the day you just have an online real-time balance to make sure that what comes in is being accounted for.
“That was supposed to be the function. But what we discovered at the end of the day was that there are some little processes and challenges within that platform because the back end for the audit was not adequately secured. So if you did not secure the back end, despite being able to make resources and bring those resources, then there is a little bit of opening in the back that could lead to haemorrhaging of resources and so on.
“I think as it is, we have actually reached out to the government on different fora, trying to make them understand that the importance of putting these back ends in check is quite important. Secondly, we want to believe too that there must be an orientation of the continuous training and retraining of individuals. You would be surprised that some that are saddled with these responsibilities do not actually understand the process effectively.
“The problem as it is is that there are no safeguards in place. We talked about preventive mechanisms. That as it is lacking. We talked about allowing treasury management to impact your cash management processes. That too is lacking. So these are those fundamental areas that we are concerned about. So that once you are able to make sure, for example, if X amount is budgeted for a project, how do you approach that project? For example, you want to build roads, bridges, culverts, now you cannot release the funds for the completion of that road all at once, because it has a process of design, a process of building the culverts, bridges, your overlays and every other thing.
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“What you need to do first and foremost, is to be able to design those projects with timelines. Once you design with timelines, release the funds that are responsible. Once those funds are released make sure they are tied to individual aspects of those contracts.
“While we are doing that, whatever you have as excess, invest those monies in very short-term investment processes that would assist the process, either even if it is just on commercial papers or government bonds for that period so that invariably the value of the money would not be lost.
“Once you do this effectively, it would be difficult for anybody to come back and start looking for variation on those jobs. these things you can put in place as one. Number two, if you need to make things work, you need to be radical about it. radical in the sense that the laws governing the procurement and other things have to be further domesticated. What do I mean? You make sure that equipment and items that are bought on yearly basis that are being wished away could have a much longer lifespan.
“For example, in the office, you keep buying photocopiers on a yearly basis. Of course, you discover that the copier can even last you five to 10 years when properly maintained.
“So those monies on those recurrent things that can be used beyond the length of those lifeshares could be ploughed back into the system. What happened to those monies? They get stolen and diverted.”
While speaking on the inefficiency in the budgeting process, NITM Technical Advisor, Mr Daniel Akeju, underscored the importance of Medium Term Expenditure Framework (MTEF) and Fiscal Policy Paper (FPP) toward achieving effective implementation of the country’s budget.
“You mention the issue of budget. When the country introduced medium-term sector strategy (MTSS) in the budgeting system, we were happy because we believe if it is followed the way it is supposed to be, we would not lack or waste resources. I was part of the team that developed the MTSS three years budget for Bauchi State some years ago.
“The principle followed helps the State to eliminate waste. What did we do? we examined per department, per ministry what they needed. it is not based on what was done last year, nor what was done two years ago.
“But what is really needed. you have to rate these needs and assign figures to them. you need to give which one is most important, which one do we need right now, which one we can leave till the new future. you rate them and assign them to three or four years.
“You attend to them in the order of importance. Anyone that cannot be accomplished in the first year, can now be moved to the first batch of next year. It is not the idea of a Director going with his car. This has to do also with what is called per zero-based budget.
“When we are talking of the international public accounting standard, IPAS, we are talking of capitalizing our assets. They say we are presently applying for IPAS but I don’t see it that way, because every year, we budget for the same thing. why should we throw away the chair the Director used and buy another chair and buy another one for the next director. why should the Director go away with the vehicle that was bought just two years ago and another director has to buy a new vehicle.
“No, all these need to be capitalised and depreciated just the way it is being done in the private sector. It is when we do this, we can eliminate waste.”
While giving an update on the Institute’s activities, the CITM Registrar/CEO observed that the organisation seeks to create a pathway toward promoting the study, the practice of properly managing the Treasury as a safeguard against fraud, misapplication/misappropriation of resources placed in the custody of fund managers in both Private and Public Sectors.
“The Institute seeks to institutionalise preventive mechanism by diligently encouraging the study and practice of the profession as obtained in greater economies of the world, bringing to bear best practices through research and cross fertilisation of ideas from like mind Institutes and Research bodies presently available in about 54 countries of the world.
“This would, in turn, lead to building world-class individuals and well-grounded professionals in the management of the Treasury.”
He averred that, when the operation of treasury management is allowed to impact on the economy of an entity, the following would be beneficial effects: firms will operate with smaller amount of cash, supervision and management of cash flows and its balances will be better managed and impacted; there would be better service from banks, proper allocation of funds will be achieved; fraud and embezzlement would be minimized; risk of loss in management of investment in liquid assets will be eliminated; firms would operate at minimum cost of funds possible within the economy of their domicile constituted authorities and institutions in Nigeria.
He added that the promotion, study and practice of properly managing the treasury as a safeguard against fraud, outright embezzlement, emasculations, misappropriation/misapplication of scarce resources placed in the care/custody of fund managers.
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