TSA: Blocking leakages in FG’s revenue

The Treasury Single Account (TSA) has been acknowledged as one of the most successful Public Financial Management reforms in Nigeria, but JOSEPH INOKOTONG writes that much needs to be done to achieve the desired outcome.

The issue of revenue accruals, especially who collects what, has always ignited heated argument with passion among feuding parties due to the dwindling financial position of all the three tiers of governments in the country and each entity often tried to advance superior reasons to justify its position. The federal, states and local government councils are presently contending with developmental challenges with acute shortfall in revenue earnings.

This is because over the years, the economy has relied heavily on revenue generated from the sale of crude oil for the running of government activities. This contributed immensely to reckless spending and mismanagement of public funds as several government agencies in the country collected money on behalf of the federal government. They had the latitude to spend part of it since they only needed to remit only a portion of the declared amount.

The multiplicity of Ministries, Departments and Agencies (MDAs) collecting revenue on behalf of the Federal Government culminated to several challenges, partly due to high cost of cash management in Nigeria’s economy, leading to operation of multiple accounts. The MDAs have been operating multiple accounts for revenue collection and they spent the monies contrary to the provision of the Nigerian constitution, which stipulates that all government revenue must be remitted into a single account, the federation account.

As a result of economic exigencies at the time, the Central Bank of Nigeria (CBN) was directed to open a consolidated revenue account where all government revenue, incomes and inflows were pulled into one single account maintained by the apex bank, known as Treasury Single Account (TSA).

Effective 2012, the Federal Government began implementation of the first phase of a single account policy with 217 MDAs as a pilot phase. Interestingly, about N500 billion was saved from the reckless spending of the MDAs. This achievement motivated government to urge all banks to employ the technology platform that will help to accommodate the TSA policy.

In essence, the TSA is part of the economic reform programme of the Federal Government enunciated to facilitate a unified structure of government bank account for all government transactions.

The new system of accounting is in tandem with the campaign for zero-tolerance for corruption. It is expected to consolidate all cash resources of the government in all MDAs which were previously located in various bank accounts, under one unified management and control. Apart from availing the government of effective control of cash resources, the TSA also guarantees timely information on government’s cash resources real time and harmonises government servicing of its obligations.

Also, the TSA enhances government revenue generation; ensures transparency, accountability in government expenditure, and helps to minimise revenue leakages that have been a major challenge to the growth and development of the economy.

Arguably, the introduction of TSA has put a stop to the MDAs managing their finances like independent entities, which only remit revenue to government treasuries at will.

This can be attested to when viewed from the prism of the impact of TSA on economic development of the country. Research results indicate that the “implementation of the TSA has a significant scientific influence on the growth of the economy in real GDP terms, while revenue generated by government and per capita income were influenced by its operation.”

The effect on government internally generated revenue performance has been impressive. For instance, between January and October 2021, a total of N86 billion revenue was generated through this means.

Aggregate collection of N7 trillion was made from 22 million transactions between January and November, 2021 while N19 trillion worth of payments were processed from 20 million transactions within the same period.

The amount generated goes to show the enormous volume of transactions processed on the TSA platform and the need to leverage on the onboarding of additional Payment System Service Provider (PSSPs) to reduce the cost of collection which is currently N150 per transaction. Government is of the opinion that there is sufficient room for reduction in cost of collection to no more than N50 per transaction.

These startling positive indicators might have influenced the decision of the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed Shamsuna to inaugurate the reconstituted Treasury Single Account (TSA) implementation structures; namely: TSA Supervisory Board and Inter-Ministerial TSA Implementation Committee in Abuja, last week.

First, like anything Nigerian, the composition of the team reflects the diversity of interests that TSA serves and demonstrates the productive partnership of public and private sectors in policy formulation.

From inception, the Federal Government had set out to be transparent and to provide a level playing field for all participants. It is in line with this that, although it could have adopted selective collecting bank approach as was popular then, it opened the collecting service to all licenced Deposit Money Banks. For this reason, it foreclosed any need for banks to either apply or lobby to participate in TSA collection and payment.

At the initial stage, participation of more than one PSSP was a challenge. The Government Integrated Financial Management Information System (GIFMIS), which was the first TSA management application, was designed to interface with T-24, the CBN core banking application through a single payment gateway.

The original intention was to use Real Time Gross Settlement System (RTGS) to be provided by the CBN; however, unable to provide the service at the time, the apex bank opted for systemspecs/remita after a rigorous competitive procurement process. That initial constraint ultimately paved way for Remita to become the dominant TSA PSSP.

Notwithstanding the obvious constraint, government insisted that other service providers should be accommodated in the TSA collection process provided they were integrated with Remita because without such integration, it would be difficult to keep track of transactions in diverse, stand-alone collection applications.

This singular act, innocuous at the time and borne out of the desire to do the right thing was unfortunately misunderstood, generated too much controversy and has become a source of needless distraction for everyone.

Interestingly, through the work of the committees that was inaugurated, government expects to finally open the TSA to multiple service providers to put an end to the agitations and discontent of the past.

Indeed, of all the reforms embarked on by the Federal Government, TSA is arguably the most popular both locally and internationally. As a public trust, Nigerians monitor its progress and voluntarily report observed non-compliance to appropriate quarters. Internationally, it is recognised as one the most successful Public Financial Management reforms out of Africa. This recognition is attested to by the bilateral co-operation Nigeria has entered with other countries to share experience with them as they implement similar reforms in their countries.

For the Government, the TSA experience has been a pleasant one. The centralisation of banking arrangement has made it easier to determine government cash balances, reduce cost of borrowing, enhance liquidity, block leakages and improve internally generated revenue performance. Using the TSA platform, government said it has since “automated direct deduction of operating surplus of eligible agencies. At the last count, 16 agencies are covered and more will be added in the coming months”.

In spite of the progress made so far, it is obvious that there remains more to be achieved. The diverse and rich expertise of the distinguished and accomplished members of the committees is a pointer to the enormous work done to harness and further improve the TSA for greater benefit to the country and people.

In a 2018 post implementation compliance exercise conducted by the government to determine the extent to which MDAs and Deposit Money Banks complied with the Presidential directive on TSA of August 7, 2015, it was discovered that huge amounts of public funds were still trapped in commercial banks. And it has been reported that the banks have not been co-operating with the Consultants assigned to sweep these funds to the TSA.

This is a sore thumb tugged in the government’s implementation of the TSA, which must be speedily addressed by directing the affected banks to transfer all remaining balances in the accounts of Federal Government owned MDAs in their custody without express exemption to the TSA.

Another vexed issue in the TSA’s implementation is the exemption of selected accounts of the Nigerian National Petroleum Corporation (NNPC) and West Africa Examination Council (WAEC). The amount of huge revenue, accruing to the country from sale of crude oil which is the main source of foreign exchange earning to Nigeria, ought to have discouraged government from towing this ignoble path. Yet Mrs Ahmed had said, “For the avoidance of doubt, except for selected accounts of NNPC and WAEC, no other MDA or fund of Federal Government is exempted from the TSA.” The Inter-Ministerial TSA Implementation Committee should terminate the exemptions in order not to give the wrong impression that some MDAs are sacred cows nurtured for sinister motives.

However, the feelings of some Nigerians may be assuaged by the words of the Minister of Finance, Budget and National Planning when she said, “We are compiling the list of affected banks and MDAs for submission to anti-corruption agencies for enforcement.”

Another teething problem is the challenges MDAs have been facing since early December, 2020 in accessing their TSA bank statement and creation of service types for collection.

These are pertinent issues, which the Inter-Ministerial TSA Implementation Committee should prioritise and find solution to these challenges so that MDAs can reconcile and prepare their end-of-year financial statements in good time. Also, in line with government’s desire for ICT driven processes, the Committee should ensure that the solution is one that enables MDAs to access detailed bank statements online and on-demand while at the same granting unfettered online and on-demand access to all MDA TSA bank statements to the Treasury.

Again, the Academic Staff Union of Universities (ASSU) had listed exemption from TSA as one its grievances for embarking on strike some years ago, but the Minister of Education, Malam Adamu Adamu, said lecturers request that universities should be allowed off TSA, but “I think government will not do this. But there are some peculiar funds in the universities, like endowments, prizes and so on. Government will exempt those ones.’’

Fortunately, the terms of reference for the TSA Supervisory Board include to “Provides overall broad policy guidance for the TSA; Resolves issues that may be escalated to it by the Implementation Committee, while Inter-Ministerial TSA Implementation Committee is charged with the task of “Proffering immediate solution to the bank statement crisis facing MDAs; Review current TSA processes and recommend new processes; Design a suitable framework for the involvement of other service providers in the TSA project; Review the current scope of the TSA and advise on exemption criteria, and Review security around the TSA processes and put in place adequate internal controls”.

Experts say, most importantly, the Inter-Ministerial Committee should realise the need for mutual co-operation and respectful engagement in the course of their assignment, as it is only by working harmoniously with each other that it will be able to deliver on the critical task before it within the three-month timeline given to deliver.