In 2015, the Federal government under the administration of President Muhammadu Buhari mandated the full implementation of the TSA which is the Treasury Single Account. This is a public accounting system with the aim of managing all government revenue and payments through a single bank account or a set of linked accounts. The TSA was initially introduced in 2012 as a trial project under the administration of President Goodluck Jonathan. However, it began full operation in 2015 with the administration of President Muhammadu Buhari. The TSA policy covers all of the existing Ministries, Departments, and Agencies (often referred to as MDAs) except companies in the oil and gas industry and other joint venture partners’ accounts. The major reason the TSA was introduced is to battle corruption in the country. The Treasury Single account aids transparency since all government payments are made into one account.
Disadvantages of Treasury Single Account (TSA) in Nigeria
The order of the implementation of TSA marks the start of all revenues of Ministries, Departments, and agencies being withdrawn from whatever account they are in commercial banks into a unified account maintained by the Central Bank of Nigeria (CBN).
Many have argued that the payment of government revenue into multiple bank accounts operated by MDAs in commercial banks, which was the practice before TSA was clearly against the Nigerian Constitution which directed that all federally-collected revenues should be paid into the Federation Account. Many describe this as another evidence of breach of the law and the deep corruption in the nation.
The establishment of the TSA has its advantages to the Nigerian economy such as helping the Nigerian Government has a stronger hold of its finances. Since the government now knows the exact money it has, it can plan and execute plans using the money for the betterment of the Nigerian citizens. Also, whatever money belongs to the Federal Government is now under its full control and is also assured of being more secured since it is operated by the Central Bank of Nigeria. The Central Bank of Nigeria is one of the most infallible financial institutions in the country. Hence, the government’s money is safe, accessible, and secure. It is now possible to audit all government transactions since it is all in one place. However, whatever it is that has an advantage will also come with its disadvantage. This article is about the disadvantages of a Treasury Single Account. Read on below:
- The inclusion of public corporations in the TSA might misstate the boundaries between the public and government sectors. This can result into limitations of public corporations. These corporations might lose their autonomy in a bid to introduce strategies that are commercially oriented. A public corporation that may seriously suffer from loss of independence is tertiary institutions. Many universities in fact opposed the inclusion of tertiary institutions in the TSA. The Committee of Vice-Chancellors of Federal Universities had a meeting with the Accountant General of the Federation where they argued that by means of the operations and services rendered by Federal universities, it should not be regarded as public services or revenue-generating organizations. The committee argued that including Federal universities in TSA might negatively affect the smooth running and operations of the institutions since government allocations are barely enough to cater to the needs of the institutions. Sometimes, universities collect third party funds for the provision of services and such functions as this many be disrupted on account of the implementation of TSA. However, the Accountant General assured them this would not be the case.
- The implementation of the Treasury Single Account would adversely affect liquidity in the banking system. This is because of a surge in money market rates because MDA’s withdrew their funds from commercial banks. This will in turn affect small business owners who are in need of loans and capital for their business. When ministries withdrew their funds from commercial banks, banks then place high-interest plans on the little left which the public will borrow from. Hence, it is the average Nigerian, such as the small business owners and traders that will suffer. Many experts conclude that this will lead to the death of many small-scale businesses and to an increase in the level of unemployment.
- When the TSA was initially implemented, there was difficulty in releasing funds to MDA’s for their operations. Many have argued that the TSA comes with a financial system that has not been used earlier, e-finance and this may affect the effectiveness of the policy.
- Another challenge with the implementation of the TSA is the ignorance of many Nigerians. Many do not understand the efficiency and effectiveness of this policy. Some claim it is another means to aid corruption by the government. For example, Dino Melaye, a Nigerian senator raised a motion that the operation of the treasury single account (TSA) should be investigated for possible corruption. He claimed that the appointment of REMITA, an e-collection agent, is a gross violation of the law. He also claimed that the constitution only recognises a banking institution as the collector of government funds and Remita was not a bank. However, the management of System Specs who developed Remita refuted the claim of it being used as a tool for embezzlement and explained that Remita is not an agency but an application or software used for facilitating payment of government revenue from other government agencies to a TSA controlled by the Central Bank of Nigeria.
Advocates of the TSA policy argue that it will encourage integrity in how public funds are managed by the government and her agencies. It will remove the secrecy of government organizations in the management of funds. It will also expose the revenue-generating agencies that have been depriving the federal government of its money through multiple bank accounts. Altogether, there will be overall efficient management of public funds which will lead to a better economy. When you consider the situation of Nigeria where corruption has been a major menace causing havoc to our economy, we need every and any system that can foster transparency and accountability. In light of this, the Treasury Single Account might just be the best way to go.