CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
In
2015, Central Bank of Nigeria issued a circular directing all deposit money
banks to implement the Remita e-Collection Platform. The Remita e-Collection is a technology
platform deployed by the Federal Government to support the collection and
remittance of all government revenue to a Consolidated Account domiciled with
the CBN. This marked the beginning of the full implementation of Treasury
Single Account (TSA) system in Nigeria.
Though
Section 80 (1) of the 1999 Constitution
as amended states “All revenues, or other moneys raised or received by the
Federation (not being revenues or other moneys payable under this Constitution
or any Act of the National Assembly into any other public fund of the
Federation established for a specific purpose) shall be paid into and form one
Consolidated Revenue Fund of the Federation”; successive governments have
continued to operate multiple accounts for the collection and spending of
government revenue in flagrant disregard to the provision of the constitution
which requires that all government revenues be remitted into a single account.
In
2012, the government ran a pilot scheme for a single account using 217
ministries, department and agencies as a test case. The pilot scheme saved the
country about N500 billion in frivolous spending. The success of the pilot
scheme motivated the government to fully implement TSA, leading to the
directives to banks to implement the technology platform that will help
accommodate all MDA’s in the TSA scheme. The recent directives by President
Mohammed Buhari that all government revenues should be remitted to a Treasury
Single Account is in consonance with this programme and in compliance with the
provisions of the 1999 constitution.
Treasury
Single Account is a public accounting system under which all government
revenue, receipts and income and collected into one single account, usually
maintained by the country’s Central Bank and all payments done through this
account as well (Lawrence, 2006). The purpose is primarily to ensure accountability
of government revenue, enhance transparency and avoid misapplication of public
sector funds. The maintenance of a Treasury Single Account will help to ensure
proper cash management by eliminating idle funds usually left with different
commercial banks and in a way enhance reconciliation of revenue collection and
payment (Lawrence, 2006).
Government banking arrangements are an
important factor in managing and controlling government’s cash resources. They
are critical for ensuring that all tax and non-tax revenues are collected and
payments are made correctly in a timely manner; and public fund balances are
optimally managed to reduce borrowing costs (or to maximize returns on surplus
cash). This is achieved by establishing a unified structure of government bank
accounts via a treasury single account (TSA) system. A TSA is a prerequisite
for modern cash management and is an effective tool for the ministry of
finance/treasury to establish oversight and centralized control over
government’s cash resources (Williams, 2010). It provides a number of other
benefits and thereby enhances the overall effectiveness of a public financial
management system. The establishment of a TSA should, therefore, receive
priority in any public financial management reform agenda.
A TSA enables regular and effective
monitoring of government cash resources/public fund by providing complete and
timely information. A TSA also facilitates better fiscal, debt management, and
monetary policy coordination as well as better reconciliation of fiscal and
banking data, which in turn improves the quality of fiscal information. Also,
the establishment of a TSA significantly reduces the government debt servicing
costs, lowers liquidity reserve needs, and helps maximize the return on
investments of surplus cash.
1.2 STATEMENT OF THE PROBLEM
The
Central Bank of Nigeria has opened a Consolidated Revenue Account to receive
all government revenue and effect payments through this account. This is the
Treasury Single Account. All Ministries, Departments and Agencies are expected
to remit their revenue collections to this account through the individual
commercial banks who act as collection agents. This means that the money
deposit banks will continue to maintain revenue collection accounts for MDA’s
but all monies collected by these banks will have to be remitted to the Consolidated
Revenue Accounts with the CBN at the end of each banking day. In other words,
MDA’s accounts with money deposit banks must be zerorized at the end every
banking day by a complete remittance to the TSA of all revenues collected. The
implication is that banks will no longer have access to the float provided by
the accounts they maintained for the MDA’s. It will help to block most if not
all the leakages that have been the bane of the growth of the economy. We have
a situation where some MDA’s manage their finances like independent empire and
remit limited revenue to government treasuries. Under a properly run TSA, this
is not possible as agencies of government are meant to spend in line with duly
approved budget provisions. The maintenance of a single account for government
will enable the Ministry of Finance monitor fund flow as no agency of
government is allowed to maintain any operational bank account outside the
oversight of the ministry of finance. It is on this note that the researcher is
examining the effect of TSA on management of public sector fund.
1.3 OBJECTIVES OF THE STUDY
The
following are the objectives of this study:
1. To
examine the effect of Treasury Single Account on management of public sector
fund in federal sector establishment in Maiduguri
2. To
assess the processes involved in the implementation of Treasury Single Account.
3. To
examine the disadvantages of Treasury Single Account.
1.4 RESEARCH QUESTIONS
1. What
is the effect of Treasury Single Account on management of public sector fund in
federal sector establishment in Maiduguri?
2. What
are the processes involved in the implementation of Treasury Single Account?
3. What
are the disadvantages of Treasury Single Account?
1.5 HYPOTHESIS
HO:
Treasury Single Account does not have any significant effect on the management
of public sector fund in Federal establishments in Maiduguri.