ABSTRACT
This
study was intended to evaluate the impact of treasury single account on
Nigerian economy using some MDA,s in the Federal Ministry of Science and
Technology as a case study . This study was guided by the following objectives;
to examine the implications of treasury single account on three MDA,s in
Nigeria, to examine the implication of treasury single account on the economic
development of Nigeria, to identify the benefits of treasury single account.
The
study employed the descriptive and explanatory design; questionnaires in
addition to library research were applied in order to collect data. Primary and
secondary data sources were used and data was analyzed using the correlation
statistical tool at 5% level of significance which was presented in frequency
tables and percentage. The respondents under the study were 32 employees of the
central bank of Nigeria, Abuja branch. The study majorly focuses on the
implications of treasury single account on banking sector of Nigeria and the
economy as a whole.
The
study findings revealed that the application of treasury single account will
not enhance economic development in Nigeria; based on the findings from the
study, efforts should be made by the Nigerian government and stakeholders in
promoting treasury single account.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
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. The
purpose is primarily to ensure accountability of government revenue, enhance
transparency and avoid misapplication of public 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 (Adeolu, 2015).
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.
It was not until 2012 that government ran a pilot scheme for a single account
using 217 ministries, department and agencies as a test case. The pilot scheme
saved Nigeria 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 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 (CBN, 2015).
The
Central Bank 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
Ministries, Departments and Agencies 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, Ministries, Departments and
Agencies accounts with money deposit banks must be zerorized at the end every
banking day by a complete remittance to the Treasury Single Account 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 Ministries,
Departments and Agencies. Difference types of account could be maintained under
a Treasury Single Account arrangement and these may include the TSA main account,
subsidiary or sub-accounts, transaction accounts and zero balance account.
Other types of accounts that could operated include imprest accounts, transit
accounts and correspondence accounts. These accounts are maintained for
transaction purposes for funds flowing in and out of the Treasury Single
Account (Adeolu, 2015).
From
the foregoing, it is obvious that the primary benefit of a Treasury Single
Account is the mechanism it provides for proper monitoring of government
receipts and expenditure. In the Nigerian case, 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 Ministries, Departments and Agencies manage their
finances like independent empire and remit limited revenue to government
treasuries. Under a properly run Treasury Single Account, 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.
As
a matter of fact, deposit money banks stand to lose immensely from the
implementation of Treasury Single Account. This is because of the fact
that public sector funds constitute a large chunk of commercial banks
deposit. Indeed, it is estimated that commercial banks hold about N2.2
trillion public sector funds at the beginning of sector quarter of 2015.
The impact of this amount of money leaving the system can be imagined when one
considers the fact that each time the monthly federal allocation is released,
the banking system is usually awashed with liquidity and as soon as this public
sector funds dries up through withdrawal by the states, liquidity tightens
again with interbank rates going up. Of major impact will be the movement
of funds of revenue generating parastatals such as the NNPC, out of commercial
banks.
1.2 STATEMENT OF THE PROBLEM
As
the Federal government of Nigeria introduces Treasury Single Account, Banks
will continue to device means of mobilizing funds from the private
sector. We see a return of the era when women are employed by banks
specifically for deposit mobilization and tacitly encouraged to use any means
necessary to get funds. We see increase in deposit interest rates as a
major means of inducing customers and most importantly we see a drop in lending
and in the profitability of banks, at least, in the short to medium term until
they fully come to terms with the impact of the policy and begin to properly
position themselves for true banking business. Ultimately, we see the
share price of these banks falling as investors attempt to price in the policy
impact. However, the implementation of this programme is a critical step
towards curbing corruption in public finance. This is a tool to combat corrupt
practices, eliminate indiscipline in public finance and ensure adequate fund
flow that will be channeled to critical sectors of the economy to catalyze
development.
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
1. To
examine the impact of Treasury Single Account on various FMST Agencies in Nigeria.
2. To
examine the implications of Treasury Single Account on the economic development
in Nigeria.
3. To
identify the benefits and challenges of Treasury Single Account.
1.4 RESEARCH QUESTIONS
1. What
are the impacts of Treasury Single Account on various FMST agencies the in Nigeria?
2. What
are the impact of Treasury Single Account on the economic development in
Nigeria?
3. What
are the benefits and challenges of Treasury Single Account?
1.6 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
1. The
results from this study will educate the general public on the benefits of
Treasury Single Account to the economy of the country. It will also educate on
its temporary effect on the banking industry as huge sum of money will be
leaving the sector suddenly.
2. This
research will also serve as a resource base to other scholars and researchers
interested in carrying out further research in this field subsequently, if
applied will go to an extent to provide new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study will cover the benefits and limitation
of TSA in the Nigerian economy
LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the
efficiency of the researcher in sourcing for the relevant materials, literature
or information and in the process of data collection (internet, questionnaire
and interview).
Time constraint- The researcher will simultaneously
engage in this study with other academic work. This consequently will cut down on
the time devoted for the research work.