The current administration of President Muhammadu Buhari has commenced the implementation of the Treasury Single Account (TSA).

While working on the implementation the TSA, following the directive of the President, the Accountant General of Federation (AGF), Ahmed Idris has reassured the public that the policy will boast revenue collection, block leakages and ensure transparency and timely disbursement of funds to beneficiaries.

The AGF who made the disclosure during separate courtesy visits to his office by the managements of Access Bank, Zenith bank and United Bank for Africa UBA added that compliance to the Presidential directive on the implementation of the TSA would promote effective management of public resources, thereby ensuring cost effectiveness and accountability.

Speaking further, the AGF noted that the implementation of TSA will facilitate compliance with sections 80 and 162 of the 1999 Constitution of the Federal Republic of Nigeria as it paves way for the timely capture and payment of all revenues into appropriate accounts of government.

The words of reassurance came few weeks after the official circular issued by the Head of Service, Danladi Kifasi

In compliance with President Buhari’s directive on  the establishment and operation of TSA for e-collection of government receipts for all federal Ministries, Departments and Agencies (MDAs), a new account name and number for the Central Bank of Nigeria has also been released to the affected MDAs. The Account Name is “Accountant General (Federal Sub-Treasury)” while the Account Number is 3000002095.

In a circular dated August 7, with reference number HCSF/428/S.1/120, the Head of Service of the Federation, Danladi Kifasi, said compliance takes effect from the date of the circular.‎

Kifasi said government has put in place effective monitoring mechanisms to ensure strict compliance with the new accounting guideline. He warned that: “All Accounting Officers, Directors of Finance and Accounts, Directors of Internal Audit, Heads of Accounts and Heads of Internal Audit Units of MDAs and other arms of government are enjoined to give this circular the widest circulation and ensure strict compliance to avoid sanctions.”

The MDAs are currently grouped into eight categories, namely, MDAs fully funded through the Federal Government Budget and include all Ministries, Departments, Agencies and Foreign Missions. In this category, all ‎collections from these agencies are to be paid directly into the TSA (e-Collection) and expenditure to be drawn from Consolidated Revenue Fund (‎CRF) based on Annual Budget.

The second category is ‎MDAs “partially funded” through the Federal Government Budget but generate additional revenues. These include teaching hospitals, medical centres, federal tertiary institutions, among others. All revenue collection from the agencies under this category are to be paid into the TSA except (Union Dues). ‎Sub-accounts linked to TSA to be maintained at CBN, and that system will be configured to allow access to funds based on approved budget.

The third category are ‎MDAs not funded through the Federal Budget but expected to pay operating surplus/25 per cent of Gross Earnings to the Consolidated Revenue Fund (‎CRF). These are ‎Central Bank of Nigeria (CBN), Security and Exchange Commission (SEC), Corporate Affairs Commission (CAC), Nigerian Ports Authority (NPA), National Communication Commission (NCC), Federal Airport Authority of Nigeria  (FAAN), Nigerian Civil Aviation Authority (NCAA),‎ Nigeria Deposit Insurance Corporation‎ (NDIC), the Nigerian Maritime Administration and Safety Agency (NIMASA), ‎Nigerian Shippers Council (NSC),  among others.

All collections from these agencies in this category are to be paid into the TSA except (Union Dues), ‎‎Sub-accounts linked to TSA to be maintained at CBN and ‎‎system will be configured to allow access to funds based on approved budget‎.

The fourth category are MDAs that are funded from the Federation Account and these include‎ Nigerian National Petroleum Corporation (NNPC), Federal Inland Revenue Service (FIRS), National Customs Service (NCS), Mining, Minerals and Sustainable Development (MMSD), Department of Petroleum Resources (DPR‎).‎

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All federation revenue generated by these agencies are to paid into Federation Account.‎  All independent revenue generated by these agencies to be paid into the TSA, the Federal Government’s‎ share of the Federation Account is to be paid into consolidated revenue fund. ‎The‎ statutorily approved cost of collection to be deducted from Federation Account to meet budgeted expenditure‎.

The fifth category are ‎‎agencies funded through the Special Accounts  (levies). These are Nigerian Railway Corporation (‎NRC)‎, ‎the Raw Materials Research and Development Council (RMRDC)‎, Petroleum Technology Development Fund (PTDF),‎  National Information Technology Development Agency (‎NITDA), among others. ‎Sub-accounts in this category linked to TSA to be maintained at CBN and that ‎ system will be configured to allow access to funds based on approved budget‎.

The sixth category is the ‎profit oriented public corporations/business enterprises like ‎Bank of Industry (BoI), Nigeria Export Import Bank (‎NEXIM), Bank of Agriculture (‎BoA), Transcorp Hilton, among others. ‎Dividends from these agencies are to be paid into the TSA‎.

The seventh category are ‎revenue generated under Public Private Partnership and ‎MDAs with revolving funds and project accounts.

The eighth and final category are ‎drug revolving funds such as (teaching hospitals, universities) fertilizer revolving fund, Roll-Back Malaria, Sure-P, among others.

The ‎Federal Government’s portion of the collection is to be paid into TSA. ‎‎Partners’ portion of the revenues are to be transferred to the partner’s accounts‎. These include all incomes from PPP arrangement e.g. production of international passports, seaport concession arrangement, among others.

Meanwhile, ‎‎Project account (revolving funds) are to be maintained at CBN, collection (IGR) from these agencies are to be paid to TSA and that system will be configured to allow access to funds based on approved budget‎.

The circular was sent to all chief executive officers as well as accounting officers of major federal institutions including those in the Presidency, Financial Institutions, Commissions, Ministries and Departments, Security Agencies among others.

While the TSA would ensure greater transparency and accountability in public finance, especially at the federal level, some critics are concerned that it may drive a liquidity squeeze on the commercial banks and negatively influence interest rates to rise. By such argument jobs may be loss while borrowing would drop significantly.

Group Managing Director, FirstBank Nigeria Limited, Mr. Bisi Onasanya, was reported to have said that “Banks have had significant reduction in their level of government’s deposits. It is not just because of the reduction in oil price, it is also because of the restructuring of the fiscal accounting, in which the TSA has been implemented.”

Onasanya added that the new system has almost moved away public accounts at the federal level from the vaults of commercial banks into the central bank which has reduced the liquidity in the financial sector.

According to some analysts banks operating in the country may be losing about N2trn deposits to the CBN, with the implementation of the TSA.

Afrinvest Group, a Lagos-based financial investment house has issued a statement saying that: “Whilst the directive issued came as the first offi cial statement by the Presidency on the TSA, the Nigerian National Petroleum Corporation, NNPC, had earlier began withdrawing its funds from banks for retirement into CBN. This had an impact on liquidity level in the banking system, resulting in a surge in money market rates during the period as banks scrambled for funds to cover their liquidity positions.

“With the TSA implementation now extended to all federal MDAs, the Nigerian banking industry, on an aggregate basis, would be affected in terms of deposits and funding cost structure.”

Global rating agency, Fitch has also sounded the alarm that Nigeria’s financial sector is likely going to experience turmoil.

The agency noted that the country’s banks are heading into financial and operational storms in view of what it called the increasingly difficult conditions under which they are operating. This it said is likely to result in a sharp deterioration in profitability, asset quality, liquidity and capital ratios.

In its report the Director, Financial Institutions, Mahin Dissanayake, Fitch Ratings said Nigerian banks are highly exposed to the domestic market and that the economic slowdown would affect their performance.

There are positive reports on the new policy. The Director, Corporate Communications Department of the Central Bank of Nigeria, Ibrahim Muazu said the TSA as a government policy, is part of the national payment initiative aimed at modernising the country’s payment system. MDAs are complying and it is going to have positive impact on the economy.”

In his contribution, the Chief Executive, Economic Associates, Dr. Ayo Teriba said that it is absolutely necessary for government to determine what comes to its cover at every given time. Speaking on a Television programme, Teriba noted that “Prior to this time, many government agencies had the autonomy to receive money on behalf of the federal government or on behalf of the federation account and they had the liberty to spend part of the revenue because they were only required to remit only a fraction of the amount that they declared.”

According to the privilege was increasingly being abused. He expressed optimism that the new system is going to be beneficial to the country when all revenues accrued to the government come to one account as all agencies will go through appropriation process without exception. He allayed the fear that the treasury single account system would encourage bureaucracy and delay in access to funds by saying that there was no sacrifice that is too much to be taken to achieve transparency.

“We should learn to take this country to a stage where we learn to be efficient. We cannot use the issue of efficiency to promote opacity. We need transparency. A situation where you don’t know how much is due to government and government revenue gets intercepted will make it difficult for government to embark on developmental project and equip the military”, he said.

Nevertheless, most financial analysts who spoke to the Economic Confidential insist that if the financial regulators become more proactive and institute measures to correct likely lapses in the implementation of the policy, the fears from some quarters may be allayed.

The new system of accounting, Economic Confidential gathered is part of campaigns for zero-tolerance for corruption as it will consolidate all cash resources of the government, in all MDAs purposely located in various bank accounts, under one unified management and control.

Apart from availing the government of effective control of cash resources, TSA guarantees timely information on its cash resources on real time and online and harmonizes government servicing of its obligations. Government should therefore, overhaul the capacity of its financial agencies to cope with challenges associated with enforcement of the provisions of the TSA. Where necessary, the government should seek appropriate legislations and legal backing to facilitate the relevant regulatory environment towards its successful implementation.