PROSPECTS AND CHALLENGES OF TREASURY SINGLE ACCOUNT IN A DEVELOPING ECONOMY (A CASE STUDY OF NIGERIA)
1.1 BACKGROUND OF THE STUDY
Earlier in February, 2015, the 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 consolidated Account domiciled with the CBN. This marked the beginning of the full implementation of Treasury Single Account (TSA) system in Nigeria.
Treasury Single Account is one of the financial policies implemented by the Federal Government of Nigeria to consolidate all inflows from all the ministries, departments and agencies (MDAs) in the country by way of deposit into Commercial Banks traceable into a single account at the Apex Bank in the country- Central Bank of Nigeria (Primetimes, 2015).
According to Adeolu (2015), Treasury Single Account is a public accounting system under which all government revenue, receipts and income are collected into one single account, usually maintained by the country’s Central Bank and all payments done through this account as well.
A TSA is a unified structure of Government Bank accounts that gives a consolidated view of government cash resources. (Pattanayak & Fainboin , 2015). Based on the principle of unity of cash and the unity of treasury,a TSA is a bank account or a set of linked accounts through which the government transacts all its receipts and payments.
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).
According to 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”; (Nigerian Constitution 1999). 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).
1.2 STATEMENT OF THE PROBLEM
The introduction of Treasury Single Account has posed a serious problem to the deposit money banks as the public sector funds constitute a large chuck of commercial bank deposit. The banks are faced with the problems of devicing means of mobilizing funds from private sector. This had lead to the return of era when women are employed by banks specifically for deposit mobilization using any means necessary to get funds. The introduction of TSA has also led to increase in deposit interest rates as a major means of inducing customers to make more deposits while the lending rate as well as the profitability of the banks continue to diminish. The general public sees the share price of these banks falling as investors attempt to price in the policy impact. Most of the money realised from revenue are being paid into multiple accounts that are being operated by MDAs in commercial banks obtained under the old constitution which is going against the new Nigerian constitution.
Also, government is lacking effective financial control over its cash resources can pay for its institutional deficiencies in multiple ways. This is why the study on the challenges of Treasury Single Account on Nigerian Banking sector and economy is very necessary.