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Not so all for TSA

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Maybe, you too get the impression that not everyone in government is enamoured of President Muhammadu Buhari’s Treasury Single Account public finance idea. Apart from disjointed and disorienting snippets, not even the Central Bank of Nigeria is thoroughly explaining the TSA to Nigerians.

That must explain Governor Ayo Fayose’s (maybe justified) stretching of the fiscal federalism concept to vow that Ekiti State will not join the TSA train. Ekiti State-born Law Professor, Akin Oyebode, must clarify Fayose’s legal locus. And for the records, the Nigerian Senate has found Fayose’s allegation that the TSA unduly enriched some individuals to be untrue.

Senator Dino Melaye insists that the TSA contravenes Section 162(1) of Nigeria’s constitution: “The Federation shall maintain a ‘Federation Account’ into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces, the Nigeria Police, the Ministry or department of government charged with… Foreign Affairs, and residents of the Federal Capital Territory, Abuja.” Clearly, it’s not all for the TSA.

Buhari must be standing on Section 80(1), “All revenues or other moneys raised, or received, by the Federation… shall be paid into, and form, one Consolidated Revenue Fund of the Federation,” and Section 80(4), “No moneys shall be withdrawn from the Consolidated Revenue Fund, or any other public fund, except in a manner prescribed by the National Assembly.”

The TSA sales pitch offers its unification and consolidation of government bank accounts for optimal utilisation of government cash resources. Ministries, Departments, and Agencies must remit their collections, still through commercial banks, to the CBN each day. Banks, that held about N2.2tn public funds by January 2015, can no longer use the float. They must have zero public funds balance at the end of every working day.    

In February 2015, the CBN, under the President Goodluck Jonathan administration, introduced Remitta e-Collection online platform for the collection and remittance of all government revenues into a CBN-domiciled Consolidated Account. So you see, the TSA is not a Buhari original.

But with the TSA, government agencies like the Nigerian National Petroleum Corporation, Nigerian Mining Corporation, and Nigerian Ports Authority can no longer lean on the self-accounting principle to withhold money from the government. This gives teeth to government’s financial control instrument, the Authority To Incur Expenditure.

This triumph will be clearer if you recall that while the three arms of the Federal Government spent N4.6tn budget in 2014, self-accounting government corporations, listed under the Fiscal Responsibility Act 2007, spent N12tn, with a casual walk, through the National Assembly! You can ask a former Minister of Finance, Dr. Ngozi Okonjo-Iweala, for confirmation.

A former CBN Governor, Prof Chukwuma Soludo, has mild concerns that the TSA will cause government money to sit idly in the CBN without stimulating the economy or earning interest for government. He advises government to use modern technology and transparent rules to track its funds, but keep them in commercial banks, through a “hub and spoke” model (think of a bicycle wheel), with the CBN as “the hub (and) the commercial banks… the spokes.”

From colonial and First Republic eras, governments had always kept public funds in commercial banks; the CBN was incorporated in 1958. The late Premier of the Western Region, Chief Obafemi Awolowo, revealed, in one of his books, that an agency of his government kept its funds in the now defunct National Bank of Nigeria.

You can be sure that the governments of Northern Region and Eastern Region kept funds in the Bank of the North and the African Continental Bank respectively. The Federal Government too kept funds in commercial banks like First Bank of Nigeria and Union Bank of Nigeria, where it later held shares through the Ministry of Finance Incorporated.

In 1986, the Babangida administration asked the MDAs to keep their funds in the CBN. As an accountant, this writer was responsible for moving the funds of a Federal Government agency from a commercial bank to the CBN in Owerri, Imo State. Electronic money transfer defeats the argument that the CBN can only discharge its responsibilities as banker to the government only if it has a wide network of branches.

Soludo’s CBN, with its albeit well-intentioned policy of creating mega banks, unwittingly scuppered Babangida’s arrangement. In their desperate bids for deposits of any kind, the banks went after the revenue of government utilities, like the National Electric Power Authority/Power Holding Corporation of Nigeria, Water Corporation, and Tax collection agencies.

Unconfirmed reports claim that some government funds went “missing” during the subsequent bank mergers and acquisitions exercise. You may recall that the Emir of Kano, His Eminence Mohammed Sanusi II, as Governor of the CBN, alleged that some NNPC funds went missing. He couldn’t tell how much, and no one is telling even now.

That is one thing that Buhari wants to tackle with the TSA. He also hopes to end or control the round-tripping of public funds; oil royalties, duties,taxes, dues, and utility bills transmuting into Treasury bills and bonds upon which the Federal Government pays costs to the banks– for the use of its own money!

There are concerns that the government could unwittingly revert to the days of the legendary Central Pay Officer, the omnibus cashier, who was slow in the collection and disbursement of public funds. Its systemic muddling sometimes led to non-receipt or non-collection of monies.

The TSA should not end up this way, though no one has quite explained how it will disburse funds. A systemic bottleneck could adversely affect the smooth operation of government organisations, like the NNPC, NMC, and NPA, whose business requires some degree of autonomy and self-accounting.

It’s going to be tough going for them to have to seek clearance before they can make payments as they go about their very dynamic everyday business. They are not your regular civil service agencies that run one-line accounting systems, spend according to amount voted, and can vary amount allocated to expense heads only on the authority of virements.

They should have some financial autonomy, but make regular remittances to government. Also, the Fiscal Responsibility Commission should make them regularly “disclose information relating to (their) revenues and expenditure; (investigate if they) violated any provisions of (the Fiscal Responsibility) Act; and if… satisfied that (any offence was committed)… forward a report of the investigation to the Attorney-General of the Federation” for prosecution.

To meet Soludo halfway, and perk up the economy, government should comply with Section 162(1) of the constitution, and allow personal income tax from the armed forces, police, Ministry of Foreign Affairs, and residents of the Federal Capital Territory, Abuja remain in the commercial banks.

Other funds could be placed as interest-yielding fixed deposits in commercial banks to provide loans to the real sector for use as working capital, to purchase conversion machinery, and enable private sector investment in infrastructure, like electricity and telecommunications. The Bank of Industry is currently disbursing textile industry intervention loans on behalf of the Federal Government.

Government should spend money in the CBN on running expenses of state, and provide infrastructure, like roads, rail and water corporation; it will trickle down to the commercial banks. But government shouldn’t borrow its own money, via Treasury bills, and pay interest anymore. It’s wrong headed, crowds out private sector, and raises the interest rate.

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