EFFECT OF TREASURY SINGLE ACCOUNT ON THE NIGERIAN ECONOMY

 CHAPTER ONE

1.0 INTRODUCTION

TSA is indeed a pre-requisite for modern Treasury management which is considered as an effective tool for Government through the finance ministry, keep track and have oversight of all its cash resources. Economic development is the development of economic wealth of countries, regions or communities for the well-being of their inhabitants. From a policy perspective, economic development can be defined as efforts that seek to improve the economic wellbeing and quality of life for a community by creating and/or retaining jobs and supporting or growing incomes and the tax base.

However,thelevelsofcompliancebyMDAshavebeenverydismalandsomeAccountingofficersareevenreluctanttomakereturnsoftheseunspentbalancesalongwithcopiesofTreasuryreceiptstotheAccountantGeneraloftheFederationorState.AdoptionofTSAwillensurestrictcompliancetothisobligationespeciallythattheAccountsarealreadywiththeCBN.

1.1 Background of the Study

The background of Treasury Single Account (TSA) is in line with the presidential Order No. 55 (2011), which stipulated that the Bureau of Treasury (BTR) will institute a Treasury Single Account to receive and remit collections of internal revenue taxes/customs duties from Bureau of Internal Revenue/Bureau of Customs, authorized money depositing banks and also National Government Agencies from authorized government depository banks. The TSA will be maintained at the Central Bank of Nigeria (CBN), shall tally with the policy of government on control of its each resources and financial management and will also allow the unionism of the structure of bank accounts of the government to ease consolidation and optimal dispensation of cash resources of the government (Ahmed, 2016).

The Central Bank of Nigeria (CBN) in November 2013 had called for an urgent implementation of a financial reform known as “the Treasury Single Account (TSA)”. This became imperative in view of the quest to properly manage the country's liquid financial resources for rapid economic development. The CBN stated this in a communiqué at the end of its 235th Monetary Policy Committee (MPC) meeting where it noted that TSA was essential for consolidating and managing government's cash resources. The Committee looked at the Treasury Single Account (TSA) as some sort of a uniform kind of a bank account which enables consolidation and optimal utilization of government's cash resources. It is a Bank account or a set of linked Bank accounts through which the government transacts its receipts and payments and gets a consolidated view of its cash at any particular time (CBN. 2013).

Lack of effective control over cash resources can lead to arbitrary decisions, massive corruption and frauds, and the inability of government to pursue sustainable economic development and by implication economic growth. This scenario also led to the preponderance of existence of several and multiple government bank accounts outside the view and control of the government treasury, an arrangement referred to as “fragmented government banking arrangement”. Putting in place effective cash management in the treasury such as the establishment of a unified structure of government bank accounts via a Treasury Single Account (TSA), could solve these problems by improving cash management and control (Pattanayak &Fainboin, 2010).

Given this noble objective of TSA and the good intention of government, manyNigerians are not seeing with that same good intention. Some feel that the policy is another conduit pipe of defrauding the government by some few privileged individuals. The purpose of this research work is to x-ray the effects of Treasury Single Account on the Nigerian economy.

1.2 Statement of the Problem

The directives by the President that all treasuries accrued to the Federal Government and its agencies shall be paid into the TSA institutionalized and operated with the CBN has been conceded as a commemorative step in the right direction. It is seen as one of the strategic and tactical measures instituted in the present administration to deter fraudulent practice and clamp down corruption

(Yusuf, 2016). 

A recent study by Kanu (2016) on the effect of TSA implementation on liquidity and performance of banks notes that by implementing TSA in Nigeria’s public accounting system, the liquidity base of banks have suffered and the performance/activities of banking sector have plummeted. Also the study of Isaac (2015) had similar findings with Kanu (2016) that the adoption of TSA has no significant effect on Nigerian economy. This is contrary to the recent study of Yusuf (2016) on the effect of TSA on finance management in Nigeria’s public sector. Accordingly, Yusuf (2016) argued that the institutionalization of TSA has the capability of bunging financial loopholes, thus promoting accountability and transparency in the financial systems of public sector organisations. 

It was noted however from the empirical literature that TSA is a feed where investigation is ongoing and many authors had argued that the TSA adoption has led to procyclicality in the financial system of the economy where others argued that the adoption of TSA has no significant effect on performance of federal government MDAs and there are fewer and scanty literature to buttress the issue. This as a result makes the empirical evidences on effect of TSA on performance of MDAs inconclusive and inconsistent. But more importantly, no study has been done on the effect of TSA adoption on performance of federal government MDAs with reference to Federal Inland Revenue Services (FIRS), Adamawa State Office. It is in view of these gaps and scanty literature to buttress on the issue of the effect of TSA in the economy of Nigeria that this study is focused. 

1.3 Objectives of the Study 

The main objective of this study is to examine the effect of Treasury Single Account on the Nigerian Economy. Other specific objectives include: 

1. To examine the effect of TSA adoption on the performance of federal government MDAs in Adamawa State.

2. To determine the extent to which TSA can prevent financial leakages in the public financial management.

3. To determine the relationship between TSA and public financial management.

4. To examine the level of compliance in the application of TSA in our tertiary institutions.

5. To ascertain if the treasury single account entrenched transparency and accountability in public financial management.

1.4 Research Questions

To achieve the above stated objectives the following research questions were formulated:

1. What is the effect of TSA adoption on the performance of federal government MDAs in Adamawa State?

2. To what extent can TSA prevent financial leakages in the public financial management?

3. What is the relationship between TSA and public financial management? 

4. What is the level of compliance in the application of TSA in our tertiary institutions? 

5. Has the treasury single account entrenched transparency and accountability in public financial management?

1.5 Significance of the Study

The result from this study would go a long way to enlighten the policy makers and the government on the impact of TSA on the federal MDAs and would also serve as an input and guide to policy formulation. Because this topic is reasonably new, it would help the public understand fully the impact of TSA, it pros and cons and its effect on the economy. It would also contribute knowledge to literature for scholars and researchers interested in carrying out further research. 

1.6 Scope of the Study

This study focuses on federal MDAs, Adamawa State. Employees in the MDAs will be given questionnaires to answer. The study would cover the effect of Treasury Single Account in the economy of Nigeria. The respondents or participants of this research would be staff of Federal Inland Revenue Service (FIRS), Adamawa State. The study would be carried out in the year 2020.

1.7 Limitation of the Study

This study is limited by various factors which range from limited scope, limited coverage and limited time frame which has hampered the anticipated quality and standard of the work.

1.8 Definition of Terms

Treasury Single Account-Treasury Single Account (TSA)is a unified structure of government bank accounts that provide a consolidated view of government cash resources and position at any point in time.

Economic Development-Economic development is the development of economic wealth of countries, regions or communities for the well-being of their inhabitants. 

MDAs-These are Ministries, Departments and Agencies which are subjected to the policy of the TSA