[Nigeria Business Forum] How will the Single Treasury System (TSA) affect the banking system in Nigeria?
On a regular basis we consult African professionals about their views on business and current economic situations. Today's question is:
How will the Single Treasury System (TSA) affect the banking system in Nigeria?
Stallone-Obaraemi Samuel, Senior HR Manager, TNS Global - Nigeria: "The concept of the Treasury Single Account (TSA) is simply saying: “We want to obey the law by making sure that all government monies and revenues are kept in a single place and regulated with a common set of rules as stipulated by law. We no longer want ministries, departments and various other government agencies to operate numerous accounts with loose financial control. We want to effectively control leakages.
"It is worthy of note that the 1999 constitution solidly provides for the consolidation of all government funds. The flagrant disrespect and disregard for this provision, with impunity, is startling. Is there any rule that we do not flout in this country? It appears for 55 years of our existence we have steadily ... read more.
Motola Oyebanjo, Client Service Director, Aerialview Marketing Communications - Nigeria: "The TSA is a requirement of the 1999 Constitution that was never fully implemented until now. It is a welcome development as it will improve accountability, cut down wasteful spending and ensure leakages are seriously reduced or stopped in our Public Finance Management.
"I also trust that instead of largely depending on public sector funds, our banks will now gear up and become more innovative in delivering quality banking services to the private sector.
"My only concern is that this system will not cause a re-emergence of skimpily dressed bank marketers seeking accounts by all 'means' necessary!"
Kayode Jesuseun, Founder, Whatproperty.ng: “It is obvious that Buhari's administration is determined to eradicate corruption from all government agencies in the country by enforcing full implementation of e-collection of all government revenues. However, It will adversely affect banking system.This is because of the fact that majority of commercial bank deposit comes from public sector. Imagine over N2 trillion estimated public sector funds that are usually in the custody of the commercial bank per quarter will not be accessible again by the bank.
“Another major implication of Treasury Single Account to banking system is the fact bank will drastically reduce loan and advances at least in short and medium terms while desperately looking for deposit from private sector with a very attractive deposit interest rate. Of course, the share price of these banks and profit generally speaking will drop as a result of the impact of the policy for a period and banks will begin to properly focused on true banking business."
Maria E. Auma, Founder, Blue Luxury Investments - Uganda: "My initial thoughts are that this is a good initiative by the Government of Nigeria. There is nothing more frustrating than accountability and lack thereof when it comes to finance and auditing. I was recently part of an audit exercise for a Government Institution that was very rigorous as it involved cross-checking measurement sheets and valuation certificates against actual project outputs. Like any project, we faced challenges in terms of finance, especially with regards to accountability amongst the different stakeholders. While I cannot irrevocably state that the entire process was smooth, I will say that the willingness of the donor to release funds was due to the confidence placed in the overall accountability of Government. We have had a Single Treasury System in Uganda for two years now and ... read more.
Ebenezer Isokari, Managing Director, Eben UK Resources - Nigeria: "Single Treasury Account (TSA) is a public accounting system under which all Government revenue, receipts and income are collected into one single account. The TSA is maintained by the Central Bank of Nigeria.
"The essence of TSA is to ensure accountability of Government revenue. The maintenance of a Treasury Single Account will help to ensure proper cash management by eliminating idle funds usually left with various commercial banks.All Government Ministries, Departments and Agencies are required to remit ... read more.
Ronke Lawal, Founder, Ariatu Public Relations - UK: “Whilst it is unfortunate that the banking sector will most likely lose a great deal of business from these changes, it is a necessary function to ensure great transparency and accountability. It also means that the banking sector in Nigeria will really have to step up its commercial and personal banking marketing initiatives as opposed to relying on governments funds. Banks will have to engage with their staff effectively and thus I hope invest in customer service training and improved banking products. In order for change to take place across Nigeria the TSA policy is vital as part of the overall fight against corruption.”
The TSA policy has been around for more than 5 years now but was again pressured to a halt by the banking community when it was revisited in 2014. Obviously, the banks have gone off course depending largely on cheap funds and playing safe with bonds and other money market instruments. Investments in the real sector have been at all-time lows as banks have refused to take investment risks, engage in intermediation to create wealth and jobs for the economy to earn profit in the process.
"A TSA is a unified structure of government bank accounts enabling consolidation and optimal utilization of government cash resources. It is a bank account or a set of linked bank accounts through which the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time. Therefore, all receipts due to the Federal Government or any of its agencies must be paid ... read more.
Chioma Nnani, Nigerian Author and Novelist: “The TSA sounds fantastic in theory - so fantastic, that one wonders why it hasn't always been the status quo. What changed? What set of circumstances led to the previous state of affairs, that the TSA now seeks to remedy? Whenever a system gives the appearance of perfection, it makes me nervous - because I trust the fallibility of humanity, too much. The seeming rigidity of certain systems can be the reason that they work - because they're not arbitrary. But they're run by human beings, whose understanding of "flexibility" could range from subjective to outrightly criminal.
“If the individual tasked with responsibility for a given TSA, isn't credible - it won't matter. It'll even make it easier for them to forget the difference between "private purse" and "public funds"; less paperwork to bother with, in order to cover tracks.”
Terser Adamu, Nigerian Business Blogger and Consultant: “Surprisingly, Single Treasury System (TSA) has been written in the Nigerian constitution since 1999. It is not a policy that Buhari has developed, but it is one that he is implementing.
“The strategy will restrict the diversion of public funds by public office holders. The Buhari Government aims to stop financial leakage. The advantage of TSA is that revenue generated will be better monitored, and there will be increased transparency in government finances. Government financial leakage has had a historical negative impact on the Nigerian economy.
“Getting rid of corruption or minimizing it seems to be one of the major objectives of this government, and I believe that TSA will play a big part in achieving this objective. I’m in full support of TSA.”
Chief Anayo Alozie, Managing Director, Iga-Shar Services - Nigeria: “TSA is likely to put weak banks in the system out of business or better still, I foresee new mergers in the banking system and more creativity on the part of the banks. Perhaps the banks in Nigeria will begin proper banking by looking for customers in the nooks and crannies of Nigeria and not depending on government deposits.”
We greatly appreciate your contribution to this forum!
Want to contribute?
Send your views to email@example.com