If you are interested in your country’s economy, you might be interested to learn more about the Treasury Single Account in Nigeria. Most of the literature on the topic usually focuses on the benefits of TSA Nigeria, but the same cannot be said about ours. Check out this article, where we will talk about the TSA meaning, its advantages and disadvantages. Nothing will be left untouched.
What is Treasury Single Account?
So what is TSA exactly? It is a public accounting system, the purpose of which is to manage the government revenue and ensure that the payments come through the Consolidated Revenue Account (CRA) of the CBN (Central Bank of Nigeria). It was introduced in 2012 as a trial project and began its operation in 2015.
It covers all of the existing Ministries, Departments and Agencies (MDAs). However, companies in the oil and gas industry, as well as other joint venture partners’ accounts, are excluded from the TSA’s responsibilities.
One of the main reasons for the introduction of the TSA was to battle corruption in the country and make sure that government payments were transparent. In less than a year, this system has allowed the country to take control of ₦3 trillion in cash assets. But that is not the only advantage of it. Continue reading to find out more.
Advantages of Treasury Single Account
The introduction of the TSA has borne numerous benefits for the Nigerian government and the economy as a whole. We have already mentioned one advantage, but there are at least nine more. Let’s consider all of them:
- First of all, TSA allowed the government to discover and close over 17 thousand accounts in commercial banks that had a 0% interest rate. Among those accounts, the Federal Government also found and shut down quite a few fake accounts that were opened on behalf of the government. Those accounts were actually operated by private establishments, which did not benefit the government in the slightest.
- The establishment of the TSA helped the Nigerian Government get a stronger hold of its finances. With this new ability, it can have better plans for the good of Nigerian citizens and have the funds for the implementation of said plans.
- Another big benefit brought on by the TSA is that bankers and civil servants are no longer able to collect the 10% interests on government funds. This means that none of these people will be able to gain their fortunes on behalf of others, including the government.
- One of the biggest breakthroughs for the Nigerian economy and especially the MDAs is that they do not have to borrow funds from one another at ridiculous rates anymore. As there is a single account, any government structure can have access to it without paying outrageous fees to commercial banks.
- The money that belongs to the Federal Government is now under its full control and more secure than ever. As the CBN is one of the most infallible financial institutions in the country, it means that the government’s money is safe and accessible at any time. Not a single naira is unaccounted for.
- With TSA there began an era of new payment opportunities for both MDAs and the government as a whole. This means that all the MDAs are now connected to the CBN, so they can use its online banking features. In addition, the government is no longer tied to microfinance and commercial banks. It can now accept payments through all the possible channels, like digital wallets, credit/debit cards, POS terminals and so on.
- The previous point is enhanced by the fact that all of these new payment opportunities mean more revenue for the government. As it has all these different methods of payment, it can receive them all day, every day, including weekends. This also means that payments can get to their recipients quicker.
- With all of the government money in one place, it is now possible to audit all government transactions. This means that all transactions are monitored, and all the information on them (like the date or purpose of payment) can be easily accessed. The audit of the TSA also allows to monitor the state of different agencies and to adjust the budgetary allocation accordingly.
- And last, but definitely not least, TSA has moved the Nigerian economy one step forward to the future. As the whole system mostly depends on e-payments, it encouraged the development of indigenous software that was able to deal with the heavy burden of the nation’s finances. This software allowed Nigerian banking to get on a new (electronic) level.
Disadvantages of Treasury Single Account
As they say, nothing is perfect. Despite all of its advantages, TSA still has a few flaws. Here are a few of them:
- Firstly, the introduction of a completely new system is always hard. It is hardest when it comes to the banking system, namely its performance and liquidity. The introduction of TSA might put unnecessary pressure on availability of credit and interest rates.
- Secondly, the fact that the public corporations are also included in the TSA might distort the boundaries between the public and government sectors, and limit the operational independence of said corporations. They might lose their autonomy to introduce strategies that are commercially oriented. In fact, many universities can seriously suffer from the loss of autonomy.
- Another challenge of the TSA is that not everyone actually understands what it is, how it works or why it is important. Many people are confused or ignorant on the topic of TSA; therefore, the support for it has been lacklustre at times.
- It might actually surprise you, but the government has not figured out yet what to do with all the money that TSA brought in. When the system was just introduced, there was also a problem with releasing the funds to various MDAs. However, government officials claim that it has been resolved.
And now you know all there is to know about the TSA account in Nigeria. As you can see, it is a great system, but it is definitely not perfect. We hope our article has helped you shape your own opinion on this topic.