During a meeting with the Nigerian community in London on Thursday 4th February, President Buhari said about N2.2 trillion has been realised since the implementation of the Treasury Single Account (TSA), in his words;
“This government did not initiate it. It was the previous government. But it was so unpopular to the bureaucracy and the previous government for its own reasons couldn’t enforce it. But when we came and found that we were broke, we said this is the way to do it. And I will just tell you two examples to convince you. First, NNPC, the cow that was giving the milk had more than 45 accounts, ministry of defense, that is the military Army, Navy and air force had over 70 accounts. Tell me which account we can trace in these several accounts. So we enforce TSA. We said there must be TSA. By the end of December, coming to January this year, that is last month, we mopped up more than N2.2trn which we have used through the bureaucracy system to raise vouchers and sign cheques so that they don’t go into the next budget.”
For the benefit of those who are not very familiar with the concept of TSA, I shall try to explain it simply. A TSA 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 the end of the day. To put this in context, prior to the adoption of the TSA, all Ministries, Departments and Agencies (MDAs) of the Federal Government had their own individual bank accounts; as a consequence it was quite difficult for the federal government to get an accurate account of its overall cash revenue and to know which MDAs had surplus cash or less. Some of the implications of this was that government being unaware of this information engaged in unnecessary borrowing thinking they were cash-strapped while in fact there might have been excess cash; secondly, cash balances of these MDA’s were left in bank accounts when they could have been invested in revenue generating activities and thirdly there were instances where personnel in these MDA’s used these idle cash for personal purposes to the detriment of budget execution. It is important to note that the adoption of the TSA does not obliterate the need to distinguish between the individual transactions of the various MDAs (i.e their revenue and expenditure) for monitoring purposes as this can be done through efficient accounting systems rather than having money in different bank accounts.
From the foregoing, it is easy to see some of the benefits of a TSA. First, it increases transparency and accountability in the various MDA’s; Second it reduces government borrowing and consequently the costs of debt service which is currently estimated at N1trillion, about 1/3rd of federal government revenue before borrowing. In Kaduna state for instance, upon weeks of implementing the TSA, the state government recovered about N24 billion from 470 accounts operated in 23 states.
With this disclosure by Mr. President, I think it is worth commending the current administration for exerting the political will needed to bring MDAs into full compliance; given that this process was actually initiated by ex-President Goodluck Jonathan but was not successfully implemented.
To learn more about how a TSA actually works in practice, you can read the references below;