Four threats facing Buhari’s TSA Policy

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In the long history of Nigeria’s attempt to take full control of the management of its cash assets and thereby fight corruption, the adoption of the Treasury Single Account (TSA) has been described as one of the most laudable reforms ever embarked on by any government.

TSA which was first introduced as a pilot scheme by former president Goodluck Jonathan in 2011, was ordered by President Muhammadu Buhari in September 2015 to be fully implemented.

Although, TSA has proven to be an effective fiscal management strategy, with its major strengths being the ability to provide government with a consolidated view of all local and foreign cash flows of all MDAs at any time and elimination of transaction delays, the gains recorded so far by the policy may be transitory if certain bold steps are not taken.

This is because, in the last two years, it has been observed that TSA has been aggressively resisted under different guises by powerful individuals and agencies within and outside government. Most of these hawks are those who had succeeded in bleeding the economy to near-death before the implementation of the policy. While we may think they have not achieved much success so far in derailing the policy due to the tough stance of the president, they only need to be given just a little more latitude to perfect their evil deeds before we witness the fall of the celebrated TSA. God forbid. But prayers may simply not be enough. Bold steps need to be taken!

The Federal Government, counting gains earlier in the year, said that the implementation of the TSA has over the last 2 years continued to save Nigeria about N4.7 billion monthly on bank charges and has processed over N7 trillion worth of local transactions that can now be easily accounted for on an MDA-by-MDA basis as at March 2017.

In the past, the amount saved on bank charges would have been pocketed by commercial banks or custodians of government revenues hidden in known and unknown bank accounts. According to government, so far, over 20,000 of such bank accounts have now been consolidated into the TSA now held at the Central Bank.

In the intervening period also, Ministries, Departments and Agencies, who previously remitted disputable amounts to the Federal Government at their convenience are now forced to remit higher amounts since there’s full visibility of all transactions. For example, the Joint Admission and Matriculation Board’s (JAMB) which used to remit an average of N3million annually remitted N8billion in 2017 alone. MDAs are also now forced to instantly remit billions of naira deducted as withholding taxes from government contractors and suppliers directly into the FIRS account at the CBN as against the old regime where such funds find their way into private accounts held in commercial banks where they generate interest for government rats and their collaborators in the banks.

However, despite the huge gains associated with TSA, the continuous existence of the policy faces great threats not only from forces outside government but those within it. Unfortunately, apart from repeatedly lauding the policy and regaling us with the successes achieved so far, government doe not seem to have put in place clear structures and modalities to ensure total compliance with the policy by its ministries and agencies. More worrisome is the recent unearthing by the House of Reps that some agencies of government have been able to procure “presidential exemptions” from TSA under yet to be explained circumstances.

Investigations have shown that there still exist a gamut of lapses that continue to dog the seamless operation and represent real threats to the sustainable success of the entire TSA policy.  Here are some of the lapses:

Failure to sensitize relevant stakeholders

As critical as the TSA policy is to the Nigerian economy, it is unbelievable that till date, no serious effort has been made by the government towards a proper stakeholder engagement that will bridge the knowledge gap, boost the confidence of the public in the policy, drive its acceptance and support its long term success.

It is established that majority of stakeholders within and outside government are simply not aware of the most basic things about TSA. Whereas policies that are not as important as TSA are well promoted, the TSA has not benefited from any sensitisation whatsoever of citizens who are expected to comply with it or be aware of its effect on the national life. There is also no evidence of a structured approach to regular interaction among relevant stakeholders to evaluate implementation progress and recommend improvements to such a significant national initiative.

Flagrant Non-compliance

Some MDAs have been revealed as flagrantly disregarding the TSA guidelines and have continued to hold funds outside the CBN under different guises while some are hiding under a “presidential exemption” that shows how the office of the president is cheaply brought into mundane activities on a daily basis; an anomaly which could shake the whole essence of the policy.

The basic expectation is that government should have put in place from inception in 2011, a robust framework to guide stakeholders on TSA adoption, compliance and applicable sanctions. This however does not seem to be the case as there’s no single record of any public official that has been sanctioned after discovery of non-compliance with TSA. Rather, government is the one being accused of granting exemption letters to some. What is the justification for such exemptions? And why is the government not tracking down and sanctioning those who fail to embrace the system.

No doubt, some MDAs have tenable excuses and have been very open about their current challenges with the TSA, but instead of seeking to be exempted, government must work out ways to accommodate them within the subsisting policy framework even if it means some technical tweaks need to be effected. An option should however never be exemption as this is one loophole that will be richly exploited to kill the policy.

It is strange that two years down the line, some revenue generating agencies still have millions of dollars and naira stashed in commercial banks.

NNPC has been famously accused of keeping N50billion outside of TSA; NPAs funds to the tune of millions of dollars are still being held by Intels in about four or five commercial banks; Some universities have gone into convoluting relationship with banks and other entities to hold government funds outside the CBN under different arrangements; While some MDAs remit bulk transactions into the TSA without any traceable breakdown of how the funds were arrived at. Indeed, leakages are not stopped by blocking some holes while leaving others unattended to.

Failure to incorporate foreign transactions

Six years down the line, only the Minister of Finance or the CBN governor can explain why government’s foreign transactions are not captured within the TSA system contrary to the design of the scheme from the very first day. Foreign denominated revenues accruing to Nigeria at home and from other endeavours abroad are currently not having visibility under TSA for unknown reasons. This entirely defeats the whole essence of TSA.

Could some people be benefitting from this apparent government-sponsored non-compliance or why has this not happened after six years and no one seems to be troubled or insisting it should be done?  Thanks to the House of Reps who brought this to light.

 

Non-payment of fees to Technology and Service Providers

Anyone who has heard and objectively analysed the story of how the TSA Technology Payment Gateway provider and the banks were forced to return fees for revenue collection services rendered based on a valid contract with government will not fail to be shocked at the arm-twisting antics of government officials under a democracy.

Revised fees for revenue collections determined at government’s sole instance with any bearing to the subsisting contract was only paid to the technology providers and the banks almost two years after they were initially forced to return earned fees. Investigations reveal they have not been paid arrears of fees for services rendered since May 2016 neither are they allowed to charge fees for current services and have all the same been mandated to continue to provide non-stop revenue collection services to Government that has resulted in the collection of trillions of Naira into its coffers.

One is tempted to say that there is more to this issue as it’s inconceivable that Government can be riding on the sweat and blood of indigenous service providers to showcase the success of one of its most successful policies while owing billions of Naira in unpaid service fees.

As reported by Financialtechnologyafrica.com, “TSA collections fee is the cheapest in the public sector as against NPA/Intel’s Pilotage Services collection fee: 28% (in Forex); Nigeria Customs cost of collections fee: 7%; FIRS cost of collections fee: 4%.” The question therefore is, why is the payment of the agreed 1% contracted service fees being delayed? The CBN Governor, the Accountant General of the Federation or even the Minister of Finance should be able to unearth this riddle to avoid jeopardising the TSA.

In conclusion, entrenching the culture of transparency and accountability in a nation famous for corruption is a big struggle. However, complete compliance with the TSA policy is needed to put the country’s development on the right trajectory.

The TSA is an excellent initiative and sustainability beyond the current administration must be secured. Government must continue to interact with stakeholders and assure them of the credibility of the process; clamp down on defaulters and prosecute them; fully activate the foreign exchange component of the transactions; pay and promote the providers of the TSA Payment Gateway platform; and ensure that the TSA is adequately monitored and supported by law.

 

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