Nigerian lenders are jittery over the pending
enforcement of the Treasury Single Account (TSA)
of government by the incoming Buhari
administration, BusinessDay interactions with
operators have shown.
The fear stems from the fact that the
implementation of this model, in addition to the
tight monetary stance of the Central Bank of
Nigeria (CBN), would put a big squeeze on the
banks.
“There is the fear of liquidity squeeze due to the
likelihood of unification of government accounts by
the incoming Buhari administration. The fear is
borne out of the fact that with the Monetary Policy
Rate at 13%, Cash Reserve Ratio (CRR) at 20% and
75% for private and public sector deposits
respectively, its implementation would be tough for
banks,” says a senior industry player.
Also, returns of lenders in Nigeria, Africa’s largest
economy, driven substantially by net interest
margins, would further be crimped by the TSA
implementation.
This is because the single account, which is
supposed to unify and monitor incoming and
outgoing government transactions for transparency
and accountability, will deny the banks of over
N60billion funds belonging to Ministries,
Departments and Agencies (MDAs) currently in the
vaults of banks.
But the much touted stern stance of Buhari’s
administration on corruption is sending jitters
through the lender community, as they fear that its
implementation may be on the prority agenda of
government.
The argument is reinforced by the transparency
that the implelemtation would bring to bear on
Buhari’s government.
“In our opinion, the implementation of a Single
Treasury Account (STA) is expected to block
revenue leakages within the government
parastatals as the Ministry of Finance will be able
to monitor the inflows and outflows, hence
augment the reduction in oil revenue due to falling
oil prices,” says Ayodeji Ebo, analyst with Afrinvest
Securities limited.
Chibuke Uche, member of the Monetary Poliocy
Committee (MPC) in his recent contribution to
deliberations at the meeting, said, “it has indeed
become very clear that total economic
restructuring is an urgent imperative. Although the
falling oil price is making the fiscal space more
complicated, I believe that there is still room for
improvement.
“One area that can be easily improved upon is the
reduction of wastages in government finances,
which is as a result of poor financial management.
By far the greatest single example of this, is the
absence of the Treasury Single Account (TSA)”.
The outgoing government had failed to enforce the
policy which would have compelled MDAs to
transfer the multi-billion internally generated
revenue into the Treasury Single Account despite
the directive by Jonah Otunla, Accountant-General
of the Federation, that all such monies be paid
through electronic channels called e-Collection,
directly to the Consolidated Revenue Fund at the
CBN, through a process called the e-Collection.
The deadline expired since February.
Efforts by the government through the CBN and
Federal Ministry of Finance by engaging chief
executives of MDAs and banks on the need for
adherance to the policy failed, as the alliance
between both parties was so strong that
government could not make a headway.
Informed industry sources say that chief
executives of some of the high revenue yielding
government establishments are frustrating
government’s moves towards single accounts
because of their pecuniary interest from such
deposits.
Some banks, including, tier one lenders, are said to
be acting in similar vein because this channel
provides them cheap funds through the mopping
up of dollars and speculating, thereby putting
pressure on the naira, which is now a major
challenge for the CBN.
“While the outgoing government has failed in its
efforts to help itself in plugging leakages in the
system, especially in the face of low oil incomes,
the opportunity has provided itself for Buhari to act
fast, as soon as he assumes office and save the
situation that has degenerated,” say
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