One Year After, TSA Slowing Economic Recovery | Independent Newspapers Limited
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One Year After, TSA Slowing Economic Recovery

economic recovery
Posted: Aug 23, 2016 at 4:30 am   /   by   /   comments (0)

Nicholas Uwerunonye And Mark Isuma


Despite efforts by the Federal Government to inject liquidity into the economy by seeking powers to loosen fiscal restrictions from the National Assembly, indications are that the country may not climb out of its current recession anytime soon if the treasury single account (TSA) remains in full implementation.

Analysts say the continued operation of TSA, which has mopped up funds from the banking system, would delay any effort at reflating the economy, adding that the economy needs funds to operate optimally.

As widely reported on Monday, President Buhari is seeking emergency powers to reflate the economy. The president, by the proposal to the lawmakers, hopes to tinker with some financial restrictions in the Procurement Act and raise mobilisation fee from 10 percent to 50 percent for government contractors. The anticipated effect of these is to inject cash into the contracting economy.

Independent investigations indicate that the measure may just be at best a stop-gap without a robust banks’ liquidity to stimulate economy.

The Federal Government in 2013 instituted the TSA under the Government Financial Management System (GFMIS), a finance reform measure, when it was discovered that about N1.3 trillion of government funds were sitting in various bank vaults generating zero interest and being loaned out to government at interest.

Last year, the government then ordered that all public funds be returned to the Central Bank of Nigeria (CBN) by mid-September 2015. As at July this year, TSA funds with CBN had hit N3.2 trillion.

Under previous practice, argued some policy wonks, the money in various banks could have been used to service businesses in trade, small investments and growing the respective banks where they domiciled. It was on the basis of these banking activities that the Nigerian economy was rebased, making it the largest in Africa until recently.

But with the TSA, government hopes to force the money deposit banks (MDBs) to do real banking by identifying areas of the economy to invest in and make gains without relying on public funds.

With various sectors of the economy showing signs of distress, and Kemi Adeosun, Finance Minister, confirming that the country is in recession, it may well appear that the gains of TSA hasn’t been manifest.

“In truth, the TSA has greatly affected banks, badly,” explained Austin Onwudinjo, ex-bank manager, financial consultant and analyst of the monetary sector of the economy, adding that the basis for implementation of TSA was sound economic policy.

His view, however, contrasts with developments in ministries, departments and agencies of government (MDAs). A government source told Independent for instance that most MDAs are currently experiencing operational hitches as a result of non-availability of funds.

For instance, the Nigerian Ports Authority (NPA) and the Federal Airports Authority of Nigeria (FAAN) are undergoing hitches in their operations.

For FAAN, this has affected airline operators, resulting in massive relocation to neighbouring countries as FAAN continues to fail in providing key services in the nation’s airports.

The TSA operation too has affected the operation of the Ministry of Finance and its agencies. The ministry has seen a reduced number of staff carrying out projects assessment, a key staff of the ministry has said refusing to be quoted.

Responding to text messages sent by our correspondent, the source said many staff of the ministry just go to office to fulfill all righteousness instead of their regular mandates of carrying out assessments of projects.

“Staff are complaining because there is little to do. You can’t reflate the economy without projects and roles from the staff.

“To get money for monitoring alone is hard. That is why only the minister is seen going here and there. Everybody is tired of the approach to this TSA thing,” the source said.

A management staff of the University of Abuja told Independent that TSA has affected their operations too. The staff, who did not want his name in print for fear of reprimand while acknowledging the importance of the account, blamed the manner in which it was implemented.

“The accounting policy is good, we commend the initiators of the policy, but I must add that it is fraught with errors. You have money meant for the running of institutions and other agencies of government in one account yet we don’t have access to it.

“There was a time we suggested a special designation to allow the institutions and other essential government agencies which are ‘special’ agencies to deduct operational funds before remitting the rest to government. But that was rejected.

“You can bear witness to series of protests being carried out in University of Abuja and other schools because we don’t have access to funds to fulfill our financial obligations,” he lamented.

Nasir Isa Fagge, former president, Academic Staff Union of Universities (ASUU), also criticised full implementation of TSA.

“TSA has made it difficult for the universities to discharge their duties, especially in research. TSA is incompatible with the autonomy of universities.”

But reacting to these, Festus Akanbi, Media Assistant to the Minister of Finance, stated that the claim that TSA has affected the operations of MDAs is more imagined than real.

“There is a mechanism that was put in place for accessing emergency funding. Operations in the MDAs are going on smoothly,” he said.

But what good is N3.2 trillion in a single account in CBN if it is not put into beefing up the economy, asks some pundits on the matter?

“The real question is what has the DMBs done with public funds before now,” asked Onwudinjo by way of responding to the poser.

“Government puts its money in these banks; the banks in turn put it on treasury bills with the CBN, making government borrow back their own money. Instead of these banks to give the money to those who want to grow the economy in the real sector, they place it on treasury bills. They would not give it to manufacturers or farmers to grow their business.

“The best they do is that they give it to players in the oil sector, same place government and CBN is funding. As you can see from this, the economy has not grown over the years. Yet at the end of the year, you will see banks declaring billions of naira in profit in an economy that is not growing.

“The truth about it is that if you are looking at the effect of TSA on the money industry, it has affected it badly but if you look at it from the economy in general, it is a better policy,” explained the ex-banker.

He also added that the argument for staggered implementation of TSA does not make sense.

“There is nothing like staggered implementation of TSA. If you want to implement it, you do so in one fell swoop. Previously you find a single ministry having 22 accounts. The new minister might not know some of them; only the DG or financial controller of the agency knows them.

“The account will just be there as fixed deposit, generating two to three percent into private pockets. But when everything goes into a single pot, it makes it easy for government to know what it is earning every month,” Onwudinjo stated.