The volume of liquidity in the banking sector will be affected by the President Muhammed Buhari’s order to all federal ministries, departments and agencies (MDAs) to pay all government revenues, incomes and other receipts into a Treasury Single Account, TSA ,with the Central Bank of Nigeria, CBN.
The 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 any given time.
The development may also constrain banks’ full year results for 2015, however, the federal government said the move was aimed at promoting transparency and facilitating compliance with Sections 80 and 162 of the constitution.
Agencies like the CBN, Securities and Exchange Commission (SEC), Corporate Affairs Commission (CAC), Nigerian Ports Authority (NPA), Nigerian Communications Commission (NCC), Federal Airports Authority of Nigeria (FAAN), Nigerian Civil Aviation Authority (NCAA), Nigerian Maritime Administration and Safety Agency (NIMASA), Nigeria Deposit Insurance Corporation (NDIC), Nigeria Customs Service (NCS), Nigerian National Petroleum Corporation (NNPC), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR), among others, are affected by the directive.
The Head of Research at Sterling Capital Limited, Sewa Wusu, who spoke on Monday, August 10, explained that the policy will affect the flow of liquidity in the banking system. He however, supported the decision by the federal government to fully implement the TSA, saying it would bring about transparency and effective revenue management.
He stressed that the decision to fully enforce the policy would help to ensure the consolidation of government’s revenue. He argued that prior to the initiative, government funds in banks were fragmented, a system that gave room for corruption.