Various reactions have trailed the directive by the Federal Government that Federal Ministries, Departments and Agencies (MDAs) must now implement Treasury Single Account (TSA), with Financial analysts in the country saying that the move will further weaken earnings in the banking sector, therefore leading to job loss.
The TSA is a unified structure of government’s bank accounts that enables consolidation and optimal utilisation of government’s cash resources. It 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 move was aimed at promoting transparency and mitigates diversion of public funds thereby 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.
However, experts are of the opinion that the policy may also constrain banks full year results for 2015, as the MDAs’ withdrawal of their accounts from the banks would lead to more than N60billion leaving their vaults at a go.
The problem may be further compounded by an earlier policy directive by the Central Bank of Nigeria (CBN) on the harmonization of the Cash Reserve Requirements (CRR) on public and private sector deposits, they added.
There have also been fears about the capability of the CBN in handling the volume of transactions, which are likely to increase as a result of the policy.
Note that when the policy comes upstream, all receipts by MDAs will be made directly to the Consolidated Revenue Fund at the CBN, through an electronic channel process known as e-Collection.
TSA implementation is not going to be limited to the federal level, with the Kaduna State governor, Nasir el-Rufai already enforcing closure of accounts of the government and its ministries and agencies with commercial banks and other states may follow suit.
The developments is certainly going to be unpleasant for the banks and their workers and may lead to massive job cuts in the sector in addition to cut-throat de-marketing by the competing banks.