In a circular signed and released on December 28th, 2023, by the Honourable Minister of Finance and Coordinating Minister of the Economy, new guidelines were issued for immediate compliance by all Federal Government Agencies and Parastatals for the collection, utilization, and remittances of Internally Generated Revenue (IGR).
This is what some news platforms have mischievously and wrongly reported as a shutdown of Nigeria’s Treasury Single Account (TSA) which is regarded as Africa’s largest and most successful TSA initiative.
The Treasury Single Account, commonly known as TSA, was introduced by the Goodluck Jonathan administration in 2012 and fully implemented by the Buhari Administration in 2015. It mandates all Federal Ministries, Departments, and Agencies (MDAs) in Nigeria to keep and expend all funds solely from the Consolidated Revenue Fund (CRF) maintained at the Central Bank. TSA, which is a centralised bank account structure, is designed to provide the government with full and unhindered access to its funds at all times, real-time tracking of all outflows and inflows from a single point, and eliminate the need for short-term borrowing from commercial banks at high-interest rates by different MDAs in an uncoordinated manner.
The Bureau of Public Service Reforms (BPSR) reports that the implementation of TSA has saved the government over N10 trillion since its inception. The EFCC, ICPC, and other investigative agencies have also found the TSA of immense benefits in investigating suspected cases of corruption, fraud, or outright theft of government funds.
Previously, different MDAs would borrow money from commercial banks at exorbitant rates to cover budget deficits, while other MDAs had idle funds in separate accounts. TSA has eliminated this extremely inefficient practice that has cost the government huge losses, leading to substantial savings for the Federal Government. The former Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, estimates that TSA saves Nigeria N45 billion in interest payments monthly.
The latest circular by the Ministry of Finance only stipulates a review of a component of the TSA. This is not the first circular that would be issued on review of TSA operations and certainly will not be the last as the government continues to respond to issues in the management of its finances under the TSA initiative. The December 28, 2023, preserves the TSA in all ramifications and has removed nothing from it, as can be seen by anyone who is familiar with the workings of the TSA.
So what is changing?
Previously, MDAs self-managed TSA sub-accounts within the Central Bank of Nigeria, where generated revenues were deposited and utilized for MDA expenditures. This included MDAs choosing when to remit the statutory deductions to the Consolidated Revenue Fund (CRF). Going forward under the new guidelines, MDAs will now be provided with new sub-recurrent accounts into which what is due to them from government inflows will be automatically deposited in such accounts and the balance automatically remitted into the CRF. In essence, MDAs will have access only to their statutory share of government inflows without the possibility of inadvertent access and tampering with funds that should accrue
into the CRF.
For clarity, the details of how the latest circular affects each of the FGN MDAs are reproduced below
FULLY FUNDED MDAs: “All Ministries, Departments, and Agencies (MDAS) that are fully funded through the Annual Federal Government Budget (receiving personnel, overhead and capital allocation) and on the schedule of Fiscal Responsibility Act, 2007 and any addition by the Federal Ministry of Finance (FMF) should remit one hundred percent (100%) of their Internally Generated Revenue (IGR) to the Sub-Recurrent Account which is a sub-component of the Consolidated Revenue Fund (CRF);
PARTIALLY FUNDED MDAs: All partially funded Federal Government Agencies/ Parastatals (receiving capital or overhead allocation from the Federal Government Budget) should remit fifty percent (50%) of their gross Internally Generated Revenue (IGR), while all statutory revenue like tender fees, contractor’s registration, sales of government assets, etc., should be remitted one hundred percent (100%) to the Sub-Recurrent Account.
SELF FUNDED MDAs: All self-funded Federal Government Agencies/Parastatals (receiving no allocation from the Federal Government Budget) should remit fifty percent (50%) of their gross Internally Generated Revenue (IGR), including all statutory revenue lines like tender fees, contractor’s registration, sales of government assets, etc., to the Sub Recurrent Account”.
In summary, “the Office of the Accountant General of the Federation (OAGF), subject to the categorization of Agencies shall map and automatically effect direct deduction of 50% (fifty percent) on gross revenue of self/partially funded Agency/Parastatals and 100% (one hundred percent) for fully funded Agencies/ Parastatals as interim remittance of the amount due to the Consolidated Revenue Fund. This is to improve revenue generation, fiscal discipline, accountability, and transparency in the management of government financial resources and the prevention of waste and inefficiencies.”
The implementation of Nigeria’s Treasury Single Account (TSA) initiative is a good example of the crucial role of leveraging Digital Public Infrastructure for the digital transformation of public sector service delivery. By leveraging the Treasury Single Account, Nigeria continues to lead in digital transformation efforts and sets an example for other nations seeking to enhance their public services through centralized digital infrastructure.
Furthermore, the implementation of TSA by the Federal Government of Nigeria has contributed to the growth of indigenous technology, setting them up for export to other climes. Companies such as Remita and others have been at the forefront of providing payment and switching technology to drive TSA from inception, with many more companies being brought on board. This has not only created an increased economic opportunity but also fostered technical competency and economic development within Nigeria.
While the Tinubu administration and many more administrations after it will continue to evolve the TSA, there’s no doubt that the TSA is a key component of Nigeria’s public financial management journey. Its implementation fosters financial visibility, reduces costs, facilitates timely remittance of funds, and streamlines public service operations.
Collins Nweze is the Assistant Business Editor at The Nation.
………..
For Advertisement, Event Coverage, Public Relations, Story/Article Publication, and other Media Services, kindly send an email to: thelegendnews25@gmail.com. To stay updated with the latest news, health updates, happenings,Sports and interesting stories, visit thelegendnewsng.com . THE OBINJA MEDIA COMMUNICATIONS (Publisher of TheLegendNews/THELEGENDTV)
