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TREASURY SINGLE ACCOUNT AND THE HARMONIZATION OF PUBLIC SECTOR FUNDS

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ABSTRACT

This study examined the relationship between the TSA and the harmonization of public sector funds. The study subjects consist of a limited number of sampling units, which represent the target population of Awka South LGA. Treasury Single Account is a public accounting system under which all government revenue or receipts are collected into one single account, usually maintained by the country’s Central Bank and all payments done through this account as well. A sample of 400 staffs was selected from the population using stratified sampling technique and purposive non probability sampling method. Data were collected from both primary and secondary sources presented in tables and analyzed using percentages and frequencies. Hypotheses were formulated and tested using Chi square method. It was discovered among other things that, staff training will improve employee’s performance in Awka-South Local Government Area. It was observed that there were observed leakages that led to the adoption of TSA in public fund management, it was also revealed that TSA implementation in Nigeria is associated with so many problems the study further revealed that TSA policy implementation in Nigeria has a lot of benefits to the Nigeria economy. Following the above findings, the researcher has recommended that government should make available infrastructural facilities and technological equipment for the MDAs for effective take-off of the policy in their respective locations and National workshops and seminars should be organized on geo-political basis to accommodate all the government functionaries, public servants, bank officials etc to stress the need and the benefits in the implementation of TSA.

TREASURY SINGLE ACCOUNT AND THE HARMONIZATION OF PUBLIC SECTOR FUNDS

ABSTRACT This study examined the relationship between the treasury single account (TSA) and the harmonization of public sector funds. The study subjects consist of a limited number of sampling units, which represent the target population of Awka South LGA. Treasury Single Account is a public accounting system under which all government revenue or receipts are collected into one single account, usually maintained by the country’s Central Bank and all payments done through this account as well. A sample of 400 staffs was selected from the population using stratified sampling technique and purposive non probability sampling method. Data were collected from both primary and secondary sources presented in tables and analyzed using percentages and frequencies. Hypotheses were formulated and tested using Chi square method. It was discovered among other things that, staff training will improve employee’s performance in Awka-South Local Government Area. It was observed that there were observed leakages that led to the adoption of treasury single account in public fund management, it was also revealed that treasury single account implementation in Nigeria is associated with so many problems the study further revealed that treasury single account policy implementation in Nigeria has a lot of benefits to the Nigeria economy. Following the above findings, the researcher has recommended that government should make available infrastructural facilities and technological equipment for the MDAs for effective take-off of the policy in their respective locations and National workshops and seminars should be organized on geo-political basis to accommodate all the government functionaries, public servants, bank officials etc to stress the need and the benefits in the implementation of TSA. public sector

CHAPTER ONE

1.0 Introduction

1.1. Background of the Study

Treasury Single Account (TSA) is a network of subsidiary accounts all linked to a main account such that transactions are effected in the subsidiary accounts but closing balances on these subsidiary accounts are transferred to the main account at the end of each business day. With the implementation of treasury single account, Ministries, Departments and Agencies of government(MDAs), will maintain their individual accounts with the commercial banks, but daily funding of their disbursements are made from the main account, which is resident with the CBN, just as their closing balance at the end of the day are transferred to the main account (chukwu, 2015).

It is a matter of administrative policy to consolidate all MDAs accounts with commercial banks into central consolidated account for the purpose of efficient and effective public financial administration. The reason is that public institution seeks to raise funds, spend and account for the funds needed for public expenditure. Thus, sound fiscal administration is of vital importance to government. It is of utmost importance that as revenue is generated from the citizens, it is also morally incumbent of the government to spend money efficiently and economically.  Treasury Single Account (TSA) therefore is one of the financial policies implemented by government to consolidate all the revenue from all the ministries, departments and agencies (MDAs) in the country by way of deposit into commercial banks traceable into a single account at the Central Bank. Based on this principle, treasury single account is usually maintained by the country’s Central Bank which performs over-sight function on all public revenues and payments made through this account. The purpose is primarily to ensure accountability of government revenue, enhance transparency and avoid misapplication of public funds. The maintenance of a treasury single account will help to ensure proper cash management by eliminating idle fund usually left with commercial banks and in a way enhance reconciliation of revenue collection and payment (Adeolu, 2015). Therefore, harmonization of public sector funds depends on treasury single account financial policy.

Harmonization of public sector funds is necessary if a country has a fragmented system for handling government receipts and payments through the banking system. This is a sign of critical weakness of public financial management that needs attention. Therefore, a country with fragmented government banking arrangements pays for its institutional deficiencies in multiple ways. This could be idle cash balances in bank accounts often fail to earn market related remuneration. Or, the government being unaware of these resources incurs unnecessary borrowing costs on raising funds to cover a perceived cash shortage. And moreover, idle government cash balances in the commercial banking sector are not idle for the banks, which they used to extend credit (Pattanayak and Fainboim, 2004). Sequel to the directive given by President Muhammadu Buhari, Federal Ministries, Departments and Agencies implemented Treasury Single Account (TSA) financial policy, which became effective in Nigeria during the third quarter of the year 2015. However, this financial policy was initiated by Former President Jonathan Goodluck in 2012, but was under consultation before his tenure expired in May 2015.  In August 2015, federal MDAs implemented the policy with immediate effect that led to full implementation of the scheme throughout the public sector at the federal level.

The Central Bank of Nigeria (CBN) opened a consolidated revenue account known as treasury single account to receive all government revenues and effect payments through the account. All MDAs are required to remit their revenue collections to this account through the individual commercial banks who act as collection agents. The bone of contention is that from the start of implementing TSA financial policy, the public sector in general experience economic chaos such as: late payment of salaries or inability to pay salaries in some states; no overhead for some office holders; increase in price of essential commodities, retrenchment in the banking industry, etc. This situation raise intriguing questions about the reasons of adopting TSA policy, the problems associated with the implementation of TSA and probable prospects of TSA policy in Nigeria.

It is worthy of research into this perplex situation about implementing treasury single account financial policy leading to economic chaos instead of improvement over the previous financial system in Nigeria. If a new centralized financial system like treasury single account replaces a former decentralized financial system, then it means that treasury single account is well formulated to rectify the lapses of previous financial system. Hence, it is inquisitive to examine if there are challenges in implementation process of perfecting treasury single account administration. Formulation of treasury single account financial policy alone cannot rectify the defects of the old system but how well the implementation process actually follows the procedures without encumbrances.

Technically, implementation of treasury single account plan of action is a critical path intended to curb corruption in public financial administration of all public establishments including Nnamadi Azikiwe University (NAU). treasury single account should have been a tool to combat corrupt practices and block corrupt personnel, eliminate embezzlement of funds by public officials and ensure adequate fund flow that will be channeled to critical sectors of the economy. Therefore, it is worthwhile to examine treasury single account financial administration in Nigeria.

1.2   Statement of the Problem

The reason of adopting treasury single account policy in Nigeria was not clear from the onset; it is also not clear how private-commercial banks in the country will be affected by the policy. Federal Government of Nigeria introduced the treasury single account (TSA) with emphasis to enhance efficiency of public financial administration to safeguard public fund for stable economic drive. However, it is doubtful about the implementation process as a result of irregular payment of civil servants’ salaries, increasing rate of unemployment, inflation and lack of clear intention about the financial viability of MDAs.

The economic system is somehow complicated during this period of TSA administration in terms of unnecessary delays or none payment of overhead running costs to public office holders, inadequate funding of projects by MDAs and sometimes even to long bureaucratic procedures and precious time taken to make payments to government or any of its agencies. Based on these prevailing economic conditions in the country, it is a mystery to unravel the outworking of TSA financial policy in Nigeria.

1.3    Objectives of the Study

The general objective of the study is to examine the relationship between the treasury single account and the harmonization of public sector funds. Other specific objectives include:

  • To discover the reasons for the TSA policy in Nigeria.
  • To discover the problems associated with implementation of TSA in Nigeria.
  • To discover the prospects /benefits of TSA policy in Nigeria

1.4    Research Questions

The following research questions were formulated for the study.

  • What are the issues that led to the adoption of TSA policy in Nigeria?
  • What are the problems associated with the implementation of TSA in Nigeria?
  • What are the prospects/ benefits of TSA policy implementation in Nigeria?

1.5 Research Hypotheses

The following research hypotheses were postulated for the research.

Hypothesis One

H1: There were observed leakages that led to the adoption of TSA in public fund management.

H0:  There were no observed leakages that led to the adoption of TSA in public fund management.

Hypothesis Two

H1: TSA implementation in Nigeria is associated with so many problems.

HO: TSA implementation in Nigeria is not associated with any problem.

Hypothesis Three

H1: TSA policy implementation in Nigeria has a lot of benefits to the Nigeria economy.

HO: TSA policy implementation in Nigeria has no benefit to the Nigeria economy.

1.6 Significance of the Study

The result from this study will educate the general public on the benefits of treasury single account to Nigerian economy. Findings of the study will also serve as a data base to other scholars and researchers in carrying out further research in the field. Nigerian policy makers, through this study will be exposed to better ways of implementing the TSA in the country.

1.7   Scope of the Study

The scope of this study covers public administration of TSA financial policy in Nigeria. It examines the reasons for adopting TSA; problems associated with its implementation; and probable prospects/benefits. Thus, the study is delimited to examine the implementation of TSA and the progress in controlling the fragmented financial system. For this reason, quantitative method is employed to analyze and verify the hypotheses.

The study subjects consist of a limited number of sampling units, which represent the target population of Awka South LGA.  The sample however is similar in will be cross-sectional in nature, which is staff of federal ministries, departments and agencies (MDA’S) will represent the entire population.

 1.8 Limitations of the Study

Limitations are matters and occurrences that arise in a study which are beyond the researcher’s control. Due to the economic hardship in the country, the researcher put strenuous effort to carry out the study of treasury single account and its emerging issues. However, the researcher accepts the basic limitations of this study such as financial inadequacies and time pressure. Limitation of financial resources, coupled with other pressing personal demands militated against the researcher’s efforts to cover more universities. The time pressure is another constraint that the researcher experienced to conduct the study within a given time-frame.

Besides, a considerable time was taken for participants to respond.  Thus, some of the respondents in one way or the other were indisposed to release necessary information for the research early enough. Despite the above challenges, the researcher was able to overcome the above limitations and spent considerable time and resources to conduct the study successfully.

1.9 Definition of Terms

Terminologies used in this study are defined for clarity purpose to have insight of the subject matter. Hence, the key terms used in this study are conceptually defined as follows;

Harmonization: This is the adjustment of differences and inconsistencies among different measurements, methods, procedures, schedules, specifications, or systems to make them uniform or mutually compatible.

Public Funds: Funds that come from the public treasury, which consists of revenue generated from tax payments, sale of crude oil, etc. that are used for the benefit of the public, including health, human service, environmental development, community development and other public service programs.

Public Sector: Public sector consists of governments and all publicly controlled or publicly funded agencies, enterprises, and other entities that deliver public programs, goods, or services.

Treasury Single Account: is one of the financial policies implemented by the federal government of Nigeria to consolidate all inflows from all ministries, departments and agencies (MDA) in the country by way of deposit into commercial banks traceable into a single account at the apex bank in the country.

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