TSA – Prized national asset yearning for ownership
TSA – Prized national asset yearning for ownership:- Central to the growth of every economy is proper management of funds and transparency, especially on the part of the government. Nigeria’s notoriety in this regard brought the country to the state of near-economic-collapse, but for the timely introduction of new policies that have salvaged the situation and helped the nation stay afloat.
Of all reforms, the Treasury Single Account (TSA) has proven to be the most significant achievement of the current administration so far. TSA has been able to consolidate all inflows from government agencies using a single account-Consolidated Revenue Account (CRA), at the Central Bank of Nigeria (CBN). The effectiveness of the TSA since its introduction in Nigeria about two years ago has greatly proven that a level of sanity can be achieved in the use of public funds. An English Newspaper, The Economist, expressed that “TSA may be the biggest coup of all. It replaced a labyrinth of government piggy banks, giving Nigeria more control of its earnings”.
The Federal Government recorded over N7 trillion in the Treasury Single Account (TSA) towards the end of March 2017. Also, TSA on a monthly basis, helps the government to save over N4 billion, previously expended on maintaining numerous accounts across the country. Prior to this development, every organisation that collects money payable to FGN stacked cash in Deposit Money Banks (DMBs) where they were left to yield interest over the years for faceless individuals and groups while the Federal Government was starved of funds meant for developmental projects.
One major development that has contributed immensely to the robustness and efficiency of TSA is its integration with financial technology (FinTech). FinTech is an economic industry composed of companies that are trying to provide new financial solutions, which was previously the prerogative of banks. These companies are active in different domains, but they have one common attribute, which is: building and implementing technology used to make financial markets and systems more efficient.
The backbone of the functionality of TSA in Nigeria, is Remita, an e-payment solution adopted by the Central Bank of Nigeria for the payment and collections of funds on behalf of the Federal Government of Nigeria and used by all commercial banks and over 500 microfinance banks. Remita has significantly assisted to revolutionise the e-payment industry in Nigeria and its developer, SystemSpecs has been described as the unsung hero of Nigeria’s financial reform.
Apart from lowering the level of corruption in Nigeria, TSA greatly exposes the emerging potential of Nigeria’s FinTech Industry. As global competition rises and technology advances, the need to leverage IT for co-creation of value is a major factor for development. According to research reports, FinTech is one of the fastest-growing industries in the world at the moment. It has grown to a 22.3 billion industry with a 75% growth rate recorded in 2015. Global investment in FinTech ventures in the first quarter of 2016 reached $5.3 billion, a 67% increase over the same period in 2015, and the percentage of investments going to FinTech companies in Europe and Asia-Pacific nearly doubled to 62 percent, as reported by Accenture.
In a more recent development, The Bank of England has opened up the UK’s payments systems – the “plumbing” which facilitates same day money transfers between banks – to organisations that are not banks, giving FinTech startups another step up in their challenge to traditional banks. It’s the latest move by the UK’s financial authorities to foster technology innovation and “level the playing field” between the established institutions and newer ones. Nigeria can hopefully take a cue from this.
The TSA journey has been a remarkable one. However, huge bottlenecks created by self-serving interests still militate against the full implementation of the policy. Despite its huge gains, the government is not treating the policy as a prized national asset that is helping to drive accountability and stock-taking. There are still some pockets of revenue leakages and financial impropriety all around. TSA is not primed to handle forex for now and this is a major excuse for Universities requesting for exemption since their grants are mainly in foreign currencies. Although, SystemSpecs Limited has the mandate to provide the technology that can power the forex component of the policy, it has not been granted approval by the government to do this. At present, the ailing President appears to be the one getting all attention, some of which could have been used to strengthen the claws of TSA against defaulters.
Recall that the Management of the National Health Insurance Scheme (NHIS) earlier claimed that TSA stifles the fluidity of funds meant for the healthcare of enrolees, until an in-depth probe revealed underhand payments running into billions of Naira to dubious HMOs which were not remitted to hospitals where enrolees were supposed to get treatment. The list of defaulters is growing and will continue to, except the government takes proactive measures to ensure sundry compliance with its directive for remittance of all public funds into the TSA.
While we must commend the Federal Government for showing some interest in the growth of FinTech with its investment in ICT universities, an ICT development bank and a $1 billion ICT firm, it should not rest on its oars just yet. Rather, it should improve its sense of ownership of the TSA policy as a home-grown FinTech solution whose gains we can readily count and chart the course for more FinTech investments in Nigeria.
Joy Ekanem is a doctoral student of finance based in Calabar (vanguardnews)