PROSPECTS AND CHALLENGES OF TREASURY SINGLE ACCOUNT IN A DEVELOPING ECONOMY: CASE STUDY OF NIGERIA
Abstract
This research project is a search for the prospects and challenges of treasury single account in a developing economy.
Chapter one of the study lays an introduction for subsequent chapters. Following the background of the study, the problem statement and the objective of the study which provided the basis for the significance of the study and the hypothesis were stated. The limitations of this study were also highlighted.
In the literature review as contained in chapter two, works of various authors, international and local journals were reviewed to elicit views on the prospects and challenges of treasury single account in a developing economy.
Chapter three, research methodology, description of population and sampling procedure for data collection were discussed. Methods of questionnaire design, determination of sampling size and questionnaire distribution were also highlighted.
Chapter four was based on the analysis of data collected. This chapter was sub-divided into data analysis, hypothesis testing and summary. Percentage table, figure and narration were carefully employed for proper understanding and testing of hypothesis.
Finally, chapter five was divided into a summary of findings, recommendation and conclusion.
TABLE OF CONTENTS
Title page ---------I
Approval page---------ii
Acknowledgement ---------iii
Dedication ----------iv
Abstract ----------v
Table of content ---------VI
List of Tables ----------ix
CHAPTER ONE
1.1 Background of the study -------1
1.2 Statement of the problem -------3
1.3 Objective of the study-------4
1.4 Research question --------4
1.5 Research hypothesis -------4
1.6 Significance of the study- -------4
1.7 Scope of the study --------5
1.8 Limitation of the study- -------5
CHAPTER TWO
2.0 Literature review --------6
2.1 Introduction ---------6
2.2. Theoretical framework -------6
2.3 Acts instituted by the government to strengthen treasury single account (TSA) in Nigeria -- -------11
2.4 Conceptual framework -------11
2.5 Empirical framework -------12
2.6 Accounts under treasury single account (TSA) ----13
2.7 Relationship between the accounts under (TSA) ---15
2.8 Prospects of treasury single account (TSA) ----16
2.9 Challenges of treasury single account (TSA) ----16
2.10 Concept of treasury single account (TSA) -----18
2.11 Implication of treasury single account (TSA) to the Nigeria economy -22
2.12 History of treasury single account in Nigeria (TSA) ---25
CHAPTER THREE
3.0 Research methodology -------26
3.1 Introduction ---------26
3.2 Research design --------26
3.3 Population of the study -------26
3.4 Sample size and technique -------27
3.5 Source of data--------27
3.6 Instrument of data collection ------27
3.7 Data analysis ---------28
CHAPTER FOUR
4.0 Presentation and analysis -------29
4.1 Introduction ---------29
4.2 Data presentation and analysis ------29
4.3 Testing of research hypothesis ------36
4.4 Summary of findings -------37
CHAPTER FIVE
5.0 Conclusion and recommendation ------38
5.1 Introduction ---------38
5.2 Conclusion ---------39
5.3 Recommendations --------39
Questionnaire --------40
Bibliography---------43
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The Treasury Single Account is a public accounting system in which all government revenue, revenues, and income are gathered into a single account, often kept by the country's Central Bank, and all payments are made through this account as well. The primary goal is to assure accountability of government revenue, increase openness, and prevent misappropriation of public monies. The maintenance of a Treasury Single Account will help to maintain efficient cash management by removing idle funds that are typically left with different commercial banks, as well as improving revenue collection and payment reconciliations. Section 80 (1) of the 1999 Constitution, as amended, states, "All revenues, or other money raised or received by the Federation (not being revenues or other money payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation"; successive governments have continued to operate multiple accounts for the collection of It wasn't until 2012 that the government launched a pilot plan for a single account, with 217 ministries, departments, and organisations serving as test cases. The pilot plan saved Nigeria approximately N500 billion in needless spending. The success of the trial plan prompted the government to fully implement TSA, resulting in directions to banks to create a technology infrastructure to support the TSA scheme. President Mohammed Buhari's recent decision that all government income be deposited to a Treasury Single Account is consistent with this programme and the terms of the 1999 constitution (Central Bank of Nigeria [CBN], 2020). The Central Bank has established a Consolidated Revenue Account to receive all government revenue and make payments through it. This is a Treasury Single Account. All Ministries, Departments, and Agencies are supposed to deposit their revenue collections into this account via the different commercial banks that serve as collection agents. This means that money deposit banks will continue to maintain revenue collection accounts for Ministries, Departments, and Agencies, but any funds received by these banks must be paid to the CBN's Consolidated Revenue Accounts at the end of each banking day. In other words, Ministries, Departments, and Agencies' accounts with money deposit institutions must be terrorised at the end of each banking day with a total remittance of all collected revenues to the Treasury Single Account. The implication is that banks will no longer have access to the float provided by the accounts they hold for Ministries, Departments, and Agencies. A Treasury Single Account arrangement allows for the maintenance of many sorts of accounts, such as the TSA main account, subsidiary or sub-accounts, transaction accounts, and zero balance accounts. Other account types that could be used include imprest accounts, transit accounts, and communication accounts. These accounts are used to record transactions involving monies that enter and exit the Treasury Single Account (Ogunleye and Ojo, 2021). According to the foregoing, the fundamental advantage of a Treasury Single Account is the method it provides for proper monitoring of government receipts and expenditure. In Nigeria, it will help to stop the majority, if not all, of the leakages that have hampered economic growth. We have a situation in which some Ministries, Departments, and Agencies manage their finances as if they were independent empires, remitting only a small portion of their revenue to the government. This is not conceivable with a properly operated Treasury Single Account since government agencies are required to spend in accordance with fully approved budget requirements. The maintenance of a single account for the government will allow the Ministry of Finance to monitor fund flow, as no government agency is permitted to retain any operational bank account outside of the Ministry of Finance's supervision. In fact, the adoption of the Treasury Single Account will result in significant losses for deposit money banks. This is due to the fact that public sector funds make up a significant portion of commercial bank deposits. Indeed, it is anticipated that commercial banks held approximately N2.2 trillion in public sector money at the start of the second quarter of 2016. The impact of this amount of money leaving the system can be imagined when one considers that each time the monthly federal allocation is released, the banking system is typically washed with liquidity, and as soon as this public sector fund dries up due to state withdrawals, liquidity tightens again, with interbank rates rising. The withdrawal of funds from commercial banks by revenue-generating parastatals such as the NNPC would have a significant impact.
1.2 STATEMENT OF THE PROBLEM
As the Federal Government of Nigeria implements the Treasury Single Account, banks will continue to explore ways to mobilise monies from the private sector. We are witnessing a return to an era in which women are employed by banks solely for deposit mobilisation and are implicitly encouraged to utilise any methods required to obtain funds. We see an increase in deposit interest rates as a major means of attracting customers, and most importantly, we see a drop in lending and bank profitability, at least in the short to medium term, until banks fully understand the policy's impact and begin to properly position themselves for true banking business. Finally, we expect the share prices of these institutions to fall as investors attempt to price in the policy impact. However, the implementation of this project is a key step towards reducing corruption in public funding. This is a technique for combating corruption, eliminating indiscipline in public finance, and ensuring appropriate funding flow to vital sectors of the economy in order to catalyse development.
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
1. To examine the implications of Treasury Single Account in developing economies.
2. To identify the benefits of Treasury Single Account.
3. To examine the challenges of treasury single account.
4. To study the prospects of treasury single account.
1.4 RESEARCH QUESTIONS
1. What are the implications of the Treasury Single Account in developing economies?
2. What are the benefits of Treasury Single Account?
3. What are the challenges of the implementation of treasury single account?
4. What are the prospects of treasury single account?
1.6. RESEARCH HYPOTHESIS
Ho: The application of treasury single account is not good for a developing economy.
Hi: The application of treasury single account is good for a developing economy.
1.7 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
1. The results from this study will educate the general public on the benefits of the Treasury Single Account to the developing economy of the country. It will also educate on its temporary effect on the banking industry as a huge sum of money will be leaving the sector suddenly.
2. This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently if applied will go to an extent to provide a new explanation to the topic.
1.8 SCOPE/LIMITATIONS OF THE STUDY
This study will cover the benefits and the limitations of Treasury single account on Nigeria economy
LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted to the research work.
References
Central Bank of Nigeria. (2020). Treasury single account (TSA) implementation and its impact on financial management in Nigeria. CBN Economic and Financial Review, 58(3), 12-27.
Ogunleye, A. M., & Ojo, F. O. (2021). The impact of Treasury Single Account (TSA) on public sector revenue management in Nigeria. Public Administration and Finance, 33(2), 156-170.
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