May 15, 2017 | An Article.
It is said that any person, who wants to know why a nation is not developing as rapidly as it should, should visit any of the local government areas. Why? This is because the impact of Local Government on national development is important as it is the grassroot level of government nearest to the people. It is designed to serve as an instrument of rural transformation and development to the society in general. It also promotes and coordinates the use of local resources to the optimal level.
Now is the TSA the major factor for docile local economic activities in Nigeria?
Firstly, what are economic activities?
These are actions that involve the production, distribution and consumption of goods and services at all levels within a society.
Now these economic activities (resource maintenance, production, distribution and consumption) must be balanced and maintained in order for an economy to function properly.
Secondly, what is the Treasury Single Account and the concept behind it?
The TSA is a Federal Government independent Revenue e-collection initiative that will automate Revenue Collections of Ministries, Departments and Agencies (MDAs) directly into the Federal Government Consolidated Revenue Fund (CFR) account at the CBN through the Remita e-collection platform and other electronic payment channels with exception to these agencies which are primarily profit oriented business entities which are required to pay dividends to the Federal Government, and they include Nigeria National Petroleum Corporation (NNPC), Power Holding Company of Nigeria (PHCN), Bank of Industry (BoI), Nigeria Railway Corporation (NRC), Federal Mortgage Bank of Nigeria (FMBN), Bank of Agriculture (BoA), Niger Delta Power Holding Company/National Integrated Power Project, National Communication Satellite Limited (NCSL), Galaxy Backbone Ltd, Ajaokuta Steel Company Ltd, Urban Development Bank, Nigerian Export – Import Bank and Transcorp Hilton Hotel.
The concept behind the TSA is simply saying “We want all government monies and revenues kept in a single place duely accounted for and regulated with a common set of rules as stipulated by law. We no longer want ministries departments and other government agencies to operate various accounts with loose financial control.”
Now prior to the introduction of the TSA local economic activities have been docile as factors like natural and human resources, capital formation and technology that contribute towards economic growth and the enhancing of economic activities in the country have been neglected and not fully utilized. Also issues like insecurity in the local areas have discouraged investors, this leaves the economy with no Foreign Direct Investment (FDI) which can boost economic activities. A decline in Gross domestic product or GDP ( which is one way of assessing economic activity) can significantly affects business activity and profits.
Poor leadership, corruption, misappropriation of funds, unfavorable economic policies and inability to harness potentials in the local space also contribute to the docility of local economic activities.
But if the TSA is properly executed, there would be:
Improved accountability, fiscal stability of all levels of government and revenue inflow into the federal account. Cut down of wasteful spending. Monitoring of government expenditure, revenue receipts and blocked leakages which is healthy for active economic activities in the local areas. i.e an accountable and working Treasury Single Account can (is required to) influence the position of GDP in Nigeria leading towards economic growth and development of the nation.
However, two main areas that would drive this are the Government and the Banking Sector; because with a developing country like Nigeria, banks come into play by being used as vehicles for achieving developmental and social goals. Government agencies will need to work with the CBN in actualizing the proper disbursement of the huge resources allotted to the development funds created by Treasury Single Account towards the development of local resources to boost economic activities, infrastructure, aviation, manufacturing and power. The importance and need for effective supervision and regulation of the CBN in order to provide confidence and stability in the Banking Sector thus encouraging enhanced banks credibility cannot be overemphasized, as this would lead to a monitored and appropriate channeling of these funds for robost economic activities in the local areas.
What are your contributions? What’s your take on this? Should the policy be reversed? How can transparency been ensured at the local level to secure the distribution and right utilization of funds.
Tasury Single Account and Nigeria’s Economy Between 1999 and 2015: An Assessment Oguntodu, J. A. & Alalade, Y. S. A. Department of Banking and Finance, School of Management Sciences, Babcock University Adekunle, Y. A. Department of Computer Science, Babcock University Adegbie, F. F. Department of Accounting, School of Management Sciences, Babcock University Corresponding Author: firstname.lastname@example.org