TSA Guidelines Explained: Fintech Expert Clarifies Misinterpretations

Epa Steven, a fintech expert, has addressed the recent rumors and misinterpretations surrounding the Treasury Single Account (TSA) by affirming that it is not shut down.

The clarification comes after the release of a circular on December 28, 2023, by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edu, which outlined new guidelines for the collection, utilization, and remittances of Internally Generated Revenue (IGR) by Federal Government agencies and parastatals.

The TSA, introduced in 2012 and fully implemented in 2015, requires all federal Ministries, Departments, and Agencies (MDAs) in Nigeria to manage their funds solely from the Consolidated Revenue Fund (CRF) maintained at the Central Bank. This centralized bank account structure ensures real-time tracking of all financial transactions and eliminates the need for short-term borrowing from commercial banks.

Reports from the Bureau of Public Service Reforms (BPSR) indicate that the implementation of the TSA has saved the government over N10 trillion since its inception. Additionally, investigative agencies such as the EFCC and ICPC have found the TSA beneficial in combating corruption and fraud.

The recent circular by the Ministry of Finance focuses on a review of a component of the TSA, indicating that it is not the first nor the last circular addressing the management of government finances under the TSA initiative. The new guidelines aim to provide MDAs with sub-recurrent accounts to receive their share of government inflows automatically, ensuring transparent and accountable financial management.

According to Mr. Steven, the implementation of the TSA showcases the role of digital infrastructure in transforming public sector service delivery. Nigeria’s progress in leveraging the TSA for digital transformation sets an example for other nations.

He, therefore, said that the recent speculations about the TSA being shut down are unfounded. Instead, the guidelines represent a strategic evolution aimed at refining the system for greater efficiency. The TSA remains a dynamic system that adapts to changing realities and continues to serve the needs of the Nigerian people.

“TSA which is a centralised bank account structure was 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.

“Equally, the former Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, estimated that TSA saves Nigeria N45 billion in interest payments monthly”.

Mr. Steven revealed that the latest circular by the Ministry of Finance only stipulates a review of a component of the TSA. According to him, that was not the first circular issued on review of TSA operations and certainly would not be the last, as the government continues to respond to issues in the management of its finances under the TSA initiative.90

In other to unpack the true implications and dispel misinformation regarding the guidelines, the fintech expert explained that going forward, under the new guidelines, MDAs would now be provided with new sub-recurrent accounts into which what was due to them from government inflows would 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.

“Previously, MDAs self-managed TSA sub-accounts within the Central Bank of Nigeria, where generated revenues were deposited and utilised for MDA expenditures. This included MDAs choosing when to remit the statutory deductions to the Consolidated Revenue Fund (CRF).

“The Office of the Accountant General of the Federation (OAGF), subject to the categorisation of agencies shall map and automatically effect a direct deduction of 50 percent on the gross revenue of self/partially funded agencies/parastatals and 100 percent for fully-funded agencies/parastatals as an 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.”

He said the implementation of Nigeria’s Treasury Single Account (TSA) initiative was a good example of the crucial role of leveraging Digital Public Infrastructure for the digital transformation of public sector service delivery.

He added that 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 centralised digital infrastructure.

“The implementation of TSA by the Federal Government of Nigeria has contributed to the growth of indigenous technologies, 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.

 “Without a doubt, the recent whispers of a TSA demise were just that – whispers. Instead, we see a strategic evolution, precisely aimed at refining the system for even greater efficiency. Remember, the TSA is not a static monolith but a living, breathing system that must adapt to changing realities. With each refinement, it grows stronger, more efficient, and better equipped to serve the needs of the Nigerian people,” he stressed.

(This report was originally purchased by Sunday Sun, excluding this headline)