The long-drawn-out implementation of the federal Treasury Single Account (TSA) rule has come to a near conclusion with euphoria upon the discovery that there is at present an average daily balance of N2.3 trillion in the account. Because these TSA funds had hitherto been suppressed and hidden from the federal budgets, they are additional to the Federal Government’s share of the Federation Account (FA). The daily balance is uncannily a shade higher than the preliminary 2016 Budget deficit of N2.2 trillion. The President’s 2016 budget address to the National Assembly indicates the fiscal deficit in part “will be financed by a combination of domestic borrowing of N984 billion and foreign borrowing of N900 billion”.
The Treasury has yet to establish pending MDA commitments, but let the admonition go out that hanky-panky moves to pad such commitments be eschewed. After the several discovered paddings of some provisions in the 2016 Budget proposals are removed and assuming subsequent MDA remittances and payouts record substantial surpluses, a trimmer 2016 Budget with little or no preliminary deficit gap should emerge. Considering the general public aversion to funding the budget with loans particularly the rankling of incurring further external debts, the available resources would save the day.
There should be total compliance with the TSA rule. It has been reported that 726 MDAs, which account for 98 per cent of the federal budget, subscribed to the TSA by year-end 2015. It implies that there remain some 40 straggler establishments to be brought into line. With a little creativity, the TSA shoe would expand and contract to fit all establishments that are wholly or majority government-owned without any highfalutin exception. Pending necessary legislation and with the concerns raised by the Revenue Mobilisation, Allocation and Fiscal Commission about the possible sharing of TSA funds among the tiers of government, the FG should apply the pooled funds to part-finance its budget.
The Minister of Finance, Mrs. Kemi Adeosun, has claimed that the implementation of the TSA rule would, one, improve the processing of collection of revenue as well as engender prompt settlement of matured government commitments and thereby facilitate project completion and service delivery on schedule; two, afford a clear view of overall government finances at any time and so reduce borrowing with the attendant costs; three, eliminate avenues for corrupt self-enrichment by public officials; and four, increase accountability and transparency.
Nonetheless, some of the claims are open to question. For example, public corruption would still luxuriate on padded project costs and fees. Also the TSA collections were in different currencies. So there was embedded corruption when some agencies that collected revenue in foreign currencies reportedly remitted only naira amounts into the TSA. Therefore, remittance should be made as earned in various currencies just as the daily balance should reflect those currencies.
Noting that the country’s revenue base was and is still low, the minister urged her audience of State Accountants-General to brainstorm on how to improve the revenue returns. Although the call for and the suggested ways to improve revenue collection administration were predictable, the minister did not hit the nail on the head. The cause of the low revenue base is an open secret. Nigerian governments and private businesses combined currently access only one-third of the domestic financial sector’s lending capacity based on bank deposits of the private sector alone. The national low revenue base results from the limited volume of economic activity that can be boosted or improved by the utilized bank credit capacity. Two-thirds of the loanable bank credit remains idle because the economy not only lacks macroeconomic stability with a conducive production environment but also, suffers high inflation-induced restrictive monetary policy stance with attendant unattractive high lending rates.
The above adverse economic features arise from the excessive fiscal deficits traceable to the age-long refusal by Nigerian Heads of State/Presidents to allow FA beneficiaries to collect dollar allocations not even by secure and abuse-proof means for conversion via deposit money banks to non-inflationary realized naira revenue. So the first step toward achieving the elusive improvement of the low revenue base must be taken by President Muhammadu Buhari and, by extension, by the Minister of Finance herself. Nigerians have endured enough policy pronouncements that merely skirt the self-inflicted problem at hand.