Monday, 31 August 2015

Banks beg FG to relax Single Treasury Account

Nigerian Deposit Money Banks, DMBs, have begun a campaign of begging the federal government to review the implementation of the Single Treasury Account, STA, as directed by President Muhammadu Buhari.
Top executives of three leading banks in the country ran to the Accountant-General of the Federation, AGF, Alhaji Ahmed Idris, in Abuja, at the end of last week to plead that the stringent condition of transferring all government revenues to the STA be relaxed.

It was gathered that the decision to meet the AGF followed an analysis by the banking sector operations with no government funds, after which they concluded that should the STA be implemented as directed, some banks would certainly go under.

Currently, collecting banks sweep all Nigeria Customs Service revenue to the Central Bank of Nigeria, CBN at the end of each business day. The same policy applies to the revenue coming through the Federal Inland Revenue Service which collects taxes and Royalties.

The only exception among the major revenue generating agencies had been the Nigerian National Petroleum Corporation, NNPC. But with the STA it has also been brought into the fold of timely revenue remittance.

Most other MDAs were not designated as revenue agencies, thus making it possible for the top executives to play around with the funds they generate. Such MDAs were allowed to keep their income, spend at will and only returned fractions to the treasury as operational surplus, at the end of each fiscal year.

Until the Buhari directive, Deposit Money Banks were said to be heavily dependent of public sector deposits which were often abused.

There had been reports of top executives of Ministries, Departments and Agencies, MDAs lodging huge sums of money with some banks at negotiated fixed interests and the banks lending same money to other government MDAs, thereby lending government money to government and at high interest rates.

Sources privy to the three separate meetings between the banks and the AGF said that the top executives did not secure the assurances of review they sort.

Rather, Alhaji Idris was quoted as telling the bankers that the TSA was introduced to enhance transparency, boost revenue collections against leakages and ensure timely disbursement of funds to beneficiaries of the Federation Accounts.

The AGF insisted that the policy was part of the reforms of the government to institutionalize a more effective and transparent management of public finances in the country and that the STA was also impacting positively on federation revenue.

He added that it was also with sections 80 and 162 of the 1999 Constitution which provides for timely capture and payment of all due revenues into government coffers.

Sections 80 provides that “All revenues or other moneys raised or received by the Federation Account (not being revenues or other moneys 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. Sub-section 2 states “No moneys shall be withdrawn from the Consolidated Revenue Fund of the Federation except to meet expenditure that is charged upon the fund by this Constitution or where the issue of those moneys has been authorised by an Appropriation Act , Supplementary Appropriation Act or an Act passed in pursuance of section 81 of this constitution.

According to Section 162 “the Federation shall maintain a special account to be called ‘the Federation Account, into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the Personal Income Tax of the personnel of the Armed Forces of the Federation, the Nigeria Police Force, the Ministry of Foreign Affairs and the residents of the Federal Capital Territory, Abuja.

The TSA is a unified structure of government bank accounts enabling consolidation and optimal utilization of government cash resources. It is an account with the Central bank of Nigeria, CBN, which the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time. The system also eradicate loss and leakages of legitimate revenue meant for the Consolidated and federation accounts.