The Federal Government’s Treasury Single Account (TSA) project, which seeks to establish a unified structure of government bank accounts, could be the single most effective mechanism for dealing with corruption in cash management in ministries and agencies, BusinessDay has learnt.
The initiative is being championed by the Federal Ministry of Finance with the office of the accountant- general of the federation serving as the implementing agency, in active collaboration with the Central Bank of Nigeria (CBN). The project is inspired by global best practices long established by countries across the world and has a proven record of enhancing oversight and control of government cash resources.
According to a review document seen by BusinessDay, the new initiative should help to reverse the situation where idle cash balances in bank accounts of MDAs, often fail to earn market related remuneration.
The document also said the full implementation of the scheme would avert the situation where “government, being unaware of these cash balances, incurs unnecessary borrowing costs on raising funds to cover perceived shortage.”
A senior government source told BusinessDay of a recent case involving a federal ministry (name with held) which had a huge time deposit with a particular bank and then turned around to seek a bridging loan from the same bank, at more than four times the interest it received from its time deposit, instead of just cancelling the deposit so it would not have to incur avoidable costs in the process.
According to him, “What was obvious in this and some other cases we have seen, is that often when the deposit is placed, the senior people in the ministry collude with the banks to offer below commercial interest rates to government and then go behind to pay huge bribes to the government officials to keep the time deposit even past the time when the funds are required to fund projects.”
The TSA system helps consolidate government cash balances, gives the ministry of finance unique oversight of all government cash-flows and brings about improvements in budget control and monitoring, said one World Bank official familiar with the project. Click here to read the full story
Source: BusinessDay NG