It’s almost two years now since the Treasury Single Account 'TSA' was flagged off. Also, It’s been about two years since the economy of the country began a dive into the pits. According to a report on dailytrust , accountant general of the federation Mr. Ahmed Idris disclosed that about N5.422 trillion has accrued to the TSA account since its implementation. The minister of finance and other members of the country’s economic team continue to tout the news of how much the country has saved in the single treasury account. One thing they never tell us is how the citizens are better of for it. The economy has witnessed a significant downturn since the implementation of the policy. Shouldn’t that signal to a reasonable economic expert that there is a problem with the implementation of the policy and maybe it should be modified? How do you withdraw money from the circulation with no clear plans of reinvesting yet expect the country to be better off for it? TSA was established to curb corruption in the government. However, when the cost of tackling corruption exceeds the cost of a corrupt system should we not review the policy?

Prior to the implementation of TSA, Nigeria’s inflation was a single digit. The country has witnessed an unusual spike in inflation since the implementation and the figure currently stands at 18.72%.

The price of most consumer goods have more than doubled. Contrary to the CBN governor’s opinion that Nigeria’s inflation was caused by too much money in the circulation chasing too few goods which is the “Demand Pull Inflation”, what the country is witnessing is a “cost push inflation.” This is a situation in which increased cost of factors of production, raw materials, machinery, capital leads to rise in cost of output.

Although the significant drop in crude oil prices led to the depreciation of Naira, TSA aggravated the situation by making access to capital more costly with the withdrawal of funds from the Deposit Money Banks (DMB). The government did not earmark any cushioning effect for the sudden withdrawal of funds from DMBs rather, CBN increased interest increasing the cost of borrowing and worsening the situation.

Agreed, the TSA account helps government consolidate transactions and accounts for ease of disbursement and monitoring, however, there must be a clear cut plan of ensuring that surplus is made available to the market for investment purposes.

According to IMF’s strategy on TSA implementation , a strategy should be developed for investing available surplus cash and funding temporary cash shortfalls.

Once a TSA has been established and its target balance has been set, a strategy needs to be developed for investing available surplus cash, and funding temporary cash shortfalls. The strategy should include options for both short-term and longer term investments.31 The management of surplus cash investment and short-term borrowing could be handled either by a specialized unit within the MoF or by a fiscal agency agreement with the central bank

However, Nigeria’s current economic team seem to be oblivious of this part of the implementation process and continue to boast of trillions of Naira that has been saved in the account.

http://www.financialadvisorngr.com/aftermath-treasury-single-account-nigeria/