TREASURY SINGLE ACCOUNT’S (TSA) IMPACTS ON BANK LIQUIDITY IN NIGERIA’S BANKING INDUSTRY
FIRST CHAPTER INTRODUCTION
1.1 THE STUDY’S BACKGROUND
Treasury single accounts are a type of public accounting in which all government income, receipts, and revenue are accumulated into a single account that is typically maintained by the central bank of the nation and through which all payments are made.
The main goals are to guarantee government income accountability, improve transparency, and prevent improper use of public funds.
By removing unused money often held by many commercial banks, the maintenance of the Treasury Single Account will assist to maintain efficient cash management and, in a sense, improve the reconciliation of revenue collection and payment (Adeolu, 2015).
All revenues or other funds raised or received by the federation (other than those 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 consolidation Revenue fund of the federation, according to Section 50 of the 1999 constitution as amended; succeeding governments have continued to operate multiple accounts for the collection and management of revenues and other funds.
It will be recalled into a single account for revenues.
It wasn’t until 2012 that the government began testing a single account pilot program with 217 ministers’ departments and agencies.
The experimental program helped Nigeria avoid spending $500 billion on unnecessary expenses.
The government was inspired by the success of the pilot program to fully implement TSA, which prompted the bank to get instructions on how to set up a technical infrastructure that will support the TSA plan.
President Mohammed Buhari’s recent instructions that all government income be transferred to a Treasury Single Account are in line with this initiative and in accordance with the 1999 Constitution’s requirements (CBN,2015).
In order to collect all government revenue and make payments through one account, the central bank created a consolidated Revenue Account.
This is the Treasury Single Account. All departments, agencies, and ministries are required to deposit revenue collections into this account through the individual commercial banks that serve as collection accounts for these entities. However, at the conclusion of each banking day, all funds collected by these institutions must be transferred to the consolidated Revenue Account with the CBN.
To put it another way, all funds deposited to the bank in the accounts of ministries, departments, and agencies must be fully remitted to the Treasury Single Account at the conclusion of each banking day.
According to the implication, banks won’t longer have access to the floats produced by the accounts they kept for the Ministries, Departments, and Agencies.
Under a Treasury Single Account setup, many account types might be maintained, including the TSA main account, subsidiary or subaccounts, transactions accounts, and zero balance accounts.
Imprest accounts, transit accounts, and communication accounts are other types of accounts that may be handled.
These accounts are kept for the purpose of processing transactions involving money entering and exiting Treasury Single Accounts (Adeolu, 2015).
From the aforementioned, it is clear that one of a Treasury Account’s main advantages is the system it offers for accurate monitoring of government receipts and expenditures.
In the case of Nigeria, it will assist prevent the majority of economic development.
In our current circumstances, several ministries, departments, and organizations manage their finances similarly to the Independence Empire and send a little amount of money to the government treasury.
In an appropriately managed Treasury Account,
This is impossible because government entities must spend money in accordance with officially approved budgetary requirements.
As no government agency is permitted to retain any operational bank accounts outside of the supervision of the ministry of finance, the maintaining of a single account for the government will enable the ministry of finance to monitor and flow.
Deposit money institutions actually stand to lose a great deal from the adoption of the Treasury Single Account.
This is due to the fact that a sizable portion of commercial deposits are made up of public sector funds.
It is estimated that
At the start of the first quarter of 2015, commercial banks held around 2.2 trillion in public sector funds.
When one considers that every time the monthly federal allocation is released, the banking sector is often drenched with liquidity tightening once again and interbank rates rising, one can understand the impact of this amount of money leaving the system.
The removal of money from commercial banks by parastatals that generate revenue, like the NNPC, would have a significant impact.
Statement of the problem: 1.2
Banks will continue to devise ways to raise money from the private sector as the Nigerian federal government rolls out the Treasury Single Account.
The day when women were engaged by banks explicitly to mobilize deposits and implicitly encouraged borrowing money by whatever means possible is returning.
Most significantly, we observe a decline in lending and in the profitability of banks with the impact of then policies and begin to appropriately position themselves for the banking industry. We perceive a rise in deposit interest rates as a primary method of luring customers.
In the end, the influence of the policy may be seen in the share price.
However, putting this policy into action is a crucial first step in reducing corruption in the banking industry and public finances.
This is a weapon to stop corrupt behavior, get rid of financial indiscipline, and make sure enough money is flowing into vital areas of the economy to spur development.
Research question: 1.3
What effects would the Single Treasury Account have on Nigeria’s banking industry?
What effects would the Treasury Single Account have on Nigeria’s economic growth?
What advantages does the Treasury Single Account offer?
1.4 THE STUDY’S OBJECTIVES
The study’s aims are as follows:
Examine how the Treasury Single Account (TSA) affects bank liquidity in Nigeria’s banking sector.
Examine how the Treasury Single Account (TSA) is affecting job security in Nigeria’s banking sector.
Examine how the Treasury Single Account (TSA) affects the profitability of jobs in Nigeria.
Statement of research hypotheses: 1.5
The following hypotheses are presented here.
H0: The Nigerian banking industry and the Treasury Single Account (TSA) are not significantly related.
H1: The Nigerian banking industry and the Treasury Single Account (TSA) have a strong connection.
H0: There is no meaningful connection between Nigeria’s economic progress and the Treasury Single Account (TSA).
H1: The Treasury Single Account (TSA) and Nigeria’s economic growth are significantly related.
H0: The Treasury Single Account (TSA) and the broader Nigerian public have no meaningful connections.
H1: The Treasury Single Account (TSA) and the broader Nigerian public have a major relationship.
1.6 THE STUDY’S SIGNIFICANCE
The study’s importance may be seen in the following:
The study’s findings will inform the general public on the advantages of Treasury Single Accounts for the national economy.
As a significant amount of money will suddenly leave the banking business, it will also inform on its short-term impact on the industry.
This study will also be used as a resource for other academics and researchers who are interested in conducting more research in this area, which, if put to use, might lead to the development of fresh explanations for the subject.
1.7 ANALYSIS OF THE STUDY
Lack of funding often makes it more difficult for researchers to collect data effectively and find the necessary resources, books, or information (Internet, questionnaire and interview).
The investigation and other academic activity will be conducted by the researchers at the same time.
As a result, less time will be allocated to the research project.
1.8 TERMINAL DEFINITIONS
TREASURY SINGLE ACCOUNT: The federal government of Nigeria has established this financial strategy to combine all incoming funds from all Ministries,
Ministries and Agencies (MDAs) throughout the nation via deposits into commercial banks that may be traced to a single account at the Apex Bank in the nation.
A budget is a numerical representation of a plan for a specific amount of time.
It might also comprise the amount of resources, the costs and expenses, assets, liabilities, and cash flows.
It uses quantifiable language to explain the strategic plans of corporate units, organizations, activities, or events.
Agency Departments in Nigeria
Minister of Finance, or MOF.
1.9 THE STUDY’S ORGANIZATION
This research project has five chapters, each of which is further broken into five chapters. Chapter one looks at the study’s introduction, problem statement, research questions, objectives, and research hypothesis as well as its importance, scope, and structure.
The study’s literature review, conceptual approach, theoretical framework, and empirical review are included in chapter two.
The research technique, data source, study population, sampling size, data collecting method, data analysis method, and study limitations are all covered in chapter three.
The presentation, analysis, and interpretation of data are covered in chapter four.
The study’s summary, conclusion, and recommendations are covered in Chapter 5.