The Implications Of The Implementation Of The Treasury Single Account Policy On The Performance Of Commercial Banks In Nigeria
Abstract
The study examined the counteraccusations of the perpetration of the storeroom single account policy on the performance of marketable banks in Nigeria. The study established that TSA is a unified structure of government bank accounts enabling connection and judicious operation of government cash coffers. The sample of the study comprised ten marketable banks in Nigeria videlicet Skye Bank, United Bank for Africa, Diamond Bank, First Bank, Fidelity Bank, cornerstone Bank, Sterling Bank, Zenith Bank, Access Bank and Unity Bank. The data used in the study were reckoned from the periodic fiscal reports of named banks. The time 2015 was gauged as the standard, since TSA was enforced in that time. The times-2013 and 2014 constituted thepre-TSA period and the times- 2016 and 2017 constituted thepost-TSA period. The performance comparison was grounded on four variables. Return on asset and return on equity were used to measure profitability; current rate was used to measure liquidity and the rate ofnon-performing loans to total loans and advances was used to measure loan performance. The independent t- test analysis was employed to compare the performance of named banks ahead and after TSAimplementation.The findings of the study revealed that The average return on asset and return on equity of named banks were advanced in thepre-TSA period; The average current rate of named banks was advanced in thepre-TSA period; The average rate ofnon-performing loans to total loans was advanced in thepost-TSA period; There’s no significant difference in the profitability of named banks ahead and after the perpetration of TSA( t = 1.101; p>0.05);( t = 1.401; p>0.05); There’s no significant difference in the liquidity of named banks ahead and after the perpetration of TSA( t = 1.909; p>0.05); There’s no significant difference in the loan performance of named banks ahead and after the perpetration of TSA( t = -0.738; p>0.05). The study concludes that the perpetration of TSA has no significant influence on the performance of named marketable banks inNigeria.The study suggested that; marketable banks should reference finances from other sectors of the frugality; TSA should be informed and guided by the vacuity of clear functional base technology structure that supports the perpetration of the model of their choice; The Central Bank of Nigeria should go beyond the guidelines and put in place measures to correct any setbacks of the policy both on the banking sector and the frugality at large.
Chapter One
Preface
Background Of Study
The background of Treasury Single Account( TSA) is in agreement with Administrative orderNO. 55b( 2011), which quested that the Bureau of Treasury( BTr) shall operate a Treasury Single Account( TSA) to admit remittance of collections of internal profit levies custom duties from Bureau of Internal Revenue( BIR) Bureau of Customs( BOC), authorized agent banks as well as other National Government Agencies from authorized government repository banks. The TSA, which shall be maintained at the Central bank of Nigeria( CBN), will align the government policy of lesser fiscal operation and control of its cash coffers and allow the junction of the structure of government bank accounts to enable connection and optimum application of government cash coffers.( Bailder, CO West View. Sun Editorial( 2015)).
The banking sector of Nigeria is one of the major contributors to the growth and development in Nigeria. The profitable and fiscal growth and status of utmost countries especially the developing nations depends on the position of stability in the banking assiduity, that’s to say that the performance of the banking sector has a significant effect on the frugality of a nation.
The Treasury Single Account is a public account system in which all government profit, bills and income are collected into one single account, generally maintained by the country’s Central Bank and all payments is done through this account as well. The purpose is primarily to insure responsibility of government profit, enhance translucency and avoid deprecation of public finances. The conservation of a Treasury Single Account will help to insure proper cash operation by barring idle finances generally left with different marketable banks and in a way enhance conciliation of profit collection and payment( Adeolu, 2015).
According to IMF( 2010), Treasury Single Account is a unified structure of government bank account that gives a consolidated view of government cash coffers. Grounded on the principle of concinnity of cash and the concinnity of storeroom, a storeroom single account is a bank account or a set of linked accounts through which the government transacts all its bills and payment.( Lienert, 2009).
Section 80( 1) of the 1999 Constitution as amended countries “ All earnings, or other moneybags raised or entered by the Federation( not being earnings or other moneybags outstanding under this Constitution or any Act of the National Assembly into any public fund of the Federation established for a specific purpose) shall be paid into and from one Consolidated Revenue Fund of the Federation ”; consecutive government have continued to operate multiple accounts for the collection and spending of government profit in obvious casualness to the provision of the constitution which requires that all government profit be remitted into a single account. The marketable banks were the devisee of this situation; most banks depend on the public fund deposited by ministries, at the end the civil government of Nigeria comes back to adopt the plutocrat with high interest rate. It wasn’t until 2012 that government ran a airman scheme for a single account using 217 ministries, departments and agencies as a test case. The airman scheme saved Nigeria about N500 billion in frivolous spending. The success of the airman scheme motivated the government to completely apply TSA, leading to the directive to all banks to apply the technology platform that will help accommodate the TSA scheme. The directive by President Mohammed Buhari that all government earnings should be remitted to a Treasury Single Account is in consonance with this programme and in compliance with the vittles of the 1999 constitution( CBN, 2015).
Before the preface of storeroom single account in Nigeria, ministries, departments and agencies( MDA) which typically induce profit have multitudinous accounts in marketable banks, they use part of the profit generated to fund their colorful operations and remit the excess to the confederation account. utmost of these agencies pay whatever they suppose fit to the civil government account; it’s apparent that utmost of these agencies are indeed important richer than the government. The outgrowth of the below circumstances leads to fiscal leakages, the embezzlement of public finances and so on. This made the civil government of Nigeria to prepare budget using false protrusions.
ultimately banks no longer watched to rally plutocrat from other sectors of the Nigeria frugality. The balances of account of the government with the marketable banks lay idle in the banks. This situation was what led to the preface of the government storeroom single account; on the 25th February, 2015. The President of Nigeria, President Buhari instructed that all ministries should close their account with all the marketable banks in Nigeria, and transfer the colorful balances into the confederation account with the Central Bank of Nigeria.
The directive came to the central bank of Nigeria with the indirect number BPS/ CSO/ CON/ DIR/01/079, and addressed to all deposit plutocrat banks( DMB). The indirect was entitled “ inception of civil government’s independent profit e collection scheme under the storeroom single account( TSA) action ”.
Adeolu( 2015) stated that “ the conservation of storeroom single account will help to insure proper cash conservation by barring finances that are left with different marketable banks and by doing so enhance the conciliation of profit collection and payment.
It’s to this regard that the study wishes to consider the recrimination of storeroom single account on banking sector of Nigeria, specifically the marketable banks.
Statement Of Problem
Interest to carry out this study is born out of the opinion that marketable banks no longer operate at the same fiscal capacity as they used to before the perpetration of section 80( 1) of the 1999 constitution as amended of the Federal Republic of Nigeria which states that all profit or other moneybags raised or entered by government ministries, departments and agencies be paid into a consolidated profit fund of the Federation, an account held at the Central Bank of Nigeria. Looking at the lending rate and capacity of marketable banks and the interest to be paid on plutocrat advanced from marketable banks and also the last two fiscal statements of marketable banks over the last two times, which do show a lower profit and cash reserve when compared to the fiscal statement before the perpetration of section 80( 1) of the 1999 constitution as amended. This is because, government finances preliminarily deposited in marketable banks by MDAs, that could have been used by marketable banks to induce further fiscal wealth for themselves, is no longer available, as all government finances generated must be transferred daily into to the storeroom single account held at the Central Bank of Nigeria. With this recent development, marketable banks are being forced to find other means and styles of generating cash reserves, fiscal wealth and increase in profit to satisfy its shareholders. The banks are being forced to increase their interest on loans, making borrowing delicate and nearly insolvable for some and as the usual practise of utmost marketable banks; their marketers are being burdened with heavy responsibility of attracting huge deposits and fat guests to bank with them within a quested period of time or threat losing their jobs. The fate of the perpetration of the Treasury Single Account on marketable banks performance in Nigeria is the reason for this exploration work.
Exploration Questions
The study will be answering the following exploration questions so as to ascertain the objects of the exploration. The exploration questions are as follows;
What are the places of marketable banks in the perpetration of the Treasury Single Account?
What’s the effect of Treasury Single Account on marketable banks liquidity?
What’s the effect of Treasury Single Account on marketable banks profitability?
What’s the effect of Treasury Single Account on marketable banks loan performance?
What are the factors affecting the perpetration of Treasury Single Account in marketable banks?
Objects Of The Study
The main end of the exploration work is to determine the effect of storeroom single account on the performance of Nigerian marketable banks. The other objects of the study include the following;
To identify the places of marketable banks in the perpetration of the Treasury Single Account.
To estimate the effect of Treasury Single Account on marketable banks liquidity.
To estimate the effect of Treasury Single Account on marketable banks profitability.
To determine the effect of Treasury Single Account on marketable banks loan performance.
To identify the factors affecting the perpetration of Treasury Single Account in Nigerian marketable banks.
Statement Of Exploration Suppositions
thesis Ӏ The perpetration of storeroom single account has no significant impact on the liquidity of marketable banks in Nigeria
thesis ӀӀ The perpetration of storeroom single account has no significant impact on the profitability of marketable banks in Nigeria
thesis ӀӀӀ The perpetration of storeroom single account has no significant impact on the loan performance of marketable banks in Nigeria
Significance Of Study
The study of the recrimination of storeroom single account on the performance of marketable banks in Nigeria will be of great benefit to the civil government of Nigeria, the marketable banks in Nigeria, the ministries, departments and agencies in Nigeria and of utmost significance to the citizens of Nigeria as proper budget and fund allocation to all sectors of the frugality will be done meetly. Eventually the exploration will be of great benefit to scholars and other experimenters that wish to carry out analogous exploration work on the below content.
Compass Of Study
The study on the recrimination of storeroom single account on the performance of marketable banks in Nigeria will be limited to marketable banks in Nigeria from time 2013 to current date, 2107. The experimenter will be comparing the performance of marketable banks before the perpetration of TSA and their performance after the perpetration of TSA. Daily reports of these banks, during this period will be used, as a time series analysis.
The sample design for the exploration work is the quoted marketable banks in Nigeria and the sample size for the exploration work is ten( 10) marketable banks in Nigeria that are being used by government MDAs in enforcing the Treasury Single Account system. The choice of the banks is through intentional slice.
The marketable banks in the sample size are; Skye Bank Plc, United Bank for Africa Plc, Diamond Bank Plc, First Bank of Nigeria Plc, Fidelity Bank Plc, cornerstone Bank Plc, Sterling Bank Plc, Zenith Bank Plc, Access Bank Plc, Unity BankPlc.
Limitation Of The Study
In line with the fact that the storeroom single account system is an old conception as it’s stated in section 80( 1) of the 1999 Constitution( as amended) of a necessity, but the conception is only new in perpetration, completely enforced by the current administration of government.
Description Of Terms
TSA refers to Treasury Single Account, is a fiscal policy or unified structure of government banking introduced by the civil government of Nigeria in 2012 to consolidate all flux from the country’s ministries, departments and agencies( MDAs) by way of deposit into marketable banks, traceable into a single account at the Central Bank of Nigeria.
fiscal Leakages refers to indecorous exodus of public fund from a indirect inflow of income model.
translucency a positive and clear view of fiscal statement of Nigeria.
MDAs ministries, departments and agencies of the Federation.
Chapter Two
Literature Review
A Treasury Single Account( TSA) is a unified structure of government bank accounts that gives a consolidated view of government cash coffers. Grounded on the principle of concinnity of cash and the concinnity of storeroom, a TSA is a bank account or a set of linked accounts through which the government transacts all its bills and payments( Lienert, 2009).
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