THE IMPLICATIONS OF THE IMPLEMENTATION OF THE TREASURY SINGLE ACCOUNT POLICY ON THE PERFORMANCE OF COMMERCIAL BANKS IN NIGERIA
Abstract
This study examined the impact of the implementation of the Treasury Single Account Policy on the performance of commercial banks in Nigeria. The study found that the TSA is a consolidation structure for government bank accounts that allows consolidation and prudent management of government cash. The survey sample included 10 Nigerian commercial banks namely Sky Bank, African Union Bank, Diamond Bank, First Bank, Fidelity Bank, Keystone Bank, Sterling Bank, Zenith Bank, Access Bank and Unity Bank. . The data used in this study were calculated from the selected banks’ annual financial statements. 2015 was chosen as the benchmark because TSA was introduced in 2015. The years -2013 and 2014 constituted the pre-TSA period and the years- 2016 and 2017 constituted the post-TSA period. The performance comparison was based on four variables. Return on asset and return on equity were used to measure profitability; current ratio was used to measure liquidity and the ratio of non-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 selected banks before and after TSA implementation.The findings of the study revealed that:
The average return on asset and return on equity of selected banks were higher in the pre-TSA period; The average current ratio of selected banks was higher in the pre-TSA period; The average ratio of non-performing loans to total loans was higher in the post-TSA period; There is no significant difference in the profitability of selected banks before and after the implementation of TSA (t=1.101; p>0.05); (t=1.401; p>0.05); There is no significant difference in the liquidity of selected banks before and after the implementation of TSA (t= 1.909; p>0.05); There is no significant difference in the loan performance of selected banks before and after the implementation of TSA (t= -0.738; p>0.05).The study concludes that the implementation of TSA has no significant influence on the performance of selected commercial banks in Nigeria.The study suggested that; Commercial banks should source funds from other sectors of the economy; TSA should be informed and guided by the availability of clear operational basis technology infrastructure that supports the implementation of the model of their choice; The Central Bank of Nigeria should go beyond the guidelines and put in place measures to correct any lapses of the policy both on the banking sector and the economy at large.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
The background of Treasury Single Account (TSA) is in accordance with Executive order NO. 55b (2011), the Treasury Department (BTr) maintains a Treasury Single Account (TSA) for forwarding domestic sales tax/duty receipts from the Bureau of Internal Revenue (BIR)/Bureau of Customs (BOC). I stipulated that I had to. Licensed banks and other federal agencies of licensed state custodians. The TSA, which will be maintained at the Central Bank of Nigeria (CBN), will coordinate government policies to improve financial management and management of cash resources, and consolidate the structure of government bank accounts for consolidation and optimal use. Make it possible. of government funding. [Bailder, Colorado:
view of the west. Sun Editorial (2015)].
The Nigerian banking sector is one of the major contributors to Nigeria’s growth and development. The economic and financial growth and status of most countries, especially developing countries, depend on the stability of their banking sector. In other words, the performance of the banking sector has a significant impact on a country’s economy.
A Treasury Single Account is a system of public accounting in which all government revenues, receipts and receipts are collected in a single account, usually maintained by a country’s central bank, through which all payments are also processed. will be Its purpose is primarily to ensure government revenue accountability, improve transparency, and avoid disapproval of public funds. Maintaining individual financial accounts typically helps ensure proper cash management by eliminating idle funds remaining in various commercial banks, and to some extent improve revenue collection and payment reconciliation. [Adeolu, 2015].
According to the IMF (2010), the Treasury Single Account is a unified government bank account structure that provides a consolidated view of government cash holdings. A single treasury account is a bank account or a series of linked accounts from which all receipts and payments are made by the government on the principle of unity of cash and unity of the treasury. [Lienert, 2009].
Section 80(1) of the 1999 Constitution, as amended, states: Payments to federations (established for a specific purpose) shall flow into and out of the combined federal revenue repository. Successive governments have continued to maintain multiple accounts for the collection and expenditure of government revenues, in flagrant disregard of the constitutional requirement to transfer all government revenues to her one account. Commercial banks benefited from this situation. Most banks rely on public funds deposited by ministries, and eventually the Nigerian federal government comes back and borrows money at high interest rates. In 2012, the government conducted a single-account pilot program using 217 ministries, departments, and agencies as test cases. The pilot program has saved Nigeria about N500 billion in wasted spending. The success of the pilot program prompted the government to fully implement the TSA and direct all banks to implement a technology platform to help adapt the TSA system. President Mohammed Buhari’s directive to transfer all government revenues to the Treasury Single Account is consistent with this program and follows the provisions of the 1999 Constitution (CBN, 2015).
Prior to the introduction of the Unified Treasury Account in Nigeria, ministries, ministries and agencies (MDAs), which typically generate revenue, had numerous accounts with commercial banks. A portion of the proceeds will be used to fund various projects and the surplus will be transferred to the association’s account. Most of these institutions deposit what they see fit in federal accounts. It is clear that most of these institutions are wealthier than the government. The consequences of the above events lead to financial leaks, misappropriation of public funds, etc. This prompted the Nigerian federal government to prepare its budget with erroneous forecasts.
Ultimately, banks no longer bothered to mobilize funds from other sectors of the Nigerian economy. Government deposits in commercial banks are idle in the banks. This situation led to the introduction of the single account of the Ministry of Finance. February 25, 2015. Nigerian President Buhari has ordered all ministries to close all Nigerian commercial bank accounts and transfer various balances to association accounts at the Central Bank of Nigeria. This directive was received by the Central Bank of Nigeria and addressed in circular number BPS/CSO/CON/DIR/01/079.
1.2 STATEMENT OF PROBLEM
Interest to carry out this study is born out of the opinion that commercial banks no longer operate at the same financial capacity as they used to before the implementation of section 80(1) of the 1999 constitution as amended of the Federal Republic of Nigeria which states that all revenue or other moneys raised or received by government ministries, departments and agencies be paid into a consolidated revenue fund of the Federation, an account held at the Central Bank of Nigeria. Looking at the lending ratio and capacity of commercial banks and the interest to be paid on money lent from commercial banks and also the last two financial statements of commercial banks over the last two years, which do show a lesser profit and cash reserve when compared to the financial statement before the implementation of section 80(1) of the 1999 constitution as amended. This is because, government funds previously deposited in commercial banks by MDAs, that could have been used by commercial banks to generate more financial wealth for themselves, is no longer available, as all government funds generated must be transferred daily into to the treasury single account held at the Central Bank of Nigeria. With this recent development, commercial banks are being forced to find other means and methods of generating cash reserves, financial wealth and increase in profit to satisfy its shareholders. The banks are being forced to increase their interest on loans, making borrowing difficult and almost impossible for some and as the usual practise of most commercial banks; their marketers are being burdened with heavy responsibility of attracting huge deposits and wealthy customers to bank with them within a stipulated period of time or risk losing their jobs. The aftermath of the introduction of the Treasury Single Account on the performance of commercial banks in Nigeria is the reason for this study.
1.3 Research question
This study will answer the following research questions to identify research goals: The research question is as follows.
What role will commercial banks play in the introduction of the Treasury Single Account?
How will the Treasury Single Account affect commercial bank liquidity?
What impact will a Treasury Single Account have on a commercial bank’s profitability? How does my financial personal account affect my commercial bank credit performance?
What are the factors affecting the implementation of the Treasury Single Account in commercial banks?
1.4 Purpose of the survey
The main objective of the research work is to determine the impact of individual financial accounts on the performance of commercial banks in Nigeria. Other objectives of this research include:
Identifying the role of commercial banks in implementing Treasury Single Accounts.
An assessment of the impact of the Treasury Single Account on commercial bank liquidity. An assessment of the impact of Treasury Personal Accounts on commercial bank profitability.
Determining the impact of Treasury Personal Accounts on the credit performance of commercial banks.
Identification of factors affecting the implementation of treasury single accounts in Nigerian commercial banks.
1.5 STATEMENT OF RESEARCH HYPOTHESES
Hypothesis Ӏ:
The implementation of treasury single account has no significant impact on the liquidity of commercial banks in Nigeria
Hypothesis ӀӀ:
The implementation of treasury single account has no significant impact on the profitability of commercial banks in Nigeria
Hypothesis ӀӀӀ:
The implementation of treasury single account has no significant impact on the loan performance of commercial banks in Nigeria
1.6 SIGNIFICANCE OF STUDY
The study of the implication of treasury single account on the performance of commercial banks in Nigeria will be of great benefit to the federal government of Nigeria, the commercial banks in Nigeria, the ministries, departments and agencies in Nigeria and of most importance to the citizens of Nigeria as proper budget and fund allocation to all sectors of the economy will be done appropriately. Finally the research will be of great benefit to students and other researchers that wish to carry out similar research work on the above topic.
1.7 SCOPE OF STUDY
The study on the implication of treasury single account on the performance of commercial banks in Nigeria will be limited to commercial banks in Nigeria from year 2013 to current date, 2107. The researcher will be comparing the performance of commercial banks before the implementation of TSA and their performance after the implementation of TSA. Quarterly reports of these banks, during this period will be used, as a time series analysis. The sample design of the study is a listed commercial bank in Nigeria, and the sample size of the study is 10 Nigerian commercial banks used by the Government’s MDA in implementing the Financial Single Account System. Banks are selected by targeted sampling.
Sample size commercial banks include: Skye Bank Plc, United Bank for Africa Plc, Diamond Bank Plc, First Bank of Nigeria, Fidelity Bank Plc, Keystone Bank Plc, Sterling Bank Plc, Zenith Bank Plc, Access Bank Plc, Unity Bank Plc.
1.8 Research Limitations
The Financial Personal Account System is an old concept as it is a requirement of Section 80(1) of the 1999 Constitution (Amendment), but the fact that the concept is a new implementation fully implemented by the current governance I am doing it.
1.9 Definition of terms
TSA:
Treasury Single Account, a national bank financial policy or uniform structure enacted in 2012 by the Federal Government of Nigeria to collect funds from national Ministries, Departments and Agencies (MDA) through traceable commercial bank deposits. Consolidate all inflows. An account with the Central Bank of Nigeria. Financial leak:
Refers to the inappropriate outflow of public funds from the revenue cycle model.
Transparency:
A positive and clear view on financial reporting in Nigeria.
MDAs:
Federal Ministries, Departments and Agencies.
Chapter 2
literature review
A Treasury Single Account (TSA) is a unified structure of government bank accounts that provides a consolidated view of government cash resources. Based on the principles of unity of cash and unity of treasury, a TSA is a bank account or set of linked accounts from which the government receives and disburses all payments (Lienert, 2009).
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