CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY
The Treasury Single Account (TSA) is a system of accounting in the public sector where all government revenue generated are paid into a single account at the Central Bank (Adebisi &Okike, 2016). TSA is believed to be an efficient and effective means of managing government revenue generation and system that provide and enforce sufficient self-control mechanism on revenue generation and budget implementation using a daily return from account balances of various Ministries, Departments and Agencies (MDAs) into a central account (Eme&Chukwurah 2015). The primary aim of TSA implementation is to ensure optimum public fund management and maximize the use of cash resources through concentration and reduction in float costs. To further substantiate this, the International Monetary Fund (IMF) working paper (2010) states that treasury single account (TSA) is an essential tool for consolidating and managing governments’ cash resources, thus minimizing borrowing costsAdewole&Osabuohien (2007).
The TSA solutions are designed to capture detailed information about the government’s cash resources and spending on a daily basis (Adebisi &Okike, 2016). The TSA is a modern cash management system that enhance government ability to safeguard public funds and suitable for good governance, transparency and accountability of every Naira generated or expended (Abdulrahman (2016).
Chukwurah and Emmanuel (2015) states that “ the payment of government revenue into multiple bank accounts operated by MDAs in commercial banks, as obtained under the old order, was clearly against the Nigerian Constitution which, in Sections 80 and 162, directed that all federally-collected revenues should be paid into the Federation Account” (Famutimi, 2012). They further state that it was a flagrant breach of the constitution that underscores the rot in the management of the country’s finances. It was on this ground that President Muhammadu Buhari on 9th August, 2015 invoked Section 80 (1) of the 1999 constitution as amended which state that “All revenues, or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assemble into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidative Revenue Fund of the Federation” by directing that all government Ministries, Departments and Agencies (MDAs) should close all their accounts domiciled in the commercial banks and transfer the balance to the federation account that is the TSA (Oyedele, T. 2015).This is part of his effort to sanitize the country and fight against financial leakages and corruption. Though, President Goodluck Jonathan had given the same directive in January with February 28th, 2015 as the deadline, the directive was ignored by the agencies. The noncompliance is blamed on his lack of political will to ensure compliance (Adeolu (2015). The TSA is seen as a solution to stalling leakages in revenue generation and making more funds available to the government which in turn increase government efficiency (Oyedele, T. 2015). The TSA has been identified by the Federal Government of Nigeria as an efficient tool for curbing revenue leakage, although it is not certain how this has played in Nigeria so far (Oyedele, T. 2015).
A state government is defined as the separate institutional unit that exercise some government functions between those of the federal government and above those units at local government level, excluding the administration of social security funds (Eurostat Glossary), the State Governments of Nigeria have been left-out of which federation government is a system, interrelated parts of other units or tiers of government; Besides, it seems that there is no study to examine the adoption and full implementation of Treasury Single Account (TSA) by State Governments of Nigeria; its benefits, challenges and prospects (Oyedele, T. 2015).
It is in view of this advantages and prospects of TSA that some state government have also adopted and implement the TSA in their states (Emmanuel & Emmanuel (2015). It is against this backdrop that the study aims at evaluating the factor that effect Single Treasury Account in Rivers State.
1.2 STATEMENT OF PROBLEMS
The expensive nature of the democratic system may have predisposed operators to have the pervading feeling that the quest for power is tantamount to political investment. This is evident in Nigeria’s political landscape and public-sector management, which has significantly affected the financial status of the nation. As once remarked by Famutimi (2012) “the cost of governance in Nigeria is disproportionately high relative to productivity” The cost of governance in the country was high and had left little resources for infrastructural development.
The gap in knowledge that this paper tries to fill is that various scholars has written on Treasury Single Account and cost of governance in Nigeria. Some scholars like Yusuf, Abdulahi, Emmanuel & Emmanuel (2015); Adebisi &Okike (2016); Adeolu (2015). Eme&Chukwurah (2015) etc. have written extensively on Treasury Single Account in Nigeria. While Abdulrahman (2016); Adeolu&Osabuohien (2007). Adewole&Osabuohien (2007) etc. have also written on cost of governance in Nigeria. It is important therefore to note that few scholars have written on Treasury Single Account adoption in Nigerian States. Most of these scholars have failed to examine the challenges of implementation in the thirty-six States. This is the gap that this study tries to fill.
1.3 OBJECTIVES OF THE STUDY
The main objective of the study is to examine the factors that affect the Treasury Single Account (TSA) in Rivers State. The specific objectives are as follows:
iii. The find out the prospects of adoption of Treasury Single Account (TSA) by the state governments.
1.4 RESEARCH QUESTIONS
iii. What are the prospects of adoption of Treasury Single Account (TSA) by the state governments?
1.5 RESEARCH HYPOTHESIS
HO: There are no problems associated with the adoption of treasury single account in Rivers State.
HI: There are problems associated with the adoption of treasury single account in Rivers State.
1.6 SIGNIFICANCE OF THE STUDY
The study is determined to examine the factors that affect the treasury single account in Rivers State. The outcome of this study will be of immense benefit to a wide range of people. First, to the government and public policy makers, this study will help them appreciate the strategic importance of adopting and implementing treasury single account in Rivers State that can fast-track economic stability for business to serve, hence, promote friendly investment climate which is an impetus for increased foreign direct investment. The study will also be of importance to academicians and students as it will contribute to literature on the subject matter.
1.7 SCOPE OF THE STUDY
The study examines the factors affecting the adoption of treasury single account in Rivers State. It will be too cumbersome for the researchers to study Rivers State at large. Therefore, the researchers decided to limit the study to some selected deposit money Banks in Port Harcourt metropolis, Rivers State which include First City Monument Bank, Union Bank and Fidelity Bank.
1.8 LIMITATION OF THE STUDY
In carrying out this research work, the researcher was constraint by lot of factors which include but not limited to the following:
TIME CONSTRAINT: The time frame provision for this study was short.
FINANCIAL CONSTRAINT: Usually, a study of this nature involved some level of expenditure therefore, finance was also a limiting factor.
POOR RESPONSE: poor response from the respondent and inability to access the entire population of the study.
1.9 DEFINITION OF TERMS
TSA: Treasury Single Account
Treasury: The funds or revenue of a state, institution, or society.
Single: Only one; not one of several.
Account: A report or description of an event or experience.
Factors: A circumstance, fact, or influence that contributes to a result.
Evaluation: The making of a judgment about the amount, number, or value of something; assessment.