What is the Treasury Single Account (TSA?

Firstly, the treasury single account is a public accounting system whereby government receipt, revenue
and income are collected into one single account The Central bank of Nigeria is responsible for the
maintenance and management on such account.

How it was designed to work?

• Firstly Government account must be unified, to enable the ministry of finance to maintain oversight of
government cash-flow in and out of this account.

• The TSA account structure can contain ledger-sub account in a single banking institution, which is the
Central bank in this case. However it can accommodate external zero account in a number of
commercial banks underlining exclusion of some sectors.

• No government agency saddled with the oversight of the account except, the treasury

• The consolidation of government cash resources should be comprehensive such that it contains all
government cash resources, both budgetary and extra-budgetary. This means that all public revenue
irrespective of whether the corresponding cash flows are subject to budgetary control

How it works with regards cash flow

• First of all Nigeria TSA is operated mostly on a Zero balance account (ZBA), what is a ZBA? These are
generally opened on a zero-balance basis, referred to as end-of-the-day cash balances, these accounts
are swept back into the TSA main account periodically

• Secondly there are 2 structure of TSA, they are centralized and decentralized: Nigeria operates a
centralized structure like

Fig 1 : Cash flow direction under the TSA

Budget Unit-- to---Treasury-- to----CBN—to --Recipient

a. The initial order comes from the budget unit, it is referred to as the trigger in the revenue circuit

b. The treasury thus follow up on the trigger by ordering the CBN, who holds the account in its purview.

c. The CBN act on the orders of the Treasury to make payment to the Recipient,

d. Recipient, which are MDA, Contractors

Those excluded from the TSA

• National Nigeria petroleum corporation (NNPC)

• Power holding corporation of Nigeria (PHCN)

• Bank of industry (B0I)

• Nigerian Railway corporation (NRC)

• Federal mortgage bank of Nigeria

• Bank of Agriculture

• Niger Delta power holding corporation

• Nigerian communication satellite limited

• Galaxy backbone limited

• Ajaokuta Steel company limited

• Urban development bank

• Nigeria import- export bank

Implications

• The presence of a single treasury account enhances the management of cash flow

• The presence of an established chain of command Reduce room for leakages

• It improves electronic penetration in public finances,

• The establishment of treasury single account reduces volatility in cash through the treasury, thus
allowing for relatively lower cash reserve buffer

• Reconciliation in government balance sheet is easier due to the ZBA approach.

• It help at appraising the budget execution

Take Away

• Evidently the treasury single improves fiscal house keeping but it also provides room for warehousing
cash

• The TSA is similar to sterilization, it does starve the system of liquidity

• The inherent bureaucracy is a negation to effective and timely payment.