Amos Otse¹

Abstract: Treasury Single Account (TSA) is an intervention policy of government that will drive revenue generation and close leakages of waste of fund in Nigeria. To achieve the goals of TSA, a unified banking structure that allows for funds and spending to be centralized by government was introduced. The study examined the effect of TSA on the Nigerian Universities to ascertain efficiency, level of acceptability to the universities and the implication of the policy to the autonomy of the universities. The study used primary data from questionnaire and it is limited to the universities in the north central geopolitical zone of Nigeria. The study employed a reconnoiter survey to identify and examine the changes in approach to public expenditure management as a result of the introduction of the TSA and its acceptability in the universities in Nigeria. A performance ratio analysis method was used to establish the change level. The findings shows that there was no significant change in value to the administration of the universities, university autonomy was eroded, bureaucratic bottlenecks increased, excess power to the CBN and too many interests on oversight functions. The study recommend improvement on TSA policy to help build efficiency in budget and performance of the public universities in Nigeria.

Keywords: Treasury Single Account; Public Expenditure Management; Expenditure Policy; University Autonomy; Accountability and Transparency

JEL Classification: H53

1. Introduction

Over the years, the public finance managers are more interested in the fiscal policy of revenue generation (i.e., focused more on tax) than expenditure issues (public expenditure management). There are three key aspects of public expenditure management: Budget preparation, budget execution and cash planning. Beyond the economics of fiscal policy and management, the need to understand how expenditure side of the budget is planned, prepared, and executed to achieve the desired macroeconomic impact is incontrovertible.

Planned data and past public expenditure are prepared in a consolidated format in agreement with macroeconomic framework in line with adequate budget preparation procedures at the begin of the budget year. The budget, been the fiscal policy guide for expenditure pattern, is then executed within the budget aggregate as a control. Government is expected to put in place adequate plan to meet fiscal target to prevent unanticipated disruption that can lead to borrowing and not achieving monetary policy targets (Barry and Diamond, 1999).

Public expenditure management is an instrument of government policy used to achieve fiscal discipline that will enable effective prioritization and implementation of government policy priority and programmes. It is a means of government policy distributing and utilizing sources productively, effectively and sensitively (Allen & Tommasi, 2001). Public expenditure management system varies from one country to another given the peculiarities of such country (Campos & Samjay, 1997). The basic principles of Public expenditure management are to accomplish macro financial discipline, strategic priorities, and functional application blend (World Bank, 1998). These three objectives are interactive, complementary and interdependent, improving the internal management systems to achieve efficiency. Public expenditure management is a new approach to an old problem (Schick, 1999) of allocating public money through collective choice. According to Prof. Allen Schick, in public expenditure management, it is not enough that government apply the right procedures; it also essential that they strive to efficiently achieve the desired policy outcomes. He further explains that public expenditure management goes beyond the traditional budgeting to cover board range of institutional and management arrangement where the public sectors are properly structured and managed in a way that produces desired results.

Spending must be structured in line with planned activities and matching cost with revenue given budget performance shows that costs are above revenue at all times. In recent times, the Nigerian Government is faced with intense pressure due to poor cash inflows as a result of dwindling revenues, and obviously impossible to meet the increasing statutory needs and social responsibilities by the government of the time (CBN, 2016). To overcome this issue, the Governments decided to embark on financial and treasury management reforms which the Treasury Single Account (TSA) scheme is a major component. This is in line with the public expenditure management reforms through strategic public sector transformation initiatives in accordance with the provision of Section 120 of the 1999 Constitution.

2. Literature Review

The word “budget” is coined from Middle English word called “budjet” which means King's wallet (Shah, 2007). Today, the word budget refers to the basic policy document of public financial management that besieges all incomes and expenditures of public interest (OECD, p.7). They are comprehensive financial documents, sometimes politically influenced, and are public management tools for curbing illegality in a raising democracy as is the case of Nigeria. In terms of administration, it is a document meant for planning of legislation and administrative units' coordination; technically, improving of managerial productivity (Hou, 2006). Separately, state budgets can also be defined as keeping the registrations of income and expenditures of the government which belong to a definite time period (Shah & Von Hagen, 2007). States budgets are to provide room for economic growth and employment and redistribution of incomes in any economy (Premchand, 2001). However, it is disputable whether budget reflects political priorities or economic priorities.

The public expenditure management reform is a massive effort of “government reengineering” to restore discipline in the budget process and to better target dwindling budgetary resources towards higher priority uses. It seeks innovative ways of using the national budget more effectively to promote socio-economic development and to experiment with variants of the successful reforms in developed countries (Schick, 1999). Government must manage public expenditure well to achieve its preferred outcomes, implement avowed policy objectives and create an institutional framework that enhances the probability that actual outcomes will conform to professed targets. Public expenditure management reforms take into consideration the fact that budgeting is not a process unto itself but is part of a broader set of institutional and governing arrangements. Its system that is concerned with how account of public institutions is managed achieve positive public expenditure outcome (Schick, 2003).

It has been confirmed that public expenditure management has improve greatly many economies in the world especially the developed countries (Schick, 2001; Rajaram & Mallika, 2001). A sound system of public expenditure management needs to take into account the wider values and requirements of the people and their interest (Jadranka & Marina, 2009) Every government needs credibility and without which no government can raise the funds it needs for its policies either from the taxpayers or from borrowers. It is therefore important for government to maintain public trust, demonstrate transparency in handling public funds with probity and in the interest of the public (Alexander, 2015).

Treasury single account is a government tool for managing cash resources and consolidating on national objectives by reducing borrowing costs and improving on public financial management reform agenda (Pattanayak & Fainboim, 2010). The essence of the TSA is to address specific problem in public organization such as lack of control and poor cash resource management. Government is expected to use the adoption of TSA to improve monetary and fiscal policy coordination, efficiency in data, quality fiscal information and minimized cost of debt servicing. Government of Nigeria is of the view that TSA will address corruption, eliminate financial indiscipline, encourage fund flow, and speed up economic development.

The attention of government should focus on three key principles that underpin a well-performing public sector: first, the person or officer that have the authority to make what decision should be made clear; second the matching of authority (flexibility) and accountability; and third the capacity and willingness to reprioritize and reallocate resources (World Bank, 1998). The focus of this approach as shaped by the principles broadly stated above is on the institution with a view to have sound budgetary and financial management system. In developing economy such as Nigeria, public-sector managers must make flexible regulatory controls and perform a new set of functions, such as: (i) designing appropriate fiscal and monetary responses to changing macroeconomic conditions; (ii) ensuring transparency and accountability in the deployment and use of public resources; (iii) improving the effectiveness and efficiency of public expenditure programs; (iv) mobilizing domestic resources and managing external resources (foreign aid and loans); and (v) decentralizing operations with adequate controls’.

2.1. Conceptual Framework of Public Expenditure Management Approach

Expenditure management in the Nigerian Universities following the introduction of the TSA at the CBN had changed over the last one. To operate, you must understand the working of the TSA and as a result the approach to managing Universities expenditures has become a little bit more complicated. All revenues payable to the Universities are now through the Remita Platform to the TSA Account at the CBN and receipt acknowledging such payments are generated electronically.

3. Methodology

The research was conducted as survey covering the North Central Geopolitical Zone in Nigeria. The North Central Zone comprises of Benue, Nasarawa, Plateau, Kogi, Niger, and Kwara States including FCT Abuja. For the purpose of this study, only the Federal Universities operating the TSA were selected from each state.

3.1. Research Design

A reconnoiter survey was conducted with a set of questionnaires for the purpose of data gathering. This was administered across the strata of staff – Teaching and Non-teaching staff- with 60:40 ratios for male and female number of employees in the selected universities. The choice of higher ratio for men was simply based on sample data of direct involvement in TSA operation.

3.2. Research Method

The study adapted an inductive approach because existing theories have shown that the case of public expenditure management varies from one country to the other (Campos and Sanjay, 1997). Inductive approach which is an approach of research from down-top, moving from the specific to a general perspective will be most ideal for this work (Saunders & Lewis, 2012). The data used in this research work are basically primary data. Therefore, the research used the qualitative method of analysis to measure data collected from the primary sources and analyze same for conclusions to reached. The research used simple rational analysis, factor analysis and reliability test to analyses responses compiled from questionnaires administered.

4. Test of Validity and Reliability

Table 1. Reliability Test

Reliability Statistics

Internal reliability test shows that Cronbach Alpha is 0.865 above lower bound intra-class correlation of 0.588 indicating that estimated quality scores are reliable and sufficient.

5. Data Analysis

Data collected from federal universities of the North Central Zone comprising of University of Agriculture Makurdi, Benue State; Federal University Lafia, Nasarawa State, University of Jos, Plateau State; Federal University, Lokoja, Kogi State, Federal University of Technology, Minna, Niger State, University of Ilorin, Kwara State and University of Abuja, FCT Abuja. 100 questionnaires were distributed in each of the universities amounting to 700 in total. The profiles of respondents are as follows:

Table 2. Respondents Profile

1. Demographic profile of respondents in North Central Public Universities operating TSA System

   Gender of respondents	Frequency	Percentage
   Male	420	60
   Female	280	40
   Total	700	100

2. Age of respondents

   Age range	Frequency	Percentage
   18 – 25	91	13
   26 – 35	133	19
   36 – 45	210	30
   46 – 55	126	18
   56 - 65	70	10
   66 - 70	70	10
   Total	700	100

3. Educational qualification of respondents

   Educational Level of respondents	Frequency	Percentage
   Valid None	35	5
   Secondary School	105	15
   High School (Diploma / NCE equivalent)	140	20
   First Degree (B.Sc, B.A, B.Ed, B.Tech, HND equivalent)	210	30
   Post Graduate	175	25
   Others (Vocational, Technical, Professional Trainings)	35	5
   Total	700	100

4. Respondent departments from various North Central Public Universities operating TSA System

Table 3. Distribution of the respondents and TSA transaction

Table 4. Distribution of Respondents Experience with TSA Policy

*Valid none were all rated and scored as not decided

6. Result and Discussion of Findings

The demographic profile shows that a total of 700 questionnaires were administered in all six north central public universities operating the TSA with male having 420 (60%) and female 280 (40%). The six North Central Universities comprises of University of Agriculture, Makurdi in Benue State, Federal University, Lafia in Nasarawa State, University of Jos in Plateau State, Federal University, Lokoja in Kogi State, Federal University of Technology, Minna in Niger State, and University of Ilorin, Ilorin in Kwara State including University of Abuja, FCT Abuja. The age distribution of respondents was bench marked at 18 years and the productive working class of over 80% and top administrative managers of over 10% actively participated in this project.

Educational level of respondents indicates that 55% are first degree holders and above. Middle level educationally qualified of diploma and professional qualified staff stood at 25% of the total respondents. Respondents from the Finance and Bursary Department 245 (45%), Office of the Vice-Chancellor (approval authorization) and the Internal Audit Unit (internal control) Department is 140 (20%) and 105 (15%) Registry (Administrative) Department. Other academic and support units comprised of the remaining 140 (20%) respondents. The distribution shows that 60% of the respondents are directly involved in TSA operations.

The result of TSA efficiency assessment showed that 458 (66%) respondents disagreed completely with the fact that TSA policy are convenient and reliable. 664 (81%) and 530 (76%) respondents are of the opinion that opening of subaccounts in addition to the main accounts and the TSA operational challenges with Remita gateway respectively are poses a lot of difficulties to the Universities. However, the result recorded 350 (50%) respondents agreeing to efficiency in ease of transaction as per assessing operational activities with CBN, 630 (90%) respondents in wholistic support in reduction on cost of bank charges, and 556 (79%) respondents strongly agreed on the improvement and convenience of e-Payment and e-Collection system over the old banking platform.

TSA as one of the public expenditure policies is expected to support financial plans of the public Universities. The study examined TSA in line with achieving budget efficiency in the public institutions especially the Universities. The result shows that TSA does not help to ensure appropriate use of funds in line with budgetary provision. This was confirmed by the 498 respondent’s response amounting to 71% affirmation. 460 (66%) respondents strongly disagree to the fact that TSA ensures government monitoring and prioritization of funds to relevant areas of Universities needs. The study further shows that TSA cannot stop off-budget expenditure as affirmed overwhelmingly by 500 (71%) of the respondents. 330 (61%) out of the 700 respondents agreed that budget performance monitoring and reporting are easier with TSA and also 510 (73%) respondents are of the opinion that TSA makes resources available to support budget funding. TSA has improved budget funding capacity of the government but does not harmonize budget process with a total number of 510 (73%) and 620 (89%) respondents respectively affirming these opinions.

The result further showed that TSA is the support structure of the public expenditure policy and assessing the performance of the Universities, some efficiency raters were considered. One, the result showed that TSA does not support an environment that fosters or demand performance efficiency in the universities. The response shows that a total of 540 which represents over 77% of the total opinion supported the assertion above. The second rater was to examine if TSA policy helps government public expenditure management system provide short- or long-term target framework. The result shows that 320 (46%) respondents are in support while 338 (48%) respondents are not in support of the rater. This indicates that there are no crestal clear improvement in public expenditure management target framework following the adoption of TSA as public expenditure policy. Rater number three shows 425 (61%) respondents unified agreement that TSA policy does not provide a clear feedback mechanism that will help Universities improve their performance. The lack of feedback strategy does not allow for efficiency and information flow as it is typical of the bureaucracy in the public sector. The fourth rater tries to examine the level of information disclosure and the convenience of accessing data. 313 (45%) of respondents disagreed and 307 (44%) of respondents agreed that performance data are published and can be easily accessed by users of stakeholders. The fifth rater evaluates the fact that with the adoption of TSA, public universities’ performance in term of accountability and other financial performance expectations can easily be rated. The result feedback shows that 550 (79%) completely disagreed with the fact that TSA can be a bases of accessing public universities performance. The study also shows a strong disagreement with the rater that TSA explains or aligns cost work, output and outcome performance with 497 (71%) result. The result in accessing TSA performance also agreed that the policy allows for funds accumulation in favor of the government and not in any form of efficiency in favor of the Universities.

7. Conclusions and Recommendations

In assessing the efficiency of the TSA system on the Universities in the North Central Zone, banking operations with the CBN tends to be more easily assessable to government and interested stakeholders from any part of the nation than that of the commercial banks. Financial transactions can be made through the Remita gateway directly to or from the Universities’ TSA accounts. Also, the cost of accounts maintenance with the TSA policy is cheaper than with various commercial banks. Government, with the TSA policy, does not just oversee the financial transaction of the Universities but have complete custody of all funds accruable to the Universities at any point in time. Universities fund being under the custody of the CBN is considered by the universities as control of financial autonomy. TSA introduced full e-Payment and e-Collection system as against cash transaction and cheques payment system with the commercial banks. The above developments are expected to achieve TSA transaction efficiency by reducing the down time and cost of transaction however, several operational bureaucratic administrative bottlenecks had limited and slowed down the ease of transaction.

The study shows that TSA policy only favors’ the government to ensure budget efficiency. It helps the government to monitor budget performance of the universities, makes available resources to support budget funding and improve government capacity to spend and control. The TSA policy does not improve in any way budget efficiency of the Universities and cannot even be used as a tool for enforcing budget discipline.

The public expenditure management policy of government was strengthened by the adoption of Treasury Single Account System as the oversight of the central government increased. However, it is imperative to note that the TSA policy had not fostered or improved the situation of the public universities. TSA adoption did not contribute to improving the working environment of the Universities with respect to information usefulness, timeliness, target and/or feedback system. It is not a policy that can help the universities refocus it priority with regards to tying cost to output and output to outcome. Universities performance are not improved with the introduction of the TSA but rather funds are accumulated and control by the government.

The study recommends that:

One, to improve public expenditure efficiency under the TSA regime, government control over Universities’ Operational Account must be removed. Operational bureaucracy and direct influence of government agencies such as the Central Bank of Nigeria (CBN) and the Office of the Accountant General of the Federation (OAGF) as to limiting the subaccounts to open, seeking approval from the OAGF before account are confirmed or opened by the CBN are but a few examples. These results in muddling up several funds in one account and the excess of keeping a separate account for third party and deposit refundable funds are defeated.

Secondly, to encourage efficiency public expenditure and TSA policies should promote revenue gain to the Universities. The study shows that fund investments are discouraged under the TSA regime. Universities are dynamic centers of academic excellence as they host and encourage endowments to promote healthy competitions. The TSA only encourages accumulation of fund and de-emphasises’ investment of future funds that are expected to yield over time. Funds accumulated in TSA should be allowed to be invested where necessary by the Universities for such special purpose so designed.

Thirdly, all operational challenges resulting from the Remita Gateway and TSA process must be resolved addressed real-time. Issues relating to transaction in-transit and mandatory charges on Universities accounts that occurs between the gateway and the Account destination are concerned sources of challenges in the TSA operations that must give way for efficiency.

Fourthly, the TSA policy should be reviewed to help achieve budget efficiency in terms of appropriate use of fund, improved quality of budget and discipline in the universities and prioritizing achievements in accordance with plan. This will help to reduce abandoned projects and improve capacity.

Finally, TSA should make Universities expenditure management more transparent and easier to track revenues and expenditures movement. This will make universities more responsible, visible with robust working environment and focused targeted achievable frameworks. The Central Bank of Nigeria as the bank to public universities must not act as only as store of value but also be allowed to access performance with relation to targeted frameworks and quality real-time financial reporting.

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