There can never be a perfect Policy. Every Policy must have its downsides just as every medicine must have some side effect. The only reason most drugs( which are essentially poisons) are allowed to be sold and administered on human beings by the regulatory authorities is that on the balance, the side effects or adverse effects are much less than the therapeutic or beneficial effects, and that without the administration of the drug, the condition of the patient may worsen and morbidity and perhaps mortality will follow. Any medicine that will cause more harm than good or that has the potential to neutralize its beneficial effects will not be allowed in the market.
  However the major difference between the downsides of medicines and those of many of our policies is that makers of medicines take the pains to warn us in copious documentations and even in adverts of the expected side effects and possible adverse reactions to the use of the medicines. They even go further to advise us on measures to take when the side effects or adverse reactions manifest. But not so with our policies and policy makers. Sometimes, because the policies are not properly synthesized or thought through, the adverse effects are not contemplated. At other times, because, we do not want opposition to the policies, we ignore or deny the possible down sides of the policies. And even when we recognize such downsides, we are poor at communicating them effectively or even taking preemptive actions to counter or hedge against the side effects or adverse reactions. Often therefore, when the adverse reactions show up and we are unprepared to handle them, we often resort to policy reversals or policy abandonment. Our environment is littered with examples of policy reversals, summersaults and total abandonment, that I do not need to prove my point.
   The TSA policy is a good one but it definitely has its downsides which we must recognize and do something to hedge against.The benefits are many as have been articulated by the government and other commentators :It will enable the government, aggregate its cash in one account or set of accounts in the Central Bank of Nigeria(CBN), so that at each point, the accountant General as the National treasurer will know how much cash the Nation has, it will prevent having to have government funds sitting in one account, while it goes to borrow money with another account and hopefully prevent revenue generating agencies from tampering with the government revenue or even holding on to it, before remitting it to the National treasury and importantly  it will help to limit corruption often connected with government revenue cycle. If all things go well,this policy should result in more efficient revenue and cash flow management by the government.  But all things never go well in life and in government, they seldom go well.
   First, the TSA will tantamount to centralization of the accounts of the government. And everywhere and worse in the government sector, centralization soon leads to overcentralization. The challenges of centralization are many and only gets complicated with overcentralization. The accountant General and his staff will now hold the strings of the purse and the over 900 Ministries, Departments and Agencies( MDAs) of the Federal Government will look unto them to decide how much cash they get, when and how they will get the cash and for what. He and his staff will decide whether the MDAs will receive the cash for onward payment to suppliers and contractors or they will be required to submit the vouchers and bills from suppliers and the Central Bank will credit the accounts of such suppliers and contractors directly. I shudder to think of the complexity of how this will work. And I am not sure many people in the MDAs know how it will work. All we have heard is Treasury single account and everybody must comply by the 15th of September. 
  Now if every MDA has remitted all the money they held in different accounts in commercial banks to the TSA in the CBN, do they still have a say on what happens to the cash or have they fully lost control? If they have maturing commitment or bills due for payment, what do they do? Assuming the cash which they had kept or saved in their account to meet a maturing commitment, now transferred to the central pool in the TSA has been deployed by the Accountant General to meet a pressing need in another department of Government, what do they do? Disappoint the commitment and queue up at the office of the AGF to await allocation or release of cash to meet this commitment?. In normal times, there was hardly sufficient cash to meet commitments, not to talk of now with severe reduction in National income, the bottleneck will be better imagined than experienced. I am forseeing the type of lobbying that will be at the AGF's office for preferential allocation of cash which could promote corruption, rather than curb it. That is what will happen when you centralize and create monopoly in dispensing scarce commodity.
 What will happen to the revenue earning and collecting agencies like the Customs, NNPC,NAFDAC and FIRS which hitherto retained some of their collections to facilitate their work and motivate their staff. While it is true that many must have abused this priveledge, will the new bureaucracy introduced by TSA not affect their work? In the government system, it may be easy to pay money into the treasury but never easy to get it out. There is a real danger that productivity may decline in these agencies if they have to wait for intermittent and certainly irregular release of cash from the TSA. The truth is that it was in an effort to motivate improved performance in some of these agencies that the provisions were made which have now been extinguished by the new policy.
  Another downside to this 'revolutionary' TSA policy is that in one fell swoop about 1.2 trillion Naira in the different commercial banks were taken out and sterilized in the CBN. This is bound to affect both the liquidity and soundness of the banks and the entire financial system. Certainly there will be less loanable funds in the banking system and as such, interest rates which are already high will worsen. There is already talk of banks scaling down activities and many of the staff in the public sector departments whose main job was to go after Public sector funds may be out of job, worsening an already bad unemployment situation in our Country at this time. All these will naturally lead to contraction of the economy and further depression of the Gross Domestic product( GDP), which in the second quarter showed an all time decline to 2.35% growth.
  The question then is, how do we diligently implement this good policy while minimizing the downsides, some of which have been highlighted above. The First and most critical step, should be to undertake a study to truly understand the ramifications of this new policy. I am not sure that such study was undertaken before the policy was rolled out. Though the policy has become effective, it will still be necessary to undertake a holistic study to help make adjustments early to assure long term success of the policy. The second is to establish the capacity and capability of the office of the AGF to carry out the complex cash flow management operations that comes with this centralization. A high level of technological innovation is required to manage the TSA policy to sequence disbursement in a timely manner and avoid the bottleneck that may develop soon. I do not think that capacity and technology exists in the right quantity in the AGF's office today. Thirdly is that we need to find a way to maintain liquidity in the interbank system and in the economy. The CBN must take proactive actions to balance this critical index so as to keep interest rates and inflation rates at acceptable levels that will promote economic growth. Many actions taken by the government in the last three months have led to market contraction and we must begin to reverse this situation immediately before the people begin to groan. 
 Fourthly, the CBN has to consider relaxing the cash Reserve Ratio (CRR), just as it has recently began, to enable the banks breathe and have some latitude to service the economy. Fifthly, I believe that first,contingency measures need to be put in place to deal with MDAs that may be inadvertently asphyxiated by this policy, so that atrophy does not set in, destroying the capability of the agencies to deliver. Thereafter, an innovative mechanism may be adopted that will enable the government cut its nose without spitting the face. Eventually, some exceptions may become appropriate.
 Finally, a lot of rigour is called for in articulating new policies especially those that have such far reaching consequences and impact on the economy as the TSA. Implementation may also have to be phased to avoid shocking the market too much too soon and too often.
 Mazi Sam Ohuabunwa OFR 


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