IMPACT OF TREASURY SINGLE ACCOUNT ON NIGERIAN BANKS (A case study of Zenith Bank Nigeria plc)
The aim of study on the impact of treasury single account on Nigerian banks is to determine the impact of treasury single account on Nigeria banks; other specific aims of the research work includes; to examine the implication of treasury single account on the banking sector of Nigeria, to examine the effect of treasury single account on bank liquidity, to examine the effect of government treasury account on the performance of commercial banks in Nigeria, to investigate on the factors affecting the implementation of the treasury single account in Nigeria. The study discussed the some relevant concept such as the implication of TSA on the banking sector of Nigeria and historical background in the literature review. The study adopted the method of survey (questionnaire) in the methodology of the research work. The study made use of a population of 32 with a sample size of 32; the Pearson correlation method and the chi-square test were used to test the hypothesis. Relevant findings and conclusion were made based on the responses of the respondents and the result of the data analysis.
1.1 BACKGROUND OF STUDY
The banking sector of Nigeria is one of the major contributor to the growth and development in Nigeria; although there have been so many reforms and policies since 1952; most banks in Nigeria did not survive the experiences from such reforms and policies. The economics and financial status of most countries especially the developing nations depends on the level of stability in the banking industry; that’s to say that the performance of the banking sector has a significant effect on the economy of the nation.
Before the introduction of treasury single account in Nigeria, MDA which normally generates revenue have numerous accounts in commercial banks, they use part of the revenue generated to fund their various and operations and remit the excess to the federation of account.
Most of these agencies pay whatever they deem fit the federal government account; it is evident that most of these agencies or ministries are even richer than the government. The outcome of the above occurrences leads to financial leakages, the embezzlement of public funds; this made the federal government of Nigeria to prepare budget using false projection.
The commercial banks were the most beneficiaries of this situation; most banks depends on the public money deposited by ministries, at the end the federal government of Nigeria comes back to borrow the money with high interest rate.
Secondly banks no longer care to mobilize money from other sector of the Nigeria economy. The balances of account of the government with the commercial banks lay idle in the banks.
The above situation was what led to the introduction of the government treasury single account; on the 25th February, 2015, the president of Nigeria instructed that all the ministries should close their account with all the commercial banks in Nigeria, and transfer the various balances into federation account with the central bank of Nigeria.
This directive came to the central bank of Nigeria with the circular number BPS/CSO/CON/DIR/01/079, and address to all deposit money banks (DMB). The circular was entitled “Commencement of federal government's independent revenue e collection scheme under the single treasury account (TSA) initiative”.
According to IMF (2010) defines treasury single account as a unified structure of the government bank account that gives a consolidated view of government resources. Based on the principle stated and the unity of the government treasury single account, a treasury single account (TSA) is a bank account or a group of linked account through which government transact all its receipt and various payment.
According to Adeolum (2015) stated that “the maintenance of treasury single account will help to ensure proper cash management by eliminating funds that are left with different commercial banks and by doing so enhance the reconciliation of revenue collection and payment.
It is to this regards that the study wishes to consider the impact of treasury single account on Nigerian banks using Zenith bank as a case study
1.2 STATEMENT OF PROBLEM
What really instigated the study was due to excess financial leakage from the public funds, the poor accountability of ministries and the rate of borrowing by the federal government of Nigeria from most of the commercial banks in Nigeria. Well an end to above stated problem will go a long way in helping the federal government of Nigeria in various ways like the projection for budget, reduction in the rate of borrowing etc. but on the other hand the bank will suffer to the recent development; the introduction of government treasury single account will increase liquidity rate in most commercial banks in Nigeria and cause a lot of cash crunch.
1.3 AIMS AND OBJECTIVES OF STUDY
The main aim of the research work is to determine the impact of treasury single account on Nigeria banks; other specific aims of the research work are stated below as follows:
- To examine the implication of treasury single account on the banking sector of Nigeria
- To examine the effect of treasury single account on bank liquidity
- To examine the effect of government treasury account on the performance of commercial banks in Nigeria
- To investigate on the factors affecting the implementation of the treasury single account in Nigeria
- To proffer solution to the above stated problems
1.4 RESEARCH QUESTION
The study came up the following research question so as to ascertain the above objectives. The research questions were stated as follows:
- What is the implication of treasury single account on the banking sector of Nigeria?
- What is the effect of treasury single account on bank liquidity?
- What is the effect of government treasury account on the performance of commercial banks in Nigeria?
- What are the factors affecting the implementation of the government treasury single account in Nigeria?
1.5 STATEMENT OF RESEARCH HYPOTHESIS
H0: there is no significant relationship between treasury single account and bank liquidity
H1: there is significant relationship between government treasury single account and bank liquidity
H0: The implementation of treasury single account has no significant impact on the performance of commercial banks in Nigeria
H1:The implementation of treasury single account has significant impact on the performance of commercial banks in Nigeria
1.6 SIGNIFICANCE OF STUDY
The study the impact of treasury single account on Nigeria banks will be of immense benefit to the federal government of Nigeria, the Zenith bank of Nigeria, the commercial banks in the Nigeria, the ministries and other government agencies in Nigeria, the study will also be of great benefit to the citizens of Nigeria as proper budget and fund allocation to both the state and local government of Nigeria will be done appropriately. Finally the study will also benefit students and other research that wishes to carry out similar research on the above topic.
1.7 SCOPE OF STUDY
The study the impact of treasury single account on the banking sector will be limited to Zenith bank in Nigeria, from the time of implementation to date
1.8LIMITATION OF STUDY
FINANCIAL CONSTRAINTS: financial constraints tends to impede the speed of the research student to buy materials and visit other areas of the federal government sector to get information and other materials concerning the research topic but the researcher was able to get meaningful information concerning the research topic.
TIME CONSTRAINTS: this researcher still being a student must be involved in one or two departmental activities like seminar presentation, submission of assignment, attendance to lectures etc but the researcher was able to meet up with the time allocated for the completion of the research work.
1.9 DEFINITION OF TERMS
FINANCIAL LEAKAGES: refers to outflow from a circular flow of income model.
TSA: Treasury single account is a financial policy introduced by the federal government of Nigeria in 2012 to consolidate all inflows from the country's ministries, departments and agencies (MDAs) by way of deposit into commercial banks, traceable into a single account at the Central Bank of Nigeria.
TRANSPARENCY: a positive and clear financial statement of Nigeria
Adeolu I. A. (2016). Understanding The Treasury Single Account (TSA) SystemThings You Should Know. [(2010), Treasury]
Isaac .A. (2015), How Treasury Single Account (TSA) may affect economy. (Unpublished Paper)
Kanu&Oyims. (2015). Financial Exclusion of Small and Medium
Enterprise and Poverty Alleviation:
Nigeria Experience. Archives' of'Business'Research,'3(4), pg. 63-77.
SailendraPattanayak and Israel Fainboim (2010), Treasury Single Account: Concept, Design and Implementation Issues. Fiscal Affairs Department (IMF Working Paper
Taiwo .O ..(2015), Does The New Treasury Single Account (TSA) Hold For Tax? PWC Nigeria.
UdomaUdoUdoma (2015), Implementation of TSA and Nigeria Economy.Chairman National Planning Commission. Nigeria. (Unpublished Paper)